Article I - THE MERGER
Section 1.1.
The
Merger . Subject
to the terms and conditions of this Agreement, at the Effective
Time (as defined in Section 1.2 below), the Company and MergerCo
shall consummate the Merger pursuant to which (a) MergerCo shall be
merged with and into the Company and the separate corporate
existence of MergerCo shall thereupon cease, (b) the Company shall
be the surviving corporation in the Merger (the “
Surviving Corporation ”) and shall continue to be
governed by the laws of the State of Delaware, and (c) the separate
corporate existence of the Company with all its rights, privileges,
immunities, powers and franchises shall continue unaffected by the
Merger. The Merger shall have the effects specified in the
DGCL.
Section 1.2.
Effective
Time . On the
Closing Date (as defined in Section 1.4 below), MergerCo and the
Company shall duly execute a certificate of merger (the “
Certificate of Merger ”) and file such
Certificate of Merger with the Secretary of State of the State of
Delaware in accordance with the DGCL. The Merger shall become
effective at such time as the Certificate of Merger, accompanied by
payment of the filing fee (as provided in the DGCL), has been
examined by and received the endorsed approval of the Secretary of
State of the State of Delaware (the “ Effective Time
”).
Section 1.3.
Certificate of
incorporation and Bylaws . The certificate of incorporation of the
Surviving Corporation shall be amended at the Effective Time to be
identical to the certificate of incorporation of MergerCo (except
for those provisions dealing with the incorporator and initial
directors, which shall be omitted and the name of the Surviving
Corporation which shall be as set forth in the last sentence of
this Section 1.3) until thereafter amended as provided by law and
the terms of such certificate of incorporation. The by-laws of
MergerCo, as in effect immediately prior to the Effective Time,
shall be the by-laws of the Surviving Corporation until thereafter
amended as provided by law, by the terms of the certificate of
incorporation of the Surviving Corporation and by the terms of such
by-laws. Notwithstanding the foregoing, the name of the Surviving
Corporation shall be “CentrePath, Inc.” and the
certificate of incorporation and by-laws of the Surviving
Corporation shall so provide.
Section 1.4.
Time and Place of
Closing . The
closing (the “ Closing ”) of the Merger shall be
held at the offices of Goodwin Procter LLP, Exchange Place, Boston,
Massachusetts, on the earlier of (a) November 30, 2006 and (b) such
other time as Parent and the Company may mutually determine. The
date on which the Closing actually occurs is sometimes referred to
herein as the “ Closing Date .”
Section 1.5.
Directors and
Officers . The
directors of MergerCo immediately prior to the Effective Time shall
be the initial directors of the Surviving Corporation and the
officers of MergerCo immediately prior to the Effective Time shall
be the initial officers of the Surviving Corporation, each to hold
office in accordance with the certificate of incorporation and
by-laws of the Surviving Corporation.
Section
1.6. Earnest Money Deposit
.
(a) Parent has deposited $1,000,000 with
the Company concurrently with the execution and delivery of this
Agreement (the “ Earnest Money Deposit
”).
(b) If the transactions contemplated hereby
are consummated, the Earnest Money Deposit shall be applied in
payment of the Merger Consideration, and the Company shall transfer
the Earnest Money Deposit to the Exchange Agent (as defined below)
at the Effective Time.
(c) The Company shall return the Earnest
Money Deposit to Parent if Parent terminates this Agreement
pursuant to Section 9.1(c) below.
(d) The Company shall have the right to
retain the Earnest Money Deposit if the transactions contemplated
by this Agreement are not consummated for any reason other than
those described in Section 1.6(c) above.
Article II - EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF
THE CONSTITUENT CORPORATIONS
Section 2.1.
Effect on the Capital
Stock . As of
the Effective Time, by virtue of the Merger and without any action
on the part of the holder of any shares of the capital stock of the
Company (the “ Company Stock ”) or any shares of
the capital stock of MergerCo:
(a) Each share of common stock, par value
$0.01 per share, of MergerCo issued and outstanding immediately
prior to the Effective Time shall be converted into one fully paid
and nonassessable share of common stock, par value $0.01 per share,
of the Surviving Corporation following the Merger.
(b) Each share of Company Stock that is
owned by the Company immediately prior to the Closing Date shall
automatically be canceled and retired and shall cease to exist, and
no cash or other consideration shall be delivered or deliverable in
exchange therefor.
