AGREEMENT AND PLAN OF MERGER dated as of November 2, 2006 among STELLENT, INC. ORACLE SYSTEMS CORPORATION and STAR ACQUISITION CORP.
Exhibit 1
dated as of
November 2, 2006
among
STELLENT, INC.
ORACLE SYSTEMS CORPORATION
and
STAR ACQUISITION CORP.
TABLE OF CONTENTS1
Page | |||||
ARTICLE 1 |
|||||
Definitions |
|||||
Section 1.01. Definitions |
1 | ||||
Section 1.02. Other Definitional and Interpretative Provisions |
9 | ||||
ARTICLE 2 |
|||||
The Offer |
|||||
Section 2.01. The Offer |
10 | ||||
Section 2.02. Company Action |
12 | ||||
Section 2.03. Directors |
13 | ||||
Section 2.04. Top-Up Option |
14 | ||||
ARTICLE 3 |
|||||
The Merger |
|||||
Section 3.01. The Closing |
15 | ||||
Section 3.02. The Merger |
15 | ||||
Section 3.03. Conversion of Shares |
16 | ||||
Section 3.04. Surrender and Payment |
16 | ||||
Section 3.05. Dissenting Shares |
18 | ||||
Section 3.06. Company Stock Options; Restricted Share Awards |
18 | ||||
Section 3.07. Adjustments |
19 | ||||
Section 3.08. Withholding Rights |
19 | ||||
Section 3.09. Lost Certificates |
19 | ||||
ARTICLE 4 |
|||||
The Surviving Corporation |
|||||
Section 4.01. Articles of Incorporation |
20 | ||||
Section 4.02. Bylaws |
20 | ||||
Section 4.03. Directors and Officers |
20 | ||||
ARTICLE 5 |
|||||
Representations and Warranties of the Company |
|||||
Section 5.01. Corporate Existence and Power |
20 | ||||
Section 5.02. Corporate Authorization |
21 | ||||
Section 5.03. Governmental Authorization |
21 | ||||
Section 5.04. Non-contravention |
22 | ||||
1 The Table of Contents is not a part of this Agreement. |
i
Page | ||||
Section 5.05. Capitalization |
22 | |||
Section 5.06. Subsidiaries |
24 | |||
Section 5.07. SEC Filings and the Xxxxxxxx-Xxxxx Act |
25 | |||
Section 5.08. Financial Statements; Internal Controls |
26 | |||
Section 5.09. Disclosure Documents |
28 | |||
Section 5.10. Absence of Certain Changes |
28 | |||
Section 5.11. No Undisclosed Material Liabilities |
29 | |||
Section 5.12. Litigation |
29 | |||
Section 5.13. Compliance with Applicable Law and Orders |
30 | |||
Section 5.14. Material Contracts |
30 | |||
Section 5.15. Taxes |
33 | |||
Section 5.16. Employee Benefit Plans |
35 | |||
Section 5.17. Labor and Employment Matters |
37 | |||
Section 5.18. Insurance Policies |
37 | |||
Section 5.19. Environmental Matters |
38 | |||
Section 5.20. Intellectual Property; Computer Software |
38 | |||
Section 5.21. Properties |
41 | |||
Section 5.22. Interested Party Transactions. |
42 | |||
Section 5.23. Certain Business Practices |
42 | |||
Section 5.24. Finders’ Fees |
42 | |||
Section 5.25. Opinion of Financial Advisor |
43 | |||
Section 5.26. Antitakeover Statutes; Company Rights Agreement |
43 | |||
ARTICLE 6 |
||||
Representations and Warranties of Parent |
||||
Section 6.01. Corporate Existence and Power |
43 | |||
Section 6.02. Corporate Authorization |
44 | |||
Section 6.03. Governmental Authorization |
44 | |||
Section 6.04. Non-contravention |
44 | |||
Section 6.05. Disclosure Documents |
45 | |||
Section 6.06. Company Securities |
45 | |||
Section 6.07. Financing |
45 | |||
Section 6.08. Litigation |
45 | |||
ARTICLE 7 |
||||
Covenants of the Company |
||||
Section 7.01. Conduct of the Company |
46 | |||
Section 7.02. Shareholder Meeting; Proxy Material; Short Form Merger |
49 | |||
Section 7.03. No Solicitation; Other Offers |
51 | |||
Section 7.04. Access to Information |
53 | |||
Section 7.05. Notice of Certain Events |
53 | |||
Section 7.06. Company Rights Agreement |
54 | |||
Section 7.07. Termination of 401(k) Plan |
54 | |||
Section 7.08. FIRPTA Certificate |
55 |
ii
Page | ||||
ARTICLE 8 |
||||
Covenants of Parent |
||||
Section 8.01. Obligations of Merger Subsidiary |
55 | |||
Section 8.02. Voting of Shares |
55 | |||
Section 8.03. Director and Officer Liability |
55 | |||
ARTICLE 9 |
||||
Covenants of Parent and the Company |
||||
Section 9.01. Reasonable Best Efforts |
56 | |||
Section 9.02. Certain Filings |
58 | |||
Section 9.03. Public Announcements |
58 | |||
Section 9.04. Further Assurances |
58 | |||
ARTICLE 10 |
||||
Conditions to the Merger |
||||
Section 10.01. Conditions to the Obligations of Each Party |
59 | |||
ARTICLE 11 |
||||
Termination |
||||
Section 11.01. Termination |
59 | |||
Section 11.02. Effect of Termination |
60 | |||
ARTICLE 12 |
||||
Miscellaneous |
||||
Section 12.01. Notices |
61 | |||
Section 12.02. Survival of Representations and Warranties |
62 | |||
Section 12.03. Amendments and Waivers |
62 | |||
Section 12.04. Expenses |
62 | |||
Section 12.05. Disclosure Schedule References |
63 | |||
Section 12.06. Binding Effect; Benefit; Assignment |
63 | |||
Section 12.07. Governing Law |
64 | |||
Section 12.08. Jurisdiction |
64 | |||
Section 12.09. Waiver of Jury Trial |
64 | |||
Section 12.10. Counterparts; Effectiveness |
64 | |||
Section 12.11. Entire Agreement |
65 | |||
Section 12.12. Severability |
65 | |||
Section 12.13. Specific Performance |
65 |
INDEX OF ANNEXES
Annex I | Conditions to the Offer |
iii
INDEX OF EXHIBITS
Exhibit A | Form of Tender and Support Agreement |
Exhibit B | Form of Amended and Restated Articles of Incorporation |
iv
AGREEMENT AND PLAN OF MERGER (this “Agreement”) dated as of November 2, 2006 among Stellent,
Inc., a Minnesota corporation (the “Company”), Oracle Systems Corporation, a Delaware corporation
(“Parent”), and Star Acquisition Corp., a Minnesota corporation and a wholly-owned subsidiary of
Parent (“Merger Subsidiary”).
WHEREAS, it is proposed that Merger Subsidiary shall commence a tender offer (as it may be
amended from time to time in accordance with this Agreement, the “Offer”) to acquire all of the
outstanding shares (the “Company Shares”) of Company Common Stock (as defined herein), including
the associated Company Rights (as defined herein), at a price of $13.50 per share net to the holder
thereof, in cash (such amount, or any different amount per share offered pursuant to the Offer in
accordance with the terms of this Agreement, the “Offer Price”), on the terms and subject to the
conditions set forth herein;
WHEREAS, it is also proposed that, following the consummation of the Offer, Merger Subsidiary
will merge with and into the Company (the “Merger”) and each Company Share that is not tendered and
accepted pursuant to the Offer will thereupon be canceled and converted into the right to receive
cash in an amount equal to the Offer Price, on the terms and subject to the conditions set forth
herein;
WHEREAS, the Boards of Directors of each of the Company, Parent and Merger Subsidiary have
approved this Agreement and deem it advisable and in the best interests of their respective
shareholders to consummate the Offer, the Merger and the other transactions contemplated hereby, on
the terms and subject to the conditions set forth herein; and
WHEREAS, concurrently with the execution and delivery of this Agreement, and as a condition
and inducement to Parent’s and Merger Subsidiary’s willingness to enter into this Agreement,
certain shareholders of the Company are entering into a Tender and Support Agreement substantially
in the form attached as Exhibit A (the “Tender and Support Agreement”).
NOW, THEREFORE, in consideration of the foregoing and the respective representations,
warranties, covenants and agreements set forth below, the parties hereto agree as follows:
ARTICLE 1
Definitions
Definitions
Section 1.01 . Definitions. (a) As used herein, the following terms have the following
meanings:
“Acquisition Proposal” means, other than the transactions contemplated by this Agreement, any
offer, proposal, inquiry or indication of interest relating to any transaction or series of related
transactions involving (i) any acquisition or purchase by any Third Party, directly or indirectly,
of 15% or more of any class of outstanding voting or equity securities of the Company or any of its
Subsidiaries, or any tender offer (including a self-tender offer) or exchange offer that, if
consummated, would result in any Third Party beneficially owning 15% or more of any class of
outstanding voting or equity securities of the Company or any of its Subsidiaries, (ii) any merger,
amalgamation, consolidation, share exchange, business combination or other similar transaction
involving the Company or any of its Subsidiaries pursuant to which the shareholders of the Company
immediately preceding such transaction hold, directly or indirectly, less than 85% of the equity
interests in the surviving or resulting entity of such transaction, (iii) any sale, lease (other
than in the ordinary course of business), exchange, transfer, license (other than in the ordinary
course of business), acquisition or disposition of 15% or more of the assets of the Company or any
of its Subsidiaries (measured by the lesser of book or fair market value thereof), or (iv) any
liquidation, dissolution, recapitalization, extraordinary dividend or other significant corporate
reorganization of the Company or any of its Subsidiaries.
“Affiliate” means, with respect to any Person, any other Person directly or indirectly
controlling, controlled by, or under common control with such Person. As used in this definition,
the term “control” (including the terms “controlling,” “controlled by” and “under common control
with”) means possession, directly or indirectly, of the power to direct or cause the direction of
the management or policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.
“Applicable Law” means, with respect to any Person, any international, national, federal,
state or local law (statutory, common or otherwise), constitution, treaty, convention, ordinance,
code, rule, regulation or other similar requirement enacted, adopted, promulgated or applied by a
Governmental Authority that is binding upon or applicable to such Person, as amended unless
expressly specified otherwise.
“Business Day” means a day, other than Saturday, Sunday or other day on which commercial banks
in New York, New York are authorized or required by Applicable Law to close.
“Closing Date” means the date of Closing.
“Code” means the Internal Revenue Code of 1986.
“Company Balance Sheet” means the audited consolidated balance sheet of the Company and its
Subsidiaries as of March 31, 2006 and the footnotes thereto set forth in the Company 10-K.
2
“Company Balance Sheet Date” means March 31, 2006.
“Company Board” means the Board of Directors of the Company.
“Company Common Stock” means the common stock, par value $0.01 per share, of the Company.
“Company Disclosure Schedule” means the disclosure schedule dated the date hereof regarding
this Agreement that has been provided by the Company to Parent and Merger Subsidiary.
“Company IP” means all Intellectual Property Rights owned or exclusively controlled by the
Company and/or any of its Subsidiaries.
“Company Material Adverse Effect” means (i) a material adverse effect on the business, assets,
liabilities, condition (financial or otherwise) or results of operations of the Company and its
Subsidiaries, taken as a whole, or (ii) an effect that would prevent, materially delay or
materially impair the Company’s ability to consummate the Merger and the other transactions
contemplated by this Agreement, excluding alone or in combination, in the case of clause (i) above,
any such effect resulting from or arising out of (A) any loss of or adverse change in the
relationship of the Company and its Subsidiaries with their respective employees, customers,
distributors, licensors, partners or suppliers arising out of or related to the announcement,
pendency or consummation of the Offer or the Merger, (B) general economic, market or political
conditions (including acts of terrorism or war or other force majeure events) that do not
disproportionately affect the Company and its Subsidiaries, taken as a whole, (C) general
conditions in the industry in which the Company and its Subsidiaries operate that do not
disproportionately affect the Company and its Subsidiaries, taken as a whole, (D) any changes
(after the date hereof) in GAAP or Applicable Law, (E) any failure to take any action as a result
of restrictions or other prohibitions set forth in the second sentence of Section 7.01, (F) any
failure of the Company to meet internal or analysts’ expectations or projections in respect of its
fiscal quarter ended September 30, 2006 (it being understood that any cause of any such failure may
be deemed to constitute, in and of itself, a Company Material Adverse Effect and may be taken into
consideration when determining whether a Company Material Adverse Effect has occurred), or (G) any
Proceeding made or brought by any holder of Company Shares (on the holder’s own behalf or on behalf
of the Company) arising out of or related to this Agreement or any of the transactions contemplated
hereby (including the Offer and the Merger).
“Company Material Subsidiaries” means Stellent SealedMedia Limited, Stellent Chicago, Inc.,
Stellent Chicago Sales, Inc., Stellent Limited, and Stellent Sales, Inc.
3
“Company Restricted Share Award” means a deferred share unit or restricted share granted
pursuant to any of the Company Stock Plans pursuant to which any Company Common Stock remains
unissued or unvested.
“Company Rights” means the preferred stock purchase rights issued pursuant to the Company
Rights Agreement.
“Company Rights Agreement” means the Share Rights Agreement dated as of May 29, 2002 between
the Company and Xxxxx Fargo Bank Minnesota, N.A., as Rights Agent thereunder.
“Company Software Products” means (i) all software products sold or offered for sale by the
Company or any of its Subsidiaries and (ii) all other software products proprietary to the Company
or any of its Subsidiaries that are used in the conduct of their respective businesses.
Notwithstanding the foregoing, the term “Company Software Products” shall not include any third
party software sold by the Company or any of its Subsidiaries on a stand-alone basis.
“Company 10-K” means the Company’s annual report on Form 10-K for the fiscal year ended March
31, 2006, as amended.
“Contract” means any written or oral contract, agreement, note, bond, indenture, mortgage,
guarantee, option, lease, license, sales or purchase order, warranty, commitment or other
instrument, obligation or binding arrangement or understanding of any kind.
“Environmental Law” means any Applicable Law or any agreement with any Governmental Authority
or other Person, relating to human health and safety, the environment or any Hazardous Substance.
“ERISA” means the Employee Retirement Income Security Act of 1974.
“ERISA Affiliate” of any entity means any other entity that, together with such entity, would
be treated as a single employer under Section 414 of the Code.
“Escrow Agreement” shall have the meaning ascribed to such term in the Tender and Support
Agreement.
“GAAP” means generally accepted accounting principles in the United States.
“Governmental Authority” means (i) any government or any state, department, local authority or
other political subdivision thereof, (ii) any governmental body, agency, authority (including any
central bank, Taxing Authority or transgovernmental or supranational entity or authority), minister
or instrumentality (including any court or tribunal) exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government, or (iii) Nasdaq.
4
“Governmental Authorizations” means, with respect to any Person, all licenses, permits
(including construction permits), certificates, waivers, consents, franchises (including similar
authorizations or permits), exemptions, variances, expirations and terminations of any waiting
period requirements and other authorizations and approvals issued to such Person by or obtained by
such Person from any Governmental Authority, or of which such Person has the benefit under any
Applicable Law.
“Hazardous Substance” means any pollutant, contaminant, waste or chemical or any toxic,
radioactive, ignitable, corrosive, reactive or otherwise hazardous substance, waste or material, or
any substance, waste or material having any constituent elements displaying any of the foregoing
characteristics, including any substance, waste or material regulated under any Environmental Law.
“HSR Act” means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976.
“Indebtedness” means, collectively, any (i) indebtedness for borrowed money, (ii) indebtedness
evidenced by any bond, debenture, note, mortgage, indenture or other debt instrument or debt
security, (iii) amounts owing as deferred purchase price for the purchase of any property, or (iv)
guarantees with respect to any indebtedness or obligation of a type described in clauses (i)
through (iii) above of any other Person.
“Intellectual Property Rights” means all worldwide (i) inventions, whether or not patentable,
(ii) patents and patent applications, (iii) trademarks, service marks, trade dress, logos, Internet
domain names and trade names, whether or not registered, and all goodwill associated therewith,
(iv) rights of publicity and other rights to use the names and likeness of individuals, (v)
copyrights, rights in databases and related rights, whether or not registered, (vi) mask works,
(vii) computer software, data, databases, files, and documentation and other materials related to
the foregoing, (viii) trade secrets and confidential, technical and business information, (ix) all
rights to any of the foregoing provided by bilateral or international treaties or conventions, (x)
all other intellectual property or proprietary rights, and (xi) all rights to xxx or recover and
retain damages and costs and attorneys’ fees for past, present and future infringement or
misappropriation of any of the foregoing.
“IT Assets” means all computers, computer software, firmware, middleware, servers,
workstations, routers, hubs, switches, data communications lines, and all other information
technology equipment, and all associated documentation owned by the Company or any of its
Subsidiaries or licensed or leased by the Company or any of its Subsidiaries pursuant to written
agreement (excluding any public networks).
5
“Lien” means, with respect to any property or asset, any mortgage, lien, pledge, charge,
security interest, encumbrance, claim, infringement, interference, right of first refusal,
preemptive right, community property right or other adverse claim of any kind in respect of such
property or asset. For purposes of this Agreement, a Person shall be deemed to own subject to a
Lien, any property or asset that it has acquired or holds subject to the interest of a vendor or
lessor under any conditional sale agreement, capital lease or other title retention agreement
relating to such property or asset.
“MBCA” means the Minnesota Business Corporation Act.
“Nasdaq” means The Nasdaq Stock Market.
“1933 Act” means the Securities Act of 1933.
“1934 Act” means the Securities Exchange Act of 1934.
“Order” means, with respect to any Person, any order, injunction, judgment, decree, ruling or
other similar requirement enacted, adopted, promulgated or applied by a Governmental Authority or
arbitrator that is binding upon or applicable to such Person or its property.
“Parent Stock” means the common stock, par value $0.01 per share, of Oracle Corporation.
“Permitted Liens” means (i) Liens disclosed on the Company Balance Sheet, (ii) Liens for Taxes
not yet due or being contested in good faith by any appropriate proceedings (and for which adequate
accruals or reserves have been established on the Company Balance Sheet), and (iii) Liens (other
than those securing Indebtedness) incurred in the ordinary course of business consistent with past
practice which do not materially detract from the value or materially interfere with any present or
intended use of the property or assets to which such Lien relates.
“Person” means any individual, corporation, partnership, limited liability company,
association, trust or other entity or organization, including any Governmental Authority.
“Proceeding” means any suit, litigation, arbitration, proceeding (including any civil,
criminal, administrative, investigative or appellate proceeding), hearing, audit, examination or
investigation commenced, brought, conducted or heard by or before, or otherwise involving, any
court or other Governmental Authority or any arbitrator or arbitration panel.
“Registered IP” means all U.S., international and foreign (i) patents and patent applications
(including provisional applications and design patents and applications) and all reissues,
divisions, divisionals, renewals, extensions,
6
counterparts, continuations and continuations-in-part thereof, and all patents, applications,
documents and filings claiming priority thereto or serving as a basis for priority thereof, (ii)
registered trademarks, service marks, applications to register trademarks, applications to register
service marks, intent-to-use applications, or other registrations or applications related to
trademarks, (iii) registered copyrights and applications for copyright registration, (iv) domain
name registrations and Internet number assignments, and (v) other Intellectual Property Rights that
are the subject of an application, certificate, filing, registration or other document issued,
filed with, or recorded by any Governmental Authority, in the case of each of clauses (i)-(v)
above, owned by, under obligation of assignment to, or filed in the name of, the Company or any of
its Subsidiaries.
“Representatives” means, with respect to any Person, the directors, officers, employees,
financial advisors, attorneys, accountants, consultants, agents and other authorized
representatives of such Person.
“Xxxxxxxx-Xxxxx Act” means the Xxxxxxxx-Xxxxx Act of 2002.
“SEC” means the Securities and Exchange Commission.
“Subsidiary” means, with respect to any Person, any entity of which securities or other
ownership interests having ordinary voting power to elect a majority of the board of directors or
other persons performing similar functions are at any time directly or indirectly owned by such
Person.
