Exhibit 2.1
Execution Copy
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
GSI LUMONICS INC., MOTION ACQUISITION CORPORATION
AND
MICROE SYSTEMS CORP.
Dated as of April 12, 2004
TABLE OF CONTENTS
Page
ARTICLE I THE MERGER
Section 1.1 The Merger........................................................................2
Section 1.2 The Closing.......................................................................2
Section 1.3 Actions at the Closing............................................................2
Section 1.4 Additional Action.................................................................3
Section 1.5 Conversion of Shares..............................................................3
Section 1.6 Exchange of Company Stock.........................................................5
Section 1.7 Dissenting Shares.................................................................6
Section 1.8 Escrow............................................................................7
Section 1.9 Options...........................................................................8
Section 1.10 Organizational Documents..........................................................9
Section 1.11 Directors and Officers............................................................9
Section 1.12 No Further Rights.................................................................9
Section 1.13 No Liability.....................................................................10
Section 1.14 Lost, Stolen or Destroyed Certificates...........................................10
Section 1.15 Closing of Transfer Books........................................................10
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 2.1 Organization, Qualification and Corporate Power..................................11
Section 2.2 Capitalization...................................................................11
Section 2.3 Authority........................................................................13
Section 2.4 Vote Required....................................................................14
Section 2.5 Noncontravention.................................................................14
Section 2.6 Company Subsidiaries.............................................................15
Section 2.7 Financial Statements.............................................................16
Section 2.8 No Undisclosed Liabilities.......................................................16
Section 2.9 Tax Matters......................................................................17
Section 2.10 Properties and Assets............................................................19
Section 2.11 Owned Real Property..............................................................20
Section 2.12 Intellectual Property............................................................21
Section 2.13 Inventory........................................................................23
Section 2.14 Real Property Leases.............................................................23
Section 2.15 Contracts........................................................................24
Section 2.16 Bank Accounts and Powers of Attorney.............................................27
Section 2.17 Insurance........................................................................28
Section 2.18 Litigation.......................................................................28
Section 2.19 Employees........................................................................28
Section 2.20 Employee Benefits................................................................29
Section 2.21 Environmental Matters............................................................32
Section 2.22 Compliance.......................................................................34
Section 2.23 Permits..........................................................................35
Section 2.24 Certain Business Relationships...................................................35
Section 2.25 Broker's Fees....................................................................35
Section 2.26 Books and Records................................................................35
Section 2.27 Company Action...................................................................36
Section 2.28 Information in Disclosure Documents..............................................36
Section 2.29 Absence of Certain Changes.......................................................36
Section 2.30 Certain Business Practices.......................................................38
Section 2.31 Termination of Existing Agreements with Holders of Company Stock.................39
Section 2.32 Disclosure.......................................................................39
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE PARENT AND THE TRANSITORY SUBSIDIARY
Section 3.1 Organization.....................................................................40
Section 3.2 Authority........................................................................40
Section 3.3 Noncontravention.................................................................40
Section 3.4 Broker's Fees....................................................................41
Section 3.5 Available Funds..................................................................41
Section 3.6 Information in Disclosure Documents..............................................41
ARTICLE IV COVENANTS
Section 4.1 Interim Operations of the Company................................................42
Section 4.2 Reasonable Best Efforts..........................................................45
Section 4.3 Stockholder Approval.............................................................46
Section 4.4 Access; Information..............................................................48
Section 4.5 Notification of Certain Matters..................................................49
Section 4.6 No Other Negotiations............................................................49
Section 4.7 Directors' and Officers' Insurance and Indemnification...........................51
Section 4.8 Company Debt.....................................................................52
Section 4.9 Certain Actions..................................................................52
Section 4.10 Certain Tax Matters..............................................................52
Section 4.11 Individual Promissory Notes......................................................53
Section 4.12 Warranty Recovery................................................................53
Section 4.13 Mercury Scrap Recovery...........................................................54
ARTICLE V CONDITIONS TO CONSUMMATION OF MERGER
Section 5.1 Conditions to Each Party's Obligation............................................55
Section 5.2 Conditions to Obligations of the Parent and the Transitory Subsidiary............56
Section 5.3 Conditions to Obligations of the Company.........................................57
Section 5.4 Taxes Relating to the Transactions Contemplated by this Agreement................58
ARTICLE VI INDEMNIFICATION
Section 6.1 Indemnification..................................................................58
Section 6.2 Method of Asserting Claims.......................................................60
Section 6.3 Survival.........................................................................62
Section 6.4 Limitations......................................................................62
Section 6.5 The Representative...............................................................62
ARTICLE VII TERMINATION
Section 7.1 Termination of Agreement.........................................................64
Section 7.2 Effect of Termination............................................................66
Section 7.3 Option to Elect Certain Remedies.................................................66
ARTICLE VIII DEFINITIONS
Section 8.1 Index to Defined Terms...........................................................66
ARTICLE IX MISCELLANEOUS
Section 9.1 Further Assurances...............................................................69
Section 9.2 Press Releases and Announcements.................................................69
Section 9.3 No Third Party Beneficiaries.....................................................70
Section 9.4 Entire Agreement.................................................................70
Section 9.5 Succession and Assignment........................................................70
Section 9.6 Counterparts.....................................................................70
Section 9.7 Interpretation...................................................................70
Section 9.8 Notices..........................................................................72
Section 9.9 Governing Law....................................................................73
Section 9.10 Amendments and Waivers...........................................................73
Section 9.11 Severability.....................................................................73
Section 9.12 Expenses.........................................................................73
Section 9.13 Incorporation of Exhibits and Schedules..........................................74
Section 9.14 Time of Essence..................................................................74
Section 9.15 Enforcement......................................................................74
AGREEMENT AND PLAN OF MERGER
Agreement and Plan of Merger entered into as of April 12, 2004 by and
among GSI Lumonics Inc., a New Brunswick corporation (the "Parent"), Motion
Acquisition Corporation, a Delaware corporation and an indirect wholly owned
subsidiary of the Parent (the "Transitory Subsidiary"), and MicroE Systems
Corp., a Delaware corporation (the "Company"). The Parent, the Transitory
Subsidiary and the Company are referred to collectively herein as the
"Parties."
WHEREAS, the respective Board of Directors of the Parent, Transitory
Subsidiary and the Company have each determined that it is advisable and in
the best interests of their respective stockholders that the Parent acquire
the Company upon the terms and subject to the conditions set forth in this
Agreement, and in furtherance of such acquisition, such Boards of Directors
have approved the merger of Transitory Subsidiary with and into the Company
(the "Merger") in accordance with the terms of this Agreement and the
applicable provisions of the General Corporation Law of the State of Delaware
(the "DGCL"); and
WHEREAS, concurrently with the execution and delivery of this
Agreement and as a condition and inducement to the Parent's willingness to
enter into this Agreement, certain holders of shares of common stock, par
value $.01 per share, of the Company (the "Company Common Stock"), are
entering into an agreement with the Parent in the form attached hereto as
Exhibit A (the "Voting Agreement") to vote such shares according to the terms
set forth in the Voting Agreement; and
WHEREAS, concurrently with the execution and delivery of this
Agreement and as a condition to the Parent's willingness to enter into this
Agreement, certain key executives of the Company are entering into employment
agreements with the Company in the form attached hereto as Exhibit B.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties and covenants herein contained and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties, intending to be legally bound, agree as follows.
ARTICLE I
THE MERGER
Section 1.1 The Merger. At the Effective Time (as defined below),
upon and subject to the terms and conditions of this Agreement, the Transitory
Subsidiary shall merge with and into the Company in accordance with the
provisions of this Agreement and the applicable provision of the DGCL, and
thereupon the separate corporate existence of the Transitory Subsidiary shall
cease and the Company shall continue its corporate existence under the DGCL
under the name MicroE Systems Corp. as the surviving corporation in the Merger
and a wholly owned subsidiary of the Parent (the "Surviving Corporation"). On
the Closing Date (as defined below) the parties hereto shall file a
Certificate of Merger substantially in the form attached hereto as Exhibit C
(the "Certificate of Merger") with the Secretary of State of the State of
Delaware in accordance with the relevant provisions of the DGCL. The parties
hereto shall make all other filings, recordings or publications required by
the DGCL in connection with the Merger. The date and time at which the Merger
becomes effective, as set forth in the Certificate of Merger, which specified
time shall be a time on the Closing Date, is referred to herein as the
"Effective Time." At the Effective Time, the Merger shall have the effect
provided for in Section 259 of the DGCL.
Section 1.2 The Closing. The closing of the transactions contemplated
by this Agreement (the "Closing") shall take place at the offices of Skadden,
Arps, Slate, Xxxxxxx & Xxxx LLP, Xxx Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx
commencing at 10:00 a.m. local time on the date specified by the Parties,
which date shall be no later than the third business day after the date on
which all of the conditions set forth in Article V have been satisfied or
waived as provided in Article V (other than those conditions that by their
terms are to be satisfied or waived at the Closing), or at such other place
and time as may be agreed upon in writing by the Parties. The date on which
the closing occurs is referred to herein as the "Closing Date."
Section 1.3 Actions at the Closing. At the Closing: (a) the Company
shall deliver to the Parent and the Transitory Subsidiary the various
certificates, instruments and documents referred to in Section 5.2; (b) the
Parent and the Transitory Subsidiary shall deliver to the Company the various
certificates, instruments and documents referred to in Section 5.3; (c) the
Company shall execute and file the Certificate of Merger with the Secretary of
State of the State of Delaware; and (d) the Parent, the Representative (as
defined below) and Wachovia Bank, National Association, as Escrow Agent (the
"Escrow Agent"), shall execute and deliver the Escrow Agreement substantially
in the form attached hereto as Exhibit D (the "Escrow Agreement"), and the
Parent shall deposit with the Escrow Agent the amount of cash specified in
Section 1.8.
Section 1.4 Additional Action. The Surviving Corporation may, at any
time after the Effective Time, take any action, including executing and
delivering any document, in the name and on behalf of either the Company or
the Transitory Subsidiary in order to consummate the transactions contemplated
by this Agreement.
Section 1.5 Conversion of Shares. Subject to the terms and conditions
of this Agreement, at the Effective Time, in accordance with the Certificate
of Merger, by virtue of the Merger and without any action on the part of any
Party or the holder of any securities of the Company or the Transitory
Subsidiary, the following shall occur:
(a) Definitions. The following terms shall have the following
definitions.
(i) "Closing Consideration" means the difference between (A)
the sum, without duplication, of (1) fifty five million dollars ($55,000,000),
(2) the aggregate amount of cash of the Company as of the Closing Date
(determined by the balance of the cash account of the Company as of the
Closing Date according to the Company's books and records), (3) the aggregate
cash payments received by the Company prior to the Closing Date in connection
with the exercise of Options (as defined below) in accordance with Section
1.9(b) (which cash payments shall include the Individual Promissory Notes (as
defined below), provided that the full amount of any such Individual
Promissory Note is set off against the portion of the Merger Consideration (as
defined below) to which the debtor thereof is entitled in the Merger), and (4)
the aggregate exercise prices of all Options, or any portion thereof,
outstanding immediately prior to the Effective Time (excluding any Options
exercised in accordance with Section 1.9(b)), in the case of the preceding
subsections (3) and (4), net of any Taxes (as defined below) incurred by the
Company, the Parent or the Transitory Subsidiary attributable to or arising in
connection with the exercise or conversion of such Options pursuant to Section
1.9(a) or 1.9(b), as applicable, and (B) the sum of (1) the aggregate amount
of Company Fees (as defined below) that are unpaid as of the Closing Date (as
certified by the Company's Chief Executive Officer in the certificate
delivered pursuant to Section 1.5(d)), (2) the aggregate amount of Company
Debt (as defined below) as of the Closing Date (as certified by the Company's
Chief Executive Officer in the certificate delivered pursuant to Section
1.5(d)) and (3) the aggregate amount of the Pre-Closing Tax Amount (as defined
below).
(ii) "Merger Consideration" means the aggregate amount of
the Per Share Cash Consideration (as defined below) to be exchanged for all
shares of Company Common Stock issued and outstanding immediately prior to the
Effective Time, other than any shares of Company Common Stock to be canceled
pursuant to Section 1.5(c) and the Dissenting Shares (as defined below).
(iii) "Per Share Cash Consideration" means in cash, without
interest, the quotient obtained by dividing (A) the Closing Consideration by
(B) the sum of (1) the number of all shares of Company Common Stock issued and
outstanding immediately prior to the Effective Time (including any shares of
Company Common Stock issued in connection with the exercise of Options in
accordance with Section 1.9(b)) and (2) the number of all shares of Company
Common Stock issuable upon exercise of all Options outstanding immediately
prior to the Effective Time (excluding any Options exercised in accordance
with Section 1.9(b)).
(b) Company Common Stock. Each share of Company Common Stock
issued and outstanding immediately prior to the Effective Time, other than any
shares of Company Common Stock to be canceled pursuant to Section 1.5(c) and
the Dissenting Shares, will be canceled and extinguished and automatically
converted into the right to receive the Per Share Cash Consideration upon
surrender of the certificate representing such share of Company Common Stock
(or in the case of a lost, stolen or destroyed certificate, upon delivery of
an affidavit and indemnity in the manner provided in Section 1.14).
(c) Cancellation of Treasury and Parent Owned Stock. Each share
of Company Common Stock held by the Company or the Parent or any direct or
indirect wholly owned Subsidiary (as defined below) of the Company or of the
Parent immediately prior to the Effective Time shall be canceled and
extinguished without any conversion thereof.
(d) Company Closing Certificate. At the Closing, the Company
shall deliver to the Parent a certificate, in form and substance satisfactory
to the Parent and signed by the Company's Chief Executive Officer, certifying
(i) the number of shares of Company Common Stock outstanding immediately prior
to the Effective Time; (ii) by reference to a schedule to such certificate, a
list of all the holders of shares of Company Common Stock as such names appear
on the stock transfer books of the Company and the number of shares of Company
Common Stock held by each such holder, in each case, immediately prior to the
Effective Time; (iii) the number of shares of Company Common Stock which
underlie Options outstanding immediately prior to the Effective Time; (iv) by
reference to a schedule to such certificate, a list of all the holders of
Options outstanding immediately prior to the Effective Time, the number of
Options held by each such holder, the exercise price for each Option and the
aggregate exercise price for the Options; (v) the aggregate amount of Company
Debt as of the Closing Date; (vi) the aggregate amount of Company Fees
incurred by the Company up to and including the Closing Date and the amount
thereof that is unpaid as of the Closing Date; and (vii) the aggregate amount
of cash of the Company as of the Closing Date (determined by the balance of
the cash account of the Company as of the Closing Date according to the
Company's books and records).
(e) Maximum Merger Consideration. Notwithstanding any provision
of this Agreement to the contrary, in no event shall the Parent, the
Transitory Subsidiary or the Surviving Corporation be required to pay to any
holder of any securities of the Company, including Options, any amount
pursuant to the Merger to the extent that the product of (i) the Per Share
Cash Consideration and (ii) the sum of (A) the number of all shares of Company
Common Stock issued and outstanding immediately prior to the Effective Time
(including any shares of Company Common Stock issued in connection with the
exercise of Options in accordance with Section 1.9(b)) and (B) the number of
all shares of Company Common Stock issuable upon exercise of all Options
outstanding immediately prior to the Effective Time (prior to their
cancellation in accordance with Section 1.9(a)) (excluding any Options
exercised in accordance with Section 1.9(b)), exceeds the Closing
Consideration.
Section 1.6 Exchange of Company Stock.
(a) Exchange Agent. The Parent shall appoint its transfer agent
or another nationally recognized exchange agent to act as the exchange agent
(the "Exchange Agent") in the Merger.
(b) Parent to Provide Cash. On or prior to the Effective Time,
the Parent shall enter into an agreement with the Exchange Agent, which shall
provide that on the Closing Date, the Parent shall make available to the
Exchange Agent for exchange in accordance with this Article I, the Merger
Consideration payable pursuant to Section 1.5 in exchange for outstanding
shares of Company Common Stock, less the amount of cash deposited by the
Parent with the Escrow Agent pursuant to Section 1.8. The cash deposited with
the Exchange Agent is referred to herein as the "Exchange Fund."
(c) Exchange Procedures. As soon as practicable, but in any
event no later than five (5) business days after the Closing Date, the Parent
shall cause the Exchange Agent to mail to each holder of record (as of the
Effective Time) of a certificate or certificates (the "Certificates"), which
immediately prior to the Effective Time represented outstanding shares of
Company Common Stock, whose shares were converted into the right to receive
the Per Share Cash Consideration pursuant to Section 1.5: (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 Exchange Agent and shall be in such form and have such
other provisions as the Exchange Agent may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates (including
a means of hand-delivery) in exchange for the Per Share Cash Consideration.
Upon surrender of Certificates for cancellation to the Exchange Agent,
together with such letter of transmittal, duly completed and validly executed
in accordance with the instructions thereto, and such other documents as may
reasonably be required by the Exchange Agent, the holder of record of such
Certificates shall be entitled to receive in exchange therefor the Per Share
Cash Consideration in respect of each share of Company Common Stock
represented thereby, and the Certificates so surrendered shall forthwith be
canceled. Until so surrendered, outstanding Certificates will be deemed from
and after the Effective Time, for all corporate purposes, to evidence the
ownership of the Per Share Cash Consideration into which such shares of
Company Common Stock shall have been so converted. Notwithstanding the
foregoing, the amount of Merger Consideration payable from the Exchange Fund
to each person that as of immediately prior to the Effective Time was a holder
of Company Common Stock, and to which each such person shall be entitled upon
surrender of such person's Certificate(s), shall be reduced by such person's
Pro Rata Portion (as defined below).
(d) Required Withholding. Each of the Exchange Agent, the
Company, the Parent and the Surviving Corporation shall be entitled to deduct
and withhold from any consideration payable or otherwise deliverable pursuant
to this Agreement to any holder or former holder of Company Common Stock such
amounts as may be required to be deducted or withheld therefrom under the
Internal Revenue Code of 1986, as amended (the "Code"), or under any provision
of state, local or foreign Tax law or under any other applicable law. To the
extent such amounts are so deducted or withheld, the amount of such
consideration shall be treated for all purposes under this Agreement as having
been paid to the person to whom such consideration would otherwise have been
paid.
(e) Investment of Exchange Fund. The Exchange Agent shall
invest any cash included in the Exchange Fund as directed by the Parent on a
daily basis; provided that no such investment or loss thereon shall affect the
amounts payable to stockholders of the Company pursuant to this Article I. Any
interest and other income resulting from such investment shall become a part
of the Exchange Fund, and any amounts in excess of the amounts payable to
stockholders of the Company pursuant to this Article I shall promptly be paid
to the Parent.
(f) Termination of Exchange Fund. Any portion of the Exchange
Fund that remains undistributed to the holders of Certificates six (6) months
after the Effective Time shall, at the request of the Parent, be delivered to
the Parent or otherwise according to the instruction of the Parent, and any
holders of the Certificates who have not surrendered such Certificates in
compliance with this Section 1.6 shall after such delivery to the Parent look
only to the Parent and the Surviving Corporation for the Per Share Cash
Consideration for each share of Company Common Stock represented thereby
pursuant to Section 1.5. If any Certificate shall not have been surrendered
immediately prior to such time as such amounts would otherwise escheat to or
become property of any Governmental Entity (as defined below), any such
portion of the Exchange Fund remaining unclaimed by holders of shares of
Company Common Stock immediately prior to such time shall, to the extent
permitted by law, become the property of the Parent free and clear of any
claims or interest of any person previously entitled thereto.
Section 1.7 Dissenting Shares.
(a) Notwithstanding anything in this Agreement to the contrary
(but subject, however, to Section 1.7(b)), any shares of Company Common Stock
outstanding immediately prior to the Effective Time, eligible under the DGCL
to exercise appraisal rights and held by a holder who has not voted in favor
of the Merger or consented thereto in writing and who has exercised and
perfected appraisal rights for such shares in accordance with Section 262 of
the DGCL and who has not effectively withdrawn or lost such appraisal rights
(collectively, the "Dissenting Shares"), shall not be converted into or
represent the right to consideration for Company Common Stock set forth in
Section 1.5, and the holder or holders of such shares shall be entitled only
to such rights as may be granted to such holder or holders in Section 262 of
the DGCL.
(b) Notwithstanding the provisions of Section 1.7(a), if any
holder of Dissenting Shares shall effectively withdraw or lose (through
failure to perfect or otherwise) such holder's appraisal rights under Section
262 of the DGCL, then, as of the later of the Effective Time and the
occurrence of such event, such holder's shares shall automatically be
converted into and represent only the right to receive the consideration for
such shares set forth in Section 1.5, without interest, upon surrender of the
certificate representing such shares.
(c) The Company shall (i) comply with all of the requirements
of Section 262 of the DGCL, (ii) give Parent prompt notice of any written
demand received by the Company pursuant to Section 262 of the DGCL, of
withdrawals of such demands, and copies of any documents or instruments served
pursuant to the DGCL and received by the Company, and (iii) give Parent the
opportunity to participate in all negotiations and proceedings with respect to
any such demands. The Company shall not make any payment or settlement offer
prior to the Effective Time with respect to any such demand unless the Parent
shall have consented in writing to such payment or settlement offer.
(d) Any amount paid by the Parent, the Company or the Surviving
Corporation to any person with respect to Dissenting Shares pursuant to
Section 262 of the DGCL in excess of the Per Share Cash Consideration for each
such Dissenting Share (such amount, unless determined in a final,
non-appealable judgment of a court, being subject to the written approval of
the Representative, which approval shall not be unreasonably withheld,
conditioned or delayed), and all interest, costs, expenses and fees as
incurred by the Company, the Parent or the Surviving Corporation in connection
with the exercise of all rights under Section 262 of the DGCL, shall
constitute Damages (as defined below) incurred or suffered by the Parent
within the meaning of Section 6.1(a), and the Parent and the Surviving
Corporation, as the case may be, shall, without limiting any other rights, be
entitled to recover such Damages from the Escrow Fund (as defined below).
Section 1.8 Escrow.
(a) At the Effective Time, the Parent shall deliver to and
deposit with the Escrow Agent cash, without interest, in the amount equal to
$5,500,000, such deposit (together with interest and other income accrued
thereon after the Closing) to constitute the escrow fund (the "Escrow Fund")
and to be governed by the terms set forth herein and in the Escrow Agreement.
The Escrow Fund shall be held as a trust fund and shall not be subject to any
lien, attachment, trustee process or any other judicial process of any
creditor of any person and shall be held and disbursed solely for the purposes
and in accordance with the terms of the Escrow Agreement.
