AGREEMENT AND PLAN OF MERGER by and among MICROSOFT CORPORATION, ARROW ACQUISITION COMPANY, and AQUANTIVE, INC. May 17, 2007
Exhibit
2.1
AGREEMENT AND PLAN OF MERGER
by and among
MICROSOFT CORPORATION,
ARROW ACQUISITION COMPANY,
and
AQUANTIVE, INC.
May 17, 2007
TABLE OF CONTENTS
Page | ||||||
ARTICLE I |
DEFINITIONS AND TERMS | 1 | ||||
Section 1.1 |
Definitions | 1 | ||||
Section 1.2 |
Other Definitional Provisions; Interpretation | 7 | ||||
ARTICLE II |
THE MERGER | 7 | ||||
Section 2.1 |
The Merger | 7 | ||||
Section 2.2 |
Effective Time | 7 | ||||
Section 2.3 |
Closing | 8 | ||||
Section 2.4 |
Articles of Incorporation and Bylaws of the Surviving Corporation | 8 | ||||
Section 2.5 |
Directors and Officers of the Surviving Corporation | 8 | ||||
ARTICLE III |
CONVERSION OF SHARES | 8 | ||||
Section 3.1 |
Conversion of Shares | 8 | ||||
Section 3.2 |
Exchange of Certificates and Book-Entry Shares | 9 | ||||
Section 3.3 |
Shares of Dissenting Shareholders | 11 | ||||
Section 3.4 |
Treatment of Stock Options; Restricted Shares | 12 | ||||
ARTICLE IV |
REPRESENTATIONS AND WARRANTIES OF THE COMPANY | 13 | ||||
Section 4.1 |
Organization | 13 | ||||
Section 4.2 |
Capitalization | 14 | ||||
Section 4.3 |
Authorization; Validity of Agreement; Company Action | 14 | ||||
Section 4.4 |
Consents and Approvals; No Violations | 14 | ||||
Section 4.5 |
SEC Reports | 15 | ||||
Section 4.6 |
No Undisclosed Liabilities | 16 | ||||
Section 4.7 |
Absence of Certain Changes | 16 | ||||
Section 4.8 |
Material Contracts | 16 | ||||
Section 4.9 |
Employee Benefit Plans; ERISA | 17 | ||||
Section 4.10 |
Litigation | 17 | ||||
Section 4.11 |
Compliance with Law | 18 | ||||
Section 4.12 |
Intellectual Property | 18 | ||||
Section 4.13 |
Taxes | 20 | ||||
Section 4.14 |
Tangible Assets | 21 | ||||
Section 4.15 |
Environmental | 21 | ||||
Section 4.16 |
Labor Matters | 21 | ||||
Section 4.17 |
Proxy Statement | 22 | ||||
Section 4.18 |
Brokers or Finders | 22 | ||||
Section 4.19 |
Vote Required | 22 | ||||
Section 4.20 |
Board Recommendation | 22 | ||||
Section 4.21 |
Opinion of Financial Advisor | 22 |
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Page | ||||||
ARTICLE V |
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB | 23 | ||||
Section 5.1 |
Organization | 23 | ||||
Section 5.2 |
Authorization; Validity of Agreement; Necessary Action | 23 | ||||
Section 5.3 |
Consents and Approvals; No Violations | 23 | ||||
Section 5.4 |
SEC Reports | 24 | ||||
Section 5.5 |
Compliance with Law | 24 | ||||
Section 5.6 |
Sub’s Operations | 24 | ||||
Section 5.7 |
Proxy Statement | 24 | ||||
Section 5.8 |
Brokers or Finders | 24 | ||||
Section 5.9 |
Sufficient Funds | 24 | ||||
Section 5.10 |
Acquiring Person | 25 | ||||
Section 5.11 |
Investigation by Parent and Sub | 25 | ||||
ARTICLE VI |
COVENANTS | 26 | ||||
Section 6.1 |
Interim Operations of the Company | 26 | ||||
Section 6.2 |
Access to Information | 27 | ||||
Section 6.3 |
Acquisition Proposals | 28 | ||||
Section 6.4 |
Employee Benefits | 31 | ||||
Section 6.5 |
Publicity | 32 | ||||
Section 6.6 |
Directors’ and Officers’ Insurance and Indemnification | 32 | ||||
Section 6.7 |
Proxy Statement | 33 | ||||
Section 6.8 |
Commercially Reasonable Efforts; HSR Act Filings | 33 | ||||
Section 6.9 |
Section 16 Matters | 34 | ||||
Section 6.10 |
Filing of Form S-8 | 34 | ||||
Section 6.11 |
ESPP | 35 | ||||
ARTICLE VII |
CONDITIONS | 35 | ||||
Section 7.1 |
Conditions to Each Party’s Obligation to Effect the Merger | 35 | ||||
Section 7.2 |
Conditions to the Obligations of Parent and Sub | 35 | ||||
Section 7.3 |
Conditions to the Obligations of the Company | 36 | ||||
Section 7.4 |
Frustration of Closing Conditions | 36 | ||||
ARTICLE VIII |
TERMINATION | 37 | ||||
Section 8.1 |
Termination | 37 | ||||
Section 8.2 |
Effect of Termination | 38 | ||||
ARTICLE IX |
MISCELLANEOUS | 40 | ||||
Section 9.1 |
Amendment and Modification | 40 | ||||
Section 9.2 |
Nonsurvival of Representations and Warranties | 40 | ||||
Section 9.3 |
Notices | 40 | ||||
Section 9.4 |
Interpretation | 42 | ||||
Section 9.5 |
Counterparts | 42 | ||||
Section 9.6 |
Entire Agreement; Third-Party Beneficiaries | 42 | ||||
Section 9.7 |
Severability | 42 | ||||
Section 9.8 |
Governing Law | 42 | ||||
Section 9.9 |
Jurisdiction | 42 | ||||
Section 9.10 |
Service of Process | 43 |
ii
Page | ||||||
Section 9.11 |
Specific Performance | 43 | ||||
Section 9.12 |
Assignment | 43 | ||||
Section 9.13 |
Expenses | 43 | ||||
Section 9.14 |
Headings | 43 | ||||
Section 9.15 |
Waivers | 43 | ||||
Section 9.16 |
Waiver of Jury Trial | 43 |
iii
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of May 17, 2007 (this “Agreement”), by and
among aQuantive, Inc., a Washington corporation (the “Company”), Microsoft Corporation, a
Washington corporation (“Parent”), and Arrow Acquisition Company, a Washington corporation
and wholly-owned subsidiary of Parent (“Sub”).
WHEREAS, the respective boards of directors of Parent, Sub and the Company have approved, and
have determined that it is in the best interests of their respective shareholders to consummate,
the acquisition of the Company by Parent and Sub upon the terms and subject to the conditions set
forth herein.
NOW, THEREFORE, in consideration of the foregoing and the representations, warranties,
covenants and agreements set forth herein, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound
hereby, agree as follows:
ARTICLE I
DEFINITIONS AND TERMS
Section 1.1 Definitions. As used in this Agreement, the following terms have the meanings
set forth below:
“Acquisition Proposal” means any offer or proposal made by any Person or Persons other
than Parent, Sub or any Affiliate thereof to acquire, other than in the transactions contemplated
by this Agreement, (i) beneficial ownership (as defined under Section 13(d) of the Exchange Act) of
ten percent (10%) or more of the Common Stock pursuant to a merger, consolidation or other business
combination, sale of shares of capital stock, tender offer or exchange offer or similar transaction
involving the Company or (ii) ten percent (10%) or more of the assets of the Company and its
Subsidiaries, taken as a whole.
“Affiliate” has the meaning set forth in Rule l2b-2 of the Exchange Act.
“Agreement” has the meaning set forth in the Preamble.
“Articles of Merger” has the meaning set forth in Section 2.2.
“Benefit Agreements” has the meaning set forth in Section 4.9.
“Benefit Plans” has the meaning set forth in Section 4.9.
“Book-Entry Shares” has the meaning set forth in Section 3.1(d).
“Business Day” means a day other than a Saturday, a Sunday or another day on which
commercial banking institutions in New York, New York are authorized or required by Law to be
closed.
“Cause” means dishonesty, fraud, misconduct, unauthorized use or disclosure of
confidential information or trade secrets, or conviction or confession of a crime punishable
by law (except minor violations).
“Certificates” has the meaning set forth in Section 3.1(d).
“Change of Recommendation” has the meaning set forth in Section 6.3(d).
“CIC Plans” has the meaning set forth in Section 6.4(b).
“Cleanup” means all actions required, under applicable Environmental Laws, to clean
up, remove, treat or remediate Hazardous Materials.
“Closing” has the meaning set forth in Section 2.3.
“Closing Date” has the meaning set forth in Section 2.3.
“Code” means the Internal Revenue Code of 1986, as amended.
“Collection and Use” has the meaning set forth in Section 4.12(g).
“Common Stock” has the meaning set forth in Section 3.1(a).
“Company” has the meaning set forth in the Preamble.
“Company Disclosure Schedule” means the disclosure schedule delivered by the Company
to Parent immediately prior to the execution of this Agreement.
“Company Material Adverse Effect” means any material adverse change in, or material
adverse effect on, the business, financial condition or continuing operations of the Company and
its Subsidiaries, taken as a whole; provided, however, that the effects of changes that are
generally applicable to (i) the industries and markets in which the Company and its Subsidiaries
operate, (ii) the United States economy or (iii) the United States securities markets shall be
excluded from the determination of Company Material Adverse Effect; and provided further that any
change or effect resulting from (A) the execution of this Agreement, the announcement of this
Agreement or the pendency or consummation of the transactions contemplated hereby (including any
cancellation of or delays in customer orders or work for clients, any reductions in sales, any
disruption in licensor, vendor, partner or similar relationships or any loss of employees), (B)
natural disasters, acts of war, terrorism or sabotage, military actions or the escalation thereof
or other force majeure events, (C) changes in GAAP or changes in the interpretation of GAAP, or
changes in the accounting rules and regulations of the SEC, (D) any other action required by Law,
contemplated by this Agreement or taken at the request of Parent or Sub, (E) any litigation brought
or threatened by shareholders of either the Company or Parent (whether on behalf of Company, Parent
or otherwise) asserting allegations of breach of fiduciary duty relating to this Agreement or
violations of securities Laws in connection with the Proxy Statement or otherwise in connection
with this Agreement, (F) any changes in Law, (G) any action required to comply with the rules and
regulations of the SEC or the SEC comment process, in each case, in connection with the Proxy
Statement, (H) in and of itself, any decrease
2
in the market price or trading volume of the Common Stock, (I) in and of itself, any failure
by the Company to meet any projections, forecasts or revenue or earnings predictions, or any
predictions or expectations of any securities analysts or (J) the failure of Parent to consent to
any of the actions proscribed in Section 6.1 where such failure to consent would be
unreasonable shall also be excluded from the determination of Company Material Adverse Effect.
“Company Option Plans” means the Company’s Restated 1998 Stock Incentive Compensation
Plan, Restated 1999 Stock Incentive Compensation Plan, and Restated 2000 Stock Incentive
Compensation Plan.
“Company Recommendation” has the meaning set forth in Section 6.7.
“Company Restricted Share” means a restricted share of Company Common Stock issued
pursuant to any of the Company Option Plans that remains unvested.
“Company SEC Reports” has the meaning set forth in Section 4.5.
“Company Shareholder Approval” has the meaning set forth in Section 4.19.
“Company Special Meeting” has the meaning set forth in Section 6.7.
“Confidentiality Agreement” has the meaning set forth in Section 6.2.
“Consideration Fund” has the meaning set forth in Section 3.2(a).
“Contract” means any note, bond, mortgage, indenture, lease, license, contract,
agreement or other consensual obligation.
“Customer Information” has the meaning set forth in Section 4.12(g).
“Dissenting Shares” has the meaning set forth in Section 3.3(a).
“Effective Time” has the meaning set forth in Section 2.2.
“Employees” has the meaning set forth in Section 6.1(h).
“Environmental Claim” means any claim, notice, directive, action, cause of action,
investigation, suit, demand, abatement order or other order by a Governmental Entity alleging
liability arising out of, based on, or resulting from (a) the release of any Hazardous Materials at
any location or (b) circumstances forming the basis of any violation of any Environmental Law.
“Environmental Laws” means all applicable and legally enforceable Laws relating to
pollution or protection of the environment, including Laws relating to releases of Hazardous
Materials and the manufacture, processing, distribution, use, treatment, storage, release,
transport or handling of Hazardous Materials.
“ERISA” has the meaning set forth in Section 4.9.
“ESPP” means the Company’s 1999 Employee Stock Purchase Plan.
3
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Exchange Ratio” has the meaning set forth in Section 3.4(c).
“Excluded License” is any license that requires, as a condition of modification or
distribution of software subject to the Excluded License, that (a) such software or other software
combined or distributed with such software be disclosed or distributed in source code form, or (b)
such software or other software combined or distributed with such software and any associated
intellectual property be licensed on a royalty-free basis (including for the purpose of making
additional copies or derivative works).
“Executive Officer” means “officer” of the Company as such term is defined for
purposes of Section 16 of the Securities Exchange Act of 1934, as amended.
“GAAP” has the meaning set forth in Section 4.5.
“Governmental Entity” has the meaning set forth in Section 4.4.
“Hazardous Materials” means all substances defined as Hazardous Substances, Oils,
Pollutants or Contaminants in the National Oil and Hazardous Substances Pollution Contingency Plan,
40 C.F.R. § 300.5, or defined as such by, or regulated as such under, any Environmental Law.
“HSR Act” means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended.
“Indemnified Parties” has the meaning set forth in Section 6.6(a).
“Intellectual Property” means all rights in patents, patent applications, inventions,
trademarks (whether registered or not), trademark applications, service xxxx registrations and
service xxxx applications, trade names, trade dress, logos, slogans, tag lines, uniform resource
locators, Internet domain names, Internet domain name applications, corporate names, copyright
applications, registered copyrighted works and commercially significant unregistered copyrightable
works (including proprietary software, books, written materials, prerecorded video or audio tapes,
and other copyrightable works), technology, software, trade secrets, know-how, technical
documentation, comments, specifications, data, databases, data collections, customer and supplier
lists, designs, rights of publicity and moral rights, and other intellectual property and
proprietary rights, other than off-the-shelf computer programs
“Insured Parties” has the meaning set forth in Section 6.6(b).
“IRS” means the U.S. Internal Revenue Service.
“knowledge” means such facts and other information that as of the date of
determination are actually known to the chief executive officer, chief financial officer, general
counsel or any division president (or equivalent position) of the referenced party.
