Exhibit 2.1
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AGREEMENT AND PLAN OF MERGER
among
WESTERN DIGITAL CORPORATION,
STATE M CORPORATION
and
KOMAG, INCORPORATED
dated as of June 28, 2007
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TABLE OF CONTENTS
Page
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ARTICLE I The Offer............................................................. 1
SECTION 1.01. The Offer.................................................... 1
SECTION 1.02. Company Actions.............................................. 4
SECTION 1.03. Top-Up Option................................................ 5
ARTICLE II The Merger........................................................... 6
SECTION 2.01. The Merger................................................... 6
SECTION 2.02. Closing...................................................... 7
SECTION 2.03. Effective Time of the Merger................................. 7
SECTION 2.04. Effects of the Merger........................................ 7
SECTION 2.05. Certificate of Incorporation and Bylaws...................... 7
SECTION 2.06. Directors.................................................... 7
SECTION 2.07. Officers..................................................... 7
SECTION 2.08. Merger Without Meeting of Stockholders....................... 8
ARTICLE III Effect of the Merger on the Capital Stock of the Constituent
Corporations; Exchange of Certificates..................................... 8
SECTION 3.01. Effect on Capital Stock...................................... 8
SECTION 3.02. Exchange of Certificates..................................... 9
ARTICLE IV Representations and Warranties....................................... 11
SECTION 4.01. Representations and Warranties of the Company................ 11
SECTION 4.02. Representations and Warranties of Parent and Sub............. 40
ARTICLE V Covenants Relating to Conduct of Business............................. 43
SECTION 5.01. Conduct of Business.......................................... 43
SECTION 5.02. No Solicitation.............................................. 47
ARTICLE VI Additional Agreements................................................ 51
SECTION 6.01. Preparation of the Proxy Statement; Stockholders Meeting..... 51
SECTION 6.02. Access to Information; Confidentiality....................... 52
SECTION 6.03. Reasonable Best Efforts; Consultation and Notice............. 53
SECTION 6.04. Equity Awards................................................ 56
SECTION 6.05. Indemnification, Exculpation and Insurance................... 58
SECTION 6.06. Fees and Expenses............................................ 59
SECTION 6.07. Public Announcements......................................... 60
SECTION 6.08. Sub Compliance............................................... 61
SECTION 6.09. Directors.................................................... 61
SECTION 6.10. Convertible Notes............................................ 62
SECTION 6.11. Parent and Sub Financing..................................... 62
SECTION 6.12. Employee Benefits............................................ 63
SECTION 6.13. 401(k) Plan.................................................. 64
SECTION 6.14. FIRPTA Certificate........................................... 64
ARTICLE VII Conditions Precedent................................................ 64
SECTION 7.01. Conditions to Each Party's Obligation to Effect the Merger... 64
ARTICLE VIII Termination, Amendment and Waiver.................................. 64
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SECTION 8.01. Termination.................................................. 64
SECTION 8.02. Effect of Termination........................................ 66
SECTION 8.03. Amendment.................................................... 66
SECTION 8.04. Extension; Waiver............................................ 66
SECTION 8.05. Approval of Independent Directors............................ 67
ARTICLE IX General Provisions................................................... 67
SECTION 9.01. Nonsurvival of Representations and Warranties................ 67
SECTION 9.02. Notices...................................................... 67
SECTION 9.03. Definitions.................................................. 68
SECTION 9.04. Exhibits and Schedules; Interpretation....................... 70
SECTION 9.05. Counterparts................................................. 71
SECTION 9.06. Entire Agreement; No Third-Party Beneficiaries............... 71
SECTION 9.07. Governing Law................................................ 71
SECTION 9.08. Assignment................................................... 71
SECTION 9.09. Consent to Jurisdiction; Service of Process; Venue........... 71
SECTION 9.10. Waiver of Jury Trial......................................... 72
SECTION 9.11. Enforcement.................................................. 72
SECTION 9.12. Consents and Approvals....................................... 72
SECTION 9.13. Severability................................................. 72
Exhibits:
EXHIBIT A Conditions to the Offer
EXHIBIT B Form of Tender and Voting Agreement
EXHIBIT C Form of Promissory Notes
EXHIBIT D Form of Amended and Restated Certificate of Incorporation
of the Surviving Corporation
ii
Glossary
TERM SECTION
40% Proposal.................................................................... 6.06(b)
401(k) Plan..................................................................... 6.13
50% Proposal.................................................................... 6.06(b)
Acquisition Agreement........................................................... 5.02(b)
Acquisition Proposal ........................................................... 5.02(a)
Action of Divestiture........................................................... 6.03(a)
Adverse Recommendation Change................................................... 5.02(b)
Adverse Recommendation Change Notice............................................ 5.02(b)
affiliate....................................................................... 9.03(a)
Agreement....................................................................... Preamble
Alternative Financing........................................................... 6.11(a)
Appraisal Shares................................................................ 3.01(e)
Benefit Agreements.............................................................. 4.01(g)
Benefit Plans................................................................... 4.01(m)
business day.................................................................... 9.03(b)
Certificate..................................................................... 3.01(d)
Certificate of Merger........................................................... 2.03
Closing......................................................................... 2.02
Closing Date.................................................................... 2.02
Code............................................................................ 1.01(e)
Commonly Controlled Entity...................................................... 4.01(m)
Company......................................................................... Preamble
Company Bylaws.................................................................. 4.01(a)
Company Certificate............................................................. 2.05(a)
Company Common Stock............................................................ Recitals
Company Convertible Notes....................................................... 4.01(c)
Company Intellectual Property................................................... 4.01(p)
Company Letter.................................................................. 4.01
Company Optionholders........................................................... 6.04(f)
Company Personnel............................................................... 4.01(g)
Company Registered Intellectual Property Rights................................. 4.01(p)
Company Source Code............................................................. 4.01(p)
Company Stock Options........................................................... 4.01(c)
Company Stock Option Notices.................................................... 6.04(b)
Company Stock Plans............................................................. 4.01(c)
Company Stock Purchase Rights................................................... 4.01(c)
Company Stock Purchase Right Notices............................................ 6.04(b)
Compensation Committee.......................................................... 4.01(r)
Confidentiality Agreement....................................................... 5.02(a)
Contract........................................................................ 4.01(d)
Debt Commitment Letter.......................................................... 4.02(f)
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DGCL............................................................................ 2.01
Effective Time.................................................................. 2.03
Employment Compensation Arrangement............................................. 4.01(r)
Environmental Claims............................................................ 4.01(l)
Environmental Law............................................................... 4.01(l)
ERISA........................................................................... 4.01(m)
Exchange Act.................................................................... 1.01(a)
Filed SEC Documents............................................................. 4.01(e)
Financing....................................................................... 4.02(f)
Foreign Benefit Plan............................................................ 4.01(m)
GAAP............................................................................ 4.01(e)
Governmental Entity............................................................. 4.01(d)
Hazardous Materials............................................................. 4.01(l)
HSR Act......................................................................... 4.01(d)
indebtedness.................................................................... 9.01(c)
Indenture....................................................................... 4.01(c)
Independent Director............................................................ 4.01(d)
Information Statement........................................................... 4.01(d)
Intellectual Property........................................................... 4.01(p)
Intellectual Property Rights.................................................... 4.01(p)
In-The-Money Company Stock Options.............................................. 6.04(f)
IRS............................................................................. 4.01(m)
Judgment........................................................................ 4.01(d)
knowledge....................................................................... 9.03(d)
Law............................................................................. 4.01(d)
Leased Real Property............................................................ 4.01(o)
Legal Restraints................................................................ 7.01(b)
Liens........................................................................... 4.01(b)
Major Customer.................................................................. 4.01(i)
Major Customer Contract......................................................... 4.01(i)
Major Supplier.................................................................. 4.01(i)
Major Supplier Contract......................................................... 4.01(i)
Material Adverse Effect ........................................................ 9.03(e)
Merger.......................................................................... Recitals
Merger Consideration............................................................ 3.01(d)
Minimum Tender Condition........................................................ Exhibit A
New Debt Financing Commitments.................................................. 6.11(a)
Non-Affiliate Plan Fiduciary.................................................... 4.01(m)
NYSE............................................................................ 1.01(a)
Offer........................................................................... Recitals
Offer Closing................................................................... 1.01(a)
Offer Closing Time.............................................................. 1.01(a)
Offer Conditions................................................................ 1.01(a)
Offer Documents................................................................. 1.01(c)
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Offer Price..................................................................... Recitals
Option Per Share Merger Consideration........................................... 6.04(a)
Owned Real Property............................................................. 4.01(o)
Parent.......................................................................... Preamble
Paying Agent.................................................................... 3.02(a)
Permits......................................................................... 4.01(j)
Permitted Liens................................................................. 4.01(i)
person.......................................................................... 9.03(f)
Proxy Statement................................................................. 4.01(d)
Release......................................................................... 4.01(l)
Representatives................................................................. 5.02(a)
Schedule 14D-9.................................................................. 1.02(b)
SEC............................................................................. 1.01(a)
SEC Documents................................................................... 4.01(e)
Section 262..................................................................... 3.01(e)
Securities Act.................................................................. 4.01(e)
Source Code Disclosure Agreement................................................ 4.01(p)
SOX............................................................................. 4.01(e)
Specified Contracts............................................................. 4.01(i)
Stockholder Approval............................................................ 4.01(d)
Stockholders Meeting............................................................ 6.01(b)
Sub............................................................................. Preamble
Subsidiary...................................................................... 9.03(g)
Superior Proposal............................................................... 5.02(a)
Surviving Corporation........................................................... 2.01
tax return...................................................................... 4.01(n)
taxes........................................................................... 4.01(n)
taxing authority................................................................ 4.01(n)
Termination Date................................................................ 8.01(b)
Termination Fee................................................................. 6.06(b)
Top-Up Option................................................................... 1.03(a)
Top-Up Shares................................................................... 1.03(a)
Transferred Employees........................................................... 6.12
Voting and Tender Agreement..................................................... Recitals
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AGREEMENT AND PLAN OF MERGER dated as of June 28, 2007 (this "Agreement"),
by and among Western Digital Corporation, a Delaware corporation ("Parent"),
State M Corporation, a Delaware corporation and a wholly owned subsidiary of
Parent ("Sub"), and Komag, Incorporated, a Delaware corporation (the "Company").
WHEREAS Parent desires to acquire the Company on the terms and subject to
the conditions set forth in this Agreement;
WHEREAS, in furtherance of the acquisition of the Company by Parent on the
terms and subject to the conditions set forth in this Agreement, Parent proposes
to cause Sub to make a tender offer (as it may be amended from time to time as
permitted under this Agreement, the "Offer") to purchase all the outstanding
shares of common stock, par value $0.01 per share, of the Company (the "Company
Common Stock"), at a price per share of Company Common Stock of $32.25 (such
amount, or any other amount per share paid pursuant to the Offer and this
Agreement, the "Offer Price"), net to the seller in cash, without interest, on
the terms and subject to the conditions set forth in this Agreement;
WHEREAS the Boards of Directors of each of the Company, Parent and Sub
have each unanimously approved the Offer and the merger of Sub with and into the
Company (the "Merger"), on the terms and subject to the conditions set forth in
this Agreement;
WHEREAS Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to the Offer and
the Merger; and
WHEREAS concurrently with the execution and delivery of this Agreement and
as a condition to the willingness of Parent to enter into this Agreement,
certain stockholders of the Company are entering into an agreement with Parent
in substantially the form attached as Exhibit B hereto pursuant to which such
stockholders shall agree, among other things, to tender their shares of Company
Common Stock into the Offer (the "Voting and Tender Agreement").
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I
The Offer
SECTION 1.01. The Offer. (a) Subject to the conditions of this Agreement
and the proviso in the first sentence of Section 1.02(b), as promptly as
practicable (but in no event later than 10 business days) after the date of this
Agreement, Sub shall, and Parent
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shall cause Sub to, commence, within the meaning of Rule 14d-2 under the
Securities Exchange Act of 1934, as amended (together with the rules and
regulations promulgated thereunder, the "Exchange Act"), the Offer; provided
that, if the Company is unable to file the Schedule 14D-9 on the same day Parent
is prepared to commence the Offer, then such 10-business day period shall be
tolled until such time as the Company is prepared to file the Schedule 14D-9
with the SEC. The obligations of Sub to, and of Parent to cause Sub to, accept
for payment, and pay for, any shares of Company Common Stock tendered pursuant
to the Offer shall be subject only to the conditions set forth in Exhibit A (the
"Offer Conditions"). The initial expiration date of the Offer shall be midnight,
New York City time, on the 20th business day immediately following the
commencement of the Offer (determined pursuant to Rule 14d-1(g)(3) under the
Exchange Act). Subject to applicable Law, Sub expressly reserves the right to,
in its sole discretion, waive, in whole or in part, any Offer Condition at any
time prior to the expiration of the Offer or modify the terms of the Offer;
provided, however, that, without the prior written consent of the Company, Sub
shall not (i) reduce the number of shares of Company Common Stock subject to the
Offer, (ii) reduce the Offer Price, (iii) waive the Minimum Tender Condition or
the conditions to the Offer set forth in lettered paragraph (b) of Exhibit A or
numbered paragraph (i) of Exhibit A, (iv) add to the conditions set forth in
Exhibit A or modify any Offer Condition (other than as required by Law, the SEC
or its Staff in a manner that is not adverse to the holders of Company Common
Stock), (v) except as otherwise provided in this Section 1.01(a), extend the
Offer, (vi) change the form of consideration payable in the Offer or (vii)
otherwise amend the Offer in any manner adverse to the holders of Company Common
Stock or any manner that would result in any mandatory extension of the Offer
(other than an increase in the Offer Price in response to an Acquisition
Proposal). Notwithstanding anything in this Agreement to the contrary: (A) in
the event that any of the Offer Conditions (including the Minimum Tender
Condition or any of the other Offer Conditions set forth in Exhibit A) is not
satisfied or waived (if permitted hereunder) as of immediately prior to the
expiration of the Offer (as it may be extended from time to time pursuant to and
in accordance with this Section 1.01(a)), Sub shall, and Parent shall cause Sub
to, extend the Offer for successive extension periods of up to 10 business days
each (or (x) any longer period as may be mutually agreed by Parent and the
Company or (y) any shorter period ending on the Termination Date, if applicable)
in order to permit the satisfaction of all of the conditions to the Offer; and
(B) Sub shall, and Parent shall cause Sub to, extend the Offer for any period
required by any rule, regulation, interpretation or position of the New York
Stock Exchange (the "NYSE") or the Securities and Exchange Commission (the
"SEC") or the staff thereof applicable to the Offer; provided, however, that Sub
shall not be required to (and Parent shall not be required to cause Sub to)
extend the Offer beyond the Termination Date. On the terms and subject to the
conditions of the Offer and this Agreement, Sub shall, and Parent shall cause
Sub to, accept and pay for all shares of Company Common Stock validly tendered
and not withdrawn pursuant to the Offer that Sub becomes obligated to purchase
pursuant to the Offer promptly (within the meaning of Section 14e-1(c)
promulgated under the Exchange Act) after the expiration date of the Offer (as
it may be extended from time to time pursuant to and in accordance with this
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Section 1.01(a)). Acceptance for payment of shares of Company Common Stock
pursuant to the Offer is referred to in this Agreement as the "Offer Closing",
and the time at which the Offer Closing occurs is referred to in this Agreement
as the "Offer Closing Time". Sub expressly reserves the right to, in its sole
discretion, provide for a "subsequent offering period" in accordance with Rule
14d-11 under the Exchange Act, and the Offer Documents shall provide for such a
reservation of right.
(b) The Offer Price shall be adjusted appropriately to reflect the effect
of any stock split, reverse stock split, stock dividend (including any dividend
or distribution of securities convertible into Company Common Stock),
reorganization, recapitalization, reclassification, combination, exchange of
shares or other like change with respect to Company Common Stock occurring on or
after the date hereof and prior to the Offer Closing in accordance with the
terms of this Agreement.
(c) On the date of commencement of the Offer, Parent and Sub shall file
with the SEC a Tender Offer Statement on Schedule TO with respect to the Offer,
which shall contain an offer to purchase and a related letter of transmittal and
summary advertisement (such Schedule TO and the documents included therein
pursuant to which the Offer will be made, together with any supplements or
amendments thereto, the "Offer Documents"). The Company shall furnish to Parent
and Sub all information concerning the Company required by the Exchange Act to
be set forth in the Offer Documents. Each of Parent, Sub and the Company shall
promptly correct any information supplied by it for inclusion or incorporation
by reference in the Offer Documents if and to the extent that such information
shall have become false or misleading in any material respect, and each of
Parent and Sub shall take all steps necessary to amend or supplement the Offer
Documents and to cause the Offer Documents as so amended or supplemented to be
filed with the SEC and disseminated to the stockholders of the Company, in each
case as and to the extent required by applicable Federal securities Laws, the
SEC or its staff or the NYSE. Parent and Sub shall promptly notify the Company
upon the receipt of any comments from the SEC, or any request from the SEC for
amendments or supplements, to the Offer Documents, and shall provide the Company
with copies of all correspondence between them and their representatives, on the
one hand, and the SEC, on the other hand. Unless the Board of Directors of the
Company has effected an Adverse Recommendation Change, prior to the filing of
the Offer Documents (including any amendment or supplement thereto) with the SEC
or dissemination thereof to the stockholders of the Company, or responding to
any comments of the SEC with respect to the Offer Documents, Parent and Sub
shall provide the Company a reasonable opportunity to review and comment on such
Offer Documents or response (including the proposed final version thereof).
(d) Parent shall provide or cause to be provided to Sub on a timely basis
the funds necessary to pay for any shares of Company Common Stock that Sub
becomes obligated to accept for payment, and pay for, pursuant to the Offer.
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(e) Sub shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to the Offer to any holder of shares of Company
Common Stock such amounts as Sub is required to deduct and withhold with respect
to the making of such payment under the Internal Revenue Code of 1986, as
amended (the "Code"), or any provision of state, local or foreign tax Law. To
the extent that amounts are so withheld and paid over to the appropriate taxing
authority by Sub, such withheld amounts shall be treated for all purposes of
this Agreement as having been paid to the holder of the shares of Company Common
Stock in respect of which such deduction and withholding was made by Sub.
SECTION 1.02. Company Actions. (a) The Company hereby approves of and
consents to the Offer, the Merger and the other transactions contemplated by
this Agreement.
(b) The Company file with the SEC a Solicitation/Recommendation Statement
on Schedule 14D-9 with respect to the Offer (such Schedule 14D-9, together with
any supplements or amendments thereto, the "Schedule 14D-9"), and shall use its
reasonable best efforts to file the Schedule 14D-9 with the SEC on the date the
Offer Documents are filed with the SEC and mail the Schedule 14D-9 to the
stockholders of the Company with the Offer Documents. Parent and Sub shall
furnish to the Company all information concerning Parent and Sub required by the
Exchange Act to be set forth in the Schedule 14D-9. Each of the Company, Parent
and Sub shall promptly correct any information supplied by it for inclusion or
incorporation by reference in the Schedule 14D-9 if and to the extent that such
information shall have become false or misleading in any material respect, and
the Company shall take all steps necessary to amend or supplement the Schedule
14D-9 and to cause the Schedule 14D-9 as so amended or supplemented to be filed
with the SEC and disseminated to the stockholders of the Company, in each case
as and to the extent required by applicable Federal securities Laws, the SEC or
its staff or the Nasdaq Global Select Market. Unless the Board of Directors of
the Company has effected an Adverse Recommendation Change, the Company shall
promptly notify Parent upon the receipt of any comments from the SEC, or any
request from the SEC for amendments or supplements, to the Schedule 14D-9, and
shall provide Parent with copies of all correspondence between the Company and
its representatives, on the one hand, and the SEC, on the other hand. Unless the
Board of Directors of the Company has effected an Adverse Recommendation Change
(and except for any Schedule 14D-9 filing in which the Company discloses an
Adverse Recommendation Change), prior to the filing of the Schedule 14D-9
(including any amendment or supplement thereto) with the SEC or mailing thereof
to the stockholders of the Company, or responding to any comments of the SEC
with respect to the Schedule 14D-9, the Company shall provide Parent a
reasonable opportunity to review and comment on such Schedule 14D-9 or response
(including the proposed final version thereof).
(c) In connection with the Offer and the Merger, the Company shall cause
its transfer agent to furnish Parent and Sub promptly with mailing labels
containing the
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names and addresses of the record holders of Company Common Stock
as of a recent date and of those persons becoming record holders subsequent to
such date, together with copies of all lists of stockholders, security position
listings and computer files and all other information in the Company's
possession or control regarding the beneficial owners of Company Common Stock,
and shall furnish to Sub such information and assistance (including updated
lists of stockholders, security position listings and computer files) as Parent
may reasonably request in communicating the Offer to holders of Company Common
Stock. Subject to the requirements of applicable Law, and except for such steps
as are necessary to disseminate the Offer Documents and any other documents
necessary to consummate the transactions contemplated by this Agreement, Parent
and Sub shall hold in confidence the information contained in any such labels,
listings and files, shall use such information only in connection with the Offer
and the Merger and, if this Agreement shall be terminated, shall, upon request,
deliver to the Company all copies of such information then in their possession
or control.
(d) At any time after the Offer Closing Time, Parent may request the
Company to take all necessary actions, and the Company agrees to take such
actions, to deregister the Company Common Stock under the Exchange Act and/or to
delist the Shares from the Nasdaq Global Select Market if (A) such actions are
otherwise permitted under applicable Law, and (B) such actions are reasonably
expected to permit the Closing to occur sooner than it would otherwise occur.
(e) Unless the Board of Directors of the Company has effected an Adverse
Recommendation Change, the Company hereby consents to the inclusion of the
recommendation described in Section 4.01(d) in the Offer Documents. If the Board
of Directors of the Company has effected an Adverse Recommendation Change,
neither Sub nor Parent may include the recommendation described in Section
4.01(d) in the Offer Documents without the Company's prior written consent.
Unless the Board of Directors of the Company has effected an Adverse
Recommendation Change, the Company shall include the recommendation described in
Section 4.01(d) in the Schedule 14D-9.
SECTION 1.03. Top-Up Option. (a) The Company hereby grants to Sub an
irrevocable option (the "Top-Up Option"), exercisable only on the terms and
conditions set forth in this Section 1.03, to purchase at a price per share
equal to the Offer Price paid in the Offer that number of newly issued shares of
Company Common Stock (the "Top-Up Shares") equal to the lowest number of shares
of Company Common Stock that, when added to the number of shares of Company
Common Stock directly or indirectly owned by Parent at the time of exercise of
the Top-Up Option shall constitute one share more than 90% of the shares of
Company Common Stock outstanding immediately after the issuance of the Top-Up
Shares; provided, however, that the Top-Up Option shall not be exercisable for a
number of shares of Company Common Stock in excess of the shares of Company
Common Stock authorized and unissued at the time of exercise of the Top-Up
Option. Provided that no applicable law, rule, regulation, order, injunction or
other legal impediment shall make the exercise of the Top-Up Option or the
issuance of the Top-Up
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Option Shares pursuant thereto illegal, the Top-Up Option
shall be exercisable at any time following the Offer Closing and prior to the
earlier to occur of (a) the Effective Time and (b) the termination of this
Agreement in accordance with its terms. Sub may only exercise the Top-Up Option
on a single occasion after the expiration of the Offer and in any case only if,
as a result of and immediately following the issuance of the Top-Up Shares,
Parent will directly or indirectly hold one share more than 90% of the shares of
Company Common Stock then outstanding (after giving effect to the issuance of
the Top-Up Shares).
