AGREEMENT AND PLAN OF
MERGER
BY AND AMONG
MOOG INC.,
PUMPCO ACQUISITION
CORP.
AND
ZEVEX INTERNATIONAL,
INC.
DATED AS OF JANUARY 12,
2007
TABLE OF CONTENTS
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SECTION 1.2
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Effective Time
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2
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SECTION 1.3
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Effects of the Merger
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2
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SECTION 1.4
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Subsequent Actions
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2
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SECTION 1.5
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Articles of Incorporation;
By-Laws; Directors and
Officers
2
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SECTION 1.6
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Merger Consideration
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3
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SECTION 1.7
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Exchange of Certificates for
Shares
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3
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SECTION 1.8
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Stock Plans
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6
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SECTION 1.9
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Dissenting Shares
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6
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SECTION 1.10
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Adjustments to Outstanding Equity
Interests
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7
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SECTION 1.11
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Time and Place of
Closing
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7
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ARTICLE II
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REPRESENTATIONS AND WARRANTIES
OF MERGER SUB AND PARENT
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SECTION 2.1
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Organization
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7
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SECTION 2.3
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No Conflict; Required Filings and
Consents
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8
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SECTION 2.4
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Financing Arrangements
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8
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SECTION 2.7
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Full Disclosure
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9
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ARTICLE III
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REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
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SECTION 3.1
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Organization and
Qualification
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9
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SECTION 3.2
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Capitalization
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10
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SECTION 3.3
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Subsidiaries
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11
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SECTION 3.5
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No Conflict; Required Filings and
Consents
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12
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SECTION 3.6
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SEC Filings; Financial
Statements
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13
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SECTION 3.7
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Absence of Certain Changes or
Events
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16
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SECTION 3.9
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Litigation
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18
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SECTION 3.10
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Employee Benefit Plans
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18
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SECTION 3.11
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Conduct of Business; Permits;
Compliance with Law
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20
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SECTION 3.13
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Environmental Matters
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23
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SECTION 3.14
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Real Property; Title to Assets;
Liens
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24
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SECTION 3.15
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Intellectual Property
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25
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SECTION 3.16
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Material Contracts
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26
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SECTION 3.17
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Insurance
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28
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SECTION 3.18
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Collective Bargaining; Labor
Disputes; Compliance
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28
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SECTION 3.19
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Transactions with
Affiliates
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29
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SECTION 3.20
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Product Warranties
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29
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SECTION 3.22
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Board Action
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30
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SECTION 3.23
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Opinion of Financial
Advisor
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30
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SECTION 3.24
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Control Share
Acquisition
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30
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SECTION 3.25
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Vote Required
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30
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SECTION 3.26
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Full Disclosure
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30
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ARTICLE IV
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COVENANTS AND
AGREEMENTS
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SECTION 4.1
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Conduct of Business by the
Company Pending the Merger
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31
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SECTION 4.2
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No Solicitation
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33
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ARTICLE V
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ADDITIONAL
AGREEMENTS
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SECTION 5.1
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Proxy Statement
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35
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SECTION 5.2
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Meeting of Stockholders of the
Company
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37
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SECTION 5.3
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Compliance with Law
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38
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SECTION 5.4
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Notification of Certain
Matters
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38
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SECTION 5.5
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Confidentiality; Access to
Information
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39
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SECTION 5.6
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Public Announcements
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40
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SECTION 5.7
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Approval and Consents;
Cooperation
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40
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SECTION 5.8
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Continuation of Employee
Benefits
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42
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SECTION 5.10
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Real Estate Matters
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43
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SECTION 5.11
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Resignation of Directors and
Officers
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43
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SECTION 5.12
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Director and Officer
Indemnification and Insurance
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43
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SECTION 5.13
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Financing
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45
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ARTICLE VI
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CONDITIONS OF
MERGER
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SECTION 6.1
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Conditions to Each Party’s
Obligation to Effect the Merger
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45
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SECTION 6.2
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Additional Conditions to
Obligation of the Company to Effect the
Merger
46
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SECTION 6.3
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Additional Conditions to
Obligations of Parent and Merger Sub to Effect the
Merger
47
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ARTICLE VII
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TERMINATION, AMENDMENT AND
WAIVER
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SECTION 7.1
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Termination
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48
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SECTION 7.2
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Effect of Termination
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50
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SECTION 7.3
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Termination Fee Payable in
Certain Circumstances
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50
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ARTICLE VIII
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GENERAL
PROVISIONS
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SECTION 8.1
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Non-Survival of Representations,
Warranties and Agreements
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52
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SECTION 8.5
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Severability
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53
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SECTION 8.6
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Entire Agreement; No Third-Party
Beneficiaries
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53
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SECTION 8.7
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Assignment
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53
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SECTION 8.8
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Governing Law;
Jurisdiction
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54
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SECTION 8.11
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Counterparts
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54
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SECTION 8.12
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Waiver of Jury Trial
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54
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SECTION 8.13
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Interpretation
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55
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SECTION 8.14
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Disclosure Generally
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55
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SECTION 8.15
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Specific Performance
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56
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Annex A – Defined Terms
Exhibit A – Form of Voting
Agreement
Exhibit B – Form of Certificate of
Incorporation for the Surviving Corporation
Exhibit C – Form of By-Laws for the
Surviving Corporation
Exhibit D – Form of Employment Agreement
with David J. McNally
Exhibit E – Form of Employment Agreement
with Phillip L. McStotts
AGREEMENT AND PLAN OF
MERGER
AGREEMENT AND PLAN OF
MERGER , dated as of
January 12, 2007 (this “Agreement” ), by
and among MOOG INC. , a New York Corporation (
“Parent” ), PUMPCO ACQUISITION
CORP. , a Delaware corporation and a wholly-owned subsidiary of
Parent ( “Merger Sub” ), and ZEVEX
INTERNATIONAL, INC. , a Delaware corporation (the
“Company” ).
W I T N E S S E T
H:
WHEREAS , the respective Boards of Directors of Parent,
Merger Sub and the Company, have each approved the merger of Merger
Sub with and into the Company with the Company continuing as the
surviving corporation and as a wholly owned subsidiary of Parent
(the “Merger” ) and the other
transactions provided herein and have adopted this Agreement, in
each case after determining that the Merger and the consummation of
the other transactions contemplated herein are advisable, fair to,
and in the best interests of Parent, Merger Sub and the Company,
respectively, and their respective stockholders; and
WHEREAS , concurrently with the execution and delivery
of this Agreement, as a condition and inducement to Parent’s
and Merger Sub’s willingness to enter into this Agreement,
certain stockholders of the Company (the “Major
Stockholders” ) have entered into a Voting Agreement,
dated as of the date of this Agreement, in the form attached hereto
as Exhibit A (the “Voting
Agreement” ) pursuant to which each Major Stockholder
has, among other things, agreed to vote the Company Common Stock
held by such Major Stockholder for the approval of this Agreement;
and
WHEREAS , Parent, as the sole stockholder of Merger Sub,
has approved and adopted this Agreement; and
WHEREAS , Parent, Merger Sub and the Company desire to
make certain representations, warranties, covenants and agreements
in connection with the Merger and also to prescribe various
conditions to the Merger; and
WHEREAS , unless otherwise noted, terms used but not
defined herein shall have the meanings set forth in Annex A
, which is attached hereto and made a part hereof.
NOW, THEREFORE
, in consideration of the foregoing
premises and the mutual covenants and agreements herein contained,
and intending to be legally bound hereby, the parties hereby agree
as follows:
•
THE MERGER
SECTION 1.1 The Merger . At
the Effective Time and subject to and upon the terms and conditions
of this Agreement and the Delaware General Corporation Law (the
“DGCL” ), Merger Sub shall be merged with
and into the Company, the separate corporate existence of Merger
Sub
shall cease, and the Company shall
continue as the surviving corporation. The Company, as the
surviving corporation after the Merger, is hereinafter sometimes
referred to as the “Surviving
Corporation.”
SECTION 1.2 Effective Time .
Subject to the provisions of this Agreement, the parties shall
cause a certificate of merger satisfying the applicable
requirements of the DGCL (the “Certificate of
Merger” ) to be filed with the Secretary of the State
of Delaware. The Merger shall become effective upon the date and
time of the filing of the Certificate of Merger with the Secretary
of the State of Delaware or such other date and time as Parent and
the Company may mutually agree and include in the Certificate of
Merger (the “Effective Time”
).
SECTION 1.3 Effects of the
Merger . At the Effective Time, the effects of the Merger shall
be as provided in the applicable provisions of the DGCL. Without
limiting the generality of the foregoing, and subject thereto, at
the Effective Time all the property, rights, privileges, powers and
franchises of the Company and Merger Sub shall vest in the
Surviving Corporation, and all debts, liabilities and duties of the
Company and Merger Sub shall become the debts, liabilities and
duties of the Surviving Corporation.
SECTION 1.4 Subsequent
Actions . If, at any time after the Effective Time, the
Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments, assurances or any other actions or
things are necessary or desirable to vest, perfect or confirm of
record or otherwise in the Surviving Corporation its right, title
or interest in, to or under any of the rights, properties or assets
of either of the Company or Merger Sub acquired or to be acquired
by the Surviving Corporation as a result of, or in connection with,
the Merger or otherwise to carry out this Agreement, the officers
and directors of the Surviving Corporation shall be authorized to
execute and deliver, in the name and on behalf of either the
Company or Merger Sub, all such deeds, bills of sale, assignments
and assurances and to take and do, in the name and on behalf of
each of such corporations or otherwise, all such other actions and
things as may be necessary or desirable to vest, perfect or confirm
any and all right, title and interest in, to and under such rights,
properties or assets in the Surviving Corporation or otherwise to
carry out this Agreement.
SECTION 1.5 Articles of
Incorporation; By-Laws; Directors and Officers .
(a) At
the Effective Time, the Certificate of Incorporation of Merger Sub
immediately prior to the Merger in the form attached hereto as
Exhibit B shall be the Certificate of Incorporation of the
Surviving Corporation until thereafter amended as provided therein
or in accordance with Law.
(b) At
the Effective Time, the By-Laws of Merger Sub immediately prior to
the Merger in the form attached hereto as Exhibit C shall be
the By-Laws of the Surviving Corporation until thereafter amended
in accordance with the Surviving Corporation’s Certificate of
Incorporation and By-Laws, or by Law.
(c) Unless
otherwise determined by Parent prior to the Effective Time, the
directors and officers of Merger Sub immediately prior to the
Effective Time shall be the initial directors and officers of the
Surviving Corporation, in each case, until their successors are
duly
elected or appointed and qualified
in the manner provided in the Surviving Corporation’s
Certificate of Incorporation and By-Laws, or as otherwise provided
by Law.
SECTION 1.6 Merger
Consideration . The manner and basis of converting the shares
of Common Stock, $.001 par value per share, of the Company (the
“Company Common Stock” ) in conjunction
with the Merger shall be as set forth in this
Section 1.6 .
(a)
Company Common Stock . At the Effective Time, by virtue of
the Merger and without any action on the part of the holder thereof
each share of Company Common Stock that is issued and outstanding
immediately prior to the Effective Time (other than any shares of
Company Common Stock to be cancelled in accordance with
Section 1.6(c) ) shall be converted into the right to
receive from the Surviving Corporation or the Parent (through the
Exchange Agent), and become exchangeable for, an amount in cash
equal to Thirteen Dollars ($13.00) per share of Company Common
Stock, without interest, (collectively the “Merger
Consideration” ). As of the Effective Time, all
shares of Company Common Stock upon which the Merger Consideration
is payable pursuant to this Section 1.6(a) shall no
longer be outstanding and shall automatically be cancelled and
retired and shall cease to exist, and each holder of a certificate
representing any such shares of Company Common Stock shall cease to
have any rights with respect thereto, except the right to receive
the Merger Consideration.
(b)
Merger Sub Common Stock . At the Effective Time, each share
of common stock, par value $1.00 per share, of Merger Sub that is
issued and outstanding immediately prior to the Effective Time
shall be converted into and become one fully paid and
non-assessable share of common stock, $.001 par value per share, of
the Surviving Corporation.
(c)
Cancellation of Treasury Stock and Parent and Merger Sub-Owned
Company Common Stock . All shares of Company Common Stock that
are owned by or held in the treasury of the Company or any direct
or indirect Subsidiary of the Company and any shares of Company
Common Stock owned by Parent, Merger Sub or any subsidiary of
Parent or Merger Sub shall, by virtue of the Merger and without any
action on the part of the holder thereof, be cancelled and retired
and shall cease to exist, and no cash or other consideration shall
be delivered or deliverable in exchange therefor.
SECTION 1.7 Exchange of
Certificates for Shares .
(a)
Exchange Agent . Prior to the Effective Time, Parent shall
deposit or shall cause to be deposited with a bank or trust company
designated by Parent (the “Exchange
Agent” ), for the benefit of the holders of shares of
Company Common Stock that have been converted into the right to
receive, and become exchangeable for, the Merger Consideration
pursuant to Section 1.6(a) , for exchange in accordance
with this Article I through the Exchange Agent, an
amount equal to the aggregate Merger Consideration (such
consideration being hereinafter referred to as the
“Exchange Fund” ). The Exchange Agent
shall, pursuant to irrevocable instructions of the Surviving
Corporation, and in accordance with the provisions of Section
1.7(b) make payments of the Merger Consideration out of the
Exchange Fund. The Exchange Fund shall not be used for any purpose
other than as described in this Section 1.7 .
