<PAGE>
AGREEMENT AND PLAN OF MERGER
by and among:
INVERNESS MEDICAL INNOVATIONS, INC.,
a Delaware corporation;
INCA ACQUISITION, INC.,
a Delaware corporation; and
BIOSITE INCORPORATED,
a Delaware corporation
Dated as of May __, 2007
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TABLE OF CONTENTS
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PAGE
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SECTION 1. THE
OFFER.....................................................
2
1.1.
The
Offer.....................................................
2
1.2.
Actions of
Parent and Purchaser............................... 3
1.3.
Actions of
the Company........................................ 4
1.4.
Board of
Directors............................................ 5
1.5.
Actions by
Directors.......................................... 6
1.6.
Top-Up
Option.................................................
7
SECTION 2. THE MERGER; EFFECTIVE
TIME.................................... 8
2.1.
Merger of
the Purchaser into Company.......................... 8
2.2. Effect of the
Merger.......................................... 8
2.3.
Effective
Time................................................ 8
2.4.
Certificate of Incorporation and Bylaws; Officers and
Directors.....................................................
8
2.5.
Conversion
of Company Shares.................................. 9
2.6.
Closing of
the Company's Transfer Books....................... 9
2.7.
Payment
for Company Shares.................................... 10
2.8.
Appraisal
Rights.............................................. 11
2.9.
Further
Action................................................ 12
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE
COMPANY................. 12
3.1.
Due
Organization and Good Standing; Subsidiaries..............
12
3.2.
Authority;
Binding Nature of Agreement........................ 13
3.3.
Non-Contravention; Consents...................................
13
3.4.
Certificate of Incorporation; Bylaws..........................
14
3.5.
Capitalization................................................
14
3.6.
SEC
Filings; Financial Statements.............................
15
3.7.
Information Supplied..........................................
17
3.8.
Schedule
14D-9................................................ 17
3.9.
Internal
Controls; Sarbanes-Oxley Act......................... 18
3.10.
Absence of
Certain Changes.................................... 19
3.11.
Title to Assets;
Real Property................................ 19
3.12.
Intellectual
Property Rights.................................. 21
3.13.
Contracts.....................................................
24
3.14.
Compliance with
Legal Requirements............................ 27
3.15.
Foreign Corrupt
Practices and International Trade Sanctions... 27
3.16.
Governmental
Authorizations................................... 27
3.17.
Legal
Proceedings; Orders. As of the date of this Agreement:..
28
3.18.
Regulatory
Matters............................................ 28
3.19.
Product
Recalls............................................... 30
3.20.
Tax
Matters...................................................
31
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3.21.
Employee Benefit
Plans........................................ 33
3.22.
Labor
Matters.................................................
36
3.23.
Environmental
Matters......................................... 38
3.24.
Insurance.....................................................
39
3.25.
Transactions
with Affiliates.................................. 39
3.26.
Vote
Required.................................................
39
3.27.
Section 203 of
the DGCL; Company Rights Agreement............. 39
3.28.
Opinion of
Financial Advisor.................................. 40
3.29.
Brokers.......................................................
40
SECTION 4. REPRESENTATIONS AND WARRANTIES OF PARENT AND
PURCHASER........ 40
4.1.
Due
Organization..............................................
40
4.2.
Authority;
Binding Nature of Agreement........................ 40
4.3.
Non-Contravention; Consents...................................
41
4.4.
Not an Interested
Stockholder................................. 42
4.5.
Financing.....................................................
42
4.6.
Ownership
of Company Shares................................... 42
4.7.
Offer
Documents...............................................
42
4.8.
Information in Schedule 14D-9 and Proxy Statement.............
42
SECTION 5.
COVENANTS.....................................................
43
5.1.
Interim
Operations of the Company............................. 43
5.2.
No
Solicitation...............................................
48
5.3.
Board
Recommendation..........................................
50
5.4.
Meeting of
the Company's Stockholders......................... 52
5.5.
Filings;
Other Action......................................... 53
5.6.
Access........................................................
55
5.7.
Interim
Operations of Purchaser............................... 55
5.8.
Publicity.....................................................
55
5.9.
Stock
Options/ESPP............................................
56
5.10.
Other Employee
Benefits....................................... 57
5.11.
Indemnification;
Directors' and Officers' Insurance........... 59
5.12.
Section 16
Matters............................................ 60
5.13.
Rule
14d-10(d)................................................
60
5.14.
Cooperation
Regarding Transition of Business.................. 61
5.15.
Termination of
Certain Company Plans.......................... 61
5.16.
Financing.....................................................
61
5.17.
Tax
Matters...................................................
61
SECTION 6. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER....
63
6.1.
Stockholder Approval..........................................
63
6.2.
No
Injunctions; Laws..........................................
63
6.3.
Government
Consents........................................... 63
6.4.
Offers
Purchased..............................................
64
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SECTION 7.
TERMINATION...................................................
64
7.1.
Termination...................................................
64
7.2.
Effect of
Termination......................................... 66
7.3.
Termination Fee...............................................
66
SECTION 8. MISCELLANEOUS
PROVISIONS...................................... 67
8.1.
Amendment.....................................................
67
8.2.
Waiver........................................................
67
8.3.
No
Survival of Representations and Warranties.................
68
8.4.
Entire
Agreement; Counterparts................................
68
8.5.
Applicable
Law; Jurisdiction; Waiver of Jury Trial............ 68
8.6.
Payment of
Expenses........................................... 69
8.7.
Assignability; No Third Party Rights..........................
69
8.8.
Notices.......................................................
70
8.9.
Severability..................................................
71
8.10.
Obligation of
Parent.......................................... 71
8.11. Specific
Performance.......................................... 71
8.12.
Cumulative
Remedies........................................... 71
8.13.
Representation
by Counsel..................................... 71
8.14.
Construction..................................................
72
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Schedule A Products Under Development
Annex I
Offer Conditions
Exhibit A Certain
Definitions
Exhibit B Certificate
of Incorporation of Surviving Corporation
iii
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AGREEMENT AND PLAN OF MERGER
THIS
AGREEMENT AND PLAN OF MERGER ("Agreement") is made and entered into
as
of May __, 2007, by and among INVERNESS MEDICAL INNOVATIONS, INC.,
a Delaware
corporation ("Parent"); INCA ACQUISITION, INC., a Delaware
corporation and a
wholly-owned Subsidiary of Parent ("Purchaser"); and BIOSITE
INCORPORATED, a
Delaware corporation (the "Company"). Certain capitalized terms
used in this
Agreement are defined in Exhibit A.
RECITALS
WHEREAS, the board of directors of each of Parent, Purchaser and
the
Company has approved the acquisition of the Company by Parent on
the terms and
conditions set forth in this Agreement;
WHEREAS, on the terms and subject to the conditions set forth
herein,
Purchaser has agreed to commence a tender offer (the "Offer") to
purchase all
outstanding Company Shares, at a price of $92.50 per Company Share,
in cash
without interest (such price, or any higher price as may be paid in
the Offer in
accordance with this Agreement, the "Offer Price");
WHEREAS, contemporaneously with the execution and delivery of
this
Agreement, Parent and Purchaser have entered into
Non-competition,
Non-disclosure and Intellectual Property Assignment Agreements,
dated as of the
date hereof, with certain employees of the Company;
WHEREAS, following consummation of the Offer, on the terms and
subject to
the conditions set forth herein Purchaser shall merge with and into
the Company
(the "Merger") and each Company Share that is issued and
outstanding immediately
prior to the Effective Time (other than Company Shares held in the
treasury of
the Company or owned by Parent, Purchaser or any direct or indirect
wholly-owned
Subsidiary of Parent or the Company immediately prior to the
Effective Time,
which will be canceled with no consideration issued in exchange
therefor, and
other than Appraisal Shares) will be canceled and converted into
the right to
receive cash in an amount equal to the Offer Price (the "Merger
Consideration"),
all upon the terms and conditions set forth herein;
WHEREAS, the Company Board has, on the terms and subject to the
conditions
set forth herein, unanimously and duly adopted resolutions (i)
determining that
the transactions contemplated by this Agreement are advisable and
fair to, and
in the best interests of, the Company and its stockholders, (ii)
adopting and
approving this Agreement and the transactions contemplated hereby,
including the
Offer, the Merger and the "agreement of merger" (as such term is
used in Section
251 of the Delaware General Corporation Law (the "DGCL")), in
accordance with
the DGCL, (iii) directing that the "agreement of merger" (as such
term is used
in Section 251 of the DGCL) contained in this Agreement be
submitted to the
stockholders of the Company for adoption (unless the Merger is
consummated in
accordance with Section 253 of the DGCL as contemplated herein),
and (iv)
recommending that the Company's stockholders
<PAGE>
accept the Offer, tender their Company Shares to Purchaser pursuant
to the
Offer, and adopt the "agreement of merger" (as such term is used in
Section 251
of the DGCL) set forth in this Agreement;
WHEREAS, the board of directors of Parent and Purchaser have, on
the terms
and subject to the conditions set forth herein, unanimously
approved and
declared advisable this Agreement and the transactions contemplated
hereby,
including the Offer and the Merger, and Parent, in its capacity as
the sole
stockholder of Purchaser, has adopted the "agreement of merger" set
forth in
this Agreement, in each case, in accordance with the DGCL; and
NOW,
THEREFORE, in consideration of the foregoing and the mutual
covenants
and agreements herein contained, and intending to be legally bound
hereby,
Parent, Purchaser and the Company hereby agree as follows:
SECTION 1. THE OFFER
1.1.
THE OFFER
(A) Provided that this Agreement shall not have previously been
validly terminated in accordance with Section 7, as promptly as
practicable
after the date hereof, but in any event within ten business days
after the date
of this Agreement, Purchaser shall commence (within the meaning of
Rule 14d-2
under the Exchange Act) the Offer for all of the outstanding
Company Shares
(including any Company Shares subject to repurchase rights in favor
of the
Company) for consideration per Company Share consisting of the
Offer Price. (The
date on which Purchaser commences the Offer, within the meaning of
Rule 14d-2
under the Exchange Act, is referred to in this Agreement as the
"Offer
Commencement Date").
(B) As promptly as practicable on the later of: (i) the earliest
date
as of which Purchaser is permitted under applicable Legal
Requirements to accept
for payment Company Shares tendered pursuant to the Offer; and (ii)
the earliest
date as of which each of the conditions set forth in Annex I (the
"Offer
Conditions") shall have been satisfied or waived, Purchaser shall
(and Parent
shall cause Purchaser to) accept for payment all Company Shares
tendered
pursuant to the Offer (and not validly withdrawn). The obligation
of Purchaser
to accept for payment Company Shares tendered pursuant to the Offer
shall be
subject only to the satisfaction or waiver of each of the Offer
Conditions (and
shall not be subject to any other conditions). As promptly as
practicable after
the acceptance for payment of any Company Shares tendered pursuant
to the Offer,
Purchaser shall pay for such Company Shares.
(C) Notwithstanding anything to the contrary contained in this
Agreement, neither Parent nor Purchaser shall (without the prior
written consent
of the Company):
(i) change or waive the Minimum Condition (as defined in Annex
I);
2
<PAGE>
(ii) decrease the number of Company Shares sought to be
purchased
by
Purchaser in the Offer;
(iii) reduce the Offer Price;
(iv) extend or otherwise change the expiration date of the
Offer
(except to the extent required pursuant to Section 1.1(d));
(v) change the form of consideration payable in the Offer; or
amend, modify or supplement any of the Offer Conditions or terms of
the
Offer in a manner that adversely affects, or would reasonably be
expected
to
adversely affect, the holders of Company Shares.
