Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
COBALT HOLDING COMPANY,
COBALT MERGER CORP.,
AND
INTERGRAPH CORPORATION
DATED AS OF AUGUST 31, 2006
TABLE OF CONTENTS
SECTION 1. THE MERGER.......................................................................... 1
Section 1.1 The Merger; Effects of the Merger................................................... 1
Section 1.2 Closing............................................................................. 2
Section 1.3 Effective Time...................................................................... 2
Section 1.4 Directors and Officers of the Surviving Corporation................................. 2
SECTION 2. CONVERSION OF SECURITIES............................................................ 2
Section 2.1 Conversion of Capital Stock......................................................... 2
Section 2.2 Dissenting Shares................................................................... 3
Section 2.3 Company Options, Restricted Shares, Restricted Share Units and ESPP................. 3
Section 2.4 Exchange of Certificates............................................................ 5
Section 2.5 Withholding......................................................................... 6
Section 2.6 Transfer Taxes...................................................................... 6
SECTION 3. REPRESENTATIONS AND WARRANTIES OF COMPANY........................................... 6
Section 3.1 Organization and Qualification...................................................... 7
Section 3.2 Authority........................................................................... 8
Section 3.3 Capitalization...................................................................... 8
Section 3.4 Company Subsidiaries................................................................ 10
Section 3.5 SEC Filings; Financial Statements; Undisclosed Liabilities.......................... 10
Section 3.6 Absence of Certain Changes or Events................................................ 12
Section 3.7 Compliance with Laws................................................................ 12
Section 3.8 Claims, Actions and Proceedings..................................................... 12
Section 3.9 Contracts and Other Agreements...................................................... 13
Section 3.10 Intellectual Property............................................................... 15
Section 3.11 Real Property; Title to Assets...................................................... 18
Section 3.12 Insurance........................................................................... 18
Section 3.13 Tax Matters......................................................................... 19
Section 3.14 Employee Benefit Plans.............................................................. 21
Section 3.15 Labor and Employee Matters.......................................................... 22
Section 3.16 Environmental Matters............................................................... 23
Section 3.17 No Breach........................................................................... 24
Section 3.18 Board Approvals; Anti-Takeover; Vote Required....................................... 25
Section 3.19 Financial Advisor................................................................... 25
Section 3.20 Information in the Proxy Statement.................................................. 26
Section 3.21 Affiliate Transactions.............................................................. 26
Section 3.22 No Other Representations or Warranties; Investigation by Parent..................... 26
SECTION 4. REPRESENTATIONS AND WARRANTIES OF PARENT............................................ 26
Section 4.1 Organization........................................................................ 27
Section 4.2 Authority to Execute and Perform Agreement.......................................... 27
Section 4.3 No Conflict; Required Filings and Consents.......................................... 27
Section 4.4 Information in the Proxy Statement.................................................. 27
Section 4.5 Litigation.......................................................................... 28
Section 4.6 Financing........................................................................... 28
Section 4.7 Guarantee........................................................................... 28
Section 4.8 Parent and Merger Sub............................................................... 29
Section 4.9 Brokers............................................................................. 29
Section 4.10 No Other Representations or Warranties.............................................. 29
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SECTION 5. CONDUCT OF BUSINESS PENDING THE MERGER; NO SOLICITATION; EMPLOYEE MATTERS........... 29
Section 5.1 Conduct of Business................................................................. 29
Section 5.2 No Solicitation..................................................................... 33
Section 5.3 Employee Matters.................................................................... 36
SECTION 6. ADDITIONAL AGREEMENTS............................................................... 37
Section 6.1 Proxy Statement..................................................................... 37
Section 6.2 Company Stockholders Meeting........................................................ 38
Section 6.3 Access to Information, Confidentiality.............................................. 38
Section 6.4 Regulatory Filings; Reasonable Efforts.............................................. 38
Section 6.5 Directors and Officers Indemnification and Insurance................................ 40
Section 6.6 Director Resignations............................................................... 41
Section 6.7 Conduct of Business of Parent and Merger Sub Pending the Merger..................... 42
Section 6.8 Financing........................................................................... 42
Section 6.9 Public Disclosure................................................................... 44
Section 6.10 Notification of Certain Matters..................................................... 44
SECTION 7. CONDITIONS PRECEDENT TO THE OBLIGATION OF THE PARTIES TO CONSUMMATE THE MERGER...... 45
Section 7.1 Conditions to Obligations of Each Party to Effect the Merger........................ 45
Section 7.2 Additional Conditions to the Obligations of Parent and Merger Sub................... 45
Section 7.3 Additional Conditions to the Obligations of the Company............................. 45
SECTION 8. TERMINATION, AMENDMENT AND WAIVER................................................... 46
Section 8.1 Termination......................................................................... 46
Section 8.2 Effect of Termination............................................................... 47
Section 8.3 Fees and Expenses................................................................... 49
Section 8.4 Amendment........................................................................... 49
Section 8.5 Waiver.............................................................................. 49
SECTION 9. MISCELLANEOUS....................................................................... 49
Section 9.1 Entire Agreement.................................................................... 49
Section 9.2 No Survival......................................................................... 50
Section 9.3 Parent Guarantee.................................................................... 50
Section 9.4 Notices............................................................................. 50
Section 9.5 Binding Effect; No Assignment; No Third-Party Beneficiaries......................... 51
Section 9.6 Severability........................................................................ 51
Section 9.7 Governing Law....................................................................... 51
Section 9.8 Submission to Jurisdiction; Waiver.................................................. 51
Section 9.9 Specific Enforcement; Remedies...................................................... 52
Section 9.10 Interpretation...................................................................... 52
Section 9.11 No Waiver of Rights................................................................. 53
Section 9.12 Counterparts; Facsimile Signatures.................................................. 53
Index of Defined Terms.................................................................................. Annex A
EXHIBITS:
Exhibit A - Certificate of Incorporation of Surviving Corporation
Exhibit B - By-laws of Surviving Corporation
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of August
31, 2006, is by and among Cobalt Holding Company ("Parent"), a newly-formed
Delaware corporation, Cobalt Merger Corp. ("Merger Sub"), a newly-formed
Delaware corporation and a direct wholly-owned subsidiary of Parent, and
Intergraph Corporation (the "Company"), a Delaware corporation.
WHEREAS, the Board of Directors of the Company (the "Company Board of
Directors") has (i) determined that it is in the best interests of the Company
and the stockholders of the Company, and has approved and declared it advisable
for the Company, to enter into this Agreement with Parent and Merger Sub
providing for the merger of Merger Sub with and into the Company in accordance
with the General Corporation Law of the State of Delaware (the "DGCL"), upon the
terms and subject to the conditions set forth herein, and (ii) resolved to
recommend adoption of this Agreement by the stockholders of the Company;
WHEREAS, the Boards of Directors of Parent and Merger Sub have each
approved and declared it advisable to enter into this Agreement providing for
the Merger in accordance with the DGCL, upon the terms and conditions set forth
herein;
WHEREAS, as a condition and material inducement to the Company's
willingness to enter into this Agreement, the Sponsors and the Lenders have
delivered to the Company the Commitment Letters and the Sponsors have delivered
to the Company the Guarantees; and
WHEREAS, the Company, Parent and Merger Sub desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and the other transactions contemplated hereby and also to prescribe
various conditions to the Merger.
NOW, THEREFORE, in consideration of the foregoing and the respective
covenants, agreements, representations and warranties herein contained, the
parties hereto, intending to be legally bound, hereby agree as follows:
SECTION 1 THE MERGER.
Section 1.1 The Merger; Effects of the Merger.
(a) At the Effective Time, upon the terms and subject to the
conditions of this Agreement, and in accordance with the DGCL, the Company and
Merger Sub shall consummate a merger (the "Merger") pursuant to which Merger Sub
shall be merged with and into the Company, and the Company shall continue as the
surviving corporation of the Merger (sometimes hereinafter referred to as, the
"Surviving Corporation").
(b) The Merger shall have the effects set forth in Section 259 of
the DGCL. Without limiting the generality of the foregoing, and subject thereto,
at the Effective Time: (i) Merger Sub shall be merged with and into the Company,
and the separate corporate existence of Merger Sub shall thereupon cease; (ii)
the Surviving Corporation shall continue to be governed by the laws of the State
of Delaware; (iii) the corporate existence of the Surviving Corporation with all
its property, rights, privileges, immunities, powers and franchises shall
continue unaffected by the Merger; and (iv) all the property, rights,
privileges, immunities, powers and franchises of Company and Merger Sub shall be
vested in the Surviving Corporation, and all debts, liabilities and duties of
Company and Merger Sub shall become the debts, liabilities and duties of the
Surviving Corporation.
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(c) The certificate of incorporation of the Surviving Corporation
shall be amended and restated at the Effective Time, substantially in the form
attached hereto as Exhibit A, and, as so amended, such certificate of
incorporation shall be the certificate of incorporation of the Surviving
Corporation until thereafter changed or amended as provided therein or by the
DGCL.
(d) The by-laws of Merger Sub, as in effect immediately prior to the
Effective Time and substantially in the form attached hereto as Exhibit B, shall
be the by-laws of the Surviving Corporation, except as to the name of the
Surviving Corporation, until thereafter amended as provided by the DGCL, the
certificate of incorporation of the Surviving Corporation and such by-laws.
Section 1.2 Closing. The closing of the Merger (the "Closing") will take
place at 11:00 a.m. (New York time) on a date to be specified by the parties,
such date to be no later than the second business day after satisfaction or
waiver of all of the conditions set forth in Section 7 capable of satisfaction
prior to the Closing (it being understood that the occurrence of the Closing
shall remain subject to the satisfaction or waiver of the conditions that by
their terms are to be satisfied at Closing), at the offices of Bass, Xxxxx &
Xxxx PLC, 000 Xxxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxx, Xxxxxxxxx 00000, unless
another time, date and/or place is agreed to in writing by the parties hereto;
provided, however, that Parent and Merger Sub shall not be required to close
prior to the earlier of (i) a date during the Marketing Period specified by
Merger Sub on no less than three business days' notice to the Company and (ii)
the end of the Marketing Period. The date on which the Closing occurs is
referred to in this Agreement as the "Closing Date."
Section 1.3 Effective Time. At the Closing, Parent, Merger Sub and the
Company shall cause the Merger to be consummated by executing and filing a
certificate of merger (the "Certificate of Merger") with the Secretary of State
of the State of Delaware as provided in the DGCL. The Merger shall become
effective at the time and date on which the Certificate of Merger has been duly
filed with the Secretary of State of the State of Delaware or such later time
and date as is specified in the Certificate of Merger, such time referred to
herein as the "Effective Time." Parent, Merger Sub and the Company shall make
all other filings or recordings required under the DGCL in connection with the
Merger.
Section 1.4 Directors and Officers of the Surviving Corporation. The
directors of Merger Sub immediately prior to the Effective Time shall, from and
after the Effective Time, be the directors of the Surviving Corporation, and the
officers of the Company immediately prior to the Effective Time shall, from and
after the Effective Time, be the officers of the Surviving Corporation, in each
case until their respective successors shall have been duly elected, designated
or qualified, or until their earlier death, resignation or removal in accordance
with the Surviving Corporation's certificate of incorporation and by-laws.
SECTION 2 CONVERSION OF SECURITIES.
Section 2.1 Conversion of Capital Stock. At the Effective Time, by virtue
of the Merger and without any action on the part of the Company, Merger Sub or
the holders of any shares of outstanding common stock of the Company, par value
$0.10 per share (including the associated Company Rights, the "Company Common
Stock"), or the other securities described below:
(a) Conversion of Shares of Company Common Stock. Each issued and
outstanding share of Company Common Stock (other than shares of Company Common
Stock to be cancelled in accordance with Section 2.1(c) and other than
Dissenting Shares), shall be cancelled and converted into the right to receive
$44.00 in cash, without interest (the "Per Share Price"), payable to the holder
thereof (the "Merger Consideration"), upon the surrender in accordance with
Section 2.4 of the certificate that formerly evidenced such shares, or as
otherwise specified for Book-Entry Shares. From and after the
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Effective Time, all such shares of Company Common Stock shall no longer be
outstanding and shall automatically be cancelled and retired and shall cease to
exist, and each holder of Book Entry Shares or a certificate representing any
such shares of Company Common Stock shall cease to have any rights with respect
thereto, except the right, subject to Section 2.4 and Section 2.5, to receive
the applicable Merger Consideration therefor.
(b) Merger Sub Common Stock. Each issued and outstanding share of
common stock of Merger Sub outstanding immediately prior to the Effective Time
shall be converted into and become one validly issued, fully paid and
nonassessable share of common stock of the Surviving Corporation.
(c) Cancellation of Treasury Stock; Parent-Owned Stock. All shares
of Company Common Stock that are owned by the Company as treasury stock and any
shares of Company Common Stock owned by Parent or Merger Sub immediately prior
to the Effective Time shall automatically be cancelled and retired and shall
cease to exist, and no consideration shall be delivered in exchange therefor.
(d) Adjustments. The Per Share Price shall be appropriately adjusted
for any stock dividend, stock split or like transaction affecting the Company
Common Stock after the date hereof and prior to the Effective Time.
Section 2.2 Dissenting Shares.
(a) Notwithstanding anything in this Agreement to the contrary,
shares of Company Common Stock that are issued and outstanding immediately prior
to the Effective Time and which are held by holders of shares of Company Common
Stock who are entitled to demand and who have properly demanded and perfected
their rights to be paid the fair value of such shares in accordance with Section
262 of the DGCL (the "Dissenting Shares") shall not be converted into the right
to receive the Merger Consideration, and the holders thereof shall be entitled
to only such rights as are granted by Section 262 of the DGCL; provided,
however, that if any such holder shall fail to perfect or shall effectively
waive, withdraw or lose such holder's rights under Section 262 of the DGCL, such
holder's shares of Company Common Stock shall thereupon be deemed to have been
converted, at the Effective Time, into the right to receive, subject to Section
2.4 and Section 2.5, the Merger Consideration as set forth in Section 2.1(a) of
this Agreement.
(b) The Company shall give Parent (i) prompt notice of any appraisal
demands received by the Company, withdrawals thereof and any other instruments
served pursuant to Section 262 of the DGCL and received by the Company and (ii)
the opportunity to participate in all negotiations and proceedings with respect
to the exercise of appraisal rights under Section 262 of the DGCL. The Company
shall not, except with the prior written consent of Parent (not to be
unreasonably withheld) or as otherwise required by applicable Law, make any
payment with respect or settle or offer to settle any such demands.
Section 2.3 Company Options, Restricted Shares, Restricted Share Units and
ESPP. Except to the extent otherwise agreed in writing by the Company and Parent
prior to the Effective Time:
(a) The Company shall ensure that, (i) immediately prior to the
Effective Time, each outstanding option to acquire shares of Company Common
Stock ("Company Options") granted under the Company's Amended and Restated 1997
Stock Option Plan, Second Amended and Restated 2002 Stock Option Plan, Amended
and Restated Non-Employee Director Stock Option Plan, and 2004 Equity Incentive
Plan (collectively, the "Stock Option Plans"), shall become fully vested and
exercisable
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(without regard to whether the Company Options are then vested or exercisable),
(ii) at the Effective Time, all Company Options not theretofore exercised shall
be cancelled and, in exchange therefor, converted into the right to receive a
cash payment from the Surviving Corporation in an amount equal to the product of
(x) the excess, if any, of the Per Share Price over the exercise price of each
such Company Option and (y) the number of shares of Company Common Stock subject
to such Company Option to the extent not previously exercised (such payment, if
any, to be net of applicable Taxes withheld pursuant to Section 2.5), and (iii)
after the Effective Time, any such cancelled Company Option shall no longer be
exercisable by the former holder thereof, but shall only entitle such holder to
the payment described in subsection (ii) without interest. In the event the
exercise price per share of Company Common Stock subject to a Company Option is
equal to or greater than the Per Share Price, such Company Option shall be
cancelled without consideration and have no further force or effect.
(b) The Company shall ensure that, immediately prior to the
Effective Time, (i) each share of Company Common Stock granted subject to
vesting or other lapse restrictions pursuant to any Stock Option Plan
(collectively, "Restricted Shares") which is outstanding immediately prior to
the Effective Time shall vest and become free of such restrictions (without
regard to whether the Restricted Shares are then vested or the applicable
restrictions have then lapsed) and (ii) the holder thereof shall receive in
exchange for each Restricted Share a cash payment from the Company in an amount
equal to the Per Share Price with respect to each such Restricted Share, less
any required withholding Taxes pursuant to Section 2.5.
(c) The Company shall ensure that, (i) immediately prior to the
Effective Time, each restricted share unit under any Stock Option Plan ("RSUs")
which is outstanding as of the Effective Time, shall vest and become free of any
lapse restrictions (without regard to whether the RSUs are then vested or the
applicable restrictions have lapsed) and, as of the Effective Time be canceled,
and (ii) at the Effective Time, and in lieu of settling such RSUs in shares of
Company Common Stock, the holder thereof shall be entitled to receive a cash
payment from the Surviving Corporation, in consideration for such cancellation,
in an amount equal to the sum of (1) the product of (A) the number of shares
previously subject to such RSU and (B) the Per Share Price, and (2) the value of
any deemed dividend equivalents accrued but unpaid with respect to such RSUs,
less any required withholding Taxes pursuant to Section 2.5. The aggregate
amount specified in Sections 2.3(a) and (c) with respect to the Company Options
and RSUs is referred to herein as the "Cash Out Amount."
(d) The Company shall ensure that, (i) the Company's 2005 Employee
Stock Purchase Plan (the "ESPP" and together with the Stock Option Plans, the
"Equity Plans") shall be suspended and no new offering periods will be commenced
subsequent to the date hereof, (ii) with respect to persons participating in the
ESPP on the date hereof (and who have not withdrawn from or otherwise ceased
participation in the Plan prior to such date), accumulated contributions will be
applied on such date to the purchase of Company Common Stock in accordance with
the ESPP's terms, (iii) any remaining balances in the withholding accounts of
the participants in the ESPP are returned in accordance with the terms of the
ESPP, and (iv) there are no outstanding rights of participants under the ESPP
following the termination thereof at the Effective Time as provided in Section
2.3(e).
(e) The Company shall ensure that, as of the Effective Time, the
Equity Plans shall terminate and that no person shall have any right under the
Equity Plans, except as set forth herein (including, to the extent necessary,
obtaining any necessary consents of the holders of Company Options, Restricted
Shares and RSUs to effect this Section 2.3).
(f) At or promptly after the Effective Time, the Surviving
Corporation shall, and Parent shall cause the Surviving Corporation to, deliver
the applicable Cash Out Amount to the holders of Company Options and RSUs,
without interest and less any applicable withholding Taxes, which
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payments may, at Parent's request, be conditioned upon the execution and
delivery of a letter of transmittal (in customary form). If for any reason the
Surviving Corporation does not have adequate freely available and unrestricted
cash to pay the aggregate Cash Out Amount, (i) Parent shall promptly deposit
additional cash with the Surviving Corporation sufficient to make all required
payments to the holders of Company Options and RSUs in respect of the Cash Out
Amount and (ii) Parent and the Surviving Corporation shall in any event be
liable for payment thereof.
(g) Notwithstanding any other provision in this Section 2.3 to the
contrary, the Company shall reasonably cooperate (at Parent's expense) with
Parent to allow, immediately prior to the Effective Time, certain Restricted
Shares to be contributed to Parent in exchange for shares of common stock of
Parent, with the written agreement of Parent and the holders of such Restricted
Shares.
Section 2.4 Exchange of Certificates.
(a) Paying Agent. Prior to the Effective Time, the Parent shall
designate a bank or trust company reasonably acceptable to Company to act as
paying agent for the holders of shares of Company Common Stock in connection
with the Merger (the "Paying Agent") and to receive the funds to which holders
of shares of Company Common Stock will become entitled pursuant to Section 2.1.
At or prior to the Effective Time, Parent shall provide, or shall cause to be
provided, to the Paying Agent cash necessary to pay for the shares of Company
Common Stock converted into the right to receive the Merger Consideration (such
cash being hereinafter referred to as the "Exchange Fund"). If for any reason
the Exchange Fund is inadequate to pay the amounts to which holders of shares of
Company Common Stock shall be entitled under Section 2.1, Parent shall, or shall
cause the Surviving Corporation to, promptly deposit additional cash with the
Paying Agent sufficient to make all payments of Merger Consideration and Parent
and the Surviving Corporation shall in any event be liable for payment thereof.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, the Surviving Corporation shall cause to be mailed to each (i)
record holder, as of the Effective Time, of an outstanding certificate or
certificates which immediately prior to the Effective Time represented shares of
the Company Common Stock (the "Certificates") or (ii) holder, as of the
Effective Time, of shares of Company Common Stock represented by book-entry
("Book-Entry Shares"), a form of letter of transmittal (which shall be in
customary form and shall specify that delivery shall be effected, and risk of
loss and title to the Certificates held by such person shall pass, only, subject
to Section 2.4(c), upon delivery of the Certificates to the Paying Agent) and
instructions for use in effecting the surrender of the Certificates or
Book-Entry Shares for payment of the Merger Consideration therefor. Upon
surrender to the Paying Agent of a Certificate or Book Entry Shares for
cancellation, together with such letter of transmittal, duly completed and
validly executed in accordance with the instructions thereto, and such other
documents as may be reasonably required pursuant to such instructions, the
holder of such Certificate or Book-Entry Shares shall be entitled to receive in
exchange therefor the Merger Consideration for each share formerly represented
by such Certificate or Book-Entry Shares and such Certificate or applicable
book-entry shall then be canceled. No interest shall be paid or accrued for the
benefit of holders of the Certificates or Book-Entry Shares on the Merger
Consideration payable in respect of the Certificates or Book-Entry Shares. Until
surrendered for cancellation as contemplated by this Section 2.4(b), each
Certificate and each Book-Entry Share 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.
(c) Lost Certificates. If any Certificate has been lost, stolen,
defaced or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen, defaced or destroyed and, if
required by the Surviving Corporation, the posting by such person of a bond in
such amount as the Surviving Corporation may reasonably direct as indemnity
against any claim that
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may be made against it or the Parent with respect to such Certificate, the
Paying Agent shall issue in exchange for such lost, stolen or destroyed
Certificate the applicable Merger Consideration with respect thereto without
interest.
(d) Transfer Books; No Further Ownership Rights in Shares of Company
Common Stock. At the Effective Time, the stock transfer books of the Company
will be closed and thereafter there will be no further registration of transfers
of shares of Company Common Stock on the records of the Company. From and after
the Effective Time, the holders of Certificates evidencing ownership of shares
of Company Common Stock outstanding immediately prior to the Effective Time
shall cease to have any rights with respect to such shares of Company Common
Stock, except as otherwise provided for herein or by applicable Law. If, after
the Effective Time, Certificates are presented to the Surviving Corporation for
any reason, they shall be cancelled against delivery of the Merger Consideration
as provided in this Section 2 without interest.
(e) Termination of Exchange Fund. At any time following the date
that is one year after the Effective Time, the Surviving Corporation shall be
entitled to require the Paying Agent to deliver to it any funds (including any
interest received with respect thereto) made available to the Paying Agent and
not disbursed (or for which disbursement is pending subject only to the Paying
Agent's routine administrative procedures) to holders of Certificates, and
thereafter such holders shall be entitled to look only to the Surviving
Corporation (subject to abandoned property, escheat or similar Laws) only as
general creditors thereof with respect to the Merger Consideration payable upon
due surrender of their Certificates, without any interest thereon.
(f) No Liability. None of Parent, the Surviving Corporation or the
Paying Agent shall be liable to any holder of a Certificate for Merger
Consideration delivered to a public official pursuant to any applicable
abandoned property, escheat or similar Law.
