AGREEMENT AND PLAN OF MERGER
Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
AMONG
GORES ENT HOLDINGS, INC.,
ENT ACQUISITION CORP.
AND
ENTERASYS NETWORKS, INC.
Dated as of November 11, 2005
Section 1 THE MERGER | 1 | ||||
1.1
|
The Merger | 1 | |||
1.2
|
Closing | 1 | |||
1.3
|
Effective Time | 2 | |||
1.4
|
Directors and Officers of the Surviving Corporation | 2 | |||
1.5
|
Subsequent Actions | 2 | |||
1.6
|
Forward Merger Structure Option | 2 | |||
Section 2 CONVERSION OF SECURITIES | 3 | ||||
2.1
|
Conversion of Capital Stock | 3 | |||
2.2
|
Exchange of Certificates | 3 | |||
2.3
|
Dissenting Shares | 4 | |||
2.4
|
The Company Option Plans | 5 | |||
2.5
|
Withholding | 5 | |||
2.6
|
Transfer Taxes | 5 | |||
Section 3 REPRESENTATIONS AND WARRANTIES OF COMPANY | 5 | ||||
3.1
|
Organization and Qualification | 6 | |||
3.2
|
Authority | 6 | |||
3.3
|
Capitalization | 7 | |||
3.4
|
Company Subsidiaries | 8 | |||
3.5
|
SEC Reports | 9 | |||
3.6
|
Financial Statements | 9 | |||
3.7
|
Absence of Undisclosed Liabilities | 9 | |||
3.8
|
Absence of Adverse Changes | 10 | |||
3.9
|
Compliance with Laws | 10 | |||
3.10
|
Claims, Actions and Proceedings | 10 | |||
3.11
|
Contracts and Other Agreements | 11 | |||
3.12
|
Intellectual Property | 12 | |||
3.13
|
Real Property; Title to Assets | 13 | |||
3.14
|
Insurance | 13 | |||
3.15
|
Commercial Relationships | 14 | |||
3.16
|
Tax Matters | 14 | |||
3.17
|
Employee Benefit Plans | 16 | |||
3.18
|
Employee Relations | 17 | |||
3.19
|
Environmental Matters | 18 | |||
3.20
|
No Breach | 19 | |||
3.21
|
Board Approvals; Anti-Takeover; Vote Required | 19 | |||
3.22
|
Financial Advisor | 20 | |||
3.23
|
Information in the Proxy Statement | 20 | |||
3.24
|
Affiliate Transactions | 21 | |||
3.25
|
Indebtedness | 21 | |||
3.26
|
Works Councils | 21 | |||
Section 4 REPRESENTATIONS AND WARRANTIES OF PARENT | 21 | ||||
4.1
|
Organization | 21 | |||
4.2
|
Authority to Execute and Perform Agreement | 21 | |||
4.3
|
No Conflict; Required Filings and Consents | 22 | |||
4.4
|
Information in the Proxy Statement | 22 | |||
4.5
|
Sub | 22 |
i
4.6
|
Ownership of Company Common Stock | 22 | |||
4.7
|
Litigation | 22 | |||
4.8
|
Financing | 22 | |||
Section 5 CONDUCT OF BUSINESS; NO SOLICITATION; EMPLOYEES | 23 | ||||
5.1
|
Conduct of Business | 23 | |||
5.2
|
No Solicitation | 25 | |||
5.3
|
WARN Act | 27 | |||
5.4
|
Employee Matters | 28 | |||
Section 6 ADDITIONAL AGREEMENTS | 28 | ||||
6.1
|
Proxy Statement | 28 | |||
6.2
|
Meeting of Stockholders of the Company | 29 | |||
6.3
|
Access to Information | 29 | |||
6.4
|
Public Disclosure | 30 | |||
6.5
|
Regulatory Filings; Reasonable Efforts | 30 | |||
6.6
|
Notification of Certain Matters | 31 | |||
6.7
|
Director’s and Officers Indemnification and Insurance | 32 | |||
6.8
|
New York Stock Exchange | 32 | |||
6.9
|
Officers and Directors of Company Subsidiaries | 32 | |||
6.10
|
Cooperation | 32 | |||
6.11
|
Tax Matters | 33 | |||
6.12
|
Organizational Documents of Company Subsidiaries | 33 | |||
6.13
|
Material Software | 33 | |||
Section 7 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE PARTIES TO CONSUMMATE THE MERGER | 33 | ||||
7.1
|
Conditions to Obligations of Each Party to Effect the Merger | 33 | |||
7.2
|
Additional Conditions to the Obligations of Parent and Sub | 33 | |||
7.3
|
Additional Conditions to the Obligations of the Company | 34 | |||
Section 8 TERMINATION, AMENDMENT AND WAIVER | 35 | ||||
8.1
|
Termination | 35 | |||
8.2
|
Effect of Termination | 36 | |||
8.3
|
Fees and Expenses | 37 | |||
8.4
|
Amendment | 37 | |||
8.5
|
Waiver | 38 | |||
Section 9 MISCELLANEOUS | 38 | ||||
9.1
|
No Survival | 38 | |||
9.2
|
Notices | 38 | |||
9.3
|
Entire Agreement | 39 | |||
9.4
|
Governing Law | 39 | |||
9.5
|
Binding Effect; No Assignment; No Third-Party Beneficiaries | 39 | |||
9.6
|
Section Headings | 39 | |||
9.7
|
Counterparts; Facsimile Signatures | 39 | |||
9.8
|
Severability | 39 | |||
9.9
|
Submission to Jurisdiction; Waiver | 39 | |||
9.10
|
Enforcement | 40 | |||
9.11
|
Rules of Construction; Certain Definitions | 40 | |||
9.12
|
No Waiver; Remedies Cumulative | 40 | |||
9.13
|
Assumption of Andover Lease | 40 |
ii
Disclosure Schedules
Section 3.3
|
Capitalization | |||
Section 3.4
|
Company Subsidiaries | |||
Section 3.6
|
Financial Statements | |||
Section 3.7
|
Absence of Undisclosed Liabilities | |||
Section 3.8
|
Absence of Adverse Changes | |||
Section 3.10
|
Claims, Actions and Proceedings | |||
Section 3.11
|
Contracts and Other Agreements | |||
Section 3.12
|
Intellectual Property | |||
Section 3.13
|
Real Property | |||
Section 3.14
|
Insurance | |||
Section 3.15
|
Commercial Relationships | |||
Section 3.16
|
Tax Matters | |||
Section 3.17
|
Employee Benefit Plans | |||
Section 3.18
|
Employee Relations | |||
Section 3.20
|
No Breach | |||
Section 3.25
|
Indebtedness | |||
Section 5.1
|
Conduct of Business | |||
Section 5.4(a)
|
Employee Matters | |||
Section 6.11
|
Pre-Closing Restructuring |
iii
Index of Defined Terms
Section | ||||
Acquisition Proposal
|
5.2(a) | |||
Actions
|
3.10 | |||
Affiliated Party
|
3.24(a) | |||
Agreement
|
Preamble | |||
Assignee
|
9.5(a) | |||
Benefits Continuation Period
|
5.4(a) | |||
Certificate of Merger
|
1.3 | |||
Certificates
|
2.2(b) | |||
Closing
|
1.2 | |||
Closing Date
|
1.2 | |||
COBRA
|
3.17(e) | |||
Code
|
2.5 | |||
Commitment Letters
|
4.8 | |||
Company
|
Preamble | |||
Company 10-K
|
3.6 | |||
Company 10-Qs
|
3.6 | |||
Company Board of Directors
|
Recitals | |||
Company Common Stock
|
Recitals | |||
Company Disclosure Schedule
|
Section 3 | |||
Company Insurance Policies
|
3.14 | |||
Company Intellectual Property
|
3.12(a) | |||
Company Material Adverse Effect
|
3.1(a) | |||
Company Options
|
2.4(b) | |||
Company Preferred Stock
|
3.3(d) | |||
Company Rights
|
3.3(d) | |||
Company Rights Agreement
|
3.3(d) | |||
Company SEC Reports
|
3.5 | |||
Company Stockholder Approval
|
3.21(d) | |||
Company Stockholders Meeting
|
6.2 | |||
Company Subsidiary
|
3.4(a) | |||
Confidentiality Agreement
|
5.2(b) | |||
Continuing Employees
|
5.4(a) | |||
Contract
|
3.11(a) | |||
Copyrights
|
3.12(f) | |||
DGCL
|
Recitals | |||
Dissenting Shares
|
2.3(a) | |||
DOJ
|
6.5(a) | |||
Effective Time
|
1.3 | |||
employee benefit plan
|
3.17(a) | |||
Environmental Claims
|
3.19(e) | |||
Environmental Laws
|
3.19(a) | |||
ERISA
|
3.17(a) |
iv
Section | ||||
ESPP
|
2.4(c) | |||
Exchange Act
|
3.3(i) | |||
Exchange Fund
|
2.2(a) | |||
Financial Statements
|
3.6 | |||
Foreign Plan
|
3.17(i) | |||
Foreign Welfare Plan
|
3.17(i) | |||
FTC
|
6.5(a) | |||
GAAP
|
3.6 | |||
Gores
|
4.8 | |||
Gores Commitment Letter
|
4.8 | |||
Governmental Entity
|
9.11(b) | |||
Hazardous Substance
|
3.19(b) | |||
HSR Act
|
3.20 | |||
Indemnified Parties
|
6.7(b) | |||
IRS
|
3.17(b) | |||
knowledge of the Company
|
3.3(g) | |||
Laws
|
3.1(a) | |||
License Agreement
|
3.11(a) | |||
Liens
|
3.4(a) | |||
Marks
|
3.12(f) | |||
Material Contract
|
3.11(a) | |||
Merger
|
1.1(a) | |||
Merger Consideration
|
2.1(c) | |||
NYSE
|
6.4 | |||
Option Plans
|
2.4(c) | |||
Owned Intellectual Property
|
3.12(a) | |||
Parent
|
Preamble | |||
Parent Board
|
8.1(a) | |||
Parent Disclosure Schedule
|
Section 4 | |||
Parent Material Adverse Effect
|
4.1 | |||
Patents
|
3.12(f) | |||
Paying Agent
|
2.2(a) | |||
Permits
|
3.9(a) | |||
Per Share Price
|
2.1(c) | |||
person
|
9.11(c) | |||
Plan
|
3.17(a) | |||
Proxy Statement
|
3.23 | |||
Real Property
|
3.13(a) | |||
Representatives
|
5.2(a) | |||
Restraints
|
8.1(b) | |||
Xxxxxxxx-Xxxxx Act
|
3.6 | |||
SEC
|
3.5 | |||
Securities Act
|
3.5 | |||
Stock Option Plans
|
2.4(b) |
v
Section | ||||
Sub
|
Preamble | |||
Sub Common Stock
|
2.1 | |||
Subsequent Determination
|
5.2(c) | |||
Superior Proposal
|
5.2(b) | |||
Surviving Corporation
|
1.1(a) | |||
Takeover Proposal
|
5.2(b) | |||
Tax
|
3.16(a) | |||
Taxable
|
3.16(a) | |||
Taxes
|
3.16(a) | |||
Tax Return
|
3.16(a) | |||
Tax Returns
|
3.16(a) | |||
Xxxxxxxxxx Commitment Letter
|
4.8 | |||
Termination Date
|
8.1(b) | |||
Trade Secrets
|
3.12(f) | |||
WARN Act
|
5.3 | |||
Warrants
|
3.3(c) | |||
Xxxxx Fargo
|
4.8 | |||
Xxxxx Fargo Commitment Letter
|
4.8 |
vi
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this
“Agreement”) dated as of November 11, 2005
is among Gores ENT Holdings, Inc. (“Parent”), a
Delaware corporation, ENT Acquisition Corp.
(“Sub”), a newly-formed Delaware corporation
and a direct wholly-owned subsidiary of Parent, and Enterasys
Networks, Inc. (the “Company”), a Delaware
corporation.
WHEREAS, the Board of Directors of the Company (the
“Company Board of Directors”) has
(i) determined that it is in the best interests of the
Company and the stockholders of the Company, and declared it
advisable, to enter into this Agreement with Parent and Sub
providing for the merger of Sub with and into the Company in
accordance with the General Corporation Law of the State of
Delaware (the “DGCL”), upon the terms and
subject to the conditions set forth herein and that the
consideration to be paid for each share of outstanding common
stock of the Company, par value $.01 per share, including
the associated Company Rights (as defined in
Section 3.3(d)) (the “Company Common
Stock”) in the Merger is fair to the holders of such
shares of Company Common Stock, (ii) exempted the
transactions contemplated by this Agreement from the provisions
of Section 203 of the DGCL, and (iii) resolved to
recommend adoption of this Agreement by the stockholders of the
Company;
Section 1 The
Merger
1.1 The Merger.
(a) Subject to the terms and conditions of this Agreement,
at the Effective Time (as defined in Section 1.3), the
Company and Sub shall consummate a merger (the
“Merger”) in accordance with the DGCL, pursuant
to which (i) Sub shall be merged with and into the Company,
and the separate corporate existence of Sub shall thereupon
cease; (ii) the Company shall be the successor or surviving
corporation in the Merger and shall continue to be governed by
the laws of the State of Delaware; (iii) the corporate
existence of the Company with all its rights, privileges,
immunities, powers and franchises shall continue unaffected by
the Merger; and (iv) the Company shall succeed to and
assume all the rights and obligations of Sub. The corporation
surviving the Merger is sometimes hereinafter referred to as the
“Surviving Corporation.” The Merger shall have
the effects set forth in the DGCL. Without limiting the
generality of the foregoing, and subject thereto, at the
Effective Time all the property, rights, privileges, powers and
franchises of Company and Sub shall be vested in the Surviving
Corporation, and all debts, liabilities and duties of Company
and Sub shall become the debts, liabilities and duties of the
Surviving Corporation.
(b) The Certificate of Incorporation of the Surviving
Corporation shall be amended and restated at the Effective Time,
and, as so amended, such Certificate of Incorporation shall be
the Certificate of Incorporation of the Surviving Corporation
until thereafter changed or amended as provided therein or by
applicable Law.
