Exhibit 2.1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
COMPUTER SCIENCES CORPORATION,
SURFSIDE ACQUISITION CORP.,
AND
COVANSYS CORPORATION
DATED AS OF APRIL 25, 2007
TABLE OF CONTENTS
Page
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ARTICLE I THE MERGER..................................................... 1
Section 1.1 The Merger............................................... 1
Section 1.2 Effective Time; Closing.................................. 2
Section 1.3 Effect of the Merger..................................... 2
Section 1.4 Articles of Incorporation and Bylaws..................... 2
Section 1.5 Directors and Officers................................... 2
Section 1.6 Effect on Capital Stock.................................. 2
Section 1.7 Surrender of Certificates................................ 3
Section 1.8 No Further Ownership Rights in Company Common Stock...... 5
Section 1.9 Lost, Stolen or Destroyed Certificates................... 5
Section 1.10 Warrants................................................. 5
Section 1.11 Further Action........................................... 5
ARTICLE II REPRESENTATIONS AND WARRANTIES OF COMPANY..................... 6
Section 2.1 Organization; Standing and Power; Charter Documents;
Subsidiaries............................................. 6
Section 2.2 Capital Structure........................................ 7
Section 2.3 Authority; Non-Contravention; Consents................... 9
Section 2.4 SEC Filings; Financial Statements; Internal Controls;
Xxxxxxxx-Xxxxx Act Compliance............................ 11
Section 2.5 Absence of Certain Changes or Events..................... 13
Section 2.6 Taxes.................................................... 14
Section 2.7 Intellectual Property.................................... 16
Section 2.8 Compliance; Permits; FCPA................................ 20
Section 2.9 Litigation............................................... 20
Section 2.10 Brokers' and Finders' Fees............................... 21
Section 2.11 Related Party Transactions............................... 21
Section 2.12 Employee Matters......................................... 21
Section 2.13 Property................................................. 24
Section 2.14 Environmental Matters.................................... 25
Section 2.15 Contracts................................................ 25
Section 2.16 Proxy Statement.......................................... 27
Section 2.17 Insurance................................................ 28
Section 2.18 Fairness Opinion......................................... 28
Section 2.19 Whistleblower Notification............................... 28
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB...... 28
Section 3.1 Organization............................................. 29
Section 3.2 Authority; Non-Contravention; Consents................... 29
Section 3.3 Disclosure............................................... 30
Section 3.4 Ownership and Interim Operations of Merger Sub........... 30
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Section 3.5 Financial Capability..................................... 30
ARTICLE IV CONDUCT PRIOR TO THE EFFECTIVE TIME........................... 30
Section 4.1 Conduct of Business of Company........................... 30
ARTICLE V ADDITIONAL AGREEMENTS.......................................... 34
Section 5.1 Proxy Statement.......................................... 34
Section 5.2 Meetings of Shareholders; Board Recommendation........... 35
Section 5.3 Acquisition Proposals.................................... 35
Section 5.4 Access to Information.................................... 38
Section 5.5 Public Disclosure........................................ 39
Section 5.6 Regulatory Filings; Reasonable Efforts................... 39
Section 5.7 Notification of Certain Matters.......................... 41
Section 5.8 Equity Awards and Employee Benefits...................... 41
Section 5.9 Indemnification; Insurance............................... 43
Section 5.10 Section 16 Matters....................................... 44
Section 5.11 Merger Sub Compliance.................................... 45
Section 5.12 Conveyance Taxes......................................... 45
ARTICLE VI CONDITIONS TO THE MERGER...................................... 45
Section 6.1 Conditions to the Obligations of Each Party.............. 45
Section 6.2 Additional Conditions to the Obligations of Company...... 45
Section 6.3 Additional Conditions to the Obligations of Parent and
Merger Sub............................................... 46
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER............................ 47
Section 7.1 Termination.............................................. 47
Section 7.2 Notice of Termination; Effect of Termination............. 48
Section 7.3 Fees and Expenses........................................ 48
Section 7.4 Amendment................................................ 50
Section 7.5 Extension; Waiver........................................ 50
ARTICLE VIII GENERAL PROVISIONS.......................................... 50
Section 8.1 Non-Survival of Representations and Warranties........... 50
Section 8.2 Notices.................................................. 50
Section 8.3 Interpretation; Certain Definitions...................... 51
Section 8.4 Counterparts; Facsimile Signatures....................... 54
Section 8.5 Entire Agreement; Third-Party Beneficiaries.............. 54
Section 8.6 Severability............................................. 54
Section 8.7 Specific Performance..................................... 54
Section 8.8 Governing Law............................................ 54
Section 8.9 Consent to Jurisdiction.................................. 54
Section 8.10 Assignment............................................... 55
Section 8.11 Waiver of Jury Trial..................................... 55
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INDEX OF DEFINED TERMS
Acceptable Confidentiality Agreement ...................................... 38
Acquisition Proposal ...................................................... 40
affiliate ................................................................. 54
Agreement ................................................................. 1
Balance Sheet Date ........................................................ 13
beneficial ownership ...................................................... 54
business day .............................................................. 54
Capitalization Date ....................................................... 7
Certificate ............................................................... 3
Certificate of Merger ..................................................... 2
Change .................................................................... 54
Change of Recommendation .................................................. 39
Change of Recommendation Notice ........................................... 39
Closing ................................................................... 2
Closing Date .............................................................. 2
Code ...................................................................... 4
Company ................................................................... 1
Company Balance Sheet ..................................................... 13
Company Board Recommendation .............................................. 10
Company Charter Documents ................................................. 7
Company Common Stock ...................................................... 3
Company Disclosure Letter ................................................. 6
Company Employee .......................................................... 23
Company Employee Agreement ................................................ 23
Company Employee Plans .................................................... 23
Company ERISA Affiliate ................................................... 23
Company Financials ........................................................ 12
Company International Plan ................................................ 23
Company IP ................................................................ 21
Company IP Agreements ..................................................... 18
Company Material Adverse Effect ........................................... 54
Company Material Contract ................................................. 27
Company Options ........................................................... 8
Company Permits ........................................................... 21
Company Preferred Stock ................................................... 7
Company Products .......................................................... 17
Company SEC Documents ..................................................... 12
Company Securities ........................................................ 8
Company Stock Plans ....................................................... 8
Company Termination Fee ................................................... 52
Confidentiality Agreement ................................................. 10
Consent ................................................................... 11
Continuing Employees ...................................................... 44
Contract .................................................................. 55
Copyrights ................................................................ 20
D&O Insurance ............................................................. 46
Deferred Compensation Plan ................................................ 45
Derivative Work ........................................................... 20
Domain Names .............................................................. 20
Effective Time ............................................................ 2
End Date .................................................................. 49
Engagement Letter ......................................................... 22
Environmental Law ......................................................... 55
ERISA ..................................................................... 23
Exchange Act .............................................................. 11
Exchange Fund ............................................................. 3
Financial Advisor ......................................................... 22
Foreign Antitrust Laws .................................................... 11
Fortune ................................................................... 56
GAAP ...................................................................... 12
Governmental Entity ....................................................... 11
Hazardous Substance ....................................................... 56
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HIPAA ..................................................................... 45
HSR Act ................................................................... 11
include ................................................................... 54
includes .................................................................. 54
including ................................................................. 54
Indemnified Parties ....................................................... 46
Insurance Policies ........................................................ 29
Intellectual Property ..................................................... 20
Intellectual Property Rights .............................................. 20
IRS ....................................................................... 24
Junior Preference Shares .................................................. 7
knowledge ................................................................. 56
Labor Organization ........................................................ 25
Law ....................................................................... 56
Leased Real Property ...................................................... 26
Leases .................................................................... 26
Legal Restraint ........................................................... 36
Licensed Company IP ....................................................... 21
Liens ..................................................................... 7
MBCA ...................................................................... 1
Merger .................................................................... 2
Merger Consideration ...................................................... 3
Merger Sub. ............................................................... 1
Merger Sub Capital Stock .................................................. 3
Nasdaq .................................................................... 12
Notice Period ............................................................. 39
NYSE ...................................................................... 12
Option Consideration ...................................................... 43
Order ..................................................................... 21
Owned Company IP .......................................................... 21
Parent .................................................................... 1
Parent Material Adverse Effect ............................................ 56
Patents ................................................................... 20
Paying Agent .............................................................. 3
Pension Plan .............................................................. 24
Permits ................................................................... 21
Permitted Encumbrances .................................................... 14
Person .................................................................... 56
plan of merger ............................................................ 54
Proceeding ................................................................ 22
Proxy Statement ........................................................... 29
Representatives ........................................................... 37
Requisite Shareholder Approval ............................................ 10
Rights .................................................................... 1
Rights Plan ............................................................... 1
Rights Plan Amendment ..................................................... 1
Xxxxxxxx-Xxxxx Act ........................................................ 12
SEC ....................................................................... 11
Securities Act ............................................................ 12
Shareholders' Meeting ..................................................... 37
Subsidiary ................................................................ 6
Subsidiary Charter Documents .............................................. 7
Subsidiary Securities ..................................................... 9
Superior Offer ............................................................ 40
Surviving Corporation ..................................................... 2
Tax ....................................................................... 15
Tax Returns ............................................................... 15
Taxes ..................................................................... 15
Taxing Authority .......................................................... 15
Terminating Plan .......................................................... 45
the business of ........................................................... 54
Trade Secrets ............................................................. 21
Trademarks ................................................................ 20
Triggering Event .......................................................... 50
Voting Debt ............................................................... 9
Warrant ................................................................... 5
without limitation ........................................................ 54
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "AGREEMENT") is made and entered
into as of April 25, 2007, by and among Computer Sciences Corporation, a Nevada
corporation ("PARENT"), Surfside Acquisition Corp., a Michigan corporation and
wholly-owned subsidiary of Parent ("MERGER SUB"), and Covansys Corporation, a
Michigan corporation ("COMPANY").
RECITALS
A. The Board of Directors of Company has, in accordance with the Michigan
Business Corporation Act (the "MBCA"), (i) determined that the Merger is fair
to, and in the best interests of, Company and its shareholders and declared the
Merger to be advisable, (ii) approved the execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby upon
the terms and conditions contained herein, and adopted the plan of merger
contained in this Agreement, and (iii) resolved to recommend that the holders of
shares of Company Common Stock approve this Agreement and the plan of merger
contained herein in accordance with the applicable provisions of the MBCA and
directed that such matter be submitted to Company's shareholders at the
Shareholders' Meeting;
B. Parent, as the sole shareholder of Merger Sub, has approved and adopted
this Agreement and approved the Merger.
C. Concurrently with the execution of this Agreement, and as a condition to
Parent and Merger Sub entering into this Agreement, Company and EquiServe Trust
Company, N.A. are entering into an amendment (the "RIGHTS PLAN AMENDMENT") to
that certain Rights Agreement, dated as of December 1, 2004, as amended (the
"RIGHTS PLAN"), so as to render the rights issued thereunder (the "RIGHTS")
inapplicable to this Agreement and the transactions contemplated hereby.
D. Prior to the execution of this Agreement, the Board of Directors of
Company has approved in advance the transactions contemplated by this Agreement
including the acquisition of Company and shares of the capital stock of Company
by Parent and Parent becoming an "interested shareholder", for purposes of
Section 782 of the MBCA.
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. At the Effective Time and subject to and upon
the terms and conditions of this Agreement and the applicable provisions of the
MBCA, Merger Sub shall be merged with and into Company (the "MERGER"), the
separate corporate existence of Merger Sub shall cease, and Company shall
continue as the surviving corporation (the "SURVIVING CORPORATION").
Section 1.2 Effective Time; Closing. Subject to the provisions of this
Agreement, the parties hereto shall cause the Merger to be consummated by filing
a Certificate of Merger (the "CERTIFICATE OF MERGER") with the Department of
Labor and Economic Growth of the State of Michigan in accordance with the
relevant provisions of the MBCA (the time of such filing with the Department of
Labor and Economic Growth of the State of Michigan (or such later time as may be
agreed in writing by Company and Parent and specified in the Certificate of
Merger) being the "EFFECTIVE TIME") as soon as practicable on the Closing Date.
The closing of the Merger (the "CLOSING") shall take place at the offices of
Xxxxxx Xxxxxx Xxxxxxxx LLP, located at 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx,
at 10:00 a.m., New York City time, on the second business day after the
satisfaction or waiver of all of the conditions set forth in Article VI, or at
such other time, date and location as the parties hereto agree in writing (the
date on which the Closing actually occurs, the "CLOSING DATE").
Section 1.3 Effect of the Merger. At the Effective Time, the effect of
the Merger shall be as provided in this Agreement and Section 724 of the MBCA.
Section 1.4 Articles of Incorporation and Bylaws. At the Effective
Time, the articles of incorporation of Company shall be amended and restated in
its entirety to be identical to the articles of incorporation of Merger Sub, in
effect immediately prior to the Effective Time, until thereafter amended in
accordance with the MBCA and as provided in such articles of incorporation;
provided, however, that at the Effective Time, Article I of the articles of
incorporation of the Surviving Corporation shall be amended and restated in its
entirety to read as follows: "The name of the corporation is Covansys
Corporation". At the Effective Time, the bylaws of Company shall be amended and
restated in their entirety to be identical to the bylaws of Merger Sub, as in
effect immediately prior to the Effective Time, until thereafter amended in
accordance with the MBCA and as provided in such bylaws.
Section 1.5 Directors and Officers. The initial directors of the
Surviving Corporation shall be the directors of Merger Sub immediately prior to
the Effective Time, until their respective successors are duly elected or
appointed and qualified. The initial officers of the Surviving Corporation shall
be the officers of Merger Sub immediately prior to the Effective Time, until
their respective successors are duly appointed.
Section 1.6 Effect on Capital Stock. Subject to the terms and
conditions of this Agreement, at the Effective Time, by virtue of the Merger and
without any action on the part of Parent, Merger Sub, Company or the holders of
any shares of capital stock of Company, the following shall occur:
(a) Company Common Stock. Each share of the Common Stock, no par
value, of Company ("COMPANY COMMON STOCK") issued and outstanding immediately
prior to the Effective Time (other than any shares of Company Common Stock to be
canceled pursuant to Section 1.6(b)), together with any Rights associated
therewith, will be canceled and extinguished and automatically converted into
the right to receive $34.00 in cash, without interest (the "MERGER
CONSIDERATION") upon surrender of the certificate representing such share of
Company Common Stock in the manner provided in Section 1.7(c) (or in the case of
a lost, stolen or destroyed certificate, upon delivery of an affidavit and bond,
if required, in the manner provided in Section 1.9). As of the Effective Time,
such shares of Company Common Stock and any
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associated Rights with respect thereto shall no longer be outstanding and shall
automatically be canceled and shall cease to exist, and each holder of a
certificate that immediately prior to the Effective Time represented any such
shares of Company Common Stock (a "CERTIFICATE") shall cease to have any rights
with respect thereto, except the right to receive the Merger Consideration.
(b) Cancellation of Treasury and Parent Owned Stock. Each share of
Company Common Stock held by Company or Parent or any direct or indirect
wholly-owned Subsidiary of Company or of Parent immediately prior to the
Effective Time shall be canceled and extinguished without any conversion thereof
or the payment of any consideration therefor.
(c) Capital Stock of Merger Sub. Each share of capital stock of Merger
Sub (the "MERGER SUB CAPITAL STOCK") issued and outstanding immediately prior to
the Effective Time shall be converted into one validly issued, fully paid and
nonassessable share of capital stock of the Surviving Corporation with the same
rights, powers and privileges as the shares so converted.
(d) Stock Options. At the Effective Time, all Company Options
outstanding under the Company Stock Plans shall be treated in accordance with
Section 5.8.
Section 1.7 Surrender of Certificates.
(a) Paying Agent. Prior to the Effective Time, Parent shall appoint an
institution reasonably acceptable to Company to act as the paying agent (the
"PAYING AGENT"), in accordance with an agreement reasonably satisfactory to
Company, to receive the funds necessary to make the payments contemplated by
Section 1.6.
(b) Parent to Provide Merger Consideration. At or prior to the
Effective Time, Parent shall deposit or cause the Merger Sub to deposit with the
Paying Agent for payments in accordance with this Section 1.7, cash, for the
benefit of the holders of Company Common Stock, in an amount sufficient to make
payments of the Merger Consideration, pursuant to Section 1.6 and such funds
shall hereinafter be referred to as the "EXCHANGE FUND." The Paying Agent shall,
pursuant to irrevocable instructions, make payments out of the Exchange Fund and
the Exchange Fund shall not be used for any purpose other than to fund payments
upon surrender of Certificates. All expenses of the Paying Agent shall be paid
by the Parent or Surviving Corporation.
(c) Exchange Procedures. Immediately after the Effective Time, Parent
shall mail, or shall cause the Paying Agent to mail, to each holder of record
(as of the Effective Time) of a Certificate or Certificates which immediately
prior to the Effective Time represented outstanding shares of Company Common
Stock that were converted into the right to receive the Merger Consideration
pursuant to Section 1.6(a): (i) a letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon delivery of the Certificates to the Paying Agent and shall
be in such form and have such other provisions as Parent may reasonably
specify); and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for the Merger Consideration. Upon surrender of
Certificates for cancellation to the Paying Agent, together with such letter of
transmittal, duly
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completed and validly executed in accordance with the instructions thereto and
such other documents as may reasonably be required by the Paying Agent, the
holder of such Certificates shall be entitled to receive in exchange therefor by
check an amount in cash (after taking into account all Certificates surrendered
by such holder) to which such holder is entitled pursuant to Section 1.6(a) and
the Certificates so surrendered shall forthwith be canceled.
(d) Transfers of Ownership. If payment of the Merger Consideration is
to be made to a Person other than a Person in whose name in which the
Certificates surrendered in exchange therefor are registered, it will be a
condition of the payment thereof that the Certificates so surrendered will be
properly endorsed and otherwise in proper form for transfer and that the Person
requesting such exchange will have paid any transfer and other Taxes required by
reason of the payment to a Person other than the registered holder of the
Certificates surrendered, or established to the satisfaction of Parent or any
agent designated by it that such Tax has been paid or is not payable.
(e) Withholding. Each of Parent, the Paying Agent and the Surviving
Corporation shall be entitled to deduct and withhold from any consideration
payable or otherwise deliverable pursuant to this Agreement to any holder or
former holder of Company Common Stock such amounts as may be required to be
deducted or withheld therefrom under the Internal Revenue Code of 1986, as
amended (the "CODE") or under any provision of state, local or foreign Tax Law
or under any other applicable Law. To the extent such amounts are so deducted or
withheld, the amount of such consideration shall be treated for all purposes
under this Agreement as having been paid to the Person to whom such
consideration would otherwise have been paid.
(f) Investment of Exchange Fund. The Paying Agent shall invest any
cash included in the Exchange Fund as directed by Parent on a daily basis,
provided that no such investment or loss thereon shall affect the amounts
payable to Company shareholders pursuant to this Section 1.7. To the extent that
there are losses with respect to such investments, Parent shall promptly replace
or restore the portion of the Exchange Fund lost through investments so as to
ensure that the Exchange Fund is maintained at a level sufficient to make such
payments. Any interest and other income resulting from such investment shall
become a part of the Exchange Fund, and any amounts in excess of the amounts
payable to Company shareholders pursuant to this Section 1.7 shall promptly be
paid to Parent.