(b) The terms and provisions of Article VI and of the Escrow
Agreement and the transactions contemplated thereby are essential terms and
provisions of the Merger, and the approval and adoption of this Agreement and
the Merger by the stockholders of the Company, and the consent to cancellation
of Options by the holders thereof as provided for by Section 1.9, shall
constitute the express approval, as essential terms and provisions of the
Merger, of Article VI and of the Escrow Agreement and of all of the
arrangements relating thereto, including the deposit of the Escrow Fund into
escrow, the indemnification obligations set forth in Article VI and the
appointment and sole authority to act on behalf of the Indemnitors (as defined
below) of the Representative, as provided for herein and in the Escrow
Agreement.
Section 1.9 Options.
(a) The Company shall take all necessary and appropriate
actions (including obtaining any necessary consents) so that, on the Closing
Date immediately prior to the Effective Time, each option to purchase Company
Common Stock that is outstanding under any stock option plan or otherwise
(each, an "Option") shall (i) cease being exercisable for Company Common
Stock, (ii) be canceled and (iii) automatically be converted into the right to
receive an amount in cash equal to the product of (A) the aggregate number of
shares of Company Common Stock into which such Option was exercisable as of
immediately prior to the Effective Time and (B) the excess of (1) the Per
Share Cash Consideration over (2) the exercise price per share of Company
Common Stock for such Option (such amount, the "Aggregate Option Spread"). All
payments with respect to Options canceled in accordance with this Section
1.9(a) shall be subject to all applicable withholding Taxes. Notwithstanding
the foregoing, the amount of Aggregate Option Spread payable pursuant to this
Section 1.9(a) to each person that as of immediately prior to the Effective
Time was a holder of an Option shall be reduced by such person's Pro Rata
Portion. The Parent shall cause the payments with respect to Options canceled
in accordance with this Section 1.9(a), which Options were converted
immediately prior to the Effective Time into the right to receive the amount
of cash specified in this Section 1.9(a), to be made as soon as practicable
following the Effective Time, but in any event no later than two (2) business
days after the Closing Date.
(b) Each holder of an Option then exercisable for shares of
Company Common Stock may elect, at any time prior to the Effective Time, to
exercise such Option by tendering to the Company in cash or, subject to
Section 4.11, a promissory note (each such note, an "Individual Promissory
Note") in an amount equal to the product of (i) the aggregate number of shares
of Company Common Stock into which such Option is then exercisable and (ii)
the exercise price per share of Company Common Stock for such Option. Upon the
tender of the required amount of cash or the Individual Promissory Note to the
Company, the shares of Company Common Stock issuable upon exercise of such
Option shall be outstanding and such Option shall (i) cease being exercisable
for shares of Company Common Stock and (ii) be canceled.
(c) Except as may be otherwise agreed to by the Parent and the
Company in writing, all stock option plans established by the Company shall
terminate as of the Effective Time and the provisions in 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 shall be deleted,
terminated and of no further force or effect as of the Effective Time.
(d) The Company has duly adopted all amendments to its stock
option plans, and any other documents, and has taken all other actions, if
any, necessary to effect the changes in the Options provided for in this
Agreement, including the changes described in this Section 1.9.
Section 1.10 Organizational Documents.
(a) At the Effective Time of the Merger, the certificate of
incorporation of the Transitory Subsidiary, as in effect immediately prior to
the Effective Time, shall be the certificate of incorporation of the Surviving
Corporation until thereafter amended as provided by law and by such
certificate of incorporation of the Surviving Corporation, except that the
name of the Surviving Corporation shall be MicroE Systems Corp.
(b) At the Effective Time of the Merger, the bylaws of
Transitory Subsidiary, as in effect immediately prior to the Effective Time
shall be the bylaws of the Surviving Corporation until thereafter amended as
provided by law and by such bylaws of the Surviving Corporation, except that
the name of the Surviving Corporation shall be MicroE Systems Corp.
Section 1.11 Directors and Officers. The directors and officers of
the Surviving Corporation shall consist of the directors and officers of the
Transitory Subsidiary immediately prior to the Effective Time, each to hold
office from the Effective Time until their respective successors are duly
elected or appointed and qualified in the manner provided in the certificate
of incorporation of the Surviving Corporation or the bylaws of the Surviving
Corporation or as otherwise provided by law.
Section 1.12 No Further Rights. All cash paid upon the cancellation
of Options or the surrender for exchange of shares of Company Common Stock in
accordance with the terms hereof shall be deemed to have been paid in full
satisfaction of all rights pertaining to such Options or shares of Company
Common Stock, as applicable, and from and after the Effective Time, no Options
or shares of Company Common Stock shall be deemed to be outstanding and
holders of Options or Certificates shall cease to have any rights with respect
thereto, except as provided herein or by law.
Section 1.13 No Liability. Notwithstanding anything to the contrary
in this Article I, neither the Exchange Agent, the Surviving Corporation nor
any Party shall be liable to a holder of shares of Company Common Stock for
any amount properly paid to a public official pursuant to any applicable
abandoned property, escheat or similar law.
Section 1.14 Lost, Stolen or Destroyed Certificates. In the event any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent
shall distribute in exchange for such lost, stolen or destroyed Certificates,
upon the making of an affidavit of that fact by the holder thereof and
indemnity to the Exchange Agent, the Per Share Cash Consideration for each
share of Company Common Stock represented thereby, pursuant to Section 1.5;
provided, however, that the Parent may, in its sole discretion and as a
condition precedent to the payment of such Per Share Cash Consideration
pursuant to Section 1.6, require the owner of such lost, stolen or destroyed
Certificate to deliver an indemnity agreement or a bond from such owner in a
sum and with customary provisions as the Parent may reasonably request as an
indemnity, against any claim that may be made against the Parent, the
Surviving Corporation or the Exchange Agent, with respect to the Certificates
alleged to have been lost, stolen or destroyed.
Section 1.15 Closing of Transfer Books. At the Effective Time, the
stock transfer books of the Company shall be closed and no transfers of shares
of Company Common Stock shall thereafter be made. If, after the Effective
Time, Certificates are presented to the Surviving Corporation for transfer,
they shall be canceled and exchanged for the consideration set forth in
Section 1.5, subject to applicable law in the case of Dissenting Shares.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure schedule prepared and signed by
the Company and delivered to the Parent simultaneously with the execution
hereof (the "Disclosure Schedule"), the Company represents and warrants to the
Parent and the Transitory Subsidiary that all of the statements contained in
this Article II are true and correct as of the date of this Agreement (or, if
made as of a specified date, as of such date), and will be true and correct as
of the Closing Date as though made on the Closing Date. Each exception set
forth in the Disclosure Schedule and each other response to this Agreement set
forth in the Disclosure Schedule 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 to the extent that one
portion of the Disclosure Schedule specifically refers to another portion
thereof, identifying such other portion by section reference or similar
specific cross reference, or it is reasonably clear that such disclosure
relates to another section or portion.
Section 2.1 Organization, Qualification and Corporate Power.
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. The
Company is duly qualified or licensed as a foreign corporation to conduct
business and is in good standing under the laws of each jurisdiction listed
under its name in Section 2.1(a) of the Disclosure Schedule, which
jurisdictions collectively constitute every jurisdiction where the nature of
the Company's business or the ownership or leasing of its properties requires
such qualification or licensing, other than those jurisdictions where the
failure to be so qualified or licensed would not, individually or in the
aggregate, be material to the Company. The Company has all requisite corporate
power and authority to carry on its business as it is now being conducted and
as it is presently proposed to be conducted and to own, lease and use the
properties owned, leased and used by it.
(b) The Company has furnished to the Parent prior to the
execution and delivery of this Agreement true and complete copies of its
certificate of incorporation as currently in effect (the "Certificate of
Incorporation") and bylaws as currently in effect (the "Bylaws", and together
with the Certificate of Incorporation, collectively the "Company Charter
Documents"). The Company is not in default under or in violation of any
provision of the Certificate of Incorporation or Bylaws.
Section 2.2 Capitalization.
(a) The authorized capital stock of the Company consists of
1,200,000 shares of Company Common Stock and 80,154 shares of Company
Preferred Stock, of which 44,154 are designated as Class A Preferred Stock,
par value $.01 per share (the "Class A Preferred Stock") and 36,000 are
designated as Class B Preferred Stock, par value $.01 per share (the "Class B
Preferred Stock" and together with the Class A Preferred Stock, the "Company
Preferred Stock"). As of the date hereof, (i) 773,691 shares of Company Common
Stock are issued and outstanding, (ii) no shares of Class A Preferred Stock
are issued and outstanding, (iii) no shares of Class B Preferred Stock are
issued and outstanding and (iv) 195,967 shares of Company Common Stock are
authorized and reserved for issuance pursuant to stock option plans of the
Company, of which 162,292 shares of Company Common Stock underlie currently
outstanding Options. As of immediately prior to the Effective Time, there will
be no shares of Company Preferred Stock issued and outstanding. Section 2.2(a)
of the Disclosure Schedule sets forth a true and complete list of all
stockholders of the Company as of the date hereof, completely and accurately
indicating the number, class and series of shares of Company Common Stock held
by each such stockholder. No shares of Company Common Stock are owned or held
by any Subsidiary of the Company.
(b) Except for the stock option plans listed in Section 2.21(a)
of the Disclosure Schedule, neither the Company nor any of its Subsidiaries
has any stock option plan or any other plan, program, agreement or arrangement
providing for any equity or equity-based compensation for any person. (i) The
Company has reserved 250,000 shares of Company Common Stock for issuance under
the 1996 Stock Plan, of which 54,033 shares have been exercised and 162,292
shares are subject to outstanding Options and (ii) no shares of Company Common
Stock are subject to stand-alone option agreements. The Company has furnished
to the Parent prior to the execution and delivery of this Agreement true and
complete copies of all of the Company's and its Subsidiaries' stock option
plans and any amendments thereto. Section 2.2(b) of the Disclosure Schedule
sets forth a true, complete and correct list of all persons who, as of the
date hereof, hold outstanding Options, indicating, with respect to each Option
then outstanding, the stock option plan under which such Option was granted,
the number of shares of Company Common Stock subject to such Option, and the
exercise price, date of grant, vesting schedule and expiration date thereof,
including the extent to which any vesting had occurred as of the date of this
Agreement and whether and to what extent the vesting of such Option will be
accelerated in any way by the consummation of the transactions contemplated by
this Agreement or by the termination of employment or engagement or change in
position of any holder thereof following or in connection with the Merger.
(c) There is no outstanding indebtedness having general voting
rights or debt convertible into securities having such rights ("Voting Debt")
of the Company or any of its Subsidiaries issued and outstanding. Except as
otherwise set forth in this Section 2.2, and except for the transactions
contemplated hereby, (i) there are no shares of capital stock of the Company
or any of its Subsidiaries authorized, issued or outstanding; (ii) there are
no existing securities, options, warrants, calls, pre-emptive rights,
subscriptions or other rights, instruments, agreements, arrangements,
understandings or commitments of any character, relating to the issued or
unissued capital stock of the Company or any of its Subsidiaries obligating
the Company or any of its Subsidiaries to issue, transfer or sell or cause to
be issued, transferred or sold any shares of capital stock or Voting Debt of,
or other equity interest in, the Company or any of its Subsidiaries or
securities convertible into or exchangeable for such shares or equity
interests, or obligating the Company or any of its Subsidiaries to grant,
extend or enter into, or accelerate the vesting of, any such security, option,
warrant, call, subscription or other right, instrument, agreement,
arrangement, understanding or commitment; and (iii) there are no outstanding
contractual obligations of the Company or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any of the capital stock of the
Company or any of its Subsidiaries or to provide funds to or make any
investment (in the form of a loan, capital contribution or otherwise) in any
person. There are no outstanding or authorized stock appreciation, phantom
stock or similar rights with respect to the Company or any of its
Subsidiaries.
(d) All of the issued and outstanding shares of Company Common
Stock are, and, upon issuance thereof by the Company, all shares of Company
Common Stock that may be issued upon exercise of Options will be, duly
authorized, validly issued, fully paid, nonassessable and free of preemptive
or similar rights of any person. All of the issued and outstanding shares of
capital stock of the Company and all outstanding Options were issued in
compliance with applicable federal and state securities laws and all
requirements set forth in any applicable contract, arrangement or agreement to
which the Company is a party and with any preemptive or similar rights or
rights to subscribe for or purchase securities of any person.
(e) Except for this Agreement, the Voting Agreement and the
agreements listed in Section 2.2(e) of the Disclosure Schedule (such
agreements listed in Section 2.2(e) of the Disclosure Schedule being
collectively referred to as the "Company Stockholder Agreements"), there are
no (i) agreements, commitments, voting trusts, proxies, rights plans,
anti-takeover plans or understandings of any character with respect to the
voting, the registration under the Securities Act of 1933, as amended, or the
sale or delivery, of any capital stock or other securities of the Company or
any of its Subsidiaries or (ii) agreements or instruments between or among the
Company and any stockholders of the Company or agreements with respect to the
Company among any stockholders of the Company.
(f) No consent or approval of the holder of any Option is
required in order to effect the treatment of such Option in the manner
described in Section 1.9.
Section 2.3 Authority. The Company has all requisite corporate power
and authority to execute and deliver this Agreement and each instrument
required hereby to be executed and delivered by it, to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated
hereby and thereby. The execution and delivery by the Company of this
Agreement and each instrument required hereby to be executed and delivered by
it, the performance by the Company of its obligations hereunder and thereunder
and, subject to the Requisite Stockholder Approval (as defined below), the
consummation by the Company of the transactions contemplated hereby and
thereby have been duly and validly authorized by all necessary corporate
action on the part of the Company and no other corporate proceedings on the
part of the Company are required to authorize this Agreement or any of the
instruments required hereby or for the Company to consummate the transactions
contemplated hereby or thereby. This Agreement has been, and upon execution
and delivery thereof by the Company, each instrument required hereby to be
executed and delivered by the Company, will be, duly and validly executed and
delivered by the Company and, assuming the due and valid authorization,
execution and delivery by the other parties thereto, constitutes, or in the
case of each such instrument, will constitute, a valid and binding obligation
of the Company, enforceable against the Company in accordance with their
respective terms, except that (i) such enforcement may be subject to
applicable bankruptcy, insolvency or other similar laws, now or hereafter in
effect, affecting creditors' rights generally, and (ii) the remedy of specific
performance and injunctive relief may be subject to equitable defenses and to
the discretion of the court before which any proceeding therefor may be
brought.
Section 2.4 Vote Required. The vote or action by written consent of
the holders of at least a majority of the votes represented by the outstanding
shares of the Company Common Stock, voting or acting as a separate class, is
the only action required by the holders of any class or series of the capital
stock of the Company that is necessary to approve and adopt this Agreement,
the Merger and the transactions contemplated by this Agreement (the "Requisite
Stockholder Approval").
Section 2.5 Noncontravention. Subject to (i) any required compliance
with the applicable provisions of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), and satisfaction of such other
requirements of the comparable laws of other jurisdictions, (ii) the filing of
the Certificate of Merger with the Secretary of State of the State of Delaware
as required by the DGCL, (iii) such notices, filings, permits, authorizations,
consents, orders or approvals as may be required under applicable state
securities or "blue sky" laws and the securities laws of any foreign country,
and (iv) such other notices, filings, consents or approvals set forth in
Section 2.5 of the Disclosure Schedule, neither the execution and delivery by
the Company of this Agreement or any instrument required hereby to be executed
and delivered by it, the performance by the Company of its obligations
hereunder or thereunder, the consummation by the Company of the transactions
contemplated hereby or thereby, or the compliance by the Company with any of
the provisions hereof or thereof, will: (a) conflict with or violate any
provision of the Certificate of Incorporation or Bylaws; (b) require on the
part of the Company or any of its Subsidiaries any notice or filing with, or
any permit, authorization, consent, order, approval or other authorization of,
or any exemption by, any federal, state, local or foreign government,
governmental authority, court, arbitrator, administrative agency, registration
authority or commission or other regulatory authority or agency, including any
authority or agency having governmental or quasi-governmental powers (a
"Governmental Entity"); (c) conflict with, result in a violation or breach of,
constitute (with or without due notice or lapse of time or both) a default
under, result in the acceleration of, give rise to any right to accelerate,
terminate, modify or cancel, or require any notice, consent, authorization,
approval or waiver under, any contract, lease, sublease, license, sublicense,
franchise, permit, indenture, agreement, Security Interest (as defined below),
instrument or other arrangement or obligation to which the Company or any of
its Subsidiaries is a party or by which the Company or any of its Subsidiaries
is bound or to which any of the assets of the Company or any of its
Subsidiaries is subject; (d) result in the imposition of any Security Interest
upon any assets of the Company or any of its Subsidiaries; (e) violate or
breach the terms of or cause any default under any order, writ, injunction,
decree, judgment, permit, license, approval, authorization, law, statute,
ordinance, rule or regulation or code or any requirements, directives,
consents, and obligations of or imposed by any Governmental Entity applicable
to the Company or any of its Subsidiaries or any of their respective
properties, assets or securities; or (f) with the passage of time, the giving
of notice or the taking of any action by another person, have any of the
effects described in clauses (a) through (e) of this Section 2.5. As used in
this Agreement, "Security Interest" shall mean any mortgage, pledge, security
interest, encumbrance, charge or other lien of any kind (including any
agreement to give any of the foregoing), any conditional sale or other title
retention agreement, any lease in the nature thereof or the filing of an
agreement to give any financing statement under the Uniform Commercial Code or
similar laws of any jurisdiction, in any case, whether arising by contract or
by operation of law.
Section 2.6 Company Subsidiaries.
(a) Section 2.6(a) of the Disclosure Schedule sets forth the
name, jurisdiction of incorporation and capitalization of each Subsidiary of
the Company and the jurisdictions in which each such Subsidiary is qualified
to do business. Except as set forth in Section 2.6(a) of the Disclosure
Schedule, the Company does not own directly or indirectly any equity or
similar interest in, or any interest convertible into or exchangeable or
exercisable for any equity or similar interest in, any other corporation,
partnership, limited liability company, joint venture, trust, association or
other organization or entity. Each Subsidiary of the Company is a corporation
duly organized, validly existing and in good standing under the laws of the
state of its incorporation. Each Subsidiary of the Company is duly qualified
or licensed as a foreign corporation to conduct business and is in good
standing under the laws of each jurisdiction listed under its name in Section
2.6(a) of the Disclosure Schedule, which jurisdictions collectively constitute
every jurisdiction where the nature of such Subsidiary's business or the
ownership or leasing of its properties requires such qualification or
licensing, other than those jurisdictions where the failure to be so qualified
or licensed would not, individually or in the aggregate, be material to the
Company. Each Subsidiary of the Company has all requisite corporate power and
authority to carry on its business as it is now being conducted and as it is
presently proposed to be conducted and to own, lease and use the properties
owned, leased and used by it. All of the outstanding capital stock of each
Subsidiary of the Company is owned directly or indirectly by the Company free
and clear of all Security Interests and all material claims or charges of any
kind, and is validly issued, fully paid and nonassessable, and 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
any such Subsidiary to any person.
(b) The Company has furnished to the Parent prior to the
execution and delivery of this Agreement true and complete copies of the
certificates of incorporation and bylaws (or similar organizational documents)
of each Subsidiary of the Company, as currently in effect. No Subsidiary of
the Company is in default under or in violation of any provision of its
certificate of incorporation or bylaws (or similar organizational documents).
(c) As used in this Agreement, "Subsidiary" means, with respect
to any party, any corporation or other organization, whether incorporated or
unincorporated, of which (a) at least a majority of the securities or other
interests having by their terms ordinary voting power to elect a majority of
the Board of Directors or others performing similar functions with respect to
such corporation or other organization is, directly or indirectly, owned or
controlled by such party or by any one or more of its Subsidiaries, or by such
party and one or more of its Subsidiaries, (b) at least a majority of the
economic interests of which is, directly or indirectly, owned or controlled by
such party or by any one or more of its Subsidiaries, or by such party and one
or more of its Subsidiaries or (c) such party or any other Subsidiary of such
party is a general partner (excluding any such partnership where such party or
any Subsidiary of such party does not have a majority of the voting interest
in such partnership).
Section 2.7 Financial Statements. The Company has provided to the
Parent true, correct and complete copies of (a) the consolidated balance
sheets of the Company and its Subsidiaries as at September 28, 2003 and
September 29, 2002, and the related consolidated statements of income, changes
in stockholders' equity and cash flow for each of the fiscal periods then
ended, including the notes thereto, as certified by Deloitte & Touche LLP,
independent auditors, whose reports thereon are included therein, and (b) the
unaudited consolidated balance sheet of the Company and its Subsidiaries as at
February 29, 2004 (the "Balance Sheet") and the related unaudited consolidated
statements of income, changes in stockholders' equity and cash flows as at and
for the five-month period ended as of the date of the Balance Sheet and for
the corresponding period in the prior year. Such financial statements
(collectively, the "Financial Statements") have been prepared in accordance
with United States generally accepted accounting principles ("GAAP") applied
on a consistent basis throughout the periods covered thereby (except as may be
stated in the notes thereto) and fairly present in all material respects the
consolidated financial position, results of operations, changes in
stockholders' equity and cash flow of the Company and its Subsidiaries as at
the respective dates thereof and for the periods referred to therein (subject,
in the case of unaudited statements, to normally recurring levels of year-end
audit adjustments that are not material in the aggregate and the absence of
complete footnotes) and were prepared from and are consistent with the books
and records of the Company and its Subsidiaries. Since September 28, 2003,
there has been no significant change in any of the accounting (including tax
accounting) policies, practices or procedures of the Company.
Section 2.8 No Undisclosed Liabilities. Except as set forth in
Section 2.8 of the Disclosure Schedule, the Company has no material liability,
whether absolute, contingent, fixed, matured, unmatured, liquidated,
unliquidated, xxxxxx, inchoate, secured, unsecured or otherwise and whether
due or to become due, except for (a) liabilities as to the extent of the
amounts specifically shown or reserved on the Balance Sheet, that reflects all
liabilities required to be reflected thereon in accordance with GAAP; and (b)
liabilities arising after the date of the Balance Sheet that satisfy all of
the following criteria: (i) such liabilities were incurred by the Company or
any of its Subsidiaries in the ordinary course of business consistent with
past custom and practice ("Ordinary Course of Business") and not in excess of
current requirements and (ii) such liabilities, either individually or in the
aggregate, have not had and would not reasonably be likely to have a Material
Adverse Effect (as defined below) on the Company. The reserves reflected in
the Financial Statements have been calculated in good faith and in a
consistent manner.
