Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
by and
among:
MDS Inc. ,
a company organized under the laws of Canada;
Monument Acquisition
Corp. ,
a Delaware corporation; and
Molecular Devices
Corporation,
a Delaware corporation
Dated
as of January 28, 2007
Table Of
Contents
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SECTION 1. THE
OFFER
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1.1 Tender
Offer
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1.2 Actions of
Parent and Acquisition Sub
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1.3 Actions of the
Company
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1.4 Board of
Directors
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1.5 Actions by
Directors
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1.6 Top-Up
Option
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SECTION 2. THE
MERGER; EFFECTIVE TIME
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2.1 Merger of
Acquisition Sub into the Company
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2.2 Effect of the
Merger
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2.3 Effective
Time
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2.4 Certificate of
Incorporation and Bylaws; Directors
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2.5 Conversion of
Company Shares
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2.6 Closing of the
Company’s Transfer Books
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2.7 Payment for
Company Shares
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2.8 Appraisal
Rights
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2.9 Further
Action
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SECTION 3.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
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3.1 Due
Organization and Good Standing; Subsidiaries
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3.2 Certificate of
Incorporation; Bylaws
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3.3
Capitalization, Etc
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3.4 SEC Filings;
Financial Statements
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3.5 Absence of
Certain Changes
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3.6 IP
Rights
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3.7 Title to
Assets; Real Property
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3.8
Contracts
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3.9 Compliance
with Legal Requirements
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3.10 Legal
Proceedings; Orders
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3.11 Governmental
Authorizations
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3.12 Tax
Matters
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Table Of
Contents
(CONTINUED)
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3.13 Employee
Benefit Plans
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3.14 Labor
Matters
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3.15 Environmental
Matters
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3.16
Insurance
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3.17 Transactions
with Affiliates
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3.18 Authority;
Binding Nature of Agreement
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3.19 Vote
Required
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3.20
Non-Contravention; Consents
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3.21 Board
Approvals; Anti-Takeover; Company Rights Agreement
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3.22 Opinion of
Financial Advisor
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3.23 Brokers
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3.24
Schedule 14D-9
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3.25 Customers;
Distributors and Vendors
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SECTION 4.
REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION SUB
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4.1 Due
Organization
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4.2 Legal
Proceedings
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4.3 Authority;
Binding Nature of Agreement
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4.4
Non-Contravention; Consents
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4.5 Not an
Interested Stockholder
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4.6
Financing
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4.7 Ownership of
Company Shares
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4.8 Offer
Documents
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4.9 Information in
Schedule 14D-9
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SECTION 5.
COVENANTS
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5.1 Interim
Operations of the Company
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5.2 No
Solicitation
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5.3 Meeting of the
Company’s Stockholders
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5.4 Filings; Other
Action
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5.5 Access
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Table Of
Contents
(CONTINUED)
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5.6 Interim
Operations of Acquisition Sub
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5.7
Publicity
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5.8 Stock
Options
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5.9 Other Employee
Benefits
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5.10
Indemnification; Directors’ and Officers’
Insurance
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SECTION 6.
CONDITIONS TO EACH PARTY’S OBLIGATION TO EFFECT THE
MERGER
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6.1 Stockholder
Approval
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6.2 No
Injunctions; Laws
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6.3 Closing of
Tender Offer
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SECTION 7.
TERMINATION
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7.1
Termination
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7.2 Effect of
Termination
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7.3 Termination
Fee and Expense Reimbursement
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SECTION 8.
MISCELLANEOUS PROVISIONS
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8.1
Amendment
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8.2 Waiver
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8.3 No Survival of
Representations and Warranties
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8.4 Entire
Agreement; Counterparts
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8.5 Applicable
Law; Jurisdiction
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8.6
Attorneys’ Fees
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8.7 Payment of
Expenses
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8.8
Assignability
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8.9 Notices
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8.10
Severability
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8.11 Obligation of
Parent
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8.12
Disclosure
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8.13
Construction
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-iii-
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of
Merger (“Agreement”) is made and entered
into as of January 28, 2007, by and among: MDS Inc. , a company
organized under the laws of Canada (“Parent”);
Monument Acquisition
Corp. , a Delaware corporation and an indirect wholly
owned subsidiary of Parent and direct wholly owned subsidiary of
MDS (US) Inc., a Delaware corporation (“Acquisition
Sub”); and Molecular Devices Corporation
, a Delaware corporation (the “Company”).
Certain capitalized terms used in this Agreement are defined in
Exhibit A.