(c) Each share of Company Stock issued and
outstanding immediately prior to the Effective Time (other than
shares to be canceled in accordance with Section 2.1(b) and the
Dissenting Shares as defined in Section 3.2 below) shall be
converted into the right to receive that portion of the Merger
Consideration (as defined below) applicable to such share,
calculated as of the Effective Time in accordance with the amounts
set forth on Exhibit A hereto, with the amounts set forth in
the column entitled “Closing Amount” to be payable as
of the Effective Time and the amounts set forth in the column
entitled “Escrow Amount” to be payable in accordance
with the terms hereof and of the Escrow Agreement, net to the
holder thereof in cash, payable to the holder thereof, without any
interest thereon, upon surrender and exchange of the Certificate
(as defined below) representing such share of Company Stock or the
delivery of an affidavit as described in Section 3.1(h).
(i) The “ Merger Consideration
” shall be an amount equal to Six Million Seven Hundred Fifty
Thousand Dollars ($6,750,000) plus or minus , as and
if applicable, the Net Asset Position Adjustment Amount (as defined
and determined in accordance with Section 2.3). As described above,
the Earnest Money Deposit is deemed to be a portion of, and shall
be applied in payment of, the Merger Consideration.
(ii) At the Closing, the Company shall
update Exhibit A to reflect the amounts of Merger
Consideration applicable to each Person who is a stockholder of the
Company at the Closing, and shall deliver such updated Exhibit
A to Parent with wire transfer instructions, if applicable, for
each such stockholder.
(d) All shares of Company Stock, when
converted as provided in Section 2.1(c), shall no longer be
outstanding and shall automatically be canceled and retired and
shall cease to exist, and each certificate (“
Certificate ”) previously evidencing such shares shall
thereafter represent only the right to receive that portion of the
Merger
Consideration
applicable to the shares underlying such Certificate, as set forth
on Exhibit A hereto. The holders of
Certificates previously evidencing shares of Company Stock
outstanding immediately prior to the Effective Time shall cease to
have any rights with respect to the Company Stock except as
otherwise provided herein or by law and, upon the surrender of
Certificates in accordance with the provisions of Section 3.1,
shall only represent the right to receive the applicable Merger
Consideration in exchange for their shares of Company
Stock.
Section 2.2.
Company Stock
Options . Any
option to purchase shares of Company Stock that is outstanding
immediately prior to the Effective Time shall terminate as of the
Effective Time.
Section
2.3. Adjustment to Merger
Consideration .
(a) Prior to the Closing Date, the Company
shall in good faith prepare, with the assistance of Parent, an
estimated balance sheet of the Company as of the Closing Date (the
“ Estimated Closing Date Balance Sheet ”), which
shall include a determination of the Net Asset Position (as defined
below) as of the Closing Date. The Estimated Closing Date Balance
Sheet shall be prepared in accordance with GAAP consistently
applied, and otherwise consistent with the methodology used to
prepare the Company’s Base Balance Sheet (as defined in
Section 4.5). Not later than two (2) business days prior to the
Closing Date, the Company shall deliver to Parent the Estimated
Closing Date Balance Sheet, together with worksheets and data that
support the Estimated Closing Date Balance Sheet and any other
information that Parent may reasonably request in order to verify
the amounts reflected on the Estimated Closing Date Balance
Sheet.
(b) As soon as practical after the Closing
Date, Parent shall review the Estimated Closing Date Balance Sheet
in accordance with GAAP consistently applied and otherwise
consistent with the methodology used to prepare the Base Balance
Sheet and make any adjustments necessary thereto, including, if
necessary, to the determination of the Net Asset Position as of the
Closing Date, consistent with the provisions of this Section 2.3
(the “ Post-Closing Balance Sheet ”). Parent
shall, within twenty (20) days of the Closing Date, deliver the
Post-Closing Balance Sheet to Thomas A. Giacchetto (the “
Stockholders’ Representative ”), together with
worksheets which detail any adjustments and the basis thereof. The
Post-Closing Balance Sheet, and the Net Asset Position at the
Closing reflected thereon, shall be binding upon the parties upon
approval of such Post-Closing Balance Sheet by the
Stockholders’ Representative. If the Stockholders’
Representative does not agree with the Post-Closing Balance Sheet
and the calculation of the Net Asset Position at the Closing stated
thereon, and Parent and the Stockholders’ Representative
cannot mutually agree on the same, then within the later of (i)
thirty (30) days after the Closing Date and (ii) ten (10) days
following receipt by the Stockholders’ Representative of the
Post-Closing Balance Sheet, Parent and the Stockholders’
Representative shall select a nationally recognized independent
accounting firm mutually satisfactory to Parent and the
Stockholders’ Representative to resolve such dispute (the
“ Neutral Auditor ”). The Neutral Auditor shall
review the Post-Closing Balance Sheet and, within ten (10) days of
its appointment, shall make any adjustments necessary
thereto, and,
upon completion of such review, such Post-Closing Balance Sheet and
the Net Asset Position at the Closing (the “ Closing Net
Asset Position ”) as determined by the Neutral Auditor
shall be binding upon the parties. If such a review is conducted,
then the party (i.e., Parent, on the one hand, or the stockholders
of the Company, on the other hand) whose last proposed offer for
the settlement of the items in dispute, taken as a whole, was
farther away from the final determination by the Neutral Auditor
pursuant to the preceding sentence, shall pay all fees and expenses
associated with such review (with any such stockholder obligation,
if applicable, payable out of the NAP Escrow Amount (as defined in
Section 3.1(a))).