(D) Unless extended as provided in this Agreement, the Offer
shall
expire on the date (the "Initial Expiration Date") that is 20
business days
(calculated as set forth in Rule 14d-1(g)(3) under the Exchange
Act) after the
Offer Commencement Date. Notwithstanding the foregoing, if, on the
Initial
Expiration Date or any subsequent date as of which the Offer is
scheduled to
expire, any Offer Condition is not satisfied and has not been
waived, then
Purchaser, without the consent of the Company, may extend (and
re-extend) the
Offer and its expiration date for one or more periods ending no
later than the
Outside Date, to permit such Offer Condition to be satisfied;
provided, however,
that no individual extension shall be for a period of more than 10
business days
without the prior written consent of the Company. The Offer may be
terminated
prior to its expiration date (as such expiration date may be
extended and
re-extended in accordance with this Agreement), but only if this
Agreement is
validly terminated in accordance with Section 7.
(E) Purchaser may, in its discretion, elect to provide for a
subsequent offering period (and one or more extensions thereof)
(and, if
immediately following the Acceptance Time (as defined in Section
1.4(a)),
Parent, Purchaser and their respective Subsidiaries and Affiliates
own more than
80% of the Company Shares outstanding at that time (which shares
beneficially
owned shall include shares tendered in the Offer and not
withdrawn), to the
extent requested by the Company, Purchaser shall provide for a
subsequent
offering period of at least 10 business days) in accordance with
Rule 14d-11
under the Exchange Act following the Acceptance Time.
(F) The Offer Price shall be adjusted to the extent appropriate
to
reflect the effect of any stock split, division or subdivision of
shares, stock
dividend, reverse stock split, consolidation of shares,
reclassification,
recapitalization or other similar transaction with respect to
Company Shares
occurring or having a record date on or after the date of this
Agreement and
prior to the payment by Purchaser for the Company Shares.
1.2.
ACTIONS OF PARENT AND PURCHASER.
(A) On the Offer Commencement Date Parent shall: (i) cause to be
filed
with the SEC a Tender Offer Statement on Schedule TO with respect
to the Offer,
which will contain Purchaser's offer to purchase and related letter
of
transmittal (the
3
<PAGE>
forms of which shall be reasonably acceptable to the Company) and
the related
form of summary advertisement (such Tender Offer Statement on
Schedule TO, all
exhibits, amendments and supplements thereto being referred to
collectively in
this Agreement as the "Offer Documents") and (ii) cause the Offer
Documents to
be disseminated to holders of Company Shares to the extent required
by
applicable Legal Requirements. Parent and Purchaser shall cause the
Offer
Documents to comply in all material respects with the applicable
requirements of
the Exchange Act and the rules and regulations thereunder. The
Company and its
counsel shall be given a reasonable opportunity to review and
comment on the
Offer Documents (including any amendment or supplement thereto)
prior to the
filing thereof with the SEC. Parent and Purchaser shall promptly
provide the
Company and its counsel with a copy or a description of any
comments received by
Parent or Purchaser (or by counsel to Parent or Purchaser) from the
SEC or its
staff with respect to the Offer Documents. Each of Parent and
Purchaser shall
respond as promptly as practicable to any comments of the SEC or
its staff with
respect to the Offer Documents or the Offer.
(B) To the extent required by the applicable requirements of
the
Exchange Act and the rules and regulations thereunder: (i) each of
Parent,
Purchaser and the Company shall correct promptly any information
provided by it
for use in the Offer Documents if such information shall have
become false or
misleading in any material respect; and (ii) each of Parent and
Purchaser shall
take all steps necessary to promptly cause the Offer Documents, as
supplemented
or amended to correct such information, to be filed with the SEC
and to be
disseminated to holders of Company Shares. The Company shall
promptly furnish to
Parent all information concerning the Company that may be
reasonably requested
by Parent in connection with any action contemplated by Section
1.2(a) or (b).
No representation is made by Parent or Purchaser with respect to
information
supplied by the Company for inclusion in the Offer Documents.
(C) Without limiting the generality of Section 8.10, Parent
shall
cause to be provided to Purchaser all of the funds necessary to
purchase any
Company Shares that Purchaser becomes obligated to purchase
pursuant to the
Offer, and shall cause Purchaser to perform, on a timely basis, all
of
Purchaser's obligations under this Agreement.
1.3.
ACTIONS OF THE COMPANY.
(A) The Company hereby approves of and consents to the Offer.
(B) On the Offer Commencement Date, the Company shall file with
the
SEC and (following or contemporaneously with the initial
dissemination of the
Offer Documents to holders of Company Shares to the extent required
by
applicable federal securities laws) disseminate to holders of
Company Shares a
Solicitation/Recommendation Statement on Schedule 14D-9 (together
with any
amendments or supplements thereto, the "Schedule 14D-9") that,
subject to
Section 5.3(c), shall contain the Company Recommendation. Except in
connection
with a Company Change in Recommendation made in accordance with
Section 5.3(c),
Parent and its counsel shall be given a reasonable opportunity to
review and
comment on the
4
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Schedule 14D-9 (including any amendment or supplement thereto)
prior to the
filing thereof with the SEC. The Company shall: (i) promptly
provide Parent and
its counsel with a copy of any written comments and a description
of any oral
comments received by the Company (or its counsel) from the SEC or
its staff with
respect to the Schedule 14D-9; (ii) except with respect to
disclosure made
relating to a Company Change in Recommendation in accordance with
Section
5.3(c), give Parent and its counsel a reasonable opportunity to
review and
comment on any response formulated in connection with such comments
prior to the
filing thereof with the SEC; and (iii) respond promptly to any such
comments. To
the extent required by the applicable requirements of the Exchange
Act and the
rules and regulations thereunder: (A) each of Parent, Purchaser and
the Company
shall promptly correct any information provided by it for use in
the Schedule
14D-9 if such information shall have become false or misleading in
any material
respect; and (B) the Company shall take all steps necessary to
cause the
Schedule 14D-9, as supplemented or amended to correct such
information, to be
filed with the SEC. Parent and Purchaser shall promptly furnish to
the Company
all information concerning Parent or Purchaser that may be
reasonably requested
in connection with any action contemplated by this Section 1.3(b).
To the extent
requested by the Company, Parent shall cause the Schedule 14D-9 to
be mailed or
otherwise disseminated to the Company's stockholders together with
the Offer
Documents disseminated to the Company's stockholders.
(C) In connection with the Offer, the Company shall instruct
its
transfer agent to furnish to Purchaser a list, as of the most
recent practicable
date, of the record holders of Company Shares and their addresses,
as well as
mailing labels containing such names and addresses. The Company
will furnish
Purchaser with such additional information (including any security
position
listings in the Company's possession or reasonably obtainable by
the Company)
and assistance as Purchaser may reasonably request for purposes of
communicating
the Offer to the record holders and beneficial holders of Company
Shares. All
information furnished in accordance with this Section 1.3(c) shall
be held in
confidence by Parent and Purchaser in accordance with the
requirements of the
letter agreement, dated April 11, 2007, between Parent and the
Company, (the
"Confidentiality Agreement"), and shall be used by Parent and
Purchaser only in
connection with the communication of the Offer and the
dissemination of any
proxy or information statement relating to the Merger to the
holders of Company
Shares.
1.4.
BOARD OF DIRECTORS.
(A) After the first time that Purchaser accepts for payment any
Company Shares tendered pursuant to the Offer (the "Acceptance
Time"), and at
all times thereafter, the Company will, upon Parent's request and
subject to
compliance with applicable Legal Requirements, take all actions
necessary to
cause persons designated by Parent to become directors of the
Company so that
the total number of such persons equals that number of directors,
rounded up to
the next whole number, determined by multiplying: (i) the total
number of
directors on the Company Board (after giving effect to the
directors elected or
designated by Parent in accordance with this Section 1.4(a)); by
(ii) the
percentage that the number of Company Shares beneficially owned by
Parent,
Purchaser or any of their respective Affiliates bears to the total
number of
Company
5
<PAGE>
Shares outstanding at the Acceptance Time (determined on a
fully-diluted basis
but disregarding any unvested stock options and other unvested
rights to acquire
Company Shares). The Company will take all actions necessary to
permit Parent's
designees to be elected to the Company Board in accordance with
this Section
1.4(a), including using reasonable efforts to secure the
resignation of
directors, promptly filling vacancies or newly created
directorships on the
Company Board, increasing the size of the Company Board, and/or
amending the
bylaws of the Company; provided, however, that prior to the
Effective Time, the
Company Board shall always have at least two Continuing Directors.
The Company
shall, upon Parent's request following the Acceptance Time, and at
all times
thereafter, also cause Persons designated by Parent to constitute
the same
percentage (rounded up to the next whole number) as is on the
Company Board of
(i) each committee of the Company Board, (ii) each board of
directors (or
similar body) of each Subsidiary of the Company and (iii) each
committee (or
similar body) of each such board, in each case to the extent
permitted by
applicable Legal Requirements and the Marketplace Rules of the
NASDAQ Global
Select Market. Upon the election or appointment of all of Parent's
designees to
the Company Board in accordance with this Section 1.4(a), the
Company shall take
all action necessary to elect to be treated as a "controlled
company" as defined
by NASDAQ Marketplace Rule 4350(c) and make all necessary filings
and
disclosures associated with such status. The provisions of this
Section 1.4(a)
are in addition to and shall not limit any rights that any of
Purchaser, Parent
or any of their respective affiliates may have as a record holder
or beneficial
owner of Company Shares as a matter of applicable Legal
Requirements with
respect to the election of directors or otherwise.
(B) The Company's obligation to cause Parent's designees to be
elected
or appointed to the Company Board shall be subject to Section 14(f)
of the
Exchange Act and Rule 14f-1 thereunder. The Company shall promptly
take all
actions, and shall include in the Schedule 14D-9 such information
with respect
to the Company and its officers and directors, as Section 14(f) of
the Exchange
Act and Rule 14f-1 thereunder require in order to fulfill its
obligations under
this Section 1.4, so long as Parent shall have provided to the
Company all
information with respect to Parent and its designees, officers,
directors and
Affiliates required by Section 14(f) of the Exchange Act and Rule
14f-1
thereunder. Parent shall promptly supply to the Company in writing,
and shall be
solely responsible for, all such information.
1.5.
ACTIONS BY DIRECTORS. Following the election or appointment of
Parent's designees to the Company Board pursuant to Section 1.4(a),
and until
the Effective Time, the approval of a majority of the Continuing
Directors shall
be required to authorize: (i) any amendment to or termination of
this Agreement
by the Company; (ii) any amendment to the Company's certificate
of
incorporation; (iii) any extension of time for the performance of
any of the
obligations or other acts of Parent or Purchaser; (iv) any waiver
of compliance
with any covenant of Parent or Purchaser or any condition to any
obligation of
the Company or any waiver of any right of the Company under this
Agreement; (v)
any Company Change in Recommendation; and (vi) any other consent or
action by
the Company Board with respect to this Agreement, the Offer or the
Merger. The
authorization of any such matter by a majority of the Continuing
Directors shall
constitute the authorization of such matter by the Company Board,
and no other
action on
6
<PAGE>
the part of the Company or any other director of the Company shall
be required
to authorize such matter.
1.6.
TOP-UP OPTION.
