AGREEMENT AND PLAN OF MERGER BY AND AMONG TRIMBLE NAVIGATION LIMITED, ROADRUNNER ACQUISITION CORP. AND @ROAD, INC. DATED AS OF DECEMBER 10, 2006
AGREEMENT
AND PLAN OF MERGER
BY
AND
AMONG
XXXXXXX
NAVIGATION LIMITED,
ROADRUNNER
ACQUISITION CORP.
AND
@ROAD,
INC.
DATED
AS OF
DECEMBER 10, 2006
TABLE
OF
CONTENTS
Page
ARTICLE
I THE
MERGER
|
1
|
|
1.1
|
Effective
Time
|
1
|
1.2
|
Closing
|
2
|
1.3
|
Effects
of the
Merger
|
2
|
1.4
|
Certificate
of
Incorporation
|
2
|
1.5
|
Bylaws
|
2
|
1.6
|
Directors
and
Officers of the Surviving Corporation
|
2
|
ARTICLE
II
CONVERSION OF SECURITIES
|
3
|
|
2.1
|
Conversion
of
Capital Stock
|
3
|
2.2
|
Exchange
of
Certificates
|
5
|
2.3
|
Appraisal
Rights
|
8
|
ARTICLE
III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
|
8
|
|
3.1
|
Organization;
Standing and Power; Charter Documents; Subsidiaries
|
8
|
3.2
|
Capital
Structure
|
10
|
3.3
|
Authority;
No
Conflict; Required Filings and Consents
|
13
|
3.4
|
SEC
Filings;
Financial Statements; Information Provided
|
14
|
3.5
|
No
Undisclosed
Liabilities
|
17
|
3.6
|
Absence
of
Certain Changes or Events
|
17
|
3.7
|
Taxes
|
18
|
3.8
|
Owned
and
Leased Real Properties
|
19
|
3.9
|
Tangible
Personal Property
|
20
|
3.10
|
Intellectual
Property
|
20
|
3.11
|
Contracts
|
23
|
3.12
|
Litigation
|
25
|
3.13
|
Environmental
Matters
|
26
|
3.14
|
Employee
Benefit Plans
|
27
|
3.15
|
Compliance
With Laws
|
29
|
3.16
|
Permits
|
30
|
3.17
|
Labor
Matters
|
30
|
3.18
|
Insurance
|
31
|
3.19
|
Transactions
with Affiliates
|
31
|
3.20
|
State
Takeover
Statutes
|
31
|
3.21
|
Opinion
of
Financial Advisor
|
31
|
3.22
|
Brokers;
Fees
|
32
|
3.23
|
No
Other
Representations and Warranties
|
32
|
ARTICLE
IV
REPRESENTATIONS AND WARRANTIES OF BUYER AND MERGER SUB
|
32
|
|
4.1
|
Organization,
Standing and Power
|
32
|
4.2
|
Authority;
No
Conflict; Required Filings and Consents
|
33
|
4.3
|
Capitalization
|
35
|
4.4
|
SEC
Filings;
Financial Statements
|
35
|
4.5
|
Operations
of
Merger Sub
|
37
|
4.6
|
Litigation
|
37
|
4.7
|
Financing
|
37
|
4.8
|
Absence
of
Certain Changes or Events
|
38
|
4.9
|
No
Other
Representations and Warranties
|
38
|
ARTICLE
V
CONDUCT OF BUSINESS
|
38
|
|
5.1
|
Ordinary
Course
|
38
|
5.2
|
Required
Consents
|
39
|
5.3
|
Buyer
Actions
|
43
|
ARTICLE
VI
ADDITIONAL AGREEMENTS
|
43
|
|
6.1
|
No
Solicitation
|
43
|
6.2
|
Prospectus/Proxy
Statement; Registration Statement
|
47
|
6.3
|
Stockholders
Meeting
|
48
|
6.4
|
Access
to
Information
|
50
|
6.5
|
Legal
Requirements
|
50
|
6.6
|
Public
Disclosure
|
52
|
6.7
|
Indemnification
|
52
|
6.8
|
Notification
of Certain Matters
|
54
|
6.9
|
Exemption
from
Liability Under Section 16
|
54
|
6.10
|
Employee
Stock
Purchase Plan
|
55
|
6.11
|
Assumption
of
Options and Related Matters
|
55
|
6.12
|
Employee
Matters
|
57
|
6.13
|
Resignations
|
58
|
6.14
|
Third-Party
Consents
|
58
|
6.15
|
145
Affiliates
|
59
|
ARTICLE
VII
CONDITIONS TO MERGER
|
59
|
|
7.1
|
Conditions
to
Each Party’s Obligation to Effect the Merger
|
59
|
7.2
|
Additional
Conditions to Obligations of Buyer and Merger Sub
|
60
|
7.3
|
Additional
Conditions to Obligations of the Company
|
61
|
ARTICLE
VIII
TERMINATION AND AMENDMENT
|
62
|
|
8.1
|
Termination
|
62
|
8.2
|
Effect
of
Termination
|
64
|
8.3
|
Fees
and
Expenses
|
65
|
8.4
|
Amendment
|
66
|
8.5
|
Extension;
Waiver
|
66
|
ARTICLE
IX
MISCELLANEOUS
|
66
|
|
9.1
|
Nonsurvival
of
Representations, Warranties and Agreements
|
66
|
9.2
|
Notices
|
66
|
9.3
|
Entire
Agreement
|
67
|
9.4
|
No
Third Party
Beneficiaries
|
68
|
9.5
|
Assignment
|
68
|
9.6
|
Severability
|
68
|
9.7
|
Counterparts
and Signature
|
69
|
9.8
|
Interpretation
|
69
|
9.9
|
Governing
Law
|
69
|
9.10
|
Remedies
|
69
|
9.11
|
Submission
to
Jurisdiction
|
70
|
9.12
|
Knowledge
of
the Company
|
70
|
EXHIBIT
INDEX
Exhibit
A Form
of Rule 145
Letter
Exhibit
B Form
of
Non-Competition Agreement
Defined
Terms
|
Reference
in
Agreement
|
Acquisition
Proposal
|
Section
6.1(f)
|
Action
of
Divestiture
|
Section
6.5(b)
|
Affiliate
|
Section
3.4(b)
|
Agreement
|
Preamble
|
Alternative
Acquisition Agreement
|
Section
6.1(b)(ii)
|
Antitrust
Laws
|
Section
6.5(b)
|
Antitrust
Order
|
Section
6.5(b)
|
Applicable
Buyer Stock Price
|
Section
2.1(c)
|
Assumed
Options
|
Section
6.11(a)
|
Business
Day
|
Section
1.2
|
Buyer
Common
Stock
|
Section
2.1(c)
|
Buyer
Financials
|
Section
4.4
|
Section
4.1
|
|
Buyer
SEC
Reports
|
Section
4.4
|
Cashed-Out
Options
|
Section
6.11(c)
|
Certificate
|
Section
2.2(b)
|
Certificate
of
Designations
|
Section
2.1(d)
|
Change
in the
Company Recommendation
|
Section
6.1(b)(iii)
|
Closing
|
Section
1.2
|
Closing
Date
|
Section
1.2
|
Code
|
Section
2.2(g)
|
Company
|
Preamble
|
Company
Balance Sheet
|
Section
3.5
|
Company
Board
|
Recitals
|
Company
Change
in Control Transaction
|
Section
8.3(b)
|
Company
Charter Documents
|
Section
3.1(b)
|
Company
Common
Consideration
|
Section
2.1(c)
|
Company
Common
Stock
|
Section
2.1(c)
|
Company
Common
Stock Consideration
|
Section
2.1(c)
|
Company
Common
Tranche One Consideration
|
Section
2.1(c)
|
Company
Common
Tranche Two Consideration
|
Section
2.1(c)
|
Company
Disclosure Schedule
|
Article
III
|
Company
Employees
|
Section
3.14(a)
|
Company
Employee Plans
|
Section
3.14(a)
|
Company
Financials
|
Section
3.4(a)
|
Company
Material Adverse Effect
|
Section
3.1(a)
|
Company
Material Contract
|
Section
3.11(a)
|
Company
Permits
|
Section
3.16
|
Company
Preferred Stock
|
Section
2.1(e)
|
Company
Recommendation
|
Section
6.3
|
Company
SEC
Reports
|
Section
3.4(a)
|
Company
Stock
Options
|
Section
3.2(b)
|
Company
Stock
Plans
|
Section
3.2(b)
|
Company
Stockholders Meeting
|
Section
3.3(d)
|
Company
Voting
Proposal
|
Section
3.3(a)
|
Confidentiality
Agreement
|
Section
6.4
|
Continuing
Employees
|
Section
6.12
|
Contract
|
Section
3.3(b)
|
Costs
|
Section
6.7(a)
|
DGCL
|
Recitals
|
Dissenting
Shares
|
Section
2.3(a)
|
Effective
Time
|
Section
1.1
|
Employee
Benefit Plan
|
Section
3.14(a)
|
Employee
Stock
Purchase Plan
|
Section
3.2(b)
|
Environmental
Law
|
Section
3.13(b)
|
ERISA
|
Section
3.14(a)
|
ERISA
Affiliate
|
Section
3.14(a)
|
Exchange
Act
|
Section
3.3(c)
|
Exchange
Agent
|
Section
2.2(a)
|
Exchange
Fund
|
Section
2.2(a)
|
Foreign
Benefit Plan
|
Section
3.14(i)
|
GAAP
|
Section
3.4(a)
|
Governmental
Entity
|
Section
3.3(c)
|
Hazardous
Substance
|
Section
3.13(c)
|
HSR
Act
|
Section
3.3(c)
|
Indemnified
Parties
|
Section
6.7(a)
|
Insurance
Cap
|
Section
6.7(c)
|
Intellectual
Property
|
Section
3.10(a)
|
Intellectual
Property Licenses
|
Section
3.10(b)
|
IRS
|
Section
3.7(b)
|
X.
X.
Xxxxxx
|
Section
3.21
|
Leased
Real
Property
|
Section
3.8
|
Leases
|
Section
3.8
|
Liens
|
Section
3.1(c)
|
Merger
|
Recitals
|
Merger
Consideration
|
Section
2.1(e)
|
Merger
Sub
|
Preamble
|
Nasdaq
|
Section
2.1(c)
|
Open
Source
Materials
|
Section
3.10(g)
|
Option
Exchange Ratio
|
Section
6.11(a)
|
Outside
Date
|
Section
8.1(b)
|
Permitted
Liens
|
Section
3.9
|
Person
|
Section
2.2(b)
|
Pre-Closing
Period
|
Section
5.1
|
Prospectus/Proxy
Statement
|
Section
3.4(b)
|
PSV
Policies
|
Section
6.12
|
Registration
Statement
|
Section
3.4(b)
|
Required
Company Stockholder Vote
|
Section
3.3(d)
|
Representatives
|
Section
6.1(a)
|
Xxxxxxxx-Xxxxx
Act
|
Section
3.4(c)
|
SEC
|
Section
3.3(c)
|
Securities
Act
|
Section
3.3(c)
|
Series
A
Consideration
|
Section
2.1(d)
|
Series
A
Preferred Stock
|
Section
2.1(d)
|
Series
A-1
Preferred Stock
|
Section
2.1(d)
|
Series
A-2
Preferred Stock
|
Section
2.1(d)
|
Series
B
Consideration
|
Section
2.1(e)
|
Series
B
Preferred Stock
|
Section
2.1(e)
|
Series
B-1
Preferred Stock
|
Section
2.1(e)
|
Series
B-2
Preferred Stock
|
Section
2.1(e)
|
Subsidiary
|
Section
3.1(a)
|
Subsidiary
Charter Documents
|
Section
3.1(b)
|
Superior
Proposal
|
Section
6.1(f)
|
Surviving
Corporation
|
Section
1.3
|
Surviving
Corporation Employee Plan
|
Section
6.12
|
Tax
Returns
|
Section
3.7(a)
|
Taxes
|
Section
3.7(a)
|
Tranche
Two
Cash Multiple
|
Section
6.11(c)
|
Tranche
Two
Stock Multiple
|
Section
6.11(c)
|
Triggering
Event
|
Section
8.1(f)
|
Value
|
Section
2.1(c)
|
Voting
Agreements
|
Recitals
|
Voting
Debt
|
Section
3.2(c)
|
AGREEMENT
AND PLAN OF MERGER
THIS
AGREEMENT AND
PLAN OF MERGER (this “Agreement”)
is entered into
as of December 10, 2006, by and among Xxxxxxx Navigation Limited, a California
corporation (“Buyer”),
Roadrunner
Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of
Buyer
( “Merger
Sub”),
and @Road, Inc.,
a Delaware corporation (the “Company”).
A. The
Boards of
Directors of Buyer, Merger Sub and the Company deem it advisable and in the
best
interests of each corporation and their respective stockholders that Buyer
acquire the Company on the terms and conditions set forth in this
Agreement;
B. The
acquisition of
the Company shall be effected through a merger (the “Merger”)
of Merger Sub with
and into the Company in accordance with the terms of this Agreement and the
Delaware General Corporation Law (the “DGCL”),
as a result of
which the Company shall become a wholly owned subsidiary of Buyer;
C. Concurrently
with
the execution of this Agreement, and as a condition and inducement to Buyer’s
willingness to enter into this Agreement, all current executive officers
and
members of the Board of Directors of the Company (the “Company
Board”),
and
Institutional Venture Partners are entering into Voting Agreements and
irrevocable proxies (the “Voting
Agreements”);
and
D. Buyer,
Merger Sub
and the Company desire to make certain representations, warranties, covenants
and agreements in connection with the Merger and to prescribe certain conditions
to the consummation of the Merger.
ARTICLE
I
THE
MERGER
1.1 Effective
Time of
the Merger.
Subject to the
terms and conditions of this Agreement, at the Closing, Buyer and the Company
shall jointly prepare and cause to be filed with the Secretary of State of
the
State of Delaware a certificate of merger in such form as is required by,
and
executed by the Company in accordance with, the relevant provisions of the
DGCL
and shall make all other filings or recordings required under the DGCL. The
Merger shall become effective upon the filing of the certificate of merger
with
the Secretary of State of the State of Delaware or at such later time as
is
agreed in writing by Buyer and the Company and set forth in the certificate
of
merger (the “Effective
Time”).
1
1.2 Closing.
The closing of the
Merger (the “Closing”)
shall take place
at 1:00 p.m., Pacific Time, on a date to be specified by Buyer and the Company
(the “Closing
Date”),
which shall be
on the same Business Day as all of the conditions set forth in Article VII
are
satisfied or waived, at the offices of Xxxxxx Xxxxxx LLP, 000 Xxxxxxxxxxx
Xxxx,
Xxxxx Xxxx, Xxxxxxxxxx, unless another date, place or time is agreed to in
writing by Buyer and the Company. For purposes of this Agreement, a
“Business
Day”
shall
be any day
other than (i) a Saturday or Sunday or (ii) a day on which banking institutions
located in San Francisco, California are required by law, executive order
or
governmental decree to remain closed.
1.3 Effects
of the
Merger.
At the Effective
Time, the separate existence of Merger Sub shall cease and Merger Sub shall
be
merged with and into the Company. The Company, as the corporation surviving
the
Merger, is sometimes referred to herein as the “Surviving
Corporation.”
The
Merger shall
have the effects set forth in Section 259 of the DGCL.
1.4 Certificate
of
Incorporation.
At the Effective
Time, the Certificate of Incorporation of the Company, as in effect immediately
prior to the Effective Time, shall be amended and restated to read in its
entirety so as to conform to the Certificate of Incorporation of Merger Sub,
as
in effect immediately prior to the Effective Time (except that Article I
of the
certificate of incorporation of the Surviving Corporation shall read as follows
“The name of the Company is @Road, Inc.”) and, as so amended and restated, shall
be the Certificate of Incorporation of the Surviving Corporation until
thereafter amended in accordance with the provisions thereof and as provided
by
applicable law.
1.5 Bylaws.
At the Effective
Time, the Bylaws of the Company, as in effect immediately prior to the Effective
Time, shall be amended and restated to read in their entirety so as to conform
to the Bylaws of Merger Sub, as in effect immediately prior to the Effective
Time and, as so amended and restated, shall become the Bylaws of the Surviving
Corporation until thereafter amended as provided by applicable law, the
Certificate of Incorporation of the Surviving Corporation and such Bylaws.
1.6 Directors
and
Officers of the Surviving Corporation.
(a) The
directors of
Merger Sub immediately prior to the Effective Time shall be the initial
directors of the Surviving Corporation, each to hold office in accordance
with
the Certificate of Incorporation and Bylaws of the Surviving
Corporation.
(b) The
officers of the
Company immediately prior to the Effective Time shall be the initial officers
of
the Surviving Corporation, each to hold office in accordance with the
Certificate of Incorporation and Bylaws of the Surviving
Corporation.
2
ARTICLE
II
CONVERSION
OF SECURITIES
2.1 Conversion
of
Capital Stock.
As
of the Effective
Time, by virtue of the Merger and without any action on the part of Buyer,
Merger Sub, the Company or the holder of any shares of the capital stock
of the
Company or capital stock of Merger Sub:
(a) Capital
Stock of
Merger Sub.
Each
share
of the common stock, par value $0.01 per share, of Merger Sub issued and
outstanding immediately prior to the Effective Time shall be converted into
and
become one validly issued, fully paid and nonassessable share of common stock,
$0.0001 par value per share, of the Surviving Corporation.
(b) Cancellation
of
Treasury Stock and Buyer-Owned Stock.
All
shares
of capital stock of the Company that are owned by the Company as treasury
stock
and any shares of the capital stock of the Company owned by Buyer, Merger
Sub or
any other wholly owned Subsidiary (as defined in Section 3.1(a) below) of
the Company or Buyer immediately prior to the Effective Time shall be cancelled
and shall cease to exist and no consideration shall be delivered in exchange
therefor.
(c) Merger
Consideration for Company Common Stock.
Each
share
of common stock, par value $0.0001 per share, of the Company (“Company
Common Stock”)
(other than
(i) shares to be cancelled in accordance with Section 2.1(b) and
(ii) Dissenting Shares (as defined in Section 2.3(a) below)) issued and
outstanding immediately prior to the Effective Time shall be automatically
converted into the right to receive: (i) an amount in cash equal to $5.00
(the
“Company
Common Tranche One Consideration”)
and (ii) a
mixture of cash and/or a fraction of a validly issued, fully paid and
nonassessable share of common stock, no par value, of Buyer (“Buyer
Common
Stock”)
having an
aggregate Value (as determined in accordance with the procedures set forth
below) of $2.50, the proportions of which mixture of cash and/or Buyer Common
Stock shall be determined in the sole discretion of Buyer (the consideration
to
be paid pursuant to this clause (ii), the “Company
Common Tranche Two Consideration”
and,
together with
the Company Common Tranche One consideration, the “Company
Common Consideration”).
For purposes of
this Agreement, the “Value”
of
the components
of the Company Common Tranche Two Consideration to be paid pursuant to clause
(ii) in the preceding sentence shall be determined (A) for the portion of
the
consideration to be paid in cash, if any, with reference to the cash amount
of
such portion, and (B) for the portion of the consideration to be paid in
shares
of Buyer Common Stock, if any, with reference to the average of the closing
sales price for a share of Buyer Common Stock on the Nasdaq Global Market
(“Nasdaq”)
for the five (5)
consecutive trading days ending with, but including, the trading day that
is six
(6) trading days prior to the date of the Closing Date (the “Applicable
Buyer Stock Price”).
Buyer shall
notify the Company in writing of its election with respect to relative
proportions of the components of the Company Common Tranche Two
3
(d) Merger
Consideration for Series A-1 and Series A-2 Redeemable Preferred
Stock.
Each share of
Series A-1 Redeemable Preferred Stock, par value $0.001 per share, of the
Company (“Series
A-1
Preferred Stock”)
and each share of
Series A-2 Redeemable Preferred Stock, par value $0.001 per share, of the
Company (“Series
A-2
Preferred Stock”)
(other than (i)
shares to be cancelled in accordance with Section 2.1(b) and (ii)
Dissenting Shares issued and outstanding immediately prior to the Effective
Time) shall be automatically converted into the right to receive an amount
in
cash equal to $100.00 plus
all declared or
accumulated but unpaid dividends with respect to such shares as of immediately
prior to the Effective Time, calculated in accordance with Section 2 of the
Company’s Certificate of Designations, Rights and Preferences (the “Certificate
of Designations”)
of Series A-1 and
Series A-2 Redeemable Preferred Stock and Series B-1 and Series B-2 Redeemable
Preferred Stock (the “Series
A
Consideration”).
The Series A-1
Preferred Stock and the Series A-2 Preferred Stock are sometimes collectively
referred to herein as the “Series
A
Preferred Stock.”
As
of the
Effective Time, all such shares of Series A Preferred Stock shall no longer
be
outstanding and shall automatically be cancelled and shall cease to exist,
and
each holder of a certificate representing any such shares of Series A Preferred
Stock shall cease to have any rights with respect thereto, except the right
to
receive the Series A Consideration pursuant to this Section 2.1(d) upon the
surrender of such certificate in accordance with Section 2.2, without interest.
(e) Merger
Consideration for Series B-1 and Series B-2 Redeemable Preferred
Stock.
Each share of
Series B-1 Redeemable Preferred Stock, par value $0.001 per share, of the
Company (“Series
B-1
Preferred Stock”)
and each share of
Series B-2 Redeemable Preferred Stock, par value $0.001 per share, of the
Company (“Series
B-2
Preferred Stock”)
(other than (i)
shares to be cancelled in accordance with Section 2.1(b) and (ii)
Dissenting Shares issued and outstanding immediately prior to the Effective
Time) shall be automatically converted into the right to receive an amount
in
cash equal to $830.48 plus
all declared or
accumulated but unpaid dividends with respect to such shares as of immediately
prior to the Effective Time, calculated in accordance with Section 2 of the
Certificate of Designations (the “Series
B
Consideration”).
The
Series B-1 Preferred Stock and the Series B-2 Preferred Stock are
sometimes collectively referred to herein as the “Series
B
Preferred Stock”
and
the Series A
Preferred Stock and the Series B Preferred Stock are sometimes collectively
referred to herein as the “Company
Preferred Stock.”
As
of the
Effective Time, all such shares of Series B Preferred Stock shall no longer
be
outstanding and shall automatically be cancelled and shall cease to exist,
and
each holder of a certificate representing any such shares of Series B Preferred
Stock shall cease to have any rights with respect thereto, except the right
to
receive the Series B Consideration pursuant to this Section 2.1(e) upon the
surrender of such certificate in accordance with Section 2.2, without interest.
The Company Common Consideration, the Series A Consideration and the Series
B
Consideration are sometimes collectively referred to herein as the “Merger
Consideration.”
4
(f) Adjustments
to
Merger Consideration.
The Merger
Consideration shall be adjusted as appropriate to reflect fully the effect
of
any reclassification, stock split, reverse split, stock dividend (including
any
dividend or distribution of securities convertible into Company Common Stock
or
Company Preferred Stock), reorganization, recapitalization or other like
change
with respect to Company Common Stock or Company Preferred Stock occurring
(or
for which a record date is established) after the date hereof and prior to
the
Effective Time.
(g) Fractional
Shares.
