Exhibit 2.1
Execution Version
AGREEMENT AND PLAN OF
MERGER
by and among:
BECKMAN COULTER,
INC.,
a Delaware
corporation;
LOUISIANA ACQUISITION SUB,
INC. ,
a Delaware corporation; and
BIOSITE
INCORPORATED,
a
Delaware corporation
Dated as of March 24,
2007
TABLE OF CONTENTS
|
|
|
Page
|
|
|
|
|
SECTION 1. THE
OFFER
|
2
|
|
1.1
|
The Offer
|
2
|
|
1.2
|
Actions of Parent and Purchaser
|
3
|
|
1.3
|
Actions of the Company
|
4
|
|
1.4
|
Board of Directors
|
5
|
|
1.5
|
Actions by Directors
|
6
|
|
1.6
|
Top-Up Option
|
6
|
|
SECTION 2. THE MERGER;
EFFECTIVE TIME
|
7
|
|
2.1
|
Merger of the Purchaser into
Company
|
7
|
|
2.2
|
Effect of the Merger
|
7
|
|
2.3
|
Effective Time
|
7
|
|
2.4
|
Certificate of Incorporation and Bylaws;
Officers and Directors
|
8
|
|
2.5
|
Conversion of Company Shares
|
8
|
|
2.6
|
Closing of the Company’s Transfer
Books
|
9
|
|
2.7
|
Payment for Company Shares
|
9
|
|
2.8
|
Appraisal Rights
|
10
|
|
2.9
|
Further Action
|
11
|
|
SECTION 3.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
|
11
|
|
3.1
|
Due Organization and Good Standing;
Subsidiaries
|
11
|
|
3.2
|
Authority; Binding Nature of
Agreement
|
12
|
|
3.3
|
Non-Contravention; Consents
|
12
|
|
3.4
|
Certificate of Incorporation;
Bylaws
|
13
|
|
3.5
|
Capitalization
|
13
|
|
3.6
|
SEC Filings; Financial Statements
|
15
|
|
3.7
|
Information Supplied
|
16
|
|
3.8
|
Schedule 14D-9
|
16
|
|
3.9
|
Internal Controls; Sarbanes-Oxley
Act
|
17
|
|
3.10
|
Absence of Certain Changes
|
18
|
|
3.11
|
Title to Assets; Real Property
|
18
|
|
3.12
|
Intellectual Property Rights
|
20
|
i
|
|
|
Page
|
|
|
|
|
3.13
|
Contracts
|
23
|
|
3.14
|
Compliance with Legal
Requirements
|
25
|
|
3.15
|
Foreign Corrupt Practices and International
Trade Sanctions
|
25
|
|
3.16
|
Governmental Authorizations
|
25
|
|
3.17
|
Legal Proceedings; Orders
|
26
|
|
3.18
|
Regulatory Matters
|
26
|
|
3.19
|
Product Recalls
|
29
|
|
3.20
|
Tax Matters
|
29
|
|
3.21
|
Employee Benefit Plans
|
31
|
|
3.22
|
Labor Matters
|
34
|
|
3.23
|
Environmental Matters
|
35
|
|
3.24
|
Insurance
|
36
|
|
3.25
|
Transactions with Affiliates
|
37
|
|
3.26
|
Vote Required
|
37
|
|
3.27
|
Section 203 of the DGCL; Company Rights
Agreement
|
37
|
|
3.28
|
Opinion of Financial Advisor
|
37
|
|
3.29
|
Brokers
|
37
|
|
SECTION 4.
REPRESENTATIONS AND WARRANTIES OF PARENT AND
PURCHASER
|
38
|
|
4.1
|
Due Organization
|
38
|
|
4.2
|
Authority; Binding Nature of
Agreement
|
38
|
|
4.3
|
Non-Contravention; Consents
|
39
|
|
4.4
|
Not an Interested Stockholder
|
39
|
|
4.5
|
Financing
|
39
|
|
4.6
|
Ownership of Company Shares
|
40
|
|
4.7
|
Offer Documents
|
40
|
|
4.8
|
Information in Schedule 14D-9 and Proxy
Statement
|
40
|
|
SECTION 5.
COVENANTS
|
40
|
|
5.1
|
Interim Operations of the Company
|
40
|
|
5.2
|
No Solicitation
|
45
|
ii
|
|
|
Page
|
|
|
|
|
5.3
|
Board Recommendation
|
47
|
|
5.4
|
Meeting of the Company’s
Stockholders
|
49
|
|
5.5
|
Filings; Other Action
|
50
|
|
5.6
|
Access
|
51
|
|
5.7
|
Interim Operations of Purchaser
|
52
|
|
5.8
|
Publicity
|
52
|
|
5.9
|
Stock Options/ESPP
|
52
|
|
5.10
|
Other Employee Benefits
|
54
|
|
5.11
|
Indemnification; Directors’ and
Officers’ Insurance
|
56
|
|
5.12
|
Section 16 Matters
|
57
|
|
5.13
|
Rule 14d-10(d)
|
57
|
|
5.14
|
Cooperation Regarding Transition of
Business
|
57
|
|
5.15
|
Termination of Certain Company
Plans
|
57
|
|
5.16
|
Financing
|
58
|
|
5.17
|
Tax Matters
|
59
|
|
SECTION 6. CONDITIONS
TO EACH PARTY’S OBLIGATION TO EFFECT THE
MERGER
|
59
|
|
6.1
|
Stockholder Approval
|
59
|
|
6.2
|
No Injunctions; Laws
|
59
|
|
6.3
|
Government Consents
|
59
|
|
6.4
|
Offers Purchased
|
59
|
|
SECTION 7.
TERMINATION
|
59
|
|
7.1
|
Termination
|
60
|
|
7.2
|
Effect of Termination
|
62
|
|
7.3
|
Termination Fee
|
62
|
|
SECTION 8.
MISCELLANEOUS PROVISIONS
|
63
|
|
8.1
|
Amendment
|
63
|
|
8.2
|
Waiver
|
63
|
|
8.3
|
No Survival of Representations and
Warranties
|
63
|
|
8.4
|
Entire Agreement; Counterparts
|
63
|
iii
|
|
|
Page
|
|
|
|
|
8.5
|
Applicable Law; Jurisdiction; Waiver of Jury
Trial
|
64
|
|
8.6
|
Payment of Expenses
|
65
|
|
8.7
|
Assignability; No Third Party
Rights
|
65
|
|
8.8
|
Notices
|
65
|
|
8.9
|
Severability
|
66
|
|
8.10
|
Obligation of Parent
|
66
|
|
8.11
|
Specific Performance
|
67
|
|
8.12
|
Cumulative Remedies
|
67
|
|
8.13
|
Representation by Counsel
|
67
|
|
8.14
|
Construction
|
67
|
|
Schedule A
|
Products Under Development
|
|
Annex I
|
Offer Conditions
|
|
Exhibit A
|
Certain Definitions
|
|
Exhibit B
|
Certificate of Incorporation of Surviving
Corporation
|
iv
AGREEMENT AND PLAN OF
MERGER
THIS AGREEMENT AND PLAN OF
MERGER (“
Agreement ”) is made and entered into as of March 24,
2007, by and among BECKMAN COULTER, INC. , a Delaware
corporation (“ Parent ”); LOUISIANA
ACQUISITION SUB, INC. , a Delaware corporation and a
wholly-owned Subsidiary of Parent (“ Purchaser
”); and BIOSITE INCORPORATED, a Delaware corporation
(the “ Company ”). Certain capitalized
terms used in this Agreement are defined in Exhibit A
.
RECITALS
WHEREAS, the board of directors of
each of Parent, Purchaser and the Company has approved the
acquisition of the Company by Parent on the terms and conditions
set forth in this Agreement;
WHEREAS, on the terms and subject to
the conditions set forth herein, Purchaser has agreed to commence a
tender offer (the “ Offer ”) to purchase all
outstanding Company Shares, at a price of $85.00 per Company Share,
in cash without interest (such price, or any higher price as may be
paid in the Offer in accordance with this Agreement, the “
Offer Price ”);
WHEREAS, following consummation of
the Offer, on the terms and subject to the conditions set forth
herein Purchaser shall merge with and into the Company (the “
Merger ”) and each Company Share that is issued and
outstanding immediately prior to the Effective Time (other than
Company Shares held in the treasury of the Company or owned by
Parent, Purchaser or any direct or indirect wholly-owned Subsidiary
of Parent or the Company immediately prior to the Effective Time,
which will be canceled with no consideration issued in exchange
therefor, and other than Appraisal Shares) will be canceled and
converted into the right to receive cash in an amount equal to the
Offer Price (the “ Merger Consideration ”), all
upon the terms and conditions set forth herein;
WHEREAS, the Company Board has, on
the terms and subject to the conditions set forth herein,
unanimously and duly adopted resolutions (i) determining that the
transactions contemplated by this Agreement are advisable and fair
to, and in the best interests of, the Company and its stockholders,
(ii) adopting and approving this Agreement and the transactions
contemplated hereby, including the Offer, the Merger and the
“agreement of merger” (as such term is used in Section
251 of the Delaware General Corporation Law (the “
DGCL ”)), in accordance with the DGCL, (iii) directing
that the “agreement of merger” (as such term is used in
Section 251 of the DGCL) contained in this Agreement be submitted
to the stockholders of the Company for adoption (unless the Merger
is consummated in accordance with Section 253 of the DGCL as
contemplated herein), and (iv) recommending that the
Company’s stockholders accept the Offer, tender their Company
Shares to Purchaser pursuant to the Offer, and adopt the
“agreement of merger” (as such term is used in Section
251 of the DGCL) set forth in this Agreement;
1
WHEREAS, the board of directors of
Parent and Purchaser have, on the terms and subject to the
conditions set forth herein, unanimously approved and declared
advisable this Agreement and the transactions contemplated hereby,
including the Offer and the Merger, and Parent, in its capacity as
the sole stockholder of Purchaser, has adopted the “agreement
of merger” set forth in this Agreement, in each case, in
accordance with the DGCL; and
NOW, THEREFORE, in consideration of
the foregoing and the mutual covenants and agreements herein
contained, and intending to be legally bound hereby, Parent,
Purchaser and the Company hereby agree as follows:
SECTION 1. THE
OFFER
1.1
The Offer
(a)
Provided that this Agreement shall
not have previously been validly terminated in accordance with
Section 7 , as promptly as practicable after the date
hereof, but in any event within ten business days after the date of
this Agreement, Purchaser shall commence (within the meaning of
Rule 14d-2 under the Exchange Act) the Offer for all of the
outstanding Company Shares (including any Company Shares subject to
repurchase rights in favor of the Company) for consideration per
Company Share consisting of the Offer Price. (The date on
which Purchaser commences the Offer, within the meaning of Rule
14d-2 under the Exchange Act, is referred to in this Agreement as
the “ Offer Commencement Date ”).
(b)
As promptly as practicable on the
later of: (i) the earliest date as of which Purchaser is permitted
under applicable Legal Requirements to accept for payment Company
Shares tendered pursuant to the Offer; and (ii) the earliest date
as of which each of the conditions set forth in Annex I (the
“ Offer Conditions ”) shall have been satisfied
or waived, Purchaser shall (and Parent shall cause Purchaser to)
accept for payment all Company Shares tendered pursuant to the
Offer (and not validly withdrawn). The obligation of
Purchaser to accept for payment Company Shares tendered pursuant to
the Offer shall be subject only to the satisfaction or waiver of
each of the Offer Conditions (and shall not be subject to any other
conditions). As promptly as practicable after the acceptance
for payment of any Company Shares tendered pursuant to the Offer,
Purchaser shall pay for such Company Shares.