(b)
Exchange Procedure for Certificates . As soon as reasonably
practicable after the Effective Time, the Surviving Corporation
shall cause the Exchange Agent to mail to each holder of record of
a certificate or certificates which immediately prior to the
Effective Time represented outstanding shares of Company Common
Stock (the “Certificates” ) that were
converted into the right to receive the Merger Consideration
pursuant to Section 1.6(a) : (x) a letter of
transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only
upon delivery of the Certificates to the Exchange Agent and shall
be in such form and have such other customary provisions as the
Surviving Corporation may reasonably specify); and
(y) instructions for use by such holders in effecting the
surrender of the Certificates in exchange for the Merger
Consideration. Upon surrender of a Certificate for cancellation to
the Exchange Agent or to such other agent or agents as may be
appointed by the Surviving Corporation, together with such letter
of transmittal, duly executed, and such other documents as may
reasonably be required by the Exchange Agent, the holder of such
Certificate shall be entitled to receive in exchange therefor the
Merger Consideration into which the shares of Company Common Stock
theretofore represented by such Certificate shall have been
converted pursuant to Section 1.6(a) , and the Certificate
so surrendered shall forthwith be cancelled. The Exchange Agent
shall accept such Certificates upon compliance with such reasonable
terms and conditions as the Exchange Agent may impose to effect an
orderly exchange thereof in accordance with normal exchange
practices. In the event of a transfer of ownership of such Company
Common Stock which is not registered in the transfer records of the
Company, payment may be made to a Person other than the Person in
whose name the Certificate so surrendered is registered, if such
Certificate shall be properly endorsed or otherwise be in proper
form for transfer and the Person requesting such payment shall pay
any transfer or other Taxes required by reason of the payment to a
Person other than the registered holder of such Certificate or
establish to the satisfaction of the Surviving Corporation that
such Taxes have been paid or are not applicable. Until surrendered
as contemplated by this Section 1.7(b) , each
Certificate (other than a Certificate representing shares of
Company Common Stock that has been cancelled in accordance with
Section 1.6(c) ) shall be deemed at any time after the
Effective Time to represent only the right to receive upon such
surrender the Merger Consideration, without interest, into which
the shares of Company Common Stock theretofore represented by such
Certificate shall have been converted pursuant to
Section 1.6(a) . No interest will be paid or will
accrue on the Merger Consideration payable upon the surrender of
any Certificate.
(c)
No Further Ownership Rights in Company Common Stock . At the
Effective Time (i) all holders of Certificates that were
outstanding prior to the Effective Time shall cease to have any
rights as stockholders of the Company other than the right to
receive the Merger Consideration and (ii) the stock transfer books
of the Company shall be closed and there shall be no further
registration of transfers on the stock transfer books of the
Surviving Corporation of the shares of Company Common Stock which
were outstanding immediately prior to the Effective Time. If, after
the Effective Time, the Certificates (other than Certificates
cancelled in accordance with Section 1.6(c) ) are presented
to the Surviving Corporation or the Exchange Agent for any reason,
they shall be cancelled and exchanged as provided in this
Article I , except as otherwise provided by Law. The
Merger Consideration paid upon the surrender of Certificates in
accordance with the terms of this Article I shall be
deemed to have been paid in full satisfaction of all rights
pertaining to the shares of Company Common Stock theretofore
represented by such Certificates.
(d)
Termination of the Exchange Fund . Any portion of the
Exchange Fund which remains undistributed to the holders of the
Certificates for 120 days after the Effective Time shall be
delivered to the Surviving Corporation and any holders of the
Certificates who have not theretofore complied with this
Article I shall thereafter look only to the Surviving
Corporation and only as general creditors thereof for payment of
their claim for the Merger Consideration. All rights of any former
holder of Company Common Stock to receive the Merger Consideration
hereunder shall, to the extent such Merger Consideration remains
unclaimed, terminate on the date that is immediately prior to the
date on which such unclaimed Merger Consideration would otherwise
become payable to a public official pursuant to any applicable
abandoned property, escheat or similar Law.
(e)
No Liability . None of the Company, Merger Sub, Parent, the
Surviving Corporation or the Exchange Agent, or any of their
respective employees, officers, directors, stockholders, agents or
affiliates, shall be liable to any Person in respect of any
unclaimed Merger Consideration delivered to a public official
pursuant to any applicable abandoned property, escheat or similar
Law.
(f)
Investment of the Exchange Fund . The Exchange Agent shall
invest any cash included in the Exchange Fund, as directed by the
Surviving Corporation, on a daily basis. Any interest and other
income resulting from such investments shall be paid to the
Surviving Corporation. To the extent that there are losses with
respect to such investments, or the Exchange Fund diminishes for
other reasons below the level required to make prompt payments of
the Merger Consideration as contemplated hereby, Parent and/or the
Surviving Corporation shall promptly replace or restore the portion
of the Exchange Fund lost through investments or other events so as
to ensure that the Exchange Fund is, at all times, maintained at a
level sufficient to make such payments. In the event this Agreement
is terminated, the Exchange Fund, including any interest and other
income earned thereon, shall be paid to Parent.
(g)
Withholding Rights . The Surviving Corporation and the
Exchange Agent shall be entitled to deduct and withhold from the
Merger Consideration otherwise payable pursuant to this Agreement
to any holder of shares of Company Common Stock such amounts as 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 state, local or foreign tax Law. To the extent
that amounts are so deducted and withheld by the Surviving
Corporation and the Exchange Agent and paid to the applicable
taxing authority when due, such withheld amounts shall be treated
for all purposes of this Agreement as having been paid to the
holder of the shares of Company Common Stock in respect of which
such deduction and withholding was made by the Surviving
Corporation.
(h)
Lost Certificates . If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact
by the Person claiming such Certificate to be lost, stolen or
destroyed and, if required by the Surviving Corporation, the
posting by such Person of a bond in such reasonable amount as the
Surviving Corporation may require as indemnity against any claim
that may be made against it with respect to such Certificate, the
Exchange Agent will pay to such Person in exchange for such lost,
stolen or destroyed Certificate the Merger Consideration payable
pursuant to this Agreement in respect of the shares of Company
Common Stock represented by such Certificate.
SECTION 1.8 Stock Plans . The
Company Board (or, if appropriate, any committee thereof
administering any of the Company’s stock option and equity
incentive plans listed in Section 3.2 of the Company
Disclosure Schedule, each as amended (collectively, the
“Stock Plans” )) shall adopt such
resolutions or take such other actions as may be required to effect
the following:
(a) Prior
to the Effective Time, the Company shall take all actions necessary
to provide that, at the Effective Time, (x) each then outstanding
option granted under any Stock Plan, or granted other than pursuant
to such Stock Plans (together, the
“Options” ), whether or not then
exercisable or vested, shall be cancelled in exchange for the right
to receive from the Surviving Corporation an amount in cash in
respect thereof equal to the product of (i) the excess, if
any, of the Merger Consideration over the per share exercise price
of such Option, multiplied by (ii) the number of shares of
Company Common Stock subject to such Option and (y) each then
outstanding restricted stock unit granted under any Stock Plan (
“Restricted Stock Units” ), whether or
not then vested, shall be cancelled in exchange for the right to
receive from the Surviving Corporation an amount in cash in respect
thereof equal to the Merger Consideration (such payments to made by
the Company through its customary payroll procedures and net of
applicable withholding Taxes).
(b) Except
as provided herein or as otherwise agreed to by the parties,
(i) the Company shall cause the Stock Plans to terminate as of
the Effective Time and cause the provisions in any other plan,
program or arrangement providing for the issuance or grant by the
Company of any interest in respect of the capital stock of the
Company or any of its Subsidiaries to terminate and have no further
force or effect as of the Effective Time and (ii) the Company
shall ensure that following the Effective Time no holder of Options
or other awards or any participant in the Stock Plans or anyone
other than Parent shall hold or have any right to acquire any
equity securities of the Company, the Surviving Corporation or any
Subsidiary thereof.
SECTION 1.9 Dissenting Shares
. Notwithstanding anything in this Agreement to the
contrary, shares of Company Common Stock outstanding immediately
prior to the Effective Time and held by a holder who has not voted
in favor of the Merger and who has delivered a written demand for
appraisal of such shares in accordance with Section 262 of the DGCL
(the “Dissenting Shares” ) shall not be
converted into the right to receive the Merger Consideration
pursuant to Section 1.6(a) , unless and until such
holder fails to perfect or effectively withdraws or otherwise loses
such holder’s right to appraisal and payment under the DGCL.
Such holder shall be entitled to receive payment of the appraised
value of such shares of Company Common Stock in accordance with the
provisions of the DGCL, provided that such holder complies with the
provisions of Section 262 of the DGCL. If, after the Effective
Time, any such holder fails to perfect or effectively withdraws or
otherwise loses such holder’s right to appraisal, such
Dissenting Shares shall thereupon be treated as if they had been
converted as of the Effective Time into the right to receive the
Merger Consideration, without interest thereon. The Company shall
give Parent and Merger Sub prompt notice of any demands received by
the Company for appraisal of shares of Company Common Stock, and,
prior to the Effective Time, Parent and Merger Sub shall have the
right to participate in all negotiations and proceedings with
respect to such demands. Prior to the Effective Time, the Company
shall not, except with the prior written consent of Parent, make
any payment with respect to, or settle or offer to settle, any such
demands.
SECTION 1.10 Adjustments to
Outstanding Equity Interests . In the event that the Company
issues additional shares of Company Common Stock, Options,
Restricted Stock Units or other securities convertible or
exchangeable into or exercisable for shares of Company Common
Stock, the Merger Consideration shall be equitably adjusted so that
the total amount of the Merger Consideration plus the amounts paid
pursuant to Section 1.8 shall not exceed Eighty-Three
Million Eight Hundred Thousand Dollars ($83,800,000) in the
aggregate.
SECTION 1.11 Time and Place of
Closing . The closing of the Merger (the
“Closing” ) will be held at the offices
of Hodgson Russ LLP, One M&T Plaza, Suite 2000, Buffalo, New
York, at 10:00 a.m., local time, on a date to be designated by
Parent, which shall be no later than the fifth Business Day
following the date that all of the conditions precedent specified
in Article VI (other than those conditions that by
their nature are to be satisfied at the Closing, but subject to the
fulfillment or waiver of those conditions) have been satisfied or,
to the extent permitted by Law, waived by the party or parties
permitted to do so (such date being referred to hereinafter as the
“Closing Date” ). The Merger and the
other transactions contemplated hereby shall be deemed to have
become effective at 12:01 a.m. on the Closing Date.
•
REPRESENTATIONS AND
WARRANTIES
OF MERGER SUB AND
PARENT
Merger Sub and Parent jointly and
severally hereby represent and warrant to the Company as
follows:
SECTION 2.1 Organization .
Each of Merger Sub and Parent is a corporation, duly organized or
formed, validly existing and in good standing under the laws of the
jurisdiction in which it is organized or formed and has the
requisite corporate power and authority to own, operate or lease
the properties that it purports to own, operate or lease and to
carry on its business in all material respects as it is now being
conducted.
SECTION 2.2 Authority . Each
of Merger Sub and Parent has the requisite corporate power and
authority to enter into this Agreement and the other agreements
referred to in this Agreement (the “Ancillary
Agreements” ), to perform its respective obligations
hereunder and thereunder, and to consummate the transactions
contemplated hereby and thereby collectively, the
“Contemplated Transactions” ). The
execution and delivery of this Agreement and the Ancillary
Agreements by each of Merger Sub and Parent and the consummation by
each of Merger Sub and Parent of the Contemplated Transactions have
been duly authorized by all necessary corporate action on the part
of each of Merger Sub and Parent, and no other corporate action by
either Merger Sub or Parent is necessary to authorize this
Agreement and the Ancillary Agreements or to consummate the
Contemplated Transactions (other than the filing of the Merger
Certificate). The Boards of Directors of Parent and of Merger Sub
have unanimously approved this Agreement. No vote of the
stockholders of Parent is required to approve the Merger. This
Agreement has been duly executed and delivered by each of Merger
Sub and Parent and constitutes a legal, valid and binding
obligation of each of Merger Sub and Parent, enforceable against
each of Merger Sub and Parent in accordance with their terms,
except that (i) such enforcement may be subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other similar
Law, now or hereafter in effect, relating to creditors’
rights generally
and (ii) equitable remedies 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
(collectively, the “Enforceability
Limitations” ).
SECTION 2.3 No Conflict; Required
Filings and Consents .
(a) The
execution, delivery and performance of this Agreement by each of
Merger Sub and Parent do not, and the consummation of the
Contemplated Transactions hereby will not, (i) subject to the
requirements, filings, consents and approvals referred to in
Section 2.3(b) , conflict with or violate any Law,
regulation, court order, judgment or decree applicable to Merger
Sub or Parent or by which any of their respective properties are
bound or subject, (ii) violate or conflict with the
certificate of incorporation or by-laws of Merger Sub or the
certificate of incorporation or by-laws of Parent or
(iii) subject to the requirements, filings, consents and
approvals referred to in Section 2.3(b) , result in any
breach of or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or give to
others any rights of termination or cancellation of, or result in
the creation of a lien, security interest, pledge, claim, charge or
encumbrance of any nature whatsoever (
“Lien” ), except for Permitted Liens, on
any of the property or assets of Merger Sub or Parent pursuant to,
any contract, agreement, indenture, lease or other instrument of
any kind, permit, license or franchise to which Merger Sub or
Parent is a party or by which either Merger Sub or Parent or any of
their respective properties are bound or subject, except, in the
case of clause (iii), for such breaches, defaults, rights or Liens
which would not materially impair the ability of Parent or Merger
Sub to timely consummate the transactions contemplated
hereby.