No fraction of a
share of Buyer Common Stock will be issued by virtue of the Merger, but in
lieu
thereof each holder of shares of Company Common Stock or Company Stock Options
who would otherwise be entitled to a fraction of a share of Buyer Common
Stock
(after aggregating all fractional shares of Buyer Common Stock that otherwise
would be received by such holder) shall, upon surrender of such holder’s
Certificate(s), be entitled to receive from Buyer an amount of cash (rounded
down to the nearest whole cent), without interest, equal to the product of:
(i) such fraction, multiplied by (ii) the Applicable Buyer Stock
Price.
2.2 Exchange
of
Certificates.
The
procedures for
exchanging certificates representing shares of Company Common Stock and/or
Company Preferred Stock for the applicable Merger Consideration pursuant
to the
Merger are as follows:
(a) Exchange
Agent.
At or promptly
following the Effective Time, Buyer shall deposit with a bank or trust company
designated by Buyer and reasonably acceptable to the Company (the “Exchange
Agent”),
for the benefit
of the holders of shares of Company Common Stock and the holders of shares
of
Company Preferred Stock, in each case issued and outstanding immediately
prior
to the Effective Time, for payment through the Exchange Agent in accordance
with
this Section 2.2, cash and Buyer Common Stock in an amount sufficient to
make payment of the Merger Consideration pursuant to Section 2.1 in exchange
for
all of the outstanding shares of Company Common Stock and Company Preferred
Stock (the “Exchange
Fund”).
5
(b) Exchange
Procedures.
Promptly after the
Effective Time, Buyer shall cause the Exchange Agent to mail to each holder
of
record of a certificate which immediately prior to the Effective Time
represented outstanding shares of Company Common Stock or Company Preferred
Stock (each, a “Certificate”)
(i) a letter of
transmittal in customary form and (ii) instructions for effecting the surrender
of the Certificates in exchange for the applicable Merger Consideration payable
with respect thereto. Upon surrender of a Certificate for cancellation to
the
Exchange Agent, together with such letter of transmittal, duly completed
and
executed, the holder of such Certificate shall be entitled to receive in
exchange therefor the applicable Merger Consideration that such holder has
the
right to receive pursuant to the provisions of this Article II, and the
Certificate so surrendered shall immediately be cancelled. In the event of
a
transfer of ownership of Company Common Stock or Company Preferred Stock
which
is not registered in the transfer records of the Company, the applicable
Merger
Consideration may be delivered to a Person other than the Person in whose
name
the Certificate so surrendered is registered, if such Certificate is presented
to the Exchange Agent, accompanied by all documents required to evidence
and
effect such transfer (in form and substance reasonably satisfactory to Buyer)
and by evidence satisfactory to Buyer that all applicable stock transfer
taxes
that may be payable in connection with the issuance of shares of Buyer Common
Stock in any name other than the name of the registered holder of the
Certificates surrendered have been paid. 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 upon such surrender
the
applicable Merger Consideration as contemplated by this Section 2.2. For
purposes of this Agreement, the term “Person”
means
any natural
person, company, corporation, limited liability company, general partnership,
limited partnership, trust, proprietorship, joint venture, business organization
or Governmental Entity.
(c) No
Further
Ownership Rights in Company Stock.
All Merger
Consideration paid upon the surrender for exchange of Certificates evidencing
shares of Company Common Stock or Company Preferred Stock in accordance with
the
terms hereof shall be deemed to have been paid in satisfaction of all rights
pertaining to such shares of Company Common Stock or Company Preferred Stock,
and from and after the Effective Time there shall be no further registration
of
transfers on the stock transfer books of the Surviving Corporation of the
shares
of Company Common Stock or Company Preferred Stock which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation or the Exchange Agent
for any reason, they shall be cancelled and exchanged as provided in this
Article II.
(d) Investment
of
Exchange Fund.
The Exchange Agent
shall invest any cash included in the Exchange Fund as directed by Buyer
on a
daily basis; provided that no such investment or loss thereon shall affect
the
amounts payable to the holders of Company Common Stock or Company Preferred
Stock pursuant to this Article II. Any interest and other income resulting
from
such investment shall become a part of the Exchange Fund, and any amounts
in
excess of the amounts payable to the holders of Company Common Stock or Company
Preferred Stock pursuant to this Article II shall be paid to Buyer as soon
as
practicable at the end of each calendar month.
6
(e) Termination
of
Exchange Fund.
Any portion of the
Exchange Fund which remains undistributed to the holders of Company Common
Stock
or Company Preferred Stock for six months after the Effective Time shall
be
delivered to Buyer, upon demand, and any holder of Company Common Stock or
Company Preferred Stock who has not previously complied with this Section
2.2
shall look only to Buyer for payment of its claim for Merger Consideration
without interest. Any such portion of the Exchange Fund remaining unclaimed
by
holders of shares of Company Common Stock or Company Preferred Stock immediately
prior to such time as such amounts would otherwise escheat to or become property
of any Governmental Entity shall, to the extent permitted by law, become
the
property of Buyer free and clear of any claims or interest of any Person
previously entitled thereto.
(f) No
Liability.
To the extent
permitted by applicable law, none of Buyer, Merger Sub, the Company, the
Surviving Corporation or the Exchange Agent shall be liable to any holder
of
shares of Company Common Stock or Company Preferred Stock for any Merger
Consideration in respect of such shares delivered to a public official pursuant
to any applicable abandoned property, escheat or similar law.
(g) Withholding
Rights.
Each of Buyer, the
Surviving Corporation and the Exchange Agent shall be entitled to deduct
and
withhold from the Merger Consideration or any other payment otherwise payable
pursuant to this Agreement such amounts as it is required to deduct and withhold
with respect to the making of such payment under the Internal Revenue Code
of
1986, as amended (the “Code”),
or any other
applicable state, local or foreign tax law. To the extent that amounts are
so
withheld, such withheld amounts (i) shall be remitted to the applicable
Governmental Entity (as defined in Section 3.3(c)), and (ii) shall be
treated for all purposes of this Agreement as having been paid to the holder
of
the shares of Company Common Stock or Company Preferred Stock in respect
of
which such deduction and withholding was made.
(h) Lost
Certificates.
If any Certificate
shall have been lost, stolen or destroyed, upon the making of an affidavit
of
that fact by the Person claiming such Certificate to be lost, stolen or
destroyed, the Exchange Agent shall issue in exchange for such lost, stolen
or
destroyed Certificate the Merger Consideration deliverable in respect thereof
pursuant to this Agreement; provided,
however,
that Buyer may, in
its discretion and as a condition precedent to the issuance thereof, require
the
owner of such lost, stolen or destroyed Certificates to deliver a bond in
such
sum as it may reasonably direct as indemnity against any claim that may be
made
against Buyer, the Surviving Corporation, the Company or the Exchange Agent
with
respect to the Certificates alleged to have been lost, stolen or destroyed.
7
2.3 Appraisal
Rights.
(a) Notwithstanding
anything to the contrary contained in this Agreement, shares of Company Common
Stock or Company Preferred Stock held by a holder who is entitled to demand
and
has made a demand for appraisal of such shares of Company Common Stock or
Company Preferred Stock, as the case may be, in accordance with Section 262
of
the DGCL and has not voted in favor of the approval of this Agreement (any
such
shares being referred to as “Dissenting
Shares”
until
such time as
such holder fails to perfect or otherwise loses such holder’s appraisal rights
under the DGCL with respect to such shares) shall not be converted into or
represent the right to receive Merger Consideration in accordance with Section
2.1, but shall be entitled only to such rights as are granted by the DGCL
to a
holder of Dissenting Shares.
(b) If
any Dissenting
Shares shall lose their status as such (through failure to perfect or
otherwise), then, as of the later of the Effective Time or the date of loss
of
such status, such shares shall automatically be converted into and shall
represent only the right to receive Merger Consideration in accordance with
Section 2.1, without interest thereon, upon surrender of the Certificates
representing such shares.
(c) The
Company shall
give Buyer (i) prompt notice of any written demand for appraisal received
by the
Company prior to the Effective Time pursuant to the DGCL, any withdrawal
of any
such demand and any other demand, notice or instrument delivered to the Company
prior to the Effective Time pursuant to the DGCL that relate to such demand;
and
(ii) the opportunity to participate in all negotiations and proceedings with
respect to any such demand, notice or instrument.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
The
Company represents and warrants to Buyer and Merger Sub, except as set forth
in
the disclosure schedule delivered by the Company to Buyer and Merger Sub
and
dated as of the date of this Agreement (the “Company
Disclosure Schedule”)
and which Company
Disclosure Schedule shall be arranged in sections and paragraphs corresponding
to the numbered and lettered sections and paragraphs set forth in this
Article III and disclosures set forth in one section of the Company
Disclosure Schedule shall be deemed to apply to any other section or subsection
thereof to the extent the applicability of the disclosure is reasonably apparent
on its face without reference to further documentation, as of the date of
this
Agreement and as of the Closing Date, as follows:
8
3.1 Organization;
Standing and Power; Charter Documents; Subsidiaries.
(a) Organization;
Standing and Power.
The Company and
each of its Subsidiaries (as defined below): (i) is a corporation or other
organization duly organized, validly existing and in good standing under
the
laws of the jurisdiction of its incorporation or organization (except, in
the
case of good standing, for entities organized under the laws of any jurisdiction
that does not recognize such concept), (ii) has all requisite corporate power
and authority to own, lease and operate its properties and assets and to
carry
on its business as now being conducted, and (iii) is duly qualified or licensed
to do business and, where applicable as a legal concept, in good standing
as a
foreign corporation in each jurisdiction in which the character of the
properties it owns, operates or leases or nature of its business makes such
qualification or licensing necessary, except in the case of clause (iii)
above
where any failure to be so qualified, licensed or in good standing, when
taken
together with all other such failures to be so qualified, licensed or in
good
standing, would not reasonably be expected to have a Company Material Adverse
Effect (as defined below). For purposes of this Agreement, “Subsidiary,”
when
used with
respect to any party, means any corporation or other organization, whether
incorporated or unincorporated, of which such party or any one or more of
its
Subsidiaries, or by such party and one or more of its Subsidiaries: (i) directly
or indirectly, owns or controls at least a majority of the securities or
other
interests which have by their terms voting power to elect a majority of the
board of directors or others performing similar functions with respect to
such
corporation or other organization or (ii) is entitled, by Contract or otherwise,
to elect, appoint or designate directors constituting a majority of the members
of the board of directors or other governing body of such corporation or
other
organization. For purposes of this Agreement, the term “Company
Material Adverse Effect”
means
any change,
event, circumstance or development that: (i) is or would reasonably be expected
to be materially adverse to the business, assets (including intangible assets),
condition (financial or otherwise) or results of operations of the Company
and
its Subsidiaries, taken as a whole other than any change, effect or circumstance
resulting primarily from one or more of any of the following: (A) changes
in
national or international economic or business conditions generally which
do not
disproportionately affect the Company and its Subsidiaries, taken as a whole,
as
compared with other participants in the industries in which the Company and
its
Subsidiaries operate; (B) the outbreak or escalation of hostilities, including
acts of war or terrorism, which do not disproportionately affect the Company
and
its Subsidiaries, taken as a whole; (C) changes generally affecting the
industries in which the Company and its Subsidiaries operate which do not
disproportionately affect the Company and its Subsidiaries, taken as a whole;
(D) changes in any law, rule or regulation or GAAP or the interpretation
thereof; (E) any action required to be taken by the Company or its Subsidiaries
pursuant to this Agreement or taken by the Company or any of its Subsidiaries
at
the request of Buyer or Merger Sub; (F) any failure by the Company to meet
securities’ analysts’ published estimates of revenues or earnings for any period
ending after the date of this Agreement and prior to the Closing Date, and
which
failure shall have occurred in the absence of any other change, event or
circumstance that would otherwise constitute a Company Material Adverse Effect;
(G) changes resulting from the public announcement of the execution of this
Agreement or the consummation of the Merger; or (H) disruptions in financial,
banking or securities markets generally which do not disproportionately affect
the Company and its Subsidiaries, taken as a whole, or the securities of
the
Company or (ii) would reasonably be expected to prevent or materially delay
the
consummation by the Company of the transactions contemplated by this
Agreement.
9
(b) Charter
Documents.
The Company has
delivered or made available to Buyer: (i) a true and correct copy of the
certificate of incorporation and bylaws of the Company, each as amended to
date
(collectively, the “Company
Charter Documents”)
and (ii) the
certificate of incorporation and bylaws, or like organizational documents
(collectively, “Subsidiary
Charter Documents”),
of each of its
Subsidiaries. Each such instrument is in full force and effect. The Company
is
not in violation of any of the provisions of the Company Charter Documents
and
no Subsidiary is in violation of any of the provisions of its respective
Subsidiary Charter Documents.
(c) Subsidiaries.
Section 3.1(c) of the Company Disclosure Schedule lists each Subsidiary of
the Company, the authorized and issued capital stock of each such Subsidiary
(and the holder thereof), the officers and directors of each such Subsidiary
and
the jurisdiction of organization of each such Subsidiary. All the outstanding
shares of capital stock of, or other equity or voting interests in, each
such
Subsidiary have been duly authorized and validly issued and are fully paid
and
nonassessable and are owned by the Company or by a direct or indirect wholly
owned Subsidiary of the Company, free and clear of all pledges, claims, liens,
charges, encumbrances and security interests of any kind or nature whatsoever,
other than liens for taxes not yet due and payable (collectively, “Liens”)
or restrictions
imposed by applicable securities laws. Other than the capital stock of the
Subsidiaries of the Company listed on Schedule 3.1(c) of the Company
Disclosure Schedule, neither the Company nor any of its Subsidiaries owns
any
capital stock of, or other equity or voting interests of any nature in, or
any
interest convertible into or exchangeable or exercisable for, capital stock
of,
or other equity or voting interests of any nature in, any other
entity.
3.2 Capital
Structure.
(a) The
authorized
capital stock of the Company consists of 250,000,000 shares of Company Common
Stock and 10,000,000 shares of preferred stock, par value $0.001 per share,
44,248 shares of which are designated as shares of Series A-1 Preferred Stock,
44,248 shares of which are designated as shares of Series A-2 Preferred Stock,
4,868 shares of which are designated as shares of Series B-1 Preferred Stock,
and 4,868 shares of which are designated as shares of Series B-2 Preferred
Stock. As of the close of business on December 8, 2006: 62,212,369 shares
of
Company Common Stock were issued and outstanding, 23,441 shares of Series
A-1
Preferred Stock were issued and outstanding, 44,242 shares of Series A-2
Preferred Stock were issued and outstanding, 4,835 shares of Series B-1
Preferred Stock were issued and outstanding, and 4,862 shares of Series B-2
Preferred Stock were issued and outstanding. There are no shares of Company
capital stock were held by the Company in its treasury and no shares of Company
capital stock are owned or held by any Subsidiary of the Company. All of
the
outstanding shares of capital stock of the Company are duly authorized and
validly issued, fully paid and nonassessable and not subject to any preemptive
rights.
10
(b) Section
3.2(b) of
the Company Disclosure Schedule sets forth a complete and accurate list,
as of
the close of business on December 8, 2006 of: (i) the number of shares of
Company Common Stock subject to outstanding options under each Company Stock
Plan and the number of shares of Company Common Stock available for grant
under
each Company Stock Plan; and (ii) all outstanding options to acquire shares
of
Company Common Stock (“Company
Stock Options”),
indicating with
respect to each such Company Stock Option the name of the holder thereof
and
whether such holder is an employee of the Company or any of its Subsidiaries,
the Company Stock Plan under which it was granted and whether such Company
Stock
Option is an “incentive stock option” (as defined in Section 422 of the Code) or
a non-qualified stock option, the number of shares of Company Common Stock
subject to such Company Stock Option, the exercise price and the date of
grant
thereof, the applicable vesting schedule of such Company Stock Option and
the
extent to which such Company Stock Option was vested and exercisable as of
December 8, 2006, whether such Company Stock Option was granted with a per
share
exercise price lower than the fair market value of one share of Company Common
Stock on the date of grant as determined in good faith by the Administrator
of
the Company Stock Plan (as defined in each such plan), and the expiration
date
of such Company Stock Option. As of the close of business on December 8,
2006, approximately 63,000 shares of Company Common Stock were issuable pursuant
to the Company’s 2000 Employee Stock Purchase Plan (the “Employee
Stock Purchase Plan”).
For purposes of
this Agreement, “Company
Stock Plans”
means
the
Company’s 1996 Stock Option Plan, the Company’s 2000 Stock Option Plan, the
Company’s 2005 Stock Option Plan and the Company’s 2000 Directors’ Stock Option
Plan, and all sub-plans relating thereto, taken together.
(c) No
bonds,
debentures, notes or other indebtedness of the Company or any of its
Subsidiaries (i) has the right to vote on any matters on which stockholders
may
vote (or which is convertible into, or exchangeable for, securities having
such
right) or (ii) the value of which is any way based upon or derived from capital
or voting stock of the Company, are issued or outstanding (collectively,
“Voting
Debt”).
(d) Except
as set forth
in Sections 3.2(a) or Section 3.2(b) above, as of the close of business on
December 8, 2006, (i) there were no shares of capital stock of the Company
authorized, issued or outstanding; (ii) there were no options, warrants,
calls,
preemptive rights, subscription or other rights, agreements, arrangements
or
commitments of any character, relating to the issued or unissued capital
stock
of the
11
(e) Since
the close of
business on December 8, 2006, other than (i) the issuance of Company Common
Stock pursuant to the exercise of Company Stock Options outstanding as of
the
close of business on December 8, 2006 as disclosed in Section 3.2(b) of the
Company Disclosure Schedule in accordance with their terms as in effect on
the
date hereof, (ii) the issuance of Company Common Stock pursuant to the terms
of
the Employee Stock Purchase Plan as in effect on the date hereof, (iii) the
redemption of Company Preferred Stock in accordance with the provisions of
the
Company Charter Documents as in effect on the date hereof, (iv) the vesting,
expiration or termination of Company Stock Options outstanding as of the
close
of business on December 8, 2006 as disclosed in Section 3.2(b) of the Company
Disclosure Schedule in accordance with the terms of the Company Stock Plans
as
in effect on the date hereof, (v) the issuance of those Company Stock Options
identified in Section 3.2(e) of the Company Disclosure Schedule that have
been
approved but not granted as of the close of business on December 8, 2006,
and
(vi) the issuance of no more than 150,000 Company Stock Options to new hires
and
to non-officer employees of the Company since the close of business on December
8, 2006, in each case in the ordinary course of business consistent with
past
practice and within the guidelines set forth in Section 5.2(h) of the
Company Disclosure Schedule and with a per share exercise price no lower
than
the fair market value of one share of Company Common Stock on the date of
grant,
there has been no change in (A) the outstanding capital stock of the Company,
(B) the number of Company Stock Options outstanding, or (C) the other options,
warrants or other rights, commitments, agreements or arrangements relating
to
capital stock of the Company or any of its Subsidiaries.
12
3.3 Authority;
No
Conflict; Required Filings and Consents.
(a) The
Company has all
requisite corporate power and authority to enter into this Agreement and,
subject to the adoption of this Agreement (the “Company
Voting Proposal”)
by the Required
Company Stockholder Vote (as defined below), to perform its obligations
hereunder and consummate the transactions contemplated by this Agreement.
Without limiting the generality of the foregoing, the Company Board, at a
meeting duly called and held, with all directors present and voting in favor,
(i) determined that the Merger is fair and in the best interests of the
Company and its stockholders, (ii) approved the Merger in accordance with
the
provisions of the DGCL, and (iii) directed that this Agreement be submitted
to
the stockholders of the Company for their approval and resolved to recommend,
subject to the provisions of Section 6.1 of this Agreement, that the
stockholders of the Company vote in favor of the approval of this Agreement.
The
execution, delivery and performance of this Agreement and the consummation
of
the transactions contemplated by this Agreement by the Company have been
duly
authorized by all necessary corporate action on the part of the Company,
subject
only to the receipt of the Required Company Stockholder Vote. This Agreement
has
been duly executed and delivered by the Company and constitutes the valid
and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating
to
or affecting creditors’ rights and to general equity principles.
(b) The
execution,
delivery and performance of this Agreement by the Company do not, and the
consummation by the Company of the transactions contemplated by this Agreement
will not, (i) conflict with, or result in any violation or breach of, any
provision of the Company Charter Documents or the Subsidiary Charter Documents,
(ii) conflict with, result in any violation or breach of, constitute (with
or
without notice or lapse of time, or both) a default (or give rise to a right
of
termination, cancellation, modification or acceleration of any obligation
or
loss of any material benefit) under, require a consent or waiver under, require
the payment of a penalty or increased fees under or result in the imposition
of
any Lien on the Company’s or any of its Subsidiaries’ assets pursuant to, any of
the terms, conditions or provisions of any lease, license, contract,
subcontract, indenture, note, option or other agreement, instrument or
obligation, written or oral, to which the Company or any of its Subsidiaries
is
a party or by which any of them or any of their properties or assets may
be
bound (each, a “Contract”),
or (iii) subject
to obtaining the Required Company Stockholder Vote and compliance with the
requirements specified in clauses (i) through (vi) of Section 3.3(c), conflict
with or violate any permit, concession, franchise, license, judgment,
injunction, order, writ, decree, statute, law, ordinance, rule or regulation
applicable to the Company or any of its Subsidiaries or any of its or their
respective properties or assets, except, in the case of clauses (ii) and
(iii)
of this Section 3.3(b), for any such conflicts, violations, breaches,
defaults, terminations, cancellations, modifications, accelerations, losses,
penalties, increased fees or Liens, and for any consents or waivers not
obtained, that, individually or in the aggregate, would not reasonably be
expected to have a Company Material Adverse Effect.
13
(c) No
consent,
approval, action, license, permit, order, certification, concession, franchise
or authorization of, or registration, declaration, notice or filing with,
any
federal, state, local or foreign court, arbitrational tribunal, administrative
agency or commission or other governmental or regulatory authority, agency
or
instrumentality (a “Governmental
Entity”)
or any other
Person is required to be obtained or made, as the case may be, by the Company
or
any of its Subsidiaries in connection with the execution, delivery and
performance of this Agreement by the Company or the consummation by the Company
of the transactions contemplated by this Agreement, except for (i) the
pre-merger notification requirements under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the “HSR
Act”)
and applicable
foreign Antitrust Laws (as defined in Section 6.5(b)), (ii) the filing of
the
certificate of merger with the Secretary of State of the State of Delaware,
(iii) the filing of the Proxy Statement (as defined in Section 3.4(b)) with
the
Securities and Exchange Commission (“SEC”)
under the
Securities Exchange Act of 1934, as amended (the “Exchange
Act”),
(iv) the filing
and effectiveness of the Registration Statement with the SEC in accordance
with
the requirements of the Securities Act of 1933, as amended (the “Securities
Act”),
(v) the filing
of such reports, schedules or materials under Section 13 of, or Rule 14a-12
under, the Exchange Act as may be required in connection with this Agreement
and
the transactions contemplated hereby, (vi) such consents, approvals, orders,
authorizations, registrations, declarations and filings as may be required
under
applicable state securities laws or the rules and regulations of Nasdaq,
and
(vii) such other consents, approvals, licenses, permits, orders, authorizations,
registrations, declarations, notices and filings which, if not obtained or
made,
would not, individually or in the aggregate, reasonably be expected to have
a
Company Material Adverse Effect.