(c)
Notwithstanding anything to the
contrary contained in this Agreement, neither Parent nor Purchaser
shall (without the prior written consent of the
Company):
(i)
change or waive the Minimum
Condition (as defined in Annex I);
(ii)
decrease the number of Company
Shares sought to be purchased by Purchaser in the Offer;
(iii)
reduce the Offer Price;
(iv)
extend or otherwise change the
expiration date of the Offer (except to the extent required
pursuant to Section 1.1(d) );
(v)
change the form of consideration
payable in the Offer; or
2
(vi)
amend, modify or supplement any of
the Offer Conditions or terms of the Offer in a manner that
adversely affects, or would reasonably be expected to adversely
affect, the holders of Company Shares.
(d)
Unless extended as provided in this
Agreement, the Offer shall expire on the date (the “
Initial Expiration Date ”) that is 20 business days
(calculated as set forth in Rule 14d-1(g)(3) under the Exchange
Act) after the Offer Commencement Date. Notwithstanding the
foregoing, if, on the Initial Expiration Date or any subsequent
date as of which the Offer is scheduled to expire, any Offer
Condition is not satisfied and has not been waived, then Purchaser,
without the consent of the Company, may (and, to the extent
requested by the Company from time to time, shall) extend (and
re-extend) the Offer and its expiration date for one or more
periods ending no later than the Outside Date, to permit such Offer
Condition to be satisfied; provided, however , that no
individual extension shall be for a period of more than 10 business
days without the prior written consent of the Company. The
Offer may be terminated prior to its expiration date (as such
expiration date may be extended and re-extended in accordance with
this Agreement), but only if this Agreement is validly terminated
in accordance with Section 7 .
(e)
Purchaser may, in its discretion,
elect to provide for a subsequent offering period (and one or more
extensions thereof) (and, if immediately following the Acceptance
Time (as defined in Section 1.4(a) ), Parent, Purchaser and
their respective Subsidiaries and Affiliates own more than 80% of
the Company Shares outstanding at that time (which shares
beneficially owned shall include shares tendered in the Offer and
not withdrawn), to the extent requested by the Company, Purchaser
shall provide for a subsequent offering period of at least 10
business days) in accordance with Rule 14d-11 under the Exchange
Act following the Acceptance Time.
(f)
The Offer Price shall be adjusted to
the extent appropriate to reflect the effect of any stock split,
division or subdivision of shares, stock dividend, reverse stock
split, consolidation of shares, reclassification, recapitalization
or other similar transaction with respect to Company Shares
occurring or having a record date on or after the date of this
Agreement and prior to the payment by Purchaser for the Company
Shares.
1.2
Actions of Parent and
Purchaser.
(a)
On the Offer Commencement Date
Parent shall: (i) cause to be filed with the SEC a Tender Offer
Statement on Schedule TO with respect to the Offer, which will
contain Purchaser’s offer to purchase and related letter of
transmittal (the forms of which shall be reasonably acceptable to
the Company) and the related form of summary advertisement (such
Tender Offer Statement on Schedule TO, all exhibits, amendments and
supplements thereto being referred to collectively in this
Agreement as the “ Offer Documents ”) and (ii)
cause the Offer Documents to be disseminated to holders of Company
Shares to the extent required by applicable Legal
Requirements. Parent and Purchaser shall cause the Offer
Documents to comply in all material respects with the applicable
requirements of the Exchange Act and the rules and regulations
thereunder. The Company and its counsel shall be given a
reasonable opportunity to review and comment on the Offer Documents
(including any amendment or supplement thereto) prior to the filing
thereof with the SEC. Parent and Purchaser shall promptly
provide the Company and its counsel with a copy or a description of
any comments received by
3
Parent or Purchaser (or by counsel
to Parent or Purchaser) from the SEC or its staff with respect to
the Offer Documents. Each of Parent and Purchaser shall
respond as promptly as practicable to any comments of the SEC or
its staff with respect to the Offer Documents or the
Offer.
(b)
To the extent required by the
applicable requirements of the Exchange Act and the rules and
regulations thereunder: (i) each of Parent, Purchaser and the
Company shall correct promptly any information provided by it for
use in the Offer Documents if such information shall have become
false or misleading in any material respect; and (ii) each of
Parent and Purchaser shall take all steps necessary to promptly
cause the Offer Documents, as supplemented or amended to correct
such information, to be filed with the SEC and to be disseminated
to holders of Company Shares. The Company shall promptly furnish to
Parent all information concerning the Company that may be
reasonably requested by Parent in connection with any action
contemplated by Section 1.2(a) or (b) . No
representation is made by Parent or Purchaser with respect to
information supplied by the Company for inclusion in the Offer
Documents.
(c)
Without limiting the generality of
Section 8.10 , Parent shall cause to be provided to
Purchaser all of the funds necessary to purchase any Company Shares
that Purchaser becomes obligated to purchase pursuant to the Offer,
and shall cause Purchaser to perform, on a timely basis, all of
Purchaser’s obligations under this Agreement.
1.3
Actions of the
Company.
(a)
The Company hereby approves of and
consents to the Offer.
(b)
On the Offer Commencement Date, the
Company shall file with the SEC and (following or contemporaneously
with the initial dissemination of the Offer Documents to holders of
Company Shares to the extent required by applicable federal
securities laws) disseminate to holders of Company Shares a
Solicitation/Recommendation Statement on Schedule 14D-9 (together
with any amendments or supplements thereto, the “ Schedule
14D-9 ”) that, subject to Section 5.3(c) , shall
contain the Company Recommendation. Except in connection with
a Company Change in Recommendation made in accordance with
Section 5.3(c) , Parent and its counsel shall be given a
reasonable opportunity to review and comment on the Schedule 14D-9
(including any amendment or supplement thereto) prior to the filing
thereof with the SEC. The Company shall: (i) promptly provide
Parent and its counsel with a copy of any written comments and a
description of any oral comments received by the Company (or its
counsel) from the SEC or its staff with respect to the Schedule
14D-9; (ii) except with respect to disclosure made relating to a
Company Change in Recommendation in accordance with Section
5.3(c) , give Parent and its counsel a reasonable opportunity
to review and comment on any response formulated in connection with
such comments prior to the filing thereof with the SEC; and (iii)
respond promptly to any such comments. To the extent required
by the applicable requirements of the Exchange Act and the rules
and regulations thereunder: (A) each of Parent, Purchaser and the
Company shall promptly correct any information provided by it for
use in the Schedule 14D-9 if such information shall have become
false or misleading in any material respect; and (B) the Company
shall take all steps necessary to cause the Schedule 14D-9, as
supplemented or amended to correct such information, to be filed
with the SEC. Parent and Purchaser shall promptly furnish to
the Company all information concerning Parent or
Purchaser
4
that may be reasonably requested in
connection with any action contemplated by this Section
1.3(b) . To the extent requested by the Company, Parent
shall cause the Schedule 14D-9 to be mailed or otherwise
disseminated to the Company’s stockholders together with the
Offer Documents disseminated to the Company’s
stockholders.
(c)
In connection with the Offer, the
Company shall instruct its transfer agent to furnish to Purchaser a
list, as of the most recent practicable date, of the record holders
of Company Shares and their addresses, as well as mailing labels
containing such names and addresses. The Company will furnish
Purchaser with such additional information (including any security
position listings in the Company’s possession or reasonably
obtainable by the Company) and assistance as Purchaser may
reasonably request for purposes of communicating the Offer to the
record holders and beneficial holders of Company Shares. All
information furnished in accordance with this Section 1.3(c)
shall be held in confidence by Parent and Purchaser in accordance
with the requirements of the letter agreement, dated May 11, 2006,
between Parent and the Company, as amended on June 2, 2006 (the
“ Confidentiality Agreement ”), and shall be
used by Parent and Purchaser only in connection with the
communication of the Offer and the dissemination of any proxy or
information statement relating to the Merger to the holders of
Company Shares.
1.4
Board of
Directors.
(a)
After the first time that Purchaser
accepts for payment any Company Shares tendered pursuant to the
Offer (the “ Acceptance Time ”), and at all
times thereafter, the Company will, upon Parent’s request and
subject to compliance with applicable Legal Requirements, take all
actions necessary to cause persons designated by Parent to become
directors of the Company so that the total number of such persons
equals that number of directors, rounded up to the next whole
number, determined by multiplying: (i) the total number of
directors on the Company Board (after giving effect to the
directors elected or designated by Parent in accordance with this
Section 1.4(a) ); by (ii) the percentage that the number of
Company Shares beneficially owned by Parent, Purchaser or any of
their respective Affiliates bears to the total number of Company
Shares outstanding at the Acceptance Time (determined on a
fully-diluted basis but disregarding any unvested stock options and
other unvested rights to acquire Company Shares). The Company
will take all actions necessary to permit Parent’s designees
to be elected to the Company Board in accordance with this
Section 1.4(a) , including using reasonable efforts to
secure the resignation of directors, promptly filling vacancies or
newly created directorships on the Company Board, increasing the
size of the Company Board, and/or amending the bylaws of the
Company; provided, however , that prior to the Effective
Time, the Company Board shall always have at least two Continuing
Directors. The Company shall, upon Parent’s request
following the Acceptance Time, and at all times thereafter, also
cause Persons designated by Parent to constitute the same
percentage (rounded up to the next whole number) as is on the
Company Board of (i) each committee of the Company Board, (ii) each
board of directors (or similar body) of each Subsidiary of the
Company and (iii) each committee (or similar body) of each such
board, in each case to the extent permitted by applicable Legal
Requirements and the Marketplace Rules of the NASDAQ Global Select
Market. Upon the election or appointment of all of
Parent’s designees to the Company Board in accordance with
this Section 1.4(a) , the Company shall take all action
necessary to elect to be treated as a “controlled
company” as defined by NASDAQ Marketplace Rule 4350(c) and
make
5
all necessary filings and
disclosures associated with such status. The provisions of
this Section 1.4(a) are in addition to and shall not limit
any rights that any of Purchaser, Parent or any of their respective
affiliates may have as a record holder or beneficial owner of
Company Shares as a matter of applicable Legal Requirements with
respect to the election of directors or otherwise.
(b)
The Company’s obligation to
cause Parent’s designees to be elected or appointed to the
Company Board shall be subject to Section 14(f) of the Exchange Act
and Rule 14f-1 thereunder. The Company shall promptly take
all actions, and shall include in the Schedule 14D-9 such
information with respect to the Company and its officers and
directors, as Section 14(f) of the Exchange Act and Rule 14f-1
thereunder require in order to fulfill its obligations under this
Section 1.4 , so long as Parent shall have provided to the
Company all information with respect to Parent and its designees,
officers, directors and Affiliates required by Section 14(f) of the
Exchange Act and Rule 14f-1 thereunder. Parent shall promptly
supply to the Company in writing, and shall be solely responsible
for, all such information.
1.5
Actions by Directors.
Following the election or
appointment of Parent’s designees to the Company Board
pursuant to Section 1.4(a) , and until the Effective Time,
the approval of a majority of the Continuing Directors shall be
required to authorize: (i) any amendment to or termination of this
Agreement by the Company; (ii) any amendment to the Company’s
certificate of incorporation; (iii) any extension of time for the
performance of any of the obligations or other acts of Parent or
Purchaser; (iv) any waiver of compliance with any covenant of
Parent or Purchaser or any condition to any obligation of the
Company or any waiver of any right of the Company under this
Agreement; (v) any Company Change in Recommendation; and (vi) any
other consent or action by the Company Board with respect to this
Agreement, the Offer or the Merger. The authorization of any
such matter by a majority of the Continuing Directors shall
constitute the authorization of such matter by the Company Board,
and no other action on the part of the Company or any other
director of the Company shall be required to authorize such
matter.