(g) Termination of Exchange Fund. Notwithstanding anything to the
contrary in this Section 1.7(g), neither Parent, Merger Sub, the Paying Agent,
the Surviving Corporation nor any party hereto shall be liable to any Person for
any cash from the Exchange Fund properly paid to a public official pursuant to
any applicable abandoned property, escheat or similar Law. Any portion of the
Exchange Fund which remains undistributed to the holders of Certificates one
year after the Effective Time shall, at the request of Parent, be delivered to
Parent or otherwise on the instruction of Parent, and any holders of the
Certificates who have not surrendered such Certificates in compliance with this
Section 1.7(g) shall after such delivery to Parent look only to Parent, and
Parent shall thereafter be liable, for the Merger Consideration pursuant to
Section 1.6(a), with respect to the shares of Company Common Stock formerly
represented thereby.
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Section 1.8 No Further Ownership Rights in Company Common Stock. All
Merger Consideration paid upon the surrender for exchange of shares of Company
Common Stock in accordance with the terms hereof shall be deemed to have been
paid in full satisfaction of all rights pertaining to such shares of Company
Common Stock, including any Rights associated with such Company Common Stock.
After the Effective Time, there shall be no further registration of transfers on
the records of Company. If, after the Effective Time, Certificates are presented
to the Surviving Corporation for any reason, they shall be canceled and
exchanged as provided and in accordance with the procedures set forth in Section
1.7.
Section 1.9 Lost, Stolen or Destroyed Certificates. In the event any
Certificates shall have been lost, stolen or destroyed, the Paying Agent shall
deliver in exchange for such lost, stolen or destroyed Certificates, upon the
making of an affidavit of that fact by the holder thereof, such Merger
Consideration as may be required pursuant to Section 1.6(a); provided, however,
that Parent or the Paying Agent, may, in its discretion, require the delivery of
a suitable indemnity, as determined in Parent's reasonable discretion.
Section 1.10 Warrants. The warrants to purchase shares of Company
Common Stock issued as of September 15, 2004 by Company to Fidelity Information
Services, Inc., an Arkansas Corporation and CDR-COOKIE Acquisition, L.L.C., a
Delaware limited liability company (each, a "WARRANT") may be exercised prior to
the Effective Time in accordance with the terms and conditions applicable to
such Warrant and upon such exercise shall result in the issuance of shares of
Company Common Stock that shall be subject to the terms of this Agreement. Each
Warrant that is unexpired, unexercised and outstanding immediately prior to the
Effective Time shall after the Effective Time entitle the holder of such Warrant
to receive from the Surviving Corporation, upon the exercise of the Warrant and
delivery of a Subscription Notice (as defined in such Warrant), in lieu of any
shares of Company Common Stock issuable upon exercise prior to the Effective
Time, either (a) upon payment of the applicable Exercise Price (as defined in
such Warrant), an amount in cash equal to the product of the Merger
Consideration multiplied by the total number of shares of Company Common Stock
subject to the Warrant designated in such Subscription Notice or (b) upon a
valid election for a cashless exercise pursuant to the terms of such Warrant, an
amount in cash equal to (i) the product of the Merger Consideration multiplied
by the total number of shares of Company Common Stock subject to the Warrant
designated in such Subscription Notice, minus (ii) the aggregate Exercise Price
with respect to all shares of Company Common Stock subject to the Warrant
designated in such Subscription Notice.
Section 1.11 Further Action. At and after the Effective Time, the
officers and directors of Parent and the Surviving Corporation will be
authorized to execute and deliver, in the name and on behalf of Company and
Merger Sub, any deeds, bills of sale, assignments or assurances and to take and
do, in the name and on behalf of Company and 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 acquired or to be acquired by the Surviving
Corporation as a result of, or in connection with, the Merger.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF COMPANY
Except as disclosed in the correspondingly numbered section of the
disclosure letter dated the date of this Agreement and delivered by Company to
Parent immediately prior to the execution of this Agreement (the "COMPANY
DISCLOSURE LETTER"), that specifically relates to such section or in another
section of the Company Disclosure Letter to the extent that it is reasonably
apparent from the text of such disclosure that such disclosure is applicable to
such section, Company hereby represents and warrants to Parent and Merger Sub as
follows:
Section 2.1 Organization; Standing and Power; Charter Documents;
Subsidiaries.
(a) Organization; Standing and Power. Company and each of its
Subsidiaries is a corporation or other organization duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization (to the extent the "good standing" concept is
applicable in the case of any jurisdiction outside of the United States). Each
of Company and its Subsidiaries has the requisite corporate power and authority
to own, lease and operate its respective properties and to carry on its business
as now being conducted. Each of Company and its Subsidiaries is duly qualified
to do business and in good standing in each jurisdiction in which the nature of
its business or the ownership or leasing of its properties makes such
qualification necessary (to the extent the "good standing" concept is applicable
in the case of any jurisdiction outside of the United States) other than where
the failure to so qualify or to be in good standing would not, individually or
in the aggregate, have a Company Material Adverse Effect. For purposes of this
Agreement, "SUBSIDIARY," when used with respect to any party, shall mean any
corporation or other organization, whether incorporated or unincorporated, at
least a majority of the securities or other interests of which having by their
terms ordinary voting power to elect a majority of the Board of Directors or
others performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such party or by
any one or more of its subsidiaries, or by such party and one or more of its
subsidiaries (it being understood that, for purposes of this Agreement, Fortune
shall be deemed to be a Subsidiary of Company).
(b) Charter Documents. Company has delivered or made available to
Parent: (i) a true and correct copy of the Restated Articles of Incorporation
(including any Certificate of Designations) and Bylaws of Company, each as
amended to date (collectively, the "COMPANY CHARTER DOCUMENTS") and (ii) the
certificate of incorporation and bylaws, or like organizational documents, each
as amended to date (collectively, the "SUBSIDIARY CHARTER DOCUMENTS"), of each
of its Subsidiaries, and each such instrument is in full force and effect.
Company is not in violation of any of the provisions of the Company Charter
Documents. No Subsidiary is in violation of any of its applicable Subsidiary
Charter Documents, except where such violations that would not, individually or
in the aggregate, have a Company Material Adverse Effect.
(c) Subsidiaries. Section 2.1(c) of the Company Disclosure Letter
lists all of the Subsidiaries of Company. All of the outstanding shares of
capital stock of, or other equity or voting interests in, each such Subsidiary
have been validly issued, were issued free of preemptive rights, and are fully
paid and nonassessable and are owned directly or indirectly by Company,
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free and clear of all pledges, liens, mortgages, encumbrances and security
interests of any kind or nature whatsoever (collectively, "LIENS"), including
any restriction on the right to vote, sell or otherwise dispose of such capital
stock or other ownership interests, except for restrictions imposed by
applicable securities Laws. Except for the capital stock of, or other equity or
voting interests in, its Subsidiaries, Company does not own, directly or
indirectly, any capital stock of, or other equity or voting interests in, any
corporation, partnership, joint venture, association, limited liability company
or other entity, other than ordinary course investments in investment
securities.
Section 2.2 Capital Structure.
(a) Capital Stock. The authorized capital stock of Company consists
of: (i) 200,000,000 shares of Company Common Stock, without par value, and (ii)
1,000,000 shares of preferred stock, no par value (the "COMPANY PREFERRED
STOCK"), of which 200,000 shares of Company Preferred Stock are designated as
Series A Voting Convertible Preferred Stock and 37,620 shares of Company
Preferred Stock are designated as Series B Participating Preferred Stock (the
"JUNIOR PREFERENCE SHARES"). At the close of business on the business day
immediately preceding the date hereof (the "CAPITALIZATION DATE"): (i)
36,492,526 shares of Company Common Stock were issued and outstanding, (ii)
9,000,000 shares of Company Common Stock were subject to issuance pursuant to
the Warrants, and (iii) no shares of Company Preferred Stock were issued and
outstanding; provided that 37,620 Junior Preference Shares have been reserved
for issuance in connection with the Rights Plan. Section 2.2(a) of the Company
Disclosure Letter sets forth a list of each outstanding Warrant, and (1) the
name of the holder of such Warrant, (2) the number and class of shares of
Company capital stock subject to such Warrant, (3) the exercise price of such
Warrant and (4) the date on which such Warrant expires. All of the outstanding
shares of capital stock of Company are, and all shares of capital stock of
Company which may be issued as contemplated or permitted by this Agreement will
be, when issued, duly authorized and validly issued, fully paid and
nonassessable and not subject to any preemptive rights. Dissenters' rights are
not available pursuant to Section 762 of the MBCA with respect to shares of
Company Common Stock in connection with the transactions contemplated by this
Agreement.
(b) Options. (i) As of the close of business on the Capitalization
Date, an aggregate of 1,617,085 shares of Company Common Stock were subject to
issuance pursuant to outstanding options or stock appreciation rights to
purchase Company Common Stock ("COMPANY OPTIONS") granted under the Covansys
Corporation 1996 Stock Option Plan, as amended, and the Covansys Corporation
2007 Stock Option Plan (collectively, the "COMPANY STOCK PLANS"). All shares of
Company Common Stock subject to issuance under the Company Stock Plans upon
issuance in accordance with the terms and conditions specified in the
instruments pursuant to which they are issuable, would be duly authorized,
validly issued, fully paid and nonassessable. Section 2.2(b)(i) of the Company
Disclosure Letter sets forth each Company Option outstanding as of the
Capitalization Date, the number of shares of Company Common Stock issuable
thereunder or related thereto, the expiration date and the exercise price
thereof.
(ii) There are no outstanding or authorized stock appreciation
rights, phantom stock, profit participation, rights to purchase or acquire
Company Preferred Stock or
7
other similar rights with respect to Company, other than in respect of the
Junior Preference Shares. Other than the Company Options and the Warrants, there
are no outstanding (i) securities of Company or any of its Subsidiaries
convertible into or exchangeable for shares of Voting Debt, capital stock,
voting securities or other ownership interests in Company, (ii) options,
restricted stock warrants, rights or other agreements or commitments to acquire
from Company or any of its Subsidiaries, or obligations of Company or any of its
Subsidiaries to issue, any Voting Debt, capital stock, voting securities or
other ownership interests in (or securities convertible into or exchangeable for
capital stock, voting securities or other ownership interests in) Company, (iii)
obligations of Company or any of its Subsidiaries to grant, extend or enter into
any subscription, warrant, right, convertible or exchangeable security or other
similar agreement or commitment relating to any Voting Debt, capital stock,
voting securities or other ownership interests in Company (the items in clauses
(i), (ii) and (iii), together with the capital stock of Company, being referred
to collectively as "COMPANY SECURITIES"). All outstanding shares of Company
Common Stock, all outstanding Warrants, all outstanding Company Options, and all
outstanding shares of capital stock of each Subsidiary of Company have been
issued and granted in compliance in all material respects with all requirements
set forth in applicable Contracts.
(iii) There are no outstanding Contracts requiring Company or any
of its Subsidiaries to (A) repurchase, redeem or otherwise acquire any Company
Securities or Subsidiary Securities or (B) dispose of any Subsidiary Securities.
Other than as set forth in Section 2.2(b)(iii) of the Company Disclosure Letter,
Company is not a party to any voting agreement with respect to any Company
Securities or Subsidiary Securities.
(iv) To the knowledge of Company, all Company Options have an
exercise price equal to no less than the fair market value of the underlying
shares of Company Common Stock on the accounting measurement date, except where
such violations would not, individually or in the aggregate, have a Company
Material Adverse Effect. To the knowledge of Company, all Company Options
granted after December 31, 2004, were granted with respect to a class of stock
of Company that is "service recipient stock" (within the meaning of applicable
regulations under Code Section 409A).
(c) Voting Debt. No bonds, debentures, notes or other indebtedness of
Company or any of its Subsidiaries (i) having the right to vote on any matters
on which shareholders or other equity owners may vote (or which is convertible
into, or exchangeable for, securities having such right) or (ii) the value of
which is any way based upon or derived from capital stock or voting securities
of Company or any of its Subsidiaries, is issued or outstanding as of the date
hereof (collectively, "VOTING DEBT").
(d) Warrants. Since the issuance of each of the Warrants, (i) no
adjustment has occurred to the Exercise Price (as defined, respectively, in each
of the Warrants) or the number of shares of Company Common Stock subject to the
Warrants, and (ii) there has been no Change that requires any such adjustment.
(e) Subsidiary Securities. There are no outstanding (i) securities of
Company or any of its Subsidiaries convertible into or exchangeable for shares
of Voting Debt, capital stock, voting securities or other ownership interests in
any Subsidiary of Company, (ii) options,
8
restricted stock, warrants, rights or other agreements or commitments to acquire
from Company or any of its Subsidiaries, or obligations of Company or any of its
Subsidiaries to issue, any Voting Debt, capital stock, voting securities or
other ownership interests in (or securities convertible into or exchangeable for
capital stock, voting securities or other ownership interests in) any Subsidiary
of Company, (iii) obligations of Company or any of its Subsidiaries to grant,
extend or enter into any subscription, warrant, right, convertible or
exchangeable security or other similar agreement or commitment relating to any
Voting Debt, capital stock, voting securities or other ownership interests in
any Subsidiary of Company (the items in clauses (i), (ii) and (iii), together
with the capital stock or other equity interests of such Subsidiaries, being
referred to collectively as "SUBSIDIARY SECURITIES").
Section 2.3 Authority; Non-Contravention; Consents.
(a) Authority. Company has all requisite corporate power and authority
to enter into this Agreement and, in the case of the consummation of the Merger,
and the other transactions contemplated hereby, subject to obtaining the
Requisite Shareholder Approval and the filing of the Certificate of Merger
pursuant to the MBCA. The execution and delivery of this Agreement by Company
and the consummation by Company of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of Company
and no other corporate proceedings on the part of Company are necessary by
Company to authorize the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby, other than in the case of
consummation of the Merger, obtaining the Requisite Shareholder Approval and the
filing of the Certificate of Merger pursuant to the MBCA. This Agreement has
been duly executed and delivered by Company and, assuming due authorization,
execution and delivery by Parent and Merger Sub, constitutes a legal, valid and
binding obligation of Company, enforceable against Company in accordance with
its terms except that such enforceability (a) may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other similar Laws
affecting or relating to creditors' rights generally and (b) is subject to
general principles of equity, whether considered in a proceeding at law or in
equity. The making of any offer or proposal, or indication of interest in making
an offer or proposal, and the taking of any other action by Parent or Merger Sub
in accordance with this Agreement and the transactions contemplated hereby have
been consented to by the Board of Directors of Company under provisions of the
confidentiality agreement, dated April 9, 2007, between Parent and Company (the
"CONFIDENTIALITY AGREEMENT").
(b) Company Board Recommendation. The Board of Directors of Company,
by resolutions duly adopted at a meeting of all directors duly called and held,
has in accordance with the MBCA (i) determined that the Merger is fair to, and
in the best interests of, Company and its shareholders and declared the Merger
to be advisable, (ii) approved the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby in
accordance with the MBCA upon the terms and conditions contained herein and
adopted the plan of merger contained in this Agreement, and (iii) resolved to
recommend that the holders of shares of Company Common Stock approve this
Agreement and the plan of merger contained herein in accordance with the
applicable provisions of the MBCA and directed that such matter be submitted to
Company's shareholders at the Shareholders' Meeting (collectively, the "COMPANY
BOARD RECOMMENDATION").
9
(c) Requisite Shareholder Approval. The affirmative vote of the
holders of a majority of the outstanding shares of Company Common Stock, voting
together as a single class, is the only vote of the holders of any class or
series of Company capital stock required to approve this Agreement and the
Merger. The approval of this Agreement and the Merger by the vote required by
the preceding sentence is referred to herein as the "REQUISITE SHAREHOLDER
APPROVAL".
(d) Takeover Laws. The bylaws of Company provide that Company will not
be subject to the provisions of the MBCA regarding control share acquisitions.
The Board of Directors of Company, by resolutions duly adopted at a meeting of
all directors duly called and held, approved in advance the transactions
contemplated by this Agreement, including the acquisition of Company and shares
of the capital stock of Company by Parent and Parent becoming an "interested
shareholder", for purposes of Section 782 of the MBCA, and such approval is
sufficient to render inapplicable to the Agreement and the transactions
contemplated hereby Section 780 of the MBCA. Such resolutions and approvals have
not been subsequently rescinded, modified or withdrawn in any way.
(e) Rights Plan. Company has taken all necessary action, including
executing the Rights Plan Amendment, to render the Rights Plan inapplicable to
this Agreement and the transactions contemplated hereby. The Rights Plan, as so
amended, has not been further amended or modified. Copies of all such amendments
to the Rights Plan have been previously provided to Parent.
(f) Non-Contravention. The execution and delivery of this Agreement by
Company does not, and performance of this Agreement by Company will not: (i)
conflict with or violate the Company Charter Documents or any of the Subsidiary
Charter Documents, (ii) subject to obtaining the Requisite Shareholder Approval
and compliance with the requirements set forth in Section 2.3(g), conflict with
or violate any Law applicable to Company or any of its Subsidiaries or by which
Company or any of its Subsidiaries or any of their respective properties is
bound or affected, (iii) subject to obtaining the Requisite Shareholder Approval
and compliance with the requirements set forth in Section 2.3(g), result in any
breach of or constitute a default (or an event that with notice or lapse of time
or both would become a default), or impair Company's or any of its Subsidiaries'
rights or alter the rights or obligations of any third party, or give to others
any rights of termination, amendment, acceleration or cancellation, or require
any consent, under any Contract, or (iv) result in the creation of any Lien on
any of the properties or assets of Company or any of its Subsidiaries, except in
the case of each of clauses (iii) and (iv) above, for such violations,
conflicts, defaults, terminations, accelerations or Liens which would not,
individually or in the aggregate, have a Company Material Adverse Effect.
(g) Consents. No consent, approval, order or authorization of, or
registration, declaration or filing (any of the foregoing being a "CONSENT")
with any federal, state or foreign government, any instrumentality, political
subdivision, court, administrative agency or commission or other governmental
authority or instrumentality, or any quasi-governmental body exercising any
regulatory, taxing, importing or other governmental or quasi-governmental
authority (a "GOVERNMENTAL ENTITY") is required to be obtained or made by
Company in connection with the execution and delivery of this Agreement or the
consummation of the
10
Merger and other transactions contemplated hereby, except for: (i) the filing of
the Certificate of Merger with the Department of Labor and Economic Growth and
appropriate documents with the relevant authorities of other states to satisfy
the applicable material Laws of states in which Company is qualified to do
business, (ii) the filing of the Proxy Statement with the Securities and
Exchange Commission ("SEC") in accordance with the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT"), and such reports under the Exchange Act
as may be required in connection with this Agreement, the Merger and the other
transactions contemplated by this Agreement, (iii) such Consents, as may be
required under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended (the "HSR ACT") and any applicable foreign antitrust, competition or
merger control Laws ("FOREIGN ANTITRUST LAWS"), that are applicable to the
transactions contemplated by this Agreement, (iv) such material Consents as may
be required under applicable state securities, "blue sky" or federal laws, the
securities laws of any foreign country, or the rules and regulations of the
NASDAQ Global Select Market ("NASDAQ") or the New York Stock Exchange ("NYSE"),
and (v) such other Consents, which if not obtained or made would not,
individually or in the aggregate, have a Company Material Adverse Effect.
Section 2.4 SEC Filings; Financial Statements; Internal Controls;
Xxxxxxxx-Xxxxx Act Compliance.
