AGREEMENT AND PLAN OF MERGER BY AND AMONG LUMASENSE TECHNOLOGIES, INC., RED ACQUISITION CORPORATION AND MIKRON INFRARED, INC. DATED AS OF FEBRUARY 8, 2007
Execution
Draft
AGREEMENT
AND PLAN OF MERGER
BY
AND AMONG
LUMASENSE
TECHNOLOGIES, INC.,
RED
ACQUISITION CORPORATION
AND
MIKRON
INFRARED, INC.
DATED
AS OF FEBRUARY 8, 2007
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Page
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| ARTICLE I |
1
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1.1
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Certain
Defined Terms
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1
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1.2
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Other
Defined Terms
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6
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| ARTICLE II THE MERGER |
7
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2.1
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Effective
Time of the Merger
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7
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2.2
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Closing
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7
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2.3
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Effects
of the Merger
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8
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2.4
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Directors
and Officers
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8
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| ARTICLE III CONVERSION OF SECURITIES |
8
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3.1
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Conversion
of Capital Stock
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8
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3.2
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Exchange
of Certificates
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9
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| ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY |
11
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4.1
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Organization,
Standing and Power; Subsidiaries
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11
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4.2
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Capitalization
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12
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4.3
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Authority;
No Conflict; Required Filings and Consents
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14
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4.4
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SEC
Filings; Financial Statements; Reporting Requirements
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15
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4.5
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No
Undisclosed Liabilities; Indebtedness
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18
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4.6
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Absence
of Certain Changes or Events
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18
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4.7
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Taxes
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18
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4.8
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Owned
and Leased Real Properties
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19
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4.9
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Intellectual
Property
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20
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4.10
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Agreements,
Contracts and Commitments; Government Contracts
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22
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4.11
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Litigation;
Product Liability; Product Recalls
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24
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4.12
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Environmental
Matters
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24
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4.13
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Employee
Benefit Plans
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25
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4.14
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Compliance
With Laws
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28
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4.15
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Permits
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28
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4.16
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Labor
Matters
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28
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4.17
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Insurance
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29
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4.18
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Inventory
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30
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4.19
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Tangible
Personal Property
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30
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4.20
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Customers
and Suppliers
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30
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4.21
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Accounts
Receivable
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30
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4.22
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Opinions
of Financial Advisors
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30
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4.23
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Brokers
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31
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4.24
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Certain
Approvals
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31
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4.25
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Unlawful
Payments
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31
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4.26
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Affiliate
Transactions
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31
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4.27
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No
Other Representations or Warranties
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31
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-
i -
TABLE
OF CONTENTS
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Page
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| ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE BUYER AND THE |
32
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| BUYER SUBSIDIARY |
32
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5.1
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Organization,
Standing and Power
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32
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5.2
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Authority;
No Conflict; Required Filings and Consents
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32
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5.3
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Information
Provided
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33
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5.4
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Operations
of the Buyer Subsidiary
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34
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5.5
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Financing
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34
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5.6
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Brokers
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34
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5.7
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Shares
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34
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| ARTICLE VI CONDUCT OF BUSINESS |
34
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6.1
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Covenants
of the Company
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34
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6.2
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Confidentiality
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35
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| ARTICLE VII ADDITIONAL AGREEMENTS |
35
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7.1
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No
Solicitation
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35
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7.2
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Proxy
Statement
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40
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7.3
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Nasdaq
Quotation
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40
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7.4
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Access
to Information
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40
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7.5
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Shareholders
Meeting
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41
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7.6
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Cooperation;
Further Action
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41
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7.7
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Public
Disclosure
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43
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7.8
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Company
Stock Plans
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43
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7.9
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Shareholder
Litigation
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43
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7.10
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Notification
of Certain Matters
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43
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7.11
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Directors’
and Officers’ Indemnification and Insurance
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44
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7.12
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Loans
to Company Employees, Officers and Directors
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45
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7.13
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Takeover
Statutes and Laws
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45
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7.14
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Standstill
Agreements; Confidentiality Agreements
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45
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| ARTICLE VIII CONDITIONS TO MERGER |
46
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8.1
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Conditions
to Each Party’s Obligation To Effect the Merger
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46
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8.2
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Additional
Conditions to Obligations of the Buyer and the Buyer
Subsidiary
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46
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8.3
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Additional
Conditions to Obligations of the Company
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48
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| ARTICLE IX TERMINATION AND AMENDMENT |
49
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9.1
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Termination
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49
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9.2
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Effect
of Termination
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50
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9.3
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Fees
and Expenses
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50
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| ARTICLE X MISCELLANEOUS |
51
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10.1
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Amendment
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51
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10.2
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Extension;
Waiver
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51
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10.3
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Non−Survival
of Representations, Warranties and Agreements
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52
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10.4
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Notices
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52
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-
ii -
TABLE
OF CONTENTS
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Page
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10.5
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Entire
Agreement
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53
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10.6
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No
Third Party Beneficiaries.
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53
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10.7
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Assignment.
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53
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10.8
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Severability.
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53
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10.9
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Counterparts
and Signature.
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54
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10.10
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Interpretation.
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54
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10.11
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Governing
Law.
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54
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10.12
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Remedies.
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54
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10.13
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Submission
to Jurisdiction.
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54
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10.14
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Waiver
Of Jury Trial.
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55
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Exhibit
A Form
of
Amended and Restated Certificate of Incorporation of the Surviving
Corporation
AGREEMENT
AND PLAN OF MERGER
THIS
AGREEMENT AND PLAN OF MERGER (this “Agreement”), dated as of February 8, 2007,
is by and among LumaSense Technologies, Inc., a Delaware corporation (the
“Buyer”), Red Acquisition Corporation, a New Jersey corporation and a
wholly-owned subsidiary of the Buyer (the “Buyer Subsidiary”), and Mikron
Infrared, Inc., a New Jersey corporation (the “Company”).
WHEREAS,
the Boards of Directors of the Buyer and the Company deem it advisable and
in
the best interests of each corporation and their respective shareholders that
the Buyer acquire the Company in order to advance the long-term business
interests of the Buyer and the Company;
WHEREAS,
the acquisition of the Company shall be effected through a merger (the “Merger”)
of the Buyer Subsidiary into the Company in accordance with the terms of this
Agreement and the NJBCA, as a result of which the Company shall become a
wholly-owned subsidiary of the Buyer; and
WHEREAS,
in order to induce the Buyer to enter into this Agreement and cause the Merger
to be consummated, concurrently with the execution and delivery of this
Agreement, certain shareholders of the Company are entering into Support
Agreements (the “Support
Agreements”)
in
favor of the Buyer and, among other things, granting the Buyer an irrevocable
proxy to vote all securities of the Company beneficially owned by such
shareholders in favor of the adoption of this Agreement and the approval of
the
Merger.
NOW,
THEREFORE, in consideration of the foregoing and the respective representations,
warranties, covenants and agreements set forth below, the Buyer, the Buyer
Subsidiary and the Company agree as follows:
ARTICLE
I
1.1 Certain
Defined Terms.
As used
in this Agreement, the following terms have the meanings ascribed thereto in
this Article:
Action
means
any claim, action, suit, arbitration, mediation, inquiry, proceeding or
investigation by or before any Governmental Entity, arbitrator or
mediator.
Affiliate
when
used with respect to any party shall mean any person who is an “affiliate” of
that party within the meaning of Rule 405 promulgated under the Securities
Act.
Agreement
has the
meaning attributed thereto in the Preamble.
Business
Day means any day that is not a Saturday, a Sunday or other day on which banks
are required or authorized by Law to be closed in The City of New
York.
Buyer
has the
meaning attributed thereto in the Preamble.
Agreement
and Plan of Merger – Page
2
Buyer
Material Adverse Effect
means
any material adverse change, event, circumstance or development with respect
to,
or any material adverse effect on, (i) the business, assets, liabilities,
capitalization, prospects, condition (financial or otherwise), or results of
operations of the Buyer and its Subsidiaries, taken as a whole or (ii) the
ability of the Buyer or the Buyer Subsidiary to consummate the transactions
contemplated by this Agreement. For the avoidance of doubt, the parties agree
that the terms “material”, “materially” or “materiality” as used in this
Agreement with an initial lower case “m” shall have their respective customary
and ordinary meanings, without regard to the meanings ascribed to Buyer Material
Adverse Effect or Company Material Adverse Effect.
Buyer
Subsidiary
has the
meaning attributed thereto in the Preamble.
Company
has the
meaning attributed thereto in the Preamble.
Company
Balance Sheet
means
the consolidated, audited balance sheet of the Company as of October 31,
2006.
Company
Board
means
the Board of Directors of the Company.
Company
Disclosure Schedule
has the
meaning attributable thereto in the first paragraph of Article IV.
Company
IP Agreements
means
all (a) licenses of Intellectual Property by the Company or any of its
Subsidiaries to any third party, (b) licenses of Intellectual Property by any
third party to the Company or any of its Subsidiaries, other than non-exclusive
object code licenses of commercially available Software, (c) other agreements
between the Company or any of its Subsidiaries and any third party relating
to
the development or use of Intellectual Property, and (d) consents, settlements,
decrees, orders, injunctions, judgments or rulings governing the use, validity
or enforceability of the Company IP Rights.
Company-Licensed
IP Rights
means
Company IP Rights that are not Company-Owned IP Rights.
Company
Material Adverse Effect
means
any change in, or effect on, the business, operations, assets, liabilities
or
condition (financial or otherwise) of the Company and its Subsidiaries which,
when considered either individually or in the aggregate together with all other
adverse changes or effects with respect to which such phrase is used in this
Agreement, is, or is reasonably likely to be, materially adverse to the
business, operations, assets, liabilities or condition (financial or otherwise)
of the Company and its Subsidiaries, taken as a whole, excluding effects
resulting from (i) changes in general economic conditions or in the securities
markets in general that do not affect the Company and its Subsidiaries in a
materially disproportionate manner relative to other companies in the same
industry, (ii) changes in the industries in which the Company and its
Subsidiaries operate (including legal and regulatory changes) that do not
specifically relate to the Company and its Subsidiaries and that do not affect
the Company and its Subsidiaries in a materially disproportionate manner
relative to other companies in such industry, (iii) acts taken pursuant to
or in
accordance with this Agreement at the request of the Buyer, or (iv) acts of
terrorism or war (whether or not declared).
Agreement
and Plan of Merger – Page
3
Company-Owned
IP Rights
means
Company IP Rights that are owned by the Company or any of its
Subsidiaries.
Company
Product or Service
means
any product or service produced, manufactured, marketed, licensed, sold,
furnished or distributed by the Company or any of its Subsidiaries at any time
prior to the Closing Date.
Encumbrance
means
any security interest, pledge, mortgage, lien, charge, hypothecation, option
to
purchase or lease or otherwise acquire any interest, conditional sales
agreement, claim, restriction, covenant, easement, right of way, title defect,
adverse claim of ownership or use, transfer restriction, voting agreement,
proxy
or other limitation on voting rights, or other encumbrance of any kind, other
than any obligation to accept returns of inventory in the ordinary course of
business and other than those arising by reason of restrictions on transfers
under federal, state and foreign securities Laws.
ERISA
means
the Employee Retirement Income Security Act of 1974, as amended, and the rules
and regulations promulgated thereunder.
Exchange
Act
means
the Securities Exchange Act of 1934, as amended.
Governmental
Entity
means
any court, arbitrational tribunal, administrative agency or commission or other
governmental or regulatory authority, agency or instrumentality or any stock
market or stock exchange on which the Shares are listed for
trading.
Governmental
Order
means
any order, writ, judgment, injunction, decree, stipulation, determination or
award entered by or with any Governmental Entity.
Indebtedness
means,
with respect to any Person, without duplication, (A) all obligations of such
Person for borrowed money, or with respect to deposits or advances of any kind
to such Person, (B) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (C) all obligations of such Person
upon which interest charges are customarily paid, (D) all obligations of such
Person under conditional sale or other title retention agreements relating
to
property purchased by such Person, (E) all obligations of such Person issued
or
assumed as the deferred purchase price of property or services (excluding
obligations of such Person or creditors for raw materials, inventory, services
and supplies incurred in the Ordinary Course of Business), (F) all capitalized
lease obligations of such Person, (G) all obligations of others secured by
any
lien on property or assets owned or acquired by such Person, whether or not
the
obligations secured thereby have been assumed, (H) all obligations of such
Person under interest rate or currency hedging transactions (valued at the
termination value thereof), (I) all letters of credit issued for the account
of
such Person and (J) all guarantees and arrangements having the economic effect
of a guarantee by such Person of any Indebtedness of any other Person.
Intellectual
Property
means
the rights associated with or arising out of any of the following: (i) domestic
and foreign patents and patent applications, together with all reissuances,
divisionals, continuations, continuations-in-part, revisions, renewals,
extensions, and reexaminations thereof, and any identified invention disclosures
(“Patents”);
(ii)
trade secret rights and corresponding rights in confidential information and
other non-public information (whether or not patentable), including ideas,
formulas, compositions, inventor’s notes, discoveries and improvements,
know-how, manufacturing and production processes and techniques, testing
information, research and development information, inventions, invention
disclosures, unpatented blueprints, drawings, specifications, designs, plans,
proposals and technical data, business and marketing plans, market surveys,
market know-how and customer lists and information (“Trade
Secrets”);
(iii)
all copyrights, copyrightable works, rights in databases, data collections,
“moral” rights, mask works, copyright registrations and applications therefore
and corresponding rights in works of authorship (“Copyrights”);
(iv)
all trademarks, service marks, logos, trade dress and trade names and domain
names indicating the source of goods or services, and other indicia of
commercial source or origin (whether registered, common law, statutory or
otherwise), all registrations and applications to register the foregoing
anywhere in the world and all goodwill associated therewith (“Trademarks”);
(v)
all computer software and code, including assemblers, applets, compilers, source
code, object code, development tools, design tools, user interfaces and data,
in
any form or format, however fixed (“Software”);
and
(vi) all Internet electronic addresses, uniform resource locators and
alphanumeric designations associated therewith and all registrations for any
of
the foregoing (“Domain
Names”).
Agreement
and Plan of Merger – Page
4
Knowledge
means,
with respect to any particular matter pertaining to the Company or any
Subsidiary, the actual knowledge of the chief executive officer, the executive
vice president or the chief financial officer of the Company regarding such
matter; provided that such officers shall be deemed to have made due and
diligent inquiry of those employees, agents, consultants or other Persons whom
such officers reasonably believe would have knowledge of the matters
represented.
Law
means
any statute, law, ordinance, regulation, rule, code, principle of common law
and
equity or other requirement of law of a Governmental Entity or any Governmental
Order.
Merger
has the
meaning attributed thereto in the Preamble.
NJBCA
means
the New Jersey Business Corporation Act (Title 14A, NJSA §§ 1-1,
et
seq.)
, as
amended.
Ordinary
Course of Business,
with
respect to any action, means such action is:
(i) consistent
with the recent past practices of such Person and is taken in the ordinary
course of the normal day-to-day operations of such Person; and
(ii) not
required to be authorized by the board of directors of such Person.
Permitted
Encumbrance
means:
(i) liens for Taxes, assessments and governmental charges or levies imposed
upon
the Company or any of its Subsidiaries not yet due and payable or which are
being contested in good faith by appropriate proceedings (provided such contests
do not exceed $200,000 in the aggregate) or for which reserves have been
established on the most recent financial statements included in the SEC Reports
filed prior to the date hereof, (ii) Encumbrances imposed by Law which are
not
yet due and payable and have arisen in the ordinary course of business, (iii)
pledges or deposits to secure obligations under workers’ compensation Laws or
similar legislation or to secure public or statutory obligations, (iv)
mechanics’, carriers’, workers’, repairers’ and similar Encumbrances imposed
upon the Company or any of its Subsidiaries arising or incurred in the Ordinary
Course of Business, (v) zoning, entitlement and other land use and environmental
regulations by Governmental Entities, (vi) such other imperfections or
irregularities in title, charges, easements, survey exceptions, leases,
subleases, license agreements and other occupancy agreements, reciprocal
easement agreements, restrictions and other customary encumbrances on title
to
real property; provided,
that in
the case of clauses (v) and (vi), none of the foregoing, individually or in
the
aggregate, have a Company Material Adverse Effect upon the continued use of
the
property to which they relate in the conduct of the business currently conducted
thereon, (vii) as to any Leased Real Property, any Encumbrance affecting the
interest of the lessor thereof, and (viii) liens relating to any Indebtedness
described in clauses (i), (ii) and (iii) of the definition of
Indebtedness.
Agreement
and Plan of Merger – Page
5
Person
means
any individual, partnership, firm, corporation, association, trust,
unincorporated organization, Governmental Authority, joint venture, limited
liability company or other entity.
SEC
means
the United States Securities and Exchange Commission.
Securities
Act
means
the Securities Act of 1933, as amended.
Shares
means
the one-third cent par value common stock of the Company.
Subsidiary
means,
with respect to a party, any corporation, partnership, joint venture, limited
liability company or other business association or entity, whether incorporated
or unincorporated, of which (i) such party or any other Subsidiary of such
party is a general partner or a managing member (excluding partnerships, the
general partnership interests of which held by such party and/or one or more
of
its Subsidiaries do not have a majority of the voting interest in such
partnership), (ii) such party and/or one or more of its Subsidiaries holds
voting power to elect a majority of the board of directors or other governing
body performing similar functions, or (iii) such party and/or one or more of
its
Subsidiaries, directly or indirectly, owns or controls more than 50% of the
equity, membership, partnership or similar interests.
Taxes
means
all taxes, charges, fees, levies or other similar assessments or liabilities,
including income, gross receipts, ad valorem, premium, value-added, excise,
real
property, personal property, sales, use, services, transfer, withholding,
employment, payroll and franchise taxes imposed by the United States of America
or any state, local or foreign government, or any agency thereof, or other
political subdivision of the United States of America or any such government,
and any interest, fines, penalties, assessments or additions to tax resulting
from, attributable to or incurred in connection with any tax or any contest
or
dispute thereof.
Tax
Returns
means
all reports, returns, declarations, statements or other information required
to
be supplied to a taxing authority in connection with Taxes.
A
Triggering
Event
shall be
deemed to have occurred if: (a) the Company Board shall have failed to recommend
that the Company’s shareholders vote to approve the Agreement, or shall have
withdrawn or modified in a manner adverse to the Buyer the Company Board
Recommendation (it being understood and agreed that any “stop-look-and-listen”
communication by the Company Board to the shareholders of the Company pursuant
to Rule 14d-9(f) of the Exchange Act shall not be deemed to constitute a
withdrawal, modification or change of its recommendation of this Agreement);
(b)
the Company shall have failed to include in the Proxy Statement the Company
Board Recommendation; (c) the Company Board fails to reaffirm the Company Board
Recommendation, or fails to reaffirm its determination that the Merger is fair
to and in the best interests of the Company’s shareholders, in a press release
if so requested by the Buyer, within 10 days after the Buyer requests in writing
that such recommendation or determination be reaffirmed; (d) the Company Board
shall have approved, endorsed or recommended any Acquisition Proposal; (e)
the
Company shall have entered into any letter of intent or similar document or
any
Contract relating to any Acquisition Proposal, other than confidentiality
agreements that the Company is required or permitted to enter into pursuant
Section 7.1 of the Agreement; (f) a tender or exchange offer relating to
securities of the Company shall have been commenced and the Company shall not
have sent to its security holders, or filed with the SEC, within 10 Business
Days after the commencement of such tender or exchange offer, a statement
disclosing that the Company recommends rejection of such tender or exchange
offer; or (g) the Company or any Representative of the Company shall have
breached (or be deemed to have breached) in any material respect any material
obligations set forth in Section 7.1 of this Agreement.
Agreement
and Plan of Merger – Page
6
1.2 Other
Defined Terms.
