Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
EMULEX CORPORATION
AVIARY ACQUISITION CORP.
AND VIXEL CORPORATION
DATED AS OF OCTOBER 8, 2003
INDEX OF DEFINED TERMS
Acquisition Agreement.........................................................44
Acquisition Proposal..........................................................42
Action of Divestiture.........................................................46
affiliates....................................................................54
Agreement......................................................................1
Appointment Time...............................................................5
Assignee......................................................................56
Audit.........................................................................26
Balance Sheet Date............................................................18
Certificate of Merger..........................................................7
Certificates..................................................................10
Closing........................................................................7
Closing Date...................................................................7
COBRA.........................................................................28
Code..........................................................................26
Common Stock...................................................................1
Company........................................................................1
Company Agreement.............................................................33
Company Authorizations........................................................21
Company Balance Sheet.........................................................18
Company Board of Directors.....................................................1
Company Capital Stock.........................................................14
Company Disclosure Letter.....................................................13
Company Employee Plans........................................................27
Company ESPP..................................................................11
Company Financials............................................................18
Company Intellectual Property Rights..........................................22
Company Option................................................................11
Company Options...............................................................11
Company SEC Reports...........................................................17
Company Technology............................................................22
Company Trademarks............................................................22
Company Warrants..............................................................12
Computer Software.............................................................22
Confidentiality Agreement.....................................................43
Copyrights....................................................................22
Current Annual Premium Amount.................................................48
DGCL...........................................................................1
Dissenting Shares.............................................................11
Effective Time.................................................................7
Encumbrances..................................................................15
Environmental Claims..........................................................25
Environmental Laws............................................................25
ERISA.........................................................................27
ERISA Affiliate...............................................................27
Exchange Act...................................................................2
Expense Fee...................................................................52
Fully Diluted Basis............................................................3
GAAP..........................................................................18
Governmental Entity...........................................................17
group.........................................................................54
HSR Act.......................................................................17
Indebtedness..................................................................15
Indemnified Parties...........................................................47
Independent Directors..........................................................5
Initial Expiration Date........................................................2
Intellectual Property Rights..................................................22
IRS...........................................................................28
knowledge.....................................................................54
Legal Requirement.............................................................47
License Agreements............................................................22
Material Adverse Effect.......................................................54
Materials of Environmental Concern............................................24
Merger.........................................................................6
Merger Agreement...............................................................3
Merger Consideration...........................................................9
Minimum Condition..............................................................3
Nasdaq.........................................................................5
Non-Competition Agreements.....................................................2
NYSE..........................................................................12
Offer..........................................................................1
Offer Documents................................................................4
Offer Price....................................................................1
Offer to Purchase..............................................................3
Option Exchange Ratio.........................................................12
Option Plans..................................................................11
Parent.........................................................................1
Parent Common Stock...........................................................11
Patents.......................................................................22
Paying Agent...................................................................9
Payment Fund...................................................................9
person........................................................................55
Preferred Stock...............................................................14
Proxy Statement................................................................8
Purchaser......................................................................1
Purchaser Common Stock.........................................................9
Purchaser Option...............................................................2
Real Property.................................................................21
Registered Company IP.........................................................22
Regulation M-A.................................................................4
Representatives...............................................................42
Rights.........................................................................1
Rights Agreement...............................................................1
Schedule 14D-9.................................................................4
Schedule TO....................................................................4
SEC............................................................................3
Section 16 Affiliate..........................................................13
Securities Act................................................................17
Series A Preferred Stock......................................................14
Series B Preferred Stock.......................................................1
Shares.........................................................................1
Special Meeting................................................................7
Stockholder....................................................................1
Stockholders Agreements........................................................1
subsidiary....................................................................55
Superior Proposal.............................................................43
Surviving Corporation..........................................................6
Takeover Proposal.............................................................43
Tax...........................................................................26
Tax Authority.................................................................26
Tax Returns...................................................................27
Taxes.........................................................................26
Technology....................................................................22
Termination Date..............................................................50
Termination Fee...............................................................52
the business of...............................................................54
Trade Secrets.................................................................22
Trademarks....................................................................22
Transactions..................................................................55
Voting Debt...................................................................15
WARN Act......................................................................30
TABLE OF CONTENTS
Page
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ARTICLE I THE OFFER AND THE MERGER.............................................2
1.1 The Offer.............................................................2
1.2 Company Actions.......................................................4
1.3 Directors.............................................................5
1.4 The Merger............................................................6
1.5 Effective Time........................................................7
1.6 Closing...............................................................7
1.7 Directors and Officers of the Surviving Corporation...................7
1.8 Subsequent Actions....................................................7
1.9 Stockholders' Meeting.................................................7
1.10 Merger Without Meeting of Stockholders................................8
ARTICLE II CONVERSION OF SECURITIES............................................9
2.1 Conversion of Capital Stock...........................................9
2.2 Exchange of Certificates..............................................9
2.3 Dissenting Shares....................................................11
2.4 Stock Option and Other Plans.........................................11
2.5 Company Warrants.....................................................12
2.6 Section 16...........................................................13
2.7 Withholding..........................................................13
2.8 Transfer Taxes.......................................................13
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY.....................13
3.1 Organization, Standing and Power.....................................14
3.2 Capitalization.......................................................14
3.3 Authorization; Validity of Agreement; Company Action.................16
3.4 Board Approvals......................................................16
3.5 Required Vote........................................................16
3.6 Consents and Approvals; No Violations................................17
3.7 SEC Filings; Company Financial Statements............................17
3.8 Absence of Certain Changes...........................................19
3.9 Absence of Undisclosed Liabilities...................................20
3.10 Litigation...........................................................21
3.11 Restrictions on Business Activities..................................21
3.12 Governmental Authorization...........................................21
3.13 Real and Personal Property...........................................21
3.14 Technology and Intellectual Property.................................22
3.15 Environmental Matters................................................24
3.16 Taxes................................................................25
3.17 Employee Benefit Plans...............................................27
3.18 Certain Agreements Affected by the Merger............................29
3.19 Employee Matters.....................................................29
3.20 Potential Conflict of Interest.......................................31
3.21 Insurance............................................................31
3.22 Compliance With Laws.................................................32
3.23 Minute Books.........................................................32
3.24 Complete Copies of Materials.........................................32
3.25 Brokers' and Finders' Fees...........................................32
3.26 Customers and Suppliers..............................................32
3.27 Material Contracts...................................................33
3.28 Third Party Consents.................................................33
3.29 Product Releases.....................................................33
3.30 Company Design Wins..................................................33
3.31 Orders, Commitments and Returns......................................34
3.32 Support, Maintenance and Warranty Obligations........................34
3.33 Inventory............................................................34
3.34 Accounts Receivable..................................................34
3.35 Information in the Proxy Statement...................................34
3.36 Information in the Offer Documents and the Schedule 14D-9............35
3.37 Opinion of Financial Advisor.........................................35
3.38 Personnel............................................................35
3.39 Rights Agreement.....................................................35
3.40 Absence of Questionable Payments.....................................36
3.41 Representations Complete.............................................36
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT...........................36
4.1 Corporate Existence..................................................36
4.2 Corporate Authorization..............................................36
4.3 Consents and Approvals; No Violations................................37
4.4 Information in the Proxy Statement...................................37
4.5 Information in the Offer Documents...................................37
4.6 Financing............................................................37
4.7 DGCL 203.............................................................37
ARTICLE V CONDUCT PRIOR TO THE EFFECTIVE TIME.................................38
5.1 Conduct of Business by the Company...................................38
5.2 No Solicitation......................................................42
ARTICLE VI ADDITIONAL AGREEMENTS..............................................44
6.1 Confidentiality; Access to Information...............................44
6.2 Public Disclosure....................................................45
6.3 Reasonable Efforts; Notification.....................................46
6.4 Indemnification......................................................47
6.5 Litigation...........................................................48
6.6 Interim Directors....................................................48
6.7 Resignation of Directors.............................................48
6.8 Rights Agreement.....................................................48
6.9 Benefit Plans........................................................48
6.10 Guarantee of Performance.............................................49
ARTICLE VII CONDITIONS........................................................49
7.1 Conditions to Obligations of Each Party to Effect the Merger.........49
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER................................50
8.1 Termination..........................................................50
8.2 Effect of Termination................................................51
8.3 Fees and Expenses....................................................52
ARTICLE IX GENERAL PROVISIONS.................................................53
9.1 Non-Survival of Representations and Warranties.......................53
9.2 Extension; Waiver....................................................53
9.3 Notices..............................................................53
9.4 Interpretation; Certain Defined Terms................................54
9.5 Counterparts.........................................................55
9.6 Entire Agreement; Third Party Beneficiaries..........................55
9.7 Severability.........................................................55
9.8 Other Remedies; Specific Performance.................................56
9.9 Governing Law; Venue.................................................56
9.10 Rules of Construction................................................56
9.11 Assignment...........................................................56
9.12 Amendment and Modification...........................................57
9.13 No Waiver............................................................57
9.14 Waiver of Jury Trial.................................................57
INDEX OF EXHIBITS
Exhibit A Form of Stockholders Agreement
Exhibit B Form of Purchaser Option Agreement
Exhibit C Form of Non-Competition Agreement
Exhibit D Form of Certificate of Incorporation of Surviving Corporation
Exhibit E Forms of Termination Fee Note and Security Agreement
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), is entered into
as of October 8, 2003 by and among Emulex Corporation, a Delaware corporation
("Parent"), Aviary Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of Parent ("Purchaser"), and Vixel Corporation, a Delaware
corporation (the "Company").
RECITALS
A. The Board of Directors of each of Parent, Purchaser and the Company
has approved, and deems it advisable and in the best interests of its respective
stockholders to consummate, the acquisition of the Company by Parent upon the
terms and subject to the conditions set forth herein.
B. In furtherance thereof, it is proposed that Purchaser commence a
cash tender offer (as it may be amended from time to time as permitted by this
Agreement, the "Offer") to acquire (i) all shares of the issued and outstanding
common stock, par value $.0015 per share (the "Common Stock"), of the Company
(together with any associated preferred stock or other rights (the "Rights")
issued pursuant to the Rights Agreement, dated as of November 15, 2000, between
the Company and Computer Share Trust Company, Inc. (as the same has been amended
through the date hereof, the "Rights Agreement")) and (ii) all shares of the
issued and outstanding Series B convertible preferred stock, par value $.001 per
share (the "Series B Preferred Stock" and, together with the Common Stock and
the associated Rights, the "Shares"), for $10.00 per Share, net to the seller
thereof in cash (such price, or any such higher price per Share as may be paid
in the Offer, referred to herein as the "Offer Price"), subject to the terms and
conditions of this Agreement.
C. The Board of Directors of each of Parent, Purchaser and the Company
has approved this Agreement, the Purchaser Option (as defined in Recital F) and
the Transactions (as defined in Section 9.4(h)), including the Merger (as
defined in Section 1.4) following the Offer in accordance with the Delaware
General Corporation Law ("DGCL") and upon the terms and subject to the
conditions set forth herein. Such approval of this Agreement, the Purchaser
Option and the Transactions, including the Merger, by the Board of Directors of
the Company (the "Company Board of Directors") was unanimous.
D. The Company Board of Directors has unanimously determined that the
consideration to be paid for each Share in the Offer and the Merger is fair to
and in the best interests of the Company and the holders of such Shares and has
recommended that the holders of such Shares accept the Offer and tender their
Shares pursuant to the Offer and has further unanimously determined that this
Agreement is advisable and recommended that, following the Offer, the
stockholders of the Company approve and adopt this Agreement and each of the
Transactions upon the terms and subject to the conditions set forth herein.
E. Contemporaneously with the execution and delivery of this Agreement,
and as a condition and inducement to Parent's and Purchaser's willingness to
enter into this Agreement, certain stockholders of the Company (each, a
"Stockholder") are entering into a Stockholders Agreement (the "Stockholders
Agreement") in the form attached hereto as Exhibit A, pursuant to
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which each such Stockholder has agreed, among other things, to tender his, her
or its Shares in the Offer and to grant Parent a proxy with respect to the
voting of such Shares in favor of the Merger upon the terms and subject to the
conditions set forth therein.
F. As a condition and further inducement to Parent and Purchaser to
enter into this Agreement and incur the obligations set forth herein,
concurrently with the execution and delivery of this Agreement, Purchaser and
the Company are entering into a Stock Option Agreement in the form of Exhibit B
hereto (the "Purchaser Option"), pursuant to which, among other things, the
Company has granted Purchaser an option to purchase certain newly-issued shares
of Common Stock and Series B Preferred Stock, subject to certain conditions.
G. In addition, contemporaneously with the execution and delivery of
this Agreement, and as a condition and inducement to Parent's and Purchaser's
willingness to enter into this Agreement, certain employees of the Company are
entering into Non-Competition Agreements with Parent in the forms attached
hereto as Exhibit C (collectively, the "Non-Competition Agreements").
H. The Company, Parent and Purchaser desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer, the Merger and the other Transactions.
NOW, THEREFORE, in consideration of the foregoing and the respective
covenants, agreements, representations and warranties set forth herein, the
parties agree as follows:
ARTICLE I
THE OFFER AND THE MERGER
1.1 The Offer.
(a) Provided that this Agreement shall not have been
terminated in accordance with Section 8.1 and none of the events set forth in
Annex I hereto shall have occurred and be continuing, Purchaser shall commence
(within the meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as
amended (together with the rules and regulations promulgated thereunder, the
"Exchange Act")) the Offer as promptly as practicable on or after October 15,
2003 and the Offer shall remain open at least twenty (20) business days (as
defined in Rule 14d-1(g)(3) of the Exchange Act) from commencement of the Offer
(the "Initial Expiration Date"). The obligation of Purchaser to accept for
payment and to pay for any Shares validly tendered and not withdrawn prior to
the expiration of the Offer (as it may be extended in accordance with
requirements of this Section 1.1(a)) shall be subject only to (i) there being
validly tendered and not withdrawn prior to the expiration of the Offer (x) that
number of shares of Common Stock which, together with any shares of Common Stock
then owned by Parent or Purchaser (without giving effect to shares subject to
purchase under the Purchaser Option or the Stockholders Agreements), represents
greater than 50.1% of the shares of Common Stock outstanding on a Fully Diluted
Basis and (y) there being validly tendered and not withdrawn prior to the
expiration of the Offer that number of shares of Series B Preferred Stock which,
together with any shares of Series B Preferred then owned by Parent or Purchaser
(without giving effect to
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shares subject to purchase under the Purchaser Option or the Stockholders
Agreements), represents greater than 50.1% of the Series B Preferred Stock
outstanding on a Fully Diluted Basis (clauses (x) and (y) together, the "Minimum
Condition"); and (ii) the other conditions set forth in Annex I hereto. As used
in this Agreement, "Fully Diluted Basis" shall refer, with respect to the Common
Stock, to the number of shares of Common Stock issued and outstanding at any
time after taking into account all shares of Common Stock issuable upon the
conversion of convertible securities (other than the shares of Series B
Preferred Stock) or upon the exercise of any options, warrants or other rights
to purchase shares of Common Stock (whether or not exercised or converted at the
time of determination) and, with respect to the Series B Preferred Stock, to the
number of shares of Series B Preferred Stock issued and outstanding at any time
after taking into account all shares of Series B Preferred Stock issuable upon
the conversion of convertible securities or upon the exercise of any options,
warrants or other rights to purchase shares of Series B Preferred Stock (whether
or not converted at the time of determination). Subject to the prior
satisfaction of the Minimum Condition and the prior satisfaction or waiver by
Parent or Purchaser of the other conditions of the Offer set forth in Annex I
hereto, Purchaser shall consummate the Offer in accordance with its terms and
accept for payment and pay for all Shares tendered and not withdrawn promptly
following the acceptance of Shares for payment pursuant to the Offer. The Offer
shall be made by means of an offer to purchase (the "Offer to Purchase") that
contains the terms set forth in this Agreement, the Minimum Condition and the
other conditions set forth in Annex I hereto. Parent expressly reserves the
right to waive any of such conditions, to increase the Offer Price and to make
any other changes in the terms of the Offer; provided, however, that Purchaser
shall not, and Parent shall cause Purchaser not to, waive the Minimum Condition,
decrease the Offer Price, change the form of consideration payable in the Offer,
decrease the number of Shares sought in the Offer, impose additional conditions
to the Offer, extend the Offer beyond the Initial Expiration Date except as set
forth below, or amend any other condition of the Offer in any manner adverse to
the holders of the Shares, in each case without the prior written consent of the
Company (such consent to be authorized by the Company Board of Directors or a
duly authorized committee thereof). Notwithstanding the foregoing, Purchaser
may, without the consent of the Company, (i) if, at any scheduled expiration of
the Offer any of the conditions to Purchaser's obligation to accept Shares for
payment shall not be satisfied or waived, extend the Offer beyond the Initial
Expiration Date for a time period reasonably necessary to permit such condition
to be satisfied, (ii) extend the Offer for any period required by any rule,
regulation or interpretation of the United States Securities and Exchange
Commission ("SEC"), or the staff thereof, applicable to the Offer or (iii)
extend (or re-extend) the Offer for an aggregate period of not more than five
(5) business days beyond the latest applicable date that would otherwise be
permitted under clause (i) or (ii) of this sentence, if, as of such date, all of
the conditions to Purchaser's obligations to accept Shares for payment are
satisfied or waived, but there shall not have been validly tendered and not
withdrawn pursuant to the Offer that number of Shares necessary on a Fully
Diluted Basis to permit the Merger to be effected without a meeting of the
Company's stockholders in accordance with the DGCL. Purchaser may, without the
consent of the Company, extend the Offer in accordance with Rule 14d-11 under
the Exchange Act. In addition, the Offer Price may be increased and the Offer
may be extended to the extent required by law in connection with such increase,
in each case without the consent of the Company.
(b) As soon as practicable after the date the Offer is
commenced, Parent and Purchaser shall file with the SEC, pursuant to Regulation
M-A under the Exchange Act
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("Regulation M-A"), a Tender Offer Statement on Schedule TO with respect to the
Offer (together with all amendments, supplements and exhibits thereto, the
"Schedule TO"). The Schedule TO shall include the summary term sheet required
under Regulation M-A and, as exhibits, the Offer to Purchase and a form of
letter of transmittal and summary advertisement (collectively, together with any
amendments and supplements thereto, the "Offer Documents"). The Company hereby
consents to the inclusion in the Offer Documents of the recommendation referred
to in clause (c) of Section 3.4 and the approval of the Board of Directors
referred to in Section 3.4. Parent and Purchaser agree to take all steps
necessary to cause the Offer Documents to be filed with the SEC and disseminated
to holders of Shares, in each case as and to the extent required by applicable
federal securities laws. Parent and Purchaser, 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 and to the extent that it shall have become false
or misleading in any material respect or as otherwise required by law. Parent
and Purchaser further agree 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, in each case as and to the extent required by applicable federal
securities laws. The Company and its counsel shall be given a reasonable
opportunity to review the Schedule TO before it is filed with the SEC. In
addition, Parent and Purchaser agree to provide the Company and its counsel with
any comments, whether written or oral, that Parent, Purchaser or their counsel
may receive from time to time from the SEC or its staff with respect to the
Offer Documents promptly after receipt of such comments, and any written or oral
responses thereto.
1.2 Company Actions.
(a) On the date the Offer is commenced, 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 5.2, contain the
recommendation referred to in clause (c) of Section 3.4 and the approval of the
Board of Directors referred to in Section 3.4. The Company further agrees to
take all steps necessary to cause the Schedule 14D-9 to be filed with the SEC
and disseminated to holders of Shares, in each case as and to the extent
required by applicable federal securities laws. The Company, on the one hand,
and Parent and Purchaser, on the other hand, agree to promptly correct any
information provided by it for use in the Schedule 14D-9 if and to the extent
that it shall have become false or misleading in any material respect or as
otherwise required by 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, in each case as and to the extent
required by applicable federal securities laws. Parent, Purchaser and their
counsel shall be given the opportunity to review and comment on the Schedule
14D-9 and any amendment thereto before it is filed with the SEC. In addition,
the Company agrees to provide Parent, Purchaser and their counsel in writing
with any comments, whether written or oral, 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 receipt of such comments, and to consult with Parent,
Purchaser and their counsel prior to responding to any such comments, either in
written or oral form.
(b) In connection with the Offer, the Company shall promptly
furnish or cause to be furnished to Parent or Purchaser mailing labels, security
position listings and all available
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listings and computer files containing the names and addresses of the record
holders of the Shares as of a recent date, and shall promptly furnish Parent or
Purchaser with such information and assistance (including, but not limited to,
lists of holders of the Shares, updated periodically, and their addresses,
mailing labels and lists of security positions) as Parent or Purchaser or their
agent(s) may reasonably request.