Section 2.9 Tax Matters. Except as specifically identified in the
appropriate subsection of Section 2.9 of the Disclosure Schedule:
(a) Tax Returns. The Company and each of its Subsidiaries has
timely filed (or there has been timely filed on its behalf) all Tax Returns
(as defined below) required to be filed by it (or on its behalf) under
applicable law. All such Tax Returns were and are true, complete and correct
in all material respects. All Taxes shown as due on such Tax Returns have been
or will be timely paid. No claim has been made within the past ten (10) years
by a Taxing Authority (as defined below) in a jurisdiction where the Company
or any of its Subsidiaries does not file Tax Returns to the effect that the
Company or any of its Subsidiaries is or may be subject to taxation by that
jurisdiction. Neither the Company nor any of its Subsidiaries is required to
file any state Tax Returns other than in those states set forth in Section
2.9(a) of the Disclosure Schedule.
(b) Tax Reserves. The accrual for Taxes on the Financial
Statements is an amount at least equal to the sum of the liability for Taxes
of the Company and its Subsidiaries (other than Taxes previously paid over to
the appropriate Taxing Authority) for all Tax periods (and portions thereof)
ending on or before the date of such financial statements plus its deferred
Tax liability. Since December 31, 2003, neither the Company nor any of its
Subsidiaries has incurred any liability for Taxes other than in the Ordinary
Course of Business.
(c) Tax Liens. There are no Tax liens upon the assets,
properties or business of the Company or any of its Subsidiaries except liens
for Taxes not yet due and payable.
(d) Withholding Taxes. The Company and each of its Subsidiaries
has complied in all material respects with the provisions of the Code and all
other applicable laws relating to information reporting and returns and the
payment and withholding of Taxes, including the withholding and reporting
requirements under Code Sections 1441 through 1464, 3401 through 3406, and
6041 through 6060, as well as similar provisions under any other laws, and
have, within the time and in the manner prescribed by law, withheld and paid
over to the proper Taxing Authority all Taxes required to have been withheld
and paid in connection with amounts paid or owing to any employee, independent
contractor, creditor, stockholder, or other third party.
(e) Extensions of Time for Filing Tax Returns. Neither the
Company nor any of its Subsidiaries has requested any extension of time within
which to file any Tax Return, which Tax Return has not since been timely
filed.
(f) Waivers of Statute of Limitations. Neither the Company nor
any of its Subsidiaries has executed any outstanding waivers or comparable
consents regarding the application of the statute of limitations with respect
to any Taxes or Tax Returns.
(g) Expiration of Statute of Limitations. The statutes of
limitations for the assessment of all Taxes of the Company and each of its
Subsidiaries for all Tax periods have expired. No deficiency for any Taxes has
been proposed, asserted or assessed against the Company or any of its
Subsidiaries that has not been resolved and paid in full.
(h) Audit, Administrative and Court Proceedings. No audits,
claims, assessments, levies, administrative or judicial proceedings are
presently pending, or, to the Knowledge (as defined below) of the Company,
threatened, with regard to any Taxes or Tax Returns of the Company or any of
its Subsidiaries.
(i) Availability of Tax Returns. Prior to the execution of this
Agreement, the Company has made available to the Parent complete and accurate
copies of (i) all Tax Returns for open years, and any amendments thereto,
filed by or on behalf of the Company or any of its Subsidiaries, (ii) all
audit reports or written proposed adjustments (whether formal or informal)
received from any Taxing Authority relating to any Tax Return filed by or on
behalf of the Company or any of its Subsidiaries and (iii) any Tax ruling or
request for a Tax ruling applicable to the Company or any of its Subsidiaries
and any written and legally binding agreement with a Taxing Authority relating
to Taxes entered into by the Company or any of its Subsidiaries.
(j) Tax Sharing Agreements. Neither the Company nor any of its
Subsidiaries is a party to, is bound by, or has any obligation under, any
agreement relating to the allocation of sharing of Taxes or has any liability
for the Taxes of any person other than the Company or any of its Subsidiaries
as a transferee, or successor or otherwise (including any liability under
Treasury Regulation Section 1.1502-6 or any similar provision of state, local
or foreign law).
(k) Code Section 481 Adjustments. Neither the Company nor any
of its Subsidiaries is required to include in income for any Tax period ending
after the date hereof any adjustment pursuant to Code Section 481(a) by reason
of a voluntary change in accounting method of the Company or any of its
Subsidiaries, nor has the Internal Revenue Service (the "IRS") proposed any
such adjustment or change in accounting method.
(l) Acquisition Indebtedness. No indebtedness of the Company or
any of its Subsidiaries is "corporate acquisition indebtedness" within the
meaning of Code Section 279(b) or an "applicable high yield discount
obligation" within the meaning of Code Section 163(i).
(m) Consolidated Tax Returns. Neither the Company nor any of
its Subsidiaries has ever been a member of an affiliated group of corporations
(within the meaning of Code Section 1504(a)) filing consolidated Tax Returns.
(n) United States Real Property Holding Company. The Company
has not been a United States real property holding company within the meaning
of Code Section 897(c)(2) during the applicable period specified in Code
Section 897(c)(1)(A)(ii).
(o) S Corporation. The Company is not and has never been an "S
Corporation" within the meaning of Code Section 1361.
(p) Definitions. As used in this Agreement: (i) "Taxes" means
any and all federal, state, county, local, foreign or other taxes, charges,
imposts, rates, fees, levies or other assessments, including, all net income,
gross income, sales and use, ad valorem, transfer, gains, profits, excise,
franchise, real and personal property, gross receipt, capital stock,
production, business and occupation, disability, employment, payroll, license,
estimated, stamp, custom duties, severance, withholding or other taxes, fees,
assessments or charges of any kind whatsoever, together with any interest and
penalties on or additions to any such taxes; (ii) "Taxing Authority" means any
government authority or any subdivision, agency, court commission,
instrumentality or official thereof or any quasi-governmental or private body
having jurisdiction over the assessment, determination, collection, imposition
or administration of any Tax (including the IRS); and (iii) "Tax Return" means
any return, report, declaration, form, claim for refund, or statement relating
to Taxes, including any schedule or attachment thereto, and including any
amendment thereof.
Section 2.10 Properties and Assets.
(a) Except for inventory sold since the date of the Balance
Sheet in the Ordinary Course of Business, the Company and each of its
Subsidiaries has good, valid and marketable title to or a leasehold interest
in, all properties and assets (real, personal and mixed, tangible and
intangible), wherever located, that it purports to own, including all of the
properties and assets which are reflected in the Balance Sheet. All such owned
properties and assets are held free and clear of all Security Interests other
than (i) Security Interests the existence of which is reflected in the Balance
Sheet; (ii) with respect to real property, liens of mechanics, materialmen,
carriers and like persons, all of which are not yet due and payable; (iii)
with respect to real property, covenants, restrictions, easements,
encroachments, rights of way or other minor imperfections of title (other than
a Security Interest securing any indebtedness) that materially detract from
the value of or impair the current or continued occupancy, operation or use of
the property subject thereto or impair the operations of the Company or any of
its Subsidiaries; and (iv) liens for current Taxes not yet due. The Company
and each of its Subsidiaries holds under valid and enforceable lease
agreements all personal properties being held under capitalized leases and all
personal property that is subject to operating leases and enjoys peaceful and
undisturbed possession of such properties under such leases, and there exists
no default or event which, with notice or lapse of time or both, would
constitute a default under such leases, other than defaults which,
individually or in the aggregate, have not had and would not reasonably be
likely to have a Material Adverse Effect on the Company. The Company has not
received any written notice of any adverse claim to the title to any personal
properties owned by the Company or any of its Subsidiaries or with respect to
any lease under which any personal properties are held by the Company or its
Subsidiaries, other than any claims that, individually or in the aggregate,
have not had and would not reasonably be likely to have a Material Adverse
Effect on the Company. The rights, properties and other assets presently
owned, leased or licensed by the Company or its Subsidiaries include all such
rights, properties and other assets necessary to permit the Company and its
Subsidiaries to conduct their respective businesses in all material respects
as currently conducted.
(b) The buildings, plants, structures and equipment of the
Company and its Subsidiaries are structurally sound, are in good operating
condition and repair, and are adequate for the uses to which they are being
put, and none of such buildings, plants, structures or equipment is in need of
maintenance or repairs, except for ordinary, routine maintenance and repairs
that are, individually or in the aggregate, not material in nature or cost.
The building, plants, structures and equipment of the Company and its
Subsidiaries are sufficient for the continued conduct of the Companies' and
its Subsidiaries' businesses after the Closing in the same manner as currently
conducted.
Section 2.11 Owned Real Property.
(a) Section 2.11(a) of the Disclosure Schedule sets forth a
complete list and the location of all real property that is owned or used by
the Company or any of its Subsidiaries or that is reflected as an asset of the
Company or any of its Subsidiaries on the Balance Sheet (the "Real Property").
The Company has furnished to the Parent prior to the execution and delivery of
this Agreement true and complete copies of (i) all deeds, title insurance
policies and surveys relating to the Real Property and (ii) all documents
evidencing all Security Interests upon the Real Property. There are no
proceedings, claims, disputes or conditions affecting any Real Property that
might materially curtail or interfere with the use of such property. Neither
the whole nor any portion of the Real Property nor any other assets of the
Company or any of its Subsidiaries is subject to any governmental decree or
order to be sold or is being condemned, expropriated or otherwise taken by any
public authority with or without payment of compensation therefor, nor, to the
Knowledge of the Company, has any such condemnation, expropriation or taking
been proposed. Neither the Company nor any of its Subsidiaries is a party to
any lease, assignment or similar arrangement under which the Company or any of
its Subsidiaries is a lessor, assignor or otherwise makes available for use by
any third party any portion of the Real Property.
(b) Neither the Company nor any of its Subsidiaries has
received any notice of, or other writing referring to, any requirements or
recommendations by any insurance company that has issued a policy covering any
part of the Real Property or by any board of fire underwriters or other body
exercising similar functions, requiring or recommending any repairs or work to
be done on any part of the Real Property, which repair or work has not been
completed.
(c) The Company and each of its Subsidiaries has obtained all
appropriate certificates of occupancy, licenses, easements and rights of way,
including proofs of dedication, required to use and operate the Real Property
in the manner in which the Real Property is currently being used and operated,
except for those certificates, licenses, easements and rights of way that are
ministerial in nature and are normally issued in due course upon application
therefore without further action by the applicant. The Company and each of its
Subsidiaries has all approvals, Permits (as defined below) and licenses
(including any and all environmental Permits) necessary to own or operate the
Real Property as currently owned and operated; and no such approvals, Permits
or licenses will be required, as a result of the Merger, to be issued after
the date hereof in order to permit the Company and its Subsidiaries, following
the Closing, to continue to own or operate the Real Property in the same
manner as heretofore, other than any such approvals, Permits or licenses that
are ministerial in nature and are normally issued in due course upon
application therefore without further action by the applicant.
Section 2.12 Intellectual Property.
(a) Definitions. The following terms shall have the following
definitions:
(i) "Business" shall mean the business of Company and its
Subsidiaries as currently conducted.
(ii) "Intellectual Property" means (i) all copyrights,
including moral rights and rights of attribution and integrity, copyrights in
Software (as defined below) and in the content contained on any Internet site,
and registrations and applications for any of the foregoing (collectively,
"Copyrights"); (ii) all patents and industrial designs, including any
continuations, divisionals, continuations-in-part, renewals, reissues and
applications for any of the foregoing (collectively, "Patents"); (iii) all
rights of publicity and privacy, including the use of the names, likenesses,
voices, signatures, biographical information, persona and other recognizable
aspects of real persons; (iv) all computer programs (whether in source code or
object code form), databases, compilations and data, and all documentation
related to any of the foregoing (collectively, "Software"); (v) all
trademarks, service marks, trade names, domain names, designs, logos, emblems,
signs or insignia, slogans, other similar designations of source or origin and
general intangibles of like nature, together with the goodwill of the business
symbolized by any of the foregoing, registrations and applications relating to
any of the foregoing (collectively, "Trademarks"); and (vi) all trade secrets
(as defined under applicable law), including trade secrets of the following
nature: financing and marketing information, technology, know-how, inventions,
proprietary processes, formulae, algorithms, models and methodologies
(collectively, "Trade Secrets").
(b) Except as set forth in Section 2.12(b) of the Disclosure
Schedule, the Company owns, is licensed to use, or otherwise possesses legally
enforceable rights in, the Intellectual Property necessary to conduct the
Business, free and clear of all Security Interests, provided that this Section
2.12(b) does not speak to or address any alleged, potential or actual
infringement of any Intellectual Property of any third party, which is
addressed solely in Section 2.12(f) below;
(c) Section 2.12(c) of the Disclosure Schedule sets forth a
list of the following Intellectual Property owned or licensed by the Company
or any of its Subsidiaries and necessary to conduct the Business (and with
respect thereto specifies which such Copyrights, Patents, Trademarks and
Software are owned by the Company or any of its Subsidiaries): (i) all
registrations and applications for Copyrights, Patents and Trademarks; (ii)
all material unregistered Trademarks; and (iii) all material unregistered
Copyrights and Software;
(d) Except as set forth in Section 2.12(d) of the Disclosure
Schedule, the Company or one of its Subsidiaries is listed in the records of
the appropriate United States, state, or foreign registry as the sole current
owner of record for each registration and application for each Copyright,
Patent and Trademark owned by the Company or such Subsidiary as applicable,
and such registrations and applications have been duly maintained, are
subsisting, in full force and effect, have not been canceled, expired or
abandoned, are valid, and to the Knowledge of the Company, enforceable;
(e) Except as set forth in Section 2.12(e) of the Disclosure
Schedule, as of the date hereof, there are no oppositions, cancellations,
invalidity proceedings, re-examination proceedings, suits, arbitrations or
claims pending or for which notice has been provided or, to the Knowledge of
Company, threatened, challenging the Company's or any of its Subsidiaries'
ownership of, right to use, or the validity or enforceability of any
Intellectual Property owned or licensed by the Company;
(f) Except as set forth in Section 2.12(f) of the Disclosure
Schedule, neither the Company nor any of its Subsidiaries has received written
notice from any third party regarding any actual or potential infringement,
misappropriation, dilution or other violation by the Company or any of its
Subsidiaries of any Intellectual Property of such third party, and, to the
Knowledge of the Company, other than any potential basis for such a claim set
forth in Section 2.12(f) of the Disclosure Schedule there is no reasonable
basis for such a claim against the Company;
(g) To the Knowledge of the Company, no third party is
infringing, misappropriating, diluting or otherwise violating any Intellectual
Property owned or licensed by the Company or any of its Subsidiaries;
(h) Except as set forth in Section 2.12(h) of the Disclosure
Schedule, the consummation of the Merger and the other transactions
contemplated by this Agreement will not result in the loss or impairment by
the Company or any of its Subsidiaries of any rights to Intellectual Property
owed or licensed by the Company or any of its Subsidiaries, nor will such
consummation require the consent of or payment to any third party in respect
of any Intellectual Property owned or licensed by the Company or any of its
Subsidiaries;
(i) The Company and its Subsidiaries have taken all reasonable
measures to protect the confidentiality of its Trade Secrets, and, to the
Knowledge of the Company, no Trade Secret has been disclosed or authorized to
be disclosed to any party other than pursuant to a signed non-disclosure
agreement; and
(j) No current or former partner, director, officer, or
employee of Company or any of its Subsidiaries will, after giving effect to
the transactions contemplated herein, own any of the Intellectual Property
that the Company or any of its Subsidiaries purports to own.
Section 2.13 Inventory. All of the inventories of the Company and its
Subsidiaries consist of a quality and quantity usable and saleable in the
Ordinary Course of Business and are fit for the purposes for which they were
procured or manufactured, except for items of obsolete materials and materials
of below-standard quality, all of which items have been written-off or
written-down on the Financial Statements to fair market value, or for which
adequate reserves have been provided therein. All inventories not written-off
have been priced at the lower of average cost or market. All work in process
and finished goods inventory is free of any material defect or other
deficiency. The quantities of each type of inventory (whether raw materials,
work-in-process, or finished goods) are not excessive, but are reasonable and
warranted in the present circumstances of the Company and its Subsidiaries.
All items included in the inventory of the Company and its Subsidiaries are
the property of the Company and its Subsidiaries, free and clear of any
Security Interests, have not been pledged as collateral, are not held by the
Company or any of its Subsidiaries on consignment from others and conform in
all material respects to all standards applicable to such inventory or its use
or sale imposed by any Governmental Entity.
Section 2.14 Real Property Leases. Section 2.14 of the Disclosure
Schedule lists all written leases or subleases, and agreements to lease or
sublease, and describes all oral leases or subleases, pursuant to which the
Company or any of its Subsidiaries leases or subleases or has agreed to lease
or sublease any real property (each, a "Lease"). Each Lease is valid,
subsisting, in full force and effect, binding upon and enforceable against the
Company or its Subsidiary, as the case may be, and, to the Knowledge of the
Company, the other parties thereto in accordance with its terms, except, in
the case of enforceability against the other parties thereto, as such
enforceability may be limited by applicable bankruptcy, insolvency or other
similar laws, now or hereafter in effect, affecting creditors' rights
generally and by general equitable principles (regardless of whether
enforceability is considered in a proceeding in equity or at law). The
leasehold estate created by each Lease is free and clear of all Security
Interests. The Company or its Subsidiary, as the case may be, is not in
material breach of or material default under any of the Leases, nor, to the
Knowledge of Company, is any other party to any Lease in material breach of or
material default under such Lease, nor, to the Knowledge of the Company, does
any condition exist that, with or without notice, lapse of time or the
happening or occurrence of any other event, could result in a material breach
of or constitute a material default under any Lease. The Company has furnished
to the Parent prior to the execution and delivery of this Agreement true and
complete copies of all Leases.
Section 2.15 Contracts.
(a) Section 2.15(a) of the Disclosure Schedule (with paragraph
references corresponding to those set forth below) contains a true and
complete list of all of the following Contracts, together with all amendments
and supplements thereto and all waivers or modifications of any terms thereof,
and, if oral, an accurate and complete summary of the terms and conditions
thereof:
(i) all Contracts or series of related Contracts requiring
aggregate payments by or to the Company or any of its Subsidiaries of more
than $50,000;
(ii) all Contracts with current directors, officers, other
employees, consultants, agents, contractors, advisors or sales representatives
(excluding any Employee Benefit Plan (as defined below)) (A) providing for a
commitment of employment or consultation services for a specified or
unspecified term or otherwise relating to employment or the termination of
employment, together with the name, position and rate of compensation of each
person party to such a Contract and the expiration date of each such Contract;
or (B) requiring the Company or any of its Subsidiaries to make severance or
termination payments;
(iii) all Contracts for the grant to any person of any
options, rights of first refusal, or preferential or similar rights to
purchase any assets, properties or securities of the Company or any of its
Subsidiaries;
(iv) all Contracts with any person containing any provision
or covenant prohibiting or limiting the ability of the Company or any of its
Subsidiaries to engage in any business activity or compete in any geographic
area or with any person, or prohibiting or limiting the ability of any person
to compete with the Company or any of its Subsidiaries or in any line of
business with the Company or any of its Subsidiaries;
(v) all partnership, joint venture, stockholders' or other
similar Contracts with any person;
(vi) all Contracts relating to or evidencing indebtedness of
the Company or any of its Subsidiaries (including mortgages, notes,
capitalized lease obligations, interest rate or currency swaps, xxxxxx or
straddles or similar transactions);
(vii) all Contracts relating to marketing and all Contracts
(A) with distributors, dealers, manufacturer's representatives, sales agencies
or franchisees for or of the Company or any of its Subsidiaries or (B)
pursuant to which the Company or any of its Subsidiaries has agreed to act as
a distributor, dealer, manufacturer's representative, sales agent or
franchisee for or of another person, setting forth, where applicable, any
termination fees or other penalties which may be assessed against the Company
or any of its Subsidiaries as a result of the termination of any such
Contract;
(viii) all Contracts relating to (A) any past (if any of the
terms thereof remain in effect) or future disposition or acquisition of any
assets and properties by or to the Company or any of its Subsidiaries other
than dispositions or acquisitions in the Ordinary Course of Business or (B)
any merger, consolidation or combination, any sale, dividend, split or other
disposition of capital stock or other equity interests of the Company or any
of its Subsidiaries, or any sale, dividend or other disposition of all or
substantially all of the assets of the Company or any of its Subsidiaries
(collectively, a "Business Combination");
(ix) all Contracts (excluding Employee Benefit Plans and any
Contracts disclosed pursuant to Section 2.15(a)(ii)) between or among the
Company or any of its Subsidiaries, on the one hand, and any holder of
securities of the Company or any of its Subsidiaries, any past or present
officer, director, employee or consultant of the Company or any of its
Subsidiaries, on the other hand;
(x) all Contracts that (A) limit or contain restrictions on
the ability of the Company or any of its Subsidiaries to declare or pay
dividends on, to make any other distribution in respect of or to issue or
purchase, redeem or otherwise acquire its capital stock, to incur
indebtedness, to incur or suffer to exist any Security Interest, to purchase
or sell any assets and properties or to change the lines of business in which
it participates or engages or to engage in any Business Combination or (B)
require the Company or any of its Subsidiaries to maintain specified financial
ratios or levels of net worth or other quantitative indicia of financial
condition;
(xi) all Contracts with customers that (A) cannot be
terminated or canceled by the Company or any of its Subsidiaries, as
applicable, within twelve (12) weeks after the giving of notice of termination
or cancellation without resulting in any cost or penalty to the Company or its
Subsidiary; or (B) entitle any customer to a rebate or right of set-off, to
return any product after acceptance thereof or to delay the acceptance
thereof, or which vary in any material respect from Company's or any of its
Subsidiaries', as applicable, standard form contract;
(xii) all agreements obligating the Company or any of its
Subsidiaries to deliver maintenance services or future product enhancements;
(xiii) all Contracts under which the Company or any of its
Subsidiaries has or has agreed to lease any personal property as lessee or
lessor which involve annual lease payments exceeding $5,000;
(xiv) all Contracts requiring the payment to any person of a
brokerage or sales commission or a finder's or referral fee (other than
arrangements to pay commissions or fees to employees in the Ordinary Course of
Business);
(xv) all Contracts involving any obligation or liability of
the Company or any of its Subsidiaries (whether absolute, accrued, contingent
or otherwise), as surety, co-signer, endorser, co-maker, indemnitor or
otherwise in respect of the obligation of any person;
(xvi) all Contracts that provide by their terms for the
payment by the Company or any of its Subsidiaries of any consequential or
special damages;
(xvii) all Contracts with vendors, suppliers or
subcontractors that (A) cannot be terminated or canceled by the Company or any
of its Subsidiaries, as applicable, within twelve (12) weeks after the giving
of notice of termination or cancellation without resulting in any cost or
penalty to the Company or its Subsidiary, as applicable; (B) contain an
escalation clause; or (C) require the Company or any of its Subsidiaries to
purchase all or substantially all of its requirements for a particular product
or service from a vendor, supplier or subcontractor or to make periodic
minimum purchases of a particular product or service from a vendor, supplier
or subcontractor; and
(xviii) all licenses or similar Contracts for Intellectual
Property, whether as licensee or licensor (or both), and any consent,
coexistence, or similar agreement restricting the Company or any of its
Subsidiaries from using or enforcing Intellectual Property owned by the
Company or any of its Subsidiaries.
