EXHIBIT 2.1
Execution Version
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AGREEMENT AND PLAN OF MERGER
Dated as of May 2, 2007
Among
INVENSYS SYSTEMS, INC.,
SIDUS ACQUISITION CORP.
And
CIMNET, INC.
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TABLE OF CONTENTS
ARTICLE I
THE
MERGER.................................................................................1
Section 1.01
The
Merger........................................................................1
Section 1.02
Closing...........................................................................2
Section 1.03
Effective
Time....................................................................2
Section 1.04
Effects of the
Merger.............................................................2
Section 1.05
Certificate of Incorporation and
By-laws..........................................2
Section 1.06
Directors.........................................................................2
Section 1.07
Officers..........................................................................3
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS;
EXCHANGE OF CERTIFICATES;
COMPANY STOCK OPTIONS AND
WARRANTS.........................................................3
Section 2.01
Total Merger
Consideration........................................................3
Section 2.02
Effect on Capital
Stock...........................................................3
Section 2.03
Exchange of
Certificates..........................................................4
Section 2.04
Company Stock Options;
Warrants...................................................6
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE
COMPANY..............................................7
Section 3.01
Organization, Standing and Corporate
Power........................................8
Section 3.02
Subsidiaries......................................................................8
Section 3.03
Capital
Structure.................................................................8
Section 3.04
Authority;
Noncontravention......................................................10
Section 3.05
Governmental
Approvals...........................................................11
Section 3.06
Company SEC Documents; Financial Statements; No Undisclosed
Liabilities..........11
Section 3.07
Information
Supplied.............................................................13
Section 3.08
Absence of Certain Changes or
Events.............................................13
Section 3.09
Litigation.......................................................................15
Section 3.10
Contracts........................................................................15
Section 3.11
Compliance with
Laws.............................................................17
Section 3.12
Environmental
Matters............................................................18
Section 3.13
Employees and
Labor..............................................................19
Section 3.14
Employee Benefit
Plans...........................................................20
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Section 3.15
Taxes............................................................................22
Section 3.16
Title to Assets;
Leases..........................................................25
Section 3.17
Intellectual
Property............................................................26
Section 3.18
Products.........................................................................27
Section 3.19
Accounts
Receivable..............................................................28
Section 3.20
Approval and Adoption
Requirements...............................................28
Section 3.21
State Takeover
Statutes..........................................................28
Section 3.22
Transactions with
Affiliates.....................................................29
Section 3.23
Suppliers and
Customers..........................................................29
Section 3.24
Insurance........................................................................29
Section 3.25
Inventory........................................................................29
Section 3.26
Sufficiency of
Assets............................................................30
Section 3.27
Brokers and Other
Advisors.......................................................30
Section 3.28
Opinion of Financial
Advisor.....................................................30
Section 3.29
Insolvency.......................................................................30
Section 3.30
Books and
Records................................................................30
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER
SUB...................................30
Section 4.01
Organization, Standing and Corporate
Power.......................................31
Section 4.02
Authority;
Noncontravention......................................................31
Section 4.03
Governmental
Approvals...........................................................31
Section 4.04
Information
Supplied.............................................................32
Section 4.05
Litigation.......................................................................32
Section 4.06
Ownership and Operations of Merger
Sub...........................................32
Section
4.07
Interested
Stockholder...........................................................32
Section 4.08
No Capital
Ownership.............................................................32
Section 4.09
Brokers
and Other
Advisors.......................................................33
Section 4.10
Financial Position of
Parent.....................................................33
ARTICLE V
COVENANTS RELATING TO CONDUCT OF
BUSINESS.................................................33
Section 5.01
Conduct of
Business..............................................................33
Section 5.02
No Solicitation by the
Company...................................................36
ARTICLE VI
ADDITIONAL
AGREEMENTS.....................................................................40
Section 6.01
Preparation of the Proxy
Statement...............................................40
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Section 6.02
Access to Information;
Confidentiality...........................................41
Section 6.03
Commercially Reasonable
Efforts..................................................41
Section 6.04
Indemnification, Exculpation and
Insurance.......................................42
Section 6.05
Fees and
Expenses................................................................44
Section 6.06
Public
Announcements.............................................................45
Section 6.07
Employee
Matters.................................................................45
Section 6.08
Principal Stockholders'
Agreement................................................46
Section 6.09
Executives' Employment
Agreements................................................46
Section 6.10
Section 16
Matters...............................................................46
Section 6.11 Stock
Plans......................................................................46
Section 6.12
Indemnification Obligations of John D. Richardson as an
Individual...............46
ARTICLE VII
CONDITIONS
PRECEDENT......................................................................46
Section 7.01
Conditions to Each Party's Obligation To Effect the
Merger.......................47
Section 7.02
Conditions to Obligations of Parent and Merger
Sub...............................47
Section 7.03
Conditions to Obligation of the
Company..........................................48
Section 7.04
Frustration of Closing
Conditions................................................48
ARTICLE VIII
TERMINATION, AMENDMENT AND
WAIVER.........................................................49
Section 8.01
Termination......................................................................49
Section
8.02
Effect of
Termination............................................................50
Section 8.03
Amendment........................................................................50
Section 8.04
Extension;
Waiver................................................................50
Section 8.05
Procedure for Termination, Amendment or
Waiver...................................51
ARTICLE IX
GENERAL
PROVISIONS........................................................................51
Section 9.01
Nonsurvival of Representations and
Warranties....................................51
Section 9.02
Notices..........................................................................51
Section 9.03
Definitions......................................................................52
Section 9.04
Interpretation...................................................................55
Section 9.05
Counterparts; Fax
Signatures.....................................................55
Section 9.06
Entire Agreement; No Third-Party
Beneficiaries...................................55
Section 9.07
Governing
Law....................................................................56
Section 9.08
Assignment.......................................................................56
Section 9.09
Jurisdiction; Waiver of Jury
Trial...............................................56
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Section 9.10
Specific
Enforcement.............................................................56
Section 9.11
Severability.....................................................................57
Exhibit A
Principal
Stockholders' Agreement
Exhibit B
Employment Agreements
Exhibit C
Wyomissing Lease Amendment
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Table of Defined Terms:
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Section
-------
Affected
Employees.................................................6.07(a)
Affiliate..........................................................9.03(a)
Affiliated
group...................................................3.15(a)
Agreement..........................................................Preamble
Alternative Acquisition
Agreement..................................5.02(a)
Anti-Bribery
Laws..................................................3.11(b)
Appraisal
Shares...................................................2.02(d)
Business
Day.......................................................9.03(b)
Certificate........................................................2.02(c)
Certificate of
Merger..............................................1.03
Change of
Recommendation...........................................5.02(d)
Change of Recommendation
Notice....................................5.02(d)(ii)
Claims.............................................................3.12
Closing............................................................1.02
Closing
Date.......................................................1.02
COBRA..............................................................3.13(d)
Code...............................................................2.03(g)
Common Stock Merger
Consideration..................................2.02(c)
Company............................................................Preamble
Company Benefit
Agreements.........................................3.08(d)
Company
By-laws....................................................3.01
Company
Certificate................................................3.01
Company Common
Stock...............................................2.02
Company Disclosure
Letter..........................................Article III
Company
Notice.....................................................5.02(c)
Company
Plans......................................................3.14(a)
Company Preferred
Stock............................................2.02
Company
Property...................................................3.12
Company SEC
Documents..............................................3.06(a)
Company
Stock......................................................2.02
Company Stockholders
Meeting.......................................3.05
Company Stock
Options..............................................3.03(b)
Company Stock
Plans................................................2.04(a)
Company Transaction
Costs..........................................9.03(c)
Competition
Law....................................................9.03(d)
Contract...........................................................3.04(b)
Customer
Agreements................................................9.03(e)
Debt
Obligations...................................................3.10(a)(ii)
DGCL...............................................................1.01
Documentation......................................................9.03(f)
Effect.............................................................9.03(k)
Effective
Time.....................................................1.03
Employees..........................................................3.13(a)
Employment
Agreements..............................................Recitals
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Environmental
Claims...............................................3.12
Environmental
Laws.................................................3.12
ERISA..............................................................3.14(a)
ERISA
Affiliates...................................................9.03(g)
Exchange
Act.......................................................3.06(a)
Exchange
Fund......................................................2.03(a)
Expense
Reimbursement..............................................6.05(b)
Expenses...........................................................9.03(h)
Executives.........................................................Recitals
Filed Company SEC
Document.........................................3.06(a)
GAAP...............................................................3.06(a)
Governmental
Authority.............................................3.05
Hazardous
Materials................................................3.12
Indemnitee.........................................................6.04(a)
Intellectual Property
Rights.......................................3.17(e)
Interested
Acquiror................................................5.02(a)
Investment Grade
Securities........................................2.03(e)
IRS................................................................3.14(c)
Knowledge..........................................................9.03(i)
Laws...............................................................3.11(a)
Leased Real
Property...............................................3.16(b)
Liens..............................................................9.03(j)
Major Business
Partner.............................................3.10(a)(iii)
Major
Customers....................................................3.23
Major
Suppliers....................................................3.23
Material Adverse
Effect............................................9.03(k)
Material
Contracts.................................................3.10(a)
Merger.............................................................Recitals
Merger
Sub.........................................................Preamble
Off the Shelf
Licenses.............................................3.17(a)
Outside
Date.......................................................8.01(b)
Parent.............................................................Preamble
Paying
Agent.......................................................2.03(a)
Permits............................................................3.11(a)
Permitted
Liens....................................................9.03(l)
person.............................................................9.03(m)
Preferred Stock Merger
Consideration...............................2.02(c)
Principal Company
Stockholders.....................................Recitals
Principal Stockholders'
Agreement..................................Recitals
Products...........................................................3.18(a)
Proxy
Statement....................................................3.05
Restraints.........................................................7.01(b)
Run-Off
Insurance..................................................6.04(c)
SEC................................................................3.05
Section
203........................................................3.21
Section
262........................................................2.02(d)
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Securities
Act.....................................................3.06(a)
SOX................................................................3.06(a)
Stockholder
Approval...............................................3.20
Subsidiary.........................................................9.03(n)
Superior
Proposal..................................................5.02(f)(ii)
Surviving
Corporation..............................................1.01
Takeover
Proposal..................................................5.02(f)(i)
taxes..............................................................3.15(o)
tax
Returns........................................................3.15(g)
Termination
Fee....................................................6.05(b)
Total Merger
Consideration.........................................2.01
WARN...............................................................3.13(b)
Warrants...........................................................2.04(b)
Wachovia
Facility..................................................9.03(o)
Wyomissing
Lease...................................................9.03(p)
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of May
2,
2007, among INVENSYS SYSTEMS, INC., a Massachusetts corporation
("Parent"),
SIDUS ACQUISITION CORP., a Delaware corporation and a wholly owned
Subsidiary of
Parent ("Merger Sub"), and CIMNET, INC., a Delaware corporation
(the "Company").
WHEREAS, the Board of Directors of each of Merger Sub and the
Company
has approved and declared advisable, and the Board of Directors of
Parent has
approved, this Agreement and the merger of Merger Sub with and into
the Company
(the "Merger"), upon the terms and subject to the conditions set
forth in this
Agreement;
WHEREAS, simultaneously with the execution and delivery of this
Agreement and as a condition and inducement to the willingness of
Parent and
Merger Sub to enter into this Agreement, John D. Richardson, Lynn
Richardson,
Anthony Crouch, Jason Dietrich, Bill Nyman, Grant Kelly, Alan N.