1.3 Directors.
(a) Effective upon the purchase of and payment for any Shares
by Parent or Purchaser or any of their affiliates pursuant to the Offer (the
"Appointment Time"), Parent shall be entitled to elect or designate such number
of directors, rounded up to the next whole number, on the Company Board of
Directors as is equal to the product of the total number of directors on the
Company Board of Directors (giving effect to the directors elected or designated
by Parent pursuant to this sentence) multiplied by the percentage that the
aggregate number of Shares beneficially owned (within the meaning of Rule 13d-3
under the Exchange Act) by Purchaser, Parent and any of their affiliates bears
to the total number of Shares then outstanding. The Company shall, upon Parent's
request, use all reasonable efforts to promptly increase the size of the Company
Board of Directors, including by amending the Bylaws of the Company if necessary
so as to increase the size of the Company Board of Directors, or use all
reasonable efforts to promptly secure the written 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 of Directors, and shall use
all reasonable efforts to cause Parent's designees to be so elected or
designated at the Appointment Time. At the Appointment Time, the Company shall,
upon Parent's request, also use all reasonable efforts to 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 Directors of (i) each committee
of the Company Board of Directors; (ii) each board of directors (or similar
body) of each Company subsidiary; and (iii) each committee (or similar body) of
each such board, in each case only to the extent permitted by applicable law or
the rules of any stock exchange or trading market on which the Company's common
stock is listed or traded. The Company shall promptly upon execution of this
Agreement take all actions required pursuant to such Section 14(f) of the
Exchange Act and Rule 14f-l promulgated thereunder in order to fulfill its
obligations under this Section 1.3(a), including, but not limited to, mailing to
stockholders (together with the Schedule 14D-9) the information required by
Section 14(f) and Rule 14f-l as is necessary to enable Parent's designees to be
elected or designated to the Company Board of Directors. Parent or Purchaser
shall supply the Company 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-l. The provisions of this Section 1.3(a) are in addition to
and shall not limit any rights that any of Purchaser, Parent or any of their
respective affiliates may have as a holder or beneficial owner of Shares as a
matter of law with respect to the election of directors or otherwise.
(b) In the event that Parent's designees are elected or
designated to the Company Board of Directors, then, until the Effective Time (as
defined in Section 1.5), the Company shall cause the Company Board of Directors
to have at least two (2) directors who are directors on the date hereof
including at least two (2) directors, or such other number as may be required by
the rules of the Nasdaq Stock Market, Inc. (the "Nasdaq"), who are independent
directors for purposes of the continued listing requirements of Nasdaq (the
"Independent Directors");
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provided, however, that if any Independent Director is unable to serve due to
death or disability, the remaining Independent Director(s) shall be entitled to
elect or designate another person (or persons) who serves as a director on the
date hereof to fill such vacancy, and such person (or persons) shall be deemed
to be an Independent Director for purposes of this Agreement. If no Independent
Director then remains, the other directors shall designate two (2) persons, or
such other number as may be required by the rules of the Nasdaq, who are
directors on the date hereof (or, in the event there shall be less than two (2)
directors, or such other number as may be required by the rules of the Nasdaq,
available to fill such vacancies as a result of such persons' deaths,
disabilities or refusals to serve, such smaller number of persons who are
directors on the date hereof) to fill such vacancies and such persons shall be
deemed Independent Directors for purposes of this Agreement. Notwithstanding
anything in this Agreement to the contrary, if Parent's designees constitute a
majority of the Company Board of Directors after the acceptance for payment of
Shares pursuant to the Offer and prior to the Effective Time, then the
affirmative vote of a majority of the Independent Directors (or if only one
exists, then the vote of such Independent Director) shall be required to (i)
amend or terminate this Agreement by the Company; (ii) exercise or waive any of
the Company's rights, benefits or remedies hereunder, if such action would
materially and adversely affect holders of Shares other than Parent or
Purchaser; (iii) amend the Certificate of Incorporation or Bylaws of the Company
if such action would materially and adversely affect holders of Shares other
than Parent or Purchaser; or (iv) take any other action of the Company Board of
Directors under or in connection with this Agreement if such action would
materially and adversely affect holders of Shares other than Parent or
Purchaser; provided, however, that if there shall be no Independent Directors as
a result of such persons' deaths, disabilities or refusal to serve, then such
actions may be effected by a 66-2/3% vote of the entire Company Board of
Directors. The Independent Directors shall have the authority to retain such
counsel and other advisors at the expense of the Company as determined
appropriate by a majority of the Independent Directors.
1.4 The Merger.
(a) Subject to the terms and conditions of this Agreement, at
the Effective Time, the Company and Purchaser shall consummate a merger (the
"Merger") in accordance with the DGCL pursuant to which (i) Purchaser shall be
merged with and into the Company and the separate corporate existence of
Purchaser shall thereupon cease; (ii) the Company shall be the successor or
surviving corporation in the Merger and shall continue to be governed by the
laws of the State of Delaware; (iii) the separate corporate existence of the
Company with all its rights, privileges, immunities, powers and franchises shall
continue unaffected by the Merger; and (iv) the Company shall succeed to and
assume all the rights and obligations of Purchaser. The corporation surviving
the Merger is sometimes hereinafter referred to as the "Surviving Corporation."
The Merger shall have the effects set forth in the DGCL.
(b) The Certificate of Incorporation of the Surviving
Corporation shall be amended in the Merger to read substantially as set forth on
Exhibit D hereto.
(c) The Bylaws of Purchaser, as in effect immediately prior to
the Effective Time, shall be the Bylaws of the Surviving Corporation, except as
to the name of the Surviving Corporation, until thereafter amended as provided
by the DGCL, the Certificate of Incorporation of the Surviving Corporation and
such Bylaws.
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1.5 Effective Time. Parent, Purchaser and the Company shall cause an
appropriate certificate of merger or certificate of ownership and merger (the
"Certificate of Merger") to be executed and filed on the Closing Date (as
defined in Section 1.6) (or on such other date as Parent and the Company may
agree) with the Secretary of State of the State of Delaware as provided in the
DGCL. The Merger shall become effective at the time and on the date on which the
Certificate of Merger has been duly filed with the Secretary of State of the
State of Delaware or such time and date as is agreed upon by the parties and
specified in the Certificate of Merger, such time and date hereinafter referred
to as the "Effective Time."
1.6 Closing. The closing of the Merger (the "Closing") will take place
at 9:00 a.m. (California time) on a date to be specified by the parties, such
date to be no later than the second business day after satisfaction or waiver of
all of the conditions set forth in Article VII (the "Closing Date"), at the
offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, 000 Xxxxxxxxxx Xxxxxx,
Xxxxx 0000, Xxxx Xxxx, Xxxxxxxxxx 00000, unless another date or place is agreed
to in writing by the parties hereto.
1.7 Directors and Officers of the Surviving Corporation. The directors
of Purchaser immediately prior to the Effective Time shall, from and after the
Effective Time, be the directors of the Surviving Corporation and the officers
of Purchaser immediately prior to the Effective Time shall, from and after the
Effective Time, be officers of the Surviving Corporation, in each case until
their respective successors shall have been duly elected, designated or
qualified, or until their earlier death, resignation or removal in accordance
with the Surviving Corporation's Certificate of Incorporation and Bylaws.
1.8 Subsequent Actions. If at any time after the Effective Time the
Surviving Corporation shall determine, in its sole discretion, or shall be
advised, that any deeds, bills of sale, assignments, assurances or any other
actions or things are necessary or desirable to vest, perfect or confirm of
record or otherwise in the Surviving Corporation its right, title or interest
in, to or under any of the rights, properties or assets of either of the Company
or Purchaser acquired or to be acquired by the Surviving Corporation as a result
of, or in connection with, the Merger or otherwise to carry out this Agreement,
then the officers and directors of the Surviving Corporation shall be authorized
to execute and deliver, in the name and on behalf of either the Company or
Purchaser, all such deeds, bills of sale, instruments of conveyance, assignments
and assurances and to take and do, in the name and on behalf of each such
corporation or otherwise, all such other actions and things as may be necessary
or desirable to vest, perfect or confirm any and all right, title or interest
in, to and under such rights, properties or assets in the Surviving Corporation
or otherwise to carry out this Agreement.
1.9 Stockholders' Meeting.
(a) If required by applicable law in order to consummate the
Merger, the Company, acting through the Company Board of Directors, shall
promptly, in accordance with applicable law and the Company's Certificate of
Incorporation and Bylaws:
(i) duly call, give notice of, convene and hold a
special meeting of its stockholders to consider and take action upon the
approval and adoption of this Agreement and the approval of the Merger (the
"Special Meeting") as soon as reasonably
7
practicable following the acceptance for payment and purchase of Shares by
Purchaser pursuant to the Offer for the purpose of considering and taking action
upon this Agreement;
(ii) prepare and file with the SEC under the Exchange
Act a preliminary proxy or information statement relating to the Merger and this
Agreement and use all reasonable efforts to obtain and furnish the information
required to be included by the SEC in the Proxy Statement (as hereinafter
defined) and, after Parent and its counsel shall have had a reasonable
opportunity to review and comment on the Proxy Statement, 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 (the
"Proxy Statement") to be mailed to its stockholders as promptly as practicable;
(iii) include in the Proxy Statement the unanimous
recommendation of the Company Board of Directors that stockholders of the
Company vote in favor of the approval of the Merger and the approval and
adoption of this Agreement;
(iv) use all reasonable efforts to solicit from holders
of Shares proxies in favor of the Merger and take all other action reasonably
necessary or, in the reasonable opinion of Parent and Purchaser, advisable to
secure the approval of stockholders required by the DGCL and any other
applicable law and the Company's Certificate of Incorporation and Bylaws (if
applicable) to effect the Merger; provided, that the obligations set forth in
clauses (iii) and (iv) of this Section 1.9(a) shall be subject to Sections 1.10
and 5.2; and
(v) at or prior to the Closing, deliver to Parent a
certificate of its corporate secretary setting forth the voting results from the
Special Meeting.
(b) Parent agrees to vote, or cause to be voted, all of the
Shares then owned by it, Purchaser or any of its other subsidiaries in favor of
the approval of the Merger and the adoption of this Agreement.
1.10 Merger Without Meeting of Stockholders. Notwithstanding Section
1.9, in the event that Parent or Purchaser shall acquire at least ninety percent
(90%) of the outstanding shares of each class of capital stock of the Company
entitled to vote on the Merger, pursuant to the Offer or otherwise, the parties
hereto agree that, subject to Article VII, Parent and Purchaser shall take, or
cause to be taken, all necessary and appropriate action 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.
8
ARTICLE II
CONVERSION OF SECURITIES
2.1 Conversion of Capital Stock. As of the Effective Time, by virtue of
the Merger and without any action on the part of the holders of any shares of
common stock, par value $0.01 per share, of Purchaser ("Purchaser Common
Stock"):
(a) Purchaser Common Stock. Each issued and outstanding share of
Purchaser Common Stock shall be converted into and become one fully paid and
nonassessable share of common stock of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Stock. All
Shares that are owned by the Company as treasury stock and any Shares owned by
Parent, Purchaser or any other wholly-owned subsidiary of Parent shall
automatically be cancelled and retired and shall cease to exist, and no
consideration shall be delivered in exchange therefor.
(c) Conversion of Shares. Each issued and outstanding Share (other
than Shares to be cancelled in accordance with Section 2.1(b) and other than
Dissenting Shares (as defined in Section 2.3(a))) shall be converted into the
right to receive the Offer Price, payable to the holder thereof in cash, without
interest and subject to withholding in accordance with Section 2.7 (the "Merger
Consideration"). From and after the Effective Time, all such Shares shall no
longer be outstanding and shall automatically be cancelled and retired and shall
cease to exist, and each holder of a certificate representing any such Shares
shall cease to have any rights with respect thereto, except the right to receive
the Merger Consideration therefor upon the surrender of such certificate in
accordance with Section 2.2.
2.2 Exchange of Certificates.
(a) Paying Agent. Parent shall designate a bank or trust company
reasonably acceptable to the Company to act as agent for the holders of Shares
in connection with the Merger (the "Paying Agent") and to receive the funds to
which holders of Shares shall become entitled pursuant to Section 2.1(c).
Promptly after the Effective Time, Parent or Purchaser shall deposit, or cause
to be deposited, with the Paying Agent cash in immediately available next-day
funds in an amount equal to the aggregate Merger Consideration (the "Payment
Fund"). For purposes of determining the amount of Merger Consideration to be so
deposited, Parent and Purchaser shall assume that no stockholder of the Company
will perfect any right to appraisal of his, her or its Shares. Such funds shall
be invested by the Paying Agent as directed by Parent or the Surviving
Corporation, in its sole discretion, pending payment thereof by the Paying Agent
to the holders of the Shares. In the event the cash in the Payment Fund shall be
insufficient to fully satisfy all of the payment obligations to be made by the
Paying Agent thereunder, then Parent and the Surviving Corporation shall
promptly deposit cash in the Payment Fund in an amount which is equal to the
deficiency. Earnings from such investments shall be the sole and exclusive
property of Parent and the Surviving Corporation, and no part of such earnings
shall accrue to the benefit of holders of Shares.
9
(b) Exchange Procedures. Promptly after the Effective Time, the
Paying Agent shall mail to each holder of record of a certificate or
certificates, which immediately prior to the Effective Time represented
outstanding Shares (the "Certificates"), whose shares were converted pursuant to
Section 2.1(c) into the right to receive the Merger Consideration (i) a letter
of transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Paying Agent and shall be in such form and have such other
provisions as Parent may reasonably specify); and (ii) instructions for
effecting the surrender of the Certificates in exchange for payment of the
Merger Consideration. Upon surrender of a Certificate for cancellation to the
Paying Agent or to such other agent or agents as may be appointed by Parent,
together with such letter of transmittal, duly executed and properly completed,
the holder of such Certificate shall be entitled to receive in exchange therefor
the Merger Consideration, without interest, for each Share formerly represented
by such Certificate and the Certificate so surrendered shall forthwith be
cancelled. Until surrendered as contemplated by this Section 2.2, each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive the Merger Consideration in cash as contemplated by
this Section 2.2, without interest thereon, and shall not evidence any interest
in, or any right to exercise the rights of a stockholder or other equity holder
of the Company or the Surviving Corporation. Notwithstanding the foregoing, any
surrendered Certificate that represents Dissenting Shares shall be returned to
the person surrendering such Certificate.
(c) Transfer Books; No Further Ownership Rights in Shares. At the
Effective Time, there shall be no further registration of transfers of Shares on
the records of the Company. From and after the Effective Time, the holders of
Certificates evidencing ownership of Shares outstanding immediately prior to the
Effective Time shall cease to have any rights with respect to such Shares,
except as otherwise provided for herein or by applicable law. If, after the
Effective Time, Certificates are presented to the Surviving Corporation for any
reason, they shall be cancelled and exchanged as provided in this Article II.
(d) Termination of Fund; No Liability. At any time following one (1)
year after the Effective Time, the Surviving Corporation shall be entitled to
require the Paying Agent to deliver to it any funds (including any interest
received with respect thereto) made available to the Paying Agent and not
disbursed (or for which disbursement is pending subject only to the Paying
Agent's routine administrative procedures) 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 Merger Consideration payable
upon due surrender of their Certificates, without any interest thereon.
Notwithstanding the foregoing, none of Parent, the Surviving Corporation or the
Paying Agent shall be liable to any holder of a Certificate for Merger
Consideration delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law to the extent that such law requires
such delivery.
(e) Lost Certificates. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
Parent, the posting by such person of a bond in such amount as Parent may
reasonably direct as indemnity against any claim that may be made
10
against it with respect to such Certificate, the Paying Agent shall pay in
exchange for such lost, stolen or destroyed Certificate the applicable Merger
Consideration with respect thereto.
2.3 Dissenting Shares.
(a) Notwithstanding anything in this Agreement to the contrary,
Shares outstanding immediately prior to the Effective Time and held by a holder
who has not voted in favor of the Merger or consented thereto in writing and who
complies with Section 262 of the DGCL (the "Dissenting Shares") shall not be
converted into a right to receive the Merger Consideration, unless such holder
fails to perfect or withdraws or otherwise loses his, her or its right to
appraisal. From and after the Effective Time, a stockholder who has properly
exercised such appraisal rights shall not have any rights of a stockholder of
the Company or the Surviving Corporation with respect to such Shares, except
those provided under Section 262 of the DGCL. A holder of Dissenting Shares
shall be entitled to receive payment of the appraised value of such Shares held
by him or her in accordance with Section 262 of the DGCL, unless, after the
Effective Time, such holder fails to perfect or withdraws or loses his, her or
its right to appraisal, in which case such Shares shall be converted into and
represent only the right to receive the Merger Consideration, without interest
thereon, upon surrender of the Certificate or Certificates representing such
Shares pursuant to Section 2.2.
(b) The Company shall give Parent (i) prompt notice of any written
demands for appraisal of any Shares, 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 (ii) the opportunity to participate in the
conduct of all negotiations and proceedings with respect to demands for
appraisal under the DGCL. Except with the prior written consent of Parent, the
Company shall not voluntarily make any payment with respect to any demands for
appraisal or settle or offer to settle any such demands for appraisal.
2.4 Stock Option and Other Plans.
(a) As of the Effective Time, each outstanding stock option, stock
equivalent right or right to acquire Shares (a "Company Option" or "Company
Options") granted under the Company's Amended and Restated 1995 Stock Option
Plan, 1999 Equity Incentive Plan (as amended), 2000 Non-Officer Equity Incentive
Plan and 1999 Employee Stock Purchase Plan ("Company ESPP") (collectively, the
"Option Plans"), whether or not then exercisable or vested, shall (without any
action on the part of the Company) automatically be converted into an option to
purchase Parent common stock, par value $.01 per share ("Parent Common Stock"),
in accordance with this Section 2.4(a). Each Company Option so converted shall
continue to have, and be subject to, similar terms and conditions (including
vesting schedule) as are currently applicable to each such Company Option,
except that, as of the Effective Time, (i) each Company Option shall be
exercisable (or shall become exercisable in accordance with its terms) for that
number of whole shares of Parent Common Stock equal to the product of the number
of shares of Common Stock that were issuable upon exercise of such Company
Option immediately prior to the Effective Time multiplied by the Option Exchange
Ratio (defined below), rounded to the nearest whole number, and (ii) the per
share exercise price for the shares of Parent Common Stock issuable upon
exercise of such Company Option so converted shall be equal to the quotient
determined by dividing the exercise price per share of Common Stock at which
such Company
11
Option was exercisable immediately prior to the Effective Time by the Option
Exchange Ratio, rounded up to the nearest whole cent. As used in this Agreement,
"Option Exchange Ratio" means the quotient determined by dividing the Merger
Consideration by the average closing prices of Parent Common Stock on the New
York Stock Exchange, Inc. ("NYSE") Composite Transaction Tape for the five
business day period ending two days prior the Effective Time. Notwithstanding
the foregoing, the conversion of any Company Options which are "incentive stock
options," within the meaning of Section 422 of the Code, into options to
purchase Parent Common stock shall be made so as not to constitute a
"modification" of such Company Options within the meaning of Section 424 of the
Code.
(b) (i) As of the Effective Time, except as provided in this Section
2.4, all rights under any provision of the Option Plans and any other plan,
program or arrangement providing for the issuance or grant of any other interest
in respect of the capital stock of the Company or any subsidiary of the Company
shall be cancelled. The Company shall take all action necessary to ensure that,
as of and after the Effective Time, except as provided in this Section 2.4, no
person shall have any right under the Option Plans or any other plan, program or
arrangement with respect to equity securities of the Company, the Surviving
Corporation or any subsidiary thereof and (ii) upon completion of the existing
Offering (as defined in the Company ESPP), the Company shall not permit a new
Offering to commence under the Company ESPP without the prior written consent of
Parent.
(c) Parent shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of Parent Common Stock for delivery upon
the exercise of Company Options assumed in accordance with Section 2.4(a).
Promptly after the Effective Time, Parent shall file a registration statement on
Form S-8 (or any successor or other appropriate forms) with respect to the
shares of Parent Common Stock subject to any assumed Company Options.
(d) At or before the Effective Time, the Company shall cause to be
effected any necessary amendments to the Option Plans to give effect to the
foregoing provisions of this Section 2.4.
2.5 Company Warrants. If permitted under the terms of the applicable
governing instruments, the Company shall take all necessary action such that, at
the Effective Time, each holder of an outstanding warrant to purchase shares of
Common Stock (collectively, the "Company Warrants") shall have the right to
receive, in lieu of the shares of Common Stock theretofore issuable upon
exercise of such Company Warrant, an amount per share equal to the excess of the
Merger Consideration over the exercise price per share of such Company Warrant;
provided, however, that to the extent the foregoing is not permissible under the
terms of any such Company Warrant, each such Company Warrant shall, at the
Effective Time, be deemed to constitute a warrant to acquire, upon payment of
the aggregate exercise price of such Company Warrant, and otherwise on the same
terms and conditions as were applicable under such Company Warrant prior to the
Effective Time, the aggregate Merger Consideration that the holder of such
Company Warrant would have been entitled to receive pursuant to Article II of
this Agreement had such holder exercised such Company Warrant in full
immediately prior to the Effective Time. The Company shall deliver to each
holder of a Company Warrant timely notice of the Merger in accordance with the
provisions thereof. The Company shall take all necessary actions to provide that
as of the Effective Time no holder of a Company Warrant will
12
have the right to receive shares of common stock of the Surviving Corporation
upon the exercise of any Company Warrant.