(a) SEC Filings. Company has filed with or furnished to the SEC all
registration statements, prospectuses, reports, schedules, forms, statements and
other documents (including exhibits and all other information incorporated by
reference) required to be so filed or furnished by it since January 1, 2005 (the
"COMPANY SEC DOCUMENTS"). Company has made available to Parent all such Company
SEC Documents (except to the extent such Company SEC Documents are publicly
available in the Electronic Data Gathering, Analysis and Retrieval (XXXXX)
database of the SEC). As of their respective filing dates (or, if amended or
superseded by a subsequent filing, as of the date of the last such amendment or
superseding filing prior to the date hereof), each of the Company SEC Documents
complied as to conform in all material respects with the applicable requirements
of the Securities Act of 1933, as amended (the "SECURITIES ACT"), the Exchange
Act and the Xxxxxxxx-Xxxxx Act of 2002 (the "XXXXXXXX-XXXXX ACT"), as
applicable, and the rules and regulations of the SEC thereunder applicable to
such Company SEC Documents. None of the Company SEC Documents, including any
financial statements, schedules or exhibits included or incorporated by
reference therein at the time they were filed (or, if amended or superseded by a
subsequent filing, as of the date of the last such amendment or superseding
filing prior to the date hereof) contained any untrue statement of a material
fact or omitted to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. None of Company's Subsidiaries is required to file any
forms, reports or other documents with the SEC.
(b) Financial Statements. Each of the consolidated financial
statements (including, in each case, any related notes thereto) contained in the
Company SEC Documents (the "COMPANY FINANCIALS"), as amended or supplemented
prior to the date of this Agreement: (i) was prepared in accordance with United
States generally accepted accounting principles ("GAAP") applied on a consistent
basis throughout the periods involved (except as may be indicated in the notes
thereto), and (ii) fairly presents in all material respects the consolidated
financial position of Company and its consolidated Subsidiaries at the
respective dates thereof and the consolidated results of Company's operations,
shareholders' equity and cash flows for
11
the periods indicated; provided, that unaudited interim financial statements may
not contain footnotes required by GAAP to be included in audited financial
statements and are subject to normal year-end audit adjustments which are not,
individually or in the aggregate, material in amount or significance, in each
case as permitted by GAAP and the applicable rules and regulations of the SEC.
(c) Internal Controls. Company has implemented and maintains a system
of internal controls over financial reporting that are sufficient to provide
reasonable assurance regarding the reliability of financial reporting and
preparation of financial statements for external purposes in accordance with
GAAP, including policies and procedures that provide reasonable assurance that
(i) transactions are executed only in accordance with authorizations of
management and directors and (ii) transactions are recorded as necessary to
permit preparation of financial statements in accordance with GAAP. Company has
implemented and maintains disclosure controls and procedures sufficient to
ensure that information required to be disclosed by Company in the reports it
files or submits under the Exchange Act is recorded, processed, summarized and
reported within the time frames specified by the SEC's rules and forms. None of
Company or its Subsidiaries has been made aware of (A) any significant
deficiencies or material weaknesses in the design or operation of Company's
internal controls over financial reporting (as defined in Rule 13a-15(f) under
the Exchange Act), which would, individually or in the aggregate, have a Company
Material Adverse Effect or (B) any fraud, whether or not material, that involves
management or other employees who have a significant role in Company's internal
controls over financial reporting.
(d) Undisclosed Liabilities. The balance sheet of Company, dated as of
December 31, 2006 (the "BALANCE SHEET DATE"), contained in the Company SEC
Documents filed prior to the date hereof is hereinafter referred to as the
"COMPANY BALANCE SHEET." Neither Company nor any of its Subsidiaries has any
liabilities (absolute, accrued, contingent, or otherwise) of the type required
to be disclosed by GAAP on the Company Balance Sheet (or reflected in the
footnotes thereto) that would, individually or in the aggregate, reasonably be
expected to be material to Company and its Subsidiaries taken as a whole, other
than (a) liabilities as and to the extent reflected or reserved against on the
Company Balance Sheet and (b) liabilities and obligations incurred since the
Balance Sheet Date in the ordinary course of business consistent with past
practice.
(e) Off-Balance Sheet Arrangements. Neither Company nor any of its
Subsidiaries is a party to, or has any commitment to become a party to, any
joint venture, partnership agreement or any similar Contract (including any
Contract relating to any transaction, arrangement or relationship between or
among Company or any of its Subsidiaries, on the one hand, and any
unconsolidated affiliate or other entity, including any structured finance,
special purpose or limited purpose entity or person, on the other hand) the
purpose or effect of which is to avoid disclosure of any material transaction
involving Company or any of its Subsidiaries in Company's consolidated financial
statements, or is otherwise a party to any arrangement described in Section
303(a)(4) of Regulation S-K promulgated by the SEC.
(f) Xxxxxxxx-Xxxxx Compliance. The chief executive officer and chief
financial officer of Company have made all certifications required by Sections
302 and 906 of the Xxxxxxxx-Xxxxx Act with respect to any Company SEC Document,
except as disclosed in
12
certifications filed with Company SEC Documents. Neither Company nor, to the
knowledge of Company, any of its officers has received notice from any
Governmental Entity challenging or questioning the accuracy, completeness, form
or manner of filing of such certifications.
Section 2.5 Absence of Certain Changes or Events. Since the Balance
Sheet Date, (a) there has not been any Company Material Adverse Effect and (b)
except for actions expressly contemplated by this Agreement or publicly
disclosed by Company in Company SEC Documents filed or furnished prior to the
date hereof, (i) the business of each of Company and its Subsidiaries has been
conducted in all material respects in the ordinary course consistent with past
practice and (ii) there has not been (A) other than cash dividends made by any
wholly owned Subsidiary of Company to Company or one of its Subsidiaries, any
split, combination or reclassification of any shares of capital stock,
declaration, setting aside or paying of any dividend or other distribution
(whether in cash, shares or property or any combination thereof) in respect of
any shares of capital stock of Company or any Subsidiary; (B) any change in any
method of accounting or accounting principles or practice by Company or any of
its Subsidiaries, except for any such change required by reason of a change in
GAAP or regulatory accounting principles; (C) any amendment of Company Charter
Documents; (D) any acquisition, redemption or amendment of any Company
Securities or Subsidiary Securities; (E) (1) any incurrence or assumption of any
long-term or short-term debt or issuance of any debt securities by Company or
any of its Subsidiaries except for short-term debt incurred to fund operations
of the business or owed to Company or any of its wholly-owned Subsidiaries, in
each case, in the ordinary course of business consistent with past practice, (2)
any assumption, guarantee or endorsement of the obligations of any other Person
(except direct or indirect wholly-owned Subsidiaries of Company) by Company or
any of its Subsidiaries, (3) any loan, advance or capital contribution to, or
other investment in, any other Person by Company or any of its Subsidiaries
(other than customary loans or advances to employees or direct or indirect
wholly-owned Subsidiaries, in each case in the ordinary course of business
consistent with past practice) or (4) any mortgage or pledge of Company's or any
of its Subsidiaries' assets, tangible or intangible, or any creation of any Lien
thereupon (other than Permitted Encumbrances); (F) any plan of complete or
partial liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization of Company or any of its Subsidiaries
(other than the Merger); (G) any material revaluation by Company or any of its
Subsidiaries of any of its assets, including writing down the value of
capitalized inventory or writing off notes or accounts receivable, other than in
the ordinary course of business consistent with past practice; or (H) any
communication between Nasdaq and Company with respect to the actual or potential
de-listing of the Company Common Stock. For purposes of this Agreement, the term
"PERMITTED ENCUMBRANCES" shall mean (a) Liens for Taxes not yet due and payable
or that are being contested in good faith by appropriate proceedings, (b) Liens
imposed by Law, such as landlord's, mechanics', laborers', carriers',
materialmen's, suppliers' and vendors' Liens arising in the ordinary course of
business for sums not yet due and payable, or that are being contested in good
faith by appropriate proceedings and for which appropriate reserves have been
established in accordance with GAAP, (c) Liens securing the performance of bids,
tenders, leases, contracts (other than for the payment of debt), statutory
obligations, surety, customs and appeal bonds and other obligations of like
nature, incurred as an incident to and in the ordinary course of business, and
(d) such other imperfections of title, charges, easements, restrictions and
encumbrances as do not materially detract from the value of or otherwise
materially interfere
13
with the present use of any of Company's or its Subsidiaries' properties or
otherwise materially impair Company's or its Subsidiaries' business operations.
Section 2.6 Taxes.
(a) Definition. For the purposes of this Agreement, the term "TAX" or,
collectively, "TAXES" shall mean any and all federal, state, local and foreign
taxes, assessments and other governmental charges, duties, impositions and
liabilities in the nature of taxes, including taxes based upon or measured by
gross receipts, net worth, income, profits, sales, use and occupation, and value
added, ad valorem, transfer, franchise, withholding, payroll, recapture,
employment, excise and property taxes, together with all interest, penalties and
additions imposed with respect to such amounts.
(b) Tax Returns and Audits.
Except as would not, individually or in the aggregate, have a Company
Material Adverse Effect:
(i) Company and each of its Subsidiaries have prepared and timely
filed all required federal, state, local and foreign returns, estimates,
information statements and reports and any amendments thereto ("TAX RETURNS")
relating to any and all Taxes concerning or attributable to Company, its
Subsidiaries or their respective operations and such Tax Returns are true and
correct and have been completed in accordance with applicable Law.
(ii) Company and each of its Subsidiaries have complied with all
applicable Laws relating to the payment and withholding of Taxes and have timely
withheld and paid to the appropriate foreign or domestic Governmental Entity
exercising any taxing or Tax regulatory authority (a "TAXING AUTHORITY") all
Taxes and any other amounts required to be paid or withheld in connection with
amounts paid or owed to any employee, independent contractor, creditor or other
third party.
(iii) Neither Company nor any of its Subsidiaries is delinquent
in the payment of any Tax, nor is there any Tax deficiency outstanding, assessed
or proposed against Company or any of its Subsidiaries, nor does Company or any
of its Subsidiaries have in effect any waiver of any statute of limitations on
or extending the period for the assessment or collection of any Tax.
(iv) No audit or other examination of any Tax Return of Company
or any of its Subsidiaries is presently in progress, nor has Company or any of
its Subsidiaries received written notification of any request for such an audit
or other examination.
(v) There are no Liens on the assets of Company or any of its
Subsidiaries relating to or attributable to Taxes, other than Liens for Taxes
not yet due and payable.
(vi) None of the assets of Company or any of its Subsidiaries is
treated as "tax-exempt use property," within the meaning of Section 168(h) of
the Code.
14
(vii) Neither Company nor any of its Subsidiaries is, nor has
been at any time during the 5-year period ending with the Effective Time, a
"United States Real Property Holding Corporation" within the meaning of Section
897(c)(2) of the Code.
(viii) Neither Company nor any of its Subsidiaries (1) is, or
since January 1, 2002 has been, a member of an affiliated group (within the
meaning of Code Section 1504(a)) filing a consolidated federal income Tax Return
(other than a group the common parent of which was Company), (2) is a party to
any Tax sharing, indemnification or allocation agreement, nor does Company or
any of its Subsidiaries owe any amount under any such agreement, or (3) has any
liability for the Taxes of any Person (other than Company or any of its
Subsidiaries) under Treas. Reg. Section 1.1502-6 (or any similar provision of
state, local or foreign Law), as a transferee or successor, by contract, or
otherwise.
(ix) Neither Company nor any of its Subsidiaries has constituted
either a "distributing corporation" or a "controlled corporation" in a
distribution of stock intended to qualify for tax-free treatment under Section
355 of the Code (x) in the two years prior to the date of this Agreement or (y)
in a distribution which could otherwise constitute part of a "plan" or "series
of related transactions" (within the meaning of Section 355(e) of the Code) in
conjunction with the Merger.
(x) Neither Company nor any of its Subsidiaries has participated
in a transaction that is the same as or substantially similar to one of the
types of transactions that the Internal Revenue Service has determined to be a
tax avoidance transaction and identified by notice, regulation, or other form of
published guidance as a listed transaction, as set forth in Section 6707A(c)(2)
of the Code.
(xi) Company and each of its Subsidiaries are in compliance with
all terms and conditions of any Tax exemption, Tax holiday or other Tax
reduction agreement or order of a territorial or non-U.S. government.
(xii) No claim has been made in writing by any Taxing Authority
in a jurisdiction where none of the Company or any of its Subsidiaries files Tax
Returns to the effect that any of Company or its Subsidiaries is or may be
subject to taxation by, or any of Company or its Subsidiaries is required to
file any Tax Return in, that jurisdiction.
(xiii) Neither Company nor any of its Subsidiaries (a) has agreed
to or is required to make any adjustment under Section 481 of the Code that will
require an adjustment to taxable income for any period following the Effective
Time, (b) has received written notification that the Internal Revenue Service is
proposing any such adjustment, or (c) has an application pending with the
Internal Revenue Service requesting permission for any changes in methods of
accounting.
(xiv) To the knowledge of Company, (a) neither Company nor any of
its Subsidiaries has participated in or cooperated with an international boycott
within the meaning of Section 999 of the Code and (b) Company is not and, within
the past three years, has not been a passive foreign investment company within
the meaning of Section 1297 of the Code.
15
(xv) Company has not within the past three years received written
notification from any U.S. federal or state Taxing Authority making or proposing
any adjustment of Tax items of the Company or any of its Subsidiaries pursuant
to Section 482 of the Code.
(xvi) Neither Company nor any of its Subsidiaries has entered
into a gain recognition agreement described in Treas. Reg. Section 1.367(a)-8
that would be outstanding after the Effective Time.
(xvii) Neither Company nor any of its Subsidiaries is party to or
bound by any closing agreement with any U.S. federal or state Taxing Authority
that has been entered into within the past three years.
Section 2.7 Intellectual Property.
(a) Section 2.7(a) of Company Disclosure Letter contains a complete
and accurate list (by name and version number), as of the date hereof, of all
Company owned material products (i) currently distributed, marketed, or sold by
Company or its Subsidiaries and (ii) that Company expects or intends to make
available commercially or for revenue that are in development by the Company or
any of its Subsidiaries as of the Closing Date ("COMPANY PRODUCTS"), provided
that Company makes no representation or warranty that all such Company Products
will in fact be made commercially available as of the Closing Date or that there
are no other products that may become available at that time.
(b) Section 2.7(b) of Company Disclosure Letter contains a complete
and accurate list, as of the date hereof, of the following Owned Company IP: (i)
all such registered Trademarks and material unregistered Trademarks; (ii) all
such Patents, if any, and (iii) all registered Copyrights, in each case listing,
as applicable, (A) the name of the current owner, (B) the jurisdiction where the
application/registration was filed or issued, and (C) the application or
registration number. To the knowledge of Company, none of the Owned Company IP
is invalid, except for any such invalidity that would not, individually or in
the aggregate, have a Company Material Adverse Effect.
(c) Section 2.7(c) of Company Disclosure Letter contains a complete
and accurate list, as of the date hereof, of Company's Domain Name
registrations. Section 2.7(c) of Company Disclosure Letter identifies, for each
Domain Name registration, the named owner, and the registrar with which that
Domain Name is registered. To the knowledge of Company, Company's use and
registration of its Domain Names do not infringe any third party's Intellectual
Property Rights, except for any such infringement that would not, individually
or in the aggregate, have a Company Material Adverse Effect. In the case in
which Company or any of its Subsidiaries has acquired ownership of a Domain Name
registration from another party, Company or its Subsidiary has, to the knowledge
of Company, made or procured a transfer of the Domain Name in accordance with
the procedure of the registrar, except as would not, individually or in the
aggregate, have a Company Material Adverse Effect.
(d) In each case in which Company or any of its Subsidiaries has
acquired assignments of ownership of any registered Trademarks, registered
Copyrights, or Patents currently included in the Owned Company IP from another
Person as set forth in the Company
16
Disclosure Letter, Company or one of its Subsidiaries has recorded or caused to
be recorded each such assignment with the U.S. Patent and Trademark Office, the
U.S. Copyright Office, or their respective equivalents in the applicable
jurisdiction, in each case in accordance with applicable Laws, except as would
not, individually or in the aggregate, have a Company Material Adverse Effect.
(e) "COMPANY IP AGREEMENTS" shall mean any material Contract that is
in effect on the date hereof and (i) under which Company or any of its
Subsidiaries uses or otherwise exploits or has the right to use or otherwise
exploit any Licensed Company IP, other than licenses and related services
agreements for software that is used or otherwise exploited by Company or any of
its Subsidiaries but not incorporated into any Company Products and that has not
been materially customized solely for use or exploitation by Company or any of
its Subsidiaries by the relevant licensor or service provider; or (ii) under
which Company or any of its Subsidiaries has licensed to others any rights under
or agreed to transfer to others any of the Company IP or Company Intellectual
Property Rights, other than customer licenses or other similar agreements
entered into in the ordinary course of business. To the knowledge of Company,
neither the Company nor any of its Subsidiaries is in breach of any of the
Company IP Agreements and, in each case except as would not, individually or in
the aggregate, have a Company Material Adverse Effect: (1) the parties
contracting with Company or any of its Subsidiaries under the Company IP
Agreements are not in breach thereof; (2) there are no pending disputes
regarding the scope of such Company IP Agreements, performance under the Company
IP Agreements, or with respect to payments made or received under such Company
IP Agreements; and (3) all Company IP Agreements are in full force and effect.
(f) To the knowledge of Company, the Owned Company IP, together with
the Licensed Company IP, is sufficient for the conduct of the business of
Company and its Subsidiaries as currently conducted.
(g) Company and its Subsidiaries own all right, title and interest in
the Owned Company IP, free and clear of all Liens other than (i) encumbrances,
restrictions or other obligations arising under any of the Company IP Agreements
and (ii) Liens that would not, individually or in the aggregate, have or
reasonably be expected to have a Company Material Adverse Effect.
(h) Company and each of its Subsidiaries has taken reasonable and
appropriate steps that, as a whole, are reasonable and appropriate to protect
and preserve the confidentiality of any Trade Secrets that comprise any part of
the Company IP. To the knowledge of Company, all use and disclosure by Company
or any of its Subsidiaries of Trade Secrets owned by another Person have been
pursuant to the terms of a written or other agreement with such Person or were
otherwise lawful, except as would not, individually or in the aggregate, have a
Company Material Adverse Effect. Company and its Subsidiaries have used
commercially reasonable efforts to enforce any policy they respectively maintain
with respect to the confidentiality of Trade Secrets, except for any failure to
enforce that would not, individually or in the aggregate, have a Company
Material Adverse Effect.
(i) To the knowledge of Company, the Company Products and the conduct
by the Company and its Subsidiaries of their respective businesses have not
infringed upon or
17
otherwise violated and do not infringe upon or otherwise violate the
Intellectual Property Rights of any third party, except for any such
infringement that would not, individually or in the aggregate, have a Company
Material Adverse Effect. To the knowledge of Company, no Person or any of such
Person's products is infringing upon in any material respect any Owned Company
IP.
(j) There is no Proceeding involving a third party pending or, to the
knowledge of Company, filed or threatened with respect to, and Company has not
been notified in writing of, any alleged infringement or other violation in any
material respect by Company or any of its Subsidiaries or any of its or their
current products or services or other operation of Company's or its
Subsidiaries' business of the Intellectual Property Rights of such third party.
There is no pending or, to the knowledge of Company, threatened claim
challenging the validity or enforceability of, or contesting Company's or any of
its Subsidiaries' ownership of or rights with respect to, any of the Owned
Company IP. To the knowledge of Company, Company and its Subsidiaries are not
subject to any Order that restricts or impairs the use of any Company
Intellectual Property or Intellectual Property Rights, other than restrictions
or impairments that would not, individually or in the aggregate, have or
reasonably be expected to have a Company Material Adverse Effect.
(k) The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby (including the Offer and the Merger)
will not result in (i) Company or its Subsidiaries granting to any third party
any rights or licenses to any Intellectual Property or Intellectual Property
Rights pursuant to any Company IP Agreement, (ii) any right of termination or
cancellation under any Company IP Agreement, (iii) the imposition of any Lien on
any Owned Company IP, or (iv) after the Merger, Parent or any of its
Subsidiaries being required, under the terms of any agreement to which Company
or any of its Subsidiaries is a party, to grant any third party any rights or
licenses to any of Parent's or any of its Subsidiaries' material Intellectual
Property or material Intellectual Property Rights, except, in the case of each
of clauses (ii) and (iii), as would not, individually or in the aggregate, have
a Company Material Adverse Effect.