“Superior Proposal” means any bona fide, unsolicited, written Acquisition Proposal which did
not result from a breach of Section 7.03 made by a Third Party which, if consummated, would result
in such Third Party (or in the case of a direct merger between such Third Party or any Subsidiary
of such Third Party and the Company, the shareholders of such Third Party) owning, directly or
indirectly, at least a majority of the outstanding shares of Company Common Stock (so long as such
Third Party is obligated to consummate a customary back-end merger pursuant to which any remaining
holders of Company Common Stock are entitled to receive the same consideration) or all or
substantially all the consolidated assets of the Company and its Subsidiaries, and which
Acquisition Proposal the Company Board determines in good faith by a majority vote, after
considering the advice of its outside legal counsel and of a financial advisor of nationally
recognized reputation and taking into account all of the terms and conditions of such Acquisition
Proposal, including any break-up fees, expense reimbursement provisions and conditions to
consummation, (i) is more favorable and provides greater value to all the Company’s shareholders
(other than Parent and its Affiliates) than as provided hereunder (including any changes to the
terms of this Agreement or the Offer proposed by Parent in response to such Superior Proposal or
otherwise), (ii) is not subject to any financing condition (and if financing is required, such
financing is then fully committed to the Third Party), and (iii) is reasonably capable of being
completed on the terms proposed without
7
unreasonable delay, taking into account all financial, legal, regulatory and other aspects of
such Acquisition Proposal.
“Third Party” means any Person or “group” as defined in Section 13(d) of the 1934 Act, other
than Parent or any of its Affiliates or Representatives.
(a) Each of the following terms is defined in the Section set forth opposite such term:
Term | Section | |||
Adverse Recommendation Change
|
7.03 | (a) | ||
Agreement
|
Preamble | |||
Articles of Merger
|
3.02 | (a) | ||
Board Recommendation
|
2.02 | (a) | ||
Capex Budget
|
7.01 | (e) | ||
Certificates
|
3.04 | (a) | ||
Closing
|
3.01 | |||
Company Disclosure Documents
|
5.09 | (a) | ||
Company Employee Plan
|
5.16 | (a) | ||
Company SEC Documents
|
5.07 | (a) | ||
Company Securities
|
5.05 | (c) | ||
Company Shares
|
Recitals | |||
Company Stock Option
|
3.06 | (a) | ||
Company Stock Plan
|
3.06 | (a) | ||
Company Subsidiary Securities
|
5.06 | (c) | ||
Confidentiality Agreement
|
7.03 | (b) | ||
Dissenting Shares
|
3.05 | |||
Effective Time
|
3.02 | (b) | ||
Employee Plan
|
5.16 | (a) | ||
End Date
|
11.01 | (b) | ||
Exchange Agent
|
3.04 | (a) | ||
Foreign Competition Laws
|
5.03 | |||
Grant Date
|
5.05 | (d) | ||
Indemnified Person
|
8.03 | (a) | ||
Insurance Policies
|
5.18 | (a) | ||
International Plans
|
5.16 | (j) | ||
Leased Real Property
|
5.21 | (b) | ||
Major Customer
|
5.14 | (a) | ||
Major Governmental Party
|
5.14 | (a) | ||
Major Supplier
|
5.14 | (a) | ||
Material Contract
|
5.14 | (b) | ||
Merger
|
Recitals | |||
Merger Consideration
|
3.03 | (a) | ||
Minimum Condition
|
2.01 | (a) | ||
Necessary IP Rights
|
5.20 | (a) | ||
Offer
|
Recitals | |||
Offer Documents
|
2.01 | (b) |
8
Term | Section | |||
Offer Price
|
Recitals | |||
Option Exchange Ratio
|
3.06 | (a) | ||
Proxy Statement
|
5.09 | (a) | ||
Publicly Available Software
|
5.20 | (i) | ||
Schedule 14D-9
|
2.02 | (b) | ||
Schedule TO
|
2.01 | (b) | ||
Shareholder Approval
|
5.02 | (a) | ||
Shareholder Meeting
|
7.02 | (a) | ||
Subsequent Offering Period
|
2.01 | (a) | ||
Surviving Corporation
|
3.02 | (c) | ||
Tax
|
5.15 | (h) | ||
Tax Asset
|
5.15 | (h) | ||
Tax Return
|
5.15 | (h) | ||
Tax Sharing Agreements
|
5.15 | (h) | ||
Taxing Authority
|
5.15 | (h) | ||
Top-Up Option
|
2.04 | (a) | ||
Top-Up Option Shares
|
2.04 | (a) | ||
Uncertificated Shares
|
3.04 | (a) |
Section 1.02 . Other Definitional and Interpretative Provisions. The words “hereof”,
“herein” and “hereunder” and words of like import used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement. The captions herein
are included for convenience of reference only and shall be ignored in the construction or
interpretation hereof. References to Articles, Sections, Exhibits and Schedules are to Articles,
Sections, Exhibits and Schedules of this Agreement unless otherwise specified. All Exhibits and
Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this
Agreement as if set forth in full herein. Any capitalized terms used in any Exhibit or Schedule
but not otherwise defined therein, shall have the meaning as defined in this Agreement. Any
singular term in this Agreement shall be deemed to include the plural, and any plural term the
singular. Whenever the words “include”, “includes” or “including” are used in this Agreement, they
shall be deemed to be followed by the words “without limitation”, whether or not they are in fact
followed by those words or words of like import. “Writing”, “written” and comparable terms refer
to printing, typing and other means of reproducing words (including electronic media) in a visible
form. References to any agreement or contract are to that agreement or contract as amended,
modified or supplemented from time to time in accordance with the terms hereof and thereof;
provided that with respect to any agreement or contract listed on any schedules hereto, all such
amendments, modifications or supplements must also be listed in the appropriate schedule (subject
to Section 12.05). References to any Person include the successors and permitted assigns of that
Person. References to any statute are to that statute, as amended from time to time, and to the
rules and regulations promulgated thereunder. References to “$” and “dollars” are to the currency
of the United States.
9
References from or through any date mean, unless otherwise specified, from
and including or through and including, respectively. References to a party’s “knowledge” are
references to the actual knowledge of, or those matters that would reasonably be expected to be
known by, (i) the directors and executive officers of that party and (ii) with respect to the
Company, the employees of the Company and/or any of its Subsidiaries listed on Section 1.02 of the
Company Disclosure Schedule, to the extent any such employee is not an executive officer of the
Company.
ARTICLE 2
The Offer
The Offer
Section 2.01 . The Offer. (a) Provided that nothing shall have occurred that, had the Offer
been commenced, would give rise to a right to terminate the Offer pursuant to any of the conditions
set forth in Annex I, as promptly as practicable after the date hereof, Merger Subsidiary
shall commence (within the meaning of Rule 14d-2 under the 0000 Xxx) the Offer. The Offer shall be
subject to the condition that there shall be validly tendered in accordance with the terms of the
Offer, prior to the scheduled expiration of the Offer (as it may be extended hereunder) and not
withdrawn, a number of Company Shares that, together with the Company Shares then directly or
indirectly owned by Parent or Merger Subsidiary, represents at least a majority of all Company
Shares then outstanding (the “Minimum Condition”) and to the other conditions set forth in
Annex I. Merger Subsidiary expressly reserves the right to waive any of the conditions to
the Offer and to make any change in the terms of or conditions to the Offer; provided that unless
otherwise provided by this Agreement or previously approved by the Company in writing, (i) the
Minimum Condition may not be waived, (ii) no change may be made that changes the form of
consideration to be paid pursuant to the Offer, decreases the Offer Price or the number of Company
Shares sought in the Offer or imposes conditions to the Offer in addition to those set forth in
Annex I, and (iii) the Offer may not be extended except as set forth in this Section
2.01(a). Subject to the terms and conditions of this Agreement, the Offer shall expire at
midnight, New York City time, on the date that is 20 Business Days (for this purpose calculated in
accordance with Section 14d-1(g)(3) under the 0000 Xxx) after the date that the Offer is commenced.
Merger Subsidiary shall extend the Offer (i) if, at the scheduled or extended expiration date of
the Offer, any of the conditions to the Offer shall not have been satisfied or waived, from time to
time, until the earliest to occur of (x) the satisfaction or waiver of such conditions, (y) the
reasonable determination by Parent that any such condition to the Offer is not capable of being
satisfied on or prior to the End Date, provided that the inability to satisfy such condition does
not result from any breach of any provision of this Agreement by Parent or Merger Subsidiary, and
(z) the End Date, and (ii) for any period required by any rule, regulation, interpretation or
position of the SEC or the staff thereof applicable to the Offer or any period required by
Applicable Law. Following expiration of the Offer,
10
Merger Subsidiary may, in its sole discretion, provide one or more subsequent offering periods
(each, a “Subsequent Offering Period”) in accordance with Rule 14d-11 of the 1934 Act. Subject to
the foregoing, including the requirements of Rule 14d-11, and upon the terms and subject to the
conditions of the Offer, Merger Subsidiary shall accept for payment and pay for, as promptly as
practicable after the final expiration of the Offer, all Company Shares (A) validly tendered and
not withdrawn pursuant to the Offer and/or (B) validly tendered in any Subsequent Offering Period.
The Offer Price payable in respect of each Company Share validly tendered and not withdrawn
pursuant to the Offer or validly tendered in any Subsequent Offering Period shall be paid net to
the holder thereof in cash, subject to reduction for any applicable withholding Taxes.
(b) As soon as practicable on the date of commencement of the Offer, Parent and Merger
Subsidiary shall (i) file with the SEC a Tender Offer Statement on Schedule TO with respect to the
Offer (together with all amendments and supplements thereto and including exhibits thereto, the
“Schedule TO”) that shall include the summary term sheet required thereby and, as exhibits or
incorporated by reference thereto, the Offer to Purchase and forms of letter of transmittal and
summary advertisement, if any, in respect of the Offer (collectively, together with any amendments
or supplements thereto, the “Offer Documents”), and (ii) cause the Offer Documents to be
disseminated to holders of Company Shares. The Company shall promptly furnish to Parent and Merger
Subsidiary in writing all information concerning the Company that may be required by applicable
securities laws or reasonably requested by Parent and Merger Subsidiary for inclusion in the
Schedule TO or the Offer Documents. Each of Parent, Merger Subsidiary and the Company agrees
promptly to correct any information provided by it for use in the Schedule TO and the Offer
Documents if and to the extent that such information shall have become false or misleading in any
material respect. Parent and Merger Subsidiary agree to take all steps necessary to cause the
Schedule TO as so corrected to be filed with the SEC and the Offer Documents as so corrected to be
disseminated to holders of Company Shares, in each case as and to the extent required by applicable
U.S. federal securities laws. The Company and its counsel shall be given a reasonable opportunity
to review and comment on the Schedule TO and the Offer Documents each time before any such document
is filed with the SEC, and Parent and Merger Subsidiary shall give reasonable and good faith
consideration to any comments made by the Company and its counsel. Parent and Merger Subsidiary
shall provide the Company and its counsel with (A) any comments or other communications, whether
written or oral, that Parent, Merger Subsidiary or their counsel may receive from time to time from
the SEC or its staff with respect to the Schedule TO or Offer Documents promptly after receipt of
those comments or other communications, and (B) a reasonable opportunity to participate in the
response of Parent and Merger Subsidiary to those comments and to provide comments on that response
(to which reasonable and good faith consideration shall be given), including by participating with
Parent and Merger Subsidiary or their counsel in any discussions or meetings with the SEC.
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(c) Parent and Merger Subsidiary shall timely file with the Commissioner of Commerce of the
State of Minnesota any registration statement relating to the Offer required to be filed pursuant
to Chapter 80B of the Minnesota Statutes and shall disseminate to the holders of Company Shares via
the Offer Documents the information set forth in any such registration statement to the extent and
within the time period required by Chapter 80B of the Minnesota Statutes.
Section 2.02 . Company Action. (a) The Company hereby consents to the Offer and represents
that at a meeting duly called and held prior to the execution of this Agreement at which all
directors of the Company were present, the Company Board duly and unanimously adopted resolutions
(i) declaring that this Agreement and the transactions contemplated hereby, including the Offer and
the Merger, are fair to and in the best interests of the Company’s shareholders, (ii) approving and
declaring advisable this Agreement and the transactions contemplated hereby, including the Offer
and the Merger, (iii) approving and adopting an amendment to the Company Rights Agreement to render
the Company Rights inapplicable to this Agreement, the Tender and Support Agreement, the Escrow
Agreement and the transactions contemplated hereby and thereby, including the Offer and the Merger,
and (iv) recommending that the Company’s shareholders accept the Offer, tender their Company Shares
to Merger Subsidiary pursuant to the Offer and grant the Shareholder Approval (such recommendation,
the “Board Recommendation”). At a meeting duly called and held prior to the execution of this
Agreement at which all “disinterested directors” (as defined in Section 302A.673 of the MBCA) of
the Company were present, a duly authorized special committee of the Company Board duly and
unanimously adopted resolutions approving this Agreement, the Tender and Support Agreement, the
Escrow Agreement and the transactions contemplated hereby and thereby for purposes of Section
302A.673 of the MBCA. Except to the extent permitted by Section 7.03(b), the Company hereby
represents that no Adverse Recommendation Change has or shall have occurred. The Company hereby
consents to the inclusion of the foregoing determinations and approvals in the Offer Documents and,
to the extent that no Adverse Recommendation Change shall have occurred in accordance with Section
7.03(b), the Company hereby consents to the inclusion of the Board Recommendation in the Offer
Documents. The Company shall promptly furnish Parent with a list of its shareholders, mailing
labels and any available listing or computer file containing the names and addresses of all record
holders of Company Shares and lists of securities positions of Company Shares held in stock
depositories, in each case true and correct as of the most recent practicable date, and shall
provide to Parent such additional information (including updated lists of shareholders, mailing
labels and lists of securities positions) and such other assistance as Parent may reasonably
request in connection with the Offer.
(b) As soon as practicable on the day that the Offer is commenced, the Company shall file with
the SEC and disseminate to holders of Company Shares,
12
in each case, as and to the extent required by applicable U.S. federal securities laws, a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with any amendments or
supplements thereto, the “Schedule 14D-9”) that, subject to Section 7.03(b), shall reflect the
Board Recommendation. Each of Parent and Merger Subsidiary shall promptly furnish to the Company
in writing all information concerning Parent and Merger Subsidiary that may be required by
applicable securities laws or reasonably requested by the Company for inclusion in the Schedule
14D-9. Each of the Company, Parent and Merger Subsidiary agrees promptly to correct any
information provided by it for use in the Schedule 14D-9 if and to the extent that it shall have
become false or misleading in any material respect. The Company agrees to take all steps necessary
to cause the Schedule 14D-9 as so corrected to be filed with the SEC and to be disseminated to
holders of Company Shares, in each case as and to the extent required by applicable U.S. federal
securities laws. Parent and its counsel shall be given a reasonable opportunity to review and
comment on the Schedule 14D-9 each time before it is filed with the SEC, and the Company shall give
reasonable and good faith consideration to any comments made by Parent, Merger Subsidiary and their
counsel. The Company shall provide Parent, Merger Subsidiary and their counsel with (i) any
comments or other communications, whether written or oral, that Parent, Merger Subsidiary or their
counsel may receive from time to time from the SEC or its staff with respect to the Schedule 14D-9
promptly after receipt of those comments or other communications, and (ii) a reasonable opportunity
to participate in the Company’s response to those comments and to provide comments on that response
(to which reasonable and good faith consideration shall be given), including by participating with
the Company or its counsel in any discussions or meetings with the SEC.
Section 2.03 . Directors. (a) Effective upon the acceptance for payment of any Company
Shares pursuant to the Offer, Parent shall be entitled to designate the number of directors,
rounded up to the next whole number, on the Company Board that equals the product of (x) the total
number of directors on the Company Board (giving effect to the election of any additional directors
pursuant to this Section), multiplied by (y) the percentage that the number of Company Shares
beneficially owned by Parent and/or Merger Subsidiary (including Company Shares accepted for
payment) bears to the total number of Company Shares outstanding, and the Company shall take all
action necessary to cause Parent’s designees to be elected or appointed to the Company Board,
including increasing the number of directors, and seeking and accepting resignations of incumbent
directors. At such time, the Company shall take all action necessary to cause individuals
designated by Parent to constitute the number of members, rounded up to the next whole number, on
(i) each committee of the Company Board and (ii) each board of directors of each Subsidiary of the
Company (and each committee thereof) that represents the same percentage as such individuals
represent on the Company Board, in each case to the fullest extent permitted by Applicable Law.
Notwithstanding the foregoing, until Parent and/or Merger Subsidiary acquires a majority of the
outstanding Company Shares on a fully-
13
diluted basis, the Company shall use its reasonable best efforts to ensure that all of the
members of the Company Board and such committees and boards as of the date hereof who are not
employees of the Company shall remain members of the Company Board and such committees and boards
until the Effective Time; provided that in no event shall use of the Company’s reasonable best
efforts require the Company to increase the compensation payable to any such Company Board,
committee or board member, in respect of such capacity, other than in the ordinary course.
(b) The Company’s obligations to appoint Parent’s designees to the Company Board shall be
subject to Section 14(f) of the 1934 Act and Rule 14f-1 promulgated thereunder. The Company shall
promptly take all actions, and shall include in the Schedule 14D-9 such information with respect to
the Company and its officers and directors, as Section 14(f) and Rule 14f-1 require in order to
fulfill its obligations under this Section. Parent shall supply to the Company in writing any
information with respect to itself and its nominees, officers, directors and affiliates required by
Section 14(f) and Rule 14f-1.
(c) Following the election or appointment of Parent’s designees pursuant to Section 2.03(a)
and until the Effective Time, the approval of a majority of the directors of the Company then in
office who were not designated by Parent shall be required to authorize (and such authorization
shall constitute the authorization of the Company Board and no other action on the part of the
Company, including any action by any other director of the Company, shall be required to authorize)
any termination of this Agreement by the Company, any amendment of this Agreement requiring action
by the Company Board, any decrease in or change of form of the Merger Consideration, any extension
of time for performance of any obligation or action hereunder by Parent or Merger Subsidiary, any
waiver of compliance with any of the agreements or conditions contained herein for the benefit of
the Company, and, as permitted by and in accordance with Section 7.03, any Adverse Recommendation
Change.
Section 2.04 . Top-Up Option. (a) The Company hereby irrevocably grants to Merger Subsidiary
an option (the “Top-Up Option”), exercisable upon the terms and conditions set forth in this
Section 2.04, to purchase that number of Company Shares (the “Top-Up Option Shares”) equal to the
lowest number of Company Shares that, when added to the number of Company Shares directly or
indirectly owned by Parent or Merger Subsidiary at the time of such exercise, shall constitute one
share more than 90% of the Company Shares then outstanding (assuming the issuance of the Top-Up
Option Shares) at a price per share equal to the Offer Price; provided that in no event shall the
Top—Up Option be exercisable for a number of Company Shares (i) that would require the Company to
obtain shareholder approval under the Marketplace Rules of Nasdaq to issue the Top-Up Option
Shares, or (ii) in excess of the Company’s then authorized and unissued shares of Company Common
Stock (giving effect to Company Shares reserved for issuance under the Company Stock Plans as if
such shares were outstanding).
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(b) Provided that no Applicable Law or Order shall prohibit the exercise of the Top-Up Option
or the delivery of the Top-Up Option Shares in respect thereof, Merger Subsidiary may exercise the
Top-Up Option, in whole but not in part, at any time after the consummation of the Offer and prior
to the earlier to occur of (i) the Effective Time and (ii) the termination of this Agreement in
accordance with its terms.
(c) Parent and Merger Subsidiary acknowledge that the Company Shares which Merger Subsidiary
may acquire upon exercise of the Top-Up Option will not be registered under the 1933 Act and will
be issued in reliance upon an exemption thereunder for transactions not involving a public
offering. Parent and Merger Subsidiary represent and warrant to the Company that Merger Subsidiary
is, or will be upon the purchase of the Top-Up Option Shares, an “accredited investor”, as defined
in Rule 501 of Regulation D under the 1933 Act. Merger Subsidiary agrees that the Top-Up Option
and the Top-Up Option Shares to be acquired upon exercise of the Top-Up Option are being and will
be acquired by Merger Subsidiary for the purpose of investment and not with a view to, or for
resale in connection with, any distribution thereof (within the meaning of the 1933 Act).
ARTICLE 3
The Merger
The Merger
Section 3.01 . The Closing. Upon the terms and subject to the conditions set forth herein,
the closing of the Merger (the “Closing”) will take place at 10:00 a.m., San Francisco time, as
soon as practicable (and, in any event, within two Business Days) after satisfaction or, to the
extent permitted hereunder, waiver of all conditions to the Merger set forth in Article 10, unless
this Agreement has been terminated pursuant to its terms or unless another time or date is agreed
to in writing by the parties hereto. The Closing shall be held at the offices of Xxxxx Xxxx &
Xxxxxxxx, 0000 Xx Xxxxxx Xxxx, Xxxxx Xxxx, Xxxxxxxxxx 00000, unless another place is agreed to by
the parties hereto.