(d) The
affirmative vote
for approval and adoption of the Company Voting Proposal by the holders of
a
majority in voting power of the outstanding shares of Company Common Stock
and
Company Preferred Stock on the record date for the meeting of the Company’s
stockholders to consider the Company Voting Proposal (the “Company
Stockholders Meeting”),
voting together
as a single class (the “Required
Company Stockholder Vote”)
is the only vote
of the holders of any class or series of the Company’s capital stock or other
securities necessary for the approval and adoption of this Agreement and
for the
consummation by the Company of the transactions contemplated by this Agreement.
14
3.4 SEC
Filings;
Financial Statements; Information Provided.
(a) The
Company has
filed or furnished all registration statements, reports, schedules and other
documents required to be filed or furnished by it or any of its Subsidiaries
with the SEC since December 31, 2003 (collectively, including any amendments
thereto, the “Company
SEC
Reports”).
As of their
respective filing dates (or, if amended, as of the date of such amendment),
the
Company SEC Reports were prepared in accordance with, and complied in all
material respects with, the requirements of the Exchange Act and the Securities
Act, as the case may be, and the rules and regulations of the SEC promulgated
thereunder, and none of the Company SEC Reports contained any untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading, except to the extent
corrected by a Company SEC Report filed subsequently (but prior to the date
hereof). The Company has made available to Buyer complete and correct copies
of
all amendments and modifications effected prior to the date of this Agreement
that have not yet been filed by the Company with the SEC but which are required
to be filed. The Company has made available to Buyer true, correct and complete
copies of all correspondence between the SEC, on the one hand, and the Company
and any of its Subsidiaries, on the other, since December 31, 2003, including
all SEC comment letters and responses to such comment letters by or on behalf
of
the Company. To the knowledge of the Company, as of the date hereof, none
of the
Company SEC Reports is the subject of ongoing SEC review or outstanding SEC
comment. Each of the financial statements (including the related notes and
schedules) of the Company included in, or incorporated by reference into,
the
Company SEC Reports (the “Company
Financials”)
complies in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, were prepared in
accordance with United States generally accepted accounting principles
(“GAAP”)
(except, in the
case of unaudited financial statements, as permitted by applicable rules
and
regulations of the SEC) applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and fairly present
in
all material respects the consolidated financial position of the Company
and its
consolidated Subsidiaries as of the dates thereof and their consolidated
results
of operations for the periods then ended (subject, in the case of unaudited
financial statements, to normal year-end audit adjustments and the absence
of
footnotes). The Company has no current intention to correct or restate, and
to
the knowledge of the Company, there is not any basis to correct or restate
any
of the Company Financials. The Company has not had any disagreement with
any of
its auditors regarding material accounting matters or policies during any
of its
past three full fiscal years or during the current fiscal
year-to-date.
(b) None
of the
information supplied or to be supplied by or on behalf of the Company for
inclusion or incorporation by reference in the registration statement on
Form
S-4 (or similar successor form) to be filed with the SEC by Buyer in connection
with the issuance of Buyer Common Stock in the Merger (including amendments
or
supplements thereto) (the “Registration
Statement”)
will, at the time
the Registration Statement
15
(c) The
Company
maintains disclosure controls and procedures as required by Rule 13a-15 or
15d-15 under the Exchange Act to ensure that all material information concerning
the Company and its Subsidiaries is made known on a timely basis to the
individuals responsible for the preparation of the Company’s filings with the
SEC and other public disclosure documents, and all such material information
that is required to be disclosed by the Company in the reports that it files
or
submits under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in the SEC’s rules and forms. The Company has
established and maintains a system of internal controls over financial reporting
required by Rules 13a-15(f) or 15d-15(f) of the Exchange Act sufficient to
provide reasonable assurances regarding the reliability of financial reporting
and the preparation of its consolidated financial statements in accordance
with
GAAP including policies and procedures that (i) require the maintenance of
records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the Company and its Subsidiaries,
(ii) provide reasonable assurance that material information relating to the
Company and its Subsidiaries is promptly made known to the officers responsible
for establishing and maintaining the system of internal controls, (iii) provide
assurance that transactions are recorded as necessary to permit preparation
of
financial statements in accordance with GAAP,
16
3.5 No
Undisclosed
Liabilities.
Except
as disclosed
in the Company SEC Reports filed prior to the date of this Agreement or in
the
consolidated unaudited balance sheet of the Company as of September 30,
2006 (the “Company
Balance Sheet”),
neither the
Company nor any of its Subsidiaries has any liabilities (whether accrued,
absolute, contingent or otherwise) that would be required by GAAP to be
reflected on a consolidated balance sheet of the Company and its Subsidiaries
(including the notes thereto), except for liabilities (i) incurred in
connection with the transactions contemplated hereby, (ii) incurred since
the date of the Company Balance Sheet in the ordinary course of business
consistent with past practice or (iii) that, individually or in the
aggregate, would not reasonably be expected to have a Company Material Adverse
Effect. Neither the Company nor any of its Subsidiaries is a party to, or
has
any commitment to become a party to, any “off-balance sheet arrangements” (as
defined in Item 303(a) of Regulation S-K of the SEC).
3.6 Absence
of
Certain Changes or Events.
Except
as disclosed
in the Company SEC Reports, since the date of the Company Balance Sheet:
(i) the
Company and its Subsidiaries have conducted their respective businesses in
the
ordinary course of business consistent with past practice and (ii) neither
the
Company nor any of its Subsidiaries has taken any action which, if taken
after
the date hereof, would require the consent of Buyer under Section 5.1 of
this
Agreement. Since the date of the Company Balance Sheet, there has not been
any
change, event, circumstance or development that, individually or in the
aggregate, has had a Company Material Adverse Effect.
17
3.7 Taxes.
(a) The
Company and each
of its Subsidiaries have timely filed all material Tax Returns (as defined
below) that they were required to file, and all such Tax Returns were correct
and complete in all material respects. The Company and each of its Subsidiaries
have paid on a timely basis all material Taxes due and payable (whether or
not
shown on any such Tax Returns), other than Taxes for which adequate reserves
exist on the Company Balance Sheet. The material unpaid Taxes of the Company
and
its Subsidiaries for Tax periods through the date of the Company Balance
Sheet
do not exceed the accruals and reserves for Taxes set forth on the Company
Balance Sheet exclusive of any accruals and reserves for “deferred taxes” or
similar items that reflect timing differences between Tax and financial
accounting principles. All liabilities for Taxes that arose since the date
of
the Company Balance Sheet arose in the ordinary course of business. All material
Taxes that the Company or any of its Subsidiaries is or was required by law
to
withhold or collect have been duly withheld or collected and, to the extent
required, have been paid to the proper Governmental Entity. There are no
liens
or encumbrances with respect to Taxes upon any of the assets or property
of the
Company or its Subsidiaries, other than liens for Taxes not yet due and payable.
For purposes of this Agreement, (i) “Taxes”
means
(A) all
taxes, charges, fees, levies or other similar assessments or liabilities,
including income, gross receipts, ad valorem, premium, value-added, excise,
real
property, personal property, sales, use, services, license alternative or
add-on
minimum, transfer, withholding, employment, payroll and franchise taxes imposed
by any federal, state, local or foreign government, or any agency thereof,
and
any interest, fines, penalties, assessments or additions to tax resulting
from,
attributable to or incurred in connection with any tax or any contest or
dispute
thereof, (B) any liability for the payment of any amounts of the type described
in clause (A) of this sentence as a result of being a member of an affiliated,
consolidated, combined, unitary or aggregate group for any taxable period,
and
(C) any liability for the payment of any amounts of the type described in
clauses (A) or (B) of this sentence as a result of being a transferee of
or
successor to any Person or entity or as a result of any express or implied
obligation to make a payment to any other Person or entity, and (ii)
“Tax
Returns”
means
all reports,
returns, declarations, statements or other information required to be supplied
to a taxing authority in connection with Taxes, including, without limitation,
any information return, claim for refund, amended return or declaration of
estimated Tax.
(b) There
are no
material deficiencies for any amount of Taxes claimed, proposed or assessed
by
any taxing or other Governmental Entity in writing that have not been fully
paid, settled or accrued for. The
18
(c) Neither
the Company
nor any of its Subsidiaries: (i) has made any payments, is obligated to make
any
payments, or is a party to any agreement that could obligate it to make any
payments that will be treated as an “excess parachute payment” under Section
280G of the Code or would give rise to an excise Tax pursuant to
Section 4999 of the Code; or (ii) has any actual or potential liability for
any Taxes of any Person or entity (other than the Company and its Subsidiaries)
under Treasury Regulation Section 1.1502-6 (or any similar provision of law
in
any jurisdiction), or as a transferee or successor, by contract or
otherwise.
(d) Neither
the Company
nor any of its Subsidiaries (i) is or has ever been a member of a group of
corporations with which it has filed (or been required to file) consolidated,
combined or unitary Tax Returns, other than a group of which only the Company
and its Subsidiaries are or were members or (ii) is a party to or bound by
any
Tax indemnity, Tax sharing, Tax allocation agreement or agreement where
liability is determined by reference to the Tax liability of a third
party.
(e) Neither
the Company
nor any of its Subsidiaries has been either a “distributing corporation” or a
“controlled corporation” in a distribution occurring during the last five years
in which the parties to such distribution treated the distribution as one
to
which Section 355 of the Code is applicable.
3.8 Owned
and Leased
Real Properties.
Neither
the Company
nor any of its Subsidiaries owns any real property. Section 3.8 of the Company
Disclosure Schedule sets forth a complete and accurate list of all real property
leased, subleased or licensed by the Company or any of its Subsidiaries (the
“Leased
Real
Property”).
The Company has
made available to Buyer true, correct and complete copies of all Contracts
under
which the Leased Real Property is currently leased, licensed
19
3.9 Tangible
Personal
Property.
The
Company and its
Subsidiaries have legal and valid title to, or, in the case of leased
properties, a valid and enforceable leasehold interest in, all of the tangible
personal properties and assets used or held for use by the Company and its
Subsidiaries in connection with the conduct of the business of the Company
and
its Subsidiaries, including all the tangible personal properties and assets
reflected in the latest Company Financials included in the Company SEC Reports,
except for such imperfections of title, if any, which do not materially impair
the continued use of the properties or assets subject thereto or affected
thereby, or otherwise materially impair business operations at such properties.
All such tangible personal properties and assets are free and clear of all
Liens, except for Permitted Liens or for such Liens, if any, which do not
materially impair the continued use of the properties or assets subject thereto
or affected thereby, or otherwise materially impair business operations at
such
properties. As used in this Agreement, “Permitted
Liens”
means:
(i)
statutory liens to secure obligations to landlords, lessors or renters under
leases or rental agreements; (ii) deposits or pledges made in connection
with,
or to secure payment of, workers’ compensation, unemployment insurance or
similar programs mandated by applicable law; (iii) statutory liens in favor
of
carriers, warehousemen, mechanics and materialmen, to secure claims for labor,
materials or supplies and other like liens; and (iv) statutory purchase money
liens.
3.10 Intellectual
Property.
(a) The
Company and its
Subsidiaries own, license, sublicense or otherwise possess (and immediately
following Closing will own, license, sublicense or otherwise possess) legally
enforceable rights to
20
(b) The
execution and
delivery of this Agreement by the Company and the consummation by the Company
of
the transactions contemplated by this Agreement will not result in the loss
or
impairment of or payment of any additional amounts with respect to, nor require
the consent of any other Person in respect of, the Company’s or any Subsidiary’s
right to own, use or hold for use any of the Intellectual Property as owned,
used or held for use in the conduct of the business of the Company and
Subsidiaries as currently conducted and will not result in the breach of;
or
create in any third party the right to terminate, suspend or modify; or result
in the payment of any additional fees or any obligation not to compete or
otherwise materially restrict business operations under, any Intellectual
Property Licenses (as defined below), nor will the consummation of such
transactions result in the Company or any of its Subsidiaries being required
to
procure or attempt to procure from Buyer or any of Buyer’s Subsidiaries a
license to or covenant not to assert Buyer’s Intellectual Property. Section
3.10(b)(i) of the Company Disclosure Schedule sets forth a complete and accurate
list of all registrations and applications for registration of Intellectual
Property owned by the Company or its Subsidiaries, and Section 3.10(b)(ii)
of
the Company Disclosure Schedule sets forth a complete and accurate list of
all
licenses, sublicenses and other agreements as to which the Company or any
of its
Subsidiaries is a party and pursuant to which the Company or any of its
Subsidiaries is authorized to use any third party Intellectual Property that
is
material to the business of the Company and its Subsidiaries, excluding
non-exclusive, generally commercially available, off-the-shelf software programs
(collectively, “Intellectual
Property Licenses”).
(c) All
patents and
registrations for trademarks, service marks and copyrights which are held
by the
Company or any of its Subsidiaries that are material to the business of the
Company and its Subsidiaries are subsisting and have not expired or been
cancelled or abandoned. To the knowledge of the Company, no third party is
infringing, violating or misappropriating Intellectual Property owned by
the
Company or any of its Subsidiaries and no such claim has been asserted or
threatened against any third party by the Company, any of its Subsidiaries
or
any other Person or entity, in the past three (3) years.
21
(d) To
the knowledge of
the Company, the conduct of the business of the Company and its Subsidiaries
as
currently conducted does not infringe, violate or constitute a misappropriation
of any Intellectual Property of any third party and, except as disclosed
in
Section 3.10(d) of the Company Disclosure Schedule, there has been no such
claim
asserted or threatened in the past three (3) years against the Company, its
Subsidiaries or any other Person or entity.
(e) The
Company has
taken commercially reasonable steps to protect and preserve its rights in
any
proprietary Intellectual Property (including executing confidentiality and
intellectual property assignment agreements with the current executive officers
and current employees and contractors that have or have had a material role
in
the development of the Company’s products and Intellectual
Property).
(f) No
source code for
any Company Intellectual Property owned by the Company or its Subsidiaries
has
been delivered, licensed, or is subject to any source code escrow obligation
by
the Company or its Subsidiaries to a third party. The execution and delivery
of
this Agreement and the consummation of the transactions contemplated by this
Agreement will not result in a release from escrow or other disclosure or
delivery to any third party of any source code that is part of the Company’s
products, services or technology. Neither the Company nor any of its
Subsidiaries has disclosed or delivered or is under any contractual obligation
to disclose or deliver to any third party any source code that is Company
Intellectual Property.
(g) The
Company and its
Subsidiaries have used commercially reasonable efforts to: (i) identify Open
Source Materials (as defined below); and (ii) to avoid the release of the
source
code of the Company Intellectual Property. There has been no material deviation
from such effort and procedures of the Company and its Subsidiaries with
respect
to Open Source Materials. Section 3.10(g) of the Company Disclosure Schedule
sets forth a list describing the material Open Source Materials and the parties
(as applicable) to all material license agreements for Open Source Materials
to
which the Company or any of its Subsidiaries is a party. Neither the Company
nor
its Subsidiaries is or will be required to disclose or distribute in source
code
form any of the software into which such Open Source Materials are incorporated.
“Open
Source
Materials”
means
all Software
or other material that is distributed as “open source software” or under a
similar open source licensing or distribution model, including, but not limited
to, the GNU General Public License (GPL), GNU Lesser General Public License
(LGPL) and Mozilla Public License (MPL).
(h) To
the knowledge of
the Company, all products of the Company and its Subsidiaries are free of:
(i)
any critical defects, including without limitation any critical error or
critical omission in the processing of any transactions; and (ii) any disabling
codes or instructions and any "back door," "time bomb," "Trojan horse," "worm,"
"drop dead device," "virus" or other software routines or hardware components
that permit unauthorized
22
3.11 Contracts.
(a) For
purposes of this
Agreement, “Company
Material Contract”
shall
mean:
(i) any
“material
contract” (within the meaning of Item 601(b)(10) of Regulation S-K under the
Securities Act and the Exchange Act) with respect to the Company;
(ii) any
employment,
consulting or other Contract with (A) any member of the Company Board or
a
member of the board of directors of any Subsidiary of the Company, (B) any
executive officer of the Company or any of its Subsidiaries or (C) any other
employee of the Company or any of its Subsidiaries earning an annual salary
equal to or in excess of $200,000, other than those Contracts terminable
by the
Company or any of its Subsidiaries on no more than thirty (30) days notice
without liability or financial obligation to the Company or any of its
Subsidiaries;
(iii) any
Contract
containing any covenant (A) limiting, in any material respect, the ability
of
the Company or any of its Subsidiaries to engage in any line of business
or
compete with any Person or (B) granting any exclusive rights to make, sell
or
distribute the Company’s products or the products of any of its
Subsidiaries;
(iv) any
Contract
containing “most favored nations” pricing or commercial terms or other similar
terms in favor of a third party;
(v) any
Contract (A)
relating to the disposition or acquisition by the Company or any of its
Subsidiaries, with obligations remaining to be performed or liabilities
continuing after the date of this Agreement, of assets for consideration
in
excess of $500,000, other than in the ordinary course of business, other
than
inventory purchase commitments entered into in the ordinary course of business
consistent with past practice, or (B) relating to any interest in any other
Person or other business enterprise other than its Subsidiaries;
23
(vi) any
Contract to
provide source code into any escrow or to any third party (under any
circumstances) for any product or technology that is material to the business
of
the Company and its Subsidiaries, taken as a whole;
(vii) any
Contract to
license to any third party the right to reproduce any of the Company’s
Intellectual Property, products, services or technology or any Contract to
sell
or distribute any of the Company’s Intellectual Property, products, services or
technology, except (A) agreements with sales representatives or other resellers
in the ordinary course of business, or (B) agreements allowing internal backup
copies made or to be made by end-user customers in the ordinary course of
business;
(viii) any
mortgages,
indentures, guarantees, loans or credit agreements, security agreements,
promissory notes or other Contracts relating to the borrowing of money,
extension of credit or other indebtedness, other than accounts receivable
and
accounts payable in the ordinary course of business;
(ix) any
settlement
agreement entered into within the three (3) years prior to the date of this
Agreement or which is otherwise still executory, other than (A) releases
immaterial in nature or amount entered into with former employees or independent
contractors of the Company in the ordinary course of business in connection
with
the cessation of such employee’s or independent contractor’s employment or
association with the Company, (B) settlement agreements for cash only (which
has
been paid) in an amount not exceeding $200,000 or (C) settlements pursuant
to
which neither the Company nor any of its Subsidiaries has any material
continuing obligation or liability;
(x) any
Contract under
which the Company or any of its Subsidiaries has received or granted a license
relating to any Intellectual Property that is material to the business of
the
Company and its Subsidiaries, taken as a whole, other than non-exclusive
licenses extended to customers, clients, distributors or other resellers
in the
ordinary course of business and other than non-exclusive licenses for generally
commercially available, off-the-shelf software programs;
(xi) any
partnership or
joint venture agreement to which the Company or any of its Subsidiaries is
a
party;
(xii) any
Contract with a
customer that accounted for net recognized revenues in 2005 or 2006 of more
than
$1,000,000 in the aggregate; and
(xiii) any
Contract (other
than Leases) with a vendor pursuant to which the Company incurred payables
in
2005 or 2006 of more than $1,000,000 in the aggregate.
24
(b) Section
3.11(b) of
the Company Disclosure Schedule sets forth a list (organized in subsections
corresponding to the subsections of Section 3.11(a) of this Agreement) of
all
Company Material Contracts as of the date hereof.
(c) Each
Company
Material Contract is valid and binding, in full force and effect and is
enforceable by the Company or its Subsidiaries in accordance with its respective
terms (subject to the bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating
to
or affecting creditors’ rights and to general equity principles), except to the
extent it has previously expired in accordance with its terms and except
for
such failures to be valid and binding or in full force and effect that,
individually or in the aggregate, would not reasonably be expected to have
a
Company Material Adverse Effect. The Company and its Subsidiaries have performed
in all material respects all respective obligations required to be performed
by
them under the Company Material Contracts and are not, and, as of the date
hereof, are not alleged in writing to be (with or without notice, the lapse
of
time or both) in breach thereof or default thereunder, and, neither the Company
nor any of its Subsidiaries has violated any provision of, or committed or
failed to perform any act which, with or without notice, lapse of time or
both,
would constitute a default under the provisions of any Company Material
Contract, except in each case, for those failures to perform, breaches,
violations and defaults that, individually or in the aggregate, would not
reasonably be expected to have a Company Material Adverse Effect.
3.12 Litigation.
Except
as disclosed
in Section 3.12 of the Company Disclosure Schedule, there
is no action,
suit, proceeding, claim, arbitration or investigation pending or, to the
knowledge of the Company, threatened against the Company, any of its
Subsidiaries, or any of their assets, properties or rights. There are no
judgments, orders, settlements or decrees outstanding against the Company
or any
of its Subsidiaries that have or would reasonably be expected to have the
effect
of prohibiting or impairing any business practice or prohibited the transfer
of
Intellectual Property of the Company or any of its Subsidiaries in such a
way
as, individually or in the aggregate, would reasonably be expected to have
a
Company Material Adverse Effect. As of the date of this Agreement, no officer
or
director of the Company or any of its Subsidiaries is a defendant in any
action
or, to the knowledge of the Company, the subject of any investigation commenced
by any Governmental Entity with respect to the performance of his or her
duties
as an officer and/or director of the Company. There are not currently, nor,
to
the knowledge of the Company, have there been since January 1, 2003, any
internal investigations or inquiries being conducted by the Company, the
Company
Board (or any committee thereof) or any third party at the request of any
of the
foregoing concerning any financial, accounting, tax, conflict of interest,
illegal activity, fraudulent or deceptive conduct or other misfeasance or
malfeasance issues.
25
3.13 Environmental
Matters
(a) Except
as would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect:
(i) neither
the Company
nor its Subsidiaries has received (A) any written notice alleging that any
of
them has not complied with applicable Environmental Laws or (B) any written
notice, demand, claim or request for information alleging that the Company
or
any of its Subsidiaries may be in violation of or subject to liability under
any
Environmental Law;
(ii) neither
the Company
nor any of its Subsidiaries has received a written notice alleging that any
of
them may be subject to liability for any Hazardous Substance disposal, release
or contamination;
(iii) neither
the Company
nor any of its Subsidiaries is subject to any investigations, proceedings,
orders, decrees or injunctions by or issued by any Governmental Entity or
is
subject to any indemnity agreement with any third party relating to liability
under any Environmental Law;
(iv) the
Company and its
Subsidiaries are, and at all prior times have been, in compliance with all
applicable Environmental Laws, including possession and compliance with the
terms of all Company Permits required by Environmental Laws; and
(v) Hazardous
Substances
have not been generated, transported, treated, stored, disposed of, arranged
to
be disposed of or released by the Company or any of its Subsidiaries or,
to the
knowledge of the Company, otherwise at, on, from or under any of the properties
or facilities currently or formerly owned, leased or otherwise used by any
of
the Company or its Subsidiaries, in a manner or to a location that would
give
rise to liability to the Company or any of its Subsidiaries, or require any
remediation or reporting by the Company or any of its Subsidiaries, under
or
relating to, any Environmental Laws.
(b) For
purposes of this
Agreement, the term “Environmental
Law”
means
any law,
statute, regulation, rule, judgment, order, decree or permit requirement
of, or
issued by, any Governmental Entity relating to: (i) pollution or the protection,
investigation or restoration of the environment, human health and safety,
or
natural resources, (ii) the manufacture, processing, distribution, handling,
use, storage, treatment, transport, disposal, release or threatened release
of
any Hazardous Substance or (iii) noise, odor or wetlands
protection.