4
“Law” means any federal, state, local or foreign law, statute, ordinance, regulation,
judgment, order, decree, injunction, arbitration award, franchise, license, agency requirement or
permit of any Governmental Entity.
“License-In Agreements” has the meaning set forth in Section 4.12(b).
“Material Contract” has the meaning set forth in Section 4.8(a).
“Merger” has the meaning set forth in Section 2.1.
“Merger Consideration” has the meaning set forth in Section 3.1(a).
“MS” has the meaning set forth in Section 4.18.
“Parent” has the meaning set forth in the Preamble.
“Parent 2001 Stock Plan” has the meaning set forth in Section 3.4(b).
“Parent Common Shares” has the meaning set forth in Section 3.4(b).
“Parent Material Adverse Effect” means any material adverse change in, or material
adverse effect on, (i) the business, financial condition or operations of Parent and its
Subsidiaries, taken as a whole or (ii) the ability of Parent or Sub to consummate the transactions
contemplated hereby; provided, however, that the effects of changes that are generally applicable
to (x) the industries or markets in which Parent and its Subsidiaries operate, (y) the United
States economy or (z) the United States securities markets shall be excluded from the determination
of Parent Material Adverse Effect; provided further that any adverse effect on Parent and its
Subsidiaries resulting from the execution of this Agreement, the announcement of this Agreement or
the pendency of the transactions contemplated hereby shall also be excluded from the determination
of Parent Material Adverse Effect.
“Parent Plans” has the meaning set forth in Section 6.4(c).
“Parent SEC Reports” has the meaning set forth in Section 5.4.
“Paying Agent” has the meaning set forth in Section 3.2(a).
“Person” means any natural person or any corporation, partnership, limited liability
company, association, trust or other entity or organization, including any Governmental Entity.
“Post-Signing Stabilization Plans” has the meaning set forth in Section
6.1(h).
“Proxy Statement” has the meaning set forth in Section 6.7.
“Qualifying Transaction” means any acquisition of (i) fifty percent (50%) or more of
the Common Stock pursuant to a merger, consolidation or other business combination, sale of shares
of capital stock, tender offer or exchange offer or similar transaction involving the Company or
(ii) fifty percent (50%) or more of the assets of the Company and its Subsidiaries, taken as a
whole.
5
“Representatives” has the meaning set forth in Section 6.2.
“SEC” means the United States Securities and Exchange Commission.
“Securities Act” means the Securities Act of 1933, as amended.
“Senior Notes” means the Company’s convertible senior subordinated notes due 2024
described in the Company SEC Reports.
“Stabilization Amount” has the meaning set forth in Section 6.1(h).
“Sub” has the meaning set forth in the Preamble.
“Subsidiary” means, as to any Person, any corporation, partnership, limited liability
company, association or other business entity (i) of which such Person directly or indirectly owns
securities or other equity interests representing more than fifty percent (50%) of the aggregate
voting power, (ii) of which such Person possesses more than fifty percent (50%) of the right to
elect directors or Persons holding similar positions, or (iii) that such Person controls directly
or indirectly through one or more intermediaries.
“Substituted Option” has the meaning set forth in Section 3.4(b).
“Superior Proposal” means any unsolicited written Acquisition Proposal to acquire,
directly or indirectly, for consideration consisting of cash and/or securities, more than fifty
percent (50%) of the equity securities of the Company entitled to vote generally in the election of
directors or all or substantially all of the assets of Company, on terms which the Company’s board
of directors determines, after consultation with its financial advisor, to be more favorable to the
Company and its shareholders than the transactions contemplated hereby.
“Surviving Corporation” has the meaning set forth in Section 2.1.
“Tax Return” means any report, return, document, declaration or other information or
filing required to be supplied to any taxing authority or jurisdiction (foreign or domestic) with
respect to Taxes.
“Taxes” means any and all taxes, charges, fees, levies or other assessments, including
income, gross receipts, excise, real or personal property, sales, withholding, social security,
occupation, use, service, service use, value added, license, net worth, payroll, franchise,
transfer and recording taxes, fees and charges, imposed by the United States Internal Revenue
Service or any taxing authority (whether domestic or foreign including any state, local or foreign
government or any subdivision or taxing agency thereof (including a United States possession)),
whether computed on a separate, consolidated, unitary, combined or any other basis; and such term
shall include any interest, penalties or additional amounts attributable to, or imposed upon, or
with respect to, any such taxes, charges, fees, levies or other assessments.
“Termination Date” has the meaning set forth in Section 8.1(b)(i).
“United States” means the United States of America.
6
“Vested Options” has the meaning set forth in Section 3.4.
“WBCA” means the Washington Business Corporation Act, as amended.
Section 1.2 Other Definitional Provisions; Interpretation.
(a) The words “hereof,” “herein” and words of similar import shall, unless otherwise stated,
be construed to refer to this Agreement as a whole and not to any particular provision of this
Agreement, and references to articles, sections, paragraphs, exhibits and schedules are to the
articles, sections and paragraphs of, and exhibits and schedules to, this Agreement, unless
otherwise specified.
(b) Whenever “include,” “includes” or “including” is used in this Agreement, such word shall
be deemed to be followed by the phrase “without limitation.”
(c) Words describing the singular number shall be deemed to include the plural and vice versa,
words denoting any gender shall be deemed to include all genders and words denoting natural persons
shall be deemed to include business entities and vice versa.
(d) When used in reference to information or documents, the phrase “made available” means that
the information or documents referred to have been made available if requested by the party to
which such information or documents are to be made available.
(e) Terms defined in the text of this Agreement as having a particular meaning have such
meaning throughout this Agreement, except as otherwise indicated in this Agreement.
ARTICLE II
THE MERGER
Section 2.1 The Merger. Subject to the terms and conditions of this Agreement and in
accordance with the WBCA, at the Effective Time, the Company and Sub shall consummate a merger (the
“Merger”) pursuant to which (i) Sub shall merge with and into the Company and the separate
corporate existence of Sub shall thereupon cease, (ii) the Company shall be the surviving
corporation (the “Surviving Corporation”) in the Merger and (iii) the separate corporate
existence of the Company shall continue unaffected by the Merger. The Merger shall, from and after
the Effective Time, have the effects set forth in Section 23B.11.060 of the WBCA and other
applicable law.
Section 2.2 Effective Time. Parent, Sub and the Company shall cause articles of merger
(the “Articles of Merger”) to be delivered on the Closing Date (or on such other date as
Parent and the Company may agree in writing) to the Secretary of State of the State of Washington
for filing as provided in the WBCA, and shall make all other deliveries, filings or recordings
required by the WBCA in connection with the Merger. The Merger shall become effective on the date
on which the Articles of Merger
are filed by the Secretary of State of the State of Washington, or on such other later date as is
agreed upon by the parties and specified in the Articles of Merger, and at the time specified in
the Articles of Merger or, if not specified
7
therein, by the WBCA, and such time on such date of
effectiveness is hereinafter referred to as the “Effective Time.”
Section 2.3 Closing. The closing of the Merger (the “Closing”) will take place at
10:00 A.M., Pacific Time, on a date to be specified by the parties, which shall be no later than
two (2) Business Days after satisfaction or waiver of all of the conditions set forth in
Article VII hereof (other than conditions that by their terms are to be satisfied at the
Closing, but subject to the satisfaction or waiver of such conditions at the Closing), at the
offices of Xxxxxxx Coie LLP, 0000 Xxxxx Xxxxxx, 00xx Xxxxx, Xxxxxxx, Xxxxxxxxxx, unless another
time, date or place is agreed to in writing by the parties hereto (such date on which the Closing
is to take place being the “Closing Date”).
Section 2.4 Articles of Incorporation and Bylaws of the Surviving Corporation. The
articles of incorporation of the Company, as in effect immediately prior to the Effective Time,
shall at the Effective Time be amended and restated in full to be the same as the articles of
incorporation of Sub, as in effect immediately prior to the Effective Time, except that the name of
the corporation shall be “aQuantive, Inc.” and as so amended and restated shall be the articles of
incorporation of the Surviving Corporation, until thereafter amended as provided by Law and such
articles of incorporation. The bylaws of Surviving Corporation shall, as of the Effective Time, be
amended and restated in their entirety to be the same as the bylaws of the Sub, as in effect
immediately prior to the Effective Time, except as to the name of the Surviving Corporation, which
shall be aQuantive, Inc., until thereafter amended as provided by Law, the articles of
incorporation of the Surviving Corporation and such bylaws.
Section 2.5 Directors and Officers of the Surviving Corporation. The directors of Sub, as
of immediately prior to the Effective Time shall, from and after the Effective Time, be the
directors of the Surviving Corporation until their successors shall have been duly elected or
appointed or qualified or until their earlier death, resignation or removal in accordance with the
Surviving Corporation’s articles of incorporation and bylaws. The officers of the Company at the
Effective Time shall, from and after the Effective Time, be the initial officers of the Surviving
Corporation until their successors shall have been duly elected or appointed or qualified or until
their earlier death, resignation or removal in accordance with the Surviving Corporation’s articles
of incorporation and bylaws.
ARTICLE III
CONVERSION OF SHARES
Section 3.1 Conversion of Shares.
(a) At the Effective Time except as otherwise provided in Section 3.4(d), each share of the
Company’s common stock, $.01 par value (the “Common
Stock”), issued and outstanding immediately prior to the Effective Time (other than
shares of Common Stock to be cancelled pursuant to Section 3.1(c) and Dissenting Shares)
shall, by virtue of the Merger and without any action on the part of the holder thereof, be
converted into the right to receive $66.50 in cash (the “Merger Consideration”) without any
interest thereon.
8
(b) Each share of common stock, $.01 par value, of Sub issued and outstanding immediately
prior to the Effective Time shall, at the Effective Time, by virtue of the Merger and without any
action on the part of Parent, be converted into one fully paid and nonassessable share of the
common stock, $.01 par value, of the Surviving Corporation.
(c) All shares of Common Stock that are owned by the Company as treasury stock and any shares
of Common Stock owned by Parent, Sub or any other direct or indirect wholly-owned Subsidiary of
Parent shall, at the Effective Time, be cancelled and shall cease to exist, and no consideration
shall be delivered in exchange therefor.
(d) At the Effective Time, each share of Common Stock converted into the right to receive the
Merger Consideration pursuant to Section 3.1(a) shall be automatically cancelled and shall
cease to exist, and the holders immediately prior to the Effective Time of shares of outstanding
Common Stock not represented by certificates (“Book-Entry Shares”) and the holders of
certificates that, immediately prior to the Effective Time, represented shares of outstanding
Common Stock (the “Certificates”) shall cease to have any rights with respect to such
shares of Common Stock other than the right to receive, upon surrender of such Book-Entry Shares or
Certificates in accordance with Section 3.2, the Merger Consideration, without any interest
thereon, for each such share of Common Stock held by them.
(e) If at any time between the date of this Agreement and the Effective Time any change in the
number of outstanding shares of Common Stock shall occur as a result of a reclassification,
recapitalization, stock split (including a reverse stock split), or combination, exchange or
readjustment of shares, or any stock dividend or stock distribution with a record date during such
period, the amount of the Merger Consideration as provided in Section 3.1(a) shall be
equitably adjusted to reflect such change.
Section 3.2 Exchange of Certificates and Book-Entry Shares.
(a) At or prior to the Closing, Parent shall deliver, in trust, to Mellon Investor Services
L.L.C. (the “Paying Agent”), for the benefit of the holders of shares of Common Stock at
the Effective Time, sufficient funds for timely payment of the aggregate Merger Consideration (such
cash being hereinafter referred to as the “Consideration Fund”) to be paid pursuant to this
Section 3.2 in respect of Certificates and Book-Entry Shares, assuming no Dissenting
Shares. In the event the Consideration Fund shall be insufficient to pay the aggregate Merger
Consideration contemplated by Section 3.1, Parent shall promptly deliver, or cause to be
delivered, additional funds to the Paying Agent in an amount that is equal to the deficiency
required to make such payments.
(b) Promptly after the Effective Time, Parent shall cause the Paying Agent to mail to each
holder of record of Certificates or Book-Entry Shares whose shares were converted into the right to
receive Merger Consideration pursuant to Section 3.1 (i) a letter of
transmittal that shall specify that delivery of such Certificates or Book-Entry Shares shall
be deemed to have occurred, and risk of loss and title to the Certificates or Book-Entry Shares, as
applicable, shall pass, only upon proper delivery of the Certificates (or affidavits of loss in
lieu thereof) or Book-Entry Shares to the Paying Agent and (ii) instructions for use in effecting
the surrender of the Certificates or Book-Entry Shares in exchange for payment of the Merger
9
Consideration, the form and substance of which letter of transmittal and instructions shall be
substantially as reasonably agreed to by the Company and Parent and prepared prior to the Closing.
Upon surrender of a Book-Entry Share or a Certificate for cancellation to the Paying Agent together
with such letter of transmittal, duly executed and completed in accordance with the instructions
thereto, and with such other documents as may be required pursuant to such instructions, the holder
of such Book-Entry Share or Certificate shall be entitled to receive in exchange therefor, subject
to any required withholding of Taxes, the Merger Consideration pursuant to the provisions of this
Article III, and the Book-Entry Share or Certificate so surrendered shall forthwith be
cancelled. No interest will be paid or accrued on the Merger Consideration payable to holders of
Book-Entry Shares or Certificates. If any Merger Consideration is to be paid to a Person other
than a Person in whose name the Book-Entry Share or Certificate surrendered in exchange therefor is
registered, it shall be a condition of such exchange that the Person requesting such exchange shall
pay to the Paying Agent any transfer or other Taxes required by reason of payment of the Merger
Consideration to a Person other than the registered holder of the Book-Entry Share or Certificate
surrendered, or shall establish to the reasonable satisfaction of the Paying Agent that such Tax
has been paid or is not applicable.
(c) The Consideration Fund shall be invested by the Paying Agent as directed by Parent or the
Surviving Corporation; provided, however, that any such investments shall be in money market mutual
or similar funds having assets in excess of $10,000,000,000. Earnings on the Consideration Fund
shall be the sole and exclusive property of Parent and the Surviving Corporation and shall be paid
to Parent or the Surviving Corporation, as Parent directs. No investment of the Consideration Fund
shall relieve Parent, the Surviving Corporation or the Paying Agent from promptly making the
payments required by this Article III, and following any losses from any such investment,
Parent shall promptly provide additional funds to the Paying Agent for the benefit of the holders
of shares of Common Stock at the Effective Time in the amount of such losses, which additional
funds will be deemed to be part of the Consideration Fund.