(b) Section 2.15(b) of the Disclosure Schedule lists (i) all of
the Company's and its Subsidiaries' outstanding purchase orders with vendors
(including the amount of the uninvoiced balance with respect to each such
purchase order) and (ii) all of the Company's and its Subsidiaries' open sale
orders (including the amount of the unfilled order with respect to each such
sale order), in each instance as of the date hereof.
(c) Section 2.15(c) of the Disclosure Schedule sets forth the
Company's and each of its Subsidiaries' standard form contract for the sale of
any product to their customers.
(d) Each Contract required to be listed in Section 2.15(a) of
the Disclosure Schedule (such Contracts, together with the Leases listed in
Section 2.14, are referred to collectively herein as the "Material Contracts")
is valid, subsisting, in full force and effect, binding upon and enforceable
against the Company or its Subsidiary, as the case may be, and, to the
Knowledge of the Company, the other parties thereto in accordance with its
terms, except, in the case of enforceability against the other parties
thereto, as such enforceability may be limited by applicable bankruptcy,
insolvency or other similar laws, now or hereafter in effect, affecting
creditors' rights generally and by general equitable principles (regardless of
whether enforceability is considered in a proceeding in equity or at law). The
Company or its Subsidiary, as the case may be, is not in material breach of or
material default under any of the Material Contracts, nor, to the Knowledge of
Company, is any other party to any Material Contract in material breach of or
material default under such Material Contract, nor, to the Knowledge of the
Company, does any condition exist that, with or without notice, lapse of time
or the happening or occurrence of any other event, could result in a material
breach of or constitute a material default under any Material Contract. The
Company has furnished to the Parent prior to the execution and delivery of
this Agreement true and complete copies of all Material Contracts.
(e) Section 2.15(e) of the Disclosure Schedule lists each
contractual obligation, contingent or otherwise, of the Company (including
milestone payments, earn-out payments, defined purchase price payments, or
other future payment obligations, but excluding royalty fees payable under
commercial contracts entered into in the Ordinary Course of Business) for
future payments created or arising under any purchase or sale agreement, or
other binding understanding or arrangement, or otherwise with respect to any
assets or other property or right acquired, to be acquired or proposed to be
acquired by the Company or any of its Subsidiaries.
(f) As used in this Agreement, "Contract" means any contract,
agreement, instrument, commitment, license, bond, mortgage, note, indenture,
or other binding arrangement, whether written or oral, to which the Company or
any of its Subsidiaries is a party or by which any of their respective assets,
properties or securities are bound.
Section 2.16 Bank Accounts and Powers of Attorney. Section 2.16 of
the Disclosure Schedule identifies all bank and brokerage accounts of the
Company and its Subsidiaries, whether or not such accounts are held in the
name of the Company or its Subsidiaries, and lists the respective signatories
therefor. There are no outstanding powers of attorney executed on behalf of
the Company or any of its Subsidiaries.
Section 2.17 Insurance. Section 2.17 of the Disclosure Schedule
contains an accurate and complete description of all material policies of
fire, liability, workmen's compensation and other forms of insurance owned or
held by the Company or any of its Subsidiaries. All such policies are in full
force and effect, all premiums with respect thereto covering all periods up to
and including the Closing Date have been and, prior to the Closing, will be
paid, and no notice of cancellation or termination has been received with
respect to any such policy. Such policies (i) are sufficient for compliance
with all material requirements of all agreements to which the Company or any
of its Subsidiaries is a party; (ii) are valid, outstanding and enforceable
policies; (iii) are reasonably believed by the Company to provide adequate
insurance coverage for the assets and operations of the Company and its
Subsidiaries; (iv) will remain in full force and effect through the respective
dates set forth in Section 2.17 of the Disclosure Schedule without the payment
of additional premiums; and (v) will not be adversely affected by, or
terminate or lapse by reason of, any of the transactions contemplated by this
Agreement. Neither the Company nor any of its Subsidiaries has been refused
any insurance with respect to its assets or operations, and its coverage has
not 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 three
(3) years.
Section 2.18 Litigation. There is no action, suit, inquiry,
proceeding or investigation by or before any court, arbitrator, or
governmental or other regulatory or administrative agency or commission
pending or, to the Knowledge of the Company, threatened against or involving
the Company or any of its Subsidiaries or any of their respective assets,
properties or securities, or which questions or challenges the validity of
this Agreement or any action taken or to be taken by the Company pursuant to
this Agreement or in connection with any of the transactions contemplated
hereby. There is no outstanding directive, memorandum of understanding, order,
injunction, decree, award, judgment of any court, arbitrator or governmental
or other regulatory or administrative agency or commission against the Company
or any of its Subsidiaries or any of their respective assets, properties or
securities.
Section 2.19 Employees. Section 2.19(a) of the Disclosure Schedule
contains a true and complete list of all officers and directors of the Company
and its Subsidiaries and all employees of the Company and its Subsidiaries,
along with the current position and salary of each such person and the number
of shares of Company Common Stock owned beneficially or of record by such
person. Section 2.19(b) of the Disclosure Schedule lists all group insurance
programs in effect for directors, officers or employees of the Company and its
Subsidiaries. Each officer and each employee of the Company involved in the
development of intellectual property and its Subsidiaries has entered into a
confidentiality and invention assignment agreement with the Company or its
Subsidiary, as applicable, a form of which has previously been provided to the
Parent. As of the date hereof, no key employee or group of employees has
informed the Company of their intention to terminate employment with the
Company or any of its Subsidiaries. Neither the Company nor any of its
Subsidiaries is delinquent in payments to any of its employees or consultants
for any wages, salaries, commissions, bonuses or other direct compensation for
any services performed by them or amounts required to be reimbursed to such
employees. Upon termination of the employment of any employees, neither the
Company, any of its Subsidiaries, the Parent nor the Surviving Corporation
will be liable to any of such employees for severance pay or any other
payments (other than accrued salary, vacation or sick pay in accordance with
the Company's and its Subsidiaries' normal policies) as a result of any oral
or written agreements made by the Company or any of its Subsidiaries prior to
the Closing. Neither the Company nor any of its Subsidiaries is a party to, or
bound by, any collective bargaining or similar labor agreement, and neither
the Company nor any of its Subsidiaries has experienced any strikes,
grievances, claims of unfair labor practices or other collective bargaining
disputes. The Company has no Knowledge of any organizational effort presently
being made or threatened by or on behalf of any labor union with respect to
employees of the Company or any of its Subsidiaries.
Section 2.20 Employee Benefits.
(a) Section 2.20(a) of the Disclosure Schedule contains a true
and complete list (identified by appropriate subsection) of (i) each deferred
compensation and each bonus or other incentive compensation, stock purchase,
stock option and other equity or equity-based compensation plan, program,
agreement or arrangement; (ii) each severance or termination pay, medical,
surgical, hospitalization, life insurance and other "welfare" plan, fund or
program (within the meaning of Section 3(1) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")); (iii) each profit-sharing, stock
bonus or other "pension" plan, fund or program (within the meaning of Section
3(2) of ERISA); (iv) each employment, "change in control," termination or
severance agreement; and (v) each other employee benefit plan, fund, program,
agreement or arrangement, in each case, that is sponsored, maintained or
contributed to or required to be contributed to by the Company, any Subsidiary
of the Company or by any trade or business, whether or not incorporated (an
"ERISA Affiliate"), that together with the Company would be deemed a "single
employer" within the meaning of Section 4001(b) of ERISA, or to which the
Company, any Subsidiary of the Company or an ERISA Affiliate is party, whether
written or oral, for the benefit of any employee or former employee of the
Company or any Subsidiary of the Company (collectively, the "Employee Benefit
Plans"). No Employee Benefit Plan is subject to Section 302 or Title IV of
ERISA or Section 412 of the Code. Neither the Company, any Subsidiary of the
Company nor any ERISA Affiliate has any commitment or formal plan, whether
legally binding or not, to create any additional employee benefit plan or
modify or change any existing Employee Benefit Plan.
(b) With respect to each Employee Benefit Plan, the Company has
heretofore delivered or made available to the Parent true and complete copies
of each of the following documents: (i) a copy of the Employee Benefit Plan
and any amendments thereto (or if the Employee Benefit Plan is not a written
plan, an accurate description thereof); (ii) a copy of the two most recent
annual reports and actuarial reports, if required under ERISA, and the most
recent report prepared with respect thereto in accordance with Statement of
Financial Accounting Standards No. 87; (iii) a copy of the most recent Summary
Plan Description required under ERISA with respect thereto; (iv) if the
Employee Benefit Plan is funded through a trust or any third party funding
vehicle, a copy of the trust or other funding agreement and the latest
financial statements thereof; and (v) the most recent determination letter
received from the IRS with respect to each Employee Benefit Plan intended to
qualify under section 401 of the Code.
(c) No liability under Title IV or Section 302 of ERISA has
been incurred by the Company, any Subsidiary of the Company or any ERISA
Affiliate that has not been satisfied in full, and no condition exists that
presents a material risk to the Company, any Subsidiary of the Company or any
ERISA Affiliate of incurring any such liability.
(d) All contributions required to be made with respect to any
Employee Benefit Plan on or prior to the Effective Time have been timely made
or are reflected on the Company's balance sheet.
(e) Neither the Company, any Subsidiary of the Company nor any
Employee Benefit Plan, trust created thereunder, or any trustee or
administrator thereof has engaged in a transaction in connection with which
the Company, any Subsidiary of the Company, any Employee Benefit Plan, any
such trust, or any trustee or administrator thereof, or any party dealing with
any Employee Benefit Plan or any such trust could be subject to either a civil
penalty assessed pursuant to Section 409 or 502(i) of ERISA or a tax imposed
pursuant to Section 4975 or 4976 of the Code.
(f) Each Employee Benefit Plan has been operated and
administered in all material respects in accordance with its terms and
applicable law, including but not limited to ERISA and the Code. There are no
pending, threatened or anticipated claims by or on behalf of any Employee
Benefit Plan, by any employee or beneficiary covered under any such Employee
Benefit Plan with respect to such a plan, or otherwise involving any such
Employee Benefit Plan (other than routine claims for benefits).
(g) Each Employee Benefit Plan intended to be "qualified"
within the meaning of Section 401(a) of the Code is so qualified and the
trusts maintained thereunder are exempt from taxation under Section 501(a) of
the Code. Each Employee Benefit Plan intended to satisfy the requirements of
Section 501(c)(9) has satisfied such requirements.
(h) No Employee Benefit Plan provides medical, surgical,
hospitalization, death or similar benefits (whether or not insured) for
employees or former employees of the Company or any Subsidiary of the Company
for periods extending beyond their retirement or other termination of service,
other than (i) coverage mandated by applicable law, (ii) death benefits under
any "pension plan," or (iii) benefits the full cost of which is borne by the
current or former employee (or his beneficiary). No condition exists that
would prevent the Company or any Subsidiary of the Company or an ERISA
Affiliate from amending or terminating any Employee Benefit Plan without
liability to the Company, such Subsidiary or such ERISA Affiliate (other than
for benefits accrued at the time of termination or vested due to such
termination).
(i) No amounts paid or payable under the Employee Benefit Plans
will fail to be deductible for U.S. federal income tax purposes by virtue of
Section 162(a)(1), Section 162(m) or Section 280G of the Code.
(j) The consummation of the transactions contemplated by this
Agreement will not, either alone or in combination with another event, (i)
entitle any current or former employee or officer of the Company or any
Subsidiary of the Company or any ERISA Affiliate to severance pay,
unemployment compensation or any other payment, except as expressly provided
in this Agreement, or (ii) accelerate the time of payment or vesting, or
increase the amount of compensation due any such employee or officer, other
than the acceleration of vesting of Options in connection with the Merger (all
such payments or amounts described in clauses (i) and (ii), collectively, the
"Transaction Payments").
(k) Section 2.20(k) of the Disclosure Schedule sets forth all
accruals or arrangements for payment of vacation benefits, non-qualified
retirement benefits, bonus payments and other compensation obligations (other
than salary obligations) that are unpaid as of the date hereof (including the
person entitled to any such benefit, payment or compensation and the amount
thereof), each of which was granted or incurred by the Company in the Ordinary
Course of Business. Neither the Company nor any of its Subsidiaries has any
accruals or arrangements for payments of vacation benefits, non-qualified
retirement benefits, bonus payments, other compensation obligations (other
than salary obligations) that are unpaid as of the date hereof and which were
granted or incurred other than in the Ordinary Course of Business.
(l) With respect to each Employee Benefit Plan that is subject
to the law of any jurisdiction outside the United States (each, a "Foreign
Benefit Plan"):
(i) all employer and employee contributions to each Foreign
Benefit Plan required by law or by the terms of such Foreign Benefit Plan have
been timely made, or, if applicable, accrued, in accordance with applicable
accounting practices;
(ii) the fair market value of the assets of each funded
Foreign Benefit Plan, the liability of each insurer for any Foreign Benefit
Plan funded through insurance or the book reserve established for any Foreign
Benefit Plan, together with any accrued contributions, is sufficient to
procure or provide for the accrued benefit obligations, as of the Effective
Time, with respect to all current and former participants in such plan
according to the actuarial assumptions and valuations most recently used to
determine employer contributions to such Foreign Benefit Plan and no
transaction contemplated by this Agreement shall cause such assets or
insurance obligations to be less than such benefit obligations; and
(iii) each Foreign Benefit Plan required to be registered
has been registered and has been maintained in good standing with applicable
governmental authorities.
Section 2.21 Environmental Matters. Except as set forth in Section
2.21 of the Disclosure Schedule (identified by appropriate subsection):
(a) Each of the Company and its Subsidiaries has complied and
is in compliance in all material respects with all applicable Environmental
Laws (as defined below). Such compliance includes the possession by the
Company and each of its Subsidiaries of all permits and other governmental
authorizations required of the Company and its Subsidiaries under all
applicable Environmental Laws and necessary for the conduct of the businesses
of the Company and its Subsidiaries or present use of the Real Property and
the improvements and equipment located thereon, and material compliance with
the terms and conditions thereof. Section 2.21(a) of the Disclosure Schedule
contains a true and complete list of all material permits and other
governmental authorizations currently held by the Company or any of its
Subsidiaries pursuant to the Environmental Laws.
(b) Neither the Company nor any of its Subsidiaries has
received any unresolved, written communication, whether from a Governmental
Entity, citizens group, employee or otherwise, that alleges that the Company
or any of its Subsidiaries is not in compliance with any Environmental Laws,
and, to the Knowledge of the Company, there are no circumstances that could
reasonably be expected to prevent or interfere with Environmental Laws as
currently enacted.
(c) There is no Environmental Claim (as defined below) by any
person that is pending or, to the Knowledge of the Company, threatened against
the Company or any of its Subsidiaries, and the Company has not received
written notice of any Environmental Claim against any person whose liability
for any Environmental Claim the Company or any of its Subsidiaries has
retained or assumed either contractually or by operation of law.
(d) No Hazardous Materials (as defined below) have been
released, treated, stored or disposed of by the Company or any of its
Subsidiaries, or, to the Knowledge of the Company, by persons who formerly
owned, leased or occupied any real property currently or formerly owned,
leased, operated or controlled by the Company or any of its Subsidiaries, that
would reasonably be expected to form the basis of any Environmental Claim
against the Company or any of its Subsidiaries.
(e) Without in any way limiting the generality of the
foregoing, (i) Section 2.21(e) of the Disclosure Schedule identifies all
on-site and off-site locations where the Company or any of its Subsidiaries
has (previously or currently) stored, disposed or arranged for the disposal of
Hazardous Materials; (ii) Section 2.21(e) of the Disclosure Schedule
identifies all underground storage tanks, and the capacity and contents of
such tanks, that are, to the Knowledge of the Company, located on any property
owned, leased, operated or controlled by the Company or any of its
Subsidiaries; (iii) to the Knowledge of the Company, there is no asbestos
contained in or forming part of any building, building component, structure or
office space owned, leased, operated or controlled by the Company or any of
its Subsidiaries; and (iv) Section 2.21(e) of the Disclosure Schedule
identifies all off-site facilities where the Company or any of its
Subsidiaries have arranged for the disposal of Hazardous Materials or the
Recycling of Hazardous Materials.
(f) The Company has made available to the Parent prior to the
execution and delivery of this Agreement all written assessments, reports,
data, results of investigations or audits, and other documents that are in the
possession of the Company or any of its Subsidiaries regarding environmental
matters pertaining to or the environmental condition of the businesses of the
Company or any of its Subsidiaries, or the compliance (or noncompliance) by
the Company or any of its Subsidiaries with any Environmental Laws.
(g) Neither the Company nor any of its Subsidiaries is subject
to any Environmental Laws requiring, by virtue of the transactions
contemplated by this Agreement or as a condition to the effectiveness of any
of the transactions contemplated by this Agreement, (i) the performance of
site assessment for Hazardous Materials; (ii) the removal or remediation of
Hazardous Materials; (iii) the giving of notice to, or receiving the approval
of, any Governmental Entity; or (iv) the recording or delivery to any other
person of any disclosure document or statement pertaining to environmental
matters.
(h) Neither the Company nor any of its Subsidiaries, nor, to
the Knowledge of the Company, any person for whose liability for any
Environmental Claim the Company or any of its Subsidiaries has retained or
assumed either contractually or by operation of law, is subject to any
administrative, civil, or criminal order, judgment or decree, whether
unilateral, voluntary or by consent or agreement, pursuant to or in connection
with any Environmental Law.
(i) As used in this Agreement, (i) "Environmental Claim" means
any claim, action, cause of action, investigation or written notice by any
person alleging actual or potential liability (including fines, penalties,
corrective action costs, injunctive relief, investigatory, cleanup or
governmental response costs, or natural resources or property damages, or
personal injuries, attorney's fees or penalties) relating to (A) the presence,
or release into the environment, of any Hazardous Materials at any location
owned or operated by the Company or any of its Subsidiaries, now or in the
past, or (B) any violation, or alleged violation, of any Environmental Law;
(ii) "Environmental Law" means each federal, state, local and foreign law and
regulation relating to pollution, protection or preservation of human health
and the environment including ambient air, surface water, ground water, land
surface or subsurface strata, and natural resources, and including each law
and regulation relating to emissions, discharges, releases or threatened
releases of Hazardous Materials, or otherwise relating to the manufacturing,
processing, distribution, use, treatment, generation, storage, containment
(whether above ground or underground), disposal, transport or handling of
Hazardous Materials, or the preservation of the environment or mitigation of
adverse effects thereon and each law and regulation with regard to record
keeping, notification, disclosure and reporting requirements respecting
Hazardous Materials; and (iii) "Hazardous Materials" means (a) any
petrochemical or petroleum products, radioactive materials, radon gas,
asbestos and asbestos-containing materials, and polychlorinated biphenyls, (b)
any chemicals, materials or substances defined as or included in the
definition of "hazardous substances," "hazardous wastes," "hazardous
materials," "hazardous constituents," "restricted hazardous materials,"
"extremely hazardous substances," "toxic substances," "contaminants,"
"pollutants," "toxic pollutants" or words of similar meaning and regulatory
effect under any applicable Environmental Law and (c) any other chemical,
material or substance, exposure to which is prohibited, limited or regulated
by any applicable Environmental Law.
Section 2.22 Compliance.
(a) Each of the Company and its Subsidiaries and the conduct
and operations of their respective businesses have complied in all material
respects with each law (including rules and regulations thereunder),
ordinance, judgment, decree, order, writ and injunction of all Governmental
Entities that (i) affects or relates to this Agreement or the transactions
contemplated hereby or (ii) is applicable to the Company or any of its
Subsidiaries or their respective businesses, properties, assets or securities,
or to the products and services sold by them.
(b) (i) No investigation or review by any Governmental Entity
with respect to the Company or any of its Subsidiaries is pending or, to the
Knowledge of the Company, threatened and (ii) no notice, charge, claim, action
or assertion has been received by the Company or any of its Subsidiaries
alleging any material violation of any law (including rules and regulations
thereunder), ordinance judgment, decree, order, writ or injunction of any
Governmental Entity.
Section 2.23 Permits. Section 2.23 of the Disclosure Schedule sets
forth a true and complete list of all franchises, permits, licenses,
registrations, certificates, orders, approvals, authorizations or other rights
and privileges (including those relating to the occupancy or use of real
property) of or from any Governmental Entity issued to or held by the Company
or any of its Subsidiaries that are material to the business of the Company or
its Subsidiaries as presently conducted and as currently proposed to be
conducted (collectively, "Permits"), and all pending applications for any such
Permits, setting forth the grantor, the grantee, the function and the
expiration and renewal date of each. The Company has furnished to the Parent
prior to the execution and delivery of this Agreement true and complete copies
of all such Permits. Each Permit is in full force and effect, and no
proceeding is pending or, to the Knowledge of the Company, threatened to
revoke or limit any Permit. The businesses of the Company and its Subsidiaries
have been conducted in compliance in all material respects with all Permits.
Each Permit will be in full force and effect immediately following the Closing
and will not expire or terminate as a result of the Merger.
Section 2.24 Certain Business Relationships. No stockholder, officer
or director of the Company (i) owns or holds, directly or indirectly, any
asset, property or right, tangible or intangible, which is used in the
business of the Company or any of its Subsidiaries, (ii) has any claim, charge
or cause of action against the Company or any of its Subsidiaries, other than
claims for reasonable unreimbursed travel or entertainment expenses, accrued
vacation pay or accrued benefits under any Employee Benefit Plan existing on
the date hereof, (iii) owes any money to the Company or any of its
Subsidiaries, or (iv) owns or holds, directly or indirectly, an interest in
any competitor, supplier or customer of the Company or any of its
Subsidiaries, other than holdings solely for passive investment purposes of
less than 5% of a class of securities of a publicly traded company.
Section 2.25 Broker's Fees. No agent, broker, investment banker,
financial advisor or other firm or person other than Xxxxx, Xxxxxxxx & Xxxx is
or will be entitled to any broker's or finder's fee or any other commission or
similar fee in connection with any of the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Company, any of
its Subsidiaries or any stockholder of the Company.