(l) Company and its Subsidiaries have taken commercially reasonable
steps and implemented commercially reasonable procedures to prevent viruses and
other disabling codes from entering Company Products. For the avoidance of
doubt, any unauthorized access caused, in whole or in part, by the operating
systems, hardware or software of third parties shall not be deemed to be caused
by the Company Products.
(m) To the knowledge of Company, the Company Disclosure Letter
contains a complete and accurate list of all software that is distributed as
"open source software" or under a similar licensing or distribution model
(including but not limited to the GNU General Public License) that is
incorporated into or bundled with (i) a Company Product or (ii) any material
software used by the Company or any of its Subsidiaries and covered in whole or
material part by any Owned Company IP.
(n) To the knowledge of Company, neither Company nor any of its
Subsidiaries has experienced any material defects in the software and hardware
used in their business as it is currently conducted (including any error or
omission in the processing of any
18
data) that, if not resolved, would, individually or in the aggregate, have or
reasonably be expected to have a Company Material Adverse Effect.
(o) To the knowledge of Company, Company's and its Subsidiaries'
collection and dissemination of personal customer information in connection with
their business has been conducted in accordance with applicable privacy policies
published or otherwise adopted by Company and its Subsidiaries and any
applicable Laws, except as would not, individually or in the aggregate, have a
Company Material Adverse Effect.
(p) For purposes of this Agreement, the following terms have the
meanings set forth herein:
(i) "DERIVATIVE WORK" shall have the meaning set forth in 17
U.S.C. Section 101.
(ii) "DOMAIN NAMES" shall mean any alphanumeric designation that
is registered with, or assigned by, any domain name registrar, domain name
registry, or other domain name registration authority as part of an electronic
address on the Internet.
(iii) "INTELLECTUAL PROPERTY" shall mean any or all of the
following: (1) proprietary inventions (whether patentable or not), invention
disclosures, industrial designs, improvements, trade secrets, proprietary
information, know how, technology, technical data and customer lists, and all
documentation relating to any of the foregoing; (2) business, technical and
know-how information, non-public information, and confidential information and
rights to limit the use or disclosure thereof by any Person including databases
and data collections and all rights therein; (3) original works of authorship
(including computer program, source code, object code, whether embodied in
software, firmware or otherwise), architecture, documentation, files, records,
schematics, verilog files, netlists, emulation and simulation reports, test
vectors and hardware development tools; and (4) any similar or equivalent
property of any of the foregoing (as applicable).
(iv) "INTELLECTUAL PROPERTY RIGHTS" shall mean any or all of the
following and all worldwide common law and statutory rights in, arising out of,
or associated therewith: (1) patents and applications therefor, if any, and all
reissues, divisions, renewals, extensions, provisionals, continuations and
continuations-in-part thereof ("PATENTS"); (2) copyrights, copyrights
registrations and applications therefor, and all other rights corresponding
thereto throughout the world including moral and economic rights of authors and
inventors, however denominated ("COPYRIGHTS"); (3) industrial designs and any
registrations and applications therefor; (4) trade names, logos, common law
trademarks and service marks, trademark and service xxxx registrations and
applications therefor ("TRADEMARKS"); and (5) trade secrets (including, those
trade secrets defined in the Uniform Trade Secrets Act and under corresponding
foreign statutory and common law), business, technical and know-how information,
non-public information, and confidential information and rights to limit the use
or disclosure thereof by any Person; including databases and data collections
and all rights therein ("TRADE SECRETS").
19
(v) "COMPANY IP" shall mean all material Intellectual Property
that is used or held for use by Company or any of its Subsidiaries.
(vi) "LICENSED COMPANY IP" means all Company IP and the
Intellectual Property Rights of the Company other than the Owned Company IP.
(vii) "OWNED COMPANY IP" shall mean that portion of the Company
IP and the Intellectual Property Rights of the Company that are owned by Company
and its Subsidiaries.
Section 2.8 Compliance; Permits; FCPA.
(a) Compliance. The Company and each of its Subsidiaries is, and at
all times since the Balance Sheet Date has been, in compliance in all material
respects with all Laws applicable to Company or any of its Subsidiaries or to
the conduct of the business or operations of Company and its Subsidiaries,
except for such violations or noncompliance that would not, individually or in
the aggregate, have a Company Material Adverse Effect. There is no outstanding
or currently existing order, judgment, decision, decree, injunction, ruling,
writ or assessment of any Governmental Entity ("ORDER"), that is binding on
Company or any of its Subsidiaries that prohibits or materially impairs any
material business practice of Company or any of its Subsidiaries, any
acquisition of material property by Company or any of its Subsidiaries or the
conduct of business by Company and its Subsidiaries as currently conducted,
except for such Order that would not, individually or in the aggregate, have a
Company Material Adverse Effect. No representation or warranty is made in this
Section 2.8 with respect to (i) compliance with the Securities Act, the Exchange
Act or Xxxxxxxx-Xxxxx, to the extent such compliance is covered in this
Agreement, (ii) applicable Laws with respect to Taxes, (iii) Environmental Laws,
(iv) ERISA matters, (v) the MBCA and (vi) Intellectual Property.
(b) Permits. Company and its Subsidiaries hold, to the extent legally
required, all material permits, licenses, consents, authorizations and approvals
from Governmental Entities ("PERMITS") that are required to conduct their
business as currently conducted (collectively, "COMPANY PERMITS"), and no
suspension or cancellation of any of the Company Permits is pending or, to the
knowledge of Company, threatened, except for such noncompliance, suspensions or
cancellation that would not, individually or in the aggregate, have a Company
Material Adverse Effect.
(c) Foreign Corrupt Practices Act. Neither Company nor any of its
Subsidiaries (including any of their respective officers or directors) has (i)
used any funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity, or (ii) made any unlawful
payment to foreign or domestic government officials or employees or to foreign
or domestic political parties or campaigns or violated in any material respect
any provision of the Foreign Corrupt Practices Act of 1977, as amended, or any
rules or regulations thereunder.
Section 2.9 Litigation. As of the date hereof, there is no suit,
claim, action, investigation, proceeding, arbitration or mediation by or before
any Governmental Entity (each, a "PROCEEDING") pending or, to the knowledge of
Company, threatened against
20
Company or any of its Subsidiaries or any properties or assets of Company or of
any of its Subsidiaries other than any such Proceeding that (a) does not involve
an amount in controversy in excess of $750,000, (b) does not seek material
injunctive relief, or (c) if resolved in accordance with plaintiff's demands,
would not, individually or in the aggregate, have a Company Material Adverse
Effect. Neither Company nor any Subsidiary of Company is subject to any
outstanding Order, that would, individually or in the aggregate, have a Company
Material Adverse Effect. As of the date hereof, no executive officer or director
of the Company or any of its Subsidiaries is a defendant in any Proceeding in
connection with his status as an executive officer or director of the Company or
any of its Subsidiaries.
Section 2.10 Brokers' and Finders' Fees. Except for fees payable to
Credit Suisse Securities (USA) LLC (the "FINANCIAL ADVISOR") pursuant to an
engagement letter with Company dated March 23, 2007 (the "ENGAGEMENT LETTER"),
and fees payable to The Chesapeake Group, pursuant to an engagement letter with
Company dated April 16, 2007, Company has not incurred any liability for
brokerage or finders' fees or agents' commissions or any similar charges in
connection with this Agreement or any transaction contemplated hereby, and other
than provisions relating generally to the indemnification of officers and
directors, Company has not entered into any indemnification agreement or
arrangement with any Person in connection with this Agreement and the
transactions contemplated hereby. Complete and correct copies of the Engagement
Letters, or accurate descriptions of the material terms of which and amounts
payable by Company thereunder, have been provided to Parent, and the Engagement
Letters have not been amended or modified in any respect.
Section 2.11 Related Party Transactions. Except as set forth in the
Company SEC Documents filed prior to the date hereof, or compensation or other
employment arrangements in the ordinary course, there are no transactions,
agreements, arrangements or understandings between Company or any of its
Subsidiaries, on the one hand, and any affiliate (including any officer or
director) thereof, but not including any wholly owned Subsidiary of Company, on
the other hand.
Section 2.12 Employee Matters.
(a) List. Section 2.12(a) of the Company Disclosure Letter contains an
accurate and complete list of (i) each material plan, program, policy,
agreement, collective bargaining agreement, or other material arrangement
providing for compensation, severance, deferred compensation, performance
awards, stock or stock-related awards, fringe, retirement, death, disability or
medical benefits or other employee benefits or remuneration of any kind, whether
written or unwritten or otherwise, funded or unfunded, including each "employee
benefit plan," within the meaning of Section 3(3) of the Employee Retirement
Income Security Act ("ERISA"), which is or has been maintained, contributed to,
or required to be contributed to, in each case, within the past 5 years, by
Company or any Subsidiary of Company or any other Person under common control
with Company or any Subsidiary of Company within the meaning of Section 414 of
the Code (each, including each Subsidiary of Company, a "COMPANY ERISA
AFFILIATE") for the benefit of any current or former employee, consultant or
director of Company or any Company ERISA Affiliate (each a "COMPANY EMPLOYEE"),
and with respect to which Company or any Company ERISA Affiliate has or may have
any liability or obligation, contingent or otherwise (collectively, the "COMPANY
EMPLOYEE PLANS"), and (ii) each
21
employment, severance or consulting agreement between Company or any Company
ERISA Affiliate and any Company Employee (each a "COMPANY EMPLOYEE AGREEMENT").
Neither Company nor any Company ERISA Affiliate has any plan or commitment (i)
to establish, adopt or enter into any new Company Employee Plan or Company
Employee Agreement, or (ii) to modify or amend any Company Employee Plan or
Company Employee Agreement (except to the extent required by Law or as required
by this Agreement).
(b) Documents. Company has made available to Parent correct and
complete copies of: (i) all material documents embodying each Company Employee
Plan and each Company Employee Agreement including all amendments, summary plan
descriptions, trust documents, administrative service agreements, group annuity
contracts, group insurance contracts, and policies pertaining to fiduciary
liability insurance covering the fiduciaries for each Company Employee Plan;
(ii) the most recent annual actuarial valuations, if any, prepared for each
Company Employee Plan; (iii) the three (3) most recent annual reports (Form
Series 5500 and all schedules and financial statements attached thereto), if
any, required to be filed for any Company Employee Plan; (iv) if a Company
Employee Plan is funded, the most recent annual and periodic accounting of
Company Employee Plan assets; (v) the most recent IRS determination letter for
each Company Employee Plan intended to be qualified under Section 401(a) of the
Code; (vi) all material communications relating to any established or proposed
Company Employee Plan that relates to any material amendments, terminations,
increases or decreases in benefits, acceleration of payments or vesting
schedules or other events which would result in any liability to Company or any
of its Subsidiaries; (vii) all material correspondence to or from any
governmental agency in the past three (3) years relating to any Company Employee
Plan; (viii) discrimination test results for each Company Employee Plan for the
last three (3) plan years which was subject to discrimination testing ; (ix) all
prospectuses prepared in connection with each Company Employee Plan; and (x)
visa and work permit information with respect to the current Company Employees.
(c) Company International Plans. With respect to any Company Employee
Plan that is maintained in any non-U.S. jurisdiction (each, a "COMPANY
INTERNATIONAL PLAN"), Company has made available to Parent correct and complete
copies of, to the extent applicable, (i) all such International Employee Plans,
including all amendments, supplements and modifications to such Plans, (ii) the
most recent annual report or similar compliance documents required to be filed
with any Governmental Entity with respect to such Company International Plan,
and (iii) any document comparable to the IRS determination letter referenced in
Section 2.12(b)(v).
(d) Employee Plan Compliance. Except as would not, individually or in
the aggregate, have a Company Material Adverse Effect, each Company Employee
Plan has been established and maintained in accordance with its terms and in
compliance with applicable Laws, including ERISA and the Code. All the Company
Employee Plans that are intended to be qualified under Section 401(a) of the
Code have received timely determination letters from the IRS, no such
determination letter has been revoked nor has revocation been threatened, and no
act or omission has occurred, that would reasonably be expected to result in the
loss of its qualification. There are no audits, inquiries or proceedings pending
or, to the knowledge of Company or any Company ERISA Affiliates, threatened by
the Internal Revenue Service ("IRS") or the Department of Labor, or any similar
Governmental Entity with respect to any
22
Company Employee Plan. Except as would not, individually or in the aggregate,
have a Company Material Adverse Effect, there are no Proceedings pending, or, to
the knowledge of Company, threatened or reasonably anticipated (other than
routine claims for benefits) against any Company Employee Plan. Neither the
Company or any Company Employee Plan, nor to the knowledge of the Company any
"disqualified person" (as defined in Section 4975 of the Code) or "party in
interest" (as defined in Section 3(18) of ERISA), has engaged in any non-exempt
prohibited transaction (within the meaning of Section 4975 of the Code or
Section 406 of ERISA) which, individually or in the aggregate, have a Company
Material Adverse Effect. To the knowledge of Company, each "nonqualified
deferred compensation plan" (as defined in Section 409A(d)(1) of the Code) of
the Company has been operated since January 1, 2005 in good faith compliance
with Section 409A of the Code and the Treasury Regulations and other guidance
issued thereunder, except for such noncompliance that would not reasonably be
expected to result in any material liability under Section 409A of the Code to
plan participants.
(e) No Pension or Welfare Plans. Neither Company nor any Company ERISA
Affiliate has ever maintained or contributed to in the last six years (i) a
"employee pension benefit plan," within the meaning of Section 3(2) of ERISA
("PENSION PLAN") that is subject to Title IV of ERISA or Section 412 of the
Code, (ii) a Pension Plan which is a "multiemployer plan," as defined in Section
3(37) of ERISA, (iii) a Pension Plan which is a "multiple employer plan" for
purposes of ERISA, (iv) a "funded welfare plan" within the meaning of Section
419 of the Code, or (v) except as listed in Section 2.12(e) of the Company
Disclosure Letter, a Company International Plan that is a defined benefit
pension plan. There are no Company Employee Plans or Company Employee Agreements
under which welfare benefits are provided to past or present employees of the
Company and its subsidiaries beyond their retirement or other termination of
service, other than coverage mandated by the Consolidated Omnibus Budget
Recommendation Act of 1985 ("COBRA"), Section 4980B of the Code, Title I of
ERISA or any similar state or local laws, except as would not, individually or
in the aggregate, have a Company Material Adverse Effect.
(f) Executive Loans. Neither Company nor any Company ERISA Affiliate
has violated Section 402 of the Xxxxxxxx-Xxxxx Act and the execution of this
Agreement and the consummation of the transactions contemplated hereby will not,
to the knowledge of Company, cause such a violation.
(g) Effect of Transaction. The execution of this Agreement and the
consummation of the transactions contemplated hereby will not (either alone or
upon the occurrence of an individual's termination of employment within one year
prior to or three years following the transactions contemplated hereby),
constitute an event under any Company Employee Plan, Company Employee Agreement,
trust or loan that will or may result in any payment (whether of severance pay
or otherwise), acceleration, forgiveness of indebtedness, vesting, distribution,
increase in benefits or obligation to fund benefits with respect to any Company
Employee. None of the Company Employee Agreements or Company Employee Plans have
a provision providing for a tax gross-up for taxes incurred under Section 4999
of the Code.
(h) Employment Law Matters. Company and each of its Company ERISA
Affiliates: (i) is in compliance in all material respects with all applicable
foreign, federal, state
23
and local Laws, respecting employment, employment practices, wages and hours,
health and safety, social security filings and payments, secondment and
expatriation rules, paid vacations and, in each case, with respect to Company
Employees; and (ii) is not liable for any payment to any trust or other fund
governed by or maintained by or on behalf of any Governmental Entity, with
respect to unemployment compensation benefits, social security or other benefits
or obligations for Company Employees (other than routine payments to be made in
the normal course of business and consistent with past practice). There are no
material Proceedings pending against Company or any Company ERISA Affiliate
under any worker's compensation policy or long-term disability policy. Neither
Company, nor any Company ERISA Affiliate, reasonably anticipates any direct or
indirect material liability with respect to any misclassification of any person
as an independent contractor, rather than as an employee, or with respect to any
employee leased from another employer.
(i) Labor. No work stoppage or labor strike against Company or any
Company ERISA Affiliate is pending or, to the knowledge of Company, threatened
or reasonably anticipated. None of the Company Employees are represented by a
labor organization, employee group or association or works council (each, a
"LABOR ORGANIZATION") or is subject to work rules or practices agreed to with
any Labor Organization and, to the knowledge of Company, there are no activities
or proceedings of any Labor Organization, to organize any Company Employees.
There are no Proceedings, labor disputes or grievances pending, or, to the
knowledge of Company, threatened or reasonably anticipated relating to any
labor, safety or discrimination matters involving any Company Employee,
including charges of unfair labor practices or discrimination complaints, which,
if adversely determined, would, individually or in the aggregate, have a Company
Material Adverse Effect. Neither Company nor any of its Subsidiaries has engaged
in any unfair labor practices within the meaning of the National Labor Relations
Act. Neither Company nor any Company ERISA Affiliate is presently, or has been
in the past, a party to, or bound by, any collective bargaining agreement, union
contract or similar agreement with respect to Company Employees and no
collective bargaining agreement is being negotiated with respect to Company
Employees. Neither Company nor any of its Subsidiaries has incurred any material
liability or material obligation under the Worker Adjustment and Retraining
Notification Act or any similar applicable Law which remains unsatisfied. During
the past five (5) years, neither Company nor any of its Company ERISA Affiliates
are or have been a party to any redundancy agreements (including social plans or
job protection plans).
Section 2.13 Property.
(a) Properties. Neither Company nor any of its Subsidiaries owns any
real property. Section 2.13(a) of the Company Disclosure Letter sets forth a
true, correct and complete list, as of the date hereof, of all leases, subleases
and other agreements (collectively, the "LEASES"), under which the Company or
any of its Subsidiaries uses or occupies or has the right to use or occupy any
real property (collectively, the "LEASED REAL PROPERTY"). All such Leases are in
full force and effect, each in accordance with its respective terms, and neither
Company nor any of its Subsidiaries is in default under any Lease, and, to the
knowledge of Company, no event has occurred that with notice or lapse of time or
both would constitute a material default thereunder, except, in each case, for
any default that would not, individually or in the aggregate, have a Company
Material Adverse Effect. Company has heretofore made
24
available to Parent true, correct and complete copies of all of the Leases
(including all modifications, amendments, supplements, waivers and side letters
thereto).
(b) Valid Title. To the knowledge of Company, Company and each of its
Subsidiaries have and own valid title to, or, in the case of the Leased Real
Properties, valid leasehold interests in, all of its tangible properties and
assets, real, personal and mixed, used or held for use in its business, free and
clear of any Liens other than Permitted Encumbrances, and except for such
defects in title that would not have a Company Material Adverse Effect.
Section 2.14 Environmental Matters.
(a) Company and its Subsidiaries are and for the last three years have
been in compliance with all applicable Environmental Laws, which compliance
includes the possession and maintenance of, and compliance with, all Permits
required under applicable Environmental Laws for the operation of the business
of Company and its Subsidiaries, except for such failures to be in compliance as
would not, individually or in the aggregate, have a Company Material Adverse
Effect.
(b) Neither Company nor any of its Subsidiaries has produced,
processed, manufactured, generated, treated, handled, stored, released or
disposed of any Hazardous Substance, except in compliance with applicable
Environmental Laws, at any property that Company or any of its Subsidiaries has
at any time owned, operated, occupied or leased; and to the knowledge of the
Company, neither Company nor any of its Subsidiaries is liable for any releases
of Hazardous Substances by any third party.