(d) At and after the Effective Time, there shall be no transfers on the stock transfer books
of the Company of the shares of Common Stock that were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates or Book-Entry Shares are presented to
the Surviving Corporation or the Paying Agent for any reason, they shall be cancelled and exchanged
for the Merger Consideration pursuant to this Article III, except as otherwise provided by
Law.
(e) Any portion of the Consideration Fund (including the proceeds of any investments thereof)
that remains unclaimed by the former shareholders of the Company one (1) year after the Effective
Time shall be delivered to the Surviving Corporation. Any holders of Certificates or Book-Entry
Shares who have not theretofore complied with this Article III with respect to such
Certificates or Book-Entry Shares shall thereafter look only to the Surviving Corporation for
payment of their claim for Merger Consideration in respect thereof.
(f) Notwithstanding the foregoing, neither the Paying Agent nor any party hereto shall be
liable to any Person in respect of cash from the Consideration Fund delivered to a public official
pursuant to any applicable abandoned property, escheat or similar Law. If any Certificate or
Book-Entry Share shall not have been surrendered prior to the date on
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which any Merger
Consideration in respect thereof would otherwise escheat to or become the property of any
Governmental Entity, any such Merger Consideration in respect of such Certificate or Book-Entry
Share shall, to the extent permitted by applicable Law, become the property of the Surviving
Corporation, and any holder of such Certificate or Book-Entry Share who has not theretofore
complied with this Article III with respect thereto shall thereafter look only to the
Surviving Corporation for payment of their claim for Merger Consideration in respect thereof.
(g) If any Certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact (such affidavit shall be in a form reasonably satisfactory to Parent and the
Paying Agent) by the Person claiming such certificate to be lost, stolen or destroyed, the Paying
Agent shall issue in exchange for such lost, stolen or destroyed Certificate the Merger
Consideration to which such Person is entitled in respect of such Certificate pursuant to this
Article III.
Section 3.3 Shares of Dissenting Shareholders.
(a) Notwithstanding anything in this Agreement other than Section 3.3(b) to the contrary, any
shares of Common Stock that are issued and outstanding immediately prior to the Effective Time and
held by a shareholder who is entitled to dissent from the Merger under Chapter 23B.13 of the WBCA
and who has exercised, when and in the manner required by Chapter 23B.13 of the WBCA to the extent
so required prior to the Effective Time, such right to dissent and to obtain payment of the fair
value of such shares under Chapter 23B.13 of the WBCA in connection with the Merger
(“Dissenting Shares”) shall not be converted into the right to receive the Merger
Consideration unless and until such shareholder shall have effectively withdrawn or lost (through
failure to perfect or otherwise) such shareholder’s right to obtain payment of the fair value of
such shareholder’s Dissenting Shares under Chapter 23B.13 of the WBCA, but shall instead be
entitled only to such rights with respect to such Dissenting Shares as may be granted to such
shareholder under Chapter 23B.13 of the WBCA. From and after the Effective Time, Dissenting Shares
shall not be entitled to vote for any purpose or be entitled to the payment of dividends or other
distributions (except dividends or other distributions payable to shareholders of record prior to
the Effective Time). The Company shall promptly provide any notices of dissent to Parent.
(b) If any shareholder who holds Dissenting Shares effectively withdraws or loses (through
failure to perfect or otherwise) such shareholder’s right to obtain payment of the fair value of
such shareholder’s Dissenting Shares under Chapter 23B.13 of the WBCA, then, as of the later of the
Effective Time and the occurrence of such effective withdrawal or loss, such shareholder’s shares
of Common Stock shall no longer be Dissenting Shares and, if the occurrence of such effective
withdrawal or loss is later than the Effective Time, shall be treated as if they had as of the
Effective Time been converted into the right to receive Merger Consideration as set forth in
subsection (a) of Section 3.1.
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Section 3.4 Treatment of Stock Options; Restricted Shares.
(a) As soon as practicable following the date of this Agreement and to the extent necessary,
the board of directors of the Company (or, if appropriate, any committee administering the Company
Option Plans) shall adopt such resolutions and take such other actions as are required with respect
to outstanding options to purchase shares of Common Stock issued pursuant to the Company Option
Plans, to the extent vested and exercisable immediately prior to the Effective Time or as a result
of the Merger (“Vested Options”), such that each Vested Option outstanding at the Effective
Time shall cease to represent a right to acquire shares of Common Stock and shall instead represent
only the right to receive the Merger Consideration for each share of Common Stock that would have
been issuable upon exercise of the Vested Option prior to the Effective Time less the applicable
exercise price for such share of Common Stock under such Vested Option (such net amount, the
“Option Per Share Amount”). Parent shall promptly pay or cause to be paid immediately
after the Effective Time to the holders of Vested Options as of immediately prior to the Effective
Time the Option Per Share Amount (less any applicable tax withholding) for each share of Common
Stock that would have been issued upon exercise of the Vested Options.
(b) At the Effective Time, each of the outstanding options to purchase shares of Common Stock
issued pursuant to the Company Option Plans to the extent not vested or exercisable prior to or as
a result of the consummation of the Merger (the “Unvested Options”) shall, without any
further action on the part of any holder thereof, be converted into an option granted pursuant to
the Parent Corporation 2001 Stock Plan, as amended and restated (the “Parent 2001 Stock
Plan”), to purchase that number of shares of common stock, par value $0.00000625 per share, of
Parent (the “Parent Common Shares”) determined by multiplying the number of Company Common
Shares subject to such Unvested Option at the Effective Time by the Exchange Ratio (as defined
below), at an exercise price per Parent Common Share equal to the exercise price per share of such
Unvested Option immediately prior to the Effective Time divided by the Exchange Ratio (rounded up
to the nearest whole cent) (a “Substituted Parent Option”). If the foregoing calculation
results in a Substituted Parent Option being exercisable for a fraction of a Parent Common Share,
then the number of Parent Common Shares subject to such option shall be rounded down to the nearest
whole number of shares.
(c) The Substituted Parent Options shall have the same vesting schedule (including any
acceleration of vesting as provided in the Company Option Plans) as the Unvested Options and
otherwise shall have the terms and conditions as set forth in such Substituted Parent Options;
provided that Parent shall convert Unvested Options into Substituted Parent Options in such a
manner as to ensure that (i) the Substituted Parent Options are not subject to Section 409A of the
Code as a result of the substitution and (ii) Substituted Parent Options received with respect to
Unvested Options that were “incentive stock options” within the meaning of section 422 of the Code
will satisfy the requirement of section 424(a) of the Code and continue to be “incentive stock
options” within the meaning of section 422 of the Code. As a result of such conversion, the
Substituted Parent Options shall be subject to all of the terms and conditions of the Parent 2001
Stock Plan and grant agreements for the Substituted Parent Options (rather than the terms and
conditions of the plan and grant agreements under which the Unvested Options were originally
issued). Prior to the Effective Time, Company shall take all actions (including causing its board
of directors, the compensation committee of Company’s board of directors, or a
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committee overseeing the Company Option Plans to take all actions) that are necessary to
confirm that the Substituted Parent Options are “equivalent” and “comparable” options, as
applicable, under the terms of the Company Option Plans or otherwise such that vesting in Unvested
Options will not be accelerated as a result of the Merger, this Agreement, or the transactions
contemplated hereby (the “Transactions”) (including the exchange of the Substituted Parent
Options for the Unvested Options) and that are otherwise necessary to ensure that the Unvested
Options may be substituted as provided in this Section 3.4(c). For purposes of this Agreement,
“Exchange Ratio” shall mean the number determined by dividing the Merger Consideration by
the average of the closing prices of a Parent Common Share as publicly reported for the Nasdaq
Global Market System as of 4:00 p.m. Eastern Time for each of the 10 consecutive trading days
immediately preceding the Effective Time.
(d) At the Effective Time, by virtue of the Merger, Company Restricted Shares outstanding
immediately prior to the Effective Time shall be converted into that number of restricted shares
(“Parent Restricted Shares”) or restricted stock units of Parent Common Shares (such
restricted stock units together with Parent Restricted Shares, “Substitute Deferred Compensation”)
with an equivalent after tax economic effect (and with no detrimental effect on the holder thereof)
determined by multiplying the number of Company Restricted Shares by the Exchange Ratio. Any
Substitute Deferred Compensation issued pursuant to this Section 3.4(d) shall be subject to the
same terms and conditions as were applicable under such Company Restricted Shares (including the
vesting schedule and any acceleration of vesting pursuant to any Company Option Plans) except to
the extent changes to the terms and conditions are otherwise agreed to between Parent and the
holder of the Parent Restricted Shares.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed in the Company SEC Reports filed by the Company prior to the date of this
Agreement or in the Company Disclosure Schedule, the Company represents and warrants to Parent and
Sub as follows:
Section 4.1 Organization. Each of the Company and its Subsidiaries is a corporation or
other entity duly organized and validly existing under the laws of the jurisdiction of its
incorporation or organization and has the requisite entity power and authority to own, lease and
operate its properties and to carry on its business as it is now being conducted. Each of the
Company and its Subsidiaries is duly qualified or licensed to do business and is in good standing
in each jurisdiction in which the nature of the business conducted by it makes such qualification
or licensing necessary, except where the failure to be so duly qualified or licensed and in good
standing would not, individually or in the aggregate, have a Company Material Adverse Effect. The
Company has made available to Parent a copy of its amended and restated articles of incorporation
and bylaws, as currently in effect, and is not in violation of any provision of such articles of
incorporation or bylaws.
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Section 4.2 Capitalization.
(a) The authorized capital stock of the Company consists of (i) 200,000,000 shares of Common
Stock, 79,171,676 of which are issued and outstanding as of May 16, 2007 and (ii) 21,083,902 shares
of preferred stock, $.01 par value per share, none of which are issued or outstanding on the date
of this Agreement. All of the outstanding shares of the Company’s capital stock are duly
authorized, validly issued, fully paid, nonassessable and free of preemptive rights. As of the
date hereof, other than pursuant to the Company Option Plans and the ESPP, and the Senior Notes,
there are no existing (i) options, warrants, calls, subscriptions or other rights, convertible
securities, agreements or commitments of any character obligating the Company or any of its
Subsidiaries to issue, transfer or sell any shares of capital stock or other equity interest in,
the Company or any of its Subsidiaries, (ii) contractual obligations of the Company or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any capital stock of the Company or any of
its Subsidiaries or (iii) voting trusts or similar agreements to which the Company is a party with
respect to the voting of the capital stock of the Company.
(b) All of the outstanding shares of capital stock or equivalent equity interests of each of
the Company’s Subsidiaries are owned of record and beneficially, directly or indirectly, by the
Company free and clear of all liens, pledges, security interests or other encumbrances.
(c) Neither the Company nor any of its Subsidiaries own any interest or investment (whether
equity or debt) in any corporation, partnership, joint venture, trust or other entity, other than a
Subsidiary of the Company, which interest or investment is material to the Company and its
Subsidiaries, taken as a whole.
Section 4.3 Authorization; Validity of Agreement; Company Action. The Company has the
requisite corporate power and authority to execute and deliver this Agreement and, subject to
obtaining the approval of its shareholders, to consummate the transactions contemplated hereby.
The execution, delivery and performance by the Company of this Agreement and the consummation by
the Company of the transactions contemplated hereby have been duly authorized by its board of
directors, and no other corporate action on the part of the Company is necessary to authorize the
execution and delivery by the Company of this Agreement and, except for shareholder approval, the
consummation by it of the transactions contemplated hereby. This Agreement has been duly executed
and delivered by the Company and is a valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except that (i) such enforcement may be subject
to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws, now or
hereafter in effect, affecting creditors’ rights and remedies generally and (ii) the remedy of
specific performance and injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor may be brought.
Section 4.4 Consents and Approvals; No Violations (a). The execution and delivery of
this Agreement by the Company do not, and the performance by the Company of this Agreement and the
consummation by the Company of the transactions contemplated hereby will not, (i) violate any
provision of the articles of incorporation or bylaws of the Company, (ii) result
14
in a violation or
breach of, or constitute (with or without due notice or lapse of time or both) a default (or give
rise to any right of termination, cancellation or acceleration) under, any of the terms, conditions
or provisions of any Contract to which the Company or any of its Subsidiaries is a party or by
which any of them or any of their properties or assets is bound, (iii) violate any Law applicable
to the Company, any of its Subsidiaries or any of their properties or assets or (iv) other than in
connection with or compliance with (A) the WBCA, (B) requirements under other state corporation
Laws, (C) the HSR Act, (D) Nasdaq rules and listing standards and (E) the Exchange Act, require the
Company to make any filing or registration with or notification to, or require the Company to
obtain any authorization, consent or approval of, any court, legislative, executive or regulatory
authority or agency (a “Governmental Entity”); except, in the case of clauses (ii), (iii)
and (iv), for such violations, breaches or defaults that, or filings, registrations, notifications,
authorizations, consents or approvals the failure of which to make or obtain, (1) would not,
individually or in the aggregate, have a Company Material Adverse Effect and would not materially
adversely affect the ability of the Company to consummate the transactions contemplated hereby, or
(2) would occur or be required as a result of the business or activities in which Parent or Sub is
or proposes to be engaged or as a result of any acts or omissions by, or the status of any facts
pertaining to, Parent or Sub.
Section 4.5 SEC Reports. The Company has filed all reports and other documents with the
SEC required to be filed or furnished by the Company since December 31, 2004 (such documents,
together with any reports filed during such period by the Company with the SEC on a voluntary basis
on Form 8-K, the “Company SEC Reports”). As of their respective filing dates, the Company
SEC Reports and any other materials filed by the Company with the SEC (i) complied in all material
respects with, to the extent in effect at the time of filing, the applicable requirements of the
Securities Act and the Exchange Act and (ii) did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were made, not misleading.
Each of the financial statements (including the related notes) of the Company included in the
Company SEC Reports complied at the time it was filed as to form in all material respects with the
applicable accounting requirements and the published rules and regulations of the SEC with respect
thereto in effect at the time of such filing, was prepared in accordance with generally accepted
accounting principles in the United States (“GAAP”) (except, in the case of unaudited
statements, as permitted by the rules and regulations of the SEC) applied on a consistent basis
during the periods involved (except as may be indicated in the notes thereto) and fairly 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 their operations
and cash flows for the respective periods then ended (subject, in the case of unaudited statements,
to normal year-end adjustments). Since December 31, 2006, there has been no change in the
Company’s accounting policies or the methods of making accounting estimates or changes in estimates
that are material to the Company’s financial statements, except as described in the Company SEC
Reports or except as may be required by any regulatory authority. The reserves reflected in the
Company’s
financial statements are in accordance with GAAP and have been calculated in a consistent manner.