The
following terms have the meanings defined for such terms in the Sections set
forth below:
| Term | Section |
|
Acquisition
Proposal
|
7.1(d)
|
|
Antitrust
Laws
|
7.6(b)
|
|
Antitrust
Order
|
7.6(b)
|
|
Benefit
Plan
|
4.13(a)
|
|
Certificate
of Merger
|
2.1
|
|
Certificates
|
3.2(a)
|
|
Closing
|
2.2
|
|
Closing
Date
|
2.2
|
|
Code
|
3.2(g)
|
|
Company
Board Recommendation
|
7.5
|
|
Company
Leases
|
4.8(b)
|
|
Company
Material Contracts
|
4.10(a)
|
|
Company
Permits
|
4.15
|
|
Company
Preferred Stock
|
4.2(a)
|
|
Company
SEC Reports
|
4.4(a)
|
|
Company
Stock Options
|
4.2(b)
|
|
Company
Stock Plans
|
4.2(b)
|
|
Company
Shareholder Approval
|
4.3(a)
|
|
Company
Shareholders Meeting
|
4.4(c)
|
|
Company
Voting Proposal
|
4.3(a)
|
|
Confidentiality
Agreement
|
6.2
|
|
Costs
|
7.11(a)
|
|
Effective
Time
|
2.1
|
|
Environmental
Law
|
4.12(c)
|
|
Environmental
Permits
|
4.12(c)
|
|
ERISA
Affiliate
|
4.13(c)
|
|
Exchange
Agent
|
3.2(a)
|
|
Exchange
Fund
|
3.2(a)
|
|
Foreign
Plan
|
4.13(a)
|
|
GAAP
|
4.4(b)
|
|
HLHZC
|
4.23
|
|
HLHZFA
|
4.22
|
|
HSR
Act
|
4.3(c)
|
|
Indemnified
Directors and Officers
|
7.11(a)
|
|
Instruments
of Indebtedness
|
4.10(a)
|
|
Insurance
Policies
|
4.17
|
|
Leased
Real Property
|
4.8(b)
|
|
Material
Contract
|
4.10(a)
|
|
Materials
of Environmental Concern
|
4.12(c)
|
|
Merger
Consideration
|
3.1(a)
|
|
Option
Consideration
|
7.8(b)
|
|
Outside
Date
|
9.1(b)
|
|
Proxy
Statement
|
4.4(c)
|
|
Regulation
M-A Filing
|
4.4(c)
|
|
Representatives
|
7.1(a)
|
|
Requisite
Regulatory Approvals
|
8.1(c)
|
|
Regulation
M-A Filing
|
4.4(c)
|
|
Specified
Time
|
7.1(a)
|
|
Superior
Proposal
|
7.1(d)
|
|
Surviving
Corporation
|
2.3
|
|
Termination
Fee
|
9.3(c)
|
|
WARN
Act
|
4.16(e)
|
Agreement
and Plan of Merger – Page
7
ARTICLE
II
THE
MERGER
2.1 Effective
Time of the Merger.
Subject
to the provisions of this Agreement, prior to the Closing, the Buyer shall
prepare, and on the Closing Date or as soon as practicable thereafter the Buyer
shall cause to be filed with the Secretary of State of the State of New Jersey,
a certificate of merger (the “Certificate of Merger”) in such form as is
required by, and executed by the Surviving Corporation in accordance with,
the
relevant provisions of the NJBCA and shall make all other filings or recordings
required under the NJBCA. The Merger shall become effective upon the filing
of
the Certificate of Merger with the Secretary of State of the State of New Jersey
or at such later time as is established by the Buyer and the Company and set
forth in the Certificate of Merger (the “Effective Time”).
2.2 Closing.
The
closing of the Merger (the “Closing”) shall take place at 10:00 a.m.,
Eastern time, on a date to be specified by the Buyer and the Company (the
“Closing Date”), which shall be no later than the second Business Day after
satisfaction or waiver of the conditions set forth in Article VII (other than
delivery of items to be delivered at the Closing and other than satisfaction
of
those conditions that by their nature are to be satisfied at the Closing, it
being understood that the occurrence of the Closing shall remain subject to
the
delivery of such items and the satisfaction or waiver of such conditions at
the
Closing), at the offices of Arent Fox LLP, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, unless another date, place or time is agreed to in writing by the Buyer
and the Company.
Agreement
and Plan of Merger – Page
8
2.3 Effects
of the Merger.
At the
Effective Time (i) the separate existence of the Buyer Subsidiary shall
cease and the Buyer Subsidiary shall be merged with and into the Company (the
Company following the Merger is sometimes referred to herein as the “Surviving
Corporation”), (ii) the amended and restated certificate of incorporation
of the Company as in effect immediately prior to the Effective Time shall be
amended and restated in its entirety in the form attached hereto as Exhibit
A,
and as
so amended and restated shall be the certificate of incorporation of the
Surviving Corporation, until further amended in accordance with the NJBCA and
(iii) the by-laws of the Buyer Subsidiary as in effect immediately prior to
the Effective Time shall be amended to change all references to the name of
the
Buyer Subsidiary to refer to the name of the Company, and, as so amended, such
by-laws shall be the by-laws of the Surviving Corporation, until further amended
in accordance with the NJBCA. The Merger shall have the effects set forth in
Section 14A:10-6 of the NJBCA.
2.4 Directors
and Officers.
The
directors and officers of the Buyer Subsidiary immediately prior to the
Effective Time shall be the initial directors and officers of the Surviving
Corporation, each to hold office in accordance with the certificate of
incorporation and by-laws of the Surviving Corporation.
ARTICLE
III
CONVERSION
OF SECURITIES
3.1 Conversion
of Capital Stock.
As of
the Effective Time, by virtue of the Merger and without any action on the part
of the holder of any shares of the capital stock of the Company or capital
stock
of the Buyer Subsidiary:
(a) Each
of
the Shares issued and outstanding immediately prior to the Effective Time (other
than Shares held in the Company’s treasury or by any wholly-owned Subsidiary of
the Company and Shares owned beneficially by the Buyer, the Buyer Subsidiary
or
any wholly-owned Subsidiary of the Buyer) shall be converted into and represent
the right to receive $11.50 in cash per share of the Shares, without any
interest thereon (the “Merger Consideration”).
(b) Cancellation
of Stock Owned by the Parties and Their Subsidiaries.
All of
the Shares that are owned by the Company as treasury stock or by any
wholly-owned Subsidiary of the Company and any Shares owned by the Buyer, the
Buyer Subsidiary or any other wholly-owned Subsidiary of the Buyer immediately
prior to the Effective Time shall be cancelled and shall cease to exist and
no
stock of the Buyer or other consideration shall be delivered in exchange
therefor.
Agreement
and Plan of Merger – Page
9
(c) Capital
Stock of the Buyer Subsidiary.
Each
share of the capital stock of the Buyer Subsidiary issued and outstanding
immediately prior to the Effective Time shall be converted into and become
one
fully paid and nonassessable share of common stock, one-third cent par value
per
share, of the Surviving Corporation.
(d) Treatment
of Company Stock Options.
Prior
to
the Effective Time, the Company (and/or, if appropriate, the Compensation
Committee thereof) shall adopt appropriate resolutions and take all other
actions necessary to provide that each Company Stock Option, whether or not
then
vested or exercisable, shall, at the Effective Time, be cancelled, and each
holder thereof shall be entitled to receive a payment in cash as provided in
Section 7.8(b)
hereof
(subject to any applicable withholding taxes). As provided herein, unless
otherwise determined by the Buyer, the Company Stock Plans (and any feature
of
any other Benefit Plans or other plan, program or arrangement providing for
the
issuance or grant of any other interest in respect of the capital stock of
the
Company) shall terminate as of the Effective Time. After the date hereof, the
Company will not issue any Company Stock Options or other options, warrants,
rights or agreements which would entitle any person to acquire any capital
stock
of the Company or, except as otherwise provided in this Section 3.1(d)
or in
Section 7.8,
to
receive any payment in respect thereof.
3.2 Exchange
of Certificates.
The
procedures for exchanging outstanding Shares for Merger Consideration pursuant
to the Merger are as follows:
(a) Exchange
Agent.
As of
the Effective Time, the Buyer shall deposit with the Buyer’s transfer agent or
another bank or trust company designated by the Buyer and reasonably acceptable
to the Company (the “Exchange Agent”), for the benefit of the holders of Shares,
for exchange in accordance with this Section 3.2,
through
the Exchange Agent, cash in an amount sufficient to pay the aggregate Merger
Consideration (such consideration being hereinafter referred to as the “Exchange
Fund”), payable pursuant to Section 3.1
to
holders of certificates which immediately prior to the Effective Time
represented outstanding Shares (the “Certificates”).
(b) Exchange
Procedures.
As soon
as reasonably practicable after the Effective Time, the Exchange 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
Exchange Agent and shall be in such form and have such other provisions as
the
Buyer may reasonably specify) and (ii) instructions for effecting the
surrender of the Certificates in exchange for each holder’s respective Merger
Consideration. Upon surrender of a Certificate for cancellation to the Exchange
Agent or to such other agent or agents as may be appointed by the Buyer,
together with such letter of transmittal, duly executed, and such other
documents as may reasonably be required by the Exchange Agent, the holder of
each Certificate shall be entitled to receive in exchange therefor cash
representing that number of whole Shares evidenced by such Certificate
multiplied by the Merger Consideration, and the Certificate so surrendered
shall
immediately be cancelled. In the event of a transfer of ownership of Shares
which is not registered in the transfer records of the Company, the payment
representing the Merger Consideration payable to the registered holder may
be
paid to a person other than the person in whose name the Certificate so
surrendered is registered, if such Certificate is presented to the Exchange
Agent, accompanied by all documents required to evidence and effect such
transfer and by evidence that any applicable stock transfer taxes have been
paid. Until surrendered as contemplated by this Section 3.2,
each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender the payment contemplated by this
Section 3.2.
Agreement
and Plan of Merger – Page
10
(c) No
Further Ownership Rights in Shares.
All
payments upon the surrender for exchange of Certificates in accordance with
the
terms hereof shall be deemed to have been paid in full satisfaction of all
rights pertaining to such Shares, and from and after the Effective Time there
shall be no further registration of transfers on the stock transfer books of
the
Surviving Corporation of the Shares which were outstanding immediately prior
to
the Effective Time. If, after the Effective Time, Certificates are presented
to
the Surviving Corporation or the Exchange Agent for any reason, they shall
be
cancelled and exchanged as provided in this Article II.
(d) Termination
of Exchange Fund.
Subject
to any applicable escheat or similar Law, any portion of the Exchange Fund
which
remains undistributed to the holders of Shares 180 days after the Effective
Time
shall be delivered to the Buyer, upon demand, and any holder of Shares who
has
not previously complied with this Section 3.2
shall
thereafter look only to the Buyer, as a general unsecured creditor, for payment
of his, her or its claim for Merger Consideration.
(e) Investment
of Exchange Fund
The
Exchange Agent shall invest cash included in the Exchange Fund, as directed
by
the Buyer, on a daily basis, provided
that no
such investment or loss thereon shall affect the amounts payable pursuant to
the
provisions of this Article II. Any interest and other income resulting from
such
investments shall be paid to the Buyer.
(f) No
Liability.
To the
extent permitted by applicable Law, none of the Buyer, the Buyer Subsidiary,
the
Company, the Surviving Corporation or the Exchange Agent shall be liable to
any
holder of Shares delivered to a public official pursuant to any applicable
abandoned property, escheat or similar Law. If any Certificate shall not have
been surrendered prior to one year after the Effective Time (or immediately
prior to such earlier date on which any cash payable to the holder of such
Certificate pursuant to this Article III would otherwise escheat to or become
the property of any Governmental Entity), any such cash in respect of such
Certificate shall, to the extent permitted by applicable Law, become the
property of the Surviving Corporation, free and clear of all claims or interest
of any person previously entitled thereto.
(g) Withholding
Rights.
Each of
the Buyer and the Surviving Corporation shall be entitled to deduct and withhold
from the consideration otherwise payable pursuant to this Agreement to any
holder of Shares such amounts as it reasonably determines that it is required
to
deduct and withhold with respect to the making of such payment under the
Internal Revenue Code of 1986, as amended (the “Code”), or any other applicable
provision of Law. To the extent that amounts are so withheld by the Surviving
Corporation or the Buyer, as the case may be, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the holder
of
the Shares in respect of which such deduction and withholding was made by the
Surviving Corporation or the Buyer, as the case may be.
Agreement
and Plan of Merger – Page
11
(h) Lost
Certificates.
If any
Certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming such Certificate to be lost,
stolen or destroyed and, if required by the Surviving Corporation, the posting
by such person of a bond in such reasonable amount as the Surviving Corporation
may direct as indemnity against any claim that may be made against it with
respect to such Certificate, the Exchange Agent shall issue in exchange for
such
lost, stolen or destroyed Certificate, the Merger Consideration deliverable
in
respect thereof pursuant to this Agreement.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
The
Company represents and warrants to the Buyer and the Buyer Subsidiary that
the
statements contained in this Article IV are true and correct, subject to
the exceptions set forth in the disclosure schedule delivered by the Company
to
the Buyer and the Buyer Subsidiary on or before the execution and delivery
of
this Agreement (the “Company
Disclosure Schedule”).
The
Company Disclosure Schedule shall be arranged in paragraphs corresponding to
the
numbered and lettered paragraphs contained in this Article IV that contain
references to such Company Disclosure Schedule; the disclosure in any paragraph
shall qualify only such specifically enumerated paragraph and any other
paragraph to which an explicit and clear cross-reference has been made. For
purposes of this Agreement, each statement or other item of information set
forth in the Company Disclosure Schedule shall be deemed to be a representation
and warranty made by the Company in Article IV.
4.1 Organization,
Standing and Power; Subsidiaries.
(a) Each
of
the Company and its Subsidiaries is a corporation duly organized, validly
existing and in good standing under the Laws of the jurisdiction of its
incorporation, has all requisite corporate power and authority to own, lease
and
operate its properties and assets and to carry on its business as now being
conducted and as proposed to be conducted, and is duly qualified to do business
and is in good standing as a foreign corporation in each jurisdiction listed
in
Section 4.1(a)
of the
Company Disclosure Schedule, which jurisdictions constitute the only
jurisdictions in which the character of the properties it owns, operates or
leases or the nature of its activities makes such qualification necessary,
except for such failures to be so organized, qualified or in good standing,
individually or in the aggregate, that have not had, and could not reasonably
be
expected to have a Company Material Adverse Effect.
(b) Section
4.1(b)
of the
Company Disclosure Schedule sets forth a complete and accurate list of all
of
the Company’s Subsidiaries and the Company’s direct or indirect equity interest
therein. Except as set forth in Section 4.1(b)
of the
Company Disclosure Schedule, neither the Company nor any of its Subsidiaries
directly or indirectly owns any equity, membership, partnership or similar
interest in, or any interest convertible into or exchangeable or exercisable
for
any equity, membership, partnership or similar interest in, any corporation,
partnership, joint venture, limited liability company or other business
association or entity, whether incorporated or unincorporated, and neither
the
Company, nor any of its Subsidiaries, has, at any time, owned any Subsidiary
or
been a general partner or managing member of any general partnership, limited
partnership, limited liability company or other entity.
Agreement
and Plan of Merger – Page
12
(c) The
Company has delivered to the Buyer complete and accurate copies of the
certificate of incorporation and by-laws of the Company and of the charter,
by-laws or other organizational documents of each Subsidiary of the Company,
in
each case as amended to date. The Company is not in default under, or in
violation of, its certificate of incorporation or by-laws, and each of its
Subsidiaries is not in violation of its comparable organizational documents.
4.2 Capitalization.
(a) The
authorized capital stock of the Company consists of 15,000,000 Shares, and
1,000
shares of preferred stock, $0.01 par value per share (“Company Preferred
Stock”). The rights and privileges of each class of the Company’s capital stock
are as set forth in the Company’s certificate of incorporation. As of February
7, 2007: (i) 5,588,556
Shares
were issued and outstanding, (ii) no Shares were held in the treasury of the
Company or by Subsidiaries of the Company, and (iii) no shares of the Company
Preferred Stock were issued or outstanding.
(b) Section
4.2(b)
of the
Company Disclosure Schedule lists the number of Shares reserved for future
issuance pursuant to stock options granted and outstanding as of the date of
this Agreement and the plans or other arrangements under which such options
were
granted (collectively, the “Company
Stock Plans”)
and
sets forth a complete and accurate list of (i) all holders of outstanding
options to purchase Shares (such outstanding options, the “Company
Stock Options”),
whether or not granted under the Company Stock Plans, and (ii) all persons
holding unvested Shares, indicating with respect to each Company Stock Option
and each unvested Share, as applicable, the number of Shares subject to such
Company Stock Option, the relationship of the holder to the Company, and the
exercise or purchase price, the date of grant or issuance, the repurchase price
payable per unvested Share, length of the repurchase period following the
holder’s termination of service, vesting schedule and the expiration date
thereof, including the extent to which any vesting has occurred as of the date
of this Agreement, and whether (and to what extent) the vesting of such Company
Stock Options or such Shares will be accelerated in any way by the transactions
contemplated by this Agreement or upon termination of employment or service
with
the Company or the surviving Corporation, the Buyer or any Subsidiary of the
Company following the Merger or otherwise. The Company has provided to the
Buyer
accurate and complete copies of all Company Stock Plans, and the forms of all
stock option agreements evidencing Company Stock Options, and there are no
agreements, understandings or commitments to amend, modify or supplement such
documents.
(c) Except
(x) as set forth in this Section 4.2,
and (y)
as reserved for future grants under Company Stock Plans, (i) there are no equity
securities of any class of the Company or any of its Subsidiaries (other than
equity securities of any such Subsidiary that are directly or indirectly owned
by the Company), or any security exchangeable into or exercisable for such
equity securities, issued, reserved for issuance or outstanding and (ii) there
are no options, warrants, equity securities, calls, rights, commitments or
agreements of any character to which the Company or any of its Subsidiaries
is a
party or by which the Company or any of its Subsidiaries is bound obligating
the
Company or any of its Subsidiaries to issue, exchange, transfer, deliver or
sell, or cause to be issued, exchanged, transferred, delivered or sold,
additional shares of capital stock or other equity interests of the Company
or
any of its Subsidiaries or any security or rights convertible into or
exchangeable or exercisable for any such shares or other equity interests,
or
obligating the Company or any of its Subsidiaries to grant, extend, accelerate
the vesting of, otherwise modify or amend or enter into any such option,
warrant, equity security, call, right, commitment or agreement. Neither the
Company nor any of its Subsidiaries has outstanding any stock appreciation
rights, phantom stock, performance-based rights or similar rights or
obligations. There are no obligations, contingent or otherwise, of the Company
or any of its Subsidiaries to repurchase, redeem or otherwise acquire any shares
of the capital stock of the Company or any of its Subsidiaries or to provide
funds to or make any investment (in the form of a loan, capital contribution
or
otherwise) in the Company or any Subsidiary of the Company or any other entity,
other than guarantees of bank obligations of Subsidiaries of the Company entered
into in the Ordinary Course of Business. Neither the Company nor any of its
Affiliates is a party to or is bound by any, and to the Knowledge of the
Company, there are no, agreements or understandings with respect to the voting
(including voting trusts and proxies) or sale or transfer (including agreements
imposing transfer restrictions) of any shares of capital stock or other equity
interests of the Company or any of its Subsidiaries. There are no registration
rights, and there is no rights agreement, “poison pill” anti-takeover plan or
other agreement or understanding to which the Company or any of its Subsidiaries
is a party or by which it or they are bound with respect to any equity security
of any class of the Company or any of its Subsidiaries or with respect to any
equity security, partnership interest or similar ownership interest of any
class
of any of its Subsidiaries.
Agreement
and Plan of Merger – Page
13
(d) Shareholders
of the Company are not entitled to dissenters’ or appraisal rights under
applicable state Law in connection with the Merger.
(e) All
outstanding Shares are, and all Shares subject to issuance as specified in
Section 4.2(b)
above,
upon issuance on the terms and conditions specified in the instruments pursuant
to which they are issuable, will be, duly authorized, validly issued, fully
paid
and nonassessable and not subject to or issued in violation of any Encumbrance,
purchase option, call option, right of first refusal, preemptive right,
subscription right or any similar right under any provision of the NJBCA, the
Company’s certificate of incorporation or by-laws or any agreement to which the
Company is a party or is otherwise bound.
(f) All
of
the outstanding shares of the Capital Stock of each of the Company’s
Subsidiaries are validly issued, fully paid and nonassessable and are owned,
directly or indirectly by the Company free and clear of any Encumbrances, and
none of such outstanding shares of capital stock have been issued in violation
of any preemptive or similar right, purchase option, call or right of first
refusal. There are no outstanding options, warrants, calls, stock appreciation
rights, or other rights or commitments or any other agreements of any character
relating to the sale, issuance or voting of, or the granting of rights to
acquire any shares of the capital stock of any of the Company’s Subsidiaries, or
any securities or other instruments convertible into, exchangeable for or
evidencing the right to purchase any shares of the capital stock of any of
the
Company’s Subsidiaries.