(b) The parties shall cooperate to ensure that the issuance and delivery
of the Top-Up Shares comply with all applicable Law, including compliance with
an applicable exemption from registration of the Top-Up Shares under the
Securities Act. In the event Sub wishes to exercise the Top-Up Option, Sub shall
give the Company one business day prior written notice, specifying (i) the
number of shares of the Company Common Stock directly or indirectly owned by
Parent at the time of such notice and (ii) a place and a time for the closing of
such purchase. The Company shall, as soon as practicable following receipt of
such notice, deliver written notice to Sub specifying, based on the information
provided by Sub in its notice, the number of Top-Up Shares. At the closing of
the purchase of Top-Up Shares, the purchase price owed by Sub to the Company
therefor shall be paid to the Company (i) in an amount of cash equal to the
aggregate par value of the Top-Up Shares, by wire transfer or cashier's check,
and (ii) by issuance by Sub to the Company of a promissory note in the form of
Exhibit C with a principal amount equal to the remaining exercise price of the
Top-Up Shares. Parent and Sub understand that the shares of Company Common Stock
which Sub will acquire upon exercise of the Top-Up Option will not be registered
under the Securities Act and will be issued in reliance upon an exemption
thereunder for transactions not involving a public offering. Parent and Sub
represent and warrant to the Company that Sub is, or will be upon the purchase
of the Top-Up Shares, an Accredited Investor within the meaning of Rule 501 of
Regulation D promulgated under the Securities Act. Sub agrees that the Top-Up
Shares to be acquired upon exercise of the Top-Up Option are not being acquired
with a view to or for resale in connection with any distribution thereof within
the meaning of the Securities Act.
ARTICLE II
The Merger
SECTION 2.01. 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"), Sub shall be merged with and into the
Company at the Effective Time. At the Effective Time, the separate corporate
existence of Sub shall cease and the Company shall continue as the surviving
corporation (the "Surviving Corporation").
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SECTION 2.02. Closing. The closing of the Merger (the "Closing") will take
place at 5:30 a.m., California time, on a date to be specified by the parties,
which shall be not later than the second business day after satisfaction or
waiver of the conditions set forth in Article VII, at the offices of O'Melveny &
Xxxxx LLP, 000 Xxxxxxx Xxxxxx Xxxxx, 00xx Xxxxx, Xxxxxxx Xxxxx, Xxxxxxxxxx
00000, unless another time, date or place is agreed to in writing by Parent and
the Company; provided, however, that if all the conditions set forth in Article
VII shall not have been satisfied or waived on such second business day, then
the Closing shall take place on the first business day on which all such
conditions shall have been satisfied or waived. The date on which the Closing
occurs is referred to in this Agreement as the "Closing Date".
SECTION 2.03. Effective Time of the Merger. Upon the terms and subject to
the conditions set forth in this Agreement, as soon as practicable on the
Closing Date, the parties shall file a certificate of merger (the "Certificate
of Merger") in such form as is required by, and executed and acknowledged in
accordance with, the relevant provisions of the DGCL. The Merger shall become
effective at such date and time as the Certificate of Merger is duly filed with
the Secretary of State of the State of Delaware or at such subsequent date and
time as Parent and the Company shall agree and specify in the Certificate of
Merger. The date and time at which the Merger becomes effective is referred to
in this Agreement as the "Effective Time".
SECTION 2.04. Effects of the Merger. The Merger shall have the effects set
forth in the DGCL.
SECTION 2.05. Certificate of Incorporation and Bylaws. (a) Subject to the
terms of Section 6.05(a), the Amended and Restated Certificate of Incorporation
of the Company (the "Company Certificate") shall be amended at the Effective
Time to read in the form of Exhibit D hereto and, as so amended, the Company
Certificate shall be the certificate of incorporation of the Surviving
Corporation until thereafter changed or amended as provided therein or by
applicable Law.
(b) Subject to the terms of Section 6.05(a), the Bylaws of Sub as in
effect immediately prior to the Effective Time shall be the Bylaws of the
Surviving Corporation until thereafter changed or amended as provided therein or
by applicable Law.
SECTION 2.06. Directors. The directors of Sub immediately prior to the
Effective Time shall be the directors of the Surviving Corporation until the
earlier of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.
SECTION 2.07. Officers. The officers of Sub immediately prior to the
Effective Time shall be the officers of the Surviving Corporation until the
earlier of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.
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SECTION 2.08. Merger Without Meeting of Stockholders. Notwithstanding
anything in this Agreement to the contrary, if, following the Offer Closing
Time, Parent or any direct or indirect Subsidiary of Parent shall own at least
90% of the outstanding shares of Company Common Stock, pursuant to the Offer or
otherwise (including as a result of the exercise of the Top-Up Option and the
issuance of the Top-Up Shares pursuant thereto), the parties hereto shall,
subject to Article VII hereof, take all necessary and appropriate action to
cause the Merger to become effective as soon as practicable after the
satisfaction of such threshold, without a meeting of stockholders of the
Company, in accordance with Section 253 of the DGCL.
ARTICLE III
Effect of the Merger on the Capital Stock of the Constituent Corporations;
Exchange of Certificates
SECTION 3.01. Effect on Capital Stock. At the Effective Time, by virtue of
the Merger and without any action on the part of the holder of any shares of
Company Common Stock, or the holder of any shares of capital stock of Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of common
stock of Sub, par value $0.01 per share, shall be converted into and become one
fully paid and nonassessable share of common stock, par value $0.01 per share,
of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent- and Sub-Owned Stock. All
shares of Company Common Stock that are owned as treasury stock by the Company
or owned by Parent or Sub immediately prior to the Effective Time shall
automatically be canceled and shall cease to exist, and no consideration shall
be delivered or deliverable in exchange therefor.
(c) Company Subsidiary-Owned Shares. Each share of Company Common Stock
that is owned, directly or indirectly, by any Company Subsidiary immediately
prior to the Effective Time shall be converted into such number of shares of
common stock of the Surviving Corporation such that each such Company Subsidiary
owns the same percentage of the Surviving Corporation immediately following the
Effective Time as such Subsidiary owned in the Company immediately prior to the
Effective Time.
(d) Conversion of Company Common Stock. Each share of Company Common Stock
issued and outstanding immediately prior to the Effective Time (other than (i)
shares to be canceled in accordance with Section 3.01(b) and (ii) except as
provided in Section 3.01(e), the Appraisal Shares) shall be converted into the
right to receive from the Surviving Corporation, in cash and without interest,
the Offer Price paid in the Offer (the "Merger Consideration"). At the Effective
Time such shares shall no longer be outstanding and shall automatically be
canceled and shall cease to exist, and each holder of a certificate that
immediately prior to the Effective Time represented any such shares
9
(a "Certificate") shall cease to have any rights with respect thereto, except
the right to receive the Merger Consideration in accordance with the terms of
this Agreement. The right of any holder of any share of Company Common Stock to
receive the Merger Consideration shall be subject to and reduced by the amount
of any withholding that is required under applicable tax Law, such withholding
to be pursuant to the terms of Section 3.02(f) and any applicable tax Law.
(e) Appraisal Rights. Notwithstanding anything in this Agreement to the
contrary, shares (the "Appraisal Shares") of Company Common 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 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 from the
Surviving Corporation, in cash and without interest, the Merger Consideration as
provided in Section 3.01(d), but instead such holder shall be entitled to
payment of the fair value of such shares in accordance with the provisions of
Section 262. At the Effective Time, the Appraisal Shares shall no longer be
outstanding and shall automatically be canceled and shall cease to exist, and
each holder of a certificate that immediately prior to the Effective Time
represented Appraisal Shares shall cease to have any rights with respect
thereto, except the right to receive the fair value of such 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 and such Appraisal Shares shall
be deemed to have been converted at the Effective Time into, and shall have
become, the right to receive from the Surviving Corporation, in cash and without
interest, the Merger Consideration as provided in Section 3.01(d). The Company
shall serve prompt notice to Parent of any demands for appraisal of any shares
of Company Common Stock, withdrawals of any such demands and any other
instruments served pursuant to the DGCL received by the Company, and Parent
shall have the right to participate in and direct all negotiations and
proceedings with respect to such demands. The Company shall not, without the
prior written consent of Parent, make any payment with respect to, or settle or
offer to settle, any such demands, or agree to do or commit to do any of the
foregoing.
SECTION 3.02. Exchange of Certificates. (a) Paying Agent. Prior to the
Effective Time, Parent shall designate a bank or trust company reasonably
acceptable to the Company to act as agent for the payment of the Merger
Consideration upon surrender of Certificates (the "Paying Agent"), and, promptly
after the Effective Time (and from time to time thereafter, if necessary),
Parent shall make available, or cause the Surviving Corporation to make
available, to the Paying Agent funds in amounts and at the times necessary for
the payment of the Merger Consideration pursuant to Section 3.01(d) upon
surrender of Certificates, it being understood that any and all interest or
other amounts earned with respect to funds made available to the Paying Agent
pursuant to this Agreement shall be turned over to Parent.
10
(b) Exchange Procedure. As soon as reasonably practicable after the
Effective Time, the Surviving Corporation 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 the Certificates held by such person shall pass, only upon proper delivery of
the Certificates to the Paying Agent and shall be in a form and have such other
provisions as Parent may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for the Merger
Consideration. Upon surrender of a Certificate for cancellation to the Paying
Agent or to such other agent or agents as may be appointed by Parent, together
with such letter of transmittal, duly completed and validly executed, and such
other documents as may reasonably be required by the Paying Agent, the holder of
such Certificate shall be entitled to receive in exchange therefor the amount of
cash equal to the Merger Consideration that such holder has the right to receive
pursuant to Section 3.01(d), and the Certificate so surrendered shall forthwith
be canceled. In the event of a transfer of ownership of Company Common Stock
that is not registered in the stock transfer books of the Company, payment of
the Merger Consideration in exchange therefor may be made to a person other than
the person in whose name the 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 payment 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 satisfaction of the Surviving
Corporation that such tax has been paid or is not applicable. No interest shall
be paid or shall accrue on the cash payable upon surrender of any Certificate.
(c) No Further Ownership Rights in Company Common Stock. All cash paid
upon the surrender of a Certificate in accordance with the terms of this Article
III shall be deemed to have been paid in full satisfaction of all rights
pertaining to the shares of Company Common Stock formerly represented by such
Certificate. At the close of business on the day on which the Effective Time
occurs, the stock transfer books of the Company shall be closed, and there shall
be no further registration of transfers on the stock transfer books of the
Surviving Corporation of the shares that were outstanding immediately prior to
the Effective Time. If, after the close of business on the day on which the
Effective Time occurs, Certificates are presented to the Surviving Corporation
or the Paying Agent for transfer or any other reason, they shall be canceled and
exchanged as provided in this Article III.
(d) No Liability. None of Parent, Sub, the Company, the Surviving
Corporation or the Paying Agent shall be liable to any person in respect of any
cash that would otherwise have been payable in respect of any Certificate which
is delivered to a public official in accordance with any applicable abandoned
property, escheat or similar Law. If any Certificates shall not have been
surrendered prior to two years after the Effective
11
Time (or immediately prior to such earlier date on which any Merger
Consideration would otherwise escheat to or become the property of any
Governmental Entity), any such Merger Consideration in respect thereof shall, to
the extent permitted by applicable Law, become the property of the Surviving
Corporation, free and clear of all claims or interest of any person previously
entitled thereto.
(e) Lost Certificates. If any Certificate shall have been lost, stolen,
defaced or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen, defaced or destroyed and the
posting by such person of a bond in such amount as the Surviving Corporation may
direct as indemnity against any claim that may be made against it with respect
to such Certificate, the Paying Agent shall pay the Merger Consideration in
respect of such lost, stolen, defaced or destroyed Certificate.
(f) Withholding Rights. Parent, the Surviving Corporation or the Paying
Agent shall be entitled to deduct and withhold from the Merger Consideration or
other amounts otherwise payable pursuant to this Agreement to any holder of
shares of Company Common Stock such amounts as Parent, the Surviving Corporation
or the Paying Agent is required to deduct and withhold with respect to the
making of such payment under the Code, or any provision of state, local or
foreign tax Law. To the extent that amounts are so withheld and paid over to the
appropriate taxing authority by Parent, the Surviving Corporation or the Paying
Agent, such withheld amounts shall be treated for all purposes of this Agreement
as having been paid to the holder of the shares of Company Common Stock in
respect of which such deduction and withholding was made by Parent, the
Surviving Corporation or the Paying Agent.
(g) Termination of Fund. At any time following the date six months after
the Effective Time, Parent or the Surviving Corporation shall be entitled to
require the Paying Agent to deliver to it any funds (including any interest or
other amounts earned with respect thereto) that had been made available to the
Paying Agent and which have not been disbursed to holders of Certificates, and
thereafter, subject to time limitations in Section 3.01(d), such holders shall
be entitled to look only to the Surviving Corporation (subject to abandoned
property, escheat or similar Laws) as general creditors thereof with respect to
the payment of any Merger Consideration that may be payable upon surrender of
any Certificates held by such holders, as determined pursuant to this Agreement,
without any interest thereon.
ARTICLE IV
Representations and Warranties
SECTION 4.01. Representations and Warranties of the Company. Except as set
forth in the letter delivered by the Company to Parent at least three business
days prior to the date of this Agreement (the "Company Letter") (it being
understood that any information set forth in one section or subsection of the
Company Letter shall be deemed
12
to apply to and qualify the section or subsection of this Agreement to which it
corresponds in number and each other section or subsection of this Agreement to
which the relevance of such disclosure is reasonably apparent on its face), the
Company represents and warrants to Parent and Sub as follows:
(a) Organization, Standing and Corporate Power. Each of the Company and
its Subsidiaries (i) is a corporation or other legal entity duly organized,
validly existing and in good standing under the Laws of the jurisdiction of its
organization (except, in the case of good standing, for entities organized under
the Laws of any jurisdiction that does not recognize such concept), (ii) has all
requisite corporate or company power and authority to carry on its business as
now being conducted and as proposed by the Company to be conducted and (iii) is
duly qualified or licensed to do business and is in good standing in each
jurisdiction (except, in the case of good standing, any jurisdiction that does
not recognize such concept) in which the nature of its business or the
ownership, leasing or operation of its properties makes such qualification or
licensing necessary or desirable, other than where the failure to be so
organized, existing, qualified or licensed or in good standing (except, in the
case of clause (i) above, with respect to the Company) would not reasonably be
expected to have a Material Adverse Effect. The Company has made available to
Parent complete and correct copies of the Company Certificate and the Amended
and Restated Bylaws of the Company (the "Company Bylaws") and the certificate of
incorporation and bylaws (or similar organizational documents) of each of its
Subsidiaries, in each case as amended to the date of this Agreement. The Company
has made available to Parent complete and correct copies of the minutes (or, in
the case of draft minutes, the most recent drafts thereof) of all meetings of
the stockholders, the Board of Directors and each committee of the Board of
Directors of the Company and each of its Subsidiaries held since January 1,
2004. The Company has made available to Parent complete and correct copies of
all resolutions of the Board of Directors of the Company, and each committee
thereof, in respect of this Agreement and the transactions contemplated hereby.
(b) Subsidiaries. Section 4.01(b) of the Company Letter sets forth a
complete and correct list of each Subsidiary of the Company and its place and
form of organization. All the outstanding shares of capital stock of, or other
equity or voting interests in, each such Subsidiary are owned by the Company, by
another wholly owned Subsidiary of the Company or by the Company and another
wholly owned Subsidiary of the Company, free and clear of all pledges, claims,
liens, options, security interests or other encumbrances of any kind or nature
whatsoever (collectively, "Liens"), except for transfer restrictions imposed by
applicable securities Laws, and are duly authorized, validly issued, fully paid
and nonassessable. Except for the capital stock of, or other equity or voting
interests in, its Subsidiaries, the Company does not own, directly or
indirectly, any capital stock of, or other equity or voting interests in, any
person, except for non-controlling investments made in the ordinary course of
business.
13
(c) Capital Structure. (i) The authorized capital stock of the Company
consists of 120,000,000 shares of Company Common Stock. At the close of business
on June 27, 2007, (A) 30,359,747 shares of Company Common Stock (excluding
treasury shares but including 1,036,090 shares subject to vesting) were issued
and outstanding, (B) no shares of Company Common Stock were held by the Company
as treasury shares, (C) 617,302 shares of Company Common Stock were subject to
outstanding options to acquire shares of Company Common Stock pursuant to the
Company's Amended and Restated 2002 Qualified Stock Plan (the "Company Stock
Plan") (such options, together with any other stock options granted after June
26, 2007, under the Company Stock Plans pursuant to the terms of this Agreement
or as disclosed in the Company Letter, the "Company Stock Options"), (D) 12,500
shares of Company Common Stock were subject to outstanding stock purchase rights
under the Company's Deferred Compensation Plan and the Company Stock Plan (such
stock purchase rights, together with any other stock purchase rights granted
after June 26, 2007, under the Company Stock Plan pursuant to the terms of this
Agreement or as disclosed in the Company Letter, the "Company Stock Purchase
Rights"), and (E) the Company's outstanding 2.125% Convertible Subordinated
Notes due 2014 of the Company (the "Company Convertible Notes") issued pursuant
to the Indenture, dated as of March 28, 2007, by and between the Company and
U.S. Bank National Association, as trustee (the "Indenture") are in the
aggregate convertible into a maximum of 7,631,250 shares of Company Common
Stock. An aggregate of 4,942,762 shares of Company Common Stock are reserved for
future issuance pursuant to the Company Stock Plan. Other than the Company Stock
Plan, there is no plan or other Contract providing for the grant of options
exercisable for or into shares of Company Common Stock by the Company or any of
its Subsidiaries. No shares of Company Common Stock are owned by any Subsidiary
of the Company. The Company has delivered to Parent (1) a complete, correct and
accurate list, as of the close of business on June 26, 2007, of all outstanding
Company Stock Options and Company Stock Purchase Rights, the number of shares
subject to each such Company Stock Option and Company Stock Purchase Right, the
grant date, exercise price per share, vesting schedule and expiration date of
each such Company Stock Option and Company Stock Purchase Right and the name of
the holder thereof and an indication of whether or not each such holder is a
current employee of the Company or any of its Subsidiaries and whether or not
each such Company Stock Option is intended to qualify as an "incentive stock
option" under Section 422 of the Code and (2) the forms of Company Stock Option
and Company Stock Purchase Right grant agreements pursuant to which any such
awards were granted. As of the date of this Agreement, other than the Company
Stock Options, Company Stock Purchase Rights and the Company Convertible Notes,
there are no outstanding rights of any person to receive Company Common Stock
under the Company Stock Plan or the Company Deferred Compensation Plan or
otherwise, on a deferred basis or otherwise. All Company Stock Options, Company
Stock Purchase Rights and any other shares of deferred stock, restricted stock
awards, stock appreciation rights, phantom stock awards or other rights to
acquire any Company Common Stock or interests or other rights linked to the
value of the Company Common Stock or the value of the Company or any part
thereof, in each case whether currently outstanding or previously issued under
the
14
Company Stock Plan, the Company Deferred Compensation Plan or any similar equity
plan previously in existence, granted on or after June 30, 2002 were (other than
Company Stock Purchase Rights) granted with an exercise price or strike price
not less than the fair market value of the Company Common Stock on the grant
date and were granted in material compliance with the applicable equity plan and
the rule of the Nasdaq Global Select Market or other securities exchange on the
Company Common Stock was traded on the grant date.
(ii) Except as set forth in Section 4.01(c)(i), as of the close of
business on June 26, 2007, no shares of capital stock of, or other equity
or voting interests in, the Company, or securities convertible into, or
exchangeable or exercisable for, or options, warrants, shares of deferred
stock, restricted stock awards, stock appreciation rights, phantom stock
awards or other rights to acquire any such stock or interests, or other
rights that are linked to the value of the Company Common Stock or the
value of the Company or any part thereof, were issued, reserved for
issuance or outstanding. Since June 26, 2007, (A) there have been no
issuances by the Company of shares of capital stock of, or other equity or
voting interests in, the Company, other than issuances of shares of
Company Common Stock pursuant to the exercise of Company Stock Options or
Company Stock Purchase Rights or the conversion of Company Convertible
Notes, in each case outstanding as of June 26, 2007, and only if and to
the extent permitted by their terms as in effect on such date and (B)
there have been no issuances by the Company of securities convertible
into, or exchangeable or exercisable for, or options, warrants, shares of
deferred stock, restricted stock awards, stock appreciation rights,
phantom stock awards or other rights to acquire, any such stock or
interests, or other rights that are linked to the value of Company Common
Stock or the value of the Company or any part thereof.
(iii) All outstanding shares of Company Common Stock are, and all
shares of Company Common Stock that may be issued pursuant to the Company
Stock Plan or the Company Convertible Notes will be, when issued in
accordance with the terms thereof, duly authorized, validly issued, fully
paid and nonassessable and not subject to preemptive rights (other than
those that may be imposed by applicable securities Laws). Other than the
Company Convertible Notes, there are no bonds, debentures, notes or other
indebtedness of the Company or any of its Subsidiaries (other than
intercompany indebtedness) or any other securities (other than shares of
Company Common Stock), instruments or obligations of the Company or any of
its Subsidiaries, in each case, which has or which by its terms may have
at any time (whether actual or contingent) the right to vote (or which is
convertible into, or exchangeable for, securities having the right to
vote) on any matters on which stockholders of the Company or any of its
Subsidiaries may vote. Except as set forth in this Section 4.01(c), there
are no securities, options, warrants, calls, rights or Contracts of any
kind to which the Company or any of its Subsidiaries is a party, or by
which the Company or any of its Subsidiaries is bound, obligating the
Company or any of its Subsidiaries to issue, deliver or sell, or cause to
be issued, delivered or sold,
15
additional shares of capital stock of, or other equity or voting interests
in, or securities convertible into, or exchangeable or exercisable for,
shares of capital stock of, or other equity or voting interests in, the
Company or any of its Subsidiaries or obligating the Company or any of its
Subsidiaries to issue, grant, extend or enter into any such security,
option, warrant, call, right or Contract. No Company Stock Option is an
"incentive stock option" under Section 422 of the Code. Except pursuant to
the exercise or tax withholding provisions of the agreements under which
Company Stock Options and Company Stock Purchase Rights were granted,
there are no outstanding contractual or other obligations of the Company
or any of its Subsidiaries to (I) repurchase, redeem or otherwise acquire
any shares of capital stock of, or other equity or voting interests in,
the Company or any of its Subsidiaries or (II) vote or dispose of any
shares of capital stock of, or other equity or voting interests in, the
Company or any of its Subsidiaries. The Company is not a party to any
voting agreements with respect to any shares of capital stock of, or other
equity or voting interests in, the Company or any of its Subsidiaries and,
to the knowledge of the Company, as of the date of this Agreement there
are no irrevocable proxies and no voting agreements with respect to any
shares of capital stock of, or other equity or voting interests in, the
Company or any of its Subsidiaries. All Company Stock Options and Company
Stock Purchase Rights may, by their terms, be treated in accordance with
Section 6.04(a).
