AGREEMENT AND PLAN OF MERGER by and among NT ACQUISITION, INC., NT MERGER SUB, INC., and NETSMART TECHNOLOGIES, INC. Dated as of November 18, 2006
by
and among
NT
ACQUISITION, INC.,
NT
MERGER SUB, INC.,
and
NETSMART
TECHNOLOGIES, INC.
Dated
as of November 18, 2006
TABLE
OF CONTENTS
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Page
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ARTICLE
I
|
TRANSACTIONS
AND TERMS OF MERGER
|
2
|
|
1.1
|
MERGER
|
2
|
|
1.2
|
TIME
AND PLACE OF CLOSING
|
2
|
|
1.3
|
EFFECTIVE
TIME
|
2
|
|
ARTICLE
II
|
TERMS
OF MERGER
|
3
|
|
2.1
|
CERTIFICATE
OF INCORPORATION
|
3
|
|
2.2
|
BYLAWS
|
3
|
|
2.3
|
DIRECTORS
AND OFFICERS
|
3
|
|
ARTICLE
III
|
EFFECT
OF THE MERGER ON THE CAPITAL STOCK OF PARENT, THE COMPANY AND MERGER
SUB
|
3
|
|
3.1
|
CONVERSION
OF SHARES
|
3
|
|
3.2
|
SHARES
HELD BY THE COMPANY ENTITIES OR PARENT ENTITIES
|
4
|
|
3.3
|
DISSENTING
STOCKHOLDERS
|
4
|
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3.4
|
STOCK
OPTIONS;WARRANTS
|
4
|
|
3.5
|
IMPACT
OF STOCK SPLITS, ETC
|
6
|
|
3.6
|
STOCK
PURCHASE PLAN
|
6
|
|
3.7
|
WAIVER
AND TERMINATION OF CERTAIN AGREEMENTS
|
6
|
|
ARTICLE
IV
|
PAYMENT
FOR SHARES
|
6
|
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4.1
|
PROCEDURES
|
6
|
|
4.2
|
RIGHTS
OF FORMER COMPANY EQUITY HOLDERS
|
9
|
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ARTICLE
V
|
REPRESENTATIONS
AND WARRANTIES OF COMPANY
|
10
|
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5.1
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ORGANIZATION,
STANDING AND POWER
|
10
|
|
5.2
|
AUTHORITY;
NO BREACH BY AGREEMENT
|
10
|
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5.3
|
CAPITAL
STOCK
|
11
|
|
5.4
|
COMPANY
SUBSIDIARIES
|
12
|
|
5.5
|
SEC
FILINGS; FINANCIAL STATEMENTS
|
13
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|
5.6
|
ABSENCE
OF UNDISCLOSED LIABILITIES
|
14
|
|
5.7
|
ABSENCE
OF CERTAIN CHANGES OR EVENTS
|
14
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5.8
|
TAX
MATTERS
|
14
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5.9
|
ASSETS
|
16
|
-i-
TABLE
OF CONTENTS
(continued)
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Page
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5.10
|
REAL
PROPERTY; LEASED REAL PROPERTY
|
16
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|
5.11
|
INTELLECTUAL
PROPERTY
|
16
|
|
5.12
|
ENVIRONMENTAL
MATTERS
|
18
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|
5.13
|
COMPLIANCE
WITH LAWS
|
19
|
|
5.14
|
LABOR
RELATIONS
|
19
|
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5.15
|
EMPLOYEE
BENEFIT PLANS
|
20
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5.16
|
MATERIAL
CONTRACTS
|
22
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5.17
|
GOVERNMENT
CONTRACTS.
|
23
|
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5.18
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CUSTOMER
AND SUPPLIER RELATIONSHIPS
|
25
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5.19
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LEGAL
PROCEEDINGS
|
26
|
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5.20
|
INSURANCE
|
26
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5.21
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STATE
TAKEOVER LAWS
|
26
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5.22
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NO
BROKERS
|
26
|
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5.23
|
OPINION
OF FINANCIAL ADVISOR
|
26
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5.24
|
BOARD
RECOMMENDATION
|
27
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5.25
|
CHARTER
PROVISIONS
|
27
|
|
5.26
|
INFORMATION
TO BE SUPPLIED
|
27
|
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5.27
|
RECEIVABLES
AND PAYABLES
|
28
|
|
5.28
|
RELATED
PARTY TRANSACTIONS
|
28
|
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5.29
|
LISTING
AND MAINTENANCE REQUIREMENTS.
|
28
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5.30
|
ACCOUNTANTS
|
29
|
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5.31
|
NO
MANIPULATION OF STOCK
|
29
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ARTICLE
VI
|
REPRESENTATIONS
AND WARRANTIES OF PARENT AND MERGER SUB
|
29
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6.1
|
ORGANIZATION,
STANDING AND POWER
|
29
|
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6.2
|
AUTHORITY;
NO BREACH BY AGREEMENT
|
30
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6.3
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LEGAL
PROCEEDINGS
|
30
|
|
6.4
|
STOCK
OWNERSHIP
|
31
|
|
6.5
|
NO
BROKERS
|
31
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6.6
|
INFORMATION
TO BE SUPPLIED
|
31
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-ii-
TABLE
OF CONTENTS
(continued)
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Page
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6.7
|
FINANCING
|
31
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ARTICLE
VII
|
CONDUCT
OF BUSINESS PENDING CONSUMMATION
|
32
|
|
7.1
|
AFFIRMATIVE
COVENANTS OF THE COMPANY
|
32
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7.2
|
NEGATIVE
COVENANTS OF THE COMPANY
|
32
|
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7.3
|
REPORTS
|
35
|
|
ARTICLE
VIII
|
ADDITIONAL
AGREEMENTS
|
35
|
|
8.1
|
PROXY
STATEMENT; STOCKHOLDER APPROVAL
|
35
|
|
8.2
|
OTHER
OFFERS
|
37
|
|
8.3
|
ANTITRUST
NOTIFICATION; CONSENTS OF REGULATORY AUTHORITIES
|
40
|
|
8.4
|
FILINGS
WITH STATE OFFICES
|
40
|
|
8.5
|
AGREEMENT
AS TO EFFORTS TO CONSUMMATE
|
41
|
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8.6
|
INVESTIGATION
AND CONFIDENTIALITY
|
42
|
|
8.7
|
PRESS
RELEASES
|
42
|
|
8.8
|
INTENTIONALLY
OMITTED
|
43
|
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8.9
|
CHARTER
PROVISIONS
|
43
|
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8.10
|
INDEMNIFICATION
|
43
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8.11
|
ACCESS
|
45
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8.12
|
FURTHER
ASSURANCES
|
45
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8.13
|
STOCKHOLDER
LITIGATION
|
45
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8.14
|
NOTICE
OF EVENTS
|
45
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8.15
|
DELISTING;
WITHDRAWAL OF REGISTRATION
|
46
|
|
8.16
|
PAYOFF
LETTER
|
46
|
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8.17
|
EMPLOYEE
MATTERS
|
46
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ARTICLE
IX
|
CONDITIONS
PRECEDENT
|
47
|
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9.1
|
CONDITIONS
TO OBLIGATIONS OF EACH PARTY
|
47
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9.2
|
CONDITIONS
TO OBLIGATIONS OF PARENT
|
48
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9.3
|
CONDITIONS
TO OBLIGATIONS OF THE COMPANY
|
49
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9.4
|
FRUSTRATION
OF CLOSING CONDITION
|
50
|
|
ARTICLE
X
|
TERMINATION
|
50
|
|
10.1
|
TERMINATION
|
50
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-iii-
TABLE
OF CONTENTS
(continued)
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Page
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10.2
|
EFFECT
OF TERMINATION
|
51
|
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10.3
|
NON-SURVIVAL
OF REPRESENTATIONS AND COVENANTS
|
52
|
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ARTICLE
XI
|
MISCELLANEOUS
|
52
|
|
11.1
|
DEFINITIONS
|
52
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11.2
|
EXPENSES
|
64
|
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11.3
|
ENTIRE
AGREEMENT
|
66
|
|
11.4
|
AMENDMENTS
|
66
|
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11.5
|
WAIVERS
|
67
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11.6
|
ASSIGNMENT
|
67
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11.7
|
NOTICES
|
67
|
|
11.8
|
GOVERNING
LAW
|
68
|
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11.9
|
COUNTERPARTS
|
69
|
|
11.10
|
CAPTIONS;
ARTICLES AND SECTIONS
|
69
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|
11.11
|
INTERPRETATIONS
|
69
|
|
11.12
|
ENFORCEMENT
OF AGREEMENT
|
69
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11.13
|
SEVERABILITY
|
69
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11.14
|
WAIVER
OF JURY TRIAL
|
70
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11.15
|
DISCLOSURE
SCHEDULES
|
70
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-iv-
THIS
AGREEMENT AND PLAN OF MERGER
(this
“Agreement”)
is
made and entered into as of November 18, 2006 by and among NT Acquisition,
Inc.
(“Parent”),
a
Delaware corporation, NT Merger Sub, Inc. (“Merger
Sub”),
a
Delaware corporation and Netsmart Technologies, Inc. (the “Company”),
a
Delaware corporation.
Recitals
WHEREAS,
the
respective Boards of Directors of the Company (acting on unanimous
recommendation of the Special Committee), Parent and Merger Sub have approved
this Agreement and the respective Boards of Directors of the Company and Merger
Sub are
of
the opinion that the transactions described herein are advisable and in the
best
interests of the Parties and their respective stockholders;
WHEREAS,
this
Agreement provides for the business combination between Parent and the Company
pursuant to the merger of Merger Sub with and into the Company, with the Company
as the surviving entity;
WHEREAS,
subject
to the terms hereof, at the effective time of such Merger (as hereinafter
defined), the outstanding shares of the capital stock of the Company shall
be
converted into the right to receive a
cash
payment;
WHEREAS,
the
transactions described in this Agreement are subject to the approvals of the
stockholders of the Company, the expiration of the required waiting period
under
the HSR Act, if applicable, and the satisfaction of certain other conditions
described in this Agreement;
WHEREAS,
concurrently with the execution of this Agreement, as a condition and inducement
to Parent’s and Merger Sub’s willingness to enter into this Agreement, Parent
and certain Persons listed on Annex
A
hereto
(together, the “Voting
Agreement Persons”)
are
entering into a voting agreement, dated as of the date hereof (the “Voting
Agreement”),
pursuant to which, among other things, the Voting Agreement Persons have agreed,
subject to the terms thereof, to vote their shares of Company Common Stock
in
favor this Agreement and the transactions contemplated hereby;
WHEREAS,
on
the
date hereof, the parent company of Parent (“HoldCo”),
Parent and certain member’s of the Company’s management (together, the
“Current
Rollover Persons”)
are
entering into agreements pursuant to which the Current Rollover Persons will,
immediately prior to the Effective Time, exchange certain shares of Company
Common Stock or certain Company Options held by the Current Rollover Persons
in
exchange for common stock, options to purchase shares of common stock or other
equity interests of Holdco (the “Rollover
Contribution”);
WHEREAS,
on the
date hereof, simultaneously with the execution of this Agreement, Insight
Venture Partners V, L.P., Insight Venture Partners (Cayman) V, L.P., Insight
Venture Partners V (Employee Co-Investors), L.P. and Insight Venture Partners
V
(Employee-Co-Investors), L.P. (collectively the “Insight
Entities”)
and
Bessemer
Venture Partners VI L.P., Bessemer
Venture Partners VI Institutional L.P., and Bessemer
Venture Partners Co-Investment L.P.
(collectively the “Bessemer
Entities”)
have
delivered an executed letter agreement to the Company pursuant to which, and
subject to the terms and conditions thereof, the Insight Entities and the
Bessemer Entities have agreed, either directly or indirectly, to provide equity
financing (the “Equity
Financing”)
in
connection with the transactions provided for herein to Parent in accordance
with the terms of such letter agreements.
NOW,
THEREFORE,
in
consideration of the above and the mutual warranties, representations,
covenants, and agreements set forth herein, the Parties agree as
follows:
ARTICLE
I
TRANSACTIONS
AND TERMS OF MERGER
| 1.1 |
Merger.
|
Subject
to the terms and conditions of this Agreement, on the Closing Date, Merger
Sub
shall be merged with and into the Company in accordance with the applicable
provisions of the DGCL (the “Merger”)
with
the effect provided for therein. The Company shall be the Surviving Corporation
resulting from the Merger and shall become a wholly owned Subsidiary of Parent
and shall continue to be governed by the Laws of the State of Delaware. The
Merger shall be consummated pursuant to the terms of this Agreement, which
has
been approved and adopted by the respective Boards of Directors of the Company,
Merger Sub and Parent and by Parent, as the sole stockholder of Merger
Sub.
| 1.2 |
Time
and Place of Closing.
|
The
closing of the transactions contemplated hereby (the “Closing”)
will
take place at 9:00 A.M. on the date that the Effective Time (as defined below)
occurs (or the immediately preceding day if the Effective Time is earlier than
9:00 A.M.), or at such other time as the Parties, acting through their
authorized officers, may mutually agree. The Closing shall be held at such
location as may be mutually agreed upon by the Parties.
| 1.3 |
Effective
Time.
|
The
Merger and other transactions contemplated by this Agreement shall become
effective on the date and at the time the certificate of merger (the
“Certificate
of Merger”),
prepared and executed in accordance with the relevant provisions of the DGCL,
reflecting the Merger shall become effective with the Secretary of State of
the
State of Delaware (the “Effective
Time”),
which
Certificate of Merger shall be filed by the Company as soon as practicable
after
the Closing of the Merger on the Closing Date. Subject to the terms and
conditions hereof, unless otherwise mutually agreed upon in writing by the
authorized officers of each Party, the Parties shall use their reasonable
efforts to cause the Effective Time to occur no later than forty-eight hours
following the
satisfaction of the conditions set forth in Article
IX
of the
Agreement (other than (i) those conditions that are waived by the Party for
whose benefit such conditions exist and (ii) any such conditions which, by
their
terms, are not capable of being satisfied until the Closing).
2
ARTICLE
II
TERMS
OF MERGER
| 2.1 |
Certificate
of Incorporation.
|
At
the
Effective Time, the certificate of incorporation of
the
Surviving Corporation shall be amended to read in its entirety in the form
of
Exhibit
A
hereto,
and as so amended, shall be the certificate of incorporation of the Surviving
Corporation until duly amended or repealed.
| 2.2 |
Bylaws.
|
The
bylaws of Merger Sub in effect immediately prior to the Effective Time shall
be
the bylaws of the Surviving Corporation until duly amended or
repealed.
| 2.3 |
Directors
and Officers.
|
The
directors of Merger Sub in office immediately prior to the Effective Time,
together with such additional persons as may thereafter be elected, shall serve
as the directors of the Surviving Corporation from and after the Effective
Time
in accordance with the Bylaws of the Surviving Corporation. The officers of
the
Company in office immediately prior to the Effective Time, together with such
additional persons as may thereafter be elected, shall serve as the officers
of
the Surviving Corporation from and after the Effective Time in accordance with
the Bylaws of the Surviving Corporation.
ARTICLE
III
EFFECT
OF THE MERGER ON THE CAPITAL STOCK OF PARENT, THE COMPANY AND MERGER
SUB
| 3.1 |
Conversion
of Shares.
|
Subject
to the provisions of this Article
III,
at the
Effective Time, by virtue of the Merger and without any action on the part
of
Parent, the Company, Merger Sub or the stockholders of any of
the
foregoing, the shares of the constituent corporations shall be converted as
follows:
(a) Each
share of capital stock of Parent issued and outstanding immediately prior to
the
Effective Time shall remain issued and outstanding from and after the Effective
Time.
(b) Each
share of Merger Sub Common Stock issued and outstanding immediately prior to
the
Effective Time shall be
converted into one validly issued, fully paid and non-assessable share of common
stock, par value $.01 per share, of the Surviving Corporation.
(c) Each
share of Company Common Stock (including shares of restricted Company Common
Stock, but excluding treasury shares and shares held by any Company Entity
or
any Parent Entity and excluding shares held by stockholders who perfect their
statutory appraisal rights, if applicable, as provided in Section
3.3)
issued
and outstanding at the Effective Time shall cease to be outstanding and shall
be
converted into and exchanged for the right to receive a cash payment (without
interest) in the amount of $16.50 (the “Merger
Consideration”)
payable to the holder thereof, less any applicable withholding of taxes, in
the
manner provided in Article
IV.
3
| 3.2 |
Shares
Held by the Company Entities
or Parent Entities.
|
Each
share of Company Common Stock (including treasury shares) held by any Company
Entity or by any Parent Entity shall be canceled and retired at the Effective
Time and no consideration shall be issued in exchange therefor.
| 3.3 |
Dissenting
Stockholders.
|
Any
holder of shares of Company Common Stock who has not voted in favor of the
Merger or consented thereto in writing and who perfects such holder’s appraisal
rights, if applicable and available, in accordance with and as contemplated
by
Section 262 of the DGCL (the “Dissenting
Shares”)
shall
not be entitled to receive the Merger Consideration but shall be entitled only
to such rights as provided by Section 262 of the DGCL, if any. No payment shall
be made to any dissenting stockholder unless and until such dissenting
stockholder has complied with the applicable provisions of the DGCL and
surrendered to the Company the certificate or certificates representing the
shares for which payment is being made; provided,
that,
at the Effective Time, all Dissenting Shares shall no longer be outstanding
and
shall automatically be canceled and cease to exist and the holder of such
Dissenting Shares shall cease to have any rights with respect to such Dissenting
Shares, except as set forth in this Section
3.3
or as
otherwise provided in the DGCL. In the event that after the Effective Time
a
dissenting stockholder of the Company fails to perfect, or effectively withdraws
or loses, such dissenting stockholder’s right to appraisal of and payment for
such dissenting stockholder’s shares, the Surviving Corporation shall issue and
deliver the consideration to which such holder of shares of Company Common
Stock
is entitled under this Article
III
(without
interest) upon surrender by such holder of the certificate or certificates
representing the shares of Company Common Stock held by such holder. The Company
shall give Parent prompt notice of any demands received by the Company for
appraisal of shares of Company Common Stock, attempted withdrawals of such
demands and any other instruments served pursuant to the DGCL that are received
by the Company for appraisal of any shares of Company Common Stock, and Parent
shall have the right to participate in and control all negotiations and
proceedings with respect to such demands. Except with the prior written consent
of Parent, the Company shall not make any payment with respect to, or offer
to
settle or settle, any such demands.
| 3.4 |
Stock
Options; Warrants.
|
(a) Between
the date of this Agreement and the Effective Time, the Company shall take all
necessary action to provide that each option, stock appreciation right, or
other
Equity Right to purchase shares of Company Common Stock (“Company
Options”)
granted by the Company under the Company Stock Plans and outstanding at the
Effective Time and each warrant to purchase shares of Company Common Stock
(the
“Company
Warrants”)
outstanding at the Effective Time, shall become fully vested and shall be
exercisable immediately prior to the Effective Time. Except as set forth in
Section
3.6,
Holders
of the Company Options and/or Company Warrants shall be given the opportunity
to
exercise their Company Options and Company Warrants, effective immediately
prior
to the Effective Time and conditioned upon the consummation of the Merger,
and
thereby to receive the Merger Consideration for each share of Company Common
Stock subject to such exercised Company Option or Company Warrant pursuant
to
Section
3.1(c).
4
(b) At
the
Effective Time, each Company Option which is not exercised in accordance with
Section
3.4(a)
or
Section
3.6
or
treated as a Rollover Option shall be canceled and shall no longer represent
the
right to purchase shares of Company Common Stock, and each holder of such
Company Option shall cease to have any rights with respect to such Company
Option except for the right to receive, upon delivery of an option surrender
agreement in a form that is customary for transactions of this type (the
“Option
Surrender Agreement”)
in
accordance with Article
IV,
a cash
payment (without interest) by the Surviving Corporation for each share of
Company Common Stock subject to such Company Option equal to the amount, if
any,
by which the Merger Consideration exceeds the per share purchase price of
Company Common Stock subject to such Company Option (the “Option
Settlement Payment”).
Each
Company Option that, immediately prior to the Effective Time, has an exercise
price greater than or equal to the Merger Consideration will be automatically
canceled without compensation at the Effective Time. At the Effective Time, the
Rollover Options, if any, shall be terminated and cancelled. and in exchange
for
such termination and cancellation, such Rollover Optionholders shall be entitled
to those rights set forth in the Rollover Agreements.
(c) At
the
Effective Time, each Company Warrant which is not exercised in accordance with
Section
3.4(a)
shall be
canceled and shall no longer represent the right to purchase shares of Company
Common Stock, and each holder of such Company Warrant shall cease to have any
rights with respect to such Company Warrant except for the right to receive,
upon delivery of a warrant surrender agreement in a form that is customary
for
transactions of this type (the “Warrant
Surrender Agreement”)
in
accordance with Article
IV,
a cash
payment (without interest) by the Surviving Corporation for each share of
Company Common Stock subject to such Company Warrant equal to the amount, if
any, by which the Merger Consideration exceeds $11.00 (the “Warrant
Settlement Payment”),
and
the Company shall take all action to provide that such treatment of the Warrants
occurs or is permitted to occur as set forth herein as of or prior to Closing.
As soon as practicable following the date of this Agreement, the Company shall
obtain such consents as are necessary under the Company Warrants to amend such
Company Warrants in order to provide for the cancellation of such Company
Warrants at the Effective Time in exchange for the Warrant Settlement
Payment.
(d) Between
the date of this Agreement and the Effective Time, the Company shall take all
necessary action with respect to the Company’s 1993 Long-Term Incentive Plan;
1998 Long-Term Incentive Plan; 1999 Long-Term Incentive Plan; and 2001 Long-Term
Incentive Plan to (a) (i) amend the definition of “Change In Control Price” so
that it shall be no greater than the Merger Consideration price per share or
(ii) provide that the cash out provisions and definition of “Change In Control
Price” are not applicable to the transactions contemplated hereby and
simultaneously provide for the termination of the foregoing Long-Term Incentive
Plans, the acceleration of vesting of the Company Options and the cancellation
of the Company Options as set forth in Section
3.4(b),
and (b)
to delete all references to, and provisions providing payments in connection
with, any “Potential Change In Control.”
5
(e) The
Company shall be entitled to deduct and withhold from the consideration
otherwise payable to the holders of Company Options or Company Warrants, as
the
case may be, who receive amounts hereunder, such amounts, if any, as it is
required to deduct and withhold with respect to the making of such payment
under
the Internal Revenue Code or any applicable provision of state, local or foreign
Tax law.
| 3.5 |
Impact
of Stock Splits, etc.
|
In
the
event of any change in the number of shares of Company Common Stock, or
securities convertible or exchangeable into or exercisable for shares of Company
Common Stock (including Company Stock Options and Company Warrants), issued
and
outstanding between the date of this Agreement and the Effective Time by reason
of any stock split, stock dividend, subdivision, reclassification,
recapitalization, combination, exchange of shares or the like, the Merger
Consideration to be paid for each share of Company Common Stock (or Option
Settlement Payment to be paid for any Company Stock Option or Warrant Settlement
Payment to be paid for any Company Warrant, as the case may be) as provided
in
this Agreement shall be equitably adjusted to effect such change and, as so
adjusted, shall from and after the date of such event, be the Merger
Consideration, the Option Settlement Payment or the Warrant Settlement Payment,
as the case may be, subject to further adjustment in accordance with this
Section
3.5.
| 3.6 |
Stock
Purchase Plan.
|
Between
the date of this Agreement and the Effective Time, the Company shall take all
necessary action with respect to the Company’s 1999 Employee Stock Purchase Plan
(the “ESPP”),
including necessary amendments to the ESPP, to (a) terminate the ESPP on or
before the Effective Time in accordance with its terms, (b) provide that the
Offering Termination Date for the Offering Period (as such terms are defined
in
the ESPP) that is in effect as of the date of the Effective Time shall occur
on
or before the last trading day prior to the Effective Time, (c) provide that
all
Company Options issued and outstanding under the ESPP on such Offering
Termination Date will be automatically exercised on such Offering Termination
Date, and (d) provide that the shares of Company Common Stock issued pursuant
to
the exercise of such Company Options shall be treated in the manner described
in
Section
3.1(c).
| 3.7 |
Waiver
and Termination of Certain
Agreements.
|
The
Parties agree that, effective as of the Closing, each of the documents listed
on
Section
3.7
of the
Company Disclosure Schedule shall be automatically terminated by the Company
without any further action by the parties thereto or any further liability
of
the Company thereunder.
ARTICLE
IV
PAYMENT
FOR SHARES
| 4.1 |
Procedures.
|
(a) Prior
to
the Effective Time, the Company and Parent shall enter into an agreement with
the Company’s transfer agent or another paying agent selected by Parent and
reasonably acceptable to the Company (the “Paying
Agent”),
and
Parent will deposit or cause to be deposited, by wire transfer of immediately
available funds, in trust with the Paying Agent for the benefit of the holders
of Company Common Stock, Company Options and/or Company Warrants cash in an
aggregate amount equal to the sum of (i) the product of the Merger Consideration
and the number of shares of Company Common Stock outstanding immediately prior
to the Effective Time and entitled to receive the Merger Consideration
(provided,
however,
that
the portion of the aggregate Merger Consideration allocable to the Dissenting
Shares shall not be required to be deposited with the Paying Agent),
plus
(ii) the
aggregate Option Settlement Payments plus
(iii)
the aggregate Warrant Settlement Payments (collectively, the “Payment
Fund”).
The
Paying Agent shall invest the Payment Fund in the manner specified by Parent,
and interest or other income resulting from the investment of the Payment Fund
shall be solely for the account of Parent or the Surviving Corporation. No
such
investment or loss thereon shall affect the amounts payable to the Company’s
stockholders hereunder. All costs and expenses related to the Paying Agent,
the
Payment Fund, the agreement with the Paying Agent and the investments made
by
the Paying Agent shall be paid one-half by the Company and one-half by Parent
(or, if after the Effective Time, the Surviving Corporation).
