EXHIBIT 2.1
Execution Version
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AGREEMENT AND PLAN OF MERGER
Dated as of May 2, 2007
Among
INVENSYS SYSTEMS, INC.,
SIDUS ACQUISITION CORP.
And
CIMNET, INC.
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TABLE OF CONTENTS
ARTICLE I THE MERGER.................................................................................1
Section 1.01 The Merger........................................................................1
Section 1.02 Closing...........................................................................2
Section 1.03 Effective Time....................................................................2
Section 1.04 Effects of the Merger.............................................................2
Section 1.05 Certificate of Incorporation and By-laws..........................................2
Section 1.06 Directors.........................................................................2
Section 1.07 Officers..........................................................................3
ARTICLE II EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS;
EXCHANGE OF CERTIFICATES;
COMPANY STOCK OPTIONS AND WARRANTS.........................................................3
Section 2.01 Total Merger Consideration........................................................3
Section 2.02 Effect on Capital Stock...........................................................3
Section 2.03 Exchange of Certificates..........................................................4
Section 2.04 Company Stock Options; Warrants...................................................6
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY..............................................7
Section 3.01 Organization, Standing and Corporate Power........................................8
Section 3.02 Subsidiaries......................................................................8
Section 3.03 Capital Structure.................................................................8
Section 3.04 Authority; Noncontravention......................................................10
Section 3.05 Governmental Approvals...........................................................11
Section 3.06 Company SEC Documents; Financial Statements; No Undisclosed Liabilities..........11
Section 3.07 Information Supplied.............................................................13
Section 3.08 Absence of Certain Changes or Events.............................................13
Section 3.09 Litigation.......................................................................15
Section 3.10 Contracts........................................................................15
Section 3.11 Compliance with Laws.............................................................17
Section 3.12 Environmental Matters............................................................18
Section 3.13 Employees and Labor..............................................................19
Section 3.14 Employee Benefit Plans...........................................................20
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Section 3.15 Taxes............................................................................22
Section 3.16 Title to Assets; Leases..........................................................25
Section 3.17 Intellectual Property............................................................26
Section 3.18 Products.........................................................................27
Section 3.19 Accounts Receivable..............................................................28
Section 3.20 Approval and Adoption Requirements...............................................28
Section 3.21 State Takeover Statutes..........................................................28
Section 3.22 Transactions with Affiliates.....................................................29
Section 3.23 Suppliers and Customers..........................................................29
Section 3.24 Insurance........................................................................29
Section 3.25 Inventory........................................................................29
Section 3.26 Sufficiency of Assets............................................................30
Section 3.27 Brokers and Other Advisors.......................................................30
Section 3.28 Opinion of Financial Advisor.....................................................30
Section 3.29 Insolvency.......................................................................30
Section 3.30 Books and Records................................................................30
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB...................................30
Section 4.01 Organization, Standing and Corporate Power.......................................31
Section 4.02 Authority; Noncontravention......................................................31
Section 4.03 Governmental Approvals...........................................................31
Section 4.04 Information Supplied.............................................................32
Section 4.05 Litigation.......................................................................32
Section 4.06 Ownership and Operations of Merger Sub...........................................32
Section 4.07 Interested Stockholder...........................................................32
Section 4.08 No Capital Ownership.............................................................32
Section 4.09 Brokers and Other Advisors.......................................................33
Section 4.10 Financial Position of Parent.....................................................33
ARTICLE V COVENANTS RELATING TO CONDUCT OF BUSINESS.................................................33
Section 5.01 Conduct of Business..............................................................33
Section 5.02 No Solicitation by the Company...................................................36
ARTICLE VI ADDITIONAL AGREEMENTS.....................................................................40
Section 6.01 Preparation of the Proxy Statement...............................................40
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Section 6.02 Access to Information; Confidentiality...........................................41
Section 6.03 Commercially Reasonable Efforts..................................................41
Section 6.04 Indemnification, Exculpation and Insurance.......................................42
Section 6.05 Fees and Expenses................................................................44
Section 6.06 Public Announcements.............................................................45
Section 6.07 Employee Matters.................................................................45
Section 6.08 Principal Stockholders' Agreement................................................46
Section 6.09 Executives' Employment Agreements................................................46
Section 6.10 Section 16 Matters...............................................................46
Section 6.11 Stock Plans......................................................................46
Section 6.12 Indemnification Obligations of ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ as an Individual...............46
ARTICLE VII CONDITIONS PRECEDENT......................................................................46
Section 7.01 Conditions to Each Party's Obligation To Effect the Merger.......................47
Section 7.02 Conditions to Obligations of Parent and Merger Sub...............................47
Section 7.03 Conditions to Obligation of the Company..........................................48
Section 7.04 Frustration of Closing Conditions................................................48
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER.........................................................49
Section 8.01 Termination......................................................................49
Section 8.02 Effect of Termination............................................................50
Section 8.03 Amendment........................................................................50
Section 8.04 Extension; Waiver................................................................50
Section 8.05 Procedure for Termination, Amendment or Waiver...................................51
ARTICLE IX GENERAL PROVISIONS........................................................................51
Section 9.01 Nonsurvival of Representations and Warranties....................................51
Section 9.02 Notices..........................................................................51
Section 9.03 Definitions......................................................................52
Section 9.04 Interpretation...................................................................55
Section 9.05 Counterparts; Fax Signatures.....................................................55
Section 9.06 Entire Agreement; No Third-Party Beneficiaries...................................55
Section 9.07 Governing Law....................................................................56
Section 9.08 Assignment.......................................................................56
Section 9.09 Jurisdiction; Waiver of Jury Trial...............................................56
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Section 9.10 Specific Enforcement.............................................................56
Section 9.11 Severability.....................................................................57
Exhibit A Principal Stockholders' Agreement
Exhibit B Employment Agreements
Exhibit C Wyomissing Lease Amendment
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Table of Defined Terms:
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Section
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Affected Employees.................................................6.07(a)
Affiliate..........................................................9.03(a)
Affiliated group...................................................3.15(a)
Agreement..........................................................Preamble
Alternative Acquisition Agreement..................................5.02(a)
Anti-Bribery Laws..................................................3.11(b)
Appraisal Shares...................................................2.02(d)
Business Day.......................................................9.03(b)
Certificate........................................................2.02(c)
Certificate of Merger..............................................1.03
Change of Recommendation...........................................5.02(d)
Change of Recommendation Notice....................................5.02(d)(ii)
Claims.............................................................3.12
Closing............................................................1.02
Closing Date.......................................................1.02
COBRA..............................................................3.13(d)
Code...............................................................2.03(g)
Common Stock Merger Consideration..................................2.02(c)
Company............................................................Preamble
Company Benefit Agreements.........................................3.08(d)
Company By-laws....................................................3.01
Company Certificate................................................3.01
Company Common Stock...............................................2.02
Company Disclosure Letter..........................................Article III
Company Notice.....................................................5.02(c)
Company Plans......................................................3.14(a)
Company Preferred Stock............................................2.02
Company Property...................................................3.12
Company SEC Documents..............................................3.06(a)
Company Stock......................................................2.02
Company Stockholders Meeting.......................................3.05
Company Stock Options..............................................3.03(b)
Company Stock Plans................................................2.04(a)
Company Transaction Costs..........................................9.03(c)
Competition Law....................................................9.03(d)
Contract...........................................................3.04(b)
Customer Agreements................................................9.03(e)
Debt Obligations...................................................3.10(a)(ii)
DGCL...............................................................1.01
Documentation......................................................9.03(f)
Effect.............................................................9.03(k)
Effective Time.....................................................1.03
Employees..........................................................3.13(a)
Employment Agreements..............................................Recitals
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Environmental Claims...............................................3.12
Environmental Laws.................................................3.12
ERISA..............................................................3.14(a)
ERISA Affiliates...................................................9.03(g)
Exchange Act.......................................................3.06(a)
Exchange Fund......................................................2.03(a)
Expense Reimbursement..............................................6.05(b)
Expenses...........................................................9.03(h)
Executives.........................................................Recitals
Filed Company SEC Document.........................................3.06(a)
GAAP...............................................................3.06(a)
Governmental Authority.............................................3.05
Hazardous Materials................................................3.12
Indemnitee.........................................................6.04(a)
Intellectual Property Rights.......................................3.17(e)
Interested Acquiror................................................5.02(a)
Investment Grade Securities........................................2.03(e)
IRS................................................................3.14(c)
Knowledge..........................................................9.03(i)
Laws...............................................................3.11(a)
Leased Real Property...............................................3.16(b)
Liens..............................................................9.03(j)
Major Business Partner.............................................3.10(a)(iii)
Major Customers....................................................3.23
Major Suppliers....................................................3.23
Material Adverse Effect............................................9.03(k)
Material Contracts.................................................3.10(a)
Merger.............................................................Recitals
Merger Sub.........................................................Preamble
Off the Shelf Licenses.............................................3.17(a)
Outside Date.......................................................8.01(b)
Parent.............................................................Preamble
Paying Agent.......................................................2.03(a)
Permits............................................................3.11(a)
Permitted Liens....................................................9.03(l)
person.............................................................9.03(m)
Preferred Stock Merger Consideration...............................2.02(c)
Principal Company Stockholders.....................................Recitals
Principal Stockholders' Agreement..................................Recitals
Products...........................................................3.18(a)
Proxy Statement....................................................3.05
Restraints.........................................................7.01(b)
Run-Off Insurance..................................................6.04(c)
SEC................................................................3.05
Section 203........................................................3.21
Section 262........................................................2.02(d)
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Securities Act.....................................................3.06(a)
SOX................................................................3.06(a)
Stockholder Approval...............................................3.20
Subsidiary.........................................................9.03(n)
Superior Proposal..................................................5.02(f)(ii)
Surviving Corporation..............................................1.01
Takeover Proposal..................................................5.02(f)(i)
taxes..............................................................3.15(o)
tax Returns........................................................3.15(g)
Termination Fee....................................................6.05(b)
Total Merger Consideration.........................................2.01
WARN...............................................................3.13(b)
Warrants...........................................................2.04(b)
Wachovia Facility..................................................9.03(o)
Wyomissing Lease...................................................9.03(p)
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of May 2,
2007, among INVENSYS SYSTEMS, INC., a Massachusetts corporation ("Parent"),
SIDUS ACQUISITION CORP., a Delaware corporation and a wholly owned Subsidiary of
Parent ("Merger Sub"), and CIMNET, INC., a Delaware corporation (the "Company").
WHEREAS, the Board of Directors of each of Merger Sub and the Company
has approved and declared advisable, and the Board of Directors of Parent has
approved, this Agreement and the merger of Merger Sub with and into the Company
(the "Merger"), upon the terms and subject to the conditions set forth in this
Agreement;
WHEREAS, simultaneously with the execution and delivery of this
Agreement and as a condition and inducement to the willingness of Parent and
Merger Sub to enter into this Agreement, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇ and
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (as joint tenants), ▇▇▇▇▇ ▇▇▇▇, J. ▇▇▇▇▇▇▇ ▇▇▇, and ▇▇▇▇ ▇▇▇▇▇▇▇
(collectively, the "Principal Company Stockholders"), the Company and Parent are
entering into an agreement (the "Principal Stockholders' Agreement") pursuant to
which each of the Principal Company Stockholders agrees, among other things, to
take certain actions in furtherance of the Merger, including voting their
respective shares to approve this Agreement and the Merger at the special
stockholders meeting to be called to approve this Agreement and the Merger;
WHEREAS, simultaneously with the execution and delivery of this
Agreement and as a condition and inducement to the willingness of Parent and
Merger Sub to enter into this Agreement, Parent and each of ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (the "Executives") are entering into
agreements (the "Employment Agreements") pursuant to which each of the
Executives agrees, among other things, to continue his employment with the
Company after the Effective Time and not to have certain relationships with
third parties after the Effective Time; and
WHEREAS, Parent, Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger;
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements contained in this
Agreement, the parties hereto agree as follows:
ARTICLE I
THE MERGER
Section 1.01 The Merger. Upon the terms and subject to the conditions
set forth in this Agreement and in accordance with the General Corporation Law
of the State of Delaware (the "DGCL"), Merger Sub shall be merged with and into
the Company as of the Effective Time pursuant to Section 251 of the DGCL. As of
the Effective Time, the separate corporate existence of Merger Sub shall
thereupon cease, and the Company shall be the surviving corporation in the
Merger (the "Surviving Corporation").
Section 1.02 Closing. Upon the terms and subject to the conditions
set forth in this Agreement, the closing of the Merger (the " Closing") will
take place at 10:00 a.m. (New York, New York local time) on a date to be
specified by the parties, which shall be no later than the second Business Day
after satisfaction or (to the extent permitted by applicable Law) waiver of the
conditions set forth in Article VII (other than those conditions that by their
terms cannot be satisfied until the Closing, but subject to the satisfaction or
waiver of such conditions at such time), at the offices of McGuireWoods LLP,
1345 Avenue of the Americas, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, unless
another time, date or place is agreed to in writing by Parent and the Company.
The date on which the Closing occurs is referred to in this Agreement as the
"Closing Date".
Section 1.03 Effective Time. Upon the terms and subject to the
conditions set forth in this Agreement, as promptly as practicable after the
Closing and on the Closing Date, the parties shall file with the Secretary of
State of the State of Delaware a certificate of merger (the "Certificate of
Merger") duly prepared, executed and acknowledged by the parties in accordance
with the relevant provisions of the DGCL, and, as promptly as practicable on or
after the Closing Date, the parties shall make all other filings or recordings
required under the DGCL. The Merger shall become effective as of such time that
the Certificate of Merger is duly filed with the Secretary of State of the State
of Delaware, or as of such subsequent time or date as Parent and the Company
shall agree and shall specify in the Certificate of Merger (the time and date at
which the Merger becomes effective being the "Effective Time").
Section 1.04 Effects of the Merger. From and after the Effective
Time, the Merger shall have the effects set forth in the DGCL, including Section
259 thereof. Without limiting the generality of the foregoing, and subject
thereto, as of the Effective Time, all the properties, assets, rights,
privileges, powers and franchises of the Company and Merger Sub shall vest in
the Surviving Corporation, and all debts, liabilities and duties of the Company
and Merger Sub shall become the debts, liabilities and duties of the Surviving
Corporation.
Section 1.05 Certificate of Incorporation and By-laws.
---------------------------------------
(a) Subject to Section 6.04, the Certificate of
Incorporation of the Surviving Corporation shall be amended to read in its
entirety as the Certificate of Incorporation of Merger Sub read immediately
prior to the Effective Time, except that the name of the Surviving Corporation
shall be CIMNET, Inc.
(b) Subject to Section 6.04, the by-laws of the Surviving
Corporation shall be amended so as to read in their entirety as the by-laws of
Merger Sub read immediately prior to the Effective Time, until thereafter
amended in accordance with applicable law, except references to Merger Sub's
name shall be replaced by references to CIMNET, Inc.
Section 1.06 Directors. The directors of Merger Sub immediately prior
to the Effective Time shall be the directors of the Surviving Corporation until
the earlier of their death, resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
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Section 1.07 Officers. The officers of Merger Sub immediately prior
to the Effective Time shall be the officers of the Surviving Corporation until
the earlier of their death, resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES;
COMPANY STOCK OPTIONS AND WARRANTS
Section 2.01 Total Merger Consideration. The total Merger
consideration shall be $23,271,177 cash (the "Total Merger Consideration") and
shall be used for: (i) payment of the Common Stock Merger Consideration and the
Preferred Stock Merger Consideration pursuant to Section 2.02(c) upon surrender
of Certificates, (ii) the cancellation of Company Stock Options pursuant to
Section 2.04(a), and (iii) the cancellation of the Warrants pursuant to Section
2.04(b).
Section 2.02 Effect on Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of the Company, Parent,
Merger Sub or any holder of any shares of common stock, par value $0.0001 per
share, of the Company ("Company Common Stock"), any shares of preferred stock,
par value $0.0001 per share, of the Company ("Company Preferred Stock" and
together with Company Common Stock, "Company Stock"), or any shares of capital
stock of Merger Sub:
(a) Capital Stock of Merger Sub. Each issued and outstanding
share of capital stock of Merger Sub shall be converted into and become one
validly issued, fully paid and nonassessable share of common stock, par value
$0.0001 per share, of the Surviving Corporation.
(b) Cancellation of Treasury Stock, and Parent-Owned Stock.
Each share of Company Common Stock and Company Preferred Stock that is owned by
the Company, Parent or Merger Sub immediately prior to the Effective Time shall
no longer be outstanding and shall automatically be canceled and retired and
shall cease to exist, and no consideration shall be delivered in exchange
therefor.
(c) Conversion of Company Common Stock and Company Preferred
Stock. Each issued and outstanding share of Company Common Stock (other than
shares to be canceled in accordance with Section 2.02(b) and Appraisal Shares)
shall be converted into the right to receive $2.43 in cash (assuming 7,414,044
shares of Company Common Stock outstanding), without interest (the "Common Stock
Merger Consideration"). Each issued and outstanding share of Company Preferred
Stock (other than shares to be canceled in accordance with Section 2.02(b) and
Appraisal Shares) shall be converted into the right to receive $2.43 in cash
(assuming 746,965 shares of Company Preferred Stock outstanding), without
interest (the "Preferred Stock Merger Consideration"). All such shares of
Company Common Stock and Company Preferred Stock shall no longer be outstanding
and shall automatically be canceled and retired and shall cease to exist, and
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each holder of a certificate which immediately prior to the Effective Time
represented any such shares of Company Common Stock or Company Preferred Stock
(each, a "Certificate") shall cease to have any rights with respect thereto,
except the right to receive the Common Stock Merger Consideration or the
Preferred Stock Merger Consideration, as applicable.
(d) Appraisal Rights. Notwithstanding anything in this
Agreement to the contrary, shares of Company Common Stock or Company Preferred
Stock issued and outstanding immediately prior to the Effective Time that are
held by any holder who is entitled to demand and properly demands appraisal of
such shares ("Appraisal Shares") pursuant to, and who complies in all respects
with, the provisions of Section 262 of the DGCL ("Section 262") shall not be
converted into the right to receive the consideration payable as provided in
Section 2.02(c), but instead such holder shall be entitled to payment of the
fair value of such shares in accordance with the provisions of Section 262. As
of the Effective Time, all Appraisal Shares shall no longer be outstanding and
shall automatically be canceled and shall cease to exist, and each holder of
Appraisal Shares shall cease to have any rights with respect thereto, except the
right to receive the fair value of such Appraisal Shares in accordance with the
provisions of Section 262. Notwithstanding the foregoing, if any such holder
shall fail to perfect or otherwise shall waive, withdraw or lose the right to
appraisal under Section 262 or a court of competent jurisdiction shall determine
that such holder is not entitled to the relief provided by Section 262, then the
right of such holder to be paid the fair value of such holder's Appraisal Shares
under Section 262 shall cease to exist and such Appraisal Shares shall be deemed
to have been converted as of the Effective Time into, and shall have become, the
right to receive the Common Stock Merger Consideration or the Preferred Stock
Merger Consideration as provided in Section 2.02(c), as the case may be. The
Company shall serve prompt notice to Parent of any demands for appraisal of any
shares of Company Common Stock or Company Preferred Stock, and Parent shall have
the right to participate in and, subject to applicable Law, after consultation
with the Company, direct all negotiations and proceedings with respect to such
demands. None of the Company and its Subsidiaries shall, without the written
consent of Parent, make any payment with respect to, or settle or offer to
settle, any such demands, or agree to do any of the foregoing.
(e) Certain Adjustments. If, between the date of this
Agreement and the Effective Time, the outstanding Company Common Stock or
Company Preferred Stock shall have been changed into a different number of
shares or different class by reason of any reclassification, recapitalization,
stock split, split-up, combination or exchange of shares or a stock dividend or
dividend payable in any other securities shall be declared with a record date
within such period, or any similar event shall have occurred, the Total Merger
Consideration shall be appropriately adjusted to provide to the holders of
Company Common Stock or Company Preferred Stock, as applicable, the same
economic effect as contemplated by this Agreement prior to such event. If,
between the date of this Agreement and the Effective Time, the assumed number of
outstanding shares of Company Common Stock or Company Preferred Stock (as
described in Section 2.02(c)) changes, then the Common Stock Merger
Consideration or Preferred Stock Merger Consideration, as the case may be, shall
be adjusted so that the Total Merger Consideration remains $23,271,177.
Section 2.03 Exchange of Certificates.
------------------------
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(a) Paying Agent. Prior to the Effective Time, Parent shall
designate a bank or trust company (the "Paying Agent") reasonably acceptable to
the Company to receive the Total Merger Consideration and to act as agent for
payment of: (i) the Common Stock Merger Consideration and the Preferred Stock
Merger Consideration pursuant to Section 2.02(c) upon surrender of Certificates,
(ii) the cancellation of Company Stock Options pursuant to Section 2.04(a), and
(iii) the cancellation of the Warrants pursuant to Section 2.04(b). As of or
prior to the Effective Time, Parent shall deposit, or cause to be deposited,
with the Paying Agent the Total Merger Consideration in exchange for all
outstanding shares of Company Common Stock and Company Preferred Stock (such
cash being hereinafter referred to as the "Exchange Fund").
(b) Exchange Procedures. As promptly as practicable after
the Effective Time, Parent shall cause the Paying Agent to mail to each holder
of record of a Certificate (i) a form of letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to
Certificates shall pass, only upon proper delivery of Certificates to the Paying
Agent and which shall be in such form as Parent and the Company may reasonably
agree to use) and (ii) instructions for use in surrendering Certificates in
exchange for the cash amounts specified in Section 2.02(c). Upon surrender of a
Certificate for cancellation to the Paying Agent, together with such letter of
transmittal, duly completed and validly executed, and such other documents as
may be reasonably required by the Paying Agent, the holder of record of such
Certificate shall be entitled to receive in exchange therefor the amount of cash
into which the shares of Company Common Stock or Company Preferred Stock
formerly represented by such Certificate shall have been converted pursuant to
Section 2.02(c), and the Certificate so surrendered shall forthwith be canceled.
In the event of a transfer of ownership of shares of Company Common Stock or
Company Preferred Stock that is not registered in the transfer records of the
Company, the proper amount of cash may be paid in exchange therefor to a person
other than the person in whose name a Certificate so surrendered is registered
if such Certificate shall be properly endorsed or otherwise be in proper form
for transfer and the person requesting such issuance shall pay any transfer or
other taxes required by reason of the payment to a person other than the
registered holder of such Certificate or establish to the reasonable
satisfaction of the Paying Agent that such tax has been paid or is not
applicable. Until surrendered as contemplated by this Section 2.03(b), each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender the amount of cash such holder
shall be entitled to receive pursuant to Section 2.02(c). No interest will be
paid or will accrue on the cash payable upon surrender of any Certificate.
(c) No Further Ownership Rights in Company Common Stock or
Company Preferred Stock. All cash paid upon the surrender of Certificates in
accordance with the terms of this Article II shall be deemed to have been paid
in full satisfaction of all rights pertaining to the shares of Company Common
Stock or Company Preferred Stock previously represented by such Certificates. As
of the close of business on the day on which the Effective Time occurs, the
stock transfer books of the Company shall be closed and there shall be no
further registration of transfers on the stock transfer books of the Surviving
Corporation of the shares of Company Common Stock or Company Preferred Stock, in
each case that were outstanding immediately prior to the Effective Time. If, at
any time after the Effective Time, Certificates are presented to the Surviving
Corporation or the Paying Agent for any reason, such Certificates shall be
canceled and exchanged as provided in this Article II.
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(d) No Liability. None of Parent, Merger Sub, the Company or
the Paying Agent shall be liable to any person in respect of any cash delivered
to a public official pursuant to any applicable abandoned property, escheat or
similar Law. Any portion of the cash included in the Exchange Fund that remains
undistributed to the holders of Certificates for one year after the Effective
Time shall be returned to Parent, upon demand, and any holders of Certificates
who have not theretofore complied with this Article II shall thereafter look
only to Parent for, and Parent shall remain liable for, payment of such funds to
which such holder may be due pursuant to Section 2.02(c).
(e) Investment of Exchange Fund. Parent may cause the Paying
Agent to invest in any Investment Grade Securities, as directed by Parent in its
sole discretion, any cash included in the Exchange Fund, and any capital gain,
interest or other income resulting from such investments shall inure to the
benefit of Parent and shall be paid to Parent from time to time by the Paying
Agent. For purposes of this Section 2.03(e), "Investment Grade Securities" shall
mean any of the following: (i) obligations of or guaranteed by the United States
of America or any agency or instrumentality thereof, (ii) money market accounts,
certificates of deposit, bank repurchase agreements or banker's acceptances of,
or demand deposits with, commercial banks having a combined capital and surplus
of at least $1,000,000,000 (based on the most recent financial statements of
such bank which are publicly available), or (iii) commercial paper obligations
rated P-1 or A-1 or better by Standard & Poor's Corporation or ▇▇▇▇▇'▇ Investor
Services, Inc.
(f) Lost Certificates. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by Parent or the Paying Agent, the posting by such person of a bond in
such reasonable amount as Parent or the Paying Agent may direct as indemnity
against any successful claim that may be made against it with respect to such
Certificate, the Paying Agent will issue in exchange for such lost, stolen or
destroyed Certificate the amount of cash which such holder would be entitled
pursuant to Section 2.02(c).
(g) Withholding Rights. The Paying Agent, Parent and the
Surviving Corporation shall be entitled to deduct and withhold from the
consideration otherwise payable to any holder of shares of Company Common Stock,
shares of Company Preferred Stock, or Company Stock Options pursuant to this
Agreement such amounts as may be required to be deducted and withheld with
respect to the making of such payment under the Internal Revenue Code of 1986,
as amended, and the rules and regulations promulgated thereunder (the "Code"),
or under any provision of state, local or foreign tax Law. To the extent that
such amounts are so withheld and paid over to the appropriate taxing authority,
such amounts shall be treated for purposes of this Agreement as having been paid
to the person in respect of which such deduction and withholding was made.
Section 2.04 Company Stock Options; Warrants.
-------------------------------
(a) Options. Before the Closing, the Board of Directors of
the Company (or, if appropriate, any committee of the Board of Directors of the
Company administering the Company Stock Plans) shall adopt such resolutions and
take all such other actions as may be necessary to provide that each Company
Stock Option granted under the Company's 1999 Stock Option Plan or the 2002
6
Stock Option Plan (together, the "Company Stock Plans"), as the case may be,
outstanding immediately prior to the Effective Time, whether or not then vested
or exercisable, shall be canceled as of the Effective Time in exchange for a
lump sum payment in cash payable at the time of cancellation equal to the
excess, if any, of (i) the product of (A) the number of shares of Company Common
Stock subject to such Company Stock Option and (B) the Common Stock Merger
Consideration over (ii) the product of (x) the number of shares of Company
Common Stock subject to such Company Stock Option and (y) the per share exercise
price of such Company Stock Option, without interest and less any required
withholdings as specified in Section 2.03(g). All payments with respect to
canceled Company Stock Options shall be made by the Paying Agent (or such other
agent designated by Parent and the Company prior to the Effective Time) as
promptly as reasonably practicable after the Effective Time from funds deposited
by or at the direction of the Surviving Corporation to pay such amounts in
accordance with Section 2.03(a). Prior to the Effective Time, as reasonably
directed by Parent, the Company shall take any all actions necessary to
effectuate this Section 2.04(a), including, without limitation, adopting any
plan amendments and using reasonable best efforts to obtain any required
consents; provided, however, that no action by the Company shall be required to
be irrevocable until immediately prior to the Effective Time.