Section 2.5 Withholding. Each of Parent, Company and the Surviving
Corporation is entitled to deduct and withhold, or cause the Paying Agent to
deduct and withhold, from any amounts payable or otherwise deliverable pursuant
to this Agreement to any holder or former holder of shares of Company Common
Stock (including Restricted Shares), Company Options, or RSUs such amounts as
are required to be deducted or withheld therefrom under the Internal Revenue
Code of 1986, as amended (the "Code"), or any provision of state, local or
foreign Tax Law or under any other applicable legal requirement. To the extent
such amounts are so deducted or withheld, such amounts shall be treated for all
purposes under this Agreement as having been paid to the person to whom such
amounts would otherwise have been paid.
Section 2.6 Transfer Taxes. If payment of the Merger Consideration payable
to a holder of shares of Company Common Stock pursuant to the Merger is to be
made to a person other than the person in whose name the surrendered Certificate
is registered, it shall be a condition of payment that the Certificate so
surrendered shall be properly endorsed or shall be otherwise in proper form for
transfer and that the person requesting such payment shall have paid all
transfer and other Taxes required by reason of the payment of the Merger
Consideration to a person other than the registered holder of the Certificate
surrendered (or shall have established to the reasonable satisfaction of Parent
that such Tax either has been paid or is not applicable).
SECTION 3 REPRESENTATIONS AND WARRANTIES OF COMPANY. Except (i) as set
forth in the disclosure schedule delivered by the Company to Parent on the date
hereof (the "Company Disclosure Schedule") or (ii) as disclosed in reasonable
detail in the Company SEC Reports filed prior to the date hereof (other than
disclosure referred to in the "Factors That May Affect Future Results," "Risk
Factors" or "Forward Looking Statements" sections of such Company SEC Reports),
the Company hereby makes
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the representations and warranties set forth in this Section 3 to Parent and
Merger Sub. The section numbers of the Company Disclosure Schedule are numbered
to correspond to the section numbers of this Agreement to which they refer. Any
information set forth in one section of the Company Disclosure Schedule will be
deemed to apply to each other section or subsection of this Agreement to which
its relevance is reasonably apparent.
Section 3.1 Organization and Qualification.
(a) Each of the Company and each subsidiary of the Company (all such
Company subsidiaries being, collectively, the "Company Subsidiaries") is a
corporation or other legal entity duly organized, validly existing and in good
standing (with respect to jurisdictions that recognize the concept of good
standing) under the federal, state, local or foreign laws, statutes,
regulations, rules, ordinances and judgments, decrees, orders, writs and
injunctions (collectively, "Laws") of any court or any nation, government, state
or other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of, or pertaining
to, government ("Governmental Entity") of its jurisdiction of organization and
has the requisite corporate or similar power and authority to own, lease and
operate its properties and assets it purports to own and to carry on its
business as now being conducted, except as has not had, individually or in the
aggregate, a Company Material Adverse Effect. Each of the Company and each
Company Subsidiary is qualified or otherwise authorized to transact business as
a foreign corporation or other organization in all jurisdictions where the
nature of their business or the ownership, leasing or operation of their
properties make such qualification or authorization necessary, except for
jurisdictions in which the failure to be so qualified or authorized or in good
standing has not had, individually or in the aggregate, a Company Material
Adverse Effect. "Company Material Adverse Effect" shall mean (i) any event,
circumstance, development, change or effect that is, individually or in the
aggregate, materially adverse to the business, assets, condition (financial or
otherwise) or results of operations of the Company and the Company Subsidiaries,
taken as a whole; provided, however, that none of the following shall
constitute, or shall be considered in determining whether there has occurred,
and no event, circumstance, development, change or effect resulting from or
arising out of any of the following shall constitute, a Company Material Adverse
Effect: (A) the announcement of the execution of this Agreement or the pendency
of consummation of the Merger, (B) changes in the national or world economy or
financial markets as a whole or changes in general economic conditions that
affect the industries in which the Company and the Company Subsidiaries conduct
their business (including, without limitation, the applicable software, design
and spatial industries), so long as such conditions do not adversely affect the
Company or the Company Subsidiaries in a materially disproportionate manner
relative to other similarly situated participants in the industries or markets
in which they operate, (C) any change in general budget or appropriations
policies of any Governmental Entities (as opposed to individual procurement
decisions) or any applicable Law, rule or regulation or GAAP or interpretation
thereof after the date hereof, so long as such changes do not adversely affect
the Company or the Company Subsidiaries in a materially disproportionate manner
relative to other similarly situated participants in the industries or markets
in which they operate, (D) any failure by the Company to meet any published
estimates of revenues, earnings or other financial projections (it being
understood, however, that any events, changes or developments causing or
contributing to such failures may, except as provided in any of (A), (B), (C),
(E), (F) or (G) of this definition, be deemed to constitute or be taken into
account in determining whether a Company Material Adverse Effect has occurred),
(E) any outbreak or escalation of war of hostilities, any occurrence or threats
of terrorist acts or any armed hostilities associated therewith and any national
or international calamity, disaster or emergency or any escalation thereof, so
long as such conditions do not adversely affect the Company or the Company
Subsidiaries in a materially disproportionate manner relative to other similarly
situated participants in the industries or markets in which they operate, (F) a
decline in the price, or a change in the trading volume, of the Company Common
Stock on the Nasdaq National Market (including any successor exchange, "Nasdaq")
(it being understood, however, that any events, changes or
7
developments causing or contributing to such decline or change may, except as
provided in any of (A), (B), (C), (D), (E) or (G) of this definition, be taken
into account in determining whether a Company Material Adverse Effect has
occurred) and (G) taking any action outside of the ordinary course of business
required by this Agreement, or taking or not taking any actions outside ordinary
course of business at the written request of, or with the written consent of,
Parent (including, without limitation, any actions requested pursuant to Section
5.1(a)(iii)), and (ii) an effect that prevents the Company's ability to
consummate the transactions contemplated hereby in accordance with this
Agreement prior to the outside dates specified in Section 8.1.
(b) The Company has made available to Parent true, correct and
complete copies of the certificate of incorporation and by-laws, or other
organizational documents, of the Company and each material Company Subsidiary
set forth in Section 3.4(a) of the Company Disclosure Schedule (each, a
"Material Company Subsidiary") as presently in effect. The Company is not in
default in the performance, observation or fulfillment of its certificate of
incorporation or by-laws. The Company Subsidiaries are not in default, in any
material respect, in the performance, observation or fulfillment of their
respective certificate of incorporation or by-laws or other organizational
documents.
Section 3.2 Authority. The Company has all necessary corporate power and
authority to enter into, execute and deliver this Agreement and each instrument
required hereby to be executed and delivered by it at the Closing and, subject
in the case of consummation of the Merger to the adoption of this Agreement by
the requisite holders of Company Common Stock, to perform its obligations
hereunder and thereunder and consummate the Merger and the other transactions
contemplated hereby. The execution, delivery and performance of this Agreement
and each instrument required hereby to be executed and delivered at the Closing
by the Company and the consummation by the Company of the Merger and the other
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action and no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement or to consummate the Merger
and the other transactions contemplated hereby (other than adoption of this
Agreement by the holders of Company Common Stock and the filing with the
Secretary of State of the State of Delaware of the Certificate of Merger as
required by the DGCL). This Agreement has been duly and validly executed and
delivered by the Company and, assuming the due authorization, execution and
delivery hereof by Parent and Merger Sub, constitutes a legal, valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms, except to the extent that enforcement of the rights and remedies created
hereby is subject to bankruptcy, insolvency, reorganization, moratorium and
other similar Laws of general application affecting the rights and remedies of
creditors and to general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at Law).
Section 3.3 Capitalization.
(a) The authorized capital stock of the Company consists of
100,000,000 shares of Company Common Stock, of which, as of August 23, 2006,
29,414,834 shares (including an aggregate of 642,767 Restricted Shares and RSUs
for which the restrictions have not lapsed) were issued and outstanding and
27,946,528 shares were held in the treasury of the Company. All of the issued
and outstanding shares of such Company Common Stock are duly authorized, validly
issued, fully paid and nonassessable, and, other than Company Rights, were
issued free of any preemptive (or similar) rights. The Company is not authorized
to issue and does not have any issued and outstanding preferred stock.
(b) As of August 23, 2006, the Company has reserved 3,928,044 shares
of Company Common Stock for issuance pursuant to all of the Company Option
Plans, of which Company Options to purchase 1,111,851 shares of Company Common
Stock with a weighted average exercise price of $15.8155 per share were
outstanding as of August 23, 2006 (all of which had an exercise price less than
8
the Per Share Price), and 2,816,193 shares remain available for grant as of such
date. The maximum remaining number of shares of Company Common Stock authorized
for purchase under the ESPP, as of August 23, 2006, is 936,586 shares. All
shares of Company Common Stock reserved for issuance as specified above, shall
be, upon issuance on the terms and conditions specified in the instruments
pursuant to which they are issuable, duly authorized, validly issued, fully paid
and nonassessable and, other than Company Rights, will not be issued subject to
any preemptive (or similar) rights.
(c) Except for (i) shares of Company Common Stock indicated in
Section 3.3(a) as issued and outstanding as of August 23, 2006 and (ii) shares
issued after August 23, 2006 but prior to the date hereof as Restricted Shares,
or upon the exercise of Company Options or RSUs granted prior to the date hereof
or "Options" under the ESPP, at the Effective Time there will not be any shares
of Company Common Stock issued and outstanding. Except as set forth in Section
3.3(c) of the Company Disclosure Schedule, no Company Options, RSUs or
Restricted Shares have been issued since August 23, 2006.
(d) No registration rights involving the Company securities will
survive consummation of the Merger.
(e) The Company's authorized capital stock consists solely of the
Company Common Stock described in Section 3.3(a). There are not authorized or
outstanding any subscriptions, options, conversion or exchange rights, warrants,
calls, repurchase or redemption agreements, or other agreements, instrument,
contracts, claims or commitments of any nature whatsoever obligating the Company
or any Company Subsidiary to issue, transfer, deliver, sell, repurchase or
redeem, or cause to be issued, transferred, delivered, sold, repurchased or
redeemed, additional shares of the Company Common Stock or other securities of
the Company or to make payments with respect to the value of any of the
foregoing or obligating the Company to grant, extend or enter into any such
agreement or commitment, other than (i) Company Options and RSUs outstanding on
the date hereof, (ii) the rights (the "Company Rights") issued pursuant to the
Amended and Restated Rights Agreement, dated as of March 5, 2002 (the "Company
Rights Agreement"), between the Company and Computershare Investor Services,
LLC, as rights agent, in respect of which no Distribution Date (as defined in
the Company Rights Agreement) has occurred and (iii) "Options" issued pursuant
to the ESPP. There are no stockholder agreements, voting trusts, proxies or
other agreements or instruments with respect to the voting of the capital stock
of the Company to which the Company or any of its officers or directors are a
party and, to the knowledge of the Company, no other party is a party to any
stockholder agreements, voting trusts, proxies or other agreements or
instruments with respect to the voting of the capital stock of the Company.
(f) The Company has no outstanding bonds, debentures, notes or other
indebtedness that have the right to vote (or which is convertible into, or
exchangeable for, securities having the right to vote) on any matters on which
stockholders may vote.
(g) The Company Common Stock constitutes the only class of
securities of the Company registered under the Securities Exchange Act of 1934,
as amended (together with the rules and regulations promulgated thereunder, the
"Exchange Act").
(h) Section 3.3(h) of the Company Disclosure Schedule sets forth a
schedule of all outstanding cash, cash equivalents and marketable debt
investments (collectively, "Cash Equivalents") of the Company and the Company
Subsidiaries as of July 31, 2006, including the currency in which such Cash
Equivalents are denominated, the entity that owns such Cash Equivalents and the
country in which such Cash Equivalents are held. Neither the Company nor any
Company Subsidiary is a party to any Contract (excluding, for avoidance of
doubt, any solvency or capital surplus requirements under applicable Law) that
would prevent any Cash Equivalents of the Company or the Company Subsidiaries
from being utilized to satisfy in part the Merger Consideration.
9
Section 3.4 Company Subsidiaries.
(a) Section 3.4(a) of the Company Disclosure Schedule sets forth a
complete list of the names and jurisdictions of organization of each Company
Subsidiary. All issued and outstanding shares or other equity interests of each
Company Subsidiary have been duly authorized, validly issued, are fully paid and
nonassessable and are owned directly or indirectly by the Company free and clear
of any pledges, charges, liens, encumbrances, restrictions on the transfer,
voting or dividend rights, rights of first offer or first refusal, security
interests or adverse rights or claims of any nature whatsoever ("Liens"), except
for (i) Liens for current taxes and assessments not yet past due or that are
being contested in good faith, (ii) Liens imposed by applicable Law, and (iii)
any other Liens that do not secure a liquidated amount, that have been incurred
or suffered in the ordinary course of business and that would not, individually
or in the aggregate, have a material effect on the Company's ownership interest
in such Company Subsidiary or the ability of Parent, the Company or any Company
Subsidiary to pledge such shares or other equity interests of such Company
Subsidiary in connection with the Debt Financing. None of the Company
Subsidiaries own any shares of Company Common Stock.
(b) There are not any authorized or outstanding subscriptions,
options, conversion or exchange rights, warrants, calls, repurchase or
redemption agreements, or other agreements, claims, contracts or commitments of
any nature whatsoever obligating any Company Subsidiary to issue, transfer,
deliver, sell, register, repurchase or redeem, or cause to be issued,
transferred, delivered, sold, repurchased or redeemed, additional shares of the
capital stock or other securities of the Company Subsidiary or to make payments
with respect to the value of any foregoing or obligating the Company Subsidiary
to grant, extend or enter into any such agreement.
Section 3.5 SEC Filings; Financial Statements; Undisclosed Liabilities.
(a) The Company has filed all forms, reports, registrations,
statements, certifications and other documents required to be filed by it with,
or furnished by the Company to, the United States Securities and Exchange
Commission (the "SEC") for all periods beginning on or after January 1, 2003
(the "Company SEC Reports"). The Company SEC Reports were prepared in accordance
with the applicable requirements of the Exchange Act and the Securities Act of
1933, as amended (together with the rules and regulations promulgated
thereunder, the "Securities Act"), and did not, as of their respective dates
(or, if amended, as of the date of such amendment), contain any untrue statement
of a material fact or omit to state a material fact required to be stated or
incorporated by reference therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. The
Company has made available to Parent and Merger Sub copies of all comment
letters from the SEC relating to the Company SEC Reports and all responses
thereto. As of the date of this Agreement, there are not outstanding or
unresolved comments in comment letters received from the SEC. To the knowledge
of the Company, as of the date hereof, none of the Company SEC Reports is the
subject of ongoing SEC review. No Company Subsidiary is required to file any
form, report, registration, statement or other document with the SEC.
(b) The consolidated financial statements contained in the Company
SEC Reports (including the related notes and schedules, where applicable) (the
"Financial Statements") (i) present fairly, in all material respects, the
consolidated financial condition and results of operations and cash flows and
statements of stockholders equity of the Company and its consolidated
subsidiaries as of and for the periods presented therein (subject, in the case
of unaudited quarterly financial statements, to normal year-end adjustments and,
with respect to pro forma financial statements, to the qualifications stated
therein), (ii) have been prepared in all material respects in accordance with
United States generally accepted accounting principles ("GAAP") applied on a
consistent basis throughout the periods involved, except as otherwise indicated
therein or, in the case of the unaudited quarterly financial statements as
10
permitted by Form 10-Q, and (iii) when filed complied as to form in all material
respects with the rules and regulations of the SEC with respect thereto. Since
December 31, 2005, there has been no material change in the Company's accounting
methods or principles that would be required to be disclosed in the Company's
financial statements in accordance with GAAP, except as described in the notes
to such financial statements. The management of the Company has implemented and
maintains disclosure controls and procedures (as defined in Rule 13a-15(e) of
the Exchange Act) to ensure that material information relating to the Company,
including the consolidated Company Subsidiaries, is made known to the chief
executive officer and the chief financial officer of the Company by others
within those entities. The Company's principal executive officer and principal
financial officer have disclosed, based on their most recent evaluation of
internal control over financial reporting, to the Company's auditors and the
audit committee of the Company Board of Directors (or persons performing the
equivalent functions): (A) all significant deficiencies and material weaknesses
within their knowledge in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the
Company's ability to record, process, summarize and report financial
information; and (B) any fraud that involves management or other employees who
have a significant role in the Company's internal control over financial
reporting. The Company's principal executive officer and principal financial
officer have made, with respect to the Company SEC Reports, all certifications
required by the Xxxxxxxx-Xxxxx Act of 2002 and any related rules and regulations
promulgated by the SEC. As of the date hereof, the Company has not identified
any material weaknesses in the design or operation of the internal controls over
financial reporting except as disclosed in the Company SEC Reports filed prior
to the date hereof. As of the date hereof, neither the Company nor any of the
Company Subsidiaries has outstanding, or has arranged any outstanding,
"extensions of credit" to directors or executive officers of the Company within
the meaning of Section 402 of the Xxxxxxxx-Xxxxx Act of 2002.
(c) To the knowledge of the Company, neither the Company, any
Company Subsidiaries, nor any of their respective officers or directors, nor any
of the Company's Affiliates (including any holder of five percent (5%) or more
of the Company's outstanding equity interests) (i) appears on the Specially
Designated Nationals and Blocked Persons List of the Office of Foreign Assets
Control of the United States Department of the Treasury ("OFAC") or on any other
similar list maintained by OFAC pursuant to any authorizing statute, executive
order or regulation; (ii) is otherwise a party with whom, or has its principal
place of business or the majority of its business operations (measured by
revenues) located in a country in which, transactions are prohibited by (A)
United States Executive Order 13224, Blocking Property and Prohibiting
Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism;
(B) the United States Uniting and Strengthening America by Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism Act of 2001; (C) the United
States Trading with the Enemy Act of 1917, as amended; (D) the United States
International Emergency Economic Powers Act of 1977, as amended or (E) the
foreign asset control regulations of the United States Department of the
Treasury; (iii) has been convicted of or charged with a felony relating to money
laundering or (iv) is under investigation by any governmental authority for
money laundering.
(d) Neither the Company nor any Company Subsidiary has any
liabilities, whether accrued, absolute, contingent or otherwise, other than
liabilities and obligations (i) reflected or reserved against on the Financial
Statements in accordance with GAAP or reasonably apparent from the notes or
management's discussion and analysis related thereto, (ii) incurred in
connection with the transactions contemplated herein or since the date of the
most recently audited Financial Statements in the ordinary course of business
consistent with past practice, (iii) discharged or paid prior to the date of
this Agreement, or (iv) that have not had, individually or in the aggregate, a
Company Material Adverse Effect.
11
Section 3.6 Absence of Certain Changes or Events.
(a) Since December 31, 2005, except as specifically contemplated by,
or disclosed in, this Agreement, there have not been any changes, events or
circumstances that have had or would reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect.
(b) There has not been any action taken by the Company or any
Company Subsidiary during the period from December 31, 2005 through the date
hereof, that, if taken during the period from the date hereof through the
Effective Time, would constitute a breach of Section 5.1, except for such
actions as have not had or would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect.
Section 3.7 Compliance with Laws.
(a) The Company and the Company Subsidiaries have obtained each
federal, state, county, local or foreign governmental consent, license, permit,
registration, order, grant or other authorization of a Governmental Entity that
is required for the operation of the business of the Company or any of the
Company Subsidiaries or the holding of any interest in any of their properties
(collectively referred to herein as, the "Permits"), except where the failure to
have, or the suspension or cancellation of, any Permit would not have,
individually or in the aggregate, a Company Material Adverse Effect. Except as
would not have, individually or in the aggregate, a Company Material Adverse
Effect, the Permits are not subject to any conditions or requirements that are
not generally imposed on the holders thereof, all of such Permits are valid and
in full force and effect and neither the Company nor any Material Company
Subsidiary has violated the terms of such Permits. No proceeding is pending or,
to the knowledge of the Company, threatened in writing to revoke, suspend,
cancel, terminate, or adversely modify any Permit.
(b) Neither the Company nor any Company Subsidiary, and no director,
officer, agent or employee acting in his or her capacity as a director, officer,
agent or employee of the Company or the Company Subsidiaries, has (i) used any
funds for unlawful contributions, gifts, entertainment or other unlawful
expenses relating to political activity, (ii) made any unlawful payment to
foreign or domestic government officials or employees or to foreign or domestic
political parties, or campaigns or violated any provision of the Foreign Corrupt
Practices Act of 1977, as amended, or (iii) taken any action that would
constitute a violation of the Foreign Corrupt Practices Act of 1977, as amended,
that in the case of clauses (i), (ii) and (iii) would result, individually or in
the aggregate, in a Company Material Adverse Effect.
(c) Except as would not have, individually or in the aggregate, a
Company Material Adverse Effect, the Company and the Company Subsidiaries are in
and have been in compliance with, are not in default or violation of, and have
not, to the knowledge of the Company, received any notice of non-compliance,
default or violation with respect to, any Laws applicable to the business of the
Company and the Company Subsidiaries or to which any of its or their properties
are bound.
(d) Neither the Company nor any Company Subsidiary is a party to, or
has a legally binding commitment to enter into, any joint venture, off balance
sheet partnership or any similar contract (including any contract or arrangement
relating to any transaction or relationship between or among the Company or the
Company Subsidiary, on the one hand, and any unconsolidated affiliate, including
any structured finance, special purpose or limited purpose entity or person, on
the other hand or any "off balance sheet arrangements" (as defined in Item
303(a) of Regulation S-K under the Exchange Act)).
Section 3.8 Claims, Actions and Proceedings. There are no outstanding
orders, writs, judgments, injunctions, decrees or other requirements of any
court or arbitrator against the Company, any
12
Company Subsidiary or any of their securities, assets or properties that would
have, individually or in the aggregate, a Company Material Adverse Effect. There
are no actions, suits, claims, investigations, arbitrations, legal or
administrative proceedings (collectively, "Actions") or, to the knowledge of the
Company, any governmental investigations or inquiries pending or overtly
threatened, against the Company or any Company Subsidiary or any of their
securities, assets or properties, except as would not have, individually or in
the aggregate, a Company Material Adverse Effect and other than Actions
challenging this Agreement or the transactions contemplated hereby, or seeking
to prohibit the Merger. As of the date hereof, there are no Actions pending or,
to knowledge of the Company, overtly threatened, against the Company or any
Company Subsidiary challenging this Agreement or the transactions contemplated
hereby, or seeking to prohibit the Merger.
Section 3.9 Contracts and Other Agreements.