6
(i) Promptly
after the Effective Time, Parent and the Surviving Corporation shall cause
the
Paying Agent to deliver to each holder of record of (A) a certificate or
certificates which represented shares of Company Common Stock (other than
treasury shares or shares held by any Company Entity or Parent Entity)
immediately prior to the Effective Time (collectively, the “Certificates”)
or (B)
shares of Company Common Stock represented immediately prior to the Effective
Time by book-entry (“Book-Entry
Shares”),
appropriate transmittal materials and instructions (collectively, the
“Letter
of Transmittal”)
(which
shall specify that delivery shall be effected, and risk of loss and title to
such Certificates shall pass, only upon proper delivery of such Certificates
to
the Paying Agent or, in the case of Book-Entry Shares, upon adherence to the
procedures set forth in the Letter of Transmittal). The Certificates of Company
Common Stock so delivered shall be duly endorsed as the Paying Agent may
require. In the event of a transfer of ownership of shares of Company Common
Stock represented by Certificates that is not registered in the transfer records
of the Company, the consideration provided in Section
3.1
may be
issued to a transferee if the Certificates representing such shares are
delivered to the Paying Agent, accompanied by all documents required to evidence
such transfer and by evidence satisfactory to the Paying Agent that any
applicable stock transfer taxes have been paid. If any Certificate shall have
been lost, stolen, mislaid or destroyed, upon receipt of (x) an affidavit
of that fact from the holder claiming such Certificate to be lost, mislaid,
stolen or destroyed, (y) such bond, security or indemnity as Parent and the
Paying Agent may reasonably require and (z) any other documents necessary
to evidence and effect the bona fide exchange thereof, the Paying Agent shall
issue to such holder the consideration into which the shares represented by
such
lost, stolen, mislaid or destroyed Certificate shall have been converted.
(ii) Promptly
after the Effective Time, Parent or the Surviving Corporation shall cause the
Paying Agent to deliver (A) to each holder of Company Options (other than
Company Options issued and outstanding under the ESPP), an Option Surrender
Agreement, instructions for effecting the surrender of such Company Options
in
exchange for the Option Settlement Payment and (B) to each holder of Company
Warrants, a Warrant Surrender Agreement, instructions for effecting the
surrender of such Company Warrants in exchange for the Warrant Settlement
Payment.
7
The
Paying Agent may establish such other reasonable and customary rules and
procedures to effect an orderly exchange. The Surviving Corporation shall pay
all charges and expenses, including those of the Paying Agent, in connection
with the distribution of the consideration provided in Article
III.
(b) After
the
Effective Time:
(i) Each
holder of shares of Company Common Stock (other than shares to be canceled
pursuant to Section
3.2
or as to
which statutory appraisal rights have been perfected as provided in Section
3.3)
issued
and outstanding at the Effective Time shall surrender their Certificate(s)
or
Book-Entry Shares (in accordance with the terms of the Letter of Transmittal)
to
the Paying Agent and shall promptly upon surrender thereof, together with a
properly completed Letter of Transmittal, receive in exchange therefor the
Merger Consideration multiplied by the number of shares of Company Common Stock
represented by such Certificate or Book-Entry Share. The Paying Agent shall
not
be obligated to deliver the Merger Consideration to which any former holder
of
Company Common Stock is entitled as a result of the Merger until such holder
surrenders such holder’s Certificates (or the documents required by Section
4.1(a)
for a
lost, stolen, mislaid or destroyed Certificate) or Book-Entry Shares (in
accordance with the terms of the Letter of Transmittal) for exchange as provided
in this Section
4.1.
(ii) Upon
surrender of a Company Option (other than Company Options issued and outstanding
under the ESPP) for cancellation to the Paying Agent, together with the Option
Surrender Agreement, duly executed, and any other documents reasonably required
by the Paying Agent, the holder of such Company Option shall be entitled to
receive in exchange therefor the Option Settlement Payment, and the Company
Option so surrendered shall then be canceled. Until surrendered in accordance
with the provisions of this Section
4.1,
each
Company Option shall be deemed at any time after the Effective Time to represent
for all purposes only the right to receive the Option Settlement Payment as
contemplated by this Article
IV.
(iii) Upon
surrender of a Company Warrant for cancellation to the Paying Agent, together
with the Warrant Surrender Agreement, duly executed, and any other documents
reasonably required by the Paying Agent, the holder of the Company Warrant
shall
be entitled to receive in exchange therefor the Warrant Settlement Payment,
and
the Company Warrant so surrendered shall then be canceled. Until surrendered
in
accordance with the provisions of this Section
4.1,
each
Company Warrant shall be deemed at any time after the Effective Time to
represent for all purposes only the right to receive the Warrant Settlement
Payment as contemplated by this Article
IV.
(c) Each
of
Parent, the Surviving Corporation and the Paying Agent shall be entitled to
deduct and withhold from the consideration otherwise payable to the holders
of
Company Common Stock, Company Options or Company Warrants, as the case may
be,
pursuant to this Agreement such amounts, if any, as it is required to deduct
and
withhold with respect to the making of such payment under the Internal Revenue
Code or any applicable provision of state, local or foreign Tax Law. To the
extent that any amounts are so withheld by Parent, the Surviving Corporation
or
the Paying Agent, as the case may be, such withheld amounts shall be treated
for
all purposes of this Agreement as having been paid to the holder of shares
of
Company Common Stock, Company Options or Company Warrants, as the case may
be,
in respect of which such deduction and withholding was made by Parent, the
Surviving Corporation or the Paying Agent, as the case may be.
8
(d) Any
portion of the Payment Fund (including any interest thereon) made available
to
the Paying Agent pursuant to Section
4.1(a)
that
remains unclaimed by the holders of shares of Company Common Stock, Company
Options or Company Warrants, as the case may be, six months after the Effective
Time shall be returned to Parent by the Paying Agent, and any such holder who
has not exchanged shares of Company Common Stock for the Merger Consideration,
Company Options for the Option Settlement Payment or Company Warrants for the
Warrant Settlement Payment, as the case may be, in accordance with this
Section
4.1
prior to
that time shall thereafter look only to Parent or the Surviving Corporation
for
payment of the Merger Consideration (without any interest thereon) upon due
surrender of their Certificates (or affidavits of loss in lieu thereof) in
respect of such shares or, in the case of Book-Entry Shares, upon adherence
to
the procedures set forth in the Letter of Transmittal, the Option Settlement
Payment (without any interest thereon) upon delivery to Parent of the Option
Surrender Agreement, duly executed, in respect of such Company Options or the
Warrant Settlement Payment (without interest thereon) upon delivery to Parent
of
the Warrant Settlement Payment, in respect of the such Company Warrants, as
the
case may be. Any other provision of this Agreement notwithstanding, none of
Parent, the Surviving Corporation or the Paying Agent shall be liable to a
holder of Company Common Stock, Company Options or Company Warrants for any
amounts paid or property delivered in good faith to a public official pursuant
to any applicable abandoned property, escheat or similar Law. Any amounts
remaining unclaimed by any holder of shares of Company Common Stock, Company
Options or Company Warrants two years after the Effective Time (or such earlier
date, immediately prior to such time when the amounts would otherwise escheat
to, or become property of any federal, state of local government authority)
shall become, to the extent permitted by applicable Law, the property of Parent
free and clear of any claims or interest of any Person previously entitled
thereto.
| 4.2 |
Rights
of Former Company Equity Holders.
|
At
the
Effective Time, the stock transfer books of the Company shall be closed as
to
holders of Company Common Stock immediately prior to the Effective Time and
no
transfer of Company Common Stock by any such holder shall thereafter be made
or
recognized. Until surrendered for exchange in accordance with the provisions
of
Section
4.1,
each
Certificate theretofore representing shares of Company Common Stock (other
than
shares to be canceled pursuant to Sections
3.2
or as to
which statutory appraisal rights have been perfected as provided in Section
3.3)
and
each Book-Entry Share shall from and after the Effective Time represent for
all
purposes only the right to receive the Merger Consideration in exchange
therefor, subject, however, to the Surviving Corporation’s obligation to pay any
dividends or make any other distributions with a record date prior to the
Effective Time which have been declared or made by the Company in respect of
such shares of Company Common Stock in accordance with the terms of this
Agreement and which remain unpaid at the Effective Time.
9
ARTICLE
V
REPRESENTATIONS
AND WARRANTIES OF COMPANY
The
Company hereby represents and warrants to Parent and Merger Sub as
follows:
| 5.1 |
Organization,
Standing and Power.
|
The
Company is a corporation duly organized, validly existing and in good standing
under the Laws of the State of Delaware, and has the corporate power and
authority to carry on its business as now conducted and to own, lease and
operate its Assets. The Company is duly qualified or licensed to transact
business as a foreign corporation in good standing in the States of the United
States and foreign jurisdictions where the character of its Assets or the nature
or conduct of its business requires it to be so qualified or licensed, except
for such jurisdictions in which the failure to be so qualified or licensed
would
not reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect. The Company has made available to Parent true and
complete copies of the certificate of incorporation and bylaws of the Company
as
in effect as of the date of this Agreement, and each such copy accurately
reflects in all respects all amendments thereto.
| 5.2 |
Authority;
No Breach By Agreement.
|
(a) The
Company has the corporate power and authority necessary to execute, deliver
and,
other than with respect to the Merger, perform this Agreement and each other
certificate or agreement entered into in connection with the Merger
(collectively, the “Transaction
Documents”),
and
the other transactions contemplated hereby, and with respect to the Merger,
upon
the approval and adoption of this Agreement and the approval of the Merger
by
the Company’s stockholders in accordance with this Agreement and the DGCL, to
perform its obligations under this Agreement and to consummate the transactions
contemplated hereby and thereby. The execution, delivery and performance of
this
Agreement and the other Transaction Documents and the consummation of the
transactions contemplated hereby and thereby, including the Merger, have been
duly and validly authorized by all necessary corporate action in respect thereof
on the part of the Company, subject to the approval and adoption of this
Agreement by the holders of a majority of
the
outstanding shares of Company Common Stock as contemplated by Section
8.1,
which
is the only stockholder vote required for the approval and adoption of this
Agreement and consummation of the Merger by the Company. Subject to the Company
Stockholder Approval, this Agreement and the other Transaction Documents
represent a legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with their respective terms (except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or other Laws affecting the enforcement of
creditors’ rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the discretion
of the court before which any proceedings may be brought).
(b) Neither
the execution and delivery of this Agreement and the other Transaction Documents
by the Company, nor the consummation by the Company of the transactions
contemplated hereby and thereby, nor compliance by the Company with any of
the
provisions hereof, will (i) conflict with or result in a breach of any
provision of the Company’s certificate of incorporation or bylaws or the
certificate or articles of incorporation or bylaws (or other organizational
documents) of any Company Subsidiary or any resolution adopted by the board
of
directors or the stockholders of any Company Entity, or (ii) except as
disclosed in Section
5.2(b)
of the
Company Disclosure Schedules, constitute or result in a Default under, or
require any Consent pursuant to, or result in the creation of any Lien on any
Asset of any Company Entity (with or without notice or lapse of time, or both)
under, any Contract or Permit of any Company Entity, except where such Default
or Lien, or any failure to obtain such Consent, would not reasonably be expected
to have, individually or in the aggregate, a Company Material Adverse Effect,
or
(iii) subject to receipt of the requisite Consents referred to in
Section
9.1(b),
constitute or result in a Default under, or require any Consent pursuant to,
any
Law or Order applicable to any Company Entity or any of their respective
material Assets.
10
(c) Other
than in connection or compliance with the provisions of the Securities Laws,
applicable state corporate and securities Laws and the rules of Nasdaq, and
other than Consents required under the HSR Act and any other applicable foreign
pre-merger notification or competition laws, rules or regulations set forth
in
Section
5.2(c)
of the
Company Disclosure Schedules, and other than Consents, filings or notifications
which, if not obtained or made, would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect, no notice
to, filing with, or Consent of, any governmental body or authority is necessary
for the consummation by the Company of the Merger and the other transactions
contemplated in this Agreement and the other Transaction Documents.
| 5.3 |
Capital
Stock.
|
(a) The
authorized capital stock of the Company consists of (i) 15,000,000 shares
of Company Common Stock, of which 6,548,037 shares are issued and outstanding
as
of the date of this Agreement, including -0- shares of restricted stock issued
under the Company Stock Plans, and not more than 7,593,763 (including as a
result of exercise of Company Options and/or Company Warrants) shares will
be
issued and outstanding at the Effective Time, and (ii) 3,000,000 shares of
preferred stock, par value $.01 per share, none of which are issued and
outstanding. All of the issued and outstanding shares of capital stock of the
Company are duly and validly issued and outstanding and are fully paid and
nonassessable under the DGCL. None of the outstanding shares of capital stock
of
the Company has been issued in violation of any preemptive rights of the current
or past stockholders of the Company. As of the date of this Agreement, (i)
914,547 shares of Company Common Stock were reserved for issuance pursuant
to
the Company Stock Plans, of which 914,547 shares of Company Common Stock are
subject to issuance upon exercise of outstanding Company Options (excluding
Company Options issued and outstanding under the ESPP) and (ii) 131,179 shares
of Company Common Stock were reserved for issuance in respect of the Company
Warrants.
(b) Except
as
disclosed in Section
5.3(b)
of the
Company Disclosure Schedules, there are no shares of capital stock, other equity
securities or voting securities (including voting debt securities) of the
Company outstanding and no outstanding Equity Rights (including, for the
avoidance of doubt, stock appreciation rights) relating to the capital stock
of
the Company. Except as specifically contemplated by this Agreement or set forth
in Section
5.3(b)
of the
Company Disclosure Schedules, there is no Contract or any right or privilege
(whether pre-emptive or contractual) capable of becoming a Contract or Equity
Right for the registration, purchase, subscription or issuance of any securities
of the Company. There are no Contracts relating to the rights of any Company
Entity to vote or to dispose of any shares of capital stock (or other equity
interests) of the Company.
To the
Knowledge of the Company, no Company stockholder is a party to or holds shares
of Company Common Stock bound by or subject to any voting agreement, voting
trust, proxy or similar arrangement, except for the Voting
Agreement.
11
| 5.4 |
Company
Subsidiaries.
|
The
Company has disclosed in Section
5.4
of the
Company Disclosure Schedules each of the Company Subsidiaries that is a
corporation (identifying its jurisdiction of incorporation, each jurisdiction
in
which it is qualified and/or licensed to transact business, and the number
of
shares owned and percentage ownership interest represented by such share
ownership) and each of the Company Subsidiaries that is a general or limited
partnership, limited liability company or other non-corporate entity
(identifying the jurisdiction in which such entity is organized, each
jurisdiction in which it is qualified and/or licensed to transact business,
and
the amount and nature of the ownership interest therein). Except as disclosed
in
Section
5.4
of the
Company Disclosure Schedules, the Company or one of its Subsidiaries owns all
of
the issued and outstanding shares of capital stock (or other equity interests)
of each Company Subsidiary free and clear of any Lien. No capital stock (or
other equity interest) of any Company Subsidiary is or may become required
to be
issued (other than to another Company Entity) by reason of any Equity Rights,
and there are no Contracts by which any Company Subsidiary is bound to issue
(other than to another Company Entity) additional shares of its capital stock
(or other equity interests) or Equity Rights or by which any Company Entity
is
or may be bound to transfer any shares of the capital stock (or other equity
interests) of any Company Subsidiary (other than to another Company Entity).
There are no Contracts relating to the rights of any Company Entity to vote
or
to dispose of any shares of the capital stock (or other equity interests) of
any
Company Subsidiary. Except for the ownership of the Subsidiaries of the Company,
neither the Company nor any of its Subsidiaries, directly or indirectly, owns,
or has agreed to purchase or otherwise acquire, the capital stock or other
equity or voting interests of, or any interest convertible into or exchangeable
for such capital stock or such equity or voting interests of, any Person. Except
as set forth in Section
5.4
of the
Company Disclosure Schedules, all of the shares of capital stock (or other
equity interests) of each Company Subsidiary that is a corporation held by
a
Company Entity are fully paid and nonassessable under the applicable corporation
Law of the jurisdiction in which such Subsidiary is incorporated or organized
and are owned by the Company Entity free and clear of any Lien. Each Company
Subsidiary is duly organized, validly existing and in good standing under the
Laws of the jurisdiction in which it is incorporated or organized, and has
the
corporate power and authority necessary for it to own, lease and operate its
Assets and to carry on its business as now conducted, except where the failure
of which would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect. Each Company Subsidiary is duly
qualified or licensed to transact business as a foreign entity in good standing
in the States of the United States and foreign jurisdictions where the character
of its Assets or the nature or conduct of its business requires it to be so
qualified or licensed, except for such jurisdictions in which the failure to
be
so qualified or licensed would not reasonably be expected to have, individually
or in the aggregate, a Company Material Adverse Effect. The Company has made
available to Parent true and complete copies of the organizational documents
of
each of the Company’s material Subsidiaries as in effect as of the date of this
Agreement, and each such copy accurately reflects in all respects all amendments
thereto.
12
| 5.5 |
SEC
Filings; Financial Statements.
|
(a) The
Company has timely filed or furnished all SEC Documents required to be filed
or
furnished by the Company since December 31, 2003 (the “Company
SEC Reports”).
The
Company SEC Reports as of their respective dates (or, if amended or superseded
by a filing prior to the date of this Agreement, then on the date of such filing
or, in the case of registration statements, at the effective date thereof)
(i) complied in all material respects with the applicable requirements of
the Securities Laws and (ii) did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated in such
Company SEC Reports or necessary in order to make the statements in such Company
SEC Reports, in light of the circumstances under which they were made, not
misleading. No
Company Subsidiary is, or at any time since December 31, 2003 has been, required
to file any SEC Documents.
(b) Each
of
the Company Financial Statements contained in the Company SEC Reports, including
any Company SEC Reports filed after the date of this Agreement until the
Effective Time, complied or will at the time filed comply as to form in all
material respects with the applicable published rules and regulations of the
SEC
with respect thereto, was prepared in accordance with GAAP applied on a
consistent basis throughout the periods indicated (except as may be indicated
in
the notes to such financial statements or, in the case of unaudited interim
statements, as permitted by Form 10-Q of the SEC), and fairly presented in
all
material respects the consolidated financial position of the Company and its
Subsidiaries as of and at the respective dates and the consolidated results
of
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements were or are subject to normal and recurring
year-end adjustments which were not or are not expected to be material in amount
or effect.
(c) The
Chief
Executive Officer and the Chief Financial Officer of the Company have signed,
and the Company has furnished to the SEC, all certifications required by Section
906 of the Xxxxxxxx-Xxxxx Act; such certifications contain no qualifications
or
exceptions to the matters certified therein and have not been modified or
withdrawn; and neither the Company nor any of its officers has received notice
from any Regulatory Authority questioning or challenging the accuracy,
completeness, form or manner of filing or submission of such certifications.
Except as otherwise disclosed in any Company SEC Report, to the Company’s
Knowledge, each director and executive officer of the Company has filed with
the
SEC on a timely basis all statements required by Section 16(a) of the Exchange
Act and the rules and regulations thereunder since December 31,
2003.
(d) The
Company and the Company Subsidiaries are in compliance with all provisions
of
the Xxxxxxxx-Xxxxx Act which are applicable to it as of the date of this
Agreement. The Company and the Company Subsidiaries will be in compliance with
all provisions of the Xxxxxxxx-Xxxxx Act which are applicable to it as of the
Closing Date. Except as disclosed on Section
5.5(d)
of the
Company Disclosure Schedules or otherwise in any Company SEC Report, the Company
and the Company Subsidiaries have established and maintain an effective system
of internal control over financial reporting (as such term is defined in the
Exchange Act ). Except as disclosed on Section
5.5(d)
of the
Company Disclosure Schedule or otherwise in any Company SEC Report, the Company
and the Company Subsidiaries have established and maintain disclosure controls
and procedures (as defined in and required by the Exchange Act). The Company’s
certifying officers have evaluated the effectiveness of the Company’s disclosure
controls and procedures and presented in the applicable Company SEC Reports
their conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the periods covered by such Company SEC Reports
based on such evaluation.
13
| 5.6 |
Absence
of Undisclosed Liabilities.
|
Except
as
set forth in Section
5.6
of the
Company Disclosure Schedules or as and to the extent set forth on the
consolidated balance sheet of the Company contained in the last quarterly report
on Form 10-Q filed by the Company prior to the date of this Agreement, or
reflected in the notes thereto, no Company Entity has any material Liabilities
and, since the Company Balance Sheet Date, no Company Entity has incurred or
paid any Liability, except for such Liabilities incurred or paid (i) in the
ordinary course of business consistent with past business practice and which
would not reasonably be expected to have, individually or in the aggregate,
a
Company Material Adverse Effect or (ii) in connection with the transactions
contemplated by this Agreement.
| 5.7 |
Absence
of Certain Changes or Events.
|
Since December
31, 2005 (the “Company
Balance Sheet Date”),
except as disclosed in Section
5.7
of the
Company Disclosure Schedules or in any Company SEC Reports, (i) there have
been no events, changes, effects, developments or occurrences which have had,
or
would reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect, (ii) the Company Entities have conducted their
business only in the ordinary course of business consistent with past practice,
and (iii) there has not been any action taken by any of the Company Entities
through the date hereof that, if taken during the period from the date hereof
through the Effective Time, would constitute a breach of Section
7.2 (a), (e), (i), (j), (k), (l) or (o).
| 5.8 |
Tax
Matters.
|
(a) All
Company Entities have timely filed (taking into account any extension of time
within which to file) with the appropriate Tax authorities all Federal income
Tax Returns and all other material Tax Returns in all jurisdictions in which
Tax
Returns were required to be filed by them, and such Tax Returns were correct
and
complete in all material respects. All Taxes of the Company Entities that have
become due and payable have been paid (other than Taxes for which proper
accruals pursuant to GAAP have been established in the Company Financial
Statements). There are no Liens for any Taxes (other than a Permitted Lien
or
Liens for current real property or ad valorem Taxes not yet due and payable
or
Liens for Taxes contested in good faith) on any of the Assets of any of the
Company Entities.
(b) Except
as
disclosed in Section
5.8(b)
of the
Company Disclosure Schedules, none of the Company Entities has received any
notice of a material assessment or a proposed assessment in connection with
any
Taxes, and there are no pending material disputes, claims, audits, actions,
suits, proceedings or examinations regarding any Taxes of any Company Entity
or
the Assets of any Company Entity nor, to the Knowledge of the Company, have
any
been threatened in writing. None of the Company Entities has waived any statute
of limitations or agreed to any extension of time in respect of any Taxes or
agreed to a Tax assessment or deficiency which is currently
outstanding.
14
(c) Each
Company Entity has complied in all material respects with all applicable Laws,
rules and regulations relating to the withholding of Taxes and the payment
thereof to appropriate Tax authorities, including 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 and Taxes
required to be withheld and paid pursuant to the Internal Revenue Code or
similar provisions under state, local or foreign Law.
(d) Except
as
disclosed in Section
5.8(d)
of the
Company Disclosure Schedules, none of the Company Entities is a party to any
Tax
allocation agreement, Tax sharing agreement or any similar agreement and none
of
the Company Entities has been a member of an affiliated group filing a
consolidated federal income Tax Return (other than a group the common parent
of
which was the Company) or has or will have any Tax Liability of any Person
under
Treasury Regulation Section 1.1502-6 or any similar provision of state, local
or
foreign Law (other than the other members of the consolidated group of which
the
Company is parent), or as a transferee or successor, by contract or
otherwise.
(e) During
the five-year period ending on the date hereof, none of the Company Entities
was
a distributing corporation or a controlled corporation in a transaction intended
to be governed by Section 355 of the Internal Revenue Code. All mergers,
spin-offs, transfers of assets or any other kind of transactions that may
qualify as a tax-free reorganization for Federal income tax purposes have been
made, and continue to be, in compliance with all applicable Tax Laws. The
consummation of the transaction contemplated by this Agreement will not affect
the Tax treatment of such transaction.
(f) None
of
the Company Entities has been a United States real property holding corporation
within the meaning of Internal Revenue Code Section 897(c)(2) during the
applicable period specified in Internal Revenue Code Section
897(c)(1)(A)(ii).
(g) The
Company Entities have delivered to Parent correct and complete copies of (i)
all
Tax Returns filed by or on behalf of the Company Entities for all completed
Tax
years of the Company Entity that remain open for audit or review by the relevant
Taxing authority and (ii) all ruling requests, private letter rulings, notices
of proposed deficiencies, closing agreements, settlement agreements, tax
opinions, and similar documents or communication sent or received by the Company
Entities relating to Taxes.
(h) Except
as
set forth in Section
5.8(h)
of the
Company Disclosure Schedule, no Tax asset or attribute of the Company is
currently subject to a limitation in Section 382 or Section 383 of the Internal
Revenue Code or similar provision of state, local or foreign Law.
15
| 5.9 |
Assets.
|
(a) Except
as
disclosed in Section
5.9
of the
Company Disclosure Schedules, the Company Entities have good and marketable
title, free and clear of all Liens, to all of their respective Assets, except
(i) for any Permitted Liens, or (ii) for Assets that have been sold or disposed
of in the ordinary course of business. All Assets used in the businesses of
the
Company Entities are in good condition, reasonable wear and tear excepted,
and
are sufficient for the operation of the business in the ordinary course of
business consistent with the Company’s past practices, except where failure to
be in such condition would not reasonably be expected to have a Company Material
Adverse Effect.
(b) All
Assets which are material to the Company’s business on a consolidated basis and
are held under leases or subleases by any of the Company Entities, are held
under valid Contracts enforceable in accordance with their respective terms
(except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or other Laws affecting the enforcement of
creditors’ rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the discretion
of the court before which any proceedings may be brought), and each such
Contract is in full force and effect.
(c) The
Assets of the Company Entities include all Assets required to operate the
business of the Company Entities in all material respects as presently
conducted.
| 5.10 |
Real
Property; Leased Real Property.
|
(a) The
Company has no Real Property.
(b) Section
5.10(b)
of the
Company Disclosure Schedules contains a true and correct list of each parcel
of
Leased Real Property. The Company or one of its Subsidiaries is the lessee
under
each of the Real Property Leases. Each Real Property Lease is in full force
and
effect and there is no existing Default by the Company or one of its
Subsidiaries or, to the Knowledge of the Company, any other party to such Real
Property Leases. Except as described in Section
5.10(b)
of the
Company Disclosure Schedules, the Company’s and its Subsidiaries’ leasehold
interest in the Real Property Leases is valid and enforceable, free and clear
of
any Liens except Permitted Liens, and is not subject to any deeds of trust,
assignments, subleases, or rights of any third parties known to or created
or
permitted by the Company other than the lessor thereof or any mortgagees of
such
lessors.
A true,
correct and complete copy of each Real Property Lease has been made available
to
Parent prior to the date hereof. Except as would not reasonably be expected
to
have, individually or in the aggregate, a Company Material Adverse Effect,
there
does not exist any pending or, to the Knowledge of the Company, threatened
condemnation or eminent domain proceedings that affect of the Leased Real
Property.
| 5.11 |
Intellectual
Property.
|
(a) Company
IP.
