AGREEMENT AND PLAN OF MERGER between COMPUTER SCIENCES CORPORATION, LB ACQUISITION CORP. and FIRST CONSULTING GROUP, INC. dated as of OCTOBER 30, 2007
EXHIBIT 2.1
Execution Version
between
COMPUTER SCIENCES CORPORATION,
LB ACQUISITION CORP.
and
FIRST CONSULTING GROUP, INC.
dated as of
OCTOBER 30, 2007
TABLE OF CONTENTS
Page | ||||
ARTICLE I THE MERGER |
1 | |||
Section 1.1 The Merger |
1 | |||
Section 1.2 Effective Time |
2 | |||
Section 1.3 Closing |
2 | |||
Section 1.4 Directors and Officers of the Surviving Corporation |
2 | |||
Section 1.5 Subsequent Actions |
2 | |||
Section 1.6 Proxy Statement; Special Meeting |
3 | |||
ARTICLE II CONVERSION OF SECURITIES |
4 | |||
Section 2.1 Conversion of Capital Stock |
4 | |||
Section 2.2 Surrender of Certificates |
5 | |||
Section 2.3 Dissenting Shares |
7 | |||
Section 2.4 Treatment of Company Options, Restricted Stock Awards and Stock Bonus Awards |
7 | |||
Section 2.5 Additional Benefits Matters |
8 | |||
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY |
9 | |||
Section 3.1 Organization |
9 | |||
Section 3.2 Capitalization |
10 | |||
Section 3.3 Authorization; Validity of Agreement; Company Action |
11 | |||
Section 3.4 Board Approvals |
11 | |||
Section 3.5 Consents and Approvals; No Violations |
12 | |||
Section 3.6 Company SEC Documents and Financial Statements |
12 | |||
Section 3.7 Internal Controls; Xxxxxxxx-Xxxxx Act |
13 | |||
Section 3.8 Absence of Certain Changes |
14 | |||
Section 3.9 No Undisclosed Liabilities |
16 | |||
Section 3.10 Litigation |
16 | |||
Section 3.11 Employee Benefit Plans; ERISA |
17 | |||
Section 3.12 Taxes |
19 | |||
Section 3.13 Contracts |
20 | |||
Section 3.14 Title to Properties; Encumbrances |
22 | |||
Section 3.15 Intellectual Property |
22 | |||
Section 3.16 Labor Matters |
25 | |||
Section 3.17 Compliance with Laws; Permits |
26 | |||
Section 3.18 Information in the Proxy Statement |
27 | |||
Section 3.19 Opinion of Financial Advisor |
27 | |||
Section 3.20 Insurance |
27 | |||
Section 3.21 Environmental Laws and Regulations |
28 | |||
Section 3.22 Related Party Transactions |
28 | |||
Section 3.23 Brokers; Expenses |
28 |
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Page | ||||
Section 3.24 Takeover Statutes; Rights Agreement |
28 | |||
Section 3.25 No Other Representations or Warranties |
29 | |||
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB |
29 | |||
Section 4.1 Organization |
29 | |||
Section 4.2 Authorization; Validity of Agreement; Necessary Action |
29 | |||
Section 4.3 Consents and Approvals; No Violations |
30 | |||
Section 4.4 Litigation |
30 | |||
Section 4.5 Information in the Proxy Statement |
30 | |||
Section 4.6 Ownership of Company Capital Stock |
31 | |||
Section 4.7 Sufficient Funds |
31 | |||
Section 4.8 Ownership and Operations of Merger Sub |
31 | |||
Section 4.9 Brokers and Other Advisors |
31 | |||
ARTICLE V CONDUCT OF BUSINESS PENDING THE MERGER |
31 | |||
Section 5.1 Interim Operations of the Company |
31 | |||
Section 5.2 No Solicitation |
34 | |||
ARTICLE VI ADDITIONAL AGREEMENTS |
38 | |||
Section 6.1 Notification of Certain Matters |
38 | |||
Section 6.2 Access; Confidentiality |
38 | |||
Section 6.3 Consents and Approvals |
38 | |||
Section 6.4 Publicity |
40 | |||
Section 6.5 Directors’ and Officers’ Insurance and Indemnification |
41 | |||
Section 6.6 State Takeover Laws |
42 | |||
Section 6.7 Obligations of Merger Sub |
42 | |||
Section 6.8 Employee Benefits Matters |
42 | |||
ARTICLE VII CONDITIONS |
44 | |||
Section 7.1 Conditions to Each Party’s Obligations to Effect the Merger |
44 | |||
Section 7.2 Conditions to the Obligations of Parent and Merger Sub |
44 | |||
Section 7.3 Conditions to the Obligations of the Company |
45 | |||
ARTICLE VIII TERMINATION |
45 | |||
Section 8.1 Termination |
45 | |||
Section 8.2 Effect of Termination |
47 | |||
ARTICLE IX MISCELLANEOUS |
48 | |||
Section 9.1 Amendment and Modification; Waiver |
48 | |||
Section 9.2 Non-survival of Representations and Warranties |
49 | |||
Section 9.3 Expenses |
49 | |||
Section 9.4 Notices |
49 |
ii
Page | ||||
Section 9.5 Certain Definitions |
50 | |||
Section 9.6 Terms Defined Elsewhere |
56 | |||
Section 9.7 Interpretation |
58 | |||
Section 9.8 Counterparts |
58 | |||
Section 9.9 Entire Agreement; No Third-Party Beneficiaries |
58 | |||
Section 9.10 Severability |
59 | |||
Section 9.11 Governing Law; Jurisdiction |
59 | |||
Section 9.12 Waiver of Jury Trial |
59 | |||
Section 9.13 Assignment |
60 | |||
Section 9.14 Specific Performance |
60 |
EXHIBITS
Exhibit A Form of Certificate of Incorporation of the Surviving Corporation
Exhibit B Form of Bylaws of the Surviving Corporation
Exhibit B Form of Bylaws of the Surviving Corporation
iii
This AGREEMENT AND PLAN OF MERGER (hereinafter referred to as this “Agreement”), dated
October 30, 2007, is by and among Computer Sciences Corporation, a Nevada corporation
(“Parent”), LB Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of
Parent (“Merger Sub”), and First Consulting Group, Inc., a Delaware corporation (the
“Company”).
WHEREAS, upon the terms and subject to the conditions set forth in this Agreement, the parties
intend that Merger Sub will be merged with and into the Company with the Company as the Surviving
Corporation (the “Merger”) in accordance with the General Corporation Law of the State of
Delaware (the “DGCL”);
WHEREAS, the Board of Directors of the Company (the “Company Board of Directors”) has
unanimously, on the terms and subject to the conditions set forth herein, (i) determined that the
Merger and other transactions contemplated by this Agreement are fair to and in the best interests
of its stockholders, (ii) approved and declared advisable this Agreement, the Merger and the other
transactions contemplated hereby and (iii) determined to recommend that the Company’s stockholders
adopt this Agreement and approve the Merger; and
WHEREAS, the Board of Directors of Parent, Merger Sub and the Company have, on the terms and
subject to the conditions set forth herein, unanimously approved and declared advisable this
Agreement, the Merger and the other transactions contemplated hereby.
NOW, THEREFORE, in consideration of the mutual covenants and premises contained in this
Agreement and for other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties to this Agreement agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger
(a) Subject to the terms and conditions of this Agreement, and in accordance
with the DGCL, at the Effective Time, the Company and Merger Sub shall consummate the Merger
pursuant to which (i) Merger Sub shall be merged with and into the Company and the separate
corporate existence of Merger Sub shall thereupon cease, (ii) the Company shall be the surviving
corporation in the Merger and shall continue to be governed by the DGCL and (iii) the separate
corporate existence of the Company with all its rights, privileges, immunities, powers and
franchises shall continue unaffected by the Merger. The corporation surviving the Merger is
sometimes hereinafter referred to as the “Surviving Corporation.” The Merger shall have
the effects set forth in Section 259 of the DGCL.
1
(b) At the Effective Time, the certificate of incorporation of the Surviving Corporation
shall, by virtue of the Merger, be amended so as to read in its entirety in the form set forth as
Exhibit A hereto until thereafter changed or amended as provided therein or by applicable
Law. At the Effective Time, the bylaws of the Surviving Corporation shall be amended so as to read
in their entirety in the form set forth in Exhibit B hereto until thereafter changed or
amended as provided therein or by applicable Law.
Section 1.2 Effective Time. Parent, Merger Sub and the Company shall cause an appropriate
certificate of merger or other appropriate documents (the “Certificate of Merger”) to be
executed and filed on the Closing Date (or on such other date as Parent and the Company may agree)
with the Secretary of State of the State of Delaware in accordance with the relevant provisions of
the DGCL and shall make all other filings or recordings required under the DGCL. The Merger shall
become effective at the time such Certificate of Merger shall have been duly filed with, and
accepted by, the Secretary of State of the State of Delaware or such later date and time as is
agreed upon by the parties and specified in the Certificate of Merger, such date and time
hereinafter referred to as the “Effective Time.”
Section 1.3 Closing. The closing of the Merger (the “Closing”) will take place at 10:00
a.m., California time, on a date to be specified by the parties hereto (the “Closing
Date”), such date to be no later than the second business day after satisfaction or waiver of
all of the conditions set forth in Article VII, at the offices of Xxxxxx & Xxxxxxx LLP, 000 Xxxx
Xxxxxx Xxxxx, 00xx xxxxx, Xxxxx Xxxx, Xxxxxxxxxx 00000, unless another time, date or place is
agreed to in writing by the parties hereto.
Section 1.4 Directors and Officers of the Surviving Corporation. The directors of Merger Sub
immediately prior to the Effective Time shall, from and after the Effective Time, be appointed as
the directors of the Surviving Corporation, and the officers of the Company immediately prior to
the Effective Time, from and after the Effective Time, shall continue as the officers of the
Surviving Corporation, in each case until their respective successors shall have been duly elected,
designated or qualified, or until their earlier death, resignation or removal in accordance with
the Surviving Corporation’s certificate of incorporation and bylaws.
Section 1.5 Subsequent Actions. If at any time after the Effective Time the Surviving Corporation
shall determine, in its sole discretion, or shall be advised, that any deeds, bills of sale,
instruments of conveyance, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving Corporation its
right, title or interest in, to or under any of the rights, properties or assets
of either of the Company or Merger Sub acquired or to be acquired by the Surviving Corporation
as a result of, or in connection with, the Merger or otherwise to carry out this Agreement, then
the officers and directors of the Surviving Corporation shall be authorized to execute and deliver,
in the name and on behalf of either the Company or Merger Sub, all such deeds, bills of sale,
instruments of conveyance, assignments and assurances and to take and do, in the name and on behalf
of each of such corporations or otherwise, all such other actions and things as may be
2
necessary or
desirable to vest, perfect or confirm any and all right, title or interest in, to and under such
rights, properties or assets in the Surviving Corporation or otherwise to carry out this Agreement.
Section 1.6 Proxy Statement; Special Meeting.
(a) As promptly as practicable after the date of this Agreement, the Company shall prepare and
file with the Securities and Exchange Commission (the “SEC”) a proxy statement for the
Special Meeting (together with any amendments thereof or supplements thereto and any other required
proxy materials, the “Proxy Statement”) relating to the Merger and this Agreement in
preliminary form as required by the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder (the “Exchange Act”), and shall use all reasonable
efforts to have the Proxy Statement cleared by the SEC; provided, that Parent, Merger Sub
and their counsel shall be given a reasonable opportunity to review and comment on the Proxy
Statement before it is filed with the SEC and the Company shall give due consideration to all
reasonable additions, deletions or changes suggested thereto by Parent, Merger Sub and their
counsel. Subject to Section 5.2(d), the Company shall include in the Proxy Statement the
recommendation of the Company Board of Directors that stockholders of the Company vote in favor of
the adoption of this Agreement and approval of the Merger in accordance with the DGCL. The Company
shall use its reasonable best efforts to obtain and furnish the information required to be included
by the SEC in the Proxy Statement and, after consultation with Merger Sub, respond promptly to any
comments made by the SEC with respect to the Proxy Statement. The Company shall provide Parent,
Merger Sub and their counsel with copies of any written comments, and shall inform them of any oral
comments, that the Company or its counsel may receive from time to time from the SEC or its staff
with respect to the Proxy Statement promptly after the Company’s receipt of such comments, and any
written or oral responses thereto. Parent, Merger Sub and their counsel shall be given a
reasonable opportunity to review and comment on any such written responses and the Company shall
give due consideration to all reasonable additions, deletions or changes suggested thereto by
Parent, Merger Sub and their counsel. Prior to and during the Special Meeting, the Company, on the
one hand, and Parent and Merger Sub, on the other hand, agree to promptly correct any information
provided by it for use in the Proxy Statement if and to the extent that it shall have become false
or misleading in any material respect or as otherwise required by applicable Law. The Company
further agrees to cause the Proxy Statement, as so corrected (if applicable), to be filed with the
SEC and, if any such correction is made following the mailing of the Proxy Statement as provided in
Section 1.6(b), mailed to holders of Shares, in each case as and to the extent required by the
Exchange Act or the SEC (or its staff).
(b) The Company, acting through the Company Board of Directors, shall, in accordance with and
subject to the requirements of applicable Law:
(i) as promptly as reasonably practicable after the Proxy Statement is cleared by the
SEC for mailing to the Company’s stockholders, (A) duly set a record date for, call and
give notice of a special meeting of its
3
stockholders (the “Special Meeting”) for
the purpose of considering and taking action upon this Agreement (with the record date and
meeting date set in consultation with Parent), and (B) convene and hold the Special
Meeting;
(ii) cause the definitive Proxy Statement to be mailed to its stockholders;
(iii) except in the case of a Company Change in Recommendation specifically permitted
by Section 5.2(d), (A) recommend to its stockholders that they adopt this Agreement and
approve the Merger, and (B) include such recommendation in the Proxy Statement; and
(iv) subject to Section 5.2(d), use its reasonable best efforts to (A) solicit from
its stockholders proxies in favor of the adoption of this Agreement and approval of the
Merger and (B) secure any approval of stockholders of the Company that is required by the
DGCL and any other applicable Law to effect the Merger.
ARTICLE II
CONVERSION OF SECURITIES
Section 2.1 Conversion of Capital Stock. At the Effective Time, by virtue of the Merger and
without any action on the part of the holders of any securities of the Company or common stock, par
value $0.001 per share, of Merger Sub (the “Merger Sub Common Stock”):
(a) Merger Sub Common Stock. Each issued and outstanding share of Merger Sub Common
Stock shall be converted into and become one fully paid and nonassessable share of common stock of
the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Stock. All Shares that are owned
by the Company and any Shares owned by Parent, Merger Sub or any of their respective Subsidiaries
shall be cancelled and shall cease to exist, and no consideration shall be delivered in exchange
therefor.
(c) Conversion of Common Stock. Each issued and outstanding Share (other than Shares
to be cancelled in accordance with Section 2.1(b) and other than Dissenting Shares) shall be
converted into the right to receive $13.00, payable to the holder thereof in cash, without interest
(the “Merger Consideration”). From and after the Effective Time, all such Shares shall no
longer be outstanding and shall automatically be cancelled and shall cease to exist, and each
holder of a Share shall cease to have any rights with respect thereto (including the associated
Rights), except the right to receive the Merger Consideration therefor upon the surrender of such
Share in accordance with Section 2.2, without interest thereon.
(d) Adjustment to Merger Consideration. The Merger Consideration shall be adjusted
appropriately to reflect the effect of any stock split, reverse stock split,
4
stock dividend
(including any dividend or distribution of securities convertible into Common Stock), cash
dividend, reorganization, recapitalization, reclassification, combination, exchange of shares or
other like change with respect to Common Stock occurring on or after the date hereof and prior to
the Effective Time.
Section 2.2 Surrender of Certificates.
(a) Paying Agent. Merger Sub shall designate a bank or trust company to act as the
payment agent in connection with the Merger (the “Paying Agent”). Prior to or at the
Effective Time, Parent or Merger Sub shall deposit, or cause to be deposited, with the Paying Agent
the aggregate Merger Consideration with respect to Shares converted into the right to receive the
Merger Consideration pursuant to Section 2.1(c). Such funds shall be invested by the Paying Agent
as directed by Parent, in its sole discretion, pending payment thereof by the Paying Agent to the
holders of the Shares. Earnings from such investments shall be the sole and exclusive property of
Parent, and no part of such earnings shall accrue to the benefit of holders of Shares.
(b) Procedures for Surrender. Promptly after the Effective Time, the Paying Agent
shall mail to each holder of record of a certificate or certificates which immediately prior to the
Effective Time represented outstanding Shares (the “Certificates”) or non-certificate
Shares represented by book-entry (“Book-Entry Shares”) and whose Shares were converted
pursuant to Section 2.1 into the right to receive the Merger Consideration (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Paying Agent and shall be in
such form and have such other provisions as Parent may reasonably specify) and (ii) instructions
for effecting the surrender of the Certificates or Book-Entry Shares in exchange for payment of the
Merger Consideration. Upon surrender of a Certificate or Book-Entry Share 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 executed, the holder of such Certificate or Book-Entry Share shall be
entitled to receive in exchange therefor the Merger Consideration for each Share formerly
represented by such Certificate or Book-Entry Share and the Certificate so surrendered or
book-entry shall forthwith be cancelled. If payment of the Merger Consideration is to be made
to a Person other than the Person in whose name the surrendered Certificate is registered, it shall
be a condition precedent of payment that (A) the Certificate so surrendered shall be properly
endorsed or shall be otherwise in proper form for transfer and (B) the Person requesting such
payment shall have paid any transfer and other similar Taxes required by reason of the payment of
the Merger Consideration to a Person other than the registered holder of the Certificate
surrendered or shall have established to the satisfaction of the Surviving Corporation that such
Tax either has been paid or is not required to be paid. Until surrendered as contemplated by this
Section 2.2, each Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive the Merger Consideration in cash as contemplated by this Section 2.2,
without interest thereon.
(c) Transfer Books; No Further Ownership Rights in Shares. At the Effective Time, the
stock transfer books of the Company shall be closed and thereafter
5
there shall be no further
registration of transfers of Shares on the records of the Company. From and after the Effective
Time, the holders of Certificates outstanding immediately prior to the Effective Time shall cease
to have any rights with respect to such Shares except as otherwise provided for herein or by
applicable Law. If, after the Effective Time, Certificates are presented to the Surviving
Corporation for any reason, they shall be cancelled and exchanged as provided in this Article II.
(d) Termination of Fund; No Liability. At any time following twelve months after the
Effective Time, the Surviving Corporation shall be entitled to require the Paying Agent to deliver
to it any funds (including any interest received with respect thereto) made available to the Paying
Agent and not disbursed (or for which no disbursement is pending subject only to the Paying Agent’s
routine administrative procedures) to holders of Certificates or Book-Entry Shares, and thereafter
such holders shall be entitled to look only to the Surviving Corporation and Parent (subject to
abandoned property, escheat or other similar Laws) as general creditors thereof with respect to the
Merger Consideration payable upon due surrender of their Certificates and compliance with the
procedures in Section 2.2(b), without any interest thereon. Notwithstanding the foregoing, neither
the Surviving Corporation nor the Paying Agent shall be liable to any holder of a Certificate or
Book-Entry Shares for Merger Consideration delivered to a public official pursuant to any
applicable abandoned property, escheat or similar Law.