(a) Except for this Agreement, or as set forth in Section 3.9(a) of
the Company Disclosure Schedule or in the exhibit lists of the Company SEC
Reports, none of the Company nor any Company Subsidiary is a party to or bound
by any note, bond, mortgage, indenture, contract, agreement, lease, license,
Permit or other instrument or obligation (each, a "Contract"): (i) that would be
required to be filed by the Company as a "material contract" pursuant to Item
601(b)(10) of Regulation S-K under the Securities Act or disclosed on Form 8 K;
(ii) that (a) contain covenants binding upon the Company or any of its
affiliates that restrict the ability of the Company or any Company Subsidiary to
compete in any business or in any geographic area in a manner that is material
to the Company and the Company Subsidiaries, taken as a whole, or (b) grant any
exclusive rights to make, sell or distribute the Company's material products and
services, or otherwise prohibit or limit in any material respect the right of
the Company and the Company Subsidiaries to develop, manufacture, market, sell
or distribute any material products or services; provided, however, that this
subsection (ii) shall not include Contracts that may be fully canceled by the
Company or any Company Subsidiary upon notice of 90 days or less without any
material payment or penalty; (iii) that would obligate the Company or any
Company Subsidiary to file a registration statement under the Securities Act,
which filing has not yet been made; (iv) that involves any license agreement
that is material to the Company and the Company Subsidiaries taken as a whole,
or is a license for software incorporated into or directly used in any
applications that form part of the products or services of the Company or any
Company Subsidiary (other than off the shelf software and any software that is
not material to any product or replaceable without significant expense or
effort) (each a "License Agreement"); (v) relating to indebtedness for borrowed
money, guarantees of indebtedness for borrowed money, lines of credit (whether
or not drawn), letters of credit, capitalized lease or surety bonds having an
outstanding principal amount in excess of $2,000,000 in the aggregate; (vi) that
involves acquisition or disposition, directly or indirectly (by merger or
otherwise), of assets or capital stock or other voting securities or equity
interests of another person or the Company for aggregate consideration in excess
of $3,000,000 that involves continuing or contingent obligations of the Company
or the Company Subsidiaries or is not yet consummated; (vii) under which the
Company or any Company Subsidiary has advanced or loaned any funds in excess of
$1,000,000 or has guaranteed any obligations of another person in excess of
$1,000,000 individually or $3,000,000 in the aggregate, other than extensions of
credit to customers in the ordinary course of business consistent with past
practice, (viii) that would constitute one of the Company's (a) top ten
contracts in terms of revenues received from the sale of products or services
(as measured by the revenue reasonably expected to be derived therefrom during
the twelve (12) months ended December 31, 2006) (the applicable customers being,
the "Major Customers")), or (b) top ten contracts with its suppliers or other
licensors (determined on the basis of amounts reasonably expected to be paid by
the Company or the Company Subsidiaries in the 12 months ended December 31,
2006) (the applicable suppliers or licensors being, the "Major Suppliers"), (ix)
that requires the payment by or to the Company or any Company Subsidiary of more
than $5,000,000 annually in respect of customers or vendors, (x) that is in
respect of any employment, retention, severance or change of control
arrangement, in each case with an executive officer of the Company or any
Company
13
Subsidiary, any employee of the Company or any Company Subsidiary who is paid a
base salary of $200,000 or more or with the potential for annual or one time
payments equal to an aggregate of $300,000 during any 12 month period, (xi) with
respect to any property of the Company or any Company Subsidiary, real or
personal (whether owned or leased), that involves annual payments in excess of
$1,000,000, (xii) that relates to any single or series of related capital
expenditures by the Company in excess of $1,000,000, (xiii) to which the Company
or any Company Subsidiary is a party constituting a general or limited
partnership, a limited liability company or a joint venture (whether limited
liability or other organizational form) or alliance or similar arrangement that
is material to the business of the Company and the Company Subsidiaries, taken
as a whole, (xiv) that relates to any settlement agreement, other than (a)
releases immaterial in nature or 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 with the Company, (b) settlement agreements for cash only (which has
been paid or accrued for) and does not exceed $1,000,000 as to such settlement
or (c) settlement agreements entered into more than two years prior to the date
of this Agreement under which none of the Company or Company Subsidiaries have
any continuing obligations, liabilities or rights (excluding releases), in each
case material to the Company and the Company Subsidiaries taken as a whole other
than settlements listed on another section of the Company Disclosure Schedule or
entered into after the date hereof with respect to patent litigation in
accordance with Section 5.1, (xv) that relates to conditional sale arrangements
or hedging activities, in each case in connection with which the aggregate
actual or contingent obligations of the Company and the Company Subsidiaries
under such Contract are greater than $1,000,000 in the aggregate, (xvi) that
involves the entity set forth in Section 3.9(a)(xvi) of the Company Disclosure
Schedule and (xvii) to which the Company or any Company Subsidiary is a party
that creates a lien or other encumbrance on the assets or properties of the
Company or any Company Subsidiary that is material to the Company and the
Company Subsidiaries, taken as a whole. Each such Contract described in clauses
(i) through (xvii) is referred to herein as a "Material Contract."
(b) Except as has not had, and would not reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect, each
of the Material Contracts is in full force and effect and is valid and binding
on the Company and each Company Subsidiary party thereto and, to the knowledge
of the Company, each other party thereto, enforceable against such parties in
accordance with their terms, except to the extent that enforcement of the rights
and remedies created thereby is subject to bankruptcy, insolvency,
reorganization, moratorium and other similar laws of general application
affecting the rights and remedies of creditors and to general principles of
equity (regardless of whether enforceability is considered in a proceeding in
equity or at Law).
(c) Except as has not had, and would not reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect, (i)
neither the Company nor any Company Subsidiary has breached, is in default
under, or has received written notice of any breach of or default under, any
Material Contract, and no event has occurred that with the lapse of time or the
giving of notice or both would constitute a default thereunder by the Company or
any Company Subsidiary. To the Company's knowledge, no other party to any
Material Contract to which the Company or any Company Subsidiary is a party is
in breach or violation of, or default under, such Material Contract. A complete
and correct copy, subject to redaction if required pursuant to the terms thereof
or if required by applicable Law, of each Material Contract has previously been
made available by the Company to Parent or filed by the Company with the SEC.
(d) As of the date of this Agreement, since January 1, 2006, none of
the Major Customers or Major Suppliers has (i) terminated or required any
amendment materially adverse to the Company or any Material Company Subsidiary
to any of their respective contracts with the Company or applicable Company
Subsidiary, or otherwise altered in writing their relationships with the Company
or
14
applicable Company Subsidiary in any respect materially adverse to the
Company or (ii) failed to renew any such contract to the extent such contract
was renewable by its terms or the nature of the contract or relationship
otherwise expressly contemplated an ongoing purchase or supply relationship.
(e) In the past three years, neither Company nor any of the Company
Subsidiaries nor, to the knowledge of the Company, any of their respective
officers or directors or principals (as defined in FAR 52.209-5) has been
debarred or suspended from doing business with the United States Government or
any of its agencies, nor has the Company received written notice that any such
suspension or debarment action has been proposed. In the past three years, no
show cause notices, notices of termination for default or cure notices have been
issued against Company or any of the Company Subsidiaries, except as to any such
cure notices, those with respect to which cure has been made in the ordinary
course of business. Neither Company nor any of the Company Subsidiaries nor, to
the knowledge of the Company, any of their respective officers or directors or
principals (as defined in FAR 52.209-5) is currently and has not been in the
past three years, convicted or under criminal indictment or had a civil judgment
rendered against them with respect to any alleged irregularity, misstatement or
omission arising under or in any way relating to any Contract with the United
States Government or any of its agencies. Neither Company nor any of the Company
Subsidiaries in the past three years has (i) made any voluntary disclosure
regarding material non-compliance relating to any Material Contract with the
United States Government or any of its agencies that remains unresolved in any
material respect or (ii) ever been denied a security clearance necessary to
perform any Contract with the United States Government or any of its agencies
unless such clearance has later been granted. To the knowledge of the Company,
in the past three years, neither Company nor any of the Company Subsidiaries,
nor any of their officers, directors, or employees, has been in material
violation of the provisions and requirements of the National Industrial Security
Program Operating Manual or the requirements of the Company facility security
clearances or the individual security clearances of the officers, directors, or
employees. Neither Company nor any of the Company Subsidiaries has assigned or
otherwise conveyed or transferred, or agreed to assign, to any persons, any
Contracts with the United States Government or any of its agencies, or any
account receivable relating thereto, whether as a security interest or
otherwise.
(f) To the knowledge of the Company, with respect to any Material
Contract with the United States Government or any of its agencies, or with any
of their prime contractors or subcontractors: (i) no material amount of money
due the Company or any of the Company Subsidiaries is being withheld or offset;
(ii) no claim or action for relief or dispute proceeding is pending against the
Company or any of the Company Subsidiaries; (iii) no material customer complaint
that remains unresolved (as determined in the Company's reasonable discretion)
has been received by the Company or any of the Company Subsidiaries; (iv) other
than routine cost or pricing audits, neither the Company nor any of the Company
Subsidiaries is being audited by the United States Government or any of its
agencies; and (v) neither the Company nor any of the Company Subsidiaries, nor
any of their respective officers or directors is under administrative, civil, or
criminal investigation by the United States Government or any of its agencies.
Section 3.10 Intellectual Property.
(a) Section 3.10(a) of the Company Disclosure Schedule contains a
list, as of the date hereof, of all United States and foreign Registered
Intellectual Property owned by the Company or any Company Subsidiary ("Owned
Intellectual Property"). The Intellectual Property owned by and licensed to the
Company and the Company Subsidiaries (collectively, the "Company Intellectual
Property") constitutes all Intellectual Property used, held for use or necessary
for the conduct of the business of the Company and the Material Company
Subsidiaries as presently conducted, except as has not had, individually or in
the aggregate, a Company Material Adverse Effect. Each item of Company
Intellectual Property immediately prior to the Effective Time hereunder will be
available for use on
15
substantially the same terms and conditions immediately subsequent to the
Effective Time, except as is not reasonably likely to have, individually or in
the aggregate, a Company Material Adverse Effect. The consummation of the
transactions contemplated by this Agreement will not in any material way (i)
alter, impair or extinguish any material Company Intellectual Property, or (ii)
trigger any obligation to grant rights under any such items or pay any, or
accelerate the payment of any, royalties to any third party in excess of the
amounts payable prior to the Closing.
(b) The Company and/or each Company Subsidiary (i) own the entire
right, title and interest in and to all of the Owned Intellectual Property, free
and clear of all Liens and/or, with respect to intellectual property embedded in
the Owned Intellectual Property or otherwise, has the right to use the material
Company Intellectual Property licensed for use by the Company or any Company
Subsidiary pursuant to the terms of subsisting license agreements, and (ii) has
not received any written notice or written claim challenging the Company's or
Subsidiary's ownership of the Owned Intellectual Property. Other than as listed
on Section 3.10(b) of the Company's Disclosure Schedule, no Owned Intellectual
Property has been licensed or a covenant not to xxx been granted to a third
party other than licenses that accompany the sale or licensing of the Company
and Company Subsidiaries products and services in the ordinary course of
business consistent with statutory provisions governing the sale of goods.
(c) Neither the Company nor any Company Subsidiary has infringed
upon, misappropriated, diluted or otherwise come into conflict with any
Intellectual Property rights of any third parties, other than any such
infringement, misappropriation, dilution or conflict which is not reasonably
likely to have, individually or in the aggregate, a Company Material Adverse
Effect. Other than as listed on Section 3.10(c) of the Company Disclosure
Schedule and other than for matters which have been resolved, neither the
Company nor any Company Subsidiary has received any written charge, complaint,
claim, demand, or notice alleging any infringement, invalidity,
unenforceability, misappropriation, misuse or violation of any third party's
Intellectual Property rights (including any "invitations to license" or
communications that claim that a person must license or refrain from using any
Intellectual Property rights of any third party) or of unfair competition
relating to third party Intellectual Property rights. There are no Actions
pending asserting the invalidity, misuse, infringement or unenforceability of
any Owned Intellectual Property. To the knowledge of the Company, no third party
is infringing upon, misappropriating or otherwise violating any of the material
Owned Intellectual Property that is currently used in the Company's material
commercial software products except for such infringement, misappropriation or
violation which is not reasonably likely to have, individually or in the
aggregate, a Company Material Adverse Effect.
(d) Except as would not have, individually or in the aggregate, a
Company Material Adverse Effect, the Company or each Company Subsidiary has
taken commercially reasonable actions to maintain the Company's and each Company
Subsidiary's Owned Intellectual Property with the relevant Governmental Entity,
including payment of all fees, annuities and all other payments which have
heretofore become due to any government authority with respect to the Owned
Intellectual Property. To the knowledge of the Company, the Owned Intellectual
Property (i) is valid and enforceable and (ii) is not the subject of any
opposition filed with the United States Patent and Trademark Office or the
corresponding offices of any foreign jurisdiction where such Intellectual
Property is owned or registered except as has not had, individually or in the
aggregate, a Company Material Adverse Effect.
(e) The Company and the Company Subsidiaries maintain policies and
procedures regarding data security and privacy that are commercially reasonable
and, in any event, in compliance in all material respects with all their
obligations to their customers and under applicable Laws. Except as has not had,
individually or in the aggregate, a Company Material Adverse Effect, there has
been no security breach relating to, violation of any security policy regarding,
or unauthorized access or unauthorized use of, any confidential or proprietary
data used in the businesses of the Company or a
16
Company Subsidiary. The use and dissemination of any and all data on concerning
individuals by their businesses is in compliance in all material respects with
customer agreements and applicable Law.
(f) Except as would not have, individually or in the aggregate, a
Company Material Adverse Effect, no material commercial product marketed or sold
by the Company or any Company Subsidiary, uses, incorporates or has embedded in
it any source, object or other software code subject to an open source license
or other similar type of license (including without limitation, the GNU General
Public License, Library Generally Public License, Lesser General Public License,
Mozilla License, Berkeley Software Distribution License, Open Source Initiative
license, MIT, Apache or Public Domain Licenses, (each an "Open Source License")
such that such product of the Company or such Company Subsidiary is, as a whole,
subject to the terms of such Open Source License as such terms pertain to the
requirement to distribute the source code for such product.
(g) To the knowledge of the Company, and except as would not have a
Company Material Adverse Effect, no trade secret or any other confidential or
proprietary information of the Company or any Company Subsidiary has been
disclosed by the Company or any Company Subsidiary to any third party other than
pursuant to a written nondisclosure agreement restricting the disclosure and use
of such information. The Company and each Company Subsidiary have taken
commercially reasonable security measures to protect the confidentiality of
their trade secrets and all third party confidential information provided to
them that they are legally obligated to maintain in confidence. The Company and
each Company Subsidiary has in place a policy and practice whereby they execute
confidentiality and Intellectual Property assignment of rights and/or employee
assignment of rights agreement with all of their respective employees,
consultants and contractors.
(h) "Intellectual Property" means the entire right, title and
interest in and to all intellectual property or other proprietary rights
throughout the world of every kind and nature, whether existing under statute or
at common law or equity, now or hereafter recognized, including all rights and
interests pertaining to or deriving from (a) any (i) fictitious trade business
names, trade names, corporate names, registered and unregistered trademarks,
service marks and logos, trade dress, together with any goodwill related to the
foregoing, (ii) (A) all patents (including all continuations, continuations in
part, revisions, renewals, reissues, reexaminations, and divisionals) and any
applications therefor ("Patents"), and (B) inventions and discoveries that may
be patentable, (iii) copyrights in both published works and unpublished works
including any registrations and applications therefor and whether registered or
unregistered, or (iv) all trade secrets, confidential information, customer
lists, software, databases, works of authorship, mask works, technical
information, data, drawings, blue prints, proprietary processes, formulae,
algorithms, models, user interfaces, concepts, ideas, techniques, methods, and
methodologies, (b) technical and confidential information, rights of privacy and
publicity, moral rights, and shop rights, (c) computer software and firmware
programs and systems, source code, object code, databases, and documentation
relating to the foregoing, and (d) Internet domain names, and all registrations
and applications therefor, and web sites and web pages and related items (and
all intellectual property and proprietary rights incorporated therein) and email
addresses. Intellectual Property does not include any third party software
modules, components or other technology included or incorporated into any
Intellectual Property of the Company or any Company Subsidiary. "Registered
Intellectual Property" means each of the following included in the Intellectual
Property everywhere throughout the world: Patents and statutory invention
registrations, registered trademarks, registered service marks, registered
copyrights, Internet domain name registrations and the registrations of and
applications for registration of any of the foregoing.
17
Section 3.11 Real Property; Title to Assets.
(a) Section 3.11(a) of the Company Disclosure Schedule lists each
parcel of real property owned by the Company or any Company Subsidiary (the
"Real Property"). The Company or any Company Subsidiary has good, valid and
marketable title to all of the Real Property, in each case free and clear of all
mortgages, pledges, liens, leases, security interests, conditional and
installment sale agreements, encumbrances, charges or other claims of third
parties of any kind, including, without limitation, any easement, right of way
or other encumbrance to title, or any option, right of first refusal, or right
of first offer, other than (i) liens for current taxes and assessments not yet
past due or being contested in good faith, (ii) inchoate liens for construction
in progress, (iii) mechanics', materialmen's, workmen's, repairmen's,
warehousemen's and carriers' liens arising in the ordinary course of business of
the Company or such Company Subsidiary consistent with past practice for sums
not yet delinquent or being contested in good faith by appropriate proceedings,
and (iv) all Liens and other imperfections of title (including matters of
record) and encumbrances that do not materially interfere individually or in the
aggregate with the conduct of the business of the Company and the Company
Subsidiaries, taken as a whole, materially detract from the value or use of the
Real Property or have, individually or in the aggregate, a Company Material
Adverse Effect (collectively, "Permitted Liens").
(b) Section 3.11(b) of the Company Disclosure Schedule lists by
address each parcel of real property leased or subleased by the Company or any
Company Subsidiary that is currently used in, and material to, the conduct of
the business of the Company and the Company Subsidiaries (together with all
other real property leased by the Company and the Company Subsidiaries, the
"Leased Properties"), with the name of the lessor and the date of the lease or
sublease. Except as would not have, individually or in the aggregate, a Company
Material Adverse Effect, the Company or one of the Company Subsidiaries has the
right to the use and occupancy of the Leased Properties, subject to the terms of
the applicable Lease and Permitted Liens. The Company or any Company Subsidiary
has good leasehold title to the material Leased Properties, subject to Permitted
Liens. There is no pending or, to the Company's knowledge, overtly threatened
eminent domain taking affecting any of the material Real Property or the
material Leased Properties or any material portion thereof or material interest
therein.
(c) Each of the Company and the Company Subsidiaries is in
compliance in all material respects with the terms of all leases to material
Leased Properties to which it is a party (each a "Lease" and, collectively, the
"Leases"), and each such lease is a legal, valid and binding agreement of the
Company or the Company Subsidiary, as the case may be and, to the knowledge of
the Company, of each other party thereto, enforceable against the Company or
such Company Subsidiary, as the case may be, and, to the knowledge of the
Company, against the other party or parties thereto, in each case, in accordance
with its terms, except to the extent that enforcement of the rights and remedies
created hereby is subject to bankruptcy, insolvency, reorganization, moratorium
and other similar Laws of general application affecting the rights and remedies
of creditors and to general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at Law).
Section 3.12 Insurance. The Company and the Company Subsidiaries maintain
insurance in such amounts and against such risks as is sufficient to comply with
applicable Law. Except as would not have, individually or in the aggregate, a
Company Material Adverse Effect, all policies or binders of material fire,
liability, product liability, workers' compensation, vehicular, directors' and
officers' and other material insurance held by or on behalf of the Company and
the Company Subsidiaries (collectively, the "Company Insurance Policies") are
(i) except for policies that have expired under their terms, in full force and
effect, and (ii) to the knowledge of the Company, valid and enforceable in
accordance with their terms. Except as would not have, individually or in the
aggregate, a Company Material Adverse Effect, neither the Company nor any
Company Subsidiary is in breach or default with respect to any provision
contained in such policy or binder. Neither the Company nor any Company
18
Subsidiary has (a) received notice of actual or threatened modification or
termination of any material Company Insurance Policy, or (b) received notice of
cancellation or non-renewal of any such Company Insurance Policy, other than in
connection with ordinary renewals.
Section 3.13 Tax Matters.
(a) For purposes of this Agreement, the term "Tax" (and, with
correlative meaning, "Taxes" and "Taxable") means all United States federal,
state and local, and all foreign, income, profits, franchise, gross receipts,
payroll, transfer, sales, employment, social security, unemployment insurance,
workers' compensation, use, property, excise, value added, ad valorem,
estimated, stamp, alternative or add-on minimum, recapture, environmental,
capital, gain, withholding taxes, any other taxes, and any fees, assessments,
liabilities, levies, charges, duties, tariffs, impositions or assessments in the
nature of taxes, together with all interest, penalties, fines and additions
imposed on or with respect to such amounts, whether disputed or not, including
any liability for taxes of a predecessor entity. "Tax Return" (and, with
correlative meaning, "Tax Returns") means any return, declaration, report, claim
for refund or information return or similar statement filed or required to be
filed with any taxing authority or any other Governmental Entity in connection
with Taxes, including any attachments thereto and any amendments thereof.
(b) Except as would not, individually or in the aggregate, have a
Company Material Adverse Effect:
(i) All Tax Returns required to be filed by or with respect to
the Company and the Company Subsidiaries have been filed or will be filed
with the appropriate tax authority within the time and in the manner
prescribed by Law. All such Tax Returns are true, correct and complete in
all respects, and all Taxes owed by the Company or the Company
Subsidiaries, whether or not shown on any Tax Return, have been timely
paid or fully reserved for on the Financial Statements. No claim (which
has not been settled and paid or accrued in the Financial Statements) has
ever been made in writing by any taxing authority in any jurisdiction in
which any of the Company or the Company Subsidiaries does not file a Tax
Return that the Company or the Company Subsidiaries are or may be subject
to taxation by that jurisdiction. Since January 1, 2003, no adjustment
relating to any Tax Return of the Company or any Company Subsidiary has
been proposed in writing by any Tax Authority (insofar as such adjustment
relates to the activities or income of the Company or any Company
Subsidiary).
(ii) There are no Liens with respect to Taxes upon any of the
assets or properties of the Company or the Company Subsidiaries, other
than with respect to Taxes not yet due and payable.
(iii) No audit, assessment, examination, dispute,
investigation or judicial or administrative proceeding is currently
pending or ongoing with respect to any Tax Return or Taxes of the Company
or the Company Subsidiaries with respect to which the Company or a Company
Subsidiary has been notified orally or in writing. No deficiency for any
Taxes has been proposed or assessed in writing against the Company or the
Company Subsidiaries, which deficiency has not been paid or accrued in
full. All Tax deficiencies determined as a result of any past completed
audit with respect to Taxes of the Company and the Company Subsidiaries
have been satisfied.
(iv) There are no outstanding requests, agreements, waivers or
arrangements extending the statutory period of limitation applicable to
any claim for, or the period for the collection or assessment of, Taxes
due from or with respect to the Company or the Company
19
Subsidiaries for any taxable period. No power of attorney granted by or
with respect to the Company or the Company Subsidiaries relating to Taxes
is currently in force.
(v) With respect to any period ending on or before the date of
the latest balance sheet included in the Financial Statements for which
Tax Returns have not yet been filed, or for which Taxes are not yet due or
owing, the Company and the Company
Subsidiaries have, in accordance with and to the extent required by GAAP,
made accruals for such Taxes in their Financial Statements.
(vi) All withholding and payroll Tax requirements required to
be complied with by the Company and the Company Subsidiaries (including
requirements to deduct, withhold and pay over amounts to any Governmental
Entity and to comply with associated reporting and record keeping
requirements) have been satisfied or accrued in the Financial Statements.
(vii) Neither the Company nor any Company Subsidiary has any
liability for the Taxes of any other person (other than the Company and
the Company Subsidiaries) under Treasury Regulation 1.1502-6 (or any
similar provision of state, local or foreign Law) by contract or as a
transferee or successor. No person has any right to any payment from the
Company or any Company Subsidiary with respect to any Tax refunds received
or due to be received by the Company.
(viii) The Company has delivered or made available to Parent
complete copies of all Tax Returns of the Company with respect to 2003 and
2004.
(ix) Neither the Company nor any Company Subsidiary has
participated in a "listed transaction" within the meaning of Treasury
Regulation section 1.6011-4(b)(2).
(x) Neither the Company nor any Company Subsidiary is a party
to any joint venture, partnership, or other arrangement (other than an
arrangement related to royalties) that the parties treat as a partnership
for federal or applicable state, local or foreign Tax purposes.