(c) The by-laws of Sub, as in effect immediately prior to
the Effective Time, shall be the by-laws of the Surviving
Corporation, except as to the name of the Surviving Corporation,
until thereafter amended as provided by the DGCL, the
Certificate of Incorporation of the Surviving Corporation and
such by-laws.
1.2 Closing. The
closing of the Merger (the “Closing”) will take
place at 9:00 a.m. (Boston time) on a date to be specified
by the parties, such date to be no later than the second
business day after
1
satisfaction or waiver of all of the conditions set forth in
Section 7 capable of satisfaction prior to the Closing (the
“Closing Date”), at the offices of
Ropes & Xxxx LLP, Xxx Xxxxxxxxxxxxx Xxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000, unless another date or place is agreed to
in writing by the parties hereto.
1.3 Effective Time.
At the Closing, Parent, Sub and the Company shall cause the
Merger to be consummated by filing a certificate of merger (the
“Certificate of Merger”) with the Secretary of
State of the State of Delaware as provided in the DGCL. The
Merger shall become effective at the time and date on which the
Certificate of Merger has been duly filed with the Secretary of
State of the State of Delaware or such later time and date as is
specified in the Certificate of Merger, such time referred to
herein as the “Effective Time.” Parent, Sub and
the Company shall make all other filings or recordings required
under the DGCL in connection with the Merger.
1.4 Directors and Officers of
the Surviving Corporation. The directors of Sub
immediately prior to the Effective Time shall, from and after
the Effective Time, be the directors of the Surviving
Corporation, and the officers of Sub immediately prior to the
Effective Time shall, from and after the Effective Time, be the
officers of the Surviving Corporation, in each case until their
respective successors shall have been duly elected, designated
or qualified, or until their earlier death, resignation or
removal in accordance with the Surviving Corporation’s
Certificate of Incorporation and by-laws.
1.5 Subsequent
Actions. If at any time after the Effective Time the
Surviving Corporation shall determine, or shall be advised, that
any deeds, bills of sale, assignments, assurances or any other
actions or things are necessary or desirable to vest, perfect or
confirm of record or otherwise in the Surviving Corporation its
right, title or interest in, to or under any of the rights,
properties or assets of either of the Company or Sub acquired or
to be acquired by the Surviving Corporation as a result of, or
in connection with, the Merger or otherwise to carry out this
Agreement, then the officers and directors of the Surviving
Corporation are authorized to execute and deliver, in the name
and on behalf of either the Company or Sub, all such deeds,
bills of sale, instruments of conveyance, assignments and
assurances and to take and do, in the name and on behalf of each
such corporation or otherwise, all such other actions and things
as may be necessary or desirable to vest, perfect or confirm any
and all right, title or interest in, to and under such rights,
properties or assets in the Surviving Corporation or otherwise
to carry out this Agreement.
1.6 Forward Merger Structure
Option.
(a) If the Parent provides written notice to the Company on
or prior to the Closing Date that it elects pursuant to this
Section 1.6 for the Merger to be a merger of the Company
with and into Sub rather than a merger of Sub with and into the
Company, the first sentence of Section 1.1(a) shall be
automatically deleted in its entirety and replaced with the
following:
“Subject to the terms and conditions of this Agreement, at the Effective Time (as defined in Section 1.3), the Company and Sub shall consummate a merger (the “Merger”) in accordance with the DGCL, pursuant to which (i) the Company shall be merged with and into Sub, and the separate corporate existence of the Company shall thereupon cease; (ii) Sub shall be the successor or surviving corporation in the Merger and shall continue to be governed by the laws of the State of Delaware; (iii) the corporate existence of Sub with all its rights, privileges, immunities, powers and franchises shall continue unaffected by the Merger; and (iv) Sub shall succeed to and assume all the rights and obligations of the Company.” |
(b) The provision of the written notice described in
Section 1.6(a) shall be deemed for all purposes hereunder
to be a written waiver by Parent and Sub of all inaccuracies in
representations and warranties contained herein, all breaches of
covenants or agreement contained herein and all failures of
conditions to closing contained herein to be met, in each case
to the extent such inaccuracy, breach or failure would result
from the change to Section 1.1(a) set forth in
Section 1.6(a).
2
Section 2 Conversion
of Securities
3
receive in exchange therefor the Merger Consideration for each
share of Company Common Stock formerly represented by such
Certificate, after giving effect to any tax withholding that may
be required by applicable law, and the Certificate so
surrendered shall forthwith be cancelled. Until surrendered as
contemplated by this Section 2.2, each Certificate shall be
deemed at any time after the Effective Time to represent only
the right to receive the Merger Consideration in cash as
contemplated by this Section 2.2, without interest thereon,
and shall not evidence any interest in, or any right to exercise
the rights of a stockholder or other equity holder of, the
Company or the Surviving Corporation.
(a) Notwithstanding anything in this Agreement to the
contrary, shares of Company Common Stock that are issued and
outstanding immediately prior to the Effective Time and which
are held by holders of shares of Company Common Stock who have
not voted in favor of or consented to the Merger and who have
properly demanded and perfected their rights to be paid the fair
value of such shares in accordance with Section 262 of the
DGCL (the “Dissenting Shares”) shall not be
converted into the right to receive the Merger Consideration,
and the holders thereof shall be entitled to only such rights as
are granted by Section 262 of the DGCL; provided,
however, that if any such holder shall fail to perfect or
shall effectively waive, withdraw or lose such holder’s
rights under Section 262 of the DGCL, such holder’s
shares of Company Common Stock shall thereupon be deemed to have
been converted, at the Effective Time, into the right to receive
the Merger Consideration, as set forth in Section 2.1 of
this Agreement, without any interest thereon.
(b) The Company shall give Parent (i) prompt notice of
any appraisal demands received by the Company, withdrawals
thereof and any other instruments served pursuant to
Section 262 of the DGCL and received by the Company and
(ii) the opportunity to direct all negotiations and
proceedings with respect to the exercise of appraisal rights
under Section 262 of the DGCL. The Company shall not,
except with the prior written consent of Parent or as otherwise
required by applicable law, make any payment with respect to any
such exercise of appraisal rights or offer to settle or settle
any such rights.
4
(a) Prior to the Effective Time, the Company Board of
Directors (or the appropriate committee of the Company Board of
Directors) shall adopt such resolutions or shall take such other
actions as are required to approve the measures contemplated by
this Section 2.4. The Company shall use reasonable efforts
to obtain any necessary consents of the holders of Company
Options to effect this Section 2.4.
(b) The Company shall use reasonable efforts to ensure
that, at the Effective Time, each outstanding option to acquire
shares of Company Common Stock (“Company
Options”) granted under the Company’s 2004 Equity
Incentive Plan, 2002 Stock Option Plan for Eligible Executives,
2001 Equity Incentive Plan, and 1998 Equity Incentive Plan
(collectively, the “Stock Option Plans”),
without regard to the extent then vested or exercisable, shall
terminate or be cancelled. In lieu of the exercise of any vested
Company Option prior to the Effective Time, the holder thereof
may elect to receive a cash payment from the Company or the
Surviving Corporation in an amount equal to the product of
(x) the excess, if any, of the Per Share Price over the
exercise price of each such Company Option and (y) the
number of shares of Company Common Stock subject to the vested
portion of such option to the extent not previously exercised
(such payment, if any, to be net of applicable Taxes withheld
pursuant to Section 2.5).
(c) The Company shall take any and all actions with respect
to the 2002 Employee Stock Purchase Plan (the
“ESPP” and together with the Stock Option
Plans, the “Option Plans”) as are necessary to
(i) terminate the ESPP immediately prior to the Effective
Time, (ii) terminate all further contributions, through
payroll deductions or otherwise, under the ESPP,
(iii) cancel each “Option” (as such term is
defined in the ESPP) under the ESPP and return the balances in
the withholding accounts of the participants in the ESPP
pursuant to Section 16 of the ESPP and (iv) ensure
that there are no outstanding rights of participants under the
ESPP following the Effective Time.
(d) As of the Effective Time, the Option Plans shall
terminate and all rights under any provision of any other plan,
program or arrangement providing for the issuance or grant of
any other interest in respect of the capital stock of the
Company shall be cancelled.
(e) The Company shall use reasonable efforts to effectuate
the foregoing, including, but not limited to, sending out the
requisite notices and obtaining all consents necessary to cash
out and cancel all Company Options or to ensure that, after the
Effective Time, no person shall have any right under the Option
Plans, except as set forth herein.
Except as set forth in the disclosure schedule delivered by the
Company to Parent on the date hereof (the “Company
Disclosure Schedule”) the section numbers of which are
numbered to correspond to the section numbers of this Agreement
to which they refer, the Company hereby makes the representations
5
and warranties set forth in this Section 3 to Parent and
Sub. Any information set forth in one section of the Company
Disclosure Schedule will be deemed to apply to each other
section or subsection of this Agreement to which its relevance
is reasonably apparent, and notwithstanding anything in this
Agreement to the contrary, the inclusion of an item in such
schedule as an exception to a representation or warranty will
not be deemed an admission that such item represents a material
exception or material fact, event or circumstance or that such
item has or is reasonably likely to have a Company Material
Adverse Effect.
(a) Each of the Company and each Company Subsidiary (as
defined in Section 3.4(a)) is a corporation or other legal
entity duly organized, validly existing and in good standing
under the federal, state, local or foreign laws, statutes,
regulations, rules, ordinances and judgments, decrees, orders,
writs and injunctions, of any court or Governmental Entity
(collectively, “Laws”) of its jurisdiction of
organization and has the requisite corporate or similar power
and authority to own, lease and operate its assets it purports
to own and to carry on its business as now being and as
heretofore conducted or as presently proposed to be conducted.
Each of the Company and each Company Subsidiary is qualified or
otherwise authorized to transact business as a foreign
corporation or other organization in all jurisdictions in which
such qualification or authorization is required by Law, except
for jurisdictions in which the failure to be so qualified or
authorized has not had and is not reasonably likely to have,
individually or in the aggregate, a Company Material Adverse
Effect. “Company Material Adverse Effect” shall
mean (i) a material adverse effect on the assets,
liabilities, properties, business, results of operations or
financial condition of the Company and the Company Subsidiaries,
taken as a whole provided, that effects resulting
primarily from any of the following shall be disregarded when
determining whether a Company Material Adverse Effect has
occurred or is reasonably likely to occur: (i) (A) the
economy or securities markets of the United States in
general, (B) conditions affecting the industries in which
the Company and the Company Subsidiaries operate, in each case,
which do not affect the Company and the Company Subsidiaries,
taken as a whole, to a materially disproportionate degree
relative to the companies in such industries, (C) changes
in generally accepted accounting principles, (D) the
announcement of this Agreement and the transactions contemplated
hereby (including without limitation the resignation of
employment of any officer listed on Schedule 3.1 resulting
in whole or in part therefrom and any adverse impact on the
Company’s assets, liabilities, properties, business results
of operation or financial condition resulting from such
resignation of employment) or (E) changes in laws of
general applicability or interpretations thereof by courts or
governmental entities, or (ii) an effect that prevents or
materially delays the Company’s ability to consummate the
transactions contemplated hereby.
(b) The Company has made available to Parent true, correct
and complete copies of the Certificate of Incorporation and
by-laws, or other organizational documents, of the Company as
presently in effect, and none of the Company or any Company
Subsidiary is in default in the performance, observation or
fulfillment of its charter, by-laws or other organizational
documents.
(a) The Company has all necessary corporate power and
authority to enter into, execute and deliver this Agreement and
each instrument required hereby to be executed and delivered by
it at the Closing and the transactions contemplated hereby, and,
subject in the case of consummation of the Merger to the
adoption of this Agreement by the holders of Company Common
Stock, to perform its obligations hereunder and thereunder and
consummate the transactions contemplated hereby and thereby. The
execution, delivery and performance of this Agreement and each
instrument required hereby to be executed and delivered by it at
the Closing by the Company and the consummation by the Company
of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action and no
other corporate proceedings on the part of the Company are
necessary to authorize this Agreement or to consummate the
transactions so contemplated (other than adoption of this
Agreement by the holders of Company Common Stock and the filing
with the Secretary of State of the State of Delaware of the
Certificate of Merger as required by the DGCL). This Agreement
has been duly and validly executed and delivered by the Company
and, assuming the due authorization, execution and
6
delivery hereof by Parent and Sub, constitutes a legal, valid
and binding obligation of the Company enforceable against the
Company in accordance with its terms, except to the extent that
enforcement of the rights and remedies created thereby is
subject to bankruptcy, insolvency, reorganization, moratorium
and other similar laws of general application affecting the
rights and remedies of creditors and to general principles of
equity (regardless of whether enforceability is considered in a
proceeding in equity or at law).
(a) The Company is authorized to issue
60,000,000 shares of Common Stock, par value $.01 per
share, of which, as of November 2, 2005,
27,329,238 shares were issued and outstanding and no shares
were held in the treasury of the Company. All of the issued and
outstanding shares of such Company Common Stock are duly
authorized, validly issued, fully paid, nonassessable. None of
the outstanding shares of Company Common Stock have been issued
in violation of any federal or state securities laws.
(b) The Company has reserved 4,586,418 shares of
Company Common Stock for issuance pursuant to all of the Option
Plans. In addition to Company Options outstanding under the 2002
Employee Stock Purchase Plan, Company Options to
purchase 3,426,257 shares of Company Common Stock were
outstanding as of November 2, 2005. Section 3.3(b) of
the Company Disclosure Schedule sets forth a true, complete and
correct list of all persons who, as of November 2, 2005,
held Company Options under the Option Plans other than the ESPP,
indicating, with respect to each Company Option then
outstanding, the number of shares of Company Common Stock
subject to such Company Option and the exercise price, and for
unvested Company Options, the date of hire or grant, as
applicable to the vesting schedule, and a general description of
the vesting schedule. Section 3.3(b) of the Company
Disclosure Schedule describes how the vesting of such Company
Option will be accelerated in any way by the consummation of the
transactions contemplated by this Agreement or by the
termination of employment or engagement or change in position of
any holder thereof following or in connection with the
consummation of the Merger. The Company has made available to
Parent true, complete and correct copies of all Option Plans and
the standard forms of stock option agreements evidencing
outstanding Company Options. The maximum number of shares of
Company Common Stock purchasable by all participants in the ESPP
in the current “Option Period” (as such term is
defined in the ESPP) is 11,850 shares. All shares of
Company Common Stock reserved for issuance as specified above,
shall be, upon issuance on the terms and conditions specified in
the instruments pursuant to which they are issuable, duly
authorized, validly issued, fully paid, nonassessable and free
of pre-emptive rights. Each Company Option issued and
outstanding pursuant to the Option Plans which (i) is not
exercised prior to the Closing Date or (ii) is not
exchanged at Closing for a cash payment in lieu of exercise
pursuant to the second sentence of Section 2.4(b), shall
terminate and be of no further force or effect following the
Closing.