1.6
Top-Up Option.
(a)
The Company hereby grants to
Purchaser an irrevocable option (the “ Top-Up Option
”), exercisable only upon the terms and subject to the
conditions set forth herein, to purchase, at a price per share
equal to the Offer Price, that number of Company Shares (the
“ Top-Up Option Shares ”) equal to the lesser of
(x) the lowest number of Company Shares that, when added to the
number of Company Shares owned by Parent, Purchaser and their
respective Subsidiaries and Affiliates at the time of such
exercise, shall constitute ten thousand (10,000) shares more than
90% of the Company Shares then outstanding (after giving effect to
the issuance of the Top-Up Option Shares) and (y) an aggregate
number of Company Shares that is equal to 19.9% of the Company
Shares issued and outstanding as of the date hereof; provided,
however , that the Top-Up Option shall not be exercisable
unless, (i) immediately prior to such exercise, Parent, Purchaser
and their respective Subsidiaries and Affiliates own more than 80%
of the Company Shares then outstanding and (ii) immediately after
such exercise and the issuance of Company Shares pursuant thereto,
Parent, Purchaser and their respective Subsidiaries and Affiliates
own more than 90% of the Company Shares then outstanding; and
provided, further , that in no event shall the Top-Up Option
be exercisable for a number of Company Shares in excess of the
Company’s total authorized and unissued Company
Shares.
6
(b)
Provided that no applicable Legal
Requirement shall prohibit the exercise of the Top-Up Option or the
issuance of the Top-Up Option Shares pursuant thereto, or otherwise
make such exercise or issuance illegal, Purchaser may exercise and
re-exercise the Top-Up Option multiple times, in whole but not in
part, at any time or times after the Acceptance Time and prior to
the earlier to occur of (i) the Effective Time and (ii) the
termination of this Agreement pursuant to Section 7
.
(c)
Each time that Purchaser wishes to
exercise the Top-Up Option, Purchaser shall send to the Company a
written notice (a “ Top-Up Exercise Notice ”)
specifying the denominations of the certificate or certificates
evidencing the Top-Up Option Shares which the Purchaser wishes to
receive, and the place, time and date for the closing of the
purchase and sale pursuant to the Top-Up Option (a “
Top-Up Closing ”). The Company shall, promptly
after receipt of a Top-Up Exercise Notice, deliver a written notice
to the Purchaser confirming the number of Top-Up Option Shares and
the aggregate purchase price therefore. At each Top-Up
Closing, Purchaser shall pay the Company the aggregate price
required to be paid for the Top-Up Option Shares issuable at such
Top-Up Closing, by delivery of, at Purchaser’s option, (A)
immediately available funds by wire transfer to an account
designated by the Company, (B) a promissory note, bearing simple
interest at 5% per annum, and due six months after the Top-Up
Closing, or (C) any combination thereof. At each Top-Up
Closing, the Company shall cause to be issued to Purchaser a
certificate or certificates representing the Top-Up Option Shares
issuable at such Top-Up Closing. Certificates representing
Company Shares in connection with the Top-Up Option may include any
legends that are required by federal or state securities
laws.
SECTION 2. THE MERGER; EFFECTIVE
TIME
2.1
Merger of the Purchaser into
Company. Upon the
terms and subject to the conditions set forth in this Agreement and
in accordance with the DGCL, at the Effective Time (as defined in
Section 2.3 ), Purchaser shall be merged with and into the
Company, and the separate existence of Purchaser shall cease.
The Company will continue as the surviving corporation in the
Merger (the “ Surviving Corporation
”).
2.2
Effect of the Merger.
The Merger shall have the
effects set forth in this Agreement and in the applicable
provisions of the DGCL. Without limiting the generality of
the foregoing and subject thereto, at the Effective Time, all the
property rights, privileges, immunities, powers and franchises of
the Company and Purchaser shall vest in the Surviving Corporation
and all debts, liabilities and duties of the Company and Purchaser
shall become the debts, liabilities and duties of the Surviving
Corporation.
2.3
Effective Time.
As soon as practicable after
the satisfaction or waiver of the conditions set forth in
Section 6 , the parties hereto shall cause a properly
executed certificate of merger conforming to the requirements of
the DGCL (the “ Certificate of Merger ”) to be
filed with the Secretary of State of the State of Delaware.
The Merger shall become effective at the time the Certificate of
Merger is filed with the Secretary of State of the State of
Delaware, or at such later time as is agreed to by the parties
hereto and specified in the Certificate of Merger (the time at
which the Merger becomes effective being referred to in this
Agreement as the “ Effective Time ”). At
10:00 a.m. (Pacific time) on the date on which the Certificate of
Merger is to be so filed, a closing shall be held at the offices of
Latham & Watkins LLP, 650 Town Center Drive,
7
20th Floor, Costa Mesa, California
92626 (or such other place or time as Parent and the Company may
jointly designate).
2.4
Certificate of Incorporation and
Bylaws; Officers and Directors. Unless otherwise jointly determined by
Parent and the Company prior to the Effective Time:
(a)
the certificate of incorporation of
the Surviving Corporation shall be amended and restated as of the
Effective Time to conform to Exhibit B;
(b)
subject to Section 5.11(a) ,
the bylaws of the Surviving Corporation shall be amended and
restated as of the Effective Time to conform to the bylaws of
Purchaser as in effect immediately prior to the Effective
Time;
(c)
the directors of the Surviving
Corporation immediately after the Effective Time shall be the
respective individuals who are directors of Purchaser immediately
prior to the Effective Time; and
(d)
the officers of the Surviving
Corporation immediately after the Effective Time shall be the
respective individuals who are officers of Purchaser immediately
prior to the Effective Time.
2.5
Conversion of Company
Shares.
(a)
Subject to Section 2.8 , at
the Effective Time, by virtue of the Merger and without any further
action on the part of Parent, Purchaser, the Company or any
stockholder of the Company:
(i)
any Company Shares then held by the
Company or any wholly owned Subsidiary of the Company (or held in
the Company’s treasury) shall cease to exist, and no
consideration shall be paid in exchange therefor;
(ii)
any Company Shares then held by
Parent, Purchaser or any other wholly owned Subsidiary of Parent
shall cease to exist, and no consideration shall be paid in
exchange therefor;
(iii)
except as provided in clauses
“(i)” and “(ii)” above, each Company Share
then outstanding (including any outstanding Company Shares subject
to any repurchase rights in favor of the Company, but excluding any
Appraisal Shares), shall be converted into the right to receive the
Merger Consideration, without interest; and
(iv)
each share of common stock, par
value $0.001 per share, of Purchaser then outstanding shall be
converted into one share of the common stock of the Surviving
Corporation.
(b)
The Merger Consideration shall be
adjusted to the extent appropriate to reflect the effect of any
stock split, division or subdivision of shares, stock dividend,
reverse stock split, consolidation of shares, reclassification,
recapitalization or other similar transaction with respect to
Company Shares occurring or having a record date on or after the
date of this
8
Agreement and prior to the Effective
Time.
2.6
Closing of the Company’s
Transfer Books. At
the Effective Time: (a) all Company Shares outstanding immediately
prior to the Effective Time shall cease to exist as provided in
Section 2.5 and all holders of certificates representing
Company Shares that were outstanding immediately prior to the
Effective Time shall cease to have any rights as stockholders of
the Company; and (b) the stock transfer books of the Company shall
be closed with respect to all Company Shares outstanding
immediately prior to the Effective Time. No further transfer
of any such Company Shares shall be made on such stock transfer
books after the Effective Time. If, after the Effective Time,
a valid certificate previously representing any of such Company
Shares (a “ Company Stock Certificate ”) is
presented to the Payment Agent (as defined in Section 2.7(a)
) or to the Surviving Corporation or Parent, such Company Stock
Certificate shall be canceled and shall be exchanged as provided in
Section 2.7 .
2.7
Payment for Company
Shares.
(a)
Prior to the Acceptance Time (i)
Parent shall select a bank or trust company (reasonably acceptable
to the Company) to act as payment agent with respect to the payment
of the Merger Consideration (the “ Payment Agent
”) and (ii) Parent shall cause to be made available to the
Payment Agent cash amounts sufficient to enable the Payment Agent
to make payments pursuant to Section 2.5 to holders of
Company Shares outstanding immediately prior to the Effective
Time.
(b)
Promptly after the Effective Time,
Parent shall cause the Payment Agent to mail to each Person who
was, immediately prior to the Effective Time, a holder of record of
Company Shares described in Section 2.5(a)(iii) a form of
letter of transmittal (reasonably acceptable to the Company) and
instructions for use in effecting the surrender of Company Stock
Certificates representing such Company Shares in exchange for
payment therefor. Parent shall ensure that, upon surrender to
the Payment Agent of each such Company Stock Certificate, together
with a properly executed letter of transmittal, the holder of such
Company Stock Certificate (or, under the circumstances described in
Section 2.7(e) , the transferee of the Company Shares
represented by such Company Stock Certificate) shall promptly
receive in exchange therefor the consideration to which such holder
(or transferee) is entitled pursuant to Section 2.5(a)(iii)
.
(c)
On or after the first anniversary of
the Effective Time, Parent or the Surviving Corporation shall be
entitled to cause the Payment Agent to deliver to Parent or the
Surviving Corporation any funds made available by Parent to the
Payment Agent which have not been disbursed to holders of Company
Stock Certificates, and thereafter such holders shall be entitled
to look only to Parent and the Surviving Corporation with respect
to the consideration payable and issuable upon surrender of their
Company Stock Certificates. Neither the Payment Agent, Parent
nor the Surviving Corporation shall be liable to any holder of a
Company Stock Certificate for any amount properly paid to a public
official pursuant to any applicable abandoned property or escheat
law. If any Company Stock Certificates shall not have been
surrendered before the third anniversary of the Effective Time (or
immediately prior to such earlier date on which any Merger
Consideration payable in respect of such Company Stock Certificates
would otherwise escheat to or become the property of any
Governmental Entity), any
9
such Merger Consideration in respect
thereof shall, to the extent permitted by applicable Legal
Requirements, become the property of Parent, free and clear of all
claims or interest of any Person previously entitled
thereto.
(d)
If any Company Stock Certificate
shall have been lost, stolen or destroyed, then, upon the making of
an affidavit of that fact by the Person claiming such Company Stock
Certificate to be lost, stolen or destroyed in a form reasonably
satisfactory to Parent (together with an indemnity in form
reasonably satisfactory to Parent against any claim that may be
made against the Payment Agent or Parent or otherwise with respect
to such certificate and, if required by Parent, the posting by such
Person of a bond in such reasonable amount as Parent may direct to
support such indemnity), Parent shall cause the Payment Agent to
pay in exchange for such lost, stolen or destroyed Company Stock
Certificate the consideration payable and issuable in respect
thereof pursuant to this Agreement.
(e)
In the event of a transfer of
ownership of Company Shares which is not registered in the transfer
records of the Company, the consideration may be paid and issued
with respect to such Company Shares to a transferee of such Company
Shares if the Company Stock Certificate representing such Company
Shares is presented to the Payment Agent, accompanied by all
documents reasonably required by the Payment Agent to evidence and
effect such transfer and to evidence that any applicable stock
transfer taxes relating to such transfer have been paid.