(e) Withholding Rights. Parent, Merger Sub, the Surviving Corporation and the Paying
Agent, as the case may be, shall be entitled to deduct and withhold from the Merger Consideration
otherwise payable pursuant to this Agreement to any holder of Shares, or to a Person other than the
Person in whose name the surrendered Certificate is registered at the direction of the Person in
whose name the surrendered Certificate is registered, such amounts that Parent, Merger Sub, the
Surviving Corporation or the Paying Agent are required to deduct and withhold with respect to the
making of such payment under the Internal Revenue Code of 1986, as amended (the “Code”),
the rules and Treasury Regulations promulgated thereunder or any provision of
applicable state, local or foreign Law, including with respect to stock transfer Taxes payable
by the seller. To the extent that amounts are so withheld by Parent, Merger Sub, the Surviving
Corporation or the Paying Agent, such amounts shall be treated for all purposes of this Agreement
as having been paid to the holder of Shares, or to such Person other than the Person in whose name
the surrendered Certificate is registered at the direction of the Person in whose name the
surrendered Certificate is registered, in respect of which such deduction and withholding was made
by Parent, Merger Sub, the Surviving Corporation or the Paying Agent.
(f) Lost, Stolen or Destroyed Certificates. In the event that any Certificates shall
have been lost, stolen or destroyed, the Paying Agent shall issue in exchange for such lost, stolen
or destroyed Certificates, upon the making of an affidavit of that fact by the holder thereof, the
Merger Consideration payable in respect thereof pursuant to Section 2.1 hereof; provided,
however, that Parent may, in its discretion and as a condition precedent to the payment of
such Merger Consideration, require the owners of such lost, stolen or destroyed Certificates to
deliver a bond in such sum as it
6
may reasonably direct as indemnity against any claim that may be
made against Parent, the Surviving Corporation or the Paying Agent with respect to the Certificates
alleged to have been lost, stolen or destroyed.
Section 2.3 Dissenting Shares.
(a) Notwithstanding anything in this Agreement to the contrary, Shares outstanding immediately
prior to the Effective Time and held by a holder who is entitled to demand and properly demands
appraisal of such Shares (“Dissenting Shares”) pursuant to, and who complies in all
respects with, Section 262 of the DGCL (the “Appraisal Rights”) shall be entitled to
payment of the fair value of such Dissenting Shares in accordance with the Appraisal Rights;
provided, however, that if any such holder shall fail to perfect or otherwise shall
waive, withdraw or lose the right to dissent under the Appraisal Rights, then the right of such
holder to be paid the fair value of such holder’s Dissenting Shares shall cease and such Dissenting
Shares shall be deemed to have been converted as of the Effective Time into, and to have become
exchangeable solely for the right to receive the Merger Consideration, without interest.
(b) The Company shall serve prompt notice to Parent of any demands received by the Company for
appraisal rights of any Shares, and Parent shall have the right to participate in and direct all
negotiations and proceedings with respect to such demands. Prior to the Effective Time, the
Company shall not, without the prior written consent of Parent, make any payment with respect to,
or settle or compromise or offer to settle or compromise, any such demand, or agree to do any of
the foregoing.
Section 2.4 Treatment of Company Options, Restricted Stock Awards and Stock Bonus Awards.
(a) Subject to the consummation of the Merger, the Company and the Board of Directors of the
Company (or the appropriate committee thereof): (i) shall cause, effective as of immediately prior
to the Effective Time, the vesting and exercisability of each then outstanding Company Option held
by any Person then performing services as an employee, director or consultant of the Company or any
Company Subsidiary immediately prior to the Effective Time to be fully accelerated, and (ii) shall
cause, effective as of the Effective Time, each then outstanding Company Option to be canceled and
terminated as of the Effective Time (if not exercised prior to the Effective Time) and the holder
thereof to become entitled to receive an amount of cash, if any, from the Company equal to the
product of (i) the excess, if any, of the Merger Consideration over the exercise price per Share of
such Company Option, and (ii) the number of Shares subject to the exercisable portion of such
Company Option (such amount being hereinafter referred to as the “Option Consideration”).
The Option Consideration shall be paid by the Surviving Corporation as soon as practicable
following the Effective Time.
(b) Subject to the consummation of the Merger, the Company and Board of Directors of the
Company (or, if appropriate, any committee thereof) shall cause, effective as of immediately prior
to the Effective Time, the vesting of each outstanding
7
restricted Share subject to a restricted
stock award or stock bonus award granted under the Company Stock Plans held by any Person then
performing services as an employee, director or consultant of the Company or any Company Subsidiary
immediately prior to the Effective Time to be fully accelerated and the contractual restrictions
thereon (including, without limitation, any contractual forfeiture, repurchase and transferability
restrictions) to terminate.
(c) Prior to the Effective Time, the Company and the Board of Directors of the Company (or the
appropriate committee thereof) shall take such steps, if any, as may be required to provide that,
with respect to each Section 16 Affiliate (as defined below), (i) the transactions contemplated by
this Section 2.4, and (ii) any other dispositions of Company equity securities (including
derivative securities), shall be exempt under Rule 16b-3 promulgated under the Exchange Act in
accordance with the terms and conditions set forth in that certain No-Action Letter, dated
January 12, 1999 (CCH Fed. Sec. L. Rep. 77.515). For purposes of this Agreement, “Section 16
Affiliate” shall mean each individual who immediately prior to the Effective Time is a director
or officer of the Company subject to Section 16(b) of the Exchange Act.
(d) The Company shall take all corporate actions necessary to effectuate the treatment of
Company Options, and restricted Shares subject to any restricted stock award or stock bonus award,
contemplated by this Section 2.4 and to ensure that (i) all awards issued and outstanding under the
Company Stock Plans immediately prior to the Effective Time shall be cancelled as of the Effective
Time, and (ii) neither any holder of Company Options and restricted Shares subject to any
restricted stock award or stock bonus award granted under the Company Stock Plans, nor any other
participant in any Company Stock Plan shall, from and after the Effective Time, have any right
thereunder to acquire any securities of the Company, the Surviving Corporation,
Parent, or any of their respective Subsidiaries or to receive any payment or benefit with
respect to any award previously granted under the Company Stock Plans, except as provided in this
Section 2.4.
(e) As soon as practicable after the Effective Time, Parent shall deliver to the holders of
the Company Options and the restricted Shares subject to any restricted stock award or stock bonus
award granted under the Company Stock Plans appropriate notices setting forth such holders’ rights
pursuant to the Company Stock Plans and this Agreement.
Section 2.5 Additional Benefits Matters . Promptly following the date hereof, the Company shall take
all necessary actions, including obtaining any required consents from holders of outstanding
Company Options and the restricted Shares subject to a restricted stock award or a stock bonus
award granted under the Company Stock Plans that are necessary to effect the transactions described
in Section 2.4 above pursuant to the terms of the applicable Company Stock Plans and agreements
evidencing the Company Options and the restricted stock awards and the stock bonus awards. All
amounts payable pursuant to Section 2.4 shall be paid without interest. Any payments made pursuant
to Section 2.4 shall be net of all applicable withholding Taxes that Parent, Merger Sub, the
Surviving Corporation and/or the Paying Agent, as the case may be,
8
shall be required to deduct and
withhold from such payments under the Code, the rules and regulations promulgated thereunder or any
provision of applicable Law. To the extent that amounts are so deducted and withheld by Parent,
Merger Sub, the Surviving Corporation or the Paying Agent, such amounts shall be treated for all
purposes of this Agreement as having been paid in respect of which such deduction and withholding
was made by Parent, Merger Sub, the Surviving Corporation or the Paying Agent.
ARTICLE III
REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
WARRANTIES OF THE COMPANY
Except as set forth in the corresponding section or subsection of the Company’s disclosure
schedule delivered to Parent immediately prior to the execution of this Agreement (the “Company
Disclosure Schedule”), the Company represents and warrants to Parent and Merger Sub as set
forth in this Article III. Each disclosure set forth in the Company Disclosure Schedule shall
qualify or modify each of the representations and warranties set forth in this Article III to the
extent the applicability of the disclosure to such other section is reasonably apparent from the
text of the disclosure made.
Section 3.1 Organization.
(a) The Company and each of the Company Subsidiaries is a corporation or other legal entity
duly organized, validly existing and in good standing (with respect to jurisdictions which
recognize such concept) under the Laws of the jurisdiction in which it is organized and has the
requisite corporate or other power, as the case may be, and authority to conduct its business as
now being conducted, except for those jurisdictions where the failure to be so qualified, licensed
or in good standing would not reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect. The Company and each of the Company Subsidiaries is duly
qualified or licensed to do business and is in good standing (with respect to jurisdictions which
recognize such concept) in each jurisdiction in which the nature of its business or the ownership,
leasing or operation of its properties makes such qualification or licensing necessary, except for
those jurisdictions where the failure to be so qualified or licensed or to be in good standing
would not reasonably be expected to have, individually or in the aggregate, a Company Material
Adverse Effect. The Company has delivered to or made available to Parent and Merger Sub prior to
the execution of this Agreement true and complete copies of any amendments to the Company’s
certificate of incorporation and the Company’s bylaws (the “Company Governing Documents”)
not filed as of the date hereof with the SEC. The Company is in compliance in all material
respects with the terms of the Company Governing Documents and each Company Subsidiary is in
compliance in all material respects with the terms of its certificate of incorporation and bylaws
(or similar governing documents or operating agreements). The Company has made available to Parent
and Merger Sub true and complete copies of the minutes (or, in the case of draft minutes, the most
recent drafts thereof as of the date of this Agreement)
9
of all meetings of the Company’s
stockholders, the Company Board of Directors and each committee of the Company Board of Directors
held since January 1, 2005.
(b) Subsidiaries. All outstanding shares of capital stock of, or other Equity
Interests in, each Company Subsidiary have been validly issued and are fully paid and nonassessable
and are owned directly or indirectly by the Company, free and clear of any Liens, other than
Permitted Liens. Other than the Company Subsidiaries, the Company does not directly or indirectly
beneficially own any Equity Interests in any other Person.
Section 3.2 Capitalization.
(a) The authorized capital stock of the Company consists of (i) 50,000,000 shares of common
stock, par value $0.001 per share (the “Common Stock”), (ii) 9,500,000 shares of preferred
stock, par value $0.001 per share (the “Preferred Stock”), and (iii) 500,000 shares of
series A junior participating preferred stock, par value $0.001 per share (the “Junior
Preferred Stock”). As of October 26, 2007, (A) 27,149,761 shares of Common Stock were issued
and outstanding, (B) no shares of Preferred Stock or Junior Preferred Stock were issued and
outstanding, (C) no shares of Common Stock were issued and held in the treasury of the Company or
otherwise owned by the Company, and (D) 3,594,956 shares of Common Stock were reserved for issuance
pursuant to the Company Stock Plans. All of the outstanding shares of the Company’s capital
stock are, and all Shares which may be issued pursuant to the exercise of outstanding Company
Options will be, when issued in accordance with the terms thereof, duly authorized, validly issued,
fully paid and non-assessable. There are no bonds, debentures, notes or other indebtedness having
voting rights (or convertible into securities having such rights) (“Voting Debt”) of the
Company or any Company Subsidiary issued and outstanding. Except for the Company Stock-Based
Awards described in Section 3.2(b), there are no (x) options, warrants, calls, pre-emptive rights,
subscriptions or other rights, agreements, arrangements or commitments of any kind, including any
stockholder rights plan, relating to the issued or unissued capital stock of the Company or any
Company Subsidiary, obligating the Company or any Company Subsidiary to issue, transfer or sell or
cause to be issued, transferred or sold any shares of capital stock or Voting Debt of, or other
equity interest in, the Company or any Company Subsidiary or securities convertible into or
exchangeable for such shares or equity interests, or obligating the Company or any Company
Subsidiary to grant, extend or enter into any such option, warrant, call, subscription or other
right, agreement, arrangement or commitment (collectively this clause (x), “Equity
Interests”) or (y) outstanding contractual obligations of the Company or any Company Subsidiary
to repurchase, redeem or otherwise acquire any Shares or any capital stock of, or other Equity
Interests in, the Company or any Company Subsidiary or to provide funds to make any investment (in
the form of a loan, capital contribution or otherwise) in the Company or any Company Subsidiary.
No Company Subsidiary owns any Shares.
(b) As of October 26, 2007, the Company had outstanding Company Options to purchase 2,025,656
shares of Common Stock and 310,900 restricted Shares subject to restricted stock awards and stock
bonus awards granted under the Company Stock Plans. Section 3.2(b) of the Company Disclosure
Schedule sets forth a listing of all outstanding Company Options and restricted Shares of Common
Stock subject to restricted stock awards and stock bonus awards (each, a “Company Stock-Based
Award”) granted under the Company
10
Stock Plans as of October 26, 2007, including the holders
thereof, the number of Shares subject to such Company Option or Company Stock-Based Award, the
expiration date of such Company Option, the per Share price at which such Company Option may be
exercised or the Shares subject to such Company Stock-Based Award were sold, and the vesting
schedule of each such Company Option or Company Stock-Based Award. The Company has no outstanding
rights to purchase Shares granted under the Company’s 2000 Associate Stock Purchase Plan. Each
Company Stock-Based Award intended to qualify as an “incentive stock option” under Section 422 of
the Code so qualifies and the exercise price of each other Company Option is no less than the fair
market value of a Share as determined on the date of grant of such Company Stock-Based Award.
(c) There are no voting trusts or other agreements to which the Company or any Company
Subsidiary is a party with respect to the voting of the Company’s Common Stock or any capital stock
of, or other Equity Interest of the Company or any equity interests of the Company Subsidiaries.
Neither the Company nor
any Company Subsidiary has granted any preemptive rights, anti-dilutive rights or rights of
first refusal or similar rights.
Section 3.3 Authorization; Validity of Agreement; Company Action. The Company has all necessary
corporate power and authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the Merger and the other transactions contemplated hereby. The
execution, delivery and performance by the Company of this Agreement, and the consummation by it of
the Merger and the other transactions contemplated hereby, have been duly and validly authorized by
the Company Board of Directors and, no other corporate action on the part of the Company, pursuant
to the DGCL or otherwise, is necessary to authorize the execution and delivery by the Company of
this Agreement, and the consummation by it of the Merger and the other transactions contemplated
hereby, other than the adoption of this Agreement and approval of the Merger by the holders of a
majority of all of the outstanding Shares entitled to vote on adoption of this Agreement (the
“Stockholder Approval”), which is the only stockholder vote required. This Agreement has
been duly executed and delivered by the Company and, assuming due and valid authorization,
execution and delivery hereof by Parent and Merger Sub, is a valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, except that (a) such
enforcement may be subject to applicable bankruptcy, insolvency or other similar Laws, now or
hereafter in effect, affecting creditors’ rights generally and (b) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to equitable defenses
and to the discretion of the court before which any proceeding therefor may be brought.
Section 3.4 Board Approvals. The Company Board of Directors, at a meeting duly called and held,
has unanimously (i) determined that this Agreement, the Merger and the other transactions
contemplated hereby are fair to, and in the best interests of the stockholders of the Company,
(ii) approved and declared advisable this
11
Agreement, the Merger and the other transactions
contemplated hereby, which approval, to the extent applicable, constituted approval under the
provisions of Section 203 of the DGCL as a result of which this Agreement, the Merger and the other
transactions contemplated hereby are not, and will not be, subject to the restrictions on “business
combinations” under the provisions of Section 203 of the DGCL or any other applicable Takeover
Laws; and (iii) subject to Section 5.2(d), recommended that the stockholders of the Company adopt
this Agreement and approve the Merger (the “Company Recommendation”).
Section 3.5 Consents and Approvals; No Violations. None of the execution, delivery or performance
of this Agreement by the Company, the consummation by the Company of the Merger or any other
transaction contemplated hereby or compliance by the Company with any of the provisions of this
Agreement will (i) conflict with or result in any breach of any provision of the Company
Governing Documents or the organizational documents of any Company Subsidiary, (ii) require
any filing by the Company or any Company Subsidiary with, or the permit, authorization, consent or
approval of, any court, arbitral tribunal, administrative agency or commission or other
governmental or other regulatory authority or agency, foreign, federal, state, local or
supernational entity (a “Governmental Entity”) (except for (A) compliance with any
applicable requirements of the Exchange Act, (B) any filings as may be required under the DGCL in
connection with the Merger, (C) filings, permits, authorizations, consents and approvals as may be
required under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the “HSR
Act”) or any other applicable Foreign Antitrust Approvals or (D) the filing with the SEC and
Nasdaq Global Market (“Nasdaq”) of (1) the Proxy Statement and (2) such reports under
Section 13(a) of the Exchange Act as may be required in connection with this Agreement and the
Merger), (iii) result in a modification, violation or breach of, or constitute (with or without
notice or lapse of time or both) a default (or give rise to any right, including, but not limited
to, any right of termination, amendment, cancellation or acceleration) under, or result in the
creation of any Lien in or upon any of the properties, assets or rights of the Company or any
Company Subsidiary under, any of the terms, conditions or provisions of any Company Material
Contracts or (iv) violate any order, writ, injunction, decree, statute, rule or regulation
applicable to the Company, any Company Subsidiary or any of their respective properties or assets;
except in each of clauses (ii), (iii) or (iv) where (x) any failure to obtain such permits,
authorizations, consents or approvals, (y) any failure to make such filings or (z) any such
modifications, violations, rights, breaches or defaults have not had and would not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse Effect or have a
material adverse effect on the ability of the Company to perform its obligations hereunder or to
consummate the Merger and the other transactions contemplated hereby.
Section 3.6 Company SEC Documents and Financial Statements. The Company and each of the Company
Subsidiaries has filed or furnished (as applicable) on a timely basis with the SEC all forms,
reports, schedules, certifications, statements and other documents required by it to be filed or
furnished (as applicable) since and including January 1, 2004, under the Exchange Act or the
Securities Act of 1933, as amended (the “Securities Act”) together with all certifications
required pursuant to the Xxxxxxxx-Xxxxx
12
Act of 2002 (the “Xxxxxxxx-Xxxxx Act”) (such
documents and any other documents filed by the Company and each Company Subsidiary with the SEC, as
have been amended since the time of their filing, collectively, the “Company SEC
Documents”). As of their respective filing dates (or, if subsequently amended or supplemented,
at the time of such amendment or supplement) the Company SEC Documents (i) did not (or with respect
to Company SEC Documents filed after the date hereof, will not) contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or necessary in order
to make the statements made therein, in light of the circumstances under which they were made, not
misleading and (ii) complied in all material respects with the applicable requirements of the
Exchange Act or the Securities Act, as the case may be, the Xxxxxxxx-Xxxxx Act and the applicable
rules and regulations of the SEC thereunder. None of the Company Subsidiaries is currently
required to file any forms, reports or other documents with the SEC. As of the date hereof,
there are no outstanding or unresolved comments received by the Company from the SEC staff with
respect to any of the Company SEC Documents. To the knowledge of the Company, there is no ongoing
SEC investigation or review with respect to the Company or any of the Company SEC Documents. All
of the audited consolidated financial statements and unaudited consolidated interim financial
statements of the Company and its consolidated Subsidiaries included in the Company SEC Documents
(collectively, the “Financial Statements”), (A) have been or will be, as the case may be,
prepared from, are in accordance with, and accurately reflect the books and records of the Company
and its consolidated Subsidiaries in all material respects, (B) have been or will be, as the case
may be, prepared in compliance in all material respects with applicable accounting requirements and
with the published rules and regulations of the SEC with respect thereto and in accordance with
United States generally accepted accounting principles (“GAAP”) applied on a consistent
basis during the periods involved (except as may be indicated in the notes thereto or, in the case
of interim financial statements, for normal and recurring year-end adjustments as permitted by the
SEC on Form 10-Q, 8-K or any successor or like form under the Exchange Act) and (C) fairly present
in all material respects the consolidated financial position and the consolidated results of
operations and cash flows of the Company and its consolidated Subsidiaries as of the times and for
the periods referred to therein.
