AGREEMENT AND PLAN OF MERGER BY AND AMONG RC2 CORPORATION, TOMY COMPANY, LTD. AND GALAXY DREAM CORPORATION March 10, 2011
Exhibit (d)(1)
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
RC2 CORPORATION,
TOMY COMPANY, LTD.
AND
GALAXY DREAM CORPORATION
March 10, 2011
TABLE OF CONTENTS
Page | ||||
ARTICLE I |
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THE OFFER |
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SECTION 1.01 The Offer |
2 | |||
SECTION 1.02 Company Actions |
4 | |||
SECTION 1.03 Top-Up Option |
6 | |||
SECTION 1.04 Directors |
7 | |||
ARTICLE II |
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THE MERGER |
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SECTION 2.01 The Merger |
8 | |||
SECTION 2.02 Closing |
8 | |||
SECTION 2.03 Effective Time |
9 | |||
SECTION 2.04 Effects of the Merger |
9 | |||
SECTION 2.05 Certificate of Incorporation and By-Laws |
9 | |||
SECTION 2.06 Directors |
9 | |||
SECTION 2.07 Officers |
9 | |||
SECTION 2.08 Subsequent Actions |
9 | |||
SECTION 2.09 Stockholders Meeting |
10 | |||
SECTION 2.10 Merger Without Meeting of Stockholders |
11 | |||
SECTION 2.11 Conversion of Securities |
11 | |||
SECTION 2.12 Exchange of Certificates |
12 | |||
SECTION 2.13 Stock Transfer Books |
14 | |||
SECTION 2.14 Treatment of Company Stock Rights; ESPP |
15 | |||
ARTICLE III |
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REPRESENTATIONS AND WARRANTIES OF THE COMPANY |
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SECTION 3.01 Organization and Qualification |
16 | |||
SECTION 3.02 Organizational Documents |
17 | |||
SECTION 3.03 Capitalization |
17 | |||
SECTION 3.04 Authorization; Validity of Agreement; Necessary Action |
19 | |||
SECTION 3.05 No Conflict; Required Filings and Consents |
20 | |||
SECTION 3.06 Compliance; Permits |
21 | |||
SECTION 3.07 SEC Documents and Financial Statements |
22 | |||
SECTION 3.08 Absence of Certain Changes or Events |
24 | |||
SECTION 3.09 Absence of Litigation |
24 | |||
SECTION 3.10 Employee Benefit Plans |
24 | |||
SECTION 3.11 Certain Contracts |
28 |
i
Page | ||||
SECTION 3.12 Schedule 14D-9 and the Proxy Statement; Information in the
Offer Documents |
31 | |||
SECTION 3.13 Assets; Title to Property |
31 | |||
SECTION 3.14 Compliance with Environmental Laws |
32 | |||
SECTION 3.15 Taxes |
33 | |||
SECTION 3.16 Insurance |
35 | |||
SECTION 3.17 Related Party Transactions |
35 | |||
SECTION 3.18 Labor Matters |
35 | |||
SECTION 3.19 Brokers |
37 | |||
SECTION 3.20 Intellectual Property |
37 | |||
SECTION 3.21 Major Customers and Suppliers |
39 | |||
SECTION 3.22 Prohibited Payments |
39 | |||
SECTION 3.23 State Takeover Laws |
39 | |||
SECTION 3.24 No Other Representations or Warranties |
40 | |||
ARTICLE IV |
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REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGERSUB |
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SECTION 4.01 Organization and Qualification |
40 | |||
SECTION 4.02 Authorization and Validity of Agreement |
40 | |||
SECTION 4.03 No Conflict; Required Filings and Consents |
41 | |||
SECTION 4.04 Absence of Litigation |
41 | |||
SECTION 4.05 Offer Documents; Information in the Proxy Statement |
41 | |||
SECTION 4.06 MergerSub |
42 | |||
SECTION 4.07 Available Funds |
42 | |||
SECTION 4.08 Ownership of Company Common Stock |
42 | |||
SECTION 4.09 No Vote of Parent Stockholders |
43 | |||
SECTION 4.10 Brokers |
43 | |||
SECTION 4.11 No Other Representations or Warranties |
43 | |||
ARTICLE V |
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CONDUCT OF BUSINESS PENDING THE MERGER |
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SECTION 5.01 Conduct of Business by the Company |
43 | |||
SECTION 5.02 Access to Information; Confidentiality |
47 | |||
SECTION 5.03 No Solicitation; Acquisition Proposals |
47 | |||
ARTICLE VI |
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ADDITIONAL AGREEMENTS |
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SECTION 6.01 Appropriate Action; Consents; Filings |
51 | |||
SECTION 6.02 Notification of Certain Matters |
52 | |||
SECTION 6.03 Public Announcements |
53 | |||
SECTION 6.04 Employee Matters |
53 |
ii
Page | ||||
SECTION 6.05 Indemnification, Exculpation and Insurance |
54 | |||
SECTION 6.06 Exemption from Liability Under Section 16(b) |
55 | |||
SECTION 6.07 Approval of Compensation Arrangements |
55 | |||
SECTION 6.08 Third Party Standstill Agreements |
56 | |||
SECTION 6.09 State Takeover Laws |
56 | |||
SECTION 6.10 Stockholder Litigation |
56 | |||
SECTION 6.11 Financial Information and Cooperation |
57 | |||
SECTION 6.12 Stock Exchange De-listing; Deregistration |
57 | |||
ARTICLE VII |
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CONDITIONS |
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SECTION 7.01 Conditions to Obligation of Each Party to Effect the Merger |
58 | |||
ARTICLE VIII |
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TERMINATION, AMENDMENT AND WAIVER |
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SECTION 8.01 Termination |
58 | |||
SECTION 8.02 Effect of Termination |
60 | |||
SECTION 8.03 Termination Fee |
60 | |||
SECTION 8.04 Amendments |
61 | |||
SECTION 8.05 Waiver |
61 | |||
ARTICLE IX |
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GENERAL PROVISIONS |
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SECTION 9.01 Non-Survival of Representations and Warranties |
62 | |||
SECTION 9.02 Notices |
62 | |||
SECTION 9.03 Certain Definitions |
63 | |||
SECTION 9.04 Interpretation |
71 | |||
SECTION 9.05 Headings |
71 | |||
SECTION 9.06 Severability |
72 | |||
SECTION 9.07 Entire Agreement |
72 | |||
SECTION 9.08 Assignment |
72 | |||
SECTION 9.09 Parties in Interest |
72 | |||
SECTION 9.10 Expenses |
72 | |||
SECTION 9.11 Governing Law |
73 | |||
SECTION 9.12 Jurisdiction; Consent to Service of Process |
73 | |||
SECTION 9.13 Waiver of Jury Trial |
73 | |||
SECTION 9.14 Counterparts |
73 | |||
SECTION 9.15 Enforcement of Agreement; Remedies |
73 |
iii
INDEX OF DEFINED TERMS
409A Plan |
3.10 | (e) | ||
Agreement |
Preamble | |||
Appraisal Rights Provisions |
2.11 | (d) | ||
Appraisal Shares |
2.11 | (d) | ||
Arrangements |
3.10 | (p) | ||
Bankruptcy and Equity Exception |
3.04 | (a) | ||
CERCLA |
9.03 | |||
Certificate |
2.11 | (a) | ||
Certificate of Merger |
2.03 | |||
Change of Recommendation |
5.03 | (e) | ||
Closing |
2.02 | |||
Closing Date |
2.02 | |||
Company |
Preamble | |||
Company Board |
Recitals | |||
Company Recommendation |
1.02 | (a) | ||
Company SEC Documents |
3.07 | (a) | ||
Company Stockholders Meeting |
2.09 | (a)(i) | ||
Confidentiality Agreement |
5.02 | (b) | ||
Continuing Director |
1.04 | |||
Copyrights |
9.03 | |||
Covered Securityholders |
3.10 | (p) | ||
Current Offering |
2.14 | (b) | ||
Current Offering Termination Date |
2.14 | (b) | ||
Cut-off Date |
5.03 | (b) | ||
Delaware Court |
9.12 | |||
DGCL |
Recitals | |||
XXXXX |
3.07 | (a) | ||
Effective Time |
2.03 | |||
Environmental Permits |
3.14 | (d) | ||
Exchange Fund |
2.12 | (a) | ||
Extension Excluded Party Notice Date |
5.03 | (b) | ||
Fairness Opinion |
3.12 | |||
FCPA |
3.22 | |||
Filed Company SEC Documents |
3.07 | (a) | ||
Financing |
6.11 | |||
Foreign Benefit Plan |
3.10 | (o) | ||
HSR Act |
3.05 | (b) | ||
Manufacturers |
3.18 | |||
Material Contract |
3.11 | (a) | ||
Merger |
Recitals | |||
Merger Consideration |
2.11 | (a) | ||
MergerSub |
Preamble | |||
Minimum Condition |
1.01 | (a) | ||
New Employment Agreements |
Recitals | |||
No-Shop Period Start Date |
5.03 | (a) | ||
Offer |
Recitals | |||
Offer Closing |
1.01 | (a) | ||
Offer Closing Date |
1.01 | (a) | ||
Offer Conditions |
1.01 | (a) | ||
Offer Documents |
1.01 | (c) | ||
Offer Price |
Recitals |
i
Option/SAR Cancellation Value |
2.14 | (a)(iii) | ||
Parent |
Preamble | |||
Parent Board |
Recitals | |||
Patents |
9.03 | |||
Paying Agent |
2.12 | (a) | ||
Promissory Note |
1.03 | (b) | ||
Proxy Statement |
2.09 | (a)(ii) | ||
RCRA |
9.03 | |||
Required Company Stockholder Vote |
3.04 | (c) | ||
Retained Employee |
6.04 | (a) | ||
RSU Cancellation Value |
2.14 | (a)(ii) | ||
Schedule 14D-9 |
1.02 | (b) | ||
Section 5.03(e) Notice |
5.03 | (e) | ||
Software |
9.03 | |||
Subsequent Offering Period |
1.01 | (a) | ||
Surviving Corporation |
2.01 | |||
Takeover Laws |
3.23 | |||
Termination Date |
8.01 | (e) | ||
Termination Fee |
8.03 | (a)(iii) | ||
Title IV Plan |
3.10 | (g) | ||
Top-Up Option |
1.03 | (a) | ||
Top-Up Option Closing |
1.03 | (b) | ||
Top-Up Option Shares |
1.03 | (a) | ||
Trade Secrets |
9.03 | |||
Trademarks |
9.03 | |||
Transactions |
3.04 | (a) | ||
Triggering Event |
8.01 | (g) | ||
Voting Debt |
3.03 | (a) |
ii
EXHIBITS
Exhibits A-1 through A-7 |
New Employment Agreements | |
Exhibit B
Exhibit C
|
Form of Amended Certificate of Incorporation
Company Restricted Stock, Company RSUs and Company Options and SARs |
SCHEDULES
Company Disclosure Schedule
Section 3.01(b)
|
Company Subsidiaries | |
Section 3.03(a)
|
Capitalization of the Company | |
Section 3.03(b)
|
Capitalization of the Company Subsidiaries | |
Section 3.03(c)
|
Record Holders of Company Stock Rights and Company Restricted Stock | |
Section 3.05(a)
|
No Conflicts | |
Section 3.05(b)
|
Consents | |
Section 3.06
|
Compliance; Permits | |
Section 3.08
|
Absence of Certain Changes or Events | |
Section 3.09
|
Litigation | |
Section 3.10(a)
|
Employee Benefit Plans | |
Section 3.10(d)
|
Certain Payments | |
Section 3.10(j)
|
Certain Post-Termination Benefits | |
Section 3.11(a)
|
Certain Contracts | |
Section 3.11(b)
|
Certain Contracts | |
Section 3.13
|
Assets; Title to Property | |
Section 3.14(a)
|
Compliance with Environmental Laws | |
Section 3.14(b)
|
Hazardous Materials | |
Section 3.14(c)
|
Notices of Alleged Environmental Liability | |
Section 3.14(d)
|
Environmental Permits | |
Section 3.14(e)
|
Material Environmental Claims | |
Section 3.15
|
Taxes | |
Section 3.17
|
Related Party Transactions | |
Section 3.18
|
Labor Matters | |
Section 3.19
|
Brokers | |
Section 3.20(a)
|
Intellectual Property | |
Section 3.20(c)
|
Intellectual Property Consents | |
Section 3.20(d)
|
Intellectual Property Litigation | |
Section 3.20(e)
|
No Conflict | |
Section 3.20(g)
|
Infringement of Third-Party Intellectual Property | |
Section 3.20(h)
|
Intellectual Property Claims | |
Section 3.20(j)
|
Patent Notices | |
Section 3.21
|
Major Customers and Suppliers | |
Section 5.01(b)
|
Conduct of Business by the Company |
iii
Section 5.01(b)(xvii) |
Annual Budget | |
Section 6.04(e) |
Assumed Employee Benefit Plans | |
Section 6.05(b) |
Annual Insurance Premiums | |
Section 9.03 |
Company Knowledge Group | |
Parent Disclosure Schedule | ||
Section 4.02 |
Authorization and Validity of Agreement | |
Section 4.03(a) |
No Conflicts | |
Section 4.03(b) |
Consents | |
Section 4.09 |
Approval of Parent Stockholders | |
Section 4.10 |
Brokers | |
Section 9.03 |
Parent Knowledge Group | |
Annex I |
Conditions of the Offer |
iv
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this “Agreement”) is entered into as of March 10,
2011, among Tomy Company, Ltd., a company organized under the Laws of Japan (“Parent”),
Galaxy Dream Corporation, a Delaware corporation and a wholly owned indirect subsidiary of Parent
(“MergerSub”), and RC2 Corporation, a Delaware corporation (the “Company”).
Certain capitalized terms used herein but not otherwise defined shall have the meanings set forth
in Section 9.03.
RECITALS
A. It is proposed that, upon the terms and subject to the conditions of this Agreement,
MergerSub make a cash tender offer (such tender offer, as it may be amended and supplemented from
time to time as permitted by this Agreement, the “Offer”) to purchase all outstanding
shares of Company Common Stock for $27.90 per share, net to the seller in cash (such price, or any
such higher price per share of Company Common Stock as may be paid in the Offer, is referred to
herein as the “Offer Price”).
B. It is proposed that, upon the terms and subject to the conditions of this Agreement and in
accordance with the Delaware General Corporation Law (the “DGCL”), following the
consummation of the Offer, MergerSub will merge with and into the Company, with the Company being
the surviving corporation (the “Merger”).
C. The Board of Directors of the Company (the “Company Board”) has by a unanimous vote
of those voting (i) determined that this Agreement and the Transactions, including the Offer and
the Merger, are advisable, fair to, and in the best interests of, the stockholders of the Company,
(ii) approved and adopted this Agreement and the Transactions, including the Offer and the Merger,
and (iii) resolved to recommend that the stockholders of the Company accept the Offer, tender their
shares of Company Common Stock into the Offer, and approve and adopt this Agreement to the extent
required by applicable Law.
D. The Board of Directors of Parent (the “Parent Board”) and Board of Directors of
MergerSub have approved and adopted this Agreement and the Transactions, including the Offer and
the Merger, and the sole stockholder of MergerSub has approved and adopted this Agreement.
E. New employment agreements with each of Xxxxxx X. Xxxxxxxxx, Xxxxx X. Xxxxxxxx, Xxxxxxx X.
Xxxxxx, Xxxxx X. Xxxxxxxxx, Xxxxxx Xx and Xxxxx X. Xxxxxxx and a bonus agreement with Xxxx X.
Xxxxxx (collectively, the “New Employment Agreements”) have been entered into prior to or
on the date hereof, which are attached as Exhibits A-1 through A-7.
AGREEMENTS
In consideration of the foregoing recitals and the mutual representations, warranties,
covenants and agreements herein contained, and intending to be legally bound hereby, Parent,
MergerSub and the Company hereby agree as follows:
ARTICLE I
THE OFFER
SECTION 1.01 The Offer.
(a) Provided that this Agreement shall not have been terminated in accordance with Section
8.01 and none of the events set forth in paragraphs (a)—(g) of Annex I hereto shall have occurred
and be continuing, on the date that is the 10th Business Day after the date of this
Agreement, MergerSub shall, and Parent shall cause MergerSub to, commence (within the meaning of
Rule 14d-2 under the Exchange Act) the Offer to purchase for cash all of the outstanding shares of
Company Common Stock at the Offer Price. The initial Expiration Date of the Offer shall be 12
midnight, New York City time, at the end of the 20th Business Day following commencement
of the Offer. The obligations of MergerSub to, and of Parent to cause MergerSub to, accept for
payment and to pay for any shares of Company Common Stock validly tendered on or prior to the
expiration of the Offer and not validly withdrawn shall be subject only to (i) there being validly
tendered and not validly withdrawn prior to the expiration of the Offer that number of shares of
Company Common Stock which, when added to any shares of Company Common Stock already owned by
Parent or any of the Parent Subsidiaries, if any, represents at least a majority of the shares of
Company Common Stock outstanding on a Fully-Diluted Basis, excluding shares of Company Common Stock
tendered in the Offer pursuant to guaranteed delivery procedures (the “Minimum Condition”)
and (ii) the satisfaction or waiver (to the extent permitted under this Agreement) of the other
conditions set forth in Annex I hereto (collectively, the “Offer Conditions”). MergerSub
expressly reserves the right, from time to time, to waive any of the Offer Conditions or to make
other changes in the terms and conditions of the Offer; provided, however, that without the prior
written consent of the Company, MergerSub shall not (A) amend or waive the Minimum Condition, (B)
decrease the Offer Price, (C) decrease the number of shares of Company Common Stock sought in the
Offer, (D) change the form of consideration payable in the Offer, (E) impose conditions to the
Offer that are in addition to the Offer Conditions, (F) extend the Expiration Date of the Offer in
any manner other than as permitted in this Section 1.01 or (G) amend any of the terms and
conditions of the Offer in any manner adverse to the holders of the shares of Company Common Stock.
Notwithstanding the foregoing, (u) if there shall have been one or more Extension Excluded Parties
as of the Extension Excluded Party Notice Date and the Company shall have delivered to Parent the
written notice identifying such Extension Excluded Party in accordance with Section 5.03(b),
MergerSub shall extend the Offer until the first Business Day following the Cut-off Date, (v) if on
the initial Expiration Date of the Offer or on any subsequent scheduled Expiration Date of the
Offer, all Offer Conditions shall not have been satisfied or waived, MergerSub may, from time to
time, in its sole discretion, extend the Offer for one or more periods of not more than five (5)
Business Days each beyond such Expiration Date, provided, however, that MergerSub shall not be
entitled to extend the Offer to any date occurring after the Termination Date, (w) MergerSub shall
extend the Offer for any period required by any rule, regulation, interpretation or position of the
SEC or the staff thereof or NASDAQ applicable to the Offer, (x) MergerSub shall extend the Offer
for one or more periods of no more than five (5) Business Days each (or such longer period as the
parties hereto agree) until the condition set forth in clause (ii) of the first paragraph
of Annex I related to the HSR Act and Foreign Antitrust Laws is satisfied or waived; provided,
however, that in no event shall MergerSub be required to extend
2
the Offer (1) beyond the
Termination Date or (2) at any time that Parent or MergerSub is permitted to terminate this
Agreement pursuant to Article VIII, (y) if on any scheduled Expiration Date, the Minimum Condition
is not satisfied but all other Offer Conditions are satisfied, then MergerSub shall extend the
Offer on a single occasion for a five (5) Business Day period; provided, however, that in no event
shall MergerSub be required to extend the Offer (1) beyond the Termination Date or (2) at any time
that Parent or MergerSub is permitted to terminate this Agreement pursuant to Article VIII, and (z)
MergerSub may, in its sole discretion, provide a “subsequent offering period” in accordance with
Rule 14d-11 under the Exchange Act (a “Subsequent Offering Period”) of not more than twenty
(20) Business Days to meet the objective that there be validly tendered, in accordance with the
terms of the Offer, prior to the Expiration Date and not validly withdrawn, a number of shares of
Company Common Stock, which when added to any shares of Company Common Stock already owned by
Parent or any of the Parent Subsidiaries, represent at least 90% of the then outstanding shares of
Company Common Stock at the Offer Closing (including following the exercise of the Top-Up Option at
Parent or MergerSub’s option). In addition, MergerSub may increase the Offer Price and extend the
Offer to the extent required by applicable Law in connection with such increase in each case in its
sole discretion and without the Company’s consent. Subject to the prior satisfaction of the
Minimum Condition and the prior satisfaction or waiver by Parent or MergerSub (to the extent
permitted under this Agreement) of the other Offer Conditions, MergerSub shall, and Parent shall
cause MergerSub to, in accordance with the terms of the Offer, consummate the Offer and accept for
payment and pay for all shares of Company Common Stock validly tendered and not validly withdrawn
pursuant to the Offer promptly (within the meaning of Rule 14e-1(c) promulgated under the Exchange
Act) after expiration of the Offer (subject to the provisions of Rule 14d-11 under the Exchange
Act, to the extent applicable). The Offer Price shall be net to the seller in cash, without
interest, upon the terms and subject to the conditions of the Offer. Acceptance for payment of the
shares of Company Common Stock pursuant to and subject to the conditions of the Offer after the
expiration of the Offer is referred to in this Agreement as the “Offer Closing”, and the
date on which the Offer Closing occurs is referred to in this Agreement as the “Offer Closing
Date”. If the payment of the Offer Price is to be made to a Person other than the Person in
whose name the tendered Certificate is registered, it shall be a condition of payment that (x) the
Certificate so tendered be properly endorsed or shall be otherwise in proper form for transfer, and
(y) the Person requesting such payment shall have paid all transfer and other Taxes required by
reason of the payment of the Offer Price to a Person other than the registered holder of the
Certificate tendered, or required for any other reason relating to such holder or requesting
Person, or shall have established to the satisfaction of Parent and MergerSub that such Tax either
has been paid or is not required to be paid.
(b) MergerSub shall not terminate the Offer prior to any scheduled Expiration Date without the
prior written consent of the Company, except if this Agreement is terminated pursuant to Article
VIII. If this Agreement is terminated pursuant to Article VIII, MergerSub shall, and Parent shall
cause MergerSub to, promptly (and in any event within twenty-four (24) hours of such termination),
irrevocably and unconditionally terminate the Offer, and MergerSub shall not in the event of any
such termination pursuant to Article VIII acquire any shares of Company Common Stock pursuant to
the Offer. If the Offer is terminated by
MergerSub, or this Agreement is terminated prior to the acquisition of shares of Company
Common Stock in the Offer, MergerSub shall promptly (within the meaning of Rule 14e-1(c)
promulgated under the Exchange Act) return, and shall cause any depositary acting on behalf of
3
MergerSub to return, in accordance with applicable Law, all shares of Company Common Stock that
have been tendered in the Offer to the registered holders thereof.
(c) As soon as practicable on the date the Offer is commenced, Parent and MergerSub shall file
with the SEC a Tender Offer Statement on Schedule TO with respect to the Offer, which shall include
the offer to purchase and forms of the related letter of transmittal and notice of guaranteed
delivery and all other required or appropriate ancillary Offer documents (collectively, together
with any amendments and supplements thereto, the “Offer Documents”). Subject to the
Company’s compliance with Section 1.02(c), Parent and MergerSub shall cause the Offer Documents to
be disseminated to holders of shares of Company Common Stock as required by applicable U.S. federal
securities Laws. Parent and MergerSub, on the one hand, and the Company, on the other hand, agree
to promptly correct any information provided by it for use in the Offer Documents if it shall have
become false or misleading in any material respect or as otherwise required by applicable Law.
MergerSub further agrees to take all steps necessary to cause the Offer Documents as so corrected
to be filed with the SEC and disseminated to holders of shares of Company Common Stock as required
by applicable U.S. federal securities Laws. The Company shall promptly furnish to Parent and
MergerSub all information concerning the Company that is required or reasonably requested by Parent
or MergerSub in connection with the obligations relating to the Offer Documents contained in this
Section 1.01(c). The Company and its counsel shall be given a reasonable opportunity to review and
comment on the Offer Documents before they are filed with the SEC. In addition, Parent and
MergerSub agree to: (i) provide the Company and its counsel with any comments or communications
that Parent, MergerSub or their counsel may receive from time to time from the SEC or its staff
with respect to the Offer Documents promptly after Parent’s or MergerSub’s, as the case may be,
receipt of such comments or communications, (ii) cooperate with the Company and its counsel in
responding to such comments or communications, and (iii) use their respective reasonable best
efforts to respond promptly to such comments.
(d) Parent shall provide or cause to be provided to MergerSub on a timely basis the
consideration necessary to pay for any shares of Company Common Stock that MergerSub becomes
obligated to accept for payment and pay for pursuant to the Offer, and shall cause MergerSub to
fulfill all of MergerSub’s obligations under this Agreement.
SECTION 1.02 Company Actions.
(a) The Company hereby approves of and consents to the Offer, and represents and warrants that
the Company Board, at a meeting duly called and held, at which all directors of the Company were
present, by a unanimous vote of those voting, has (i) determined that this Agreement and the
Transactions, including the Offer and the Merger, are advisable, fair to, and in the best interests
of, the stockholders of the Company; (ii) approved and adopted this Agreement and the Transactions,
including the Offer and the Merger; (iii) resolved to recommend that the stockholders of the
Company accept the Offer, tender their shares of Company Common Stock into the Offer, and approve
and adopt this Agreement to the extent required by applicable Law (the “Company
Recommendation”); (iv) to the extent applicable, directed that this Agreement and the Merger be
submitted to the stockholders of the Company for consideration in accordance with this Agreement;
and (v) taken all actions required to be taken in order to exempt this Agreement and the
Transactions from the requirements of any
4
Takeover Laws, which resolutions have not been amended,
rescinded, modified or withdrawn in any way. The Company consents to the inclusion in the Offer
Documents of the Company Recommendation contained in the Schedule 14D-9. The Company has been
advised that all of the Company’s directors and executive officers intend to tender all shares of
Company Common Stock beneficially owned by them to MergerSub pursuant to the Offer.
(b) As soon as reasonably practicable on the date the Offer Documents are filed with the SEC,
the Company shall, in a manner that complies with Rule 14d-9 under the Exchange Act, file with the
SEC a Tender Offer Solicitation/Recommendation Statement on Schedule 14D-9 (together with all
amendments, supplements and exhibits thereto, the “Schedule 14D-9”) which shall, subject to
the provisions of Section 5.03(e), contain the Company Recommendation and shall include the
Fairness Opinion and the information with respect to such opinion required to be disclosed by Item
1015(b) of Regulation M-A under the Exchange Act (regardless of whether such item is applicable).
The Company agrees to cause the Schedule 14D-9 to be filed with the SEC and disseminated to holders
of shares of Company Common Stock as required by applicable U.S. federal securities Laws. The
Company, on the one hand, and Parent and MergerSub, on the other hand, agree to promptly correct
any information provided by it for use in the Schedule 14D-9 if it shall have become false or
misleading in any material respect or as otherwise required by applicable Law. The Company agrees
to take all steps necessary to cause the Schedule 14D-9 as so corrected to be filed with the SEC
and disseminated to holders of the shares of Company Common Stock as required by applicable U.S.
federal securities Laws. Parent and MergerSub shall promptly furnish to the Company all
information concerning Parent and MergerSub that is required or reasonably requested by the Company
in connection with the obligations relating to the Schedule 14D-9 contained in this Section
1.02(b). Parent, MergerSub and their counsel shall be given the reasonable opportunity to review
and comment on the Schedule 14D-9 before it is filed with the SEC. In addition, the Company agrees
to: (i) provide Parent, MergerSub and their counsel in writing with any comments or communications
that the Company or its counsel may receive from time to time from the SEC or its staff with
respect to the Schedule 14D-9 promptly after the Company’s receipt of such comments or
communications, (ii) cooperate with Parent and its counsel in responding to such comments or
communications, and (iii) use its reasonable best efforts to respond promptly to such comments.