(f)
The Surviving Corporation or Parent
shall bear and pay all charges and expenses, including those of the
Payment Agent, incurred in connection with the exchange of the
Company Shares.
(g)
Parent, the Surviving Corporation
and the Payment Agent shall be entitled to deduct and withhold from
the consideration otherwise payable pursuant to the Offer, the
Merger or this Agreement to any holder of Company Shares or Company
Options such amounts as Parent, the Surviving Corporation or the
Payment Agent are required to deduct and withhold under the Code,
or any Legal Requirement, with respect to the making of such
payment. To the extent that amounts are so withheld by Parent, the
Surviving Corporation or the Payment Agent, such withheld amounts
shall be treated for all purposes of this Agreement as having been
paid to the holder of Company Shares or Company Options in respect
of whom such deduction and withholding was made by Parent, the
Surviving Corporation or the Payment Agent.
2.8
Appraisal Rights.
(a)
Notwithstanding anything to the
contrary contained in this Agreement, any Company Shares that
constitute Appraisal Shares shall not be converted into or
represent the right to receive payment in accordance with
Section 2.5 , and each holder of Appraisal Shares shall be
entitled only to such rights with respect to such Appraisal Shares
as may be granted to such holder pursuant to Section 262 of the
DGCL. From and after the Effective Time, a holder of
Appraisal Shares shall not have and shall not be entitled to
exercise any of the voting rights or other rights of a stockholder
of the Surviving Corporation.
(b)
The Company: (i) shall give Parent
prompt written notice of any demand by any stockholder of the
Company for appraisal of such stockholder’s Company
Shares
10
pursuant to Section 262 of the DGCL;
and (ii) shall give Parent the opportunity to participate in all
negotiations and proceedings with respect to any such demand.
Except with the prior written consent of Purchaser (which consent
may be withheld in the sole and absolute discretion of Purchaser)
or as may otherwise be required by applicable Legal Requirements,
the Company shall not make any payment with respect to, or settle
or offer to settle, any such demands.
(c)
For purposes of this Agreement,
“ Appraisal Shares ” shall refer to any Company
Shares outstanding immediately prior to the Effective Time that are
held by stockholders who have preserved their appraisal rights
under Section 262 of the DGCL with respect to such Company
Shares. If any holder of Appraisal Shares shall fail to
perfect or shall otherwise lose such holder’s right of
appraisal under Section 262 of the DGCL, then: (i) any right of
such holder with respect to such Company Shares as may be granted
to such holder pursuant to Section 262 of the DGCL shall be
extinguished; and (ii) such Appraisal Shares shall automatically be
converted into and shall represent only the right to receive (upon
the surrender of the Company Stock Certificate(s) representing such
Appraisal Shares) payment for such Appraisal Shares in accordance
with Section 2.5 .
2.9
Further Action.
If, at any time after the
Effective Time, any further action is necessary to carry out the
purposes of this Agreement, the officers and directors of the
Surviving Corporation and Parent shall be authorized (in the name
of Purchaser, in the name of the Company or otherwise) take such
action.
SECTION 3. REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
The Company represents and warrants
to Parent and Purchaser that, except as set forth in the disclosure
schedule delivered to Parent on the date of this Agreement (the
“ Company Disclosure Schedule ”):
3.1
Due Organization and Good
Standing; Subsidiaries.
(a)
Each of the Company and the Company
Subsidiaries is a corporation duly organized, validly existing and
(where such concept is recognized under the laws of the
jurisdiction in which it is incorporated) in good standing under
the laws of the jurisdiction in which it is incorporated, and has
all requisite corporate power and authority necessary to own, lease
and operate its properties and to carry on its business as it is
now being conducted. The Company and each of the Company
Subsidiaries is duly qualified or licensed to do business and is in
good standing in each state in which the nature of the business
conducted by it makes such qualification or license necessary,
except where the failure to be so qualified does not have a Company
Material Adverse Effect.
(b)
Part 3.1 of the Company Disclosure
Schedule lists all Company Subsidiaries in existence as of the date
of this Agreement, together with the jurisdiction of organization
of each such Subsidiary and, if the Company, together with the
Company Subsidiaries, does not own all of the outstanding equity
interests of such Company Subsidiary, the percentage of equity
interests of such Company Subsidiary owned by the Company and the
Company Subsidiaries. All the outstanding shares of capital
stock and other equity interests of each Company Subsidiary have
been duly authorized and validly issued, are fully paid
and
11
nonassessable are not subject to any
purchase option, call option, right of first refusal, preemptive
right, subscription right or any similar right entitling the
holders thereof to acquire shares of capital stock or other equity
interests from such Company Subsidiary under any provision of the
Legal Requirements pursuant to which such Company Subsidiary is
formed, such Company Subsidiary’s organizational documents or
any Contract to which such Company Subsidiary is a party or is
otherwise bound, and are owned directly or indirectly by the
Company free and clear of all liens, pledges or Encumbrances,
except for Permitted Encumbrances. Except for the capital
stock of, or other equity interests in, the Company Subsidiaries,
and except for marketable securities held from time to time by the
Company in connection with its normal cash management activities,
the Company does not own, directly or indirectly, any capital stock
of, or other equity or voting interests in, any Person.
3.2
Authority; Binding Nature of
Agreement. The
Company has the requisite corporate power and authority to enter
into and to perform its obligations under this Agreement. The
Company Board, at a meeting duly called and held, has unanimously:
(a) determined that this Agreement, the Offer, the Merger, the
Top-Up Option and the other transactions contemplated by this
Agreement are fair to, and in the best interests of, the
Company’s stockholders; (b) duly and validly authorized and
approved the execution, delivery and performance of this Agreement
by the Company; (c) declared that this Agreement is advisable; and
(d) resolved to make the Company Recommendation. The
execution and delivery of this Agreement by the Company and the
consummation by the Company of the Merger have been duly authorized
by all necessary corporate action on the part of the Company, and
no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement other than, with respect to
the Merger, the adoption of this Agreement by the holders of a
majority of the then outstanding Company Shares (if required under
the DGCL) and the filing of the appropriate merger documents as
required by the DGCL. This Agreement has been duly executed
and delivered on behalf of the Company and, assuming the due
authorization, execution and delivery of this Agreement by Parent
and Purchaser, constitutes the valid and binding obligation of the
Company, enforceable against the Company in accordance with its
terms, subject to (i) laws of general application relating to
bankruptcy, insolvency and the relief of debtors, and (ii) rules of
law governing specific performance, injunctive relief and other
equitable remedies.
3.3
Non-Contravention;
Consents. Except
as set forth on Part 3.3 of the Company Disclosure Schedule, the
execution and delivery of this Agreement by the Company, the
acquisition of Company Shares by Purchaser pursuant to the Offer
and the consummation by the Company of the Merger and the other
transactions contemplated by this Agreement will not: (a) cause a
violation of any of the provisions of the certificate of
incorporation or bylaws of the Company or any of the equivalent
organizational documents of the Company Subsidiaries; (b) cause a
violation by the Company or any of the Company Subsidiaries of any
Legal Requirement applicable to the business of the Company or any
of the Company Subsidiaries; or (c) result in a modification,
violation or breach of, or constitute (with or without notice or
lapse of time or both) a default (or give rise to any right,
including any right of termination, amendment, cancellation or
acceleration) under, any of the terms, conditions or provisions of
any Contract to which the Company or any Company Subsidiary is a
party or by which its properties or assets are otherwise bound;
except in the case of clauses (b) and (c) does not result in a
Company Material Adverse Effect. Except as may be required by
the Exchange Act, the DGCL, the HSR
12
Act or the antitrust or competition
laws of foreign jurisdictions, the Company is not required to make
any filing with, or to obtain any consent from, any Person in
connection with the execution and delivery of this Agreement by the
Company or the consummation by the Company of the Merger, except
where the failure to make any such filing or obtain any such
consent does not result in a Company Material Adverse
Effect.
3.4
Certificate of Incorporation;
Bylaws. The Company has
delivered or made available to Parent complete and correct copies
of the certificate of incorporation and bylaws of the Company,
including all amendments thereto. The Company is not in violation
of its certificate of incorporation or bylaws.
3.5
Capitalization.
(a)
The authorized capital stock of the
Company consists of 60,000,000 Company Shares and 5,000,000 shares
of preferred stock, par value $0.01 per share (“ Preferred
Shares ”), of which 25,000 shares have been designated
Series A Participating Preferred Stock and reserved for issuance in
connection with the Company Rights. As of March 22, 2007: (i)
16,000,118 Company Shares were issued and outstanding; (ii) no
Preferred Shares were outstanding; (iii) no Company Shares or
Preferred Shares were issued and held in the treasury of the
Company or otherwise owned, directly or indirectly, by the Company,
(iv) 4,603,792 Company Shares were reserved for future issuance
pursuant to the Company Option Plans, of which 4,281,397 Company
Shares were subject to outstanding Company Options; and
(v) 404,853 Company Shares were reserved for future issuance
pursuant to the Company’s Amended and Restated Employee Stock
Purchase Plan (the “ Company ESPP ”). The
Company has delivered or made available to Parent complete and
correct copies of: (A) the Company Option Plans, which cover the
stock options granted by the Company that are outstanding as of the
date of this Agreement; and (B) the Company ESPP. The
treatment of Company Options set forth in Section 5.9 does
not require the approval or consent of any holder of Company
Options and does not conflict with the terms of the Company Option
Plans.
(b)
All of the outstanding Company
Shares are duly authorized, validly issued, fully paid and
nonassessable. No class of capital stock of the Company or any
Company Subsidiary is entitled to any purchase option, call option,
right of first refusal, preemptive right, subscription right or any
similar right entitling the holders thereof to acquire capital
stock or other equity interests from the Company under any
provision of the DGCL, the Company’s certificate of
incorporation, the Company’s bylaws or any Contract to which
the Company is a party or is otherwise bound. All of the
Company Shares that may be issued pursuant to the Company Options
or under the Company ESPP will be, when issued, duly authorized,
validly issued, fully paid and nonassessable and not subject to any
purchase option, call option, right of first refusal, preemptive
right, subscription right or any similar right entitling the
holders thereof to acquire capital stock or other equity interests
from the Company under any provision of the DGCL, the
Company’s certificate of incorporation, the Company’s
bylaws or any Contract to which the Company is a party or is
otherwise bound.
(c)
Part 3.5 of the Company Disclosure
Schedule contains a true and complete list, as of March 22, 2007,
of all outstanding options to purchase Company Shares, whether or
not granted under the Company Option Plans, including the date of
grant, the number of
13
Company Shares subject to each such
option, the exercise price per share, the maximum term of each such
option and, where applicable, the Company Option Plan under which
such option was granted. All outstanding Company Options are
evidenced by stock option agreements. From March 22, 2007
until the date of this Agreement, the Company has not issued, or
reserved for issuance, any capital stock or any options, warrants
or other rights to acquire capital stock or other equity interests
(or securities convertible into or exercisable or exchangeable for
capital stock or other equity interests), other than the issuance
of Company Shares pursuant to the exercise of Company Options that
were outstanding as of the close of business on March 22,
2007.