16
(i) Section
5.11(a)(i)
of the
Company Disclosure Schedules sets forth a true and complete list of all material
United States and non-United States applications and registrations for
Intellectual Property owned by the Company or its Subsidiaries as of the date
of
this Agreement. Except for any Permitted Liens, the Company or its Subsidiaries
own all right, title and interest in and to (x) each of the items set forth
on
Schedule
5.11(a)(i),
and (y)
all of the material United States and non-United States unregistered
Intellectual Property owned by the Company or its Subsidiaries (collectively,
the “Company
Owned IP”),
free
and clear of any liens or encumbrances.
(ii) Section
5.11(a)(ii)
of the
Company Disclosure Schedules sets forth a true and complete list of all material
Intellectual Property as to which the Company or its Subsidiaries holds a valid
and enforceable license to use such Intellectual Property, including using,
including or incorporating such Intellectual Property in or in connection with
the Company’s business and/or products (collectively, the “Company
Licensed IP”).
(iii) Neither
the Company nor any Company Subsidiary is in breach or default of any material
IP Agreement granting rights in and to the Company Owned IP and the Company
Licensed IP (collectively, the “Company
IP”),
each
of which is a valid and binding agreement of the Company or its Subsidiaries
and
is in full force and effect as to the Company or its Subsidiaries party thereto
and, to the Company’s Knowledge, as to each other party thereto, except as would
not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect, and the Closing will not affect the rights of the Company,
its
Subsidiaries, or any other third party under such material IP
Agreements.
(iv) Section
5.11(a)(iv)
of the
Company Disclosure Schedules sets forth a true and complete list of all material
Software included within the Company IP. All such Software is free of any
viruses and does not include any open source or public domain software or
code.
(b) The
Company IP does not infringe, misappropriate or otherwise violate the rights
of
any third party in such third party’s Intellectual Property. Except as disclosed
in Section
5.11(b)
of the
Company Disclosure Schedules, no proceedings have been asserted or are pending
or, to the Knowledge of the Company, threatened against the Company or any
of
its Subsidiaries (i) based upon, challenging, or seeking to deny or restrict
the
use by the Company or any of its Subsidiaries of any of the Company IP, (ii)
alleging that any of the Company IP infringes, misappropriates or otherwise
violates the Intellectual Property of any third party, or (iii) alleging that
any of the Company IP is being used by the Company or any of its Subsidiaries
in
conflict with the terms of any material IP Agreement, except for proceedings
which individually or in the aggregate would not reasonably be expected to
have
a Material Adverse Effect.
(c) Except
as
disclosed in Section
5.11(c)
of the
Company Disclosure Schedules, neither the Company nor any of its Subsidiaries
have asserted any claim (i) based upon, challenging, or seeking to deny or
restrict the use by any third party of any of the Company IP, (ii) alleging
that
any third party is infringing, misappropriating or otherwise violating the
Company IP, or (iii) alleging that any third party is using the Company IP
in
conflict with the terms of any material IP Agreement, except for proceedings
which individually or in the aggregate would not reasonably be expected to
have
a Material Adverse Effect.
17
(d) Except
as
disclosed in Section
5.11(d)
of the
Company Disclosure Schedules, every employee of any Company Entity is a party
to
a Contract which requires such employee to assign any interest in any
Intellectual Property developed in the course and scope of their employment
to
the Company or one of its Subsidiaries, and to keep confidential any trade
secrets, proprietary data, customer information or other business information
of
the Company and its Subsidiaries, and, to the knowledge of the Company, as
of
the date hereof no material violation of or non-compliance with any such
agreements has occurred. In addition, to the Knowledge of the Company, no such
employee is party to any Contract with any third party which requires such
employee to assign any interest in any Intellectual Property to any third party
or to keep confidential any trade secrets, proprietary data, customer
information, or other business information of any third Party.
(e) The
Company and its Subsidiaries have taken all steps reasonably necessary to
maintain the validity of the Company IP, including paying all necessary fees
and
making all necessary filings with the appropriate government entity, except
to
the extent that any failure to take such steps would not reasonably be expected
to have a Company Material Adverse Effect. The Closing will not disturb any
of
the Company IP, and following the Closing the Company will possess all of the
Company IP as they currently exist. The Company’s continued operation of its
business as presently conducted will not give rise to any claims that allege
that the operations of the Company’s business as presently conducted, including
the manufacture, use or sale of any product or service or the use of any process
now used or offered by the Company or any of its Subsidiaries, infringes,
violates, misappropriates or conflicts with any Intellectual Property of any
third party, or constitutes unfair competition with any third party, and no
royalty or other payment will accrue or be due following the Closing based
on
the continued operation of the business
as presently conducted.
The
Company IP includes all Intellectual Property required to operate the business
of the Company Entities in all material respects as presently
conducted.
| 5.12 |
Environmental
Matters.
|
Except
as
described in Section
5.12
of the
Company Disclosure Schedules or as would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect, (a) no
Company Entity is in violation of, or since December 31, 2003 has violated,
any
Environmental Law; (b) none of the properties currently or, to the
Knowledge of the Company, formerly owned, leased or operated by any Company
Entity (including surface and subsurface soils and surface and ground waters)
contains levels of Hazardous Materials that require investigation, removal,
remediation or corrective action under applicable Environmental Laws;
(c) no Company Entity has been the subject of any claim, suit, action,
proceeding, notice, order, investigation or request for information alleging
any
actual or potential violation of, or liability under any Environmental Law;
(d) each Company Entity has all permits, licenses and other authorizations
required under any Environmental Law for the operation of the Company
(“Environmental
Permits”);
(f) each Company Entity is, and since December 31, 2003 has been, in
compliance with its Environmental Permits; and (g) neither the execution of
this
Agreement nor the consummation of the Merger will require any investigation,
remediation or other action with respect to Hazardous Materials, or any notice
to or Consent of Regulatory Authorities or third parties, pursuant to any
applicable Environmental Law or Environmental Permit. The Company has furnished
to Parent all material reports, audits, assessments, investigations, studies
and
analyses relating to environmental conditions at properties owned, leased or
occupied by the Company or any Company Entity.
18
| 5.13 |
Compliance
with Laws.
|
Each
Company Entity has in effect all Permits necessary for it to own, lease or
operate its Assets and to carry on its business as now conducted, except for
those Permits the absence of which would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect, and there
has occurred no Default under any such Permit, other than Defaults which would
not reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect. No investigation or review by any federal, state or
local government or any Regulatory Authority with respect to the Company or
any
of its Subsidiaries is pending or, to the Knowledge of the Company, threatened,
other than those the outcome of which would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect. Except
as
disclosed in Section
5.13
of the
Company Disclosure Schedules:
(a) none
of
the Company Entities is, or at any time since December 31, 2003 has been, in
Default under any of the provisions of its certificate or articles of
incorporation or bylaws (or other governing instruments);
(b) each
of
the Company Entities is, and since December 31, 2003 has been, (i) in compliance
in all material respects with all applicable Laws (including the Health
Insurance Portability and Accountability Act of 1996 (as amended)) and Orders,
and (ii) in compliance with the terms of the Permits, except for failures to
comply with such Permits that would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect; or
(c) none
of
the Company Entities at any time since December 31, 2003, has received any
notification or communication from any agency or department of federal, state
or
local government or any Regulatory Authority (i) asserting that any Company
Entity is not, or may not be, in compliance with any Laws or Orders in all
material respects, (ii) threatening to revoke any Permits, the revocation
of which would reasonably be expected to have, individually or in the aggregate,
a Company Material Adverse Effect, or (iii) requiring any Company Entity to
enter into or Consent to the issuance of a cease and desist order, injunction
formal agreement, directive, commitment, or memorandum of understanding, or
to
adopt any board resolution or similar undertaking, which restricts materially
the conduct of its business or in any manner relates to its employment
decisions, its employment or safety policies or practices or would reasonably
be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect.
| 5.14 |
Labor
Relations.
|
Except
as
set forth in Section
5.14
of the
Company Disclosure Schedules, no Company Entity is the subject of any Litigation
asserting that it or any other Company Entity has committed an unfair labor
practice (within the meaning of the National Labor Relations Act or comparable
state Law) or other violation of state or federal labor Law, except as would
not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect, or seeking to compel it or any other Company Entity
to
bargain with any labor organization or other employee representative as to
wages
or conditions of employment, nor is any Company Entity party to any collective
bargaining agreement or subject to any bargaining order, injunction or other
Order relating to the Company’s relationship or dealings with its employees, any
labor organization or any other employee representative. No employee of any
Company entity is represented by any labor organization, union or association.
There is no strike, slowdown, lockout or other job action or labor dispute
involving any Company Entity pending or, to the Knowledge of Company, threatened
and there has been no such actions or disputes in the past five years. Except
as
set forth in Section
5.14
of the
Company Disclosure Schedules or as required by Law, to the Knowledge of the
Company, in the past five years, there have not been any attempt by any Company
Entity employees or any labor organization or other employee representative
to
organize or certify a collective bargaining unit or to engage in any other
union
organization activity with respect to the workforce of any Company Entity.
Except as set forth in Section
5.14
of the
Company Disclosure Schedules or as required by applicable Law, the employment
of
each employee of each Company Entity is terminable at will by the relevant
Company Entity without any penalty, liability or severance obligation incurred
by any Company Entity. Except as set forth in Section
5.14
of the
Company Disclosure Schedules, no Company Entity will owe any amounts to any
of
its employees or independent contractors as of the Closing Date for change
of
control payments or severance obligations.
19
| 5.15 |
Employee
Benefit Plans.
|
(a) Section
5.15(a)
of the
Company Disclosure Schedules sets forth a list of each Employee Benefit Plan
currently adopted, maintained by, sponsored in whole or in part by, or
contributed to by any Company Entity or ERISA Affiliate thereof or under which
the Company has any obligation or Liability, contingent or otherwise
(collectively, the “Company
Benefit Plans”).
(b) The
Company has delivered or made available to Parent prior to the execution of
this
Agreement true and complete copies of the Employee Benefit Plans including
(i)
all trust agreements or other funding arrangements for such Employee Benefit
Plans, (ii) the most recent determination letter and all rulings, opinion
letters, information letters or advisory opinions issued by the United States
Internal Revenue Service (“IRS”)
or the
United States Department of Labor (“DOL”)
during
this calendar year or any of the preceding three calendar years, (iii) any
filing or documentation (whether or not filed with the IRS) where corrective
action was taken in connection with the IRS EPCRS program set forth in Revenue
Procedure 2006-27 (or its predecessor or successor rulings), (iv) annual reports
or returns, audited or unaudited financial statements, actuarial reports and
valuations prepared for any Employee Benefit Plan for the current plan year
to
the extent applicable and the three preceding plan years and (v) the most recent
summary plan descriptions and any material modifications thereto.
(c) Each
Company Benefit Plan is in compliance with the terms of such Company Benefit
Plan and the Internal Revenue Code, ERISA and all other applicable Laws in
all
material respects. Each Company Benefit Plan that is intended to be qualified
under Section 401(a) of the Internal Revenue Code has received a favorable
determination letter from the IRS that is still in effect. To the Knowledge
of
the Company, nothing has occurred since the date of the applicable determination
letter that could reasonably be expected to have a material adverse effect
on
the qualified status of any such plan or the exempt status of any applicable
trust. The Company has not received any communication (written or unwritten)
from any Regulatory Authority questioning or challenging the compliance of
any
Company Benefit Plan with applicable Laws. Within the past three calendar years,
no Company Benefit Plan has been, nor is any Company Benefit Plan currently
being, audited by a Regulatory Authority.
20
(d) There
has
been no written, or to the Company’s Knowledge, oral representation or
communication with respect to any aspect of the Employee Benefit Plans made
to
employees of the Company which is not substantially in accordance with the
written or otherwise preexisting material terms and provisions of such plans.
Neither the Company nor any employee of the Company who is an administrator
or
fiduciary of any Company Benefit Plan (or, to the Company’s Knowledge, any agent
of any of the foregoing) has engaged in any transaction, or acted or failed
to
act in any manner, which could subject the Company or Parent to any direct
or
indirect material Liability (by indemnity or otherwise) for breach of any
fiduciary, co-fiduciary or other duty under ERISA. There are no material
unresolved claims or disputes under the terms of, or in connection with, the
Company Benefit Plans other than claims for benefits which are payable in the
ordinary course of business and no material action, proceeding, prosecution,
inquiry, hearing or investigation has been commenced with respect to any Company
Benefit Plan.
(e) Except
as
disclosed in Section
5.15(e)
of the
Company Disclosure Schedules, all Company Benefit Plan documents and annual
reports or returns, audited or unaudited financial statements, actuarial
valuations, summary annual reports, and summary plan descriptions issued with
respect to the Company Benefit Plans are correct and complete in all material
respects, have been timely filed with the IRS, the DOL and distributed to
participants of the Company Benefit Plans (as required by Law) and there have
been no material changes in the information set forth therein (in each case,
except as may be required by Law).
(f) No
Company Entity has, and, to the Company’s Knowledge, no other “party in
interest” (as defined in ERISA Section 3(14)) or “disqualified person” (as
defined in Internal Revenue Code Section 4975(e)(2)) of any Company Benefit
Plan
has, engaged in any nonexempt “prohibited transaction” (described in Internal
Revenue Code Section 4975(c) or ERISA Section 406).
(g) The
Company and its ERISA Affiliates have never sponsored, maintained, contributed
to, or been obligated under ERISA or otherwise to contribute to (i) a “defined
benefit plan” (as defined in ERISA Section 3(35) or Internal Revenue Code
Section 414(j)), (ii) a “multiemployer plan” (as defined in ERISA Sections 3(37)
or 4001(a)(3)) or (iii) a “multiple employer plan” (meaning a plan sponsored by
more than one employer within the meaning of ERISA Sections 4063 or 4064 or
Internal Revenue Code Section 413(c)). The Company and its ERISA Affiliates
have
not incurred and, to the Company’s Knowledge, there are no circumstances under
which any of such Persons could reasonably incur, any Liability under Title
IV
of ERISA.
(h) Except
as
disclosed in Section
5.15(h)
of the
Company Disclosure Schedules, no Company Entity has any Liability for retiree
health or life benefits under any of the Company Benefit Plans except (i) to
the
extent required under Part 6 of Title I of ERISA or Internal Revenue Code
Section 4980B or state or local Law or (ii) disability benefits under a welfare
plan that is fully covered by insurance. All health benefits currently provided
to an employee of a Company Entity are provided under an accident or health
insurance policy.
21
(i) Except
as
disclosed in Section
5.15(i)
of the
Company Disclosure Schedules, neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will,
either alone or in combination with another event, (i) entitle any person to
any
benefit under any Company Benefit Plan, (ii) increase any benefits otherwise
payable under any Company Benefit Plan, (iii) result in any acceleration of
the
time of payment or vesting of any such benefit or (iv) entitle any individual
to
payments that would constitute “excess parachute payments” within the meaning of
Section 280G of the Internal Revenue Code.
(j) The
actuarial present values of all accrued deferred compensation entitlements
(including entitlements under any executive compensation, supplemental
retirement, or employment agreement) of employees and former employees of any
Company Entity and their respective beneficiaries have been fully reflected
in
all material respects on the Company Financial Statements to the extent required
by, and in accordance with, GAAP.
(k) All
current employees of each Company Entity that are participating in (or eligible
to participate in) any Company Benefit Plan are common-law employees of a
Company Entity. Any individual who performs services for a Company Entity and
is
not treated as an employee for federal income Tax purposes by such Company
Entity is not an employee for any purpose including for Tax withholding or
Company Benefit Plan purposes.
(l) Each
“non-qualified deferred compensation plan” (as defined in Section 409A(d)(1) of
the Code) of the Company is in reasonable good faith compliance with Section
409A of the Internal Revenue Code and the published applicable guidance
thereunder. Except as expressly set forth on Section
5.15(l)
of the
Company Disclosure Schedules, no Company Benefit Plan that is a nonqualified
deferred compensation plan (but solely to the extent attributable to deferred
compensation that was earned and vested (within the meaning of Code Section
409A
and the published applicable guidance thereunder) as of December 31, 2004)
has
been “materially modified” (within the meaning of IRS Notice 2005-1) at any time
after October 3, 2004.
| 5.16 |
Material
Contracts.
|
22
Except
as
disclosed in Section
5.16
of the
Company Disclosure Schedules, as of the date of this Agreement, none of the
Company Entities, nor any of their respective material Assets, businesses or
operations, is a party to, or is bound or affected by, or receives benefits
under, (i) any employment, severance, termination, consulting or retirement
Contract that (A) restricts the Company’s or any of its Subsidiaries’ right to
terminate the employment of any employee without cause or without a specified
notice period or (B) obligates the Company or any of its Subsidiaries to pay
severance to any employee of the Company or any of its Subsidiaries upon
termination of such employee’s employment with the Company or any of its
Subsidiaries or to pay any Person a bonus or other remuneration upon a change
of
control or similar event (including the transactions contemplated by this
Agreement), (ii) any Contract relating to the borrowing of money or
extension of credit by any Company Entity or the guarantee by any Company Entity
of any such obligation (other than Contracts evidencing trade payables and
Contracts relating to borrowings or guarantees made in the ordinary course
of
business), (iii) any Contract which prohibits or restricts any Company
Entity from engaging in any business activities in any geographic area, line
of
business or otherwise in competition with any other Person, (iv) any other
Contract or amendment thereto that would be required to be filed under Items
601(b)(4), (9) and (10) of Regulation S-K promulgated by the SEC as an exhibit
to a Form 10-K filed by the Company with the SEC as of the date of this
Agreement, (v) any Contract involving annual expenditures or payments to or
from
any Company Entity in excess of $75,000 or any Contract not cancelable without
penalty by any Company Entity within three years, (vi) any Contract for the
acquisition sale, lease or license of material properties or assets of any
Company Entity outside the ordinary course of business consistent with past
practice (by merger, purchase or sale of Assets or stock or otherwise), (vii)
any Contract evidencing obligations secured by a Lien, or interest rate,
currency or commodities hedging activities, in each case in connection with
which the aggregate actual or contingent obligations of the Company Entities
under such Contract are greater than $75,000, (viii) any material Contract
pursuant to which any Company Entity is subject to or the beneficiary of
continuing indemnification, “earn-out,” or other contingent payment obligations,
other than such Contracts entered into in the ordinary course of business
consistent with past practice, (ix) any Contract between or among a Company
Entity, on the one hand, and any of the Company Entities, on the other hand,
other than Company Benefit Plans or other compensation plans or immaterial
agreements, (x) any Contract relating to a material joint venture, material
partnership or other arrangement that is material involving a sharing of
profits, losses, costs or liabilities with another person, (xi) any Contract
with respect to Company Common Stock and (xii) any Contract that relates to
capital expenditures by the Company in excess of $75,000 (together with all
Contracts referred to in Sections
5.10
and
5.15(a),
the
“Company
Contracts”).
With
respect to each Company Contract and except as disclosed in Section
5.16
of the
Company Disclosure Schedules: (A) the Contract is in full force and effect
and is legal, valid and binding on each Company Entity party thereto and, to
the
Knowledge of the Company, each other party thereto, enforceable against such
parties in accordance with their terms, except to the extent that enforcement
of
the rights and remedies created thereby is subject to bankruptcy, insolvency,
reorganization, moratorium, and other similar laws of general application
affecting the rights and remedies of creditors and to general principles of
equity; (B) no Company Entity is in Default thereunder, other than Defaults
which would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect; (C) no Company Entity has
repudiated or waived any material provision of any such Contract; and
(D) no other party to any such Contract is, to the Knowledge of Company, in
Default in any respect, other than Defaults which would not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect, or has repudiated or waived any material provision thereunder. A true,
correct and complete copy of each Company Contract has been provided or made
available to Parent prior to the date hereof.
| 5.17 |
Government
Contracts.
|
(a) Section
5.17(a)
of the
Company Disclosure Schedules sets forth a complete and accurate list of all
contracts entered into since December 31, 2003 between the Company and/or any
Company Subsidiary and any Regulatory Authority that provide or provided for
annual payments in excess of $75,000 to any of the Company Entities
(“Government
Contracts”),
true,
complete and correct copies of which have been made available to Parent.
23
(b) Except
as
set forth in Section
5.17(b)
of the
Company Disclosure Schedules, neither the Company nor any Company Subsidiary
is
a party to any current material dispute relating to a Government Contract.
Except as set forth on Section
5.17(b)
of the
Company Disclosure Schedules, neither the Company nor any Company Subsidiary
has
received notice from the Regulatory Authority that is counterparty in any such
Government Contract (“Official
Notice”)
that
the Company or any Company Subsidiary has breached or violated any applicable
Law, certification, representation, clause, provision or requirement with
respect to any Government Contract. There is no current or, to the Knowledge
of
the Company, threatened Litigation against the Company or any Company Subsidiary
arising out of or relating to any Government Contract. Neither the Company
nor
any Company Subsidiary has received an Official Notice that constitutes a cure
notice, a show cause notice, a suspension of work notice or a stop work order
with respect to any Government Contract.
(c) Except
as
set forth in Section
5.17(c)
of the
Company Disclosure Schedules, neither any Regulatory Authority nor any other
Person has given Official Notice to the Company or any Company Subsidiary that
the Company, any Company Subsidiary, or any of its or their directors, officers,
agents or employees have breached or violated any applicable Law, certification
or regulation relating to any Government Contract.
(d) With
respect to each Government Contract, except as set forth in Section
5.17(d)
of the
Company Disclosure Schedules, neither the Company nor any Company Subsidiary
has
been challenged by any Regulatory Authority as to any cost incurred by the
Company or any Company Subsidiary and no such cost been the subject of any
audit
or investigation by any Regulatory Authority, or disallowed by any Regulatory
Authority. No payment due to the Company or any Company Subsidiary relating
to
any Government Contract has been withheld or set off (except to the extent
such
withholding or setting off is in the ordinary course of business), nor has
any
claim been made by any Regulatory Authority to withhold or set off (except
to
the extent such withholding or setting off is in the ordinary course of
business) money due to the Company or any Company Subsidiary under a Government
Contract.
(e) Except
as
set forth in Section
5.17(e)
of the
Company Disclosure Schedules, the Company and the Company Subsidiaries have
complied in all material respects with the terms and conditions of each
Government Contract, including all clauses, provisions and requirements
incorporated expressly, by reference or by operation of Law. The Company and
the
Company Subsidiaries have, with respect to all Government Contracts (i) complied
in all material respects with all certifications and representations it has
executed, acknowledged or set forth with respect to each such Government
Contract and (ii) submitted certifications and representations with respect
to
each such Government Contract that were in all material respects accurate,
current and complete when submitted, and were properly updated in all material
respects to the extent required by Law or the applicable Government Contract,
except where failure to submit any such certificate or representation would
not
reasonably be expected to have a Company Material Adverse Effect.
(f) Except
as
set forth in Section
5.17(f)
of the
Company Disclosure Schedules, neither the Company nor any Company Subsidiary
has
received Official Notice of any warranty claims relating to any Government
Contract other than in the ordinary course of business.
24
(g) Neither
the Company nor any Company Subsidiary has received Official Notice of any
unfavorable past performance assessments, evaluations or ratings relating to
any
Government Contract.
(h) Except
as
set forth in Section
5.17(h)
of the
Company Disclosure Schedules, no Government Contracts are subject to any right
of set off, except as provided under applicable Law. Neither the Company nor
any
Company Subsidiary has received any written Official Notice that monies due
under any Government Contract are or may be subject to withholding or set
off.
(i) Except
as
set forth in Section
5.17(i)
of the
Company Disclosure Schedules, during the past three (3) years, neither the
Company nor any Company Subsidiary has been or is now being audited or, to
the
Knowledge of the Company, investigated, by any Regulatory Authority in respect
of any Government Contract.
(j) Neither
the Company, the Company Subsidiaries, nor, to the Knowledge of the Company,
any
of the Company’s or any Company Subsidiary’s officers, directors or employees,
has knowingly or recklessly provided to any Person any materially false or
misleading information with respect to the Company, the Company Subsidiaries,
or
any of its or their officers, directors, equity holders or employees, in
connection with the procurement of, performance under or renewal of, any
Government Contract.
| 5.18 |
Customer
and Supplier
Relationships.
|
(a) Section
5.18
of the
Company Disclosure Schedules sets forth the fifty (50) largest customers by
dollar volume of the Company (“Customers”),
and
the ten (10) largest suppliers by dollar value of the Company (“Suppliers”),
in
each case during the Company’s fiscal year 2006 as of the date of this
Agreement.
(b) Except
as
set forth in Section
5.18(b)
of the
Company Disclosure Schedules, there exists no actual or, to the Knowledge of
the
Company, threatened termination, cancellation or limitation of, or any change
in, the business relationship that any of the Customers or Suppliers has with
the Company or any Company Subsidiary that has had, or would reasonably be
expected to have, a Company Material Adverse Effect. To the Knowledge of the
Company, no Customer or Supplier has experienced any work stoppage or other
circumstance or condition that has had or would reasonably be expected to have
a
Company Material Adverse Effect or that has had, or would reasonably be expected
to have, a material adverse effect on the Company's or any Company Subsidiary's
future relationship with any such Customer or Supplier. There are no pending
material disputes or controversies between the Company or any Company Subsidiary
and any Customer or Supplier. No Customer of the Company or any Company
Subsidiary has any right to any credit or refund for products sold or services
rendered or to be rendered by the Company or any Company Subsidiary pursuant
to
any Contract, understanding or practice of the Company or any Company Subsidiary
other than pursuant to the normal course return policy of the Company or any
Company Subsidiary.