(c) In connection with the Offer, the Company shall promptly furnish (or cause its transfer
agent to furnish) to MergerSub mailing labels or electronic files containing the names and
addresses of all record holders of shares of Company Common Stock and security position listings of
shares of Company Common Stock held in stock depositories, each as of a recent date, together with
all other available listings or computer files containing the names, addresses and security
position listings of the record holders and beneficial owners of the shares of Company Common Stock
as of a recent date. The Company shall promptly furnish MergerSub with such additional information
and such other assistance in disseminating the Offer Documents to holders of the shares of Company
Common Stock (including lists of holders of the shares of Company Common Stock, updated
periodically, and their addresses, mailing labels and
lists of security positions) as MergerSub or its agents may reasonably request. The Company,
Parent and MergerSub agree to disseminate the Offer Documents and the Schedule 14D-9 to the holders
of shares of Company Common Stock together in the same mailing or other form of distribution.
Subject to the requirements of applicable Law, and except for such steps as are
5
necessary to
disseminate the Offer Documents and any other documents necessary to consummate the Offer, the
Merger and the Transactions, Parent and MergerSub and their respective Representatives shall use
the information provided pursuant to this Section 1.02(c) only in connection with the Offer and the
Merger, shall keep confidential and not disclose such information and materials in accordance with
the terms and conditions of the Confidentiality Agreement, and, if this Agreement shall be
terminated, will deliver to the Company or destroy all copies of such information then in their
possession or under their control in accordance with the Confidentiality Agreement upon the request
of the Company.
SECTION 1.03 Top-Up Option.
(a) The Company hereby grants to MergerSub an irrevocable option (the “Top-Up Option”)
to purchase, at a price per share equal to the Offer Price, a number (but not less than that
number) of newly issued shares of Company Common Stock (the “Top-Up Option Shares”) that,
when added to the number of shares of Company Common Stock owned, directly or indirectly, by
Parent, MergerSub or any of the other Parent Subsidiaries, at the time of exercise of the Top-Up
Option, constitutes one share of Company Common Stock more than ninety percent (90%) of the number
of shares of Company Common Stock that will be outstanding immediately after the issuance of the
Top-Up Option Shares. The Top-Up Option may be exercised, in whole but not in part, at any one
time on or after the date MergerSub accepts for payment all shares of Company Common Stock validly
tendered and not withdrawn pursuant to the Offer and prior to the earlier to occur of (1) the
Effective Time and (2) the termination of this Agreement in accordance with Section 8.01; provided,
however, that the obligation of the Company to deliver Top-Up Option Shares upon the exercise of
the Top-Up Option is subject to the conditions that (A) upon exercise of the Top-Up Option, the
number of shares of Company Common Stock owned, directly or indirectly, by Parent or MergerSub
constitutes one share of Company Common Stock more than ninety percent (90%) of the number of
shares of Company Common Stock that will be outstanding immediately after the issuance of the
Top-Up Option Shares and (B) the number of Top-Up Option Shares issued pursuant to the Top-Up
Option shall in no event exceed the number of authorized and unissued shares of Company Common
Stock not otherwise reserved for issuance.
(b) Upon the exercise of the Top-Up Option in accordance with Section 1.03(a), MergerSub shall
so notify the Company and shall set forth in such notice (1) the number of shares of Company Common
Stock expected to be owned, directly or indirectly, by Parent or MergerSub immediately preceding
the purchase of the Top-Up Option Shares, (2) the number of Top-Up Option Shares, and (3) a place
and time for the closing of the purchase of the Top-Up Option Shares (the “Top-Up Option
Closing”). At the Top-Up Option Closing, MergerSub shall pay the Company the aggregate
purchase price required to be paid for the Top-Up Option Shares pursuant to this Section 1.03, and
the Company shall cause to be issued to MergerSub a certificate representing the Top-Up Option
Shares. At its election, MergerSub may pay the aggregate purchase price payable for the Top-Up
Option
Shares either (A) in cash by wire transfer of immediately available funds to an account
designated by the Company, or (B) by (i) paying in cash, by wire transfer of immediately available
funds to an account designated by the Company, an amount equal to not less than the aggregate par
value of the Top-Up Option Shares and (ii) executing and delivering to the Company a promissory
note having a principal amount equal to the aggregate purchase price payable for the Top-Up Option
Shares less the amount paid
6
in cash pursuant to the preceding clause (i) (the “Promissory
Note”). The Promissory Note (A) shall be due on the first anniversary of the Top-Up Option
Closing, (B) shall accrue simple interest of 3% per annum, (C) shall be full recourse to Parent and
MergerSub, (D) may be prepaid, in whole or in part, at any time without premium or penalty, (E)
shall provide that the unpaid principal amount and accrued interest under the Promissory Note shall
immediately become due and payable in the event that (x) MergerSub fails to make any payment of
interest on the Promissory Note as provided therein and such failure continues for a period of 30
days or (y) MergerSub files or has filed against it any petition under bankruptcy or insolvency law
or makes a general assignment for the benefit of creditors and (F) shall have no other material
terms.
(c) Parent and MergerSub understand that the shares of Company Common Stock that MergerSub may
acquire upon exercise of the Top-Up Option will not be registered under the Securities Act and will
be issued in reliance upon an exemption thereunder for transactions not involving a public
offering. MergerSub agrees that any Top-Up Option Shares to be acquired upon exercise of the
Top-Up Option will be acquired 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 Securities Act, and that any
certificates representing the Top-Up Option Shares may include any legends required by applicable
securities laws.
(d) The parties agree and acknowledge that in any appraisal proceeding with respect to
Dissenting Shares and to the fullest extent permitted by applicable Law, the fair value of the
Dissenting Shares shall be determined in accordance with Section 262(h) of the DGCL without regard
to the Top-Up Option, the Top-Up Option Shares or any consideration paid or delivered by MergerSub
to the Company in payment for the Top-Up Option Shares.
SECTION 1.04 Directors.
(a) Effective upon the Offer Closing and from time to time thereafter, Parent shall be
entitled to elect or designate such number of directors, rounded up to the next whole number, on
the Company Board as is equal to the product of the total number of directors on the Company Board
(giving effect to the directors elected or designated by Parent pursuant to this Section 1.04(a))
multiplied by the percentage that the aggregate number of shares of Company Common Stock
beneficially owned by MergerSub, Parent and any of the other Parent Subsidiaries bears to the total
number of shares of Company Common Stock then outstanding (on a Fully-Diluted Basis). The Company
shall, upon Parent’s request, either take all actions necessary to promptly increase the size of
the Company Board, or promptly secure the resignations of such number of its incumbent directors,
or both, as is necessary to enable Parent’s designees to be so elected or designated to the Company
Board, and shall take all actions necessary to cause Parent’s designees to be so elected or
designated at such time. At such time, the Company shall, upon Parent’s request, also cause
Persons elected or designated by Parent to
constitute the same percentage (rounded up to the next whole number) as is on the Company Board of
(i) each committee of the Company Board, (ii) each board of directors (or similar body) of each
Company Subsidiary, and (iii) each committee (or similar body) of each such board. The Company’s
obligations under this Section
7
1.04(a) shall be subject to Section 14(f) of the Exchange Act and
Rule 14f-1 thereunder. The Company shall promptly take all actions required pursuant to such
Section 14(f) and Rule 14f-1 in order to fulfill its obligations under this Section 1.04(a),
including mailing to stockholders (together with the Schedule 14D-9) the information required by
Section 14(f) and Rule 14f-1 as is necessary to enable Parent’s designees to be elected or
designated to the Company Board. Parent or MergerSub shall supply the Company with information
with respect to either of them and their nominees, officers, directors and affiliates to the extent
required by Section 14(f) and Rule 14f-1.
(b) Following the election or appointment of Parent’s designees to the Company Board pursuant
to Section 1.04(a) and until the Effective Time, the approval of a majority of the Continuing
Directors, or the sole Continuing Director if there only be one Continuing Director, shall be
required in order to (i) amend, modify or terminate this Agreement, or agree or consent to any
amendment, modification or termination of this Agreement, in any case on behalf of the Company,
(ii) extend the time for performance of, or waive, any of the obligations or other acts of Parent
or MergerSub under this Agreement, (iii) waive or exercise any of the Company’s rights under this
Agreement or (iv) amend the Company’s certificate of incorporation or by-laws in any manner that
would adversely affect the Company’s stockholders. The Continuing Directors shall have the
authority to retain such counsel (which may include current counsel to the Company) and other
advisors at the reasonable expense of the Company for the purpose of fulfilling their obligations
hereunder, and shall have the authority following the election of Parent’s designees to the Company
Board pursuant to Section 1.04(a), to institute any action on behalf of the Company to enforce
performance of this Agreement or in accordance with its terms. For purposes of this Section
1.04(b), “Continuing Director” shall mean a member of the Company Board who was a member of
the Company Board as of immediately prior to payment by MergerSub for shares pursuant to the Offer;
provided, however, that if prior to the Effective Time there shall be no Continuing Director for
any reason, the other members of the Company Board shall designate a person to serve as a member of
the Company Board who is not an officer, employee, director or designee of Parent or any of its
affiliates and who is an “independent director” as defined by the NASDAQ Marketplace Rules (and
such person designated shall be considered a Continuing Director for purposes of this Agreement).
ARTICLE II
THE MERGER
SECTION 2.01 The Merger. Upon the terms and subject to the conditions set forth in this Agreement, and in accordance with
the DGCL, at the Effective Time, MergerSub shall be merged with and into the Company. As a result
of the Merger, the separate corporate existence of MergerSub shall cease and the Company shall
continue its existence under the DGCL as the surviving corporation of the Merger (the
“Surviving Corporation”).
SECTION 2.02 Closing. Unless this Agreement shall have been terminated and the Merger shall have been abandoned
pursuant to Section 8.01 hereof, the closing (the “Closing”) of the Merger shall take place
at the offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, 000 Xxxxx Xxxxxx Xxxxx, Xxxxxxx,
Xxxxxxxx 00000 at 10:00 a.m., Central Time, on the 3rd Business Day after all of the
conditions to the Closing set forth in Article VII hereof are satisfied or, if permitted, waived
(in writing)
8
(other than those that by their terms cannot be satisfied prior to the Closing, but
subject to the fulfillment or waiver, if permissible, (in writing) of such conditions at the
Closing), unless another date and time is agreed to in writing by the parties hereto (the actual
date of Closing being herein called the “Closing Date”).
SECTION 2.03 Effective Time. Upon the terms and subject to the conditions set forth in this Agreement, on the Closing Date
the parties hereto shall cause the Merger to be consummated by filing with the Secretary of State
of the State of Delaware a Certificate of Merger (the “Certificate of Merger”), in such
form as is required by, and executed in accordance with the relevant provisions of, the DGCL.
Notwithstanding the foregoing, if the Merger is to be consummated pursuant to Section 2.10, on the
Closing Date Parent shall execute and file a Certificate of Ownership and Merger with the Secretary
of State of the State of Delaware in accordance with the DGCL. The Merger shall become effective
upon the date and time of the filing of the Certificate of Merger or the Certificate of Ownership
and Merger, as the case may be, with the Delaware Secretary of State or on such later date or later
time as Parent and the Company shall agree and specify in the Certificate of Merger or Certificate
of Ownership and Merger, as the case may be (the “Effective Time”).
SECTION 2.04 Effects of the Merger. At and after the Effective Time, the effect of the Merger shall be as provided in the applicable
provisions of the DGCL.
SECTION 2.05 Certificate of Incorporation and By-Laws. The certificate of incorporation of the Company as in effect immediately prior to the Effective
Time shall be amended at the Effective Time to read in the form of Exhibit B hereto and, as so
amended, shall be the certificate of incorporation of the Surviving Corporation until thereafter
changed or amended as provided therein or by applicable Law. The by-laws of MergerSub as in effect
immediately prior to the Effective Time shall be the by-laws of the Surviving Corporation, except
that all references therein to MergerSub shall be deemed to be references to the Surviving
Corporation, until thereafter changed or amended as provided therein, by the certificate of
incorporation of the Surviving Corporation or by applicable Law.
SECTION 2.06 Directors. The directors of MergerSub immediately prior to the Effective Time shall, from and after the
Effective Time, be the directors of the Surviving Corporation, each to hold office until the
earlier of his or her death, resignation or removal in accordance with the Surviving Corporation’s
certificate of incorporation and by-laws or until his or her successor is duly elected and
qualified, as the case may be.
SECTION 2.07 Officers. The individuals specified by Parent prior to the Effective Time shall, from and after the
Effective Time, be the officers of the Surviving Corporation, each to hold office until the earlier
of each such Person’s death, resignation or
removal in accordance with the Surviving Corporation’s certificate of incorporation and by-laws or
until his or her successor is duly elected and qualified, as the case may be.
SECTION 2.08 Subsequent Actions. If at any time after the Effective Time the Surviving Corporation shall determine, in its sole
discretion, that any actions are necessary or desirable to vest, perfect or confirm of record or
otherwise in the Surviving Corporation its right, title or interest in, to or under any of the
rights or properties of MergerSub acquired or to be acquired by the Surviving Corporation as a
result of, or in connection with, the Merger or otherwise to carry out this Agreement, then the
officers and directors of the Surviving
9
Corporation shall be authorized to take all such actions as
may be necessary or desirable to vest all right, title or interest in, to or under such rights or
properties in the Surviving Corporation or otherwise to carry out this Agreement.
SECTION 2.09 Stockholders Meeting.
(a) If following the Offer Closing it is required by Law to consummate the Merger, the Company
shall in accordance with applicable Law:
(i) duly call, give notice of, convene and hold a special meeting of its
stockholders as soon as reasonably practicable following the Offer Closing Date (or,
if later, following the termination of the Subsequent Offering Period, if any) for
the purpose of considering and taking action upon this Agreement (the “Company
Stockholders Meeting”);
(ii) prepare and file with the SEC a preliminary proxy or information statement
relating to the Merger and this Agreement and use its reasonable best efforts (A)
to obtain and furnish the information required to be included by the SEC in the
Proxy Statement and, after consultation with Parent, respond promptly to any
comments made by the SEC with respect to the preliminary proxy or information
statement and cause a definitive proxy or information statement (together with any
amendments and supplements thereto, the “Proxy Statement”) to be mailed to
its stockholders as soon as reasonably practicable, which Proxy Statement shall
include all information required under applicable Law to be furnished to the
stockholders of the Company in connection with the Merger and the Transactions, and
shall include the Company Recommendation and the Fairness Opinion and information
with respect to such opinion required to be disclosed by Item 1015(b) of Regulation
M-A under the Exchange Act (regardless of whether such item is applicable), and (B)
to obtain the necessary approvals of this Agreement, the Merger and the other
Transactions by the stockholders of the Company; and
(iii) use its reasonable best efforts to solicit from holders of shares of
Company Common Stock proxies in favor of the Merger and take all actions reasonably
necessary or, in the reasonable opinion of MergerSub, advisable to secure the
approval of stockholders required by the DGCL, the
Company’s certificate of incorporation and any other applicable Law to effect
the Merger.
(b) The Company shall ensure that the Company Stockholders Meeting is called, noticed,
convened, held and conducted, and that all proxies solicited in
connection with the Company Stockholders Meeting are solicited in compliance with applicable Law. Parent agrees that it will
vote, or cause to be voted, all of the shares of Company Common Stock then owned by it or MergerSub
in favor of the approval and the adoption of this Agreement.
(c) Without limiting the generality of the foregoing, the Company agrees that its obligation
to duly call, give notice of, convene and hold the Company
10
Stockholders Meeting, as required by
this Section 2.09, shall not be affected by the withdrawal, amendment or modification of the
Company Recommendation.
SECTION 2.10 Merger Without Meeting of Stockholders. Notwithstanding Section 2.09, in the event that Parent or MergerSub shall acquire at least 90%
of the outstanding shares of Company Common Stock, the parties hereto agree, subject to Article
VII, to take all necessary and appropriate actions to cause the Merger to become effective as soon
as practicable after such acquisition, without a meeting of stockholders of the Company, in
accordance with Section 253 of the DGCL.
SECTION 2.11 Conversion of Securities. At the Effective Time, by virtue of the Merger and without any action on the part of Parent,
MergerSub, the Company or the holders of any of the following securities:
(a) Each share of Company Common Stock, issued and outstanding immediately prior to the
Effective Time (other than any shares of Company Common Stock to be canceled pursuant to Section
2.11(b) and other than any Appraisal Shares) shall be converted, in accordance with Section 2.12,
into the right to receive the Offer Price in cash, without interest (the “Merger
Consideration”). From and after the Effective Time, all such shares of Company Common Stock
shall no longer be outstanding and shall automatically be canceled and retired and shall cease to
exist, and each certificate or evidence of shares in book-entry form that immediately prior to the
Effective Time represented any such shares of Company Common Stock (a “Certificate”) shall
thereafter cease to have any rights with respect thereto other than the right to receive the Merger
Consideration into which such Company Common Stock has been converted pursuant hereto upon the
surrender of such Certificate in accordance with Section 2.12, without interest thereon.
(b) Each share of Company Common Stock held in the treasury of the Company and each share of
Company Common Stock owned by Parent, MergerSub or any direct or indirect wholly owned Parent
Subsidiary immediately prior to the Effective Time shall be canceled and extinguished without any
conversion thereof and no payment shall be made with respect thereto.
(c) Each share of common stock, par value $0.01 per share, of MergerSub issued and outstanding
immediately prior to the Effective Time shall be converted into and become one fully-paid and
nonassessable share of common stock, par value $0.01 per
share, of the Surviving Corporation held by the same holder thereof and shall constitute the
only outstanding shares of capital stock of the Surviving Corporation. From and after the
Effective Time, all certificates representing the common stock of MergerSub shall be deemed for all
purposes to represent the number of shares of common stock of the Surviving Corporation into which
they were converted in accordance with the immediately preceding sentence.
(d) Notwithstanding anything in this Agreement to the contrary, any shares of Company Common
Stock that are issued and outstanding immediately prior to the Effective Time and that are held by
stockholders of the Company who, in accordance with Section 262 of the DGCL (the “Appraisal
Rights Provisions”) (i) have not voted or consented to adopt and approve this Agreement and
(ii) shall have demanded properly in writing appraisal for
11
such shares, and not effectively
withdrawn, lost or failed to perfect their rights to appraisal (collectively, the “Appraisal
Shares”), will not be converted as described in Section 2.11(a), but at the Effective Time, by
virtue of the Merger and without any action on the part of the holder thereof, shall be canceled
and shall cease to exist and shall represent the right to receive only those rights provided under
the Appraisal Rights Provisions; provided, however, that all shares of Company Common Stock held by
stockholders who shall have failed to perfect or who effectively shall have withdrawn or lost their
rights to appraisal of such shares under the Appraisal Rights Provisions shall thereupon be deemed
to have been canceled and retired and to have been converted, as of the Effective Time, into the
right to receive the Merger Consideration in the manner provided in Section 2.11(a) upon surrender
of the Certificates representing such shares of Company Common Stock pursuant to Section 2.12.
Persons who have perfected appraisal rights under the Appraisal Rights Provisions with respect to
Appraisal Shares as aforesaid will not receive the Merger Consideration as provided in this
Agreement and will have only such rights as are provided by the Appraisal Rights Provisions with
respect to such Appraisal Shares. The Company shall give Parent prompt notice of any demands
received by the Company for the exercise of appraisal rights with respect to any shares of Company
Common Stock and withdrawals and attempted withdrawals of such demands and any other instruments
served pursuant to the DGCL and received by the Company relating to rights of appraisal, and Parent
shall have the right to direct all negotiations and proceedings with respect to such demands. The
Company shall not, except with the prior written consent of Parent, make any payment with respect
to, or settle or offer to settle, any such demands or approve any withdrawal of such demands.
(e) Without limiting the other provisions of this Agreement, if at any time during the period
between the date of this Agreement and the Effective Time, any change in the number of outstanding
shares of Company Common Stock shall occur as a result of a reclassification, recapitalization,
stock split (including a reverse stock split), or combination, exchange or readjustment of shares,
or any stock dividend or stock distribution with a record date during such period, the Offer Price,
Merger Consideration, Option/SAR Cancellation Value and RSU Cancellation Value shall be equitably
adjusted to reflect such change and as so adjusted shall, from and after the date of such event, be
the Offer Price, Merger Consideration, Option/SAR Cancellation Value and RSU Cancellation Value,
subject to further adjustment in accordance with this sentence; provided that this Section 2.11(e)
shall not be deemed to constitute a waiver of any breach by the Company of Section 5.01.
SECTION 2.12 Exchange of Certificates.
(a) Paying Agent. As of the Effective Time, Parent shall deposit, or shall cause to
be deposited, with a bank or trust company designated by Parent and reasonably acceptable to the
Company (the “Paying Agent”), and such deposit shall be solely for the benefit of the
holders of shares of Company Common Stock (other than holders of Appraisal Shares), for exchange in
accordance with this Article II through the Paying Agent, available funds sufficient to pay the
aggregate Merger Consideration required to be paid pursuant to Section 2.11(a) (such cash being
referred to herein as the “Exchange Fund”) in exchange for the outstanding shares of
Company Common Stock.
12
(b) Exchange Procedures. As soon as reasonably practicable after the Effective Time,
the Surviving Corporation or Parent shall cause the Paying Agent to mail or personally deliver to
each holder of record (or his or her attorney-in-fact) of a Certificate or Certificates, whose
shares of Company Common Stock were converted into the right to receive the Merger Consideration
pursuant to Section 2.11(a), (i) a letter of transmittal (which shall (A) include an accompanying
IRS Form W-9 (or substitute IRS Form W-9) and IRS Form W-8BEN, (B) specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Paying Agent, and (C) be in such form and have such other provisions as Parent
may reasonably specify) and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for the Merger Consideration. After the Effective Time and upon surrender
of a Certificate for cancellation to the Paying Agent, together with such letter of transmittal,
duly executed and completed in accordance with the instructions thereto, and such other documents
as reasonably may be required by the Paying Agent, the holder of such Certificate shall be entitled
to receive in exchange therefor the Merger Consideration to which such holder is entitled pursuant
hereto, and the Certificate so surrendered shall forthwith be canceled and the Merger Consideration
shall be sent promptly to such holder. No interest will accrue or be paid with respect to any
Merger Consideration to be delivered upon surrender of the Certificates. If the payment of the
Merger Consideration is to be made to a Person other than the Person in whose name the surrendered
Certificate is registered, it shall be a condition of payment that (x) the Certificate so
surrendered be properly endorsed or shall be otherwise in proper form for transfer, and (y) the
Person requesting such payment shall have paid all transfer and other Taxes required by reason of
the payment of the Merger Consideration to a Person other than the registered holder of the
Certificate surrendered, or required for any other reason relating to such holder or requesting
Person, or shall have established to the satisfaction of Parent and MergerSub that such Tax either
has been paid or is not required to be paid. Until surrendered as contemplated by this Section
2.12, each Certificate shall be deemed at any time after the Effective Time to represent only the
right to receive upon such surrender the Merger Consideration to which the holder of such
Certificate is entitled pursuant hereto, without interest thereon.
(c) No Further Rights in the Shares. All Merger Consideration paid upon conversion of
the shares of Company Common Stock in accordance with the terms hereof shall be deemed to have been
issued in full satisfaction of all rights pertaining to such shares.
(d) Termination of Exchange Fund. At any time following the one-year anniversary of
the Closing Date, the Surviving Corporation shall be entitled to require the Paying Agent to
deliver to it any cash (including any interest or earnings received with respect thereto) that is
held in the Exchange Fund and that has not been disbursed to holders of Certificates, and
thereafter such holders shall be entitled to look only to the Surviving Corporation (subject to
abandoned property, escheat or other similar Laws) only as general creditors thereof with respect
to the payment of any Merger Consideration that may be payable upon surrender of any Certificates
held by such holders, as determined pursuant to this Agreement, without any interest thereon.
Notwithstanding the foregoing, none of Parent, MergerSub, the Company, the Surviving Corporation,
the Paying Agent or any other Person shall be liable to any Person in respect of any Merger
Consideration that would otherwise have been payable in respect of any Certificate which is
delivered to a public official as required by applicable abandoned property, escheat or similar
Laws. If any Certificate shall not have been surrendered prior to the date on which the
13
related
Merger Consideration would, pursuant to applicable Law, escheat to or become the property of any
Governmental Authority, any such Merger Consideration shall, to the extent permitted by applicable
Law, immediately prior to such time, become the property of Parent, free and clear of all Claims
and interests of any Person previously entitled thereto.
(e) Withholding Rights. Notwithstanding anything in this Agreement to the contrary,
the Paying Agent, MergerSub, the Surviving Corporation and Parent shall be entitled to deduct and
withhold from any cash consideration payable pursuant to this Agreement to any holder of shares of
Company Common Stock or any holder of Company Stock Rights such amounts as it is required by Law to
deduct and withhold with respect to the making of such payment under the Code, or any provision of
state, local, or foreign Law. To the extent that amounts are so withheld, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the holder of the shares
of Company Common Stock or Company Stock Rights, as applicable, in respect of which such deduction
and withholding was made.
(f) Lost Certificates. If any Certificate shall have been lost, stolen, defaced or
destroyed, upon the making of an affidavit of that fact by the Person claiming such Certificate to
be lost, stolen, defaced or destroyed and, if required by the Paying Agent or the Surviving
Corporation, the posting by such Person of a bond in such reasonable amount as the Paying Agent or
the Surviving Corporation may direct as indemnity against any Claim that may be made against it
with respect to such Certificate, the Paying Agent or the Surviving Corporation, as the case may
be, shall pay the Merger Consideration in respect of such lost, stolen, defaced or destroyed
Certificate.
(g) Investment of Exchange Fund. The Paying Agent shall invest any cash included in
the Exchange Fund as directed by Parent, on a daily basis, provided that (i) no such investment or
losses thereon shall relieve Parent, the Surviving Corporation or the Paying Agent from promptly
making the payments required by this Article II or affect the amount of Merger Consideration
payable to the holders of shares of Company Common Stock, and following any losses from any such
investment, Parent shall promptly provide additional funds to the Paying Agent for the benefit of
the holders of shares of Company Common Stock at the Effective Time in the amount of such losses,
which additional funds will be deemed to be part of the Exchange Fund, and (ii) such investments
shall be in short-term obligations of or guaranteed
by the United States of America with maturities of no more than 30 days, or in commercial
paper obligations rated A-1 or P-1 or better by Xxxxx’x Investor Services, Inc. or Standard &
Poor’s Corporation, respectively (or funds that invest in such obligations). The Exchange Fund
shall not be used for any other purpose, except as provided in this Agreement. Any interest and
other income resulting from such investments shall be the sole and exclusive property of Parent and
shall be paid to Parent as provided in Section 2.12(d).
SECTION 2.13 Stock Transfer Books. At the Effective Time, the stock transfer books of the Company shall be closed and there shall
be no further registration of transfers of shares of Company Common Stock thereafter on the records
of the Company. From and after the Effective Time, the holders of Certificates evidencing
ownership of shares of Company Common Stock outstanding immediately prior to the Effective Time
shall cease to have any rights with respect to such shares except as otherwise provided herein or
by applicable
14
Law. On or after the Effective Time, any Certificates presented to the Paying Agent,
the Surviving Corporation or Parent for any reason shall be canceled and converted into the Merger
Consideration in accordance with this Article II.
SECTION 2.14 Treatment of Company Stock Rights; ESPP.
(a) Effective not later than immediately prior to the Effective Time, the Company shall
terminate all Company Stock Plans. As soon as practicable following the date of this Agreement,
the Company Board (or, if appropriate, any committee administering the Company Stock Plans) shall
adopt such resolutions or take such other actions (including obtaining any required consents) as
may be required to effect the following:
(i) immediately prior to the Effective Time, but conditioned upon the Merger,
except as set forth in Exhibit C, each share of Company Restricted Stock shall
become fully vested and free of restrictions and shall be treated as a share of
Company Common Stock in accordance with Section 2.11(a);
(ii) except as set forth in Exhibit C, at the Effective Time, each Company RSU
outstanding immediately prior to the Effective Time shall be canceled in full and
the holder thereof shall be entitled to receive in consideration for such
cancellation (the “RSU Cancellation Value”) a cash payment equal to the
product of the target number of shares of Company Common Stock that are subject to
such Company RSU immediately prior to the Effective Time multiplied by the Merger
Consideration, which RSU Cancellation Value shall be payable to such holder
immediately following the Effective Time by the Surviving Corporation (or, if such
Company RSU is subject to Section 409A of the Code, at such later date provided by
the terms of such Company RSU); and
(iii) except as set forth in Exhibit C, at the Effective Time, each Company
Option and each Company SAR outstanding immediately prior to the Effective Time,
whether or not vested, shall be canceled in full and cease to exist and the holder
thereof shall be entitled to receive in consideration
for such cancellation (the “Option/SAR Cancellation Value”) a cash
payment equal to the product of (A) the number of shares of Company Common Stock
that are subject to such Company Option or Company SAR immediately prior to the
Effective Time, multiplied by (B) (x) the Merger Consideration reduced by (y) the
exercise price per share of Company Common Stock subject to such Company Option or
Company SAR, which Option/SAR Cancellation Value shall be payable by the Surviving
Corporation to such holder immediately following the Effective Time.