(b) Warrants. Section 2.04(b) of the Company Disclosure
Letter sets forth each vested and unexpired warrant to purchase Company Common
Stock that is outstanding as of the Effective Time (the "Warrants"), the number
of shares of Company Common Stock subject to each such Warrant, the grant dates
and exercise prices and vesting schedule of each such Warrant, and the names of
the holder of each such Warrant. With respect to such Warrants, the Company
shall use its reasonable best efforts to obtain such consents or amendments as
are necessary under the Warrants to amend such Warrants in order to provide for
the cancellation of the Warrants immediately prior to the Effective Time in
exchange for the right to receive an amount in cash equal to the excess, if any,
of (i) the product of (A) the number of shares of Company Common Stock subject
to the applicable Warrant and (B) the Common Stock Merger Consideration over
(ii) the product of (x) the number of shares of Company Common Stock subject to
the applicable Warrant and (y) the per share exercise price of such Warrant,
without interest and less any required withholdings as specified in Section
2.03(g). All payments with respect to canceled Warrants shall be made by the
Paying Agent (or such other agent designated by Parent and the Company prior to
the Effective Time) as promptly as reasonably practicable after the Effective
Time from funds deposited by or at the direction of the Surviving Corporation to
pay such amounts in accordance with Section 2.03(a). No action by the Company
with respect to the Warrants shall be required to be irrevocable until
immediately prior to the Effective Time.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure letter delivered by the Company
to Parent dated as of the date hereof certified by a duly authorized officer of
the Company (the "Company Disclosure Letter") (each section of which qualifies
the correspondingly numbered representation, warranty or covenant to the extent
specified therein and such other representations, warranties or covenants to the
extent a matter in such section is disclosed in such a way as to make its
relevance to such other representation, warranty or covenant readily apparent),
the Company represents and warrants to Parent and Merger Sub as follows:
7
Section 3.01 Organization, Standing and Corporate Power. The Company
(i) is a corporation duly organized, validly existing and in good standing under
the Laws of the State of Delaware, and (ii) has all requisite corporate power
and authority to carry on its business as now being conducted. The Company is
duly qualified or licensed to do business and is in good standing in the
jurisdictions set forth in Section 3.01 of the Company Disclosure Letter, which
jurisdictions are all of the jurisdictions in which the nature of its business
or the ownership, leasing or operation of its properties or other assets makes
such qualification or licensing necessary, other than in such jurisdictions
where the failure to be so qualified or licensed individually or in the
aggregate has not had and is not reasonably likely to have a Material Adverse
Effect. The Company has provided to Parent true and complete copies of the
certificate of incorporation of the Company as in effect on the date hereof
("Company Certificate") and the By-laws of the Company as in effect on the date
hereof ("Company By-laws") and, provided the Parent access to all minutes taken
at the meetings of the stockholders, the Board of Directors and each committee
of the Board of Directors of the Company held since April 1, 2002. Section 3.01
of the Company Disclosure Letter sets forth the officers and directors of the
Company.
Section 3.02 Subsidiaries. The Company does not have any
Subsidiaries. The Company does not beneficially own, directly or indirectly, any
capital stock of, or other equity or voting interests or investment (whether
equity or debt) in, any person, nor is the Company subject to any obligation or
requirement to provide for or to make any investment (in the form of a loan,
capital contribution or otherwise) to or in, any person.
Section 3.03 Capital Structure.
-----------------
(a) The authorized capital stock of the Company consists of
15,000,000 shares of Company Common Stock and 5,000,000 shares of Company
Preferred Stock. As of the close of business on April 30, 2007: (i) 7,414,044
shares of Company Common Stock (excluding treasury shares) were issued and
outstanding, (ii) 746,965 shares of Company Preferred Stock were issued and
outstanding, (iii) no shares of Company Common Stock or Company Preferred Stock
were held by the Company in its treasury, (iv) 746,965 shares of Company Common
Stock were reserved for issuance pursuant to conversion of the Company Preferred
Stock, (v) 820,000 shares of Company Common Stock were reserved for issuance
pursuant to conversion of Warrants, (vi) 2,900,000 shares of Company Common
Stock were reserved for issuance pursuant to the Company Stock Plans (of which
1,457,000 shares of Company Common Stock were subject to outstanding options to
purchase shares of Company Common Stock granted under the Company Stock Plans),
and (vii) no shares of Company Stock will be (x) subject to a right of
repurchase by the Company, (y) subject to forfeiture back to the Company or (z)
subject to transfer or lock-up restrictions, in each of cases (x), (y) and (z),
following the consummation of the Merger.
(b) Section 3.03(b) of the Company Disclosure Letter sets
forth, as of the date hereof, a true and complete list of all outstanding
options to purchase Company Common Stock (collectively, "Company Stock
Options"), the number of shares of Company Common Stock subject to each such
Company Stock Option or other such right, the grant dates and exercise prices
8
and vesting schedule of each such Company Stock Option, or other right and the
names of the holder of each such Company Stock Option or other right. There are
no options to purchase Company Preferred Stock. Except as set forth in Section
3.03(a) of this Agreement, (i) there are not issued, reserved for issuance or
outstanding any (A) shares of capital stock of, or other equity or voting
interests in, the Company, (B) securities of the Company convertible into or
exchangeable or exercisable for shares of capital stock of, or other equity or
voting interests in, the Company or (C) options, warrants or other rights to
acquire from the Company any capital stock of, or other equity or voting
interests in, or securities convertible into or exchangeable or exercisable for
capital stock of, or other equity or voting interests in, the Company and (ii)
as of the date of this Agreement, there exists no obligation of the Company to
issue any capital stock of, or other equity or voting interests in, or
securities convertible into or exchangeable or exercisable for capital stock of,
or other equity or voting interests in, the Company. Except as set forth in
Section 3.03(a) of this Agreement, there are no outstanding stock appreciation
rights, phantom stock awards, rights to receive shares of Company Stock on a
deferred basis or otherwise or other similar rights that are linked in any way
to the value of Company Stock or any part thereof. Except as set forth in
Section 3.03(b) of the Company Disclosure Letter, during the period from the
close of business on December 31, 2006, to the date hereof, there have been no
issuances by the Company of (i) shares of capital stock of, or other equity or
voting interests in, the Company (other than issuances pursuant to the exercise
of Company Stock Options outstanding on such date as required by their terms as
in effect on the date of this Agreement), (ii) securities of the Company
convertible into or exchangeable or exercisable for shares of capital stock of,
or other equity or voting interests in, the Company or (iii) options, warrants
or other rights to acquire from the Company any capital stock of, or other
equity or voting interests in, or securities convertible into or exchangeable or
exercisable for capital stock of, or other equity or voting interests in, the
Company.
(c) All outstanding shares of capital stock of the Company
are, and all shares which may be issued upon exercise of the Company Stock
Options will be, when issued in accordance with the terms thereof, duly
authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights. Except as set forth in Section 3.03(a) and Section 3.03(b) of
this Agreement, there are no (i) Contracts of any kind to which the Company or
any of its Subsidiaries is a party or is bound that obligate the Company or any
of its Subsidiaries to repurchase, redeem or otherwise acquire shares of capital
stock of, or other equity or voting interests in, the Company or (ii) options,
warrants or other rights to acquire shares of capital stock of, or other equity
or voting interests in, or securities convertible into or exchangeable for
capital stock of, or other equity or voting interests in, the Company. Other
than the Principal Stockholders' Agreement or as set forth in Section 3.03(c) of
the Company Disclosure Letter, the Company is not a party to any voting Contract
with respect to the voting of any such securities. Other than the Principal
Stockholders' Agreement or as set forth in Section 3.03(c) of the Company
Disclosure Letter, to the Company's Knowledge, there are no irrevocable proxies
and no voting Contracts (or Contracts to execute a written consent or a proxy)
with respect to any shares of Company Stock or any other voting securities of
the Company.
(d) Section 3.03(d) of the Company Disclosure Letter sets
forth a true and complete list of all outstanding Debt Obligations of the
Company and all guarantees by the Company of any Debt Obligations of any person.
9
Section 3.04 Authority; Noncontravention.
---------------------------
(a) The Company has all requisite corporate power and
authority to execute and deliver this Agreement and to consummate the Merger and
the other transactions contemplated hereby and thereby, subject, in the case of
the consummation of the Merger, only to receipt of the Stockholder Approval. The
execution and delivery of this Agreement by the Company and the consummation of
the Merger and the other transactions contemplated hereby and thereby and the
compliance by the Company with the provisions of this Agreement have been duly
authorized by all necessary corporate action on the part of the Company and no
other corporate proceedings on the part of the Company are necessary to
authorize or approve this Agreement or to consummate the Merger or the other
transactions contemplated hereby or thereby, subject, in the case of the
consummation of the Merger, only to receipt of the Stockholder Approval. This
Agreement has been duly executed and delivered by the Company and, assuming the
due authorization, execution and delivery by each of the other parties hereto,
constitutes the legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms (subject to applicable
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
other Laws affecting creditors' rights generally from time to time in effect).
The Board of Directors of the Company, at a meeting duly called and held, at
which all directors of the Company were present, duly and unanimously adopted
resolutions (i) approving, adopting and declaring advisable this Agreement, the
Merger and the other transactions contemplated hereby and thereby, (ii)
declaring that the Merger and the other transactions contemplated hereby are in
the best interests of the stockholders of the Company, (iii) fixing the record
date to determine the stockholders entitled to consent to the adoption of this
Agreement and approve the Merger and the other transactions contemplated hereby,
which date is the date hereof, (iv) directing that this Agreement be submitted
to the stockholders promptly following the execution and delivery of this
Agreement by each of the parties hereto for such stockholders to consider
whether to adopt this Agreement and approve the Merger and other transactions
contemplated hereby and (v) recommending that the stockholders of the Company
adopt this Agreement and approve the Merger and the other transactions
contemplated hereby, which resolutions have not been subsequently rescinded,
modified or withdrawn in any way.
(b) The execution and delivery of this Agreement does not,
and the consummation of the Merger and the other transactions contemplated
hereby and thereby and compliance with the provisions hereof and thereof do not
and will not, conflict with, or result in any violation or breach of, or
constitute a default (with or without notice or lapse of time or both) under, or
give rise to a right of termination, cancellation or acceleration of any
obligation, or to the loss of a benefit under, or result in the creation of any
Lien in or upon any of the properties or other assets of the Company under (i)
the Company Certificate or the Company By-laws, (ii) any loan or credit
agreement, bond, debenture, note, mortgage, indenture, lease or other contract,
commitment, agreement, instrument, obligation, option, undertaking, concession,
franchise or license, binding arrangement or binding understanding (each,
including all amendments thereto, a "Contract") to which the Company is a party
or is bound or any of their respective properties or other assets is bound by or
subject to or otherwise under which the Company has any rights or benefits or
(iii) subject to the governmental filings and other matters referred to in
Section 3.05, any Law applicable to the Company or its properties or other
assets, other than, in the case of clauses (ii) and (iii), any such conflicts,
violations, breaches, defaults, rights, results, losses or Liens that
individually or in the aggregate have not had and are not reasonably likely to
have a Material Adverse Effect.
10
Section 3.05 Governmental Approvals. Except as set forth in Section
3.05 of the Company Disclosure Letter, no consent, approval, order or
authorization of, action by or in respect of, or registration, declaration or
filing with, any domestic or foreign (whether supernational, national, Federal,
state, provincial, local or otherwise) government or any court, administrative,
regulatory or other governmental agency, commission or authority or any
nongovernmental self-regulatory agency, commission or authority (each, a
"Governmental Authority") is required by or with respect to the Company in
connection with the execution and delivery of this Agreement by the Company or
the consummation by the Company of the Merger or the other transactions
contemplated hereby or thereby, except for: (a) the filing with the Securities
and Exchange Commission ("SEC") of (i) a preliminary and definitive proxy
statement relating to the stockholders meeting (the "Company Stockholders
Meeting") for the Stockholder Approval pursuant to Regulation 14A of the
Exchange Act (as amended or supplemented from time to time, the "Proxy
Statement") and (ii) such reports under the Exchange Act as may be required
after the date hereof in connection with this Agreement, the Principal
Stockholders' Agreement, the Merger and the other transactions contemplated
hereby and thereby, (b) the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware and appropriate documents with the
relevant authorities of other states in which the Company is qualified to do
business and (c) such other consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required after the date hereof
under state securities, takeover or "blue sky" laws of various states.
Section 3.06 Company SEC Documents; Financial Statements; No
Undisclosed Liabilities.
(a) The Company has filed all reports, schedules, forms,
statements and other documents (including exhibits and other information
incorporated therein) with the SEC required to be filed by the Company since
January 1, 2002 under the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder (the "Securities Act") and Securities and
Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder (the "Exchange Act") (such documents, together with any documents
filed during such period by the Company with the SEC on a voluntary basis on
Current Reports on Form 8-K, the "Company SEC Documents"). As of their
respective dates, the Company SEC Documents complied in all material respects
with the requirements of the Securities Act, the Exchange Act and the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002, and the rules and regulations promulgated thereunder
("SOX"), applicable to such Company SEC Documents, and, as of their respective
dates, none of the Company SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Except to the extent
that information contained in any Company SEC Document filed and publicly
available prior to the date hereof ("Filed Company SEC Document") has been
revised, amended, supplemented or superseded by a later filed Company SEC
Document, none of the Company SEC Documents contains any untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. Except as set forth in Section
3.06(a) of the Company Disclosure Letter, the financial statements (including
11
the related notes thereto) of the Company included in the Company SEC Documents
(i) complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto as of their respective dates, (ii) were prepared in accordance with
United States generally accepted accounting principles ("GAAP") (except, in the
case of unaudited statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and (iii) presented fairly in all material respects the financial
position of the Company as of the dates thereof and the consolidated results of
their operations and cash flows for the periods then ended (subject, in the case
of unaudited statements, to normal year-end audit adjustments). The Company has
not made any filings or any amendments or modifications to any Company SEC
Documents which have not yet been filed with the SEC but that are required to be
filed with the SEC in accordance with the Securities Act or the Exchange Act, as
the case may be. As used in this Section 3.06, the term "file" shall be broadly
construed to include any manner in which a document or information is furnished,
supplied or otherwise made available in writing to the SEC.
(b) The Company has no liabilities or obligations of any
nature (whether accrued, absolute, contingent or otherwise and whether known or
unknown), except for (i) liabilities and obligations referenced (whether by
value or otherwise) or reflected in the Company's annual report for the fiscal
year ended December 31, 2006 on Form 10-KSB filed with the ▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇,
▇▇▇▇, (▇▇) liabilities and obligations incurred in the ordinary course of
business since December 31, 2006, (iii) liabilities under Material Contracts,
Contracts filed as exhibits to the Filed Company SEC Documents and Contracts set
forth on Section 3.16(b) of the Company Disclosure Letter, in each case, that
relate to obligations that have not yet been performed, and are not required to
be performed, as of the date hereof, and (iv) liabilities and obligations set
forth in Section 3.06(b) of the Company Disclosure Letter.
(c) The principal executive officer of the Company and the
principal financial officer of the Company has made all certifications required
by Rule 13a-14 or 15d-14 under the Exchange Act and Sections 302 and 906 of SOX
with respect to the Company SEC Documents, and the statements contained in such
certifications were at the time they were made, and are, true and accurate. For
purposes of this Agreement, "principal executive officer" and "principal
financial officer" shall have the meanings given to such terms in SOX. Except as
set forth in Section 3.06(c) of the Company Disclosure Letter, the Company has
no outstanding, or has not arranged any outstanding, "extensions of credit" to
directors or executive officers within the meaning of Section 402 of SOX.
(d) The Company is not a party to, or has no commitment to
become a party to, any joint venture, off-balance sheet partnership or any
similar Contract (including any Contract or arrangement relating to any
transaction or relationship between or among the Company, on the one hand, and
any unconsolidated Affiliate, including any structured finance, special purpose
or limited purpose entity or person, on the other hand or any "off-balance sheet
arrangements" (as defined in Item 303(a) of Regulation S-K of the SEC)), where
the result, purpose or effect of such Contract is to avoid disclosure of any
material transaction involving, or material liabilities of, the Company in the
Company's published financial statements or other Company SEC Documents.
12
(e) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific authorizations,
(ii) access to assets is permitted only in accordance with management's general
or specific authorization and (iii) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
(f) The Company's "disclosure controls and procedures" (as
defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) are reasonably
designed to ensure that (i) all information (both financial and non-financial)
required to be disclosed by the Company in the reports that it files or submits
under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified in the rules and forms of the SEC and (ii) all such
information is accumulated and communicated to the Company's management as
appropriate to allow timely decisions regarding required disclosure and to make
the certifications of the principal executive officer and principal financial
officer of the Company required under the Exchange Act with respect to such
reports.
(g) As of the date hereof, there are no outstanding or
unresolved comments from the SEC staff with respect to any of the Filed Company
SEC Documents. The Company has made available to Parent copies of all material
correspondence between the SEC, on the one hand, and the Company, on the other
hand, since January 1, 2004 through the date of this Agreement.
(h) Except as set forth in of Section 3.06(h) of the Company
Disclosure Letter, since January 1, 2004, the Company has not received any
notification of (i) a "significant deficiency" or (ii) a "material weakness" in
the Company's internal controls. For purposes of this Agreement, the terms
"significant deficiency" and "material weakness" shall have the meanings
assigned to them in Release 2004-001 of the Public Company Accounting Oversight
Board, as in effect on the date hereof.
Section 3.07 Information Supplied. None of the information provided
by the Company included or incorporated by reference in the Proxy Statement
will, on the date it is first mailed to the stockholders of the Company, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The information provided by the Company contained in the Proxy
Statement is complete and accurate and will comply as to form in all material
respects with the requirements of the Exchange Act.
Section 3.08 Absence of Certain Changes or Events. Since December 31,
2006, the Company has conducted its businesses only in the ordinary course, and
except as disclosed in the Filed Company SEC Documents, or as set forth in
Section 3.08 of the Company Disclosure Letter, there has not been:
(a) any Effect that individually or in the aggregate has had
or is reasonably likely to have a Material Adverse Effect;
13
(b) (i) any declaration, setting aside or payment of any
dividend or other distribution (whether in cash, stock, property or other
assets) in respect of any of the Company's capital stock, or other equity or
voting interests, (ii) any split, combination or reclassification of any of the
Company's capital stock, or other equity or voting interests, or any issuance or
the authorization of any issuance of any other securities in respect of, in lieu
of or in substitution for shares of such capital stock, or other equity or
voting interests, (iii) any purchase, redemption or other acquisition of any
shares of capital stock, or other equity or voting interests or any other
securities of the Company or any warrants, options or other rights to acquire
any such shares or other securities, or (iv) any issuance of Company Stock
Options or restricted shares of the capital stock of the Company;
(c) any granting by the Company to any current or former
director, officer, employee or consultant (other than attorneys, accountants or
other similar professional service providers) of the Company of any increase in
compensation, bonus or other benefits or any such granting of any type of
compensation, bonus or other benefits to any current or former director,
officer, employee or consultant (other than attorneys, accountants or other
similar professional service providers) of the Company not previously receiving
or entitled to receive such type of compensation, bonus or other benefit, except
for increases of cash compensation (i) in the ordinary course of business
consistent with past practice or, (ii) as was required under any Company Plan or
Company Benefit Agreement listed in Section 3.14(a) of the Company Disclosure
Letter;
(d) any entering into, or any amendment or termination of,
any employment, deferred compensation, supplemental retirement, severance,
retention, "change in control" or other similar Contract ("Company Benefit
Agreements") or any collective bargaining Contract or other labor union Contract
or any Company Plan;
(e) any change in financial or tax accounting methods,
principles or practices by the Company, except insofar as may have been required
by a change in GAAP;
(f) any material election with respect to taxes by the
Company or any settlement or compromise of any tax liability or refund;
(g) any revaluation by the Company of any material assets of
the Company;
(h) any sale, lease, license or other disposition of, or
subjecting to any Lien, any assets of the Company (including Intellectual
Property Rights), except in the ordinary course of business consistent with past
practice;
(i) any damage or destruction to or loss of Company
property, not covered by insurance, in excess of $25,000;
(j) any material incurrence, assumption or guarantee by the
Company of any indebtedness for borrowed money; or
(k) Contract or agreement to take any of the actions
described in Sections 3.08(a) through 3.08(j).
14
Section 3.09 Litigation. Except as set forth in Section 3.09 of the
Company Disclosure Letter, there is no claim, suit, action, investigation or
other proceeding pending or, to the Knowledge of the Company, threatened against
the Company or any its properties or other assets, nor is there any judgment,
decree, injunction, rule or order of any Governmental Authority or arbitrator
outstanding against, or, to the Knowledge of the Company, investigation,
proceeding, notice of violation, order of forfeiture or complaint by any
Governmental Authority involving, the Company.
Section 3.10 Contracts.
---------
(a) The Company is not a party or bound or otherwise does
not have any rights or benefits under, and none of the Company's properties or
other assets is bound by or subject to, any Contract that is of a nature
required to be filed as an exhibit to a report or filing under the Securities
Act or the Exchange Act, other than any such Contract that is filed as an
exhibit to the Filed Company SEC Documents. Except for Contracts filed as
exhibits to the Filed Company SEC Documents and purchase orders entered into in
the ordinary course of business consistent with past practice (but not the
Contracts pursuant to which such purchase orders were issued), Section 3.10 of
the Company Disclosure Letter sets forth (with specific reference to the
subsection to which it relates), as of the date hereof, a true and complete list
of, and the Company has provided the Parent access to true and complete copies
of (collectively, the Contracts required to be listed in the Company Disclosure
Letter, "Material Contracts"):
(i) each Contract of the Company involving aggregate
annual payments by or to the Company, of more than $40,000, other than
any Contract set forth on Section 3.13, 3.14(a) or 3.16(b) of the
Company Disclosure Letter;
(ii) (A) all Contracts pursuant to which any of the
following indebtedness of the Company is outstanding or may be
incurred: borrowed money, bonds, finance or capitalized leases,
sureties, letters of credit or other credit agreements (collectively,
"Debt Obligations"), (B) all Contracts of or by the Company
guaranteeing any Debt Obligations of any other person (other than the
Company), including the respective aggregate principal amounts
outstanding as of the date hereof, and (C) all Contracts involving any
"keep well" arrangements or pursuant to which the Company has agreed to
maintain any financial statement condition of another person;
(iii) all Contracts between the Company and any vendor
or supplier of the Company to whom the Company has paid or has an
annual payment obligation to, and each customer of the Company who has
paid or is obligated to pay the Company, in excess of $40,000 in either
2006 or to date in 2007 (each such vendor, supplier or customer, a
"Major Business Partner");
(iv) (A) all Contracts pursuant to which the
Company has agreed not to, or which, following the consummation of the
Merger, could restrict the ability of Parent or any of its
Subsidiaries, including the Company to compete with any person in any
business or in any geographic area or to engage in any business or
other activity, including any restrictions relating to "exclusivity" or
any similar requirement in favor of any person other than the Company
or pursuant to which any benefit is required to be given or lost as a
15
result of so competing or engaging, and (B) all Contracts pursuant to
which the Company has agreed not to, or which, following the
consummation of the Merger, could restrict the ability of Parent or any
of its Subsidiaries, including the Company to solicit or to hire any
person for positions in which annual compensation would be expected to
exceed $75,000 to work for the Company (either as an employee or as an
independent contractor or other agent) or pursuant to which any benefit
is required to be given or lost as a result of so soliciting or hiring;
(v) all Contracts of the Company granting the other
party to such Contract or a third party "most favored nation" or
similar status;
(vi) all Contracts to which the Company is party
granting any license to, or franchise in respect of, any material
right, property or other asset (except for customer rights pursuant to
existing Customer Agreements);
(vii) all joint venture, limited liability company,
partnership or other similar Contracts (including all amendments
thereto) in which the Company holds an interest;
(viii) all confidentiality, standstill or similar
Contracts to which the Company is a party that would impose
restrictions on the activities of Parent or any of its Subsidiaries,
including the Surviving Corporation;
(ix) all Contracts by the Company that restrict the
payment of dividends or the repurchase of securities; and
(x) all Contracts by the Company that relate to the
making of any loan to or investment in any person;
(xi) all Contracts providing for indemnity (including
an obligation to advance funds for expenses other than Customer
Agreements that do not constitute Material Contracts) by the Company;
(xii) all sales, agency or distributorship Contracts;
(xiii) all Contracts for leases, subleases, rental
arrangements, Contracts of sale tenancies or licenses of real property;
(xiv) all outstanding powers of attorney executed on
behalf of the Company;
(xv) all Contracts providing for the services of
consultants or independent contractors, including, but not limited to,
Contracts relating to design, development, advertising or engineering,
that, in each case, involve future expenditures of the Company in
excess of $40,000;
16
(xvi) all Contracts providing a warranty period that
is greater than twelve months (other than Customer Agreements that do
not constitute Material Contracts);
(xvii) all Contracts involving a guarantee by the
Company to a third-party customer that such customer will achieve a
specified level of cost avoidance or efficiency through utilization of
the Company's Products;
(xviii) all other Contracts (other than Customer
Agreements that do not constitute Material Contracts) that are not
cancelable by the Company on notice of ninety (90) calendar days or
less without liability or penalty; or
(xix) any Contract providing an indemnity that (i)
includes incidental damages, special or exemplary damages,
consequential damages, damages for lost profits, or damages based upon
diminution in the value, and (ii) is not capped at the applicable
Contract's value.
The Company is not in material violation or breach of or in default
under (nor, to the Knowledge of the Company, does there exist any condition
which upon the passage of time or the giving of notice or both would cause such
a violation or breach of or default under) any Contract to which it is a party
or is bound or by which it or any of its properties or other assets is bound by
or subject to or otherwise under which the Company has any rights or benefits.
Except as set forth in Section 3.10 of the Company Disclosure Letter, no
approval or consent of, or notice to, any person is needed in order that each
Material Contract shall continue in full force and effect in accordance with its
terms without penalty, acceleration or rights of early termination by reason of
the consummation of the transactions contemplated by this Agreement.
(b) Since January 1, 2006, no person that was a Major
Business Partner has terminated (including delivering a notice to the Company
having such effect) any Material Contract or any of its existing relationships
with the Company or failed to renew or requested any amendment to any Material
Contract that is adverse to the Company.
Section 3.11 Compliance with Laws.
--------------------
(a) Except with respect to Environmental Laws and taxes,
which are the subject of Sections 3.12 and 3.15, respectively, the Company is,
and since January 1, 2003, has been, in compliance with (a) all statutes, laws,
ordinances, rules, regulations, judgments, orders and decrees of any
Governmental Authority (collectively, "Laws") applicable to it, its personnel,
properties or other assets or its business or operations, and (b) all permits,
licenses, variances, exemptions, authorizations, operating certificates,
franchises, orders and approvals of all Governmental Authorities (collectively,
"Permits") issued to the Company, other than any instances of noncompliance with
any Laws or Permits that are capable of being remedied (including payment of
fines and penalties), individually or in the aggregate, for less than $50,000.
The Company has not received, since January 1, 2002, a notice or other written
communication alleging or relating to a possible material violation of any Law
applicable to it, its personnel, properties or other assets or its businesses or
operations. The Company has in effect all Permits necessary for them to own,
lease or operate their properties and other assets and to carry on their
17
businesses operations as now conducted. All Permits are listed on Section 3.11
of the Company Disclosure Letter. There is no event that has occurred that has
resulted in or, to the Knowledge of the Company, is reasonably likely to result
in the revocation, cancellation, non-renewal or adverse modification of any
Permit.