(A) The Company hereby
grants to Purchaser an irrevocable option (the
"Top-Up Option"), exercisable only upon the terms and subject to
the conditions
set forth herein, to purchase, at a price per share equal to the
Offer Price,
that number of Company Shares (the "Top-Up Option Shares") equal to
the lesser
of (x) the lowest number of Company Shares that, when added to the
number of
Company Shares owned by Parent, Purchaser and their respective
Subsidiaries and
Affiliates at the time of such exercise, shall constitute ten
thousand (10,000)
shares more than 90% of the Company Shares then outstanding (after
giving effect
to the issuance of the Top-Up Option Shares) and (y) an aggregate
number of
Company Shares that is equal to 19.9% of the Company Shares issued
and
outstanding as of the date hereof; provided, however, that the
Top-Up Option
shall not be exercisable unless, (i) immediately prior to such
exercise, Parent,
Purchaser and their respective Subsidiaries and Affiliates own more
than 80% of
the Company Shares then outstanding and (ii) immediately after such
exercise and
the issuance of Company Shares pursuant thereto, Parent, Purchaser
and their
respective Subsidiaries and Affiliates own more than 90% of the
Company Shares
then outstanding; and provided, further, that in no event shall the
Top-Up
Option be exercisable for a number of Company Shares in excess of
the Company's
total authorized and unissued Company Shares.
(B) Provided that no applicable Legal Requirement shall prohibit
the
exercise of the Top-Up Option or the issuance of the Top-Up Option
Shares
pursuant thereto, or otherwise make such exercise or issuance
illegal, Purchaser
may exercise and re-exercise the Top-Up Option multiple times, in
whole but not
in part, at any time or times after the Acceptance Time and prior
to the earlier
to occur of (i) the Effective Time and (ii) the termination of this
Agreement
pursuant to Section 7.
(C) Each time that Purchaser wishes to exercise the Top-Up
Option,
Purchaser shall send to the Company a written notice (a "Top-Up
Exercise
Notice") specifying the denominations of the certificate or
certificates
evidencing the Top-Up Option Shares which the Purchaser wishes to
receive, and
the place, time and date for the closing of the purchase and sale
pursuant to
the Top-Up Option (a "Top-Up Closing"). The Company shall, promptly
after
receipt of a Top-Up Exercise Notice, deliver a written notice to
the Purchaser
confirming the number of Top-Up Option Shares and the aggregate
purchase price
therefore. At each Top-Up Closing, Purchaser shall pay the Company
the aggregate
price required to be paid for the Top-Up Option Shares issuable at
such Top-Up
Closing, by delivery of, at Purchaser's option, (A) immediately
available funds
by wire transfer to an account designated by the Company, (B) a
promissory note,
bearing simple interest at 5% per annum, and due six months after
the Top-Up
Closing, or (C) any combination thereof. At each Top-Up Closing,
the Company
shall cause to be issued to Purchaser a certificate or certificates
representing
the Top-Up Option Shares issuable at such Top-Up Closing.
Certificates
representing Company Shares in
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connection with the Top-Up Option may include any legends that are
required by
federal or state securities laws.
SECTION 2. THE MERGER; EFFECTIVE TIME
2.1.
MERGER OF THE PURCHASER INTO COMPANY. Upon the terms and subject
to
the conditions set forth in this Agreement and in accordance with
the DGCL, at
the Effective Time (as defined in Section 2.3), Purchaser shall be
merged with
and into the Company, and the separate existence of Purchaser shall
cease. The
Company will continue as the surviving corporation in the Merger
(the "Surviving
Corporation").
2.2.
EFFECT OF THE MERGER. The Merger shall have the effects set forth
in
this Agreement and 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, immunities, powers and franchises
of the
Company and Purchaser shall vest in the Surviving Corporation and
all debts,
liabilities and duties of the Company and Purchaser shall become
the debts,
liabilities and duties of the Surviving Corporation.
2.3.
EFFECTIVE TIME. As soon as practicable after the satisfaction
or
waiver of the conditions set forth in Section 6, the parties hereto
shall cause
a properly executed certificate of merger conforming to the
requirements of the
DGCL (the "Certificate of Merger") to be filed with the Secretary
of State of
the State of Delaware. The Merger shall become effective at the
time the
Certificate of Merger is filed with the Secretary of State of the
State of
Delaware, or at such later time as is agreed to by the parties
hereto and
specified in the Certificate of Merger (the time at which the
Merger becomes
effective being referred to in this Agreement as the "Effective
Time"). At 10:00
a.m. (Pacific time) on the date on which the Certificate of Merger
is to be so
filed, a closing shall be held at the offices of Goodwin Procter
LLP, Exchange
Place, 53 State Street, Boston, Massachusetts 02109 (or such other
place or time
as Parent and the Company may jointly designate).
2.4.
CERTIFICATE OF INCORPORATION AND BYLAWS; OFFICERS AND
DIRECTORS.
Unless otherwise jointly determined by Parent and the Company prior
to the
Effective Time:
(A) the certificate of incorporation of the Surviving
Corporation
shall be amended and restated as of the Effective Time to conform
to Exhibit B;
(B) subject to Section 5.11(a), the bylaws of the Surviving
Corporation shall be amended and restated as of the Effective Time
to conform to
the bylaws of Purchaser as in effect immediately prior to the
Effective Time;
(C) the directors of the Surviving Corporation immediately after
the
Effective Time shall be the respective individuals who are
directors of
Purchaser immediately prior to the Effective Time; and
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(D) the officers of the Surviving Corporation immediately after
the
Effective Time shall be the respective individuals who are officers
of Purchaser
immediately prior to the Effective Time.
2.5.
CONVERSION OF COMPANY SHARES.
(A) Subject to Section 2.8, at the Effective Time, by virtue of
the
Merger and without any further action on the part of Parent,
Purchaser, the
Company or any stockholder of the Company:
(i) any Company Shares then held by the Company or any wholly
owned Subsidiary of the Company (or held in the Company's treasury)
shall
cease to exist, and no consideration shall be paid in exchange
therefor;
(ii) any Company Shares then held by Parent, Purchaser or any
other wholly owned Subsidiary of Parent shall cease to exist, and
no
consideration shall be paid in exchange therefor;
(iii) except as provided in clauses "(i)" and "(ii)" above,
each
Company Share then outstanding (including any outstanding Company
Shares
subject to any repurchase rights in favor of the Company, but
excluding any
Appraisal Shares), shall be converted into the right to receive the
Merger
Consideration, without interest; and
(iv) each share of common stock, par value $0.001 per share, of
Purchaser then outstanding shall be converted into one share of the
common
stock of the Surviving Corporation.
(B) The Merger Consideration shall be adjusted to the extent
appropriate to reflect the effect of any stock split, division or
subdivision of
shares, stock dividend, reverse stock split, consolidation of
shares,
reclassification, recapitalization or other similar transaction
with respect to
Company Shares occurring or having a record date on or after the
date of this
Agreement and prior to the Effective Time.
2.6.
CLOSING OF THE COMPANY'S TRANSFER BOOKS. At the Effective Time:
(a)
all Company Shares outstanding immediately prior to the Effective
Time shall
cease to exist as provided in Section 2.5 and all holders of
certificates
representing Company Shares that were outstanding immediately prior
to the
Effective Time shall cease to have any rights as stockholders of
the Company;
and (b) the stock transfer books of the Company shall be closed
with respect to
all Company Shares outstanding immediately prior to the Effective
Time. No
further transfer of any such Company Shares shall be made on such
stock transfer
books after the Effective Time. If, after the Effective Time, a
valid
certificate previously representing any of such Company Shares (a
"Company Stock
Certificate") is presented to the Payment Agent (as defined in
Section 2.7(a))
or to the Surviving Corporation or Parent, such Company Stock
Certificate shall
be canceled and shall be exchanged as provided in Section 2.7.
9
<PAGE>
2.7.
PAYMENT FOR COMPANY SHARES.
(A) Prior to the Acceptance Time (i) Parent shall select a bank
or
trust company (reasonably acceptable to the Company) to act as
payment agent
with respect to the payment of the Merger Consideration (the
"Payment Agent")
and (ii) Parent shall cause to be made available to the Payment
Agent cash
amounts sufficient to enable the Payment Agent to make payments
pursuant to
Section 2.5 to holders of Company Shares outstanding immediately
prior to the
Effective Time.
(B) Promptly after the Effective Time, Parent shall cause the
Payment
Agent to mail to each Person who was, immediately prior to the
Effective Time, a
holder of record of Company Shares described in Section 2.5(a)(iii)
a form of
letter of transmittal (reasonably acceptable to the Company) and
instructions
for use in effecting the surrender of Company Stock Certificates
representing
such Company Shares in exchange for payment therefor. Parent shall
ensure that,
upon surrender to the Payment Agent of each such Company Stock
Certificate,
together with a properly executed letter of transmittal, the holder
of such
Company Stock Certificate (or, under the circumstances described in
Section
2.7(e), the transferee of the Company Shares represented by such
Company Stock
Certificate) shall promptly receive in exchange therefor the
consideration to
which such holder (or transferee) is entitled pursuant to Section
2.5(a)(iii).
(C) On or after the first anniversary of the Effective Time, Parent
or
the Surviving Corporation shall be entitled to cause the Payment
Agent to
deliver to Parent or the Surviving Corporation any funds made
available by
Parent to the Payment Agent which have not been disbursed to
holders of Company
Stock Certificates, and thereafter such holders shall be entitled
to look only
to Parent and the Surviving Corporation with respect to the
consideration
payable and issuable upon surrender of their Company Stock
Certificates. Neither
the Payment Agent, Parent nor the Surviving Corporation shall be
liable to any
holder of a Company Stock Certificate for any amount properly paid
to a public
official pursuant to any applicable abandoned property or escheat
law. If any
Company Stock Certificates shall not have been surrendered before
the third
anniversary of the Effective Time (or immediately prior to such
earlier date on
which any Merger Consideration payable in respect of such Company
Stock
Certificates would otherwise escheat to or become the property of
any
Governmental Entity), any such Merger Consideration in respect
thereof shall, to
the extent permitted by applicable Legal Requirements, become the
property of
Parent, free and clear of all claims or interest of any Person
previously
entitled thereto.
(D) If any Company Stock Certificate shall have been lost, stolen
or
destroyed, then, upon the making of an affidavit of that fact by
the Person
claiming such Company Stock Certificate to be lost, stolen or
destroyed in a
form reasonably satisfactory to Parent (together with an indemnity
in form
reasonably satisfactory to Parent against any claim that may be
made against the
Payment Agent or Parent or otherwise with respect to such
certificate and, if
required by Parent, the posting by such Person of a bond in such
reasonable
amount as Parent may direct to support such indemnity), Parent
shall cause the
Payment Agent to pay in exchange for such lost, stolen
10
<PAGE>
or destroyed Company Stock Certificate the consideration payable
and issuable in
respect thereof pursuant to this Agreement.
(E) In the event of a transfer of ownership of Company Shares which
is
not registered in the transfer records of the Company, the
consideration may be
paid and issued with respect to such Company Shares to a transferee
of such
Company Shares if the Company Stock Certificate representing such
Company Shares
is presented to the Payment Agent, accompanied by all documents
reasonably
required by the Payment Agent to evidence and effect such transfer
and to
evidence that any applicable stock transfer taxes relating to such
transfer have
been paid.
(F) The Surviving Corporation or Parent shall bear and pay all
charges
and expenses, including those of the Payment Agent, incurred in
connection with
the exchange of the Company Shares.
(G) Parent, the Surviving Corporation and the Payment Agent shall
be
entitled to deduct and withhold from the consideration otherwise
payable
pursuant to the Offer, the Merger or this Agreement to any holder
of Company
Shares or Company Options that are to be cancelled and terminated
in exchange
for a cash payment pursuant to Section 5.9(b) hereof, such amounts
as Parent,
the Surviving Corporation or the Payment Agent are required to
deduct and
withhold under the Code, or any Legal Requirement, with respect to
the making of
such payment. To the extent that amounts are so withheld by Parent,
the
Surviving Corporation or the Payment Agent, such withheld amounts
shall be
treated for all purposes of this Agreement as having been paid to
the holder of
Company Shares or Company Options in respect of whom such deduction
and
withholding was made by Parent, the Surviving Corporation or the
Payment Agent.