(b) The ESPP shall continue to be operated in accordance with its terms and past practice for
the Offering (as defined in the ESPP) that is in effect as of the date of this Agreement (the
“Current Offering”). Promptly upon execution of this Agreement, the Company shall, subject
to applicable Law, suspend the commencement of any future Offerings under the ESPP unless and until
this Agreement is terminated and shall terminate the ESPP as of the Closing Date. In the event the
Offering Termination Date (as defined in the ESPP) for the
15
Current Offering (the “Current
Offering Termination Date”) occurs following the Effective Time, the holder of each option then
outstanding under the ESPP will be entitled to receive at the Current Offering Termination Date
upon the exercise of such option for each share as to which such option shall be exercised, as
nearly as reasonably may be determined, a cash payment equal to the Merger Consideration.
(c) All amounts payable pursuant to this Section 2.14 shall be subject to any required
withholding taxes as provided in Section 2.12(e) and shall be paid without interest.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except (a) as is disclosed in any of the Filed Company SEC Documents (other than disclosures
referred to in any “Risk Factors” or “Forward Looking Statements” sections of any such Filed
Company SEC Document or any other statements in such Filed Company SEC Documents that are
predictive, cautionary or forward-looking) or (b) as set forth in the Company Disclosure Schedule
with reference to the sections or subsections in this Agreement to which the information in such
Company Disclosure Schedule relates; provided, however, that any information set forth in one
section or subsection of the Company Disclosure Schedule shall be deemed to apply to each other
section or subsection thereof or hereof to which its relevance is readily apparent on its face, the
Company hereby represents and warrants to Parent that:
SECTION 3.01 Organization and Qualification.
(a) The Company. The Company is a corporation duly organized, validly existing and in
good standing under the Laws of the State of Delaware. The Company has the requisite corporate
power and authority necessary to own, lease, and operate its properties and to carry on its
business as it is now being conducted. The Company is duly qualified or licensed as a foreign
corporation to do business and in good standing in each jurisdiction where the character of the
properties owned, leased, or operated by it or the nature of
its activities makes such qualification or licensing necessary, except for any such failure to
be so duly qualified or licensed or in good standing that has not had and would not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse Effect.
(b) The Company Subsidiaries. Except for the Company Subsidiaries or as set forth in
Section 3.01(b) of the Company Disclosure Schedule, the Company does not directly or indirectly own
any equity interest in, or any interest convertible into or exchangeable or exercisable for any
equity interest in, any corporation, partnership, limited liability company, joint venture or other
Person. The Company Disclosure Schedule at Section 3.01(b) lists each Company Subsidiary and its
jurisdiction of formation or incorporation. Each Company Subsidiary is a corporation or other
entity duly organized and validly existing and in good standing under the Laws of the jurisdiction
of its formation or incorporation. Each Company Subsidiary has the requisite corporate, limited
liability company or other organizational power and authority necessary to own, lease, and operate
its properties and to carry on its business as it is now being conducted. Each Company Subsidiary
is duly qualified or licensed as a foreign corporation to do business and in good standing in each
jurisdiction where the character of the
16
properties owned, leased, or operated by it or the nature
of its activities makes such qualification or licensing necessary, except for any such failure to
be so duly qualified or licensed or in good standing that has not had and would not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse Effect.
SECTION 3.02 Organizational Documents. The Company has heretofore delivered or made available to Parent complete and correct copies of
the Organizational Documents, as amended or restated, of the Company and each of the Company’s
“significant subsidiaries” (as such term in defined in Rule 1-02(w) of Regulation S-X) and such
Organizational Documents are in full force and effect. None of the Company or any Company
Subsidiary are in violation of their respective Organizational Documents.
SECTION 3.03 Capitalization.
(a) Capitalization of the Company. The entire authorized capital stock of the Company
consists of 28,000,000 shares of Company Common Stock. As of the date of this Agreement, (i)
21,584,878 shares of Company Common Stock are issued and outstanding (other than shares of Company
Restricted Stock), all of which were duly authorized, validly issued, and are fully paid and
nonassessable, (ii) 2,878,190 shares of Company Common Stock are held in the Company’s treasury,
(iii) a total of 1,369,156 shares of Company Common Stock are reserved for issuance upon the
exercise of outstanding Company Options, (iv) a total of 1,260,267 shares of Company Common Stock
are reserved for issuance upon the exercise of outstanding stock-settled Company SARs, (v) a total
of 740,999 shares of Company Common Stock are reserved for future grant under the Company Stock
Plans, (vi) a total of 416,846 shares of Company Common Stock are reserved for purchase under the
ESPP, (vii) a total of 74,170 shares of Company Restricted Stock awards are issued and outstanding
and (viii) a total of 140,000 target shares of Company Common Stock are subject to Company RSUs.
All of the outstanding shares of the Company’s capital stock have been, all shares of Company
Common Stock which may be issued pursuant to the Top-Up Option will be, when issued in accordance
with the terms of this Agreement, and all shares of Company Common Stock which may be issued
pursuant to the exercise of outstanding Company Options, outstanding stock-settled
Company SARs or outstanding Company RSUs will be, when issued in accordance with the terms of
the applicable grant agreement, duly authorized, validly issued, fully paid and non-assessable and
not subject to or issued in violation of pre-emptive or other similar rights. There is no
indebtedness having general voting rights (or convertible into securities having such rights)
(“Voting Debt”) of the Company or any Company Subsidiary issued and outstanding. Except
for the Top-Up Option and as set forth at Section 3.03(c) of the Company Disclosure Schedule, there
are no options, warrants, pre-emptive rights, restricted stock, restricted stock units, stock
appreciation rights, subscriptions, puts, calls, exchange rights or other rights, agreements,
arrangements, understandings or commitments of any character relating to the issued or unissued
capital stock of, or other equity interests in, the Company or obligating the Company to issue,
deliver, transfer, register or sell or cause to be issued, delivered, transferred, registered or
sold, any shares of capital stock or Voting Debt of, or other equity interests in, the Company or
securities convertible into or exchangeable for such shares, equity interests or other securities,
or obligating the Company to grant, extend or enter into any such option, warrant, pre-emptive
right, restricted stock, restricted stock unit, stock appreciation right, subscription, put, call,
exchange right or other right, agreement, arrangement, understanding or commitment. Except as
17
set
forth at Section 3.03(a) of the Company Disclosure Schedule, there are no agreements, arrangements,
understandings, commitments or obligations, contingent or otherwise, of the Company to repurchase,
redeem, or otherwise acquire any shares of the capital stock of the Company or any capital stock or
other equity interests in any Person or to make any investment (in the form of a loan, capital
contribution, or otherwise) in any Person. Except as set forth at Section 3.03(a) of the Company
Disclosure Schedule, there are no voting trusts, proxies or any other agreements, arrangements,
understandings or commitments relating to the voting or disposition of any shares of the Company’s
capital stock or granting to any Person or group of Persons the right to elect, or to designate or
nominate for election, a director to the Company Board.
(b) Capitalization of the Subsidiaries. Except as set forth on Section 3.03(b) of the
Company Disclosure Schedule, all of the outstanding capital stock of, or other equity interests in,
each Company Subsidiary (i) have been duly authorized, validly issued, and are fully paid and
non-assessable and not subject to or issued in violation of preemptive rights or other similar
rights, (ii) are owned, directly or indirectly, by the Company, free and clear of all Encumbrances,
and (iii) are free of any other restriction (including any restriction on the right to vote, sell
or otherwise dispose of such capital stock or other ownership interests). There are no options,
warrants, pre-emptive rights, restricted stock, restricted stock units, stock appreciation rights,
subscriptions, puts, calls, exchange rights or other rights, agreements, arrangements,
understandings or commitments of any character relating to the issued or unissued capital stock of,
or other equity interests in, any Company Subsidiary or obligating any Company Subsidiary to issue,
deliver, transfer, register or sell or cause to be issued, delivered, transferred, registered or
sold, any shares of capital stock or Voting Debt of, or other equity interests in, any Company
Subsidiary or securities convertible into or exchangeable for such shares, equity interests or
other securities, or obligating any Company Subsidiary to grant, extend or enter into any such
option, warrant, pre-emptive right, restricted stock, restricted stock unit, stock appreciation
right, subscription, put, call, exchange right or other right, agreement, arrangement,
understanding or commitment. Except as set forth at Section 3.03(b) of the Company Disclosure
Schedule, there are no agreements, arrangements, understandings, commitments or obligations,
contingent or otherwise, of any Company Subsidiary to repurchase, redeem, or otherwise acquire any
shares of
the capital stock or other equity interest in any Company Subsidiary or to make any investment
(in the form of a loan, capital contribution or otherwise) in any Person. Except as set forth at
Section 3.03(b) of the Company Disclosure Schedule, there are no voting trusts, proxies or any
other agreements, arrangements, understandings or commitments relating to the voting or disposition
of any shares of any Company Subsidiary’s capital stock or other equity interests or granting to
any Person or group of Persons the right to elect, or to designate or nominate for election, a
director to the board of directors or similar body of any Company Subsidiary.
(c) Section 3.03(c) of the Company Disclosure Schedule sets forth a correct and complete list
as of the date hereof of all record holders of Company Stock Rights and Company Restricted Stock,
including for each such award (i) the number of shares of Company Common Stock subject to each
award, (ii) the exercise or vesting schedule, as applicable, (iii) if applicable, the exercise
price per share, (iv) the date of grant, (v) the expiration date, as applicable, and (vi) whether
the Company Option is an incentive stock option (as defined in
Section 422 of the Code) or a
nonqualified stock option.
18
(d) Each grant of a Company Stock Right and Company Restricted Stock was validly issued and
properly approved by the Company Board (or a duly authorized committee or subcommittee thereof) in
compliance with all applicable Laws and recorded on the Company’s financial statements in
accordance with GAAP consistently applied, and no such grants involved any “back dating,” “forward
dating” or similar practices with respect to the effective date of grant. No Company Option or
Company SAR has an exercise price that has been or may be less than the fair market value of a
share of Company Common Stock as of the date such Company Option or Company SAR was granted or has
any feature for the deferral of compensation other than the deferral of recognition of income until
the later of exercise or disposition of such option, in each case, determined in accordance with
Treasury Regulation 1.409A-1(b)(5)(i) and other applicable regulations and guidance under Section
409A of the Code.
(e) Prior to the date hereof, the Company has delivered or made available to Parent accurate
and complete copies of each of the Company Stock Plans and all forms of award agreements evidencing
outstanding awards granted pursuant to the Company Stock Plans as of the date hereof as well as
copies of all Section 83(b) of the Code elections for all Company Restricted Stock awards. No
material changes have been made to any such forms in connection with any award.
(f) There are no accrued and unpaid dividends or other distributions with respect to any
outstanding shares of capital stock of the Company.
SECTION 3.04 Authorization; Validity of Agreement; Necessary Action.
(a) Authorization and Validity of Agreement. The Company has all necessary corporate
power and authority to execute and deliver this Agreement and the New Employment Agreements to
which it is a party, to perform its obligations hereunder and to consummate the transactions
provided for or contemplated hereby, including the Offer and the Merger and the transactions
contemplated by the New Employment Agreements to which it is a party (collectively, the
“Transactions”). The execution, delivery
and performance of this Agreement and the New Employment Agreements to which it is a party by
the Company and the consummation by the Company of the Transactions have been duly and validly
authorized by all necessary corporate action and no other corporate proceedings on the part of the
Company are necessary to authorize the execution, delivery and performance by the Company of this
Agreement or to consummate the Transactions (other than, with respect to the Merger, the Required
Company Stockholder Vote, to the extent required under the DGCL). This Agreement and each of the
New Employment Agreements to which it is a party has been duly and validly executed and delivered
by the Company and, assuming the due authorization, execution and delivery by Parent and MergerSub,
as applicable, constitutes the legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except that such enforceability (i) may be
limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other
similar Laws of general application affecting or relating to the enforcement of creditors’ rights
generally and (ii) is subject to general principles of equity, whether considered in a proceeding
at law or in equity (the “Bankruptcy and Equity Exception”).
19
(b) Company Board Approval. The Company Board, at a meeting duly called and held, at
which all directors of the Company were present, by a unanimous vote of the directors who voted,
adopted resolutions (i) determining that this Agreement and the Transactions, including the Offer
and the Merger are advisable, fair to, and in the best interests of, the stockholders of the
Company, (ii) approving and adopting this Agreement and the Transactions, including the Offer and
the Merger, (iii) making the Company Recommendation, (iv) to the extent applicable, directing that
this Agreement and the Merger be submitted to the stockholders of the Company for consideration in
accordance with this Agreement, and (v) taking all actions required to be taken in order to exempt
this Agreement and the Transactions from the requirements of any Takeover Laws, which resolutions
have not been amended, rescinded, modified or withdrawn in any way.
(c) Required Vote. Other than the affirmative vote of the holders of a majority of
the outstanding shares of Company Common Stock to approve and adopt this Agreement with respect to
the Merger if required by the DGCL (the “Required Company Stockholder Vote”), no vote or
consent of the holders of any class or series of capital stock of the Company is required to
approve and adopt this Agreement, the New Employment Agreements to which it is a party or the
Transactions.
SECTION 3.05 No Conflict; Required Filings and Consents.
(a) Except as set forth in Section 3.05(a) of the Company Disclosure Schedule, the execution,
delivery and performance of this Agreement and each of the New Employment Agreements to which it is
a party by the Company does not, and the consummation of the Transactions and the performance of
this Agreement and such New Employment Agreements by the Company and the compliance by the Company
with any provisions of this Agreement and such New Employment Agreements will not, (i) conflict
with, violate or result in a breach of any provision of the Organizational Documents of the Company
or any of the Company Subsidiaries, (ii) conflict with or violate any Law or Order applicable to
the Company or any of the Company Subsidiaries, or by which any of their respective properties are
bound or
affected or (iii) result in a violation or breach of or the loss of any benefit under, or
constitute a default (or an event that with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration or cancellation of, or
result in the creation of an Encumbrance on, any of the properties of the Company or any of the
Company Subsidiaries pursuant to any of the terms or provisions of any Contract, lien, Permit,
franchise or other instrument or obligation to which the Company or any of the Company Subsidiaries
is or are a party or by which the Company or any of the Company Subsidiaries or any of their
respective properties is or may be bound or affected, except in the case of clauses (ii) and (iii)
for any such conflicts, violations, breaches, defaults or other condition or state of facts that
would not reasonably be expected to be, individually or in the aggregate, material to the Company
and the Company Subsidiaries, taken as a whole, or to prevent or materially delay the consummation
by the Company of the Transactions.
(b) No consent, approval or Order of, filing with, or notification to, or other Permit or
authorization of, any Governmental Authority or any other Person is required to be made, obtained,
performed or given to or with respect to the Company or any of the Company Subsidiaries in
connection with the execution, delivery and performance of this Agreement or the
20
New Employment
Agreements to which it is a party by the Company or the consummation by the Company of the
Transactions, except for: (i) the filings required under, and compliance with other applicable
requirements of, the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the “HSR
Act”), and the filings and receipt, termination or expiration, as applicable, of such other
approvals or waiting periods required under any applicable Foreign Antitrust Law, or foreign
investment control or similar Law; (ii) the filing with the SEC of (1) the Schedule 14D-9 and (2)
the Proxy Statement if stockholder approval of the Merger is required by Law; (iii) such reports
and filings under Section 13(a), 14(a) or 15(d) of the Exchange Act as may be required in
connection with this Agreement and the Transactions; (iv) the filing and recordation of the
Certificate of Merger or Certificate of Ownership and Merger, as the case may be, as required by
the DGCL; (v) if required by the DGCL with respect to the Merger, the Required Company Stockholder
Vote; (vi) the filing of appropriate documents with NASDAQ and the relevant authorities of any
states where the Company is qualified to do business; (vii) the consents, approvals, Orders,
filings, notifications, other Permits or authorizations set forth on Section 3.05(b) of the Company
Disclosure Schedule; and (viii) such consents, approvals, Orders, filings, notifications, other
Permits or authorizations, the failure to be made or obtained would not reasonably be expected to
be, individually or in the aggregate, material to the Company and the Company Subsidiaries, taken
as a whole, or to prevent or materially delay the consummation by the Company of the Transactions.
SECTION 3.06 Compliance; Permits. Except as set forth at Section 3.06 of the Company Disclosure Schedule, the Company and the
Company Subsidiaries, the operation of the business of the Company and the Company Subsidiaries,
and the Company’s and the Company Subsidiaries’ use and ownership of their respective assets are,
and since December 31, 2008 have been, in compliance with all applicable Laws, including all
energy, safety, environmental, zoning, health, export, import, trade practice, antidiscrimination,
antitrust, wage, hour and price control Laws, except for such noncompliance that has not had and
would not reasonably be expected to have, individually or in the aggregate, a Company Material
Adverse Effect, and no notice, Claim or assertion has been received by the Company or any Company
Subsidiary or has been filed, commenced or, to the Company’s Knowledge, brought, initiated or
threatened against
the Company or any Company Subsidiary alleging any violation of any of the foregoing, except for
such violation that has not had and would not reasonably be expected to have, individually or in
the aggregate, a Company Material Adverse Effect. The Company and the Company Subsidiaries have in
effect all Permits that are necessary for them to own, lease or operate their properties and to
carry on their businesses as currently being conducted or that are otherwise required under
applicable Law, except for the failure to have such Permits that has not had and would not
reasonably be expected to have, individually or in the aggregate, a Company Material Adverse
Effect. The execution and delivery of this Agreement and each of the New Employment Agreements to
which it is a party by the Company does not, and the consummation of the Transactions and
compliance with the terms hereof and thereof would not reasonably be expected to, cause the
revocation, withdrawal, non-renewal, suspension or cancellation of any such Permit, except for such
revocation, withdrawal, non-renewal, suspension or cancellation that has not had and would not
reasonably be expected to have, individually or in the aggregate, a Company Material Adverse
Effect. Neither the Company nor any Company Subsidiary has received any written communication from
any Governmental Authority or any other Person that alleges that the Company or any Company
Subsidiary is not in compliance in any material respect with, or is subject to material Liability
under, any Permit or Law.
21
SECTION 3.07 SEC Documents and Financial Statements.
(a) Since December 31, 2008, the Company has timely filed all registration statements,
prospectuses, forms, reports, schedules, statements, certifications, exhibits and other documents
required to be filed by it with the SEC. Except to the extent available in full without redaction
on the SEC’s web site through the Electronic Data Gathering, Analysis and Retrieval System
(“XXXXX”) two (2) days prior to the date of this Agreement, the Company has delivered or
made available to Parent copies in the form filed with the SEC of all registration statements,
prospectuses, forms, reports, schedules, statements, certifications, exhibits and other documents
required to be filed by it with the SEC since December 31, 2008 (the “Company SEC
Documents” and, to the extent available in full without redaction on the SEC’s web site through
XXXXX two (2) days prior to the date of this Agreement, the “Filed Company SEC Documents”).
The Company has delivered or made available to Parent complete and correct copies of all comment
letters received by the Company from the staff of the SEC since December 31, 2008 and all responses
to such comment letters by or on behalf of the Company. As of the date of this Agreement, there
are no outstanding or unresolved comments in comment letters received from the staff of the SEC
with respect to any of the Company SEC Documents. The Company SEC Documents (i) were prepared in
accordance with, and complied in all material respects with the requirements of, the Securities
Act, the Exchange Act and SOX, as applicable, and (ii) did not at the time they were filed with the
SEC, or if amended, at the date of the last such amendment, contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or necessary in order
to make the statements made therein, in 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 Securities Act, as of the date such registration
statement or amendment became effective, did 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. None of the Company Subsidiaries is
required to file any forms, reports or other documents with the SEC. As used in this Section
3.07, the term “filed” shall be broadly construed to include any manner in which a document or
information is furnished, supplied or otherwise made available to the SEC.
(b) Each of the principal executive officer of the Company and the principal financial officer
of the Company (or each former principal executive officer of the Company and each former principal
financial officer of the Company, as applicable) has made all certifications required by Rule
13a-14 or 15d-14 under the Exchange Act and Sections 302 and 906 of SOX with respect to the Company
SEC Documents. For purposes of this Section 3.07, “principal executive officer” and “principal
financial officer” shall have the meanings given to such terms in SOX. Neither the Company nor any
of the Company Subsidiaries has outstanding, or has arranged any outstanding, “extensions of
credit” to directors or executive officers within the meaning of Section 402 of SOX.
(c) The consolidated financial statements of the Company and the Company Subsidiaries included
or incorporated by reference in any Company SEC Documents (including the related notes): (i)
complied as to form, as of the respective dates of filing of such Company SEC Documents with the
SEC, in all material respects with applicable accounting requirements and the rules and regulations
of the SEC with respect thereto (including Regulation
22
S-X), (ii) have been prepared in accordance
with GAAP (except, in the case of unaudited financial statements, to the extent permitted by
Regulation S-X for Quarterly Reports on Form 10-Q) applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes thereto), and (iii) fairly present in all
material respects the consolidated financial condition of the Company and the Company Subsidiaries
at the dates thereof and the consolidated results of operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit adjustments).
(d) The Company and the Company Subsidiaries have no Liabilities other than (i) Liabilities
reflected or otherwise reserved against in the consolidated financial statements of the Company and
the Company Subsidiaries included in the Filed Company SEC Documents, (ii) Liabilities arising
under this Agreement or incurred in connection with the Transactions, (iii) Liabilities incurred in
the ordinary course of business consistent with past practice since December 31, 2010, and (iv)
Liabilities that have not had and would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect.
(e) The Company is in compliance in all material respects with the applicable provisions of
SOX and the applicable listing and governance rules and regulations of the NASDAQ Stock Market.
(f) The Company maintains “internal control over financial reporting” (as defined in Rules
13a-15(f) and 15d-15(f) of the Exchange Act) sufficient to provide reasonable assurance (i) that
the Company maintains records that in reasonable detail accurately and fairly reflect its
transactions and dispositions of assets, (ii) that transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP, (iii) that receipts and expenditures
are executed only in accordance with authorizations of management and the Company Board and (iv)
regarding prevention or timely detection of the unauthorized
acquisition, use or disposition of the Company’s assets that could have a material effect on
the Company’s consolidated financial statements. The Company has disclosed, based on the most
recent evaluation of internal control over financial reporting, to the Company’s auditors and the
audit committee of the Company Board (and made available to Parent a summary of the significant
aspects of such disclosure) (A) all significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting that are reasonably likely to adversely
affect the Company’s ability to record, process, summarize and report financial information and (B)
any fraud, whether or not material, that involves management or other employees who have a
significant role in the Company’s internal control over financial reporting. The Company has not
identified any material weaknesses in the design or operation of the Company’s internal control
over financial reporting.
(g) The Company’s “disclosure controls and procedures” (as defined in Rule 13a-15(e) and
15d-15(e) under the Exchange Act) are reasonably designed to ensure that all information required
to be disclosed by the Company in the reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified in the rules and
forms of the SEC, and that all such information is accumulated and communicated to the Company’s
management as appropriate to allow timely decisions regarding required disclosure.
23
(h) Neither the Company nor any Company Subsidiary is a party to, nor does it have any
commitment to become a party to, any “off-balance sheet arrangements” (as defined in Item 303(a)(4)
of Regulation S-K of the SEC).
(i) To the Knowledge of the Company, there are no SEC inquiries or investigations, other
inquiries or investigations by Governmental Authorities or internal investigations pending or
threatened in each case regarding any accounting practices of the Company or any malfeasance by any
director or executive officer of the Company. Since December 31, 2008, there have been no internal
investigations regarding accounting or revenue recognition discussed with, reviewed by or initiated
at the direction of the Company’s chief executive officer, the Company’s chief financial officer,
the Company Board or any committee thereof.
SECTION 3.08 Absence of Certain Changes or Events. Except as set forth at Section 3.08 of the Company Disclosure Schedule, from December 31, 2010
to the date of this Agreement:
(a) neither the Company nor any Company Subsidiary has (i) suffered any Company Material
Adverse Effect or (ii) become aware of any change, event, development, condition, action,
violation, inaccuracy, circumstance or occurrence that would reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect;
(b) each of the Company and each Company Subsidiary has conducted its respective business only
in the ordinary course of business consistent with past practice; and
(c) neither the Company nor any Company Subsidiary has taken any action that, if taken after
the date of this Agreement, would constitute a breach of any of the covenants set forth in Section
5.01(b).
SECTION 3.09 Absence of Litigation. Except as set forth at Section 3.09 of the Company Disclosure Schedule: (a) neither the Company
nor any of the Company Subsidiaries is or has been since December 31, 2008, subject to any material
continuing Order of, or material investigation by, any Governmental Authority or the Company Board
or any committee thereof, or any Order of any Governmental Authority, including cease-and-desist or
other Orders of any Governmental Authority; and (b) there is no material Claim pending or, to the
Knowledge of the Company, threatened against or naming the Company or any Company Subsidiary or
affecting the assets of the Company or any Company Subsidiary.
SECTION 3.10 Employee Benefit Plans.
(a) The Company Disclosure Schedule at Section 3.10(a) sets forth a list of all Employee
Benefit Plans maintained, sponsored or contributed to by the Company or any ERISA Affiliate or
under which the Company or any ERISA Affiliate has any Liability.
(b) The Company has delivered or made available to Parent correct and complete copies of: (i)
each Employee Benefit Plan and a written summary of any Employee Benefit Plan not in writing; (ii)
the most recent determination letter received from the IRS with respect to any Employee Benefit
Plan; (iii) the summary plan description, all summaries of
24
material modifications and employee
booklets with respect to any Employee Benefit Plan; (iv) any service agreement, including
third-party administration agreements or other similar Contracts related to each Employee Benefit
Plan; (v) the two most recent annual reports on Form 5500 required to be filed for each Employee
Benefit Plan including required attachments; (vi) the two most recent actuarial reports, if
applicable; (vii) all related trust agreements, annuity contracts, insurance contracts, including
stop-loss insurance contracts or other funding arrangements which relate to any Employee Benefit
Plan, and the most recent periodic accounting of related plan assets; and (viii) the two most
recent annual statements for the investments in which the assets of each Pension Plan is invested.
(c) Neither the Company nor any ERISA Affiliate sponsors, maintains or contributes to any
multiple employer plan within the meaning of Code Section 413(c), any multiple employer arrangement
within the meaning of ERISA Section 514 or any multi-employer plan within the meaning of ERISA
Section 3(37).
(d) Except as disclosed in the Company Disclosure Schedule at Section 3.10(d), the
consummation of the Transactions will not, either alone or in combination with another event: (i)
entitle any present or former director, officer or employee of the Company or any ERISA Affiliate
to severance pay, unemployment compensation, excess parachute payments (within the meaning of
Section 280G of the Code) or any other payment; (ii) accelerate the time of payment or vesting of
benefits under any of the Employee Benefit Plans; or (iii) increase the amount of compensation or
benefits due under any of the Employee Benefit Plans with respect to any such present or former
director, officer or employee of the Company or any Company Subsidiary.
(e) Each Employee Benefit Plan that is a “nonqualified deferred compensation plan” (as defined
in Section 409A(d)(1) of the Code) (each, a “409A Plan”) (i) has been maintained and
operated since January 1, 2005 in good faith compliance with Section 409A of the Code and all
applicable IRS guidance promulgated thereunder so as to avoid any tax, penalty or interest under
Section 409A of the Code, (ii) since January 1, 2009, has been in documentary and operational
compliance with Section 409A of the Code and all applicable IRS guidance promulgated thereunder and
(iii) to the extent any such plan was in existence before January 1, 2005 and is grandfathered from
the application of Code Section 409A, has not been “materially modified” (within the meaning of IRS
Notice 2005-1) at any time after October 3, 2004. No 409A Plan has been funded by an off-shore
arrangement described in Section 409A(b)(1) of the Code, except for any such non-qualified deferred
compensation plan that is grandfathered and not subject to Code Section 409A.