(c) The Company has reserved 4,891 shares of Company
Common Stock for issuance pursuant to warrants to purchase
Company Common Stock (the “Warrants”). Warrants
to purchase 4,891 shares of Company Common Stock were
outstanding as of November 2, 2005. Section 3.3(c) of
the Company Disclosure Schedule includes a true and complete
list of all Warrants outstanding as of November 2, 2005,
including the names of all the holders thereof and the exercise
price for each such Warrant. The Company is not obligated to
accelerate the vesting of any Warrants as a result of the
transactions contemplated hereby.
(d) The Company is authorized to issue
2,000,000 shares of Preferred Stock, par value
$1.00 per share (“Company Preferred
Stock”), of which 300,000 shares of have been
designated as Series F Preferred Stock, all of which were
reserved for issuance upon exercise of preferred stock purchase
rights (the “Company Rights”) issuable pursuant
to the Rights Agreement dated as of May 28, 2002, between
the Company and EquiServe Trust Company, N.A., as rights agent
(the “Company Rights Agreement”). No shares of
Company Preferred Stock were outstanding on November 2,
2005.
(e) Except for (i) shares of Company Common Stock
indicated in Section 3.3(a) as issued and outstanding on
November 2, 2005, (ii) shares issued after such date
upon the exercise of outstanding Company Options listed in
Section 3.3(b) of the Company Disclosure Schedule or
outstanding under the 2002 Employee Stock Purchase Plan,
(iii) shares issued after such date upon the exercise of
outstanding
7
Warrants listed in Section 3.3(c) of the Company Disclosure
Schedule, and (iv) shares issued after such date upon the
exercise of options to purchase Company Common Stock granted
after such date in the ordinary course of business consistent
with past practice, there are not as of the date hereof, and at
the Effective Time there will not be, any shares of Company
Common Stock or Company Preferred Stock issued and outstanding.
(f) No registration rights involving the Company securities
will survive consummation of the Merger.
(g) The Company’s authorized capital stock consists
solely of the Company Common Stock described in
Section 3.3(a) and the Company Preferred Stock described in
Section 3.3(d). There are not as of the date hereof, and at
the Effective Time there will not be, authorized or outstanding
any subscriptions, options, conversion or exchange rights,
warrants, repurchase or redemption agreements, or other
agreements, claims or commitments of any nature whatsoever
obligating the Company to issue, transfer, deliver or sell, or
cause to be issued, transferred, delivered, sold, repurchased or
redeemed, additional shares of the capital stock or other
securities of the Company or obligating the Company to grant,
extend or enter into any such agreement, other than
(i) Company Options listed in Section 3.3(b) of the
Company Disclosure Schedule or issued pursuant to the 2002
Employee Stock Purchase Plan, (ii) the Warrants,
(iii) the Company Rights and (iv) Company Options
granted in the ordinary course of business consistent with past
practice since November 2, 2005. There are no stockholder
agreements, voting trusts, proxies or other agreements,
instruments or understandings with respect to the voting of the
capital stock of the Company to which the Company or any of its
officers or directors are a party and, to the knowledge of the
Company no other party is a party to any stockholder agreements,
voting trusts, proxies or other agreements, instruments or
understandings with respect to the voting of the capital stock
of the Company. For purposes of this Agreement,
“knowledge of the Company” shall mean the
actual knowledge of the officers of the Company. For purposes of
this definition, the officers of the Company to whom knowledge
may be attributed are listed on Section 3.3(g) of the
Company Disclosure Schedule.
(h) The Company has no outstanding bonds, debentures, notes
or other indebtedness that have the right to vote on any matters
on which stockholders may vote.
(i) The Company Common Stock and the Company Rights
constitutes the only classes of securities of the Company or any
Company Subsidiary registered or required to be registered under
the Securities Exchange Act of 1934, as amended (together with
the rules and regulations promulgated thereunder, the
“Exchange Act”).
(a) Section 3.4(a) of the Company Disclosure Schedule
sets forth a true and complete list of the names and
jurisdictions of organization of each Company Subsidiary. All
issued and outstanding shares or other equity interests of each
Company Subsidiary are owned directly by the Company free and
clear of any charges, liens, encumbrances, security interests or
adverse claims (“Liens”). As used in this
Agreement, “Company Subsidiary” means any
corporation, partnership or other organization, whether
incorporated or unincorporated, of which (i) the Company or
any Company Subsidiary is a general partner or (ii) at
least 50% of the securities or other interests having voting
power to elect a majority of the board of directors or others
performing similar functions with respect to such corporation,
partnership or other organization are directly or indirectly
owned or controlled by the Company or by any Company Subsidiary,
or by the Company and one or more Company Subsidiary.
(b) There are not as of the date hereof, and at the
Effective Time there will not be, any subscriptions, options,
conversion or exchange rights, warrants, repurchase or
redemption agreements, or other agreements, claims or
commitments of any nature whatsoever obligating any Company
Subsidiary to issue, transfer, deliver or sell, or cause to be
issued, transferred, delivered, sold, repurchased or redeemed,
shares of the capital stock or other securities of the Company
or any Company Subsidiary or obligating the Company or any
Company Subsidiary to grant, extend or enter into any such
agreement. To the knowledge of the Company, there are no
stockholder agreements, voting trusts, proxies or other
8
agreements, instruments or understandings with respect to the
voting of the capital stock of any Company Subsidiary.
9
(i) reflected or reserved against on the Financial
Statements in accordance with GAAP or readily apparently from
the notes thereto, (ii) incurred since July 2, 2005 in
the ordinary course of business, consistent with past practice
or (iii) liabilities that have not had and are not
reasonably likely to have, individually or in the aggregate, a
Company Material Adverse Effect.
(a) Since July 2, 2005, there has not been any change,
event or circumstance that has had, or is reasonably likely to
have, individually or in the aggregate, a Company Material
Adverse Effect.
(b) There has not been any action taken by the Company or
any Company Subsidiary during the period from July 2, 2005
through the date hereof that, if taken during the period from
the date hereof through the Effective Time, would constitute a
breach of Section 5.1.
(a) The Company and the Company Subsidiaries have obtained
each federal, state, county, local or foreign governmental
consent, license, permit, registration, order, grant or other
authorization of a Governmental Entity (i) pursuant to
which the Company or any Company Subsidiary currently operates
or holds any interest in any of its properties or (ii) that
is required for the operation of the business of the Company or
any of its subsidiaries or the holding of any such interest ((i)
and (ii) are herein collectively called
“Permits”). The Permits are not subject to any
conditions or requirements that are not generally imposed on the
holders thereof, all of such Permits are valid and in full force
and effect and neither the Company nor any Company Subsidiary
has violated the terms of such Permits in any material respect.
No proceeding is pending or, to the knowledge of the Company,
threatened in writing to revoke, suspend, cancel, terminate, or
adversely modify any Permit.
(b) The Company and the Company Subsidiaries have been in
material compliance with, are not in material default or
violation of, have not received any notice of material
non-compliance, default or violation with respect to, and have
no material liabilities, whether accrued, absolute, contingent
or otherwise, under any Laws applicable to the business of the
Company and the Company Subsidiaries and to the knowledge of the
Company there is no such material non-compliance, default or
violation thereunder.
(c) Neither the Company nor any Company Subsidiary is a
party to, nor do the Company or any Company Subsidiary have any
commitment to become a party to, any joint venture, off balance
sheet partnership or any similar contract (including any
contract or arrangement relating to any transaction or
relationship between or among the Company or the Company
Subsidiary, on the one hand, and any unconsolidated affiliate,
including any structured finance, special purpose or limited
purpose entity or Person, on the other hand or any “off
balance sheet arrangements” (as defined in Item 303(a)
of Regulation S-K under the Exchange Act)), where the
result, purpose or intended effect of such contract or
arrangement is to avoid disclosure of any material transaction
involving, or material liabilities of, the Company or any
Company Subsidiary in the Company’s published financial
statements or other Company SEC Reports.
10
(a) Except for this Agreement, as set forth in the
Company 10-K under item 10 of the exhibit list, none
of the Company nor any Company Subsidiary is a party to or bound
by any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit or other instrument or obligation (each,
a “Contract”): (i) that would be required
to be filed by the Company as a “material contract”
pursuant to Item 601(b)(10) of Regulation S-K under
the Securities Act or disclosed on Form 8-K; (ii) that
contain covenants binding upon the Company or any of its
affiliates that materially restrict the ability of the Company
or any of its affiliates (or which, following the consummation
of the Merger, could materially restrict the ability of the
Surviving Corporation) to compete in the business as currently
conducted by the Company or in any geographic area,
provided, however, that this
subsection (ii) shall not include Contracts that may
be canceled without penalty by the Company or any Company
Subsidiary upon notice of 60 days or less; (iii) that
would obligate the Company or any Company Subsidiary to file a
registration statement under the Securities Act, which filing
has not yet been made; (iv) any license agreement the
termination of which would have a Company Material Adverse
Effect (“License Agreement”); (v) relating
to a material joint venture, material partnership or other
arrangement that is material involving a sharing of profits,
losses, costs or liabilities with another person;
(vi) relating to indebtedness for borrowed money,
guarantees of indebtedness for borrowed money, letters of credit
or surety bonds having an outstanding principal amount in excess
of $5,000,000 in the aggregate; (vii) that is an interest
rate, equity or other swap or derivative instrument;
(viii) acquisition or disposition, directly or indirectly
(by merger or otherwise), of assets or capital stock or other
equity interests of another person for aggregate consideration
in excess of $1,000,000 executed in the past twelve months;
(ix) under which the Company or any Company Subsidiary has
advanced or loaned any funds in excess of $1,000,000 or has
guaranteed any obligations of another person in excess of
$1,000,000, other than extensions of credit to customers in the
ordinary course of business consistent with past practice,
(x) that would constitute one of the Company’s top ten
contracts in terms of revenues received from the sale of goods
(as measured by the revenue reasonably expected to be derived
therefrom during the twelve (12) months ended
December 31, 2005), (xi) that requires the payment by
or to the Company or any Company Subsidiary of more than
(A) $1,000,000 annually in respect of customers or
(B) $1,000,000 annually in respect of vendors,
(xii) that is in respect of any employment, retention,
severance or change of control arrangement, in each case with an
executive officer of the Company or any Company Subsidiary or
any employee of the Company or any Company Subsidiary who is
paid a base salary of $150,000 or more, (xiii) with respect
to any property of the Company or any Company Subsidiary, real
or personal involves annual payments in excess of $1,000,000 and
(xiv) that relates to capital expenditures by the Company
in excess of $1,000,000. Each such Contract described in
clauses (i) through (xiv), together with each item set
forth in the Company 10-K under item 10 of the exhibit
list and each of the Contracts set forth on Section 3.11 of
the Company Disclosure Schedule, is referred to herein as a
“Material Contract.”
(b) Each of the Material Contracts is in full force and
effect and is valid and binding on the Company and each Company
Subsidiary party thereto and, to the knowledge of the Company,
each other party thereto, enforceable against such parties in
accordance with their terms, except to the extent that
enforcement of the rights and remedies created thereby is
subject to bankruptcy, insolvency, reorganization, moratorium
and other similar laws of general application affecting the
rights and remedies of creditors and to general principles of
equity (regardless of whether enforceability is considered in a
proceeding in equity or at law).
(c) Neither the Company nor any Company Subsidiary has
materially breached, is in material default under, or has
received written notice of any material breach of or default
under, any Material Contract, and no event has occurred that
with the lapse of time or the giving of notice or both would
constitute a material default thereunder by the Company or any
Company Subsidiary. To the Company’s knowledge, no other
party to any Material Contract to which the Company or any
Company Subsidiary is a party is in material breach or violation
of, or material default under, such Material Contract. A
complete and correct copy, subject to redaction, of each
Material Contract has previously been made available by the
Company to Parent or filed by the Company with the SEC.
11
(a) Section 3.12 of the Company Disclosure Schedule
contains a list of all registered Intellectual Property (as
defined below) owned by the Company or any Company Subsidiary
(“Owned Intellectual Property”). To the
Company’s knowledge, the Intellectual Property owned and
licensed to the Company and the Company Subsidiaries
(collectively, the “Company Intellectual
Property”) encompasses all Intellectual Property rights
necessary for the conduct of the business of the Company and the
Company Subsidiaries as presently conducted except as has not
had and is not reasonably likely to have, individually or in the
aggregate, a Company Material Adverse Effect. Each item of
Company Intellectual Property immediately prior to the Effective
Time hereunder will be owned or available for use on
substantially the same terms and conditions immediately
subsequent to the Effective Time hereunder except as has not had
and is not reasonably likely to have a Company Material Adverse
Effect.
(b) The Company and/or each Company Subsidiary own the
entire right, title and interest in and to all of the Owned
Intellectual Property, free and clear of all Liens (other than
Material Contracts, License Agreements, and customer agreements,
purchase orders and other revenue earning Contracts entered into
in the ordinary course); (ii) the Company and/or each
Company Subsidiary has the right to use the material
Intellectual Property licensed for use by the Company or any
Company Subsidiary pursuant to the terms of valid and subsisting
license agreements, and (iii) neither the Company nor any
Company Subsidiary has received any notice or claim challenging
the Company’s or Subsidiary’s ownership of the Owned
Intellectual Property.