Recitals
A. Parent, Acquisition
Sub and the Company have determined that it is in the best
interests of their respective stockholders for the Company to be
acquired upon the terms and subject to the conditions set forth in
this Agreement.
B. In furtherance of
the contemplated acquisition of the Company, it is proposed that
Acquisition Sub make a tender offer to acquire all of the issued
and outstanding Company Shares upon the terms and subject to the
conditions set forth in this Agreement. (Such tender offer, as it
may be amended from time to time, is referred to in this Agreement
as the “Offer.”)
C. Each Company Share
accepted for payment pursuant to the Offer will be exchanged for
$35.50 (the “Per Share Amount”), net to the seller in
cash.
D. It is further
proposed that, after acquiring Company Shares pursuant to the
Offer, Acquisition Sub merge with and into the Company upon the
terms and subject to the conditions set forth in this Agreement
(the merger of Acquisition Sub into the Company being referred to
in this Agreement as the “Merger”), which will result
in the Company becoming a wholly owned subsidiary of MDS
(US) Inc.
Agreement
The parties to this Agreement,
intending to be legally bound, agree as follows:
SECTION 1 . THE OFFER
1.1 Tender Offer .
(a) Unless this Agreement shall have previously been validly
terminated in accordance with Section 7, as promptly as
practicable, but in any event within fifteen business days, after
the date of this Agreement, Acquisition Sub 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) at a
price per Company Share equal to the Per Share Amount. (The date on
which Acquisition Sub
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) Unless the Offer is extended in accordance with
Section 1.1(d), within one business day after the later of:
(i) the earliest date as of which Acquisition Sub is permitted
under applicable law 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, Acquisition
Sub shall (and Parent shall cause Acquisition Sub to) accept for
payment all Company Shares validly tendered pursuant to the Offer
(and not validly withdrawn). The obligation of Acquisition Sub to
accept for payment Company Shares validly 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 possible after the acceptance for
payment of any Company Shares tendered pursuant to the Offer,
Acquisition Sub shall pay for such Company Shares. Acquisition Sub
shall be entitled to deduct and withhold from the consideration
otherwise payable to any holder of Company Shares tendering Company
Shares to Acquisition Sub pursuant to the Offer such amounts as
Acquisition Sub is required to deduct and withhold with respect to
the making of such payment under the Code or any provision of
state, local or foreign tax law. To the extent amounts are so
withheld and paid over to the appropriate taxing authority by
Acquisition Sub, such withheld amounts shall be treated for all
purposes as having been paid to the holder of Company Shares in
respect of which such deduction and withholding was made by
Acquisition Sub.
(c) Acquisition Sub expressly reserves the right to waive
any of the Offer Conditions without the prior written consent of
the Company. Notwithstanding anything to the contrary contained in
this Agreement, neither Parent nor Acquisition Sub 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 Acquisition Sub in the Offer;
(iii) reduce the price per share to be paid pursuant to the
Offer;
(iv) extend or otherwise change the expiration date of the
Offer (except to the extent required or permitted pursuant to
Section 1.1(d));
(v) change the form of consideration payable in the
Offer;
(vi) amend or modify any of the Offer Conditions in any
manner adversely affecting, or that could reasonably be expected to
have an adverse effect on, any of the holders of Company Shares or
impose any condition to the Offer in addition to the Offer
Conditions; or
(vii) amend, modify or supplement any of the terms of the
Offer in any manner adversely affecting, or that could reasonably
be expected to have an adverse effect on, any of the holders of
Company Shares.
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(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) and Rule 14e-1(a) 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: (i)
Acquisition Sub may extend (and re-extend) the Offer and its
expiration date beyond the Initial Expiration Date or such other
date for one or more periods ending no later than June 30,
2007, to permit such Offer Condition to be satisfied; and
(ii) to the extent requested by the Company from time to time,
Acquisition Sub shall extend (and re-extend) the Offer and its
expiration date beyond the Initial Expiration Date or such other
date for one or more periods ending no later than June 30, 2007, to
permit such Offer Condition to be satisfied. The Offer may not be
terminated prior to its expiration date (as such expiration date
may be extended and re-extended in accordance with this Agreement),
unless this Agreement is validly terminated in accordance with
Section 7.
(e) Acquisition Sub may, in its discretion, elect to provide
for a subsequent offering period (and one or more extensions
thereof) in accordance with Rule 14d-11 under the Exchange Act
following the Acceptance Time (as defined in
Section 1.4(a)).
1.2 Actions of Parent and
Acquisition Sub .