Section 3.7 Internal Controls; Xxxxxxxx-Xxxxx Act.
(a) The Company and the Company Subsidiaries have designed and maintained a system of internal
controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act)
sufficient to provide reasonable assurances regarding the reliability of financial reporting and
the preparation of financial statements in accordance with GAAP. The Company (i) has designed and
maintains disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the
Exchange Act) to ensure that material information required to be disclosed by the Company in the
reports that it files or submits under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the SEC’s rules and forms and is accumulated and
communicated to the Company’s management as appropriate to allow timely decisions regarding
required disclosure and (ii) has disclosed to the Company’s auditors and the audit committee of the
Company Board of Directors (and
13
made summaries of such disclosures available to Parent) (A) any
significant deficiencies and material weaknesses in the design or operation of internal controls
over financial reporting that are reasonably likely to adversely affect in any material respect the
Company’s ability to record, process, summarize and report financial information and (B) any fraud
or alleged fraud, in each case, whether or not material, that involves management or other
employees who have a significant role in the Company’s internal controls over financial reporting.
The Company has been in compliance in all material respects with all effective provisions of the
Xxxxxxxx-Xxxxx Act since its enactment.
(b) Since January 1, 2005, (i) neither the Company nor any Company Subsidiary nor, to the
knowledge of the Company, any director, officer, employee, auditor, accountant or Representative of
the Company or any of its Subsidiaries has received or otherwise had or obtained knowledge of any
material complaint, allegation, assertion or claim, whether written or oral, regarding the
accounting or auditing practices, procedures, methodologies or methods of the Company or Company
Subsidiary or their respective internal accounting controls, including any material complaint,
allegation, assertion or claim that the Company or any Company Subsidiary has engaged in
questionable accounting or auditing practices and (ii) no attorney representing the Company or any
Company Subsidiary, whether or not employed by the Company or any Company Subsidiary, has reported
evidence of a material violation of securities Laws, breach of fiduciary duty or similar violation
by the Company or any of its officers, directors, employees or agents to the Company Board of
Directors any committee thereof or to any director or officer of the Company.
(c) The Company is in compliance in all material respects with (i) the applicable provisions
of the Xxxxxxxx-Xxxxx Act and (ii) the applicable listing and corporate governance rules and
regulations of Nasdaq.
Section 3.8 Absence of Certain Changes.
(a) Except as contemplated by this Agreement or in the Company SEC Documents filed prior to
the date hereof, since December 29, 2006, each of the Company and each Company Subsidiary has
conducted, in all material respects, its respective business in the ordinary course of business
consistent with past practice.
(b) From December 29, 2006 through the date of this Agreement, (A) no fact(s), change(s),
event(s), development(s) or circumstances have occurred, arisen, come into existence or become
known, which have had or would reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect, and (B) except as disclosed in the Company SEC Documents (but
excluding all exhibits, schedules, annexes or appendices thereto or included therein) filed prior
to the date hereof, neither the Company nor any Company Subsidiary has:
(i) (A) declared, set aside or paid any dividend or other distribution payable in
cash, stock or property (or any combination thereof) with respect to the Company’s capital
stock or (B) amended the Company Governing Documents;
14
(ii) redeemed, purchased or acquired, or offered to redeem, purchase or acquire, any
Equity Interests, except (x) repurchases or forfeitures of unvested restricted Shares
subject to restricted stock awards or stock bonus awards granted under the Company Stock
Plans in accordance with the terms and conditions of such awards, (y) repurchases of
unvested Shares in connection with the withholding of Shares upon the exercise of Company
Options or the vesting of
restricted Shares subject to restricted stock awards or stock bonus awards granted
under the Company Stock Plans, and (z) repurchases of Shares from employees of the Company
or a Company Subsidiary in relation to the loan agreements with such employees that are set
forth in Section 5.1(d)(iii) of the Company Disclosure Schedule;
(iii) acquired (whether pursuant to merger, stock or asset purchase or otherwise) in
one transaction, or any series of related transactions, (x) except in the ordinary course
of business consistent with past practice, any assets having a fair market value in excess
of $1,000,000 or (y) any equity interests in any Person or any business or division of any
Person or all or substantially all of the assets of any Person (or business or division
thereof);
(iv) transferred, leased, licensed, sold, mortgaged, pledged, disposed of, or
encumbered any of its material assets, other than (x) sales of inventory and licenses of
software or other Intellectual Property, in each case, to customers in the ordinary course
of business consistent with past practice, and (y) dispositions of assets no longer used in
the operation of the business;
(v) incurred or assumed any long-term or short-term indebtedness, except short-term
payables incurred in the ordinary course of business consistent with past practice;
(vi) assumed, guaranteed, or endorsed, or otherwise became liable or responsible for
(whether directly, contingently or otherwise), the obligations of any other Person, other
than obligations of wholly owned Company Subsidiaries in the ordinary course of business
consistent with past practice;
(vii) made any loans, advances or capital contributions to, or investments in, any
other Person, other than loans, advances or capital contributions to, or investments in,
wholly owned Company Subsidiaries made in the ordinary course of business consistent with
past practice;
(viii) other than as required by applicable Law, made any change in, or accelerate the
vesting of, the compensation or benefits payable or to become payable to, or granted any
severance or termination pay to, any employee of the Company with a title equal or senior
to Vice President, or made any loans to any such Person or made any change in its existing
borrowing or lending arrangements for or on behalf of any of such Person pursuant to a
Benefit Plan or otherwise, except (i) as required by and pursuant to previously existing
contractual arrangements or policies of the Company, or (ii) to the extent
15
necessary to comply with, or satisfy an exemption from, Section 409A of the Code without increasing the
benefits provided to any Person;
(ix) incurred any capital expenditures or any obligations or liabilities in respect
thereof in excess of $1,000,000, in the aggregate, except those
contemplated in the capital expenditures budgets for the Company and the Company
Subsidiaries previously made available to Parent;
(x) entered into any agreement or arrangement that limits or otherwise restricts the
Company, any Company Subsidiary, or upon completion of the Merger, Parent or its
Subsidiaries or any successor thereto from engaging or competing in any line of business or
in any location;
(xi) changed any of the accounting methods used by it materially affecting its assets,
liabilities or business, except for such changes required by GAAP or Regulation S-X
promulgated under the Exchange Act;
(xii) entered into any new line of business outside of its existing business segments
that is material to the Company and the Company Subsidiaries, taken as a whole;
(xiii) paid, discharged, settled or satisfied any material claims, liabilities or
obligations (absolute, accrued, contingent or otherwise), other than (i) performance of
contractual obligations in accordance with their terms, (ii) payment, discharge, settlement
or satisfaction thereof in the ordinary course of business, or (iii) settlement or
satisfaction of outstanding claims or litigation for less than $500,000 in the aggregate;
and
(xiv) made any material revaluation of any of its assets, including writing down the
value of capitalized inventory or writing off notes or accounts receivable, other than in
the ordinary course of business consistent with past practice.
Section 3.9 No Undisclosed Liabilities. Except (a) as reflected or otherwise reserved against on
the Financial Statements included in the Company 10-Q, (b) for liabilities and obligations incurred
since June 29, 2007 in the ordinary course of business than have not had and would not reasonably
be expected to have, individually or in the aggregate, a Company Material Adverse Effect, and (c)
for liabilities and obligations incurred under this Agreement or in connection with the Merger or
the other transactions contemplated hereby, neither the Company nor any Company Subsidiary has
incurred any liabilities or obligations of any nature, whether or not absolute, accrued or
contingent, and whether due or to become due, other than as have not had and would not reasonably
be expected to have, individually or in the aggregate, a Company Material Adverse Effect.
Section 3.10 Litigation. There is no claim, action, suit, arbitration, investigation by a
Governmental Entity, alternative dispute resolution action or any other judicial or administrative
proceeding, in Law or equity (collectively, a “Legal
16
Proceeding”), pending against (or to
Company’s knowledge, threatened against or naming as a party thereto),
the Company, any Company Subsidiary, or any executive officer or director of the Company or
any Company Subsidiary (in their capacity as such) other than Legal Proceedings that (a) do not
involve an amount in controversy in excess of $500,000, (b) do not seek material injunctive relief,
or (c) have not had and would not reasonably be expected to have, individually or in the aggregate,
a Company Material Adverse Effect. Neither the Company nor any Company Subsidiary is subject to
any outstanding order, writ, injunction, decree or arbitration ruling or judgment of a Governmental
Entity which has had or would reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect or which would reasonably be expected to prevent or materially
delay the performance by the Company of its obligations hereunder or the consummation of the Merger
or any of the other transactions contemplated hereby.
Section 3.11 Employee Benefit Plans; ERISA .
(a) Section 3.11(a) of the Company Disclosure Schedule sets forth a correct and complete list
of all “employee benefit plans” as that term is defined in Section 3(3) of ERISA and all other
benefit plans, programs, agreements or arrangements, including pension, retirement, profit sharing,
deferred compensation, stock option, change in control, retention, equity or equity-based
compensation, stock purchase, employee stock ownership, severance pay, vacation, bonus or other
incentive plans, all medical, vision, dental or other health plans, all life insurance plans, and
all other material employee benefit plans or fringe benefit plans, in each case, whether oral or
written, funded or unfunded, or insured or self-insured, maintained or sponsored by the Company or
any Company Subsidiary, or to which the Company or any Company Subsidiary contributes or is
obligated to contribute thereunder, or with respect to which the Company or any Company Subsidiary
has or may have any liability (contingent or otherwise) (the “Benefit Plans”).
(b) Each Benefit Plan that is intended to be qualified under Section 401(a) of the Code, and
each trust that is related to a Benefit Plan and intended to be tax exempt under Section 501(a) of
the Code, has been determined by the Internal Revenue Service to be qualified under Section 401(a)
of the Code or exempt from taxation under Section 501(a) of the Code and, to the knowledge of the
Company, nothing has occurred that would adversely affect the qualification or tax exemption of any
such Benefit Plan or related trust. Each Benefit Plan (other than a Foreign Benefit Plan) and any
related trust complies in all material respects, and has been maintained and administered in
compliance in all material respects, with ERISA, the Code, and other applicable Laws. Each Benefit
Plan (other than a Foreign Benefit Plan) and any related trust that is required to be funded has
been funded by the Company or any Company Subsidiary in compliance in all material respects with
ERISA, the Code, and other applicable Laws. With respect to each Benefit Plan (other than a
Foreign Benefit Plan), the payments, premiums, contributions, distributions and reimbursements
required to have been made under such Benefit Plan have been made in compliance in all material
respects with such Benefit Plan. There are no suits, claims, proceedings, actions, governmental
audits or
investigations with respect to any Benefit Plan that are pending or, to the knowledge of
17
the Company, threatened (other than routine claims for benefits in the normal course). There has been
no “prohibited transaction” (as defined in Section 406 of ERISA or Section 4975 of the Code) or
breach of fiduciary duty (as determined under ERISA) with respect to any Benefit Plan that could
result in any material liability to the Company or any Company Subsidiary.
(c) No Benefit Plan (i) is a “multiemployer plan” (as defined in Section 3(37) or 4001(a)(3)
of ERISA), (ii) is subject to Part 3 of Subtitle B of Title I of ERISA or Title IV of ERISA or
Section 412 of the Code, (iii) provides for post-retirement or other post-employment welfare
benefits (other than health care continuation coverage as required by Section 4980B of the Code or
ERISA), (iv) is a “multiple employer plan” (as defined in Section 210 of ERISA or Section 413(c) of
the Code), or (v) is a “multiple employer welfare arrangement” (as defined in Section 3(40) of
ERISA).
(d) Neither the Company nor any Company Subsidiary has any plan or obligation to create any
additional Benefit Plan, or to amend or modify any existing Benefit Plan in such a manner as to
materially increase the cost of such Benefit Plan to the Company or any Company Subsidiary.
(e) (i) Neither this Agreement (or the consummation of the Merger) nor any Benefit Plan or
other agreement or contract between the Company or any Company Subsidiary and an employee or other
individual, could reasonably be expected to result in any “excess parachute payment” within the
meaning of Section 280G(b)(1) of the Code; and (ii) except as contemplated under this Agreement,
neither the execution and delivery of this Agreement nor the consummation of the Merger will cause
the acceleration of vesting in, or payment of, any benefits under any Benefit Plan or otherwise
accelerate or increase any liability or obligation under any Benefit Plan.
(f) With respect to the Benefit Plans, to the extent applicable, correct and complete copies
of the following have been delivered or made available to Parent by the Company: (i) all Benefit
Plans (including all amendments and attachments thereto); (ii) written summaries of any Benefit
Plan not in writing, (iii) all related trust documents; (iv) all insurance contracts or other
funding arrangements; (v) the most recent annual report (Form 5500) filed with the Internal Revenue
Service; (vi) the most recent determination letter from the Internal Revenue Service; and (vii) the
most recent summary plan description and any summary of material modification thereto.
(g) To the knowledge of the Company, no payment pursuant to any Benefit Plan, or other
agreement or contract between the Company or a Company Subsidiary and any “service provider” (as
such term is defined in Section 409A of the Code and the Treasury Regulations and Internal Revenue
Service guidance thereunder), would subject any Person to a Tax pursuant to Section 409A of the
Code, whether pursuant to the consummation of the Merger or otherwise.
(h) Section 3.11(h) of the Company Disclosure Schedule lists each benefit plan, program,
agreement or arrangement maintained or sponsored by the Company or any Company Subsidiary with
respect to which the Company or any
18
Company Subsidiary has any material liability or obligation
that is maintained primarily for the benefit of employees of the Company or any Company Subsidiary
who are employed, or individuals who are independent contractors of the Company or any Company
Subsidiary who are working, outside of the United States (each, a “Foreign Benefit Plan”).
To the knowledge of the Company, (i) each Foreign Benefit Plan has been maintained and administered
in compliance in all material respects with its terms, the requirements of any applicable
collective bargaining agreement and with applicable Laws, and (ii) each Foreign Benefit Plan
required to be funded has been funded by the Company or any Company Subsidiary in compliance in all
material respects with its terms, the requirements of any applicable collective bargaining
agreement and with applicable Laws, and no Foreign Benefit Plan has any unfunded or underfunded
liabilities.
(i) There does not exist any Controlled Group Liability that would reasonably be expected to
be a material liability (contingent or otherwise) of the Company or of any of the Company
Subsidiaries following the Closing.
Section 3.12 Taxes.
(a) The Company and each of the Company Subsidiaries has timely filed all material Tax Returns
required to be filed (taking into account any extensions of time within which to file such Tax
Returns), and all such Tax Returns are complete and accurate, except to the extent the failure of
any such Tax Return to be complete and accurate would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect. Except as set forth on
Schedule 3.12(a), the Company and each of the Company Subsidiaries has paid all Taxes shown
to be due on such Tax Returns, or has established an adequate reserve therefor in accordance with
GAAP, subject to such exceptions as would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect.
(b) There currently are no audits, examinations or judicial or other administrative
proceedings currently pending or in progress or, to the knowledge of the Company, threatened with
respect to any Taxes of the Company or any of the Company Subsidiaries, subject to exceptions for
any proceedings that if resolved in a manner unfavorable to the Company or any of the Company
Subsidiaries would not, individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect. Neither the Company nor any of the Company Subsidiaries have waived any
statute of limitations in respect of Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency. To the knowledge of the Company, no Governmental Entity has claimed that
the Company or any of the Company Subsidiaries is or may be subject to taxation in a jurisdiction
where the Company or Company Subsidiary does not file Tax Returns.
(c) There are no material Tax Liens upon any property or assets of the Company or any of the
Company Subsidiaries, except Liens for Taxes not yet delinquent or Taxes being contested in good
faith by appropriate proceedings.
19
(d) All Taxes required to be withheld, collected or deposited by or with respect to the
Company and each of the Company Subsidiaries have been timely withheld, collected or deposited, as
the case may be, and to the extent required by applicable Law, have been paid to the relevant
Governmental Entity, subject to such exceptions as would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect.
(e) Neither the Company nor any of the Company Subsidiaries is responsible for the Taxes of
any other Person (other than the Company or one of the Company Subsidiaries) that would have a
Company Material Adverse Effect. Neither the Company nor any of the Company Subsidiaries is a
party to, is bound by or has any obligation under any Tax sharing, Tax allocation or Tax indemnity
agreement or similar contract or arrangement.
(f) Neither the Company nor any of the Company Subsidiaries (A) has been a party to a “listed
transaction” as defined in Section 1.6011-4 of the Treasury Regulations, or any analogous
transaction under any state, local or foreign Tax Law, or (B) during the five year period ending on
the date hereof, has been a distributing or controlled corporation in a transaction intended to be
governed by Section 355 of the Code.
Section 3.13 Contracts.
(a) Except as filed as exhibits to the Company SEC Documents filed prior to the date hereof,
Section 3.13(a) of the Company Disclosure Schedule sets forth a list of each note, bond, mortgage,
Lien, indenture, lease, license, contract or agreement, or other instrument or obligation to which
the Company or any Company Subsidiary is a party or by which any of them or any of their respective
properties or assets is bound (the “Company Agreements”) which, as of the date hereof:
(i) is a “material contract” (as such term is defined in Item 601(b)(10) of Regulation
S-K under the Securities Act);
(ii) involved the exchange of consideration in excess of $500,000 during the six
months ended September 28, 2007;
(iii) contains any non-compete or exclusivity provisions with respect to any line of
business or geographic area with respect to the Company or any Company Subsidiary, or upon
consummation of the Merger, Parent or its Subsidiaries, or which restricts the conduct of
any line of business by the Company or any Company Subsidiary;
(iv) relates to a partnership, joint venture or similar arrangement, unless immaterial
to the Company and the Company Subsidiaries;
(v) is an employment or consulting contract with any current executive of the Company
or a Company Subsidiary or any member of the Company Board of Directors;
20
(vi) will have increased benefits or accelerated vesting of benefits due to the
consummation of the Merger;
(vii) relates to any pending acquisition or disposition by the Company or any of the
Company Subsidiaries of properties or assets or, to the extent the Company or any Company
Subsidiary has any ongoing, future or contingent obligations, any completed acquisition or
disposition by the Company or any of the Company Subsidiaries, except, in each case, for
acquisitions and dispositions of properties, assets and inventory in the ordinary course of
business;
(viii) is a Company IP Agreement that is material to the business of the Company or
any Company Subsidiary; or
(ix) relates to the borrowing of money or extension of credit, the placing of any
Lien, or the guaranty thereof by the Company or any Company Subsidiary, in each case having
a principal amount of indebtedness in excess of $250,000, other than (A) accounts
receivables and payables and (B) loans to direct or indirect wholly-owned Subsidiaries, in
each case in the ordinary course of business.
(b) Each contract of the type described above in Section 3.13(a), whether or not set forth in
Section 3.13(a) of the Company Disclosure Schedule, is referred to herein as a “Company
Material Contract.” Except as has not had and would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect, (i) each Company Material
Contract is valid and binding on the Company and each Company Subsidiary party thereto and each
other party thereto, as applicable, and in full force and effect (except that (x) such enforcement
may be subject to applicable bankruptcy, insolvency or other similar Laws, now or hereafter in
effect, affecting creditors’ rights generally and (y) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought), and (ii) there is no
event or condition which has occurred or exists, which constitutes or could constitute (with or
without notice, the happening of any event and/or the passage of time) a default or breach under
any Company Material Contract by the Company or any Company Subsidiary or, to the knowledge of the
Company, any other party to any Company Material Contract.