(d) Authority; Noncontravention. The Company has the requisite
corporate power and authority to execute and deliver this Agreement, to
consummate the Merger and the other transactions contemplated by this Agreement,
subject, in the case of the Merger if required by applicable Law, to the
affirmative vote of the holders of a majority of the outstanding shares of the
Company Common Stock in favor of adopting this Agreement (the "Stockholder
Approval"), and to comply with the provisions of this Agreement. The execution
and delivery of this Agreement by the Company, the consummation by the Company
of the Merger and the other transactions contemplated by this Agreement 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 this Agreement, to comply with the terms of this Agreement or to
consummate the Offer, the Merger and the other transactions contemplated by this
Agreement, subject, in the case of the Merger if required by applicable Law, to
obtaining the Stockholder Approval. This Agreement has been duly executed and
delivered by the Company and, assuming the due execution and delivery of this
Agreement by Parent and Sub, constitutes a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms. 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 and declaring advisable this Agreement, the Offer, the Merger and
the other transactions contemplated by this Agreement, (ii) declaring that it is
in the best interests of the Company's stockholders that the Company enter into
this Agreement and consummate the transactions
16
contemplated by this Agreement on the terms and subject to the conditions set
forth in this Agreement, (iii) declaring that the terms of the Offer and the
Merger are fair to the Company's stockholders, (iv) recommending that the
Company's stockholders accept the Offer, tender their shares of Company Common
Stock pursuant to the Offer and, if required by applicable Law, adopt this
Agreement and (v) acknowledging that each member of the Compensation Committee
approving any employment compensation, severance or other employee benefit
arrangement as set forth in Section 4.01(t) is an "independent director" within
the meaning of Rule 4200(a)(15) of The Nasdaq National Market, Inc. (an
"Independent Director"), which resolutions, except to the extent permitted by
Section 5.02, have not been rescinded, modified or withdrawn in any way. The
execution and delivery of this Agreement, the consummation of the Offer, the
Merger and the other transactions contemplated by this Agreement and compliance
by the Company with the provisions of this Agreement do not and will not
conflict with, or automatically result in any violation or breach of, or default
(with or without notice or lapse of time or both) under, or give rise to a right
of, or result in, termination, cancellation or acceleration of any obligation or
to a loss of a benefit under, or result in the creation of any Lien in or upon
any of the properties or assets of the Company or any of its Subsidiaries under,
or give rise to any increased, additional, accelerated or guaranteed rights or
entitlements under (including any right of a holder of a security of the Company
or any of its Subsidiaries to require the Company or any of its Subsidiaries to
acquire such security), any provision of (A) the Company Certificate or the
Company Bylaws or the certificate of incorporation or bylaws (or similar
organizational documents) of any of its Subsidiaries, (B) any loan or credit
agreement, bond, debenture, note, mortgage, indenture, guarantee, lease or other
contract, commitment, agreement (including purchase orders), instrument,
arrangement, understanding, obligation, undertaking or license, whether written
or, to the Company's knowledge oral, in each case that is legally binding (each,
including all amendments thereto, a "Contract") or Permit to which the Company
or any of its Subsidiaries is a party or bound by or any of their respective
properties or assets are bound by or subject to or otherwise under which the
Company or any of its Subsidiaries has rights or benefits or (C) subject to the
governmental filings and other matters referred to in the second following
sentence, any (1) Federal, state or local, domestic or foreign, statute, law,
code, ordinance, rule, guidance or regulation of any Governmental Entity (each,
a "Law") or (2) Federal, state or local, domestic or foreign, judgment,
injunction, order, writ or decree of any Governmental Entity (each, a
"Judgment"), in each case, applicable to the Company or any of its Subsidiaries
or their respective properties or assets, other than, in the case of clauses (B)
and (C), any such conflicts, violations, breaches, defaults, rights,
terminations, cancellations, accelerations, losses, Liens, rights or
entitlements that, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect. No consent, approval, order or
authorization of, registration, declaration or filing with, or notice to, any
Federal, state or local, domestic or foreign, government or any court,
administrative agency or commission or other governmental or regulatory
authority or agency, domestic or foreign (a "Governmental Entity"), is required
by or with respect to the Company or any of its Subsidiaries in connection with
the execution
17
and delivery of this Agreement by the Company, the consummation of the Offer,
the Merger or any of the other transactions contemplated by this Agreement or
the compliance by the Company with the provisions of this Agreement, except for
(I) the filing of a premerger notification and report form by the Company under
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and the filings and receipt, termination or expiration, as applicable, of
such other approvals or waiting periods required under any other applicable
competition, merger control, antitrust or similar Law, (II) the filing with the
SEC of (w) the Schedule 14D-9, (x) a proxy statement relating to the adoption of
this Agreement by the Company's stockholders, if required by applicable Law (as
amended or supplemented from time to time, the "Proxy Statement"), (y) an
information statement required in connection with the Offer under Rule 14f-1
under the Exchange Act (as amended or supplemented from time to time, the
"Information Statement") and (z) such reports under the Exchange Act as may be
required in connection with this Agreement, the Offer, the Merger and the other
transactions contemplated by this Agreement, (III) the filing of the Certificate
of Merger with the Secretary of State of the State of Delaware, (IV) any filings
required under the rules and regulations of The Nasdaq Global Select Market or
the National Association of Securities Dealers, Inc. and (V) such other
consents, approvals, orders, authorizations, registrations, declarations,
filings and notices the failure of which to be obtained or made, individually or
in the aggregate, would not reasonably be expected to have a Material Adverse
Effect.
(e) SEC Documents. (i) The Company has made available to Parent, or
the Electronic Data Gathering, Analysis and Retrieval (XXXXX) database of the
SEC contains in a publicly available format, complete and correct copies of all
reports, schedules, forms, statements and other documents filed with or
furnished to the SEC by the Company since January 1, 2004 (together with all
information incorporated therein by reference, the "SEC Documents"). Since
January 1, 2004, the Company has filed with or furnished to the SEC each report,
schedule, form, statement or other document or filing required by Law to be
filed or furnished at or prior to the time so required. No Subsidiary of the
Company is required to file or furnish any report, schedule, form, statement or
other document with, or make any other filing with, or furnish any other
material to, the SEC. As of their respective dates, each of the SEC Documents
complied as to form in all material respects with the requirements of the
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder (collectively, the "Securities Act") and the Exchange Act, in each
case, applicable to such SEC Document, and none of the SEC Documents at the time
it was filed or furnished 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. The Company has made available to Parent copies
of all comment letters received by the Company from the SEC since January 1,
2004, and relating to the SEC Documents, together with all written responses of
the Company thereto. As of the date of this Agreement, there are no outstanding
or unresolved comments in such comment letters received by the Company from the
SEC.
18
As of the date of this Agreement, to the knowledge of the Company, none of the
SEC Documents is the subject of any ongoing review by the SEC. The financial
statements (including the related notes) of the Company included in the SEC
Documents complied, at the time the respective statements were filed, as to form
in all material respects with the applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted accounting principles in effect
from time to time in the United States of America ("GAAP") (except, in the case
of interim financial statements, as permitted by the SEC under Form 10-Q, Form
8-K or any successor or like form under the Exchange Act) applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present in all material respects the consolidated
financial position of the Company and its consolidated Subsidiaries as of the
dates thereof and their consolidated results of operations and cash flows for
the periods then ended (subject, in the case of unaudited quarterly financial
statements, to normal and recurring year-end audit adjustments). Except as set
forth in the Company's unaudited financial statements for the quarter ended
April 1, 2007 included in the Filed SEC Documents, the Company and its
Subsidiaries have no liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise), other than (A) liabilities and obligations
expressly permitted or contemplated by this Agreement, (B) liabilities and
obligations incurred in the ordinary course of business consistent with past
practice, or (C) liabilities and obligations that would not reasonably be
expected to have a Material Adverse Effect. For purposes of this Agreement, a
"Filed SEC Document" is any SEC Document filed or furnished and publicly
available prior to the date of this Agreement.
(ii) The Company is in compliance in all material respects with the
provisions of the Xxxxxxxx-Xxxxx Act of 2002 and the rules and regulations
promulgated thereunder (collectively, "SOX") applicable to it.
(iii) Neither the Company nor any of its Subsidiaries is a party to,
or has any commitment to become a party to, any joint venture, off-balance
sheet partnership or any similar Contract (including any Contract relating
to any transaction or relationship between or among the Company and any of
its Subsidiaries, 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 or any of its Subsidiaries in the Company's or any of its
Subsidiaries published financial statements or other SEC Documents.
(iv) The Company maintains "internal control over financial
reporting" (as defined in Rule 13a-15(f) under the Exchange Act) in
compliance with the Exchange Act.
19
(v) The Company maintains "disclosure controls and procedures" (as
defined in Rule 13a-15(e) under the Exchange Act) in compliance with the
Exchange Act.
(f) Information Supplied. None of the information included or
incorporated by reference in the Schedule 14D-9, the Information Statement or
the Proxy Statement (and none of the information supplied by the Company
specifically for inclusion or incorporation by reference in the Offer Documents)
will, in the case of the Schedule 14D-9, the Information Statement and the Offer
Documents, at the respective times the Schedule 14D-9, the Information Statement
and the Offer Documents are filed with the SEC or first published, sent or given
to the Company's stockholders or, in the case of the Proxy Statement, at the
time the Proxy Statement is first mailed to the Company's stockholders or at the
time of the Stockholders Meeting, contain any statement that, in light of the
circumstances under which it is made, is false or misleading with respect to any
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 false or misleading, except that no
representation or warranty is made by the Company with respect to statements
made or incorporated by reference in Schedule 14D-9, the Information Statement
or the Proxy Statement based on information supplied by Parent or Sub
specifically for inclusion or incorporation by reference therein. The Schedule
14D-9, the Information Statement and the Proxy Statement will comply as to form
in all material respects with the requirements of the Exchange Act.
(g) Absence of Certain Changes or Events. Since April 1, 2007 there
has not been any Material Adverse Effect or any state of facts, change,
development, event, effect, condition, occurrence, action or omission that,
individually or in the aggregate, has had a Material Adverse Effect. Since April
1, 2007 through the date hereof, the Company and its Subsidiaries have conducted
their respective businesses only in the ordinary course consistent with past
practice and there has not been: (A) any declaration, setting aside or payment
of any dividend on, or other distribution (whether in cash, stock or property)
in respect of, any of the Company's or any of its Subsidiaries' capital stock or
other equity or voting interests, except for dividends by a direct or indirect
wholly owned Subsidiary of the Company to its parent, (B) any split, combination
or reclassification of any of the Company's or any of its Subsidiaries' 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 capital stock of, or other equity or voting interests
in, the Company or any of its Subsidiaries, (C)(1) any grant by the Company or
any of its Subsidiaries to any current or former director, officer, employee,
contractor or consultant of the Company or any of its Subsidiaries
(collectively, "Company Personnel") of any bonus opportunity, any loan or any
increase in any type of compensation or benefits, except for normal grants and
increases, in each case, prior to the date of this Agreement in the ordinary
course of business consistent with past practice, or (2) any payment by the
Company or any of its Subsidiaries to any Company Personnel of any bonus, except
for bonuses paid prior to the date of this Agreement in the ordinary course of
business consistent with past practice, (D) any grant by the Company
20
or any of its Subsidiaries to any Company Personnel of any severance, change in
control, retention, termination or similar compensation or benefits or increases
therein, (E) any adoption of or entry by the Company or any of its Subsidiaries
into, any amendment of or modification to or agreement to amend or modify (or
announcement of an intention to amend or modify), or any termination of, (1) any
change in control, severance or termination or similar Contract between the
Company or any of its Subsidiaries, on the one hand, and any Company Personnel,
on the other hand, or (2) any Contract between the Company or any of its
Subsidiaries, on the one hand, and any Company Personnel, on the other hand, the
benefits of which are contingent, or the terms of which are materially altered,
upon the occurrence of a transaction involving the Company of the nature
contemplated by this Agreement (all such Contracts under this clause (F),
including any such Contract which is entered into on or after the date of this
Agreement, collectively with (x) any current employment, deferred compensation,
employee benefit, loan, indemnification, equity or equity-based or related
compensation, consulting or similar Contract between the Company and its
Subsidiaries, on the one hand, and any Company Personnel on the other hand, and
(y) any trust or insurance Contract or other agreement to fund or otherwise
secure payment of any compensation or benefit to be provided to any Company
Personnel, "Benefit Agreements"), (G) the removal or modification of any
restrictions on or terms of any incentive award (including any equity or
equity-based or related compensation), (H) the taking of any action to
accelerate the vesting or payment of any compensation or benefits under any
Benefit Plan or Benefit Agreement disclosed on Section 4.01(m) of the Company
Letter, (I) any material change in financial or tax accounting methods,
principles or practices by the Company or any of its Subsidiaries, except
insofar as may have been required by GAAP or applicable Law, (J) any material
tax election or change in any material tax election or any settlement or
compromise of any material income tax liability, (K) any write-down by the
Company or any of its Subsidiaries of any of the material assets of the Company
or any of its Subsidiaries, or (L) any agreement with regard to the acquisition,
disposition or licensing of any material Intellectual Property or rights
thereto, other than nonexclusive licenses granted in the ordinary course of the
business of the Company and its Subsidiaries consistent with past practice.
(h) Litigation. As of the date of this Agreement, there are no
material claims, actions, suits or judicial, administrative or regulatory
proceedings pending or, to the knowledge of the Company, threatened by or
against the Company or any of its Subsidiaries. There is no Judgment of any
Governmental Entity or arbitrator outstanding against the Company or any of its
Subsidiaries and, to the knowledge of the Company, there is no investigation,
proceeding, notice of violation, order of forfeiture or complaint by any
Governmental Entity threatened or pending involving the Company or any of its
Subsidiaries that, individually or in the aggregate, would reasonably be
expected to be material to the Company and its Subsidiaries, taken as a whole.
21
(i) Contracts. (i) Section 4.01(i) of the Company Letter contains a
complete and correct list, as of the date of this Agreement, of:
(A) any "material contract" (as such term is defined in Item
601(b)(10) of Regulation S-K of the SEC, other than those agreements and
arrangements described in Item 601(b)(10)(iii)) with respect to the
Company and its Subsidiaries, taken as whole;
(B) each Contract pursuant to which the Company or any of its
Subsidiaries has agreed not to compete with any person in any area or to
engage in any activity or business;
(C) each Contract to which the Company or any of its Subsidiaries is
a party providing for exclusivity or pursuant to which the Company or any
of its Subsidiaries is restricted in any material way, or which after the
Effective Time would restrict Parent or any of its Subsidiaries in any
material way, with respect to the development, manufacture, marketing or
distribution of their respective products or services or otherwise with
respect to the operation of their businesses;
(D) each Contract to which the Company or any of its Subsidiaries is
a party with any officer or director of the Company or any of its
Subsidiaries involving the payment of salary in excess of $100,000 or more
in any fiscal year;
(E) each Contract (excluding purchase orders) under which the
Company or any of its Subsidiaries has incurred any indebtedness in excess
of $50,000;
(F) any Contract currently in force relating to the acquisition or
disposition by the Company or any of its Subsidiaries after the date of
this Agreement of a material amount of assets not in the ordinary course
of business or pursuant to which the Company or any of its Subsidiaries
have continuing material obligations to jointly develop Intellectual
Property that will not be owned, in whole or in part, by the Company or
any of its Subsidiaries;
(G) each Contract to which the Company or any of its Subsidiaries is
a party creating or granting a material Lien (including material Liens
upon any properties or assets acquired under conditional sales, capital
leases or other title retention or security devices), other than (1) Liens
for taxes not yet due and payable, that are payable without penalty or
that are being contested in good faith and for which adequate reserves
have been recorded in accordance with GAAP, (2) Liens for assessments and
other governmental charges or landlords', carriers', warehousemen's,
mechanics', repairmen's, workers' and similar Liens incurred in the
ordinary course of business, in each case for sums not yet due and payable
or due but not delinquent or being contested in good faith by appropriate
proceedings, (3) Liens incurred in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other
types of social security or to secure the performance of tenders,
statutory obligations, surety and appeal bonds, bids, leases, government
contracts, performance and return of money bonds and similar obligations,
(4) Liens in favor of depositary institutions or institutions where the
22
Company or any of its Subsidiaries maintains a securities account, (5)
leases and subleases, (6) easements, covenants, rights of way (recorded
and unrecorded), and other similar restrictions, and zoning, building and
other similar restrictions, in each case that do not adversely effect in
any material respect the current use of the applicable property, (7)
statutory, common law or contractual Liens of landlords and (8) Liens
incurred in the ordinary course of business that are not reasonably likely
to adversely interfere in a material way with the use of properties or
assets encumbered thereby (the Liens listed on Section 4.01(i)(i)(G) of
the Company Letter, together with the Liens described in the foregoing
clauses (1) through (8) collectively, "Permitted Liens");
(H) each Contract pursuant to which the Company or any of its
Subsidiaries grants any person a right of first refusal, right of first
offer or similar right with respect to the assets, properties or business
of the Company or its Subsidiaries;
(I) each Contract (1) which requires the Company or any of its
Subsidiaries to make any purchases on a requirements or volume purchase
basis for any period of time after the date hereof, (2) pursuant to which
the Company or any of its Subsidiaries has agreed to provide a customer
with its requirements or meet production volumes for any period of time
after the date hereof, or (3) which requires the Company or any of its
Subsidiaries to maintain the production of any products or provision of
any services for any period of time after the date hereof;
(J) each Contract pursuant to which the Company or any of its
Subsidiaries has warranted customers that the Company's products will not
be subject to any epidemic or wide-spread failures or defects or otherwise
expressly assumed liability for such failures or defects;
(K) each Contract to which the Company or any of its Subsidiaries is
a party granting the other party to such Contract or a third party "most
favored nation" pricing or terms that (1) applies to the Company or any of
its Subsidiaries or (2) following the Effective Time, would apply to
Parent or any of its Subsidiaries other than the Surviving Corporation;
(L) each Contract to which the Company or any of its Subsidiaries is
a party for any joint venture (whether in partnership, limited liability
company or other organizational form) or material collaboration or similar
arrangement;
(M) each material Contract to which the Company or any of its
Subsidiaries is a party entered into in the last three years in connection
with the settlement or other resolution of any suit, claim, action,
investigation or proceeding;
23
(N) each Contract between the Company or any of its Subsidiaries and
any of the five (5) largest customers of the Company and its Subsidiaries
(determined on the basis of revenues received by the Company or any of its
Subsidiaries for the four consecutive fiscal quarters ended March 31, 2007
(each such customer, a "Major Customer", and each such Contract, a "Major
Customer Contract");
(O) a list of the Company's and its Subsidiaries' largest suppliers
(by dollars spent on purchases) for the period covering the fiscal year
ended December 31, 2006 presented on the basis of commodity type (each
such supplier, a "Major Supplier", and each such Contract, a "Major
Supplier Contract");
(P) except for the Contracts described above, each Contract that has
aggregate future sums due to or from the Company or any of its
Subsidiaries, taken as a whole, during the period commencing on the date
of this Agreement and ending on the 12-month anniversary of this
Agreement, in excess of $3 million; and
(Q) any Contract, or group of Contracts with a person (or group of
affiliated persons), the termination or breach of which would have a
Material Adverse Effect and is not disclosed pursuant to clauses (A)
through (P) above.
The Contracts of the Company or any of its Subsidiaries of the type referred to
in clauses (A) through (Q) above and in Sections 4.01(o)(iii) and (p)(i) of the
Company Letter are collectively referred to in this Agreement as "Specified
Contracts". The Company has made available to Parent a complete and correct copy
of each of the Specified Contracts, including all amendments thereto. Each
Specified Contract is in full force and effect (except for those Contracts that
have expired in accordance with their terms) and is a legal, valid and binding
agreement of the Company or its Subsidiary, as the case may be, and, to the
knowledge of the Company, of each other party thereto, enforceable against the
Company or such Subsidiary, as the case may be, and, to the knowledge of the
Company, against the other party or parties thereto, in each case, in accordance
with its terms, except as enforceability may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other similar
Laws relating to the enforcement of creditors' rights generally and by general
principles of equity (regardless of whether enforcement is sought in equity or
at law). Each of the Company and its Subsidiaries has performed or is performing
all obligations required to be performed by it under the Specified Contracts and
is not (with or without notice or lapse of time or both) in breach in any
respect or default thereunder, and has not waived or failed to enforce any
rights or benefits thereunder, in each case except as would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect or
prevent or materially delay consummation of the Offer, the Merger and the
transactions contemplated by this Agreement. To the knowledge of the Company, no
other party to any of the Specified Contracts is (with or without notice or
lapse of time or both) in breach in any material respect or default thereunder,
except as would not reasonably be expected, individually or in the aggregate, to
have a Material Adverse Effect. To the knowledge of the Company, there has
occurred no event giving (with or without notice or lapse of time or both) to
others any right of termination, material amendment or cancellation of any
Specified Contract.
24
(ii) None of the Major Customers or Major Suppliers has terminated,
failed to renew or requested any material amendment to any of its Major
Customer Contracts or Major Supplier Contracts, or any of its existing
relationships, with the Company or any of its Subsidiaries.
(j) Permits; Compliance with Laws. (i) The Company and its
Subsidiaries have in effect all certificates, permits, licenses, franchises,
approvals, concessions, qualifications, registrations, certifications and
similar authorizations from any Governmental Entity (collectively, "Permits")
that are necessary for them to own, lease or operate their properties and assets
and to carry on their businesses as currently conducted, except where the
failure to have any such Permits would not reasonably be expected, individually
or in the aggregate, to have a Material Adverse Effect. The execution and
delivery of this Agreement by the Company does not, and the consummation of the
Offer, the Merger and the other transactions contemplated hereby and compliance
with the terms hereof, would not reasonably be expected to cause the revocation
or cancellation of any Permit, the revocation or cancellation of which would
reasonably be expected to have a Material Adverse Effect. Except as would not
reasonably be expected to result in material liability to the Company or any of
its Subsidiaries, each of the Company and its Subsidiaries is, and since January
1, 2004 has been, in compliance in all respects with all applicable Laws and
Judgments. Neither the Company nor any of its Subsidiaries has received any
written communication during the past three years from any person that alleges
that the Company or any of its Subsidiaries is not in compliance in all material
respects with, or is subject to liability under, any Permit, Law or Judgment or
relating to the revocation or modification of any material Permit. Neither the
Company nor any of its Subsidiaries has received any written notice that any
investigation or review by any Governmental Entity is pending with respect to
the Company or any of its Subsidiaries or any of the assets or operations of the
Company or any of its Subsidiaries and to the knowledge of the Company, no such
investigation or review has been threatened.
(ii) The Company's Malaysian Subsidiary Komag USA (Malaysia) Sdn has
qualified for "Pioneer Status" from the government of Malaysia for the
Company's thin-film media venture in Malaysia, and such status is in full
force and effect. Such Subsidiary is, and since January 1, 2004 has been,
in compliance in all material respects with the requirements to maintain
such status, and no condition or state of facts exists that could
reasonably be expected to give rise to a loss of such status. Neither the
Company nor any of its Subsidiaries has received any written communication
that alleges that, and there is not grounds the Company or any of its
Subsidiaries is not in compliance in all material respects with, or is
subject to liability under, such status.
25
(k) Absence of Changes in Benefit Plans; Employment Agreements;
Labor Relations. (i) Except as disclosed in the Filed SEC Documents, since April
1, 2007, none of the Company or any of its Subsidiaries has adopted, entered
into, terminated, amended, modified or agreed to adopt, enter into, terminate,
amend or modify (or announced an intention to adopt, enter into, terminate,
amend or modify) in any material respect any Benefit Plans, or has made any
change in any actuarial or other assumption used to calculate funding
obligations with respect to any Pension Plan, or any change in the manner in
which contributions to any Pension Plan are made or the basis on which such
contributions are determined.
(ii) As of the date of this Agreement, there are no collective
bargaining agreements or other labor union Contracts to which the Company
or any of its Subsidiaries is a party or by which any of them is bound.
Since January 1, 2006, neither the Company nor any of its Subsidiaries has
encountered any actual or, to the knowledge of the Company, threatened
labor union organizing activity. Since January 1, 2004, there has been no
actual or, to the knowledge of the Company, threatened strikes, work
stoppages, slowdowns or lockouts with respect to any employees of the
Company or any of its Subsidiaries. None of the employees of the Company
or any of its Subsidiaries is represented by any union with respect to his
or her employment by the Company or such Subsidiary. There are no unfair
labor practice complaints pending, or, to the knowledge of the Company,
threatened against the Company or any of its Subsidiaries, in each case
before the National Labor Relations Board or any comparable Governmental
Entity, except as would not reasonably be expected to result in material
liability to the Company and its Subsidiaries taken as a whole.
(iii) Each of the Company and its Subsidiaries is, and since January
1, 2004, has been in compliance in all material respects with all
applicable Laws and Judgments relating to employment and employment
practices, occupational safety and health standards, terms and conditions
of employment, the calculation and payment of wages, hours, employment
discrimination, disability rights or benefits, equal employment
opportunity, affirmative action, and other hiring practices, labor
relations, plant closures and layoffs, immigration, workers' compensation,
employee leave issues, unemployment insurance, and the payment of social
security and other taxes, except as would not reasonably be expected to
result in material liability to the Company and its Subsidiaries, taken as
a whole. The Company and each of its Subsidiaries has properly classified
(i) employees as exempt from applicable overtime Laws and (ii) consultants
as independent contractors under applicable Tax reporting, withholding and
related laws, except as would not reasonably be expected to result in
material liability to the Company and its Subsidiaries taken as a whole.