2.8.
APPRAISAL RIGHTS.
(A) Notwithstanding anything to the contrary contained in this
Agreement, any Company Shares that constitute Appraisal Shares
shall not be
converted into or represent the right to receive payment in
accordance with
Section 2.5, and each holder of Appraisal Shares shall be entitled
only to such
rights with respect to such Appraisal Shares as may be granted to
such holder
pursuant to Section 262 of the DGCL. From and after the Effective
Time, a holder
of Appraisal Shares shall not have and shall not be entitled to
exercise any of
the voting rights or other rights of a stockholder of the Surviving
Corporation.
(B) The Company: (i) shall give Parent prompt written notice of
any
demand by any stockholder of the Company for appraisal of such
stockholder's
Company Shares pursuant to Section 262 of the DGCL; and (ii) shall
give Parent
the opportunity to participate in all negotiations and proceedings
with respect
to any such demand. Except with the prior written consent of
Purchaser (which
consent may be withheld in the sole and absolute discretion of
Purchaser) or as
may otherwise be required by applicable Legal Requirements, the
Company shall
not make any payment with respect to, or settle or offer to settle,
any such
demands.
11
<PAGE>
(C) For purposes of this Agreement, "Appraisal Shares" shall refer
to
any Company Shares outstanding immediately prior to the Effective
Time that are
held by stockholders who have preserved their appraisal rights
under Section 262
of the DGCL with respect to such Company Shares. If any holder of
Appraisal
Shares shall fail to perfect or shall otherwise lose such holder's
right of
appraisal under Section 262 of the DGCL, then: (i) any right of
such holder with
respect to such Company Shares as may be granted to such holder
pursuant to
Section 262 of the DGCL shall be extinguished; and (ii) such
Appraisal Shares
shall automatically be converted into and shall represent only the
right to
receive (upon the surrender of the Company Stock Certificate(s)
representing
such Appraisal Shares) payment for such Appraisal Shares in
accordance with
Section 2.5.
2.9.
FURTHER ACTION. If, at any time after the Effective Time, any
further
action is necessary to carry out the purposes of this Agreement,
the officers
and directors of the Surviving Corporation and Parent shall be
authorized (in
the name of Purchaser, in the name of the Company or otherwise) to
take such
action.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The
Company represents and warrants to Parent and Purchaser that,
except as
set forth in the disclosure schedule delivered to Parent on the
date of this
Agreement (the "Company Disclosure Schedule"):
3.1.
DUE ORGANIZATION AND GOOD STANDING; SUBSIDIARIES.
(A) Each of the Company and the Company Subsidiaries is a
corporation
duly organized, validly existing and (where such concept is
recognized under the
laws of the jurisdiction in which it is incorporated) in good
standing under the
laws of the jurisdiction in which it is incorporated, and has all
requisite
corporate power and authority necessary to own, lease and operate
its properties
and to carry on its business as it is now being conducted. The
Company and each
of the Company Subsidiaries is duly qualified or licensed to do
business and is
in good standing in each state in which the nature of the business
conducted by
it makes such qualification or license necessary, except where the
failure to be
so qualified does not have a Company Material Adverse Effect.
(B) Part 3.1 of the Company Disclosure Schedule lists all
Company
Subsidiaries in existence as of the date of this Agreement,
together with the
jurisdiction of organization of each such Subsidiary and, if the
Company,
together with the Company Subsidiaries, does not own all of the
outstanding
equity interests of such Company Subsidiary, the percentage of
equity interests
of such Company Subsidiary owned by the Company and the Company
Subsidiaries.
All the outstanding shares of capital stock and other equity
interests of each
Company Subsidiary have been duly authorized and validly issued,
are fully paid
and nonassessable are not subject to any purchase option, call
option, right of
first refusal, preemptive right, subscription right or any similar
right
entitling the holders thereof to acquire shares of capital stock or
other equity
interests
12
<PAGE>
from such Company Subsidiary under any provision of the Legal
Requirements
pursuant to which such Company Subsidiary is formed, such Company
Subsidiary's
organizational documents or any Contract to which such Company
Subsidiary is a
party or is otherwise bound, and are owned directly or indirectly
by the Company
free and clear of all liens, pledges or Encumbrances, except for
Permitted
Encumbrances. Except for the capital stock of, or other equity
interests in, the
Company Subsidiaries, and except for marketable securities held
from time to
time by the Company in connection with its normal cash management
activities,
the Company does not own, directly or indirectly, any capital stock
of, or other
equity or voting interests in, any Person.
3.2.
AUTHORITY; BINDING NATURE OF AGREEMENT. The Company has the
requisite
corporate power and authority to enter into and to perform its
obligations under
this Agreement. The Company Board, at a meeting duly called and
held, has
unanimously: (a) determined that this Agreement, the Offer, the
Merger, the
Top-Up Option and the other transactions contemplated by this
Agreement are fair
to, and in the best interests of, the Company's stockholders; (b)
duly and
validly authorized and approved the execution, delivery and
performance of this
Agreement by the Company; (c) declared that this Agreement is
advisable; and (d)
resolved to make the Company Recommendation. The execution and
delivery of this
Agreement by the Company and the consummation by the Company of the
Merger have
been duly authorized by all necessary corporate action on the part
of the
Company, and no other corporate proceedings on the part of the
Company are
necessary to authorize this Agreement other than, with respect to
the Merger,
the adoption of this Agreement by the holders of a majority of the
then
outstanding Company Shares (if required under the DGCL) and the
filing of the
appropriate merger documents as required by the DGCL. This
Agreement has been
duly executed and delivered on behalf of the Company and, assuming
the due
authorization, execution and delivery of this Agreement by Parent
and Purchaser,
constitutes the valid and binding obligation of the Company,
enforceable against
the Company in accordance with its terms, subject to (i) laws of
general
application relating to bankruptcy, insolvency and the relief of
debtors, and
(ii) rules of law governing specific performance, injunctive relief
and other
equitable remedies.
3.3.
NON-CONTRAVENTION; CONSENTS. Except as set forth on Part 3.3 of
the
Company Disclosure Schedule, the execution and delivery of this
Agreement by the
Company, the acquisition of Company Shares by Purchaser pursuant to
the Offer
and the consummation by the Company of the Merger and the other
transactions
contemplated by this Agreement will not: (a) cause a violation of
any of the
provisions of the certificate of incorporation or bylaws of the
Company or any
of the equivalent organizational documents of the Company
Subsidiaries; (b)
cause a violation by the Company or any of the Company Subsidiaries
of any Legal
Requirement applicable to the business of the Company or any of the
Company
Subsidiaries; or (c) result in a modification, violation or breach
of, or
constitute (with or without notice or lapse of time or both) a
default (or give
rise to any right, including any right of termination, amendment,
cancellation
or acceleration) under, any of the terms, conditions or provisions
of any
Contract to which the Company or any Company Subsidiary is a party
or by which
its properties or assets are otherwise bound; except in the case of
clauses (b)
and (c) does not result in a Company Material Adverse Effect.
Except as may be
required by the Exchange Act, the
13
<PAGE>
DGCL, the HSR Act or the antitrust or competition laws of foreign
jurisdictions,
the Company is not required to make any filing with, or to obtain
any consent
from, any Person in connection with the execution and delivery of
this Agreement
by the Company or the consummation by the Company of the Merger,
except where
the failure to make any such filing or obtain any such consent does
not result
in a Company Material Adverse Effect.
3.4.
CERTIFICATE OF INCORPORATION; BYLAWS. The Company has delivered
or
made available to Parent complete and correct copies of the
certificate of
incorporation and bylaws of the Company, including all amendments
thereto. The
Company is not in violation of its certificate of incorporation or
bylaws.
3.5.
CAPITALIZATION.
(A) The authorized capital stock of the Company consists of
60,000,000
Company Shares and 5,000,000 shares of preferred stock, par value
$0.01 per
share ("Preferred Shares"), of which 25,000 shares have been
designated Series A
Participating Preferred Stock and reserved for issuance in
connection with the
Company Rights. As of April 23, 2007: (i) 16,467,125 Company Shares
were issued
and outstanding; (ii) no Preferred Shares were outstanding; (iii)
no Company
Shares or Preferred Shares were issued and held in the treasury of
the Company
or otherwise owned, directly or indirectly, by the Company, (iv)
4,136,673
Company Shares were reserved for future issuance pursuant to the
Company Option
Plans, of which 3,815,390 Company Shares were subject to
outstanding Company
Options; and (v) 404,853 Company Shares were reserved for future
issuance
pursuant to the Company's Amended and Restated Employee Stock
Purchase Plan (the
"Company ESPP"). The Company has delivered or made available to
Parent complete
and correct copies of: (A) the Company Option Plans, which cover
the stock
options granted by the Company that are outstanding as of the date
of this
Agreement; and (B) the Company ESPP. The treatment of Company
Options set forth
in Section 5.9 does not require the approval or consent of any
holder of Company
Options and does not conflict with the terms of the Company Option
Plans.
(B) All of the outstanding Company Shares are duly authorized,
validly
issued, fully paid and nonassessable. No class of capital stock of
the Company
or any Company Subsidiary is entitled to any purchase option, call
option, right
of first refusal, preemptive right, subscription right or any
similar right
entitling the holders thereof to acquire capital stock or other
equity interests
from the Company under any provision of the DGCL, the Company's
certificate of
incorporation, the Company's bylaws or any Contract to which the
Company is a
party or is otherwise bound. All of the Company Shares that may be
issued
pursuant to the Company Options or under the Company ESPP will be,
when issued,
duly authorized, validly issued, fully paid and nonassessable and
not subject to
any purchase option, call option, right of first refusal,
preemptive right,
subscription right or any similar right entitling the holders
thereof to acquire
capital stock or other equity interests from the Company under any
provision of
the DGCL, the Company's certificate of incorporation, the Company's
bylaws or
any Contract to which the Company is a party or is otherwise
bound.
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<PAGE>
(C) Part 3.5 of the Company Disclosure Schedule contains a true
and
complete list, as of May __, 2007, of all outstanding options to
purchase
Company Shares, whether or not granted under the Company Option
Plans, including
the date of grant, the number of Company Shares subject to each
such option, the
exercise price per share, the maximum term of each such option and,
where
applicable, the Company Option Plan under which such option was
granted. All
outstanding Company Options are evidenced by stock option
agreements. From May
__, 2007 until the date of this Agreement, the Company has not
issued, or
reserved for issuance, any capital stock or any options, warrants
or other
rights to acquire capital stock or other equity interests (or
securities
convertible into or exercisable or exchangeable for capital stock
or other
equity interests), other than the issuance of Company Shares
pursuant to the
exercise of Company Options that were outstanding as of the close
of business on
May __, 2007.
(D) Except as set forth above in this Section 3.5 or in Part 3.5
of
the Company Disclosure Schedule, as of the date of this Agreement,
there are not
any options, warrants, rights, convertible or exchangeable
securities, "phantom"
stock rights, stock appreciation rights, stock-based performance
units,
commitments, Contracts, arrangements or undertakings of any kind to
which the
Company or any of the Company Subsidiaries is a party or by which
any of them is
bound (i) obligating the Company or any of the Company Subsidiaries
to issue,
deliver or sell, or cause to be issued, delivered or sold, equity
interests in
the Company or any of the Company Subsidiaries, (ii) obligating the
Company or
any of the Company Subsidiaries to issue, grant, extend or enter
into any such
option, warrant, right, security, unit commitment, Contract,
arrangement or
undertaking or (iii) that give any Person the right to receive any
economic
benefit or right similar to or derived from the economic benefits
and rights
occurring to holders of Company Shares. There are no outstanding
obligations of
the Company or any of the Company Subsidiaries to repurchase,
redeem or
otherwise acquire any shares of capital stock or other equity
interests of the
Company or any of the Company Subsidiaries. There are no bonds,
debentures,
notes or other Indebtedness of the Company or the Company
Subsidiaries 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.