2.6 Section 16. Parent, the Surviving Corporation and the Company shall
each take all such steps as may be required to provide that, with respect to
each Section 16 Affiliate (as defined below), (a) the transactions contemplated
by this section, and (b) any other dispositions of Company equity securities
(including derivative securities) or other acquisitions of Parent equity
securities (including derivative securities) in connection with this Agreement,
shall be exempt under Rule 16b-3 promulgated under the Exchange Act, in
accordance with the terms and conditions set forth in that certain No-Action
Letter, dated January 12, 1999, issued by the SEC to Skadden, Arps, Slate,
Xxxxxxx & Xxxx LLP. For purposes of this Agreement, "Section 16 Affiliate" shall
mean each individual who (a) immediately prior to the Effective Time is a
director or officer of the Company or (b) at the Effective Time will become a
director or officer of Parent or the Surviving Corporation.
2.7 Withholding. The Surviving Corporation, the Paying Agent, and Parent
shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of Shares such amounts as the
Surviving Corporation, the Paying Agent, or Parent has determined is required to
be deducted and withheld with respect to the making of such payment under any
provision of Federal, state, local or foreign tax law. To the extent that
amounts are so withheld by the Surviving Corporation, the Paying Agent, or
Parent such withheld amounts shall be treated for all purposes of this Agreement
as having been paid to the holder of the Shares in respect of which such
deduction and withholding was made by the Surviving Corporation, the Paying
Agent, or Parent, as the case may be.
2.8 Transfer Taxes. If payment of the Offer Price payable to a holder of
Shares pursuant to the Offer or the Merger 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 the Certificate so surrendered shall be properly
endorsed or shall be otherwise in proper form for transfer and that the person
requesting such payment shall have paid all transfer and other Taxes required by
reason of the issuance to a person other than the registered holder of the
Certificate surrendered or shall have established to the satisfaction of Parent
that such Tax either has been paid or is not applicable.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed in that section of the letter of even date herewith
delivered by the Company to Parent and Purchaser prior to the execution and
delivery of this Agreement (the "Company Disclosure Letter") corresponding to
the section of this Agreement to which any of the following representations or
warranties pertain, the Company represents and warrants to Parent and Purchaser
as set forth below. Each exception set forth in the Company Disclosure Letter is
identified by reference to, or has been grouped under a heading referring to, a
specific individual section of this Agreement and relates only to such section
except where it is readily apparent from the text that such disclosure is
relevant to such other sections.
13
3.1 Organization, Standing and Power.
(a) The Company and each of its subsidiaries is a corporation or
other legal entity duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization. Each of the Company and its
subsidiaries has all corporate power and all governmental licenses,
authorizations, permits, consents and approvals to own, lease and operate its
properties and to carry on its business as now being conducted and as currently
proposed to be conducted. The Company and each of its subsidiaries is duly
qualified to do business as a foreign corporation where the character of the
property owned or leased by it or the business conduct or nature of its
activities makes such qualification necessary and is in good standing in each
applicable jurisdiction. Section 3.1(a) of the Company Disclosure Letter sets
forth the name, jurisdiction of incorporation and outstanding capital of each
Company subsidiary and the jurisdictions in which the Company and each of its
subsidiaries is qualified to do business.
(b) The Company has delivered to Parent a true and correct copy of
the Certificate of Incorporation and Bylaws, or other equivalent charter
documents, as applicable, of the Company and each of its subsidiaries, each as
amended to date. Neither the Company nor any of its subsidiaries is in violation
of any of the provisions of its Certificate of Incorporation or Bylaws or
equivalent charter documents, as applicable. Except for the entities identified
in Section 3.1(b) of the Company Disclosure Letter, the Company does not
directly or indirectly own any equity or similar interest in, or any interest
convertible or exchangeable or exercisable for any equity or similar interest
in, any corporation, partnership, joint venture or other business association or
entity.
3.2 Capitalization.
(a) The authorized capital stock of the Company consists of (i)
60,000,000 shares of Common Stock, and (ii) 5,000,000 shares of preferred stock,
par value $.001 per share ("Preferred Stock" ), of which 600,000 are designated
as Series A Junior Participating Preferred Stock (the "Series A Preferred
Stock") and 4,400,000 are designated as the Series B Preferred Stock (the Series
B Preferred Stock together with the Series A Preferred Stock and the Common
Stock, the "Company Capital Stock"). As of the close of business on September
28, 2003, (i) 24,696,691 shares of Common Stock were issued and outstanding
(excluding 1,895,426 shares of Common Stock issued and held in the treasury of
the Company), (ii) no shares of Series A Preferred Stock were issued and
outstanding, (iii) 2,947,651 shares of Series B Preferred Stock were issued and
outstanding, (iv) 1,895,426 shares of Common Stock and no shares of Preferred
Stock were issued and held in the treasury of the Company, (v) 7,184,688 shares
of Common Stock were reserved for issuance pursuant to outstanding Company
Options, (vi) 1,277,183 shares of Common Stock were subject to issuance under
Company Warrants and (vii) 114,539 shares of Common Stock were available for
issuance in the purchase period ending October 31, 2003 under the Company ESPP.
All of the outstanding shares of Company Capital Stock are, and all shares of
Company Capital Stock which may be issued pursuant to the exercise of
outstanding Company Options and Company Warrants will be, when issued in
accordance with the respective terms thereof, duly authorized, validly issued,
fully paid and non-assessable. The rights, preferences and privileges of the
Preferred Stock are as set forth in the Certificate of Incorporation of the
Company and in the Certificate of Designation for each of the Series A
14
Preferred Stock and Series B Preferred Stock. None of the outstanding securities
of the Company has been issued in violation of any federal or state securities
laws.
(b) Except as set forth above, as of the date hereof, (i) there are
no shares of capital stock of the Company authorized, issued or outstanding,
(ii) there are no existing options, warrants, calls, preemptive or similar
rights, bonds, debentures, notes or other indebtedness having general voting
rights or debt convertible into securities having such rights ("Voting Debt") or
subscriptions or other rights, agreements, arrangements or commitments of any
character, relating to the issued or unissued capital stock of the Company
obligating the Company to issue, transfer or sell or cause to be issued,
transferred, sold or repurchased any options or shares of capital stock or
Voting Debt of, or other equity interest in, the Company or securities
convertible into or exchangeable for such shares or equity interests, or
obligating the Company to grant, extend or enter into any such option, warrant,
call, subscription or other right, agreement, arrangement or commitment and
(iii) there are no outstanding contractual obligations of the Company to
repurchase, redeem or otherwise acquire any Company Capital Stock, or other
capital stock of the Company or to provide funds to make any investment (in the
form of a loan, capital contribution or otherwise) in any other entity. All of
the outstanding capital stock of each subsidiary of the Company is owned
directly or indirectly by the Company and each such share owned by the Company
or any of its subsidiaries, is free and clear of all liens, charges, security
interests, options, claims, mortgages, pledges, assessments, charges, adverse
claims, rights of others or restrictions (whether on voting, sale, transfer,
disposition or otherwise) or other encumbrances or restrictions of any nature
whatsoever whether imposed by agreement, understanding, law or equity, or any
conditional sale contract, title retention contract or other contract to give or
refrain from giving any of the foregoing ("Encumbrances") and is validly issued,
fully paid and nonassessable. There are no outstanding options, rights or
agreements of any kind relating to the issuance, sale or transfer of any capital
stock or other equity securities of such Company subsidiary to any person other
than the Company.
(c) There are no voting trusts or other agreements or understandings
to which the Company is a party with respect to the voting of the Company
Capital Stock.
(d) Following the Effective Time, no holder of Company Options or
Company Warrants will have any right to receive shares of common stock of the
Surviving Corporation upon exercise of Company Options or Company Warrants.
(e) Except as disclosed in Section 3.2(e) of the Company Disclosure
Letter, no Indebtedness of the Company contains any restriction upon (i) the
prepayment of any of such Indebtedness, (ii) the incurrence of Indebtedness by
the Company, or (iii) the ability of the Company to grant any lien on its
properties or assets. As used in this Agreement, "Indebtedness" means (i) all
indebtedness for borrowed money or for the deferred purchase price of property
or services (other than current trade liabilities incurred in the ordinary
course of business and payable in accordance with customary practices), (ii) any
other indebtedness that is evidenced by a note, bond, debenture or similar
instrument, (iii) all obligations under financing leases, (iv) all obligations
in respect of acceptances issued or created, (v) all liabilities secured by any
lien on any property and (vi) all guarantee obligations.
15
(f) Section 3.2(f) of the Company Disclosure Letter lists all
Company Options outstanding as of the date hereof, the name of the holder of
each Company Option, the date of grant and the exercise price of such Company
Option, the number of shares of Common Stock as to which such Company Option has
vested, the vesting schedule for such Company Option, a summary of any
acceleration provisions or milestones, and whether the exercisability of such
Company Option will be accelerated in any way by the Transactions, and indicates
the extent of acceleration, if any. Since July 30, 2003, the Company has not
granted any Company Options to officers or directors of the Company.
(g) No agreement or understanding requires consent or approval from
the holder of any Company Option or Company Warrant to effectuate the terms of
this Agreement. The Company has previously provided true and complete copies of
each Company Warrant to Parent.
3.3 Authorization; Validity of Agreement; Company Action. The Company has
the requisite power and authority to enter into this Agreement and the Purchaser
Option and to consummate the Transactions. The execution and delivery of this
Agreement (including the exhibits hereto) and the Purchaser Option and the
consummation of the Transactions have each been duly authorized by all necessary
corporate action on the part of the Company, subject only to the approval and
adoption of this Agreement and approval of the Merger by the Company's
stockholders. Each of this Agreement and the Purchaser Option has been duly
executed and delivered by the Company and, assuming due and valid authorization,
execution and delivery thereof by Parent and Purchaser, constitutes the valid
and binding obligation of the Company enforceable against the Company in
accordance with its terms, except to the extent that enforceability may be
limited by the effect, if any, of (i) any applicable bankruptcy, reorganization,
insolvency, moratorium or other laws affecting the enforcement of creditors'
rights generally, and (ii) general principles of equity, regardless of whether
such enforceability is considered in a proceeding at law or in equity.
3.4 Board Approvals. The Company Board of Directors, at a meeting duly
called and held, has unanimously (a) determined that each of this Agreement, the
Purchaser Option, the Offer and the Merger are fair to and in the best interests
of the Company and the holders of the Shares, (b) duly and validly approved and
taken all corporate action required to be taken by the Company Board of
Directors to authorize the consummation of the Transactions, (c) recommended
that the holders of Shares accept the Offer, tender their Shares to Purchaser
pursuant to the Offer, and (d) determined that this Agreement is advisable and
recommended that, following the Offer, the stockholders of the Company approve
and adopt this Agreement and each of the Transactions, and none of the aforesaid
actions by the Company Board of Directors has been amended, rescinded or
modified. The action taken by the Company Board of Directors constitutes
approval of the Transactions (including each of the Offer and the Merger) by the
Company Board of Directors under Section 203 of the DGCL, and no other state
takeover statute is applicable to the Transactions.
3.5 Required Vote. Assuming the accuracy of Parent's representations set
forth in Section 4.7, the affirmative vote of the holders of a majority of the
outstanding Shares (including the Series B Preferred Stock voting on an
as-converted basis) is the only vote of the holders of any class or series of
the Company's capital stock necessary to approve the Merger, and no vote of any
class or series of the Company's capital stock is necessary to approve any of
the
16
Transactions other than the Merger. Each share of Series B Preferred shall be
entitled to 0.89 of a vote.
3.6 Consents and Approvals; No Violations. The execution, delivery and
performance of this Agreement and the Purchaser Option by the Company do not,
and the consummation of the Transactions or compliance by the Company with any
of the provisions hereof or thereof will not, conflict with, or result in any
violation of, or default under (with or without notice or lapse of time, or
both), or give rise to a right of termination, cancellation or acceleration of
any obligation or loss of any benefit under (a) any provision of the Certificate
of Incorporation or Bylaws, or other equivalent charter documents, as
applicable, of the Company or any of its subsidiaries (b) any Company Agreement
(as defined in Section 3.27) or (c) any material permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to the Company or any of its properties or assets. No notice to,
filing with, and no permit, authorization, consent or approval of, any
arbitrator, court, nation, government, any state or other political subdivision
thereof and any entity exercising executive, legislative, judicial regulatory or
administrative functions of, or pertaining to, government (a "Governmental
Entity"), or any private third party (including, without limitation, consents
from parties to any Company Agreement is necessary for the consummation by the
Company of the Transactions, except for (a) compliance with any applicable
requirements of the Exchange Act, (b) any filings that may be required under the
DGCL and appropriate documents with relevant authorities of other states which
the Company and/or its subsidiaries are qualified to do business in connection
with the Merger, (c) the filing with the SEC and/or the Nasdaq of (i) the
Schedule 14D-9, (ii) the Proxy Statement if stockholder approval is required by
law and (iii) such reports under Section 13(a) of the Exchange Act as may be
required in connection with this Agreement, the Purchaser Option, the
Stockholder Agreement and the Transactions, (d) such filings and approvals as
may be required by any applicable state securities, blue sky or takeover laws,
filings, permits, authorizations, consents and approvals as may be required
under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), and any comparable provisions under any applicable pre-merger
notification laws or regulations of foreign jurisdictions, (e) the consents
listed on Section 3.6 of the Company Disclosure Letter, and (f) such other
consents, authorizations, filings, approvals and registrations which if not
obtained or made would not be material to the Company or Parent or have a
material effect on the ability of the parties hereto to consummate the Offer and
the Merger within the time frame in which the Offer and the Merger would
otherwise be consummated in the absence of the need for such consent, approval,
order, authorization, registration, declaration or filing.
3.7 SEC Filings; Company Financial Statements.
(a) The Company has filed all forms, reports, schedules, statements
and other documents required to be filed by the Company with the SEC since
October 1, 1999 under the Exchange Act or the Securities Act of 1933, as amended
(the "Securities Act") and has made available to Parent such forms, reports and
documents in the form filed with the SEC. All such required forms, reports and
documents (including those that the Company may file subsequent to the date
hereof) are referred to herein as the "Company SEC Reports." As of their
respective dates, the Company SEC Reports (i) complied in all material respects
with the requirements of the Securities Act or the Exchange Act, as the case may
be, the Xxxxxxxx-Xxxxx Act of 2002 and the rules and regulations of the SEC
thereunder applicable to such Company SEC Reports and
17
(ii) did not at the time they were filed (or if amended or superseded by a
filing prior to the date of this Agreement, then on the date of such filing)
contain any untrue statement of a material fact or omit to state a material fact
or disclose any matter or proceeding required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. None of the Company's subsidiaries is
required to file any forms, reports or other documents with the SEC or similar
regulatory body. Between the date of this Agreement and the Closing Date, the
Company will timely file with the SEC all documents required to be filed by it
under the Exchange Act.
(b) Each of the consolidated financial statements (including, in
each case, any related notes thereto) contained in the Company SEC Reports (the
"Company Financials"), including each Company SEC Report filed after the date
hereof until the Closing, (i) was prepared from, are in accordance with and
accurately reflect in all material respects, the Company's books and records as
of the times and for the periods referred to therein, (ii) complied in all
material respects with the published rules and regulations of the SEC with
respect thereto, (iii) was prepared in accordance with United States generally
accepted accounting principles ("GAAP") applied on a consistent basis throughout
the periods involved (except as may be indicated in the notes thereto or, in the
case of unaudited interim financial statements, as may be permitted by the SEC
on Form 10-Q under the Exchange Act), (iv) fairly presented the consolidated
financial position of the Company and its subsidiaries as at the respective
dates thereof and the consolidated results of the Company's operations and cash
flows for the periods indicated, except that the unaudited interim financial
statements may not contain footnotes and were or are subject to normal and
recurring year-end adjustments and (v) was prepared from and in accordance with
the Company's books and records. The balance sheet of the Company contained in
the Company SEC Reports as of June 29, 2003 (the "Balance Sheet Date") as filed
with the SEC before the date hereof is hereinafter referred to as the "Company
Balance Sheet."
(c) The Company has heretofore furnished to Parent and Purchaser a
complete and correct copy of any amendments or modifications, which have not yet
been filed with the SEC but which are required to be filed, to agreements,
documents or other instruments which previously had been filed by the Company
with the SEC pursuant to the Securities Act or the Exchange Act. All public
announcements in a news release issued by the Dow Xxxxx news service, PR
Newswire or any equivalent service made by the Company since the Balance Sheet
Date did not and will not contain any untrue statement of a material fact or
omit to state a material fact or disclose any matter or proceeding required to
be stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(d) Section 3.7(d) of the Company Disclosure Letter sets forth a
complete list of all effective registration statements filed on Form S-3 or Form
S-8 or otherwise relying on Rule 415 under the Securities Act.
(e) The Company has established and maintains disclosure controls
and procedures (as defined in Rules 13a-14 and 15d-14 promulgated under the
Exchange Act) designed to ensure that material information relating to the
Company, including its consolidated subsidiaries, is made known to the Chief
Executive Officer and Chief Financial Officer. To the Company's knowledge, there
are no significant deficiencies or material weaknesses in the design
18
or operation of Company's internal controls which could adversely affect
Company's ability to record, process, summarize and report financial data. To
the Company's knowledge, there is no fraud, whether or not material, that
involves management or other employees who have a significant role in the
Company's internal controls.
3.8 Absence of Certain Changes. Except as disclosed in Section 3.8 of the
Company Disclosure Letter, from the Balance Sheet Date to the date hereof, the
Company and its subsidiaries have not:
(a) suffered any Material Adverse Effect or any event or change
which is reasonably expected to have or constitute a Material Adverse Effect;
(b) incurred any liabilities or obligations (absolute, accrued,
contingent or otherwise), except items incurred in the ordinary course of
business and consistent with past practice, which exceed $150,000 in the
aggregate;
(c) paid, discharged or satisfied any claims, liabilities or
obligations (absolute, accrued, contingent or otherwise) other than the payment,
discharge or satisfaction in the ordinary course of business and consistent with
past practice of liabilities and obligations reflected or reserved against in
the Company Balance Sheet or incurred in the ordinary course of business and
consistent with past practice since the Balance Sheet Date;
(d) permitted or allowed any of their properties or assets (real,
personal or mixed, tangible or intangible) to be subjected to any Encumbrances,
except for liens for current taxes not yet due or liens the incurrence of which
would not be reasonably expected to have a Material Adverse Effect on the
Company;
(e) cancelled any debts or waived any claims or rights of material
value;
(f) sold, transferred, or otherwise disposed of any of their
material properties or assets (real, personal or mixed, tangible or intangible),
except in the ordinary course of business, consistent with past practice;
(g) granted any increase in the compensation or benefits of any
director, officer, employee or consultant of the Company or its subsidiaries
(including any such increase pursuant to any bonus, pension, profit sharing or
other plan or commitment) or any increase in the compensation or benefits
payable or to become payable to any director, officer, employee or consultant of
the Company or its subsidiaries, except in the case of employees other than
officers of the Company or its subsidiaries for such increases in compensation
or benefits made in the ordinary course of business, consistent with past
practice;
(h) made any change in severance policy or practices;
(i) made any capital expenditure or acquired any property, plant and
equipment for a cost in excess of $100,000 in the aggregate;
(j) other than required dividends on the Series B Preferred Stock,
declared, paid or set aside for payment any dividend or other distribution
(whether in cash, stock or property) in
19
respect of their respective capital stock or redeemed, purchased or otherwise
acquired, directly or indirectly, any shares of capital stock or other
securities of the Company or its subsidiaries;
(k) (i) made any changes in any of the accounting methods used by it
materially affecting its assets, liabilities or business, except for such
changes required by GAAP; or (ii) made or changed any election relating to
Taxes, adopted or changed any accounting method relating to Taxes, entered into
any closing agreement relating to Taxes, filed any amended Tax Return, settled
or consented to any claim or assessment relating to Taxes, incurred any
obligation to make any payment of, or in respect of, any Taxes, except in the
ordinary course of business, or agreed to extend or waive the statutory period
of limitations for the assessment or collection of Taxes;
(l) paid, loaned, modified or advanced any amount to, or sold,
transferred or leased any material properties or assets (real, personal or
mixed, tangible or intangible) to, or entered into any agreement or arrangement
with, any of their respective officers, directors or stockholders or any
affiliate or associate of any of their officers, directors or stockholders
except for directors' fees, expense reimbursements in the ordinary course and
compensation to officers at rates not inconsistent with the Company or its
subsidiaries' past practice;
(m) written-down the value of any inventory (including write-downs
by reason of shrinkage or xxxx-down) or written off as uncollectible any notes
or accounts receivable, except for write-downs and write-offs in the ordinary
course of business consistent with past practice nor is any such write-down
required;
(n) suffered any impairment of any material Company Intellectual
Property Rights (as defined in Section 3.14(a)) or any material adverse change
in any material Intellectual Property Rights licensed from a third party, in
each case, other than in the ordinary course of business consistent with past
practice, or disposed of or disclosed (except as necessary in the conduct of its
business) to a third party any Trade Secrets owned by the Company or its
subsidiaries;
(o) granted, issued, accelerated, paid, accrued or agreed to pay or
make any accrual or arrangement for payments or benefits pursuant to, or adopted
or amended, any Company Employee Plans except those made in the ordinary course
of business consistent with past practice; or
(p) agreed, whether in writing or otherwise, to take any action
described in this Section 3.8.