(d)
Except as set forth above in this
Section 3.5 or in Part 3.5 of the Company Disclosure
Schedule, as of the date of this Agreement, there are not any
options, warrants, rights, convertible or exchangeable securities,
“phantom” stock rights, stock appreciation rights,
stock-based performance units, commitments, Contracts, arrangements
or undertakings of any kind to which the Company or any of the
Company Subsidiaries is a party or by which any of them is bound
(i) obligating the Company or any of the Company Subsidiaries to
issue, deliver or sell, or cause to be issued, delivered or sold,
equity interests in the Company or any of the Company Subsidiaries,
(ii) obligating the Company or any of the Company Subsidiaries to
issue, grant, extend or enter into any such option, warrant, right,
security, unit commitment, Contract, arrangement or undertaking or
(iii) that give any Person the right to receive any economic
benefit or right similar to or derived from the economic benefits
and rights occurring to holders of Company Shares. There are
no outstanding obligations of the Company or any of the Company
Subsidiaries to repurchase, redeem or otherwise acquire any shares
of capital stock or other equity interests of the Company or any of
the Company Subsidiaries. There are no bonds, debentures,
notes or other Indebtedness of the Company or the Company
Subsidiaries having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any
matters on which stockholders of the Company may vote.
(e)
There are no voting trusts or other
agreements or understandings to which the Company or any Company
Subsidiary is a party or of which, as of the date of this
Agreement, the Company has knowledge, with respect to the voting of
Company Shares or any capital stock of, or other equity interest of
the Company or any of the Company Subsidiaries.
3.6
SEC Filings; Financial
Statements.
(a)
The Company has filed or furnished
(as required or permitted) all forms, reports, schedules, proxy
statements, registration statements and other documents (including
exhibits and other information incorporated therein) required to be
filed by the Company with the SEC since January 1, 2003 (the
“ Company SEC Documents ”). As of the time
it became effective (with respect to filings made under the
Securities Act) and as of the time it was filed with or furnished
to the SEC (with respect to filings made under the Exchange Act
and, with respect to proxy statements, at the time such proxy
statement was mailed to stockholders of the Company) (or, with
respect to filings made under the Exchange Act and amended or
superseded by a filing prior to the date of this Agreement, then on
the date of the filing or furnishing of such amendment or, with
respect to an amendment to a proxy statement, on the date such
amendment to the proxy statement was mailed to stockholders of the
Company, if applicable): (i) each of the Company SEC
Documents complied in all material respects with the applicable
requirements of
14
the Securities Act or the Exchange
Act (as the case may be); and (ii) the Company SEC Documents did
not (and with respect to Company SEC Documents filed after the date
of this Agreement, will not) contain any untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were
made, not misleading. The Company has made available to
Parent copies of all comment letters received by the Company from
the SEC since January 1, 2003, and relating to the Company SEC
Documents, together with all written responses of the Company
thereto. As of the date of this Agreement, to the
Company’s knowledge, there are no outstanding or unresolved
comments in such comment letters received by the Company from the
SEC. As of the date of this Agreement, to the knowledge of
the Company none of the SEC Documents is the subject of any ongoing
review by the SEC. No Company Subsidiary is, or has ever
been, required to file any reports, schedules, proxy statements,
registration statements or other documents with the SEC.
(b)
The financial statements (including
any related notes) contained in the Company SEC Documents fairly
present, in all material respects, the consolidated financial
position of the Company and the Company Subsidiaries as of the
respective dates thereof and the consolidated results of operations
of the Company and the Company Subsidiaries for the periods covered
thereby, have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered (except as may be
indicated in the notes to such financial statements or, in the case
of unaudited statements, as permitted by Form 10-Q of the SEC, and
except that unaudited financial statements are subject to normal
year-end audit adjustments) and complied at the time they were
filed as to form in all material respects with the applicable
accounting requirements and the published rules and regulations of
the SEC with respect thereto at the time of filing.
(c)
Neither the Company nor any Company
Subsidiary is a party to, or has any commitment to become a party
to, any joint venture, off-balance sheet partnership or any similar
Contract (including any Contract relating to any transaction or
relationship between or among the Company and any Company
Subsidiary, on the one hand, and any unconsolidated affiliate,
including any structured finance, special purpose or limited
purpose Entity or Person, on the other hand, or any
“off-balance sheet arrangements” (as defined in
Item 303(a) of Regulation S-K of the SEC)), where the
result, purpose or intended effect of such Contract is to avoid
disclosure of any material transaction involving, or material
liabilities of, the Company or any Company Subsidiary in the
Company’s or any Company Subsidiary’s published
financial statements or other Company SEC Documents.
(d)
The independent registered public
accounting firm engaged to express its opinion with respect to the
financial statements included in the Company SEC Documents is, and
has been throughout the periods covered thereby
“independent” within the meaning of Rule 2-01 of
Regulation S-X. Ernst & Young, LLP has not resigned or
been dismissed as an independent public accountant of the Company
as a result of or in connection with any disagreement with the
Company on a matter of accounting principles or practices,
financial statement disclosure or auditing scope or
procedure.
(e)
Neither the Company nor any of the
Company Subsidiaries (taken together as a whole) has any material
liabilities of any nature (whether accrued, absolute,
contingent
15
determined or otherwise) required by
GAAP to be recognized or disclosed on a consolidated balance sheet
of the Company or any Company Subsidiary or in the notes thereto,
except for: (i) liabilities disclosed in the financial
statements (including any related notes) contained in the Company
SEC Documents filed prior to the date of this Agreement; (ii) for
liabilities and obligations incurred under any Material Contract
other than liabilities or obligations due to breaches thereunder;
and (iii) liabilities incurred in the Ordinary Course of Business
since December 31, 2006 that could not reasonably be expected to,
individually or in the aggregate, have a Company Material Adverse
Effect.
3.7
Information Supplied.
None of the information
included or incorporated by reference in the Proxy Statement will,
at the date it is first mailed to the Company’s stockholders,
at the time of the Special Meeting or at the time of any amendment
or supplement thereof, contain any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not
misleading, except that no representation, warranty or covenant is
made by the Company with respect to statements made or incorporated
by reference therein based on written information supplied by
Parent or Purchaser expressly for inclusion or incorporation by
reference in the Proxy Statement. The Proxy Statement will
comply as to form in all material respects with the requirements of
the Exchange Act. The written information provided by or on
behalf of the Company expressly for inclusion or incorporation by
reference in the Offer Documents shall not, at the time the Offer
Documents are mailed to the stockholders of the Company, or at any
other time at or prior to the Acceptance Time, contain an untrue
statement of material fact or omit to state a material fact
required to be stated therein, or necessary in order to make the
statements therein, in light of the circumstances under which they
were made, not misleading.
3.8
Schedule 14D-9.
The Schedule 14D-9 will comply as to
form in all material respects with the requirements of the Exchange
Act and, on the date filed with the SEC and on the date first
published, sent or given to the Company’s stockholders, the
Schedule 14D-9 will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading, except that no representation, warranty or covenant is
made by the Company with respect to statements made or incorporated
by reference therein based on any written information supplied by
Parent or Purchaser expressly for inclusion or incorporation by
reference in the Schedule 14D-9.
3.9
Internal Controls; Sarbanes-Oxley
Act.
(a)
The Company has designed and
maintains a system of internal control over financial reporting (as
defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act)
sufficient to provide reasonable assurance regarding the
reliability of financial reporting. The Company (i) has
designed and maintains disclosure controls and procedures (as
defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) to
ensure that material information required to be disclosed by the
Company in the reports that it files or submits under the Exchange
Act is recorded, processed, summarized and reported within the time
periods specified in the SEC’s rules and forms and is
accumulated and communicated to the Company’s management as
appropriate to allow timely decisions regarding required disclosure
and (ii) has disclosed to the
16
Company’s auditors and the
audit committee of the Company Board (and made summaries of such
disclosures available to Parent) (A) any significant
deficiencies and material weaknesses in the design or operation of
internal control over financial reporting that are reasonably
likely to adversely affect in any material respect the
Company’s ability to record, process, summarize and report
financial information and (B) any fraud, whether or not
material, that involves management or other employees who have a
significant role in the Company’s internal controls over
financial reporting. The Company is in compliance in all
material respects with all effective provisions of the
Sarbanes-Oxley Act.
(b)
Each of the principal executive
officer of the Company and the principal financial officer of the
Company (or each former principal executive officer of the Company
and each former principal financial officer of the Company, as
applicable) has made all certifications required by Rule 13a-14 or
15d-14 under the Exchange Act or Sections 302 and 906 of the
Sarbanes Oxley Act and the rules and regulations of the SEC
promulgated thereunder with respect to the Company SEC Documents,
and the statements contained in such certifications are true and
correct. For purposes of this Section 3.9(b) ,
“principal executive officer” and “principal
financial officer” shall have the meanings given to such
terms in the Sarbanes-Oxley Act. Neither the Company nor any
Company Subsidiary has outstanding, or has arranged any
outstanding, “extensions of credit” to directors or
executive officers within the meaning of Section 402 of the
Sarbanes Oxley-Act.
(c)
Neither the Company nor any of the
Company Subsidiaries nor, to the Company’s knowledge, any
director, officer, auditor, accountant, consultant or
representative of the Company or any of the Company Subsidiaries
has received or otherwise had or obtained knowledge of any
substantive and material complaint, allegation, assertion or claim,
whether written or oral, that the Company or any of the Company
Subsidiaries has engaged in questionable accounting or auditing
practices. No current or former attorney representing the Company
or any of the Company Subsidiaries has reported evidence of a
material violation of securities laws, breach of fiduciary duty or
similar violation by the Company or any of its officers, directors,
employees or agents to the current Company Board or any committee
thereof or to any current director or executive officer of the
Company.
(d)
To the Company’s knowledge, no
employee of the Company or any of the Company’s Subsidiaries
has provided information to any law enforcement agency regarding
the commission or possible commission of any crime or the violation
or possible violation of any applicable Legal Requirements
described in Section 806 of the Sarbanes-Oxley Act by the
Company or any of the Company Subsidiaries. Neither the Company nor
any of the Company’s Subsidiaries nor, to the knowledge of
the Company, any director, officer, employee, contractor,
subcontractor or agent of the Company or any such Subsidiary has
discharged, demoted, suspended, threatened, harassed or in any
other manner discriminated against an employee of the Company or
any of the Company’s Subsidiaries in the terms and conditions
of employment because of any lawful act of such employee described
in Section 806 of the Sarbanes-Oxley Act.
17
3.10
Absence of Certain
Changes.
(a)
Between December 31, 2006 and the
date of this Agreement, neither the Company nor any Company
Subsidiary has: (a) suffered any Company Material Adverse
Effect; (b) conducted its respective business other than in the
Ordinary Course of Business.
(b)
Between December 31, 2006 and the
date of this Agreement, neither the Company nor any Company
Subsidiary has, except as disclosed in Part 3.10(b) of the Company
Disclosure Schedule taken any action that, if taken during the
period from the date of this Agreement through the Effective Time,
would constitute a breach of Section 5.1 .
3.11
Title to Assets; Real
Property.
(a)
The Company or one of the Company
Subsidiaries owns, and has good title to, each of the tangible
assets reflected as owned by the Company or the Company
Subsidiaries on the Latest Balance Sheet (except for tangible
assets sold or disposed of since that date in the Ordinary Course
of Business) free of any liens or Encumbrances (other than
Permitted Encumbrances). The material properties and tangible
assets owned or leased by the Company and the Company Subsidiaries
are sufficient (subject to normal wear and tear) to operate their
businesses in substantially the same manner as they are currently
conducted by the Company and the Company Subsidiaries.