(c) For
purposes of this
Agreement, the term “Hazardous
Substance”
means:
(i) any
substance that is regulated or which falls within the definition of a “hazardous
substance,” “hazardous waste,” “hazardous material,” “solid waste,” “pollutant,”
“contaminant,” “toxic waste” or any other term of similar import under any
Environmental Law; or (ii) any petroleum product or by-product, chemical,
asbestos-containing material, polychlorinated biphenyls, radioactive materials,
lead or lead-based paints or materials, toxic fungus or mold, mycotoxins
or
radon.
26
3.14 Employee
Benefit
Plans.
(a) Section
3.14(a) of
the Company Disclosure Schedule sets forth a complete and accurate list as
of
the date of this Agreement of all material Employee Benefit Plans to which
the
Company, any of the Company’s Subsidiaries or any of their ERISA Affiliates
contribute, sponsor or have any liability (together, the “Company
Employee Plans”).
For purposes of
this Agreement, the following terms shall have the following meanings: (i)
“Employee
Benefit Plan”
means
any
“employee pension benefit plan” (as defined in Section 3(2) of ERISA), any
“employee welfare benefit plan” (as defined in Section 3(1) of ERISA), including
the Company Stock Plans and, without limitation, all severance, employment,
change-in-control, material fringe benefit, bonus, incentive, deferred
compensation and employee loan arrangements, whether or not subject to ERISA
(including any funding mechanism therefore now in effect or required in the
future as a result of the transaction contemplated by this Agreement or
otherwise), whether formal or informal, oral or written under which (A) any
current or former employee, director or consultant of the Company or its
Subsidiaries (the “Company
Employees”)
has any present
or future right to benefits and which are contributed to, sponsored by or
maintained by the Company or any of its Subsidiaries or (B) the Company or
any
of its Subsidiaries has any present or future liability, for the benefit
of, or
relating to, any current or former employee of the Company or any of its
Subsidiaries or an ERISA Affiliate; (ii) “ERISA”
means the Employee
Retirement Income Security Act of 1974, as amended; and (iii) “ERISA
Affiliate”
means any entity
which is a member of (A) a controlled group of corporations (as defined in
Section 414(b) of the Code), (B) a group of trades or businesses under
common control (as defined in Section 414(c) of the Code), or (C) an affiliated
service group (as defined under Section 414(m) of the Code or the
regulations under Section 414(o) of the Code), any of which includes or
included the Company or a Subsidiary of the Company.
(b) With
respect to each
Company Employee Plan, the Company has made available to Buyer a complete
and
accurate copy of each Company Employee Plan and, to the extent applicable
or in
existence: (i) the most recent IRS determination letter; (ii) any summary
plan
description; (iii) a summary of any proposed amendments or changes anticipated
to be made to the Company Employee Plans at any time within the twelve months
immediately following the date hereof and which have been communicated to
employees; (iv) the most recent annual report (Form 5500) filed with the
IRS;
and (v) each trust agreement, group annuity contract or other funding
instrument, if any, relating to such Company Employee Plan.
27
(c) Each
Company
Employee Plan that is not a Foreign Benefit Plan (as defined in Section 3.14(i))
has been administered in all material respects in accordance with ERISA,
the
Code and all other applicable laws and the regulations thereunder and in
accordance with its terms; (ii) no event has occurred and, to the knowledge
of
the Company, no condition exists that would subject the Company or its
Subsidiaries, either directly or by reason of their affiliation with any
ERISA
Affiliate, to any tax, fine, lien, penalty or other liability imposed by
ERISA,
the Code or other applicable laws, rules and regulations that would,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect; (iii) no Company Employee Plan is a split-dollar
life
insurance program or otherwise provides for loans (except for routine advances
for business expenses in the ordinary course and similar items) to executive
officers (within the meaning of the Xxxxxxxx-Xxxxx Act); and (iv) neither
the
Company nor any of its Subsidiaries has incurred any current or projected
liability in respect of post-employment or post-retirement health, medical
or
life insurance benefits for current, former or retired employees of Company
or
any of its Subsidiaries in the United States, except as required to avoid
an
excise tax under Section 4980B of the Code or otherwise except as may be
required pursuant to any other applicable law.
(d) With
respect to the
Company Employee Plans that are not Foreign Benefit Plans, there are no material
benefit obligations for which contributions have not been made if due or
properly accrued in the Company’s financial books and records to the extent
required by GAAP. The assets of each Company Employee Plan which is funded
are
reported at their fair market value on the financial books and records of
such
Employee Benefit Plan.
(e) All
the Company
Employee Plans that are intended to be qualified under Section 401(a) of
the
Code are so qualified and have received determination letters from the IRS
to
the effect that such Company Employee Plans are qualified and the plans and
trusts related thereto are exempt from federal income taxes under Sections
401(a) and 501(a), respectively, of the Code, or the period for obtaining
such a
determination letter has not yet closed.
(f) Neither
the Company,
any of its Subsidiaries nor any of their ERISA Affiliates has ever (i)
contributed to a Company Employee Plan or any other employee benefit plan
which
was ever subject to Section 412 of the Code or Title IV of ERISA or (ii)
been
obligated to contribute to a “multiemployer plan” (as defined in
Section 4001(a)(3) of ERISA).
(g) Neither
the Company
nor any of its Subsidiaries is a party to any oral or written (i) agreement
with
any stockholders, or any present or former director, executive officer or
other
key employee of the Company or any of its Subsidiaries (A) the benefits of
which are contingent, or the terms of which are materially altered, upon
the
occurrence of a transaction involving the Company or any of its Subsidiaries
of
the nature of any of
28
(h) With
respect to any
Company Employee Plan, no administrative investigation, audit or other
administrative proceeding by the Department of Labor, the IRS or other United
States governmental agencies is in progress or, to the knowledge of the Company,
pending or threatened.
(i) Section
3.14(i) of
the Company Disclosure Schedule sets forth a list of all Company Employee
Plans
that are maintained outside the jurisdiction of the United States, or that
cover
any employee residing or working outside the United States (except for those
Company Employee Plans set forth as such in Section 3.14(b) of the Company
Disclosure Schedule, each a “Foreign
Benefit Plan”).
With respect to
any Foreign Benefit Plans, (i) all Foreign Benefit Plans have been established,
maintained and administered in material compliance with their terms and all
applicable statutes, laws, ordinances, rules, orders, decrees, judgments,
writs,
and regulations of any controlling governmental authority or instrumentality;
(ii) all Foreign Benefit Plans that are required to be funded are fully funded,
and with respect to all other Foreign Benefit Plans, adequate reserves therefor
have been established on the accounting statements of the applicable Company
or
Subsidiary entity, and (iii) no liability or obligation of the Company or
its
Subsidiaries exists with respect to such Foreign Benefit Plans that would,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.
(j) Any
Company Employee
Plan that is a nonqualified deferred compensation plan within the meaning
of
Section 409A(d)(1) of the Code has been operated since January 1, 2005
in good faith compliance with Section 409A of the Code, IRS Notice 2005-1
and all other guidance issued thereunder.
3.15 Compliance
With
Laws.
The Company and
each of its Subsidiaries is in compliance in all material respects with all
applicable statutes, laws, rules, orders and regulations material to the
operation of the business of the Company and each of its Subsidiaries. No
notice
has been received by the Company or any of its Subsidiaries from any
Governmental Entity alleging any violation of any applicable statutes, laws,
rules, orders or regulations, except for violations that, individually or
in the
aggregate, would not reasonably be expected to be material to the Company
and
its Subsidiaries.
29
3.16 Permits.
The
Company and each
of its Subsidiaries have all permits, licenses, franchises, certificates
and
authorizations (the “Company
Permits”)
from Governmental
Entities required to conduct their businesses as now being conducted, except
for
such permits, licenses, franchises, certificates and authorizations, the
absence
of which, individually or in the aggregate, would not reasonably be expected
to
have a Company Material Adverse Effect. The Company and each of its Subsidiaries
are in compliance in all material respects with the terms of the Company
Permits.
3.17 Labor
Matters.
The
Company and each
of its Subsidiaries are in compliance in all material respects with all
applicable statutes, laws, rules, orders and regulations respecting employment,
employment practices, terms, conditions and classifications of employment,
employee safety and health, immigration status and wages and hours, and in
each
case, with respect to employees/independent contractors (i) are not liable
for
any arrears of wages, severance pay or any Taxes or any penalty for failure
to
comply with any of the foregoing and (ii) are not liable for any payment
to any
trust or other fund governed by or maintained by or on behalf of any
Governmental Entity, with respect to unemployment compensation benefits,
social
security or other benefits or obligations for employees/independent contractors
(other than routine payments to be made in the normal course of business
and
consistent with past practice), except, in each case, individually or in
the
aggregate, as would not reasonably be expected to have a Company Material
Adverse Effect. There are no actions, grievances, investigations, suits,
claims,
charges or administrative matters pending, or, to the knowledge of the Company,
threatened or reasonably anticipated against the Company or any of its
Subsidiaries relating to any employees/independent contractors which,
individually or in the aggregate, would reasonably be expected to have a
Company
Material Adverse Effect. There are no pending or, to the knowledge of the
Company, threatened or reasonably anticipated claims or actions against the
Company, any of its Subsidiaries, any Company trustee or any trustee of any
Subsidiary under any workers’ compensation policy or long term disability policy
except as would not, individually or in the aggregate, reasonably be expected
to
have a Company Material Adverse Effect. Except as would not reasonably be
expected to have a Company Material Adverse Effect, there are no actions,
suits,
claims, labor disputes or grievances pending or, to the knowledge of the
Company, threatened by or on behalf of any employee/independent contractor
against the Company or its Subsidiaries, including charges of unfair labor
practices. No work stoppage, slowdown, lockout or labor strike against the
Company or any of its Subsidiaries is pending as of the date of this Agreement,
or to the knowledge of the Company threatened nor has there been any such
occurrence for the past three years. Neither the Company nor any of its
Subsidiaries is party to any collective bargaining agreement or other labor
union contract applicable to persons employed by the Company or any Subsidiary,
nor, to the knowledge of the Company, are there any activities by any labor
unions to organize such employees. Within the past year, neither the Company
nor
any of its Subsidiaries has incurred any liability or obligation under WARN
or
any similar state or local law that remains unsatisfied, and no terminations
prior to the Closing Date shall result in unsatisfied liability or obligation
under WARN or any similar state or local law. No employee/independent contractor
of the Company or any of its Subsidiaries has experienced an employment loss,
as
defined by the WARN Act or any similar applicable state or local law requiring
notice to employees in the event of a closing or layoff, within ninety days
prior to the date of this Agreement.
30
3.18 Insurance.
Schedule
3.18 of the
Company Disclosure Schedule lists all policies of liability, fire, casualty,
business interruption, worker’s compensation and other forms of insurance
insuring the Company and its Subsidiaries and their respective assets,
properties and operations. All such policies are in full force and effect.
All
premiums due and payable under all such policies have been paid and neither
the
Company nor any Subsidiary is otherwise in material breach or default (including
any such breach or default with respect to the giving of notice), and, to
the
knowledge of the Company, no event has occurred which, with notice or the
lapse
of time, would constitute such a material breach or default of the Company
or
any Subsidiary, or permit termination or modification by the insurance carrier,
under any policy. There is no material claim pending under any of such policies
or bonds as to which coverage has been denied or disputed by the underwriters
of
such policies or bonds. To the knowledge of the Company, there has been no
threatened termination of, or material premium increase with respect to,
any of
such policies.
3.19 Transactions
with
Affiliates.
Except
as disclosed
in the Company SEC Reports, there are no Contracts or transactions between
the
Company or any of its Subsidiaries, on the one hand, and any (i) officer
or
director of the Company or any of its Subsidiaries, (ii) record or beneficial
owner of five percent or more of any class of the voting securities of the
Company or (iii) Affiliate or family member of any such officer, director
or
record or beneficial owner, in each case of a type that would be required
to be
disclosed under Item 404 of Regulation S-K under the Securities Act and the
Exchange Act.
3.20 State
Takeover
Statutes.
Except
for Section
203 of the DGCL, no “fair price,” “moratorium,” “control share acquisition,”
“business combination” or other similar anti-takeover statute or regulation
enacted under state or federal laws in the United States applicable to the
Company is applicable to the Merger or the other transactions contemplated
by
this Agreement. The Company Board has taken all actions so that the restrictions
contained in Section 203 of Delaware Law applicable to a “business combination”
(as defined in such Section 203) will not apply to Buyer, including the
execution, delivery or performance of this Agreement and the consummation
of the
Merger and the other transactions contemplated hereby.
3.21 Opinion
of
Financial Advisor.
The
financial
advisor of the Company, X.X. Xxxxxx Securities Inc. (“X.X.
Xxxxxx”),
has delivered to
the Company an opinion dated the date of this Agreement to the effect that,
as
of such date, that the Company Common Consideration is fair to the holders
of
Company Common Stock from a financial point of view. An executed copy of
this
opinion will be delivered to Buyer promptly after it becomes
available.
31
3.22 Brokers;
Fees.
Except
for the fees
payable to X.X. Xxxxxx pursuant to an engagement letter dated August 7, 2006,
no
agent, broker, investment banker, financial advisor or other firm or Person
is
or shall be entitled, as a result of any action, agreement or commitment
of the
Company, or any of its Subsidiaries or their respective officers, directors
or
employees, to any broker’s, finder’s, financial advisor’s or other similar fee
or commission in connection with any of the transactions contemplated by
this
Agreement, nor has the Company or any of its Subsidiaries entered into any
indemnification agreement or other arrangement with any Person specifically
in
connection with this Agreement and the transactions contemplated
hereby.
3.23 No
Other
Representations and Warranties.
Except
as set forth
in this Agreement or any exhibit or schedule to, or certificate delivered
by the
Company in connection with, this Agreement, the Company makes no other
representation or warranty, express or implied, at law, or in equity, in
respect
of the Company, any of its Subsidiaries or any of their respective assets,
liabilities or operations in connection with the transactions contemplated
by
this Agreement, and any such other representations or warranties are hereby
expressly disclaimed. Without limiting the foregoing, the Company has not
made,
and shall not be deemed to have made, any representations or warranties in
the
materials relating to the Company or any of its Subsidiaries made available
to
Buyer or its representatives, including due diligence materials, in connection
with the transactions contemplated by this Agreement (except, for the avoidance
of doubt, as set forth in this Agreement and the exhibits and schedules to,
or
certificate delivered by the Company in connection with, this
Agreement).
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF
BUYER
AND
MERGER SUB
Buyer
and Merger Sub
each represent and warrant to the Company as of the date of this Agreement
and
as of the Closing Date, as follows:
4.1 Organization,
Standing and Power.
Each
of Buyer and
Merger Sub (i) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, (ii) has
all requisite corporate power and authority to own, lease and operate its
properties and assets and to carry on its business as now being conducted,
and
(iii) is duly qualified or licensed to do business and, where applicable
as a
legal concept, is in good standing as a foreign corporation in each jurisdiction
in which the character of the properties it owns, operates or leases or the
nature of its business makes such qualification or licensing necessary, except
in the case of clause (iii) above) where any failure to be so qualified,
licensed or in good standing, when taken together with all other such failures
to be so qualified, licensed or in good standing, would not be reasonably
be
32
4.2 Authority;
No
Conflict; Required Filings and Consents.
(a) Each
of Buyer and
Merger Sub has all requisite corporate power and authority to enter into
this
Agreement and to perform its obligations hereunder and to consummate the
transactions contemplated by this Agreement. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated by this Agreement by Buyer and Merger Sub have been duly authorized
by all necessary corporate action on the part of each of Buyer and Merger
Sub.
This Agreement has been duly executed and delivered by each of Buyer and
Merger
Sub and constitutes the valid and binding obligation of each of Buyer and
Merger
Sub, enforceable against each of them in accordance with its terms, subject
to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors’ rights
and to general equity principles.
33
(b) The
execution,
delivery and performance of this Agreement by each of Buyer and Merger Sub
do
not, and the consummation by Buyer and Merger Sub of the transactions
contemplated by this Agreement will not, (i) conflict with, or result in
any
violation or breach of, any provision of the certificate of incorporation
or
bylaws of Buyer or Merger Sub, (ii) conflict with, result in any violation
or
breach of, constitute (with or without notice or lapse of time, or both)
a
default (or give rise to a right of termination, cancellation, modification
or
acceleration of any obligation or loss of any material benefit) under, require
a
consent or waiver under, require the payment of a penalty or increased fees
under or result in the imposition of any Lien on Buyer’s or Merger Sub’s assets
pursuant to, any of the terms, conditions or provisions of any lease, license,
contract, subcontract, indenture, note, option or other agreement, instrument
or
obligation, written or oral, to which Buyer or Merger Sub is a party or by
which
any of them or any of their properties or assets may be bound, or (iii) subject
to compliance with the requirements specified in clauses (i) through (iii)
of
Section 4.2(c), conflict with or violate any permit, concession, franchise,
license, judgment, injunction, order, writ, decree, statute, law, ordinance,
rule or regulation applicable to Buyer or Merger Sub or any of their respective
properties or assets, except in the case of clauses (ii) and (iii) of this
Section 4.2(b) for any such conflicts, violations, breaches, defaults,
terminations, cancellations, modifications, accelerations, losses, penalties,
increased fees or Liens, and for any consents or waivers not obtained, that,
individually or in the aggregate, could not result in a Buyer Material Adverse
Effect.
(c) No
consent,
approval, action, license, permit, order, certification, concession, franchise
or authorization of, or registration, declaration, notice or filing with,
any
Governmental Entity is required to be obtained or made, as the case may be,
by
Buyer or Merger Sub in connection with the execution, delivery and performance
of this Agreement by Buyer or Merger Sub or the consummation by Buyer or
Merger
Sub of the transactions contemplated by this Agreement, except for (i) the
pre-merger notification requirements under the HSR Act and applicable foreign
Antitrust Laws, (ii) the filing of the certificate of merger with the Secretary
of State of the State of Delaware and, as applicable, appropriate corresponding
documents with the appropriate authorities of other states in which the Company
or Buyer are qualified as a foreign corporation to transact business (iii)
the
filing and effectiveness of the Registration Statement with the SEC in
accordance with the requirements of the Securities Act, (iv) such consents,
approvals, orders, authorizations, registrations, declarations, notices and
filings as may be required under applicable state securities laws and the
rules
and regulations of Nasdaq, and (v) such other consents, approvals, licenses,
permits, orders, authorizations, registrations, declarations, notices and
filings which, if not obtained or made, could not, individually or in the
aggregate, result in a Buyer Material Adverse Effect.
(d) No
vote of the
holders of any class or series of Buyer’s capital stock or other securities is
necessary for the approval and adoption of this Agreement and the consummation
by Buyer of the transactions contemplated by this Agreement.
34
4.3 Capitalization.
The
authorized
capital stock of Buyer consists of 90,000,000 shares of Buyer Common Stock.
As
of the close of business on December 7, 2006: (i) 55,665,581 shares of Buyer
Common Stock were issued and outstanding, (ii) no shares of Buyer capital
stock
were held by the Company in its treasury, (iii) no shares of Buyer capital
stock
are owned or held by any Subsidiary of Buyer, (iv) 5,682,733 shares of Buyer
Common Stock are subject to issuance pursuant to outstanding options to purchase
Buyer Common Stock and (v) approximately 720,137 shares of Buyer Common Stock
were issuable pursuant to Buyer’s employee stock purchase plan. All of the
outstanding shares of capital stock of Buyer are duly authorized and validly
issued, fully paid and nonassessable and not subject to any preemptive
rights.
4.4 SEC
Filings;
Financial Statements.
(a) Buyer
has filed or
furnished all registration statements, reports, schedules and other documents
required to be filed or furnished by it or any of its Subsidiaries with the
SEC
since December 31, 2003 (collectively, including any amendments thereto,
the
“Buyer
SEC
Reports”).
As of their
respective filing dates (or, if amended, as of the date of such amendment),
Buyer SEC Reports were prepared in accordance with, and complied in all material
respects with, the requirements of the Exchange Act and the Securities Act,
as
the case may be, and the rules and regulations of the SEC promulgated
thereunder, and none of Buyer SEC Reports contained any untrue statement
of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading, except to the extent corrected
by a
Buyer SEC Report filed subsequently (but prior to the date hereof). Buyer
has
made available to the Company complete and correct copies of all amendments
and
modifications effected prior to the date of this Agreement that have not
yet
been filed by Buyer with the SEC but which are required to be filed. Buyer
has
made available to the Company true, correct and complete copies of all
correspondence between the SEC, on the one hand, and Buyer and any of its
Subsidiaries, on the other, since December 31, 2003, including all SEC comment
letters and responses to such comment letters by or on behalf of Buyer. To
the
knowledge of Buyer, as of the date hereof, none of Buyer SEC Reports is the
subject of ongoing SEC review or outstanding SEC comment. Each of the financial
statements (including the related notes and schedules) of Buyer included
in, or
incorporated by reference into, Buyer SEC Reports (the “Buyer
Financials”)
complies in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, were prepared in
accordance with GAAP (except, in the case of unaudited financial statements,
as
permitted by applicable rules and regulations of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated
in the
notes thereto) and fairly present in all material respects the consolidated
financial position of Buyer and its consolidated Subsidiaries as of the dates
thereof and their consolidated results of operations for the periods then
ended
(subject, in the case of unaudited financial statements, to normal year-end
audit adjustments and the absence of footnotes). Buyer has no current intention
to correct or restate, and to the knowledge of Buyer, there is not any basis
to
correct or restate any of Buyer Financials. Buyer has not had any disagreements
with any of its auditors regarding material accounting matters or policies
during any of its past three full fiscal years or during the current fiscal
year-to-date.
35
(b) None
of the
information supplied or to be supplied by or on behalf of Buyer and Merger
Sub
for inclusion or incorporation by reference in the Registration Statement
will,
at the time the Registration Statement becomes effective under the Securities
Act, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the
statements therein, in the light of the circumstances under which they are
made,
not misleading. None of the information supplied or to be supplied by or
on
behalf of Buyer and Merger Sub for inclusion or incorporation by reference
in
the Prospectus/Proxy Statement, will, at the time the Prospectus/Proxy Statement
is first mailed to the stockholders of the Company or at the time of the
Company
Stockholders Meeting or as of the Effective Time, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in the light
of
the circumstances under which they are made, not misleading. If at any time
prior to the Company Stockholders Meeting any fact or event relating to Buyer
or
Merger Sub or any of their Affiliates which should be set forth in an amendment
or supplement to the Prospectus/Proxy Statement should be discovered by Buyer
or
should occur, Buyer shall, promptly after becoming aware thereof, inform
the
Company of such fact or event. Notwithstanding the foregoing, no representation
or warranty is made by Buyer or Merger Sub with respect to statements made
or
incorporated by reference therein about the Company and its Subsidiaries
and
Affiliates supplied by the Company for inclusion or incorporation by reference
in the Registration Statement or the Prospectus/Proxy Statement.