(b) Except
for applicable requirements, if any, of the Securities Exchange Act
of 1934, as amended, and the rules and regulations promulgated
thereunder (the “Exchange Act” ), the
pre-merger notification requirements of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the
“HSR Act” ), and the filing of the
Articles of Merger under the DGCL, neither Parent nor Merger Sub is
required to submit any notice, report or other filing with any
federal, state, provincial, local and foreign government,
governmental, quasi-governmental, supranational, regulatory or
administrative authority, agency, commission or any court,
tribunal, or judicial or arbitral body (each, a
“Governmental Entity” ) in connection
with the execution, delivery or performance of this Agreement or
the consummation of the transactions contemplated hereby. Except as
set forth above, no waiver, consent, approval or authorization of
any Governmental Entity is required to be obtained or made by
Parent or Merger Sub in connection with their execution, delivery
or performance of this Agreement.
SECTION 2.4 Financing
Arrangements . Parent and Merger Sub have and will have
available on the Closing Date sufficient funds to enable them to
consummate the transactions contemplated hereby. As of the date
hereof, the Definitive Financing Agreements are valid and in full
force and effect, and no event has occurred which (with or without
notice, lapse of time, or both) would constitute a breach
thereunder on the part of Parent. The aggregate proceeds that are
available to Parent under the Definitive Financing Agreements are
sufficient and, as of the Closing Date, will be sufficient for
Parent to pay the aggregate Merger Consideration upon the Closing,
as contemplated by this Agreement.
SECTION 2.5 Brokers . No
broker, finder or investment banker is entitled to any brokerage,
finder’s or other fee or commission in connection with the
Contemplated Transactions based upon arrangements made by and on
behalf of Merger Sub or Parent.
SECTION 2.6 Litigation .
There are no claims, actions, suits, arbitrations, grievances,
proceedings or investigations (collectively
“Proceedings” ) pending or, to the
knowledge of Parent or Merger Sub, threatened against Parent or
Merger Sub that seek to enjoin, or would reasonably be expected to
have the effect of preventing, making illegal or otherwise
interfering with the consummation of any of the Contemplated
Transactions or the Ancillary Agreements.
SECTION 2.7 Full Disclosure .
This Agreement does not, and the certificate referred to in
Section 6.2(b) will not: (a) contain any representation,
warranty or information that is false or misleading with respect to
any material fact, or (b) omit to state any material fact necessary
in order to make the representations, warranties and information
contained and to be contained herein and therein (in the light of
the circumstances under which such representations, warranties and
information were or will be made or provided) not false or
misleading.
•
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY
Except as set forth in the
disclosure schedule (subject to Section 8.15 ) delivered to
Parent by the Company prior to entering into this Agreement (the
“Company Disclosure Schedule” ), the
Company hereby represents and warrants on behalf of itself and its
Subsidiaries to Merger Sub and Parent as follows:
SECTION 3.1 Organization and
Qualification . The Company and each of its Subsidiaries is a
corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction in which it is organized and has
the requisite corporate power and authority necessary to own,
possess, license, operate or lease the properties that it purports
to own, possess, license, operate or lease and to carry on its
business as it is now being conducted. The Company and each of its
Subsidiaries is duly qualified or licensed as a foreign corporation
to do business, and is in good standing, in each jurisdiction where
its business or the character of its properties owned, possessed,
licensed, operated or leased, or the nature of its activities,
makes such qualification necessary, except for such failure which,
when taken together with all other such failures, would not
constitute a Company Material Adverse Effect. For purposes of this
Agreement, “Company Material Adverse
Effect” means any effect, change, fact, event,
occurrence, development or circumstance that, individually or
together with any other effect, violation, inaccuracy, change,
fact, event, occurrence, development or circumstance, that (A) is,
or is reasonably likely to be, materially adverse (financial or
otherwise), to the properties, business, operations, financial
condition, results of operations, assets or liabilities of the
Company and its Subsidiaries, taken as a whole, or (B) prohibits,
or materially impedes the timely consummation of the Merger; other
than: (i) any change in, disruption of, or price decline in
the U.S. securities markets, generally; (ii) any change in
accounting requirements or principles required by GAAP or required
by any change in Law; (iii) any adverse change, effect, event,
occurrence, state of facts or development attributable to
conditions affecting the U.S. economy as a whole or the industries
or markets in which the Company participates (including acts of war
or terrorism), so long as the changes in this subparagraph (iii) do
not affect the Company or any
Subsidiary in a disproportionate
degree relative to other entities operating in such markets or
industries; (iv) any adverse change, effect, event,
occurrence, state of fact or development resulting from any change
in Law after the date hereof; (v) except as set forth below, any
adverse change, effect, event, occurrence, state of fact or
development resulting from the public announcement or pendency of
the Merger or the Contemplated Transactions; (vi) any actions or
inactions by the Company that are specifically permitted by a prior
written waiver by Parent; (vii) the termination after the date
of this Agreement of any Employee of the Company or any of its
Subsidiaries (other than (A) David J. McNally, Phillip L. McStotts
or Andrea Kendall or (B) two or more of Philip Eggers, Timothy
Govin, Micheal Henderson and Jeanine Wilson), or any notice
thereof; (viii) any adverse change in the market price or trading
volume of the Company Common Stock after the date hereof not
resulting from another Company Material Adverse Effect; (ix) any
expenses incurred with respect to attorneys, accountants, financial
advisors, consultants and agents in connection with the
negotiation, documentation, execution, consummation or performance
of this Agreement, the Ancillary Agreements or the Contemplated
Transactions in an amount not to exceed $550,000 in the aggregate,
(x) any expenses incurred as a result of the Company's entry into,
and the payment of any amounts due to, or the provision of any
other benefits (including benefits relating to acceleration of
Options and Restricted Stock Units) to, any officers or Employees
under, employment contracts, non-competition agreements, employee
benefit plans, severance, bonus or retention arrangements or other
arrangements set forth in Section 3.10(a) of the
Company Disclosure Schedule; (xi) the taking of any action by the
Company that is required by this Agreement; or (xii) the
failure of the Company to take any action prohibited by this
Agreement. Notwithstanding anything to the contrary contained
above, a Company Material Adverse Effect will be deemed to have
occurred if an authorized representative of any party set forth on
Section 3.1 of the Company Disclosure Schedule takes
definitive steps that could reasonably be expected to lead to a
termination or adverse alteration of its existing contractual
relationship with the Company or any of its Subsidiaries as a
result of the execution and delivery of this Agreement and/or the
consummation of the Merger or the Contemplated
Transactions.
SECTION 3.2 Capitalization
.
(a) The
authorized capital stock of the Company consists of (i) 22,000,000
shares of Company Common Stock, and (ii) 2,000,000 shares of
preferred stock. As of the date of this Agreement: (A) 5,716,206
shares of Company Common Stock are issued and outstanding;
(B) no shares of the Company’s preferred stock are
issued and outstanding; (C) 58,702 shares of Company Common Stock
are held by the Company in its treasury; (D) 630,255 shares of
Company Common Stock are subject to issued and outstanding Options
granted under the Company’s Stock Option Plan of 1993 Stock
Option Plan (the “1993 Stock Option Plan”
); (E) 413,745 shares of Company Common Stock are subject to issued
and outstanding Options granted under the Company’s Stock
Option Plan of 1999 Stock Option Plan (the “1999 Stock
Option Plan” ) and (F) 1,000,000 shares of Company
Common Stock are reserved for issuance under the Company’s
2006 Equity Incentive Plan (the “2006 Equity
Plan” ), of which 60,400 shares were subject to
issued and outstanding equity awards granted under the 2006 Equity
Plan. Set forth on Section 3.2 of the Company
Disclosure Schedule is a correct and complete list of each Stock
Option Plan, each Option, each restricted stock unit and each other
equity award, including the holder, date of grant, exercise price,
if applicable, vesting schedule and number of shares of Company
Common Stock subject thereto. All Options or other grants were
granted
under the Stock Plans and not under
any other plan, program or agreement (other than any individual
award agreements, forms of which have been made available to
Parent). The shares of Company Common Stock issuable pursuant to
the Stock Plans have been duly reserved for issuance by the
Company, and upon any issuance of such shares in accordance with
the terms of the Stock Plans, such shares will be duly authorized,
validly issued, fully paid and non-assessable and free and clear
from any preemptive or other similar rights. Since September 30,
2006, the Company has not issued any shares of its capital stock or
options in respect thereof, except upon the conversion of the
securities or the exercise of the Options referred to above. No
shares of capital stock or other voting securities of the Company
will be issued or become outstanding after the date hereof other
than upon exercise of the Options and conversion of the Restricted
Stock Units outstanding as of the date hereof. None of the
outstanding equity securities or other securities of the Company or
any of its Subsidiaries were issued in violation of the Securities
Act of 1933, as amended, and the rules and regulations promulgated
thereunder (the “Securities Act” ) or any
other Law. All outstanding shares of Company Common Stock are, and
all shares which may be issued prior to the Effective Time will be
when issued, duly authorized, validly issued, fully paid and
non-assessable and free and clear from any preemptive or other
similar rights.
(b) Except
as disclosed in Section 3.2 of the Company Disclosure
Schedule, there are (i) no other options, puts, calls,
warrants or other rights, agreements, arrangements, restrictions,
or commitments of any character obligating the Company or any of
its Subsidiaries to issue, sell, redeem, repurchase, acquire or
exchange any shares of capital stock of or other equity interests
in the Company or any securities convertible into or exchangeable
for any capital stock or other equity interests, or any debt
securities of the Company or to provide funds to or make any
investment (in the form of a loan, capital contribution or
otherwise) and (ii) no bonds, debentures, notes or other
indebtedness having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any
matters on which stockholders of the Company may vote (whether or
not dependent on conversion or other trigger event). Except as
disclosed in Section 3.2 of the Company Disclosure
Schedule, there are no existing registration covenants with respect
to Company Common Stock or any other securities of the Company and
its Subsidiaries.
(c) The
Company is not a party to, nor does it hold shares of Company
Common Stock or other equity securities of the Company bound by or
subject to, any voting agreement, voting trust, proxy or similar
arrangement. To the Company’s knowledge, no stockholder is a
party to or holds shares of Company Common Stock or other equity
securities of the Company bound by or subject to any voting
agreement, voting trust, proxy or similar arrangement.
SECTION 3.3 Subsidiaries .
Each Subsidiary of the Company is identified on Section 3.3
of the Company Disclosure Schedule. All the outstanding equity
interests of each Subsidiary of the Company are owned by the
Company free and clear of all Liens except as set forth on
Section 3.3 of the Company Disclosure Schedule. All of
the capital stock or other equity interests of each Subsidiary of
the Company has been duly authorized and is validly issued, fully
paid and non-assessable and free and clear from any Liens and
preemptive or other similar rights. There are no proxies or voting
agreements with respect to any shares of capital stock or other
equity interests of any such Subsidiary. There are no options,
puts, calls, warrants or other
rights, agreements, arrangements,
restrictions or commitments of any character obligating the Company
or any of its Subsidiaries to issue, sell, redeem, repurchase or
exchange any shares of capital stock of or other equity interests
in any of the Company’s Subsidiaries or any securities
convertible into or exchangeable for any capital stock or other
equity interests, or any debt securities of any of the
Company’s Subsidiaries or to provide funds to or make any
investment (in the form of a loan, capital contribution or
otherwise) in the Company’s Subsidiaries or any other Person.
Except for the ownership of the Subsidiaries of the Company,
neither the Company nor any Subsidiary of the Company, directly or
indirectly, owns, or has agreed to purchase or otherwise acquire,
the capital stock or other equity interests of, or any interest
convertible into or exchangeable or exercisable for such capital
stock or such equity interests of, any corporation, partnership,
joint venture or other entity.
SECTION 3.4 Authority . The
Company has all necessary corporate power and authority to execute
and deliver this Agreement and Ancillary Agreements, to perform its
obligations hereunder and thereunder, and to consummate the Merger
and the other Contemplated Transactions. The execution and delivery
of this Agreement and the Ancillary Agreements by the Company and
the consummation by the Company of the Contemplated Transactions
have been duly and validly authorized by all necessary corporate
action, and no other corporate action on the part of the Company is
necessary to authorize this Agreement and the Ancillary Agreements
or to consummate the Contemplated Transactions (other than, with
respect to the Merger, obtaining the Company Stockholders’
Approval, and filing the Certificate of Merger). The Company Board
has unanimously approved the Agreement, declared it to be advisable
and resolved to recommend to the Company’s stockholders that
they vote in favor of the adoption of the Agreement in accordance
with the DGCL. This Agreement has been duly and validly executed
and delivered by the Company and constitutes a legal, valid and
binding obligation of the Company, enforceable against it in
accordance with its terms, except as such enforcement may be
limited by the Enforceability Limitations.
SECTION 3.5 No Conflict; Required
Filings and Consents .
(a) Except
as set forth in Section 3.5(a) of the Company
Disclosure Schedule, neither the execution and delivery of this
Agreement nor the consummation of any of the Contemplated
Transactions do, or will, directly or indirectly (with or without
notice or lapse of time or both), (i) contravene, violate or
conflict with the Certificate of Incorporation or By-Laws, the
certificate of incorporation or by-laws of any of its Subsidiaries
or any resolution adopted by the Company Board or the stockholders
of the Company or any of its Subsidiaries, (ii) result in any
breach of or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or terminate
or cancel or give to others any rights of termination, acceleration
or cancellation of (with or without notice or lapse of time or
both), or result in the creation of a Lien, except for Permitted
Liens, on any of the properties or assets of the Company or any of
its Subsidiaries pursuant to, any of the terms, conditions or
provisions of any Company Material Contract, or (iii) violate
any valid and enforceable judgment, ruling, order, writ,
injunction, decree, Permit or Law applicable to the Company or any
of its Subsidiaries or by which any of their respective properties
are bound or subject, except, in the case of clauses (ii) and
(iii), for breaches, defaults or violations that would not prevent
or delay consummation of the Merger in any material respect, or
otherwise prevent the Company from performing its obligations under
this Agreement in any material respect.