(b)
Part 3.11(b) of the Company
Disclosure Schedule lists each real property that is owned by the
Company or any Company Subsidiary as of the date of this Agreement
(such property, together with any real property acquired by the
Company after the date of this Agreement (which will have been so
acquired in compliance with Section 5.1 ), the “
Owned Real Property ”). Except as disclosed in
Part 3.11(b) of the Company Disclosure Schedule, each of the
Company and or a Company Subsidiary has good title to the Owned
Real Property, free and clear of all Encumbrances, other than
Permitted Encumbrances. Except as set forth on Part 3.11(b)
of the Company Disclosure Schedule, (i) there are no outstanding
Contracts for the sale of any of the Owned Real Property, (ii)
there are no leases, subleases, licenses, concessions or any other
Contracts granting to any Person other than the Company or any of
the Company Subsidiaries any right to the possession, use,
occupancy or enjoyment of any of the Owned Real Property or any
portion thereof and (iii) there are no easements, covenants,
rights-of-way and other similar restrictions of record, if any,
that, individually or in the aggregate, materially impair, or would
reasonably be expected to impair materially, the continued use and
operation of the Owned Real Property to which they relate in the
conduct of the business of the Company and the Company Subsidiaries
as presently conducted. Any reciprocal easements, operating
agreements, option agreements, rights of first refusal or rights of
first offer with respect to any Owned Real Property are set forth
in Part 3.11(b) of the Company Disclosure Schedule. There are
no physical conditions or defects at any of the Owned Real Property
which materially impair or would be reasonably expected to
materially impair the continued operation of such facility as
presently conducted. The present use of the land, buildings,
structures and improvements on the Owned Real Property are, in all
material respects, in conformity with all Legal Requirements,
including all applicable zoning laws, ordinances and regulations
and with all registered deeds or other restrictions of record, and
neither the Company nor any of the Company Subsidiaries, as the
case may be, has received any written notice of violation thereof,
except for such nonconformities or violations that do not, and
would not, individually or in the aggregate, reasonably be expected
to materially interfere with the operations at the Owned Real
Property as
18
presently conducted (or as would be
conducted at full capacity). Neither the Company nor any of
the Company Subsidiaries, as the case may be, has received any
written notice of any material conflict or dispute with any
Governmental Entity or other Person relating to any Owned Real
Property or the activities thereon, other than where there is no
current or reasonably likely material interference with the
operations at the Owned Real Property as presently conducted (or as
would be conducted at full capacity). As of the date hereof,
there are no existing, or to the knowledge of the Company, any
threatened or pending condemnation or eminent domain proceedings
(or proceedings in lieu thereof) affecting the Owned Real Property
or any portion thereof.
(c)
Part 3.11(c) of the Company
Disclosure Schedule lists each real property that is leased by the
Company or any Company Subsidiary as of the date of this Agreement,
pursuant to which the Company or such Company Subsidiary is
required to pay a monthly rental in excess of $50,000 (such
property, together with any such lease entered into by the Company
or a Company Subsidiary after the date of this Agreement which will
have been so acquired in compliance with Section 5.1 , the
“ Leased Real Property ”). Except as
disclosed in Part 3.11(c) of the Company Disclosure Schedule, the
Company or a Company Subsidiary holds a valid leasehold interest in
the Leased Real Property free and clear of all Encumbrances, other
than Permitted Encumbrances or Encumbrances encumbering a
lessor’s interest in the Leased Real Property incurred by the
lessor. Each of the leases under which the Leased Real
Property is held (A) is in full force and effect, and (B) is
enforceable against the Company or the Company Subsidiaries and the
other party or parties thereto, in accordance with its terms,
except as the same may be limited by (i) laws of general
application relating to bankruptcy, insolvency and the relief of
debtors, and (ii) rules of law governing specific performance,
injunctive relief and other equitable remedies. No material
default exists under any lease under which the Leased Real Property
is held to which the Company or any of the Company Subsidiaries is
a party and no circumstance exists which, with the giving of
notice, the passage of time or both, is reasonably likely to result
in such a default. Except as set forth on Part 3.11(c) of the
Company Disclosure Schedule, there are no material subleases,
licenses, concessions or any other Contracts or agreements to which
the Company or any of the Company Subsidiaries is a party or by
which any of them is otherwise bound granting to any Person or
entity other than the Company or any of the Company Subsidiaries
any right to the possession, use, occupancy or enjoyment of any of
the Leased Real Property or any portion thereof. Any material
reciprocal easements, operating agreements, option agreements,
rights of first refusal or rights of first offer to which the
Company or any of the Company Subsidiaries is a party or by which
any of them is otherwise bound with respect to any Leased Real
Property are set forth in Part 3.11(c) of the Company Disclosure
Schedule. There are no physical conditions or defects at any
of the Leased Real Property which materially impair or would be
reasonably expected to materially impair the continued operation of
such facility as presently conducted. As of the date hereof,
there are no existing, or to the knowledge of the Company, any
threatened or pending condemnation or eminent domain proceedings
(or proceedings in lieu thereof) affecting the Leased Real Property
or any portion thereof. The present use of the land,
buildings, structures and improvements on the Leased Real Property
are, to the knowledge of the Company, in conformity with all Legal
Requirements, including all applicable zoning laws, ordinances and
regulations and with all registered deeds or other restrictions of
record, and neither the Company nor any of the Company
Subsidiaries, as the case may be, has received any written notice
of violation thereof, except for such nonconformities or violations
that would not, individually or in the aggregate,
reasonably
19
be expected to have a Company
Material Adverse Effect. Neither the Company nor any of the
Company Subsidiaries, as the case may be, has received any written
notice of any conflict or dispute with any Governmental Entity or
other Person relating to any Leased Real Property or the activities
thereon, other than where there is no current or reasonably likely
material interference with the operations at the Leased Real
Property as presently conducted (or as would be conducted at full
capacity).
3.12
Intellectual Property
Rights.
(a)
Part 3.12(a) of the Company
Disclosure Schedule sets forth with respect to the Intellectual
Property Rights owned by the Company or the Company
Subsidiaries: (i) for each patent and patent application, the
patent number or application serial number for each jurisdiction in
which the patent or application has been filed, the date filed or
issued, and the present status thereof, as maintained in records by
the Company, a Company Subsidiary, or its or their outside
intellectual property counsel; (ii) for each registered trademark,
trade name or service mark, the application serial number or
registration number, for each country, province and state, and the
class of goods covered, as maintained in records by the Company, a
Company Subsidiary, or its or their outside intellectual property
counsel; and (iii) for any URL or domain name, the registration
date, any renewal date and name of registry, as maintained in
records by the Company, a Company Subsidiary, or its or their
outside intellectual property counsel. As of the date of this
Agreement, to the knowledge of the Company, all registered
trademarks, issued patents and registered copyrights owned by the
Company or a Company Subsidiary are valid and subsisting. To
the knowledge of the Company, neither the Company nor any Company
Subsidiary is engaging in or has engaged at any time in any patent
or copyright misuse or any fraud or inequitable conduct, including
with respect to its patent applications, trademark applications or
copyright registration applications.
(b)
To the knowledge of the Company, the
Intellectual Property Rights and Technology owned or licensed by
the Company and the Company Subsidiaries, or that the Company or
any Company Subsidiary has a right to use pursuant to a covenant
not to sue, constitute all Intellectual Property Rights and
Technology used in or necessary for the conduct of the
Company’s or the Company Subsidiaries’ business as
presently conducted, including the design, manufacture, license,
sale and support of all (i) Products Under Development or
(ii) products currently offered for sale by the Company or a
Company Subsidiary.
(c)
Except pursuant to licenses or with
respect to the subject matter listed in Part 3.12(c) of the Company
Disclosure Schedule, to the knowledge of the Company neither the
Company nor any Company Subsidiary is compensating or has any
obligation to compensate or account to any Person for the use of
any of the Company’s or any Company Subsidiary’s
Intellectual Property Rights or Technology used in the design,
manufacture, license, sale and support of all (i) Products Under
Development or (ii) products currently offered for sale by the
Company and the Company Subsidiaries.
(d)
The Company or each Company
Subsidiary (a) owns all right, title and interest in and to the
Intellectual Property Rights and Technology owned or purported to
be owned by the Company, including the Intellectual Property Rights
and Technology listed on Part 3.12(a) of the Company Disclosure
Schedule, free and clear of any mortgage, easement,
lien,
20
pledge (including any negative
pledge) or security interest (other than Permitted Encumbrances);
and (b) has a valid and enforceable right or license to use all
other Intellectual Property Rights and Technology used in the
design, manufacture, license, sale and support of all products
currently offered for sale or with respect to Products Under
Development by the Company and the Company Subsidiaries, and,
except as disclosed in Part 3.12(d) of the Company Disclosure
Schedule, all such licensed Intellectual Property Rights and rights
to use Technology will not cease to be valid and enforceable rights
of the Company or the applicable Company Subsidiary by reason of
the execution, delivery and performance of this Agreement, or by
any ancillary agreements executed in connection with this
Agreement, or the consummation of the transactions contemplated
hereby or thereby.
(e)
Except as disclosed in Part 3.12(e)
of the Company Disclosure Schedule, no Legal Proceedings are
pending against the Company or a Company Subsidiary, or, to the
knowledge of the Company, are threatened, that challenge the right
of Company or the Company Subsidiaries with respect to the use or
ownership of the Intellectual Property Rights or Technology owned
or licensed by the Company and the Company Subsidiaries.
Without limiting the foregoing, and except as disclosed in Part
3.12(e) of the Company Disclosure Schedule, no interference,
opposition, reexamination, or other Legal Proceeding initiated by a
third party is pending against the Company or a Company Subsidiary,
or, to the Company’s knowledge, is threatened, or has during
the past three years been threatened but did not develop into a
Legal Proceeding in which the scope, validity, or enforceability of
any of Company’s or the Company Subsidiaries’
Intellectual Property Rights is being or has been challenged.
Except as disclosed in Part 3.12(e) of the Company Disclosure
Schedule, to the knowledge of the Company, neither the
Company’s nor any Company Subsidiary’s past or present
use of Intellectual Property Rights or Technology owned by the
Company or any Company Subsidiary infringes upon or
misappropriates, breaches or otherwise conflicts with the
Intellectual Property Rights of any third party and neither the
Company nor any Company Subsidiary has received any notice alleging
any such infringement or misappropriation. Except as
disclosed in Part 3.12(e) of the Company Disclosure Schedule, the
Intellectual Property Rights and Technology owned by the Company
and each Company Subsidiary are not subject to any outstanding
judgment, decree, order, writ, award, injunction or determination
of an arbitrator or court or other governmental authority (other
than office actions and correspondence regarding pending patent
applications and trademark applications) restricting the rights of
the Company or any Company Subsidiary with respect thereto.
To the knowledge of the Company, no Person has interfered with,
infringed upon or misappropriated any of the Intellectual Property
Rights owned by the Company or any Company Subsidiary, or is
currently doing so.
(f)
To the knowledge of the Company, all
of the registrations and pending applications to Governmental
Entities with respect to the Intellectual Property Rights owned by
the Company and the Company Subsidiaries are being duly maintained
and prosecuted and all maintenance and related fees due as of the
date hereof have been paid. The Company and each Company
Subsidiary has taken reasonable steps to safeguard and maintain the
secrecy and confidentiality of trade secrets that are material to
the Company and the Company Subsidiaries. The Company has
entered into an employee confidentiality and assignment of
inventions agreement in the standard form that has been made
available to Parent with each U.S. based employee of the Company or
a Company Subsidiary. Without limiting the foregoing, except
as disclosed in Part 3.12(f) of the Company Disclosure Schedule, to
the knowledge of the
21
Company, (A) there has been no
misappropriation of any trade secrets or other confidential
Intellectual Property Rights or Technology used in connection with
the business of the Company or the Company Subsidiaries by any
Person; (B) no employee, independent contractor or agent of the
Company or any Company Subsidiary has misappropriated any trade
secrets of any other Person in the course of performance as an
employee, independent contractor or agent of the business; and (C)
no employee, independent contractor or agent of the Company or any
Company Subsidiary is in default or breach of any term of any
employment agreement, nondisclosure agreement, assignment of
invention agreement or similar Contract relating in any way to the
protection, ownership, development, use or transfer of the
Intellectual Property Rights and Technology of the Company or the
Company Subsidiaries. No funding, facilities, or personnel of
any Governmental Entity or educational institution were used,
directly or indirectly, to develop or create, in whole or in part,
any Intellectual Property Rights or Technology owned by the Company
or any Company Subsidiary. Neither the Company nor any
Company Subsidiary has made any written submission to, and is not
subject to any Contract with, any standards bodies or other
entities that would obligate the Company or any Company Subsidiary
to grant licenses to or otherwise impair its control of its
Intellectual Property Rights.
