AGREEMENT AND PLAN OF MERGER
Exhibit
2.1
AGREEMENT
AND PLAN OF MERGER
among:
Peet’s
Coffee & Tea, Inc.,
a
Washington corporation;
Xxxxx
Acquisition Sub, Inc.,
a
Delaware corporation; and
Xxxxxxxx
Coffee, Inc.,
a
Delaware corporation
___________________________
Dated as
of November 2, 2009
___________________________
AGREEMENT
AND PLAN OF MERGER
This
Agreement and Plan of Merger (“Agreement”) is made and
entered into as of November 2, 2009, by and among: Peet’s
Coffee & Tea,
Inc., a Washington corporation (“Parent”); Xxxxx
Acquisition Sub, Inc., a Delaware corporation and a wholly-owned
subsidiary of Parent (“Acquisition Sub”);
and Xxxxxxxx
Coffee,
Inc., a Delaware corporation (the “Company”). Certain
capitalized terms used in this Agreement are defined in Exhibit A.
Recitals
A. The
boards of directors of Parent, Acquisition Sub and the Company have each
determined that it is in the best interests of their respective stockholders for
Parent to acquire the Company upon the terms and subject to the conditions set
forth in this Agreement.
B. In
furtherance of the contemplated acquisition of the Company by Parent, on the
terms and subject to the conditions set forth in this
Agreement: (a) Acquisition Sub shall make an exchange offer
(such exchange offer, as it may be amended from time to time, being referred to
in this Agreement as the “Offer”) to acquire
all of the issued and outstanding shares of Company Common Stock at the Per
Share Consideration (as defined in Section 1.1(a))
for each such share; and (b) after acquiring shares of Company Common Stock
pursuant to the Offer, Acquisition Sub shall merge into the Company (the merger
of Acquisition Sub into the Company being referred to in this Agreement as the
“Merger”).
C. In
order to induce Parent and Acquisition Sub to enter into this Agreement and to
consummate the Contemplated Transactions, concurrently with the execution and
delivery of this Agreement certain stockholders of the Company are executing and
delivering stockholder agreements in favor of Parent and Acquisition Sub (the
“Stockholder
Agreements”).
Agreement
The
parties to this Agreement, intending to be legally bound, agree as
follows:
Section
1.The
Offer
1.1 Conduct of the
Offer.
(a) Parent
shall cause Acquisition Sub to, and Acquisition Sub shall, use commercially
reasonable efforts to commence (within the meaning of Rule 14d-2 under the
Exchange Act) the Offer as promptly as practicable after the date of this
Agreement and to the extent feasible and with the reasonable cooperation of the
Company and the Company’s Representatives, within ten (10) business days
after the date of this Agreement. Each share of Company Common Stock
accepted by Acquisition Sub in accordance with the terms and subject to the
conditions of the Offer shall be exchanged for the right to receive a
combination of (i) $17.33, net to the holder of such share in cash (the
“Cash
Component”), and (ii) a fraction of a share of Parent Common Stock
having a numerator equal to $8.67 and having a denominator equal to the Parent
Average Stock Price (the “Applicable
Fraction”); provided,
however, that in no event will the Applicable Fraction exceed 0.315 of a
share of Parent Common Stock. The date on which
Acquisition Sub commences the Offer, within the meaning of Rule 14d-2 under
the Exchange Act, is referred to in this Agreement as the “Offer Commencement
Date.”
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(b) The
obligation of Acquisition Sub to accept for exchange (and the obligation of
Parent to cause Acquisition Sub to accept for exchange) shares of Company Common
Stock validly tendered (and not withdrawn) pursuant to the Offer shall be
subject to (i) the condition (the “Minimum Condition”)
that there shall be validly tendered (and not withdrawn) a number of shares of
Company Common Stock that, together with any shares of Company Common Stock
owned by Parent, Acquisition Sub or any other Subsidiaries of Parent immediately
prior to the acceptance for exchange of shares of Company Common Stock pursuant
to the Offer, represents more than 50% of the Adjusted Outstanding Share Number
(as defined below) and (ii) the other conditions set forth in Exhibit B. The
Minimum Condition and the other conditions set forth in Exhibit B are
referred to collectively as the “Offer
Conditions.” For purposes of this Agreement, the “Adjusted Outstanding Share
Number” shall be the sum of (1) the aggregate number of shares of
Company Common Stock issued and outstanding immediately prior to the Acceptance
Time, plus (2) at
the election of Parent, an additional number of shares up to (but not exceeding)
the aggregate number of shares of Company Common Stock issuable upon the
exercise of all Company Options, Company Warrants and other rights to acquire
Company Common Stock that are outstanding immediately prior to the acceptance of
shares of Company Common Stock for exchange pursuant to the Offer and that are
vested and exercisable or will be vested and exercisable prior to the Effective
Time (but in all cases excluding the shares of Company Common Stock subject to
the Top-Up Option).
(c) Acquisition
Sub expressly reserves the right, in its sole discretion, to (i) increase
the Per Share Consideration and (ii) waive or make any other changes to the
terms and conditions of the Offer; provided, however, that
without the prior written consent of the Company: (A) the
Minimum Condition may not be amended or waived; and (B) no change may be
made to the Offer that (1) changes the form of consideration to be
delivered by Acquisition Sub pursuant to the Offer, (2) decreases any
component of the Per Share Consideration, (3) decreases the number of
shares of Company Common Stock to be purchased by Acquisition Sub in the Offer,
(4) modifies the Offer or the Offer Conditions in a manner adverse to the
stockholders of the Company or imposes conditions to the Offer in addition to
the Offer Conditions, or (5) except as provided in Section 1.1(d),
extends the expiration time of the Offer beyond the initial expiration time of
the Offer. Subject to the terms and conditions of the Offer and this
Agreement, Acquisition Sub shall, and Parent shall cause Acquisition Sub to,
(x) accept for exchange all shares of Company Common Stock validly tendered
(and not withdrawn) pursuant to the Offer as soon as practicable after
Acquisition Sub is permitted to do so under applicable Legal Requirements (and
in any event in compliance with Rule 14e-1(c) of the Exchange Act) and
(y) deliver the Per Share Consideration in exchange for each share of
Company Common Stock accepted for exchange pursuant to the Offer.
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(d) The
Offer shall initially be scheduled to expire 20 business days following the
Offer Commencement Date (calculated as set forth in Rule 14d-1(g)(3) and
Rule 14e-1(a) under the Exchange Act). Notwithstanding anything
to the contrary contained in this Agreement, but subject to the parties’
respective termination rights under Section 8.1: (i) if,
at the time as of which the Offer is scheduled to expire, any Offer Condition is
not satisfied and has not
been waived, then, subject to the parties’ respective termination rights under
Section 8.1,
Acquisition Sub shall extend the Offer on one or more occasions, for additional
successive periods of up to 20 business days per extension (with the length of
such periods to be determined by Parent), until all Offer Conditions are
satisfied or validly waived in order to permit the Acceptance Time to occur;
provided, however, that
in no event shall Acquisition Sub be required to extend the Offer to a date
later than March 31, 2010; and (ii) Acquisition Sub shall extend the Offer
from time to time for any period required by any rule, regulation,
interpretation or position of the SEC or the staff of the SEC applicable to the
Offer. If less than 90% of the number of outstanding shares of
Company Common Stock are accepted for exchange pursuant to the Offer,
Acquisition Sub may, in its sole discretion (and without the consent of the
Company or any other Person), elect to provide for one or more subsequent
offering periods (of up to 20 business days in the aggregate) in accordance with
Rule 14d-11 under the Exchange Act. Subject to the terms and
conditions of this Agreement, Acquisition Sub shall promptly accept for
exchange, and deliver consideration for, all shares of Company Common Stock that
are validly tendered during any such subsequent offering period (or any
extension thereof). For the avoidance of doubt, if, at any scheduled
expiration date of the Offer, all of the Offer Conditions have been satisfied or
waived in writing by Parent, and this Agreement has not otherwise been
terminated in accordance with its terms, Acquisition Sub shall promptly accept
for exchange, and deliver consideration for, all Shares validly tendered and not
validly withdrawn pursuant to the Offer in accordance with this
Agreement. For the further avoidance of doubt, the Acceptance Time
shall not be extended by any subsequent offering periods.
(e) No
fractional shares of Parent Common Stock shall be issued in connection with the
Offer, and no certificates or scrip for any such fractional shares shall be
issued in connection with the Offer. Any holder of Company Common
Stock who would otherwise be entitled to receive a fraction of a share of Parent
Common Stock in the Offer (after aggregating all fractional shares of Parent
Common Stock issuable to such holder in the Offer) shall, in lieu of such
fraction of a share, be paid in cash the dollar amount (rounded to the nearest
whole cent), without interest, determined by multiplying such fraction by the
closing trading price of a share of Parent Common Stock as reported on the
Nasdaq Capital Market on the trading day immediately before the trading day that
includes the Acceptance Time.
(f) As
soon as practicable after the date of this Agreement but in no event after the
Offer Commencement Date, Parent shall prepare and file with the SEC a
registration statement on Form S-4 to register the offer and sale of Parent
Common Stock pursuant to the Offer (the “Registration
Statement”). The Registration Statement will include a
preliminary prospectus containing the information required under
Rule 14d-4(b) under the Exchange Act (the “Preliminary
Prospectus”). On the Offer Commencement Date, Parent and
Acquisition Sub shall: (i) cause to be filed with the SEC a
Tender Offer Statement on Schedule TO with respect to the Offer, which will
contain or incorporate by reference the Preliminary Prospectus and forms of the
related letter of transmittal and summary advertisement (such Tender Offer
Statement on Schedule TO and all exhibits, amendments and supplements
thereto being referred to collectively in this Agreement as the “Offer Documents”);
and (ii) cause the Offer Documents to be disseminated to holders of shares
of Company Common Stock to the extent required by applicable Legal Requirements
(including the Exchange Act and the rules and regulations
thereunder). Parent and Acquisition Sub shall cause the Registration
Statement and the Offer
Documents to comply in all material respects with applicable Legal Requirements
(including the Exchange Act and the Securities Act and the rules and regulations
thereunder).
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The
Company and its counsel shall be given reasonable opportunity to review and
comment on the Registration Statement and the Offer Documents (including all
amendments and supplements thereto) prior to the filing thereof with the SEC,
and Parent and Acquisition Sub shall include all additions, deletions or changes
thereto suggested by the Company and its legal counsel that Parent determines,
in its good faith discretion, to be appropriate. Parent and
Acquisition Sub shall promptly provide the Company and its counsel with a copy
of any written comments and a description of any oral comments received by
Parent, Acquisition Sub or their counsel from the SEC or its staff with respect
to the Registration Statement or the Offer Documents. Each of Parent
and Acquisition Sub shall use reasonable efforts to respond promptly to any
comments of the SEC or its staff with respect to the Registration Statement, the
Offer Documents or the Offer. To the extent required by applicable
Legal Requirements (including the Exchange Act and the Securities Act and the
rules and regulations thereunder), (1) each of Parent, Acquisition Sub and
the Company shall correct promptly any information provided by it for use in the
Registration Statement or the Offer Documents to the extent that it becomes
aware that such information shall be or shall have become false or misleading in
any material respect and (2) Parent and Acquisition Sub shall take all
steps necessary to promptly cause the Registration Statement and the Offer
Documents, as supplemented or amended to correct such information, to be filed
with the SEC and to be disseminated to holders of shares of Company Common
Stock. The Company shall promptly furnish to Parent and Acquisition
Sub all information concerning the Company and the Company’s stockholders that
may be required or reasonably requested in connection with any action
contemplated by this Section 1.1(f). Parent
shall use commercially reasonable efforts to have the Registration Statement
declared effective under the Securities Act as promptly as possible after its
filing and to maintain its effectiveness for so long as shall be required for
the issuance of Parent Common Stock pursuant to the Offer and the
Merger. Following the time the Registration Statement is declared
effective, Parent shall file the final prospectus included therein under
Rule 424(b) under the Securities Act.
(g) Between
the date of this Agreement and the date on which any particular share of Company
Common Stock is accepted for exchange pursuant to the Offer, (i) if the
outstanding shares of Company Common Stock are changed into a different number
or class of shares by reason of any stock split, division or subdivision of
shares, stock dividend, reverse stock split, consolidation of shares,
reclassification, recapitalization or other similar transaction, then the Per
Share Consideration shall be adjusted to the extent necessary or appropriate to
achieve the same economic outcome, and (ii) if the outstanding shares of
Parent Common Stock are changed into a different number or class of shares by
reason of any stock split, division or subdivision of shares, stock dividend,
reverse stock split, consolidation of shares, reclassification, recapitalization
or other similar transaction, then the Applicable Fraction shall be adjusted to
the extent necessary or appropriate to achieve the same economic
outcome.
(h) Notwithstanding
anything to the contrary in this Agreement (including Section 1.1(a)),
in the event that pursuant to Nasdaq Listing Rule 5635(a) (or its
successor), the issuance of shares of Parent Common Stock (or rights with
respect thereto) as part of the Contemplated Transactions would, but for the
provisions of this Section 1.1(h),
require the approval of the stockholders of Parent, then the Applicable Fraction
shall automatically (and without
any action on the part of any party hereto) be reduced to be the greatest
fraction of a share of Parent Common Stock that would, if such fraction were the
Applicable Fraction, not require the approval of the stockholders of Parent with
respect to such issuance.
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1.2 Company Actions.
(a) The
Company hereby consents to the Offer and represents and warrants to Parent and
Acquisition Sub that the Company’s board of directors, at a meeting duly called
and held on November 2, 2009, has by the unanimous vote of all directors of the
Company (i) determined that this Agreement and the Contemplated
Transactions, including the Offer and the Merger, are fair to and in the best
interests of the Company’s stockholders, (ii) adopted and approved this
Agreement and approved the Offer, the Merger and the other Contemplated
Transactions, in accordance with the requirements of the Delaware General
Corporation Law (the “DGCL”),
(iii) declared that this Agreement is advisable, (iv) resolved to
recommend that the stockholders of the Company accept the Offer and tender their
shares of Company Common Stock pursuant to the Offer and (to the extent
necessary) adopt this Agreement, and (v) to the extent necessary, adopted a
resolution having the effect of causing the Company not to be subject to any
restriction set forth in any state takeover law or similar Legal Requirement
that would otherwise apply to the Stockholder Agreements, the Offer, the Merger
or any of the other Contemplated Transactions.
(b) Contemporaneously
with the filing of the Schedule TO or as promptly as practicable thereafter
on the Offer Commencement Date, the Company shall file with the SEC and
(following or contemporaneously with the dissemination of the Offer Documents
and related documents) disseminate to holders of shares of Company Common Stock
a Solicitation/Recommendation Statement on Schedule 14D-9 (together with
any amendments or supplements thereto, the “Schedule 14D-9”)
that, subject to Section 5.3,
shall reflect the Company Board Recommendation. Without limiting the
foregoing, the parties hereto shall use commercially reasonable efforts to cause
the Schedule 14D-9 to be disseminated concurrently with and in the same
mailing envelope as the Offer Documents. The Company shall cause the
Schedule 14D-9 and the filing and dissemination thereof to comply in all
material respects with applicable Legal Requirements (including the Exchange Act
and the rules and regulations thereunder). Parent and its legal
counsel shall be given reasonable opportunity to review and comment on the
Schedule 14D-9 (including any amendment or supplement thereto) prior to the
filing thereof with the SEC, and the Company shall include all additions,
deletions or changes thereto suggested by Parent and its legal counsel that the
Company determines, in its good faith discretion, to be
appropriate. The Company shall promptly provide Parent and its legal
counsel with a copy of any written comments and a description of any oral
comments received by the Company or its legal counsel from the SEC or its staff
with respect to the Schedule 14D-9 and shall use commercially reasonable
efforts to respond promptly to any such comments. To the extent
required by applicable Legal Requirements (including the Exchange Act and the
rules and regulations thereunder), (i) each of Parent, Acquisition Sub and
the Company shall promptly correct any information provided by it for use in the
Schedule 14D-9 to the extent that it becomes aware that such information
shall be or shall have become false or misleading in any material respect, and
(ii) the Company shall take all steps necessary to cause the
Schedule 14D-9, as supplemented or amended to correct such information, to
be filed with the SEC and, if required by
applicable Legal Requirements, to be disseminated to holders of shares of
Company Common Stock.
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(c) The
Company shall promptly provide to Parent (i) a list of the Company’s
stockholders as well as mailing labels and any available listing or computer
file containing the names and addresses of all record holders of shares of
Company Common Stock and lists of securities positions of shares of Company
Common Stock held in stock depositories, in each case accurate and complete as
of the most recent practicable date, and (ii) such additional information
(including updated lists of stockholders, mailing labels and lists of securities
positions) and such other assistance as Parent may reasonably request in
connection with the Offer or the Merger. Except as may be required by
applicable Legal Requirements, and except as may be necessary to disseminate the
Offer Documents, Parent and Acquisition Sub shall hold in confidence, in
accordance with the terms of the Confidentiality Agreement and this Agreement,
any information contained in any such labels, listings and files provided by the
Company to Parent.
1.3 Directors.
(a) Effective
upon the Acceptance Time and from time to time thereafter, Parent shall be
entitled to designate, to serve on the Company’s board of directors, the number
of directors, rounded up to the next whole number, determined by
multiplying: (i) the total number of directors on the Company’s
board of directors (giving effect to any increase in the size of the Company’s
board of directors effected pursuant to this Section 1.3(a));
by (ii) a
fraction having (x) a numerator equal to the aggregate number of shares of
Company Common Stock then beneficially owned by Parent or Acquisition Sub or any
other Subsidiaries of Parent (including all shares of Company Common Stock
accepted for exchange pursuant to the Offer) and (y) a denominator equal to
the total number of shares of Company Common Stock then issued and
outstanding. Promptly following a written request from Parent, the
Company shall take all actions necessary and reasonably available to the Company
to cause Parent’s designees (the “Parent Designees”) to
be elected or appointed to the Company’s board of directors, including seeking
and accepting resignations of incumbent directors and, if such resignations are
not obtained, increasing the size of the Company’s board of
directors. From and after the Acceptance Time, to the extent
requested by Parent, the Company shall also, as permitted by all applicable
Legal Requirements (including the rules of the Nasdaq Capital Market), cause the
Parent Designees to constitute the number of members, rounded up to the next
whole number, on (1) each committee of the Company’s board of directors and
(2) the board of directors of each Subsidiary of the Company (and each
committee thereof) that represents at least the same percentage as individuals
designated by Parent represent on the board of directors of the
Company. In furtherance of the foregoing, Parent shall designate an
adequate number of Parent Designees so that the audit committee of the Company
has at least three (3) members, and each of the Parent Designees serving on
such audit committee shall be an “independent director” as defined by
Rule 5605(a)(2) of the Nasdaq Marketplace Rules and eligible to serve on
the Company’s audit committee under the Exchange Act and Nasdaq Marketplace
Rules, and at least one (1) of whom shall be an “audit committee financial
expert” as defined in Item 407(d)(5)(ii) of Regulation S-K and the
instructions thereto. Notwithstanding the provisions of this Section 1.3, at
all times prior to the Effective Time (as defined in Section 2.3), at
least two (2) of the members of the Company’s board of directors shall be
individuals who were directors of the Company on the date
of this Agreement (“Continuing
Directors”); provided,
however, that if at any time prior to the Effective Time there shall be
only one Continuing Director serving as a director of the Company for any
reason, then the Company’s board of directors shall, subject to the following
sentence, cause an individual selected by the remaining Continuing Director to
be appointed to serve on the Company’s board of directors (and such individual
shall be deemed to be a Continuing Director for all purposes under this
Agreement). The Company shall designate, prior to the Acceptance
Time, two (2) alternate Continuing Directors that the board of directors of
the Company shall appoint in the event of death, disability or resignation of
the Continuing Directors, each of whom shall, following such appointment to the
Company’s board of directors, be deemed to be a Continuing Director of the
Company.
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(b) In
connection with the performance of its obligations to cause the Parent Designees
to be elected or appointed to the Company’s board of directors, each of the
Company and Parent shall use its commercially reasonable efforts to promptly
take all actions, and the Company shall cause to be included in the
Schedule 14D-9 such information with respect to the Company and its
officers and directors, as Section 14(f) of the Exchange Act and
Rule 14f-1 thereunder require (subject to the Company’s receipt of the
information with respect to Parent and its nominees, officers, directors and
affiliates required by Section 14(f) of the Exchange Act and
Rule 14f-1 thereunder). Parent shall supply to the Company in
writing and be solely responsible for any information with respect to itself and
its nominees (including the Parent Designees), officers, directors and
affiliates required by Section 14(f) and Rule 14f-1, and Parent shall
use its commercially reasonable efforts to provide such information to enable it
to be filed with the SEC in the Schedule 14D-9 on the date the Offer
Documents are filed with the SEC. The provisions of this Section 1.3 are
in addition to, and shall not limit, any right that Acquisition Sub, Parent or
any affiliate of Acquisition Sub or Parent may have (with respect to the
election of directors or otherwise) under applicable Legal Requirements as a
holder or beneficial owner of shares of Company Common Stock.
(c) Following
the election or appointment of the Parent Designees to the Company’s board of
directors pursuant to Section 1.3(a)
and until the Effective Time, each of the following actions may be effected only
if there are on the Company’s board of directors one or more Continuing
Directors and such action is approved by a majority of such Continuing
Directors: (i) action by the Company with respect to any
amendment or waiver of any term or condition of this Agreement, the Merger, or
the certificate of incorporation or bylaws of the Company; (ii) termination
of this Agreement by the Company; (iii) extension by the Company of the
time for the performance of any of the obligations or other acts of Parent or
Acquisition Sub, or any waiver or assertion of any of the Company’s rights under
this Agreement; or (iv) other consent or action by the Company with respect
to the Offer, the Merger or any of the other Contemplated Transactions; provided that, in each case,
the taking of such action could reasonably be expected to affect adversely the
holders of shares of Company Common Stock (other than Parent or Acquisition
Sub). To the extent permitted under applicable Legal Requirements,
until the Effective Time, (x) the approval of any of the foregoing actions
by a majority of the Continuing Directors shall constitute the valid
authorization of the Company’s board of directors with respect to such action
(provided that all
other requirements under the Company’s certificate of incorporation and bylaws
and under applicable Legal Requirements are satisfied) and (y) in addition
to any requirements under the Company’s certificate of incorporation and bylaws,
any quorum of the Company’s board of directors for the purposes of any
meeting thereof or transacting of business thereby with respect to the approval
of any of the foregoing actions shall be deemed to require the attendance of at
least one (1) Continuing Director.
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1.4 Top-Up
Option.
(a) The
Company hereby grants to Parent and Acquisition Sub an assignable and
irrevocable option (the “Top-Up Option”),
exercisable upon the terms and subject to the conditions set forth in this
Agreement, to purchase from the Company an aggregate number of newly-issued
shares of Company Common Stock equal to the lesser of (i) the Top-Up Number
(as defined below) or (ii) the aggregate number of shares of Company Common
Stock that the Company is authorized to issue under its certificate of
incorporation but that are not issued and outstanding (and are not subscribed
for or otherwise committed to be issued) at the time of exercise of the Top-Up
Option. “Top-Up Number” means
the number of shares of Company Common Stock that, when added to the number of
shares of Company Common Stock owned of record by Parent or Acquisition Sub or
any other Subsidiaries of Parent at the time of exercise of the Top-Up Option,
constitutes a designated percentage of the number of shares of Company Common
Stock that would be outstanding immediately after the issuance of all shares of
Company Common Stock subject to the Top-Up Option, which percentage shall be
designated by Parent at its sole discretion, provided that such percentage
shall be greater than 90% but less than 91%.
(b) The
Top-Up Option may be exercised by Parent or Acquisition Sub, in whole or in
part, at any time at or after the Acceptance Time but prior to the earlier of
the Effective Time and the date on which this Agreement is
terminated. The aggregate purchase price payable for the shares of
Company Common Stock being purchased by Parent or Acquisition Sub pursuant to
the Top-Up Option shall be determined by multiplying the number of such shares
by an amount equal to
the sum of (i) the Cash Component and (ii) the amount determined by
multiplying (A) the Applicable Fraction by (B) the Parent
Average Stock Price. Such purchase price may be paid by Parent or
Acquisition Sub, at its election, either entirely in cash or by executing and
delivering to the Company a promissory note having a principal amount equal to
such purchase price, or by any combination of the foregoing. Any such
promissory note shall bear interest at the rate of 3% per annum, shall mature on
the first anniversary of the date of execution thereof and may be prepaid
without premium or penalty.
(c) In
the event Parent or Acquisition Sub wishes to exercise the Top-Up Option, Parent
or Acquisition Sub shall deliver to the Company a notice setting forth
(i) the number of shares of Company Common Stock that Parent or Acquisition
Sub intends to purchase pursuant to the Top-Up Option, (ii) the manner in
which Parent or Acquisition Sub intends to pay the applicable exercise price and
(iii) the place, date and time at which the closing of the purchase of such
shares of Company Common Stock by Parent or Acquisition Sub is to take place,
which date shall not be more than ten (10) business days after the date of
such notice. At the closing of the purchase of such shares of Company
Common Stock, Parent or Acquisition Sub shall cause to be delivered to the
Company the consideration required to be delivered in exchange for such shares,
and the Company shall cause to be issued to Parent or Acquisition Sub (as the
case may be) a certificate representing such shares or, at Parent or Acquisition
Sub’s request or otherwise if the
Company does not then have certificated shares, the applicable number of
uncertificated shares represented by book-entry (“Book-Entry
Shares”).
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(d) Acquisition
Sub acknowledges that the shares of Company Common Stock that Acquisition Sub
may acquire upon exercise of the Top-Up Option will not be registered under the
Securities Act and will be issued in reliance upon an exemption thereunder for
transactions not involving a public offering. Acquisition Sub
represents and warrants to the Company that Acquisition Sub is, and will be upon
the purchase of shares subject to the Top-Up Option, an “accredited investor,”
as defined in Rule 501 of Regulation D under the Securities
Act. Acquisition Sub agrees that the Top-Up Option and the shares to
be acquired upon exercise thereof are being and will be acquired by Acquisition
Sub for its own account, for the purpose of investment and not with a view to,
or for resale in connection with, any distribution thereof (within the meaning
of the Securities Act).
Section
2. The
Merger
2.1 Merger of Acquisition Sub into the
Company. At the Effective Time (as defined in Section 2.3),
upon the terms and subject to the conditions set forth in this Agreement and in
accordance with the DGCL, Acquisition Sub shall be merged with and into the
Company. Following the Merger, the Company shall continue as the
surviving corporation (the “Surviving
Corporation”), and the separate corporate existence of Acquisition Sub
shall cease.
2.2 Effect of the
Merger. The Merger shall have the effects set forth in this
Agreement and in the DGCL. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time all of the properties,
rights, privileges, immunities, powers and franchises of the Company and
Acquisition Sub shall vest in the Surviving Corporation, and all debts,
liabilities, obligations and duties of the Company and Acquisition Sub shall
become the debts, liabilities, obligations and duties of the Surviving
Corporation.