25
| 5.19 |
Legal
Proceedings.
|
Section
5.19
of the
Company Disclosure Schedules sets forth, as of the date of this Agreement,
a
complete list of all Litigation instituted or pending, or, to the Knowledge
of
the Company, threatened against any Company Entity, none of which
(i) involves, in any individual case, a claim for monetary damages in
excess of $100,000, (ii) would reasonably be expected to have, individually
or in the aggregate, a Company Material Adverse Effect or (iii) would
prohibit or materially restrict the ability of the Company Entities to operate
their consistent with past practice, nor are there any Orders outstanding
against any Company Entity that would reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse
Effect.
| 5.20 |
Insurance.
|
Section
5.20
of the
Company Disclosure Schedules sets forth, as of the date of this Agreement,
a
complete list of all material insurance policies owned or held by the Company
Entities. With respect to each such material insurance policy: (i) the policy
is
legal, valid and binding and enforceable in accordance with its terms and,
except for policies that have expired under their terms in the ordinary course,
is in full force and effect, in each case in all material respects;
(ii) all premiums due and payable under such policies have been fully paid
to date, (iii) no Company Entity is in material breach or Default under the
policy and (iv) no notice of cancellation, termination or modification has
been
received other than in connection with ordinary renewals.
| 5.21 |
State
Takeover Laws.
|
Each
Company Entity has taken all necessary action to exempt the execution, delivery
and performance of this Agreement and the Voting Agreement, and the consummation
of the Merger and the other transactions contemplated by this Agreement and
the
Voting Agreement from, or if necessary to challenge the validity or
applicability of, any applicable “moratorium,” “fair price,” “business
combination,” “control share,” or other anti-takeover Laws, including Section
203 of the DGCL (collectively, “Takeover
Laws”).
| 5.22 |
No
Brokers.
|
Except
for Xxxxxxx Xxxxx & Company, LLC (“Xxxxxxx
Xxxxx”)
and
its Affiliates (the amounts of which have been disclosed to Parent prior to
the
date hereof), no Company Entity has entered into any agreement or incurred
any
obligation, directly or indirectly, for the payment of any broker’s or finder’s
fee or commission, or any other similar payment to any Person in connection
with
this Agreement or the transactions contemplated hereby, and no Company Entity
is
otherwise obligated to pay any such fee, commission or other payment, and the
Company has no Knowledge of any basis for any claim by any Person for the
payment of such fee, commission or other payment.
| 5.23 |
Opinion
of Financial Advisor.
|
The
Board
of Directors of the Company (or the Special Committee) has received the executed
opinion letter of Xxxxxxx Xxxxx or its Affiliate, dated the date of this
Agreement (the “Fairness
Opinion”),
to
the effect that the Merger Consideration is fair, from a financial point of
view, to holders of Company Common Stock, and an execution copy of such Fairness
Opinion has been provided to Parent and the Company has not been informed of
any
changes, amendments, supplements, or withdrawals to be made with respect to
the
Fairness Opinion. The Company has been authorized by Xxxxxxx Xxxxx to permit
the
inclusion of the Fairness Opinion in its entirety and/or references thereto
in
the Proxy Statement, so long as such inclusion is in form and substance
reasonably satisfactory to Xxxxxxx Xxxxx and its counsel.
26
| 5.24 |
Board
Recommendation.
|
The
Board
of Directors of the Company, upon the unanimous vote of all members present
at a
meeting duly called and held, has (i) determined that this Agreement and
the other Transaction Documents and the transactions contemplated hereby and
thereby, including the Merger, are advisable, are
fair
to and in the best interests of the Company and its stockholders and has
approved, adopted and declared advisable this Agreement the other Transaction
Documents and the transactions contemplated hereby and thereby, (ii)
resolved to recommend that the holders of the shares of Company Common Stock
approve and adopt this Agreement and the other Transaction Documents and approve
the Merger (the “Company
Board Recommendation”)
and
(iii) directed that this Agreement be submitted to the holders of Company Common
Stock for their adoption. The Special Committee has been validly and duly formed
by the Board and the Special Committee is comprised of the following members
of
the Board of Directors of the Company: Xxxxx
Xxxxxxxx, Xxxx Xxxxxxxxx, Xxxxx Xxxxxxx, and Xxxxxx Xxxxxxxx.
| 5.25 |
Charter
Provisions.
|
Each
Company Entity has taken all action so that the entering into of this Agreement
and the other Transaction Documents and the consummation of the Merger and
the
other transactions contemplated hereby and thereby do not and will not result
in
the grant of any rights to any Person under the certificate of incorporation,
bylaws or other governing instruments of any Company Entity or restrict or
impair the ability of Parent or any of its Subsidiaries to vote, or otherwise
to
exercise the rights of a stockholder with respect to, shares of any Company
Entity that may be directly or indirectly acquired or controlled by
them.
| 5.26 |
Information
to be Supplied.
|
None
of
the information supplied or to be supplied by any Company Entity or any
Affiliate thereof for inclusion in the Proxy Statement to be mailed to the
Company stockholders in connection with the Stockholders’ Meeting, the Schedule
13E-3, if applicable, and any other documents to be filed with the SEC or any
other Regulatory Authority in connection with the transactions contemplated
hereby, will, at the respective time such documents are filed, and with respect
to the Proxy Statement, when filed and when first mailed to the stockholders
of
the Company, be false or misleading with respect to any material fact, or omit
to state any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading, or, in the case of the Proxy Statement and the Schedule
13E-3, if applicable, or any amendment thereof or supplement thereto, at the
time of the Stockholders’ Meeting, be false or misleading with respect to any
material fact, or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of
any
proxy for the Stockholders’ Meeting; provided that no representation is made by
the Company with respect to statements made or incorporated by reference therein
based on information supplied solely by Parent or Merger Sub for inclusion
or
incorporation by reference.
27
| 5.27 |
Receivables
and Payables.
|
(a) All
the
accounts receivable and notes receivable owing to the Company and its
Subsidiaries as of the date of this Agreement constitute, and as of the Closing
will constitute, valid and enforceable claims arising from bona fide
transactions in the ordinary course of business, and there are no known or
asserted claims, refusals to pay or other rights of set-off against any thereof
other than such as have arisen or will arise in the ordinary course of business
and for which adequate reserves have been established in the Company Financial
Statements. Except as set forth on Section
5.27(a)
of the
Company Disclosure Schedules, as of the date of this Agreement, (i) all accounts
and notes receivable are good and collectible in the ordinary course of business
consistent with past practice at the aggregate recorded amounts thereof net
of
such reserves as have been established in the Company Financial Statements;
(ii)
no account debtor or note debtor is delinquent in its payment by more than
ninety (90) days; (iii) no account debtor or note debtor has refused or, to
the
Knowledge of the Company, threatened to refuse, to pay its obligations for
any
reason other than as adequately reserved for in the Company Financial
Statements; (iv) to the Knowledge of the Company, no account debtor or note
debtor is insolvent or bankrupt; (v) no account receivable or note receivable
has been pledged to any third party by the Company or its Subsidiaries and
(vi)
to the Knowledge of the Company, no customer has changed or intends to change
its accounts payable policy in a manner adverse to the Company or its
Subsidiaries.
(b) All
accounts payable and notes payable by the Company and its Subsidiaries to third
parties as of the date of this Agreement arose, and as of the Closing will
have
arisen, in the ordinary course of business, and, except as set forth on
Section
5.27(b)
of the
Company Disclosure Schedules there is no such account payable or note payable
delinquent in its payment, except those contested in good faith and for which
adequate reserves have been established in the Company Financial Statements.
Neither the Company nor its Subsidiaries has altered its payment policies or
practices since December 31, 2005.
| 5.28 |
Related
Party Transactions.
|
There
are
no outstanding amounts payable to or receivable from, and no Company Entity
is
otherwise a creditor or debtor to, or party to any contract, agreement or
transaction with any beneficial owner of 5% or more of the Company Common Stock
or any director, officer, employee or Affiliate of the Company Entities, or
to
the Knowledge of the Company, any relative of any of the foregoing, except
for
employment or compensation agreements or arrangements with directors, officers
and employees made in the ordinary course of business consistent with past
practice.
| 5.29 |
Listing
and Maintenance Requirements.
|
The
Company Common Stock is registered pursuant to Section 12(g) of the Exchange
Act, and the Company has taken no action designed to, or likely to have the
effect of, terminating the registration of the Company Common Stock under the
Exchange Act nor has the Company received any notification that the SEC is
contemplating terminating such registration. Except as specified in the Company
SEC Reports or as set forth on Section 5.29 of the Company Disclosure Schedules,
the Company has not, in the two (2) years preceding the date hereof, received
notice from any Trading Market on which the Common Stock is or has been listed
or quoted to the effect that the Company is not in compliance with the listing
or maintenance requirements of such Trading Market. The Company is, and has
no
reason to believe that it will not in the foreseeable future continue to be,
in
compliance with all such listing and maintenance requirements for continued
listing of the Company Common Stock on the applicable Trading Market, including
the eligibility rules thereunder.
28
| 5.30 |
Accountants.
|
The
Company's accountants are Xxxxxx & Xxxxxxxx LLP. Xxxxxx & Xxxxxxxx LLP,
who the Company expects will express their opinion with respect to the financial
statements to be included in the Company's Annual Report on Form 10-K for the
year ending December 31, 2006, is an independent registered public accounting
firm as required by the Securities Act and registered with the Public Company
Accounting Oversight Board. The Company expects such accounting firm to consent
to the inclusion of their opinion on such financial statements into the
registration statement and the prospectus which forms a part
thereof.
| 5.31 |
No
Manipulation of Stock.
|
The
Company has not taken and will not take, any action designed to or that could
reasonably be expected to cause or result in manipulation of the price of the
Company Common Stock to facilitate the transactions contemplated hereby or
the
sale or resale of the shares of Company Common Stock.
ARTICLE
VI
REPRESENTATIONS
AND WARRANTIES OF PARENT AND MERGER SUB
Parent
and Merger Sub hereby represent and warrant to the Company as
follows:
| 6.1 |
Organization,
Standing and Power.
|
Each
of
Parent and Merger Sub is a corporation duly organized, validly existing and
in
good standing under the Laws of its jurisdiction of incorporation, and has
the
corporate power and authority to carry on its business as now conducted and
to
own, lease and operate its Assets. Each of Parent and Merger Sub is duly
qualified or licensed to transact business as a foreign corporation in good
standing in the States of the United States and foreign jurisdictions where
the
character of its Assets or the nature or conduct of its business requires it
to
be so qualified or licensed, except for such jurisdictions in which the failure
to be so qualified or licensed would not reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect. The
certificate of incorporation and bylaws of each of Parent and Merger Sub have
been made available to the Company for its review and are true and complete
in
all material respects as in effect as of the date of this Agreement and
accurately reflect in all material respects all amendments thereto.
29
| 6.2 |
Authority;
No Breach By Agreement.
|
(a) Each
of
Parent and Merger Sub has the corporate power and authority necessary to
execute, deliver and perform this Agreement and the other Transaction Documents,
and to consummate the transactions contemplated hereby and thereby. The
execution, delivery and performance of this Agreement and the other Transaction
Documents and the consummation of the transactions contemplated hereby and
thereby, including the Merger, have been duly and validly authorized by all
necessary corporate action in respect thereof on the part of Parent and Merger
Sub. This Agreement and the other Transaction Documents represent a legal,
valid
and binding obligation of each of Parent and Merger Sub, enforceable against
Parent and Merger Sub in accordance with their respective terms (except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or other Laws affecting the enforcement of
creditors’ rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the discretion
of the court before which any proceedings may be brought).
(b) Neither
the execution and delivery of this Agreement and the other Transaction Documents
by each of Parent and Merger Sub, nor the consummation by each of Parent and
Merger Sub of the transactions contemplated hereby and thereby, nor compliance
by each of Parent and Merger Sub with any of the provisions hereof and thereof,
will (i) conflict with or result in a breach of any provision of Parent’s
certificate of incorporation or bylaws, (ii) conflict with or result in a breach
of any provision of the articles of incorporation or bylaws or equivalent
organizational documents of any Parent Subsidiary (including Merger Sub), or
(iii) constitute or result in a Default under, or require any Consent
pursuant to, or result in the creation of any Lien (other than pursuant to
the
credit agreement entered into in connection with the Debt Financing or
Alternative Financing) on any Asset of any Parent Entity (with or without notice
or lapse of time, or both) under, any Contract or Permit of any Parent Entity,
where such Default or Lien, or any failure to obtain such Consent, would
reasonably be expected to have, individually or in the aggregate, a Parent
Material Adverse Effect, or (iv) subject to receipt of the requisite
Consents referred to in Section
9.1(b),
constitute or result in a Default under, or require any Consent pursuant to,
any
Law or Order applicable to any Parent Entity or any of their respective material
Assets.
(c) Other
than in connection or compliance with the provisions of the Securities Laws,
applicable state corporate and securities Laws, and other than Consents required
from Regulatory Authorities, and other than notices to or filings with the
IRS
or the Pension Benefit Guaranty Corporation with respect to any employee benefit
plans, or under the HSR Act and any other applicable foreign pre-merger
notification or competition laws, rules or regulations, and other than Consents,
filings or notifications which, if not obtained or made, are not reasonably
likely to have, individually or in the aggregate, a Parent Material Adverse
Effect, no notice to, filing with, or Consent of, any public body or authority
is necessary for the consummation by Parent of the Merger and the other
transactions contemplated in this Agreement.
| 6.3 |
Legal
Proceedings.
|
There
is
no Litigation instituted or pending, or, to the Knowledge of Parent, threatened
against any Parent Entity that is reasonably likely to have, individually or
in
the aggregate, a Parent Material Adverse Effect, nor are there any Orders
outstanding against any Parent Entity that is reasonably likely to have,
individually or in the aggregate, a Parent Material Adverse Effect.
30
| 6.4 |
Stock
Ownership.
|
Neither
Parent nor Merger Sub is, nor at any time during the last three years has been,
an “interested stockholder” of the Company (as defined in Section 203 of the
DGCL).
| 6.5 |
No
Brokers.
|
No
Parent
Entity has entered into any agreement or incurred any obligation, directly
or
indirectly, for the payment of any broker’s or finder’s fee or commission, or
any other similar payment to any Person in connection with this Agreement or
the
transactions contemplated hereby, and no Parent Entity is otherwise obligated
to
pay any such fee, commission or other payment, and Parent has no knowledge
of
any basis for any claim by any Person for the payment of such fee, commission
or
other payment.
| 6.6 |
Information
to be Supplied.
|
None
of
the information supplied or to be supplied by any Parent Entity or any Affiliate
thereof for inclusion in the Proxy Statement to be mailed to the Company
stockholders in connection with the Stockholders’ Meeting, the Schedule 13E-3,
if applicable, and any other documents to be filed with the SEC or any other
Regulatory Authority in connection with the transactions contemplated hereby,
will, at the respective time such documents are filed, and with respect to
the
Proxy Statement, when filed and when first mailed to the stockholders of the
Company, be false or misleading with respect to any material fact, or omit
to
state any material fact required to be stated therein or necessary to make
the
statements therein, in light of the circumstances under which they were made,
not misleading, or, in the case of the Proxy Statement and the Schedule 13E-3,
if applicable, or any amendment thereof or supplement thereto, at the time
of
the Stockholders’ Meeting, be false or misleading with respect to any material
fact, or omit to state any material fact necessary to correct any statement
in
any earlier communication with respect to the solicitation of any proxy for
the
Stockholders’ Meeting.
| 6.7 |
Financing.
|
(a) The
Parent has delivered to the Company a true, complete and correct copy
of the debt commitment letter, dated as of the date hereof, from Xxxxx
Fargo Foothill, Inc. (the “Lender”)
to an
Affiliate of Parent (the “Debt
Commitment Letter”)
pursuant to which the Lender has committed, upon the terms and subject to the
conditions set forth therein, to provide credit facilities in the amount
of $55.0 million (including a $5.0 million revolver) in connection with the
transactions contemplated by this Agreement.
(b) The
Debt
Commitment Letter, in the form delivered to the Company, is in full force and
effect and constitutes a legal, valid and binding obligation of Parent to
the extent of its terms and, to the knowledge of Parent, the Lender. All
commitment fees required to be paid thereunder have been and will be duly paid
in full when due. As of the date hereof, there is no existing default or breach
on the part of Parent, or, to the Parent’s knowledge, the Lender. As of the date
hereof, Parent does not believe that it will be unable to satisfy in a timely
basis any term or condition of Closing to be satisfied by it contained in the
Debt Commitment Letter. The aggregate proceeds contemplated by the Debt
Commitment Letter, if and when funded immediately prior to the Effective Time
in
accordance with the Debt Commitment Letter, together with the proceeds of the
Equity Financing, Rollover Contribution or any other exchange similar to the
Rollover Contribution and available unrestricted cash of the Parent and
Merger Sub, will be sufficient for Parent and the Merger Sub to pay the
aggregate Merger Consideration, the aggregate Option Settlement Payment and
the
aggregate Warrant Settlement Payment, and the fees and expenses incurred in
connection with
the
transactions contemplated thereby.
The
obligation of the Lender to fund the commitments under the Debt Commitment
Letter is not subject to any conditions other than as set forth or referred
to
in the Debt Commitment Letter.
31
ARTICLE
VII
CONDUCT
OF BUSINESS PENDING CONSUMMATION
| 7.1 |
Affirmative
Covenants of the Company.
|
From
the
date of this Agreement until the earlier of (i) the Effective Time or (ii)
the
termination of this Agreement, unless the prior written consent of Parent shall
have been obtained, and except as otherwise expressly contemplated herein or
as
required by Law, the Company covenants and agrees that it shall, and shall
cause
each of its Subsidiaries to, (A) operate its business only in the ordinary
course consistent with past practice, (B) use reasonable best efforts to
preserve intact its business organization and material Assets and keep available
the services of their present officers and employees, and (C) not knowingly
take any action which would (1) materially adversely affect the ability of
any Party to obtain any Consents required for the transactions contemplated
hereby, or (2) materially adversely affect the ability of any Party to
perform its covenants and agreements under this Agreement.
| 7.2 |
Negative
Covenants of the Company.
|
From
the
date of this Agreement until the earlier of (i) the Effective Time or (ii)
the
termination of this Agreement, unless the prior written consent of Parent shall
have been obtained, and except as otherwise expressly required or contemplated
herein or as required by Law, the Company covenants and agrees that it will
not
do or agree or commit to do, or permit any of its Subsidiaries to do or agree
or
commit to do, any of the following:
(a) amend
the
certificate of incorporation, bylaws or other governing instruments of any
Company Entity;
(b) (i)
incur, create or assume any additional debt obligation or other obligation
for
borrowed money (other than indebtedness between the Company and any of its
wholly-owned Subsidiaries or between any of such wholly-owned Subsidiaries)
in
excess of an aggregate of $75,000 (for the Company Entities on a consolidated
basis) or guarantee any indebtedness of another Person or issue or sell any
debt
securities or guarantee any debt securities of another Person, or (ii) impose,
or suffer the imposition, on any material Asset of any Company Entity of any
material Lien or permit any such Lien to exist (other than in connection with
Permitted Liens or Liens in effect as of the date hereof that are disclosed
in
Section
7.2(b)
of the
Company Disclosure Schedules);
32
(c) repurchase,
redeem or otherwise acquire or exchange (other than exchanges or exercises
in
the ordinary course under employee benefit plans), directly or indirectly,
any
shares or any securities convertible into or exchangeable for any shares, of
the
capital stock of any Company Entity;
(d) except
as
contemplated in this Agreement, or pursuant to the exercise of stock options
or
the conversion of other convertible securities outstanding as of the date hereof
and pursuant to the terms thereof in existence on the date hereof or as revised
pursuant to the terms of Section
3.4
of this
Agreement, or as disclosed in Section
7.2(d)
of the
Company Disclosure Schedules, issue, grant, sell, pledge, encumber, authorize
the issuance of, enter into any Contract to issue, sell, pledge, encumber,
or
authorize the issuance of, or otherwise permit to become outstanding, any
additional shares of Company Common Stock or any other capital stock of any
Company Entity, or any stock appreciation rights, or any option, warrant or
other Equity Right, including pursuant to the Company Stock Plans;
(e) adjust,
split, combine or reclassify any capital stock of any Company Entity or issue
or
authorize the issuance of any other securities in respect of or in substitution
for shares of Company Common Stock, or sell, lease, license, sublicense,
mortgage or otherwise dispose of or otherwise encumber (i) any shares of
capital stock of any Company Subsidiary (unless any such shares of stock are
sold or otherwise transferred to another Company Entity) or (ii) any
Asset other
than in the ordinary course of business consistent with past practice for
reasonable and adequate consideration;
(f) except
for purchases of U.S. Treasury securities or U.S. Government agency securities,
which in either case have maturities of three years or less, purchase any
securities or make any investment in excess of an aggregate of $75,000, either
by purchase of stock of securities, contributions to capital, merger,
consolidation, Asset transfers, or purchase of any Assets, in any Person other
than a wholly owned Company Subsidiary, or otherwise acquire direct or indirect
control over any Person, other than in connection with (i) foreclosures in
the ordinary course of business or (ii) the creation of new wholly owned
Subsidiaries organized to conduct or continue activities otherwise permitted
by
this Agreement;
(g) grant
any
increase in compensation, severance, bonus, welfare or other benefits to the
current or former officers of the Company or any of its Subsidiaries, except
in
accordance with past practice or as required by Law or Contract in effect as
of
the date hereof; pay any severance or termination pay or any bonus other than
pursuant to past practices, written policies or written Contracts in effect
on
the date of this Agreement; or enter into or amend any severance agreements
with
officers of the Company or any of its Subsidiaries who are not currently
eligible for such agreements; grant any material increase in fees or other
increases in compensation or other benefits to directors of the Company except
as disclosed in Section
7.2(g)
of the
Company Disclosure Schedules;
(h) enter
into or amend any employment Contract between any Company Entity and any Person
having a base salary thereunder in excess of $75,000 per
year
(unless such amendment is required by Law) that the Company Entity does not
have
the unconditional right to terminate without Liability (other than Liability
for
services already rendered), at any time on or after the Effective Time;
33
(i) adopt
any
new employee benefit plan of any Company Entity or terminate or withdraw from,
or make any material change in or to, any existing employee benefit plans of
any
Company Entity (other than any such change that is required by Law or that,
in
the opinion of counsel, is necessary to maintain the tax qualified status of
any
such plan), or make any distributions from such employee benefit plans, except
as required by Law or the terms of such plans;
(j) make
any
change in any method of reporting income or deductions for Tax purposes or
accounting methods or systems of internal accounting controls, except as may
be
required to conform to changes in Tax Laws or regulatory accounting requirements
or GAAP that become effective subsequent to the date of this Agreement;
(k) file
any
amended Tax Return or make, change or rescind any express or deemed Tax election
(including any election for any joint venture, partnership, limited liability
company or other investment where the Company Entities have the capacity to
make
such binding election, but excluding any election that must be made periodically
and is made consistent with past practice), or settle or compromise any material
claim, action, suit, litigation, proceeding, arbitration, investigation, audit
or controversy relating to Taxes, or participate in discussions with a Tax
authority to facilitate such a settlement or compromise;
(l) commence
any Litigation other than in accordance with past practice, pay, discharge
or
settle any Litigation involving any Liability of any Company Entity for amounts
in excess of $75,000 or that restrict the ability of the Company to do business
in any material respect;
(m) except
in
the ordinary course of business or as contemplated in Section
7.2(m)
of the
Company Disclosure Schedules, enter into, modify, amend or terminate any
material Contract (including any loan Contract with an unpaid balance exceeding
$1,000,000) or waive, release, compromise or assign any material rights or
claims;
(n) declare,
set aside or pay any dividend or other distribution with respect to any share
of
its capital stock, other than dividends and other distributions paid by any
Subsidiary of the Company to the Company or any wholly-owned Subsidiary of
the
Company;
(o) adopt
a
plan of complete or partial liquidation or dissolution or restructuring,
recapitalization or other reorganization;
(p) make
any
loans or advances to any Person other than the Company or any wholly-owned
Subsidiary of the Company, except for loans or advances to employees in the
ordinary course of business consistent with past practice;
(q) accelerate
the payment of accounts receivables or delay the payment of any accounts payable
other than in the ordinary course of business consistent with past
practice;
34
(r) extend
discounts off published list prices except in the ordinary course of
business;
(s) fail
to
pay any fee, take any action or make any filing reasonably necessary to maintain
its ownership of the material owned Intellectual Property;
(t) make,
authorize, or permit any Company Subsidiary to make or authorize any capital
expenditures which are in the aggregate greater than 120% of the aggregate
amount of capital expenditures scheduled to be made in the Company’s capital
expenditure budget for fiscal year 2006 which budget has previously been made
available to the Parent;
(u) enter
into, renew or amend in any material respect any Contract, transaction,
agreement, arrangement or understanding between (i) the Company or any of its
Subsidiaries, on the one hand, and (ii) any Affiliate of the Company (other
than
any of the Company’s Subsidiaries), on the other hand, of the type that would be
required to be disclosed under Item 404 of Regulation S-K of the Securities
Act;
or
(v) agree,
authorize or commit to do any of the foregoing.
| 7.3 |
Reports.
|
Each
of
the Company and Parent shall file all reports required to be filed by it with
Regulatory Authorities between the date of this Agreement and the Effective
Time. If financial statements are contained in any such reports filed by the
Company with the SEC, such financial statements will fairly present in all
material respects the consolidated financial position of the Company and its
Subsidiaries as at the respective dates and the consolidated results of
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements may be subject to normal and recurring year-end
adjustments which are not expected to be material in amount or effect. As of
their respective dates, such reports filed with the SEC will comply in all
material respects with the applicable Securities Laws. Without limiting the
generality of the foregoing, the Company shall, on or before 5:00 p.m. Eastern
time on the fourth (4th)
business day following the date hereof, issue a Current Report on Form 8-K,
reasonably acceptable to Parent, disclosing all such information required to
be
disclosed pursuant to the rules and regulations of the SEC, including the
material terms of the transactions contemplated hereby, and shall attach all
appropriate documentation thereto.
ARTICLE
VIII
ADDITIONAL
AGREEMENTS
| 8.1 |
Proxy
Statement; Stockholder Approval.
|
35
(a) As
soon
as reasonably practicable after the execution of this Agreement, the Company
shall prepare and file the preliminary Proxy Statement and a Rule 13e-3
Transaction Statement on Schedule 13E-3, if applicable, (together with any
amendments thereof or supplements thereto, the “Schedule
13E-3”)
with
the SEC, shall use its reasonable efforts to cause the preliminary Proxy
Statement to be cleared by the SEC and thereafter mail the Proxy Statement
and
all other proxy materials required in connection with such meeting to its
stockholders as soon as practicable. The Company shall give Parent and its
counsel a reasonable opportunity to review the preliminary Proxy Statement
and
the Schedule 13E-3, if applicable, prior to its being filed with the SEC and
shall accept all reasonable additions, deletions or changes suggested by Parent
in connection therewith. The Company shall promptly notify Parent of the receipt
of any comments of the SEC staff with respect to the Proxy Statement or the
Schedule 13E-3, if applicable, and of any requests by the SEC for any amendment
or supplement thereto or for additional information, and shall provide to Parent
as promptly as reasonably practicable, and in any event within one business
day,
copies of all written correspondence between the Company or any representative
of the Company and the SEC with respect to the Proxy Statement or the Schedule
13E-3, if applicable. If comments are received from the SEC staff with respect
to the Proxy Statement or the Schedule 13E-3, if applicable, the Company shall
respond as promptly as reasonably practicable to such comments. The Company
shall give Parent and its counsel the opportunity to review all amendments
and
supplements to each of the preliminary and the definitive Proxy Statement and
the Schedule 13E-3, if applicable, and all comments from the SEC and responses
thereto prior to their being filed with the SEC and shall accept all reasonable
additions, deletions or changes suggested by Parent in connection therewith.