(g)
To the knowledge of the Company, any
software or firmware incorporated in or provided with the products,
and any media used to distribute it, contain at delivery no
computer instructions, circuitry or other technological means whose
purpose or effect is to disrupt, damage or negatively interfere
with any use of any customer’s computer and communications
facilities or equipment (“ Harmful Code ”), and
the Company and each Company Subsidiary have used commercially
reasonable efforts to prevent the introduction of such Harmful Code
to all software, firmware and media distributed, licensed or sold
by the Company or any Company Subsidiary. “Harmful
Code” includes (a) any instrumentality that could cause the
software or firmware to fail to be operative upon command of or by
design by the Company or any Company Subsidiary, and (b) any code
containing viruses, trojan horses, worms, or like destructive code
or code that self-replicates. Except as disclosed in Part
3.12 of the Company Disclosure Schedule, to the knowledge of the
Company, none of the software incorporated in the Company’s
or any Company Subsidiary’s products is, in whole or in part,
subject to the provisions of any open source or quasi-open source
license agreement, or any other Contract obligating the Company to
make source code available to third parties or to publish source
code. Except as disclosed in Part 3.12(g) of the Company
Disclosure Schedule, neither the Company nor any Company Subsidiary
have entered into any Contract requiring the Company or any Company
Subsidiary to place the source code or other Technology
incorporated in the Company’s or Subsidiaries’ products
in escrow so that a licensee might obtain access to it upon the
occurrence of any release condition.
(h)
The Company and the Subsidiaries
have obtained all material approvals necessary for exporting the
Company’s and the Subsidiaries’ products outside the
United States in accordance with all applicable United States
export control regulations, and importing the products into any
country in which the products are now sold or licensed for use, and
all such export and import Governmental Authorizations or approvals
in the United States and throughout the world are valid, current,
outstanding and in full force and effect in all material
respects.
22
3.13
Contracts.
(a)
Part 3.13 of the Company Disclosure
Schedule contains a list as of the date of this Agreement of each
of the following Contracts to which the Company or any of the
Company Subsidiaries is a party or by which any of them or their
respective assets are otherwise bound:
(i)
other than distribution Contracts,
each Contract that provides for exclusivity or restricts in any
material respect the ability of the Company or any of the Company
Subsidiaries or any of the Company’s current or future
Affiliates to compete in any geographic area or line of business,
in each case for a period extending beyond three months from the
date of this Agreement, or pursuant to which any benefit or right
is required to be given or lost as a result of so
competing;
(ii)
each indemnification or employment
contract with any director or officer of the Company or the Company
Subsidiaries;
(iii)
each Contract evidencing
Indebtedness in excess of $500,000 in aggregate principal
amount;
(iv)
each (A) distributor Contract or (B)
supply Contract pursuant to which goods, raw materials, or
equipment are supplied to the Company or any Company Subsidiary
(excluding purchase orders given or received in the Ordinary Course
of Business), in each case under which the Company or any Company
Subsidiary paid or received in excess of $500,000 in fiscal 2006 or
is expected to pay or receive in excess of $ 500,000 in fiscal
2007;
(v)
each customer Contract (excluding
purchase orders given or received in the Ordinary Course of
Business) under which the Company or any Company Subsidiary
received in excess of $1,500,000 in fiscal 2006 or is expected to
receive in excess of $1,500,000 in fiscal 2007;
(vi)
each material “single
source” supply Contract pursuant to which goods, raw
materials or equipment are supplied to the Company or any Company
Subsidiary from an exclusive source;
(vii)
each collective bargaining
agreement;
(viii)
each lease involving real property
pursuant to which the Company or any of the Company Subsidiaries is
required to pay a monthly rental in excess of $50,000;
(ix)
each lease or rental Contract
involving personal property (and not relating primarily to real
property) pursuant to which the Company or any of the Company
Subsidiaries is required to make rental payments in excess of
$50,000 per year;
(x)
each Contract that involves
“take or pay” provisions under which the Company or any
Company Subsidiary paid or received in excess of $500,000 in fiscal
2006 or is expected to pay or receive in excess of $500,000 in
fiscal 2007 or, based on the Company’s present operations,
any fiscal year thereafter;
(xi)
each Contract pursuant to which any
of the benefits to any party of
23
which will be materially increased,
or the vesting of the benefits to any party of which will be
materially accelerated, by the occurrence of any of the
transactions contemplated by this Agreement or the value of any of
the material benefits to any party of which will be calculated on
the basis of any of the transactions contemplated by this
Agreement;
(xii)
each Contract for any joint
venture (whether in partnership, limited liability company or
other organizational form), co-promote agreements or co-branding
agreements (other than distribution agreements) or agreements
pursuant to which the Company or a Company Subsidiary permitted
distribution of the Company’s products under another
party’s name or trademarks;
(xiii)
each Contract providing for future
performance by the Company or a Company Subsidiary in consideration
of amounts previously paid the balance of which exceeds $250,000 as
of the date of this Agreement;
(xiv)
each Contract where, in settlement
of an actual or threatened Legal Proceeding for patent
infringement, trade secret misappropriation or similar intellectual
property action, another Person agrees in writing not to contest
the validity or ownership of Intellectual Property Rights of the
Company; and
(xv)
each Contract granting a third party
any license to use Intellectual Property Rights of the Company
relating to Products Under Development in the field of clinical
diagnostics.
In this Agreement, “
Material Contract ” refers to each Contract (x)
identified in this Section 3.13 , whether or not listed in
Part 3.13 of the Company Disclosure Schedule, (y) entered into
after the date of this Agreement that would be required to be
listed in Part 3.13 of the Company Disclosure Schedule if such
Contract were in effect as of the date of this Agreement, or (z)
that would be required to be filed as an exhibit to a Registration
Statement on Form S-1 filed by the Company under the Securities Act
or as an exhibit to an Annual Report on Form 10-K filed by the
Company under the Exchange Act.
(b)
Each Material Contract is
enforceable against the Company and each Company Subsidiary that is
a party thereto and each other party thereto, except as the same
may be limited by (i) laws of general application relating to
bankruptcy, insolvency and the relief of debtors, and (ii) rules of
law governing specific performance, injunctive relief and other
equitable remedies. There are no material existing breaches
or defaults on the part of the Company or any of the Company
Subsidiaries under (or any condition to which with the passage of
time or the giving of notice would cause such a breach of or
default under) any Material Contract and, to the knowledge of the
Company, there are no material existing breaches or defaults on the
part of any other Person under (or any condition to the knowledge
of the Company which with the passage of time or the giving of
notice would cause such a breach of or default under) any Material
Contract. The Company has made available to Parent copies of
each Material Contract in effect as of the date of this Agreement,
together with all amendments and supplements thereto in effect as
of the date of this Agreement.
24
3.14
Compliance with Legal
Requirements.
Except as set forth in Section 3.18 pertaining to compliance
with FDA Laws, the Company and the Company Subsidiaries are and at
all time have been in material compliance with all material Legal
Requirements applicable to their businesses.
3.15
Foreign Corrupt Practices and
International Trade Sanctions. Except as disclosed in Part 3.15 of the Company
Disclosure Schedule, neither the Company, nor any Company
Subsidiary, nor any of their respective directors, officers,
agents, employees or any other Persons acting on their behalf has
(i) violated the Foreign Corrupt Practices Act, 15 U.S.C. §
78dd-1 et seq., or any other similar applicable foreign, federal,
or state Legal Requirement, (ii) made or provided, or caused to be
made or provided, directly or indirectly, any payment or thing of
value to a foreign official, foreign political party, candidate for
office or any other person knowing that the person will pay or
offer to pay the foreign official, party or candidate, for the
purpose of influencing a decision, inducing an official to violate
their lawful duty, securing any improper advantage, or inducing a
foreign official to use their influence to affect a governmental
decision, (iii) paid, accepted or received any unlawful
contributions, payments, expenditures or gifts, or (iv) violated or
operated in noncompliance with any export restrictions, money
laundering law, anti-terrorism law or regulation, anti-boycott
regulations or embargo regulations.
3.16
Governmental
Authorizations. As
of the date of this Agreement, the Company and the Company
Subsidiaries hold all Governmental Authorizations necessary to
enable them to conduct their businesses in all material respects in
the manner in which such businesses are currently being conducted
and are proposed to be conducted. The material Governmental
Authorizations held by the Company and the Company Subsidiaries
are, in all material respects, valid and in full force and effect.
The Company and the Company Subsidiaries are in compliance with the
terms and requirements of such Governmental Authorizations in all
material respects. The execution and delivery of this
Agreement by the Company does not, and the consummation of the
Offer, the Merger or the other transactions contemplated hereby and
compliance with the terms hereof would not reasonably be expected
to cause the revocation or cancellation of any material
Governmental Authorization. To the knowledge of the Company,
there are no facts or circumstances existing which would lead to
any suspension, loss of or material modification to any material
Governmental Authorization or refusal by a Governmental Entity to
renew or accept for filing any material Governmental Authorizations
on terms not substantially less advantageous, in the aggregate, to
the Company and the Company Subsidiaries than the terms of those
Governmental Authorization currently in force. All
Governmental Authorizations material to the operation of the
Company’s or any Company Subsidiary’s business is
transferable to Parent or any of its Subsidiaries at the Effective
Time if necessary to be so transferred following the Acceptance
Time. Since January 1, 2004, neither the Company nor any of
the Company Subsidiaries has been notified by any Governmental
Entity: (a) asserting any material violation of any term or
requirement of any Governmental Authorization or Legal Requirement;
or (b) notifying the Company or one of the Company Subsidiaries of
the suspension, revocation of, loss of or material modification to
any Governmental Authorization.
3.17
Legal Proceedings;
Orders. As of the date of
this Agreement:
(a)
except as disclosed in Part 3.17 of
the Company Disclosure Schedule, (i) there is no Legal
Proceeding pending (or, to the knowledge of the Company,
threatened) against the Company or any of the Company Subsidiaries
or any of their respective properties or
25
rights or any executive officer or
director of the Company or any Company Subsidiary (in their
capacity as such), in which the claim is for more than $200,000 in
damages, or for an injunction or specific performance, and (ii)
neither the Company, any Company Subsidiary, nor, to the knowledge
of the Company, any of its or their current or former officers,
directors, employees, or independent contractors, each in their
capacity as such, has been identified by any Governmental Entity as
a subject or target of a government investigation, or otherwise
been informed or become aware that their conduct is being
investigated by a Governmental Entity. Except as set forth in
Part 3.17 of the Company Disclosure Schedule, there is no Legal
Proceeding brought by the Company against any Person that is
pending as of the date of this Agreement; and
(b)
there is no material order,
injunction, decree or judgment specific to the Company or any of
the Company Subsidiaries to which the Company or any of the Company
Subsidiaries is subject.