15
Section 4.6 No Undisclosed Liabilities. Except for (a) liabilities and obligations
incurred in the ordinary course of business since Xxxxx 00, 0000, (x) liabilities and obligations
disclosed in the Company SEC Reports, (c) liabilities and obligations incurred in connection with
the Merger or otherwise as contemplated by this Agreement, (d) liabilities and obligations that
would not, individually or in the aggregate, have a Company Material Adverse Effect and (e) other
liabilities and obligations that are otherwise the subject of any other representation or warranty
contained in this Article IV, since March 31, 2007, neither the Company nor any of its
Subsidiaries has incurred any liabilities or obligations that would be required to be reflected or
reserved against in a consolidated balance sheet of the Company and its consolidated Subsidiaries
prepared in accordance with GAAP as applied in preparing the consolidated balance sheet of the
Company and its consolidated Subsidiaries included in the Company SEC Reports.
Section 4.7 Absence of Certain Changes. Except as contemplated by this Agreement, since
March 31, 2007 through the date hereof (i) the Company has not suffered a Company Material Adverse
Effect and (ii) has not taken any action that would be prohibited by Section 6.1(a) through
Section 6.1(k) if taken after the date hereof.
Section 4.8 Material Contracts.
(a) As of the date hereof and other than as reflected in a Company SEC Report, the Company is
not a party to or bound by any Contract (i) that would be required to be filed by the Company as a
material contract pursuant to Item 601(b)(10) of Regulation S-K of the SEC; (ii) that would, after
giving effect to the Merger, limit or restrict the Surviving Corporation or any successor thereto
from engaging in any line of business or in any geographic area; (iii) that creates a partnership
or joint venture or similar arrangement with respect to any material business of the Company, (iv)
would or would reasonably be expected to, individually or in the aggregate, prevent, materially
delay or materially impede the Company’s ability to consummate the transactions contemplated by
this Agreement; (v) that is an indenture, credit agreement, loan agreement, security agreement,
guarantee, note, mortgage or other agreement providing for indebtedness in excess of $2,500,000;
(vi) that is a written contract (other than this Agreement) for the sale of any of its assets after
the date hereof in excess of $2,500,000 (other than in the ordinary course of business); (vii) that
is a collective bargaining agreement; or (viii) under which the Company and the Company
Subsidiaries have made payments in excess of $2,500,000 in calendar 2006 (other than in the
ordinary course of business). Each such contract described in clauses (i)-(viii) is referred to
herein as a “Material Contract.”
(b) Each Material Contract is a valid and binding obligation of the Company enforceable
against the Company in accordance with its terms and, to the Company’s knowledge, each other party
thereto, and is in full force and effect, and the Company has performed in all material respects
all obligations required to be performed by it to the date hereof
under each Material Contract and, to the Company’s knowledge, each other party to each
Material Contract has performed in all material respects all obligations required to be performed
by it under such Material Contract. The Company has not received notice, nor does it have
knowledge, of any material violation of
or default of any material obligation under (or any
condition which with the passage of time or the giving of notice would cause such a violation of
16
or
default under) any Material Contract to which it is a party or by which it or any of its properties
or assets is bound.
Section 4.9 Employee Benefit Plans; ERISA.
(a) Section 4.9(a) of the Company Disclosure Schedule sets forth a list of all
material employee benefit plans, including plans described in section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”), maintained for the benefit of
any current or former employee, officer or director of the Company or any of its Subsidiaries by
the Company or by any trade or business, whether or not incorporated, which together with the
Company is treated as a single employer under sections 414(b), (c) or (m) of the Code (such plans,
“Benefit Plans”) and all material employment and severance agreements with employees of the
Company or any of its Subsidiaries (such agreements, “Benefit Agreements”).
(b) With respect to each Benefit Plan and Benefit Agreement except as would not, individually
or in the aggregate, have a Company Material Adverse Effect: (i) if intended to be qualified under
section 401(a) of the Code, such Benefit Plan (A) is the subject of an unrevoked favorable
determination letter from the IRS, (B) has remaining a period of time under the Code or
applicable Treasury regulations or IRS pronouncements in which to request, and make any amendments
necessary to obtain, such a letter from the IRS, or (C) is a prototype or volume submitter plan
entitled, under applicable IRS guidance, to rely on the favorable opinion or advisory
letter issued by the IRS to the sponsor of such prototype or volume submitter plan, and, to the
knowledge of the Company, nothing has occurred since the date of the most recent such
determination, opinion or advisory letter that would adversely affect such qualification, (ii) to
the knowledge of the Company, such Benefit Plan or Benefit Agreement has been administered in
accordance with its terms and applicable Law, (iii) no disputes are pending, or, to the knowledge
of the Company, threatened that would give rise to material liability on the part of the Company,
and (iv) the consummation of the transactions contemplated by this Agreement will not result in, or
accelerate the vesting in or time of payment of, compensation due any current employee or officer
of the Company.
(c) Neither the Company nor any of its current or former Subsidiaries (or trades or businesses
which together with the Company are or were treated as a single employer under sections 414(b), (c)
or (m) of the Code) sponsors, maintains or contributes to, or has ever sponsored, maintained or
contributed to (or been obligated to sponsor, maintain or contribute to), (i) a multiemployer plan,
as defined in section 3(37) or 4001(a)(3) of ERISA, (ii) a multiple employer plan within the
meaning of section 4063 or 4064 of ERISA or section 413 of the Code, or (iii) an employee benefit
plan that is subject to section 302 of ERISA, Title IV of ERISA or section 412 of the Code.
Section 4.10 Litigation. As of the date hereof, there is no action, claim, suit, proceeding or governmental investigation
pending or, to the knowledge of the Company, threatened, that would, individually or in the
aggregate, have a Company Material Adverse Effect.
17
Section 4.11 Compliance with Law. Except as would not, individually or in the aggregate,
have a Company Material Adverse Effect, neither the Company nor any of its Subsidiaries is in
violation of, or in default under, any Law, in each case, applicable to the Company or any of its
Subsidiaries or any of their respective assets and properties. Notwithstanding the foregoing, this
Section 4.11 shall not apply to employee benefit plans, Taxes, Environmental Laws or labor
and employment matters, which are the subject exclusively of the representations and warranties in
Section 4.9, Section 4.13, Section 4.15 and Section 4.16,
respectively.
Section 4.12 Intellectual Property.
(a) Section 4.12 of the Company Disclosure Schedule sets forth all (i) issued patents
and pending patent applications, (ii) trademark and service xxxx registrations and applications for
registration thereof, and (iii) copyright work registrations and applications for registration
thereof, in each case that are owned by or on behalf of the Company or any of its Subsidiaries.
With respect to each item of Intellectual Property required to be identified in this Section
4.12: (i) the Company or one of its Subsidiaries is the sole owner and possesses all right,
title, and interest in and to such item, free and clear of any lien; (ii) such item is not subject
to any outstanding injunction, judgment, order, decree, ruling, or charge of which the Company has
received notice; (iii) no action, suit, proceedings, hearing, investigation, charge, complaint,
claim, or demand of which the Company has received notice is pending or, to the knowledge of the
Company, is threatened that challenges the legality, validity, enforceability, registrations, use,
or ownership of such item; and (iv) neither the Company nor any of its Subsidiaries has agreed to
indemnify any Person for or against any interference, infringement, misappropriation, or other
conduct with respect to such item, excluding any of the foregoing which would not reasonably be
expected to result in a Company Material Adverse Effect.
(b) Section 4.12 of the Company Disclosure Schedule sets forth a list of all material
agreements under which the Company or any of its Subsidiaries licenses from a third party material
Intellectual Property that is used by the Company or such Subsidiary in the conduct of its
business, except for off-the-shelf software programs that the Company and any of its Subsidiaries
use in the ordinary course of business (such agreements being referred to as “License-In
Agreements”). To the knowledge of the Company, (i) each License-In Agreement is valid,
binding, and in full force and effect; (ii) each License-In Agreement will continue to be valid,
binding, and in full force and effect on identical terms following the consummation of the
transactions contemplated hereby; (iii) neither the Company nor any of its Subsidiaries is in
default of any such License-In Agreement, and no event has occurred that constitutes a material
default or material breach thereunder; (iv) neither the Company nor any of its Subsidiaries has
repudiated any provision of any License-In Agreement; and (v) neither the Company nor any of its
Subsidiaries has granted any sublicense with respect to any License-In Agreement, in the case of
each of clauses (i), (ii) and (iii), except for any of the foregoing that have not had, and are not
reasonably expected to have, a Company Material Adverse Effect.
(c) The Company and its Subsidiaries own or have the right to use, without payments to any
other Person except pursuant to any License-In Agreement, all Intellectual Property actually used
in the operation of the business of the Company and its Subsidiaries as and where the business is
presently conducted. Each item of Intellectual Property
18
(except for off-the-shelf software
programs that the Company and its Subsidiaries use in the ordinary course of business) owned or
used by the Company and its Subsidiaries immediately prior to the Closing hereunder will be owned
or available for use by the Company and its Subsidiaries on identical terms and conditions
immediately subsequent to the Closing hereunder, excluding any item of such Intellectual Property
the absence of which would not reasonably be expected to have a Company Material Adverse Effect.
The Company and its Subsidiaries are taking or have taken all commercially reasonable actions that
are required to maintain each item of Intellectual Property that they own or use, excluding any
item of such Intellectual Property, the absence of which would not reasonably be expected to have a
Company Material Adverse Effect.
(d) To the knowledge of the Company, none of (i) the Company or any of its Subsidiaries, (ii)
the Intellectual Property owned by the Company or any of its Subsidiaries, and (iii) the operation
of the business of the Company or any of its Subsidiaries has interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Intellectual Property rights of third
parties, and neither the Company nor any of its Subsidiaries has received any written charge,
complaint, claim, demand, or notice during the past two (2) years (or earlier, if not resolved),
alleging any such interference, infringement, misappropriation, or conflict (including any claim
that the Company or any of its Subsidiaries must license or refrain from using any Intellectual
Property rights of any third party), excluding any of the forgoing that would not reasonably be
expected to have a Company Material Adverse Effect. To the knowledge of the Company, no third
party has interfered with, infringed upon, misappropriated, or otherwise come into conflict with
any Intellectual Property rights of the Company or any of its Subsidiaries during the past two (2)
years (or earlier if not resolved), excluding any such interference, infringement, misappropriation
or conflict that would not reasonably be expected to have a Company Material Adverse Effect.
(e) As of the Effective Time, no former or current shareholder, employee, director or officer
of the Company or any of its Subsidiaries will have, directly or indirectly, any interest in any
Intellectual Property used in or pertaining to the business of the Company and its Subsidiaries,
nor will any such Person have any rights to past or future royalty payments or license fees from
the Company or any of its Subsidiaries, deriving from licenses, technology agreements or other
agreements, whether written or oral, between any such Person and the Company and/or any of its
Subsidiaries.
(f) The Company takes and has taken commercially reasonable efforts to protect and preserve
its rights in any proprietary Intellectual Property (including executing confidentiality, and
intellectual property assignment agreements with current executive officers and current employees
and contractors that have a role in the development of Company’s products and Intellectual
Property). To the Company’s knowledge, all Persons (including current and former employees and
independent contractors) who create or contribute to material proprietary Intellectual Property
owned by Company have assigned to Company in writing all of their rights therein that did not
initially vest with Company by operation of law.
(g) The Company is in compliance in all material respects with all applicable laws, rules,
regulations, and its contractual obligations governing the collection, interception, storage,
receipt, purchase, sale, transfer and use (“Collection and Use”) of personal,
19
consumer, or
customer information (“Customer Information”). The Company’s Collection and Use of
Customer Information are in accordance in all material respects with the Company’s privacy policy
as published on its website or any other privacy policies presented to consumers or customers and
to which the Company is bound or otherwise subject and any contractual obligations of the Company
to its customers regarding privacy. The Company takes commercially reasonable actions consistent
with industry practice to protect the confidentiality, integrity and security of all Customer
Information and to prevent the unauthorized Collection and Use of Customer Information. The
execution or delivery of this Agreement or any other agreement or document contemplated by this
Agreement or the performance of the Company’s obligations hereunder or thereunder, will not
materially violate any such applicable law, rule, or regulation or any of the Company’s privacy
policies or any contractual obligation of the Company governing the Collection and Use of Customer
Information.
(h) Except for custom website-related development provided to a Company customer that is not
distributed generally as part of the Company’s product or service offerings, the Company has not
distributed or published to any third party any Company software or third party software used or
provided in or as part of any Company product or service offerings (including Company software
under development) that is governed by an Excluded License.
(i) The Company has not exported or re-exported its products, service offerings or technology,
directly or indirectly, in violation of law either to: (i) any countries that are subject to
United States export restrictions or export restrictions of any other jurisdiction in which the
Company operates or is otherwise subject; or (ii) any end-user who the Company knows or has reason
to know will utilize them in the design, development, or production of nuclear, chemical, or
biological weapons; and the Company has complied with all end-user, end-use, and destination
restrictions issued by the United States and any other jurisdiction in which Company operates or to
which it is subject.
(j) No parties other than the Company and its Subsidiaries possess any current or contingent
rights to any source code included in the Company’s or its Subsidiaries’ product or service
offerings.
Section 4.13 Taxes.
(a) Each of the Company and its Subsidiaries has (i) timely filed all material Tax Returns
required to be filed by any of them (taking into account applicable extensions) and all such
returns were true, correct and complete in all material respects when filed and (ii) paid or
accrued (in accordance with GAAP) all material Taxes shown to be due on such Tax Returns other than
such Taxes as are being contested in good faith by the Company or its Subsidiaries, which contest,
if determined adversely to the Company, would not reasonably be expected to have a Company Material
Adverse Effect.
(b) There are no material pending and neither the Company nor any Subsidiary has received
written notice of any material federal, state, local or foreign audits or examinations of any Tax
Return of the Company or its Subsidiaries.
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(c) There are no outstanding written waivers to extend the statutory period of limitations
applicable to the assessment of any material Taxes or material deficiencies against the Company or
any of its Subsidiaries.
(d) Neither the Company nor any of its Subsidiaries is a party to any agreement providing for
the allocation or sharing of Taxes.