(c) Within three (3) business days
following determination of the Closing Net Asset Position in
accordance with Section 2.3(b), (i) in the event the Closing Net
Asset Position is less than zero dollars ($0), (A) up to the first
$75,000 (less any amounts payable out of the NAP Escrow Amount
pursuant to the last sentence of Section 2.3(b)) of the positive
difference between such amounts shall be paid to Parent out of the
NAP Escrow Account and (B) any portion of the positive difference
between such amounts in excess of $75,000 (less any amounts payable
out of the NAP Escrow Amount pursuant to the last sentence of
Section 2.3(b)) shall be paid by each stockholder of the Company to
Parent, based on its pro rata share (as set forth opposite such
stockholder’s name in column 6 of Exhibit A attached
hereto) of such portion, provided that in no event shall the
stockholders of the Company be liable to or obligated to pay Parent
for any amount under this Section 2.3(c), together with any amount
payable to the holders of Dissenting Shares under Section 3.2(c)
below, in excess of the aggregate Merger Consideration, and (ii) in
the event the Closing Net Asset Position is greater than zero
dollars ($0), Parent shall pay to the Exchange Agent (as defined
below) the difference between such amounts, and the Exchange Agent
shall distribute such amount proportionally to the stockholders of
the Company based on each such stockholder’ pro rata share
(as set forth opposite such stockholder’s name in column 6 of
Exhibit A attached hereto). All payments under this Section
2.3(c) shall be made by wire transfer of immediately available
funds or check. The difference between the Closing Net Asset
Position and zero dollars ($0) is referred to herein as the “
Net Asset Position Adjustment Amount .”
Subject to any Reserved Receivables (as defined in Section 2.3(d)
below), that may be in the NAP Escrow Amount, on the date of
payment of the Net Asset Position Adjustment Amount, if any, to the
extent there remains any portion of the NAP Escrow Amount, the
Escrow Agent shall distribute such remaining portion to the
stockholders of the Company based on each such stockholder’
pro rata share (as set forth opposite such stockholder’s name
in column 6 of Exhibit A attached hereto).
(d) As used in this Section 2.3 “
Net Asset Position ” means Current Assets minus
Liabilities; “ Current Assets ” means and
includes all accounts receivable, cash, cash equivalents, prepaid
expenses and all other current assets of the Company, in each case
as determined in accordance with GAAP, consistently applied, but
does not include any accrued interest payable to the Company
pursuant to certain promissory notes made by officers of the
Company as of February 14, 2004 in connection with the purchase by
such officers of restricted shares of the capital stock of the
Company or any accounts relating to non-cash amortization of
up-front setup costs relating to the Company’s remote
management customers; and “ Liabilities ” means
and includes all
accounts
payable, accrued expenses, accrued but unpaid taxes, deferred
revenue (only cost to fulfill deferred revenues for professional
services contracts in process), indebtedness pursuant to that
certain Loan and Security Agreement No. 4131, dated July 28, 2004,
as amended, by and between Lighthouse Capital Partners V,
L.P.