(a) On the Offer Commencement Date, Parent and Acquisition
Sub shall: (i) cause to be filed with the SEC a Tender Offer
Statement on Schedule TO with respect to the Offer, which will
contain or incorporate by reference Acquisition Sub’s offer
to purchase and related letter of transmittal (the form of such
letter of transmittal shall be subject to the approval of the
Company, which approval shall not be unreasonably withheld or
delayed) and the related form of summary advertisement (such Tender
Offer Statement on Schedule TO and 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. 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 this
Section 1.2(a). Parent and Acquisition Sub 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
reasonable opportunity to review and comment on the Offer Documents
(including any amendment or supplement thereto) prior to the filing
thereof with the SEC or the dissemination thereof to the
Company’s stockholders, and Parent and Acquisition Sub will
give reasonable good faith consideration to any such comments.
Parent and Acquisition Sub shall promptly provide the Company and
its counsel with a copy or a description of any comments received
by Parent or Acquisition Sub (or by counsel to Parent or
Acquisition Sub) from the SEC or its staff with respect to the
Offer Documents. Each of Parent and Acquisition Sub shall respond
promptly 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, Acquisition Sub and the Company shall
correct promptly any information provided by it for use in the
Offer Documents if such
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information shall have become false or misleading in any material
respect; and (ii) each of Parent and Acquisition Sub 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 this
Section 1.2(b).
(c) Without limiting the generality of Section 8.11,
Parent shall cause to be provided to Acquisition Sub all of the
funds necessary to purchase any Company Shares that Acquisition Sub
becomes obligated to purchase pursuant to the Offer, and shall
cause Acquisition Sub to perform, on a timely basis, all of
Acquisition Sub’s obligations under this Agreement.
1.3 Actions of the Company
.
(a) On or as promptly as practicable after 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) 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 1.3(b), shall contain the recommendation of the
Company’s Board of Directors that stockholders of the Company
accept the Offer and tender their Company Shares pursuant to the
Offer and adopt this Agreement (the “Company Board
Recommendation”). The Company shall cause the
Schedule 14D-9 to comply in all material respects with the
applicable requirements of the Exchange Act and the rules and
regulations thereunder. Parent and its counsel shall be given
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 or dissemination thereof
to the Company’s stockholders, and the Company will give
reasonable good faith consideration to any such comments. The
Company shall promptly provide Parent and its counsel with a copy
or a description of any comments received by the Company (or its
counsel) from the SEC or its staff with respect to the
Schedule 14D-9, and the Company shall respond promptly to any
such comments. To the extent required by the applicable
requirements of the Exchange Act and the rules and regulations
thereunder: (i) each of Parent, Acquisition Sub and the
Company shall promptly correct any information provided by it for
use in the Schedule 14D-9 if that such information shall have
become false or misleading in any material respect; and
(ii) 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 Acquisition Sub
shall promptly furnish to the Company all information concerning
Parent or Acquisition Sub that may be reasonably requested in
connection with any action contemplated by this
Section 1.3(a). To the extent reasonably practicable, the
Company, Parent and Acquisition Sub 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.
(b) Notwithstanding anything to the contrary contained in
this Agreement, the Company’s Board of Directors may
withdraw, modify, amend or qualify the Company Board Recommendation
if it determines in good faith (after consultation with counsel)
that failure to do
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so would
create a material risk of a breach by the Company’s Board of
Directors of its fiduciary duties to the Company’s
stockholders.
(c) In connection with the Offer, the Company shall instruct
its transfer agent to furnish to Acquisition Sub a list, as of a
recent 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 Acquisition Sub with such
additional information (including any security position listings in
the Company’s possession) and assistance as Acquisition Sub
may reasonably request for purposes of communicating the Offer to
the holders of Company Shares. All information furnished in
accordance with this Section 1.3(c) shall be held in
confidence by Parent and Acquisition Sub in accordance with the
requirements of the letter agreement, dated November 22, 2006,
between Parent and the Company (the “Confidentiality
Agreement”), and shall be used by Parent and Acquisition Sub
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) If requested by Parent, following the first time at
which Acquisition Sub accepts for payment any Company Shares
tendered pursuant to the Offer (the “Acceptance Time”),
the Company will, subject to compliance with applicable Legal
Requirements, use reasonable efforts to 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’s Board of Directors; by (ii) the
percentage that the number of Company Shares purchased by
Acquisition Sub pursuant to the Offer bears to the total number of
Company Shares outstanding at the Acceptance Time; provided,
however , that in no event shall Parent be entitled to
designate any directors to serve on the Company’s Board of
Directors unless it is the beneficial owner of Company Shares
entitling it to exercise at least a majority of the voting power of
the outstanding Company Shares. The Company will use its reasonable
efforts to secure the resignation of directors or to increase the
size of the Company’s Board of Directors (or both) to the
extent necessary to permit Parent’s designees to be elected
to the Company’s Board of Directors in accordance with this
Section 1.4(a); provided, however , that prior to the
Effective Time, the Company’s Board of Directors shall always
have at least two Continuing Directors.