(f) No material Liability under Title IV or Section 302 of ERISA has been incurred by the
Company or any ERISA Affiliate that has not been satisfied in full, and no condition exists that
presents a risk to the Company or any ERISA Affiliate of incurring any such Liability, other than
Liability for premiums due the Pension Benefit Guaranty Corporation (which premiums have been paid
when due). Insofar as the representation made in this Section 3.10(f) applies to Section 4064, 4069
or 4204 of ERISA, it is made with respect to any employee benefit plan, program, agreement or
arrangement subject to Title IV of ERISA to which the Company, any Company Subsidiary or any ERISA
Affiliate made, or was required to make, contributions during the six-year period ending on the
last day of the most recent plan year ended
25
before the date of this Agreement. The Pension Benefit
Guaranty Corporation has not instituted proceedings to terminate any Employee Benefit Plan and no
condition exists that presents a material risk that such proceedings will be instituted.
(g) No Employee Benefit Plan which is subject to Title IV of ERISA (“Title IV Plan”)
or any trust established thereunder has incurred any “accumulated funding deficiency” (as defined
in Section 302 of ERISA and Section 412 of the Code), whether or not waived, as of the last day of
the most recent fiscal year of each Title IV Plan ended prior to the Effective Time. All
contributions required to be made with respect to any Employee Benefit Plan on or prior to the
Effective Time have been timely made, or have been reflected on the consolidated financial
statements of the Company and the Company Subsidiaries included in the Filed Company SEC Documents.
(h) Each Employee Benefit Plan has been operated and administered in accordance with its terms
and applicable Law, including ERISA and the Code, except as has not had and would not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse Effect.
(i) Each Employee Benefit Plan intended to qualify under Section 401(a) of the Code and each
trust intended to qualify under Section 501(a) of the Code has received a favorable determination
or opinion letter from the IRS with respect to each such Employee Benefit Plan as to its qualified
status under the Code, and no fact or event has occurred since the date of such determination or
opinion letter that would reasonably be expected to adversely affect the qualified status of any
Employee Benefit Plan.
(j) Except as set forth at Section 3.10(j) of the Company Disclosure Schedule, no Employee
Benefit Plan provides medical, surgical, hospitalization, death or similar benefits (whether or not
insured) for employees or former employees of the Company or any Company Subsidiary for periods
extending beyond their retirement or other termination of service, other than (i) coverage mandated
by applicable Law, (ii) death benefits under any Pension Plan, or (iii) benefits the full cost of
which is borne by the current or former employee (or his beneficiary).
(k) There are no pending, or, to the Knowledge of the Company, threatened or anticipated
Claims by or on behalf of any Employee Benefit Plan, by any employee or beneficiary covered under
any such Employee Benefit Plan, or otherwise involving any such Employee Benefit Plan (other than
routine Claims for benefits), except as has not had and would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect.
(l) None of the Company, any Company Subsidiary, any ERISA Affiliate, any of the Employee
Benefit Plans, any trust created thereunder, nor to the Company’s Knowledge, any trustee or
administrator thereof has engaged in a transaction or has taken or failed to take any action in
connection with which the Company, any Company Subsidiary or any ERISA Affiliate could be subject
to any material Liability for either a civil penalty assessed pursuant to Section 409 or 502(i) of
ERISA or a tax imposed pursuant to Section 4975, 4976 or 4980B of the Code.
26
(m) Neither the Company nor any ERISA Affiliate is a party to any agreement or understanding,
whether written or unwritten, with the Pension Benefit Guaranty Corporation, the IRS, the
Department of Labor or the Centers for Medicare & Medicaid Services. No representations or
communications, oral or written, with respect to the participation, eligibility for benefits,
vesting, benefit accrual or coverage under any Employee Benefit Plan have been made to employees,
directors or agents (or any of their representatives or beneficiaries) of the Company or any
Company Subsidiary which are not in accordance with the terms and conditions of the Employee
Benefit Plans.
(n) No “leased employee,” as that term is defined in Section 414(n) of the Code, performs
services for the Company or any ERISA Affiliate. The Company and each Company Subsidiary have at
all times been in material compliance with applicable Law regarding the classification of employees
and independent contractors.
(o) With respect to each material Employee Benefit Plan that is not subject to United States
Law (each, a “Foreign Benefit Plan”):
(i) all employer and employee contributions to each Foreign Benefit Plan
required by any applicable Law or by the terms of such Foreign Benefit Plan have
been made, or, if applicable, accrued, in accordance with normal accounting
practices;
(ii) the fair market value of the assets of each funded Foreign Benefit Plan,
the Liability of each insurer for any Foreign Benefit Plan funded through insurance
or the book reserve established for any Foreign Benefit Plan, together with any
accrued contributions, is sufficient in all material respects to procure or provide
for the accrued benefit obligations, as of the Effective Time, with respect to all
current and former participants in such plan according to the actuarial assumptions
and valuations most recently used to determine employer contributions to such
Foreign Benefit Plan and no transaction shall cause such assets or insurance
obligations to be materially less than such benefit obligations; and
(iii) each Foreign Benefit Plan required to be registered has been registered
and has been maintained in good standing with applicable regulatory authorities.
(p) The Company acknowledges that certain payments have been made or are to be made and
certain benefits have been granted or are to be granted according to employment compensation,
severance and other employee benefit plans of the Company, including the Employee Benefit Plans
(collectively, the “Arrangements”) to certain holders of Company Common Stock and other
securities of the Company (the “Covered Securityholders”) including the New Employment
Agreements to which it is a party. The Company represents and warrants that all such amounts
payable under the Arrangements, including the New Employment Agreements to which it is a party (i)
are being paid or granted as compensation for past services performed, future services to be
performed, or future services to be refrained from performing, by the Covered Securityholders (and
matters incidental thereto) and (ii) are not calculated based
27
on the number of shares of Company
Common Stock tendered or to be tendered into the Offer by the applicable Covered Securityholder.
The Company also represents and warrants that (i) the adoption, approval, amendment or modification
of each Arrangement, including the New Employment Agreements to which it is a party, since the
discussions relating to the Transactions between the Company and Parent began has been approved as
an employment compensation, severance or other employee benefit arrangement solely by independent
directors of the Company in accordance with the requirements of Rule 14d-10(d)(2) under the
Exchange Act and the instructions thereto and (ii) the “safe harbor” provided pursuant to Rule
14d-10(d)(2) is otherwise applicable thereto as a result of the taking prior to the execution of
this Agreement of all necessary actions by the Company Board, the Compensation Committee of the
Company Board or its “independent directors” as defined by Rule 4200(a)(15) of the NASDAQ
Marketplace Rules. A correct and complete copy of any resolutions of any committee of the Company
Board reflecting any approvals and actions referred to in the preceding sentence and taken prior to
the date of this Agreement has been provided to Parent prior to the execution of this Agreement.
SECTION 3.11 Certain Contracts.
(a) Except (1) for Contracts filed or listed as an exhibit to the Company’s annual report on
Form 10-K for the year ended December 31, 2010, or (2) as listed and described in Section 3.11(a)
of the Company Disclosure Schedule, neither the Company nor
any Company Subsidiary is a party to, nor are any of their respective properties bound by, any
of the following types of Contracts (each, whether listed or required to be listed, a “Material
Contract” and, collectively, the “Material Contracts”):
(i) Contract with any officer or director of the Company or any holder of 10%
or more of the outstanding shares of Company Common Stock;
(ii) employment, consulting, retention, severance, change-of-control,
non-competition, termination or indemnification Contract between the Company or any
Company Subsidiary and any employee earning non-contingent cash compensation in
excess of $100,000 per year as of the date of this Agreement;
(iii) Contract with any labor union, works council or other representative of
employees, including collective bargaining agreements, arrangements with works
councils and work rules and practices;
(iv) Contract for the future purchase of, or payment for, supplies or products,
or for the performance of services by a third party, involving in any one case more
than $250,000 that is not terminable within 30 days without payment by the Company
or any of the Company Subsidiaries, other than purchase orders entered into in the
ordinary course of business;
(v) Contract to sell or supply products or to perform services, involving in
any one case more than $250,000 that is not terminable
28
within 30 days without
payment by the Company or any of the Company Subsidiaries, other than purchase
orders entered into in the ordinary course of business;
(vi) representative, sales agency or dealer Contract involving in any one case
more than $250,000 in commissions in 2010;
(vii) distributor Contract involving in any one case more than $250,000 in
sales in 2010;
(viii) lease with respect to personal property under which the Company or any
Company Subsidiary is either lessor or lessee, involving in any one case more than
$200,000 per year;
(ix) lease with respect to real property under which the Company or any Company
Subsidiary is either lessor or lessee, involving in any one case more than $200,000
per year;
(x) note, debenture, bond, conditional sale agreement, equipment trust
agreement, letter of credit agreement, loan agreement, credit agreement, indenture
or other Contract for the borrowing or lending of money (including loans to or from
any officer or director of the Company or any
Company Subsidiary or any member of the immediate family of any such officer or
director), agreement or arrangement for a line of credit or guarantee, pledge or
undertaking of the indebtedness of any other Person;
(xi) Contract for any capital expenditure, involving in any one case more than
$250,000;
(xii) Contract relating to any joint venture, partnership or other arrangement
(however named) involving a sharing of the profits, losses, costs or Liabilities of
the Company or any Company Subsidiary with any other Person;
(xiii) any Contract containing covenants or conditions that in any way purport
to restrict or prohibit the business activity of the Company or any Company
Subsidiary, or limit the freedom of the Company or any Company Subsidiary to engage
in any line of business or to compete with any third party or to sell, supply or
distribute any product or service, in each case, in any geographic area or to
restrict or prohibit the Company or any Company Subsidiary from hiring any
individual or group of individuals;
(xiv) any Contract (including letters of intent) regarding the acquisition of a
Person or business, whether in the form of an asset purchase, merger, consolidation
or otherwise (including any such Contract that has closed but under which one or
more of the parties has executory indemnification, earn-out or other Liabilities);
29
(xv) any “single source” supply Contract pursuant to which goods or materials
that are material to the Company’s business are supplied from an exclusive source;
(xvi) any Contract under which the Company has granted any Person registration
rights (including demand and piggy-back registration rights);
(xvii) any Contract pursuant to which the Company or any Company Subsidiary is
granted or obtains or agrees to obtain any right to use any Intellectual Property
(other than standard form Contracts granting rights to use readily available shrink
wrap or click wrap Software) having an annual minimum license fee of more than
$150,000 or a total guaranteed sum of $250,000 or more in the case of multi-year
contract, is restricted in its right to use or register any Intellectual Property
owned by the Company or any Company Subsidiary, or permits or agrees to permit any
other Person, to use, enforce, or register any Intellectual Property owned by the
Company or any Company Subsidiary, including any license agreements, coexistence
agreements and covenants not to xxx;
(xviii) any Contract with any Governmental Authority;
(xix) any Contract that by its terms limits the payment of dividends or other
distributions by the Company or any Company Subsidiary;
(xx) any Contract that grants any right of first refusal or right of first
offer or similar right or that limits or purports to limit the ability of the
Company or any Company Subsidiary to own, operate, sell, transfer, pledge or
otherwise dispose of any material amount of assets or businesses;
(xxi) any Contract that would be required to be filed by the Company as a
“material contract” pursuant to Item 601(b)(10) of Regulation S-K or would be
required to be disclosed pursuant to Item 404 of Regulation S-K; or
(xxii) any amendments, supplements, modifications or renewals in respect of any
of the foregoing.
(b) Except as disclosed in Section 3.11(b) of the Company Disclosure Schedule or as has not
had and would not reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect: (i) each of the Material Contracts is legally valid and binding and in
full force and effect and is enforceable in accordance with its terms; (ii) neither the Company nor
any Company Subsidiary, nor to the Knowledge of the Company, any other party thereto is in breach
or default in the performance, observance or fulfillment of any provision or term of any Material
Contract, and to the Knowledge of the Company, there has not occurred any event that, with the
lapse of time or giving of notice or both could constitute such a breach or default; (iii) neither
the Company nor any Company Subsidiary has received notice of termination of any Material Contract,
nor has the Company or any Company Subsidiary received any notice of any facts or events which
would reasonably be expected to result in any such
30
termination. The Company has delivered or made
available to Parent complete and correct copies of all written Material Contracts and complete and
correct written summaries of all oral Material Contracts.
SECTION 3.12 Schedule 14D-9 and the Proxy Statement; Information in the Offer
Documents. The Schedule 14D-9 will comply in all material respects with the provisions of applicable U.S.
federal securities Laws. The Schedule 14D-9 and the information supplied by the Company in writing
expressly for inclusion in the Offer Documents, will not, at the respective times the Offer
Documents and the Schedule 14D-9 or any amendments or supplements thereto are filed with the SEC or
are first published, sent or given to stockholders of the Company, as the case may be, 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. The Proxy Statement, if any, will not,
at the date that the Proxy Statement or any amendment or supplement thereto is first mailed to the
Company’s stockholders, at the time of the Company Stockholders Meeting and at the Effective Time,
contain any untrue statement of material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading. The Proxy Statement will comply in all material
respects with the requirements of the Exchange Act.
Notwithstanding the foregoing, the Company makes no representation or warranty with respect to
statements made in the Schedule 14D-9 and the Proxy Statement, if any, based on information
furnished in writing by Parent or MergerSub expressly for inclusion therein. The Company has
received from Xxxxxx X. Xxxxx & Co. a written opinion, dated March 10, 2011 (the “Fairness
Opinion”), to the effect that, as of such date, the consideration the Company’s stockholders
will receive pursuant to the Offer and the Merger is fair to the Company’s stockholders from a
financial point of view, and a correct and complete copy of the Fairness Opinion has been delivered
to Parent and MergerSub. The Company has been authorized by Xxxxxx X. Xxxxx & Co. to permit the
inclusion of the Fairness Opinion in its entirety and a discussion of Xxxxxx X. Xxxxx & Co.’s
analysis in preparing the Fairness Opinion in the Schedule 14D-9 and the Proxy Statement.
SECTION 3.13 Assets; Title to Property. The Company Disclosure Schedule at Section 3.13 identifies all real property owned, leased or
used by the Company or any of the Company Subsidiaries. Except as has not had and would not
reasonably be expected to have, individually or in the aggregate, a Company Material Adverse
Effect, (a) the Company and each of the Company Subsidiaries have good and marketable title to, or
valid leasehold interests in, all of their respective properties, real and personal, tangible and
intangible, free and clear of all Encumbrances, except Encumbrances for taxes not yet due and
payable and Encumbrances as set forth in the Company Disclosure Schedule at Section 3.13, (b) all
leases pursuant to which the Company or any of the Company Subsidiaries lease from others real or
personal property are in good standing, valid, effective, binding and enforceable in accordance
with their respective terms, except for the Bankruptcy and Equity Exception, and (c) there is not
or there has not occurred, under any of such leases, any existing default or event of default (or
event which with notice or lapse of time, or both, would constitute a default and in respect of
which the Company or any of the Company Subsidiaries have not taken adequate steps to prevent such
a default from occurring). Each of the Company and the Company Subsidiaries enjoys peaceful and
undisturbed possession under all material real property leases to which it is a party. All of the
31
property, plant and equipment of the Company and each Company Subsidiary has been maintained in
reasonable operating condition and repair, ordinary wear and tear excepted, and is in all material
respects sufficient to permit the Company and each Company Subsidiary to conduct their operations
in the ordinary course of business in a manner consistent with their past practices.
SECTION 3.14 Compliance with Environmental Laws.
(a) Except as set forth in Section 3.14(a) of the Company Disclosure Schedule, the Company and
the Company Subsidiaries are, and for the past five years have been, in compliance with all
Environmental Laws, except for any non-compliance which has not had and would not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse Effect.
(b) Except as disclosed in Section 3.14(b) of the Company Disclosure Schedule, to the
Knowledge of the Company, there has been no Release of or exposure to any Hazardous Material at
real property that is currently owned, operated or leased by the Company or any Company
Subsidiaries or at any other location (including property formerly owned, operated and/or leased by
the Company or any of the Company Subsidiaries as well as property
where Hazardous Materials were disposed of or placed by the Company or any of the Company
Subsidiaries) that would reasonably be likely to: (i) form the basis of any Environmental Claim
against the Company or any of the Company Subsidiaries or against any Person whose Liabilities for
such Environmental Claims the Company or any of the Company Subsidiaries has, or may have, retained
or assumed, either contractually or by operation of Law; (ii) require the Company or any Company
Subsidiary to report such Release to a Governmental Authority; or (iii) require the Company or any
Company Subsidiary to undertake an investigation or remediation of said Release pursuant to
Environmental Law.
(c) Except as disclosed in Section 3.14(c) of the Company Disclosure Schedule, neither the
Company nor any of the Company Subsidiaries has received any written communication from any third
party, including any Governmental Authority, alleging that the Company or such Company Subsidiary
is in material violation of, or may have material Liability under, any Environmental Law or
requesting information pursuant to any applicable Environmental Law with respect to a matter that
could result in an Environmental Claim.
(d) Except as disclosed in Section 3.14(d) of the Company Disclosure Schedule, (i) each of the
Company and the Company Subsidiaries possesses (or has timely applied for the renewal thereof) and
is in compliance with all material Permits required under Environmental Laws (“Environmental
Permits”) for the current conduct of its operations and all of such Environmental Permits are
valid and in good standing and (ii) neither the Company nor any of the Company Subsidiaries has
been advised in writing by any Governmental Authority of any actual or potential change in any
material respect in the status or terms and conditions of any such Environmental Permit.
(e) Except as disclosed in Section 3.14(e) of the Company Disclosure Schedule, there are no
material Environmental Claims pending or, to the Knowledge of the Company, threatened against the
Company or any of the Company Subsidiaries.
32
(f) To the Knowledge of the Company, neither the Company nor any of the Company Subsidiaries
is identified as a potentially responsible party at any site relating to the investigation,
characterization or remediation of Hazardous Materials.
(g) Neither the Company nor any Company Subsidiary has entered into any written agreement or
incurred any legal or monetary obligation that is currently in effect that may require them to pay
to, reimburse, guarantee, pledge, defend, indemnify or hold harmless any Person from or against any
material Liabilities or costs arising out of or related to the generation, manufacture, use,
transportation or disposal of Hazardous Materials, or otherwise arising in connection with or under
Environmental Laws.
(h) The Company has made available to Parent all environmental reports, studies, audits,
sampling results or correspondence with Governmental Authorities relating to any pending material
Environmental Claims in its possession.
SECTION 3.15 Taxes. Except as set forth on Section 3.15 of the Company Disclosure Schedule:
(a) Each of the Company and each Company Subsidiary has duly filed or caused to be filed, in a
timely manner, with the appropriate taxing authorities, all income tax and other material Tax
Returns required to be filed by it (determined with regard to any timely extensions). Each such
Tax Return filed or required to be filed (including any amendment thereto) is true, correct, and
complete in all material respects, and all material Taxes (regardless of having been shown as due
on any Tax Return) have been timely paid in full, or an adequate reserve has been established
therefor on the financial statements included in the Filed Company SEC Documents. There are no
extensions of time to file any Tax Returns that are pending.
(b) The amount of the Liability of the Company and the Company Subsidiaries for unpaid Taxes
does not, in the aggregate, materially exceed the amount of the current Liability accruals for
Taxes (excluding reserves for deferred Taxes) reflected in the financial statements included in the
Filed Company SEC Documents for all periods ending on or before the date of such financial
statements.
(c) There are no Encumbrances for Taxes on any of the assets of the Company or any Company
Subsidiary except for Encumbrances for Taxes not yet due and payable.
(d) None of the Company or any Company Subsidiary is a party to or bound by any tax indemnity,
tax sharing or tax allocation agreement, or any other contract, obligation, understanding or
agreement to pay the Taxes of another Person or to pay the Taxes with respect to transactions
relating to any other Person (other than the Company and Company Subsidiaries).
(e) There are no agreements or waivers extending the statutory period of limitation applicable
to any Taxes of the Company or any Company Subsidiary for any period. There is no power of
attorney given by or binding upon the Company or any Company Subsidiary with respect to Taxes for
any period for which the statute of limitations (including any waivers or extensions) has not yet
expired.
33
(f) No foreign, federal, state, or local tax audits or administrative or judicial Tax
proceedings are pending, being conducted or threatened in writing with respect to the Company or
any Company Subsidiary.
(g) None of the Company or any Company Subsidiary has received from any foreign, federal,
state or local taxing authority (including jurisdictions where the Company or any Company
Subsidiary has not filed Tax Returns) any written notice indicating an intent to open an audit or
other review, request for information relating to material Tax matters, or notice of deficiency or
proposed adjustment for any amount of Tax proposed, asserted or assessed by any taxing authority
against the Company or any Company Subsidiary.
(h) None of the Company or any Company Subsidiary has ever been a member of any affiliated,
combined, consolidated or unitary group (other than a group the common parent of which was the
Company) for state income or franchise tax purposes and none of the Company or any Company
Subsidiary files (or is required to file) combined, consolidated
or unitary returns (other than for a group the common parent of which was the Company) for
state income or franchise tax purposes.
(i) None of the Company or any Company Subsidiary has any Liability for the Taxes of any
Person (other than the Company or any Company Subsidiary) under Treasury Regulations Section
1.1502-6 (or any similar provision of state, local or foreign Law), as a transferee or successor,
by Contract, by operation of Law or otherwise.
(j) None of the Company or any Company Subsidiary will be required to include any item of
income, or exclude any item of deduction from, taxable income for any taxable period ending after
the Effective Time as a result of any (i) change in method of accounting for a taxable period
ending on or prior to the Effective Time, (ii) closing agreement (as described in Section 7121 of
the Code) executed on or prior to the Effective Time, (iii) installment sale or open transaction
disposition made on or prior to the Effective Time, or (iv) prepaid amounts received on or prior to
the Effective Time.
(k) None of the Company or any Company Subsidiary owns any real property in any jurisdiction
in which a Tax is imposed upon the transfer of securities of an issuer having an interest in real
property.
(l) The Company has disclosed on its federal income Tax Return all positions taken therein
that could give rise to substantial understatement of federal income Taxes within the meaning of
Section 6662 of the Code.
(m) None of the Company or any Company Subsidiary is or has been a party to any “listed
transaction” as defined in Treasury Regulation Section 1.6011-4(b)(2).
(n) The Company has delivered or made available to Parent copies of the federal and state
income Tax Returns and all foreign Tax Returns relating to the Company or any Company Subsidiary
(and amended Tax Returns, revenue agents’ reports, and other notices from the Internal Revenue
Service or state taxing authorities) for each of the preceding five taxable years. The Company
shall promptly deliver or make available to Parent copies of all other Tax Returns and other
reports and statements made or received by or on behalf of any of
34
the Company or any of the Company
Subsidiaries that relate to Taxes arising during such periods, including income tax audit reports,
statements of income or gross receipts tax, franchise tax, sales tax and transfer tax received by
or on behalf of the Company or any Company Subsidiary.
(o) The Company is not and has not been a “United States real property holding corporation”
(as defined in Section 897(c)(2) of the Code) during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code, and the shares of Company Common Stock are “regularly traded on an
established securities market” for purposes of Section 1445(b)(6) of the Code and Treasury
Regulation Section 1.1445-2(c)(2).
(p) Neither the Company nor any Company Subsidiary has been a “controlled corporation” or a
“distributing corporation” in any distribution of stock qualifying for tax-free treatment under
Section 355 of the Code occurring during the two-year period ending on the date hereof.
SECTION 3.16 Insurance. The Company or a Company Subsidiary maintains policies of fire and casualty, liability and other
forms of insurance in such amounts, with such deductibles and against such risks and losses as are
customary for businesses in the Company’s and the Company Subsidiaries’ business. All such
policies are in full force and effect and will not terminate by virtue of the Transactions, all
premiums due thereon have been paid by the Company or the Company Subsidiaries, and the Company and
the Company Subsidiaries are otherwise in compliance in all material respects with the terms and
provisions of such policies. Furthermore, (a) neither the Company nor any Company Subsidiary has
received any notice of cancellation or non-renewal of any such policy or arrangement nor is the
termination of any such policies or arrangements threatened, (b) there is no Claim pending under
any of such policies or arrangements as to which coverage has been questioned, denied or disputed
by the underwriters of such policies or arrangements, (c) neither the Company nor any Company
Subsidiary has received any notice from any of its insurance carriers that any insurance premiums
will be increased in the future or that any insurance coverage presently provided for will not be
available to the Company or any Company Subsidiary in the future on substantially the same terms as
now in effect and (d) none of such policies or arrangements provides for any retrospective premium
adjustment, experienced-based liability or loss sharing arrangement affecting the Company or any
Company Subsidiary.
SECTION 3.17 Related Party Transactions. Except as disclosed in the Company Disclosure Schedule at Section 3.17, since December 31, 2008,
no event or transaction has occurred or has been proposed and there have been no agreements,
arrangements or understandings between the Company or any Company Subsidiaries on the one hand, and
the affiliates of the Company, on the other hand, that would be required to be reported by the
Company pursuant to Item 404 of Regulation S-K promulgated by the SEC.
SECTION 3.18 Labor Matters. Except as set forth on the Company Disclosure Schedule at Section 3.18 or as has not had and
would not reasonably be expected to have, individually or in the aggregate, a Company Material
Adverse Effect, (a) the Company and each Company Subsidiary are in compliance with all applicable
Laws respecting employment and employment practices, including all Laws respecting terms and
conditions of employment,
35
wages and hours, health and safety, child labor, immigration, employment
discrimination, disability rights or benefits, equal opportunity, plant closures and layoffs,
affirmative action, workers’ compensation, labor relations, employee leave issues, and unemployment
insurance, and are not engaged in any unfair labor practice, (b) the Company and each Company
Subsidiary are neither party to, nor bound by, any labor or collective bargaining agreement or any
other agreement with a labor union, labor organization, or works council and there are no labor or
collective bargaining agreements or any other labor-related agreements or arrangements that pertain
to any of the employees of the Company or any Company Subsidiary, nor are any such employees
represented by any labor union, labor organization, or works council with respect to such
employment, (c) no labor union, labor organization, works council, or group of employees of the
Company or any Company Subsidiary has made a pending demand for recognition or certification, and
there are no representation or certification proceedings or petitions seeking a representation
proceeding presently pending or threatened in writing to be brought or filed with the National
Labor Relations Board or any other labor relations tribunal or authority and the Company does not
know of any labor union organizing activities with respect to any employees of the Company or any
Company Subsidiary, (d) there is no unfair labor practice complaint or
other allegation of labor law violation against the Company or any Company Subsidiary pending
before the National Labor Relations Board or other Governmental Authority, (e) since December 31,
2008, there has been no labor strike, dispute, lockout, slowdown, representation campaign, or work
stoppage actually pending or, to the Company’s Knowledge, threatened against or affecting the
Company or any Company Subsidiary, (f) no grievance or arbitration proceeding arising out of or
under collective bargaining agreements is pending and no written Claim therefor has been asserted
against the Company or any Company Subsidiary, (g) neither the Company nor any Company Subsidiary
is experiencing any material work stoppage, (h) neither the Company nor any Company Subsidiary is
bound by any court, administrative agency, tribunal, commission or board decree, judgment,
decision, arbitration agreement or settlement relating to collective bargaining agreements, terms
and conditions of employment, employment discrimination, attempts to organize a collective
bargaining unit or any unlawful employment practices, (i) neither the Company nor any Company
Subsidiary has received notice of any actual or threatened investigation, charge or complaint
against the Company or any Company Subsidiary with respect to employees pending before the Equal
Employment Opportunity Commission or any other Governmental Authority or in any other forum
regarding an unlawful employment practice, breach of any contract of employment, or any other
wrongful or tortious conduct in connection with the employment relationship, (j) the Company and
each Company Subsidiary is, and has been since December 31, 2008, in compliance with all notice and
other requirements under the Workers’ Adjustment and Retraining Notification Act and any similar
state, local or foreign Law, (k) to the Company’s Knowledge, no employee of the Company or any
Company Subsidiary is in any respect in violation of any term of any employment contract,
non-disclosure agreement, common law nondisclosure obligation, fiduciary duty, noncompetition
agreement, or any restrictive covenant to a former employer relating to the right of any such
employee to be employed by the Company or any Company Subsidiary because of the nature of the
business now being conducted by the Company or any Company Subsidiary or to the use of Trade
Secrets or proprietary information of others, (l) to the Knowledge of the Company, the
manufacturers, contractors and subcontractors engaged in the manufacturing of products for the
Company and all Company
Subsidiaries (“Manufacturers”) are in compliance with all
applicable Laws respecting employment and employment practices, and the Company and all Company
36
Subsidiaries require all of their Manufacturers to provide written assurances that they have
complied with all such Laws, (m) the Company and all Company Subsidiaries have taken all reasonable
steps to ensure that their Manufacturers do not utilize forced labor, prison labor, convict labor,
indentured labor, child labor, corporal punishment or other forms of mental or physical coercion in
connection with the manufacture of the products for the Company and any Company Subsidiary,
including the maintenance of a compliance program to monitor activities of such entities, and to
the Knowledge of the Company, no Manufacturer has engaged in such conduct and (n) to the Knowledge
of the Company, no complaint or Claim has been made against any Manufacturers that would result in
Liability to the Company or any Company Subsidiary. Neither the Company or any Company Subsidiary
is or has been (i) a “contractor” or “subcontractor” (as defined by Executive Order 11246); (ii)
required to comply with Executive Order 11246; or (iii) required to maintain an affirmative action
plan.