(b) The Company is in compliance in all material respects
with all statutory and regulatory requirements under (i) the anti-bribery
provisions of the Foreign Corrupt Practices Act (15 U.S.C. ▇▇.▇▇. 78dd-1 and
78dd-2), (ii) the books and records provisions of the Foreign Corrupt Practices
Act as they relate to any payment in violation of the anti-bribery provisions of
the Foreign Corrupt Practices Act, (iii) the Organization for Economic
Cooperation and Development Convention Against Bribery of Foreign Public
Officials in International Business Transactions and (iv) local anti-corruption
and bribery laws in jurisdictions in which the Company is operating
(collectively, the "Anti-Bribery Laws"). The Company has not received any
communication that alleges that the Company or any agent thereof is, or may be,
in violation of, or has, or may have, any material liability under, the
Anti-Bribery Laws.
Section 3.12 Environmental Matters. Except as disclosed in the
Company SEC Documents or as set forth in Section 3.12 of the Company Disclosure
Letter, to the Knowledge of the Company (i) Hazardous Materials (as hereinafter
defined) have not at any time been generated, used, treated or stored on, or
transported to or from or released or disposed of on any Company Property (as
hereinafter defined) or, to the knowledge of the Company, any property adjoining
or adjacent to any Company Property, except in material compliance with
Environmental Laws (as hereinafter defined) and so as not to give rise to an
Environmental Claim (as hereinafter defined), (ii) the Company is in compliance
with all Environmental Laws and the requirements of any Permits issued under
such Environmental Laws with respect to any Company Property, (iii) there are no
past, pending or threatened Environmental Claims against the Company or any
Company Property, (iv) there are no facts or circumstances, conditions or
occurrences regarding any Company Property that are reasonably likely (A) to
form the basis of an Environmental Claim against the Company or any Company
Property or (B) to cause such Company Property to be subject to any restrictions
on its ownership, occupancy, use or transferability under any Environmental Law,
(v) there are not now and never have been any underground storage tanks located
on any Company Property and (vi) no Company Property is listed on the National
Priorities List or the Comprehensive Environmental Response, Compensation and
Liability Information System promulgated pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, 42
U.S.C. Section 9601 et seq. or state equivalent lists and laws.
For purposes of this Agreement, the following terms shall have
the following meanings: (i) "Company Property" means any real property and
improvements at any time owned, leased, used, operated or occupied by the
Company; (ii) "Hazardous Materials" means (A) any petroleum or petroleum
products, radioactive materials, asbestos in any form that is friable, urea
formaldehyde foam insulation, dielectric fluid containing levels of
polychlorinated biphenyls, and radon gas; (B) any chemicals, materials or
substances defined as or included in the definition of "hazardous substances,"
"hazardous wastes," "hazardous materials," "extremely hazardous substances,"
"restricted hazardous wastes," "toxic substances," "toxic pollutants," or words
of similar import, under any applicable Environmental Law; and (C) any other
chemical, material or substance, exposure to which is prohibited, limited or
regulated by any governmental authority; (iii) "Environmental Law" means any
18
federal, state or local statute, law, rule, regulation, ordinance, code, policy
or rule of common law in effect and in each case as amended as of the date
hereof and the Effective Time, and any judicial or administrative interpretation
thereof as of the date hereof and the Effective Time, including any judicial or
administrative order, consent decree or judgment, relating to the environment,
health, safety or Hazardous Materials, including the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. ss.9601
et seq.; the Resource Conservation and Recovery Act, as amended, 42 U.S.C.
ss.6901 et seq.; the Federal Water Pollution Control Act, as amended, 33 U.S.C.
ss.1251 et seq.; the Toxic Substances Control Act, 15 U.S.C. ss. 2601 et seq.;
the Clean Air Act, 42 U.S.C. ss. 7401 et seq.; the Safe Drinking Water Act, 42
U.S.C. ss. 3808 et seq.; the Occupational Safety and Health Act, 29 U.S.C.
▇▇.▇▇. 651 - 678 (1999); and the Oil Pollution Act, 33 U.S.C. ▇▇.▇▇. 2701 - 2706
(1999); and (iv) "Environmental Claims means any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, claims, liens,
notices of noncompliance or violation, investigations or proceedings relating in
any way to any Environmental Law (for purposes of this subclause (iv), "Claims")
or any permit issued under any such Environmental Law, including (A) any and all
Claims by governmental or regulatory authorities for enforcement, cleanup,
removal, response, remedial or other actions or damages pursuant to any
applicable Environmental Law and (B) any and all Claims by any third party
seeking damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from Hazardous Materials or arising from alleged
injury or threat of injury to health, safety or the environment.
Section 3.13 Employees and Labor.
-------------------
(a) Section 3.13 of the Company Disclosure Letter sets forth
(i) a true and complete list of all collective bargaining Contracts and similar
labor union Contracts to which the Company is a party or is otherwise bound,
(ii) a true and complete list of all current or pending arbitrations to which
any collective bargaining Contract or similar labor union Contract is applicable
or relating to any labor union or similar organization or any member thereof. No
other collective bargaining Contracts or similar labor union Contracts with the
employees or their representatives and/or the trade unions exist and/or are
applied with the Company other than those disclosed in Section 3.13 of the
Company Disclosure Letter. Except to the extent covered by a collective
bargaining Contract or similar labor union Contract as set forth on Section 3.13
of the Company Disclosure Letter, (A) none of the employees of the Company (the
"Employees") is represented in his or her capacity as an Employee by any labor
union or similar organization, (B) the Company has not recognized any labor
organization as the collective bargaining agent of any Employees with respect to
employment with the Company and (C) after January 1, 2002, no labor union or
similar organization has attempted to organize or otherwise made a claim to
represent the Employees and no such action is pending or threatened. After
January 1, 2002, the Company has not experienced any lockout or work slowdown or
stoppage, and there is no labor dispute or work slowdown or stoppage pending,
or, to the Knowledge of the Company, threatened, against or affecting the
Company.
(b) (i) The Company is, and at all times since January 1,
2003, has been, in compliance with all federal, state or other applicable laws
respecting employment and employment practices, terms and conditions of
employment and wages and hours, and has not and is not engaged in any unfair
labor practice, (ii) no unfair labor practice complaint against the Company is
19
pending, or to the Knowledge of the Company, threatened before the National
Labor Relations Board, and (iii) the Company has not experienced any material
labor difficulty since January 1, 2003, (iv) there has been no "mass layoff" or
"plant closing" by the Company as defined in the Federal Workers Adjustment
Retraining And Notification Act ("WARN) or any state law equivalent, or any
other mass layoff or plant closing that would trigger notice pursuant to WARN or
any state law equivalent, within (90) days prior to the Effective Time.
(c) No liability has been incurred by the Company for breach
of any employment agreement, plant agreement, collective bargaining Contract, or
for compensation for wrongful dismissal or unfair dismissal or for failure to
comply with any order for the reinstatement or re-engagement of any employment
or for any other liability accruing from the termination or variation of any
contract of employment or for services or from the violation of any statutory
labor law, including the applicable laws regarding the protection of disabled
persons.
(d) The Company has no obligations (including the obligation
to restore employment relationships that have been terminated) arising from the
termination or cancellation of any of its employment agreements with any current
or former director, officer, employee or consultant of the Company, except the
obligation to provide continuity coverage to a former employee under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"),
and at the sole expense of the former employee.
(e) All salaries, wages, bonuses, commissions and other
emoluments relating to the directors, officers and employees of the Company have
always been paid when due and to the extent this is not the case are reflected
and accrued in the records of the Company.
(f) All foreign nationals employed with the Company hold
valid work permits, if necessary, and are in compliance with any rules or
regulations imposed by the relevant country.
(g) No independent contractor of the Company may be
characterized as an employee in connection with the determination to provide or
pay any benefits in respect of such person or to pay or withhold any taxes or
required withholdings.
Section 3.14 Employee Benefit Plans.
----------------------
(a) Section 3.14(a) of the Company Disclosure Letter sets
forth a true and complete list of (i) all "employee benefit plans", as defined
in Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and all other material employee benefit or compensation
plans, programs, policies, arrangements or payroll practices maintained or
required to be maintained by the Company or to which the Company contributed or
is obligated to contribute thereunder for any current or former director,
officer, employee or consultant of the Company (the "Company Plans") and (ii)
all Company Benefit Agreements. The Company has not incurred or is reasonably
likely to incur any liability under Section 412 of the Code or Title IV of ERISA
with respect to any ongoing, frozen or terminated employee benefit plan. Except
as set forth in Section 3.14(a) of the Company Disclosure Letter, none of the
Company Plans provides for post-employment life or health insurance, benefits or
20
coverage for any participant or any beneficiary of a participant, except as may
be required under COBRA, and at the sole expense of the participant or the
participant's beneficiary.
(b) Neither the Company nor any of its ERISA Affiliates has
(or had during the most recent six year period) any obligation to contribute to
(or any other obligation or liability, including current or potential withdrawal
liability, with respect to) any "multiemployer plan" within the meaning of
Section 3(37) or Section 4001(a)(3) of ERISA or Section 414(f) of the Code.
(c) The Company has provided Parent access to true and
complete copies of the following documents, with respect to each of the Company
Plans and Company Benefit Agreements: (i) such Company Plan or Company Benefit
Agreement, all amendments thereto and related trust documents and amendments
thereto, (ii) the most recent Forms 5500 and all schedules thereto and the most
recent actuarial report, if any, (iii) the most recent Internal Revenue Service
(the "IRS") determination letter and any communication from or with the IRS
relating to such letter or the subject matter thereof and (iv) summary plan
descriptions.
(d) Each Company Plan has been maintained in all material
respects in accordance with its terms and, together with the Company, is in
compliance in all material respects with all provisions of ERISA, the Code
(including rules and regulations thereunder) and other applicable Laws with
respect to such Company Plan. There is no pending or, to the Knowledge of the
Company, threatened claim, suit, action, investigation or proceeding relating to
any Company Plan or Company Benefit Agreement. To the Knowledge of the Company,
no "prohibited transaction", breach of fiduciary duty or similar action or
omission has resulted in or is reasonably likely to result in the imposition of
any material liability, tax or penalty on the Company under ERISA, the Code or
other applicable Law. During the five years preceding the date hereof, no
Company Plan has been terminated and there has been no "reportable event" (as
defined in Section 4043 of ERISA) for which the 30-day reporting requirement was
not waived.
(e) The Company Plans intended to qualify under Section 401
of the Code are so qualified, and the trusts maintained pursuant thereto are
exempt from Federal income taxation under Section 501 of the Code, and, to the
Knowledge of the Company, nothing has occurred with respect to the Company Plans
that has caused or is reasonably likely to cause the loss of such qualification
or exemption or the imposition of any liability, penalty or tax under ERISA or
the Code.
(f) All contributions (including all employer contributions
and employee salary reduction contributions) required to have been made under
any of the Company Plans or by Law (without regard to any waivers granted under
Section 412 of the Code) to any funds or trusts established under a Company Plan
or in connection therewith have been made by the due date thereof (including any
valid extensions).
(g) Each Company Plan that is an employee welfare benefit
plan may be amended or terminated on or after the Closing Date, on notice
provided as set forth in Section 3.14(g) of the Company Disclosure Letter,
without the incurrence of any material cost or liability by the Company.
21
(h) Except as set forth in Section 3.14(h) of the Company
Disclosure Letter, no current or former director, officer, employee or
consultant of the Company is entitled to any compensation or benefit that could
become payable or be provided to such person under the Company Plans and Company
Benefit Agreements if such person's employment were terminated immediately after
the Closing Date. Except as set forth in Section 3.14(h) of the Company
Disclosure Letter or as otherwise expressly contemplated by this Agreement,
neither the execution and delivery of this Agreement or the Principal
Stockholders' Agreement nor the consummation of the Merger or any other
transaction contemplated hereby or thereby will (i) entitle any current or
former director, officer, employee or consultant of the Company to, or increase
any, severance, change in control, termination or other compensation or benefits
(whether alone or in coordination with any other event) or (ii) except pursuant
to the Company Stock Plans with respect to Company Stock Options, accelerate the
time of payment or vesting or trigger any payment or funding (through a grantor
trust or otherwise) of compensation or benefits under, or trigger any other
material obligation pursuant to, any Company Plan or Company Benefit Agreement.
(i) Any amount or economic benefit that could be received
(whether in cash or property or in respect of the vesting of property) as a
result of the Merger or any other transaction contemplated by this Agreement or
the Principal Stockholders' Agreement (alone or in combination with any other
event) by any person who is a "disqualified individual" (as such term is defined
in Treasury Regulation Section 1.280G-1) with respect to the Company would not
be characterized as an "excess parachute payment" (as defined in Section
280G(b)(1) of the Code), and no such person is entitled to receive any
additional payment from the Company or any other person in the event that the
excise tax under Section 4999 of the Code is imposed on such person.
(j) No deduction by the Company in respect of any
"applicable employee remuneration" (within the meaning of Section 162(m) of the
Code) has been disallowed or is subject to disallowance by reason of Section
162(m) of the Code.
(k) The Company does not have any material liability or
obligations, including under or pursuant to any Company Plan or Company Benefit
Agreement, arising out of the hiring of persons to provide services to the
Company and treating such persons as consultants or independent contractors and
not as employees of the Company.
(l) Except as set forth in Section 3.14(1) of the Company
Disclosure Letter, the Company has no obligations with respect to pension
payments or contributions for current or former employees or directors except as
reflected in the Filed Company SEC Documents.
(m) The Company has no formal plans or commitments to create
any additional pension plan or to modify or change any existing pension plan,
nor has the Company communicated any such plans or commitments to any employee.
Section 3.15 Taxes.
-----
(a) The Company and any consolidated, combined, unitary,
affiliated or aggregate group of which the Company is a member (an "affiliated
group") has timely filed (taking into account any extension of time within which
22
to file) all Federal, state, local and foreign income and franchise tax returns
and all other tax returns required to be filed by it, all taxes shown due on
such tax returns and, except as set forth in Section 3.15(a) of the Company
Disclosure Letter all other taxes as are due, have been paid, and all such tax
returns are true and complete in all material respects. The Company has withheld
or collected all taxes it was required to withhold and collect, and has timely
paid to the proper authorities such taxes withheld or collected to the extent
due and payable.
(b) Except as set forth in Section 3.15(b) of the Company
Disclosure Letter, the Company has not been the subject of an audit or other
examination of taxes by any taxing authority nor has the Company received any
notices from any taxing authority relating to any issue which could reasonably
be expected to affect the tax liability of the Company. No deficiencies for any
taxes have been proposed, asserted or assessed against the Company or any
affiliated group that are still pending and no Liens for taxes exist with
respect to any property or other assets of the Company, except for statutory
Liens for taxes not yet due or payable or the validity of which is being
contested in good faith by appropriate proceedings and as to which adequate
reserves have been established on the Company's books and records reflecting the
full amount of such contested taxes.
(c) All assessments for taxes due with respect to such
completed and settled examinations or to any concluded litigation have been
fully paid or have been adequately reserved on the most recent financial
statements included in the Filed Company SEC Documents in accordance with GAAP.
(d) The Company has provided Parent access to true and
complete copies of (i) all income and franchise tax returns of the Company and
affiliated groups for the preceding three taxable years and (ii) any audit
report issued since January 1, 2004 (or otherwise with respect to any audit or
proceeding in progress) relating to taxes of the Company or any affiliated
group.
(e) The Company has not constituted either a "distributing
corporation" or a "controlled corporation" (in each case, within the meaning of
Section 355(a)(1)(A) of the Code) in a distribution of stock qualifying for
tax-free treatment under Section 355(e) of the Code (A) in the two years
preceding the date hereof or (B) in a distribution that could otherwise
constitute part of a "plan" or "series of related transactions" (within the
meaning of Section 355(e) of the Code) in conjunction with the Merger.
(f) The Company (i) has not entered into an agreement or
waiver or been requested to enter into an agreement or waiver extending any
statute of limitations relating to the payment or collection of taxes, (ii) is
not presently contesting the tax liability of the Company before any court,
tribunal or agency or (iii) has not applied for and/or received a ruling or
determination from a taxing authority regarding a past or prospective
transaction of the Company.
(g) The Company has not received written notice of any claim
ever being made by any taxing authority in a jurisdiction where the Company does
not file tax returns that the Company is or may be subject to taxation by that
jurisdiction.
23
(h) There are no tax sharing, allocation, indemnification or
similar agreements in effect as between the Company or any predecessor or
affiliate thereof and any other party under which the Company could reasonably
be expected to be liable for any taxes of any person.
(i) The Company is not a party to any agreement, contract,
arrangement or plan that has resulted or could reasonably be expected to result,
separately or in the aggregate, in the payment of (x) any "excess parachute
payment" within the meaning of Section 280G of the Code (or any corresponding
provision of state, local or foreign tax law) and (y) any amount that will not
be fully deductible as a result of Section 162(m) of the Code (or any
corresponding provision of state, local or foreign tax law).
(j) The Company has not been a United States real property
holding corporation within the meaning of Code Section 897(c)(2) during the
applicable period specified in Code Section 897(c)(1)(A)(ii).
(k) The Company has disclosed on its federal income tax
returns all positions taken therein that could reasonably be expected to give
rise to a substantial understatement of federal income tax within the meaning of
Section 6662 of the Code or a reportable transaction understatement within the
meaning of Section 6662A of the Code. The Company has not engaged in a
transaction that would be reportable by or with respect to the Company pursuant
to Sections 6011, 6111, or 6112 of the Code. The Company has not entered into
any transactions that required or will require the filing of Internal Revenue
Service Form 8886.
(l) The Company (x) has not been a member of an affiliated
group filing a consolidated federal income tax return or (y) has no liability
for the taxes of any person (other than itself) under Treasury Regulation
section 1.1502-6 (or any similar provision of state, local or foreign law), as a
transferee or successor, by contract, or otherwise.
(m) The Company will not be required to include any item of
income in, or exclude any item of deduction from, taxable income for any taxable
period (or portion thereof) ending after the Closing Date or the Effective Time
as a result of any: (A) change in method of accounting for a taxable period
ending on or before the Closing Date or the Effective Time; (B) "closing
agreement" as described in Section 7121 of the Code (or any corresponding or
similar provision of state, local or foreign tax law) executed on or before the
Closing Date or the Effective Time; (C) inter-company transaction or excess loss
account described in Treasury Regulations under section 1502 of the Code (or any
corresponding or similar provision of state, local or foreign tax law); (D)
installment sale or open transaction disposition made on or before the Closing
Date or the Effective Time; or (E) prepaid amount received on or before the
Closing Date or the Effective Time.
(n) The Company complies and has duly complied with all
actions required pursuant to the applicable rules for employment taxes for all
employees, officers and directors. The Company has withheld from each payment
made to any of its directors, officers and employees the amount of all taxes and
contributions required to be withheld and has paid the same together with the
Company's share of the same, if any, to the proper tax and other receiving
offices within the time required under applicable law.
24
(o) For purposes of this Agreement, (i) "taxes" shall mean
all Federal, state and local (whether domestic or foreign) income, employment,
withholding, property, sales, excise and other taxes, tariffs or governmental
charges of any nature whatsoever, including any interest, penalties or additions
with respect thereto, imposed by any Governmental Authority, including any
liability for the payment of any amounts of the type described above as a result
of being a member of an affiliated group or a party to any tax sharing Contract
or as a result of any obligation to indemnify any other person with respect to
the payment of any tax, and (ii) "tax returns" shall mean any return,
declaration, report, claim for refund, or information return or statement
relating to taxes, including any schedule or attachment thereto, and including
any amendment thereof.
Section 3.16 Title to Assets; Leases.
-----------------------
(a) The Company does not own, nor has it owned during the
past 6 years, any real property.
(b) Section 3.16(b) of the Company Disclosure Letter sets
forth a true and complete list of all leases for real property and interests in
real property leased by the Company (each, a "Leased Real Property"). The
Company has provided Parent access to true and complete copies of all such
leases and agreements. The Company has complied with the terms of all leases of
the Leased Real Properties to which it is a party and under which it is in
occupancy, and all such leases are in full force and effect. The Leased Real
Property is all of the property used or held for use by the Company.
(c) The Company has valid leasehold interests (or, with
respect to any such assets located outside the United States, its equivalent in
such other location(s)) in its Leased Real Properties, and good and marketable
title or valid leasehold interests (or, with respect to any such assets located
outside the United States, its equivalent in such other location(s)) in the
other assets reflected in the Company's consolidated balance sheet, except for
such as have been disposed of in the ordinary course of business. All such
Leased Real Properties and other assets are free and clear of all Liens other
than Permitted Liens.
(d) The Company has not received any written notice, and the
Company does not have Knowledge, that any entity or Governmental Authority
considers the operation, use or ownership of the Leased Real Property to have
violated any zoning, land use or similar laws, ordinances, rules, regulations or
administrative interpretations applicable thereto, or that any investigation has
been commenced regarding such possible violation. The present use and operation
of the Leased Real Property is in compliance with all existing zoning, land use
and similar laws, ordinances, rules, regulations or administrative
interpretations applicable thereto. No condemnation or eminent domain proceeding
against any part of the Leased Property is pending or, to the Knowledge of the
Company, threatened. All operating facilities located on the Leased Real
Property are supplied with utilities and other services, assuming the operation
of such utilities, in such amounts as are reasonably necessary for the current
operation of such facilities, including gas, electricity, water, waste water,
irrigation, drainage, and similar reasonably required services.
25
(e) This Section 3.16 does not relate to any matters with
respect to intellectual property, which are addressed in Section 3.17.
(f) The Company is not in violation or breach of or in
default under (nor, to the Knowledge of the Company, does there exist any
condition which upon the passage of time or the giving of notice or both would
cause such a violation or breach of or default under) any lease relating to the
Leased Real Property to which it is a party. Except as set forth in Section
3.16(b) of the Company Disclosure Letter, no approval or consent of, or notice
to, any person is needed in order that each such lease shall continue in full
force and effect in accordance with its terms without penalty, acceleration or
rights of early termination by reason of the consummation of the transactions
contemplated by this Agreement.
(g) The buildings, machinery, equipment, and other tangible
assets that the Company owns or leases are and have been maintained in
accordance with the Company's prior practice, and are in good operating
condition and repair (subject to normal wear and tear). The assets, properties
and rights of the Company as of the Closing Date and after giving effect to the
transactions contemplated hereby will be sufficient to conduct the business of
the Company as a going concern on a basis consistent with past practice.
Section 3.17 Intellectual Property.
---------------------
(a) Section 3.17 of the Company Disclosure Letter sets forth
a true and complete list of all trademarks (registered or unregistered), trade
▇▇▇▇ applications, trade names, domain names, service marks, service ▇▇▇▇
applications, brand names, registered copyrights and applications therefor,
patents and patent applications, if any, in each case, owned by or licensed to
the Company (other than Off the Shelf Licenses). The Company owns, or is validly
licensed or otherwise has the exclusive right to use all Intellectual Property
Rights that are material to the conduct of the business of the Company, in each
case free and clear of all Liens other than the Permitted Liens. All of the
Intellectual Property Rights owned by the Company are to the Knowledge of the
Company valid, subsisting and enforceable and no such Intellectual Property
Rights have been abandoned or cancelled (excepting any expirations in the
ordinary course), or are subject to any outstanding order, judgment or decree
restricting its use or adversely affecting the Company's rights thereto. For the
purposes of this Section 3.17(a), "Off the Shelf Licenses" shall mean any
license or other agreement for the perpetual use by the Company of software in
the capacity of an end user only, which software is generally available in "off
the shelf" commercial packages or by internet distribution, for less than $5,000
per copy licensed, or $10,000 in the aggregate for all copies of such software
licensed, and as to which the Company has fully paid all applicable license
fees.
(b) Except as set forth in Section 3.17 of the Company
Disclosure Letter and to the Knowledge of the Company, no person other than the
Company has any ownership interest in, or a right to receive a royalty or
similar payment with respect to, any Intellectual Property Rights owned by the
Company. To the Knowledge of the Company, the Company has not infringed upon or
misappropriated any Intellectual Property Rights of any other person. No suit,
action, reissue, reexamination, public protest, interference, arbitration,
mediation, opposition, cancellation or other proceeding is pending alleging that
the Company has violated any Intellectual Property Rights of any other person
and, to the Knowledge of the Company, no claim has been threatened or asserted
26
against the Company alleging a violation of any Intellectual Property Rights of
any other person.
(c) To the Company's Knowledge, no person or persons are
infringing the rights of the Company with respect to any Intellectual Property
Rights owned by the Company. No claims are pending or, to the Company's
Knowledge, threatened against the Company with regard to the ownership by the
Company of any of its Intellectual Property Rights.
(d) The Company is not in material violation or breach of or
in default under (nor, to the Knowledge of the Company, does there exist any
condition which upon the passage of time or the giving of notice or both would
cause such a violation or breach of or default under) any agreement with respect
to Intellectual Property Rights to which it is a party. Except as set forth in
Section 3.17 of the Company Disclosure Letter, no approval or consent of, or
notice to, any person is needed in order that each such agreements shall
continue in full force and effect in accordance with its terms without penalty,
acceleration or rights of early termination by reason of the consummation of the
transactions contemplated by this Agreement.
(e) As used in this Agreement, "Intellectual Property
Rights" shall mean all intellectual property rights arising from or in respect
of the following, whether protected, created, or arising under the laws of the
United States or any other jurisdiction: patents, trademarks (registered or
unregistered), trade names, trade secrets, domain names, service marks, brand
names, trade dress, and other indications of origin, together with the goodwill
associated with the foregoing and registrations of, and applications to
register, the foregoing, including any extension, modification or renewal of any
such registration or application; computer programs, technical know-how, and
confidential information and rights to limit the use or disclosure thereof by
any person; registrations or applications for registration of copyrights, and
any renewals or extensions thereof; any similar intellectual property or
proprietary rights similar to any of the foregoing, including all rights in and
privileges with respect to customer databases, ideas, discoveries, inventions,
conceptions, processes, formulae, copyrights and original works of authorship;
and licenses.
Section 3.18 Products.
--------
(a) Except as set forth in Section 3.18(a) of the Company
Disclosure Letter, the Company is the sole and exclusive owner of the computer
software products marketed, sold, licensed, supported, serviced or maintained by
the Company, together with all modifications, updates, corrections and
enhancements to past and current versions of such products, in existence as of
the date hereof, and versions of such products currently under development, and
any and all English and foreign language versions of such products, in each
case, to the extent applicable, including the source code and object code
versions of such computer software, and all Documentation relating thereto (the
"Products").
(b) The Current Versions of the Products meet all material
contractual terms and materially comply with all warranties provided to any
customers who purchase or license, or have purchased or licensed, such Current
Versions of the Products from the Company or its agents, provided that such
customers are using a Current Version and have a current maintenance or support
agreement in effect. The Current Versions of the Products do not contain any
27
viruses, Trojan horses or other computer instructions, intentional devices or
techniques that are designed to threaten, infect, disrupt, damage, disable or
infiltrate a computer system or any component of such computer system.
(c) The source code for the Current Versions of the Products
will compile into executable object code and such executable object code is
capable of performing the material functions described in the applicable
Documentation. The Company has neither disclosed to any other person nor placed
in escrow the source code for the Current Versions of the Products.