Forman and
Jocelyn Forman (as joint tenants), David Birk, J. Jeffrey Fox, and
Karl Gerhart
(collectively, the "Principal Company Stockholders"), the Company
and Parent are
entering into an agreement (the "Principal Stockholders'
Agreement") pursuant to
which each of the Principal Company Stockholders agrees, among
other things, to
take certain actions in furtherance of the Merger, including voting
their
respective shares to approve this Agreement and the Merger at the
special
stockholders meeting to be called to approve this Agreement and the
Merger;
WHEREAS, simultaneously with the execution and delivery of this
Agreement and as a condition and inducement to the willingness of
Parent and
Merger Sub to enter into this Agreement, Parent and each of John D.
Richardson,
Anthony Crouch and Jason Dietrich (the "Executives") are entering
into
agreements (the "Employment Agreements") pursuant to which each of
the
Executives agrees, among other things, to continue his employment
with the
Company after the Effective Time and not to have certain
relationships with
third parties after the Effective Time; and
WHEREAS, Parent,
Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection
with the
Merger and also to prescribe various conditions to the Merger;
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements contained in
this
Agreement, the parties hereto agree as follows:
ARTICLE I
THE MERGER
Section 1.01 The
Merger. Upon the terms and subject to the conditions
set forth in this Agreement and in accordance with the General
Corporation Law
of the State of Delaware (the "DGCL"), Merger Sub shall be merged
with and into
the Company as of the Effective Time pursuant to Section 251 of the
DGCL. As of
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the Effective Time, the separate corporate existence of Merger Sub
shall
thereupon cease, and the Company shall be the surviving corporation
in the
Merger (the "Surviving Corporation").
Section 1.02
Closing. Upon the terms and subject to the conditions
set forth in this Agreement, the closing of the Merger (the "
Closing") will
take place at 10:00 a.m. (New York, New York local time) on a date
to be
specified by the parties, which shall be no later than the second
Business Day
after satisfaction or (to the extent permitted by applicable Law)
waiver of the
conditions set forth in Article VII (other than those conditions
that by their
terms cannot be satisfied until the Closing, but subject to the
satisfaction or
waiver of such conditions at such time), at the offices of
McGuireWoods LLP,
1345 Avenue of the Americas, 7th Floor, New York, New York
10105-0106, unless
another time, date or place is agreed to in writing by Parent and
the Company.
The date on which the Closing occurs is referred to in this
Agreement as the
"Closing Date".
Section 1.03
Effective Time. Upon the terms and subject to the
conditions set forth in this Agreement, as promptly as practicable
after the
Closing and on the Closing Date, the parties shall file with the
Secretary of
State of the State of Delaware a certificate of merger (the
"Certificate of
Merger") duly prepared, executed and acknowledged by the parties in
accordance
with the relevant provisions of the DGCL, and, as promptly as
practicable on or
after the Closing Date, the parties shall make all other filings or
recordings
required under the DGCL. The Merger shall become effective as of
such time that
the Certificate of Merger is duly filed with the Secretary of State
of the State
of Delaware, or as of such subsequent time or date as Parent and
the Company
shall agree and shall specify in the Certificate of Merger (the
time and date at
which the Merger becomes effective being the "Effective Time").
Section 1.04
Effects of the
Merger. From and after the Effective
Time, the Merger shall have the effects set forth in the DGCL,
including Section
259 thereof. Without limiting the generality of the foregoing, and
subject
thereto, as of the Effective Time, all the properties, assets,
rights,
privileges, powers and franchises of the Company and Merger Sub
shall vest in
the Surviving Corporation, and all debts, liabilities and duties of
the Company
and Merger Sub shall become the debts, liabilities and duties of
the Surviving
Corporation.
Section 1.05
Certificate of Incorporation and By-laws.
---------------------------------------
(a) Subject to
Section 6.04, the Certificate of
Incorporation of the Surviving Corporation shall be amended to read
in its
entirety as the Certificate of Incorporation of Merger Sub read
immediately
prior to the Effective Time, except that the name of the Surviving
Corporation
shall be CIMNET, Inc.
(b) Subject to
Section 6.04, the by-laws of the Surviving
Corporation shall be amended so as to read in their entirety as the
by-laws of
Merger Sub read immediately prior to the Effective Time, until
thereafter
amended in accordance with applicable law, except references to
Merger Sub's
name shall be replaced by references to CIMNET, Inc.
Section 1.06
Directors. The directors of Merger Sub immediately prior
to the Effective Time shall be the directors of the Surviving
Corporation until
the earlier of their death, resignation or removal or until their
respective
successors are duly elected and qualified, as the case may be.
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Section 1.07
Officers. The officers of Merger Sub immediately prior
to the Effective Time shall be the officers of the Surviving
Corporation until
the earlier of their death, resignation or removal or until their
respective
successors are duly elected and qualified, as the case may be.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES;
COMPANY STOCK OPTIONS AND WARRANTS
Section 2.01
Total Merger Consideration. The total Merger
consideration shall be $23,271,177 cash (the "Total Merger
Consideration") and
shall be used for: (i) payment of the Common Stock Merger
Consideration and the
Preferred Stock Merger Consideration pursuant to Section 2.02(c)
upon surrender
of Certificates, (ii) the cancellation of Company Stock Options
pursuant to
Section 2.04(a), and (iii) the cancellation of the Warrants
pursuant to Section
2.04(b).
Section 2.02
Effect on Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of the
Company, Parent,
Merger Sub or any holder of any shares of common stock, par value
$0.0001 per
share, of the Company ("Company Common Stock"), any shares of
preferred stock,
par value $0.0001 per share, of the Company ("Company Preferred
Stock" and
together with Company Common Stock, "Company Stock"), or any shares
of capital
stock of Merger Sub:
(a) Capital
Stock of Merger Sub. Each issued and outstanding
share of capital stock of Merger Sub shall be converted into and
become one
validly issued, fully paid and nonassessable share of common stock,
par value
$0.0001 per share, of the Surviving Corporation.
(b) Cancellation
of Treasury Stock, and Parent-Owned Stock.
Each share of Company Common Stock and Company Preferred Stock that
is owned by
the Company, Parent or Merger Sub immediately prior to the
Effective Time shall
no longer be outstanding and shall automatically be canceled and
retired and
shall cease to exist, and no consideration shall be delivered in
exchange
therefor.
(c) Conversion
of Company Common Stock and Company Preferred
Stock. Each issued and outstanding share of Company Common Stock
(other than
shares to be canceled in accordance with Section 2.02(b) and
Appraisal Shares)
shall be converted into the right to receive $2.43 in cash
(assuming 7,414,044
shares of Company Common Stock outstanding), without interest (the
"Common Stock
Merger Consideration"). Each issued and outstanding share of
Company Preferred
Stock (other than shares to be canceled in accordance with Section
2.02(b) and
Appraisal Shares) shall be converted into the right to receive
$2.43 in cash
(assuming 746,965 shares of Company Preferred Stock outstanding),
without
interest (the "Preferred Stock Merger Consideration"). All such
shares of
Company Common Stock and Company Preferred Stock shall no longer be
outstanding
and shall automatically be canceled and retired and shall cease to
exist, and
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each holder of a certificate which immediately prior to the
Effective Time
represented any such shares of Company Common Stock or Company
Preferred Stock
(each, a "Certificate") shall cease to have any rights with respect
thereto,
except the right to receive the Common Stock Merger Consideration
or the
Preferred Stock Merger Consideration, as applicable.
(d) Appraisal
Rights. Notwithstanding anything in this
Agreement to the contrary, shares of Company Common Stock or
Company Preferred
Stock issued and outstanding immediately prior to the Effective
Time that are
held by any holder who is entitled to demand and properly demands
appraisal of
such shares ("Appraisal Shares") pursuant to, and who complies in
all respects
with, the provisions of Section 262 of the DGCL ("Section 262")
shall not be
converted into the right to receive the consideration payable as
provided in
Section 2.02(c), but instead such holder shall be entitled to
payment of the
fair value of such shares in accordance with the provisions of
Section 262. As
of the Effective Time, all Appraisal Shares shall no longer be
outstanding and
shall automatically be canceled and shall cease to exist, and each
holder of
Appraisal Shares shall cease to have any rights with respect
thereto, except the
right to receive the fair value of such Appraisal Shares in
accordance with the
provisions of Section 262. Notwithstanding the foregoing, if any
such holder
shall fail to perfect or otherwise shall waive, withdraw or lose
the right to
appraisal under Section 262 or a court of competent jurisdiction
shall determine
that such holder is not entitled to the relief provided by Section
262, then the
right of such holder to be paid the fair value of such holder's
Appraisal Shares
under Section 262 shall cease to exist and such Appraisal Shares
shall be deemed
to have been converted as of the Effective Time into, and shall
have become, the
right to receive the Common Stock Merger Consideration or the
Preferred Stock
Merger Consideration as provided in Section 2.02(c), as the case
may be. The
Company shall serve prompt notice to Parent of any demands for
appraisal of any
shares of Company Common Stock or Company Preferred Stock, and
Parent shall have
the right to participate in and, subject to applicable Law, after
consultation
with the Company, direct all negotiations and proceedings with
respect to such
demands. None of the Company and its Subsidiaries shall, without
the written
consent of Parent, make any payment with respect to, or settle or
offer to
settle, any such demands, or agree to do any of the foregoing.
(e) Certain
Adjustments. If, between the date of this
Agreement and the Effective Time, the outstanding Company Common
Stock or
Company Preferred Stock shall have been changed into a different
number of
shares or different class by reason of any reclassification,
recapitalization,
stock split, split-up, combination or exchange of shares or a stock
dividend or
dividend payable in any other securities shall be declared with a
record date
within such period, or any similar event shall have occurred, the
Total Merger
Consideration shall be appropriately adjusted to provide to the
holders of
Company Common Stock or Company Preferred Stock, as applicable, the
same
economic effect as contemplated by this Agreement prior to such
event. If,
between the date of this Agreement and the Effective Time, the
assumed number of
outstanding shares of Company Common Stock or Company Preferred
Stock (as
described in Section 2.02(c)) changes, then the Common Stock
Merger
Consideration or Preferred Stock Merger Consideration, as the case
may be, shall
be adjusted so that the Total Merger Consideration remains
$23,271,177.
Section 2.03
Exchange of Certificates.
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(a) Paying
Agent. Prior to the Effective Time, Parent shall
designate a bank or trust company (the "Paying Agent") reasonably
acceptable to
the Company to receive the Total Merger Consideration and to act as
agent for
payment of: (i) the Common Stock Merger Consideration and the
Preferred Stock
Merger Consideration pursuant to Section 2.02(c) upon surrender of
Certificates,
(ii) the cancellation of Company Stock Options pursuant to Section
2.04(a), and
(iii) the cancellation of the Warrants pursuant to Section 2.04(b).
As of or
prior to the Effective Time, Parent shall deposit, or cause to be
deposited,
with the Paying Agent the Total Merger Consideration in exchange
for all
outstanding shares of Company Common Stock and Company Preferred
Stock (such
cash being hereinafter referred to as the "Exchange Fund").
(b) Exchange
Procedures. As promptly as practicable after
the Effective Time, Parent shall cause the Paying Agent to mail to
each holder
of record of a Certificate (i) a form of letter of transmittal
(which shall
specify that delivery shall be effected, and risk of loss and title
to
Certificates shall pass, only upon proper delivery of Certificates
to the Paying
Agent and which shall be in such form as Parent and the Company may
reasonably
agree to use) and (ii) instructions for use in surrendering
Certificates in
exchange for the cash amounts specified in Section 2.02(c). Upon
surrender of a
Certificate for cancellation to the Paying Agent, together with
such letter of
transmittal, duly completed and validly executed, and such other
documents as
may be reasonably required by the Paying Agent, the holder of
record of such
Certificate shall be entitled to receive in exchange therefor the
amount of cash
into which the shares of Company Common Stock or Company Preferred
Stock
formerly represented by such Certificate shall have been converted
pursuant to
Section 2.02(c), and the Certificate so surrendered shall forthwith
be canceled.