(e) There are no material liens for Taxes upon the assets of the Company or any of its
Subsidiaries that are not provided for in the Company SEC Reports, except liens for Taxes not yet
due and payable and liens for Taxes that are being contested in good faith, which contest, if
determined adversely to the Company, would not reasonably be expected to have a Company Material
Adverse Effect.
Section 4.14 Tangible Assets. Except as would not, individually or in the aggregate, have
a Company Material Adverse Effect, the Company and/or one or more of its Subsidiaries have valid
title to, or valid leasehold or sublease interests or other comparable contract rights in or
relating to, all of the real properties and other tangible assets necessary for the conduct of the
business of the Company and its Subsidiaries, taken as a whole, as currently conducted.
Section 4.15 Environmental.
(a) To the knowledge of the Company, each of the Company and its Subsidiaries is in compliance
with all Environmental Laws, except for noncompliance that would not, individually or in the
aggregate, have a Company Material Adverse Effect, which compliance includes the possession by the
Company and its Subsidiaries of material permits and other governmental authorizations required for
their current operations under applicable Environmental Laws, and compliance with the terms and
conditions thereof.
(b) Neither the Company nor any of its Subsidiaries has received written notice of any
Environmental Claims against the Company or any Subsidiary that would, individually or in the
aggregate, have a Company Material Adverse Effect.
(c) To the knowledge of the Company, with respect to the real property currently owned, leased
or operated by the Company or any of its Subsidiaries, there have been no releases of Hazardous
Materials that require a Cleanup.
Section 4.16 Labor Matters.
(a) As of the date hereof, there are no pending or, to the knowledge of the Company,
threatened strikes, lockouts, work stoppages or slowdowns involving the employees of the Company or
any of its Subsidiaries.
(b) As of the date hereof, neither the Company nor any of its Subsidiaries is a party to, or
bound by, any collective bargaining agreement, contract or other agreement or understanding with a
labor union or labor organization.
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(c) There is no unfair labor practice or labor arbitration proceeding pending or, to the
knowledge of the Company, threatened against the Company or its Subsidiaries, except for any such
proceeding that would not, individually or in the aggregate, have a Company Material Adverse
Effect.
Section 4.17 Proxy Statement. The Proxy Statement will not, at the date the Proxy
Statement is first mailed to shareholders of the Company or at the time of the Company Special
Meeting, contain any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that no representation or warranty
is made by the Company with respect to statements made or incorporated by reference therein based
on information supplied by or on behalf of Parent or Sub for inclusion or incorporation by
reference therein. The Proxy Statement will, when filed with the SEC, comply as to form in all
material respects with the applicable requirements of the Exchange Act.
Section 4.18 Brokers or Finders. No investment banker, broker, finder, consultant or
intermediary other than Xxxxxx Xxxxxxx & Co. Incorporated (“MS”), the fees and expenses of
which will be paid by the Company, is entitled to any investment banking, brokerage, finder’s or
similar fee or commission in connection with this Agreement or the transactions contemplated hereby
based upon arrangements made by or on behalf of the Company or any of its Subsidiaries.
Section 4.19 Vote Required. The affirmative vote of the holders of a majority of the
outstanding shares of Common Stock entitled to vote on this Agreement is the only vote of the
holders of securities of the Company necessary to approve this Agreement and the consummation of
the Merger (the “Company Shareholder Approval”).
Section 4.20 Board Recommendation. The Company’s board of directors has unanimously (a)
determined that this Agreement and the Merger are advisable and in the best interests of Company
and its shareholders, (b) approved and adopted this Agreement, including the Merger and the other
transactions contemplated thereby, and (c) subject to the other terms and conditions of this
Agreement, resolved to recommend the Agreement, the Merger and approval of this Agreement by
Company’s shareholders, and, as of the date of this Agreement, none of such actions by Company’s
board of directors has been amended, rescinded, or modified.
Section 4.21 Opinion of Financial Advisor. The board of directors of Company has received an opinion of Xxxxxx Xxxxxxx & Co. Incorporated,
dated May 17, 2007, to the effect that, as of such date and based upon and subject to the matters
set forth in such opinion, the Merger Consideration is fair from a financial point of view to the
holders of the Common Stock.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub jointly and severally represent and warrant to the Company as follows:
Section 5.1 Organization. Each of Parent and Sub is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its incorporation and has the
requisite power and authority to own, lease and operate its properties and to carry on its business
as it is now being conducted. Each of Parent and Sub is duly qualified or licensed to do business
and in good standing in each jurisdiction in which the property owned, leased or operated by it or
the nature of the business conducted by it makes such qualification or licensing necessary, except
where the failure to be so duly qualified or licensed and in good standing would not, individually
or in the aggregate, have a Parent Material Adverse Effect. Parent has made available to the
Company a copy of the articles of incorporation and bylaws or other equivalent organizational
documents of Parent and Sub, as currently in effect, and neither Parent nor Sub is in violation of
any provision of its articles of incorporation or bylaws or other equivalent organizational
documents.
Section 5.2 Authorization; Validity of Agreement; Necessary Action. Each of Parent and Sub
has the requisite power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance by Parent and Sub of
this Agreement, approval and adoption of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by all necessary action of Parent and Sub
(the written consent of the sole shareholder of which has not been modified or revoked), and no
other action on the part of Parent or Sub is necessary to authorize the execution and delivery by
Parent and Sub of this Agreement and the consummation by them of the transactions contemplated
hereby. This Agreement has been duly executed and delivered by Parent and Sub and, assuming due
and valid authorization, execution and delivery hereof by the Company, is a valid and binding
obligation of each of Parent and Sub, enforceable against each of them in accordance with its
terms, except that (i) such enforcement may be subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws, now or hereafter in effect, affecting creditors’
rights generally and (ii) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought.
Section 5.3 Consents and Approvals; No Violations. The execution and delivery of this
Agreement by Parent and Sub do not, and the performance by Parent and Sub of this Agreement and the
consummation by Parent and Sub of the
transactions contemplated hereby will not, (i) violate any provision of the articles of
incorporation or bylaws (or equivalent organizational documents) of Parent or Sub, (ii) result in a
violation or breach of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or acceleration) under, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation to which Parent or any of its Subsidiaries is a party
or by which any of them or any of their properties or assets may be bound, (iii) violate any Law
applicable to Parent, any of its Subsidiaries or any of their properties or assets or (iv) other
than in connection with or
23
compliance with (A) the WBCA, (B) requirements under other state
corporation Laws, (C) the HSR Act and (D) the Exchange Act, require on the part of Parent or Sub
any filing or registration with, notification to, or authorization, consent or approval of, any
Governmental Entity; except, in the case of clauses (ii), (iii) or (iv), for such violation,
breaches or defaults that, or filings, registrations, notifications, authorizations, consents or
approval the failure of which to make or obtain, would not, individually or in the aggregate, have
a Parent Material Adverse Effect.
Section 5.4 SEC Reports. Parent has filed all reports and other documents with the SEC
required to be filed or furnished by Parent since December 31, 2004 (such documents, together with
any current reports filed during such period by Parent with the SEC on a voluntary basis on Form
8-K, the “Parent SEC Reports”). As of their respective filing dates, the Parent SEC
Reports (i) complied in all material respects with, to the extent in effect at the time of filing,
the applicable requirements of the Securities Act and the Exchange Act and (ii) did not contain any
untrue statement of a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
Section 5.5 Compliance with Law. Except as would not, individually or in the aggregate,
materially impair the ability of Parent or Sub to consummate the transactions contemplated hereby,
neither Parent nor any of its Subsidiaries is in violation of, or in default under, any Law, in
each case, applicable to Parent or any of its Subsidiaries or any of their respective assets and
properties.
Section 5.6 Sub’s Operations. Sub was formed solely for the purpose of engaging in the
transactions contemplated hereby and has not owned any assets, engaged in any business activities
or conducted any operations other than in connection with the transactions contemplated hereby.
Section 5.7 Proxy Statement. None of the information supplied by Parent or Sub for
inclusion in the Proxy Statement will, at the date the Proxy Statement is first mailed to
shareholders of the Company or at the time of the Company Special Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances under which they
were made, not misleading.
Section 5.8 Brokers or Finders. No investment banker, broker, finder, consultant or
intermediary other than Lazard Freres & Co. LLC, the fees and expenses of which will be paid by
Parent, is entitled to any investment banking, brokerage, finder’s or similar fee or commission in
connection with this Agreement or the transactions contemplated hereby based upon arrangements made
by or on behalf of Parent or any of its Subsidiaries.
Section 5.9 Sufficient Funds. Parent has, and as of the Closing will have, sufficient
immediately available funds (through existing credit arrangements or otherwise) to pay when due the
aggregate Merger Consideration and to pay when due all of its fees and expenses related to the
transactions contemplated by this Agreement.
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Section 5.10 Acquiring Person. None of Parent, Sub or their respective Affiliates is or
ever has been, with respect to the Company, an “acquiring person”, or an “affiliate” or “associate”
of an “acquiring person” (as such terms are defined in Chapter 23B.19 of the WBCA). Sub will not
be, with respect to the Company after the Merger, an “affiliate or associate” of an “acquiring
person” (as such terms are defined in Chapter 23B.19 of the WBCA).
Section 5.11 Investigation by Parent and Sub.
(a) Each of Parent and Sub has conducted its own independent review and analysis of the
businesses, assets, condition, operations and prospects of the Company and its Subsidiaries and
acknowledges that each of Parent and Sub has been provided access to the properties, premises and
records of the Company and its Subsidiaries for this purpose. In entering into this Agreement,
each of Parent and Sub has relied solely upon its own investigation and analysis, and each of
Parent and Sub acknowledges that, except for the representations and warranties of the Company
expressly set forth in Article IV, none of the Company or its Subsidiaries nor any of their
respective Representatives makes any representation or warranty, either express or implied, as to
the accuracy or completeness of any of the information provided or made available to Parent or Sub
or any of their Representatives. Without limiting the generality of the foregoing, none of the
Company or its Subsidiaries nor any of their respective Representatives or any other Person has
made a representation or warranty to Parent or Sub with respect to (a) any projections, estimates
or budgets for the Company or its Subsidiaries or (b) any material, documents or information
relating to the Company or its Subsidiaries made available to each of Parent or Sub or their
Representatives in any “data room,” confidential memorandum, other offering materials or otherwise,
except as expressly and specifically covered by a representation or warranty set forth in
Article IV. Parent has no knowledge of any of the Company’s representations or warranties
being untrue in any material respect.
(b) In connection with Parent’s and Sub’s investigation of the Company, each of Parent and Sub
has received from the Company and its Representatives certain projections and other forecasts,
including but not limited to projected financial statements, cash flow items and other data of the
Company and its Subsidiaries and certain
business plan information of the Company and its Subsidiaries. Each of Parent and Sub
acknowledges that there are uncertainties inherent in attempting to make such projections and other
forecasts and plans and accordingly is not relying on them, that each of Parent and Sub is familiar
with such uncertainties, that each of Parent and Sub is taking full responsibility for making its
own evaluation of the adequacy and accuracy of all projections and other forecasts and plans so
furnished to it, and that each of Parent and Sub and its Representatives shall have no claim
against any Person with respect thereto. Accordingly, each of Parent and Sub acknowledges that,
without limiting the generality of this Section 5.11, neither the Company nor any Person
acting on behalf of the Company has made any representation or warranty with respect to such
projections and other forecasts and plans.
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ARTICLE VI
COVENANTS
Section 6.1 Interim Operations of the Company. During the period from the date of this
Agreement to the Effective Time or the date, if any, on which this Agreement is earlier terminated
pursuant to Section 8.1 (except (w) as may be required by Law, (x) with the prior written
consent of Parent, which consent shall not be unreasonably withheld, delayed or conditioned, (y) as
contemplated or permitted by this Agreement or (z) as set forth in the Company Disclosure
Schedule), the business of the Company and its Subsidiaries shall be conducted only in the ordinary
and usual course of business in all material respects consistent with past practice, and, to the
extent consistent therewith, the Company and its Subsidiaries shall use commercially reasonable
efforts to (i) preserve intact their current business organization and (ii) preserve their
relationships with customers, suppliers and others having business dealings with them; provided,
however, that no action by the Company or any of its Subsidiaries with respect to matters addressed
specifically by any provision of this Section 6.1 shall be deemed a breach of this sentence
unless such action would constitute a breach of such specific provision. Without limiting the
generality of the foregoing, except (w) as may be required by Law, (x) with the prior written
consent of Parent, which consent shall not be unreasonably withheld, delayed or conditioned, (y) as
contemplated or permitted by this Agreement or (z) as set forth in the Company Disclosure Schedule,
prior to the Effective Time, neither the Company nor any of its Subsidiaries will:
(a) amend its articles of incorporation or bylaws (or equivalent organizational documents);
(b) except for Common Stock to be issued or delivered pursuant to the Company Option Plans or
the ESPP, or upon conversion of any of the Senior Notes and except for the issuance, grant or
delivery of options for Common Stock issued pursuant to the Company Option Plans in the ordinary
course of business consistent with past practice, issue, deliver, sell, dispose of, pledge or
otherwise encumber, or authorize or propose the issuance, sale, disposition or pledge or other
encumbrance of (i) any shares of capital stock of any class or any other ownership interest of the
Company or any of its Subsidiaries, or any securities or rights convertible into, exchangeable for,
or evidencing the right to subscribe for any shares of capital stock or any other ownership
interest of the Company or any of its Subsidiaries, or any rights,
warrants, options, calls, commitments or any other agreements of any character to purchase or
acquire any shares of capital stock or any other ownership interest of the Company or any of its
Subsidiaries or any securities or rights convertible into, exchangeable for, or evidencing the
right to subscribe for, any shares of capital stock or any other ownership interest of the Company
or any of its Subsidiaries, or (ii) any other securities of the Company or any of its Subsidiaries
in respect of, in lieu of, or in substitution for, Common Stock outstanding on the date hereof;
(c) redeem, purchase or otherwise acquire, or propose to redeem, purchase or otherwise
acquire, any outstanding Common Stock;
(d) split, combine, subdivide or reclassify any Common Stock or declare, set aside for payment
or pay any dividend or other distribution in respect of any Common Stock or otherwise make any
payments to shareholders in their capacity as such;
26
(e) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries,
other than the Merger;
(f) other than in the ordinary course of business consistent with past practice, acquire,
sell, lease, dispose of, pledge or encumber any assets that, in the aggregate, are material to the
Company and its Subsidiaries, taken as a whole;
(g) other than in the ordinary course of business consistent with past practice, incur any
material indebtedness for borrowed money in addition to that incurred as of the date of this
Agreement or guarantee any such indebtedness or make any loans, advances or capital contributions
to, or investments in, any other Person, other than to the Company or any wholly-owned Subsidiary
of the Company;
(h) grant any material increases in the compensation of any employees of the Company and its
Subsidiaries (the “Employees”) or directors, except in the ordinary course of business and
in accordance with past practice, or enter into any material new employment or severance agreements
with any such director or Employee, except for retention bonus agreements, bonus plans or bonus
arrangements for Employees other than Executive Officers involving, in the aggregate, obligations
of not more than ten million dollars ($10,000,000.00) (the “Stabilization Amount,” any such
agreements, plans or arrangements subject to this exception, “Post-Signing Stabilization
Plans”), provided any bonuses thereunder will be paid to an Employee in accordance with the
following terms: a bonus grant may provide for not more than thirty percent (30%) of the total
potential bonus being paid prior to six (6) months after the date of this Agreement, and the
Employee may not have voluntarily terminated his or her employment with the Company, Parent or the
Surviving Corporation prior to the date specified for payment or have been terminated for Cause.