(d) The Company has taken commercially reasonable steps
(including, without limitation, entering into appropriate confidentiality
agreements with all officers, directors, employees, and other persons with
access to the Current Versions of the Products) to protect the source code for
the Current Versions of the Products as trade secrets of the Company. With
respect to the license of the Products to customers, the Company has executed
Contracts protecting the confidentiality and proprietary nature of the Products
(and all related assets including the source code) from improper use or
disclosure.
(e) No person has a license to use or the right to acquire a
license to use any future version of the Products, except for customer rights to
obtain licenses to future versions of the Products pursuant to existing Customer
Agreements.
(f) No Customer Agreement or other agreement currently in
force obligates the Company to develop or provide any specific improvement,
enhancement, change in functionality or other alteration in the performance of
the Products, other than Customer Agreements that provide for Product support
services entered into in the ordinary course of business consistent with past
practice.
(g) To the Knowledge of the Company, the Products do not
infringe, misappropriate or otherwise violate the Intellectual Property Rights
of any other person.
Section 3.19 Accounts Receivable. All accounts receivable of the
Company have arisen from bona fide transactions in the ordinary course of
business consistent with past practice.
Section 3.20 Approval and Adoption Requirements. The only approval or
consent of the holders of any class or series of capital stock necessary to
adopt this Agreement and approve the Merger and the other transactions
contemplated hereby is the affirmative vote of the holders of a majority of
outstanding votes attributed to the outstanding shares of Company Common Stock
and Company Preferred Stock, voting together as a single class (the "Stockholder
Approval").
Section 3.21 State Takeover Statutes. Prior to the date of this
Agreement, the Board of Directors of the Company has taken all action necessary,
assuming the accuracy of the representations given by the Parent and Merger Sub
in Section 4.07, to render inapplicable to this Agreement, the Principal
Stockholders' Agreement, the Merger and the other transactions contemplated
hereby and thereby, the provisions of Section 203 of the DGCL ("Section 203") to
the extent, if any, Section 203 would otherwise be applicable to this Agreement,
the Principal Stockholders' Agreement, the Merger and the other transactions
28
contemplated hereby or thereby. No other state takeover or similar statute or
regulation is applicable to this Agreement, the Principal Stockholders'
Agreement, the Merger or the other transactions contemplated hereby or thereby.
Section 3.22 Transactions with Affiliates. Section 3.22 of the
Company Disclosure Letter sets forth, (i) a true and complete list of all
Contracts between, among or involving the Company, on the one hand, and any
director or officer of the Company or any of the Affiliates thereof, on the
other hand and (ii) a description of all payments (including dividends,
distributions, loans, service or trade payments, salary, bonuses, payments under
any management, consulting, monitoring or financial advisory Contract, advances
or otherwise) made to or received from the Company, on the one hand, and any
Affiliate of the Company, on the other hand, after January 1, 2004. Except as
expressly disclosed in Section 3.22 of the Company Disclosure Letter, no such
payments have been so made or received since January 1, 2004, or are required to
be so received as of or after the date hereof. Except as expressly disclosed in
Section 3.22 of the Company Disclosure Letter, none of the Contracts between the
Company, on the one hand, and any Principal Company Stockholder or any of the
Affiliates thereof, on the other hand, will continue in effect subsequent to the
Closing, and all obligations of the Company thereunder will have been satisfied.
Section 3.23 Suppliers and Customers. Section 3.23 of the Company
Disclosure Letter contains a list of the top ten suppliers and customers of the
Company (by volume in dollars of purchases) for the two fiscal years ended
December 31, 2005 and December 31, 2006 (the "Major Suppliers" and "Major
Customers", respectively). Except as set forth in Section 3.23 of the Company
Disclosure Letter, the Company has no Knowledge that a Major Supplier or Major
Customer will stop or materially reduce the aggregate volume of its supply or
purchase of materials, products or services to or from the Company (whether as a
result of the consummation of the transactions contemplated hereby or
otherwise), that a Major Supplier intends significant price increases, that a
Major Customer has received or intends to seek significant price decreases or
that the relationship between the Company with the Major Suppliers and Major
Customers would otherwise be materially affected.
Section 3.24 Insurance. Section 3.24 of the Company Disclosure Letter
lists all policies of fire, liability, workmen's compensation, life, property
and casualty and other insurance owned or held by the Company. Except as set
forth in Section 3.24 of the Company Disclosure Letter, all such policies of
insurance (a) are in full force and effect and (b) will not in any way be
affected by, or terminate or lapse by reason of, the transactions contemplated
by this Agreement. The Company is not in default with respect to its obligations
under any of such insurance policies, nor has the Company received any notice of
cancellation of any insurance policy. No insurance carrier has denied coverage
for any claim asserted by the Company since January 1, 2004, nor has any
insurance carrier declined to provide any coverage to the Company since January
1, 2004.
Section 3.25 Inventory. Except as set forth in Section 3.25 of the
Company Disclosure Letter, the inventory of the Company (a) is usable or salable
in the ordinary course of business, except to the extent of reserves for
obsolescence recorded in the December 31, 2006 balance sheet; (b) is sufficient
but not excessive in kind or amount for the conduct of the Company as it is
29
presently being conducted; (c) meets the quality control standards of the
Company; (d) is not held on consignment from third parties; (e) is not subject
to any Lien; and (f) is carried on the books of the Company at an amount which
reflects valuations not in excess of the lower of cost or market determined in
accordance with generally accepted accounting principles applied on a consistent
basis.
Section 3.26 Sufficiency of Assets. The tangible assets of the
Company are in all material respects sufficient to conduct the business of the
Company as it is presently being conducted, are suitable and adequate for the
purposes for which such assets are currently used and are in good condition and
repair for their present use by the Company in operation of its business.
Section 3.27 Brokers and Other Advisors. No broker, investment
banker, financial advisor or other person, other than ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
LLC, the fees and expenses of which will be paid by the Company, is entitled to
any broker's, finder's, financial advisor's or other similar fee or commission
in connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company. The Company has delivered to
Parent true and complete copies of all Contracts under which such fees or
expenses are payable and all indemnification and other Contracts related to the
engagement of the persons to whom such fees or expenses are payable. The
compensation arrangement of the Company with ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ LLC has
been disclosed to Parent.
Section 3.28 Opinion of Financial Advisor. The Company's Board of
Directors has received the opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ LLC in customary
form, to the effect that, as of the date of such opinion, the consideration to
be received in the Merger by the stockholders of the Company is fair from a
financial point of view to such stockholders, a complete and correct signed copy
of which has been delivered to Parent by the Company. The Company has been
authorized by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ LLC to permit the inclusion of such
fairness opinion (or a reference thereto) in the Proxy Statement.
Section 3.29 Insolvency. No procedure relating to bankruptcy,
insolvency, moratorium or equivalent procedure relating to the Company has been
commenced and the Company does not have Knowledge of any circumstances which may
give rise to any right to commence such proceedings.
Section 3.30 Books and Records. True, correct and complete copies of
the minutes that were taken at all meetings of the stockholders, the Board of
Directors, or any committee of the Board of Directors of the Company held since
April 1, 2002 have been provided to Parent, and such minutes are complete and
accurate.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Each of Parent and Merger Sub represents and warrants to the Company as
follows:
30
Section 4.01 Organization, Standing and Corporate Power. Each of
Parent and Merger Sub is a corporation duly organized, validly existing and in
good standing under the Laws of the jurisdiction in which it is incorporated and
has all requisite corporate power and authority to carry on its business as now
being conducted.
Section 4.02 Authority; Noncontravention.
---------------------------
(a) Each of Parent and Merger Sub has all requisite
corporate power and authority to execute and deliver this Agreement and, in the
case of Parent, the Principal Stockholders' Agreement and to consummate the
Merger and the other transactions contemplated hereby and thereby. The execution
and delivery of this Agreement by Parent and Merger Sub and the Principal
Stockholders' Agreement by Parent and the consummation of the Merger and the
other transactions contemplated hereby and thereby and the compliance by Parent
and Merger Sub, as the case may be, with the provisions of this Agreement and
the Principal Stockholders' Agreement have been duly authorized by all necessary
corporate action on the part of Parent and Merger Sub, and no other corporate
proceedings on the part of Parent or Merger Sub are necessary to authorize or
approve this Agreement or to consummate the Merger or the other transactions
contemplated hereby and thereby. This Agreement and the Principal Stockholders'
Agreement have been duly executed and delivered by Parent and Merger Sub, as
applicable, and, assuming the due authorization, execution and delivery by the
other parties hereto and thereto, such agreements constitute legal, valid and
binding obligations of Parent and Merger Sub, as applicable, enforceable against
Parent and Merger Sub, as applicable, in accordance with each of their
respective terms (subject to applicable bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and other Laws affecting creditors' rights
generally from time to time in effect).
(b) The execution and delivery of this Agreement and the
Principal Stockholders' Agreement do not, and the consummation of the Merger and
the other transactions contemplated hereby and thereby and compliance with the
provisions hereof and thereof do not and will not, conflict with, or result in
any violation or breach of, or constitute a default (with or without notice or
lapse of time or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation, or to the loss of a benefit
under, or result in the creation of any Lien upon any of the properties or other
assets of Parent or Merger Sub under (i) the certificate of incorporation or
by-laws of each of Parent and Merger Sub, (ii) any Contract to which Parent or
Merger Sub is a party or is bound or any of their respective properties or other
assets is bound by or subject to or otherwise under which Parent or Merger Sub
has any rights or benefits or (iii) subject to the governmental filings and
other matters referred to in Section 4.03, any Law applicable to Parent or
Merger Sub or their respective properties or other assets, other than, in the
case of clauses (ii) and (iii) above, any such conflicts, violations, breaches,
defaults, rights, results, losses or Liens that individually or in the aggregate
are not reasonably likely to impair in any material respect the ability of each
of Parent and Merger Sub to perform its obligations under this Agreement or
prevent or materially impede, interfere with, hinder or delay the consummation
of the Merger or any of the other transactions contemplated by this Agreement.
Section 4.03 Governmental Approvals. No consent, approval, order or
authorization of, action by or in respect of, or registration, declaration or
filing with, any Governmental Authority is required by or with respect to Parent
or Merger Sub in connection with the execution and delivery of this Agreement or
31
the Principal Stockholders' Agreement by Parent and Merger Sub, as applicable,
or the consummation by Parent and Merger Sub of the Merger or the other
transactions contemplated hereby or thereby, except for (i) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware, (ii)
the filing with the SEC of such reports or schedules under the Exchange Act as
may be required in connection with this Agreement, the Principal Stockholders'
Agreement, the Merger and the other transactions contemplated hereby and thereby
and (iii) such other consents, approvals, orders, authorizations, registrations,
declarations and filings the failure of which to be obtained or made
individually or in the aggregate is not reasonably likely to impair in any
material respect the ability of each of Parent and Merger Sub to perform its
obligations under this Agreement or prevent or materially impede, interfere
with, hinder or delay the consummation of any of the transactions contemplated
by this Agreement.
Section 4.04 Information Supplied. None of the information supplied
in writing by Parent or Merger Sub specifically for inclusion or incorporation
by reference in the Proxy Statement will, on the date it is first mailed to the
stockholders of the Company contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading.
Section 4.05 Litigation. There is no claim, suit, action,
investigation or other proceeding pending or, to the Knowledge of Parent,
threatened against or affecting Parent or Merger Sub that individually or in the
aggregate is reasonably likely to impair in any material respect the ability of
each of Parent and Merger Sub to perform its obligations under this Agreement or
prevent or materially impede, interfere with, hinder or delay the consummation
of any of the transactions contemplated by this Agreement, nor is there any
judgment, decree, injunction, rule or order of any Governmental Authority or
arbitrator outstanding, or, to the Knowledge of Parent, investigation,
proceeding, notice of violation, order of forfeiture or complaint by any
Governmental Authority involving, Parent or Merger Sub that individually or in
the aggregate is reasonably likely to impair in any material respect the ability
of each of Parent and Merger Sub to perform its obligations under this Agreement
or prevent or materially impede, interfere with, hinder or delay the
consummation of the Merger or any of the other transactions contemplated by this
Agreement.
Section 4.06 Ownership and Operations of Merger Sub. Parent owns
beneficially and of record all of the outstanding capital stock of Merger Sub.
Merger Sub was formed solely for the purpose of engaging in the transactions
contemplated hereby and has engaged in no other business activities other than
in connection with the transactions contemplated hereby.
Section 4.07 Interested Stockholder. Neither Parent nor Merger Sub,
nor any of their "affiliates" or "associates" have been "interested
stockholders" of the Company at any time within the three years prior to the
date of this Agreement, as those terms are used in Section 203 of the DGCL.
Section 4.08 No Capital Ownership. Neither Parent nor Merger Sub owns
any shares of capital stock of the Company.
32
Section 4.09 Brokers and Other Advisors. No broker, investment
banker, financial advisor or other person is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Parent or Merger Sub.
Section 4.10 Financial Position of Parent. As of the date of this
Agreement, Parent has cash resources available to it that are greater than or
equal to the amount of the Total Merger Consideration and Parent's financial
position is otherwise sufficient to enable Parent and Merger Sub to consummate
the transactions contemplated by this Agreement.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 5.01 Conduct of Business.
-------------------
(a) Conduct of Business by the Company. During the period
from the date hereof to the Effective Time, except as provided in Section 5.01
of the Company Disclosure Letter, as consented to in writing by Parent or as
specifically and expressly required or permitted by this Agreement, the Company
shall (i) carry on its businesses and operations in the ordinary course
consistent with past practice, (ii) continue all advertising, pricing, sales,
inventory, receivables, payables, customer credit practices, in the ordinary
course consistent with past practice (to the extent consistent with this Section
5.01(a)) and (iii) use all commercially reasonable efforts to preserve intact
its assets, brands, licenses, technology, Intellectual Property Rights and
business organizations, keep available the services of its current officers and
employees and preserve in accordance with past practice its relationships with
suppliers, licensors, licensees, distributors, customers and others having
business dealings with it and maintain its franchises, rights, Contracts and
Permits, with the intention that its goodwill and ongoing business shall be
unimpaired as of the Effective Time. Without limiting the generality of the
foregoing, during the period from the date hereof to the Effective Time, except
as consented to in writing by Parent, as provided in Section 5.01 of the Company
Disclosure Letter or as specifically and expressly required or permitted by this
Agreement, the Company shall not:
(i) (A) declare, set aside or pay any dividends on,
or make any other distributions (whether in cash, stock, property or
other assets) in respect of, any of its capital stock, or other equity
or voting interests, except for the payment of dividends then due in
respect of outstanding shares of Series A Convertible Preferred Stock
pursuant to the Company Certificate, (B) split, combine or reclassify
any of its capital stock, or other equity or voting interests, or issue
or authorize the issuance of any other securities in respect of, in
lieu of or in substitution for shares of its capital stock, or other
equity or voting interests, (C) purchase, redeem or otherwise acquire
any shares of capital stock, or other equity or voting interests, or
any other securities of the Company or any warrants, options or other
rights to acquire any such shares or other securities or (D) take any
action that could result in any amendment, modification or change of
any term of any debt security of the Company;
33
(ii) issue, deliver, sell, grant, pledge or otherwise
encumber or subject to any Lien any shares of its capital stock, any
other equity or voting interests or any securities convertible into, or
exchangeable for, or any warrants, options or other rights to acquire
or receive, any such shares, interests or securities or any "phantom"
stock, "phantom" stock rights or awards, stock appreciation rights,
stock-based performance units or any other rights that are linked in
any way to the price of Company Stock or the value of the Company or
any part thereof (other than the issuance of shares of Company Common
Stock upon the conversion of the Company Preferred Stock or the
Warrants, or the exercise of Company Stock Options on the date hereof
in accordance with their terms on the date hereof);
(iii) amend or propose to amend the Company
Certificate or Company By-laws;
(iv) acquire or agree to acquire by merging or
consolidating with, or by purchasing assets of or equity in, or by any
other manner, any business or any corporation, partnership, association
or other business organization or division thereof or otherwise acquire
or agree to acquire any assets with a value individually or in the
aggregate with a value in excess of $50,000;
(v) sell, lease, license, mortgage, sell or
leaseback or otherwise encumber or subject to any Lien or otherwise
dispose of any of its properties or other assets or any interest
therein, to a third party with an aggregate value in excess of $50,000,
except for sales of inventory or excess or obsolete assets in the
ordinary course of business consistent with past practice, or allow any
assets or properties to become subject to any Lien other than Permitted
Liens;
(vi) (A) incur or commit to incur any Debt
Obligations (other than any draws on the Wachovia Facility in the
ordinary course of business) or issue or sell any debt securities or
warrants, options or other rights to acquire any debt securities of the
Company, (B) repurchase or prepay any Debt Obligations or debt
securities of the Company or any third person, (C) guarantee any
indebtedness or debt securities of another person or enter into any
"keep well" or other Contract to maintain any financial statement
condition of another person or (D) make any loans, advances (other than
in respect of travel expenses advanced to employees in the ordinary
course of business consistent with past practice) or capital
contributions to, or investments in, any other person, other than the
Company;
(vii) incur or commit to incur any capital
expenditure, or any obligations or liabilities in connection therewith,
except as set forth in the capital expenditure budget provided to
Parent;
(viii) (A) pay, discharge, settle or satisfy any claims
(including claims of any stockholders of the Company and any
stockholder litigation relating to this Agreement, the Principal
Stockholders' Agreement, the Merger or any other transaction
contemplated hereby or thereby), liabilities or obligations (whether
absolute, accrued, asserted or unasserted, contingent or otherwise),
other than the payment, discharge or satisfaction of claims,
34
liabilities or obligations (x) in the ordinary course of business
consistent with past practice, or (y) for an immaterial amount of money
or (z) with the proceeds of any insurance recoveries in respect of such
claims, liabilities or obligations under insurance policies of the
Company (provided that payments, discharges, settlements and
satisfactions under subsections (x), (y) and (z) shall not have and
shall not be reasonably likely to have a material and adverse effect or
include the admission of liability), or (B) waive, release, grant or
transfer any right of material value, other than in the ordinary course
of business consistent with past practice, or (C) waive any material
benefits of, agree to modify in a manner materially adverse to the
Company, fail to enforce or consent to any matter with respect to which
its consent is required under any confidentiality, standstill or
similar Contract to which the Company is a party;
(ix) grant to any director, officer, employee or
consultant of the Company any increase in (A) compensation, bonus or
other benefits or (B) severance or termination pay, in each case,
except as required by any Company Plan or Company Benefit Agreement as
in effect on the date hereof;
(x) (A) enter into, amend or terminate any Company
Plan or Company Benefit Agreement, (B) accelerate, fund or secure the
vesting or payment of compensation or benefits under any Company Plan
or Company Benefit Agreement, in each case except as required by any
Company Plan or Company Benefit Agreement as in effect on the date
hereof or (C) adopt, enter into, amend or terminate any collective
bargaining Contract or other labor union Contract;
(xi) except as required by GAAP or applicable Law,
make any change in its fiscal year, revalue any of its material assets
or make changes in financial or tax accounting methods, principles or
practices;
(xii) make any election with respect to taxes (other
than elections that are consistent with past practice) or enter into
any settlement or compromise of any material tax liability or refund;
(xiii) enter into any lease of real property;
(xiv) modify, amend, terminate or permit the lapse of
any Contract relating to the lease of any real property, any reciprocal
easement agreement or any operating agreement pertaining to, real
property;
(xv) maintain insurance at less than current levels
or otherwise in a manner inconsistent with past practice;
(xvi) take any action if such action is reasonably
likely to result in (A) any representation and warranty of the Company
set forth in this Agreement that is qualified as to materiality
becoming untrue, or (B) any such representation and warranty that is
not so qualified becoming untrue in any material respect;
(xvii) enter into any Contract of the type described in
Section 3.10(a);
35
(xviii) become guarantor, surety, endorser or otherwise
liable for the debts or obligations (direct or indirect, known or
unknown, absolute or contingent) of any other person;
(xix) alter through merger, liquidation,
reorganization, restructuring, sale of shares or in any other fashion
the corporate structure or ownership of the Company; or
(xx) propose, resolve, authorize, agree or commit to
take any of the foregoing actions.
(b) Litigation. The Company shall promptly provide to Parent
written notice and copies of all pleadings and correspondence in connection with
any claim, suit, action, investigation or other proceeding before or by a
Governmental Authority against the Company or its directors relating to the
transactions contemplated by this Agreement or by the Principal Stockholders'
Agreement. Without limiting the generality of the foregoing, the Company shall
give Parent the opportunity to participate in the defense of any litigation
against the Company or its directors relating to the transactions contemplated
by this Agreement or by the Principal Stockholders' Agreement.
(c) Certain Tax Matters. During the period from the date
hereof to the Effective Time, the Company shall cause any and all existing tax
sharing Contracts, tax indemnity obligations and similar Contracts, arrangements
and practices with respect to taxes to which the Company is a party or by which
the Company is otherwise bound to be terminated as of the Closing Date so that
after such date the Company shall not have any further rights or liabilities
thereunder.
(d) Advice of Changes. The Company shall promptly advise
Parent orally and in writing of (i) any Effect that has had or is reasonably
likely to have a Material Adverse Effect and (ii) upon obtaining Knowledge
thereof, any representation or warranty made by it contained in this Agreement
becoming untrue or inaccurate such that the conditions set forth in Article VII
would not be satisfied; provided, however, that no such notification shall
affect the representations, warranties, covenants or agreements of the parties
or the conditions to the obligations of the parties under this Agreement.
Section 5.02 No Solicitation by the Company.
------------------------------
(a) No Solicitation. From the date hereof until the
Effective Time or the earlier termination of this Agreement in accordance with
Article VIII, except as described in this Section 5.02, the Company shall not,
and it shall cause its officers, directors or employees or the investment
bankers, financial advisors, attorneys, accountants or other representatives
retained by it not to, directly or indirectly, (i) solicit, initiate or
encourage (including by way of furnishing information which has not been
previously publicly disseminated), or take any other action designed to
facilitate, any inquiries or the making of any proposal which constitutes, or
may reasonably be expected to lead to, any Takeover Proposal (as defined in
Section 5.02(f)(i)); (ii) participate in any way in any discussions or
negotiations regarding any Takeover Proposal; (iii) furnish or disclose to any
person (other than Parent) any information with respect to, or take any other
action to facilitate or in furtherance of any inquiries or the making of any
proposal that constitutes, or could reasonably be expected to lead to, any
36
Takeover Proposal; (iv) approve, endorse or recommend any Takeover Proposal; or
(v) enter into any agreement related to any Takeover Proposal (an "Alternative
Acquisition Agreement") or any agreement or understanding requiring it to
abandon, terminate or fail to consummate the Merger or any transaction
contemplated by this Agreement. The Company shall cease each of the foregoing
actions, and shall cause its officers, directors, employees, financial advisors,
attorneys and other advisors to cease, any and all such existing actions.
Notwithstanding the foregoing, the Company shall not be deemed to have acted in
violation of the provisions of this Section 5.02(a) if (i) it shall respond to
an unsolicited Takeover Proposal by doing nothing more than providing the party
making such unsolicited Takeover Proposal (the "Interested Acquiror") copies of
this Agreement prior to the time that this Agreement is publicly filed with the
SEC, (ii) in response to a specific request made by an Interested Acquiror, the
Company's legal counsel engages in non-substantive discussions with the
Interested Acquiror for the sole purpose of clarifying the procedural
requirements set forth in Sections 5.02, 6.05, and 8.01 of this Agreement to be
followed by the Interested Acquiror, the Company, and the Company's Board of
Directors as a condition precedent to consummation by such Interested Acquiror
of a Takeover Proposal, or (iii) the Company shall provide financial information
or other information regarding the Company pursuant to contractual obligations
of the Company existing as of the date hereof and set forth in Section 5.02(a)
of the Company Disclosure Letter, if and only if the party receiving such
information from the Company is a party to such contractual obligation and such
party is not a person making a Takeover Proposal; provided, however, that the
Company shall provide Parent as promptly as reasonably practicable (and, in any
event, within 24 hours) with oral and written notice of any actions taken
pursuant to the last sentence of this Section 5.02(a).
(b) Notification of Takeover Proposals. As promptly as
reasonably practicable (and, in any event, within 24 hours) after receipt by the
Company of any Takeover Proposal or any written request for nonpublic
information or inquiry relating to a Takeover Proposal, the Company shall
provide Parent with oral and written notice of the material terms and conditions
of such Takeover Proposal, request or inquiry, and the identity of the person
making such Takeover Proposal, request or inquiry and a copy of all written
materials provided from the person making such Takeover Proposal in connection
with such Takeover Proposal, request or inquiry. The Company shall provide
Parent as promptly as reasonably practicable (and, in any event within 24 hours)
copies of all correspondence and other written materials reasonably relating to
the Takeover Proposal, request or inquiry and the status and details thereof
(including material amendments or proposed material amendments) and notice of
all changes in the aggregate amount of consideration contemplated by the
Takeover Proposal. The Company shall promptly provide oral updates to Parent,
upon request by Parent, regarding all material developments with respect to such
Takeover Proposal.
(c) Superior Proposals. Notwithstanding anything to the
contrary contained in this Section 5.02, in the event that (i) the Company
receives an unsolicited written bona fide Takeover Proposal and the Board of
Directors (or a committee thereof) has in good faith concluded that such
Takeover Proposal is, or could reasonably be expected based on the written
contents of such Takeover Proposal to lead to, a Superior Proposal (as defined
in Section 5.02(f)(ii)), and (ii) the Board of Directors (or a committee
thereof) concludes in good faith following consultation with its outside legal
counsel that the failure to do any of the following would be likely to
constitute a breach of its fiduciary duties to the Company's stockholders under
37
applicable law, then, (x) after providing written notice of its decision to take
such action to Parent (the "Company Notice") and (y) on or before the fifth
(5th) Business Day following the date on which a person making a Takeover
Proposal has made its first Takeover Proposal (which the Board of Directors (or
a committee thereof) has in good faith concluded is, or could reasonably be
expected to lead to, a Superior Proposal) which is received by the Company
following the execution hereof and on or before the Closing, it may:
(A) request information from the person making such
Takeover Proposal for the purpose of the Board of Directors
informing itself about the Takeover Proposal that has been
made and the person that made it;
(B) furnish information with respect to the Company
to the person making such Takeover Proposal pursuant to a
customary confidentiality agreement the benefits of the terms
are which no more favorable to the person making such Takeover
Proposal than the Confidentiality Agreement in any material
respect; provided that such confidentiality agreement shall
not prohibit disclosure to Parent of the terms and conditions
of such Takeover Proposal, including the identity of the
person making such Takeover Proposal and any material changes
thereto; and
(C) engage in discussions or negotiations with the
person making such Takeover Proposal regarding such Takeover
Proposal.