(c) Neither Company nor any of its Subsidiaries has received written
notice of, is a party to or to the knowledge of Company is the subject of any
Proceeding alleging any liability or responsibility under or noncompliance with
any Environmental Law or seeking to impose any financial responsibility for any
investigation, cleanup, removal, containment or any other remediation or
compliance under any Environmental Law.
(d) Company has provided to Parent copies of the Phase I and Phase II
environmental assessment reports listed in Section 2.14(d) of the Company
Disclosure Letter, which is a true and complete list of all Phase I and Phase II
environmental assessment reports in the Company's possession relating to any
property that Company or any of its Subsidiaries has at any time owned,
operated, occupied or leased.
Section 2.15 Contracts.
(a) Material Contracts. For purposes of this Agreement, "COMPANY
MATERIAL CONTRACT" shall mean:
(i) any "material contracts" (as such term is defined in Item
601(b)(10) of Regulation S-K of the Securities Act) with respect to Company and
its Subsidiaries (whether or not filed by Company with the SEC);
(ii) any employment or consulting Contract (in each case, under
which Company has continuing obligations as of the date hereof) with any
executive officer or other
25
Company Employee or member of Company's Board of Directors with a current base
salary in excess of $275,000, other than those that are terminable by Company or
any of its Subsidiaries on no more than 30 days notice without material
liability or financial obligation to Company
(iii) any Contract or plan, including any stock option plan,
stock appreciation right plan or stock purchase plan, any of the benefits of
which will be increased, or the vesting of benefits of which will be
accelerated, by the consummation of the transactions contemplated by this
Agreement or the value of any of the benefits of which will be calculated on the
basis of any of the transactions contemplated by this Agreement;
(iv) any agreement of indemnification or any guaranty that is
material to Company and its Subsidiaries, taken as whole (in each case, under
which Company has continuing obligations as of the date hereof), other than any
agreement of indemnification entered into with a customer or a vendor in the
ordinary course of business;
(v) any Contract containing any covenant applicable to Company or
any of its Subsidiaries (or, after the Effective Time, the Surviving Corporation
or Parent) (A) limiting in any respect any such Person's right to engage in any
line of business or to operate in any geographic area or distribution channel,
to make use of, disclose, enforce or assign any Intellectual Property or compete
with any Person in any line of business, (B) granting any exclusive rights or
(C) otherwise prohibiting or limiting the right of any such Person to purchase,
sell, distribute or manufacture any products or services or to purchase or
otherwise obtain any software, components, parts or subassemblies, other than
such Contracts that may be cancelled without material liability to Company or
its Subsidiaries upon notice of 180 days or less;
(vi) any Contract relating to the disposition or acquisition by
Company or any of its Subsidiaries after the date of this Agreement of a
material amount of assets not in the ordinary course of business or pursuant to
which Company or any of its Subsidiaries has any material ownership interest in
any other Person or other business enterprise other than Company's Subsidiaries;
(vii) any dealer, distributor, joint venture, joint marketing or
joint development agreement, under which Company or any of its Subsidiaries has
continuing obligations or costs in excess of $1,000,000 per year, and which may
not be canceled without penalty upon notice of 90 days or less;
(viii) any Contract (A) containing any financial penalty for the
failure by Company or any of its Subsidiaries to comply with any support or
maintenance obligation or (B) containing any service obligation or cost on the
part of Company or any of its Subsidiaries in excess of $1,000,000, other than
those obligations that are terminable by Company or any of its Subsidiaries on
no more than 90 days notice without liability or financial obligation to Company
or its Subsidiaries;
(ix) any Contract to license any third party to manufacture or
reproduce any Company Products or any Contract to sell or distribute any Company
Products, except (A) agreements with distributors or sales representatives in
the ordinary course of business
26
consistent with past practice, or (B) agreements allowing internal copies made
or to be made by end-user customers in the ordinary course of business
consistent with past practice;
(x) any mortgages, indentures, guarantees, loans or credit
agreements, security agreements or other Contracts relating to the borrowing of
money or extension of credit, in each case in excess of $1,000,000, other than
(A) accounts receivables and payables in the ordinary course of business and (B)
loans to direct or indirect wholly-owned Subsidiaries;
(xi) (A) any settlement agreement entered into within two years
prior to the date of this Agreement relating to Intellectual Property and (B)
any settlement agreement not relating to Intellectual Property entered into
within one year prior to the date of this Agreement, other than (1) releases
immaterial in nature or amount entered into with former employees or independent
contractors of Company in the ordinary course of business or (2) settlement
agreements for cash only (which has been paid) and does not exceed $1,000,000 as
to such settlement; or
(xii) any other agreement, contract or commitment that provides
for payment obligations by Company or any of its Subsidiaries of $5,000,000 or
more in any individual case that is not terminable by Company or its
Subsidiaries upon notice of 30 days or less without material liability to
Company or its Subsidiary and is not disclosed pursuant to clauses (i) through
(xi) above.
(b) Schedule of Material Contracts. Section 2.15(b) of the Company
Disclosure Letter sets forth a list, as of the date hereof, of all Company
Material Contracts to which Company or any of its Subsidiaries is a party.
(c) No Breach. All Company Material Contracts are valid and in full
force and effect except to the extent they have previously expired in accordance
with their terms. Neither Company nor any of its Subsidiaries, nor, to the
knowledge of the Company, any counterparty thereto, has violated any provision
of, or committed or failed to perform any act which, with or without notice,
lapse of time or both would constitute a default under the provisions of, any
Company Material Contract except where such violation, failure to perform or
default would not, individually or in the aggregate, have a Company Material
Adverse Effect. Neither Company nor any of its Subsidiaries are in breach of any
provision of a Company Material Contract except where such breach would not,
individually or in the aggregate, have a Company Material Adverse Effect.
Section 2.16 Proxy Statement. The letter to shareholders, notice of
meeting, proxy statement and form of proxy that will be provided to shareholders
of Company in connection with the Merger (including any amendments or
supplements) and any schedules required to be filed with the SEC in connection
therewith (collectively, the "PROXY STATEMENT"), will, when filed with the SEC,
comply as to form in all material respects with the applicable requirements of
the Exchange Act. At the time the Proxy Statement is mailed to the shareholders
of Company and at the time of the Shareholders' Meeting, the Proxy Statement
will not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they are made, not misleading. Notwithstanding any
of the foregoing, no representation
27
or warranty is made by Company with respect to information or other statements
supplied or made by, or incorporated by reference from, Parent, Merger Sub or
any of their officers, directors, representatives, agents or employees for
inclusion or incorporation by reference in the Proxy Statement.
Section 2.17 Insurance. Section 2.17 of the Company Disclosure Letter
sets forth a correct and complete list, as of the date hereof, of all material
Insurance Policies owned or held by Company and each Subsidiary. Except as would
not have a Company Material Adverse Effect, (i) the Insurance Policies are in
full force and effect, and (ii) neither the Company nor any of its Subsidiaries
has violated any provision of, or committed or failed to perform any act which,
with or without notice, lapse of time or both would constitute a default under
the provisions of, any Insurance Policies. For purposes of this Agreement,
"INSURANCE POLICIES" shall mean insurance policies covering the assets,
business, equipment, properties, operations and employees of Company and its
Subsidiaries.
Section 2.18 Fairness Opinion. Prior to the execution of this
Agreement, the Financial Advisor has delivered to Company's Board of Directors
and/or a committee thereof its written opinion, dated the date hereof, to the
effect that, as of such date, the Merger Consideration is fair, from a financial
point of view, to the holders of Company Common Stock (other than the Parent or
the Merger Sub). A copy of such opinion, in writing, shall be made available to
Parent within three business days of the date of this Agreement.
Section 2.19 Whistleblower Notification.
(a) Whistleblowers. The audit committee of the Board of Directors of
Company and Company's external auditors have been notified of all material
whistleblower claims. No current attorney representing Company or any of its
Subsidiaries has reported evidence of a violation of securities Laws, breach of
fiduciary duty or similar violation by Company, any of its Subsidiaries or any
of its or their officers, directors, employees or agents to Company's Board of
Directors or any committee thereof or to any director or officer of Company or
any of its Subsidiaries.
(b) Retaliation. To the knowledge of Company, since January 1, 2005,
no employee of Company or any of its Subsidiaries has provided or is providing
information to any law enforcement agency regarding the commission or possible
commission of any crime or the violation or possible violation of any applicable
Law described in Section 806 of the Xxxxxxxx-Xxxxx Act by Company or any of its
Subsidiaries.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF PARENT AND MERGER SUB
Parent and Merger Sub hereby represent and warrant to Company as follows:
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Section 3.1 Organization. Each of Parent and Merger Sub is a
corporation duly organized, validly existing and in good standing under the Laws
of the jurisdiction of its incorporation and has the requisite power and
authority to carry on its business as now being conducted.
Section 3.2 Authority; Non-Contravention; Consents.
(a) Authority. Each of Parent and Merger Sub has all requisite
corporate power and authority to execute and deliver this Agreement, to
consummate the Merger and the other transactions contemplated hereby, and to
comply with the provisions of this Agreement. The execution and delivery of this
Agreement by Parent and Merger Sub, the consummation by Parent and Merger Sub of
the Merger and the other transactions contemplated hereby, and the compliance by
Parent and Merger Sub with the provisions of this Agreement have been duly
authorized by all necessary corporate action on the part of Parent and Merger
Sub, and no other corporate proceedings on the part of Parent or Merger Sub are
necessary to authorize the execution and delivery of this Agreement, to comply
with the terms of this Agreement, or to consummate the Merger and the other
transactions contemplated hereby, subject only to the filing of the Certificate
of Merger pursuant to MBCA. This Agreement has been duly executed and delivered
by Parent and Merger Sub and, assuming due execution and delivery by Company,
constitutes the valid and binding obligation of Parent and Merger Sub,
enforceable against Parent and Merger Sub in accordance with its terms.
(b) Non-Contravention. The execution and delivery of this Agreement by
Parent and Merger Sub, the consummation of the Merger and the other transactions
contemplated by this Agreement, and the compliance by Parent and Merger Sub with
this provisions of this Agreement do not and will not: (i) conflict with or
violate any provision of the Parent Charter Documents or the articles of
incorporation or bylaws of Merger Sub, (ii) subject to obtaining the Requisite
Shareholder Approval and compliance with the requirements set forth in clauses
(i)-(iv) of Section 3.2(c), conflict with or violate any Law or Order applicable
to Parent or Merger Sub or by which Parent or Merger Sub or any of their
respective properties or assets are bound or affected, (iii) result in any
breach of or constitute a default (or an event that with notice or lapse of time
or both would become a default) under, or impair Parent's or Merger Sub's rights
or alter the rights or obligations of any third party, or give to others any
rights of termination, amendment, acceleration or cancellation, under any
Contract or Permit to which Parent or Merger Sub is a party or bound by or their
respective properties or assets are bound by or subject to or otherwise under
which Parent or Merger Sub has rights or benefits, or (iv) result in the
creation of any Lien in or upon any of the properties or assets of Parent or
Merger Sub, except, in the case of each of clauses (ii), (iii) and (iv), as
would not, individually or in the aggregate, have a Parent Material Adverse
Effect.
(c) Consents. No consent, approval, order or authorization of, or
registration, declaration or filing with, or notice to, any Governmental Entity
is required to be obtained or made by Parent or Merger Sub in connection with
the execution and delivery of this Agreement, the consummation of the Merger and
other transactions contemplated hereby, or the compliance by Parent or Merger
Sub with the provisions of this Agreement, except for: (i) the filing of the
Certificate of Merger with the Department of Labor and Economic Growth of the
State of Michigan and appropriate documents with the relevant authorities of
other states in which
29
Company and/or Parent are qualified to do business, (ii) the filing of the Proxy
Statement with the SEC in accordance with the Exchange Act, and such reports
under the Exchange Act as may be required in connection with this Agreement, the
Merger and the other transactions contemplated by this Agreement, (iii) such
consents, approvals, orders, authorizations, registrations, declarations and
filings as may be required under the HSR Act or Foreign Antitrust Laws, in any
case that are applicable to the transactions contemplated by this Agreement,
(iv) such consents, approvals, orders, authorizations, registrations,
declarations and filings as may be required under applicable state securities or
"blue sky" laws, the securities laws of any foreign country, or Nasdaq or the
NYSE, and (v) such other consents, authorizations, filings, approvals and
registrations which if not obtained or made would not, individually or in the
aggregate, have or reasonably be expected to have a Parent Material Adverse
Effect.
Section 3.3 Disclosure. None of the information supplied or to be
supplied by or on behalf of Parent and Merger Sub expressly for inclusion or
incorporation by reference in the Proxy Statement, will, at the time the Proxy
Statement is mailed to the shareholders of Company, at the time of any amendment
to supplement thereof, at the time of the Shareholders' Meeting or as of the
Effective Time, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in the light of the circumstances under which they are
made, not misleading. Notwithstanding the foregoing, no representation or
warranty is made by Parent and Merger Sub with respect to statements made or
incorporated by reference therein supplied by Company for inclusion or
incorporation by reference in the Proxy Statement.
Section 3.4 Ownership and Interim Operations of Merger Sub. Parent
and/or one or more of its wholly-owned subsidiaries owns all of the outstanding
capital stock of Merger Sub. Merger Sub was formed solely for the purpose of
engaging in the Merger or the other transactions contemplated by this Agreement
and has engaged in no business other than in connection with the Merger or the
other transactions contemplated by this Agreement.
Section 3.5 Financial Capability. Parent has the financial capacity to
perform and to cause the Merger Sub to perform all of its obligations under this
Agreement, and, as of the Closing Date, Parent will have available all funds
necessary to pay the Merger Consideration and to perform the other obligations
of Parent and Merger Sub with respect to the transactions contemplated by this
Agreement.
ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME
Section 4.1 Conduct of Business of Company.
(a) Ordinary Course. During the period from the date hereof and
continuing until the earlier of the termination of this Agreement pursuant to
its terms or the Effective Time, Company shall and shall cause each of its
Subsidiaries to, except as otherwise expressly contemplated by this Agreement or
to the extent that Parent shall otherwise consent in writing, (i) carry on its
business in the usual, regular and ordinary course, in a manner consistent with
past practice and in compliance with all applicable Laws, (ii) pay its debts and
Taxes when due, pay or perform other material obligations when due (subject to
good faith disputes over such
30
debts, Taxes or obligations), (iii) use commercially reasonable efforts in a
manner consistent with past practices to (A) preserve intact its business
organization, (B) keep available the services of its present executive officers
and Company Employees, and (C) preserve its relationships with customers,
suppliers, licensors, licensees, and others with which it has business dealings
in a manner consistent with past practices.
(b) Required Consent. In addition, without limiting the generality of
Section 4.1(a), except as expressly permitted or expressly required by the terms
of this Agreement or as set forth in Section 4.1(b) of the Seller Disclosure
Letter, without the prior written consent of Parent (such consent not to be
unreasonably withheld or delayed), during the period from the date hereof and
continuing until the earlier of the termination of this Agreement pursuant to
its terms or the Effective Time, Company shall not do any of the following, and
shall not permit any of its Subsidiaries to do any of the following:
(i) declare, set aside or pay any dividends on or make any other
distributions (whether in cash, stock, equity securities or property) in respect
of any capital stock or other equity interests or split, combine or reclassify
any capital stock or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for any capital stock or other equity
interests (other than dividends or distributions paid to Company or one of its
wholly-owned Subsidiaries by a wholly-owned Subsidiary of Company);
(ii) purchase, redeem or otherwise acquire, directly or
indirectly, any Company Securities or Subsidiary Securities, except repurchases
of unvested shares at cost in connection with the termination of the employment
relationship with any employee pursuant to stock option or purchase agreements
in effect on the date hereof;
(iii) issue, deliver, sell, authorize, pledge or otherwise
encumber any Company Securities or Subsidiary Securities, other than (i)
issuances of Company Common Stock upon the exercise of Warrants or vested
Company Options existing on the date hereof, each case in accordance with their
present terms, or (ii) grants to newly hired employees of Company Options issued
in the ordinary course of business with a per share exercise price that is no
less than the then-current market price of a share of Company Common Stock;
(iv) cause, permit or propose any amendments to Company Charter
Documents or any of the Subsidiary Charter Documents;
(v) acquire or agree to acquire (whether by merging or
consolidating with or otherwise) any business, assets or securities, in each
case involving the payment of consideration in excess of $5,000,000 individually
or in excess of $15,000,000 for all such acquisitions in the aggregate, other
than ordinary course investments in investment securities;
(vi) enter into any binding agreement, agreement in principle,
letter of intent, memorandum of understanding or similar Contract with respect
to any joint venture, strategic partnership or alliance, except for standard
commercial partnerships and alliances consistent with past practice;
(vii) sell, lease, license, encumber or otherwise dispose of any
properties, assets or any Subsidiary Securities except (A) sales of inventory in
the ordinary
31
course of business consistent with past practice, (B) the sale, lease or
disposition (other than through licensing) of property or assets which are not
material, individually or in the aggregate, to the business of Company and its
Subsidiaries, (C) the sale of goods or non-exclusive licenses of Intellectual
Property in the ordinary course of business and in a manner consistent with past
practice or (D) dispositions of other immaterial assets in the ordinary course
of business and in a manner consistent with past practice;
(viii) make any loans, advances or capital contributions to, or
investments in, any other Person, other than (A) employee advances for business
expenses made in the ordinary course of business consistent with past practices
provided such employee advances are in compliance with applicable Law and (B)
those made by Company or a Subsidiary to another Subsidiary;
(ix) except as required by a change in Law or GAAP, (A) make any
material change in its methods, principles or practices of accounting since the
date of the Company Balance Sheet or (B) revalue any of its assets;
(x) (A) make or change any material Tax (unless required by
applicable Law) election or adopt or change any accounting method in respect of
Taxes, (B) enter into any closing agreement, settle or compromise any claim or
assessment in respect of Taxes other than with respect to a claim or assessment
which exists on the date hereof and in an amount not greater than the liability
or reserve that has been recorded with respect hereto on the Company Balance
Sheet or (C) consent to any extension or waiver of any limitation period with
respect to any claim or assessment for Taxes;
(xi) except as required by applicable Law: (A) increase in any
manner (including by means of acceleration of payment) the amount of salary,
cash bonus, compensation or fringe benefits of, or pay any bonus to or xxxxx
xxxxxxxxx or termination pay to any Company Employee, except in the ordinary
course of business consistent with past practice, (B) commit to increase or
increase any benefit payable under a Company Employee Plan (including any
severance plan), or make any contribution to any Company Employee Plan, other
than contributions required by Law or the terms of such plans, (C) waive any
stock repurchase rights, accelerate (other than by operation of the terms of the
respective agreement as in effect on the date hereof), amend or modify (other
than by operation of the terms of the respective agreement or as in effect on
the date hereof) Company Options, or reprice any Company Options or authorize
cash payments in exchange for any Company Options, (D) enter into any
employment, severance, termination or indemnification agreement with any Company
Employee or enter into any collective bargaining agreement, except in the
ordinary course of business with respect to new hires consistent with past
practice, (E) make any oral or written representation with respect to any aspect
of any Company Employee Plan that is not materially in accordance with the
existing written terms of such Company Employee Plan, (F) grant any stock
appreciation right, phantom stock award, stock-related award or performance
award (whether payable in cash, shares or otherwise) to any Person (including
any Company Employee), except in the ordinary course of business consistent with
past practice, or (G) enter into any agreement with any Company Employee the
benefits of which are (in whole or in part) contingent or the terms of which are
materially altered in favor of the Company Employee upon the occurrence of a
transaction involving Company of the nature contemplated hereby.