In the event of a transfer of ownership of shares of Company Common
Stock or
Company Preferred Stock that is not registered in the transfer
records of the
Company, the proper amount of cash may be paid in exchange therefor
to a person
other than the person in whose name a Certificate so surrendered is
registered
if such Certificate shall be properly endorsed or otherwise be in
proper form
for transfer and the person requesting such issuance shall pay any
transfer or
other taxes required by reason of the payment to a person other
than the
registered holder of such Certificate or establish to the
reasonable
satisfaction of the Paying Agent that such tax has been paid or is
not
applicable. Until surrendered as contemplated by this Section
2.03(b), each
Certificate shall be deemed at any time after the Effective Time to
represent
only the right to receive upon such surrender the amount of cash
such holder
shall be entitled to receive pursuant to Section 2.02(c). No
interest will be
paid or will accrue on the cash payable upon surrender of any
Certificate.
(c) No Further
Ownership Rights in Company Common Stock or
Company Preferred Stock. All cash paid upon the surrender of
Certificates in
accordance with the terms of this Article II shall be deemed to
have been paid
in full satisfaction of all rights pertaining to the shares of
Company Common
Stock or Company Preferred Stock previously represented by such
Certificates. As
of the close of business on the day on which the Effective Time
occurs, the
stock transfer books of the Company shall be closed and there shall
be no
further registration of transfers on the stock transfer books of
the Surviving
Corporation of the shares of Company Common Stock or Company
Preferred Stock, in
each case that were outstanding immediately prior to the Effective
Time. If, at
any time after the Effective Time, Certificates are presented to
the Surviving
Corporation or the Paying Agent for any reason, such Certificates
shall be
canceled and exchanged as provided in this Article II.
5
<PAGE>
(d) No
Liability. None of Parent, Merger Sub, the Company or
the Paying Agent shall be liable to any person in respect of any
cash delivered
to a public official pursuant to any applicable abandoned property,
escheat or
similar Law. Any portion of the cash included in the Exchange Fund
that remains
undistributed to the holders of Certificates for one year after the
Effective
Time shall be returned to Parent, upon demand, and any holders of
Certificates
who have not theretofore complied with this Article II shall
thereafter look
only to Parent for, and Parent shall remain liable for, payment of
such funds to
which such holder may be due pursuant to Section 2.02(c).
(e) Investment
of Exchange Fund. Parent may cause the Paying
Agent to invest in any Investment Grade Securities, as directed by
Parent in its
sole discretion, any cash included in the Exchange Fund, and any
capital gain,
interest or other income resulting from such investments shall
inure to the
benefit of Parent and shall be paid to Parent from time to time by
the Paying
Agent. For purposes of this Section 2.03(e), "Investment Grade
Securities" shall
mean any of the following: (i) obligations of or guaranteed by the
United States
of America or any agency or instrumentality thereof, (ii) money
market accounts,
certificates of deposit, bank repurchase agreements or banker's
acceptances of,
or demand deposits with, commercial banks having a combined capital
and surplus
of at least $1,000,000,000 (based on the most recent financial
statements of
such bank which are publicly available), or (iii) commercial paper
obligations
rated P-1 or A-1 or better by Standard & Poor's Corporation or
Moody's Investor
Services, Inc.
(f) Lost
Certificates. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that
fact by the
person claiming such Certificate to be lost, stolen or destroyed
and, if
required by Parent or the Paying Agent, the posting by such person
of a bond in
such reasonable amount as Parent or the Paying Agent may direct as
indemnity
against any successful claim that may be made against it with
respect to such
Certificate, the Paying Agent will issue in exchange for such lost,
stolen or
destroyed Certificate the amount of cash which such holder would be
entitled
pursuant to Section 2.02(c).
(g) Withholding
Rights. The Paying Agent, Parent and the
Surviving Corporation shall be entitled to deduct and withhold from
the
consideration otherwise payable to any holder of shares of Company
Common Stock,
shares of Company Preferred Stock, or Company Stock Options
pursuant to this
Agreement such amounts as may be required to be deducted and
withheld with
respect to the making of such payment under the Internal Revenue
Code of 1986,
as amended, and the rules and regulations promulgated thereunder
(the "Code"),
or under any provision of state, local or foreign tax Law. To the
extent that
such amounts are so withheld and paid over to the appropriate
taxing authority,
such amounts shall be treated for purposes of this Agreement as
having been paid
to the person in respect of which such deduction and withholding
was made.
Section 2.04
Company Stock Options; Warrants.
-------------------------------
(a) Options.
Before the Closing, the Board of Directors of
the Company (or, if appropriate, any committee of the Board of
Directors of the
Company administering the Company Stock Plans) shall adopt such
resolutions and
take all such other actions as may be necessary to provide that
each Company
Stock Option granted under the Company's 1999 Stock Option Plan or
the 2002
6
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Stock Option Plan (together, the "Company Stock Plans"), as the
case may be,
outstanding immediately prior to the Effective Time, whether or not
then vested
or exercisable, shall be canceled as of the Effective Time in
exchange for a
lump sum payment in cash payable at the time of cancellation equal
to the
excess, if any, of (i) the product of (A) the number of shares of
Company Common
Stock subject to such Company Stock Option and (B) the Common Stock
Merger
Consideration over (ii) the product of (x) the number of shares of
Company
Common Stock subject to such Company Stock Option and (y) the per
share exercise
price of such Company Stock Option, without interest and less any
required
withholdings as specified in Section 2.03(g). All payments with
respect to
canceled Company Stock Options shall be made by the Paying Agent
(or such other
agent designated by Parent and the Company prior to the Effective
Time) as
promptly as reasonably practicable after the Effective Time from
funds deposited
by or at the direction of the Surviving Corporation to pay such
amounts in
accordance with Section 2.03(a). Prior to the Effective Time, as
reasonably
directed by Parent, the Company shall take any all actions
necessary to
effectuate this Section 2.04(a), including, without limitation,
adopting any
plan amendments and using reasonable best efforts to obtain any
required
consents; provided, however, that no action by the Company shall be
required to
be irrevocable until immediately prior to the Effective Time.
(b) Warrants.
Section 2.04(b) of the Company Disclosure
Letter sets forth each vested and unexpired warrant to purchase
Company Common
Stock that is outstanding as of the Effective Time (the
"Warrants"), the number
of shares of Company Common Stock subject to each such Warrant, the
grant dates
and exercise prices and vesting schedule of each such Warrant, and
the names of
the holder of each such Warrant. With respect to such Warrants, the
Company
shall use its reasonable best efforts to obtain such consents or
amendments as
are necessary under the Warrants to amend such Warrants in order to
provide for
the cancellation of the Warrants immediately prior to the Effective
Time in
exchange for the right to receive an amount in cash equal to the
excess, if any,
of (i) the product of (A) the number of shares of Company Common
Stock subject
to the applicable Warrant and (B) the Common Stock Merger
Consideration over
(ii) the product of (x) the number of shares of Company Common
Stock subject to
the applicable Warrant and (y) the per share exercise price of such
Warrant,
without interest and less any required withholdings as specified in
Section
2.03(g). All payments with respect to canceled Warrants shall be
made by the
Paying Agent (or such other agent designated by Parent and the
Company prior to
the Effective Time) as promptly as reasonably practicable after the
Effective
Time from funds deposited by or at the direction of the Surviving
Corporation to
pay such amounts in accordance with Section 2.03(a). No action by
the Company
with respect to the Warrants shall be required to be irrevocable
until
immediately prior to the Effective Time.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure letter delivered by the
Company
to Parent dated as of the date hereof certified by a duly
authorized officer of
the Company (the "Company Disclosure Letter") (each section of
which qualifies
the correspondingly numbered representation, warranty or covenant
to the extent
specified therein and such other representations, warranties or
covenants to the
extent a matter in such section is disclosed in such a way as to
make its
relevance to such other representation, warranty or covenant
readily apparent),
the Company represents and warrants to Parent and Merger Sub as
follows:
7
<PAGE>
Section 3.01
Organization, Standing and Corporate Power. The Company
(i) is a corporation duly organized, validly existing and in good
standing under
the Laws of the State of Delaware, and (ii) has all requisite
corporate power
and authority to carry on its business as now being conducted. The
Company is
duly qualified or licensed to do business and is in good standing
in the
jurisdictions set forth in Section 3.01 of the Company Disclosure
Letter, which
jurisdictions are all of the jurisdictions in which the nature of
its business
or the ownership, leasing or operation of its properties or other
assets makes
such qualification or licensing necessary, other than in such
jurisdictions
where the failure to be so qualified or licensed individually or in
the
aggregate has not had and is not reasonably likely to have a
Material Adverse
Effect. The Company has provided to Parent true and complete copies
of the
certificate of incorporation of the Company as in effect on the
date hereof
("Company Certificate") and the By-laws of the Company as in effect
on the date
hereof ("Company By-laws") and, provided the Parent access to all
minutes taken
at the meetings of the stockholders, the Board of Directors and
each committee
of the Board of Directors of the Company held since April 1, 2002.
Section 3.01
of the Company Disclosure Letter sets forth the officers and
directors of the
Company.
Section 3.02
Subsidiaries. The Company does not have any
Subsidiaries. The Company does not beneficially own, directly or
indirectly, any
capital stock of, or other equity or voting interests or investment
(whether
equity or debt) in, any person, nor is the Company subject to any
obligation or
requirement to provide for or to make any investment (in the form
of a loan,
capital contribution or otherwise) to or in, any person.
Section 3.03
Capital Structure.
-----------------
(a) The
authorized capital stock of the Company consists of
15,000,000 shares of Company Common Stock and 5,000,000 shares of
Company
Preferred Stock. As of the close of business on April 30, 2007: (i)
7,414,044
shares of Company Common Stock (excluding treasury shares) were
issued and
outstanding, (ii) 746,965 shares of Company Preferred Stock were
issued and
outstanding, (iii) no shares of Company Common Stock or Company
Preferred Stock
were held by the Company in its treasury, (iv) 746,965 shares of
Company Common
Stock were reserved for issuance pursuant to conversion of the
Company Preferred
Stock, (v) 820,000 shares of Company Common Stock were reserved for
issuance
pursuant to conversion of Warrants, (vi) 2,900,000 shares of
Company Common
Stock were reserved for issuance pursuant to the Company Stock
Plans (of which
1,457,000 shares of Company Common Stock were subject to
outstanding options to
purchase shares of Company Common Stock granted under the Company
Stock Plans),
and (vii) no shares of Company Stock will be (x) subject to a right
of
repurchase by the Company, (y) subject to forfeiture back to the
Company or (z)
subject to transfer or lock-up restrictions, in each of cases (x),
(y) and (z),
following the consummation of the Merger.