(d) Change of Recommendation. Following the receipt of an
unsolicited Takeover Proposal received by the Company before the Closing that is
a Superior Proposal, the Board of Directors (or a committee thereof) may cause
the Company to terminate this Agreement pursuant to Section 8.01(d)(i) and
either (x) enter into or seek to enter into an Alternative Acquisition Agreement
with respect to a Superior Proposal or (y) in the case of a Superior Proposal
that is a tender offer or exchange offer made directly to its stockholders,
recommend that its stockholders accept the tender or exchange offer (any such
termination, whether caused by the Board of Directors or a committee thereof,
and actions described under clause (x) or (y) above, a "Change of
Recommendation"); provided, however, that the Company shall not terminate this
Agreement pursuant to this Section 5.02(d) or Section 8.01(d)(i), and any
purported termination pursuant to such sections shall be void and of no force
and effect, unless concurrently with such termination pursuant to this Section
5.02(d) or Section 8.01(d)(i), the Company satisfies all of the following
conditions:
(i) the Superior Proposal has been made and has not
been withdrawn and continues to be a Superior Proposal;
(ii) the Company has (A) provided to Parent five (5)
Business Days' prior written notice (a "Change of Recommendation
Notice") which shall state expressly (x) that it has received a
Superior Proposal, (y) the material terms and conditions of the
Superior Proposal and the identity of the person making the Superior
Proposal, and (z) that it intends to effect a Change of Recommendation
and the manner in which it intends to do so, (B) provided to Parent all
materials and information made available to the person making the
Superior Proposal in connection with such Superior Proposal not
38
otherwise made available to Parent, and (C) during such five (5)
Business Day period, if requested by Parent, engaged in good faith
negotiations to amend this Agreement in such a manner that the Takeover
Proposal which was determined to be a Superior Proposal no longer is a
Superior Proposal (for purposes of such determination, if the
consideration offered in a Superior Proposal is other than cash, Parent
shall be deemed to have "matched" such Superior Proposal for purposes
of the amount of consideration of such Superior Proposal if the
aggregate consideration offered by Parent has a value that is not less
than the value of the consideration offered in the Superior Proposal,
as determined in good faith by the Board of Directors (or a committee
thereof), after consultation with and taking into account the advice of
its outside legal counsel);
(iii) the Company shall have paid to Parent the
Termination Fee and the Expense Reimbursement referred to in Section
6.05(b); and
(iv) the Company shall have complied with this
Section 5.02(d) and shall not have breached in any material respect any
of the other provisions set forth in this Section 5.02.
(e) Compliance with Tender Offer Rules. Nothing contained in
this Section 5.02 or in Section 6.06 shall prohibit the Company from taking and
disclosing to its stockholders a position with respect to a Takeover Proposal by
a third party to the extent required by Rule 14d-9(a) or Rule 14e-2(a)
promulgated under the Exchange Act or from making any disclosure to the
Company's stockholders required by law; provided, however, neither the Company
nor the Board of Directors nor any committee thereof shall, except as in
accordance with Section 5.02(d), effect or propose publicly to effect a Change
of Recommendation.
(f) Definitions. For purposes of this Agreement:
(i) "Takeover Proposal" means any inquiry, proposal
or offer from any person other than Parent or its subsidiaries,
affiliates or representatives relating to any acquisition, purchase,
lease, sale, issuance or other disposition, directly or indirectly, by
merger, consolidation, share exchange or otherwise of substantially all
of the assets of the Company or at least a majority of the voting power
represented by the equity securities of the Company, any tender offer
or exchange offer that if consummated would result in any person
beneficially owning at least a majority of the voting power represented
by the equity securities of the Company, or any merger, consolidation,
share exchange, business combination, recapitalization, liquidation,
dissolution or similar transaction involving the Company, or any
combination of the foregoing, other than the transactions contemplated
by this Agreement.
(ii) "Superior Proposal" means any bona fide Takeover
Proposal submitted to the Company or the Board of Directors (or any
committee thereof) which did not result from a breach of this Section
5.02 and which the Board of Directors (or any committee thereof)
concludes in good faith after (A) taking into account all relevant
factors, facts and circumstances, including (x) the respective terms,
conditions and structure of the transaction contemplated by this
Agreement and the transaction contemplated by such Takeover Proposal,
including pricing terms, the type of consideration, financing
39
conditions and contingencies, regulatory conditions and impediments,
other conditions, termination rights, break-up or similar fees, expense
reimbursement obligations and the timing of the closing of the
transaction, (y) the likelihood that each such transaction will be
consummated and (z) any changes to the terms of this Agreement which
have been proposed by Parent, and (B) consulting with its outside legal
advisors, is, given all relevant factors, more favorable to the
Company's stockholders from a financial point of view than the terms of
the transactions contemplated by this Agreement (including any changes
to the terms of this Agreement which have been proposed by Parent).
(g) Immediately following a request by Parent, the Company
shall request each person or entity which has heretofore executed a
confidentiality agreement in connection with its consideration of acquiring the
Company or any portion thereof to return all confidential information heretofore
furnished to such person or entity by or on behalf of the Company.
ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.01 Preparation of the Proxy Statement.
----------------------------------
(a) As promptly as practicable following the date hereof,
the Company shall prepare and file with the SEC the Proxy Statement in
preliminary form pursuant to Regulation 14A promulgated under the Exchange Act.
Each of the Company and Parent shall use commercially reasonable efforts to
respond as promptly as practicable to any comments of the SEC with respect to
the Proxy Statement and to cause the Proxy Statement to be mailed to the
Company's stockholders as promptly as practicable following the date hereof.
Each of the Company and Parent shall furnish all information concerning such
person to the other as may be reasonably requested in connection with the
preparation, filing and distribution of the Proxy Statement. The Company shall
promptly notify Parent upon the receipt of any comments from the SEC or its
staff or any request from the SEC or its staff for amendments or supplements to
the Proxy Statement and shall provide Parent with copies of all correspondence
between it and its representatives, agents and advisors, on the one hand, and
the SEC and its staff, on the other hand. Notwithstanding the foregoing, prior
to filing or mailing the Proxy Statement (or any amendment or supplement
thereto) or responding to any comments of the SEC with respect thereto, the
Company (i) shall provide Parent an opportunity to review and comment on such
document or response, (ii) shall include in such document or response all
comments reasonably proposed by Parent and (iii) shall not file or mail such
document or respond to the SEC prior to receiving the consent of Parent.
(b) If at any time prior to the Effective Time there shall
occur (i) any event with respect to the Company, or with respect to other
information regarding the Company in the Proxy Statement or (ii) any event with
respect to Parent, or with respect to information supplied by Parent for
inclusion in the Proxy Statement, in either case, which event is required to be
described in an amendment of, or a supplement to, the Proxy Statement, such
event promptly shall be so described by the Company to Parent or by Parent to
the Company, as the case may be, and such amendment or supplement shall be
40
promptly filed by the Company with the SEC and, as required by law, disseminated
to the holders of Company Stock.
(c) The Company shall promptly notify Parent of the receipt
of any comments from the SEC or its staff or any other appropriate government
official and of any requests by the SEC or its staff or any other appropriate
government official for amendments or supplements to any of the filings with the
SEC in connection with the Merger and the other transactions contemplated hereby
or for additional information, and shall supply Parent with copies of all
correspondence between the Company or any of its representatives, on the one
hand, and the SEC or its staff or any other appropriate government official, on
the other hand, with respect thereto. The Company shall use its commercially
reasonable efforts to respond to any comments of the SEC with respect to the
Proxy Statement as promptly as reasonably practicable after the receipt thereof.
Parent shall cooperate with the Company and provide to the Company all
information about Parent reasonably necessary to prepare the Proxy Statement.
(d) Subject to Sections 5.02(c) and (d), the Company shall,
as promptly as reasonably practicable after the Proxy Statement is cleared by
the SEC, duly call, give notice of, convene and hold the Company Stockholders
Meeting in accordance with the DGCL, the Company Certificate and the Company
By-laws, as applicable. Subject to Sections 5.02(c) and (d), the Company shall
take all other lawful action reasonably necessary and reasonably desirable to
obtain the Stockholder Approval as promptly as reasonably practicable after the
Proxy Statement is cleared by the SEC.
(e) The Proxy Statement shall include the recommendation of
the Board of Directors of the Company to the stockholders of the Company that
they vote in favor of the Merger, this Agreement and the other transactions
contemplated hereby, subject to Sections 5.02(c) and (d).
Section 6.02 Access to Information; Confidentiality. Subject to
applicable Laws relating to the exchange of information, the Company shall
afford, upon reasonable advance notice, to Parent and Parent's representatives,
agents and advisors, reasonable access during normal business hours during the
period prior to the Effective Time or the termination of this Agreement to all
of its properties and other assets, books, contracts, commitments, records,
directors, officers, employees, attorneys, accountants, and auditors and other
advisors and, during such period, the Company shall furnish promptly to Parent
(i) a copy of each report, schedule, registration statement and other document
filed by it during such period pursuant to the requirements of Federal or state
securities Laws, and (ii) all other information concerning its business,
properties and personnel as Parent may reasonably request. Parent shall hold,
and shall cause its representatives, agents and advisors to hold, all
confidential information received from the Company, directly or indirectly,
under this Agreement or otherwise in confidence.
Section 6.03 Commercially Reasonable Efforts.
-------------------------------
(a) Upon the terms and subject to the conditions set forth
in this Agreement, each of the parties agrees to use, except as otherwise
provided below, its commercially reasonable efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, and to assist and cooperate
with the other parties in doing, all things necessary, proper or advisable to
41
consummate and make effective, in the most expeditious manner practicable, the
Merger and the other transactions contemplated by this Agreement, including
using commercially reasonable efforts to accomplish the following: (i) the
taking of all acts necessary to cause the conditions to Closing to be satisfied
as promptly as practicable, (ii) the obtaining of all necessary actions or
non-actions, waivers, consents, approvals, orders and authorizations from, and
the giving of any necessary notices to, Governmental Authorities and the making
of all necessary registrations, declarations and filings (including filings with
Governmental Authorities, if any), and the taking of all acts as may be
necessary to obtain any such action, non-action, waiver, consent, approval,
order or authorization, and (iii) the execution and delivery of any additional
instruments necessary to consummate the transactions contemplated by, and to
fully carry out the purposes of, this Agreement.
(b) Parent and the Company shall take any and all
commercially reasonable steps necessary to avoid or eliminate each and every
impediment under any Competition Law that may be asserted by any Governmental
Authority with respect to the Merger so as to enable the Effective Time to occur
as promptly as reasonably practicable and to avoid any suit or proceeding that
would otherwise have the effect of preventing or delaying the Effective Time;
provided, however, that Parent shall not be required to, and the Company shall
not, without the written consent of Parent, agree or proffer to divest or hold
separate, enter into any licensing or similar arrangement with respect to, or
take any other action with respect to (A) any of the properties, other assets
(whether tangible or intangible) or any portion of any business of Parent or any
of its Affiliates or (B) any of the properties, other assets (whether tangible
or intangible) or any portion of any business of the Company. Each party hereto
shall (x) promptly notify the other party of any written communication to that
party or its Affiliates from any Governmental Authority and, subject to
applicable Law, permit the other party to review in advance any proposed written
communication to any of the foregoing, (y) not agree to participate, or to
permit its Affiliates to participate, in any substantive meeting or discussion
with any Governmental Authority with respect of any filings, investigation or
inquiry concerning this Agreement or the Merger unless it consults with the
other party in advance and, to the extent permitted by such Governmental
Authority, gives the other party the opportunity to attend and participate
thereat, and (z) furnish the other party with copies of all correspondence,
filings and communications (and memoranda setting forth the substance thereof)
between them and their Affiliates and their respective representatives, agents
and advisors, on the one hand, and any Governmental Authority or members of
their respective staffs, on the other hand, with respect to this Agreement and
the Merger. The cost and expense of any filings (or similar fees) required to be
made with any Governmental Authority under any Competition Law shall be borne by
Parent.
Section 6.04 Indemnification, Exculpation and Insurance.
------------------------------------------
(a) Parent and Merger Sub agree that all rights to
indemnification and exculpation from liabilities for acts or omissions occurring
as of or prior to the Effective Time (and any rights relating to the advancement
of expenses) existing as of the date hereof in favor of the current or former
directors, officers, employees or agents of the Company (each, an "Indemnitee")
as provided in the Company Certificate and the Company By-laws and
indemnification Contracts in existence as of the date hereof between the Company
and any of them shall be assumed by the Surviving Corporation, without further
action, as of the Effective Time and shall survive the Merger and shall continue
in full force and effect in accordance with their terms. Such rights shall not
42
be amended, or otherwise modified in any manner that would adversely affect the
rights of the Indemnitees, unless such modification is required by Law. In
addition, the Surviving Corporation shall pay any related expenses of any
Indemnitee under this Section 6.04(a) as incurred to the fullest extent
permitted under applicable Law (including expenses incurred to determine whether
indemnification or exculpation is available), provided that the person to whom
expenses are advanced provides an undertaking to repay such advances to the
extent required by applicable Law. Parent shall take any and all actions
necessary to ensure that the Surviving Corporation complies with and honors the
foregoing obligation as in effect on the date hereof, including providing funds,
if necessary, to permit the Surviving Corporation to comply with its obligations
under this Section 6.04(a).
(b) For a period of at least six (6) years after the
Effective Time, Parent shall cause the certificate of incorporation and by-laws
of the Surviving Corporation to contain provisions no less favorable with
respect to the limitation of certain liabilities of directors, officers,
employees and agents and indemnification than are set forth as of the date of
this Agreement in the Company Certificate and the Company By-laws, which
provisions shall not be amended, repealed or otherwise modified in a manner that
would adversely affect the rights thereunder of the Indemnitees.
(c) For six years after the Effective Time, Parent shall, or
shall cause the Surviving Corporation to, obtain and maintain director's and
officers' liability insurance with respect to acts, errors or omissions
occurring prior to the Effective Time ("Run-Off Insurance"). Such Run-Off
Insurance shall (i) solely be negotiated and implemented by the Parent or its
agents, (ii) provide coverage for each person or entity covered by the Company's
current directors and officers liability insurance policy as in effect on the
date hereof, (iii) not be cancelable by the Parent, its agents or the Surviving
Corporation during the six year term of such Run-Off Insurance and (iv) be no
less favorable with respect to coverage terms and amounts in any material
respect than the Company's current directors' and officers' liability insurance
policy as in effect on the date hereof; provided, however, that in no event
shall Parent, any of its Subsidiaries or the Surviving Corporation be obligated
or required to pay aggregate premiums for insurance under this Section 6.04(c)
in any annual coverage period in excess of 150% of the amount of the aggregate
premiums paid by the Company for the period from November 1, 2006 to, and
including, October 31, 2007, for such purpose (which premiums for such period
are hereby represented and warranted by the Company to be $17,000); provided
that Parent shall nevertheless be obligated to provide such coverage in any
annual coverage period as may be obtained for such 150% amount. Subject to this
Section 6.04(c), Parent or its agents shall have the right to substitute the
insurance company providing the Company's current director's and officer's
liability insurance policy with another financially sound insurance company.
(d) The provisions of this Section 6.04 are (i) intended to
be for the benefit of, and will be enforceable by, each Indemnitee and his or
her heirs and (ii) are in addition to, and not in substitution for, any other
rights to indemnification or contribution that any such person may have by
contract or otherwise.
(e) In the event that the Surviving Corporation or any of
its successors or assigns (i) consolidates with or merges into any other person
and is not the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers or conveys all or substantially all of
43
its properties and assets to any person, then, and in each such case as a
condition precedent to the Surviving Corporation or any of its successors or
assigns entering into such consolidation or merger, Parent shall cause proper
provision to be made so that the successor and assign of the Surviving
Corporation, as the case may be, assumes the obligations set forth in this
Section 6.04.
(f) The obligations of Parent and the Surviving Corporation
under this Section 6.04 shall not be terminated or modified in such a manner as
to adversely affect any Indemnitee to whom this Section 6.04 applies without the
consent of the affected Indemnitee (it being expressly agreed that the
Indemnitees to whom this Section 6.04 applies shall be third party beneficiaries
of this Section 6.04).
Section 6.05 Fees and Expenses.
-----------------
(a) Except as provided in Section 6.05(b), all fees and
expenses incurred in connection with this Agreement, the Principal Stockholders'
Agreement, the Merger and the other transactions contemplated hereby and thereby
shall be paid by the party incurring such fees or expenses, whether or not the
Merger or any such other transaction is consummated.
(b) (i) The Company will reimburse Parent in immediately
available funds for all Expenses up to a maximum reimbursement of $500,000
("Expense Reimbursement") and a termination fee in an amount equal to $1,000,000
("Termination Fee"):
(A) if this Agreement is terminated by the Company
pursuant to Section 5.02(d) or Section 8.01(d)(i);
(B) if this Agreement is terminated by Parent
pursuant to Section 8.01(e) (or by the Company for any reason
at any time after Parent becomes entitled to terminate this
Agreement pursuant to Section 8.01(e)); or
(C) if (1) this Agreement is terminated by Parent or
the Company (except for a termination by the Company resulting
from Parent's material failure to fulfill any of its
obligations under this Agreement which is the sole cause of or
resulted in the failure of the Merger to occur on or before
the Outside Date) pursuant to Section 8.01(b)(i), and (2) a
bona fide Takeover Proposal has been submitted to the Company
or the Board of Directors (or any committee thereof) after the
date of this Agreement but prior to the Outside Date, and (3)
within twelve (12) months of the date of such termination the
Company enters into an Alternative Acquisition Agreement with
the same person or entity (or any Affiliate thereof) that made
such bona fide Takeover Proposal.
(ii) The Company will pay the Parent the Expense
Reimbursement (but not the Termination Fee) if this Agreement is
terminated by Parent pursuant to Section 8.01(c)(i).
(iii) The Company shall make any payments required by
this Section 6.05(b) in immediately available funds (A) as a condition
precedent to terminating this Agreement pursuant to Section 5.02(d) or
Section 8.01(d)(i), (B) within 3 Business Days of the date of
44
termination in the case of termination pursuant to Section 8.01(e) or
Section 8.01(c)(i), or (C) the date of the execution of such
Alternative Acquisition Agreement under the circumstances contemplated
by Section 6.05(b)(i)(C).
(iv) If the Termination Fee and/or the Expense
Reimbursement becomes due and owing, such Termination Fee and/or
Expense Reimbursement, as applicable, shall constitute liquidated
damages and the sole and exclusive remedy for Parent and Merger Sub for
any and all claims arising from the Company's failure to consummate the
transactions contemplated by this Agreement.
Section 6.06 Public Announcements. Parent and the Company shall
consult with each other before issuing, and give each other the opportunity to
review and comment upon, any press release or other public statements with
respect to this Agreement, the Principal Stockholders' Agreement, the Merger and
the other transactions contemplated hereby and thereby, and shall not issue any
such press release or make any such public statement without the consent of the
other party, such consent not to be unreasonably withheld or delayed, except as
may be required by applicable Law, court process or by obligations pursuant to
any listing agreement with any national securities exchange or national
securities quotation system. The parties agree that the initial press release to
be issued with respect to the transactions contemplated by this Agreement shall
be in a form mutually agreed to by the parties.
Section 6.07 Employee Matters.
----------------
(a) Employees who continue their employment after the
Effective Time ("Affected Employees") shall receive employee benefits
substantially comparable in the aggregate to the Company Plans listed on Section
3.14(a) of the Company Disclosure Letter according to their terms as in effect
immediately prior to the Effective Time (excluding for all purposes stock-based
plans and other equity-based compensation arrangements).
(b) For purposes of any applicable waiting period, vesting
eligibility and benefit entitlement (but excluding benefit accruals under any
defined benefit pension plan), following the Effective Time, Parent shall, or
shall cause its Affiliates to, recognize each Affected Employee's service with
the Company prior to the Effective Time as service with Parent and its
Affiliates in connection with any tax-qualified pension plan, 401(k) savings or
other retirement plan and welfare benefit plan (including paid time off,
vacations and holidays) maintained by Parent or any of its Affiliates in which
such Affected Employee participates, but only (i) to the extent such service was
recognized under a comparable plan of the Company immediately prior to the
Effective Time and (ii) to the extent the recognition of such service would not
result in a duplication of benefits. Parent shall, or shall cause its Affiliates
to, waive any pre-existing condition exclusions, evidence of insurability
provisions, waiting period requirements or any similar provision under any of
the welfare plans maintained by Parent or any of its Affiliates in which
Affected Employees participate following the Effective Time to the extent such
limitations and restrictions were waived or satisfied under the applicable
Company Plan immediately prior to the Effective Time. In addition, Affected
Employees shall receive credit for any co-payments, deductibles and annual
out-of-pocket expenses incurred under the welfare plans of the Company or any of
its Affiliates during the calendar year in which the Effective Time occurs, but
prior to the Effective Time, for purposes of the corresponding co-payments,
45
deductibles and annual out-of-pocket expenses under welfare plans of Parent or
any of its Affiliates for the calendar year in which the Effective Time occurs.
(c) Nothing contained in this Section 6.07 or elsewhere in
this Agreement shall be construed to prevent, from and after the Effective Time,
the termination of employment of any individual Affected Employee or any change
in the particular employee benefits available to any such individual Affected
Employee or the amendment or termination of any particular Company Plan or
Company Benefit Agreement in accordance with the terms of such Company Plan or
Company Benefit Agreement.
Section 6.08 Principal Stockholders' Agreement. Concurrently
herewith, the Principal Stockholders entered into the Principal Stockholders'
Agreement with Parent in substantially the form attached hereto as Exhibit A.
Section 6.09 Executives' Employment Agreements. Concurrently
herewith, the Executives entered into the Employment Agreements with Parent in
substantially the form attached hereto as Exhibit B, such Employment Agreements
to become effective at the Effective Time.
Section 6.10 Section 16 Matters. Prior to the Effective Time, Parent
and the Company shall use all reasonable efforts to approve in advance in
accordance with the procedures set forth in Rule 16b-3 promulgated under the
Exchange Act any dispositions of securities of the Company (including derivative
securities with respect to securities of the Company, including any Company
Preferred Stock or Company Stock Options) resulting from the transactions
contemplated by this Agreement by each officer or director of the Company who is
subject to Section 16 of the Exchange Act (or who will become subject to Section
16 of the Exchange Act as a result of the transactions contemplated hereby) with
respect to equity securities of the Company.
Section 6.11 Stock Plans. The Board of Directors (or, if appropriate,
any committee thereof) shall adopt appropriate resolutions and the Company shall
amend the Company Stock Plans and take the actions described in Section 6.11 of
the Company Disclosure Letter to effectuate the treatment of each outstanding
Company Stock Option at the Effective Time as contemplated by Section 2.04(a).
The Board of Directors (or, if appropriate, any committee thereof) shall adopt
such resolutions and take such other action as may be necessary to terminate, as
of the Effective Time, any plan, program or arrangement providing for the
prospective issuance or grant of any interest in respect of the capital stock of
the Company.
Section 6.12 Indemnification Obligations of ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ as an
Individual. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ agrees to indemnify the Parent and the Company
against any and all Company Transaction Costs that exceed, in the aggregate,
$350,000 (which excess costs shall be deducted from the portion of the Common
Stock Merger Consideration payable to ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇).
ARTICLE VII
CONDITIONS PRECEDENT
46
Section 7.01 Conditions to Each Party's Obligation To Effect the
Merger. The respective obligation of each party hereto to effect the Merger is
subject to the satisfaction or waiver by such party on or prior to the Closing
Date of the following conditions:
(a) Stockholder Approval. The Stockholder Approval shall
have been obtained.
(b) No Injunctions or Restraints. No (i) temporary
restraining order, preliminary or permanent injunction or other judgment, order
or decree issued by any Governmental Authority or (ii) Law that, in either case,
has the effect of preventing the consummation of the Merger (collectively,
"Restraints") shall be in effect.
Section 7.02 Conditions to Obligations of Parent and Merger Sub. The
obligations of Parent and Merger Sub to effect the Merger are further subject to
the satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Representations and Warranties.
(i) The representations and warranties of the
Company contained in Article III that are qualified as to materiality
or Material Adverse Effect shall be true and correct in all respects
and those not so qualified shall be true and correct in all material
respects, in each case, as of the date hereof and as of the Closing
Date, with the same effect as if made as of the Closing Date (or, if
given as of a specific date, as of such date); and
(ii) Parent 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 the effect of the preceding clause
(i).
(b) Performance of Obligations of the Company. The Company
shall have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing Date, and Parent
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) No Litigation. (i) There shall not be pending any claim,
suit, action, investigation or other proceeding, whether judicial or
administrative, brought or threatened in writing by any Governmental Authority
(A) challenging or seeking to restrain or prohibit the consummation of the
Merger, (B) seeking to prohibit or limit in any material respect the ownership
or operation by the Company, Parent or any of their respective Affiliates of the
properties, other assets (whether tangible or intangible) or any portion of any
business of the Company or Parent and its Subsidiaries or to require any such
person to dispose of or hold separate any of the properties, other assets
(whether tangible or intangible) or any portion of any business of the Company
or Parent and its Subsidiaries, in each case, as a result of the Merger or (C)
seeking to prohibit Parent or any of its Affiliates from effectively controlling
in any material respect the properties, other assets (whether tangible or
intangible) or any portion of any business of the Company.
47
(d) Appraisal Rights. The Company shall not have received
from the holders of more than 612,075 shares of Company Common Stock, notice of
intention to demand appraisal of their shares pursuant to Section 262(d) of the
DGCL.
(e) Resignations. Each of the officers and directors of the
Company listed in Section 3.01 of the Company Disclosure Letter shall have
resigned such positions as of the Effective Time.
(f) Executives; Employment Agreements. Neither ▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇ nor ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ shall have died or suffered any injury, sickness
or mental illness or other condition which has resulted in, or is reasonably
likely to result in, his "disability" (as defined in the Company's executive
disability insurance plan). The Employment Agreements shall continue and remain
in full force and effect.
(g) Material Adverse Effect. There shall not have occurred
any Effect that, individually or in the aggregate, has had or would reasonably
be expected to have a Material Adverse Effect.
(h) Lease Amendment. The Wyomissing Lease shall have been
amended in the form attached hereto as Exhibit C.
(i) Non-Disturbance Agreement. With respect to the
Wyomissing Lease, Parent shall have obtained a subordination, non-disturbance
and attornment agreement from the landlord's lender that is reasonably
satisfactory to Parent.
Section 7.03 Conditions to Obligation of the Company. The obligation
of the Company to effect the Merger is further subject to the satisfaction or
waiver on or prior to the Closing Date of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Parent and Merger Sub contained in this Agreement, disregarding
all qualifications and exceptions contained therein relating to materiality,
shall be true and correct as of the date hereof and as of the Closing Date with
the same effect as if made on and as of the Closing Date (or, if given as of a
specific date, at and as of such date), except where the failure to be true and
correct is not reasonably likely to impair in any material respect the ability
of each of Parent and Merger Sub to perform their obligations under this
Agreement or prevent or materially impede, interfere with, hinder or delay the
consummation of the Merger or any of the other transactions contemplated by this
Agreement. The Company shall have received a certificate signed on behalf of
Parent by an executive officer of Parent to such effect.
(b) Performance of Obligations of Parent and Merger Sub.
Parent and Merger Sub shall have performed in all material respects all
obligations required to be performed by them under this Agreement at or prior to
the Closing Date, and the Company shall have received a certificate signed on
behalf of Parent by an executive officer of Parent to such effect.