Section 3.02 . The Merger. (a) Upon the terms and subject to the conditions set forth
herein, as soon as practicable after the Closing, the Company and Merger Subsidiary shall file with
the Minnesota Secretary of State articles of merger (the “Articles of Merger”) in connection with
the Merger in such form as is required by, and executed and acknowledged in accordance with, the
MBCA.
(b) The Merger shall become effective at such time (the “Effective Time”) as the Articles of
Merger have been duly filed with the Minnesota Secretary of State (or at such later time as may be
specified in the Articles of Merger).
(c) At the Effective Time, Merger Subsidiary shall be merged with and into the Company in
accordance with the MBCA, whereupon the separate
15
existence of Merger Subsidiary shall cease, and the Company shall be the surviving corporation
(the “Surviving Corporation”). From and after the Effective Time, the Surviving Corporation shall
possess all the rights, powers, privileges and franchises and be subject to all of the obligations,
liabilities, restrictions and disabilities of the Company and Merger Subsidiary, all as provided
under the MBCA.
Section 3.03 . Conversion of Shares. At the Effective Time, by virtue of the Merger and
without any action on the part of the holders thereof:
(a) except as otherwise provided in Section 3.03(b), Section 3.03(c) or Section 3.05, each
Company Share outstanding immediately prior to the Effective Time (together with the Company Rights
attached to each such share) shall be converted into the right to receive $13.50 in cash or any
different amount paid per Company Share in the Offer, without interest (the “Merger
Consideration”);
(b) each Company Share owned by Parent or Merger Subsidiary (whether pursuant to the Offer or
otherwise) immediately prior to the Effective Time (together with the Company Rights attached to
each such share) shall be canceled, and no payment shall be made with respect thereto;
(c) each Company Share held by any Subsidiary of either the Company or Parent (other than
Merger Subsidiary) immediately prior to the Effective Time (together with the Company Rights
attached to each such share) shall be converted into such number of shares of common stock, par
value $0.01 per share, of the Surviving Corporation such that each such Subsidiary owns the same
percentage of Surviving Corporation immediately following the Effective Time as such Subsidiary
owned in the Company immediately prior to the Effective Time; and
(d) each share of common stock of Merger Subsidiary outstanding immediately prior to the
Effective Time shall be converted into and become one share of common stock, par value $0.01 per
share, of the Surviving Corporation with the same rights, powers and privileges as the shares so
converted and (in addition to shares referred to in Section 3.03(c)) shall constitute the only
outstanding shares of capital stock of the Surviving Corporation.
Section 3.04 . Surrender and Payment. (a) Prior to the Effective Time, Parent shall appoint
an exchange agent (the “Exchange Agent”) for the purpose of exchanging for the Merger Consideration
(i) certificates representing Company Shares (the “Certificates”) and (ii) uncertificated Company
Shares (the “Uncertificated Shares”). Parent shall pay to the Exchange Agent, as needed, the
Merger Consideration to be paid in respect of the Certificates and the Uncertificated Shares.
Promptly after the Effective Time, Parent shall send, or shall cause the Exchange Agent to send, to
each record holder of Company Shares at the Effective Time a letter of transmittal and instructions
(which shall specify that the delivery shall be effected, and risk of loss and title shall pass,
only upon
16
proper delivery of the Certificates or transfer of the Uncertificated Shares to the Exchange
Agent) for use in such exchange.
(b) Each holder of Company Shares that have been converted into the right to receive the
Merger Consideration shall be entitled to receive the Merger Consideration in respect of the
Company Common Stock represented by a Certificate or Uncertificated Share, upon (i) surrender to
the Exchange Agent of a Certificate, together with a properly completed letter of transmittal, or
(ii) receipt of an “agent’s message” by the Exchange Agent (or such other evidence, if any, of
transfer as the Exchange Agent may reasonably request) in the case of a book-entry transfer of
Uncertificated Shares. Until so surrendered or transferred, as the case may be, each such
Certificate or Uncertificated Share shall represent after the Effective Time for all purposes only
the right to receive such Merger Consideration.
(c) If any portion of the Merger Consideration is to be paid to a Person other than the Person
in whose name the surrendered Certificate or the transferred Uncertificated Share is registered, it
shall be a condition to such payment that (i) either such Certificate shall be properly endorsed or
shall otherwise be in proper form for transfer or such Uncertificated Share shall be properly
transferred, and (ii) the Person requesting such payment shall pay to the Exchange Agent any
transfer or other Tax required as a result of such payment to a Person other than the registered
holder of such Certificate or Uncertificated Share or establish to the satisfaction of the Exchange
Agent that such Tax has been paid or is not payable.
(d) After the Effective Time, there shall be no further registration of transfers of Company
Shares. If, after the Effective Time, Certificates or Uncertificated Shares are presented to the
Surviving Corporation, they shall be canceled and exchanged for the Merger Consideration provided
for, and in accordance with the procedures set forth, in this Article 3.
(e) Any portion of the Merger Consideration paid to the Exchange Agent pursuant to Section
3.04(a) (and any interest or other income earned thereon) that remains unclaimed by holders of
Company Shares six months after the Effective Time shall be returned to Parent, upon demand, and
any such holder who has not exchanged Company Shares for the Merger Consideration in accordance
with this Section 3.04 prior to that time shall thereafter look only to Parent for payment of the
Merger Consideration in respect of such shares without any interest thereon. Notwithstanding the
foregoing, Parent shall not be liable to any holder of Company Shares for any amounts paid to a
public official pursuant to applicable abandoned property, escheat or similar laws.
(f) Any portion of the Merger Consideration paid to the Exchange Agent pursuant to Section
3.04(a) in respect of any Dissenting Shares shall be returned to Parent, upon demand.
17
Section 3.05 . Dissenting Shares. Notwithstanding Section 3.03, any Company Shares
outstanding immediately prior to the Effective Time (together with the Company Rights attached to
each such share) (collectively, the “Dissenting Shares”) held by a holder who has not voted in
favor of adoption of this Agreement or the Merger and who validly has asserted dissenters’ rights
with respect to the Merger in accordance with the MBCA shall not be converted into a right to
receive the Merger Consideration, unless such holder fails to perfect, withdraws or otherwise loses
its dissenters’ rights; provided that if, after the Effective Time, such holder fails to perfect,
withdraws or loses its dissenters’ rights pursuant to the MBCA, such Company Shares (together with
the Company Rights attached to each such share) shall be treated as if they had been converted as
of the Effective Time into the right to receive the Merger Consideration. The Company shall
provide Parent prompt notice of any notice of dissent with respect to the Merger received by the
Company, and Parent shall have the right to participate in all negotiations and proceedings with
respect to each such dissent. Except with the prior written consent of Parent, the Company shall
not make any payment with respect to, or offer to settle or settle, any such dissent.
Section 3.06 . Company Stock Options; Restricted Share Awards. (a) Effective as of the
Effective Time, each option to purchase shares of Company Common Stock (each, a “Company Stock
Option”) outstanding under any stock option or equity compensation plan or agreement (the “Company
Stock Plans”), other than any employee stock purchase plan, that is outstanding immediately prior
to the Effective Time, whether or not then vested or exercisable, shall be converted automatically
at the Effective Time into an option to acquire shares of Parent Stock, on substantially the same
terms and conditions as were applicable under such Company Stock Option (including vesting
schedule), except that (i) the number of shares of Parent Stock subject to each such option shall
be determined by multiplying the number of shares of Company Common Stock subject to such Company
Stock Option immediately prior to the Effective Time by a fraction (the “Option Exchange Ratio”),
the numerator of which is the per share Merger Consideration and the denominator of which is the
average closing price of Parent Stock on Nasdaq over the five trading days immediately preceding
(but not including) the Closing Date (rounded down to the nearest whole share) and (ii) the
exercise price per share of Parent Stock (rounded up to the nearest whole cent) shall equal (x) the
per share exercise price for the shares of Company Common Stock otherwise purchasable pursuant to
such Company Stock Option immediately prior to the Effective Time divided by (y) the Option
Exchange Ratio. No Company Stock Options shall become vested solely as a result of the
transactions contemplated hereby.
(b) Effective as of the Effective Time, each Company Restricted Share Award that is held by an
employee of the Company or any of its Subsidiaries shall be converted automatically into a
substantially similar award for Parent Stock and shall remain subject to the vesting conditions in
effect on the date hereof, except that the number of shares of Parent Stock subject to each such
assumed award
18
shall be determined by multiplying the number of Company Shares subject to such Company
Restricted Share Award by the Option Exchange Ratio.
(c) Prior to the Effective Time, the Company shall (i) use its reasonable best efforts to
obtain any consents from holders of Company Stock Options, and (ii) have any resolutions passed by
the Company Board or make any amendments to the terms of such Company Stock Options or Company
Stock Plans, in each case, that are necessary to give effect to the transactions contemplated by
this Section 3.06. Without limitation of the foregoing, the Company Board shall take such actions
as are necessary to cause any Company Stock Options or Company Restricted Share Awards which would
become vested solely as a result of the transactions contemplated hereby in accordance with their
terms unless otherwise determined by the Company Board, not to become vested solely as a result of
the transactions contemplated hereby.
(d) Parent shall take such actions as are necessary for the assumption of the Company Stock
Options pursuant to this Section 3.06, including the reservation, issuance and listing of Parent
Stock as is necessary to effectuate the transactions contemplated by this Section 3.06. Parent
shall prepare and file with the SEC a registration statement on Form S-8 with respect to the shares
of Parent Stock subject to the Company Stock Options promptly following the Effective Time and use
reasonable best efforts to maintain the effectiveness of such registration statement covering such
Company Stock Options for so long as such Company Stock Options remain outstanding.
Section 3.07 . Adjustments. If, during the period between the date of this Agreement and the
Effective Time, any change in the outstanding shares of capital stock of the Company shall occur,
including by reason of any reclassification, recapitalization, stock split (including reverse stock
split) or combination, exchange or readjustment of shares, or any stock dividend thereon with a
record date during such period, the Merger Consideration and any other amounts payable pursuant to
this Agreement shall be appropriately adjusted.
Section 3.08 . Withholding Rights. Each of the Surviving Corporation and Parent shall be
entitled to deduct and withhold from the consideration otherwise payable to any Person pursuant to
this Article 3 such amounts as it is required to deduct and withhold with respect to the making of
such payment under any provision of any Tax law. If the Surviving Corporation or Parent, as the
case may be, so withholds amounts, such amounts shall be treated for all purposes of this Agreement
as having been paid to the Person in respect of which the Surviving Corporation or Parent, as the
case may be, made such deduction and withholding.
Section 3.09 . Lost Certificates. If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person claiming such Certificate to
be lost, stolen or destroyed and, if required by Parent, the posting by such Person of a bond, in
such reasonable amount as Parent may direct, as indemnity against any claim that may be made
against it with respect to
19
such Certificate, the Exchange Agent will issue, in exchange for such lost, stolen or
destroyed Certificate, the Merger Consideration to be paid in respect of the Company Shares
formerly represented by such Certificate, as contemplated under this Article 3.
ARTICLE 4
The Surviving Corporation
The Surviving Corporation
Section 4.01 . Articles of Incorporation. The articles of incorporation of the Company shall
be amended at the Effective Time as set forth in Exhibit B and, as so amended, shall be the
articles of incorporation of the Surviving Corporation until amended in accordance with Applicable
Law.
Section 4.02 . Bylaws. The bylaws of Merger Subsidiary in effect immediately prior to the
Effective Time shall be the bylaws of the Surviving Corporation until amended in accordance with
Applicable Law.
Section 4.03 . Directors and Officers. From and after the Effective Time, until successors
are duly elected or appointed and qualified in accordance with Applicable Law, (i) the directors of
Merger Subsidiary immediately prior to the Effective Time shall be the directors of the Surviving
Corporation, and (ii) the officers of the Merger Subsidiary immediately prior to the Effective Time
shall be the officers of the Surviving Corporation.
ARTICLE 5
Representations and Warranties of the Company
Representations and Warranties of the Company
Subject to Section 12.05, except as set forth or described in the Company Disclosure Schedule,
the Company represents and warrants to Parent that:
Section 5.01 . Corporate Existence and Power. The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the State of Minnesota and
has all corporate powers required to carry on its business as now conducted. The Company is duly
qualified to do business and is in good standing in each jurisdiction where such qualification is
necessary, except for those jurisdictions where failure to be so qualified would not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse Effect. The Company
has heretofore delivered to Parent complete and correct copies of the articles of incorporation and
bylaws of the Company as currently in effect. The Company has heretofore delivered to Parent
complete and correct copies of the minutes (or, in the case of draft minutes, the most recent
drafts thereof) of all meetings of the shareholders of the Company, the Company Board and each
committee of the Company Board and the Boards
20
of Directors (and each committee thereof) of each of the Company’s Subsidiaries held since
January 1, 2003.
Section 5.02 . Corporate Authorization. (a) The execution, delivery and performance by the
Company of this Agreement and the consummation by the Company of the transactions contemplated
hereby are within the Company’s corporate powers and, except for obtaining the Shareholder
Approval, if required, have been duly authorized by all necessary corporate action on the part of
the Company. The affirmative vote of the holders of a majority of the outstanding Company Shares
voting to approve and adopt this Agreement and the Merger (the “Shareholder Approval”) is the only
vote of the holders of any of the Company’s capital stock necessary in connection with the
consummation of the Merger and the other transactions contemplated by this Agreement. This
Agreement constitutes a valid and binding agreement of the Company enforceable against the Company
in accordance with its terms, except as such enforceability may be limited by bankruptcy,
insolvency, moratorium and other similar Applicable Law affecting creditors’ rights generally and
by general principles of equity.
(b) At a meeting duly called and held, prior to the execution of this Agreement, at which all
directors of the Company were present, the Company’s Board of Directors duly and unanimously
adopted resolutions (i) declaring that this Agreement and the transactions contemplated hereby are
fair to and in the best interests of the Company’s shareholders, (ii) approving and declaring
advisable this Agreement, the Merger and the other transactions contemplated hereby, (iii)
approving and adopting an amendment to the Company Rights Agreement to render the Company Rights
inapplicable to the Merger, this Agreement, the Tender and Support Agreement, the Escrow Agreement
and the transactions contemplated hereby and thereby, (iv) directing that the adoption of this
Agreement be submitted to the Shareholder Meeting, and (v) making the Board Recommendation. At a
meeting duly called and held prior to the execution of this Agreement at which all “disinterested
directors” (as defined in Section 302A.673 of the MBCA) of the Company were present, a duly
authorized special committee of the Company Board duly and unanimously adopted resolutions
approving this Agreement, the Tender and Support Agreement, the Escrow Agreement and the
transactions contemplated hereby and thereby for purposes of Section 302A.673 of the MBCA. Except
to the extent permitted by Section 7.03(b), no Adverse Recommendation Change has or shall have
occurred.
Section 5.03 . Governmental Authorization. The execution, delivery and performance by the
Company of this Agreement and the consummation by the Company of the transactions contemplated
hereby require no action by or in respect of, or filing with, any Governmental Authority, other
than (i) the filing of the Articles of Merger with the Minnesota Secretary of State and appropriate
documents with the relevant authorities of other states in which the Company is qualified to do
business, (ii) compliance with any applicable requirements of (A) the HSR Act and (B) any
Applicable Law analogous to the HSR Act or otherwise
21
regulating antitrust, competition or merger control matters and in each case existing in
foreign jurisdictions (“Foreign Competition Laws”), (iii) compliance with any applicable
requirements of the 1933 Act, the 1934 Act and any other applicable U.S. state or federal
securities laws, (iv) such filings as may be required under Chapter 80B of the Minnesota Statutes,
and (v) any actions or filings the absence of which would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect.
Section 5.04 . Non-contravention. The execution, delivery and performance by the Company of
this Agreement and the consummation by the Company of the Merger and the other transactions
contemplated hereby do not and will not (i) contravene, conflict with, or result in any violation
or breach of any provision of the articles of incorporation or bylaws of the Company, (ii) assuming
compliance with the matters referred to in Section 5.03, contravene, conflict with, or result in a
violation or breach of any provision of any Applicable Law or Order, (iii) require any consent or
other action by any Person under, constitute a default, or an event that, with or without notice or
lapse of time or both, would constitute a default under, or cause or permit the termination,
cancellation, acceleration or other change of any right or obligation or the loss of any benefit
under, any provision of any material Contract binding upon the Company or any of its Subsidiaries
or any Governmental Authorization affecting, or relating in any way to, the assets or business of
the Company or any of its Subsidiaries, or (iv) result in the creation or imposition of any Lien on
any asset of the Company or any of its Subsidiaries, with such exceptions, in the case of each of
clauses (ii) through (iv), as would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect; provided that in determining whether a Company
Material Adverse Effect would result, any adverse effect otherwise excluded by clause (A) of the
definition of “Company Material Adverse Effect” shall be taken into account.
Section 5.05 . Capitalization. (a) The authorized capital stock of the Company consists of
90,000,000 shares of Company Common Stock and 10,000,000 shares of preferred stock, par value $0.01
per share, of the Company (of which 1,000,000 shares have been designated as Series A Junior
Participating Preferred Stock and reserved for issuance upon exercise of the Company Rights). As
of the close of business on November 1, 2006, (i) 29,999,426 Company Shares were issued and
outstanding, (ii) no shares of preferred stock of the Company were issued and outstanding, (iii)
Company Stock Options to purchase an aggregate of 6,008,648 Company Shares were issued and
outstanding (of which Company Stock Options to purchase an aggregate of 3,407,135 Company Shares
were exercisable), and (iv) an aggregate of 71,913 Company Shares were reserved for settlement of
Company Restricted Share Awards. All outstanding shares of capital stock of the Company have been,
and all shares that may be issued pursuant to any Company Stock Plan will be, when issued in
accordance with the respective terms thereof, duly authorized and validly issued and are (or,
22
in the case of shares that have not yet been issued, will be) fully paid, nonassessable and
free of preemptive rights.
(b) Section 5.05(b) of the Company Disclosure Schedule sets forth, as of the close of business
on November 1, 2006, a complete and correct list of (i) all outstanding Company Stock Options,
including with respect to each such option, the number of shares subject to such option, the name
of the holder, the grant date, the exercise price per share, the vesting schedule (including any
portion that would become vested as a result of the transactions contemplated hereby) and
expiration date of each such option, whether the option is an “incentive stock option” under
Section 422 of the Code or a non-qualified stock option, and the form of Company Stock Option award
agreement pursuant to which such option was granted, and (ii) all outstanding Company Restricted
Share Awards, including with respect to each such award, the name of the holder, the grant date and
vesting schedule (including any portion that would become vested as a result of the transactions
contemplated hereby), whether a Section 83(b) election was taken under the Code (if available) with
respect to such Company Restricted Share Award, and the form of Company Restricted Share Award
grant agreement pursuant to which such award was granted. The Company Stock Plans set forth on
Section 5.05(b) of the Company Disclosure Schedule are the only plans or programs the Company or
any of its Subsidiaries maintains under which stock options, restricted shares, restricted share
units, stock appreciation rights, performance shares or other compensatory equity-based awards have
been granted and remain outstanding or may be granted. All Company Stock Options and Company
Restricted Share Awards may, by their terms, be treated in accordance with Section 3.06.
(c) Except, in the case of clauses (i)-(iv) below, (x) as set forth in this Section 5.05, (y)
for changes since November 1, 2006 resulting from the exercise of Company Stock Options outstanding
on such date and disclosed on Section 5.05(b) of the Company Disclosure Schedule, or (z) for
issuances of shares of Company Common Stock and grants of Company Stock Options expressly permitted
under clauses (A) and (B) of Section 7.01(c)(i), there are no outstanding (i) shares of capital
stock or voting securities of the Company, (ii) securities of the Company convertible into or
exchangeable for shares of capital stock or voting securities of the Company, (iii) options,
warrants or other rights or arrangements to acquire from the Company, or other obligations or
commitments of the Company to issue, any capital stock or other voting securities or ownership
interests in, or any securities convertible into or exchangeable for capital stock or other voting
securities or ownership interests in, the Company, (iv) restricted shares, restricted share units,
stock appreciation rights, performance shares, contingent value rights, “phantom” stock or similar
securities or rights that are derivative of, or provide economic benefits based, directly or
indirectly, on the value or price of, any capital stock of, or other voting securities or ownership
interests in, the Company (the items in clauses (i)-(iv) being referred to collectively as the
“Company Securities”), (v) voting trusts, proxies or other
23
similar agreements or understandings to which Company or any of its Subsidiaries is a party or
by which the Company or any of its Subsidiaries is bound with respect to the voting of any shares
of capital stock of Company or any of its Subsidiaries, (vi) obligations or commitments of any
character restricting the transfer of, or requiring the registration for sale of, any shares of
capital stock of Company or any of its Subsidiaries, or (vii) obligations or commitments of any
character of the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any
of the Company Securities. No Company Securities are owned by any Subsidiary of the Company.