(c) To the knowledge of the Company, neither the Company
nor any Company Subsidiary infringes upon or misappropriates any
intellectual property, proprietary or other rights of third
parties, other than any such infringement or misappropriation
which is not reasonably likely to have, individually or in the
aggregate, a Company Material Adverse Effect. There are no
Actions pending or, to the knowledge of the Company, threatened,
asserting the invalidity, misuse, infringement or
unenforceability of any material Owned Intellectual Property.
(d) The Company or each Company Subsidiary (i) has
taken commercially reasonable actions to maintain and protect
the Company’s and each Company Subsidiary’s material
Company Intellectual Property, including payment of all fees,
annuities and all other payments which have heretofore become
due to any government authority with respect to the
Company’s or the Company Subsidiaries’ material
registered Owned Intellectual Property, and (ii) to the
knowledge of the Company, the material registered Owned
Intellectual Property is valid and enforceable.
(e) To the knowledge of the Company, each person, including
employees, agents, consultants, and independent contractors, who
has had access to or otherwise been exposed to confidential or
proprietary information regarding the Company or any Company
Subsidiary at any time during the three (3) years
immediately prior to the date of this Agreement has entered into
a confidentiality agreement with the Company or applicable
Company Subsidiary. The Company has made available to Parent a
true, complete and correct copy of the standard form of the
employee confidentiality agreement with the Company.
(f) “Intellectual Property” means
(a) any (i) fictitious trade business names, trade
names, corporate names, registered and unregistered trademarks,
service marks, designs, and general intangibles of like nature
and applications, together with any goodwill related to the
foregoing (“Marks”), (ii) all
(A) patents and patent applications and any continuations,
continuations in part, renewals and applications therefor, and
(B) inventions and discoveries that may be patentable
(collectively, “Patents”),
(iii) copyrights in both published works and unpublished
works including any registrations and applications therefor and
whether registered or unregistered (collectively,
“Copyrights”), or (iv) all know-how, trade
secrets, confidential information, customer lists, Software,
databases, works of authorship, mask works, technical
information, data, process technology, plans, drawings, blue
prints know-how, proprietary processes, formulae, algorithms,
models, user interfaces, inventions, discoveries, concepts,
ideas, techniques, methods, methodologies and, with respect to
all of the foregoing, related confidential data or information
(collectively, “Trade Secrets”),
(b) technical and confidential information (including,
without limitation, designs, plans, specifications, formulas,
processes, methods, methodologies, shop rights, know-how, show-
12
how, and other business or technical confidential information in
each case whether or not such rights are patentable,
copyrightable, or registerable), (c) computer software and
hardware programs and systems, source code, object code,
know-how, show-how, processes, formula, specifications and
designs, data bases, and documentation relating to the
foregoing, and (d) Internet domain names, and all
registrations and applications therefor, and web sites and web
pages and related items (and all intellectual property and
proprietary rights incorporated therein), IP addresses and email
addresses.
(a) The Company and each Company Subsidiary has sole and
exclusive, good, clear and marketable title to all its real and
personal tangible assets, and interests in such properties and
assets, real and personal, reflected in the Financial Statements
(except properties, interests in properties and assets sold or
otherwise disposed of since July 2, 2005 in the ordinary
course of business consistent with past practice), and with
respect to material leased properties and assets, valid
leasehold interests in such properties and assets, in each case,
free and clear of all Liens, imperfections of title,
restrictions, encroachments and easements, except (i) liens
for current Taxes not yet due and payable and for which
appropriate reserves have been taken and reflected in the
Company’s latest balance sheet, (ii) such
imperfections of title, restrictions, encroachments and
easements as do not and are not reasonably likely not to
materially detract from or interfere with the use or value of
the properties subject thereto or affected thereby, or otherwise
materially impair business operations involving such properties
and (iii) liens securing debt which is reflected on the
Financial Statements (or are readily apparent from the notes
thereto). There are no written or oral subleases, licenses,
occupancy agreements or other contractual obligations that grant
the right of use or occupancy of any real property owned or
leased by the Company or any Company Subsidiary (collectively,
the “Real Property”), and there is no person in
possession of the Real Property other than the Company and the
Company Subsidiaries. There is no pending, or, to the knowledge
of the Company, threatened in writing eminent domain,
condemnation or similar proceeding affecting any Real Property.
The property and equipment of the Company and each Company
Subsidiary that are used in the operations of business are
(i) in good operating condition and repair (subject to
typical wear and obsolescence) and (ii) have been
maintained in accordance with normal industry practices.
Section 3.13 of the Company Disclosure Schedule lists all
Real Property, including (A) with respect to owned Real
Property, the property address, and, where applicable, property
identification number and (B) with respect to leased Real
Property, the lease pursuant to which the Real Property is
leased or a general description of the leased property.
(b) With respect to each Real Property lease, such lease
will (i) continue to be legal, valid, binding, enforceable
and in full force and effect against the Company or the Company
Subsidiary that is the party thereto immediately following the
Closing in accordance with the terms thereof as in effect
immediately prior to the Closing, (ii) neither the Company
nor any Company Subsidiary nor, to the knowledge of the Company,
any other party to such lease is in breach or violation of, or
default under, any such lease, and no event has occurred, is
pending or, to the knowledge of the Company, is threatened in
writing, which, after the giving of notice, with lapse of time,
or otherwise, would constitute a breach or default by the
Company or any Company Subsidiary or, to the knowledge of the
Company, any other party under such lease, (iii) there are
no disputes in effect as to such lease, and (iv) neither
the Company nor any Company Subsidiary has assigned,
transferred, conveyed, mortgaged, deeded in trust or encumbered
any interest in the leasehold or subleasehold. The Company or
Company Subsidiary which is party to a Real Property lease has
been, and currently is, in compliance with the material
provisions of each such Real Property lease.
13
is in material default with respect to any provision contained
in such policy or binder. All premiums for each policy or binder
have been paid for the current period, and there are no
outstanding premium finance payments due for such period.
Neither the Company nor any Company Subsidiary has
(a) agreed to modify or cancel any such Company Insurance
Policy, (b) received notice (whether oral or written) of
actual or threatened modification or termination of any such
Company Insurance Policy, (c) received notice of
cancellation, non-renewal or material increase in premiums to be
paid under any such Company Insurance Policy or (d) failed
to give any notice or present any claim thereunder in due and
timely fashion. During the period of time from January 1,
2004 through the date of this Agreement there were no, and there
are no currently pending, claims against such insurance by the
Company or any Subsidiary as to which the insurers have denied
coverage or otherwise reserved rights.
(a) For purposes of this Agreement, the term
“Tax” (and, with correlative meaning,
“Taxes” and “Taxable”) means
all United States federal, state and local, and all foreign,
income, profits, franchise, gross receipts, payroll, transfer,
sales, employment, social security, unemployment insurance,
workers’ compensation, use, property, excise, value added,
ad valorem, estimated, stamp, alternative or add-on minimum,
recapture, environmental, capital, withholding taxes, any other
taxes, and any fees, assessments, liabilities, levies, charges,
duties, tariffs, impositions or assessments in the nature of
taxes, together with all interest, penalties, fines and
additions imposed on or with respect to such amounts, including
any liability for taxes of a predecessor entity. “Tax
Return” (and, with correlative meaning, “Tax
Returns”) means any return, declaration, report, claim
for refund or information return or statement filed or required
to be filed with any taxing authority or any other Governmental
Entity in connection with Taxes, including any attachments
thereto and any amendments thereof.
(b) All Tax Returns required to be filed by or with respect
to the Company and the Company Subsidiaries have been filed or
will be filed with the appropriate tax authority within the time
and in the manner prescribed by Law. For all years in which the
applicable statute of limitations has not closed, all such Tax
Returns are true, correct and complete in all material respects,
and all Taxes owed by the Company or the Company Subsidiaries,
whether or not shown on any Tax Return, have been timely paid or
fully reserved for on the Financial Statements. No claim has
ever been made in writing in the prior three years by any taxing
authority in any jurisdiction in which any of the Company or the
Company Subsidiaries does not file a Tax Return that the Company
or the Company Subsidiaries are or may be subject to taxation by
that jurisdiction. Since January 1, 2004, no material
adjustment relating to any Tax Return of the Company or any
Company Subsidiary has been proposed in writing by any Tax
Authority (insofar as such adjustment relates to the activities
or income of the Company or any Company Subsidiary).
(c) There are no Liens with respect to Taxes upon any of
the assets or properties of the Company or the Company
Subsidiaries, other than with respect to Taxes not yet due and
payable.
(d) No audit, assessment, examination, dispute,
investigation or judicial or administrative proceeding is
currently pending with respect to any Tax Return or Taxes of the
Company or the Company
14
Subsidiaries. No deficiency for any Taxes has been proposed or
assessed in writing against the Company or the Company
Subsidiaries, which deficiency has not been paid in full. All
Tax deficiencies determined as a result of any past completed
audit with respect to Taxes of the Company and Subsidiaries have
been satisfied.
(e) There are no outstanding requests, agreements, waivers
or arrangements extending the statutory period of limitation
applicable to any claim for, or the period for the collection or
assessment of, Taxes due from or with respect to the Company or
the Company Subsidiaries for any taxable period. No power of
attorney granted by or with respect to the Company or the
Company Subsidiaries relating to Taxes is currently in force.
(f) With respect to any period for which Tax Returns have
not yet been filed, or for which Taxes are not yet due or owing,
the Company and the Company Subsidiaries have, in accordance
with generally accepted accounting principles, made accruals for
such Taxes in their respective books and records.
(g) All withholding and payroll Tax requirements required
to be complied with by the Company and the Company Subsidiaries
(including requirements to deduct, withhold and pay over amounts
to any Governmental Entity have been satisfied).
(h) Neither the Company nor any Company Subsidiary has any
liability for the Taxes of any other person (other than the
Company and the Company Subsidiaries) under Treasury
Regulation 1.1502-6 (or any similar provision of state,
local or foreign Law) or as a transferee or successor. No person
has any right to any payment from the Company or any Company
Subsidiary with respect to any Tax refunds received or due to be
received by the Company since January 1, 2004.
(i) Since January 1, 2004, neither the Company nor any
Company Subsidiary has made any payments, or has been or is a
party to any Contract, arrangement or plan that could result in
it making payments, that have resulted or would result,
separately or in the aggregate, in the payment of any
“excess parachute payment” within the meaning of Code
Section 280G or in the imposition of an excise Tax under
Code Section 4999 (or any corresponding provisions of
state, local or foreign Tax law) or that were not or would not
be deductible by reason of Code Sections 162(m).
(j) The Company has delivered or made available to Parent
(i) complete copies of all Tax Returns, examination reports
and statements of deficiencies assessed against or agreed to by
the Company or any Company Subsidiary with respect to the prior
three (3) taxable years and (ii) written schedules of
(A) the taxable years of the Company and each Company
Subsidiary for which the statute of limitations with respect to
income Taxes has not expired and (B) with respect to income
Taxes of the Company and each Company Subsidiary, those years
for which examinations have been completed, those years for
which examinations are presently being conducted, those years
for which examinations have not yet been initiated and those
years for which required Tax Returns have not yet been filed.
(k) Neither the Company nor any Company Subsidiary has
participated in a “listed transaction” within the
meaning of Treasury Regulation section 1.6011-4(b)(2).
(l) Neither the Company nor any Company Subsidiary is a
party to any material joint venture, partnership, or other
arrangement (other than an arrangement related to royalties)
that the parties treat as a partnership for federal or
applicable state, local or foreign Tax purposes.
(m) Except as disclosed in its Tax Returns, neither the
Company nor any Company Subsidiary has received approval to make
or agreed to a change in any accounting method or has any
written application pending with any Tax authority requesting
permission for any such change.
(n) The Company has not been a “distributing
corporation” or a “controlled corporation” within
the meaning of Code section 355(a)(1)(A) in a transaction
occurring within the past two years.
(o) Neither the Company nor any Company Subsidiary is party
to or bound by any active closing agreement or offer in
compromise with any U.S. Tax authority.
15
(a) Section 3.17 of the Company Disclosure Schedule
lists each material pension, savings, profit sharing,
retirement, deferred compensation, employment, welfare, fringe
benefit, insurance, short and long term disability, medical,
death benefit, incentive, bonus, stock, other equity-based,
vacation pay, severance pay, cafeteria plan and other plan,
program and arrangement for the benefit of employees or former
employees of the Company or the Company Subsidiaries, or their
beneficiaries, including each “employee benefit
plan” (as that term is defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”)) that is not a Foreign Plan (as
defined in Section 3.17(i), and that is maintained by
Company and/or by one or more Company Subsidiaries or to which
the Company and/or one or more Company Subsidiaries are required
to contribute (each, a “Plan”).
(b) With respect to each Plan, the Company has delivered or
made available to Parent current, accurate and complete copies
of each of the following together with, when applicable, all
amendments: (i) the Plan, or, if the Plan has not been
reduced to writing, a written summary of its material terms,
(ii) if the Plan is subject to the disclosure requirement
of Title I of ERISA, the summary plan description, and in
the case of each other Plan, any similar employee summary,
(iii) if the Plan is intended to be qualified under
Section 401(a) of the Code, the most recent determination
letter issued by the Internal Revenue Service
(“IRS”), (iv) if the Plan is subject to
the requirement that a Form 5500 series annual
report/return be filed, the three most recently filed annual
reports/returns, (v) all related trust agreements, group
annuity contracts, administrative services, (vi) for each
Plan that is funded, the most recent financial statements for
each such Plan and (vii) since January 1, 2004, any
material communications received from or sent to the IRS or the
U.S. Department of Labor relating to an audit or similar
process involving the Plan.
(c) There is no entity (other than the Company or any
Company Subsidiary) that together with the Company or any
Company Subsidiary that was, during the five years preceding the
date of this Agreement, or currently would be treated as a
single employer within the meaning of Section 414(b), (c),
(m) or (o) of the Code or Section 4001(b) of
ERISA. None of the Plans is a defined benefit plan subject to
Title IV of ERISA.