(b) Section
3.03(b) of the Company Disclosure Letter sets
forth, as of the date hereof, a true and complete list of all
outstanding
options to purchase Company Common Stock (collectively, "Company
Stock
Options"), the number of shares of Company Common Stock subject to
each such
Company Stock Option or other such right, the grant dates and
exercise prices
8
<PAGE>
and vesting schedule of each such Company Stock Option, or other
right and the
names of the holder of each such Company Stock Option or other
right. There are
no options to purchase Company Preferred Stock. Except as set forth
in Section
3.03(a) of this Agreement, (i) there are not issued, reserved for
issuance or
outstanding any (A) shares of capital stock of, or other equity or
voting
interests in, the Company, (B) securities of the Company
convertible into or
exchangeable or exercisable for shares of capital stock of, or
other equity or
voting interests in, the Company or (C) options, warrants or other
rights to
acquire from the Company any capital stock of, or other equity or
voting
interests in, or securities convertible into or exchangeable or
exercisable for
capital stock of, or other equity or voting interests in, the
Company and (ii)
as of the date of this Agreement, there exists no obligation of the
Company to
issue any capital stock of, or other equity or voting interests in,
or
securities convertible into or exchangeable or exercisable for
capital stock of,
or other equity or voting interests in, the Company. Except as set
forth in
Section 3.03(a) of this Agreement, there are no outstanding stock
appreciation
rights, phantom stock awards, rights to receive shares of Company
Stock on a
deferred basis or otherwise or other similar rights that are linked
in any way
to the value of Company Stock or any part thereof. Except as set
forth in
Section 3.03(b) of the Company Disclosure Letter, during the period
from the
close of business on December 31, 2006, to the date hereof, there
have been no
issuances by the Company of (i) shares of capital stock of, or
other equity or
voting interests in, the Company (other than issuances pursuant to
the exercise
of Company Stock Options outstanding on such date as required by
their terms as
in effect on the date of this Agreement), (ii) securities of the
Company
convertible into or exchangeable or exercisable for shares of
capital stock of,
or other equity or voting interests in, the Company or (iii)
options, warrants
or other rights to acquire from the Company any capital stock of,
or other
equity or voting interests in, or securities convertible into or
exchangeable or
exercisable for capital stock of, or other equity or voting
interests in, the
Company.
(c) All
outstanding shares of capital stock of the Company
are, and all shares which may be issued upon exercise of the
Company Stock
Options will be, when issued in accordance with the terms thereof,
duly
authorized, validly issued, fully paid and nonassessable and not
subject to
preemptive rights. Except as set forth in Section 3.03(a) and
Section 3.03(b) of
this Agreement, there are no (i) Contracts of any kind to which the
Company or
any of its Subsidiaries is a party or is bound that obligate the
Company or any
of its Subsidiaries to repurchase, redeem or otherwise acquire
shares of capital
stock of, or other equity or voting interests in, the Company or
(ii) options,
warrants or other rights to acquire shares of capital stock of, or
other equity
or voting interests in, or securities convertible into or
exchangeable for
capital stock of, or other equity or voting interests in, the
Company. Other
than the Principal Stockholders' Agreement or as set forth in
Section 3.03(c) of
the Company Disclosure Letter, the Company is not a party to any
voting Contract
with respect to the voting of any such securities. Other than the
Principal
Stockholders' Agreement or as set forth in Section 3.03(c) of the
Company
Disclosure Letter, to the Company's Knowledge, there are no
irrevocable proxies
and no voting Contracts (or Contracts to execute a written consent
or a proxy)
with respect to any shares of Company Stock or any other voting
securities of
the Company.
(d) Section
3.03(d) of the Company Disclosure Letter sets
forth a true and complete list of all outstanding Debt Obligations
of the
Company and all guarantees by the Company of any Debt Obligations
of any person.
9
<PAGE>
Section 3.04
Authority; Noncontravention.
---------------------------
(a) The Company
has all requisite corporate power and
authority to execute and deliver this Agreement and to consummate
the Merger and
the other transactions contemplated hereby and thereby, subject, in
the case of
the consummation of the Merger, only to receipt of the Stockholder
Approval. The
execution and delivery of this Agreement by the Company and the
consummation of
the Merger and the other transactions contemplated hereby and
thereby and the
compliance by the Company with the provisions of this Agreement
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 or approve this Agreement or to consummate the Merger or
the other
transactions contemplated hereby or thereby, subject, in the case
of the
consummation of the Merger, only to receipt of the Stockholder
Approval. This
Agreement has been duly executed and delivered by the Company and,
assuming the
due authorization, execution and delivery by each of the other
parties hereto,
constitutes the legal, valid and binding obligation of the Company,
enforceable
against the Company in accordance with its terms (subject to
applicable
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and
other Laws affecting creditors' rights generally from time to time
in effect).
The Board of Directors of the Company, at a meeting duly called and
held, at
which all directors of the Company were present, duly and
unanimously adopted
resolutions (i) approving, adopting and declaring advisable this
Agreement, the
Merger and the other transactions contemplated hereby and thereby,
(ii)
declaring that the Merger and the other transactions contemplated
hereby are in
the best interests of the stockholders of the Company, (iii) fixing
the record
date to determine the stockholders entitled to consent to the
adoption of this
Agreement and approve the Merger and the other transactions
contemplated hereby,
which date is the date hereof, (iv) directing that this Agreement
be submitted
to the stockholders promptly following the execution and delivery
of this
Agreement by each of the parties hereto for such stockholders to
consider
whether to adopt this Agreement and approve the Merger and other
transactions
contemplated hereby and (v) recommending that the stockholders of
the Company
adopt this Agreement and approve the Merger and the other
transactions
contemplated hereby, which resolutions have not been subsequently
rescinded,
modified or withdrawn in any way.
(b) The
execution and delivery of this Agreement does not,
and the consummation of the Merger and the other transactions
contemplated
hereby and thereby and compliance with the provisions hereof and
thereof do not
and will not, conflict with, or result in any violation or breach
of, or
constitute a default (with or without notice or lapse of time or
both) under, or
give rise to a right of termination, cancellation or acceleration
of any
obligation, or to the loss of a benefit under, or result in the
creation of any
Lien in or upon any of the properties or other assets of the
Company under (i)
the Company Certificate or the Company By-laws, (ii) any loan or
credit
agreement, bond, debenture, note, mortgage, indenture, lease or
other contract,
commitment, agreement, instrument, obligation, option, undertaking,
concession,
franchise or license, binding arrangement or binding understanding
(each,
including all amendments thereto, a "Contract") to which the
Company is a party
or is bound or any of their respective properties or other assets
is bound by or
subject to or otherwise under which the Company has any rights or
benefits or
(iii) subject to the governmental filings and other matters
referred to in
Section 3.05, any Law applicable to the Company or its properties
or other
assets, other than, in the case of clauses (ii) and (iii), any such
conflicts,
violations, breaches, defaults, rights, results, losses or Liens
that
individually or in the aggregate have not had and are not
reasonably likely to
have a Material Adverse Effect.
10
<PAGE>
Section 3.05
Governmental Approvals. Except as set forth in Section
3.05 of the Company Disclosure Letter, no consent, approval, order
or
authorization of, action by or in respect of, or registration,
declaration or
filing with, any domestic or foreign (whether supernational,
national, Federal,
state, provincial, local or otherwise) government or any court,
administrative,
regulatory or other governmental agency, commission or authority or
any
nongovernmental self-regulatory agency, commission or authority
(each, a
"Governmental Authority") is required by or with respect to the
Company in
connection with the execution and delivery of this Agreement by the
Company or
the consummation by the Company of the Merger or the other
transactions
contemplated hereby or thereby, except for: (a) the filing with the
Securities
and Exchange Commission ("SEC") of (i) a preliminary and definitive
proxy
statement relating to the stockholders meeting (the "Company
Stockholders
Meeting") for the Stockholder Approval pursuant to Regulation 14A
of the
Exchange Act (as amended or supplemented from time to time, the
"Proxy
Statement") and (ii) such reports under the Exchange Act as may be
required
after the date hereof in connection with this Agreement, the
Principal
Stockholders' Agreement, the Merger and the other transactions
contemplated
hereby and thereby, (b) the filing of the Certificate of Merger
with the
Secretary of State of the State of Delaware and appropriate
documents with the
relevant authorities of other states in which the Company is
qualified to do
business and (c) such other consents, approvals, orders,
authorizations,
registrations, declarations and filings as may be required after
the date hereof
under state securities, takeover or "blue sky" laws of various
states.
Section 3.06
Company SEC Documents; Financial Statements; No
Undisclosed Liabilities.
(a) The Company
has filed all reports, schedules, forms,
statements and other documents (including exhibits and other
information
incorporated therein) with the SEC required to be filed by the
Company since
January 1, 2002 under the Securities Act of 1933, as amended, and
the rules and
regulations promulgated thereunder (the "Securities Act") and
Securities and
Exchange Act of 1934, as amended, and the rules and regulations
promulgated
thereunder (the "Exchange Act") (such documents, together with any
documents
filed during such period by the Company with the SEC on a voluntary
basis on
Current Reports on Form 8-K, the "Company SEC Documents"). As of
their
respective dates, the Company SEC Documents complied in all
material respects
with the requirements of the Securities Act, the Exchange Act and
the
Sarbanes-Oxley Act of 2002, and the rules and regulations
promulgated thereunder
("SOX"), applicable to such Company SEC Documents, and, as of their
respective
dates, none of the Company SEC Documents contained any untrue
statement of a
material fact or omitted to state a material fact required to be
stated therein
or necessary in order to make the statements therein, in light of
the
circumstances under which they were made, not misleading. Except to
the extent
that information contained in any Company SEC Document filed and
publicly
available prior to the date hereof ("Filed Company SEC Document")
has been
revised, amended, supplemented or superseded by a later filed
Company SEC
Document, none of the Company SEC Documents contains any untrue
statement of a
material fact or omits 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. Except as set forth in
Section
3.06(a) of the Company Disclosure Letter, the financial statements
(including
11
<PAGE>
the related notes thereto) of the Company included in the Company
SEC Documents
(i) complied as to form in all material respects with applicable
accounting
requirements and the published rules and regulations of the SEC
with respect
thereto as of their respective dates, (ii) were prepared in
accordance with
United States generally accepted accounting principles ("GAAP")
(except, in the
case of unaudited statements, as permitted by Form 10-Q of the SEC)
applied on a
consistent basis during the periods involved (except as may be
indicated in the
notes thereto) and (iii) presented fairly in all material respects
the financial
position of the Company as of the dates thereof and the
consolidated results of
their operations and cash flows for the periods then ended
(subject, in the case
of unaudited statements, to normal year-end audit adjustments). The
Company has
not made any filings or any amendments or modifications to any
Company SEC
Documents which have not yet been filed with the SEC but that are
required to be
filed with the SEC in accordance with the Securities Act or the
Exchange Act, as
the case may be. As used in this Section 3.06, the term "file"
shall be broadly
construed to include any manner in which a document or information
is furnished,
supplied or otherwise made available in writing to the SEC.
(b) The Company
has no liabilities or obligations of any
nature (whether accrued, absolute, contingent or otherwise and
whether known or
unknown), except for (i) liabilities and obligations referenced
(whether by
value or otherwise) or reflected in the Company's annual report for
the fiscal
year ended December 31, 2006 on Form 10-KSB filed with the SEC on
March 30,
2007, (ii) liabilities and obligations incurred in the ordinary
course of
business since December 31, 2006, (iii) liabilities under Material
Contracts,
Contracts filed as exhibits to the Filed Company SEC Documents and
Contracts set
forth on Section 3.16(b) of the Company Disclosure Letter, in each
case, that
relate to obligations that have not yet been performed, and are not
required to
be performed, as of the date hereof, and (iv) liabilities and
obligations set
forth in Section 3.06(b) of the Company Disclosure Letter.
(c) The
principal executive officer of the Company and the
principal financial officer of the Company has made all
certifications required
by Rule 13a-14 or 15d-14 under the Exchange Act and Sections 302
and 906 of SOX
with respect to the Company SEC Documents, and the statements
contained in such
certifications were at the time they were made, and are, true and
accurate. For
purposes of this Agreement, "principal executive officer" and
"principal
financial officer" shall have the meanings given to such terms in
SOX. Except as
set forth in Section 3.06(c) of the Company Disclosure Letter, the
Company has
no outstanding, or has not arranged any outstanding, "extensions of
credit" to
directors or executive officers within the meaning of Section 402
of SOX.