(g) All
Company Stock Options and all issued and outstanding Shares have been issued
in
compliance with the Securities Act and any applicable state blue sky Laws.
Any
consents of the holders of Company Stock Options which are required in
connection with the actions contemplated by Section 7.8
have
been obtained, and such actions so contemplated comport with the requirements
of
the documents underlying any such derivative securities.
Agreement
and Plan of Merger – Page
14
4.3 Authority;
No Conflict; Required Filings and Consents.
(a) The
Company has all requisite corporate power and authority to enter into this
Agreement and, subject only to the adoption of this Agreement and the approval
of the Merger (the “Company Voting Proposal”) by the Company’s shareholders
under the NJBCA (the “Company Shareholder Approval”), to consummate the
transactions contemplated by this Agreement. Without limiting the generality
of
the foregoing, the Company Board, at a meeting duly called and held, by the
unanimous vote of all directors (i) determined that the Merger is fair and
in
the best interests of the Company and its shareholders, (ii) adopted this
Agreement in accordance with the provisions of the NJBCA, (iii) directed that
this Agreement and the Merger be submitted to the shareholders of the Company
for their adoption and approval and resolved to recommend that the shareholders
of the Company vote in favor of the adoption of this Agreement and the approval
of the Merger and (iv) to the extent necessary, adopted a resolution having
the
effect of causing the Company not to be subject to any state anti-takeover
statute, Law or regulation (including, without limitation, a “fair price,”
“moratorium,” or “control share acquisition” statute) that might otherwise apply
to the Merger and any other transactions contemplated by this Agreement. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated by this Agreement by the Company have been duly
authorized by all necessary corporate action on the part of the Company, subject
only to the required receipt of the Company Shareholder Approval. This Agreement
has been duly executed and delivered by the Company and constitutes the valid
and binding obligation of the Company, enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors’ rights and
remedies generally and to general principles of equity.
(b) The
execution and delivery of this Agreement by the Company do not, and the
consummation by the Company of the transactions contemplated by this Agreement
shall not, (i) conflict with, or result in any violation or breach of, any
provision of the certificate of incorporation or by-laws of the Company or
of
the charter, by-laws, or other organizational document of any Subsidiary of
the
Company, (ii) except as set forth in Section 4.3(b)
of the
Company Disclosure Schedule, conflict with, or result in any violation or breach
of, or constitute (with or without notice or lapse of time, or both) a default
(or give rise to a right of termination, cancellation or acceleration of any
obligation or loss of any benefit) under, or require a consent or waiver under,
constitute a change in control under, require the payment of a penalty under
or
result in the imposition of any Encumbrance on the Company’s or any of its
Subsidiaries’ assets under, any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, lease, license, contract or other agreement,
instrument or obligation to which the Company or any of its Subsidiaries is
a
party or by which any of them or any of their properties or assets may be bound
(iii) subject to obtaining the Company Shareholder Approval and compliance
with the requirements specified in clauses (i) through (v) of Section
4.3(c)
below,
conflict with or violate any permit, concession, franchise, license, judgment,
injunction, order, decree or Law applicable to the Company or any of its
Subsidiaries or any of its or their properties or assets, or (iv) result in
the creation of a material lien on any of the material properties or assets
of
the Company or any of its Subsidiaries, except in the case of clauses (ii)
and
(iii) of this Section 4.3(b)
for any
such conflicts, violations, breaches, defaults, terminations, cancellations,
accelerations or losses that, individually or in the aggregate, could not
constitute or could not reasonably be expected to constitute a Company Material
Adverse Effect. There are no consents, waivers or approvals under any of the
Company’s or any of its Subsidiaries’ agreements, licenses or leases required to
be obtained in connection with the consummation of the transactions contemplated
hereby.
Agreement
and Plan of Merger – Page
15
(c) No
consent, approval, license, permit, order or authorization of, or registration,
declaration, notice or filing with any Governmental Entity is required by or
with respect to the Company or any of its Subsidiaries in connection with the
execution and delivery of this Agreement by the Company or the consummation
by
the Company of the transactions contemplated by this Agreement, except for
(i)
the pre-merger notification requirements under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended (the “HSR Act”), (ii) the filing of the
Certificate of Merger with the Secretary of State of the State of New Jersey
and
appropriate corresponding documents with the Secretaries of appropriate
authorities of other states in which the Company is qualified as a foreign
corporation to transact business, (iii) the filing of the Proxy Statement with
the SEC in accordance with the Exchange Act, (iv) the filing of such reports,
schedules or materials under Section 13, Rule 14a-12 or other relevant sections
under the Exchange Act as may be required in connection with this Agreement
and
the transactions contemplated hereby and (v) such consents, approvals, orders,
authorizations, registrations, declarations and filings as may be required
under
applicable state securities Laws and the securities Laws of any foreign
country.
(d) The
affirmative vote of the holders of a majority of the outstanding Shares on
the
record date for the Company Shareholders Meeting is the only vote of the holders
of any class or series of the Company’s capital stock or other securities
necessary for the adoption of this Agreement and for the consummation by the
Company of the Merger and the other transactions contemplated by this Agreement
and the Support Agreements. There are no bonds, debentures, notes or other
indebtedness of the Company having the right to vote (or convertible into,
or
exchangeable for, securities having the right to vote) on any matters on which
shareholders of the Company may vote. To the Knowledge of the Company, the
Persons who have executed Support Agreements collectively beneficially own
approximately 21.4% of the issued and outstanding Shares as of the date of
this
Agreement.
4.4 SEC
Filings; Financial Statements; Reporting Requirements.
(a) The
Company has filed all registration statements, forms, reports and other
documents required to be filed by the Company with the SEC and/or the Nasdaq
Stock Market since November 1, 2001, all of which are publicly available on
the
SEC’s ▇▇▇▇▇ system. All such registration statements, forms, reports and other
documents (including those that the Company may file after the date hereof
until
the Closing) are referred to herein as the “Company
SEC Reports.”
Prior
to the Closing, the Company will have furnished to the Buyer a true, correct
and
complete copy of any additional Company SEC Reports filed with the SEC or the
Nasdaq Stock Market on or after the date hereof but prior to the Closing. The
Company SEC Reports (i) were or will be filed on a timely basis, (ii) at the
time filed, were or will be prepared in compliance in all material respects
with
the applicable requirements of the Securities Act and the Exchange Act, as
the
case may be, and the rules and regulations of the SEC thereunder applicable
to
such Company SEC Reports including the provision of all statements and
certifications required by (x) the SEC’s order dated June 27, 2002 pursuant to
Section 21(a)(1) of the Exchange Act, (y) Rule 13a-14 or 15d-14 under the
Exchange Act or (z) 18 U.S.C. §1350 (Section 906 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of
2002), and (iii) did not or will not at the time they were or are filed contain
any untrue statement of a material fact or omit to state a material fact
required to be stated in such Company SEC Reports or necessary in order to
make
the statements in such Company SEC Reports, in the light of the circumstances
under which they were made, not misleading. No press releases or other public
statement issued or made by the Company (with any statement pertaining to the
Company made by an officer of Company being deemed for purposes of this Section
4.4 to have been made by the Company) since November 1, 2001 as of their
respective dates of issuance contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
to make the statements made therein, in light of the circumstances under which
they were made, not misleading. No Subsidiary of the Company is subject to
the
reporting requirements of Section 13(a) or Section 15(d) of the Exchange Act.
There are no off-balance sheet or securitization structures or transactions
with
respect to the Company or any of its Subsidiaries that would be required to
be
reported or set forth in the Company SEC Reports. As used in this Section
4.4,
the
term “file” and variations thereof shall be broadly construed to include any
manner in which a document or information is furnished, supplied or otherwise
made available to the SEC.
Agreement
and Plan of Merger – Page
16
(b) Each
of
the consolidated financial statements (including, in each case, any related
notes and schedules) contained or to be contained in or incorporated by
reference in the Company SEC Reports at the time filed (i) complied or 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 and (ii) were or will be prepared in accordance with United States
generally accepted accounting principles (“GAAP”) applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes to
such
financial statements or, in the case of unaudited interim financial statements,
as permitted by the SEC on Form 10-QSB or Form 10-Q under the Exchange
Act). Each of the consolidated balance sheets (including, in each case, any
related notes and schedules) contained or to be contained or incorporated by
reference in the Company SEC Reports at the time filed fairly presented or
will
fairly present the consolidated financial position of the Company and its
Subsidiaries as of the dates indicated and each of the consolidated statements
of operations, shareholders’ equity and cash flows contained or to be contained
or incorporated by reference in the Company SEC Reports (including, in each
case, any related notes and schedules) fairly presents, or will fairly present,
the results of operations, changes in shareholders’ equity and cash flows, as
the case may be, of the Company and its Subsidiaries for the periods set forth
therein, except that the unaudited interim financial statements were or are
subject to normal and recurring year-end adjustments which were not or are
not
expected to be material in amount.
(c) The
information to be supplied by or on behalf of the Company for inclusion in
any
filing pursuant to Rule 14a-12 under the Exchange Act (each a “Regulation M-A
Filing”), shall not at the time any Regulation M-A Filing is filed with the SEC,
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 not misleading. The Proxy Statement will comply as to form in all
material respects with the requirements of the Exchange Act and the rules and
regulations thereunder, except that no representation or warranty is made by
the
Company with respect to statements made based on information supplied by the
Buyer or the Buyer Subsidiary specifically for inclusion therein. The
information to be supplied by or on behalf of the Company for inclusion in
the
proxy statement (the “Proxy Statement”) to be sent to the shareholders of the
Company in connection with the meeting of the Company’s shareholders to consider
the Company Voting Proposal (the “Company Shareholders Meeting”), which shall be
deemed to include all information about or relating to the Company, the Company
Voting Proposal and the Company Shareholder Meeting, shall not, on the date
the
Proxy Statement is first mailed to shareholders of the Company, or at the time
of the Company Shareholders Meeting or at the Effective Time, contain any
statement which, at such time and in light of the circumstances under which
it
shall be made, is false or misleading with respect to any material fact, or
omit
to state any material fact necessary in order to make the statements made in
the
Proxy Statement not false or misleading; or omit to state any material fact
necessary to correct any statement in any earlier communication with respect
to
the solicitation of proxies for the Company Shareholders Meeting which has
become false or misleading. If at any time prior to the Effective Time any
fact
or event relating to the Company or any of its Affiliates which should be set
forth in an amendment or supplement to the Proxy Statement should be discovered
by the Company or should occur, the Company shall promptly inform the Buyer
of
such fact or event.
Agreement
and Plan of Merger – Page
17
(d) Since
the
enactment of the Sarbanes−Oxley Act of 2002, the Company has been and is in
compliance in all material respects with (i) the applicable provisions of the
Sarbanes−Oxley Act of 2002 and (ii) the applicable listing and corporate
governance rules and regulations of the Nasdaq Capital Market.
(e) The
Company has designed disclosure controls and procedures to ensure that material
information relating to the Company, including its consolidated Company
Subsidiaries, is made known to the chief executive officer and the chief
financial officer of the Company by others within those entities.
(f) The
Company has disclosed, based on its most recent evaluation prior to the date
hereof, to the Company’s auditors and the audit committee of the Company Board
(i) any significant deficiencies and material weaknesses in the design or
operation of internal controls over financial reporting which are reasonably
likely to adversely affect in any material respect the Company’s ability to
record, process, summarize and report financial information and (ii) any fraud
or allegation of fraud, whether or not material, that involves management or
other employees who have a significant role in the Company’s internal controls
over financial reporting.
(g) As
of the
date hereof, to the Knowledge of the Company, the Company has not identified
any
material weaknesses in the design or operation of internal controls over
financial reporting. To the Knowledge of the Company, there is no reason to
believe that its auditors and its chief executive officer and chief financial
officer will not be able to give the certifications and attestations required
pursuant to the rules and regulations adopted pursuant to Section 404 of the
Sarbanes−Oxley Act of 2002 when next due.
(h) None
of
the Company’s Subsidiaries is subject to the reporting requirements of Sections
13(a) or 15(d) under the Exchange Act.
Agreement
and Plan of Merger – Page
18
4.5 No
Undisclosed Liabilities; Indebtedness.
(a) Neither
the Company nor any of its Subsidiaries has any liabilities or obligations
of
any nature, whether or not accrued, contingent or otherwise, except for (i)
liabilities and obligations that are specifically disclosed in type and amount
on the Company Balance Sheet or in the notes thereto and (ii) liabilities and
obligations incurred in the Ordinary Course of Business since October 31, 2006,
that are not and could not, individually or in the aggregate with all other
liabilities and obligations of the Company and its Subsidiaries, reasonably
be
expected to have a Company Material Adverse Effect. Without limiting the
foregoing, the Company Balance Sheet reflects reasonable reserves in accordance
with GAAP for contingent liabilities relating to pending litigation and other
contingent obligations of the Company and its Subsidiaries (including
liabilities under escheat and similar Laws).
(b) Section
4.5(b)
of the
Company Disclosure Schedule sets forth a complete and accurate list of all
loan
or credit agreements, notes, bonds, mortgages, indentures and other agreements
and instruments pursuant to which any Indebtedness of the Company or any of
its
Subsidiaries is outstanding or may be incurred and the respective principal
amounts outstanding thereunder as of the date of this Agreement. All of the
outstanding Indebtedness of the type described in this Section 4.5(b)
of the
Company and each of its Subsidiaries may be prepaid by the Company or its
Subsidiary at any time without the consent or approval of, or prior notice
to,
any other Person, and without payment of any premium or penalty.
4.6 Absence
of Certain Changes or Events.
Since
the date of the Company Balance Sheet, the Company and its Subsidiaries have
conducted their respective businesses only in the Ordinary Course of Business
and, since such date, there has not been (i) any change, event, circumstance,
development or effect (whether or not covered by insurance) that, individually
or in the aggregate, has had, or could reasonably be expected to have, a Company
Material Adverse Effect or (ii) any other action or event that would have
required the consent of the Buyer pursuant to Section 6.1
of this
Agreement had such action or event occurred after the date of this
Agreement.
4.7 Taxes.
(a)
Except
as set forth in Section 4.7 of the Company Disclosure Schedule: (i) all Tax
Returns required to be filed by, or with respect to any activities of, the
Company and its Subsidiaries prior to the date hereof have been filed (except
those under valid extension), (ii) as of the date hereof, all Taxes of the
Company and each of its Subsidiaries have been paid or adequately provided
for
on the most recent financial statements included in the Company SEC Reports
filed prior to the date hereof (unless such Taxes are being contested in good
faith) other than those Taxes accrued in the ordinary course of business since
July 31, 2005, (iii) neither the Company nor any of its Subsidiaries has
received written notice of any action, suit, proceeding, investigation, claim
or
audit against, or with respect to, any Taxes, (iv) there are no liens for Taxes
(other than Taxes not yet due and payable) upon any of the assets of the Company
or any of its Subsidiaries, (v) the Company and each of its Subsidiaries has
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, (vi) neither the Company nor any
of
its Subsidiaries (A) has been a member of an affiliated group filing a
consolidated federal income tax return (other than a group the common parent
of
which was the Company) or (B) has any liability for the Taxes of any Person
(other than the Company, or any of its Subsidiaries) under Treasury regulation
section 1.1502−6 (or any similar provision of state, local or foreign Law),
(vii) neither the Company nor any of its Subsidiaries has distributed the stock
of another company in a transaction that was purported or intended to be
governed by section 355 or section 361 of the Code,
(viii)
neither the Company nor any of its Subsidiaries is a party to or is bound by
any
Tax sharing or Tax allocation agreement nor does the Company or any of its
Subsidiaries have any liability or potential liability to another party under
any such agreement, (ix) neither the Company nor any of its Subsidiaries has
filed any disclosures under Section 6662 or comparable provisions of state,
local or foreign Law to prevent the imposition of penalties with respect to
any
Tax reporting position taken on any Tax Return, (x) neither the Company nor
any
of its Subsidiaries has ever been a member of a consolidated, combined, unitary
or aggregate group of which the Company was not the ultimate parent corporation
and (xi) each of the Company and each of its Subsidiaries has in its possession
receipts for any Taxes paid by it to foreign Governmental Entities.
Agreement
and Plan of Merger – Page
19
(b) Neither
the Company nor any of its Subsidiaries: (i) has been a United States real
property holding corporation within the meaning of Section 897(c)(2) of the
Code during the applicable period specified in Section 897(c)(l)(A)(ii) of
the Code; (ii) has made any payments, is obligated to make any payments, or
is a
party to any agreement that could obligate it to make any payments that may
be
treated as an “excess parachute payment” under Section 280G of the Code
(including, without limitation, as a result of the transactions contemplated
hereby); (iii) has any actual or potential liability for any Taxes of any person
(other than the Company and its Subsidiaries) under Treasury Regulation Section
1.1502-6 (or any similar provision of Law in any jurisdiction), or as a
transferee or successor, by contract, or otherwise; or (iv) is or has been
required to make a basis reduction pursuant to Treasury Regulation Section
1.1502-20(b) or Treasury Regulation Section 1.337(d)-2(b). The Company has
not
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 intended to qualify for tax-free treatment under Section 355 of the
Code.
(c) None
of
the assets of the Company or any of its Subsidiaries: (i) is property that
is
required to be treated as being owned by any other person pursuant to the
provisions of former Section 168(f)(8) of the Code; (ii) is “tax-exempt use
property” within the meaning of Section 168(h) of the Code; or (iii) directly or
indirectly secures any debt the interest on which is tax exempt under Section
103(a) of the Code.
(d) Neither
the Company nor any of its Subsidiaries has undergone, or will undergo as a
result of the transactions contemplated by the Agreement, a change in its method
of accounting resulting in an adjustment to its taxable income pursuant to
Section 481(a) of the Code.
4.8 Owned
and Leased Real Properties.
(a) Neither
the Company, nor any of its Subsidiaries owns any real property.
Agreement
and Plan of Merger – Page
20
(b) Section
4.8(b)
of the
Company Disclosure Schedule sets forth a complete and accurate list of all
real
property leased, subleased, licensed or occupied as a tenant-at-will by the
Company or any of its Subsidiaries (collectively “Leased Real Property”) and the
location of the premises. Neither the Company nor any of its Subsidiaries nor,
to the Knowledge of the Company, any other party to any lease, sublease, license
or other agreement pertaining to the occupancy of any Leased Real Property
by
the Company or any of its Subsidiaries (the “Company Leases”), is in default in
any material respect under any of the Company Leases. Each of the Company Leases
is in full force and effect and is enforceable in accordance with its terms
and
shall not cease to be in full force and effect as a result of the transactions
contemplated by this Agreement. Neither the Company nor any of its Subsidiaries
leases, subleases or licenses any real property to any person other than the
Company and its Subsidiaries. The Company has provided the Buyer with complete
and accurate copies of all Company Leases.
4.9 Intellectual
Property.
(a) The
Company or one of its Subsidiaries owns or is licensed to use all the
Intellectual Property currently used for the operation of the business (the
“Company
IP Rights”).
The
Company IP Rights are all the Intellectual Property necessary to conduct the
business of the Company or its Subsidiaries as currently conducted. The Company
and its Subsidiaries have taken all necessary steps to establish, protect,
preserve and maintain the Company’s and its Subsidiaries’ interest in the
Company IP Rights.
(b) Neither
the execution, delivery and performance of this Agreement nor the consummation
of the Merger and the other transactions contemplated by this Agreement will
impair the rights of the Company, any of its Subsidiaries or the rights of
the
Surviving Corporation in any Company IP Rights. Except as set forth in Section
4.9(b)(ii) of the Company Disclosure Schedule, neither the Company nor any
of
its Subsidiaries is paying any license fees, royalties, honoraria or other
payments to any third person (other than salaries payable to employees and
independent contractors not contingent on or related to use of their work
product) as a result of the ownership, use, possession, license in, sale,
marketing, advertising or disposition of any Company IP Rights, and none shall
become payable as a result of the consummation of the transactions contemplated
by this Agreement.