No claim, action, suit or judicial, administrative or regulatory
proceeding is pending or, to the knowledge of the Company, threatened
against the Company or any of its Subsidiaries based on any alleged
material violation of any employment Laws or Contracts.
26
(iv) Neither the Company nor any of its Subsidiaries is a party to,
or otherwise bound by, any consent decree with, or citation by, any
Governmental Entity relating to employees or employment practices. Since
January 1, 2006, neither the Company nor any of its Subsidiaries has
received any notice of intent by any Governmental Entity responsible for
the enforcement of labor or employment Laws to conduct an investigation or
inquiry relating to the Company or any of its Subsidiaries, and to the
knowledge of the Company, no such investigation or inquiry is in progress.
(v) To the knowledge of the Company, no employee, officer or
director of the Company or any of its Subsidiaries is a party to, or is
otherwise bound by, any Contract with a former employer, including any
confidentiality, non-competition or proprietary rights agreement, that in
any way materially and adversely affects (i) the performance of his or her
duties as an employee, officer or director of the Company or the
Subsidiary, or (ii) the ability of the Company and each of its
Subsidiaries to conduct the Business.
(vi) To the knowledge of the Company, no employee, officer or
director of the Company or any of its Subsidiaries is in violation, in any
material respect, of any term of any employment agreement, nondisclosure
agreement, common law nondisclosure obligation, fiduciary duty,
non-competition agreement or restrictive covenant to a former employer.
(l) Environmental Matters. (i) Except as would not reasonably be
expected to have a Material Adverse Effect, (i) each of the Company and its
Subsidiaries is, and has been since June 30, 2002, in compliance in all material
respects with all applicable Environmental Laws, and neither the Company nor any
of its Subsidiaries has received any communication alleging that the Company or
such Subsidiary is in violation of, or may have liability under, any
Environmental Law; (ii) there are no Environmental Claims pending or, to the
knowledge of the Company, threatened against the Company or any of its
Subsidiaries; (iii) neither the Company nor any of its Subsidiaries has retained
or assumed, either contractually or by operation of Law, any liability or
obligation that could reasonably be expected to form the basis of any
Environmental Claim against the Company or any of its Subsidiaries; (iv) there
are no aboveground or underground storage tanks, generators or known or
suspected asbestos-containing materials at, on, under or about property owned,
operated or leased by the Company or any of its Subsidiaries, nor, to the
knowledge of the Company, were there any aboveground or underground storage
tanks at, on, under or about any such property in the past; (v) neither the
Company nor any of its Subsidiaries stores, generates, handles, recycles or
disposes of Hazardous Materials at, on, under, about or from property owned or
leased by the Company or any of its Subsidiaries, except in material compliance
with Environmental Laws; (vii) there are no past or present events, conditions,
circumstances, activities,
27
practices, incidents, actions or plans that could reasonably be expected to form
the basis of any Environmental Claim against the Company or any of its
Subsidiaries and, to the knowledge of the Company, no such events, conditions,
circumstances, activities, practices, incidents, actions or plans could
reasonably be expected to arise in the future; and (viii) neither the Company
nor any of its Subsidiaries are obligated to provide financial assurance under
Environmental Law.
(ii) Each of the Company and its Subsidiaries possess all material
permits and is in compliance in all material respects with all Permits
required under Environmental Laws for the conduct of their respective
operations, all such material Permits are valid and in good standing and
neither the Company nor any of its Subsidiaries has been advised by any
Governmental Entity of any actual or potential change in any material
respect in the status or terms and conditions of any such Permit.
(iii) To the knowledge of the Company, there has been no Release of
any Hazardous Material that could reasonably be expected to form the basis
of any material Environmental Claim against the Company or any of its
Subsidiaries or against any person whose liabilities for such
Environmental Claims the Company or any of its Subsidiaries has, or may
have, retained or assumed, either contractually or by operation of Law.
(iv) The Company has made available to Parent or its counsel all
Phase 1 and Phase II environmental reports and other soil and groundwater
testing that that are in the possession of the Company and its
Subsidiaries with respect to facilities owned or operated by the Company
or any of its Subsidiaries after June 30, 2002.
(v) For all purposes of this Agreement, (A) "Environmental Claims"
means any and all administrative, regulatory or judicial actions, suits,
Judgments, demands, directives, claims, Liens, investigations, proceedings
or written or oral notices of noncompliance or violation by or from any
person alleging liability of any kind or nature (including liability or
responsibility for the costs of enforcement proceedings, investigations,
cleanup, governmental response, removal or remediation, natural resource
damages, property damages, personal injuries, medical monitoring,
penalties, contribution, indemnification and injunctive relief) arising
out of, based on or resulting from (1) the presence or Release of, or
exposure to, any Hazardous Material at any location or (2) the failure to
comply with any Environmental Law; (B) "Environmental Law" means any Law,
Judgment, legally binding agreement or Permit issued, promulgated or
entered into by or with any Governmental Entity relating to pollution, the
environment (including ambient air, surface water, groundwater, land
surface or subsurface strata), Hazardous Materials, solid or hazardous
waste, natural resources, worker safety or exposure of any individual to
Hazardous Materials; (C) "Hazardous Materials" means any petroleum or
petroleum products, radioactive materials or wastes, contaminants,
pollutants, asbestos in any form, polychlorinated biphenyls, toxic
substances and any other chemical, material, substance or waste including
lead paint and radon that is prohibited, limited or regulated under any
Environmental Law; and (D) "Release" means any actual or threatened
release, spill, emission, leaking, dumping, injection, pouring, deposit,
disposal, discharge, dispersal, leaching or migration into or through the
environment or within any building, structure, facility or fixture of any
Hazardous Materials.
28
(m) ERISA Compliance. (i) Section 4.01(m)(i) of the Company Letter
sets forth a complete and correct list of 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 Benefit Agreements and collective
bargaining agreement, and any material employment, bonus, pension, profit
sharing, deferred compensation, stock ownership, stock purchase, stock
appreciation, restricted stock, stock repurchase right, stock option (including
the Company Stock Plan), phantom stock, stock-based compensation, retirement,
savings, severance, change in control, termination, disability, death benefit,
and other similar fringe or employee benefit program, arrangement or
understanding (whether oral or written, formal or informal, funded or unfunded
and whether or not legally binding or subject to the Laws of the United States)
sponsored, maintained, contributed to, or required to be maintained or
contributed to, by the Company, any of its Subsidiaries or any other person
that, together with the Company, is treated as a single employer under Section
414(b), (c), (m) or (o) of the Code or with respect to which the Company is
otherwise jointly or severally liable under applicable Law (each, a "Commonly
Controlled Entity") or with respect to which the Company or any of its
Subsidiaries has or may in the future have any material liability (contingent or
otherwise) (such plans, collectively, the "Benefit Plans"). The Company has made
available to Parent complete and correct copies of (A) each Benefit Plan (or, in
the case of any unwritten Benefit Plan, descriptions thereof) including (without
limitation) all amendments thereto, and all related trust documents, (B) the two
most recent annual reports, or such similar reports, statements, information
returns required to be filed, with or delivered to any Governmental Entity, if
any, with respect to each Benefit Plan (including reports filed on Form 5500),
(C) all Internal Revenue Service ("IRS") or Department of Labor determination,
opinion, notification and advisory letters, or each pending application for a
determination or approval letter, with respect to each Benefit Plan, (D) all
material correspondence to or from any Governmental Authority received in the
last two years with respect to each Benefit Plan (E) the most recent summary
plan description (if any), and any summary of material modifications, prepared
for each Benefit Plan for which such summary plan description is required under
applicable Law, (F) each trust agreement and group annuity or insurance Contract
and other documents relating to the funding or payment of compensation or
benefits under any Benefit Plan, and (G) all material written agreements and
contracts currently in effect, including (without limitation) administrative
service agreements, group annuity contracts, and group insurance contracts,
applicable to each Benefit Plan. Each Benefit Plan has been administered in all
material respects in accordance with its terms. The Company and its Subsidiaries
and all the Benefit Plans are in compliance in all material respects with
applicable Law, including ERISA and the Code.
29
(ii) All Benefit Plans intended to be tax qualified under the Code
either (i) have been the subject of favorable determination letters from
the IRS with respect to all tax Law changes with respect to which the IRS
is currently willing to provide a determination letter to the effect that
such Benefit Plans are qualified and exempt from United States Federal
income taxes under Sections 401(a) and 501(a), respectively, of the Code,
and no such determination letter has been revoked (nor, as of the date of
this Agreement to the knowledge of the Company, has revocation been
threatened) and to the Company's knowledge, no event has occurred since
the date of the most recent determination letter or application therefor
relating to any such Benefit Plan that could reasonably be expected to
adversely affect the qualification of such Benefit Plan, or (ii) are still
within the "remedial amendment period" as described in Section 401(b) and
the regulations thereunder.
(iii) Neither the Company nor any Commonly Controlled Entity
currently sponsors or contributes to, nor has within the six-year period
ending on the date hereof sponsored, maintained, contributed to, or been
obligated to maintain or contribute to, nor has any actual or contingent
liability under, any Benefit Plan that is or ever was (A) a "multiemployer
plan" as defined in Section 3(37) of ERISA, (B) a plan described in
Section 413 of the Code, (C) subject to Section 302 or Title IV of ERISA
or Section 412 of the Code or is or was otherwise a defined benefit
pension plan or that provides for the payment of termination indemnities,
or (D) a plan maintained in connection with any trust described in Section
501(c)(9) of the Code.
(iv) No Benefit Plan is funded through a "welfare benefits fund" (as
such term is defined in Section 419(e) of the Code), or is self-insured.
No Benefit Plan provides benefits, and there are no understandings,
written or oral, with respect to the provision of benefits after
termination of employment, except where the cost thereof is borne entirely
by the former employee (or his or her eligible dependents or
beneficiaries) or as required by Section 4980B(f) of the Code or similar
Law.
(v) Except as expressly provided by this Agreement, no Company
Personnel will be entitled to any severance, change in control,
termination, bonus or other additional compensation or benefits or any
acceleration of the time of payment or vesting of any compensation or
benefits as a result of the Offer, the Merger or any of the other
transactions contemplated by this Agreement (alone or in combination with
any other event) or any compensation or benefits related to or contingent
upon, or the value of which will be calculated on the basis of, the Offer,
the Merger or any of the other transactions contemplated by this Agreement
(alone or in combination with any other event). The execution and delivery
of this Agreement, the consummation of the Offer, the Merger and the other
transactions contemplated by this Agreement (alone or in combination with
any other event) and compliance by the Company with the provisions of this
Agreement do not and will not (A) trigger any funding (through a grantor
trust or otherwise) of, or increase the cost of, or give rise to any other
obligation under, any Benefit Plan or any other employment arrangement,
(B) trigger the forgiveness of indebtedness owed by any Company Personnel
to the Company or any of its affiliates or (C) result in any violation or
breach of, or a default (with or without notice or lapse of time or both)
under, or limit to the Company's ability to amend, modify or terminate,
any Benefit Plan.
30
(vi) No deduction of any amount payable pursuant to the terms of the
Benefit Plans or any other employment arrangements has been disallowed or
would reasonably be expected to be subject to disallowance under Section
162(m) of the Code.
(vii) Neither the Company nor any of its Subsidiaries has received
notice of, and, to the knowledge of the Company, there are no, pending
investigations by any Governmental Entity with respect to, or pending
termination proceedings or other material claims (except claims for
benefits payable in the normal operation of the Benefit Plans), suits or
proceedings against or involving any Benefit Plan or asserting any rights
or claims to benefits under, any Benefit Plan.
(viii) All contributions, reserves, premiums and benefit payments
under or in connection with the Benefit Plans that are required to have
been made or accrued by the Company or any of its Subsidiaries have been
timely made or accrued. Neither the Company nor any of its Subsidiaries
has incurred, or could reasonably be expected to incur, any unfunded
liabilities in relation to any Benefit Plan.
(ix) With respect to each Benefit Plan, (A) there has not occurred
any prohibited transaction that could reasonably be expected to subject
the Company, any of its Subsidiaries or any of their respective directors,
officers or employees or, to the knowledge of the Company, any trustee or
other fiduciary or administrator of any Benefit Plan or trust created
thereunder, in each case, who is not a director, officer or employee of
the Company or any of its Subsidiaries (a "Non-Affiliate Plan Fiduciary"),
to a material tax or penalty pursuant to Sections 4975 through 4980B of
the Code or the sanctions imposed under Title I of ERISA or any other
applicable Law and (B) none of the Company, any of its Subsidiaries or any
of their respective directors, officers or employees, or, to the knowledge
of the Company, any Non-Affiliate Plan Fiduciary, or any agent of any of
the foregoing, has engaged in any transaction or acted in a manner, or
failed to act in a manner, that could reasonably be expected to subject
the Company, any of its Subsidiaries or, to the knowledge of the Company,
any Non-Affiliate Plan Fiduciary to any liability for breach of fiduciary
duty under ERISA or any other applicable Law.
(x) The Company and its Subsidiaries do not have, nor could be
reasonably expected to incur, any liability or obligations, including
under or on account of a Benefit Plan, arising out of the hiring of
persons to provide services to the Company or any of its Subsidiaries and
treating such persons as consultants or independent contractors and not as
employees of the Company or any of its Subsidiaries, except as would not
reasonably be expected to have a Material Adverse Effect.
31
(xi) Except as set forth on Section 4.01(m)(xi) of the Company
Letter, no Benefit Plan is maintained outside the jurisdiction of the
United States, or covers any employee residing or working outside the
United States (any such Benefit Plan, a "Foreign Benefit Plan"). With
respect to any Foreign Benefit Plan, (A) all Foreign Benefit Plan have
been established, maintained and administered in compliance in all
material respects with their terms and all applicable statutes, laws,
ordinances, rules, orders, decrees, judgments, writs, and regulations of
any controlling Governmental Authority, (B) all Foreign Benefit Plan that
are required to be funded are fully funded, and with respect to all other
Foreign Benefit Plan, adequate reserves therefor have been established on
the Closing Statement, and (C) no material liability or obligation of the
Company or its Subsidiaries exists with respect to such Foreign Benefit
Plan that has not been disclosed on Section 4.01(m)(xi) of the Company
Letter.
(xii) To the Company's knowledge, each Benefit Plan that is a
"nonqualified deferred compensation plan" (as defined for purposes of
Section 409A(d)(1) of the Code) (1) has been operated in all material
respects since January 1, 2005 in good faith compliance with Section 409A
of the Code and all applicable IRS guidance promulgated thereunder to the
extent such plan is subject to Section 409A of the Code, and (2) as to any
such plan in existence prior to January 1, 2005 and not subject to Section
409A of the Code, has not been "materially modified" (within the meaning
of IRS Notice 2005-1) at any time after October 3, 2004. No Company Stock
Option (whether currently outstanding or previously exercised) is, has
been or would be, as applicable, subject to any tax, penalty or interest
under Section 409A of the Code.
(n) Taxes. (i) Except as would not have a Material Adverse Effect,
each of the Company and its Subsidiaries has timely filed all tax returns
required to be filed by it, and all such tax returns are true, complete and
correct in all material respects. Except as would not have a Material Adverse
Effect, each of the Company and its Subsidiaries has timely paid or accrued in
accordance with GAAP, whether or not shown on any tax return, all taxes due and
owing, and the most recent financial statements contained in the Filed SEC
Documents reflect an adequate reserve for all taxes payable by the Company and
its Subsidiaries for all taxable periods and portions thereof through the date
of such financial statements.
(ii) No material tax return of the Company or any of its
Subsidiaries is currently under audit or examination by any taxing
authority, and no written notice of an audit or examination has been
received by the Company or any of its Subsidiaries. There is no existing
or threatened in writing, deficiency, refund litigation, proposed
adjustment or matter in controversy with respect to any material taxes due
and owing by the Company or any of its Subsidiaries. Each deficiency
resulting from any completed audit or examination or concluded litigation
relating to material taxes by any taxing authority has been timely paid.
The relevant statute of limitations is closed with respect to the income
tax returns of the Company and its Subsidiaries for all years through
1999. Neither the Company nor any of its Subsidiaries has been informed in
writing by any jurisdiction that the jurisdiction believes that the
Company or any of its Subsidiaries was required to file any material tax
return that was not filed.
32
(iii) No Liens for material taxes exist with respect to any assets
or properties of the Company or any of its Subsidiaries, except for Liens
for taxes not yet due or that the Company or any of its Subsidiaries is
contesting in good faith through appropriate proceedings and for which
adequate reserves have been established in accordance with GAAP.
(iv) None of the Company or any of its Subsidiaries is a party to or
bound by or currently has any material liability under any tax sharing
agreement, tax indemnity obligation or similar agreement, arrangement or
practice with respect to taxes (including any advance pricing agreement,
closing agreement (including pursuant to Section 7121 of the Code) or
other agreement relating to taxes with any taxing authority). Neither the
Company nor any of its Subsidiaries has been a member of an affiliated
group filing a consolidated, combined, or unitary income tax return (other
than a group the common parent of which was the Company). Neither the
Company nor any of its Subsidiaries has any material liability for the
Taxes of any person (other than the Company and its Subsidiaries) under
Treasury Regulation 1.1502-6 (or any similar provision of state, local or
foreign law), as a transferee or successor, by contract, or otherwise.
(v) Neither the Company nor any of its Subsidiaries will be required
to include any material item of income in, or exclude a material item of
deduction from, taxable income for any taxable period ending after the
Effective Time, as a result of any (A) change in method of accounting for
a prior taxable period under Code Section 481(c) (or any corresponding or
similar provision under state, local, or foreign tax law), or (B) deferred
intercompany gain or excess loss account described in Treasury regulations
promulgated under Section 1502 of the Code (or any corresponding or
similar provisions under state, local or foreign tax law).
(vi) There is no Contract, plan or arrangement to which the Company
or any of its Subsidiaries or its or their respective affiliates is a
party as of the date of this Agreement, including the provisions of this
Agreement, covering any employee or former employee of the Company or any
of its Subsidiaries that, individually or collectively, would reasonably
be expected to give rise to the payment of any amount that would not be
deductible pursuant to Sections 280G, 404 or 162(m) of the Code. There is
no Contract, plan or arrangement to which the Company or any of its
Subsidiaries or any of its or their affiliates is a party or by which it
is bound to compensate any individual for excise taxes paid pursuant to
Section 4999 of the Code.
33
(vii) Except as would not have a Material Adverse Effect, the
Company and its Subsidiaries have complied with all applicable Laws
relating to the payment and withholding of taxes (including withholding of
taxes pursuant to Sections 1441, 1442, 3121 and 3402 of the Code or
similar provisions under any other Law) and have, within the time and the
manner prescribed by Law, withheld from and paid over to the proper taxing
authorities all amounts required to be so withheld and paid over under
applicable Laws.
(viii) Neither the Company nor any of its Subsidiaries has
constituted either a "distributing corporation" or a "controlled
corporation" (A) in a distribution of stock qualifying for tax-free
treatment under Section 355 of the Code in the two years prior to the date
of this Agreement 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 or any of
the other transactions contemplated by this Agreement.
(ix) Except as would not have a Material Adverse Effect, (A) all
related party transactions involving the Company or any of its
Subsidiaries are at arm's length in compliance with Section 482 of the
Code and the Treasury Regulations promulgated thereunder and any
comparable provision of any tax Law, (B) none of the Company or any of its
Subsidiaries is or has been a party a party to any cost-sharing agreement
or similar arrangement that is not a "qualified cost sharing arrangement"
within the meaning of Treasury Regulation Section 1.482-7 and any
comparable provision of any tax Law, and (C) each of the Company and its
Subsidiaries has maintained all necessary documentation in connection with
such related party transactions in accordance with Sections 482 and 6662
of the Code and the Treasury Regulations promulgated thereunder and any
comparable provision of any applicable tax Law.
(x) Neither the Company nor any of its Subsidiaries is subject to
tax in any jurisdiction other than its country of incorporation or
formation by virtue of having a permanent establishment in that
jurisdiction.
(xi) Neither the Company nor any of its Subsidiaries has ever
participated in any "listed transaction", as defined in Treasury
Regulation Section 1.6011-4(b)(2), required to be reported in a disclosure
statement pursuant to Treasury Regulation Section 1.6011-4(a).
(xii) The Company and its Subsidiaries have complied in all material
respects with all conditions and requirements through the Effective Time
necessary for maintaining tax exemptions and reductions pursuant to its
agreements with Malaysian taxing authorities. The Company and its
Subsidiaries reasonably expect that such conditions and requirements would
be met in all material respects for the year ending December 31, 2007 if
the transactions contemplated by this Agreement were not consummated.
(xiii) For purposes of this Agreement, (A) "taxes" shall include all
Federal, state and local, domestic and foreign income, franchise,
property, sales, excise, employment, payroll, social security,
value-added, ad valorem, transfer, export,
34
import, duty, withholding and other taxes, including taxes based on or
measured by gross receipts, profits, sales, use or occupation, tariffs,
levies, impositions, assessments or governmental charges of any nature
whatsoever, including any interest, penalties or additions with respect
thereto; (B) "taxing authority" means any Governmental Entity exercising
regulatory authority in respect of any taxes; and (C) "tax return" means
any Federal, state and local, domestic and foreign declaration, report,
form, claim for refund, disclosure statement (including any statement
pursuant to Treasury Regulation Section 1.6011-4(a)) or information,
return statement or other document relating to taxes filed with a taxing
authority, including any certificate, schedule or attachment thereto, and
including any amendment thereof.
(o) Properties. (i) Each of the Company and its Subsidiaries has
good and valid title to, or in the case of leased tangible assets has valid and
enforceable leasehold interests in, all of its material tangible assets, except
as could not reasonably be expected to materially interfere with the ability of
the Company and its Subsidiaries to use such assets in the business of the
Company and its Subsidiaries as currently conducted. All such material
properties and tangible assets leased by the Company or any of its Subsidiaries
are free and clear of all Liens, except for Permitted Liens and Liens imposed on
the underlying fee interest in leased property. The material properties and
tangible assets owned or leased by the Company and its Subsidiaries, or which
they otherwise have the right to use, are sufficient (subject to normal wear and
tear) to operate their businesses in substantially the same manner as they are
currently conducted.
(ii) Section 4.01(o)(ii) of the Company Letter sets forth, as of the
date of this Agreement, a complete and correct list of all real property
and interests in real property leased by the Company or any of its
Subsidiaries (each such property, a "Leased Real Property"). Each of the
Company and its Subsidiaries has valid and enforceable leasehold interests
in all of its material Leased Real Properties, except as could not
reasonably be expected to materially interfere with the ability of the
Company and its Subsidiaries to use such properties in the business of the
Company and its Subsidiaries as currently conducted. With respect to each
Leased Real Property, (A) neither the Company nor any of its Subsidiaries
has subleased, licensed or otherwise granted anyone the right to use or
occupy such Leased Real Property or any portion thereof and (B) neither
the Company nor any of its Subsidiaries has collaterally assigned or
granted any other security interest in any such leasehold estate or any
interest therein.
(iii) Except as would not reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect, each of the Company and
its Subsidiaries is in compliance with the terms of all leases of Leased
Real Property to which it is a party and under which it is in occupancy,
and each such lease is a legal, valid and binding agreement of the Company
or its Subsidiary, as the case may be, and, to the knowledge of the
Company, of each other party thereto, enforceable against the Company or
such Subsidiary, as the case may be, and, to the knowledge of the
35
Company, against the other party or parties thereto, in each case, in
accordance with its terms, except as the enforceability thereof may be
limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar Laws relating to the enforcement of creditors'
rights generally and by general principles of equity.