Parent shall furnish to the Company all information concerning it that the
Company may reasonably request in connection with the Proxy Statement and the
Schedule 13E-3, if applicable. After all the comments received from the SEC
have
been cleared by the SEC staff and all information required to be contained
in
the Proxy Statement has been included therein by the Company, the Company shall
file the definitive Proxy Statement with the SEC and cause the Proxy Statement
to be mailed (including by electronic delivery if permitted) as promptly as
practicable thereafter, to its stockholders of record, as of the record date
established by the Board of Directors of the Company. Notwithstanding the
foregoing, the Company shall not file or mail the preliminary or definitive
Proxy Statement (or any amendment or supplement thereto) or respond to the
comments of the SEC with respect thereto prior to receiving the approval of
Parent, which approval shall not be unreasonably withheld, conditioned or
delayed. Parent and the Company shall timely and properly make all necessary
filings with respect to the Merger under the Securities Laws, including filings
required under SEC Rule 14a-12.
(b) The
Company shall duly call, give notice of, convene and hold a special meeting
of
its stockholders (the “Stockholders’
Meeting”),
to be
held as soon as reasonably practicable after the Proxy Statement and the
Schedule 13E-3, if applicable, are cleared by the SEC, for the purpose of voting
upon approval and adoption of this Agreement and approval of the Merger and
such
other related matters as it deems appropriate (the “Company
Stockholder Approval)
and
shall use its reasonable best efforts to obtain the Company Stockholder
Approval. Once the Stockholders’ Meeting has been called and noticed, the
Company shall not postpone or adjourn (other than for the absence of a quorum
and then only to the next possible future date) the Stockholders’ Meeting
without Parent’s consent. Subject to Section
10.1(g),
the
Board of Directors of the Company shall submit this Agreement to its
stockholders, whether or not the Board of Directors of the Company at any time
changes, withdraws or modifies its Company Board Recommendation. Subject to
Section
10.1(g),
without
limiting the generality of the foregoing, (i) the Company agrees that its
obligation to duly call, give notice of, convene and hold a meeting of the
holders of Company Common Stock, as required by this Section
8.2(b),
shall
not be affected by the withdrawal, amendment or modification of the Company
Board Recommendation and (ii) the Company agrees that its obligations pursuant
to this Section
8.2
shall
not be affected by the commencement, public proposal, public disclosure or
communication to the Company of any Acquisition Proposal or Superior
Proposal.
36
(c) Except
to
the extent provided in Section
8.2(d):
(i) the
Board of Directors of the Company (or the Special Committee) shall make the
Company Board Recommendation to the stockholders at the Stockholders’ Meeting
and the Board of Directors of the Company shall solicit from stockholders of
the
Company proxies in favor of the adoption of this Agreement and shall take all
other action necessary or advisable to secure the vote or Consent of the Company
stockholders required by the DGCL and the Company’s certificate of incorporation
and bylaws, (ii) the Proxy Statement shall include a statement to the effect
that the Board of Directors of the Company has recommended that the Company
stockholders vote in favor of approval and adoption of this Agreement and
approval of the Merger at the Stockholders’ Meeting, and (iii) neither the Board
of Directors of the Company nor any committee thereof shall withdraw, amend
or
modify, or propose or resolve to withdraw, amend or modify in a manner adverse
to Parent, the Company Board Recommendation.
| 8.2 |
Other
Offers.
|
(a) The
Company agrees that it shall not, and shall cause its Subsidiaries and its
Representatives and its Subsidiaries’ Representatives not to (and shall not
authorize any of them to) directly or indirectly: (i) solicit, initiate, or
knowingly encourage, facilitate, propose or induce any inquiry with respect
to,
or the making, submission or announcement of any inquiries, offers or proposals
relating to, any Acquisition Proposal, (ii) initiate, enter into, explore,
maintain, participate in or continue any discussions or negotiations with any
Person regarding an Acquisition Proposal or any inquiry or indication of
interest that could reasonably be expected to lead to an Acquisition Proposal,
or furnish or disclose to any Person any information relating to the Company
or
any of its Subsidiaries or afford access to the business, properties, assets,
books or records of the Company or any of its Subsidiaries in connection with
or
in response to an Acquisition Proposal or any inquiry or indication of interest
that could reasonably be expected to lead to an Acquisition Proposal, or take
any other action to facilitate any inquiries or the making of any proposal
that
constitutes or may reasonably be expected to lead to, any Acquisition Proposal,
(iii) engage in negotiations with any Person with respect to any Acquisition
Proposal, (iv) approve, endorse or recommend or propose or determine to approve
endorse or recommend any Acquisition Proposal (except to the extent specifically
permitted pursuant to Section
8.2(d)),
or (v)
approve, endorse or recommend, or propose or determine to approve, endorse
or
recommend or enter into any agreement in principle, arrangement, understanding,
term sheet, letter of intent or contract relating to any Acquisition Proposal
or
transaction contemplated thereby (except as permitted pursuant to Sections
8.2(d)).
(b) As
soon
as reasonably practicable (and in any event within one business day) after
receipt by the Company or any of its Subsidiaries (including through a
notification by its representatives) of any Acquisition Proposal or any request
for information or inquiry which it reasonably believes could lead to an
Acquisition Proposal, the Company shall provide Parent with oral and written
notice of the material terms and conditions of such Acquisition Proposal,
request or inquiry, the identity of the Person or “Group”
(as
such term is defined under Section 13(d) of the Exchange Act) making any such
Acquisition Proposal, request or inquiry and a copy of such proposal, request
or
inquiry, if in writing (or, where such proposal, request or inquiry was not
in
writing, a description of the terms of such proposal, request or inquiry),
and
any written material submitted in connection with such proposal request or
inquiry. Upon receipt of an Acquisition Proposal, the Company shall
(i) provide Parent as promptly as reasonably practicable (and in any event
within one business day) oral and written notice setting forth all such
information as is reasonably necessary to keep Parent informed in all material
respects of the status and details (including material amendments or proposed
material amendments) of any such Acquisition Proposal, request or inquiry,
and
any communications related thereto (including with respect to the terms of
any
such proposal, request or inquiry and whether such proposal, request or inquiry
has been modified or withdrawn) and (ii) provide Parent as promptly as
reasonably practicable (and in any event, within one business day after receipt
or delivery thereof) with copies of all correspondence and other written
materials sent or provided to the Company or any of its Subsidiaries or its
or
their directors, employees, agents or Representatives from any third party
or
its agents or Representatives in connection with any such proposal, request
or
inquiry or that was sent or provided by the Company or its Subsidiaries or
its
or their directors, employees, agents or Representatives to any third party
or
its agents or Representatives in connection with such proposal, request or
inquiry. The Company shall provide any information to Parent that it is
providing to any third party pursuant to this Section
8.2(b)
at the
same time it provides such information to such other third party. The Company
agrees that it shall not, and shall cause its Subsidiaries not to, enter into
any confidentiality agreement with any third party after the date hereof that
prohibits the Company or any of its Subsidiaries from providing such information
to Parent.
37
(c) Notwithstanding
anything to the contrary contained in this Agreement, in the event that the
Company receives an unsolicited, bona fide written Acquisition Proposal from
a
third party at any time prior to the Company Stockholder Approval being obtained
and its Board of Directors (or the Special Committee) has in good faith
concluded (following the receipt of the advice of its outside legal counsel
and
its financial advisor), that such Acquisition Proposal is, or is reasonably
likely to result in, a Superior Proposal, it may then take the following
actions: (i) furnish nonpublic information to the third party making such
Acquisition Proposal, provided that (A) (1) concurrently with furnishing any
such nonpublic information to such party, its gives Parent written notice of
its
intention to furnish nonpublic information and (2) it receives from the third
party an executed confidentiality agreement containing customary limitations
on
the use and disclosure of all nonpublic written and oral information furnished
to such third party on its behalf, the terms of which are at least as
restrictive as the terms contained in the Confidentiality Agreement and (B)
contemporaneously with furnishing any such nonpublic information to such third
party, it furnishes such nonpublic information to Parent (to the extent such
nonpublic information has not been previously so furnished); and (ii) engage
in
negotiations with the third party with respect to the Acquisition Proposal,
provided that as soon as reasonably practicable (and in any event within one
business day) prior to entering into negotiations with such third party, it
gives Parent written notice of the its intention to enter into negotiations
with
such third party.
(d) In
response to the receipt of an Acquisition Proposal that the Board of Directors
of the Company (or the Special Committee) determines in good faith, after
consultation with its financial advisors and outside legal advisors, constitutes
a Superior Proposal (taking into account any adjustment to the terms and
conditions of the Merger proposed by Parent in response to such Acquisition
Proposal), the Board of Directors of the Company may withhold, withdraw, amend
or modify, or propose or resolve to withdraw, amend or modify the Company Board
Recommendation, and, in the case of a Superior Proposal that is a tender or
exchange offer made directly to its stockholders, may recommend that its
stockholders accept the tender or exchange offer (any of the foregoing actions,
whether by the Board of Directors of the Company (or the Special Committee),
a
“Change
of Recommendation”),
if
all of the following conditions are met: (i) a Superior Proposal with respect
to
it has been made and has not been withdrawn; (ii) the Company Stockholder
Approval has not been obtained; (iii) it has determined, after consultation
with
its financial advisors and outside legal counsel, that such action is necessary
to comply with the Board of Directors’ fiduciary duties to the Company’s
stockholders under applicable Law; (iv) it shall have (A) provided to
Parent written notice at least 5 business days prior to taking such action
which
shall state expressly (1) that it has received a Superior Proposal (and provided
Parent with the terms and provisions of the Superior Proposal and copies of
such
agreements and/or documents providing for the Superior Proposal), (2) the
identity of the Person or Group making the Superior Proposal, and (3) that
it
intends to effect a Change of Recommendation and the manner in which it intends
to do so, and (B) made available to Parent all nonpublic information (to the
extent such nonpublic information has not been previously so furnished) made
available to the Person or Group making the Superior Proposal in connection
with
such Superior Proposal; and (v) it shall not have breached in any material
respect any of the provisions set forth in Section
8.1
or this
Section
8.2.
38
(e) Nothing
contained in this Agreement shall prohibit the Board of Directors of the Company
from taking and disclosing to its stockholders, to the extent required by
applicable Law, a position contemplated by Rules 14d-9 and 14e-2(a) promulgated
under the Exchange Act; provided that the content of any such disclosure
thereunder shall be governed by the terms of this Agreement; provided,
further,
that in
any such disclosure document or communication prepared, filed, issued or made
in
conjunction with the compliance by the Company, the Board of Directors of the
Company or any committee thereof with such rules or regulations as set forth
in
this Section
8.2(e),
the
Board of Directors of the Company (or any committee thereof) shall, except
as
expressly permitted by Section
8.2(d),
re-affirm its recommendation to the Company’s stockholders to adopt this
Agreement and approve the Merger (including the Company Board
Recommendation).
(f) The
Company shall, and shall cause its Subsidiaries, Representatives and Affiliates
to, cease immediately and cause to be terminated any and all existing
activities, discussions or negotiations, if any, with any third party conducted
on or prior to the date hereof with respect to any Acquisition Proposal or
any
proposal or discussion that could reasonably be expected to lead to an
Acquisition Proposal. The Company agrees that it will take the necessary steps
to promptly, and in any event within three business days after the date hereof,
inform the Persons referred to in the first sentence of Section
8.2(a)
of this
Section
8.2.
The
Company acknowledges and agrees that any violation of the restrictions set
forth
in this Section
8.2
by any
of its Subsidiaries or any Representatives of the Company or any of its
Subsidiaries, whether or not such Person is purporting to act on behalf of
the
Company or any of its Subsidiaries or otherwise, shall be deemed a breach of
this Section
8.2
by the
Company.
39
| 8.3 |
Antitrust
Notification; Consents of Regulatory Authorities.
|
(a) To
the
extent required by the HSR Act, each of the Parties will, within a reasonable
period of time, file with the United States Federal Trade Commission
(“FTC”)
and
the United States Department of Justice (“DOJ”)
the
notification and report form required for the transactions contemplated hereby,
will promptly file any supplemental or additional information which may be
requested in connection therewith pursuant to the HSR Act, and will comply
in
all material respects with the requirements of the HSR Act. Each Party shall
use
its reasonable efforts to resolve objections, if any, which may be asserted
with
respect to the Merger under the HSR Act, the Xxxxxxx Act, as amended, the
Xxxxxxx Act, as amended, the Federal Trade Commission Act, as amended, and
any
other federal, state or foreign Law, regulation or decree designed to prohibit,
restrict or regulate actions for the purpose or effect of monopolization or
restraint of trade (collectively “Antitrust
Laws”).
In
the event any Litigation is threatened or instituted challenging the Merger
as
violative of Antitrust Laws, each Party shall use its reasonable efforts to
avoid the filing of, or resist or resolve, such Litigation. Each Party shall
use
its reasonable efforts to take such action as may be required by: (i) the
DOJ and/or the FTC in order to resolve such objections as either of them may
have to the Merger under the Antitrust Laws; or (ii) any federal or state
court of the United States, or similar court of competent jurisdiction in any
foreign jurisdiction, in any suit brought by any Regulatory Authority or any
other Person challenging the Merger as violative of the Antitrust Laws, in
order
to avoid the entry of any Order (whether temporary, preliminary or permanent)
which has the effect of preventing the consummation of the Merger and to have
vacated, lifted, reversed or overturned any such Order; provided,
however,
that no
Party shall be required to sell, or otherwise dispose, of any businesses or
material Assets or take any action that would materially and adversely effect
or
otherwise impair such Party’s business or financial condition. Parent shall be
entitled to direct any proceedings or negotiations with any Regulatory Authority
relating to any of the foregoing, provided that it shall afford the Company
a
reasonable opportunity to participate therein.
(b) The
Parties hereto shall cooperate with each other and use their reasonable efforts
to promptly prepare and file all necessary documentation, to effect all
applications, notices, petitions and filings (which shall include the filings
pursuant to subsection (a) above), and obtain as promptly as practicable all
Consents of all Regulatory Authorities and other Persons which are necessary
or
advisable to consummate the transactions contemplated by this Agreement
(including the Merger). The Parties agree that they will consult with each
other
with respect to the obtaining of all Consents of all Regulatory Authorities
and
other Persons necessary or advisable to consummate the transactions contemplated
by this Agreement and each Party will keep the other apprised of the status
of
matters relating to contemplation of the transactions contemplated herein.
Each
Party also shall promptly advise the other upon receiving any communication
from
any Regulatory Authority whose Consent is required for consummation of the
transactions contemplated by this Agreement which causes such Party to believe
that there is a reasonable likelihood that any requisite Consent will not be
obtained or that the receipt of any such Consent will be materially
delayed.
| 8.4 |
Filings
with State Offices.
|
Upon
the
terms and subject to the conditions of this Agreement, on the Closing Date,
Parent, the Company and Merger Sub shall
execute and file the Certificate
of Merger (in form and substance satisfactory to Parent) with the Secretary
of
State of the State of Delaware in connection with the Closing.
40
| 8.5 |
Agreement
as to Efforts to Consummate.
|
(a) Subject
to the terms and conditions of this Agreement, each Party agrees to use, and
to
cause its Subsidiaries to use, its reasonable best efforts to take, or cause
to
be taken, all actions, and to do, or cause to be done, all things necessary,
proper or advisable under applicable Laws to consummate and make effective,
as
soon as reasonably practicable after the date of this Agreement, the
transactions contemplated by this Agreement, including using its reasonable
best
efforts to lift or rescind any Order adversely affecting its ability to
consummate the transactions contemplated herein and to cause to be satisfied
the
conditions referred to in Article
IX;
provided, however, that nothing herein shall preclude either Party from
exercising its rights under this Agreement.
(b) The
Company agrees to use reasonable best efforts to take, or cause to be taken,
or
assist Parent in taking, all action necessary to obtain all Consents required
for, and to effect all necessary registrations and filings and submissions
of
information requested or required by any Regulatory Authority in connection
with, the transactions contemplated hereby, including any novation of the
Company’s or any of its Subsidiaries’ obligations under any Government
Contract.
(c) The
Company agrees to provide, and will cause the Company Subsidiaries and its
and
their respective officers and employees to provide, reasonable cooperation
as
reasonably requested by Parent or Merger Sub in connection with the arrangement
and consummation of, and the negotiation of agreements with respect to, the
third party debt financing (the “Debt
Financing”)
to be
obtained by the Parent or Merger Sub in connection with the transactions
contemplated hereby as described in the Debt Commitment Letter, or in connection
with any Alternative Financing (defined below). Notwithstanding anything herein
to the contrary, neither the Company nor any of its Subsidiaries shall be
required to pay any commitment or other similar fee or incur any other liability
in connection with the financings contemplated by the Debt Commitment Letter
or
the arrangements therefor prior to the Effective Time. If Parent has been
notified by any or all of the lenders party to the Debt Commitment Letters
that
funds will not be available pursuant to the Debt Commitment Letters so as to
enable Parent to proceed with the Closing by the Closing Date for reasons other
than (i) the occurrence of a Company Material Adverse Effect or (ii) the actual
or anticipated failure of the conditions to the Closing set forth in
Section
9.1
to be
satisfied or the actual or anticipated failure by the Company to satisfy the
conditions to Closing set forth in Section
9.2,
then
Parent shall use its commercially reasonable efforts to obtain alternative
debt
financing (“Alternative
Financing”)
from a
Person that is not an Affiliate of Parent in an amount at least sufficient
to
consummate the transactions contemplated by this Agreement by the Closing Date;
provided,
however,
that in
no event shall Parent be required to obtain Alternative Financing on terms
that
are materially less favorable to Parent or the Company than the terms set forth
in the Debt Commitment Letters. Parent shall keep the Company informed on a
reasonably current basis in reasonable detail of the status of its respective
commercially reasonable efforts to arrange the Debt Financing or any Alternative
Financing in accordance with this Section
8.5.
Parent
or Merger Sub shall not amend the Debt Commitment Letter so as to provide for
any additional closing conditions without the prior written consent of the
Company.
41
| 8.6 |
Investigation
and Confidentiality.
|
(a) Prior
to
the Effective Time, each Party shall
keep the other Party advised
of all material developments relevant to its business and to consummation of
the
Merger and shall permit the other Party to
make
or cause to be made such investigation of the business and properties of
it and
its
Subsidiaries and of their respective financial and legal conditions as the
other
Party reasonably
requests upon reasonable notice and during normal business hours, provided
that
such investigation shall be related to the transactions contemplated hereby
and
shall not interfere unnecessarily with normal operations. No investigation
by a
Party shall affect the ability of such Party to rely on the representations
and
warranties of the other Party.
(b) In
addition to the Parties’ respective obligations
under the Confidentiality Agreement, which is hereby reaffirmed and adopted,
and
incorporated by reference herein, each Party shall,
and shall cause its advisers and agents to, maintain the confidentiality of
all
confidential information furnished to it by the other Party concerning its
and
its Subsidiaries’ businesses, operations and financial positions and shall not
use such information for any purpose except in furtherance of the transactions
contemplated by this Agreement. If this Agreement is terminated prior to the
Effective Time, each Party shall promptly return or certify the destruction
of
all documents and copies thereof, and all work papers containing confidential
information received from the other Party.
(c) Each
Party agrees to give the other Party notice as soon as practicable after any
determination by it of any fact or occurrence relating to the other Party which
it has discovered through the course of its investigation and which represents,
or is reasonably likely to represent, either a material breach of any
representation, warranty, covenant or agreement of the other Party or which
has
had or would reasonably be expected to have a Company Material Adverse Effect
or
a Parent Material Adverse Effect, as applicable; provided, however, that no
such
notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under this Agreement.
| 8.7 |
Press
Releases.
|
Prior
to
the Effective Time, the Company and Parent shall consult with each other as
to
the form and substance of, and will provide each other the opportunity to review
and comment on, any press release or other public disclosure materially related
to this Agreement or any other transaction contemplated hereby; provided,
that
nothing in this Section
8.7
shall be
deemed to prohibit any Party from making any disclosure which its counsel
reasonably deems necessary or advisable in order to satisfy such Party’s
disclosure obligations imposed by Law (in which case such Party shall promptly
inform the other parties hereto of such compelled disclosure).
42
| 8.8 |
Intentionally
Omitted.
|
| 8.9 |
Charter
Provisions.
|
Each
Company Entity shall take all necessary action to ensure that the entering
into
of this Agreement and the consummation of the Merger and the other transactions
contemplated hereby do not and will not result in the grant of any rights to
any
Person under the certificate of incorporation, bylaws or other governing
instruments of any Company Entity or restrict or impair the ability of Parent
or
any of its Subsidiaries to vote, or otherwise to exercise the rights of a
stockholder with respect to, shares of any Company Entity that may be directly
or indirectly acquired or controlled by them.
| 8.10 |
Indemnification.
|
(a) From
the
Effective Time through the sixth anniversary of the date on which the Effective
Time occurs, the Parent shall cause the Surviving Corporation to indemnify
and
hold harmless each person who is now, or has been at any time prior to the
date
hereof, or who becomes prior to the Effective Time, a director or officer of
the
Company or any of its Subsidiaries (the “Indemnified
Parties”),
against all claims, losses, liabilities, damages, judgments, fines and
reasonable fees, costs and expenses, including attorneys’ fees and
disbursements, incurred in connection with any claim, action, suit, proceeding
or investigation, whether civil, criminal, administrative or investigative,
arising out of or pertaining to the fact that the Indemnified Party is or was
an
officer or director of the Company or any of its Subsidiaries, or acting on
behalf of the Company or any Subsidiary whether or not in such capacity, whether
asserted or claimed prior to, at or after the Effective Time, to the fullest
extent permitted under the DGCL for officers and directors of Delaware
corporations, except to the extent such the Indemnified Parties acted with
gross
negligence or willful misconduct. Each Indemnified Party will be entitled,
subject to applicable Law, to advancement of expenses reasonably incurred in
connection with the defense of any such claim, action, suit, proceeding or
investigation from the Surviving Corporation pursuant, and subject, to the
terms
of Section
8.10(b).
(b) Any
Indemnified Party wishing to claim indemnification under paragraph (a) of this
Section
8.10,
upon
learning of any such claims, shall promptly notify Parent and the Surviving
Corporation thereof; provided that any delay in notification will not release
or
discharge the indemnification obligation except to the extent, if any, that
such
delay has actually prejudiced the Parent or Surviving Corporation. In the event
of any such claims which relate to any Litigation (whether arising before or
after the Effective Time), (i) Parent or the Surviving Corporation shall have
the right to assume the defense thereof and neither Parent nor the Surviving
Corporation shall be liable to such Indemnified Parties for any legal expenses
of other counsel or any other expenses subsequently incurred by such Indemnified
Parties in connection with the defense thereof (except as provided below);
provided,
that
Parent and the Surviving Corporation shall be obligated pursuant to this
Section
8.10(b)
to pay
for only one firm of counsel for all Indemnified Parties; (ii) the Indemnified
Parties will cooperate in the defense of any such Litigation; and (iii) neither
Parent nor the Surviving Corporation shall be liable for any settlement effected
without its prior written consent; and provided,
further,
that
neither Parent nor the Surviving Corporation shall have any obligation hereunder
to any Indemnified Party (i) when and if a court of competent jurisdiction
shall
have determined by final non-appealable judgment that the indemnification of
such Indemnified Party in the manner contemplated hereby is prohibited by
applicable Law or (ii) to the extent that a court of competent jurisdiction
shall have determined by final non-appealable judgment that such the Indemnified
Parties acted with gross negligence or willful misconduct. In any case where
the
Parent or Surviving Corporation shall have assumed the defense, the Indemnified
Parties shall have the right to participate therein, and shall have the right
to
employ their own counsel which shall be at their own expense unless (i) the
Parent, Surviving Corporation and the Indemnified Parties mutually agree to
the
retention of the same counsel, in which case such counsel shall be retained
at
the expense of the Parent or Surviving Corporation or (ii) the named parties
to
such claim include both the Parent and Surviving Corporation, on the one hand,
and an Indemnified Party, on the other hand, and the Indemnified Party shall
have been advised that in the reasonable opinion of counsel that there may
be
one or more legal defenses available to it which are different from or in
addition to those available to the Parent and Surviving Corporation and that
the
assertion of such defenses may create a conflict of interest such that it would
be inappropriate for counsel to the Parent and Surviving Corporation to
represent the Indemnified Party, in which case such counsel shall be retained
at
the expense of the Parent or Surviving Corporation.
43
(c) The
certificate of incorporation and by-laws of the Surviving Corporation shall
contain provisions no less favorable with respect to indemnification,
advancement of expenses and exculpation of present and former directors and
officers of the Company and its Subsidiaries than are presently set forth in
the
Company’s certificate of incorporation and by-laws, which provisions shall not
be amended, modified or repealed for a period of six years time from the
Effective Time in a manner that would adversely affect the rights thereunder
of
individuals who, at or prior to the Effective Time, were officers or directors
of the Company, unless such amendment, modification or repeal is required by
applicable law after the Effective Time.
(d) Parent
shall cause the Surviving Corporation (and the Company shall cooperate prior
to
the Effective Time in these efforts) to maintain in effect, to the extent
available, for a period of six years after the Effective Time the Company’s
existing directors’ and officers’ liability insurance policy (provided that
Parent or the Surviving Corporation may substitute therefor (i) policies of
at least the same coverage and amounts containing terms and conditions which
are
no less favorable to such directors and officers or (ii) with the Consent
of the Company given prior to the Effective Time, any other policy) with respect
to claims arising from facts or events which occurred prior to the Effective
Time and covering persons who are currently covered by such insurance;
provided,
however,
that
such insurance policies shall not be procured and/or maintained if the annual
premium therefor shall be in excess of 250% of the last annual premium paid
by
the Company prior to the date hereof (the “Insurance
Cap”);
provided further
that if
the annual premium shall exceed the Insurance Cap, then the Surviving
Corporation shall cause to be obtained as much comparable insurance as can
reasonably be obtained at a cost up to but not exceeding the Insurance
Cap.