(c) The
operation of the Company’s and its Subsidiaries’ business as currently conducted
does not infringe or misappropriate any Intellectual Property right of any
third
party or breach any Company IP Agreements. Except as set forth in Section 4.9(c)
of the Company Disclosure Schedule, neither the Company nor any of its
Subsidiaries has received any notice asserting that the development, use, sale,
license or disposition of any Company Product or Service infringes or
misappropriates, or would infringe or misappropriate, the Intellectual Property
of any third party, and neither the Company nor any of its Subsidiaries has
received any notice from any third party offering a license under any such
third
party Intellectual Property to avoid litigation or other claims.
(d) Except
as
set forth in Section 4.9(d) of the Company Disclosure Schedule, no current
or
former employee, officer, consultant or independent contractor of the Company
or
any of its Subsidiaries (“Staff
Member”):
(i)
is in material violation of any term or covenant of any employment contract
relating to Intellectual Property, patent disclosure agreement, invention
assignment agreement, nondisclosure agreement, or noncompetition agreement
or
similar contract with any third party by virtue of such Staff Member being
employed by, or performing services for, the Company or any of its Subsidiaries;
(ii) has failed to execute and deliver to the Company or the applicable
Subsidiary an enforceable contract regarding the protection of the Company’s,
its Subsidiaries’ or their customers’ or business partners’ Trade Secrets; (iii)
has failed to execute and deliver an enforceable written contract assigning
to
the Company or one of its Subsidiaries all right, title and interest in any
inventions and works of authorship, whether or not patentable, invented,
created, developed, conceived and/or reduced to practice during the term of
such
Staff Member’s work for the Company or a Subsidiary, and all Intellectual
Property rights therein; or (iv) has any right, license, claim or interest
whatsoever in or with respect to any Company-Owned IP Rights.
Agreement
and Plan of Merger – Page
21
(e) To
the
Knowledge of the Company, there is no unauthorized use, disclosure, infringement
or misappropriation of any Company-Owned IP Rights by any third party or Staff
Member. To the Knowledge of the Company, except as set forth in Section
4.9(e)(i) of the Company Disclosure Schedule, the Company and its Subsidiaries
own all right, title and interest in and to all Company-Owned IP Rights free
and
clear of any and all licenses, options, preemptive rights, rights of first
refusal or first offer, or other adverse claims, restrictions or Encumbrances
on
title or transfer of any nature whatsoever. None of the Company-Owned IP Rights
has been adjudicated invalid or unenforceable, in whole or in part, and to
the
Knowledge of the Company, the Company-Owned IP Rights are valid and enforceable.
No Company-Owned IP Right is subject to any outstanding injunction, judgment,
order, decree, ruling, charge, settlement or other disposition of any dispute
regarding any Company-Owned IP Right. To the Knowledge of the Company, no
Governmental Entity, university, college or other educational institution or
research center has any right to (other than license rights for internal
purposes), ownership of or right to royalties for Company-Owned IP Rights.
To
the Knowledge of the Company, the Company’s and its Subsidiaries’ rights to use
the Company-Licensed IP is subject only to the terms and conditions of the
Company IP Agreements listed in Section 4.9(e)(ii) of the Company Disclosure
Schedule.
(f) Section
4.9(f)(i) of the Company Disclosure Schedule contains a true and complete list
of (i) all worldwide registrations made by or on behalf of the Company and
any
of its Subsidiaries of any Company-Owned IP Rights with any Governmental Entity,
and (ii) all applications filed by the Company and its Subsidiaries to secure
its interest in Company-Owned IP Rights, and, where applicable, the jurisdiction
in which each application has been applied for or filed (“Company
Registered IP”).
To
the Knowledge of the Company, all Company Registered IP is valid, enforceable
and subsisting and all necessary registration, maintenance and renewal fees
in
connection with such Company Registered IP have been paid in a timely manner
and
all necessary documents and articles in connection with such Company Registered
IP have been filed in a timely manner with the relevant Governmental Entity
for
the purposes of maintaining such Company Registered IP (and Company-Licensed
IP
Rights in which the Company has a contractual right or obligation to pay
registration, maintenance and renewal fees). There are no actions that must
be
taken by the Company or any of its Subsidiaries within 180 days of the Closing
Date, including the payment of any registration, maintenance or renewal fees
or
the filing of any documents, applications or articles for the purpose of
maintaining, perfecting or preserving or renewing any such Company Registered
IP.
Agreement
and Plan of Merger – Page
22
(g) Except
as
set forth in Section 4.9(g) of the Company Disclosure Schedule, neither the
Company nor any of its Subsidiaries has agreed to indemnify any Person for
any
infringement of any Intellectual Property of any third party by any Company
Product or Service that has been sold, licensed to third parties, leased to
third parties, supplied, marketed, distributed or provided by the Company or
any
of its Subsidiaries.
(h) To
the
Knowledge of the Company, the business of the Company and its Subsidiaries
as
currently conducted does not involve the use or development of, or engagement
in, encryption technology, or other technology, the development,
commercialization or export of which is restricted under applicable Law, and
the
Company and its Subsidiaries have been and are in compliance with all export
restrictions applicable to such technology.
(i) In
each
case in which Company or any of its Subsidiaries intended to acquire ownership
of Intellectual Property from any third party (other than Staff Members), the
Company or such Subsidiary (as the case may be) obtained a valid and enforceable
assignment of all rights in such Intellectual Property (including the right
to
seek past and future damages with respect thereto) to the Company or any of
its
Subsidiaries and, to the extent necessary under applicable Laws, the Company
or
its applicable Subsidiaries have recorded each such assignment with the relevant
Governmental Entities in a timely manner.
4.10 Agreements,
Contracts and Commitments; Government Contracts.
(a) Except
as
set forth in the exhibit index for the Company’s Annual Report on Form 10-K for
the year ended October 31, 2006 or in Section 4.10 (a) of the Disclosure
Schedule, neither the Company nor any of its Subsidiaries is a party to or
bound
by (i) any agreement relating to the incurring of Indebtedness by the Company
or
any of its Subsidiaries in an amount in excess in the aggregate of $10,000,
including any such agreement which contains provisions that restrict, or may
restrict, the conduct of business of the issuer thereof as currently conducted
(collectively, “Instruments of Indebtedness”), (ii) any “Material Contract” (as
such term is defined in Item 601(b)(10) of Regulation S-K of the SEC); (iii)
any
non-competition or exclusive dealing agreement, or any other agreement or
obligation which purports to limit or restrict in any respect (A) the ability
of
the Company or its Subsidiaries to solicit customers, (B) the manner in which,
or the localities in which, all or any portion of the business of the Company
and its Subsidiaries is or would be conducted, (C) the right of the Company
or
any of its Affiliates to make, sell or distribute any products or services
or
use, transfer, license, distribute or enforce any Intellectual Property rights
of the Company or any of its Subsidiaries or (D) the ability or manner in which
the Buyer or any of its Affiliates (other than the Company and its Subsidiaries)
may conduct all or any portion of their respective businesses following the
consummation of the transactions contemplated by this Agreement, (iv) any
agreement providing for the indemnification or any guaranty by the Company
or
its Subsidiaries of any Person other than standard form indemnity provisions
in
agreements with customers of the Company or any of its Subsidiaries entered
into
in the Ordinary Course of Business, (v) any contract relating to the disposition
or acquisition by the Company or any of its Subsidiaries after the date of
this
Agreement of a material amount of assets not in the Ordinary Course of Business
or pursuant to which the Company or any of its Subsidiaries has any material
ownership interest in any other Person or other business enterprise other than
the Company’s Subsidiaries (including, without limitation, joint venture,
partnership or other similar agreements), (vi) any agreement that grants any
right of first refusal or right of first offer or similar right or that limits
or purports to limit the ability of the Company or any of its Subsidiaries
to
own, operate, sell, transfer, pledge or otherwise dispose of any assets or
business, (vii) any contract or agreement providing for any significant payments
that are conditioned, in whole or in part, on a change of control of the Company
or any of its Subsidiaries, (viii) any collective bargaining agreement, (ix)
any
employment, service or consulting agreement, or any other agreement or
arrangement, with any current or former (A) employee, executive officer or
member of the Company Board, or (B) employee, executive officer or managing
director of any Subsidiary, that contains, in each case, any severance pay
or
post-employment liabilities or obligations (other than as required by Law),
(x)
any agreement material to the Company and its Subsidiaries, taken as a whole,
pertaining to the use of or granting any right to use or practice any rights
under any Intellectual Property, (xi) any agreements pursuant to which the
Company or any of its Subsidiaries leases any material real property or leases
any material real property to third parties, (xii) any contract or agreement
material to the Company and its Subsidiaries, taken as a whole, providing for
the outsourcing or provision of servicing of customers, technology or product
offerings of the Company or its Subsidiaries, (xiii) any agreement, contract
or
commitment, or group of agreements, contracts or commitments, with a Person
(or
group of affiliated Persons), the termination or breach of which could
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect, (xiv) any agreement, contract or commitment to license
any third party to manufacture or reproduce any of the Company’s products or any
agreement, contract or commitment to sell or distribute any of the Company’s
products (except agreements with distributors or sales representatives in the
normal course of business cancelable without penalty upon notice of 90 days
or
less and substantially in the form previously provided to the Buyer), (xv)
any
material settlement agreement, contract or commitment under which the Company
or
any of its Subsidiaries has ongoing obligations; (xvi) any other contract or
other agreement not made in the Ordinary Course of Business that (A) is material
to the Company and its Subsidiaries taken as a whole or (B) could reasonably
be
expected to materially delay or prevent the consummation of the Merger or any
of
the transactions contemplated by this Agreement (the agreements, contracts
and
obligations listed in clauses (i) through (xvi) being referred to herein as
“Company Material Contracts”). None of the Company Material Contracts contains a
“most favored nation” clause or other term providing preferential pricing or
treatment to a third party that, following the Merger, would in any way apply
to
the Buyer or any of its Subsidiaries.
Agreement
and Plan of Merger – Page
23
(b) Each
Company Material Contract is valid and binding on the Company (or, to the extent
a Subsidiary of the Company is a party, such Subsidiary) and, to the Knowledge
of the Company, any other party thereto, and each Company Material Contract
is
in written form and in full force and effect. Neither the Company nor any of
its
Subsidiaries is in breach or default under any Company Material Contract or
is
aware of any condition that with the passage of time or the giving of notice
or
both could result in such a breach or default, except in each case where any
such breaches or defaults could not, individually or in the aggregate,
reasonably be expected to result in a Company Material Adverse Effect. Neither
the Company nor any Subsidiary of the Company knows of, or has received written
notice of, any breach or default under (nor, to the Knowledge of the Company,
does there exist any condition which with the passage of time or the giving
of
notice or both would result in such a breach or default under) any Company
Material Contract by any other party thereto. Prior to the date hereof, the
Company has made available to the Buyer true and complete copies of all Company
Material Contracts.
Agreement
and Plan of Merger – Page
24
4.11 Litigation;
Product Liability; Product Recalls.
Except
as disclosed in the Company SEC Reports filed prior to the date of this
Agreement, there is no Action pending or, to the Knowledge of the Company,
threatened against or affecting the Company or any of its Subsidiaries that:
(i)
individually or in the aggregate, constitute or could reasonably be expected
to
constitute a Company Material Adverse Effect; or (ii) seek to delay, alter
or
prevent the consummation of the transactions contemplated hereby, and as to
each
of the foregoing, to the Knowledge of the Company, there are no bases or grounds
on which such a suit, proceeding, claim, arbitration or investigation could
be
commenced with a reasonable likelihood of success. There are no material
judgments, orders or decrees outstanding against the Company or any of its
Subsidiaries that could, individually or in the aggregate, constitute or could
reasonably be expected to constitute a Company Material Adverse Effect or that
could prevent or delay the consummation of the transactions contemplated hereby.
No product liability claims have been asserted or, to the Knowledge of the
Company, threatened against the Company or any of its Subsidiaries relating
to
products or product candidates developed, tested, manufactured, marketed,
distributed or sold by the Company or any of its Subsidiaries. There is no
design, manufacturing or other defect in any product category of the Company
or
any Subsidiary or any specifications relating thereto. Each of the products
sold
by the Company or any Subsidiary meets, and at all times has met, in all
material respects, all standards for quality and workmanship prescribed by
Law,
industry standards, contractual agreements or the product literature of the
Company or such Subsidiary. The Company is not aware of any pattern or series
of
claims against the Company or any of its Subsidiaries that could reasonably
be
expected to result in a generalized product recall relating to products sold
by
the Company or any of its Subsidiaries, regardless of whether such product
recall is formal, informal, voluntary or involuntary.
Neither
the Company nor any of its Subsidiaries has any action, suit, proceeding, claim
or arbitration against any other party pending before any Governmental
Entity.
4.12 Environmental
Matters.
(a) Except
as
would not reasonably be expected to have, individually or in the aggregate,
a
Company Material Adverse Effect, (i) the Company and each of its Subsidiaries
comply and have complied with all applicable Environmental Laws, and possess
and
comply, and have complied, with all applicable Environmental Permits required
under such Laws to operate as it currently operates; (ii) there are no, and
there have not been any, Materials of Environmental Concern at any property
currently or formerly operated by the Company or any of its Subsidiaries, under
circumstances that have resulted in or are reasonably likely to result in
liability of the Company or any of its Subsidiaries under any applicable
Environmental Laws, except to the extent that the Company or any of its
Subsidiaries may be vicariously liable for the actions of other Persons who
kept
or maintained Materials of Environmental Concern at any property currently
or
formerly operated by the Company or any of its Subsidiaries; and (iii) neither
the Company nor any of its Subsidiaries has received any written notification
alleging that it is liable for, or request for information pursuant to section
104(e) of the CERCLA or similar foreign, state or local Law, concerning any
release or threatened release of Materials of Environmental
Concern.
(b) Notwithstanding
any other representations and warranties in this Agreement, the representations
and warranties in this Section 4.12
are the
only representations and warranties in this Agreement with respect to
Environmental Laws or Materials of Environmental Concern.
Agreement
and Plan of Merger – Page
25
(c) For
purposes of this Agreement, the following terms have the meanings assigned
below:
Environmental
Laws
means
all foreign, federal, state, or local statutes, common Law, regulations,
ordinances, codes, orders or decrees relating to the protection of the
environment, including the ambient air, soil, surface water or groundwater,
or
relating to the protection of human health from exposure to Materials of
Environmental Concern including, but not limited to, the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. Section 9601
et seq. (“CERCLA”); the Resource Conservation and Recovery Act, 42 U.S.C.
Section 6901 et seq.; the Federal Water Pollution Control Act, as amended,
33
U.S.C. Section 1251 et seq.; the Toxic Substances Control Act, 15 U.S.C. Section
2601 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 Oil Pollution Act of
1990, 33 U.S.C. Section 2701 et seq.; the German Soil Protection Act
(Bundesbodenschutzgesetz), Section 4 et seq.; or any other Law of similar
effect, each as amended from time to time..
Environmental
Permits
means
all permits, licenses, registrations, and other authorizations required under
applicable Environmental Laws.
Materials
of Environmental Concern
means:
any hazardous, acutely hazardous, or toxic substance or waste defined or
regulated as such under Environmental Laws, including the federal Comprehensive
Environmental Response, Compensation and Liability Act and the federal Resource
Conservation and Recovery Act; petroleum, asbestos, lead, polychlorinated
biphenyls, radon, or toxic mold; and any other substance the exposure to which
would reasonably be expected, because of hazardous or toxic qualities, to result
in liability under applicable Environmental Laws.
4.13 Employee
Benefit Plans.
(a) Section
4.13(a) of the Company Disclosure Schedule sets forth a correct and complete
list of all employee benefit plans, programs, agreements or arrangements,
including pension, retirement, profit sharing, deferred compensation, stock
option, change in control, retention, equity or equity-based compensation,
stock
purchase, employee stock ownership, severance pay, vacation, bonus or other
incentive plans, all medical, vision, dental or other health plans, all life
insurance plans, and all other employee benefit plans or fringe benefit plans,
including “employee benefit plans” as that term is defined in Section 3(3) of
ERISA, in each case, whether oral or written, funded or unfunded, or insured
or
self-insured, maintained by the Company or any of its Subsidiaries, or to which
the Company or any of its Subsidiaries contributed or is obligated to contribute
thereunder, or with respect to which the Company or any of its Subsidiaries
has
or may have any liability (contingent or otherwise), in each case, for or to
(i)
any current or former employees, directors, officers or consultants of the
Company or any of its Subsidiaries located primarily in the United States and/or
their dependents (collectively, the “Benefit Plans”), or (ii) any current or
former employees, directors, officers or consultants of any of its Subsidiaries
not located primarily in the United States and/or their dependents
(collectively, the “Foreign Plans”). For purposes of this Agreement, the term
“plan,” when used with respect to Foreign Plans, shall mean a “scheme” or other
employee benefit program or arrangement in accordance with specific country
usage.
Agreement
and Plan of Merger – Page
26
(b) All
Benefit Plans that are intended to be subject to Code Section 401(a) and any
trust agreement that is intended to be tax exempt under Code Section 501(a)
have
been determined by the Internal Revenue Service to be qualified under Code
Section 401(a) and exempt from taxation under Code Section 501(a), and, to
the
Knowledge of the Company, nothing has occurred that would adversely affect
the
qualification of any such plan. Except as would not reasonably be expected
to
have, individually or in the aggregate, a Company Material Adverse Effect:
(i)
each Benefit Plan and any related trust subject to ERISA complies in all
material respects with and has been administered in substantial compliance
with,
(A) the provisions of ERISA, (B) all provisions of the Code, (C) all other
applicable Laws, and (D) its terms and the terms of any collective bargaining
or
collective labor agreements; (ii) neither the Company nor any of its
Subsidiaries has received any written notice from any Governmental Entity
questioning or challenging such compliance; and (iii) there are no unresolved
claims or disputes under the terms of, or in connection with, the Benefit Plans
other than claims for benefits which are payable in the ordinary course; (iv)
there has not been any prohibited transaction (within the meaning of Section
406
of ERISA or Section 4975 of the Code) with respect to any Benefit Plan; (v)
no
Action has been commenced with respect to any Benefit Plan and, to the Knowledge
of the Company, no such Action is threatened (other than routine claims for
benefits in the normal course); (vi) there are no governmental audits or
investigations pending or, to the Knowledge of the Company, threatened in
connection with any Benefit Plan; and (vii) to the Knowledge of the Company,
there are not any facts that could give rise to any liability in the event
of
any governmental audit or investigation.
(c) Neither
the Company nor any ERISA Affiliate of the Company (i) sponsors or contributes
to a Benefit Plan that is a “defined benefit plan” (as defined in ERISA Section
3(35)); (ii) has an “obligation to contribute” (as defined in ERISA Section
4212) to a Benefit Plan that is a “multiemployer plan” (as defined in ERISA
Sections 4001(a)(3) and 3(37)(A)); (iii) has any liability, contingent or
otherwise, under Title IV of ERISA with respect to a Benefit Plan, either
directly or through any ERISA Affiliate; (iv) except as stated in Section
4.13(c) of the Company Disclosure Schedule, sponsors, maintains or contributes
to any plan, program or arrangement that provides for post-retirement or other
post-employment welfare benefits (other than health care continuation coverage
as required by Law); and (v) sponsors a Foreign Plan that is a defined benefit
pension plan intended to be registered or approved by any Governmental Entity.
For purposes of this Section 4.13, “ERISA Affiliate” shall mean any trade or
business, whether or not incorporated, that together with the Company would
be
deemed to be a single employer for purposes of Section 4001 of ERISA or Sections
414(b), (c), (m), (n) or (o) of the Code.
(d) Each
Foreign Plan complies in all material respects with and has been administered
in
substantial compliance with the Laws of the applicable foreign country. Each
Foreign Plan which, under the Laws of the applicable foreign country, is
required to be registered or approved by any Governmental Entity, has been
so
registered or approved. All contributions to each Foreign Plan required to
be
made by the Company or the Company Subsidiaries through the Closing Date have
been or shall be made or, if applicable, shall be accrued in accordance with
country-specific accounting practices. No Action has been commenced with respect
to any Foreign Plan and, to the Knowledge of the Company, no such Action is
threatened (other than routine claims for benefits in the normal course). There
are no governmental audits or investigations pending or, to the Knowledge of
the
Company, threatened in connection with any Foreign Plan.
Agreement
and Plan of Merger – Page
27
(e) All
reports, returns and similar documents with respect to all Benefit Plans or
Foreign Plans required to be filed by the Company or any of its Subsidiaries
with any Governmental Entity have been duly and timely filed. All material
reports, returns and similar documents with respect to all Benefit Plans or
Foreign Plans required to be distributed to any Benefit Plan or Foreign Plan
participant have been duly and timely distributed.