Section 7.04 Frustration of Closing Conditions. None of the Company,
Parent or Merger Sub may rely on the failure of any condition set forth in
Section 7.01, 7.02 or 7.03, as the case may be, to be satisfied if such failure
was caused by such party's failure to use its commercially reasonable efforts,
48
as the case may be, to consummate the Merger and the other transactions
contemplated by this Agreement, as required by and subject to Section 6.03.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
Section 8.01 Termination. This Agreement may be terminated, and the
Merger contemplated hereby may be abandoned, at any time prior to the Effective
Time, whether before or after receipt of the Stockholder Approval:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company, (i) if, for any reason,
the Merger shall not have been consummated on or before the date that is 120
days after the execution of the Merger Agreement (the "Outside Date") for any
reason; provided, however, that the right to terminate this Agreement under this
clause 8.01(b)(i) shall not be available to any party hereto whose material
failure to fulfill any of its obligations under this Agreement has been the
principal cause of or resulted in the failure of the Merger to occur on or
before the Outside Date; or (ii) if any Restraint having the effect set forth in
Section 7.01(c) shall be in effect and shall have become final and
nonappealable, provided, however, that the right to terminate this Agreement
under this clause 8.01(b)(ii) shall not be available to any party hereto whose
material failure to fulfill any of its obligations under this Agreement has been
the principal cause of or resulted in such Restraint;
(c) by Parent, (i) if the Company shall have materially
breached or failed to perform any of its representations, warranties, covenants
or agreements set forth in this Agreement, which breach or failure to perform
(A) would give rise to the failure of a condition set forth in Section 7.02(a)
or (b), and (B) is incapable of being cured by the Outside Date or is capable of
being cured by the Outside Date but the Company is not reasonably attempting, or
has ceased to reasonably attempt, to diligently cure such breach or failure
after its receipt of written notice thereof from Parent; or (ii) if any
Restraint having the effect of granting or implementing any relief referred to
in Section 7.02(c) shall be in effect and shall have become final and
nonappealable;
(d) by the Company, (i) if the Board of Directors shall have
effected a Change of Recommendation; provided, however, that it shall be a
condition to the exercise of this right of termination that it shall have
complied with the conditions to taking such action set forth in Section 5.02(d);
or (ii) if Parent shall have materially breached or failed to perform any of its
representations, warranties, covenants or agreements set forth in this
Agreement, which breach or failure to perform (A) would give rise to the failure
of a condition set forth in Section 7.03(a) or (b) and (B) is incapable of being
cured by the Outside Date or is capable of being cured by the Outside Date but
Parent is not reasonably attempting, or has ceased to reasonably attempt, to
diligently cure such breach or failure after its receipt of written notice
thereof from the Company;
49
(e) by Parent if (i) the Company, or its Board of Directors,
as the case may be, shall have (A) entered into any Alternative Acquisition
Agreement, (B) withdrawn or modified, or proposed to withdraw or modify, in a
manner adverse to Parent, its approval and recommendation of the Merger and this
Agreement, (C) approved or recommended, or proposed to approve or recommend, any
Takeover Proposal other than the Merger or (D) announced a neutral position with
respect to any Takeover Proposal other than the Merger and does not reject such
Takeover Proposal within five (5) Business Days of the announcement of such
neutral position, (ii) the Company's Board of Directors or any committee thereof
shall have failed to reaffirm its unconditional approval and recommendation of
the Merger and the Merger Agreement within five (5) Business Days of Parent's
request for such reaffirmation, or (iii) the Company or the Company's Board of
Directors or any committee thereof shall have resolved to do any of the
foregoing;
(f) by Parent if the Company shall have received from the
holders of more than 612,075 shares of Company Common Stock, notice of intention
to demand appraisal of their shares pursuant to Section 262(d) of the DGCL;
(g) by either Parent or the Company, if Stockholder Approval
shall not have been obtained upon a vote taken thereof at the Company
Stockholders Meeting duly convened therefore (including any adjournment or
postponement thereof); or
(h) by Parent upon the occurrence of any Effect that
individually or in the aggregate has had or is reasonably likely to have a
Material Adverse Effect.
Section 8.02 Effect of Termination. In the event of a valid
termination of this Agreement by either the Company or Parent as provided in
Section 8.01, this Agreement shall forthwith become void and have no further
force or effect, without any liability or obligation on the part of Parent,
Merger Sub or the Company, other than the provisions of Section 3.27, Section
4.09, the last sentence of Section 6.02, Section 6.05, this Section 8.02 and
Article IX, which provisions shall survive such termination.
Section 8.03 Amendment. This Agreement may be amended by the parties
hereto at any time before or after receipt of the Stockholder Approval;
provided, however, that after such approval has been obtained, there shall be
made no amendment without obtaining the further approval of the stockholders of
the Company if such further approval is required by Law. This Agreement may not
be amended except by an instrument in writing signed on behalf of each of the
parties hereto.
Section 8.04 Extension; Waiver. At any time prior to the Effective
Time, the parties may (i) extend the time for the performance of any of the
obligations or other acts of the other parties, (ii) waive any inaccuracies in
the representations and warranties contained herein or in any document delivered
pursuant hereto or (iii) waive compliance with any of the agreements or
conditions contained herein; provided, however, that, after the Stockholder
Approval has been obtained, there shall be granted no extension or waiver
without obtaining the further approval of the stockholders of the Company if
such further approval is required by Law in connection with such extension or
waiver. Any agreement on the part of a party to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed on behalf of
such party. Any such waiver shall not operate as a waiver of, or estoppel with
50
respect to, any subsequent inaccuracy or noncompliance. The failure or delay 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 nor shall any single or
partial exercise by any party to this Agreement of any of its rights under this
Agreement preclude any other or further exercise of such rights or any other
rights under this Agreement.
Section 8.05 Procedure for Termination, Amendment or Waiver. A
termination of this Agreement pursuant to Section 8.01, an amendment of this
Agreement pursuant to Section 8.03 or an extension or waiver of any provision of
this Agreement pursuant to Section 8.04 shall, in order to be effective, require
(i) approval by the Board of Directors of each party hereto that is required to
act in connection with such termination, amendment, extension or waiver pursuant
to Section 8.01, 8.03 or 8.04, as the case may be, and (ii) to the extent
required by Section 8.03 or 8.04, approval by the Company's stockholders.
ARTICLE IX
GENERAL PROVISIONS
Section 9.01 Nonsurvival of Representations and Warranties. None of
the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time. This
Section 9.01 shall not limit any covenant or agreement of the parties which by
its terms contemplates performance after the Effective Time.
Section 9.02 Notices. Except for notices that are specifically
required by the terms of this Agreement to be delivered orally, all notices,
requests, claims, demands, waivers and other communications hereunder shall be
in writing and shall be deemed given if delivered personally, or sent by
overnight courier (providing proof of delivery) or transmitted by facsimile to
the parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
if to Parent or Merger Sub, to:
Invensys Systems, Inc.
c/o Invensys plc
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
Attention: Company Secretary
Facsimile No.: ▇▇.▇▇▇.▇▇▇.▇▇▇▇
with copies to (which shall not constitute notice):
McGuireWoods LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ III
Facsimile No.: 804.698.2249
and
51
Invensys Systems, Inc.
Wonderware Business Unit
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile No.: 949.639.1463
if to the Company, to:
CIMNET, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Chief Executive Officer
Facsimile No.: 610.736.0230
with a copy to (which shall not constitute notice):
▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile No.: 212.938.2812
Any such notice shall be effective (i) if delivered personally, when received,
(ii) if sent by overnight courier, when receipted for and (iii) if sent by
facsimile, upon receipt of confirmation of transmission to the facsimile number
set forth above, if transmitted during normal business hours at the location to
which it is transmitted or upon the opening of business on the next Business Day
if transmitted other than during normal business hours at the location to which
it is transmitted.
Section 9.03 Definitions. For purposes of this Agreement:
(a) an "Affiliate" of any person means another person that
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first person.
(b) "Business Day" means a day except a Saturday, a Sunday
or other day on which the SEC or banks in New York, New York are authorized or
required by Law to be closed.
(c) "Company Transaction Costs" means all costs and fees
paid or incurred by the Company after March 31, 2007 in connection with the
Merger and other transactions contemplated by this Agreement, including without
limitation, investment banking fees and fairness opinion fees, accounting fees,
and legal fees and associated expenses (excluding Appraisal Shares Amounts) and
in each case determined after giving effect to any tax benefit to be received by
52
the Company with respect to the payment of such costs and fees. Company
Transaction Costs shall not include any extraordinary costs or fees incurred by
the Company after the date of this Agreement relating to any claim, suit, action
or other proceeding arising out of the transactions contemplated by this
Agreement.
(d) "Competition Law" means any federal, state and foreign
Law or order that is designed or intended to prohibit, restrict or regulate
actions having the purpose or effect of monopolization, antitrust or restraint
of trade or lessening of competition.
(e) "Customer Agreements" means any binding agreement
between the Company on the one hand, and a customer of the Company on the other
hand, with respect to a Product, under which the Company is currently receiving
or has received revenue within the last 18 months.
(f) "Documentation" means all documentation and written
narratives of all procedures used in the operation or maintenance of, and
customer support with respect to, any Product.
(g) "ERISA Affiliates" means any entity, which, together
with Parent, Merger Sub and the Company, as the case may be, would be treated as
a single employer under Section 414(b), (c), (m) or (o) of the Code.
(h) "Expenses" means documented and reasonable out-of-pocket
fees and expenses incurred or paid by or on behalf of Parent in connection with
the Merger or the consummation of any of the transactions contemplated by this
Agreement, including all filing fees, printing fees and reasonable fees and
expenses of law firms, commercial banks, investment banking firms, accountants,
experts and consultants to Parent.
(i) "Knowledge" of any person that is not an individual
means, with respect to any matter in question, (i) the knowledge of such
person's executive officers and other officers or employees having primary
responsibility for such matter (which in the case of the Company shall mean only
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇▇
▇▇▇▇▇▇) and (ii) those facts and other matters that the foregoing persons would
reasonably been expected to discover or otherwise become aware of in the course
of conducting a reasonably comprehensive investigation (including a reasonable
inquiry of both their direct subordinates or Affiliates who could reasonably be
expected to have such knowledge) concerning the existence thereof.
(j) "Liens" means all pledges, claims, liens, charges,
options, rights of first refusal or similar rights, encumbrances and security
interests of any kind or nature whatsoever.
(k) "Material Adverse Effect" means any state of facts,
change, development, effect, condition or occurrence (any such item, an
"Effect") that is or is reasonably likely to (A) adversely affect in a material
respect the business, assets, liabilities, properties, condition (financial or
otherwise), results of operations of the Company or (B) impair in any material
respect the ability of the Company to perform its obligations under this
Agreement or prevent or materially impede, interfere with, hinder or delay the
consummation of the Merger or any of the other transactions contemplated hereby;
provided that, solely with respect to clause (A) of this definition, the
53
following shall not be deemed either alone or in combination to constitute, and
none of the following shall be taken into account in determining whether there
has been, or could reasonably be expected to be, a "Material Adverse Effect":
(1) any change, event, occurrence or state of facts relating to the U.S. or
global economy, financial markets or political conditions (in each case, in
general), including such changes thereto as are caused by terrorist activities,
entry into or material worsening of war or armed hostilities, or other national
or international calamity (in each case under this clause (1), other than any
such change, event, occurrence or state of facts that has a disproportionate
effect on the Company or its customers); (2) any change, event, occurrence or
state of facts that directly arises out of or results from the announcement or
pendency of this Agreement or any of the transactions contemplated hereby; (3)
any change, event, occurrence or state of facts directly arising out of or
resulting from any action taken, or failure to take an action, by the Company
with Parent's express written consent or in accordance with the express written
instructions of Parent or as otherwise expressly required or specifically
permitted to be taken by the Company pursuant to the terms of this Agreement;
(4) any change in the Company's stock price or trading volume or any failure to
meet internal projections or forecasts or published revenue or earnings
projections of industry analysts (provided that this clause (4) shall not be
construed as providing that the change, event, occurrence or state of facts
giving rise to such change or failure does not constitute or contribute to a
Material Adverse Effect); and (5) any change, event, occurrence or state of
facts arising out of any change in GAAP or applicable accounting requirements or
principles which occur or become effective after the date of this Agreement.
(l) "Permitted Liens" means (i) Liens for current taxes and
assessments not yet due and payable or being contested in good faith by
appropriate proceedings, (ii) Liens as reflected in title records relating to
real property owned or leased by the Company, and (iii) Liens that, individually
or in the aggregate, do not and could not reasonably be expected to materially
interfere with the conduct of the Company's business as currently conducted and
do not and could not reasonably be expected to adversely affect in any material
respect the use or value of the Company's assets as currently operated.
(m) "person" means an individual, corporation, partnership,
limited liability company, joint venture, joint stock company, Governmental
Authority, association, trust, unincorporated organization or other entity.
(n) A "Subsidiary" of any person means another person of
which (i) an amount of the voting securities, other voting rights or voting
partnership interests of which is sufficient to elect at least a majority of its
Board of Directors or other governing body (or, if there are no such voting
interests, 50% or more of the equity interests of which) is owned directly or
indirectly by such first person or (ii) such first person is a general partner.
(o) "Wachovia Facility" means that certain $1,000,000
revolving line of credit of the Company with Wachovia Bank, N.A. established on
June 2, 2006 and renewed on February 12, 2007.
(p) "Wyomissing Lease" means that certain real property
lease effective as of the 24th day of January, 2007 by and between the Company
and JNL Real Estate, LLC, a Pennsylvania limited liability company, Eastwood
54
Associates, LLC, a Pennsylvania limited liability company, and HBL Holdings,
LLC, a Pennsylvania limited liability company, collectively trading and doing
business as ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Joint Venture, the fee simple owners of the
real estate located at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Berks County, Pennsylvania.
Section 9.04 Interpretation. When a reference is made in this
Agreement to an Article, a Section, Subsection, Exhibit or Schedule, such
reference shall be to an Article of, a Section or Subsection of, or an Exhibit
or Schedule to, this Agreement unless otherwise indicated. The table of contents
and headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.
Whenever the words "include", "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation". The words "hereof", "hereto", "hereby", "herein" and "hereunder"
and words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement. The
words "date hereof" shall refer to the date of this Agreement. The term "or" is
not exclusive. The word "extent" in the phrase "to the extent" shall mean the
degree to which a subject or other thing extends, and such phrase shall not mean
simply "if". All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein. The definitions contained in this Agreement
are applicable to the singular as well as the plural forms of such terms and to
the masculine as well as to the feminine and neuter genders of such term. Any
Contract or statute defined or referred to herein or in any Contract that is
referred to herein means such Contract or statute as from time to time amended,
modified or supplemented, including (in the case of Contracts) by waiver or
consent and (in the case of statutes) by succession of comparable successor
statutes and references to all attachments thereto and instruments incorporated
therein. References to a person are also to its permitted successors and
assigns.
Section 9.05 Counterparts; Fax Signatures. This Agreement may be
executed in one or more counterparts, all of which shall be considered one and
the same agreement and shall become effective when one or more counterparts have
been signed by each of the parties and delivered to the other parties.
Signatures on this Agreement and certain other documents to be delivered in
connection with this Agreement may be delivered by facsimile in lieu of an
original signature, and Parent, Merger Sub and the Company agree to treat such
signatures as original signatures and shall be bound thereby.
Section 9.06 Entire Agreement; No Third-Party Beneficiaries. This
Agreement, the Confidentiality Agreement and the Principal Stockholders'
Agreement (i) constitute the entire agreement, and supercede all prior
agreements, understandings and negotiations, both written and oral, among the
parties with respect to the subject matter of this Agreement, the
Confidentiality Agreement and the Principal Stockholders' Agreement and (ii)
except for the provisions of Article II and Section 6.04, are not intended to
confer upon any person other than the parties hereto (and their respective
successors and assigns) or thereto (and their respective successors and assigns)
any rights or remedies.
55
Section 9.07 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the Laws of the State of Delaware, regardless of
the Laws that might otherwise govern under applicable principles of conflict of
laws thereof.
Section 9.08 Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned, in whole or in
part, by operation of Law or otherwise by any of the parties without the written
consent of the other parties, except that Merger Sub may assign, in its sole
discretion, any of or all its rights, interests and obligations under this
Agreement to Parent or to any direct or indirect wholly owned Subsidiary of
Parent, provided that no such assignment shall relieve Merger Sub of any of its
obligations hereunder. Subject to the preceding sentence, this Agreement will be
binding upon, inure to the benefit of, and be enforceable by, the parties and
their respective successors and assigns.
Section 9.09 Jurisdiction; Waiver of Jury Trial.
----------------------------------
(a) Each of the parties hereto hereby agrees that any claim,
suit, action or other proceeding, directly or indirectly, arising out of, under
or relating to this Agreement shall be heard and determined in the Chancery
Court of the State of Delaware (and each agrees that no such claim, action, suit
or other proceeding relating to this Agreement shall be brought by it or any of
its Affiliates except in such court), and the parties hereto hereby irrevocably
and unconditionally submit to the exclusive jurisdiction of any such court in
any such claim, suit, action or other proceeding and irrevocably and
unconditionally waive the defense of an inconvenient forum to the maintenance of
any such claim, suit, action or other proceeding. Each of the parties hereto
further agrees that, to the fullest extent permitted by applicable Law, service
of any process, summons, notice or document by U.S. registered mail to such
person's respective address set forth in Section 9.02 shall be effective service
of process for any claim, action, suit or other proceeding in Delaware with
respect to any matters to which it has submitted to jurisdiction as set forth
above in the immediately preceding sentence. The parties hereto hereby agree
that a final judgment in any such claim, suit, action or other proceeding shall
be conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by applicable Law.
(b) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHTS IT MAY HAVE
TO TRIAL BY JURY IN ANY CLAIM, SUIT, ACTION OR OTHER PROCEEDING DIRECTLY OR
INDIRECTLY ARISING OUT OF, UNDER OR RELATED TO THIS AGREEMENT. EACH PARTY HERETO
HEREBY (I) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER
PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH PARTY WOULD NOT, IN THE
EVENT OF ANY CLAIM, ACTION, SUIT OR PROCEEDING, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (II) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT, BY, AMONG OTHER THINGS, THE MUTUAL WAIVER
AND CERTIFICATIONS IN THIS SECTION 9.09.
Section 9.10 Specific Enforcement. Each of the parties hereto hereby
agrees that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
56
specific terms or were otherwise breached. It is accordingly agreed that the
parties hereto shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
of this Agreement in the Chancery Court of the State of Delaware, without bond
or other security being required, this being in addition to any other remedy to
which they are entitled at law or in equity.
Section 9.11 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible to the fullest
extent permitted by applicable Law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
[Signature page follows]
57
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
INVENSYS SYSTEMS, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Attorney In Fact
SIDUS ACQUISITION CORP.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Attorney In Fact
CIMNET, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: President and CEO
Acknowledged and agreed to with
respect to Section 6.12 only:
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, individually
Exhibit A - Principal Stockholders' Agreement
VOTING AGREEMENT
----------------
This VOTING AGREEMENT (this "Agreement") is made and entered into as of
May 2, 2007, by and among INVENSYS SYSTEMS, INC., a Massachusetts corporation
("Parent"), SIDUS ACQUISITION CORP., a Delaware corporation and wholly-owned
subsidiary of Parent ("Merger Sub"), each undersigned stockholder (each, a
"Stockholder") of CIMNET, INC., a Delaware corporation (the "Company"), and,
solely for the purposes of Section 4.3 hereof, the Company. Capitalized terms
used and not otherwise defined herein shall have the respective meanings set
forth in the Merger Agreement (defined below).
W I T N E S S E T H:
WHEREAS, pursuant to an Agreement and Plan of Merger, dated as of even
date herewith, by and among Parent, Merger Sub and the Company (the "Merger
Agreement"), Parent has agreed to acquire the outstanding capital stock of the
Company pursuant to a statutory merger of Merger Sub with and into the Company
in which outstanding shares of capital stock of the Company will be converted
into the right to receive, in the aggregate, the Total Merger Consideration;
WHEREAS, as a condition to the willingness of Parent and Merger Sub to
enter into the Merger Agreement and as an inducement and in consideration
therefor, each Stockholder has agreed to enter into this Agreement; and
WHEREAS, each Stockholder is the record and legal owner of that number
of shares of common stock, par value $0.0001 per share ("Common Stock") of the
Company set forth opposite such Stockholder's name on Exhibit A hereto (the
"Shares") (such Shares, together with any New Shares (as defined in Section
1.2), being referred to herein as the "Subject Shares").
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, the parties hereby agree as follows:
1. Agreement to Retain Subject Shares.
----------------------------------
1.1 Prior to the Expiration Date (as defined below), each
Stockholder agrees not to: (a) transfer, assign, sell, gift-over, pledge or
otherwise dispose of, or consent to any of the foregoing, any or all of the
Subject Shares or any right or interest therein ("Transfer"); (b) enter into any
contract, option or other agreement, arrangement or understanding with respect
to any Transfer; (c) grant any proxy, power-of-attorney or other authorization
or consent with respect to any of the Subject Shares (other than the proxy
contemplated in Section 3 herein); or (d) deposit any of the Subject Shares into
a voting trust, or enter into a voting agreement or arrangement with respect to
any of the Subject Shares. As used herein, the term "Expiration Date" shall mean
the earlier to occur of (x) the Effective Time, or (y) termination of the Merger
Agreement in accordance with the terms thereof.
1.2 "New Shares" means:
----------
(a) any shares of capital stock or voting securities of
the Company that a Stockholder purchases or with respect to which such
Stockholder otherwise acquires beneficial ownership (whether through the
exercise of any options, warrants or other rights to purchase shares of Common
Stock or otherwise) after the date of this Agreement and prior to the Expiration
Date; and
(b) any shares of capital stock or voting securities of
the Company that a Stockholder becomes the beneficial owner of as a result of
any change in Common Stock by reason of a stock dividend, stock split, split-up,
recapitalization, reorganization, business combination, consolidation, exchange
of shares, or any similar transaction or other change in the capital structure
of the Company affecting the Common Stock.
2. Agreement to Vote Subject Shares and Take Certain Other
Action.
2.1 Prior to the Expiration Date, at every meeting of the
stockholders of the Company, however called, or in connection with any written
consent of the stockholders of the Company at which any of the following matters
is considered or voted upon, and at every adjournment or postponement thereof,
each Stockholder shall vote or cause to be voted his/her Subject Shares:
(a) in favor of the Merger, the adoption of the Merger
Agreement and the transactions contemplated thereby;
(b) against approval of any proposal made in opposition to
or competition with consummation of the Merger;
(c) against any Takeover Proposal from any party other than
Parent or an Affiliate of Parent;
(d) against any extraordinary corporate transaction (other
than the Merger), such as a merger, consolidation, business combination, tender
or exchange offer, reorganization, recapitalization, sale, lease or transfer of
a material amount of the assets or securities of the Company (other than in
connection with the Merger);
(e) against any proposal or action which could reasonably be
expected to, impede, frustrate, prevent, prohibit, delay or discourage any of
the transactions contemplated by the Merger Agreement;
(f) against any amendment of the Company Certificate or the
Company By-laws, which has the effect of or which could reasonably be expected
to impede, frustrate, prevent, prohibit, delay or discourage any of the
transactions contemplated by the Merger Agreement; and
(g) against any dissolution, liquidation or winding up of
the Company.
2.2 Prior to the Expiration Date, each Stockholder, as the holder
of the Subject Shares set forth opposite his/her name on Exhibit A hereto, shall
be present, in person or by proxy, at all meetings of stockholders of the
Company at which the matters referred to in Section 2.1 are to be voted upon so
that all Subject Shares are counted for the purposes of determining the presence
of a quorum at such meetings.
2.3 Between the date of this Agreement and the Expiration Date,
each Stockholder agrees not to, and will not permit any entity under such
Stockholder's control (other than the Company) to, (a) solicit proxies or become
a "participant" in a "solicitation" (as such terms are defined in Rule 14A under
the Exchange Act) with respect to an Opposing Proposal (as defined below) or (b)
initiate a stockholders' vote with respect to an Opposing Proposal or (c) become
a member of a "group" (as such term is used in Section 13(d) of the Exchange
Act) with respect to any voting securities of the Company with respect to an
Opposing Proposal. For purposes of this Agreement, the term "Opposing Proposal"
means any of the actions or proposals described in clauses (b) through (g) of
Section 2.1; provided, however, that notwithstanding anything to the contrary
contained herein, at any time prior to the Expiration Date, each Stockholder and
his/her Representatives shall be permitted to participate in any discussions or
negotiations with any Person regarding an Opposing Proposal to the extent that
(x) such Stockholder's participation is requested by the Company, and (y) such
discussions or negotiations, if conducted by the Company, would then be
permitted under the terms of the Merger Agreement. For purposes of this
Agreement, the term "Representative" means each agent and representative
(including without limitation any investment banker, financial advisor,
attorney, accountant or other representative retained by or acting on behalf of
any Stockholder).
2.4 Nothing in this Agreement shall limit or restrict any
Stockholder from (a) taking any action in such Stockholder's capacity as a
director of the Company, to the extent applicable, or (b) voting, in such
Stockholder's sole discretion, on any matter other than the matters referred to
in Section 2.1 of this Agreement.
3. Grant of Irrevocable Proxy Coupled with an Interest.
---------------------------------------------------
3.1 Each Stockholder hereby revokes any and all other proxies in
respect of any Subject Shares and agrees that during the period commencing on
the date hereof and ending on the Expiration Date, such Stockholder hereby
irrevocably appoints Parent, Merger Sub or any individual designated by Parent
or Merger Sub as such Stockholder's agent, attorney-in-fact and proxy (with full
power of substitution), for and in the name, place and stead of such
Stockholder, to vote (or cause to be voted) the Subject Shares held of record by
such Stockholder, in the manner set forth in Section 2.1, at any meeting of the
stockholders of the Company, however called, or in connection with any written
consent of the stockholders of the Company. Parent may terminate this proxy with
respect to any Stockholder at any time at its sole election by written notice
provided to such Stockholder.
3.2 Each Stockholder acknowledges that the proxy set forth in this
Section 3 is irrevocable until the Expiration Date, is coupled with an interest,
and is granted in consideration of Parent and Merger Sub entering into the
Merger Agreement. Each Stockholder will take such further action or execute such
other instruments as may be necessary to effectuate the intent of this proxy
and/or this Agreement. The proxy granted herein is intended to comply with the
requirements of Section 212 of the DGCL applicable to irrevocable proxies.
3.3 The vote of the proxyholder shall control in any conflict
between the vote by the proxyholder of Stockholder's Subject Shares and a vote
by Stockholder of Stockholder's Subject Shares.
4. Representations, Warranties and Covenants of Stockholder. Each
Stockholder, severally and not jointly, hereby represents, warrants and
covenants to Parent as follows:
4.1 (a) Such Stockholder is the record owner of the Subject
Shares; (b) the Subject Shares set forth opposite his/her name on Exhibit A
hereto constitute such Stockholder's entire interest in the outstanding capital
stock and voting securities of the Company as of the date hereof; (c) the
Subject Shares are, and will be, at all times up until the Expiration Date, free
and clear of any liens, claims, options, charges, security interests, proxies,
voting trusts, agreements, rights, understandings or arrangements, or exercise
of any rights of a stockholder in respect of the Subject Shares or other
encumbrances; (d) such Stockholder has voting power and the power of disposition
with respect to all of the Subject Shares set forth opposite his/her name on
Exhibit A hereto outstanding on the date hereof, and will have voting power and
power of disposition with respect to all of the Subject Shares acquired by such
Stockholder after the date hereof; and (e) such Stockholder's principal
residence or place of business is accurately set forth on Exhibit A hereto.
4.2 Such Stockholder has full power and legal capacity to execute
and deliver this Agreement and to comply with and perform such Stockholder's
obligations hereunder. This Agreement has been duly and validly executed and
delivered by such Stockholder and constitutes the valid and binding obligation
of such Stockholder, enforceable against such Stockholder in accordance with its
terms. The execution and delivery of this Agreement by such Stockholder does
not, and the performance of Stockholder's obligations hereunder will not result
in any breach of or constitute a default (or an event that with notice or lapse
of time or both would become a default) under, or give to others any right to
terminate, amend, accelerate or cancel any right or obligation under, or result
in the creation of any lien or encumbrance on any Subject Shares pursuant to,
any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which Stockholder is a
party or by which Stockholder or the Subject Shares are or will be bound or
affected.