(c) Buyer
maintains
disclosure controls and procedures as required by Rule 13a-15 or 15d-15 under
the Exchange Act to ensure that all material information concerning Buyer
and
its Subsidiaries is made known on a timely basis to the individuals responsible
for the preparation of Buyer’s filings with the SEC and other public disclosure
documents, and all such material information that is required to be disclosed
by
Buyer in the reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified
in the SEC’s rules and forms. Buyer has established and maintains a system of
internal controls over financial reporting required by Rules 13a-15(f) or
15d-15(f) of the Exchange Act sufficient to provide reasonable assurances
regarding the reliability of financial reporting and the preparation of its
consolidated financial statements in accordance with GAAP including policies
and
procedures that (i) require the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions and dispositions of
the
assets of Buyer and its Subsidiaries, (ii) provide reasonable assurance that
material information relating to Buyer and its Subsidiaries is promptly made
known to the officers responsible for establishing and maintaining the system
of
36
4.5 Operations
of
Merger
Sub. Merger
Sub was
formed solely for the purpose of engaging in the transactions contemplated
by
this Agreement, has engaged in no other business activities and has conducted
its operations only as contemplated by this Agreement.
4.6 Litigation.
There
is no action,
suit, proceeding, claim, arbitration or investigation pending or, to the
knowledge of Buyer, threatened or contemplated against Buyer or Merger Sub
or
any of their assets, properties or rights that, individually or in the
aggregate, would be reasonably expected to result in a Buyer Material Adverse
Effect.
4.7 Financing.
Buyer
has or has
access to, and at the Effective Time will have or will have access to,
sufficient funds to consummate the transactions contemplated by this
Agreement.
37
4.8 Absence
of
Certain Changes or Events.
Since September
29, 2006, there has not been any change, event, circumstance or development
that, individually or in the aggregate, has had a Buyer Material Adverse
Effect.
4.9 No
Other
Representations and Warranties.
Except
as set forth
in this Agreement or any exhibit or schedule to, or certificate delivered
by
Buyer in connection with, this Agreement, neither Buyer nor Merger Sub makes
any
other representation or warranty, express or implied, at law, or in equity,
in
respect of Buyer, Merger Sub any of its other Subsidiaries or any of their
respective assets, liabilities or operations in connection with the transactions
contemplated by this Agreement, and any such other representations or warranties
are hereby expressly disclaimed. Without limiting the foregoing, neither
Buyer
nor Merger Sub has made, and shall not be deemed to have made, any
representations or warranties in the materials relating to Buyer, Merger
Sub or
any of its other Subsidiaries made available to the Company or its
representatives, including due diligence materials, in connection with the
transactions contemplated by this Agreement (except, for the avoidance of
doubt,
as set forth in this Agreement and the exhibits and schedules to, or certificate
delivered by Buyer in connection with, this Agreement).
ARTICLE
V
CONDUCT
OF
BUSINESS
5.1 Ordinary
Course.
Except
as expressly
provided herein or as consented to in writing by Buyer, which consent shall
not
be unreasonably withheld, delayed or conditioned, during the period commencing
on the date of this Agreement and ending at the Effective Time or such earlier
date as this Agreement may be terminated in accordance with its terms (the
“Pre-Closing
Period”),
the Company
shall, and shall cause each of its Subsidiaries to: (i) act and carry on
its
business in the ordinary course of business, in substantially the same manner
as
heretofore conducted and in compliance with all applicable laws and regulations,
(ii) pay their material debts when due, subject to good faith disputes over
such debts, and pay or perform other material obligations when due and
(iii) use commercially reasonable efforts consistent with past practice to
(x) preserve intact their present business organization and employee base
and (y) preserve their relationships with customers, suppliers, licensors,
licensees, and others with which they have business dealings. In addition,
the
Company shall promptly notify Buyer in writing of any occurrence of a Company
Material Adverse Effect.
38
5.2 Required
Consents.
Without
limiting the
generality of the foregoing, except as expressly provided herein or as set
forth
in Section 5.2 of the Company Disclosure Schedule, during the Pre-Closing
Period
the Company shall not, and shall not permit or cause any of its Subsidiaries
to,
directly or indirectly, do any of the following without the prior written
consent of Buyer, which consent shall not be unreasonably withheld, delayed
or
conditioned:
(a) (i)
declare, set
aside or pay any dividends on, or make any other distributions (whether in
cash,
securities or other property) in respect of, or convertible into or exchangeable
or exercisable for, any of its capital stock (other than dividends and
distributions by a direct or indirect wholly owned Subsidiary of the Company
to
its parent and other than dividends required to be accrued or accumulated
on
Company Preferred Stock); (ii) adjust, split, combine or reclassify any of
its
capital stock or issue or authorize the issuance of any other securities
in
respect of, in lieu of or in substitution for shares of its capital stock
or any
of its other securities; or (iii) purchase, redeem or otherwise acquire any
shares of its capital stock or any other of its securities or any rights,
warrants or options to acquire any such shares or other securities (other
than
redemptions of Company Preferred Stock at the option of the holders’ thereof in
accordance with the Company’s Charter Documents as in effect on the date
hereof);
(b) issue,
deliver,
sell, grant, pledge or otherwise dispose of or encumber any shares of its
capital stock, Voting Debt, any other voting securities or any securities
convertible into or exchangeable for, or any rights, warrants or options
to
acquire, any such shares, Voting Debt, voting securities or convertible or
exchangeable securities (other than (i) the issuance of Company Common
Stock pursuant to the exercise of Company Stock Options outstanding as of
December 8, 2006, (ii) the issuance of shares of Company Common Stock
pursuant to obligations existing under the Employee Stock Purchase Plan as
of
December 8, 2006 and (iii) the issuance of those Company Stock Options
identified in Section 3.2(e) of the Company Disclosure Schedule that have
been
approved but not granted as of the close of business on December 8, 2006,
and
(vi) the issuance of no more than 150,000 Company Stock Options to new hires
and
to non-officer employees of the Company since the close of business on December
8, 2006, in each case, in the ordinary course of business consistent with
past
practice and within the guidelines set forth in Schedule 5.2(h) of the Company
Disclosure Schedule and with a per share exercise price no less than the
fair
market value of one share of Company Common Stock on the date of
grant);
(c) amend
the Company
Charter Documents or the Subsidiary Charter Documents;
(d) acquire
(i) by
merger or consolidation or by any other means, any business, whether a
corporation, partnership, joint venture, limited liability company, association
or other business organization or division thereof or (ii) any assets outside
the ordinary course of business which have an aggregate value in excess of
$500,000;
39
(e) sell,
lease,
license, assign, pledge, subject to a Lien or otherwise dispose of or encumber
any properties or assets of the Company or of any of its Subsidiaries outside
the ordinary course of business which have an aggregate value in excess of
$500,000;
(f) (i)
incur or assume
any indebtedness for borrowed money or guarantee any indebtedness of another
Person or entity (other than a wholly-owned Subsidiary of the Company) or
amend
any such existing indebtedness or guarantee, (ii) issue, sell or amend any
debt
securities or warrants or other rights to acquire any debt securities of
the
Company or any of its Subsidiaries, or (iii) guarantee any debt securities
of
another Person or entity (other than a wholly-owned Subsidiary of the Company)
or enter into any “keep well” or other agreement to maintain any financial
condition of another Person or entity (other than a wholly-owned Subsidiary
of
the Company) or (iv) enter into any arrangement having the economic effect
of
any of the foregoing;
(g) make
any material
changes in accounting methods or principles or revalue any of its assets,
except
as may be required by a change in GAAP or SEC requirements as may be advised
by
the Company’s independent accountants;
(h) except
as required
to comply with applicable law or agreements, plans or arrangements binding
on
the Company as of the date hereof, (i) adopt, enter into, terminate or amend
any
material employment, severance or similar agreement or benefit plan, including
any Company Employee Plan, policy, trust, fund or program or other arrangement
for the benefit or welfare of any current or former director, officer, employee
or consultant, or any collective bargaining agreement; (ii) increase in any
manner the compensation or benefits of any present or former directors,
officers, employees or consultants of the Company or its Subsidiaries, except,
in the case of non-officer employees of the Company or one of its Subsidiaries,
for normal salary increases and increase in bonus payments in the ordinary
course of business consistent with past practice; (iii) accelerate the
payment, right to payment or vesting of any compensation or benefits, including
any outstanding options or restricted stock awards or waive any stock repurchase
rights, other than as required by this agreement; (iv) grant any awards under
any bonus, incentive, performance or other compensation plan or arrangement
or
benefit plan, including the grant of stock options, stock appreciation rights,
stock based or stock related awards, performance units or restricted stock,
except for (A) the issuance of those Company Stock Options identified in
Section
3.2(e) of the Company Disclosure Schedule that have been approved but not
granted as of the close of business on December 8, 2006, and of no more than
150,000 Company Stock Options to new hires and to non-officer employees of
the
Company since the close of business on December 8, 2006, in each case, in
the
ordinary course of business consistent with past practice and within the
guidelines set forth in Section 5.2(h) of the Company Disclosure Schedule
and
with a per share exercise price no lower than the fair market value of one
share
of Company Common Stock on the date of grant, and (B) the payment of bonuses
to
employees in accordance with the provisions of the Company bonus plans
identified on Section 5.2(h) of the Company Disclosure Schedule, or (v) loan
or
advance any money or other property to any present or former director, officer
or employee of the Company or its Subsidiaries, other than routine advances
for
business expenses in the ordinary course;
40
(i) enter
into any joint
venture, partnership or other similar arrangement;
(j) make
any loan,
advance or capital contribution to or investment in any Person, other than
(i) inter-company loans, advances or capital contributions among the
Company or any other wholly-owned Subsidiary and any wholly-owned Subsidiary,
(ii) investments in any wholly-owned Subsidiary of the Company or
(iii) routine advances for business expenses in the ordinary course
consistent with past practice and in accordance with the Company’s policies as
in effect on the date hereof;
(k) cancel
any debts or
waive any claims or rights of substantial value (including the cancellation,
compromise, release or assignment of any indebtedness owed to, or claims
held
by, the Company or any its Subsidiaries), except for cancellations made or
waivers granted in the ordinary course of business consistent with past
practice;
(l) enter
into, or
materially amend, modify or supplement any Company Material Contract or Lease
outside the ordinary course of business or waive, release, grant, assign
or
transfer any of its material rights or claims (whether such rights or claims
arise under a Material Contract or Lease or otherwise);
(m) Effect
any material
restructuring activities by the Company or any of its Subsidiaries with respect
to their respective
employees,
including any material reductions in force;
(n) Fail
to file, on a
timely basis, including allowable extensions, with the appropriate Governmental
Entities, all material Tax Returns required to be filed by or with respect
to
the Company and each of its Subsidiaries on or prior to the Closing Date,
or
fail to timely pay or remit (or cause to be paid or remitted) any material
Taxes
due in respect of such Tax Returns;
(o) (A)
Amend any
material Tax Returns, make any material election relating to Taxes, change
any
material election relating to Taxes already made, adopt any material accounting
method relating to Taxes, change any material accounting method relating
to
Taxes unless required by a change in the Code, or (B) settle, consent, or
enter
into any closing agreement relating to any Audit or consent to any waiver
of the
statutory period of limitations in respect of any Audit;
41
(p) Cancel
or terminate
without reasonable substitute policy therefor, or amend in any material respect
or enter into, any material insurance policy, other than the renewal of existing
insurance policies;
(q) Enter
into any
Contracts containing, or otherwise subject the Surviving Corporation or Buyer
to, any (A) non-competition, “most favored nations,” unpaid future deliverables,
service requirements in each case outside the ordinary course of business,
or
(B) exclusivity or future royalty payments, or other material restrictions
on
the Company or the Surviving Corporation or Buyer, or any of their respective
businesses, following the Closing;
(r) Provide
any material
refund, credit or rebate to any customer, reseller or distributor, in each
case,
other than in the ordinary course of business consistent with past
practice;
(s) Hire
any non-officer
employees other than in the ordinary course of business consistent with past
practice or hire, elect or appoint any officers other than to fill vacancies
or
elect any directors, except in accordance with the Company Charter Documents
with respect to director vacancies;
(t) (A)
Enter into any
agreement to purchase or sell any interest in real property or grant any
security interest in any real property, or (B) enter into any material lease,
sublease or other occupancy agreement with respect to any real property or
materially alter, amend, modify or terminate any of the terms of any
Lease;
(u) Enter
into any
customer Contract that contains any material non-standard terms, including
but
not limited to, non-standard discounts, provisions for unpaid future
deliverables, non-standard service requirements or future royalty payments,
other than as is consistent with past practice;
(v) Enter
into any
Contract that materially and adversely affects any patents or applications
therefor, in each case, of the Company, its Subsidiaries or any other affiliates
of such entity;
(w) Dispose
of,
transfer, permit to lapse or abandon any Intellectual Property or Intellectual
Property Rights, or dispose of or unlawfully disclose to any Person, other
than
representatives of Buyer, any Trade Secrets, and other than in the ordinary
course of business consistent with past practice;
(x) Abandon
or permit to
lapse any rights to any United States patent or patent application without
first
consulting with Buyer; or
(y) Take,
commit, agree
(in writing or otherwise) or announce the intention to take any of the foregoing
actions.
42
5.3 Buyer
Actions. Buyer
shall promptly
notify the Company in writing of any occurrence of a Buyer Material Adverse
Effect.
ARTICLE
VI
ADDITIONAL
AGREEMENTS
6.1 No
Solicitation.
(a) No
Solicitation
or Negotiation.
During the
Pre-Closing Period, neither the Company nor any of its Subsidiaries shall,
and
the Company shall cause its directors, officers, employees, investment bankers,
attorneys, accountants and other advisors or representatives (such directors,
officers, employees, investment bankers, attorneys, accountants, other advisors
and representatives, collectively, “Representatives”)
not to, directly
or indirectly:
(i) solicit,
initiate,
or knowingly encourage or facilitate (including by way of furnishing
information) any inquiries or the making of any proposal or offer (including
any
proposal from or offer to the Company’s stockholders) with respect to, or that
could reasonably be expected to lead to, any Acquisition Proposal;
or
(ii) enter
into, continue
or otherwise participate in any discussions or negotiations regarding, or
furnish to any Person any non-public information or grant access to its
properties, books and records or personnel in connection with, any Acquisition
Proposal.
Notwithstanding
anything to the contrary set forth in this Agreement, the Company may, to
the
extent necessary for the Company Board to comply with its fiduciary obligations
under applicable law, as determined in good faith by the Company Board after
consultation with outside counsel, in response to a bona fide, unsolicited
Acquisition Proposal received by the Company after the date of this Agreement
that the Company Board determines in good faith after consultation with outside
counsel and its financial advisor would reasonably be expected to result
in a
Superior Proposal, in each case, so long as such Acquisition Proposal did
not
result from a material breach by the Company of this Section 6.1 and the
Company
has complied in all material respects with this Section 6.1, (x) furnish
information with respect to the Company to the Person making such Acquisition
Proposal and its Representatives pursuant to a customary confidentiality
agreement not materially less restrictive of the other party than the
Confidentiality Agreement (as defined in Section 6.4); provided that
contemporaneously with furnishing any such nonpublic information to such
third
party, the Company furnishes such nonpublic information to Buyer (to the
extent
that such nonpublic information has not been previously so furnished),
(y) participate in discussions or negotiations (including solicitation of a
revised Acquisition Proposal) with such Person and its Representatives regarding
any Acquisition Proposal, and (z) amend, or grant a waiver or release
under, any standstill or similar agreement with respect to any Company Common
Stock.
43
As
promptly as practicable (and in any event no later than 24 hours) after receipt
of any Acquisition Proposal or any request for nonpublic information or inquiry
that would reasonably be expected to lead to an Acquisition Proposal or from
any
Person seeking to have discussions or negotiations with the Company relating
to
a possible Acquisition Proposal, the Company shall provide Buyer with notice
of
such Acquisition Proposal, request or inquiry, including: (i) the material
terms
and conditions of such Acquisition Proposal, request or inquiry; (ii) the
identity of the Person or group making any such Acquisition Proposal, request
or
inquiry; and (iii) a copy of all written materials provided by or on behalf
of
such Person or group in connection with such Acquisition Proposal, request
or
inquiry. The Company shall provide Buyer with 48 hours prior notice (or such
lesser prior notice as is provided to the members of its Board of Directors)
of
any meeting of its Board of Directors at which its Board of Directors is
expected to consider any Acquisition Proposal or any such inquiry or to consider
providing nonpublic information to any Person. The Company shall notify Buyer,
in writing, of any decision of its Board of Directors as to whether to consider
such Acquisition Proposal, request or inquiry or to enter into discussions
or
negotiations concerning any Acquisition Proposal or to provide nonpublic
information or data to any Person, which notice shall be given as promptly
as
practicable after such meeting (and in any event no later than 24 hours after
such determination was reached and 24 hours prior to entering into any
discussions or negotiations or providing any nonpublic information or data
to
any Person). The Company agrees that it shall promptly provide Buyer with
oral
and written notice setting forth all such information as is reasonably necessary
to keep Buyer currently informed in all material respects of the status and
material terms of any such Acquisition Proposal, request or inquiry (including
any negotiations contemplated by this Section) and shall promptly provide
Buyer
a copy of all written materials subsequently provided to, by or on behalf
of
such Person or group in connection with such Acquisition Proposal, request
or
inquiry.
(b) No
Change in
Recommendation or Alternative Acquisition Agreement.
During
the
Pre-Closing Period, the Company Board shall not:
(i) withhold,
withdraw
or modify in a manner adverse to Buyer, the approval or recommendation by
the
Company Board with respect to the Merger or the Company Voting
Proposal;
(ii) cause
or permit the
Company to enter into (or publicly propose that the Company enter into) any
letter of intent, memorandum of understanding, agreement in principle,
acquisition agreement, merger agreement or other Contract (an “Alternative
Acquisition Agreement”)
with respect to
any Acquisition Proposal or approve or recommend or propose to approve or
recommend any Acquisition Proposal or any agreement, understanding or
arrangement relating to any Acquisition Proposal (or resolve or authorize
or
propose to agree to do any of the foregoing actions), except for a
confidentiality agreement, waiver or release referred to in Section 6.1(a)
entered into in the circumstances referred to in Section 6.1(a) and subject
to
Section 6.1(c); or
44
(iii) approve,
recommend
or take any position other than to recommend rejection (including modifying
any
recommendation of rejection) of, any Acquisition Proposal.
Notwithstanding
anything to the contrary set forth in this Agreement, the Company may, prior
to
the adoption of the Company Voting Proposal only, to the extent necessary
for
the Company Board to comply with its fiduciary obligations under applicable
law,
as determined in good faith by the Company Board after consultation with
outside
counsel and the Company’s financial advisors, (i) withhold, withdraw or
modify in a manner adverse to Buyer the Company Recommendation (as defined
below) (a “Change
in
the Company Recommendation”)
and/or
(ii) terminate this Agreement to enter into an Alternative Acquisition
Agreement with respect to a Superior Proposal, but, in each case, only if
(w)
such Superior Proposal, if any, did not result from a material breach by
the
Company of this Section 6.1; (x) the Company has complied in all material
respects with this Section 6.1, including Section 6.1(c); (y) the Company
Board
shall have first provided prior written notice to Buyer that it is prepared
to
effect a Change in the Company Recommendation or terminate this Agreement
to
enter into an Alternative Acquisition Agreement; and (z) Buyer does not make,
within four Business Days after the receipt of such notice, a proposal that
the
Company Board determines in good faith, after consultation with its financial
adviser, is more favorable to the stockholders of the Company than such Superior
Proposal or that results in the Company Board no longer being required to
make a
Change in the Company Recommendation in order to comply with its fiduciary
obligations under applicable law. The Company agrees that, during the four
Business Day period prior to effecting a Change in the Company Recommendation
or
terminating this Agreement to enter into an Alternative Acquisition Agreement,
the Company and its Representatives shall negotiate in good faith with Buyer
and
its Representatives regarding any revisions to the terms of the transaction
contemplated by this Agreement that are proposed by Buyer.
(c) Notices
to
Buyer.
The Company shall
as promptly as reasonably practicable provide oral and written notice to
Buyer
of receipt by the Company of any Acquisition Proposal, and, subject to any
confidentiality provisions set forth in such Acquisition Proposal and to
any
other confidentiality arrangements with third parties that may be in effect
on
the date of this Agreement, the material terms and conditions of any such
Acquisition Proposal and the identity of the Person making any such Acquisition
Proposal, and shall keep Buyer reasonably informed of any material modifications
or material developments with respect to such Acquisition Proposal, including
without limitation, either copies of all written Acquisition Proposals,
including draft agreements or term sheets, or summaries of the material terms
thereof.
45
(d) Certain
Permitted
Disclosure.
Nothing contained
in this Agreement shall be deemed to prohibit the Company from taking and
disclosing to its stockholders a position with respect to a tender or exchange
offer contemplated by Rule 14d-9 or Rule 14e-2 promulgated under the
Exchange Act or from making any required disclosure to the Company’s
stockholders if the Company Board determines in good faith, after consultation
with outside counsel, that such action is necessary for the Company Board
to
comply with its fiduciary obligations under applicable law; provided, however,
that neither the Company nor the Company Board (nor any committee thereof)
shall
(i) recommend that the stockholders of the Company tender or exchange their
shares of Company Common Stock in connection with any such tender or exchange
offer (or otherwise approve or recommend any Acquisition Proposal) or
(ii) withhold, withdraw or modify in a manner adverse to Buyer the Company
Board’s recommendation with respect to the Merger or the Company Voting
Proposal, unless in each case the requirements of this Section 6.1 shall
have
been satisfied.
(e) Cessation
of
Ongoing Discussions.
The Company shall,
and shall direct its Representatives to, cease immediately all discussions
and
negotiations that commenced prior to the date of this Agreement regarding
any
proposal that constitutes, or could reasonably be expected to lead to, an
Acquisition Proposal and shall request that all confidential information
previously furnished to any such third parties be promptly returned or
destroyed.
(f) Definitions.
For purposes of
this Agreement:
“Acquisition
Proposal”
means
(i) any
proposal or offer (A) relating to a merger, reorganization, consolidation,
dissolution, sale of substantial assets, tender offer, exchange offer,
recapitalization, liquidation, dissolution, joint venture, share exchange
or
other business combination involving the Company or any of its Subsidiaries,
(B)
for the issuance by the Company of 20% or more of its equity securities,
(C) to
acquire in any manner, directly or indirectly, in a single transaction or
a
series of related transactions, 20% or more of the capital stock of the Company
or any of its Subsidiaries (on a consolidated basis), or (D) to acquire,
directly or indirectly, in a single transaction or a series of related
transactions, assets of the Company and its Subsidiaries having a fair market
value equal to 20% or more of the Company’s consolidated assets, in each case
other than the transactions contemplated by this Agreement or (ii) any written
inquiry with respect to, any oral inquiry to which the Company or its
representatives have responded with respect to, or any other oral inquiry
that
might reasonably be expected to lead to, any proposal or offer described
in the
foregoing clause (i).
“Superior
Proposal”
means
any
unsolicited, bona fide written proposal made by a third party to acquire,
directly or indirectly, a majority of the equity securities or a majority
of the
assets of the Company, pursuant to a tender or exchange offer, a merger,
a
consolidation or a sale of its assets, which the Company Board determines
in its
good faith judgment to be (i) on terms more favorable to the holders of Company
Common
46
(g) State
Takeover
Statute.
The Company Board
shall not, in connection with any Change in the Company Recommendation, take
any
action to change the approval of the Company Board for purposes of causing
any
state takeover statute or other state law to be applicable to the transactions
contemplated hereby. For the avoidance of doubt, this Section 6.1(g) shall
not
prohibit the Company from effecting a Change in the Company Recommendation
under
the circumstances and subject to the conditions set forth in this Section
6.1.