(E) There are no voting trusts or other agreements or
understandings
to which the Company or any Company Subsidiary is a party or of
which, as of the
date of this Agreement, the Company has knowledge, with respect to
the voting of
Company Shares or any capital stock of, or other equity interest of
the Company
or any of the Company Subsidiaries.
3.6.
SEC FILINGS; FINANCIAL STATEMENTS.
(A) The Company has filed or furnished (as required or permitted)
all
forms, reports, schedules, proxy statements, registration
statements and other
documents (including exhibits and other information incorporated
therein)
required to be filed by the Company with the SEC since January 1,
2003 (the
"Company SEC Documents"). As of the time it became effective (with
respect to
filings made under the Securities Act) and as of the time it was
filed with or
furnished to the SEC (with respect to filings made under
15
<PAGE>
the Exchange Act and, with respect to proxy statements, at the time
such proxy
statement was mailed to stockholders of the Company) (or, with
respect to
filings made under the Exchange Act and amended or superseded by a
filing prior
to the date of this Agreement, then on the date of the filing or
furnishing of
such amendment or, with respect to an amendment to a proxy
statement, on the
date such amendment to the proxy statement was mailed to
stockholders of the
Company, if applicable): (i) each of the Company SEC Documents
complied in all
material respects with the applicable requirements of the
Securities Act or the
Exchange Act (as the case may be); and (ii) the Company SEC
Documents did not
(and with respect to Company SEC Documents filed after the date of
this
Agreement, will not) contain any untrue statement of a material
fact or omit to
state a material fact required to be stated therein or necessary in
order to
make the statements therein, in the light of the circumstances
under which they
were made, not misleading. The Company has made available to Parent
copies of
all comment letters received by the Company from the SEC since
January 1, 2003,
and relating to the Company SEC Documents, together with all
written responses
of the Company thereto. As of the date of this Agreement, to the
Company's
knowledge, there are no outstanding or unresolved comments in such
comment
letters received by the Company from the SEC. As of the date of
this Agreement,
to the knowledge of the Company none of the SEC Documents is the
subject of any
ongoing review by the SEC. No Company Subsidiary is, or has ever
been, required
to file any reports, schedules, proxy statements, registration
statements or
other documents with the SEC.
(B) The financial statements (including any related notes)
contained
in the Company SEC Documents fairly present, in all material
respects, the
consolidated financial position of the Company and the Company
Subsidiaries as
of the respective dates thereof and the consolidated results of
operations of
the Company and the Company Subsidiaries for the periods covered
thereby, have
been prepared in accordance with GAAP applied on a consistent basis
throughout
the periods covered (except as may be indicated in the notes to
such financial
statements or, in the case of unaudited statements, as permitted by
Form 10-Q of
the SEC, and except that unaudited financial statements are subject
to normal
year-end audit adjustments) and complied at the time they were
filed as to form
in all material respects with the applicable accounting
requirements and the
published rules and regulations of the SEC with respect thereto at
the time of
filing.
(C) Neither the Company nor any Company Subsidiary is a party to,
or
has any commitment to become a party to, any joint venture,
off-balance sheet
partnership or any similar Contract (including any Contract
relating to any
transaction or relationship between or among the Company and any
Company
Subsidiary, on the one hand, and any unconsolidated affiliate,
including any
structured finance, special purpose or limited purpose Entity or
Person, on the
other hand, or any "off-balance sheet arrangements" (as defined in
Item 303(a)
of Regulation S-K of the SEC)), where the result, purpose or
intended effect of
such Contract is to avoid disclosure of any material transaction
involving, or
material liabilities of, the Company or any Company Subsidiary in
the Company's
or any Company Subsidiary's published financial statements or other
Company SEC
Documents.
16
<PAGE>
(D) The independent registered public accounting firm engaged
to
express its opinion with respect to the financial statements
included in the
Company SEC Documents is, and has been throughout the periods
covered thereby
"independent" within the meaning of Rule 2-01 of Regulation S-X.
Ernst & Young,
LLP has not resigned or been dismissed as an independent public
accountant of
the Company as a result of or in connection with any disagreement
with the
Company on a matter of accounting principles or practices,
financial statement
disclosure or auditing scope or procedure.
(E) Neither the Company nor any of the Company Subsidiaries
(taken
together as a whole) has any material liabilities of any nature
(whether
accrued, absolute, contingent determined or otherwise) required by
GAAP to be
recognized or disclosed on a consolidated balance sheet of the
Company or any
Company Subsidiary or in the notes thereto, except for: (i)
liabilities
disclosed in the financial statements (including any related notes)
contained in
the Company SEC Documents filed prior to the date of this
Agreement; (ii) for
liabilities and obligations incurred under any Material Contract
other than
liabilities or obligations due to breaches thereunder; and (iii)
liabilities
incurred in the Ordinary Course of Business since December 31, 2006
that could
not reasonably be expected to, individually or in the aggregate,
have a Company
Material Adverse Effect.
3.7.
INFORMATION SUPPLIED. None of the information included or
incorporated
by reference in the Proxy Statement will, at the date it is first
mailed to the
Company's stockholders, at the time of the Special Meeting or at
the time of any
amendment or supplement thereof, contain any untrue statement of a
material fact
or omit to state any material fact required to be stated therein or
necessary in
order to make the statements therein, in light of the circumstances
under which
they are made, not misleading, except that no representation,
warranty or
covenant is made by the Company with respect to statements made or
incorporated
by reference therein based on written information supplied by
Parent or
Purchaser expressly for inclusion or incorporation by reference in
the Proxy
Statement. The Proxy Statement will comply as to form in all
material respects
with the requirements of the Exchange Act. The written information
provided by
or on behalf of the Company expressly for inclusion or
incorporation by
reference in the Offer Documents shall not, at the time the Offer
Documents are
mailed to the stockholders of the Company, or at any other time at
or prior to
the Acceptance Time, contain an untrue statement of 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.
3.8.
SCHEDULE 14D-9. The Schedule 14D-9 will comply as to form in
all
material respects with the requirements of the Exchange Act and, on
the date
filed with the SEC and on the date first published, sent or given
to the
Company's stockholders, the Schedule 14D-9 will not contain any
untrue statement
of a material fact or omit to state any material fact required to
be stated
therein or necessary in order to make the statements therein, in
the light of
the circumstances under which they were made, not misleading,
except that no
representation, warranty or covenant is made by the Company with
respect to
statements made or incorporated by reference therein based on any
written
information supplied by Parent or Purchaser expressly for inclusion
or
incorporation by reference in the Schedule 14D-9.
17
<PAGE>
3.9.
INTERNAL CONTROLS; SARBANES-OXLEY ACT.
(A) The Company has designed and maintains a system of internal
control over financial reporting (as defined in Rules 13a-15(f) and
15d-15(f) of
the Exchange Act) sufficient to provide reasonable assurance
regarding the
reliability of financial reporting. The Company (i) has designed
and maintains
disclosure controls and procedures (as defined in Rules 13a-15(e)
and 15d-15(e)
of the Exchange Act) to ensure that material information required
to be
disclosed by the Company in the reports that it files or submits
under the
Exchange Act is recorded, processed, summarized and reported within
the time
periods specified in the SEC's rules and forms and is accumulated
and
communicated to the Company's management as appropriate to allow
timely
decisions regarding required disclosure and (ii) has disclosed to
the Company's
auditors and the audit committee of the Company Board (and made
summaries of
such disclosures available to Parent) (A) any significant
deficiencies and
material weaknesses in the design or operation of internal control
over
financial reporting that are reasonably likely to adversely affect
in any
material respect the Company's ability to record, process,
summarize and report
financial information and (B) any fraud, whether or not material,
that involves
management or other employees who have a significant role in the
Company's
internal controls over financial reporting. The Company is in
compliance in all
material respects with all effective provisions of the
Sarbanes-Oxley Act.
(B) Each of the principal executive officer of the Company and
the
principal financial officer of the Company (or each former
principal executive
officer of the Company and each former principal financial officer
of the
Company, as applicable) has made all certifications required by
Rule 13a-14 or
15d-14 under the Exchange Act or Sections 302 and 906 of the
Sarbanes Oxley Act
and the rules and regulations of the SEC promulgated thereunder
with respect to
the Company SEC Documents, and the statements contained in such
certifications
are true and correct. For purposes of this Section 3.9(b),
"principal executive
officer" and "principal financial officer" shall have the meanings
given to such
terms in the Sarbanes-Oxley Act. Neither the Company nor any
Company Subsidiary
has outstanding, or has arranged any outstanding, "extensions of
credit" to
directors or executive officers within the meaning of Section 402
of the
Sarbanes Oxley-Act.
(C) Neither the Company nor any of the Company Subsidiaries nor,
to
the Company's knowledge, any director, officer, auditor,
accountant, consultant
or representative of the Company or any of the Company Subsidiaries
has received
or otherwise had or obtained knowledge of any substantive and
material
complaint, allegation, assertion or claim, whether written or oral,
that the
Company or any of the Company Subsidiaries has engaged in
questionable
accounting or auditing practices. No current or former attorney
representing the
Company or any of the Company Subsidiaries has reported evidence of
a material
violation of securities laws, breach of fiduciary duty or similar
violation by
the Company or any of its officers, directors, employees or agents
to the
current Company Board or any committee thereof or to any current
director or
executive officer of the Company.
18
<PAGE>
(D) To the Company's knowledge, no employee of the Company or any
of
the Company's Subsidiaries has provided information to any law
enforcement
agency regarding the commission or possible commission of any crime
or the
violation or possible violation of any applicable Legal
Requirements described
in Section 806 of the Sarbanes-Oxley Act by the Company or any of
the Company
Subsidiaries. Neither the Company nor any of the Company's
Subsidiaries nor, to
the knowledge of the Company, any director, officer, employee,
contractor,
subcontractor or agent of the Company or any such Subsidiary has
discharged,
demoted, suspended, threatened, harassed or in any other manner
discriminated
against an employee of the Company or any of the Company's
Subsidiaries in the
terms and conditions of employment because of any lawful act of
such employee
described in Section 806 of the Sarbanes-Oxley Act.
3.10. ABSENCE OF
CERTAIN CHANGES.
(A) Between December 31, 2006 and the date of this Agreement,
neither
the Company nor any Company Subsidiary has: (a) suffered any
Company Material
Adverse Effect; (b) conducted its respective business other than in
the Ordinary
Course of Business.
(B) Between December 31, 2006 and the date of this Agreement,
neither
the Company nor any Company Subsidiary has, except as disclosed in
Part 3.10(b)
of the Company Disclosure Schedule taken any action that, if taken
during the
period from the date of this Agreement through the Effective Time,
would
constitute a breach of Section 5.1.
3.11. TITLE TO ASSETS; REAL PROPERTY.
(A) The Company or one of the Company Subsidiaries owns, and has
good
title to, each of the tangible assets reflected as owned by the
Company or the
Company Subsidiaries on the Latest Balance Sheet (except for
tangible assets
sold or disposed of since that date in the Ordinary Course of
Business) free of
any liens or Encumbrances (other than Permitted Encumbrances). The
material
properties and tangible assets owned or leased by the Company and
the Company
Subsidiaries are sufficient (subject to normal wear and tear) to
operate their
businesses in substantially the same manner as they are currently
conducted by
the Company and the Company Subsidiaries.