Section 2.26 Books and Records. The books of account, minute books,
stock record books and other similar records of the Company and its
Subsidiaries are true, complete and correct in all material respects and have
been maintained in accordance with sound business practice, including the
maintenance of an adequate system of controls. The Company has made and kept
books, records and accounts which, in reasonable detail, accurately and fairly
reflect its transactions and the dispositions of its assets. The stock ledgers
of the Company, true and complete copies of which have been furnished to the
Parent prior to the execution and delivery of this Agreement, are complete and
correct. The minute books of the Company and its Subsidiaries, true and
complete copies of which have been furnished to the Parent prior to the
execution and delivery of this Agreement, contain true and complete records of
all meetings held of, and corporate action taken by, the Company's and its
Subsidiaries' stockholders, Board of Directors or any committee thereof and of
all written consents executed in lieu of the holding of any such meeting. No
meeting of any such stockholders, Board of Directors or committee has been
held for which minutes have been prepared and are not contained in such minute
books. At the Closing, the Company will have possession of all of its books
and records.
Section 2.27 Company Action. The Company Board, at a meeting duly
called and held, by the unanimous vote of all directors present, or by
unanimous written consent, in each case in accordance with the DGCL, (i)
determined that the Merger and the transactions contemplated by this Agreement
are advisable and in the best interests of the Company and its stockholders
and are on terms that are fair to such stockholders, (ii) approved this
Agreement, the Merger and the transactions contemplated hereby, (iii) directed
that this Agreement and the Merger be submitted to the stockholders of the
Company for their approval and adoption and (iv) recommended that the
stockholders of the Company vote in favor of the approval and adoption of this
Agreement and the Merger.
Section 2.28 Information in Disclosure Documents. None of the
information supplied or to be supplied by or on behalf of the Company for
inclusion or incorporation by reference in any information statement or other
disclosure document or materials provided to any stockholders of the Company
relating to (i) any meeting of stockholders of the Company to be held in
connection with the Merger or (ii) any written consent of stockholders of the
Company in connection with the Merger (the "Company Disclosure Statement")
will, at the time the Company Disclosure Statement is mailed or otherwise
delivered to the stockholders of the Company, at the time of any meeting of
stockholders to be held in connection with the Merger, at the date of any
written consent of stockholders of the Company concerning this Agreement or as
of the Effective Time, 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 the light of the circumstances under which
they are made, not misleading. If at any time prior to the meeting of
stockholders to be held in connection with the Merger or the date of any
written consent of stockholders of the Company concerning this Agreement, any
event relating to the Company or any Affiliate of the Company should be
discovered by the Company, which should be set forth in a supplement to the
Company Disclosure Statement, the Company shall promptly inform the Parent.
Notwithstanding the foregoing, no representation or warranty is made by the
Company with respect to statements made or incorporated by reference therein
about the Parent supplied by the Parent for inclusion or incorporation by
reference in the Company Disclosure Statement.
Section 2.29 Absence of Certain Changes. Since September 28, 2003,
(a) each of the Company and its Subsidiaries has conducted its respective
business and operations in the Ordinary Course of Business and (b) through the
date hereof, except as set forth in Section 2.29(b) of the Disclosure
Schedule, there has not occurred:
(i) any event or occurrence which has had or could
reasonably be expected to have a Material Adverse Effect on the Company;
(ii) any material adverse change in the Company's or any of
its Subsidiaries' working capital, liabilities (absolute, accrued, contingent
or otherwise) or reserves;
(iii) the incurrence by the Company or any of its
Subsidiaries of any liability or obligation (absolute, accrued, contingent or
otherwise), except items incurred in the Ordinary Course of Business, or
increase, or change in any assumptions underlying or methods of calculating,
any bad debt, contingency or other reserves;
(iv) any payment, discharge or satisfaction of any claim,
liability or obligation (whether absolute, accrued, contingent or otherwise)
of the Company or any of its Subsidiaries other than the payment, discharge or
satisfaction in the Ordinary Course of Business of liabilities and obligations
reflected or reserved against in the Balance Sheet;
(v) any write-down of the value of any inventory of the
Company or any of its Subsidiaries (including write-downs by reason of
shrinkage or xxxx-down) or write-off as uncollectible of any accounts
receivable of the Company or any of its Subsidiaries, except for write-downs
and write-offs in the Ordinary Course of Business, in either case in excess of
$25,000;
(vi) any increase in the aggregate amount of the Company's
or any of its Subsidiaries' accounts payable greater than $50,000;
(vii) any redemption or other acquisition of any capital
stock of the Company by the Company or any declaration, setting aside, or
payment of any dividend or distribution of any kind with respect to any shares
of capital stock of the Company or any of its Subsidiaries;
(viii) any increase in compensation, bonus or other benefits
payable or to become payable by the Company or any of its Subsidiaries to any
of its directors, officers or employees, other than in the Ordinary Course of
Business;
(ix) any entering into or granting by the Company or any of
its Subsidiaries of any new employment agreement providing for annual
compensation over $50,000, any new employee benefit, deferred compensation or
other similar employee benefit arrangement, or any new consulting arrangement
and any grant of any severance or termination rights to any director, officer
or employee of the Company or any of its Subsidiaries or any increase in
benefits payable under existing severance or termination pay policies or
employment agreements;
(x) any change to any accounting method or practice of the
Company, except as required by GAAP;
(xi) except for inventory or equipment acquired in the
Ordinary Course of Business, any acquisition by the Company or any of its
Subsidiaries of all or any part of the assets, properties, capital stock or
business of any other person;
(xii) any destruction of, damage to or loss of any assets
material to the business of the Company or any of its Subsidiaries (whether or
not covered by insurance);
(xiii) cancellation of any material debts or waiver of any
material claims or rights of the Company or any of its Subsidiaries;
(xiv) except in the Ordinary Course of Business, any sale,
abandonment or any other disposition of any assets or properties of the
Company or any of its Subsidiaries;
(xv) disposal or lapse of any rights to the use of any
Company Intellectual Property, or disposal of or disclosure to any person
other than representatives of the Parent of any Trade Secret or Company
Intellectual Property not theretofore a matter of public knowledge, except in
the Ordinary Course of Business; or
(xvi) any commitment, understanding or agreement by the
Company or any of its Subsidiaries or any of their respective directors,
officers or employees to do any of the things described in the preceding
clauses (i) through (xv).
Section 2.30 Certain Business Practices. (a) No unrecorded fund or
asset of the Company or any of its Subsidiaries has been established for any
purpose, (b) no accumulation or use of corporate funds of the Company or any
of its Subsidiaries has been made without being properly accounted for in the
books and records of the Company or such Subsidiary, (c) no payment has been
made by or on behalf of the Company or any of its Subsidiaries with the
understanding that any part of such payment is to be used for any purpose
other than that described in the documents supporting such payment and (d)
none of the Company, any of its Subsidiaries, any director, officer or
employee of the Company or any of its Subsidiaries or, to the Knowledge of the
Company, any agent of, or any other person associated with or acting for or on
behalf of, the Company or any of its Subsidiaries has, directly or indirectly,
made any illegal contribution, gift, bribe, rebate, payoff, influence payment,
kickback or other payment to any person, private or public, regardless of
form, whether in money, property or services, (i) to obtain favorable
treatment for any stockholder of the Company, the Company, any Subsidiary of
the Company or any director, officer or employee of the Company or any of its
Subsidiaries in securing business, (ii) to pay for favorable treatment for
business secured for any stockholder of the Company, the Company, any
Subsidiary of the Company or any director, officer or employee of the Company
or any of its subsidiaries, (iii) to obtain special concessions, or for
special concessions already obtained, for or in respect of any stockholder of
the Company, the Company, any Subsidiary of the Company or any director,
officer or employee of the Company or any of its subsidiaries or (iv)
otherwise for the benefit of any stockholder of the Company, the Company, any
Subsidiary of the Company or any director, officer or employee of the Company
or any of its subsidiaries in violation of any federal, state, local,
municipal, foreign, international, multinational or other administrative
order, constitution, law, ordinance, principle of common law, regulation,
statute, or treaty (including existing site plan approvals, zoning or
subdivision regulations or urban redevelopment plans relating to Real
Property). Neither the Company nor any of its Subsidiaries nor any current
director, officer or employee of the Company or any of its Subsidiaries or, to
the Knowledge of the Company, any agent of, or any other person associated
with or acting for or on behalf of, the Company or any of its Subsidiaries,
has accepted or received any unlawful contribution, payment, gift, kickback,
expenditure or other item of value.
Section 2.31 Termination of Existing Agreements with Holders of
Company Stock. The Company has taken all action, and has obtained the written
consent, approval or agreement of any person, required to terminate in their
entirety, effective at the Effective Time, all Company Stockholder Agreements
so that as of the Effective Time the Company Stockholder Agreements shall be
void and of no further force or effect and no person shall have any rights or
obligations whatsoever thereunder.
Section 2.32 Disclosure. The Company has not failed to disclose to
the Parent any facts which are material to the business, results of
operations, assets, liabilities or financial condition of the Company and its
Subsidiaries, taken as a whole. No representation or warranty contained in
this Agreement, and no statement contained in the Disclosure Schedule or in
any certificate furnished to the Parent pursuant to any provision of this
Agreement or in connection with the transactions contemplated hereby, contains
or will contain any untrue statement of a material fact or omits or will omit
to state any material fact necessary in order to make the statements contained
herein and therein, in light of the circumstances in which they were made, not
misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PARENT AND THE TRANSITORY SUBSIDIARY
The Parent and the Transitory Subsidiary, jointly and severally,
represent and warrant to the Company that all of the statements contained in
this Article III are true and correct as of the date of this Agreement (or, if
made as of a specified date, as of such date), and will be true and correct as
of the Closing Date as though made on the Closing Date.
Section 3.1 Organization. The Parent is a corporation duly organized,
validly existing and in good standing under the laws of the Province of New
Brunswick, Canada. The Transitory Subsidiary is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
All of the outstanding capital stock of Transitory Subsidiary is indirectly
owned by the Parent. Each of the Parent and the Transitory Subsidiary is duly
qualified or licensed as a foreign corporation to conduct business and is in
good standing under the laws of each jurisdiction in which the nature of its
business or the ownership or leasing of its properties requires such
qualification or licensing, except where the failure to so qualify would not
prevent or impair in any material respect the ability of the Parent and the
Transitory Subsidiary to perform their respective obligations hereunder or to
consummate the transactions contemplated by this Agreement. Each of the Parent
and the Transitory Subsidiary has all requisite corporate power and authority
to carry on its businesses as they are now being conducted and to own, lease
and use the properties owned, leased and used by it.
Section 3.2 Authority. Each of the Parent and the Transitory
Subsidiary has all requisite corporate power and authority to execute and
deliver this Agreement and each instrument required hereby to be executed and
delivered by it, to perform their respective obligations hereunder and
thereunder and to consummate the transactions contemplated hereby and thereby.
The execution and delivery by the Parent and the Transitory Subsidiary of this
Agreement and each instrument required hereby to be executed and delivered by
it, the performance by the Parent and the Transitory Subsidiary of their
respective obligations hereunder and thereunder and the consummation by the
Parent and the Transitory Subsidiary of the transactions contemplated hereby
and thereby have been duly and validly authorized by all necessary corporate
action on the part of the Parent and the Transitory Subsidiary and no other
corporate proceedings on the part of the Parent or the Transitory Subsidiary
are required to authorize this Agreement or any of the instruments required
hereby or for the Parent and the Transitory Subsidiary to consummate the
transactions contemplated hereby or thereby. This Agreement has been, and,
upon execution and delivery thereof by the Parent and the Transitory
Subsidiary, each instrument required hereby to be executed and delivered by
the Parent or the Transitory Subsidiary, will be, duly and validly executed
and delivered by the Parent and the Transitory Subsidiary and, assuming the
due and valid authorization, execution and delivery by the other parties
thereto, constitute, or in the case of each such instrument will constitute, a
valid and binding obligation of the Parent and the Transitory Subsidiary,
enforceable, against them in accordance with their respective terms, except
that (i) such enforcement may be subject to applicable bankruptcy, insolvency
or other similar laws, now or hereafter in effect, affecting creditors' rights
generally, and (ii) the remedy of specific performance and injunctive relief
may be subject to equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought.
Section 3.3 Noncontravention. Subject to (i) any required compliance
with the applicable provisions of the HSR Act, and satisfaction of such other
requirements of the comparable laws of other jurisdictions, (ii) the filing of
the Certificate of Merger as required by the DGCL, and (iii) such notices,
filings, permits, authorizations, consents, orders or approvals as may be
required under applicable state securities or "blue sky" laws and the
securities laws of any foreign country, neither the execution and delivery by
the Parent or the Transitory Subsidiary of this Agreement or any instrument
required hereby to be executed and delivered by it, the consummation by the
Parent and the Transitory Subsidiary of the transactions contemplated hereby
or thereby, or the compliance by the Parent and the Transitory Subsidiary with
any of the provisions hereof or thereof, will: (a) conflict with or violate
any provision of the charter documents or by-laws of the Parent and the
Transitory Subsidiary; (b) require on the part of the Parent or the Transitory
Subsidiary any notice or filing with, or any permit, authorization, consent,
order, approval or other authorization of, or any exemption by, any
Governmental Entity; (c) conflict with, result in a violation or breach of,
constitute (with or without due notice or lapse of time or both) a default
under, result in the acceleration of, give rise to any right to accelerate,
terminate, modify or cancel, or require any notice, consent, authorization,
approval or waiver under, any contract, lease, sublease, license, sublicense,
franchise, permit, indenture, agreement, Security Interest, instrument or
other arrangement or obligation to which the Parent or Transitory Subsidiary
is a party or by which either is bound or to which any of their assets are
subject; (d) violate or breach the terms of or cause any default under any
order, writ, injunction, decree, judgment, permit, license, approval,
authorization, law, statute, ordinance, rule or regulation or code or any
requirements, directories, consents and obligations of or imposed by any
Governmental Entity applicable to the Parent or the Transitory Subsidiary or
any of their respective properties, assets or Securities; or (e) with the
passage of time, the giving of notice or the taking of any action by another
person, have any of the effects described in clauses (a) through (d) of this
Section 3.3.
Section 3.4 Broker's Fees. No agent, broker, investment banker,
financial advisor or other firm or person is or will be entitled to any
broker's or finder's fee or any other commission or similar fee in connection
with any of the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Parent or Transitory Subsidiary.
Section 3.5 Available Funds. The Parent has available, or has made
arrangements to obtain (through existing credit arrangements or otherwise),
sufficient funds to pay the Merger Consideration at the Closing.
Section 3.6 Information in Disclosure Documents. None of the
information supplied or to be supplied by or on behalf of the Parent for
inclusion or incorporation by reference in the Company Disclosure Statement
will, at the time the Company Disclosure Statement is mailed or otherwise
delivered to the stockholders of the Company, at the time of any meeting of
stockholders to be held in connection with the Merger, at the date of any
written consent of stockholders of the Company concerning this Agreement or as
of the Effective Time, 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. Notwithstanding the foregoing, no representation or
warranty is made by the Parent with respect to statements made or incorporated
by reference therein about the Company supplied by the Company for inclusion
or incorporation by reference in the Company Disclosure Statement.
ARTICLE IV
COVENANTS
Section 4.1 Interim Operations of the Company. The Company covenants
and agrees that, except (i) as set forth in Section 4.1 of the Disclosure
Schedule, (ii) as specifically contemplated by this Agreement or (iii) as
agreed in writing by the Parent, during the period from the date hereof to the
Effective Time:
(a) the business of the Company and its Subsidiaries shall be
conducted only in the Ordinary Course of Business and in compliance with all
applicable laws and regulations, and the Company shall use its reasonable best
efforts to preserve its and its Subsidiaries' business organization intact,
keep available the services of its and its Subsidiaries' current officers and
employees and maintain its and its Subsidiaries' existing relations with
franchisees, customers, suppliers, creditors, business partners and others
having business dealings with it, to the end that its goodwill and ongoing
business shall be unimpaired at the Effective Time;
(b) neither the Company nor any of its Subsidiaries shall make
or commit to make capital expenditures in excess of $50,000 in the aggregate
in any consecutive twelve (12) month period;
(c) increase the aggregate amount of the Company's or any of
its Subsidiaries' accounts payable by an aggregate amount greater than
$50,000;
(d) neither the Company nor any of its Subsidiaries shall: (i)
amend the Certificate of Incorporation or Bylaws or similar organizational
documents of the Company's Subsidiaries; (ii) issue, sell, transfer, pledge,
dispose of or encumber any shares of any class or series of its capital stock
or Voting Debt, or securities convertible into or exchangeable for, or
options, warrants, calls, commitments or rights of any kind to acquire, any
shares of any class or series of its capital stock or any Voting Debt, other
than issue shares of Company Common Stock upon the exercise of Options
outstanding on the date hereof (to the extent then exercisable); (iii)
declare, set aside or pay any dividend or other distribution payable in cash,
stock or property with respect to any shares of any class or series of its
capital stock; (iv) split, combine or reclassify any shares of any class or
series of its stock; or (v) redeem, purchase or otherwise acquire directly or
indirectly any shares of any class or series of its capital stock, or any
instrument or security which consists of or includes a right to acquire such
shares;
(e) neither the Company nor any of its Subsidiaries shall: (i)
incur or modify any indebtedness or other liability (absolute, accrued,
contingent or otherwise), other than in the Ordinary Course of Business; (ii)
assume, guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the liabilities or obligations of any
other person; or (iv) make any loans, advances or capital contributions to, or
investments in, any other person;
(f) neither the Company nor any of its Subsidiaries shall
transfer, lease, license, sell, mortgage, pledge, dispose of, encumber or
otherwise dispose of any assets or subject any assets to any Security Interest
other than in the Ordinary Course of Business;
(g) neither the Company nor any of its Subsidiaries shall enter
into any commitment or transaction to purchase, sell or lease any Real
Property;
(h) neither the Company nor any of its Subsidiaries shall (i)
make any change in the compensation payable or to become payable to any of its
officers, directors, employees, agents or consultants or to persons providing
management services (other than normal recurring increases in wages in the
Ordinary Course of Business to employees who are not officers or directors);
or (ii) enter into or amend any employment, severance, consulting, termination
or other agreement, including any Employee Benefit Plan, with, or make any
loans to, any of its stockholders, officers, directors, employees, 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 an Employee
Benefit Plan or otherwise;
(i) neither the Company nor any of its Subsidiaries shall: (i)
pay or make any accrual or arrangement for payment of any pension, retirement
allowance or other employee benefit pursuant to any existing Employee Benefit
Plan, agreement or arrangement to any officer, director or employee or pay or
agree to pay or make any accrual or arrangement for payment to any officers,
directors or employees 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, or except as required by law or the express terms
of this Agreement; (ii) adopt or pay, grant, issue, accelerate or accrue
salary or other payments or benefits pursuant to any pension, profit-sharing,
bonus, extra compensation, incentive, deferred compensation, stock purchase,
stock option, stock appreciation right, group insurance, severance pay,
retirement or other employee benefit plan, agreement or arrangement, or any
employment or consulting agreement with or for the benefit of any director,
officer, employee, agent or consultant, whether past or present, or except as
required by law, the express terms of an employee Benefit Plan, or the express
terms of third Agreement; or (iii) amend in any material respect any such
existing plan, agreement or arrangement in a manner inconsistent with the
foregoing;
(j) neither the Company nor any of its Subsidiaries shall: (i)
modify, amend or terminate, or take or omit to take any action that would
constitute a violation or a default under, any Material Contract, or waive,
release or assign any material rights or claims thereunder; (ii) enter into
any Contract requiring the Company or any of its Subsidiaries to pay in excess
of $10,000 in the aggregate in any consecutive twelve (12) month period; or
(iii) enter into any Contract containing, or otherwise subject the Surviving
Corporation or the Parent to, any non-competition, exclusivity, "most
favorable nation" or other material restriction;
(k) neither the Company nor any of its Subsidiaries shall
permit any insurance policy naming it as a beneficiary or a loss payable payee
to be canceled or terminated without notice to Parent, except policies
providing coverage for losses not in excess of $25,000;
(l) neither the Company nor any of its Subsidiaries shall enter
into any Contract or transaction relating to the purchase or sale of assets
other than in the Ordinary Course of Business;
(m) neither the Company nor any of its Subsidiaries shall pay,
repurchase, discharge or satisfy any of its claims, liabilities, Security
Interests or other obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or satisfaction in
the Ordinary Course of Business of claims, liabilities or obligations
reflected or reserved against in, or contemplated by, the Balance Sheet;
(n) neither the Company nor any of its Subsidiaries shall adopt
a plan of complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of the Company or any
of its Subsidiaries (other than the Merger);
(o) neither the Company nor any of its Subsidiaries shall do
any act or omit to do any act whereby any material Intellectual Property owned
by the Company may lapse, become abandoned, dedicated to the public, or
rendered unenforceable;
(p) neither the Company nor any of its Subsidiaries shall
initiate any litigation or arbitration proceeding or settle any litigation or
arbitration proceeding;
(q) neither the Company nor any of its Subsidiaries shall take,
or agree or commit to take, any action that results, or would reasonably be
likely to result, in any of the conditions to the Merger set forth in Article
V not being satisfied, or would make any representation or warranty of the
Company contained herein inaccurate in any respect at, or as of any time prior
to, the Effective Time, or that would materially impair the ability of the
Company, the Parent, the Transitory Subsidiary or the holders of the Company
Common Stock to consummate the Merger in accordance with the terms hereof or
materially delay such consummation;
(r) the Company shall not, except as required by GAAP as
concurred with by its independent auditors, make any material change in its
methods or principals of accounting since the date of the Balance Sheet;
(s) neither the Company nor any of its Subsidiaries shall: (i)
make, revoke, or amend any Tax election; (ii) file any Tax Return; (iii)
consent to extend the period of limitations for the payment or assessment of
any Tax; (iv) enter into any agreement with any Governmental Entity affecting
any Tax liability or refund; or (v) settle or compromise any Tax liability or
refund; and
(t) neither the Company nor any of its Subsidiaries shall enter
into an agreement, contract, commitment or arrangement to do any of the
foregoing, or to authorize, recommend, propose or announce an intention to do
any of the foregoing.
Section 4.2 Reasonable Best Efforts.