(f) Section
4.13(f) of the Company Disclosure Schedule discloses whether each Benefit Plan
that is an employee welfare benefit plan is (i) unfunded or self-insured, (ii)
funded through a “welfare benefit fund,” as such term is defined in Code Section
419(e) or other funding mechanism or (iii) insured. Each such employee welfare
benefit plan may be amended or terminated (including with respect to benefits
provided to retirees and other former employees) without liability (other than
benefits then payable under such plan without regard to such amendment or
termination) to the Company or any of its Subsidiaries at any time. Each of
the
Company and the Company’s Subsidiaries complies in all material respects with
the applicable requirements of Section 4980B(f) of the Code or any similar
state
statute with respect to each Benefit Plan that is a group health plan within
the
meaning of Section 5000(b)(1) of the Code or such state statute. Neither the
Company nor any of its Subsidiaries has any material obligations for retiree
health or life insurance benefits under any Benefit Plan (other than for
continuation coverage under Section 4980B(f) of the Code).
(g) Except
as
may be required by Law, or as contemplated under this Agreement, neither the
Company nor any of its Subsidiaries has any plan or commitment to create any
additional Benefit Plans or Foreign Plans, or to amend or modify any existing
Benefit Plan or Foreign Plan in such a manner as to materially increase the
cost
of such Benefit Plan or Foreign Plan to the Company or any of its
Subsidiaries.
(h) Neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will cause or trigger (i) any material payment
(including any bonus, severance, unemployment compensation, deferred
compensation, forgiveness of indebtedness or golden parachute payment) to any
current or former employee under any Benefit Plan or Foreign Plan; (ii) any
increase in any material respect of any benefit otherwise payable under any
Benefit Plan or Foreign Plan; (iii) any acceleration in any material respect
of
the time of payment or vesting of any such benefits under any Benefit Plan
or
Foreign Plan; or (iv) any material obligation to fund any trust or other
arrangement with respect to compensation or benefits under a Benefit Plan or
Foreign Plan. No payment or benefit which has been, will or may be made by
the
Company or any of its Subsidiaries with respect to any current or former
employee located in the United States in connection with the execution and
delivery of this Agreement or the consummation of the transaction contemplated
hereby would be characterized as an “excess parachute payment” with the meaning
of Section 280G(b)(1) of the Code or fail to be deductible under Section 162(m)
of the Code.
Agreement
and Plan of Merger – Page
28
(i) Neither
the Company nor any of its Subsidiaries has classified any individual as an
“independent contractor” or similar status who, according to a Benefit Plan or
Foreign Plan or applicable Law, should have been classified as an employee
or of
similar status. To the Knowledge of the Company, neither the Company nor any
of
its Subsidiaries has any material liability by reason of any individual who
provides or provided services to the Company or any of its Subsidiaries, in
any
capacity, being improperly excluded from participating in any Benefit Plan
or
Foreign Plan.
(j) Correct
and complete copies have been delivered or made available to the Buyer by the
Company of all Benefit Plans and Foreign Plans (including all amendments and
attachments thereto); written summaries of any Benefit Plan not in writing,
all
related trust documents; all insurance contracts or other funding arrangements
to the degree applicable; the two most recent annual information filings (Form
5500) and annual financial reports for those Benefit Plans (where required);
the
most recent determination letter from the Internal Revenue Service (where
required); and the most recent summary plan descriptions for the Benefit Plans
and in respect of defined Benefit Plans and Foreign Plans, the most recent
actuarial valuation and any subsequent valuation or funding advice (including
draft valuations).
4.14 Compliance
With Laws.
The
Company, each of its Subsidiaries and their respective businesses as previously
conducted and as now being conducted have complied and do comply with, were
not
and are not in violation of, and have not received any notice alleging any
violation with respect to, any applicable provisions of any Law with respect
to
the conduct of its business, or the ownership or operation of its properties
or
assets, except for failures to comply or violations that, individually or in
the
aggregate, have not had, and could not reasonably be expected to have, a Company
Material Adverse Effect.
4.15 Permits.
The
Company and each of its Subsidiaries have all permits, licenses and franchises
from Governmental Entities required to conduct their businesses as now being
conducted or as presently contemplated to be conducted (the “Company Permits”),
except for such permits, licenses and franchises the absence of which,
individually or in the aggregate, has not had, and could not reasonably be
expected to have, a Company Material Adverse Effect. The Company and each of
its
Subsidiaries have complied
with the
terms of the Company Permits in all material respects. The
transactions contemplated by this Agreement
will not
result in a default under or a breach or violation of, adversely affect the
rights and benefits afforded the Company and its Subsidiaries by, or adversely
affect the obligations imposed on the Company and its Subsidiaries in connection
with, any Company Permit.
4.16 Labor
Matters.
With
respect to employees of and service providers to
the
Company and each of its Subsidiaries:
(a) The
Company and its Subsidiaries comply and have
complied
with
all
applicable domestic
and foreign Laws
respecting employment and employment practices, terms and conditions of
employment and wages and hours, including without limitation any such
Laws
respecting employment discrimination, employee
classification, workers’
compensation, family and medical leave, the Immigration Reform and Control
Act,
and occupational safety and health requirements, and have
complied with all employment agreements, and no
claims,
controversies,
investigations,
or
suits
are
pending or, to the Knowledge of the Company,
threatened with respect to such Laws
or
agreements,
either
by private individuals or by
governmental agencies; and all employees are at-will. To
the
Knowledge of the Company, as
of the
date hereof, no facts or events exist that are likely to give rise to a
violation of Section 4.16
on or
before the Effective Time.
Agreement
and Plan of Merger – Page
29
(b) Neither
the Company
nor
any
of
its Subsidiaries is or has
been
engaged
in any
unfair
labor practice,
and
there
is not
now, nor within the past three years
has
there been, any unfair labor practice complaint against the Company or
any of
its Subsidiaries pending
or, to the Knowledge of the Company,
threatened, before the National Labor Relations Board or any other comparable
foreign or domestic authority or any workers’
council.
(c) No
labor
union represents or has ever represented the Company’s or any of its
Subsidiaries’ employees and no collective bargaining agreement is or has been
binding against the Company or any of its Subsidiaries. No
grievance or arbitration proceeding arising out of or under collective
bargaining agreements or employment relationships is
pending, and no claims therefor
exist or
have, to the Knowledge of the Company,
been
threatened; no labor strike, lock-out, slowdown, or work stoppage is
or
has
ever been pending
or threatened against or directly affecting the Company
or any
of its Subsidiaries.
(d) To
the
Knowledge of the Company, no contractor, manufacturer, or supplier used by
or
under contract with Company or any of its Subsidiaries is in material violation
of any Law relating to labor or employment matters.
(e) Neither
the Company nor any of its Subsidiaries has effectuated (i) a plant closing
as
defined in the Worker Adjustment and Retraining Notification Act of 1988, as
amended from time to time (the “WARN Act”) affecting any site of employment or
one or more operating units within any site of employment of the Company or
Related Employer or (ii) a mass layoff as defined in the WARN Act, nor has
the
Company or any Related Employer been affected by any transaction or engaged
in
layoffs or employment terminations sufficient in number to trigger application
of any similar state or local Law.
(f) All
persons who have
performed
services
for the Company and its
Subsidiaries and have been
classified as independent contractors
have
satisfied the requirements of Law to be so classified, and the
Company
or the
applicable Subsidiary
of the Company has fully and accurately reported their compensation on IRS
Forms
1099 or
other
applicable tax forms for independent contractors when
required to do so.
(g) The
Company and its Subsidiaries have complied with all applicable foreign Laws
concerning employer contributions to any trade union, housing, unemployment,
retirement, bonus and welfare funds and all other funds to which an employer
is
required by Law to contribute.
4.17 Insurance.
Each of
the Company and its Subsidiaries maintains insurance policies (the “Insurance
Policies”) with reputable insurance carriers against all risks of a character
and in such amounts as are usually insured against by similarly situated
companies in the same or similar businesses. Section 4.17
of the
Company Disclosure Schedule sets forth the insurance coverages maintained by
the
Company and its Subsidiaries. Each Insurance Policy is in full force and effect
and is valid, outstanding and enforceable, and all premiums due thereon have
been paid in full. None of the Insurance Policies shall terminate or lapse
(or
be affected in any other materially adverse manner) by reason of the
transactions contemplated by this Agreement. The Company and each of its
Subsidiaries has complied in all material respects with the provisions of each
Insurance Policy under which it is the insured party. No insurer under any
Insurance Policy has canceled or generally disclaimed liability under any such
policy or indicated any intent to do so or not to renew any such policy. All
material claims under the Insurance Policies have been filed in a timely
fashion.
Agreement
and Plan of Merger – Page
30
4.18 Inventory.
All
inventory of the Company and each of its Subsidiaries, whether or not reflected
on the Company Balance Sheet, consists of a quality and quantity usable and
saleable in the Ordinary Course of Business of the Company and its Subsidiaries,
except for obsolete items and items of below-standard quality, all of which
have
been written-off or written-down to net realizable value on the Company Balance
Sheet. All inventories not written-off have been priced on the accounting basis
(i.e., LIFO or FIFO) described in the Company’s audited financial statements for
the year ended October 31, 2005. The quantities of each type of inventory,
whether raw materials, work-in-process or finished goods, are not excessive
in
the present circumstances of the Company and its Subsidiaries.
4.19 Tangible
Personal Property.
The
Company and its Subsidiaries have legal and valid title to, or in the case
of
leased assets and properties, valid and subsisting leasehold interests in,
all
of the material tangible personal assets and properties used or held for use
by
the Company and its Subsidiaries in connection with the conduct of the business
of the Company and its Subsidiaries, free and clear of all Encumbrances other
than Permitted Encumbrances. Except as would not reasonably be expected to
have,
individually or in the aggregate, a Company Material Adverse Effect, all
tangible personal property is in good condition, ordinary wear and tear
excepted.
4.20 Customers
and Suppliers.
No
customer of the Company or any of its Subsidiaries that represented 5% or more
of the Company’s consolidated revenues in the fiscal year ended October 31, 2006
has indicated to the Company or any of its Subsidiaries that it will stop,
or
decrease the rate of, buying materials, products or services from the Company
or
any of its Subsidiaries. No material supplier or exclusive supplier of the
Company or any of its Subsidiaries has indicated to the Company or any of its
Subsidiaries that it will stop, or decrease the rate of, supplying materials,
products or services to them or materially increase the pricing of such
materials, products or services.
4.21 Accounts
Receivable.
All
accounts receivable of the Company or its Subsidiaries reflected on the Company
Balance Sheet are valid receivables, arose from bona fide sales of goods and
services in the Ordinary Course of Business, and are not subject to any setoffs
or counterclaims.
4.22 Opinions
of Financial Advisors.
Each of
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇ Financial Advisors, Inc. (“HLHZFA”) and
Capitalink, L.C. has delivered
to the Company Board its written opinion (or oral opinion to be confirmed in
writing), dated as of the date hereof, that, as of such date, the Merger
Consideration is fair, from a financial point of view, to the holders of the
Shares, and neither of such opinions has been withdrawn or modified.
The
Company has made available to the Buyer accurate and complete copies of all
agreements under which fees, commissions or other amounts have been paid or
may
become payable and all indemnification and other agreements related to the
engagement of HLHZFA and Capitalink, L.C..
Agreement
and Plan of Merger – Page
31
4.23 Brokers.
Except
for ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇ Capital, Inc. (“HLHZC”), an affiliate of
HLHZFA , no agent, broker, investment banker, financial advisor or other Person
is or shall be entitled, as a result of any action, agreement or commitment
of
the Company or any of its Affiliates, to any broker’s, finder’s, financial
advisor’s or other similar fee or commission in connection with any of the
transactions contemplated by this Agreement.
The
Company has made available to the Buyer copies of all agreements under which
any
such fees or commissions have been paid or may become payable and all
indemnification and other agreements related to the engagement of HLHZC. Such
copies are complete and accurate in all respects, except that the parameters
for
calculating the portion of the fee payable to HLHZC upon closing of the Merger
has been redacted therefrom.
4.24 Certain
Approvals.
The
Company has taken all necessary action to ensure that no state anti-takeover
statute, Law or regulation (including, without limitation, a “fair price,”
“moratorium,” or “control share acquisition” statute) applies to the Company,
the Buyer, the Buyer Subsidiary, the Merger and this Agreement.
4.25 Unlawful
Payments.
Neither
the Company, any of its Subsidiaries, any director, officer, employee,
shareholder, agent or representative of the Company or any of its Subsidiaries,
nor any Person associated with or acting for or on behalf of the Company or
any
of its Subsidiaries, has directly or indirectly made any contribution, gift,
bribe, rebate, payoff, influence payment, kickback, or other payment to any
Person, private or public, regardless of what form, whether in money, property,
or services (i) to obtain favorable treatment for the Company or any of its
Subsidiaries or to secure contracts, (ii) to pay for favorable treatment for
the
Company or any of its Subsidiaries or for contracts secured, (iii) to obtain
special concessions for the Company or any of its Subsidiaries or for special
concessions already obtained or (iv) in violation of any legal
requirement.
4.26 Affiliate
Transactions.
There
are
no transactions, agreements, arrangements or understandings between (i) the
Company or any of its Subsidiaries, on the one hand, and (ii) any Affiliate
of
the Company (other than the Company Subsidiaries), on the other hand, of the
type that would be required to be disclosed under Item 404 of Regulation S−K
under the Securities Act.
4.27 No
Other Representations or Warranties.
(a) Except
for the representations and warranties contained in this Article IV of this
Agreement, in the Company Disclosure Schedule or any certificate or instrument
furnished by the Company or any of its Subsidiaries pursuant to this Agreement
or the disclosures in the Company SEC Reports, the Buyer acknowledges that
neither the Company nor any other Person on behalf of the Company makes any
other express or implied representation or warranty with respect to the Company
with respect to any other information provided to the Buyer. Except in the
case
of fraud or willful misrepresentation, neither the Company nor any other Person
will have or be subject to any liability or indemnification obligation to the
Buyer or any other Person resulting from the distribution to the Buyer, or
use
by the Buyer of, any such information, including any information, documents,
projections, forecasts or other material made available to the Buyer in the
online data room to which the Buyer was given access, and pursuant to the
confidential information memorandum and management presentations provided by
the
Company to the Buyer, in each case prior to the date of execution of this
Agreement.
Agreement
and Plan of Merger – Page
32
(b) In
connection with investigation by the Buyer of the Company and its Subsidiaries,
the Buyer has received or may receive from the Company and/or its Subsidiaries
certain projections, forward-looking statements and other forecasts and certain
business plan information. the Buyer acknowledges that there are uncertainties
inherent in attempting to make such estimates, projections and other forecasts
and plans, that the Buyer is familiar with such uncertainties, that the Buyer
is
taking full responsibility for making its own evaluation of the adequacy and
accuracy of all estimates, projections and other forecasts and plans so
furnished to it (including the reasonableness of the assumptions underlying
such
estimates, projections, forecasts or plans), and that, absent fraud or willful
misrepresentation, the Buyer shall have no claim against anyone with respect
thereto. Accordingly, the Buyer acknowledges that the Company makes no
representation or warranty with respect to such estimates, projections,
forecasts or plans (including the reasonableness of the assumptions underlying
such estimates, projections, forecasts or plans).
ARTICLE
V
REPRESENTATIONS
AND WARRANTIES OF THE BUYER AND THE
BUYER
SUBSIDIARY
The
Buyer
and the Buyer Subsidiary represent and warrant to the Company that the
statements contained in this Article IV are true and correct.
5.1 Organization,
Standing and Power.
Each of
the Buyer and the Buyer Subsidiary is a corporation duly organized, validly
existing and in good standing under the Laws of the jurisdiction of its
incorporation, has all requisite corporate power and authority to own, lease
and
operate its properties and assets and to carry on its business as now being
conducted and as proposed to be conducted, and is duly qualified to do business
and is in good standing as a foreign corporation in each jurisdiction in which
the character of the properties it owns, operates or leases or the nature of
its
activities makes such qualification necessary, except for such failures to
be so
organized, qualified or in good standing, individually or in the aggregate,
that
have not had, and could not reasonably be expected to have, a Buyer Material
Adverse Effect.
5.2 Authority;
No Conflict; Required Filings and Consents.
(a) Each
of
the Buyer and the Buyer Subsidiary has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated by this Agreement. The execution and delivery of this Agreement
and
the consummation of the transactions contemplated by this Agreement by the
Buyer
and the Buyer Subsidiary have been duly authorized by all necessary corporate
action on the part of each of the Buyer and the Buyer Subsidiary (including
the
approval of the Merger by the Buyer in its capacity as the sole shareholder
of
the Buyer Subsidiary). This Agreement has been duly executed and delivered
by
each of the Buyer and the Buyer Subsidiary and constitutes the valid and binding
obligation of each of the Buyer and the Buyer Subsidiary, enforceable in
accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors’ rights and remedies generally and to general principles of
equity.
Agreement
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(b) The
execution and delivery of this Agreement by each of the Buyer and the Buyer
Subsidiary do not, and the consummation by the Buyer and the Buyer Subsidiary
of
the transactions contemplated by this Agreement shall not, (i) conflict
with, or result in any violation or breach of, any provision of the certificate
of incorporation or by-laws of the Buyer or the Buyer Subsidiary,
(ii) conflict with, or result in any violation or breach of, or constitute
(with or without notice or lapse of time, or both) a default (or give rise
to a
right of termination, cancellation or acceleration of any obligation or loss
of
any material benefit) under, require a consent or waiver under, constitute
a
change in control under, require the payment of a penalty under or result in
the
imposition of any Encumbrance on the Buyer’s or the Buyer Subsidiary’s assets
under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, lease, license, contract or other agreement, instrument or obligation
to which the Buyer or the Buyer Subsidiary is a party or by which any of them
or
any of their properties or assets may be bound, or (iii) subject to
compliance with the requirements specified in clause (i), (ii), (iii) and (iv)
of Section 5.2(c),
conflict with or violate any permit, concession, franchise, license, judgment,
injunction, order, decree, statute, Law, ordinance, rule or regulation
applicable to the Buyer or the Buyer Subsidiary or any of its or their
properties or assets, except in the case of clauses (ii) and (iii) of this
Section 5.2(b)
for any
such conflicts, violations, breaches, defaults, terminations, cancellations,
accelerations or losses that, individually or in the aggregate, could not
reasonably be expected to have a Buyer Material Adverse Effect.
(c) No
consent, approval, license, permit, order or authorization of, or registration,
declaration, notice or filing with, any Governmental Entity is required by
or
with respect to the Buyer or the Buyer Subsidiary in connection with the
execution and delivery of this Agreement by the Buyer or the Buyer Subsidiary
or
the consummation by the Buyer or the Buyer Subsidiary of the transactions
contemplated by this Agreement, except for (i) the pre-merger notification
requirements under the HSR Act, (ii) the filing of the Certificate of Merger
with the Secretary of State of the State of New Jersey and appropriate
corresponding documents with the Secretaries of State of other states in which
the Company is qualified as a foreign corporation to transact business, (iii)
the filings of such reports, schedules or materials under the Exchange Act
as
may be required in connection with this Agreement and the transactions
contemplated hereby and (iv) such consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required under applicable
state securities Laws and the securities Laws of any foreign
country.
5.3 Information
Provided.
None of
the information supplied or to be supplied by the Buyer in writing specifically
for inclusion in any Regulation M-A Filing or the Proxy Statement shall at
the
time the Regulation M-A Filing is filed with the SEC or the Proxy Statement
is
sent to shareholders of the Company to consider the Company Voting Proposal
(as
applicable), 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 not misleading. If at any time prior to the Effective
Time any fact or event relating to the Buyer or any of its Affiliates which
should be set forth in an amendment or supplement to the Proxy Statement should
be discovered by the Buyer or should occur, the Buyer shall promptly inform
the
Company of such fact or event.
Agreement
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5.4 Operations
of the Buyer Subsidiary.
The
Buyer Subsidiary was formed solely for the purpose of engaging in the
transactions contemplated by this Agreement, has engaged in no other business
activities and has conducted its operations only as contemplated by this
Agreement.
5.5 Financing.
The
Buyer has possession of, or has available to it under existing lines of credit,
sufficient funds to consummate the transactions contemplated by this
Agreement.