(b) The
execution and delivery by the Company of this Agreement do not, and
the performance of this Agreement and the consummation of the
Contemplated Transactions by the Company will not, require any
consent of or filing with or notification to, any Governmental
Entity, except (i) for applicable requirements of the Exchange Act,
including the filing of the Proxy Statement (as defined in
Section 5.1 ), (ii) the pre-merger notification
requirements of the HSR Act and the expiration or termination of
any applicable waiting period thereunder, and (iii) the filing of
the Certificate of Merger under the DGCL, except where such failure
would not prevent or delay consummation of the Merger in any
material respect, or otherwise prevent the Company from performing
its obligations under this Agreement in any material
respect.
SECTION 3.6 SEC Filings;
Financial Statements .
(a) The
Company has timely filed all forms, reports, registration
statements, schedules and other documents required to be filed by
it with the SEC since January 1, 2003. Section 3.6(a) of the
Company Disclosure Schedule lists and, except to the extent
available in full without redaction on the SEC’s web site
through the Electronic Data Gathering, Analysis and Retrieval
System ( “EDGAR” ) two Business Days
prior to the date of this Agreement, the Company has delivered to
Parent copies in the form filed with the SEC (including the full
text of any document filed subject to a request for confidential
treatment) of the following: (i) the Company’s Annual Reports
on Form 10-K for each fiscal year of the Company beginning on or
after January 1, 2003, (ii) the Company’s Quarterly Reports
on Form 10-Q for each of the three fiscal quarters in each of the
fiscal years of the Company referred to in clause (i), (iii) all
proxy and information statements relating to the Company’s
meetings of stockholders (whether annual or special) held, and all
information statements relating to stockholder consents, since the
beginning of the fiscal year referred to in clause (i), (iv) the
Company’s Current Reports on Form 8-K filed since the
beginning of the first fiscal year referred to in clause (i), (v)
all other forms, reports, registration statements and other
documents filed by the Company with the SEC since the beginning of
the first fiscal year in clause (i), (the forms, reports,
registration statements and other documents referred to in clauses
(i), (ii), (iii), (iv) and (v) above, whether or not available
through EDGAR, are, collectively, the “Company SEC
Reports,” and, to the extent available in full
without redaction through EDGAR at least two Business Days prior to
the date of this Agreement, the “Filed Company SEC
Reports” ), (vi) all certifications and statements
required by Rules 13a-14 and 15d-14 under the Exchange Act and
Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 (
“Sarbanes-Oxley” ), and the rules and
regulations promulgated thereunder, with respect to any report
referred to in clause (i) or (ii) (collectively, the
“Certifications” ), and (vii) all comment
letters received by the Company from the Staff of the SEC since the
beginning of the fiscal year referred to in clause (i) and all
responses to such comment letters by or on behalf of the Company.
To the Company’s knowledge, except as disclosed in the
Company SEC Reports, each director and officer (as defined in Rule
16a-1(f) of the Exchange Act) of the Company has filed with the SEC
on a timely basis all statements required by Section 16(a) of the
Exchange Act and the rules and regulations thereunder since January
1, 2003. No Subsidiary of the Company is, or since the beginning of
the first fiscal year referred to in clause (i) of the second
sentence of this Section 3.6(a) has been, required to file
any form, report, registration statement or other document with the
SEC. As used in this Section 3.6 , the term
“file” or “filed” shall be broadly
construed to include any manner in which a document or information
is furnished, transmitted or otherwise made available to the SEC.
Each of the Company SEC Reports (i) complied in all material
respects, as of their respective dates of filing with the
SEC,
with the requirements of the
Securities Act, and the Exchange Act, as the case may be, and, to
the extent then applicable, Sarbanes-Oxley, including in each case,
the rules and regulations promulgated thereunder, and (ii) did
not at the time they were filed and do not, as amended and
supplemented, if applicable, 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; provided , however , that prior to
January 1, 2007 the Company has been a “non-accelerated
filer” pursuant to SEC regulations and, as such, prior to
such date both it and its officers have been exempt from certain
disclosure and certification requirements in this regard, as
permitted by the SEC.
(b) Except
as set forth in Section 3.6(b) of the Company
Disclosure Schedule, the consolidated financial statements
contained in the Company SEC Reports (i) complied in all material
respects, as of their respective dates of filing with the SEC, and
the Company SEC Reports filed with the SEC after the date of this
Agreement will comply as of their respective dates of filing with
the SEC, in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC
with respect thereto (including Regulation S-X and SEC Staff
Accounting Bulletins), (ii) have been, and the Company SEC Reports
filed after the date of this Agreement will be, prepared in
accordance with GAAP (except, in the case of unaudited consolidated
quarterly statements, as permitted by Form 10-Q under the Exchange
Act and except as may be indicated in the notes thereto, in each
case to the extent not materially different to the notes to the
financial statements included in the Company SEC Reports since the
Company’s most recent Annual Report on Form 10-K) and (iii)
fairly present, and the financial statements contained in the
Company SEC Reports filed after the date of this Agreement will
fairly present, in all material respects, the consolidated
financial position of the Company and its Subsidiaries as of the
respective dates thereof and the consolidated statements of
operations, cash flows and changes in stockholders’ equity of
the Company for the periods indicated, except in the case of
unaudited quarterly financial statements that were or are subject
to normal and recurring non-material year-end
adjustments.
(c) Except
as set forth in Section 3.6 (c) of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries has any
material liabilities or obligations of any nature whatsoever
(whether accrued, absolute, contingent, known, unknown or
otherwise), except for (i) liabilities or obligations incurred
since September 30, 2006 in the Ordinary Course of Business,
(ii) obligations under operating leases, and (iii) liabilities
that, individually or in the aggregate, are immaterial to the
financial condition or operating results of the Company and its
Subsidiaries, taken as a whole.
(d) Set
forth in Section 3.6(d) of the Company Disclosure Schedule
is a list of the Company’s Off-Balance Sheet Arrangements. As
used herein, “Off-Balance Sheet
Arrangements” means with respect to any Person, any
securitization transaction to which that Person or its Subsidiaries
is a party and any other transaction, agreement or other
contractual arrangement to which an entity unconsolidated with that
Person is a party, under which that Person or its Subsidiaries,
whether or not a party to the arrangement, has, or in the future
may have, (i) any obligation under a direct or indirect guarantee
or similar arrangement; (ii) a retained or contingent interest in
assets transferred to an unconsolidated entity or similar
arrangement; (iii) derivatives to the extent that the fair value
thereof is not fully reflected as a liability or asset in the
financial statements included in the Company’s Form 10-Q for
the period ended
September 30, 2006 (the
“Interim Financial Statements” ); or (iv)
any obligation or liability, including a contingent obligation or
liability, to the extent that it is not fully reflected in the
Interim Financial Statements.
(e)
Section 3.6(e) of the Company Disclosure Schedule contains a
description of all non-audit services performed by the
Company’s auditors for the Company and its Subsidiaries since
the beginning of the immediately preceding fiscal year of the
Company and the fees paid for such services. All such non-audit
services have been approved as required by Section 10A of the
Exchange Act.
(f) The
Company is, and since January 1, 2003 has been, in compliance with
(i) the applicable listing and corporate governance rules and
regulations of the NASDAQ Stock Market, Inc., and (ii) the
applicable provisions of Sarbanes-Oxley and the related rules and
regulations promulgated thereunder. The Certifications complied
with Rules 13a-14 and 15d-14 under the Exchange Act and Sections
302 and 906 of Sarbanes-Oxley, and the rules and regulations
promulgated thereunder, and the statements contained in the
Certifications were true and correct as of the date of the filing
thereof; provided , however , that prior to January
1, 2007 the Company has been a “non-accelerated filer”
pursuant to SEC regulations and, as such, prior to such date time
both it and its officers have been exempt from certain disclosure
and certification requirements in this regard, as permitted by the
SEC. The management of the Company has (i) implemented and
maintains disclosure controls and procedures (as defined in
Rules 13a-15(e) and 15d-15(e) of the Exchange Act) designed to
ensure (and such controls and procedures are effective to ensure)
that material information relating to the Company and its
Subsidiaries is accumulated and communicated to the management of
the Company, including its chief executive officer and chief
financial officer, as appropriate, by others within those entities
to allow timely decisions regarding required disclosure and
(ii) disclosed, based on its most recent evaluation, to the
Company’s outside auditors and the audit committee of the
Company Board (A) all significant deficiencies and material
weaknesses in the design or operation of internal controls (as
defined in Rule 13a-15(f) of the Exchange Act) that are
reasonably likely to materially affect the Company’s ability
to record, process, summarize and report financial data and
(B) any fraud, whether or not material, that involves
management or other Employees who, in each case, have a significant
role in the Company’s internal controls.
(g) The
Company and its Subsidiaries have implemented and maintain a system
of internal control over financial reporting (as defined in Rules
13a-15(f) and 15d-15(f) under the Exchange Act) sufficient to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with GAAP, including, without limitation,
that (i) transactions are executed in accordance with
management’s general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of
financial statements in conformity with GAAP and to maintain asset
accountability, (iii) access to assets is permitted only in
accordance with management’s general or specific
authorization, and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any
differences.
(h) Since
January 1, 2003, neither the Company nor any of its Subsidiaries
or, to the knowledge of the Company, any director, officer,
Employee, auditor, accountant or
representative of the Company or any
of its Subsidiaries has received or has otherwise had or obtained
knowledge of any complaint, allegation, assertion or claim, whether
written or oral, regarding any material non-compliance in the
accounting or auditing practices, procedures, principles or methods
of the Company or any of its Subsidiaries or their internal control
over financial reporting.
SECTION 3.7 Absence of Certain
Changes or Events . From December 31, 2005 to the date hereof,
except as set forth in Section 3.7 of the Company
Disclosure Schedule, the Company and its Subsidiaries have
conducted their respective businesses in all material respects in
the Ordinary Course of Business and there has not been:
(a) any
material loss, damage or destruction to, or any material
interruption in the use of, any of the assets of the Company or any
of its Subsidiaries (whether or not covered by insurance) that
constitutes a Company Material Adverse Effect;
(b) (i)
any declaration, accrual, set aside or payment of any dividend or
any other distribution in respect of any shares of capital stock of
the Company or any of its Subsidiaries, or (ii) any repurchase,
redemption or other acquisition by the Company or any of its
Subsidiaries of any shares of capital stock or other
securities;
(c) any
sale, issuance or grant, or authorization of the issuance of, (i)
any capital stock or other security of the Company or any of its
Subsidiaries (except for Company Common Stock issued upon the valid
exercise of Options or upon the maturity of Restricted Stock Units
granted under any of the Stock Plans), (ii) any option, warrant or
right to acquire any capital stock or any other security of the
Company or any of its Subsidiaries (except for Options and
Restricted Stock Units described in Section 3.2 ), or (iii)
any instrument convertible into or exchangeable for any capital
stock or other security of the Company or any of its Subsidiaries
(except for Options and Restricted Stock Units described in
Section 3.2 );
(d) any
amendment or waiver of any of the rights of the Company or any of
its Subsidiaries under, or acceleration of vesting under, (i) any
provision of any of the Stock Plans, (ii) any provision of any
contract evidencing any outstanding Option, or (iii) any Restricted
Stock Unit agreement;
(e) any
amendment to any organizational document of any of the Company or
any of its Subsidiaries, any merger, consolidation, share exchange,
business combination, recapitalization, reclassification of shares,
stock split, reverse stock split or similar transaction involving
the Company or any of its Subsidiaries;
(f) any
creation of any Subsidiary of the Company or any of its
Subsidiaries or acquisition by the Company or any of its
Subsidiaries of any equity interest or other interest in any other
Person;
(g) any
capital expenditure by the Company or any of its Subsidiaries
which, when added to all other capital expenditures made on behalf
of the Company or any of its Subsidiaries since the date of the
Interim Financial Statements, exceeds $250,000 in the
aggregate;
(h) any
action by the Company or any of its Subsidiaries to (i) enter into,
or suffer any of the assets owned or used by it to become bound by,
any Company Material Contract (as defined in Section 3.16(a)
), or (ii) amend or terminate, or waive any material right or
remedy under, any Company Material Contract;
(i) any
(i) acquisition, lease or license by the Company or any of its
Subsidiaries of any material right or other material asset from any
other Person, (ii) sale or other disposal or lease or license by
the Company or any of its Subsidiaries of any material right or
other material asset to any other Person, or (iii) waiver or
relinquishment by the Company or any of its Subsidiaries of any
right, except for rights or other assets acquired, leased, licensed
or disposed of in the Ordinary Course of Business;
(j) any
write-off as uncollectible, or establishment of any extraordinary
reserve with respect to, any account receivable or other
indebtedness of the Company or any of its Subsidiaries;
(k) any
pledge of any assets of or sufferance of any of the assets of the
Company or any of its Subsidiaries to become subject to any
Lien;
(l) any
(i) loan by the Company or any of its Subsidiaries to any Person,
or (ii) incurrence or guarantee by the Company or any of its
Subsidiaries of any indebtedness for borrowed money;
(m) any
(i) adoption, establishment, entry into or amendment by the Company
or any of its Subsidiaries of any Employee Plan or (ii) payment of
any bonus or any profit sharing or similar payment to, or material
increase in the amount of the wages, salary, commissions, fringe
benefits or other compensation or remuneration payable to, any of
the directors, officers or Employees of the Company or any of its
Subsidiaries;
(n) any
change of the methods of accounting or accounting practices of the
Company or any of its Subsidiaries in any material
respect;
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(o)
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any material Tax election by the
Company or any of its Subsidiaries;
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(p) any
commencement or settlement of any legal proceeding by the Company
or any of its Subsidiaries; or
(q) any
agreement or commitment to take any of the actions referred to in
clauses (a) through (p) above.