(xi) Except as disclosed in its Tax Returns, neither the
Company nor any Company Subsidiary has received approval to make or agreed
to a change in any accounting method or has any written application
pending with any Tax authority requesting permission for any such change.
(xii) The Company has not been a "distributing corporation" or
a "controlled corporation" within the meaning of Code section 355(a)(1)(A)
in a transaction occurring within the past five years.
(xiii) Neither the Company nor any Company Subsidiary is party
to or bound by any active closing agreement pursuant to Section 7121 of
the Code (or any similar provision of state, local or foreign law) or
offer in compromise with any U.S. Tax authority.
(xiv) Neither the Company nor any of the Company Subsidiaries
is a party to any indemnification, allocation, sharing or similar
agreement, with respect to Taxes that would give rise to a payment or
indemnification obligation (other than agreements among the Company and
the Company Subsidiaries).
20
Section 3.14 Employee Benefit Plans.
(a) With respect to each material pension, savings, profit sharing,
retirement, deferred compensation, employment, welfare, fringe benefit,
insurance, short and long term disability, medical, death benefit, incentive,
bonus, stock, other equity-based, vacation pay, severance pay, cafeteria plan
and other plan, program and arrangement for the benefit of any current or former
employee, director or consultant of the Company or any Company Subsidiary
(collectively, the "Company Employees"), or their beneficiaries, including each
"employee benefit plan" (as that term is defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) that is not a
Foreign Plan (as defined in Section 3.14(h)), and that is sponsored or
maintained by the Company and/or by one or more Company Subsidiaries or to which
the Company and/or one or more Company Subsidiaries has contributed or under
which the Company or any Company Subsidiary has any present or future liability
(each, a "Plan"), the Company has delivered or made available to Parent current,
accurate and complete copies of each of the following together with, when
applicable, all amendments: (i) the Plan, or, if the Plan has not been reduced
to writing, a written summary of its material terms, (ii) if the Plan is subject
to the disclosure requirement of Title I of ERISA, the summary plan description,
and in the case of each other Plan, any similar employee summary, (iii) if the
Plan is intended to be qualified under Section 401(a) of the Code, the most
recent determination letter (or opinion letter upon which the Company is
entitled to rely) issued by the Internal Revenue Service ("IRS"), (iv) if the
Plan is subject to the requirement that a Form 5500 series annual report/return
be filed, the three most recently filed annual reports/returns, (v) all related
trust agreements, group annuity contracts, administrative services agreements,
(vi) for each Plan that is funded, the three most recent financial statements
and actuarial reports for each such Plan and (vii) since January 1, 2003, any
material communications received from or sent to the IRS or the U.S. Department
of Labor relating to an audit or similar process involving the Plan. Section
3.14(a) of the Company Disclosure Schedule sets forth a list of all material
Plans.
(b) There is no entity (other than the Company or any Company
Subsidiary) that together with the Company or any Material Company Subsidiary
that was, during the five years preceding the date of this Agreement, or
currently would be treated as a single employer within the meaning of Section
414(b), (c), (m) or (o) of the Code or Section 4001(b) of ERISA. None of the
Plans is a defined benefit plan subject to Title IV of ERISA.
(c) Each Plan has been established and administered in all material
respects in accordance with its terms and the provisions of applicable law,
including ERISA and the Code (and the rules and regulations thereunder), and to
the knowledge of the Company, nothing has been done or not done with respect to
any Plan, the doing or not doing of which could result in any material liability
on the part of the Company or any Company Subsidiary under Title I of ERISA or
Chapter 43 of the Code. None of the Plans is currently under examination by the
IRS or the U.S. Department of Labor. All contributions, premiums and expenses,
if any, due under each Plan have been timely made. Each Plan intended to be
qualified under Section 401(a) of the Code has received a favorable
determination letter (or opinion letter upon which the Company may rely) from
the IRS that it is so qualified, and to the knowledge of the Company nothing has
occurred since the date of such letter that could reasonably be expected to
adversely affect the qualified status of such Plan. Each trust created under any
such Plan is exempt from tax under Section 501(a) of the Code. No Plan is or has
been subject to Section 302 of ERISA or Section 412 of the Code. To the
knowledge of the Company, no event has occurred and no condition exists that
would subject the Company or any Company Subsidiary either directly or by reason
of their affiliation with any member of their "Controlled Group" (defined as any
organization that is a member of a controlled group of organizations within the
meaning of Sections 414 (b), (c), (m) or (o) of the Code), to any tax, fine,
lien, penalty or other liability imposed by ERISA, the Code or other applicable
laws, rules or regulations which could result in any material liability on the
part of the Company or any Company Subsidiary.
21
(d) Except for continuation of health coverage described in Section
4980B of the Code or Section 601 et seq. of ERISA ("COBRA"), no Plan provides
for medical, dental, life insurance coverage or any other welfare benefits after
termination of employment or for other post-employment welfare benefits.
(e) No Action (other than routine claims for benefits in the
ordinary course) is pending or, to the knowledge of the Company, threatened
against any Plan (including any audit or other administrative proceeding by the
U.S. Department of Labor, the IRS or other governmental agencies), except as
would not have, individually or in the aggregate, a Company Material Adverse
Effect.
(f) Neither the Company nor any of the Company Subsidiaries has ever
maintained, sponsored, contributed to, been required to contribute to, or
incurred any liability under any defined benefit pension plan subject to Title
IV of ERISA, including without limitation any multi-employer plan as defined in
Section 3(37) or Section 4001(a)(3) of ERISA or any multiple employer plan as
defined in Section 413(c) of the Code, or any plan that has two or more
contributing sponsors at least two of whom are not under common control, within
the meaning of Section 4063(a) of ERISA.
(g) Neither the Company nor any Company Subsidiary, nor, to the
knowledge of the Company, any other "disqualified person" or "party in interest"
(as defined in Section 4975(e)(2) of the Code and Section 3(14) of ERISA,
respectively) has engaged in any transactions in connection with any Plan that
would result in the imposition on the Company of a material penalty pursuant to
Section 502 of ERISA, material damages pursuant to Section 409 of ERISA or a
material tax pursuant to Section 4975 of the Code.
(h) Each non-governmental plan maintained, or contributed to, by or
on behalf of the Company or any Company Subsidiary applicable to employees of
the Company or any Company Subsidiary located outside of the United States (a
"Foreign Plan") and each material non-governmental welfare benefit plan
maintained or contributed to by or on behalf of the Company or any Company
Subsidiary applicable to employees of the Company or any Company Subsidiary
located outside of the United States (a "Foreign Welfare Plan"), has been
administered in material compliance with its terms and the requirements of all
applicable Laws and regulations, and all required contributions to each Foreign
Plan and Foreign Welfare Plan have been made. All Foreign Plans that are
required to be funded are funded to the extent required in all material
respects. There are no Actions (other than routine benefit claims) pending or,
to the knowledge of the Company, threatened against any Foreign Plan or Foreign
Welfare Plan, or, to the Company's knowledge, no facts or circumstances exist
that could give rise to any such Actions, except in each case as would not have,
individually or in the aggregate, a Company Material Adverse Effect.
(i) Except as required by applicable Law, no Plan exists that, as a
result of the execution of this Agreement, shareholder approval of this
Agreement, or the transactions contemplated by this Agreement, would (i) result
in severance pay or any increase in severance pay upon any termination of
employment after the date of this Agreement (except as required by the Code or
ERISA) (ii) except as contemplated by Section 2 with respect to Options,
Restricted Shares and RSUs, accelerate the time of payment or vesting or result
in any payment or funding (through a grantor trust or otherwise) of compensation
or benefits under, increase the amount payable or result in any other material
obligation pursuant to, any Plan, or (iii) limit or restrict the right of the
Company to merge, amend or terminate any of the Plans.
Section 3.15 Labor and Employee Matters. Except as has not had,
individually or in the aggregate, a Company Material Adverse Effect, no work
stoppage, slowdown or labor strike against the Company or any Company Subsidiary
is pending or, to the knowledge of the Company, threatened.
22
Except as has not had and would not reasonably be expected to have, individually
or in the aggregate, a Company Material Adverse Effect, the Company and the
Company Subsidiaries (a) have no direct or indirect liability with respect to
any misclassification of any Persons as an independent contractor rather than as
an employee and (b) are in compliance with all applicable foreign, federal,
state and local laws, rules and regulations respecting employment, employment
practices, terms and conditions of employment and wages and hours, in each case,
with respect to their employees. Except as set forth on Section 3.15 of the
Company Disclosure Schedules, neither the Company nor any Company Subsidiary is
party to any collective bargaining agreement or other labor union contract or
statutory works council applicable to Company Employees, nor to the knowledge of
the Company, are there any activities by any labor unions to organize such
Company Employees.
Section 3.16 Environmental Matters.
(a) Except as would not have, individually or in the aggregate, a
Company Material Adverse Effect, (i) none of the Company or any of the Company
Subsidiaries is in violation of any Environmental Law or, except for any
violation that has been fully resolved, has violated in the past any
Environmental Law; (ii) there is and has been no Release of Hazardous Substances
at, on or under (A) any of the properties currently owned, leased or operated by
the Company or any of the Company Subsidiaries or, formerly owned, leased or
operated by the Company or any of the Company Subsidiaries or, (B) to the
knowledge of the Company, any other locations (including any location used for
the storage, disposal, recycling or other handling of any Hazardous Substances),
that would reasonably be expected to result in a liability or obligation of the
Company or any of the Company Subsidiaries; (iii) the Company and the Company
Subsidiaries have obtained and are in compliance with all Environmental Permits
that are required for the operation of the business of the Company or any of the
Company Subsidiaries or the holding of any interest in any of their properties
and, except for any noncompliance that has been fully and finally resolved, have
at all prior times been in compliance with such Environmental Permits; and (iv)
to the knowledge of the Company, there are no actions, orders claims or notices
pending or issued to or threatened against the Company or any of the Company
Subsidiaries alleging violations of or liability under any Environmental Law or
otherwise concerning the Release, threatened Release or management of Hazardous
Substances.
(b) Parent and Merger Sub acknowledge that (i) the representations
and warranties contained in this Section 3.16 are the only representations and
warranties being made with respect to compliance with or liability under
Environmental Laws or with respect to any environmental, health or safety
matter, including natural resources, related in any way to the Company or to the
Company Subsidiaries or to this Agreement or to its subject matter and (ii) no
other representation or warranty contained in this Agreement (including pursuant
to Section 3.7) shall apply to any such matters and no other representation or
warranty, express or implied, is being made with respect thereto.
(c) To the Company's knowledge, the Company has made available to
Parent a copy of all material environmental reports, studies, assessments and
audits prepared on or after January 1, 1999 with respect to the Company or any
of the Company Subsidiaries that are currently in the possession or control of
the Company or any of the Company Subsidiaries.
(d) For purposes of this Agreement:
(i) "Environmental Laws" means any Laws (including common law)
of the United States federal, state, local, non-United States, or any
other Governmental Entity, relating to (A) Releases or threatened Releases
of Hazardous Substances or materials containing Hazardous Substances; (B)
the manufacture, handling, transport, use, treatment, storage, emission,
discharge, disposal or arranging for disposal of Hazardous Substances or
materials
23
containing Hazardous Substances; or (C) pollution or protection of the
environment or of human health and safety as such is affected by Hazardous
Substances or materials containing Hazardous Substances.
(ii) "Environmental Permits" means any permit, consent,
license, registration, order, grant, approval, notification or any other
authorization pursuant to Environmental Law.
(iii) "Hazardous Substances" means (A) those substances,
materials or wastes defined as toxic, hazardous, acutely hazardous,
pollutants or contaminants, in, or regulated under, the following United
States federal statutes and any analogous foreign or state statutes, and
all regulations thereunder: the Hazardous Materials Transportation Act,
the Resource Conservation and Recovery Act, the Comprehensive
Environmental Response, Compensation and Liability Act, the Clean Water
Act, the Safe Drinking Water Act, the Atomic Energy Act, the Federal
Insecticide, Fungicide, and Rodenticide Act and the Clean Air Act; (B)
petroleum and petroleum products, including crude oil and any fractions
thereof; (C) natural gas, synthetic gas, and any mixtures thereof; and (D)
polychlorinated biphenyls, asbestos, molds that would reasonably be
expected to have an adverse effect on human health and urea formaldehyde
foam insulation.
(iv) "Release" means any release, spilling, leaking, pumping,
pouring, discharging, emitting, emptying, escaping, leaching, injecting,
dumping, disposing or migrating into or through the indoor or outdoor
environment.
Section 3.17 No Breach. The execution, delivery and performance of this
Agreement do not and the consummation by the Company of the Merger and the other
transactions contemplated by this Agreement will not (i) violate any provision
of the certificate of incorporation or by-laws of the Company or the comparable
organizational documents of a Material Company Subsidiary, (ii) violate,
conflict with or result in the breach of any of the terms or conditions of,
result in modification of or the cancellation or loss of a benefit under,
require any notice or action under, or otherwise give any other contracting
party the right to terminate, accelerate obligations under or receive payment or
additional rights under or constitute (or with notice or lapse of time, or both,
constitute) a default under, any Contract (excluding Permits), (iii) violate any
Law applicable to the Company or the Company Subsidiaries or by which any of the
Company's or the Company Subsidiaries' assets or properties is bound, (iv)
violate any Permit, (v) except for (a) filings with the SEC under the Exchange
Act, (b) filings pursuant to the DGCL as contemplated herein, (c) the filing of
a pre-merger notification report under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), and any merger control,
competition or fair trade Law filings in foreign jurisdictions if and to the
extent required, (d) filings required with, and approvals required by, the
Nasdaq rules and regulations, and (e) the notifications and consents listed on
Section 3.17 of the Company Disclosure Schedule, require any registration or
filing with, notice to, or Permit, order, authorization, consent or approval of,
any Governmental Entity or any third party pursuant to a Material Contract or
any material Lease, or (vi) result in the creation of any Lien on the assets or
properties of the Company or a Company Subsidiary (other than Permitted Liens),
excluding from the foregoing clauses (ii), (iii), (iv), (v) and (vi) violations,
conflicts, breaches, accelerations, rights or entitlements, defaults and Liens
which, and filings, registrations, notices, Permits, orders, authorizations,
consents and approvals the absence of which would not have, individually or in
the aggregate, a Company Material Adverse Effect. Notwithstanding the foregoing,
for all purposes of the Agreement, the Company does not make any representation
or warranty (pursuant to this Section 3.17 or elsewhere in this Agreement)
regarding the effect of the applicable antitrust, merger control, competition or
fair trade Laws on its ability to execute, deliver, or perform its obligations
under the Agreement or to consummate the Merger as a result of the enactment,
promulgation, application, or threatened or actual judicial or
24
administrative investigation or litigation under, or enforcement of, any
antitrust, merger control, competition or fair trade Law with respect to the
consummation of the Merger.
Section 3.18 Board Approvals; Anti-Takeover; Vote Required.
(a) The Company Board of Directors has (i) duly and validly approved
and adopted resolutions addressing all corporate action required to be taken by
the Company Board of Directors to authorize this Agreement and the Merger, (ii)
resolved that the Merger is advisable and in the best interests of the
stockholders of the Company, and (iii) subject to the other terms and conditions
of this Agreement, resolved to submit this Agreement to the stockholders of the
Company and to recommend that the stockholders of the Company approve and adopt
this Agreement and the Merger.
(b) Assuming the accuracy of the representations and warranties set
forth in Section 4.8(c), the Company and the Company Board of Directors has
taken all action necessary such that no restrictions contained in any "fair
price," "moratorium," "control share acquisition," "business combination" or
similar statute or regulation or provision in the Company's certificate of
incorporation or by-laws, including without limitation Section 203 of the DGCL,
or any applicable regulation thereunder, will apply to the execution, delivery
or performance of or compliance with this Agreement or the Merger.
(c) The Company has delivered or made available to Parent a true and
correct copy of the Company Rights Agreement, as amended to date, and the
Company Board of Directors has taken such action as is necessary to amend the
Company Rights Agreement such that the execution, delivery or performance of or
compliance with this Agreement and the Merger will not: (i) result in Parent
becoming an "Acquiring Person" under the Company Rights Agreement or (ii) result
in the grant of any rights to any person under the Company Rights Agreement or
enable, require or cause the Company Rights to become exercisable, detach from
the Company Common Stock, be exercised or deemed exercised, or be distributed or
otherwise triggered.
(d) Assuming the accuracy of the representations and warranties set
forth in Section 4.8(c), the affirmative vote of the holders of a majority of
the outstanding shares of Company Common Stock (the "Company Stockholder
Approval") is the only vote of the Company's stockholders necessary to approve
or adopt this Agreement and the transactions contemplated hereby.
Section 3.19 Financial Advisor.
(a) The Company Board of Directors has received the opinion of
Xxxxxxx Xxxxx & Co. substantially to the effect that, as of the date hereof, and
based upon and subject to the factors and assumptions set forth therein, the Per
Share Price to be received by the holders of shares of Company Common Stock
pursuant to this Agreement is fair from a financial point of view to such
holders, a signed copy of which will be shown to Parent promptly after it is
available following the date hereof.
(b) Other than Xxxxxxx Sachs & Co., no broker, investment banker,
financial advisor, finder, agent or similar intermediary has acted on behalf of
the Company or any Company Subsidiary in connection with this Agreement or the
transactions contemplated hereby, and there are no other brokerage commissions,
finders' fees, financial advisor's fees or similar fees or commissions payable
in connection herewith based on any agreement, arrangement, commitment or
understanding with the Company or any Company Subsidiary, or any action taken by
or on behalf of the Company or any Company Subsidiary. The Company has made
available to Parent a true, complete and correct copy of the Company's
engagement letter with Xxxxxxx Xxxxx & Co. prior to the date hereof. Section
3.19(b) of the Company Disclosure Schedule sets forth the Company's good faith
estimate as of the date hereof of
25
the amount of all legal and advisory fees and expenses to be incurred by the
Company in connection with the Merger.
Section 3.20 Information in the Proxy Statement. The proxy statement to
be provided to the Company's stockholders in connection with the Company
Stockholders Meeting (such proxy statement, inclusive of any amendment thereof
or supplement thereto, the "Proxy Statement") on the date mailed to the
Company's stockholders and at the time of any meeting of the Company's
stockholders to be held in connection with the Merger, will not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading, except
that no representation is made by the Company with respect to statements made
therein based on information supplied by Parent, Merger Sub or any Sponsor
expressly for inclusion in the Proxy Statement. The Proxy Statement will comply
as to form in all material respects with the provisions of the Exchange Act and
the rules and regulations thereunder.
Section 3.21 Affiliate Transactions. No executive officer or director of
the Company or any Company Subsidiary or any person owning 5% or more of the
Company Common Stock or any affiliate or family member of any such officer,
director or owner (an "Affiliated Party") is a party to any Contract with or
binding upon the Company or any Company Subsidiary or has any material interest
in any property or assets owned by the Company or any Company Subsidiary or has
engaged in any transaction (other than those related to employment or incentive
arrangements) with the Company that is material to the Company within the last
12 months, in each case, of the type that would be required to be disclosed
under Item 404 of Regulation S-K under the Securities Act.
Section 3.22 No Other Representations or Warranties; Investigation by
Parent. Except for the representations and warranties contained in this Section
3, and any certificates delivered by the Company in connection with Closing,
each of Parent and Merger Sub acknowledges and agrees that neither the Company
nor any other person on behalf of the Company makes, nor have Parent nor Merger
Sub relied upon or otherwise been induced by, any other express or implied
representation or warranty with respect to the Company or with respect to any
other information made available to Parent or Merger Sub in connection with the
transaction contemplated hereunder. Neither the Company nor any other person
will have or be subject to any liability or indemnification obligation to
Parent, Merger Sub or any other person resulting from the distribution to Parent
or Merger Sub, or Parent's or Merger Sub's use of, any such information,
including any information, documents, projections, forecasts or other material
made available to Parent or Merger Sub in certain "data rooms" or management
presentations in expectation of the transactions contemplated by this Agreement,
unless any such information is expressly included in a representation or
warranty contained in this Section 3 or in the corresponding section of the
Company Disclosure Schedule. Notwithstanding the foregoing or any other
provision of this Agreement, nothing herein shall relieve the Company or any
other person from liability for fraud.
SECTION 4 REPRESENTATIONS AND WARRANTIES OF PARENT.
Except as set forth in the disclosure schedule delivered by Parent to the
Company on the date hereof (the "Parent Disclosure Schedule"), the Parent and
Merger Sub hereby jointly and severally make the representations and warranties
set forth in this Section 4 to the Company. The section numbers of the Parent
Disclosure Schedules are numbered to correspond to the section numbers of this
Agreement to which they refer. Any information set forth in one section of the
Parent Disclosure Schedule will be deemed to apply to each other section or
subsection of this Agreement to which its relevance is reasonably apparent.
26
Section 4.1 Organization. Parent and Merger Sub are corporations duly
organized, validly existing and in good standing under the Laws of the State of
Delaware. Parent and Merger Sub are duly qualified or licensed as a foreign
corporation or organization to do business, and are in good standing, in each
jurisdiction where the character of the properties owned, leased or operated by
them or the nature of their business makes such qualification or licensing
necessary, except for such failures to be so qualified or licensed and in good
standing that would not reasonably be likely to prevent or materially delay
Parent and Merger Sub's ability to consummate the transactions contemplated
hereby (a "Parent Material Adverse Effect"). Parent and Merger Sub have been
formed solely for the purpose of engaging in the transactions contemplated by
this Agreement.
Section 4.2 Authority to Execute and Perform Agreement. Parent and
Merger Sub have the necessary corporate power and authority to enter into,
execute and deliver this Agreement and to perform fully their obligations
hereunder and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by Parent and Merger Sub and the consummation of
the transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Parent and Merger Sub. This Agreement has been
duly executed and delivered by Parent and Merger Sub and, assuming this
Agreement constitutes the valid and binding obligation of the other parties
hereto, constitutes a valid and binding obligation, enforceable against them in
accordance with its terms, except to the extent that enforcement of the rights
and remedies created hereby is subject to bankruptcy, insolvency,
reorganization, moratorium and other similar laws of general application
affecting the rights and remedies of creditors and to general principles of
equity (regardless of whether enforceability is considered in a proceeding in
equity or at Law).
Section 4.3 No Conflict; Required Filings and Consents.
(a) The execution and delivery by Parent and Merger Sub of this
Agreement do not, and the consummation of the transactions contemplated hereby
and compliance with the terms hereof will not, (i) violate in any material
respect (A) any provision of the certificate of incorporation, by-laws or other
organizational documents of Parent or Merger Sub (including the limited
partnership or similar agreements of the Sponsors), or (B) subject to the
filings and other matters referred to in Section 4.3(b), any Law applicable to
Parent or Merger Sub or their properties or assets or (ii) require the consent
of, or registration, declaration or filing with, any third party under any
Contract to which Parent or Merger Sub is a party or by which their respective
assets or properties are bound.
(b) No consent of, or registration, declaration or filing with, any
third party or Governmental Entity is required to be obtained or made by or with
respect to Parent or Merger Sub in connection with the execution, delivery and
performance of this Agreement or the consummation of the transactions
contemplated hereby, other than (i) filing of a pre-merger notification report
under the HSR Act, (ii) the filing with the SEC of such reports under Section 13
of the Exchange Act as may be required in connection with this Agreement and the
transactions contemplated hereby, (iii) the filing of the Certificate of Merger
with the Secretary of State of the State of Delaware and any appropriate
documents with the relevant authorities of the other jurisdictions in which
Parent or Merger Sub is qualified to do business, (iv) compliance with and
filings under the merger control, competition or fair trade Laws of any foreign
jurisdiction, if and to the extent required, (v) as set forth in Section 3.17 of
the Company Disclosure Schedule and (vi) such items that have not had and are
not reasonably likely to have, individually or in the aggregate, a Parent
Material Adverse Effect.