(“
Lighthouse ”) and the Company (the “ Credit
Facility ”), expected lease obligations relating to the
second floor of the Company’s Waltham office space pursuant
to the terms of that certain lease described on Schedule 4.11(a),
net of $234,000, and all other current liabilities of the Company,
in each case as determined in accordance with GAAP, consistently
applied, but does not include any accounts relating to non-cash
amortization for that portion of the Company’s business
referred to as the “GLCC Business” and up-front setup
fees relating to the Company’s remote management customers,
or any liability relating to the Oracle matter disclosed on
Schedule 4.8 or the Master Lease Agreement with Sun
MicroSystems disclosed on Schedule 4.11 . Further, in
determining Current Assets, accounts receivable that have been
disputed by the customer and/or are over 90 days past due shall be
included in the calculation (the “ Reserved
Receivables ”); provided, however, a reserve for the
amount of such Reserved Receivables shall be established from the
NAP Escrow Amount, and the escrow agent shall pay to the
stockholders of the Company based on each such stockholder’
pro rata share (as set forth opposite such stockholder’s name
in column 6 of Exhibit A attached hereto) an amount equal to
the Reserved Receivable subsequently collected. If the Reserved
Receivables are not collected within a year of the Effective Date,
the escrow agent shall pay such reserve to the Surviving Company.
For purposes of clarity, both the Estimated Closing Date Balance
Sheet and the Post-Closing Balance Sheet shall assume completion of
the transactions contemplated hereby. Additionally, for
illustration purposes only, an example of the calculation of Net
Asset Position is attached hereto as Exhibit B .
Article III -
PAYMENT FOR SHARES; DISSENTING SHARES
Section 3.1.
Payment for Shares of
Company Stock .
(a) At the Effective Time, (i) Parent shall
deposit, or shall cause to be deposited, with a bank or trust
company, or one or more other Persons as shall be mutually
acceptable to Parent and the Company (such Person or Persons, the
“ Exchange Agent ”), for the
benefit of the holders of shares of Company Stock for exchange
through the Exchange Agent, the aggregate Merger Consideration as
provided pursuant to Section 2.1(c) less (A) the Earnest Money
Deposit and (B) less the Escrow Amount (as defined below), and (ii)
the Company shall deposit with the Exchange Agent, for the benefit
of the holders of shares of Company Stock for exchange through the
Exchange Agent, the Earnest Money Deposit (the amounts described in
clauses (i) and (ii), in the aggregate, the “ Exchange
Fund ”). At the Effective Time, Parent shall cause to be
delivered to a mutually acceptable nationally recognized escrow
agent (the “ Escrow Agent ”) an aggregate amount
of cash equal to $399,000 (the “ Escrow Amount
”), such deposit to constitute an escrow fund (the “
Escrow Fund ”). The Escrow Fund shall be governed by
the terms of an escrow agreement to be entered into by and among
Parent, the Stockholders’ Representative and the Escrow Agent
(the “ Escrow Agreement ”). The Escrow Fund
shall be held in escrow and shall be available to satisfy certain
obligations
of the Company
and the stockholders of the Company as set forth in Sections 2.3,
3.2 and 6.9 of this Agreement. Each of the parties to this
Agreement hereby acknowledges and agrees that (i) $30,000 of the
Escrow Fund will be available solely for the payment to Parent of
any Total Dissenting Share Amount due to the holders of Dissenting
Shares, if any, under Section 3.2 (the “ Dissenter Escrow
Amount ”), (ii) $75,000 of the Escrow Fund will be
available solely for the payment to Parent of any amounts due to
Parent, if any, under Section 2.3 (the “ NAP Escrow
Amount ”), (iii) $60,000 of the Escrow Fund will be
available solely for the payment to Parent of any Oracle Losses (as
defined in Section 6.9) due to Parent, if any (the “
Oracle Escrow Amount ”), and (iv) $234,000 of the
Escrow Fund will be available solely for the payment to Parent of
any Sublease Losses (as defined in Section 6.9) due to Parent, if
any (the “ Sublease Escrow Amount ”). No
interest shall be paid or shall accrue on any amount pursuant to
this Article III except as earned from the Escrow Fund itself.At or
prior to the Effective Time, Parent shall cause the Exchange Agent
to deliver or mail to each holder of record of a Certificate or
Certificates that immediately prior to the Effective Time
represented (or will represent) outstanding shares of Company Stock
(i) a form of letter of transmittal reasonably acceptable to the
Company which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon
proper delivery of the Certificates to the Exchange Agent and (ii)
instructions for use in surrendering the Certificates in exchange
for the applicable Merger Consideration.
(b) Upon surrender of a Certificate for
cancellation to the Exchange Agent together with such letter of
transmittal, properly completed and duly executed, and such other
documents as may be required pursuant to such instructions, at the
Effective Time the holder of such Certificate shall be entitled to
receive in exchange therefor the Merger Consideration as calculated
in accordance with Section 2.1(c) that such holder has the right to
receive in respect of the shares of Company Stock formerly
represented by such Certificate, and the Certificate so surrendered
shall forthwith be canceled at the Effective Time. No interest will
be paid or accrued on any Merger Consideration payable to holders
of Certificates.