(iv) Section 4.01(o)(iv) of the Company Letter sets forth a complete
and correct list of all real property and interests in real property owned
by the Company or any of its Subsidiaries (each such property, an "Owned
Real Property"). Each of the Company and its Subsidiaries has good and
valid title to all of the Owned Real Property, free and clear of all
Liens, other than Permitted Liens, zoning, entitlement, building and other
land use regulations imposed by Governmental Entities having jurisdiction
over the Owned Real Property which are not violated by the current use and
operation thereof and covenants, conditions, restrictions, easements and
other similar matters of record affecting title to the Owned Real Property
which are not violated by the current use and operation thereof. Neither
the Company nor any of its Subsidiaries has (I) subleased, licensed or
otherwise granted anyone the right to use or occupy any Owned Real
Property or any portion thereof, or (II) collaterally assigned or granted
any other security interest in any such Owned Real Property or any
interest therein.
(p) Intellectual Property. (i) (A)Section 4.01(p)(i) of the Company
Letter sets forth a complete and correct list of all Intellectual Property
Rights that have been issued to the Company or any of its Subsidiaries by any
Governmental Entity as of the date of this Agreement, or applied for or recorded
in the name of the Company or any of its Subsidiaries, with any Governmental
Entity as of the date of this Agreement ("Company Registered Intellectual
Property Rights").
(B) The Company has made available to Parent complete and correct
copies of, and Section 4.01(p)(i)(B) of the Company Letter sets
forth a complete and correct list of, all license agreements
pursuant to which the Company or any of its Subsidiaries licenses
Intellectual Property or Intellectual Property Rights from any third
party as of the date of this Agreement, other than (i) licenses
agreements for off-the-shelf packaged software not incorporated into
the Company products, and (ii) license agreements for software used
only internally by the Company or any of its Subsidiaries.
(C) The Company has made available to Parent complete and correct
copies of, and Section 4.01(p)(i)(C) of the Company Letter sets
forth a complete and correct list of, all license agreements
pursuant to which the Company or any of its Subsidiaries licenses
Intellectual Property or Intellectual Property Rights to any third
party as of the date of this Agreement, other than licenses
agreements for off-the-shelf packaged software.
36
(ii) (A) In each applicable jurisdiction, the Company or its
Subsidiaries have, as of the date of this Agreement, filed all documents
and certifications, and have paid all maintenance fees necessary to
maintain the Company Registered Intellectual Property Rights.
(B) To the knowledge of the Company, none of the Company or
any of its Subsidiaries or any of the Company products (including the
design, development, manufacture, marketing and sale of such Company
products) has infringed upon, violated or misappropriated, or is
infringing, violating or misappropriating, the Intellectual Property
Rights of any third party.
(C) There is no suit, claim, action, investigation or
proceeding pending, or to the knowledge of the Company, threatened with
respect to Company's use of any Intellectual Property or Intellectual
Property Rights, and the Company has not been notified in writing of any
infringement, violation or misappropriation in any material respect by the
Company or any of its Subsidiaries or any of the Company products of the
Intellectual Property Rights of any third party.
(D) To the knowledge of the Company, no third party or any
product or service of any third party is infringing upon, violating or
misappropriating in any material respect any Intellectual Property Rights
owned by the Company or any of its Subsidiaries.
(E) Each of the former or current members of management or key
personnel of the Company or any of its Subsidiaries, (including all former
and current employees, agents, consultants and independent contractors)
who have contributed to or participated in the conception and development
of material Intellectual Property owned or purported to be owned by the
Company or any of its Subsidiaries ("Company Intellectual Property"), have
assigned or otherwise transferred to the Company or any of its
Subsidiaries all Intellectual Property Rights of such person in any such
Company Intellectual Property, and to the knowledge of the Company, (i) no
claim has been brought in writing by any such individuals asserting
ownership of any Intellectual Property Rights in any such Company
Intellectual Property, and (ii) there is no basis for any such claim.
(F) The execution and delivery of this Agreement, the
consummation of the Offer, the Merger and the compliance by the Company
with the provisions of this Agreement do not and will not conflict with,
or result in any violation of, or default (with or without notice or lapse
of time or both) under any agreement listed in Section 4.01(p)(i)(B) or
Section 4.01(p)(i)(C) of the Company Letter, or give rise under any
agreement to (i) Parent or any of its Subsidiaries granting any
incremental right, license or encumbrance relating to, any material
Company Intellectual Property, or (ii) any incremental right of
termination, cancellation or acceleration of any agreement pursuant to
which the Company or any of its Subsidiaries license any material
Intellectual Property Right to or from any third party, or (iii) the
incremental
37
loss or encumbrance of any material benefit to the Company or any of its
Subsidiaries under any agreement pursuant to which the Company or its
Subsidiaries license any material Intellectual Property Right to or from
any third party; or (iv) cause or obligate, or result in, Parent or any of
its Subsidiaries granting any incremental rights or licenses to any of
their respective Intellectual Property to any third party; or (v) subject
Parent or any of its Subsidiaries to any incremental non-compete or
exclusivity restriction with respect to their respective businesses or
products.
(G) To the extent that any Intellectual Property has been
developed or created by a third party for the Company or any of its
Subsidiaries, the Company or the relevant Subsidiary has a written
agreement with such third party with respect thereto and the Company or
such Subsidiary either: (i) has obtained ownership by operation of law or
by assignment and is the owner thereof, or (ii) has obtained a license
thereto sufficient for the conduct of its business as currently conducted.
(H) No Company Intellectual Property or any Company Product is
subject to any Order or Judgment restricting in any manner the use,
transfer, or licensing thereof by the Company or any of its Subsidiaries
or that affects the validity, use or enforceability of such Company
Intellectual Property or Company Product.
(I) The Company and its Subsidiaries have taken those measures
that are reasonably required to protect the Company and its Subsidiaries'
rights in the confidential information and trade secrets of the Company
and its Subsidiaries, except where the Company or its Subsidiaries has
made a determination not to maintain the confidential nature of such
information or trade secrets, and such determination (i) was made prior to
the cessation of such measures that would have been reasonably required to
protect such rights; and (ii) can be reasonably evidenced through
documentation.
(J) Neither the Company nor any of its Subsidiaries has
assigned, sold or otherwise transferred ownership of any material Company
Registered Intellectual Property Right since January 1, 2004.
(K) Section 4.01(p)(ii)(K) of the Company Letter sets forth a
true, correct and complete list of all agreements by which any Source Code
owned by the Company or any of its Subsidiaries ("Company Source Code")
has been provided, or is contractually required to be provided to an
escrow agent or other person (a "Source Code Disclosure Agreement"). The
consummation of the transactions contemplated by this Agreement will not
result in the release or transfer of any Company Source Code to any
person, whether pursuant to a Source Code Disclosure Agreement or
otherwise. To the knowledge of the Company, there has been no unauthorized
disclosure of any Company Source Code by the Company or any of its
Subsidiaries.
38
(L) Section 4.01(p)(ii)(L) of the Company Letter identifies
any and all open source, public source or freeware software or any
modification or derivative thereof, including any version of any software
licensed pursuant to any GNU, general public license, LGPL or limited
general public license, that is incorporated into or distributed with any
Company Product.
(iii) For purposes of this Agreement:
(A) "Intellectual Property" means software, inventions, discoveries
and ideas, whether patentable or not in any jurisdiction, non-public
information, trade secrets, know-how, formulae, processes, devices,
prototypes, schematics, bread boards, net lists, mask works, test
methodologies and hardware development tools, procedures, research
records, records of invention, test information, market surveys,
writings and other works of authorship;
(B) "Intellectual Property Rights" mean any or all of the following
and all rights in, arising out of, or associated therewith: (i) all
patents and utility models and applications therefor and all
reissues, divisions, re-examinations, renewals, extensions,
provisionals, continuations and continuations-in-part thereof; (ii)
all trade secrets and other rights in know-how and confidential or
proprietary information; (iii) all copyrights, copyrights
registrations and applications therefor; (iv) all industrial designs
and any registrations and applications therefor throughout the
world; (v) mask works, mask work registrations and applications
therefor; (vi) all rights in World Wide Web addresses and domain
names and applications and registrations therefor, all trade names,
logos, common law trademarks and service marks, trademark and
service xxxx registrations and applications therefor and all
goodwill associated therewith; and (vii) any similar, corresponding
or equivalent rights to any of the foregoing anywhere in the world.
(q) Insurance. Copies of all material insurance policies maintained
by the Company and its Subsidiaries have been made available to Parent.
All such material policies are in full force and effect, all premiums due
and payable thereon have been paid, and no notice of cancellation or
termination has been received with respect to any such material policy
which has not been replaced on substantially similar terms prior to the
date of such cancellation. There is no material claim pending under any
such material policies as to which coverage has been questioned, denied or
disputed.
(r) Rule 14d-10 Matters. The Compensation Committee of the Board of
Directors of the Company (the "Compensation Committee") (i) at a meeting
duly called and held at which all members of the Compensation Committee
were present, duly and unanimously adopted resolutions approving as an
"employment compensation, severance or other employee benefit arrangement"
within the meaning of Rule 14d-10(d)(1) under the Exchange Act (an
"Employment Compensation Arrangement"), (A) each Company Stock Plan, (B)
the treatment of the Company Stock Options and Company Stock Purchase
Rights in accordance with the terms set forth in this Agreement, the
applicable Company Stock Plan and any applicable Benefit Plans, (C) the
terms of Sections 6.04 and 6.05 of this Agreement and (D) each other
Benefit Plan that under the terms of this
39
Agreement is required to be set forth in Section 4.01(m)(i) of the Company
Letter or Section 4.01(m)(v) of the Company Letter, which resolutions have not
been rescinded, modified or withdrawn in any way, and (ii) has taken all other
actions necessary to satisfy the requirements of the non-exclusive safe harbor
under Rule 14d-10(d)(2) under the Exchange Act with respect to the foregoing
arrangements. Each member of the Compensation Committee is an "independent
director" in accordance with the requirements of Rule 14d-10(d)(2) under the
Exchange Act.
(s) State Takeover Statutes; Company Certificate. Assuming the accuracy of
the representation and warranty set forth in Section 4.02(h), the approval by
the Board of Directors of the Company of the Offer, the Merger and the
transactions contemplated thereby, as referred to in Section 4.01(d),
constitutes the only action necessary to render inapplicable to this Agreement,
the Offer, the Merger, the Voting Agreements and the other transactions
contemplated by this Agreement, and compliance with the terms of this Agreement,
the restrictions on "business combinations" (as defined in Section 203 of the
DGCL) set forth in Section 203 of the DGCL to the extent, if any, such
restrictions would otherwise be applicable to this Agreement, the Offer, the
Merger, the Voting Agreements, the other transactions contemplated by this
Agreement, or compliance with the terms of this Agreement. No other state
takeover or similar statute or regulation is applicable to this Agreement, the
Offer, the Merger, the Voting Agreements, the other transactions contemplated by
this Agreement or compliance with the terms of this Agreement.
(t) Brokers; Schedule of Fees and Expenses. No broker, investment banker,
financial advisor or other person, other than Credit Suisse Securities (USA)
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 Offer, the Merger and the other transactions contemplated
by this Agreement based upon arrangements made by or on behalf of the Company.
The Company has delivered to Parent complete and correct copies of all
agreements under which any such fees or commissions are payable and all
indemnification and other agreements related to the engagement of the persons to
whom such fees are payable. A good faith estimate, as of the date hereof, of all
third party fees and expenses of any accountant, broker, financial advisor,
consultant, legal counsel or other person retained by the Company in connection
with this Agreement or the transactions contemplated hereby incurred or to be
incurred or expected to be incurred by the Company in connection with this
Agreement and the transactions contemplated by this Agreement is set forth in
Section 4.01(t) of the Company Letter.
(u) Opinion of Financial Advisor. The Company has received the opinion of
Credit Suisse Securities (USA) LLC to the effect that, as of the date of the
opinion, and based upon and subject to the matters set forth therein, the Offer
Price and the Merger Consideration to be received by the stockholders of the
Company in the Offer and the Merger pursuant to this Agreement is fair to such
stockholders from a financial point of view, a written copy of which opinion
will delivered to Parent as promptly as practicable.
40
SECTION 4.02. Representations and Warranties of Parent and Sub. Parent and
Sub represent and warrant to the Company as follows:
(a) Organization. Each of Parent and Sub is a corporation duly organized,
validly existing and in good standing under the Laws of the jurisdiction of its
organization and has all requisite corporate power and authority to carry on its
business as now being conducted.
(b) Authority; Noncontravention. Each of Parent and Sub has the requisite
corporate power and authority to execute and deliver this Agreement, to
consummate the Offer, the Merger and the other transactions contemplated by this
Agreement and to comply with the provisions of this Agreement. The execution and
delivery of this Agreement by Parent and Sub, the consummation by Parent and Sub
of the Offer, the Merger and the other transactions contemplated by this
Agreement and the compliance by Parent and Sub with the provisions of this
Agreement have been duly authorized by all necessary corporate action on the
part of Parent and Sub, and no other corporate proceedings on the part of Parent
or Sub are necessary to authorize this Agreement, to comply with the terms of
this Agreement or to consummate the Offer, the Merger and the other transactions
contemplated by this Agreement. This Agreement has been duly executed and
delivered by Parent and Sub and, assuming the due execution and delivery of this
Agreement by the Company, constitutes a valid and binding obligation of Parent
and Sub, enforceable against Parent and Sub in accordance with its terms, except
as enforceability may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar Laws relating to the
enforcement of creditors' rights generally and by general principles of equity.
The execution and delivery of this Agreement, the consummation of the Offer, the
Merger and the other transactions contemplated by this Agreement and the
compliance by Parent and Sub with the provisions of this Agreement do not and
will not conflict with, or result in any violation or breach of, or default
(with or without notice or lapse of time or both) under, or give rise to a right
of, or result in, termination, cancellation or acceleration of any obligation or
to a loss of a benefit under, or result in the creation of any Lien in or upon
any of the properties or assets of Parent or Sub under, or give rise to any
increased, additional, accelerated or guaranteed rights or entitlements under,
any provision of (i) the Certificate of Incorporation or Bylaws of Parent or
Sub, (ii) any Contract or Permit to which Parent or Sub is a party or bound by
or their respective properties or assets are bound by or subject to or otherwise
under which Parent or Sub has rights or benefits or (iii) subject to the
governmental filings and other matters referred to in the following sentence,
any Law or Judgment, in each case, applicable to Parent or Sub or their
respective properties or assets, other than, in the case of clauses (ii) and
(iii), any such conflicts, violations, breaches, defaults, terminations,
cancellations, accelerations, losses, Liens, rights or entitlements that,
individually or in the aggregate, could not reasonably be expected to impair in
any material respect the ability of each of Parent and Sub to perform its
obligations under this Agreement or prevent or materially impede or materially
delay the consummation of the Offer, the Merger or the other transactions
41
contemplated by this Agreement. No consent, approval, order or authorization of,
registration, declaration or filing with, or notice to, any Governmental Entity
is required by or with respect to Parent or Sub in connection with the execution
and delivery of this Agreement by Parent and Sub, the consummation of the Offer,
the Merger or the other transactions contemplated by this Agreement or the
compliance by Parent and Sub with the provisions of this Agreement, except for
(A) the filing of a premerger notification and report form under the HSR Act and
the filings and receipt, termination or expiration, as applicable, of such other
approvals or waiting periods required under any other applicable competition,
merger control, antitrust or similar Law, (B) the filing with the SEC of the
Offer Documents, (C) the filing of the Certificate of Merger with the Secretary
of State of the State of Delaware and appropriate documents with the relevant
authorities of other states in which the Company or any of its Subsidiaries is
qualified to do business, (D) any filings required under the rules and
regulations of The New York Stock Exchange, and (E) such other consents,
approvals, orders, authorizations, registrations, declarations, filings and
notices, the failure of which to be obtained or made, individually or in the
aggregate, could not reasonably be expected to impair in any material respect
the ability of each of Parent and Sub to perform its obligations under this
Agreement or prevent or materially impede or materially delay the consummation
of the Offer, the Merger or the other transactions contemplated by this
Agreement.
(c) Information Supplied. None of the information included or incorporated
by reference in the Offer Documents (and none of the information supplied by
Parent or Sub specifically for inclusion or incorporation by reference in the
Schedule 14D-9, the Information Statement or the Proxy Statement) will, in the
case of the Offer Documents, the Schedule 14D-9 and the Information Statement,
at the respective times the Offer Documents, the Schedule 14D-9 and the
Information Statement are filed with the SEC or first published, sent or given
to the Company's stockholders or, in the case of the Proxy Statement, at the
time the Proxy Statement is first mailed to the Company's stockholders or at the
time of the Stockholders Meeting, contain any statement that, in light of the
circumstances under which it is made, is false or misleading with respect to any
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 false or misleading, except that no
representation or warranty is made by Parent or Sub with respect to statements
made or incorporated by reference in the Offer Documents based on information
supplied by the Company specifically for inclusion or incorporation by reference
therein. The Offer Documents will comply as to form in all material respects
with the requirements of the Exchange Act.
(d) Interim Operations of Sub. Sub was formed solely for the purpose of
engaging in the Offer, the Merger and the other transactions contemplated by
this Agreement and has engaged in no business other than in connection with the
Offer, the Merger and the other transactions contemplated by this Agreement.
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(e) Sufficient Funds. At the Offer Closing, Sub will have sufficient funds
to consummate the transactions contemplated hereby, including the Offer and the
Merger, to perform its obligations under this Agreement and to pay all related
fees and expenses.
(f) Financing. Parent has provided to the Company a true and complete copy
of a fully executed debt commitment letter, dated as of the date of this
Agreement (the "Debt Commitment Letter") pursuant to which, and subject to the
terms and conditions thereof, Xxxxxxx Xxxxx Credit Partners L.P. has committed
to provide Sub with loans in the amounts described therein, the proceeds of
which are to be used to consummate the Offer, the Merger and the other
transactions contemplated hereby and pay related fees and expenses (the
"Financing"). The Debt Commitment Letter, in the form so delivered, is a legal,
valid and binding obligation of Parent and Sub and, to Parent's knowledge, the
other parties thereto. As of this date of this Agreement, the Debt Commitment
Letter is in full force and effect and has not been withdrawn, rescinded or
terminated or otherwise amended or modified in any respect. The proceeds funded
under the Debt Commitment Letter, when funded in accordance with the Debt
Commitment Letter, together with cash and cash equivalents currently held by
Parent and its wholly-owned direct or indirect Subsidiaries, will constitute all
of the funds required to enable Parent and Sub to consummate the transactions
contemplated hereby, including the Offer and the Merger, and the fulfill their
respective obligations hereunder. The Debt Commitment Letter contains all of the
conditions precedent to the obligations of the lenders thereunder to make the
Financing available to Parent and Sub on the terms therein. As of the date of
this Agreement, to the knowledge of Parent, no event has occurred which, with or
without notice, lapse of time or both, would constitute a breach or default on
the part of Parent or Sub under any term or condition of the Debt Commitment
Letter. As of the date of this Agreement, neither Parent nor Sub has any reason
to believe that it will be unable to satisfy on a timely basis any term or
condition to be satisfied by it in the Debt Commitment Letter. Parent has fully
paid any and all commitment fees that have been incurred and are due and payable
in connection with the Debt Commitment Letter, and Parent will pay when due all
other commitment fees arising under the Debt Commitment Letter when due and
payable.
(g) Litigation. There is no claim, action, suit, arbitration, alternative
dispute resolution action or any other judicial or administrative proceeding
pending against (or, to the knowledge of Parent, threatened against or naming as
a party thereto) Parent or any of its Subsidiaries, nor, to the knowledge of
Parent, is there any investigation pending or threatened against Parent or any
of its Subsidiaries, in each case, which would, individually or in the
aggregate, reasonably be expected to impair in any material respect the ability
of each of Parent and Sub to perform its obligations under this Agreement or
prevent or materially impede or materially delay the consummation of the Offer,
the Merger or the transactions contemplated by this Agreement.
(h) Ownership of Company Capital Stock. Neither Parent nor Sub is, nor at
any time during the last three (3) years has it been, an "interested
stockholder" of the Company as defined in Section 203 of the DGCL (other than as
contemplated by this Agreement).