(h) Continuing
Obligation to Call, Hold and Convene Company Stockholders Meeting; No Other
Vote.
Notwithstanding
anything to the contrary contained in this Agreement, the obligation of the
Company to call, give notice of, convene and hold the Company Stockholders
Meeting shall not be limited or otherwise affected by the commencement,
disclosure, announcement or submission to it of any Acquisition Proposal,
or by
any Change in the Company Recommendation. The Company shall not submit to
the
vote of its stockholders any Acquisition Proposal, or propose to do
so.
(i) Specific
Performance.
The parties hereto
agree that irreparable damage would occur in the event that the provisions
of
this Section 6.1 were not performed in accordance with their specific terms
or
were otherwise breached. It is accordingly agreed by the parties hereto that
Buyer shall be entitled to an immediate injunction or injunctions, without
the
necessity of proving the inadequacy of money damages as a remedy and without
the
necessity of posting any bond or other security, to prevent breaches of the
provisions of this Section 6.1 and to enforce specifically the terms and
provisions hereof in any court of the United States or any state having
jurisdiction, this being in addition to any other remedy to which Buyer may
be
entitled at law or in equity.
6.2 Prospectus/Proxy
Statement;
Registration
Statement. As
promptly as
reasonably practicable after the execution of this Agreement, Buyer and the
Company will prepare and file with the SEC the Prospectus/Proxy Statement,
and
Buyer will prepare and file with the SEC the Registration Statement in which
the
Prospectus/Proxy Statement is to be included as a prospectus. Buyer and the
Company will provide each other with any information which may be required
in
order to effectuate the preparation and filing of the Prospectus/Proxy Statement
and the Registration Statement pursuant to this Section 6.2. Each of Buyer
and
the Company will respond to any
47
6.3 Stockholders
Meeting.
(a) Meeting
of
Company Stockholders.
Promptly after the
Registration Statement is declared effective under the Securities Act, the
Company will take all action necessary in accordance with the DGCL and its
certificate of incorporation and bylaws to call, hold and convene the Company
Stockholders Meeting to be held as promptly as reasonably practicable, and
in
any event, will use all commercially reasonable efforts (to the extent
permissible under applicable law) to cause the Company Stockholders Meeting
to
be convened within 45 days after the mailing of the Prospectus/Proxy Statement
to the Company’s stockholders. Subject to Section 6.1(b), the Company will use
commercially reasonable efforts to solicit from its stockholders proxies
in
favor of the adoption and approval of this Agreement and the approval of
the
Merger, and will take all other action necessary or advisable to secure the
vote
or consent of its stockholders required by the DGCL to obtain such approvals.
Notwithstanding anything to the contrary contained in this Agreement, (i)
the
Company may adjourn or postpone the Company Stockholders Meeting after
consultation with Buyer to the extent necessary to ensure that any necessary
supplement or amendment to the Prospectus/Proxy Statement is provided to
its
stockholders in advance of a
48
(b) Board
Recommendation.
Except to the
extent expressly permitted by Section 6.1(b): (i) the Company Board shall
recommend that the Company’s stockholders vote in favor of the adoption of this
Agreement at the Company Stockholders Meeting; (ii) the Prospectus/Proxy
Statement shall include a statement to the effect that the Company Board
has
unanimously recommended that the Company’s stockholders vote in favor of
adoption of this Agreement at the Company Stockholders Meeting (the “Company
Recommendation”);
and (iii) neither
the Company Board nor any committee thereof shall withdraw, amend or modify,
or
propose or resolve to withdraw, amend or modify in a manner adverse to Buyer,
the unanimous recommendation of its Board of Directors that the Company’s
stockholders vote in favor of the adoption of this Agreement.
49
6.4 Access
to
Information.
The
parties
acknowledge that Buyer and the Company have previously executed a
confidentiality agreement, dated as of September 7, 2006 (the “Confidentiality
Agreement”),
which
Confidentiality Agreement shall continue in full force and effect in accordance
with its terms, except as expressly waived or modified as provided herein
or
therein. During the Pre-Closing Period, the Company shall, and shall cause
each
of its Subsidiaries to, afford to Buyer’s officers, employees, accountants,
counsel, and other Representatives, reasonable access, upon reasonable notice,
during normal business hours and in a manner that does not unreasonably disrupt
or interfere with business operations, to all of its properties, books,
contracts, commitments, management personnel and records as Buyer shall
reasonably request, and, during such period, the Company shall (and shall
cause
each of its Subsidiaries to) furnish promptly to Buyer (x) a copy of each
report, schedule, registration statement and other document filed or received
by
it during such period pursuant to the requirements of federal or state
securities laws and (y) all other information concerning its business, finances,
operations, properties, assets and personnel as Buyer may reasonably request,
in
each case, subject to any restrictions contained in the Confidentiality
Agreement; provided that the foregoing shall not require the Company to permit
any inspection or disclose any information that, in the reasonable judgment
of
the Company, would result in the disclosure of any trade secrets of third
parties or otherwise privileged information so long as the existence of such
trade secrets of third parties or privileged information and the lack of
disclosure thereof is identified to Buyer. Without limiting the generality
of
any of the foregoing, the Company shall promptly provide Buyer with copies
of:
(i) any written materials or communications sent by or on behalf of the Company
to its stockholders; (iii) any notice, document or other communication relating
to the Merger sent by or on behalf of any of the Company or any of its
subsidiaries to any customer, supplier, employee, or other party with whom
the
Company or any of its subsidiaries has a contractual relationship; provided
that
a form of such notice, document or other communication shall suffice where
such
notice, document or other communication is substantially identical but for
the
addressee; (iv) any notice, report or other document filed with or sent to
any
Governmental Entity on behalf of the Company or any of its subsidiaries in
connection with the Merger; and (v) any material notice, report or other
document received by the Company or any of its subsidiaries from any
Governmental Entity. Buyer will hold, and instruct all such officers, employees,
accountants, counsel, and other Representatives to hold, any such information
that is nonpublic in confidence in accordance with the Confidentiality
Agreement.
6.5 Legal
Requirements.
(a) Subject
to the terms
hereof, including Section 6.5(b) below, each of the Company and Buyer shall,
and
the Company shall cause its Subsidiaries to, each use their commercially
reasonable efforts to:
50
(i) take,
or cause to be
taken, all actions, and 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 the transactions contemplated hereby as promptly
as practicable;
(ii) as
promptly as
practicable, obtain from any Governmental Entity or any other third party
any
consents, licenses, permits, waivers, approvals, authorizations, or orders
required to be obtained by the Company or Buyer or any of their Subsidiaries
in
connection with the authorization, execution and delivery of this Agreement
and
the consummation of the transactions contemplated hereby;
(iii) as
promptly as
practicable, make all necessary filings, notifications, and thereafter make
any
other required submissions, with respect to this Agreement and the Merger
required under (A) the Exchange Act, and any other applicable federal or
state
securities laws, (B) the HSR Act and any related governmental request
thereunder, and (C) any other applicable law; and
(iv) contest
any legal
proceeding relating to the Merger or the other transactions contemplated
by this
Agreement; and
(v) execute
or deliver
any additional instruments necessary to consummate the transactions contemplated
by, and to fully carry out the purposes of, this Agreement.
The
Company and Buyer shall cooperate with each other in connection with the
making
of all such filings. The Company and Buyer shall each use their commercially
reasonable efforts to furnish to each other all information required for
any
application or other filing to be made pursuant to the rules and regulations
of
any applicable law (including all information required to be included in
the
Proxy Statement) in connection with the transactions contemplated by this
Agreement. For the avoidance of doubt, Buyer and the Company agree that nothing
contained in this Section 6.5(a) shall modify or affect their respective
rights
and responsibilities under Section 6.5(b).
(b) Buyer
and the
Company agree, and shall cause each of their respective Subsidiaries, to
cooperate and to use their commercially reasonable efforts to obtain any
government clearances or approvals required for Closing under the HSR Act,
the
Xxxxxxx Act, as amended, the Xxxxxxx Act, as amended, the Federal Trade
Commission Act, as amended, and any other federal, state or foreign law,
regulation or decree designed to prohibit, restrict or regulate actions for
the
purpose or effect of monopolization or restraint of trade (collectively
“Antitrust
Laws”),
to respond to
any government requests for information under any Antitrust Law, and to contest
and resist any action, including any legislative, administrative or judicial
action, and to have vacated, lifted, reversed or overturned any decree,
judgment, injunction or other order (whether temporary, preliminary or
permanent) (an “Antitrust
Order”)
that restricts,
prevents or prohibits the consummation of the Merger or any other transactions
contemplated by this Agreement under any Antitrust Law. The parties hereto
will
consult and cooperate with
51
Notwithstanding
anything in this Agreement to the contrary, nothing contained in this Agreement
shall be deemed to require Buyer or any Subsidiary or affiliate thereof to
agree
to any Action of Divestiture. The Company shall not, without the prior written
consent of Buyer, take or agree to take any Action of Divestiture. For purposes
of this Agreement, an “Action
of
Divestiture”
shall
mean (i) any
license, sale or other disposition or holding separate (through establishment
of
a trust or otherwise) of any shares of capital stock or of any business,
assets
or properties of Buyer, its subsidiaries or affiliates, or of the Company
or its
Subsidiaries that are material to Buyer or the Company, (ii) the imposition
of
any material limitation on the ability of Buyer, its Subsidiaries or affiliates,
or the Company or its Subsidiaries to conduct their respective businesses
or own
any capital stock or assets or to acquire, hold or exercise full rights of
ownership of their respective businesses and, in the case of Buyer, the
businesses of the Company and its Subsidiaries or (iii) the imposition of
any
material impediment on Buyer, its Subsidiaries or affiliates, or the Company
or
its Subsidiaries under any statute, rule, regulation, executive order, decree,
order or other legal restraint governing competition, monopolies or restrictive
trade practices.
6.6 Public
Disclosure.
Prior
to the
Closing, the parties shall not issue any report, statement or press release
or
otherwise make any public statements with respect to this Agreement and the
transactions contemplated by this Agreement without the prior written approval
of the other party, except (i) as may be required by law or the rules and
regulations of Nasdaq or in connection with the enforcement of this Agreement,
in which case the parties will use their commercially reasonable efforts
to
reach mutual agreement as to the language of any such report, statement or
press
release in advance of publication or (ii) in connection with the exercise
of the Company’s rights pursuant to Section 6.1 of this Agreement. Any
press release announcing the execution of this Agreement or the Closing shall
be
issued only in such form as shall be mutually agreed upon by the Company
and
Buyer, and Buyer and the Company shall consult with the other party before
issuing any other press release or otherwise making any public statement
with
respect to the Merger or this Agreement.
6.7 Indemnification.
(a) From
the Effective
Time through the sixth anniversary of the date on which the Effective Time
occurs, Buyer will cause the Surviving Corporation to honor and fulfill in
all
respects the obligations of the Company pursuant to any indemnification
agreements between the Company and any directors and officers of the Company
or
any of its Subsidiaries (the “Indemnified
Parties”)
in effect on the
date hereof as set forth in
52
(b) The
certificate of
incorporation and bylaws of the Surviving Corporation shall contain provisions
no less favorable with respect to indemnification, advancement of expenses
and
exculpation of present and former directors and officers of the Company and
its
Subsidiaries than are presently set forth in the Company Charter Documents,
which provisions shall not be amended, modified or repealed for a period
of six
(6) years time from the Effective Time in a manner that would adversely affect
the rights thereunder of individuals who, at or prior to the Effective Time,
were officers or directors of the Company, unless such amendment, modification
or repeal is required by applicable law after the Effective Time.
(c) The
Surviving
Corporation shall maintain, and Buyer shall cause the Surviving Corporation
to
maintain, at no expense to the beneficiaries, in effect for six (6) years
from
the Effective Time insurance “tail” or other insurance policies with respect to
directors’, officers’ and fiduciaries’ liability insurance with respect to
matters existing or occurring at or prior to the Effective Time (including
the
transactions contemplated by this Agreement) in an amount and scope at least
as
favorable as the coverage applicable to directors and officers as of the
date
hereof under the Company’s directors’ and officers’ liability insurance policy;
provided that if the annual premiums for such “tail” or other policies are not
available at a cost not greater than 200% of the annual premiums paid as
of the
date hereof under such policy (the “Insurance
Cap”)
(which premium
the Company hereby represents and warrants is as set forth on Section 6.7(c)
of
the Company Disclosure Schedule), then the Surviving Corporation shall be
required to obtain as much coverage as is possible under substantially similar
policies for such annual premiums as do not exceed the Insurance
Cap.
(d) The
Surviving
Corporation shall pay all expenses, including reasonable attorneys’ fees, that
may be incurred by the Persons referred to in this Section 6.7 in connection
with their enforcement of their rights provided in this Section 6.7; provided
that the Indemnified Party must provide a written undertaking to repay all
expenses if it is finally judicially determined that such Indemnified Party
is
not entitled to indemnification.
53
(e) The
provisions of
this Section 6.7 are intended to be in addition to the rights otherwise
available to the current or former officers and directors of the Company
by law,
charter, statute, Bylaw or agreement, and shall operate for the benefit of,
and
shall be enforceable by, each of the Indemnified Parties, their heirs and
their
representatives.
(f) In
the event the
Surviving Corporation or any of its successors or assigns (i) consolidates
with
or merges into any other Person and shall not be the continuing or surviving
corporation or entity in such consolidation or merger, or (ii) transfers
all or
substantially all of its assets to any individual, corporation or other entity,
then, in each such case, proper provision shall be made so that the successors
or assigns of the Surviving Corporation shall assume and succeed to all the
obligations set forth in this Section 6.7.
(g) Buyer
shall, subject
to applicable law, cause the Surviving Corporation to perform all of the
obligations of the Surviving Corporation under this Section 6.7.
6.8 Notification
of
Certain Matters.
During
the
Pre-Closing Period, Buyer shall give prompt notice to the Company, and the
Company shall give prompt notice to Buyer, of (a) the occurrence, or failure
to
occur, of any event, which occurrence or failure to occur is reasonably likely
to cause any representation or warranty of such party contained in this
Agreement to be untrue or inaccurate in any material respect, in each case
at
any time from and after the date of this Agreement until the Effective Time,
or
(b) any material failure of Buyer and Merger Sub or the Company, as the
case may be, or of any officer, director, employee or agent thereof, to comply
with or satisfy any covenant, condition or agreement to be complied with
or
satisfied by it under this Agreement. Notwithstanding the above, the delivery
of
any notice pursuant to this Section will not limit or otherwise affect the
remedies available hereunder to the party receiving such notice or the
conditions to such party’s obligation to consummate the Merger and the other
transactions contemplated by this Agreement.
6.9 Exemption
from
Liability Under Section 16.
Prior
to the
Closing, the Company shall take all such steps as may be required to cause
to be
exempt under Rule 16b-3 promulgated under the Exchange Act any dispositions
of
Company Common Stock (including derivative securities with respect to Company
Common Stock) under such rule resulting from the transactions contemplated
by
Articles I and II of this Agreement by each individual who is subject to
the
reporting requirements of Section 16(a) of the Exchange Act with respect
to the
Company.
54
6.10 Employee
Stock
Purchase Plan.
As
of the Effective
Time, the Employee Stock Purchase Plan shall be terminated. The Company shall
consult with Buyer in its preparation of any materials to be distributed
to
participants in connection with the termination of the Employee Stock Purchase
Plan. The rights of participants in the Employee Stock Purchase Plan shall
be
determined by treating the last Business Day (as defined in the Employee
Stock
Purchase Plan) prior to the Effective Time as the last day of such Offering
Period(s) (as defined in the Employee Stock Purchase Plan) then in effect
and by
making such other pro-rata adjustments as may be required pursuant to the
Employee Stock Purchase Plan to reflect the shortened Offering Period but
otherwise treating such Offering Period as a fully effective and completed
Offering Period for all purposes of such Employee Stock Purchase Plan. Prior
to
the Effective Time, the Company shall take all actions that are necessary
to
give effect to the transactions contemplated by this Section 6.10; provided,
however, that the change in the Offering Period referred to in this Section
6.10
shall be conditioned upon the consummation of the Merger. If the Closing
has not
occurred on or prior to April 30, 2007, the Company will take all commercially
reasonable steps to suspend new enrollment under the terms of the Employee
Stock
Purchase Plan from such time, and to provide that no new Offering Periods
shall
commence on or after April 30, 2007, until (A) immediately prior to the
Effective Time when the Employee Stock Purchase Plan shall be terminated
or, if
earlier (B) termination of this Agreement; provided, however, that in
conjunction with the taking such actions Buyer and the Company shall meet
and
confer regarding potential employee retention measures that might be taken
in
lieu of the Employee Stock Purchase Plan. Outstanding rights to purchase
shares
of Company Common Stock shall be exercised in accordance with the terms of
the
Employee Stock Purchase Plan, and each share of Company Common Stock purchased
pursuant to such exercise shall by virtue of the Merger, and without any
action
on the part of Buyer, Merger Sub, the Company or holder thereof, be converted
into the right to receive Company Common Consideration without issuance of
certificates representing issued and outstanding shares of Company Common
Stock
to participants under the Employee Stock Purchase Plan.
6.11 Assumption
of
Options and Related Matters.
(a) Assumption
and
Termination of Unvested Company Stock Options.
At the Effective
Time, each Company Stock Option that is unvested, unexpired and outstanding
immediately prior to the Effective Time that has a per share exercise price
that
is equal to or less than $7.50 shall, on the terms and subject to the conditions
set forth in this Agreement, be assumed by Buyer (each such Company Stock
Option
an “Assumed
Option”).
Each Assumed
Option shall continue to have, and be subject to, the same terms and conditions
(including, if applicable, the vesting arrangements and other terms and
conditions set forth in the Company Stock Plan and the applicable stock option
or other agreement) as are in effect immediately prior to the Effective Time,
except that (i) such option shall become exercisable for that number of whole
shares of Buyer Common Stock equal to the product (rounded down to the next
whole number of shares of Buyer Common Stock) of (A) the number of shares
of
Company Common Stock that would have been issuable upon exercise of such
Assumed
Option immediately
55
(b) Registration
of
Assumed Options.
Buyer will use
commercially reasonable efforts to cause Buyer Common Stock issuable upon
exercise of the Assumed Options to be registered with the SEC on Form
S-8 promptly
after the
Effective Time (and in any event, within 15 Business Days), will exercise
commercially reasonable efforts to maintain the effectiveness of such
registration statement for so long as such Assumed Options remain outstanding
and will maintain a sufficient number of reserved shares of Buyer Common
Stock
for issuance upon exercise thereof. The Company shall reasonably cooperate
with
and assist Buyer in the preparation of such registration statement prior
to the
Closing Date.
(c) Termination
of
Certain Vested and Unvested Company Stock Options.
At the Effective
Time, each Company Stock Option that is vested as of the Effective Time or
that
becomes vested as a result of the transactions set forth in this Agreement
as of
the Effective Time, and that is unexpired, unexercised and outstanding
immediately prior to the Effective Time and that has a per share exercise
price
that is less than or equal to $7.50 (collectively, the “Cashed-Out
Options”)
shall, on the
terms and subject to the conditions set forth in this Agreement, terminate
in
its entirety at the Effective Time, and the holder of each Cashed-Out Option
shall be entitled to receive therefor at the Effective Time or as soon
thereafter as reasonably practicable: (i) in the event the Company Common
Tranche Two Consideration consists solely of cash, an amount of cash equal
to
the product of (A)
56
6.12 Employee
Matters.
With
respect to any
accrued but unused personal, sick or vacation time to which any of its employees
and employees of the Surviving Corporation or their respective Subsidiaries
who
shall have been employees of the Company or any of its Subsidiaries immediately
prior to the Effective Time (“Continuing
Employees”)
is entitled
pursuant to the personal, sick or vacation policies applicable to such
Continuing Employee immediately prior to the Effective Time (the “PSV
Policies”),
such Continuing
Employee shall be allowed to use such accrued personal, sick or vacation
time;
provided, however, that if Buyer deems it necessary to
57
6.13 Resignations.
The
Company shall
use commercially reasonable efforts to obtain and deliver to Buyer at the
Closing evidence reasonably satisfactory to Buyer of the resignation, effective
as of the Effective Time, of all directors of the Company and each of its
Subsidiaries.
58
6.14 Third-Party
Consents.
As soon as
practicable following the date hereof, the Company will use commercially
reasonable efforts to obtain such material consents, waivers and approvals
under
any of its or its Subsidiaries’ respective Contracts required to be obtained in
connection with the consummation of the transactions contemplated hereby
as may
be reasonably requested by Buyer after consultation with the Company, including
all consents, waivers and approvals set forth in Section 3.3(c) of the Company
Disclosure Schedule. In connection with seeking such consents, waivers and
approvals, the Company shall keep Buyer informed of all material developments.
Such consents, waivers and approvals shall be in a form reasonably acceptable
to
Buyer. In the event the Merger does not close for any reason, neither Buyer
nor
Merger Sub shall have any liability to the Company, its stockholders or any
other Person for any costs, claims, liabilities or damages resulting from
the
Company seeking to obtain such consents, waivers and approvals. Notwithstanding
the foregoing, the failure to obtain any consents, waivers and approvals
pursuant to this Section 6.14 shall not be deemed a failure of any conditions
to
the obligations of Buyer and Merger Sub under Section 7.2(b).
6.15 145
Affiliates.
As
soon as practicable after the date hereof, and in no event less than ten
(10)
days prior to the Closing Date, the Company shall deliver to Buyer a letter
identifying all Persons who are, at the time this Agreement is submitted
for
adoption by the stockholders of the Company, “affiliates” of the Company for
purposes of Rule 145 under the Securities Act. The Company shall use
commercially reasonable efforts to cause each such Person to deliver to Buyer
at
least ten (10) days prior to the Closing Date a written agreement substantially
in the form attached as Exhibit
A
hereto.
ARTICLE
VII
CONDITIONS
TO MERGER
7.1 Conditions
to
Each Party’s
Obligation to
Effect the Merger. The
respective
obligations of each party to this Agreement to effect the Merger shall be
subject to the satisfaction on or prior to the Closing Date of the following
conditions:
(a) Stockholder
Approval.
The Company Voting
Proposal shall have been approved and adopted at the Company Stockholders
Meeting, at which a quorum is present, by the Required Company Stockholder
Vote.
(b) HSR
Act and
Foreign Antitrust Laws.
All mandatory
waiting periods (and any extensions thereof) applicable to the consummation
of
the Merger under the HSR Act and applicable foreign Antitrust Laws shall
have
expired or otherwise been terminated.
(c) Governmental
Approvals.
Other than the
filing of the certificate of merger, all material authorizations, consents,
orders or approvals of, or declarations or filings with, or expirations of
waiting periods imposed by, any Governmental Entity in connection with the
Merger and the consummation of the other transactions contemplated by this
Agreement shall have been filed or been obtained.
59
(d) S-4
Effectiveness.
In the event, and
only in the event, that the Company Common Tranche Two Consideration includes
any Buyer Common Stock, the S-4 shall have been declared effective under
the
Securities Act, and no stop order suspending the effectiveness of the S-4
shall
be in effect and no proceedings for that purpose shall be pending before
or
threatened by the SEC.
7.2 Additional
Conditions to Obligations of Buyer
and Merger
Sub. The
obligations of
Buyer and Merger Sub to effect the Merger shall be subject to the satisfaction
on or prior to the Closing Date of each of the following additional conditions,
any of which may be waived, in writing, exclusively by Buyer and Merger Sub:
(a) Representations
and Warranties.