(c) Until surrendered in accordance with
this Section 3.1, each such Certificate (other than Certificates
representing shares of Company Stock to be canceled in accordance
with Section 2.1(b) and Dissenting Shares (as defined in Section
3.2)) shall represent solely the right to receive the Merger
Consideration relating thereto. If the Merger Consideration (or any
portion thereof) is to be delivered to any person other than the
person in whose name the Certificate formerly representing shares
of Company Stock surrendered therefor is registered, it shall be a
condition to such right to receive such Merger Consideration that
the Certificate so surrendered shall be properly endorsed or
otherwise be in proper form for transfer and that the person
surrendering such shares of Company Stock shall pay to the Exchange
Agent any transfer or other taxes required by reason of the payment
of the Merger Consideration to a person other than the registered
holder of the Certificate surrendered, or shall establish to the
satisfaction of the Exchange Agent that such tax has been paid or
is not applicable.
(d) Promptly following the date that is
ninety (90) days after the Effective Time, the Exchange Agent shall
deliver to the Surviving Corporation all cash, 7
Certificates
and other documents in its possession relating to the Merger, and
the Exchange Agent’s duties shall terminate. Thereafter, each
holder of a Certificate formerly representing shares of Company
Stock may surrender such Certificate to the Surviving Corporation
and (subject to applicable abandoned property, escheat and similar
laws) receive in consideration therefor the Merger Consideration
relating thereto.
(e) At the Effective Time, the stock
transfer books of the Company shall be closed and, thereafter,
there shall be no further registration of transfers of shares of
Company Stock on the stock transfer books of the Surviving
Corporation of any shares of Company Stock that were outstanding
immediately prior to the Effective Time. On or after the Effective
Time, any Certificates formerly representing shares of Company
Stock presented to the Surviving Corporation or the Exchange Agent
shall be surrendered and canceled in return for the payment of the
Merger Consideration relating thereto, as provided in this Article
III.
(f) None of Parent, the Surviving
Corporation or the Exchange Agent or any of their respective
subsidiaries or Affiliates shall be liable to any person in respect
of any cash from the Exchange Fund delivered to a public official
pursuant to any applicable abandoned property, escheat or similar
law.
(g) If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that
fact by the person claiming such Certificate to be lost, stolen or
destroyed, the Exchange Agent will issue the applicable Merger
Consideration in exchange for such lost, stolen or destroyed
Certificate.
(h) Parent and the Company shall cooperate
to determine the amount of Taxes (as defined in Section 4.9(b)(i))
required to be withheld with respect to any payments to be made
pursuant to this Agreement that will be treated as compensation
income to the recipient thereof for any relevant tax purposes,
determined as if the Company was the payor of such amounts. Parent
shall withhold such amounts from the portion of the Merger
Consideration otherwise due to the recipient with respect to which
such withholding is required, and shall instead pay such amount to
the Company for payment to the applicable Tax authority. In
addition, the Exchange Agent, Parent and the Surviving Corporation
shall be entitled to deduct and withhold from the Merger
Consideration or other amounts payable pursuant to this Agreement
to any holder of shares of Company Stock such amounts as the
Exchange Agent, Parent or the Surviving Corporation is required to
deduct and withhold with respect to the making of such payment
under the Internal Revenue Code of 1986, as amended (the “
Code ”), or any provision of United States federal,
state or local tax laws. To the extent that amounts are so withheld
by the Exchange Agent, Parent or the Surviving Corporation, such
amounts withheld shall be treated for all purposes of this
Agreement as having been paid to the holder of the shares of
Company Stock in respect of which such deduction and withholding
was made by the Exchange Agent, Parent or the Surviving
Corporation.
Section 3.2.
Appraisal
Rights .