2.3 Closing; Effective
Time. The consummation of the Merger (the “Closing”) shall take
place at the offices of Xxxxxx Godward Kronish llp, 0000 Xxxxxxx Xxxxxx, Xxxx
Xxxx, Xxxxxxxxxx, at 10:00 a.m. on a date to be designated by Parent, which
shall be no later than the second (2nd) business day after the satisfaction or
waiver of the last to be satisfied or waived of the conditions set forth in
Section 7, or at such other
place or at such other time or on such other date as Parent and the Company
mutually agree in writing. The day on which the Closing takes place
is referred to as the “Closing
Date.” Subject to the provisions of this Agreement, Parent,
Acquisition Sub and the Company shall cause the Merger to be consummated by
causing a certificate of merger complying with Section 251 or a certificate
of ownership and merger complying with Section 253, as applicable, of the
DGCL (either, the “Certificate of
Merger”) to be filed with the Secretary of State of the State of Delaware
on the Closing Date. The Merger shall become effective upon the date
and time of the filing of such Certificate of Merger, or at such later time as
may be mutually agreed in writing by the Company and Parent and specified in
such Certificate of Merger (the “Effective
Time”).
2.4 Certificate of Incorporation and
Bylaws; Directors and Officers. Unless otherwise determined by
Parent prior to the Effective Time:
(a) the
Certificate of Incorporation of the Surviving Corporation shall be amended in
its entirety immediately after the Effective Time to conform to the Certificate
of Incorporation of Acquisition Sub as in effect immediately prior to the
Effective Time, except that the name of the Surviving Corporation shall be
“Xxxxxxxx Coffee, Inc.”;
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(b) the
Bylaws of the Surviving Corporation shall be amended and restated as of the
Effective Time to conform to the Bylaws of Acquisition Sub as in effect
immediately prior to the Effective Time; and
(c) the
directors and officers of the Surviving Corporation immediately after the
Effective Time shall be the respective individuals who are directors and
officers of Acquisition Sub immediately prior to the Effective
Time.
2.5 Conversion of
Shares.
(a) At
the Effective Time, by virtue of the Merger and without any further action on
the part of Parent, Acquisition Sub, the Company or any holder of shares of the
Company:
(i) any
shares of Company Common Stock then held by the Company or any wholly owned
Subsidiary of the Company or held in the Company’s treasury shall be canceled
and retired and shall cease to exist, and no consideration shall be delivered in
exchange therefor;
(ii) any
shares of Company Common Stock then owned of record by Parent, Acquisition Sub
or any other wholly owned Subsidiary of Parent shall be canceled and retired and
shall cease to exist, and no consideration shall be delivered in exchange
therefor;
(iii) except
as provided in clauses “(i)” and “(ii)” above and
subject to Sections 2.5(b),
2.5(c) and
2.7, each share
of Company Common Stock then outstanding shall be converted into the right to
receive (upon the proper surrender of the certificate representing such share
or, in the case of a Book-Entry Share, the proper surrender of such Book-Entry
Share) the Per Share Consideration; and
(iv) each
share of the common stock, $0.001 par value per share, of Acquisition Sub then
outstanding shall be converted into one newly and validly issued, fully paid and
nonassessable share of common stock of the Surviving Corporation.
(b) Between
the date of this Agreement and the Effective Time, (i) if the outstanding
shares of Company Common Stock are changed into a different number or class of
shares by reason of any stock split, division or subdivision of shares, stock
dividend, reverse stock split, consolidation of shares, reclassification,
recapitalization or other similar transaction, then the Per Share Consideration
shall be adjusted to the extent necessary or appropriate to achieve the same
economic outcome, and (ii) if the outstanding shares of Parent Common Stock
are changed into a different number or class of shares by reason of any stock
split, division or subdivision of shares, stock dividend, reverse stock split,
consolidation of shares, reclassification, recapitalization
or other similar transaction, then the Applicable Fraction shall be adjusted to
the extent necessary or appropriate to achieve the same economic
outcome.
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(c) If
(i) any share of Company Common Stock outstanding immediately prior to the
Effective Time is unvested or is subject to a repurchase option, risk of
forfeiture or other condition under any restricted stock purchase agreement or
other agreement with the Company or under which the Company has any rights, and
(ii) such restricted stock purchase agreement or other agreement does not
provide that the vesting of such share of Company Common Stock shall fully
accelerate at or prior to the Effective Time, then the amount payable with
respect thereto (or with respect to any portion that does not accelerate at or
prior to the Effective Time) pursuant to Section 2.5(a)(iii)
will also be unvested and subject to the same repurchase option, risk of
forfeiture or other condition. The Company shall take all action that
may be necessary to ensure that, from and after the Effective Time, Parent is
entitled to exercise any such repurchase option or other right set forth in any
such restricted stock purchase agreement or other agreement.
(d) No
fractional shares of Parent Common Stock shall be issued in connection with the
Merger, and no certificates or scrip for any such fractional shares shall be
issued in connection with the Merger. Any holder of Company Common
Stock who would otherwise be entitled to receive a fraction of a share of Parent
Common Stock in the Merger (after aggregating all fractional shares of Parent
Common Stock issuable to such holder in the Merger) shall, in lieu of such
fraction of a share and upon surrender of such holder’s Stock Certificate(s) (as
defined in Section 2.6(b)),
be paid in cash the dollar amount (rounded to the nearest whole cent), without
interest, determined by multiplying such fraction by the closing trading price
of a share of Parent Common Stock as reported on the Nasdaq Capital Market on
the trading day immediately before the trading day that includes the Effective
Time.
2.6 Surrender of Certificates; Stock
Transfer Books.
(a) Prior
to the Effective Time, Parent shall designate a bank or trust company to act as
exchange agent in the Merger (the “Exchange
Agent”). Promptly after the Effective Time, Parent shall
deposit with the Exchange Agent (i) cash in an amount equal to the cash
payable pursuant to Section 2.5(a)(iii),
(ii) certificates representing any shares of Parent Common Stock issuable
pursuant to Section 2.5(a)(iii)
and (iii) cash sufficient to make any payments in lieu of fractional shares
of Parent Common Stock that would have been payable with respect to Company
Common Stock but for Section 2.5(d),
in each case excluding amounts applicable to shares of Company Common Stock with
respect to which the holder thereof has perfected appraisal rights under
Section 262 of the DGCL. The cash amounts and any shares of
Parent Common Stock so deposited with the Exchange Agent, together with any
dividends or distributions received by the Exchange Agent with respect to such
shares, are referred to collectively as the “Exchange
Fund.” The cash in the Exchange Fund shall be invested by the
Exchange Agent as directed by Parent in money market funds or similar short-term
liquid investments.
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(b) Promptly
after the Effective Time (and in any event no more than five (5) business
days after the Effective Time), Parent will instruct the Exchange Agent to
promptly mail to the Persons who, immediately prior to the Effective Time, were
record holders of
certificates representing shares of Company Common Stock (“Stock Certificates”)
or uncertificated shares of Company Common Stock represented by Book-Entry
Shares, (i) a letter of transmittal in customary form and containing such
provisions as Parent may reasonably specify (including, in the case of holders
of Stock Certificates, a provision confirming that delivery of Stock
Certificates shall be effected, and risk of loss and title to Stock Certificates
shall pass, only upon delivery of such Stock Certificates to the Exchange
Agent), and (ii) instructions for use in effecting the surrender of Stock
Certificates and Book-Entry Shares. Upon surrender of a Stock
Certificate or Book-Entry Share to the Exchange Agent for exchange, together
with a duly executed letter of transmittal and such other documents as may be
reasonably required by the Exchange Agent or Parent, (A) the holder of such
Stock Certificate or Book-Entry Share shall be entitled to receive in exchange
therefor the consideration deliverable to such holder pursuant to Section 2.5(a)(iii)
and any cash payment in lieu of a fractional share of Parent Common Stock in
accordance with Section 2.5(d),
and (B) the Stock Certificate or Book-Entry Share so surrendered shall be
canceled. Until surrendered as contemplated by this Section 2.6(b),
each Stock Certificate or Book-Entry Share shall be deemed, from and after the
Effective Time, to represent solely the right to receive the Per Share
Consideration for each share of Company Common Stock formerly evidenced by such
Stock Certificate or Book-Entry Share. If any Stock Certificate shall
have been lost, stolen or destroyed, Parent may, in its discretion and as a
condition to the delivery of any consideration with respect thereto, require the
owner of such lost, stolen or destroyed Stock Certificate to provide an
appropriate affidavit and to deliver a bond (in such sum as Parent may
reasonably direct) as indemnity against any claim that may be made against the
Exchange Agent, Parent or the Surviving Corporation with respect to such Stock
Certificate.
(c) No
dividends or other distributions declared or made with respect to Parent Common
Stock with a record date after the Effective Time shall be paid to the holder of
any unsurrendered Stock Certificate with respect to any shares of Parent Common
Stock that such holder has the right to receive in the Merger until such holder
surrenders such Stock Certificate in accordance with this Section 2.6 (at
which time such holder shall be entitled, subject to the effect of applicable
escheat or similar laws, to receive all such dividends and distributions,
without interest).
(d) Any
portion of the Exchange Fund that remains undistributed to holders of Stock
Certificates or Book-Entry Shares as of the date that is nine (9) months
after the date on which the Merger becomes effective shall be delivered to
Parent upon demand, and any holders of Stock Certificates or Book-Entry Shares
who have not theretofore surrendered their Stock Certificates or Book-Entry
Shares in accordance with this Section 2.6
shall thereafter look only to Parent for satisfaction of their claims for
delivery of consideration in connection with the Merger. Neither
Parent nor the Surviving Corporation shall be liable to any holder or former
holder of Company Common Stock or to any other Person with respect to any cash
amounts or shares of Parent Common Stock delivered to any public official
pursuant to any applicable abandoned property law, escheat law or similar Legal
Requirement.
(e) At
the Effective Time, holders of Stock Certificates and Book-Entry Shares that
were outstanding immediately prior to the Effective Time shall cease to have any
rights as stockholders of the Company, and the stock transfer books of the
Company shall be closed with respect to all shares of Company Common Stock
outstanding immediately prior to the
Effective Time. No further transfer of any such shares of Company
Common Stock shall be made on such stock transfer books after the Effective
Time. If, after the Effective Time, a valid Stock Certificate is
presented to the Surviving Corporation or Parent, such Company Stock Certificate
shall be canceled and shall be exchanged as provided in this Section 2.6.
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(f) Parent
and the Surviving Corporation shall be entitled to deduct and withhold from any
consideration payable or otherwise deliverable to any holder or former holder of
Company Common Stock pursuant to this Agreement such amounts as Parent or the
Surviving Corporation determines in good faith may be required to be deducted or
withheld therefrom under the Code or any provision of state, local or foreign
Tax law or under any other Legal Requirement. To the extent any 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.
(g) If
any Stock Certificate has not been surrendered by the earlier of (i) the
fifth anniversary of the date on which the Merger becomes effective or
(ii) the date immediately prior to the date on which the consideration that
such Stock Certificate represents the right to receive would otherwise escheat
to or become the property of any Governmental Body, then such consideration
shall, to the extent permitted by applicable Legal Requirements, become the
property of the Surviving Corporation, free and clear of any claim or interest
of any Person previously entitled thereto.
2.7 Appraisal
Rights.
(a) Notwithstanding
anything to the contrary contained in this Agreement, any share of Company
Common Stock that, as of the Effective Time, is held by a holder who is entitled
to, and who has properly preserved, appraisal rights under Section 262 of
the DGCL with respect to such share shall not be converted into or represent the
right to receive the Per Share Consideration in accordance with Section 2.5(a)(iii),
and the holder of such share shall be entitled only to such rights as may be
granted to such holder pursuant to Section 262 of the DGCL with respect to
such share; provided,
however, that if such appraisal rights shall not be perfected or the
holder of such share shall otherwise lose such holder’s appraisal rights with
respect to such share, then, as of the later of the Effective Time or the time
of the failure to perfect such rights or the loss of such rights, such share
shall automatically be converted into and shall represent only the right to
receive (upon the surrender of the Stock Certificate representing such share)
the Per Share Consideration in accordance with Section 2.5(a)(iii).
(b) The
Company shall give Parent (i) prompt notice of (A) any written demand
received by the Company prior to the Effective Time to require the Company to
purchase shares of Company Common Stock pursuant to Section 262 of the DGCL
and (B) any other demand, notice or instrument delivered to the Company
prior to the Effective Time pursuant to the DGCL, and (ii) the opportunity
to direct all negotiations and proceedings with respect to any such demand,
notice or instrument. Without limiting the generality of the
foregoing, the Company shall not make any payment or settlement offer prior to
the Effective Time with respect to any such demand unless Parent shall have
consented in writing to such payment or settlement offer.
2.8 Further Action. If,
at any time after the Effective Time, any further action is determined by Parent
to be necessary or desirable to carry out the purposes of this Agreement or to
vest the Surviving Corporation with full right, title and possession of and to
all rights and property of Acquisition Sub and the Company, the officers and
directors of the Surviving Corporation and Parent shall be fully authorized (in
the name of Acquisition Sub, in the name of the Company and otherwise) to take
such action.
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Section 3.
Representations and Warranties of the Company
Except as
explicitly set forth in (i) the Annual Report on Form 10-K filed by
the Company with the SEC with respect to the fiscal year ended June 24, 2009,
(ii) any Current Reports on Form 8-K filed by the Company with the SEC
since the filing date of the Form 10-K referred to above, and
(iii) the most recent draft of the Quarterly Report on Form 10-Q to be
filed by the Company with the SEC with respect to the quarter ended September
16, 2009, a copy of which draft has been furnished to Parent, excluding any
“risk factors” or similar statements that are cautionary, predictive or
forward-looking in nature (but, for the purpose of clarification, including and
giving effect to any factual or historical statements included in any such
statements) in a manner where the relevance of such information to a particular
representation and warranty below is readily apparent, and except as set forth
in the Disclosure Schedule (it being understood that any exception or disclosure
set forth in any part or subpart of the Disclosure Schedule shall be deemed an
exception or disclosure, as applicable, only with respect
to: (a) the corresponding Section or subsection of this Section 3;
(b) the Section or subsection of this Section 3
corresponding to any other part or subpart of the Disclosure Schedule that is
explicitly cross-referenced therein; and (c) any other Section or
subsection of this Section 3 with
respect to which the relevance of such exception or disclosure is readily
apparent), the Company represents and warrants to Parent and Acquisition Sub as
follows:
3.1 Due
Organization; Former Subsidiary; Etc.
(a) The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has all necessary corporate power
and authority: (i) to conduct its business in the manner in
which its business is currently being conducted; (ii) to own and use its
assets in the manner in which its assets are currently owned and used; and
(iii) to perform its obligations under all Company Contracts.
(b) The
Company is qualified to do business as a foreign corporation, and is in good
standing (except for any jurisdiction that does not recognize such concept)
under the laws of all jurisdictions where the nature of its business requires
such qualification, except where the failure to be so qualified or in good
standing, individually or in the aggregate, do not constitute a Company Material
Adverse Effect.
(c) The
Company has no Subsidiaries, and does not own any capital stock of, or any
equity interest of any nature in, any other Entity, other than the Entities
identified in Part 3.1(c) of the Disclosure Schedule. The
Company has not agreed and is not obligated to make, and is not bound by any
Contract under which it may become obligated to make, any future investment in
or capital contribution to any other Entity. Except as set forth on
Part 3.1(c) of the Disclosure Schedule, the Company has not, at any time, been a
general partner of, or has otherwise
been liable for any of the debts or other obligations of, any general
partnership, limited partnership or other Entity.
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3.2 Certificate of Incorporation and
Bylaws. The Company has Made Available to Parent accurate and
complete copies of its certificate of incorporation, bylaws and other charter
and organizational documents (collectively the “Charter Documents”),
each as currently in effect. The Company has Made Available to Parent
accurate and complete copies of: (a) the charters of all
committees of the Company’s board of directors; and (b) any code of conduct
or similar policy adopted by the Company or by the board of directors, or any
committee of the board of directors, of the Company. The Company has
not violated any of its Charter Documents.
3.3 Capitalization,
Etc.
(a) The
authorized capital stock of the Company consists
of: (i) 17,500,000 shares of Company Common Stock, of which
5,726,813 shares have been issued and are outstanding as of the date of this
Agreement; and (ii) 3,000,000 shares of Company Preferred Stock, of which
no shares have been issued or are outstanding. The Company does not
hold any shares of its capital stock in its treasury. All of the
outstanding shares of Company Common Stock have been duly authorized and validly
issued, and are fully paid and nonassessable. Except as set forth in
Part 3.3(a) of the Disclosure Schedule: (A) none of the
outstanding shares of Company Common Stock is entitled or subject to any
preemptive right, right of participation, right of maintenance or any similar
right; (B) none of the outstanding shares of Company Common Stock is
subject to any right of first refusal in favor of the Company; and
(C) there is no Company Contract relating to the voting or registration of,
or restricting any Person from purchasing, selling, pledging or otherwise
disposing of (or from granting any option or similar right with respect to), any
shares of Company Common Stock. The Company is not under any
obligation, nor is the Company bound by any Company Contract pursuant to which
it may become obligated, to repurchase, redeem or otherwise acquire any
outstanding shares of Company Common Stock or other securities. The
Company holds no repurchase right with respect to shares of Company Common Stock
(including shares issued pursuant to the exercise of stock
options).
(b) As
of the date of this Agreement: (i) 791,500 shares of Company
Common Stock are subject to issuance pursuant to Company Options; and
(ii) 261,417 shares of Company Common Stock are reserved for future
issuance pursuant to equity awards not yet granted under the Company Equity
Plans. Part 3.3(b) of the Disclosure Schedule sets forth with
respect to each Company Option outstanding as of the date of this Agreement the
following information: (A) the particular plan (if any) pursuant
to which such Company Option was granted; (B) the name of the holder of
such Company Option; (C) the number of shares of Company Common Stock
subject to such Company Option; (D) the per-share exercise price (if any)
of such Company Option; (E) the date on which such Company Option was
granted; (F) the applicable vesting schedule, and the extent to which such
Company Option is vested and exercisable; (G) the date on which such
Company Option expires; and (H) whether such Company Option is an
“incentive stock option” (as defined in the Code) or a non-qualified stock
option. The Company has Made Available to Parent accurate and
complete copies of all equity plans pursuant to which any outstanding Company
Options were granted by the Company, and the forms
of all stock option agreements evidencing such Company Options. The
exercise price of each Company Option is no less than the fair market value of a
share of Company Common Stock as determined on the date of grant of such Company
Option. All grants of Company Options were recorded on the Company’s
financial statements (including, any related notes thereto) contained in the
Company SEC Documents (as defined in Section 3.4(a))
in accordance with GAAP, and no such grants involved any “back dating,” “forward
dating” or similar practices with respect to the effective date of grant
(whether intentionally or otherwise). There are no outstanding or
authorized stock appreciation, phantom stock, profit participation or similar
rights or equity-based awards with respect to the Company other than as set
forth in Part 3.3(b) of the Disclosure Schedule.
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(c) As
of the date of this Agreement, 1,987,000 shares of Company Common Stock are
subject to issuance pursuant to Company Warrants. Part 3.3(c) of
the Disclosure Schedule sets forth with respect to each Company Warrant
outstanding as of the date of this Agreement the following
information: (A) the name of the holder of such Company Warrant;
(B) the number of shares of Company Common Stock subject to such Company
Warrant; (C) the per-share exercise price (if any) of such Company Warrant;
(D) the date on which such Company Warrant was granted; (E) the
applicable vesting schedule, if any, and the extent to which such Company
Warrant is vested and exercisable; and (F) the date on which such Company
Warrant expires. The Company has Made Available to Parent accurate
and complete copies of all Company Warrants and all related
agreements.
(d) Except
as set forth in Parts 3.3(b) and 3.3(c) of the Disclosure Schedule, there
is: (i) as of the date of this Agreement, no outstanding
subscription, option, call, warrant or right (whether or not currently
exercisable) to acquire any shares of the capital stock or other securities of
the Company; (ii) as of the date of this Agreement, no outstanding
security, instrument or obligation that is or may become convertible into or
exchangeable for any shares of the capital stock or other securities of the
Company; or (iii) no stockholder rights plan (or similar plan commonly
referred to as a “poison pill”) or Company Contract under which the Company is
or may become obligated to sell or otherwise issue any shares of its capital
stock or any other securities.
(e) All
outstanding shares of Company Common Stock, Company Options, Company Warrants
and other securities of the Company have been issued and granted in compliance
with: (i) all applicable securities laws and other applicable
Legal Requirements; and (ii) all requirements set forth in applicable
Contracts.
3.4 SEC
Filings; Internal Controls and Procedures; Financial Statements.
(a) Except
as set forth on Part 3.4(a) of the Disclosure Schedule, the Company has
filed with the SEC all registration statements, proxy statements, Certifications
(as defined below) and other statements, reports, schedules, forms and other
documents required to be filed by the Company with the SEC since January 1,
2005, and all amendments thereto (the “Company SEC
Documents”). All statements, reports, schedules, forms and
other documents required to have been filed by the Company or its officers with
the SEC have been so filed on a timely basis. The Company has Made
Available to Parent accurate and complete copies of each Company SEC Document
(including each exhibit thereto) that is not publicly available through
the SEC’s
XXXXX database. As of the time it was filed with the SEC (or, if
amended or superseded by a filing prior to the date of this Agreement, then on
the date of such filing): (i) each of the Company SEC Documents
complied as to form with the applicable requirements of the Securities Act or
the Exchange Act (as the case may be) and the applicable rules and regulations
of the SEC thereunder; and (ii) none of the Company SEC Documents contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. Each of the certifications and statements required
by: (A) Rule 13a-14 or Rule 15d-14 under the Exchange
Act; (B) 18 U.S.C. §1350 (Section 906 of the Xxxxxxxx-Xxxxx Act); or
(C) any other rule or regulation promulgated by the SEC or applicable to
the Company SEC Documents (collectively, the “Certifications”) are
accurate and complete, and comply as to form and content with all applicable
Legal Requirements. As used in this Agreement, the term “file” and variations
thereof, when used in reference to the SEC, shall be broadly construed to
include any manner in which a document or information is furnished, supplied or
otherwise made available to the SEC.
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(b) The
Company’s “disclosure controls and procedures” (as defined in
Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are reasonably
designed to ensure that: (i) all material information required
to be disclosed by the Company in the reports that it files or furnishes under
the Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the rules and forms of the SEC; and (ii) all material
information concerning the Company is made known on a timely basis to the
individuals responsible for the preparation of the Company’s filings with the
SEC and other public disclosure documents.
(c) The
Company maintains a system of “internal controls over financial reporting” (as
defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) sufficient
to provide reasonable assurance that: (i) transactions are
executed in accordance with management’s general or specific authorizations;
(ii) transactions are recorded as necessary to permit preparation of
financial statements in conformity with GAAP; (iii) access to assets is
permitted only in accordance with management’s general or specific
authorization; and (iv) the recorded accountability for assets is compared
with the existing assets at reasonable intervals and appropriate action is taken
with respect to any differences. The Company’s management has
completed an assessment of the effectiveness of the Company’s system of internal
controls over financial reporting in compliance with the requirements of
Section 404 of the Xxxxxxxx-Xxxxx Act for the fiscal year ended June 24,
2009, and such assessment concluded that such controls were
effective. Since June 24, 2009, neither the Company nor the Company’s
independent registered accountant has identified or been made aware
of: (A) any significant deficiency or material weakness in the
design or operation of internal control over financial reporting utilized by the
Company; (B) any illegal act or fraud, whether or not material, that
involves the Company’s management or other employees; or (C) any claim or
allegation regarding any of the foregoing.
(d) The
consolidated financial statements (including any related notes) contained or
incorporated by reference in the Company SEC Documents (as amended prior to the
date of this Agreement): (i) complied as to form in all material
respects with the published rules and regulations of the SEC applicable thereto;
(ii) were prepared in accordance with GAAP applied
on a consistent basis throughout the periods covered (except as may be indicated
in the notes to such financial statements or, in the case of unaudited financial
statements, as permitted by Form 10-Q, Form 8-K or any successor form
under the Exchange Act, and except that the unaudited financial statements may
not contain footnotes and are subject to normal and recurring year-end
adjustments that will not, individually or in the aggregate, be material in
amount), and (iii) fairly presented, in all material respects, the
consolidated financial position of the Company and its consolidated Subsidiaries
as of the respective dates thereof and the consolidated results of operations
and cash flows of the Company and its consolidated Subsidiaries for the periods
covered thereby. No financial statements of any Person other than the
Company are required by GAAP to be included in the consolidated financial
statements of the Company. With respect to the financial statements
(including any related notes) contained or incorporated by reference in the
Company SEC Documents, there have been no deficiencies or weaknesses identified
in writing by the Company or the Company’s independent auditors (whether current
or former) in the design or operation of internal controls of financial
reporting utilized by the Company and its consolidated
Subsidiaries.
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(e) The
Company’s auditor has at all times since the date of enactment of the
Xxxxxxxx-Xxxxx Act been: (i) a registered public accounting firm
(as defined in Section 2(a)(12) of the Xxxxxxxx-Xxxxx Act);
(ii) “independent” with respect to the Company within the meaning of
Regulation S-X under the Exchange Act; and (iii) to the Knowledge of
the Company, in compliance with subsections (g) through (l) of
Section 10A of the Exchange Act and the rules and regulations promulgated
by the SEC and the Public Company Accounting Oversight Board thereunder. All
non-audit services performed by the Company’s auditors for the Company that were
required to be approved in accordance with Section 202 of the
Xxxxxxxx-Xxxxx Act were so approved.
(f) Part 3.4(f)
of the Disclosure Schedule lists all securitization transactions, special
purpose entities, unconsolidated Subsidiaries, joint ventures, material minority
interest investments and all other “off-balance sheet arrangements” (as defined
in Item 303(c) of Regulation S-K under the Exchange Act) effected by the
Company or the Former Subsidiary since January 1, 2005. The Company
does not have any obligation or other commitment to become a party to any such
“off-balance sheet arrangements” in the future.
(g) As
of the date of this Agreement, there are no unresolved comments issued by the
staff of the SEC with respect to any of the Company SEC Documents.
(h) Except
as set forth on Part 3.4(h) of the Disclosure Schedule, the Company is, in
all material respects, in compliance with (i) the applicable rules and
regulations of the NASDAQ Stock Market LLC, (ii) the applicable listing
requirements of the NASDAQ Capital Market, and (iii) the applicable
provisions of the Xxxxxxxx-Xxxxx Act, and has not since January 1, 2005 received
any notice asserting any non-compliance with the rules and regulations of the
NASDAQ Stock Market LLC, the listing requirements of the NASDAQ Capital Market
or the applicable provisions of the Xxxxxxxx-Xxxxx Act.