(d) With respect to the Company Stock Options, (i) each Company Stock Option intended to
qualify as an “incentive stock option” under Section 422 of the Code so qualifies, (ii) each grant
of a Company Stock Option was duly authorized no later than the date on which the grant of such
Company Stock Option was by its terms to be effective (the “Grant Date”) by all necessary corporate
action, including, as applicable, approval by the Company Board (or a duly constituted and
authorized committee thereof), or a duly authorized delegate thereof, and any required shareholder
approval by the necessary number of votes or written consents, and the award agreement governing
such grant (if any) was duly executed and delivered by each party thereto no later than the Grant
Date, (iii) each such grant was made in accordance with the terms of the applicable Company Stock
Plan, the 1934 Act and all other Applicable Law, including the rules of Nasdaq, (iv) the per share
exercise price of each Company Stock Option was not less than the fair market value of a share of
Company Common Stock on the applicable Grant Date, and (v) each such grant was properly accounted
for in all material respects in accordance with GAAP in the financial statements (including the
related notes) of the Company and disclosed in the Company SEC Documents in accordance with the
1934 Act and all other Applicable Laws. The Company has not granted, and there is no and has been
no Company policy or practice to grant, Company Stock Options prior to, or otherwise coordinate the
grant of Company Stock Options with, the release or other public announcement of material
information regarding the Company or any of its Subsidiaries or their financial results or
prospects.
Section 5.06 . Subsidiaries. (a)(i) Section 5.06(a)(i) of the Company Disclosure Schedule
sets forth a complete and correct list of each Subsidiary of the Company, its place and form of
organization and each jurisdiction in which it is authorized to conduct or actually conducts
business. (ii) Other than each Company Material Subsidiary, no Subsidiary of the Company would
constitute a “significant subsidiary” within the meaning of Rule 1-02 of Regulation S-X under the
1934 Act.
(b) Each Subsidiary of the Company is a corporation or other business entity duly incorporated
or organized (as applicable), validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization and has all corporate or other organizational powers
required to carry on its business as now conducted. Each such Subsidiary is duly qualified to do
business and is in
24
good standing in each jurisdiction where such qualification is necessary, except for those
jurisdictions where failure to be so qualified would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect.
(c) All of the outstanding capital stock of, or other voting securities or ownership interests
in, each Subsidiary of the Company, is owned by the Company, directly or indirectly, free and clear
of any Lien and free of any other limitation or restriction (including any restriction on the right
to vote, sell or otherwise dispose of such capital stock or other voting securities or ownership
interests). There are no outstanding (i) securities of the Company or any of its Subsidiaries
convertible into or exchangeable for shares of capital stock or other voting securities or
ownership interests in any Subsidiary of the Company, (ii) options, warrants or other rights or
arrangements to acquire from the Company or any of its Subsidiaries, or other obligations or
commitments of the Company or any of its Subsidiaries to issue, any capital stock of or other
voting securities or ownership interests in, or any securities convertible into or exchangeable for
any capital stock of or other voting securities or ownership interests in, any Subsidiary of the
Company, or (iii) restricted shares, stock appreciation rights, performance shares, contingent
value rights, “phantom” stock or similar securities or rights that are derivative of, or provide
economic benefits based, directly or indirectly, on the value or price of, any capital stock of, or
other voting securities or ownership interests in, any Subsidiary of the Company (the items in
clauses (i)-(iii), in addition to all shares of capital stock or voting securities of the Company’s
Subsidiaries, being referred to collectively as the “Company Subsidiary Securities”). There are no
outstanding obligations of the Company or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any of the Company Subsidiary Securities.
(d) Neither the Company nor any of its Subsidiaries directly or indirectly owns any equity,
ownership, profit, voting or similar interest in or any interest convertible, exchangeable or
exercisable for, any equity, profit, voting or similar interest in, any Person (other than a
Subsidiary of the Company).
Section 5.07 . SEC Filings and the Xxxxxxxx-Xxxxx Act. (a) The Company has made available to
Parent complete and correct copies of (i) the Company’s annual reports on Form 10-K for its fiscal
years ended March 31, 2006, 2005 and 2004, (ii) its quarterly reports on Form 10-Q for its fiscal
quarter ended June 30, 2006, (iii) its proxy or information statements relating to meetings of, or
actions taken without a meeting by, the shareholders of the Company since March 31, 2005, and (iv)
all of its other reports, statements, schedules and registration statements filed with the SEC
since March 31, 2005 (the documents referred to in this Section 5.07(a), together with all
information incorporated by reference therein in accordance with applicable SEC regulations, are
collectively referred to in this Agreement as the “Company SEC Documents”).
25
(b) Since March 31, 2005, the Company has filed with or furnished to the SEC each report,
statement, schedule, form or other document or filing required by Applicable Law to be filed or
furnished at or prior to the time so required. No Subsidiary of the Company is required to file or
furnish any report, statement, schedule, form or other document with, or make any other filing
with, or furnish any other material to, the SEC.
(c) As of its filing date, each Company SEC Document complied, and each such Company SEC
Document filed subsequent to the date hereof will comply, as to form in all material respects with
the applicable requirements of the 1933 Act and the 1934 Act, as the case may be.
(d) As of its filing date (or, if amended or superseded by a filing prior to the date hereof,
on the date of such filing), each Company SEC Document filed pursuant to the 1934 Act did not, and
each such Company SEC Document filed subsequent to the date hereof will not, contain any untrue
statement of a material fact or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they were made, not
misleading. Each Company SEC Document that is a registration statement, as amended or
supplemented, if applicable, filed pursuant to the 1933 Act, as of the date such registration
statement or amendment became effective, did not, and each such Company SEC Document filed
subsequent to the date hereof will not, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the statements therein
not misleading.
(e) The Company has made available to Parent copies of all comment letters received by the
Company from the SEC since January 1, 2004 relating to the Company SEC Documents, together with all
written responses of the Company thereto. There are no outstanding or unresolved comments in any
such comment letters received by the Company from the SEC. As of the date of this Agreement, to
the knowledge of the Company, none of the Company SEC Documents is the subject of any ongoing
review by the SEC.
(f) Each required form, report and document containing financial statements that has been
filed with or submitted to the SEC by the Company since July 31, 2002 was accompanied by the
certifications required to be filed or submitted by the Company’s chief executive officer and/or
chief financial officer, as required, pursuant to the Xxxxxxxx-Xxxxx Act and, at the time of filing
or submission of each such certification, such certification was true and accurate and complied
with the Xxxxxxxx-Xxxxx Act.
Section 5.08 . Financial Statements; Internal Controls. (a) The audited consolidated
financial statements and unaudited consolidated interim financial statements of the Company
included in the Company SEC Documents (i) comply as to form, as of their respective filing dates
with the SEC, in all material respects with the applicable accounting requirements and the
published rules and
26
regulations of the SEC with respect thereto, (ii) have been prepared in accordance with GAAP
applied on a consistent basis during the periods involved (except, in the case of unaudited
statements, for the absence of footnotes), and (iii) fairly present (except as may be indicated in
the notes thereto) the consolidated financial position of the Company and its consolidated
Subsidiaries as of the dates thereof and their consolidated results of operations and cash flows
for the periods then ended (subject to normal year-end adjustments in the case of any unaudited
interim financial statements).
(b) The Company’s system of internal controls over financial reporting is reasonably
sufficient in all material respects to provide reasonable assurance (i) that transactions are
recorded as necessary to permit preparation of financial statements in conformity with GAAP, (ii)
that receipts and expenditures are executed in accordance with the authorization of management, and
(iii) regarding prevention or timely detection of the unauthorized acquisition, use or disposition
of the Company’s assets that would materially affect the Company’s financial statements. No
significant deficiency or material weakness was identified in management’s assessment of internal
controls as of March 31, 2005 (nor has any such deficiency or weakness since been identified).
(c) The Company’s “disclosure controls and procedures” (as defined in Rules 13a-15(e) and
15d-15(e) of the 0000 Xxx) are reasonably designed to ensure that (i) all information (both
financial and non-financial) required to be disclosed by the Company in the reports that it files
or submits under the 1934 Act is recorded, processed, summarized and reported to the individuals
responsible for preparing such reports within the time periods specified in the rules and forms of
the SEC, and (ii) all such information is accumulated and communicated to the Company’s management
as appropriate to allow timely decisions regarding required disclosure and to make the
certifications of the principal executive officer and principal financial officer of the Company
required under the 1934 Act with respect to such reports.
(d) Since April 1, 2004, neither the chief executive officer nor the chief financial officer
of the Company has become aware of any fact, circumstance or change that is reasonably likely to
result in a “significant deficiency” or a “material weakness” in the Company’s internal controls
over financial reporting.
(e) The audit committee of the Company Board includes an Audit Committee Financial Expert, as
defined by Item 401(h)(2) of Regulation S-K.
(f) The Company has adopted a code of ethics, as defined by Item 406(b) of Regulation S-K, for
senior financial officers, applicable to its principal financial officer, comptroller or principal
accounting officer, or persons performing similar functions. The Company has promptly disclosed
any change in or waiver of the Company’s code of ethics with respect to any such persons, as
required by Section 406(b) of the Xxxxxxxx-Xxxxx Act. To the knowledge of the
27
Company, there have been no violations of provisions of the Company’s code of ethics by any
such persons.
Section 5.09 . Disclosure Documents. (a) Each document required to be filed by the Company
with the SEC or required to be distributed or otherwise disseminated to the Company’s shareholders
in connection with the transactions contemplated by this Agreement (the “Company Disclosure
Documents”), including the Schedule 14D-9, the proxy or information statement of the Company (the
“Proxy Statement”), if any, to be filed with the SEC for use in connection with the solicitation of
proxies from the Company’s shareholders in connection with the Merger and the Shareholder Meeting,
and any amendments or supplements thereto, when filed, distributed or disseminated, as applicable,
will comply as to form and substance in all material respects with the applicable requirements of
the 1934 Act.
(b) (i) The Company Proxy Statement, as supplemented or amended, if applicable, at the time
such Company Proxy Statement or any amendment or supplement thereto is first mailed to shareholders
of the Company and at the time such shareholders vote on adoption of this Agreement, and (ii) any
Company Disclosure Document (other than the Company Proxy Statement), at the time of the filing of
such Company Disclosure Document or any supplement or amendment thereto and at the time of any
distribution or dissemination thereof, will not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading. The representations and
warranties contained in this Section 5.09(b) will not apply to statements or omissions included in
the Company Disclosure Documents based upon information furnished to the Company in writing by
Parent or Merger Subsidiary specifically for use therein.
(c) The information with respect to the Company or any of its Subsidiaries that the Company
furnishes to Parent in writing specifically for use in the Schedule TO and the Offer Documents, at
the time of the filing of the Schedule TO, at the time of any distribution or dissemination of the
Offer Documents and at the time of the consummation of the Offer, 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 made therein, in the light of the circumstances under
which they were made, not misleading.
Section 5.10 . Absence of Certain Changes. (a) Since the Company Balance Sheet Date, (i) the
business of the Company and each of its Subsidiaries has been conducted in the ordinary course
consistent with past practice, and (ii) there has not been any event, change, development or set of
circumstances that has had or would reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect. Since the Company Balance Sheet Date to the date
hereof, there has not been any action or event, nor any authorization, commitment or agreement by
the Company or any of its Subsidiaries with respect
28
to any action or event, that if taken or if it occurred after the date hereof would be
prohibited by Section 7.01.
(b) Since the Company Balance Sheet Date to the date hereof, none of the Company and its
Subsidiaries has engaged, except in the ordinary course of business consistent with past practice,
in (i) any promotional sales or discount activity with any customers or distributors with the
effect of accelerating to prior fiscal quarters (including the current fiscal quarter) sales to the
trade or otherwise that would otherwise be expected to occur in subsequent fiscal quarters, (ii)
any practice that would have the effect of accelerating to prior fiscal quarters (including the
current fiscal quarter) collections of receivables that would otherwise be expected to be made in
subsequent fiscal quarters, or (iii) any practice that would have the effect of postponing to
subsequent fiscal quarters payments by the Company or any of its Subsidiaries that would otherwise
be expected to be made in prior fiscal quarters (including the current fiscal quarter).
Section 5.11 . No Undisclosed Material Liabilities. There are no liabilities or obligations
of the Company or any of its Subsidiaries of any kind whatsoever, whether accrued, contingent,
absolute, determined, determinable or otherwise, and there is no existing condition, situation or
set of circumstances that could reasonably be expected to result in such a liability or obligation,
other than:
(a) liabilities or obligations disclosed and provided for in the Company Balance Sheet or
disclosed in the notes thereto;
(b) liabilities or obligations incurred under this Agreement or in connection with the
transactions contemplated hereby; and
(c) liabilities or obligations incurred in the ordinary course of business since the Company
Balance Sheet Date that would not reasonably be expected to have, individually or in the aggregate,
a Company Material Adverse Effect.
Section 5.12 . Litigation. There is no Proceeding pending against or, to the knowledge of the
Company, threatened against or affecting, the Company or any of its Subsidiaries or any of their
respective businesses or assets or any of the directors or employees of the Company or any of its
Subsidiaries or any of its shareholders or Representatives (in each case insofar as any such
matters relate to their activities with the Company or any of its Subsidiaries) that would,
individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.
Neither the Company nor any of its Subsidiaries is subject to any Order against the Company or any
of its Subsidiaries or naming the Company or any of its Subsidiaries as a party or by which any of
the employees or representatives of the Company or any of its Subsidiaries is prohibited or
restricted from engaging in or otherwise conducting the business of the Company or any of its
Subsidiaries as presently conducted that would, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect.
29
Section 5.13 . Compliance with Applicable Law and Orders. (a) The Company and each of its
Subsidiaries is and, since January 1, 2003 has been, in compliance in all material respects with
all Applicable Laws and Orders, and no condition or state of facts exists that is reasonably likely
to give rise to a material violation of, or a material liability or default under, any Applicable
Law or Order. Neither the Company nor any of its Subsidiaries has received any written notice
since January 1, 2003 (i) of any material administrative or civil, or criminal investigation or
material audit (other than Tax audits) by any Governmental Authority relating to the Company or any
of its Subsidiaries, or (ii) from any Governmental Authority alleging that the Company or any of
its Subsidiaries are not in compliance in any material respect with any Applicable Law or Order.
(b) Each of the Company and its Subsidiaries has in effect all material Governmental
Authorizations necessary for it to own, lease or otherwise hold and to operate its properties and
assets and to carry on its businesses and operations as now conducted. There have occurred no
material defaults (with or without notice or lapse of time or both) under, material violations of,
or events giving rise to any right of termination, material amendment or cancellation of any such
Governmental Authorizations.
Section 5.14 . Material Contracts. (a) Section 5.14 of the Company Disclosure Schedule
contains a complete and correct list of each of the following Contracts to which the Company or any
of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is legally bound
as of the date hereof:
(i) (A) each of the 20 largest Contracts entered into by an end-user customer for the
license of any Company Software Products from the Company or any of its Subsidiaries in
each of the fiscal year ended March 31, 2005, the fiscal year ended March 31, 2006 and the
period from April 1, 2006 to September 30, 2006, and (B) each of the 20 largest Contracts
entered into by a non-end user customer that embeds one or more Company Software Products
into one or more product of the customer for the license of any Company Software Product
from the Company or any of its Subsidiaries in each of the fiscal year ended March 31,
2005, the fiscal year ended March 31, 2006 and the period from April 1, 2006 to September
30, 2006 (in each case in clauses (A) and (B) above, such largest Contracts determined
based on product license revenues earned in the applicable period) (each customer that is
a party to a Contract identified pursuant to this Section 5.14(a)(i), or any other
Contract by which the Company or any of its Subsidiaries is legally bound as of or after
the date hereof providing for product license revenues (on an annualized basis) in an
amount greater than any under such Contract, a “Major Customer”);
(ii) (A) each Contract between the Company or any of its Subsidiaries and (x) any of
the 20 largest licensors or other suppliers of the Company and any of its Subsidiaries in
the fiscal year ended March
30
31, 2006, or (y) any of the 10 largest licensors or other suppliers of the Company
and its Subsidiaries for the period between April 1, 2006 and September 30, 2006 (in each
case in this clause (A), such largest licensors or other suppliers determined on the basis
of aggregate payments made by the Company or any of its Subsidiaries in the applicable
period), and (B) each contract listed on Section 5.20(e)(i) of the Company Disclosure
Schedule (each licensor or supplier that is a party to a Contract identified pursuant to
clause (A) above, or any other Contract by which the Company or any of its Subsidiaries is
legally bound as of or after the date hereof providing for aggregate payments by the
Company or any of its Subsidiaries (on an annualized basis) in an amount greater than
under any such Contracts, a “Major Supplier”);
(iii) each Contract that contains any provisions restricting the Company or any of
its Subsidiary from competing in any line of business or with any Person or in any area or
engaging in any activity or business (including with respect to the development,
manufacture, marketing or distribution of their respective products or services), or
pursuant to which any benefit or right is required to be given or lost as a result of so
competing or engaging, or which would have any such effect on Parent or any of its
Affiliates after the consummation of the Offer or the Closing Date;
(iv) each Contract that (A) grants any exclusive license or supply or distribution
agreement or other exclusive rights, (B) grants any “most favored nation” rights, rights
of first refusal, rights of first negotiation or similar rights with respect to any
product, service or Intellectual Property, or (C) contains any provision that requires the
purchase of all or a given portion of the Company’s or any of its Subsidiaries’
requirements from a given third party, or any other similar provision;
(v) each Contract pursuant to which the Company or any of its Subsidiaries has agreed
or is required to provide any third party with access to source code, to provide for
source code to be put in escrow or to refrain from granting license or franchise rights to
any other person;
(vi) each Contract pursuant to which the Company or any of its Subsidiaries has been
granted any license to Intellectual Property, other than nonexclusive licenses granted in
the ordinary course of business of the Company and its Subsidiaries consistent with past
practice;
(vii) (A) each lease or sublease of real property, and (B) each lease or sublease of
personal property providing for either (x) annual payments of $100,000 or more or (y)
aggregate payments of $200,000 or more to which the Company or any of its Subsidiaries is
party as either lessor or lessee;
31
(viii) each Contract relating to Indebtedness, except any such Contract with an
aggregate outstanding principal amount not exceeding $100,000 and which may be prepaid on
not more than 30 days’ notice without the payment of any penalty;
(ix) each Contract providing for either (x) annual payments of $100,000 or more or
(y) aggregate payments of $200,000 or more, creating or granting a Lien (including Liens
upon properties acquired under conditional sales, capital leases or other title retention
or security devices), other than Permitted Liens;
(x) each Contract under which the Company or any of its Subsidiaries has, directly or
indirectly, made any loan, capital contribution to, or other investment in, any Person
(other than the Company or any of its Subsidiaries and other than extensions of credit in
the ordinary course of business consistent with past practices);
(xi) each Contract under which the Company or any of its Subsidiaries has any
material obligations that have not been satisfied or performed relating to the acquisition
or disposition of all or any portion of any business of the Company (whether by merger,
sale of stock, sale of assets or otherwise);
(xii) each Contract providing for aggregate payments of $100,000 or more, (i) between
the Company or any of its Subsidiaries and (A) any Governmental Authority, (B) any prime
contractor to any Governmental Authority, or (C) any subcontractor with respect to any
contract described in clauses (A) or (B) above, or (ii) to the knowledge of the Company,
financed by any Governmental Authority and subject to the rules and regulations of any
Governmental Authority concerning procurement (each third party that is a party to a
Contract identified pursuant to this Section 5.14(a)(xii), or any other Contract which
would have been required to be so disclosed if it had existed on the date of this
Agreement, a “Major Governmental Party”);
(xiii) each partnership, joint venture or other similar Contract or arrangement;
(xiv) each Contract for the development of any Necessary IP Rights;
(xv) each employee collective bargaining agreement or other Contract with any labor
union and each employment Contract (other than for employment at-will or similar
arrangements) that is not terminable by the Company without notice and without cost to the
Company;
32
(xvi) each material Contract entered into in the last five years in connection with
the settlement or other resolution of any Proceeding that has any continuing obligations,
liabilities or restrictions or involved payment of more than $100,000; or
(xvii) except for the Contracts disclosed above, each Contract required to be filed
by the Company pursuant to Item 601(b)(10) of Regulation S-K under the 1933 Act, or that
is otherwise material to Company and its Subsidiaries, taken as a whole, and not entered
into in the ordinary course of business consistent with past practice.