(d) The Company
is not a party to, or has no commitment to
become a party to, any joint venture, off-balance sheet partnership
or any
similar Contract (including any Contract or arrangement relating to
any
transaction or relationship between or among the Company, 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 effect of such Contract is to avoid
disclosure of any
material transaction involving, or material liabilities of, the
Company in the
Company's published financial statements or other Company SEC
Documents.
12
<PAGE>
(e) The Company
maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (i)
transactions are
executed in accordance with management's general or specific
authorizations,
(ii) access to assets is permitted only in accordance with
management's general
or specific authorization and (iii) the recorded accountability for
assets is
compared with the existing assets at reasonable intervals and
appropriate action
is taken with respect to any differences.
(f) The
Company's "disclosure controls and procedures" (as
defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) are
reasonably
designed to ensure that (i) all information (both financial and
non-financial)
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 rules and forms of the SEC and
(ii) all such
information is accumulated and communicated to the Company's
management as
appropriate to allow timely decisions regarding required disclosure
and to make
the certifications of the principal executive officer and principal
financial
officer of the Company required under the Exchange Act with respect
to such
reports.
(g) As of the
date hereof, there are no outstanding or
unresolved comments from the SEC staff with respect to any of the
Filed Company
SEC Documents. The Company has made available to Parent copies of
all material
correspondence between the SEC, on the one hand, and the Company,
on the other
hand, since January 1, 2004 through the date of this Agreement.
(h) Except as
set forth in of Section 3.06(h) of the Company
Disclosure Letter, since January 1, 2004, the Company has not
received any
notification of (i) a "significant deficiency" or (ii) a "material
weakness" in
the Company's internal controls. For purposes of this Agreement,
the terms
"significant deficiency" and "material weakness" shall have the
meanings
assigned to them in Release 2004-001 of the Public Company
Accounting Oversight
Board, as in effect on the date hereof.
Section 3.07
Information
Supplied. None of the information provided
by the Company included or incorporated by reference in the Proxy
Statement
will, on the date it is first mailed to the stockholders of the
Company, 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. The information provided by the Company contained in
the Proxy
Statement is complete and accurate and will comply as to form in
all material
respects with the requirements of the Exchange Act.
Section 3.08
Absence of Certain Changes or Events. Since December 31,
2006, the Company has conducted its businesses only in the ordinary
course, and
except as disclosed in the Filed Company SEC Documents, or as set
forth in
Section 3.08 of the Company Disclosure Letter, there has not
been:
(a) any Effect
that individually or in the aggregate has had
or is reasonably likely to have a Material Adverse Effect;
13
<PAGE>
(b) (i)
any declaration,
setting aside or payment of any
dividend or other distribution (whether in cash, stock, property or
other
assets) in respect of any of the Company's capital stock, or other
equity or
voting interests, (ii) any split, combination or reclassification
of any of the
Company's capital stock, or other equity or voting interests, or
any issuance or
the authorization of any issuance of any other securities in
respect of, in lieu
of or in substitution for shares of such capital stock, or other
equity or
voting interests, (iii) any purchase, redemption or other
acquisition of any
shares of capital stock, or other equity or voting interests or any
other
securities of the Company or any warrants, options or other rights
to acquire
any such shares or other securities, or (iv) any issuance of
Company Stock
Options or restricted shares of the capital stock of the
Company;
(c) any granting
by the Company to any current or former
director, officer, employee or consultant (other than attorneys,
accountants or
other similar professional service providers) of the Company of any
increase in
compensation, bonus or other benefits or any such granting of any
type of
compensation, bonus or other benefits to any current or former
director,
officer, employee or consultant (other than attorneys, accountants
or other
similar professional service providers) of the Company not
previously receiving
or entitled to receive such type of compensation, bonus or other
benefit, except
for increases of cash compensation (i) in the ordinary course of
business
consistent with past practice or, (ii) as was required under any
Company Plan or
Company Benefit Agreement listed in Section 3.14(a) of the Company
Disclosure
Letter;
(d) any entering
into, or any amendment or termination of,
any employment, deferred compensation, supplemental retirement,
severance,
retention, "change in control" or other similar Contract ("Company
Benefit
Agreements") or any collective bargaining Contract or other labor
union Contract
or any Company Plan;
(e) any change
in financial or tax accounting methods,
principles or practices by the Company, except insofar as may have
been required
by a change in GAAP;
(f) any material
election with respect to taxes by the
Company or any settlement or compromise of any tax liability or
refund;
(g) any
revaluation by the Company of any material assets of
the Company;
(h) any sale,
lease, license or other disposition of, or
subjecting to any Lien, any assets of the Company (including
Intellectual
Property Rights), except in the ordinary course of business
consistent with past
practice;
(i) any damage
or destruction to or loss of Company
property, not covered by insurance, in excess of $25,000;
(j) any material
incurrence, assumption or guarantee by the
Company of any indebtedness for borrowed money; or
(k) Contract or
agreement to take any of the actions
described in Sections 3.08(a) through 3.08(j).
14
<PAGE>
Section 3.09
Litigation. Except as set forth in Section 3.09 of the
Company Disclosure Letter, there is no claim, suit, action,
investigation or
other proceeding pending or, to the Knowledge of the Company,
threatened against
the Company or any its properties or other assets, nor is there any
judgment,
decree, injunction, rule or order of any Governmental Authority or
arbitrator
outstanding against, or, to the Knowledge of the Company,
investigation,
proceeding, notice of violation, order of forfeiture or complaint
by any
Governmental Authority involving, the Company.
Section 3.10
Contracts.
---------
(a) The Company
is not a party or bound or otherwise does
not have any rights or benefits under, and none of the Company's
properties or
other assets is bound by or subject to, any Contract that is of a
nature
required to be filed as an exhibit to a report or filing under the
Securities
Act or the Exchange Act, other than any such Contract that is filed
as an
exhibit to the Filed Company SEC Documents. Except for Contracts
filed as
exhibits to the Filed Company SEC Documents and purchase orders
entered into in
the ordinary course of business consistent with past practice (but
not the
Contracts pursuant to which such purchase orders were issued),
Section 3.10 of
the Company Disclosure Letter sets forth (with specific reference
to the
subsection to which it relates), as of the date hereof, a true and
complete list
of, and the Company has provided the Parent access to true and
complete copies
of (collectively, the Contracts required to be listed in the
Company Disclosure
Letter, "Material Contracts"):
(i)
each Contract of the Company involving aggregate
annual payments by or to the Company, of more than $40,000, other
than
any Contract set forth on Section 3.13, 3.14(a) or 3.16(b) of
the
Company Disclosure Letter;
(ii) (A)
all Contracts
pursuant to which any of the
following indebtedness of the Company is outstanding or may be
incurred: borrowed money, bonds, finance or capitalized leases,
sureties, letters of credit or other credit agreements
(collectively,
"Debt Obligations"), (B) all Contracts of or by the Company
guaranteeing any Debt Obligations of any other person (other than
the
Company), including the respective aggregate principal amounts
outstanding as of the date hereof, and (C) all Contracts involving
any
"keep well" arrangements or pursuant to which the Company has
agreed to
maintain any financial statement condition of another person;
(iii) all
Contracts between the Company and any vendor
or
supplier of the Company to whom the Company has paid or has an
annual payment obligation to, and each customer of the Company who
has
paid or is obligated to pay the Company, in excess of $40,000 in
either
2006 or to date in 2007 (each such vendor, supplier or customer,
a
"Major Business Partner");
(iv) (A)
all
Contracts pursuant to which the
Company has agreed not to, or which, following the consummation of
the
Merger, could restrict the ability of Parent or any of its
Subsidiaries, including the Company to compete with any person in
any
business or in any geographic area or to engage in any business
or
other activity, including any restrictions relating to
"exclusivity" or
any similar requirement in favor of any person other than the
Company
or pursuant to which any benefit is required to be given or lost as
a
15
<PAGE>
result of so competing or engaging, and (B) all Contracts pursuant
to
which the Company has agreed not to, or which, following the
consummation of the Merger, could restrict the ability of Parent or
any
of its Subsidiaries, including the Company to solicit or to hire
any
person for positions in which annual compensation would be expected
to
exceed $75,000 to work for the Company (either as an employee or as
an
independent contractor or other agent) or pursuant to which any
benefit
is required to be given or lost as a result of so soliciting or
hiring;
(v)
all Contracts of the Company granting the other
party to such Contract or a third party "most favored nation"
or
similar status;
(vi) all
Contracts to which the Company is party
granting any license to, or franchise in respect of, any
material
right, property or other asset (except for customer rights pursuant
to
existing Customer Agreements);
(vii) all joint
venture, limited liability company,
partnership or other similar Contracts (including all
amendments
thereto) in which the Company holds an interest;
(viii) all
confidentiality, standstill or similar
Contracts to which the Company is a party that would impose
restrictions on the activities of Parent or any of its
Subsidiaries,
including the Surviving Corporation;
(ix) all
Contracts by the Company that restrict the
payment of dividends or the repurchase of securities; and
(x)
all Contracts by the Company that relate to the
making of any loan to or investment in any person;
(xi) all
Contracts providing for indemnity (including
an obligation to advance funds for expenses other than Customer
Agreements that do not constitute Material Contracts) by the
Company;
(xii) all sales,
agency or distributorship Contracts;
(xiii) all Contracts
for leases, subleases, rental
arrangements, Contracts of sale tenancies or licenses of real
property;
(xiv) all
outstanding powers of attorney executed on
behalf of the Company;
(xv) all
Contracts providing for the services of
consultants or independent contractors, including, but not limited
to,
Contracts relating to design, development, advertising or
engineering,
that, in each case, involve future expenditures of the Company
in
excess of $40,000;
16
<PAGE>
(xvi) all
Contracts providing a warranty period that
is greater than twelve months (other than Customer Agreements that
do
not constitute Material Contracts);
(xvii) all Contracts
involving a guarantee by the
Company to a third-party customer that such customer will achieve
a
specified level of cost avoidance or efficiency through utilization
of
the Company's Products;
(xviii) all other Contracts (other than Customer
Agreements that do not constitute Material Contracts) that are
not
cancelable by the Company on notice of ninety (90) calendar days
or
less without liability or penalty; or
(xix)
any Contract
providing an indemnity that (i)
includes incidental damages, special or exemplary damages,
consequential damages, damages for lost profits, or damages based
upon
diminution in the value, and (ii) is not capped at the
applicable
Contract's value.
The Company is not in material violation or breach of or in
default
under (nor, to the Knowledge of the Company, does there exist any
condition
which upon the passage of time or the giving of notice or both
would cause such
a violation or breach of or default under) any Contract to which it
is a party
or is bound or by which it or any of its properties or other assets
is bound by
or subject to or otherwise under which the Company has any rights
or benefits.
Except as set forth in Section 3.10 of the Company Disclosure
Letter, no
approval or consent of, or notice to, any person is needed in order
that each
Material Contract shall continue in full force and effect in
accordance with its
terms without penalty, acceleration or rights of early termination
by reason of
the consummation of the transactions contemplated by this
Agreement.
(b) Since
January 1, 2006, no person that was a Major
Business Partner has terminated (including delivering a notice to
the Company
having such effect) any Material Contract or any of its existing
relationships
with the Company or failed to renew or requested any amendment to
any Material
Contract that is adverse to the Company.
Section 3.11
Compliance with Laws.