3.18
Regulatory
Matters.
(a)
The Company and the Company
Subsidiaries have established and administer compliance programs
(including written compliance policies) applicable to the Company
and the Company Subsidiaries (i) to assist the Company, the Company
Subsidiaries and their respective directors, officers and employees
in complying with all Legal Requirements and guidelines (including
those administered by the FDA) applicable to the Company, the
Company Subsidiaries or their businesses and (ii) to provide
compliance policies governing activities and requirements
applicable to medical device companies (including pre-clinical and
clinical testing, product design and development, product testing,
product manufacturing, product labeling, product storage,
pre-market clearance and approval, marketing, advertising and
promotion, product sales and distribution, medical device recall
and reporting regulations, and record keeping).
(b)
Except as set forth in Part 3.18(b)
of the Company Disclosure Schedule, the Company and each Company
Subsidiary is in compliance in all material respects with all Legal
Requirements applicable to the Company’s products and
activities, including product design, development, testing,
manufacture, marketing, distribution, labeling, storage and
transport, in all jurisdictions in which such acts or any of them
occur or are reasonably likely to occur or such products or any of
them are likely to be sold or used (including any FDA Laws).
All applications, submissions, information, claims, reports and
statistics and other data and conclusions derived therefrom,
utilized as the basis for or submitted in connection with any and
all requests for authorizations, approvals, certificates, waivers,
certifications, clearances, exemptions, notifications, consents,
orders, registrations, licenses or permits of the FDA or comparable
Governmental Entities relating to the Company, the Company
Subsidiaries, their businesses and their products were, when
submitted to the FDA or other Governmental Entities, true, complete
and correct in all material respects and in conformance with Legal
Requirements as of the date of submission and any updates, changes,
corrections or modification to such applications, submissions,
information and data which were or are necessary or required to be
filed, maintained, or furnished to the FDA or other Governmental
Entities have been timely filed, maintained, or furnished and were
true, complete and correct in all material respects and in
conformance with Legal Requirements as of the date of
submission. The labeling claims made
26
by the Company and the Company
Subsidiaries for each of their products are consistent with the
scope of regulatory clearance, exemption or approval for each
product in each jurisdiction where it is marketed in all material
respects, and supported by proper research design, testing,
analysis and disclosure that conforms with Legal
Requirements.
(c)
The activities, products and
facilities of the Company and the Company Subsidiaries, as well as,
to the Company’s knowledge, its suppliers, distributors,
contractors and other intermediaries, are in compliance with all
applicable requirements of CLIA, the FDCA and implementing FDA
regulations, including the registration, listing, labeling and
manufacturing requirements of 21 C.F.R. Parts 807, 809 and 820, all
to the extent applicable to the Company’s products and
services. The Company and each Company Subsidiary is not
subject to any obligation arising under any consent decree, consent
agreement, or warning letter issued by or entered into with the FDA
or any other Governmental Entity or other notice, response or
commitment made to the FDA or any other Governmental Entity.
The Company has delivered to Parent true, correct and complete
copies of all customer complaints relating to the Company’s
and the Company Subsidiaries’ products and all Medical Device
Reports, in each case, filed with the FDA within the last five
years. The Company has delivered to Parent true, complete and
correct copies of all warning letters, untitled letters, notices of
inspectional observations (Form FDA 483s), or similar notices, or
other correspondence relating to the Company’s and the
Company Subsidiaries’ products and its compliance with Legal
Requirements from the FDA and any other Governmental Entity and all
of the Company’s responses thereto within the last five
years.
(d)
Except as set forth in Part 3.18(d)
of the Company Disclosure Schedule, since January 1, 2003, no
exemptions, clearances or approvals for the Company and the Company
Subsidiaries’ products have been subjected to reevaluation or
suspension of sale by the FDA and no products manufactured,
marketed or sold by the Company or any Company Subsidiary have been
recalled or subject to a field notification, field correction or
safety alert (whether voluntarily or otherwise) and no proceedings
have occurred (whether completed or pending) seeking to recall,
reclassify, re-label, suspend, or seize any product sold or
proposed to be sold by the Company or a Company Subsidiary.
To the Company’s knowledge, there are no facts which are
reasonably likely to cause: (A) the recall, suspension, field
notification, field correction, reclassification, re-labeling or
safety alert of any product sold or intended to be sold by the
Company or any Company Subsidiary; (B) a change in the marketing
classification or a material change in labeling of any such
products; or (C) a termination or suspension of marketing of any
such products.
(e)
All products being manufactured,
distributed, or developed by the Company and the Company
Subsidiaries that are subject to the jurisdiction of the FDA or
comparable Governmental Entity are being manufactured, labeled,
stored, tested, distributed, and marketed in material compliance
with all applicable requirements and implementing regulations
thereunder.
(f)
Except as set forth in Part 3.18(f)
of the Company Disclosure Schedule, all pre-clinical trials and
clinical trials conducted by or on behalf of the Company and the
Company Subsidiaries have been, and are being conducted in material
compliance with experimental protocols, procedures and controls
pursuant to accepted professional scientific standards and
all
27
applicable Legal Requirements
relating thereto, including the FDCA and its applicable
implementing regulations at 21 C.F.R. Parts 50, 54, 56 and
812.
(g)
Neither the Company, the Company
Subsidiaries, nor, to the knowledge of the Company, any of their
collective officers, employees or agents has committed any act,
made any statement, or failed to make any statement, that would be
reasonably expected to provide a basis for the FDA to invoke its
policy respecting “Fraud, Untrue Statements of Material
Facts, Bribery, and Illegal Gratuities,” set forth in 56 Fed.
Reg. 46191 (September 10, 1991) and any amendments
thereto.
(h)
Neither the Company, the Company
Subsidiaries, nor, to the knowledge of the Company, any of their
collective officers, employees or agents has been convicted of any
crime or engaged in any conduct that could result in a material
debarment or exclusion under 21 U.S.C. Section 335a or under any
similar Legal Requirement. No claims, actions, proceedings or
investigations that could reasonably be expected to result in such
a material debarment or exclusion are pending or threatened against
the Company, the Company Subsidiaries, or, to the knowledge of the
Company, any of their collective officers, employees or
agents.
(i)
Except as disclosed on Part 3.18(i)
of the Company Disclosure Schedule, there are no investigations,
audits, actions or other proceedings pending with respect to a
violation by the Company or any Company Subsidiary of any Legal
Requirement that reasonably would be expected to result in
administrative, civil, or criminal liability, and there are no
facts or circumstances existing that would reasonably be expected
to serve as a basis for such an investigation, audit, action or
other proceeding.
(j)
The Company and each of the Company
Subsidiaries is in material compliance with all applicable FDA
import and export requirements, including import-for-export
requirements, export notifications or authorizations and record
keeping requirements.
3.19
Product Recalls.
Part 3.19 of the Company Disclosure
Schedule sets forth a list of (i) all recalls, field notifications,
field corrections and safety alerts with respect to products
manufactured and/or distributed by the Company or any Company
Subsidiary, or by any Person on behalf of the Company or any
Company Subsidiary, in each case between January 1, 2004 and the
date of this Agreement, and the dates, if any, such recalls, field
notifications, field corrections and safety alerts were resolved or
closed, and (ii) to the knowledge of the Company, any material
complaints with respect to products produced by the Company or any
or any Company Subsidiary, or by any Person on behalf of the
Company or any or any Company Subsidiary, that are open as of the
date of this Agreement. There are no outstanding recalls,
field notifications, field corrections, safety alerts or product
complaints with respect to the products manufactured and/or
distributed by the Company or any or any Company Subsidiary, or by
any Person on behalf of the Company or any or any Company
Subsidiary, and to the Company’s knowledge, there are no
facts that would be reasonably likely to result in a material
product recall, field notification, field correction or safety
alert with respect to any such products.
28
3.20
Tax Matters.
(a)
Each of the Company and the Company
Subsidiaries has timely filed with the appropriate Governmental
Entity all Tax Returns required to be filed. All such Tax
Returns are complete and accurate in all material respects and have
been prepared in compliance with applicable Legal
Requirements. All material Taxes due and owing by the Company
and the Company Subsidiaries (whether or not shown on any Tax
Return) have been paid. Neither the Company nor any Company
Subsidiary is the beneficiary of any extension of time within which
to file any material Tax Return. No written claim has ever
been received by the Company or any Company Subsidiary from a
Governmental Entity in a jurisdiction where the Company or any
Company Subsidiary does not file Tax Returns that it is or may be
subject to taxation by that jurisdiction.
(b)
The unpaid Taxes of the Company and
the Company Subsidiaries did not, as of the date of the Latest
Balance Sheet, exceed the reserve for Tax liability (excluding any
reserve for deferred Taxes established to reflect timing
differences between book and Tax income) set forth on the face of
such balance sheets (rather than in any notes thereto). Since
the date of the Latest Balance Sheet, neither the Company nor any
Company Subsidiary has incurred any liability for Taxes outside the
ordinary course of business or otherwise inconsistent with past
custom and practice.
(c)
There are no examinations, audits or
Legal Proceedings with respect to material Taxes of the Company or
any Company Subsidiary currently pending or underway (and to the
knowledge of the Company no such examination, audit or proceeding
is threatened) nor has the Company or any Company Subsidiary
received any notice from a Governmental Entity relating to any
issue which could result in a material Tax liability for the
Company or any Company Subsidiary. No deficiency for material
Taxes against the Company or any Company Subsidiary has been
claimed, proposed or assessed by any Governmental Entity that has
not been satisfied by payment or withdrawn. No extension or
waiver of the limitation period applicable to any material Taxes or
material Tax Return is in effect. The Company has delivered or made
available to Parent complete and accurate copies of federal, state
and local Tax Returns of the Company and each Company Subsidiary
and their predecessors for all open Tax years, and complete and
accurate copies of all examination reports and statements of
deficiencies assessed against or agreed to by the Company, any
Company Subsidiary or any predecessors since its last open Tax
year.
(d)
There are no Encumbrances for
material Taxes (other than Permitted Encumbrances) upon any of the
assets of the Company or any Company Subsidiary.
(e)
Neither the Company nor any Company
Subsidiary will be required to include any material item of income
in, or exclude any material item of deduction from, taxable income
for any period (or any portion thereof) ending after the Acceptance
Time as a result of any installment sale or other transaction on or
prior to the Acceptance Time, any accounting method change or
agreement with any Governmental Entity, any prepaid amount received
on or prior to the Acceptance Time or any intercompany transaction
or excess loss account described in Code Section 1502 (or any
corresponding provision of state, local or foreign Tax
law).
(f)
None of the outstanding indebtedness
of the Company or any Company Subsidiary constitutes indebtedness
with respect to which any interest deductions may be
29
disallowed under Sections 163(i),
163(l) or 279 of the Code or under any other provision of
applicable Legal Requirements.
(g)
The Company and each Company
Subsidiary has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, service provider, creditor,
stockholder or other third party and is not liable for any arrears
of wages or any taxes or any penalty for failure to withhold or pay
such amounts.
(h)
Neither the Company nor any Company
Subsidiary: (i) is a party to or bound by a Tax sharing,
allocation, indemnification or similar agreement; (ii) has been a
member of an affiliated group of corporations within the meaning of
Section 1504 of the Code or any group that has filed a
consolidated, combined or unitary Tax Return other than a
consolidated, combined or unitary group of which the Company is the
common parent; or (iii) has any liability for material Taxes of any
Person (other than Taxes of the Company and the Company
Subsidiaries) under Treasury regulation Section 1.1502-6 (or any
similar