3.5 Absence of
Changes. Since the date of the Year-End Balance
Sheet:
(a) there
has not been any Company Material Adverse Effect;
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(b) there
has not been any material loss, damage or destruction to, or any material
interruption in the use of, any of the assets of the Company (whether or not
covered by insurance);
(c) the
Company has not: (i) declared, accrued, set aside or paid any
dividend or made any other distribution in respect of any shares of capital
stock; or (ii) repurchased, redeemed or otherwise reacquired any shares of
capital stock or other securities, other than repurchases from employees of the
Company following termination of employment pursuant to the terms of applicable
pre-existing restricted stock purchase agreements;
(d) the
Company has not sold, issued or granted, or authorized the issuance
of: (i) any capital stock or other security (except for Company
Common Stock issued upon the valid exercise of outstanding Company Options);
(ii) any option, warrant or right to acquire any capital stock or any other
security (except for Company Options identified in Part 3.3(b) of the
Disclosure Schedule); or (iii) any instrument convertible into or
exchangeable for any capital stock or other security;
(e) the
Company has not amended or waived any of its rights under, or permitted the
acceleration of vesting under: (i) any provision of any of the
Company Equity Plans; (ii) any provision of any Contract evidencing any
outstanding Company Option; (iii) any restricted stock agreement; or
(iv) any other Contract evidencing or relating to any equity award (whether
payable in cash or stock);
(f) the
Company has not: (i) acquired, leased or licensed any material
right or other material asset from any other Person; (ii) sold or otherwise
disposed of, or leased or licensed, any material right or other material asset
to any other Person; or (iii) waived or relinquished any material right;
except for, in each case, rights or other assets acquired, leased, licensed or
disposed of in the ordinary course of business and consistent with past
practices;
(g) the
Company has not written off as uncollectible, or established any extraordinary
reserve with respect to, any account receivable or other indebtedness in excess
of $20,000 in each case and $100,000 in the aggregate;
(h) the
Company has not: (i) lent money to any Person in excess of
$250,000 in the aggregate; or (ii) incurred or guaranteed any indebtedness
(other than indebtedness for reimbursement of expenses made in the ordinary
course of business) in excess of $250,000 in the aggregate;
(i) the
Company has not: (i) adopted, established or entered into any
Company Employee Plan; (ii) caused or permitted any Company Employee Plan
to be amended in any material respect; or (iii) materially increased the
amount of the wages, salary, commissions, fringe benefits or other compensation
or remuneration payable to any of its directors, officers or other
employees;
(j) to
the Knowledge of the Company, there has been no violation of, and neither the
Company’s board of directors nor any committee of the Company’s board of
directors has granted any waiver with respect to, the Company’s Code of
Ethics;
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(k) the
Company has not changed any of its methods of accounting or accounting practices
in any material respect, except as required by GAAP;
(l) the
Company has not entered into any material transaction or taken any other
material action outside the ordinary course of business or inconsistent with
past practices; and
(m) the
Company has not agreed or committed to take any of the actions referred to in
clauses “(c)” through “(l)”
above.
3.6 Title to
Assets. The Company owns, and has good and valid title to, all
assets reflected on the Year-End Balance Sheet (except for assets sold or
otherwise disposed of in the ordinary course of business since the date of the
Year-End Balance Sheet, free and clear of any Encumbrances, except
for: (i) any Encumbrance for current taxes not yet due and
payable; (ii) Encumbrances that have arisen in the ordinary course of
business and that do not (individually or in the aggregate) materially detract
from the value of the assets subject thereto or materially impair the operations
of the Company; and (iii) Encumbrances described in Part 3.6 of the
Disclosure Schedule (clauses “(i)” through “(iii),” collectively,
“Permitted
Encumbrances”). The Company is the lessee of, and holds valid
leasehold interests in, all leasehold estates reflected in the Year-End Balance
Sheet and has enjoyed undisturbed possession of such leasehold
estates.
3.7 Receivables; Customers; Inventories;
Cash.
(a) All
existing accounts receivable of the Company (including those accounts receivable
reflected on the Year-End Balance Sheet that have not yet been collected and
those accounts receivable that have arisen since the date of the Year-End
Balance Sheet and have not yet been collected): (i) represent,
in all material respects, valid obligations of customers of the Company arising
from bona fide transactions entered into in the ordinary course of business; and
(ii) are current and, to the Knowledge of the Company, will be collected in
full when due, without any counterclaim or set off (net of an allowance for
doubtful accounts not to exceed $250,000 in the aggregate).
(b) Part 3.7(b)
of the Disclosure Schedule accurately identifies, and provides an accurate and
complete breakdown of the revenues received from, each customer or other Person
that accounted for more than 5% of the consolidated gross revenues of the
Company in the fiscal year ended June 24, 2009. The Company has not
received any written notice or, to the Knowledge of the Company, other
communication indicating that any such customer is ceasing, will cease or plans
to cease dealing with the Company.
(c) The
inventory of the Company reflected on the Year-End Balance Sheet was as of June
24, 2009, and the current inventory of the Company (the “Current Inventory”)
is, in all material respects, in usable and saleable condition in the ordinary
course of business. The Current Inventory is not, in any material
respect, excessive and is, in all material respects, adequate in relation to the
requirements of the businesses of the Company, and none of the Current Inventory
is obsolete, slow moving, unmarketable or of limited value in relation to the
businesses of the Company, in any material respect. The finished
goods, work in progress, raw
materials and other materials and supplies included in the Current Inventory
are, in all material respects, of a standard that is at least as high as the
generally accepted standard prevailing in the industries in which the Company
operate.
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(d) The
cash equivalents and short-term investments of the Company are liquid and
unimpaired. The Year-End Balance Sheet accurately reflects the fair
market value of the cash equivalents and short-term investments of the Company
as of June 24, 2009. Except as set forth in Part 3.7(d) of the
Disclosure Schedule, none of the cash, cash equivalents or short-term
investments of the Company is subject to any restriction or other
Encumbrance.
3.8 Real
Property; Equipment.
(a) The
Company does not own a fee interest in any real property. Part 3.8(a) of
the Disclosure Schedule sets forth an accurate and complete description of each
real property lease pursuant to which the Company leases real property from any
other Person. (All real property leased to the Company, including all
buildings, structures, fixtures and other improvements leased to the Company,
are referred to as the “Leased Real
Property.”) The present use and operation of the Leased Real
Property is, in all material respects, in compliance with all applicable zoning,
land use, building, fire, health, labor, safety and environmental laws and other
Legal Requirements. To the Knowledge of the Company, no Legal
Proceeding is pending or has been threatened that challenges or adversely
affects the continuation of the present leasehold ownership, use or operation of
any Leased Real Property by the Company. To the Knowledge of the
Company, there is no existing plan or study by any Governmental Body or by any
other Person that challenges or otherwise adversely affects the continuation of
the present ownership, use or operation of any Leased Real Property by the
Company. Except as set forth on Part 3.8(a) of the Disclosure
Schedule, there are no subleases, licenses, occupancy agreements or other
contractual obligations to which the Company is party that grant the right of
use or occupancy of any of the Leased Real Property to any Person other than the
Company, and there is no Person in possession of or with a right to occupy, any
of the Leased Real Property other than the Company.
(b) All
items of equipment and other tangible assets owned by or leased to the Company
are, in all material respects, adequate for the uses to which they are being
put, in good condition and repair (ordinary wear and tear excepted) and adequate
for the conduct of the business of the Company in the manner in which such
business is currently being conducted.
3.9 Intellectual
Property.
(a) Part 3.9(a)
of the Disclosure Schedule accurately identifies:
(i) in
Part 3.9(a)(i) of the Disclosure Schedule: (A) each item of
Registered IP that is part of the Company IP; (B) the jurisdiction in which
such item of Registered IP has been registered or filed and the applicable
registration or serial number; and (C) any other Person that has an
ownership interest in such item of Registered IP and the nature of such
ownership interest; provided,
however, that nothing in this Agreement shall
constitute any representation or warranty by Company that any Registered IP, if
an application for registration, shall proceed to grant or
registration.
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(ii) in
Part 3.9(a)(ii) of the Disclosure Schedule: (A) each
Contract (including any Contract entered into in settlement or avoidance of
litigation) pursuant to which any material Intellectual Property or Intellectual
Property Right is licensed or otherwise provided (but not assigned) to the
Company (other than implied licenses to Intellectual Property Rights where the
Company receives a license to the Intellectual Property which embodies the
Intellectual Property Rights, or software license agreements for any third-party
software that is generally available on standard terms or is licensed under an
Open Source License); and (B) whether these licenses are exclusive or
nonexclusive (for purposes of this Agreement, a covenant not to xxx or not to
assert infringement claims shall be deemed to be equivalent to a license);
and
(iii) in
Part 3.9(a)(iii) of the Disclosure Schedule: (A) each
patent license or cross-license (other than implied licenses to Intellectual
Property Rights where the Company receives a license to the Intellectual
Property which embodies the Intellectual Property Rights) to which the Company
is a party pursuant to which any Person has been granted any license under, or
otherwise has received or acquired any right (whether or not currently
exercisable) or interest in, any Company IP; and (B) whether these
licenses, rights and interests are exclusive or nonexclusive.
(b) The
Company has sufficient rights to all of the material Intellectual Property and
Intellectual Property Rights in or relating to the Company Products and
necessary to conduct its business in the manner that such business is, as of the
date of this Agreement, being conducted by the Company and planned by the
Company to be conducted.
(c) All
Company IP is valid, subsisting and enforceable. The Company is not
bound by, and no Company IP is subject to, any settlement, Legal Proceeding,
Order or stipulation that limits or restricts, or would limit or restrict, in
any material respect the ability of the Company to use, transfer, license,
exploit, assert or enforce any Company IP or that may adversely affect the
validity of any Company IP differently from the manner in which such Company IP
is, as of the date of this Agreement, being used by the Company and planned by
the Company to be used. The Company has taken sufficient reasonable
steps to maintain the confidentiality of, and otherwise protect and enforce its
rights in, all material proprietary information held by the Company, or
purported to be held by the Company, as a trade secret.
(d) Neither
the execution, delivery or performance of this Agreement or the Stockholder
Agreements, nor the consummation of the Offer or the Merger or any of the other
Contemplated Transactions will, with or without notice or the lapse of time,
result in or give any other Person the right or option to cause, impose or
declare: (i) a loss of, or Encumbrance on, any Company IP;
(ii) an obligation to make any payment or royalties or the loss or
acceleration of any payment or royalties; (iii) a breach, modification,
cancellation, termination or suspension of any Contract listed or required to be
listed in Part 3.9(a) of the Disclosure Schedule or any Material Contract
relating to any Company IP; (iv) the release, disclosure or delivery of any
Company IP by or to any escrow agent or other Person; (v) the grant,
assignment or transfer to any other Person of any license or other right or
interest under, to or in any
of the Company IP; or (vi) any restriction on pursuing any claim or
enforcing any material Intellectual Property Right or any other material
restriction, including any noncompetition restriction, on the operation or scope
of the business of the Company.
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(e) To
the Knowledge of the Company, since January 1, 2007, no Person has infringed,
misappropriated or otherwise violated, and no Person is currently infringing,
misappropriating or otherwise violating, any Company IP.
(f) Except
as set forth in Part 3.9(f) of the Disclosure Schedule, neither the Company
nor any of the Company Products, since January 1, 2007, has infringed (directly,
contributorily, by inducement or otherwise), misappropriated or otherwise
violated (where such infringement, misappropriation, or violation has not been
settled, dismissed or otherwise concluded) or currently infringes (directly,
contributorily, by inducement or otherwise), misappropriates or otherwise
violates any Intellectual Property Right of any other Person.
(g) (i) No
infringement, misappropriation or similar claim or Legal Proceeding is pending
(other than office actions in connection with applications for Registered IP)
or, to the Knowledge of the Company, threatened against the Company, and
(ii) since January 1, 2007, the Company has not received any requests for
indemnification or received written notice of any claims from any Person that
is, or has asserted or could reasonably be expected to assert that it is,
entitled to be indemnified, defended, held harmless or reimbursed by the Company
with respect to such claim or Legal Proceeding (excluding any claim or Legal
Proceeding that has been settled, dismissed or otherwise
concluded).
(h) Except
for the Company’s obligations to indemnify customers, distributors, resellers
and sales representatives against third party infringement claims based on
Company Products as part of the ordinary course of business, the Company has not
assumed, or agreed to discharge or otherwise take responsibility for, any
obligation to indemnify, defend, hold harmless or reimburse any other Person
with respect to any infringement, misappropriation or similar claim relating to
Intellectual Property Rights.
(i) Except
as set forth in Part 3.9(i) of the Disclosure Schedule, the Company has
complied at all applicable times and in all material respects with all Company
Privacy Policies and with all applicable Legal Requirements pertaining to
privacy, user data, or Personal Data and none of (i) the execution,
delivery, or performance of this Agreement or the Stockholder Agreement,
(ii) the consummation of the Offer, the Merger or any of the other
Contemplated Transactions, or (iii) Parent’s possession or use of any user
data, will or could reasonably be expected to result in any violation of any
Company Privacy Policy or any Legal Requirement pertaining to privacy or
Personal Data.
3.10 Contracts.
(a) Part 3.10
of the Disclosure Schedule identifies each Company Contract that constitutes a
Material Contract (as defined below). For purposes of this Agreement,
each of the following shall be deemed to constitute a “Material
Contract”:
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(i) any
Contract imposing any material restriction on the right or ability of the
Company: (A) to compete with any other Person; (B) to
acquire any product or other asset or any services from any other Person;
(C) to solicit, hire or retain any Person as an employee, consultant or
independent contractor; (D) to develop, sell, supply, distribute, offer,
support or service any product or any technology or other asset to or for any
other Person; (E) to perform services for any other Person; (F) to
bring any claim or enforce any Intellectual Property right against any Person;
or (G) to transact business or deal in any other manner with any other
Person;
(ii) any
Contract of the type required under Section 3.9 to
be identified on the Disclosure Schedule;
(iii) any
Contract relating to the disposition or acquisition by the Company of a business
unit or material amount of assets outside the ordinary course of
business;
(iv) any
Contract that provides for indemnification of any Indemnified Person (as defined
in Section 6.5(a));
(v) any
Contract that contemplates or involves the payment or delivery of cash or other
consideration in an amount or having a value in excess of $250,000 in the
aggregate, or contemplates or involves the performance of services having a
value in excess of $250,000 in the aggregate;
(vi) any
Contract (other than Contracts evidencing Company
Options): (A) relating to the acquisition, issuance, voting,
registration, sale or transfer of any securities; (B) providing any Person
with any preemptive right, right of participation, right of maintenance or
similar right with respect to any securities; or (C) providing to or
imposing upon the Company any right of first refusal with respect to, or right
or obligation to repurchase or redeem, any securities;
(vii) any
Contract incorporating or relating to any guaranty, any warranty, any sharing of
liabilities or any indemnity or similar obligation, except for
(A) Contracts which do not differ materially from the standard forms Made
Available by the Company to Parent, (B) the Company’s obligations to
indemnify customers, distributors, resellers and sales representatives against
third party infringement claims based solely on Company Products that are
contained in Company Contracts entered into in the ordinary course of business,
and (C) the Company’s obligations to indemnify certain licensors, suppliers
and other vendors that are contained in Company Contracts entered into in the
ordinary course of business;
(viii) any
Contract containing “standstill” or similar provisions;
(ix) any
other Contract, if a breach or termination of such Contract would constitute a
Company Material Adverse Effect; and
(x) any
“material contract” as such term is defined in Item 601(b)(10) of
Regulation S-K of the SEC.
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(b) The
Company has Made Available to Parent an accurate and complete copy of each
Material Contract. To the Company’s Knowledge, there are no
agreements, understandings, arrangements or courses of dealing between the
Company and any third party, written or oral, explicit or implicit, that could
result in any Material Contract, other than any agreement set forth on
Part 3.10(b) of the Disclosure Schedule (any such agreement, a “Specified Contract”),
being interpreted or enforced other than in accordance with the explicit terms
thereof that have been disclosed to Parent prior to the date of this
Agreement. There are no agreements, understandings, arrangements or
courses of dealing between the Company and any third party, written or oral,
explicit or implicit, that could result in any Specified Contract being
interpreted or enforced other than in accordance with the explicit terms thereof
that have been disclosed to Parent prior to the date of this
Agreement.
(c) Each
Material Contract is valid and in full force and effect, and is enforceable
against the Company (and to the Knowledge of the Company is enforceable against
each other party thereto) in accordance with its terms, and subject
to: (i) laws of general application relating to bankruptcy,
insolvency and the relief of debtors; and (ii) rules of law governing
specific performance, injunctive relief and other equitable
remedies.
(d) (i) The
Company is not in material violation or breach of, or in default under, any
Material Contract; (ii) to the Knowledge of the Company, no other Person is
in material violation or breach of, or in default under, any Material Contract;
(iii) to the Knowledge of the Company, no event has occurred, and no
circumstance or condition exists, that (with or without notice or lapse of time)
could reasonably be expected to: (A) result in a material
violation or breach of any of the provisions of any Material Contract; or
(B) give any Person the right to cancel, terminate, modify or declare a
default or exercise any remedy under any Material Contract; and (iv) the
Company has not received any written notice from another party to a Material
Contract asserting that the Company is in breach of or default under any such
Material Contract.
3.11 Company
Products.
(a) Since
January 1, 2009, to the Knowledge of the Company, the Company has not received
any written notice from any material supplier threatening to cease supplying
products to the Company.
(b) Except
as set forth in Part 3.11(b) of the Disclosure Schedule, the Company is not
bound by any Contract that limits or restricts the ability of the Company to
develop, manufacture, market or sell any Company Product for any period of time,
in any territory, to or for any particular customer or group of customers or in
any other material respect.
3.12 No Undisclosed
Liabilities. The Company does not have any accrued, contingent
or other liabilities of any nature, either matured or unmatured, except
for: (a) liabilities identified in the Year-End Balance Sheet of
the Company (or the notes thereto); (b) normal and recurring current
liabilities that have been incurred by the Company since the date of the
Year-End Balance Sheet in the ordinary course of business and consistent with
past practice; and (c) liabilities for performance of obligations of the
Company under Company Contracts,
to the extent such liabilities are readily ascertainable (in nature, scope and
amount) from the copies of such Company Contracts Made Available to Parent prior
to the date of this Agreement.
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3.13 Compliance with Legal
Requirements. Except as set forth on Part 3.13 of the
Disclosure Schedule, the Company is, and the Company and the Former Subsidiary
have at all times since January 1, 2007 been in compliance in all material
respects with all applicable Legal Requirements. Since January 1,
2007, neither the Company nor the Former Subsidiary has received any written
notice or, to the Knowledge of the Company, other communication from any
Governmental Body or other Person, or otherwise obtained Knowledge, regarding
any actual or possible violation of, inquiry or investigation relating to or
failure of the Company or the Former Subsidiary, or any of their respective
Representatives, to comply with any material Legal Requirement, or any actual or
possible violation by any Person of, or failure by any Person to comply with,
any Legal Requirement relating to the Company Common Stock or the purchase or
sale of Company Common Stock, or any inquiry or investigation relating to any of
the foregoing.
3.14 Certain Business
Practices. Neither the Company nor any director, officer,
other employee or agent of the Company has violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended.
3.15 Governmental
Authorizations. Except as set forth on Part 3.15 of the
Disclosure Schedule, (a) The Company holds all Governmental Authorizations
necessary to enable the Company to conduct its businesses in the manner in which
such businesses are currently being conducted, (b) all such Governmental
Authorizations are valid and in full force and effect, and (c) the Company
is, and at all times since January 1, 2007 has been, in compliance with the
terms and requirements of such Governmental Authorizations. Since
January 1, 2007, the Company has not received any written notice or, to the
Knowledge of the Company, other communication from any Governmental Body
regarding: (i) any violation of or failure to comply with any
term or requirement of any such Governmental Authorization; or (ii) any
revocation, withdrawal, suspension, cancellation, termination or modification of
any such Governmental Authorization.
3.16 Tax Matters.
(a) Each
of the Tax Returns required to be filed by or on behalf of the Company with
respect to any taxable period ending on or before the Closing Date (the “Company
Returns”): (i) has been or will be filed on or before the
applicable due date (taking into account any extensions of such due date); and
(ii) has been, or will be when filed, prepared in all material respects in
compliance with all applicable Legal Requirements. All amounts shown
on the Company Returns to be due on or before the Closing Date have been or will
be paid on or before the Closing Date. The Company has timely
withheld and timely paid all Taxes which are required to have been withheld and
paid by it in connection with amounts paid or owing to any employee, independent
contractor, creditor, supplier, stockholder or other Person. There
are no material unsatisfied liabilities of the Company (including liabilities
for interest, additions to Tax and penalties thereon and related expenses) with
respect to any Tax (other than liabilities for Taxes that are being contested in
good faith by the Company and with respect to which adequate reserves for
payment have been established on the Year-End Balance Sheet).
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(b) To
the Knowledge of the Company, except as set forth in Part 3.16(b) of the
Disclosure Schedule, since January 1, 2007, no Company Return has been examined
or audited by any Governmental Body. No extension or waiver of the
limitation period applicable to any of the Company Returns has been granted by
the Company or other Person(s) authorized by the Company, and no such extension
or waiver has been requested in writing from the Company. The Company
has not received any notice or other communication in writing that any Company
Return will be subject to an audit that has not commenced.
(c) No
Legal Proceeding with respect to Tax is pending or, to the Knowledge of the
Company, threatened against or with respect to the Company. There are
no liens for material Taxes upon any of the assets of the Company except liens
for current Taxes not yet due and payable.
(d) The
Company has not been, and the Company will not be, required to include any
adjustment in taxable income for any tax period (or portion thereof) pursuant to
Section 481 or 263A of the Code (or any comparable provision of state or
foreign Tax laws) as a result of transactions or events occurring, or accounting
methods employed, prior to the Closing.
(e) Part 3.16(e)
of the Disclosure Schedule sets forth each country or state in which the Company
files a Tax Return. Since January 1, 2007, no written claim has been
received by the Company from any Governmental Body in a jurisdiction where the
Company does not file a Tax Return that it is or may be subject to taxation by
that jurisdiction which has resulted or would reasonably be expected to result
in a material Tax obligation.
(f) There
are no agreements relating to allocating or sharing of Taxes to which the
Company is a party. The Company is not liable for Taxes of any other
Person, or is currently under any contractual obligation to indemnify any Person
with respect to any amounts of such Person’s Taxes or is a party to any
agreement providing for payments by the Company with respect to any amount of
Taxes of any other Person. For the purposes of this Section 3.16(f), commercially
reasonable agreements providing for the allocation or payment of real property
Taxes attributable to real property leased or occupied by the Company and
commercially reasonable agreements for the allocation of payment of personal
property Taxes, sales or use Taxes or value added Taxes with respect to personal
property leased, used, owned or sold by the Company in the ordinary course of
business shall be disregarded.
(g) The
Company is not, and has not been since January 1, 2007, either a “distributing
corporation” or a “controlled corporation” within the meaning of
Section 355(a)(1)(A) of the Code.
(h) The
Company is not and has never been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the
Code.
(i) The
Company is not and has never been a member of an affiliated group of
corporations within the meaning of Section 1504 of the Code (or any similar
provision of state, local or non-U.S. Tax law).
(j) Except
as set forth on Part 3.16(j) of the Disclosure Schedule, the Company has
Made Available to Parent accurate and complete copies of all federal and state
income
Tax Returns of the Company for all Tax years that remain open or are otherwise
subject to audit, and all other material Tax Returns of the Company filed after
December 31, 2006. The Company has disclosed on its federal
income Tax Returns all positions that could give rise to a material
understatement penalty within the meaning of Section 6662 of the Code or
any similar Legal Requirement.
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(k) The
Company has not participated in, and is not currently participating in, a
“Listed Transaction” or a “Reportable Transaction” within the meaning of
Treasury Regulation Section 1.6011-4(b)(2) or similar transaction under any
corresponding or similar Legal Requirement.
(l) The
Company has never participated in an international boycott as defined in
Section 999 of the Code.
(m) The
Company is not and has never been a passive foreign investment company within
the meaning of Sections 1291 through 1297 of the Code.
(n) The
Company has not incurred (or been allocated) an “overall foreign loss” as
defined in Section 904(f)(2) of the Code which has not been previously
recaptured in full as provided in Sections 904(f)(1) and/or 904(f)(3) of
the Code.
(o) The
Company is not a party to a gain recognition agreement under Section 367 of
the Code.
(p) Since
January 1, 2007, the Company is not and has not been a party to a transaction or
agreement that is in conflict with, in any material respect, the Tax rules on
transfer pricing in any relevant jurisdiction. None of the
transactions by the Company (or other related party) that occurred on or after
January 1, 2007 is subject to any material adjustment, apportionment, allocation
or re-characterization under Section 482 of the Code or any similar
federal, state or local or foreign rule or regulation, and all of such
transactions have been effected on an arm’s length basis. The Company
has made available to Parent copies or descriptions of all intercompany
agreements (whether or not in writing) that were entered into on or after
January 1, 2007 and relate to transfer pricing.
(q) The
Company is, in all material respects, in compliance with all terms and
conditions of any Tax exemptions, Tax holiday or other Tax reduction agreement,
approval or order of any Governmental Body.
3.17 Employee and Labor Matters; Benefit
Plans.
(a) The
Company has Made Available to Parent accurate and complete copies of all
employee manuals and handbooks, disclosure materials, policy statements and
other materials relating to the employment of Company Associates.
(b) To
the Knowledge of the Company, no employee of the Company is a party to or is
bound by any confidentiality agreement, noncompetition agreement or other
Contract (with any Person) that may have a material effect on the business or
operations of the Company or, following the Merger, Parent or any of its
Subsidiaries.
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(c) The
Company is not a party to or bound by any collective bargaining agreement or
union contract, and no collective bargaining agreement is being negotiated by
the Company. To the Knowledge of the Company, there are no activities
or proceedings of any labor union to organize any Company
employees. There is no labor dispute, strike or work stoppage pending
against the Company or, to the Knowledge of the Company, threatened against the
Company. The Company has not committed and, to the Knowledge of the
Company, the Company has not been accused of committing any unfair labor
practice in connection with the operation of its business that could reasonably
be expected to result in a material liability to the Company. There
are no material actions, suits, claims, labor disputes or grievances pending or,
to the Knowledge of the Company, threatened relating to any labor, safety or
discrimination matters involving any Company Associate, including charges of
unfair labor practices or discrimination complaints, which, if adversely
determined, could reasonably be expected to result in a material liability to
the Company.
(d) None
of the current or former independent contractors of the Company is required to
be reclassified as an employee.
(e) Part 3.17(e)(i)
of the Disclosure Schedule contains an accurate and complete list, as of the
date of this Agreement, of each material Company Employee Plan and each Company
Employee Agreement. Except as set forth in Part 3.17(e)(ii) of
the Disclosure Schedule, the Company does not intend, and the Company has not
committed, to establish or enter into any new Company Employee Plan, Foreign
Plan or Company Employee Agreement, or to modify any Company Employee Plan,
Foreign Plan or Company Employee Agreement (except to conform any such Company
Employee Plan, Foreign Plan or Company Employee Agreement to the requirements of
Section 409A of the Code or any other applicable Legal
Requirements).
(f) Except
as set forth on Part 3.17(f) of the Disclosure Schedule, the Company has
Made Available to Parent accurate and complete copies
of: (i) each material Company Employee Plan and each Company
Employee Agreement, including all amendments thereto and all related trust
documents; (ii) the most recent annual reports/filings, if any, required
under applicable Legal Requirements in connection with each Company Employee
Plan; (iii) the most recent annual and periodic accounting of Company
Employee Plan assets, if any, for each Company Employee Plan; (iv) the most
recent summary plan description together with the summaries of material
modifications thereto, if any, required under ERISA or any similar Legal
Requirement with respect to each Company Employee Plan; (v) all material
written Contracts relating to each Company Employee Plan, including
administrative service agreements and group insurance contracts; (vi) all
material correspondence to or from any Governmental Body relating to any Company
Employee Plan since January 1, 2007; and (vii) the most recent IRS
determination or opinion letter issued with respect to each Company Employee
Plan intended to be qualified under Section 401(a) of the
Code.
(g)
(i) The
Company and each of the Company Affiliates has performed in all material
respects all obligations required to be performed by it under each Company
Employee Plan, each Foreign Plan and each Company Employee Plan has been
established
and maintained in all material respects in accordance with its terms and in
compliance in all material respects with all applicable Legal
Requirements.