3.9 Absence of Undisclosed Liabilities. Except (a) as disclosed in the
Company Balance Sheet and (b) for liabilities and obligations incurred in the
ordinary course of business consistent with past practice since the Balance
Sheet Date, neither the Company nor any Company subsidiary has incurred any
material liabilities or obligations of any nature, whether or not accrued,
contingent or otherwise required by GAAP to be recognized or disclosed on a
consolidated balance sheet of the Company or in the notes thereto.
20
3.10 Litigation. Except as disclosed in the Company SEC Reports filed
prior to the date hereof, there is no private or governmental action, suit,
proceeding, claim, arbitration or investigation pending before any agency, court
or tribunal, foreign or domestic or, to the knowledge of the Company, threatened
against the Company or its subsidiaries any of their properties or any of their
officers or directors (in their capacities as such). There is no judgment,
decree or order against the Company or any of its subsidiaries or, to the
knowledge of the Company, any of their directors or officers (in their
capacities as such), that could prevent, enjoin, or materially alter or delay
any of the Transactions, or that would reasonably be expected to have a Material
Adverse Effect on the Company. Except as disclosed in the Company SEC Reports
filed prior to the date hereof, there is no litigation that the Company or any
of its subsidiaries has pending against other parties. The descriptions of all
litigation in the Company SEC Reports are accurate in all material respects.
3.11 Restrictions on Business Activities. There is no agreement, judgment,
injunction, order or decree binding upon the Company or its subsidiaries which
has or could reasonably be expected to have the effect of prohibiting or
impairing any current business practice of the Company or its subsidiaries, any
acquisition of property by the Company or its subsidiaries or the conduct of
business by the Company or its subsidiaries as currently conducted.
3.12 Governmental Authorization. The Company and its subsidiaries have
obtained each federal, state, county, local or foreign governmental consent,
license, permit, grant, or other authorization of a Governmental Entity (a)
pursuant to which the Company or any of its subsidiaries currently operates or
holds any interest in any of its properties or (b) that is required for the
operation of the business of the Company or any of its subsidiaries or the
holding of any such interest ((a) and (b) are herein collectively called
"Company Authorizations"), and all of such Company Authorizations are in full
force and effect, except where the failure to obtain or have any such Company
Authorizations would not reasonably be expected to have a Material Adverse
Effect on the Company.
3.13 Real and Personal Property.
(a) Neither the Company nor any Company subsidiary owns any real
property. Section 3.13(a) of the Company Disclosure Letter sets forth a complete
list of all real property leased by the Company and the Company subsidiaries
(the "Real Property"), the term of each related lease, and the monthly or annual
rent and other commitments related thereto. Except as disclosed in Section
3.13(a) of the Company Disclosure Letter, the Company is not a party to any
lease, assignment or similar arrangement under which the Company is a lessor,
assignor or otherwise makes available for use by any third party any portion of
the Real Property.
(b) The Company and its subsidiaries own, or hold under valid
leases, free and clear of all Encumbrances, all personal property, plants,
machinery and equipment necessary for the conduct of the business of the Company
and the Company subsidiaries.
(c) The property and equipment of the Company and each of its
subsidiaries that are used in the operations of business are in good operating
condition and repair, subject to normal wear and tear. All properties used in
the operations of the Company are reflected in the Company Balance Sheet to the
extent GAAP requires the same to be reflected.
21
3.14 Technology and Intellectual Property.
(a) Definitions. The following terms shall have the meanings set
forth below.
"Company Intellectual Property Rights" means all Intellectual
Property Rights in the Registered Company IP and all other Intellectual Property
Rights in the Company Technology and Company Trademarks other than third party
Intellectual Property Rights.
"Company Technology" means all Technology used, or held for use, in
the business of the Company and its subsidiaries, as currently conducted or
contemplated to be conducted.
"Company Trademarks" means all Trademarks used, or held for use, in
the business of the Company and its subsidiaries, as currently conducted or
contemplated to be conducted.
"Computer Software" means all computer programs (whether in source
code or object code form), databases, compilations and documentation (including,
without limitation, user, operator and training manuals) related to the
foregoing.
"Copyrights" means U.S. and foreign copyrights (whether
registered or unregistered).
"Intellectual Property Rights" means all rights in or under
Copyrights, Patents, Trade Secrets, and Trademarks.
"License Agreements" means all agreements to which the Company or
one of its subsidiaries is a party or otherwise bound, under which the Company
or one of its subsidiaries is granting or is granted any Intellectual Property
Right.
"Patents" means all U.S. and foreign patents and patent
applications.
"Registered Company IP" means all (i) Patents, (ii) registered
Copyrights and Copyright applications, and (iii) registered Trademarks and
Trademark applications, in which the Company or any one of its subsidiaries has
an ownership interest.
"Technology" means all processes, formulae, algorithms, data,
models, plans, methodologies, theories, ideas, techniques, discoveries,
disclosures, inventions, Computer Software, information or know-how.
"Trademarks" means all U.S. and foreign trademarks, service marks,
trade names, designs, logos, slogans, and internet domain names.
"Trade Secrets" means trade secrets as defined in the Uniform Trade
Secrets Act.
(b) Section 3.14(b) of the Company Disclosure Letter sets forth a
true and complete list of all Registered Company IP and Internet domain names
registered in the name of the Company or one of its subsidiaries.
22
(c) The Company or one of its subsidiaries is listed in the records
of the appropriate U.S., state or foreign agency as the sole owner of record for
each item of Registered Company IP. Subject to the rights and interests granted
to third parties in the License Agreements, the Company or one of its
subsidiaries owns all right, title and interest in and to the Registered Company
IP, and owns all other Company Intellectual Property Rights, free and clear of
all Encumbrances. The Registered Company IP is subsisting in full force and
effect and, to the knowledge of the Company, has not been cancelled, expired or
abandoned, and, to the knowledge of the Company, the Company Intellectual
Property Rights are valid and enforceable.
(d) With respect to any Patents that are included in the Registered
Company IP: (i) each has been prosecuted in material compliance with all
applicable rules, policies and procedures of the U.S. Patent and Trademark
Office or applicable foreign agency; and (ii) neither the Company nor any of its
subsidiaries is aware of any prior art or other facts that could render any of
the claims in the patents invalid or unenforceable.
(e) Section 3.14(e) of the Company Disclosure Letter sets forth a
true and complete list of all material License Agreements, except for
off-the-shelf software. Each License Agreement is valid and binding on the
Company and its subsidiaries and, to the knowledge of the Company, each other
party thereto and enforceable in accordance with its terms. Except as stated in
Section 3.14(e) of the Company Disclosure Letter, none of the License Agreements
grants any third party exclusive rights to or under any Company Intellectual
Property Rights or the right to sublicense any Company Intellectual Property
Rights. The Company and its subsidiaries are in compliance with, and have not
breached any term of any of such License Agreements and, to the knowledge of the
Company, all other parties to such License Agreements are in compliance with,
and have not breached any term of, such License Agreements.
(f) Except as disclosed in Section 3.14(f) of the Company Disclosure
Letter, neither the Company nor any of its subsidiaries has received any notice
of infringement of or conflict with any Intellectual Property Rights of a third
party, received any offers for a license to a third party patent, or obtained a
written opinion of counsel relating to a third party patent. To the knowledge of
the Company, there is no reasonable basis to allege that the Company or any of
its subsidiaries has infringed upon, violated, misappropriated or is infringing
upon, violating or misappropriating an Intellectual Property Right of a third
party.
(g) Except as disclosed in Section 3.14(g) of the Company Disclosure
Letter, neither the Company nor any of its subsidiaries has provided to a third
party any notice of infringement of or conflict with any Company Intellectual
Property Rights. Except as disclosed in Section 3.14(g) of the Company
Disclosure Letter, to the knowledge of the Company, no person has infringed
upon, violated, misappropriated or is infringing upon, violating or
misappropriating any of the Company Intellectual Property Rights.
(h) Except as disclosed in the Company SEC Reports filed prior to
the date hereof, to the knowledge of the Company, there is no pending or
threatened claim, suit, arbitration or other adversarial proceeding before any
court, agency, arbitral tribunal, or registration authority in any jurisdiction:
(i) involving the Company Intellectual Property Rights; (ii) alleging that the
Company or any of its subsidiaries is or may be infringing upon, violating or
23
misappropriating an Intellectual Property Right of a third party; or (iii)
challenging the ownership, use, validity, enforceability or registrability of
any Company Intellectual Property Rights.
(i) To the knowledge of the Company, no material Trade Secret of the
Company has been disclosed or authorized to be disclosed to any third party in
violation of confidentiality obligations to the Company, or its subsidiaries
taken as a whole, and no party to a nondisclosure agreement with the Company is
in breach or default thereof. The Company has taken reasonable measures,
consistent with customary industry practice, to protect, preserve and maintain
the secrecy of its Trade Secrets.
(j) Except as disclosed in Section 3.14(j) of the Company Disclosure
Letter, there are no settlements, forbearances to xxx, consents, judgments,
injunctions, releases, waivers, orders or similar obligations, other than the
License Agreements, that: (i) restrict any Company Intellectual Property Rights
or; (ii) restrict the conduct of the business of the Company in order to
accommodate Intellectual Property Rights of a third party; or (iii) grant third
parties any rights under Company Intellectual Property Rights.
(k) All current and former employees and consultants of the Company
and its subsidiaries have executed an agreement that assigns to the Company or
one of its subsidiaries their Intellectual Property Rights in the work product
developed pursuant to their employment or relationship with the Company or any
of its subsidiaries. No current or former director, officer or employee of the
Company will, after giving effect to the Transactions, own any of the Company
Intellectual Property Rights.
(l) The execution of, the delivery of, the consummation of the
Transactions contemplated by, and the performance of the Company's obligations
under, this Agreement will not result in any material loss or impairment of the
Company Intellectual Property Rights or any Intellectual Property Rights
licensed to the Company.
(m) Neither the Company nor any of its subsidiaries has used or will
use before the purchase of the Shares pursuant to the Offer any of the prior
inventions disclosed in the Proprietary Information and Inventions Agreements of
its employees, except for those inventions that were acquired in connection with
the merger with Arcxel Technologies, Inc., and, to the Company's knowledge, no
employees of the Company or any of its subsidiaries have improperly brought to
the Company or used at the Company any confidential information from their prior
employers.
3.15 Environmental Matters. (a) The Company and its subsidiaries are in
compliance in all material respects with federal, state, local and foreign laws
and regulations relating to pollution or protection or preservation of human
health or the environment, including, without limitation, laws and regulations
relating to emissions, discharges, releases or threatened releases of toxic or
hazardous substances or hazardous waste, petroleum and petroleum products,
asbestos or asbestos-containing materials, polychlorinated biphenyls, radon, or
lead or lead-based paints or materials ("Materials of Environmental Concern"),
or otherwise relating to the generation, storage, containment (whether above
ground or underground), disposal, transport or handling of Materials of
Environmental Concern, or the preservation of the environment or mitigation of
24
adverse effects thereon (collectively, "Environmental Laws"), and including, but
not limited to, compliance with any permits or other governmental authorizations
or the terms and conditions thereof, except where noncompliance would not
reasonably be expected to have a Material Adverse Effect on the Company; (b)
neither the Company nor any of its subsidiaries has received any communication
or notice, whether from a governmental authority or otherwise, alleging any
violation of or noncompliance with any Environmental Laws by the Company or any
of its subsidiaries or for which the any of them is responsible, and there is no
pending or, to the Company's knowledge, threatened claim, action, investigation
or notice by any person or entity alleging potential liability for
investigatory, cleanup or governmental response costs, or natural resources or
property damages, or personal injuries, attorneys' fees or penalties relating to
(i) the presence, or release into the environment, of any Materials of
Environmental Concern at any location owned or operated by the Company or any of
its subsidiaries, now or in the past, or (ii) any violation, or alleged
violation, of any Environmental Law (collectively, "Environmental Claims"),
except where such notices, communications or Environmental Claims would not
reasonably be expected to have a Material Adverse Effect on the Company; and (c)
to the Company's knowledge, there are no past or present facts or circumstances
that are reasonably likely to form the basis of any Environmental Claim against
the Company or any Company subsidiary or against any person or entity whose
liability for any Environmental Claim the Company or such Company subsidiary
have retained or assumed either contractually or by operation of law, except
where such Environmental Claim, if made, would not reasonably be expected to
have a Material Adverse Effect on the Company.
3.16 Taxes.
(a) The Company and each of its subsidiaries (i) have duly filed (or
there have been filed on their behalf) with the appropriate Tax Authorities all
material Tax Returns (as hereinafter defined) required to be filed by them, and
such Tax Returns are true, correct and complete in all material respects, and
(ii) have duly paid in full (or there has been paid on their behalf), or have
established reserves (in accordance with GAAP) as reflected on the Financial
Statements, all material Taxes that are due and payable.
(b) There are no material liens for Taxes upon any property or
assets of the Company or any of its subsidiaries, except for liens for Taxes not
yet due or for which adequate reserves have been established in accordance with
GAAP.
(c) No material Federal, state, local or foreign Audits are pending
with regard to any material Taxes or material Tax Returns of the Company or any
of its subsidiaries and, to the best knowledge of the Company and its
subsidiaries, no such Audit is threatened.
(d) The Federal income Tax Returns of the Company and each of its
subsidiaries have been examined by the Internal Revenue Service (or the
applicable statutes of limitation for the assessment of Taxes for such periods
have expired) for all periods through and including December 31, 2002, and as of
the date hereof no material adjustments have been asserted as a result of such
examinations which have not been (x) resolved and fully paid, or (y) reserved on
the Financial Statements in accordance with GAAP.
25
(e) Neither the Company nor any of its subsidiaries is a party to
any agreement providing for the allocation, indemnification, or sharing of
Taxes.
(f) Neither the Company nor any of its subsidiaries has been a
member of any "affiliated group" (as defined in Section 1504(a) of the Code)
other than the affiliated group of which Company is the "parent" and is not
subject to Treas. Reg. 1.1502-6 (or any similar provision under foreign, state,
or local law) for any period other than in connection with the affiliated group
of which the company is the "parent."
(g) Neither the Company nor any of its subsidiaries is or has 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.
(h) The Company has delivered or made available to Parent and
Purchaser complete and accurate copies of each of (i) all Audit reports, letter
rulings, technical advice memoranda and similar documents issued by a Tax
Authority relating to Taxes due from or with respect to the Company or any of
its subsidiaries and (ii) all closing agreements entered into by the Company or
any of its subsidiaries with any Tax Authority, in each case existing on the
date hereof.
(i) Neither the Company nor any of its subsidiaries has received
notice of any claim made by an authority in a jurisdiction where it does not
file Tax Returns that it is or may be subject to taxation by that jurisdiction.
(j) Neither the Company nor any of its subsidiaries has made any
change in Tax elections.
(k) Neither the Company nor any of its subsidiaries has waived any
statutory period of limitations for the assessment of any Tax or agreed to any
extension of time with respect to a Tax assessment or deficiency, in each case,
which is currently outstanding, nor is any request to so waive or extend
currently outstanding. No power of attorney granted by the Company or any of its
subsidiaries with respect to Taxes is currently in force.
(l) The United States Federal and state "net operating loss" of the
Company and its subsidiaries through the date of the last filed applicable Tax
Return is set forth on Section 3.16(l) of the Company Disclosure Letter. As of
the date of this Agreement, there are no material limitations on the ability of
the Company to utilize United States Federal and state "net operating losses"
pursuant to Section 382 of the Code or similar state tax laws.
(m) "Audit" means any audit, assessment, or other examination
relating to Taxes by any Tax Authority or any judicial or administrative
proceedings relating to Taxes. "Code" means the Internal Revenue Code of 1986,
as amended. "Tax" or "Taxes" means all Federal, state, local, and foreign taxes,
and other assessments of a similar nature (whether imposed directly or through
withholding), including any interest, additions to tax, or penalties applicable
thereto, imposed by any Tax Authority. "Tax Authority" means the Internal
Revenue Service and any other domestic or foreign governmental authority
responsible for the administration of
26
any Taxes. "Tax Returns" mean all Federal, state, local, and foreign tax
returns, declarations, statements, reports, schedules, forms, and information
returns and any amendments thereto.
3.17 Employee Benefit Plans.
(a) Section 3.17 of the Company Disclosure Letter lists, with
respect to the Company, any of its subsidiaries and any trade or business
(whether or not incorporated) which is treated as a single employer with the
Company within the meaning of Section 414(b), (c), (m) or (o) of the Code (an
"ERISA Affiliate"), (i) all employee benefit plans (as defined in Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
(ii) each loan to a non-officer employee in excess of $10,000, loans to officers
and directors and any stock option, stock purchase, phantom stock, stock
appreciation right, supplemental retirement, severance, sabbatical, medical,
dental, vision care, disability, employee relocation, cafeteria benefit (Code
Section 125) or dependent care (Code Section 129), life insurance or accident
insurance plans, programs, agreements or arrangements, (iii) all bonus, pension,
profit sharing, savings, deferred compensation or incentive plans, programs,
agreements or arrangements, (iv) other fringe or employee benefit plans,
programs, agreements or arrangements of the Company or any of its subsidiaries
and (v) any current or former employment, change of control, retention or
executive compensation or severance agreements, written or otherwise, as to
which unsatisfied obligations of the Company or any of its subsidiaries of
greater than $10,000 remain for the benefit of, or relating to, any present or
former employee, consultant or director of the Company or any of its
subsidiaries (together, the "Company Employee Plans").
(b) The Company has delivered to Parent a copy of each of the
Company Employee Plans and related material plan documents (including trust
documents, insurance policies or contracts, employee booklets, summary plan
descriptions and other authorizing documents, and any material employee
communications relating thereto) and has, with respect to each Company Employee
Plan which is subject to ERISA reporting requirements, provided copies of the
Form 5500 reports filed for the last three (3) plan years. Any Company Employee
Plan intended to be qualified under Section 401(a) of the Code has either
obtained from the IRS a favorable determination letter as to its qualified
status under the Code, including all amendments to the Code effected by the Tax
Reform Act of 1986, or has applied to the IRS for such a determination letter
prior to the expiration of the requisite period under applicable Treasury
Regulations or IRS pronouncements in which to apply for such determination
letter and to make any amendments necessary to obtain a favorable determination
or has been established under a standardized prototype plan for which an IRS
opinion letter has been obtained by the plan sponsor and is valid as to the
adopting employer. The Company has also delivered to Parent the most recent IRS
determination, notification, advisory, or opinion letter issued with respect to
each such Company Employee Plan, and, to the Company's knowledge, nothing has
occurred since the issuance of each such letter which could reasonably be
expected to cause the loss of the tax-qualified status of any Company Employee
Plan subject to Code Section 401(a).
(c) There has been no "prohibited transaction," as such term is
defined in Section 406 of ERISA and Section 4975 of the Code, with respect to
any Company Employee Plan. Each Company Employee Plan has been administered in
accordance with its terms and in compliance with the requirements prescribed by
any and all statutes, rules and regulations (including ERISA and the Code),
except as would not be reasonably expected to have, in the
27
aggregate, a Material Adverse Effect on the Company, and the Company and each of
its subsidiaries or ERISA Affiliates have performed all obligations required to
be performed by them under, are not in any material respect in default under or
violation of, and have no knowledge of any material default or violation by any
other party to, any of the Company Employee Plans. Neither the Company nor any
of its subsidiaries or ERISA Affiliates is subject to any liability or penalty
under Sections 4976 through 4980 of the Code or ERISA with respect to any of the
Company Employee Plans. All contributions and premiums required to be made by
the Company or any of its subsidiaries or ERISA Affiliates to any Company
Employee Plan have been made on or before their due dates. Each Company Employee
Plan can be amended, terminated or otherwise discontinued in accordance with its
terms. With respect to each Company Employee Plan subject to ERISA as either an
employee pension benefit plan within the meaning of Section 3(2) of ERISA or an
employee welfare benefit plan within the meaning of Section 3(1) of ERISA, the
Company has prepared in good faith and timely filed all requisite material
governmental reports (which, to the Company's knowledge, were true and correct
as of the date filed) and has properly and timely filed and distributed or
posted all material notices and reports to employees required to be filed,
distributed or posted with respect to each such Company Employee Plan. No suit,
administrative proceeding, action or other litigation has been brought, or to
the best knowledge of the Company is threatened, against or with respect to any
such Company Employee Plan, including any audit or inquiry by the Internal
Revenue Service (the "IRS") or United States Department of Labor other than
routine claims for benefits.