5.6 Brokers.
No
agent, broker, finder or investment banker is entitled to any brokerage,
finder’s or other fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf
of
the Buyer or the Buyer Subsidiary for which the Company could have any liability
if the Closing does not occur.
5.7 Shares.
Neither
the Buyer nor the Buyer Subsidiary is, and at no time during the last three
years has been, an “interested stockholder” of the Company as defined in Section
14A:10A-3 of the NJBCA. Neither the Buyer nor the Buyer Subsidiary owns
(directly or indirectly, beneficially or of record), or is a party to any
agreement, other than the Support Agreements, arrangement or understanding
for
the purpose of acquiring, holding, voting or disposing of, in each case, any
shares of capital stock of the Company (other than as contemplated by this
Agreement).
ARTICLE
VI
CONDUCT
OF BUSINESS
6.1 Covenants
of the Company.
Except
as expressly provided herein or as consented to in writing by the Buyer, from
and after the date of this Agreement until the earlier of the termination of
this Agreement in accordance with its terms or the Effective Time, the Company
shall, and shall cause each of its Subsidiaries to, act and carry on its
business in the usual, regular and ordinary course in substantially the same
manner as previously conducted, pay its debts and Taxes and perform its other
obligations when due (subject to good faith disputes over such debts, Taxes
or
obligations), comply with all applicable Laws, rules and regulations, and use
best efforts, consistent with past practices, to maintain and preserve its
and
each Subsidiary’s business organization, assets and properties, keep available
the services of its present officers and employees and preserve its advantageous
business relationships with customers, strategic partners, suppliers,
distributors and others having business dealings with it to the end that its
goodwill and ongoing business shall be unimpaired at the Effective Time. Without
limiting the generality of the foregoing, and except as otherwise expressly
required by this Agreement or as set forth on a correspondingly numbered
subsection of Section 6.1
of the
Company Disclosure Schedule, the Company will not, and will not permit any
of
its Subsidiaries to, prior to the Effective Time, without the prior written
consent of the Buyer:
(a) adopt
any
amendment to its certificate of incorporation or by-laws or comparable charter
or organizational documents;
Agreement
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(b) sell,
transfer, dispose of, pledge, hypothecate, grant a security interest in or
otherwise encumber any capital stock owned by it in any of its
Subsidiaries;
(c) (i)
issue, reissue or sell, or authorize the issuance, reissuance or sale of
(A) shares of capital stock of any class, or securities convertible into
capital stock of any class, or any rights, warrants or options to acquire any
convertible securities or capital stock, of such Person other than the issuance
by the Company of Shares pursuant to the exercise of Company Stock Options
outstanding on the date hereof in accordance with the terms of such Company
Stock Options or (B) any other securities in respect of, in lieu of, or in
substitution for, capital stock outstanding on the date hereof, or (ii) make
any
other changes in its capital structure;
(d) declare,
set aside or pay any dividend or other distribution (whether in cash, securities
or property or any combination thereof) in respect of any class or series of
its
capital stock except for dividends by any wholly-owned Subsidiary of the Company
to the Company or another wholly-owned Subsidiary of the Company;
(e) split,
combine, subdivide, reclassify or redeem, purchase or otherwise acquire, or
propose to redeem or purchase or otherwise acquire, any capital stock, or any
of
its other securities;
(f) sell,
transfer, lease, mortgage, encumber, license, pledge, abandon, cancel,
surrender, allow to lapse or expire, or otherwise dispose of, encumber or
subject to any material Lien, any assets or property (including Intellectual
Property), except pursuant to existing contracts or commitments or the sale
of
goods in the Ordinary Course of Business;
(g) acquire
(whether by merger, consolidation, acquisition of stock or assets or any other
form of transaction) any corporation, partnership or other business organization
or division thereof or, except in the Ordinary Course of Business, any
assets;
(h) incur,
guarantee, or modify in any material respect, any Indebtedness or make any
loans, advances or capital contributions to, or investments in, any other Person
(other than a Subsidiary of the Company), in each case, other than (but only
to
the extent such Indebtedness can be repaid without prepayment or other
penalties) in the Ordinary Course of Business, (iii) other than in the Ordinary
Course of Business, enter into, renew or amend in any material respect any
contract or agreement which is or would be a Material Contract or would be
material to the Company and its Subsidiaries taken as a whole, (iv) authorize
any material new capital expenditures which are, in the aggregate, in excess
of
the capital expenditure budgets of the Company and its Subsidiaries set forth
in
Section 6.1 of the Company Disclosure Schedule, (v) other than in the Ordinary
Course of Business commence or undertake any extraordinary sales events or
significant discounting of products, or (vi) take any actions to materially
change in a manner adverse to the Company or its Subsidiaries, relationships
with material product vendors and suppliers;
Agreement
and Plan of Merger – Page
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(i) sublease,
license, grant any material easement affecting and/or transfer any interest
in
any Leased Real Property, or materially amend, extend or terminate any leasehold
interest in any Leased Real Property;
(j) except
(i) as contemplated by this Agreement, (ii) to the extent required under any
Benefit Plan or any Foreign Plan, or (iii) as required by applicable Law, (A)
increase or decrease the compensation or fringe benefits of, or pay any bonus
to, any current or former director, officer, employee or consultant of the
Company or any of its Subsidiaries (except in the Ordinary Course of Business
(including with regard to the timing and the basis upon which increases or
payments are made) with respect to employees who are not directors or officers),
(B) terminate or make any material amendment or modification to any existing
Benefit Plan or Foreign Plan, (C) take any action to fund the payment of
compensation or benefits under any Benefit Plan or Foreign Plan (except in
the
Ordinary Course of Business with respect to employees who are not directors
or
officers), (D) exercise any discretion to accelerate the vesting or payment
or
any compensation or benefit under any Benefit Plan or Foreign Plan, (E) grant
any awards under any Benefit Plan or Foreign Plan (including the grant of stock
options, stock appreciation rights, stock based or stock related awards,
performance units, restricted stock units, or restricted stock) (except in
the
Ordinary Course of Business with respect to employees who are not directors
or
officers), (F) materially change any actuarial or other assumption used to
calculate funding obligations with respect to any Benefit Plan or change the
manner in which contributions to any Benefit Plan are made or the basis on
which
such contributions are determined, (G) adopt or enter into any new employee
benefit plan, arrangement or employment contract or (H) hire or terminate any
officer other than termination for cause;
(k) enter
into any transaction, agreement, arrangement or understanding between (i) the
Company or any Subsidiary of the Company, on the one hand, and (ii) any
Affiliate of the Company (other than the Company Subsidiaries), on the other
hand, of the type that would be required to be disclosed under Item 404 of
Regulation S−K;
(l) settle
or
dismiss any Action threatened against, relating to or involving the Company
or
any of its Subsidiaries in connection with any business, asset or property
of
the Company and any of its Subsidiaries, other than in the Ordinary Course
of
Business but not, in any individual case, in excess of $50,000 or in a manner
that would prohibit or materially restrict the Company from operating as it
has
historically;
(m) other
than in the Ordinary Course of Business, (i) make any material Tax election
or
change any method of accounting, (ii) enter into any settlement or compromise
of
any material Tax liability, (iii) file any amended Tax Return with respect
to
any material Tax, (iv) change any annual Tax accounting period, (v) enter into
any closing agreement relating to any material Tax or (vi) surrender any right
to claim a material Tax refund;
(n) make
any
changes in accounting policies or procedures other than as required by GAAP
or a
Governmental Entity;
(o) willfully
take any action that would result in (i) any of its representations and
warranties set forth in this Agreement that are qualified as to materiality
becoming untrue, or (ii) any of such representations and warranties that
are not so qualified becoming untrue in any material respect; or
Agreement
and Plan of Merger – Page
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(p) agree
to
take, make any commitment to take, or adopt any resolutions of the Company
Board
or any board of directors or similar body of any Subsidiary in support of,
any
of the actions prohibited by this Section 6.1.
6.2 Confidentiality.
The
parties acknowledge that the Buyer and HLHZC, acting on behalf of the Company,
have previously executed a confidentiality agreement dated October 9, 2006
(the
“Confidentiality Agreement”), which Confidentiality Agreement shall continue in
full force and effect in accordance with its terms, except as expressly modified
herein.
ARTICLE
VII
ADDITIONAL
AGREEMENTS
7.1 No
Solicitation.
(a) No
Solicitation or Negotiation.
Except
as expressly permitted in this Section 7.1,
the
Company shall not, nor shall it authorize or permit any of its Subsidiaries
or
any of its or their directors, officers, employees, investment bankers,
attorneys, accountants or other advisors or representatives (such directors,
officers, employees, investment bankers, attorneys, accountants, other advisors
and representatives, collectively, “Representatives”) to directly or
indirectly:
(i) solicit,
initiate, encourage or take any other action to facilitate any inquiries or
the
making of any proposal or offer that constitutes, or could reasonably be
expected to lead to, any Acquisition Proposal, including without limitation,
amending or granting any waiver or release under any standstill or similar
agreement with respect to any Shares;
(ii) enter
into, continue or otherwise participate in any discussions or negotiations
regarding, furnish to any Person any information with respect to, assist or
participate in any effort or attempt by any Person with respect to, or otherwise
cooperate in any way with, any Acquisition Proposal; or
(iii) make
or
authorize any statement, recommendation or solicitation in support of any
Acquisition Proposal.
The
Company shall use its reasonable best efforts to take the necessary steps
promptly to inform the Persons described in the first sentence of this Section
7.1(a)
of the
obligations undertaken under this Section.
Agreement
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Notwithstanding
the foregoing, nothing contained in this Agreement shall prevent the Company
or
the Company Board from (i) taking and disclosing to its shareholders a position
contemplated by Rule 14d-9 and Rule 14e-2(a) promulgated under the Exchange
Act
(or any similar communication to shareholders in connection with the making
or
amendment of a tender offer or exchange offer) or from making any legally
required disclosure to shareholders with regard to an Acquisition Proposal
(provided that neither the Company nor its Company Board may recommend any
Acquisition Proposal unless permitted by Section 7.1(b)
below
and the Company may not fail to make or withdraw, modify or change in a manner
adverse to the Buyer all or any portion of the Company Board Recommendation
unless permitted by Section 7.5
(in
which case the Buyer shall have the right to terminate this Agreement as set
forth in Section 7.1(b)(ii)),
and
provided further that, notwithstanding anything herein to the contrary, any
“stop-look-and-listen” communication by the Company or the Company Board to the
shareholders of the Company pursuant to Rule 14d-9(f) promulgated under the
Exchange Act shall not be considered a failure to make, or a withdrawal,
modification or change in any manner adverse to the Buyer of, all or a portion
of the Company Board Recommendation) or (ii) prior to the adoption of this
Agreement by the Company’s shareholders in accordance with this Agreement, (A)
providing access to its properties, books and records and providing information
or data in response to a request therefor by a Person who has made an
unsolicited bona fide written Acquisition Proposal if the Company Board receives
from the Person so requesting such information an executed confidentiality
agreement on terms substantially similar to those contained in the
Confidentiality Agreement (except for such changes specifically necessary in
order for the Company to be able to comply with its obligations under this
Agreement and it being understood that the Company may enter into a
confidentiality agreement without a standstill provision or with a standstill
provision less favorable to the Company if it waives or similarly modifies
the
standstill provision in the Confidentiality Agreement), or (B) engaging in
any
negotiations or discussions with any Person who has made an unsolicited bona
fide written Acquisition Proposal, if and only to the extent that prior to
taking any of the actions set forth in clauses (A) or (B) of clause (ii), (x)
the Company Board shall have determined in good faith, after consultation with
its outside legal counsel and financial advisors, that such action is necessary
in order for the Company Board to comply with its fiduciary duties under
applicable Law and that such Acquisition Proposal will, or would reasonably
be
expected to, result in, a Superior Proposal, and (y) the Company shall have
informed the Buyer promptly following (and in no event later than 24 hours
after) the taking by it of any such action.
(b) Receipt
of an Unsolicited Acquisition Proposal.
Notwithstanding anything in this Section 7.1
to the
contrary, if, at any time prior to the adoption of this Agreement by the
Company’s shareholders in accordance with this Agreement, the Company, the
Company Board or any of the Representatives receives a bona fide written
Acquisition Proposal that was unsolicited and that did not otherwise result
from
a material breach of Section 7.1(a):
(i) the
Company shall (A) promptly (and in no event later than 48 hours after receipt
of
an Acquisition Proposal) notify (which notice shall be provided orally and
in
writing and shall identify the Person making the Acquisition Proposal and set
forth in reasonable detail its material terms and conditions) the Buyer that
it
has received an Acquisition Proposal and thereafter shall keep the Buyer
reasonably informed of the status and material terms and conditions of any
proposals or offers; and (B) make available to the Buyer (to the extent it
has
not already done so) all material non-public information made available to
any
Person making an Acquisition Proposal at substantially the same time as it
provides it to such other Person; and
(ii) if
the
Company Board determines in good faith, after consultation with its financial
advisors and outside legal counsel, in response to such bona fide written
Acquisition Proposal, that such proposal is a Superior Proposal and that
terminating this Agreement to accept such Superior Proposal and/or recommending
such Superior Proposal to the shareholders of the Company is necessary in order
for the Company Board to comply with its fiduciary duties under applicable
Law,
the Company may terminate this Agreement and/or the Company Board may approve
or
recommend such Superior Proposal to its shareholders, and immediately prior
to
or concurrently with the termination of this Agreement, enter into any
agreement, understanding, letter of intent or arrangement with respect to such
Superior Proposal, as applicable; provided,
however,
that
the Company shall not terminate this Agreement pursuant to this sentence, and
any purported termination pursuant to this sentence shall be void and of no
force or effect, unless concurrently with such termination pursuant to this
Section 7.1(b)(ii)
the
Company pays to the Buyer the Termination Fee payable pursuant to Section
9.3(c);
and
provided,
further,
however, that the Company shall not exercise its right to terminate this
Agreement and the Company Board shall not recommend a Superior Proposal to
its
shareholders pursuant to this Section 7.1(b)
unless
the Company shall have delivered to the Buyer a prior written notice advising
the Buyer that the Company or the Company Board intends to take such action
with
respect to a Superior Proposal, specifying in reasonable detail the material
terms and conditions of the Superior Proposal, this notice to be delivered
not
less than three Business Days prior to the time the action is taken, and, during
this three Business Day period, the Company and its advisors shall negotiate
in
good faith with the Buyer to make such adjustments in the terms and conditions
of this Agreement such that such Acquisition Proposal would no longer constitute
a Superior Proposal.
Agreement
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(c) Termination
of All Pending Discussions.
The
Company shall immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any Persons conducted heretofore
with respect to any Acquisition Proposal. The Company also shall, if it has
not
already done so, promptly request, to the extent it has a contractual right
to
do so, that each Person, if any, that has heretofore executed a confidentiality
agreement within the 12 months prior to the date of this Agreement in connection
with its consideration of any Acquisition Proposal shall return or destroy
all
confidential information or data heretofore furnished to any Person by or on
behalf of it or any of its Subsidiaries.
(d) Definitions.
For
purposes of this Agreement:
(i) “Acquisition
Proposal” means any inquiry, proposal or offer from any Person (other than from
the Buyer and its Affiliates) relating to a tender offer or exchange offer,
merger, reorganization, share exchange, consolidation or other business
combination involving the Company and its Subsidiaries (or any of them) or
any
proposal or offer to acquire in any manner an equity interest representing
a 10%
or greater economic or voting interest in the Company, or the assets, securities
or other ownership interests of or in the Company or any of its Subsidiaries
representing 10% or more of the consolidated assets, revenues or earnings of
the
Company and its Subsidiaries, other than the transactions contemplated by this
Agreement.
(ii) “Superior
Proposal” means an Acquisition Proposal (provided that for purposes of the
definition of Superior Proposal, the term Acquisition Proposal shall have the
meaning set forth in Section 7.1(d)(i),
except
that references to “10% or greater” and “10% or more” shall be deemed to be
references to “90% or greater” and “90% or more,” respectively) that is
reasonably capable of being consummated, taking into account all legal,
financial, regulatory, timing, and similar aspects of, and conditions to, the
proposal, the likelihood of obtaining necessary financing and the Person making
the proposal, and, if consummated, would result in a transaction more favorable
to the Company’s shareholders from a financial point of view than the
transactions contemplated by this Agreement (after giving effect to any
adjustments to the terms and provisions of this Agreements committed to in
writing by the Buyer in response to such Acquisition Proposal).
Agreement
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7.2 Proxy
Statement.
(a) As
promptly as practicable after the execution of this Agreement, the Company
shall
prepare and file the Proxy Statement with the SEC.
(b) Each
of
the Buyer and the Company shall respond to any comments of the SEC, if any,
and
the Company shall use its best efforts to cause the Proxy Statement to be
cleared under the Exchange Act and, as promptly as practicable after such
filing, mailed to its shareholders at the earliest practicable time thereafter.
Each of the Buyer and the Company shall notify the other promptly upon the
receipt of any comments from the SEC or its staff or any other government
officials and of any request by the SEC or its staff or any other government
officials for amendments or supplements to the Proxy Statement or any filing
pursuant to this Section or for additional information and shall supply the
other with copies of all correspondence between such party or any of its
representatives, on the one hand, and the SEC, or its staff or any other
government officials, on the other hand, with respect to the Proxy Statement,
the Merger or any filing pursuant to this Section. The Company shall use its
best efforts to cause all documents that it is responsible for filing with
the
SEC or other regulatory authorities under this Section to comply in all
material respects with all applicable requirements of Law and the rules and
regulations promulgated thereunder. Whenever any event occurs which is required
to be set forth in an amendment or supplement to the Proxy Statement or any
filing pursuant to this Section, the Buyer or the Company, as the case may
be,
shall promptly inform the other of such occurrence and cooperate in filing
with
the SEC or its staff or any other government officials, and/or mailing to
shareholders of the Company, such amendment or supplement.
(c) The
Buyer
and the Company shall promptly make all necessary filings with respect to the
Merger under the Securities Act, the Exchange Act, applicable state blue sky
Laws and the rules and regulations thereunder.
7.3 Nasdaq
Quotation.
The
Company agrees to continue the quotation of the Shares on The Nasdaq Capital
Market during the term of this Agreement.
7.4 Access
to Information.
Subject
to applicable Law, the Company shall (and shall cause each of its Subsidiaries
to) afford to the Buyer’s officers, employees, accountants, counsel and other
representatives, full access, during normal business hours during the period
prior to the Effective Time, to all its properties, books, contracts,
commitments, personnel and records and, during such period, the Company shall
(and shall cause each of its Subsidiaries to) furnish promptly to the Buyer
(a) a copy of each report, schedule, registration statement and other
document filed or received by it during such period pursuant to the requirements
of federal or state securities Laws, (b) the internal or external reports
prepared by it or its Subsidiaries in the Ordinary Course of Business that
are
reasonably required by the Buyer promptly after such reports are made available
to the Company’s personnel, and (c) all other information concerning its
business, properties, assets and personnel as the Buyer may reasonably request.
The Buyer will hold any such information which is nonpublic in confidence in
accordance with the Confidentiality Agreement. No information or knowledge
obtained in any investigation pursuant to this Section or otherwise shall affect
or be deemed to modify any representation or warranty contained in this
Agreement or the conditions to the obligations of the parties to consummate
the
Merger.
Agreement
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7.5 Shareholders
Meeting.
As soon
as reasonably practicable following the date of this Agreement, the Company,
acting through the Company Board, and in accordance with applicable Law, shall
(i) duly call, give notice of, convene and hold the Shareholders Meeting and
(ii) (A) include in the Proxy Statement the recommendation of the Company Board
that the terms of this Agreement are fair to and in the best interest of the
shareholders of the Company, declaring this Agreement advisable and that the
shareholders of the Company vote in favor of the adoption of this Agreement
(the
“Company Board Recommendation”) and (B) use its reasonable best efforts to
obtain the necessary approval of the transactions contemplated by this Agreement
by the shareholders of the Company; provided, that the Company Board may fail
to
make or may withdraw, modify or change in a manner adverse to the Buyer all
or
any portion of the Company Board Recommendation and/or may fail to use such
efforts if it shall have determined in good faith, after consultation with
outside counsel to the Company, that such action is necessary in order for
the
Company Board to comply with its fiduciary duties under applicable
Law.
7.6 Cooperation;
Further Action.