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(ii) Each
Company Employee Plan intended to be qualified under Section 401(a) of the
Code has obtained a favorable determination letter (or opinion letter, if
applicable, on which the adopting employer is entitled to rely) as to its
qualified status under the Code, and no event has occurred and no circumstance
or condition exists that would reasonably be expected to result in the
disqualification of any such Company Employee Plan.
(iii) No
non-exempt “prohibited transaction,” within the meaning of Section 4975 of
the Code or Sections 406 and 407 of ERISA has occurred with respect to any
Company Employee Plan.
(iv) There
are no claims or Legal Proceedings pending, or, to the Knowledge of the Company,
threatened or reasonably anticipated (other than routine claims for benefits),
against any Company Employee Plan or against the assets of any Company Employee
Plan.
(v) There
are no audits, inquiries or Legal Proceedings pending or, to the Knowledge of
the Company, threatened by the IRS, DOL, or any other Governmental Body with
respect to any Company Employee Plan.
(vi) The
Company and each of the Company Affiliates has made all contributions and other
payments required by and due under the terms of each Company Employee
Plan.
(h) Neither
the Company nor any Company Affiliate has at any time in the past six (6)
years maintained, established, sponsored, participated in or contributed to
any: (i) Company Pension Plan subject to Title IV of ERISA;
(ii) “multiemployer plan” within the meaning of Section (3)(37) of
ERISA; or (iii) plan described in Section 413 of the
Code.
(i) Except
as set forth in Part 3.17(i) of the Disclosure Schedule, no Company
Employee Plan or Company Employee Agreement provides (except at no cost to the
Company or any Company Affiliate) post-termination or retiree life insurance,
post-termination or retiree health benefits or other post-termination or retiree
employee welfare benefits to any Person for any reason, except as may be
required by COBRA or other applicable Legal Requirements.
(j) Except
as set forth in Part 3.17(j) of the Disclosure Schedule, and except as
expressly required or provided by this Agreement, neither the execution and
delivery of this Agreement, nor the consummation of the Offer or the Merger or
any of the other Contemplated Transactions will (either alone or upon the
occurrence of termination of employment) constitute an event under any Company
Employee Plan or Company Employee Agreement that will result (either alone or in
connection with any other circumstance or event) in or give rise
to: (i) any payment (whether of severance pay or otherwise),
acceleration, forgiveness of indebtedness, vesting, distribution, increase in
benefits or obligation to fund benefits with respect to any Company Associate;
or (ii) any “parachute payment” within the meaning
of Section 280G(b)(2) of the Code. The Company is not a party to
any agreement to compensate any Person for excise taxes payable pursuant to
Section 4999 of the Code.
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(k) Except
as set forth in Part 3.17(k) of the Disclosure Schedule, each of the
Company and Company Affiliates: (i) is, and at all times has
been, in compliance in all material respects with all applicable Legal
Requirements respecting employment, employment practices, terms and conditions
of employment and wages and hours, in each case, with respect to Company
Associates; (ii) has withheld and reported all amounts required by
applicable Legal Requirements or by applicable Contracts to be withheld and
reported with respect to wages, salaries and other payments to Company
Associates; (iii) is not liable for any arrears of wages or any Taxes or
any penalty for failure to comply with the Legal Requirements applicable of the
foregoing; and (iv) is not liable for any payment to any trust or other
fund governed by or maintained by or on behalf of any Governmental Body with
respect to unemployment compensation benefits, social security or other benefits
or obligations for Company Associates (other than routine payments to be made in
the ordinary course of business and consistent with past practice).
(l) There
is no agreement, plan, arrangement or other Contract covering any Company
Associate, and no payments have been made or will be made to any Company
Associate, that, considered individually or considered collectively with any
other such Contracts or payments, will, or could reasonably be expected to, be
characterized as a “parachute payment” within the meaning of
Section 280G(b)(2) of the Code or give rise directly or indirectly to the
payment of any amount that would not be deductible pursuant to
Section 162(m) of the Code (or any comparable provision under state or
foreign Tax laws). The Company is not a party to any agreement to compensate any
Person for excise taxes payable pursuant to Section 4999 of the
Code.
(m) There
are no loans or other advances that have been made by the Company to any Company
Associate that are currently outstanding, other than expense advances made to
employees in the ordinary course of business.
(n) To
the Knowledge of the Company, except as set forth in Part 3.17(n) of the
Disclosure Schedule, no executive officer of the Company or other employee of
the Company at the level of Vice President or above: (i) has
indicated his or her intent to terminate his or her employment with the Company;
or (ii) has received an offer to join a business that could reasonably be
expected to be competitive with the Company’s business.
3.18 Environmental
Matters.
(a) The
Company: (i) is and has since January 1, 2007 been in compliance
in all material respects with, and has not been and is not in material violation
of or subject to any material liability under, any applicable Environmental Laws
(as defined below); and (ii) possesses all permits and other Governmental
Authorizations required under applicable Environmental Laws, and is in
compliance with the terms and conditions thereof.
(b) The
Company has not received any written notice or, to the Knowledge of the Company,
other communication, whether from a Governmental Body that alleges that the
Company is not or might not be in compliance in any material respect with any
Environmental Law.
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(c) To
the Knowledge of the Company: (i) all Leased Real Property and
any other property that is or was controlled or used by the Company, and all
surface water, groundwater and soil associated with or adjacent to such
property, is free of any Materials of Environmental Concern (as defined below)
or material environmental contamination of any nature caused by the Company;
(ii) none of the Leased Real Property or any other property that is or was
controlled or used by the Company contains any underground storage tanks,
asbestos, equipment using PCBs or underground injection xxxxx; and
(iii) none of the Leased Real Property or any other property that is or was
controlled or used by the Company contains any septic or other tanks or xxxxx
field or other area into which process wastewater or any Materials of
Environmental Concern have been Released (as defined below) by the
Company.
(d) The
Company has never Released any Materials of Environmental Concern except in
compliance in all material respects with all applicable Environmental
Laws.
(e) To
the Knowledge of the Company, the Company has never sent or transported, or
arranged to send or transport, any Materials of Environmental Concern to a site
that, pursuant to any applicable Environmental Law: (i) has been
placed on the “National Priorities List” of hazardous waste sites or any similar
state list; (ii) is otherwise designated or identified as a potential site
for remediation, cleanup, closure or other environmental remedial activity; or
(iii) is subject to a Legal Requirement to take “removal” or “remedial”
action as detailed in any applicable Environmental Law or to make payment for
the cost of cleaning up any site.
(f) For
purposes of this Section 3.18: (i) “Environmental Law”
shall mean any federal, state, local or foreign Legal Requirement relating to
pollution or protection of human health or the environment (including ambient
air, surface water, ground water, land surface or subsurface strata), including
any Legal Requirement relating to emissions, discharges, releases or threatened
releases of Materials of Environmental Concern, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Materials of Environmental Concern; (ii) “Materials of Environmental
Concern” include chemicals, pollutants, contaminants, wastes, toxic
substances, petroleum and petroleum products and any other substance that is
regulated by any Environmental Law; and (iii) “Release” shall mean
any spilling, leaking, emitting, discharging, depositing, escaping, leaching,
dumping or other releasing into the environment, whether intentional or
unintentional.
3.19 Insurance. Except
as set forth on Part 3.19 of the Disclosure Schedule, the Company has Made
Available to Parent a copy of all material insurance policies and all material
self insurance programs and arrangements relating to the business, assets and
operations of the Company. Each of such insurance policies is in full
force and effect. Since January 1, 2007, the Company has not received
any (a) written notice or, to the Knowledge of the Company, other
communication regarding any cancellation or invalidation of any such insurance
policy; or (b) written notice of refusal of any coverage or rejection of
any material claim under any such
insurance policy. Except as set forth in Part 3.19 of the
Disclosure Schedule, there is no pending workers’ compensation claim under any
insurance policy of the Company. With respect to each Legal
Proceeding that has been filed against the Company, the Company has provided
written notice of such Legal Proceeding to the appropriate insurance carrier(s),
if any, and no such carrier has issued a denial of coverage or a reservation of
rights with respect to any such Legal Proceeding, or, to the Knowledge of the
Company, informed the Company of its intent to do so.
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3.20 Transactions with
Affiliates. Except as set forth in the Company SEC Documents
filed prior to the date of this Agreement, between June 24, 2009 and the date of
this Agreement, no event has occurred that would be required to be reported by
the Company pursuant to Item 404 of Regulation S-K promulgated by the
SEC.
3.21 Legal Proceedings;
Orders.
(a) Except
as set forth in Part 3.21(a) of the Disclosure Schedule, there is not
pending any Legal Proceeding, and, to the Knowledge of the Company, no Person
has threatened to commence any Legal Proceeding that involves the Company or any
of the assets owned or used by the Company.
(b) There
is no Order to which the Company, or any of the assets owned or used by the
Company, is subject. To the Knowledge of the Company, no named
executive officer of the Company is subject to any Order that prohibits such
officer from engaging in or continuing any conduct, activity or practice
relating to the business of the Company.
3.22 Authority; Inapplicability of
Anti-takeover Statutes; Binding Nature of Agreement. The board
of directors of the Company (at a meeting duly called and held)
has: (a) unanimously determined that the Offer, the Merger and
this Agreement are advisable and fair to and in the best interests of the
Company and its stockholders; (b) unanimously authorized and approved the
execution, delivery and performance of this Agreement by the Company and
unanimously approved the Offer and the Merger; (c) unanimously resolved to
recommend that stockholders of the Company accept the Offer and tender their
shares of Company Common Stock pursuant to the Offer and adopt this Agreement;
and (d) to the extent necessary, adopted a resolution having the effect of
causing the Contemplated Transactions not to be subject to Section 203 of
the DGCL. This Agreement constitutes the legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, subject to: (i) laws of general application relating
to bankruptcy, insolvency and the relief of debtors; and (ii) rules of law
governing specific performance, injunctive relief and other equitable
remedies.
3.23 Vote Required. If
required under applicable Legal Requirements in order to permit the consummation
of the Merger, the affirmative vote of the holders of a majority of the shares
of Company Common Stock outstanding on the record date for the Company
Stockholders’ Meeting (the “Required Company Stockholder
Vote”) is the only vote of the holders of any class or series of the
Company’s capital stock necessary to adopt this Agreement, approve the Merger or
consummate any of the other Contemplated Transactions.
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3.24 Non-Contravention;
Consents. Except as set forth in Part 3.24 of the
Disclosure Schedule, neither (1) the execution, delivery or performance of
this Agreement or the Stockholder Agreements, nor (2) the consummation of
the Offer, the Merger or any of the other Contemplated Transactions, will
directly or indirectly (with or without notice or lapse of time):
(a) contravene,
conflict with or result in a violation of: (i) any of the
provisions of the Charter Documents of the Company; or (ii) any resolution
adopted by the stockholders, the board of directors or any committee of the
board of directors of the Company;
(b) in
any material respect, contravene, conflict with or result in a violation of any
Legal Requirement or any Order to which the Company, or any of the assets owned
or used by the Company, is subject;
(c) in
any material respect, contravene, conflict with or result in a violation of any
of the terms or requirements of, or give any Governmental Body the right to
revoke, withdraw, suspend, cancel, terminate or modify, any Governmental
Authorization that is held by the Company or that otherwise relates to the
business of the Company or to any of the assets owned or used by the
Company;
(d) in
any material respect, contravene, conflict with or result in a violation or
breach of, or result in a default under, any provision of any Material Contract,
or give any Person the right to: (i) declare a default or
exercise any remedy under any such Material Contract; (ii) accelerate the
maturity or performance of any such Material Contract; or (iii) cancel,
terminate or modify any right, benefit, obligation or other term of any such
Material Contract;
(e) result
in the imposition or creation of any Encumbrance upon or with respect to any
material asset owned or used by the Company, except for Permitted Encumbrances;
or
(f) result
in the transfer of any material asset of the Company to any Person (except as
contemplated by this Agreement).
Except as
set forth in Part 3.24 of the Disclosure Schedule, the Company is not and
will not be required to make any filing with, give any notice to, or to obtain
any Consent from, any Person in connection with (x) the execution, delivery
or performance of this Agreement by the Company, (y) the execution,
delivery or performance of the Stockholder Agreements or (z) the
consummation of the Offer, the Merger or any of the other Contemplated
Transactions, except as may be required by the Securities Act, the Exchange Act,
the DGCL, any applicable state or foreign securities laws, the HSR Act, any
foreign antitrust Legal Requirement and the NASD Bylaws.
3.25 Fairness
Opinion. The Company’s board of directors has received the
written opinion of Houlihan, Lokey, Xxxxxx & Xxxxx Capital, Inc. (“Xxxxxxxx Xxxxx”),
financial advisor to the Company, dated November 2, 2009, to the effect that, as
of the date of such opinion and subject to the matters set forth in such
opinion, the Per Share Consideration is fair, from a financial point of view, to
the holders of Company Common Stock (other than any Affiliates
of the Company or Parent, Acquisition Sub and their respective
Affiliates). The Company has furnished (solely for informational
purposes) a copy of said written opinion to Parent.
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3.26 Financial
Advisor. Except for Xxxxxxxx Xxxxx, no broker, finder or
investment banker is entitled to any brokerage, finder’s or other fee or
commission in connection with the Offer or the Merger or any of the other
Contemplated Transactions based upon arrangements made by or on behalf of the
Company.
3.27 Disclosure. None of
the information supplied or to be supplied by or on behalf of the Company for
inclusion in the Registration Statement, the Post-Effective Amendment, the Offer
Documents or the Schedule 14D-9 will, at the time the Registration
Statement is filed with the SEC, at the time the Post-Effective Amendment is
filed with the SEC, at the time the Offer Documents and the Schedule 14D-9
are mailed to stockholders of the Company or at any time between the time the
Registration Statement is filed with the SEC and the Acceptance Time, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they are made, not
misleading. None of the information supplied or to be supplied by or
on behalf of the Company for inclusion in the Proxy Statement will, at the time
the Proxy Statement is mailed to stockholders of the Company or at the time of
the Company Stockholders’ Meeting (or any adjournment or postponement thereof),
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they are made, not
misleading. The Proxy Statement will comply as to form in all
material respects with the provisions of the Exchange Act and the rules and
regulations promulgated by the SEC thereunder. No representation or
warranty is made by the Company with respect to written information supplied by
Parent or Acquisition Sub specifically for inclusion in the Schedule 14D-9
or the Proxy Statement.
Section 4.
Representations and Warranties of Parent and Acquisition Sub
Except as
explicitly set forth in (i) the Annual Report on Form 10-K filed by
Parent with the SEC with respect to the fiscal year ended December 28, 2008,
(ii) any Current Reports on Form 8-K filed by Parent with the SEC
since the filing date of the Form 10-K referred to above, and
(iii) the Quarterly Reports on Form 10-Q filed by Parent with the SEC
since the filing date of the Form 10-K referred to above (excluding any
“risk factors” or similar statements that are cautionary, predictive or
forward-looking in nature (but, for the purpose of clarification, including and
giving effect to any factual or historical statements included in any such
statements) in a manner where the relevance of such information to a particular
representation and warranty below is readily apparent, Parent and Acquisition
Sub represent and warrant to the Company as follows:
4.1 Due Organization.
(a) Parent
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Washington and has all necessary corporate power and
authority: (i) to conduct its business in the manner in which
its business is currently being conducted;
(ii) to own and use its assets in the manner in which its assets are
currently owned and used; and (iii) to perform its obligations under all
Contracts by which it is bound. Parent is qualified to do business as
a foreign corporation, and is in good standing (except for any jurisdiction that
does not recognize such concept) under the laws of all jurisdictions where the
nature of its business requires such qualification, except where the failure to
be so qualified or in good standing, individually or in the aggregate, do not
constitute a Parent Material Adverse Effect.
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(b) Acquisition
Sub is a corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware and has all necessary corporate power and
authority: (i) to conduct its business in the manner in which
its business is currently being conducted; (ii) to own and use its assets
in the manner in which its assets are currently owned and used; and
(iii) to perform its obligations under all Contracts by which it is
bound.
4.2 Certificate of Incorporation and
Bylaws. Parent has Made Available to the Company accurate and
complete copies of its and Acquisition Sub’s certificate of incorporation,
bylaws and other charter and organizational documents (collectively the “Parent Charter
Documents”), each as currently in effect.
4.3 Capitalization. The
authorized capital stock of Parent consists of 50,000,000 shares of Parent
Common Stock. As of October 30, 2009, (a) 12,995,078 shares of
Parent Common Stock are issued and outstanding and (b) 2,887,917 shares of
Parent Common Stock are subject to issuance pursuant to securities convertible
into or exchangeable for shares of Parent Common Stock. There are no
outstanding obligations of Parent or any of its Subsidiaries to repurchase,
redeem or otherwise acquire any Parent Common Stock or securities convertible
into or exchangeable for Parent Common Stock. The shares of Parent
Common Stock to be issued in the Offer and the Merger will be duly authorized,
validly issued, fully paid and nonassessable. All shares or other
equity interests of the Subsidiaries of Parent are owned by Parent or another
wholly owned Subsidiary of Parent free and clear of any
Encumbrance.
4.4 SEC Filings; Financial
Statements.
(a) Parent
has filed with the SEC all registration statements, proxy statements,
Certifications and other statements, reports, schedules, forms and other
documents required to be filed by Parent with the SEC since January 1, 2005, and
all amendments thereto (the “Parent SEC
Documents”). All statements, reports, schedules, forms and
other documents required to have been filed by Parent or its officers with the
SEC have been so filed on a timely basis. Parent has Made Available
to the Company accurate and complete copies of each Parent SEC Document
(including each exhibit thereto) that is not publicly available through the
SEC’s XXXXX database. As of the time it was filed with the SEC (or,
if amended or superseded by a filing prior to the date of this Agreement, then
on the date of such filing): (i) each of the Parent SEC
Documents complied with the applicable requirements of the Securities Act or the
Exchange Act (as the case may be) and the applicable rules and regulations of
the SEC thereunder; and (ii) none of the Parent SEC Documents contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading. Each of the certifications and statements required
by: (A) Rule 13a-14 or Rule 15d-14
under the Exchange Act; (B) 18 U.S.C. §1350 (Section 906 of the
Xxxxxxxx-Xxxxx Act); or (C) any other rule or regulation promulgated by the
SEC or applicable to the Parent SEC Documents are accurate and complete, and
comply as to form and content with all applicable Legal
Requirements.
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(b) The
consolidated financial statements (including any related notes) contained or
incorporated by reference in the Parent SEC Documents (as amended prior to the
date of this Agreement): (i) complied as to form in all material
respects with the published rules and regulations of the SEC applicable thereto;
(ii) were prepared in accordance with GAAP applied on a consistent basis
throughout the periods covered (except as may be indicated in the notes to such
financial statements or, in the case of unaudited financial statements, as
permitted by Form 10-Q, Form 8-K or any successor form under the
Exchange Act, and except that the unaudited financial statements may not contain
footnotes and are subject to normal and recurring year-end adjustments that will
not, individually or in the aggregate, be material in amount), and
(iii) fairly presented, in all material respects, the consolidated
financial position of Parent and its consolidated Subsidiaries as of the
respective dates thereof and the consolidated results of operations and cash
flows of Parent and its consolidated Subsidiaries for the periods covered
thereby. No financial statements of any Person other than Parent are
required by GAAP to be included in the consolidated financial statements of
Parent. With respect to the financial statements (including any
related notes) contained or incorporated by reference in the Parent SEC
Documents, there have been no deficiencies or weaknesses identified in writing
by Parent or Parent’s independent auditors (whether current or former) in the
design or operation of internal controls of financial reporting utilized by
Parent and its consolidated Subsidiaries.
4.5 Authority; Binding Nature of
Agreement. Parent and Acquisition Sub have the absolute and
unrestricted right, power and authority to perform their obligations under this
Agreement; and the execution, delivery and performance by Parent and Acquisition
Sub of this Agreement have been duly authorized by any necessary action on the
part of Parent and Acquisition Sub and their respective boards of
directors. This Agreement constitutes the legal, valid and binding
obligation of Parent and Acquisition Sub, enforceable against them in accordance
with its terms, subject to: (a) laws of general application
relating to bankruptcy, insolvency and the relief of debtors; and (b) rules
of law governing specific performance, injunctive relief and other equitable
remedies.
4.6 No Vote
Required. No vote of the holders of Parent Common Stock is
required to authorize the issuance of shares of Parent Common Stock in
connection with the Offer or the Merger.
4.7 Absence of
Changes. Since June 28, 2009, except as otherwise contemplated
by this Agreement, there has not been any Parent Material Adverse
Effect.
4.8 Non-Contravention;
Consents. Except as does not constitute a Parent Material
Adverse Effect, neither (1) the execution, delivery or performance by
Parent or Acquisition Sub of this Agreement, nor (2) the consummation by
Parent or Acquisition Sub of the Offer, the Merger or any of the other
Contemplated Transactions, will directly or indirectly (with or without notice
or lapse of time):
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(a) contravene,
conflict with or result in a violation of: (i) any of the
provisions of the Parent Charter Documents; or (ii) any resolution adopted
by the stockholders, the board of directors or any committee of the board of
directors of Parent or Acquisition Sub; or
(b) contravene,
conflict with or result in a violation of any Legal Requirement or any Order to
which Parent, Acquisition Sub or any of the assets owned or used by either of
them, is subject.
Each of
Parent and Acquisition Sub is not and will not be required to make any filing
with, give any notice to, or to obtain any Consent from, any Person in
connection with (x) the execution, delivery or performance of this
Agreement by Parent or Acquisition Sub, or (y) the consummation of the
Offer, the Merger or any of the other Contemplated Transactions, except as may
be required by the Securities Act, the Exchange Act, the DGCL, any applicable
state or foreign securities laws, the HSR Act, any foreign antitrust Legal
Requirement and the NASD Bylaws.
4.9 Disclosure. None of
the information supplied or to be supplied by or on behalf of Parent for
inclusion in the Registration Statement, the Post-Effective Amendment, the Offer
Documents or the Schedule 14D-9 will, at the time the Registration
Statement is filed with the SEC, at the time the Post-Effective Amendment is
filed with the SEC or at the time the Offer Documents and the
Schedule 14D-9 are mailed to the stockholders of the Company or at any time
between the time the Registration Statement is filed with the SEC and the
Acceptance Time, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
are made, not misleading. None of the information supplied or to be
supplied by or on behalf of Parent for inclusion in the Proxy Statement will, at
the time the Proxy Statement is mailed to the stockholders of the Company or at
the time of the Company Stockholders’ Meeting (or any adjournment or
postponement thereof), contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in the light of the circumstances under which
they are made, not misleading. No representation or warranty is made
by Parent or Acquisition Sub with respect to written information supplied by the
Company specifically for inclusion in the Registration Statement, the
Post-Effective Amendment or the Offer Documents.
4.10 Funds. Parent or
Acquisition Sub will have, at the Acceptance Time, sufficient funds available to
satisfy the obligation to pay the Cash Component for each share of Company
Common Stock validly tendered (and not withdrawn) in the Offer, and Parent or
Acquisition Sub will have, at the Effective Time, sufficient funds available to
satisfy the obligation to pay the Cash Component for each share of Company
Common Stock that is converted into the right to receive the Per Share
Consideration pursuant to Section 2.5(a)(iii)
in connection with the Merger.
Section 5.Certain
Covenants of the Parties
5.1 Access and
Investigation. During the period from the date of this
Agreement through the earlier of (1) the Effective Time and (2) the
termination of this Agreement pursuant to Section 8.1 (the
“Pre-Closing
Period”), the Company shall, and shall cause the
respective Representatives of the Company to: (a) provide Parent
and Parent’s Representatives with reasonable access to the Company’s
Representatives, personnel and assets and to all existing books, records, Tax
Returns, work papers and other documents and information relating to the
Company; and (b) provide Parent and Parent’s Representatives with such
copies of the existing books, records, Tax Returns, work papers and other
documents and information relating to the Company, and with such additional
financial, operating and other data and information regarding the Company, as
Parent may reasonably request. During the Pre-Closing Period, the Company shall,
and shall cause the Representatives of the Company to, permit Parent’s senior
officers to meet, upon reasonable notice and during normal business hours, with
the chief financial officer and other officers of the Company responsible for
the Company’s financial statements and the internal controls of the Company to
discuss such matters as Parent may deem necessary or appropriate in order to
enable Parent to satisfy its obligations under the Xxxxxxxx-Xxxxx Act and
the rules and regulations relating thereto. Without limiting the
generality of any of the foregoing, during the Pre-Closing Period, the Company
shall promptly provide Parent with copies of:
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(i) all
material operating and financial reports prepared by the Company for the
Company’s senior management, including copies of the unaudited monthly
consolidated balance sheets of the Company and the related unaudited monthly
consolidated statements of operations, statements of stockholders’ equity and
statements of cash flows;
(ii) any
written materials or communications sent by or on behalf of the Company to its
stockholders;
(iii) any
material notice, document or other communication (other than any communication
that relates solely to routine commercial transactions and that is of the type
sent in the ordinary course of business and consistent with past practices) sent
by or on behalf of the Company to any party to any Company Contract that
constitutes a Material Contract or sent to the Company by any party to any
Company Contract that constitutes a Material Contract;
(iv) any
notice, report or other document filed with or sent to any Governmental Body on
behalf of the Company in connection with the Offer or the Merger or any of the
other Contemplated Transactions; and
(v) any
material notice, report or other document received by the Company from any
Governmental Body.
During
the Pre-Closing Period, Parent shall promptly provide the Company with copies of
any notice, report or other document filed with or sent to any Governmental Body
on behalf of Parent or Acquisition Sub in connection with the Offer or the
Merger or any of the other Contemplated Transactions. Without
limiting the effect of any of the other obligations set forth in this Agreement,
before filing any document with or furnishing any document to the SEC or any
other Governmental Body in connection with the Offer or the Merger or any of the
other Contemplated Transactions, each party shall consult with the other party
regarding the proposed content of such document. All information
obtained pursuant to this Section 5.1
shall be subject to the Confidentiality
Agreement to the extent such information constitutes Confidential Information
(as defined in the Confidentiality Agreement).
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5.2 Operation
of the Company’s Business.
(a) Except
in each case (x) as specifically required by any other provision of this
Agreement or specifically set forth in Part 5.2(a) of the Disclosure
Schedule, (y) as required by any applicable Legal Requirement, or
(z) with the prior written consent of Parent, during the Pre-Closing
Period: (i) the Company shall conduct its business and
operations (A) in the ordinary course and in accordance with past practices
and (B) in compliance, in all material respects, with all applicable Legal
Requirements and the requirements of all Company Contracts that constitute
Material Contracts; (ii) the Company shall use commercially reasonable
efforts to preserve intact its current business organization, keep available the
services of its current officers and other employees and maintain its relations
and goodwill with all suppliers, customers, landlords, creditors, licensors,
licensees, distributors, resellers, employees and other Persons having business
relationships with the Company; (iii) the Company shall keep in full force
all insurance policies referred to in Section 3.19 (other than any
such policies that are immediately replaced with substantially similar
policies); and (iv) the Company shall promptly notify Parent of
(A) any written notice or other communication of which the Company has
Knowledge from any Person alleging that the Consent of such Person is or may be
required in connection with any of the Contemplated Transactions, and
(B) any Legal Proceeding commenced, or, to the Knowledge of the Company,
threatened against, relating to, involving or otherwise affecting the Company
that relates to the consummation of the Offer or the Merger or any of the other
Contemplated Transactions. Except in each case (x) as
specifically required by any other provision of this Agreement, (y) as
required by any applicable Legal Requirement, or (z) with the prior written
consent of the Company, during the Pre-Closing Period, Parent shall promptly
notify the Company of (A) any written notice or other communication of
which Parent has Knowledge from any Person alleging that the Consent of such
Person is or may be required in connection with any of the Contemplated
Transactions, and (B) any Legal Proceeding commenced, or, to the Knowledge
of Parent, threatened against, relating to, involving or otherwise affecting
Parent or Acquisition Sub that relates to the consummation of the Offer or the
Merger or any of the other Contemplated Transactions.