(d) With respect to each Company Employee Plan, the Company, each
Company subsidiary and their respective ERISA Affiliates have complied with (i)
the applicable health care continuation and notice provisions of the
Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA") and the
regulations (including proposed regulations) thereunder, (ii) the applicable
requirements of the Family Medical and Leave Act of 1993 and the regulations
thereunder, and (iii) the applicable requirements of the Health Insurance
Portability and Accountability Act of 1996 and the regulations (including
proposed regulations) thereunder, except where the failure to comply with the
applicable requirements of such laws and regulations would not be reasonably
expected to have a Material Adverse Effect on the Company.
(e) The consummation of the Transactions will not (i) entitle any
current or former employee, director or consultant of the Company or any of its
subsidiaries or any ERISA Affiliates to severance benefits or any other payment,
except as expressly provided in this Agreement, or (ii) except as disclosed in
Section 3.17(e) of the Company Disclosure Letter, accelerate the time of payment
or vesting of Company Options, or increase the amount of compensation due any
such employee, director or consultant.
(f) No amounts payable under any of the Company Employee Plans or
any other contract, agreement or arrangement with respect to which the Company
or any of its subsidiaries may have any liability could fail to be deductible
for federal income tax purposes by virtue of Section 162(m) or Section 280G of
the Code. None of the Company Employee Plans contains any provision requiring a
gross-up pursuant to Section 280G of the Code or similar tax provisions.
(g) No Company Employee Plan provides benefits, including without
limitation death or medical benefits (whether or not insured), with respect to
current or former employees
28
of the Company, its subsidiaries or any ERISA Affiliate after retirement or
other termination of service (other than (i) coverage mandated by applicable
laws, (ii) death benefits or retirement benefits under any "employee pension
benefit plan," as that term is defined in Section 3(2) of ERISA, or (iii)
benefits, the full direct cost of which is borne by the current or former
employee (or beneficiary thereof)).
(h) There has been no amendment to, written interpretation or
announcement (whether or not written) by the Company or any of its subsidiaries
or any ERISA Affiliates relating to, or change in participation or coverage
under, any Company Employee Plan which would increase the expense of maintaining
such Plan above the level of expense incurred with respect to that Plan for the
most recent fiscal quarter included in the Company Financials.
(i) Neither the Company nor any of its subsidiaries or any ERISA
Affiliate currently maintains, sponsors, participates in or contributes to, nor
have they ever maintained, established, sponsored, participated in, or
contributed to, any employee pension benefit plan (within the meaning of Section
3(2) of ERISA) which is subject to Part 3 of Subtitle B of Title I of ERISA,
Title IV of ERISA or Section 412 of the Code.
(j) Neither the Company nor any of its subsidiaries or any ERISA
Affiliate is a party to, or has ever made any contribution to or otherwise
incurred any obligation to contribute to, any "multiemployer plan" as defined in
Section 3(37) of ERISA.
(k) Section 3.17(k) of the Company Disclosure Schedule sets forth
for each Company Option, where applicable, the performance targets, design wins,
thresholds or other measurement pursuant to which vesting or exercise of such
option is contingent.
3.18 Certain Agreements Affected by the Merger. Except as disclosed in
Section 3.18 of the Company Disclosure Letter, neither the execution and
delivery of this Agreement nor the consummation of the Transactions will (a)
result in any payment (including, without limitation, severance, unemployment
compensation, golden parachute, bonus or otherwise) becoming due to any officer,
director or employee of the Company or any of its subsidiaries, (b) materially
increase any benefits under the Company Employee Plans or (c) result in the
acceleration of the time of payment or vesting of any such benefits. No payment
which will or may be made by the Company or any of its subsidiaries to any
employee will be characterized as an "excess parachute payment" within the
meaning of Section 280G(b)(1) of the Code.
3.19 Employee Matters.
(a) There are no actions, suits, claims, charges, labor disputes,
grievances or controversies pending, or to the Company's knowledge, threatened
involving the Company or any of its subsidiaries and any of their respective
employees or former employees. To the Company's knowledge, no Governmental
Entity responsible for the enforcement of labor or employment laws intends to
conduct an investigation with respect to or relating to the Company or any of
its subsidiaries and no such investigation is in progress. To the Company's
knowledge, no employee of the Company or any of its subsidiaries has violated
any employment contract, nondisclosure agreement or noncompetition agreement by
which such employee is bound due to such employee being employed by the Company
or any of its subsidiaries and
29
disclosing to the Company or any such subsidiary or using Trade Secrets of any
other person. There has been: (i) no labor union organizing or attempting to
organize any employees of the Company or any of its subsidiaries into one or
more collective bargaining units; and (ii) no labor dispute, strike, work
slowdown, work stoppage or lock out or other collective labor action by or with
respect to any employees of the Company or any of its subsidiaries pending, or,
to the Company's knowledge, threatened against or affecting the Company or any
of its subsidiaries. Neither the Company nor any of its subsidiaries is a party
to, or bound by, any collective bargaining agreements or other agreement with
any labor organization applicable to the employees of the Company or any of its
subsidiaries and no such agreement is currently being negotiated.
(b) Each of the Company and its subsidiaries (i) is in compliance in
all material respects with all applicable laws respecting employment and
employment practices, terms and conditions of employment, health and safety and
wages and hours, and is not engaged in any unfair labor practice, (ii) has
withheld all amounts required by law or by agreement to be withheld from the
wages, salaries and other payments to employees, (iii) is not liable in any
material respect for any arrears of wages or any Taxes or any penalty for
failure to comply with any of the foregoing and (iv) is not liable for any
material payment to any trust or other fund or to any governmental or
administrative authority, with respect to unemployment compensation benefits,
social security or other benefits or obligations for employees (other than
routine payments to be made in the ordinary course of business and consistent
with past practice).
(c) To the Company's knowledge, no employee of the Company or any of
its subsidiaries has provided or is providing information to any law enforcement
agency regarding the commission or possible commission of any crime or the
violation or possible violation of any applicable law involving the Company or
any of its subsidiaries. Neither the Company nor any of its subsidiaries nor any
officer, employee, contractor, subcontractor or agent of the Company or any such
subsidiary of the Company has discharged, demoted, suspended, threatened,
harassed or in any other manner discriminated against an employee of the Company
or any of its subsidiaries in the terms and conditions of employment because of
any act of such employee described in 18 U.S.C. Section 1514A(a).
(d) Since June 30, 2000, neither the Company nor any of its
subsidiaries has effectuated (i) a "plant closing" as defined in the Worker
Adjustment and Retraining Notification Act ("WARN Act"), affecting any site of
employment or one or more facilities or operating units within any site of
employment or facility of the Company or any of its subsidiaries or (ii) a "mass
layoff" (as defined in the WARN Act) affecting any site of employment or
facility of the Company or any of its subsidiaries; nor has the Company or any
of its subsidiaries been affected by any transaction or engaged in layoffs or
employment terminations sufficient in number to trigger application of any
state, local or foreign law or regulation similar to the WARN Act. To the
Company's knowledge, neither the Company's nor any of its subsidiaries'
employees has suffered an "employment loss" (as defined in the WARN Act) in the
ninety (90) days prior to the date of this Agreement.
(e) Section 3.19(e) of the Company Disclosure Letter contains a true
and complete list of (i) the names of all directors and elected and appointed
officers of each of the Company and its subsidiaries, together with such
person's position or function, annual base
30
salary and incentives or bonus arrangement, and (ii) the number of shares of
Company Common Stock owned beneficially or of record, or both, by each such
person and the family relationships, if any, among such persons. As of the date
hereof, no key employee, director or officer of the Company or any of its
subsidiaries has given notice to the Company, nor, except as provided in Section
6.7, is the Company otherwise aware of any information that would lead it to
reasonably believe, that any such person will or may cease to be engaged by the
Company or applicable subsidiary of the Company for any reason prior to the
Effective Time.
3.20 Potential Conflict of Interest. Except as set forth in the Company
SEC Reports filed prior to the date hereof or as disclosed in Section 3.20 of
the Company Disclosure Letter, since December 31, 2002, there have been no
transactions, agreements, arrangements or understandings between the Company or
any subsidiary of the Company, on the one hand, and their respective affiliates,
on the other hand, that would be required to be disclosed under Item 404 of
Regulation S-K under the Securities Act. Except as set forth in the Company SEC
Reports filed prior to the date hereof, no officer of the Company or any Company
subsidiary owns, directly or indirectly, any interest in (excepting not more
than one percent (1%) stock holdings for investment purposes in securities of
publicly-held and traded companies) or is an officer, director, employee or
consultant of any person which is a competitor, lessor, lessee, customer or
supplier of the Company; and no officer or director of the Company or any
Company subsidiary (a) owns, directly or indirectly, in whole or in part, any
Intellectual Property which the Company or any Company subsidiary is using or
the use of which is necessary for the business of the Company or any Company
subsidiary, (b) has any claim, charge, action or cause of action against the
Company or any Company subsidiary, except for immaterial claims for accrued
vacation pay, accrued benefits under any Company Employee Plans and similar
matters and agreements existing on the date hereof, (c) has made, on behalf of
the Company or any of its subsidiaries, any payment or commitment to pay any
commission, fee or other amount to, or to purchase or obtain or otherwise
contract to purchase or obtain any goods or services from, any other person of
which any officer or director of the Company or any Company subsidiary, or, to
the Company's knowledge, a relative of any of the foregoing, is a partner or
stockholder (except stock holdings solely for investment purposes in securities
of publicly held and traded companies) or (d) owes any money to the Company or
any of its subsidiaries (except for reimbursement of advances in the ordinary
course of business consistent with past practice).
3.21 Insurance. The Company and each of its subsidiaries has policies of
insurance and bonds of the type and in amounts customarily carried by persons
conducting businesses or owning assets similar to those of the Company and each
of its subsidiaries. Section 3.21 of the Company Disclosure Letter contains an
accurate summary of the material terms of all material policies of fire,
liability, workmen's compensation, director and officer and other forms of
insurance owned or held by the Company. All such policies and other forms of
insurance are in full force and effect, all premiums with respect thereto
covering all periods up to and including the date of the Closing have been paid,
and no notice of cancellation or termination has been received with respect to
any such policy or other form of insurance. There is no material claim pending
under any such policies as to which coverage has been questioned, denied or
disputed by any underwriter of such policies or other forms of insurance. Such
policies or other forms of insurance are sufficient for compliance with all
requirements of law and of all agreements to which the Company is a party, are
valid, outstanding and enforceable, provide adequate insurance coverage for the
normal risks incident to the business of the Company and its assets,
31
will remain in full force and effect through the respective dates set forth in
the Company Disclosure Letter without the payment of additional premiums (other
than existing policy premiums payable in installments), and will not in any way
be affected by, or terminate or lapse by reason of, the Transactions. Section
3.21 of Company Disclosure Letter identifies all risks which the Company, its
Board of Directors or officers have designated as being self insured (other than
applicable deductibles or retentions). The Company has not been refused any
insurance with respect to its assets or operations, nor has its coverage been
limited, by any insurance carrier to which it has applied for any such insurance
or with which it has carried insurance during the last two years.
3.22 Compliance With Laws. The Company and its subsidiaries have complied
in a timely manner and in all material respects with all laws, rules and
regulations, ordinances, judgments, decrees, orders, writs and injunctions of
all United States federal, state, local, foreign governments and agencies
thereof which affect the business, properties or assets of the Company and its
subsidiaries, except for instances of possible noncompliance that individually
or in the aggregate would not reasonably be expected to have a Material Adverse
Effect on the Company, and no notice, charge, claim, action or assertion has
been received by the Company or any of its subsidiaries or has been filed,
commenced or, to the Company's knowledge, threatened against the Company or any
of its subsidiaries alleging any violation of any of the foregoing, except for
instances of possible noncompliance that individually or in the aggregate would
not reasonably be expected to have a Material Adverse Effect on the Company. All
licenses, permits and approvals required under such laws, rules and regulations
are in full force and effect except where the failure to be in full force and
effect would not reasonably be expected to have a Material Adverse Effect on the
Company.
3.23 Minute Books. The minute books of the Company and its subsidiaries
made available to Parent contain a complete and accurate summary of all meetings
of directors and stockholders or actions by written consent from October 1, 1999
through the date of this Agreement, and reflect all material transactions
referred to in such minutes accurately.
3.24 Complete Copies of Materials. The Company has delivered or made
available true and complete copies of each document which has been requested by
Parent or its counsel in connection with their legal and accounting review of
the Company and its subsidiaries.
3.25 Brokers' and Finders' Fees. The Company has not incurred, nor will it
incur, directly or indirectly, any liability for brokerage or finders' fees or
agents' commissions or investment bankers' fees or any similar charges in
connection with this Agreement or any Transaction other than Xxxxxxx, Xxxxx &
Co., pursuant to a letter dated August 19, 2003, a copy of which has been
delivered to Parent.
3.26 Customers and Suppliers. No single customer which individually
accounted for more than 4% of the Company's gross revenues during the 12-month
period preceding the date hereof, and no single supplier of the Company or its
subsidiaries, has canceled or otherwise terminated, or has advised the Company
that it intends to cancel or otherwise terminate, its relationship with the
Company or its subsidiaries. Except as disclosed in Section 3.26 of the Company
Disclosure Letter, no single customer which individually accounted for more than
4% of the Company's gross revenues during the 12-month period preceding the date
hereof
32
decreased materially its use of the services or products of the Company or its
subsidiaries or advised the Company that it intends to decrease materially its
use of the services or products of the Company and its subsidiaries. No single
supplier of the Company or its subsidiaries has, during the 12-month period
preceding the date hereof, decreased materially its services or supplies to the
Company or its subsidiaries or has advised the Company that it intends to
decrease materially its services or supplies to the Company or its subsidiaries.
Neither the Company nor any of its subsidiaries has breached, so as to provide a
benefit to the Company and any such subsidiary that was not intended by the
parties, any agreement with, or engaged in any fraudulent conduct with respect
to, any customer or supplier of the Company or any of its subsidiaries.
3.27 Material Contracts. Section 3.27 of the Company Disclosure Letter
sets forth a true and complete list of (i) all material contracts, agreements,
indemnities, guarantees, notes, bonds, mortgages, liens, indentures, leases,
licenses or other instruments or obligations of the Company and its subsidiaries
(each a "Company Agreement") (including any agreement required to be filed as an
Exhibit to an Annual Report on form 10-K of the Company pursuant to Item
601(b)(10) of Regulation S-K of the Securities Act) entered into by the Company
or any Company subsidiary since December 31, 2002 and all amendments to any
Company Agreements included as an exhibit to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 2002 and (ii) all non-competition
agreements imposing restrictions on the ability of the Company or any Company
subsidiary to conduct business in any jurisdiction or territory. True, correct
and complete copies of all such material Company Agreements have been delivered
to Parent. Each Company Agreement that is required to be listed in Section 3.27
of the Company Disclosure Letter is valid, binding and enforceable and is in
full force and effect and there are no defaults, events of default or, to the
knowledge of the Company, allegations of default thereunder. Each of the Company
and its subsidiaries has in all material respects performed the obligations
required to be performed by it and is entitled to the benefits under each
Company Agreement except such benefits as that would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Company.
3.28 Third Party Consents. Section 3.28 of the Company Disclosure Letter
lists all Company Agreements that require notices, authorizations, consents or
approvals that are necessary for the consummation by the Company of any of the
Transactions and identifies each Company Agreement which, if no notice is given
or no authorization, consent or approval is obtained, would reasonably be
expected to have a Material Adverse Effect on Parent's ability to operate the
business of the Company and its subsidiaries in the same manner as the business
was operated by the Company and its subsidiaries prior to the Effective Time.
3.29 Product Releases. The Company has provided Parent a schedule of
product releases, which schedule is attached as Section 3.29 of the Company
Disclosure Letter. The Company has a good faith reasonable belief that it can
achieve the release of products on the schedule described in Section 3.29 of the
Company Disclosure Letter and is not currently aware of any change in its
circumstances or other fact that has occurred that would cause it to believe
that it will be unable to meet such release schedule.
3.30 Company Design Wins. Section 3.30 of the Company Disclosure Letter
sets forth a true and complete list of design wins by the Company or any of its
subsidiaries as of the date of
33
the this Agreement, whether publicly disclosed or not, specifying for each
design win, the name of the customer and the relevant product or products. As of
the date of this Agreement, for each design win listed in Section 3.30 of the
Company Disclosure Letter: (i) neither the Company nor any of its subsidiaries
has any reason to believe that the relevant product or products will not be
developed and issued for production, and (ii) no customer listed on Section 3.30
of the Company Disclosure Schedule has canceled or otherwise terminated, or has
advised the Company that such customer intends to cancel or otherwise terminate,
the design win relating to such customer.
3.31 Orders, Commitments and Returns. As of the date of this Agreement,
there are no claims against the Company to return in excess of an aggregate of
$300,000 of merchandise by reason of alleged overshipments, defective
merchandise or otherwise, or of merchandise in the hands of customers under an
understanding that such merchandise would be returnable.
3.32 Support, Maintenance and Warranty Obligations. Section 3.32 of the
Company Disclosure Letter sets forth, as of September 28, 2003, the approximate
installed base of the Company's products, the key customers that have purchased
the products and the warranty reserves for warranty obligations of the Company
and its subsidiaries as of September 28, 2003.
3.33 Inventory. The inventories shown on the Company Financials or
thereafter acquired by the Company, consisted of items of a quantity and quality
usable or salable in the ordinary course of business (other than slow-moving,
obsolete or unusable items which are adequately reserved for in the Company
Financials to reflect realizable value). Since the Balance Sheet Date, the
Company has continued to replenish inventories in a normal and customary manner
consistent with past practices. The Company has not received written or oral
notice that it will experience in the foreseeable future any material difficulty
in obtaining, in the desired quantity and quality and at a reasonable price and
upon reasonable terms and conditions, the raw materials, supplies or component
products required for the manufacture, assembly or production of its products.
The values at which inventories are carried reflect the inventory valuation
policy of the Company, which is consistent with its past practice and in
accordance with generally accepted accounting principles applied on a consistent
basis. Since the Balance Sheet Date, due provision was made on the books of the
Company in the ordinary course of business consistent with past practices, to
provide for all slow-moving, obsolete, or unusable inventories to their
estimated useful or scrap values and such inventory reserves are adequate to
provide for such slow-moving, obsolete or unusable inventory and inventory
shrinkage. As of September 28, 2003, the aggregate value of the inventory of the
Company in the distribution channel does not exceed the average aggregate value
of the inventory of the Company in the distribution channel over the past four
quarters.
3.34 Accounts Receivable. Subject to any reserves set forth in the Company
Financials, the accounts receivable shown in the Company Financials represent
bona fide claims against debtors for sales and other charges, and are not
subject to discount except for normal cash and immaterial trade discounts. The
amount carried for doubtful accounts and allowances disclosed in the Company
Financials is reasonably adequate and consistent with the Company's past
practice.
3.35 Information in the Proxy Statement. The Proxy Statement, if any (and
any amendment thereof and supplement thereto), at the date mailed to the
Company's stockholders
34
and at the time of any meeting of Company stockholders to be held in connection
with the Merger, will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading, except that no representation is made by the
Company with respect to statements made therein based on information supplied in
writing by Parent or Purchaser expressly for inclusion in the Proxy Statement.
The Proxy Statement will comply in all material respects with the provisions of
the Exchange Act and the rules and regulations thereunder.
3.36 Information in the Offer Documents and the Schedule 14D-9. The
information supplied by the Company expressly for inclusion or incorporation by
reference in the Offer Documents or the Schedule 14D-9 will not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements made therein,
in the light of the circumstances under which they were made, not misleading.
The Schedule 14D-9 will comply in all material respects with the provisions of
applicable federal securities laws and, on the date filed with the SEC and on
the date first published or sent or given to the Company's stockholders, will
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading, except that the Company makes no representation or
warranty with respect to statements made in the Schedule 14D-9 based on
information furnished by Parent or Purchaser expressly for inclusion therein.
3.37 Opinion of Financial Advisor. The Company has received the written
opinion of Xxxxxxx, Xxxxx & Co. to the effect that, as of the date of such
opinion, the consideration to be received by the holders of the Company's Common
Stock in the Offer and the Merger was fair from a financial point of view to
such stockholders.