(b) Each Contract disclosed in Section 5.14(a) of the Company Disclosure Schedule, required to
be disclosed pursuant to this Section or which would have been required to be so disclosed if it
had existed on the date of this Agreement and (without duplication of any of the foregoing) each
Contract between the Company or any of its Subsidiaries and a Major Customer or a Major Supplier
(each, a “Material Contract”) is in full force and effect and is a legal, valid and binding
agreement of the Company or any of its Subsidiary, as the case may be, and, to the knowledge of the
Company, of each other party thereto, enforceable against the Company or such Subsidiary, as the
case may be, and, to the knowledge of the Company, against the other party or parties thereto, in
each case, in accordance with its terms except as such enforceability may be limited by bankruptcy,
insolvency, moratorium and other similar Applicable Law affecting creditors’ rights generally and
by general principles of equity. No notice to terminate, in whole or part, any Material Contract
has been served, nor, to the knowledge of the Company, has any such termination been threatened.
Except for overdue payables from Major Customers in respect of which adequate accruals or reserves
have been established on the Company Balance Sheet, none of the Company, any of its Subsidiaries
or, to the knowledge of the Company, any other party thereto is in default or breach in any
material respect under the terms of any Material Contract, and, to the knowledge of the Company, no
event or circumstance has occurred that, with notice or lapse of time or both, would constitute any
event of default thereunder.
(c) Since April 1, 2006, none of the Major Customers, Major Suppliers or Major Governmental
Parties has terminated, failed to renew or requested any material amendment to, which amendment
would reasonably be expected to be adverse to the Company or any of its Subsidiaries, any of its
Contracts or any of its other existing business relationships with the Company or any of its
Subsidiaries.
(d) Complete and correct copies of each Material Contract in existence as of the date hereof
have been delivered by the Company to Parent prior to the date hereof.
Section 5.15 . Taxes. (a) All material income, franchise and other Tax Returns required by
Applicable Law to be filed with any Taxing Authority by, or
33
on behalf of, the Company or any of its Subsidiaries have been filed when due in accordance
with all Applicable Laws, and all such Tax Returns are, or shall be at the time of filing, true and
complete in all material respects.
(b) The Company and each of its Subsidiaries has paid (or has had paid on its behalf) or has
withheld and remitted to the appropriate Taxing Authority all material Taxes due and payable, or,
where payment is not yet due, has established (or has had established on its behalf and for its
sole benefit and recourse) in accordance with GAAP an adequate accrual for all material Taxes
through the end of the last period for which the Company and its Subsidiaries ordinarily record
items on their respective books.
(c) The income and franchise Tax Returns of the Company and the Company Material Subsidiaries
through the Tax year ended December 31, 2002 have been examined and closed or are Tax Returns with
respect to which the applicable period for assessment under Applicable Law, after giving effect to
extensions or waivers, has expired.
(d) There is no Proceeding pending or, to the Company’s knowledge, threatened against or with
respect to the Company or any of its Subsidiaries in respect of any Tax or Tax Asset.
(e) Neither the Company nor any of its Subsidiaries has granted any extension or waiver of the
statute of limitations period applicable to any Tax Return, which period (after giving effect to
such extension or waiver) has not yet expired.
(f) During the five-year period ending on the date hereof, neither the Company nor any of its
Subsidiaries was a “distributing corporation” or a “controlled corporation” in a transaction
intended to be governed by Section 355 of the Code.
(g) Section 5.15(g) of the Company Disclosure Schedule contains a list of all jurisdictions
(whether foreign or domestic) in which the Company or any of its Subsidiaries currently files
income, franchise or payroll Tax Returns.
(h) “Tax” means (i) any tax, governmental fee or other like assessment or charge of any kind
whatsoever (including withholding on amounts paid to or by any Person), together with any interest,
penalty, addition to tax or additional amount imposed by any Governmental Authority (a “Taxing
Authority”) responsible for the imposition of any such tax (domestic or foreign), and any liability
for any of the foregoing as transferee, (ii) in the case of the Company or any of its Subsidiaries,
liability for the payment of any amount of the type described in clause (i) as a result of being or
having been before the Effective Time a member of an affiliated, consolidated, combined or unitary
group, or a party to any agreement or arrangement, as a result of which liability of the Company or
any of its Subsidiaries to a Taxing Authority is determined or taken
34
into account with reference to the activities of any other Person, and (iii) liability of the
Company or any of its Subsidiaries for the payment of any amount as a result of being party to any
Tax Sharing Agreement or with respect to the payment of any amount imposed on any Person of the
type described in (i) or (ii) as a result of any existing express or implied agreement or
arrangement (including an indemnification agreement or arrangement). “Tax Asset” means any net
operating loss, net capital loss, investment tax credit, foreign tax credit, charitable deduction
or any other credit or tax attribute that could be carried forward or back to reduce Taxes
(including without limitation deductions and credits related to alternative minimum Taxes). “Tax
Return” means any report, return, document, declaration or other information or filing required to
be supplied to any Taxing Authority with respect to Taxes, including information returns, any
documents with respect to or accompanying payments of estimated Taxes, or with respect to or
accompanying requests for the extension of time in which to file any such report, return, document,
declaration or other information. “Tax Sharing Agreements” means all existing agreements or
arrangements (whether or not written) binding the Company or any of its Subsidiaries that provide
for the allocation, apportionment, sharing or assignment of any Tax liability or benefit, or the
transfer or assignment of income, revenues, receipts, or gains for the purpose of determining any
Person’s Tax liability (excluding any indemnification agreement or arrangement pertaining to the
sale or lease of assets of the Company or any of its Subsidiaries).
Section 5.16 . Employee Benefit Plans. (a) Section 5.16 of the Company Disclosure Schedule
contains a correct and complete list identifying each “employee benefit plan,” as defined in
Section 3(3) of ERISA, each employment, severance or similar contract, plan, arrangement or policy
and each other plan or arrangement (written or oral) providing for compensation, bonuses,
profit-sharing, stock option or other stock related rights or other forms of incentive or deferred
compensation, vacation benefits, insurance (including any self-insured arrangements), health or
medical benefits, employee assistance program, disability or sick leave benefits, workers’
compensation, supplemental unemployment benefits, severance benefits and post-employment or
retirement benefits (including compensation, pension, health, medical or life insurance benefits)
(each, an “Employee Plan”) which is maintained, administered or contributed to by the Company or
any ERISA Affiliate of the Company and covers any employee or former employee of the Company or any
of its Subsidiaries, or with respect to which the Company or any of its Subsidiaries has any
liability (each, a “Company Employee Plan”). Copies of such Company Employee Plans (and, if
applicable, related trust or funding agreements or insurance policies) and all amendments thereto
have been made available to Parent together with the most recent annual report and tax return
prepared in connection with any such Company Employee Plan.
(b) Neither the Company nor any ERISA Affiliate nor any predecessor thereof sponsors,
maintains or contributes to, or has in the past sponsored,
35
maintained or contributed to, any Employee Plan subject to Title IV of ERISA, any non-U.S.
defined benefit plan, or any multiple employer plan within the meaning of Section 4063 or 4064 of
ERISA.
(c) Neither the Company nor any ERISA Affiliate nor any predecessor thereof contributes to, or
has in the past contributed to, any multiemployer plan, as defined in Section 3(37) of ERISA.
(d) Each Company Employee Plan which is intended to be qualified under Section 401(a) of the
Code has received a favorable determination letter, or has pending or has time remaining in which
to file, an application for such determination from the Internal Revenue Service, and the Company
is not aware of any reason why any such determination letter should be revoked or not be reissued.
The Company has made available to Parent copies of the most recent Internal Revenue Service
determination letters with respect to each such Company Employee Plan. Each Company Employee Plan
has been maintained in substantial compliance with its terms and with the requirements prescribed
by any and all statutes, orders, rules and regulations, including ERISA and the Code, which are
applicable to such Employee Plan. No events have occurred with respect to any Company Employee
Plan that could result in payment or assessment by or against the Company of any excise taxes under
Sections 4972, 4975, 4976, 4977, 4979, 4980B, 4980D, 4980E or 5000 of the Code.
(e) The consummation of the transactions contemplated by this Agreement will not (either alone
or together with any other event) entitle any employee, director or independent contractor of the
Company or any of its Subsidiaries to severance pay or accelerate the time of payment or vesting or
trigger any payment or funding (through a grantor trust or otherwise) of compensation or benefits
under, increase the amount payable or trigger any other material obligation pursuant to, any
Company Employee Plan.
(f) There is no contract, plan or arrangement (written or otherwise) covering any employee or
former employee of the Company or any of its Subsidiaries that, individually or collectively, would
entitle any employee or former employee to any severance or other payment solely as a result of the
transactions contemplated hereby, or could give rise to the payment of any amount that would not be
deductible pursuant to the terms of Section 280G or 162(m) of the Code.
(g) Neither the Company nor any of its Subsidiaries has any liability in respect of
post-retirement health, medical or life insurance benefits for retired, former or current employees
or directors of the Company or any of its Subsidiaries except as required to avoid excise tax under
Section 4980B of the Code.
(h) There has been no amendment to, written interpretation of or announcement (whether or not
written) by the Company or any of its Subsidiaries
36
relating to, or change in employee participation or coverage under, any Employee Plan that
would increase materially the expense of maintaining such Employee Plan above the level of the
expense incurred in respect thereof for the most recent fiscal year ended prior to the date hereof.
(i) There is no Proceeding pending, or, to the knowledge of the Company, threatened, against
or involving any Employee Plan before any arbitrator or any Governmental Authority.
(j) With respect to all Company Employee Plans subject to the laws of any jurisdiction outside
the United States (“International Plans”), (i) to the Company’s knowledge, the International Plans
have been maintained in all material respects in accordance with all Applicable Laws, (ii) if
intended to qualify for special Tax treatment, the International Plans meet all requirements for
such treatment, (iii) if intended to be funded and/or book-reserved, the International Plans are
fully funded and/or book reserved, as appropriate, based upon reasonable actuarial assumptions, and
(iv) no liability which could be material to the Company and its Subsidiaries, taken as a whole,
exists or reasonably could be imposed upon the assets of the Company or any of its Subsidiaries by
reason of such International Plans, other than to the extent reflected on the Company Balance
Sheet.
Section 5.17 . Labor and Employment Matters. Neither the Company nor any of its Subsidiaries
is a party to, bound by or subject to, or is currently negotiating in connection with entering
into, any collective bargaining agreement or understanding with a labor union or organization.
None of the employees of the Company or any of its Subsidiaries is represented by any union with
respect to his or her employment by the Company or such Subsidiary. There is no (i) unfair labor
practice, labor dispute (other than routine individual grievances) or labor arbitration proceeding
pending or, to the knowledge of the Company, threatened against the Company or any of its
Subsidiaries relating to their businesses, (ii) activity or proceeding by a labor union or
representative thereof to the knowledge of the Company to organize any employees of the Company or
any of its Subsidiaries, or (iii) lockout, strike, slowdown, work stoppage or threat thereof by or
with respect to such employees, and during the last three years there has not been any such action.
Section 5.18 . Insurance Policies. (a) Section 5.18(a) of the Company Disclosure Schedule
lists all material insurance policies and fidelity bonds covering the assets, business, equipment,
properties, operations, employees, officers or directors of the Company and the Company Material
Subsidiaries (collectively, the “Insurance Policies”) and the coverage limitations and deductibles
applicable to each such policy. All of the Insurance Policies or renewals thereof are in full
force and effect and not voidable. There is no material claim by the Company or any of its
Subsidiaries pending under any of such policies or bonds as to which the Company has been notified
that coverage has been questioned, denied or disputed by the underwriters of such policies or
bonds.
37
All premiums due and payable under all such policies and bonds have been paid when due, and
the Company and its Subsidiaries are otherwise in material compliance with the terms of such
policies and bonds.
(b) Section 5.18(b) of the Company Disclosure Schedule lists each material insurance claim, if
any, made by the Company or any of its Subsidiaries since the Company Balance Sheet Date to the
date hereof.
Section 5.19 . Environmental Matters. (a) Except as would not reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect:
(i) no notice, demand, request for information, citation, summons or order has been
received, no complaint has been filed, no penalty has been assessed, and no Proceeding is
pending and, to the knowledge of the Company, is threatened by any Governmental Authority
or other Person relating to or arising out of any failure of the Company or any of its
Subsidiaries to comply with any Environmental Law;
(ii) the Company and its Subsidiaries are and have been in compliance with all
Environmental Laws and all Governmental Authorizations relating to or required by
Environmental Law and affecting, or relating in any way to, the business of the Company;
(iii) there has been no release by the Company or any of its Subsidiaries, or for
which the Company or any of its Subsidiaries would reasonably be expected to be liable by
Contract or by operation of Law, of any Hazardous Substance at, under, from or to any
facility or real property currently or formerly owned, leased or operated by the Company
or any of its Subsidiaries; and
(iv) there are no liabilities or obligations of or relating to the Company or any of
its Subsidiaries, whether accrued, contingent, absolute, determined, determinable or
otherwise arising under or relating to any Environmental Law or any Hazardous Substance
and, there is no condition, situation or set of circumstances that could reasonably be
expected to result in or be the basis for any such liability or obligation.
(b) For purposes of this Section 5.19, the terms “Company” and “Subsidiaries” shall include
any entity that is, in whole or in part, a predecessor of the Company or any of its Subsidiaries.
Section 5.20 . Intellectual Property; Computer Software. (a) The Company and its
Subsidiaries own or otherwise hold the right to use (i) all Intellectual Property Rights necessary
for the conduct of the business of the Company and its Subsidiaries as currently conducted, and
(ii) all Intellectual Property Rights to the Company’s knowledge in existence, and necessary for
the
38
conduct of the business of the Company and its Subsidiaries as currently proposed to be
conducted by the Company or any of its Subsidiaries (the “Necessary IP Rights”). The consummation
of the transactions contemplated by this Agreement will not (i) alter, restrict, encumber, impair
or extinguish any Necessary IP Rights, or (ii) result in the creation of any Lien with respect to
any of the Intellectual Property Rights owned or otherwise held by the Company or any of its
Subsidiaries.
(b) There are no legal disputes or claims, threatened or pending, (i) alleging infringement,
misappropriation or any other violation of any Intellectual Property Rights of any Person by the
Company or any of its Subsidiaries or any of their respective products or services, or (ii)
challenging the scope, ownership, validity, or enforceability of the Company IP or of the Company
and its Subsidiaries’ rights under the Necessary IP Rights. None of the Company or its
Subsidiaries has infringed, misappropriated or otherwise violated any Intellectual Property Rights
of any Person.
(c) (i) The Company and its Subsidiaries hold all right, title and interest in and to the
Company IP, free and clear of any Lien, (ii) no Person, other than the Company and its
Subsidiaries, possesses any current or contingent rights to license, sell or otherwise distribute
the Company Software Products or other products or services utilizing the Company IP, and (iii)
there are no restrictions on the disclosure, use, license or transfer of the Necessary IP Rights,
the Company IP or the Company Software Products.
(d) Section 5.20(d)(i) of the Company Disclosure Schedule contains a true and complete list of
all Registered IP. The Company and its Subsidiaries have taken all actions necessary to maintain
and protect the Registered IP, including payment of applicable maintenance fees, filing of
applicable statements of use, timely response to office actions and disclosure of any required
information, and all assignments (and licenses where required) of the Registered IP have been duly
recorded with the appropriate governmental authorities. Section 5.20(d)(ii) of the Company
Disclosure Schedule includes a true and complete list of all material actions that must be taken
within 180 days of the date hereof with respect to any of the Registered IP. The Company and each
of its Subsidiaries have complied with all applicable notice and marking requirements for the
Registered IP. None of the Registered IP has been adjudged invalid or unenforceable in whole or
part and, to the knowledge of the Company, all Registered IP is valid and enforceable.
(e) Section 5.20(e)(i) of the Company Disclosure Schedule contains (A) a true and complete
list of all licenses and other Contracts pursuant to which the Company or any Subsidiary is granted
rights in any third-party Intellectual Property (excluding any Publicly Available Software) (x)
sold with, incorporated into or used in the development of any Company Software Product, or (y)
used or held for use by the Company for any other purpose (excluding, for purposes of clause (y)
only, any generally available, off-the-shelf software programs licensed
39
by the Company on standard terms), (B) a summary of the Company’s and its Subsidiaries’
remaining payment and accounting obligations, if any, with respect to each of the Contracts listed
thereon, excluding agreements for generally available, off-the-shelf software programs licensed by
the Company on standard terms. Section 5.20(e)(ii) of the Company Disclosure Schedule contains a
true and complete list of (A) all agreements pursuant to which the Company or any of its
Subsidiaries has provided source code of any Company Software Product or any material part thereof
to a third party, and (B) all third parties to whom the Company or any of its Subsidiaries has
granted a contingent right to receive the source code of any Company Software Product or any
material part thereof, whether pursuant to an escrow arrangement or otherwise.
(f) The Company and its Subsidiaries have taken all commercially reasonable steps to protect
their rights in the Company IP and to protect any confidential information provided to them by any
other Person under obligation of confidentiality. Without limitation of the foregoing, the Company
and its Subsidiaries have not made any of their trade secrets or other confidential or proprietary
information that they intended to maintain as confidential (including source code with respect to
Company Software Products) available to any other Person except pursuant to written agreements, or
other legally binding obligations, requiring such Person to maintain the confidentiality of such
information or materials.
(g) The Company and its Subsidiaries have obtained from all parties (including current or
former directors, officers or employees) who have created any portion of, or otherwise who would
have any rights in or to, any Company IP or Company Software Product valid and enforceable
assignments of any such rights to the Company and its Subsidiaries either in writing or through
operation of law. Neither the Company nor any of its Subsidiaries is obligated to provide any
consideration (whether financial or otherwise) to any third party with respect to any exercise of
rights by the Company or any of its Subsidiaries, or any successor to the Company or any of its
Subsidiaries, in any Company IP or Company Software Product.
(h) Section 5.20(h) of the Company Disclosure Schedule contains a true and complete list of
all Company Software Products.
(i) No Company Software Product (including any Company Software Product currently under
development) contains any code that is, in whole or in part, subject to the provisions of any
license to software that is made generally available to the public without requiring payment of
fees or royalties (including any obligation or condition under any “open source” license such as,
without limitation, the GNU General Public License, GNU Lesser General Public License, Mozilla
Public License or BSD licenses) (collectively, “Publicly Available Software”). All Publicly
Available Software used by the Company or any Subsidiary has been used in its entirety and without
modification. Neither the Company nor any Subsidiary has incorporated or otherwise used Publicly
40
Available Software in a manner that would require, or condition the use or distribution of any
Company Software Product on the disclosure, licensing or distribution of any source code for any
portion of such Company Software Product.
(j) The Company Software Products do not contain any computer code designed to disrupt,
disable, harm, distort or otherwise impede in any manner the legitimate operation of such software
by or for the Company or its authorized users, or any other associated software, firmware,
hardware, computer system or network (including without limitation what are sometimes referred to
as “viruses”, “worms”, “time bombs” and/or “back doors”).
(k) Neither the Company nor any of its Subsidiaries has transferred ownership of, or granted
any currently effective exclusive license with respect to, any Company IP to any other Person.
(l) No funding, facilities or personnel of any Governmental Authority were used, directly or
indirectly, to develop or create, in whole or in part, any Company IP, including any Company
Software Product. Neither the Company nor any Subsidiary is or has ever been a member or promoter
of, or a contributor to, any industry standards body or similar organization that could compel the
Company or such Subsidiary to grant or offer to any other Person any license or right to such
Company IP.
(m) The IT Assets operate and perform in all material respects in a manner that permits the
Company and each of its Subsidiaries to conduct its business as currently conducted and, to the
knowledge of the Company, no person has gained unauthorized access to any IT Asset. Each of the
Company and its Subsidiaries have implemented reasonable backup and disaster recovery technology
processes consistent with industry practices.
Section 5.21 . Properties. (a) The Company and each of its Subsidiaries has good and
marketable title to, or in the case of leased property and leased tangible assets, valid leasehold
interests in, all of its material properties and material tangible assets. All such assets and
properties, other than assets and properties in which the Company or any of its Subsidiaries has
leasehold interests, are free and clear of all Liens, except for Permitted Liens.
(b) Section 5.21(b) of the Company Disclosure Schedule sets forth a complete and correct list
of all real property and interests in real property leased by the Company or any of its
Subsidiaries (each, a “Leased Real Property”). Neither the Company nor any of its Subsidiaries
owns or has previously owned in fee any real property or held any other interests in real property
(other than the leasehold interests in the Leased Real Property).