32
(xii) grant any exclusive rights with respect to any material
Intellectual Property of Company or any of its Subsidiaries, divest any
Intellectual Property of Company or any of its Subsidiaries, or modify Company's
standard warranty terms for its products or services or amend or modify any
product or service warranties in effect as of the date hereof in any material
manner that is adverse to Company or any of its Subsidiaries, except in the
ordinary course of business;
(xiii) enter into any agreement or commitment the effect of which
would be to grant to a third party following the Merger any actual or potential
right of license to any Intellectual Property owned by Parent or any of its
Subsidiaries (other than the Surviving Corporation), other than in the ordinary
course of business consistent with past practice;
(xiv) adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or other
reorganization of Company or any of its Subsidiaries (other than the Merger or
as expressly provided in this Agreement);
(xv) hire or offer to hire employees, other than in the ordinary
course of business, consistent with past practice;
(xvi) other than pursuant to Company's Credit Agreement with XX
Xxxxxx Xxxxx Bank N.A., or any replacement thereof, or bonds for customer
contracts consistent with past practice, incur any indebtedness for borrowed
money or guarantee any such indebtedness of another Person, issue or sell any
debt securities or options, warrants, calls or other rights to acquire any debt
securities of Company or any of its Subsidiaries, guarantee any debt securities
of another Person, enter into any "keep well" or other agreement to maintain any
financial statement condition of any other Person or enter into any arrangement
having the economic effect of any of the foregoing;
(xvii) make any individual or series of related payments outside
of the ordinary course of business or make or commit to make capital
expenditures inconsistent with or beyond those contained in Company's capital
expenditure budget in effect on the date hereof, a copy of which is set forth in
Section 4.1(b)(xvii) of the Company Disclosure Letter;
(xviii) enter into, modify or amend in a manner adverse in any
material respect to Company or any of its Subsidiaries, or terminate any lease,
sublease or Company Material Contract, or waive, release or assign any material
rights or claims thereunder, in each case, in a manner adverse in any material
respect to Company or any of its Subsidiaries, other than entering into any new,
or any modification, amendment or termination of any existing, Company Material
Contract in the ordinary course of business, consistent with past practice;
(xix) enter into any Contracts containing, or otherwise subject
the Surviving Corporation or Parent to, any non-competition, exclusivity or
other material restrictions on Company, any of its Subsidiaries, the Surviving
Corporation or Parent, or any of their respective businesses, following the
Closing, other than in the ordinary course of business;
(xx) permit Company Employees to exercise their Company Options
with a promissory note or, to the extent not previously permitted by the
applicable Company Stock Plan, through a net exercise;
33
(xxi) fail to use commercially reasonable efforts to maintain
with financially responsible insurance companies insurance in such amounts and
against such risks and losses as are consistent with the Company's past
practices;
(xxii) pay, discharge or satisfy any claims, actions or
proceedings, other than the payment, discharge or satisfaction of any such
claims, actions or proceedings, (i) in the ordinary course of business and
consistent with past practice, properly reflected or reserved against in the
consolidated financial statements (or the notes thereto) as of and for the
fiscal year ended December 31, 2006 of the Company and its consolidated
Subsidiaries, or (ii) incurred in the ordinary course of business consistent
with past practice that do not exceed $2 million in the aggregate; or
(xxiii) agree in writing or otherwise to take any of the actions
described in (i) through (xxii) above.
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.1 Proxy Statement. As promptly as practicable, Company shall
prepare and file with the SEC the Proxy Statement in preliminary form.
Notwithstanding anything contained in this Agreement to the contrary, absent any
Order issued by any court of competent jurisdiction or other legal restraint or
prohibition (each, a "LEGAL RESTRAINT"), Company shall file with the SEC the
definitive Proxy Statement as promptly as practicable following the ten-day
period specified in Rule 14a-6 of the Exchange Act or, if later, the date the
SEC staff advises Company that they have no further comments, and shall cause
the mailing of the definitive Proxy Statement to the shareholders of Company to
occur on that day or as promptly as reasonably practicable thereafter. Each of
Company and Parent shall use its commercially reasonable efforts to respond as
promptly as practicable to any comments of the SEC or its staff with respect to
the Proxy Statement. Each of Company and Parent shall furnish all information
concerning itself and its Subsidiaries to the other as may be reasonably
requested in connection with the preparation, filing and distribution of the
Proxy Statement. Company shall promptly notify Parent upon the receipt of any
comments from the SEC or its staff or any request from the SEC or its staff for
amendments or supplements to the Proxy Statement and shall promptly provide
Parent with copies of all correspondence between it and its representatives, on
the one hand, and the SEC and its staff, on the other hand. Notwithstanding the
foregoing, prior to filing or mailing the Proxy Statement (or any amendment or
supplement thereto) or responding to any comments of the SEC or its staff with
respect thereto, Company (i) shall provide Parent an opportunity to review and
comment on such document or response, (ii) shall include in such document or
response all comments reasonably proposed by Parent, and (iii) shall not file or
mail such document or respond to the SEC prior to receiving the approval of
Parent, which approval shall not be unreasonably withheld or delayed. If at any
time prior to the Effective Time, any information relating to Company, Parent or
any of their respective affiliates, officers or directors, should be discovered
by Company or Parent which should be set forth in an amendment or supplement to
the Proxy Statement, so that the Proxy Statement shall not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made,
34
not misleading, the party which discovers such information shall promptly notify
the other parties hereto and an appropriate amendment or supplement describing
such information shall be filed with the SEC and, to the extent required by Law,
disseminated to the shareholders of Company.
Section 5.2 Meetings of Shareholders; Board Recommendation.
(a) Meeting of Shareholders. Company shall, as promptly as reasonably
practicable after the date of this Agreement, duly call, give notice of,
establish a record date for, convene and hold, a meeting of its shareholders
(the "SHAREHOLDERS' MEETING"), for the purpose of obtaining the approval and
adoption of this Agreement and the approval of the Merger; provided, however,
that (i) if Company is unable to obtain a quorum of its shareholders at such
time, Company may extend the date of the Shareholders' Meeting by no more than
five business days and Company shall use its commercially reasonable efforts
during such five business day period to obtain such a quorum as soon as
practicable and (ii) Company may delay the Shareholders' Meeting to the extent
(and only to the extent) Company determines in good faith that such delay is
required by applicable Law or to comply with written or verbal comments made by
the SEC with respect to the Proxy Statement; further, provided, that upon
receipt by Company, less than 10 days prior to the scheduled date of the
Shareholders' Meeting, of an Acquisition Proposal of the type described in
Section 5.3(c), Company shall be entitled to adjourn or postpone the
Shareholders' Meeting for such period as it may require to furnish information
to and engage in negotiations with the third party making such Acquisition
Proposal, but not exceeding 10 days. Subject to Section 5.3(d), the Company
Board shall recommend to holders of shares of Company Common Stock they adopt
and approve this Agreement, and shall include such recommendation in the Proxy
Statement. Subject to Sections 5.3(d) and 7.1, Company will use reasonable best
efforts to solicit from its shareholders proxies in favor of the adoption and
approval of this Agreement and will take all other action necessary or advisable
to secure the vote or consent of its shareholders required by the rules of
NASDAQ or applicable Law to obtain such approvals.
(b) Board Recommendation. Except to the extent expressly permitted by
Section 5.3(d), the Proxy Statement mailed to shareholders shall include the
Company Board Recommendation.
Section 5.3 Acquisition Proposals.
(a) No Solicitation. Subject to the provisions of this Section 5.3,
Company agrees that neither it nor any of its Subsidiaries nor any of the
officers, directors, employees, agents and representatives (including any
investment banker, attorney or accountant) (collectively, "REPRESENTATIVES") of
it or its Subsidiaries shall, directly or indirectly: (i) solicit, initiate, or
knowingly take any action to facilitate the making, submission or announcement
of, any Acquisition Proposal, (ii) engage in any discussions or negotiations
(other than to state that they are not permitted to have discussions) regarding
any Acquisition Proposal, (iii) terminate, amend, or waive any rights under any
"standstill" or other similar agreement between Company or any of its
Subsidiaries and any Person (other than Parent) or (iv) take any action to (A)
render the Rights issued pursuant to the term of the Rights Plan inapplicable to
an Acquisition Proposal or the transactions contemplated thereby or (B) allow
the Rights to expire prior to their
35
expiration date (except as otherwise contemplated in connection with the
Merger), except in the case of clauses (ii) and (iii) to the extent expressly
permitted by this Agreement. Company and each of its Subsidiaries and each of
its and their respective Representatives will each immediately cease any and all
existing activities, discussions or negotiations with any third parties
conducted heretofore with respect to any Acquisition Proposal. Without limiting
the generality of the foregoing, it is understood that any violation of the
restrictions set forth in this Section 5.3(a) by any Subsidiary of Company or
any Representative of Company or any of its Subsidiaries shall be deemed to be a
breach of this Section 5.3(a) by Company. "ACCEPTABLE CONFIDENTIALITY AGREEMENT"
means a confidentiality agreement the terms of which are at least as restrictive
to the third party as the terms contained in the Confidentiality Agreement.
(b) Notification of Unsolicited Acquisition Proposals. As promptly as
reasonably practicable (and in any event within two days) after receipt of any
Acquisition Proposal, Company shall provide Parent with written notice of the
material terms and conditions of such Acquisition Proposal, request or inquiry;
the identity of the Person or Persons making any such Acquisition Proposal,
request or inquiry; and a copy of all written materials provided in connection
with such Acquisition Proposal, request or inquiry. Company shall keep Parent
informed on a reasonably current basis of the status and details of any such
Acquisition Proposal or request, and shall promptly (and in any event within two
days) provide to Parent a copy of all written materials subsequently provided to
or by Company in connection with such Acquisition Proposal or request.
(c) Superior Offers. Notwithstanding anything to the contrary
contained in Section 5.3(a), in the event that after the date hereof and prior
to obtaining the Requisite Shareholder Approval, (1) Company receives an
unsolicited, bona fide written Acquisition Proposal from a third party that did
not result from a breach of this Section 5.3 and (2) its Board of Directors or a
committee thereof determines in good faith (following consultation with its
Representatives) that such Acquisition Proposal is, or is reasonably likely to
constitute, a Superior Offer, then Company, its Board of Directors or a
committee thereof may directly or indirectly through advisors, agents, other
intermediaries or representatives, take the following actions:
(i) furnish non-public information to the third party making such
Acquisition Proposal (provided that (A) Company enters into an Acceptable
Confidentiality Agreement with the third party prior to furnishing any
non-public information, and (B) substantially concurrently with furnishing such
information to such third party, Company furnishes copies of such information to
Parent, to the extent not previously provided to Parent); and
(ii) engage in discussions and negotiations (including exchanging
draft agreements) with the third party (and its Representatives) with respect to
the Acquisition Proposal.
(d) Changes of Recommendation. Except as expressly permitted in this
Section 5.3(d), the Board of Directors of Company (or any committee thereof)
shall not: (A) withdraw, or modify or change in any manner adverse to Merger
Sub, the Company Board Recommendation; (B) approve, adopt or recommend any
Acquisition Proposal; or (C) approve
36
or recommend, or allow Company or any Subsidiary to enter into, any letter of
intent, acquisition agreement or other similar agreement with respect to any
Acquisition Proposal (any of the foregoing a "CHANGE OF RECOMMENDATION").
Notwithstanding anything to the contrary contained in Section 5.2 or this
Section 5.3, in response to an unsolicited, bona fide written Acquisition
Proposal after the date hereof and prior to obtaining the Requisite Shareholder
Approval, the Board of Directors of Company, or any committee thereof, may
effect a Change of Recommendation and terminate this Agreement to enter into a
definitive agreement effectuating the Superior Offer described below, if, and
only if, all of the following conditions set forth in clauses (i) through (v)
are satisfied:
(i) the Board of Directors of Company, or any committee thereof,
shall have determined in good faith (after consultation with outside legal
counsel and financial advisors of Company, its Board of Directors or any
committee thereof) that such Acquisition Proposal constitutes a Superior Offer
(after giving effect to all of the adjustments to the terms of this Agreement
which may be offered by Parent including pursuant to clause (iii) below);
(ii) Company (A) shall deliver to Parent written notice (a
"CHANGE OF RECOMMENDATION NOTICE") of its intention to take such action, at
least three business days (the "NOTICE PERIOD") in advance, specifying in such
notice the material terms and conditions of such Superior Offer (including the
identity of the party making the Superior Offer); and (B) in the event of any
material revisions to the Superior Offer after the start of the Notice Period,
shall promptly deliver a new Change of Recommendation Notice to Parent and
comply with the requirements of this clause (ii) with respect to such new
notice;
(iii) after delivering the Change of Recommendation Notice,
Company shall provide Parent with an opportunity to make such adjustments in the
terms and conditions of this Agreement during such three business day period,
and negotiate with respect thereto during such three business day period;
(iv) Company's Board of Directors, or any committee thereof,
shall have determined, after consultation with outside legal counsel and
financial advisors of Company, its Board of Directors or any committee thereof,
in good faith, that the failure of the Board of Directors to effect a Change of
Recommendation or to terminate this Agreement would reasonably be expected to
result in a breach of its fiduciary obligations to the shareholders of Company
under applicable Law; and
(v) Company shall not have breached any of the provisions set
forth in Section 5.2 or this Section 5.3.
(e) Compliance with Tender Offer Rules. Nothing contained in this
Agreement shall prohibit Company, its Board of Directors or any committee
thereof from taking and disclosing to its shareholders a position contemplated
by Item 1012(a) of Regulation M-A and Rules 14d-9 and 14e-2(a), each as
promulgated under the Exchange Act. Nothing contained in this Section 5.3(e)
shall be interpreted to affect or otherwise qualify, limit or modify in any way
the rights of Parent or Merger Sub set forth in Article VII hereof.
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(f) Certain Definitions. For purposes of this Agreement, the following
terms shall have the following meanings:
(i) "ACQUISITION PROPOSAL" shall mean with respect to Company,
any offer or proposal (other than an offer, proposal or indication of interest
by Parent or Merger Sub), to engage in any transaction or series of related
transactions (other than the transactions contemplated by this Agreement)
involving: (i) the purchase or other acquisition by any Person or "group" (as
defined in or under Section 13(d) of the Exchange Act), directly or indirectly,
of more than, 25% of any class or series of capital stock of Company outstanding
as of the consummation of such purchase or other acquisition, or any tender
offer (including self-tenders) or exchange offer by any Person or "group" (as
defined in or under Section 13(d) of the Exchange Act) that, if consummated in
accordance with its terms, would result in such Person or "group" beneficially
owning more than 25% of any class or series of capital stock of Company
outstanding as of the consummation of such acquisition or tender or exchange
offer; (ii) a merger, consolidation, business combination or other transaction
involving Company or any of its Subsidiaries pursuant to which the shareholders
of Company immediately preceding such transaction hold less than 51% of the
voting equity interests in the surviving or resulting entity of such
transaction; (iii) a sale, lease, exchange, transfer, license, acquisition or
disposition of more than 25% of the consolidated assets of Company and its
Subsidiaries (including the equity or other ownership of Company's Subsidiaries)
taken as a whole; or (iv) a liquidation or dissolution of Company; provided,
however, that the consummation of any agreement entered into prior to the date
hereof by the Company or any of its Subsidiaries and previously disclosed to
Parent with respect to a sale, exchange, divestiture or acquisition of Company
Subsidiaries shall not be deemed an Acquisition Proposal.
(ii) "SUPERIOR OFFER" shall mean any unsolicited, bona fide,
written Acquisition Proposal for at least a majority of the outstanding equity
securities of Company or more than 50% of the consolidated assets of Company and
its Subsidiaries and (a) on terms which the Board of Directors of Company, or a
committee thereof, determines in good faith, after taking into account, among
other things, (X) all other legal, financial, regulatory and other aspects of
the offer and (Y) the business, legal and financial condition of the Person
making the offer, more favorable to Company's shareholders (in their capacities
as shareholders) than the terms of the Merger (including any revised offer
received from Parent) from a financial point of view.
Section 5.4 Access to Information.
(a) Subject to applicable Law: (i) Company will afford Parent and
Parent's accountants, counsel and other representatives reasonable access during
regular and normal business hours to its properties, books, Contracts and
records (subject to restrictions imposed by applicable Laws); and (ii) upon
request by Parent, Company shall, and shall cause each of its Subsidiaries to,
furnish promptly to Parent a copy of any report, schedule, registration
statement and other document filed by it during such period pursuant to the
requirements of federal or state securities Laws (other than any such filings
that are publicly available in the Electronic Data Gathering, Analysis and
Retrieval (XXXXX) database of the SEC); provided, however, that such access
noted in (i) and (ii) shall be provided only to the extent such access does not
unreasonably interfere with the business operation of Company or any of its
Subsidiaries.
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(b) Nothing in this Section 5.4 shall require Company to disclose any
information that, in the reasonable judgment of Company, would violate any of
its contractual obligations to any third party with respect to confidentiality,
provided that Company shall use its commercially reasonable efforts to obtain
the consent of such third party to such disclosure. Information obtained by
Parent or Merger Sub pursuant to Section 5.4, Section 5.6 and Section 5.7 shall
be subject to the provisions of the Confidentiality Agreement, and the
Confidentiality Agreement will continue in full force and effect in accordance
with its terms (except as provided in Section 8.5).
(c) No information or knowledge obtained pursuant to this Section 5.4,
Section 5.6 or Section 5.7 shall affect or be deemed to modify any
representation or warranty contained herein, the covenants, agreements, rights
or remedies of the parties hereto, or the conditions to the obligations of the
parties hereto under this Agreement.
Section 5.5 Public Disclosure. Parent and Company shall consult with
each other before issuing any press release or making any public statement with
respect to this Agreement or the transactions contemplated hereby and shall not
issue any such press release or make any such public statement without the prior
written consent of the other party, which shall not be unreasonably withheld or
delayed; provided, however, that a party may, without the prior consent of the
other party, issue such press release or make such public statement as may upon
the written advice of counsel be required by Law or the rules and regulations of
the NYSE or Nasdaq if it has used all reasonable efforts to consult with the
other party prior thereto; provided, further, that no such consultation or
agreement shall be required following a Change of Recommendation or any
termination of this Agreement pursuant to Section 7.1(e) or Section 7.1(f)(ii).
Section 5.6 Regulatory Filings; Reasonable Efforts.
(a) Regulatory Filings. Each of Company, Parent and Merger Sub agrees,
subject to the other provisions of this Section 5.6, (i) to file as promptly as
practicable any and all Notification and Report Forms required under the HSR Act
with respect to the transactions contemplated hereby, (ii) to make as promptly
as reasonably practicable any required submissions under the Foreign Antitrust
Laws which Company or Parent determines should be made with respect to the
transactions contemplated hereby, (iii) to supply as promptly as reasonably
practicable any additional information and documentary material that may be
requested pursuant to the HSR Act or Foreign Antitrust Laws, and (iv) to use its
reasonable best efforts to take or cause to be taken all actions necessary,
proper or advisable consistent with the other provisions of this Section 5.6 to
cause the expiration or termination of the applicable waiting periods under the
HSR Act or Foreign Antitrust Laws as soon as practicable, including by
requesting early termination thereof.