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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 of this Agreement until the earlier of the Offer
Closing or the valid termination of this Agreement in accordance with Article
VIII, except with the prior written consent of Parent or as specifically
contemplated by this Agreement or as set forth in Section 5.01(a) of the Company
Letter, the Company shall, and shall cause each of its Subsidiaries to, carry on
their respective businesses in the ordinary course consistent with past practice
and use commercially reasonable efforts to comply with all applicable Laws and,
to the extent consistent therewith, use commercially reasonable efforts to (i)
keep available the services of their present officers and employees, (ii)
preserve their assets and technology, (iii) preserve their relationships with
customers, suppliers, licensors, licensees, distributors and others having
business dealings with them, and (iv) maintain their franchises, rights and
Permits. Without limiting the generality of the foregoing, during the period
from the date of this Agreement to the Offer Closing, except with the prior
written consent of Parent or as specifically contemplated by this Agreement or
as set forth in Section 5.01(a) of the Company Letter, the Company shall not,
and shall not permit any of its Subsidiaries to:
(i) (A) declare, set aside or pay any dividends on, or make any
other distributions (whether in cash, stock or property) in respect of,
any of its capital stock or other equity or voting interests, except for
dividends by a direct or indirect wholly owned Subsidiary of the Company
to its parent, (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, other
than any such transaction by a Company Subsidiary that remains a Company
Subsidiary after consummation of such transaction, (C) purchase, redeem or
otherwise acquire any shares of capital stock or any other securities of
the Company or any of its Subsidiaries or any options, warrants, calls or
rights to acquire any such shares or other securities (including any
Company Stock Options and Company Stock Purchase Rights), except (1) cash
paid in lieu of fractional shares, and (2) repurchases of Company Stock
Purchase Rights pursuant to the terms of such Company Stock Purchase
Rights or (D) amend, modify or change in any material respect the terms of
any indebtedness of the Company or any of its Subsidiaries if the effect
of such amendment, modification or change is to increase the interest rate
thereof, change to an earlier date the maturity or payment dates thereof,
add events of default or make any covenants of the Company or its
Subsidiaries more onerous;
44
(ii) issue, deliver, sell, pledge or otherwise encumber any shares
of its capital stock, any other equity or voting interests or any
securities convertible into, or exchangeable for, or any options,
warrants, calls or rights to acquire, any such stock, interests or
securities or any stock appreciation rights, phantom stock awards or other
rights that are linked to the value of Company Common Stock or the value
of the Company or any part thereof (other than the issuance of shares of
Company Common Stock upon the exercise of Company Stock Options and
Company Stock Purchase Rights or upon the conversion of the Company
Convertible Notes);
(iii)amend or propose to amend its certificate of incorporation or
bylaws (or similar organizational documents), other than any such
transaction by a Company Subsidiary that remains a Company Subsidiary
after consummation of such transaction;
(iv) acquire or agree to acquire (A) by merging or consolidating
with, or by purchasing all or a substantial portion of the assets of, or
by purchasing all or a substantial equity or voting interest in, or by any
other manner, any business or person or division thereof or (B) any other
assets other than assets having a fair market value of less than $5
million or assets acquired in the ordinary course of business consistent
with past practice;
(v) sell, lease, sell and lease back, mortgage or otherwise subject
to any Lien or otherwise dispose of any of its properties or assets
(including any shares of capital stock, equity or voting interests or
other rights, instruments or securities), except (A) sales of inventory
and used equipment in the ordinary course of business consistent with past
practice, (C) capital expenditures permitted by this Section 5.01, (D)
Permitted Liens and Liens imposed by Law, (E) non-exclusive licenses
permitted by clause (vi) below and (F) non-exclusive licenses and
non-exclusive sublicenses granted in the ordinary course of business;
(vi) sell, transfer, license, encumber or otherwise dispose of any
Intellectual Property, other than non-exclusive licenses granted in the
ordinary course of business consistent with past practice;
(vii)(A) repurchase, prepay or incur any indebtedness, including by
way of a guarantee or an issuance or sale of debt securities, excluding
conversions of the Company Convertible Notes, or issue and sell options,
warrants, calls or other rights to acquire any debt securities of the
Company or any of its Subsidiaries, enter into any "keep well" or other
Contract to maintain any financial statement or similar condition of
another person or enter into any arrangement having the economic effect of
any of the foregoing or (B) make any loans, advances or capital
contributions to, or investments in, any other person, other than (1) the
Company or any direct or indirect wholly owned Subsidiary of the Company,
(2) loans and advances to employees in the ordinary course of business,
(3) deposits, prepayments and other credits to suppliers made in the
ordinary course of business, and (4) accounts receivable, prepaid
royalties or expenses or notes receivable arising from the sale of goods
in the ordinary course of business;
45
(viii) incur or commit to incur any capital expenditures, or any
obligations or liabilities in connection therewith, in excess of $5
million in any individual case or $25 million in the aggregate in any
three-month period, other than capital expenditures made after prior
consultation with Parent to address changes in product mix required by
customers of the Company;
(ix) (A) pay, discharge, settle or satisfy any claims (including any
claims of stockholders and any stockholder litigation relating to this
Agreement or any transaction contemplated by this Agreement or otherwise),
liabilities or obligations, other than, with respect to claims,
liabilities and obligations relating that do not relate to patent
infringement or trade secret violation, the payment, discharge, settlement
or satisfaction in the ordinary course of business consistent with past
practice, or as required by their terms as in effect on the date of this
Agreement, of claims, liabilities or obligations reserved against in the
Company's most recent financial statements contained in the audited
financial statements for the fiscal year ended December 31, 2006
(including the notes thereto) included in the Filed SEC Documents (for
amounts not in excess of such reserves) or incurred since the date of such
financial statements in the ordinary course of business consistent with
past practice, in each case, the payment, discharge, settlement or
satisfaction of which does not include any material obligation (other than
the payment of money) to be performed by the Company or its Subsidiaries
following the Closing Date, or (B) waive any material benefits of, or
agree to modify in any adverse respect, or 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 or
any of its Subsidiaries is a party;
(x) enter into any lease or sublease of real property (whether as a
lessor, sublessor, lessee or sublessee), or modify or amend in any
material respect, or exercise any right to renew, any lease or sublease of
real property;
(xi) modify or amend in any material respect, or accelerate,
terminate or cancel, any Specified Contract, other than as may be
necessary to comply with any such Specified Contract in connection with
the transactions contemplated hereby;
(xii)enter into any Contract that is not in the ordinary course of
business or consistent with past practice, or enter into or extend any
Contract to provide products to customers that by its terms does not
expire without penalty more than 90 days after the date of this Agreement
or agree to provide or commit to provide to a customer under any Contract
with such customer a greater volume of its products than the minimum
number of products the Company is contractually required to provide under
such existing Contract;
46
(xiii) except as required to ensure that any Benefit Plan in effect
on the date of this Agreement is not then out of compliance with
applicable Law or as specifically required pursuant to this Agreement
(and, in each case, only to the extent the Compensation Committee has duly
approved (by vote of members of the Compensation Committee who have been
determined by the Board of Directors of the Company to be Independent
Directors at the time of such approval) the arrangements resulting from
such action as Employment Compensation Arrangements and taken all other
actions necessary to satisfy the requirements of the non-exclusive safe
harbor under Rule 14d-10(d)(2) under the Exchange Act with respect to such
arrangements), (A) adopt, enter into, terminate, amend or modify any
Benefit Plan, (B) increase in any manner the compensation or benefits of,
or pay any bonus to, or grant any loan to, any Company Personnel, other
than in the ordinary course of business consistent with past practice and
pursuant to any a Benefit Agreement or Benefit Plan in effect on the date
of this Agreement, (C) pay or provide to any Company Personnel any
compensation or benefit not provided for under a Benefit Plan as in effect
on the date of this Agreement other than the payment of base compensation
in the ordinary course of business consistent with past practice, (D)
grant or amend any awards under any Benefit Plan (including the grant of
any equity or equity-based or related compensation) or remove or modify
existing restrictions in any Benefit Plan or awards made thereunder, (E)
grant or pay any severance, change in control, retention, termination or
similar compensation or benefits to, or increase in any manner the
severance, change in control, retention, termination or similar
compensation or benefits of, any Company Personnel, (F) take any action to
fund or in any other way secure the payment of compensation or benefits
under any Benefit Plan, (G) take any action to accelerate the time of
payment or vesting of any compensation or benefits under any Benefit Plan
or (H) make any material determination under any Benefit Plan that is
inconsistent with the ordinary course of business or past practice;
(xiv) form any Subsidiary of the Company;
(xv) enter into any Contract containing any restriction on the
ability of the Company or any of its Subsidiaries to assign all or any
portion of its rights, interests or obligations thereunder, unless such
restriction expressly excludes any assignment to Parent and any of its
Subsidiaries in connection with or following the consummation of the
Offer, the Merger or the other transactions contemplated by this
Agreement;
(xvi)except as required by applicable Law, adopt or enter into any
collective bargaining agreement or other labor union Contract applicable
to the employees of the Company or any of its Subsidiaries or terminate
the employment of any Company Personnel who has an employment, severance
or similar agreement or arrangement with the Company or any of its
Subsidiaries;
47
(xvii) write down any of its material assets, including any
Intellectual Property, or make any change in any financial accounting
principle, method or practice, other than as required by GAAP or
applicable Law or in the ordinary course of business consistent with past
practice;
(xviii) except in the ordinary course of business consistent with
past practice, take any action or fail to take any action which action or
failure to act would result in the material loss or reduction in value of
the Intellectual Property of the Company and its Subsidiaries, taken as a
whole;
(xix)enter into, extend or renew (A) any Contract or amendment
thereof which, if executed prior to the date of this Agreement, would have
been required to have been disclosed pursuant to Section 4.01(i), or (B)
any Contract or amendment thereof that grants any person the right or
ability to access, license or use all or a material portion of the
Intellectual Property of the Company and its Subsidiaries, other than in
the ordinary course of business consistent with past practice;
(xx) except for this Agreement, enter into (A) any Contract with any
beneficial owner of any shares of Company Common Stock, or securities
convertible into, or exchangeable for, or any options, warrants, calls or
rights to acquire, any shares of Company Common Stock, where such Contract
provides for consideration payable to such beneficial owner or any of its
affiliates for shares of Company Common Stock tendered, or to be tendered,
in the Offer or (B) any Contract with any person where the amount payable
thereunder is calculated based on the number of shares of Company Common
Stock tendered, or to be tendered, in the Offer by such person or any of
its affiliates;
(xxi)make or change any material tax election, change any annual tax
accounting period, adopt or change any material method of tax accounting,
materially amend any tax returns, enter into any closing agreement, settle
any material tax claim, audit or assessment, or surrender any right to
claim a material tax refund, offset or other reduction in tax liability;
or
(xxii) authorize any of, or commit, resolve or agree to take any of,
the foregoing actions.
(b) No Control. Nothing contained in this Agreement is intended to give
Parent, directly or indirectly, the right to control or direct the Company's or
its Subsidiaries' operations prior to the Offer Closing. Prior to the Offer
Closing, the Company shall exercise, consistent with the terms and conditions of
this Agreement, complete control and supervision over its and its subsidiaries
operations.
SECTION 5.02. No Solicitation. (a) Notwithstanding any provision in this
Agreement to the contrary, the Company shall not, nor shall it permit any of its
Subsidiaries to, nor shall it authorize or permit any director, officer,
employee,
48
investment banker, attorney, accountant or other advisor or representative
(collectively, "Representatives") of the Company or any of its Subsidiaries to,
directly or indirectly (and it shall instruct, and cause each of its
Subsidiaries to instruct, each Representative of the Company or any of its
Subsidiaries not to), (i) solicit, initiate or encourage, or knowingly
facilitate, any Acquisition Proposal or any inquiries or the making of any
proposal that would reasonably be expected to lead to an Acquisition Proposal or
(ii) enter into or otherwise participate in any discussions or negotiations
regarding, or furnish to any person (or any representative thereof) any
information with respect to, or otherwise cooperate in any way with any person
(or any representative thereof) with respect to, any Acquisition Proposal;
provided, however, that if, at any time prior to the Offer Closing, the Company
receives a bona fide written Acquisition Proposal that the Board of Directors of
the Company determines in good faith either constitutes, or is reasonably likely
to lead to, a Superior Proposal, and which Acquisition Proposal did not result
from a breach of this Section 5.02(a), the Company may, and may authorize and
permit any of its Subsidiaries and any director, officer or employee of the
Company or any of its Subsidiaries or any investment banker, attorney,
accountant or other advisor or representative of the Company or any of its
Subsidiaries to, in each case subject to compliance with Section 5.02(c) and the
other provisions of this Agreement, (A) furnish information with respect to the
Company and its Subsidiaries to the person making such Acquisition Proposal (and
its advisors and representatives) pursuant to a confidentiality agreement which
contains terms that are no less restrictive (in all but de minimis respects) to
such person than those contained in the Confidentiality Agreement dated June 13,
2007 between Parent and the Company (as it may be amended from time to time, the
"Confidentiality Agreement") and that allows for the Company to comply with its
obligations pursuant to this Section 5.02 (including the notification provisions
of Section 5.02(b) and (c)), provided that all such information has been
provided, or is concurrently provided, to Parent, and (B) enter into or
otherwise participate in discussions or negotiations with the person making such
Acquisition Proposal (and its advisors and representatives) regarding such
Acquisition Proposal. Without limiting the generality of the foregoing, it is
understood that any violation of the restrictions set forth in the preceding
sentence by any Representative of the Company or any of its Subsidiaries shall
be deemed to be a breach of this Section 5.02(a) by the Company.
For purposes of this Agreement, the term "Acquisition Proposal" means any
proposal or offer from any person (other than Parent or Sub or any of their
affiliates) relating to any direct or indirect acquisition, in one transaction
or a series of transactions, including by way of any merger, consolidation,
tender offer, exchange offer, stock acquisition, asset acquisition, binding
share exchange, business combination, recapitalization, liquidation,
dissolution, joint venture, license agreement or similar transaction, of (i)
assets or businesses that constitute, represent or generate 15% or more of the
total revenue, net income, EBITDA or assets of the Company and its Subsidiaries,
taken as a whole, or (ii) 15% or more of the outstanding shares of Company
Common Stock or of any class of capital stock of, or other equity or voting
interests in, one or more of the Subsidiaries of the Company which, in the
aggregate, directly or indirectly, hold the assets or businesses referred to in
clause (i) above.
49
For purposes of this Agreement, the term "Superior Proposal" means any
binding bona fide written offer, which did not result from a breach of Section
5.02(a), made by any person (other than Parent or Sub or any of their
affiliates) for a transaction that, if consummated, would result in such person
(or in the case of a direct merger between such person and the Company, the
stockholders of such person) acquiring, directly or indirectly, a majority of
the voting power of the Company Common Stock or all or substantially all the
assets of the Company and its Subsidiaries, taken as a whole, and that, in the
good faith judgment of the Board of Directors of the Company (after consultation
with its financial advisor and outside legal counsel and after taking into
account all of the terms and conditions and other characteristics of such
proposal, including (A) the probability of, and time necessary to achieve,
consummation of such proposal, and (B) all financial, legal, regulatory and
other aspects of such proposal and this Agreement (including any changes to the
terms of the Offer or this Agreement proposed by Parent in response to such
Superior Proposal or otherwise)) is more favorable from a financial point of
view to the stockholders of the Company (in their capacity as such) than the
Offer and the Merger, taken together.
(b) Neither the Board of Directors of the Company nor any committee
thereof shall (i) withdraw or modify in a manner adverse to Parent or Sub, or
propose publicly to withdraw or modify in a manner adverse to Parent or Sub, the
recommendation or declaration of advisability by such Board of Directors or any
such committee of this Agreement, the Offer or the Merger, or recommend, or
propose publicly to recommend, the approval or adoption of any Acquisition
Proposal, or resolve or agree to take any such action (any such action,
resolution or agreement to take such action being referred to herein as an
"Adverse Recommendation Change"), (ii) adopt or approve any Acquisition
Proposal, or propose the approval or adoption of any Acquisition Proposal, or
resolve or agree to take any such action, or (iii) cause or permit the Company
to enter into any letter of intent, memorandum of understanding, agreement in
principle, acquisition agreement, merger agreement, option agreement, joint
venture agreement, partnership agreement or other agreement (each, an
"Acquisition Agreement") constituting or related to, or which is intended to or
is reasonably likely to lead to, any Acquisition Proposal (other than a
confidentiality agreement referred to in Section 5.02(a)), or resolve or agree
to take any such action. Notwithstanding the foregoing, at any time prior to the
Offer Closing, the Board of Directors of the Company may, in response to a
Superior Proposal, effect an Adverse Recommendation Change and/or cause the
Company to terminate this Agreement pursuant to Section 8.01(e) to enter into a
definitive agreement in respect of a Superior Proposal with a third party if the
Board of Directors of the Company determines in good faith, after consultation
with its outside legal counsel, that the failure to do so would reasonably be
expected to be a breach of its fiduciary duties to the stockholders of the
Company under applicable Law; provided, however, that notwithstanding the
foregoing, (A) the Company may not terminate this Agreement pursuant to Section
50
8.01(e), and any purported termination pursuant to Section 8.01(e) shall be void
and of no force and effect, unless the Company shall have complied in all
material respects with all the provisions of this Section 5.02 in connection
with such Superior Proposal (including the notification provisions of this
Section 5.02(b)) and with all applicable requirements of Section 6.06(b)
(including payment of the Termination Fee prior to or concurrently with such
termination) in connection with such Superior Proposal, and (B) the Board of
Directors of the Company may not effect such an Adverse Recommendation Change or
terminate this Agreement pursuant to Section 8.01(e) unless (I) the Board of
Directors of the Company shall have first provided prior written notice to
Parent (an "Adverse Recommendation Change Notice") that it is prepared to effect
an Adverse Recommendation Change in response to a Superior Proposal and/or cause
the Company to terminate this Agreement pursuant to Section 8.01(e) to enter
into a definitive agreement in respect of a Superior Proposal with a third
party, which notice shall attach the definitive form of written agreement
relating to the transaction that constitutes such Superior Proposal, and (II)
Parent does not make, within five business days after the receipt of such
notice, a proposal that would, in the good faith judgment of the Board of
Directors of the Company (after consultation with its financial advisor and
outside legal counsel), cause the offer previously constituting a Superior
Proposal to no longer constitute a Superior Proposal. The Company agrees that,
during the five business day period prior to its effecting an Adverse
Recommendation Change and/or terminating this Agreement pursuant to Section
8.01(e) to enter into a definitive agreement in respect of a Superior Proposal
with a third party, the Company and its officers, directors and representatives
shall negotiate in good faith with Parent and its officers, directors, and
representatives regarding any revisions to the terms of the transaction
contemplated by this Agreement proposed by Parent.
(c) In addition to the obligations of the Company set forth in Sections
5.02(a) and 5.02(b), the Company shall, as promptly as practicable and in any
event within one business day after the receipt thereof, notify Parent of (i)
any Acquisition Proposal or any request for information or inquiry that the
Company reasonably believes could lead to or contemplates an Acquisition
Proposal and (ii) the material terms and conditions of such Acquisition
Proposal, request or inquiry (including any subsequent amendment or other
modification to such terms and conditions) and the identity of the person making
any such Acquisition Proposal, request or inquiry. The Company shall (as
promptly as practicable and in any event within one business day notify Parent
of any material change or other material development with respect to any such
Acquisition Proposal, request or inquiry, including material amendments or
proposed amendments as to price and other material terms thereof. The Company
shall provide Parent with at least 48 hours prior notice of any meeting of the
Board of Directors of the Company (or such lesser notice as is provided to such
Board of Directors generally) at which the Company Board is reasonably expected
to consider any Acquisition Proposal.
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(d) Nothing contained in this Section 5.02 or elsewhere in this Agreement
shall prohibit the Company from taking and disclosing to its stockholders a
position contemplated by Rule 14d-9 and Rule 14e-2(a) promulgated under the
Exchange Act or otherwise making any statements or disclosing any information to
its stockholders that the Board of Directors of the Company determines in good
faith (after consultation with its outside legal counsel) to make or disclose in
order to fulfill its fiduciary duties under applicable Law; provided, however,
that in no event shall the Company or its Board of Directors or any committee
thereof take, agree or resolve to take any action prohibited by Section 5.02(b);
provided further that any "stop, look and listen" communication of the type
contemplated by Rule 14d-9(f) under the Exchange Act shall be deemed in
compliance with the terms of Section 5.02(b) and shall not be deemed an Adverse
Recommendation Change in the event that it includes an express reaffirmation of
the Board of Directors of the Company's recommendation set forth in Section
4.02.
ARTICLE VI
Additional Agreements
SECTION 6.01. Preparation of the Proxy Statement; Stockholders Meeting.
(a) If the adoption of this Agreement by the Company's stockholders is required
by applicable Law, the Company shall, as promptly as practicable following the
Offer Closing and the expiration of any "subsequent offering period" provided by
Parent pursuant to and in accordance with this Agreement, prepare and file with
the SEC the preliminary Proxy Statement. The Company shall use its commercially
reasonable efforts to cause the definitive Proxy Statement to be mailed to the
Company's stockholders as promptly as practicable after such filing. 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 any request from the SEC
for amendments or supplements to the Proxy Statement and shall provide Parent
with copies of all correspondence between it and its representatives, on the one
hand, and the SEC, on the other hand. 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. 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 (including the proposed final version of
such document or response) and (ii) shall include in such document or response
all comments reasonably proposed by Parent. If, at any time prior to the
Stockholders Meeting, any information relating to the Company, Parent or any of
their respective affiliates, officers or directors should be discovered by the
Company or Parent which should be set forth in an amendment or supplement to the
Proxy Statement, so that the Proxy Statement does not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading, the party that
discovers
52
such information shall promptly notify the other parties hereto, and an
appropriate amendment or supplement describing such information shall be filed
with the SEC and, to the extent required by applicable Law, disseminated to the
stockholders of the Company.
(b) If the adoption of this Agreement by the Company's stockholders is
required by applicable Law, the Company shall, as promptly as practicable
following the Offer Closing and the expiration of any "subsequent offering
period" provided by Parent pursuant to and in accordance with the terms of this
Agreement, establish a record date (which will be as promptly as reasonably
practicable following the Offer Closing and the expiration of any "subsequent
offering period" provided by Parent pursuant to and in accordance with the terms
of this Agreement) for, duly call, give notice of, convene and hold a meeting of
its stockholders (the "Stockholders Meeting"), for the purpose of obtaining the
Stockholder Approval. The notice of such Stockholders Meeting shall state that a
resolution to adopt this Agreement will be considered at the Stockholders
Meeting. Subject to Section 5.02(b)(i), the Board of Directors of the Company
shall recommend to holders of the Company Common Stock that they adopt this
Agreement, and shall include such recommendation in the Proxy Statement.
Notwithstanding the foregoing, in the event that Parent, Sub and their
respective Subsidiaries and affiliates shall hold, in the aggregate, at least
90% of the outstanding shares of the Company Common Stock entitled to vote on
adoption of this Agreement under the DGCL and other applicable Law following the
Offer Closing and the expiration of any "subsequent offering period" provided by
Parent pursuant to and in accordance with this Agreement, if applicable, and the
exercise of the Top-Up Option, if applicable, the parties hereto shall take all
necessary and appropriate action to cause the Merger to become effective as soon
as practicable without the Stockholders Meeting in accordance with Section 253
of the DGCL.
(c) Parent agrees to cause all shares of Company Common Stock acquired
pursuant to the Offer and all other shares of Company Common Stock owned by
Parent or any subsidiary of Parent to be voted in favor of the Stockholder
Approval and to deliver or provide, in its capacity as a stockholder of the
Company, any other approvals that are required by the DGCL and any other
applicable Law to effect the Merger in accordance with the terms of this
Agreement.
SECTION 6.02. Access to Information; Confidentiality. The Company shall,
and shall cause each of its Subsidiaries to, afford to Parent and to Parent's
officers, employees, investment bankers, attorneys, accountants, consultants and
other representatives and advisors reasonable access upon reasonable advance
notice and during normal business hours during the period prior to the Effective
Time or the termination of this Agreement to all their respective properties,
assets, books, records, Contracts, Permits, documents, information, directors,
officers and employees, and during such period the Company shall, and shall
cause each of its Subsidiaries to, furnish to Parent any information concerning
its business as Parent may reasonably request
53
(including the work papers of KPMG LLP). Following the date of this Agreement
and prior to the Effective Time, Parent may (but shall not be required to),
following reasonable notice to the Company, contact and interview any Company
Personnel and review the personnel records and such other information concerning
the Company Personnel as Parent may reasonably request. No investigation by
Parent or any of its officers, directors, employees, investment bankers,
attorneys, accountants or other advisors or representatives and no other receipt
of information by Parent or any of its officers, directors, employees,
investment bankers, attorneys, accountants or other advisors or representatives
shall operate as a waiver or otherwise affect any representation or warranty of
the Company or any covenant or other provision in this Agreement. Except as
required by any applicable Law or Judgment, Parent will hold, and will direct
its officers, employees, investment bankers, attorneys, accountants and other
advisors and representatives to hold, any and all information received from the
Company confidential in accordance with the Confidentiality Agreement.
Notwithstanding the foregoing or anything to the contrary set forth in this
Agreement, the Company shall not be required to provide the foregoing access to
Parent or to Parent's officers, employees, investment bankers, attorneys,
accountants, consultants and other representatives or advisors, or to disclose
any information Parent or to Parent's officers, employees, investment bankers,
attorneys, accountants, consultants or other representatives and advisors, in
any case pursuant to this Section 6.02 or otherwise, if (i) such access or
disclosure would cause a loss, waiver or impairment of the attorney-client
privilege of the Company or its Subsidiaries (it being understood that the
parties shall use reasonable best efforts to cause such information to be
provided in a manner that does not result in such loss, waiver or impairment,
which reasonable best efforts shall include entering into one or more joint
defense or community of interest agreements on customary terms if counsels to
the parties reasonably conclude that such agreements are likely to preserve the
privilege), or (ii) if the Company determines, after consultation with Parent
and considering the advice of the Company's outside counsel, that such access or
disclosure would violate any Law or Judgment applicable to the Company or any of
its Subsidiaries or breach or otherwise violate any Contract to which the
Company or any of its Subsidiaries is a party entered into prior to the date of
this Agreement; provided, however, that the Company shall use its reasonable
best efforts to get consents from the counter-parties to any such Contracts in
order to allow the Company to disclose confidential information to Parent and
its officers, employees, investment bankers, attorneys, accountants, consultants
and other representatives or advisors.