(e) If
Parent
or the Surviving Corporation or any successors or assigns shall consolidate
with
or merge into any other Person and shall not be the continuing or surviving
Person of such consolidation or merger or shall transfer all or substantially
all of its Assets to any Person, then and in each case, proper provision shall
be made so that the successors and assigns of Parent or the Surviving
Corporation shall assume the obligations set forth in this Section
8.10.
44
The
provisions of this Section
8.10
are
intended to be in addition to the rights otherwise available to the current
and
former officers and directors of the Company by law, charter, statute, by-law
or
agreement, and are intended to be for the benefit of, and shall be enforceable
by, each of the Company’s director’s and officers who are currently covered by
such applicable insurance and their respective heirs and
representatives.
| 8.11 |
Access.
|
From
the
date hereof until the Effective Time, and subject to applicable Law, the
Confidentiality Agreement and the terms of this Agreement, the Company shall,
upon reasonable notice and during normal business hours in a manner that does
not unreasonably disrupt or interfere with the business operations of the
Company (i) give Parent and its Representatives and financing sources reasonable
access, subject to Parent’s and the Company’s compliance with applicable Law, to
the offices properties, books and records of the Company and the Subsidiaries
and (ii) furnish to Parent, its Representatives and financing such financial
and
operating data and other information as such Persons may reasonably request
and
(iii) instruct the Representatives of the Company Entities to cooperate with
all
reasonable requests of Parent in its investigation of the Company and its
Subsidiaries. Notwithstanding the foregoing, the Company may restrict the
foregoing access to the extent that (i) in the reasonable judgment of the
Company upon written advice from counsel, any Law, treaty, rule or regulation
of
any Regulatory Authority applicable to the Company requires the Company or
its
Subsidiaries to restrict or prohibit access to any such properties or
information, (ii) in the reasonable judgment of the Company upon written advice
from counsel, disclosure of any such information or document would result in
the
loss of the Company’s attorney-client privilege or (iii) in the reasonable
judgment of the Company, such disclosure would result in a material breach
of a
Contract to which the Company or any of its Subsidiaries is a party on the
date
of this Agreement.
| 8.12 |
Further
Assurances.
|
At
and
after the Effective Time, the officers and directors of the Surviving
Corporation shall be authorized to execute and deliver, in the name and on
behalf of the Company or Merger Sub, any deeds, bills of sale, assignments,
documents, instruments, or assurances and to take and do, in the name and on
behalf of the Company or Merger Sub, any other actions and things to vest,
perfect or confirm of record or otherwise in the Surviving Corporation any
and
all right, title and interest in, to and under any of the rights, properties
or
assets of the Company acquired or to be acquired by the Surviving Corporation
as
a result of, or in connection with, the Merger.
| 8.13 |
Stockholder
Litigation.
|
The
Company shall give Parent the opportunity to participate in the defense or
settlement of any stockholder litigation against the Company or its directors
relating to the Merger or the other transactions contemplated hereby; provided
that no such settlement shall be agreed to without Parent’s consent, which
consent shall not be unreasonably withheld.
| 8.14 |
Notice
of Events.
|
The
Company shall give prompt notice to Parent, and Parent or Merger Sub shall
give
prompt notice to the Company, upon becoming aware of (i) any condition, event
or
circumstance that would be reasonably likely to result in any of the conditions
set forth in Article
IX
not
being met or (ii) the failure by it to comply with or satisfy in any material
respect any covenant, condition or agreement to be complied with or satisfied
by
it under this Agreement; provided,
however,
that no
such notification shall affect the representations, warranties, covenants or
agreements of the Parties or the conditions to the obligations of the Parties
under this Agreement.
45
| 8.15 |
Delisting;
Withdrawal of Registration.
|
(a) Each
of
the Parties agrees to cooperate with each other in taking, or causing to be
taken, all actions necessary to delist the Company Common Stock from the Nasdaq
Capital Market and to terminate registration under the Exchange Act;
provided,
however,
that
such delisting and termination shall not be effective until after the Effective
Time.
(b) Prior
to
the Effective Time, the Company shall take all action necessary to withdraw
or
otherwise cancel the Company’s filed registration statements (effective or
otherwise) including registration statements on Form X-0, Xxxx X-0/X, Xxxx
X-0
or other similar forms under the Securities Act filed with the SEC, including
the filing of post-effective amendments as appropriate.
| 8.16 |
Payoff
Letter.
|
Prior
to
the Effective Time, Bank of America, N.A. (“BOA”),
as
lender under that certain Revolving Credit and Term Loan Agreement dated as
of
October 7, 2005 (as amended, modified, restated or supplemented from time to
time, the “Loan
Agreement”)
by and
between the Company and BOA, shall have provided the Company with a payoff
letter in form and substance reasonably satisfactory to Parent and Merger Sub
that shall acknowledge, among other things, that (i) the Loan Agreement and
all
commitments thereunder shall have been terminated, (ii) any and all Liens held
by BOA shall have been released and (iii) the Company and the Company
Subsidiaries party to the Loan Agreement or any guaranty, pledge, security
or
other ancillary agreement executed in connection with the Loan Agreement (the
“Ancillary
Agreements”)
shall
have been released from any and all liabilities, guaranties, pledges, grants and
other obligations under the Loan Agreement and the Ancillary Agreements, in
each
case subject to repayment of the aggregate principal amount outstanding under
the Loan Agreement, together with all interest accrued thereon and any other
fees or expenses payable thereunder in connection with such
prepayment.
| 8.17 |
Employee
Matters.
|
(a) Except
as
otherwise provided in new employment or other agreements (including as
contemplated by Section
9.2(j)),
that
are entered into by Employees of the Company on or after the date hereof,
Employees of the Company as of the Effective Time (“Continuing
Employees”)
shall
receive credit for all years of past service with the Company for purposes
of
accrual of vacation time and, to the extent practicable and permitted under
applicable benefit plans, for purposes of eligibility for participation and
vesting under any employee benefit plan, program or arrangement established
or
maintained by the Parent, Surviving Corporation or any of their respective
Subsidiaries under which Continuing Employees may be eligible to participate
on
or after the Effective Time (“New
Plans”).
In
addition and without limiting the generality of the foregoing, except as
otherwise provided in new employment or other agreements (including as
contemplated by Section
9.2(j)),
that
are entered into by Employees of the Company on or after the date hereof: (i)
each Continuing Employee shall be immediately eligible to participate, without
any waiting time, in any and all New Plans to the extent coverage under such
New
Plan replaces coverage under a comparable Company Benefit Plan in which such
Continuing Employee participated immediately before the Effective Time (such
plans, collectively, the “Old
Plans”);
and
(ii) for purposes of each New Plan providing medical, dental, disability,
pharmaceutical and/or vision benefits to any Continuing Employee, the Surviving
Corporation shall cause all pre-existing condition exclusions and
actively-at-work requirements of such New Plan to be waived for such employee
and his or her covered dependents during the portion of the plan year of the
Old
Plan ending on the date such employee’s participation in the corresponding New
Plan begins to be taken into account under such New Plan for purposes of
satisfying all deductible, coinsurance and maximum out-of-pocket requirements
applicable to such employee and his or her covered dependents for the applicable
plan year as if such amounts had been paid in accordance with such New
Plan.
46
(b) Notwithstanding
anything in this Agreement to the contrary, from and after the Effective Time,
the Surviving Corporation shall have sole discretion over the hiring, promotion,
retention, firing and other terms and conditions of the employment of the
Continuing Employees, and nothing in this Agreement shall obligate the Surviving
Corporation to maintain the employment of any Continuing Employee for any period
of time. Nothing in this Agreement shall prevent Parent or the Surviving
Corporation from amending or terminating any of the Company Benefit Plans in
accordance with their terms.
(c) The
provisions of this Section
8.18
are for
the sole benefit of the parties to this Agreement and nothing herein, expressed
or implied, is intended or shall be construed to confer upon or give to any
person (including, without limitation, any Continuing Employee), other than
parties hereto and their respective permitted successors and assigns, any legal
or equitable or other rights or remedies (with respect to the matters provided
for in this Section
8.18)
under
or by reason of any provision of this Agreement, and nothing herein, express
or
implied, is intended or shall be construed to amend or modify the terms or
provisions of any Company Benefit Plan.
ARTICLE
IX
CONDITIONS
PRECEDENT
| 9.1 |
Conditions
to Obligations of Each Party.
|
The
respective obligations of each Party to perform this Agreement and consummate
the Merger and the other transactions contemplated hereby are subject to the
satisfaction of the following conditions, unless waived by the Parties pursuant
to Section
11.5:
(a) Company
Stockholder Approval.
The
Company Stockholder Approval shall have been obtained.
(b) Regulatory
Approvals.
Other
than filing the Certificate of Merger, all Consents of, filings and
registrations with, and notifications to, all Regulatory Authorities required
for consummation of the Merger shall have been obtained or made and shall be
in
full force and effect and all waiting periods required by Law shall have
expired.
47
(c) Legal
Proceedings.
No
court or governmental or Regulatory Authority of competent jurisdiction shall
have enacted, issued, promulgated, enforced or entered any Law or Order (whether
temporary, preliminary or permanent) or taken any other action which prohibits,
restricts or makes illegal consummation of the transactions contemplated by
this
Agreement.
| 9.2 |
Conditions
to Obligations of Parent.
|
The
obligations of Parent to perform this Agreement and consummate the Merger and
the other transactions contemplated hereby are subject to the satisfaction
of
the following conditions, unless waived by Parent pursuant to Section
11.5(a):
(a) Representations
and Warranties.
For
purposes of this Section
9.2(a),
the
accuracy of the representations and warranties of the Company set forth in
this
Agreement shall be assessed as of the date of this Agreement and as of the
Effective Time with the same effect as though all such representations and
warranties had been made on and as of the Effective Time (provided that
representations and warranties which are confined to a specified date shall
speak only as of such date). The
representations and warranties set forth in Section
5.3
shall be
true and correct (except for inaccuracies that are de minimus in amount). The
representations and warranties set forth in Sections
5.21,
5.23,
5.24,
and
5.25
shall be
true and correct in all material respects. There shall not exist inaccuracies
in
the representations and warranties of the Company set forth in this Agreement
(excluding the representations and warranties set forth in Sections
5.3,
5.21,
5.23,
5.24,
and
5.25)
such
that the effect of such inaccuracies (without regard to any materiality, or
Company Material Adverse Effect qualifier(s) contained in any and each such
representation and warranty) has, or would reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse
Effect.
(b) Performance
of Agreements and Covenants.
Each
and all of the agreements and covenants of the Company to be performed and
complied with pursuant to this Agreement and the other agreements contemplated
hereby prior to the Effective Time shall have been duly performed and complied
with in all material respects.
(c) Certificates.
The
Company shall have delivered to Parent (i) a certificate, dated as of the
Effective Time and signed on its behalf by its chief executive officer or its
chief financial officer, to the effect that the conditions set forth in
Section
9.1
as
relates to the Company and in Sections
9.2(a)
and
9.2(b)
have
been satisfied, and (ii) certified copies of resolutions duly adopted by
the Company’s Board of Directors and stockholders evidencing the taking of all
corporate action necessary to authorize the execution, delivery and performance
of this Agreement, and the consummation of the transactions contemplated hereby,
all in such reasonable detail as Parent and its counsel shall reasonably
request.
(d) Absence
of Company Material Adverse Effect.
There
shall not have occurred after the date of this Agreement any event, change,
effect or development that, individually or in the aggregate, has had or would
reasonably be expected to have a Company Material Adverse Effect.
48
(e) Dissenting
Shares.
The
total number of shares of Company Common Stock outstanding immediately prior
to
the Effective Time and held by a holder who has not voted in favor of the Merger
or consented thereto in writing, and who has properly demanded appraisal for
such shares in accordance with Section 262 of the DGCL shall not have exceeded
5% of the issued and outstanding shares of Company Common Stock as of the
Effective Time.
(f) Consents
and Approvals.
Each of
the Consents set forth in Section
9.1(c)
of the
Company Disclosure Schedules shall have been obtained, as well as any and all
Consents required to prevent any Default under any Contract or Permit of the
Company Entities which, if not obtained or made, would reasonably be expected
to
have, individually or in the aggregate, a Company Material Adverse
Effect.
(g) Financing.
Parent
shall have received the proceeds of the financings described in the Debt
Commitment Letter or Alternative Financing, if applicable, in accordance with
Section
8.5(c),
(sufficient, when taken together with the proceeds of the Equity Financing
and
the Rollover Contribution, to pay the aggregate Merger Consideration, the
aggregate Option Settlement Payments and the aggregate Warrant Settlement
Payments payable pursuant to Sections
3.1 and 3.4,
respectively); provided,
that
(i) this Section
9.2(g)
shall
not be a condition precedent to the consummation of the Parent’s obligations
under this Agreement solely in the event that all conditions to the Debt
Financing or Alternative Financing have been satisfied except those conditions
solely in control of the Parent, the Insight Entities or the Bessemer Entities
and those conditions that are not able to be satisfied solely because the
conditions that are solely in control of the Parent, the Insight Entities or
the
Bessemer Entities have not been satisfied; and (ii) notwithstanding Section
9.2(g)(i),
this
Section
9.2(g)
shall
continue to be a condition precedent to the extent the failure to satisfy such
conditions to the Debt Financing or Alternative Financing that are solely in
control of the Parent, the Insight Entities or the Bessemer Entities is caused
by any breach of this Agreement by the Company.
(h) Fairness
Opinion.
The
Company shall have delivered to Parent an executed copy of the Fairness
Opinion.
(i) Resignations.
Parent
and Merger Sub shall have received resignations, dated and effective as of
the
Closing Date, of the individual directors and officers of the Company and the
Company Subsidiaries identified in writing by Parent prior to the Closing Date.
(j) Employment
Agreements.
On or
prior to the Closing Date, the Company and each of Xxxxx Xxxxxx and Xxxxxxx
Xxxxxxxx, shall have executed and delivered to the Company amended and restated
employment agreements, each in form substantially similar to that set forth
respectively on Exhibit
B
and
Exhibit
C,
attached hereto, and documents to be entered into in connection therewith and
such agreements shall be in full force and effect.
| 9.3 |
Conditions
to Obligations of the Company.
|
The
obligations of the Company to perform this Agreement and consummate the Merger
and the other transactions contemplated hereby are subject to the satisfaction
of the following conditions, unless waived by the Company pursuant to
Section
11.5(b):
49
(a) Representations
and Warranties.
For
purposes of this Section
9.3(a),
the
accuracy of the representations and warranties of Parent and Merger Sub set
forth in this Agreement shall be assessed as of the date of this Agreement
and
as of the Effective Time with the same effect as though all such representations
and warranties had been made on and as of the Effective Time (provided that
representations and warranties which are confined to a specified date shall
speak only as of such date). There
shall not exist inaccuracies in the representations and warranties of Parent
or
Merger Sub set forth in this Agreement such that the aggregate effect of such
inaccuracies (without regard to any materiality, or Parent Material Adverse
Effect qualifier(s) contained in any and each such representation and warranty)
has, would reasonably be expected to have, a Parent Material Adverse
Effect.
(b) Performance
of Agreements and Covenants.
Each
and all of the agreements and covenants of Parent and Merger Sub to be performed
and complied with pursuant to this Agreement and the other agreements
contemplated hereby prior to the Effective Time shall have been duly performed
and complied with in all material respects.
(c) Certificates.
Parent
shall have delivered to the Company (i) a certificate, dated as of the
Effective Time and signed on its behalf by its chief executive officer or its
chief financial officer or other duly authorized officers, to the effect that
the conditions set forth in Section
9.1
as
relates to Parent and Merger Sub and in Sections
9.3(a)
and
9.3(b)
have
been satisfied, and (ii) certified copies of resolutions duly adopted by
Parent’s Board of Directors and Merger Sub’s Board of Directors and sole
stockholder, evidencing the taking of all corporate action necessary to
authorize the execution, delivery and performance of this Agreement, and the
consummation of the transactions contemplated hereby, all in such reasonable
detail as the Company and its counsel shall reasonably request.
| 9.4 |
Frustration
of Closing Condition.
|
No
Party
may rely on the failure of a condition set forth in Sections
9.1, 9.2
or
9.3,
as the
case may be, to be satisfied if such failure was caused by such Party’s failure
to act in good faith or failure to use its reasonable efforts to consummate
the
transactions to the extent required by this Agreement.
ARTICLE
X
TERMINATION
| 10.1 |
Termination.
|
Notwithstanding
any other provision of this Agreement, this Agreement may be terminated and
the
Merger abandoned at any time prior to the Effective Time:
(a) By
mutual
written consent duly authorized by the Boards of Directors of Parent
and the Company;
or
(b) By
either
Parent or the Company in the event that the Merger shall not have been
consummated by May 15, 2007 (the “End
Date”),
if
the failure to consummate the transactions contemplated hereby on or before
such
date is not caused by any breach of this Agreement by the Party electing to
terminate pursuant to this Section
10.1(b);
or
50
(c) By
either
Parent or the Company (provided that the terminating Party is not then in
material breach of any covenant or other agreement contained in this Agreement
and has not willfully breached any of such Party’s representations and
warranties contained in this Agreement) in the event of a breach by the other
Party of any representation, warranty, covenant or agreement contained in this
Agreement which breach would permit such Party to refuse to consummate the
transactions contemplated by this Agreement pursuant to the standards set forth
in Section
9.2(a)
or
(b)
or
9.3(a)
or
(b),
as
applicable;
provided that if such breach in the representations, warranties, covenants
or
agreements is curable prior to the End Date through the exercise of reasonable
efforts and the breaching Party exercises reasonable efforts to cure such
breach, then the non-breaching Party may not terminate this Agreement under
this
Section
10.1(c)
prior to
30 days following the receipt of written notice of such breach by the other
Party; provided that the failure of Parent to deposit (or caused to be
deposited) the Merger Consideration in the Payment Fund at the Closing prior
to
the Effective Time to the extent required hereunder and to the extent all of
the
conditions set forth in Section
9.1
and
Section
9.2
have
been met, shall not be subject to cure hereunder, and in the event of such
breach, the Company may thereupon terminate this Agreement immediately;
or
(d) By
either
Parent or the Company in the event (i) any Consent of any Regulatory
Authority required for consummation of the Merger and the other transactions
contemplated hereby pursuant to Section
9.1(b)
shall
have been denied by final nonappealable action of such authority or if any
action taken by such authority is not appealed within the time limit for appeal,
or (ii) any Law or Order permanently restraining, enjoining or otherwise
prohibiting the consummation of the Merger or the transactions contemplated
by
this Agreement shall have become final and nonappealable; or
(e) By
either
Parent or the Company in the event the Company Stockholder Approval is not
obtained at the Stockholders’ Meeting or at any adjournment thereof where such
matters were presented to such stockholders
for
approval and voted upon; or
(f) By
Parent
in the
event (i) the Board of Directors of the Company (or the Special Committee)
shall have made a Change of Recommendation, (ii) the Company materially breaches
Sections
8.1
or
8.2
hereof
or (iii) the Board of Directors of the Company (or the Special Committee)
resolves to take any of the foregoing actions.
(g) By
the
Company if the Board of Directors of the Company (or Special Committee) shall
have made a Change of Recommendation in accordance with Section
8.2(d).
A
terminating Party shall provide written notice of termination to the other
Party
specifying the reason for such termination.
| 10.2 |
Effect
of Termination.
|
In
the
event of the termination and abandonment of this Agreement pursuant to
Section
10.1,
this
Agreement shall become void and have no effect, except that (i) the
provisions of this Section
10.2,
Section
8.6(b),
Section
8.7
and
Article
XI,
shall
survive any such termination and abandonment and (ii) no such termination
shall relieve the breaching Party from Liability resulting from any willful
breach by that Party of this Agreement. No termination of this Agreement shall
affect the obligations of the Parties contained in the Confidentiality
Agreement, all of which obligations shall survive such termination or
abandonment in accordance with their terms.
51
| 10.3 |
Non-Survival
of Representations and Covenants.
|
The
respective representations, warranties, obligations, covenants and agreements
of
the Parties shall not survive the Effective Time; provided, however, that this
Section
10.3
shall
not limit any covenant or agreement of the Parties hereto which by its terms
contemplates performance after the Effective Time.
ARTICLE
XI
MISCELLANEOUS
| 11.1 |
Definitions.
|
(a) The
terms
set forth below shall have the meanings ascribed thereto in the referenced
sections:
|
Term
|
Section
|
|
|
|
|
Agreement
|
Preamble
|
|
Alternative
Financing
|
8.5(c)
|
|
Ancillary
Agreements
|
8.16
|
|
Antitrust
Laws
|
8.3(a)
|
|
Bessemer
Entities
|
Recitals
|
|
BOA
|
8.16
|
|
Book-Entry
Shares
|
4.1(a)
|
|
Certificate
of Merger
|
1.3
|
|
Certificates
|
4.1(a)
|
|
Change
of Recommendation
|
8.2(d)
|
|
Closing
|
1.2
|
|
Company
|
Preamble
|
|
Company
Balance Sheet Date
|
5.7
|
|
Company
Benefit Plans
|
5.15(a)
|
|
Company
Board Recommendation
|
5.24
|
|
Company
Contracts
|
5.16
|
|
Company
Expenses
|
11.2(g)
|
|
Company
IP
|
5.11(a)
|
|
Company
Licensed IP
|
5.11(a)
|
|
Company
Options
|
3.4(a)
|
|
Company
Owned IP
|
5.11(a)
|
|
Company
SEC Reports
|
5.5
|
|
Company
Stockholder Approval
|
8.1(b)
|
52
|
Company
Warrants
|
3.4(a)
|
|
Continuing
Employees
|
8.17(a)
|
|
Current
Rollover Persons
|
Recitals
|
|
Debt
Commitment Letter
|
6.7(a)
|
|
Debt
Financing
|
8.5(c)
|
|
Dissenting
Shares
|
3.3
|
|
DOJ
|
8.3(a)
|
|
DOL
|
5.15(b)
|
|
Effective
Time
|
1.3
|
|
End
Date
|
10.1(b)
|
|
Environmental
Permits
|
5.12
|
|
Equity
Financing
|
Recitals
|
|
ESPP
|
3.6
|
|
Fairness
Opinion
|
5.23
|
|
FTC
|
8.3(a)
|
|
Group
|
8.2(b)
|
|
HoldCo
|
Recitals
|
|
Indemnified
Parties
|
8.10(a)
|
|
Insight
Entities
|
Recitals
|
|
IRS
|
5.15(b)
|
|
Lender
|
6.7
|
|
Letter
of Transmittal
|
4.1(a)
|
|
Loan
Agreement
|
8.16
|
|
Merger
|
1.1
|
|
Merger
Consideration
|
3.1(c)
|
|
Merger
Sub
|
Preamble
|
|
New
Plans
|
8.17(a)
|
|
Old
Plans
|
8.17(a)
|
|
Option
Settlement Payment
|
3.4(b)
|
|
Option
Surrender Agreement
|
3.4(b)
|
|
Parent
|
Preamble
|
|
Parent
Expenses
|
11.2(f)
|
|
Paying
Agent
|
4.1(a)
|
|
Payment
Fund
|
4.1(a)
|
|
Rollover
Contribution
|
Recitals
|
|
Schedule
13E-3
|
8.1(a)
|
|
Stockholders’
Meeting
|
8.1(b)
|
|
Takeover
Laws
|
5.21
|
|
Termination
Fee
|
11.2(b)
|
|
Transaction
Documents
|
5.2(a)
|
|
Voting
Agreement
|
Recitals
|
|
Voting
Agreement Persons
|
Recitals
|
|
Warrant
Settlement Payment
|
3.4(c)
|
|
Warrant
Surrender Agreement
|
3.4(c)
|
|
Xxxxxxx
Xxxxx
|
5.22
|
53
(b) Except
as
otherwise provided herein, the capitalized terms set forth below shall have
the
following meanings:
“Acquisition
Proposal”
means
any written or oral Contract, offer or proposal or indication of interest
(whether communicated to the Company or publicly announced to the Company’s
stockholders) by any Person or Group (other than Parent or any of its
Affiliates) with respect to (i) a merger, reorganization, share exchange,
consolidation, business combination, recapitalization, reclassification, or
similar transaction involving the Company or any of its Subsidiaries whose
assets, individually or in the aggregate constitute more than 15% of the
consolidated assets of the Company; (ii) any direct or indirect purchase or
acquisition by any Person or Group of more than 15% of the voting securities
of
the Company or any of its Subsidiaries whose assets, individually or in the
aggregate constitute more than 15% of the consolidated assets of the Company
or
any tender offer or exchange offer that if consummated would result in any
Person or Group beneficially owning 15% or more of the voting securities of
the
Company or any of its Subsidiaries whose assets, individually or in the
aggregate constitute more than 15% of the consolidated assets of the Company;
(iii) any direct or indirect purchase of Assets, securities or ownership
interests representing an amount equal to or greater than 15% of the fair value
of the consolidated Assets of the Company or any of its Subsidiaries whose
assets, individually or in the aggregate constitute more than 15% of the
consolidated assets of the Company; or (iv) any liquidation or dissolution
of
the Company or any of its Subsidiaries whose assets, individually or in the
aggregate constitute more than 15% of the consolidated assets of the
Company.
“Affiliate”
of
a
Person means: (i) any other Person directly, or indirectly through one or
more intermediaries, controlling, controlled by or under common control with
such Person, where “control” means the possession, directly or indirectly, of
the power to direct or cause the direction of the management policies of a
Person, whether through the ownership of voting securities, by contract, as
trustee or executor or otherwise, (ii) any officer, director, partner,
employer, or direct or indirect beneficial owner of any 10% or greater equity
or
voting interest of such Person, or (iii) any other Person for which a
Person described in clause (ii) acts in any such capacity.
“Assets”
of
a
Person means all of the assets, properties, businesses and rights of such Person
of every kind, nature, character and description, whether real, personal or
mixed, tangible or intangible, accrued or contingent, or otherwise relating
to
or utilized in such Person’s business, directly or indirectly, in whole or in
part, whether or not carried on the books and records of such Person, and
whether or not owned in the name of such Person or any Affiliate of such Person
and wherever located.
“Closing
Date”
means
the date on which the Closing occurs.
“Company
Common Stock”
means
the $.01 par value common stock of the Company.
54
“Company
Disclosure Schedules”
means
the written information entitled “Netsmart Disclosure Schedules” delivered prior
to the date of this Agreement to Parent describing in reasonable detail the
matters contained therein and, with respect to each disclosure made therein,
specifically referencing each Section of this Agreement under which such
disclosure is being made.