(c) The Company has delivered or made available to Parent or provided to Parent for review,
prior to the execution of this Agreement, true and complete copies of all of the Company Material
Contracts.
(d) Section 3.13(d) of the Company Disclosure Schedule sets forth a list of the Company’s top
15 customers, on a consolidated basis, as of December 31, 2006 and July 31, 2007 (in each case, by
sales to such customers in the 12-month period ending as of such date). As of the date hereof,
neither the Company nor any Company Subsidiary has received any written notice from any such
customer to the effect that any such customer will or intends to stop, decrease the rate of, or
change the terms (whether
21
related to payment, price or otherwise) with respect to buying or
licensing software products or services from the Company or the Company Subsidiaries (whether as a
result of the consummation of the Merger or otherwise), and, to the Company’s knowledge, no such
customer has any such intention.
Section 3.14 Title to Properties; Encumbrances. Section 3.14 of the Company Disclosure Schedule sets
forth the address of each Company Property. The Company and each of the Company Subsidiaries has
good and valid title to, or in the case of the Company Property and leased tangible assets, a valid
leasehold interest in, all of its real properties and tangible assets that are necessary for the
Company and its Subsidiaries to conduct their respective businesses as currently conducted, subject
to no Liens, except for (a) Liens reflected in a consolidated balance sheet as of the December 29,
2006 (“Balance Sheet Date”), (b) Liens consisting of zoning or planning restrictions,
easements, permits and other restrictions or limitations on the use of real property or
irregularities in title thereto, which do not materially impair the value of such properties or the
use of such property by the Company or any of the Company Subsidiaries in the operation of its
respective business, (c) Liens for current Taxes, assessments or governmental charges or levies on
property not yet due and payable and Liens for Taxes that are being contested in good faith by
appropriate proceedings and for which an adequate reserve has been provided on the appropriate
financial statements and (d) Liens which would not materially interfere with the use of such
property or assets by the Company and the Company Subsidiaries (the foregoing Liens (a)-(d),
“Permitted Liens”). The Company has delivered or made available to Parent or Merger Sub a
true and complete copy of each lease document (including all amendments, extensions, renewals,
guaranties and other agreements with respect thereto) relating to each Company Property. The
Company and each of the Company Subsidiaries are in compliance with the terms of all leases
relating to the Company Property to which they are a party, except such compliance which has not
had or would not reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect. All such leases relating to the Company Property are in full force and
effect, and the Company and each of the Company Subsidiaries enjoys peaceful and undisturbed
possession under all such leases. Neither the Company nor any of the Company Subsidiaries owns any
real property.
Section 3.15 Intellectual Property.
(a) Section 3.15(a) of the Company Disclosure Schedule contains a complete and accurate list,
as of the date hereof, of the following Owned Company IP: (i) all Company Registered IP; (ii) all
unregistered Trademarks used in connection with Company Products that are material to the Company;
and (iii) software that is material to the Company; in each case listing, as applicable, (A) the
name of the applicant or registrant and current owner, (B) the jurisdiction where the application
or registration is filed, and (C) the application or registration number. The Company and each of
the Company Subsidiaries has in a timely manner made all filings, payments, and recordations
required to obtain and maintain ownership of the applicable Intellectual Property Rights in each
item of Company Registered IP, except for such matters which have not had or would not reasonably
be expected to have, individually or in the aggregate, a Company Material Adverse Effect.
22
(b) Neither the Company nor any Company Subsidiary has granted any exclusive license under or
to any material Company IP. To the knowledge of the Company, there are no pending disputes
regarding any agreement (1) under which the Company or any Company Subsidiary uses or has the right
to use any Licensed Company IP or (2) under which the Company or any Company Subsidiary has
licensed or otherwise permitted others the right to use any Company IP or Company Products (such
agreements described in clauses (1) and (2) above, the “Company IP Agreements”).
(c) To the knowledge of the Company, the Company and the Company Subsidiaries own or otherwise
have a license to use all Intellectual Property Rights used in the conduct of the business of, or
necessary to conduct the business of, the Company and the Company Subsidiaries as conducted prior
to the Closing Date except such Intellectual Property Rights that, if not possessed by the Company
or any Company Subsidiary, would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect.
(d) The Company or a Company Subsidiary exclusively owns all right, title and interest in the
Owned Company IP, free and clear of all Liens, other than Permitted Liens and the Company IP
Agreements. Without limiting the foregoing, each Person who is or was an employee or contractor of
Company or any Company Subsidiary and who is or was involved in the creation or development of any
Owned Company IP has executed a valid agreement containing an assignment of all Intellectual
Property Rights in such employee’s or contractor’s contribution to such Owned Company IP.
(e) The Company and each Company Subsidiary has taken reasonable steps to protect and preserve
the confidentiality of the Trade Secrets of the Company or of any Company Subsidiary, and to the
knowledge of the Company, there are no unauthorized uses, disclosures or misappropriation of any
such Trade Secrets by any Person. To the Company’s knowledge, all use and disclosure by the
Company or the Company Subsidiaries of Trade Secrets owned by another Person has been pursuant to
the terms of a written agreement with such Person permitting such use or was otherwise lawful. The
Company and the Company Subsidiaries have executed confidentiality agreements with all employees
and contractors to whom the Company or any Company
Subsidiary has granted access to Trade Secrets, which agreements prohibit such employees and
contractors from disclosing such Trade Secrets to third parties or using such Trade Secrets for any
purpose other than for the benefit of the Company or a Company Subsidiary.
(f) To the knowledge of the Company, none of the Company Products or operation of the
Company’s or a Company Subsidiary’s business has infringed upon or misappropriated, or is
infringing upon or misappropriating, the Intellectual Property Rights of any third party, except
for any such infringement that has not had or would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect. To the knowledge of the
Company as of the date hereof, no Person or any of such Person’s products or services or other
operation of such Person’s business is infringing upon or otherwise violating any Owned Company IP
in any material respect.
23
(g) No action, claim or proceeding alleging infringement, misappropriation, or other violation
of any Intellectual Property Right of another Person is pending or, to the knowledge of the
Company, has been threatened against the Company or any Company Subsidiary. Neither the Company
nor any Company Subsidiary has received any written notice relating to any actual, alleged, or
suspected infringement, misappropriation, or violation of any Intellectual Property Right of
another Person by the Company or any Company Subsidiary (including any demands or unsolicited
offers to license any Intellectual Property from any Person). The Company and the Company
Subsidiaries are not subject to any order of any Governmental Entity that restricts or impairs the
use of any Company IP.
(h) There are no proceedings or actions pending before any court or Governmental Entity
(including the United States Patent and Trademark Office or any equivalent authority anywhere else
in the world) challenging the ownership, validity or enforceability of the Company Registered IP
and, to the knowledge of the Company, no such proceedings or actions have been threatened against
the Company or any Company Subsidiary, in each case except such proceedings or actions that, if
resolved against the Company or its Subsidiaries, would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect. To the knowledge of the
Company, the Company Registered IP is valid and enforceable.
(i) The execution and delivery of this Agreement and the consummation of the Merger and the
other transactions contemplated hereby will not (with or without notice or the lapse of time, or
both) automatically result in (i) the Company or its Subsidiaries granting to any third party any
rights or licenses to any Intellectual Property or Intellectual Property Rights, (ii) any right of
termination, amendment, modification, cancellation or acceleration under any Company IP Agreement,
(iii) the loss of or the imposition of any Lien on any Owned Company IP, (iv) the release,
disclosure, or delivery of any Owned Company IP by or to any escrow agent or other Person, or
(v) after the Merger, Parent or any of its Subsidiaries being required, under the terms of any
agreement to which the Company or any of its Subsidiaries is a party, to grant any Person any
rights or licenses to any of Parent’s or any
of its Subsidiaries’ Intellectual Property or Intellectual Property Rights, except, in each of
the clauses (i)-(v), for any such matters that has not had or would not reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect.
(j) To the knowledge of the Company, no software incorporated in any Company Product is
subject to any obligation or condition under any “open source” license such as the GNU Public
License, Lesser GNU Public License, or Mozilla Public License that (i) could require or condition
the use or distribution of any software contained in any Company Product on the disclosure,
licensing, or distribution of any source code for any portion of Owned Company IP, or (ii) could
otherwise impose any limitation, restriction, or condition on the right or ability of the Company
or its Subsidiaries to use or distribute any software contained in any Company Product.
(k) None of the source code used by Company or any of its Subsidiaries and material to the
conduct of the business of the Company, including
24
software contained in any of the Company
Products, (collectively, “Company Source Code”), has been disclosed by the Company or any
of its Subsidiaries, except to its employees or advisers or pursuant to non-disclosure agreements,
or, to the knowledge of the Company, by any other person except as authorized by the Company under
a non-disclosure agreement. Neither the Company nor any of its Subsidiaries has provided or
licensed, or has any duty or obligation (whether present, contingent, or otherwise) to provide or
license, Company Source Code to any escrow agent or other third party. No event has occurred, and
no circumstance or condition exists, that (with or without notice or lapse of time) will, or could
reasonably be expected to, result in the provision, license, or disclosure of any Company Source
Code to any third party.
(l) The Company’s and its Subsidiaries’ collection and dissemination of personal information
in connection with their business has been conducted in all material respects in accordance with
applicable privacy policies published or otherwise adopted by the Company and its Subsidiary and
any applicable Laws.
(m) The Company and its Subsidiaries own, lease or license Information Technology that is
adequate for the operations of the Company and its Subsidiaries’ businesses except to the extent
the failure to own, lease or license such Information Technology would not have, or reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse Effect, and, in the
last twelve (12) months, there have been no material failures, breakdowns, breaches, outages or
unavailability of such Information Technology, or of the websites through which the Company and its
Subsidiaries conduct their respective businesses. The Company and its Subsidiaries have disaster
recovery plans and test such plans no less frequently than annually. “Information
Technology” means computer software and hardware, networking equipment, and other information
technology owned or used by the Company or any of its Subsidiaries.
(n) Except as has not had and would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect, the Company
Products (i) meet all of the warranty and performance standards set forth in the customer
contracts of the Company and its Subsidiaries and neither the Company nor any of its Subsidiaries
is or has been obligated to make any payments or grant any material offsets as a result of the
failure to meet such standards, including service level credits and milestone default credits; and
(ii) are capable of being scaled to meet all of the performance standards set forth in the customer
contracts of the Company and each Subsidiary, including increased volume requirements.
Section 3.16 Labor Matters
(a) There is no collective bargaining or other labor union or foreign work council or contract
labor contract applicable to Persons employed by the Company or any of the Company Subsidiaries to
which the Company or any of the Company Subsidiaries is bound, whether as a party or otherwise
(each a “Company Collective Bargaining Agreement”). No Company Collective Bargaining
Agreement is being negotiated by the Company or any of the Company Subsidiaries. There is no
strike or
25
work stoppage against the Company or any of the Company Subsidiaries pending or, to the
knowledge of the Company, threatened that may interfere with the respective business activities of
the Company or any Company Subsidiary. To the knowledge of the Company, none of the Company or any
Company Subsidiary has committed any material unfair labor practice in connection with the
operation of the respective businesses of the Company and the Company Subsidiaries.
(b) The Company and its Subsidiaries have complied and are in compliance in all respects with
applicable Laws, rules and regulations with respect to employment, contract labor, employment
practices, and terms, conditions and classification of employment or contract labor (including
applicable Laws, rules and regulations regarding wage and hour requirements, immigration status,
discrimination in employment, employee health and safety, and the Workers’ Adjustment and
Retraining Notification Act), except such non-compliance that has not had and would not reasonably
be expected to have, individually or in the aggregate, a Company Material Adverse Effect.
(c) To the knowledge of the Company, no current employee or officer of the Company or any of
its Subsidiaries has expressed his intent to terminate his employment relationship with such entity
as a result of the consummation of the transactions contemplated hereby.
Section 3.17 Compliance with Laws; Permits.
(a) The Company and each Company Subsidiary have complied and are in compliance with all Laws,
rules and regulations, ordinances, judgments, decrees, orders, writs and injunctions of all
federal, state, local and foreign governments and agencies thereof, which affect the business,
properties or assets of the Company or any Company Subsidiary (except such non-compliance that has
not had and would not reasonably be expected to have, individually or in the aggregate, a Company
Material
Adverse Effect), and no notice, charge or assertion has been received by the Company or any
Company Subsidiary or, to the Company’s knowledge, threatened against the Company or any Company
Subsidiary alleging any material violation of any of the foregoing. Notwithstanding anything to
the contrary in this Section 3.17(a), the provisions of this Section 3.17(a) shall not apply to
matters discussed in Sections 3.11, 3.12 and 3.21.
(b) (i) The Company and each Company Subsidiary is in possession of all material
authorizations, licenses, permits, certificates, approvals, registrations, qualifications, consents
and clearances of any Governmental Entity necessary for the Company and each Company Subsidiary to
own, lease and operate its properties or to carry on their respective businesses in the manner
described in the Company SEC Documents filed prior to the date hereof and as it is being currently
conducted, except for such permits the failure of which to have has not had and would not
reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect
(the “Company Permits”), (ii) all such Company Permits are valid, and in full force and
effect, and (iii) there has occurred no violation of, default (with or without notice or lapse of
time or both) under or event giving to others any right of revocation, non-renewal, material
adverse modification or cancellation of, with or without notice or lapse of time or both, any such
Company Permit, nor would any such revocation, non-renewal,
26
material adverse modification or cancellation of, with or without notice or lapse of time or
both, any such Company Permit, nor would any such revocation, non-renewal, material adverse
modification or cancellation result from the consummation of the transactions contemplated hereby.
(c) Neither Company nor any Company Subsidiary (including any of their respective officers or
directors) has (i) used any funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity, or (ii) made any unlawful payment to foreign or
domestic government officials or employees or to foreign or domestic political parties or campaigns
or violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as
amended, or any rules or regulations thereunder.
Section 3.18 Information in the Proxy Statement. The Proxy Statement, (and any amendment thereof
or supplement thereto), at the date mailed to the Company’s stockholders and at the time of the
Special Meeting, will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the statements therein,
in light of the circumstances under which they are made, not misleading, except that no
representation or warranty is made by the Company with respect to statements made therein based on
information supplied by Parent or Merger Sub. At the time of its distribution and at the Special
Meeting, the Proxy Statement will comply as to form in all material respects with the provisions of
the Exchange Act and the rules and regulations thereunder.
Section 3.19 Opinion of Financial Advisor. The Company has received the written opinion of Xxxxxxx
Xxxxx & Company, L.L.C. (the “Company Financial Advisor”), to the effect that, as of the
date hereof, the Merger Consideration (other than Shares to be cancelled in accordance with Section
2.1(b) and other than Dissenting Shares) is fair, from a financial point of view, to the holders of
Shares, and such opinion has not been modified or withdrawn. A signed true and complete copy of
such opinion has been or will be provided promptly provided to Parent.
Section 3.20 Insurance. The Company and its Subsidiaries have all material policies of insurance
covering the Company, its Subsidiaries, or any of their respective employees, properties or assets,
including policies of property, fire, workers’ compensation, products liability, directors’ and
officers’ liability, and other casualty and liability insurance, and such policies are in a form
and amount which the Company believes is adequate for the operation of its business. All such
insurance policies are in full effect, no written notice of cancellation has been received by the
Company under such policies, and there is no existing default or event which, with the giving of
notice, lapse of time, or both, has not had and would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect and neither the Company nor any
Company Subsidiary has taken any action or failed to take any action which, with notice or the
lapse of time, would constitute such a material breach or default under, or permit termination or
modification of, any of such insurance policies. Neither the Company nor any Company Subsidiary
has any self-insurance or co-insurance programs.
27
Section 3.21 Environmental Laws and Regulations. Except as has not had and would not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse Effect, to Company’s
knowledge (a) Hazardous Materials have not been generated, used, treated or stored on, transported
to or from or Released or disposed of on, any Company Property, (b) the Company and each of the
Company Subsidiaries are and have been in compliance with all applicable Environmental Laws and the
requirements of any permits issued under such Environmental Laws with respect to any Company
Property, (c) there are no past, pending or threatened Environmental Claims against the Company or
any of the Company Subsidiaries or any Company Property and (d) there are no facts or
circumstances, conditions or occurrences regarding the business, assets or operations of the
Company or any Company Property that could reasonably be anticipated to form the basis of an
Environmental Claim against the Company or any of the Company Subsidiaries or any Company Property.
The Company has furnished to Parent all material environmental reports and other material
environmental, health and safety documentation prepared by or on behalf of the Company or any
Company Subsidiary with respect to the current and former properties and operations of the Company
and the Company Subsidiaries.
Section 3.22 Related Party Transactions. Except as set forth in the Company SEC Documents or
compensation or other employment or Company Board of Directors arrangements entered into the
ordinary course of business, there are no transactions, agreements, arrangement or understandings
between the Company or any of Company Subsidiaries, on the one hand, and any affiliate (including
any officer or director, or any person beneficially owning 5% or more of the Shares) thereof (each,
a “Related Person”), but not including any wholly owned Subsidiary of the Company, on the
other hand. No Related Person has any material interest in any material property owned by the
Company or any of the Company Subsidiaries.
Section 3.23 Brokers; Expenses. No broker, investment banker, financial advisor or other Person,
other than the Company Financial Advisor, 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 Merger or the other transactions contemplated hereby based upon
arrangements made by or on behalf of Company or the Company Subsidiaries.
Section 3.24 Takeover Statutes; Rights Agreement. Assuming the accuracy of the representation and
warranty contained in Section 4.6, the Company Board of Directors and the Company have taken all
action necessary to render inapplicable to this Agreement, the Merger and the other transactions
contemplated hereby (a) each and every state or federal takeover statute or regulation, including
the restrictions on “business combinations” set forth in Section 203 of the DGCL and any “control
share acquisition”, “fair price” or similar statute or regulation applicable to the Company with
respect to this Agreement, the Merger or any other transaction contemplated hereby (collectively,
the “Takeover Laws”), and (b) any anti-takeover provision in the Company Governing
Documents. The Company and the Company Board of Directors have taken all action required to
(i) render the Rights Agreement, including the rights with respect to the Junior Preferred Stock
provided thereunder (the “Rights”) inapplicable to this
28
Agreement, the Merger and the other transactions contemplated hereby, and (ii) cause the
Rights to expire immediately prior to the Effective Time without any payment being made in respect
thereof. The Company has delivered to Parent a complete and correct copy of the Rights Agreement,
as amended to the date of this Agreement.
Section 3.25 No Other Representations or Warranties. Except for the representations and warranties
set forth in this Article III, neither the Company nor the Company Subsidiaries nor any other
Person makes any express or implied representation or warranty on behalf of the Company or any
Company Subsidiary, and the Company disclaims any such representation or warranty, whether by the
Company or any Company Subsidiary or any of their respective Representatives.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND MERGER SUB
OF PARENT AND MERGER SUB
Except as set forth in the corresponding section or subsection of the Parent’s disclosure
schedule delivered to the Company immediately prior to the execution of this Agreement (the
“Parent Disclosure Schedule”), Parent and Merger Sub represent and warrant to the Company
as set forth in this Article IV. Each disclosure set forth in the Parent Disclosure Schedule shall
qualify or modify each of the representations and warranties set forth in this Article IV to the
extent the applicability of the disclosure to such other section is reasonably apparent from the
text of the disclosure made.
Section 4.1 Organization. Each of Parent and Merger Sub is a corporation or other legal entity
duly organized, validly existing and in good standing (with respect to jurisdictions which
recognize such concept) under the Laws of the jurisdiction in which it is organized and has the
requisite corporate or other power, as the case may be, and authority to conduct its business as
now being conducted, except, for those jurisdictions where the failure to be so organized, existing
or in good standing, individually or in the aggregate, would not impair in any material respect the
ability of each of Parent and Merger Sub, as the case may be, to perform its obligations under this
Agreement or prevent or materially delay the consummation of the Merger or the other transactions
contemplated hereby.