(B) Part 3.11(b) of the Company Disclosure Schedule lists each
real
property that is owned by the Company or any Company Subsidiary as
of the date
of this Agreement (such property, together with any real property
acquired by
the Company after the date of this Agreement (which will have been
so acquired
in compliance with Section 5.1), the "Owned Real Property"). Except
as disclosed
in Part 3.11(b) of the Company Disclosure Schedule, each of the
Company and or a
Company Subsidiary has good title to the Owned Real Property, free
and clear of
all Encumbrances, other than Permitted Encumbrances. Except as set
forth on Part
3.11(b) of the Company Disclosure Schedule, (i) there are no
outstanding
Contracts for the sale of any of the Owned Real Property, (ii)
there are no
leases, subleases, licenses, concessions or any other Contracts
19
<PAGE>
granting to any Person other than the Company or any of the Company
Subsidiaries
any right to the possession, use, occupancy or enjoyment of any of
the Owned
Real Property or any portion thereof and (iii) there are no
easements,
covenants, rights-of-way and other similar restrictions of record,
if any, that,
individually or in the aggregate, materially impair, or would
reasonably be
expected to impair materially, the continued use and operation of
the Owned Real
Property to which they relate in the conduct of the business of the
Company and
the Company Subsidiaries as presently conducted. Any reciprocal
easements,
operating agreements, option agreements, rights of first refusal or
rights of
first offer with respect to any Owned Real Property are set forth
in Part
3.11(b) of the Company Disclosure Schedule. There are no physical
conditions or
defects at any of the Owned Real Property which materially impair
or would be
reasonably expected to materially impair the continued operation of
such
facility as presently conducted. The present use of the land,
buildings,
structures and improvements on the Owned Real Property are, in all
material
respects, in conformity with all Legal Requirements, including all
applicable
zoning laws, ordinances and regulations and with all registered
deeds or other
restrictions of record, and neither the Company nor any of the
Company
Subsidiaries, as the case may be, has received any written notice
of violation
thereof, except for such nonconformities or violations that do not,
and would
not, individually or in the aggregate, reasonably be expected to
materially
interfere with the operations at the Owned Real Property as
presently conducted
(or as would be conducted at full capacity). Neither the Company
nor any of the
Company Subsidiaries, as the case may be, has received any written
notice of any
material conflict or dispute with any Governmental Entity or other
Person
relating to any Owned Real Property or the activities thereon,
other than where
there is no current or reasonably likely material interference with
the
operations at the Owned Real Property as presently conducted (or as
would be
conducted at full capacity). As of the date hereof, there are no
existing, or to
the knowledge of the Company, any threatened or pending
condemnation or eminent
domain proceedings (or proceedings in lieu thereof) affecting the
Owned Real
Property or any portion thereof.
(C) Part 3.11(c) of the Company Disclosure Schedule lists each
real
property that is leased by the Company or any Company Subsidiary as
of the date
of this Agreement, pursuant to which the Company or such Company
Subsidiary is
required to pay a monthly rental in excess of $50,000 (such
property, together
with any such lease entered into by the Company or a Company
Subsidiary after
the date of this Agreement which will have been so acquired in
compliance with
Section 5.1, the "Leased Real Property"). Except as disclosed in
Part 3.11(c) of
the Company Disclosure Schedule, the Company or a Company
Subsidiary holds a
valid leasehold interest in the Leased Real Property free and clear
of all
Encumbrances, other than Permitted Encumbrances or Encumbrances
encumbering a
lessor's interest in the Leased Real Property incurred by the
lessor. Each of
the leases under which the Leased Real Property is held (A) is in
full force and
effect, and (B) is enforceable against the Company or the Company
Subsidiaries
and the other party or parties thereto, in accordance with its
terms, except as
the same may be limited by (i) laws of general application relating
to
bankruptcy, insolvency and the relief of debtors, and (ii) rules of
law
governing specific performance, injunctive relief and other
equitable remedies.
No material default exists under any lease under which the Leased
Real Property
is held to which the Company or any of the Company Subsidiaries is
a party and
no circumstance exists which, with the giving of
20
<PAGE>
notice, the passage of time or both, is reasonably likely to result
in such a
default. Except as set forth on Part 3.11(c) of the Company
Disclosure Schedule,
there are no material subleases, licenses, concessions or any other
Contracts or
agreements to which the Company or any of the Company Subsidiaries
is a party or
by which any of them is otherwise bound granting to any Person or
entity other
than the Company or any of the Company Subsidiaries any right to
the possession,
use, occupancy or enjoyment of any of the Leased Real Property or
any portion
thereof. Any material reciprocal easements, operating agreements,
option
agreements, rights of first refusal or rights of first offer to
which the
Company or any of the Company Subsidiaries is a party or by which
any of them is
otherwise bound with respect to any Leased Real Property are set
forth in Part
3.11(c) of the Company Disclosure Schedule. There are no physical
conditions or
defects at any of the Leased Real Property which materially impair
or would be
reasonably expected to materially impair the continued operation of
such
facility as presently conducted. As of the date hereof, there are
no existing,
or to the knowledge of the Company, any threatened or pending
condemnation or
eminent domain proceedings (or proceedings in lieu thereof)
affecting the Leased
Real Property or any portion thereof. The present use of the land,
buildings,
structures and improvements on the Leased Real Property are, to the
knowledge of
the Company, in conformity with all Legal Requirements, including
all applicable
zoning laws, ordinances and regulations and with all registered
deeds or other
restrictions of record, and neither the Company nor any of the
Company
Subsidiaries, as the case may be, has received any written notice
of violation
thereof, except for such nonconformities or violations that would
not,
individually or in the aggregate, reasonably be expected to have a
Company
Material Adverse Effect. Neither the Company nor any of the
Company
Subsidiaries, as the case may be, has received any written notice
of any
conflict or dispute with any Governmental Entity or other Person
relating to any
Leased Real Property or the activities thereon, other than where
there is no
current or reasonably likely material interference with the
operations at the
Leased Real Property as presently conducted (or as would be
conducted at full
capacity).
3.12. INTELLECTUAL PROPERTY RIGHTS.
(A) Part 3.12(a) of the Company Disclosure Schedule sets forth
with
respect to the Intellectual Property Rights owned by the Company or
the Company
Subsidiaries: (i) for each patent and patent application, the
patent number or
application serial number for each jurisdiction in which the patent
or
application has been filed, the date filed or issued, and the
present status
thereof, as maintained in records by the Company, a Company
Subsidiary, or its
or their outside intellectual property counsel; (ii) for each
registered
trademark, trade name or service mark, the application serial
number or
registration number, for each country, province and state, and the
class of
goods covered, as maintained in records by the Company, a Company
Subsidiary, or
its or their outside intellectual property counsel; and (iii) for
any URL or
domain name, the registration date, any renewal date and name of
registry, as
maintained in records by the Company, a Company Subsidiary, or its
or their
outside intellectual property counsel. As of the date of this
Agreement, to the
knowledge of the Company, all registered trademarks, issued patents
and
registered copyrights owned by the Company or a Company Subsidiary
are valid and
subsisting. To the knowledge of the Company,
21
<PAGE>
neither the Company nor any Company Subsidiary is engaging in or
has engaged at
any time in any patent or copyright misuse or any fraud or
inequitable conduct,
including with respect to its patent applications, trademark
applications or
copyright registration applications.
(B) To the knowledge of the Company, the Intellectual Property
Rights
and Technology owned or licensed by the Company and the Company
Subsidiaries, or
that the Company or any Company Subsidiary has a right to use
pursuant to a
covenant not to sue, constitute all Intellectual Property Rights
and Technology
used in or necessary for the conduct of the Company's or the
Company
Subsidiaries' business as presently conducted, including the
design,
manufacture, license, sale and support of all (i) Products Under
Development or
(ii) products currently offered for sale by the Company or a
Company Subsidiary.
(C) Except pursuant to licenses or with respect to the subject
matter
listed in Part 3.12(c) of the Company Disclosure Schedule, to the
knowledge of
the Company neither the Company nor any Company Subsidiary is
compensating or
has any obligation to compensate or account to any Person for the
use of any of
the Company's or any Company Subsidiary's Intellectual Property
Rights or
Technology used in the design, manufacture, license, sale and
support of all (i)
Products Under Development or (ii) products currently offered for
sale by the
Company and the Company Subsidiaries.
(D) The Company or each Company Subsidiary (i) owns all right,
title
and interest in and to the Intellectual Property Rights and
Technology owned or
purported to be owned by the Company, including the Intellectual
Property Rights
and Technology listed on Part 3.12(a) of the Company Disclosure
Schedule, free
and clear of any mortgage, easement, lien, pledge (including any
negative
pledge) or security interest (other than Permitted Encumbrances);
and (ii) has a
valid and enforceable right or license to use all other
Intellectual Property
Rights and Technology used in the design, manufacture, license,
sale and support
of all products currently offered for sale or with respect to
Products Under
Development by the Company and the Company Subsidiaries, and,
except as
disclosed in Part 3.12(d) of the Company Disclosure Schedule, all
such licensed
Intellectual Property Rights and rights to use Technology will not
cease to be
valid and enforceable rights of the Company or the applicable
Company Subsidiary
by reason of the execution, delivery and performance of this
Agreement, or by
any ancillary agreements executed in connection with this
Agreement, or the
consummation of the transactions contemplated hereby or
thereby.
(E) Except as
disclosed in Part 3.12(e) of the Company Disclosure
Schedule, no Legal Proceedings are pending against the Company or a
Company
Subsidiary, or, to the knowledge of the Company, are threatened,
that challenge
the right of Company or the Company Subsidiaries with respect to
the use or
ownership of the Intellectual Property Rights or Technology owned
or licensed by
the Company and the Company Subsidiaries. Without limiting the
foregoing, and
except as disclosed in Part 3.12(e) of the Company Disclosure
Schedule, no
interference, opposition, reexamination, or other Legal Proceeding
initiated by
a third party is pending against the Company or a Company
Subsidiary, or, to the
Company's knowledge, is threatened, or has during the
22
<PAGE>
past three years been threatened but did not develop into a Legal
Proceeding in
which the scope, validity, or enforceability of any of Company's or
the Company
Subsidiaries' Intellectual Property Rights is being or has been
challenged.
Except as disclosed in Part 3.12(e) of the Company Disclosure
Schedule, to the
knowledge of the Company, neither the Company's nor any Company
Subsidiary's
past or present use of Intellectual Property Rights or Technology
owned by the
Company or any Company Subsidiary infringes upon or
misappropriates, breaches or
otherwise conflicts with the Intellectual Property Rights of any
third party and
neither the Company nor any Company Subsidiary has received any
notice alleging
any such infringement or misappropriation. Except as disclosed in
Part 3.12(e)
of the Company Disclosure Schedule, the Intellectual Property
Rights and
Technology owned by the Company and each Company Subsidiary are not
subject to
any outstanding judgment, decree, order, writ, award, injunction
or
determination of an arbitrator or court or other governmental
authority (other
than office actions and correspondence regarding pending patent
applications and
trademark applications) restricting the rights of the Company or
any Company
Subsidiary with respect thereto. To the knowledge of the Company,
no Person has
interfered with, infringed upon or misappropriated any of the
Intellectual
Property Rights owned by the Company or any Company Subsidiary, or
is currently
doing so.