--------------------
(a) Except with
respect to Environmental Laws and taxes,
which are the subject of Sections 3.12 and 3.15, respectively, the
Company is,
and since January 1, 2003, has been, in compliance with (a) all
statutes, laws,
ordinances, rules, regulations, judgments, orders and decrees of
any
Governmental Authority (collectively, "Laws") applicable to it, its
personnel,
properties or other assets or its business or operations, and (b)
all permits,
licenses, variances, exemptions, authorizations, operating
certificates,
franchises, orders and approvals of all Governmental Authorities
(collectively,
"Permits") issued to the Company, other than any instances of
noncompliance with
any Laws or Permits that are capable of being remedied (including
payment of
fines and penalties), individually or in the aggregate, for less
than $50,000.
The Company has not received, since January 1, 2002, a notice or
other written
communication alleging or relating to a possible material violation
of any Law
applicable to it, its personnel, properties or other assets or its
businesses or
operations. The Company has in effect all Permits necessary for
them to own,
lease or operate their properties and other assets and to carry on
their
17
<PAGE>
businesses operations as now conducted. All Permits are listed on
Section 3.11
of the Company Disclosure Letter. There is no event that has
occurred that has
resulted in or, to the Knowledge of the Company, is reasonably
likely to result
in the revocation, cancellation, non-renewal or adverse
modification of any
Permit.
(b) The Company
is in compliance in all material respects
with all statutory and regulatory requirements under (i) the
anti-bribery
provisions of the Foreign Corrupt Practices Act (15 U.S.C. ss.ss.
78dd-1 and
78dd-2), (ii) the books and records provisions of the Foreign
Corrupt Practices
Act as they relate to any payment in violation of the anti-bribery
provisions of
the Foreign Corrupt Practices Act, (iii) the Organization for
Economic
Cooperation and Development Convention Against Bribery of Foreign
Public
Officials in International Business Transactions and (iv) local
anti-corruption
and bribery laws in jurisdictions in which the Company is
operating
(collectively, the "Anti-Bribery Laws"). The Company has not
received any
communication that alleges that the Company or any agent thereof
is, or may be,
in violation of, or has, or may have, any material liability under,
the
Anti-Bribery Laws.
Section 3.12
Environmental Matters. Except as disclosed in the
Company SEC Documents or as set forth in Section 3.12 of the
Company Disclosure
Letter, to the Knowledge of the Company (i) Hazardous Materials (as
hereinafter
defined) have not at any time been generated, used, treated or
stored on, or
transported to or from or released or disposed of on any Company
Property (as
hereinafter defined) or, to the knowledge of the Company, any
property adjoining
or adjacent to any Company Property, except in material compliance
with
Environmental Laws (as hereinafter defined) and so as not to give
rise to an
Environmental Claim (as hereinafter defined), (ii) the Company is
in compliance
with all Environmental Laws and the requirements of any Permits
issued under
such Environmental Laws with respect to any Company Property, (iii)
there are no
past, pending or threatened Environmental Claims against the
Company or any
Company Property, (iv) there are no facts or circumstances,
conditions or
occurrences regarding any Company Property that are reasonably
likely (A) to
form the basis of an Environmental Claim against the Company or any
Company
Property or (B) to cause such Company Property to be subject to any
restrictions
on its ownership, occupancy, use or transferability under any
Environmental Law,
(v) there are not now and never have been any underground storage
tanks located
on any Company Property and (vi) no Company Property is listed on
the National
Priorities List or the Comprehensive Environmental Response,
Compensation and
Liability Information System promulgated pursuant to the
Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended, 42
U.S.C. Section 9601 et seq. or state equivalent lists and laws.
For purposes of this Agreement, the following terms shall have
the following meanings: (i) "Company Property" means any real
property and
improvements at any time owned, leased, used, operated or occupied
by the
Company; (ii) "Hazardous Materials" means (A) any petroleum or
petroleum
products, radioactive materials, asbestos in any form that is
friable, urea
formaldehyde foam insulation, dielectric fluid containing levels
of
polychlorinated biphenyls, and radon gas; (B) any chemicals,
materials or
substances defined as or included in the definition of "hazardous
substances,"
"hazardous wastes," "hazardous materials," "extremely hazardous
substances,"
"restricted hazardous wastes," "toxic substances," "toxic
pollutants," or words
of similar import, under any applicable Environmental Law; and (C)
any other
chemical, material or substance, exposure to which is prohibited,
limited or
regulated by any governmental authority; (iii) "Environmental Law"
means any
18
<PAGE>
federal, state or local statute, law, rule, regulation, ordinance,
code, policy
or rule of common law in effect and in each case as amended as of
the date
hereof and the Effective Time, and any judicial or administrative
interpretation
thereof as of the date hereof and the Effective Time, including any
judicial or
administrative order, consent decree or judgment, relating to the
environment,
health, safety or Hazardous Materials, including the Comprehensive
Environmental
Response, Compensation, and Liability Act of 1980, as amended, 42
U.S.C. ss.9601
et seq.; the Resource Conservation and Recovery Act, as amended, 42
U.S.C.
ss.6901 et seq.; the Federal Water Pollution Control Act, as
amended, 33 U.S.C.
ss.1251 et seq.; the Toxic Substances Control Act, 15 U.S.C. ss.
2601 et seq.;
the Clean Air Act, 42 U.S.C. ss. 7401 et seq.; the Safe Drinking
Water Act, 42
U.S.C. ss. 3808 et seq.; the Occupational Safety and Health Act, 29
U.S.C.
ss.ss. 651 - 678 (1999); and the Oil Pollution Act, 33 U.S.C.
ss.ss. 2701 - 2706
(1999); and (iv) "Environmental Claims means any and all
administrative,
regulatory or judicial actions, suits, demands, demand letters,
claims, liens,
notices of noncompliance or violation, investigations or
proceedings relating in
any way to any Environmental Law (for purposes of this subclause
(iv), "Claims")
or any permit issued under any such Environmental Law, including
(A) any and all
Claims by governmental or regulatory authorities for enforcement,
cleanup,
removal, response, remedial or other actions or damages pursuant to
any
applicable Environmental Law and (B) any and all Claims by any
third party
seeking damages, contribution, indemnification, cost recovery,
compensation or
injunctive relief resulting from Hazardous Materials or arising
from alleged
injury or threat of injury to health, safety or the
environment.
Section 3.13
Employees and Labor.
-------------------
(a) Section 3.13
of the Company Disclosure Letter sets forth
(i) a true and complete list of all collective bargaining Contracts
and similar
labor union Contracts to which the Company is a party or is
otherwise bound,
(ii) a true and complete list of all current or pending
arbitrations to which
any collective bargaining Contract or similar labor union Contract
is applicable
or relating to any labor union or similar organization or any
member thereof. No
other collective bargaining Contracts or similar labor union
Contracts with the
employees or their representatives and/or the trade unions exist
and/or are
applied with the Company other than those disclosed in Section 3.13
of the
Company Disclosure Letter. Except to the extent covered by a
collective
bargaining Contract or similar labor union Contract as set forth on
Section 3.13
of the Company Disclosure Letter, (A) none of the employees of the
Company (the
"Employees") is represented in his or her capacity as an Employee
by any labor
union or similar organization, (B) the Company has not recognized
any labor
organization as the collective bargaining agent of any Employees
with respect to
employment with the Company and (C) after January 1, 2002, no labor
union or
similar organization has attempted to organize or otherwise made a
claim to
represent the Employees and no such action is pending or
threatened. After
January 1, 2002, the Company has not experienced any lockout or
work slowdown or
stoppage, and there is no labor dispute or work slowdown or
stoppage pending,
or, to the Knowledge of the Company, threatened, against or
affecting the
Company.
(b) (i) The
Company is, and at all times since January 1,
2003, has been, in compliance with all federal, state or other
applicable laws
respecting employment and employment practices, terms and
conditions of
employment and wages and hours, and has not and is not engaged in
any unfair
labor practice, (ii) no unfair labor practice complaint against the
Company is
19
<PAGE>
pending, or to the Knowledge of the Company, threatened before the
National
Labor Relations Board, and (iii) the Company has not experienced
any material
labor difficulty since January 1, 2003, (iv) there has been no
"mass layoff" or
"plant closing" by the Company as defined in the Federal Workers
Adjustment
Retraining And Notification Act ("WARN) or any state law
equivalent, or any
other mass layoff or plant closing that would trigger notice
pursuant to WARN or
any state law equivalent, within (90) days prior to the Effective
Time.
(c) No liability
has been incurred by the Company for breach
of any employment agreement, plant agreement, collective bargaining
Contract, or
for compensation for wrongful dismissal or unfair dismissal or for
failure to
comply with any order for the reinstatement or re-engagement of any
employment
or for any other liability accruing from the termination or
variation of any
contract of employment or for services or from the violation of any
statutory
labor law, including the applicable laws regarding the protection
of disabled
persons.
(d) The Company
has no obligations (including the obligation
to restore employment relationships that have been terminated)
arising from the
termination or cancellation of any of its employment agreements
with any current
or former director, officer, employee or consultant of the Company,
except the
obligation to provide continuity coverage to a former employee
under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
("COBRA"),
and at the sole expense of the former employee.
(e) All
salaries, wages, bonuses, commissions and other
emoluments relating to the directors, officers and employees of the
Company have
always been paid when due and to the extent this is not the case
are reflected
and accrued in the records of the Company.
(f) All foreign
nationals employed with the Company hold
valid work permits, if necessary, and are in compliance with any
rules or
regulations imposed by the relevant country.
(g) No
independent contractor of the Company may be
characterized as an employee in connection with the determination
to provide or
pay any benefits in respect of such person or to pay or withhold
any taxes or
required withholdings.
Section 3.14
Employee Benefit Plans.
----------------------
(a) Section
3.14(a) of the Company Disclosure Letter sets
forth a true and complete list of (i) all "employee benefit plans",
as defined
in Section 3(3) of the Employee Retirement Income Security Act of
1974, as
amended ("ERISA"), and all other material employee benefit or
compensation
plans, programs, policies, arrangements or payroll practices
maintained or
required to be maintained by the Company or to which the Company
contributed or
is obligated to contribute thereunder for any current or former
director,
officer, employee or consultant of the Company (the "Company
Plans") and (ii)
all Company Benefit Agreements. The Company has not incurred or is
reasonably
likely to incur any liability under Section 412 of the Code or
Title IV of ERISA
with respect to any ongoing, frozen or terminated employee benefit
plan. Except
as set forth in Section 3.14(a) of the Company Disclosure Letter,
none of the
Company Plans provides for post-employment life or health
insurance, benefits or
20
<PAGE>
coverage for any participant or any beneficiary of a participant,
except as may
be required under COBRA, and at the sole expense of the participant
or the
participant's beneficiary.
(b) Neither the
Company nor any of its ERISA Affiliates has
(or had during the most recent six year period) any obligation to
contribute to
(or any other obligation or liability, including current or
potential withdrawal
liability, with respect to) any "multiemployer plan" within the
meaning of
Section 3(37) or Section 4001(a)(3) of ERISA or Section 414(f) of
the Code.
(c)
The Company has
provided Parent access to true and
complete copies of the following documents, with respect to each of
the Company
Plans and Company Benefit Agreements: (i) such Company Plan or
Company Benefit
Agreement, all amendments thereto and related trust documents and
amendments
thereto, (ii) the most recent Forms 5500 and all schedules thereto
and the most
recent actuarial report, if any, (iii) the most recent Internal
Revenue Service
(the "IRS") determination letter and any communication from or with
the IRS
relating to such letter or the subject matter thereof and (iv)
summary plan
descriptions.