Section 4.2 Authorization; Validity of Agreement; Necessary Action. Each of Parent and Merger Sub
has all necessary corporate power and authority to execute and deliver this Agreement and to
consummate the Merger and the other transaction contemplated hereby. The execution, delivery and
performance by Parent and Merger Sub of this Agreement and the consummation by them of the Merger
and the other transactions contemplated hereby have been duly authorized by all necessary corporate
action on the part of Parent and Merger Sub and, promptly following execution hereof, will be
adopted by the sole stockholder of Merger Sub. This Agreement has been duly executed and delivered
by Parent and Merger Sub and, assuming due and valid authorization, execution and delivery hereof
by the Company, is the valid and binding
29
obligation of each of Parent and Merger Sub enforceable against each of them in accordance with its terms, except that (a)
such enforcement may be subject to applicable bankruptcy, insolvency or other similar Laws, now or
hereafter in effect, affecting creditors’ rights generally and (b) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to equitable defenses
and to the discretion of the court before which any proceeding therefor may be brought.
Section 4.3 Consents and Approvals; No Violations. None of the execution, delivery or performance
of this Agreement by Parent and Merger Sub, the consummation by Parent and Merger Sub of the Merger
and the other transactions contemplated hereby or compliance by Parent or Merger Sub with any of
the provisions of this Agreement will (a) conflict with or result in any breach of any provision of
the organizational documents of Parent or Merger Sub, (b) require any filing by Parent or Merger
Sub with, or the permit, authorization, consent or approval of, any Governmental Entity (except for
(i) compliance with any applicable requirements of the Exchange Act, (ii) any filings as may be
required under the DGCL in connection with the Merger, (iii) filings, permits, authorizations,
consents and approvals as may be required under the HSR Act or any other applicable Foreign
Antitrust Approvals, or (iv) the filing with the SEC of (x) the Proxy Statement and (y) such
reports under Section 13(a) of the Exchange Act as may be required in connection with this
Agreement, the Merger and the other transactions contemplated hereby), or (c) violate any order,
writ, injunction, decree, statute, rule or regulation applicable to Parent or Merger Sub, any of
their Subsidiaries, or any of their properties or assets, except in the case of clause (b) or (c)
such violations, breaches or defaults which would not, individually or in the aggregate, impair in
any material respect the ability of each Parent or Merger Sub to perform its obligations under this
Agreement, as the case may be, or prevent the consummation of the Merger or the other transactions
contemplated hereby.
Section 4.4 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 of a Governmental Entity
pending or threatened against Parent or any of its Subsidiaries, and none of Parent or any of its
Subsidiaries is subject to any outstanding order, writ, injunction or decree, in each case, which
would, individually or in the aggregate, impair in any material respect the ability of each of
Parent and Merger Sub to perform its obligations under this Agreement, as the case may be, or
prevent the performance by Parent or Merger Sub of their obligations hereunder or the consummation
of the Merger or any other transaction contemplated hereby.
Section 4.5 Information in the Proxy Statement. None of the information supplied by Parent or
Merger Sub expressly for inclusion or incorporation by reference in the Proxy Statement (or any
amendment thereof or supplement thereto) will, at the date mailed to stockholders of the Company or
at the time of the Special Meeting, 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
made therein, in light of the circumstances under which they are made, not misleading.
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Section 4.6 Ownership of Company Capital Stock. Neither Parent nor Merger 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).
Section 4.7 Sufficient Funds. Parent has, and Parent will have at the Effective Time, the funds
necessary to consummate the Merger and to pay all fees and expenses incurred by Parent, Merger Sub
and the Company in connection with this Agreement, the Merger and the other transactions
contemplated hereby.
Section 4.8 Ownership and Operations of Merger Sub. Parent owns beneficially and of record all of
the outstanding capital stock of Merger Sub. Merger Sub was formed solely for the purpose of
engaging in the Merger and the other transactions contemplated hereby and has engaged in no other
business activities and has conducted its operations only as contemplated hereby.
Section 4.9 Brokers and Other Advisors. No broker, investment banker, financial advisor, agent or
other Person is entitled to any broker’s, finder’s, financial advisor’s, agent’s or other similar
fee or commission in connection with the Merger or the other transactions contemplated hereby based
upon arrangements made by or on behalf of Parent or any of its Subsidiaries.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
Section 5.1 Interim Operations of the Company. Except as set forth in Section 5.1 of the Company
Disclosure Schedule, as required pursuant to this Agreement, from the date hereof until the earlier
of (A) the valid termination of this Agreement in accordance with Article VIII hereof, and (B) the
Effective Time, the Company shall, and shall cause the Company Subsidiaries to, (i) conduct their
businesses in all material respects in the ordinary course consistent with past practice, (ii) use
their reasonable best efforts to preserve intact their present business organizations, (iii) use
their reasonable best efforts to maintain satisfactory relations with and keep available the
services of their current officers and other key employees, and (iv) use their reasonable best
efforts to preserve existing relationships with material customers, lenders, suppliers,
distributors and others having material business relationships with the Company and the Company
Subsidiaries. Without limiting the generality of the foregoing, except as set forth in Section 5.1
of the Company Disclosure Schedule, as expressly required pursuant to this Agreement or as
consented to in writing by Parent (which consent shall not be unreasonably withheld), from the date
hereof until the earlier of (x) the valid termination of this Agreement in accordance with Article
VIII hereto, and (y) the Effective Time, the Company shall not, nor shall it permit any Company
Subsidiary to:
(a) amend or modify the Company Governing Documents, the Rights Agreement or equivalent
documents of any Company Subsidiary or amend or modify the terms of any outstanding security of the
Company or any Company Subsidiary;
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(b) split, combine, subdivide or reclassify any shares of capital stock of the Company or any
Company Subsidiary, other than any such transaction by a Company Subsidiary that remains a Company
Subsidiary after consummation of such transaction;
(c) declare, set aside or pay any dividend or other distribution payable in cash, stock or
property (or any combination thereof) with respect to the Company’s capital stock;
(d) redeem, purchase or otherwise acquire, or offer to redeem, purchase or otherwise acquire,
any Equity Interests, except (i) repurchases or forfeitures of unvested restricted Shares subject
to restricted stock awards or stock bonus awards granted under the Company Stock Plans in
accordance with the terms and conditions of such awards, (ii) repurchases of unvested Shares in
connection with the withholding of Shares upon the exercise of Company Options or the vesting of
restricted Shares subject to restricted stock awards or stock bonus awards granted under the
Company Stock Plans, and (iii) repurchases of Shares from employees of the Company or a Company
Subsidiary in relation to the loan agreements with such employees that are set forth in Section
5.1(d)(iii) of the Company Disclosure Schedule;
(e) issue, sell, pledge, deliver, transfer, dispose of or encumber any shares of, or
securities convertible into or exchangeable for, or grant any Company Options, restricted Shares
subject to restricted stock awards or stock bonus awards or other stock awards under the Company
Stock Plans or warrants, calls, commitments or rights of any kind to acquire, any shares of capital
stock of any class, or grant to any Person any right the value of which is based on the value of
Shares or other capital stock, other than (i) the issuance of Shares pursuant to the exercise of
the Company Options outstanding as of the date hereof and disclosed in Section 3.2(b) of the
Company Disclosure Schedule or granted after the date hereof in compliance with the terms of the
succeeding clause (ii) of this Section 5.1(e), and (ii) the grant of Company Options to newly hired
or promoted employees of the Company or any Company Subsidiary after the date hereof in the
ordinary course of business up to a maximum of 100,000 Shares, provided that the exercise price for
any such grants shall be the fair market value of the Shares underlying such Company Options on the
date of the grant;
(f) acquire (whether pursuant to merger, stock or asset purchase or otherwise) in one
transaction or any series of related transactions (i) except in the ordinary course of business
consistent with past practice, any assets having a fair market value in excess of $1,000,000 or
(ii) any equity interests in any Person or any business or division of any Person or all or
substantially all of the assets of any Person (or business or division thereof);
(g) transfer, lease, license, sell, mortgage, pledge, dispose of, or encumber any of its
material assets, other than (i) sales of inventory and licenses of software or other Intellectual
Property, in each case, to customers in the ordinary course of business consistent with past
practice, and (ii) dispositions of assets no longer used in the operation of the business;
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(h) (i) incur or assume any long-term or short-term indebtedness except short-term payables
incurred in the ordinary course of business consistent with past practice; (ii) assume, guarantee,
endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for
the obligations of any other Person, other than obligations of wholly owned Company Subsidiaries in
the ordinary course of business consistent with past practice; or (iii) make any loans, advances or
capital contributions to, or investments in, any other Person, other than loans, advances or
capital contributions to, or investments in, wholly owned Company Subsidiaries made in the ordinary
course of business consistent with past practice;
(i) other than as required by applicable Law or the terms of any agreement or other contract
in effect on the date hereof, make any change in, or accelerate the vesting of, the compensation or
benefits payable or to become payable to, or grant any severance or termination pay to, any of its
officers, directors, employees, agents or consultants or enter into or amend any employment,
consulting, severance, retention, change in control, termination pay, collective bargaining or
other similar agreement or, except as permitted under Section 5.1(e)(ii), any equity based
compensation, pension, deferred compensation, welfare benefits or other employee benefit plan or
arrangement, or make any loans to any of its officers, directors, employees, affiliates or agents
or consultants or make any change in its existing borrowing or lending arrangements for or on
behalf of any of such Persons pursuant to a Benefit Plan or otherwise; except (i) as required by
and pursuant to previously existing contractual arrangements or policies of the Company, (ii)
pursuant to employment agreements that do not provide for any compensation or severance related to
or as a result of a change in control which (x) are entered into in the ordinary course of business
with a Person who would hold a title junior to Vice President of the Company after entry into such
employment agreement and who is hired or promoted by the Company or a Company Subsidiary after the
date hereof in the ordinary course of business, (y) provide for severance benefits which are no
more favorable than the severance benefits provided under the Company’s current severance policy
described in Section 6.8 of the Company Disclosure Schedule and (z) in the event the Person
entering such employment agreement is replacing an existing officer, director, employee, agent or
consultant of the Company or a Company Subsidiary, provide for severance benefits which do not
exceed the severance benefits that were applicable to the predecessor of such Person, or (iii) to
the extent necessary to comply with, or satisfy an exemption from, Section 409A of the Code without
increasing the benefits provided to any Person.
(j) incur any capital expenditures or any obligations or liabilities in respect thereof in
excess of $1,000,000, in the aggregate, except those contemplated in the capital expenditures
budgets for the Company and the Company Subsidiaries previously made available to Parent;
(k) enter into any agreement or arrangement that limits or otherwise restricts the Company,
any Company Subsidiary, or upon completion of the Merger, Parent or its Subsidiaries or any
successor thereto from engaging or competing in any line of business or in any location;
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(l) change any of the accounting methods used by it materially affecting its assets,
liabilities or business, except for such changes required by GAAP or Regulation S-X promulgated
under the Exchange Act;
(m) adopt a plan of complete or partial liquidation, dissolution, restructuring,
recapitalization or other reorganization of the Company (other than the Merger);
(n) make or change any election, change any annual accounting period, adopt or change any
method of accounting, file any amended Tax Return, enter into any closing agreement, settle any
claim or assessment, surrender any right to claim a refund, offset or other reduction in liability,
or consent to any extension or waiver of the limitations period applicable to any claim or
assessment, in each case with respect to Taxes;
(o) enter into any new line of business outside of its existing business segments that is
material to the Company and the Company Subsidiaries, taken as a whole;
(p) pay, discharge, settle or satisfy any material claims, liabilities or obligations
(absolute, accrued, contingent or otherwise), other than (i) performance of contractual obligations
in accordance with their terms, (ii) payment, discharge, settlement or satisfaction thereof in the
ordinary course of business, or (iii) settlement or satisfaction of outstanding claims or
litigation for less than $500,000 in the aggregate;
(q) fail to keep in force insurance policies or replacement or revised provisions regarding
insurance coverage with respect to the assets, operations and activities of the Company and the
Company Subsidiaries as currently in effect;
(r) (i) modify, amend, terminate, cancel or extend any Company Material Contract or (ii) enter
into any contract that if in effect on the date hereof would be a Company Material Contract,
except, in either case, in the ordinary course of business consistent with past practice; and
(s) enter into any written agreement, contract, commitment or arrangement to do any of the
foregoing, or authorize in writing any of the foregoing.
Section 5.2 No Solicitation.
(a) Subject to Sections 5.2(b), 5.2(d) and 5.2(e):
(i) The Company shall not, and shall cause its Subsidiaries and Representatives not
to, directly or indirectly, from the date hereof until the Effective Time, approve or
recommend, or publicly propose to approve or recommend, an Acquisition Proposal, or effect
a Company Change in Recommendation, or enter into any merger agreement, letter of intent,
agreement in principle, purchase agreement, option agreement or other similar agreement
relating to an Acquisition Proposal.
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(ii) The Company and its Subsidiaries shall not, and shall cause their Representatives
to not, directly or indirectly, from the date hereof until the Effective Time, initiate,
solicit or knowingly encourage (including by way of providing non-public information) the
submission of any inquiries, proposals or offers that constitute or may reasonably be
expected to lead to, any Acquisition Proposal, or engage in any discussions or negotiations
with respect thereto, or otherwise cooperate with or assist or participate in, or knowingly
facilitate any such inquiries, proposals, offers, discussions or negotiations (including by
way of providing non-public information and by exempting any Person from any applicable
Takeover Laws or the Rights Agreement).
(iii) Upon the date hereof, the Company shall immediately cease and cause to be
terminated any solicitation, encouragement, discussion or negotiation with any Person
conducted theretofore by the Company, its Subsidiaries or any of their respective
Representatives with respect to any actual or potential Acquisition Proposal and, as soon
as reasonably practicable after the date hereof, request, and use its reasonable best
efforts to cause, the return or destruction of all confidential information provided by or
on behalf of the Company or any of its Subsidiaries to such Person.
(b) Notwithstanding anything to the contrary contained in Section 5.2(a), if at any time
following the date of this Agreement and prior to obtaining the Stockholder Approval, (i) the
Company has received a written Acquisition Proposal from a third party that the Company Board of
Directors determines in good faith to be bona fide, (ii) the Company has not breached Section
5.2(a), (iii) the Company Board of Directors determines in good faith, after consultation with its
financial advisors and outside counsel, that such Acquisition Proposal constitutes or could
reasonably be expected to result in a Superior Proposal, and (iv) the Company Board of Directors
determines in good faith, after consultation with outside counsel, that the failure to take such
action would be inconsistent with its fiduciary duties under applicable Law, then the Company may
(A) furnish information with respect to the Company and its Subsidiaries to the Person making such
Acquisition Proposal and (B) engage in discussions or negotiations with the Person making such
Acquisition Proposal regarding such Acquisition Proposal; provided that the Company (x)
will not, and will not allow its Subsidiaries or its or their Representatives to, disclose any
non-public information to such Person without first entering into an Acceptable Confidentiality
Agreement and (y) will provide to Parent any material non-public information concerning the Company
or its Subsidiaries provided to such other Person which was not previously provided to Parent.
(c) From and after the date hereof, the Company shall promptly (and in any event within 48
hours) notify Parent in the event that the Company or any of its Subsidiaries or Representatives
receives: (i) any Acquisition Proposal or indication by any Person that it is considering making an
Acquisition Proposal or proposals or offers with respect to an Acquisition Proposal, (ii) any
request for non-public information relating to the Company or any of its Subsidiaries other than
requests for information in the ordinary course of business and unrelated to an Acquisition
Proposal, or (iii) any
35
inquiry or request for discussions or negotiations regarding any Acquisition Proposal. The
Company shall promptly (and in any event within 48 hours) notify Parent of the identity of such
Person and provide Parent with the material terms of such Acquisition Proposal, indication, inquiry
or request. The Company shall keep Parent reasonably informed (orally and in writing) of the status
of any such Acquisition Proposal, indication, inquiry or request (including the material terms and
conditions thereof and of any modification thereto). Without limiting the foregoing, from and after
the date hereof, the Company shall promptly (and in any event within 48 hours) notify Parent orally
and in writing if it determines to begin providing information or to engage in discussions or
negotiations concerning an Acquisition Proposal pursuant to Section 5.2(b). The Company agrees
that it shall not, and shall cause the Company Subsidiaries not to, enter into any confidentiality
agreement or other agreement with any Person subsequent to the date of this Agreement which
prohibits the Company from providing the foregoing information to Parent. Subject to the proviso
set forth below, the Company agrees that neither it nor any of the Company Subsidiaries shall
terminate, waive, amend or modify any provision of an existing confidentiality or standstill
agreement or Acceptable Confidentiality Agreement to which the Company or any Company Subsidiary is
or becomes a party; provided, however, that, (i) at any time prior to obtaining the
Stockholder Approval in the case of any Person that is not an Interested Person or an affiliate or
Representative of an Interested Person or (ii) during the period from the date hereof until the
date that is 30 days after the date hereof in the case of any Interested Person or affiliate or
Representative of any Interested Person, the Company and any Company Subsidiary may waive, amend or
modify any such agreement to permit the other party to such agreement to convey confidentially an
Acquisition Proposal to the Company (subject to Section 5.2(a)(ii)) and otherwise permit such party
and the Company to undertake the activities permitted by Section 5.2(b); provided,
further, if any such waiver, amendment or modification of any such agreement results in
such agreement having more favorable terms than the terms of the Confidentiality Agreement, then
the provisions of the Confidentiality Agreement shall automatically, and without any further action
of the parties, be waived, amended or modified, as the case may be, so that the applicable terms of
the Confidentiality Agreement are consistent with the more favorable terms of such agreement. The
Company shall promptly (and in any event within 48 hours) notify Parent of the occurrence and
material terms of any such waiver, amendment or modification and provide Parent with a copy of such
agreement as so amended or modified.