(b) Exchange of Information. Parent, Merger Sub and Company each shall
promptly supply the other with any information that may be required in order to
effectuate any filing or application pursuant to Section 5.6(a). Except where
prohibited by applicable Laws, and subject to the Confidentiality Agreement,
each of Company and Parent shall consult with the other or its counsel prior to
taking a position with respect to any such filing, shall permit the other or its
counsel to review and discuss in advance, and shall consider in good faith the
views
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of the other or its counsel in connection with, any analyses, appearances,
presentations, memoranda, briefs, white papers, arguments, opinions and
proposals before making or submitting any of the foregoing to any Governmental
Entity by or on behalf of any party hereto in connection with this Agreement or
the transactions contemplated hereby (including under the HSR Act or any Foreign
Antitrust Law), shall coordinate with the other or its counsel in preparing and
exchanging such information, and shall promptly provide the other or its counsel
with copies of all filings, presentations or submissions (and a summary of any
oral presentations) made by such party with any Governmental Entity in
connection with this Agreement or the transactions contemplated hereby; provided
that with respect to any such filing, presentation or submission, each of Parent
and Company need not supply the other or its counsel with copies (or in case of
oral presentations, a summary) to the extent that any Law applicable to such
party requires such party or its Subsidiaries to restrict or prohibit access to
any such properties or information. Except to the extent prohibited by
applicable Laws, Parent and Company, or their respective counsel, shall consult
with the other on the strategy for dealing with the Federal Trade Commission,
Department of Justice, European Commission or any other Governmental Entity with
responsibility for reviewing the Merger with respect to antitrust or competition
issues.
(c) Notification. Each of Parent and Company will notify the other
promptly upon the receipt of: (i) any comments from any officials of any
Governmental Entity in connection with any filings made pursuant to this Section
5.6 and (ii) any request by any officials of any Governmental Entity for
amendments or supplements to any filings made pursuant to, or information
provided to comply in all material respects with, any Laws in connection with
this Agreement and the transactions contemplated hereby. Whenever any event
occurs that is required to be set forth in an amendment or supplement to any
filing made pursuant to this Section 5.6, Parent, Merger Sub or Company, as the
case may be, will promptly inform the other of such occurrence and cooperate in
filing with the applicable Governmental Entity such amendment or supplement.
(d) Reasonable Best Efforts. Subject to the terms and conditions of
this Agreement, each of the parties agrees to use reasonable best efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, and to
assist and cooperate with the other parties in doing, all things necessary,
proper or advisable to consummate and make effective, in the most expeditious
manner practicable, the transactions contemplated by this Agreement. Without
limiting the foregoing, and subject to the other provisions of this Section 5.6,
each of Company, Parent and Merger Sub agrees to use its reasonable best efforts
to (i) obtain all consents, approvals, orders and authorizations of, and make
all registrations, declarations or filings with, any Governmental Entity that
are required to be obtained under Law in connection with the transactions
contemplated hereby, (ii) obtain all waivers, consents and approvals from other
parties to Contracts to which Company or any of its Subsidiaries is a party
necessary for the consummation of the transactions contemplated hereby, (iii)
prevent the entry, enactment or promulgation of any threatened or pending Order
or Legal Restraint that could materially and adversely affect the ability of the
parties hereto to consummate the transactions under this Agreement, (iv) lift or
rescind any Order or Legal Restraint that could materially and adversely affect
the ability of the parties hereto to consummate the transactions under this
Agreement, and (v) in the event that any Proceeding relating hereto or to the
transactions contemplated hereby is commenced, whether before or after the date
of this Agreement, cooperate to defend against it and respond thereto. In
connection with and without limiting the foregoing, Company and its
40
Board of Directors and Subsidiaries shall, if any Takeover Law or similar Law is
or becomes applicable to this Agreement or any of the transactions contemplated
by this Agreement, use all commercially reasonable efforts to ensure that the
Merger and the other transactions contemplated by this Agreement may be
consummated as promptly as practicable on the terms contemplated by this
Agreement and otherwise to minimize the effect of such Law on the Merger, this
Agreement and the transactions contemplated hereby.
Section 5.7 Notification of Certain Matters.
(a) By Company. Company shall give written notice to Parent and Merger
Sub, promptly upon obtaining knowledge thereof, of the occurrence or
non-occurrence of any event that is likely (i) to result in a condition to the
Merger, set forth in Article VI, not being satisfied or (ii) to result in any
failure of Company 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.
(b) By Parent. Parent shall give written notice to Company, promptly
upon obtaining knowledge thereof, of the occurrence or non-occurrence of any
event that is likely (i) to result in a condition to the Merger, set forth in
Article VI, not being satisfied or (ii) to result in any failure of Parent or
Merger Sub to comply with or satisfy in any material respect any covenant,
condition or agreement to be complied with or satisfied by either of them under
this Agreement.
Section 5.8 Equity Awards and Employee Benefits.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, at the Effective Time, by virtue of the Merger, each Company Option
shall be either exercised by the option holder or canceled and extinguished and
automatically converted into the right to receive an amount in cash from the
Surviving Corporation equal to the positive product obtained by multiplying (x)
the aggregate number of shares of Company Common Stock that were issuable upon
exercise of such Company Option immediately prior to the Effective Time and (y)
the excess, if any, of the Merger Consideration over the per share exercise
price of such Company Option (the "OPTION CONSIDERATION"). Parent shall, or
shall cause the Surviving Corporation to, pay to holders of outstanding and
unexercised (as of the time immediately prior to the Effective Time) Company
Options the Option Consideration. For the avoidance of doubt, each Canceled
Company Option having a per share exercise price equal to or greater than the
Merger Consideration shall automatically be canceled and extinguished without
the conversion thereof or the payment of any consideration therefor. The payment
of the Option Consideration to the holder of a Company Option shall be reduced
by any income or employment tax withholding required under the Code or any
provision of state, local or foreign tax Law. To the extent that amounts are so
withheld, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of such Company Option. Prior to the
Effective Time, Company shall take all action necessary to effect the
terminations anticipated by this Section 5.8(a) under any outstanding Company
Options, including, but not limited to, any actions required by the applicable
Company Stock Plan.
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(b) During the period from the Effective Time until the end of the
twelfth month following the Effective Time, Parent shall, or shall cause the
Surviving Corporation to, provide those employees of the Company who continue to
be employed by the Surviving Corporation (or Parent or any of its Subsidiaries)
throughout such twelve-month period (the "CONTINUING EMPLOYEES") with salary and
other benefits that are comparable in the aggregate to those offered to such
employees by the Company immediately prior to the Effective Time.
(i) With respect to any officer or employee of Company who is
covered by a severance policy or plan separate from the standard severance
policy for Company's employees, the Parent shall maintain or cause to be
maintained such separate policy or plan as in effect as of the date hereof, and
as to all other officers and employees, Parent shall maintain or cause to be
maintained Company's standard severance policy as in effect as of the date
hereof for a period of at least 12 months from the Effective Time.
(ii) Parent shall honor or cause to be honored all severance
agreements and employment agreements with Company's directors, officers and
employees in accordance with their terms as in effect immediately prior to the
Effective Time, subject to any amendment or termination thereof that may be
permitted by such agreements.
(c) Subject to Section 5.8(b) above, Continuing Employees shall be
eligible to receive benefits consistent with Parent's applicable human resources
policies. Each Continuing Employee shall receive credit for prior service with
Company only (i) for purposes of determining the vacation accrual rate pursuant
to Parent's standard procedures, (ii) for all purposes under Parent's
Pay-In-Lieu-Of-Notice policy, and (iii) for purposes eligibility for
participation, matching contributions and vesting under Parent's 401(k) plan.
Each Continuing Employee's service for all other purposes shall be calculated
based upon the date of hire by Parent or one of its Subsidiaries (including the
Surviving Corporation), except as otherwise provided herein or required by Law.
Company shall cash-out any accrued and unused vacation, sick leave or time off
days prior to the Closing Date that Parent determines are not able to be carried
over. Notwithstanding the foregoing, with respect to U.S. employees of Company
and its Subsidiaries that become eligible to participate in Parent's employee
benefit plans, Parent shall, to the extent permitted by applicable Law, (i)
apply prior period(s) of health insurance coverage towards satisfaction of
Parent's pre-existing condition limitations upon submission of Certificate(s) of
Creditable Coverage, as permitted under the Health Insurance Portability and
Accountability Act ("HIPAA"), (ii) provide credit to each such employee for any
co-payments and deductibles under Parent's Preferred Access medical plan where
paid by the employee prior to the change in coverage for the plan year in which
the Closing Date occurs, and (iii) apply immediate prior period participation in
Company's short-term disability and long-term disability plans toward
satisfaction of pre-existing conditions limitations under Parent's short-term
disability and long-term disability plans.
(d) Effective as of the day immediately preceding the Closing Date,
(i) each of Company and any Company ERISA Affiliate shall terminate Company
Employee Plans that includes a Code Section 401(k) arrangement (a "TERMINATING
PLAN") pursuant to resolutions of the Company Board of Directors prepared by
Company promptly after the date hereof and reviewed and approved by Parent (such
approval not to be unreasonably withheld) and (ii) Company shall provide Parent
with evidence that such Terminating Plan(s) have been terminated
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before the Closing Date, and shall take such other actions in furtherance of
terminating such Terminating Plan(s) as Parent may reasonably require; provided,
however, that Parent may, at its election, instruct Company in writing, no less
than seven days prior to the Closing Date, not to terminate any such Terminating
Plans and Company shall comply with such instruction.
(e) Effective as of no later than immediately preceding the Effective
Time, the Company shall terminate and, in accordance with the terms thereof,
distribute all account balances under the Company's Executive Deferred
Compensation Plan (the "DEFERRED COMPENSATION PLAN") pursuant to resolutions of
the Company Board of Directors. Company shall provide Parent with evidence that
the Deferred Compensation Plan has been terminated before the Effective Time,
and shall take such other actions in furtherance of terminating the Deferred
Compensation Plan as Parent may reasonably require.
(f) This Section 5.8 shall be binding upon and inure solely to the
benefit of each of the parties to this Agreement, and nothing in this Section
5.8, express or implied, is intended to confer upon any other Person any rights
or remedies of any nature whatsoever under or by reason of this Section 5.8 or
is intended to be an amendment to any Company Employee Plan. Without limiting
the foregoing, no provision of this Section 5.8 will create any third party
beneficiary rights in any current or former employee, director or consultant of
the Company or its Subsidiaries in respect of continued employment (or resumed
employment) or any other matter. Nothing in this Section 5.8 is intended to
amend any Company Employee Plan, or interfere with Parent's or the Surviving
Corporation's right from and after the Effective Time to amend or terminate any
Company Employee Plan or the employment or provision of services by any
director, employee, independent contractor or consultant.
Section 5.9 Indemnification; Insurance.
(a) The articles of incorporation and bylaws of the Surviving
Corporation shall contain provisions relating to indemnification, exculpation
and the liability of directors and officers no less favorable than such
provisions included in the Company Charter Documents as of the date hereof and
the Surviving Corporation shall not amend, repeal or otherwise modify such
provisions for at least six years after the Effective Time in any manner that
would affect adversely the rights thereunder of individuals who, at or prior to
the Effective Time, were directors, officers, employees, fiduciaries or agents
of Company or any of its Subsidiaries, except as required by Law.
(b) After the Effective Time, the Surviving Corporation shall
indemnify and hold harmless and provide advancement of expenses to each person
who, as of the Effective Time, is a present or former director or officer of
Company, in and to the extent of their capacities as such and not as
securityholders (collectively, the "INDEMNIFIED PARTIES"), against all costs and
expenses (including attorneys' fees), judgments, fines, losses, claims, damages,
liabilities and settlement amounts paid in connection with any Proceeding
(whether arising before or after the Effective Time), whether civil, criminal,
administrative or investigative, arising out of or pertaining to any action or
omission in their capacity as an officer, director, fiduciary or agent of
Company or any of its Subsidiaries, occurring on or before the Effective Time,
to the same extent as provided in the Company Charter Documents as of the date
hereof.
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(c) For a period of six years after the Effective Time, the Surviving
Corporation shall maintain in effect Company's current directors' and officers'
liability insurance ("D&O INSURANCE") in respect of acts or omissions occurring
on or before the Effective Time, on terms and conditions no less favorable to
the Indemnified Parties than those of the D&O Insurance in effect on the date of
this Agreement (which Company represents and warrants are set forth in Section
5.9(c) of the Company Disclosure Letter); provided, however, that in satisfying
its obligations under this Section 5.9(c), the Surviving Corporation shall not
be obligated to pay annual premiums in excess of 400% of the amount paid by
Company for coverage for its last full fiscal year; provided, however, that, if
equivalent coverage cannot be obtained or can be obtained only by paying
aggregate premiums in excess of 400% of such amount, the Surviving Corporation
shall only be required to maintain as much coverage as can be obtained by paying
aggregate premiums equal to 400% of such amount. Notwithstanding the foregoing
and in lieu of all obligations of the Surviving Corporation under the first
sentence of this Section 5.9(c), Parent or, at Parent's written direction,
Company, may purchase a "tail" policy of directors and officers liability
insurance covering a period of six years after the Effective Time, which policy
(i) shall be on terms and conditions no less favorable to the Indemnified
Parties than those of the D&O Insurance in effect on the date of this Agreement
and be written by a carrier with the same or better rating as the carrier of the
D&O Insurance as of the date of this Agreement, (ii) shall be prepaid and
non-cancelable, and (iii) shall have aggregate premiums not in excess of 400% of
the aggregate annual amounts paid by Company for coverage for its last full
fiscal year; provided, however, that, if equivalent coverage cannot be obtained
or can be obtained only by paying aggregate premiums in excess of 400% of such
amount, Parent or Company shall obtain (and the Surviving Corporation shall only
be required to maintain) as much coverage as can be obtained by paying aggregate
premiums equal to 400% of such amount.
(d) This Section 5.9 is intended to be for the benefit of, and shall
be enforceable by the Indemnified Parties and their heirs and personal
representatives and shall be binding on Parent and the Surviving Corporation and
their respective successors and assigns, and shall be in addition to, and not in
substitution for, any other rights to indemnification or contribution that any
such Person may have by contract or otherwise. On and after the Effective Time,
the obligations of Parent under Section 5.9 shall not be terminated or modified
in such a manner as to adversely affect the rights of any Indemnified Party
under Section 5.9 without the consent of such affected Indemnified Party. In the
event Parent or the Surviving Corporation or its successor or assign (i)
consolidates with or merges into any other Person and shall not be the
continuing or surviving corporation or entity in such consolidation or merger or
(ii) transfers all or substantially all of its properties and assets to any
Person, then, and in each case, proper provision shall be made so that the
successor and assign of Parent or the Surviving Corporation, as the case may be,
honor the obligations set forth with respect to Parent or the Surviving
Corporation, as the case may be, in this Section 5.9.
Section 5.10 Section 16 Matters. Prior to the Effective Time, Company
shall take all such steps as may be required (to the extent permitted under
applicable Law) to cause any dispositions of Company Common Stock (including
derivative securities with respect to Company Common Stock) or acquisitions of
derivative securities with respect to Parent Common Stock resulting from the
transactions contemplated by Article I and Section 5.8 of this Agreement by each
individual who is subject to the reporting requirements of
44
Section 16(a) of the Exchange Act with respect to Company to be exempt under
Rule 16b-3 promulgated under the Exchange Act.
Section 5.11 Merger Sub Compliance. Parent shall cause Merger Sub to
comply with all of Merger Sub's obligations under or relating to this Agreement.
Merger Sub shall not engage in any business which is not in connection with or
incident to the transactions contemplated by this Agreement.
Section 5.12 Conveyance Taxes. Parent, Merger Sub and Company shall
cooperate in the preparation, execution and filing of all returns,
questionnaires, applications or other documents regarding any real property
transfer or gains, sales, use, transfer, value added, stock transfer or stamp
taxes, any transfer, recording, registration or other fees or any similar taxes
which become payable in connection with the transactions contemplated by this
Agreement that are required or permitted to be filed on or before the Effective
Time. All such taxes will be paid by the party bearing the legal responsibility
for such payment.
ARTICLE VI
CONDITIONS TO THE MERGER
Section 6.1 Conditions to the Obligations of Each Party. The
respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction at or prior to the Closing or waiver (to
the extent permitted by applicable Law) of the following conditions:
(a) Shareholder Approval. This Agreement shall have been approved and
adopted, and the Merger shall have been duly approved, by the Requisite
Shareholder Approval.
(b) No Legal Restraint. No Legal Restraint shall have been enacted,
issued, promulgated, enforced or entered which has the effect of making illegal
or otherwise prohibiting consummation of any of the transactions contemplated by
this Agreement.
(c) Regulatory Approvals. All waiting periods (and any extensions
thereof) under the HSR Act relating to the transactions contemplated hereby
shall have expired or been terminated early, and any other material consents or
approvals under Foreign Antitrust Laws required to have been obtained prior to
the Effective Time with respect to the transactions contemplated hereby shall
have been received (or been deemed to have been received by virtue of the
expiration or termination of any applicable waiting period).
Section 6.2 Additional Conditions to the Obligations of Company. The
obligation of Company to consummate and effect the Merger shall be subject to
the satisfaction at or prior to the Closing of each of the following conditions,
any of which may be waived, in writing, exclusively by Company:
(a) Representations and Warranties. The representations and warranties
of Parent and Merger Sub contained in this Agreement shall be true and correct
on the date hereof and as of the Closing Date with the same force and effect as
if made on the Closing Date (except to the extent any such representation or
warranty is expressly made as of an earlier date, in which case such
representation or warranty shall be true and correct as of such earlier date),
except for
45
any failure to be so true and correct which would not, individually or in the
aggregate with all other such failures, have or reasonably be expected to have a
Parent Material Adverse Effect (it being understood that for the purpose of this
Section 6.2(a), all references to the term "Parent Material Adverse Effect" and
all materiality qualifications and other qualifications based on the word
"material" contained in such representations and warranties shall be
disregarded). Company shall have received a certificate with respect to the
foregoing signed on behalf of Parent, with respect to the representations and
warranties of Parent, by an authorized senior executive officer of Parent and a
certificate with respect to the foregoing signed on behalf of Merger Sub, with
respect to the representations and warranties of Merger Sub, by an authorized
officer of Merger Sub.
(b) Agreements and Covenants. Parent and Merger Sub shall have
performed or complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by either of them on
or prior to the Closing Date, and Company shall have received a certificate with
respect to the foregoing signed on behalf of Parent, with respect to the
covenants of Parent, by an authorized senior executive officer of Parent and a
certificate with respect to the foregoing signed on behalf of Merger Sub, with
respect to the covenants of Merger Sub, by an authorized officer of Merger Sub.
Section 6.3 Additional Conditions to the Obligations of Parent and
Merger Sub. The obligations of Parent and Merger Sub to consummate and effect
the Merger shall be subject to the satisfaction at or prior to the Closing of
each of the following conditions, any of which may be waived, in writing,
exclusively by Parent and Merger Sub:
(a) Representations and Warranties. The representations and warranties
of Company contained in this Agreement shall be true and correct on the date
hereof and as of the Closing Date with the same force and effect as if made on
the Closing Date (except to the extent any such representation or warranty is
expressly made as of an earlier date, in which case such representation or
warranty shall be true and correct as of such earlier date), except for any
failure to be so true and correct which would not, individually or in the
aggregate with all other such failures, constitute a Company Material Adverse
Effect (it being understood that for the purpose of this Section 6.3(a), all
references to the term "Company Material Adverse Effect" and all materiality
qualifications and other qualifications based on the word "material" contained
in such representations and warranties shall be disregarded). Parent and Merger
Sub shall have received a certificate with respect to the foregoing signed on
behalf of Company by an authorized senior executive officer of Company.
(b) Agreements and Covenants. Company shall have performed or complied
in all material respects with each of the agreements and covenants required by
this Agreement to be performed or complied with by it at or prior to the Closing
Date, and Parent and Merger Sub shall have received a certificate to such effect
signed on behalf of Company by its chief executive officer or chief financial
officer.