(b) Except
in each case (x) as specifically required by any other provision of this
Agreement or specifically set forth in Part 5.2(b) of the Disclosure
Schedule, (y) as required by any applicable Legal Requirement, or
(z) with the prior written consent of Parent, during the Pre-Closing Period
(which consent shall not be unreasonably withheld, conditioned or delayed, but
only with respect to clauses “(xi),” “(xvii),” “(xx),” “(xxi)” and “(xxii)” below), the
Company shall not:
(i) declare,
accrue, set aside or pay any dividend or make any other distribution in respect
of any shares of capital stock, split, combine or reclassify any capital stock
or repurchase, redeem or otherwise reacquire, directly or indirectly, any shares
of capital stock or other securities, other than repurchases from employees of
the Company following termination of employment pursuant to the terms of
applicable pre-existing restricted stock agreements;
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(ii) sell,
issue, grant deliver or authorize the sale, issuance, delivery or grant
of: (A) any capital stock or other security; (B) any
option, call, warrant or right to acquire any capital stock or other security;
or (C) any instrument convertible into or exchangeable for any capital
stock or other security (except that: (1) the Company may issue
shares of Company Common Stock upon the valid exercise of Company Options or
Company Warrants outstanding as of the date of this Agreement; and (2) the
Company may, in the ordinary course of business and consistent with past
practices, grant to any employee of the Company below the level of Vice
President (x) options (having an exercise price equal to the fair market
value of the Company Common Stock covered by such options determined as of the
time of the grant of such options, containing no vesting acceleration provisions
and containing the Company’s standard vesting schedule) or (y) restricted
stock units or restricted stock awards (containing no vesting acceleration
provisions and containing the Company’s standard vesting schedule) under the
Company Equity Plans in connection with either the hiring of such employee
during the Pre-Closing Period or the Company’s annual employee review process,
provided that
(I) any such award grants made to newly-hired employees of the Company
shall be made in accordance with the Company’s new hire guidelines set forth in
Part 5.2(b)(ii)(I) of the Disclosure Schedule; and (II) any award
grants made to Company employees in connection with the Company’s annual
employee performance review process, shall be made in accordance with the
guidelines set forth in Part 5.2(b)(ii)(I) of the Disclosure
Schedule;
(iii) amend
or waive any of its rights under, or accelerate the vesting under, any provision
of any of the Company Equity Plans or any provision of any Contract evidencing
any outstanding Company Option or any restricted stock purchase agreement, or
otherwise modify any of the terms of any outstanding option, restricted stock
units, warrant or other security or any related Contract, other than any
acceleration of vesting that occurs in accordance with the terms of a Company
Contract in effect as of the date of this Agreement and previously Made
Available to Parent;
(iv) amend
or permit the adoption of any amendment to any of its Charter Documents, or
effect or become a party to any merger, consolidation, share exchange, business
combination, amalgamation, recapitalization, reclassification of shares, stock
split, reverse stock split, division or subdivision of shares, consolidation of
shares or similar transaction;
(v) form
any Subsidiary or acquire any equity interest or other interest in any other
Entity;
(vi) make
any capital expenditure (except that the Company may make any capital
expenditure that: (A) does not exceed $250,000 individually; and
(B) when added to all other capital expenditures made on behalf of the
Company during the calendar month in which such capital expenditure is made,
does not exceed $2,000,000 in the aggregate);
(vii) other
than in the ordinary course of business consistent with past practices
(A) enter into or become bound by, or permit any of the material
assets
owned or used by it to become bound by, any Material Contract or (B) amend
or terminate, or waive or exercise any material right or remedy under, any
Material Contract;
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(viii) grant
any exclusive license or right with respect to any Company IP, other than any
grant of Company IP that occurs in accordance with the terms of a Company
Contract in effect as of the date of this Agreement and previously Made
Available to Parent;
(ix) enter
into, renew or become bound by, or permit any of the material assets owned or
used by it to become bound by, any Contract the effect of which would be to
grant to any Person following the Merger any right or license to any
Intellectual Property right owned as of the date of this Agreement by the
Company or Parent;
(x) enter
into, renew or become bound by, or permit any of the material assets owned or
used by it to become bound by, any Contract containing, or otherwise subjecting
the Company to, any non-competition, exclusivity or other material restriction
on the operation of the business of the Company or Parent;
(xi) acquire,
lease or license any right or other asset from any other Person or sell or
otherwise dispose of, lease or license any right or other asset to any other
Person (except in each case for assets (that are not material individually or in
the aggregate) acquired, leased, licensed or disposed of by the Company in the
ordinary course of business and consistent with past practices), or, other than
in the ordinary course of business in connection with the collection of accounts
receivable, waive or relinquish any material right;
(xii) other
than in the ordinary course of business consistent with past practices, write
off as uncollectible, or establish any extraordinary reserve with respect to,
any receivable or other indebtedness;
(xiii) make
any pledge of any of its material assets or (B) permit any of its material
assets to become subject to any Encumbrances, except for Encumbrances that do
not materially detract from the value of such assets or materially impair the
operations of the Company;
(xiv) permit
any cash, cash equivalents or short-term investments of the Company to become
subject to any Encumbrance;
(xv) (A) lend
money to any Person, incur or guarantee any indebtedness (including capital
lease obligations) (other than indebtedness for reimbursement of expenses made
in the ordinary course of business) or obtain or enter into any bond or letter
of credit or any related Contract, in each case in excess of $50,000
individually or $250,000 in the aggregate, or (B) announce, offer, arrange,
syndicate or issue any debt securities (including convertible securities) or
announce, arrange or syndicate any bank financing;
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(xvi) establish,
adopt, enter into or amend any Company Employee Plan or Company Employee
Agreement, pay any bonus or make any profit-sharing or similar payment to, or
increase the amount of the wages, salary, commissions, fringe benefits or other
compensation (including equity-based compensation, whether payable in stock,
cash or other property) or remuneration payable to, any of its directors or any
of its officers or other employees (except that the
Company: (A) may provide routine, reasonable salary increases to
employees that are not at the Vice President level or above in the ordinary
course of business and in accordance with past practices in connection with the
Company’s customary employee review process; (B) may amend the Company
Employee Plans to the extent required by Section 409A of the Code and other
applicable Legal Requirements; (C) may make customary bonus payments and
profit sharing payments consistent with past practices in accordance with
existing bonus and profit sharing plans referred to in Part 3.16(b) of the
Disclosure Schedule); and (D) may comply with requirements set forth
Company Employee Plans or Company Employee Agreements that are in existence as
of the date of this Agreement or are entered into in compliance with this
Agreement, each of which was previously Made Available to Parent;
(xvii) hire
any employee (A) at the director level with compensation that is
inconsistent with the Company’s compensation guidelines or its past practices;
(B) at the level of Vice President or above, or (C) with an annual
base salary in excess of $150,000;
(xviii) other
than in the ordinary course of business consistent with past practices,
materially change any of its pricing policies, product return policies, product
maintenance polices, service policies, product modification or upgrade policies,
personnel policies or other business policies, or any of its methods of
accounting or accounting practices (other than as required by GAAP) in any
respect;
(xix) make
any material Tax election, amend any Tax Return or file a claim for refund with
respect to any Tax Return described in the first sentence of Section 3.16(j), compromise or
settle any Legal Proceeding with respect to any Tax or Tax-related matter, enter
into or obtain any Tax ruling or take any action that could reasonably be
expected to have a material and adverse impact on the Tax liability of the
Company;
(xx) commence
any Legal Proceeding, other than Legal Proceedings commenced for the routine
collection of bills;
(xxi) settle
any claim or Legal Proceeding, other than claims or Legal Proceedings against
the Company that do not relate to Tax or Tax-related matters and with respect to
which the settlement involves solely the payment by the Company of an amount
less than $50,000 individually and less than $250,000 in the aggregate for all
such claims and Legal Proceedings settled during the Pre-Closing
Period;
(xxii) pay,
discharge, settle or satisfy any claims (whether or not commenced prior to the
date of this Agreement), except that the Company may pay, discharge,
settle or satisfy any claim if the only obligation involved on the part of the
Company will be payment of money in an amount not to exceed $50,000 individually
and not to exceed $250,000 in the aggregate for all such claims during the
Pre-Closing Period; or
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(xxiii) agree
or commit to take any of the actions described in clauses “(i)” through “(xxii)” of this Section 5.2(b).
(c) Notwithstanding
anything in Section 5.2(a)
or 5.2(b) to
the contrary, if (i) the Parent Designees constitute a majority of the
directors sitting on the board of directors of the Company and (ii) the
board of directors of the Company expressly directs or authorizes the Company
(of its officers) to act or not act in a certain manner, or expressly consents,
in advance, to such action or inaction, then such action or inaction shall be
deemed not to constitute a breach of Section 5.2(a)
or 5.2(b);
provided, however, that
such direction, authorization or consent, as applicable, of the board of
directors of the Company shall be based on a resolution of the entire board of
directors (and not the approval of merely the majority of the Continuing
Directors, as contemplated by the Section 1.3(c)).
(d) During
the Pre-Closing Period, the Company shall promptly notify Parent in writing if
the Company has the right to exercise any right or option to repurchase shares
of its capital stock from any Company Associate or other Person upon termination
of such Person Person’s service. The Company shall not exercise any
such repurchase right except to the extent directed by Parent in
writing.
(e) By
not later than immediately prior to the Acceptance Time, the Company shall
either (i) renegotiate all existing equipment leases that have change in
control provisions so that the lessor no longer has the right to either demand
accelerated rent or repossess the equipment by reason of the consummation of the
Offer or the Merger, or (ii) if the Company shall have been unable to
renegotiate all such leases in the manner described above, exercise its buyout
option with respect to all of such leases that have not been renegotiated, with
the result that the Company shall obtain fee ownership in all such equipment and
the lessors’ rights with respect to such equipment shall be
terminated. If the Company becomes obligated to exercise such buyout
option, but determines in good faith that it has inadequate funds to do so, then
the Company shall promptly notify Parent of the amount of funds so required and
provide Parent with reasonable documentary evidence supporting such calculation,
and Parent shall thereafter either (A) make such funds available to the
Company (which the Company shall use solely for the purpose of exercising such
buyout option), or (B) waive the Company’s obligation to exercise such
buyout option.
5.3 No
Solicitation; Go-Shop; Etc.
(a) Subject
to Sections 5.3(b),
5.3(c) and
5.3(g), during
the Pre-Closing Period, the Company shall not directly or indirectly, and shall
not cause or permit any Representatives of the Company to, directly or
indirectly, (i) solicit, initiate, knowingly encourage or knowingly
facilitate the making, submission or announcement of any Acquisition Proposal or
Acquisition Inquiry, (ii) furnish any non-public information regarding the
Company to any Person in connection with or in response to an Acquisition
Proposal or Acquisition Inquiry,
(iii) engage in discussions or negotiations with any Person with respect to
any Acquisition Proposal or Acquisition Inquiry, (iv) approve, endorse or
recommend any Acquisition Proposal or (v) enter into any letter of intent
or similar document or any Contract contemplating or providing for any
Acquisition Transaction or accepting any Acquisition Proposal; provided, however, that none
of the foregoing restrictions shall apply to the Company’s and its
Representatives’ interactions with Parent, Acquisition Sub and their respective
Representatives. Without limiting the generality of the foregoing, the Company
acknowledges and agrees that any action taken by any Representative of the
Company that, if taken by the Company would constitute a breach of this Section 5.3,
shall be deemed to constitute a breach of this Section 5.3 by
the Company (whether or not such Representative is purporting to act on behalf
of the Company).
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(b) Notwithstanding
the provisions of Section 5.3(a),
during the period between the date of this Agreement and 5:00 p.m. Pacific Time
on November 23, 2009 (the “Go-Shop Period”), the
Company may (directly or through its Representatives) take any of the actions
set forth in Section 5.3(a),
provided that
(i) the Company shall not take any of the actions set forth in Section 5.3(a)
with respect to such Person unless the Company has informed Parent in writing of
the identity of such Person prior to taking any such action, and (ii) the
Company shall not furnish any non-public information regarding the Company to
any Person unless the board of directors of the Company (or a committee
thereof) has determined in good faith, after consultation with the
Company’s outside legal counsel and its financial advisor(s), that such Person
has made or is financially capable of making a Superior Proposal, and that such
Person would be reasonably capable of consummating the transaction contemplated
by such Superior Proposal. Notwithstanding the foregoing, the Company
shall, and shall cause its Representatives to, (A) immediately upon the
expiration of the Go-Shop Period, cease and cause to be terminated all actions
and activities that, but for the provisions of this Section 5.3(b),
would have been prohibited by the terms of this Agreement and (B) during
the Go-Shop Period, comply with all other requirements set forth in this Section 5.3
(other than the requirements set forth in Section 5.3(a)
which is addressed by this Section 5.3(b)).
(c) Nothing
in this Agreement shall prohibit the Company or its board of directors from
furnishing non-public information regarding the Company to, or entering into
discussions or negotiations (including, as a part thereof, exchanging any
counterproposals) with, any Person and its Representatives in response to a
written Acquisition Proposal that is submitted to the Company by such Person
(and not withdrawn) which the board of directors of the Company determines in
good faith (after consultation with its financial advisor(s)) is, or could
reasonably be expected to lead to, a Superior Proposal if (i) neither the
Company nor any Representative of the Company shall have breached in any
material respect any of the provisions set forth in this Section 5.3,
(ii) the board of directors of the Company determines in good faith, after
consultation with the Company’s outside legal counsel, that the failure to take
such action could reasonably be expected to constitute a breach of the Company’s
board of directors’ fiduciary obligations to the Company’s stockholders under
applicable Legal Requirements, (iii) prior to furnishing any such
non-public information to, or entering into discussions or negotiations with,
such Person, (A) the Company gives written notice to Parent of the identity
of such Person and of the Company’s decision to furnish non-public information
to, or enter into discussions or negotiations with, such Person, and
(B) the Company receives from such Person an executed confidentiality
agreement containing customary limitations on the use and disclosure
of all
non-public written and oral information furnished to such Person by or on behalf
of the Company that are no less favorable to the Company than the
confidentiality provisions and use restrictions of the Confidentiality
Agreement, and (iv) contemporaneously with or prior to furnishing any such
non-public information to such Person, the Company Makes Available to Parent all
such non-public information (to the extent such non-public information has not
been previously Made Available to Parent).
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(d) If
the Company or any of its Representatives receives an Acquisition Proposal or
any request for non-public information at any time during the Pre-Closing Period
(other than from Parent, Acquisition Sub or their respective Representatives),
then the Company shall promptly (and in no event later than 24 hours after
receipt of such Acquisition Proposal or request) advise Parent in writing of
such Acquisition Proposal or request (including the identity of the Person
making or submitting such Acquisition Proposal or request and the material terms
thereof) and provide Parent with a copy of such Acquisition Proposal or request
if it is in writing. The Company shall keep Parent promptly informed
with respect to any material development relating to such Acquisition Proposal
or request and any modification or proposed modification thereto, and provide
Parent with copies of such development, modification and proposed modification
if they are in writing.
(e) Subject
to Section 5.3(b),
the Company shall immediately cease and cause to be terminated any existing
discussions between the Company or any of its Representatives and any Person
(other than Parent, Acquisition Sub and their respective Representatives) with
respect to any Acquisition Proposal or Acquisition Inquiry pending as of the
date of this Agreement.
(f) Except
to the extent necessary to engage in the activities permitted during the Go-Shop
Period, the Company agrees not to release any Person from, or to amend or waive
any provision of, any confidentiality, “standstill,” nonsolicitation or similar
agreement to which the Company is or becomes a party or under which the Company
has or acquires any rights, and will use commercially reasonable efforts to
enforce or cause to be enforced each such agreement at the request of Parent;
provided, however, that
this Section 5.3(f)
shall not preclude the Company from responding to an unsolicited Acquisition
Proposal submitted to the Company by a party that is bound by a “standstill”
agreement and shall not require the Company to enforce or cause to be enforced
its rights under such “standstill” agreement relating to the submission of such
unsolicited Acquisition Proposal. The Company also shall promptly
request each Person that has executed a confidentiality agreement in connection
with its consideration of a possible Acquisition Transaction to return or
destroy in accordance with the terms of such confidentiality agreement all
confidential information heretofore furnished to such Person by or on behalf of
the Company, provided
that in the case of any Person with respect to which the Company or its
Representatives permissibly engages in the activities described in Section 5.3(a)
during the Go-Shop Period, the Company shall not be required to make the
foregoing request until the expiration of the Go-Shop Period.
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(g) Notwithstanding
any other provision in this Agreement to the contrary:
(i) Subject
to the Company’s right to make a Recommendation Change (as defined below) to the
extent permitted by Section 5.3(g)(ii)
or 5.3(g)(iii),
the Company (1) consents to the inclusion of the Company Board
Recommendation in the Offer Documents; and (2) agrees that the Company
Board Recommendation shall not be withdrawn or modified in a manner adverse to
Parent or Acquisition Sub, and that no resolution of the board of directors of
the Company or any committee thereof to withdraw or modify the Company Board
Recommendation in a manner adverse to Parent or Acquisition Sub shall be adopted
(it being understood that the Company Board Recommendation shall be deemed to
have been modified in a manner adverse to Parent and Acquisition Sub if it shall
no longer be unanimous) (any such withdrawal, modification or adoption being
referred to in this Agreement as a “Recommendation
Change”).
(ii) A
Recommendation Change may be made at any time prior to the Acceptance Time
if: (i) an Acquisition Proposal is made that did not result from
a breach by the Company of any of the provisions of Section 5.3;
(ii) at least one (1) day prior to the date of any meeting of the
Company’s board of directors (or any committee thereof) at which such board of
directors (or committee) will consider whether such Acquisition Proposal may
constitute a Superior Proposal or whether such Acquisition Proposal may require
the Company to make a Recommendation Change, the Company provides Parent with a
written notice specifying the date and time of such meeting, the reasons for
holding such meeting and a description of such Acquisition Proposal;
(iii) the Company’s board of directors determines in good faith, after
consultation with the Company’s outside legal counsel and its financial
advisor(s), (A) that such Acquisition Proposal would, if this Agreement or
the Offer were not amended or an alternative transaction with Parent were not
entered into, constitute a Superior Proposal and (B) that in light of such
Acquisition Proposal, the failure to make a Recommendation Change, if this
Agreement or the Offer were not amended or an alternative transaction with
Parent were not entered into, could reasonably be expected to constitute a
breach of the Company’s board of directors’ fiduciary obligations to the
Company’s stockholders under applicable Legal Requirements; (iv) the
Company delivers to Parent a Superior Proposal Notice in accordance with Section 5.3(g)(iv)
with respect to such Acquisition Proposal (including as an attachment the
Specified Definitive Acquisition Agreement (as defined in Section 5.3(g)(iv))
relating to such Acquisition Proposal) and otherwise complies in all material
respects with the notice, negotiation and other requirements set forth in Section 5.3(g)(iv);
and (v) following the negotiation period(s) described in Section 5.3(g)(iv),
the Company’s board of directors determines in good faith, after consultation
with the Company’s outside legal counsel and its financial advisor(s), and after
taking into account any definitive written proposal submitted to the Company by
Parent or Acquisition Sub to amend this Agreement or the Offer or to enter into
an alternative transaction as a result of any negotiations contemplated by Section 5.3(g)(iv),
that (A) such Acquisition Proposal constitutes a Superior Proposal, and
(B) in light of such Acquisition Proposal, the failure to make a
Recommendation Change could reasonably be expected to constitute a breach of the
Company’s board of directors’ fiduciary obligations to the Company’s
stockholders under applicable Legal Requirements.
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(iii) A
Recommendation Change may also be made at any time prior to the Acceptance Time
if: (i) there shall occur or arise after the date of this
Agreement a material and fundamental development or material and fundamental
change in circumstances that relates to the Company but does not relate to any
Acquisition Proposal (any such material development or material change in
circumstances unrelated to an Acquisition Proposal being referred to in this
Agreement as an “Intervening Event”);
(ii) neither the Company nor any Representative of the Company had any
Knowledge of such Intervening Event or, as of the date of this Agreement, could
reasonably foresee that such Intervening Event would occur; (iii) at least
one (1) day prior to the date of any meeting of the Company’s board of
directors (or any committee thereof) at which such board of directors (or
committee) will consider whether such Intervening Event may require a
Recommendation Change, the Company provides Parent with a written notice
specifying the date and time of such meeting, the reasons for holding such
meeting and a description of such Intervening Event; (iv) the Company’s
board of directors determines in good faith, after consultation with the
Company’s outside legal counsel and its financial advisor(s), that, in light of
such Intervening Event, the failure to make a Recommendation Change, if this
Agreement or the Offer were not amended or an alternative transaction with
Parent were not entered into, could reasonably be expected to constitute a
breach of the Company’s board of directors’ fiduciary obligations to the
Company’s stockholders under applicable Legal Requirements; (v) a
Recommendation Change is not made at any time within the period of four (4)
business days after Parent receives written notice from the Company confirming
that the Company’s board of directors has determined that the failure to make a
Recommendation Change in light of such Intervening Event could reasonably be
expected to constitute a breach of its fiduciary obligations to the Company’s
stockholders under applicable Legal Requirements; (vi) during such
four (4) business day period, if requested by Parent, the Company engages
in good faith negotiations with Parent to amend this Agreement or the Offer or
enter into an alternative transaction so that the failure to make a
Recommendation Change in light of such Intervening Event could reasonably be
expected to constitute a breach of its fiduciary obligations to the Company’s
stockholders under applicable Legal Requirements; and (vii) at the end of
such four (4) business day period, the Company’s board of directors
determines in good faith, after consultation with the Company’s outside legal
counsel and its financial advisor(s), that the failure to make a Recommendation
Change could reasonably be expected to constitute a breach of the fiduciary
obligations of the Company’s board of directors to the Company’s stockholders
under applicable Legal Requirements in light of such Intervening Event (taking
into account any definitive written proposal submitted to the Company by Parent
or Acquisition Sub to amend this Agreement or the Offer or enter into an
alternative transaction as a result of the negotiations contemplated by clause “(vi)”
above).
(iv) Notwithstanding
anything to the contrary contained in Section 5.3(g)(ii),
a Recommendation Change may not be made pursuant to Section 5.3(g)(ii),
and this Agreement may not be terminated pursuant to Section 8.1(e),
unless: (i) the board of directors of the Company shall have
received an Acquisition Proposal that it has determined to be a Superior
Proposal pursuant to Section 5.3(g)(ii)
and shall have received from the Person making such Acquisition Proposal a
definitive acquisition agreement, duly executed on behalf of such Person,
providing for the consummation of the transaction contemplated by such
Acquisition Proposal, or other duly executed summary of all of the terms of such
Acquisition Proposal (in either case, the “Specified Definitive
Acquisition Agreement”); (ii) not less than four (4) business
days (or such longer period as provided below) prior to any such
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Recommendation
Change pursuant to Section 5.3(g)(ii)
and not less than four (4) business days (or such longer period as provided
below) prior to any termination of this Agreement by the Company pursuant to
Section 8.1(e),
the Company shall have delivered to Parent a written notice (the “Superior Proposal
Notice”) stating that the Company (or its board of directors) intends to
take such action pursuant to Section 5.3(g)(ii)
and/or Section 8.1(e)
and intends to enter into the Specified Definitive Acquisition Agreement with
respect to such Acquisition Proposal (it being understood and agreed that any
determination to send to Parent, or actual delivery to Parent of, a Superior
Proposal Notice shall not, in and of itself, constitute a Triggering Event);
(iii) during the four (4) business day period commencing on the date
of Parent’s receipt of such Superior Proposal Notice (as such period may be
extended as provided below), the Company shall have made its Representatives
reasonably available for the purpose of engaging in negotiations with Parent (to
the extent Parent desires to negotiate) regarding a possible amendment of this
Agreement or the Offer or a possible alternative transaction so that the
Acquisition Proposal that is the subject of the Superior Proposal Notice ceases
to be a Superior Proposal; and (iv) any definitive written proposal made by
Parent or Acquisition Sub to amend this Agreement or the Offer or enter into an
alternative transaction during the negotiations described in clause “(iii)” above shall
have been considered by the board of directors of the Company in good faith,
and, after the expiration of the negotiation period described in clause “(iii)” above, the
Company’s board of directors shall have determined in good faith, after
consultation with the Company’s outside legal counsel and its financial
advisor(s), that such Acquisition Proposal still constitutes a Superior
Proposal; provided,
however, that, in the event of any amendment to the financial or other
material terms of such Acquisition Proposal, the Company shall be required to
deliver to Parent a new Superior Proposal Notice (including as attachments
thereto a copy of the new Specified Definitive Acquisition Agreement relating to
such amended Acquisition Proposal), and the negotiation period described in
clause “(iii)” above shall be
extended by an additional two (2) business days from the date of Parent’s
receipt of such new Superior Proposal Notice, with respect to any such
amendment.
(h) Nothing
in this Agreement shall prohibit the Company or its board of directors from
disclosing to the Company’s stockholders a position with respect to a tender
offer by a third party pursuant to Rules 14d-9 and 14e-2(a) promulgated
under the Exchange Act or Item 1012(a) of Regulation M-A; provided, however, that
unless such disclosure consists solely of a “stop, look and listen”
communication containing only statements contemplated by Rule 14d-9(f)
under the Exchange Act, the Company shall first comply with Section 5.3(g)(iii)
to the extent applicable to such disclosure and such disclosure may, to the
extent provided herein, constitute a Triggering Event.
Section
6.Additional Covenants of the Parties
6.1 Stockholder Approval; Proxy
Statement.
(a) If
the adoption of this Agreement by the Company’s stockholders is required by
applicable Legal Requirements in order to consummate the Merger, the Company
shall, as promptly as practicable following the later of the Acceptance Time or
the expiration of any subsequent offering period provided in accordance with
Rule 14d-11 under the Exchange Act, take all action necessary or advisable
under applicable Legal Requirements to call, give notice of and hold a meeting
of the holders of Company Common Stock to vote on the adoption of this Agreement
(the “Company
Stockholders’ Meeting”). The Company shall ensure that all
proxies solicited in connection with the Company Stockholders’ Meeting are
solicited in compliance with all applicable Legal Requirements.