SECTION 6.03. Reasonable Best Efforts; Consultation and Notice. (a) Upon
the terms and subject to the conditions set forth in this Agreement, each of the
parties hereto agrees to use its reasonable best efforts to take, or cause to be
taken, all actions that are necessary, proper or advisable to consummate and
make effective the Offer, the Merger and the other transactions contemplated by
this Agreement, including: (i) using reasonable best efforts to satisfy the
conditions precedent set forth in Exhibit A and Article VII, (ii) using
reasonable best efforts to obtain all necessary actions or nonactions, waivers,
consents, approvals, orders and authorizations from, and the giving
54
of any necessary notices to, Governmental Entities and other persons and the
making of all necessary registrations, declarations and filings (including
filings under the HSR Act and other registrations, declarations and filings
with, or notices to, Governmental Entities, if any), (iii) coordinating and
cooperating with, and giving due consideration to all reasonable additions,
deletions or changes suggested by the other party in connection with, making (A)
any filing under or with respect to the HSR Act, any other antitrust,
competition, merger control or similar Law or any other applicable Laws and (B)
any filings, conferences or other submissions related to resolving any
investigation or other inquiry by any Governmental Entity, (iv) using reasonable
best efforts to provide any supplemental information requested by a Governmental
Entity, including participating in meetings with officials of such entity in the
course of its review of this Agreement, the Offer, the Merger or the other
transactions contemplated by this Agreement, (v) using reasonable best efforts
to avoid any suit, claim, action, investigation or proceeding by any
Governmental Entity or other person, and (vi) litigating or participating in the
litigation of any suit, claim, action, investigation or proceeding, whether
judicial or administrative, brought by any Governmental Entity for the purpose
of enabling the parties to consummate the transactions contemplated hereby,
including the Offer and the Merger, on the terms and conditions set forth
herein. In connection with and without limiting the generality of the foregoing,
each of the Company and its Board of Directors shall, if any state takeover
statute or similar statute or regulation is or becomes applicable to this
Agreement or any of the Offer, the Merger and the other transactions
contemplated by this Agreement, use its reasonable best efforts to ensure that
the Offer, the Merger and the other transactions contemplated by this Agreement
may be consummated as promptly as practicable on the terms contemplated hereby
or thereby and otherwise to minimize the effect of such statute or regulation on
this Agreement, the Offer, the Merger and the other transactions contemplated by
this Agreement. Notwithstanding the foregoing or any other provision of this
Agreement to the contrary, in no event shall Parent or Sub be obligated to, and
the Company and its Subsidiaries shall not agree with a Governmental Entity
without the prior written consent of Parent, to divest or hold separate, or
enter into any licensing or similar arrangement with respect to, any material
assets (whether tangible or intangible) or any material portion of any business
of Parent, the Company or any of their respective Subsidiaries (any such action,
an "Action of Divestiture").
(b) (i) Except as prohibited by applicable Law, the Company shall promptly
notify Parent in writing:
(A) that any representation or warranty made by the Company in
this Agreement has become untrue or inaccurate, or of any failure of the
Company to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement, in any such case if
and only to the extent that such untruth or inaccuracy, or such failure,
would reasonably be expected to cause any of the conditions to the
obligations of Parent and Sub to consummate the transactions contemplated
hereby set forth in numbered paragraph (ii) of Exhibit A to fail to be
satisfied at the then scheduled expiration of the Offer;
55
(B) when any of the Company's directors or executive officers
become aware that any person (other than a Governmental Entity) has alleged
that the consent of such person is required in connection with the Offer, the
Merger or any of the other transactions contemplated by this Agreement;
(C) when any of the Company's directors or executive officers
become aware that any customer, distributor or reseller is terminating its
relationship with Company or any of its Subsidiaries as a result of the
Offer, the Merger or any of the other transactions contemplated by this
Agreement;
(D) when any of the Company's directors or executive officers
become aware of any material notice or other material communication from any
Governmental Entity in connection with the Offer, the Merger or any of the
other transactions contemplated hereby, and a copy of any such notice or
communication shall be furnished to Parent together with the Company's
written notice; and
(E) when any of the Company's directors or executive officers
become aware of any investigations by any Governmental Entity or any actions,
suits or proceedings or material claims, in each case (I) commenced against
the Company or any of its Subsidiaries or (II) relating to the Company or any
of its Subsidiaries that would reasonably be expected to adversely affect the
Company and its Subsidiaries, in each case that, if pending on the date of
this Agreement, would have been required to have been disclosed pursuant to
Section 4.01(h) or that relate to the consummation of the Offer, the Merger
or any of the other transactions contemplated by this Agreement;
provided, however, that no such notification shall affect the representations,
warranties, covenants, agreements or obligations of the parties (or remedies
with respect thereto) or the conditions to the obligations of the parties under
this Agreement.
(ii) Parent shall give prompt notice to the Company of (A) any
representation or warranty made by Parent or Sub contained in this Agreement
that is qualified as to materiality becoming untrue or any such
representation or warranty that is not so qualified becoming untrue in any
material respect or (B) the failure of Parent or Sub to perform in any
material respect any obligation to be performed by such party under this
Agreement; provided, however, that no such notification shall affect the
representations, warranties, covenants, agreements or obligations of the
parties (or remedies with respect thereto) or the conditions to the
obligations of the parties under this Agreement.
(c) 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 and/or its directors relating to the Offer, the Merger or
the other transactions contemplated by this Agreement, and will obtain the prior
written consent of Parent prior to settling or satisfying any such claim, it
being understood and agreed that this Section 6.03(c) shall not give Parent the
right to direct such defense.
56
(d) During the period from the date of this Agreement until the earlier of
the Offer Closing or the valid termination of this Agreement pursuant to Article
VIII, the Company shall, at the request of Parent, use its reasonable best
efforts to identify and segregate any confidential information of third parties
in the possession of the Company or any of its Subsidiaries for the purpose of
facilitating the return to such third parties or destruction of such
confidential information as promptly as practicable after the Offer Closing;
provided that the Company shall not be required to take any action pursuant to
this undertaking that would cause a disruption in, or inability of, the Company
to manufacture its products.
SECTION 6.04. Equity Awards. (a) At the Effective Time, each In-The-Money
Company Stock Option outstanding immediately prior to the Effective Time shall
be amended and converted into the right to receive, with the same vesting
schedule as was applicable to the Company Common Stock issuable pursuant to such
In-the-Money Company Stock Option, subject to the provisions of this Section
6.04, the Merger Consideration minus the exercise price per share of such
In-the-Money Company Stock Option (with respect to each such vested or unvested
Company Stock Option, the "Option Per Share Merger Consideration"). At the
Effective Date, all Company Stock Options which are not "In-the-Money Company
Stock Options" as of the Effective Date shall be cancelled.
(b) As promptly as reasonably practicable after the Effective Time, Parent
shall deliver to the Company Optionholders of In-the-Money Company Stock Options
appropriate notices (the "Company Stock Option Notices") informing them that
each In-the-Money Company Stock Option has been converted into the right to
receive the Option Per Share Merger Consideration. Promptly after the vesting of
an In-the-Money Company Stock Option, Parent shall pay to such Company
Optionholder of a vested In-the-Money Company Stock Option the Option Per Share
Merger Consideration. Payment shall be made no later than the fifteenth (15th)
day after the end of the month in which the Company Optionholder's In-the-Money
Company Stock Option becomes vested.
(c) At the Effective Time, each Company Stock Purchase Right outstanding
immediately prior to the Effective Time shall be converted into the right to
receive, with the same vesting schedule and agreement as was applicable to the
Company Stock Purchase Right, subject to the provisions of this Section 6.04,
the Merger Consideration.
(d) As promptly as reasonably practicable after the Effective Time, Parent
shall deliver to the holders of Company Stock Purchase Right appropriate notices
(the "Company Stock Purchase Right Notices") (i) informing them that each
Company Stock Purchase Right has been cancelled and converted into the right to
receive the Merger Consideration and (ii) setting forth the schedule as to when
such Company Stock Purchase Right vests. Promptly following the vesting of each
Company Stock Purchase
57
Right, Parent shall pay to such holder of the Company Stock Purchase Right the
Merger Consideration. If all conditions for payment have been satisfied, then
payment shall be made no later than the fifteenth (15th) day after the end of
the month in which the Company Stock Purchase Right becomes vested.
(e) Except as (i) otherwise agreed to in writing or (ii) as otherwise
contemplated by this Section 6.04 and except to the extent required under the
respective terms of the Company Stock Plan, the Deferred Compensation Plan, the
Company Stock Options, the Company Stock Purchase Rights, and related
agreements, all restrictions, cancellations, terminations or limitations on
transfer and vesting with respect to Company Stock Options or Company Stock
Purchase Rights awarded under the Company Stock Plan or any other plan, program
or arrangement of the Company or the Subsidiaries, to the extent that such
restrictions, cancellations, terminations or limitations shall not have already
lapsed, shall remain in full force and effect with respect to such Company Stock
Options and Company Stock Purchase Rights after giving effect to the Merger and
the conversion as set forth above.
(f) For purposes of this Agreement, "In-The-Money Company Stock Options"
means all Company Stock Options outstanding immediately prior to the Effective
Time with an exercise price lower than the Merger Consideration; and (ii)
"Company Optionholders" means the holders of In-The-Money Company Stock Options.
(g) All amounts payable pursuant to this Section 6.04 shall be subject to
any required withholding of taxes and shall be paid without interest.
(h) The Company shall ensure that each provision in each Benefit Plan
providing for the issuance, transfer or grant of any shares of Company Common
Stock or any Company Stock Options, Company Stock Purchase Rights or any other
interests in respect of any capital stock (including any "phantom" stock or
stock appreciation rights) of the Company shall be deleted prior to the
Effective Time, and shall ensure, prior to the Effective Time that, following
the Effective Time, there shall be no rights to acquire shares of Company Common
Stock, Company Stock Options, Company Stock Purchase Rights or any other
interests in respect of any capital stock (including any "phantom" stock or
stock appreciation rights) of the Company, the Surviving Corporation or their
Subsidiaries.
(i) As soon as practicable following the date of this Agreement, and in
all events prior to the Effective Time, the Company agrees that the Board of
Directors of the Company (or, if appropriate, any committee administering the
Company Stock Plan and the Deferred Compensation Plan) shall adopt such
resolutions or take such other actions (including obtaining any required
consents) as may be required to effect the terms of this Section 6.04.
58
SECTION 6.05. Indemnification, Exculpation and Insurance. (a) Parent and
Sub shall, and Parent shall cause the Surviving Corporation to, honor and
fulfill in all respects all obligations of the Company and its Subsidiaries in
respect of rights to indemnification, advancement of expenses and exculpation
from liabilities for acts or omissions occurring at or prior to the Effective
Time now existing in favor of the current or former directors or officers of the
Company and its Subsidiaries as provided in their respective certificates of
incorporation or bylaws (or comparable organizational documents) and any
indemnification or other agreements of the Company as in effect on the date of
this Agreement and disclosed on Section 6.05 of the Company Letter shall be
assumed by the Surviving Corporation in the Merger, without further action, at
the Effective Time, and shall survive the Merger and shall continue in full
force and effect in accordance with their terms; provided that such obligations
shall be subject to any limitation imposed from time to time under applicable
Law. In furtherance and not in limitation of the foregoing, during the period
commencing at the Effective Time and ending on the sixth anniversary of the
Effective Time, Parent shall (and shall cause the Surviving Corporation and its
Subsidiaries to) cause the certificate of incorporation and bylaws (and other
similar organizational documents) of the Surviving Corporation and its
Subsidiaries to contain provisions with respect to indemnification, advancement
of expenses and exculpation that are at least as favorable as the
indemnification, advancement of expenses and exculpation provisions contained in
the certificate of incorporation and bylaws (or other comparable organizational
documents) of the Company and its Subsidiaries as of the date hereof, and during
such six-year period, such provisions shall not be repealed, amended or
otherwise modified in any manner except as required by applicable Law.
(b) 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 its properties and assets to
any person, or if Parent dissolves the Surviving Corporation then, and in each
such case, Parent shall cause proper provision to be made so that the successors
and assigns of the Surviving Corporation assume the obligations set forth in
this Section 6.05.
(c) For six years after the Effective Time, Parent shall maintain in
effect the Company's current directors' and officers' liability insurance
covering each person currently covered by the Company's directors' and officers'
liability insurance policy for acts or omissions occurring prior to the
Effective Time on terms with respect to such coverage and amounts no less
favorable than those of such policy in effect on the date of this Agreement;
provided that in no event shall Parent be required to pay, with respect to the
entire six year period following the Effective Time, premiums for insurance
under this Section 6.05(c) that in the aggregate exceed 225% of the current
annual premium paid by the Company (which premium is hereby represented and
warranted by the Company to be set forth in Section 6.05(b) of the Company
Letter), it being understood that Parent shall nevertheless be obligated to
provide such coverage, with respect to the entire six year period following the
Effective Time, as may be obtained for such 225% amount; provided further that
Parent may (i) substitute therefor policies of any reputable insurance company
or (ii) satisfy its obligation under this Section 6.05(c) by causing the
59
Surviving Corporation to obtain, at the Effective Time, prepaid (or "tail")
directors' and officers' liability insurance policy, in each case, the material
terms of which, including coverage and amount, are no less favorable to such
directors and officers than the insurance coverage otherwise required under this
Section 6.05(c). Prior to the Effective Time, notwithstanding anything to the
contrary set forth in this Agreement, the Company may purchase a six-year
prepaid "tail" policy to its existing directors' and officers' liability
insurance policy (which "tail" policy shall contain the same terms and
conditions as such existing policy), and in such event, Parent and the Surviving
Corporation shall maintain such "tail" policy in full force and effect and
continue to honor their respective obligations thereunder, in lieu of all other
obligations of Parent and the Surviving Corporation under the first sentence of
this Section 6.05(c) for such six-year period; provided that in no event shall
the Company pay a premium for such "tail" policy that in the aggregate exceeds
225% of the current annual premium paid by the Company (it being understood that
the Company may nevertheless acquire a "tail" policy providing such coverage as
may be obtained for such 225% amount).
(d) The obligations set forth in this Section 6.05 shall not be
terminated, amended or otherwise modified in any manner that adversely affects
any indemnified party under this Section 6.05 (or his or her heirs and his or
her representatives) without the prior written consent of such affected
indemnified party (or his or her heirs and his or her representatives). The
provisions of this Section 6.05 (i) are intended to be for the benefit of, and
will be enforceable by, each indemnified party, his or her heirs and his or her
representatives 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.
SECTION 6.06. Fees and Expenses. (a) Except as expressly set forth in this
Section 6.06, all fees and expenses incurred in connection with this Agreement,
the Offer, the Merger and the other transactions contemplated by this Agreement
shall be paid by the party incurring such fees or expenses, whether or not the
Offer or the Merger is consummated.
(b) In the event that (i) a 50% Proposal is publicly announced or
otherwise becomes publicly known to the Company's stockholders or an intention
(whether or not conditional and whether or not withdrawn) to make a 50% Proposal
is publicly announced or otherwise becomes publicly known to the Company's
stockholders and thereafter (A) this Agreement is terminated by either Parent or
the Company pursuant to Section 8.01(b)(i) and (B) prior to the date that is 12
months after such termination, the Company or any of its Subsidiaries enters
into any Acquisition Agreement with respect to any 40% Proposal, the Board of
Directors of the Company recommends acceptance of any 40% Proposal or any 40%
Proposal is consummated, (ii) this Agreement is terminated by Parent pursuant to
Section 8.01(c) or 8.01(d) or (iii) this Agreement is terminated by the Company
pursuant to Section 8.01(e), then, in each such case, the Company shall pay
Parent a cash fee equal to $38,000,000 (the "Termination Fee") by wire transfer
of same-day funds to an account designated by Parent (A) in the case of a
60
termination by Parent pursuant to Section 8.01(c) or 8.01(d), within two
business days after such termination, (B) in the case of a payment as a result
of any event referred to in Section 6.06(b)(i)(B), no later than the first to
occur of such events and (C) in the case of a termination by the Company
pursuant to Section 8.01(e), prior to or concurrently with such termination.
For purposes of this Agreement, the term "50% Proposal" shall have the
meaning set forth in the definition of "Acquisition Proposal," except that all
references therein to "15% or more" shall be deemed references to "50% or more."
For purposes of this Agreement, the term "40% Proposal" shall have the meaning
set forth in the definition of "Acquisition Proposal," except that all
references therein to "15% or more" shall be deemed references to "40% or more."
(c) The Company acknowledges that the agreements contained in this Section
6.06 are an integral part of the transactions contemplated by this Agreement,
and that, without these agreements, Parent would not have entered into this
Agreement and that any amounts payable pursuant to this Section 6.06 do not
constitute a penalty. Accordingly, if the Company fails promptly to pay the
amounts due pursuant to this Section 6.06 and, in order to obtain such payment,
Parent commences a suit that results in a judgment against the Company for the
amounts set forth in this Section 6.06, the Company shall pay to Parent its
reasonable costs and expenses (including attorneys' fees and expenses) in
connection with such suit and any appeal relating thereto, together with
interest on the amounts set forth in this Section 6.06 at the prime rate of
Citibank, N.A. in effect on the date such payment was required to be made.
SECTION 6.07. Public Announcements. 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 agreed to by the parties. Parent and Sub, on the
one hand, and the Company, on the other hand, further agree that they shall
consult with the other with respect to any other press releases, public
statements and other public communications relating to this Agreement, the
Offer, the Merger and the other transactions contemplated by this Agreement,
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, in which case, Parent and Sub, on the one
hand, and the Company, on the other hand, shall consult with each other to the
extent reasonably practicable before making any such press release or other
public statements or other public communications with respect to this Agreement,
the Offer, the Merger and the other transactions contemplated by this Agreement;
provided however that the parties shall not be required to consult with the
other with respect to any press release or other public statements or other
public communications after the Board of Directors of the Company effects an
Adverse Recommendation Change (or pursuant to which the Board of Directors of
the Company discloses or announces an Adverse Recommendation Change).
61
SECTION 6.08. Sub Compliance. Parent shall cause Sub to fulfill all of
Sub's obligations under this Agreement, and in the event that Sub shall fail to
fulfill any of its obligations hereunder, Parent shall fulfill such obligations.
SECTION 6.09. Directors. Following the Offer Closing, Parent or Sub shall
be entitled to designate, from time to time, such number of members of the Board
of Directors of the Company as will give Sub, subject to compliance with Section
14(f) of the Exchange Act, representation equal to at least that number of
directors, rounded up to the next whole number, that is the product of (a) the
total number of directors (giving effect to the directors elected or appointed
pursuant to this sentence) multiplied by (b) the percentage that (i) the number
of shares of Company Common Stock owned by Parent, Sub or any other Subsidiary
of Parent (including shares of Company Common Stock accepted for payment and
paid for pursuant to the Offer) bears to (ii) the number of shares of the
Company Common Stock then outstanding; provided, however, that, in the event
that Parent's designees are appointed or elected to the Board of Directors of
the Company, until the Effective Time, the Board of Directors of the Company
shall have at least two (2) directors who are directors on the date hereof who
are Independent Directors; provided further, that if there is in office only one
Independent Director, the Board of Directors of the Company will take all
reasonable action necessary to cause a person designated by the remaining
Independent Director to fill such vacancy who shall be an Independent Director
or, if no Independent Directors remain, the other directors shall designate two
persons to fill the vacancies who shall be Independent Directors. The Company
shall take all action requested by Parent necessary to effect any such election
or appointment, including (A) increasing the size of the Board of Directors of
the Company and (B) obtaining the resignation of such number of its current
directors as is, in each case, necessary to enable such designees to be so
elected or appointment to the Board of Directors of the Company in compliance
with applicable Law (including, to the extent applicable prior to the Effective
Time, Rule 10A-3 under the Exchange Act and Rule 4350(d)(2) of the National
Association of Securities Dealers, Inc.). The Company shall take all action
necessary to cause individuals designated by Parent to constitute the number of
members, rounded up to the next whole number, on (i) each committee of the Board
of Directors of the Company and (ii) each board of directors of each Subsidiary
of the Company (and each committee thereof) that represents the same percentage
as such individuals represent on the Board of Directors of the Company, in each
case to the fullest extent permitted by applicable Law. The Company's
obligations to appoint Parent's designees to the Board of Directors of the
Company and committees of such Board of Directors shall be subject to Section
14(f) of the 1934 Act and Rule 14f-1 promulgated thereunder. The Company shall
promptly take all actions, and shall include in the Schedule 14D-9 such
information with respect to the Company and its officers and directors, as
Section 14(f) and Rule 14f-1 require in order to fulfill its obligations under
this Section. Parent shall supply to the Company in writing any information with
respect to itself and its nominees, officers, directors and affiliates required
by Section 14(f) and Rule 14f-1.
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SECTION 6.10. Convertible Notes. From and after the Offer Closing, Parent
shall, and shall cause the Surviving Corporation, to take all actions reasonably
necessary to comply with the terms of the Indenture with respect to the Company
Convertible Notes and the Registration Rights Agreement, dated as of March 28,
2007, by and among the Company and certain initial purchasers of the Company
Convertible Notes.
SECTION 6.11. Parent and Sub Financing. (a) Parent and Sub shall use their
reasonable best efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary, proper or advisable to arrange and
obtain the Financing on the terms and conditions described in the Debt
Commitment Letter, including by using reasonable best efforts to (i) maintain in
effect the Debt Commitment Letter, (ii) negotiate and enter into definitive
agreements with respect to the Financing on the terms and conditions reflected
in the Debt Commitment Letter, (iii) satisfy on a timely basis all conditions
applicable to Parent and Sub in such definitive agreements that are within their
control, (iv) enforce its rights under the Debt Commitment Letter, and (v)
consummate the Financing at or prior to Offer Closing; provided that
notwithstanding, and as an alternative to, the foregoing, Parent and Sub may in
any case obtain alternative financing from alternative sources on terms that are
not less favorable, in the aggregate, to Parent and Sub then the Financing
contemplated by the Debt Commitment Letter ("New Debt Financing Commitments") ;
provided further that any such New Debt Financing Commitments shall not (A)
expand or adversely change in any material respect the conditions to the
Financing set forth in the Debt Commitment Letter or (B) reasonably be expected
to adversely impact the ability of Parent and Sub to perform their respective
obligations under this Agreement. Upon and from and after such event, the term
"Financing" as used herein shall be deemed to mean the Financing contemplated by
the Debt Commitment Letter to the extent in effect at the time in question and
the New Debt Financing Commitments to the extent then in effect. In the event
any portion of the Financing becomes unavailable on the terms and conditions
contemplated in the Debt Commitment Letter for any reason, as promptly as
practicable following the occurrence of such event Parent and Sub shall use
their reasonable best efforts to obtain alternative financing from alternative
sources ("Alternative Financing") on terms that are not less favorable, in the
aggregate, to Parent and Sub then the Financing contemplated by the Debt
Commitment Letter as promptly as practicable following the occurrence of such
event. Parent shall keep the Company reasonably apprised as to the status of,
and any material developments relating to, the Financing.
(b) Prior to the Closing, the Company agrees to use its reasonable best
efforts to provide Parent and Sub with all cooperation reasonably requested by
Parent in connection with the arrangement of the Financing contemplated by the
Debt Commitment Letter or any Alternative Financing, including, without
limitation, (A) using reasonable best efforts to assist in the preparation of
confidential information memoranda and rating agency presentations with respect
to the Financing or any Alternative Financing, (B) delivering such financial and
statistical information and projections relating to the Company and its
Subsidiaries as may be reasonably requested in
63
connection with the Financing or any Alternative Financing, (C) using its
reasonable best efforts to arrange for the Company's independent accountants to
provide such assistance to Parent that may be reasonably required in respect of
the Financing or any Alternative Financing (including the preparation of
financial statements, pro forma financial statements and comfort letters, in
each case in compliance with requirements for financings of this sort and
otherwise reasonably satisfactory to the lenders), (D) making appropriate
officers of the Company available for due diligence meetings and for
participation in meetings with rating agencies and prospective lenders, (E)
providing timely access to diligence materials and appropriate personnel to
allow lenders and their representatives to complete all appropriate diligence,
and (F) providing assistance with respect to the review and granting of security
interests in collateral for the Financing or any Alternative Financing, and
obtaining any consents associated therewith; provided, however, that the Company
shall not be required to become party to any document related to the Financing
or any Alternative Financing, or have any obligation with respect thereto, prior
to the Effective Time; provided further that neither the Company nor any of its
Subsidiaries shall be required to pay any commitment fee or similar fee with
respect to the Financing or any Alternative Financing prior to the Effective
Time.