(a) Notwithstanding anything in this
Agreement to the contrary, any shares of Company Stock
(collectively, the “ Dissenting Shares ”) that
are issued and outstanding immediately prior to the Effective Time
and that are held by stockholders of the Company who have not
adopted and approved, or consented in favor of the adoption and
approval, of this Agreement and who shall have demanded properly in
writing appraisal for such shares in accordance with Section 262 of
the DGCL (the “ Appraisal Rights
Provisions ”) will not be converted as described in
Section 2.1, but will thereafter constitute only the right to
receive payment of the fair value of such shares of Company Stock
in accordance with the Appraisal Rights Provisions; provided
, however , that all shares of Company Stock held by
stockholders who shall have failed to perfect or who effectively
shall have withdrawn or lost their rights to appraisal of such
shares of Company Stock under the Appraisal Rights Provisions shall
thereupon be deemed to have been canceled and retired and to have
been converted, as of the Effective Time, into the right to receive
the applicable Merger Consideration, without interest, in the
manner provided in Section 2.1. Persons who have perfected
statutory rights with respect to Dissenting Shares as aforesaid
will not be paid by the Surviving Corporation as provided in this
Agreement and will have only such rights as are provided by the
Appraisal Rights Provisions with respect to such Dissenting Shares.
Notwithstanding anything in this Agreement to the contrary, if
Parent, MergerCo or the Company abandon or are finally enjoined or
prevented from carrying out, or the stockholders rescind their
adoption and approval of, this Agreement, the right of each holder
of Dissenting Shares to receive the fair value of such Dissenting
Shares in accordance with the Appraisal Rights Provisions will
terminate, effective as of the time of such abandonment,
injunction, prevention or rescission. Prior to the Effective Time,
(i) the Company shall give Parent and MergerCo prompt notice of any
demands received by the Company for the exercise of appraisal
rights with respect to shares of Company Stock and Parent shall
have the right to participate in all negotiations and proceedings
with respect to such demands, and (ii) the Company shall not,
except with the prior written consent of Parent (which consent
shall not be unreasonably withheld), make any payment with respect
to, or settle or offer to settle, any such demands. On and after
the Effective Time, (i) Parent or the Surviving Company shall give
the Stockholders’ Representative prompt notice of any demands
received by Parent or the Surviving Company for the exercise of
appraisal rights with respect to shares of Company Stock and the
Stockholders’ Representative shall have the right to
participate in all negotiations and proceedings with respect to
such demands, and (ii) neither Parent nor the Surviving Company
shall, except with the prior written consent of the
Stockholders’ Representative (which consent shall not be
unreasonably withheld), make any payment with respect to, or settle
or offer to settle, any such demands.
(b) The costs incurred by the Surviving
Company in connection with the exercise by holders of Dissenting
Shares in accordance with the Appraisal Rights Provisions, if any
(the “ Appraisal Costs ”), will be payable as
follows: (i) up to the first $30,000 shall be paid by the Escrow
Agent to the Surviving Company out of the Dissenter Escrow Amount
and (ii) any remainder shall be paid by the Surviving Company. On
the date that is the later of (x) twenty (20) days following notice
to the stockholder of the Company of the Appraisal Rights
Provisions and (y) the date on which
payment for
Appraisal Costs, if any, has been satisfied, the Escrow Agent shall
distribute any remaining Dissenter Escrow Amount to the
stockholders of the Company based on each such stockholder’
pro rata share (as set forth opposite such stockholder’s name
in column 6 of Exhibit A attached hereto).
(c) Each dissenting stockholder who becomes
entitled under the DGCL to payment for Dissenting Shares shall
receive payment therefor after the Effective Time (but only after
the amount to be paid for such Dissenting Shares shall have been
agreed upon or finally determined pursuant to the DGCL): (i) first,
from the stockholders of the Company based on each such
stockholder’ pro rata share (as set forth opposite such
stockholder’s name in column 6 of Exhibit A attached
hereto) of the aggregate amount to be paid for such Dissenting
Shares pursuant to the DGCL, provided that in no event shall the
stockholders of the Company be liable to or obligated to pay any
amount to the holders of Dissenting Shares under this Section
3.2(c), together with any amounts payable to Parent under Section
2.3(c), in excess of the aggregate Merger Consideration, and (ii)
thereafter, from the Surviving Company; and such shares of Company
Stock shall thereupon be canceled.
Article IV - REPRESENTATIONS AND WARRANTIES OF THE
COMPANY
The Company hereby makes to Parent and MergerCo
the representations and warranties contained in this Article
IV.
Section
4.1. Existence; Good Standing;
Authority .