SECTION 3.8 Inventory .
Except as set forth in Section 3.8 of the Company Disclosure
Schedule, (i) the Inventory is in the physical possession of the
Company or its Subsidiaries and (ii) none of the Inventory has been
pledged as collateral or otherwise is subject to any Lien (other
than Permitted Liens) or is held on consignment from others. The
Inventory has been, determined and valued on a first in - first out
basis (but not in excess of net realizable value), in accordance
with GAAP applied on a basis consistent with the consolidated
financial statements contained in the Company SEC Reports. The
Inventory was acquired or produced by the Company in the Ordinary
Course of Business. Except as reflected in the reserve for
obsolete
inventory reflected in the Interim
Financial Statements, the Inventory is good and merchantable and is
of a quality and quantity presently useable and salable by the
Company or its Subsidiaries in the Ordinary Course of
Business.
SECTION 3.9 Litigation .
Except as disclosed in Section 3.9 of the Company
Disclosure Schedule, there are no Proceedings pending (including
matters which are on appeal or have not been fully funded, and
administrative matters that may be closed but with respect to which
the applicable statute of limitations has not run) or, to the
knowledge of the Company, threatened against the Company or any of
its Subsidiaries or any of their respective properties or rights of
the Company or any of its Subsidiaries or any of their respective
officers, directors, Employees or agents, in their capacity as
such, at law or in equity, before any Governmental Entity,
including Proceedings alleging violations of the provisions of any
Company Material Contract or any Law, nor have any acts of alleged
misconduct by the Company or any of its Subsidiaries been reported
to the Company. Except as disclosed in Section 3.9 of
the Company Disclosure Schedule, neither the Company nor any of its
Subsidiaries nor any of their respective properties is subject to
any order, judgment, injunction or decree material to the conduct
of the businesses of the Company or its Subsidiaries. The Company
has furnished Parent with copies of all attorney responses to the
request of the independent auditors for the Company with respect to
loss contingencies in connection with the Company’s financial
statements for the previous three fiscal years.
SECTION 3.10 Employee Benefit
Plans .
(a)
Section 3.10(a) of the Company Disclosure Schedule sets
forth a list of all employee benefit plans (as defined in
Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ( “ERISA” )), whether or
not subject to ERISA and all other employment, compensation,
consulting, bonus, stock option, restricted stock grant, stock
purchase, other cash or stock-based incentive, profit sharing,
savings, retirement, disability, insurance, severance, retention,
change in control, deferred compensation and other compensatory
plans, policies, programs, agreements or arrangements sponsored,
maintained, contributed to or required to be contributed to, or
entered into or made by the Company or any other entity, whether or
not incorporated, that together with the Company would be deemed a
“single employer” for purposes of Section 414 of
the Code or Section 4001 of ERISA (an “ERISA
Affiliate” ) with or for the benefit of, or relating
to, any current or former Employee, director or other independent
contractor of, or consultant to, the Company or any of its
Subsidiaries and with respect to which the Company or any
Subsidiary has or may have any direct or indirect liability
(together, the “Employee Plans”
).
(b) The
Company has provided Parent and Merger Sub true and complete copies
of (i) all Employee Plans, together with all amendments thereto,
(ii) the latest Internal Revenue Service determination letters
obtained with respect to any Employee Plan intended to be qualified
under Section 401(a) or 501(a) of the Code, (iii) the two most
recent annual actuarial valuation reports, if any, (iv) the
two most recently filed Forms 5500 together with all related
schedules, if any, (v) the “summary plan
description” (as defined in ERISA), if any, and all
modifications thereto communicated to Employees, (vi) any
trust or other funding governing documents for vehicles maintained
as part of any Employee Plan, and (vii) the two most recent
annual and periodic accountings of related plan assets.
(c) Neither
the Company or any of its Subsidiaries nor any of their respective
directors, officers, Employees or agents has, with respect to any
Employee Plan, engaged in or been a party to any “prohibited
transaction” (as defined in Section 4975 of the Code or
Section 406 of ERISA), which could result in the imposition of
either a penalty assessed pursuant to Section 502(i) of ERISA or a
tax imposed by Section 4975 of the Code, in each case
applicable directly or indirectly (through an indemnification
obligation or otherwise) to the Company or any of its Subsidiaries
or any Employee Plan.
(d) All
Employee Plans have been administered in accordance with their
terms and in compliance in all material respects with the
requirements, including, but not limited to, ERISA and the Code. No
compensation paid or required to be paid under any Employee Plan is
or will be subject to additional tax under Section 409A(1)(B) of
the Code. All equity compensation awards issued by the Company have
been made, accounted for, reported and disclosed in accordance with
Law, accounting rules and stock exchange requirements.
(e) There
are no pending or, to the knowledge of the Company, threatened
claims, arbitrations, regulatory or other proceedings (other than
routine claims for benefits), relating to any of the Employee
Plans, or the assets of any trust for any Employee Plan.
(f) Each
Employee Plan intended to qualify under Section 401(a) of the Code,
and the trusts created thereunder intended to be exempt from tax
under the provisions of Section 501(a) of the Code has received a
favorable determination or opinion letter from the Internal Revenue
Service which is currently in effect. To the knowledge of the
Company, nothing has occurred since the date of the determination
letter that would adversely effect the qualification or tax exempt
status of such Plan and its related trust.
(g) All
contributions or payments required to be made before the Effective
Time under the terms of any Employee Plan will have been made by
the Effective Time. All contributions that are not yet due on or
before the Effective Time either have been made in accordance with
the Company’s past practice and custom or have been accrued
in accordance with GAAP.
(h) Neither
the Company nor any of its Subsidiaries or any of its or their
ERISA Affiliates contributes, nor within the six-year period ending
on the date hereof has any of them contributed or been obligated to
contribute, to any plan, program or agreement which is a
“multiemployer plan” (as defined in Section 3(37)
of ERISA) or which is subject to Section 412 of the Code or
Section 302 or Title IV of ERISA.
(i) No
Employee Plan provides medical, surgical, hospitalization, death or
similar benefits (whether or not insured) for current or former
Employees, directors, consultants or other personnel of the Company
or any of its Subsidiaries for periods extending beyond their
retirement or other termination of service, other than group health
plan continuation coverage mandated by Law.
(j) No
condition exists that would prevent the Company or any of its
Subsidiaries from amending or terminating any Employee Plan
providing health or medical benefits in respect of any active
Employee.
(k) Except
as set forth in Section 3.10(k) of the Company
Disclosure Schedule, the consummation of the Contemplated
Transactions will not, either alone or in combination with any
other event, (i) entitle any current or former Employee,
director or officer of the Company or any of its Subsidiaries to
severance pay or any other payment or benefit, (ii) accelerate the
time of payment or vesting, or increase the amount of compensation
due any such Employee, director or officer or (iii) require
the Company to place in trust or otherwise set aside any amounts in
respect of severance pay or any other payment or
benefit.
(l) Except
as set forth in Section 3.10(l) of the Company
Disclosure Schedule, there are no agreements between the Company
and any director, officer or employee pursuant to which the Company
would be required to make a “parachute payment” (within
the meaning of Section 280G(b)(2) of the Code) as a result of
the consummation of the Contemplated Transactions (whether alone or
in combination with a termination of employment or other event). No
payments required to be made after the date hereof, whether as a
result of the consummation of the Contemplated Transactions or
otherwise, will be non-deductible by reason of Section 162(m) of
the Code.
SECTION 3.11 Conduct of Business;
Permits; Compliance with Law . Section 3.11 of the
Company Disclosure Schedule contains a complete and accurate list
of all permits, licenses, approvals, certifications and
authorizations from any Governmental Entity (collectively,
“Permits” ) obtained or possessed by the
Company or its Subsidiaries, the date each Permit was last granted
to the Seller and the current term of each Permit. Except as
disclosed in Section 3.11 of the Company Disclosure
Schedule, the business of the Company and each of its Subsidiaries
is not being, and for the past five years has not been, conducted
(i) in default or violation of any term, condition or
provision of the Certificate of Incorporation or By-Laws of the
Company or the comparable charter documents or by-laws of any of
its Subsidiaries, (ii) to the Company’s knowledge, in
default or violation of (X) any Company Material Contract or
(Y) any Law, including rules, regulations, codes, plans,
agreements, contracts, injunctions, orders, rulings and charges
thereunder, applicable to the Company or any of its Subsidiaries or
their respective businesses and material to the business of the
Company and its Subsidiaries, taken as a whole. The Permits are in
full force and effect and sufficient for all business presently
conducted by the Company and its Subsidiaries, except as would not,
individually or in the aggregate, have a Company Material Adverse
Effect. Except as set forth in Section 3.11 of the
Company Disclosure Schedule, no event has occurred or circumstance
exists that (with or without notice or lapse of time or both) (A)
may constitute or result in a material violation by the Company or
any of its Subsidiaries of, or a substantial failure on the part of
the Company or any of its Subsidiaries to comply with, any Law, or
(B) may give rise to any obligation on the part of the Company or
any of its Subsidiaries to undertake, or to bear all or any portion
of the cost of, any substantial remedial action of any nature.
Neither the Company nor any of its Subsidiaries has received any
claim or notice (whether written or oral) (i) from any Governmental
Entity of any actual, alleged, possible or potential violation of,
or failure to comply with, any Law, (ii) from any Governmental
Entity of any actual, alleged, possible or potential obligation on
the part of the Company or any of its Subsidiaries to undertake, or
bear all or any portion of the cost of, any remedial action of any
nature, or (iii) that the Company or any of its Subsidiaries is not
in compliance with, nor, is the Company or any Subsidiary of the
Company not in compliance with, the terms of any such Permits or
any requirements, standards and procedures of the Governmental
Entity which issued them, or any limitation or proposed limitation
on any Permit,
except where the failure to be in
compliance would not have a Company Material Adverse Effect. The
Permits currently held by the Company and its Subsidiaries
constitute all of the Permits that the Company and its Subsidiaries
are required to own, hold and possess and that are necessary to
conduct the business presently conducted by the Company and its
Subsidiaries. Except as set forth in Section 3.11 of
the Company Disclosure Schedule or as would not, individually or in
the aggregate, have a Company Material Adverse Effect, none of the
Permits will lapse, terminate or otherwise cease to be valid as a
result of the consummation of the transactions contemplated
hereby.
SECTION 3.12 Taxes . Except
as set forth in Section 3.12 of the Company Disclosure
Schedule:
(a) each
of the Company and its Subsidiaries has duly and timely filed all
Tax Returns required to be filed by it (taking into account
extensions), and all such Tax Returns are true, correct and
complete in all material respects and were prepared in substantial
compliance with all Law;
(b) each
of the Company and its Subsidiaries has timely paid all material
Taxes required to be paid by it (whether or not shown due on any
Tax Return);
(c) each
of the Company and its Subsidiaries has made adequate provision in
the consolidated financial statements contained in the Company SEC
Reports discussed in Section 3.6(b) for all unpaid
Taxes of the Company and its Subsidiaries;
(d) each
of the Company and its Subsidiaries has complied with all Law
relating to the payment and withholding of Taxes and has, within
the time and manner prescribed by Law, withheld and paid over to
the proper tax authorities all amounts required to be withheld and
paid over by it;
(e) no
pending or to the Company’s knowledge threatened audit,
proceeding, examination or litigation or similar claim has been
commenced or is presently pending with respect to any Taxes or Tax
Return of the Company or any of its Subsidiaries;
(f) no
written claim has been made by any tax authority in a jurisdiction
where any of the Company or its Subsidiaries does not file a Tax
Return that the Company or any of its Subsidiaries is or may be
subject to taxation in that jurisdiction;
(g) no
outstanding written agreements, consents or waivers to extend the
statutory period of limitations applicable to the assessment of any
Taxes or deficiencies against the Company or any of its
Subsidiaries, and no power of attorney granted by either the
Company or any of its Subsidiaries with respect to any Taxes is
currently in force;
(h) neither
the Company nor any of its Subsidiaries is a party to any agreement
providing for the allocation or sharing of any Taxes imposed on or
with respect to any Person, and neither the Company nor any of its
Subsidiaries (A) has been a member of an affiliated group (or
similar state, local or foreign filing group) filing a consolidated
U.S. federal income Tax Return (other than the group the common
parent of which is the Company) or (B) has any liability for
the Taxes of any person (other than the Company or any of
its
Subsidiaries) under Treasury
Regulations Section 1.1502-6 (or any similar provision of
state, local or foreign Law), or as a transferee or
successor;
(i) the
federal income Tax Returns of the Company and its Subsidiaries have
been examined by and settled with the Internal Revenue Service (or
the applicable statutes of limitation have lapsed) for all years
through December 31, 2002. All assessments for Taxes due with
respect to such completed and settled examinations or any concluded
litigation have been fully paid;
(j) neither
the Company nor any of its Subsidiaries has participated in a
“reportable transaction” within the meaning of Treasury
Regulations Section 1.6011-4(b);
(k) there
are no Liens for Taxes upon the assets or properties of the Company
or any of its Subsidiaries, except for Liens which arise by
operation of law with respect to current Taxes not yet due and
payable;
(l) the
Company has previously delivered or made available to Parent or
Merger Sub complete and accurate copies of each of (i) all
federal Tax Returns of the Company and each of its Subsidiaries for
the prior five tax years; (ii) all state and local Tax Returns of
the Company and each of its Subsidiaries for the prior three tax
years; (iii) all audit reports, letter rulings, technical advice
memoranda and similar documents issued by any tax authority
relating to the United States Federal, state, local or foreign
Taxes due from or with respect to the Company and its Subsidiaries
and (iv) any closing agreements entered into by any of the
Company and its Subsidiaries with any tax authority in each case
existing on the date hereof;
(m) neither
the Company nor any of its Subsidiaries is or has been a United
States real property holding corporation (as defined in
Section 897(c)(2) of the Code) during the applicable period
specified in Section 897(c)(1)(A)(ii) of the Code;
(n) the
Company has not been required to include in income any adjustment
pursuant to Section 481 of the Code by reason of a voluntary change
in accounting method initiated by the Company, and the IRS has not
initiated or proposed any such adjustment or change in accounting
method;
(o) the
Company has not been a “distributing corporation” or a
“controlled corporation” in a distribution intended to
qualify under Section 355 of the Code within the past five
years;
(p) the
Company does not have any deferred gain or loss from a deferred
intercompany transaction within the meaning of Treasury Regulation
Section 1.1502-13 (or any similar provision under state, local or
foreign law) or an excess loss account with respect to any stock of
a Subsidiary within the meaning of Treasury Regulation Section
1.1502-19 (or any similar provision of state, local or foreign
law);
(q) the
Company has disclosed on all relevant Tax Returns any positions
taken therein that could give rise to a substantial understatement
of Taxes within the meaning of Section 6662 of the Code;
(r) neither
the Company nor any of its Subsidiaries is a party to any
agreement, contract, arrangement or plan that has resulted or could
result in the payment of any amount that will not be fully
deductible as a result of Section 162(m) of the Code (or any
corresponding provision of state, local or foreign law);
and
(s) the
Company is not a party to any agreement that would require it to
make any payment that would constitute an “excess parachute
payment” for purposes of Sections 280G and 4999 of the
Code.