“Company
Entities”
means,
collectively, the Company and all Company Subsidiaries.
“Company
Financial Statements”
means
(i) the consolidated balance sheets (including related notes and schedules,
if any) of the Company as of September 30, 2006, and the related statements
of
income, changes in stockholders’ equity, and cash flows (including related notes
and schedules, if any) for each of the three fiscal years ended December 31,
2004, December 31, 2005 and December 31, 2006, as filed by the Company in the
SEC Documents, and (ii) the consolidated balance sheets of the Company
(including related notes and schedules, if any) and related statements of
income, changes in stockholders’ equity and cash flows (including related notes
and schedules, if any) included in the SEC Documents filed with respect to
periods ended subsequent to September 30, 2006.
“Company
Material Adverse Effect”
means
an event, change, condition or occurrence which, individually or together with
any other event, change, condition or occurrence, has a material adverse impact
or effect on (i) the financial position, condition, business assets,
properties, liabilities or results of operations of the Company and its
Subsidiaries, taken as a whole, or (ii) the ability of the Company to
perform its material obligations under this Agreement and the other Transaction
Documents or to consummate the Merger or the other transactions contemplated
hereby or thereby; provided that “Company Material Adverse Effect” shall not be
deemed to include the impact or effect of (A) changes in Laws or
interpretations applicable to the Company or the industry in which the Company
operates, except to the extent such change has a disproportionate effect on
the
Company and its Subsidiaries in a significant respect, taken as a whole, as
compared to other Persons in the industry in which the Company and its
Subsidiaries operate, (B) changes in GAAP or the interpretations thereof,
except to the extent such change has a disproportionate effect on the Company
and its Subsidiaries, taken as a whole, as compared to other Persons in the
industry in which the Company and its Subsidiaries operate, (C) compliance
with and performance of this Agreement and the transactions contemplated by
this
Agreement, (D) changes affecting general economic conditions and the industry
in
which the Company operates except to the extent such change has a
disproportionate effect on the Company and its Subsidiaries in a significant
respect, taken as a whole, as compared to other Persons in the industry in
which
the Company and its Subsidiaries operate, (E) any change in the Company’s stock
price or trading volume, in and of itself (it being agreed that the facts or
occurrences giving rise or contributing to such change may be deemed to
constitute, or be taken into account in determining, whether there has been,
or
will be, a Company Material Adverse Effect), or (F) the failure of the Company
to meet projections of earnings, revenues or other financial measures (whether
such projections were made by the Company or independent third parties), in
and
of itself (it being agreed that the facts or occurrences giving rise or
contributing to such failure may be deemed to constitute, or be taken into
account in determining, whether there has been, or will be, a Company Material
Adverse Effect).
55
“Company
Stock Plans”
means
the existing stock option and other stock-based compensation plans of the
Company designated as follows: 1993 Long-Term Incentive Plan; 1998 Long-Term
Incentive Plan; 1999 Long-Term Incentive Plan; 2001 Long-Term Incentive Plan;
1999 Employee Stock Purchase Plan; and Executive Retirement, Non-Competition
and
Consulting Plan, as amended.
“Company
Subsidiaries”
means
the Subsidiaries of the Company, which shall include the Company Subsidiaries
described in Section
5.4
and any
corporation, limited liability company, limited partnership, limited liability
partnership or other organization acquired as a Subsidiary of the Company in
the
future and held as a Subsidiary by the Company at the Effective
Time.
“Confidentiality
Agreement”
means
that certain Confidentiality Agreement, dated July 17, 2006 between the Company
and Insight Venture Management, LLC.
“Consent”
means
any consent, approval, authorization, clearance, exemption, waiver or similar
affirmation by any Person pursuant to any Contract, Law, Order or
Permit.
“Contract”
means
any written or oral agreement, arrangement, authorization, commitment, contract,
indenture, instrument, lease, license, obligation, plan, practice, restriction,
understanding or undertaking of any kind or character.
“DGCL”
means
the General Corporation Law of the State of Delaware.
“Default”
means
(i) any breach or violation of, default under, contravention of or conflict
with, any Contract, Law, Order or Permit, (ii) any occurrence of any event
that with the passage of time or the giving of notice or both would constitute
a
breach or violation of, default under, contravention of, or conflict with,
any
Contract, Law, Order or Permit, or (iii) any occurrence of any event that
with or without the passage of time or the giving of notice would give rise
to a
right of any Person to exercise any remedy or obtain any relief under, terminate
or revoke, suspend, cancel, modify or change the current terms of, or
renegotiate, or to accelerate the maturity or performance of, or to increase
or
impose any Liability under, any Contract, Law, Order, or Permit, where, in
any
such event, such Default is reasonably likely to have, individually or in the
aggregate, a Company Material Adverse Effect or a Parent Material Adverse
Effect, as applicable.
“Employee
Benefit Plan”
means
each pension, retirement, profit-sharing, deferred compensation, stock option,
employee stock ownership, share purchase, severance pay, vacation, bonus,
retention, change in control or other incentive plan, medical, vision, dental
or
other health plan, any life insurance plan, flexible spending account, cafeteria
plan, vacation, holiday, disability or any other employee benefit plan or fringe
benefit plan, including any “employee benefit plan,” as that term is defined in
Section 3(3) of ERISA and any other plan, fund, trust, policy, program,
practice, custom understanding, arrangement or agreement providing compensation
or other benefits for the benefit of any current or former officer, employee,
director, retiree or independent contractor or any spouse, dependent or
beneficiary thereof, whether or not such Employee Benefit Plan is or is intended
to be (i) covered or qualified under the Internal Revenue Code, ERISA or any
other applicable Law, (ii) written or oral, (iii) funded or unfunded, (iv)
actual or contingent or (v) arrived at through collective bargaining or
otherwise.
56
“Environmental
Laws”
shall
mean all codes, Laws (including common Law), ordinances, regulations, reporting
or licensing requirements, rules, or statutes relating to pollution or
protection of human health or the environment (including ambient air, surface
water, ground water, land surface, or subsurface strata), including (i) the
Comprehensive Environmental Response Compensation and Liability Act, 42 U.S.C.
§§9601 et seq. (“CERCLA”); (ii) the Solid Waste Disposal Act, as amended by the
Resource Conservation and Recovery Act, 42 U.S.C. §§6901 et seq., (“RCRA”);
(iii) the Emergency Planning and Community Right to Know Act (42 U.S.C. §§11001
et seq.); (iv) the Clean Air Act (42 U.S.C. §§ 7401 et seq.); (v) the Clean
Water Act (33 U.S.C. §§1251 et seq.); (vi) the Toxic Substances Control Act (15
U.S.C. §§2601 et seq.); (vii) the Hazardous Materials Transportation Act (49
U.S.C. §§ 5101 et seq.); (viii) the Federal Insecticide, Fungicide and
Rodenticide Act (7 U.S.C. §§136 et seq.); (ix) the Safe Drinking Water Act (41
U.S.C. §§300f et seq.); (x) any state, county, municipal or local statues, laws
or ordinances similar or analogous to the federal statutes listed in parts
(i) -
(ix) of this subparagraph; (xi) any amendments to the statues, laws or
ordinances listed in parts (i) - (x) of this subparagraph; and (xii) any rules,
regulations, guidelines, directives, orders or the like adopted pursuant to
or
implementing the statutes, laws, ordinances and amendments listed in parts
(i) -
(xi) of this subparagraph.
“Equity
Rights”
means
all arrangements, calls, commitments, Contracts, options, rights to subscribe
to, scrip, understandings, warrants or other binding obligations of any
character whatsoever relating to, or securities or rights convertible into
or
exchangeable for, shares of the capital stock of a Person or by which a Person
is or may be bound to issue additional shares of its capital stock or other
Equity Rights.
“ERISA”
means
the Employee Retirement Income Security Act of 1974, as amended.
“ERISA
Affiliate”
means
any entity which together with a Company Entity would be treated as a single
employer under Internal Revenue Code Section 414 or ERISA Section
4001(b).
57
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
“GAAP”
means
generally accepted accounting principles in the United States, consistently
applied during the periods involved.
“Hazardous
Material”
shall
mean any chemical, substance, waste, material, pollutant, contaminant, equipment
or fixture defined as or deemed hazardous or toxic or otherwise regulated under
any Environmental Law, including RCRA hazardous wastes, CERCLA hazardous
substances, pesticides and other agricultural chemicals, oil and petroleum
products or byproducts and any constituents thereof, urea formaldehyde
insulation, lead in paint or drinking water, asbestos, and polychlorinated
biphenyls (PCBs).
“HSR
Act”
means
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, and the
rules and regulations promulgated thereunder.
“Intellectual
Property”
shall
mean any and all (x) (i) inventions (whether patentable or unpatentable and
whether or not reduced to practice), improvements thereto, patents, patent
applications, provisional applications, patent equivalents, statutory invention
registrations, and any disclosures, revivals, renewals, reissuances, divisions,
continuations, continuations-in-part, revisions, extensions, reexaminations,
or
certifications relating to the foregoing, (ii) trademarks, service marks, trade
names, devices, designs, icons, logos, slogans, or Internet domain names, or
any
other designation of origin, source or sponsorship, together with the goodwill
relating to any of the foregoing, (iii) copyrights, copyrightable works, works
of authorship, and moral rights, (iv) computer software and programs (excluding
commercial, off-the-shelf software), databases, and mask works, and (v)
confidential or proprietary information, including trade secrets, know-how,
knowledge, technology and technical information, processes, formulae,
discoveries, technical advances, designs or design protocols, devices,
instructions, specifications, products and methods, as well as (y) any
documentation and media constituting, describing or relating to any of the
foregoing, and (z) any applications or registrations for any of the foregoing
and including the Company Owned IP and the Company Licensed IP.
“Internal
Revenue Code”
means
the Internal Revenue Code of 1986, as amended, and the rules and regulations
promulgated thereunder.
“IP
Agreements”
means
any and all agreements to which the Company or its Subsidiaries are a party
with
a third party governing licenses of any Intellectual Property to or from the
Company or its Subsidiaries, other than routine commercial off-the-shelf
shrink-wrap or click-through licenses.
58
“Knowledge”
as
used
with respect to a Person (including references to such Person being aware of
a
particular matter) means those facts that are known by the persons listed in
Section
11.1
of the
Company Disclosure Schedules after due inquiry.
“Law”
means
any code, law (including common law), ordinance, regulation, treaty reporting
or
licensing requirement, rule, or statute applicable to a Person or its Assets,
Liabilities, or business, including those promulgated, interpreted or enforced
by any Regulatory Authority.
“Leased
Real Property”
means
all real property that is not owned in fee simple by the Company or its
Subsidiaries that the Company or its Subsidiaries either occupies or uses or
has
the right to occupy or use, together with all improvements thereon (including
construction in progress) and appurtenances thereto located on such real
property).
“Liability”
means
any direct or indirect, primary or secondary, liability, indebtedness,
obligation, penalty, cost or expense (including costs of investigation,
collection and defense), claim, deficiency, guaranty or endorsement of or by
any
Person (other than endorsements of notes, bills, checks, and drafts presented
for collection or deposit in the ordinary course of business) of any type,
whether accrued, absolute or contingent, liquidated or unliquidated, matured
or
unmatured, determinable or otherwise.
“Lien”
means
any conditional sale agreement, default of title, easement, encroachment,
encumbrance, hypothecation, infringement, lien, mortgage, pledge, charge,
reservation, restriction, security interest, title retention, deed of trust,
option, right of first refusal, defect in title preemptive right or other
security arrangement, or any adverse right or interest, charge, or claim of
any
nature whatsoever of, on, or with respect to any property or property interest,
other than (i) Liens for current property Taxes not yet due and payable,
(ii) Liens which do not materially impair the use of or title to the Assets
subject to such Lien, (iii) the filing of a filing statement under the Uniform
Commercial Code or its equivalent in any jurisdiction or (iv) any agreement
by
such Person to grant, give or otherwise convey any of the foregoing (each of
the
Liens referred to in clauses (i) and (ii), a “Permitted
Lien”).
“Litigation”
means
any action, arbitration, mediation, cause of action, lawsuit, claim, complaint,
criminal prosecution, governmental or other examination or investigation, audit
(other than regular audits of financial statements by outside auditors), hearing
or administrative or other proceeding relating to or affecting such a
Party.
“Material”
or
“material” for purposes of this Agreement shall be determined in light of the
facts and circumstances of the matter in question; provided that any specific
monetary amount stated in this Agreement shall determine materiality in that
instance.
59
“Merger
Sub Common Stock”
means
the $0.01 par value common stock of Merger Sub.
“Nasdaq”
means
the Nasdaq Stock Market, Inc.
“Order”
means
any administrative decision or award, decree, injunction, judgment, order,
quasi-judicial decision or award, ruling or writ of any federal, state, local
or
foreign or other court, arbitrator, mediator, tribunal, administrative agency,
or Regulatory Authority.
“Parent
Entities”
means,
collectively, Parent and all Parent Subsidiaries.
“Parent
Material Adverse Effect”
means
an event, change, condition or occurrence which, individually or together with
any other event, change, condition or occurrence, has a material adverse impact
or effect on the ability of Parent to perform its obligations under this
Agreement and the other Transaction Documents or to consummate the Merger or
the
other transactions contemplated hereby or thereby.
“Parent
Subsidiaries”
means
the Subsidiaries of Parent and any corporation, limited liability company,
limited partnership, limited liability partnership or other organization
acquired as a Subsidiary of Parent in the future and held as a Subsidiary by
Parent at the Effective Time.
“Party”
means
any of the Company, Merger Sub or Parent, and “Parties”
means
the Company, Merger Sub and Parent.
“Permit”
means
any federal, state, local and foreign governmental approval, authorization,
certificate, easement, filing, franchise, license, notice, permit, or right
to
which any Person is a party or that is or may be binding upon or inure to the
benefit of any Person or its securities, Assets, or business.
“Person”
means
a
natural person or any legal, commercial or governmental entity, such as, but
not
limited to, a corporation, general partnership, joint venture, limited
partnership, limited liability company, limited liability partnership, trust,
business association, group acting in concert, or any person acting in a
representative capacity.
“Proxy
Statement”
means
the proxy statement, as amended or supplemented, used by the Company to solicit
the Company Stockholder Approval.
“Real
Property”
means
all real property that is owned by the Company or any of its Subsidiaries,
and
all of the Company’s or its Subsidiaries’ right, title, and interest in the
improvements located thereon, together with all water lines, rights of way,
uses, licenses, hereditaments, tenements, and appurtenances belonging or
appertaining thereto and any and all assignable warranties of third parties
with
respect thereto.
60
“Real
Property Leases”
means
any real estate leases (including, any assignment of a real estate lease or
sublease) pursuant to which the Company or any of its Subsidiaries leases any
Leased Real Property, and any and all assignable warranties of third parties
with respect thereto, and any amendments, extensions and renewals of such real
estate leases.
“Regulatory
Authorities”
means,
collectively, the SEC, Nasdaq, the IRS, and all other federal, state, county,
local, foreign or other governmental or regulatory agencies, authorities
(including taxing and self-regulatory authorities), instrumentalities,
commissions, boards or bodies having jurisdiction over the Parties and their
respective Subsidiaries.
“Representative”
means
any officers, directors, employees, investment banker, financial advisor,
attorney, accountant, consultant or other representative, agent or advisor
engaged by a Person.
“Rollover
Agreements”
means
those individual agreements entered into by the Rollover Persons and Parent
or
Holdco, at or prior to the Closing Date, including employment or other
agreements related thereto.
“Rolling
Persons”
means
those holders of Company Options or shares of Company Common Stock, including
the Current Rolling Persons, to be set forth in a schedule to be delivered
by
Parent to the Company no later than 5 days prior to the Closing
Date.
“Rollover
Options”
means
a
number of Company Options held by the Rolling Persons that the Rolling Persons
agree, pursuant to the Rollover Agreements shall be cancelled in exchange for
options to purchase shares of common stock or other equity interests of Holdco.
“Xxxxxxxx-Xxxxx
Act”
means
the Xxxxxxxx-Xxxxx Act of 2002, as amended, and the rules and regulations
promulgated thereunder.
“SEC”
means
the United States Securities and Exchange Commission.
“SEC
Documents”
means
all forms, proxy statements, registration statements, reports, schedules and
other documents, including all certifications and statements required by (x)
Rule 13a-14 or 15d-14 under the Exchange Act or (y) Section 906 of the
Xxxxxxxx-Xxxxx Act with respect to any report that is an SEC Document, filed
or
required to be filed, by a Party or any of its Subsidiaries with any Regulatory
Authority pursuant to the Securities Laws.
61
“Securities
Act”
means
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
“Securities
Laws”
means
the Securities Act, the Exchange Act, the Xxxxxxxx-Xxxxx Act, the Investment
Company Act of 1940, as amended, the Investment Advisors Act of 1940, as
amended, the Trust Indenture Act of 1939, as amended, and the rules and
regulations of any Regulatory Authority promulgated thereunder.
“Software”
means
any and all computer programs and software programs (including all source code
and object code).
“Special
Committee”
means
a
committee of the Company’s Board of Directors, the members of which are not
affiliates with Parent or Merger Sub and are not members of the Company’s
management and are “independent” as defined under applicable rules of the
Nasdaq, formed for the purpose of, among other things, evaluating and making
a
recommendation for the full Board of Directors of the Company (including the
Company Board Recommendation) with respect to this Agreement and the
transactions contemplated hereby.
“Subsidiaries”
means
all those corporations, associations, or other business entities of which the
entity in question either (i) owns or controls 50% or more of the
outstanding equity securities either directly or through an unbroken chain
of
entities as to each of which 50% or more of the outstanding equity securities
is
owned or controlled directly or indirectly by its parent (provided, there shall
not be included any such entity the equity securities of which are owned or
controlled in a fiduciary capacity), (ii) in the case of partnerships,
serves as a general partner, (iii) in the case of a limited liability
company, serves as a managing member, or (iv) otherwise has the ability to
elect a majority of the directors, trustees or managing members
thereof.
“Superior
Proposal”
means
any Acquisition Proposal (on its most recently amended or modified terms, if
amended or modified) (i) involving the acquisition of at least 75% of the
voting securities of the Company or 75% of the consolidated Assets of the
Company and its Subsidiaries, taken as a whole, and (ii) with respect to which
the Board of Directors of the Company (or the Special Committee)
(A) determines in good faith that such Acquisition Proposal, if accepted,
is reasonably likely to be consummated on a timely basis, taking into account
all legal, financial, regulatory, timing of consummation and other aspects
of
the Acquisition Proposal and the Person or Group making the Acquisition Proposal
and (B) determines in its good faith judgment (after consultation with its
financial advisors and receiving the advice of outside legal advisors and
Xxxxxxx Xxxxx, its affiliates or any other financial advisor of nationally
recognized reputation) to be more favorable to the Company’s stockholders
(including from a financial point of view) than the Merger taking into account
all relevant factors (including whether, in the good faith judgment of the
Board
of Directors of the Company, after consultation with its financial advisors
and
receiving the advice of outside legal advisors and Xxxxxxx Xxxxx, its affiliates
or any other financial advisor of nationally recognized reputation, the Person
or Group making such Acquisition Proposal is reasonably able to finance the
transaction, and any proposed changes to this Agreement that may be proposed
by
Parent in response to such Acquisition Proposal). The Company acknowledges
and
agrees that each successive modification of the financial or other material
terms of an Acquisition Proposal that is determined to be a Superior Proposal
shall be deemed to constitute a new Superior Proposal if such proposal, as
modified, otherwise shall satisfy the definition hereof.
62
“Surviving
Corporation”
means
the Company as the surviving corporation resulting from the Merger.
“Tax”
or
“Taxes”
means
any federal, state, county, local, or foreign taxes, charges, fees, levies,
imposts, duties, or other assessments, including income, gross receipts, excise,
employment, sales, use, transfer, recording license, payroll, franchise,
severance, documentary, stamp, occupation, windfall profits, escheat,
environmental, federal highway use, commercial rent, customs duties, capital
stock, paid-up capital, profits, withholding, Social Security, single business
and unemployment, disability, real property, personal property, registration,
ad
valorem, value added, alternative or add-on minimum, estimated, or other tax
or
governmental fee of any kind whatsoever, imposed or required to be withheld
by
the United States or any state, county, local or foreign government or
subdivision or agency thereof, and any Liability imposed by Law for the Taxes
of
another Person, including by reason of being a successor to or transferee of
any
Person or a member of an affiliated, consolidated or unitary group (including
pursuant to Treasury Regulations 1.1502-6 and corresponding provisions of
state, local and foreign Law), together with all interest, penalties and
additions imposed with respect to such amounts and any obligations under any
agreements or arrangements with any other Person with respect to such
amounts.
“Tax
Return”
means
any report, return, information return, or other information required to be
supplied to a Regulatory Authority in connection with Taxes, including any
return of an affiliated or combined or unitary group that includes a Party
or
its Subsidiaries.
“Termination
Fee Acquisition Proposal”
means
any Acquisition Proposal (on its most recently amended or modified terms, if
amended or modified) involving the acquisition of at least 35% of the voting
securities of the Company or 35% of the consolidated Assets of the Company
and
its Subsidiaries, taken as a whole.
“Trading Market”
means
the following markets or exchanges on which the Company Common Stock is listed
or quoted for trading on the date in question: the Nasdaq Capital Market, the
American Stock Exchange, the New York Stock Exchange, the Nasdaq Global Market
or the OTC Bulletin Board.
63
(c) Any
singular term in this Agreement shall be deemed to include the plural, and
any
plural term the singular. Whenever the words “include,” “includes” or
“including” are used in this Agreement, they shall be deemed followed by the
words “without limitation.”
| 11.2 |
Expenses.
|
(a) Except
as
otherwise provided in this Section
11.2,
each of
the Parties shall bear and pay all costs and expenses incurred by it or on
its
behalf in connection with the transactions contemplated hereunder, including
filing, registration and application fees, printing fees, and fees and expenses
of its own financial or other consultants, investment bankers, accountants,
and
counsel, whether or not the Merger is consummated.
(b) Notwithstanding
the foregoing, if Parent
shall terminate this Agreement pursuant to Section
10.1(f)
or if
the Company shall terminate this Agreement pursuant to Section
10.1(g),
then
the
Company shall pay to Parent an amount equal to three-percent (3.0%) of the
aggregate Merger Consideration, Option Settlement Payments and Warrant
Settlement Payments payable hereunder (the “Termination
Fee”).
Payment of the Termination Fee pursuant to this Section
11.2(b)
shall be
made by wire transfer of immediately available funds, to an account designated
by Parent, no later than two business days from the date of termination of
this
Agreement.
(c) If
(i)
either Parent or the Company terminates this Agreement pursuant to Section
10.1(e),
(ii) at
the time of the Stockholders’ Meeting there shall have been proposed or
announced a bona fide Acquisition Proposal and (iii) either (A) within 365
days
following the date of such termination, the Company enters into a definitive
agreement with respect to or consummates a transaction with respect to such
Acquisition Proposal or enters into a definitive agreement with respect to
or
consummates a transaction with respect to any Termination Fee Acquisition
Proposal with the same Person who had made such Acquisition Proposal or (B)
within 180 days following the date of such termination, the Company enters
into
a definitive agreement with respect to or consummates a transaction with respect
to any Termination Fee Acquisition Proposal with any Person, then at the closing
or other consummation of a transaction with respect to such Acquisition Proposal
or Termination Fee Acquisition Proposal, the Company shall pay Parent an amount
equal to the Termination Fee less any Parent Expenses paid by the Company to
Parent pursuant to Section
11.2(f)
by wire
transfer of immediately available funds, to an account designated by Parent,
no
later than two business days from the date such transaction is
consummated.
(d) If
(i)
either Parent or the Company terminates this Agreement pursuant to Section
10.1(b)
and (ii)
either (A) within 365 days following the date of such termination, the Company
enters into a definitive agreement with respect to or consummates a transaction
with respect to an Acquisition Proposal that was proposed or announced at the
time of termination or enters into a definitive agreement with respect to or
consummates a transaction with respect to any Termination Fee Acquisition
Proposal with the same Person who had made such Acquisition Proposal or (B)
within 180 days following the date of such termination, the Company enters
into
a definitive agreement with respect to or consummates a transaction with respect
to any Termination Fee Acquisition Proposal with any Person, then at the closing
or other consummation of a transaction with respect to such Acquisition Proposal
or Termination Fee Acquisition Proposal, the Company shall pay Parent an amount
equal to the Termination Fee less any Parent Expenses paid by the Company to
Parent pursuant to Section
11.2(f)
by wire
transfer of immediately available funds, to an account designated by Parent,
no
later than two business days from the date such transaction is
consummated.
64
(e) If
(i)
Parent shall terminate this Agreement pursuant to Section
10.1(c)
and (ii)
either (A) within 365 days following the date of such termination, the Company
enters into a definitive agreement with respect to or consummates a transaction
with respect to an Acquisition Proposal that was proposed or announced at the
time of termination or enters into a definitive agreement with respect to or
consummates a transaction with respect to any Termination Fee Acquisition
Proposal with the same Person who had made such Acquisition Proposal or (B)
within 180 days following the date of such termination, the Company enters
into
a definitive agreement with respect to or consummates a transaction with respect
to any Termination Fee Acquisition Proposal with any Person, then at the closing
or other consummation of a transaction with respect to such Acquisition Proposal
or Termination Fee Acquisition Proposal, the Company shall pay Parent an amount
equal to the Termination Fee less any Parent Expenses paid by the Company to
Parent pursuant to Section
11.2(f)
by wire
transfer of immediately available funds, to an account designated by Parent,
no
later than two business days from the date such transaction is
consummated.
(f) In
the
event that this Agreement is terminated by Parent, on the one hand, or the
Company, on the other hand, pursuant to Section
10.1(e)
or
10.1(b),
or if
Parent terminates this Agreement pursuant to Section
10.1(c),
in each
case under circumstances in which the Termination Fee is not payable at the
time
of such termination pursuant to this Section
11.2,
then
the Company shall pay, to an account or account designated by Parent, as
promptly as possible (and in any event within 2 business days) following receipt
of an invoice therefor, all of Parent’s actual and reasonably documented
out-of-pocket fees and expenses (including reasonable legal fees and expenses)
incurred by Parent and its Affiliates on or prior to the termination of this
Agreement in connection with the transactions contemplated by this Agreement
(“Parent
Expenses”)
as
directed by Parent in writing, which amount shall not be greater than
one-percent (1.0%) of the aggregate Merger Consideration, Option Settlement
Payments and Warrant Settlement Payments payable hereunder; provided,
however,
that
the existence of circumstances which could require the Termination Fee to become
subsequently payable by the Company pursuant to this Section
11.2
shall
not relieve the Company of its obligations to pay the Parent Expenses pursuant
to this paragraph
(f)
of this
Section
11.2;
provided further,
however,
that
the payment by the Company of the Parent Expenses pursuant to this paragraph
(f)
of this Section
11.2
shall
not relieve the Company of any subsequent obligation to pay the Termination
Fee
pursuant to this Section
11.2.