(a) The Company is a corporation duly
incorporated, validly existing and in good standing under the laws
of the State of Delaware. The Company has all requisite corporate
power and authority to own, operate, lease and encumber its
properties and carry on its business as currently conducted. The
Company is duly licensed or qualified to do business as a foreign
corporation under the laws of each other jurisdiction in which the
character of its properties or in which the transaction of its
business makes such qualification necessary, except where the
failure to be so licensed or qualified would not, individually or
in the aggregate, have a Material Adverse Effect. The copies of the
Company’s Sixth Amended and Restated Certificate of
Incorporation as in effect on the date hereof (the “
Charter ”) and by-laws, each as amended to date and
made available to Parent’s counsel, are complete and correct,
and no amendments thereto are pending.
(b) The Company has the corporate power and
authority to execute and deliver this Agreement and to perform its
obligations hereunder. The execution and delivery of this
Agreement, the performance by the Company of its obligations
hereunder and the consummation of the transactions contemplated
hereby have been duly authorized by all requisite corporate action
on the part of the Company. This Agreement has been duly executed
and delivered by the Company and, assuming the due authorization,
execution and delivery of this Agreement by Parent, this
Agreement
constitutes a
legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting
creditors’ rights generally and by general equitable
principles.
Section 4.2.
Capitalization . As of the date of this Agreement, the
authorized, issued and outstanding capital stock of the Company is
set forth on Schedule 4.2 . All of the issued and
outstanding shares of capital stock of the Company are duly
authorized, validly issued, fully paid and nonassessable. As of the
date of this Agreement, except as set forth on Schedule 4.2
, there are no outstanding options, warrants or other rights of any
kind to acquire any additional shares of capital stock of the
Company or securities convertible into or exchangeable for, or
which otherwise confer on the holder thereof any right to acquire,
any such additional shares, nor is the Company committed to issue
any such option, warrant, right or security. Except as set forth on
Schedule 4.2 , there are no agreements or understandings to
which the Company is a party with respect to the voting of any
shares of capital stock of the Company or which restrict the
transfer of any such shares. Except as set forth on Schedule
4.2 , there are no outstanding contractual obligations of the
Company to repurchase, redeem or otherwise acquire any shares of
capital stock, other equity interests or any other securities of
the Company. Except as set forth on Schedule 4.2 , the
Company is not under any obligation by reason of any agreement to
register the offer and sale or resale of any of its securities
under the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder (the “ Securities
Act ”).
Section 4.3.
Subsidiaries . The Company has no subsidiaries, and does not
own any interest or investment (whether equity or debt) in any
Person (other than investments in short-term investment
securities).
Section 4.4.
No
Conflict .
Neither the execution and delivery by the Company of this Agreement
and the other agreements, documents and instruments contemplated
hereby to which the Company is a party, nor the consummation by the
Company of the transactions in accordance with the terms hereof and
thereof, conflicts with or results in a breach of any provisions of
the Charter or by-laws of the Company. Except as set forth on
Schedule 4.4 , and assuming the consents, approvals and
authorizations contemplated by Section 4.7 are obtained, the
execution and delivery by the Company of this Agreement and the
other agreements, documents and instruments contemplated hereby to
which the Company is a party and the consummation by the Company of
the transactions in accordance with the terms hereof and thereof
will not violate, or conflict with, or result in a breach of any
provision of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under
any of the terms, conditions or provisions of any material note,
bond, mortgage, indenture, deed of trust, lease, contract or other
agreement to which the Company is a party or by which the or any of
its properties is bound, except, in each case, as would not,
individually or in the aggregate, have a Material Adverse Effect or
would become applicable as a result of the business or activities
in which Parent proposes to be engaged or as a result of any acts
or omissions by, or the status of any facts pertaining to,
Parent.
Section 4.5.
Financial
Statements .
(a) The Company has delivered to Parent the
following financial statements, copies of which are attached hereto
as Schedule 4.5 (collectively, the “ Financial
Statements ”):
(i) Audited balance sheet of the as of
December 31, 2005, and statements of income and retained earnings
and statements of cash flows the year then ended;
(ii) Unaudited adjusted balance sheet of
the as of September 30, 2006 (the “ Base Balance Sheet
”); and
(iii)Unaudited adjusted statements of income of
the Company as of September 30, 2006.
Subject to the absence of footnotes and year-end
audit adjustments with respect to any unaudited Financial
Statements, the Financial Statements have been prepared using the
Company’s past practices and procedures in accordance with
GAAP consistently applied, and present fairly in all material
respects the consolidated financial condition of the
Company.
(b) As of the date hereof, all liabilities
of the Company of a type that would be required to be shown on the
Financial Statements in accordance with GAAP have been (i) stated
or adequately reserved against on the Base Balance Sheet or the
notes thereto, (ii) reflected on Schedule 4.5 or the other
Schedules furnished to Parent hereunder, or (iii) incurred after
the date of the Base Balance Sheet in the ordinary course of
business consistent with past practices, except for liabilities
which are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect.