(d) Each Plan has been administered in all material
respects in accordance with its terms and the provisions of
applicable law, including ERISA and the Code, and to the
knowledge of the Company, nothing has been done or not done with
respect to any Plan, the doing or not doing of which could
result in any material liability on the part of the Company or
any Company Subsidiary under Title I of ERISA or
Chapter 43 of the Code. None of the Plans is currently
under examination by the IRS or the U.S. Department of
Labor. All contributions, premiums and expenses, if any, due
under each Plan have been timely made. Each Plan intended to be
qualified under Section 401(a) of the Code has received a
favorable determination letter from the IRS that it is so
qualified, and to the knowledge of the Company, nothing has
occurred since the date of such letter that could reasonably be
expected to adversely affect the qualified status of such Plan.
No Plan is or has been subject to Section 302 of ERISA or
Section 412 of the Code.
(e) Except for continuation of health coverage described in
Section 4980B of the Code or Section 601 et
seq. of ERISA (“COBRA”), no Plan provides
for medical, dental, life insurance coverage or any other
welfare benefits after termination of employment or for other
post-employment welfare benefits.
(f) No action, suit or claim (other than routine claims for
benefits in the ordinary course) is pending or, to the knowledge
of the Company, threatened in writing against any Plan or
against the Company or any Company Subsidiary.
(g) Neither the Company nor any of the Company Subsidiaries
has ever maintained, sponsored, contributed to, been required to
contribute to, or incurred any liability under any
multi-employer plan as defined in Section 3(37) or
Section 4001(a)(3) of ERISA or any multiple employer plan
as defined in
16
Section 413(c) of the Code, or any plan that has two or
more contributing sponsors at least two of whom are not under
common control, within the meaning of Section 4063(a) of
ERISA.
(h) Neither the Company nor any Company Subsidiary, nor, to
the knowledge of the Company, any other “disqualified
person” or “party in interest” (as defined in
Section 4975(e)(2) of the Code and Section 3(14) of
ERISA, respectively) has engaged in any transactions in
connection with any Plan that would result in the imposition on
the Company of a penalty pursuant to Section 502 of ERISA,
damages pursuant to Section 409 of ERISA or a tax pursuant
to Section 4975 of the Code.
(i) Section 3.17 of the Company Disclosure Schedule
sets forth each material non-governmental plan maintained, or
contributed to, by or on behalf of the Company or any Company
Subsidiary applicable to employees of the Company or any Company
Subsidiary Business located outside of the United States (a
“Foreign Plan”) and each material
non-governmental welfare benefit plan maintained or contributed
to by or on behalf of the Company or any Company Subsidiary
applicable to employees of the Company or any Company Subsidiary
located outside of the United States (a “Foreign Welfare
Plan”). Each Foreign Plan and Foreign Welfare Plan has
been administered in material compliance with its terms and the
requirements of all applicable Laws and regulations, and all
required contributions to each Foreign Plan and Foreign Welfare
Plan have been made. There are no material Actions (other than
routine benefit claims) pending or, to the knowledge of the
Company, threatened against any Foreign Plan or Foreign Welfare
Plan.
(j) Since January 1, 2004, no communication, report or
disclosure has been made which, at the time made, did not
accurately reflect the terms and operations of any Plan. Except
as otherwise reflected in a duly executed amendment to a Plan or
an amended and restated Plan, neither the Company nor any
Company Subsidiary has (i) announced its intention to
modify or terminate any Plan listed on Section 3.17 of the
Company Disclosure Schedule, (ii) modified or terminated
any Plan listed on Section 3.17 of the Company Disclosure
Schedule in a manner materially different than the version of
the Plan made available to the Parent, or (iii) adopted any
arrangement or program not listed on Section 3.17 of the
Company Disclosure Schedule which, once established, would come
within the definition of a Plan.
(k) Since January 1, 2004, there has been no amendment
to, written interpretation or announcement (whether or not
written) by the Company or any Company Subsidiary, relating to,
or change in employee participation or coverage under any Plan
that would increase materially the expense of maintaining such
Plan above the level or expense incurred in respect of such Plan
for the most recent plan year. The execution of this Agreement
and the consummation of the transactions contemplated hereby do
not and will not either alone or upon the occurrence of a
subsequent event result in any payment, acceleration, vesting or
increase in benefits under any Plan to any employee, former
employee or director of the Company or any Company Subsidiary.
(l) Section 3.17(l) of the Company Disclosure Schedule
sets forth a true and complete list of each individual
designated by the Company to participate in (i) the
Company’s 2002 Change-in-Control Severance Benefit Plan for
Key Executives and (ii) the Company’s 2005
Change-in-Control Severance Benefit Plan for Key Executives.
(a) Section 3.18(a) of the Company Disclosure Schedule
lists all current employees of the Company or any Company
Subsidiary as of November 3, 2005 which hold the position
of director or higher, their current hourly rates of
compensation or base salaries (as applicable), and their current
cash incentive compensation targets.
(b) Upon termination of the employment of any employee,
none of the Company, the Company Subsidiaries, the Surviving
Corporation nor Parent will be liable to any of such employees
for severance pay or any other similar payments, other than
compensation earned but unpaid through the date of termination
(including salary or wages and terminal vacation pay in
accordance with applicable Law) that would not be payable by the
Company or the Company Subsidiaries absent the Merger. Neither
the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated hereby
17
will (i) result in any payment (including, without
limitation, severance, unemployment compensation, golden
parachute, bonus or otherwise) becoming due to any director or
employee of the Company from the Company, under any Plan or
otherwise; (ii) increase any benefits otherwise payable
under any Plan or otherwise; or (iii) result in the
acceleration of the time of payment or vesting of any such
benefits.
(c) The Company and each Company Subsidiary: (i) is,
and at all times since January 1, 2003 has been, in
compliance in all material respects with all Laws respecting
employment, employment practices, occupational safety and
health, immigration and naturalization, terms and conditions of
employment, and wage and hour requirements (including the
payment of overtime wages), in each case with respect to
employees, (ii) has withheld all amounts required by Law or
by agreement to be withheld from the wages, salaries,
commissions, bonuses and other payments to employees,
(iii) is not in arrears for any wages, salaries,
commissions, bonuses or other direct compensation for any
services performed or amounts required to be reimbursed to any
employees or consultants or liable for any Taxes or any penalty
for failure to comply with any of the foregoing, and
(iv) is not liable for any payment to any trust or other
fund or to any Governmental Entity, with respect to unemployment
compensation benefits, social security or other benefits or
obligations for employees (other than routine payments made in
the ordinary course of business and consistent with past
practice). No claims are pending against the Company or any
Company Subsidiary before the Equal Employment Opportunity
Commission or any other administrative body or in any court
asserting any violation of Title VII of the Civil Rights
Act of 1964, the Age Discrimination Act of 1967,
42 U.S.C. §§ 1981 or 9183 or any other
Federal, state or local Law, statute or ordinance barring
discrimination in employment.
(d) There are no work stoppages, labor strikes, slow downs,
job actions, disputes or lockouts existing or, to the knowledge
of the Company, pending or threatened against the Company or any
Company Subsidiary, (ii) neither the Company nor any
Company Subsidiary is involved in or, to the knowledge of the
Company, threatened in writing with, any material labor dispute
or labor contract grievance or any litigation relating to labor,
employment, safety or discrimination matters involving any
employee, including charges of unfair labor practices or
complaints of unlawful discrimination that, if adversely
determined, (iii) neither the Company nor any Company
Subsidiary is engaged in any material unfair labor practices
within the meaning of the National Labor Relations Act,
(iv) neither the Company nor any Company Subsidiary is a
party to or bound by any collective bargaining agreement or
union contract with respect to any of its employees and no
collective bargaining agreement is being negotiated by the
Company or any Company Subsidiary and (v) no union
organizing campaign with respect to non-union employees of the
Company or any Company Subsidiary is ongoing or, to the
knowledge of the Company, pending or threatened in writing.
(a) The Company and the Company Subsidiaries are, and have
been, in compliance in all respects with all Laws and the
requirements of Permits issued under such Laws relating to
(A) releases or threatened releases of Hazardous Substances
(as defined below), (B) pollution or protection of public
health or the environment or worker safety or health or
(C) the manufacture, handling, transport, use, treatment,
storage, or disposal of Hazardous Substances (any such laws,
including, without limitation, any applicable federal, state,
foreign or local statute, law, rule, regulation, ordinance,
code, or rule of common law in effect and in each case as
amended as of the Effective Time relating to the environment,
health, safety or Hazardous Materials, including the
Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended, 42 U.S.C.
§ 9601 et seq.; the Resource
Conservation and Recovery Act, as amended, 42 U.S.C.
§ 6901 et seq.; the Federal Water
Pollution Control Act, as amended, 33 U.S.C.
§ 1251 et seq.; the Toxic Substances
Control Act, 15 U.S.C. § 2601 et
seq.; the Clean Air Act, 42 U.S.C. § 7401
et seq.; the Safe Drinking Water Act,
42 U.S.C. § 300f et seq.; the Oil
Pollution Act of 1990, 33 U.S.C. § 2701 et
seq.; and their state and local counterparts and
equivalents, collectively, the “Environmental
Laws”).
(b) There has been no actual or threatened release,
disposal, discharge, spillage, leaking, dumping, emission,
escape, seepage, placement of any pollutant, petroleum,
petroleum product, asbestos, radioactive
18
material, or any fraction thereof, contaminant or toxic or
hazardous material, substance or waste or any other chemicals,
materials or substances defined as or included in the definition
of “hazardous substances,” “hazardous
wastes,” “hazardous materials,” “extremely
hazardous wastes,” “restricted hazardous wastes,”
“toxic substances,” “toxic pollutants,” or
words of similar import, under any applicable Environmental Law
(each a “Hazardous Substance”) on, upon, into
or from any site currently or heretofore owned, leased or
otherwise used by Company, any Company Subsidiary or any
predecessor of Company or any Company Subsidiary.
(c) There have been no Hazardous Substances generated by
Company, any Company Subsidiary or any predecessor of Company or
any Company Subsidiary that have been disposed of or come to
rest at any site that has been included in any published
U.S. federal, state or local “superfund” site
list or any other similar list of hazardous or toxic waste sites
published by any governmental entity in the United States.
(d) There are no underground storage tanks located on, no
PCBs (polychlorinated biphenyls) or PCB-containing equipment
used or stored on, and no hazardous waste as defined by the
Resource Conservation and Recovery Act stored on, any site owned
or operated by Company, any Company Subsidiary or any
predecessor of Company or any Company Subsidiary, except for the
storage of hazardous waste in compliance with Environmental Laws.
(e) There are no current, and to the knowledge of the
Company there are no pending or threatened, Environmental Claims
against the Company or any Company Subsidiary or, to the
knowledge of the Company, pending or threatened against any
property or assets of the Company. For purposes of this
Section 3.19(e), “Environmental Claims”
means administrative, regulatory or judicial actions, suits,
demands, demand letters, claims, liens, notices of
non-compliance or violation, investigations or proceedings
relating in any way to any Environmental Law or any permit
issued under any such Law (hereafter “Claims”),
including (A) Claims by governmental or regulatory
authorities for enforcement, cleanup, removal, response,
remedial or other actions or damages pursuant to any applicable
Environmental Law, and (B) Claims by any third party
seeking damages, contribution, indemnification, cost recovery,
compensation or injunctive relief resulting from Hazardous
Materials or arising from alleged injury or threat of injury to
health, safety or the environment.
(a) The Company Board of Directors, at a meeting duly
called and held at which all directors were present, has
(i) duly and validly approved and adopted resolutions
addressing all corporate action required to be taken by the
Company Board of Directors to authorize this Agreement and the
consummation of the
19
transactions contemplated hereby, (ii) resolved that the
transactions contemplated hereby are advisable and in the best
interests of the stockholders of the Company and that the
consideration to be paid for each share of Company Common Stock
in the Merger is fair to the holders of such shares of Company
Common Stock and was determined in good faith, and
(iii) subject to the other terms and conditions of this
Agreement, resolved to submit this Agreement to the stockholders
of the Company and to unanimously recommend that the
stockholders of the Company approve this Agreement and each of
the transactions contemplated hereby. As of the date of this
Agreement, none of the aforesaid actions by the Company Board of
Directors has been amended, rescinded or modified.
(b) The Company and the Company Board of Directors has
taken all action necessary such that no restrictions contained
in any “fair price,” “moratorium,”
“control share acquisition,” “business
combination” or similar statute, including without
limitation Section 203 of the DGCL, or any applicable
regulation thereunder, will apply to the execution, delivery or
performance of this Agreement or the transactions contemplated
hereby.
(c) The Company Board of Directors has taken such action as
is necessary with respect to the Company Rights Agreement such
that the execution and delivery of this Agreement and the
transactions contemplated hereby will not: (i) result in
Parent becoming an “Acquiring Person” under the
Company Rights Agreement or (ii) result in the grant of any
rights to any person under the Company Rights Agreement or
enable, require or cause the Company Rights to become
exercisable, detach from the Company Common Stock, be exercised
or deemed exercised, or be distributed or otherwise triggered.
The Company has not amended the Company Rights Agreement,
redeemed the rights thereunder or taken any other action to make
the Company Rights Agreement or the rights thereunder
inapplicable, in each case, with respect to (a) any person
or entity other than Parent or Sub or (b) any Acquisition
Proposal (as defined in Section 5.2(a)) or any other
substantially similar proposal.
(d) The affirmative vote of the holders of 50% of the
outstanding shares of Company Common Stock (the “Company
Stockholder Approval”) is the only vote of the
Company’s stockholders necessary to approve this Agreement
and the transactions contemplated hereby.
(a) The Company Board of Directors has received the opinion
of X.X. Xxxxxx Securities Inc. to the effect that, as of
the date hereof, the consideration to be received in the Merger
by the holders of the Company Common Stock is fair from a
financial point of view to the stockholders of the Company. The
Company shall forward to Parent a copy of the written version of
such opinion promptly after the date hereof.
(b) Other than X.X. Xxxxxx Securities Inc., no broker,
finder, agent or similar intermediary has acted on behalf of the
Company or any Company Subsidiary in connection with this
Agreement or the transactions contemplated hereby, and there are
no brokerage commissions, finders’ fees or similar fees or
commissions payable in connection herewith based on any
agreement, arrangement or understanding with the Company or any
Company Subsidiary, or any action taken by the Company or any
Company Subsidiary.