SECTION 3.13 Environmental
Matters .
(a) Except
as would not, individually or in the aggregate, have a Company
Material Adverse Effect: (i) the Company and each of its
Subsidiaries is and for the past five years has been in compliance
with all applicable Environmental Laws; and (ii) neither the
Company nor any of its Subsidiaries has received any written
communication, whether from a Governmental Entity, citizens group,
Employee or otherwise, alleging that the Company or any of its
Subsidiaries is not in such compliance, and (iii) to the knowledge
of the Company, there are no past or present actions, activities,
circumstances, conditions, events or incidents that are reasonably
likely to prevent or interfere with such compliance in the
future.
(b) Except
as set forth in Section 3.13(b) of the Company
Disclosure Schedule or as would not, individually or in the
aggregate, have a Company Material Adverse Effect, there is no
Environmental Claim pending or, to the knowledge of the Company,
threatened, against the Company or any of its Subsidiaries or, to
the knowledge of the Company, against any Person whose liability
for any Environmental Claim the Company or any of its Subsidiaries
has or may have retained or assumed either contractually or by
operation of law.
(c) Except
as would not, individually or in the aggregate, have a Company
Material Adverse Effect, there are no past or present actions,
activities, circumstances, conditions, events or incidents,
including, without limitation, the Release or presence of any
Hazardous Material which could form the basis of any Environmental
Claim against the Company or any of its Subsidiaries, or to the
knowledge of the Company, against any Person whose liability for
any Environmental Claim the Company has or may have retained or
assumed either contractually or by operation of law.
(d) The
Company has made available to Parent and Merger Sub true, complete
and correct copies and results of any reports, studies, analyses,
tests or monitoring possessed by the Company or any of its
Subsidiaries that are in the possession of the Company or any of
its Subsidiaries pertaining to Hazardous Materials in, on, beneath
or adjacent to any property currently or formerly owned, operated,
occupied or leased by the Company or any of its Subsidiaries, or
regarding the Company’s or any of its Subsidiaries’
compliance with applicable Environmental Laws.
SECTION 3.14 Real Property; Title
to Assets; Liens .
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(a)
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Leased Real
Property .
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(i) Set
forth in Section 3.14(a) of the Company Disclosure
Schedule is a list of all Leased Real Property. Each of the leases
relating to Leased Real Property creates a valid and subsisting
leasehold interest in favor of the Company or one of its
Subsidiaries, as the case may be, is a valid, binding and
subsisting obligation of the Company or one of its Subsidiaries
and, to the knowledge of the Company, each other party thereto,
enforceable against the Company or one of its Subsidiaries and, to
the knowledge of the Company, each other party thereto in
accordance with its terms, except as such enforcement may be
limited by the Enforceability Limitations;
(ii) except
as would not, individually or in the aggregate, have a Company
Material Adverse Effect, there are no disputes with respect to any
Real Property Lease; and neither the Company nor any other party to
each Real Property Lease is in breach or default under such Real
Property Lease, and no event has occurred or failed to occur and no
circumstance exists which, with the delivery of notice, the passage
of time or both, would constitute such a breach or default, or
permit the termination, modification or acceleration of rent under
any Real Property Lease;
(iii) except
as disclosed in Section 3.14(a)(iii) of the Company
Disclosure Schedule or as would not, individually or in the
aggregate, have a Company Material Adverse Effect, no consent by
the landlord or any other party under the Real Property Leases is
required in connection with the consummation of the transaction
contemplated herein; and
(iv) none
of the Leased Real Property has been pledged or assigned by the
Company or any of its Subsidiaries or is subject to any Liens
(other than pursuant to this Agreement or Permitted
Liens).
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(b)
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Owned Real Property
.
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(i)
Section 3.14(b) of the Company Disclosure Schedule sets
forth a true, correct and complete list and description of all real
property owned by either the Company or any of its Subsidiaries (
“Owned Real Property” ). Except as
specified in Section 3.14(b) of the Company Disclosure
Schedule, the Company or one of its Subsidiaries has good and
marketable fee simple title to the Owned Real Property, free and
clear of any Liens, other than Permitted Liens;
(ii) neither
the Company nor, to the Company’s knowledge, any other Person
has granted any rights, options or rights of first refusal,
conditional sales or any other agreements of any kind, which are
currently in effect, to purchase or otherwise acquire the Owned
Real Property or any portion thereof or interest therein, except
the rights granted to Parent and Merger Sub pursuant to this
Agreement; and
(iii) the
Owned Real Property is zoned for a classification that permits the
continued use thereof in the manner currently used by the Company
and its Subsidiaries, as applicable.
(c)
Personal Property . Except as would not, individually or in
the aggregate, have a Company Material Adverse Effect, (i) each of
the Company and its Subsidiaries has good and marketable fee title
to, or, in the case of leased assets, has good and valid leasehold
interests in, all of its other tangible and intangible assets, used
or held for use in, or which are necessary to conduct, the
respective business of the Company and its Subsidiaries as
currently conducted, free and clear of any Liens, except Permitted
Liens and (ii) such assets, taken as a whole, are in reasonable
working order and adequate for their intended use, ordinary wear
and tear and normal repairs and replacements excepted.
SECTION 3.15 Intellectual
Property . All Trademark registrations, Trademark applications,
and any other material Trademarks (including domain names) are
identified in Section 3.15 of the Company Disclosure
Schedule, and such Trademarks are valid and enforceable and have
not been abandoned. All Copyright registrations, Copyright
applications, and any other material Copyrights or Software (other
than contracts, agreements, licenses or arrangements granting
rights to use readily available commercial Software having an
acquisition price of less than $25,000 per contract, agreements,
license or arrangement) are identified in Section 3.15 of
the Company Disclosure Schedule, and such Copyrights are valid and
enforceable. All issued Patents and pending applications for
Patents are identified in Section 3.15 of the Company
Disclosure Schedule. Section 3.15 of the Company Disclosure
Schedule identifies the owner(s) of such Trademarks, Copyrights and
Patents. Except as disclosed in Section 3.15 of the
Company Disclosure Schedule: (i) the Company or its
Subsidiaries are the sole and exclusive owner of all right, title
and interest in or have valid and enforceable rights to use, by
license or other agreements, all of the Intellectual Property
Rights that are currently used in the conduct of the business of
the Company and its Subsidiaries, except where the failure to own
or possess such Intellectual Property Rights would not,
individually or in the aggregate, have a Company Material Adverse
Effect; (ii) no Proceeding has commenced, been brought or
heard by or before any Governmental Entity or arbitrator or is
pending or to the Company’s knowledge is or has been
threatened in written or oral communication by any third Person
with respect to any Intellectual Property Rights owned or used by
the Company or its Subsidiaries in connection with the business of
the Company and its Subsidiaries as currently conducted, including
any claim or suit that alleges that any such conduct or
Intellectual Property Right infringes, impairs, misappropriates,
dilutes or otherwise violates the rights of others, and the Company
or its Subsidiaries are not the subject of any outstanding
injunction, judgment, order, decree, ruling, charge, settlement, or
other dispute involving any third Person’s Intellectual
Property Rights; (iii) none of the Company or its Subsidiaries
is aware of, or has threatened or initiated, any claim or action or
Proceeding against any third Person with respect to any
Intellectual Property Rights, except for those claims or actions
that would not, individually or in the aggregate, have a Company
Material Adverse Effect; (iv) the conduct of the business
of the Company and its Subsidiaries does not conflict with or
infringe any Intellectual Property Rights of any third Person
except those that would not, individually or in the aggregate, have
a Company Material Adverse Effect; (v) there is no unauthorized
use, unauthorized disclosure, infringement, misappropriation or
other violation by another Person of any Intellectual Property
owned by the Company or its Subsidiaries which would, individually
or in the aggregate, have a Company Material Adverse Effect; (vi)
the Company or its Subsidiaries have secured valid written
assignments from all Persons (including, without limitation,
consultant and Employees) who contributed to the creation or
development of Intellectual Property Rights created or developed
for use by the Company or its Subsidiaries that the Company or its
Subsidiaries do not
already own by operation of law; and
(vii) the Company or its Subsidiaries have taken all reasonable
steps to protect and preserve the confidentiality and integrity of
all trade secrets, know-how, source codes, databases, confidential
and proprietary information, and similar Intellectual Property
Rights owned or used in the conduct of the business of the Company
or its Subsidiaries and all use, disclosure or appropriation
thereof by or to any third Person has been pursuant to the terms of
a written agreement between such third Person and the Company or
its Subsidiaries.
SECTION 3.16 Material
Contracts .
(a)
Section 3.16 of the Company Disclosure Schedule sets
forth a list of all Company Material Contracts.
“Company Material Contracts” means all
written or oral agreements or arrangements to which the Company or
any of its Subsidiaries is a party to or bound by and that
constitute:
(i) any
“material contract” (as defined in Item 601(b)
(10) of Regulation S-K of the SEC);
(ii) any
contract or agreement for the purchase of materials or personal
property from any supplier or for the furnishing of services to the
Company or any of its Subsidiaries that involves aggregate annual
payments by the Company or any of its Subsidiaries of $50,000 or
more;
(iii) any
contract or agreement for the sale, license or lease (as lessor) by
the Company or any of its Subsidiaries of services, materials,
products, supplies or other assets, owned or leased by the Company
or any of its Subsidiaries;
(iv) any
non-competition agreement, profit-sharing agreement or any other
agreement or obligation which purports to restrict the conduct of
any businesses by the Company or any of its affiliates, or the
ability of the Company to operate in any geographic
area;
(v) any
contract or plans, including any employment, compensation,
non-competition, non-solicitation, incentive, retirement, loan,
change of control or severance arrangements, with any current or
former stockholder, director, officer or Employee of the Company or
any Subsidiary of the Company;
(vi) any
agreement, joint venture, product development, research and
development or limited partnership agreements or arrangements
involving a sharing of profits, losses, costs or liabilities by the
Company or any Subsidiary of the Company with any other
Person;
(vii) mortgages,
indentures, loan or credit agreements, security agreements and
other agreements and instruments relating to the borrowing or
guarantee of money or extension of credit in any case in excess of
$50,000;
(viii) any
standby letter of credit, performance or payment bond, guarantee
arrangement or surety bond of any nature involving amounts in
excess of $50,000;
(ix) other
contracts not in the Ordinary Course of Business involving annual
payments made to or by the Company in excess of $50,000;
(x) any
contract for the sale of any of the assets of the Company or any
Subsidiary (whether by merger, sale of stock, sale of assets or
otherwise) or for the grant to any Person of any preferential
rights to purchase any of its assets (whether by merger, sale of
stock, sale of assets or otherwise), in each case, for
consideration in excess of $50,000 individually, or $100,000 in the
aggregate;
(xi) any
contract relating to the ownership, management or control of any
Person in which the Company or a Subsidiary owns any equity
interest other than direct and indirect wholly owned Subsidiaries
of the Company or another Subsidiary of the Company;
(xii) any
contract pursuant to which the Contemplated Transactions would
amend or modify such contract, or would trigger the payment of
revenues or fees to the counterparty of such contract;
(xiii) any
contract (A) relating to the acquisition, issuance, voting,
registration, sale or transfer of any securities, (B) providing any
Person with any preemptive right, right of participation, right of
maintenance or any similar right with respect to any securities, or
(C) providing the Company or any of its Subsidiaries with any right
of first refusal with respect to, or right to repurchase or redeem,
any securities, except for contracts evidencing Company
options;
(xiv) any
contract imposing any confidentiality obligation on the Company or
any of its Subsidiaries or containing “standstill” or
similar provisions;
(xv) (A)
to which any Governmental Entity is a party or under which any
Governmental Entity has a right or obligation, or (B) directly or
indirectly benefiting any Governmental Entity (including any
subcontract or other contract between the Company or any of its
Subsidiaries and any contractor or subcontractor to any
Governmental Entity);
(xvi) requiring
that the Company or any of its Subsidiaries give any notice or
provide any information to any Person prior to considering or upon
accepting any Company Acquisition Proposal or similar proposal, or
prior to entering into any discussions, agreement, arrangement or
understanding relating to any Company Acquisition Proposal or
similar transaction;
(xvii) any
contract, agreement or arrangement to allocate, share or otherwise
indemnify for Taxes; or
(xviii) any
contract, agreement, license or arrangement (i) granting or
obtaining any right to use any Intellectual Property Rights (other
than contracts, agreements, licenses or arrangements granting
rights to use readily available commercial Software having an
acquisition price of less than $50,000 per contract, agreements,
license or arrangement); (ii) restricting the Company’s
right, or permitting third Persons to use, any material
Intellectual Property Rights; or (iii) setting forth the terms of
co-existence pertaining to any Intellectual Property
Rights.