As soon as practicable after the Company or a Subsidiary thereof determines that an Employee is
eligible to be considered for a Post-Signing Stabilization Plan benefit, the Company shall inform
Parent of the name of the individual awarded such right and the amount of the potential bonus.
(i) except as may be contemplated by this Agreement or in the ordinary course of business
consistent with past practices, terminate or materially amend any Benefit Plans;
(j) change any of the accounting methods used by the Company unless required by GAAP or
applicable Law; or
(k) enter into any contract, agreement, commitment or arrangement to do any of the foregoing.
Section 6.2 Access to Information. The Company shall (and shall cause each of its
Subsidiaries to) afford to officers, employees, counsel, investment bankers, accountants and other
authorized representatives (“Representatives”) of Parent reasonable access, in a manner not
disruptive to the operations of the business of the Company and its Subsidiaries, during normal
business hours and upon reasonable notice throughout the period prior to the Effective Time, to the
properties, books and records of the Company and its
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Subsidiaries and, during such period, shall
(and shall cause each of its Subsidiaries to) furnish promptly to such Representatives all
information concerning the business, properties and personnel of the Company and its Subsidiaries
in each case as may reasonably be requested and necessary to consummate the transactions
contemplated by this Agreement (and not to conduct further due diligence or other investigation of
the Company); provided, however, that nothing herein shall require the Company or any of its
Subsidiaries to disclose any information to Parent or Sub if such disclosure would, in the
reasonable judgment of the Company, (i) cause significant competitive harm to the Company or its
Subsidiaries if the transactions contemplated by this Agreement are not consummated, (ii) violate
applicable Law or the provisions of any agreement to which the Company or any of its Subsidiaries
is a party or (iii) jeopardize any attorney-client or other legal privilege; provided further,
however, that nothing herein shall authorize Parent or its Representatives to undertake any further
investigation of the Company, including environmental investigations or sampling at any of the
properties owned, operated or leased by the Company or its Subsidiaries. Parent agrees that it
will not, and will cause its Representatives not to, use any information obtained pursuant to this
Section 6.2 for any competitive or other purpose unrelated to the consummation of the
transactions contemplated by this Agreement pursuant to this Agreement. The
Confidentiality/Non-Disclosure Agreement, dated May 2, 2007 (the “Confidentiality
Agreement”), between the Company and Parent shall apply with respect to information furnished
by the Company, its Subsidiaries and the Company’s officers, employees, and other Representatives
hereunder.
Section 6.3 Acquisition Proposals.
(a) The Company and its Subsidiaries will not, and will use their reasonable best efforts to
cause their respective officers, directors, employees and other Representatives not to, directly or
indirectly (i) initiate, encourage, facilitate, solicit, or participate or engage in any
negotiations, inquiries, or discussions with respect to any Acquisition Proposal, (ii) in
connection with any potential Acquisition Proposal, disclose or furnish any nonpublic information
or data to any Person concerning the Company’s business or
properties or afford any Person other than Parent or its Representatives access to its
properties, books, or records, except as required by law or pursuant to a governmental request for
information, (iii) enter into or execute, or propose to enter into or execute, any agreement
relating to an Acquisition Proposal, or (iv) approve, endorse, recommend or make or authorize any
public statement, recommendation, or solicitation in support of any Acquisition Proposal or any
offer or proposal relating to an Acquisition Proposal other than with respect to the Merger. The
Company will, and will direct its Representatives to, cease immediately and cause to be terminated
all discussions and negotiations that commenced prior to the date of this Agreement regarding any
proposal that constitutes, or could reasonably be expected to lead to, an Acquisition Proposal, and
shall request that all confidential or proprietary information previously furnished to any such
third parties be promptly returned or destroyed.
(b) Notwithstanding anything to the contrary contained in this Agreement, in the event that
the Company is contacted by any third party expressing an interest in discussing a possible
Acquisition Proposal or receives an unsolicited Acquisition Proposal, the Company and its board of
directors may participate in discussions or negotiations (including, as a part thereof, making any
counterproposal) with, or furnish any non-public information to, any Person or Persons (but only
after such Person enters into a customary confidentiality agreement
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with the Company (which
confidentiality agreement (i) must be no less restrictive in the aggregate to the Person making
such proposal than the Confidentiality Agreement, (ii) may not provide for an exclusive right to
negotiate with the Company and (iii) may not restrict the Company from complying with this Section
6.3(b))) making such contact or making such Acquisition Proposal and their respective
Representatives , prior to Company Shareholder Approval, in each case, if and to the extent that
(A) the Company’s board of directors determines in good faith, by resolution duly adopted, after
consultation with its financial advisors and outside legal counsel, that such Person or Persons
have submitted to the Company an Acquisition Proposal that is, or would reasonably be expected to
lead to, a Superior Proposal, and (B) the Company’s board of directors determines in good faith, by
resolution duly adopted, after consultation with outside legal counsel, that the failure to
participate in such discussions or negotiations, furnish such information, enter into any agreement
related to any Acquisition Proposal or accept any offer or proposal relating to an Acquisition
Proposal would reasonably be expected to result in a breach of the directors’ fiduciary duties
under applicable Law. In addition, nothing herein shall restrict the Company from complying with
its disclosure obligations with regard to any Acquisition Proposal under applicable Law.
(c) The Company will as promptly as reasonably practicable (and in any event within 24 hours
after receipt) notify Parent of the receipt by the Company of any Acquisition Proposal or of any
expression of interest from a Person in discussing a possible Acquisition Proposal, and the
identity of the Person or Persons making such Acquisition Proposal or expression of interest. The
Company will provide Parent with a correct and complete copy of any confidentiality agreement
entered into pursuant to Section 6.3(b) within 24 hours after execution thereof. The Company will
provide Parent with 24 hours prior notice (or such lesser prior notice as is provided to the
members of its board of directors) of any meeting of its board of directors at which its board of
directors would reasonably be expected to consider any Acquisition Proposal or any such inquiry or
to consider providing nonpublic information to any Person. The Company shall notify Parent, in
writing, of any decision of its board of directors as to whether to consider any Acquisition
Proposal or to enter into discussions or
negotiations concerning any Acquisition Proposal or to provide non-public information with
respect to the Company to any Person in compliance with the provisions of this Section 6.3, which
notice shall be given as promptly as practicable after such meeting (and in any event no later than
24 hours after such determination was reached). The Company will (i) provide Parent with oral and
written notice setting forth all such information as is reasonably necessary to keep Parent
currently informed in all material respects of the status and material terms of any such
Acquisition Proposal and of any material amendments or proposed material amendments thereto
(including negotiations contemplated by Section 6.3(b)), (ii) promptly provide Parent a copy of all
written information subsequently provided to, by or on behalf of such Person or group in
connection with any Acquisition Proposal and (iii) promptly (and in any event within 24 hours of
such determination) notify Parent of any determination by the Company’s board of directors that
such Acquisition Proposal constitutes a Superior Proposal.
(d) Subject to Section 6.3(e), unless and until this Agreement has been terminated in
accordance with Section 8.1, neither the board of directors of the Company nor any
committee thereof shall, directly or indirectly, (A)(i) withdraw or modify, or propose publicly to
withdraw or modify, in a manner adverse to the Parent or Sub, the approval or recommendation or
declaration of advisability by the board of directors of the Company or any such committee
29
thereof
of the Merger as set forth in Section 6.7; (ii) approve, adopt, or recommend, or propose
publicly to approve, adopt, or recommend, any Acquisition Proposal or (iii) in the event of a
tender offer or exchange offer for any outstanding Company Common Shares, fail to recommend against
acceptance of such tender offer or exchange offer by Company’s shareholders within ten (10)
Business Days of the commencement thereof (for the avoidance of doubt, the taking of no position or
a neutral position by the board of directors of the Company in respect of the acceptance of any
tender offer or exchange offer by its shareholders shall constitute a failure to recommend against
any such offer) (any action described in clauses (i)-(iii) being referred to as a “Change of
Recommendation”) or (B) approve or recommend, or publicly propose to approve or recommend, or
allow the Company to execute or enter into, any letter of intent, memorandum of understanding,
agreement in principle, merger agreement, acquisition agreement, option agreement, joint venture
agreement, partnership agreement, or other similar agreement, arrangement, or understanding (i)
constituting or related to, or that is intended to or would reasonably be expected to lead to, any
Acquisition Proposal or (ii) requiring it to abandon, terminate, or fail to consummate the Merger
or any other transaction contemplated by this Agreement.
(e) Notwithstanding the foregoing, in the event that, prior to the Company Special Meeting,
the Company’s board of directors receives a Superior Proposal that has not been withdrawn, the
Company’s board of directors may, if the Company’s board of directors by resolution duly adopted
determines in good faith, after consultation with its outside legal counsel, that the failure to
take such action would reasonably be expected to result in a breach of the directors’ fiduciary
duties under applicable Law, may make a Change of Recommendation, approve or recommend such
Superior Proposal or terminate this Agreement as permitted pursuant to the terms of Section
8.1(c)(ii); provided that:
(i) the Company notifies the Parent that it intends to take such action, which
notice must specify the reasons for taking such action, the
identity of the party making such proposal and the material terms and
conditions of such proposal; and
(ii) Parent shall not have proposed, within three (3) Business Days after
receipt of such notice from the Company, to amend this Agreement to provide for
terms the board of directors of the Company determines in good faith, after
consultation with its financial advisor, to be as favorable as or superior to those
of the Superior Proposal.
(f) Nothing contained in this Section 6.3 shall prohibit the Company or its board of
directors from taking and disclosing to the Company’s shareholders a position with respect to a
tender offer or exchange offer by a third party or from taking any action or making any disclosure
required by applicable Law; provided that the content of the disclosure complies with this
Section 6.3.
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Section 6.4 Employee Benefits.
(a) For the benefit of Employees, until the earlier of six (6) months after the Effective Time
or June 30, 2008, Parent agrees to (i) maintain or cause its Subsidiaries (including the Surviving
Corporation) to maintain for each eligible Employee the amount of Employees’ base salary or wage
rates, equity compensation, incentive compensation opportunity and other cash compensation that, in
the aggregate, are not less than those in effect for such Employee on the date hereof and (ii)
either (A) maintain or cause its Subsidiaries (including the Surviving Corporation) to maintain the
Benefit Plans (other than the Company Option Plans and ESPP) at the benefit levels in effect on the
date hereof or (B) provide or cause its Subsidiaries (including the Surviving Corporation) to
provide employee benefits (including, without limitation, retirement, health and life insurance
benefits) that, in the aggregate, are no less favorable to each Employee than those in effect for
such Employee on the date hereof.
(b) As of the Effective Time, Parent shall honor or cause to be honored, in accordance with
their terms, all Benefit Agreements and all incentive, bonus, individual benefit, employment,
employment termination, severance and other compensation agreements, plans and arrangements,
including the Company’s executive change-in-control and general severance and retention plans
(collectively, the “CIC Plans”), in each case existing immediately prior to the execution
of this Agreement, that are between the Company or any of its Subsidiaries and any current or
former director or Employee thereof or for the benefit of any such current or former director or
Employee. As of the Effective Time, Parent shall honor or cause to be honored all Post-Signing
Stabilization Plans. Parent shall not, and shall cause the Surviving Corporation not to, terminate
the CIC Plans or Post-Signing Stabilization Plans or amend them in any manner without the consent
of the affected current or former Employee for a period of two (2) years immediately following the
Effective Time. Parent hereby guarantees the payment and performance by the Surviving Corporation
of such obligations assumed by Surviving Corporation pursuant to this Section 6.4(b). In
addition, Parent agrees that if an Employee thereof is employed immediately after the Effective
Time with the Parent or any Subsidiary thereof (including the Surviving Corporation) and their
position with the Surviving Corporation is eliminated or their employment is involuntarily
terminated by Parent without Cause within the first twelve (12) months immediately following the
Effective Time, such Employee shall receive
additional vesting in Substituted Parent Options as if the Employee were employed with Parent
or a Subsidiary thereof (including the Surviving Corporation) for an additional twelve (12) months
after his or her actual date of termination of employment.
(c) With respect to each benefit plan, program, practice, policy or arrangement maintained by
Parent or its Subsidiaries that are located within the United States (including the Surviving
Corporation) following the Effective Time and in which any of the Employees working in the United
States participate (the “Parent Plans”), for purposes of determining eligibility to
participate and vesting, service with the Company and its Subsidiaries (or predecessor employers to
the extent the Company provides past service credit) shall be treated as service with Parent and
its Subsidiaries. Each applicable Parent Plan shall waive eligibility waiting periods, evidence of
insurability requirements and pre-existing condition limitations to the extent (i) waived or not
included under the corresponding Benefit Plan and (ii) permitted by the applicable insurance policy
under the Parent Plan.
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Section 6.5 Publicity. The initial press release by each of Parent and the Company with
respect to the execution of this Agreement shall be acceptable to Parent and the Company. Neither
the Company nor Parent (nor any of their respective Affiliates) shall issue any other press release
or make any other public announcement with respect to this Agreement or the transactions
contemplated hereby without the prior agreement of the other party, except as may be required by
Law or by any listing agreement with a national securities exchange, in which case the party
proposing to issue such press release or make such public announcement shall use its reasonable
best efforts to consult in good faith with the other party before making any such public
announcements; provided that the Company will no longer be required to obtain the prior agreement
of or consult with Parent in connection with any such press release or public announcement if the
Company’s board of directors has effected a Change of Recommendation or in connection with any such
press release or public announcement pursuant to Section 6.3(f).