(a) Prior to the Closing, upon the terms and subject to the
conditions hereof, each of the Parties shall use all their reasonable best
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable (subject to applicable law) to
consummate and make effective the transactions contemplated by this Agreement
as promptly as possible, including to (i) prepare and file all forms,
registrations and notices required to consummate the transactions contemplated
by this Agreement and take of all such actions as are necessary to obtain any
requisite waiver, consent, permit, authorization, qualification, order or
approval of, or any exemption by, any Governmental Entity or other third
party, required to be obtained or made by the Company, the Parent or the
Transitory Subsidiary in connection with the transactions contemplated hereby,
including all filings, applications and submissions under the DGCL as may be
reasonably required to be made in connection with this Agreement and the
transactions contemplated hereby (any of the foregoing waivers, consents,
permits, authorizations, qualifications, orders, approvals or exemptions, an
"Approval") and (ii) the satisfaction of the other Parties' conditions to
Closing. In addition, no Party hereto shall take any action after the date
hereof that would reasonably be likely to delay materially the obtaining of,
or result in not obtaining, any Approval from any Governmental Entity or other
third party necessary to be obtained prior to Closing. Notwithstanding
anything to the contrary contained herein, neither the Parent nor the Company
shall be required to agree, as a condition to any Approval, to divest itself
or hold separate any Subsidiary, division or business unit and, without the
Parent's prior written consent, the Company shall not be entitled to divest or
hold separate or otherwise take or commit to take any action that limits the
Parent's or the Transitory Subsidiary's freedom of action with respect of, or
their ability to retain, the Company or any material portions thereof or any
of the businesses, product lines, properties or assets of the Company or any
of its Subsidiaries.
(b) Prior to the Closing, each Party shall promptly consult
with the other Parties hereto with respect to, provide any necessary
information with respect to, and provide the other Parties (or their
respective counsel) with copies of, all filings made by such Party with any
Governmental Entity or any other information supplied by such Party to a
Governmental Entity in connection with this Agreement and the transactions
contemplated hereby. Each Party hereto shall promptly inform the other of any
communication from any Governmental Entity regarding any of the transactions
contemplated hereby. If any Party hereto thereof receives a request for
additional information or documentary material from any such Governmental
Entity with respect to any of the transactions contemplated hereby, then such
Party shall endeavor in good faith to make, or cause to be made, as soon as
reasonably practicable and after consultation with the other Parties, an
appropriate response in compliance with such request. To the extent that
transfers, amendments or modifications of Permits (including environmental
Permits) are required as a result of the execution of this Agreement or
consummation of the transactions contemplated hereby, the Company shall use
all its reasonable best efforts to effect such transfers, amendments or
modifications.
(c) The Company and the Parent shall (and, if applicable and to
the extent within its control, the Company shall cause its stockholders to)
file as soon as practicable, and in any event within five (5) business days
after the date hereof, notifications under the HSR Act and respond as promptly
as practicable to any inquiries received from the Federal Trade Commission or
the Antitrust Division of the Department of Justice for additional information
or documentation and respond as promptly as practicable to all inquiries and
requests received from any State Attorney General or other Governmental Entity
in connection with antitrust matters. Concurrently with the filing of
notifications under the HSR Act, the Company and the Parent shall each request
early termination of the HSR Act waiting period.
(d) Notwithstanding the foregoing, nothing in this Agreement
shall be deemed to require the Parent, the Transitory Subsidiary or the
Company to commence any litigation against any person in order to facilitate
the consummation of any of the transactions contemplated hereby or to defend
against any litigation brought by any Governmental Entity seeking to prevent
the consummation of any of the transactions contemplated hereby.
Section 4.3 Stockholder Approval.
(a) As promptly as practicable after the date of this
Agreement, the Company shall: (i) prepare the Company Disclosure Statement in
accordance with applicable federal and state law and include therein the
recommendation of the Company's Board of Directors that stockholders of the
Company vote in favor of approving and adopting this Agreement and the Merger;
(ii) cause the Company Disclosure Statement to be mailed or otherwise
delivered to the Company's stockholders and take such other action as is
necessary in accordance with the DGCL and the Company Charter Documents to
cause the Company's stockholders to consider and act upon this Agreement and
the Merger, including setting a record date for stockholders entitled to
consent in writing to this Agreement and the Merger; and (iii) subject to
Section 4.6(d), solicit the written consent or proxies of the stockholders of
the Company in favor of approving and adopting this Agreement and the Merger.
The Company agrees that the Company Disclosure Statement and all other
materials to be provided to the stockholders of the Company in connection with
obtaining approval and adoption of this Agreement and the Merger shall be
subject to the prior review of and approval by the Parent and its counsel. The
Company hereby consents to the Parent contacting and communicating with the
stockholders of the Company in any reasonable manner to assist in securing
consents to or proxies in favor of approving and adopting this Agreement and
the Merger. The Company shall promptly notify the Parent upon obtaining the
Requisite Stockholder Approval.
(b) To the extent required to secure the approval of the
stockholders of the Company in favor of approving and adopting this Agreement
and the Merger, or, if not yet secured, as may be requested by the Parent, the
Company shall call, hold and convene a meeting of its stockholders (the
"Stockholders' Meeting") in accordance with the DGCL and the Company Charter
Documents to consider the approval and adoption of this Agreement and the
Merger. Notwithstanding anything to the contrary contained in this Agreement,
the Company may adjourn or postpone the Stockholders' Meeting to the extent
necessary to ensure that any supplement or amendment to the Company Disclosure
Statement is provided to its stockholders in advance of a vote on this
Agreement or, if as of the time for which the Stockholders' Meeting is
originally scheduled there are insufficient shares of Company Common Stock
represented (either in person or by proxy) to constitute a quorum necessary to
conduct the business of such Stockholders' Meeting. The Company shall use its
best efforts to ensure that the Stockholders' Meeting is called, noticed,
convened, held and conducted, and that all proxies solicited by it in
connection with the Stockholders' Meeting or all solicitations for written
consents are solicited in compliance with the DGCL, the Company Charter
Documents and all other applicable laws. The Company shall call, give notice
of, convene and hold the Stockholders' Meeting in accordance with this Section
4.3(b) and shall submit the proposal to approve and adopt this Agreement and
the Merger to its stockholders for the purpose of acting upon such proposal
whether or not (i) the Company's Board of Directors at any time subsequent to
the date of this Agreement determines, in the manner permitted by Section
4.6(d), that the proposal is no longer advisable, or (ii) any actual,
potential or purported Acquisition Proposal (as defined below) or Superior
Proposal (as defined below) has been commenced, disclosed, announced or
submitted to the Company.
(c) Except as permitted by Section 4.6(d), until the time that
the approval of the Company Proposals is obtained, (i) the Company's Board of
Directors shall recommend that the Company's stockholders vote in favor of
approving and adopting this Agreement and the Merger; (ii) any materials
initially provided to the holders of the Company's capital stock in connection
with efforts to secure the consent in favor of approving and adopting this
Agreement and the Merger or in connection with any Stockholders' Meeting, if
any, and, at the request of the Parent, any follow-up materials, shall include
a statement to the effect that the Company's Board of Directors has
recommended that the Company's stockholders vote in favor of approving and
adopting this Agreement and the Merger; and (iii) neither the Company's Board
of Directors nor any committee thereof shall withdraw, amend or modify, or
propose or resolve to withdraw, amend or modify in a manner adverse to the
Parent, the recommendation of the Company's Board of Directors that the
Company's stockholders vote in favor of approving and adopting this Agreement
and the Merger. Within seventy-two (72) hours of the written request of the
Parent, the Company's Board of Directors shall re-affirm the recommendation of
the Company's Board of Directors that the Company's stockholders vote in favor
of or consent to the approval and adoption of this Agreement and the Merger.
(d) Any information provided by the Company to the holders of
the Company's capital stock in connection with the effort to secure the
approval of the holders of the Company's capital stock in favor of the Merger
and the approval and adoption of this Agreement shall be true and correct in
all material respects and not misleading. The Company shall cooperate and
provide the Parent (and its counsel) with a reasonable opportunity to review
any such information and comment thereon prior to the distribution of any such
information to the holders of the Company's capital stock, and will provide
the Parent with a copy of all such distributions (it being understood that
provision of a copy of this Agreement and the financial statements of the
Company is hereby agreed to). If at any time prior to the Stockholders'
Meeting or the date of the written consent of stockholders of the Company
concerning this Agreement and the Merger, any information regarding the Parent
is determined by the Parent to be required to be set forth in a supplement to
the Company Disclosure Statement, the Parent shall promptly inform the Company
of such information.
Section 4.4 Access; Information. Prior to the Effective Time, the
Company shall afford to the officers, employees, accountants, counsel,
financing sources and other representatives of the Parent, reasonable access
during normal business hours with prior notice to all the Company's
properties, books, contracts, commitments and records and to all employees,
financial advisors, legal advisors and accountants of the Company and, during
such period, the Company shall furnish promptly to the Parent (a) 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 or
state securities or blue sky laws or the DGCL and (b) all other information
concerning its business, properties and personnel as the Parent may reasonably
request. Access shall include the right to conduct such environmental studies
as the Parent, in its discretion, shall deem appropriate. Unless otherwise
required by law or in order to comply with disclosure requirements applicable
to the Company Disclosure Document, each Party agrees to hold in confidence
all material non-public information so acquired in accordance with the terms
of the Confidentiality Agreement dated December 9, 2003 between the Parent and
the Company (the "Confidentiality Agreement").
Section 4.5 Notification of Certain Matters. Each Party shall
promptly deliver to the other Parties hereto written notice of (i) the
occurrence or non-occurrence of any event the occurrence or non-occurrence of
which would cause any representation or warranty of such Party contained in
this Agreement to be untrue or inaccurate in any material respect at or prior
to the Effective Time and (ii) any material failure of such Party, to comply
with or satisfy any covenant, condition or agreement to be complied with or
satisfied by it hereunder; provided, however, that the delivery of any notice
pursuant to this Section 4.5 shall not limit or otherwise affect the remedies
available hereunder to the Party receiving such notice.
Section 4.6 No Other Negotiations.
(a) Neither the Company nor any of its Subsidiaries or
Affiliates shall (and the Company shall cause the officers, directors,
employees, representatives and agents of the Company, each of its Subsidiaries
and Affiliates, including investment bankers, attorneys and accountants, not
to) (i) directly or indirectly, encourage, solicit or facilitate any inquiries
or proposals that constitute, or could reasonably be expected to lead to, an
Acquisition Proposal; (ii) participate in or initiate discussions or
negotiations concerning, or provide any information to, any person or group
(other than the Parent or its representatives) relating to, an Acquisition
Proposal; or (iii) approve, endorse or recommend any Acquisition Proposal
(except to the extent specifically permitted pursuant to Section 4.6(d)). As
used in this Agreement, "Acquisition Proposal" means any inquiry, proposal or
offer to acquire, directly or indirectly, any part of the business or
properties of the Company or any of its Subsidiaries or any capital stock of
the Company or any of its Subsidiaries, whether by sale of assets, tender
offer, exchange offer, merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transactions involving
the Company or any of its Subsidiaries.
(b) As promptly as practicable after the receipt of any
Acquisition Proposal or any request for nonpublic information or other inquiry
that could reasonably lead to an Acquisition Proposal, the Company shall
provide the Parent with oral and written notice of the material terms and
conditions of such inquiry, proposal, offer or request, and the identity of
the person or group making any such inquiry, proposal, offer or request. After
receipt of any such inquiry, proposal, offer or request, the Company shall
continue to provide the Parent as promptly as practicable oral and written
notice setting forth all such information as is reasonably necessary to keep
the Parent informed in all material respects of the status and details
(including material amendments or proposed material amendments) of any such
inquiry, proposal, offer or request.
(c) Notwithstanding anything to the contrary in this Agreement,
if, at any time prior to approval of the Merger and the approval and adoption
of this Agreement by the stockholders of the Company, the Company's Board of
Directors determines in good faith, after consultation with outside counsel,
that it is necessary to do so in order to comply with its fiduciary duties to
the stockholders of the Company under applicable law, the Company may, in
response to a Superior Proposal that was not solicited by it or that did not
otherwise result from a breach of this Section 4.6, and subject to providing
five (5) business days' prior written notice of its decision to take such
action to the Parent and compliance with Section 4.6(b), (i) furnish
information with respect to the Company and any of its Subsidiaries to any
person making a Superior Proposal pursuant to a confidentiality agreement
containing terms no less favorable to the Company than the Confidentiality
Agreement and (ii) participate in discussions or negotiations regarding such
Superior Proposal. As used in this Agreement, "Superior Proposal" means any
inquiry, proposal or offer made by a third party to acquire, directly or
indirectly, including pursuant to a sale of assets, tender offer, exchange
offer, merger, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction, for consideration consisting
of cash and/or securities, more than fifty percent (50%) of the combined
voting power of the Company Common Stock then outstanding or all or
substantially all the assets of the Company and its Subsidiaries and otherwise
on terms which the Company's Board of Directors determines in its good faith
judgment (after receipt of (y) an opinion of a financial advisor of nationally
recognized reputation that the such proposal is superior, from a financial
point of view, to the Merger and (z) an opinion from independent legal counsel
to the Company that the failure to provide such information or access or to
engage in such discussions or negotiations would cause the Company's Board of
Directors to violate its fiduciary duties to the stockholders of the Company
under applicable law), to be more favorable to the stockholders of the Company
than the Merger and which is not subject to the receipt of any necessary
financing or which, in the good faith judgment of the Company's Board of
Directors, is reasonably capable of being obtained by such third party.
(d) In response to the receipt of a Superior Proposal, the
Company's Board of Directors may withhold, withdraw, amend or modify its
recommendation in favor of the approval and adoption of this Agreement and the
Merger by the stockholders of the Company (any of the foregoing actions,
whether by the Company's Board of Directors or a committee thereof, a "Change
of Recommendation"), if (i) the Superior Proposal has been made and has not
been withdrawn and continues to be a Superior Proposal; (ii) the Company's
Board of Directors determines in good faith, after consultation with outside
counsel, that it is necessary to do so in order to comply with its fiduciary
duties to the stockholders of the Company under applicable law; and (iii) the
Company shall have complied with subsections (a), (b) and (c) of this Section
4.6 and shall not have breached in any material respect any of the provisions
of Sections 4.2 and 4.3. Nothing in this Section 4.6 shall be deemed to (y)
affect any obligation of the Company under this Agreement or (z) limit the
Company's obligation to call, give notice of, convene and hold the
Stockholders' Meeting in accordance with Section 4.3(b), regardless of whether
the Company's Board of Directors has affected a Change of Recommendation.
(e) The Company shall not submit to the vote of its
stockholders any Acquisition Proposal, or propose to do so except as otherwise
required pursuant to the Company Charter Documents or applicable provisions of
the DGCL relating to the rights of stockholders to call meetings of
stockholders. Notwithstanding anything to the contrary in this Agreement, the
Company's Board of Directors shall be permitted to take such action so as to
comply with its duties of disclosure and candor to its stockholders under
applicable law.
Section 4.7 Directors' and Officers' Insurance and Indemnification.
(a) For three (3) years after the Effective Time, Parent and
the Surviving Corporation shall jointly and severally indemnify, defend and
hold harmless each present and former officer and director of the Company and
each person who becomes an officer or director of the Company prior to the
Effective Time (each, a "Former Officer or Director") against all losses,
claims, damages, liabilities, costs, fees and expenses, including reasonable
fees and disbursements of counsel and judgments, fines, losses, claims,
liabilities and amounts paid in settlement (provided that any such settlement
is effected with the written consent of the Parent or the Surviving
Corporation, which consent shall not be unreasonably withheld) arising out of
actions or omissions occurring prior to the Effective Time to the fullest
extent required under the Company Charter Documents, as in effect at the date
hereof, or, if greater, to the fullest extent permitted under the DGCL, as
amended and in effect from time to time; provided that in the event any claim
or claims are asserted or made within such three-year period, all rights to
indemnification in respect of any such claim or claims shall continue until
disposition of any and all such claims.
(b) The Parent or the Surviving Corporation shall maintain the
Company's existing officers' and directors' liability insurance for a period
of not less than three (3) years after the Effective Date; provided that the
Parent may substitute therefor policies of substantially equivalent coverage
and amounts containing terms no less favorable to each Former Officer or
Director to which such insurance applies; provided, further, that in no event
shall the Parent or the Surviving Company be required to pay aggregate
premiums for insurance under this Section 4.7(b) in excess of one hundred and
fifty percent (150%) of the aggregate premiums paid by the Company in 2003 on
an annualized basis for such purpose; provided, further, that if the Parent or
the Surviving Corporation is unable to obtain the amount of insurance required
by this Section 4.7(b) for such aggregate premium, Parent or the Surviving
Corporation shall obtain as much insurance as can be obtained for an annual
premium not in excess of one hundred and fifty percent (150%) of the aggregate
premiums paid by the Company in 2003 on an annualized basis for such purpose.
Section 4.8 Company Debt. Prior to the Closing Date, the Company
shall take all action necessary such that on the Closing Date the Company
shall have no Company Debt. As used in this Agreement, "Company Debt" means
any of the following (without duplication) with respect to the Company and any
of its Subsidiaries: (a) all indebtedness for borrowed money, but excluding
obligations to trade creditors incurred in the Ordinary Course of Business
that are not overdue by more than six (6) months; (b) all reimbursement and
other obligations with respect to letters of credit, bankers' acceptances and
surety, appeal and performance bonds, whether or not matured; (c) all
liabilities or obligations evidenced by notes, bonds, debentures or similar
instruments; (d) any contractual obligation, contingent or otherwise, to pay
or be liable for the payment of any indebtedness, liability or obligation
described in this definition of another person, including any such
indebtedness, directly or indirectly guaranteed, or any agreement to purchase
such indebtedness, liability or obligation or to provide funds for the payment
or discharge thereof; (e) any liability or obligation relating to or arising
out of (i) the redemption of any shares of Company Preferred Stock and (ii)
any dividends, interest or other payments owed or owing on any shares of
Company Preferred Stock; (f) all obligations under capitalized leases; and (g)
all liabilities or obligations with respect to Transaction Payments.
Section 4.9 Certain Actions. Prior to the Closing Date, the Company
shall (i) if not provided prior to the date hereof, provide to the United
States Bankruptcy Court for the Northern District of California, in which
Hoetron, Inc. has filed a petition for relief pursuant to Title 11, Chapter 7
of the United States Bankruptcy Code, an election to retain the Company's
rights under the Agreement between the Company and Hoetron, Inc., dated April
28,1999, as amended by the amendment thereto dated February 9, 2001 (the
"Hoetron Agreement"), or (ii) have entered into a definitive agreement,
approved by the trustee in the bankruptcy case, to acquire the Patents owned
by Hoetron and subject to the Hoetron Agreement.
Section 4.10 Certain Tax Matters. (a) In the case of any taxable
period that includes (but does not end on) the Closing Date (a "Straddle
Period"), the amount of any Taxes for the Pre-Closing Period shall be
determined based on an interim closing of the Company's books as of the close
of business on the Closing Date (and for such purpose, the taxable period of
any partnership or other pass-through entity in which the Company or its
Subsidiaries holds a beneficial interest shall be deemed to terminate at such
time), except that Taxes (such as real or personal property Taxes) imposed on
a periodic basis shall be allocated on a daily basis. Prior to the Closing,
the Parent and the Company shall agree on the estimated amount of unpaid Taxes
of, or payable by or with respect to, the Company and each of its Subsidiaries
for the Pre-Closing Period, which estimated amount shall be allocated to the
Company (the "Pre-Closing Tax Amount"). The Parent shall prepare or cause to
be prepared and file or cause to be filed all Tax Returns for the Company and
its Subsidiaries that are or are required to be filed after the Closing Date
and shall provide a copy to the Representative of any Tax Return in respect of
the Pre-Closing Period.
(b) Subject to the provisions below, any Tax refunds that are
received by Parent or the Company and it Subsidiaries prior to the first
anniversary of the Closing Date, and any amounts credited against Tax to which
Parent or the Company and its Subsidiaries becomes entitled prior to the first
anniversary of the Closing Date, that relate to the Pre-Closing Period shall
be for the account of the holders of Company Common Stock and Options
immediately prior to the Effective Time to the extent that any such Tax refund
or credit exceeds the specific accrual for such Tax refund or credit set forth
on the Balance Sheet, and Parent shall pay over to the Representative any such
excess refund or the amount of any such excess credit within fifteen (15) days
after the first anniversary of the Closing Date; provided that any Tax refunds
received by Parent or the Company and its Subsidiaries, and any amounts
credited against Tax to which the Parent or the Company and its Subsidiaries
becomes entitled, directly or indirectly relating to or arising out of any
deductions attributable to or resulting from the conversion of Options
pursuant to Section 1.9 hereof shall be for the account of Parent or the
Company; provided, further, that to the extent that an indemnification
obligation of the Indemnitors (as defined below) to the Indemnitees (as
defined below) pursuant to Section 6.1 has not been paid as of the first
anniversary of the Closing Date), then (i) any such excess refund or the
amount of any such excess credit shall, to the extent of the amount of any
such unpaid indemnification obligation, be for the account of Parent or the
Company and Parent shall, to the extent of the amount of any such unpaid
indemnification obligation, not be required to pay over any such excess refund
or the amount of any such excess credit to the Representative (or the holders
of Company Common Stock or Options immediately prior to the Effective Time)
and (ii) any such excess refund or the amount of any such excess credit shall,
to the extent of the amount of any such unpaid indemnification obligation, be
offset against and reduce the amount of any such unpaid indemnification
obligation.
Section 4.11 Individual Promissory Notes. The Company shall require
each holder of Options electing to pay for the exercise price of Options held
by such person pursuant to an Individual Promissory Note (the holder of such
Options to be debtor under the Individual Promissory Note) to enter into an
Individual Promissory Note in a form previously consented to in writing by
Parent and that provides by its terms that the Individual Promissory Note may
be paid in full or in part, at the sole option of the Company, by set off of
the full amount of such Individual Promissory Note against the portion of the
Merger Consideration to which the debtor of such Individual Promissory Note is
entitled in the Merger. The Company shall also require a pledge of the shares
of Company Common Stock acquired by such debtor upon the exercise of Options
for which the Individual Promissory Note was delivered to secure the payment
of the Individual Promissory Note. The Company shall not accept an Individual
Promissory Note as payment for the aggregate exercise price of the Options on
the date hereof without obtaining the prior written consent of the Parent as
to the form of such note (which consent shall not be unreasonably withheld or
delayed.
Section 4.12 Warranty Recovery.
(a) Schedule 4.12 sets forth an example of the measurement and
calculation (in accordance with procedures implemented by the Company and
agreed to by Parent prior to the Closing Date) of the Company's Actual
Warranty Cost for the fiscal quarter stated therein (for any fiscal quarter,
the "Actual Warranty Cost"), the average quarterly revenues of the Company for
the preceding twelve (12) months (including such fiscal quarter) for the
fiscal quarter stated therein (for any fiscal quarter, the "Average Revenues")
and the Quarterly Warranty Cost Percentage for such fiscal quarter, which is
the quotient, expressed as a percentage, of (i) such Actual Warranty Cost,
divided by (ii) such Average Revenues.