Section 4.6.
Absence of Certain
Changes .
Except as set forth on Schedule 4.6 , from the date of the
Base Balance Sheet to the date of this Agreement, the Company has
operated only in the ordinary course of business consistent with
past practices and there has not been any:
(a) change in the Company’s
authorized or issued capital stock; grant of any option, right to
purchase or similar right regarding the capital stock of the
Company; purchase, redemption, retirement, or other acquisition by
the Company of any such capital stock; or declaration or payment of
any dividend or other distribution or payment in respect of the
capital stock of the Company;
(b) amendment to the Charter or
by-laws of the Company;
(c) payment of any bonuses, or
material increase in salaries or othercompensation, by the Company
to any of their respective directors, officers, or employees,
except for bonus awards and increases in salaries made in the
ordinary course of business consistent with past
practices;
(d) damage to or destruction or loss of any
asset or property of the Company, whether or not covered by
insurance, which has had a Material Adverse Effect;
(e) incurrence of indebtedness or guarantee
of debt or other liability of any third party by the Company other
than in the ordinary course of business;
(f) material change in the accounting
methods or principles used by the Company, other than (A)
write-downs or write-offs in the value of assets as required by
GAAP, or (B) such adjustments as may be required by GAAP as a
result of the transactions contemplated by this Agreement;
or
(g) entering into any written agreement to
do any of the actions described in clauses (a) through
(f).
Section 4.7.
Consents and
Approvals .
(a) To the Company’s knowledge,
except as set forth on Schedule 4.7(a) , the
execution, delivery and performance of this Agreement by the
Company will not, as of the Closing Date, require any consent,
approval, authorization or other action by, or filing with or
notification to, any federal, state, local, or any foreign
government, governmental, regulatory or administrative authority,
agency or commission or any court, tribunal, or judicial or
arbitral body (a “ Governmental Authority ”),
except (i) where failure to obtain such consent, approval,
authorization or action, or to make such filing or notification,
would not, individually or in the aggregate, have (A) a Material
Adverse Effect or (B) a material adverse effect on the ability of
the Company to perform its obligations under this Agreement, and
(ii) as may be necessary as a result of any facts or circumstances
relating solely to Parent (including, without limitation, its
sources of financing).
(b) To the Company’s knowledge,
except as set forth on Schedule 4.7(b) , the
execution, delivery and performance of this Agreement by the
Company will not, as of the Closing Date, require any third-party
consents, approvals, authorizations or actions, except where
failure to obtain such consents, approvals, authorizations or
actions would not, individually or in the aggregate, have (i) a
Material Adverse Effect or (ii) a material adverse effect on the
ability of the Company to perform its obligations under this
Agreement.
Section 4.8.
Litigation . Except as set forth on Schedule 4.8 ,
as of the date of this Agreement there is no litigation, action,
suit, proceeding, claim, arbitration or investigation pending or,
to the Company’s knowledge, threatened in writing against the
Company, as to which there is a reasonable likelihood of an adverse
determination and which, if adversely determined, individually or
in the aggregate, with all such other litigation, actions, suits,
proceedings, claims, arbitrations or investigations, would have a
Material Adverse Effect.
(a) Except as set forth on Schedule
4.9 or as would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse
Effect:
(i) The Company has timely filed or been
included in, or will timely file or be included in, all material
Tax Returns required to be filed by it or in which it is to be
included with respect to Taxes for any period ending on or before
the date of this Agreement, taking into account any extension of
time to file granted to or obtained on behalf of the
Company;
(ii) The Company has paid or caused to be
paid all Taxes shown on such Tax Returns prior to the date of this
Agreement and has made provision, in accordance with GAAP, for all
Taxes owed or accrued through the date of this
Agreement;
(iii)Neither the Internal Revenue Service (the
“ IRS ”) nor any other Governmental Authority is
asserting as of the date of this Agreement by written notice to the
Company or, to the Company’s knowledge, threatening as of the
date of this Agreement to assert against the Company, any
deficiency or claim for any material amount of additional Taxes;
and
(iv)To the Company’s knowledge, no
federal, state, local or foreign audits or other administrative
proceedings or court proceedings are pending as of the date of this
Agreement with regard to any Taxes or Tax Returns of the Company
and the Company has not received a written notice prior to the date
of this Agreement of any actual or thr