The
representations and warranties of the Company set forth in this Agreement
shall
be true and correct as of the Closing Date as though made on and as of the
Closing Date (except to the extent such representations and warranties are
specifically made as of a particular date, in which case such representations
and warranties shall be true and correct as of such date), in each case,
except
(other than the representations and warranties of the company contained in
Sections 3.2, which shall be true and correct in all material respects and
Section 3.3(a) which shall be true and correct in all respects) where the
failure to be true and correct, individually or in the aggregate, has not
had
and would not reasonably be expected to have a Company Material Adverse Effect;
and Buyer shall have received a certificate signed on behalf of the Company
by
an officer of the Company to such effect.
(b) Performance
of
Obligations of the Company.
The Company shall
have performed in all material respects all obligations required to be performed
by it under this Agreement on or prior to the Closing Date; and Buyer shall
have
received a certificate signed on behalf of the Company by an officer of the
Company to such effect.
(c) No
Restraints.
(i) No
Governmental Entity of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any order, executive order, stay, decree,
judgment or injunction (preliminary or permanent) or statute, rule or regulation
which is in effect which would, and (ii) there shall not be instituted or
pending any action or proceeding in which any Governmental Entity seeks to,
(A)
make the Merger illegal or otherwise challenge, restrain or prohibit
consummation of the Merger or the other transactions contemplated by this
Agreement or (B) cause the transactions contemplated by this Agreement to
be
rescinded following consummation or (C) require Buyer or the Company or any
Subsidiary or affiliate thereof to effect an Action of Divestiture; provided,
however, that each of Buyer and Merger Sub shall have used reasonable efforts
to
prevent the entry of any such order or injunction and to appeal as promptly
as
possible any order or injunction that may be entered.
(d) Material
Adverse
Effect.
No
event has
occurred or circumstance shall have come into existence, either individually
or
in the aggregate, since the date hereof that has or would reasonably be expected
to have a Company Material Adverse Effect.
60
(e) Non-Competition
Agreement.
Xx. Xxxxxxx Xxxx
shall have entered into a non-competition agreement in the form attached
hereto
as Exhibit B,
and such agreement
shall be in full force and effect.
7.3 Additional
Conditions to Obligations of the Company.
The
obligation of
the Company to effect the Merger shall be subject to the satisfaction on
or
prior to the Closing Date of each of the following additional conditions,
any of
which may be waived, in writing, exclusively by the Company:
(a) Representations
and Warranties.
The
representations and warranties of Buyer and Merger Sub set forth in this
Agreement shall be true and correct as of the Closing Date as though made
on and
as of the Closing Date (except to the extent such representations and warranties
are specifically made as of a particular date, in which case such
representations and warranties shall be true and correct as of such date),
in
each case, except where the failure to be true and correct, individually
or in
the aggregate, has not had, or would not reasonably be expected to have a
Buyer
Material Adverse Effect; and the Company shall have received a certificate
signed on behalf of Buyer by an officer of Buyer to such effect.
(b) Performance
of
Obligations of Buyer and Merger Sub.
Buyer and Merger
Sub shall have performed in all material respects all obligations required
to be
performed by them under this Agreement on or prior to the Closing Date; and
the
Company shall have received a certificate signed on behalf of Buyer by an
officer of Buyer to such effect.
(c) No
Restraints.
(i) No
Governmental Entity of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any order, executive order, stay, decree,
judgment or injunction (preliminary or permanent) or statute, rule or regulation
which is in effect which would, and (ii) there shall not be instituted or
pending any action or proceeding in which any Governmental Entity seeks to,
(A)
make the Merger illegal or otherwise challenge, restrain or prohibit
consummation of the Merger or the other transactions contemplated by this
Agreement or (B) cause the transactions contemplated by this Agreement to
be
rescinded following consummation; provided, however, that the Company shall
have
used reasonable efforts to prevent the entry of any such order or injunction
and
to appeal as promptly as possible any order or injunction that may be
entered.
(d) Material
Adverse
Effect.Unless
Buyer elects
to pay all Company Common Tranche Two Consideration in cash and does not
revoke
such election, in which case this Section 7.3(d) shall not apply, no event
has
occurred or circumstance shall have come into existence, either individually
or
in the aggregate, since the date hereof that has had or would reasonably
be
expected to have a Buyer Material Adverse Effect.
61
ARTICLE
VIII
TERMINATION
AND AMENDMENT
8.1 Termination.
This
Agreement may
be terminated at any time prior to the Effective Time (whether before or
after
the Company Stockholders Meeting) (with respect to Sections 8.1(b) through
8.1(h), by written notice by the terminating party to the other party specifying
the provision hereof pursuant to which such termination is
effected):
(a) by
mutual written
consent of Buyer, Merger Sub and the Company; or
(b) by
either Buyer or
the Company if the Merger shall not have been consummated by September 10,
2007
(the “Outside
Date”);
provided that
the right to terminate this Agreement under this Section 8.1(b) shall not
be
available to any party whose failure to fulfill any obligation under this
Agreement has been a principal cause of the failure of the Merger to occur
on or
before the Outside Date;
(c) by
either Buyer or
the Company if a Governmental Entity of competent jurisdiction shall have
issued
a nonappealable final order, decree or ruling or taken any other nonappealable
final action, in each case having the effect of permanently restraining,
enjoining or otherwise prohibiting the Merger; provided, that the party seeking
to terminate this Agreement pursuant to this Section 8.1(c) shall have used
commercially reasonable efforts to prevent the occurrence of and to remove
such
order, decree or ruling;
(d) by
either Buyer or
the Company if at the Company Stockholders Meeting at which a vote on the
Company Voting Proposal is taken, the Required Company Stockholder Vote in
favor
of the adoption of the Company Voting Proposal shall not have been obtained;
provided,
however,
that the right to
terminate this Agreement under this Section 8.1(d) shall not be available
to the
Company where the failure to obtain the Required Company Stockholder Vote
shall
have been caused by the action or failure to act of the Company, and such
action
or failure to act constitute a breach by the Company of this Agreement;
(e) by
the Company, in
accordance with the procedures set forth in Section 6.1 and the Company shall
have paid Buyer the Termination Fee described in Section 8.3(b);
62
(f) by
Buyer (at any
time prior to the adoption of this Agreement by the required vote of the
stockholders of the Company) if a Triggering Event with respect to the Company
shall have occurred.
For
the purposes of this Agreement, a “Triggering
Event,”
with
respect to
the Company, shall be deemed to have occurred if: (i) the Company Board or
any
committee thereof shall for any reason have withdrawn or shall have amended
or
modified in a manner adverse to Buyer its recommendation in favor of the
adoption of the Agreement by the stockholders of the Company; (ii) it shall
have
failed to include in the Prospectus/Proxy Statement the recommendation of
the
Company Board in favor of the adoption of the Agreement by the stockholders
of
the Company; (iii) the Company Board fails to reaffirm (publicly, if so
requested, in connection with an Acquisition Proposal that has been publicly
announced or otherwise known to the public generally) its recommendation
in
favor of the adoption of this Agreement by the stockholders of the Company
within ten (10) Business Days after Buyer requests in writing that such
recommendation be affirmed; (iv) the Company Board or any committee thereof
fails to reject within ten (10) Business Days after the receipt thereof or
shall
have approved or publicly recommended any Acquisition Proposal; (v) the Company
shall have entered into any letter of intent or similar document or any
agreement, contract or commitment accepting any Superior Offer, following
notice
of such Superior Offer to Buyer as promptly as practicable (and in any event
no
later than 24 hours) after the Company Board has determined, in good faith,
after consultation with its outside legal counsel and its financial advisors
that the failure to take such action with respect to the Superior Offer would
reasonably be expected to result in a breach of the Company Board’s fiduciary
duties to the stockholders of the Company under applicable law, and a reasonable
opportunity to make such adjustments in the terms and conditions of this
Agreement during the four-Business Day period following such notice, as would
enable the Company to proceed with the Merger; (vi) a tender or exchange
offer
relating to its securities shall have been commenced by a Person unaffiliated
with Buyer, and the Company shall not have sent to its security holders pursuant
to Rule 14e-2 promulgated under the Exchange Act, within ten (10) Business
Days
after such tender or exchange offer is first published, sent or given, a
statement disclosing that the Company Board recommends rejection of such
tender
or exchange offer; or (vii) the Company materially breaches any of its
obligations set forth in Sections 6.1 or 6.3 (provided that with respect
to
Section 6.1, such breach must have been intentional on the part of the Company
and the Company Board and with respect to the notice provisions of Sections
6.1
and 6.3, Buyer must have been materially prejudiced thereby).
(g) by
Buyer, if there
has been a breach of or failure to perform any representation, warranty,
covenant or agreement on the part of the Company set forth in this Agreement,
which breach or failure to perform (i) would cause the conditions set forth
in
Section 7.2(a) or 7.2(b) not to be satisfied, and (ii) shall not have been
cured
within twenty (20) Business Days following receipt by the Company of written
notice of such breach or failure to perform from Buyer or which by its nature
or
timing cannot reasonably be cured by the Outside Date; or
63
(h) by
the Company, if
there has been a breach of or failure to perform any representation, warranty,
covenant or agreement on the part of Buyer or Merger Sub set forth in this
Agreement, which breach or failure to perform (i) would cause the conditions
set
forth in Section 7.3(a) or 7.3(b) not to be satisfied, and (ii) shall not
have
been cured within twenty (20) Business Days following receipt by Buyer of
written notice of such breach or failure to perform from the Company or which
by
its nature or timing cannot reasonably be cured by the Outside
Date.
(i) by
Buyer, if any
event has occurred or circumstance has arisen, either individually or in
the
aggregate, since the date hereof that has had, or would reasonably be expected
to have, a Company Material Adverse Effect and (x) such Company Material
Adverse
Effect is not capable of being cured prior to the Outside Date or (y) such
Company Material Adverse Effect is not cured prior to the earlier of the
Outside
Date and twenty (20) Business Days following the receipt of written notice
from
Buyer to the Company of such Company Material Adverse Effect (it being
understood that Buyer may not terminate this Agreement pursuant to this
subsection (i) if it shall have materially breached this Agreement or if
such
Company Material Adverse Effect is cured); and
(j) by
Company, unless
Buyer has elected to pay the Company Common Tranche Two Consideration entirely
in cash and has not revoked such election (in which case this Section 8.1(j)
shall not apply), if any event has occurred or circumstance has arisen, either
individually or in the aggregate, since the date hereof that has had, or
would
reasonably be expected to have, a Buyer Material Adverse Effect and (x) such
Buyer Material Adverse Effect is not capable of being cured prior to the
Outside
Date or (y) such Buyer Material Adverse Effect is not cured prior to the
earlier
of the Outside Date and twenty (20) Business Days following the receipt of
written notice from the Company to Buyer of such Buyer Material Adverse Effect
(it being understood that the Company may not terminate this Agreement pursuant
to this subsection (j) if it shall have materially breached this Agreement
or if
such Buyer Material Adverse Effect is cured).
8.2 Effect
of
Termination.
In
the event of
termination of this Agreement as provided in Section 8.1, this Agreement
shall
immediately become void and there shall be no liability or obligation on
the
part of Buyer, the Company, Merger Sub or their respective officers, directors,
stockholders or Affiliates under this Agreement; provided that:
(a) any
such termination
shall not relieve any party from liability for any willful breach of this
Agreement prior to such termination, and
64
(b)
the provisions of
Sections 6.4, this Section 8.2, Section 8.3 and Article IX of this Agreement
and
the Confidentiality Agreement shall remain in full force and effect and survive
any termination of this Agreement in accordance with its terms.
8.3 Fees
and
Expenses.
(a) All
fees and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby, including the fees and disbursements of counsel, financial
advisors and accountants, shall be paid by the party incurring such fees
and
expenses, whether or not the Merger is consummated.
(b) If
this Agreement is
terminated (i) by the Company pursuant to Section 8.1(e), or (ii) by Buyer
or
the Company, as applicable, pursuant to Section 8.1(d), (f) or (g) (provided,
however,
in
the case of termination pursuant to Section 8.1(g) that the breach by the
Company giving rise to the termination is willful and occurs after receipt
by
the Company of an Acquisition Proposal) and (A) if this Agreement is terminated
pursuant to Section 8.1(d) or (f), after the execution of this Agreement
but
prior to such termination, an Acquisition Proposal shall have been publicly
disclosed, announced, commenced, submitted or made and (B) within twelve
(12)
months after such termination, the Company consummates any Company Change
in
Control Transaction, then, concurrently with any such termination pursuant
to
Section 8.1(e) and, in the case of any such termination pursuant to Sections
8.1(d), (f) or (g), concurrently with the consummation of such transaction,
the
Company shall pay to Buyer an amount equal to $17,360,000.
All amounts payable
by the Company to Buyer under Section 8.3(b) shall be paid in immediately
available funds to such U.S. bank account as Buyer may designate in writing
to
the Company.
For
purposes of this Agreement, the term “Company
Change of Control Transaction”
shall
mean any
transaction or series of transactions in which: (i) the Company merges with
or
into, or is acquired, directly or indirectly, by merger or otherwise by any
Person or “group” (as defined in the Exchange Act and the rules promulgated
thereunder) of related Persons (other than Buyer or any of its affiliates)
pursuant to which the stockholders of the Company immediately preceding such
transaction hold, by virtue of retaining or converting their equity interests
in
the Company, less than 50% of the aggregate equity interests in the surviving
or
resulting entity of such transaction or any direct or indirect parent thereof;
(ii) any Person or “group” (as defined above) of related Persons acquires,
directly or indirectly, by means of an issuance of securities, direct or
indirect acquisition of securities, tender offer, exchange offer or similar
transaction, more than 50% of the outstanding shares of Company Common Stock;
or
(iii) any Person or “group” (as defined above) of related Persons acquires,
directly or indirectly, by means of a sale, lease, exchange, transfer, license,
acquisition or disposition of any business or businesses or of assets or
rights
that, in each case, constitute or account for 50% or more of the consolidated
net revenues, net income or assets of the Company and its Subsidiaries, taken
as
a whole.
65
8.4 Amendment.
This
Agreement may
be amended by the parties hereto, by action taken or authorized by their
respective Boards of Directors, at any time before or after receipt of the
Required Company Stockholder Vote in favor of the adoption of the Company
Voting
Proposal, but, after receipt of any such Required Company Stockholder Vote,
no
amendment shall be made which by law requires further approval by such
stockholders without such further approval. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto.
8.5 Extension;
Waiver.
At
any time prior to
the Effective Time, the parties hereto, by action taken or authorized by
their
respective Boards of Directors, may, to the extent legally allowed, (i) extend
the time for the performance of any of the obligations or other acts of the
other parties hereto, (ii) waive any inaccuracies in the representations
and
warranties contained herein or in any document delivered pursuant hereto
and
(iii) waive compliance with any of the agreements or conditions contained
herein. Any agreement on the part of a party hereto to any such extension
or
waiver shall be valid only if set forth in a written instrument signed on
behalf
of such party. Such extension or waiver shall not be deemed to apply to any
time
for performance, inaccuracy in any representation or warranty, or noncompliance
with any agreement or condition, as the case may be, other than that which
is
specified in the extension or waiver. The failure of any party to this Agreement
to assert any of its rights under this Agreement or otherwise shall not
constitute a waiver of such rights.
ARTICLE
IX
MISCELLANEOUS
9.1 Nonsurvival
of
Representations, Warranties and Agreements.
None
of the
representations, warranties and agreements in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective
Time, except for the provisions contained in Article II, Section 8.3 and
Article
IX and those covenants and agreements contained in this Agreement which by
their
terms are to be performed following the Effective Time.
9.2 Notices.
All
notices and other communications hereunder shall be in writing and shall
be
deemed duly delivered (i) four (4) Business Days after being sent by registered
or certified mail, return receipt requested, postage prepaid, (ii) one (1)
Business Day after being sent for next Business Day delivery, fees prepaid,
via
a reputable nationwide overnight courier service, or (iii) on the date of
confirmation of receipt (or, the first Business Day following such receipt
if
the date of such receipt is not a Business Day) of transmission by facsimile,
in
each case to the intended recipient as set forth below:
66
(a)
|
if
to Buyer or
Merger Sub, to :
|
Xxxxxxx
Navigation Limited
|
|
000
Xxxxxxx
Xxxxx
|
|
Xxxxxxxxx,
XX
00000
|
|
Attn:
General
Counsel
|
|
Facsimile:
(000) 000-0000
|
|
with
a copy
to:
|
|
Skadden,
Arps,
Slate, Xxxxxxx & Xxxx LLP
|
|
000
Xxxxxxxxxx
Xxxxxx
|
|
Xxxx
Xxxx, XX
00000
|
|
Attn:
Xxxxxx
Xxxx
|
|
Facsimile:
(000) 000-0000
|
|
If
to the
Company, to:
|
|
@Road,
Inc.
|
|
00000
Xxxxxxx
Xxxxxxx
|
|
Xxxxxxx,
XX
00000
|
|
Attn:
General
Counsel
|
|
Facsimile:
(000) 000-0000
|
|
with
a copy
to:
|
|
Xxxxxx
Xxxxxx
LLP
|
|
000
Xxxxxxxxxxx Xxxx
|
|
Xxxxx
Xxxx, XX
00000
|
|
Attn:
Xxxx
Xxxxx
|
|
Facsimile:
(000) 000-0000
|
Any
party to this Agreement may give any notice or other communication hereunder
using any other means (including Personal delivery, messenger service, ordinary
mail or electronic mail), but no such notice or other communication shall
be
deemed to have been duly given unless and until it actually is received by
the
party for whom it is intended. Any party to this Agreement may change the
address to which notices and other communications hereunder are to be delivered
by giving the other parties to this Agreement notice in the manner herein
set
forth.
9.3 Entire
Agreement.
This
Agreement
(including the schedules and exhibits hereto and the documents and instruments
referred to herein that are to be delivered at the Closing) constitutes the
entire agreement among the parties to this Agreement and supersedes any prior
understandings, agreements or representations by or among the parties hereto,
or
any of them, written or oral, with respect to the subject matter hereof;
provided that the Confidentiality Agreement shall remain in effect in accordance
with its terms.
67
9.4 No
Third Party
Beneficiaries.
Nothing
in this
Agreement, express or implied, is intended to or shall confer upon any Person
(other than the parties hereto) any right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement except for (i) the rights,
benefits and remedies granted to the Indemnified Persons under Section 6.7,
(ii)
the rights of the Company Stockholders and the holders of Company Options
to
receive Merger Consideration in accordance with the provisions of this Agreement
after the Effective Time, (iii) the rights of the Continuing Employees granted
under Section 6.12, and (iv) the right of the Company, on behalf of the
Company’s stockholders and holders of Company Options, to pursue claims for
damages and other relief, including equitable relief, for Buyer’s or Merger
Sub’s intentional breach of this Agreement fraud, wrongful repudiation or
termination of this Agreement or wrongful failure to consummate the Merger,
provided, however, that the rights granted pursuant to clause (iv) of this
Section 9.4 shall only be enforceable on behalf of the Company’s stockholders
and the holders of Company Options by the Company in its sole and absolute
discretion.
9.5 Assignment.
Neither
this
Agreement nor any of the rights, interests or obligations under this Agreement
may be assigned or delegated, in whole or in part, by operation of law or
otherwise by any of the parties hereto without the prior written consent
of the
other parties, and any such assignment without such prior written consent
shall
be null and void; provided that notwithstanding the foregoing, Buyer may
designate, by written notice to the Company, another wholly owned direct
or
indirect subsidiary to replace Merger Sub, in which event all references
herein
to Merger Sub shall be deemed references to such other subsidiary, except
that
all representations and warranties made herein with respect to Merger Sub
as of
the date of this Agreement shall be deemed representations and warranties
made
with respect to such other subsidiary as of the date of such designation;
provided further that no such assignment shall relieve Buyer of its obligations
hereunder. Subject to the preceding sentence, this Agreement shall be binding
upon, inure to the benefit of, and be enforceable by, the parties hereto
and
their respective successors and permitted assigns.
9.6 Severability.
Any
term or
provision of this Agreement that is invalid or unenforceable in any situation
in
any jurisdiction shall not affect the validity or enforceability of the
remaining terms and provisions hereof or the validity, legality or
enforceability of the offending term or provision in any other situation
or in
any other jurisdiction. If the final judgment of a court of competent
jurisdiction declares that any term or provision hereof is invalid, illegal
or
unenforceable, the parties hereto agree that the court making such determination
shall have the power to limit the term or provision, to delete specific words
or
phrases, or to replace any invalid, illegal or unenforceable term or provision
with a term or provision that is valid, legal and enforceable and that comes
closest to expressing the intention of the invalid, illegal or unenforceable
term or provision, and this Agreement shall be enforceable as so modified.
In
the event such court does not exercise the power granted to it in the prior
sentence, the parties hereto agree to replace such invalid, illegal or
unenforceable term or provision with a valid, legal and enforceable term
or
provision that will achieve, to the extent possible, the economic, business
and
other purposes of such invalid, illegal or unenforceable term.
68
9.7 Counterparts
and
Signature.
This
Agreement may
be executed in two or more counterparts, each of which shall be deemed an
original but all of which together shall be considered one and the same
agreement and shall become effective when counterparts have been signed by
each
of the parties hereto and delivered to the other parties, it being understood
that all parties need not sign the same counterpart. This Agreement may be
executed and delivered by facsimile transmission.
9.8 Interpretation.
When
reference is
made in this agreement to an article or a section, such reference shall be
to an
article or section of this Agreement, unless otherwise indicated. The table
of
contents, table of defined terms and headings contained in this Agreement
are
for convenience of reference only and shall not affect in any way the meaning
or
interpretation of this Agreement. The language used in this Agreement shall
be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against any party.
Whenever the context may require, any pronouns used in this Agreement shall
include the corresponding masculine, feminine or neuter forms, and the singular
form of nouns and pronouns shall include the plural, and vice versa. Any
reference to any federal, state, local or foreign statute or law shall be
deemed
also to refer to all rules and regulations promulgated thereunder, unless
the
context requires otherwise. Whenever the words “include,” “includes” or
“including” are used in this Agreement, they shall be deemed to be followed by
the words “without limitation.” No summary of this Agreement prepared by any
party shall affect the meaning or interpretation of this Agreement.
9.9 Governing
Law.
This
Agreement shall
be governed by and construed in accordance with the internal laws of the
State
of Delaware without giving effect to any choice or conflict of law provision
or
rule (whether of the State of Delaware or any other jurisdiction) that would
cause the application of laws of any jurisdictions other than those of the
State
of Delaware.
9.10 Remedies.
Except
as otherwise
provided herein, any and all remedies herein expressly conferred upon a party
will be deemed cumulative with and not exclusive of any other remedy conferred
hereby, or by law or equity upon such party, and the exercise by a party
of any
one remedy will not preclude the exercise of any other remedy. The parties
hereto agree that irreparable damage would occur in the event that any of
the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that
the
parties shall be entitled to an injunction or injunctions to prevent breaches
of
this Agreement and to enforce specifically the terms and provisions of this
Agreement, this being in addition to any other remedy to which they are entitled
at law or in equity.
69
9.11 Submission
to
Jurisdiction.