SECTION 3.19 Brokers. Except as set forth in the Company Disclosure Schedule at Section 3.19, no broker, finder,
financial advisor, investment bank or other Person is entitled to any brokerage fee, finder’s fee
or other fee or commission in connection with the Transactions based upon arrangements made by or
on behalf of the Company or any of the
Company Subsidiaries. Correct and complete copies of all agreements between the Company and any
Person entitled to such fees or commissions set forth in the Company Disclosure Schedule at Section
3.19, including any fee arrangements have been delivered or made available to Parent.
SECTION 3.20 Intellectual Property.
(a) Section 3.20(a) of the Company Disclosure Schedule sets forth a correct and complete list
of all (i) issued Patents and Patent applications, (ii) Trademark registrations and applications,
and (iii) Copyright registrations and applications, in each case which is owned by the Company and
each Company Subsidiary in any jurisdiction in the world and used by the Company or any Company
Subsidiary. The Company or a Company Subsidiary is the sole and exclusive beneficial and, with
respect to applications and registrations (including Patents), record owner of all the Intellectual
Property items set forth in Section 3.20(a) of the Company Disclosure Schedule, and all such
Intellectual Property is subsisting, valid and enforceable, except as has not had and would not
reasonably be expected to have, individually or in the aggregate, a Company Material Adverse
Effect.
(b) The Company and the Company Subsidiaries own, are properly licensed under, or otherwise
possess the valid and enforceable right to use all Intellectual Property that is used in or
necessary to the operation of their respective businesses as now being conducted, except as has not
had and would not reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect.
(c) Except as set forth in Section 3.20(c) of the Company Disclosure Schedule, the
consummation of the Transactions will not result in the loss or impairment of, or payment of any
additional amounts with respect to, nor require the consent of any other Person in respect of, any
Intellectual Property of the Company or any Company Subsidiary, as owned or used in their
respective businesses as now being conducted, except as has not had and would not
37
reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse Effect.
(d) Except as set forth in Section 3.20(d) of the Company Disclosure Schedule, there are no
Claims or litigation pending, or to the Knowledge of the Company, threatened that challenge the
Company’s or any Company Subsidiary’s right, title, and interest with respect to its use or
continued use and its right to preclude others from using any material Intellectual Property used
in their respective businesses as now being conducted; nor have any such Claims or litigation been
asserted or, to the Knowledge of the Company, threatened (including in the form of offers or
invitations to obtain a license) in the past three (3) years against the Company or any Company
Subsidiary.
(e) Except as set forth in Section 3.20(e) of the Company Disclosure Schedule, the Company is
not, nor will it be as a result of the execution and delivery of this Agreement or the performance
of its obligations hereunder, in violation of any licenses, sublicenses or other agreements as to
which the Company or any Company Subsidiary is a party and pursuant to which the Company or any
Company Subsidiary is authorized to use any third-party Intellectual Property rights, except as has not had and would not reasonably be expected
to have, individually or in the aggregate, a Company Material Adverse Effect.
(f) To the Knowledge of the Company, no third party is infringing, misappropriating or
otherwise violating any material Intellectual Property owned or used by the Company or any Company
Subsidiary, and no such Claims have been asserted or, to the Knowledge of the Company, threatened
against any third party by the Company or any Company Subsidiary in the past three (3) years.
(g) Except as set forth in Section 3.20(g) of the Company Disclosure Schedule, to the
Knowledge of the Company, the business of the Company and each Company Subsidiary as now being
conducted (including the products and services of the Company and each Company Subsidiary) does not
infringe, misappropriate, or otherwise violate, and, to the Knowledge of the Company, has not
infringed upon, misappropriated or otherwise violated any other third-party Intellectual Property
or other proprietary rights, except as has not had and would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect.
(h) No material Intellectual Property right of the Company or any Company Subsidiary is or has
been judicially determined to be invalid or unenforceable. Except as set forth in Section 3.20(h)
of the Company Disclosure Schedule, no Claim is currently pending or, to the Knowledge of the
Company, threatened which challenges the validity, scope or enforceability of any material
Intellectual Property right of the Company or any Company Subsidiary. The Company and each Company
Subsidiary have not granted any Person any right to control the prosecution or registration of any
material Intellectual Property owned by the Company and each Company Subsidiary or to commence,
defend, or otherwise control any Claim with respect to such material Intellectual Property.
(i) To the Knowledge of the Company, there has not been any disclosure of any material Trade
Secret of the Company and each Company Subsidiary
38
(including any such information of any third
party disclosed in confidence to the Company or a Company Subsidiary) to any third Person in a
manner that has resulted or is likely to result in the loss of a material Trade Secret or other
material rights in and to such information.
(j) Except as set forth in Section 3.20(j) of the Company Disclosure Schedule, to the
Knowledge of the Company, all products of the Company and each Company Subsidiary have been
properly and correctly marked with the proper patent notices continuously since the issuance of the
relevant Patent(s).
SECTION 3.21 Major Customers and Suppliers. Section 3.21 of the Company Disclosure Schedule sets forth a true, correct and complete list of
the top ten customers of the Company and the Company Subsidiaries for the fiscal year ended
December 31, 2010 (determined on the basis of the consolidated total dollar amount of net sales)
showing the dollar amount of net sales from each such customer during such period. Section 3.21 of
the Company Disclosure Schedule also sets forth a list of the top ten suppliers of the Company and
the Company Subsidiaries (determined on the basis of the consolidated total dollar volume of
purchases during such fiscal year) showing the dollar amount of the purchases from each such
supplier during such period. Since December 31, 2010 to the date of this Agreement, there has been
no termination, cancellation or material curtailment of the business relationship of the Company or
any Company Subsidiary with any such customer or supplier or group of affiliated customers or
suppliers nor has any such customer, supplier or group of affiliated customers or suppliers
provided notice (written or oral) that it will so terminate, cancel or materially curtail its
business relationship with the Company or any Company Subsidiary.
SECTION 3.22 Prohibited Payments. Neither the Company, any Company Subsidiary, nor any director, officer, agent, employee or other
Person acting on behalf of the Company or any Company Subsidiary has (a) used any corporate funds
for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political
activity; (b) made any direct or indirect unlawful payment to any foreign or domestic government
official or employee or to foreign or domestic political parties or campaigns from corporate funds;
(c) violated any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended (the
“FCPA”) or any other federal, foreign or state anti-corruption or anti-bribery Law or
requirement applicable to the Company or any Company Subsidiary; or (d) made any unlawful bribe,
rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic
government official or employee. During the last three years, neither the Company nor any Company
Subsidiary has received any written communication that alleges that the Company or any Company
Subsidiary, or any director, officer, agent, employee or other Person acting on behalf of the
Company or any Company Subsidiary, is in violation of, or has any material Liability under, the
FCPA.
SECTION 3.23 State Takeover Laws. The Company has taken all action required to be taken in order to exempt this Agreement, the
other agreements contemplated by this Agreement and the Transactions, from the requirements of any
“moratorium,” “control share,” “fair price,” “affiliate transaction,” “anti-greenmail,” “business
combination” or other anti-takeover Laws of any jurisdiction, including Section 203 of the DGCL
(collectively, “Takeover Laws”).
39
SECTION 3.24 No Other Representations or Warranties. Except for the representations and warranties made by the Company in this Article III, the
Company makes no representations or warranties, and the Company hereby disclaims any other
representations or warranties, with respect to the Company, the Company Subsidiaries, or its or
their businesses, operations, assets, Liabilities, condition (financial or otherwise) or prospects,
notwithstanding the delivery or disclosure to Parent or its affiliates or Representatives of any
documentation, forecasts, projections, memorandums or other information with respect to any one or
more of the foregoing. Without limiting the generality of the foregoing, none of the Company or
any Company Subsidiary nor any of their respective Representatives or any other Person has made a
representation or warranty to Parent or MergerSub with respect to (a) any projections, estimates or
budgets for the Company or any Company Subsidiary or (b) any material, documents or information
relating to the Company or any Company Subsidiary made available to each of
Parent or MergerSub, confidential memorandum, other offering materials or otherwise, except, in
each case, as expressly and specifically covered by a representation or warranty set forth in this
Article III.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGERSUB
Except as set forth in the Parent Disclosure Schedule, Parent and MergerSub hereby jointly and
severally represent and warrant to the Company that:
SECTION 4.01 Organization and Qualification. Parent is a corporation duly organized, validly existing and in good standing under the Laws of
Japan. MergerSub is a corporation duly organized, validly existing and in good standing under the
Laws of the State of Delaware. Each of Parent and MergerSub has the requisite corporate power and
authority necessary to own, lease, and operate its properties and to carry on its business as it is
now being conducted. Each of Parent and MergerSub is duly qualified or licensed as a foreign
corporation or entity to do business and in good standing in each jurisdiction where the character
of the properties owned, leased, or operated by it or the nature of its activities makes such
qualification or licensing necessary, except for any such failure to be so duly qualified or
licensed and in good standing that has not had and would not reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect.
SECTION 4.02 Authorization and Validity of Agreement. Each of Parent and MergerSub has all necessary corporate power and authority to execute and
deliver this Agreement, to perform their respective obligations hereunder and to consummate the
Transactions. Except as set forth in Section 4.02 of the Parent Disclosure Schedule, the
execution, delivery and performance of this Agreement by Parent and MergerSub and the consummation
by Parent and MergerSub of the Transactions have been duly and validly authorized by all necessary
corporate action on the part of Parent and MergerSub and no other corporate proceedings on the part
of Parent or MergerSub are necessary to authorize the execution, delivery and performance of this
Agreement or to consummate the Transactions. This
Agreement has been duly and validly executed and delivered by each of Parent and MergerSub and,
assuming the due authorization, execution and delivery by the Company, constitutes the
40
legal, valid
and binding obligation of each of Parent and MergerSub enforceable against each of them in
accordance with its terms, except for the Bankruptcy and Equity Exception.
SECTION 4.03 No Conflict; Required Filings and Consents.
(a) Except as set forth in Section 4.03(a) of the Parent Disclosure Schedule, the execution,
delivery and performance of this Agreement by Parent and MergerSub does not, and the consummation
of the Transactions will not, (i) conflict with, violate or result in a breach of any provision of
the Organizational Documents of Parent or MergerSub, (ii) conflict with or violate any Law or Order
applicable to Parent or MergerSub, or by which their respective properties are bound or affected or
(iii) result in a violation or breach of or the loss of any benefit under, or constitute a default
(or an event that with notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of an Encumbrance on, any of the properties of
Parent or MergerSub pursuant to any of the terms or provisions of any Contract, lien, Permit,
franchise or other instrument or obligation to which Parent or MergerSub are a party or by which
Parent or MergerSub or any of their respective properties is or may be bound or affected, except in
the case of clauses (ii) and (iii) for any such conflicts, violations, breaches, defaults or other
condition or state of facts that would not reasonably be expected to have, individually or in the
aggregate, a Parent Material Adverse Effect.
(b) No consent, approval or Order of, filing with, or notification to, or other Permit or
authorization of, any Governmental Authority or any other Person is required to be made, obtained,
performed or given to or with respect to Parent or MergerSub in connection with the execution,
delivery and performance of this Agreement by Parent and MergerSub or the consummation by Parent
and MergerSub of the Transactions, except for: (i) the filings required under, and compliance with
other applicable requirements of, the HSR Act, and the filings and receipt, termination or
expiration, as applicable, of such other approvals or waiting periods required under any Foreign
Antitrust Law; (ii) any filing pursuant to the DGCL; (iii) the consents, approvals, Orders,
filings, notifications, other Permits or authorizations set forth on Section 4.03(b) of the Parent
Disclosure Schedule; (iv) compliance with any applicable requirements of the Exchange Act; (v) the
filing with the SEC and the NASDAQ Stock Market of the Schedule TO as required by Law; (vi) the
filings required under, and in compliance with other applicable requirements of, the Japanese
Foreign Exchange and Foreign Trade Act (Gaitame-hou) and the rules and regulations of the Tokyo
Stock Exchange; and (vii) such consents, approvals, Orders, filings, notifications, other Permits
or authorizations, the failure to be made or obtained would not reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect.
SECTION 4.04 Absence of Litigation. There is no Claim pending or, to the Knowledge of Parent, threatened, against or naming the
Parent or MergerSub except for matters which would not reasonably be expected to have, individually
or in the aggregate, a Parent Material Adverse Effect.
SECTION 4.05 Offer Documents; Information in the Proxy Statement. The Offer Documents will comply in all
material respects with the provisions of applicable U.S.
federal securities Laws. The Offer Documents will not, at the time the Offer Documents are
41
filed with the SEC or first published, sent or given to the Company’s stockholders, 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. Notwithstanding the foregoing, Parent and MergerSub make no
representation or warranty with respect to statements made in the Offer Documents based on
information furnished by the Company for inclusion or incorporation by reference in the Offer
Documents. None of the information supplied or to be supplied by Parent or MergerSub in writing
expressly for inclusion or incorporation by reference in the Proxy Statement will, at the date the
Proxy Statement or any amendment or supplement thereto is first mailed to the Company’s
stockholders, at the time of the Company Stockholders Meeting, and at the Effective Time, contain
any untrue statement of material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the circumstances under
which they are made, not misleading.
SECTION 4.06 MergerSub. MergerSub was formed solely for the purpose of engaging in the Offer, the Merger and the other
Transactions. As of the date hereof and as of the Effective Time, all of the outstanding shares of
capital stock of MergerSub are or will be owned indirectly by Parent. As of the date hereof and as
of the Effective Time, except for Liabilities incurred in connection with its formation or
organization and the Transactions, MergerSub has not and will not have incurred any Liabilities or
engaged in any business activities of any type whatsoever or entered into any agreements or
arrangements with any Person, which would, individually or in the aggregate, impair in any material
respect the ability of MergerSub to perform its obligations under this Agreement or prevent the
consummation of the Transactions.
SECTION 4.07 Available Funds. As of the date of this Agreement, Parent has sufficient funds, or commitments from financial
institutions to enable it to borrow sufficient funds, to consummate the Transactions, including
payment in full for all shares of Company Common Stock validly tendered into the Offer or
outstanding at the Effective Time and the payment of any debt required to be repaid, redeemed,
retired, canceled, terminated or otherwise satisfied in connection with the Transactions. At the
Offer Closing and the Effective Time, Parent will have available to it sufficient funds necessary
to satisfy all of its obligations hereunder and in connection with the Offer and the Merger,
including payment in full for all shares of Company Common Stock validly tendered into the Offer or
outstanding at the Effective Time and the payment of any debt required to be repaid, redeemed,
retired, canceled, terminated or otherwise satisfied in connection with the Merger.
SECTION 4.08 Ownership of Company Common Stock. As of the date of this Agreement, (a) neither Parent, MergerSub nor any other Parent Subsidiary
beneficially owns, directly or indirectly, any shares of Company Common Stock or other securities
convertible into, exchangeable into or exercisable for shares of Company Common Stock, and (b)
other than this Agreement and the Transactions, there are no voting trusts or other agreements,
arrangements or understandings to which Parent, MergerSub or any other Parent Subsidiary is a party
with respect to the voting of the Company Common Stock, nor are there any agreements, arrangements
or understandings to which Parent, MergerSub or any other Parent Subsidiary is a party with respect
to the acquisition, divestiture, retention, purchase, sale or tendering of the Company Common
Stock. Prior to the Company Board approving this Agreement and the Transactions for purposes of
the applicable provisions of the DGCL, neither Parent nor
42
MergerSub, alone or together with any
other Person, was at any time, or became, an “interested shareholder” under Section 203 of the DGCL
or has taken any action that would cause any Takeover Laws to be applicable to this Agreement, the
Merger or any of the other Transactions.
SECTION 4.09 No Vote of Parent Stockholders. Except as set forth on Section 4.09 of the Parent Disclosure Schedule, no vote of the
stockholders of Parent or the holders of any other securities of Parent (equity or otherwise) is
required by any applicable Law, the Organizational Documents of Parent or the applicable rules of
any exchange on which securities of Parent are traded, in order for Parent to consummate the
Transactions.
SECTION 4.10 Brokers. Except as set forth in the Parent Disclosure Schedule at Section 4.10, no broker, finder,
financial advisor, investment bank or other Person is entitled to any brokerage fee, finder’s fee
or other fee or commission in connection with the Transactions based upon arrangements made by or
on behalf of Parent or any of the Parent Subsidiaries.
SECTION 4.11 No Other Representations or Warranties.
Except for the representations and warranties made by Parent and MergerSub in this Article IV,
Parent and MergerSub make no representations or warranties, and each of Parent and MergerSub hereby
disclaim any other representations or warranties, with respect to Parent or MergerSub or their
respective businesses, operations, assets, Liabilities, condition (financial or otherwise) or
prospects, notwithstanding the delivery or disclosure to the Company or its affiliates or
Representatives of any documentation, forecasts, projections, memorandums or other information with
respect to any one or more of the foregoing.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.01 Conduct of Business by the Company.
(a) The Company hereby covenants and agrees with Parent that prior to the earlier of (1) such
time as designees of Parent first constitute a majority of the Company Board pursuant to Section
1.04 and (2) the Effective Time, unless the prior written consent of Parent shall have been
obtained (such consent not to be unreasonably withheld, delayed or conditioned) and except as
expressly permitted by this Agreement, it will and it will cause each of the Company Subsidiaries
to (i) operate its business only in the ordinary course consistent with past practices and (ii) use
reasonable best efforts to: (A) preserve intact its business organization and assets, maintain its
material rights and franchises, and maintain its relationships with material customers, suppliers
contractors, distributors, licensees, licensors and others having material business dealings with
it; (B) maintain and keep its material properties in as good repair and condition as at present,
ordinary wear and tear excepted; (C) keep in full force and effect insurance and bonds comparable
in amount and scope of coverage to that now maintained by it; (D) comply with and perform in all
material respects all obligations and duties imposed upon it by all applicable Laws; and (E) keep
available the services of its current officers, employees and consultants.
43
(b) Without limiting the generality of the foregoing Section 5.01(a), prior to the earlier of
(x) such time as designees of Parent first constitute a majority of the Company Board pursuant to
Section 1.04 and (y) the Effective Time, except (1) as set forth in the Company Disclosure Schedule
at Section 5.01(b), (2) as required by applicable Law, (3) as expressly permitted by this Agreement
and (4) with the prior written consent of Parent (such consent not to be unreasonably withheld,
delayed or conditioned), the Company shall not do, or permit any of the Company Subsidiaries to do,
any of the following:
(i) amend the Organizational Documents of the Company or any Company
Subsidiary;
(ii) transfer, lease, license, sell, exchange or swap, mortgage, pledge,
dispose of, encumber, abandon or fail to maintain any part of the assets or capital
stock, businesses or properties of the Company or any Company Subsidiary outside the
ordinary course of business;
(iii) declare, set aside for payment or pay any dividends on or make other
distributions in respect of any of its capital stock, whether payable in cash, stock
or property, except for cash dividends by a wholly owned Company Subsidiary to the
Company or another wholly owned Company Subsidiary;
(iv) split, combine, subdivide or reclassify any of its capital stock or other
equity interests or issue or authorize or propose the issuance
of any other securities in respect of, in lieu of or in substitution for shares
of its capital stock or other equity interests;
(v) repurchase, redeem or otherwise acquire, directly or indirectly, any shares
of its capital stock or other equity interests;
(vi) directly or indirectly, issue, deliver, grant, sell, transfer, encumber,
pledge or dispose of, or authorize or propose the issuance, delivery, grant, sale,
transfer, encumbrance, pledge or disposition of, any shares of its capital stock or
other equity interests or any securities convertible into, exchangeable for or
evidencing the right to subscribe for any such shares of its capital stock or other
equity interests, or any rights, warrants, options or any other agreements of any
character to acquire any such shares, equity interests or convertible or
exchangeable securities, other than, with respect to the Company, the issuance of
shares of Company Common Stock upon the exercise of Company Stock Rights outstanding
as of the date of this Agreement under the Company Stock Plans or pursuant to the
Current Offering under the ESPP;
(vii) adjust or otherwise modify any of the Company Stock Rights, the Company
Stock Plans or the ESPP, other than as expressly contemplated by Section 2.14;
(viii) (A) change the compensation or benefits payable or to become payable to
any of its officers, directors, employees or consultants, other
44
than annual salary
increases to be effective as of April 1, 2011 to employees below the executive
officer level in the ordinary course of business consistent with past practice and
not to exceed 3.5% of current base salaries; (B) enter into any plan, program,
arrangement or agreement that would otherwise constitute an Employee Benefit Plan or
enter into any collective bargaining agreement or extend or amend any, collective
bargaining agreement or consulting agreement; (C) make any loans to any of its
officers, directors, employees, consultants or affiliates (other than travel
advances or other advances to employees made in the ordinary course of business
consistent with past practice) or change its existing borrowing or lending
arrangements for or on behalf of any of such Persons pursuant to an employee benefit
plan or otherwise; or (D) take any action to terminate or amend any of the New
Employment Agreements or waive any provision thereof;
(ix) (A) pay or arrange for payment of any pension, retirement allowance or
other employee benefit pursuant to any existing plan, agreement or arrangement to
any officer, director, employee or affiliate or pay or make any arrangement for
payment to any officers, directors, employees or affiliates of the Company of any
amount relating to unused vacation days, except payments and accruals made in
the ordinary course of business consistent with past practice; (B) except as
may be required pursuant to the terms of an Employee Benefit Plan as in effect as of
the date of this Agreement, adopt or pay, grant, issue, accelerate or accrue salary
or other payments or benefits pursuant to any pension, profit-sharing, bonus, extra
compensation, incentive, deferred compensation, stock purchase, stock option, stock
appreciation right, group insurance, severance pay, retirement or other employee
benefit plan, agreement or arrangement, or any employment or consulting agreement
with or for the benefit of any director, officer or employee, whether past or
present; or (C) amend in any material respect any Employee Benefit Plan in effect as
of the date of this Agreement;
(x) adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization of the
Company or any of the Company Subsidiaries, other than the Merger;
(xi) (A) incur or assume any indebtedness or issue any debt securities; (B)
assume, guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any other Person; (C)
make any loans, advances or capital contributions to, or investments in, any other
Person (other than travel advances or other advances to employees made in the
ordinary course of business consistent with past practice); or (D) acquire (by
merger, consolidation, acquisition of stock or assets or otherwise) any corporation,
partnership or other business organization or division thereof or any equity
interest therein, except in the case of clauses (A) and (C) for any such
transactions between or among the Company and the Company Subsidiaries;
45
(xii) (A) modify, extend, amend, terminate, cancel, renew or supplement any
Material Contract or any Change in Control Contract; (B) waive, release or assign
any rights or Claims under any such Material Contracts or Change in Control
Contracts; or (C) enter into any Material Contract or Change in Control Contract;
(xiii) except as necessary to operate in the ordinary course consistent with
past practices, grant or acquire, agree to grant to or acquire from any Person, or
dispose of or voluntarily permit to lapse any rights to, any material Intellectual
Property, or disclose or agree to disclose to any Person, other than Representatives
of Parent and MergerSub, any Trade Secret;
(xiv) (A) change any of the accounting methods used by it except for such
changes required by GAAP or (B) make any material new Tax election or change any
material Tax election already made, adopt any material new Tax accounting method,
change any material Tax accounting method, amend any U.S. federal income or other
material Tax Return, forgo any material Tax refund, enter into any closing
agreement or private letter ruling or settle any material Claim or assessment
relating to Taxes or consent to any material Claim or assessment relating to Taxes
or any waiver of the statute of limitations for any such Claim or assessment;
(xv) pay, discharge or satisfy any material Liabilities (whether absolute,
accrued, contingent or otherwise), other than the payment, discharge or satisfaction
of any such Liabilities in the ordinary course of business consistent with past
practice, or of Liabilities reflected or reserved against in the consolidated
financial statements of the Company and the Company Subsidiaries included in the
Filed Company SEC Documents for the period ended December 31, 2010 or incurred since
December 31, 2010 in the ordinary course of business consistent with past practice;
(xvi) (A) settle or commence any Claim or litigation involving an amount in
excess of $50,000 or, in the aggregate, an amount in excess of $250,000 or (B) enter
into any consent decree, injunction or other similar restraint or form of equitable
relief in settlement of any Claim or litigation;
(xvii) make any capital expenditure or any commitment with respect to media or
advertising (other than ordinary course payments or allowances to customers for
co-op advertising) which is not in all material respects in accordance with the
annual budget for the fiscal year 2011 (which expenditures shall not be accelerated
inconsistent with past practice), a correct and complete copy of which is attached
to the Company Disclosure Schedule at Section 5.01(b)(xvii);
(xviii) enter into any agreement, Contract or arrangement or make any
commitment to take any of the actions prohibited by this Section 5.01.
46
SECTION 5.02 Access to Information; Confidentiality.
(a) Prior to the Effective Time and upon reasonable notice and without unreasonable disruption
to the business carried on by the Company or the Company Subsidiaries, the Company shall (and shall
cause the Company Subsidiaries to) afford to Parent, MergerSub and their respective Representatives
reasonable access, during normal business hours, to its officers, employees, properties, books,
Contracts, commitments, personnel and records (other than the portion of Company Board minutes
which discuss merger proposals) as Parent may reasonably request, and, during such period, the
Company shall (and shall cause each of the Company Subsidiaries to) furnish promptly to Parent and
MergerSub (i) a copy of each report,
schedule, registration statement and other document filed by it pursuant to the requirements
of applicable U.S. federal securities Laws and (ii) all other information concerning its
business, properties and personnel as Parent or MergerSub may reasonably request; provided that the
foregoing shall not require the Company (A) to disclose any information that, in the reasonable
judgment of the Company, would violate any applicable Law or (B) to disclose any information of the
Company or any Company Subsidiary which would be reasonably likely to cause a waiver of any
attorney-client privilege or attorney work product protection in the opinion of counsel to the
Company (provided further that, in each such case under clauses (A) or (B), the Company shall use
its reasonable best efforts to put in place an arrangement to permit such disclosure without
violating such Law or without loss of such privilege or protection). Parent shall be entitled to
undertake environmental investigations at any of the properties owned, operated or leased by the
Company or any Company Subsidiary, provided, that such investigations shall not include any
intrusive sampling without the consent of the Company, such consent not to be unreasonably withheld
or delayed. All requests for information made pursuant to this Section 5.02(a) shall be directed
to the executive officer or other Person designated by the Company. From the date of this
Agreement to the Effective Time, the Company shall further afford to Representatives of Parent and
MergerSub reasonable access to the officers of the Company for purposes of negotiating new or
amended employment agreements between such executive officers and the Surviving Corporation. No
investigation pursuant to this Section 5.02 shall affect any representation or warranty made by the
parties hereunder.
(b) Any information provided to Parent by the Company or any of the Company Subsidiaries,
whether prior to or subsequent to the date of this Agreement, shall be kept confidential in
accordance with the letter agreement between the parties dated November 9, 2010 regarding
confidentiality (the “Confidentiality Agreement”), provided, however, that, notwithstanding
the terms of the Confidentiality Agreement, Parent may provide information of the type covered by
the Confidentiality Agreement to potential financing sources subject to customary confidentiality
arrangements with such persons regarding such information.