(d) Notwithstanding anything in Section 5.2(a)(i) to the contrary, at any time prior to
obtaining the Stockholder Approval, (i) if an Intervening Event has occurred or a bona fide written
Acquisition Proposal, which did not result from a breach of this Section 5.2, received by the
Company constitutes a Superior Proposal (after giving effect to all adjustments which may be
offered by Parent pursuant to clause (B) below), and the Company Board of Directors concludes in
good faith, after consultation with outside counsel and its financial advisors, that it is required
to do so in order to comply with the fiduciary duties of the Company Board of Directors under
applicable Law, then the Company Board of Directors may withdraw, modify or qualify, or propose
publicly to withdraw, modify or qualify, in a manner adverse to Parent or Merger Sub, the Company
Recommendation (a “Company Change in Recommendation”) and/or (ii) if a bona fide
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written Acquisition Proposal, which did not result from a breach of this Section 5.2, received
by the Company constitutes a Superior Proposal (after giving effect to all adjustments which may be
offered by Parent pursuant to clause (B) below), and the Company Board of Directors concludes in
good faith, after consultation with outside counsel and its financial advisors, that failing to
take such action would be inconsistent with the fiduciary duties of the Company Board of Directors
under applicable Law, the Company may terminate this Agreement to enter into a definitive agreement
with respect to such Superior Proposal; provided, however, that the Company shall
not terminate this Agreement pursuant to the foregoing clause (ii), and any purported termination
pursuant to the foregoing clause (ii) shall be void and of no force or effect, unless in advance of
or concurrently with such termination the Company (1) pays the Termination Fee, as required by
Section 8.2(b), and (2) simultaneously with such termination enters into an acquisition agreement,
merger agreement or similar definitive agreement (the “Alternative Acquisition Agreement”)
and terminates this Agreement in compliance with Section 8.1(d); provided, further,
that the Company Board of Directors may not effect a Company Change in Recommendation or terminate
this Agreement pursuant to the foregoing respective clauses (i) or (ii), as applicable, unless (A)
the Company shall have provided prior written notice to Parent, at least five (5) calendar days in
advance (the “Notice Period”), of its intention to take such action, which notice shall
specify, in the case of clause (i), the basis for the Intervening Event and, in the case of a
clauses (i) (if applicable) and (ii), the material terms and conditions of any such Superior
Proposal (including the identity of the party making such Superior Proposal), and (B) prior to
effecting a Company Change in Recommendation (but only if such change is due to the existence of a
Superior Proposal) and/or terminating this Agreement pursuant to clause (ii) to enter into an
Alternative Acquisition Agreement with respect to such Superior Proposal, the Company shall, during
the Notice Period, negotiate with Parent in good faith (but only if such negotiations are requested
by Parent) to make such adjustments in the terms and conditions of this Agreement so that such
Acquisition Proposal ceases to constitute a Superior Proposal. In the event of any material
revisions to the Superior Proposal after the start of the Notice Period, the Company shall be
required to deliver a new written notice to Parent and to comply with the requirements of this
Section 5.2(d) with respect to such new written notice, and the Notice Period shall be deemed to
have re-commenced on the date of such new notice, except that the Notice Period shall be reduced to
two (2) business days.
(e) Nothing contained in this Section 5.2 shall prohibit the Company Board of Directors from
complying with its disclosure obligations under U.S. federal or state Law with regard to an
Acquisition Proposal, including taking and disclosing to the stockholders of the Company a position
contemplated by Rule 14e-2(a) and Rule 14d-9 promulgated under the Exchange Act (or any similar
communication to stockholders); provided that any public disclosure other than a
“stop-look-and-listen” communication to the stockholders of the Company pursuant to Rule 14d-9(f)
promulgated under the Exchange Act (or any similar communications to the stockholders of the
Company) shall be deemed to be a Company Change in Recommendation unless such other public
disclosure contains therein an express statement that the Company Board of Directors (i) rejects
the applicable Acquisition Proposal or (ii) reaffirms its recommendation to its stockholders in
favor of the Merger.
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ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.1 Notification of Certain Matters. The Company shall give prompt notice to Parent and
Merger Sub, and Parent and Merger Sub shall give prompt notice to the Company, of the occurrence or
non-occurrence of any event whose occurrence or non-occurrence, as the case may be, would be likely
to cause any representation or warranty of such Person contained in this Agreement to be untrue or
inaccurate as if made as of any time prior to the Effective Time, such that the conditions set
forth in Article VII would not be satisfied; provided, however, that the delivery
of any notice pursuant to this Section 6.1 shall not limit or otherwise affect the remedies
available hereunder to the party receiving such notice or the representations or warranties of the
parties, or the conditions to the obligations of the parties hereto.
Section 6.2 Access; Confidentiality. From the date of this Agreement until the Effective Time,
the Company shall, and shall cause the Company Subsidiaries to, upon reasonable prior notice, (a)
give Parent and Merger Sub, their officers and a reasonable number of their employees and their
authorized Representatives, reasonable access during normal business hours (x) to the Company
Agreements, contracts, books, records, analysis, projections, plans, systems, personnel,
commitments, offices and other facilities and properties of the Company and the Company
Subsidiaries, and (y) with the prior consent of the Company (such consent not to be unreasonably
withheld), to the customers, suppliers and Representatives of the Company and the Company
Subsidiaries, and (b) furnish, or cause to be furnished, (i) to Parent, Merger Sub or Parent’s
Representatives, such reasonably available information concerning the business, properties, Company
Material Contracts, assets, liabilities, personnel and other aspects of the Company and the Company
Subsidiaries as Parent, Merger Sub or Parent’s Representatives may reasonably request, and (ii) to
Parent, any monthly financial statements that are provided to the Company Board of Directors in the
ordinary course of business (which statements shall be provided substantially contemporaneously
with the time such information is furnished to the Company Board of Directors). The terms of the
Confidentiality Agreement shall apply to any information provided to Parent or Merger Sub pursuant
to this Section 6.2. Notwithstanding anything to the contrary set forth herein, the Company shall
not be required to provide access to, or to disclose information, where such access or disclosure
would jeopardize the attorney-client privilege of the Company or its Subsidiaries or contravene any
Law; provided that the parties to this Agreement shall use their reasonable best efforts to
cause all such information to be provided in a manner that does not jeopardize such attorney-client
privilege or contravene such Law.
Section 6.3 Consents and Approvals.
(a) Each of the Company, Parent and Merger Sub shall use its reasonable best efforts to (i)
take, or cause to be taken, all appropriate action, and do, or cause to be done, all things
necessary, proper or advisable under any applicable Law or otherwise to consummate and make
effective the Merger as promptly as practicable, but
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in no event later than the Outside Date, (ii) obtain from any Governmental Entities any
consents, licenses, permits, waivers, clearances approvals, authorizations or orders required
to be obtained or made by Parent, Merger Sub or the Company or any of their respective
Subsidiaries, or required to avoid any action or proceeding by any Governmental Entity, in each
case to the extent required in connection with the HSR Act or any other antitrust or competition
Law or regulation of a jurisdiction located outside of the United States (the “Foreign
Antitrust Approvals”), in connection with the authorization, execution and delivery of this
Agreement and the consummation of the Merger and the other transactions contemplated hereby,
(iii) make or cause to be made the applications or filings required to be made by Parent, Merger
Sub or the Company or any of their respective Subsidiaries under or with respect to the HSR Act,
any other applicable Foreign Antitrust Approvals or any other applicable Laws in connection with
the authorization, execution and delivery of this Agreement and the consummation of the Merger or
the other transactions contemplated hereby, (iv) comply at the earliest reasonably practicable date
with any request under or with respect to the HSR Act, any other Foreign Antitrust Approvals and
any such other applicable Laws for additional information, documents or other materials received by
Parent or the Company or any of their respective Subsidiaries from the Federal Trade Commission or
the Department of Justice or any other Governmental Entity in connection with such applications or
filings or the Merger or the other transactions contemplated hereby and (v) coordinate and
cooperate with, and give 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 Foreign Antitrust Approvals or any such other applicable Laws and (B) any
filings, conferences or other submissions related to resolving any investigation or other inquiry
by any such Governmental Entity. For the avoidance of doubt and notwithstanding anything to the
contrary contained in this Agreement, Parent and its Subsidiaries shall commit to any and all
divestitures, licenses or hold separate or similar arrangements with respect to its assets or
conduct of business arrangements as a condition to obtaining any and all approvals from any
Governmental Entity for any reason in order to satisfy the conditions set forth in Section 7.1(c)
of this Agreement, as promptly as practicable, but in no event later than the Outside Date,
including taking any and all actions necessary in order to ensure that (x) no requirement for
non-action, a waiver, consent or approval of the United States Federal Trade Commission or the
Antitrust Division of the United States Department of Justice, (y) no decree, judgment, injunction,
temporary restraining order or any other order in any suit or proceeding, in each case, pursuant to
any antitrust or competition Law or regulation, and (z) no other matter relating to any antitrust
or competition Law or regulation, would preclude satisfaction of the conditions set forth in
Article VII by the Outside Date. The Company shall agree if, but solely if, requested by Parent to
divest, hold separate or otherwise take or commit to take any action with respect to the
businesses, services, or assets of the Company or any of its subsidiaries in furtherance of this
Section 6.3; provided, however, that any such action may be conditioned upon
consummation of the Merger.
(b) Each of the Company and Parent shall, and shall cause their respective Subsidiaries to,
furnish to the other party all information necessary for any such application or other filing to be
made in connection with the Merger and the other
39
transactions contemplated hereby. Each of the Company and Parent shall promptly
inform the other of any material communication with, and any proposed understanding,
undertaking or agreement with, any Governmental Entity regarding any such application or filing.
If a party hereto intends to independently participate in any meeting with any Governmental Entity
in respect of any such filings, investigation or other inquiry, then such party shall give the
other party reasonable prior notice of such meeting and invite Representatives of the other party
to participate in the meeting with the Governmental Entity unless prohibited by such Governmental
Entity. The parties shall coordinate and cooperate with one another in connection with
any analyses, appearances, presentations, memoranda, briefs, arguments, opinions and proposals made
or submitted by or on behalf of any party in connection with all meetings, actions and proceedings
under or relating to any such application or filing.
(c) The Company shall give (or shall cause its Subsidiaries to give) any notices to third
parties, and use, and cause its Subsidiaries to use, reasonable best efforts to obtain any third
party consents necessary, proper or advisable to consummate the Merger or the other transactions
contemplated hereby, or required to be disclosed in the Company Disclosure Schedule.
(d) If any administrative or judicial action or proceeding is instituted (or threatened to be
instituted) by a Governmental Entity challenging the Merger or the other transactions contemplated
hereby as violative of any applicable Law, each of the Company and Merger Sub shall, and shall
cause their respective affiliates to, cooperate and use their reasonable best efforts to contest
and resist any such action or proceeding, including any action or proceeding that seeks a temporary
restraining order or preliminary injunction that would prohibit, prevent or restrict consummation
of the Merger or the other transactions contemplated hereby.
(e) Notwithstanding anything set forth in this Agreement, nothing contained in this Agreement
shall give Parent or Merger Sub, directly or indirectly, the right to control or direct the
operations of the Company prior to the Effective Time. Prior to the Effective Time, the Company
shall exercise, consistent with the terms and conditions of this Agreement, control and supervision
over its business operations.
Section 6.4 Publicity. So long as this Agreement is in effect, neither the Company nor Parent,
nor any of their respective Subsidiaries or affiliates, shall issue or cause the publication of any
press release or other announcement with respect to the Merger or this Agreement without the prior
consent of the other party, unless such party determines, after consultation with outside counsel,
that it is required by applicable Law or by any listing agreement with or the listing rules of a
national securities exchange or trading market to issue or cause the publication of any press
release or other announcement with respect to the Merger or this Agreement, in which event such
party shall endeavor, on a basis reasonable under the circumstances, to provide a meaningful
opportunity to the other parties to review and comment upon such press release or other
announcement and shall give due consideration to all reasonable additions, deletions or changes
suggested thereto; provided, however, that the Company shall not be required to
provide any such review or comment to Parent in connection with the receipt and
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existence of an Acquisition Proposal and matters related thereto or a Company Change in Recommendation; provided, further, each party hereto and their respective
controlled affiliates may make statements that are not inconsistent with previous press releases,
public disclosures or public statements made by Parent and the Company in compliance with this
Section 6.4.
Section 6.5 Directors’ and Officers’ Insurance and Indemnification.
(a) Parent shall, or shall cause the Surviving Corporation to, honor and fulfill in all
respects the obligations of the Company to the fullest extent permissible under applicable
provisions of the DGCL and under the Company Governing Documents in effect on the date hereof and
under any indemnification or other similar agreements (the “Indemnification Agreements”) in
effect on the date hereof between the Company and the individuals who serve as directors and
officers of the Company (the “Covered Persons”) arising out of or relating to actions or
omissions in their capacity as officers or directors of the Company or the Company Subsidiaries
occurring at or prior to the Effective Time, including in connection with the approval of this
Agreement and the Merger or the other transactions contemplated hereby.
(b) The Surviving Corporation shall advance expenses (including reasonable legal fees and
expenses) incurred in the defense of any claim, action, suit, proceeding or investigation with
respect to any matters subject to indemnification pursuant to Section 6.5(a) pursuant to the
procedures set forth, and to the extent provided, in the Company Governing Documents or the
Indemnification Agreements as in effect on the date hereof; provided, however, that
any Person to whom expenses are advanced undertakes, to the extent required by the Company
Governing Documents or the DGCL, to repay such advanced expenses to the Surviving Corporation as
soon as reasonably practicable if it is ultimately determined that such Person is not entitled to
indemnification.
(c) For a period of six (6) years after the Effective Time, the certificate of incorporation
and bylaws of the Surviving Corporation shall contain provisions no less favorable with respect to
indemnification, advancement of expenses and exculpation of Covered Persons for periods prior to
and including the Effective Time than are currently set forth in the Company Governing Documents.
The Indemnification Agreements with Covered Persons in existence on the date of this Agreement that
survive the Merger shall continue in full force and effect in accordance with their terms.
(d) For a period of six (6) years after the Effective Time, Parent shall cause to be
maintained in effect the current policies of directors’ and officers’ liability insurance
maintained by the Company (provided that Parent may substitute therefor policies with reputable and
financially sound carriers of at least the same coverage and amounts containing terms and
conditions which are no less advantageous) with respect to claims arising from or related to facts
or events which occurred at or before the Effective Time; provided, however, that
Parent shall not be obligated to make annual premium payments for such insurance to the extent such
premiums exceed 300% of the annual premiums paid as of the date hereof by the Company for such
insurance (such 300% amount, the “Base Premium”); provided, further, if
such insurance coverage cannot be obtained at all, or can only be
41
obtained at an annual premium in excess of the Base Premium, Parent shall maintain the most advantageous policies of directors’ and officers’
insurance obtainable for an annual premium equal to the Base Premium, provided,
further, if either the Company or Parent, in each case, in its sole discretion elects, by
giving written notice to the other party at least 10 days prior to the Effective Time, then, in
lieu of the foregoing insurance, effective as of the Effective Time, the Company or Parent, as
applicable, shall purchase a directors’ and officers’ liability insurance “tail” or “runoff”
insurance program for a period of six (6) years after the Effective Time with respect to wrongful
acts and/or omissions committed or allegedly committed at or prior to the Effective Time (such
coverage shall have an aggregate coverage limit over the term of such policy in an amount not to
exceed the annual aggregate coverage limit under the Company’s existing directors and officers
liability policy, and in all other respects shall be comparable to such existing coverage),
provided that the premium for such “tail” or “runoff” coverage shall not exceed an amount equal to
the Base Premium.
(e) In the event the Surviving Corporation or any of its successors or assigns (i)
consolidates with or merges into any other Person and shall not be the continuing or surviving
corporation or entity of such consolidation or merger or (ii) transfers all or substantially all of
its properties and assets to any Person, then and in each such case, proper provision shall be made
so that such continuing or surviving corporation or entity or transferee of such assets, as the
case may be, shall assume all of the applicable obligations set forth in this Section 6.5.
(f) The Covered Persons (and their successors and heirs) are intended third party
beneficiaries of this Section 6.5, and this Section 6.5 shall not be amended after the Effective
Time in a manner that is adverse to the Covered Persons (including their successors and heirs) or
terminated without the consent of the Covered Persons (including their successors and heirs)
affected thereby.
Section 6.6 State Takeover Laws. If any Takeover Law becomes or is deemed to become applicable to
the Company, the Merger or any other transaction contemplated hereby or any provision of the Rights
Agreement becomes or is deemed to become applicable to Parent or Merger Sub, the Merger or any
other transaction contemplated hereby, in each case, then the Company Board of Directors shall take
all action necessary to render such statute or provision inapplicable to the foregoing.
Section 6.7 Obligations of Merger Sub. Parent shall take all action necessary to cause Merger Sub
and the Surviving Corporation to perform their respective obligations under this Agreement and to
consummate the transactions contemplated by this Agreement, including the Merger, upon the terms
and subject to the conditions set forth in this Agreement.
Section 6.8 Employee Benefits Matters . Effective as of the Effective Time, Parent shall provide,
or shall cause the Company or a Company Subsidiary to provide, to each employee of the Company or a
Company Subsidiary who continues to be employed by the Company or any Company Subsidiary
immediately following the Effective Time (the “Affected Employees”), (a) an initial base
salary or initial regular
42
hourly wage, whichever is applicable, that is not less than the base
salary or regular hourly wage provided to such Affected Employee by the Company or any Company Subsidiary immediately prior
to the Effective Time, and (b) for at least six (6) months following the Effective Time, employee
benefits that are, in the aggregate, substantially comparable to those provided to similarly
situated employees of Parent (other than any equity-based benefits). Parent shall maintain and
honor, and shall cause the Company, the Surviving Corporation, and each Company Subsidiary to
maintain and honor, the Company’s current severance policy described in Section 6.8 of the Company
Disclosure Schedule for a period of six (6) months after the Effective Time. Effective as of the
Effective Time and thereafter, Parent shall provide, or shall cause the Company or a Company
Subsidiary to provide, that periods of employment with the Company or any Company Subsidiary
(including, without limitation, any current or former affiliate of the Company or any predecessor
of the Company or any Company Subsidiary) shall be taken into account for purposes of determining,
as applicable, the eligibility for participation and vesting (but not benefit accruals under any
defined benefit plan) of any Affected Employee under all employee benefit plans (other than any
equity-based plans) maintained by Parent or an affiliate of Parent for the benefit of the Affected
Employees, including, without limitation, vacation plans or arrangements, 401(k) or other
retirement plans and any severance or welfare plans (but expressly excluding any equity-based
plans) to the same extent taken into account for a similar purpose by the Company under an
analogous Benefit Plan prior to the Effective Time. Effective as of the Effective Time and
thereafter, Parent shall, and shall cause the Company and any Company Subsidiary to, (i) reduce any
period of limitation on health benefits coverage of Affected Employees due to pre-existing
conditions under the applicable health benefits plan of Parent or an affiliate of Parent by the
number of days of an individual’s “creditable coverage,” to the extent required by Section 701 of
ERISA, and (ii) credit each Affected Employee with all deductible payments and co-payments paid by
such employee under the health benefit plans of the Company or its affiliates prior to the Closing
Date during the year in which the Closing occurs for the purpose of determining the extent to which
any such employee has satisfied his or her deductible and whether he or she has reached the
out-of-pocket maximum under any health benefit plan of Parent or an affiliate of Parent for such
year. Nothing in this Agreement shall confer upon any Affected Employee any right to continue in
the employ or service of Parent, the Company or any affiliate of Parent or the Company, or shall
interfere with or restrict in any way the rights of Parent, the Company or any affiliate of Parent
or the Company to discharge or terminate the services of any Affected Employee. This Section 6.8
is not intended to confer upon any Person other than the parties hereto any rights or remedies
hereunder. Nothing in this Section 6.8 shall be construed to modify, amend, or establish any
employee benefit plan, program, agreement or arrangement or in any way interfere with or restrict
in any way the rights of the parties hereto or any other Person to modify, amend or terminate any
of its employee benefit plans, programs, agreements or arrangements.
43
ARTICLE VII
CONDITIONS
Section 7.1 Conditions to Each Party’s Obligations to Effect the Merger. The respective
obligations of each party to effect the Merger shall be subject to the
satisfaction on or prior to the Closing Date of each of the following conditions, any and all
of which may be waived in whole or in part by Parent, Merger Sub and the Company, as the case may
be, to the extent permitted by applicable Law:
(a) Stockholder Approval. This Agreement shall have been adopted and the Merger
approved at the Special Meeting by the holders of a majority of the then outstanding Shares;
(b) Statutes; Court Orders. No statute, rule or regulation shall have been enacted or
promulgated by any Governmental Entity of competent jurisdiction which prohibits the consummation
of the Merger, and there shall be no order or injunction of a court of competent jurisdiction in
effect preventing the consummation of the Merger; and
(c) HSR Act; Foreign Antitrust Approvals. All waiting periods (and any extensions
thereof) applicable to the transactions contemplated hereby under the HSR Act shall have expired or
been terminated early, and any other material consents or Foreign Antitrust Approvals required to
have been obtained prior to the Effective Time with respect to the transactions contemplated hereby
shall have been received (or been deemed to have been received by virtue of the expiration or
termination of any applicable waiting period).