Section 6.6 Directors’ and Officers’ Insurance and Indemnification.
(a) From and after the Effective Time, Parent shall, and shall cause the Surviving Corporation
to, indemnify and hold harmless the individuals who at any time prior to the Effective Time were
directors or officers of the Company or any of its present or former Subsidiaries or corporate
parents (the “Indemnified Parties”) against any costs or expenses (including reasonable
attorneys’ fees), judgments, fines, losses, claims, damages or liabilities in connection with
actions or omissions occurring at or prior to the Effective Time (including the transactions
contemplated by this Agreement) to the fullest extent permitted by Law, and Parent shall, and shall
cause the Surviving Corporation to, promptly advance expenses as incurred to the fullest extent
permitted by Law. The articles of incorporation and bylaws of the Surviving Corporation shall
contain the provisions with respect to indemnification and advancement of expenses set forth in the
articles of incorporation and bylaws of the Company as amended, restated and in effect on the date
of this Agreement, which provisions shall not be amended, repealed or otherwise modified in any
manner that would adversely affect the rights thereunder of the Indemnified Parties, unless such
modification is required by Law.
(b) Parent shall cause to be maintained in effect for not less than six (6) years from the
Effective Time the current policies of directors’ and officers’ liability insurance and fiduciary
liability insurance maintained by the Company and the Company’s Subsidiaries for the Indemnified
Parties and any other employees, agents or other individuals otherwise covered by such insurance
policies prior to the Effective Time (collectively, the “Insured Parties”) with respect to
matters occurring at or prior to the Effective Time (including the transactions contemplated by
this Agreement); provided that in lieu of the purchase of such insurance by Parent or the Surviving
Corporation, the Company may at its option prior to the Effective Time purchase a six-year run-off
(Extended Reporting Period) program for directors’ and officers’ liability insurance and fiduciary
liability insurance.
(c) This Section 6.6 is intended to benefit the Insured Parties and the Indemnified
Parties, and shall be binding on all successors and assigns of Parent, Sub, the Company and the
Surviving Corporation. Parent hereby guarantees the payment and performance by the Surviving
Corporation of the indemnification and other obligations pursuant to this Section 6.6 and
the articles of incorporation and bylaws of the Surviving Corporation.
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(d) In the event that Parent, the Surviving Corporation or any of their successors or assigns
(i) consolidates with or merges into any other Person and shall not be the continuing or surviving
Person of such consolidation or merger or (ii) transfers or conveys a majority of its properties
and assets to any Person, then, and in each such case, proper provision shall be made so that the
successors, assigns and transferees of Parent or the Surviving Corporation or their respective
successors or assigns, as the case may be, assume the obligations set forth in this Section
6.6.
Section 6.7 Proxy Statement. So long as the Company’s board of directors shall not have
effected a Change of Recommendation, (a) the Company shall take all action necessary in accordance
with applicable Law and its articles of incorporation and bylaws and Nasdaq rules to call, give
notice of, convene and hold a special meeting of the Company’s shareholders (including any
adjournment or postponement thereof, the “Company Special Meeting”) as soon as practicable
following the date hereof for the purpose of approving this Agreement, and (b) in connection with
the Company Special Meeting, as soon as practicable after the date hereof the Company shall prepare
and file with the SEC a proxy statement (together with all amendments and supplements thereto, the
“Proxy Statement”) relating to the Merger and this Agreement and furnish the information
required to be provided to the shareholders of the Company pursuant to the WBCA and the Exchange
Act. Promptly after its preparation and prior to its filing with the SEC, the Company shall
provide a copy of the Proxy Statement, and any amendment to the Proxy Statement, to Parent, and
will consider inclusion into the Proxy Statement comments timely received from Parent or its
counsel. The Company shall give Parent notice of any comments on the Proxy Statement received by
the SEC, and shall promptly respond to SEC comments, if any. The Proxy Statement shall include the
recommendation of the Company’s board of directors that the Company’s shareholders approve this
Agreement (the “Company Recommendation”).
Section 6.8 Commercially Reasonable Efforts; HSR Act Filings.
(a) Upon the terms and subject to the conditions set forth in this Agreement, the Company and
Parent shall each use their commercially reasonable efforts to promptly, unless prohibited by Law
(i) take, or to cause to be taken, all actions, and to do, or to cause to be done, and to assist
and cooperate with the other parties in doing all things necessary, proper or advisable under
applicable Law or otherwise to consummate and make effective the transactions contemplated by this
Agreement; (ii) obtain from any Governmental Entities any actions, non-actions, clearances,
waivers, consents, approvals, permits or orders required to be obtained by the Company, Parent or
any of their respective Subsidiaries in connection with the authorization, execution, delivery and
performance of this Agreement and the consummation of the transactions contemplated hereby; (iii)
promptly make all necessary registrations and filings, and thereafter make any other required
submissions, with respect to this Agreement and the Merger required under (A) any applicable
federal or state securities Laws, (B) the HSR Act and any applicable competition, antitrust or
investment Laws of jurisdictions other than the United States (for purposes of this Section
6.8(a)(iii)(B), “promptly” shall mean within ten Business Days of the date of this Agreement), and
(C) any other applicable Law; provided, however, that the Company and Parent will cooperate with
each other in connection with the making of all such filings, including providing copies of all
such filings and attachments to outside counsel for the non-filing party; (iv) furnish all
information required for any application or other filing to be
33
made pursuant to any applicable Law
in connection with the transactions contemplated by this Agreement; (v) keep the other party
informed in all material respects of any material communication received by such party from, or
given by such party to, any Governmental Entity and of any material communication received or given
in connection with any proceeding by a private party, in each case relating to the transactions
contemplated by this Agreement; (vi) permit the other parties to review any material communication
delivered to, and consult with the other party in advance of any meeting or conference with, any
Governmental Entity relating to the transactions contemplated by this Agreement or in connection
with any proceeding by a private party relating thereto, and giving the other party the opportunity
to attend and participate in such meetings and conferences (to the extent permitted by such
Governmental Entity or private party); (vii) avoid the entry of, or have vacated or terminated, any
decree, order, or judgment that would restrain, prevent or delay the Closing, including defending
any lawsuits or other legal proceedings, whether judicial or administrative, challenging this
Agreement or the consummation of the transactions contemplated hereby; and (viii) execute and
deliver any additional instruments necessary to consummate the transactions contemplated by this
Agreement. No parties to this Agreement shall consent to any voluntary delay of the Closing at the
behest of any Governmental Entity without the consent of the other parties to this Agreement, which
consent shall not be unreasonably withheld. Parent agrees to take, or to cause to be taken, any
and all steps and to make any and all undertakings necessary to avoid or eliminate each and every
impediment under any antitrust, merger control, competition, or trade regulation Law that may be
asserted by any Governmental Entity with respect to the Merger so as to enable the Closing to occur
as soon as reasonably possible (and in any event, no later than the Termination Date (as defined
herein)). Notwithstanding anything to the contrary in this Section 6.8(a), (x) neither Parent nor
any of its subsidiaries shall be required to divest any of their respective material businesses,
product lines, or assets, or to take or agree to take any other material action or agree to any
material limitation on its business practices, and (y) Company shall not be
required to divest material businesses, product lines, or assets, or to take or agree to take
any other material action or agree to any material limitation on its business practices.
(b) Each of the Company, Parent and Sub shall give prompt notice to the other parties of (i)
any written notice or other communication from any Governmental Entity in connection with the
Merger and (ii) any change or development that is reasonably likely to have a Company Material
Adverse Effect or a Parent Material Adverse Effect.
Section 6.9 Section 16 Matters. Prior to the Effective Time, the board of directors of
Parent, or an appropriate committee of non-employee directors, shall adopt a resolution consistent
with the interpretative guidance of the SEC so that the acquisition of the Substituted Options
pursuant to this Agreement shall be an exempt transaction for purposes of Section 16 of the
Exchange Act by any officer or director of the Company who may become a covered person of Parent
for purposes of Section 16 of the Exchange Act.
Section 6.10 Filing of Form S-8. Parent has filed or agrees to file no later than the
Effective Time a registration statement on Form S-8 (or any successor or other appropriate form)
with respect to the shares of Parent’s common stock issuable with respect to Parent Restricted
Shares and Substitute Options and shall use all reasonable efforts to maintain the effectiveness of
such registration statement or registration statements (and maintain the
34
current status of the
prospectus or prospectuses contained therein) for so long as the Substitute Options acquired in
accordance with this Agreement remain outstanding.
Section 6.11 ESPP. The Company’s ESPP shall continue to be operated in accordance with its
terms and past practice for the current Purchase Period (as defined in the ESPP) (“Purchase
Period”); provided that if the Closing is expected to occur prior to the end of the current
Purchase Period, the Company shall take action to provide for an earlier Purchase Date (as defined
in the ESPP) in accordance with Section 21.2 of the ESPP. Such earlier Purchase Date shall
be as reasonably close to the Closing Date as is administratively practicable. The Company shall
suspend the commencement of any future Purchase Periods under the ESPP unless and until this
Agreement is terminated and shall terminate the ESPP prior to the Closing Date.
ARTICLE VII
CONDITIONS
Section 7.1 Conditions to Each Party’s Obligation to Effect the Merger. The obligations of
the Company, on the one hand, and Parent and Sub, on the other hand, to consummate the Merger are
subject to the satisfaction (or waiver by the Company, Parent and Sub, if permissible under
applicable Law) of the following conditions:
(a) this Agreement shall have been approved by the shareholders of the Company in accordance
with the WBCA;
(b) no Governmental Entity having jurisdiction over the Company, Parent or Sub shall have
issued an order, decree or ruling or taken any other action enjoining or otherwise prohibiting
consummation of the Merger substantially on the terms contemplated by this Agreement; and
(c) any applicable waiting period under the HSR Act or other comparable law or regulation of a
non-U.S. Governmental Entity having jurisdiction over the transactions contemplated hereby shall
have expired or been terminated.
Section 7.2 Conditions to the Obligations of Parent and Sub. The obligations of Parent and
Sub to consummate the Merger are subject to the satisfaction (or waiver by Parent and Sub) of the
following further conditions:
(a) each of the representations and warranties of the Company shall be true and accurate as of
the Closing as if made at and as of such time (other than those representations and warranties that
address matters only as of a particular date or only with respect to a specific period of time,
which representations and warranties need only be true and accurate as of such date or with respect
to such period), except where the failure of such representations and warranties to be so true and
accurate (without giving effect to any limitation as to “materiality” or “material adverse effect”
set forth therein), would not, individually or in the aggregate, have a Company Material Adverse
Effect;
35
(b) the Company shall have performed in all material respects its obligations hereunder
required to be performed by it at or prior to the Closing; and
(c) Parent shall have received a certificate signed by the chief financial officer of the
Company, dated as of the Closing Date, to the effect that, to the knowledge of such officer, the
conditions set forth in Section 7.2(a) and Section 7.2(b) have been satisfied.
Section 7.3 Conditions to the Obligations of the Company. The obligations of the Company
to consummate the Merger are subject to the satisfaction (or waiver by the Company) of the
following further conditions:
(a) each of the representations and warranties of Parent and Sub shall be true and accurate as
of the Closing as if made at and as of such time (other than those representations and warranties
that address matters only as of a particular date or only with respect to a specific period of
time, which representations and warranties need only be true and accurate as of such date or with
respect to such period), except where the failure of such representations and warranties to be so
true and accurate (without giving effect to any limitation as to “materiality” or “material adverse
effect” set forth therein) would not, individually or in the aggregate, have a Parent Material
Adverse Effect;
(b) each of Parent and Sub shall have performed in all material respects all of the respective
obligations hereunder required to be performed by Parent or Sub, as the case may be, at or prior to
the Closing;
(c) the Company shall have received a certificate signed by the chief financial officer of
Parent, dated as of the Closing Date, to the effect that, to the knowledge of such officer, the
conditions set forth in Section 7.3(a) and Section 7.3(b) have been satisfied; and
(d) Parent shall have delivered to the Company a certificate, in form and substance reasonably
satisfactory to the Company, to the effect that, at the Effective Time, after giving effect to the
Merger and the other transactions contemplated hereby, none of the Surviving Corporation or any of
its Subsidiaries will (i) be insolvent (either because the financial condition is such that the sum
of its debts is greater than the fair value of its assets or because the present fair saleable
value of its assets will be less than the amount required to pay its probable liability on its
debts as they become absolute and matured), (ii) have unreasonably small capital with which to
engage in its business or (iii) have incurred or plan to incur debts beyond its ability to pay as
they become absolute and matured.
Section 7.4 Frustration of Closing Conditions. None of the Company, Parent or Sub may rely
on the failure of any condition set forth in Section 7.1, Section 7.2 or
Section 7.3, as the case may be, to be satisfied if such failure was caused by such party’s
failure to act in good faith or use its reasonable best efforts to consummate the Merger and the
other transactions contemplated by this Agreement, as required by and subject to Section
6.8(a).