(a) Subject
to the terms hereof, including Section 7.6(b),
the
Company and the Buyer shall each use its reasonable best efforts (subject to,
and in accordance with applicable Laws) to (i) take, or cause to be taken,
all
actions, and do, or cause to be done, and to assist and cooperate with the
other
parties in doing, all things necessary, proper or advisable to consummate and
make effective the transactions contemplated hereby as promptly as practicable,
(ii) as promptly as practicable, obtain from any Governmental Entity or any
other third party any consents, licenses, permits, waivers, approvals,
authorizations, actions or non-actions, or orders required to be obtained or
made by the Company or the Buyer or any of their Subsidiaries in connection
with
the authorization, execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby, (iii) as promptly as practicable,
make
all necessary filings, and thereafter make any other required submissions,
with
respect to this Agreement and the Merger required under (A) the Securities
Act
and the Exchange Act, and any other applicable federal or state securities
Laws,
(B) the HSR Act and any other Antitrust Laws and any related governmental
request thereunder, and (C) any other applicable Law, (iv) defend any
lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement or the consummation of the transactions contemplated
hereby, (v) publicly support this Agreement and the Merger and (vi) execute
or
deliver any additional instruments necessary to consummate the transactions
contemplated by, and to fully carry out the purposes of, this Agreement. The
Company and the Buyer shall consult and cooperate with each other in connection
with obtaining such consents, licenses, permits, waivers, approvals,
authorizations, or orders, including, without limitation, keeping the other
apprised of the status of matters relating to the completion of the transactions
contemplated hereby and providing copies of written notices or other
communications received by such party or any of its respective Subsidiaries
with
respect to the transactions contemplated hereby and, subject to applicable
Laws
relating to the sharing of information, providing copies in advance of any
proposed filing to the non-filing party and its advisors prior to filing and,
if
requested, accepting all reasonable additions, deletions or changes suggested
in
connection therewith. The Company and the Buyer shall use their respective
reasonable best efforts to furnish to each other all information required for
any application or other filing to be made pursuant to the rules and regulations
of any applicable Law (including all information required to be included in
the
Proxy Statement) in connection with the transactions contemplated by this
Agreement. For the avoidance of doubt, the Buyer and the Company agree that
nothing contained in this Section 7.6(a)
shall
modify or affect their respective rights and responsibilities under Section
7.6(b).
The
Company shall not permit any of its officers or any other representatives or
agents to participate in any meeting or proceeding with any Governmental Entity
in respect of any filings, investigation or other inquiry in connection with
the
transactions contemplated by this Agreement unless it consults with the Buyer
in
advance and, to the extent permitted by such Governmental Entity, gives the
Buyer and its outside counsel the opportunity to attend and participate at
such
meeting or proceeding.
Agreement
and Plan of Merger – Page
42
(b) Subject
to the terms hereof, the Buyer and the Company agree, and shall cause each
of
their respective Subsidiaries, to cooperate and to use their respective
reasonable efforts to obtain any government clearances or approvals required
for
Closing under the HSR Act, the ▇▇▇▇▇▇▇ Act, as amended, the ▇▇▇▇▇▇▇ Act, as
amended, the Federal Trade Commission Act, as amended, and any other federal,
state or foreign Law or, regulation or decree designed to prohibit, restrict
or
regulate actions for the purpose or effect of monopolization or restraint of
trade (collectively “Antitrust Laws”), to respond as promptly as practicable to
any government requests for information under any Antitrust Law, and to contest
and resist any action, including any legislative, administrative or judicial
action, and to have vacated, lifted, reversed or overturned any decree,
judgment, injunction or other order (whether temporary, preliminary or
permanent) (an “Antitrust Order”) that restricts, prevents or prohibits the
consummation of the Merger or any other transactions contemplated by this
Agreement under any Antitrust Law. The Buyer shall be entitled to direct any
proceedings or negotiations with any Governmental Entity relating to any of
the
foregoing, provided that it shall afford the Company a reasonable opportunity
to
participate therein. Notwithstanding anything in this Agreement to the contrary,
neither the Buyer nor any of its Affiliates shall be under any obligation to
(i)
make proposals, execute or carry out agreements or submit to orders providing
for the sale or other disposition or separate holding (through the establishment
of a trust or otherwise) of any assets or categories of assets of the Buyer
or
any of its Affiliates or the Company or any of its Affiliates or the separate
holding of any Shares (or shares of stock of the Surviving Corporation) or
imposing or seeking to impose any material limitation on the ability of the
Buyer or any of its Affiliates to conduct their business or own such assets
or
to acquire, hold or exercise full rights of ownership of the Shares (or shares
of stock of the Surviving Corporation) or (ii) take any action under this
Section if the United States Department of Justice or the United States
Federal Trade Commission authorizes its staff to seek a preliminary injunction
or restraining order to enjoin consummation of the Merger, and none of the
Company or any of its Affiliates shall agree to any action set forth in the
foregoing clause (i) without the prior written consent of the
Buyer.
(c) Each
of
the Company and the Buyer shall give (or shall cause their respective
Subsidiaries to give) any notices to third parties, and use, and cause their
respective Subsidiaries to use, their reasonable best efforts to obtain any
third party consents related to or required in connection with the Merger that
are (A) necessary to consummate the transactions contemplated hereby, (B)
disclosed or required to be disclosed in the Company Disclosure Schedule or
(C)
required to prevent the occurrence of an event that has had or may have a
Company Material Adverse Effect or a Buyer Material Adverse Effect prior to
or
after the Effective Time.
Agreement
and Plan of Merger – Page
43
7.7 Public
Disclosure.
Except
as may be required by Law or stock market regulations, (i) the press release
announcing the execution of this Agreement shall be issued only in such form
as
shall be mutually agreed upon by the Company and the Buyer and (ii) the Buyer
and the Company shall consult with and obtain the consent of the other party
before issuing any other press release or otherwise making any public statement
with respect to the Merger or this Agreement.
7.8 Company
Stock Plans.
(a) Prior
to
the Effective Time, the Company Board (or, if appropriate, any committee
administering the Company Stock Plans) shall adopt such resolutions or take
such
other actions as are required to effect the transactions contemplated by Section
3.1(d)
in
respect of all outstanding Company Stock Options, and thereafter the Company
Board (or any such committee) shall adopt any such additional resolutions and
take such additional actions as are required in furtherance of the
foregoing.
(b) Payments
in Respect of Company Stock Options.
Each
Company Stock Option cancelled pursuant to Section 3.1(d)
shall,
upon cancellation, be converted into the right to receive an amount in cash
equal to the product of (i) the number of Shares subject to such Company Stock
Option, whether or not then exercisable, and (ii) the excess, if any, of the
Merger Consideration over the exercise price per share subject or related to
such Company Stock Option (the “Option Consideration”).
(c) Time
of Payment.
The
cash amount described in paragraph (b)
of this
Section 7.8
shall be
paid as promptly as is practicable after the Effective Time.
(d) Withholding.
All
amounts payable pursuant to Section 3.1(d)
and
Section 7.8(b)
and
(c)
shall be
subject to any required withholding of taxes and shall be paid without interest.
Payment shall, at the Buyer’s request, be withheld in respect of any Company
Stock Option until the buyer has received documentation that evidences such
payment is in full satisfaction of all rights under such Company Stock
Option.
7.9 Shareholder
Litigation.
Until
the earlier of the termination of this Agreement in accordance with its terms
or
the Effective Time, the Company shall give the Buyer the opportunity to
participate in the defense or settlement of any shareholder litigation against
the Company or the Company Board relating to this Agreement or any of the
transactions contemplated by this Agreement, and shall not settle any such
litigation without the Buyer’s prior written consent, which will not be
unreasonably withheld or delayed.
7.10 Notification
of Certain Matters.
The
Buyer shall give prompt notice to the Company, and the Company shall give prompt
notice to the Buyer, of (a) the occurrence, or failure to occur, of any event,
which occurrence or failure to occur could be reasonably likely to cause (i)
(x)
any representation or warranty of such party contained in this Agreement that
is
qualified as to materiality to be untrue or inaccurate in any respect or (y)
any
other representation or warranty of such party contained in this Agreement
to be
untrue or inaccurate in any material respect, in each case at any time from
and
after the date of this Agreement until the Effective Time, (ii) any failure
of
the Buyer and the Buyer Subsidiary or the Company, as the case may be, or of
any
officer, director, employee or agent thereof, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it under
this Agreement or (iii) any actions, suits, claims, investigations or
proceedings commenced or threatened in writing against, relating to or involving
such party or any of its Subsidiaries that relate to the consummation of the
Merger, or (b) any notice or other communication from any third party alleging
that the consent of such third party is or may be required in connection with
the transactions contemplated by this Agreement. Notwithstanding the above,
the
delivery of any notice pursuant to this Section will not limit or otherwise
affect the remedies available hereunder to the party receiving such notice
or
the conditions to such party’s obligation to consummate the Merger.
Agreement
and Plan of Merger – Page
44
7.11 Directors’
and Officers’ Indemnification and Insurance.
(a) Without
limiting any additional rights that any employee, officer or director may have
under any employment agreement or Benefit Plan or under the Company’s
certificate of incorporation or bylaws, after the Effective Time, the Buyer
shall, and shall cause the Surviving Corporation to, indemnify and hold harmless
each present (as of the Effective Time) and former officer or director of the
Company and its Subsidiaries (the “Indemnified Directors and Officers”), against
all Actions, losses, liabilities, damages, judgments, inquiries, fines and
reasonable fees, costs and expenses, including, attorneys’ fees and
disbursements (collectively, “Costs”), incurred in connection with any Action,
whether civil, criminal, administrative or investigative, arising out of actions
taken by them in their capacity as officers or directors at or prior to the
Effective Time (including this Agreement and the transactions and actions
contemplated hereby), or taken by them at the request of the Company or any
of
its Subsidiaries, whether asserted or claimed prior to, at or after the
Effective Time, to the fullest extent permitted under applicable Law for a
period of six years from the Effective Time. Each Indemnified Director and
Officer will be entitled to advancement of expenses incurred in the defense
of
any Action from the Surviving Corporation within ten Business Days of receipt
by
the Surviving Corporation from the Indemnified Director or Officer of a request
therefor; provided
that
any
Person to whom expenses are advanced provides an undertaking, if and only to
the
extent required by the NJBCA, to repay such advances if it is ultimately
determined that such person is not entitled to indemnification. The Surviving
Corporation shall not settle, compromise or consent to the entry of any judgment
in any proceeding or threatened Action (and in which indemnification could
be
sought by such Indemnified Director or Officer hereunder), unless such
settlement, compromise or consent includes an unconditional release of such
Indemnified Director or Officer from all liability arising out of such Action
or
such Indemnified Director or Officer otherwise consents.
(b) The
certificate of incorporation and by-laws of the Surviving Corporation shall
contain provisions no less favorable with respect to indemnification,
advancement of expenses and exculpation of former or present directors and
officers than are presently set forth in the Company’s certificate of
incorporation and by-laws, which provisions shall not be amended, repealed
or
otherwise modified for a period of six years from the Effective Time in any
manner that would adversely affect the rights thereunder of any such
individuals.
Agreement
and Plan of Merger – Page
45
(c) Prior
to
the Effective Time, the Company shall endeavor to (and if it is unable to,
the
Buyer shall cause the Surviving Corporation to after the Effective Time) obtain
and fully pay in one payment (up to a maximum cost of 260% of the current annual
premium paid by the Company for its existing coverage in the aggregate) for
“tail” insurance policies (providing only for the Side A coverage for
Indemnified Directors and Officers where the existing policies also include
coverage for the Company) with a claims period of at least six years from the
Effective Time from an insurance carrier with the same or better credit rating
as the Company’s current insurance carrier with respect to directors’ and
officers’ liability insurance in an amount and scope at least as favorable as
the Company’s existing policies with respect to matters existing or occurring at
or prior to the Effective Time. The Buyer shall, and shall cause the Surviving
Corporation to, honor and perform under all indemnification agreements entered
into by the Company or any Company Subsidiary set forth in Section 7.11 of
the
Company Disclosure Schedule.
(d) Notwithstanding
anything herein t o the contrary, if any Action (whether arising before, at
or
after the Closing Date) is made against any Indemnified Director or Officer
or
any other party covered by directors’ and officers’ liability insurance, on or
prior to the sixth anniversary of the Effective Time, the provisions of this
Section 7.11
shall
continue in effect until the final disposition of such Action.
(e) The
covenants contained in this Section 7.11
are
intended to be for the benefit of, and shall be enforceable by, each of the
Indemnified Directors and Officers and their respective heirs and legal
representatives. The indemnification provided for herein shall not be deemed
exclusive of any other rights to which an Indemnified Director or Officer is
entitled, whether pursuant to Law, contract or otherwise.
7.12 Loans
to Company Employees, Officers and Directors.
Prior
to the Effective Time, all loans by the Company or any of its Subsidiaries
to
any of their employees, officers or directors shall have been repaid in full
by
the applicable borrowers.
7.13 Takeover
Statutes and Laws.
If any
anti-takeover Law (including, without limitation, a “fair price,” “moratorium,”
or “control share acquisition” statute) becomes applicable to the Merger, or any
of the other transactions contemplated by hereby or thereby, the Company and
the
Company Board shall grant such approvals and take such actions as are necessary
so that such transactions may be consummated as promptly as practicable on
the
terms contemplated by this Agreement or by the Merger and otherwise act to
eliminate or minimize the effects of such Law on such transactions.
7.14 Standstill
Agreements; Confidentiality Agreements.
During
the period from the date of this Agreement through the Effective Time, the
Company shall not terminate, amend, modify or waive any provision of any
confidentiality or standstill agreement to which it or any of its respective
Subsidiaries is a party and which relates to the confidentiality or information
regarding the Company or its Subsidiaries or which relate to securities of
the
Company, other than client and customer agreements entered into by the Company
or its Subsidiaries in the ordinary course of business consistent with past
practice. During such period, the Company shall use reasonable best efforts
to
enforce, to the fullest extent permitted under applicable Law, the provisions
of
any such agreement, including by using reasonable best efforts to obtain
injunctions to prevent any breaches of such agreements and to enforce
specifically the terms and provisions thereof in any court having
jurisdiction.
Agreement
and Plan of Merger – Page
46
ARTICLE
VIII
CONDITIONS
TO MERGER
8.1 Conditions
to Each Party’s Obligation To Effect the Merger.
The
respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction on or prior to the Closing Date of the
following conditions:
(a) Shareholder
Approval.
The
Company Voting Proposal shall have been duly approved and adopted at the Company
Shareholders Meeting, at which a quorum is present, by the requisite vote of
the
shareholders of the Company under applicable Law and the Company’s certificate
of incorporation and by-laws.
(b) HSR
Act and Similar Clearances.
The
waiting period applicable to the consummation of the Merger under the HSR Act
and any other applicable Antitrust Laws shall have expired or been
terminated.
(c) Governmental
Approvals.
Other
than the filing of the Certificate of Merger, all authorizations, consents,
orders or approvals of, or declarations, notices or filings with, or expirations
of waiting periods imposed by, any Governmental Entity in connection with the
Merger and the consummation of the other transactions contemplated by this
Agreement, the failure of which to file, obtain or occur would proscribe or
prohibit the consummation of the transactions contemplated hereby (all such
authorizations, consents, orders or approvals of, or declarations, notices
or
filings with, or expirations of waiting periods imposed by, collectively, the
“Requisite Regulatory Approvals”) shall have been filed, obtained or
occurred.
(d) Proxy
Statement.
No stop
order suspending, or similar proceeding relating to, the Proxy Statement shall
have been initiated or threatened in writing by the SEC or its
staff.
(e) No
Injunctions.
No
Governmental Entity of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any order, executive order, stay, decree,
judgment or injunction (preliminary or permanent) or statute, rule or regulation
which is in effect and which has the effect of making the Merger illegal or
otherwise prohibiting consummation of the Merger or the other transactions
contemplated by this Agreement.
8.2 Additional
Conditions to Obligations of the Buyer and the Buyer Subsidiary.
The
obligations of the Buyer and the Buyer Subsidiary to effect the Merger shall
be
subject to the satisfaction on or prior to the Closing Date of each of the
following additional conditions, any of which may be waived, in writing,
exclusively by the Buyer and the Buyer Subsidiary:
(a) Representations
and Warranties.
(i)
The
representations and warranties of the Company set forth in Sections 4.2(c),
(e)
and
(f),
4.3,
4.23
and
4.24
shall be
true and correct in all material respects as of the Closing Date as though
made
on and as of such date (unless any such representation or warranty is made
only
as of a specific date, in which event such representation and warranty shall
be
true and correct as of such specified date), (ii) the representations and
warranties of the Company set forth in Section 4.2(a)
shall be
true and correct as of the Closing Date as though made on and as of such date
(unless any such representation or warranty is made only as of a specific date,
in which event such representation and warranty shall be true and correct as
of
such specified date), except in the case of this clause (ii) where the failure
of any such representations and warranties to be so true and correct, in the
aggregate, has not resulted in and would not reasonably be expected to result
in, liability to the Company or to the Surviving Corporation with respect to
not
more than 24,000 additional Shares and (iii) the other representations and
warranties of the Company contained in this Agreement (disregarding any Company
Material Adverse Effect, materiality or similar qualifiers therein) shall be
true and correct as of the Closing Date as though made on and as of such date
(unless any such representation or warranty is made only as of a specific date,
in which event such representation and warranty shall be true and correct as
of
such specified date), except in the case of this clause (iii) where the failure
of any such representations and warranties to be so true and correct, in the
aggregate, has not had and could not reasonably be expected to have a Company
Material Adverse Effect; and the Buyer shall have received a certificate signed
on behalf of the Company by the chief executive officer and the chief financial
officer of the Company to such effect.
Agreement
and Plan of Merger – Page
47
(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 on or prior to the Closing Date;
and
the Buyer shall have received a certificate signed on behalf of the Company
by
the chief executive officer and the chief financial officer of the Company
to
such effect.
(c) Governmental
Approvals.
Other
than the filing of the Certificate of Merger, all authorizations, consents,
orders or approvals of, or declarations, notices or filings with, or expirations
of waiting periods imposed by, any Governmental Entity required on the part
of
the Buyer or any of its Subsidiaries in connection with the Merger and the
consummation of the other transactions contemplated by this Agreement, the
failure of which to file, obtain or occur, individually or in the aggregate,
could reasonably be expected to have, directly or indirectly, a Buyer Material
Adverse Effect or a Company Material Adverse Effect, shall have been filed,
been
obtained or occurred on terms and conditions which, individually or in the
aggregate, could not reasonably be expected to have a Buyer Material Adverse
Effect or a Company Material Adverse Effect.
(d) Third
Party Consents.
The
Company shall have obtained any required consent or approval of any third party
(other than a Governmental Entity) (i) listed or described on Section
8.2(d) of the Company Disclosure Schedule, or (ii) the failure of which to
obtain, individually or in the aggregate, could reasonably be expected to have
a
Company Material Adverse Effect.
(e) No
Restraints.
There
shall not be instituted or pending any action or proceeding by any Governmental
Entity (i) seeking to restrain, prohibit or otherwise interfere with the
ownership or operation by the Buyer or any of its Subsidiaries of all or any
portion of the business of the Company or any of its Subsidiaries or of the
Buyer or any of its Subsidiaries or to compel the Buyer or any of its
Subsidiaries to dispose of or hold separate all or any portion of the business
or assets of the Company or any of its Subsidiaries or of the Buyer or any
of
its Subsidiaries, (ii) seeking to impose or confirm limitations on the ability
of the Buyer or any of its Subsidiaries effectively to exercise full rights
of
ownership of the Shares (or shares of stock of the Surviving Corporation)
including the right to vote any such shares on any matters properly presented
to
shareholders, (iii) seeking to require divestiture by the Buyer or any of its
Subsidiaries of any such shares or (iv) seeking to obtain from the Company,
the
Buyer or the Buyer Subsidiary any material damages.
Agreement
and Plan of Merger – Page
48
(f) Absence
of Company Material Adverse Effect.
No
Company Material Adverse Effect shall have occurred, and there shall exist
no
change, event, circumstance, development or effect that could, individually
or
in the aggregate, reasonably be expected to have, a Company Material Adverse
Effect.
(g) Resignations.
The
Buyer shall have received copies of the resignations, effective as of the
Effective Time, of each director of the Company and its
Subsidiaries.
8.3 Additional
Conditions to Obligations of the Company.