20
(a) No executive officer or director of the Company or any
Company Subsidiary or any person owning 5% or more of the
Company Common Stock (an “Affiliated Party”) is
a party to any material Contract or has any material interest in
any property or assets owned by the Company or any Company
Subsidiary or has engaged in any transaction with the Company
material to the Company within the last 12 months, in each
case, of the type that would be required to be disclosed under
Item 404 of Regulation S-K under the Securities Act.
(b) There are no outstanding loans to directors or officers
of the Company or any Company Subsidiary of the kind prohibited
by Section 402 of the Xxxxxxxx-Xxxxx Act.
Except as set forth in the disclosure schedule delivered by
Parent to the Company on the date hereof (the “Parent
Disclosure Schedule”), the section numbers of which are
numbered to correspond to the section numbers of this Agreement
to which they refer, the Parent and Sub hereby jointly and
severally make the representations and warranties set forth in
this Section 4 to the Company. Any information set forth in
one section of the Parent Disclosure Schedule will be deemed to
apply to each other section or subsection of this Agreement to
which its relevance is reasonably apparent, and notwithstanding
anything in this Agreement to the contrary, the inclusion of an
item in such schedule as an exception to a representation or
warranty will not be deemed an admission that such item
represents a material exception or material fact, event or
circumstance or that such item has or is reasonably likely to
have a Parent Material Adverse Effect.
4.1 Organization.
Parent is a corporation duly organized, validly existing and in
good standing under the Laws of the State of Delaware. Parent is
duly qualified or licensed as a foreign corporation or
organization to do business, and is in good standing, in each
jurisdiction where the character of the properties owned, leased
or operated by it or the nature of its business makes such
qualification or licensing necessary, except for such failures
to be so qualified or licensed and in good standing that would
not reasonably be likely to prevent or materially delay
consummation of the transactions contemplated hereby (a
“Parent Material Adverse Effect”).
21
(a) The execution and delivery by Parent and Sub of this
Agreement do not, and the consummation of the transactions
contemplated hereby and compliance with the terms hereof will
not, violate in any material respect (i) any provision of
the charter, by-laws or other organizational documents of Parent
or Sub or (ii) subject to the filings and other matters
referred to in Section 4.3(b), any Law applicable to Parent
or Sub or their properties or assets, other than, in the case of
clause (ii) above.
(b) No consent of, or registration, declaration or filing
with, any third party or Governmental Entity is required to be
obtained or made by or with respect to Parent or Sub in
connection with the execution, delivery and performance of this
Agreement or the consummation of the transactions contemplated
hereby, other than (i) compliance with and filing of a
pre-merger notification report under the HSR Act, (ii) the
filing with the SEC of such reports under Section 13 of the
Exchange Act as may be required in connection with this
Agreement and the transactions contemplated hereby,
(iii) the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware and any appropriate
documents with the relevant authorities of the other
jurisdictions in which Parent or Sub is qualified to do
business, (iv) compliance with and filings under the
antitrust Laws of any foreign jurisdictions, if and to the
extent required, and (v) such other items that have not had
and are not reasonably likely to have, individually or in the
aggregate, a Parent Material Adverse Effect.
22
(a) Affirmative Covenants Pending Closing. The Company shall: |
(b) Negative Covenants Pending Closing. The Company shall not: |
23
24
(a) Each of the Company and its Representatives (as defined
below) has ceased and caused to be terminated all existing
solicitations, discussions, negotiations and communications with
any persons or entities with respect to any offer or proposal or
potential offer or proposal relating to any transaction or
proposed transaction or series of related transactions, other
than the transactions contemplated hereby, involving:
(A) any acquisition or purchase from the Company by any
person or “group” (as defined under Section 13(d)
of the Exchange Act) of fifteen percent (15%) interest or more
in the total outstanding voting securities of the Company or any
Company Subsidiary or any tender offer or exchange offer that if
consummated would result in any person or “group” (as
defined under Section 13(d) of the Exchange Act)
beneficially owning fifteen percent (15%) or more of the total
outstanding voting securities of the Company or any Company
Subsidiary, (B) any consolidation, business combination,
merger or similar transaction involving the Company or any
Company Subsidiary; (C) any sale, lease, exchange,
transfer, license, acquisition or disposition of assets of the
Company or any Company Subsidiary (including for this purpose
the outstanding equity securities of the Company Subsidiaries)
for consideration equal to fifteen percent (15%) or more of the
aggregate fair market value of all of the outstanding shares of
Company Common Stock on the date prior to the date hereof; or
(D) any recapitalization, restructuring, liquidation or
dissolution of the Company or any Company Subsidiary (any
transaction or series of transactions referred to in
clauses (A)-(D), an “Acquisition
Proposal”). Except as provided in Section 5.2(b)
or (b), from the date hereof until the earlier of the
termination of this Agreement or the Effective Time, the Company
shall not and shall not authorize or permit its officers,
directors, employees, investment bankers, attorneys, accountants
or other agents or those of any Company Subsidiary (collectively,
25
“Representatives”) to directly or indirectly
(i) initiate, solicit or encourage, or take any action to
facilitate the making of, any offer or proposal which
constitutes or is reasonably likely to lead to any Acquisition
Proposal, (ii) enter into any letter of intent, memorandum
of understanding, agreement, option agreement or similar
agreement or arrangement with respect to any Acquisition
Proposal, (iii) participate, engage or assist in any manner
in negotiations or discussions with, or provide any information
or data to, any person (other than Parent or any of its
affiliates or representatives) relating to any Acquisition
Proposal or grant any waiver or release under any standstill or
other agreement, or (iv) take any action to (A) other
than as contemplated by this Agreement in connection with the
Merger, render the Company Rights issued pursuant to the terms
of the Company Rights Agreement inapplicable to an Acquisition
Proposal or the transactions contemplated thereby, exempt or
exclude any person from the definition of an Acquiring Person
(as defined in the Company Rights Agreement) under the terms of
the Company Rights Agreement or allow the Company Rights to
expire prior to their expiration date or (B) exempt any
person from the restrictions on “business
combinations” contained in Section 203 of the DGCL (or
any similar provision) or otherwise cause such restrictions not
to apply.
(b) Notwithstanding the foregoing, prior to obtaining the
Company Stockholder Approval, the Company may furnish
information concerning its business, properties or assets to any
person pursuant to a confidentiality agreement with terms no
less favorable to the Company than those contained in the
confidentiality agreement, dated as of May 24, 2005 between
Parent and the Company (the “Confidentiality
Agreement”) (it being understood that such
confidentiality agreement or any related agreement will not
include any provision calling for an exclusive right to
negotiate with the Company or having the effect of prohibiting
the Company from satisfying its obligations under this
Agreement, including this Section 5.2) and may negotiate
and participate in discussions and negotiations with such person
concerning an Acquisition Proposal if, but only if,
(x) such Acquisition Proposal provides for consideration to
be received by the holders of substantially all of the issued
and outstanding shares of Company Common Stock (a
“Takeover Proposal”); (y) such person has,
in the absence of any violation of this Section 5.2 by the
Company, submitted a bona fide written proposal to the
Company relating to any such Takeover Proposal which the Board
of Directors determines in good faith, after consultation with
its financial advisor, involves, or is reasonably likely to lead
to a proposal that involves, consideration to the holders of the
shares of Company Common Stock that would be more favorable to
the Company’s stockholders taking into account all of the
terms and conditions of such proposal, including any break-up
fees, expense reimbursement provisions and conditions to
consummation and the likelihood of consummation in light of all
financing (which must be fully committed or reasonably
determined to be available by the Board of Directors),
regulatory, legal and other aspects of such proposal, and this
Agreement (including any proposal to amend the terms of this
Agreement), and (z) in the good faith opinion of the
Company Board of Directors, after consultation with outside
legal counsel, providing such information or access or engaging
in such discussions or negotiations is or would reasonably
likely to be in the best interests of the Company and its
stockholders and is or would reasonably likely to be required in
order for the Company Board of Directors to comply with its
fiduciary duties to the Company’s stockholders under
applicable Law (a Takeover Proposal which satisfies
clauses (x), (y) and (z) being referred to herein
as a “Superior Proposal”). The Company shall
promptly, and in any event within 24 hours after receipt of
such Superior Proposal, notify Parent (i) of such Superior
Proposal, which notice shall include a copy of such Superior
Proposal and identify the person making such Superior Proposal,
(ii) upon receipt of any inquiries, proposals or offers
received by, any request for information from, or any
discussions or negotiations sought to be initiated or continued
with, either the Company, or of the Company Subsidiaries or
Representatives concerning an Acquisition Proposal or that could
reasonably be expected to lead to an Acquisition Proposal and
disclose the identity of the other party and the material terms
of such inquiry, offer, proposal or request and, in the case of
written materials, provide copies of such materials and
(iii) provide Parent with copies of all materials provided
by the Company to such party. The Company will keep Parent
informed on a reasonably prompt basis of the status and details
(including amendments and proposed amendments) of any such
Superior Proposal or other inquiry, offer, proposal or request.
The Company shall promptly, following a determination by the
Company Board of Directors that a Takeover Proposal is a
Superior Proposal, notify Parent of such determination.
26
(c) Except as set forth herein, neither the Company Board
of Directors nor any committee thereof shall (i) withdraw
or modify, or propose to withdraw or modify, in a manner adverse
to Parent or Sub, the approval or recommendation by the Company
Board of Directors of this Agreement or the Merger,
(ii) approve or recommend or propose to approve or
recommend any Acquisition Proposal or (iii) approve or
recommend, or allow the Company or any Company Subsidiary, to
enter into any letter of intent, memorandum of understanding,
agreement, option agreement or similar agreement or arrangement
with respect to any Acquisition Proposal (any of the actions
described in clauses (i), (ii) or (iii), a
“Subsequent Determination”). Notwithstanding
the foregoing, prior to obtaining the Company Stockholder
Approval: (A) in response to a Takeover Proposal that did
not arise directly or indirectly from a material breach of this
Section 5.2, the Company Board of Directors may, if it
determines in good faith, after consultation with outside
counsel, that the failure to take such action would be
reasonably likely to result in a breach of the Company Board of
Directors’ fiduciary duties to the Company’s
stockholders under applicable Law, make a Subsequent
Determination; provided, that the Company Board of
Directors has determined in good faith that such Takeover
Proposal constitutes a Superior Proposal and, in the case of an
action described in clause (iii) of the definition of
“Subsequent Determination,” (1) the Company has
notified the Parent in writing of the determination that such
Takeover Proposal constitutes a Superior Proposal and
(2) at least five days following effective delivery of such
notice to Parent, the Company Board of Directors has determined
such Superior Proposal remains a Superior Proposal; and
(B) in circumstances other than those described in
(A) above, the Company Board of Directors may, if it
determines in good faith, after consulting with outside counsel,
that the failure to take such action would be reasonably likely
to result in a breach of the Company Board of Directors’
fiduciary duties to the Company stockholders under applicable
Law, take any of the actions described in clause (i) of the
definition of “Subsequent Determination”;
provided, that (1) the Company has notified Parent
in writing that the Company Board of Directors is prepared to
make the determination set forth in this
clause (B) setting forth the reasons therefor in
reasonable detail, and (2) at least five days following
effective delivery of such notice to Parent, the Company Board
of Directors remains prepared to make the determination
described in this clause (B) after taking into account
adjustments proposed by Parent to the terms and conditions of
this Agreement, the Merger and the other transactions
contemplated hereby. Any such withdrawal, modification or change
of the recommendation of the Company Board of Directors, or
recommendation or proposed recommendation of any Superior
Proposal shall not change the approval of the Company Board of
Directors for purposes of causing any state takeover statute or
other state Law to be inapplicable to the transactions
contemplated by this Agreement, including the Merger. The
Company shall not be entitled to enter into an agreement with
respect to a Superior Proposal unless and until this Agreement
is terminated in accordance with Section 8.1 of this
Agreement and the Company has paid Parent all amounts due Parent
pursuant to Section 8.2 of this Agreement.
(d) Nothing contained in this Section 5.2 or any other
provision hereof shall prohibit the Company or the Company Board
of Directors (nor any committee thereof) from taking and
disclosing to the Company’s stockholders a position with
respect to any tender or exchange offer by a third party
pursuant to Rules 14d-9 and 14e-2 promulgated under the
Exchange Act; provided, however, that the Company
Board of Directors (nor any committee thereof) shall not
(i) (A) recommend that the stockholders of the Company
tender their shares of Company Common Stock in connection with
such tender or exchange offer (or otherwise approve or recommend
any Acquisition Proposal) or (B) withdraw or modify its
approval or recommendation of this Agreement and the Merger,
unless in each case the requirements of Section 5.2(c)
shall have been satisfied, or (ii) otherwise take, agree or
resolve to take, any action prohibited by Section 5.2(c).
27
(a) Except as provided in Section 5.4(a) of the
Company Disclosure Schedule, until the first anniversary of the
Effective Time (the “Benefits Continuation
Period”), the Surviving Corporation shall pay or cause
to be paid to each employee who continues as an employee of the
Company, the Company Subsidiaries or the Surviving Corporation
during the Benefits Continuation Period (the “Continuing
Employees”) salary, wages, cash incentive
opportunities, medical benefits and other welfare benefit plans
programs and arrangements which are least comparable in the
aggregate to those provided prior to the Closing Date,
provided, that such comparable compensation need not
include equity, provided, further, that with
respect to Continuing Employees who are subject to employment
agreements, the 2002 Change in Control Plan for Key Employees,
the 2005 Change in Control Plan for Key Employees, compensation,
benefits and payments shall be provided in accordance with such
agreements, and the Surviving Corporation shall expressly assume
such employment agreements (including change in control
agreements), and fulfill all obligations thereunder. During the
Benefits Continuation Period, the Surviving Corporation shall
pay, subject to such terms and conditions as it shall establish,
any such Continuing Employee whose employment is involuntarily
terminated by the Parent, the Surviving Corporation or any of
their Subsidiaries without cause an amount of severance pay in
cash equal to the amount of cash severance pay that would have
been payable to such Continuing Employee under the terms of the
severance plan maintained by the Company and its Subsidiaries
and applicable to such Continuing Employee immediately prior to
the date of this Agreement. The foregoing provisions of this
Section 5.4 shall not be construed or interpreted to
restrict in any way the Surviving Corporation’s or
Parent’s ability to amend, modify or terminate any Plan
(including, without limitation, to change the entities who
administer such Plans, or the manner in which such Plans are
administered) to the extent not inconsistent with such foregoing
restrictions or any other plan made available to the Continuing
Employees or to terminate any person’s employment at any
time or for any reason.