4.3 Each Stockholder hereby unconditionally and irrevocably
instructs the Company not to and the Company shall not, (a) permit the Transfer
of, or any grant of authority to vote with respect to, his/her Subject Shares,
in violation of this Agreement on its books and records by such Stockholder, (b)
issue a new certificate representing any such Subject Shares or (c) record such
vote unless and until such Stockholder shall have complied with the terms of
this Agreement.
4.4 Each Stockholder shall, and shall cause each of his/her
Representatives (each, a "Stockholder Representative") to, immediately cease any
discussions or negotiations with any other parties conducted heretofore (other
than Parent and its Affiliates) with respect to any Takeover Proposal. Each
Stockholder shall not, nor shall it permit his/her Stockholder Representatives
to, directly or indirectly through another person, (i) solicit, initiate or
encourage (including by way of furnishing non-public information), or take any
other action to facilitate, any inquiries or the making of any proposal that
constitutes a Takeover Proposal or (ii) solicit, initiate, encourage, facilitate
or otherwise participate in any discussions or negotiations regarding, or
otherwise cooperate in any way with, any Takeover Proposal. Notwithstanding the
foregoing, the Stockholder shall not be deemed to have acted in violation of the
provisions of this Section 4.4 if (i) it shall respond to an unsolicited
Takeover Proposal by doing nothing more than providing the party making such
unsolicited Takeover Proposal (the "Interested Acquiror") copies of the Merger
Agreement prior to the time that the Merger Agreement is publicly filed with the
SEC, (ii) in response to a specific request made by an Interested Acquiror, the
Company's legal counsel engages in non-substantive discussions with the
Interested Acquiror for the sole purpose of clarifying the procedural
requirements set forth in Sections 5.02, 6.05, and 8.01 of the Merger Agreement
to be followed by the Interested Acquiror, the Company, and the Company's Board
of Directors as a condition precedent to consummation by such Interested
Acquiror of a Takeover Proposal, or (iii) the Stockholder shall provide
financial information or other information regarding the Company pursuant to
contractual obligations of the Company existing as of the date hereof and set
forth in Section 5.02(a) of the Company Disclosure Letter, if and only if the
party receiving such information from the Company is a party to such contractual
obligation and such party is not a person making a Takeover Proposal; provided,
however, that the Stockholder shall provide Parent as promptly as reasonably
practicable (and, in any event, within 24 hours) with oral and written notice of
any actions taken pursuant to the penultimate sentence of this Section 4.4.
Without limiting the foregoing, it is agreed that any violation of the foregoing
by the Stockholders or any Stockholder Representative shall be a violation of
Section 5.02 of the Merger Agreement by the Company.
4.5 Each Stockholder hereby agrees to notify Parent as promptly as
practicable (an in any event within 24 hours after receipt) in writing of (i)
the number of New Shares which the Stockholder acquires on or after the date
hereof, and (ii) any inquiries or proposals which are received by, any
information which is requested from, or any negotiations or discussions which
are sought to be initiated or continued with, the Stockholder or any of its
Representatives with respect to any Takeover Proposal or any other matter
referred to in Section 4.4 above (including the material terms thereof and the
identity of such person(s) making such inquiry or proposal, requesting such
information or seeking to initiate or continue such negotiations or discussions,
as the case may be). Each Stockholder will keep Parent informed on a reasonably
current basis of material developments with respect to such Takeover Proposal.
5. Termination. This Agreement and the proxy granted pursuant to
Section 3 hereof and all obligations of each Stockholder hereunder and
thereunder shall terminate and shall have no further force or effect as of the
Expiration Date.
6. Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced under applicable Law, all
other conditions and provisions of this Agreement shall nevertheless remain in
full force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, this Agreement shall
automatically be deemed to be modified so as to effect the original intent of
the parties as closely as possible in order that the transactions contemplated
hereby be consummated as originally contemplated to the greatest extent
possible.
7. Binding Effect and Assignment. Neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned, in whole or
in part, by operation of Law or otherwise by any of the parties without the
written consent of the other parties, except that Merger Sub may assign, in its
sole discretion, any of or all its rights, interests and obligations under this
Agreement to Parent or to any direct or indirect wholly owned Subsidiary of
Parent, provided that no such assignment shall relieve Merger Sub of any of its
obligations hereunder. Subject to the preceding sentence, this Agreement will be
binding upon, inure to the benefit of, and be enforceable by, the parties and
their respective successors and assigns. Any assignment in violation of the
preceding sentence shall be void.
8. Amendment and Modification. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto.
9. Specific Performance; Injunctive Relief. The parties hereto
acknowledge that Parent will be irreparably harmed and that there will be no
adequate remedy at Law for a violation of any of the covenants or agreements of
each Stockholder set forth herein. Therefore, it is agreed that, in addition to
any other remedies that may be available to Parent upon any such violation,
Parent shall have the right to enforce such covenants and agreements by specific
performance, injunctive relief or by any other means available to Parent at Law
or in equity and each such Stockholder hereby waives any and all defenses which
could exist in his/her favor in connection with such enforcement and waives any
requirement for the security or posting of any bond in connection with such
enforcement.
10. Notices. All notices, requests, claims, demands, waivers and
other communications hereunder shall be in writing and shall be deemed given if
delivered personally, or sent by overnight courier (providing proof of delivery)
or transmitted by facsimile to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):
if to Parent or Merger Sub, to:
Invensys Systems, Inc.
c/o Invensys plc
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
Attention: Company Secretary
Facsimile No.: ▇▇.▇▇▇.▇▇▇.▇▇▇▇
with copies to (which shall not constitute notice):
McGuireWoods LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ III
Facsimile No.: 804.698.2249
and
Invensys Systems, Inc.
Wonderware Business Unit
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile No.: 949.639.1463
if to the Company, to:
CIMNET, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Chief Executive Officer
Facsimile No.: 610.736.0230
with a copy to (which shall not constitute notice):
▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile No.: 212.938.2812
11. Expenses. Each party hereto shall pay their own expenses
incurred in connection with this Agreement.
12. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the Laws of the State of Delaware, regardless of
the Laws that might otherwise govern under applicable principles of conflict of
laws thereof.
13. Submission to Jurisdiction. Each party hereby irrevocably and
unconditionally agrees that any action, suit or proceeding, at Law or equity,
arising out of or relating to this Agreement or any agreements or transactions
contemplated hereby shall only be brought in any federal court of the State of
Delaware or the Court of Chancery of the State of Delaware, and hereby
irrevocably and unconditionally expressly submits to the personal jurisdiction
and venue of such courts for the purposes thereof and hereby irrevocably and
unconditionally waives (by way of motion, as a defense or otherwise) any and all
jurisdictional, venue and convenience objections or defenses that such party may
have in such action, suit or proceeding. Each party hereby irrevocably and
unconditionally consents to the service of process of any of the aforementioned
courts, in the manner provided for notice in Section 10 or otherwise. Nothing
herein contained shall be deemed to affect the right of any party to serve
process in any manner permitted by Law or commence legal proceedings or
otherwise proceed against any other party in any other jurisdiction to enforce
judgments obtained in any action, suit or proceeding brought pursuant to this
Section 13.
14. No Waiver. The failure of any party hereto to exercise any
right, power or remedy provided under this Agreement or otherwise available in
respect hereof at law or in equity, or to insist upon compliance by any other
party hereto with their obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, shall not constitute a waiver by such
party of their right to exercise any such or other right, power or remedy or to
demand such compliance.
15. Entire Agreement; No Third-Party Beneficiaries. This Agreement
(a) constitutes the entire agreement, and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter of this Agreement and (b) is not intended to confer upon any
Person other than the parties any rights or remedies.
16. Counterparts; Fax Signatures. This Agreement may be executed
in one or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other parties. Signatures on
this Agreement and certain other documents to be delivered in connection with
this Agreement may be delivered by facsimile in lieu of an original signature,
and Parent, Merger Sub, each of the Stockholders and the Company agree to treat
such signatures as original signatures and shall be bound thereby.
17. Effect of Headings. The section headings herein are for
convenience only and shall not affect the construction or interpretation of this
Agreement.
18. Several Liability. The representations, warranties, covenants
and agreements of each Stockholder are made and given severally only, and not
jointly and severally, and no Stockholder shall have any liability to Parent,
Merger Sub, the Company or any other person for any breach of this Agreement by
any other Stockholder party hereto.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered as of the date first above written.
INVENSYS SYSTEMS, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Attorney In Fact
SIDUS ACQUISITION CORP.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Attorney In Fact
CIMNET, INC.
(solely for purposes of Section 4.3)
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: President and CEO
STOCKHOLDERS:
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, individually
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, individually
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, individually
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, individually
/s/ ▇▇▇▇ ▇▇▇▇▇
-----------------------------------------
▇▇▇▇ ▇▇▇▇▇, individually
/s/ ▇▇▇▇▇ ▇▇▇▇
-----------------------------------------
▇▇▇▇▇ ▇▇▇▇, individually
/s/ ▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇ ▇▇▇▇▇, individually
/s/ J. ▇▇▇▇▇▇▇ ▇▇▇
-----------------------------------------
J. ▇▇▇▇▇▇▇ ▇▇▇, individually
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇, individually
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
joint tenants
EXHIBIT A
---------
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Stockholder Existing Shares Address
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ 3,060,000 ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
--------------------------------------------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 200,000 ▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
--------------------------------------------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 59,677 ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
--------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 425,312 ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
--------------------------------------------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇ 11,200 ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
--------------------------------------------------------------------------------
▇▇▇▇▇ ▇▇▇▇ 5,000 ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
--------------------------------------------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇ 112,269 ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
J. ▇▇▇▇▇▇▇ ▇▇▇ 20,000 ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
--------------------------------------------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇ 125,000 ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
--------------------------------------------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇ and 100,000 ▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
--------------------------------------------------------------------------------
Total: 4,118,458
--------------------------------------------------------------------------------
Exhibit B - Employment Agreements
2 May 2007
Private and Confidential
------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear ▇▇▇▇:
Conditioned on the Closing of the acquisition by Invensys of Cimnet, Inc., I am
pleased to confirm our offer of employment to you as Vice President, MES and
P&PM Business for the Wonderware Business Unit of Invensys Systems, Inc.,
reporting to me. Under the terms of this offer, you will be located at the
Wonderware facility in Wyomissing, Pennsylvania that Invensys will assume upon
the Closing of the Cimnet acquisition.
Your compensation & benefits package includes:
Cash Compensation
-----------------
An annual base salary of $250,000, paid at the semi-monthly rate of $9,615. Your
salary will be subject to review on 1st July 2008 and annually thereafter during
the time that you are employed at Invensys. All compensation shall be subject to
income tax withholding and other payroll tax deductions required by applicable
state and federal law or as otherwise authorized in writing by you.
Other Incentive Arrangements
----------------------------
[1] Executive Bonus Plan ("EBP")
You will be eligible to participate in the EBP for FY 2008 with a bonus target
of 35% of salary and a performance range of 0 to 70% of salary. You should note
that bonus payments are non-pensionable. The bonus plan year for FY2008
commenced on 1st April 2007.
As your commencement date of employment is later than the 1st April any bonus
payment will be pro-rated for the number of months worked in the year.
The specific objectives are outlined on the Bonus Scorecard for Invensys Process
Systems that will be sent to you shortly. You will note that the bonus award is
contingent upon meeting a number of discretionary criteria that are listed on
the scorecard and include achievement of your personal objectives.
The Company may vary or withdraw the scheme at any time and ongoing
participation is dependent upon your personal performance and contribution;
provided the Company will not vary or withdraw the scheme as represented to you
for FY2008.
[2] Exceptional Turnaround Bonus Overlay Plan
Once the target level of performance is reached under the EBP, we also have
approval to extend the opportunity to earn additional bonus during the FY2008.
Your additional bonus under the Turnaround Bonus Plan will be zero at the target
level of performance, rising to 200% of target bonus (35% of base salary) once
stretch performance is reached. Please note that targets for FY 2008 have not
been established, and that once established you will be subject to the same
targets as other members of the senior management team of Wonderware
This additional bonus is paid in Company shares, and released in two tranches -
50% after one year following the end of the bonus year, and the remaining 50%
after two years. The Turnaround Bonus Plan will not operate after FY 2008.
[3] Long-Term Incentive Plan
At the next permissible date following your first date of employment, the
Company will seek approval from the Board Remuneration Committee to grant an
award under the Company's 1998 Senior Executive Long-Term Incentive Plan
("LTIP"). This award will be based on a multiple of .75 of your basic salary at
the time of the award. The number of shares is calculated by dividing the salary
multiple by the Company-confirmed share price at the time of the award.
Vesting of awards under the LTIP is subject to the satisfaction of performance
conditions over a 3-year performance period. The performance conditions that
will attach to your award include comparative Total Shareholder Return against a
selected comparator group of similar industrial companies. Once vested, 50% of
the award is subject to a further one year holding period.
[4] Share Ownership Guidelines
To align your interests with those of our shareholders, we have introduced a
share ownership requirement. Individuals receiving share awards under the above
programs or through personal share purchase will be expected to retain those
shares (other than to meet any tax obligations) until the required share
ownership level (xx% of salary as defined in the Share Ownership Guidelines has
been reached. Only upon reaching the required level can the excess shares be
sold.
Further details on the Share Ownership Guidelines and the other incentive plans
referred to above are attached.
However, you should be aware that the decision to grant Plan participation is
always at the discretion of the CEO of Invensys plc and will depend upon your
ongoing personal performance and contribution to the business. Nevertheless, for
FY2008, your participation in the Plan has been approved by the CEO of Invensys.
The Company reserves the right to amend or withdraw the Plan from year to year.
Full details of the Plan will be issued separately.
Other Terms
-----------
o You will be entitled to 20 vacation days each calendar year, the actual
dates of which will be subject to my approval. Such vacation days will
be in addition to normal public holidays observed at Wonderware's
offices in Wyomissing.
o You will be eligible to participate in the Invensys Executive Deferred
Compensation Plan immediately upon employment.
o You will be eligible to participate in all standard benefits for
employees of Invensys Wonderware, subject to the terms of participation
in those plans. Details of these benefits including medical, dental,
life insurance and 401K programs have been sent to you separately.
o You will also be entitled to sick leave in accordance with Wonderware's
written policy as maintained and amended by Wonderware from time to
time. Please note that you will not be paid for unused sick leave and
any sick leave unused by the end of each calendar year will be
forfeited.
Severance
---------
You will be entitled to severance as follows:
o If your employment is terminated for Cause (as defined below), no
severance will be payable and your entitlement to salary, bonuses,
benefits or other compensation shall cease upon termination of your
employment; provided however, that you shall be paid (i) accrued and
unpaid salary and bonus through the date of termination, (ii) accrued
and unused vacation and sick pay solely accrued during your employment
with the Company, and (iii) reimbursement of actual business expenses
incurred by you (collectively, the "Termination Payments"). To the
extent that such Cause is remediable, termination for Cause shall only
be effective if we provide you with (i) not less than 5 days prior
written notice (the "Cause Notice") that we intend to terminate you for
Cause which written notice shall specify in reasonable detail the
reasons or events constituting Cause, and (ii) an opportunity to
address Wonderware's senior executive management team to discuss the
allegations set forth in the Cause Notice.
o If you terminate your employment by resignation without Good Reason (as
defined below), no severance will be payable and your entitlement to
salary, bonuses, benefits or other compensation shall cease upon
termination of your employment; provided however, that you shall be
paid the Termination Payments.
o If (i) your employment is terminated by the Company for other than
Cause, or (ii) you terminate your employment for Good Reason, you will
be entitled to the Termination Payments plus a lump sum payment equal
to six (6) months of base salary as of the effective date of
termination payable within 10 days following such date of termination.
Additionally, Invensys will maintain your existing medical and dental
coverage until the earlier of the date you begin employment with
another employer or for no more than the duration of the six (6) month
severance period.
"Cause" is defined as gross misconduct, unlawful conduct that adversely effects
the Company, misappropriation of the Company's assets, conviction of a
misdemeanor involving moral turpitude or a felony, intentionally or negligently
engaging in illegal business practices in connection with the Company's
business, or willful or consistent violation of company policies or procedures
that materially and adversely effects the Company.
"Good Reason" shall mean the occurrence of any of the following without your
prior written consent: (i a material diminution in your title or authority
unless such diminution is based on your poor performance; or (ii) any change in
reporting responsibility so that you report to any person other than the
President of the Wonderware business unit so long as there is a President of the
Wonderware business unit, (iii) your relocation to any location more than 50
miles from the current office in Wyomissing, PA.
In consideration of and as a condition precedent to receiving any of the
payments and benefits described in this "Severance" section you agree you will
execute and deliver to Invensys and not revoke a release in the form attached as
Appendix A.
Restrictions on Competition
---------------------------
During the term of employment with the Company, you shall not directly or
indirectly compete against the Company or directly or indirectly divert or
attempt to divert business from customers or potential customers of the Company.
If you are terminated for "Cause" as defined above or resign your position of
employment prior to the completion of a date equal to three (3) years from the
commencement of your employment with the Company (the "Three Year Date"), then
for a period through the Three Year Date you will not, directly or indirectly,
provide Restricted Services for or on behalf of any Competitive Business. During
the period prior to the Three Year Date, you also will not, directly or
indirectly, provide any Competitive Business with any advice or counsel in the
nature of the Restricted Services.
If you are terminated for other than "Cause", or if you resign your position of
employment for "Good Reason" as defined above, then for a period of twelve (12)
months following the end of your employment with the Company you will not,
directly or indirectly, provide accept employment or provide Restricted Services
for or on behalf of any Competitive Business. During such twelve (12) month
period, you also will not, directly or indirectly, provide any Competitive
Business with any advice or counsel in the nature of the Restricted Services.
The term "Restricted Services" means services of any kind or character
comparable to those provided by you to the Company during employment with the
Company. The term "Competitive Business" means any entity (or division or
subsidiary of any entity) which is/are engaged in the Industrial Software or MES
Software market anywhere in the world. "Competitive Businesses" include, but are
not limited to, those divisions, affiliates or subsidiaries of Siemens, General
Electric, Rockwell, SAP, OSI Software, Apriso, Microsoft or Schneider that are
engaged in the Industrial Software or MES Software market. You understand and
agree that (i) the restrictions on competition described in this letter are fair
and reasonable, and that these restrictions are ancillary to the sale of Cimnet,
Inc., and are instituted as a material condition of the sale of Cimnet, Inc.,
for which you served as founder, CEO and material shareholder, and (ii) adequate
consideration has been received by you for such restrictions.
No Solicitation of Company Employees
------------------------------------
During the term of your employment and for a period of two (2) years following
termination of your employment for any reason, you shall not directly or
indirectly solicit, interfere with, induce or encourage any employee of Invensys
to: (i) become employed by any Competitive Business; (ii) become a consultant or
representative to any Competitive Business; or (iii) terminate his or her
employment relationship with Invensys.
Prior to Your Start Date
------------------------
This offer is contingent on
o The Close of the acquisition of Cimnet, Inc. by Invensys pursuant to
the Merger Agreement.
o Your not having entered into a signed agreement with a previous
employer that contains a non-competition clause that might affect your
ability to accept employment with Invensys or any entity thereof. If
you have entered into such an agreement, you need to forward a copy of
the agreement to my attention prior to any further action on this
offer.
Please complete the attached "Legal and Ethical Policy/Code of Conduct" document
and return to our office.
Orientation Information
-----------------------
In preparation for getting you on board smoothly:
o Your ability to comply with Immigration and Naturalization Service
requirements by providing verification of your employment eligibility
in the United States is required. Please bring the appropriate
documents with you to orientation. You may provide, but are not limited
to, any of the following documents in order to establish your
eligibility:
o United States Passport
o Certificate of Naturalization
o INS Employment Authorization
o Both a US social security card AND a driver's license
o If you qualify for any special tax handling, please note that you will
be fully taxed per applicable laws until such time as you provide
appropriate exemption documentation to the payroll department.
o You will be required to sign a confidentiality and non-disclosure
agreement upon your employment.
General Terms
-------------
The terms of this letter shall be interpreted, governed by and construed by the
laws of the Commonwealth of Pennsylvania without giving effect to its conflicts
of law provisions. If any one or more provisions of this letter are held to be
invalid or unenforceable, the validity and enforceability of the remaining
provisions shall not be affected thereby.
All disputes between parties in connection with arising out of the existence,
validity, construction, performance and termination of this Agreement shall be
finally settled by arbitration. The arbitration shall be held in Philadelphia,
PA in accordance with the Rules of the American Arbitration Association by one
or more arbitrators appointed in accordance with the said Rules and the award of
such arbitrators shall be final and binding upon the Parties. The non-prevailing
party shall pay for all reasonable costs and actual reasonable expenses incurred
in connection with such dispute, including filing and arbitrator fees as well as
the reasonable costs and actual verifiable expenses of opposing legal counsel.
The terms and conditions of this Agreement shall terminate on the Three Year
Date hereof.
To confirm your acceptance of this offer, please sign below and return the one
copy to me as soon as possible. The extra copy is for your files.
I am extremely excited that you have decided to join our team and look forward
to working with you. I am confident you will make a significant contribution and
enjoy being an Invensys executive.
Sincerely,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
President
Invensys Wonderware
Cc
Accepted:
______________________________________________ _______________
Date
Start Date: ___________________
2 May 2007
Private and Confidential
------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear ▇▇▇▇▇:
Conditioned on the Closing of the acquisition by Invensys of Cimnet, Inc., I am
pleased to confirm our offer of employment to you as Vice President, MES
Solutions for the Wonderware Business Unit of Invensys Systems, Inc., reporting
to ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇. Under the terms of this offer, you will be located at the
Wonderware facility in Wyomissing, Pennsylvania that Invensys will assume upon
the Closing of the Cimnet acquisition.
Your compensation & benefits package includes:
Cash Compensation
-----------------
An annual Base Salary of $185,000, paid at the semi-monthly rate of $7,115. Your
salary will be subject to review on 1st July 2008 and annually thereafter during
the time that you are employed at Invensys. All compensation shall be subject to
income tax withholding and other payroll tax deductions required by applicable
state and federal law or as otherwise authorized in writing by you.
You also shall be entitled to additional compensation under Wonderware's Sales
Incentive Plan (or "SIP") based on a 60%/40% split, with your Base Salary
representing the 60% and your Sales Incentive Compensation representing the 40%.
For FY 2008, this means that your Sales Incentive Compensation at 100% of Plan
is $123,333.
As your employment commencement date is yet undetermined, your Sales Incentive
Compensation for FY 2008 will be pro-rated to your actual commencement date.
To assist with your transition to Wonderware, the Company agrees to guaranty
100% of your pro-rated Sales Incentive Compensation for FY 2008. Please note
that this guaranty means that you cannot exceed 100% of your total compensation,
and that there thus is no additional Sales Incentive Compensation for exceeding
100% of your Plan.
Additional details are as described in the SIP which will be provided to you by
separate cover.
Other Incentive Arrangements
----------------------------
[1] Long-Term Incentive Plan
At the next permissible date following your first date of employment, the
Company will seek approval from the Board Remuneration Committee to grant an
award under the Company's 1998 Senior Executive Long-Term Incentive Plan
("LTIP"). This award will be based on a multiple of .75 of your basic salary at
the time of the award. The number of shares is calculated by dividing the salary
multiple by the Company-confirmed share price at the time of the award.
Vesting of awards under the LTIP is subject to the satisfaction of performance
conditions over a 3-year performance period. The performance conditions that
will attach to your award include comparative Total Shareholder Return against a
selected comparator group of similar industrial companies. Once vested, 50% of
the award is subject to a further one year holding period.
[2] Share Ownership Guidelines
To align your interests with those of our shareholders, we have introduced a
share ownership requirement. Individuals receiving share awards under the above
programs or through personal share purchase will be expected to retain those
shares (other than to meet any tax obligations) until the required share
ownership level (xx% of salary as defined in the Share Ownership Guidelines) has
been reached. Only upon reaching the required level can the excess shares be
sold.
Further details on the Share Ownership Guidelines and the other incentive plans
referred to above are attached.
However, you should be aware that the decision to grant Plan participation is
always at the discretion of the CEO of Invensys plc and will depend upon your
ongoing personal performance and contribution to the business. Nevertheless, for
FY2008, your participation in the Plan has been approved by the CEO of Invensys.
The Company reserves the right to amend or withdraw the Plan from year to year.
Full details of the Plan will be issued separately.
Other Terms
-----------
o You will be entitled to 15 vacation days each calendar year, the actual
dates of which will be subject to my approval. Such vacation days will
be in addition to normal public holidays observed at Wonderware's
offices in Wyomissing.
o You will be eligible to participate in the Invensys Executive Deferred
Compensation Plan immediately upon employment.
o You will be eligible to participate in all standard benefits for
employees of Invensys Wonderware, subject to the terms of participation
in those plans. Details of these benefits including medical, dental,
life insurance and 401K programs have been sent to you separately.
o You will also be entitled to sick leave in accordance with Wonderware's
written policy as maintained and amended by Wonderware from time to
time. Please note that you will not be paid for unused sick leave and
any sick leave unused by the end of each calendar year will be
forfeited.
Severance
---------
You will be entitled to severance as follows:
o If your employment is terminated for Cause (as defined below), no
severance will be payable and your entitlement to salary, bonuses,
benefits or other compensation shall cease upon termination of your
employment; provided however, that you shall be paid (i) accrued and
unpaid salary and bonus through the date of termination, (ii) accrued
and unused vacation and sick pay solely accrued during your employment
with the Company, and (iii) reimbursement of actual business expenses
incurred by you (collectively, the "Termination Payments"). To the
extent that such Cause is remediable, termination for Cause shall only
be effective if we provide you with (i) not less than 5 days prior
written notice (the "Cause Notice") that we intend to terminate you for
Cause which written notice shall specify in reasonable detail the
reasons or events constituting Cause, and (ii) an opportunity to
address Wonderware's senior executive management team to discuss the
allegations set forth in the Cause Notice.
o If you terminate your employment by resignation without Good Reason (as
defined below), no severance will be payable and your entitlement to
salary, bonuses, benefits or other compensation shall cease upon
termination of your employment; provided however, that you shall be
paid the Termination Payments.
o If (i) your employment is terminated by the Company for other than
Cause, or (ii) you terminate your employment for Good Reason, you will
be entitled to the Termination Payments plus a lump sum payment equal
to six (6) months of base salary as of the effective date of
termination payable within 10 days following such date of termination.
Additionally, Invensys will maintain your existing medical and dental
coverage until the earlier of the date you begin employment with
another employer or for no more than the duration of the six (6) month
severance period.
"Cause" is defined as breach of the Company's then current Code of Conduct or,
conviction of a misdemeanor involving moral turpitude or a felony.
"Good Reason" shall mean the occurrence of any of the following without your
prior written consent: (i) a material diminution in your title or authority or
(ii) your involuntary relocation to any location more than 50 miles from the
current office in Wyomissing, PA.
In consideration of and as a condition precedent to receiving any of the
payments and benefits described in this "Severance" section you agree you will
execute and deliver to Invensys and not revoke a release in the form attached as
Appendix A.
Restrictions on Competition
---------------------------
During the term of employment with the Company, you shall not directly or
indirectly compete against the Company or directly or indirectly divert or
attempt to divert business from customers or potential customers of the Company.