SECTION 5.03 No Solicitation; Acquisition Proposals.
(a) Notwithstanding any other provision of this Agreement to the contrary, during the period
beginning on the date of this Agreement and continuing until 5:00 p.m. (New York City time) on the
30th calendar day following the date of this Agreement (the “No-Shop Period Start
Date”), the Company and the Company Subsidiaries and their respective Representatives shall
have the right (acting under the direction of the Company Board), directly or indirectly, to: (i)
solicit, initiate, encourage, induce and facilitate, whether publicly or
47
otherwise, Acquisition
Proposals (or inquiries, proposals or offers or other efforts or attempts that are reasonably
expected to lead to an Acquisition Proposal), including by way of providing access to nonpublic
information, provided, however, that the Company shall only permit such information to be provided
pursuant to an Acceptable Confidentiality Agreement (a copy of which shall be provided by the
Company to Parent promptly after its execution); provided, further, that the Company shall provide
to Parent any nonpublic information regarding the Company or the Company Subsidiaries provided to
any other Person which was not previously provided to Parent, such additional information to be
provided substantially concurrently with the time such information is provided to such other
Person and (ii) enter into, engage in, and maintain discussions or negotiations with respect
to Acquisition Proposals or otherwise cooperate with or assist or participate in, or facilitate any
such inquiries, proposals, discussions or negotiations.
(b) Except as expressly permitted by this Section 5.03 and except with an Excluded Party (for
as long as such Person is an Excluded Party), on the No-Shop Period Start Date, the Company shall,
and shall cause its Representatives to, immediately cease and cause to be terminated any
solicitation, encouragement, discussions or negotiations with any Person that may be ongoing that
relate to any Acquisition Proposal and shall use its reasonable best efforts to cause any such
Person (other than an Excluded Party as provided above) and its Representatives in possession of
confidential information about the Company or the Company Subsidiaries that was furnished by or on
behalf of the Company to return or destroy all such information. In addition, promptly after any
Excluded Party ceases to be an Excluded Party or any Extension Excluded Party ceases to be an
Extension Excluded Party, as applicable, but subject to Section 5.03(c), the Company shall use its
reasonable best efforts to cause any such Person and its Representatives in possession of
confidential information about the Company or the Company Subsidiaries that was furnished by or on
behalf of the Company to return or destroy all such information. Except as expressly provided in
this Section 5.03, after the No-Shop Period Start Date until the earlier of the Effective Time or
the termination of this Agreement pursuant to Section 8.01, the Company agrees that neither it nor
any Company Subsidiary shall, and that it shall cause its and their respective Representatives not
to, directly or indirectly, (i) solicit or initiate, or knowingly encourage (including by way of
furnishing information or assistance) or induce, or take any other action designed to, or which
would reasonably be expected to, facilitate any inquiry with respect to, or the making, submission
or announcement of, any Acquisition Proposal or (ii) enter into, continue or otherwise participate
in any discussions or negotiations regarding an Acquisition Proposal with, furnish any nonpublic
information to, or otherwise cooperate in any way with, any Person (other than Parent and its
Representatives) relating to an Acquisition Proposal. On the No-Shop Period Start Date, the
Company shall provide Parent with written notice identifying each Excluded Party as of such date
and a summary of the Company Board’s reasons for such determination. On the day that is one (1)
Business Day prior to the initial scheduled Expiration Date of the Offer (the “Extension
Excluded Party Notice Date”), the Company shall provide Parent with written notice identifying
each Extension Excluded Party and a summary of the Company Board’s reasons for such determination.
The parties agree that, notwithstanding the commencement of the obligations of the Company under
this Section 5.03(b) from and after the No-Shop Period Start Date, the Company may continue to
engage in the activities described in Section 5.03(a) with an Excluded Party (and any of its
Representatives) or an Extension Excluded Party (and any of its Representatives), as applicable,
with respect to a bona fide written Acquisition Proposal submitted by such Excluded Party or
Extension Excluded Party prior to the No-Shop Period Start Date that constitutes or is reasonably
expected to result in a Superior Proposal, including with respect to any such amended or revised
proposal submitted by such Excluded Party or
48
Extension Excluded Party, for as long as such Person
is an Excluded Party or Extension Excluded Party, as applicable. Notwithstanding anything
contained herein to the contrary, (i) any Excluded Party shall cease to be an Excluded Party for
all purposes under this Agreement upon the earlier of (w) 5:00 pm (New York City time) on the
Extension Excluded Party Notice Date or (x) immediately at such time as such Acquisition Proposal
made by such
party is withdrawn, terminated, expires or no longer constitutes or is no longer reasonably
expected to result in a Superior Proposal and (ii) any Extension Excluded Party shall cease to
be an Extension Excluded Party for all purposes under this Agreement upon the earlier of (y) 5:00
pm. (New York City time) on the 15th calendar day following the No-Shop Period Start
Date (the “Cut-off Date”) or (z) immediately at such time as such Acquisition Proposal made
by such party is withdrawn, terminated, expires or no longer constitutes or is no longer reasonably
expected to result in a Superior Proposal.
(c) Notwithstanding the limitations set forth in Section 5.03(b) or any other provision of
this Agreement, if at any time following the No-Shop Period Start Date and prior to the Offer
Closing, the Company receives, on an unsolicited basis and in the absence of any violation of this
Section 5.03 relating thereto, a bona fide written Acquisition Proposal from a third party that the
Company Board determines in good faith (after consultation with the Company’s financial advisors
and outside legal counsel) constitutes or would reasonably be expected to result in a Superior
Proposal, then the Company may take the following actions prior to the Offer Closing: (A) furnish
nonpublic information to the third party making such Acquisition Proposal and its Representatives
pursuant to an Acceptable Confidentiality Agreement (a copy of which shall be provided to Parent
promptly after its execution) and subject to the other restrictions imposed by Section 5.03(a)(i)
and (B) engage in discussions or negotiations with the third party and its Representatives with
respect to the Acquisition Proposal.
(d) At all times from and after the date of this Agreement until the earlier of the Effective
Time or the termination of this Agreement pursuant to Section 8.01, the Company shall promptly (and
in any event within twenty four-hours and substantially concurrently with providing any such Person
with any non-public information) orally and in writing notify Parent if any inquiries, proposals or
offers are received by, any information is requested from, or any negotiations or discussions are
sought to be initiated or continued with, the Company or any of its Representatives, in each case,
in connection with, or which would reasonably be expected to result in, an Acquisition Proposal,
which notice shall identify the name of the Person making such inquiry, proposal or request or
seeking such negotiations or discussions and the material terms and conditions of such inquiry,
proposal or request and include copies of all correspondence and written materials provided to the
Company or any of its Representatives that describe any material terms and conditions of any such
inquiry, proposal or request (and any subsequent material changes to such terms and conditions).
The Company shall (i) promptly keep Parent fully informed, in all material respects, of the status
and details of any Acquisition Proposal or inquiries related thereto (including any changes in the
material terms thereof) and (ii) promptly upon receipt or delivery thereof, provide Parent and its
outside legal counsel with copies of all drafts and final versions (and any comments thereon) of
agreements (including schedules and exhibits thereto) relating to any Acquisition Proposal
exchanged
49
between the Company or any of its Representatives, on the one hand, and the Person making
such Acquisition Proposal or any of its Representatives, on the other hand.
(e) Except as permitted by this Section 5.03(e), neither the Company Board nor any committee
thereof shall (i) withdraw, modify or qualify in any manner adverse to Parent or MergerSub, or
resolve to or publicly propose to withdraw, modify or qualify in a manner adverse to Parent or
MergerSub, the Company Recommendation or otherwise take any action or make any statement in
connection with the Transactions that is inconsistent with the
Company Recommendation, (ii) approve, endorse or recommend, or resolve to or publicly
propose to approve, endorse or recommend, any Acquisition Proposal (any of the foregoing
actions in clauses (i) and (ii), a “Change of Recommendation”) or (iii) adopt or recommend,
or publicly propose to adopt or recommend, or allow the Company or any of the Company Subsidiaries
to execute or enter into, any binding or non-binding letter of intent, agreement in principle,
memorandum of understanding, merger agreement, acquisition agreement, option agreement, joint
venture agreement, partnership agreement or other agreement, commitment, arrangement or
understanding contemplating or otherwise in connection with, or that is intended to or would
reasonably be expected to lead to, any Acquisition Proposal (other than an Acceptable
Confidentiality Agreement referred to in Sections 5.03(a) and (c)). Notwithstanding the foregoing,
the Company Board may prior to the Offer Closing (A) in response to information obtained after the
date of this Agreement and that was not reasonably capable of being known by the Company Board as
of the date of this Agreement, make a Change of Recommendation if the Company Board determines in
good faith, after consultation with the Company’s outside legal counsel, that the failure of the
Company Board to effect a Change of Recommendation would be reasonably likely to be inconsistent
with the directors’ fiduciary duties to the Company’s stockholders under applicable Law or (B) in
response to a Superior Proposal received by the Company after the date of this Agreement and in the
absence of any violation of this Section 5.03 relating thereto, cause the Company to terminate this
Agreement pursuant to Section 8.01(h) and concurrently with such termination cause the Company to
enter into a definitive agreement with respect to such Superior Proposal, subject to satisfaction
of its obligations under Section 8.03, if the Company Board determines in good faith, after
consultation with the Company’s outside legal counsel, that the failure to do so would be
reasonably likely to be inconsistent with the directors’ fiduciary duties to the Company’s
stockholders under applicable Law; provided, however, that the Company Board shall not be entitled
to effect a Change of Recommendation or exercise its right to terminate this Agreement pursuant to
Section 8.01(h) until after the fourth Business Day following Parent’s receipt of written notice (a
“Section 5.03(e) Notice”) (it being understood and agreed that a Section 5.03(e) Notice,
any resolution or determination of the Company Board to make a Section 5.03(e) Notice or
negotiations with Parent relating thereto as provided below in this Section 5.03(e) shall not be
deemed to constitute a Change of Recommendation) from the Company advising Parent that the Company
Board intends to make a Change of Recommendation or terminate this Agreement pursuant to Section
8.01(h) and specifying the reasons therefor, including, if the basis of the proposed action by the
Company Board is a Superior Proposal, the terms and conditions of any Superior Proposal and a copy
of the proposed transaction agreement for any such Superior Proposal in the form to be
entered into
(it being understood and agreed that, in the event of an amendment to the financial terms or other
material terms of such Superior Proposal, the Company Board shall not be entitled to exercise such
right based on such Superior Proposal, as so amended, until after the second full Business Day
following Parent’s receipt of a new Section 5.03(e) Notice from the Company with respect
50
to such Superior Proposal as so amended). In determining whether to terminate this Agreement in response
to a Superior Proposal or to make a Change of Recommendation, the Company Board shall take into
account any proposals made by Parent to amend the terms of this Agreement, shall cause the
Company’s financial adviser and legal counsel to negotiate in good faith with Parent regarding any
such proposals and shall not make a Change of Recommendation or terminate this Agreement unless,
prior to the effectiveness of such Change of
Recommendation or termination, the Company Board, after considering the results of any such
negotiations and any revised proposals made by Parent, concludes that it continues to meet the
requirements to make a Change of Recommendation under clause (A) above and/or that the Superior
Proposal giving rise to the Section 5.03(e) Notice continues to be a Superior Proposal and that it
continues to meet the requirements to terminate this agreement under clause (B) above.
(f) Nothing contained in this Section 5.03 shall prohibit the Company from complying with Rule
14e-2 and Rule 14d-9 promulgated under the Exchange Act with respect to an Acquisition Proposal
that constitutes a tender offer or exchange offer so long as the requirements set forth in this
Section 5.03 are satisfied, provided that such rules shall in no way eliminate or modify the effect
that any action pursuant to such rules may otherwise have under this Agreement (including any such
action which may constitute a Change of Recommendation, it being understood that a statement made
pursuant to this Section 5.03(f) other than issuance by the Company of a “stop, look and listen” or
similar communication of the type contemplated by Rule 14d-9(f) under the Exchange Act that does
not expressly reaffirm the Company Recommendation shall be deemed a Change of Recommendation).
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01 Appropriate Action; Consents; Filings. Upon the terms and subject to the conditions set forth in this Agreement, the Company, Parent
and MergerSub shall each use reasonable best efforts to as promptly as reasonably practicable: (a)
take, or cause to be taken, all appropriate action, and do, or cause to be done, all things
necessary, proper or advisable under applicable Law to consummate and make effective the
Transactions; (b) obtain all Permits, waivers or authorizations required under Law (including all
rulings and approvals of Governmental Authorities and consents from parties to Contracts) in
connection with the authorization, execution, and delivery of this Agreement and the consummation
by them of the Transactions, including the Offer and the Merger; (c) defend any proceeding
challenging this Agreement or the consummation of the Transactions, including seeking to have any
stay or temporary restraining order vacated or reversed; and (d) make all necessary filings, and
thereafter make any other required submissions, with respect to this Agreement and the Merger
required under the HSR Act or required under any Foreign Antitrust Laws; provided, that Parent and
the Company shall cooperate with each other in connection with the making of all such filings,
including providing copies of all such documents to the non-filing party and its advisors prior to
filing and, if requested, to accept all reasonable additions, deletions, or changes suggested in
connection therewith. The Company and Parent shall furnish all information required for any
application or other filing to be made pursuant to the rules and regulations of any applicable Law
in connection with the Transactions. Without limiting the foregoing, each of
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the parties shall use
reasonable best efforts to (i) make or cause to be made the applications or filings required to be
made by Parent, MergerSub or the Company or any of their respective Subsidiaries under or with
respect to the HSR Act in connection with the authorization, execution and delivery of this
Agreement and the consummation of the Merger and the other Transactions as promptly as is
reasonably practicable, and in any event within 10
Business Days after the date of this Agreement, and concurrently with such filing or as soon as
practicable thereafter, request early termination of the waiting period under the HSR Act, (ii)
comply at the
earliest practicable date with any request under or with respect to the HSR Act or Foreign
Antitrust Laws for additional information, documents or other materials received by Parent or the
Company or any of their respective Subsidiaries from the Federal Trade Commission or the Department
of Justice or any other Governmental Authority in connection with such applications or filings or
the Transactions and (iii) reasonably coordinate and cooperate with each other party in the making
of any applications or filings (including furnishing any information the other party may require in
order to make any such application or filing), or obtaining any approvals, required in connection
with the Transactions under the HSR Act or Foreign Antitrust Laws. Notwithstanding anything
contained herein, Parent shall have the right to take the lead in any communications or meetings
with, and any dealings with, any third Person or Governmental Authority in connection with
obtaining any such approvals, consents, Orders, exemptions or waivers, and the Company shall not
take any actions, including entering into any agreements, arrangements or understandings, in
connection therewith without the prior written consent of Parent. Each Party hereto shall promptly
inform the other of any communication from any Governmental Authority regarding any of the
Transactions unless otherwise prohibited by Law. Notwithstanding anything to the contrary
contained herein, in connection with the receipt of any necessary approvals under the HSR Act or
any Foreign Antitrust Laws, neither Parent nor the Company shall be required to divest or hold
separate or otherwise take or commit to take any action that limits Parent’s or the Company’s
freedom of action with respect to, or their ability to retain, any of the businesses, product
lines, or properties of the Company or Parent, except for any such action as would be immaterial to
Parent, the Company or the economic or business benefits of the Transactions to Parent.
SECTION 6.02 Notification of Certain Matters. The Company shall give prompt notice to Parent after obtaining Knowledge of the occurrence or
non-occurrence of any event, the occurrence or non-occurrence of which, as the case may be, would
be reasonably likely to cause any condition set forth in Section 7.01 or Annex I to not be
satisfied at any time as a result of any representation or warranty of the Company contained in
this Agreement being untrue or inaccurate in any material respect or any failure of the Company to
comply with or satisfy any covenant, condition, or agreement to be complied with or satisfied by it
hereunder. Parent shall give prompt notice to the Company after obtaining Knowledge of the
occurrence or non-occurrence of any event, the occurrence or non-occurrence of which, as the case
may be, would be reasonably likely to have, individually or in the aggregate, a Parent Material
Adverse Effect as a result of any representation or warranty of Parent or MergerSub contained in
this Agreement being untrue or inaccurate in any material respect or any failure of Parent or
MergerSub to comply with or satisfy any covenant, condition, or agreement to be complied with or
satisfied by it hereunder. The delivery of any notice pursuant to this Section 6.02 shall not
limit or otherwise affect the remedies available hereunder to the party receiving such notice or
the representations or warranties or covenants of the parties or the conditions to the obligations
of the parties hereunder.
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SECTION 6.03 Public Announcements. The parties shall issue a joint press release, mutually acceptable to the Company and Parent,
promptly after the date hereof. Thereafter, Parent and the Company shall consult with each other
before issuing any press release or otherwise making any public statements with respect to the
Offer, the Merger or any other Transactions and shall not issue any such press release or make any
such public statement prior to such consultation and with mutual consent of both Parent and the
Company, except as
may be required by Law or any listing agreement with NASDAQ or the rules of a securities exchange
or trading market, in which case the party required to make the release or announcement shall use
its reasonable best efforts to provide the other party with a reasonable opportunity to review and
comment on such release or announcement in advance of its issuance; provided, however, that the
Company will no longer be required to obtain the prior consent of or consult with Parent in
connection with any such press release or public announcement if the Company Board has effected a
Change of Recommendation.
SECTION 6.04 Employee Matters.
(a) For a period of one year following the Effective Time, Parent shall cause the Surviving
Corporation and each Company Subsidiary to provide to those individuals employed by the Surviving
Corporation or by one or more of the Company Subsidiaries as of the Effective Time (each, a
“Retained Employee” and collectively, the “Retained Employees”) salary and benefits
under employee benefit plans (other than defined benefit pension plans, plans providing for retiree
medical benefits, incentive pay plans, plans that provide equity-based compensation and plans that
provide for payments or benefits upon a change in control) which are substantially no less
favorable in the aggregate than the benefits provided by the Company and any Company Subsidiary to
Retained Employees under the Employee Benefit Plans listed in Section 3.10(a) of the Company
Disclosure Schedule as in effect immediately before the Effective Time (excluding defined benefit
pension plans, plans providing for retiree medical benefits, incentive pay plans, plans that
provide equity-based compensation and plans that provide for payments or benefits under a change in
control); provided, however, that Retained Employees covered by a collective bargaining agreement
shall not be subject to the foregoing sentence, but shall be subject to the applicable collective
bargaining agreement.
(b) Effective upon the Effective Time, to the extent any employee benefit plan, program, or
policy of Parent or Parent Subsidiary is made available to the Retained Employees: (i) service
with the Company or its Subsidiaries (to the same extent such service is recognized under analogous
plans, programs or arrangements of the Company or its affiliates prior to the Closing) by any
Retained Employee immediately prior to the Effective Time shall be credited in determining such
employee’s eligibility, vesting and benefit levels, provided, however, that (x) such crediting of
service shall not operate to duplicate any benefit or the funding of such benefit under any plan,
or (y) require the crediting of past service for benefit accrual purposes under any defined benefit
pension plan and (ii) with respect to any welfare benefit plans in which such Retained Employees
may become eligible to participate, Parent shall cause such plans to provide credit for any
co-payments or deductibles by such employees paid in respect of the plan year in which the Closing
occurs, to the extent that, following the Closing, they participate in any other plan for which
deductibles or co-payments are required and waive
any pre-existing condition exclusions which were waived under the terms of any Employee
Benefit Plan immediately prior to the Closing and waiting periods, other than waiting periods
53
that have not been satisfied under any welfare plans maintained by the Company for Retained Employees
prior to the Effective Time. The requirement of this Section 6.04(b) shall not apply to any
Retained Employee covered by a collective bargaining agreement, it being understood that the terms
of the applicable collective bargaining agreement covering each such Retained Employee shall apply.
(c) Nothing in this Section 6.04, whether express or implied, shall (i) confer any rights upon
any or remedies of any kind or description upon any Retained Employee or any other Person other
than the Company and Parent and their respective successors and permitted assigns; (ii) constitute
or create an employment agreement or otherwise contravene any employment-at-will relationship;
(iii) constitute or be treated as an amendment, waiver, modification or adoption of any Employee
Benefit Plan; (iv) prevent the amendment, modification or termination of any Employee Benefit Plan
or interfere with the right or obligation of Parent or its affiliates to make such changes to the
foregoing as are necessary to conform with applicable Law; or (v) limit the right of Parent, the
Surviving Corporation, the Company or any of their respective affiliates to terminate the
employment of any employee at any time or require Parent, the Surviving Corporation or any of their
Subsidiaries to continue to employ any Retained Employees for any period of time following the
Effective Time or otherwise to treat any such employee on any basis other than as an
employee-at-will.
(d) The Company shall not, during the period prior to the Effective Time, make any written or
other communication to its employees relating to employee, compensation or benefits without the
prior approval of Parent, which approval shall not be unreasonably withheld, delayed or
conditioned.
(e) Parent agrees to cause the Surviving Corporation to expressly assume those Employee
Benefit Plans listed on Section 6.04(e) of the Company Disclosure Schedule.
(f) Prior to the Closing, the Company and all Company Subsidiaries, as applicable, shall fully
comply with all notice, consultation, effects bargaining or other bargaining obligations to any
labor union, labor organization, works council or group of employees of the Company and its
Subsidiaries in connection with the Transactions. In connection with the foregoing, the Company,
on behalf of itself and all Company Subsidiaries, shall periodically consult with Parent and keep
Parent informed.
SECTION 6.05 Indemnification, Exculpation and Insurance.
(a) Each of Parent, MergerSub and the Surviving Corporation agrees that all rights to
indemnification, advance and reimbursement of expenses, or exculpation existing in favor of, and
all limitations on the personal liability of, each present and former director or officer of the
Company with respect to acts or omissions arising on or before the Effective Time provided for in
its Organizational Documents or in Contracts in effect as of the
date hereof and disclosed to Parent shall continue in full force and effect after the
Effective Time. From and after the Effective Time, Parent shall cause the Surviving Corporation to
comply with their obligations that correspond to such rights.
54
(b) For a period of six years from the Effective Time, Parent shall cause to be maintained in
effect the current policies of directors’ and officers’ liability insurance and fiduciary liability
insurance maintained by the Company with respect to acts or omissions arising on or before the
Effective Time; provided, however, that Parent may substitute therefor policies of substantially
equivalent coverage and amounts containing terms no less favorable to such directors or officers;
provided further, however, that, after the Effective Time, Parent shall not be
required to pay annual premiums in excess of 250% of the last annual premium for the Company’s
existing policies in respect of the coverages required to be obtained pursuant hereto (which annual
premium is set forth on Section 6.05(b) of the Company Disclosure Schedule), but in such case shall
purchase as much coverage as may be purchased for such amount. The Company may purchase, prior to
the Offer Closing Date, or Parent may purchase or cause the Company to purchase, prior to the
Effective Time, a six-year prepaid “tail” policy on terms and conditions providing substantially
equivalent benefits as the current policies of directors’ and officers’ liability insurance and
fiduciary liability insurance maintained by the Company with respect to acts or omissions occurring
at or before the Effective Time, covering without limitation the Transactions; provided that the
cost of such “tail” policy purchased by the Company prior to the Offer Closing Date shall not
exceed 250% of the last annual premium paid by the Company for directors’ and officers’ liability
insurance and fiduciary liability insurance. If such “tail” prepaid policy has been obtained, from
and after the Effective Time Parent shall cause such policy to be maintained in full force and
effect, for its full term, and cause all obligations thereunder to be honored by the Surviving
Corporation, and no other party shall have any further obligation to purchase or pay for insurance
hereunder.
(c) In the event Parent or 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 assets to any Person, then, and in each such case, proper provision shall
be made so that the successors and assigns of Parent or the Surviving Corporation, as the case may
be, assume the applicable obligations set forth in this section.
(d) The provisions of this Section 6.05 (i) are intended to be for the benefit of, and will be
enforceable by, each director, officer or other Person referred to herein, his or her heirs and his
or her Representatives and (ii) are in addition to, and not in substitution for, any other rights
to indemnification or contribution that any such Person may have by Contract or otherwise.
SECTION 6.06 Exemption from Liability Under Section 16(b). Prior to the Effective Time, the Company shall take all reasonable steps as may be required to
cause the transactions contemplated by Section 2.14 and any other dispositions of Company equity
securities (including derivative securities) in connection with this Agreement by each individual
who is a director or officer of the Company subject to Section 16 of the Exchange Act to be exempt
under Rule 16b-3 promulgated under the Exchange Act.
SECTION 6.07 Approval of Compensation Arrangements. If the Company enters into, adopts, amends, modifies or terminates any Arrangements, including
the New Employment Agreements to which it is a party, with Covered Securityholders, all such
amounts payable under such Arrangements (i) shall be paid or granted as compensation for past
services
55
performed, future services to be performed, or future services to be refrained from
performing, by the Covered Securityholders (and matters incidental thereto) and (ii) shall not be
calculated based on the number of shares of Company Common Stock tendered or to be tendered into
the Offer by the applicable Covered Securityholder. Moreover, the Company shall take all actions
necessary so that, prior to the Expiration Date: (i) the adoption, approval, amendment or
modification of each such Arrangement, including the New Employment Agreements to which it
is a party, shall be approved as an employment compensation, severance or other employee benefit
arrangement solely by independent directors of the Company in accordance with the requirements of
Rule 14d-10(d)(2) under the Exchange Act and the instructions thereto and (ii) the “safe harbor”
provided pursuant to Rule 14d-10(d)(2) is otherwise applicable thereto as a result of the taking
prior to the Expiration Date of all necessary actions by the Company Board, the Compensation
Committee of such Company Board or its “independent directors” as defined by Rule 4200(a)(15) of
the NASDAQ Marketplace Rules.
SECTION 6.08 Third Party Standstill Agreements During the period from the date of this Agreement through the Effective Time, the Company
shall enforce to the fullest extent permitted under applicable Law (including obtaining injunctions
to prevent any breaches of such agreements and to enforce specifically the terms and provisions
thereof in any court or other tribunal having jurisdiction) and shall not terminate, amend, modify
or waive any standstill provision of any confidentiality or standstill agreement between the
Company and other parties; provided, however, (a) from the date of this Agreement until the No-Shop
Period Start Date, the Company may grant any such waiver solely to the extent necessary to permit
any counterparty to any such agreement to make non-public submissions of Acquisition Proposals or
amendments thereto to the Company Board prior to the No-Shop Period Start Date and (b) at any time
from the date of this Agreement to the Offer Closing, the Company may grant any such waiver if the
Company Board determines in good faith, after consultation with the Company’s outside legal
counsel, that the failure of the Company Board to grant such waiver would be reasonably likely to
be inconsistent with the directors’ fiduciary duties to the Company’s stockholders under applicable
Law. The Company shall provide written notice to Parent of the waiver or release of any standstill
by the Company. The Company shall not, and shall not permit any of its Representatives to, enter
into any confidentiality agreement subsequent to the date of this Agreement which does not
expressly permit, or which contains any provision that adversely affects the rights of the Company
under such confidentiality agreement upon, compliance by the Company with any provision of this
Agreement.
SECTION 6.09 State Takeover Laws. From the date of this Agreement until the Closing or the earlier termination of this Agreement
in accordance with its terms, the Company will not take any action that would cause the
Transactions to be subject to requirements imposed by any Takeover Law. If any Takeover Law
becomes or is deemed to become applicable to the Company or the Transactions, then the Company
Board shall take all actions necessary to render such Takeover Law inapplicable to the foregoing.
SECTION 6.10 Stockholder Litigation. The Company shall give Parent the opportunity to participate in the defense or settlement of any
stockholder litigation against the Company and/or its directors or executive officers relating to
the Transactions, whether commenced prior to or after the execution and delivery of this Agreement.
The Company agrees that it shall not settle or offer to settle any litigation commenced prior to
or after the date of this
56
Agreement against the Company or any of its directors or executive
officers by any stockholder of the Company relating to this Agreement, the Offer, the Merger, any
other Transaction or otherwise, without the prior written consent of Parent.