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(b) If
the adoption of this Agreement by the Company’s stockholders is required by
applicable Legal Requirements in order to consummate the Merger, as soon as
practicable following the later of the Acceptance Time or the expiration of any
subsequent offering period provided in accordance with Rule 14d-11 under
the Exchange Act, (i) the Company shall prepare and file with the SEC the
Proxy Statement, and (ii) Parent shall prepare and file with the SEC the
Post-Effective Amendment. Each of Parent and the Company shall use
its reasonable efforts to (A) cause the Post-Effective Amendment and the
Proxy Statement to comply in all material respects with applicable Legal
Requirements (including the Exchange Act and the Securities Act and the rules
and regulations thereunder), (B) respond promptly to any comments received
from the SEC or its staff with respect to the Post-Effective Amendment or the
Proxy Statement, (C) have the Post-Effective Amendment declared effective
under the Securities Act as promptly as practicable after it is filed with the
SEC, and (D) cause the Proxy Statement to be mailed to the Company’s
stockholders as promptly as practicable after the Post-Effective Amendment is
declared effective under the Securities Act. The Company
(x) shall give Parent reasonable opportunity to comment on any
correspondence with the SEC or its staff regarding the Proxy Statement or any
proposed material to be included in the Proxy Statement prior to its
transmission to the SEC or its staff and (y) shall not transmit any such
material to which Parent reasonably objects. Parent (I) shall
give the Company reasonable opportunity to comment on any correspondence with
the SEC or its staff regarding the Post-Effective Amendment or any proposed
material to be included in the Post-Effective Amendment prior to its
transmission to the SEC or its staff and (II) shall not transmit any such
material to which the Company reasonably objects. The Company shall
respond promptly to any comments received from the SEC or its staff with respect
to the Proxy Statement, and shall correct promptly any information in the Proxy
Statement if and to the extent that it becomes aware that such information shall
be or shall have become false or misleading in any material
respect. If at any time prior to the Company Stockholders’ Meeting
there shall occur any event that should be set forth in an amendment or
supplement to the Post-Effective Amendment or to the Proxy Statement, or the
Post-Effective Amendment or the prospectus included therein is amended by Parent
to correct any information therein, the Company shall (1) with respect to
the Post-Effective Amendment and the prospectus included therein, cooperate with
Parent in filing such amendment or supplement with the SEC and transmitting such
supplement or amendment to the Company’s stockholders, and (2) with respect
to the Proxy Statement, promptly prepare such an amendment or supplement and,
after obtaining the consent of Parent to such amendment or supplement, promptly
transmit such amendment or supplement to the Company's
stockholders.
(c) Notwithstanding
anything to the contrary contained in this Agreement, if Parent, Acquisition Sub
or any other Subsidiary of Parent shall own, by virtue of the Offer or
otherwise, in the aggregate at least 90% of the outstanding shares of Company
Common Stock, Parent, Acquisition Sub and the Company shall take all
actions necessary and appropriate to cause the merger of Acquisition Sub into
the Company to become effective as soon as practicable following the time such
ownership is first obtained, without a stockholders’ meeting in accordance with
Section 253 of the DGCL.
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(d) If
the adoption of this Agreement by the Company’s stockholders is required by
applicable Legal Requirements in order to consummate the Merger, Parent agrees
to cause all shares of Company Common Stock owned by Parent, Acquisition Sub or
any other Subsidiary of Parent to be present and voted in favor of the adoption
of this Agreement at the Company Stockholders’ Meeting.
6.2 Company Options and Company
Warrants.
(a) At
the Acceptance Time, each Company Option that is outstanding and unexercised as
of immediately prior to the Acceptance Time, whether or not vested, shall
automatically (and without any action on the part of any party hereto or the
holder thereof) be cancelled and cease to represent a right to acquire shares of
Company Common Stock, and converted into the right (each, a “Right”) to receive
the following:
(i) if
the exercise price per share of such Company Option is less than the Cash
Component, then (A) an amount of cash determined by multiplying (1) the number of shares of
Company Common Stock that were subject to such Company Option immediately prior
to the Acceptance Time, times (2) the
amount by which (x) the Cash Component exceeds (y) the
exercise price per share of such Company Option, and (B) a number of shares
of Parent Common Stock determined by multiplying (1) the number of
shares of Company Common Stock that were subject to such Company Option
immediately prior to the Acceptance Time, times (2) the
Applicable Fraction;
(ii) if
the exercise price per share of such Company Option is equal to the Cash
Component, then (A) no cash and (B) a number of shares of Parent
Common Stock determined by multiplying (1) the number of
shares of Company Common Stock that were subject to such Company Option
immediately prior to the Acceptance Time, times (2) the
Applicable Fraction;
(iii) if
the exercise price per share of such Company Option is greater than the Cash
Component but less than the Total Option Value (as defined below), then
(A) no cash and (B) a number of shares of Parent Common Stock
determined by multiplying (1) the number of
shares of Company Common Stock that were subject to such Company Option
immediately prior to the Acceptance Time, times (B) the
Applicable Fraction, times (C) the
In-the-Money Option Percentage (as defined below); and
(iv) if
the exercise price per share of such Company Option is greater than the Total
Option Value, then (A) no cash and (B) no shares of Parent Common
Stock.
For
purposes of this Section 6.2(a): (1) the
“Total Option
Value” shall be the sum of (i) the Cash Component, plus (ii) the
product of the Applicable Fraction times the Parent
Average Stock Price; and (2) the “In-the-Money Option
Percentage” shall be the percentage corresponding to a fraction
(i) whose numerator is the sum of (A) an amount equal to the product
of the Applicable Fraction times the Parent
Average Stock Price, minus (B) the
amount by which the exercise price per share of such Company Option exceeds the Cash
Component, and (ii) whose denominator is an amount equal to the product of
the Applicable Fraction times the Parent
Average Stock Price. The vesting terms previously applicable to any
Company Option that is so cancelled and converted into a Right shall continue in
full force and effect and in all respects apply to such Right, and the cash and
shares of Parent Common Stock payable or issuable in respect of such Right, as
set forth in clauses “(i)” through “(iv)” above, shall be delivered to the
holder of such Right at such times and in the same percentages as the cancelled
Company Option would have become vested in connection with or following the
acquisition of shares by Acquisition Sub pursuant to the Offer and/or
consummation of the Merger. For the avoidance of doubt, any vesting
of a Company Option that occurs by reason of the acquisition of shares by
Acquisition Sub pursuant to the Offer and/or consummation of the Merger (whether
alone or in combination with any other event) shall be given effect by its
application to the Right into which such Company Option shall be converted upon
its cancellation. At the Acceptance Time, Parent’s board of directors
or a committee thereof shall succeed to the authority and responsibility of the
Company’s board of directors or any committee thereof with respect to each such
Company Option and corresponding Right.
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(b) Within
ten (10) business days following the Acceptance Time, Parent shall send to
each former holder of a Company Option a written notice setting forth the amount
of cash and the number of shares of Parent Common Stock subject to each Right in
respect of a Company Option.
(c) Prior
to the Acceptance Time, the Company shall use commercially reasonable efforts to
take all action that may be necessary (under the Company Equity Plans and
otherwise) to effectuate the provisions of this Section 6.2 and
to ensure that, from and after the Effective Time, holders of Company Options
have no rights with respect thereto other than those specifically provided in
this Section 6.2.
(d) At
the Acceptance Time, each Company Warrant that is outstanding immediately prior
to the Acceptance Time shall automatically (and without any action on the part
of any party hereto or the holder thereof) be cancelled and cease to represent a
right to acquire shares of Company Common Stock, and converted into the right to
receive (i) an amount of cash determined by multiplying (A) the number of shares of
Company Common Stock that were subject to such Company Warrant immediately prior
to the Acceptance Time, times (B) the
Cash Component, times (C) the
In-the-Money Warrant Percentage (as defined below), and (ii) a number of
shares of Parent Common Stock determined by multiplying (A) the number of
shares of Company Common Stock that were subject to such Company Warrant
immediately prior to the Acceptance Time, times (B) the
Applicable Fraction, times (C) the
In-the-Money Warrant Percentage. For purposes of this Section 6.2(d),
the “In-the-Money
Warrant Percentage” shall be the percentage corresponding to a fraction
(1) whose numerator is the sum of (A) the Cash Component, plus (B) an
amount equal to the product of the Applicable Fraction times the Parent
Average Stock Price, minus (C) the
exercise price per share of such Company Warrant, and (2) whose denominator
is the sum of (A) the Cash Component, plus (B) an
amount equal to the product of the Applicable Fraction times the Parent
Average Stock Price.
(e) The
Surviving Corporation shall be entitled to deduct and withhold from the amounts
otherwise payable pursuant to this Section 6.2 such
amounts as Parent or the Surviving Corporation is required to deduct and
withhold under the Code, or any provision of state or local Tax
law. Notwithstanding the foregoing, no deduction or withholding shall
be made with respect to amounts payable in consideration for the Company
Warrants if the holder thereof provides documentation reasonably requested by
Parent or the Surviving Corporation that evidences that such deduction or
withholding is not required.
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6.3 Employees, Compensation
and
Benefits.
(a) Parent
agrees that, during the period commencing at the Effective Time and ending on
the first anniversary of the Effective Time, all employees of the Company who
continue employment with Parent, the Surviving Corporation or any Subsidiary of
the Surviving Corporation after the Effective Time (“Continuing
Employees”) will be provided with base salary, incentive compensation
opportunities and employee benefits (excluding equity, equity-based and
long-term incentive opportunities) that are no less favorable in the aggregate
than that provided by the Company and immediately prior to the Effective
Time. Parent agrees that the acquisition of shares of Company Common
Stock by Acquisition Sub pursuant to the Offer shall be deemed a “change in
control” and/or “change of control” for all purposes under each of the Company
Employee Plans and Company Employee Agreements.
(b) If
Parent elects not to maintain the Surviving Corporation’s health, vacation or
401(k) plans after the Effective Time, then, subject to any Legal
Requirements: (i) all Continuing Employees shall be eligible to
participate in Parent’s health, vacation and 401(k) plans, to substantially the
same extent as similarly situated employees of Parent; and (ii) for
purposes of determining a Continuing Employee’s eligibility to participate in
such plans, such Continuing Employee shall receive credit under such plans for
his or her years of continuous service with the Company prior to the Effective
Time. Each such Continuing Employee will receive credit for purposes
of eligibility to participate, level of benefits, vesting and vacation, sick and
personal time off (but not for purposes of benefit accrual) under such plan,
program or policy for years of service with the Company, provided that such credit
does not result in a duplication of benefits, compensation, incentive or
otherwise. Parent shall cause any and all pre-existing condition (or
actively at work or similar) limitations, eligibility waiting periods and
evidence of insurability requirements under Parent’s employee benefit plans in
which Continuing Employees are eligible to participate after the Effective Time
to be waived with respect to such Continuing Employees and their eligible
dependents, and shall provide Continuing Employees and their eligible dependents
with credit for any co-payments, deductibles, and offsets (or similar payments)
made during the plan year in which the Effective Time occurs for the purposes of
satisfying any applicable deductible, out-of-pocket, or similar requirements
under any of Parent’s employee benefit plans in which they are eligible to
participate after the Effective Time.
(c) Nothing
in this Section 6.3 or
elsewhere in this Agreement shall be construed to create a right in any Company
Associate to employment with Parent, the Surviving Corporation or any other
Subsidiary of Parent. Except for Indemnified Persons (as defined in
Section 6.4(a))
to the extent of their respective rights pursuant to Section 6.4, no
Company Associate, and no Continuing Employee, shall be deemed to be a third
party beneficiary of this Agreement. Nothing in this Section 6.3(c)
shall limit the effect of Section 9.9.
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(d) Unless
otherwise requested by Parent in writing at least two (2) days prior to the
Acceptance Time, the Company shall take (or cause to be taken) all actions
necessary or appropriate to terminate, effective no later than the day prior to
the date on which the Merger becomes effective, any Company Employee Plan that
contains a cash or deferred arrangement intended to qualify under
Section 401(k) of the Code (a “Company 401(k)
Plan”). If the Company is required to terminate any Company
401(k) Plan, then the Company shall provide to Parent prior to the date on which
the Acceptance Time occurs written evidence of the adoption by the Company’s
board of directors of resolutions authorizing the termination of such Company
401(k) Plan (the form and substance of which shall be subject to the prior
review and approval of Parent). The Company also shall take such
other actions in furtherance of terminating such Company 401(k) Plan as Parent
may reasonably request.
(e) To
the extent any employee notification or consultation requirements are imposed by
applicable Legal Requirements with respect to the Contemplated Transactions, the
Company shall cooperate with Parent to ensure that such notification or
consultation requirements are complied with prior to the Effective
Time. Prior to the Effective Time, neither the Company nor any ERISA
Affiliate shall communicate with Continuing Employees regarding post-Closing
employment matters, including post-Closing employee benefits and compensation,
without the prior written approval of Parent, which shall not be unreasonably
withheld.
6.4 Indemnification of Officers and
Directors.
(a) Parent
and the Company agree that all rights to exculpation, indemnification and
advancement of expenses existing as of the date of this Agreement in favor of
the current (as of the Effective Time) or former directors or officers of the
Company (each, an “Indemnified Person”)
as provided in the Charter Documents or in any Indemnification Agreement (as
defined below) shall survive the Merger and shall continue in full force and
effect. For a period of six (6) years from the Effective Time,
Parent shall cause the Surviving Corporation to maintain in effect the
exculpation, indemnification and advancement of expenses provisions of the
Charter Documents as in effect as of the date of this Agreement or in any
Indemnification Agreements, and shall not amend, repeal or otherwise modify any
such provisions in any manner that would adversely affect the rights thereunder
of any Indemnified Person; provided, however, that all
rights to exculpation, indemnification and advancement of expenses in favor of
such Indemnified Person in respect of any Action (as defined in Section 5.5(b))
pending or asserted or any claim made against them within such six-year period
shall continue until the final disposition of such Action or resolution of such
claim. From and after the Effective Time, Parent shall cause the
Surviving Corporation to honor, in accordance with their respective terms, each
of the covenants contained in this Section 6.4. For
purposes of this Agreement, “Indemnification
Agreement” shall mean any indemnification agreement between the Company
and an Indemnified Person, as such agreement is in effect as of the date of this
Agreement.
(b) Without
limitation of any superior rights in the Charter Documents or any
Indemnification Agreement, Parent shall cause the Surviving Corporation to, to
the fullest extent permitted under applicable Legal Requirements, indemnify and
hold harmless each Indemnified Person against any costs or expenses (including
advancing attorneys’ fees and expenses in advance of the final disposition of
any Action to each Indemnified Person to the fullest extent permitted by
applicable Legal Requirements), judgments, fines, losses, claims, damages,
liabilities and amounts paid in settlement in connection with any actual or
threatened claim, action, suit, proceeding or investigation, whether civil,
criminal, administrative or investigative (an “Action”) arising out
of, relating to or in connection with any action or omission by such Indemnified
Person occurring or alleged to have occurred at or before the Effective Time
(whether such Action is asserted or claimed prior to, at or after the Effective
Time) in connection with such Indemnified Person serving as an officer or
director of the Company or at the request of the Company as a director, officer,
employee, agent or trustee of another corporation or of a partnership, joint
venture, trust or other enterprise, including service with respect to an
employee benefit plan. In the event of any such Action, Parent and
the Surviving Corporation shall cooperate with the Indemnified Person in the
defense of any such Action.
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(c) Prior
to the Effective Time, the Company shall purchase and prepay a six-year “tail”
policy on terms and conditions providing substantially equivalent benefits and
coverage levels as the current policies of directors’ and officers’ liability
insurance and fiduciary liability insurance maintained by the Company (the
“Existing D&O
Policies”) with
respect to matters arising at or before the Effective Time, covering without
limitation the Contemplated Transactions (the “Tail Policy”); provided, however, that if
such “tail” policy is not available at a cost equal to or less than 300% of the
aggregate annual premiums paid by the Company during the most recent policy year
for the Existing D&O Policies (the “Maximum Premium
Amount”), the Company shall purchase the best coverage as is reasonably
available for such amount. Parent shall cause the Tail Policy to be
maintained in full force and effect, for its full term, and cause all
obligations thereunder to be honored by the Surviving Corporation. In
the event that any of the carriers issuing or reinsuring the Tail Policy shall
become insolvent or otherwise financially distressed such that any of them is
unable to satisfy its financial obligations under the Tail Policy at any time
during the aforementioned six-year period, Parent agrees that it shall, from
time to time, cause the Tail Policy to be replaced with another prepaid “tail”
policy on terms and conditions providing substantially equivalent benefits and
coverage levels as the Tail Policy, with a term extending for the remainder of
such six-year period (the “New Tail Policy”);
provided, however, that
in no event shall the maximum amount that Parent is required to expend to obtain
any New Tail Policy under this Section 5.5(c)
exceed the amount by which the Maximum Premium Amount exceeds the sum of
(i) the premium paid by the Company for the Tail Policy plus (ii) the aggregate
premium(s) paid by Parent and the Surviving Corporation to obtain any other New
Tail Policy. In such event, references in this Agreement to the Tail
Policy shall be deemed to include any New Tail Policy, as
applicable.
(d) The
rights of each Indemnified Person hereunder shall be in addition to, and not in
limitation of, any other rights such Indemnified Person may have under the
Charter Documents of the Company or the Surviving Corporation, under any other
indemnification arrangement, under the DGCL or otherwise. The
provisions of this Section 6.4
shall survive the consummation of the Merger and expressly are intended to
benefit, and are enforceable by, each of the Indemnified Persons.
(e) This
Section 6.4
shall be binding on Parent and the Surviving Corporation and their successors
and assigns.
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6.5 Regulatory Approvals and Related
Matters.
(a) Each
party shall use commercially reasonable efforts to file, as soon as practicable
after the date of this Agreement, all notices, reports and other documents
required to be filed by such party with any Governmental Body with respect to
the Offer, the Merger and the other Contemplated Transactions, and to submit
promptly any additional information requested by any such Governmental
Body. Without limiting the generality of the foregoing, the Company
and Parent shall, promptly after the date of this Agreement and in any event
within ten (10) business days, prepare and file: (i) the notification
and report forms required to be filed under the HSR Act in connection with the
Offer, the Merger and the other Contemplated Transactions; and (ii) if
required in connection with the Offer, the Merger and the other Contemplated
Transactions, all notifications and other documents under all applicable foreign
antitrust- or competition-related Legal Requirements. The Company and
Parent shall respond as promptly as practicable to: (A) any inquiries or
requests received from the Federal Trade Commission or the Department of Justice
for additional information or documentation; and (B) any inquiries or
requests received from any state attorney general, foreign antitrust or
competition authority or other Governmental Body in connection with antitrust or
competition matters. At the request of Parent, the Company shall
agree to divest, sell, dispose of, hold separate or otherwise take or commit to
take any other action with respect to any of the businesses, product lines or
assets of the Company, provided that any such action
is conditioned upon the consummation of the Offer or the Merger.
(b) Subject
to the limitations set forth in Section 6.5(c),
Parent and the Company shall use commercially reasonable efforts to take, or
cause to be taken, all actions necessary to consummate the Offer and the Merger
and make effective the other Contemplated Transactions. Without
limiting the generality of the foregoing, but subject to the limitations set
forth in Section 6.5(c),
each party to this Agreement: (i) shall make all filings (if any) and give
all notices (if any) required to be made and given by such party or any of its
Subsidiaries in connection with the Offer and the Merger and the other
Contemplated Transactions; (ii) shall use commercially reasonable efforts
to obtain each Consent (if any) required to be obtained pursuant to any
applicable Legal Requirement by such party or any of its Subsidiaries in
connection with the Offer and the Merger or any of the other Contemplated
Transactions; and (iii) shall use commercially reasonable efforts to lift
any restraint, injunction or other legal bar to the Offer or the Merger or any
of the other Contemplated Transactions. Each of Parent and the
Company shall provide the other party with a copy of each proposed filing with
or other submission to any Governmental Body relating to any of the Contemplated
Transactions, and shall give the other party a reasonable time prior to making
such filing or other submission in which to review and comment on such proposed
filing or other submission. Each of Parent and the Company shall
promptly deliver to the other party a copy of each such filing or other
submission made, each notice given and each Consent obtained.
(c) Notwithstanding
anything to the contrary contained in this Section 6.6 or
elsewhere in this Agreement, neither Parent nor Acquisition Sub shall have any
obligation under this Agreement to take any of the following actions, if Parent
determines in good faith that taking such actions could reasonably be expected
to materially affect the business or interests of Parent, any of Parent’s
Subsidiaries or the Surviving Corporation in any adverse way: (i) to
dispose of or transfer or cause any of its Subsidiaries to dispose of or
transfer any assets, or to commit to cause the Company to dispose of or transfer
any assets; (ii) to discontinue or cause any of its Subsidiaries to
discontinue offering any product or service, or to commit to cause the Company
to discontinue offering any product or service; (iii) to license or
otherwise make available, or cause any of its Subsidiaries to license or
otherwise make available to any Person any technology, software or other
Intellectual Property or Intellectual Property Right, or to commit to cause the
Company to license or otherwise make available to any Person any technology,
software or other Intellectual Property or Intellectual Property Right;
(iv) to hold separate or cause any of its Subsidiaries to hold separate any
assets or operations (either before or after the Closing Date), or to commit to
cause the Company to hold separate any assets or operations; (v) to make or
cause any of its Subsidiaries to make any commitment, or to commit to cause the
Company to make any commitment (to any Governmental Body or otherwise) regarding
its future operations or the future operations of the Company; or (vi) to
contest any Legal Proceeding or any order, writ, injunction or decree relating
to the Offer or the Merger or any of the other Contemplated
Transactions.
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6.6 Notification of Certain
Matters.
(a) During
the Pre-Closing Period, the Company shall promptly notify Parent in writing of
the discovery by the Company of: (i) any event, condition, fact
or circumstance that occurred or existed on or prior to the date of this
Agreement and that caused or constitutes a material inaccuracy in any
representation or warranty made by the Company in this Agreement; (ii) any
event, condition, fact or circumstance that occurs, arises or exists after the
date of this Agreement and that would cause or constitute a material inaccuracy
in any representation or warranty made by the Company in this Agreement if such
event, condition, fact or circumstance had occurred, arisen or existed on or
prior to the date of this Agreement; (iii) any material breach of any
covenant or obligation of the Company; and (iv) any event, condition, fact
or circumstance that would make the timely satisfaction of any of the Offer
Conditions or the conditions set forth in Section 7
impossible or would make the failure of any such condition reasonably
likely. No notification given to Parent pursuant to this Section 6.6(a) or any information
or knowledge obtained pursuant to Section 5.1
shall limit or otherwise affect any of the representations, warranties,
covenants or obligations of the Company contained in this
Agreement.
(b) During
the Pre-Closing Period, Parent shall promptly notify the Company in writing of
the discovery by Parent of: (i) any event, condition, fact or
circumstance that occurred or existed on or prior to the date of this Agreement
and that caused or constitutes a material inaccuracy in any representation or
warranty made by Parent or Acquisition Sub in this Agreement; (ii) any
event, condition, fact or circumstance that occurs, arises or exists after the
date of this Agreement and that would cause or constitute a material inaccuracy
in any representation or warranty made by Parent or Acquisition Sub in this
Agreement if such event, condition, fact or circumstance had occurred, arisen or
existed on or prior to the date of this Agreement; (iii) any material
breach of any covenant or obligation of Parent or Acquisition Sub; and
(iv) any event, condition, fact or circumstance that would make the timely
satisfaction of any of the Offer Conditions or the conditions set forth in Section 7
impossible or would make the failure of any such condition reasonably
likely. No notification given to the Company pursuant to this Section 6.6(b)
or any information or knowledge obtained pursuant to Section 5.1
shall limit or otherwise affect any of the representations, warranties,
covenants or obligations of Parent or Acquisition Sub contained in this
Agreement.
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6.7 Public
Announcements. Parent and the Company shall consult with one
another before any press release is issued by a party hereto or any public
statement is made by a party hereto with respect to the Offer, the Merger or any
of the other Contemplated Transactions. Except as otherwise required
or permitted by this Agreement, the parties to this Agreement shall not, and
shall not permit any of their respective Subsidiaries or Representatives to,
make any public disclosure regarding the Offer, the Merger or any of the other
Contemplated Transactions unless (a) the other parties shall have approved
such disclosure (which approval shall not be unreasonably withheld, conditioned
or delayed) or (b) such disclosure is required by applicable Legal
Requirements.
6.8 Listing. Parent
shall use commercially reasonable efforts to cause the shares of Parent Common
Stock being issued in the Offer to be promptly approved for listing (subject to
notice of issuance) on The Nasdaq Capital Market at or prior to the Acceptance
Time and shall cause the shares of Parent Common Stock being issued in the
Merger to be approved for listing (subject to notice of issuance) on The Nasdaq
Capital Market at or prior to the Effective Time.
6.9 Financing. During
the Pre-Closing Period, upon the request of Parent, the Company shall, and shall
instruct its Representatives to, cooperate reasonably with Parent in connection
with Parent’s financing of the Offer and the Merger, including
by: (i) making senior management of the Company available to
participate in meetings and road shows, if any; (ii) providing on a timely
basis information reasonably requested by Parent relating to such financing;
(iii) preparing in a timely manner business projections and financial
statements (including pro forma financial statements), including delivery to
Parent of a balance sheet, income statement and statement of cash flows for the
Company for any fiscal year that has ended at least 90 days prior to the
Closing Date and for any fiscal quarter since the most recently ended fiscal
year that has ended at least 45 days prior to the Closing Date;
(iv) assisting in a timely manner in the preparation of offering memoranda,
private placement memoranda, prospectuses and similar documents;
(v) providing such assistance as Parent may reasonably require in procuring
a corporate credit rating for Parent from Standard & Poor’s Rating Services
and a corporate family credit rating for Parent from Xxxxx’x Investor Services,
Inc.; (vi) obtaining the consent of, and customary comfort letters from,
BDO Xxxxxxx, LLP (including by providing customary management letters and
requesting legal letters to obtain such consent) if necessary or desirable for
Parent’s use of the Company’s financial statements; (vii) using
commercially reasonable efforts to ensure that the syndication effort of the
lenders to Parent benefit materially from the existing lending relationships of
the Company; and (viii) providing such other documents as may be reasonably
requested by Parent for such financing, including (x) confirmation of
public or non-public nature of information provided, (y) solvency and
closing certificates and documents and information necessary to facilitate the
pledge of collateral (including the release of any Encumbrances on the assets of
the Company), and (z) providing such documentation and other information to
Parent’s lenders that is required by regulatory authorities under applicable
“know your customer” and anti-money laundering rules and regulations, including
without limitation, the Patriot Act; provided, however, to the extent that a
third party (including the Person brokering, arranging or providing the
financing) is proposed to receive confidential information in connection with
any of the foregoing activities, the Company’s related obligations shall be
subject to such party first entering into a confidentiality agreement in form
and substance reasonably acceptable to the Company. Without limiting
the generality of the foregoing, all financial and other projections concerning
the Company that are Made Available by the Company to Parent after the date of
this Agreement shall be prepared in good faith and shall be based upon
assumptions that are reasonable at the time made. Notwithstanding the
foregoing: (A) such requested cooperation shall not unreasonably
interfere with the ongoing operations of the Company; and (B) the Company
shall not be required to pay any commitment or other similar fee or incur any
other liability in connection with such financing prior to the Acceptance
Time.
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6.10 Stockholder
Litigation. The Company shall give Parent the
opportunity to participate in the defense or settlement of any stockholder
litigation (including any class action or derivative litigation) against the
Company and/or any of its directors or officers relating to this Agreement, the
Offer, the Merger or any of the other Contemplated Transactions or the
Stockholder Agreements, and no compromise or full or partial settlement of any
such litigation shall be agreed to by the Company without Parent’s prior written
consent (which consent shall not be unreasonably withheld, conditioned or
delayed).