Each
of
the parties to this Agreement (a) consents to submit itself to the personal
jurisdiction of the courts of the State of Delaware in any action or proceeding
arising out of or relating to this Agreement or any of the transactions
contemplated by this Agreement, (b) agrees that all claims in respect of
such
action or proceeding may be heard and determined in any such court, (c) agrees
that it shall not attempt to deny or defeat such personal jurisdiction by
motion
or other request for leave from any such court, and (d) agrees not to bring
any
action or proceeding arising out of or relating to this Agreement or any
of the
transaction contemplated by this Agreement in any other court. Each of the
parties hereto waives any defense of inconvenient forum to the maintenance
of
any action or proceeding so brought and waives any bond, surety or other
security that might be required of any other party with respect thereto.
Any
party hereto may make service on another party by sending or delivering a
copy
of the process to the party to be served at the address and in the manner
provided for the giving of notices in Section 9.2. Nothing in this Section
9.11,
however, shall affect the right of any party to serve legal process in any
other
manner permitted by law.
9.12 Knowledge
of the
Company.
For
all
purposes of this Agreement, the phrase “to
the
knowledge of the Company”
shall
mean the
actual knowledge of Xxxxx Xxxx, Xxxxxx Xxxxx, Xxxxxxx Xxxxx, Xxxxx X. Xxx,
Xxx
Xxxx, Xxxx Xxxxxxx, Xxx Xxxxxxxxx, Xxxxx Xxxx-Xxxxxx and Xxxxxxx Xxxxxx after
due inquiry.
[Remainder
of Page
Intentionally Left Blank]
70
XXXXXXX
NAVIGATION LIMITED
|
|
By:
/s/
Xxxxxx X.
Xxxxxxxx
|
|
Name:
Xxxxxx
X. Xxxxxxxx
|
|
Title:
President & Chief Executive Officer
|
|
ROADRUNNER
ACQUISITION CORP.
|
|
By:
/s/
Xxxxx
Xxxxxx
|
|
Name:
Xxxxx
Xxxxxx
|
|
Title:
Vice
President
|
|
@ROAD,
INC.
|
|
By:
/s/
Xxxxx
Xxxx
|
|
Name:
Xxxxx
Xxxx
|
|
Title:
Chief
Executive Officer
|
|
71
Exhibit
A
Form
of Affiliate
Letter
______________,
2006
Xxxxxxx
Navigation
Limited
000
Xxxxxxx Xxxxx
Xxxxxxxxx,
XX
00000
Attention:
General
Counsel
Telecopy:
(000)
000-0000
Ladies
and
Gentlemen:
I
have been advised
that I may be deemed to be an “affiliate” of @Road, Inc., a Delaware corporation
(the "Company”),
as that term is
defined in Rule 145 promulgated by the Securities and Exchange Commission
(the
“SEC”)
under the
Securities Act of 1933, as amended (the “Securities
Act”).
I understand
that pursuant to the terms of the Agreement and Plan of Merger, dated as
of
December 10, 2006 (the “Merger
Agreement”),
by and among the
Company, Xxxxxxx Navigation Limited,
a California
corporation ("Trimble”), and Roadrunner Acquisition Corp., a Delaware
corporation and wholly owned subsidiary of Trimble ("Merger
Sub"),
the Company
plans
to merge with and into Merger Sub (the “Merger”),
with
Merger Sub
being the surviving company.
Capitalized terms
used herein but not otherwise defined shall have the meanings given to such
terms in the Merger Agreement.
I
further understand
that, as a result of the Merger, in exchange for shares of common stock,
par
value $0.0001 per share, of the Company (“Company
Common
Stock”)
I will receive
common stock, no par value per share of Trimble ("Trimble
Common
Stock").
If
in fact I were an
affiliate under the Securities Act, my ability to sell, assign or transfer
the
Trimble Common Stock received by me in exchange for any shares of Company
Common
Stock pursuant to the Merger may be restricted unless such transaction is
registered under the Securities Act or an exemption from such registration
is
available. I have read this letter and reviewed the Merger Agreement and
discussed their requirements and other applicable limitations upon my ability
to
sell, transfer or otherwise dispose of Trimble Common Stock, including
information with respect to the applicability to the sale of such securities
of
Rules 144 and 145(d) promulgated under the Securities Act, to the extent
I felt
necessary with my counsel or counsel for the Company. I understand that Trimble
will not be required to maintain the effectiveness of any registration statement
under the Securities Act for purposes of resale of Trimble Common Stock by
me.
72
I
represent, warrant
and covenant with and to Trimble that in the event I receive any Trimble
Common
Stock as a result of the Merger, I shall not effect any sale, transfer, or
other
disposition of such Trimble Common Stock unless: (i) such sale, transfer
or
other disposition has been registered under the Securities Act, (ii) such
sale,
transfer or other disposition is made in conformity with the provisions of
Rule
145 under the Securities Act (as such rule may be amended from time to time),
or
(iii) in the opinion of counsel in form and substance reasonably satisfactory
to
Trimble, or under a “no-action” letter or interpretive letter from the staff of
the SEC, such sale, transfer or other disposition will not violate or is
otherwise exempt from registration under the Securities Act.
In
the event of a
sale or other disposition by me of Trimble Common Stock received by me in
the
Merger pursuant to Rule 145, I will supply Trimble with evidence of compliance
with such Rule 145, in the form of a letter in the form of Annex I
hereto or the
opinion of counsel or no-action letter referred to above. I understand that
Trimble may instruct its transfer agent to withhold the transfer of any Trimble
Common Stock disposed of by the undersigned, but that (provided such transfer
is
not prohibited by any other provision of this letter agreement) upon receipt
of
such evidence of compliance the transfer agent shall effectuate the transfer
of
the Trimble Common Stock sold as indicated in the letter.
I
understand that
Trimble is under no obligation to register the sale, transfer or other
disposition of Trimble Common Stock by me or on my behalf under the Securities
Act or, other than as set forth below, to take any other action necessary
in
order to make compliance with an exemption from such registration
available.
I
acknowledge and
agree that, unless the transfer by me of the Trimble Common Stock issued
to me
as a result of the Merger has been registered under the Securities Act or
such
transfer is made in conformity with the provisions of Rule 145(d) under the
Securities Act, the following legend may be placed on certificates, if any,
representing such shares of Trimble Common Stock:
“The
shares
represented by this certificate were issued in a transaction to which Rule
145
under the Securities Act of 1933, as amended (the “Act”), applies. The shares
may not be sold, transferred or otherwise disposed of except in compliance
with
the requirements of rule 145 or pursuant to an effective registration statement
under, or in accordance with an exemption from the registration requirements
of,
the Act.”
73
It
is understood and
agreed that the legend set forth above shall be removed by delivery of
substitute certificates without such legend and/or any stop transfer
instructions will be lifted if (A) one year (or such other period as may
be
required by Rule 145(d)(2) or any successor thereto) shall have elapsed
from the date I acquired the Trimble Common Stock received in the Merger
and the
provisions of Rule 145(d)(2) (or any successor thereto) are then available
to me, (B) two years (or such other period as may be required by
Rule 145(d)(3) or any successor thereto) shall have elapsed from the date I
acquired the Trimble Common Stock received in the Merger and the provisions
of
Rule 145(d)(3) (or any successor thereto) are then available to me or
(C) I shall have delivered to Trimble a copy of a “no-action” letter or
interpretative letter from the staff of the SEC, or an opinion of counsel
in
form and substance reasonably satisfactory to Trimble, to the effect that
such
legend is not required for purposes of the Securities Act.
At
the time that I
make any offer to or otherwise sell, pledge, transfer or dispose of any Trimble
Common Stock that I own after the Merger, I shall notify my broker, dealer
or
nominee in whose name my shares are held or registered that such Trimble
Common
Stock is subject to this letter.
Execution
of this
letter should not be considered an admission on my part of "affiliate" status
as
described in the first paragraph of this letter agreement, or as a waiver
of any
rights I may have to object to any claim that I am such an affiliate on or
after
the date of this letter.
The
representations, warranties, covenants and other agreements in this letter
shall
only become effective as of the Effective Time.
This
letter
agreement shall be binding on my heirs, legal representatives and successors.
This
letter
agreement shall be governed by and construed in accordance with the laws
of the
State of Delaware.
This
letter
agreement may be executed in counterparts, all of which when so executed
shall
constitute one agreement, notwithstanding that all of the signatories are
not
signatories to the original or the same counterpart.
Very
truly
yours,
By:
_______________________
Name:
Accepted
this ____
day of
________________,
200__.
XXXXXXX
NAVIGATION
LIMITED
By:
_____________________________
Name:
Title:
74
Annex
I
[Name][Date]
On
___________, the undersigned sold the securities of Xxxxxxx Navigation Limited,
a California corporation (“Trimble”),
described below
in the space provided for that purpose (the “Securities”).
The Securities
were received by the undersigned in connection with the merger of @Road,
Inc., a
Delaware corporation, with and into Roadrunner Acquisition Corp., a Delaware
corporation and wholly owned subsidiary of Trimble
Based
upon the most
recent report or statement filed by Trimble with the Securities and Exchange
Commission, the Securities sold by the undersigned were within the prescribed
limitations set forth in paragraph (e) of Rule 144 promulgated under the
Securities Act of 1933, as amended (the “Securities
Act”).
The
undersigned hereby represents that the Securities were sold in “brokers’
transactions” within the meaning of Section 4(4) of the Securities Act or
in transactions directly with a “market maker” as that term is defined in
Section 3(a)(38) of the Securities Exchange Act of 1934, as amended. The
undersigned further represents that the undersigned has not solicited or
arranged for the solicitation of orders to buy the Securities, and that the
undersigned has not made any payment in connection with the offer or sale
of the
Securities to any person other than to the broker who executed the order
in
respect of such sale.
Very
truly
yours,
Description
of the
Securities:
75
Exhibit
B
FORM
OF
NONCOMPETITION AGREEMENT
THIS
NONCOMPETITION
AGREEMENT (this “Agreement”)
is entered into
as of [●],by and between Xxxxxxx Navigation Limited, a California corporation
(the “Company”)
and Xxxxx Xxxx
(“Shareholder”),
a shareholder
and chief executive officer of @Road, Inc., a Delaware corporation
(“Target”).
A. Target
is engaged in
business of providing solutions designed to automate the management of mobile
resources such as field force management, field service management and field
asset management (the “Business”).
B. Shareholder
is the
chief executive officer and a significant shareholder of Target and accordingly
has acquired confidential and proprietary information relating to the Business
and operations of Target, and has directly or indirectly participated in,
supervised or managed such operations of Target, in the United
States.
C. Shareholder’s
covenant not to compete with the Company, as reflected in this Agreement,
is an
essential inducement to the Company to enter into the transactions described
in
the Agreement and Plan of Merger dated as of the date hereof (the “Merger
Agreement”),
among the
Company, Target and Roadrunner Acquisition Corp., a Delaware corporation
and a
wholly owned subsidiary of the Company (the transactions contemplated by
the
Merger Agreement are referred to hereinafter as the “Merger”).
D. Shareholder holds
a significant
number of the issued and outstanding shares of stock of Target, for which
he
will receive valuable consideration as part of the transactions contemplated
by
the Merger Agreement, and therefore has a material economic interest in the
consummation of the Merger.
E. In
order to protect
the goodwill related to the Business, and as a condition precedent to the
obligations of the Company to complete the Merger, Shareholder has agreed
to the
restrictive covenants and other terms and conditions set forth in this
Agreement.
NOW,
THEREFORE, in
consideration of the foregoing and to induce the Company to consummate the
transactions contemplated by the Merger Agreement and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Shareholder hereby covenants and agrees as follows:
1. Noncompetition.
(a) Shareholder
and the
Company agree that due to the nature of Shareholder’s association with Target,
Shareholder has Confidential Information (as defined below) relating to the
business and operations of Target and the Company. Shareholder acknowledges
that
such information is of extreme importance to the business of Target and the
Company and will continue to be so after the Merger and that disclosure of
the
Confidential Information to others, or the unauthorized use of such information
by Shareholder, may cause substantial loss and harm to the Company.
76
(b) Shareholder
and the
Company further agree that the market for the Business is intensely competitive
and that Target and the Company may engage in the Business throughout the
entire
world.
(c) Shareholder
and the
Company intend and agree that this Agreement is an ancillary agreement to
the
Merger Agreement.
(d) During
the period
which shall commence at the Closing and shall terminate eighteen (18) months
from the Closing, Shareholder shall not, anywhere in the Business Area (as
defined below), directly or indirectly (including without limitation, through
any Affiliate (as defined below) of Shareholder), own, manage, operate, control,
be employed by or otherwise engage or participate in, or be connected as
an
owner, partner, principal, sales representative, advisor, member of the board
of
directors of, employee of or consultant of any Competitor (as defined below).
(e) Notwithstanding
the
foregoing provisions of Section 1(d) and the restrictions set forth
therein, Shareholder may own securities in any of the Competitors, but only
to
the extent that Shareholder does not own, of record or beneficially, more
than
2% (two percent) of the outstanding beneficial ownership of any such
Competitor.
(f) “Competitor”
as
used herein,
means any entity or person that is directly, or indirectly through an Affiliate,
actively competing with Target or the Company in the Business.
(g) “Business
Area”
as
used herein,
means North America, the United Kingdom and Australia.
(h) “Affiliate”
as
used herein,
means, with respect to any person or entity, any person or entity directly
or
indirectly controlling, controlled by or under direct or indirect common
control
with such other person or entity.
2. Nonsolicitation
of Employees.
During the period
which shall commence at the Closing and shall terminate two (2) years from
the
Closing, Shareholder shall not, without the prior written consent of the
Company, directly or indirectly encourage, solicit, request, cause, induce
or
attempt to induce any person who was an employee of or a consultant of Target
or
any of its Affiliates as of the Closing to leave the employ of or terminate
such
person’s relationship with Target, its Affiliates or the Company.
3. Nonsolicitation
of Customers and Suppliers.
During the period
which shall commence at the Closing and shall terminate two (2) years from
the
Closing, Shareholder shall not, directly or indirectly, (i) solicit, induce
or
attempt to induce any Customer (as defined below) or Supplier to cease doing
business in whole or in part with Target, its Affiliates or the Company with
respect to the Business; (ii) attempt to limit or interfere with any
Business agreement or relationship existing between Target or the Company
and/or
their Affiliates with respect to the Business with any third party; or
(iii) disparage or take any actions that are harmful to the business
reputation of Target, its Affiliates or the Company (or their respective
management teams). “Customer”
as
used herein
means any customer or client of Target, its Affiliates or the Company with
respect to the Business that, as of the Closing, Shareholder has or had contact
with, supervision over or access to confidential information regarding, by
virtue of his association with Target, its Affiliates or the Company.
“Supplier,”
as
used herein,
means any supplier or Target, its Affiliates or the Company with respect
to the
Business that, as of the Closing, Shareholder has or had contact with,
supervision over or access to confidential information regarding, by virtue
of
his association with Target, its Affiliates or the Company.
77
4. Confidentiality.
Shareholder
covenants that he will not, at any time, directly or indirectly, use for
his own
account, or disclose to any person, firm or corporation, other than authorized
officers, directors and employees of Target or the Company, Confidential
Information (as hereinafter defined) of Target and/or the Company. As used
herein, “Confidential
Information”
means
information
about Target, its Affiliates or the Company of any kind, nature or description,
including, but not limited to, any proprietary knowledge, trade secrets,
data,
formulae, employees, and client and customer lists and all documents, papers,
resumes, and records (including computer records) which is disclosed to or
otherwise known to Shareholder as a direct or indirect consequence of his
association with Target, its Affiliates and his association with the Company
in
the context of the Merger; provided, however, that Confidential Information
does
not include information that (i) is in or enters the public domain otherwise
than as a result of Shareholder’s breach of an obligation of confidentiality to
the Company or (ii) is disclosed to Shareholder without restriction by a
third
party who rightfully possesses the information and is under no duty of
confidentiality with respect thereto. Shareholder
acknowledges that such Confidential Information is specialized, unique in
nature
and of great value to the Company and that such information gives Target
and the
Company a competitive advantage in the Business. Shareholder further agrees
to
deliver to the Company, at the Company’s request, all documents, computer tapes
and disks, records, lists, data, drawings, prints, notes and written or
electronic information (and all copies thereof) furnished by Target, its
Affiliates or the Company or created by Shareholder in connection with his
association with Target and/or the Company.
5. Injunctive
Relief.
The parties agree
that the remedy at law for any breach of this Agreement is and will be
inadequate, and in the event of a breach or threatened breach by Shareholder
of
the provisions of Sections 1, 2, 3 or 4 of this Agreement, the Company shall
be
entitled to seek an injunction restraining Shareholder from the conduct which
would constitute a breach of this Agreement. Nothing herein contained shall
be
construed as prohibiting the Company from pursuing any other remedies available
to it or them for such breach or threatened breach, including, without
limitation, the recovery of damages from Shareholder.
6. Reasonableness
and Enforceability of Covenants.
(a) The
parties
expressly agree that the character, duration and geographical scope of this
Agreement are reasonable in light of the circumstances as they exist on the
date
upon which this Agreement has been executed, including, but not limited to,
Shareholder’s material economic interest in the transactions contemplated in the
Merger Agreement as well as his position of confidence and trust as an executive
employee of Target.
78
(b) If
any court of
competent jurisdiction determines that any of the covenants and agreements
contained herein, or any part thereof, is unenforceable because of the
character, duration or geographic scope of such provision, such court shall
have
the power to reduce the duration or scope of such provision, as the case
may be,
and, in its reduced form, such provision shall then be enforceable to the
maximum extent permitted by applicable law.
(c) Shareholder
expressly agrees to be bound by the restrictive covenants and the other
agreements contained in this Agreement to the maximum extent permitted by
law,
it being the intent and spirit of the parties that the restrictive covenants
and
the other agreements contained herein shall be valid and enforceable in all
respects, and, subject to the terms and conditions of this
Agreement.
(d) Shareholder
acknowledges that (i) as part of the Merger, the Company will be vested with
the
goodwill of, and will carry on, the Business that had been conducted by Target
prior to the Merger; (ii) the restrictive covenants and the other agreements
contained herein are an essential part of this Agreement and (iii) the
transactions contemplated by the Merger Agreement are designed and intended
to
qualify as a sale (or other disposition) by Shareholder of all of Shareholder’s
interests in Target within the meaning of section 16601 of the Business and
Professions Code of California (the “BPCC”), which section provides as
follows:
§
16601. Sale
of
goodwill or corporation shares; agreement not to compete. Any
person who sells
the goodwill of a business, or any Shareholder of a corporation selling or
otherwise disposing of all his shares in said corporation, or any Shareholder
of
a corporation which sells (a) all or substantially all of its operating assets
together with the goodwill of the corporation, (b) all or substantially all
of
the operating assets of a division or a subsidiary of the corporation together
with the goodwill of such division or subsidiary, or (c) all of the shares
of
any subsidiary, may agree with the buyer to refrain from carrying on a similar
business within a specified county or counties, city or cities, or a part
thereof, in which the business so sold, or that of said corporation, division,
or subsidiary has been carried on, so long as the buyer, or any person deriving
title to the goodwill or shares from him, carries on a like business therein.
For the purposes of this section, “subsidiary” shall mean any corporation, a
majority of whose voting shares are owned by the selling
corporation.
(d) Shareholder
further
represents, warrants and agrees that (i) Shareholder has been fully advised
by,
or has had the opportunity to be advised by, counsel in connection with the
negotiation, preparation, execution and delivery of this Agreement and the
transactions contemplated by this Agreement and the Merger Agreement; and
(ii)
Shareholder has read section 16601 of the BPCC, understands its terms and
agrees
that section 16601 of the BPCC applies in the context of the transactions
contemplated by the Merger Agreement and this Agreement and such transactions
are within the scope and intent of section 16601 and an exception to section
16600 of the BPCC and agrees to be fully bound by the restrictive covenants
and
the other agreements contained in this Agreement. Accordingly, Shareholder
agrees to be bound by the restrictive covenants and the other agreements
contained in this Agreement to the maximum extent permitted by law, it being
the
intent and spirit of the parties that the restrictive covenants and the other
agreements contained herein shall be valid and enforceable in all respects,
and,
subject to the terms and conditions of this Agreement.
79
7. Legitimate
Business Interest.
Shareholder
expressly agrees that the Company has a legitimate business interest justifying
the restrictions contained in Sections 1, 2, 3 and 4 hereof.
8. Severability.
If any of the
provisions of this Agreement shall otherwise contravene or be invalid under
the
laws of any state where this Agreement is applicable but for such contravention
or invalidity, such contravention or invalidity shall not invalidate all
of the
provisions of this Agreement but rather it shall be construed, insofar as
the
laws of that state, country or jurisdiction are concerned, as not containing
the
provision or provisions contravening or invalid under the laws of that state,
and the rights and obligations created hereby shall be construed and enforced
accordingly.
9. Construction.
This Agreement
shall be construed and enforced in accordance with and governed by the laws
of
the State of Delaware, without regard to principles of conflicts or choice
of
laws.
10. Amendments
and
Waivers.
This Agreement may
be modified only by a written instrument duly executed by each party hereto.
No
breach of any covenant, agreement, warranty or representation shall be deemed
waived unless expressly waived in writing by the party who might assert such
breach. No waiver of any right hereunder shall operate as a waiver of any
other
right or of the same or a similar right on another occasion.
11. Entire
Agreement.
This Agreement,
together with the Merger Agreement and the ancillary documents executed in
connection therewith, contains the entire understanding of the parties relating
to the subject matter hereof, supersedes all prior and contemporaneous
agreements and understandings relating to the subject matter hereof and shall
not be amended except by a written instrument signed by each of the parties
hereto.
12. Counterparts.
This Agreement may
be executed by the parties in separate counterparts, each of which, when
so
executed and delivered, shall be an original, but all of which, when taken
as a
whole, shall constitute one and the same instrument.
13. Section
Headings.
The headings of
each Section, subsection or other subdivision of this Agreement are for
reference only and shall not limit or control the meaning thereof.
14. Assignment.
Neither this
Agreement nor any right, remedy, obligation or liability arising hereunder
or by
reason hereof nor any of the documents executed in connection herewith may
be
assigned by any party without the consent of the other parties; provided,
however, that the Company may assign their rights hereunder, without the
consent
of Shareholder, to any entity that acquires or succeeds to the
Business.
15. Notices.
All notices and
other communications hereunder shall be in writing and shall be deemed given
if
delivered personally or two business days after being mailed by registered
or
certified mail (return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by
like
notice):
80
(a) if
to the
Company:
Xxxxxxx
Navigation
Limited
000
Xxxxxxx Xxxxx
Xxxxxxxxx,
XX
00000
Attention:
General
Counsel
Fax:
(000)
000-0000
(b) if
to Shareholder:
to
the address set
forth below the name of Shareholder on the signature page
hereof.
16. Each
Party the
Drafter.
This Agreement and
the provisions contained herein shall not be construed or interpreted for
or
against any party to this Agreement because that party drafted or caused
that
party’s legal representative to draft any of its provisions.
17. Defined
Terms.
Capitalized terms
not otherwise defined herein shall have the meanings given to them in the
Merger
Agreement.
81
COMPANY
XXXXXXX
NAVIGATION
LIMITED
By:
________________________
Name:
_____________________
Title:
_______________________
SHAREHOLDER
____________________________
Xxxxx
Xxxx
Address:
_________________________
Facsimile: ________________________