Section 7.2 Conditions to the Obligations of Parent and Merger Sub. The obligation of Parent and
Merger Sub to effect the Merger shall be subject to the satisfaction on or prior to the Closing
Date of each of the following conditions, any and all of which may be waived in whole or in part by
Parent, to the extent permitted by applicable Law:
(a) Representations and Warranties. (i) All representations or warranties of the
Company set forth in Section 3.1 (Organization), Section 3.2 (Capitalization), Section 3.3
(Authorization; Validity of Agreement; Company Action), Section 3.4 (Board Approvals),
Section 3.8(b)(A) (Absence of Company Material Adverse Effect) and Section 3.23 (Brokers; Expenses)
shall be true and correct in all material respects as of the date of this Agreement and as of the
Closing Date as if made as of the Closing Date (except to the extent such representations and
warranties related expressly to an earlier date, in which case as of such earlier date); and (ii)
all representations or warranties of the Company (excluding those representations and warranties
described in clause (i) above) contained in the Agreement (without giving effect to any references
to any Company Material Adverse Effect or materiality qualifications) shall be true and correct as
of the date of this Agreement and as of the Closing Date as if made as of the Closing Date (except
to the extent such representations
44
and warranties related expressly to an earlier date, in which
case as of such earlier date), except as has not had and would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect.
(b) Performance of Obligations of the Company. The Company shall have performed or
complied in all material respects with all agreements and covenants to be performed or complied
with by it under the Agreement.
(c) Officers’ Certificate. Parent shall have received a certificate signed by an
executive officer of the Company certifying as to the matters set forth in Sections 7.2(a) and
7.2(b).
(d) No Company Material Adverse Effect. Since the date of this Agreement, no Company
Material Adverse Effect shall have occurred or exist.
Section 7.3 Conditions to the Obligations of the Company. The obligation of the Company to effect
the Merger shall be subject to the satisfaction on or prior to the Closing Date of each of the
following conditions, any and all of which may be waived in whole or in part by the Company, to
the extent permitted by applicable Law:
(a) Representations and Warranties. All representations or warranties of Parent and
Merger Sub contained in the Agreement (without giving effect to any references to materiality
qualifications) shall be true and correct in all material respects as of the date of this Agreement
and as of the Closing Date as if made as of the Closing Date (except to the extent such
representations and warranties related expressly to an earlier date, in which case as of such
earlier date).
(b) Performance of Obligations of Parent and Merger Sub. Each of Parent and Merger
Sub shall have performed or complied in all material respects with all agreements and covenants to
be performed or complied with by it under the Agreement.
(c) Officers’ Certificate. The Company shall have received a certificate signed by an
executive officer of Parent certifying as to the matters set forth in Sections 7.3(a) and 7.3(b).
ARTICLE VIII
TERMINATION
Section 8.1 Termination. This Agreement may be terminated and the Merger may be abandoned at any
time prior to the Effective Time, notwithstanding the receipt of Stockholder Approval (with any
termination by Parent also being an effective termination by Merger Sub) only as follows:
(a) by either Parent or the Company, if there has been a breach by the other party of any
representation, warranty, covenant or agreement set forth in this Agreement, which (1) in the case
of a breach by the Company, would result in any of the conditions in Section 7.2(a) or 7.2(b) not
being satisfied and (2) in the case of a breach by
45
Parent or Merger Sub, would result in any of the
conditions in Section 7.3(a) or 7.3(b) not being satisfied (and in each case such breach is not
curable, or if curable, has not been cured within twenty (20) business days after (but in no event
later than the Outside Date) the receipt of notice thereof by the defaulting party from the
non-defaulting party); provided that, this Agreement may not be terminated pursuant to this
Section 8.1(a) by any party if such party is then in material breach of any representation,
warranty, covenant or agreement set forth in this Agreement;
(b) by either Parent or the Company, if the Merger shall not have been consummated by
midnight, New York City time, on or before April 30, 2008 (the “Outside Date”);
provided, however, that the right to terminate this Agreement pursuant to this
Section 8.1(b) shall not be available to any party whose breach of any representation, warranty,
covenant or agreement set forth in this Agreement has been the cause of, or resulted in, the
failure of the Merger to be consummated by the Outside Date;
(c) by Parent, if (1) the Company Board of Directors shall have effected a Company Change in
Recommendation, (2) the Company Board of Directors or any committee thereof shall have approved or
recommended (or proposed publicly to approve or recommend) any Acquisition Proposal (whether or not
a Superior Proposal), (3) a tender or exchange offer, that if successful, would result in any
Person or group becoming the beneficial owner of 15% or more of the outstanding Shares, has been
commenced (other than by Parent, Merger Sub or any of their affiliates) and the Company Board of
Directors fails to publicly recommend that the stockholders of the Company not tender their shares
in such tender or exchange offer within ten (10) business days of such commencement, or (4) the
Company shall have materially breached any of its obligations under Section 5.2 and such material
breach is not curable, or if curable, has not been cured by the Company within twenty (20) business
days after (but in no event later than the Outside Date) the receipt of notice thereof from Parent;
(d) by the Company, in accordance with and subject to the terms and conditions of Section
5.2(d); provided, however, that the right to terminate this Agreement pursuant to
this Section 8.1(d) shall not be available to the Company unless the Company has complied in all
material respects with Section 5.2;
(e) by either Parent or the Company, if the Stockholder Approval shall not have been obtained
at the Special Meeting duly convened therefore or at any adjournment or postponement thereof at
which a vote on the adoption of this Agreement was taken;
(f) by either Parent or the Company, if a court of competent jurisdiction or other
Governmental Entity of competent jurisdiction shall have issued a final, non-appealable order,
decree or ruling in each case permanently restraining, enjoining or otherwise prohibiting the
Merger; or
(g) by mutual written consent of Parent and the Company duly authorized by the Company Board
of Directors and the Board of Directors of Parent.
46
Section 8.2 Effect of Termination.
(a) In the event of the termination of this Agreement as provided in Section 8.1, written
notice thereof shall forthwith be given to the other party or parties specifying the provision
hereof pursuant to which such termination is made, and this Agreement shall forthwith become null
and void and there shall be no liability on the part of Parent, Merger Sub or the Company, except
(i) Section 8.2 and Sections 9.3 through 9.14 shall survive such termination, and (ii) nothing herein shall relieve any party from
liability for any willful or intentional material breach of this Agreement.
(b) Termination Fee.
(i) If Parent terminates this Agreement pursuant to Section 8.1(c)(1), 8.1(c)(2) or
8.1(c)(3), then the Company shall pay to Parent promptly, but in no event later than two
(2) business days after the date of such termination, a fee of $10,900,000 in cash (the
“Termination Fee”).
(ii) If the Company terminates this Agreement pursuant to Section 8.1(d), prior to or
concurrent with, and as a condition to, the effectiveness of such termination, the Company
shall pay to Parent the Termination Fee.
(iii) If (A) Parent or the Company shall have terminated this Agreement pursuant to
Section 8.1(b) or 8.1(e) or Parent shall have terminated this Agreement pursuant to Section
8.1(c)(4), (B) following the execution and delivery of this Agreement and prior to the
termination of this Agreement an Acquisition Proposal shall have been publicly announced or
shall have become publicly known and not publicly withdrawn, and (C) within twelve (12)
months following such termination, the Company consummates an Acquisition Proposal (whether
or not such Acquisition Proposal relates to the Acquisition Proposal as originally
announced or known) or enters into a definitive agreement with respect to an Acquisition
Proposal, then the Company shall pay to Parent, on the earlier of the date of entry into
such definitive agreement or consummation of such Acquisition Proposal, as the case may be,
the Termination Fee, less any amount previously paid pursuant to Section 8.2(b)(iv).
(iv) If Parent shall have terminated this Agreement pursuant to Section 8.1(a) as a
result of a breach of the Agreement by the Company, then, in addition to and without
limiting any other right or remedy hereunder or under applicable Law, the Company shall
reimburse Parent and Merger Sub in cash for the documented out-of-pocket costs, fees and
expenses incurred by Parent and/or Merger Sub in connection with this Agreement and the
Merger up to an amount not to exceed $3,000,000 in the aggregate, which such reimbursement
shall be payable to Parent (or as directed by Parent) within two (2) business days
following the later of the date of such termination or the date of delivery of such
documentation, which must be in reasonable form and substance.
47
(v) For purposes of this Section 8.2(b), the term “Acquisition Proposal” shall have
the meaning assigned to such term in Section 9.5, except that the reference to “at least
15%” in the definition of “Acquisition Proposal” shall be deemed to be a reference to “at
least 50%”.
(c) Any amounts payable pursuant to this Section 8.2 shall be paid by wire transfer of
immediately available funds to an account designated in writing by Parent (which account
instructions Parent shall provide upon request). For the avoidance
of doubt, in no event shall the Company be obligated to pay the Termination Fee on more than
one occasion.
(d) The Company acknowledges that the agreements contained in this Section 8.2 are an integral
part of the transactions contemplated by this Agreement and that without such provisions, Parent
would not have entered into this Agreement. If the Company fails to pay an amount required to be
paid pursuant to this Section 8.2, and Parent or Merger Sub commences a suit which results in a
judgment against the Company to pay such amount or any portion thereof, the Company shall pay to
Parent and Merger Sub their reasonable, out-of-pocket costs and expenses (including reasonable
attorney’s fees and disbursements) in connection with such suit, together with interest on the
amounts set forth in Section 8.2(b) hereof or portion thereof at the prime rate of Citibank N.A. in
effect on the date such payment was required to be made through the date of payment.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Amendment and Modification; Waiver.
(a) Subject to applicable Law and except as otherwise provided in this Agreement, this
Agreement may be amended, modified and supplemented, whether before or after any vote of
stockholders of the Company contemplated hereby, by written agreement of the parties hereto (by
action taken by their respective Boards of Directors); provided, however, that
after the adoption of this Agreement by the stockholders of the Company, no amendment shall be made
which by Law requires further approval by such stockholders without obtaining such further
approval. This Agreement may not be amended except by an instrument in writing signed on behalf of
each of the parties hereto.
(b) At any time and from time to time prior to the Effective Time, any party or parties hereto
may, to the extent legally allowed and except as otherwise set forth herein, (i) extend the time
for the performance of any of the obligations or other acts of the other party or parties hereto,
as applicable, (ii) waive any inaccuracies in the representations and warranties made to such party
or parties hereto contained herein or in any document delivered pursuant hereto and (iii) waive
compliance with any of the agreements or conditions for the benefit of such party or parties hereto
contained herein. Any agreement on the part of a party or parties hereto to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party
48
or parties, as applicable. Any delay in exercising any right under this Agreement shall not
constitute a waiver of such right.
Section 9.2 Non-survival of Representations and Warranties. None of the representations and
warranties in this Agreement or in any schedule, instrument or other document delivered pursuant to
this Agreement shall survive the Effective Time. This Section 9.2 shall not limit any covenant or
agreement of the parties which by its terms contemplates performance after the Effective Time.
Section 9.3 Expenses. Except as expressly set forth in Section 8.2, all fees, costs and expenses
incurred in connection with this Agreement, the Merger and the other transactions contemplated
hereby shall be paid by the party incurring such fees, costs and expenses.
Section 9.4 Notices. All notices and other communications hereunder shall be in writing and shall
be deemed given if delivered personally (notice deemed given upon receipt), telecopied (notice
deemed given upon confirmation of receipt) or sent by a nationally recognized overnight courier
service, such as Federal Express (notice deemed given upon receipt of proof of delivery), to the
parties at the following addresses (or at such other address for a party as shall be specified by
like notice):
(a)
|
if to Parent or Merger Sub, to: | |
Computer Sciences Corporation | ||
0000 Xxxx Xxxxx Xxxxxx | ||
Xx Xxxxxxx, XX 00000 | ||
Attention: General Counsel and | ||
Vice President, Corporate Development | ||
Facsimile: (000) 000-0000 | ||
with a copy to: | ||
Xxxxxx, Xxxx & Xxxxxxxx LLP | ||
Century City Xxxxxx | ||
0000 Xxxxxxx Xxxx Xxxx | ||
Xxx Xxxxxxx, XX 00000 | ||
Attention: Xxxx X. Xxxxxx | ||
Facsimile: (000) 000-0000 | ||
and | ||
(b)
|
if to the Company, to: | |
First Consulting Group, Inc. | ||
000 X. Xxxxx Xxxxxxxxx | ||
Xxxxxx Xxxxx | ||
Xxxx Xxxxx, Xxxxxxxxxx 00000 |
49
Attention: | Xxxxxxx X. Xxxxxxxx, | |||
Senior Vice President, Corporate Affairs, | ||||
General Counsel and Corporate Secretary | ||||
Facsimile: | (000) 000-0000 | |||
with a copy to: | ||||
Xxxxxx & Xxxxxxx LLP | ||||
000 Xxxx Xxxxxx Xxxxx, 00xx Xxxxx | ||||
Xxxxx Xxxx, Xxxxxxxxxx 00000 | ||||
Attention: | Xxxxxxx X. Xxxx | |||
Xxxxx X. Xxxxxxxx |
||||
Facsimile: | (000) 000-0000 |
Section 9.5 Certain Definitions. For the purposes of this Agreement, the term:
“Acceptable Confidentiality Agreement” means a confidentiality agreement that contains terms
that are no less favorable in the aggregate to the Company than those contained in the
Confidentiality Agreement; provided that the standstill provision in an Acceptable
Confidentiality Agreement entered into after the date hereof with a Person (other than an
Interested Person or affiliate or Representative of an Interested Person) may permit the other
party to such agreement to convey confidentially an Acquisition Proposal to the Company (subject to
Section 5.2(a)(ii)) and otherwise permit such party and the Company to undertake the activities
permitted by Section 5.2(b); provided, further, that, if any such Acceptable
Confidentiality Agreement contains a standstill provision that is more favorable to the other party
thereto than the terms of the Confidentiality Agreement, as permitted by the prior proviso, the
Confidentiality Agreement shall automatically, and without any further action of the parties, be
amended to restate the standstill provision in the Confidentiality Agreement to make the terms of
the Confidentiality Agreement relating to the standstill provision consistent with the more
favorable terms of the Acceptable Confidentiality Agreement; provided, further,
that prior to entering into any Acceptable Confidentiality Agreement, the Company shall provide
written notice to Parent of its intention to do so and shall provide Parent with a copy of such
Acceptable Confidentiality Agreement, and any drafts thereof, as soon as reasonably practicable.
“Acquisition Proposal” means any offer or proposal, or any indication of interest in making an
offer or proposal, made by a Person or group (other than the Merger Sub and Parent) at any time
which is structured to permit such Person or group to acquire beneficial ownership of at least 15%
of the assets of, equity interest in, or businesses of, the Company and its Subsidiaries (whether
pursuant to a merger, consolidation or other business combination, sale of shares of capital stock,
sale of assets, tender offer or exchange offer or otherwise, including any single or multi-step
transaction or series of related transactions), in each case other than the Merger.
50
“business days” has the meaning set forth in Rule 14d-1(g)(3) of the Exchange Act.
“Company 10-Q” means the Company’s quarterly report on Form 10-Q for its fiscal quarter ended
as of June 29, 2007.
“Company IP” means Owned Company IP and Licensed Company IP.
“Company Material Adverse Effect” means any change, effect, development, circumstance,
condition or worsening thereof (an “Effect”) that, individually or in the aggregate, has or
is reasonably likely to have a material adverse effect on the properties, assets, liabilities,
condition (financial or otherwise), business or results of operations of the Company and the
Company Subsidiaries, taken as a whole; provided, however, that no Effects
resulting from the following shall be deemed to constitute a Company Material Adverse Effect or
shall be taken into account when determining whether a Company Material Adverse Effect has occurred
or is reasonably likely to exist: (i) conditions (or changes therein) in any industry or industries
in which the Company operates to the extent that such conditions do not have a materially
disproportionate effect on the Company and its Subsidiaries, taken as a whole, relative to other
companies of comparable size to the Company operating in such industry or industries, (ii) general
economic conditions (or changes therein) in the United States, in any country in which the Company
or any of its Subsidiaries conducts business or in the global economy as a whole, (iii) any
generally applicable change in Law, rule or regulation or GAAP, (iv) conditions arising out of acts
of terrorism, war, weather conditions or other force majeure events, (v) any actions taken, or
failure to take action, to which Parent or Merger Sub has expressly consented or requested, (vi)
changes in the Common Stock price or the trading volume of the Common Stock, in and of itself (it
being understood that the facts or occurrences giving rise or contributing to such changes that are
not otherwise excluded from the definition of a “Company Material Adverse Effect” may be taken into
account), and (vii) 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 forecasts of its revenues, earnings or other financial performance or results of
operations, in and of itself (in each case, it being understood that the facts or occurrences
giving rise or contributing to such failure that are not otherwise excluded from the definition of
a “Company Material Adverse Effect” may be taken into account).
“Company Options” shall mean all options to purchase shares of Common Stock granted or awarded
under the Company Stock Plans.
“Company Products” means all products distributed and services performed by Company or its
Subsidiaries.
“Company Property” means any real property and improvements, now or heretofore, owned, leased
or operated by the Company or any of the Company Subsidiaries or their respective predecessors.
51
“Company Registered IP” means any Registered IP owned by the Company or any of the Company
Subsidiaries.
“Company Stock Plans” mean collectively the Company’s 2007 Equity Incentive Plan, the
Company’s 1997 Equity Incentive Plan, the Company’s Non-Employee Directors’ Stock Option Plan, the
Company’s 1999 Non-Officer Equity Incentive Plan, the Company 1994 Restricted Stock Plan, the
Doghouse Enterprises, Inc.
2000 Equity Incentive Plan, the Paragon Solutions, Inc. Incentive Stock Plan, the Paragon
Solutions, Inc. Non-Employee Directors’ Stock Option Plan, Integrated Systems Consulting Group,
Inc. Amended and Restated Stock Option Plan.
“Company Subsidiary” means each Person that is a Subsidiary of the Company.
“Confidentiality Agreement” means the letter agreement, dated May 18, 2007, between the
Company Financial Advisor as agent for the Company and Parent regarding confidentiality and
standstill obligations.
“Controlled Group Liability” means any liability (i) under Title IV of ERISA, (ii) under
Section 302 of ERISA, or (iii) under Sections 412 and 4971 of the Code.
“Environmental Claims” means any and all administrative, regulatory or judicial actions,
suits, demands, demand letters, claims, Liens, notices of noncompliance or violation,
investigations or proceedings under any Environmental Law or any permit issued under any such
Environmental Law, including, without limitation, (i) any and all environmental claims by
Governmental Entities for enforcement, cleanup, removal, response, remedial or other actions or
damages pursuant to any applicable Environmental Law and (ii) any and all environmental claims by
any third party seeking damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from Hazardous Materials or arising from alleged injury to the
environment or as a result of exposure to Hazardous Materials.
“Environmental Law” means any federal, state, foreign or local statute, Law, rule, regulation,
ordinance, code or rule of common law and any judicial or administrative interpretation thereof
binding on the Company, any of the Company Subsidiaries or their respective operations or property,
including any judicial or administrative order, consent decree or judgment, relating to the
environment, Hazardous Materials, worker safety or exposure of any Person to Hazardous Materials
including, without limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended, 42 U.S.C. sec. 9601 et seq.; the Resource Conservation and
Recovery Act, as amended, 42 U.S.C. sec. 6901 et seq.; the Federal Water Pollution Control Act, as
amended, 33 U.S.C. sec. 1251 et seq.; the Toxic Substances Control Act, 15 U.S.C. sec. 2601 et
seq.; the Clean Air Act, 42 U.S.C. sec. 7401 et seq.; Oil Pollution Act of 1990, 33 U.S.C. sec.