(F) To the
knowledge of the Company, all of the registrations and
pending applications to Governmental Entities with respect to the
Intellectual
Property Rights owned by the Company and the Company Subsidiaries
are being duly
maintained and prosecuted and all maintenance and related fees due
as of the
date hereof have been paid. The Company and each Company Subsidiary
has taken
reasonable steps to safeguard and maintain the secrecy and
confidentiality of
trade secrets that are material to the Company and the Company
Subsidiaries. The
Company has entered into an employee confidentiality and assignment
of
inventions agreement in the standard form that has been made
available to Parent
with each U.S. based employee of the Company or a Company
Subsidiary. Without
limiting the foregoing, except as disclosed in Part 3.12(f) of the
Company
Disclosure Schedule, to the knowledge of the Company, (i) there has
been no
misappropriation of any trade secrets or other confidential
Intellectual
Property Rights or Technology used in connection with the business
of the
Company or the Company Subsidiaries by any Person; (ii) no
employee, independent
contractor or agent of the Company or any Company Subsidiary has
misappropriated
any trade secrets of any other Person in the course of performance
as an
employee, independent contractor or agent of the business; and
(iii) no
employee, independent contractor or agent of the Company or any
Company
Subsidiary is in default or breach of any term of any employment
agreement,
nondisclosure agreement, assignment of invention agreement or
similar Contract
relating in any way to the protection, ownership, development, use
or transfer
of the Intellectual Property Rights and Technology of the Company
or the Company
Subsidiaries. No funding, facilities, or personnel of any
Governmental Entity or
educational institution were used, directly or indirectly, to
develop or create,
in whole or in part, any Intellectual Property Rights or Technology
owned by the
Company or any Company Subsidiary. Neither the Company nor any
Company
Subsidiary has made any written submission to, and is not subject
to any
Contract with, any standards bodies or other entities that would
obligate the
Company or any Company Subsidiary to grant licenses to or otherwise
impair its
control of its Intellectual Property Rights.
23
<PAGE>
(G) To the knowledge of the Company, any software or firmware
incorporated in or provided with the products, and any media used
to distribute
it, contain at delivery no computer instructions, circuitry or
other
technological means whose purpose or effect is to disrupt, damage
or negatively
interfere with any use of any customer's computer and
communications facilities
or equipment ("Harmful Code"), and the Company and each Company
Subsidiary have
used commercially reasonable efforts to prevent the introduction of
such Harmful
Code to all software, firmware and media distributed, licensed or
sold by the
Company or any Company Subsidiary. "Harmful Code" includes (i)
any
instrumentality that could cause the software or firmware to fail
to be
operative upon command of or by design by the Company or any
Company Subsidiary,
and (ii) any code containing viruses, trojan horses, worms, or like
destructive
code or code that self-replicates. Except as disclosed in Part
3.12(g) of the
Company Disclosure Schedule, to the knowledge of the Company, none
of the
software incorporated in the Company's or any Company Subsidiary's
products is,
in whole or in part, subject to the provisions of any open source
or quasi-open
source license agreement, or any other Contract obligating the
Company to make
source code available to third parties or to publish source code.
Except as
disclosed in Part 3.12(g) of the Company Disclosure Schedule,
neither the
Company nor any Company Subsidiary have entered into any Contract
requiring the
Company or any Company Subsidiary to place the source code or other
Technology
incorporated in the Company's or Subsidiaries' products in escrow
so that a
licensee might obtain access to it upon the occurrence of any
release condition.
(H) The Company and the Subsidiaries have obtained all material
approvals necessary for exporting the Company's and the
Subsidiaries' products
outside the United States in accordance with all applicable United
States export
control regulations, and importing the products into any country in
which the
products are now sold or licensed for use, and all such export and
import
Governmental Authorizations or approvals in the United States and
throughout the
world are valid, current, outstanding and in full force and effect
in all
material respects.
(I) To the actual knowledge of the individuals specified in
Part
3.12(i)(1) of the Company Disclosure Schedule, there is no basis in
existence as
of the date of this Agreement that would give the Person specified
in Part
3.12(i)(2) of the Company Disclosure Schedule the legal right to
terminate the
Confidentiality Agreement pursuant to Section 9.2 of the
Confidentiality
Agreement.
3.13. CONTRACTS.
(A) Part 3.13 of the Company Disclosure Schedule contains a list as
of
the date of this Agreement of each of the following Contracts to
which the
Company or any of the Company Subsidiaries is a party or by which
any of them or
their respective assets are otherwise bound:
(i) other than distribution Contracts, each Contract that
provides for exclusivity or restricts in any material respect the
ability
of
the Company or any of the Company Subsidiaries or any of the
Company's
current or
24
<PAGE>
future Affiliates to compete in any geographic area or line of
business, in
each
case for a period extending beyond three months from the date of
this
Agreement, or pursuant to which any benefit or right is required to
be
given or lost as a result of so competing;
(ii) each indemnification or employment contract with any
director or officer of the Company or the Company Subsidiaries;
(iii) each Contract evidencing Indebtedness in excess of
$500,000
in
aggregate principal amount;
(iv) each (A) distributor Contract or (B) supply Contract
pursuant to which goods, raw materials, or equipment are supplied
to the
Company or any Company Subsidiary (excluding purchase orders given
or
received in the Ordinary Course of Business), in each case under
which the
Company or any Company Subsidiary paid or received in excess of
$500,000 in
fiscal 2006 or is expected to pay or receive in excess of $ 500,000
in
fiscal 2007;
(v) each customer Contract (excluding purchase orders given or
received in the Ordinary Course of Business) under which the
Company or any
Company Subsidiary received in excess of $1,500,000 in fiscal 2006
or is
expected to receive in excess of $1,500,000 in fiscal 2007;
(vi) each material "single source" supply Contract pursuant to
which goods, raw materials or equipment are supplied to the Company
or any
Company Subsidiary from an exclusive source;
(vii) each collective bargaining agreement;
(viii) each lease involving real property pursuant to which the
Company or any of the Company Subsidiaries is required to pay a
monthly
rental in excess of $50,000;
(ix) each lease or rental Contract involving personal property
(and
not relating primarily to real property) pursuant to which the
Company
or
any of the Company Subsidiaries is required to make rental payments
in
excess of $50,000 per year;
(x) each Contract that involves "take or pay" provisions under
which the Company or any Company Subsidiary paid or received in
excess of
$500,000 in fiscal 2006 or is expected to pay or receive in excess
of
$500,000 in fiscal 2007 or, based on the Company's present
operations, any
fiscal year thereafter;
(xi) each Contract pursuant to which any of the benefits to any
party of which will be materially increased, or the vesting of the
benefits
to
any party of which will be materially accelerated, by the
occurrence of
any
of the transactions contemplated by this Agreement or the value of
any
of
the material
25
<PAGE>
benefits to any party of which will be calculated on the basis of
any of
the
transactions contemplated by this Agreement;
(xii) each Contract for any joint venture (whether in
partnership, limited liability company or other organizational
form),
co-promote agreements or co-branding agreements (other than
distribution
agreements) or agreements pursuant to which the Company or a
Company
Subsidiary permitted distribution of the Company's products under
another
party's name or trademarks;
(xiii) each Contract providing for future performance by the
Company or a Company Subsidiary in consideration of amounts
previously paid
the
balance of which exceeds $250,000 as of the date of this
Agreement;
(xiv) each Contract where, in settlement of an actual or
threatened Legal Proceeding for patent infringement, trade
secret
misappropriation or similar intellectual property action, another
Person
agrees in writing not to contest the validity or ownership of
Intellectual
Property Rights of the Company; and
(xv) each Contract granting a third party any license to use
Intellectual Property Rights of the Company relating to Products
Under
Development in the field of clinical diagnostics.
In this Agreement, "Material Contract" refers to each Contract (x)
identified in
this Section 3.13, whether or not listed in Part 3.13 of the
Company Disclosure
Schedule, (y) entered into after the date of this Agreement that
would be
required to be listed in Part 3.13 of the Company Disclosure
Schedule if such
Contract were in effect as of the date of this Agreement, or (z)
that would be
required to be filed as an exhibit to a Registration Statement on
Form S-1 filed
by the Company under the Securities Act or as an exhibit to an
Annual Report on
Form 10-K filed by the Company under the Exchange Act.
(B) Each Material Contract is enforceable against the Company and
each
Company Subsidiary that is a party thereto and each other party
thereto, except
as the same may be limited by (i) laws of general application
relating to
bankruptcy, insolvency and the relief of debtors, and (ii) rules of
law
governing specific performance, injunctive relief and other
equitable remedies.
There are no material existing breaches or defaults on the part of
the Company
or any of the Company Subsidiaries under (or any condition to which
with the
passage of time or the giving of notice would cause such a breach
of or default
under) any Material Contract and, to the knowledge of the Company,
there are no
material existing breaches or defaults on the part of any other
Person under (or
any condition to the knowledge of the Company which with the
passage of time or
the giving of notice would cause such a breach of or default under)
any Material
Contract. The Company has made available to Parent copies of each
Material
Contract in effect as of the date of this Agreement, together with
all
amendments and supplements thereto in effect as of the date of this
Agreement.
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3.14. COMPLIANCE WITH LEGAL REQUIREMENTS. Except as set forth in
Section
3.18 pertaining to compliance with FDA Laws, the Company and the
Company
Subsidiaries are and at all time have been in material compliance
with all
material Legal Requirements applicable to their businesses.
3.15. FOREIGN CORRUPT PRACTICES AND INTERNATIONAL TRADE SANCTIONS.
Except
as disclosed in Part 3.15 of the Company Disclosure Schedule,
neither the
Company, nor any Company Subsidiary, nor any of their respective
directors,
officers, agents, employees or any other Persons acting on their
behalf has (a)
violated the Foreign Corrupt Practices Act, 15 U.S.C. Section
78dd-1 et seq., or
any other similar applicable foreign, federal, or state Legal
Requirement, (b)
made or provided, or caused to be made or provided, directly or
indirectly, any
payment or thing of value to a foreign official, foreign political
party,
candidate for office or any other person knowing that the person
will pay or
offer to pay the foreign official, party or candidate, for the
purpose of
influencing a decision, inducing an official to violate their
lawful duty,
securing any improper advantage, or inducing a foreign official to
use their
influence to affect a governmental decision, (c) paid, accepted or
received any
unlawful contributions, payments, expenditures or gifts, or (d)
violated or
operated in noncompliance with any export restrictions, money
laundering law,
anti-terrorism law or regulation, anti-boycott regulations or
embargo
regulations.
3.16. GOVERNMENTAL AUTHORIZATIONS. As of the date of this
Agreement, the
Company and the Company Subsidiaries hold all Governmental
Authorizations
necessary to enable them to conduct their businesses in all
material respects in
the manner in which such businesses are currently being conducted
and are
proposed to be conducted. The material Governmental Authorizations
held by the
Company and the Company Subsidiaries are, in all material respects,
valid and in
full force and effect. The Company and the Company Subsidiaries are
in
compliance with the terms and requirements of such Governmental
Authorizations
in all material respects. The execution and delivery of this
Agreement by the
Company does not, and the consummation of the Offer, the Merger or
the other
transactions contemplated hereby and compliance with the terms
hereof would not
reasonably be expected to cause the revocation or cancellation of
any material
Governmental Authorization. To the knowledge of the Company, there
are no facts
or circumstances existing which would lead to any suspension, loss
of or
material modification to any material Governmental Authorization or
refusal by a
Governmental Entity to renew or accept for filing any material
Governmental
Authorizations on terms not substantially less advantageous, in the
aggregate,
to the Company and the Company Subsidiaries than the terms of those
Governmental
Authorization currently in force. All Governmental Authorizations
material to
the operation of the Company's or any Company Subsidiary's business
is
transferable to Parent or any of its Subsidiaries at the Effective
Time if
necessary to be so transferred following the Acceptance Time. Since
January 1,
2004, neither the Company nor any of the Company Subsidiaries has
been notified
by any Governmental Entity: (a) asserting any material violation of
any term or
requirement of any Governmental Authorization or Legal Requirement;
or (b)
notifying the Company or one of the Company Subsidiaries of the
suspension,
revocation of, loss of or material modification to any
Governmental
Authorization.