SECTION 6.11 Financial Information and Cooperation. During the period prior to the Effective Time, the Company shall provide to Parent consolidated
monthly financial statements and its complete monthly internal financial reporting package no later
than 20 calendar days following the end of each fiscal month. The Company shall use, and shall
cause its Representatives to use, their reasonable best efforts to cooperate and assist Parent and
MergerSub with respect to the arrangement of Parent’s financing (the “Financing”).
Further, the Company shall provide, and shall cause the Representatives of the Company to provide,
all reasonable cooperation in connection with the arrangement and consummation of the Financing,
including (a) promptly providing to Parent’s or MergerSub’s financing sources all material
financial and other pertinent information with respect to the Company and the Transactions
reasonably requested by Parent, including information and projections prepared by the Company
relating to the Company and the Transactions, (b) causing the Company’s senior officers and other
Representatives to be reasonably available to Parent’s or MergerSub’s financing sources in
connection with such Financing, to participate in due diligence sessions, meetings and drafting
sessions and to participate in presentations related to the Financing, including presentations to
rating agencies, (c) assisting, and using its reasonable best efforts to cause its Representatives
to assist, in the preparation of one or more appropriate offering documents (including the
preparation of pro forma financial statements meeting the requirements of SEC Regulation S-X) and
assisting Parent’s or MergerSub’s financing sources in preparing and delivering other appropriate
marketing and closing materials, in each case to be used in connection with the Financing, (d)
reasonably cooperating with the marketing efforts of Parent and its financing sources for any of
the Financing, (e) providing and executing documents as may be reasonably requested by Parent,
including a certificate of the chief financial officer of the Company with respect to solvency
matters and assisting Parent in obtaining comfort letters of the Company’s accountants, consents of
the Company’s accountants for use of their reports in any materials relating to the Financing, and
legal opinions of the Company’s counsel, and (f) reasonably facilitating the pledge of the
Company’s assets as collateral. The Company hereby consents to the use of its and its
Subsidiaries’ logos in connection with the Financing. Parent (i) acknowledges and agrees that the
Company, the Company Subsidiaries and their respective Representatives shall not incur any
Liability to any Person prior to Effective Time under the
Financing and (ii) shall indemnify and hold harmless the Company, the Company Subsidiaries and
their respective Representatives from and against any and all losses, damages, claims, costs or
reasonable expenses suffered or incurred by any of them in connection with the arrangement of the
Financing and any information used in connection therewith, except (A) with respect to any
information provided by the Company or any of the Company Subsidiaries in writing for inclusion in
customary offering documents and any historical financial information relating to the Company or
the Company Subsidiaries contained in any Company SEC Documents and (B) for any of the foregoing to
the extent the same is the result of willful misconduct or bad faith of the Company, any Company
Subsidiary or their respective Representatives.
SECTION 6.12 Stock Exchange De-listing; Deregistration. Prior to the Closing Date, the Company shall cooperate with Parent and use reasonable best
efforts to take, or cause to be taken, all actions, and do or cause to be done all things,
necessary, proper or
57
advisable on its part under applicable Laws and rules and policies of NASDAQ
to cause the delisting of the Company and of the Company Common Stock from NASDAQ as promptly as
practicable after the Effective Time and the deregistration of the Company Common Stock under the
Exchange Act as promptly as practicable after such delisting. Prior to April 15, 2011, the
Company shall amend its annual report on Form 10-K for the year ended December 31, 2010 to include
the information required to be set forth in Part III thereof without reliance on incorporation by
reference to the Company’s proxy statement for its 2011 annual meeting of stockholders.
ARTICLE VII
CONDITIONS
SECTION 7.01 Conditions to Obligation of Each Party to Effect the Merger. The respective obligations of each party to effect the Merger shall be subject to the
satisfaction at or prior to the Effective Time of each of the following conditions, any and all of
which may be waived in whole or in part by Parent, MergerSub and the Company, as the case may be,
to the extent permitted by applicable Law:
(a) Stockholder Approval. The Required Company Stockholder Vote shall have been
obtained, if required pursuant to the requirements of the DGCL.
(b) Acceptance of Shares. MergerSub shall have accepted for payment all shares of
Company Common Stock validly tendered and not validly withdrawn pursuant to the Offer.
(c) No Law or Order. No Law shall have been enacted or promulgated by any
Governmental Authority which prohibits consummation of the Merger, and no Governmental Authority
shall have issued any Order (whether temporary, preliminary, or permanent) which prohibits
consummation of the Merger.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01 Termination. This Agreement may be terminated and the Offer, the Merger and the other Transactions may be
abandoned at any time prior to the Effective Time, whether before or after the Required Company
Stockholder Vote has been obtained, upon written notice (other than in the case of Section 8.01(a)
below) from the terminating party to the nonterminating party specifying the subsection of this
Section 8.01 pursuant to which such termination is effected:
(a) by mutual written consent of Parent, MergerSub and the Company;
(b) by Parent, prior to the Offer Closing, if the Company shall have breached any of its
representations or warranties or failed to perform any of its covenants or other agreements
contained in this Agreement, which breach or failure to perform (A) would give rise to the failure
of a condition set forth in clause (d) or (e) of Annex I and (B) is incapable
58
of being cured by the
Company by the date that is 20 Business Days after such breach or failure or, if capable of being
cured by the Company by such date, the Company does not commence to cure such breach or failure
within 10 Business Days after its receipt of written notice thereof from Parent and diligently
pursue such cure thereafter;
(c) by the Company, prior to the Offer Closing, if (i) (A) Parent or MergerSub shall have
breached any of its representations or warranties which breach (1) would result in any of the
representations or warranties of Parent and MergerSub in Section 4.01 of this Agreement that is
qualified as to “Parent Material Adverse Effect” not being true and correct in all respects or any
such representation or warranty that is not so qualified as to “Parent Material Adverse Effect” not
being true and correct in all material respects or (2) would result in any other representation and
warranty of Parent and MergerSub in Article IV of this Agreement (without giving effect to any
qualification as to “materiality” or “Parent Material Adverse Effect” qualifiers set forth therein)
not being true and correct in all respects, except where the failure to be so true and correct
would not, individually or in the aggregate, reasonably be expected to have a Parent Material
Adverse Effect or (B) Parent or MergerSub shall have breached or failed, in any material respect,
to perform or comply with any of its agreements or covenants to be performed or complied with by it
under this Agreement and (ii) such breach or failure to perform or comply is incapable of being
cured by Parent or MergerSub by the date that is 20 Business Days after such breach or failure or,
if capable of being cured by Parent or MergerSub by such date, Parent or MergerSub does not
commence to cure such breach or failure within 10 Business Days after its receipt of written notice
thereof from the Company and diligently pursue such cure thereafter;
(d) by either Parent or the Company if an Order shall have been entered permanently
restraining, enjoining or otherwise prohibiting the consummation of the Offer, the Merger or the
Transactions, and such Order shall have become final and non-appealable;
(e) by either Parent or the Company if (i) the Offer has not been consummated on or before
September 10, 2011 (the “Termination Date”) and (ii) the party seeking to terminate this
Agreement pursuant to this Section 8.01(e) shall not have breached in any material respect its
obligations under this Agreement in any manner that shall have proximately caused or resulted in
the failure of the Offer to have been consummated by such date;
(f) by either Parent or the Company if (i) the Offer shall have expired (taking into account
any extensions as provided herein) or been terminated without any shares of Company Common Stock
being purchased therein and (ii) the party seeking to terminate this Agreement pursuant to this
Section 8.01(f) shall not have breached in any material respect any of its obligations under this
Agreement in any manner that shall have proximately caused or resulted in the failure of the Offer
to have been consummated;
(g) by Parent, prior to the Offer Closing, if (i) the Company Board or any committee thereof
shall have effected a Change of Recommendation (whether or not in compliance with Section 5.03),
(ii) after the No-Shop Period Start Date (or if later, the date after which there ceases to be an
Excluded Party or Extension Excluded Party), the Company Board or any committee thereof shall have
failed to publicly affirm the Company Recommendation within
59
three (3) Business Days of a request in
writing to do so by Parent following the public announcement or public disclosure of an Acquisition
Proposal, (iii) the Company shall fail to include the Company Recommendation in the Schedule 14D-9,
or (iv) there is a Willful and material breach by the Company of its obligations under Section 5.03
(each of clauses (i)—(iv), a “Triggering Event”);
(h) by the Company, prior to the Offer Closing, if the Company Board determines to enter into
a definitive agreement providing for a Superior Proposal pursuant to and in compliance with Section
5.03 (including the payment to Parent of the Termination Fee concurrently with such termination in
accordance with Section 8.03); or
(i) by the Company if (i) (A) in violation of Section 1.01, MergerSub fails to commence the
Offer or (B) MergerSub, in violation of the terms of this Agreement, fails to accept for payment
and to purchase any validly tendered shares of Company Common Stock pursuant to the Offer, (ii) the
Company shall not have breached in any material respect any of its obligations under this Agreement
in any manner that shall have proximately caused or resulted in the failure of the Offer to have
been commenced or consummated by such date, as applicable and (iii) such violation and failure to
perform is not cured within 2 Business Days after Parent’s receipt of written notice thereof from
the Company.
SECTION 8.02 Effect of Termination. In the event of the termination of this Agreement pursuant to Section 8.01, this Agreement shall
forthwith become void, except that the provisions of Section 5.02(b), this Section 8.02, Section
8.03 and Article IX shall survive any such termination, and there shall be no Liability on the part
of any party hereto or their respective directors, officers, employees or stockholders; provided,
however, that nothing herein shall relieve any party from any Liability for any Willful and
material breach by such party of any of its representations, warranties, covenants or
agreements set forth in this Agreement and all rights and remedies of such non-breaching party
under this Agreement in the case of such a Willful and material breach, at law or in equity, shall
be preserved.
SECTION 8.03 Termination Fee.
(a) Anything to the contrary notwithstanding, if this Agreement is terminated:
(i) by Parent pursuant to Section 8.01(g);
(ii) by the Company pursuant to Section 8.01(h); or
(iii) (A) (1) by Parent or the Company pursuant to Section 8.01(e), (2) by
Parent or the Company pursuant to Section 8.01(f) in circumstances where the Offer
shall have expired (taking into account any extensions as provided herein) or been
terminated without any shares of Company Common Stock being purchased therein as a
result of the failure to satisfy the Minimum Condition or (3) by Parent pursuant to
Section 8.01(b) and (B) (1) an Acquisition Proposal shall have been publicly made or
publicly disclosed or any Person shall have publicly announced an intention (whether
or not conditional) to make an Acquisition Proposal prior to such termination and
(2) within 12 months
60
after the termination of this Agreement, an Acquisition
Transaction is consummated or a definitive agreement is entered into by the Company
providing for an Acquisition Transaction,
then in each such case the Company shall pay Parent (or MergerSub, as directed by Parent) the
Termination Fee. As used herein, the “Termination Fee”
shall mean a cash amount equal to $20,940,000; except in the event that this Agreement is
terminated by the Company pursuant to Section 8.01(h) (I) prior to the No-Shop Period Start Date or
(II) after the No-Shop Period Start Date and prior to the Cut-off Date, to enter into a definitive
agreement with an Excluded Party or Extension Excluded Party, in either case (I) or (II), the
“Termination Fee” shall mean a cash amount equal to $11,280,000.
(b) If the Termination Fee becomes payable, the Company shall make payment by wire transfer of
immediately available funds to an account designated in writing by Parent. The Termination Fee
shall be paid within one (1) Business Day after termination of this Agreement in the case of the
occurrence of any event described in clause (i) of Section 8.03(a) above, concurrently with the
termination of this Agreement in the case of the occurrence of any event described in clause (ii)
of Section 8.03(a) above, and upon the date the Acquisition Transaction is consummated in the case
of the occurrence of any event described in clause (iii) of Section 8.03(a) above. For the
avoidance of doubt, in no event shall the Company be obligated to pay the Termination Fee on more
than one occasion. Except to the extent required by
applicable Law, the Company shall not withhold any withholding Taxes on any payment under this
Section 8.03.
(c) The Company acknowledges that the agreements contained in Section 8.03 are an integral
part of the Transactions, and that, without these agreements, Parent would not enter into this
Agreement. If the Company shall fail to pay the Termination Fee when due, the Termination Fee
shall be deemed to include the out-of-pocket costs and expenses incurred by Parent (including
reasonable fees and expenses of counsel) in connection with the collection under and enforcement of
this Section 8.03, together with interest on such unpaid Termination Fee, commencing on the date
that the Termination Fee became due, at a rate equal to the rate of interest publicly announced by
Bank of America from time to time as such bank’s prime rate plus two percent (2%).
SECTION 8.04 Amendments. This Agreement may be amended by the parties hereto by action taken by or on behalf of their
respective Boards of Directors at any time prior to the Effective Time; provided, however, that
after approval of the Merger by the stockholders of the Company, no amendment may be made which
would (a) reduce the amount or change the type of consideration into which each share of Company
Common Stock shall be converted pursuant to this Agreement upon consummation of the Merger or (b)
alter or change any of the terms or conditions of this Agreement if any of such alterations or
changes, alone or in the aggregate, would require approval of the Company’s stockholders under the
DGCL. This Agreement may not be amended except by an instrument in writing signed by the parties
hereto.
SECTION 8.05 Waiver. At any time prior to the Effective Time, any party hereto may (a) extend the time for the
performance of any of the obligations or other acts of the other party hereto, (b) waive any
inaccuracies in the representations and warranties contained
61
herein or in any document delivered pursuant hereto or (c) waive compliance with any of the
agreements or conditions contained herein. Any such extension or waiver shall be valid only if set
forth in an instrument in writing signed by the party or parties to be bound thereby. The failure
of any party hereto to exercise any right, power or remedy provided under this Agreement or
otherwise in respect hereof at law or in equity, or to insist upon compliance by any other party
hereto with its obligations hereunder, and any custom or practice of the parties at variance with
the terms hereof, shall not constitute a waiver by such party of its right to exercise any such or
other right, power or remedy or demand such compliance.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01 Non-Survival of Representations and Warranties. None of the representations and warranties in this Agreement shall survive the Effective Time.
SECTION 9.02 Notices. Each notice, request, demand or other communication under this Agreement shall be in writing and
shall be deemed to have been duly given or made as follows: (a) if sent by registered or certified
mail in the United States, return receipt requested, then such communication shall be deemed duly
given and made upon receipt; (b) if sent by nationally recognized overnight air courier (such as
DHL or Federal Express), then such communication shall be deemed duly given and made two (2)
Business Days after being sent; (c) if sent by facsimile transmission or by electronic mail before
5:00 p.m. (New York City time) on any Business Day, then such communication shall be deemed duly
given and made when receipt is confirmed; (d) if sent by facsimile transmission or by electronic
mail on a day other than a Business Day and receipt is confirmed, or if sent after 5:00 p.m. (New
York City time) on any Business Day and receipt is confirmed, then such communication shall be
deemed duly given and made on the Business Day following the date which receipt is confirmed; and
(e) if otherwise actually personally delivered to a duly authorized representative of the
recipient, then such communication shall be deemed duly given and made when delivered to such
authorized representative; provided that, in all cases, such notices, requests, demands and other
communications are delivered to the parties at the following addresses or telecopier numbers (or at
such other address or telecopier numbers for a party as shall be specified by like notice):
(a) | If to Parent or MergerSub: |
Tomy Company, Ltd.
Attention: Kantaro Tomiyama
0-0-00 Xxxxxxxx, Xxxxxxxxxx-xx
Xxxxx 000-0000, Xxxxx
Telecopier: (00) 0000-0000
E-Mail: xxxxxxxx@xxxxxxxxxx.xx.xx
Attention: Kantaro Tomiyama
0-0-00 Xxxxxxxx, Xxxxxxxxxx-xx
Xxxxx 000-0000, Xxxxx
Telecopier: (00) 0000-0000
E-Mail: xxxxxxxx@xxxxxxxxxx.xx.xx
With a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Attention: Xxxxxxxx Xxxxxxxx
Attention: Xxxxxxxx Xxxxxxxx
62
Izumi Garden Tower, 00xx Xxxxx
0-0-0, Xxxxxxxx, Xxxxxx-xx, Xxxxx, 000-0000
Telecopier: +81.3.3568-2626
E-Mail: Xxxxxxxx.Xxxxxxxx@xxxxxxx.xxx
0-0-0, Xxxxxxxx, Xxxxxx-xx, Xxxxx, 000-0000
Telecopier: +81.3.3568-2626
E-Mail: Xxxxxxxx.Xxxxxxxx@xxxxxxx.xxx
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Attention: Xxxxxxx X. Xxxxxx, Xx.
000 X. Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Telecopier: (000) 000-0000
E-Mail: Xxxxxxx.Xxxxxx@xxxxxxx.xxx
Attention: Xxxxxxx X. Xxxxxx, Xx.
000 X. Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Telecopier: (000) 000-0000
E-Mail: Xxxxxxx.Xxxxxx@xxxxxxx.xxx
(b) | If to Company: |
RC2 Corporation
Attention: Xxxxxx X. Xxxxxxxxx
0000 Xxxx 00xx Xxxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxx 00000
Telecopier: (000) 000-0000
E-Mail: xxxxxxxxxxx@xx0xxxx.xxx
Attention: Xxxxxx X. Xxxxxxxxx
0000 Xxxx 00xx Xxxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxx 00000
Telecopier: (000) 000-0000
E-Mail: xxxxxxxxxxx@xx0xxxx.xxx
With a copy to:
Xxxxxxxx Xxxxxxx Van Deuren s.c.
Attention: Xxxxx X. Xxxxxx, Esq.
0000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000
Telecopier: (000) 000-0000
E-Mail: xxxxxxx@xxxxxxxxxxx.xxx
Attention: Xxxxx X. Xxxxxx, Esq.
0000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000
Telecopier: (000) 000-0000
E-Mail: xxxxxxx@xxxxxxxxxxx.xxx
SECTION 9.03 Certain Definitions. For purposes of this Agreement, the term:
“Acceptable Confidentiality Agreement” shall mean any confidentiality and standstill
agreement that contains provisions no less favorable to the Company than those contained in the
Confidentiality Agreement (it being understood that such confidentiality agreement need not
prohibit the non-public submission of Acquisition Proposals or amendments thereto to the Company
Board prior to the No-Shop Period Start Date); provided that such confidentiality and standstill
agreement shall expressly permit, and shall not contain any provision that adversely affects the
rights of the Company thereunder upon, compliance by the Company with any provision of this
Agreement.
“Acquisition Proposal” shall mean any offer or proposal that relates to any
Acquisition Transaction.
“Acquisition Transaction” shall mean any transaction or series of transactions, other
than the Offer and the Merger contemplated by this Agreement, directly or indirectly involving: (i)
any merger, consolidation, reorganization, amalgamation, share exchange, business
63
combination,
recapitalization, dissolution, liquidation or other similar transaction involving the Company (A)
in which a Person directly or indirectly acquires beneficial or record ownership of securities
representing 15% or more of the outstanding shares of Company Common Stock or (B) in which the
Company issues securities representing 15% or more of the outstanding shares of Company Common
Stock, (ii) any sale, lease, exchange, transfer, license or other disposition of any business or
businesses or assets (including any equity securities of any Company Subsidiary) which constitute
15% or more of the net revenues, net income or assets of the Company and the Company Subsidiaries,
taken as a whole, or (iii) any sale, purchase, tender offer, exchange offer or other acquisition
that, if consummated, would result in any Person beneficially owning 15% or more of any class of
equity or voting securities of the Company.
“beneficially owned” or “beneficial ownership” with respect to any securities
shall mean having “beneficial ownership” of such securities as determined pursuant to Rule 13d-3
under the Exchange Act.
“Business Day” shall mean any day on which the principal offices of the SEC in
Washington, D.C. are open to accept filings or, in the case of determining a date on which payment
is due, any day on which banks are not required or authorized by applicable Law to close in New
York, New York or Tokyo, Japan.
“Change in Control Contract” shall mean any Contract which provides for termination,
acceleration of payment or other special rights upon the occurrence of a change in control of the
Company.
“Claim” shall mean any claim, demand, cause of action, investigation, inquiry, suit,
action, charge or legal, administrative, arbitrative or other proceeding.
“Code” shall mean the Internal Revenue Code of 1986, as amended.
“Company Common Stock” shall mean shares of common stock, par value $0.01 per share,
of the Company.
“Company Disclosure Schedule” shall mean the disclosure schedule delivered by the
Company to Parent and MergerSub concurrently with the execution of this Agreement.
“Company Material Adverse Effect” shall mean any change, event, development, effect,
condition, action, violation, inaccuracy, circumstance or occurrence that individually or in the
aggregate with all other changes, events, developments, effects, conditions, actions, violations,
inaccuracies, circumstance or occurrences, is (a) materially adverse to the business, financial
condition, results of operations, assets or Liabilities of the Company and the Company
Subsidiaries, taken as a whole, or (b) has prevented, or is reasonably likely to prevent the
consummation by the Company of each of the Transactions or the performance of its material
obligations under this Agreement, other than, in the case of clause (a) only, changes, events,
developments, effects, conditions, actions, violations, inaccuracies, circumstances or occurrences
arising out of or resulting from (i) general changes in conditions in the United States economy or
capital or financial markets, (ii) general changes in the businesses and industries in which the
Company and the Company Subsidiaries operate, (iii) acts of war, sabotage or terrorism, or any
escalation or worsening of any such acts of war, sabotage or terrorism threatened or underway as
64
of the date of this Agreement, (iv) changes in Law or GAAP, or any interpretation thereof, (v) (A) the
announcement or pendency of this Agreement or the Transactions (including any impact on or
disruptions in relationships with customers, suppliers, licensors, dealers, employees or other
similar relationships), (B) the failure by the Company to obtain any consent set forth on Section
3.05(a) or 3.05(b) of the Company Disclosure Schedule after the Company has satisfied its
obligations under Section 6.01 with respect to such consent or (C) any actions taken pursuant to
(and required by) Section 5.01 of this Agreement or the failure to take any actions due to
restrictions set forth in Section 5.01 of this Agreement, (vi) any failure, in and of itself, to
meet financial projections, forecasts, estimates or budgets, provided that the exception in this
clause shall not exclude a determination that a change, event, development, effect, condition,
action, effect, violation, inaccuracy, circumstance or occurrence underlying such failure has
resulted in, or would reasonably be expected to result in, a Company Material Adverse Effect, or
(vii) any change in prices or trading volume of the Company Common Stock, provided that the
exception in this clause shall not exclude a determination that a change, event, development,
effect, violation, inaccuracy, circumstance or occurrence underlying such change in prices or
trading volume has resulted in, or would reasonably be expected to result in, a Company Material
Adverse Effect; except in the cases of clauses (i), (ii), (iii) and (iv), to the extent the Company
and the Company Subsidiaries, taken as a whole, are materially disproportionately affected thereby
as compared with other participants in the businesses and industries in which the Company and the
Company Subsidiaries operate.
“Company Options” shall mean any outstanding options to purchase shares of Company
Common Stock granted under any of the Company Stock Plans.
“Company Restricted Stock” shall mean any outstanding shares of restricted stock
granted under any of the Company Stock Plans.
“Company RSUs” shall mean any outstanding restricted stock units (including
performance-based restricted stock units) granted under any of the Company Stock Plans.
“Company SARs” shall mean any outstanding stock appreciation rights (whether
cash-settled or stock-settled) granted under any of the Company Stock Plans.
“Company Stock Plans” shall mean the Company’s 2005 Stock Incentive Plan, the Racing
Champions Ertl Corporation Stock Incentive Plan and any predecessor plans thereto and each other
equity compensation plan pursuant to which outstanding equity-based awards are held by employees or
directors of or other service providers to the Company or its Subsidiaries.
“Company Stock Rights” shall mean any outstanding Company Options, Company RSUs or
Company SARs.
“Company Subsidiary” shall mean any Subsidiary of the Company.
“Contract” shall mean any loan or credit agreement, debenture, note, bond, mortgage,
indenture, deed of trust, lease, license, contract, arrangement or understanding or other legally
binding instrument or agreement, whether written or oral.
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“Employee Benefit Plan” shall mean any Pension Plan, Welfare Plan or Fringe Benefit
Plan, whether written or oral and whether qualified or non-qualified, and any trust, escrow, or
other agreement covering any present or former directors, officers, consultants or employees of the
Company or any Company Subsidiary or any of their respective dependents including each loan to any
non-officer employee, loans to officers and directors, any current or former offer letter or
employment or executive compensation or severance agreement for the benefit of, or relating to, any
present of former employee, consultant or director of the Company or any Company Subsidiary, and
each plan, program, agreement and arrangement maintained or contributed to for the benefit of,
provided to, or otherwise relating to, any current or former director, officer, employee or
consultant of the Company or any Company Subsidiary employed in a jurisdiction outside the United
States.
“Encumbrance” shall mean any mortgage, security interest, title retention agreement,
option to purchase, right of first refusal, lien, Claim, pledge or other encumbrance or restriction
of any nature whatsoever.
“Environmental Claims” shall mean any and all administrative, regulatory or judicial
actions, suits, complaints, demands, directives, Orders, Claims, Encumbrances, investigations,
proceedings or written notices of noncompliance or violation by or from any Person alleging
Liability of any kind (including Liability or responsibility for the costs of enforcement
proceedings, investigations, cleanup, governmental response, removal or remediation, natural
resource damages, property damages, personal injuries, medical monitoring, penalties, contribution,
indemnification and injunctive relief) arising out of, based on or resulting from (a) the presence
of, threat of Release of, Release of or exposure to, any Hazardous Material at any location, and/or
(b) the failure to comply with any Environmental Law.
“Environmental Laws” shall mean all applicable federal, state, local and foreign Laws,
and binding determinations, orders, Permits, licenses or rulings of any Governmental Authority,
relative to or that govern or purport to govern air quality, soil quality, water quality, wetlands,
natural resources, solid waste, hazardous waste, hazardous or toxic substances, pollution or the
protection of public health, human health or the environment, including the Comprehensive
Environmental Response, Compensation, and Liability Act, 42 U.S.C. § 9601 et seq., as amended
(“CERCLA”), the Hazardous Materials Transportation Act (49 U.S.C. § 1801 the Federal Water
Pollution Control Act (33 U.S.C. § 1251, et seq.), the Safe Drinking Water Act (42 U.S.C. § 300f,
et seq.), the Resource Conservation and Recovery Act (42 U.S.C. § 6901, et seq.) (“RCRA”),
the Clean Air Act (42 U.S.C. § 7401, et seq.), the Toxic Substances Control Act (15 U.S.C. § 2601,
et seq.), and the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. § 136, et seq.).
“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.
“ERISA Affiliate” shall mean any entity (whether or not incorporated) which is or was,
together with the Company, treated as a single employer under Section 414(b), (c), (m), or (o) of
the Code.
“ESPP” shall mean the Company’s Employee Stock Purchase Plan, as amended.
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“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, together
with the rules and regulations thereunder.
“Excluded Party” shall mean any Person (other than Parent and any of the Parent
Subsidiaries) or “group,” within the meaning of Section 13(d) of the Exchange Act (so long as such
Person and the other members of such group, if any, who were members of such group immediately
prior to the No-Shop Period Start Date constitute at least 80% of the equity financing of such
group at all times following the No-Shop Period Start Date and prior to the termination of this
Agreement), from whom the Company has received a bona fide written Acquisition Proposal after the
execution of this Agreement and prior to the No-Shop Period Start Date that, on or before the
No-Shop Period Start Date, the Company Board determines (and provides written notice to Parent of
such determination at such time and a summary of the Company Board’s reasons for such
determination), in good faith, after consultation with the Company’s financial advisor and outside
legal counsel, constitutes or would reasonably be expected to result in a Superior Proposal, and
which Acquisition Proposal has not expired or been terminated, rejected or withdrawn as of the
No-Shop Period Start Date.
“Expiration Date” shall mean the expiration date for the Offer (as it may have been
extended or re-extended pursuant to this Agreement).
“Extension Excluded Party” shall mean any Excluded Party from whom the Company has
received a bona fide written Acquisition Proposal after the execution of this Agreement and prior
to 5:00 p.m. (New York City time) on the Extension Excluded Party Notice Date who has remained an
Excluded Party at all times up to such time and which Acquisition Proposal, on the Extension
Excluded Party Notice Date, the Company Board determines, in good faith, after consultation with
the Company’s financial advisor and outside legal counsel, constitutes or would reasonably be
expected to result in a Superior Proposal.