(d) Each Company
Plan has been maintained in all material
respects in accordance with its terms and, together with the
Company, is in
compliance in all material respects with all provisions of ERISA,
the Code
(including rules and regulations thereunder) and other applicable
Laws with
respect to such Company Plan. There is no pending or, to the
Knowledge of the
Company, threatened claim, suit, action, investigation or
proceeding relating to
any Company Plan or Company Benefit Agreement. To the Knowledge of
the Company,
no "prohibited transaction", breach of fiduciary duty or similar
action or
omission has resulted in or is reasonably likely to result in the
imposition of
any material liability, tax or penalty on the Company under ERISA,
the Code or
other applicable Law. During the five years preceding the date
hereof, no
Company Plan has been terminated and there has been no "reportable
event" (as
defined in Section 4043 of ERISA) for which the 30-day reporting
requirement was
not waived.
(e) The Company
Plans intended to qualify under Section 401
of the Code are so qualified, and the trusts maintained pursuant
thereto are
exempt from Federal income taxation under Section 501 of the Code,
and, to the
Knowledge of the Company, nothing has occurred with respect to the
Company Plans
that has caused or is reasonably likely to cause the loss of such
qualification
or exemption or the imposition of any liability, penalty or tax
under ERISA or
the Code.
(f) All
contributions (including all employer contributions
and employee salary reduction contributions) required to have been
made under
any of the Company Plans or by Law (without regard to any waivers
granted under
Section 412 of the Code) to any funds or trusts established under a
Company Plan
or in connection therewith have been made by the due date thereof
(including any
valid extensions).
(g) Each Company
Plan that is an employee welfare benefit
plan may be amended or terminated on or after the Closing Date, on
notice
provided as set forth in Section 3.14(g) of the Company Disclosure
Letter,
without the incurrence of any material cost or liability by the
Company.
21
<PAGE>
(h) Except as
set forth in Section 3.14(h) of the Company
Disclosure Letter, no current or former director, officer, employee
or
consultant of the Company is entitled to any compensation or
benefit that could
become payable or be provided to such person under the Company
Plans and Company
Benefit Agreements if such person's employment were terminated
immediately after
the Closing Date. Except as set forth in Section 3.14(h) of the
Company
Disclosure Letter or as otherwise expressly contemplated by this
Agreement,
neither the execution and delivery of this Agreement or the
Principal
Stockholders' Agreement nor the consummation of the Merger or any
other
transaction contemplated hereby or thereby will (i) entitle any
current or
former director, officer, employee or consultant of the Company to,
or increase
any, severance, change in control, termination or other
compensation or benefits
(whether alone or in coordination with any other event) or (ii)
except pursuant
to the Company Stock Plans with respect to Company Stock Options,
accelerate the
time of payment or vesting or trigger any payment or funding
(through a grantor
trust or otherwise) of compensation or benefits under, or trigger
any other
material obligation pursuant to, any Company Plan or Company
Benefit Agreement.
(i) Any amount
or economic benefit that could be received
(whether in cash or property or in respect of the vesting of
property) as a
result of the Merger or any other transaction contemplated by this
Agreement or
the Principal Stockholders' Agreement (alone or in combination with
any other
event) by any person who is a "disqualified individual" (as such
term is defined
in Treasury Regulation Section 1.280G-1) with respect to the
Company would not
be characterized as an "excess parachute payment" (as defined in
Section
280G(b)(1) of the Code), and no such person is entitled to receive
any
additional payment from the Company or any other person in the
event that the
excise tax under Section 4999 of the Code is imposed on such
person.
(j) No deduction
by the Company in respect of any
"applicable employee remuneration" (within the meaning of Section
162(m) of the
Code) has been disallowed or is subject to disallowance by reason
of Section
162(m) of the Code.
(k) The Company
does not have any material liability or
obligations, including under or pursuant to any Company Plan or
Company Benefit
Agreement, arising out of the hiring of persons to provide services
to the
Company and treating such persons as consultants or independent
contractors and
not as employees of the Company.
(l) Except as
set forth in Section 3.14(1) of the Company
Disclosure Letter, the Company has no obligations with respect to
pension
payments or contributions for current or former employees or
directors except as
reflected in the Filed Company SEC Documents.
(m) The Company
has no formal plans or commitments to create
any additional pension plan or to modify or change any existing
pension plan,
nor has the Company communicated any such plans or commitments to
any employee.
Section 3.15
Taxes.
-----
(a) The Company
and any consolidated, combined, unitary,
affiliated or aggregate group of which the Company is a member (an
"affiliated
group") has timely filed (taking into account any extension of time
within which
22
<PAGE>
to file) all Federal, state, local and foreign income and franchise
tax returns
and all other tax returns required to be filed by it, all taxes
shown due on
such tax returns and, except as set forth in Section 3.15(a) of the
Company
Disclosure Letter all other taxes as are due, have been paid, and
all such tax
returns are true and complete in all material respects. The Company
has withheld
or collected all taxes it was required to withhold and collect, and
has timely
paid to the proper authorities such taxes withheld or collected to
the extent
due and payable.
(b) Except as
set forth in Section 3.15(b) of the Company
Disclosure Letter, the Company has not been the subject of an audit
or other
examination of taxes by any taxing authority nor has the Company
received any
notices from any taxing authority relating to any issue which could
reasonably
be expected to affect the tax liability of the Company. No
deficiencies for any
taxes have been proposed, asserted or assessed against the Company
or any
affiliated group that are still pending and no Liens for taxes
exist with
respect to any property or other assets of the Company, except for
statutory
Liens for taxes not yet due or payable or the validity of which is
being
contested in good faith by appropriate proceedings and as to which
adequate
reserves have been established on the Company's books and records
reflecting the
full amount of such contested taxes.
(c) All
assessments for taxes due with respect to such
completed and settled examinations or to any concluded litigation
have been
fully paid or have been adequately reserved on the most recent
financial
statements included in the Filed Company SEC Documents in
accordance with GAAP.
(d) The Company
has provided Parent access to true and
complete copies of (i) all income and franchise tax returns of the
Company and
affiliated groups for the preceding three taxable years and (ii)
any audit
report issued since January 1, 2004 (or otherwise with respect to
any audit or
proceeding in progress) relating to taxes of the Company or any
affiliated
group.
(e) The Company
has not constituted either a "distributing
corporation" or a "controlled corporation" (in each case, within
the meaning of
Section 355(a)(1)(A) of the Code) in a distribution of stock
qualifying for
tax-free treatment under Section 355(e) of the Code (A) in the two
years
preceding the date hereof or (B) in a distribution that could
otherwise
constitute part of a "plan" or "series of related transactions"
(within the
meaning of Section 355(e) of the Code) in conjunction with the
Merger.
(f) The Company
(i) has not entered into an agreement or
waiver or been requested to enter into an agreement or waiver
extending any
statute of limitations relating to the payment or collection of
taxes, (ii) is
not presently contesting the tax liability of the Company before
any court,
tribunal or agency or (iii) has not applied for and/or received a
ruling or
determination from a taxing authority regarding a past or
prospective
transaction of the Company.
(g) The Company
has not received written notice of any claim
ever being made by any taxing authority in a jurisdiction where the
Company does
not file tax returns that the Company is or may be subject to
taxation by that
jurisdiction.
23
<PAGE>
(h) There are no
tax sharing, allocation, indemnification or
similar agreements in effect as between the Company or any
predecessor or
affiliate thereof and any other party under which the Company could
reasonably
be expected to be liable for any taxes of any person.
(i) The Company
is not a party to any agreement, contract,
arrangement or plan that has resulted or could reasonably be
expected to result,
separately or in the aggregate, in the payment of (x) any "excess
parachute
payment" within the meaning of Section 280G of the Code (or any
corresponding
provision of state, local or foreign tax law) and (y) any amount
that will not
be fully deductible as a result of Section 162(m) of the Code (or
any
corresponding provision of state, local or foreign tax law).
(j) The Company
has not been a United States real property
holding corporation within the meaning of Code Section 897(c)(2)
during the
applicable period specified in Code Section 897(c)(1)(A)(ii).
(k) The Company
has disclosed on its federal income tax
returns all positions taken therein that could reasonably be
expected to give
rise to a substantial understatement of federal income tax within
the meaning of
Section 6662 of the Code or a reportable transaction understatement
within the
meaning of Section 6662A of the Code. The Company has not engaged
in a
transaction that would be reportable by or with respect to the
Company pursuant
to Sections 6011, 6111, or 6112 of the Code. The Company has not
entered into
any transactions that required or will require the filing of
Internal Revenue
Service Form 8886.
(l) The Company
(x) has not been a member of an affiliated
group filing a consolidated federal income tax return or (y) has no
liability
for the taxes of any person (other than itself) under Treasury
Regulation
section 1.1502-6 (or any similar provision of state, local or
foreign law), as a
transferee or successor, by contract, or otherwise.
(m) The Company
will not be required to include any item of
income in, or exclude any item of deduction from, taxable income
for any taxable
period (or portion thereof) ending after the Closing Date or the
Effective Time
as a result of any: (A) change in method of accounting for a
taxable period
ending on or before the Closing Date or the Effective Time; (B)
"closing
agreement" as described in Section 7121 of the Code (or any
corresponding or
similar provision of state, local or foreign tax law) executed on
or before the
Closing Date or the Effective Time; (C) inter-company transaction
or excess loss
account described in Treasury Regulations under section 1502 of the
Code (or any
corresponding or similar provision of state, local or foreign tax
law); (D)
installment sale or open transaction disposition made on or before
the Closing
Date or the Effective Time; or (E) prepaid amount received on or
before the
Closing Date or the Effective Time.
(n) The Company
complies and has duly complied with all
actions required pursuant to the applicable rules for employment
taxes for all
employees, officers and directors. The Company has withheld from
each payment
made to any of its directors, officers and employees the amount of
all taxes and
contributions required to be withheld and has paid the same
together with the
Company's share of the same, if any, to the proper tax and other
receiving
offices within the time required under applicable law.
24
<PAGE>
(o) For purposes
of this Agreement, (i) "taxes" shall mean
all Federal, state and local (whether domestic or foreign) income,
employment,
withholding, property, sales, excise and other taxes, tariffs or
governmental
charges of any nature whatsoever, including any interest, penalties
or additions
with respect thereto, imposed by any Governmental Authority,
including any
liability for the payment of any amounts of the type described
above as a result
of being a member of an affiliated group or a party to any tax
sharing Contract
or as a result of any obligation to indemnify any other person with
respect to
the payment of any tax, and (ii) "tax returns" shall mean any
return,
declaration, report, claim for refund, or information return or
statement
relating to taxes, including any schedule or attachment thereto,
and including
any amendment thereof.
Section 3.16
Title to Assets; Leases.
-----------------------
(a) The Company
does not own, nor has it owned during the
past 6 years, any real property.
(b) Section
3.16(b) of the Company Disclosure Letter sets
forth a true and complete list of all leases for real property and
interests in
real property leased by the Company (each, a "Leased Real
Property"). The
Company has provided Parent access to true and complete copies of
all such
leases and agreements. The Company has complied with the terms of
all leases of
the Leased Real Properties to which it is a party and under which
it is in
occupancy, and all such leases are in full force and effect. The
Leased Real
Property is all of the property used or held for use by the
Company.
(c) The Company
has valid leasehold interests (or, with
respect to any such assets located outside the United States, its
equivalent in
such other location(s)) in its Leased Real Properties, and good and
marketable
title or valid leasehold interests (or, with respect to any such
assets located
outside the United States, its equivalent in such other
location(s)) in the
other assets reflected in the Company's consolidated balance sheet,
except for
such as have been disposed of in the ordinary course of business.