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<PAGE>
3.17. LEGAL PROCEEDINGS; ORDERS. AS OF THE DATE OF THIS
AGREEMENT:
(A) except as disclosed in Part 3.17 of the Company Disclosure
Schedule, (i) there is no Legal Proceeding pending (or, to the
knowledge of the
Company, threatened) against the Company or any of the Company
Subsidiaries or
any of their respective properties or rights or any executive
officer or
director of the Company or any Company Subsidiary (in their
capacity as such),
in which the claim is for more than $200,000 in damages, or for an
injunction or
specific performance, and (ii) neither the Company, any Company
Subsidiary, nor,
to the knowledge of the Company, any of its or their current or
former officers,
directors, employees, or independent contractors, each in their
capacity as
such, has been identified by any Governmental Entity as a subject
or target of a
government investigation, or otherwise been informed or become
aware that their
conduct is being investigated by a Governmental Entity. Except as
set forth in
Part 3.17 of the Company Disclosure Schedule, there is no Legal
Proceeding
brought by the Company against any Person that is pending as of the
date of this
Agreement; and
(B) there is no material order, injunction, decree or judgment
specific to the Company or any of the Company Subsidiaries to which
the Company
or any of the Company Subsidiaries is subject.
3.18. REGULATORY MATTERS.
(A) The Company and the Company Subsidiaries have established
and
administer compliance programs (including written compliance
policies)
applicable to the Company and the Company Subsidiaries (i) to
assist the
Company, the Company Subsidiaries and their respective directors,
officers and
employees in complying with all Legal Requirements and guidelines
(including
those administered by the FDA) applicable to the Company, the
Company
Subsidiaries or their businesses and (ii) to provide compliance
policies
governing activities and requirements applicable to medical device
companies
(including pre-clinical and clinical testing, product design and
development,
product testing, product manufacturing, product labeling, product
storage,
pre-market clearance and approval, marketing, advertising and
promotion, product
sales and distribution, medical device recall and reporting
regulations, and
record keeping).
(B) Except as set forth in Part 3.18(b) of the Company
Disclosure
Schedule, the Company and each Company Subsidiary is in compliance
in all
material respects with all Legal Requirements applicable to the
Company's
products and activities, including product design, development,
testing,
manufacture, marketing, distribution, labeling, storage and
transport, in all
jurisdictions in which such acts or any of them occur or are
reasonably likely
to occur or such products or any of them are likely to be sold or
used
(including any FDA Laws). All applications, submissions,
information, claims,
reports and statistics and other data and conclusions derived
therefrom,
utilized as the basis for or submitted in connection with any and
all requests
for authorizations, approvals, certificates, waivers,
certifications,
clearances, exemptions, notifications, consents, orders,
registrations, licenses
or permits of the FDA or comparable Governmental Entities relating
to the
Company, the Company Subsidiaries,
28
<PAGE>
their businesses and their products were, when submitted to the FDA
or other
Governmental Entities, true, complete and correct in all material
respects and
in conformance with Legal Requirements as of the date of submission
and any
updates, changes, corrections or modification to such applications,
submissions,
information and data which were or are necessary or required to be
filed,
maintained, or furnished to the FDA or other Governmental Entities
have been
timely filed, maintained, or furnished and were true, complete and
correct in
all material respects and in conformance with Legal Requirements as
of the date
of submission. The labeling claims made by the Company and the
Company
Subsidiaries for each of their products are consistent with the
scope of
regulatory clearance, exemption or approval for each product in
each
jurisdiction where it is marketed in all material respects, and
supported by
proper research design, testing, analysis and disclosure that
conforms with
Legal Requirements.
(C) The activities, products and facilities of the Company and
the
Company Subsidiaries, as well as, to the Company's knowledge, its
suppliers,
distributors, contractors and other intermediaries, are in
compliance with all
applicable requirements of CLIA, the FDCA and implementing FDA
regulations,
including the registration, listing, labeling and manufacturing
requirements of
21 C.F.R. Parts 807, 809 and 820, all to the extent applicable to
the Company's
products and services. The Company and each Company Subsidiary is
not subject to
any obligation arising under any consent decree, consent agreement,
or warning
letter issued by or entered into with the FDA or any other
Governmental Entity
or other notice, response or commitment made to the FDA or any
other
Governmental Entity. The Company has delivered to Parent true,
correct and
complete copies of all customer complaints relating to the
Company's and the
Company Subsidiaries' products and all Medical Device Reports, in
each case,
filed with the FDA within the last five years. The Company has
delivered to
Parent true, complete and correct copies of all warning letters,
untitled
letters, notices of inspectional observations (Form FDA 483s), or
similar
notices, or other correspondence relating to the Company's and the
Company
Subsidiaries' products and its compliance with Legal Requirements
from the FDA
and any other Governmental Entity and all of the Company's
responses thereto
within the last five years.
(D) Except as set forth in Part 3.18(d) of the Company
Disclosure
Schedule, since January 1, 2003, no exemptions, clearances or
approvals for the
Company and the Company Subsidiaries' products have been subjected
to
reevaluation or suspension of sale by the FDA and no products
manufactured,
marketed or sold by the Company or any Company Subsidiary have been
recalled or
subject to a field notification, field correction or safety alert
(whether
voluntarily or otherwise) and no proceedings have occurred (whether
completed or
pending) seeking to recall, reclassify, re-label, suspend, or seize
any product
sold or proposed to be sold by the Company or a Company Subsidiary.
To the
Company's knowledge, there are no facts which are reasonably likely
to cause:
(i) the recall, suspension, field notification, field
correction,
reclassification, re-labeling or safety alert of any product sold
or intended to
be sold by the Company or any Company Subsidiary; (ii) a change in
the marketing
classification or a material change in labeling of any such
products; or (iii) a
termination or suspension of marketing of any such products.
29
<PAGE>
(E) All products being manufactured, distributed, or developed by
the
Company and the Company Subsidiaries that are subject to the
jurisdiction of the
FDA or comparable Governmental Entity are being manufactured,
labeled, stored,
tested, distributed, and marketed in material compliance with all
applicable
requirements and implementing regulations thereunder.
(F) Except as set forth in Part 3.18(f) of the Company
Disclosure
Schedule, all pre-clinical trials and clinical trials conducted by
or on behalf
of the Company and the Company Subsidiaries have been, and are
being conducted
in material compliance with experimental protocols, procedures and
controls
pursuant to accepted professional scientific standards and all
applicable Legal
Requirements relating thereto, including the FDCA and its
applicable
implementing regulations at 21 C.F.R. Parts 50, 54, 56 and 812.
(G) Neither the Company, the Company Subsidiaries, nor, to the
knowledge of the Company, any of their collective officers,
employees or agents
has committed any act, made any statement, or failed to make any
statement, that
would be reasonably expected to provide a basis for the FDA to
invoke its policy
respecting "Fraud, Untrue Statements of Material Facts, Bribery,
and Illegal
Gratuities," set forth in 56 Fed. Reg. 46191 (September 10, 1991)
and any
amendments thereto.
(H) Neither the Company, the Company Subsidiaries, nor, to the
knowledge of the Company, any of their collective officers,
employees or agents
has been convicted of any crime or engaged in any conduct that
could result in a
material debarment or exclusion under 21 U.S.C. Section 335a or
under any
similar Legal Requirement. No claims, actions, proceedings or
investigations
that could reasonably be expected to result in such a material
debarment or
exclusion are pending or threatened against the Company, the
Company
Subsidiaries, or, to the knowledge of the Company, any of their
collective
officers, employees or agents.
(I) Except as disclosed on Part 3.18(i) of the Company
Disclosure
Schedule, there are no investigations, audits, actions or other
proceedings
pending with respect to a violation by the Company or any Company
Subsidiary of
any Legal Requirement that reasonably would be expected to result
in
administrative, civil, or criminal liability, and there are no
facts or
circumstances existing that would reasonably be expected to serve
as a basis for
such an investigation, audit, action or other proceeding.
(J) The Company and each of the Company Subsidiaries is in
material
compliance with all applicable FDA import and export requirements,
including
import-for-export requirements, export notifications or
authorizations and
record keeping requirements.
3.19. PRODUCT RECALLS. Part 3.19 of the Company Disclosure Schedule
sets
forth a list of (a) all recalls, field notifications, field
corrections and
safety alerts with respect to products manufactured and/or
distributed by the
Company or any Company Subsidiary, or by any Person on behalf of
the Company or
any Company Subsidiary, in
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<PAGE>
each case between January 1, 2004 and the date of this Agreement,
and the dates,
if any, such recalls, field notifications, field corrections and
safety alerts
were resolved or closed, and (b) to the knowledge of the Company,
any material
complaints with respect to products produced by the Company or any
or any
Company Subsidiary, or by any Person on behalf of the Company or
any or any
Company Subsidiary, that are open as of the date of this Agreement.
There are no
outstanding recalls, field notifications, field corrections, safety
alerts or
product complaints with respect to the products manufactured and/or
distributed
by the Company or any or any Company Subsidiary, or by any Person
on behalf of
the Company or any or any Company Subsidiary, and to the Company's
knowledge,
there are no facts that would be reasonably likely to result in a
material
product recall, field notification, field correction or safety
alert with
respect to any such products.
3.20. TAX MATTERS.
(A) Each of the Company and the Company Subsidiaries has timely
filed
with the appropriate Governmental Entity all Tax Returns required
to be filed.
All such Tax Returns are complete and accurate in all material
respects and have
been prepared in compliance with applicable Legal Requirements. All
material
Taxes due and owing by the Company and the Company Subsidiaries
(whether or not
shown on any Tax Return) have been paid. Neither the Company nor
any Company
Subsidiary is the beneficiary of any extension of time within which
to file any
material Tax Return. No written claim has ever been received by the
Company or
any Company Subsidiary from a Governmental Entity in a jurisdiction
where the
Company or any Company Subsidiary does not file Tax Returns that it
is or may be
subject to taxation by that jurisdiction.
(B) The unpaid Taxes of the Company and the Company Subsidiaries
did
not, as of the date of the Latest Balance Sheet, exceed the reserve
for Tax
liability (excluding any reserve for deferred Taxes established to
reflect
timing differences between book and Tax income) set forth on the
face of such
balance sheets (rather than in any notes thereto). Since the date
of the Latest
Balance Sheet, neither the Company nor any Company Subsidiary has
incurred any
liability for Taxes outside the ordinary course of business or
otherwise
inconsistent with past custom and practice.
(C) There are no examinations, audits or Legal Proceedings with
respect to material Taxes of the Company or any Company Subsidiary
currently
pending or underway (and to the knowledge of the Company no such
examination,
audit or proceeding is threatened) nor has the Company or any
Company Subsidiary
received any notice from a Governmental Entity relating to any
issue which could
result in a material Tax liability for the Company or any Company
Subsidiary. No
deficiency for material Taxes against the Company or any Company
Subsidiary has
been claimed, proposed or assessed by any Governmental Entity that
has not been
satisfied by payment or withdrawn. No extension or waiver of the
limitation
period applicable to any material Taxes or material Tax Return is
in effect. The
Company has delivered or made available to Parent complete and
accurate copies
of federal, state and local Tax Returns of the Company and each
Company
Subsidiary and their predecessors for all open Tax years, and
complete and
accurate copies of all examination reports and statements of
31
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deficiencies assessed against or agreed to by the Company, any
Company
Subsidiary or any predecessors since its last open Tax year.
(D) There are no Encumbrances for material Taxes (other than
Permitted
Encumbrances) upon any of the assets of the Company or any Company
Subsidiary.
(E) Neither the Company nor any Company Subsidiary will be required
to
include any material item of income in, or exclude any material
item of
deduction from, taxable income for any period (or any portion
thereof) ending
after the Acceptance Time as a result of any installment sale or
other
transaction on or prior to the Acceptance Time, any accounting
method change or
agreement with any Governmental Entity, any prepaid amount
received