“Foreign Antitrust Laws” shall mean any Laws (other than the HSR Act) intended to
prohibit, restrict or regulate actions or transactions having the purpose or effect of
monopolization, restraint of trade or harm to or substantial lessening of competition.
“Fringe Benefit Plans” shall mean (i) any fringe benefit plan under Code Sections 125,
127, 129, 132, or 137 and (ii) any bonus, commission, profit sharing, savings, provident funds,
education funds, pension funds, manager insurance polices, deferred compensation, incentive
compensation, restricted stock, stock option, stock purchase, phantom stock, stock appreciation
right, restricted stock unit, other stock-based incentive, supplemental retirement, salary
continuation, severance, termination, sabbatical, employee relocation, employment-related change in
control benefit or any other fringe benefit plan, program, agreement or arrangement which is not
within the meaning of a Pension Plan or Welfare Plan, in each case which is maintained, sponsored
or contributed to by the Company or any ERISA Affiliate or under which the Company or any ERISA
Affiliate has any Liability.
“Fully-Diluted Basis” shall mean the outstanding shares of Company Common Stock
assuming conversion or exercise of all derivative securities, but excluding the shares of Company
Common Stock subject to the Top-Up Option.
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“GAAP” shall mean generally accepted accounting principles in the United States.
“Governmental Authority” shall mean any government, judicial or arbitral body,
regulatory or administrative agency, commission or authority, securities exchange (including
NASDAQ), or other governmental or regulatory authority, agency or instrumentality, whether federal,
state or local, domestic, foreign or multinational.
“Hazardous Materials” shall mean hazardous substances as that term is defined in
CERCLA, solid waste, hazardous waste and any other individual or class of pollutants, contaminants,
toxins, chemicals, substances, wastes or materials in their solid, liquid or gaseous phase,
defined, listed, designated, regulated, classified or identified under any Environmental Law.
“Intellectual Property” shall mean all of the intellectual property and industrial
property rights and rights in confidential information of every kind and description throughout the
world, including all U.S., foreign and multinational: (a) patents, patent applications, invention
disclosures, and all related continuations, continuations-in-part, divisionals, reissues,
re-examinations, substitutions, and extensions thereof (“Patents”); (b) trademarks, service
marks, trade names, brand names, corporate names, Internet domain names, logos, slogans, trade
dress, design rights, and other similar designations of source or origin, together with the
goodwill symbolized by any of the foregoing (“Trademarks”); (c) copyrights, related rights
and copyrightable subject matter (“Copyrights”); (d) trade secrets and all other
confidential information, ideas, know-how, inventions, proprietary processes, formulae, models, and
methodologies (“Trade Secrets”); (e) rights in computer software programs and applications
(whether in source code, object code or other form), algorithms, databases, compilations and data,
technology supporting the foregoing, and all documentations, including user manuals and training
materials, related to any of the foregoing (“Software”); (f) tangible and intangible
proprietary information or materials; and (g) all applications filed, applications to be filed, and
registrations relating to any of the foregoing clauses (a)-(f) above.
“IRS” shall mean the United States Internal Revenue Service.
“Knowledge” shall mean, with respect to the Company, the actual knowledge of a
particular fact or other matter by any of the individuals set forth in Section 9.03 of the Company
Disclosure Schedule after reasonable inquiry and, with respect to Parent or MergerSub, the actual
knowledge of a particular fact or other matter by any of the individuals set forth in Section 9.03
of the Parent Disclosure Schedule after reasonable inquiry.
“Laws” shall mean all domestic (federal, state or local) and foreign laws, statutes,
constitutions, principles of common law, ordinances, codes, permits, rules, regulations, policies,
guidelines, rulings, requirements or Orders issued, enacted, adopted, promulgated, implemented or
otherwise put into effect by or under the authority of any Governmental Authority.
“Liability” shall mean any direct or indirect indebtedness, Claim, deficiency,
guaranty, endorsement, obligation or other liability of any kind, whether known or unknown, direct
or indirect, accrued or unaccrued, absolute or contingent, disputed or undisputed.
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“NASDAQ” shall mean the NASDAQ Stock Market.
“Order” shall mean, with respect to any Person, any order, writ, rule, injunction,
award, judgment, decree, stipulation, verdict or ruling issued, made, rendered, enacted, adopted,
promulgated or applied by a Governmental Authority that is binding upon or applicable to such
Person or its property.
“Organizational Documents” shall mean: (a) the articles or certificate of
incorporation and the by-laws of a corporation; (b) the partnership agreement and any statement of
partnership of a general partnership; (c) the limited partnership agreement and the certificate or
articles of limited partnership of a limited partnership; (d) the limited liability partnership
agreement and the certificate or articles of limited liability partnership of a limited liability
partnership; (e) the operating agreement or limited liability company agreement and the articles of
organization or certificate of formation of a limited liability company; (f) any charter or similar
document adopted or filed in connection with the creation, formation or organization of a Person;
and (g) any amendment to any of the foregoing.
“Parent Disclosure Schedule” shall mean the disclosure schedule delivered by Parent
and MergerSub to the Company concurrently with the execution of this Agreement.
“Parent Material Adverse Effect” shall mean any change, event, development, effect,
condition, action, violation, inaccuracy, circumstance or occurrence that has prevented or
materially delayed, or is reasonably likely to prevent or materially delay, consummation by Parent
or MergerSub of the Offer or the Merger or the performance of Parent or MergerSub’s material
obligations under this Agreement.
“Parent Subsidiary” shall mean any Subsidiary of Parent.
“Pension Plan” shall mean each “employee pension benefit plan” as defined in Section
3(2) of ERISA maintained, sponsored or contributed to by the Company or any ERISA Affiliate or
under which the Company or any ERISA Affiliate has any Liability. The term “Pension Plan” includes
an “employee pension benefit plan” which is subject to an exemption under ERISA.
“Permits” shall mean permits, licenses, variances, exemptions, consents, Orders,
clearances, approvals, qualifications, registrations, certifications and similar authorizations
from any Governmental Authority.
“Person” shall mean an individual, corporation, partnership, limited liability
company, business trust, joint stock company, association, trust, unincorporated organization,
joint venture, Governmental Authority or other entity or group (as defined in Section 13(d) of the
Exchange Act).
“Release” shall mean any releasing, disposing, discharging, injecting, spilling,
leaking, leaching, pumping, dumping, emitting, escaping, emptying, seeping, dispersal, migration,
transporting, placing and the like, including the moving of any materials through, into or upon,
any land, building surface, soil, surface water, ground water or air, or otherwise entering into
the environment.
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“Representatives” shall mean a Person’s officers, directors, employees, accountants,
legal counsel, investment bankers and other authorized representatives.
“SEC” shall mean the United States Securities and Exchange Commission.
“Securities Act” shall mean the Securities Act of 1933, as amended, together with the
rules and regulations thereunder.
“SOX” shall mean the Xxxxxxxx-Xxxxx Act of 2002, as amended, together with the rules
and regulations thereunder.
“Subsidiary” shall mean with respect to any Person, (a) any corporation at least a
majority of the outstanding voting stock of which is owned, directly or indirectly, by such Person
or by one or more of its subsidiaries, or by such Person and one or more of its subsidiaries, (b)
any general partnership, joint venture, limited liability company, statutory trust, or other entity
(other than a limited partnership), at least a majority of the outstanding partnership, membership,
or other similar interests of which shall at the time be owned by such Person, or by one or more of
its subsidiaries, or by such Person and one or more of its subsidiaries, and (c) any limited
partnership of which such Person or any of its subsidiaries is a general partner. For the purposes
of this definition, “voting stock” means shares, interests, participations, or other equivalents in
the equity interest (however designated) in such Person having ordinary voting power for the
election of a majority of the directors (or the equivalent) of such Person.
“Superior Proposal” shall mean a bona fide written Acquisition Proposal (provided that
for purposes of the definition of “Superior Proposal,” the references to “15%” in the definition of
Acquisition Proposal shall be deemed to be references to “51%”) that the Company Board determines,
in good faith, after consultation with the Company’s financial advisors and outside legal counsel,
and in light of all relevant circumstances and all terms and conditions of such Acquisition
Proposal and this Agreement (and if applicable, any proposal by Parent to amend the terms of this
Agreement pursuant to Section 5.03(e) or otherwise), (i) is more favorable to the Company’s
stockholders from a financial point of view than the Offer and the Merger and (ii) is reasonably
capable of being completed on the terms so proposed, taking into account all financial, legal,
regulatory and other aspects of such Acquisition Proposal and the Person making such Acquisition
Proposal.
“Tax” or “Taxes” shall mean taxes, charges, fees, levies, and other
governmental assessments and impositions of any kind, payable to any federal, state, local, or
foreign Governmental Authority or taxing authority or agency, including: (a) income, franchise,
profits, gross receipts, estimated, ad valorem, value added, sales, use, service, real or personal
property, capital stock, license, payroll, withholding, disability, employment, social security,
workers compensation, unemployment compensation, utility, severance, production, excise, stamp, any
amount owed in respect of any Law relating to unclaimed property or escheat, occupation, premiums,
windfall profits, transfer, and gains taxes; (b) customs, duties, imposts, charges, levies, or
other similar assessments of any kind; (c) interest, penalties, and additions to tax imposed with
respect thereto, and any Liability for or in respect of any amounts described in clauses (a), (b)
or (c) as a transferee or successor, by Contract, or as a result of having filed any
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Tax Return on
a combined, consolidated, unitary, affiliated or similar basis with any other Person.
“Tax Returns” shall mean returns, reports, information statements, forms and any other
document (including elections, declarations, amendments, schedules, or attachments thereto) with
respect to Taxes filed or required to be filed with the IRS or any other Governmental Authority or
taxing authority or agency, domestic or foreign, including affiliated, consolidated, combined and
unitary tax returns.
“Welfare Plan” shall mean each “employee welfare plan” as defined in ERISA Section
3(1), including medical reimbursement benefits provided under a Fringe Benefit Plan subject to Code
Section 125 and health reimbursement arrangements, maintained, sponsored or contributed to by the
Company or any ERISA Affiliate or under which the Company or any ERISA Affiliate has any Liability.
The term “Welfare Plan” includes an “employee welfare plan” which is subject to an exemption under
ERISA.
“Willful” shall mean, with respect to a breach of this Agreement by a party, that such
breach is intentional and a consequence of an act or failure to act by the breaching party with the
actual knowledge that the taking of such act or failure to take such act would cause a breach of
this Agreement.
SECTION 9.04 Interpretation. The language used in this Agreement shall be deemed to be the language chosen by the parties
hereto to express their mutual intent, and no rule of strict construction shall be applied against
any party. Unless the context otherwise requires, as used in this Agreement: (a) an accounting
term not otherwise defined herein has the meaning ascribed to it in accordance with GAAP; (b) “or”
is not exclusive; (c) “including” and its variants mean “including, without limitation” and its
variants; (d) words defined in the singular have the parallel meaning in the plural and vice versa;
(e) references to “written” or “in writing” include in electronic form; (f) the terms “hereof”,
“herein”, “hereby”, “hereto”, and derivative or similar words refer to this entire Agreement,
including the Schedules hereto; (g) whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms; (h) the word “will” shall be construed to have
the same meaning and effect as the word “shall”; (i) references to “dollars” or “$” in this
Agreement shall mean United States dollars; (j) the words “asset” and “property” shall be construed
to have the same meaning and effect and to refer to any and all tangible and intangible assets and
properties, including cash, securities, accounts, contract rights and real and personal property;
(k) all Sections, Articles, Schedules and Exhibits referred to herein are, respectively, Sections
and Articles of, and Schedules and Exhibits to, this Agreement; (l) as used in this Agreement, the
term “affiliates” shall have the meaning set forth in Rule 12b-2 of the Exchange Act; and (m) the
phrase “made available” in this Agreement shall mean that the information or documents referred to
have been posted and made available for viewing and printing by Parent, MergerSub and their
Representatives on the electronic datasite for the Transactions and that was established by the
Company and hosted by IntraLinks, Inc.
SECTION 9.05 Headings. The headings contained in this Agreement, the Table of Contents and the Index of Defined Terms
are for reference purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
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SECTION 9.06 Severability. Any term or provision of this Agreement that is invalid or unenforceable in any situation in any
jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in any other situation
or in any other jurisdiction. If the final judgment of a court of competent jurisdiction declares
that any term or provision hereof is invalid or unenforceable, the parties agree to negotiate in
good faith to modify this Agreement so as to effect the original intent of the parties as closely
as possible in an acceptable manner to the end that the Transactions are fulfilled to the extent
possible.
SECTION 9.07 Entire Agreement. This Agreement together with the Disclosure Schedules and Exhibits hereto, the Confidentiality
Agreement and the New Employment Agreements, constitute the entire agreement of the parties and
supersede all prior agreements and undertakings, both written and oral, between the parties, or any
of them, with respect to the subject matter hereof and, except as otherwise expressly provided
herein, are not intended to confer upon any other Person any rights or remedies hereunder (provided
that (i) the provisions of this Agreement shall supersede any conflicting provision of the
Confidentiality Agreement and (ii) the standstill and any other similar provisions of the
Confidentiality Agreement shall terminate immediately following the execution and delivery of this
Agreement solely to the extent necessary to permit Parent and MergerSub to make proposals and
changes in terms in accordance with Section 5.03(e) (in each case, solely with respect to Parent
and MergerSub and their respective Representatives, and not for any other Person or for purposes of
the definition of an Acceptable Confidentiality Agreement)).
SECTION 9.08 Assignment. This Agreement shall not be assigned by operation of Law or otherwise, except that MergerSub may
assign, in its sole discretion, any of or all its rights, interests and obligations under this
Agreement to Parent or to one or more direct or indirect wholly owned Subsidiaries of Parent, or
any combination thereof, but no such assignment shall relieve MergerSub of any of its obligations
hereunder. Subject to the foregoing, this Agreement will be binding upon, inure to the benefit of
and be enforceable by the parties and permitted assigns.
SECTION 9.09 Parties in Interest. This Agreement shall be binding upon and inure solely to the benefit of each party hereto and
its successors, and nothing in this Agreement, express or implied, is intended to or shall confer
upon any other Person any right, benefit, or remedy of any nature whatsoever under or by reason of
this Agreement, except for (a) the provisions of Sections 2.11, 2.12 and 2.14 which shall be
enforceable following the Effective Time by the holders of the Company Common Stock and Company
Stock Rights and (b) the provisions of Section 6.05 which are intended to be for the benefit of the
Persons referred to therein and may be enforced by such Persons following the Effective Time.
SECTION 9.10 Expenses. Whether or not the Transactions are consummated, all fees and expenses incurred by any party in
connection with this Agreement, the New Employment Agreements and the Transactions shall be borne
solely and entirely by the party that has incurred the same, except that each of Parent and the
Company shall pay 50% of the expense of printing and filing the Proxy Statement, if any, Schedule
14D-9, Offer Documents and all SEC, HSR Act and other regulatory filing fees incurred in connection
with this Agreement and the Transactions.
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SECTION 9.11 Governing Law. This Agreement and the agreements, instruments and documents contemplated hereby and all
disputes between the parties under or relating to this Agreement or the facts and circumstances
leading to its execution and delivery, whether in contract, tort or otherwise, shall be governed by
and construed in accordance with the Laws of the State of Delaware, regardless of the Laws that
might otherwise govern under applicable principles of conflicts of law.
SECTION 9.12 Jurisdiction; Consent to Service of Process. Each party hereto hereby irrevocably and unconditionally submits, for itself and its property,
to the exclusive jurisdiction of the Court of Chancery or other courts of the State of Delaware (a
“Delaware Court”), and any appellate court from any such court, in any suit, action or
proceeding arising out of or relating to this Agreement, or for recognition or enforcement of any
judgment resulting from any suit, action or proceeding, and each party hereby irrevocably and
unconditionally agrees that all Claims in respect of any such suit, action or proceeding may be
heard and determined in a Delaware Court. No party may move to (a) transfer any such suit, action
or proceeding from a Delaware Court to another jurisdiction, (b) consolidate any such suit, action
or proceeding brought in a Delaware Court with a suit, action or proceeding in another jurisdiction
or (c) dismiss any such suit, action or proceeding brought in a Delaware Court for the purpose of
bringing the same in another jurisdiction. Each party hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, (i) any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or
relating to this Agreement in a Delaware Court, (ii) the defense of an inconvenient forum to the
maintenance of such suit, action or proceeding in any such court and (iii) the right to object,
with respect to such suit, action or proceeding, that such court does not have jurisdiction over
such party. Each party irrevocably consents to service of process in any manner permitted by Law.
SECTION 9.13 Waiver of Jury Trial. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THE ACTIONS OF PARENT OR THE
COMPANY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT THEREOF.
SECTION 9.14 Counterparts. This Agreement may be executed in one or more counterparts, and by the different parties hereto
in separate counterparts, each of which when executed shall be deemed to be an original but all of
which taken together shall constitute one and the same agreement. Signatures delivered by
facsimile or in portable document format (“pdf”) shall be binding for all purposes hereof.
SECTION 9.15 Enforcement of Agreement; Remedies. The parties hereto agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with its specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction
or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and
provisions hereof in any Delaware Court without bond or other security being required, this being
in addition to any other remedy to which they are entitled at law or in equity. Without limiting
the foregoing, it is
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explicitly agreed that the Company shall be entitled to specific performance
of Parent’s and MergerSub’s obligations to fund the Offer and the Merger and to consummate the
Offer and the Merger. Each of the parties agrees that it will not oppose the granting of an
injunction, specific performance or other equitable relief on the basis that (i) the other party
has an adequate remedy at law or (ii) an injunction, an award of specific performance or other
equitable relief is not an appropriate remedy for any reason at law or equity. All rights, powers
and remedies provided by this Agreement or otherwise available in respect hereof in law or at
equity shall be cumulative and not alternative, and the exercise of any thereof by any party shall
not preclude the simultaneous or later exercise of any other such right, power or remedy by such
party.
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, Parent, MergerSub and the Company have caused this Agreement to be
executed as of the date first written above by their respective officers thereunto duly authorized.
TOMY COMPANY, LTD. |
||||
By: | /s/ Kantaro Tomiyama | |||
Name: | Kantaro Tomiyama | |||
Title: | President & C.E.O. | |||
GALAXY DREAM CORPORATION |
||||
By: | /s/ Kantaro Tomiyama | |||
Name: | Kantaro Tomiyama | |||
Title: | President | |||
RC2 CORPORATION |
||||
By: | /s/ Xxxxxx X. Xxxxxxxxx | |||
Name: | Xxxxxx X. Xxxxxxxxx | |||
Title: | CEO | |||
Signature Page to Agreement and Plan of Merger
ANNEX I
CONDITIONS OF THE OFFER
Notwithstanding any other provisions of the Offer, and in addition to (and not in limitation
of) MergerSub’s right to extend and amend the Offer at any time in its sole discretion (subject to
the provisions of the Agreement), MergerSub shall not be required to accept for payment or, subject
to any applicable rules and regulations of the SEC, including Rule 14e-1(c) under the Exchange Act
(relating to MergerSub’s obligation to pay for or return tendered shares of Company Common Stock
after termination or withdrawal of the Offer), pay for, and may delay the acceptance for payment of
or, subject to the restriction referred to above, the payment for, any validly tendered shares of
Company Common Stock if by the expiration of the Offer (as it may be extended in accordance with
the requirements of Section 1.01), (i) the Minimum Condition shall not be satisfied, (ii)(A) any
applicable waiting period under the HSR Act shall not have expired or been terminated or (B) all
approvals, clearances, filings or waiting periods or consents of Governmental Authorities required
pursuant to any Foreign Antitrust Laws applicable to the Transactions shall not have expired, be
deemed expired, or been made or received or deemed received, as the case may be or (iii) at any
time on or after the date of the Agreement and prior to the acceptance for payment of shares of
Company Common Stock pursuant to the Offer, any of the following events shall occur and be
continuing:
(a) there shall be any Law or Order enacted, entered, enforced, promulgated or deemed
applicable by any Governmental Authority to the Offer, the Merger or the Transactions, or any other
action shall be taken by any Governmental Authority that is reasonably likely to result, directly
or indirectly, in (i) restraining or prohibiting MergerSub’s or Parent’s ownership or operation (or
that of any of their respective Subsidiaries or affiliates) of all or a material portion of the
Company’s and the Company Subsidiaries’ businesses or assets, or to compel Parent or MergerSub or
their respective Subsidiaries and affiliates to dispose of or hold separate any material portion of
the business or assets of the Company or Parent and their respective Subsidiaries, (ii) restraining
or prohibiting the acquisition by Parent or MergerSub of any shares of Company Common Stock under
the Offer or the making or consummation of the Offer or the Merger, (iii) imposing material
limitations on the ability of MergerSub, or rendering MergerSub unable, to accept for payment, pay
for or purchase some or all of the shares of Company Common Stock pursuant to the Offer and the
Merger, or (iv) imposing material limitations on the ability of MergerSub or Parent to exercise
full rights of ownership of the shares of Company Common Stock, including the right to vote the
shares of Company Common Stock purchased by it on all matters properly presented to the Company’s
stockholders;
(b) since the date of the Agreement, there shall have occurred any change, event, development,
effect, condition, action, violation, inaccuracy, circumstance or occurrence which has had, or
which would reasonably be expected to have, individually or in the aggregate, a Company Material
Adverse Effect;
(c) a Triggering Event shall have occurred;
(d) (i) the representations and warranties of the Company set forth in Sections
3.03(a) or 3.03(c) shall not be true and correct in all respects (except for any de
minimis inaccuracy) at and as of the date of this Agreement and at and as of such time on or after
the date of the Agreement as though made at and as of such time (except to the extent expressly
made as of an earlier date, in which case, at and as of such earlier date), (ii) any of the
representations and warranties of the Company in Section 3.01(a) that is qualified as to
“materiality” or “Company Material Adverse Effect” shall not be true and correct in all respects,
or any such representation or warranty that is not so qualified as to “materiality” or “Company
Material Adverse Effect” shall not be true and correct in all material respects, in each case, at
and as of the date of this Agreement and at and as of such time on or after the date of the
Agreement as though made at and as of such time (except to the extent expressly made as of an
earlier date, in which case, at and as of such earlier date) and (iii) any other representation and
warranty of the Company in Article III (without giving effect to any qualification as to
“materiality” or “Company Material Adverse Effect” qualifiers set forth therein) shall not be true
and correct in all respects at and as of the date of this Agreement and at and as of such time on
or after the date of the Agreement as though made at and as of such time (except to the extent
expressly made as of an earlier date, in which case, at and as of such earlier date), except where
the failure to be so true and correct would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect;
(e) the Company shall have breached or failed, in any material respect, to perform or to
comply with its agreements and covenants to be performed or complied with by it under the Agreement
at or prior to the Offer Closing;
(f) the Company shall have terminated or amended any of the New Employment Agreements or
waived any provision thereof (except, in each case, with the prior written consent of Parent); or
(g) the Agreement shall have been terminated in accordance with its terms.
At the request of Parent or MergerSub the Company shall deliver to Parent a certificate
executed on behalf of the Company by the chief executive officer of the Company certifying that
none of the conditions set forth in clauses (b), (d) and (e) above shall have occurred and be
continuing at the expiration of the Offer (as extended).
The foregoing conditions are for the sole benefit of Parent and MergerSub, may be asserted by
Parent or MergerSub regardless of the circumstances giving rise to such condition, and may be
waived by Parent or MergerSub in whole or in part at any time and from time to time in the sole
discretion of Parent or MergerSub, subject in each case to the terms of the Agreement. The failure
by Parent or MergerSub 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 used in this Annex I shall have the meanings set forth in the
Agreement and Plan of Merger to which this Annex I is annexed.
EXHIBIT B
SECOND AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
RC2 CORPORATION
FIRST: The name of the Corporation is RC2 Corporation (the “Corporation”).
SECOND: The address of the registered office of the Corporation in the State of Delaware is
0000 Xxxxxx Xxxxxx, in the City of Wilmington, County of New Castle. The name of its registered
agent at that address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or activity for which a
corporation may be organized under the General Corporation Law of the State of Delaware as set
forth in Title 8 of the Delaware Code (the “GCL”).
FOURTH:
The total number of shares of stock which the Corporation shall have authority to issue is one thousand (1000) shares of Common Stock, each
having a par value of one cent ($0.01).
FIFTH: The following provisions are inserted for the management of the business and the
conduct of the affairs of the Corporation, and for further definition, limitation and regulation of
the powers of the Corporation and of its directors and stockholders:
(1) The business and affairs of the Corporation shall be managed by or under the direction of the
Board of Directors.
(2) The directors shall have concurrent power with the stockholders to make, alter, amend, change,
add to or repeal the By-Laws of the Corporation.
(3) The number of directors of the Corporation shall be as from time to time fixed by, or in the
manner provided in, the By-Laws of the
Corporation. Election of directors need not be by written ballot unless the By-Laws so provide.
(4) In addition to the powers and authority hereinbefore or by statute expressly conferred upon
them, the directors are hereby empowered to exercise all such powers and do all such acts and
things as may be exercised or done by the Corporation, subject, nevertheless, to the provisions of
the GCL, this Certificate of Incorporation, and any By-Laws adopted by the stockholders; provided,
however, that no By-Laws hereafter adopted by the stockholders shall invalidate any prior act of
the directors which would have been valid if such By-Laws had not been adopted.
SIXTH: Meetings of stockholders may be held within or without the State of Delaware, as the
By-Laws may provide. The books of the Corporation may be kept (subject to any provision contained
in the GCL) outside the State of Delaware at such place or places as may be designated from time to
time by the Board of Directors or in the By-Laws of the Corporation.
SEVENTH: The Corporation reserves the right to amend, alter, change or repeal any provision
contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by
statute, and all rights conferred upon stockholders herein are granted subject to this reservation.
EXHIBIT C
Xxxxxx Xxxxxxxxx:
|
The sum of (i) that number of shares of Restricted Stock, (ii) that number of Company RSUs that would otherwise have an RSU Cancellation Value and (iii) that number of Company Options and Company SARs that would otherwise have an Option/SAR Cancellation Value equal to $3,500,000 in the aggregate shall not vest and shall be cancelled at the Effective Time. | |
Xxxxx Xxxxxxxx
|
The sum of (i) that number of shares of Restricted Stock, (ii) that number of Company RSUs that would otherwise have an RSU Cancellation Value and (iii) that number of Company Options and Company SARs that would otherwise have an Option/SAR Cancellation Value equal to $3,500,000 in the aggregate shall not vest and shall be cancelled at the Effective Time. | |
Xxxxx Xxxxxxxxx:
|
The sum of (i) that number of shares of Restricted Stock, (ii) that number of Company RSUs that would otherwise have an RSU Cancellation Value and (iii) that number of Company Options and Company SARs that would otherwise have an Option/SAR Cancellation Value equal to $1,000,000 in the aggregate shall not vest and shall be cancelled at the Effective Time. | |
Xxxx Xxxxxx:
|
The sum of (i) that number of shares of Restricted Stock, (ii) that number of Company RSUs that would otherwise have an RSU Cancellation Value and (iii) that number of Company Options and Company SARs that would otherwise have an Option/SAR Cancellation Value equal to $1,000,000 in the aggregate shall not vest and shall be cancelled at the Effective Time. | |
Xxxxxx Xx:
|
The sum of (i) that number of shares of Restricted Stock, (ii) that number of Company RSUs that would otherwise have an RSU Cancellation Value and (iii) that number of Company Options and Company SARs that would otherwise have an Option/SAR Cancellation Value equal to $1,000,000 in the aggregate shall not vest and shall be cancelled at the Effective Time. | |
Xxxxx Xxxxxxx:
|
The sum of (i) that number of shares of Restricted Stock, (ii) that number of Company RSUs that would otherwise have an RSU Cancellation Value and (iii) that number of Company Options and Company SARs that would otherwise have an Option/SAR Cancellation Value equal to $150,000 in the aggregate shall not vest and shall be cancelled at the Effective Time. | |
Xxxx Xxxxxx:
|
The sum of (i) that number of shares of Restricted Stock, (ii) that number of Company RSUs that would otherwise have an RSU Cancellation Value and (iii) that number of Company Options and Company SARs that would otherwise have an Option/SAR Cancellation Value equal to $150,000 in the aggregate shall not vest and shall be cancelled at the Effective Time. |
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