3.38 Personnel. Section 3.38 of the Company Disclosure Letter sets forth a
true and complete list of (a) the names and current salaries of all directors
and elected and appointed officers of each of the Company and its subsidiaries,
and (b) the number of shares of Company Common Stock owned beneficially or of
record, or both, by each such person and the family relationships, if any, among
such persons.
3.39 Rights Agreement. The Company and the Board of Directors of the
Company have amended the Rights Agreement and have taken and will maintain in
effect all further necessary action (a) to prevent any Right issued or issuable
under the Rights Agreement from becoming exercisable by virtue of this
Agreement, the Purchaser Option, the Stockholder Agreement, the Offer, the
Merger and the other Transactions and (b) to ensure that (i) neither Parent nor
Purchaser nor any of their "Affiliates" (as defined in the Rights Agreement) or
"Associates" (as defined in the Rights Agreement) is considered to be an
"Acquiring Person" (as defined in the Rights Agreement) and (ii) the provisions
of the Rights Agreement, including the occurrence of a Distribution Date (as
defined in the Rights Agreement), are not and shall not be triggered by reason
of the announcement or consummation of the Offer, the Merger, the execution of
this Agreement, the Purchaser Option or the Stockholder Agreement or the
announcement or consummation of any other Transaction. Prior to the termination
of this Agreement, the Company shall not terminate, amend or modify the Rights
Agreement in any
35
manner other than as contemplated by this Agreement. The Company has made
available to Parent a complete and correct copy of the Rights Agreement as
amended and supplemented to the date of this Agreement.
3.40 Absence of Questionable Payments. Neither the Company nor any of its
subsidiaries nor any director, officer, agent, employee or other person acting
on behalf of the Company or any of its subsidiaries, has used any corporate or
other funds for unlawful contributions, payments, gifts, or entertainment, or
made any unlawful expenditures relating to political activity to government
officials or others or established or maintained any unlawful or unrecorded
funds in violation of Section 30A of the Exchange Act. Neither the Company nor
any subsidiary of the Company nor any current director, officer, agent, employee
or other person acting on behalf of the Company or any subsidiary of the
Company, has accepted or received any unlawful contributions, payments, gifts,
or expenditures. The Company is in compliance with the provisions of Section
13(b) of the Exchange Act.
3.41 Representations Complete. None of the representations or warranties
made by the Company herein or in any Schedule hereto, including the Company
Disclosure Letter, or in any certificate furnished by the Company pursuant to
this Agreement, when all such documents are read together in their entirety,
contains or will contain upon the consummation of the Offer any untrue statement
of a material fact, or omits or will omit upon the consummation of the Offer to
state any material fact necessary in order to make the statements contained
herein or therein, in the light of the circumstances under which made, not
misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to the Company as follows:
4.1 Corporate Existence. Each of Parent and Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. Purchaser was formed solely for the purpose of engaging in
the Transactions and has not engaged in any business activities or conducted any
operations other than in connection with the Transactions.
4.2 Corporate Authorization. The execution, delivery and performance by
each of Parent and Purchaser of this Agreement and the consummation by Parent
and Purchaser of the Transactions are within each of Parent and Purchaser's
corporate powers and have been duly authorized by all necessary corporate
action. This Agreement has been duly executed by each of Parent and Purchaser
and, assuming due authorization, execution and delivery of this Agreement by the
Company, this Agreement constitutes a valid and binding agreement of each of
Parent and Purchaser, enforceable against it in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights, and to general equity
principles.
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4.3 Consents and Approvals; No Violations. None of the execution, delivery
or performance of this Agreement by Parent or Purchaser, the consummation by
Parent or Purchaser of the Transactions, or compliance by Parent or Purchaser
with any of the provisions hereof will (a) conflict with or result in any breach
of any provision of the Certificate of Incorporation or Bylaws of Parent or
Purchaser, (b) require any filing by Parent or Purchaser with, or permit,
authorization, consent or approval of, any Governmental Entity (except for (i)
compliance with any applicable requirements of the Exchange Act, (ii) any filing
pursuant to the DGCL, (iii) filings, permits, authorizations, consents and
approvals as may be required under the HSR Act and comparable merger and
notifications, laws or regulations of foreign jurisdictions, (iv) the filing or
deemed filing with the SEC and the Nasdaq of (x) the Schedule TO, (y) the Proxy
Statement, if stockholder approval is required by law, and (z) such reports
under Section 13(a) of the Exchange Act as may be required in connection with
this Agreement and the Transactions, or (iv) such filings and approvals as may
be required by any applicable state securities, blue sky or takeover laws), or
(c) violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Parent, any of its subsidiaries, or any of their properties or
assets, except in the case of clauses (b) or (c) such violations, breaches or
defaults which would not, individually or in the aggregate, impair in any
material respect the ability of each Parent and Purchaser to perform its
obligations under this Agreement, as the case may be, or prevent the
consummation of any the Transactions.
4.4 Information in the Proxy Statement. The information supplied by Parent
or Purchaser in writing expressly for inclusion or incorporation by reference in
the Proxy Statement (or any amendment thereof or supplement thereto) will not,
at the date mailed to stockholders and at the time of the meeting of
stockholders to be held in connection with the Merger, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements made therein, in
light of the circumstances under which they are made, not misleading.
4.5 Information in the Offer Documents. The Offer Documents will comply in
all material respects with the provisions of applicable federal securities laws
and, on the date filed with the SEC and on the date first published or sent or
given to Company stockholders, will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading, except that Parent and
Purchaser make no representation or warranty with respect to information
furnished by the Company expressly for inclusion in the Offer Documents.
4.6 Financing. Purchaser has, and will have available to it upon the
consummation of the Offer, sufficient funds to consummate the Transactions
contemplated by this Agreement, including payment in full for all Shares validly
tendered into the Offer or outstanding at the Effective Time (and all related
fees and expenses).
4.7 DGCL 203. At no time during the three (3) years prior to the date
hereof was Parent or any of its affiliates or associates an "interested
stockholder" of the Company within the meaning of and as defined in Section 203
of the DGCL.
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ARTICLE V
CONDUCT PRIOR TO THE EFFECTIVE TIME
5.1 Conduct of Business by the Company.
(a) During the period from the date of this Agreement and continuing
until the earlier of the termination of this Agreement pursuant to its terms or
the Effective Time, the Company and each of its subsidiaries shall, except to
the extent that Parent shall otherwise consent in writing, carry on its business
in the usual, regular and ordinary course, in substantially the same manner as
heretofore conducted and in compliance in all material respects with all
applicable laws and regulations, pay its debts and Taxes when due subject to
good faith disputes over such debts, pay or perform other material obligations
when due, and use all reasonable efforts to (i) preserve intact its present
business organization, (ii) keep available the services of its present officers,
employees and contractors and (iii) preserve its relationships with customers,
suppliers, licensors, licensees, and others with which it has business dealings.
(b) Without limiting the generality of the foregoing, without the
prior written consent of Parent, during the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
pursuant to its terms or the Effective Time, the Company shall not do any of the
following and shall not permit its subsidiaries to do any of the following:
(i) waive any stock repurchase rights, accelerate (other than
pursuant to the terms of Company Options in effect as of the date hereof), amend
or change the period of vesting or exercisability of Company Options or
restricted stock, or reprice Company Options granted under the Option Plans or
any other plan, program or arrangement or authorize cash payments in exchange
for any Company Options granted under any of such plans or exercise any
authority under the Option Plans or any Company Employee Plan to accelerate any
vesting or exercise of any Company Option;
(ii) adopt a plan of complete or partial liquidation,
dissolution, merger, acquisition, consolidation, restructuring, recapitalization
or other reorganization (other than the Merger);
(iii) grant any severance, bonus or termination pay to any
employee, officer or director except non-discretionary pay pursuant to written
agreements in effect, or policies existing, on the date hereof and as previously
disclosed in writing to Parent, or adopt any new severance, retention or change
in control plan, policy or arrangement;
(iv) transfer or license to any person or entity or otherwise
extend, amend, modify, permit to lapse or fail to preserve any of the Company
Intellectual Property Rights material to the Company's business as presently
conducted or proposed to be conducted, other than nonexclusive licenses in the
ordinary course of business consistent with past practice, or disclose to any
person who has not entered into a confidentiality agreement any Trade Secrets;
38
(v) other than required dividends on the Series B Preferred
Stock, declare, set aside, or pay any dividends on or make any other
distributions (whether in cash, stock, equity securities or property) in respect
of any capital stock or split, combine or reclassify any capital stock or issue
or authorize the issuance of any other securities in respect of, in lieu of or
in substitution for any capital stock;
(vi) purchase, redeem or otherwise acquire, directly or
indirectly, any shares of capital stock of the Company or its subsidiaries, or
any instrument or security that consists of a right to acquire such shares
except repurchases of unvested shares at cost in connection with the termination
of the employment relationship with any employee pursuant to stock option or
purchase agreements in effect on the date hereof;
(vii) except for grants of Company Options pursuant to written
commitments in effect on the date hereof and to new hires in the ordinary course
of business and consistent with past practice (not to exceed 100,000 shares of
Common Stock in the aggregate to employees that are not officers or directors),
issue or sell, or authorize the issuance or sale of, pledge or otherwise
encumber any shares of its capital stock or any other equity securities, or
issue or sell, or authorize the issuance or sale of, any securities convertible
into or options, warrants or rights to purchase or subscribe to, or enter into
or create any contract with respect to the issuance or sale of, any shares of
its capital stock or any other equity securities, or make any other changes in
its capital structure, except for the issuance and sale of shares of Common
Stock upon the exercise of Company Options or Company Warrants which are
outstanding on the date hereof and other than pursuant to the Company ESPP
consistent with the terms thereof;
(viii) cause, permit or propose any amendments to its Certificate
of Incorporation, Bylaws or other charter documents (or similar governing
instruments of any of its subsidiaries);
(ix) acquire or agree to acquire by merging or consolidating
with, or by purchasing any equity interest in or a portion of the assets of, or
by any other manner, any business or any corporation, partnership, association
or other business organization or division thereof; or otherwise acquire or
agree to acquire any assets which are material, individually or in the
aggregate, to the business of the Company or enter into any joint ventures,
strategic partnerships or alliances;
(x) sell, transfer, lease, license, mortgage, pledge, encumber or
otherwise dispose of any properties or assets which are material, individually
or in the aggregate, to the business of the Company;
(xi) incur any indebtedness for borrowed money or guarantee any
such indebtedness of another person, issue or sell any debt securities or
options, warrants, calls or other rights to acquire any debt securities of the
Company, enter into any "keep well" or other agreement to maintain any financial
statement condition, incur or modify any other material liability or enter into
any arrangement having the economic effect of any of the foregoing other than
(x) in connection with the financing of ordinary course
39
trade payables consistent with past practice or (y) pursuant to existing credit
facilities as in effect on the date hereof in the ordinary course of business;
(xii) adopt or amend any Company Employee Plan, pay, or incur an
obligation or commitment to pay, any special bonus or special remuneration to
any director, officer, consultant or employee, or increase the salaries or wage
rates or fringe benefits (including rights to severance or indemnification) of
its directors, officers, employees or consultants other than increases to
employees who are not directors or affiliates in the ordinary course of
business, consistent with past practice or make any loans to any of its
officers, directors, employees, affiliates, agents or consultants or make any
change in its existing borrowing or lending arrangements for or on behalf of any
of such persons pursuant to a Company Employee Plan or otherwise;
(xiii) pay or agree to pay or make any accrual or arrangement for
payment to any officers, directors, employees or affiliates of the Company or
any of its subsidiaries of any amount relating to unused vacation days, except
payments and accruals made in the ordinary course of business consistent with
past practice;
(xiv) modify, amend or terminate any Company Agreement, or waive,
release or assign any material rights or claims thereunder, other than any such
modification, amendment or termination of any such material contract or any such
waiver, release or arrangement thereunder in the ordinary course of business
consistent with past practice;
(xv) modify, amend or terminate, or waive, release or assign any
material rights or claims with respect to any confidentiality agreement or
non-competition agreement to which the Company is a party.
(xvi) pay, discharge, satisfy or settle any pending or threatened
adverse third party claims, suits, actions, liabilities or other obligations
(whether absolute, accrued, contingent or otherwise), other than the payment,
discharge or satisfaction of any such claims, liabilities or obligations, in the
ordinary course of business consistent with past practice, or of claims,
liabilities or obligations reflected or reserved against in, or contemplated by,
the consolidated financial statements (or the notes thereto) of the Company;
(xvii) commence, join or make an appeal with respect to any
action, claim, suit, arbitration, litigation or other proceeding for money
damage or other relief against any third party (other than Parent or Purchaser)
before any court or governmental or other regulatory or administrative agency or
commission in any jurisdiction, other than ordinary course collections claims
for accounts receivable due and payable to the Company or any of its
subsidiaries not exceeding $50,000 in the aggregate or which would result in any
restrictions on its operations or which relates to this Agreement or the
Transactions;
(xviii) enter into any contract which involves payments or
commitments or results in potential liability in excess of $100,000 in any
consecutive
40
twelve (12) month period, or, in cases where the Company or a subsidiary of the
Company is the party responsible for such payment, commitment or liability which
is not terminable upon thirty (30) days notice other than in the ordinary course
of business consistent with past practice;
(xix) permit any insurance policy naming it as a beneficiary or a
loss payee to be cancelled or terminated without notice to and consent by
Parent;
(xx) revalue any of its assets or make any change in accounting
methods, principles or practices, except as required by GAAP after notice to
Parent;
(xxi) delay or postpone the payment of accounts payable or other
liabilities other than in the ordinary course of business;
(xxii) make or change any election relating to Taxes, adopt or
change any accounting method relating to Taxes, enter into any closing agreement
relating to Taxes, file any amended Tax Return, settle or consent to any claim
or assessment relating to Taxes, incur any obligation to make any payment of, or
in respect of, any Taxes, except in the ordinary course of business, or agree to
extend or waive the statutory period of limitations for the assessment or
collection of Taxes;
(xxiii) fail to make in a timely manner any filings with the SEC
required under the Securities or the Exchange Act or the rules and regulations
promulgated thereunder;
(xxiv) except as required by applicable law or GAAP, make any
change in its accounting principles, practices or methods after notice to
Parent;
(xxv) take any action that would or is reasonably likely to
result in any of the conditions to the Merger set forth in Article VII or any of
the conditions to the Offer set forth in Annex I not being satisfied, or would
make any representation or warranty of the Company contained herein inaccurate
in any material respect at, or as of any time prior to, the Effective Time, or
that would materially impair the ability of the Company to consummate the Merger
in accordance with the terms hereof or materially delay such consummation;
(xxvi) enter into any agreement or commitment the effect of which
would be to grant to a third party following the Merger any actual or potential
right or license of any material Intellectual Property Rights owned by Parent or
any of its subsidiaries, in each case, other than the Surviving Corporation or
any successor thereto;
(xxvii) take any action to exempt or make any person (other than
Parent or Purchaser) not subject to the provisions of Section 203 of the DGCL or
any other potentially applicable anti-takeover or similar statute or regulation;
(xxviii) redeem the Rights or amend, waive any rights under or
otherwise modify or terminate the Rights Agreement in connection with an
Acquisition Proposal by any person other than Parent or Purchaser or render the
Rights Agreement
41
inapplicable to any Acquisition Proposal by any person other than Parent or
Purchaser unless, and only to the extent that, the Company is required to do so
by a court of competent jurisdiction; or
(xxix) enter into any written agreement, contract, commitment or
arrangement to do any of the foregoing, or authorize, recommend, propose, in
writing or otherwise or announce an intention to do any of the foregoing.
5.2 No Solicitation.
(a) Each of the Company and its Representatives (as defined below)
has ceased and caused to be terminated all existing solicitations, initiations,
encouragements, discussions, negotiations and communications with any persons or
entities with respect to any offer or proposal relating to any transaction or
series of related transactions other than the Transactions involving: (i) any
acquisition or purchase from the Company by any person or group (as defined in
Section 9.4(c)) of more than a fifteen percent (15%) interest in the total
outstanding voting securities of the Company or any tender offer or exchange
offer that if consummated would result in any person or group beneficially
owning fifteen percent (15%) or more of the total outstanding voting securities
of the Company; (ii) any merger, consolidation, business combination or similar
transaction involving the Company; (iii) any sale, lease, exchange, transfer,
license, acquisition or disposition of more than fifteen percent (15%) of the
assets of the Company; or (iv) any recapitalization, restructuring, liquidation
or dissolution of the Company (each, an "Acquisition Proposal"). Except as
provided in Section 5.2(b), from the date of this Agreement until the earlier of
termination of this Agreement or the Effective Time, the Company shall not and
shall not authorize or permit its officers, directors, employees, investment
bankers, attorneys, accountants or other agents or those of its subsidiaries
(collectively, "Representatives") to directly or indirectly (i) initiate,
solicit or knowingly encourage, or knowingly take any action (other than the
issuance of the joint press release under Section 6.2 or filings with the SEC
permitted by this Agreement), to facilitate the making of, any offer or proposal
which constitutes or is reasonably likely to lead to any Acquisition Proposal,
(ii) enter into any agreement with respect to any Acquisition Proposal (other
than a confidentiality agreement entered into in compliance with the terms of
Section 5.2(b)), (iii) in the event of an unsolicited Acquisition Proposal for
the Company, engage in negotiations or discussions with, or provide any
non-public information or data to, any person or group (other than Parent or any
of its affiliates or representatives) relating to any Acquisition Proposal, or
(iv) grant any waiver or release under any standstill or other agreement. Any
violation of the foregoing restrictions by any of the Company's Representatives,
whether or not such Representative is so authorized and whether or not such
Representative is purporting to act on behalf of the Company or otherwise, shall
be deemed to be a material breach of this Agreement by the Company.
Notwithstanding the foregoing, nothing contained in this Section 5.2 or any
other provision hereof shall prohibit the Company or the Company Board of
Directors from (i) taking and disclosing to the Company's stockholders its
position with respect to any tender or exchange offer by a third party pursuant
to Rules 14d-9 and 14e-2 and Item 1012(a) of Regulation M-A promulgated under
the Exchange Act, or (ii) making such disclosure to the Company's stockholders
(including withdrawing or modifying, in a manner adverse to the Transactions
contemplated by this Agreement, the approval or recommendation by the Company
Board of Directors or any committee thereof in favor of the Offer, this
Agreement or the Merger) as in the good faith judgment of the Company
42
Board of Directors, only after receipt of advice from outside legal counsel to
the Company that such disclosure is required under applicable law and that the
failure to make such disclosure is reasonably likely to cause the Company Board
of Directors to violate its fiduciary duties to the Company 's stockholders
under applicable law, is required.
(b) Notwithstanding the foregoing or any other provision of this
Agreement, prior to the acceptance of Shares pursuant to the Offer, the Company
may furnish non-public information to any person or group pursuant to a
confidentiality agreement with terms no less favorable to the Company than those
contained in the confidentiality agreement, dated September 2, 2003, entered
into between Parent and the Company (as amended through the date hereof, the
"Confidentiality Agreement"), and may negotiate and participate in discussions
and negotiations with such person or group concerning an Acquisition Proposal
if, but only if, (i) (x) such Acquisition Proposal provides for consideration to
be received by the holders of all, but not less than all, of the issued and
outstanding Shares (a "Takeover Proposal"); (y) such person or group has on an
unsolicited basis, and in the absence of any violation of this Section 5.2 by
the Company or its Representatives, submitted a bona fide written proposal to
the Company relating to any such Takeover Proposal which at least a majority of
the full Board of Directors of the Company determines in good faith, after
receiving advice from a nationally recognized investment banking firm and its
outside legal counsel, involves consideration to the holders of the Shares that
is, or is reasonably likely to lead to a proposal that is, more favorable from a
financial point of view to the Company's stockholders than the consideration
offered pursuant to the Offer, is reasonably capable of being completed and
which is not conditioned upon obtaining additional financing, in each case
taking into account, among other things, conditions to consummation, required
regulatory approvals and the fees payable to Parent hereunder, and (z) in the
good faith opinion of the Company Board of Directors, only after consultation
with outside legal counsel to the Company, providing such information or access
or engaging in such discussions or negotiations is in the best interests of the
Company and its stockholders and the failure to provide such information or
access or to engage in such discussions or negotiations would cause the Company
Board of Directors to violate its fiduciary duties to the Company's stockholders
under applicable law (a Takeover Proposal which satisfies clauses (x), (y) and
(z) being referred to herein as a "Superior Proposal"). The Company shall
promptly, and in any event within forty-eight (48) hours following receipt of an
Acquisition Proposal, and prior to providing any person or group with any
material non-public information, notify Parent orally and in writing of such
Acquisition Proposal, which notice shall disclose the identity of the other
party and the material terms of such Acquisition Proposal. The Company shall
promptly, and in any event within twenty-four (24) hours following a
determination by the Company Board of Directors that a Takeover Proposal is a
Superior Proposal or is reasonably likely to lead to a Superior Proposal, notify
Parent of such determination. The Company shall promptly provide to Parent any
material non-public information regarding the Company provided to any other
person or group which was not previously provided to Parent, such additional
information to be provided no later than the date of provision of such
information to such other person or group.