SECTION 6.12. Employee Benefits. Following the Effective Time, Parent
shall arrange for each Company Benefit Plan participant who becomes a Parent
employee (or an employee of any Parent subsidiary or affiliate) after the
Effective Time (the "Transferred Employees") to be eligible for at least
substantially the same benefits in the aggregate as those provided to similarly
situated employees of Parent. Each Transferred Employee (including without
limitation all eligible dependents) shall, to the extent permitted by law and
applicable tax qualification requirements, receive credit including for
eligibility to participate and vesting under Parent employee benefit plans for
years of service with the Company (and its subsidiaries, affiliates, and
predecessors) prior to the Effective Time (except where doing so would cause a
duplication of benefits). If applicable, Parent shall cause any and all
pre-existing condition (or actively at work or similar) limitations, eligibility
waiting periods and evidence of insurability requirements under any group health
plans to be waived with respect to such Transferred Employees and their eligible
dependents in accordance with applicable laws and shall provide them with credit
for any co-payments, deductibles, and offsets (or similar payments) made during
the plan year including the Effective Time for the purposes of satisfying any
applicable deductible, out-of-pocket, or similar requirements under any Parent
employee benefit plans or programs in which they are eligible to participate
after the Effective Time. Nothing contained in this Agreement (including,
without limitation, this Section 6.12) shall (i) amend, or be deemed to amend,
any Company Benefit Plan, (ii) provide any person not a party to this Agreement
with any right, benefit or remedy with regard to any Company Benefit Plan or a
right to enforce any provision of this Agreement, or (iii) limit in any way the
Surviving Corporation's ability to amend or terminate any Company Benefit Plan
at any time.
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SECTION 6.13. Company 401(k) Plan. Prior to the Closing Date, the Company
shall take all necessary steps to terminate the Company's Incorporated Savings
and Deferred Profit Sharing Plan (the "401(k) Plan") and cease all future
contributions to the 401(k) Plan, effective as of a date prior to the Closing
Date (other than the repayment by 401(k) Plan participants of any outstanding
loan).
SECTION 6.14. FIRPTA Certificate. On or prior to the Effective Time, the
Company shall deliver to Parent a properly executed statement in a form
reasonably acceptable to Parent for purposes of satisfying Parent's obligations
under Treasury Regulation Section 1.1445-2(c)(3).
ARTICLE VII
Conditions Precedent
SECTION 7.01. Conditions to Each Party's Obligation to Effect the Merger.
The respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Stockholder Approval. The Stockholder Approval shall have been
obtained if required by applicable Law.
(b) No Injunctions or Legal Restraints. No temporary restraining order,
preliminary or permanent injunction or other Judgment issued by any court of
competent jurisdiction in the United States or any other jurisdiction in which
Parent or the Company have material businesses or operations or have current
plans to have material businesses or operations or other legal restraint or
prohibition (collectively, "Legal Restraints") that has the effect of preventing
the consummation of the Merger shall be in effect.
(c) Purchase of Company Common Stock in the Offer. Sub shall have
previously accepted for payment and paid for shares of Company Common Stock
validly tendered and not withdrawn pursuant to the Offer.
ARTICLE VIII
Termination, Amendment and Waiver
SECTION 8.01. Termination. This Agreement may be terminated, and the
transactions contemplated hereby may be abandoned, upon written notice (other
than in the case of Section 8.01(a) below) from the terminating party to the
non-terminating party specifying the subsection of this Section 8.01 pursuant to
which such termination is effected:
(a) subject to Section 8.05, by mutual written consent of Parent, Sub and
the Company;
65
(b) by either Parent or the Company:
(i) at any time prior to the Offer Closing, if the Offer shall have
expired or been terminated without Sub accepting for payment any shares of
Company Common Stock tendered pursuant to the Offer or the Offer Closing
shall not have occurred, in either case for any reason prior to December
28, 2007 (the "Termination Date"); provided that, if the condition to
consummation of the Offer set forth in lettered paragraph (b) of Exhibit A
has not been satisfied by such date, then the Company shall have the right
to extend the Termination Date until March 28, 2008 by written notice to
Parent; provided, further, that the right to terminate this Agreement
under this Section 8.01(b)(i) shall not be available to any party whose
action or failure to act has been a principal cause of or resulted in the
failure of the Offer Closing to occur prior to such date and such action
or failure to act constitutes a material breach of this Agreement; or
(ii) if any Legal Restraint having the effect of preventing the
consummation of the Offer or the Merger shall have become final and
nonappealable; or
(c) prior to the Offer Closing, by Parent, in the event an Adverse
Recommendation Change has occurred;
(d) prior to the Offer Closing, by Parent, in the event the Board of
Directors of the Company fails to publicly reaffirm its recommendation of the
Offer within five business days of a written request by Parent for such
reaffirmation;
(e) prior to the Offer Closing, by the Company, to immediately enter
into a binding definitive agreement in respect of a Superior Proposal with a
third party pursuant to and in accordance with Section 5.02(b); provided that
the Company shall have paid any amounts due pursuant to Section 6.06(b) in
accordance with the terms, and at the times, specified therein; or
(f) prior to the Offer Closing, by Parent, if (i) the Company shall
have breached any of its representations or warranties or failed to perform any
of its covenants or other agreements contained in this Agreement, which breach
or failure to perform (A) would give rise to the failure of a condition set
forth in numbered paragraph (ii) of Exhibit A and (B) is incapable of being
cured by the Company by the Termination Date or, if capable of being cured by
the Company by the Termination Date, the Company does not commence efforts to
cure such breach or failure within 10 business days after its receipt of written
notice thereof from Parent and reasonably pursue such cure thereafter, or (ii)
if any Legal Restraint that could reasonably be expected to result, directly or
indirectly, in any Action of Divestiture shall be in effect and shall have
become final and nonappealable; or
(g) prior to the Offer Closing, by the Company, if (i) the
representations and warranties of Parent and Sub contained in this Agreement
that are qualified as to
66
materiality are not true and correct (as so qualified), and the representations
and warranties of Parent and Sub contained in this Agreement that are not so
qualified are not true and correct in all material respects, in each case as of
the date of this Agreement and as of the Offer Closing Time, except that the
accuracy of representations and warranties that by their terms speak as of a
specified date will be determined as of such date, or (ii) Parent or Sub shall
have failed to perform in all material respects any of its covenants or other
agreements contained in this Agreement required to be performed by them under
this Agreement at or prior to the Offer Closing, in each case, which breach or
failure to perform is incapable of being cured by Parent or Sub by the
Termination Date or, if capable of being cured by Parent by the Termination
Date, Parent and Sub do not commence efforts to cure such breach or failure
within 10 business days after their receipt of written notice thereof from the
Company and reasonably pursue such cure thereafter.
SECTION 8.02. Effect of Termination. In the event of 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 effect, without any liability
or obligation on the part of Parent, Sub or the Company, other than the
provisions of the penultimate sentence of Section 6.02(a), Section 6.06, this
Section 8.02 and Article IX and except for any intentional breach by a party of
any of its representations, warranties, covenants or agreements set forth in
this Agreement, liability for which shall not be affected by termination of this
Agreement or any payment of the Termination Fee pursuant to Section 6.06(b)).
SECTION 8.03. Amendment. Subject to Section 8.05, this Agreement may be
amended by the parties hereto at any time, whether before or after the Offer
Closing shall have occurred or the Stockholder Approval, if required by
applicable Law, has been obtained; provided, however, that (a) after the Offer
Closing, there shall be no amendment that decreases the Merger Consideration and
(b) after the Stockholder Approval has been obtained, there shall be made no
amendment that by Law requires further approval by stockholders of the Company
without the further approval of such stockholders. 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,
subject to the limitations set forth in this Agreement (including Section 1.01)
and in Section 8.05, the parties may, (a) extend the time for the performance of
any of the obligations or other acts of the other parties, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto or (c) waive compliance with any of the
agreements or conditions contained herein; provided, however, that after the
Stockholder Approval has been obtained, there shall be made no waiver that by
Law requires further approval by stockholders of the Company without the further
approval of such stockholders. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in an instrument
67
in writing signed on behalf of such party which specifically sets forth the
terms of such extension or waiver. The failure or delay by 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. Approval of Independent Directors. Following the election or
appointment of Parent's or Sub's designees pursuant to Section 6.09 and prior to
the Effective Time, the affirmative vote of a majority of the Independent
Directors then in office shall be required for the Company to consent (a) to
amend or terminate this Agreement, (b) to waive any of the Company's rights or
remedies under this Agreement, (c) to extend the time for the performance of any
of the obligations or other acts of Parent or Sub, or (d) to take any other
action of the Company's Board of Directors under or in connection with this
Agreement if such action would materially and adversely affect the holders of
shares of Company Common Stock (other than Parent or Sub).
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. All notices or other communications required or
permitted to be given hereunder shall be in writing and shall be delivered by
hand or sent by facsimile or sent, postage prepaid, by registered, certified or
express mail or reputable overnight courier service and shall be deemed given
when so delivered by hand or sent by facsimile (receipt confirmed), or if
mailed, three days after mailing (one business day in the case of express mail
or overnight courier service), as follows (or at such other address for a party
as shall be specified by notice given in accordance with this Section 9.02):
if to Parent or Sub, to:
Western Digital Corporation
00000 Xxxx Xxxxxx Xxxxx
Xxxx Xxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: General Counsel
68
with a copy to:
O'Melveny & Xxxxx LLP
000 Xxxxxxx Xxxxxx Xxxxx
00xx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxx Xxxxxx, Esq./Xxxxx X. Xxxxxxxx, Esq.
if to the Company, to:
Komag, Incorporated
0000 Xxxxxxxxxx Xxxxxxx
Xxx Xxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxx Xxxxxx
with a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx P.C.
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx, Esq./Page Xxxxxxxxx, Esq.
SECTION 9.03. Definitions. For purposes of this Agreement:
(a) "affiliate" means, with respect to any person, any other person
directly or indirectly controlling, controlled by or under common control with
such first person;
(b) "business day" means any day on which the principal offices of the SEC
in Washington, D.C. are open to accept filings or, in the case of determining a
date when any payment is due, any day on which banks are not required or
authorized by applicable Law to close in Los Angeles, California;
(c) "indebtedness" means, without duplication, (A) indebtedness for
borrowed money, (B) indebtedness evidenced by any bond, debenture, note,
mortgage, indenture or other debt instrument or debt security, (C) amounts owing
as deferred purchase price for the purchase of any property, (D) capital leases,
or (E) guarantees with respect to any indebtedness or obligation of a type
described in clauses (A) through (D) above of any other person.
(d) as it relates to the Company, "knowledge" means, with respect to any
matter in question, the actual knowledge of any officer of the Company;
69
(e) "Material Adverse Effect" on or with respect to the Company means any
state of facts, change, development, event, effect, condition, occurrence,
action or omission that, individually or in the aggregate, would reasonably be
expected to result in a material adverse effect on the business, assets,
properties, financial condition or results of operations of the Company and its
Subsidiaries, taken as a whole; provided, however, that none of the following,
either individually or in the aggregate, shall be considered in determining
whether a Material Adverse Effect has or would occur: (A) any facts, changes,
developments, events, effects, conditions, occurrences, actions or omissions
generally affecting (1) the industry in which the Company and its Subsidiaries
operate to the extent they do not disproportionately affect the Company and its
Subsidiaries, taken as a whole, in relation to other companies in the industry
in which the Company and its Subsidiaries operate (for example, conditions
generally affecting such industry arising out of terrorism or war or other
similar events or arising out of force majeure (e.g. weather-related events), in
each case to the extent they do not disproportionately affect the Company and
its Subsidiaries, taken as a whole, in relation to other companies in the
industry in which the Company and its Subsidiaries operate) or (2) the economy,
or financial or capital markets, in the United States or elsewhere in the world
to the extent they do not disproportionately affect the Company and its
Subsidiaries, taken as a whole, in relation to other companies in the industry
in which the Company and its Subsidiaries operate (for example, conditions
generally affecting the economy, or financial or capital markets, arising out of
terrorism or war or other similar events or arising out of force majeure (e.g.
weather-related events), in each case to the extent they do not
disproportionately affect the Company and its Subsidiaries, taken as a whole, in
relation to other companies in the industry in which the Company and its
Subsidiaries operate), (B) changes (after the date of this Agreement) in Law or
in GAAP (or the interpretation thereof), (C) (1) any loss or departure of
officers or other employees of the Company or any of its Subsidiaries, (2) the
termination, reduction or other similar negative development in the Company's
relationships with its customers, suppliers, distributors or other business
partners, or (3) other facts, changes, developments, events, effects,
conditions, occurrences, actions or omissions, in each case resulting from the
announcement, pendency or consummation of the Offer, the Merger or the other
transactions contemplated by this Agreement; provided that this clause (C) shall
not be applicable with respect to facts, changes, developments, events, effects,
conditions, occurrences, actions or omissions related to representations and
warranties by the Company directly concerning the effect of the Offer, the
Merger or the other transactions contemplated by this Agreement, (D) any facts,
changes, developments, events, effects, conditions or occurrences resulting from
the failure by the Company or its Subsidiaries to take any action prohibited by
this Agreement, (E) any changes in the Company's stock price or the trading
volume of the Company's stock, in and of itself (it being understood that the
underlying cause of any such change may be taken into consideration in
determining whether a Material Adverse Effect has or would occur), (F) any
failure by the Company to meet any published analyst estimates or expectations
of the Company's revenue, earnings or other financial performance or results of
operations for any period, in and of itself, or any failure by the Company to
meet its internal budgets, plans or
70
forecasts of its revenues, earnings or other financial performance or results of
operations, in and of itself (it being understood that the underlying cause of
any such failure may be taken into consideration in determining whether a
Material Adverse Effect has or would occur), (G) any legal proceedings made or
brought by any of the current or former stockholders of the Company (on their
own behalf or on behalf of the Company) arising out of or related to the Offer,
the Merger, this Agreement or any of the transactions contemplated by this
Agreement, or (H) the matters set forth on Section 9.03(e) of the Company
Letter;
(f) "person" means any natural person, corporation, limited liability
company, partnership, joint venture, trust, business association, Governmental
Entity or other entity; and
(g) a "Subsidiary" of any person shall mean any other person (i) more than
50% of whose outstanding shares or securities representing the right to vote for
the election of directors or other managing authority of such other person are,
now or hereafter, owned or controlled, directly or indirectly, by such first
person, but such other person shall be deemed to be a Subsidiary only so long as
such ownership or control exists, or (ii) which does not have outstanding shares
or securities with such right to vote, as may be the case in a partnership,
joint venture or unincorporated association, but more than 50% of whose
ownership interest representing the right to make the decisions for such other
person is, now or hereafter, owned or controlled, directly or indirectly, by
such first person, but such other person shall be deemed to be a Subsidiary only
so long as such ownership or control exists.
SECTION 9.04. Exhibits and Schedules; Interpretation. The headings
contained in this Agreement or in any Exhibit or Schedule hereto and in the
table of contents to this Agreement are for reference purposes only and shall
not affect the meaning or interpretation of this Agreement. Any capitalized
terms used in any Schedule or Exhibit but not otherwise defined therein, shall
have the meaning as defined in this Agreement. When a reference is made in this
Agreement to an Article, Section, Subsection, Exhibit or Schedule, such
reference shall be to a Section or Article of, or an Exhibit or Schedule to,
this Agreement unless otherwise indicated. For all purposes hereof, the terms
"include", "includes" and "including" shall be deemed 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 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". The definitions contained in this
Agreement are applicable to the singular as well as the plural forms of such
terms. Any agreement or instrument defined or referred to herein or in any
agreement or instrument that is referred to herein means such agreement or
instrument as from time to time amended, modified or supplemented. References to
a person are also to its permitted successors and assigns.
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SECTION 9.05. Counterparts. This Agreement may be executed in one or more
counterparts (including by facsimile), all of which shall be considered one and
the same agreement and shall become effective when one or more such counterparts
have been signed by each of the parties and delivered to the other parties.
SECTION 9.06. Entire Agreement; No Third-Party Beneficiaries. This
Agreement (a) together with the Exhibits hereto and the Company Letter,
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, except for the Confidentiality Agreement, and
(b) except for the provisions of Section 6.05, is not intended to confer upon
any person other than the parties hereto (and their respective successors and
assigns) any rights (legal, equitable or otherwise) or remedies, whether as
third party beneficiaries or otherwise.
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 conflicts 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 prior written
consent of the other parties, except that 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, but no such assignment shall relieve Sub of any of its obligations
hereunder. Subject to the preceding sentence, this Agreement shall be binding
upon, inure to the benefit of and be enforceable by, the parties hereto and
their respective successors and assigns.
SECTION 9.09. Consent to Jurisdiction; Service of Process; Venue. Each of
the parties hereto irrevocably and unconditionally submits to the exclusive
jurisdiction of the Delaware Court of Chancery (and if jurisdiction in the
Delaware Court of Chancery shall be unavailable, any Delaware State court and
the Federal court of the United States of America sitting in the State of
Delaware) for the purposes of any suit, action or other proceeding arising out
of this Agreement or any transaction contemplated hereby (and agrees that no
such action, suit or proceeding relating to this Agreement shall be brought by
it or any of its Subsidiaries except in such courts). Each of the parties
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 above shall be effective service of
process for any action, suit or proceeding in the State of Delaware with respect
to any matters to which it has submitted to jurisdiction as set forth above in
the immediately preceding sentence. Each of the parties hereto irrevocably and
unconditionally waives (and agrees not to plead or claim), any objection to the
laying of venue of any action, suit or proceeding arising out of this Agreement
or the transactions contemplated hereby in the
72
Delaware Court of Chancery (and if the Delaware Court of Chancery shall be
unavailable, in any Delaware State court or the Federal court of the United
States of America sitting in the State of Delaware) or that any such action,
suit or proceeding brought in any such court has been brought in an inconvenient
forum.
SECTION 9.10. Waiver of Jury Trial. Each party hereto hereby waives, to
the fullest extent permitted by applicable Law, any right it may have to a trial
by jury in respect of any suit, action or other proceeding directly or
indirectly arising out of, under or in connection with this Agreement. Each
party hereto (a) 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 action, suit or proceeding, seek to enforce the foregoing
waiver and (b) 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 9.10.
SECTION 9.11. Enforcement. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties 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 Delaware Court of Chancery
(and if the Delaware Court of Chancery shall be unavailable, in any Delaware
State court or the Federal court of the United States of America sitting in the
State of Delaware), this being in addition to any other remedy to which they are
entitled at Law or in equity.
SECTION 9.12. Consents and Approvals. For any matter under this Agreement
requiring the consent or approval of any party to be valid and binding on the
parties hereto, such consent or approval must be in writing and executed and
delivered to the other parties by a person duly authorized by such party to do
so.
SECTION 9.13. Severability. If any provision of this Agreement or the
application of any such provision to any person or circumstance shall be held
invalid, illegal or unenforceable in any respect by a court of competent
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision hereof.
73
IN WITNESS WHEREOF, Parent, 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.
WESTERN DIGITAL CORPORATION,
By /S/ XXXX X. XXXXX
------------------------------
Name: Xxxx X. Xxxxx
Title: President and CEO
STATE M CORPORATION,
By /S/ XXX XXXXXX
-------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President
KOMAG, INCORPORATED,
By /S/ XXXXXXX XXXXXX
-------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chief Executive Officer
[SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER]
EXHIBIT A
CONDITIONS OF THE OFFER
Notwithstanding any other term of the Offer or this Agreement, Sub
shall not be required to, and Parent shall not be required to cause Sub to,
accept for payment or, subject to any applicable rules and regulations of the
SEC, including Rule 14e-l(c) under the Exchange Act (relating to Sub's
obligation to pay for or return tendered shares of Company Common Stock promptly
after the termination or withdrawal of the Offer), to pay for any shares of
Company Common Stock tendered pursuant to the Offer unless:
(a) there shall have been validly tendered and not withdrawn prior
to the expiration of the Offer that number of shares of Company Common Stock
which would represent a majority of the sum of (1) all shares of Company Common
Stock outstanding as of the scheduled expiration of the Offer, plus (2) all
shares of Company Common Stock issuable upon the exercise of all Company Stock
Options and any other rights to acquire Company Common Stock (for the avoidance
of doubt, excluding the Company Convertible Notes) outstanding as of the
scheduled expiration of the Offer that both (i) have an exercise price or strike
price less than the Offer Price and (ii) are vested as of the scheduled
expiration of the Offer or would vest within two months after the scheduled
expiration of the Offer assuming the satisfaction of the conditions to vesting
set forth in the governing plans, agreements or other instruments and assuming
consummation of the Offer (the "Minimum Tender Condition");
(b) any waiting period (and any extension thereof) applicable to the
Offer and the Merger under the HSR Act shall have been terminated or shall have
expired and the other approvals or waiting periods listed on Section 7.01(b) of
the Company Letter shall have been obtained or terminated or shall have expired;
and
(c) Parent shall have received a certificate signed on behalf of the
Company by the chief executive officer and chief financial officer of the
Company to the effect that none of the matters set forth in numbered paragraphs
(ii) and (iii) below shall have occurred.
Furthermore, notwithstanding any other term of the Offer or this
Agreement, Sub shall not be required to, and Parent shall not be required to
cause Sub to, accept for payment or, subject as aforesaid, to pay for any shares
of Company Common Stock tendered pursuant to the Offer if, at the expiration of
the Offer, any of the following conditions exists:
(i) there shall be in effect any Legal Restraint that has the effect
of preventing the consummation of the Offer or the Merger;
(ii) (A) (1) any of the representations and warranties of the
Company set forth in Sections 4.01(c)(i), (c)(ii) and (g)(A) shall not be
true in all respects (provided that the condition set forth in this
paragraph (ii)(A)(1) with respect to Sections 4.01(c)(i) and (c)(ii) shall
be deemed satisfied if the capitalization of the Company varies by
2
less than 1.0% from the capitalization set forth in Sections 4.01(c)(i) or
4.01(c)(ii)); (2) any of the representations and warranties of the Company
set forth in Section 4.01(r), (s), (t) or (u) that is qualified by
materiality or "Material Adverse Effect" shall not be true and correct in
all respects or any of the representations and warranties of the Company
set forth in Section 4.01(r), (s), (t) or (u) that is not so qualified
shall not be true and correct in all material respects, in each case at
and as of the date of the Agreement and at the expiration of the Offer (as
it may be extended from time to time) as though made at and as of such
time (except to the extent expressly made as of an earlier date, in which
case as of such date), or (3) any of the other representations and
warranties of the Company set forth in the Agreement (disregarding all
qualifications and exceptions contained therein regarding materiality or
Material Adverse Effect) shall not be true and correct in each case at and
as of the date of the Agreement and at the expiration of the Offer (as it
may be extended from time to time) as though made at and as of such time
(except to the extent expressly made as of an earlier date, in which case
as of such date), except where the failure of such representations and
warranties to be so true and correct would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect; or
(B) the Company shall have failed to perform in all material respects all
obligations required to be performed by it under this Agreement at or
prior to the expiration of the Offer (as it may be extended from time to
time pursuant to and in accordance with the terms of this Agreement);
(iii) since the date of this Agreement, there shall have occurred a
Material Adverse Effect on the Company that is continuing as of the
expiration of the Offer (as it may be extended from time to time pursuant
to and in accordance with the terms of the Agreement);
(iv) there shall be pending any suit, action or proceeding brought
by any Governmental Entity in the United States or any other jurisdiction
in which Parent or the Company have material businesses or operations or
have current plans to have material businesses or operations (A)
challenging or seeking to restrain or prohibit the consummation of the
Offer, Merger or any of the other transactions contemplated by this
Agreement, or (B) seeking an Action of Divestiture;
(v) there shall be in effect any Legal Restraint that could
reasonably be expected to result, directly or indirectly, in any Action of
Divestiture; or
(vi) this Agreement shall have been terminated in accordance with
its terms.
The foregoing conditions shall be in addition to, and not a
limitation of, the rights of Parent and Sub to terminate and/or modify the Offer
pursuant to the terms of this Agreement.
3
The foregoing conditions are for the sole benefit of Parent and Sub
and may be asserted by Parent or Sub regardless of the circumstances giving rise
to such condition and, subject to the terms of this Agreement, may be waived by
Sub and Parent in whole or in part at any time and from time to time, in their
sole discretion prior to the expiration of the Offer. The failure by Parent, Sub
or any other affiliate of Parent at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right, the waiver of any such
right with respect to particular facts and circumstances shall not be deemed a
waiver with respect to any other facts and circumstances and each such right
shall be deemed an ongoing right that may be asserted at any time and from time
to time.