(c) With respect to each Leased Real Property, neither the Company nor any of its Subsidiaries
has subleased, licensed or otherwise granted anyone a
41
currently effective right to use or occupy such Leased Real Property or any portion thereof.
The Company and each of its Subsidiaries enjoy peaceful and undisturbed possession of the Leased
Real Property.
Section 5.22 . Interested Party Transactions. (i) Neither the Company nor any of its
Subsidiaries is a party to any transaction or agreement (other than ordinary course directors’
compensation arrangements or any Company Employee Plan listed on Section 5.16(a) of the Company
Disclosure Schedule) with any Affiliate, shareholder that beneficially owns 5% or more of the
Company’s outstanding common stock, or director or executive officer of the Company, and (ii) no
event has occurred since the date of the Company’s last proxy statement to its shareholders that
would be required to be reported by the Company pursuant to Item 404 of Regulation S-K promulgated
by the SEC.
Section 5.23 . Certain Business Practices. Except as would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect, neither the Company
nor any of its Subsidiaries nor (to the knowledge of the Company) any director, officer, agent or
employee of the Company or any of its Subsidiaries (i) used any funds for unlawful contributions,
gifts, entertainment or other expenses relating to political activity or for the business of the
Company or any of its Subsidiaries, (ii) made any bribe or kickback, illegal political
contribution, payment from corporate funds which was incorrectly recorded on the books and records
of the Company or any of its Subsidiaries, unlawful payment from corporate funds to foreign or
domestic government officials or employees or to foreign or domestic political parties or campaigns
or violated any provision of the Foreign Corrupt Practices Act of 1977, or (iii) made any other
unlawful payment.
Section 5.24 . Finders’ Fees. (a) Except for Xxxxxx Xxxxxxx & Co. Incorporated, a copy of
whose engagement agreement (and all indemnification and other agreements related to such
engagement) has been made available to Parent, there is no investment banker, broker, finder or
other intermediary that has been retained by or is authorized to act on behalf of the Company or
any of its Subsidiaries, Affiliates, or any of their respective officers or directors in their
capacity as officers or directors, who might be entitled to any banking, broker’s finder’s or
similar fee or commission in connection with the Merger and the other transactions contemplated by
this Agreement.
(b) The Company does not believe that the aggregate fees and expenses of its accountants,
brokers, financial advisors, consultants, legal counsel or other persons retained by the Company or
any of its Subsidiaries, Affiliates, or any of their respective officers or directors in their
capacity as officers or directors, incurred or to be incurred in connection with this Agreement and
the transactions contemplated by this Agreement will exceed the aggregate fees and expenses set
forth in Section 5.24(b) of the Company Disclosure Schedule.
42
Section 5.25 . Opinion of Financial Advisor. The Company has received the opinion of Xxxxxx
Xxxxxxx & Co. Incorporated financial advisor to the Company, dated as of the date hereof, to the
effect that, as of the date of such opinion, the Merger Consideration is fair to the Company’s
shareholders from a financial point of view, a copy of which opinion has been delivered to Parent
for informational purposes only.
Section 5.26 . Antitakeover Statutes; Company Rights Agreement. (a) No further action is
required by the Company Board or the shareholders of the Company to render inapplicable to the
Offer, the Merger, this Agreement, the Tender and Support Agreement, the Escrow Agreement and the
transactions contemplated hereby and thereby the restrictions on (i) “control share acquisition”
(as defined in Section 302A.011 of the MBCA) set forth in Section 302A.671 of the MBCA, and
(ii)“business combinations” with an “interested shareholder” (each as defined in Section 302A.011
of the MBCA) set forth in Section 302A.673 of the MBCA, and, accordingly, neither such Section nor
any other antitakeover or similar Applicable Law applies or purports to apply to any such
transactions, other than Section 302A.675 of the MBCA and Chapter 80B of the Minnesota Statutes.
Except as set forth in the immediately preceding sentence, no other “control share acquisition,”
“fair price,” “moratorium” or other antitakeover laws enacted under U.S. state or federal laws
apply to the Merger, this Agreement, the Tender and Support Agreement, the Escrow Agreement or any
of the transactions contemplated hereby and thereby.
(b) The Company has taken all action necessary (i) to render the Company Rights inapplicable
to the Merger, this Agreement, the Tender and Support Agreement, the Escrow Agreement and the
transactions contemplated hereby and thereby, and (ii) ensure that (A) neither Parent, Merger
Subsidiary nor any of their Affiliates will become an “Acquiring Person” (as such term is defined
in the Company Rights Agreement), (B) none of a “Share Acquisition Date”, a “Distribution Date”, or
a “Section 13 Event” (each as defined in the Company Rights Agreement) shall occur, and (C) the
Company Rights will not separate from the shares of Company Common Stock, in each case, by reason
of the approval or execution of this Agreement, the announcement or consummation of the Merger,
this Agreement, the Tender and Support Agreement, the Escrow Agreement or the transactions
contemplated hereby and thereby.
ARTICLE 6
Representations and Warranties of Parent
Representations and Warranties of Parent
Parent represents and warrants to the Company that:
Section 6.01 . Corporate Existence and Power. Each of Parent and Merger Subsidiary is a
corporation duly incorporated, validly existing and in good standing under the laws of the state of
its incorporation and has all corporate powers required to carry on its business as now conducted.
Since the date of its
43
incorporation, Merger Subsidiary has not engaged in any activities other than in connection
with or as contemplated by this Agreement.
Section 6.02 . Corporate Authorization. The execution, delivery and performance by Parent
and Merger Subsidiary of this Agreement and the consummation by Parent and Merger Subsidiary of the
transactions contemplated hereby are within the corporate powers of Parent and Merger Subsidiary
and have been duly authorized by all necessary corporate action. This Agreement constitutes a
valid and binding agreement of each of Parent and Merger Subsidiary, enforceable against each such
Person in accordance with its terms, except as such enforceability may be limited by bankruptcy,
insolvency, moratorium and other similar Applicable Law affecting creditors’ rights generally and
by general principles of equity.
Section 6.03 . Governmental Authorization. The execution, delivery and performance by Parent
and Merger Subsidiary of this Agreement and the consummation by Parent and Merger Subsidiary of the
transactions contemplated hereby require no action by or in respect of, or filing with, any
Governmental Authority, other than (i) the filing of the Articles of Merger with the Minnesota
Secretary of State and appropriate documents with the relevant authorities of other states in which
Parent is qualified to do business, (ii) compliance with any applicable requirements of (A) the HSR
Act and (B) any Foreign Competition Law, (iii) compliance with any applicable requirements of the
1933 Act, the 1934 Act and any other U.S. state or federal securities laws, (iv) such filings as
may be required under Chapter 80B of the Minnesota Statutes, and (v) any actions or filings the
absence of which would not reasonably be expected to prevent, materially delay or materially impair
Parent’s or Merger Subsidiary’s ability to consummate the transactions contemplated by this
Agreement.
Section 6.04 . Non-contravention. The execution, delivery and performance by Parent and
Merger Subsidiary of this Agreement and the consummation by Parent and Merger Subsidiary of the
transactions contemplated hereby do not and will not (i) contravene, conflict with, or result in
any violation or breach of any provision of the certificate of incorporation or bylaws of Parent or
the articles of incorporation and bylaws of Merger Subsidiary, (ii) assuming compliance with the
matters referred to in Section 6.03, contravene, conflict with or result in a violation or breach
of any provision of any Applicable Law or Order, (iii) require any consent or other action by any
Person under, constitute a default under, or cause or permit the termination, cancellation,
acceleration or other change of any right or obligation or the loss of any benefit to which Parent
or any of its Subsidiaries is entitled under, any provision of any agreement or other instrument
binding upon Parent or Merger Subsidiary, with such exceptions, in the case of each of clauses (ii)
and (iii) above, as would not reasonably be expected to prevent, materially delay or materially
impair Parent’s or Merger Subsidiary’s ability to consummate the transactions contemplated by this
Agreement.
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Section 6.05 . Disclosure Documents. (a) The information with respect to Parent and any of
its Subsidiaries that Parent furnishes to the Company in writing specifically for use in any
Company Disclosure Document 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
made therein, in the light of the circumstances under which they were made, not misleading (i) in
the case of the Company Proxy Statement, as supplemented or amended, if applicable, at the time
such Company Proxy Statement or any amendment or supplement thereto is first mailed to shareholders
of the Company and at the time such shareholders vote on adoption of this Agreement, and (ii) in
the case of any Company Disclosure Document other than the Company Proxy Statement, at the time of
the filing of such Company Disclosure Document or any supplement or amendment thereto and at the
time of any distribution or dissemination thereof.
(b) The Schedule TO, when filed, and the Offer Documents, when distributed or disseminated,
will comply as to form and substance in all material respects with the applicable requirements of
the 1934 Act and, at the time of such filing, at the time of such distribution or dissemination and
at the time of consummation of the Offer, will not contain any untrue statement of a material fact
or omit to state any material fact necessary to make the statements made therein, in the light of
the circumstances under which they were made, not misleading; provided that this representation and
warranty will not apply to statements or omissions included in the Schedule TO and the Offer
Documents based upon information furnished to Parent or Merger Subsidiary in writing by the Company
specifically for use therein.
Section 6.06 . Company Securities. Neither Parent nor any of its Subsidiaries owns any
Company Securities.
Section 6.07 . Financing. Parent has, or will have prior to the expiration of the Offer,
sufficient cash, available lines of credit or other sources of immediately available funds to
enable Merger Subsidiary to purchase all of the Company Shares outstanding pursuant to the Offer.
Section 6.08 . Litigation. There is no Proceeding pending against or, to the knowledge of
Parent, threatened against or affecting, Parent or any of its Subsidiaries that would, individually
or in the aggregate, reasonably be expected to prevent, materially delay or materially impair
Parent’s or Merger Subsidiary’s ability to consummate the transactions contemplated by this
Agreement. Neither Parent nor any of its Subsidiaries is subject to any Order against Parent or
any of its Subsidiaries or naming Parent or any of its Subsidiaries as a party that would,
individually or in the aggregate, reasonably be expected to prevent, materially delay or materially
impair Parent’s or Merger Subsidiary’s ability to consummate the transactions contemplated by this
Agreement.
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ARTICLE 7
Covenants of the Company
Covenants of the Company
The Company agrees that:
Section 7.01 . Conduct of the Company. Except for matters expressly contemplated by this
Agreement, from the date of this Agreement until the Effective Time, the Company shall, and shall
cause each of its Subsidiaries to, conduct its business in the ordinary course consistent with past
practice and use commercially reasonable efforts to (i) preserve intact its assets, Intellectual
Property Rights and business organization, (ii) maintain in effect all of its Governmental
Authorizations, (iii) keep available the services of its directors, officers and employees, (iv)
maintain satisfactory relationships with its customers, partners, suppliers, licensors, licensees,
distributors and others having material business relationships with it, (v) manage its working
capital (including the timing of collection of accounts receivable and of the payment of accounts
payable and the management of inventory) in the ordinary course of business consistent with past
practice, and (vi) continue to make capital expenditures consistent with the Capex Budget. Without
limiting the generality of the foregoing, except for matters expressly permitted by this Agreement
or set forth on Section 7.01 of the Company Disclosure Schedule, the Company shall not, nor shall
it permit any of its Subsidiaries to, do any of the following without the prior written consent of
Parent:
(a) amend its articles of incorporation, bylaws or other comparable charter or organizational
documents (whether by merger, consolidation or otherwise);
(b) (i) declare, set aside or pay any dividends on, or make any other distributions (whether
in cash, stock, property or otherwise) in respect of, or enter into any agreement with respect to
the voting of, any capital stock of the Company or any of its Subsidiaries, other than dividends
and distributions by a direct or indirect wholly owned Subsidiary of the Company to its parent,
(ii) split, combine or reclassify any capital stock of the Company or any of its Subsidiaries,
(iii) issue or authorize the issuance of any other securities in respect of, in lieu of or in
substitution for, shares of capital stock of the Company or any of its Subsidiaries, (iv) purchase,
redeem or otherwise acquire any Company Securities or Company Subsidiary Securities, or (v) take
any action that would result in any amendment, modification or change of any term of any
Indebtedness of the Company or any of its Subsidiaries;
(c) (i) issue, deliver, sell, grant, pledge, transfer, subject to any Lien or otherwise
encumber or dispose of any Company Securities or Company Subsidiary Securities, other than (A) the
issuance of shares of Company Common Stock upon the exercise of Company Stock Options or pursuant
to the terms of the Company Restricted Share Awards that are outstanding on the date of this
Agreement, in each case, only if and to the extent required by and in accordance
46
with the applicable equity award’s terms as in effect on the date of this Agreement, or (B)
grants of Company Stock Options to newly hired employees in the ordinary course of business
consistent with past practice, with a per share exercise price no less than the then-current market
price of a share of Company Common Stock and not subject to any accelerated vesting or other
provision that would be triggered as a result of the consummation of the transactions contemplated
hereby and/or termination of employment, so long as (x) the aggregate number of shares Company
Common Stock subject to such additional Company Stock Options does not exceed 100,000 and (y) the
aggregate number of shares of Company Common Stock subject to Company Stock Options granted to any
individual newly hired employee does not exceed 5,000, or (ii) amend any term of any Company
Security or any Company Subsidiary Security (in each case, whether by merger, consolidation or
otherwise);
(d) adopt a plan or agreement of, or resolutions providing for or authorizing, complete or
partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other
reorganization;
(e) incur any capital expenditures or any obligations or liabilities in respect thereof,
except for those contemplated by the capital expenditure budget for the Company and its
Subsidiaries that is attached to Section 7.01(e) of the Company Disclosure Schedule (the “Capex
Budget”);
(f) acquire (i) any business or Person or division thereof (whether by purchase of stock,
purchase of assets, merger, consolidation, or otherwise), or (ii) any other assets other than
immaterial assets acquired in the ordinary course of business consistent with past practice;
(g) sell, lease, license, pledge, transfer, subject to any Lien or otherwise dispose of any of
its material assets or properties except (i) sales of inventory or used equipment in the ordinary
course of business consistent with past practice, and (ii) Permitted Liens incurred in the ordinary
course of business consistent with past practice;
(h) (i) grant to any current or former director, officer, employee or consultant of the
Company or any of its Subsidiaries any increase in compensation, bonus or other benefits, except
(A) increases in connection with promotions of non-executive officer employees in the ordinary
course of business consistent with past practices, (B) annual merit increases in base salaries of
non-executive officer employees in accordance with past practices so long as such increases do not
exceed $200,000 in the aggregate, or (C) bonuses granted in accordance with, and paid on the terms
and conditions of, existing bonus plans, policies, agreements or arrangements listed on Section
5.16(a) of the Company Disclosure Schedule, (ii) grant to any current or former director, officer,
employee or consultant of the Company or any of its Subsidiaries any severance or termination pay
or benefits or any increase in severance, change of control or termination pay or benefits, except
in connection with actual termination in the
47
ordinary course of any such Person to the extent required under Applicable Law or existing
plans, policies, agreements or arrangements listed on Section 5.16(a) of the Company Disclosure
Schedule, (iii) establish, adopt, or enter into any Company Employee Plan (other than offer letters
that contemplate “at will” employment without severance benefits) or collective bargaining
agreement, or amend (except as would not reasonably be expected to increase any benefit payable
thereunder or any administrative expense thereof) any Company Employee Plan or collective
bargaining agreement, (iv) take any action to accelerate any rights or benefits or take any action
to fund or in any other way secure the payment of compensation or benefits under any Company
Employee Plan, or (v) make any Person (after the date of this Agreement) a beneficiary of any
retention or severance plan under which such Person is not as of the date of this Agreement a
beneficiary which would entitle such Person to vesting, acceleration or any other right as a
consequence of consummation of the transactions contemplated by this Agreement;
(i) (i) except as required by GAAP (as agreed to by the Company’s independent auditor),
write-down any of its material assets, including any Company IP, or (ii) make any change in any
method of accounting principles, method or practices, except for any such change required by reason
of a concurrent change in GAAP or Regulation S-X under the 1934 Act (as agreed to by the Company’s
independent auditor);
(j) (i) repurchase, prepay or incur any Indebtedness, including by way of a guarantee or an
issuance or sale of debt securities, or issue and sell options, warrants, calls or other rights to
acquire any debt securities of the Company or any of its Subsidiaries, enter into any “keep well”
or other Contract to maintain any financial statement or similar condition of another person or
enter into any arrangement having the economic effect of any of the foregoing, or (ii) make any
loans, advances or capital contributions to, or investments in, any other Person, other than to the
Company or any of its wholly owned Subsidiaries;
(k) enter into, terminate, renew, amend or modify in any material respect or fail to enforce
any material term of any Material Contract, other than any entry into, renewal, amendment or
modification of any Material Contract which would not have been required to be disclosed in any of
clauses (iii) through (xi) and (xiii) through (xvi) of Section 5.14(a) if it had existed on the
date of this Agreement, in each case, in the ordinary course of business consistent with past
practices;
(l) (i) pay, discharge, settle or satisfy any material claims, liabilities or obligations
(whether absolute, accrued, asserted or unasserted, contingent or otherwise), other than the
payment, discharge, settlement or satisfaction in the ordinary course of business consistent with
past practice, or as required by their terms as in effect on the date of this Agreement, of claims,
liabilities or obligations reserved against on the Company Balance Sheet (for amounts not in excess
of such reserves) or incurred since the date of such financial statements in
48
the ordinary course of business consistent with past practice, in each case, the payment,
discharge, settlement or satisfaction of which does not include any obligation (other than the
payment of money) to be performed by the Company or any of its Subsidiaries following the Closing
Date, (ii) waive, relinquish, release, grant, transfer or assign any right of material value, or
(iii) waive any material benefits of, or agree to modify in any adverse respect, or fail to
enforce, or consent to any matter with respect to which its consent is required under, any
confidentiality, standstill or similar Contract to which the Company or any of its Subsidiaries is
a party;
(m) engage in (i) any trade loading practices or any other promotional sales or discount
activity with any customers or distributors with any intent of accelerating to prior fiscal
quarters (including the current fiscal quarter) sales to the trade or otherwise that would
otherwise be expected (based on past practice) to occur in subsequent fiscal quarters, (ii) any
practice which would have the effect of accelerating to prior fiscal quarters (including the
current fiscal quarter) collections of receivables that would otherwise be expected (based on past
practice) to be made in subsequent fiscal quarters, (iii) any practice which would have the effect
of postponing to subsequent fiscal quarters payments by the Company or any of its Subsidiaries that
would otherwise be expected (based on past practice) to be made in prior fiscal quarters (including
the current fiscal quarter) or (iv) any other promotional sales or discount activity, in each case
in clauses (i) through (iv) in a manner outside the ordinary course of business consistent with
past practices;
(n) make or change any Tax election, change any annual tax accounting period, adopt or change
any material method of tax accounting, materially amend any Tax Returns or file claims for material
Tax refunds, enter into any closing agreement, settle any Tax claim, audit or assessment, or
surrender any material right to claim a Tax refund, offset or other reduction in Tax liability;
(o) institute, settle, or agree to settle any material Proceeding pending or threatened before
any arbitrator, court or other Governmental Authority; or
(p) authorize, resolve, commit or agree to take any of the foregoing actions.
Section 7.02 . Shareholder Meeting; Proxy Material; Short Form Merger. (a) If the
Shareholder Approval is required under the MBCA in order to consummate the Merger other than
pursuant to Section 302A.621 of the MBCA, the Company shall establish a record date (which will be
as promptly as reasonably practicable following the consummation of the Offer) for, duly call, give
notice of, convene and hold a meeting of its shareholders (the “Shareholder Meeting”) as promptly
as practicable after the consummation of the Offer, for the purpose of voting on the matters
requiring the Shareholder Approval; provided that (i) if the Company is unable to obtain a quorum
of its shareholders at such time, the Company may extend the date of the Shareholder Meeting by no
more
49
than five Business Days and the Company shall use its reasonable best efforts during such
five-Business Day period to obtain such a quorum as soon as practicable, and (ii) the Company may
delay the Shareholder Meeting to the extent (and only to the extent) the Company reasonably
determines that such delay is required by Applicable Law to comply with any comments made by the
SEC with respect to the Proxy Statement. Subject to Section 7.03(b), the Company Board shall make
the Board Recommendation and use its reasonable best efforts to obtain the Shareholder Approval,
and the Company shall otherwise comply with all Applicable Laws applicable to the Shareholder
Meeting. Without limiting the generality of the foregoing, the Company shall establish a record
date for, call, give notice of, convene and hold the Shareholder Meeting and the matters
constituting the Shareholder Approval shall be submitted to the Company’s shareholders at the
Shareholder Meeting whether or not (A) an Adverse Recommendation Change shall have occurred, or (B)
any Acquisition Proposal shall have been publicly proposed or announced or otherwise submitted to
the Company or any of its Representatives.