If you are terminated for "Cause" as defined above, then for a period of
twenty-four (24) months following the end of your employment with the Company
you will not, directly or indirectly, provide Restricted Services for or on
behalf of any division, affiliate or subsidiary of Siemens, General Electric,
Rockwell, SAP or Schneider which is primarily engaged in the Industrial Software
or MES Software market anywhere in the world (the "Five Competitors"). For the
first twelve (12) months following the end of your employment with the Company
you will not, directly or indirectly, provide Restricted Services for or on
behalf of any Competitive Business (as defined below). During such restricted
period (twenty-four (24) months for the Five Competitors), you also will not,
directly or indirectly, provide any of the Five Competitors with any advice or
counsel in the nature of the Restricted Services.
If you are terminated for other than "Cause", or if you resign your position of
employment for any reason including "Good Reason", then for a period of twelve
(12) months following the end of your employment with the Company you will not,
directly or indirectly, accept employment or provide Restricted Services for or
on behalf of any Competitive Business. During such twelve (12) month period, you
also will not, directly or indirectly, provide any Competitive Business with any
advice or counsel in the nature of the Restricted Services. However, if you are
terminated for other than "Cause", or if you resign your position of employment
for any reason including "Good Reason" in no event shall the restriction on your
providing Restricted Services to Competitive Businesses extend for a period
exceeding a date equal to three (3) years from the date of commencement of your
employment.
The term "Restricted Services" means services of any kind or character
comparable to those provided by you to the Company during employment with the
Company. The term "Competitive Business" means any entity (or division or
subsidiary of any entity) which is/are primarily engaged in the Industrial
Software or MES Software market anywhere in the world. "Competitive Businesses"
include, but are not limited to, those divisions or affiliates of Siemens,
General Electric, Rockwell, SAP, OSI Software, Apriso, Microsoft or Schneider
that are primarily engaged on the Industrial Software or MES software markets.
You understand and agree that (i) the restrictions on competition described in
this letter are fair and reasonable, and that these restrictions are ancillary
to the sale of Cimnet, Inc., and are instituted as a material condition of the
sale of Cimnet, Inc., and (ii) adequate consideration has been received by you
for such restrictions.
No Solicitation of Company Employees
------------------------------------
During the term of your employment and for a period of two (2) years following
termination of your employment for any reason, you shall not directly or
indirectly solicit, interfere with, induce or encourage any employee of the
Invensys to: (i) become employed by any direct or indirect competitor of
Invensys; (ii) become a consultant or representative to any direct or indirect
competitor of Invensys; or (iii) terminate his or her employment relationship
with Invensys.
Prior to Your Start Date
------------------------
This offer is contingent on
o The Close of the acquisition of Cimnet, Inc. by Invensys within the
time frame agreed to by the parties in the Merger Agreement.
o Your not having entered into a signed agreement with a previous
employer that contains a non-competition clause that might affect your
ability to accept employment with Invensys or any entity thereof. If
you have entered into such an agreement, you need to forward a copy of
the agreement to my attention prior to any further action on this
offer.
Please complete the attached "Legal and Ethical Policy/Code of Conduct" document
and return to our office.
Orientation Information
-----------------------
In preparation for getting you on board smoothly:
o Your ability to comply with Immigration and Naturalization Service
requirements by providing verification of your employment eligibility
in the United States is required. Please bring the appropriate
documents with you to orientation. You may provide, but are not limited
to, any of the following documents in order to establish your
eligibility:
o United States Passport
o Certificate of Naturalization
o INS Employment Authorization
o Both a US social security card AND a driver's license
o If you qualify for any special tax handling, please note that you will
be fully taxed per applicable laws until such time as you provide
appropriate exemption documentation to the payroll department.
o You will be required to sign a confidentiality and non-disclosure
agreement upon your employment.
General Terms
-------------
The terms of this letter shall be interpreted, governed by and construed by the
laws of the State of Pennsylvania. If any one or more provisions of this letter
are held to be invalid or unenforceable, the validity and enforceability of the
remaining provisions shall not be affected thereby.
All disputes between parties in connection with arising out of the existence,
validity, construction, performance and termination of this Agreement shall be
finally settled by arbitration. The arbitration shall be held in Philadelphia,
PA in accordance with the Rules of the American Arbitration Association by one
or more arbitrators appointed in accordance with the said Rules and the award of
such arbitrators shall be final and binding upon the Parties. The non-prevailing
party shall pay for all reasonable costs and actual reasonable expenses incurred
in connection with such dispute, including filing and arbitrator fees as well as
the reasonable costs and actual verifiable expenses of opposing legal counsel.
The terms and conditions of this Agreement shall terminate on third anniversary
of the date of the commencement of your employment.
To confirm your acceptance of this offer, please sign below and return the one
copy to me as soon as possible. The extra copy is for your files.
I am extremely excited that you have decided to join our team and look forward
to working with you. I am confident you will make a significant contribution and
enjoy being an Invensys executive.
Sincerely,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
President
Invensys Wonderware
Cc
Accepted:
______________________________________________ _______________
Date
Start Date: ___________________
2 May 2007
Private and Confidential
------------------------
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear ▇▇▇▇:
Conditioned on the Closing of the acquisition by Invensys of Cimnet, Inc., I am
pleased to confirm our offer of employment to you as Chief MES Software Officer
and Director of Technology for the Wonderware Business Unit of Invensys Systems,
Inc., reporting to ▇▇▇▇▇▇ ▇▇▇▇. Under the terms of this offer, your office will
be located at the Wonderware facility in Lake Forest, California.
Your compensation & benefits package includes:
Cash Compensation
-----------------
An annual base salary of $185,000, paid at the semi-monthly rate of $7,115. Your
salary will be subject to review on 1st July 2008 and annually thereafter during
the time that you are employed at Invensys. All compensation shall be subject to
income tax withholding and other payroll tax deductions required by applicable
state and federal law or as otherwise authorized in writing by you.
Sign-On Bonus
-------------
The Company has agreed to pay you a one-time amount of $92,500 as a Sign-On
Bonus. Payment will be made concurrent with your first regular payroll payment.
You agree that if you terminate employment with the Company by resignation or if
your employment is terminated for Cause (as defined below) prior to twenty-four
(24) months from your employment commencement date you will repay to the Company
the portion of your Sign-On Bonus that has not been reduced. Please note that
your Sign-On Bonus is reduced 1/24 each full month of your employment. For
purposes of clarity, this means that if your employment terminated twelve (12)
months from your commencement date, your Sign-On Bonus liability would have been
reduced by 1/24 for each of the 12 months of your employment for a total
reduction from the Sign-On Bonus of $46,250, and you thus would be obligated to
repay the Company $46,250. You agree that to pay the Company any unreduced
amounts of your Sign-On Bonus within five (5) days of the date of termination of
your employment.
Cost of Living Adjustment
-------------------------
To assist you and your family in your new house payments due to your relocation
to California, the Company agrees to pay you a cost of living adjustment
("COLA") equal to the following:
o $45,000 over first twelve (12) months of your employment ($3,750 per
month)
o $35,000 over months 13 - 24 of your employment ($2,917 per month)
o $25,000 over months 25 - 36 of your employment ($2,083 per month)
The COLA will be paid bi-weekly commencing with your commencement date. If you
do not purchase and close on a home within twelve (12) months of your
commencement date of employment, the COLA shall cease and future COLA payments
are null and void. Additionally, the COLA shall cease immediately upon the date
of termination of your employment.
Other Incentive Arrangements
----------------------------
[1] Local Bonus Plan ("LBP")
You will be eligible to participate in the EBP for FY 2008 with a bonus target
of 20% of salary and a performance range of 0 to 40% of salary. You should note
that bonus payments are non-pensionable. The bonus plan year for FY2008
commenced on 1st April 2007.
As your commencement date of employment is later than the 1st April any bonus
payment will be pro-rated for the number of months worked in the year.
The specific objectives are outlined on the Bonus Scorecard for Invensys Process
Systems that will be sent to you shortly. You will note that the bonus award is
contingent upon meeting a number of discretionary criteria that are listed on
the scorecard and include achievement of your personal objectives.
The Company may vary or withdraw the scheme at any time and ongoing
participation is dependent upon your personal performance and contribution,
provided the Company will not vary or withdraw the scheme as represented to you
for FY2008.
[2] Long-Term Incentive Plan
At the next permissible date following your first date of employment, the
Company will seek approval from the Board Remuneration Committee to grant an
award under the Company's 1998 Senior Executive Long-Term Incentive Plan
("LTIP"). This award will be based on a multiple of .75 of your basic salary at
the time of the award. The number of shares is calculated by dividing the salary
multiple by the Company-confirmed share price at the time of the award.
Vesting of awards under the LTIP is subject to the satisfaction of performance
conditions over a 3-year performance period. The performance conditions that
will attach to your award include comparative Total Shareholder Return against a
selected comparator group of similar industrial companies. Once vested, 50% of
the award is subject to a further one year holding period.
[3] Share Ownership Guidelines
To align your interests with those of our shareholders, we have introduced a
share ownership requirement. Individuals receiving share awards under the above
programs or through personal share purchase will be expected to retain those
shares (other than to meet any tax obligations) until the required share
ownership level (xx% of salary as defined in the Share Ownership Guidelines) has
been reached. Only upon reaching the required level can the excess shares be
sold.
Further details on the Share Ownership Guidelines and the other incentive plans
referred to above are attached.
However, you should be aware that the decision to grant Plan participation is
always at the discretion of the CEO of Invensys plc and will depend upon your
ongoing personal performance and contribution to the business. The Company
reserves the right to amend or withdraw the Plan from year to year. Full details
of the Plan will be issued separately.
Other Terms
-----------
o Relocation assistance will be provided as outlined in the Invensys
Relocation Policy.
o You will be entitled to 15 vacation days each calendar year, the actual
dates of which will be subject to approval. Such vacation days will be
in addition to normal public holidays observed at Wonderware's offices
in Lake Forest.
o You will be eligible to participate in the Invensys Executive Deferred
Compensation Plan immediately upon employment.
o You will be eligible to participate in all standard benefits for
employees of Invensys Wonderware, subject to the terms of participation
in those plans. Details of these benefits including medical, dental,
life insurance and 401K programs have been sent to you separately.
o You will also be entitled to sick leave in accordance with Wonderware's
written policy as maintained and amended by Wonderware from time to
time. Please note that you will not be paid for unused sick leave and
any sick leave unused by the end of each calendar year will be
forfeited.
Severance
---------
You will be entitled to severance as follows:
o If your employment is terminated for Cause (as defined below), no
severance will be payable and your entitlement to salary, bonuses,
benefits or other compensation shall cease upon termination of your
employment; provided however, that you shall be paid (i) accrued and
unpaid salary and bonus through the date of termination, (ii) accrued
and unused vacation and sick pay solely accrued during your employment
with the Company, and (iii) reimbursement of actual business expenses
incurred by you (collectively, the "Termination Payments"). To the
extent that such Cause is remediable, termination for Cause shall only
be effective if we provide you with (i) not less than 5 days prior
written notice (the "Cause Notice") that we intend to terminate you for
Cause which written notice shall specify in reasonable detail the
reasons or events constituting Cause, and (ii) an opportunity to
address Wonderware's senior executive management team to discuss the
allegations set forth in the Cause Notice.
o If you terminate your employment by resignation without Good Reason (as
defined below), no severance will be payable and your entitlement to
salary, bonuses, benefits or other compensation shall cease upon
termination of your employment; provided however, that you shall be
paid the Termination Payments.
o If (i) your employment is terminated by the Company for other than
Cause, or (ii) you terminate your employment for Good Reason, you will
be entitled to the Termination Payments plus a lump sum payment equal
to six (6) months of base salary as of the effective date of
termination payable within 10 days following such date of termination.
Additionally, Invensys will maintain your existing medical and dental
coverage until the earlier of the date you begin employment with
another employer or for no more than the duration of the six (6) month
severance period.
"Cause" is defined as gross misconduct, unlawful conduct that adversely effects
the Company, misappropriation of the Company's assets, conviction of a
misdemeanor involving moral turpitude or a felony, intentionally or negligently
engaging in illegal business practices in connection with the Company's
business, or willful or consistent violation of company policies or procedures
that materially and adversely effects the Company.
"Good Reason" shall mean the occurrence of any of the following without your
prior written consent: (i) a material diminution in your title or authority
unless such diminution is based on your poor performance, or (ii) your
relocation to any location more than 50 miles from the current office in Lake
Forest, California.
In consideration of and as a condition precedent to receiving any of the
payments and benefits described in this "Severance" section you agree you will
execute and deliver to Invensys and not revoke a release in the form attached as
Appendix A.
Restrictions on Competition
---------------------------
During the term of employment with the Company, you shall not directly or
indirectly compete against the Company or directly or indirectly divert or
attempt to divert business from customers or potential customers of the Company.
If you are terminated for "Cause" as defined above or resign your position of
employment prior to the completion of a date equal to three (3) years from the
commencement of your employment with the Company (the "Three Year Date"), then
for a period through the Three Year Date you will not, directly or indirectly,
provide Restricted Services for or on behalf of any Competitive Business. During
the period prior to the Three Year Date, you also will not, directly or
indirectly, provide any Competitive Business with any advice or counsel in the
nature of the Restricted Services.
If you are terminated for other than "Cause", or if you resign your position of
employment for "Good Reason" as defined above, then for a period of twelve (12)
months following the end of your employment with the Company you will not,
directly or indirectly, provide accept employment or provide Restricted Services
for or on behalf of any Competitive Business. During such twelve (12) month
period, you also will not, directly or indirectly, provide any Competitive
Business with any advice or counsel in the nature of the Restricted Services.
The term "Restricted Services means services of any kind or character comparable
to those provided by you to the Company during employment with the Company. The
term "Competitive Business" means any entity (or division or subsidiary of any
entity) which is/are engaged in the Industrial Software or MES Software market
anywhere in the world. "Competitive Businesses" include, but are not limited to,
those divisions, subsidiaries and affiliates of Siemens, General Electric,
Rockwell, SAP, OSI Software, Apriso, Microsoft or Schneider that are engaged in
the Industrial Software or MES Software market. You understand and agree that
(i) the restrictions on competition described in this letter are fair and
reasonable, and that these restrictions are ancillary to the sale of Cimnet,
Inc., and are instituted as a material condition of the sale of Cimnet, Inc.,
for which you served as CTO and material shareholder, and (ii) adequate
consideration has been received by you for such restrictions.
No Solicitation of Company Employees
------------------------------------
During the term of your employment and for a period of two (2) years following
termination of your employment for any reason, you shall not directly or
indirectly solicit, interfere with, induce or encourage any employee of the
Invensys to: (i) become employed by any direct or indirect competitor of
Invensys; (ii) become a consultant or representative to any direct or indirect
competitor of Invensys; or (iii) terminate his or her employment relationship
with Invensys.
Prior to Your Start Date
------------------------
This offer is contingent on
o The Close of the acquisition of Cimnet, Inc. by Invensys within the
time frame agreed to by the parties in the Merger Agreement.
o Your not having entered into a signed agreement with a previous
employer that contains a non-competition clause that might affect your
ability to accept employment with Invensys or any entity thereof. If
you have entered into such an agreement, you need to forward a copy of
the agreement to my attention prior to any further action on this
offer.
Please complete the attached "Legal and Ethical Policy/Code of Conduct" document
and return to our office.
Orientation Information
-----------------------
In preparation for getting you on board smoothly:
o Your ability to comply with Immigration and Naturalization Service
requirements by providing verification of your employment eligibility
in the United States is required. Please bring the appropriate
documents with you to orientation. You may provide, but are not limited
to, any of the following documents in order to establish your
eligibility:
o United States Passport
o Certificate of Naturalization
o INS Employment Authorization
o Both a US social security card AND a driver's license
o If you qualify for any special tax handling, please note that you will
be fully taxed per applicable laws until such time as you provide
appropriate exemption documentation to the payroll department.
o You will be required to sign a confidentiality and non-disclosure
agreement upon your employment.
General Terms
-------------
The terms of this letter shall be interpreted, governed by and construed by the
laws of the State of California. If any one or more provisions of this letter
are held to be invalid or unenforceable, the validity and enforceability of the
remaining provisions shall not be affected thereby.
The terms and conditions of this Agreement shall terminate on the Three Year
Date hereof.
To confirm your acceptance of this offer, please sign below and return the one
copy to me as soon as possible. The extra copy is for your files.
I am extremely excited that you have decided to join our team and look forward
to working with you. I am confident you will make a significant contribution and
enjoy being an Invensys executive.
Sincerely,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
President
Invensys Wonderware
Cc
Accepted:
______________________________________________ _______________
Date
Start Date: ___________________
Exhibit C - Wyomissing Lease Amendment
FIRST AMENDMENT TO LEASE AGREEMENT
----------------------------------
This FIRST AMENDMENT TO LEASE AGREEMENT (this "Amendment") is made and
entered into as of May 2, 2007 by and between JNL REAL ESTATE, LLC, a
Pennsylvania limited liability company ("JNL"), EASTWOOD ASSOCIATES, LLC, a
Pennsylvania limited liability company ("Eastwood"), and HBL HOLDINGS, LLC, a
Pennsylvania limited liability company ("HBL"), collectively trading and doing
business as ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ JOINT VENTURE ("Lessor"), and CIMNET, INC.,
a Delaware corporation ("Lessee") (hereinafter sometimes collectively referred
to as the "Parties"). Capitalized terms used and not otherwise defined herein
shall have the respective meanings set forth in the Lease (defined below).
W I T N E S S E T H:
WHEREAS, JNL, Eastwood, HBL, Lessor and Lessee entered into a Lease
Agreement dated January 24, 2007 (the "Lease"), covering the premises located at
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, as more
fully described in the Lease (the "Leased Premises"); and
WHEREAS, The Parties desire to amend the Lease on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, the Parties hereby agree as follows:
1. Option to Terminate. Notwithstanding anything in the Lease to
the contrary, the Parties agree that effective at any time on or after January
31, 2010, Lessee shall have the right and option to terminate the Lease (the
"Termination") by (i) delivery of no less than six (6) months advance written
notice to Lessor (the "Termination Notice"), and (ii) payment to Lessor, on the
date of the Termination (which shall be set forth in the Termination Notice and
shall be the last day of a month) of the Termination Fee. For purposes of this
Amendment, the "Termination Fee" shall equal $400,000 if the Termination occurs
on January 31, 2010, such amount to be reduced by $8,333.33 for each month that
passes thereafter without the occurrence of the Termination. Notwithstanding the
foregoing, at no point will the Termination Fee be reduced below $160,000. For
illustrative purposes, the sliding scale applicable to the Termination Fee is
attached hereto as Exhibit A.
2. Assignment and Subletting. Section 6 of the Lease is amended
as follows:
2.1 The introductory paragraph in Section 6 of the Lease is hereby
deleted and replaced with the following:
"Negative Covenants of Lessee. Lessee covenants and agrees
that it will do none of the following things without first
obtaining the consent, in writing, of Lessor, which consent
Lessor shall not unreasonably withhold, condition or delay,
and without providing Lessor with reimbursement for any
reasonable expenses incurred or incidental to Lessee's
proposed action."
2.2 Paragraph (b) of Section 6 of the Lease is hereby amended by
adding the following at the end of such paragraph (b) of Section 6:
"Notwithstanding anything herein to the contrary, Lessor's
consent shall not be required in the event of any assignment
or subletting by Lessee to: (i) any "Affiliate" (defined for
the purposes of this Lease as any entity controlling,
controlled by, or under common control with Lessee), or (ii)
any third party, provided that (a) such third party (or a
guarantor that has agreed to guarantee the obligations of such
third party) has net profit in excess of $1,500,000 for the
most recently reported 12-month period, and (b) Lessee
provides Lessor prior written notice of the assignment or
subletting at least twenty (20) days prior to the effective
date thereof, together with the relevant financial data of
such third party. In the case of either Lessee subletting the
Leased Premises or an assignment pursuant to clause (i) above,
Lessee shall remain responsible for all of its obligations
arising under the Lease. In the case of a valid assignment
pursuant to clause (ii) above, Lessor shall be deemed
unconditionally released from all of its obligations arising
under the Lease."
3. Subordination, Non-Disturbance and Attornment. Lessor
represents to Lessee that as of the date of this Amendment the Premises is
encumbered by a mortgage in favor of the Lessor's lender (the "Security Deed")
and that Lessor is the fee simple owner of the Premises. Lessee agrees that the
Lease (as amended hereby) is and shall remain subject and subordinate to such
Security Deed; provided, however, that as a part of such subordination and on
the Lease Amendment Effective Date (as defined in Section 8 of this Amendment),
Lessor, Lessee and Lessor's lender shall enter into said lender's standard,
commercially reasonable form of Subordination, Non-Disturbance and Attornment
Agreement ("SNDA"), provided that (i) such form is acceptable to Lessee in its
reasonable discretion, and (ii) except for the subordination of this Lease to
the Security Deed, such SNDA does not impair Lessee's rights or remedies or
increase Lessee's obligations under the Lease. In the event that, following the
date of this Amendment, Lessor desires to refinance the debt secured by the
Security Deed, or otherwise encumber the Premises with a deed to secure debt,
deed of trust, mortgage or other similar instrument, Lessee agrees to
subordinate this Lease to such instrument provided that Lessor, Lessee and
Lessor's lender enter into said lender's standard, commercially reasonable form
of SNDA, provided that (i) such form is acceptable to Lessee in its reasonable
discretion, and (ii) except for the subordination of this Lease to the
applicable financing, such SNDA does not impair Lessee's rights or remedies or
increase Lessee's obligations under the Lease.
4. Memorandum of Lease. Upon request by any of the Parties, the
Parties each agree to execute a Memorandum of Lease in recordable form, setting
forth such provisions of the Lease (as amended hereby) as may be required by
Pennsylvania law. If so requested by Lessee, Lessor shall execute such
Memorandum of Lease simultaneously with the execution of this Amendment.
Recording costs, together with any transfer taxes or other fees charged by any
local or state governmental authorities in connection with such recordation,
shall be borne by the party requesting recordation of same. The provisions of
the Lease (as amended hereby) shall control with regard to any omissions from,
or provisions which may be in conflict with, the Memorandum of Lease.
5. Improvements and/or Alterations. Paragraph (b) of Section 18
of the Lease is hereby amended and restated as follows: "Upon written consent by
Lessor, Lessee may erect or make all improvements and/or alterations to the
Premises which are reasonably necessary to Lessee's business. Upon expiration or
sooner termination of this Lease, Lessee covenants and agrees that Lessee will
remove (at the request of Lessor) all improvements and/or alterations made by
Lessee and restore the Premises to the same or substantially the same condition
existing before Lessee made such improvements and/or alterations, such removal
and/or restoration costs to be borne solely by Lessee."
6. No Further Amendment. Except as expressly modified herein, the
terms and conditions of the Lease shall remain unchanged and in full force and
effect.
7. Counterparts. This Amendment may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties. Signatures on this Amendment and
certain other documents to be delivered in connection with this Agreement may be
delivered by facsimile in lieu of an original signature, and the Parties agree
to treat such signatures as original signatures and shall be bound thereby.
8. Execution; Condition to Amendment. The Parties have executed
this Amendment simultaneously with the execution of that certain Agreement and
Plan of Merger (the "Merger Agreement") by and between Invensys Systems, Inc.,
Sidus Acquisition Corp., and Lessee. Notwithstanding anything in this Amendment
to the contrary, the Parties agree and acknowledge that this Amendment shall
become effective only upon the Closing of the transactions contemplated by the
Merger Agreement, and that this Amendment shall be deemed effective as of the
Effective Time of the Merger (the "Lease Amendment Effective Date"). In the
event that the Merger Agreement is terminated, this Amendment shall immediately
become null and void and of no force or effect, without need for any further
documentation.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the Parties have executed this Amendment as of the
date first written above.
LESSOR:
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ JOINT VENTURE
by and through:
JNL REAL ESTATE, LLC
By:
---------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, III
Title: Manager
By
---------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Manager
EASTWOOD ASSOCIATES, LLC
By:
---------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Manager
By:
---------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Manager
By:
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Manager
By:
---------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
. Title: Manager
HBL HOLDINGS, LLC
By:
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Manager
LESSEE:
CIMNET, INC.
By:
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, III
Title: President and CEO
Exhibit A
Termination Fee Sliding Scale
-----------------------------
--------------------------------------------------------------------
Termination Date Termination Fee
--------------------------------------------------------------------
--------------------------------------------------------------------
January 31, 2010 $400,000.00
--------------------------------------------------------------------
February 28, 2010 $391,666.67
--------------------------------------------------------------------
March 31, 2010 $383,333.34
--------------------------------------------------------------------
April 30, 2010 $375,000.01
--------------------------------------------------------------------
May 31, 2010 $366,666.68
--------------------------------------------------------------------
June 30, 2010 $358,333.35
--------------------------------------------------------------------
July 31, 2010 $350,000.02
--------------------------------------------------------------------
August 31, 2010 $341,666.69
--------------------------------------------------------------------
September 30, 2010 $333,333.36
--------------------------------------------------------------------
October 31, 2010 $325,000.03
--------------------------------------------------------------------
November 30, 2010 $316,666.70
--------------------------------------------------------------------
December 31, 2010 $308,333.37
--------------------------------------------------------------------
January 31, 2011 $300,000.04
--------------------------------------------------------------------
February 28, 2011 $291,666.71
--------------------------------------------------------------------
March 31, 2011 $283,333.38
--------------------------------------------------------------------
April 30, 2011 $275,000.05
--------------------------------------------------------------------
May 31, 2011 $266,666.72
--------------------------------------------------------------------
June 30, 2011 $258,333.39
--------------------------------------------------------------------
July 31, 2011 $250,000.06
--------------------------------------------------------------------
August 31, 2011 $241,666.73
--------------------------------------------------------------------
September 30, 2011 $233,333.40
--------------------------------------------------------------------
October 31, 2011 $225,000.07
--------------------------------------------------------------------
November 30, 2011 $216,666.74
--------------------------------------------------------------------
December 31, 2011 $208,333.41
--------------------------------------------------------------------
January 31, 2012 $200,000.08
--------------------------------------------------------------------
February 28, 2012 $191,666.75
--------------------------------------------------------------------
March 31, 2012 $183,333.42
--------------------------------------------------------------------
April 30, 2012 $175,000.09
--------------------------------------------------------------------
May 31, 2012 $166,666.76
--------------------------------------------------------------------
June 30, 2012 $160,000.00
--------------------------------------------------------------------
July 31, 2012 $160,000.00
--------------------------------------------------------------------
August 31, 2012 $160,000.00
--------------------------------------------------------------------
September 30, 2012 $160,000.00
--------------------------------------------------------------------
October 31, 2012 $160,000.00
--------------------------------------------------------------------
November 30, 2012 $160,000.00
--------------------------------------------------------------------
December 31, 2012 $160,000.00
--------------------------------------------------------------------
January 31, 2013 $160,000.00
--------------------------------------------------------------------
February 28, 2013 $160,000.00
--------------------------------------------------------------------
March 31, 2013 $160,000.00
--------------------------------------------------------------------
April 30, 2013 $160,000.00
--------------------------------------------------------------------
May 31, 2013 $160,000.00
--------------------------------------------------------------------
--------------------------------------------------------------------
June 30, 2013 $160,000.00
--------------------------------------------------------------------
July 31, 2013 $160,000.00
--------------------------------------------------------------------
August 31, 2013 $160,000.00
--------------------------------------------------------------------
September 30, 2013 $160,000.00
--------------------------------------------------------------------
October 31, 2013 $160,000.00
--------------------------------------------------------------------
November 30, 2013 $160,000.00
--------------------------------------------------------------------
December 31, 2013 $160,000.00
--------------------------------------------------------------------