(b) The Surviving Corporation shall (i) waive any
applicable pre-existing condition exclusions and waiting periods
with respect to participation and coverage requirements in any
replacement or successor welfare benefit plan of the Surviving
Corporation that a Continuing Employee is eligible to
participate in following the Effective Time to the extent such
exclusions or waiting periods were inapplicable to, or had been
satisfied by, such Continuing Employee immediately prior to the
Effective Time under the relevant Plan in which such employee
participated, (ii) provide each such Continuing Employee
with credit for any co-payments and deductible paid prior to the
Effective Time (to the same extent such credit was given under
the analogous Plan prior to the Effective Time) in satisfying
any applicable deductible or out-of-pocket requirements and
(iii) to the extent that any Continuing Employee is allowed
to participate in any employee benefit plan of the Parent, the
Surviving Corporation or any of their subsidiaries following the
Effective Time, cause such plan to recognize the service of such
Continuing Employee with the Company and the Company
Subsidiaries prior to the Effective Time for purposes of
eligibility to participate, vesting and benefit accrual (but not
for benefit accrual under any defined benefit, retiree welfare
or similar plan) to the extent of such service.
(c) With respect to matters described in this
Section 5.4, the Company will consult with Parent (and
consider in good faith the advice of Parent) prior to sending
any written notices or other communication materials (including,
without limitation, any postings to any website) to its
employees or former employees of the Company or any Company
Subsidiary. Prior to the Effective Time, the Company shall
provide Parent with reasonable access to such employees or
former employees for purposes of Parent providing notices or
other communication materials regarding Parent compensation and
benefit plans and the matters described in this
Section 5.4; provided, that such notices or other
communication materials are approved in advance by the Company,
which approval shall not be unreasonably withheld.
28
SEC with respect thereto. The Company shall ensure that, at the
time the Proxy Statement is filed with the SEC or mailed to the
Company’s stockholders or at the time of the Company
Stockholders Meeting (as defined below), or at the time of any
amendment or supplement thereof, the information (except for
information furnished to the Company by or on behalf of Parent)
contained in 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, not misleading. Parent shall ensure that, at the
time the Proxy Statement is filed with the SEC or mailed to the
Company’s stockholders or at the time of the Company
Stockholders Meeting, or at the time of any amendment or
supplement thereof, the information contained in the Proxy
Statement and furnished to the Company by or on behalf of Parent
(as indicated to the Company in writing) 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, not misleading. The
Company shall notify Parent promptly of the receipt of any
comments from the SEC or its staff and of any request by the SEC
or its staff for amendments or supplements to the Proxy
Statement or for additional information and shall supply Parent
with copies of all correspondence between the Company or any of
its representatives, on the one hand, and the SEC or its staff,
on the other hand, with respect to the Proxy Statement. The
Company shall use its reasonable best efforts to cause the Proxy
Statement to be mailed to the Company’s stockholders as
promptly as practicable after filing with the SEC, but in no
event later than five (5) days following the filing of the
definitive Proxy Statement with the SEC. If at any time prior to
receipt of the approval of this Agreement by the affirmative
vote of the holders of Company Stockholder Approval there shall
occur any event that should be set forth in an amendment or
supplement to the Proxy Statement, the Company shall promptly
prepare and mail to its stockholders such an amendment or
supplement. Notwithstanding anything to the contrary stated
above, prior to filing or mailing the Proxy Statement or any
other filing required in connection with the transactions
contemplated hereby (or, in each case, any amendment or
supplement thereto) or responding to any comments of the SEC
with respect thereto, the party responsible for filing or
mailing such document shall provide the other party an
opportunity to review and comment on such document or response
and, unless there has been a Subsequent Determination and
termination in accordance with the termination provisions
hereof, shall include in such document or response comments
reasonably proposed by the other party. Subject to
Section 5.2(c), the Proxy Statement shall contain a
recommendation from the Company Board of Directors that the
stockholders of the Company vote to adopt this Agreement.
29
by Parent (whether conducted prior to or after the date hereof)
shall diminish or obviate any of the representations,
warranties, covenants or agreements of the Company contained in
this Agreement. In order that Parent may have full opportunity
to make such investigation, the Company shall furnish the
representatives of Parent during such period with all such
information and copies of such documents concerning the affairs
of the Company as such representatives may reasonably request
and cause its officers, employees, consultants, agents,
accountants and attorneys to cooperate fully with such
representatives in connection with such investigation. The
information and documents so provided shall be subject to the
terms of the Confidentiality Agreement.
(a) As promptly as practicable after the date hereof, each
of Parent, Sub and the Company shall make all filings, notices,
petitions, statements, registrations, submissions of
information, application or submission of other documents
required by any Governmental Entity or any foreign labor
organization or works council in connection with the Merger and
the other transactions contemplated hereby, including, without
limitation: (i) Notification and Report Forms with the
United States Federal Trade Commission (the
“FTC”) and the Antitrust Division of the United
States Department of Justice (“DOJ”) as
required by the HSR Act, which shall be made within twenty
(20) days after the date of this Agreement,
(ii) filings required by the merger notification or control
Laws of any applicable jurisdiction, as reasonably requested by
Parent, which must be made within twenty (20) days after
such request by Parent, (iii) any filings required under
the Securities Act, the Exchange Act, any applicable state or
securities or “blue sky” laws and the securities laws
of any foreign country, (iv) any foreign labor organization
or works council or (v) any other applicable Laws or rules
and regulations of any Governmental Entity relating to the
Merger. Each of Parent and the Company will cause all documents
that it is responsible for filing with any Governmental Entity
under this Section 6.5(a) to comply in all material
respects with all applicable Laws and rules and regulations of
any Governmental Entity.
(b) Each of Parent, Sub, and the Company shall promptly
supply the others with any information which may be reasonably
required in order to make any filings or applications pursuant
to Section 6.5(a).
(c) Each of Parent, Sub and the Company will notify the
others promptly upon the receipt of: (i) any comments from
any officials of any Governmental Entity in connection with any
filings made pursuant hereto 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 applicable
Laws and rules and regulations of any Governmental Entity.
Whenever any event occurs that is required to be set forth in an
amendment or supplement to any filing made pursuant to
Section 6.5(a), Parent, Sub or the Company, as the case may
be, will promptly inform the others of such occurrence and
cooperate in filing with the applicable Governmental Entity such
amendment or supplement.
30
(d) Upon the terms and subject to the conditions set forth
in this Agreement, each of the Company, on the one hand, and
Parent and Sub, on the other hand, agrees to use its reasonable
efforts to take, or cause to be taken, all actions, and to do,
or cause to be done, and to assist and cooperate with the other
parties in doing, all things necessary, proper or advisable to
consummate and make effective, in the most expeditious manner
practicable, the Merger and the other transactions contemplated
hereby, including complying in all material respects with all
applicable Laws and with all rules and regulations of any
Governmental Entity and using its reasonable efforts to
accomplish the following: (i) the causing of all of the
conditions set forth in Section 7 to the other parties
obligations to consummate the Merger to be satisfied and to
consummate and make effective the Merger and the other
transactions contemplated hereby, (ii) the obtaining of all
necessary actions or nonactions, waivers, consents, clearances,
approvals, orders and authorizations from Governmental Entities
required by it and the making of all necessary registrations,
declarations and filings (including registrations, declarations
and filings with Governmental Entities, if any) required by it,
(iii) the obtaining of all reasonably requested consents,
approvals or waivers from third parties required by it,
(iv) the defending of any suits, claims, actions,
investigations or proceedings, whether judicial or
administrative, to which it is a party challenging this
Agreement or the consummation of the transactions contemplated
hereby, including seeking to have any stay or temporary
restraining order entered by any court or other Governmental
Entity vacated or reversed, and (v) the execution or
delivery of any additional instruments necessary to consummate
the transactions contemplated hereby, and to carry out fully the
purposes of, this Agreement. In connection with and without
limiting the foregoing, the Company and the Company Board of
Directors shall, if any state takeover statute or similar
statute or regulation is or becomes applicable to the Merger,
this Agreement or any of the other transactions contemplated
hereby, use all reasonable efforts to ensure that the Merger and
the other transactions contemplated hereby may be consummated as
promptly as practicable on the terms contemplated by this
Agreement and otherwise to minimize the effect of such statute
or regulation on the Merger, this Agreement and the other
transactions contemplated hereby. In case at any time after the
Effective Time any further action is necessary or desirable to
carry out the purposes of this Agreement, the proper officers
and directors of the Company, Parent and Sub shall use all
reasonable efforts to take, or cause to be taken, all such
necessary actions. Without limiting the foregoing, the parties
shall request and shall use reasonable efforts to obtain early
termination of the waiting period provided for in the
HSR Act. Parent shall cause Sub to fulfill all Sub’s
obligations under, and pursuant to, this Agreement. Nothing in
this Agreement shall require Parent, the Surviving Corporation
or any other subsidiary of Parent to sell, hold separate,
license or otherwise dispose of any assets or conduct their
business in a specified manner, or agree or proffer to sell,
hold separate, license or otherwise dispose of any assets or
conduct their business in a specified manner, or permit or agree
to the sale, holding separate, licensing or other disposition of
any assets of Parent, the Surviving Corporation or any other
subsidiary of Parent or the Company, whether as a condition to
obtaining any approval from, or to avoid potential litigation or
administrative action by, a Governmental Entity or any other
person or for any other reason. Until this Agreement is
terminated in accordance with Section 8.1, Parent shall
have the right to participate in the defense of any action, suit
or proceeding instituted or threatened against the Company (or
any of its directors or officers) before any court or
governmental or regulatory body, to restrain, modify or prevent
the consummation of the transactions contemplated hereby, or to
seek damages or discovery in connection with such transactions.
31
(a) The certificate of incorporation of the Surviving
Corporation shall contain the provisions with respect to
indemnification set forth in the certificate of incorporation of
the Company, which provisions shall not be amended, repealed or
otherwise modified for a period of six years from the Effective
Time in any manner that would adversely affect the rights
thereunder of individuals who at the Effective Time were
directors, officers, employees or agents of the Company, unless
such modification is required by law.
(b) The Company shall, to the fullest extent permitted
under applicable law or under the Company’s Certificate of
Incorporation, by-laws or any applicable indemnification
agreements and regardless of whether the Merger becomes
effective, indemnify, defend and hold harmless, and, after the
Effective Time, the Parent shall, and shall cause the Surviving
Corporation, to the fullest extent permitted under applicable
law, indemnify, defend and hold harmless, each present and
former director, officer or employee of the Company or any of
its subsidiaries (collectively, the “Indemnified
Parties”) against any costs or expenses (including
attorneys’ fees), judgments, fines, losses, claims,
damages, liabilities and amounts paid in settlement in
connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or
investigative, (x) arising out of or pertaining to the
transactions contemplated by this Agreement or
(y) otherwise with respect to any acts or omissions
occurring at or prior to the Effective Time. Any determination
required to be made with respect to whether an Indemnified
Party’s conduct complied with the standards set forth under
Delaware law, the Company’s Certificate of Incorporation,
by-laws or indemnification agreements, as the case may be, shall
be made by independent counsel mutually acceptable to Parent and
the Indemnified Party.
(c) Parent shall and shall cause the Surviving Corporation
to honor and fulfill in all respects the obligations of the
Company pursuant to indemnification agreements with the
Company’s directors and officers existing at or before the
Effective Time.
(d) At or prior to the Effective Time, Parent shall obtain
a “tail” insurance policy that provides coverage for
the six years following the Effective Time comparable to the
coverage provided under the Company’s directors and
officers insurance policy in effect on the date hereof for the
individuals who are directors and officers of the Company on the
date hereof for events occurring prior to the Effective Time.
(e) This Section shall survive the consummation of the
Merger at the Effective Time, is intended to benefit the
Company, the Surviving Corporation and the Indemnified Parties,
shall be binding on all successors and assigns of the Surviving
Corporation and shall be enforceable by the Indemnified Parties.