(g) In
the
event that this Agreement (i) is terminated by the Company pursuant to
Section
10.1(c),
or (ii)
(A) is terminated by the Company pursuant to Section
10.1(b),
(B) all
conditions to Closing as set forth in Article
IX,
other
than the conditions set forth in Section
9.2(g)
with
respect to the Debt Financing or Alternative Financing, have been satisfied,
(C)
all other conditions to the Debt Financing or Alternative Financing have been
satisfied (except those conditions solely in control of the Parent, the Insight
Entities or the Bessemer Entities and those conditions that are not able to
be
satisfied solely because the conditions that are solely in control of the
Parent, the Insight Entities or the Bessemer Entities have not been satisfied),
and (D) the failure to satisfy the conditions set forth in Section
9.2(g)
is not
caused by any breach of this Agreement by the Company; then the Parent shall
pay, to an account or account designated by the Company, as promptly as possible
(and in any event within 2 business days) following receipt of an invoice
therefor, all of the Company’s actual and reasonably documented out-of-pocket
fees and expenses (including reasonable legal fees and expenses) incurred by
the
Company on or prior to the termination of this Agreement in connection with
the
transactions contemplated by this Agreement (“Company
Expenses”)
as
directed by the Company in writing, which amount shall not be greater than
one-percent (1.0%) of the aggregate Merger Consideration, Option Settlement
Payments and Warrant Settlement payments payable hereunder.
65
(h) The
Parties acknowledge that the agreement contained in paragraphs
(b)-(g)
of this
Section
11.2
are an
integral part of the transactions contemplated by this Agreement, and that
without the agreement, they would not enter into this Agreement; accordingly,
if
the Company fails to pay promptly the Termination Fee or Parent Expenses payable
by it pursuant to this Section
11.2,
then
the Company shall pay to Parent, its costs and expenses (including attorneys’
fees) in connection with collecting such fee, together with interest on the
amount of the fee at the prime rate of Citibank N.A. from the date such payment
was due under this Agreement until the date of payment to the extent the Parent
is successful in seeking a judgment or settlement for the payment by the Company
of all or a portion of the Termination Fee or Parent Expenses. The Company
acknowledges and agrees that, notwithstanding anything to the contrary in this
Agreement, the Transaction Documents or any document or instrument delivered
in
connection herewith or therewith, the rights set forth in Section
11.2(g)
shall be
the Company’s or any of its Affiliates’ sole and exclusive remedy against the
Parent, Merger Sub or any of their respective Affiliates, with respect to the
matters set forth in Section
11.2(g)
and
with respect to the failure of Parent or Merger Sub to satisfy an obligation
due
to a failure to obtain the Debt Financing or the Alternative Financing to the
extent the conditions precedent set forth in Section
9.2(g)
are not
available pursuant to the terms thereof, except as otherwise expressly set
forth
in the equity commitment letters entered into with the Insight Entities and
the
Bessemer Entities in connection with the Equity Financing.
| 11.3 |
Entire
Agreement.
|
Except
as
otherwise expressly provided herein, this Agreement (including the documents
and
instruments referred to herein) constitutes the entire agreement between the
Parties with respect to the transactions contemplated hereunder and supersedes
all prior arrangements or understandings with respect thereto, written or oral
(except for the Confidentiality Agreement). Nothing in this Agreement expressed
or implied, is intended to or shall confer upon any Person, other than the
Parties or their respective successors, any rights, remedies, obligations,
or
liabilities of any nature whatsoever under or by reason of this Agreement,
other
than as provided in Section
8.10.
| 11.4 |
Amendments.
|
To
the
extent permitted by Law, this Agreement may be amended by a subsequent writing
signed by each of the Parties upon the approval of each of the Parties, whether
before or after Company Stockholder Approval of this Agreement has been
obtained; provided, however, that after any such approval by the holders of
Company Common Stock, no amendment shall be made that requires the further
approval of the stockholders of the Company, without such further
approval.
66
| 11.5 |
Waivers.
|
(a) Prior
to
or at the Effective Time, Parent, acting through its Board of Directors (or
Special Committee, as the case may be), chief executive officer or other
authorized officer, shall have the right to waive any Default in the performance
of any term of this Agreement by the Company, to waive or extend the time for
the compliance or fulfillment by the Company of any and all of its obligations
under this Agreement, and to waive any or all of the conditions precedent to
the
obligations of Parent under this Agreement, except any condition which, if
not
satisfied, would result in the violation of any Law. No such waiver shall be
effective unless in writing signed by a duly authorized officer of
Parent.
(b) Prior
to
or at the Effective Time, the Company, acting through its Board of Directors,
chief executive officer or other authorized officer, shall have the right to
waive any Default in the performance of any term of this Agreement by
Parent or
Merger
Sub, to waive or extend the time for the compliance or fulfillment by
Parent or Merger
Sub of any and all of its obligations under this Agreement, and to waive any
or
all of the conditions precedent to the obligations of the Company under this
Agreement, except any condition which, if not satisfied, would result in the
violation of any Law. No such waiver shall be effective unless in writing signed
by a duly authorized officer of the Company.
(c) The
failure of any Party at any time or times to require performance of any
provision hereof shall in no manner affect the right of such Party at a later
time to enforce the same or any other provision of this Agreement. No waiver
of
any condition or of the breach of any term contained in this Agreement in one
or
more instances shall be deemed to be or construed as a further or continuing
waiver of such condition or breach or a waiver of any other condition or of
the
breach of any other term of this Agreement.
| 11.6 |
Assignment.
|
Except
as
expressly contemplated hereby, neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any Party hereto
(whether by operation of Law or otherwise) without the prior written consent
of
the other Party; provided,
that
(i) Merger Sub may assign, in its sole discretion, any of or all its rights,
interests, and obligations under this Agreement to Parent or to any direct
or
indirect wholly-owned Subsidiary or Affiliate of Parent and (ii) Parent or
Merger Sub may assign in its or their sole discretion, any of or all its or
their rights, interests and obligations under this Agreement to any financing
source, but in either case, no such assignment shall relieve Parent or Merger
Sub of any of its obligations under this Agreement. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and
be
enforceable by the Parties and their respective successors and
assigns.
| 11.7 |
Notices.
|
All
notices or other communications which are required or permitted hereunder shall
be in writing and sufficient if delivered by hand, by registered or certified
mail, postage pre-paid, by courier or overnight carrier, or by facsimile
transmission to the Persons at the addresses set forth below (or at such other
address as may be provided hereunder), and shall be deemed to have been
delivered as of the date so delivered:
67
| the Company: |
Netsmart
Technologies, Inc.
|
| the Company: Netsmart Technologies, Inc. |
| 0000 Xxxxxxx Xxxxxxx, Xxxxx X-000 |
| Xxxxx Xxxxx, Xxx Xxxx 00000 |
| Attention: Xxxxx Xxxxxx |
|
Fax:
(000)
000-0000
|
|
Copy
to Counsel:
|
Xxxxxxx
Xxxxx P.C.
|
| 0000 Xxxxxxx Xxxxx |
| Xxxxxxxxx, XX 00000-0000 |
| Attention: Xxxxx Xxxxxxxxx, Esq. |
| Fax: (000) 000-0000 |
|
Copy
to Special
|
|
Committee
Counsel:
|
Xxxxxxxxx
Xxxxxxx Xxxx & Xxxxx LLP
|
|
0000
Xxxxxx xx xxx Xxxxxxxx
|
|
Xxx
Xxxx, Xxx Xxxx 00000
|
|
Attention:
Xxxxxx X. Xxx, Esq.
|
|
Fax:
(000) 000-0000
|
| Parent: |
NT
Acquisition, Inc.
|
| c/o Insight Venture Management, L.L.C. |
| 000 Xxxxx Xxxxxx, 0xx Xxxxx |
| Xxx Xxxx, XX 00000 |
| Attention: Xxxxxxxx Xxxxxx |
| Fax: (000) 000-0000 |
|
Copy
to Counsel:
|
O’Melveny
& Xxxxx LLP
|
| Times Square Tower |
| 0 Xxxxx Xxxxxx |
| Xxx Xxxx, Xxx Xxxx 00000 |
| Attention: Xxxx X. Nissan, Esq. |
| Fax: (000) 000-0000 |
| 11.8 |
Governing
Law.
|
Regardless
of any conflict of Law or choice of law principles that might otherwise apply,
the Parties agree that this Agreement shall be governed by and construed in
all
respects in accordance with the Laws of the State of Delaware. The Parties
all
expressly agree and acknowledge that the State of Delaware has a reasonable
relationship to the Parties and/or this Agreement. All actions and proceedings
arising out of or relating to this Agreement (including any action or proceeding
by a person who is a beneficiary of Section 8.10
to
enforce his or her rights thereunder) shall be heard and determined exclusively
in the Chancery Court of the State of Delaware (or other appropriate state
court
in the State of Delaware) or any federal court sitting in the State of Delaware.
The Parties hereby (a) submit to the exclusive jurisdiction of any such state
or
federal court sitting in the State of Delaware for the purpose of any proceeding
arising out of or relating to this Agreement brought by any Party or any
beneficiary of Section 8.10
and
(b) irrevocably waive, and agree not to assert by way of motion, defense or
otherwise, in any such proceeding, any claim that it is not subject personally
to the jurisdiction of the above-named courts, that its property is exempt
or
immune from attachment or execution, that the proceeding is brought in an
inconvenient forum, that the venue of the proceeding is improper, or that this
Agreement or the transactions contemplated herein may not be enforced in or
by
any of the above-named courts.
68
| 11.9 |
Counterparts.
|
This
Agreement may be executed in two or more counterparts, including via facsimile
transmission, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
| 11.10 |
Captions;
Articles and Sections.
|
The
captions contained in this Agreement are for reference purposes only and are
not
part of this Agreement. Unless otherwise indicated, all references to particular
Articles or Sections shall mean and refer to the referenced Articles and
Sections of this Agreement.
| 11.11 |
Interpretations.
|
Neither
this Agreement nor any uncertainty or ambiguity herein shall be construed or
resolved against any Party, whether under any rule of construction or otherwise.
No Party to this Agreement shall be considered the draftsman. The Parties
acknowledge and agree that this Agreement has been reviewed, negotiated and
accepted by all Parties and their attorneys and shall be construed and
interpreted according to the ordinary meaning of the words used so as fairly
to
accomplish the purposes and intentions of all Parties hereto.
| 11.12 |
Enforcement
of Agreement.
|
The
Parties hereto agree that irreparable damage would occur in the event that
any
of the provisions of this Agreement was not performed in accordance with its
specific terms or was otherwise breached. It is accordingly agreed that, except
as otherwise provided in Section
11.2(h),
the
Parties shall be entitled to an injunction or injunctions to prevent breaches
of
this Agreement and to enforce specifically the terms and provisions hereof
in
any court of the United States or any state having jurisdiction, this being
in
addition to any other remedy to which they are entitled at law or in
equity.
| 11.13 |
Severability.
|
Any
term
or provision of this Agreement which is invalid or unenforceable in any
jurisdiction shall, as to that jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without rendering invalid or unenforceable
the remaining terms and provisions of this Agreement or affecting the validity
or enforceability of any of the terms or provisions of this Agreement in any
other jurisdiction. If any provision of this Agreement is so broad as to be
unenforceable, the provision shall be interpreted to be only so broad as is
enforceable.
69
| 11.14 |
Waiver
of Jury Trial.
|
Each
Party hereby waives to the fullest extent permitted by applicable Law any right
it may have to a trial by jury with respect to any litigation directly or
indirectly arising out of, under or in connection with this Agreement or the
transactions contemplated herein. Each Party (a) certifies that no agent or
representative of any other Party has represented, expressly or otherwise,
that
such other Party would not, in the event of litigation, seek to enforce that
foregoing waiver and (b) acknowledges that it and the other Parties hereto
have
been induced to enter into this Agreement and the transactions contemplated
herein, as applicable, by, among other things, the mutual waivers and
certifications in this Section
11.14.
| 11.15 |
Disclosure
Schedules.
|
Parent
and Merger Sub shall be entitled to claim that any fact or combination of facts
constitutes a breach of any of the representations or warranties contained
in
this Agreement only if and to the extent that such fact or combination of facts
has been disclosed in any Section of the Company Disclosure Schedules in
sufficient detail and is reasonably apparent to put a reasonable person on
notice of the relevance of the facts or circumstances so disclosed. The
inclusion of any item in any Section of the Company Disclosure Schedules (i)
does not represent a determination by the Company that such item is “material”
or has, or would reasonably be expected to have, a Company Material Adverse
Effect and (ii) does not represent a determination by the Company that such
item
did not arise in the ordinary course of business.
[SIGNATURES
ON NEXT PAGE]
70
IN
WITNESS WHEREOF, each of the Parties has caused this Agreement to be executed
on
its behalf by its duly authorized officers as of the day and year first above
written.
| PARENT: | ||
| NT ACQUISITION, INC. | ||
| By: | /s/ Xxxxxxxx Xxxxxx | |
| Name: | Xxxxxxxx Xxxxxx | |
| Its: | President | |
| MERGER SUB: | ||
| NT MERGER SUB, INC. | ||
| By: | /s/ Xxxxxxxx Xxxxxx | |
| Name: | Xxxxxxxx Xxxxxx | |
| Its: | President | |
| THE COMPANY: | ||
| NETSMART TECHNOLOGIES, INC. | ||
| By: | /s/ Xxxxx X. Xxxxxx | |
| Name: | Xxxxx X. Xxxxxx | |
| Its: | CEO | |
Annex
A
Xxxx
X.
Xxxxxxxx
Xxxxxx
X.
Xxxx
Xxxxx
X.
Xxxxxx
Xxxxxxx
X. Xxxxxxxx
Xxxxxx
X.
Xxxxxxxx
Xxxxxxx
X. Xxxxxxxx
Xxxx
S.T.
Xxxxxxxxx
Xxxxx
Xxxxxxx
Xxxxx
Xxxxxx
Xxxx
X.
Xxxxxxxxxxx
Exhibit
A
AMENDED
AND RESTATED CERTIFICATE OF INCORPORATION
OF
NETSMART
TECHNOLOGIES,
INC.
ARTICLE
I
NAME
The
name
of the corporation (herein called the “Corporation”)
is
“Netsmart Technologies, Inc.”
ARTICLE
II
REGISTERED
OFFICE AND AGENT
The
address of the registered office of the Corporation in the State of Delaware
is
0000 Xxxxxxxxxxx Xxxx, Xxxxx 000, Xxxx xx Xxxxxxxxxx, Xxxxxx of New Castle
19808. The name of the registered agent of the Corporation at such address
is
Corporate Agents, Inc.
ARTICLE
III
PURPOSE
The
purpose of the Corporation is to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of the State
of
Delaware (the “DGCL”).
ARTICLE
IV
CAPITAL
STOCK
The
total
number of shares of all classes of stock which the Corporation shall have
authority to issue is 1,000 shares, all of which shall be of one class, shall
be
designated Common Stock and shall have a par value of $0.01 per
share.
ARTICLE
V
DIRECTORS
The
number of directors of the Corporation shall be such as from time to time shall
be fixed in the manner provided in the By-laws of the Corporation. The election
of directors of the Corporation need not be by ballot unless the By-laws so
require.
ARTICLE
VI
MANAGEMENT
OF THE CORPORATION
For
the
management of the business and for the conduct of the affairs of the
Corporation, and in further definition, limitation and regulation of the powers
of the Corporation and of its directors and stockholders, it is further
provided:
6.1 In
furtherance and not in limitation of the powers conferred by the laws of the
State of Delaware, the board of directors of the Corporation is expressly
authorized and empowered:
(a) to
make,
alter, amend or repeal the By-laws in any manner not inconsistent with the
laws
of the State of Delaware or this Certificate of Incorporation;
(b) without
the assent or vote of the stockholders, to authorize and issue securities and
obligations of the Corporation, secured or unsecured, and to include therein
such provisions as to redemption, conversion or other terms thereof as the
board
of directors in its sole discretion may determine, and to authorize the
mortgaging or pledging, as security therefor, of any property of the
Corporation, real or personal, including after-acquired property;
In
addition to the powers and authorities herein or by statute expressly conferred
upon it, the board of directors may exercise all such powers and do all such
acts and things as may be exercised or done by the Corporation, subject,
nevertheless, to the provisions of the laws of the State of Delaware, of this
Certificate of Incorporation and of the By-laws of the Corporation.
6.2 Any
director or any officer elected or appointed by the stockholders or by the
board
of directors may be removed at any time in such manner as shall be provided
in
the By-laws of the Corporation.
6.3 From
time
to time any of the provisions of this Certificate of Incorporation may be
altered, amended or repealed, and other provisions authorized by the laws of
the
State of Delaware at the time in force may be added or inserted, in the manner
and at the time prescribed by said laws, and all rights at any time conferred
upon the stockholders of the Corporation by this Certificate of Incorporation
are granted subject to the provisions of this paragraph (c).
2
ARTICLE
VII
CREDITORS
MEETINGS
Whenever
a compromise or arrangement is proposed between this Corporation and its
creditors or any class of them and/or between this Corporation and its
stockholders or any class of them, any court of equitable jurisdiction within
the State of Delaware may, on the application in a summary way of this
Corporation or of any creditor or stockholder thereof or on the application
of
any receiver or receivers appointed for this Corporation under Section 291
of
the DGCL, or on the application of trustees in dissolution or of any receiver
or
receivers appointed for this Corporation under Section 279 of the DGCL order
a
meeting of the creditors or class of creditors, and/or of the stockholders
or
class of stockholders of this Corporation, as the case may be, to be summoned
in
such manner as the said court directs. If a majority in number representing
three-fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this Corporation, as the case may
be,
agree on any compromise or arrangement and to any reorganization of this
Corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned
by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders of this Corporation, as the case may be, and also on this
Corporation.
ARTICLE
VIII
INTERESTED
TRANSACTIONS
The
Corporation elects not to be governed by Section 203 of the DGCL.
ARTICLE
IX
CORPORATE
OPPORTUNITY
9.1 In
anticipation that Insight Venture Partners V, L.P., Bessemer Venture Partners
VI
L.P. and/or their respective affiliates (each, an “Investor”,
and
collectively, the “Investors”)
will
be, indirectly or directly, substantial stockholders of the Corporation, and
in
recognition of (i) the benefits to be derived by the Corporation through its
continued contractual, corporate and business relations with each Investor
(including service of officers, directors, partners, managers, employees or
affiliates of each Investor (collectively, “Investor
Persons”)
as
directors of the Corporation) and (ii) the difficulties attendant to any
director, who desires and endeavors fully to satisfy such director’s fiduciary
duties, in determining the full scope of such duties in any particular
situation, the provisions of this Article IX are set forth to regulate, define
and guide the conduct of certain affairs of the Corporation as they may involve
the Investors and any Investor Persons, and the powers, rights, duties and
liabilities of the Corporation and its officers, directors and stockholders
in
connection therewith.
3
9.2 Except
as
the Investors may otherwise agree in writing, each Investor shall have the
right
to (i) engage, directly or indirectly, in the same or similar business
activities or lines of business as the Corporation and (ii) do business with
any
client, competitor or customer of the Corporation, with the result that the
Corporation shall have no right in or to such activities or any proceeds or
benefits therefrom, and no Investor or Investor Person (except as provided
in
paragraph (c) of this Article IX) shall be liable to the Corporation or its
stockholders for breach of any fiduciary duty by reason of any such activities
of such Investor or such Investor Person’s participation therein. In the event
that any Investor or Investor Person acquires knowledge of a potential
transaction or matter that may be a corporate opportunity for both the
Corporation and such Investor, such Investor or Investor Person shall have
no
duty to communicate or present such corporate opportunity to the Corporation
and
the Corporation hereby renounces any interest or expectancy it may have in
such
corporate opportunity, with the result that such Investor or Investor Person
shall not be liable to the Corporation or its stockholders for breach of any
fiduciary duty, including for breach of any fiduciary duty as a stockholder
of
the Corporation by reason of the fact that such Investor pursues or acquires
such corporate opportunity for itself, directs such corporate opportunity to
another person or entity, or does not present such corporate opportunity to
the
Corporation.
9.3 In
the
event that a director or officer of the Corporation who is an Investor Person
acquires knowledge of a potential transaction or matter that may be a corporate
opportunity for both the Corporation and any Investor, such corporate
opportunity shall belong to such Investor, and the Corporation hereby renounces
any interest or expectancy it may have in such corporate opportunity, unless
such corporate opportunity is expressly offered to such director or officer
in
writing solely in his capacity as a director or officer of the Corporation,
in
which case such corporate opportunity shall belong to the
Corporation.
9.4 For
the
purposes of this Article IX, “corporate opportunities” shall not include any
business opportunities that the Corporation is not financially or contractually
able to undertake, or that are, from their nature, not in the line of the
Corporation’s business or are of no practical advantage to it or that are ones
in which the Corporation has no interest or reasonable expectancy.
9.5 Any
person or entity purchasing or otherwise acquiring any interest in any shares
of
capital stock of the Corporation shall be deemed to have notice of and consented
to the provisions of this Article IX.
9.6 For
purposes of this Article IX only, the “Corporation” shall mean the Corporation
and all corporations, partnerships, joint ventures, associations and other
entities in which the Corporation beneficially owns (directly or indirectly)
fifty percent (50%) or more of the outstanding voting stock, voting power or
similar voting interests.
Notwithstanding
anything in this Certificate of Incorporation to the contrary and in addition
to
any vote of the Board required by this Certificate of Incorporation, the
affirmative vote of the holders of more than eighty percent (80%) of the voting
power of the Common Stock then outstanding, voting together with a single class,
shall be required to alter, amend or repeal in a manner adverse to the interests
of any Investor or Investor Person, or adopt any provision adverse to the
interests of any Investor or Investor Person and inconsistent with, any
provision of this Article IX.
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ARTICLE
X
INDEMNIFICATION
A
director of the Corporation shall not be personally liable to the Corporation
or
its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director’s duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions
not
in good faith or which involve intentional misconduct or a knowing violation
of
law, (iii) under Section 174 of the DGCL, or (iv) for any transaction from
which
the director derived any improper personal benefit.
10.1 Right
to Indemnification.
Each
person who was or is made a party or is threatened to be made a party to or
is
involved in any action, suit or proceeding, whether civil, criminal,
administrative or investigative (hereinafter, a “proceeding”), by reason of the
fact that he or she, or a person of whom he or she is the legal representative,
is or was a director or officer of the Corporation or is or was serving at
the
request of the Corporation as a director, officer, employee or agent of another
corporation or of a partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, shall be indemnified
and held harmless by the Corporation to the fullest extent authorized by the
DGCL, as the same exists or may hereafter be amended (but, in the case of any
such amendment, only to the extent that such amendment permits the Corporation
to provide broader indemnification rights than said law permitted the
Corporation to provide prior to such amendment), against all expense, liability
and loss (including attorneys’ fees, judgments, fines, ERISA excise taxes or
penalties and amounts paid or to be paid in settlement) reasonably incurred
or
suffered by such person in connection therewith and such indemnification shall
continue as to a person who has ceased to be a director or officer and shall
inure to the benefit of his or her heirs, executors and administrators;
provided,
however,
that,
except as provided in Paragraph (b) of this Article X, the Corporation shall
indemnify any such person seeking indemnification in connection with a
proceeding (or part hereof) initiated by such person only if such proceeding
(or
part thereof) was authorized by the board of directors of the Corporation.
The
right to indemnification conferred in this Article X shall be a contract right
and shall include the right to be paid by the Corporation the expenses incurred
in defending any such proceeding in advance of its final disposition;
provided,
further,
however,
that,
if the DGCL requires, the payment of such expenses incurred by a director or
officer in his or her capacity as a director of officer (and not in any other
capacity in which service was or is rendered by such person while a director
or
officer, including, without limitation, service to an employee benefit plan)
in
advance of the final disposition of a proceeding, shall be made only upon
delivery to the Corporation of an undertaking, by or on behalf of such director
or officer, to repay all amounts so advanced if it shall ultimately be
determined that such director or officer is not entitled to be indemnified
under
this Article X or otherwise.
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10.2 Right
of Claimant to Bring Suit.
If a
claim under Paragraph (a) of this Article X is not paid in full by the
Corporation within thirty (30) days after a written claim has been received
by
the Corporation, the claimant may at any time thereafter bring suit against
the
Corporation to recover the unpaid amount of the claim and, if successful in
whole or in part, the claimant shall be entitled to be paid also the expense
of
prosecuting such claim. It shall be a defense to any such action (other than
an
action brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition whether the required undertaking,
if any is required, has been tendered to the Corporation) that the claimant
has
not met the standards of conduct which make it permissible under the DGCL for
the Corporation to indemnify the claimant for the amount claimed, but the burden
of proving such defense shall be on the Corporation. Neither the failure of
the
Corporation (including its board of directors, independent legal counsel or
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in the
DGCL, nor an actual determination by the Corporation (including its board of
directors, independent legal counsel or stockholders) that the claimant has
not
met such applicable standard of conduct, shall be a defense to the action or
create a presumption that the claimant has not met the applicable standard
or
conduct.
10.3 Non-Exclusivity
of Rights.
The
right to indemnification and the payment of expenses incurred in defending
a
proceeding in advance of its final disposition conferred in this Article X
shall
not be exclusive of any other right which any person may have or hereafter
acquire under any statute, provision of the Certificate of Incorporation,
by-law, agreement, vote of stockholders or disinterested directors or
otherwise.
10.4 Insurance.
The
Corporation may maintain insurance, at its expense, to protect itself and any
director, officer, employee or agent of the Corporation or another corporation,
partnership, joint venture, trust or other enterprise against any such expense,
liability or loss, whether or not the Corporation would have the power to
indemnify such person against such expense, liability or loss under the
DGCL.
Any
amendment, repeal or modification of the foregoing provisions of this Article
X
shall not adversely affect any right or protection of a director, officer,
agent, of other person existing at the time of, or increase the liability of
any
director of the Corporation with respect to any acts or omissions of such
director, officer or agent occurring prior to, such amendment, repeal or
modification.
*
* *
*
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