All such
Leased Real Properties and other assets are free and clear of all
Liens other
than Permitted Liens.
(d) The Company
has not received any written notice, and the
Company does not have Knowledge, that any entity or Governmental
Authority
considers the operation, use or ownership of the Leased Real
Property to have
violated any zoning, land use or similar laws, ordinances, rules,
regulations or
administrative interpretations applicable thereto, or that any
investigation has
been commenced regarding such possible violation. The present use
and operation
of the Leased Real Property is in compliance with all existing
zoning, land use
and similar laws, ordinances, rules, regulations or
administrative
interpretations applicable thereto. No condemnation or eminent
domain proceeding
against any part of the Leased Property is pending or, to the
Knowledge of the
Company, threatened. All operating facilities located on the Leased
Real
Property are supplied with utilities and other services, assuming
the operation
of such utilities, in such amounts as are reasonably necessary for
the current
operation of such facilities, including gas, electricity, water,
waste water,
irrigation, drainage, and similar reasonably required services.
25
<PAGE>
(e) This Section
3.16 does not relate to any matters with
respect to intellectual property, which are addressed in Section
3.17.
(f) The Company
is not in violation or breach of or in
default under (nor, to the Knowledge of the Company, does there
exist any
condition which upon the passage of time or the giving of notice or
both would
cause such a violation or breach of or default under) any lease
relating to the
Leased Real Property to which it is a party. Except as set forth in
Section
3.16(b) of the Company Disclosure Letter, no approval or consent
of, or notice
to, any person is needed in order that each such lease shall
continue in full
force and effect in accordance with its terms without penalty,
acceleration or
rights of early termination by reason of the consummation of the
transactions
contemplated by this Agreement.
(g) The
buildings, machinery, equipment, and other tangible
assets that the Company owns or leases are and have been maintained
in
accordance with the Company's prior practice, and are in good
operating
condition and repair (subject to normal wear and tear). The assets,
properties
and rights of the Company as of the Closing Date and after giving
effect to the
transactions contemplated hereby will be sufficient to conduct the
business of
the Company as a going concern on a basis consistent with past
practice.
Section 3.17
Intellectual Property.
---------------------
(a) Section 3.17
of the Company Disclosure Letter sets forth
a true and complete list of all trademarks (registered or
unregistered), trade
mark applications, trade names, domain names, service marks,
service mark
applications, brand names, registered copyrights and applications
therefor,
patents and patent applications, if any, in each case, owned by or
licensed to
the Company (other than Off the Shelf Licenses). The Company owns,
or is validly
licensed or otherwise has the exclusive right to use all
Intellectual Property
Rights that are material to the conduct of the business of the
Company, in each
case free and clear of all Liens other than the Permitted Liens.
All of the
Intellectual Property Rights owned by the Company are to the
Knowledge of the
Company valid, subsisting and enforceable and no such Intellectual
Property
Rights have been abandoned or cancelled (excepting any expirations
in the
ordinary course), or are subject to any outstanding order, judgment
or decree
restricting its use or adversely affecting the Company's rights
thereto. For the
purposes of this Section 3.17(a), "Off the Shelf Licenses" shall
mean any
license or other agreement for the perpetual use by the Company of
software in
the capacity of an end user only, which software is generally
available in "off
the shelf" commercial packages or by internet distribution, for
less than $5,000
per copy licensed, or $10,000 in the aggregate for all copies of
such software
licensed, and as to which the Company has fully paid all applicable
license
fees.
(b) Except as
set forth in Section 3.17 of the Company
Disclosure Letter and to the Knowledge of the Company, no person
other than the
Company has any ownership interest in, or a right to receive a
royalty or
similar payment with respect to, any Intellectual Property Rights
owned by the
Company. To the Knowledge of the Company, the Company has not
infringed upon or
misappropriated any Intellectual Property Rights of any other
person. No suit,
action, reissue, reexamination, public protest, interference,
arbitration,
mediation, opposition, cancellation or other proceeding is pending
alleging that
the Company has violated any Intellectual Property Rights of any
other person
and, to the Knowledge of the Company, no claim has been threatened
or asserted
26
<PAGE>
against the Company alleging a violation of any Intellectual
Property Rights of
any other person.
(c) To the
Company's Knowledge, no person or persons are
infringing the rights of the Company with respect to any
Intellectual Property
Rights owned by the Company. No claims are pending or, to the
Company's
Knowledge, threatened against the Company with regard to the
ownership by the
Company of any of its Intellectual Property Rights.
(d) The Company
is not in material violation or breach of or
in default under (nor, to the Knowledge of the Company, does there
exist any
condition which upon the passage of time or the giving of notice or
both would
cause such a violation or breach of or default under) any agreement
with respect
to Intellectual Property Rights to which it is a party. Except as
set forth in
Section 3.17 of the Company Disclosure Letter, no approval or
consent of, or
notice to, any person is needed in order that each such agreements
shall
continue in full force and effect in accordance with its terms
without penalty,
acceleration or rights of early termination by reason of the
consummation of the
transactions contemplated by this Agreement.
(e) As used in
this Agreement, "Intellectual Property
Rights" shall mean all intellectual property rights arising from or
in respect
of the following, whether protected, created, or arising under the
laws of the
United States or any other jurisdiction: patents, trademarks
(registered or
unregistered), trade names, trade secrets, domain names, service
marks, brand
names, trade dress, and other indications of origin, together with
the goodwill
associated with the foregoing and registrations of, and
applications to
register, the foregoing, including any extension, modification or
renewal of any
such registration or application; computer programs, technical
know-how, and
confidential information and rights to limit the use or disclosure
thereof by
any person; registrations or applications for registration of
copyrights, and
any renewals or extensions thereof; any similar intellectual
property or
proprietary rights similar to any of the foregoing, including all
rights in and
privileges with respect to customer databases, ideas, discoveries,
inventions,
conceptions, processes, formulae, copyrights and original works of
authorship;
and licenses.
Section 3.18
Products.
--------
(a) Except as
set forth in Section 3.18(a) of the Company
Disclosure Letter, the Company is the sole and exclusive owner of
the computer
software products marketed, sold, licensed, supported, serviced or
maintained by
the Company, together with all modifications, updates, corrections
and
enhancements to past and current versions of such products, in
existence as of
the date hereof, and versions of such products currently under
development, and
any and all English and foreign language versions of such products,
in each
case, to the extent applicable, including the source code and
object code
versions of such computer software, and all Documentation relating
thereto (the
"Products").
(b) The Current
Versions of the Products meet all material
contractual terms and materially comply with all warranties
provided to any
customers who purchase or license, or have purchased or licensed,
such Current
Versions of the Products from the Company or its agents, provided
that such
customers are using a Current Version and have a current
maintenance or support
agreement in effect. The Current Versions of the Products do not
contain any
27
<PAGE>
viruses, Trojan horses or other computer instructions, intentional
devices or
techniques that are designed to threaten, infect, disrupt, damage,
disable or
infiltrate a computer system or any component of such computer
system.
(c) The source
code for the Current Versions of the Products
will compile into executable object code and such executable object
code is
capable of performing the material functions described in the
applicable
Documentation. The Company has neither disclosed to any other
person nor placed
in escrow the source code for the Current Versions of the
Products.
(d) The Company
has taken commercially reasonable steps
(including, without limitation, entering into appropriate
confidentiality
agreements with all officers, directors, employees, and other
persons with
access to the Current Versions of the Products) to protect the
source code for
the Current Versions of the Products as trade secrets of the
Company. With
respect to the license of the Products to customers, the Company
has executed
Contracts protecting the confidentiality and proprietary nature of
the Products
(and all related assets including the source code) from improper
use or
disclosure.
(e) No person
has a license to use or the right to acquire a
license to use any future version of the Products, except for
customer rights to
obtain licenses to future versions of the Products pursuant to
existing Customer
Agreements.
(f) No Customer
Agreement or other agreement currently in
force obligates the Company to develop or provide any specific
improvement,
enhancement, change in functionality or other alteration in the
performance of
the Products, other than Customer Agreements that provide for
Product support
services entered into in the ordinary course of business consistent
with past
practice.
(g) To the
Knowledge of the Company, the Products do not
infringe, misappropriate or otherwise violate the Intellectual
Property Rights
of any other person.
Section 3.19
Accounts Receivable. All accounts receivable of the
Company have arisen from bona fide transactions in the ordinary
course of
business consistent with past practice.
Section 3.20
Approval and Adoption Requirements. The only approval or
consent of the holders of any class or series of capital stock
necessary to
adopt this Agreement and approve the Merger and the other
transactions
contemplated hereby is the affirmative vote of the holders of a
majority of
outstanding votes attributed to the outstanding shares of Company
Common Stock
and Company Preferred Stock, voting together as a single class (the
"Stockholder
Approval").
Section 3.21
State Takeover Statutes. Prior to the date of this
Agreement, the Board of Directors of the Company has taken all
action necessary,
assuming the accuracy of the representations given by the Parent
and Merger Sub
in Section 4.07, to render inapplicable to this Agreement, the
Principal
Stockholders' Agreement, the Merger and the other transactions
contemplated
hereby and thereby, the provisions of Section 203 of the DGCL
("Section 203") to
the extent, if any, Section 203 would otherwise be applicable to
this Agreement,
the Principal Stockholders' Agreement, the Merger and the other
transactions
28
<PAGE>
contemplated hereby or thereby. No other state takeover or similar
statute or
regulation is applicable to this Agreement, the Principal
Stockholders'
Agreement, the Merger or the other transactions contemplated hereby
or thereby.
Section 3.22
Transactions with Affiliates. Section 3.22 of the
Company Disclosure Letter sets forth, (i) a true and complete list
of all
Contracts between, among or involving the Company, on the one hand,
and any
director or officer of the Company or any of the Affiliates
thereof, on the
other hand and (ii) a description of all payments (including
dividends,
distributions, loans, service or trade payments, salary, bonuses,
payments under
any management, consulting, monitoring or financial advisory
Contract, advances
or otherwise) made to or received from the Company, on the one
hand, and any
Affiliate of the Company, on the other hand, after January 1, 2004.
Except as
expressly disclosed in Section 3.22 of the Company Disclosure
Letter, no such
payments have been so made or received since January 1, 2004, or
are required to
be so received as of or after the date hereof. Except as expressly
disclosed in
Section 3.22 of the Company Disclosure Letter, none of the
Contracts between the
Company, on the one hand, and any Principal Company Stockholder or
any of the
Affiliates thereof, on the other hand, will continue in effect
subsequent to the
Closing, and all obligations of the Company thereunder will have
been satisfied.
Section 3.23
Suppliers and Customers. Section 3.23 of the Company
Disclosure Letter contains a list of the top ten suppliers and
customers of the
Company (by volume in dollars of purchases) for the two fiscal
years ended
December 31, 2005 and December 31, 2006 (the "Major Suppliers" and
"Major
Customers", respectively). Except as set forth in Section 3.23 of
the Company
Disclosure Letter, the Company has no Knowledge that a Major
Supplier or Major
Customer will stop or materially reduce the aggregate volume of its
supply or
purchase of materials, products or services to or from the Company
(whether as a
result of the consummation of the transactions contemplated hereby
or
otherwise), that a Major Supplier intends significant price
increases, that a
Major Customer has received or intends to seek significant price
decreases or
that the relationship between the Company with the Major Suppliers
and Major
Customers would otherwise be materially affected.
Section 3.24
Insurance. Section 3.24 of the Company Disclosure Letter
lists all policies of fire, liability, workmen's compensation,
life, property
and casualty and other insurance owned or held by the Company.
Except as set
forth in Section 3.24 of the Company Disclosure Letter, all such
policies of
insurance (a) are in full force