(b) (i)
Each Company Material Contract is legal, valid and binding on the
Company or one of its Subsidiaries and, to the knowledge of the
Company, each other party thereto, and is in full force and effect,
(ii) the Company or one of its Subsidiaries, as applicable,
and, to the knowledge of the Company, each other party thereto, has
performed all material obligations required to be performed by it
to date under each Company Material Contract, except where such
failure to perform would not result in a Company Material Adverse
Effect; and (iii) neither the Company nor any of its
Subsidiaries, as applicable, nor, to the knowledge of the Company,
any other party thereto, has violated or defaulted in any material
respect or terminated, nor has the Company or any of its
Subsidiaries, as applicable, nor, to the knowledge of the Company,
any other party thereto, given or received notice of, any material
violation or default or any termination under (nor, to the
knowledge of the Company, does there exist any condition which with
the passage of time or the giving of notice or both would result in
such a violation, default or termination under) any Company
Material Contract. The Company has provided, or made available, to
Parent and Merger Sub true and correct copies of each of the
Company Material Contracts.
SECTION 3.17 Insurance .
Section 3.17 of the Company Disclosure Schedule sets
forth a list and description of each insurance policy that covers
the Company and its Subsidiaries (including self-insurance),
specifying as to each policy (i) the carrier, (ii) policy number,
(iii) coverage limits and deductibles, (iv) expiration date, (v)
annual premiums, (vi) type of coverage provided, (vii) policy
exclusions and (viii) whether such policy is claims or occurrence
based. All such policies are in full force and effect, all premiums
due thereon have been paid and the Company and its Subsidiaries
have complied with the provisions of such policies. Neither the
Company nor any of its Subsidiaries has been advised of any defense
to coverage in connection with any claim to coverage asserted or
noticed by the Company or its Subsidiaries under or in connection
with any of their extant insurance policies. Neither the Company
nor any of its Subsidiaries has received any written notice from or
on behalf of any insurance carrier issuing policies or binders
relating to or covering either the Company or any of its
Subsidiaries that there will be a cancellation or non-renewal of
existing policies or binders, or that alteration of any equipment
or any improvements to real estate occupied by or leased to or by
the Company or any of its Subsidiaries, purchase of additional
equipment or material modification of any of the methods of doing
business, will be required. Such insurance policies provide full
and adequate coverage for all normal risks incident to the
Company.
SECTION 3.18 Collective
Bargaining; Labor Disputes; Compliance . None of the Company or
its Subsidiaries has been, or is now, a party to any collective
bargaining agreement or other labor contract and (a) to the
knowledge of the Company there is no unionization or organizational
activity relating to the Employees, or affecting, the Company; and
(b) to the knowledge of the Company no strike, slowdown,
picketing, work stoppage, work slowdown or Employee grievance
process involving the Company or any of its Subsidiaries is or has
been threatened. No application or petition for an election of or
for certification of a collective bargaining agent is pending and
no grievance, unfair labor practice charge or arbitration
proceeding exists. There is no lockout of any Employees by the
Company or its Subsidiaries, and no such action is contemplated by
the Company or any of its Subsidiaries. Except as set forth in
Section 3.18 of the Company Disclosure Schedule, there
has been no charge of discrimination filed or, to the
Company’s knowledge, threatened against the Company or any of
its Subsidiaries with any Governmental Entity. The Company is in
material compliance with all
Law respecting employment,
including, but not limited to, gender, race, disability, national
origin or age discrimination, child labor, equal pay, the
Occupational Safety and Health Act of 1970, as amended, the Family
and Medical Leave Act of 1993, as amended, the Immigration and
Nationality Act, the Worker Adjustment and Retraining Notification
Act of 1988 and other federal and state Law regarding wages and
hours.
SECTION 3.19 Transactions with
Affiliates . Section 3.19 of the Company Disclosure
Schedule lists all transactions, agreements, arrangements or
understandings between the Company or any of its Subsidiaries, on
the one hand, and the Company’s affiliates (other than
wholly-owned subsidiaries of the Company) or other Persons, on the
other hand (an “Affiliate Transaction” ).
Any Affiliate Transaction at the time it was entered into and as of
the time of any amendment or renewal thereof contained such terms,
provisions and conditions as were at least as favorable to the
Company or any of its Subsidiaries as would have been obtainable by
the Company or any of its Subsidiaries in a similar transaction
with an unaffiliated third party.
SECTION 3.20 Product
Warranties .
(a)
Section 3.20(a) of the Company Disclosure Schedule contains
a form of each product warranty relating to products produced or
sold by the Company or its Subsidiaries or services performed by
the Company and its Subsidiaries at any time during the five year
period preceding the date of this Agreement.
(b)
Section 3.20(b) of the Company Disclosure Schedule sets
forth a true and complete list of (i) all products designed,
manufactured, marketed or sold by the Company or its Subsidiaries
that have been recalled or withdrawn (whether voluntarily or
otherwise) at any time during the past five (for purposes of this
Section 3.20(b) , a product shall have been recalled or
withdrawn if all or a substantial number of products in a product
line were recalled or withdrawn) and (ii) Proceedings (or to the
knowledge of the Company, any investigation) by any Governmental
Entity (whether completed or pending) at any time during the past
five years seeking the recall, withdrawal, suspension or seizure of
any product sold by the Company or its Subsidiaries.
(c) Except
as set forth in Section 3.20(c) of the Company Disclosure
Schedule, to the knowledge of the Company, (i) no material defect
exists in any design, materials, manufacture or otherwise in any
products designed, manufactured, marketed or sold by the Company or
its Subsidiaries during the past five years and (ii) no defect in,
or replacement of, any such products exists which could give rise
to any material claim.
(d) Except
for sensors, which are warrantied for life, and except as set forth
in Section 3.20(d) of the Company Disclosure Schedule,
neither the Company nor any of its Subsidiaries has sold any
products which are subject to an extended warranty of the Company
or its Subsidiaries beyond 24 months and which warranty has not yet
expired.
(e) Each
of the products designed, manufactured, marketed or sold by the
Company or its Subsidiaries has been designed and manufactured to
meet and comply with all Law and governmental standards and
specifications currently in effect. To the knowledge of the
Company, there are no statements, citations or decisions by any
Governmental Entity or any
product testing laboratory stating that any such
product is unsafe or fails to meet any standards, whether mandatory
or voluntary, promulgated by such Governmental Entity or testing
laboratory, as the case may be. To the knowledge of the Company,
there has been no pattern of defects in the design, construction,
manufacture, assembly or installation of any product designed,
manufactured, marketed or sold by the Company or its Subsidiaries
nor any fact relating to any such product that may impose a duty on
the Company or its Subsidiaries to recall any product or warn any
customer of a defect in any product.
SECTION 3.21 Brokers . No
broker, finder or investment banker is entitled to any brokerage,
finder’s or other fee or commission in connection with the
Contemplated Transactions based upon arrangements made by or on
behalf of the Company.
SECTION 3.22 Board Action .
The Company Board, at a meeting duly called and held, at which all
of the directors were present, duly and unanimously:
(i) approved and adopted this Agreement and the transactions
contemplated hereby, including the Merger; (ii) resolved to
recommend that this Agreement and the transactions contemplated
hereby, including the Merger, be submitted for consideration by the
Company’s stockholders at the meeting of the Company’s
stockholders to consider and vote upon the Merger Agreement (the
“Company Stockholders’ Meeting” );
(iii) resolved to recommend that the stockholders of the
Company approve this Agreement and the transactions contemplated
hereby, including the Merger; and (iv) determined that this
Agreement and the transactions contemplated hereby, including the
Merger, are fair to and in the best interests of the stockholders
of the Company.
SECTION 3.23 Opinion of Financial
Advisor . The Company Board has received the written opinion
(or oral opinion to be confirmed in writing) of A.G. Edwards &
Sons, Inc., dated January 11, 2007, to the effect that, as of such
date, the Merger Consideration to be received by holders of Company
Common Stock is fair, from a financial point of view, to such
holders. A copy of that opinion has been delivered to
Parent.
SECTION 3.24 Control Share
Acquisition . No restrictive provision of any “fair
price,” “moratorium,” “control share
acquisition,” “business combination,”
“stockholder protection,” “interested
stockholder” or other similar anti-takeover statute or
regulation (each, a “Takeover Statute” )
or any restrictive provision of the Certificate of Incorporation or
By-Laws of the Company or any of its Subsidiaries is, or at the
Effective Time will be, applicable to the Company, its
Subsidiaries, Parent, Merger Sub, Company Common Stock, the Merger
or any other of the Contemplated Transactions.
SECTION 3.25 Vote Required .
The affirmative vote of the holders of a majority of the
outstanding shares of Company Common Stock is the only vote of the
Company’s stockholders necessary (under Law or otherwise), to
approve this Agreement (the “Company Stockholder
Approval” ).
SECTION 3.26 Full Disclosure
. This Agreement (including the Company Disclosure Schedule) does
not, and the certificate referred to in Section 6.3(b) will
not, (a) contain any representation, warranty or information that
is false or misleading with respect to any material fact, or (b)
omit to state any material fact necessary in order to make the
representations,
warranties and information contained
and to be contained herein and therein (in the light of the
circumstances under which such representations, warranties and
information were or will be made or provided) not false or
misleading.