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ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
Section 7.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time, by action taken or authorized by the terminating
party or parties, and except as provided below, whether before or after the
Requisite Shareholder Approval having been obtained (with any termination by
Parent also constituting an effective termination by Merger Sub):
(a) by mutual written consent duly authorized by Parent and the Board
of Directors of Company;
(b) by either Company or Parent if the Merger shall not have been
consummated by December 31, 2007 (the "END DATE"); provided, however, that the
right to terminate this Agreement under this Section 7.1(b) shall not be
available to any party whose action or failure to act has been a principal cause
of or resulted in the failure of the Merger to occur on or before such date and
such action or failure to act constitutes a breach of this Agreement;
(c) by either Company or Parent if a Governmental Entity shall have
issued an Order or taken any other action (including the failure to have taken
an action), in any case having the effect of permanently restraining, enjoining
or otherwise prohibiting the Merger, which Order or other action is final and
nonappealable;
(d) by either Company or Parent, if the Shareholders' Meeting shall
have been convened and a vote with respect to the approval of the plan of merger
contained in this Agreement shall have been taken thereat (or at any adjournment
or postponement thereof) and the Requisite Shareholder Approval shall not have
been obtained;
(e) by Parent (at any time prior to the Requisite Shareholder Approval
having been obtained) if a Triggering Event shall have occurred;
(f) by Company,
(i) upon a breach of any representation, warranty, covenant or
agreement on the part of Parent or Merger Sub set forth in this Agreement, or if
any representation or warranty of Parent or Merger Sub shall have become untrue,
in either case such that the conditions set forth in Section 6.2(a) or 6.2(b)
would not be satisfied as of the time of such breach or as of the time such
representation or warranty shall have become untrue, provided that if such
inaccuracy in Parent's or Merger Sub's representations and warranties or breach
by Parent or Merger Sub is curable by Parent or Merger Sub in 30 days through
the exercise of reasonable efforts, then Company may not terminate this
Agreement under this Section 7.1(f)(i) prior to 30 days following the receipt of
written notice from Company to Parent of such breach, provided, further, that
Parent and Merger Sub continue to exercise all reasonable efforts to cure such
breach through such 30 day period; or
(ii) pursuant to and in accordance with the terms of Section
5.3(d) to enter into a definitive agreement to effectuate a Superior Offer;
47
(g) by Parent, upon a breach of any representation, warranty, covenant
or agreement on the part of Company set forth in this Agreement (other than
those set forth in Sections 5.2 and 5.3), or if any representation or warranty
of Company shall have become untrue, in either case such that the conditions set
forth in Section 6.3(a) or 6.3(b) would not be satisfied as of the time of such
breach or as of the time such representation or warranty shall have become
untrue, provided, that if such inaccuracy in Company's representations and
warranties or breach by Company is curable by Company in 30 days through the
exercise of reasonable efforts, then Parent may not terminate this Agreement
under this Section 7.1(g) prior to 30 days following the receipt of written
notice from Parent to Company of such breach, provided that Company continues to
exercise all reasonable efforts to cure such breach through such 30 day period;
or
(h) For the purposes of this Agreement, a "TRIGGERING EVENT" shall be
deemed to have occurred if: (i) Company's Board of Directors or any committee
thereof shall for any reason have effected a Change of Recommendation, (ii)
Company shall have failed to include in the Proxy Statement the Company Board
Recommendation and failed to circulate an amendment thereto within five business
days after notice thereof by Parent, (iii) Company's Board of Directors fails to
reaffirm (publicly, if so requested by Parent) its recommendation in favor of
the adoption and approval of the Agreement and the approval of the Merger within
twenty days after the date any Acquisition Proposal or material modification
thereto is first publicly disclosed, or (iv) Company shall have breached in any
material respect its obligations under Sections 5.2 or 5.3 of this Agreement.
Section 7.2 Notice of Termination; Effect of Termination. Any
termination of this Agreement under Section 7.1 above will be effective
immediately upon the delivery of a valid written notice of the terminating party
to the other parties hereto. In the event of the termination of this Agreement
as provided in Section 7.1, this Agreement shall be of no further force or
effect, without any liability or obligation on the part of Parent, Merger Sub or
the Company, except (i) as set forth in Section 5.5, this Section 7.2, Section
7.3 and Article VIII, each of which shall survive the termination of this
Agreement and (ii) nothing herein shall relieve any party from liability for any
willful breach 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 termination of this Agreement in accordance
with the terms of the Confidentiality Agreement.
Section 7.3 Fees and Expenses.
(a) General. All fees and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expenses whether or not the Merger is consummated; provided,
however, that Parent shall pay any necessary filing fee and expense (other than
Company's legal and accounting expenses) for the Notification and Report Forms
filed with the Federal Trade Commission and Department of Justice under the HSR
Act and premerger or merger notification and reports forms to be submitted to
any other Governmental Entity under any local merger control Laws of other
jurisdictions, in each case pursuant to Section 5.6(a).
48
(b) Reimbursement of Expenses. In the event that this Agreement is
terminated by Parent or Company, as applicable, pursuant to Sections 7.1(d),
(e), (f)(ii) or (g), in addition to any other remedies that Parent or Merger Sub
may then have or later have as a result of such termination (including receipt
of the Company Termination Fee), the Company shall reimburse Parent and its
Affiliates (not later than three business days after submission of statements
therefor) for all documented out-of-pocket costs and expenses incurred by them
in connection with this Agreement and the transactions contemplated hereby,
including, without limitation, financing fees, fees and expenses of counsel,
accountants, investment bankers and other advisors, filing fees and printing
expenses, if any, up to a maximum of $4 million, which amount shall be credited
against the Company Termination Fee payable pursuant to Section 7.3(c) if any.
In the event that this Agreement is terminated by Company pursuant to Section
7.1(f)(i), in addition to any other remedies that Company may then have as a
result of such termination, Parent shall reimburse the Company and its
Affiliates (not later than three business days after submission of statements
therefor) for all documented out-of-pocket costs and expenses incurred by them
in connection with this Agreement and the transactions contemplated hereby,
including, without limitation, financing fees, fees and expenses of counsel,
accountants, investment bankers and other advisors, filing fees and printing
expenses, if any, up to a maximum of $4 million.
(c) Company Termination Fee. In the event that this Agreement is
terminated by Parent or Company, as applicable, pursuant to Sections 7.1(d),
(e), (f)(ii) or (g) (but only based on Company's willful breach in the case of
(g)), Company shall pay Parent a fee equal to $40 million in immediately
available funds (the "COMPANY TERMINATION FEE"); provided, however, that in the
case of termination under Sections 7.1(d), (e) or (g) (but only based on
Company's willful breach in the case of (g)), such payment shall be made only if
(i) prior to such termination of this Agreement, an Acquisition Proposal shall
have been made known to Company or shall have been made directly to the
shareholders of Company or otherwise become publicly known or any Person shall
have publicly announced or made known an intention (whether or not conditional)
to make an Acquisition Proposal, and (ii) within twelve months following the
termination of this Agreement, the Company enters into a definitive agreement in
respect of, or consummates or submits to its shareholders for approval, a
transaction in respect of any Acquisition Proposal (whether or not such
Acquisition Proposal was made known to the Company or publicly announced prior
to termination of this Agreement); provided that for purposes of this Section
7.3(c), the term "Acquisition Proposal" shall have the meaning assigned to such
term in Section 5.3, except that the references therein to "25%" shall be deemed
to be references to "a majority". Such payment shall be made (i) in the case of
a termination of this Agreement pursuant to Sections 7.1(d), (e) or (g) (but
only based on Company's willful breach in the case of (g)), upon execution of a
definitive agreement described in the previous sentence and (ii) in the case of
a termination of this Agreement pursuant to Section 7.1(f)(ii) concurrent with
such termination.
49
Section 7.4 Amendment. Subject to applicable Law, this Agreement may
be amended by the parties hereto, by action taken or authorized by their
respective Boards of Directors, at any time before or after approval of the
matters presented in connection with the Merger by the shareholders of Parent
and Company. This Agreement may not be amended except by execution of an
instrument in writing signed on behalf of each of Parent, Merger Sub and
Company.
Section 7.5 Extension; Waiver. At any time prior to the Effective Time
either party hereto, by action taken or authorized by their respective Board of
Directors, may, to the extent legally allowed: (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto, and (iii)
waive compliance with any of the agreements or conditions for the benefit of
such party contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party. Delay in exercising any right under this
Agreement shall not constitute a waiver of such right.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.1 Non-Survival of Representations and Warranties. The
representations and warranties of Company, Parent and Merger Sub contained in
this Agreement and in any document delivered pursuant to this Agreement shall
terminate at the Effective Time, and only the covenants that by their terms
survive the Effective Time and this Article VIII shall survive the Effective
Time.
Section 8.2 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed duly given (i) on the date of delivery
if delivered personally, (ii) on the date of confirmation of receipt (or, the
first business day following such receipt if the date is not a business day) of
transmission by telecopy or facsimile, or (iii) on the date of confirmation of
receipt (or, the first business day following such receipt if the date is not a
business day) if delivered by a nationally recognized courier service. All
notices hereunder shall be delivered as set forth below, or pursuant to such
other instructions as may be designated in writing by the party to receive such
notice:
50
(a) if to Parent or Merger Sub, to:
Computer Sciences Corporation
0000 Xxxx Xxxxx Xxxxxx
Xx Xxxxxxx, Xxxxxxxxxx 00000
Attention: General Counsel
Facsimile No.: (000) 000-0000
With a copy to:
Xxxxxx, Xxxx & Xxxxxxxx LLP
0000 Xxxxxxx Xxxx Xxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
(b) if to Company, to:
Covansys Corporation
00000 Xxxx Xxxxxx Xxxx Xxxx
Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxxx, Chair of Special Committee
of Board of Directors
General Counsel
Facsimile No.: (000) 000-0000
With a copy to:
Xxxxxx Xxxxxx Rosenman LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Xxxx X. Xxxxxxx, Esq.
Facsimile No.: (000) 000-0000
Section 8.3 Interpretation; Certain Definitions. (a) When a reference
is made in this Agreement to Exhibits, such reference shall be to an Exhibit to
this Agreement unless otherwise indicated. When a reference is made in this
Agreement to Sections, such reference shall be to a section of this Agreement
unless otherwise indicated. For purposes of this Agreement, the words "INCLUDE,"
"INCLUDES" and "INCLUDING," when used herein, shall be deemed in each case to be
followed by the words "WITHOUT LIMITATION." The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. When reference is
made herein to "THE BUSINESS OF" an entity, such reference shall be deemed to
include the business of all such entity and its Subsidiaries, taken as a whole.
For purposes of this Agreement, the term "PLAN OF MERGER" shall mean a plan of
merger within the meaning of Section 701 of the MBCA.
51
(b) For purposes of this Agreement, the following terms shall have the
meanings ascribed to them in this Section 8.3:
"AFFILIATE" shall have the meanings given to such term in Rule 12b-2
promulgated under the Exchange Act.
"BENEFICIAL OWNERSHIP" shall have the meaning given to such term in Rule
13d-3 under the Exchange Act. Phases such as "beneficially own" or "own
beneficially" have correlative meanings.
"BUSINESS DAY" shall mean any day, other than a Saturday, Sunday and any
day which is a legal holiday under the laws of the State of New York or is a day
on which banking institutions located in the State of New York are authorized or
required by Law or other governmental action to close.
"COMPANY MATERIAL ADVERSE EFFECT" shall mean any event, circumstance,
change, effect or development (each, a "CHANGE") that, individually or in the
aggregate, and taken together with all Changes, (i) is, or is reasonably likely
to be, materially adverse to the business, results of operations, assets
(including intangible assets), financial condition of Company and its
Subsidiaries, taken as a whole, or (ii) would have a material adverse effect on
the ability of Company to consummate the Merger prior to the End Date; provided,
however, that no Change to the extent resulting from any of the following shall
be taken into account when determining whether a "Company Material Adverse
Effect" under clause (i) of this definition has occurred: (A) general market,
economic or political conditions, (B) general market, economic or political
conditions in the industries in which Company or any of its Subsidiaries
conducts business, (C) any change arising as a result of any weather conditions,
natural disasters, acts of war, sabotage or terrorism, military actions or the
escalation thereof or other force majeure events, (D) general market, economic
or political conditions in India (including any changes arising out of acts of
terrorism or war, weather conditions or other force majeure events), (E) changes
in GAAP or changes in the interpretation of GAAP with respect to Tax matters or
as a result of or arising from an audit review of the consolidated financial
statements of Company and its Subsidiaries, in either case, pursuant to which
Company is required to change its prior accounting policies or practices, (F)
any material weakness in internal controls over financial reporting, in and of
itself (it being understood that the underlying causes or consequences of any
such material weakness may be deemed to constitute a Company Material Adverse
Effect and may be taken into consideration when determining whether there has
occurred a Company Material Adverse Effect), (G) any changes in Law, (H) the
pendency or announcement of this Agreement, including without limitation the
Merger or any customer or supplier reaction to the identity of Parent, (I)
compliance with the terms of, or the taking of any action required by, this
Agreement, (J) any litigation brought or threatened by shareholders of either
Company or Parent (whether on behalf of Company, Parent or otherwise) asserting
allegations of a breach of fiduciary duty relating to this Agreement, violations
of securities Laws in connection with the Proxy Statement or otherwise in
connection with this Agreement, (K) any action required to comply with the rules
and regulations of the SEC or the SEC comment process, in each case, in
connection with the Proxy Statement, (L) any decrease in the market price or
trading volume of the Company Common Stock (it being understood that the
underlying cause or causes of any such decrease may be deemed to constitute, in
and of itself and themselves, a Company Material Adverse
52
Effect and may be taken into consideration when determining whether there has
occurred a Company Material Adverse Effect), (M) Company's failure to meet any
internal or published projections, forecasts or revenue or earnings predictions
or published industry analyst expectations (it being understood that the
underlying cause or causes of any such failure may be deemed to constitute, in
and of itself and themselves, a Company Material Adverse Effect and may be taken
into consideration when determining whether there has occurred a Company
Material Adverse Effect), or (N) the formal investigation of Company, captioned
In the Matter of Covansys Corp. (C-03825), being conducted by the Enforcement
Staff of the SEC.
"CONTRACT" shall mean any written, oral or other agreement, contract,
subcontract, settlement agreement, lease, binding understanding, instrument,
note, option, warranty, purchase order, license, sublicense, insurance policy or
legally binding commitment or undertaking of any nature.
"ENVIRONMENTAL LAW" means any and all applicable Laws and regulations
promulgated thereunder, relating to the protection of the environment
(including, without limitation, ambient air, surface water, groundwater or land)
or human health as affected by the environment or Hazardous Substances or
otherwise relating to the production, use, emission, storage, treatment,
transportation, recycling, disposal, discharge, release or other handling of any
Hazardous Substances or the investigation, clean-up or other remediation or
analysis thereof.
"FORTUNE" means Fortune Info Tech Ltd., a company organized under the laws
of India.
"HAZARDOUS SUBSTANCE" means any substance, material or waste that is
characterized or regulated under any Environmental Law as "hazardous,"
"pollutant," "contaminant," "toxic" or words of similar meaning or effect,
including, without limitation, petroleum and petroleum products, polychlorinated
biphenyls and asbestos.
"KNOWLEDGE" of a Person shall mean, with respect to any matter in question,
the knowledge of the Chief Executive Officer, Chief Financial Officer or General
Counsel of such Person.
"LAW" shall mean any federal, state, local, municipal, foreign or other
law, statute, constitution, resolution, ordinance, code, order, edict, decree,
rule, regulation, ruling or requirement issued, enacted, adopted, promulgated,
implemented or otherwise put into effect by or under the authority of any
Governmental Entity.
"PARENT MATERIAL ADVERSE EFFECT" shall mean any Change that would prevent
or materially delay the consummation of the transactions contemplated by this
Agreement or the ability of Parent or Merger Sub to perform in all material
respects their covenants and obligations under this Agreement.
"PERSON" shall mean any individual, corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, company (including any limited
liability company or joint stock company), firm or other enterprise,
association, organization, entity or Governmental Entity.
53
Section 8.4 Counterparts; Facsimile Signatures. This Agreement may be
executed in two or more counterparts, all of which shall be considered one and
the same agreement and shall become effective when one or more counterparts have
been signed by each of the parties and delivered to the other party, it being
understood that all parties need not sign the same counterpart. Facsimile
signatures shall be acceptable and binding.
Section 8.5 Entire Agreement; Third-Party Beneficiaries. This
Agreement and the documents and instruments and other agreements among the
parties hereto as contemplated by or referred to herein, including the Company
Disclosure Letter (i) constitute the entire agreement among the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof (it being understood that the Confidentiality Agreement
shall continue in full force and effect until the Closing) and shall survive any
termination of this Agreement in accordance with its terms and (ii) are not
intended to confer upon any other Person any rights or remedies hereunder,
except as specifically provided, following the Effective Time, in Section 5.9.
Section 8.6 Severability. In the event that any provision of this
Agreement or the application thereof, becomes or is declared by a court of
competent jurisdiction to be illegal, void or unenforceable, the remainder of
this Agreement will continue in full force and effect and the application of
such provision to other Persons or circumstances will be interpreted so as
reasonably to effect the intent of the parties hereto. The parties further agree
to replace such void or unenforceable provision of this Agreement with a valid
and enforceable provision that will achieve, to the greatest extent possible,
the economic, business and other purposes of such void or unenforceable
provision.
Section 8.7 Specific Performance. The parties hereby acknowledge and
agree that money damages may not be a sufficient remedy for any breach of this
Agreement and that each party shall be entitled to equitable relief, including
injunction or specific performance, as a remedy for any such breach.
Section 8.8 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Michigan, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
law thereof.
Section 8.9 Consent to Jurisdiction. Each of the parties hereto
irrevocably and unconditionally submits to the exclusive jurisdiction of any
state or federal district court located within Xxxxx County, in the State of
Michigan, for the purposes of any suit, action or other proceeding arising out
of this Agreement or any transaction contemplated hereby (and each agrees that
no such action, suit or proceeding relating to this Agreement shall be brought
by it or any of its affiliates except in such courts). Each of the parties
hereto further agrees that, to the fullest extent permitted by applicable Law,
service of any process, summons, notice or document by U.S. registered mail to
such party's respective address set forth above shall be effective service of
process for any action, suit or proceeding in the State of Michigan with respect
to any matters to which it has submitted to jurisdiction as set forth above in
the immediately preceding sentence. Each of the parties hereto irrevocably and
unconditionally waives (and agrees not to plead or claim) any objection to the
laying of venue of any action,
54
suit or proceeding arising out of this Agreement or the transactions
contemplated hereby in any state or federal district court located in Xxxxx
County in the State of Michigan, or that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient forum.
Section 8.10 Assignment. No party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior written
approval of the other parties; provided, however, that Parent may assign any or
all of its rights and obligations under this Agreement to one or more of its
direct or indirect wholly-owned Subsidiaries without the consent of the Company,
but no such assignment shall relieve Parent of its obligations hereunder if such
assignee does not perform such obligations. Any purported assignment in
violation of this Section 8.10 shall be void. Subject to the preceding sentence,
this Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
Section 8.11 Waiver of Jury Trial. EACH OF PARENT, MERGER SUB AND
COMPANY HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF PARENT, MERGER
SUB OR COMPANY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT
HEREOF.
*****
55
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized respective officers as of the date first
written above.
COMPUTER SCIENCES CORPORATION
By:
------------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President - Corporate
Development
SURFSIDE ACQUISITION CORP.
By:
------------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President
COVANSYS CORPORATION
By:
------------------------------------
Name: Xxxxxxxx X. Xxxxxxxxx
Title: President and Chief Executive
Officer
Signature Page to Agreement and Plan of Merger