6.11 Section 16
Matters. Prior to the Effective Time, Parent and the Company
shall take all such steps as may be required (to the extent permitted under
applicable Legal Requirements and no-action letters issued by the SEC) to cause
any dispositions of Company Common Stock (including derivative securities with
respect to Company Common Stock) in connection with the Merger by each
individual who is subject to the reporting requirements of Section 16(a) of
the Exchange Act with respect to the Company, and the acquisition of Parent
Common Stock (including derivative securities with respect to Parent Common
Stock) by each individual who is or will be subject to the reporting
requirements of Section 16(a) of the Exchange Act with respect to Parent,
to be exempt under Rule 16b-3 under the Exchange Act. At least
five (5) days prior to the Closing Date, the Company shall furnish the
following information to Parent for each individual who, in connection with the
Contemplated Transactions, immediately after the Effective Time, will become
subject to the reporting requirements of Section 16(a) of the Exchange Act
with respect to Parent: (a) the number of shares of Company
Common Stock held by such individual and expected to be exchanged for shares of
Parent Common Stock pursuant to the Merger; (b) the number of Company
Options and Company RSUs held by such individual and expected to be converted
into options to purchase or rights to be issued shares of Parent Common Stock in
connection with the Merger; and (c) the number of other derivative
securities (if any) with respect to Company Common Stock held by such individual
and expected to be converted into shares of Parent Common Stock or derivative
securities with respect to Parent Common Stock in connection with the
Merger.
Section 7.
Conditions Precedent to the Merger
The
respective obligations of the parties to effect the Merger are subject to the
satisfaction, at or prior to the Closing, of each of the following
conditions:
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7.1 Stockholder
Approval. If required by applicable Legal Requirements in
order to consummate the Merger, this Agreement shall have been duly adopted by
the Required Company Stockholder Vote.
7.2 No Restraints. No
temporary restraining order, preliminary or permanent injunction or other order
preventing the consummation of the Merger shall have been issued by any court of
competent jurisdiction and remain in effect, and there shall not be any Legal
Requirement enacted or deemed applicable to the Merger by a Governmental Body
having authority over Parent, Acquisition Sub or the Company that makes
consummation of the Merger illegal; provided, however, that prior
to invoking this Section 7.2,
each party shall have used its commercially reasonable efforts to have any such
injunction, order or Legal Requirement or other prohibition lifted.
7.3 Effectiveness of Registration
Statement. The Registration Statement and the Post-Effective
Amendment shall have become effective in accordance with the provisions of the
Securities Act, and no stop order shall have been issued by the SEC and be
outstanding, and no proceeding for that purpose shall have been initiated by the
SEC and be outstanding or be threatened by the SEC, with respect to the
Registration Statement or the Post-Effective Amendment.
7.4 Consummation of
Offer. Shares of Company Common Stock validly tendered (and
not withdrawn) pursuant to the Offer shall have been accepted for exchange and
paid for pursuant to the Offer; provided, however, that
neither Parent nor Acquisition Sub shall be entitled to assert the failure of
this condition if, in breach of this Agreement or the terms of the Offer,
Acquisition Sub fails to purchase any shares of Company Common Stock validly
tendered (and not withdrawn) pursuant to the Offer.
Section
8.Termination
8.1 Termination. This
Agreement may be terminated:
(a) by
mutual written consent of Parent and the Company at any time prior to the
Effective Time;
(b) by
either Parent or the Company at any time prior to the Effective Time if any U.S.
court of competent jurisdiction or other U.S. Governmental Body having authority
over Parent, Acquisition Sub or the Company shall have issued a final and
nonappealable judgment, order, injunction, writ or decree, or shall have taken
any other action, having the effect of (i) permanently restraining,
enjoining or otherwise prohibiting (A) prior to the Acceptance Time, the
acquisition or acceptance for exchange of, or the delivery of consideration in
exchange for, shares of Company Common Stock pursuant to the Offer or
(B) prior to the Effective Time, the Merger, (ii) prior to the
Acceptance Time, making the acquisition of or delivery of consideration for
shares of Company Common Stock pursuant to the Offer illegal, or
(iii) prior to the Effective Time, making the consummation of the Merger
illegal; provided,
however, that (1) the party to this Agreement seeking to terminate
this Agreement pursuant to this Section 8.1(b)
shall have used commercially reasonable efforts to resist or lift such judgment,
order, injunction, writ or decree and (2) a party shall not be permitted to
terminate this Agreement pursuant to this Section 8.1(b) if the issuance of
such judgment, order, injunction, writ or decree is attributable to the failure
of such party to fulfill any of its obligations under this
Agreement;
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(c) by
either Parent or the Company at any time after March 31, 2010 and prior to the
Acceptance Time if the Acceptance Time shall not have occurred on or prior to
March 31, 2010; provided,
however, that a party shall not be permitted to terminate this Agreement
pursuant to this Section 8.1(c) if the failure of
the Acceptance Time to occur on or prior to March 31, 2010 is attributable to
the failure of such party to fulfill any of its obligations under this
Agreement;
(d) by
Parent at any time prior to the Acceptance Time if a Triggering Event shall have
occurred;
(e) by
the Company at any time prior to the Acceptance Time, in order to accept a
Superior Proposal and enter into the Specified Definitive Acquisition Agreement
relating to such Superior Proposal, if (i) such Superior Proposal shall not
have resulted from a breach by the Company of any of the provisions
of Section 5.3,
(ii) the Company and its board of directors shall have satisfied in all
material respects all of the notice, negotiation and other requirements set
forth in Section 5.3(g)
with respect to such Superior Proposal and the negotiation period(s) described
in Section 5.3(g)(iii)
shall have expired, (iii) the Company shall have, or shall have caused to
be, paid to Parent the fee required to be paid to Parent pursuant to Section 8.3(c)
or Section 8.3(d),
as applicable, and (iv) the Company enters into the Specified Definitive
Acquisition Agreement relating to such Superior Proposal immediately following
the termination of this Agreement;
(f) by
Parent at any time prior to the Acceptance Time if: (i) any of
the Company’s representations and warranties contained in this Agreement shall
be inaccurate as of the date of this Agreement or shall have become inaccurate
as of a date subsequent to the date of this Agreement (as if made on such
subsequent date), in either case such that the condition set forth in clause “(a)” of Exhibit B or the
condition set forth in clause “(b)” of Exhibit B would
not be satisfied (it being understood that, for purposes of determining the
accuracy of such representations and warranties as of the date of this Agreement
or as of any subsequent date, (A) all “Company Material Adverse Effect” and
other qualifications based on the word “material” contained in such
representations and warranties shall be disregarded and (B) any update of
or modification to the Disclosure Schedule made or purported to have been made
on or after the date of this Agreement shall be disregarded); or (ii) any
of the Company’s covenants contained in this Agreement shall have been breached
such that the condition set forth in clause “(c)” of Exhibit B would
not be satisfied; provided,
however, that if such inaccuracy or breach is curable by the Company
within 30 days after receiving notice thereof and the Company is continuing
to exercise reasonable efforts to cure such inaccuracy or breach, then Parent
may not terminate this Agreement under this Section 8.1(f) on account of such
inaccuracy or breach (1) during the 30-day period commencing on the date on
which the Company receives notice of such inaccuracy or breach or (2) after
such 30-day period if such inaccuracy or breach shall have been cured in a
manner such that such inaccuracy or breach no longer results in the applicable
condition set forth in Exhibit B not
being satisfied;
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(g) by
the Company at any time prior to the Acceptance Time
if: (i) Parent’s representations and warranties contained in
this Agreement shall have failed to be accurate in all respects as of the date
of this Agreement or shall have failed to be accurate in all respects as of a
date subsequent to the date of this Agreement (as if made on such subsequent
date) (in each case, except for representations and warranties that by their
terms are made only as of a specific date or time, which need only be accurate
in all respects as of such date or time), and the inaccuracy in such
representations and warranties has had or could reasonably be expected to have
or result in a material adverse effect on Acquisition Sub’s ability to purchase
and pay for shares of Company Common Stock validly tendered (and not withdrawn)
pursuant to the Offer or Parent’s or Acquisition Sub’s ability to otherwise
consummate the Contemplated Transactions; provided, however, that, for
purposes of determining the accuracy of such representations and warranties, all
“material adverse effect” and other qualifications based on the word “material”
contained in such representations and warranties shall be disregarded;
(ii) Parent or Acquisition Sub shall have materially failed to comply with
or perform its obligations under Sections 1.1(a)
or 6.5(a); or
(iii) Parent or Acquisition Sub shall have materially failed to comply with
or perform each covenant set forth in this Agreement (other than the covenants
set forth in Section 8.1(g)(ii)
above) that Parent or Acquisition Sub is required to comply with or perform, and
such failure has a material adverse effect on Acquisition Sub’s ability to
purchase and pay for shares of Company Common Stock validly tendered (and not
withdrawn) pursuant to the Offer or Parent’s or Acquisition Sub’s ability to
otherwise consummate the Contemplated Transactions; provided, however, that if
any inaccuracy or breach described in clause “(i),” clause “(ii)” or clause “(iii)” above is
curable by Parent or Acquisition Sub within 30 days after receiving notice
thereof and Parent is continuing to exercise reasonable efforts to cure such
inaccuracy or breach, then the Company may not terminate this Agreement under
this Section 8.1(g) on account of such
inaccuracy or breach (1) during the 30-day period commencing on the date on
which Parent receives notice of such inaccuracy or breach or (2) after such
30-day period if such inaccuracy or breach shall have been cured in a manner
such that such inaccuracy or breach no longer has a material adverse effect on
Acquisition Sub’s ability to purchase and pay for shares of Company Common Stock
validly tendered (and not withdrawn) pursuant to the Offer or Parent’s or
Acquisition Sub’s ability to otherwise consummate the Contemplated Transactions;
or
(h) by
Parent at any time prior to the Acceptance Time if a Company Material Adverse
Effect shall have occurred; provided, however, that if
the Company can reasonably expect to cause such Company Material Adverse Effect
to no longer constitute a Company Material Adverse Effect prior to
March 31, 2010 and the Company is continuing to exercise reasonable efforts
to cause such Company Material Adverse Effect to no longer constitute a Company
Material Adverse Effect, then Parent may not terminate this Agreement under this
Section 8.1(h)
on account of such Company Material Adverse Effect prior to the expiration time
of the Offer.
Notwithstanding
anything to the contrary contained in this Section 8.1,
this Agreement may not be terminated by any party unless any fee required to be
paid (or caused to be paid) by such party pursuant to Section 8.3 at
or prior to the time of such termination shall have been paid in
full.
8.2 Effect of
Termination. In the event of the termination of this Agreement
as provided in Section 8.1,
this Agreement shall be of no further force or effect; provided, however, that
(i) this Section 8.2,
Section 8.3 and
Section 9
(and the Confidentiality Agreement) shall survive the termination of this
Agreement and shall remain in full force and effect, (ii) the termination
of this Agreement shall not relieve any party from any liability for any prior
material breach of any covenant or obligation contained in this Agreement and
shall not relieve any party from any liability for any material breach of any
representation or warranty contained in this Agreement, and (iii) no
termination of this Agreement shall in any way affect any of the parties’ rights
or obligations with respect to any shares of Company Common Stock accepted for
exchange pursuant to the Offer prior to such
termination. Notwithstanding anything herein to the contrary, except
with respect to any liability of the Company for any willful or intentional
breach of any covenant or obligation contained in this Agreement, the payment of
the Termination Fee shall be the exclusive remedy of Parent and Acquisition Sub
with respect to a termination of this Agreement pursuant to Sections 8.1(d)
or 8.1(e) or a
termination of this Agreement pursuant to Sections 8.1(c))
followed by payment of the Termination Fee pursuant to Section 8.3(b).
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8.3 Expenses; Termination
Fees.
(a) Except
as set forth in this Section 8.3, all
expenses incurred in connection with this Agreement and the Contemplated
Transactions shall be paid by the party incurring such expenses, whether or not
any shares are purchased pursuant to the Offer and whether or not the Merger is
consummated.
(b) If
(i) this Agreement is terminated by Parent or the Company pursuant to Section 8.1(c),
and (ii) at or prior to the time of the termination of this Agreement an
Acquisition Proposal shall have been publicly disclosed, announced or commenced
(and not withdrawn at least five (5) business days prior to the time of
termination), and (iii) within one (1) year after the date of
termination of this Agreement, (A) an Acquisition Transaction is
consummated or (B) a definitive agreement contemplating an Acquisition
Transaction is executed and such Acquisition Transaction is ultimately
consummated, then the Company shall pay to Parent, in cash at the time such
Acquisition Transaction (as it may have been modified, including any other
Acquisition Transaction among or involving the parties to such definitive
agreement or any of such parties’ affiliates) is consummated, a nonrefundable
fee in the amount of $8,517,000; provided, however, that for
purposes of clause “(iii)” above, all
references to “15%” in the definition of Acquisition Transaction shall be deemed
to refer to “50%”.
(c) If
this Agreement is terminated (i) by Parent at any time pursuant to Section 8.1(d)
based upon clause “(i)” of the
definition of “Triggering Event”, (ii) by Parent following the expiration
of the Go-Shop Period pursuant to Section 8.1(d)
based upon any of clauses “(ii),” “(iii),” “(iv)” or “(v)” of the
definition of “Triggering Event” or (iii) by the Company following the
expiration of the Go-Shop Period pursuant to Section 8.1(e),
then the Company shall pay to Parent, in cash at the time specified in the next
sentence, a nonrefundable fee in the amount of $8,517,000. In the
case of any termination of this Agreement by Parent pursuant to Section 8.1(d), the fee referred
to in the preceding sentence shall be paid by the Company within two (2)
business days after such termination; and in the case of termination of this
Agreement by the Company pursuant to Section 8.1(e), the fee referred
to in the preceding sentence shall be paid by the Company at or prior to the
time of such termination.
(d) If,
during the Go-Shop Period, this Agreement is terminated by the Company pursuant
to Section 8.1(e)
or by Parent pursuant to Section 8.1(d)
based upon any of any of clauses “(ii),” “(iii),” “(iv)” or “(v)” of the
definition of “Triggering Event”, then the Company shall pay to Parent, in cash
at or prior to the time of such termination, a nonrefundable fee in the amount
of $6,388,000.
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(e) If
the Company fails to pay when due any amount payable under Section 8.3(b),
Section 8.3(c)
or Section 8.3(d),
then (i) the Company shall reimburse Parent for all reasonable costs and
expenses (including fees and disbursements of legal counsel) actually incurred
in connection with the collection of such overdue amount and the enforcement by
Parent of its rights under this Section 8.3, and
(ii) the Company shall pay to Parent interest on any amount that is overdue
(for the period during which such amount is overdue) at a rate per annum equal
to 300 basis points over the “prime rate” (as announced by Bank of America or
any successor thereto) in effect on the date such amount was originally required
to be paid.
Section 9.
Miscellaneous Provisions
9.1 Amendment. Subject
to Section 1.3,
this Agreement may be amended with the approval of the respective boards of
directors of the Company and Parent at any time (whether before or after the
adoption of this Agreement by the Company’s stockholders); provided, however, that after
any such adoption of this Agreement by the Company’s stockholders, no amendment
shall be made which under applicable Legal Requirements requires further
approval of the stockholders of the Company without the further approval of such
stockholders. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties
hereto.
9.2 Parent Guarantee. Parent
shall cause Acquisition Sub to comply in all respects with each of its
representations, warranties, covenants, obligations, agreements and undertakings
pursuant to or otherwise in connection with this Agreement, the Offer, the
Merger and the other Contemplated Transactions.
9.3 Waiver.
(a) Subject
to Section 1.3, at
any time prior to the Effective Time, Parent and Acquisition Sub, on the one
hand, and the Company, on the other hand, may (i) extend the time for the
performance of any of the obligations or other acts of the other,
(ii) waive any uncured inaccuracies in the representations and warranties
of the other contained herein or in any document delivered pursuant hereto and
(iii) waive compliance by the other with any of the agreements or
conditions contained herein; provided, however, that after
any approval of this Agreement by the Company’s stockholders, there may not be
any extension or waiver of this Agreement which would require the approval of
the Company’s stockholders under applicable Legal Requirements without the
approval of such stockholders.
(b) No
failure on the part of any party to exercise any power, right, privilege or
remedy under this Agreement, and no delay on the part of any party in exercising
any power, right, privilege or remedy under this Agreement, shall operate as a
waiver of such power, right, privilege or remedy; and no single or partial
exercise of any such power, right, privilege or remedy shall preclude any other
or further exercise thereof or of any other power, right, privilege or
remedy. No party shall be deemed to have waived any claim arising out
of this Agreement, or any power, right, privilege or remedy under this
Agreement, unless the waiver of such claim, power, right, privilege or remedy is
expressly set forth in a written instrument duly executed and delivered on
behalf of such party; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.
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9.4 No Survival of Representations and
Warranties. None of the representations and warranties
contained in this Agreement or in any certificate delivered pursuant to this
Agreement shall survive the Acceptance Time.
9.5 Entire Agreement;
Counterparts. Without limiting Section 8.2,
this Agreement and the other agreements referred to in this Agreement constitute
the entire agreement and supersede all prior agreements and understandings, both
written and oral, among or between any of the parties with respect to the
subject matter hereof and thereof; provided, however, that the
provisions of the Confidentiality Agreement shall not be superseded and shall
remain in full force and effect. This Agreement may be executed in
several counterparts, each of which shall be deemed an original and all of which
shall constitute one and the same instrument.
9.6 Applicable Law;
Jurisdiction. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof. In any action between any of the parties arising out of
or relating to this Agreement or any of the Contemplated
Transactions: (a) each of the parties irrevocably and
unconditionally consents and submits to the exclusive jurisdiction and venue of
the Court of Chancery of the State of Delaware; and (b) each of the parties
irrevocably waives the right to trial by jury.
9.7 Disclosure
Schedule. The fact that any item of information is disclosed
in the Disclosure Schedule shall not be construed to mean that such information
is required to be disclosed by this Agreement. Inclusion of any item
in the Disclosure Schedule shall not be deemed an admission that such item is
material or that such item constitutes or is reasonably likely to result in a
Company Material Adverse Effect. The Disclosure Schedule shall be
arranged in separate parts corresponding to the sections contained in Section 3. However,
descriptive headings in the Disclosure Schedule are inserted for reference
purposes and for convenience of the reader only, and shall not affect the
interpretation thereof or of this Agreement. Nothing contained in the
Disclosure Schedule shall be construed as an admission of liability or
responsibility in connection with any pending, threatened or future matter or
proceeding.
9.8 Attorneys’ Fees. In
any action at law or suit in equity to enforce this Agreement or the rights of
any of the parties hereunder, the prevailing party in such action or suit shall
be entitled to receive a reasonable sum for its attorneys’ fees and all other
reasonable costs and expenses incurred in such action or suit.
9.9 Assignability; Third Party
Beneficiaries. This Agreement shall be binding upon, and
except as otherwise provided in Section 6.4,
shall be enforceable by and inure solely to the benefit of, the parties hereto
and their respective successors and assigns; provided, however, that
neither this Agreement nor any of the rights hereunder may be assigned by any
party hereto without the prior written consent of the other parties, and any
attempted assignment of this Agreement or any of such rights by any party
without such consent shall be void and of no effect. Nothing in this
Agreement, express or implied, is intended to or shall confer any right, benefit
or remedy of any nature whatsoever upon any Person (other than (i) the
parties hereto and (ii) the Indemnified Persons to the extent of their
respective rights pursuant to Section 6.4).
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9.10 Notices. Each
notice, request, demand or other communication under this Agreement shall be in
writing and shall be deemed to have been duly given or made as
follows: (a) if sent by registered or certified mail in the
United States, return receipt requested, then such communication shall be deemed
duly given and made upon receipt; (b) if sent by nationally recognized
overnight air courier (such as DHL or Federal Express), then such communication
shall be deemed duly given and made two (2) business days after being sent;
(c) if sent by facsimile transmission before 5:00 p.m. (California time) on
any business day, then such communication shall be deemed duly given and made
when receipt is confirmed; (d) if sent by facsimile transmission on a day
other than a business day and receipt is confirmed, or if sent after 5:00 p.m.
(California time) on any business day and receipt is confirmed, then such
communication shall be deemed duly given and made on the business day following
the date which receipt is confirmed; and (e) if otherwise actually
personally delivered to a duly authorized representative of the recipient, then
such communication shall be deemed duly given and made when delivered to such
authorized representative; provided that, in all cases,
such notices, requests, demands and other communications are delivered to the
address set forth below, or to such other address as any party shall provide by
like notice to the other parties to this Agreement:
|
|
if
to Parent or Acquisition Sub:
|
|
|
Peet’s
Coffee & Tea, Inc.
|
|
|
0000
Xxxx Xxxxxx
|
|
|
Xxxxxxxxxx,
XX 00000
|
|
|
Attention: Chief
Financial Officer
|
|
|
Facsimile: (000)
000-0000
|
|
|
with
a copy (which shall not constitute notice)
to:
|
|
|
Xxxxxx
Godward Kronish LLP
|
|
|
000
Xxxxxxxxxx Xxxxxx
|
|
|
Xxx
Xxxxxxxxx, XX 00000
|
|
|
Attention: Xxxxxxx
X. Xxxxxxxx
|
|
|
Facsimile: (000)
000-0000
|
|
|
if
to the Company:
|
|
|
Xxxxxxxx
Coffee, Inc.
|
|
|
00
Xxxxxxxxx Xxxx, Xxxxx 000
|
|
|
Xxxxxx,
XX 00000
|
|
|
Attention: Chief
Financial Officer
|
|
|
Facsimile: (000)
000-0000
|
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|
|
with
a copy (which shall not constitute notice)
to:
|
|
|
Xxxxxx
Xxxx & Xxxxxxxx LLP
|
|
|
0000
Xxxxxxxxx Xxxxx
|
|
|
Xxxxxx,
XX 00000
|
|
|
Attention: Xxxx
X. Xxxxxxxx
|
|
|
Facsimile: (000)
000-0000
|
9.11 Cooperation. The
Company and Parent agree to cooperate fully with each other and to execute and
deliver such further documents, certificates, agreements and instruments and to
take such other actions as may be reasonably requested by the other to evidence
or reflect the Contemplated Transactions and to carry out the intent and
purposes of this Agreement.
9.12 Severability. Any
term or provision of this Agreement that is invalid or unenforceable in any
situation in any jurisdiction shall not affect the validity or enforceability of
the remaining terms and provisions hereof or the validity or enforceability of
the offending term or provision in any other situation or in any other
jurisdiction. If the final judgment of a court of competent
jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the parties hereto agree that the court making such determination
shall have the power to limit the term or provision, to delete specific words or
phrases, or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and
this Agreement shall be enforceable as so modified. In the event such
court does not exercise the power granted to it in the prior sentence, the
parties hereto shall replace such invalid or unenforceable term or provision
with a valid and enforceable term or provision that will achieve, to the extent
possible, the economic, business and other purposes of such invalid or
unenforceable term.
9.13 Enforcement. In the
event of any breach or threatened breach by Parent or Acquisition Sub, on the
one hand, or the Company, on the other hand, of any covenant or obligation of
such party contained in this Agreement, the other party shall be entitled to
seek, in addition to any monetary or damages remedy: (a) a
decree or order of specific performance to enforce the observance and
performance of such covenant or obligation; and (b) an injunction
restraining such breach or threatened breach.
9.14 Construction.
(a) For
purposes of this Agreement, whenever the context requires: the
singular number shall include the plural, and vice versa; the masculine gender
shall include the feminine and neuter genders; the feminine gender shall include
the masculine and neuter genders; and the neuter gender shall include masculine
and feminine genders.
(b) The
parties hereto agree that any rule of construction to the effect that
ambiguities are to be resolved against the drafting party shall not be applied
in the construction or interpretation of this Agreement.
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(c) As
used in this Agreement, the words “include” and “including,” and variations
thereof, shall not be deemed to be terms of limitation, but rather shall be
deemed to be followed by the words “without limitation.”
(d) Except
as otherwise indicated, all references in this Agreement to “Sections,”
“Exhibits” and “Schedules” are intended to refer to Sections of this Agreement
and Exhibits or Schedules to this Agreement.
(e) The
bold-faced headings contained in this Agreement are for convenience of reference
only, shall not be deemed to be a part of this Agreement and shall not be
referred to in connection with the construction or interpretation of this
Agreement.
[Signature
page follows.]
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In Witness
Whereof, the parties have caused this Agreement to be executed as of the
date first above written.
Peet’s
Coffee & Tea, Inc.
By: /s/ Xxxxxxx
X’Xxx
Name: Xxxxxxx
X’Xxx
Title: Chief Executive
Officer
Xxxxx
Acquisition Sub, Inc.
By: /s/ Xxx
Xxxxxx
Name: Xxx
Xxxxxx
Title: Chief Financial
Officer
Xxxxxxxx Coffee, Inc.
By: /s/ Xxxxx X
Xxxxxxxx
Name: Xxxxx X.
Xxxxxxxx
Title: President and Chief
Executive Officer
Signature
Page
to
Agreement
and Plan of Merger
Exhibit A
Certain
Definitions
For
purposes of the Agreement (including this Exhibit A and
Exhibit B):
Acceptance
Time. “Acceptance Time”
shall mean the first time as of which Acquisition Sub accepts any shares of
Company Common Stock for exchange pursuant to the Offer.
Acquisition
Inquiry. “Acquisition Inquiry”
shall mean an inquiry, indication of interest or request for information (other
than an inquiry, indication of interest or request for information made or
submitted by Parent, Acquisition Sub or any of their respective Subsidiaries or
by any of their respective Representatives on their behalf) that could
reasonably be expected to lead to an Acquisition Proposal.
Acquisition
Proposal. “Acquisition Proposal”
shall mean any offer, proposal, inquiry or indication of interest (other than an
offer, proposal, inquiry or indication of interest made or submitted by Parent,
Acquisition Sub or any of their respective Subsidiaries or by any of their
respective Representatives on their behalf) relating to any Acquisition
Transaction.
Acquisition
Transaction. “Acquisition
Transaction” shall mean any transaction or series of transactions with
any Person other than Parent or Acquisition Sub or any of their respective
Subsidiaries involving:
(a) any
merger, consolidation, amalgamation, share exchange, business combination,
issuance of securities, acquisition of securities, reorganization,
recapitalization, tender offer, exchange offer or other similar
transaction: (i) in which the Company is a constituent
corporation; (ii) in which a Person or “group” (as defined in the Exchange
Act and the rules thereunder) of Persons directly or indirectly acquires
beneficial or record ownership of securities representing more than 15% of the
outstanding securities of any class of voting securities of the Company; or
(iii) in which the Company issues securities representing more than 15% of
the outstanding securities of any class of voting securities of the Company;
or
(b) any
sale, lease, exchange, transfer, license, acquisition or disposition of any
business or businesses or assets that constitute or account for 15% or more of
the consolidated net revenues, consolidated net income or consolidated assets of
the Company.
Affiliate. “Affiliate” of any
Person shall mean another Person that directly or indirectly, through one or
more intermediaries, controls, is controlled by, or is under common control
with, such first Person.
Agreement. “Agreement” shall mean
the Agreement and Plan of Merger to which this Exhibit A is
attached, as it may be amended from time to time.
Exhibit A
– Page 1
COBRA. “COBRA” shall mean the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.
Code. “Code” shall mean the
Internal Revenue Code of 1986, as amended.
Company
Affiliate. “Company Affiliate”
shall mean any Person under common control with the Company within the meaning
of Sections 414(b), (c), (m) and (o) of the Code, and the regulations
thereunder.
Company
Associate. “Company Associate”
shall mean any current or former employee, independent contractor, consultant or
director of or to the Company or any Company Affiliate.
Company Board
Recommendation. “Company Board
Recommendation” shall mean the recommendation of the Company’s board of
directors that the stockholders of the Company accept the Offer and tender their
shares of Company Common Stock pursuant to the Offer and adopt the
Agreement.