(c) Except as set forth in this Section 5.2, neither the Company
Board of Directors nor any committee thereof shall (i) withdraw or modify, or
propose to withdraw or modify, in a manner adverse to the Transactions
contemplated by this Agreement, Parent or Purchaser, the approval, or
recommendation by the Company Board of Directors or any committee thereof in
favor of the Offer, this Agreement or the Merger, (ii) approve or
43
recommend or propose to approve or recommend any Acquisition Proposal of any
person or group other than Parent and Purchaser or (iii) enter into any
agreement with respect to any Acquisition Proposal of any person or group other
than Parent and Purchaser (other than a confidentiality agreement entered into
in compliance with the terms of Section 5.2(b)). Notwithstanding the foregoing
or any other provision of this Agreement, prior to the time of acceptance for
payment of Shares in the Offer, the Company Board of Directors may (subject to
the terms of this and the following sentence) withdraw or modify its approval or
recommendation in favor of the Offer, this Agreement or the Merger, approve or
recommend a Superior Proposal, or enter into an agreement with respect to a
Superior Proposal (and make any amendments to the Rights Agreement necessary
thereto), in each case, only after the third business day following the
Company's delivery to Parent of written notice advising Parent that the Company
Board of Directors has received a Superior Proposal, specifying the material
terms and conditions of such Superior Proposal, identifying the person or group
making such Superior Proposal and advising Parent that the Company intends to
approve or recommend a Superior Proposal or enter into an agreement with respect
to a Superior Proposal (specifying which course of action the Company intends to
take); provided, however, that the Company shall not enter into an agreement
with respect to a Superior Proposal unless the Company shall also terminate this
Agreement in compliance with Section 5.2(d). Any such withdrawal, modification
or change of the recommendation of the Company Board of Directors, the approval
or recommendation or proposed approval or recommendation of any Superior
Proposal or the entry by the Company into any agreement with respect to any
Superior Proposal shall not change the approval of the Company Board of
Directors for purposes of causing any state takeover statute or other state law
to be inapplicable to the Transactions.
(d) The Company may terminate this Agreement and enter into an
acquisition agreement or other similar agreement (each, an "Acquisition
Agreement") with respect to such Superior Proposal pursuant to Section 8.1(g) at
any time three (3) business days following delivery of the notice referenced in
Section 5.2(c); provided, that (i) neither the Company nor its Representatives
is in material breach of this Section 5.2, (ii) during the three (3) business
day period following the Company's delivery to Parent of the written notice
described in Section 5.2(c), Parent shall have the right to propose adjustments
in the terms and conditions of this Agreement and the Company shall have caused
its financial and legal advisors to negotiate with Parent in good faith such
proposed adjustments in the terms and conditions of this Agreement, and (iii)
upon the expiration of the three (3) business day period following the Company's
delivery to Parent of the written notice described in Section 5.2(c), the
Company delivers to Parent (x) a written notice of termination of this Agreement
pursuant to this Section 5.2(d), and (y) pays the Termination Fee (as defined in
Section 8.2(b)) plus the Expense Fee (as defined in Section 8.2(b)), as the same
may have been estimated by Parent in good faith prior to the date of such
delivery (subject to the limitations of Section 8.2(b) and to an adjustment
payment between the parties upon Parent's definitive determination of such
expenses) as set forth in Section 8.2.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Confidentiality; Access to Information.
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(a) The parties acknowledge that the Company and Parent have
previously executed the Confidentiality Agreement. Unless otherwise required by
law or regulation (including Nasdaq or NYSE rules) or pursuant to the terms and
provisions of the Confidentiality Agreement or this Agreement, Parent and the
Purchaser will hold any information which is non-public in confidence in
accordance with the terms of the Confidentiality Agreement and, in the event
this Agreement is terminated for any reason, Parent or the Purchaser shall
promptly return or destroy such information in accordance with the
Confidentiality Agreement.
The Company will afford Parent and its Representatives reasonable access during
normal business hours to the properties, books, analysis, projections, plans,
systems, contracts, commitments, records, personnel offices and other facilities
of the Company and its subsidiaries during the period prior to the Effective
Time to obtain all information concerning the business, including the status of
product development efforts, properties, results of operations and personnel of
the Company and use all reasonable efforts to make available at all reasonable
times during normal business hours to Parent and its Representatives, the
appropriate individuals (including management personnel, attorneys, accountants
and other professionals) for discussion of the Company's business, properties,
prospects and personnel as Parent may reasonably request. The Company agrees to
provide its consent and to execute suitable confidentiality agreements allowing
the Company's third party suppliers, strategic partners and customers to meet
with and hold discussions with representatives of Parent. During such period,
the Company shall (and shall cause each of the Company's subsidiaries to),
subject to any limitations imposed by law with respect to records of employees,
furnish promptly to Parent and the Purchaser (i) a copy of each report,
schedule, registration statement and other document filed or received by it
during such period pursuant to the requirements of federal securities laws and
(ii) all other information concerning its business, properties and personnel as
Parent or the Purchaser may reasonably request. No information or knowledge
obtained by Parent in any investigation pursuant to this Section 6.1 will affect
or be deemed to modify any representation or warranty contained herein or the
conditions to the obligations of the parties to consummate the Merger.
(b) Notwithstanding anything to the contrary contained in this
Agreement or the Confidentiality Agreement, the parties (and each employee,
representative or other agent of the parties) may disclose to any and all
persons, without limitation of any kind, the tax treatment and tax structure of
the transactions contemplated hereby beginning on the earliest of (i) the date
of the public announcement by the parties of discussions relating to the
Transactions, (ii) the date of public announcement by the parties of the
Transactions hereby or (iii) the date of the execution of this Agreement;
provided, however, that nothing in this Section 6.1(b) shall permit either party
(or any employee, representative or agent thereof) to disclose (i) any
information that is not necessary to understand the tax treatment and tax
structure of such transactions (including the identity of the parties and any
information that could lead another to determine the identity of the parties) or
(ii) any other information to the extent that such disclosure could result in a
violation of any federal or state securities law.
6.2 Public Disclosure. The initial press release concerning the Offer and
the Merger shall be a joint press release and, thereafter, neither Parent,
Purchaser nor the Company will disseminate any press release or other
announcement concerning the Merger, the Offer or this Agreement or the other
Transactions contemplated by this Agreement to any third party or to the
employees of the Company without the prior written consent of each of the other
parties hereto,
45
which consent shall not be unreasonably withheld; provided, however, that the
Company and Parent may file a copy of this Agreement and the related agreements
as exhibits to a Current Report on Form 8-K filed in connection with the
announcement of this Agreement. The parties have agreed to the text of the joint
press release announcing the execution of this Agreement.
6.3 Reasonable Efforts; Notification.
(a) Subject to the express provisions of Section 5.2 hereof and upon
the terms and subject to the conditions set forth in this Agreement, each of the
parties agrees to use all reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, and to assist and cooperate with the
other parties in doing, all things necessary, proper or advisable to consummate
and make effective, in the most expeditious manner practicable, the Merger and
the other Transactions, including complying in all material respects with all
applicable laws and with all rules and regulations of any Governmental Entity,
using all reasonable efforts to accomplish the following: (i) the taking of all
reasonable acts necessary to cause the Minimum Condition and all the conditions
set forth in Article VII and in Annex I hereto to be satisfied and to consummate
and make effective the Offer, the Merger and the other Transactions, (ii) the
obtaining of all necessary actions or non-actions, waivers, consents, approvals,
orders and authorizations from Governmental Entities and the making of all
necessary registrations, declarations and filings (including registrations,
declarations and filings with Governmental Entities, if any) and the taking of
all reasonable steps as may be necessary to avoid any suit, claim, action,
investigation or proceeding by any Governmental Entity, (iii) the obtaining of
all necessary consents, approvals or waivers from third parties, (iv) the
defending of any suits, claims, actions, investigations or proceedings, whether
judicial or administrative, challenging this Agreement or the consummation of
the Transactions, including seeking to have any stay or temporary restraining
order entered by any court or other Governmental Entity vacated or reversed if
there is a reasonable possibility that defending such actions would result in
their dismissal, removal, elimination or termination, and (v) the execution or
delivery of any additional instruments necessary to consummate the Transactions,
and to carry out fully the purposes of, this Agreement. In connection with and
without limiting the foregoing, the Company and its Board of Directors shall, if
any state takeover statute or similar statute or regulation is or becomes
applicable to the Merger, this Agreement or any of the other Transactions, use
all reasonable efforts to ensure that the Merger and the other Transactions may
be consummated as promptly as practicable on the terms contemplated by this
Agreement and otherwise to minimize the effect of such statute or regulation on
the Merger, this Agreement and the other Transactions. Notwithstanding anything
in this Agreement to the contrary, nothing in this Agreement shall be deemed to
require Parent, Purchaser or any subsidiary or affiliate thereof to take or
agree to take any Action of Divestiture (as defined below) which would be
reasonably expected either to materially and adversely impact the benefits
expected to be derived by Parent as a result of the transactions contemplated
hereby or to have a Material Adverse Effect on the business of the Company and
its subsidiaries as currently conducted or as contemplated to be conducted on a
combined basis with the business of Parent and its subsidiaries following the
Merger. For purposes of this Agreement, an "Action of Divestiture" shall mean
(i) making proposals, executing or carrying out agreements or submitting to any
applicable federal, state, local, municipal, foreign or other law, statute,
constitution, principle of common law, resolution, ordinance, code, order,
judgment, edict, decree, rule, regulation, ruling or requirement issued,
enacted, adopted, promulgated, implemented or otherwise put into effect by or
under the
46
authority of any Governmental Entity (a "Legal Requirement") providing for the
license, sale or other disposition or holding separate (through the
establishment of a trust or otherwise) of any assets or categories of assets of
Parent, any of its affiliates or the Company or the holding separate of the
shares of Common Stock or Series B Preferred Stock or imposing or seeking to
impose any limitation on the ability of Parent or any of its subsidiaries or
affiliates to conduct their business or own such assets or to acquire, hold or
exercise full rights of ownership of the shares of the Common Stock or Series B
Preferred Stock or (ii) otherwise taking any step to avoid or eliminate any
impediment which may be asserted under any Legal Requirement governing
competition, monopolies or restrictive trade practices. In case at any time
after the Effective Time any further action is necessary or desirable to carry
out the purposes of this Agreement, the proper officers and directors of the
Company, Parent and Purchaser shall use all reasonable efforts to take, or cause
to be taken, all such necessary actions.
(b) The Company shall give prompt notice to Parent of (i) any
representation or warranty made by the Company in this Agreement that is untrue
or inaccurate in any material respect at any time from the date hereof to the
Effective Time (ii) any condition set forth in Annex I that is unsatisfied in
any material respect at any time from the date hereof to the date the Purchaser
purchases Shares pursuant to the Offer (except to the extent it refers to a
specific date), (iii) any change or event having or which could, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect on
the Company and (iv) any material failure of the Company or any Representative
to comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by it hereunder; provided, however, that no such notification
shall affect the representations, warranties, covenants or agreements of the
parties or the conditions to the obligations of the parties under this Agreement
or the Purchaser Option.
6.4 Indemnification.
(a) For a period of six (6) years after the Effective Time, Parent
will cause the Surviving Corporation to fulfill and honor in all respects the
obligations of the Company pursuant to any indemnification agreements, dated
prior to the date hereof and set forth in Section 6.4(a) the Company Disclosure
Letter, between the Company and its present and former directors and officers
(the "Indemnified Parties") and any indemnification provisions under the
Company's Certificate of Incorporation or Bylaws as in effect on the date
hereof. The Certificate of Incorporation and Bylaws of the Surviving Corporation
will contain provisions with respect to exculpation and indemnification that are
at least as favorable to the Indemnified Parties as those contained in the
Certificate of Incorporation and Bylaws of the Company as in effect on the date
hereof, which provisions will not be amended, repealed or otherwise modified for
a period of six (6) years from the Effective Time in any manner that would
adversely affect the rights thereunder of the Indemnified Parties.
(b) For a period of six (6) years after the Effective Time, Parent
will, at its election, either (i) cause the Surviving Corporation to use its
commercially reasonable efforts to maintain in effect, if available, directors'
and officers' liability insurance covering those persons who are currently
covered by the Company's directors' and officers' liability insurance policy on
terms comparable to those applicable to the directors and officers of the
Company or (ii) obtain, or permit the Company to obtain, a six (6) year "tail"
insurance policy that provides coverage substantially similar to the coverage
provided under the Company's directors' and officers'
47
liability insurance covering those persons who are currently covered by the
Company's directors' and officers' liability insurance policy on terms
comparable to those applicable to the directors and officers of the Company;
provided, however, that in no event will the Surviving Corporation be required
to expend in excess of one hundred twenty-five percent (125%) of the annual
premium currently paid by the Company for such coverage (the "Current Annual
Premium Amount") (or such coverage as is available for such one hundred
twenty-five percent (125%) of such annual premium). The Current Annual Premium
Amount is set forth on Section 6.4(b) of the Company Disclosure Letter.
(c) This Section 6.4 shall survive the consummation of the Merger,
is intended to benefit the Company, the Surviving Corporation and each
indemnified party, shall be binding on all successors and assigns of the
Surviving Corporation and Parent, and shall be enforceable by the Indemnified
Parties.
6.5 Litigation. The Company shall give Parent the opportunity to
participate in the defense of any litigation (other than where the Parent or
Purchaser is an adverse party) against the Company and/or any of its
subsidiaries and/or any of their respective directors relating to the
Transactions.
6.6 Interim Directors. Pursuant to Section 1.3(b), the Company shall use
all reasonable efforts to cause a sufficient number of its current directors to
continue as Independent Directors of the Company until the Effective Time.
6.7 Resignation of Directors. Prior to the Effective Time, the Company
shall cause each member of its Board of Directors and every member of the Board
of Directors of each subsidiary of the Company not designated by Parent pursuant
to Section 1.3, to execute and deliver a letter effectuating his or her
voluntary resignation as a director of the Board of Directors of the Company and
each of its subsidiaries effective immediately prior to the Effective Time.
6.8 Rights Agreement. The Company has amended the Rights Agreement and
shall take such further action as may be necessary under the Rights Agreement to
render the Rights Agreement inapplicable to the negotiation and execution of
this Agreement, the Purchaser Option, the Stockholder Agreement, the Offer, the
Merger and any other Transaction. As soon as practicable on or after the date
hereof, but in any event no later than two (2) business days, the Company shall
register the Rights on Form 8-A and list the Rights for trading on the Nasdaq.
6.9 Benefit Plans. Parent shall, from and after the Effective Time, (i)
until such time as employees of the Company are covered by or participating in
Parent's medical, dental, life and short- and long-term disability insurance and
401(k) plans, comply with the Company's medical, dental, life, short- and
long-term disability insurance and 401(k) plans in accordance with their terms
to the extent not inconsistent with applicable law, (ii) provide employees of
the Company who remain as employees of the Surviving Corporation with employee
benefit plans which are no less favorable in the aggregate than those provided
to similarly situated employees of Parent, (iii) provide employees of the
Company who remain as employees of the Surviving Corporation credit for years of
service with the Company or any of its subsidiaries prior to the Effective Time
for the purpose of eligibility and vesting pursuant to Parent's plans and
policies (but not for
48
accrual of benefits to the extent that such credit would result in a duplication
of benefits), and (iv) cause any and all pre-existing condition limitations (to
the extent such limitations did not apply to a pre-existing condition under
comparable Company Employee Plans) and eligibility waiting periods under group
health plans of Parent to be waived with respect to former employees of the
Company who remain as employees of the Surviving Corporation (and their eligible
dependents) and who become participants in similar group health plans of Parent
or the Surviving Corporation. Former employees of the Company who remain as
employees of the Surviving Corporation shall also be given credit for any
deductible or co-payment amounts paid in respect of the plan year of Parent in
which the Effective Time occurs, to the extent, following the Effective Time,
they participate in any of Parent's plans during such plan year for which
deductibles or co-payments are required. Nothing in this Section 6.9 shall be
interpreted as preventing Parent or its subsidiaries from amending, modifying or
terminating any Company Employee Plans, or other contracts, arrangements,
commitments or understandings.
6.10 Guarantee of Performance. Parent hereby guarantees the payment and
performance by Purchaser of all of its obligations under this Agreement.
ARTICLE VII
CONDITIONS
7.1 Conditions to Obligations of Each Party to Effect the Merger. The
respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction or written waiver at or prior to the
Closing Date of the following conditions:
(a) Stockholder Approval. The Merger and this Agreement shall have
been approved and adopted by the requisite vote of the holders of the Shares, to
the extent required pursuant to the requirements of the Certificate of
Incorporation and the DGCL.
(b) Statutes; Court Orders. No statute, rule or regulation shall
have been enacted or promulgated by any Governmental Entity which prohibits the
consummation of the Merger, and there shall be no order or injunction of a court
of competent jurisdiction in effect preventing consummation of the Merger.
(c) Purchase of Shares in Offer. Purchaser shall have purchased, or
caused to be purchased, Shares pursuant to the Offer; provided, however, that
this condition shall be deemed to have been satisfied with respect to the
obligation of Parent and Purchaser to effect the Merger if Purchaser fails to
accept for payment or pay for Shares validly tendered pursuant to the Offer in
violation of the terms of the Offer or of this Agreement.
(d) HSR Approval. The applicable waiting period under the HSR Act
and any comparable provisions under any applicable pre-merger notification laws
or regulations of foreign jurisdictions shall have expired or been terminated.
49
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.1 Termination. This Agreement may be terminated and the Transactions may
be abandoned at any time before the Effective Time, whether before or after
stockholder approval thereof:
(a) by mutual written consent duly authorized by the Board of
Directors of Parent and the Board of Directors of the Company; or
(b) by either Parent or the Company (i) if a court of competent
jurisdiction or other Governmental Entity shall have issued an order, decree or
ruling or taken any other action (including the failure to have taken an
action), in each case having the effect of permanently restraining, enjoining or
otherwise prohibiting any of the Transactions or (ii) if Purchaser has not
accepted and paid for the Shares pursuant to the Offer by December 31, 2003 (the
"Termination Date"); provided, however, that the right to terminate this
Agreement pursuant to this Section 8.1(b) shall not be available to any party
whose action or failure to fulfill any obligation under this Agreement has been
the principal cause of, or resulted in, the failure of the Offer to be
consummated by such date; or
(c) by Parent if the Minimum Condition shall not have been satisfied
by the Initial Expiration Date (including any extensions thereof); provided,
however, that Parent shall not be entitled to terminate this Agreement pursuant
to this Section 8.1(c) if it or Purchaser is in material breach of its
representations and warranties, covenants or other agreements under this
Agreement and such breach has been the cause of, or resulted in, such failure to
satisfy the Minimum Condition; or
(d) by Parent if (i) prior to the purchase of Shares pursuant to the
Offer, there has been a material breach by the Company of any representation,
warranty, covenant or agreement set forth in this Agreement, which breach is
reasonably likely to result in any condition set forth in Annex I not being
satisfied and such breach has not been cured or such condition has not been
satisfied within thirty (30) days after the receipt of notice thereof or such
breach is not reasonably capable of being cured or such condition is not
reasonably capable of being satisfied within such period or (ii) due to an
occurrence or circumstance that would result in a failure to satisfy any
condition set forth in Annex I hereto, Purchaser shall have (x) failed to
commence the Offer within sixty (60) days following the date of this Agreement,
(y) allowed the Offer to terminate without having accepted any Shares for
payment thereunder or (z) failed to accept Shares for payment pursuant to the
Offer prior to the Termination Date, unless such action or inaction under
clauses (x), (y) or (z) shall have been principally caused by or resulted from
the failure of either of Parent or Purchaser to perform, in any material
respect, any of its covenants or agreements contained in this Agreement, or the
breach by Parent of any of its representations or warranties contained in this
Agreement; or
(e) by Parent, at any time prior to the purchase of the Shares
pursuant to the Offer, if (i) the Company Board of Directors shall have
withdrawn, modified, or changed its approval or recommendation in favor of this
Agreement or the Offer in a manner adverse to
50
Parent or Purchaser, (ii) the Company Board of Directors or any committee
thereof shall have approved or recommended any Acquisition Proposal, (iii) a
tender or exchange offer relating to its securities shall have been commenced by
a person unaffiliated with Parent and it shall not have sent to its security
holders pursuant to Rule 14e-2 promulgated under the Exchange Act, within ten
(10) business days after such tender or exchange offer is first published, sent
or given, a statement disclosing that the Company Board of Directors recommends
rejection of such tender or exchange offer or (iv) the Company shall have
violated or breached in any material respect any of its obligations under
Section 5.2, unless there has been a material breach by Parent or Purchaser of
any representation, warranty, covenant or agreement contained in this Agreement
except to the extent such breach, together with all such breaches, does not and
would not be likely to have a material adverse effect on Parent's or Purchaser's
ability to consummate the Offer or the Merger; or
(f) by the Company if (i) prior to the purchase of Shares pursuant
to the Offer that would represent a majority of the Shares on a Fully Diluted
Basis, there has been a material breach by Parent or Purchaser of any
representation, warranty, covenant or agreement contained in this Agreement
except to the extent such breach, together with all such breaches, does not and
would not be likely to have a material adverse effect on Parent's or Purchaser's
ability to consummate the Offer or the Merger (and such breach has not been
cured or such condition has not been satisfied within thirty (30) days after the
receipt of notice thereof or such breach is not reasonably capable of being
cured or such condition is not reasonably capable of being satisfied with such
period); or (ii) due to an occurrence or circumstance that would result in a
failure to satisfy any condition set forth in Annex I hereto, Purchaser shall
have (x) failed to commence the Offer within sixty (60) days following the date
of this Agreement, (y) allowed the Offer to terminate without having accepted
any Shares for payment hereunder or (z) failed to accept Shares for payment
pursuant to the Offer prior to the Termination Date, unless such action or
inaction under clauses (x), (y) or (z) shall have been principally caused by or
resulted from the failure of the Company to perform, in any material respect,
any of its covenants or agreements contained in this Agreement, or the material
breach by the Company of any of its representations or warranties contained in
this Agreement; or
(g) by the Company pursuant to Section 5.2(d).