(b) If the Shareholder Approval is required under the MBCA in order to consummate the Merger
other than pursuant to Section 302A.621 of the MBCA, as promptly as practicable after the
consummation of the Offer, the Company and Parent shall prepare jointly and the Company shall file
with the SEC the Proxy Statement and as soon as practicable thereafter use its reasonable best
efforts to mail to its shareholders the Proxy Statement and all other proxy materials for such
meeting, and if necessary in order to comply with applicable securities laws, after the Proxy
Statement shall have been so mailed, promptly circulate amended, supplemental or supplemented proxy
material, and, if required in connection therewith, resolicit proxies. Subject to Section 7.03(b),
the Proxy Statement shall contain the Board Recommendation. The Company and Parent, as the case
may be, shall furnish all information concerning the Company or Parent as the other party hereto
may reasonably request in connection with the preparation and filing with the SEC of the Proxy
Statement. Parent and its counsel shall be given a reasonable opportunity to review and comment on
the Proxy Statement before such document (or any amendment or supplement thereto) is filed with the
SEC, and the Company shall include in such document any comments reasonably proposed by Parent and
its counsel. The Company shall (i) as promptly as practicable after receipt thereof, provide
Parent and its counsel with copies of any written comments, and advise Parent and its counsel of
any oral comments, with respect to the Proxy Statement (or any amendment or supplement thereto)
received from the SEC or its staff, (ii) provide Parent and its counsel a reasonable opportunity to
review the Company’s proposed response to such comments, (iii) include in the Company’s written
response to such comments any input reasonably proposed by Parent and its counsel, and (iv) provide
Parent and its counsel a reasonable opportunity to participate in any discussions or meetings with
the SEC.
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(c) Notwithstanding any provision of this Agreement to the contrary, if Parent, Merger
Subsidiary or any other Subsidiary of Parent shall acquire at least 90% of the outstanding Company
Shares pursuant to the Offer, through exercise of the Top-Up Option or otherwise, the parties
hereto shall take all necessary and appropriate action to cause the Merger to be effective as soon
as practicable after such acquisition without a meeting of shareholders of the Company, in
accordance with Section 302A.621 of the MBCA.
Section 7.03 . No Solicitation; Other Offers. (a) Neither the Company nor any of its
Subsidiaries shall, nor shall the Company or any of its Subsidiaries authorize or permit any of its
or their Representatives to, and the Company shall instruct, and cause each applicable Subsidiary,
if any, to instruct, each such Representative not to, directly or indirectly, solicit, initiate or
knowingly take any action to facilitate or encourage the submission of any Acquisition Proposal or
any inquiries or the making of any proposal that could reasonably be expected to lead to any
Acquisition Proposal, or, subject to Section 7.03(b), (i) conduct or engage in any discussions or
negotiations with, disclose any non-public information relating to the Company or any of its
Subsidiaries to, afford access to the business, properties, assets, books or records of the Company
or any of its Subsidiaries to, or otherwise cooperate in any way with, or knowingly assist,
participate in, facilitate or encourage any effort by, any Third Party that is seeking to make, or
has made, any Acquisition Proposal, (ii) (A) amend or grant any waiver or release under any
standstill or similar agreement with respect to any class of equity securities of the Company or
any of its Subsidiaries, (B) approve any transaction under, or any Third Party becoming an
“interested shareholder” under, Section 302A.011 of the MBCA, or (C) amend or grant any waiver or
release or approve any transaction or redeem any Company Rights under the Company Rights Agreement,
except in connection with the transactions contemplated by this Agreement, or (iii) enter into any
agreement in principle, letter of intent, term sheet, acquisition agreement, merger agreement,
option agreement, joint venture agreement, partnership agreement or other Contract relating to any
Acquisition Proposal. Subject to Section 7.03(b), neither the Company Board nor any committee
thereof shall fail to make, withdraw or modify in a manner adverse to Parent or Merger Subsidiary
the Board Recommendation, or recommend an Acquisition Proposal, fail to recommend against
acceptance of any tender offer or exchange offer for the Company Shares within 10 Business Days
after the commencement of such offer, or take any action or make any public statement inconsistent
with the Board Recommendation, or resolve or agree to take any of the foregoing actions (any of the
foregoing, an “Adverse Recommendation Change”). The Company shall, and shall cause its
Subsidiaries and its and their respective Representatives to, cease immediately and cause to be
terminated any and all existing activities, discussions or negotiations, if any, with any Third
Party conducted prior to the date hereof with respect to any Acquisition Proposal and shall use its
reasonable best efforts to cause any such Third Party (or its agents or advisors) in possession of
non-public information in respect of the Company or any of its Subsidiaries
51
that was furnished by or on behalf of the Company and its Subsidiaries at any time after April
1, 2006 to return or destroy (and confirm destruction of) all such information.
(b) Notwithstanding the foregoing, prior to the acceptance for payment of Company Shares under
the Offer (in the case of clauses (i) through (iii) below), the Company Board, directly or
indirectly through any Representative, may (i) engage in negotiations or discussions with any Third
Party that, subject to the Company’s compliance with this Section 7.03, has made (and not
withdrawn) a bona fide, unsolicited Acquisition Proposal in writing that the Company Board
reasonably believes, after considering the advice of its outside legal counsel and of a financial
advisor of nationally recognized reputation, is reasonably likely to lead to a Superior Proposal,
(ii) thereafter furnish to such Third Party non-public information relating to the Company or any
of its Subsidiaries pursuant to an executed confidentiality agreement with terms no less favorable
to the Company than those contained in the Confidential Disclosure Agreement dated as of August 15,
2006 between the Company and Oracle Corporation (the “Confidentiality Agreement”) and containing
additional provisions that expressly permit the Company to comply with the terms of this Section
7.03 (a copy of which confidentiality agreement shall be promptly (in all events within 24 hours)
provided for informational purposes only to Parent), (iii) following receipt of and on account of
such Superior Proposal, make an Adverse Recommendation Change and/or (iv) take any non-appealable,
final action that any court of competent jurisdiction orders the Company to take, but in each case
referred to in the foregoing clauses (i) through (iii), only if the Company Board determines in
good faith by a majority vote, after considering the advice of outside legal counsel to the
Company, that it must take such action to comply with its fiduciary duties under Applicable Law.
Nothing contained herein shall prevent the Company Board from complying with Rule 14d-9 and Rule
14e-2(a) under the 1934 Act with regard to an Acquisition Proposal, so long as any action taken or
statement made to so comply is consistent with this Section 7.03.
(c) The Company Board shall not take any of the actions referred to in clauses (i) through
(iv) of the preceding subsection unless the Company shall have delivered to Parent a prior written
notice advising Parent that it intends to take such action. The Company shall notify Parent
promptly (but in no event later than 24 hours) after receipt by the Company or any of its
Subsidiaries (or any of their respective Representatives) of any Acquisition Proposal, any inquiry
that would reasonably be expected to lead to an Acquisition Proposal, any request for non-public
information relating to the Company or any of its Subsidiaries or for access to the business,
properties, assets, books or records of the Company or any of its Subsidiaries by any Third Party
that is seeking to make an Acquisition Proposal or any other indication that a Third Party is
considering making an Acquisition Proposal. The Company shall provide such notice orally and in
writing and shall identify the Third Party making, and the terms and conditions of, any such
Acquisition Proposal, indication or request. The Company shall keep
52
Parent fully informed, as promptly as practicable, of the status and details of any such
Acquisition Proposal, indication or request, including the material resolved and unresolved issues
related thereto and material amendments or proposed amendments as to price and other material terms
thereof. The Company shall provide Parent with at least 48 hours prior notice of any meeting of
the Company Board (or such lesser notice as is provided to the members of the Company Board) at
which the Company Board is reasonably expected to consider any Acquisition Proposal. The Company
shall promptly provide Parent with (i) any non-public information concerning the Company’s
business, present or future performance, financial condition or results of operations, provided to
any Third Party that was not previously provided to Parent, and (ii) copies of all other documents
and written communications relating to such Acquisition Proposal exchanged between the Company, any
of its Subsidiaries or any of their respective Representatives, on the one hand, and the Third
Party making such Acquisition Proposal or any of its Representatives, on the other hand.
Section 7.04 . Access to Information. From the date hereof until the Effective Time and
subject to the Confidentiality Agreement, the Company shall (i) give to Parent and its
Representatives reasonable access to the offices, properties, books, records, Contracts,
Governmental Authorizations, documents, directors, officers and employees of the Company and its
Subsidiaries, (ii) furnish to Parent and its Representatives such financial and operating data and
other information as such Persons may reasonably request, and use its reasonable best efforts to
cause Xxxxx Xxxxxxxx LLP to furnish its work papers in respect of the Company and its Subsidiaries,
and (iii) instruct its Representatives to cooperate with Parent and its Representatives in its
investigation; provided that the Company may restrict the foregoing access to the extent that any
Applicable Law requires the Company to restrict or prohibit access to any such properties or
information, or such disclosure would, based on the advice of such party’s counsel, result in a
waiver of attorney-client privilege, work product doctrine or any other applicable privilege
applicable to such information. Any investigation pursuant to this Section 7.04 shall be conducted
in such manner as not to interfere unreasonably with the conduct of the business of the Company and
its Subsidiaries.
Section 7.05 . Notice of Certain Events. (a) In connection with the continuing operation of
the business of the Company and its Subsidiaries prior to the Effective Time, subject to Applicable
Law, the Company shall consult in good faith on a reasonably regular basis with Parent to report
material operational developments, the general status of relationships with customers, partners,
suppliers, licensors, licensees, distributors and others having material business relationships
with, the general status of ongoing operations and other matters reasonably requested by Parent
pursuant to procedures reasonably requested by Parent.
(b) The Company shall promptly notify Parent of:
53
(i) any notice or other communication from any Person alleging that the consent of
such Person is or may be required in connection with the transactions contemplated by this
Agreement;
(ii) any notice or other communication from any Governmental Authority in connection
with the transactions contemplated by this Agreement;
(iii) any Proceeding commenced or, to its knowledge, threatened against, relating to
or involving or otherwise affecting the Company or any of its Subsidiaries, as the case
may be, that, if pending on the date of this Agreement, would have been required to have
been disclosed pursuant to Section 5.12, 5.13, 5.15 or 5.16, as the case may be, or that
relate to the consummation of the transactions contemplated by this Agreement;
(iv) any notice or other communication from any Major Customer, Major Supplier or
Major Governmental Party to the effect that such Person is terminating or otherwise
materially adversely modifying its relationship with Company or any of its Subsidiaries as
a result of the transactions contemplated by this Agreement;
(v) any inaccuracy of any representation or warranty contained in this Agreement at
any time during the term hereof that could reasonably be expected to cause the conditions
set forth in paragraph (c) of Annex I not to be satisfied; and
(vi) any failure of the Company to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder.
Section 7.06 . Company Rights Agreement. The Company Board shall take all further actions
(in addition to those referred to in Section 5.26(b)) reasonably requested by Parent in order to
render the Company Rights inapplicable to this Agreement, the Tender and Support Agreement, the
Escrow Agreement and the transactions contemplated hereby and thereby, including the Offer and the
Merger.
Section 7.07 . Termination of 401(k) Plan. Unless otherwise directed in writing by Parent at
least five business days prior to the consummation of the Offer, the Company will terminate any and
all Employee Plans intended to qualify as a qualified cash or deferred arrangement under Section
401(k) of the Code, effective as of the day immediately preceding the date the Company becomes a
member of the same Controlled Group of Corporations (as defined in Section 414(b) of the Code) as
Parent. The Company shall provide Parent evidence that such resolutions to terminate the 401(k)
plan(s) of the Company and its Subsidiaries have been adopted by the Company Board or the board of
54
directors of its Subsidiaries, as applicable. The form and substance of such resolutions
shall be subject to the reasonable approval of Parent. The Company shall also take such other
actions in furtherance of terminating any such 401(k) plans as Parent may reasonably request.
Immediately prior to such termination, the Company will make (or cause to be made) all necessary
payments to fund the contributions (i) necessary or required to maintain the tax-qualified status
of any such 401(k) Plan, (ii) for elective deferrals made pursuant to any such 401(k) Plan for the
period prior to termination, and (iii) for employer matching contributions (if any) for the period
prior to termination.
Section 7.08 . FIRPTA Certificate. On or prior to the Closing Date, the Company shall
deliver to Parent a properly executed statement certifying that the Company has not been a United
States real property holding corporation within the meaning of Section 897(c)(2) of the Code during
the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
ARTICLE 8
Covenants of Parent
Covenants of Parent
Parent agrees that:
Section 8.01 . Obligations of Merger Subsidiary. Parent shall cause Merger Subsidiary to
perform its obligations under this Agreement and to consummate the Offer and the Merger on the
terms and conditions set forth in this Agreement.
Section 8.02 . Voting of Shares. Parent shall vote any Company Shares beneficially owned by
it or any of its Subsidiaries in favor of adoption of this Agreement at the Shareholder Meeting.
Section 8.03 . Director and Officer Liability. (a) All rights to indemnification,
advancement of expenses and exculpation from liabilities for acts or omissions occurring at or
prior to the Effective Time now existing in favor of the current or former directors or officers of
the Company and its Subsidiaries (each, an “Indemnified Person”) as provided in their respective
articles of incorporation or bylaws (or comparable organizational documents) and any
indemnification or other agreements of the Company as in effect on the date of this Agreement
(copies of which have been made available to Parent prior to the date hereof) shall be assumed by
the Surviving Corporation in the Merger, without further action, at the Effective Time, and shall
survive the Merger and shall continue in full force and effect in accordance with their terms, and
Parent shall cause the Surviving Corporation to comply with and honor the foregoing obligations;
provided that such obligations shall be subject to any limitation imposed from time to time under
Applicable Law.
55
(b) For six years after the Effective Time, the Surviving Corporation shall maintain officers’
and directors’ liability insurance in respect of acts or omissions occurring prior to the Effective
Time covering each such Indemnified Person currently covered by the Company’s officers’ and
directors’ liability insurance policy on terms with respect to coverage and amount no less
favorable than those of such policy in effect on the date hereof; provided that in satisfying its
obligation under this Section 8.03(b), the Surviving Corporation shall not be obligated to pay
annual premiums in excess of 200% of the amount per annum the Company paid in respect of its
current fiscal year, which amount is set forth in Section 8.03(b) of the Company Disclosure
Schedule; provided further that if such insurance cannot be so maintained or obtained at such cost,
the Surviving Corporation shall maintain or obtain as much of such insurance as can be so
maintained or obtained at an annual cost equal to 200% of the current annual premium of the Company
for such insurance.
(c) If Parent, 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 or conveys all or substantially all of
its properties and assets to any Person, then, and in each such case, to the extent necessary,
proper provision shall be made so that the successors and assigns of Parent or the Surviving
Corporation, as the case may be, shall assume the obligations set forth in this Section 8.03.
(d) The rights of each Indemnified Person under this Section 8.03 shall survive consummation
of the Merger and are intended to benefit, and shall be enforceable by, each Indemnified Person.
ARTICLE 9
Covenants of Parent and the Company
Covenants of Parent and the Company
The parties hereto agree that:
Section 9.01 . Reasonable Best Efforts. (a) Subject to the terms and conditions of this
Agreement, the Company and Parent shall use their reasonable best efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under
Applicable Law to consummate the transactions contemplated by this Agreement, including (i)
preparing and filing as promptly as practicable with any Governmental Authority or other third
party all documentation to effect all necessary filings, notices, petitions, statements,
registrations, submissions of information, applications and other documents, and (ii) obtaining and
maintaining all approvals, consents, registrations, permits, authorizations and other confirmations
required to be obtained from any Governmental Authority or other third party that are necessary,
proper or advisable to consummate the transactions contemplated by this Agreement.
56
(b) In furtherance and not in limitation of the foregoing, each of Parent and the Company
shall make an appropriate filing of a Notification and Report Form pursuant to the HSR Act with
respect to the transactions contemplated hereby as promptly as practicable and in any event within
10 Business Days of the date hereof and to supply as promptly as practicable any additional
information and documentary material that may be requested pursuant to the HSR Act and to take all
other actions necessary to cause the expiration or termination of the applicable waiting periods
under the HSR Act as soon as practicable.
(c) Each of Parent and the Company shall (i) promptly notify each other party hereto of any
written or oral communication to that party or its Affiliates from any Governmental Authority and,
subject to Applicable Law, permit each other party to review in advance any proposed written
communication to any Governmental Authority, in each case concerning this Agreement or the
transactions contemplated hereby, (ii) not agree to participate, or to permit its Affiliates to
participate, in any substantive meeting or discussion with any Governmental Authority in respect of
any filings, investigation or inquiry concerning this Agreement or the transactions contemplated
hereby unless it consults with each other party in advance and, to the extent permitted by such
Governmental Authority and consistent with the reasonably determined confidentiality obligations of
each party, gives each other party the opportunity to attend and participate in such meeting,
provided that if the Governmental Authority does not permit such participation by the other
parties, or if all parties agree that such joint participation would not be advisable, each party
shall allow outside counsel for the other parties to attend and participate to the extent permitted
by the Governmental Authority, and (iii) furnish each other party with copies of all
correspondence, filings, and communications (and memoranda setting forth the substance thereof)
between them and their Affiliates and their respective Representatives, on the one hand, and any
Governmental Authority or members of their respective staffs, on the other hand, concerning this
Agreement and the transactions contemplated hereby. Without limiting the generality of the
foregoing, the Company shall provide Parent the opportunity to participate in the defense of any
Proceeding against the Company and/or its directors relating to the transactions contemplated by
this Agreement and will obtain the prior written consent of Parent prior to settling or satisfying
any such Proceeding.
(d) Notwithstanding anything to the contrary herein, nothing in this Agreement shall require
Parent or any of its Subsidiaries to, nor shall the Company or any of its Subsidiaries without the
prior written consent agree or proffer to, divest, hold separate, or enter into any license or
similar agreement with respect to, or agree to restrict the ownership or operation of, any business
or assets of Parent, the Company or any of their respective Subsidiaries. Notwithstanding anything
to the contrary herein, in no event shall Parent or any of its Subsidiaries be obligated to
litigate or participate in the litigation of any Proceeding, whether judicial or administrative,
brought by any Governmental Authority or appeal any Order (i) challenging or seeking to make
illegal, delay
57
materially or otherwise directly or indirectly restrain or prohibit the consummation of the
Offer, the Merger or the other transactions contemplated by this Agreement or seeking to obtain
from Parent or any of its Subsidiaries any damages in connection therewith, (ii) seeking to
prohibit or limit in any respect, or place any conditions on, the ownership or operation by the
Company, Parent or any of their respective Affiliates of all or any portion of the business, assets
or any product of the Company or any of its Subsidiaries or Parent or any of its Subsidiaries or to
require any such Person to dispose of, license (whether pursuant to an exclusive or nonexclusive
license) or hold separate all or any portion of the business, assets or any product of the Company
or any of its Subsidiaries or Parent or any of its Subsidiaries, in each case as a result of or in
connection with the Offer, the Merger or any of the other transactions contemplated by this
Agreement, (iii) seeking, directly or indirectly, to impose or confirm limitations on the ability
of Parent or any of its Affiliates to acquire or hold, or exercise full rights of ownership of, any
Company Shares or any shares of common stock of the Surviving Corporation, including the right to
vote the Company Shares or the shares of common stock of the Surviving Corporation on all matters
properly presented to the shareholders of the Company or the Surviving Corporation, respectively,
(iv) seeking to require divestiture by Parent or any of its Affiliates of any Company Shares, or
(v) which would reasonably be expected to impede, interfere with, prevent or materially delay the
Offer or the Merger or that would reasonably be expected to dilute materially the benefits to
Parent of the transactions contemplated hereby.
Section 9.02 . Certain Filings. The Company and Parent shall cooperate with one another (i)
in connection with the preparation of the Company Disclosure Documents and the Offer Documents,
(ii) in determining whether any action by or in respect of, or filing with, any Governmental
Authority is required, or any actions, consents, approvals or waivers are required to be obtained
from parties to any material contracts, in connection with the consummation of the transactions
contemplated by this Agreement, and (iii) in taking such actions or making any such filings,
furnishing information required in connection therewith or with the Company Disclosure Documents or
the Offer Documents and seeking timely to obtain any such actions, consents, approvals or waivers.
Section 9.03 . Public Announcements. Parent and the Company shall consult with each other
before issuing any press release, making any other public statement, or scheduling any press
conference or conference call with investors or analysts, with respect to this Agreement or the
transactions contemplated hereby and, except as may be required by Applicable Law or any listing
agreement with or rule of any national securities exchange or association, shall not issue any such
press release, make any such other public statement, or schedule any such press conference or
conference call before such consultation.