Company Common
Stock. “Company Common Stock”
shall mean the Common Stock, $0.01 par value per share, of the
Company.
Company
Contract. “Company Contract”
shall mean any Contract to which the Company is a party, by which the Company or
any of its assets are bound or pursuant to which the Company has any
rights.
Company Employee
Agreement. “Company Employee
Agreement” shall mean any management, employment, severance, transaction
bonus, change in control, consulting, relocation, repatriation or expatriation
agreement or other Contract between the Company or any Company Affiliate and any
Company Associate, other than: (i) any such Contract which is
terminable “at will” without any obligation on the part of the Company or any
Company Affiliate to make any severance, change in control or similar payment or
provide any benefit; (ii) any Company Employee Plan; and (iii) any
Foreign Plan.
Company Employee
Plan. “Company Employee
Plan” shall mean any plan, program, policy, practice or Contract
providing for compensation, severance, termination pay, deferred compensation,
performance awards, stock or stock-related awards, fringe benefits, retirement
benefits or other benefits or remuneration of any kind, whether written,
unwritten or otherwise and whether funded or unfunded, including each “employee
benefit plan,” within the meaning of Section 3(3) of ERISA (whether or not
ERISA is applicable to such plan): (a) that is or has been
maintained or contributed to, or required to be maintained or contributed to, by
the Company or any Company Affiliate for the benefit of any Company Associate;
and (b) with respect to which the Company or any Company Affiliate has or
may incur or become subject to any liability or obligation; provided, however, that
Company Employee Agreements and Foreign Plans shall not be considered Company
Employee Plans.
Company Equity
Plan. “Company Equity Plan”
shall mean any of the following, in each case as amended: the
Xxxxxxxx Coffee, Inc. 2000 Equity Incentive Plan; the 2000 Non-Employee
Directors Stock Option Plan; the Amended and Restated Xxxxxxxx Coffee, Inc. 1996
Stock Incentive Plan; the Xxxxxxxx Coffee, Inc. 1996 Non-Employee Directors
Stock Option Plan; and the J. Xxxxxxx Xxxxxxxx Stock Option
Agreement.
Exhibit A
– Page 2
Company IP. “Company IP” shall
mean all material Intellectual Property and Intellectual Property Rights that
the Company owns (or purports to own) or in which the Company has (or purports
to have) an exclusive license or similar exclusive right.
Company Material Adverse
Effect. “Company Material Adverse
Effect” shall mean any effect, change, claim, event or circumstance that,
considered together with all other effects, changes, claims, events and
circumstances, has had or could reasonably be expected to have or result in a
material adverse effect on, (1) the business, financial condition or
results of operations of the Company or (2) the ability of the Company to
consummate the Contemplated Transactions, but shall not
include: (i) effects, changes, claims, events or circumstances
resulting from (A) changes since the date of the Agreement in general
economic or political conditions or the securities, credit or financial markets
worldwide, (B) changes since the date of the Agreement in conditions
generally affecting the industry in which the Company operates, (C) changes
since the date of the Agreement in generally accepted accounting principles or
the interpretation thereof, (D) changes since the date of the Agreement in
Legal Requirements, (E) any acts of terrorism or war since the date of the
Agreement, or (F) any stockholder class action or derivative litigation
commenced against the Company since the date of the Agreement and arising from
allegations of breach of fiduciary duty of the Company’s directors relating to
their approval of the Agreement or from allegations of false or misleading
public disclosure by the Company with respect to the Agreement; (ii) any
adverse impact on the Company’s relationships with employees, customers and
suppliers of the Company that is attributable to the announcement or pendency of
the Agreement and the Contemplated Transactions, or any other adverse impact on
the Company that is directly (and to the extent) attributable to the
announcement and pendency of the Contemplated Transactions; (iii) any
failure after the date of the Agreement to meet internal or analyst projections
or forecasts for any period or changes in the trading price or trading volume of
Company Common Stock, in and of itself; or (iv) the taking of any action
required to be taken by the Company pursuant to the Agreement or specifically
instructed or consented to, in advance and in writing, by Parent; provided that, (x) in
the case of each of clauses “(i)(A),” “(i)(B),” (i)(C),” (i)(D)” and “(i)(E)” above, the
exception shall apply so long as and only to the extent that such effects,
changes, claims, events or circumstances do not disproportionately impact the
Company relative to other participants in the industry or industries in which
the Company conducts its business and (y) any facts or circumstances
underlying, causing or contributing to any litigation of the type referred to in
clause “(i)(F)” of the
preceding sentence, or underlying, causing or contributing to any failure or
decline of the type referred to in clause “(iii)” of the
preceding sentence, in each case that are not otherwise excluded from the
definition of a Company Material Adverse Effect, may be taken into account in
determining whether there has been or would be a Company Material Adverse
Effect. Notwithstanding any of the foregoing, (x) for purposes
of the representations and warranties of the Company in Section 3 and
the conditions set forth in clauses “(a)” and “(b)” of Exhibit B, any
effect, change, claim, event or circumstance that results or could reasonably be
expected to result in (i) the termination of any Specified Contract, or
(ii) a material adverse effect on the value to the Company of any Specified
Contract will be considered a Company Material Adverse Effect, and (y) any
action taken by a party to a Specified Contract or any Affiliate of such party
after the date of the Agreement, other than effects, changes, claims, events and
circumstances described in clause “(x)” above, will not
in and of itself be considered a Company Material Adverse Effect.
Exhibit A
– Page 3
Company
Option. “Company Option” shall
mean each option to purchase shares of Company Common Stock from the Company,
whether granted by the Company pursuant to a Company Equity Plan, assumed by the
Company in connection with any merger, acquisition or similar transaction or
otherwise issued or granted and whether vested or unvested; provided that the Top-Up
Option shall not be considered a Company Option.
Company Pension
Plan. “Company Pension Plan”
shall mean each Company Employee Plan that is an “employee pension benefit
plan,” within the meaning of Section 3(2) of ERISA.
Company Preferred
Stock. “Company Preferred
Stock” shall mean the Preferred Stock, $0.01 par value per share, of the
Company.
Company Privacy
Policy. “Company Privacy Policy” shall mean each external or
internal, past or current privacy policy of the Company, including any policy
relating to: (a) the privacy of any user of any Company Product
or any user of any website of the Company; (b) the collection, storage,
disclosure or transfer of any Personal Data; or (c) any employee
information.
Company
Product. “Company Product” shall mean any product or service
that the Company manufactured, marketed, distributed, leased (as lessor),
licensed (as licensor) or sold at any time since January 1, 2008.
Company
Warrants. “Company Warrants”
shall mean all warrants to acquire shares of Company Common Stock from the
Company.
Confidentiality
Agreement. “Confidentiality
Agreement” shall mean that certain Confidentiality Agreement dated as of
March 5, 2008, between the Company and Parent, as amended through the date
hereof.
Consent. “Consent” shall mean
any approval, consent, ratification, permission, waiver or authorization
(including any Governmental Authorization).
Contemplated
Transactions. “Contemplated
Transactions” shall mean: (i) all actions and
transactions contemplated by the Agreement, including (A) the Offer and the
acceptance for exchange of shares of Company Common Stock pursuant to the Offer,
and (B) the Merger; and (ii) all actions and transactions contemplated
by the Stockholder Agreements.
Contract. “Contract” shall mean
any written, oral or other agreement, contract, subcontract, lease,
understanding, instrument, warrant, note, debenture, indenture, option,
warranty, purchase order, license, sublicense, or legally binding commitment or
undertaking, and any amendments to any of the foregoing.
Designated Representations. “Designated
Representations” shall mean the representations and warranties of the
Company contained in Section 3.3 of
the Agreement.
Exhibit A
– Page 4
Disclosure
Schedule. “Disclosure Schedule”
shall mean the disclosure schedule that has been prepared by the Company in
accordance with the requirements of Section 9.7 of the Agreement
and that has been delivered by the Company to Parent on the date of the
Agreement.
DOL. “DOL” shall mean the
United States Department of Labor.
Employee
Plans. “Employee Plans” shall
mean each employment, consulting, salary, bonus, vacation, deferred
compensation, incentive compensation, stock purchase, stock option or other
equity-based, severance, termination, retention, change-in-control, death and
disability benefits, hospitalization, medical, life or other insurance, flexible
benefits, supplemental unemployment benefits, other welfare fringe benefits,
profit-sharing, pension or retirement plans, program, practice agreement or
commitment and each other employee benefit plan or arrangement, whether written,
unwritten or otherwise, funded or unfunded, including each Foreign Plan and each
“employee benefit plan,” within the meaning of Section 3(3) of ERISA which
is or has been sponsored, maintained, contributed to or required to be
contributed to by the Company and with respect to which the Company has or may
have any liability or obligation.
Encumbrance. “Encumbrance” shall
mean any lien, pledge, hypothecation, charge, mortgage, easement, encroachment,
imperfection of title, title exception, title defect, right of possession,
lease, tenancy license, security interest, encumbrance, claim, infringement,
interference, option, right of first refusal, preemptive right, community
property interest or restriction of any nature (including any restriction on the
voting of any security, any restriction on the transfer of any security or other
asset, any restriction on the receipt of any income derived from any asset, any
restriction on the use of any asset and any restriction on the possession,
exercise or transfer of any other attribute of ownership of any
asset).
Entity. “Entity” shall mean
any corporation (including any non-profit corporation), general partnership,
limited partnership, limited liability partnership, joint venture, estate,
trust, company (including any company limited by shares, limited liability
company or joint stock company), firm, society or other enterprise, association,
organization or entity.
ERISA. "ERISA" shall mean the
Employee Retirement Income Security Act of 1974, as amended.
ERISA
Affiliate. "ERISA Affiliate"
shall mean any Person that, together with the Company, is or was at any time
treated as a single employer under Section 414 of the Code or
Section 4001 of ERISA and any general partnership of which the Company is
or has been a general partner.
Exchange
Act. “Exchange Act” shall
mean the Securities Exchange Act of 1934, as amended.
FMLA. “FMLA” shall mean the
Family Medical Leave Act of 1993, as amended.
Foreign
Plan. “Foreign Plan” shall
mean any (a) plan, program, policy, practice, Contract or other arrangement
mandated by a Governmental Body outside the United States to which the Company
is required to contribute or under which the Company has or may have any
material liability, (b) Employee Plan that is subject to any of the Legal
Requirements of any jurisdiction outside the United States or (c) Employee
Plan that covers or has covered any former or current employee, consultant or
director of the Company whose services are or have been performed primarily
outside of the United States.
Exhibit A
– Page 5
Form S-4 Registration
Statement. “Form S-4 Registration
Statement” shall mean the registration statement on Form S-4 to be
filed with the SEC by Parent in connection with the issuance of Parent
Common Stock pursuant to the Offer and the Merger, as said registration
statement may be amended.
Former
Subsidiary. “Former Subsidiary”
shall mean Praise U.S. Holdings, Inc., a Delaware corporation.
Governmental
Authorization. “Governmental
Authorization” shall mean any: (a) permit, license,
certificate, franchise, permission, variance, clearance, registration,
qualification or authorization issued, granted, given or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement; or (b) right under any Contract with any Governmental
Body.
Governmental
Body. “Governmental Body”
shall mean any: (a) nation, state, commonwealth, province,
territory, county, municipality, district or other governmental jurisdiction of
any nature; (b) federal, state, local, municipal, foreign or other
government; (c) governmental or quasi-governmental authority of any nature
(including any governmental division, department, agency, commission,
instrumentality, official, ministry, fund, foundation, center, organization,
unit, body or Entity and any court or other tribunal); or
(d) self-regulatory organization (including the NASDAQ Stock Market LLC and
the Financial Industry Regulatory Authority).
HIPAA. “HIPAA” shall mean the
Health Insurance Portability and Accountability Act of 1996, as
amended.
HSR Act. “HSR Act” shall mean
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended.
Intellectual
Property. “Intellectual
Property” shall mean algorithms, apparatus, databases, data collections,
diagrams, formulae, inventions (whether or not patentable), recipes, tools,
files, records and data, all schematics, test methodologies, prototypes,
processes, know-how, logos, marks (including brand names, product names, logos,
and slogans), methods, proprietary information, protocols, schematics,
specifications, software, software code (in any form, including firmware, source
code and executable or object code), techniques, user interfaces, URLs, web
sites, works of authorship and other forms of technology (whether or not
embodied in any tangible form and including all tangible embodiments of the
foregoing, such as instruction manuals, laboratory notebooks, samples, studies
and summaries).
Intellectual Property
Rights. “Intellectual Property
Rights” shall mean all rights of the following types, which may exist or
be created under the laws of any jurisdiction in the world: (a) rights
associated with works of authorship, including exclusive exploitation rights,
copyrights, moral rights and mask works; (b) trademark and trade name
rights and similar rights (collectively with those rights in clause “(f)”, “Trademarks”);
(c) trade secret rights; (d) patent and industrial property rights
(collectively with those rights in clause “(f)”, “Patents”);
(e) other proprietary rights in Intellectual Property; and (f) rights
in or relating to registrations, renewals, extensions, combinations, divisions
and reissues of, and applications for, any of the rights referred to in clauses “(a)” through “(e)”
above.
Exhibit A
– Page 6
IRS. “IRS” shall mean the
United States Internal Revenue Service.
Knowledge. An
Entity shall be deemed to have “Knowledge” of a fact
or other matter if any of the members of its board of directors or any of its
executive officers has actual knowledge of such fact or other
matter.
Legal
Proceeding. “Legal Proceeding”
shall mean any action, suit, litigation, arbitration, proceeding (including any
civil, criminal, administrative, investigative or appellate proceeding),
hearing, inquiry, audit, examination or investigation commenced, brought,
conducted or heard by or before, or otherwise involving, any court or other
Governmental Body or any arbitrator or arbitration panel.
Legal
Requirement. “Legal Requirement”
shall mean any federal, state, local, municipal, foreign or other law, statute,
constitution, principle of common law, resolution, ordinance, code, edict,
decree, rule, regulation, order, award, ruling or requirement issued, enacted,
adopted, promulgated, implemented or otherwise put into effect by or under the
authority of any Governmental Body.
Made Available. Any
statement in the Agreement to the effect that any information, document or other
material has been “Made Available” shall
mean that such information, document or material was made available by the
Company to Parent or by Parent to the Company, as applicable, for review prior
to the execution of the Agreement, by either (i) physically delivering such
information to the recipient, (ii) delivering such information to the
recipient in electronic format, whether via email or contained in a disc or
other memory device, or (iii) by making such information available to the
recipient in a virtual data room maintained by such party or otherwise in
connection with the Contemplated Transactions.
Open Source
License. “Open Source License”
shall mean any license that has been designated as an approved “open source
license” on xxx.xxxxxxxxxx.xxx (including the GNU General Public License (GPL),
GNU Lesser General Public License (LGPL), Mozilla Public License (MPL), BSD
licenses, the Artistic License, the Netscape Public License, the Sun Community
Source License (SCSL), the Sun Industry Standards Source License (SISSL) and the
Apache License).
Order. “Order” shall mean any
order, writ, injunction, judgment or decree issued, entered or otherwise
promulgated by a court of competent jurisdiction or other Governmental
Body.
Parent Average Stock
Price. “Parent Average Stock
Price” shall mean the volume weighted average price for one share of
Parent Common Stock as reported on the Nasdaq Capital Market for the
five (5) trading day period ending immediately prior to (and excluding) the
date on which the Acceptance Time occurs.
Exhibit A
– Page 7
Parent Common
Stock. “Parent Common Stock”
shall mean the Common Stock, no par value per share, of Parent.
Parent Material Adverse
Effect. “Parent Material Adverse
Effect” shall mean any effect, change, claim, event or circumstance that,
considered together with all other effects, changes, claims, events and
circumstances, has or could reasonably be expected to have or result in a
material adverse effect on, (i) the business, financial condition or
results of operations of Parent or (ii) the ability of Parent or
Acquisition Sub to consummate the Contemplated Transactions, but shall not
include: (i) effects, changes, claims, events or circumstances
resulting from (A) changes since the date of the Agreement in general
economic or political conditions or the securities, credit or financial markets
worldwide, (B) changes since the date of the Agreement in conditions
generally affecting the industry in which Parent operates, (C) changes
since the date of the Agreement in generally accepted accounting principles or
the interpretation thereof, (D) changes since the date of the Agreement in
Legal Requirements, (E) any acts of terrorism or war since the date of the
Agreement, or (F) any stockholder class action or derivative litigation
commenced against Parent since the date of the Agreement and arising from
allegations of breach of fiduciary duty of Parent’s directors relating to their
approval of the Agreement or from allegations of false or misleading public
disclosure by Parent with respect to the Agreement; (ii) any adverse impact
on Parent’s relationships with employees, customers and suppliers of Parent that
is attributable to the announcement or pendency of the Agreement and the
Contemplated Transactions, or any other adverse impact on Parent that is
directly (and to the extent) attributable to the announcement and pendency of
the Contemplated Transactions; (iii) any failure after the date of the
Agreement to meet internal or analyst projections or forecasts for any period or
changes in the trading price or trading volume of Parent Common Stock, in and of
itself; or (iv) the taking of any action required to be taken by Parent or
Acquisition Sub pursuant to by the Agreement or specifically instructed or
consented to, in advance and in writing, by the Company; provided that, (x) in
the case of each of clauses “(i)(A),” “(i)(B),” (i)(C),” (i)(D)” and “(i)(E)” above, the
exception shall apply so long as and only to the extent that such effects,
changes, claims, events or circumstances do not disproportionately impact Parent
relative to other participants in the industry or industries in which Parent
conducts its business, and (y) any facts or circumstances underlying,
causing or contributing to any litigation of the type referred to in clause “(i)(F)” of the
preceding sentence, or underlying, causing or contributing to any failure or
decline of the type referred to in clause “(iii)” of the
preceding sentence, in each case that are not otherwise excluded from the
definition of a Parent Material Adverse Effect, may be taken into account in
determining whether there has been or would be a Parent Material Adverse
Effect.
PBGC. “PBGC” shall mean the
United States Pension Benefit Guaranty Corporation.
Per Share
Consideration. “Per Share
Consideration” shall mean the Cash Component and the fraction of a
share of Parent Common Stock representing the Applicable Fraction.
Person. “Person” shall mean
any individual, Entity or Governmental Body.
Personal
Data. “Personal Data” shall
include (a) a natural person’s name, street address, telephone number,
e-mail address, photograph, social security number, driver’s license number,
passport number and customer or account number, (b) any other piece of
information that allows the identification of a natural person and (c) any
other data or information collected by or on behalf of the Company from users of
Company Products or any website of the Company.
Exhibit A
– Page 8
Post-Effective
Amendment. “Post-Effective
Amendment” shall mean a post-effective amendment to the Registration
Statement for the offer and sale of shares of Parent Common Stock in connection
with the Merger, in which the Proxy Statement shall be included as a
prospectus.
Proxy
Statement. “Proxy Statement”
shall mean the proxy or information statement of the Company to be sent to the
Company’s stockholders in connection with the Company Stockholders’
Meeting.
Registered
IP. “Registered IP” shall
mean all Intellectual Property Rights that are registered or filed with, or
issued under the authority of, any Governmental Body, including all granted
Patents, registered copyrights, registered mask works and registered Trademarks
and all applications for any of the foregoing.
Representatives. “Representatives”
shall mean directors, officers, other employees, agents, attorneys, accountants,
advisors and representatives.
Xxxxxxxx-Xxxxx
Act. “Xxxxxxxx-Xxxxx Act”
shall mean the Xxxxxxxx-Xxxxx Act of 2002.
SEC. “SEC” shall mean the
United States Securities and Exchange Commission.
Securities
Act. “Securities Act” shall
mean the Securities Act of 1933, as amended.
Subsidiary. An
Entity shall be deemed to be a “Subsidiary” of
another Person if such Person directly or indirectly owns or purports to own,
beneficially or of record, (a) an amount of voting securities or other
interests in such Entity that is sufficient to enable such Person to elect at
least a majority of the members of such Entity’s board of directors or other
governing body, or (b) at least 50% of the outstanding equity, voting or
financial interests in such Entity.
Superior
Proposal. “Superior Proposal”
shall mean an unsolicited bona fide written offer by a third party to purchase,
in exchange for consideration consisting exclusively of cash or publicly traded
equity or debt securities or a combination thereof, all or substantially all of
the outstanding shares of Company Common Stock or the Company's assets, that
(a) was not obtained or made as a direct or indirect result of a breach of
the Agreement and (b) is on terms and conditions that the board of
directors of the Company (or a committee thereof) determines, in its reasonable,
good faith judgment, after consultation with the Company's financial advisors
and outside counsel, and after taking into account the likelihood and timing of
consummation of the purchase transaction contemplated by such Superior Proposal,
to be more favorable from a financial point of view to the Company’s
stockholders than the Transaction.
Tax. “Tax” shall mean any
tax (including any tax based upon or measured by income, capital gains, gross
receipts, profits, employment or occupation, any value-added tax, franchise tax,
surtax, estimated tax, unemployment tax, national health insurance tax, excise
tax, ad valorem tax, transfer tax, stamp tax, sales tax, use tax, property tax,
business tax, withholding tax or payroll tax), levy, assessment, tariff or duty
(including any customs duty) and any related charge or amount (including any
fine, penalty or interest), imposed, assessed or collected by or under the
authority of any Governmental Body.
Exhibit A
– Page 9
Tax Return. “Tax Return” shall
mean any return (including any information return), report, declaration,
schedule, notice, form, election, certificate or other document or information
filed with or submitted to, or required to be filed with or submitted to, any
Governmental Body relating to Taxes.
Triggering Event. A
“Triggering
Event” shall be deemed to have occurred if: (i) the board
of directors of the Company shall have failed to make a Company Board
Recommendation or shall have made a Recommendation Change, or shall have taken
any other action publicly that would cause a reasonable observer to conclude
that the board of directors of the Company does not unanimously support the
Offer or the Merger; (ii) following the disclosure or announcement of an
Acquisition Proposal or an Acquisition Inquiry, the board of directors of the
Company fails to reaffirm publicly the Company Board Recommendation, within
ten (10) business days after Parent requests in writing that such
recommendation or determination be reaffirmed publicly; (iii) the board of
directors of the Company shall have publicly approved, endorsed or recommended
any Acquisition Proposal; (iv) the Company shall have entered into any
letter of intent or Contract contemplating or providing for any Acquisition
Proposal (other than a confidentiality agreement executed and delivered in
accordance with clause “(3)” of Section 5.3(c)
of the Agreement); or (v) a tender or exchange offer relating to securities
of the Company shall have been commenced by a third party and the Company shall
not have sent to its security holders, within ten (10) business days after
the commencement of such tender or exchange offer, a statement disclosing that
the Company recommends rejection of such tender or exchange offer.
Year-End Balance
Sheet. “Year-End Balance Sheet” shall mean the audited
consolidated balance sheet of the Company and its consolidated Subsidiaries as
of June 24, 2009, included in the Company’s Report on Form 10-K for the
fiscal year then ended, as filed with the SEC on September 22,
2009.
Exhibit A
– Page 10
Exhibit B
Conditions
to the Offer
The
obligation of Acquisition Sub to accept for exchange and deliver consideration
for shares of Company Common Stock validly tendered (and not withdrawn) pursuant
to the Offer is subject to the satisfaction of the Minimum Condition and the
additional conditions set forth in clauses “(a)” through “(l)”
below. Accordingly, notwithstanding any other provision of the Offer
or the Agreement to the contrary, Acquisition Sub shall not be required to
accept for exchange or deliver consideration for, and may delay the acceptance
for exchange or the delivery of consideration for, any tendered shares of
Company Common Stock, if (i) the Minimum Condition shall not be
satisfied by midnight, Eastern Time, on the expiration date of the Offer (taking
into account any extensions made pursuant to Section 1.1(d)),
or (ii) any of the following additional conditions shall not be satisfied
or have been waived in writing by Parent:
(a) each
of the Designated Representations shall have been accurate in all material
respects as of the date of the Agreement, and shall be accurate in all material
respects at and as of the expiration time of the Offer with the same force and
effect as if made at and as of such time (in each case, except for
representations and warranties that by their terms are made only as of a
specific date or time, which need only be accurate in all material respects as
of such date or time); provided, however, that, for
purposes of determining the accuracy of such representations and warranties,
(x) all “Company Material Adverse Effect” and other qualifications based on
the word “material” contained in such representations and warranties shall be
disregarded, and (y) any update of or modification to the Disclosure
Schedule made or purported to have been made on or after the date of the
Agreement shall be disregarded;
(b) each
of the representations and warranties of the Company set forth in the Agreement
(other than those referred to in clause “(a)” above) shall
have been accurate in all respects as of the date of the Agreement, and shall be
accurate in all respects at and as of the expiration time of the Offer with the
same force and effect as if made at and as of such time (in each case, except
for representations and warranties that by their terms are made only as of a
specific date or time, which need only be accurate in all respects as of such
date or time), except where the failure of such representations and warranties
to be accurate, including the circumstances constituting or giving rise to such
inaccuracies, considered in the aggregate, do not constitute a Company
Material Adverse Effect; provided, however, that, for
purposes of determining the accuracy of such representations and warranties,
(x) all “Company Material Adverse Effect” and other qualifications based on
the word “material” contained in such representations and warranties shall be
disregarded, and (y) any update of or modification to the Disclosure
Schedule made or purported to have been made on or after the date of the
Agreement shall be disregarded;
(c) each
covenant set forth in the Agreement that the Company is required to comply with
or to perform at or prior to the Acceptance Time shall have been complied with
or performed in all material respects, or, if not complied with or performed in
all material respects, such noncompliance or failure to perform shall have been
cured;
Exhibit B
– Page 1
(d) since
the date of the Agreement, no Company Material Adverse Effect shall have
occurred and be continuing;
(e) Parent
and the Company shall have received a certificate executed by the Company’s
Chief Executive Officer or Chief Financial Officer confirming that the
conditions set forth in clauses “(a),” “(b),” “(c)” and “(d)” of this Exhibit B have
been duly satisfied;
(f) the
waiting period applicable to the Offer under the HSR Act shall have expired or
been terminated;
(g) no
temporary restraining order, preliminary or permanent injunction or other order
preventing the acquisition of or payment for shares of Company Common Stock
pursuant to the Offer or preventing consummation of the Merger shall have been
issued by any court of competent jurisdiction or other Governmental Body having
authority over Parent, Acquisition Sub or the Company and remain in effect, and
there shall not be any applicable Legal Requirement enacted or deemed applicable
to the Offer or the Merger by a Governmental Body having authority over Parent,
Acquisition Sub or the Company that makes the acquisition of or payment for
shares of Company Common Stock pursuant to the Offer or the consummation of the
Merger illegal;
(h) there
shall not be pending, or threatened in writing, any Legal Proceeding by any
Governmental Body having authority over Parent, Acquisition Sub or the Company
challenging or seeking to restrain or prohibit the acquisition of or payment for
shares of Company Common Stock pursuant to the Offer or the consummation of the
Merger or any of the other Contemplated Transactions;
(i) no
Triggering Event shall have occurred; and
(j) the
Agreement shall not have been validly terminated.
The
foregoing conditions are for the sole benefit of Parent and Acquisition Sub and
may be waived by Parent, in whole or in part at any time and from time to time,
in the sole discretion of Parent.
Exhibit B
– Page 2
Exhibits
Exhibit A - Certain
Definitions
Exhibit B - Conditions to
the Offer