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ARTICLE VIII
TERMINATION
Section 8.1 Termination. Anything herein or elsewhere to the contrary notwithstanding,
this Agreement may be terminated and the Merger contemplated herein may be abandoned at any time
prior to the Effective Time, whether before or after shareholder approval of this Agreement:
(a) by the mutual consent of the Company and Parent;
(b) by either the Company or Parent:
(i) if the Merger shall not have occurred on or prior to November 17, 2007 (the
“Termination Date”); provided, however, that the right to terminate this
Agreement under this Section 8.1(b)(i) shall not be available to any party
whose failure to fulfill any obligation under this Agreement has been the cause of,
or resulted in, the failure of the Merger to occur on or prior to such date;
provided further, however, that if, as of such date, all conditions to this
Agreement shall have been satisfied or waived (other than those conditions that by
their terms are to be satisfied at the Closing, but subject to the satisfaction or
waiver of such conditions at the Closing), other than the conditions set forth
in Section 7.1(b) and Section 7.1(c), then either the Company or
Parent may extend the Termination Date to May 17, 2008;
(ii) if any Governmental Entity having jurisdiction over the Company, Parent or
Sub shall have issued an order, decree or ruling or taken any other action, in each
case permanently enjoining or otherwise prohibiting the consummation of the Merger
substantially as contemplated by this Agreement, and such order, decree, ruling or
other action shall have become final and non-appealable, unless the party seeking to
terminate this Agreement pursuant to this Section 8.1(b)(ii) shall not have
complied with its obligations under Section 6.8(a); or
(iii) if the Company Special Meeting shall have concluded without the approval
of this Agreement by the Company’s shareholders having been obtained in accordance
with the WBCA;
(c) by the Company:
(i) upon a breach of any covenant or agreement on the part of Parent or Sub, or
if any representation or warranty of Parent or Sub shall be or become untrue, in any
case such that the conditions set forth in Section 7.3(a) or Section
7.3(b) would not be satisfied (assuming that the date of such determination is
the Closing Date); provided that if such breach is curable by Parent and Sub through
the exercise of their reasonable best efforts and Parent and Sub continue to
exercise such reasonable best efforts, the Company may not terminate this Agreement
under this Section 8.1(c)(i) until the earlier of (x) 30 days after delivery
of written notice of such breach or untruth, or (y) the
37
date on which the Parent or
Sub ceases to exercise commercially reasonable efforts to cure such untruth,
inaccuracy or breach; provided further that the right to terminate this Agreement
under this Section 8.1(c)(i) shall not be available to the Company if it has
failed to perform in any material respect any of its obligations under or in
connection with this Agreement; or
(ii) in order to accept a Superior Proposal in compliance with Section 6.3; or
(d) By Parent:
(i) upon a breach of any covenant or agreement on the part of the Company, or
if any representation or warranty of the Company shall be or become untrue, in any
case such that the conditions set forth in Section 7.2(a) or Section
7.2(b) would not be satisfied (assuming that the date of such determination is
the Closing Date); provided that if such breach is curable by the Company through
the exercise of its reasonable best efforts and the Company continues to exercise
such reasonable best efforts, Parent may not terminate this Agreement under this
Section 8.1(d)(i) until the earlier of (x) 30 days after
delivery of written notice of such breach or untruth, or (y) the date on which
the Company ceases to exercise commercially reasonable efforts to cure such breach ,
inaccuracy or untruth; provided further that the right to terminate this Agreement
under this Section 8.1(d)(i) shall not be available to Parent if it has
failed to perform in any material respect any of its obligations under or in
connection with this Agreement; or
(ii) if the board of directors of the Company shall have withdrawn or modified,
in a manner adverse to Parent or Sub, the Company Recommendation, or approved or
recommended (or, in case of a tender or exchange offer, failed to recommend
rejection thereof within the time prescribed by the applicable SEC rules) another
Acquisition Proposal or has resolved to do so.
Section 8.2 Effect of Termination.
(a) In the event of the termination of this Agreement in accordance with Section 8.1,
written notice thereof shall forthwith be given to the other party or parties specifying the
provision hereof pursuant to which such termination is made, and this Agreement shall forthwith
become null and void, and there shall be no liability on the part of Parent, Sub or the Company or
their respective directors, officers, employees, shareholders, Representatives, agents or advisors
other than, with respect to Parent, Sub and the Company, the obligations pursuant to this
Section 8.2, Article IX and the last sentence of Section 6.2. Nothing
contained in this Section 8.2 shall relieve Parent, Sub or the Company from liability for
fraud or intentional breach of this Agreement or the Confidentiality Agreement.
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(b) If
(i) this Agreement is terminated by the Company pursuant to Section 8.1(c)(ii)
or by Parent pursuant to Section 8.1(d)(ii), or
(ii) (A) this Agreement is terminated by (I) the Company pursuant to
Section 8.1(b)(i) (but only if at such time Parent would not be prohibited
from terminating this Agreement by the first proviso in Section 8.1(b)(i))
without a vote of the Company’s shareholders being taken or (II) by either Parent or
the Company pursuant to Section 8.1(b)(iii), (B) there has been publicly
disclosed for the first time after the date of this Agreement and prior to the
termination of this Agreement in the case of clause (A)(I) and the time of Company
Special Meeting in the case of clause (A)(II), an Acquisition Proposal and (C)
within twelve (12) months after such termination, either (1) the Company enters into
a definitive agreement with respect to a Qualifying Transaction pursuant to such
Acquisition Proposal, which Qualifying Transaction is later consummated with the
Person that made such Acquisition Proposal, or (2) such a Qualifying Transaction
occurs with such Person,
then the Company shall pay to Parent a termination fee of $175,000,000 in cash,
(x) concurrently with any termination pursuant to Section 8.1(c)(ii),
(y) within five (5) Business Days after any termination pursuant to Section
8.1(d)(ii) and
(z) within five (5) Business Days after the consummation of the transaction
contemplated by Section 8.2(b)(ii)(C) after a termination by the Company
pursuant to Section 8.1(b)(i) or by the Company or Parent pursuant to
Section 8.1(b)(iii) in the manner contemplated by Section
8.2(b)(ii);
it being understood that in no event shall the Company be required to pay the fee referred to in
this Section 8.2(b) on more than one occasion. Upon payment of such fee, the Company shall
have no further liability to Parent or Sub with respect to this Agreement or the transactions
contemplated hereby, provided that nothing herein shall release any party from liability for
intentional breach or fraud. All payments contemplated by this Section 8.2(b) shall be
made by wire transfer of immediately available funds to an account designated by Parent and shall
be reduced by any amounts required to be deducted or withheld therefrom under applicable Law in
respect of Taxes.
(c) If (i) this Agreement is terminated by Parent or the Company (A) pursuant to Section
8.1(b)(i) due to the failure to satisfy the conditions to Closing set forth in Sections 7.1(b) or
(c) due to the failure to receive any required antitrust or competition consent or clearance from a
Governmental Entity of competent jurisdiction or any action by any Governmental Entity of competent
jurisdiction to prevent the Merger for antitrust, competition, privacy or security reasons, or (B)
pursuant to Section 8.1(b)(ii), (ii) all other conditions to
39
Closing (other than those conditions
that by their terms are to be satisfied at the Closing) have been satisfied or waived at such time,
and (iii) the Company has not breached in any material respect any of its covenants set forth in
this Agreement, then Parent shall, concurrently with such termination, pay the Company a fee of
$500,000,000 in cash.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Amendment and Modification. Subject to applicable Law, this Agreement may be
amended, modified and supplemented in any and all respects, whether before or after any vote of the
shareholders of the Company contemplated hereby, by written agreement of the parties hereto, by
action taken by their respective boards of directors (or individuals holding similar positions, in
the case of a party that is not a corporation), at any time prior to the Closing Date with respect
to any of the terms contained herein; provided, however, that after the approval of this Agreement
by the shareholders of the Company, no such amendment, modification or supplement shall reduce or
change the Merger Consideration or adversely affect the rights of the Company’s shareholders
hereunder without the approval of such shareholders.
Section 9.2 Nonsurvival of Representations and Warranties. None of the representations and
warranties in this Agreement or in any schedule, instrument or other document delivered pursuant to
this Agreement shall survive the Effective Time or the termination of this Agreement. This
Section 9.2 shall not limit any covenant or agreement contained in this Agreement that by
its terms is to be performed in whole or in part after the Effective Time.
Section 9.3 Notices. All notices, consents and other communications hereunder shall be in
writing and shall be given (and shall be deemed to have been duly given upon receipt) by hand
delivery, by prepaid overnight courier (providing written proof of delivery), by confirmed
facsimile transmission or by certified or registered mail (return receipt requested and first-class
postage prepaid), addressed as follows:
(a) | if to Parent or Sub, to: Microsoft Corporation Xxx Xxxxxxxxx Xxx Xxxxxxx, XX 00000-0000 Attention: Xxxxx X. Xxxxxxxx Associate General Counsel Facsimile: 000-000-0000 |
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with a copy to: |
Xxxxxxxxxxx & Xxxxxxxx Xxxxxxx Xxxxx Xxxxx LLP 000 Xxxxxx Xxxxxx, Xxxxx 0000 Xxxxxxx, XX 00000-0000 Facsimile: 206-623-7022 Attention: Xxxxxx X. Xxxxx Xxxx Xxxxxxxx Xxxxx X. Xxxxxx |
|||
(b) | if to the Company, to: aQuantive, Inc. 000 Xxxxxx Xxxxxx, Xxxxx 0000 Xxxxxxx, XX 00000 Facsimile: 000-000-0000 Attention: Xxxxx X. Xxxxxxxxxx Senior Vice President and General Counsel |
with a copy to: |
Xxxxxxx Coie LLP 0000 Xxxxx Xxxxxx, Xxxxx 0000 Xxxxxxx, Xxxxxxxxxx 00000 Facsimile: 000-000-0000 Attention: Xxxxx X. XxXxxx Xxxxxx Xxx |
and |
Xxxxxxx Coie LLP 0000 XX Xxxxx Xxxxxx, 00xx Xxxxx Xxxxxxxx, Xxxxxx 00000 Facsimile: 000-000-0000 Attention: Xxx X. Xxxxxx |
or to such other address or facsimile number for a party as shall be specified in a notice given in
accordance with this section; provided that any notice received by facsimile transmission or
otherwise at the addressee’s location on any Business Day after 5:00 P.M. (addressee’s local time)
shall be deemed to have been received at 9:00 A.M. (addressee’s local time) on the next Business
Day; provided further that notice of any change to the address or any of the other details
specified in or pursuant to this section shall not be deemed to have been received until, and shall
be deemed to have been received upon, the later of the date specified in such notice or the date
that is five (5) Business Days after such notice would otherwise be deemed to have been received
pursuant to this section. A party’s rejection or other refusal to accept notice hereunder or the
inability of another party to deliver notice to such party because of such party’s changed address
or facsimile number of which no notice was given by such party shall be deemed to be receipt of the
notice by such party as of the date of such rejection, refusal or inability to deliver.
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Nothing in
this section shall be deemed to constitute consent to the manner or address for service of process
in connection with any legal proceeding, including litigation arising out of or in connection with
this Agreement.
Section 9.4 Interpretation. The parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the parties, and no presumption
or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any
provisions of this Agreement. Information provided in any section of the Company Disclosure
Schedule shall be deemed to be adequate response and disclosure of such facts or circumstances with
respect to any section of Article IV calling for disclosure of such information, whether or
not such disclosure is specifically associated with or purports to respond to one or more or all of
such representations or warranties. The inclusion of any item in the Company Disclosure Schedule
shall not be deemed to be an admission or evidence of materiality of such item, nor shall it
establish any standard of materiality for any purpose whatsoever.
Section 9.5 Counterparts. This Agreement may be executed in multiple counterparts, each of which when executed and
delivered shall be deemed to be an original but all of which taken together shall constitute one
and the same agreement.
Section 9.6 Entire Agreement; Third-Party Beneficiaries. This Agreement (including the
Company Disclosure Schedule and the exhibits and instruments referred to herein) and the
Confidentiality Agreement (a) constitute the entire agreement and supersede all prior agreements
and understandings, both written and oral, among the parties with respect to the subject matter
hereof and (b) except as provided in Article III on and after the Effective Time and
Section 6.4 and Section 6.6, are not intended to confer upon any Person other than
the parties hereto any rights or remedies hereunder.
Section 9.7 Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or other authority to be invalid, void,
unenforceable or against its regulatory policy, the remainder of the terms, provisions, covenants
and restrictions of this Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
Section 9.8 Governing Law. This Agreement shall be governed and construed in accordance
with the laws of the State of Washington applicable to contracts to be made and performed entirely
therein without giving effect to the principles of conflicts of law thereof or of any other
jurisdiction.
Section 9.9 Jurisdiction. Each of the parties hereto hereby (a) expressly and irrevocably
submits to the exclusive personal jurisdiction of any United States federal court located in the
State of Washington or any Washington state court in the event any dispute arises out of this
Agreement or any of the transactions contemplated by this Agreement, (b) agrees that it will not
attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any
such court and (c) agrees that it will not bring any action relating to this Agreement or any of
the transactions contemplated by this Agreement in any court other than a United States federal or
state court sitting in the State of Washington; provided that each of the
42
parties shall have the
right to bring any action or proceeding for enforcement of a judgment entered by any United States
federal court located in the State of Washington or any Washington state court in any other court
or jurisdiction.
Section 9.10 Service of Process. Each party irrevocably consents to the service of process
outside the territorial jurisdiction of the courts referred to in Section 9.9 in any such
action or proceeding by mailing copies thereof by registered United States mail, postage prepaid,
return receipt requested, to its address as specified in or pursuant to Section 9.3.
However, the foregoing shall not limit the right of a party to effect service of process on the
other party by any other legally available method.
Section 9.11 Specific Performance. Each of the parties hereto acknowledges and agrees
that, in the event of any breach of this Agreement, each nonbreaching party would be irreparably
and immediately harmed and could not be made whole by monetary damages. It is accordingly agreed
that the parties hereto (a) will waive, in any action for specific performance, the defense of
adequacy of a remedy at law and (b) shall be entitled, in addition to any other remedy to which
they may be entitled at law or in equity, to compel specific performance of this Agreement in any
action instituted in accordance with Section 9.9.
Section 9.12 Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto (whether by operation of law
or otherwise) without the prior written consent of the other parties. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the
parties and their respective permitted successors and assigns.
Section 9.13 Expenses. All costs and expenses incurred in connection with the Merger, this
Agreement and the consummation of the transactions contemplated hereby shall be paid by the party
incurring such costs and expenses, whether or not the Merger or any of the other transactions
contemplated hereby is consummated.
Section 9.14 Headings. Headings of the articles and sections of this Agreement and the
table of contents, schedules and exhibits are for convenience of the parties only and shall be
given no substantive or interpretative effect whatsoever.
Section 9.15 Waivers. Except as otherwise provided in this Agreement, any failure of any
of the parties to comply with any obligation, covenant, agreement or condition herein may be waived
by the party or parties entitled to the benefits thereof only by a written instrument signed by the
party granting such waiver, but such waiver or failure to insist upon strict compliance with such
obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure.
Section 9.16 WAIVER OF JURY TRIAL. EACH OF PARENT, SUB AND THE COMPANY HEREBY IRREVOCABLY
WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF PARENT,
SUB OR THE COMPANY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT THEREOF.
43
IN WITNESS WHEREOF, the Company, Parent and Sub have caused this Agreement to be signed by
their respective officers thereunto duly authorized as of the date first written above.
AQUANTIVE, INC. |
||||
By: | /s/ Xxxxx XxXxxxxxx | |||
Name: Xxxxx XxXxxxxxx | ||||
Title: President and CEO | ||||
MICROSOFT CORPORATION |
||||
By: | /s/ Xxxxx X. Xxxxxxx | |||
Name: Xxxxx Xxxxxxx | ||||
Title: President, Platform and Services Division | ||||
ARROW ACQUISITION COMPANY |
||||
By: | /s/ Xxxxx Xxxxxxxx | |||
Name: Xxxxx Xxxxxxxx | ||||
Title: President | ||||