Section 4.4 Information in the Proxy Statement. The information supplied
by Parent and Merger Sub expressly for inclusion in the Proxy Statement will not
contain at the time it is first mailed to the stockholders of the Company or at
the time of the Company Stockholders Meeting, any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in
27
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading.
Section 4.5 Litigation. As of the date of this Agreement, there is no
Action pending or, to the knowledge of Parent, threatened, against Parent or any
of its affiliates before any Governmental Entity that would or seeks to
materially delay or prevent the consummation of the Merger. As of the date of
this Agreement, neither Parent nor any of its affiliates is subject to any
continuing order of, consent decree, settlement agreement or other similar
written agreement with, or, to the knowledge of Parent, continuing investigation
by, any Governmental Entity, or any order, writ, judgment, injunction, decree,
determination or award of any Governmental Entity that would or seeks to
materially delay or prevent the consummation of the Merger.
Section 4.6 Financing. Parent has delivered to the Company true and
complete copies of (i) the Equity Commitment Letter, dated as of the date hereof
(the "Equity Commitment Letter"), by and between Parent and each of Xxxxxxx &
Xxxxxxxx Capital Partners V, L.P., JMI Equity Fund V, L.P. and TPG Partners V,
L.P. (each, a "Sponsor" and collectively, the "Sponsors"), pursuant to which
each Sponsor has committed, subject to the terms and conditions set forth
therein, to provide certain of the cash equity financing to Parent in connection
with the transactions contemplated hereby, and (ii) the Debt Commitment Letter,
dated as of the date hereof (as amended, supplemented or otherwise modified from
time to time pursuant to Section 6.8) (the "Debt Commitment Letter"), between
Parent and Xxxxxx Xxxxxxx & Co. Incorporated, Xxxxxx Xxxxxxx Senior Funding,
Inc., Wachovia Bank, National Association, Wachovia Investment Holdings, LLC,
Wachovia Capital Markets, LLC (collectively, the "Lenders"), pursuant to which
the Lenders have committed, subject to the terms and conditions set forth
therein, to provide the debt financing set forth therein (the "Debt Financing")
to Parent in connection with the transactions contemplated hereby. The Equity
Commitment Letter, together with the Debt Commitment Letter, are sometimes
referred to collectively herein as, the "Commitment Letters," and the amounts
committed pursuant to the Commitment Letters being, the "Financing." As of the
date hereof, the commitments contained in the Commitment Letters have not been
withdrawn or rescinded in any respect. As of the date hereof, the Commitment
Letters are in full force and effect in the form so delivered. There are no
conditions precedent or other contingencies related to the funding of the full
amount of the Financing, other than as set forth in or contemplated by the
Commitment Letters. Parent has fully paid all commitment fees required in
connection with the Debt Commitment Letter. Assuming the satisfaction in full of
the conditions set forth in Section 7.2, the aggregate proceeds contemplated by
the Commitment Letters will, together with the unrestricted Cash Equivalents net
of any tax liabilities associated with making such Cash Equivalents available to
pay the Merger Consideration (excluding, for avoidance of doubt, any cash which
cannot be distributed, contributed or otherwise delivered to the Company in
accordance with applicable Laws, including those relating to solvency, adequate
surplus and similar capital adequacy tests) of the Company and the Company
Subsidiaries (assuming that the sum, as of the Effective Time, of such cash and
cash received upon the liquidation of all Cash Equivalents, as calculated above,
will equal at least $190,000,000), be sufficient when funded for Parent and the
Surviving Corporation to pay the aggregate Merger Consideration, Cash Out Amount
and any other payments contemplated in this Agreement and to pay all fees and
expenses related to the Financing or the Merger. As of the date of this
Agreement, Parent does not have any reason to believe that any of the conditions
to the Financing will not be satisfied or that the Financing will not be
available to Merger Sub on the Closing Date. For avoidance of doubt, it shall
not be a condition to Closing for Parent to obtain the Financing or any
alternative financing.
Section 4.7 Guarantee. Concurrently with the execution of this
Agreement, Parent and Merger Sub have delivered to the Company guarantees, dated
the date hereof, of each Sponsor with respect to certain matters on the terms
specified therein (the "Guarantees"). Each Guarantee is in full force and effect
and has not been amended, withdrawn or rescinded in any respect. Prior to the
close of
28
business on the third business day after the date of this Agreement, Parent will
cause to be delivered an opinion of counsel for each Sponsor, in each case in
form and substance reasonably satisfactory to the Company, as to the
authorization of the Guarantee of such Sponsor, which opinion has not been
withdrawn or modified.
Section 4.8 Parent and Merger Sub.
(a) Each of Parent and Merger Sub has been formed solely for the
purpose of engaging in the transactions contemplated hereby and prior to the
Effective Time will have engaged in no other business activities and will have
incurred no liabilities or obligations other than as contemplated herein.
(b) Prior to the Effective Time, Parent shall deliver to the Company
a complete and correct description of its projected (immediately following the
Effective Time) ownership. At the Effective Time, the Sponsors shall own a
majority of the outstanding equity interests in Parent, and no Person other than
the Sponsors shall own five percent (5%) or more of the outstanding equity
interests in Parent. Parent will not, at or immediately following the Effective
Time, be owned or controlled by a foreign person or persons for purposes of the
International Traffic in Arms Regulations or by a foreign person or persons such
that any foreign person(s), directly or indirectly, will own or have beneficial
ownership (defined as the power to vote or direct the voting of a security or to
impose or direct the disposition of a security) of five percent (5%) or more of
the outstanding shares of any class of Parent's equity securities.
(c) Each of Parent, Merger Sub, each Sponsor and their respective
affiliates is not, nor at any time during the last three years has it been, an
"interested stockholder" of the Company as defined in Section 203 of the DGCL.
Each of Parent, Merger Sub, each Sponsor and their respective affiliates do not
own (directly or indirectly, beneficially or of record) and is not a party to
any agreement, arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of, in each case, any shares of capital stock of
the Company (other than as contemplated by this Agreement).
Section 4.9 Brokers. No broker, finder, agent or similar intermediary has
acted on behalf of any Sponsor, Parent or Merger Sub in connection with this
Agreement or the transactions contemplated hereby, and there are no brokerage
commissions, finders' fees or similar fees or commissions payable in connection
herewith based on any agreement, arrangement or understanding with any Sponsor,
Parent or Merger Sub, or any action taken by any Sponsor, Parent or Merger Sub
other than fees and commissions that would not be borne by the Company in the
event the Closing does not occur.
Section 4.10 No Other Representations or Warranties. Except for the
representations and warranties contained in this Section 4, and any certificate
delivered by Parent or Merger Sub in connection with Closing the Company
acknowledges and agrees that none of Parent, Merger Sub or any other person on
behalf of Parent or Merger Sub makes, nor has the Company relied upon or been
induced by, any other express or implied representation or warranty with respect
to Parent or Merger Sub or with respect to any other information provided to the
Company in connection with the transactions contemplated hereunder.
SECTION 5 CONDUCT OF BUSINESS PENDING THE MERGER; NO SOLICITATION;
EMPLOYEE MATTERS.
Section 5.1 Conduct of Business. During the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
or the Effective Time, the Company and each Company Subsidiary shall, except as
required by Law, as expressly contemplated by this
29
Agreement, as set forth on Section 5.1 of the Company Disclosure Schedule, or to
the extent that Parent shall otherwise consent in writing (not to be
unreasonably withheld or delayed), conduct its business in the ordinary course.
Without limiting the generality of the foregoing, without the prior written
consent of Parent (not to be unreasonably withheld or delayed), during the
period from the date hereof and continuing until the earlier of the termination
of this Agreement or the Effective Time, the Company and the Company
Subsidiaries shall observe the following covenants, in each case except as
required by Law or as contemplated by this Agreement or as set forth on Section
5.1 of the Company Disclosure Schedule:
(a) Affirmative Covenants Pending Closing. The Company agrees that
the Company and the Company Subsidiaries shall:
(i) Preservation of the Business; Maintenance of Properties;
Material Contracts. Use reasonable best efforts to, on a basis consistent
with past practices, (A) preserve the business of the Company and the
Company Subsidiaries, including without limitation, keeping available the
services of the current officers, employees and consultants of the Company
and the Company Subsidiaries and to preserve the present relationships of
the Company and the Company Subsidiaries with customers, suppliers and
other persons with which the Company or any Company Subsidiary has
significant business relations, (B) advertise, promote and market the
Company's products, (C) keep the Company's and the Company Subsidiaries
material properties substantially intact, to preserve their goodwill and
business, to maintain all physical properties in good repair and
condition, (D) perform and comply in all material respects with the terms
of its Contracts, and (E) maintain, and comply in all material respects
with, all Permits;
(ii) Insurance. Use reasonable best efforts to keep in effect
general liability, casualty, product liability, worker's compensation,
directors' and officers' liability and other material insurance policies
in coverage scope and amounts (except as contemplated by Section 6.5)
substantially similar to those in effect at the date hereof; and
(iii) Company Cash. The Company agrees to use reasonable best
efforts to take and to cause the Company Subsidiaries to use reasonable
best efforts to take, all action reasonably requested by Parent in order
to cause all, or such portion as Parent shall request, of the Company's
and the Company Subsidiaries' unrestricted Cash Equivalents (excluding,
for avoidance of doubt, any Cash Equivalents which cannot be distributed,
contributed or otherwise delivered to the Company in accordance with
applicable Laws, including those relating to solvency, adequate surplus
and similar capital adequacy tests) to be liquidated and converted into
cash of the Company that is available to the Company at the Effective Time
to pay as part of the Merger Consideration.
(b) Negative Covenants Pending Closing. The Company agrees that each
of the Company and the Company Subsidiaries shall not:
(i) Indebtedness. Other than (x) intercompany transactions
among the Company and/or one or more Company Subsidiaries, (y) performance
bonds issued in the ordinary course of business, and (z) letters of credit
issued in the ordinary course of business consistent with past practice
under the Credit Agreement, dated as of September 4, 2002, between the
Company and Xxxxx Fargo Bank, National Bank, and the Credit Agreement,
dated as of January 26, 2005, between Intergraph Deutschland GmbH and
Fortis Bank Germany, each as amended and in effect on the date hereof,
incur any indebtedness for borrowed money or issue any debt securities or
assume, guarantee, endorse or otherwise become payable for any
indebtedness in an aggregate amount in excess of $3,000,000;
30
(ii) Compensation. (1) Change the compensation payable to any
executive officer, officer, employee, agent or consultant or enter into or
amend any employment, change in control, bonus, severance, termination,
retention or other agreement or arrangement with any officer, employee,
agent or consultant of the Company or a Company Subsidiary, or adopt,
establish, enter into, amend or terminate, or increase the benefits
(including fringe benefits), severance or termination pay under, any
employee benefit plan or agreement or otherwise, or otherwise grant any
severance or termination pay to any of the foregoing, except (A), in each
case, as required by Law or in accordance with existing agreements and (B)
in the case of annual increases in salary and wages for employees (other
than executive officers), in the ordinary course of business consistent
with past practice, or (2) make any loans or advances to any of its
directors, officers or employees, agents or consultants, other than
advancements of business expenses in the ordinary course in accordance
with the Company's existing policies, or make any material change in its
existing borrowing or lending arrangements for or on behalf of any such
persons pursuant to a Plan or otherwise; provided, however, that the
foregoing clause (1) shall not restrict the Company or any of the Company
Subsidiaries from entering into or making available to newly hired
employees (other than executive officers) or to employees (other than
executive officers) in the context of promotions based on job performance
or workplace requirements, in each case in the ordinary course of
business, plans, agreements, benefits and compensation arrangements
(excluding equity or equity-based grants) that have a value that is
consistent with the past practice of making compensation and benefits
available to newly hired or promoted employees in similar positions;
(iii) Capital Stock. Split, combine or reclassify any of its
capital stock or make any change in the number of shares of its capital
stock authorized, issued or outstanding (other than through the exercise
of Company Options outstanding on the date hereof or repurchases or
cancellation of Restricted Shares in accordance with the terms of the
applicable award agreements or similar arrangements to satisfy withholding
obligations upon the vesting of Restricted Shares or the exercise of
Company Options) or grant, sell or otherwise issue or authorize the
issuance of any share of capital stock, any other voting security or any
security convertible into, or any option, warrant or other right to
purchase (including any equity-based award), or convert any obligation
(other than RSUs outstanding on the date hereof) into, shares of its
capital stock or any other voting security, declare, set aside, make or
pay any dividend or other distribution with respect to any shares of its
capital stock, sell, encumber or transfer any shares of its capital stock,
or acquire, redeem or otherwise repurchase any shares of its capital stock
or any rights, warrants or options to purchase any of its capital stock,
or any securities convertible into or exchangeable for any such shares, or
amend or alter in any respect, or grant any waiver or exception under, the
Company Rights Agreement (including taking any action so that any Person
is not an "Acquiring Person" thereunder);
(iv) Charter, By Laws and Directors. Amend, or otherwise alter
or modify in any respect, the certificate of incorporation or by-laws of
the Company or any Material Company Subsidiary in a manner adverse to
Parent;
(v) Acquisitions. Acquire or license (including by merger,
consolidation or acquisition of stock or assets or any other business
combination), or enter into any binding memorandum of understanding,
letter of intent or other agreement, arrangement or understanding to
acquire or license all or substantially all the assets thereof or equity
interests therein of any corporation, partnership, other business or any
division thereof, except that the Company can engage in one (and only one)
such acquisition having a transaction price less than $3,000,000 without
obtaining Parent's prior consent or, in the case of licenses, in the
ordinary course of business consistent with past practice; (vi)
Disposition of Assets. Sell or transfer, or mortgage, pledge, lease,
license, terminate any lease or license, or otherwise dispose of or
encumber any tangible or intangible asset or related assets (including
capital stock or other equity interest of any Person, including the
Company or a Company Subsidiary) with a value in excess of $1,000,000
individually or $3,000,000 in the aggregate, other than sales and
non-exclusive licenses of products and services of the Company and the
Company Subsidiaries in the ordinary course of business consistent with
past practice;
31
(vi) Disposition of Assets. Sell or transfer, or mortgage,
pledge, lease, license, terminate any lease or license, or otherwise
dispose of or encumber any tangible or intangible asset or related assets
(including capital stock or other equity interest of any Person, including
the Company or a Company Subsidiary) with a value in excess of $1,000,000
individually or $3,000,000 in the aggregate, other than sales and
non-exclusive licenses of products and services of the Company and the
Company Subsidiaries in the ordinary course of business consistent
with past practice;
(vii) Material Contracts/Amendments. Enter into, or permit a
Company Subsidiary to enter into (A) any Material Contract that
terminates, provides a right to terminate, is modified or results in any
payment or penalty as a result of completion of the Merger, (B) any
Contract that is material to the Company and the Company Subsidiaries,
taken as a whole, other than in the ordinary course of business on terms
consistent with past practice; voluntarily terminate or modify in any
material respect any Contract of the type specified in subsection (B)
other than modifications in the ordinary course of business consistent
with past practice;
(viii) Capital Expenditures. Authorize any single capital
expenditure or purchase of assets, or a series of related expenditures or
purchases, in excess of $2,000,000;
(ix) Accounting Policies. Except as may be required as a
result of a change in Law or GAAP (or any interpretation thereof), change
any of the accounting practices or principles used by it;
(x) Writing Up or Down Assets. Write up, write down or write
off the book value of any assets of the Company and the Material Company
Subsidiaries, other than (i) in the ordinary course of business and
consistent with past practice or (ii) as may be required by GAAP or the
Financial Accounting Standards Board;
(xi) Legal. Other than in connection with the settlement of an
intellectual property dispute pursuant to which a license may be granted
in Intellectual Property of the Company or any Company Subsidiary that is
not incorporated in the primary commercial products of the Security,
Government & Infrastructure Division or Process, Power & Marine Division
of the Company and the Company Subsidiaries which settlement does not
involve the Company or any Company Subsidiary making any payments or
agreeing to any restrictions on its business, with respect to which
settlements the Company agrees to consult with Parent and consider
Parent's views in good faith, settle or compromise any pending or
threatened suit, action or claim which (a) is material to the Company and
the Company Subsidiaries taken as a whole, (b) requires payment to or by
the Company or any Company Subsidiary (exclusive of attorney's fees,
including success fees) in excess of $1,000,000, (c) relates to the
transactions contemplated hereby, (d) involves material restrictions on
the business activities of the Company or any Company Subsidiary or other
equitable remedies that materially adversely affect the business
activities of the Company or any Company Subsidiary, or (e) would involve
the issuance of Company securities;
(xii) Extraordinary Transactions. Adopt a plan of complete or
partial liquidation, dissolution, merger, consolidation, or
recapitalization of the Company or any of the Company Subsidiaries (other
than the Merger);
(xiii) Plans. Except as required by Law, establish, adopt,
enter into or amend any collective bargaining, bonus, profit sharing,
thrift, compensation, stock option, restricted stock, pension, retirement,
deferred compensation, employment, termination, severance or other
32
plan, agreement, trust, fund, policy or arrangement for the benefit of any
current or former directors, officers or employees of the Company or any
Company Subsidiary, pay any discretionary bonuses to any employee of the
Company or any Company Subsidiary, except for the exercise of
discretionary elements under existing Plans or arrangements, or change in
any material respect the manner in which contributions to any such Plan or
arrangement are made or the basis on which such contributions are
determined;
(xiv) Tax Matters. Except in each case as required by Law or
Treasury regulation, make, revoke or change any material Tax election,
file any amended Tax Return with respect to any material Tax, settle or
compromise any material federal, state, local or foreign Tax liability,
surrender any right to claim a material Tax refund, waive any statute of
limitations in respect of a material amount of Taxes, agree to an
extension of time with respect to an assessment or deficiency for a
material amount of Taxes or change any annual Tax accounting period;
(xv) Cash Management. (i) Except as requested by Parent,
including pursuant to Section 5.1(a)(iii), fail to manage and retain cash
and Cash Equivalents and investments in marketable securities in a manner
substantially consistent with past practice and in their current
jurisdiction and substantially in conformity with the reasonable
instructions of Parent, or (ii) intentionally fail to manage accounts
payable or accounts receivable in a manner substantially consistent with
past practice;
(xvi) Merger Financing. Take any action that is intended to
materially impair, materially delay or prevent Parent's obtaining of
financing contemplated by the Debt Commitment Letter; or
(xvii) Obligations. Authorize, commit or obligate itself to do
any of the foregoing.
(c) No Control of the Company's Business. Parent acknowledges and
agrees that: (i) nothing contained in this Agreement shall give Parent, directly
or indirectly, the right to control or direct the Company's or the Company
Subsidiaries' operations prior to the Effective Time, (ii) prior to the
Effective Time, each of the Company and Parent shall exercise, consistent with
the terms and conditions of this Agreement, complete control and supervision
over its and its subsidiaries' respective operations, and (iii) notwithstanding
anything to the contrary set forth in this Agreement, no consent of the Parent
shall be required with respect to any matter set forth in Section 5.1 or
elsewhere in this Agreement to the extent the requirement of such consent would,
upon advice of counsel, violate applicable anti-trust Law.
Section 5.2 No Solicitation.
(a) Each of the Company, the Company Subsidiaries and their
respective Representatives (as defined below) has ceased and caused to be
terminated all existing solicitations, discussions and negotiations with any
persons with respect to any inquiry, offer or proposal from any person or group
other than the Parent or any of its affiliates relating to any transaction or
proposed transaction or series of related transactions involving: (A) any direct
or indirect acquisition or purchase by any person or "group" (as defined under
Section 13(d) of the Exchange Act) of a twenty percent (20%) interest or more in
the total outstanding shares of any class of equity or voting securities of the
Company or any Material Company Subsidiary or any other Company Subsidiary that
is a "significant subsidiary" within the meaning of Rule 1-02 of Regulation S-X
promulgated by the SEC (collectively the "Significant Company Subsidiaries"), or
any tender offer or exchange offer that if consummated would result in any
person or "group" beneficially owning twenty percent (20%) or more of the total
outstanding shares of any class of equity or voting securities of the Company,
(B) any sale or disposition of consolidated assets
33
or rights of the Company (including for this purpose the outstanding assets,
rights and equity securities of the Company Subsidiaries) to any person or
"group" for consideration equal to twenty percent (20%) or more of the aggregate
fair market value of all of the outstanding shares of Company Common Stock, or
(C) any consolidation, merger, business combination, recapitalization,
liquidation, dissolution or similar transaction with respect to the Company or
any Significant Company Subsidiary (any of the foregoing inquiries, offers or
proposals being an "Acquisition Proposal"). Except as provided in Section
5.2(b), (c) or (d), from the date hereof, until the earlier of the termination
of this Agreement or the Effective Time, the Company shall not and shall not
authorize or permit its officers, directors, employees, investment bankers,
attorneys, accountants, financial or other advisors or other agents or those of
any Company Subsidiary (collectively, "Representatives") to, directly or
indirectly, (i) solicit, initiate, propose or knowingly encourage or take any
other action to knowingly facilitate the submission of an Acquisition Proposal,
(ii) enter into any letter of intent, memorandum of understanding, agreement,
option agreement or other agreement or arrangement with respect to any
Acquisition Proposal, (iii) enter into, continue, participate, engage or
knowingly assist in any manner in negotiations or discussions with, or provide
any non-public information or data to, any person (other than Parent or any of
its affiliates or representatives) relating to any Acquisition Proposal, or
grant any waiver or release under any standstill, or (iv) take any action to (A)
other than as contemplated by this Agreement in connection with the Merger,
render the Company Rights issued pursuant to the terms of the Company Rights
Agreement inapplicable to an Acquisition Proposal or the transactions
contemplated thereby, exempt or exclude any person from the definition of an
Acquiring Person (as defined in the Company Rights Agreement) under the terms of
the Company Rights Agreement or allow the Company Rights to expire prior to
their expiration date or (B) exempt any person from the restrictions on
"business combinations" contained in Section 203 of the DGCL (or any similar
provision) or otherwise cause such restrictions not to apply.