•
COVENANTS AND
AGREEMENTS
SECTION 4.1 Conduct of Business
by the Company Pending the Merger . The Company covenants and
agrees on behalf of itself and its Subsidiaries that, between the
date of this Agreement and the Effective Time, except as
contemplated by this Agreement or as required by Law, or unless
Parent and Merger Sub shall otherwise consent in writing (which
consent shall not be unreasonably withheld or delayed), the
businesses of the Company and its Subsidiaries shall be conducted
only in, and the Company shall not, and the Company shall not
permit any of its Subsidiaries to, take any action except in the
Ordinary Course of Business; and the Company will use its
commercially reasonable efforts to preserve substantially intact
the business organization of the Company and its Subsidiaries, to
keep available the services of the present officers, Employees and
consultants of the Company and its Subsidiaries, to preserve the
present relationships of the Company and its Subsidiaries with
customers, clients, suppliers and other Persons with which the
Company and its Subsidiaries have significant business relations
and pay all applicable federal and material state, local and
foreign Taxes when due and payable (other than those Taxes the
payment of which the Company or one of its Subsidiaries challenges
in good faith in appropriate proceedings), to operate the business
of the Company and its Subsidiaries in compliance with all Law, and
to maintain in full force and effect all Permits necessary for the
conduct of the business of the Company and its Subsidiaries as
currently conducted. Notwithstanding the foregoing, except as set
forth in Section 4.1 of the Company Disclosure
Schedule, the Company shall not, and shall not permit any of its
Subsidiaries, without the prior written consent of Parent and
Merger Sub (which consent shall not be unreasonably withheld or
delayed), to:
(a) amend
or propose to amend (i) its Certificate of Incorporation or
By-Laws or comparable organizational documents or (ii) any
term of any outstanding security issued by the Company or any of
its Subsidiaries or effect or become a party to any merger,
consolidation, share exchange, business combination,
recapitalization or similar transaction;
(b) (i)
declare, set aside or pay any dividend or other distribution
payable in cash, stock or property with respect to its capital
stock or other equity or voting interests (other than dividends
paid by wholly-owned Subsidiaries of the Company to the Company or
another wholly-owned Subsidiary of the Company), (ii) redeem,
purchase or otherwise acquire, directly or indirectly, any of its
capital stock or other equity or voting interests, (iii) issue,
sell, pledge, dispose of or encumber any (A) shares of its
capital stock or other equity or voting interests, (B) securities
convertible into or exchangeable for, or Options, warrants, calls,
commitments or rights of any kind to acquire or receive, any shares
of its capital stock, interests, securities or any stock
appreciation rights, phantom stock awards or other rights that are
linked in any way to the price of the Company Common Stock or
(C) Restricted Stock Units or other securities of the Company
or any of its Subsidiaries, other than shares of Company Common
Stock issued upon the exercise of Options outstanding on the date
hereof in accordance with the Stock Plans as in effect on the date
hereof or (iv) split, combine or reclassify any of its
outstanding capital stock or
issue or authorize or propose the
issuance of any of other securities in respect of, in lieu of or in
substitution for, shares of its capital stock or other equity or
voting interests;
(c) incur
any aggregate capital expenditures, or any obligations or
liabilities in connection therewith, or acquire or agree to acquire
(i) by merging or consolidating with, or by purchasing a
substantial portion of the equity interests of, or by any other
manner, any business or any corporation, partnership, joint
venture, association or other business organization or division
thereof or (ii) any assets, except purchases of supplies in an
aggregate amount not to exceed the amount set forth in the
Company’s capital expenditure budget for 2007 as delivered to
Parent, multiplied by a fraction, (A) the numerator of which is the
number of calendar days in the period commencing January 1, 2007
and ending on the Closing Date and (B) the denominator of which is
365;
(d) amend,
enter into, alter, modify or terminate any Company Material
Contract, or waive, release or assign any material rights or claims
thereunder;
(e) enter
into, amend or otherwise alter any lease or sublease of real
property (whether as a lessor, lessee or sublessee) or change,
terminate or fail to exercise any right to renew any lease or
sublease of real property;
(f) transfer,
lease, license, sell, mortgage, pledge, dispose of, encumber or
subject to any Lien any property or assets or cease to operate any
assets, other than (A) Inventory in the Ordinary Course of
Business; (B) obsolete equipment and property no longer used in the
business of the Company or its Subsidiaries and (C) assets which do
not have a value of more than $10,000 individually or $50,000 in
the aggregate;
(g) except
as required to comply with Law and except as described in
Section 4.1(g) of the Company Disclosure Schedules,
(i) adopt, enter into, terminate, amend, or increase the
amount or accelerate the payment or vesting of any benefit or award
or amount payable under, any Employee Plan or other arrangement for
the current or future benefit or welfare of any current or former
director, officer or Employee, other than to the extent necessary
to avoid adverse tax consequences under Section 409A of the
Code and the proposed regulations and guidance thereunder,
(ii) increase or enhance in any manner the compensation or
fringe benefits of, or pay any bonus to, any director, officer or
Employee, (iii) pay any benefit not provided for under any
Employee Plan as in effect on the date hereof, (iv) grant any
awards under any bonus, incentive, performance or other
compensation plan or arrangement or Employee Plan; (v) grant or
award to any director, officer or Employee of stock options,
restricted stock, stock appreciation rights, stock based or stock
related awards, performance units, units of phantom stock or
restricted stock, or any removal of existing restrictions in any
Employee Plan or agreements or awards made thereunder; or
(vi) take any action to fund or in any other way secure the
payment of compensation or benefits under any Employee plan,
agreement, contract or arrangement or Employee Plan;
(h) except
for borrowing under the Company’s Credit Agreement in an
amount not exceeding $1,000,000 in the aggregate,
(i) repurchase, prepay, incur or assume any material
indebtedness, (ii) modify any material indebtedness or other
liability in a manner that adversely affects the Company, (iii)
assume, guarantee, endorse or otherwise become liable or
responsible (whether directly,
contingently or otherwise) for the obligations of any other Person,
or (iv) make any loans, advances or capital contributions to,
or investments in, any other Person (other than customary travel
advances to Employees in compliance with Law and in accordance with
past practice in an amount not to exceed $20,000 in the
aggregate);
(i) change
any accounting policies or procedures (including procedures with
respect to reserves, revenue recognition, payments of accounts
payable and collection of accounts receivable) used by it unless
required by Law or GAAP;
(j) make
any material Tax election or material change in any Tax election,
amend any Tax Returns or enter into any settlement or compromise of
any Tax liability of the Company or its Subsidiaries in an amount
in excess of $25,000;
(k) except
for the payment of any deductible under an existing insurance
policy, (i) pay, discharge, satisfy, settle or compromise
(including by judgment or consent decree) any claim, litigation or
any legal proceeding (including claims, litigation and legal
proceedings of stockholders and any stockholder litigation relating
to this Agreement, the Merger or any other of the Contemplated
Transactions or otherwise), except for any settlement or compromise
involving less than $25,000, but subject to an aggregate maximum of
$100,000, including all fees, costs and expenses associated
therewith but excluding from such amounts any contribution from any
insurance company or other parties to the litigation; (ii) waive,
release, grant or transfer any right of material value; or (iii)
commence any material legal proceeding;
(l) enter
into any material agreement or arrangement with any of its
officers, directors, Employees or any affiliate;
(m) except
as required by Law, adopt or enter into any collective bargaining
agreement or other labor union contract applicable to the
Employees;
(n) take
any action (or omit to take any action) if such action (or
omission) would, or would be reasonably likely to result in (i) any
representation and warranty of the Company set forth in this
Agreement that is qualified by materiality becoming untrue (as so
qualified) or (ii) any such representation and warranty that is not
so qualified becoming untrue in any material respect;
(o) enter
into any agreement, arrangement or contract to allocate, share or
otherwise indemnify for Taxes; or
(p) authorize
any of, or commit, resolve or agree to take any of, the foregoing
actions.
SECTION 4.2 No Solicitation
.
(a) The
Company shall not, and shall not authorize or permit any of its
Subsidiaries to, nor shall it authorize any officer, director,
Employee, investment banker, attorney, accountant or other advisor
or agent of the Company or any of its Subsidiaries, directly or
indirectly, to (i) solicit, initiate or otherwise knowingly
encourage any Company Acquisition Proposal, (ii) provide any
non-public information or data to any Person relating to or
in
connection with or in response to a
Company Acquisition Proposal or an inquiry or indication of
interest that could reasonably be expected to lead to a Company
Acquisition Proposal, engage in any discussions or negotiations
concerning a Company Acquisition Proposal, or otherwise take any
action knowingly to facilitate any effort or attempt to make or
implement a Company Acquisition Proposal, (iii) approve,
recommend, agree to or accept, or propose publicly to approve,
recommend, agree to or accept, any Company Acquisition Proposal, or
(iv) approve, recommend, agree to or accept, or propose to
approve, recommend, agree to or accept, or execute or enter into,
any letter of intent, agreement in principle, merger agreement,
acquisition agreement, option agreement or other similar agreement
related to any Company Acquisition Proposal. The Company agrees
that it will immediately cease and cause to be terminated any
existing activities, discussions or negotiations with any Persons
(other than Parent and its affiliates) conducted heretofore with
respect to any Company Acquisition Proposal.
(b) Nothing
contained in Section 4.2(a) shall prevent the Company
or the Company Board from, prior to the adoption of this Agreement
by the holders of Company Common Stock, engaging in any discussions
or negotiations with, or providing any information, including
non-public information, to, any Person, if and only to the extent
that (i) the Company receives from such Person a Company
Acquisition Proposal (which, at the time such information is
provided by the Company or the Company Board, has not been
withdrawn), which was not solicited in violation of
Section 4.2(a) ; (ii) the Company complies with
Section 4.2(d) ; (iii) at least two Business Days prior to
commencing discussions or providing any information or data to such
Person, the Company provides Parent with written notice advising
Parent that the Company Board has received a Company Acquisition
Proposal; (iv) following such two Business Days and prior to
commencing discussions or providing information to such Person, the
Company Board concludes in good faith (after taking into account
the advice of outside legal and financial advisors) that (A) the
failure to take such action would be inconsistent with its
fiduciary duties under Law, and (B) such a Company Acquisition
Proposal would reasonably be expected to lead to in a Company
Superior Proposal; (v) following such two Business Days and prior
to providing any non-public information or data to such Person, the
Company Board receives from such Person an executed confidentiality
agreement containing terms no less restrictive on such Person than
the terms contained in the Confidentiality Agreement at the time
the Company and Parent entered into such Confidentiality Agreement;
and (vi) the Company provides Parent with written notice advising
Parent that the Company Board has determined that such Company
Acquisition Proposal would reasonably be expected to lead to in a
Company Superior Proposal.
(c) Nothing
in this Agreement shall prohibit the Company from taking and
disclosing to its stockholders a position contemplated by
Rule 14e-2(a)-(b) promulgated under the Exchange Act or from
making any disclosure to the Company’s stockholders if the
Company Board (after taking into account the advice of outside
legal advisors), concludes that its failure to do so would be
inconsistent with its fiduciary duties to the Company’s
stockholders under Law.
(d) The
Company shall promptly (and in no event later than 24 hours after
receipt of any Company Acquisition Proposal, any inquiry or
indication of interest that could reasonably be expected to lead to
a Company Acquisition Proposal or any request for non-public
information relating to the Company or any of its Subsidiaries)
advise Parent in writing of any Company Acquisition Proposal, any
inquiry or indication of interest that could reasonably be expected
to lead to a Company Acquisition Proposal or any request for
non-public information
relating to the Company or any of
its Subsidiaries (including the identity of the Person making or
submitting such Company Acquisition Proposal, inquiry, indication
of interest or request, and the terms thereof) that is made or
submitted by any Person during the period prior to Closing. The
Company shall keep Parent fully informed with respect to the status
of any such Company Acquisition Proposal, inquiry, indication of
interest or request and any modification or proposed modification
thereto.
(e) The
Company agrees not to release or permit the release of any Person
from, or waive or permit the waiver of any provision of, any
confidentiality, “standstill” or similar agreement to
which the Company or any of its Subsidiaries is a party, and will
use its commercially reasonable efforts to enforce or cause to be
enforced each such agreement at the request of Parent. The Company
also will, promptly after signing this Agreement, request each
Person (other than Parent) that has executed, within 12 months
prior to the date of this Agreement, a confidentiality agreement in
connection with its consideration of any possible Company
Acquisition Proposal to return all confidential information
heretofore furnished to such Person by or on behalf of the Company
or any of its Subsidiaries.
•
ADDITIONAL
AGREEMENTS
SECTION 5.1 Proxy Statement
.
(a) In
connection with the Company Stockholders’ Meeting, the
Company will, (i) as promptly as reasonably practicable after
the date of this Agreement (but in any event within 10 Business
Days thereafter), prepare and file a proxy statement (together with
any amendments and supplements thereto, the “Proxy
Statement” ) with the SEC; provided , that the
Company will allow the Parent a reasonable opportunity (but in any
event not less than five Business Days) to review and comment upon
the Proxy Statement prior to any filing of the Proxy Statement with
the SEC, (ii) respond, as promptly as reasonably practicable,
to any comments received from the SEC with respect to such filing
and will provide copies of such comments to Parent promptly upon
receipt and provide copies of proposed responses to Parent, giving
Parent a reasonable opportunity (but in any event not less than two
Business Days) to review and comment upon such responses prior to
filing such responses with the SEC, (iii) as promptly as
reasonably practicable, prepare and file any amendments or
supplements necessary to be filed in response to any SEC comments
or as required by Law, giving Parent a reasonable opportunity (but
in any event not less than two Business Days) to review and comment
upon such amendments or supplements prior to filing such amendments
or supplements with the SEC, (iv) use its commercially
reasonable efforts to have the SEC confirm that it has no further
comments on the Proxy Statement and thereafter mail to its
stockholders, as promptly as reasonably practicable, the Proxy
Statement, (v) to the extent required by Law, as promptly as
reasonably practicable, prepare, file and distribute to the Company
stockholders any supplement or amendment to the Proxy Statement if
any event shall occur which requires such action at any time prior
to the Company Stockholders’ Meeting, and (vi) otherwise
use commercially reasonable efforts to comply with all requirements
of Law applicable to the Proxy Statement, the Company
Stockholders’ Meeting and the Merger. Parent and Merger Sub
shall review and comment upon the Proxy Statement as promptly as
reasonably practicable, and shall otherwise cooperate with the
Company in connection with the preparation of the Proxy
Statement,
including promptly furnishing the
Company upon request with any and all information as may be
required to be set forth in the Proxy Statement under Law. If at
any time prior to the Effective Time any information relating to
the Company, any of its Subsidiaries, Parent or Merger Sub, or any
of their respective affiliates, should be discovered by the Company
or Parent which should be set forth in an amendment or supplement
to the Proxy Statement, so that the Proxy Statement would not
include any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements made, in
light of the circumstances under which they were made, not
misleading, as applicable, the party which discovers such
information shall promptly notify the other parties hereto,
whereupon (i) the parties shall take all reasonable steps to file
with the SEC and have cleared by the SEC an appropriate amendment
or supplement describing such information and (ii) to the extent
required by Law, the Company shall promptly disseminate such
amendment or supplement to the Company’s
stockholders.
(b) None
of the information to be supplied by Merger Sub or Parent
specifically for inclusion or incorporation by reference in the
Proxy Statement will, on the date such document is filed and on the
date it is first published, sent or given to the holders of Company
Common Stock, and at the time of the Company Stockholders’
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 are made, not misleading. If, at any
time prior to the Company Stockholders’ Meeting, any event
with respect to either Merger Sub or Parent, or with respect to
information supplied by either Merger Sub or Parent specifically
for inclusion or incorporation by reference in the Proxy Statement
shall occur which is required to be described in an amendment of,
or supplement to, such Proxy Statement such event shall be so
described by either Merger Sub or Parent, as applicable, and
promptly provided to the Company. All documents that Merger Sub or
Parent is responsible for filing with the SEC in connection with
the transactions contemplated herein will comply as to form, in all
material respects, with the provisions of the Exchange Act and the
rules and regulations thereunder, and each such document required
to be filed with any Governmental Entity will comply in all
material respects with the provisions of Law as to the information
required to be contained therein. Notwithstanding the foregoing,
neither Merger Sub nor Parent makes any representation or warranty
with respect to the information supplied or to be supplied by or on
behalf of the Company for inclusion or incorporation by reference
in the Proxy Statement.
(c) None
of the information to be supplied by the Company specifically for
inclusion or incorporation by reference in the Proxy Statement
will, on the date on which each such document is first filed with
the SEC and on the date it is first mailed to the holders of the
Company Common Stock, and on the date of the Company
Stockholders’ 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 are made,
not misleading. If, at any time prior to the date of the Company
Stockholders’ Meeting, any event with respect to the Company
or any of its Subsidiaries, or with respect to information supplied
by or on behalf of the Compan