Section 9.04 . Further Assurances. At and after the Effective Time, the officers and
directors of the Surviving Corporation shall be authorized to execute and deliver, in the name and
on behalf of the Company or Merger Subsidiary, any
58
deeds, bills of sale, assignments or assurances and to take and do, in the name and on behalf
of the Company or Merger Subsidiary, any other actions and things to vest, perfect or confirm of
record or otherwise in the Surviving Corporation any and all right, title and interest in, to and
under any of the rights, properties or assets of the Company acquired or to be acquired by the
Surviving Corporation as a result of, or in connection with, the Merger.
ARTICLE 10
Conditions to the Merger
Conditions to the Merger
Section 10.01 . Conditions to the Obligations of Each Party. The obligation of each party
hereto to consummate the Merger is subject to the satisfaction, at or prior to the Closing, of the
following conditions:
(a) if required by the MBCA, the Shareholder Approval shall have been obtained;
(b) no Applicable Law or Order shall prohibit the consummation of the Merger; and
(c) Merger Subsidiary (or Parent on Merger Subsidiary’s behalf) shall have accepted for
payment and paid for all of the Company Shares validly tendered pursuant to the Offer and not
withdrawn.
ARTICLE 11
Termination
Termination
Section 11.01 . Termination. This Agreement may be terminated and the Merger may be
abandoned at any time prior to the Closing (notwithstanding any approval of this Agreement by the
shareholders of the Company):
(a) by mutual written agreement of the Company and Parent;
(b) by either the Company or Parent, if:
(i) the Offer has not been consummated on or before April 1, 2007 (the “End Date”);
provided that the right to terminate this Agreement pursuant to this Section 11.01(b)(i)
shall not be available to any party whose breach of any provision of this Agreement
results in the failure of the Offer to be consummated by the End Date; or
(ii) there shall be any Applicable Law or Order that shall have become final and
non-appealable that (A) makes acceptance for payment of, and payment for, the Company
Shares pursuant to the Offer or consummation of the Merger illegal or otherwise
prohibited, or (B)
59
enjoins Merger Subsidiary from accepting for payment of, and paying for, the Company
Shares pursuant to the Offer or the Company or Parent from consummating the Merger;
(c) by Parent, if:
(i) an Adverse Recommendation Change shall have occurred;
(ii) the Company shall have entered into, or publicly announced its intention to
enter into, a letter of intent, memorandum of understanding or Contract (other than a
confidentiality agreement contemplated by Section 7.03(b)) relating to any Acquisition
Proposal;
(iii) the Company or any of its Representatives shall have willfully and materially
breached any of its obligations under Section 7.02 or Section 7.03; or
(iv) a Third Party shall have consummated an Acquisition Proposal; or
(d) by the Company, if, prior to the acceptance for payment of the Company Shares under the
Offer, the Company Board authorizes the Company, subject to complying with the terms of this
Agreement, to enter into a binding definitive agreement in respect of a Superior Proposal; provided
that the Company shall have paid any amounts due pursuant to Section 12.04 in accordance with the
terms, and at the times, specified therein; and provided further that in the case of any
termination by the Company, (A) the Company notifies Parent, in writing and at least three Business
Days prior to such termination, promptly of its intention to terminate this Agreement and to enter
into a binding definitive agreement in respect of a Superior Proposal, attaching the final version
of such proposed definitive agreement, and (B) Parent does not make, within three Business Days of
receipt of such written notification, an offer that is determined by the Company Board in good
faith after considering the advice of its outside counsel and of a financial advisor of nationally
recognized reputation to be at least as favorable to the shareholders of the Company as such
Superior Proposal, it being understood that the Company shall not enter into any such binding
agreement during such three Business Day period.
The party desiring to terminate this Agreement pursuant to this Section 11.01 (other than pursuant
to Section 11.01(a)) shall give notice of such termination to each other party hereto.
Section 11.02 . Effect of Termination. If this Agreement is terminated pursuant to Section
11.01, this Agreement shall become void and of no effect without liability of any party (or any
shareholder, director, officer, employee, agent, consultant or representative of such party) to
each other party hereto; provided that if such termination shall result from the willful and
material (i)
60
failure of any party to fulfill a condition to the performance of the obligations of any other
party, or (ii) failure of any party to perform a covenant hereof, such party shall be fully liable
for any and all liabilities and damages incurred or suffered by any other party as a result of such
failure. The provisions of this Section 11.02 and Sections 12.04, 12.06(b), 12.07, 12.08 and 12.09
shall survive any termination hereof pursuant to Section 11.01.
ARTICLE 12
Miscellaneous
Miscellaneous
Section 12.01 . Notices. All notices, requests and other communications to any party
hereunder shall be in writing (including facsimile transmission) and shall be given,
if to Parent or Merger Subsidiary, to:
Oracle Systems Corporation
000 Xxxxxx Xxxxxxx
Xxxxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxxxxx
Facsimile No.: (000) 000-0000
000 Xxxxxx Xxxxxxx
Xxxxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxxxxx
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxx Xxxx & Xxxxxxxx
0000 Xx Xxxxxx Xxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
Facsimile No.: (000) 000-0000
0000 Xx Xxxxxx Xxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
Facsimile No.: (000) 000-0000
if to the Company, to:
Stellent, Inc.
0000 Xxxxxx Xxxxx Xxxxx, Xxxxx 000
Xxxx Xxxxxxx, Xxxxxxxxx 00000
Attention: Chief Executive Officer
Facsimile No.: (000) 000-0000
Attention: General Counsel
Facsimile No.: (000) 000-0000
0000 Xxxxxx Xxxxx Xxxxx, Xxxxx 000
Xxxx Xxxxxxx, Xxxxxxxxx 00000
Attention: Chief Executive Officer
Facsimile No.: (000) 000-0000
Attention: General Counsel
Facsimile No.: (000) 000-0000
61
with a copy to:
Faegre & Xxxxxx LLP
2200 Xxxxx Fargo Center
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx
Facsimile No.: (000) 000-0000
2200 Xxxxx Fargo Center
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx
Facsimile No.: (000) 000-0000
or to such other address or facsimile number as such party may hereafter specify for the purpose by
notice to each other party hereto. All such notices, requests and other communications shall be
deemed received on the date of receipt by the recipient thereof if received prior to 5:00 p.m. on a
Business Day in the place of receipt. Otherwise, any such notice, request or communication shall
be deemed to have been received on the next succeeding Business Day in the place of receipt.
Section 12.02 . Survival of Representations and Warranties. The representations and
warranties contained herein and in any certificate or other writing delivered pursuant hereto shall
not survive the Effective Time.
Section 12.03 . Amendments and Waivers. (a) Any provision of this Agreement may be amended
or waived prior to the Effective Time if, but only if, such amendment or waiver is in writing and
is signed, in the case of an amendment, by each party to this Agreement or, in the case of a
waiver, by each party against whom the waiver is to be effective; provided that after the
Shareholder Approval without the further approval of the Company’s shareholders, no such amendment
or waiver shall be made or given that requires the approval of the shareholders of the Company
under the MBCA unless the required approval is obtained.
(b) No failure or delay by any party in exercising any right, power or privilege hereunder
shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies
provided by Applicable Law.
Section 12.04 . Expenses. (a) Except as otherwise provided herein, all costs and expenses
incurred in connection with this Agreement shall be paid by the party incurring such cost or
expense; provided that the Company and Parent shall share equally all filing fees payable pursuant
to the HSR Act or any Foreign Competition Law.
(b) If this Agreement is terminated pursuant to Section 11.01(c) or Section 11.01(d), then the
Company shall pay to Parent (by wire transfer of immediately available funds), simultaneously with
the occurrence of such termination, a fee in an amount equal to $15,500,000.
62
(c) If this Agreement is terminated pursuant to Section 11.01(b)(i) and (i) prior to the
acceptance for payment of Company Shares under the Offer, an Acquisition Proposal shall have been
made, and (ii) within 12 months following the date of such termination the Company shall have (A)
recommended to its shareholders or consummated an Acquisition Proposal, or (B) entered into a
definitive agreement with respect to an Acquisition Proposal which shall have been consummated
within 24 months following the date of such termination, then the Company shall pay to Parent (by
wire transfer of immediately available funds), within one Business Day after making such
recommendation or the consummation of such transaction, a fee in an amount equal to $15,500,000.
For purposes of this Section 12.04(c), each reference to 15% in the definition of “Acquisition
Proposal” shall be deemed to be 30%, the reference to 85% therein shall be deemed to be 70%, and
the reference to “the Company or any of its Subsidiaries” in clauses (i), (iii) and (iv) therein
shall be deemed to be “the Company and its Subsidiaries”.
(d) The Company acknowledges that the agreements contained in this Section 12.04 are an
integral part of the transactions contemplated by this Agreement and that, without these
agreements, Parent and Merger Subsidiary would not enter into this Agreement. Accordingly, if the
Company fails to pay any amount due to Parent pursuant to this Section 12.04, when due, the Company
shall pay the costs and expenses (including reasonable legal fees and expenses) in connection with
any action taken to collect payment (including the prosecution of any lawsuit or other legal
action), together with interest on the unpaid amount at the publicly announced prime rate of
Citibank, N.A. in New York City from the date such amount was first payable to the date it is paid.
(e) In no event shall more than one fee be payable under Section 12.04(b) and Section
12.04(c).
Section 12.05 . Disclosure Schedule References. The parties hereto agree that any reference
in a particular Section of the Company Disclosure Schedule shall only be deemed to be an exception
to (or, as applicable, a disclosure for purposes of) (i) the representations and warranties (or
covenants, as applicable) of the Company that are contained in the corresponding Section of this
Agreement, and (ii) any other representations and warranties (or covenants, as applicable) of the
Company that are contained in this Agreement, but only if the relevance of that reference as an
exception to (or a disclosure for purposes of) such representations and warranties (or covenants,
as applicable) would be readily apparent to a reasonable person who has read that reference and
such representations and warranties (or covenants, as applicable), without any independent
knowledge on the part of the reader regarding the matter(s) so disclosed.
Section 12.06 . Binding Effect; Benefit; Assignment. (a) The provisions of this Agreement
shall be binding upon and, except as provided in Section 8.03, shall inure to the benefit of the
parties hereto and their respective successors and
63
assigns. Except as provided in Section 8.03, no provision of this Agreement is intended to
confer any rights, benefits, remedies, obligations or liabilities hereunder upon any Person other
than the parties hereto and their respective successors and assigns.
(b) No party may assign, delegate or otherwise transfer any of its rights or obligations under
this Agreement without the consent of each other party hereto, except that Parent or Merger
Subsidiary may transfer or assign its rights and obligations under this Agreement, in whole or from
time to time in part, to (i) one or more of its Affiliates at any time, and (ii) after the
acceptance for payment and payment of the Company Shares pursuant to the Offer to any Person;
provided that such transfer or assignment shall not relieve Parent or Merger Subsidiary of any of
its obligations hereunder.
Section 12.07 . Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware (except to the extent that provisions of the MBCA
are applicable), without regard to the conflicts of law rules of such State.
Section 12.08 . Jurisdiction. The parties hereto agree that any Proceeding seeking to
enforce any provision of, or based on any matter arising out of or in connection with, this
Agreement or the transactions contemplated hereby shall be brought in any federal court located in
the State of Delaware or any Delaware state court, and each of the parties hereby irrevocably
consents to the exclusive jurisdiction of such courts (and of the appropriate appellate courts
therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent
permitted by law, any objection that it may now or hereafter have to the laying of the venue of any
such suit, action or proceeding in any such court or that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum. Process in any such
Proceeding may be served on any party anywhere in the world, whether within or without the
jurisdiction of any such court. Without limiting the foregoing, each party agrees that service of
process on such party as provided in Section 12.01 shall be deemed effective service of process on
such party.
Section 12.09 . Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES
ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 12.10 . Counterparts; Effectiveness. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument. This Agreement shall become effective when each party
hereto shall have received a counterpart hereof signed by all of the other parties hereto. Until
and unless each party has received a counterpart hereof signed by each other party
64
hereto, this Agreement shall have no effect and no party shall have any right or obligation
hereunder (whether by virtue of any other oral or written agreement or other communication).
Section 12.11 . Entire Agreement. This Agreement, together with the Tender and Support
Agreement, the Escrow Agreement and the Confidentiality Agreement, constitutes the entire agreement
between the parties with respect to the subject matter of this Agreement and supersedes all prior
agreements and understandings, both oral and written, between the parties with respect to their
subject matter.
Section 12.12 . Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or other Governmental Authority to be
invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions
of this Agreement shall remain in full force and effect and shall in no way be affected, impaired
or invalidated so long as the economic or legal substance of the transactions contemplated hereby
is not affected in any manner materially adverse to any party. Upon such a determination, the
parties 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 in order that the transactions
contemplated hereby be consummated as originally contemplated to the fullest extent possible.
Section 12.13 . Specific Performance. The parties hereto agree that irreparable damage would
occur if any provision of this Agreement were not performed in accordance with the terms hereof and
that the parties shall be entitled to an injunction or injunctions to prevent breaches of this
Agreement or to enforce specifically the performance of the terms and provisions hereof in any
federal court located in the State of Delaware or any Delaware state court, in addition to any
other remedy to which they are entitled at law or in equity.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
65
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their
respective authorized officers as of the day and year first above written.
ORACLE SYSTEMS CORPORATION |
||||
By: | /s/ Xxxxxxx Xxxxxxx | |||
Name: | Xxxxxxx Xxxxxxx | |||
Title: | Senior Vice President | |||
STAR ACQUISITION CORP. |
||||
By: | /s/ Xxxxxxx Xxxxxxx | |||
Name: | Xxxxxxx Xxxxxxx | |||
Title: | Vice President | |||
STELLENT, INC. |
||||
By: | /s/ Xxxxxx X. Xxxxx | |||
Name: | Xxxxxx X. Xxxxx | |||
Title: | President and Chief Executive Officer | |||
[SIGNATURE PAGE TO THE MERGER AGREEMENT]
ANNEX I
Notwithstanding any other provision of the Offer, but subject to compliance with Section
2.01(a) of the Agreement, Merger Subsidiary (i) shall not be required to accept for payment or pay
for any tendered Company Shares, (ii) may delay the acceptance for payment of, or the payment for,
any tendered Company Shares, and (iii) may terminate or amend the Offer as to Company Shares not
then paid for, in the event that at or prior to the scheduled expiration of the Offer (as it may be
extended pursuant to Section 2.01(a) of the Agreement): (A) the Minimum Condition shall not have
been satisfied; (B) the applicable waiting period (and any extension thereof) applicable to the
transactions contemplated by the Agreement (including the Offer and the Merger) under the HSR Act
or any Foreign Competition Law shall not have expired or been terminated, or any affirmative
approval of a Governmental Authority required under any Foreign Competition Law shall not have been
obtained; or (C) any of the following conditions exists:
(a) there shall be instituted or pending any action or proceeding by any Governmental
Authority, or instituted or pending any action or proceeding before any Governmental Authority by
any other Person that has a reasonable likelihood of success, (i) challenging or seeking to make
illegal, delay materially or otherwise directly or indirectly restrain or prohibit the making of
the Offer, the acceptance for payment of or payment for some or all of the Company Shares by Parent
or Merger Subsidiary or the consummation of the Offer or the Merger or seeking to obtain material
damages in connection therewith, (ii) seeking to restrain or prohibit Parent’s ownership or
operation (or that of its Affiliates) of all or any material portion of the business, assets or
products of the Company and its Subsidiaries, taken as a whole, or of Parent and its Subsidiaries,
taken as a whole, or to compel Parent or any of its Affiliates to dispose of, license (whether
pursuant to an exclusive or nonexclusive license) or hold separate all or any material portion of
the business, assets or products of the Company and its Subsidiaries, taken as a whole, or of
Parent and its Subsidiaries, taken as a whole, (iii) seeking, directly or indirectly, to impose or
confirm material limitations on the ability of Parent or any of its Affiliates effectively to
acquire, hold or exercise full rights of ownership of any Company Shares or any shares of common
stock of the Surviving Corporation, including the right to vote the Company Shares or the shares of
common stock of the Surviving Corporation acquired or owned by Parent, Merger Subsidiary or any of
Parent’s other Affiliates on all matters properly presented to the Company’s shareholders, (iv)
seeking to require divestiture by Parent, Merger Subsidiary or any of Parent’s other Affiliates of
any Shares, or (v) which would reasonably be expected to impede, interfere with, prevent or
materially delay the Offer or the Merger or that would reasonably be expected to dilute materially
the benefits to Parent of the transactions contemplated by the Agreement; or
(b) there shall have been any action taken, or any Applicable Law shall have been proposed,
enacted, enforced, promulgated, issued or deemed applicable to the Offer or the Merger, by any
Governmental Authority, other than the application of the waiting period provisions of the HSR Act
or any Foreign Competition Law or any requirement for affirmative approval of a Governmental
Authority under any Foreign Competition Law, that, in the good faith judgment of Parent is likely,
directly or indirectly, to result in any of the consequences referred to in clauses (i) through (v)
of paragraph (a) above; or
(c) (i) any of the representations and warranties of the Company contained in Section 5.05(a)
or Section 5.05(c) shall not be true in all but de minimis respects when made or at any time prior
to the consummation of the Offer as if made at and as of such time (other than any such
representation or warranty that is made only as of a specified date, which need only to be true in
but de minimis respects as of such specified date), (ii) any of the representations and warranties
of the Company contained in Sections 2.02(a), 5.02, 5.04(i), 5.09(c), 5.24(a), 5.25 and 5.26,
disregarding any materiality or Company Material Adverse Effect qualifications contained in any
such representation or warranty, shall not be true in all material respects when made or at any
time prior to the consummation of the Offer as if made at and as of such time (other than any such
representation or warranty that is made only as of a specified date, which need only to be true in
all material respects as of such specified date), or (iii) any of the other representations and
warranties of the Company contained in this Agreement, disregarding any materiality or Company
Material Adverse Effect qualifications contained in any such representation or warranty, shall not
be true in all respects when made or at any time prior to the consummation of the Offer as if made
at and as of such time (other than any such representation or warranty that is made only as of a
specified date, which need only to be true in all respects as of such specified date); provided
that the condition set forth in this paragraph (c)(iii) shall be deemed to have been satisfied
unless the individual or aggregate impact of the failure to be true of the representations and
warranties of the Company contained in this Agreement would reasonably be expected to have a
Company Material Adverse Effect; provided further that in determining whether a Company Material
Adverse Effect would result, any inaccuracies in the representations and warranties set forth in
Sections 5.04(iii) and Section 5.04(iv) that would cause an adverse effect otherwise excluded by
clause (A) of the definition of Company Material Adverse Effect shall be taken into account; or
(d) the Company shall have breached or failed to perform in any material respects any of its
obligations under the Agreement; or
(e) any change or development shall have occurred following the date of this Agreement that
would reasonably be expected to have, individually or in the aggregate, a Company Material Adverse
Effect; or
(f) (i) an Adverse Recommendation Change shall have occurred, or (ii) the Company shall have
entered into, or publicly announced its intention to
A-2
enter into, a letter of intent, memorandum of understanding or Contract (other than a
confidentiality agreement contemplated by Section 7.03(b) of the Agreement) relating to any
Acquisition Proposal; or
(g) it shall have been publicly disclosed that any Third Party shall have acquired beneficial
ownership of more than 15% of any class or series of capital stock of the Company (including the
Company Shares), through the acquisition of stock, the formation of a group or otherwise, or shall
have been granted any option, right or warrant, conditional or otherwise, to acquire beneficial
ownership of more than 15% of any class or series of capital stock of the Company (including the
Company Shares), other than acquisitions for bona fide arbitrage purposes only; or
(h) the Agreement shall have been terminated in accordance with its terms.
The foregoing conditions are for the sole benefit of Parent and Merger Subsidiary and, subject
to the terms and conditions of the Agreement, may be waived by Parent or Merger Subsidiary, in
whole or in part at any time and from time to time in the sole discretion of Parent or Merger
Subsidiary. The failure by Parent or Merger Subsidiary at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right and each such right shall be deemed
an ongoing right which may be asserted at any time and from time to time.
The capitalized terms that are used in this Annex I shall have the respective meanings
ascribed thereto in the Agreement and Plan of Merger (the “Agreement”), dated as of November 2,
2006, by and among Oracle Systems Corporation, a Delaware corporation (“Parent”), Star Acquisition
Corp., a Minnesota corporation (“Merger Subsidiary”) and Stellent, Inc., a Minnesota corporation
(the “Company”).
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