(b) Notwithstanding the foregoing, prior to obtaining the Company
Stockholder Approval, the Company (i) may (and may authorize and permit its
Representatives to), pursuant to a confidentiality agreement with terms and
conditions no less favorable in any material respect to the Company than the
Confidentiality Agreements (except for such changes as are necessary to allow
the Company to comply with the terms of this Agreement), furnish information
concerning, and provide access to, its business, properties, employees and
assets to any Person (and its Representatives acting in such capacity) that has
made an Acquisition Proposal, provided that any such information must be
provided to Parent prior to or substantially concurrent with the time of its
provision to such third party to the extent not previously made available to
Parent, and (ii) may participate, engage or assist in any manner in negotiations
and discussions with any Person (and its Representatives acting in such
capacity) that has made an Acquisition Proposal with respect to such Acquisition
Proposal if, but only if, in the case of both clause (i) and (ii): (x) such
Acquisition Proposal provides for any Person or group to acquire, directly or
indirectly, a majority of the issued and outstanding shares of Company Common
Stock (or a majority of the voting securities of any surviving corporation in a
merger or consolidation with the Company) or provides for the acquisition of all
or substantially all of the consolidated assets of the Company (a "Takeover
Proposal"); (y) such Takeover Proposal was not solicited or initiated in
violation of Section 5.2(a) by the Company, any Company Subsidiary or any of
their respective Representatives and the Company Board of Directors (or any
committee thereof) determines in good faith, after consultation with its
financial advisor and outside counsel, that such Takeover Proposal is, or is
reasonably likely to result in, a Takeover Proposal from such Person that is
more favorable, from a financial point of view, to the Company's stockholders
taking into account all of the terms and conditions of such proposal, including
any break-up fees, expense reimbursement provisions and conditions to
consummation and the likelihood of consummation in light of all financing,
regulatory, legal, and other aspects of such proposal, and this Agreement
(including any binding written and complete proposal to amend the terms of this
Agreement) and for which financing, to the extent required, is then committed
and on terms and conditions that the Company Board of Directors (or any
committee thereof) determines,
34
after consultation with its financial advisor, are reasonably likely to result
in disbursement sufficient for consummation of the transactions contemplated by
the Takeover Proposal; and (z) in the good faith opinion of the Company Board of
Directors (or any committee thereof), after consultation with outside legal
counsel, providing such information or access or participating, engaging or
assisting in such negotiations or discussions is or would be in the best
interests of the Company and its stockholders and that the failure to take such
action could violate the Company Board of Directors' fiduciary duties to the
Company's stockholders under applicable Law (a Takeover Proposal which satisfies
clauses (x), (y) and (z) being referred to herein as a "Superior Proposal"). The
Company shall promptly, and in any event within one business day after receipt
of any inquiries, proposals or offers received by, any request for information
from, or any negotiations sought to be initiated or continued with, either the
Company or its Representatives concerning an Acquisition Proposal or that could
reasonably be expected to lead to an Acquisition Proposal, notify Parent orally
and in writing and disclose the identity of the other party and the material
terms of such inquiry, offer, proposal or request and, in the case of written
materials provided to the Company, provide Parent copies or written summaries of
such materials as promptly as reasonably practicable. The Company will keep
Parent informed on a reasonably prompt basis of the status and any discussions
or negotiations (including amendments and proposed amendments) relating to any
Takeover Proposal or other inquiry, offer, proposal or request.
(c) Except as set forth in this subsection (c), neither the
Company Board of Directors nor any committee thereof shall (i) withdraw or
modify, or publicly propose to withdraw or modify, in a manner adverse to Parent
or Merger Sub, the approval or recommendation of the Company Board of Directors
of this Agreement or the Merger or announce that it has resolved to take such
action (any such action under this clause (i), a "Change in Recommendation"),
(ii) approve, recommend or adopt or publicly propose to approve, recommend or
adopt any Acquisition Proposal or (iii) approve, recommend, adopt or allow the
Company to enter into any letter of intent, memorandum of understanding, option
agreement or similar arrangement with respect to any Acquisition Proposal.
Notwithstanding the foregoing, in response to a Takeover Proposal that did not
arise from a breach by the Company, any Company Subsidiary or any of their
respective Representatives of Section 5.2(a), prior to the Company Stockholder
Approval (x) the Company Board of Directors (or any committee thereof) shall be
permitted to make a Change in Recommendation if it determines in good faith,
after consultation with its financial advisor and outside legal counsel, that
such Takeover Proposal is a Superior Proposal and that the failure to take such
action could violate the Company Board of Directors' fiduciary duties to the
Company's stockholders under applicable Law and (y) the Company may enter into a
definitive agreement with respect to such Takeover Proposal if the Company Board
of Directors (or a committee thereof) has made the determination in clause (x),
has determined in good faith, after consultation with its financial advisor and
outside legal counsel, that such Takeover Proposal constitutes a Superior
Proposal and, concurrently with entering into such definitive agreement,
terminates this Agreement pursuant to Section 8.1(g) and pays the applicable
termination fee as a condition to such termination. The Company shall not be
entitled to terminate pursuant to Section 8.1(g), effect a Change in
Recommendation or enter into an agreement with respect to a Superior Proposal
unless and until (A) after the third business day following Parent's receipt of
a written notice (a "Notice of Superior Proposal") from the Company advising
Parent that the Company intends to take such action and specifying the reasons
therefor, including the material terms and conditions of the Superior Proposal
that is the basis of such action in such Notice of Superior Proposal, and
stating that the Company intends to terminate the Agreement pursuant to Section
8.1(g) or effect a Change in Recommendation, as applicable (it being understood
and agreed that (1) in determining whether to cause or permit the Company to so
terminate this Agreement, the Company Board of Directors (or a committee
thereof) shall take into account any changes to the financial terms of this
Agreement proposed by the Sponsor to the Company in any binding written proposal
in response to a Notice of Superior Proposal or otherwise, and (2) any material
amendment to the financial terms of such Superior Proposal shall require a new
Notice of Superior Proposal and a new three business day period), (B) the
Company has complied in all material respects with this Section 5.2 and (C) in
the case of a termination
35
pursuant to Section 8.1(g) to enter into an agreement for a Superior Proposal,
the Company has paid, or caused to be paid to, Parent or its designee all
amounts due Parent pursuant to Section 8.2 of this Agreement as a result of a
termination pursuant to Section 8.1(g).
(d) Nothing contained in this Section 5.2 or any other provision of
this Agreement shall prohibit the Company or the Company Board of Directors (or
any committee thereof) from taking and disclosing to the Company's stockholders
a position with respect to any tender or exchange offer by a third party
pursuant to Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act,
provided that any such disclosure (other than a recommendation of rejection of
such tender or exchange offer or a "stop, look and listen" letter or similar
communication of the type contemplated by Rule 14d-9(f) under the Exchange Act)
shall be deemed to be a Change in Recommendation; provided, however, that the
Company Board of Directors (or any committee thereof) shall not (A) recommend
that the stockholders of the Company tender their shares of Company Common Stock
in connection with such tender or exchange offer (or otherwise approve or
recommend any Acquisition Proposal or take any action under the Company Rights
Agreement to facilitate such tender or exchange offer) or (B) withdraw or modify
its approval or recommendation of this Agreement and the Merger, unless in each
case the applicable requirements of Section 5.2(c) shall have been satisfied.
Section 5.3 Employee Matters.
(a) Except as provided in Section 5.3(a) of the Company Disclosure
Schedule, until the first anniversary of the Effective Time (the "Benefits
Continuation Period"), the Surviving Corporation shall pay or cause to be paid
to each employee who continues as an employee of the Company, the Company
Subsidiaries or the Surviving Corporation during the Benefits Continuation
Period (the "Continuing Employees") salary, wages, cash incentive opportunities,
severance, medical benefits and other welfare benefit plans programs and
arrangements (with the exception of any equity compensation programs or defined
benefit plans) which are at least comparable in the aggregate to those provided
prior to the Closing Date under the Plans; provided, that with respect to
Continuing Employees who are subject to employment agreements that have not been
superseded by agreements with Parent and which are listed in Section 3.9(a)(x)
of the Company Disclosure Schedule (the "Employment Agreements"), the Surviving
Corporation shall expressly assume such Employment Agreements, and fulfill all
obligations thereunder. During the Benefits Continuation Period, the Surviving
Corporation shall pay, subject to such terms and conditions as it shall
establish and the terms of applicable Employment Agreements, any such Continuing
Employee whose employment is involuntarily terminated by the Parent, the
Surviving Corporation or any of their Subsidiaries without cause an amount of
severance pay in cash equal to the amount of cash severance pay that would have
been payable to such Continuing Employee under the terms of the severance policy
listed in Schedule 3.14(a) of the Company Disclosure Schedule and applicable to
such Continuing Employee immediately prior to the date of this Agreement or, if
applicable, such Continuing Employee's Employment Agreement. The foregoing
provisions of this Section 5.3 shall not be construed or interpreted to restrict
in any way the Surviving Corporation's or Parent's ability to amend, modify or
terminate any Plan or policy (including, without limitation, to change the
entities who administer such Plans or policies, or the manner in which such
Plans or policies are administered) to the extent not inconsistent with such
foregoing restrictions or any other plan made available to the Continuing
Employees or, subject to the terms of applicable Employment Agreements, to
terminate any person's employment at any time or for any reason.
(b) The Surviving Corporation shall (i) waive any applicable
pre-existing condition exclusions and waiting periods with respect to
participation and coverage requirements in any replacement or successor welfare
benefit plan of the Surviving Corporation that a Continuing Employee is eligible
to participate in following the Effective Time to the extent such exclusions or
waiting periods were inapplicable to, or had been satisfied by, such Continuing
Employee immediately prior to the
36
Effective Time under the relevant Plan in which such Continuing Employee
participated, (ii) provide each such Continuing Employee with credit for any
co-payments and deductible paid prior to the Effective Time (to the same extent
such credit was given under the analogous Plan prior to the Effective Time) in
satisfying any applicable deductible or out-of-pocket requirements and (iii) to
the extent that any Continuing Employee is allowed to participate in any
employee benefit plan of the Parent, the Surviving Corporation or any of their
subsidiaries following the Effective Time, cause such plan to recognize the
service of such Continuing Employee with the Company and the Company
Subsidiaries prior to the Effective Time for purposes of eligibility to
participate, vesting and benefit accrual (but not for benefit accrual under any
defined benefit, retiree welfare or similar plan) to the extent of such service;
provided, however, that such crediting of service shall not operate to duplicate
any benefit or the funding of any such benefit.
(c) Parent and Company acknowledge and agree that the provisions
contained in this Section 5.3 shall not create any right in any other Person,
including, without limitation, any Continuing Employee or any participant in any
Plan, or shall interfere with the right of Parent or the Surviving Corporation
to amend, modify or terminate any Plan (subject to the provisions of Section
5.3(a) and (b) above) or to terminate the employment of any Continuing Employee
for any reason.
(d) Prior to the Effective Time, the Company shall take all such
steps as may be reasonably necessary (to the extent permitted under applicable
Law) to cause any dispositions of the Company Common Stock (including derivative
securities with respect to the Company Common Stock) resulting from the Merger
or the other transactions contemplated by Section 2 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 to be exempt under Rule 16b-3
promulgated under the Exchange Act.
SECTION 6 ADDITIONAL AGREEMENTS.
Section 6.1 Proxy Statement. The Company shall, as soon as practicable
following the date hereof, prepare and file with the SEC the Proxy Statement in
preliminary form, and each of the Company, Parent and Merger Sub shall use their
reasonable efforts to respond as promptly as practicable to any comments of the
SEC or its staff with respect thereto. The Company shall notify Parent promptly
of the receipt of any comments from the SEC or its staff and of any request by
the SEC or its staff for amendments or supplements to the Proxy Statement or for
additional information and shall supply Parent with copies of all correspondence
between the Company or any of its representatives, on the one hand, and the SEC
or its staff, on the other hand, with respect to the Proxy Statement. The
Company shall use its reasonable best efforts to cause the Proxy Statement to be
mailed to the Company's stockholders as promptly as practicable after filing
with the SEC. If at any time prior to receipt of the Company Stockholder
Approval there shall occur any event that should, upon the advice of the
Company's outside legal counsel, be set forth in an amendment or supplement to
the Proxy Statement so that the Proxy Statement shall not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading, the Company shall
promptly prepare, file with the SEC and mail to its stockholders such an
amendment or supplement. Notwithstanding anything to the contrary stated above,
prior to filing or mailing the Proxy Statement or any other SEC filing required
in connection with the transactions contemplated hereby (or, in each case, any
amendment or supplement thereto) or responding to any comments of the SEC with
respect thereto, the party responsible for filing or mailing such document shall
provide the other party an opportunity to review and comment on such document or
response and shall include in such document or response comments reasonably
proposed by the other party.
37
Section 6.2 Company Stockholders Meeting. The Company shall, as soon as
practicable following the date hereof, duly call, give notice of, convene and
hold a meeting of its stockholders (the "Company Stockholders Meeting") for the
purpose of seeking the Company Stockholder Approval. Subject to Section 5.2(c),
the Company's Board of Directors (or any committee thereof) shall recommend
adoption and approval of this Agreement and the Merger by the stockholders of
the Company and include such recommendation in the Proxy Statement. Unless such
recommendation shall have been modified or withdrawn in accordance with Section
5.2(c), the Company shall take all action that is both reasonable and lawful to
solicit from its stockholders proxies in favor of the proposal to adopt and
approve this Agreement and the Merger and shall take all other reasonable
actions necessary or advisable to secure the vote or consent of the stockholders
of the Company that are required by the Nasdaq rules or the DGCL. For avoidance
of doubt, the Company shall not be required to hold the Company Stockholders
Meeting if this Agreement is terminated before that meeting is held.
Section 6.3 Access to Information, Confidentiality. Prior to the Effective
Time, except as otherwise prohibited by applicable Law or the terms of any
Contract entered into prior to the date hereof or entered into with the United
States federal government to which the Company or any Company Subsidiary is a
party or as would be reasonably expected to violate the attorney-client
privilege of the Company or a Company Subsidiary (it being agreed that the
parties shall use their reasonable efforts to cause such information to be
provided in a manner that does not cause such violation or prohibition), the
Company shall, and shall cause the Company Subsidiaries to, afford to Parent and
its directors, employees, representatives, financial advisors, lenders, legal
counsel, accountants and other advisors and representatives, to have such access
to the books and records, financial, operating and other data, assets,
properties, facilities, plants, offices, employees, auditors, authorized
representatives, business and operations of the Company and the Company
Subsidiaries as Parent may reasonably request, including access by Parent and
its representatives to supporting documentation with respect to the preparation
of the financial statements included in the Required Financial Information and,
with the consent of the auditor, the independent auditor's work papers relating
to such financial statements. Any such investigation and examination shall be
conducted at reasonable times upon reasonable advance notice and under
reasonable circumstances so as to minimize disruption to or impairment of the
Company's business. In order that Parent may have full opportunity to make such
investigation and, provided such persons are bound by the confidentiality
agreements, dated as of May 3, 2006, between Sponsors and the Company (the
"Confidentiality Agreements"), or have otherwise agreed to be bound to the
provisions of such agreement applicable to representatives, the Company shall
furnish the representatives of Parent during such period with all such
information and copies of such documents concerning the affairs of the Company
as such representatives may reasonably request. The information and documents so
provided shall be subject to the terms of the Confidentiality Agreements. No
investigation or disclosure pursuant to this Section 6.3 or otherwise shall
affect any representation, warranty, covenant in this Agreement of any party
hereto (or the remedies with respect thereto) or any condition to the
obligations of the parties under this Agreement.
Section 6.4 Regulatory Filings; Reasonable Efforts.
(a) As promptly as practicable after the date hereof, each of
Parent, Merger Sub and the Company shall use reasonable best efforts to make and
shall cause their affiliates or owners to use reasonable best efforts to make
all filings, notices, petitions, statements, registrations, submissions of
information, application or submission of other documents required by any
Governmental Entity or any foreign labor organization or works council in
connection with the Merger, including, without limitation: (i) the filings
identified on Section 3.17 of the Company Disclosure Schedule that are required
to be made with a Governmental Entity, (ii) pre-merger notification reports to
be filed with the United States Federal Trade Commission (the "FTC") and the
Antitrust Division of the United States Department of Justice ("DOJ") as
required by the HSR Act, (iii) filings required by the merger notification or
control Laws, and any other applicable antitrust or fair trade Law, of any
applicable foreign jurisdiction or filings required
38
by any foreign labor organization or works council, (iv) any filings required
under the Securities Act, the Exchange Act, any applicable state or securities
or "blue sky" laws and the securities laws of any foreign country, or (v) any
other applicable Laws or rules and regulations of any Governmental Entity
relating to, and material to the consummation of, the Merger.
(b) Subject to restrictions required by Law, each of Parent, Merger
Sub, and the Company shall promptly supply, and shall cause their affiliates or
owners promptly to supply, the others with any information which may be
reasonably required in order to make any filings or applications pursuant to
Section 6.4(a).
(c) Subject to applicable confidentiality restrictions or
restrictions required by Law, each of Parent, Merger Sub and the Company will
notify the others promptly upon the receipt of: (i) any comments or questions
from any officials of any Governmental Entity in connection with any filings
made pursuant hereto or the Merger itself and (ii) any request by any officials
of any Governmental Entity for amendments or supplements to any filings made
pursuant to any applicable Laws and rules and regulations of any Governmental
Entity or answers to any questions, or the production of any documents, relating
to an investigation of the Merger by any Governmental Entity. Whenever any event
occurs that is required to be set forth in an amendment or supplement to any
filing made pursuant to Section 6.4(a), Parent, Merger Sub or the Company, as
the case may be, will promptly inform the others of such occurrence and
cooperate in filing with the applicable Governmental Entity such amendment or
supplement. Without limiting the generality of the foregoing, each party shall
provide to the other parties (or their respective advisors) upon request copies
of all correspondence between such party and any Governmental Entity relating to
the Merger. The parties may, as they deem advisable and necessary, designate any
competitively sensitive materials provided to the other under this Section as
"outside counsel only." Such materials and the information contained therein
shall be given only to outside counsel of the recipient and will not be
disclosed by such outside counsel to employees, officers, or directors of the
recipient without the advance written consent of the party providing such
materials. In addition, to the extent reasonably practicable, all discussions,
telephone calls, and meetings with a Governmental Entity regarding the Merger
shall include representatives of Parent, Merger Sub, and Company. Subject to
applicable Law, the parties will consult and cooperate with each other in
connection with any analyses, appearances, presentations, memoranda, briefs,
arguments, and proposals made or submitted to any Governmental Entity regarding
the Merger by or on behalf of any party.
(d) Upon the terms and subject to the conditions set forth in this
Agreement, each of the Company, on the one hand, and Parent and Merger Sub, on
the other hand, agrees to use its reasonable efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, and to assist and cooperate
with the other parties in doing, all things necessary, proper or advisable to
consummate and make effective the Merger, including using its reasonable efforts
to accomplish the following: (i) the causing of all of the conditions set forth
in Section 7 to the other parties' obligations to consummate the Merger to be
satisfied and to consummate and make effective the Merger and the other
transactions contemplated hereby, (ii) the obtaining of all necessary actions or
non-actions, expirations of all necessary waiting periods, waivers, consents,
clearances, approvals, orders and authorizations from Governmental Entities
required by it and the making of all necessary registrations, declarations and
filings (including registrations, declarations and filings with Governmental
Entities, if any) required by it, (iii) the obtaining of all necessary consents,
approvals or waivers from third parties, (iv) the defending of any suits,
claims, actions, investigations or proceedings, whether judicial or
administrative, challenging this Agreement or the consummation of the Merger to
which it is a party, including seeking to have any stay or temporary restraining
order entered by any court or other Governmental Entity vacated or reversed, and
(v) the execution or delivery of any additional instruments necessary to
consummate the Merger, and to carry out fully the purposes of, this Agreement.
In case at any time after the Effective Time any further action is necessary or
desirable to carry out the purposes of this Agreement, the proper officers and
directors of the
39
Surviving Corporation and Parent shall use all reasonable efforts to take, or
cause to be taken, all such necessary actions. Without limiting the foregoing,
the parties shall request and shall use reasonable efforts to obtain early
termination of the waiting period provided for in the HSR Act. Notwithstanding
anything herein to the contrary, Parent agrees to take, and to cause its
affiliates and owners to take, whatever action may be necessary to resolve any
objections relating to the consummation of the Merger as may be asserted under
the HSR Act or any other applicable merger control, antitrust, competition or
fair trade Laws with respect to the Merger.
(e) Notwithstanding anything to the contrary in this Agreement,
except as contemplated under Section 6.8, in connection with obtaining any
approval or consent from any person (other than a Governmental Entity) with
respect to the Merger, (i) without the prior written consent of Parent, which
shall not be unreasonably withheld or delayed, none of the Company or any
Company Subsidiaries or the Surviving Corporation shall pay or commit to pay to
such person whose approval or consent is being solicited any material amount of
cash or other material consideration, make any material commitment or incur any
material liability or other material obligation due to such person or materially
modify any Contract with such person and (ii) neither Parent nor any of its
affiliates shall be required to pay or commit to pay to such person whose
approval or consent is being solicited any cash or other consideration, make any
commitment or to incur any liability or other obligation.
Section 6.5 Directors and Officers Indemnification and Insurance.
(a) The certificate of incorporation and/or by-laws of the Surviving
Corporation shall contain provisions with respect to indemnification not less
favorable than those set forth in the certificate of incorporation and by-laws
of the Company as of the date hereof, which provisions shall not be amended,
repealed or otherwise modified for a period of six years from the Effective Time
in any manner that would adversely affect the rights thereunder of individuals
who at, or prior to, the Effective Time were directors or officers of the
Company.
(b) The Company shall, to the fullest extent permitted under
applicable Law or under the Company's certificate of incorporation, by-laws or
any applicable indemnification agreements, and regardless of whether the Merger
becomes effective, indemnify, defend and hold harmless, and, after the Effective
Time, the Surviving Corporation shall and Parent shall cause the Surviving
Corporation, to the fullest extent permitted under applicable Law, to indemnify,
defend and hold harmless each present and former director or officer of the
Company or any of the Company Subsidiaries (collectively, the "Indemnified
Parties") against any costs or expenses (including attorneys' fees), judgments,
fines, losses, claims, damages, liabilities and amounts paid in settlement in
connection with any claim, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative, arising out of or pertaining
to (x) the fact that the Indemnified Party is or was an officer, director,
employee, agent or other fiduciary of the Company or a Company Subsidiary or (y)
this Agreement or the transactions contemplated by this Agreement, whether in
any case asserted or arising before or after the Effective Time. Without
limiting the generality of the foregoing, if any Indemnified Party becomes
involved in any actual or threatened suit, action, claim, proceeding or
investigation with respect to which such Indemnified Party is entitled to
indemnification pursuant to this Section 6.5 after the Effective Time, the
Surviving Corporation shall and Parent shall cause the Surviving Corporation to,
to the fullest extent permitted by Law, promptly advance to such Indemnified
Party his or her legal expenses (including the cost of any investigation and
preparation incurred in connection therewith); provided that any person to whom
expenses are advanced provides an undertaking, to the extent then required by
the DGCL, to repay such advances if it is finally judicially determined that
such person is not entitled to indemnification. Any determination required to be
made, for purpose of this Section 6.5 in advance of final judicial
determination, with respect to whether an Indemnified Party's conduct complied
with the standards set forth under Delaware law, the Company's certificate of
incorporation, by-laws or indemnification
40
agreements, as the case may be, shall be made by independent counsel mutually
acceptable to Parent and the Indemnified Party.
(c) Parent shall cause the Surviving Corporation to honor and
fulfill in all respects the obligations of the Company pursuant to
indemnification agreements with the Company's directors, officers, employees or
agents existing at or prior to the Effective Time to the fullest extent
permitted by applicable Law or, subject to Section 6.5(a), under the relevant
certificate of incorporation or by-laws. Neither Parent nor the Surviving
Corporation shall settle, compromise or consent to the entry of any judgment in
any threatened or actual claim for which an Indemnified Party would be entitled
to indemnification hereunder, unless such settlement, compromise or consent
includes an unconditional release of such Indemnified Party from all liability
arising out of such claim or such Indemnified Party otherwise consents in
writing to such settlement, compromise or consent. The Surviving Corporation
shall cooperate with an Indemnified Party in the defense of any matter for which
such Indemnified Party could seek indemnification hereunder.
(d) At or prior to the Effective Time, the Surviving Corporation
shall obtain a "tail" insurance policy from an insurance carrier with the same
or better credit rating as the Company's current insurance carrier with respect
to directors' and officers' liability insurance that provides coverage for the
six years following the Effective Time at least comparable in amount and scope
to the coverage provided under the Company's directors and officers insurance
policy in effect as of the Effective Time for the individuals who are or were
directors and officers of the Company for claims arising from facts or events
occurring prior to the Effective Time; provided however, that in no event shall
the aggregate premium payable for such "tail" insurance policy exceed the amount
set forth on Section 6.5(d) of the Company Disclosure Schedule (the "Maximum
Premium"). The Company agrees to consult with Parent and Merger Sub in
connection with purchasing such insurance coverage. If the Company is unable to
obtain the "tail" insurance described in the first sentence of this Section
6.5(d) for an amount equal to or less than the Maximum Premium, the Company
shall be entitled to obtain as much comparable "tail" insurance as possible for
an amount equal to the Maximum Premium.