(b) The Company’s obligation to cause Parent’s
designees to be elected or appointed to the Company’s Board
of Directors 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.
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1.5 Actions by Directors .
Following the election or appointment of Parent’s designees
to the Company’s Board of Directors pursuant to
Section 1.4(a), and until the Effective Time, the approval of
the Company’s Board of Directors, including 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 or bylaws;
(iii) any extension of time for the performance of any of the
obligations or other acts of Parent or Acquisition Sub;
(iv) any waiver of compliance with any covenant of Parent or
Acquisition Sub or any condition to any obligation of the Company
or any waiver of any right of the Company under this Agreement;
(v) any withdrawal, modification, amendment or qualification
by the Company’s Board of Directors of the Company Board
Recommendation; and (vi) any other consent or action by the
Company’s Board of Directors with respect to this Agreement,
other than with respect to Section 1.6, or the Merger that
adversely affects or could reasonably be expected to adversely
affect any of the holders of Company Shares.
1.6 Top-Up Option .
(a) The Company hereby irrevocably grants to Acquisition Sub
an option (the “Top-Up Option”), exercisable subject to
and upon the terms and conditions set forth in this
Section 1.6, to purchase that number of Company Shares (the
“Top-Up Option Company Shares”) equal to the lesser of:
(i) the number of Company Shares that, when added to the
number of Company Shares directly or indirectly owned by Parent or
Acquisition Sub at the time of such exercise, shall constitute one
share more than 90% of the Company Shares taking into account the
issuance of the Top-Up Option Company Shares) and (ii) the
number of Company Shares that is one (1) share less than 20%
of the Company Shares issued and outstanding as of the date of this
Agreement, at a price per share equal to the Per Share Amount;
provided that in no event shall the Top-Up Option be
exercisable for a number of Company Shares in excess of the
Company’s then authorized and unissued Company Shares (giving
effect to Company Shares reserved for issuance under the Company
Option Plans as if such shares were outstanding).
(b) Provided that no Legal Requirement shall prohibit the
exercise of the Top-Up Option or the delivery of the Top-Up Option
Company Shares in respect thereof, Acquisition Sub may exercise the
Top-Up Option, in whole but not in part, at any one time 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) In the event that Acquisition Sub wishes to exercise the
Top-Up Option, Parent shall send to the Company a written notice (a
“Top-Up Exercise Notice,” the date of which notice is
referred to herein as the “Top-Up Notice Date”)
specifying the number of Top-Up Option Company Shares, the
aggregate purchase price therefore and the place, time and date for
the closing of the purchase and sale pursuant to the Top-Up Option
(the “Top-Up Closing”). At the Top-Up Closing,
Acquisition Sub shall, and Parent shall cause Acquisition Sub to,
pay the Company the aggregate purchase price required to be paid
for the Top-Up Option Company Shares either in cash or with a
promissory note having a principal amount equal to such purchase
price or any combination thereof.
(d) Parent and Acquisition Sub acknowledge that the Company
Shares that Acquisition Sub may acquire upon exercise of the Top-Up
Option will not be registered under
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the 1933
Act and will be issued in reliance upon an exemption thereunder for
transactions not involving a public offering. Each of Parent and
Acquisition Sub hereby represents and warrants to the Company that
Acquisition Sub is, and will be, upon the purchase of the Top-Up
Option Company Shares, an “accredited investor”, as
defined in Rule 501 of Regulation D under the 1933 Act.
Acquisition Sub agrees that the Top-Up Option and the Top-Up Option
Company Shares to be acquired upon exercise of the Top-Up Option
are being and will be acquired by Acquisition Sub for the purpose
of investment and not with a view to, or for resale in connection
with, any distribution thereof (within the meaning of the 1933
Act).
SECTION 2 . THE MERGER; EFFECTIVE TIME
2.1 Merger of Acquisition Sub
into the Company. Upon the terms and subject to the conditions
set forth in this Agreement and in accordance with the Delaware
General Corporation Law (the “DGCL”), at the Effective
Time (as defined in Section 2.3), Acquisition Sub shall be
merged with and into the Company, and the separate existence of
Acquisition Sub 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.