32
Section 7 Conditions
Precedent to the Obligation of the Parties to Consummate the
Merger
33
34
(a) By mutual written consent of Parent and the Company authorized by the Board of Directors of Parent (the “Parent Board”) and the Company Board of Directors; | |
(b) By either Parent or the Company: (i) if a court of competent jurisdiction or other Governmental Entity shall have issued a final, non-appealable order, decree or ruling or taken any other action, or there shall exist any statute, rule or regulation, in each case restraining, enjoining or otherwise prohibiting (collectively, “Restraints”) the consummation of any of the transactions contemplated hereby; provided, however, that the party seeking to terminate this Agreement pursuant to this Section 8.1(b)(i) shall have used all reasonable efforts to prevent the entry of and to remove such Restraints; or (ii) if the Merger has not been consummated by March 15, 2006 (the “Termination Date”); provided, however, that (A) the right to terminate this Agreement pursuant to this Section 8.1(b)(ii) shall not be available to any party whose action or failure to fulfill any obligation under this Agreement has been the principal cause of, or resulted in, the failure of the Merger to be consummated by such date and (B) the Termination Date for any termination pursuant to this Section 8.1(b)(ii) shall be extended by the number of days in excess of thirty (30) days that is required to obtain final SEC approval of the Proxy Statement (measured from the date of the first filing of the preliminary Proxy Statement with the SEC until the date the Proxy Statement is mailed to the Company’s stockholders), but not beyond April 15, 2006; | |
(c) By Parent if there has been a breach of, or inaccuracy in, any representation, warranty, covenant or agreement of the Company set forth in this Agreement, which breach or inaccuracy has resulted or is reasonably likely to result in any condition set forth in Sections 7.1 or 7.2 not being satisfied (and such breach or inaccuracy has not been cured or such condition has not been satisfied within twenty (20) business days after the receipt of notice thereof or such breach or inaccuracy is not reasonably capable of being cured or such condition is not reasonably capable of being satisfied within such period); | |
(d) By the Company if there has been a breach of, or inaccuracy in, any representation, warranty, covenant or agreement of Parent or Sub set forth in this Agreement which breach or inaccuracy has resulted or is reasonably likely to result in any condition set forth in Section 7.1 or 7.3 not being satisfied (and such breach or inaccuracy has not been cured or such condition has not been satisfied within twenty (20) business days after the receipt of notice thereof or such breach or |
35
inaccuracy is not reasonably capable of being cured or such condition is not reasonably capable of being satisfied within such period); | |
(e) By Parent if (i) the Company Board of Directors (or any committee thereof) shall have (A) withdrawn, modified or changed its approval or recommendation of this Agreement or the Merger, or publicly announced its intention to do so, or failed to recommend this Agreement or the Merger, (B) approved or recommended to the Company’s stockholders any proposal other than by Parent or Sub in respect of any Acquisition Proposal, or entered into or publicly announced its intention to enter into any agreement or agreement in principle in respect to any Acquisition Proposal, (C) made a Subsequent Determination, (D) failed to recommend against a tender or exchange offer related to an Acquisition Proposal in any position taken pursuant to Rules 14d-9 and 14e-2 under the Exchange Act, or (E) failed to reconfirm a recommendation to adopt and approve this Agreement and the Merger within five (5) days after Parent requests in writing that it do so; or (ii) the Company shall have violated or breached any of its obligations under Section 5.2; | |
(f) By the Company, at any time prior to the Company Stockholder Approval, if (i) the Company Board of Directors has made a Subsequent Determination in accordance with clause (A) of the second sentence of Section 5.2(c), (ii) the Company Board of Directors approves, and the Company concurrently enters into, a definitive agreement providing for the implementation of a Superior Proposal and (iii) the Company pays the Parent the termination fee provided for in Section 8.2(d) concurrently with such termination and as a condition to such termination; or | |
(g) By either Parent or the Company, if upon a vote at a duly held meeting to obtain the Company Stockholder Approval at which a quorum is present, the Company Stockholder Approval is not obtained. |
(a) Any termination of this Agreement under
Section 8.1 hereof will be effective immediately upon the
delivery of a valid written notice of the terminating party to
the other parties hereto and, if then due, payment of the
termination fee required pursuant to Section 8.2(d). In the
event of termination of this Agreement as provided in
Section 8.1 hereof, this Agreement shall forthwith become
null and void and be of no further force or effect, and there
shall be no liability on the part of Parent, Sub or the Company
(or any of their respective directors, officers, employees,
stockholders, agents or representatives), except as set forth in
the last sentence of Section 6.3, Section 8 and
Section 9, each of which shall remain in full force and
effect and survive any termination of this Agreement;
provided, however, that nothing herein (except as
set forth in Section 8.2(e)) shall relieve any party from
liability for fraud or the willful and material breach of any of
its representations, warranties, covenants or agreements set
forth in this Agreement.
(b) If Parent terminates this Agreement pursuant to
(x) Section 8.1(c) and the Company Stockholders
Meeting has not been held as of the date of such termination or
the Closing has not occurred because one or more of the
conditions set forth in Section 7.2 have not been satisfied
as of the date of such termination or
(y) Section 8.1(g), then the Company shall promptly
following such termination, upon written request from Parent and
receipt of reasonable substantiation therefor, reimburse Parent
for all external and third party fees and expenses (including
the reasonable fees and expenses of the Operations Group and the
Legal Group of Gores Technology Group, LLC to the extent that
such expenses are reasonably comparable to an independent third
party’s fees and expenses) incurred by Parent in connection
with the transactions contemplated by this Agreement, including
without limitation reasonable fees and expenses of Parent’s
legal counsel, accountants and financial advisors, commitment
fees paid or payable by Parent to potential financing sources,
and fees and expenses of potential financing sources that Parent
is required to pay or reimburse, in an amount not to exceed
$3,000,000.
(c) If Parent or the Company terminates this Agreement
pursuant to Section 8.1(g), and (i) if prior to the to
the Company Stockholders Meeting an Acquisition Proposal is
publicly announced or is otherwise communicated to the
Company’s Board of Directors, and (ii) within twelve
(12) months after the date of such termination, the Company
enters into a definitive agreement with respect to an
36
“Acquisition Proposal,” the Company shall pay to
Parent a termination fee of $15,000,000 no later than two
(2) business days after the execution of such definitive
agreement, provided, that solely for purposes of this
Section 8.2(c), the term “Acquisition Proposal”
shall have the meaning ascribed thereto in Section 5.2(a),
except that all references to fifteen percent (15%) shall be
changed to fifty percent (50%).
(d) If Parent terminates this Agreement pursuant to
Section 8.1(e) on or prior to January 31, 2006, the
Company shall promptly pay Parent a termination fee of
$10,000,000 and, if Parent terminates this Agreement pursuant to
Section 8.1(e) after January 31, 2006, the Company
shall promptly pay Parent a termination fee of $15,000,000. If
the Company terminates this Agreement pursuant to
Section 8.1(f) on or prior to January 31, 2006, the
Company shall, concurrently with and as a condition to such
termination, pay Parent a termination fee of $10,000,000. If the
Company terminates this Agreement pursuant to
Section 8.1(f) after January 31, 2006, the Company
shall, concurrently with and as a condition to such termination,
pay Parent a termination fee of $15,000,000.
(e) In the event that this Agreement is terminated by the
Company pursuant to Section 8.1(d) as a result of a breach
by Parent or Sub (i) of its respective obligation to effect
the Closing pursuant to Section 1.2 hereof and satisfy its
obligations under Article II including depositing (or
causing to be deposited) with the Paying Agent sufficient funds
to make all payments pursuant to Section 2.2(b) after all
conditions set forth in Section 7 capable of satisfaction
prior to the Closing have been satisfied or waived or
(ii) of any other agreement or covenant of Parent or Sub
hereunder before all conditions set forth in Section 7
capable of satisfaction prior to the Closing have been satisfied
or waived, then Parent shall pay to the Company a fee of
$15,000,000, no later than two (2) business days after such
termination by the Company, provided, however,
that in the case of a breach described in clause (ii)
above, if the Parent provides written notice to the Company
within such two-business-day period that it waives any condition
to closing to the extent the failure of such condition to be
satisfied is caused by the Parent’s breach alleged by the
Company, then notwithstanding the purported termination, the
Company’s termination notice will be null and void, this
Agreement will not terminate and Parent shall not be required to
pay the fee which it would otherwise be obligated to pay
pursuant to this Section 8.2(e).
(f) The Company and the Parent each acknowledge that the
agreements contained in Sections 8.2(b), (c), and
(d) are an integral part of the transactions contemplated
by this Agreement, and that, without these agreements, Parent or
the Company would not enter into this Agreement; accordingly, if
the Company or Parent fails promptly to pay the amounts due
pursuant to Sections 8.2(b), (c), or (d), respectively,
and, in order to obtain such payment, the Company or Parent
commences a suit which results in a final non-appealable
judgment against the Parent or the Company, the Company or the
Parent shall pay to Parent or the Company, as applicable, its
reasonable attorneys’ fees and expenses actually incurred
in connection with such suit, together with interest on the
amount of the fee from the date such payment was required to be
made until the date such payment is actually made.
(g) Each of the Company and Parent (for itself and its
affiliates) hereby agrees, that, upon any termination of this
Agreement under circumstances where it is entitled to a
termination fee and such termination fee is paid in full to the
Company or Parent, except in the case of fraud or a willful and
material breach by the Company or the Parent, as applicable, the
Company or Parent and its affiliates shall be precluded from any
other remedy against the Company or Parent and its affiliates,
at law or in equity or otherwise, and neither the Company or
Parent nor any of its affiliates may seek (and the Company or
Parent shall cause its affiliates not to seek) to obtain any
recovery, judgment, or damages of any kind, including
consequential, indirect, or punitive damages, against the
Company or Parent or any of its respective directors, officers,
employees, partners, managers, members, or stockholders in
connection with this Agreement or the transactions contemplated
hereby.
37
any vote of the stockholders of the Company contemplated hereby,
by written agreement of the parties hereto, by action taken by
their respective Boards of Directors, but after the approval of
this Agreement by the stockholders of the Company, no amendment
shall be made which by Law requires further approval by such
stockholders without obtaining such further approval. This
Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties hereto.
Section 9 Miscellaneous
(a) if to Parent or Sub, to:
Gores ENT Holdings, Inc. | |
ENT Acquisition Corp. | |
c/o The Gores Group | |
0000 Xxxxxxx Xxxx | |
Xxxxxxx, Xxxxxxxx 00000 | |
Telephone: (000) 000-0000 | |
Facsimile: (000) 000-0000 | |
Attention: Chief Financial Officer | |
with copies to: | |
The Gores Group | |
00000 Xxxxxxxx Xxxxxxxxx, 00xx Xxxxx | |
Xxx Xxxxxxx, Xxxxxxxxxx 00000 | |
Telephone: (000 000-0000 | |
Facsimile: (000) 000-0000 | |
Attention: General Counsel | |
Xxxxxxx XxXxxxxxx LLP | |
000 Xxxxx Xxxx., 00xx Xxxxx | |
Xxxxx Xxxx, Xxxxxxxxxx 00000 | |
Attn: Xxxxx X. Loss, Esq. | |
Telephone: (000) 000-0000 | |
Facsimile: (000) 000-0000 |
(b) if to the Company, to:
Enterasys Networks, Inc. | |
00 Xxxxxxxxx Xxxx | |
Xxxxxxx, XX 00000 | |
Attn: General Counsel | |
Telephone: (000) 000-0000 | |
Facsimile: (000) 000-0000 |
38
with a copy to: | |
Ropes & Xxxx LLP | |
Xxx Xxxxxxxxxxxxx Xxxxx | |
Xxxxxx, Xxxxxxxxxxxxx 00000 | |
Attn: Xxxxx X. Fine, Esq. | |
Telephone: (000) 000-0000 | |
Facsimile: (000) 000-0000 |
Any party may by notice given in accordance with this
Section 9.2 to the other parties designate another address
or person for receipt of notices hereunder.
(a) This Agreement shall not be assigned by any of the
parties hereto (whether by operation of law or otherwise)
without the prior written consent of the other parties, except
that the Sub may assign, in its sole discretion and without the
consent of any other party, any or all of its rights, interests
and obligations hereunder to (i) Parent, (ii) to
Parent and one or more wholly-owned subsidiaries of Parent, or
(iii) to one or more wholly-owned subsidiaries of Parent
(each, an “Assignee”). Any such Assignee may
thereafter assign, in its sole discretion and without the
consent of any other party, any or all of its rights, interests
and obligations hereunder to one or more additional Assignees.
Subject to the preceding sentence, but without relieving any
party hereto of any obligation hereunder, this Agreement will be
binding upon, inure to the benefit of and be enforceable by the
parties and their respective successors and assigns.
(b) Other than Sections 5.4 and 6.7, nothing in this
Agreement, express or implied, is intended to or shall confer
upon any person other than Parent, Sub and the Company and their
respective successors and permitted assigns any right, benefit
or remedy of any nature whatsoever under or by reason of this
Agreement.
39
of such action may be heard and determined in such Delaware
state or federal court. Each of the Company, Parent and Sub
hereby irrevocably waives, and agrees not to assert, by way of
motion, as a defense, counterclaim or otherwise, in any action
or proceeding with respect to this Agreement, (a) any claim
that it is not personally subject to the jurisdiction of the
above-named courts for any reason other than the failure to
lawfully serve process, (b) that it or its property is
exempt or immune from jurisdiction of any such court or from any
legal process commenced in such courts (whether through service
of notice, attachment prior to judgment, attachment in aid of
execution of judgment, execution of judgment or otherwise), and
(c) to the fullest extent permitted by applicable Law, that
(i) the suit, action or proceeding in any such court is
brought in an inconvenient forum, (ii) the venue of such
suit, action or proceeding is improper or (iii) this
Agreement, or the subject matter hereof, may not be enforced in
or by such courts. Each of the Company, Parent and Sub waives,
to the fullest extent permitted by applicable Laws, any right it
may have to a trial by jury in respect of any action, suit or
proceeding arising out of or relating to this Agreement.
(a) All words used in this Agreement shall be construed to
be of such gender or number as the circumstances require. Unless
otherwise expressly provided, the word “including”
does not limit the preceding words or terms. The parties hereto
agree that they have been represented by counsel during the
negotiation and execution of this Agreement and, therefor, waive
the application of any law, regulation, holding or ruling of
construction providing that ambiguities in an agreement or other
document shall be construed against the party drafting such
agreement or document.
(b) For purposes of this Agreement, the term
“Governmental Entity” shall mean any court,
nation, government, any state or other political subdivision
thereof and any entity exercising executive, legislative,
judicial regulatory or administrative functions of, or
pertaining to, government.
(c) For purposes of this Agreement, the term
“person” shall mean any individual, corporation
(including any non-profit corporation), general partnership,
limited partnership, limited liability partnership, joint
venture, estate, trust, company (including any limited liability
company or joint stock company), firm or other enterprise,
association, organization, entity or Governmental Entity.
[Remainder of Page Intentionally Left Blank]
40
ENTERASYS NETWORKS, INC. |
By: | /s/ XXXX XXXXXX |
|
|
Name: Xxxx Xxxxxx | |
Title: Chief Executive Officer | |
GORES ENT HOLDINGS, INC. |
By: | /s/ XXXX X. XXXXX |
|
Name: Xxxx X. Xxxxx | |
Title: Chairman | |
ENT ACQUISITION CORP. |
By: | /s/ XXXXX XXXXXXX |
|
Name: Xxxxx Xxxxxxx | |
Title: Vice President |
41