8.2 Effect of Termination.
(a) In the event of the termination of this Agreement as provided in
Section 8.1, written notice thereof shall forthwith be given to the other party
or parties specifying the provision hereof pursuant to which such termination is
made, and this Agreement shall forthwith become null and void and there shall be
no liability on the part of Parent, Purchaser or the Company (or any of their
representatives), except (i) as set forth in this Section 8.2, Section 8.3 and
Article IX, each of which shall survive the termination of this Agreement and
(ii) nothing herein shall relieve any party from liability for any material
breach of this Agreement.
(b) If (i) Parent shall have terminated this Agreement pursuant to
Section 8.1(e) or (ii) the Company shall have terminated this Agreement pursuant
to Section 8.1(g), then the Company shall pay to Parent promptly, but in no
event later than two (2) business days after the date of such termination if
pursuant to Section 8.1(e), or immediately prior thereto or concurrent
51
therewith if pursuant to Section 8.1(g), a termination fee of $9.3 million (the
"Termination Fee"), plus an amount equal to the actual out-of-pocket expenses
(including, without limitation, legal, accounting and investment banking fees,
if any, and disbursements) incurred by Parent and Purchaser in connection with
the Offer, the Merger and this Agreement up to an aggregate amount of $1.0
million (the "Expense Fee"); provided, however, that in the event of termination
pursuant to Section 8.1(e)(i), (ii), or (iii) or 8.1(g), one-half of the
aggregate Termination Fee and Expense Fees (as the same may have been estimated
by Parent in good faith prior to the time such payment is due, with an
adjustment payment in cash upon Parent's definitive determination of the Expense
Fee) otherwise payable in cash may, at the election of the Company, instead be
paid pursuant to a promissory note and security agreement in the forms attached
hereto as Exhibit E, which note shall be executed and delivered within the time
periods otherwise provided herein.
(c) If Parent shall have terminated this Agreement pursuant to
Section 8.1(b)(ii) or 8.1(d)(i) and (i) prior to the termination of this
Agreement a bona fide Acquisition Proposal shall have been publicly announced or
shall have become publicly known and not withdrawn and (ii) within twelve (12)
months following the date of this Agreement an Acquisition Proposal with any
party other than Parent and Purchaser is announced or consummated, the Company
shall pay to Parent the Termination Fee and the Expense Fee promptly, but in no
event later than two (2) business days after the earlier of the announcement of
the Acquisition Agreement or the consummation of the acquisition; provided,
however, that one-half of the aggregate Termination Fee and Expense Fee (as the
same may have been estimated by Parent in good faith prior to the time such
payment is due, with an adjustment payment in cash upon Parent's definitive
determination of the Expense Fee) otherwise payable in cash may, at the election
of the Company, instead be paid pursuant to a promissory note and security
agreement in the forms attached hereto as Exhibit E, which note shall be
executed and delivered within the time periods otherwise provided herein. For
the purposes of this Section 8.2(c), the term "Acquisition Proposal" shall have
the meaning set forth in Section 5.2(a), except that the percentages set forth
in such provision shall be changed to 50%, and except that the events described
in clause (iv) thereof shall not be deemed to be Acquisition Proposals.
(d) Except as provided above, the Company shall pay the Termination
Fee and the Expense Fee to Parent in cash by wire transfer in immediately
available funds to such account as Parent may designate to the Company in
writing.
8.3 Fees and Expenses. Except as provided in Section 8.2, all fees, costs
and expenses incurred in connection with this Agreement and the Transactions
contemplated hereby shall be paid by the party incurring such expenses whether
or not the Merger is consummated; provided, however, that Parent and the Company
shall share equally all fees and expenses, other than attorneys' and accountants
fees and expenses, incurred in relation to the printing and filing with the SEC
of the Offer Documents, 14D-9 and Proxy Statement (including any preliminary
materials related thereto) and any amendments or supplements thereto, and the
filing of any documents required under the HSR Act.
52
ARTICLE IX
GENERAL PROVISIONS
9.1 Non-Survival of Representations and Warranties. None of the
representations and warranties contained in this Agreement or in any schedule,
instrument or other document delivered pursuant to this Agreement shall survive
the Effective Time, and only the covenants and exhibits that by their terms
survive the Effective Time and this Article IX shall survive the Effective Time.
9.2 Extension; Waiver. At any time prior to the Effective Time any party
hereto may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(b) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto, and (c)
waive compliance with any of the agreements or conditions for the benefit of
such party contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party. Delay in exercising any right under this
Agreement shall not constitute a waiver of such right.
9.3 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by commercial
delivery service, or sent via telecopy (receipt confirmed) to the parties at the
following addresses or telecopy numbers (or at such other address or telecopy
numbers for a party as shall be specified by like notice):
(a) if to Parent or Purchaser:
Emulex Corporation
0000 Xxxxxx Xxxxxxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxx
Vice President, General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(b) if to the Company:
Vixel Corporation
00000 Xxxxx Xxxxx Xxxxxxx Xxxxx
00
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx
Chief Financial Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxx White & XxXxxxxxx LLP
000 0xx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
9.4 Interpretation; Certain Defined Terms.
(a) When a reference is made in this Agreement to Exhibits, such
reference shall be to an Exhibit to this Agreement unless otherwise indicated.
When a reference is made in this "Agreement to Sections, such reference shall be
to a Section of this Agreement unless otherwise indicated. The words "include,"
"includes" and "including" when used herein shall be deemed in each case to be
followed by the words "without limitation." The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. When reference is
made herein to "the business of" an entity, such reference shall be deemed to
include the business of all direct and indirect subsidiaries of such entity.
(b) For purposes of this Agreement, "affiliates" shall have the
meaning set forth in Rule 12b-2 of the Exchange Act.
(c) For purposes of this Agreement, the term "group" shall have the
meaning set forth under Section 13(d) of the Exchange Act and the rules and
regulations thereunder.
(d) For purposes of this Agreement, the term "knowledge" means (i)
with respect to any natural person, the actual knowledge of such person, and
(ii) with respect to any corporation or entity, the actual knowledge of such
party's officers and directors provided that such persons shall have made due
and diligent inquiry of those employees of such party whom such officers and
directors reasonably believe would have actual knowledge of the matters
represented.
(e) For purposes of this Agreement, any reference to a "Material
Adverse Effect" with respect to any entity or group of entities means any event,
change, occurrence or development, individually or together with other events,
changes, occurrences or developments that (i) is materially adverse to the
condition (financial or otherwise), properties, assets (including intangible
assets), prospects, liabilities, business, operations or results of operations
of such entity and its subsidiaries, taken as a whole, or (ii) would prevent or
materially alter or delay any of the Transactions except, for each of (i) and
(ii) above, to the extent that no such
54
event, change, occurrence or development results solely from changes in general
economic or market conditions, or from changes affecting the industry generally
in which the party operates and which do not affect such party
disproportionately; provided, that a Material Adverse Effect shall not include
an event, change, occurrence or development arising out of or resulting from
actions contemplated by the parties in connection with this Agreement or that is
directly attributable to the announcement, pendency or performance of this
Agreement or the transactions contemplated hereby (excluding any litigation
brought by stockholders or others in connection therewith).
(f) For purposes of this Agreement, the term "person" shall mean any
individual, corporation (including any non-profit corporation), general
partnership, limited partnership, limited liability partnership, joint venture,
estate, trust, company (including any limited liability company or joint stock
company), firm or other enterprise, association, organization, entity or
Governmental Entity.
(g) For purposes of this Agreement, a "subsidiary" of a specified
entity will be any corporation, partnership, limited liability company, joint
venture or other legal entity of which the specified entity (either alone or
through or together with any other subsidiary) owns, directly or indirectly,
fifty percent (50%) or more of the stock or other equity or partnership
interests the holders of which are generally entitled to vote for the election
of the Board of Directors or other governing body of such corporation or other
legal entity. Reference to the subsidiaries of an entity shall be deemed to
include all direct and indirect subsidiaries of such entity.
(h) For purposes of this Agreement, "Transactions" shall mean all of
the transactions contemplated in this Agreement, including the Offer, the
Merger, the Purchaser Option, the Stockholder Agreement, the Non-Competition
Agreements and the transactions contemplated thereunder.
9.5 Counterparts. This Agreement may be executed in two or more
counterparts, and by facsimile, all of which shall be considered one and the
same agreement and shall become effective when one or more counterparts have
been signed by each of the parties and delivered to the other party, it being
understood that all parties need not sign the same counterpart.
9.6 Entire Agreement; Third Party Beneficiaries. This Agreement and the
exhibits, documents and instruments and other agreements among the parties
hereto as contemplated by or referred to herein, including the Company
Disclosure Letter (a) constitute the entire agreement among the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, it being understood that the provisions of this Agreement
shall supersede any conflicting provisions of the Confidentiality Agreement; and
(b) are not intended to confer upon any other person any rights or remedies
hereunder, except as specifically provided in Section 6.4.
9.7 Severability. In the event that any provision of this Agreement or the
application thereof, becomes or is declared by a court of competent jurisdiction
to be illegal, void or unenforceable, the remainder of this Agreement will
continue in full force and effect and the application of such provision to other
persons or circumstances will be interpreted so as
55
reasonably to effect the intent of the parties hereto. The parties further agree
to replace such void or unenforceable provision of this Agreement with a valid
and enforceable provision that will achieve, to the extent possible, the
economic, business and other purposes of such void or unenforceable provision.
9.8 Other Remedies; Specific Performance. Except as otherwise provided
herein, any and all remedies herein expressly conferred upon a party will be
deemed cumulative with and not exclusive of any other remedy conferred hereby,
or by law or equity upon such party, and the exercise by a party of any one
remedy will not preclude the exercise of any other remedy. The parties hereto
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to seek an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having jurisdiction, this
being in addition to any other remedy to which they are entitled at law or in
equity.
9.9 Governing Law; Venue. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
law thereof; provided, however, that the laws of the respective jurisdictions of
incorporation of each of the parties shall govern the relative rights,
obligations, powers, duties and other internal affairs of such party and its
board of directors. Each of the parties hereto (a) consents to submit itself to
the personal jurisdiction of any federal court located in the State of Delaware
or any Delaware state court in the event any dispute arises out of this
Agreement or any of the Transactions; (b) agrees that it shall not attempt to
deny or defeat such personal jurisdiction by motion or other request for leave
from any such court and (c) agrees that it shall not bring any action relating
to this Agreement or any of the Transactions in any court other than the
Delaware Court of Chancery or a federal court sitting in the State of Delaware.
9.10 Rules of Construction. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document will
be construed against the party drafting such agreement or document.
9.11 Assignment. This Agreement shall not be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties, except that the Purchaser may assign, in
its sole discretion and without the consent of any other party, any or all of
its rights, interests and obligations hereunder to (a) Parent, (b) to Parent and
one or more direct or indirect wholly-owned subsidiaries of Parent, or (c) to
one or more direct or indirect wholly-owned subsidiaries of Parent (each, an
"Assignee"); provided, however, that, to the extent required by Section 251 of
the DGCL in order for this Agreement, with such rights assigned, to be valid
from and after such assignment, such assignment shall be effective only after
(a) an appropriate amendment to this Agreement to effectuate such assignment
shall have been executed by the parties hereto and any such Assignee and (b)
such amendment, or this Agreement as so amended, shall have received all
approvals required by the DGCL. Subject to the preceding sentence, but without
relieving any party hereto of any obligation hereunder, this
56
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns.
9.12 Amendment and Modification. Subject to applicable law and as
otherwise provided in the Agreement, this Agreement may be amended, modified and
supplemented in any and all respects, whether before or after any vote of the
stockholders of the Company contemplated hereby, by written agreement of the
parties hereto, by action taken by their respective Boards of Directors or
equivalent governing bodies, but, after the purchase of Shares pursuant to the
Offer, no amendment shall be made which decreases the Merger Consideration and,
after the approval of this Agreement by the stockholders, no amendment shall be
made which by law requires further approval by such stockholders without
obtaining such further approval. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
9.13 No Waiver. No failure or delay on the part of any party hereto in the
exercise of any right hereunder will impair such right or be construed to be a
waiver of, or acquiescence in, any breach of any representation, warranty or
agreement herein, nor will any single or partial exercise of any such right
preclude other or further exercise thereof or of any other right.
9.14 Waiver of Jury Trial. EACH OF PARENT, THE COMPANY AND PURCHASER
HEREBY IRREVOCABLY WAIVES AND COVENANTS THAT IT WILL NOT ASSERT THE RIGHT TO A
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED IN
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
AGREEMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENT OR ACTION
RELATED HERETO OR THERETO.
[REST OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorized respective officers as of the date first written above.
EMULEX CORPORATION
By: /s/ Xxxx Xxxxxx
-------------------------------------
Name: Xxxx Xxxxxx
Title: Chairman of the Board and Chief
Executive Officer
AVIARY ACQUISITION CORP.
By: /s/ Xxxx Xxxxxx
-------------------------------------
Name: Xxxx Xxxxxx
Title: President and Chief Executive Officer
VIXEL CORPORATION
By: /s/ Xxxxx XxXxxxxx
-------------------------------------
Name: Xxxxx XxXxxxxx
Title: President and Chief Executive Officer
ANNEX I
Notwithstanding any other provisions of the Offer, and in addition
to (and not in limitation of) Purchaser's rights to extend and amend the Offer
at any time in its sole discretion (subject to the provisions of the Merger
Agreement), Purchaser shall not be required to accept for payment or, subject to
any applicable rules and regulations of the SEC, including Rule 14e-l(c) under
the Exchange Act (relating to Purchaser's obligation to pay for or return
tendered Shares promptly 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 unless the
Minimum Condition shall have been satisfied. Furthermore, notwithstanding any
other provisions of the Offer, Purchaser shall not be required to accept for
payment or pay for any validly tendered Shares if, at the scheduled expiration
date (i) any applicable waiting periods under the HSR Act and any comparable
provisions under any applicable pre-merger notification laws or regulations of
foreign jurisdictions have not expired or terminated prior to termination of the
Offer, or (ii) any of the following events shall occur and be continuing:
(a) there shall have been or be pending any suit, action or
proceeding by any Governmental Entity or any third party against Purchaser,
Parent, the Company or any Company subsidiary (i) seeking to prohibit or impose
any material limitations on Parent's or Purchaser's ownership or operation (or
that of any of their respective subsidiaries or affiliates) of all or any
portion of their or the Company's or the Company subsidiaries' businesses or
assets, or to compel Parent or Purchaser or their respective subsidiaries or
affiliates to dispose of or hold separate any material portion of the business
or assets of the Company or Parent or their respective subsidiaries, (ii)
challenging the acquisition by Parent or Purchaser of any Shares pursuant to the
Offer, seeking to delay, restrain or prohibit the making or consummation of the
Offer, the exercise of the Purchaser Option or the Merger or the performance of
any of the other Transactions contemplated by this Agreement, or seeking to
obtain any damages in connection with the Offer, the Merger or any Transaction
contemplated by this Agreement from the Company that are material in relation to
the Company and the Company's subsidiaries taken as a whole or from Parent or
Purchaser that are material in relation to the Company and the Company's
subsidiaries taken as a whole, (iii) seeking to impose limitations on the
ability of Purchaser, or render Purchaser unable, to accept for payment, pay for
or purchase some or all of the Shares pursuant to the Offer, the Purchaser
Option, the Stockholder Agreement or the Merger, (iv) seeking to impose material
limitations on the ability of Purchaser or Parent effectively to exercise full
rights of ownership of the Shares, including, without limitation, the right to
vote the Shares purchased by it on all matters properly presented to the
Company's stockholders, or (v) seeking to require divestiture by Parent or any
of its subsidiaries or affiliates of any Shares;
(b) there shall be any statute, rule, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated or deemed applicable,
pursuant to an authoritative interpretation by or on behalf of a Government
Entity, to the Offer, the Merger or any other Transaction, or any other action
shall be taken by any Governmental Entity, that is reasonably likely to result,
directly or indirectly, in any of the consequences referred to in clauses (i)
through (v) of paragraph (a) above;
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(c) there shall have occurred and be continuing any suspension of
payments in respect of banks in the United States (whether or not mandatory);
(d) any of the representations and warranties of the Company
contained in this Agreement shall not be true and correct in all material
respects (other than representations and warranties qualified by materiality or
Material Adverse Effect, which shall be true and correct in all respects) as of
the date of this Agreement and as of the date of any scheduled expiration of the
Offer, except for representations and warranties that relate to a specific date
or time (which need only be true and correct in all material respects as of such
date or time) and except for the representations and warranties in Section 3.2
(which shall be true and correct in all respects other than de minimis
variations with respect to the number of securities outstanding, not to exceed
5,000 Shares and shares issuable under the Company Options, the ESPP and
outstanding Company Warrants);
(e) since the date of this Agreement, there shall have occurred any
events or changes which have had, or which are reasonably expected to have or
constitute, individually or in the aggregate, a Material Adverse Effect on the
Company;
(f) the Company Board of Directors or any committee thereof shall
have (i) withdrawn, or modified or changed in a manner adverse to the
Transactions, to the Parent or to Purchaser (including by amendment of the
Schedule 14D-9), its recommendation in favor of the Offer, the Merger Agreement,
or the Merger or shall have failed to make such favorable recommendation, (ii)
approved or recommended any third party Acquisition Proposal or entered into or
publicly announced its intention to enter into any agreement or agreement in
principle with respect to any third party Acquisition Proposal, (iii) resolved
or publicly proposed to do any of the foregoing; or (iv) taken a neutral
position or made no recommendation with respect to a third party Acquisition
Proposal after a reasonable amount of time (and in no event more than ten (10)
business days following receipt thereof) has elapsed for the Company Board of
Directors or any committee thereof to review and make a recommendation with
respect thereto.
(g) the Company shall have breached or failed, in any material
respect, to perform or to comply with any material agreement, obligation or
covenant to be performed or complied with by it under this Agreement;
(h) Purchaser shall have failed to receive a certificate executed by
the Company's Chief Executive Officer or President on behalf of the Company,
dated as of the scheduled expiration of the Offer, to the effect that the
conditions set forth in paragraphs (d), (e), (f) and (g) of this Annex I have
not occurred;
(i) any party to any Stockholder Agreement other than the Purchaser
and Parent shall be in breach of or have failed to perform any of its covenants
or agreements under such agreement or shall be in breach of any of its
representations and warranties in such agreement at the Initial Expiration Date
unless the Minimum Condition has been satisfied as of the Initial Expiration
Date;
(j) all consents, permits and approvals of Governmental Authorities
shall not have been obtained;
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(k) the Rights shall have become exercisable; or
(l) the Merger Agreement shall have been terminated in accordance
with its terms.
The foregoing conditions are for the sole benefit of Parent and
Purchaser, may be asserted by Parent or Purchaser regardless of the
circumstances (including any action or omission by Parent or any of its
affiliates) giving rise to such condition and, except for the Minimum Condition,
may be waived by Parent or Purchaser in whole or in part at any time and from
time to time and in the sole discretion of Parent or Purchaser, subject in each
case to the terms of this Agreement. The failure by Parent or Purchaser 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 to which it is annexed, except that the term "Merger
Agreement" shall be deemed to refer to the Agreement to which this Annex I is
annexed.
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