The
obligation of the Company to effect the Merger shall be subject to the
satisfaction on or prior to the Closing Date of each of the following additional
conditions, any of which may be waived, in writing, exclusively by the
Company:
(a) Representations
and Warranties.
The
representations and warranties of the Buyer and the Buyer Subsidiary set forth
in this Agreement and in any certificate or other writing delivered by the
Buyer
or the Buyer Subsidiary pursuant hereto shall be true and correct (i) as of
the
date of this Agreement (except in the case of this clause (i), to the extent
such representations and warranties are specifically made as of a particular
date, in which case such representations and warranties shall be true and
correct as of such date) and (ii) as of the Closing Date as though made on
and
as of the Closing Date (except in the case of this clause (ii), (x) to the
extent such representations and warranties are specifically made as of a
particular date, in which case such representations and warranties shall be
true
and correct as of such date, and (y) where the failure to be true and correct
(without regard to any materiality, Buyer Material Adverse Effect or knowledge
qualifications contained therein), individually or in the aggregate, has not
had, and could not reasonably be expected to have, a Buyer Material Adverse
Effect); and the Company shall have received a certificate signed on behalf
of
the Buyer by the chief executive officer or the chief financial officer of
the
Buyer to such effect.
(b) Performance
of Obligations of the Buyer and the Buyer Subsidiary.
The
Buyer and the Buyer Subsidiary shall have performed in all material respects
all
obligations required to be performed by them under this Agreement on or prior
to
the Closing Date; and the Company shall have received a certificate signed
on
behalf of the Buyer by the chief executive officer or the chief financial
officer of the Buyer to such effect.
Agreement
and Plan of Merger – Page
49
ARTICLE
IX
TERMINATION
AND AMENDMENT
9.1 Termination.
This
Agreement may be terminated at any time prior to the Effective Time (with
respect to Sections 9.1(b)
through
9.1(f),
by
written notice by the terminating party to the other party, specifying the
provision of this Agreement pursuant to which such termination is effected),
whether before or, subject to the terms hereof, after adoption of this Agreement
by the shareholders of the Company or the sole shareholder of the Buyer
Subsidiary:
(a) by
mutual
written consent of the Buyer, the Buyer Subsidiary and the Company;
or
(b) by
either
the Buyer or the Company if the Merger shall not have been consummated by April
30, 2007 (the “Outside Date”), provided
that
the
right to terminate this Agreement under this Section 9.1(b)
shall
not be available to any party whose failure to fulfill any obligation under
this
Agreement has been a principal cause of or resulted in the failure of the Merger
to occur on or before the Outside Date) and, provided
further
that, in the event that the conditions set forth in Sections 8.1(b),
(c)
or
8.1(e)
above
shall not have been satisfied by the Outside Date, either the Buyer or the
Company may unilaterally extend the Outside Date until June 15, 2007 upon
written notice to the other by the Outside Date, in which case the Outside
Date
shall be deemed for all purposes to be June 15, 2007; or
(c) by
either
the Buyer or the Company if (i) a Governmental Entity of competent jurisdiction
shall have issued a nonappealable final order, decree or ruling or taken any
other nonappealable final action, in each case having any of the effects set
forth in Section 8.1(e)
or (ii)
a Governmental Entity that must grant a Requisite Regulatory Approval has denied
the applicable Requisite Regulatory Approval and such denial has become final
and nonappealable, provided
that
in the
case of clause (i) or (ii) the party seeking to terminate this Agreement has
complied with its obligations in Section 7.6;
or
(d) by
either
the Buyer or the Company if at the Company Shareholders Meeting (including
any
adjournment or postponement thereof permitted by this Agreement) at which a
vote
on the Company Voting Proposal is taken, the requisite vote of the shareholders
of the Company in favor of the Company Voting Proposal shall not have been
obtained; or
(e) by
the
Buyer (i) if there shall have been a material breach of any representation,
warranty, covenant or agreement on the part of the Company contained in this
Agreement such that the conditions set forth in Section 8.2(a)
or
8.2(b)
would
not be satisfied and which shall not have been cured prior to the earlier of
(A)
10 business days following notice of such breach and (B) the Termination Date;
provided
that
Buyer shall not have the right to terminate this Agreement pursuant to this
Section 9.1(e)
if the
Buyer or the Buyer Subsidiary is then in material breach of any of its covenants
or agreements contained in this Agreement, or (ii) if a Triggering Event shall
have occurred; or
Agreement
and Plan of Merger – Page
50
(f) by
the
Company (i) if there shall have been a material breach of any representation,
warranty, covenant or agreement on the part of the Buyer or the Buyer Subsidiary
contained in this Agreement such that the condition set forth in Section
8.3(a)
or
8.3(b)
would
not be satisfied and which shall not have been cured prior to the earlier of
(A)
10 Business Days following notice of such breach and (B) the Outside Date;
provided
that
the
Company shall not have the right to terminate this Agreement pursuant to this
Section 9.1(f)
if the
Company is then in material breach of any of its covenants or agreements
contained in this Agreement, or (ii) prior to the approval of the transactions
contemplated by this Agreement by the shareholders of the Company in accordance
with this Agreement, pursuant to, and subject to the terms and conditions of,
Section 7.1(b)(ii).
9.2 Effect
of Termination.
In the
event of termination of this Agreement as provided in Section 9.1,
this
Agreement shall immediately become void and there shall be no liability or
obligation on the part of the Buyer, the Company, the Buyer Subsidiary or their
respective officers, directors, shareholders or Affiliates; provided that (i)
any such termination shall not relieve any party from liability for any willful
breach of this Agreement (which includes, without limitation, the making of
any
representation or warranty by a party in this Agreement that the party knew
was
not true and accurate when made) and (ii) the provisions of Sections
4.23,
6.2,
9.3,
this
Section 9.2,
Article
X and the Confidentiality Agreement shall remain in full force and effect and
survive any termination of this Agreement.
9.3 Fees
and Expenses.
(a) Except
as
set forth in this Section 9.3,
all
fees and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
fees
and expenses, whether or not the Merger is consummated; provided, however,
that
the Company and the Buyer shall share equally all fees paid under the HSR Act
and the applicable Antitrust Laws of other jurisdictions which impose pre-merger
notification requirements upon parties to a merger or acquisition transaction
that are similar to the HSR Act.
(b) If
this
Agreement is terminated pursuant to Section 9.1(d),
then
the Company shall pay the Buyer an amount equal to the sum of the Buyer’s
Expenses (not to exceed $750,000 in the aggregate) for which the Buyer has
not
theretofore been reimbursed by the Company. Such payment shall be made not
later
than two Business Days after delivery to the Company of notice of demand for
payment and a documented itemization setting forth in reasonable detail all
Expenses of the Buyer (which itemization may be supplemented and updated from
time to time by the Buyer until the ninetieth day after the Buyer delivers
such
notice of demand for payment). For purposes of this Agreement, “Expenses” shall
mean all reasonable out-of-pocket expenses (including, without limitation,
all
fees and expenses of counsel, accountants, investment bankers, experts and
consultants to a party hereto and its Affiliates) incurred by a party or on
its
behalf in connection with or related to the authorization, preparation,
negotiation, execution and performance of this Agreement and the transactions
contemplated hereby.
(c) In
the
event that this Agreement is terminated by the Buyer pursuant to clause (ii)
of
Section 9.1(e)
or by
the Company pursuant to clause (ii) of Section 9.1(f),
then
the Company shall pay to the Buyer $1,941,400 less any Expenses actually paid
to
the Buyer pursuant to Section 9.3 (b) (the “Termination Fee”), at or prior to
the time of, and as a pre-condition to the effectiveness of, termination in
the
case of a termination pursuant to Section 9.1(f)
or as
promptly as practicable (but in any event within two Business Days) in the
case
of a termination pursuant to Section 9.1(e),
payable
by wire transfer of same day funds.
Agreement
and Plan of Merger – Page
51
(d) If:
(i)
this Agreement is terminated by the Buyer or the Company pursuant to Section
9.1(d); (ii) at or prior to the time of the termination of this Agreement an
Acquisition Proposal shall have been disclosed, announced, commenced, submitted
or made; and (iii) on or prior to the date 12 months after the date of
termination of this Agreement, either: (A) an Acquisition Proposal is
consummated; or (B) a definitive agreement with respect to an Acquisition
Proposal is entered into by the Company (or any other Acquisition Proposal
among
or involving the parties to such definitive agreement or any of such parties’
controlled or controlling Affiliates) is consummated, then, prior to the
consummation of such Acquisition Proposal, the Company shall pay to the Buyer
the Termination Fee as promptly as practicable (but in any event within two
Business Days of any such event), provided that any fees paid by the Buyer
under
Section 9.3(b) shall be credited against the fee to be paid under this
Section 9.3(d).
(e) The
parties acknowledge that the agreements contained in this Section 9.3
are an
integral part of the transactions contemplated by this Agreement, and that,
without these agreements, the parties would not enter into this Agreement.
If
the Company fails to promptly pay any expense reimbursement or fee due
hereunder, the Company shall pay the costs and expenses (including legal fees
and expenses) incurred by the Buyer in connection with the filing and
prosecution of any Action, and enforcement of its rights to collect the amount
finally determined under such Action to be due and owing, together with interest
thereon at the publicly announced prime rate of Bank of America, N.A. plus
two
percent per annum from the date such expense reimbursement or fee was required
to be paid.
ARTICLE
X
MISCELLANEOUS
10.1 Amendment.
This
Agreement may be amended by the parties hereto, by action taken or authorized
by
their respective Boards of Directors, at any time before or after approval
of
the matters presented in connection with the Merger by the shareholders of
the
Company or the Buyer Subsidiary, provided,
however,
that,
after any such approval, no amendment shall be made which by Law requires
further approval by such shareholders without such further approval. This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties hereto.
10.2 Extension;
Waiver.
At any
time prior to the Effective Time, the parties hereto, by action taken or
authorized by their respective boards of directors, may, to the extent legally
allowed, (i) extend the time for the performance of any of the obligations
or other acts of the other parties hereto, (ii) waive any inaccuracies in
the representations and warranties contained herein or in any document delivered
pursuant hereto and (iii) subject to the proviso in Section 10.1, waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall
be
valid only if set forth in a written instrument signed on behalf of such party.
Such extension or waiver shall not be deemed to apply to any time for
performance, inaccuracy in any representation or warranty, or noncompliance
with
any agreement or condition, as the case may be, other than that which is
specified in the extension or waiver. The failure of any party to this Agreement
to assert any of its rights under this Agreement or otherwise shall not
constitute a waiver of such rights.
Agreement
and Plan of Merger – Page
52
10.3 Non−Survival
of Representations, Warranties and Agreements.
None of
the representations, warranties, covenants and agreements in this Agreement
or
in any instrument delivered pursuant to this Agreement, and the other agreements
and documents contemplated to be delivered in connection herewith, including
any
rights arising out of any breach of such representations, warranties, covenants
and agreements, shall survive the Effective Time, except for (i) those covenants
and agreements contained herein that by their terms apply or are to be performed
in whole or in part at or after the Effective Time and (ii) this Article
X.
10.4 Notices.
Any and
all notices or other communications or deliveries required or permitted to
be
provided hereunder shall be in writing and shall be deemed given and effective
on the earliest of (i) the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile telephone number specified in this
Section 10.4
prior to
5:00 p.m. (New York time) on a Business Day, (ii) the Business Day after the
date of transmission, if such notice or communication is delivered via facsimile
at the facsimile telephone number specified in this Agreement later than 5:00
p.m. (New York time) on any date and earlier than 11:59 p.m. (New York time)
on
such date, (iii) when received, if sent by nationally recognized overnight
courier service, or (iv) if delivered in any other manner, upon actual receipt
by the party to whom such notice is required to be given. The address for such
notices and communications shall be as follows:
| (a) |
if
to the Buyer or the Buyer Subsidiary,
to
|
LumaSense
Technologies, Inc.
▇▇▇▇
▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇
▇▇▇▇▇
Telephone:
(▇▇▇) ▇▇▇-▇▇▇▇
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
with
a
copy to:
▇▇▇▇▇
Day
▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇
▇.
▇▇▇▇
▇▇▇▇
▇.
▇▇▇▇▇▇
Telephone
No: (▇▇▇)
▇▇▇-▇▇▇▇
Facsimile
No: (▇▇▇)
▇▇▇-▇▇▇▇
Agreement
and Plan of Merger – Page
53
| (b) |
if
to the Company, to
|
Mikron
Infrared, inc.
▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇
▇.
▇▇▇▇▇▇
Telephone:
(▇▇▇) ▇▇▇-▇▇▇▇
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
with
a
copy to:
Arent
Fox
LLP
▇▇▇▇
▇▇▇▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇
▇.
▇▇▇▇▇▇, Esq.
Telephone:
(▇▇▇) ▇▇▇-▇▇▇▇
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
10.5 Entire
Agreement.
This
Agreement (including the Schedules and Exhibits hereto and the documents and
instruments referred to herein that are to be delivered at the Closing)
constitutes the entire agreement among the parties to this Agreement and
supersedes any prior understandings, agreements or representations by or among
the parties hereto, or any of them, written or oral, with respect to the subject
matter hereof; provided that the Confidentiality Agreement shall remain in
effect in accordance with its terms.
10.6 No
Third Party Beneficiaries.
Except
for Section 7.11,
this
Agreement shall be binding upon and inure solely to the benefit of the parties
hereto and their permitted assigns and nothing herein, express or implied,
is
intended to or shall confer upon any other Person any legal or equitable right,
benefit or remedy of any nature whatsoever under or by reason of this
Agreement.
10.7 Assignment.
No
party may assign any of its rights or delegate any of its performance
obligations under this Agreement, in whole or in part, by operation of Law
or
otherwise without the prior written consent of the other parties, and any such
assignment without such prior written consent shall be null and void, except
that from and after the Effective time, this Agreement may be assigned (in
whole
but not in part) to an Affiliate of a party hereto. Any purported assignment
of
rights or delegation of performance obligations in violation of this Section
10.7
is
void.
10.8 Severability.
Any term
or provision of this Agreement that is invalid or unenforceable in any situation
in any jurisdiction shall not affect the validity or enforceability of the
remaining terms and provisions hereof or the validity or enforceability of
the
offending term or provision in any other situation or in any other jurisdiction.
If the final judgment of a court of competent jurisdiction declares that any
term or provision hereof is invalid or unenforceable, the parties hereto agree
that the court making such determination shall have the power to limit the
term
or provision, to delete specific words or phrases, or to replace any invalid
or
unenforceable term or provision with a term or provision that is valid and
enforceable and that comes closest to expressing the intention of the invalid
or
unenforceable term or provision, and this Agreement shall be enforceable as
so
modified. In the event such court does not exercise the power granted to it
in
the prior sentence, the parties hereto agree to replace such invalid or
unenforceable term or provision with a valid and enforceable term or provision
that will achieve, to the extent possible, the economic, business and other
purposes of such invalid or unenforceable term.
Agreement
and Plan of Merger – Page
54
10.9 Counterparts
and Signature.
This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original but all of which together shall be considered one and the
same agreement and shall become effective when counterparts have been signed
by
each of the parties hereto and delivered to the other parties, it being
understood that all parties need not sign the same counterpart. The
exchange of a fully executed Agreement (in counterparts or otherwise) by
facsimile or by electronic delivery in PDF format shall be sufficient to bind
the parties to the terms and conditions of this Agreement.
10.10 Interpretation.
When
reference is made in this Agreement to an Article or a Section, such reference
shall be to an Article or Section of this Agreement, unless otherwise indicated.
The table of contents and headings contained in this Agreement are for
convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement. The language used in this Agreement shall
be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against any party.
Whenever the context may require, any pronouns used in this Agreement shall
include the corresponding masculine, feminine or neuter forms, and the singular
form of nouns and pronouns shall include the plural, and vice versa. Any
reference to any federal, state, local or foreign statute or Law shall be deemed
also to refer to all rules and regulations promulgated thereunder, unless the
context requires otherwise. Whenever the words “include”, “includes” or
“including” are used in this Agreement, they shall be deemed to be followed by
the words “without limitation”. No summary of this Agreement prepared by any
party shall affect the meaning or interpretation of this Agreement.
10.11 Governing
Law.
All
matters arising out of or relating to this Agreement and the transactions
contemplated hereby (including without limitation its interpretation,
construction, performance and enforcement) shall be governed by and construed
in
accordance with the internal Laws of the State of Delaware without giving effect
to any choice or conflict of Law provision or rule (whether of the State of
Delaware or any other jurisdiction) that would cause the application of Laws
of
any jurisdictions other than those of the State of Delaware to be
applied.
10.12 Remedies.
Except
as otherwise provided herein, any and all remedies herein expressly conferred
upon a party will be deemed cumulative with and not exclusive of any other
remedy conferred hereby, or by Law or equity upon such party, and the exercise
by a party of any one remedy will not preclude the exercise of any other remedy.
The parties hereto 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, this being in addition to any other remedy to which they
are
entitled at Law or in equity.
10.13 Submission
to Jurisdiction.
Each of
the parties to this Agreement (a) consents to submit itself to the personal
jurisdiction of any state or federal court sitting in the State of Delaware
in
any action or proceeding arising out of or relating to this Agreement or any
of
the transactions contemplated by this Agreement, (b) agrees that all claims
in respect of such action or proceeding may be heard and determined in any
such
court, (c) agrees that it shall not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court, and
(d) agrees not to bring any action or proceeding arising out of or relating
to this Agreement or any of the transaction contemplated by this Agreement
in
any other court. Each of the parties hereto waives any defense of inconvenient
forum to the maintenance of any action or proceeding so brought and waives
any
bond, surety or other security that might be required of any other party with
respect thereto. Any party hereto may make service on another party by sending
or delivering a copy of the process to the party to be served at the address
and
in the manner provided for the giving of notices in Section 10.4.
Nothing
in this Section 10.13,
however, shall affect the right of any party to serve legal process in any
other
manner permitted by Law.
Agreement
and Plan of Merger – Page
55
10.14 Waiver
Of Jury Trial.
EACH OF
THE BUYER, THE BUYER SUBSIDIARY AND THE COMPANY HEREBY IRREVOCABLY WAIVES ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED
ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR
THE TRANSACTIONS CONTEMPLATED HEREBY OR THE ACTIONS OF THE BUYER, THE BUYER
SUBSIDIARY OR THE COMPANY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND
ENFORCEMENT OF THIS AGREEMENT.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
Agreement
and Plan of Merger – Signature
Page
IN
WITNESS WHEREOF, the Buyer, the Buyer Subsidiary and the Company have caused
this Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
|
LUMASENSE
TECHNOLOGIES, INC.
|
|||
| By: | /s/ ▇▇▇▇▇ ▇▇▇▇▇ | ||
|
|
|||
| Title: | |||
|
|
|||
|
RED
ACQUISITION CORPORATION
|
|||
| By: | /s/ ▇▇▇▇▇ ▇▇▇▇▇ | ||
|
|
|||
| Title: | |||
|
|
|||
|
MIKRON
INFRARED, INC.
|
|||
| By: | /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ | ||
|
|
|||
| Title: | Chairman | ||
|
|
|||
EXHIBIT
A
New
Jersey Division of Revenue
Restated
Certificate of Incorporation of
Mikron
Infrared, Inc.
To:
The
Treasurer, State of New Jersey
Pursuant
to the provisions of Section 14A:9-5 of the New Jersey Business Corporation
Act
(N.J.S.A. Sections 14A:1-1 et seq)
(the
“Act”), the undersigned corporation hereby executes the following Restated
Certificate of Incorporation:
1. The
name
of the corporation is Mikron Infrared, Inc. (the “Corporation”).
2. The
purposes for which the Corporation is formed are to engage in any activity
within the purposes for which corporations may be organized under the Act.
3. The
aggregate number of shares that the Corporation is authorized to issue
is 1,000
common shares of the par value of one-third cent each.
4. The
address of the corporation’s current registered office is ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, and the name of its current registered
agent at
such address is Corporation Service Company.
5. The
number of directors constituting the current board of directors is three.
The
names and addresses of the directors are as follows:
▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and
▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
6. The
duration of the Corporation shall be perpetual.
IN
WITNESS WHEREOF,
the
undersigned Corporation has executed this Restated Certificate of Incorporation
on
[
] [ ], 2007.
|
Mikron
Infrared, Inc.
|
||
| |
|
|
| By: | ||
|
, President |
||