(b) For each of the four (4) fiscal quarters (or, if
calculation based on a fiscal quarter is impractical, such other period as
Parent (with the consent of the Representative, such consent not to be
unreasonably withheld) shall agree) ending immediately following the Closing
Date but at least five (5) business days prior to the one year anniversary of
the Closing Date (each a "Testing Period"), the Parent (in consultation with
the Representative) shall calculate the Actual Warranty Cost incurred during
such Testing Period, determined in a manner consistent with the measurements
and calculations set forth in Schedule 4.12. Notwithstanding the foregoing,
the determination of Actual Warranty Cost and Excess Warranty Cost (as defined
below) shall only be determined with respect to those types of products that
were designed, manufactured, shipped, sold, marketed or distributed by the
Company or its Subsidiaries prior to the Closing Date or that, on the Closing
Date, were planned to be designed, manufactured, shipped, sold, marketed or
distributed by the Company or its Subsidiaries within six months after the
Closing Date (collectively, "Products").
(c) If, as of the final Testing Period, the quotient of (i) the
sum of all Actual Warranty Costs for such four Testing Periods, divided by
(ii) the sum of the Average Revenues for such four Testing Periods (such
quotient, the "Actual Warranty Cost Percentage") exceeds 1.5%, then Parent
shall be entitled to recover from the Escrow Fund the amount (the "Excess
Warranty Cost") equal to the product of (A) the difference between (1) the
Actual Warranty Cost Percentage and (2) 1.5%, multiplied by (B) the sum of all
Actual Warranty Costs for such four Testing Periods.
Section 4.13 Mercury Scrap Recovery.
(a) Schedule 4.13 sets forth an example of the measurement and
calculation (in accordance with procedures implemented by the Company and
agreed to by Parent prior to the Closing Date) of the cost of all destroyed or
unusable parts relating from the Company's manufacture of Products in the
Mercury product line (the "Actual Mercury Scrap") for the fiscal quarter
stated therein, the aggregate standard cost of goods sold ("Mercury COGS") for
all Products in the Mercury product line sold during such fiscal quarter and
the Quarterly Mercury Scrap Percentage for such fiscal quarter, which, for any
period, is the quotient, expressed as a percentage, of (i) the Actual Mercury
Scrap during such period, divided by (ii) the Mercury COGS during such period.
(b) For the nine-month period commencing ninety (90) days after
the Closing Date and ending at least five (5) business days prior to the one
year anniversary of the Closing Date, or such shorter period as the Parent
(with the consent of the Representative, which consent shall not be
unreasonably withheld) shall mutually agree (the "Scrap Testing Period"), the
Parent (in consultation with the Representative) shall calculate the Actual
Mercury Scrap incurred during the Scrap Testing Period, determined in a manner
consistent with the measurements and calculations set forth in Schedule 4.13.
(c) If the quotient of (i) the aggregate Actual Mercury Scrap
for the Scrap Testing Period, divided by (ii) the aggregate Mercury COGS for
the Scrap Testing Period (such quotient, the "Actual Mercury Scrap
Percentage") exceeds 5%, then Parent shall be entitled to recover from the
Escrow Fund the amount (the "Excess Mercury Scrap") equal to the product of
(A) the difference between (1) the Actual Mercury Scrap Percentage and (2) 5%,
multiplied by (B) the aggregate Mercury COGS for the Scrap Testing Period.
ARTICLE V
CONDITIONS TO CONSUMMATION OF MERGER
Section 5.1 Conditions to Each Party's Obligation. The respective
obligations of the Parent, the Transitory Subsidiary and the Company to
consummate the Merger shall be subject to satisfaction at or prior to the
Effective Time of each of the following conditions, any of which may be waived
in whole or in part by the Parent, the Transitory Subsidiary or the Company,
as the case may be, to the extent permitted by applicable law:
(a) the Requisite Stockholder Approval shall have been
obtained;
(b) no Governmental Entity (including a federal or state court)
of competent jurisdiction shall have enacted, issued, promulgated, enforced or
entered any statute, rule, regulation, executive order, decree, injunction or
other order (whether temporary, preliminary or permanent) which is in effect
and which materially restricts, prevents or prohibits consummation of the
Merger or any transaction contemplated by this Agreement; and
(c) any waiting period applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated, and no action
shall have been instituted by the Department of Justice or Federal Trade
Commission challenging or seeking to enjoin the consummation of this
transaction, which action shall have not been withdrawn or terminated.
Section 5.2 Conditions to Obligations of the Parent and the
Transitory Subsidiary.
The obligation of each of the Parent and the Transitory Subsidiary to
consummate the Merger shall be subject to satisfaction at or prior to the
Effective Time of each of the following conditions, any of which may be waived
in whole or in part by Parent and the Transitory Subsidiary to the extent
permitted by applicable law:
(a) the Parent, Transitory Subsidiary and the Company shall
have obtained all required Approvals of Governmental Entities and of third
parties and effected all required registrations, filings and notices necessary
to consummate the Merger (including to enable the Surviving Corporation to
conduct its business and to own or lease its properties and assets in
substantially the same manner in which such business was previously conducted
and such assets and properties were previously owned or leased), except where
the failure to obtain any such Approval or effect any such registration,
filing or notice would not have a Material Adverse Effect on the Company or a
Material Adverse Effect on the Parent;
(b) each of the representations and warranties of the Company
contained in this Agreement that are qualified as to materiality or Material
Adverse Effect (or any variation of such terms) shall be true and correct in
all respects, and each of the representations and warranties that are not so
qualified shall be true and correct in all material respects, in each case on
the date hereof and as of the Closing Date as if made as of the Closing Date,
except for representations and warranties made as of a specific date, which
shall be true and correct as of such date;
(c) the Company shall have performed or complied with its
covenants set forth in Section 4.3 and shall have performed or complied in all
material respects with its other agreements and covenants required to be
performed or complied with under this Agreement as of or prior to the
Effective Time;
(d) no Material Adverse Effect on the Company shall have
occurred since the date hereof and be continuing;
(e) since the date hereof, no change, event, occurrence (or
development or threat with respect to a prospective change, event or
occurrence) shall have occurred which, individually or in the aggregate, has
had or would reasonably be likely to have a Material Adverse Effect on the
Company;
(f) there shall not be pending any suit, action or proceeding
by any Governmental Entity or other person (i) seeking the result set forth in
Section 5.1(b) or (ii) which otherwise is reasonably likely to have a Material
Adverse Effect on the Company;
(g) the Company shall have delivered to the Parent a
certificate (without qualification as to knowledge or materiality or
otherwise) to the effect that the conditions specified in Sections 5.1(a),
5.2(b) and 5.2(c) are satisfied;
(h) the Parent shall have received a properly executed
statement in a form reasonably acceptable to the Parent for the purposes of
satisfying the Parent's obligations under Treasury Regulations Section
1.1445-2(c)(3);
(i) the Parent shall have received from Mintz, Levin, Cohn,
Ferris, Glovsky and Popeo P.C., special counsel to the Company, an opinion
addressed to the Parent and dated the Closing Date as to each of the matters
set forth in Exhibit E;
(j) the Representative and the Escrow Agent shall have executed
and delivered the Escrow Agreement;
(k) each of the Company Stockholder Agreements shall have been
terminated;
(l) the holders of at least seventy five percent (75%) of the
then issued and outstanding shares of Company Common Stock shall have approved
the acceleration of vesting of the Options by the Company;
(m) the Company shall have no Company Debt; and
(n) all certificates, opinions, instruments and other documents
required to effect the transactions contemplated hereby shall be in form and
substance reasonably satisfactory to the Parent.
Section 5.3 Conditions to Obligations of the Company. The obligation
of the Company to consummate the Merger shall be subject to satisfaction at or
prior to the Effective Time of each of the following conditions, any of which
may be waived in whole or in part by the Company to the extent permitted by
applicable law:
(a) each of the representations and warranties of the Parent
and the Transitory Subsidiary contained in this Agreement that are qualified
as to materiality or Material Adverse Effect (or any variation of such terms)
shall be true and correct in all respects, and each of the representations and
warranties that are not so qualified shall be true and correct in all material
respects, in each case on the date hereof and as of the Closing Date as if
made as of the Closing Date, except for representations and warranties made as
of a specific date, which shall be true and correct as of such date;
(b) each of the Parent and the Transitory Subsidiary shall have
performed or complied in all material respects with its agreements and
covenants required to be performed or complied with under this Agreement as of
or prior to the Effective Time;
(c) the Parent shall have delivered to the Company a
certificate (without qualification as to knowledge or materiality or
otherwise) to the effect that each of the conditions specified in Section
5.3(a) and 5.3(b) is satisfied;
(d) the Parent and the Escrow Agent shall have executed and
delivered the Escrow Agreement; and
(e) all certificates, opinions, instruments and other documents
required to effect the transactions contemplated hereby shall be in form and
substance reasonably satisfactory to the Company.
Section 5.4 Taxes Relating to the Transactions Contemplated by this
Agreement.
All sales, use, transfer, filing, conveyance, recording, stamp
registration and other such similar Taxes and fees, including all applicable
real estate transfer Taxes and recording fees and stock transfer Taxes
(collectively, "Transfer Taxes"), imposed in connection with the Merger,
regardless of against whom such Transfer Taxes are assessed, shall be borne by
the holders of Company Common Stock immediately prior to the Effective Time.
ARTICLE VI
INDEMNIFICATION
Section 6.1 Indemnification.
(a) The Company, on behalf of each holder of Company Common
Stock and each holder of an Option, in each case immediately prior to the
Effective Time (collectively, the "Indemnitors"), hereby agrees that
subsequent to the Closing the Indemnitors shall severally (and not jointly)
indemnify the Surviving Corporation and the Parent, and their respective
officers, directors, employees, agents, representatives and Affiliates
(collectively, the "Indemnitees"), from and in respect of, and hold the
Indemnitees harmless against, any and all damages, fines, penalties, losses,
liabilities (including any liabilities for Taxes), judgments, deficiencies,
costs and expenses (including amounts paid in settlement (including license
fees or royalties), interest, court costs, costs of investigators, reasonable
fees and expenses of attorneys and accountants and other expenses of
litigation) incurred or suffered by any of the Indemnitees (collectively,
"Damages") resulting from, relating to or in connection with (i) any
inaccuracy in, or misrepresentation or breach of, any representation or
warranty of the Company contained in this Agreement, or in any schedule,
certificate, instrument or other document delivered pursuant to this
Agreement; (ii) any breach of or failure to perform any covenant or agreement
of the Company contained in this Agreement or in any schedule, certificate,
instrument or other document delivered pursuant to this Agreement; (iii) any
Company Fees not taken into account in determining the Closing Consideration;
(iv) any Company Debt not taken into account in determining the Closing
Consideration; (v) any Excess Warranty Cost; (vi) any Excess Mercury Scrap;
(vii) any Taxes of, or payable by or with respect to, the Company and each of
its Subsidiaries for all taxable periods or portion thereof ending on or
before the close of business on the Closing Date (the "Pre-Closing Period") to
the extent that any such Tax exceeds the specific amounts for such Tax taken
into account in the computation of the Pre-Closing Tax Amount, and (viii) any
claim, suit, action or proceeding against the Company or any Company
Subsidiary asserting that the manufacture, use or sale of any Product by the
Company or any Subsidiary of the Company (or Parent or any of its affiliates)
infringes any patent of any third party; provided, that indemnification
pursuant to this Section 6.1(a)(viii) shall not apply to any portion of such
claims, suit, actions, or proceedings that do not pertain to such patent
infringement. Notwithstanding anything to the contrary in this Agreement, for
purposes of this Article VI, in determining the existence of any inaccuracy
in, or misrepresentation or breach of, any representation, warranty, covenant
or agreement by the Company and the amount of any Damages, no effect shall be
given to any qualification as to Material Adverse Effect.
(b) The Escrow Fund shall secure the indemnification
obligations of the Indemnitors to the Indemnitees. For purposes of determining
the reduction (i) in the amount of Merger Consideration payable to each person
that, as of immediately prior to the Effective Time, was a holder of Company
Common Stock and (ii) in the amount of cash payable to each person that, as of
immediately prior to the Effective Time, was a holder of an Option, in each
instance in accordance with the applicable provisions of Article I, each of
such persons will be deemed to have contributed his, her or its Pro Rata
Portion of the Escrow Fund to be governed under the terms set forth in this
Agreement and in the Escrow Agreement. As used in this Agreement, "Pro Rata
Portion" shall mean, with respect to each person that was a holder of Company
Common Stock and each person that was a holder of an Option, in each instance
as of immediately prior to the Effective Time, the quotient obtained by
dividing (y) the total number of shares of Company Common Stock (assuming
that, with respect to each Option, such person holds an amount of shares of
Company Common Stock equal to the Option Spread Share Equivalent (as defined
below)) held by such person as of immediately prior to the Effective Time by
(z) the sum of (1) the number of all shares of Company Common Stock issued and
outstanding immediately prior to the Effective Time and (2) the total number
of shares of Company Common Stock (assuming that the holders of all Options
hold an amount of shares of Company Common Stock equal to the aggregate
Options Spread Share Equivalent) held by all holders of Company Common Stock
and all holders of Options as of immediately prior to the Effective Time. As
used in this Agreement, "Option Spread Share Equivalent" means, for each
Option, the number, expressed in terms of shares of Company Common Stock,
which would result from dividing the Aggregate Option Spread with respect to
such Option by the Per Share Cash Consideration, rounding the result down to
the nearest whole share.
(c) Notwithstanding anything to the contrary in this Agreement,
no investigation (including any environmental investigation or assessment) by,
or furnishing of information to, or any knowledge acquired by, the Parent or
the Transitory Subsidiary shall affect the right of the Parent and the
Transitory Subsidiary to rely on the representations, warranties, covenants
and agreements of the Company contained in this Agreement or in any schedule,
certificate, instrument or other document delivered pursuant to this
Agreement, or to seek indemnification under this Article VI.
(d) As a term of the Merger, the Indemnitors acknowledge that
their indemnification obligations hereunder are solely in their capacity as
former holders of shares of capital stock of the Company and former holders of
Options, as applicable, and, accordingly, the indemnification obligations in
this Article VI shall not entitle any current or former officer, director or
employee of the Company or any of its Subsidiaries to any indemnification from
the Company pursuant to the Charter Documents or any agreement with the
Company.
(e) All indemnification payments made by an Indemnitor to an
Indemnitee pursuant to this Agreement shall, to the maximum extent permitted
by applicable law, be treated for all Tax purposes as an adjustment to the
Merger Consideration.
Section 6.2 Method of Asserting Claims.
(a) An Indemnitee shall give prompt written notice to the
Representative, as agent for the Indemnitors, with a copy to the Escrow Agent
of any claim or event known to it which gives rise or, in its reasonable
judgment, may give rise to a claim for indemnification hereunder by the
Indemnitee against the Indemnitors; provided that the failure of any
Indemnitee to give notice as provided in this Section 6.2 shall not relieve
the Indemnitors of their obligations under this Article VI, except to the
extent that such failure has materially and adversely affected the rights of
the Indemnitors. In the case of any claim for indemnification hereunder
arising out of a claim, action, suit or proceeding brought by any person who
is not a Party (a "Third-Party Claim"), the Indemnitee shall also give the
Representative, as agent for the Indemnitors, copies of any written claims,
process or legal pleadings with respect to such Third-Party Claim promptly
after such documents are received by the Indemnitee.
(b) Except as otherwise provided in Section 6.2(c), the
Indemnitees shall be entitled to control the defense of any Third-Party Claim;
provided, however, that the Representative, as agent for the Indemnitors, may
elect, at the Indemnitors' own cost and expense, to participate in any
Third-Party Claim; provided, further, however, that neither the Representative
nor any Indemnitor shall take any action with respect to such Third-Party
Claim before consulting with, and receiving the consent of, each Indemnitee
involved. If the Representative, as agent for the Indemnitors, elects to
participate in a Third-Party Claim, the Representative shall, within thirty
(30) days of its receipt of the notice provided pursuant to Section 6.2(a) (or
sooner, if the nature of such Third-Party Claim so requires), notify the
related Indemnitee of its intent to do so. The Representative and each
Indemnitor shall reasonably cooperate in the compromise of, or defense
against, such Third-Party Claim. The Indemnitee shall not consent to entry of
any judgment or enter into any settlement without the prior written consent of
the Representative, as agent for the Indemnitors, which consent shall not be
unreasonably withheld.
(c) If the Indemnitee elects not to compromise or defend
against a Third-Party Claim, the Representative, on behalf of the Indemnitors
shall pay, compromise or defend such Third-Party Claim at the Indemnitors own
cost and expense. The Representative shall, within ten (10) days (or sooner,
if the nature of such Third-Party Claim so requires), notify the Indemnitee of
its intent to pay, compromise or defend such Third-Party Claim, and such
Indemnitee shall reasonably cooperate in the compromise of, or defense
against, such Third-Party Claim. The Indemnitors shall be responsible for the
payment of the Indemnitees' costs and expenses incurred in connection with
such cooperation, and such costs and expenses shall constitute Damages
incurred or suffered by the Parent within the meaning of Section 6.1(a).
Neither the Representative nor any Indemnitor shall consent to entry of any
judgment or enter into any settlement without the prior written consent of
each related Indemnitee (which consent shall not be unreasonably withheld),
unless such judgment or settlement provides solely for money damages or other
money payments for which such Indemnitee is entitled to indemnification
hereunder and includes as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnitee of a release from all liability in
respect of such Third-Party Claim; provided that the Representative shall not
be entitled to settle any claim, action, suit or proceeding brought by a
Taxing Authority in respect of Taxes for any Pre-Closing Period that would
have the effect of materially decreasing the Surviving Corporation's
deductions for credits or materially increasing the Surviving Corporation's
taxable income for any taxable year or period subsequent to the Pre-Closing
Period without the prior written consent of the Parent, which consent shall
not be unreasonably withheld. After notice from the Representative, as agent
for the Indemnitors, to an Indemnitee of its election to assume the defense of
a Third-Party Claim, the Indemnitors shall not be liable to such Indemnitee
under this Article VI for any legal expenses subsequently incurred by such
Indemnitee in connection with the defense thereof; provided that such
Indemnitee shall have the right to employ one counsel of its choice to
represent such Indemnitee if, in such Indemnitee's reasonable judgment, a
conflict of interest between such Indemnitee and the Indemnitors exists in
respect of such claim, or if there is a reasonable likelihood that a
Third-Party Claim may have a Material Adverse Effect on an Indemnitee, and in
that event the reasonable fees and expenses of such separate counsel shall be
the responsibility of the Indemnitors (and shall constitute Damages incurred
or suffered by the Parent within the meaning of Section 6.1(a).
Section 6.3 Survival. (a) The representations, warranties, covenants
and agreements of the Company set forth in this Agreement, or in any schedule,
certificate, instrument or other document delivered pursuant to this
Agreement, shall survive the Closing and shall continue until, except as
provided in clause (b) of this Section 6.3, the first anniversary of the
Effective Time.
(b) Notwithstanding Section 6.3(a), the representations,
warranties, covenants and agreements of the Company in this Agreement or in
any agreement, schedule, certificate, instrument or document delivered
pursuant to this Agreement shall survive the Closing until (i) the close of
business on the third anniversary of the Closing Date with respect to matters
covered by Section 6.1(a)(viii); and (ii) indefinitely with respect to matters
covered by Section 6.1(a)(iii), and Section 6.1(a)(iv).
(c) Notwithstanding the immediately preceding clauses, this
Section 6.3 shall not limit, terminate or impair any covenant or agreement of
the Parties which by its terms contemplates performance after the first
anniversary of the Closing. Notwithstanding anything to the contrary in this
Agreement, for purposes of this Article VI, if a claim for indemnification is
made before the expiration of the periods of survival set forth in this
Section 6.3, then (notwithstanding the expiration of such time period) the
representation, warranty, covenant or agreement applicable to such claim shall
survive for the period of time necessary for purposes of the resolution of
such claim.
Section 6.4 Limitations. Except as otherwise expressly provided this
Agreement, the Indemnitors shall not be liable under this Article VI in
respect of matters for which indemnification is provided under Section
6.1(a)(i) or Section 6.1(a)(ii) unless and until the aggregate amount of
Damages incurred or suffered by Indemnitees exceeds $100,000 (at which point
the Indemnitors shall become liable for the entire amount of such Damages). In
no event, however, shall the Indemnitors in the aggregate be liable to
indemnify the Indemnitees for an aggregate amount exceeding the value of the
Escrow Fund, and, if the Merger is consummated as contemplated herein, (a) the
Indemnitees' sole recourse in respect of a claim for Damages for which
indemnification is available under this Article VI shall be the
indemnification provisions of this Article VI and (b) the Indemnitees' sole
recourse under this Article VI in respect of matters for which indemnification
is provided under Section 6.1(a) (other than 6.1(a)(iii) and 6.1(a)(iv)) shall
be to the Escrow Fund; provided, however, that nothing in this Article VI
shall limit, in any manner (whether by time, amount, procedure or otherwise),
any remedy at law or in equity to which the Parent may be entitled as a result
of actual fraud or intentional misrepresentation by the Company or any of its
officers, directors or stockholders.
Section 6.5 The Representative.
(a) The Company, on behalf of each Indemnitor, hereby
authorizes, directs and appoints Xxxxxx X. Xxxxxxxx to act as sole and
exclusive agent, attorney-in-fact and representative of the Indemnitors for
purposes of this Agreement and the Escrow Agreement (the "Representative"),
and authorizes and directs the Representative to (i) take any and all actions
(including executing and delivering any documents and making any and all
determinations) which may be required or permitted by this Agreement or the
Escrow Agreement to be taken by the Indemnitors or the Representative, (ii)
exercise such other rights, power and authority as are authorized, delegated
and granted to the Representative hereunder and under the Escrow Agreement in
connection with the transactions contemplated hereby and thereby and (iii)
exercise such rights, power and authority as are incidental to the foregoing.
By virtue of the approval and adoption of this Agreement by the requisite vote
of the stockholders of the Company, each holder of Company Common Stock and
each holder of an Option (other than such holders, if any, holding Dissenter's
Shares) shall be deemed to have agreed to appoint Xxxxxx X. Xxxxxxxx as the
Representative for and on behalf of Indemnitors. Any such actions taken,
exercises of rights, power or authority, and any decision or determination
made by the Representative consistent with this Section 6.5 shall be
absolutely and irrevocably binding on each Indemnitor as if such Indemnitor
personally had taken such action, exercised such rights, power or authority or
made such decision or determination in such Indemnitor's individual capacity.