(e) Nothing in this Agreement is intended to, shall be construed to
or shall release, waive or impair any rights to directors' and officers'
insurance claims under any policy that is or has been in existence with respect
to the Company or the Company Subsidiaries any of their officers or directors,
it being understood and agreed that the indemnification provided for in this
Section 6.5 is not prior to or in substitution for any such claims under such
policies.
(f) This Section shall survive the consummation of the Merger at the
Effective Time, is intended to benefit the Company, the Surviving Corporation
and the Indemnified Parties, shall be binding on all successors and assigns of
the Surviving Corporation and shall be enforceable by the Indemnified Parties.
In the event Parent or the Surviving Corporation or any of their respective
successors or assigns (i) consolidates with or merges into any other person and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger, or (ii) transfers all or substantially all of its
properties and assets to any person, then, and in each such case, proper
provision shall be made so that the successors and assigns of Parent or the
Surviving Corporation, as the case may be, shall succeed to the obligations set
forth in this Section 6.5.
Section 6.6 Director Resignations. The Company shall obtain and deliver to
Parent at the Closing evidence reasonably satisfactory to Parent of the
resignation, effective as of the Effective Time, of those directors of the
Company or any Material Company Subsidiary designated by Parent to the Company
in writing at least fifteen (15) business days prior to the Closing.
41
Section 6.7 Conduct of Business of Parent and Merger Sub Pending the
Merger. Each of Parent and Merger Sub agrees that, between the date of this
Agreement and the Effective Time, it shall not, directly or indirectly, (i)
engage in any business activities and will incur no liabilities or obligations
other than as expressly contemplated by this Agreement, or (ii) take any action
(a) intended, or that would reasonably be expected, to cause its representations
and warranties set forth in Section 4 to be untrue in any material respect; or
(b) that would, or would reasonably be expected to, individually or in the
aggregate, prevent, materially delay or materially impede the ability of Parent
or Merger Sub to consummate the Merger or the other transactions contemplated by
this Agreement. Parent agrees that it will promptly notify the Company of any
assignments under Section 3 of the Equity Commitment Letter by any Investor (as
defined in the Equity Commitment Letter) to the extent other than to an
affiliated fund of such Investor, and Parent agrees that it will not grant any
consent under the last sentence of such Section 3 of the Equity Commitment
Letter with respect to an assignment to other than an affiliated fund.
Section 6.8 Financing.
(a) Parent shall use reasonable best efforts to take, or cause to be
taken, all actions and do, or cause to be done, all things necessary, proper or
advisable to arrange the Debt Financing on the terms and conditions described in
the Debt Commitment Letter, including using reasonable best efforts to (i)
satisfy, in all material respects, on a timely basis all conditions applicable
to Parent and Merger Sub to obtaining the Debt Financing set forth therein, (ii)
negotiate and enter into definitive agreements with respect thereto on the terms
and conditions contemplated by the Debt Commitment Letters (including the flex
provisions related to the Debt Financing) or on other terms acceptable to Parent
(to the extent not more conditional than those provided in the Debt Commitment
Letters), and (iii) consummate the Debt Financing at or prior to Closing. In the
event any portion of the Debt Financing becomes unavailable on the terms and
conditions contemplated in the Debt Commitment Letter, Parent shall use its
reasonable best efforts to arrange to obtain alternative financing from
alternative sources in an amount sufficient, when combined with the funds under
the Equity Commitment Letters and the unrestricted and freely available cash and
short-term investments of the Company and the Company Subsidiaries (excluding,
for avoidance of doubt, any cash which cannot be distributed, contributed or
otherwise delivered to the Company in accordance with applicable Laws, including
those relating to solvency, adequate surplus and similar capital adequacy
tests), to consummate the transactions contemplated by this Agreement on terms
and conditions not materially less favorable to Parent in the aggregate and in
no event less favorable as to pricing and other economic terms (as determined in
the good faith reasonable judgment of Parent) than the Debt Financing as
promptly as practicable following the occurrence of such event but no later than
the last day of the Marketing Period. For the avoidance of doubt, in the event
that (x) all or any portion of the Debt Financing structured as high yield
financing has not been consummated, (y) all closing conditions contained in
Section 7 shall have been satisfied or waived (other than those conditions that
by their terms are to be satisfied at the Closing, provided that nothing has
occurred and no conditions exist that would cause those conditions to not be
satisfied) and (z) the bridge facilities contemplated by the Debt Commitment
Letter (or alternative bridge financing obtained in accordance with this Section
6.8(a)) are available on the terms and conditions substantially as described in
the Debt Commitment Letter (or replacements thereof as contemplated by this
Section 6.8(a)), then Parent shall cause the proceeds of such bridge financing
to be used to replace such high yield financing no later than the last day of
the Marketing Period. For purposes of this Agreement, "Marketing Period" shall
mean the first period of 20 consecutive calendar days after the Initiation Date,
(A) throughout which (1) Parent shall have the Required Financial Information
that the Company is required to provide to Parent pursuant to Section 6.8(b) and
(2) nothing has occurred and no condition exists that would cause any of the
conditions set forth in Section 7.2 to fail to be satisfied assuming the Closing
were to be scheduled for any time during such 20 consecutive-calendar-day
period, and (B) at the end of which the conditions set forth in Section 7.1
shall be satisfied; provided, that if the Marketing Period has not ended on or
prior to December 19, 2006, the Marketing Period shall commence no earlier than
January 2, 2007; and provided, further, that the Marketing Period
42
shall not be deemed to have commenced if, prior to the completion of the
Marketing Period, Ernst & Young LLP shall have withdrawn its audit opinion with
respect to any financial statements contained in the Required Financial
Information. For purposes of this Agreement, "Initiation Date" shall mean the
first date after the date hereof on which all of which (a) Parent shall have the
Required Financial Information that the Company is required to provide to Parent
pursuant to Section 6.8(b), (b) nothing has occurred and no condition exists
that would cause any of the conditions set forth in Section 7.2 to fail to be
satisfied assuming the Closing were to be scheduled at any time during the next
20-consecutive calendar day period and (c) the conditions set forth in Section
7.1 have been satisfied, provided that in no event shall the Initiation Date be
earlier than November 12, 2006. Parent shall give the Company prompt notice of
any material breach by any party of the Commitment Letters of which Parent or
Merger Sub becomes aware or any termination of the Commitment Letters. Parent
shall keep the Company informed on a reasonably current basis in reasonable
detail of the status of its efforts to arrange the Financing and provide to the
Company copies of executed copies of the definitive documents related to the
Debt Financing (excluding any fee letters, engagement letters or other
agreements that are confidential by their terms).
(b) The Company agrees to provide, and shall cause the Company
Subsidiaries and its and their Representatives to provide, all reasonable
cooperation (including with respect to timeliness) in connection with the
arrangement of the Debt Financing as may be reasonably requested by Parent
(provided that such requested cooperation does not unreasonably interfere with
the ongoing operations of the Company and the Company Subsidiaries) including
without limitation, (i) participation in meetings, drafting sessions,
presentations, road shows, and rating agency and due diligence sessions, (ii)
furnishing Parent, Merger Sub and their financing sources with financial and
other pertinent information regarding the Company as may be reasonably requested
by Parent to consummate the Debt Financing or alternative financing, including
all financial statements and financial data required to consummate the high
yield financing at the time during the Company's fiscal year such offering will
be made if such offering were registered under the Securities Act and of the
type and form customarily included in private placements under Rule 144A of the
Securities Act (the "Required Financial Information") (and shall allow Parent's
Representative the opportunity to review and comment upon the financial
statements (including pro forma financial statements) in draft form to the
extent such financial statements were not prepared prior to the date hereof),
(iii) assisting Parent, Merger Sub and their financing sources in the
preparation of (A) offering documents, business projections, pro forma financial
information, private placement memoranda, bank information, memoranda,
prospectuses and similar documents for any portion of the Debt Financing or
alternative financing, including the offering of the high yield financing, and
(B) materials for rating agency presentations, (iv) reasonably cooperating with
the marketing efforts of Parent, Merger Sub and their financing sources for any
portion of the Debt Financing or the alternative financing, (v) executing and
delivering any underwriting or placement agreements, pledge and security
documents, other definitive financing documents and delivering such other
certificates, legal opinions or documents as may be reasonably requested by
Parent (including a certificate of the chief financial officer of the Company or
any Subsidiary with respect to solvency matters and consents of accountants for
use of their reports in any materials relating to the Debt Financing) and
otherwise reasonably facilitating the pledging of collateral, (vi) using
reasonable best efforts to satisfy the conditions set forth in Exhibit E to the
Commitment Letter, (vii) using reasonable best efforts to obtain legal opinions,
surveys and title insurance as reasonably requested by Parent, (viii) using
reasonable best efforts to cause an independent auditor of the Company to
provide an unqualified opinion (to the extent applicable), consents and
customary comfort letter with respect to the financial statements included in
the Required Financial Information, (ix) providing monthly and quarterly
unaudited financial statements (excluding footnotes) within the time frame, and
to the extent, the Company prepares such financial statements for the Company
Board of Directors, (x) entering into one or more credit or other agreements on
terms satisfactory to Parent in connection with the Debt Financing immediately
prior to the Effective Time; provided that, subject to taking the actions
required by clause (xi) below, the Company shall not be required to enter into
any purchase agreement for any high-
43
yield debt financing (other than bridge financing), (xi) taking all corporate
actions, subject to the occurrence of the Closing, reasonably requested by
Parent to permit the consummation of the Debt Financing and the direct borrowing
or incurrence of all of the proceeds of the Debt Financing, including any high
yield debt financing, by the Surviving Corporation immediately following the
Effective Time; provided that none of the Company or any Company Subsidiary
shall be required to pay any commitment or other similar fee or incur any other
liability in connection with the Debt Financing prior to the Effective Time
except for any liabilities that are conditioned on the Effective Time having
occurred. If this Agreement is terminated prior to the Effective Time, Parent
shall, promptly upon request by the Company, reimburse the Company for all
reasonable out-of-pocket costs incurred by the Company or the Company
Subsidiaries in connection with such cooperation. If this Agreement is
terminated prior to the Effective Time, Parent and Merger Sub shall, on a joint
and several basis, indemnify and hold harmless the Company, the Company
Subsidiaries and their respective Representatives for and against any and all
losses suffered or incurred by them in connection with the arrangement of Debt
Financing or any alternative financing and any information utilized in
connection therewith (other than information provided by the Company or the
Company Subsidiaries expressly for use in connection therewith). The Company
hereby consents to the reasonable use of its and the Company Subsidiaries' logos
in connection with the Debt Financing, provided that such logos are used solely
in a manner that is not intended to nor reasonably likely to harm or disparage
the Company or any of the Company Subsidiaries or the reputation or goodwill of
the Company or any of the Company Subsidiaries and its or their marks.
Section 6.9 Public Disclosure. The initial press release concerning the
Merger shall be a joint press release and, thereafter, so long as this Agreement
is in effect, neither Parent, Merger Sub nor the Company will disseminate any
press release or other public announcement concerning the Merger or this
Agreement or the other transactions contemplated by this Agreement (other than a
press release or other announcement that primarily relates to a Superior
Proposal) to any third party, except as may be required by Law or by any listing
agreement with Nasdaq, without the prior consent of each of the other parties
hereto, which consent shall not be unreasonably withheld. The parties have
agreed to the text of the joint press release announcing the execution of this
Agreement. Notwithstanding the foregoing, without prior consent of the other
parties, the Company (a) may communicate with customers, financial analysts,
investors and media representatives in a manner consistent with its past
practice in compliance with applicable Law and (b) may disseminate the
information included in a press release or other document previously approved
for external distribution by the Parent, and Parent and Merger Sub and their
affiliates may, subject to taking appropriate steps to ensure the
confidentiality of such information (to the extent non-public), disseminate
information concerning the Merger or this Agreement or the other transactions
contemplated by this Agreement to potential sources of financing for the Merger
or such other transactions solely for the purposes of consummating the Debt
Financing in accordance with Section 6.8.
Section 6.10 Notification of Certain Matters. Each party shall give prompt
notice to the other parties of (i) the occurrence or non-occurrence of any event
the occurrence or non-occurrence of which would reasonably be expected to cause
any representation or warranty made by such party in this Agreement to be untrue
or inaccurate in any material respect at the Effective Time, or would reasonably
be expected to cause any condition set forth in Section 7 not to be satisfied in
any material respect at the Closing, and (ii) any material failure of such party
or any of its representatives to comply with or satisfy any covenant, condition
or agreement to be complied with or satisfied by it hereunder; provided,
however, that no such notification shall affect the representations, warranties,
covenants or agreements of the parties (or the remedies with respect thereto) or
the conditions to the obligations of the parties under this Agreement.
44
SECTION 7 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE PARTIES TO
CONSUMMATE THE MERGER
Section 7.1 Conditions to Obligations of Each Party to Effect the Merger.
The respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction or written waiver at or prior to the
Closing Date of the following conditions:
(a) Stockholder Approval. The Company Stockholder Approval shall
have been obtained.
(b) Statutes; Court Orders. No statute, rule, executive order or
regulation shall have been enacted, issued, entered or promulgated by any
Governmental Entity which prohibits the consummation of the Merger, and there
shall be no order or preliminary or permanent injunction of a court of competent
jurisdiction, including any temporary restraining order, in effect preventing or
prohibiting consummation of the Merger.
(c) Regulatory Approvals. The waiting period (and any extension
thereof) applicable to the Merger under the HSR Act and applicable foreign
competition or merger control Laws shall have been terminated or shall have
expired, and approvals under all foreign competition or merger control Laws set
forth in Section 7.1(c) of the Company Disclosure Schedule, and approvals or
waiting periods of Governmental Entities set forth in Section 7.1(c) of the
Company Disclosure Schedule to the Merger shall have been obtained or expired,
as the case may be.
Section 7.2 Additional Conditions to the Obligations of Parent and Merger
Sub. The obligations of Parent and Merger Sub to consummate and effect the
Merger shall be subject to the additional conditions, which may be waived in
writing in whole or in part by Parent or Merger Sub to the extent permitted by
applicable Law, that:
(a) Representations, Warranties and Covenants. The representations
and warranties of the Company contained in this Agreement (other than the
representations and warranties set forth in Sections 3.2, 3.3, 3.6(a) and 3.18),
disregarding all qualifications and exceptions contained therein relating to
materiality or Material Adverse Effect, shall be true and correct as of the
Closing Date as if made on and as of the Closing Date (or, if given as of a
specific date, at and as of such date), except where the failure or failures of
any such representations and warranties to be so true and correct have not had
and would not reasonably be expected to have, individually or in the aggregate,
a Company Material Adverse Effect. The representations and warranties of the
Company contained in Sections 3.2, 3.3 and 3.18 shall be true and correct in all
material respects as of the Closing Date as if made on and as of the Closing
Date (or, if given as of a specific date, at and as of such date). The
representations and warranties of the Company contained in Section 3.6(a) shall
be true and correct as of the Closing Date as if made on and as of the Closing
Date. The Company shall have performed and complied in all material respects
with all covenants and agreements required by this Agreement to be performed or
complied with by it on or prior to the Closing Date. The Company shall have
delivered to Parent a certificate from an officer of the Company, dated the
Closing Date, to the foregoing effect.
Section 7.3 Additional Conditions to the Obligations of the Company. The
obligations of the Company to consummate and effect the Merger shall be subject
to the additional conditions, which may be waived in writing in whole or in part
by the Company to the extent permitted by applicable Law, that:
(a) Representations, Warranties and Covenants. The representations
and warranties of the Parent and Merger Sub contained in this Agreement,
disregarding all qualifications and exceptions contained therein relating to
materiality or Material Adverse Effect, shall be true and correct as of the
45
Closing Date as if made on and as of the Closing Date (or, if given as of a
specific date, at and as of such date), except where the failure or failures of
any such representations and warranties to be so true and correct would not
reasonably be expected to prevent or materially impede the timely consummation
of the Merger. The Parent and Merger Sub shall have performed and complied in
all material respects with all covenants and agreements required by this
Agreement to be performed or complied with by it on or prior to the Closing
Date. The Parent and Merger Sub shall each have delivered to the Company a
certificate from an officer of the Parent and the Merger Sub, as applicable,
dated the Closing Date, to the foregoing effect.
XXXXXXX 0 XXXXXXXXXXX, XXXXXXXXX AND WAIVER.
Section 8.1 Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time before the
Effective Time, whether before or after the Company Stockholder Approval:
(a) By mutual written consent of Parent and the Company authorized
by the Parent Board of Directors and the Company Board of Directors;
(b) By either Parent or the Company, if the Merger has not been
consummated by March 31, 2007 (the "Termination Date"); provided, however, that
the right to terminate this Agreement pursuant to this Section 8.1(b) shall not
be available to any party whose action or failure to fulfill any obligation
under this Agreement or failure to act in good faith has been the principal
cause of, or resulted in, the failure of the Merger to be consummated by such
date;
(c) By either Parent or the Company, if a court of competent
jurisdiction or other Governmental Entity shall have issued a final,
non-appealable order, decree or ruling or taken any other action, or there shall
exist any statute, rule or regulation, in each case preventing or otherwise
prohibiting (collectively, "Restraints") the consummation of the Merger or that
otherwise has the effect of making the Merger illegal; provided, however, that
the party seeking to terminate this Agreement pursuant to this Section 8.1(c)
shall have used all reasonable efforts to prevent the entry of and to remove
such Restraints to the extent within their control or influence;
(d) By Parent (if neither it nor Merger Sub is in material breach of
it representations, warranties, covenants and obligations under this Agreement
so as to cause any of the conditions set forth in Section 7.1 or 7.3 not to be
satisfied) if there has been a breach of, or inaccuracy in, any representation,
warranty, covenant or agreement of the Company set forth in this Agreement,
which breach or inaccuracy would cause any condition set forth in Section 7.1 or
7.2 not to be satisfied (and such breach or inaccuracy has not been cured or
such condition has not been satisfied within twenty (20) business days after the
receipt of notice thereof or such breach or inaccuracy is not reasonably capable
of being cured or such condition is not reasonably capable of being satisfied
prior to the Termination Date);
(e) By the Company (i) (if it is not in material breach of its
representations, warranties, covenants and obligations under this Agreement so
as to cause any of the conditions set forth in Section 7.1 or 7.2 not to be
satisfied) if there has been a breach of, or inaccuracy in, any representation,
warranty, covenant or agreement of Parent or Merger Sub set forth in this
Agreement, which breach or inaccuracy would cause any condition set forth in
Section 7.1 or 7.3 not to be satisfied (and such breach or inaccuracy has not
been cured or such condition has not been satisfied within twenty (20) business
days after the receipt of notice thereof or such breach or inaccuracy is not
reasonably capable of being cured or such condition is not reasonably capable of
being satisfied prior to the Termination Date or, if sooner, the date the
Company becomes entitled to terminate this Agreement under subsection (ii)
below), or (ii) if the conditions set forth in Sections 7.1 and 7.2 have been
satisfied (other than those conditions
46
that by their terms are to be satisfied at Closing, and no state of facts or
circumstances exists that would cause such conditions to not be satisfied,
provided that nothing has occurred and no conditions exist that would cause
those conditions to not be satisfied if the Closing were to occur, for purposes
of this Section 8.1(e)(ii), on the last day of the Marketing Period) and Parent
has failed to consummate the Merger by the last day of the Marketing Period;
(f) By Parent, if (i) the Company Board of Directors shall have (A)
made or resolved to make a Change in Recommendation, (B) failed to recommend
against a tender or exchange offer related to an Acquisition Proposal in any
publicly disclosed position taken pursuant to Rules 14d-9 and 14e-2 under the
Exchange Act (other than a "stop, look and listen" disclosure), (C) recommended
to the stockholders of the Company or approved any Acquisition Proposal or
resolved to effect the foregoing or (D) failed to include in the Proxy Statement
its recommendation that the stockholders adopt and approve this Agreement and
the Merger;
(g) By the Company, at any time prior to the Company Stockholder
Approval, if the Company concurrently enters into a definitive agreement with
respect to a Superior Proposal in accordance with, and subject to the terms and
conditions of, clause (y) of Section 5.2(c) and at least three business days
have passed since the last Notice of a Superior Proposal; provided that, any
such purported termination pursuant to this Section 8.1(g) shall be void and of
no force or effect unless the Company has paid the applicable termination fee in
accordance with Section 8.2; or
(h) By either Parent or the Company, if upon a vote at a duly held
meeting to obtain the Company Stockholder Approval at which a quorum is present,
the Company Stockholder Approval is not obtained.
Section 8.2 Effect of Termination.
(a) Any termination of this Agreement under Section 8.1 hereof will
be effective immediately upon the delivery of a valid written notice of the
terminating party to the other parties hereto and, if then due, payment of the
termination fee required pursuant to this Section 8.2. In the event of
termination of this Agreement as provided in Section 8.1 hereof, (i) this
Agreement shall forthwith become null and void and be of no further force or
effect, except as set forth in the penultimate sentence of Section 6.3, the
indemnification and reimbursement obligations set forth in Section 6.8(b),
Section 8, Section 9, the Confidentiality Agreements (insofar as Parent, Merger
Sub and the Company have rights and obligations to each other thereunder) and
the Guarantees, each of which shall remain in full force and effect and survive
any termination of this Agreement in accordance with the terms thereof, and (ii)
there shall be no liability on the part of Parent, Merger Sub or the Company (or
any of their respective affiliates, directors, officers, employees,
stockholders, agents or representatives), except as may be provided in Section
8.2(b), (c) or (d), the first sentence of Section 8.2(e), Section 8.2(f),
Section 9.9 or the Guarantees; provided, however, that except as provided in
Section 8.2(e) nothing herein shall relieve any party from liability for fraud
or the willful and material breach by Parent or the Company of any of its
representations, warranties, covenants or agreements set forth in this
Agreement.
(b) If Parent terminates this Agreement pursuant to Section 8.1(d)
or if the Company or Parent terminates this Agreement pursuant to Section
8.1(h), the Company shall promptly pay Parent or its designee the documented and
reasonable expenses of Parent referred to in Section 8.3 up to $7,000,000.
(c) If Parent or the Company terminates this Agreement pursuant to
Section 8.1(f) or Section 8.1(g), respectively, the Company shall pay to Parent
or its designee a termination fee of
47
$33,140,000 concurrently with the termination of this Agreement by the Company
or no later than two (2) business days after such termination by Parent, as
applicable.
(d) If Parent terminates this Agreement pursuant to Section 8.1(d)
or if Parent or Company terminates this Agreement pursuant to Section 8.1(b) or
Section 8.1(h), and (i) if prior to the date of such termination (but on or
after the date hereof) a bona fide Acquisition Proposal is publicly announced or
is otherwise communicated to the Company Board of Directors, and (ii) within
twelve (12) months after the date of such termination, the Company enters into a
definitive agreement with respect to any Acquisition Proposal or an Acquisition
Proposal is otherwise consummated (which need not be the same Acquisition
Proposal), the Company shall pay to Parent or its designee a termination fee of
$33,140,000 (less any amounts previously paid or owing pursuant to Section
8.2(b)) concurrently with the execution of such definitive agreement or
consummation of such Acquisition Proposal, as the case may be; provided, that
solely for purposes of Section 8.2(d), the term Acquisition Proposal shall have
the meaning ascribed thereto in Section 5.2(a), except that all references to
twenty percent (20%) therein shall be changed to fifty percent (50%).