2701 et seq.; the Safe Drinking Water Act, 42 U.S.C. sec. 300f et seq.; the Hazardous Materials
Transportation Act, 49 U.S.C. sec. 1801 et seq.; the Occupational Safety and Health Act of 1970, 29
U.S.C. sec.
52
651 et seq., and all similar or analogous foreign, state, regional or local statutes,
secondary and subordinate legislation, and directives, and the rules and regulations promulgated
thereunder.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the
regulations promulgated and rulings issued thereunder.
“Hazardous Materials” means (i) any petroleum or petroleum products, radioactive materials,
asbestos in any form that is or could become friable, transformers or other equipment that contain
dielectric fluid containing levels of polychlorinated biphenyls, and radon gas; and (ii) any
chemicals, materials or substances defined as or included in the definition of “hazardous
substances,” “hazardous wastes,” “hazardous materials,” “extremely hazardous wastes,” “extremely
hazardous substances,” “restricted hazardous wastes,” “toxic substances,” “toxic pollutants,” or
words of similar import, under any applicable Environmental Law.
“Intellectual Property” shall mean any or all of the following: (i) inventions (whether
patentable or not), invention disclosures, improvements, and all documentation relating to any of
the foregoing; (ii) non-public business, technical, and customer information, business records and
files, trade secrets, confidential information, proprietary information, know how, technical data
and other non-public information; (iii) works of authorship (including computer programs, software,
and firmware, including source code, object code, executable code, code libraries, and scripts),
computer program architecture and files, schematics, drawings, and diagrams, development tools and
other documentation in whatever media; (iv) marketing materials or other materials containing
representations of trademarks, logos, slogans, service marks, business names, trade names, and
trade dress, URLs and domain names; (v) databases and data collections, and (vi) any similar or
equivalent embodiments, representations or manifestations of Intellectual Property Rights.
“Intellectual Property Rights” shall mean any or all of the following and all worldwide common
law and statutory rights in, arising out of, or associated therewith: (i) patents and applications
therefor and all reissues, divisionals, renewals, extensions, substitutions, continuations, and
continuations-in-part thereof (“Patents”); (ii) copyright rights, copyright registrations
and applications therefor, and all other rights corresponding thereto throughout the world
including moral and economic rights of authors, however denominated (“Copyrights”); (iii)
rights in trade marks, service marks, trade names, business names, logos, slogans, trade dress, and
trademark and service xxxx registrations and applications therefor, and all goodwill associated
therewith (“Trademarks”); (iv) URLs and domain names; (v) trade secret rights, confidential
information, know how and inventions (including, those trade secret rights defined in the Uniform
Trade Secrets Act and under corresponding foreign statutory and common law), and rights to limit
the use or disclosure thereof by any Person; including databases and data collections and all
rights therein (“Trade Secrets”); and (vi) any similar or equivalent proprietary or
intellectual property rights to any of the foregoing (as applicable), whether now known or
hereafter recognized in any jurisdiction.
53
“Interested Person” means any Person that has communicated in writing to the Company, the
Company Board of Directors or their respective Representatives an indication of interest, offer or
proposal with respect to an Acquisition Proposal at any time during the nine-month period
immediately prior to the date hereof.
“Intervening Event” shall mean a material fact or event with respect to the Company’s assets
or business that is neither known by the Company Board of Directors
as of the date hereof (or, if known, the material consequences of which are not known to or
understood by the Company Board of Directors as of the date hereof) nor reasonably foreseeable as
of the date hereof, which fact or event (or any material consequence of which) becomes known to or
by (or understood by) the Company Board of Directors prior to Stockholder Approval; provided,
however, that in no event shall (i) any event resulting from a breach of this Agreement by the
Company or any of its Subsidiaries or (ii) the receipt, existence or terms of an Acquisition
Proposal or any matter relating thereto or consequence thereof, constitute an Intervening Event.
“knowledge” will be deemed to be the actual knowledge of any executive officer of Parent,
Merger Sub or the Company, as the case may be.
“Law” means any law, common law, statute, code, rule, regulation, order, ordinance, judgment
or decree or other pronouncement of any Governmental Entity having the effect of law.
“Licensed Company IP” means all Intellectual Property and Intellectual Property Rights that
are licensed to the Company or any of its Subsidiaries by third parties.
“Lien” means any lien, pledge, hypothecation, mortgage, security interest, encumbrance, claim,
infringement, interference, option, right of first refusal, preemptive right, community property
interest or restriction of any nature (including any restriction on the voting of any security, any
restriction on the transfer of any security or other asset, any restriction on the possession,
exercise or transfer of any other attribute of ownership of any asset).
“made available to Parent,” “furnished to Parent” or similar phrases used in this Agreement
means that the subject documents were posted to the “Project Champion” data room at
xxxxx://xxxxxxxx.xxxxxxxxxxx.xxx prior to, and remain accessible to Parent on the date that is two
business days prior to the date of this Agreement.
“Owned Company IP” means all Intellectual Property and Intellectual Property Rights that are
owned by the Company or any of its Subsidiaries.
“Person” means a natural person, partnership, corporation, limited liability company, business
trust, joint stock company, trust, unincorporated association, joint venture, Governmental Entity
or other entity or organization.
“Registered IP” means all Intellectual Property and Intellectual Property Rights that are
registered, filed, or issued under the authority of any Governmental Entity,
54
including all Patents,
registered Copyrights, registered Trademarks, registered Trade Secrets, and registered domain names
and URLs, and all pending applications for any of the foregoing.
“Release” means disposing, discharging, injecting, spilling, leaking, leaching, dumping,
emitting, escaping, emptying or seeping into or upon any land or water or air, or otherwise
entering into the environment.
“Representatives” means, when used with respect to Parent, Merger Sub or the Company, the
directors, officers, employees, consultants, financial advisors, accountants, legal counsel,
investment bankers, and other agents, advisors and representatives of Parent, Merger Sub or the
Company, as applicable, and its Subsidiaries.
“Rights Agreement” means the Share Purchase Rights Agreement of the Company adopted November
22, 1999, as amended.
“Share” means a share of the Company’s Common Stock, par value $0.001 per share.
“Subsidiary” means with respect to any Person, any corporation, limited liability company,
partnership or other organization, whether incorporated or unincorporated, of which (i) at least a
majority of the outstanding shares of capital stock of, or other equity interests, having by their
terms ordinary voting power to elect a majority of the board of directors or others performing
similar functions with respect to such corporation or other organization is directly or indirectly
owned or controlled by such Person or by any one or more of its Subsidiaries, or by such Person and
one or more of its Subsidiaries or (ii) with respect to a partnership, such Person or any other
Subsidiary of such Person is a general partner of such partnership.
“Superior Proposal” means any bona fide Acquisition Proposal (except the references therein to
“15%” shall be replaced by “50%”) made in writing that (x) is on terms that the Company Board of
Directors has determined in its good faith judgment (after consultation with its financial advisor
and outside counsel) is more favorable from a financial point of view to the holders of Shares than
the Merger, taking into account all the terms and conditions of such Acquisition Proposal and this
Agreement, and (y) which the Company Board of Directors has determined in good faith (after
consultation with its financial advisor and outside counsel and after taking into account all
legal, financial, regulatory and other aspects of the proposal, including the financing terms
thereof) is reasonably capable of being consummated.
“Tax” or “Taxes” means any (i) federal, state, local or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental, customs duties, capital stock, franchise, profits,
withholding, social security, unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax of
any kind whatsoever and denominated by any name whatsoever, including any interest, penalty, or
addition thereto, whether disputed or not, (ii) any and all liability
55
for amounts described in (i)
of any member of an affiliated, consolidated, combined or unitary group of which the Company or any
Company Subsidiary (or any predecessor of any of the foregoing) is or was a member on or prior to
the Closing Date, including pursuant to Treasury Regulations Section 1.1502-6 or any analogous or
similar state, local, or foreign Law or regulation, and (iii) any and all liability for amounts
described in clause (i) of any Person (other than the Company or any Company Subsidiary) imposed on
the Company or any Company Subsidiary as a transferee or successor, by contract or pursuant to any
Law, rule or regulation, which Taxes relate to an event or transaction occurring before the
Closing.
“Tax Return” means any return, report, certificate, form or similar statement or document or
other communication required or permitted to be supplied to, or filed with, a Governmental Entity
in connection with the determination, assessment or collection of any Tax or the administration of
any Laws relating to any Tax.
“Treasury Regulations” means the United States Treasury regulations promulgated under the
Code.
Section 9.6 Terms Defined Elsewhere. The following terms are defined elsewhere in
this Agreement, as indicated below:
“Affected Employees”
|
Section 6.8 | |
“Agreement”
|
Preamble | |
“Alternative Acquisition Agreement”
|
Section 5.2(d) | |
“Appraisal Rights”
|
Section 2.3(a) | |
“Balance Sheet Date”
|
Section 3.14 | |
“Base Premium”
|
Section 6.5(d) | |
“Benefit Plans”
|
Section 3.11(a) | |
“Book-Entry Shares”
|
Section 2.2(b) | |
“Certificate of Merger”
|
Section 1.2 | |
“Certificates”
|
Section 2.2(b) | |
“Closing”
|
Section 1.3 | |
“Closing Date”
|
Section 1.3 | |
“Code”
|
Section 2.2(e) | |
“Common Stock”
|
Section 3.2(a) | |
“Company”
|
Preamble | |
“Company Agreements”
|
Section 3.13(a) | |
“Company Board of Directors”
|
Recitals | |
“Company Change in Recommendation”
|
Section 5.2(d) | |
“Company Collective Bargaining Agreement”
|
Section 3.16(a) | |
“Company Disclosure Schedule”
|
Article III | |
“Company Financial Advisor”
|
Section 3.19 | |
“Company Governing Documents”
|
Section 3.1 | |
“Company IP Agreements”
|
Section 3.15(b) | |
“Company Material Contract”
|
Section 3.13(b) | |
“Company Permits”
|
Section 3.17(b) | |
“Company Recommendation”
|
Section 3.4 |
56
“Company SEC Documents”
|
Section 3.6 | |
“Company Source Code”
|
Section 3.15(k) | |
“Company Stock-Based Award”
|
Section 3.2(b) | |
“Copyrights”
|
Section 9.5 | |
“Covered Persons”
|
Section 6.5(a) | |
“DGCL”
|
Recitals | |
“Dissenting Shares”
|
Section 2.3(a) | |
“Effect”
|
Section 9.5 | |
“Effective Time”
|
Section 1.2 | |
“Equity Interests”
|
Section 3.2(a) | |
“Exchange Act”
|
Section 1.6(a) | |
“Financial Statements”
|
Section 3.6 | |
“Foreign Antitrust Approvals”
|
Section 6.3(a) | |
“Foreign Benefit Plan”
|
Section 3.11(h) | |
“GAAP”
|
Section 3.6 | |
“Governmental Entity”
|
Section 3.5 | |
“HSR Act”
|
Section 3.5 | |
“Indemnification Agreements”
|
Section 6.5(a) | |
“Information Technology”
|
Section 3.15(m) | |
“Junior Preferred Stock”
|
Section 3.2(a) | |
“Legal Proceeding”
|
Section 3.10 | |
“Merger”
|
Recitals | |
“Merger Consideration”
|
Section 2.1(c) | |
“Merger Sub”
|
Preamble | |
“Merger Sub Common Stock”
|
Section 2.1 | |
“Nasdaq”
|
Section 3.5 | |
“Notice Period”
|
Section 5.2(d) | |
“Option Consideration”
|
Section 2.4(a) | |
“Outside Date”
|
Section 8.1(b) | |
“Parent”
|
Preamble | |
“Parent Disclosure Schedule”
|
Article IV | |
“Patents”
|
Section 9.5 | |
“Paying Agent”
|
Section 2.2(a) | |
“Permitted Liens”
|
Section 3.14 | |
“Preferred Stock”
|
Section 3.2(a) | |
“Proxy Statement”
|
Section 1.6(a) | |
“Related Person”
|
Section 3.22 | |
“Rights”
|
Section 3.24 | |
“Xxxxxxxx-Xxxxx Act”
|
Section 3.6 | |
“SEC”
|
Section 1.6(a) | |
“Section 16 Affiliate”
|
Section 2.4(c) | |
“Securities Act”
|
Section 3.6 | |
“Special Meeting”
|
Section 1.6(b) | |
“Stockholder Approval”
|
Section 3.3 | |
“Surviving Corporation”
|
Section 1.1(a) | |
“Takeover Laws”
|
Section 3.24 |
57
“Termination Fee”
|
Section 8.2(b) | |
“Trade Secrets”
|
Section 9.5 | |
“Trademarks”
|
Section 9.5 | |
“Voting Debt”
|
Section 3.2(a) |
Section 9.7 Interpretation. When a reference is made in this Agreement to an Article
or Section, such reference shall be to an Article or Section of this Agreement unless otherwise
indicated. Whenever the words “include”, “includes” or “including” are used in this Agreement they
shall be deemed to be followed by the words “without limitation.” As used in this Agreement, the
term “affiliates” shall have the meaning set forth in Rule 12b-2 of the Exchange Act. All
references to this Agreement shall be deemed to include references to the “plan of merger”
contained herein (as such term is used in the DGCL). The table of contents and headings set forth
in this Agreement are for convenience of reference purposes only and shall not affect or be deemed
to affect in any way the meaning or interpretation of this Agreement or any term or provision
hereof. When reference is made herein to a Person, such reference shall be deemed to include all
direct and indirect Subsidiaries of such Person unless otherwise indicated or the context otherwise
requires. Unless otherwise indicated, all references herein to the Subsidiaries of a Person shall
be deemed to include all direct and indirect Subsidiaries of such Person unless otherwise indicated
or the context otherwise requires. The parties hereto agree that they have been represented by
counsel during the negotiation and execution of this Agreement and, therefore, waive the
application of any Law, regulation, holding or rule of construction providing that ambiguities in
an agreement or other document will be construed against the party drafting such agreement or
document.
Section 9.8 Counterparts. This Agreement may be executed manually or by facsimile by
the parties hereto, in any number of counterparts, each of which shall be considered one and the
same agreement and shall become effective when a counterpart hereof shall have been signed by each
of the parties and delivered to the other parties.
Section 9.9 Entire Agreement; No Third-Party Beneficiaries. This Agreement (including
the Company Disclosure Schedule and the Parent Disclosure Schedule) and the Confidentiality
Agreement:
(a) constitute the entire agreement among the parties with respect to the subject matter
hereof and thereof and supersede all other prior agreements (except that the Confidentiality
Agreement shall be amended so that until the termination of this Agreement in accordance with
Section 8.1 hereof, Parent and Merger Sub shall be permitted to take the action contemplated by
this Agreement) and understandings, both written and oral, among the parties or any of them with
respect to the subject matter hereof and thereof, and
(b) except as provided in Section 6.5, are not intended to confer upon any Person other than
the parties hereto any rights or remedies hereunder.
58
Section 9.10 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by rule of Law or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full force and effect so
long as the economic or legal substance of the Merger is not affected in any manner adverse to any
party. Upon such determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as
to effect the original intent of the parties as closely as possible in an acceptable manner to the
end that the Merger is fulfilled to the extent possible.
Section 9.11 Governing Law; Jurisdiction.
(a) This Agreement shall be governed by, and construed in accordance with, the Laws of the
State of Delaware, without giving effect to conflicts of laws principles that would result in the
application of the Law of any other state.
(b) Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and
its property, to the exclusive jurisdiction of the Delaware Court of Chancery, or, if such court
does not have proper jurisdiction, the Federal court of the United States of America, sitting in
Delaware, and any appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the agreements delivered in connection herewith or the transactions
contemplated hereby or thereby or for recognition or enforcement of any judgment relating thereto,
and each of the parties hereby irrevocably and unconditionally (i) agrees not to commence any such
action or proceeding except in such courts, (ii) agrees that any claim in respect of any such
action or proceeding may be heard and determined in such Delaware Court of Chancery or, if such
court does not have proper jurisdiction, in such Federal court, (iii) waives, to the fullest extent
it may legally and effectively do so, any objection which it may now or hereafter have to the
laying of venue of any such action or proceeding in the Delaware Court of Chancery or such Federal
court, and (iv) waives, to the fullest extent permitted by Law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in the Delaware Court of Chancery or such
Federal court. Each of the parties hereto agrees that a final judgment in any such action or
proceeding shall be conclusive
and may be enforced in other jurisdictions by suit on the judgment or in any other manner
provided by Law. Each party to this Agreement irrevocably consents to service of process in the
manner provided for notices in Section 9.4. Nothing in this Agreement will affect the right of any
party to this Agreement to serve process in any other manner permitted by Law.
Section 9.12 Waiver of Jury Trial. EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY
ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY OF THE AGREEMENTS DELIVERED IN CONNECTION
HEREWITH OR THE MERGER CONTEMPLATED HEREBY OR THEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT
(A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR
59
OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE EITHER OF
SUCH WAIVERS, (B) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVERS, (C) IT MAKES
SUCH WAIVERS VOLUNTARILY, AND (D) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.12.
Section 9.13 Assignment. This Agreement shall not be assigned by any of the parties hereto
(whether by operation of Law or otherwise) without the prior written consent of the other parties,
except that (a) Merger Sub may assign, in its sole discretion and without the consent of any other
party, any or all of its rights, interests and obligations hereunder to (i) Parent, (ii) Parent and
one or more direct or indirect wholly-owned Subsidiaries of Parent or (iii) one or more direct or
indirect wholly-owned Subsidiaries of Parent, and (b) Parent may assign, in its sole discretion and
without the consent of any other party, any or all of its rights, interests and obligations
hereunder to any of its affiliates so long as Parent shall also remain liable for such obligations
and any such assignment shall not impede or delay the consummation of any of the transactions
contemplated hereby or otherwise impede or adversely affect the rights of the stockholders of the
Company under this Agreement. Subject to the preceding sentence, but without relieving any party
hereto of any obligation hereunder, this Agreement will be binding upon, inure to the benefit of
and be enforceable by the parties and their respective successors and assigns.
Section 9.14 Specific Performance. The parties hereto agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not performed in accordance
with their specific terms. It is accordingly agreed that the parties hereto shall be entitled seek
an injunction or injunctions to prevent breaches of this Agreement and to specifically enforce the
terms hereof, this being in addition to any other remedy to which they are entitled at Law or in
equity. Except as otherwise provided herein, any and all remedies herein expressly conferred upon
a party will be deemed cumulative with and not exclusive of any other remedy conferred hereby, or
by Law or equity upon such party, and the exercise by a party of any one remedy will not preclude
the exercise of any other remedy.
[Remainder of Page Intentionally Left Blank]
60
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this Agreement to be signed
by their respective officers thereunto duly authorized as of the date first written above.
COMPUTER SCIENCES CORPORATION |
||||
By | /s/ Xxxx X. Xxxxxx | |||
Name: | Xxxx X. Xxxxxx | |||
Title: | Vice President, Corporate Development | |||
LB ACQUISITION CORP. |
||||
By | /s/ Xxxx X. Xxxxxx | |||
Name: | Xxxx X. Xxxxxx | |||
Title: | Vice President | |||
FIRST CONSULTING GROUP, INC. |
||||
By | /s/ Xxxxx X. Xxxxxxxx | |||
Name: | Xxxxx X. Xxxxxxxx | |||
Title: | Chief Executive Officer | |||
61