Notwithstanding any other provision of this Agreement, if the Closing occurs,
then with respect to the matters covered by Article VI (y) each of the
Indemnitors irrevocably relinquishes such Indemnitor's right to act
independently and other than through the Representative, except with respect
to the removal of the Representative or appointment of a successor
Representative as provided in Section 7.5(b) below, and (z) no Indemnitor
shall have any right under this Agreement or otherwise to institute any suit,
action or proceeding against the Company, the Parent or the Escrow Agent with
respect to any such matter, any such right being irrevocably and exclusively
delegated to the Representative. The Representative hereby acknowledges and
accepts the foregoing authorization and appointment and agrees to serve as the
Representative in accordance with this Agreement and the Escrow Agreement.
(b) The Representative shall serve as Representative until his
resignation, removal from office, incapacity or death; provided, however, that
the Representative shall not have the right to resign without (i) prior
written notice to the Indemnitors and (ii) picking a successor reasonably
satisfactory to the Parent to serve until a successor thereto is elected by
the Indemnitors. The Representative may be removed at any time, and a
successor representative, reasonably satisfactory to the Parent, may be
appointed, pursuant to written action by Indemnitors who, immediately prior to
the Effective Time, held shares of Company Common Stock and/or Option
convertible into Company Common Stock constituting sixty six and two-thirds
percent (66 2/3%) or more of all such shares and shares underlying Options
then outstanding. Any successor to the Representative shall, for purposes of
this Agreement and the Escrow Agreement, be deemed to be, from the time of the
appointment thereof in accordance with the terms hereof, the Representative,
and from and after such time, the term "Representative" as used herein and
therein shall be deemed to refer to such successor. No appointment of a
successor shall be effective unless such successor agrees in writing to be
bound by the terms of this Agreement and the Escrow Agreement.
(c) The Representative shall be permitted to retain counsel,
consultants and other advisors and shall promptly notify the Parent after
retaining any such person. The Representative shall be entitled to
reimbursement by the Parent of his or her reasonable out-of-pocket expenses
including the reasonable, documented fees and expenses incurred by the
Representative for payment to, or in connection with, the retention of such
counsel, consultants or other advisors, not to exceed $200,000 in the
aggregate, incurred in the performance of his duties under this Agreement and
the Escrow Agreement, respectively. All expense reimbursements provided to the
Representative by the Parent shall constitute Damages incurred or suffered by
the Parent within the meaning of Section 6.1(a) hereof.
(d) The provisions of this Section 6.5 shall in no way impose
any obligations on the Parent (other than those set forth in paragraph (c)
above). In particular, notwithstanding any notice received by the Parent to
the contrary (except any notice of the appointment of a successor
Representative approved by the Parent in accordance with paragraph (b) of this
Section 6.5), the Parent (i) shall be fully protected in relying upon and
shall be entitled to rely upon, shall have no liability to the Indemnitors
with respect to, and shall be indemnified by the Indemnitors from and against
all liability arising out of (any such indemnifiable amounts constituting
Damages within the meaning of Section 6.1(a)) actions, decisions and
determinations of the Representative and (ii) shall be entitled to assume that
all actions, decisions and determinations of the Representative are fully
authorized by the Indemnitors.
(e) The Representative shall not be liable to the Indemnitors
for the performance of any act or the failure to act so long as he acted or
failed to act in good faith in what he reasonably believed to be the scope of
his authority and for a purpose which he reasonably believed to be in the best
interests of the Indemnitors.
ARTICLE VII
TERMINATION
Section 7.1 Termination of Agreement. This Agreement may be
terminated at any time prior to the Effective Time (except where specifically
provided otherwise, whether before or after the Requisite Stockholder Approval
shall have been obtained) as provided below:
(a) this Agreement may be terminated by the mutual written
consent of the Parent and the Company;
(b) this Agreement may be terminated by either the Parent or
the Company, if the Merger shall not have been consummated before September
30, 2004 (provided that the right to terminate this Agreement under this
Section 7.1(b) shall not be available to any Party whose action or failure to
act has been a principal cause of or resulted in the failure of the Merger to
occur on or before such date and such action or failure constitutes a breach
of a representation, warranty, covenant or agreement set forth in this
Agreement);
(c) the Parent may terminate this Agreement by giving written
notice to the Company (i) in the event the Company shall have breached Section
4.3 or Section 4.7 or (ii) in the event the Company shall have breached any
representation, warranty, covenant or agreement set forth herein which would
permit the Parent, pursuant to Section 5.2(b) or Section 5.2(c), not to
consummate the Merger, and the Company fails to cure such breach within ten
(10) business days after notice of such breach is given to the Company by the
Parent;
(d) the Company may terminate this Agreement by giving written
notice to the Parent in the event the Parent or the Transitory Subsidiary
shall have breached any representation, warranty, covenant or Agreement set
forth herein which would permit the Company, pursuant to Section 5.3(a) or
Section 5.3 (b), not to consummate the Merger, and the Parent fails to cure
such breach within ten (10) business days after notice of such breach is given
to the Parent by the Company;
(e) the Parent or the Company may terminate this Agreement by
giving written notice to the other at any time after the stockholders of the
Company have held a stockholders meeting and voted on whether to approve and
adopt this Agreement and the Merger, if such vote to approve and adopt this
Agreement and the Merger failed to obtain the Requisite Stockholder Approval;
provided that the right to terminate this Agreement pursuant to this Section
7.1(e) shall not be available to the Company where the failure to obtain the
Requisite Stockholder Approval shall have been caused by the action or failure
to act of the Company and such action or failure to act constitutes a breach
by the Company of a representation, warranty, covenant or agreement set forth
in this Agreement.
(f) the Parent or the Company may terminate this Agreement by
giving written notice to the other if any permanent injunction or action by
any Governmental Entity of competent jurisdiction preventing, restraining,
enjoining, restricting or otherwise prohibiting the consummation of the Merger
and such injunction or action shall become final and nonappealable;
(g) the Parent may terminate this Agreement by giving written
notice to the Company if a Material Adverse Effect on the Company shall have
occurred since the date hereof and be continuing; or
(h) the Parent may terminate this Agreement by giving written
notice to the Company at any time prior to the approval and adoption of this
Agreement and the Merger by the Requisite Stockholder Approval if (i) the
Company's Board of Directors shall have failed to recommend the approval and
adoption by the Company's stockholders of (or withdrawn, amended or modified
in a manner adverse to the Parent its recommendation that the Company's
stockholders approve and adopt) this Agreement and the Merger, or (ii) the
Company's Board of Directors shall have approved or recommended any
Acquisition Proposal.
Section 7.2 Effect of Termination. If the Parent or the Company
terminates this Agreement pursuant to Section 7.1, the Merger shall be deemed
abandoned and all obligations of the Parties hereunder shall terminate, except
(i) as set forth in this Section 7.2, Section 7.3, Article IX and the
Confidentiality Agreement, each of which shall survive any such termination
and the Parties' respective rights and obligations in respect thereof shall
remain in full force and effect, and (ii) nothing herein shall release any
Party from liability for any willful breach of this Agreement prior to
termination.
Section 7.3 Option to Elect Certain Remedies. Without limitation of
the Parent's right to terminate this Agreement as provided in Section 7.1, the
Parent's right to obtain specific performance and other equitable relief under
applicable law or the Parent's rights under Section 9.12, if the Parent is
entitled to terminate this Agreement pursuant to Section 7.1, the Parent shall
have the option either (a) to terminate this Agreement or (b) subject to
satisfaction or waiver of the conditions set forth in Article V, proceed with
the consummation of the Merger; and, in the event the Parent elects to proceed
under this Section 7.3(b), the Company hereby agrees that, subject to
satisfaction or waiver of the conditions set forth in Article V, the Parent
shall be entitled to specific performance and other appropriate equitable
relief to effect the Merger; provided, however, that this Section 7.3 shall
have no effect on the Parent's rights to indemnification under Article VI.
ARTICLE VIII
DEFINITIONS
Section 8.1 Index to Defined Terms. Each of the following terms is
defined in the Section of this Agreement indicated below.
Defined Term Section
Actual Mercury Scrap 4.13
Actual Mercury Scrap Percentage 4.13
Actual Warranty Cost 4.12
Actual Warranty Cost Percentage 4.12
Acquisition Proposal 4.6(a)
Affiliate 9.7(a)
Aggregate Option Spread 1.9(a)
Agreement 9.7(b)
Approval 4.2(a)
Balance Sheet 2.7
Business 2.12(a)(i)
Business Combination 2.15(a)(viii)
Bylaws 2.1(b)
Certificate of Incorporation 2.1(b)
Certificate of Merger 1.1
Certificates 1.6(c)
Change of Recommendation 4.6(d)
Class A Preferred Stock 2.2(a)
Class B Preferred Stock 2.2(a)
Closing 1.2
Closing Consideration 1.5(a)(i)
Closing Date 1.2
Code 1.6(d)
Company Preamble
Company Charter Documents 2.1(b)
Company Common Stock Recitals
Company Debt 4.8
Company Disclosure Statement 2.28
Company Fees 9.12(a)
Company Preferred Stock 2.2(a)
Company Stockholder Agreements 2.2(e)
Confidentiality Agreement 4.4
Contract 2.15(f)
Copyrights 2.12(a)(ii)
Damages 6.1(a)
DGCL Recitals
Disclosure Schedule Article II Introduction
Dissenting Shares 1.7(a)
Effective Time 1.1
Employee Benefit Plan 2.20(a)
Environmental Claim 2.21(i)
Environmental Law 2.21(i)
ERISA 2.20(a)
ERISA Affiliate 2.20(a)
Escrow Agent 1.3
Escrow Agreement 1.3
Escrow Fund 1.8(a)
Excess Mercury Scrap 4.13
Excess Warranty 4.12
Exchange Agent 1.6(a)
Exchange Fund 1.6(b)
Financial Statements 2.7
Foreign Benefit Plan 2.20(l)
Former Officer or Director 4.7(a)
GAAP 2.7
Governmental Entity 2.5
Hazardous Materials 2.21(h)
Hoetron Agreement 4.9
HSR Act 2.5
Indemnitees 6.1(a)
Indemnitors 6.1(a)
Individual Promissory Note 1.9(a)
Intellectual Property 2.12(a)(ii)
IRS 2.9(k)
Knowledge 9.7(c)
Lease 2.14
Material Contracts 2.15(d)
Material Adverse Effect 9.7(d)
Mercury COGS 4.13
Merger Recitals
Merger Consideration 1.5(a)(ii)
Option 1.9(a)
Option Spread Share Equivalent 6.1(b)
Ordinary Course of Business 2.8
Parent Preamble
Parent Fees 9.12(a)
Parties Preamble
Patents 2.12(a)(ii)
Per Share Cash Consideration 1.5(a)(iii)
Permits 2.23
Person 9.7(e)
Pre-Closing Period 6.1(a)
Product 4.12
Pro Rata Portion 6.1(b)
Real Property 2.11(a)
Representative 6.5(a)
Requisite Stockholder Approval 2.4
Scrap Testing Period 4.13
Security Interest 2.5
Software 2.12(a)(ii)
Stockholders' Meeting 4.3(b)
Straddle Period 4.10
Subsidiary 2.6(c)
Superior Proposal 4.6(c)
Surviving Corporation 1.1
Tax Return 2.9(p)
Taxes 2.9(p)
Taxing Authority 2.9(p)
Testing Period 4.12
Third Party Claim 6.2(a)
Trade Secrets 2.12(a)(ii)
Trademarks 2.12(a)(ii)
Transaction Payments 2.20(j)
Transfer Taxes 5.4
Transitory Subsidiary Preamble
Voting Agreement Recitals
Voting Debt 2.2(c)
ARTICLE IX
MISCELLANEOUS
Section 9.1 Further Assurances. 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 all other things necessary, proper or advisable to consummate and
make effective the transactions contemplated hereby and to enable the Parent
to enjoy after the Closing the rights and benefits currently enjoyed by the
Company in the operation of the business conducted by or in respect of the
Company prior to the Closing.
Section 9.2 Press Releases and Announcements. No Party shall issue
any press release or announcement or make any disclosure to any other person
(other than its counsel, financial advisors and accountants) relating to the
subject matter of this Agreement without the prior written approval of the
Parent and the Company; provided, however, that the Parent may make any public
disclosure it believes in good faith is required by applicable law,
regulation, legal process or the requirements of any stock market on which the
Parent's common stock is listed or quoted (in which case the Parent shall
advise the Company of such disclosure and provide it with a copy of such
disclosure).
Section 9.3 No Third Party Beneficiaries. This Agreement shall not
confer any rights or remedies upon any person other than the Parties, the
Representative (with respect only to Article VI) and the Indemnitees (with
respect to Article VI) and their respective successors and permitted assigns.
Section 9.4 Entire Agreement. This Agreement (including the exhibits,
schedules and other documents referred to herein), together with the Voting
agreement, constitute the entire agreement among the Parties and supersedes
all other prior understandings, agreements or representations by or among the
Parties, both written or oral, that may have related in any way to the subject
matter hereof.
Section 9.5 Succession and Assignment. This Agreement shall be
binding upon and inure to the benefit of the Parties named herein and their
respective successors and permitted assigns. No Party may assign either this
Agreement or any of its rights, interests or obligations hereunder without the
prior written approval of the other Parties; provided, however, that the
Transitory Subsidiary may assign its rights, interests and obligations
hereunder to another Affiliate.
Section 9.6 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
Section 9.7 Interpretation.
(a) "Affiliate" means each director, executive officer and
holder of more than 10% of outstanding capital stock (on an as-converted to
common stock basis) of a person.
(b) "Agreement" means this Agreement and Plan of Merger,
together with the schedules and exhibits hereto.
(c) An individual will be deemed to have "Knowledge" of a
particular fact or other matter if such individual is actually aware of such
fact or other matter or such individual could reasonably be expected to
discover or otherwise become aware of such fact or other matter in the course
of performing the duties or functions of such individual's job or position,
and (ii) the Company will be deemed to have "Knowledge" of a particular fact
or other matter if any of Xxxxxx Xxxxxxxx, Xxx Xxxxxxxx, Xxxxxx Xxxxxx, Xxxxxx
Xxxxxx, Xxxxxx Xxxxxxx or Xxxxxx Xxxxxxxxxx has Knowledge of such fact or
other matter.
(d) "Material Adverse Effect" means, when used in connection
with any person, any change, event, violation, inaccuracy, circumstance or
effect (other than any change, event, violation, inaccuracy, circumstance or
effect generally affecting the economy of the United States or the industry in
which such person operates, provided that such person is not disproportionably
affected in any material respect thereby), individually or in the aggregate,
that is reasonably likely to be materially adverse to the business, assets,
liabilities, financial condition or results of operations of such person and
its Subsidiaries, taken as a whole, or, when such person is a Party, the
ability of such Party to consummate the Merger.
(e) As used herein, the term "person" shall mean any
individual, corporation, limited liability company, partnership, joint
venture, trust, association, organization or Governmental Entity.
(f) The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(g) When a reference is made in this Agreement to a Section or
Article, such reference shall be to a Section or Article of this Agreement
unless otherwise clearly indicated to the contrary.
(h) Whenever the words "include," "includes" or "including" are
used in this Agreement they shall be deemed to be followed by the words
"without limitation."
(i) The words "hereof," "herein" and "herewith" and words of
similar import shall, unless otherwise stated, be construed to refer to this
Agreement as a whole and not to any particular provision of this Agreement,
and Article, Section, paragraph, exhibit and schedule references are to the
Articles, Sections, paragraphs, exhibits and schedules of this Agreement
unless otherwise specified.
(j) The meaning assigned to each term defined herein shall be
equally applicable to both the singular and plural forms of such form, and
words denoting any gender shall include all genders. Where a word or phrase is
defined herein, each of its other grammatical forms shall have a corresponding
meaning.
(k) A reference to any Party to this Agreement or any other
Agreement or document shall include such Party's successors and permitted
assigns.
(l) A reference to any legislation or to any provision of any
legislation shall include any modification or re-enactment thereof, any
legislative provision substituted therefor and all regulations and statutory
instruments issued thereunder or pursuant thereto.
(m) The Parties have participated jointly in the negotiation
and drafting of this Agreement. In the event an ambiguity or question of
intent or interpretation arises, this Agreement shall be construed as if
drafted jointly by the Parties, and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any
provisions of this Agreement.
Section 9.8 Notices. All notices, requests, demands, claims and other
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly delivered two
business days after it is sent by registered or certified mail, return receipt
requested, postage prepaid, one business day after it is sent via a reputable
nationwide overnight courier service, or upon receipt of confirmation of
delivery of a telecopy, in each case to the intended recipient as set forth
below:
If to the Parent or the
Transitory Subsidiary: Copy to:
--------------------- -------
GSI Lumonics Inc. Skadden, Arps, Slate,
00 Xxxxxxx Xxxx Xxxxxxx & Xxxx XXX
Xxxxxxxxx, XX 00000 One Beacon Street
Attn: Chief Financial Officer Xxxxxx, XX 00000
Telecopy: (000) 000-0000 Attn: Xxxxxxxx X. Xxxxx
Telecopy: (000) 000-0000
If to the Company: Copy to:
----------------- -------
MicroE Systems Corp. Mintz Xxxxx Xxxx Xxxxxx Xxxxxxx
8 Erie Drive and Popeo PC
Xxxxxx, XX 00000 One Financial Center
Attn: President Xxxxxx, XX 00000
Telecopy: (000) 000-0000 Attn: Xxxxx Xxxxxx
Telecopy: (000) 000-0000
If to the Representative: Copy to:
------------------------ -------
Xxxxxx X. Xxxxxxxx Xxxxx Xxxxx Xxxx Xxxxxx Xxxxxxx
and Popeo PC
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxx Xxxxxx
Telecopy: (000) 000-0000
Any Party may give any notice, request, demand, claim or other communication
hereunder using any other means (including personal delivery, expedited
courier, messenger service, telex, ordinary mail or electronic mail), but no
such notice, request, demand, claim or other communication shall be deemed to
have been duly given unless and until it actually is received by the
individual for whom it is intended. Any Party may change the address to which
notices, requests, demands, claims and other communications hereunder are to
be delivered by giving the other Parties notice in the manner herein set
forth. Nothing in this Section 9.8 shall be deemed to constitute consent to
the manner and address for service of process in connection with any legal
proceeding (including litigation arising out of or in connection with this
Agreement), which service shall be effected as required by applicable law.
Section 9.9 Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws (and not the law of conflicts)
of the Commonwealth of Massachusetts, except that the Merger shall be governed
by the DGCL.
Section 9.10 Amendments and Waivers. The Parties may mutually amend
any provision of this Agreement at any time prior to the Effective Time;
provided, however, that any amendment effected subsequent to the Requisite
Stockholder Approval shall be subject to the restrictions contained in the
DGCL. No amendment of any provision of this Agreement shall be valid unless
the same shall be in writing and signed by all of the Parties. No waiver by
any Party of any default, misrepresentation or breach of warranty or covenant
hereunder, whether intentional or not, shall be deemed to extend to any prior
or subsequent default, misrepresentation or breach of warranty or covenant
hereunder or affect in any way rights arising by virtue of any prior or
subsequent such occurrence.
Section 9.11 Severability. Any term or provision of this Agreement
that is invalid or unenforceable in any situation in any jurisdiction shall
not affect the validity or enforceability of the remaining terms and
provisions hereof or the validity or enforceability of the offending term or
provision in any other situation or in any other jurisdiction. If the final
judgment of a court of competent jurisdiction declares that any term or
provision hereof is invalid or unenforceable, the Parties agree that the court
making the determination of invalidity or unenforceability shall have the
power to reduce the scope, duration or area of the term or provision, to
delete specific words or phrases or to replace any invalid or unenforceable
term or provision with a term or provision that is valid and enforceable and
that comes closest to expressing the intention of the invalid or unenforceable
term or provision, and this Agreement shall be enforceable as so modified
after the expiration of the time within which the judgment may be appealed.
Section 9.12 Expenses.
(a) Except as set forth in the Escrow Agreement, Article VI and
this Section 9.12, the Parent and the Transitory Subsidiary shall bear their
own costs and expenses (including fees and expenses of any broker, investment
banker, financial advisor, legal advisor or accountant), whether incurred by
them on their behalf, in connection with this Agreement and the transactions
contemplated hereby (the "Parent Fees"). Except as set forth in the Escrow
Agreement, Article VI and this Section 9.12, the Company and its stockholders
shall bear their respective costs and expenses (including fees and expenses of
any broker, investment banker, financial advisor, legal advisor or
accountant), whether incurred by them or on their behalf, in connection with
this Agreement and the transactions contemplated hereby (collectively, the
"Company Fees").
(b) If this Agreement is terminated by the Parent pursuant to
Section 7.1(c), Section 7.1(e) or Section 7.1(h), then (i) immediately upon
such termination the Company shall reimburse the Parent and the Transitory
Subsidiary in immediately available funds for all Parent Fees and (ii) the
Parent and the Transitory Subsidiary shall have any other remedies which may
be available to them at law or in equity.
(c) If this Agreement is terminated by the Company pursuant to
Section 7.1(d), then (i) immediately upon such termination the Parent shall
reimburse the Company in immediately available funds for all Company Fees and
(ii) the Company shall have any other remedies which may be available to it at
law or in equity.
Section 9.13 Incorporation of Exhibits and Schedules. The Exhibits
and Schedules identified in this Agreement are incorporated herein by
reference and made a part hereof.
Section 9.14 Time of Essence. Each of the Parties hereto hereby
agrees that, with regard to all dates and time periods set forth or referred
to in this Agreement, time is of the essence.
Section 9.15 Enforcement. The Parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached.
It is accordingly agreed that the Parties shall be entitled to an injunction
or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any court of the
United States located in the Commonwealth of Massachusetts or in Massachusetts
state court, this being in addition to any other remedy to which they are
entitled at law or in equity. In addition, each of the Parties hereto (a)
consents to submit itself to the personal jurisdiction of any Federal court
located in the Commonwealth of Massachusetts or any Massachusetts state court
in the event any dispute arises out of this Agreement or any of the
transactions contemplated by this Agreement, (b) agrees that it will 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 will not bring
any action relating to this Agreement or any of the transactions contemplated
by this Agreement in any court other than a Federal or state court sitting in
the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement
under seal as of the date first above written.
GSI LUMONICS INC.
By: /s/ Xxxxxx Xxxxx
------------------------------------
Name: Xxxxxx Xxxxx
Title: Vice President, Finance
and Chief Financial Officer
MOTION ACQUISITION CORPORATION
By: /s/ Xxxxxx Xxxxx
------------------------------------
Name: Xxxxxx Xxxxx
Title: Treasurer
MICROE SYSTEMS CORP.
By: /s/ Xxx Xxxxxxxx
------------------------------------
Name: Xxx Xxxxxxxx
Title: President and Chief Executive
Officer
Solely for purposes of Article VI:
/s/ Xxxxxx X. Xxxxxxxx
----------------------------------------
Xxxxxx X. Xxxxxxxx, solely in his
capacity as Representative