(e) In the event this Agreement is terminated by the Company
pursuant to Section 8.1(e)(ii) and Parent has failed to consummate the Merger by
reason of a failure of Parent or Merger Sub to receive the proceeds of the debt
financing contemplated by the Debt Commitment Letter, then Parent shall pay to
the Company a fee of $53,020,000 the "Parent Termination Fee") within two (2)
business days after such termination by the Company. If the Parent Termination
Fee is paid, and Parent and Merger Sub are not otherwise in willful material
breach of this Agreement (other than any breach arising from the failure by
Parent, after complying with its obligations under Section 6.8 of this
Agreement, to obtain the Debt Financing), then the Company's termination of this
Agreement and receipt of payment of the Parent Termination Fee shall be the sole
and exclusive remedy (except as expressly provided in Section 9.9 with regards
to a breach of Section 6.3) against Parent, Merger Sub, Sponsors and any of
their respective Representatives, Affiliates, directors, officers, employees,
partners, managers, members, or stockholders (each, a "Parent Party") for any
loss or damage suffered as a result of the breach of this Agreement or any
representation, warranty, covenant or agreement contained herein by Parent or
Merger Sub or the failure of the Merger to be consummated (such losses or
damages, collectively, "Company Damages"). Notwithstanding anything to the
contrary in this Agreement, the maximum aggregate liability of all Parent
Parties in the aggregate for all Company Damages shall be limited to $99,420,000
less any Parent Termination Fee paid or payable (the "Parent Liability
Limitation"), and in no event shall the Company, any Company Subsidiaries or any
of their affiliates seek (and the Company shall cause its affiliates not to
seek) any Company Damages or any other recovery, judgment, or damages of any
kind, including consequential, indirect, or punitive damages, against any Parent
Party in excess of Parent Liability Limitation from any Parent Party in
connection therewith and the Company, the Company Subsidiaries and their
affiliates shall be precluded from any other remedy against any Parent Party at
Law or in equity or otherwise. In addition, notwithstanding anything to the
contrary in this Agreement, in all cases, the maximum liability of each Sponsor,
directly or indirectly, shall be limited to the express obligations of such
Sponsor under their Guarantee. For the avoidance of doubt, subject to the first
sentence of this Section 8.2(e), there shall be no liability of any Parent Party
for Company Damages other than liability for fraud or the willful and material
breach by Parent or the Company of any of its representations, warranties,
covenants or agreements set forth in this Agreement.
(f) The Company and the Parent each acknowledge that the agreements
contained in this Section 8.2 are an integral part of the transactions
contemplated by this Agreement, and that, without these agreements, Parent or
the Company would not enter into this Agreement; accordingly, if the Company or
Parent fails promptly to pay the amounts due pursuant to Sections 8.2(b), (c),
(d) or (e), respectively, and, in order to obtain such payment, the Company or
Parent commences a suit which results in a final non-appealable judgment against
the Parent or the Company, the Company or the Parent
48
shall pay to Parent or the Company, as applicable, its reasonable attorneys'
fees and expenses actually incurred in connection with such suit, together with
interest on the amount of the fee from the date such payment was required to be
made until the date such payment is actually made.
(g) Each of the Company and Parent (for itself and its affiliates,
including the Sponsors) hereby agrees, that, upon any termination of this
Agreement under circumstances where it is entitled to a termination fee pursuant
to Section 8.2(c), 8.2(d) or 8.2(e) and provided such termination fee is paid in
full, except as provided in Section 8.2(e) or Section 9.9, the Company or Parent
and their respective affiliates shall be precluded from any other remedy against
the Company or Parent and their respective affiliates, at Law or in equity or
otherwise, and neither the Company or Parent nor any of their affiliates may
seek (and the Company or Parent shall cause its affiliates not to seek) to
obtain any recovery, judgment, or damages of any kind, including consequential,
indirect, or punitive damages, against the Company, Parent, Sponsors or any of
their respective directors, officers, employees, partners, managers, members, or
stockholders in connection with this Agreement or the transactions contemplated
hereby.
Section 8.3 Fees and Expenses. Except as otherwise expressly provided in
Section 8.2 and 6.8(b), all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expenses whether or not the Merger is consummated, including all
out-of-pocket expenses (including all fees and expenses of counsel, accountants,
investment bankers, financing sources, hedging counterparties, experts and
consultants to a party hereto and its affiliates) incurred by a party or on its
behalf (or, with respect to Parent, incurred by Sponsor, Parent's stockholders
or on their behalf) in connection with or related to the authorization,
preparation, negotiation, execution and performance of this Agreement, the
preparation, printing, filing and mailing of the Proxy Statement, the
solicitation of the Company Stockholder Approval, regulatory filings and
notices, the Financing and all other matters related to the closing of the
Merger, provided that if the Effective Time shall occur, Parent may require the
Surviving Corporation to reimburse Parent for all fees and expenses incurred by
Parent and its Affiliates.
Section 8.4 Amendment. Subject to applicable Law, this Agreement may be
amended, modified and supplemented in any and all respects, whether before or
after any vote of the stockholders of the Company contemplated hereby, by
written agreement of the parties hereto, by action taken by their respective
Boards of Directors, but after the approval of this Agreement by the
stockholders of the Company, no amendment shall be made which by Law requires
further approval by such stockholders without obtaining such further approval.
This Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
Section 8.5 Waiver. At any time prior to the Effective Time, each party
hereto may (a) extend the time for the performance of any of the obligations or
other acts of any other party hereto or (b) waive compliance with any of the
agreements of any other party or any conditions to its own obligations;
provided, that any such extension or waiver shall be binding upon a party only
if such extension or waiver is set forth in a writing executed by such party.
SECTION 9 MISCELLANEOUS.
Section 9.1 Entire Agreement. This Agreement, together with the Company
Disclosure Schedule and the Parent Disclosure Schedule and the documents and
instruments referred to herein that are to be delivered at the Closing, contains
the entire agreement among the parties with respect to the Merger and related
transactions, and supersedes all prior agreements, written or oral, among the
parties with respect thereto, other than the Confidentiality Agreements and the
Guarantees, which shall survive execution of this Agreement and shall terminate
in accordance with the provisions thereof. EACH
49
PARTY HERETO AGREES THAT, EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES
CONTAINED IN THIS AGREEMENT, NEITHER PARENT, MERGER SUB NOR THE COMPANY MAKES
ANY OTHER REPRESENTATIONS OR WARRANTIES, AND EACH HEREBY DISCLAIMS ANY OTHER
REPRESENTATIONS OR WARRANTIES MADE BY ITSELF OR ANY OF ITS RESPECTIVE OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS, FINANCIAL AND LEGAL ADVISORS OR OTHER
REPRESENTATIVES (OTHER THAN AS SET FORTH IN THE CONFIDENTIALITY AGREEMENTS OR
THE GUARANTEES), WITH RESPECT TO THE EXECUTION AND DELIVERY OF THIS AGREEMENT OR
THE MERGER, NOTWITHSTANDING THE DELIVERY OR DISCLOSURE TO THE OTHER OR THE
OTHER'S REPRESENTATIVES OF ANY DOCUMENTATION OR OTHER INFORMATION WITH RESPECT
TO ANY ONE OR MORE OF THE FOREGOING.
Section 9.2 No Survival. None of the representations, warranties and,
except as provided in the following sentence, covenants contained herein or in
any instrument delivered pursuant to this Agreement shall survive the Effective
Time. This Section 9, the agreements of Parent and the Company in Section 6.5,
Section 8.2 and Section 8.3 and those other covenants and agreements contained
herein that by their terms apply, or that are to be performed in whole or in
part, after the Effective Time shall survive the consummation of the Merger.
Section 9.3 Parent Guarantee. Parent agrees to take all action necessary
to cause Merger Sub or the Surviving Corporation, as applicable, to perform all
of its respective agreements, covenants and obligations under this Agreement.
Subject to the provisions of Section 8.2 and 9.9 hereof, Parent unconditionally
guarantees to the Company the full and complete performance by Merger Sub or the
Surviving Corporation, as applicable, of its respective obligations under this
Agreement and shall be liable for any breach of any representation, warranty,
covenant or obligation of Merger Sub or the Surviving Corporation, as
applicable, under this Agreement. Parent hereby waives diligence, presentment,
demand of performance, filing of any claim, any right to require any proceeding
first against Merger Sub or the Surviving Corporation, as applicable, protest,
notice and all demands whatsoever in connection with the performance of its
obligations set forth in this Section 9.3.
Section 9.4 Notices. Any notice or other communication required or
permitted hereunder shall be in writing and shall be deemed given when delivered
in person, by overnight courier, by facsimile transmission (with receipt
confirmed by telephone or by automatic transmission report) or two business days
after being sent by registered or certified mail (postage prepaid, return
receipt requested), as follows:
If to Parent or Merger Sub: With copies (which shall not
constitute notice) to:
Cobalt Holding Company Xxxxxxx Xxxxxxx & Xxxxxxxx LLP
Cobalt Merger Corp 0000 Xxxxxxx Xxxxxx
c/o Hellman & Xxxxxxxx Xxxx Xxxx, Xxxxxxxxxx 00000
Xxx Xxxxxxxx Xxxxx, 00xx Xxxxx Telephone: (000) 000-0000
Xxx Xxxxxxxxx, XX 00000 Facsimile: (000) 000-0000
Telephone: (000) 000-0000 Attn.: Xxxxxxx Xxxxxxxxx, Esq.
Facsimile: (000) 000-0000 Xxxxxxx Xxxxxx, Esq.
Attn.: Xxxxx Xxxxxxx
Xxxxx Xxxx
and
c/o Texas Pacific Group
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
00
Xxxx Xxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attn.: Xxxxx Xxxxxx
Xxxxx Xxxxxx
If to the Company: With copies (which shall not
constitute notice) to:
Intergraph Corporation J. Xxxxx Xxxxxx, Esq.
c/o Chief Financial Officer Bass, Xxxxx & Xxxx, PLC
One Madison Industrial Park IW 2000 000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, XX 35894-0001 Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
Any party may by notice given in accordance with this Section 9.4 to the other
parties designate another address or person for receipt of notices hereunder.
Section 9.5 Binding Effect; No Assignment; No Third-Party Beneficiaries.
(a) This Agreement shall not be assigned by any of the parties
hereto (whether by operation of Law or otherwise) without the prior written
consent of the other parties. Subject to the preceding sentence, but without
relieving any party (including any assignor) hereto of any obligation hereunder,
this Agreement will be binding upon, inure to the benefit of and be enforceable
by the parties and their respective successors and assigns.
(b) Other than Section 6.5 with respect to the Indemnified Parties
thereunder, nothing in this Agreement, express or implied, is intended to or
shall confer upon any person other than Parent, Merger Sub and the Company and
their respective successors and permitted assigns any right, benefit or remedy
of any nature whatsoever under or by reason of this Agreement.
Section 9.6 Severability. If any provision of this Agreement is held
invalid or unenforceable by any court of competent jurisdiction, the other
provisions of this Agreement shall remain in full force and effect. Any
provision of this Agreement held invalid or unenforceable only in part or degree
shall remain in full force and effect to the extent not held invalid or
unenforceable. The parties further agree to negotiate in good faith to replace
such invalid or unenforceable provision of this Agreement, or invalid or
unenforceable portion thereof, with a valid and enforceable provision that will
achieve, to the extent possible, the economic, business and other purposes of
such invalid or unenforceable provision or portion thereof.
Section 9.7 Governing Law. This Agreement and all actions arising under or
in connection therewith shall be governed by the performance of the transactions
contemplated herein and obligations of the parties hereunder will be governed
by, and construed in accordance with, the laws of the State of Delaware, without
giving effect to any choice of Law principles that would result in the
application of the law of any other state.
Section 9.8 Submission to Jurisdiction; Waiver. Each of the Company,
Parent and Merger Sub irrevocably submits to the jurisdiction and venue of the
Court of Chancery of the State of Delaware (or, in the case of any claim as to
which the federal courts have exclusive subject matter jurisdiction, the Federal
court of the United States of America) sitting in the State of Delaware in any
action arising out of
51
or relating to this Agreement, and hereby irrevocably agrees that all claims in
respect of such action may be heard and determined in such court. Each of the
Company, Parent and Merger Sub hereby irrevocably waives, and agrees not to
assert, by way of motion, as a defense, counterclaim or otherwise, in any action
or proceeding with respect to this Agreement, (a) any claim that it is not
personally subject to the jurisdiction of the above-named courts for any reason
other than the failure to lawfully serve process, (b) that it or its property is
exempt or immune from jurisdiction of any such court or from any legal process
commenced in such courts (whether through service of notice, attachment prior to
judgment, attachment in aid of execution of judgment, execution of judgment or
otherwise), and (c) to the fullest extent permitted by applicable Law, that (i)
the suit, action or proceeding in any such court is brought in an inconvenient
forum, (ii) the venue of such suit, action or proceeding is improper or (iii)
this Agreement, or the subject matter hereof, may not be enforced in or by such
courts. Each of the Company, Parent and Merger Sub waives, to the fullest extent
permitted by applicable Laws, any right it may have to a trial by jury in
respect of any action, suit or proceeding arising out of or relating to this
Agreement.
Section 9.9 Specific Enforcement; Remedies. The parties recognize and
agree that if for any reason any of the provisions of this Agreement are not
performed by the Company in accordance with their specific terms or are
otherwise breached, immediate and irreparable harm or injury would be caused for
which money damages would not be an adequate remedy. Accordingly, each party
agrees that, in addition to other remedies, prior to any termination by Parent
or Merger Sub of this Agreement pursuant to Section 8.1, Parent and Merger Sub
shall be entitled to specific performance of the terms hereof, in addition to
any other remedy at Law or equity. In the event that any action shall be brought
in equity to enforce the provisions of the Agreement, the Company shall not
allege, and hereby waives the defense, that there is an adequate remedy at Law.
The parties further acknowledge that the Company shall not be entitled to an
injunction or injunctions to prevent breaches of this Agreement by Parent or
Merger Sub or to enforce specifically the terms and provisions of this Agreement
and that the Company's sole and exclusive remedy with respect to any such breach
shall be the Parent Termination Fee (if applicable) and, if applicable, the
other remedies at Law available to the Company to the extent set forth in
Section 8.2 (subject to the Parent Liability Limitation); provided, however,
that the Company shall be entitled to specific performance against Parent and
Merger Sub to prevent any breach by Parent or Merger Sub of Section 6.3.
Section 9.10 Interpretation.
(a) When a reference is made in this Agreement to a Section,
subsection or clause, such reference shall be to a Section, subsection or clause
of this Agreement unless otherwise indicated.
(b) The table of contents and headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
(c) This Agreement is the result of the joint efforts of Parent and
the Company, and each provision hereof has been subject to the mutual
consultation, negotiation and agreement of the parties and there shall be no
construction against any party based on any presumption of that party's
involvement in the drafting thereof.
(d) The words "include," "includes" or "including" shall be deemed
to be followed by the words "without limitation." The words "ordinary course of
business" shall be deemed to be followed by the words "consistent with past
practice."
(e) The term "business day" means any day on which the principal
offices of the SEC in Washington, D.C. are open to accept filings, or in the
case of determining a date when any payment is due, any day on which banks are
not required or authorized to close in the City of New York.
52
(f) To the extent this Agreement refers to information or documents
having been made available (or delivered or provided) to Parent, the Company
shall be deemed to have satisfied such obligation if the Company or its
representatives made such information or document available (or delivered or
provided such information or document) to any officer or partner of Parent or
Sponsor or any of their respective representatives.
(g) The disclosure of any matter or item in the Company Disclosure
Schedule or the Parent Disclosure Schedule shall not be deemed to constitute an
acknowledgement that such matter or item is required to be disclosed therein or
is a material exception to a representation, warranty, covenant or condition set
forth in this Agreement and shall not be used as a basis for interpreting the
terms "material," "materially," "materiality," "Company Material Adverse Effect"
or "Parent Material Adverse Effect" or any word or phrase of similar import and
does not mean that such matter or item would, with any other matter or item,
have or be reasonably expected, individually or in the aggregate, to have a
Company Material Adverse Effect or a Parent Material Adverse Effect. Certain
matters have been disclosed in the Company Disclosure Schedule for informational
purposes only.
(h) The term "person" or "Person" shall mean any individual,
corporation (including any non-profit corporation), general partnership, limited
partnership, limited liability partnership, joint venture, estate, trust,
company (including any limited liability company or joint stock company), firm
or other enterprise, association, organization, entity or Governmental Entity.
(i) The term "knowledge" of the Company shall mean the actual
knowledge the officers of the Company listed on Section 9.10(i) of the Company
Disclosure Schedule.
(j) The term "affiliate" or "Affiliate" means a person that
directly, or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, the first-mentioned person.
(k) The term "subsidiary" or "Subsidiary," with respect to any
Person, means any other Person of which the first Person owns, directly or
indirectly, securities or other ownership interests having voting power to elect
a majority of the board of directors or other persons performing similar
functions (or, if there are no such voting interests, more than 50% of the
equity interests of the second Person).
Section 9.11 No Waiver of Rights. No failure or delay on the part of any
party hereto in the exercise of any right hereunder will impair such right or be
construed to be a waiver of, or acquiescence in, any breach of any
representation, warranty or agreement herein, nor will any single or partial
exercise of any such right preclude other or further exercise thereof or of any
other right.
Section 9.12 Counterparts; Facsimile Signatures. This Agreement may be
executed in two or more counterparts, each of which shall be deemed an original,
and all of which together shall constitute one and the same instrument.
Facsimile signatures shall be acceptable and binding.
[Remainder of page intentionally left blank.]
53
IN WITNESS WHEREOF, the parties have executed this Agreement and Plan of
Merger as of the date first stated above.
INTERGRAPH CORPORATION
By: /s/ X. Xxxxxx Xxxx
---------------------------------
Name: X. Xxxxxx Wise
Title: President & Chief Executive
Officer
COBALT HOLDING COMPANY
By: /s/ Xxxxxxx Xxx
---------------------------------
Name: Xxxxxxx Xxx
Title: Vice President
COBALT MERGER CORP.
By: /s/ Xxxxxxx Xxx
---------------------------------
Name: Xxxxxxx Xxx
Title: Vice President
ANNEX A
INDEX OF DEFINED TERMS
SECTION
--------
Acquiring Person.................................................... 3.18(c)
Acquisition Proposal................................................ 5.2(a)
Actions............................................................. 3.8
affiliate........................................................... 9.10(j)
Affiliated Party.................................................... 3.21
Agreement........................................................... Preamble
Benefits Continuation Period........................................ 5.3(a)
Book-Entry Shares................................................... 2.4(b)
business day........................................................ 9.10(e)
Cash Equivalents.................................................... 3.3(h)
Cash Out Amount..................................................... 2.3(c)
Certificate of Merger............................................... 1.3
Certificates........................................................ 2.4(b)
Change in Recommendation............................................ 5.2(c)
Closing............................................................. 1.2
Closing Date........................................................ 1.2
COBRA............................................................... 3.14(d)
Code................................................................ 2.5
Commitment Letters.................................................. 4.6
Company............................................................. Preamble
Company Board of Directors.......................................... Recitals
Company Common Stock................................................ 2.1
Company Damages..................................................... 8.2(e)
Company Disclosure Schedule......................................... 3
Company Employees................................................... 3.14(a)
Company Insurance Policies.......................................... 3.12
Company Intellectual Property....................................... 3.10(a)
Company Material Adverse Effect..................................... 3.1(a)
Company Options..................................................... 2.3(a)
Company Rights...................................................... 3.3(e)
Company Rights Agreement............................................ 3.3(e)
Company SEC Reports................................................. 3.5(a)
Company Stockholder Approval........................................ 3.18(d)
Company Stockholders Meeting........................................ 6.2
Company Subsidiary.................................................. 3.1(a)
Confidentiality Agreements.......................................... 6.3
Continuing Employees................................................ 5.3(a)
Contract............................................................ 3.9(a)
Controlled Group.................................................... 3.14(c)
Debt Commitment Letter.............................................. 4.6
Debt Financing...................................................... 4.6
DGCL................................................................ Recitals
Dissenting Shares................................................... 2.2(a)
DOJ................................................................. 6.4(a)
Effective Time...................................................... 1.3
Employment Agreements............................................... 5.3(a)
Environmental Laws.................................................. 3.16(d)
A-1
Environmental Permits............................................... 3.16(d)
Equity Commitment Letter............................................ 4.6
Equity Plans........................................................ 2.3(d)
ERISA............................................................... 3.14(a)
ESPP................................................................ 2.3(d)
Exchange Act........................................................ 3.3(g)
Exchange Fund....................................................... 2.4(a)
Financial Statements................................................ 3.5(b)
Financing........................................................... 4.6
Foreign Plan........................................................ 3.14(h)
Foreign Welfare Plan................................................ 3.14(h)
FTC................................................................. 6.4(a)
GAAP................................................................ 3.5(b)
Governmental Entity................................................. 3.1(a)
Guarantees.......................................................... 4.7
Hazardous Substance................................................. 3.16(d)
HSR Act............................................................. 3.17
Indemnified Parties................................................. 6.5(b)
Intellectual Property............................................... 3.10(h)
Initiation Date..................................................... 6.8(a)
IRS................................................................. 3.14(a)
knowledge........................................................... 9.10(i)
Laws................................................................ 3.1(a)
Lease............................................................... 3.11(c)
Leased Properties................................................... 3.11(b)
Lenders............................................................. 4.6
License Agreement................................................... 3.9(a)
Liens............................................................... 3.4(a)
Major Customers..................................................... 3.9(a)
Major Suppliers..................................................... 3.9(a)
Material Contract................................................... 3.9(a)
Marketing Period.................................................... 6.8(a)
Material Company Subsidiary......................................... 3.1(b)
Maximum Premium..................................................... 6.5(d)
Merger.............................................................. 1.1(a)
Merger Consideration................................................ 2.1(a)
Merger Sub.......................................................... Preamble
Nasdaq.............................................................. 3.1(a)
Notice of Superior Proposal......................................... 5.2(c)
OFAC................................................................ 3.5(c)
Open Source License................................................. 3.10(f)
Owned Intellectual Property......................................... 3.10(a)
Parent.............................................................. Preamble
Parent Disclosure Schedule.......................................... 4
Parent Liability Limitation......................................... 8.2(e)
Parent Material Adverse Effect...................................... 4.1
Parent Party........................................................ 8.2(e)
Parent Termination Fee.............................................. 8.2(e)
Patents............................................................. 3.10(h)
Paying Agent........................................................ 2.4(a)
Per Share Price..................................................... 2.1(a)
A-2
Permits............................................................. 3.7(a)
Permitted Liens..................................................... 3.11(a)
person.............................................................. 9.10(h)
Plan................................................................ 3.14(a)
Proxy Statement..................................................... 3.20
Real Property....................................................... 3.11(a)
Registered Intellectual Property.................................... 3.10(h)
Release............................................................. 3.16(d)
Representatives..................................................... 5.2(a)
Restraints.......................................................... 8.1(c)
Restricted Shares................................................... 2.3(b)
Required Financial Information...................................... 6.8(b)
RSUs................................................................ 2.3(c)
SEC................................................................. 3.5(a)
Securities Act...................................................... 3.5(a)
Significant Company Subsidiaries.................................... 5.2(a)
Sponsor............................................................. 4.6
Stock Option Plans.................................................. 2.3(a)
Superior Proposal................................................... 5.2(b)
Surviving Corporation............................................... 1.1(a)
Takeover Proposal................................................... 5.2(b)
Tax................................................................. 3.13(a)
Taxable............................................................. 3.13(a)
Taxes............................................................... 3.13(a)
Tax Return.......................................................... 3.13(a)
Tax Returns......................................................... 3.13(a)
Termination Date.................................................... 8.1(b)
A-3