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 Cooley
Godward Kronish llp ,
3175 Hanover Street, Palo Alto, California (or such other place or
time as Parent and the Company may jointly designate) for the
purpose of confirming the satisfaction or waiver of each of the
conditions set forth in Section 6.
2.4 Certificate of Incorporation
and Bylaws; 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 5.10(a), the Bylaws of the Surviving Corporation shall
be amended and restated as of the Effective Time to conform to the
Bylaws of Acquisition Sub as in effect immediately prior to the
Effective Time; and
(c) the directors of the
Surviving Corporation immediately after the Effective Time shall be
the respective individuals who are directors of Acquisition Sub
immediately prior to the Effective Time.
7
2.5 Conversion of Company
Shares. Subject to Section 2.8, at the Effective Time, by
virtue of the Merger and without any further action on the part of
Parent, Acquisition Sub, the Company or any stockholder of the
Company:
(a) any Company Shares then
held by the Company (or held in the Company’s treasury) shall
cease to exist, and no consideration shall be paid in exchange
therefor;
(b) any Company Shares then
held by Parent, Acquisition Sub or any other wholly owned
Subsidiary of Parent shall cease to exist, and no consideration
shall be paid in exchange therefor;
(c) except as provided in
clauses “(a)” and “(b)” 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 (as defined in Section 2.8(c)),
shall be converted into the right to receive the Per Share Amount
in cash or such greater cash amount as may have been paid for any
Company Shares pursuant to the Offer without interest; and
(d) each share of common
stock, par value $0.001 per share, of Acquisition Sub then
outstanding shall be converted into one share of the common stock
of the Surviving Corporation.
If,
between the date of this Agreement and the Effective Time, the
outstanding Company Shares are changed into a different number or
class of shares by reason of any stock split, division or
subdivision of shares, stock dividend, reverse stock split,
consolidation of shares, reclassification, recapitalization or
other similar transaction, then the Per Share Amount shall be
adjusted to the extent appropriate.
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 Paying Agent (as defined in
Section 2.7) or to the Surviving Corporation or Parent, such
Company Stock Certificate shall be canceled and shall be exchanged
as provided in Section 2.7.
8
2.7 Payment for Company
Shares .
(a) Prior to the Effective Time: (i) Parent (after
consultation with and approval of the Company) shall select a
reputable bank or trust company to act as paying agent with respect
to the Merger (the “Paying Agent”); and
(ii) Parent shall cause Acquisition Sub to make available to
the Paying Agent cash amounts sufficient to enable the Paying 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 Paying 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(c) a form of letter of transmittal
(mutually approved by Parent and 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 Paying 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 amount of cash to which such
holder (or transferee) is entitled pursuant to Section 2.5(c);
provided , however , that Parent, the Surviving
Corporation or the Paying Agent shall be entitled to deduct and
withhold from the consideration otherwise payable to any holder of
Company Shares surrendering Company Shares to the Paying Agent such
amounts as Parent, the Surviving Corporation or the Paying Agent
are required to deduct and withhold with respect to the making of
such payment under the Code or any provision of state, local or
foreign tax law. To the extent amounts are so withheld and paid
over to the appropriate taxing authority by Parent, the Surviving
Corporation or the Paying Agent, such withheld amounts shall be
treated for all purposes as having been paid to the holder of
Company Shares in respect of which such deduction and withholding
was made by Parent, the Surviving Corporation or the Paying
Agent.
(c) On or after the first anniversary of the Effective Time,
the Surviving Corporation shall be entitled to cause the Paying
Agent to deliver to the Surviving Corporation any funds made
available to the Paying Agent pursuant to Section 2.7(a)(ii)
hereof which have not been disbursed to holders of Company Stock
Certificates, and thereafter such holders shall be entitled to look
to Parent and the Surviving Corporation with respect to the cash
amounts payable upon surrender of their Company Stock Certificates.
Neither the Paying Agent 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.
(d) If any Company Stock Certificate shall have been lost,
stolen or destroyed, then, upon the making of an affidavit
reasonably acceptable to Parent of that fact by the Person claiming
such Company Stock Certificate to be lost, stolen or destroyed,
and, if required by the Surviving Corporation, the posting by such
Person of such bond or surety as is customary and reasonable as
indemnity against any claim that may be made against the Surviving
Corporation with respect to such Company Stock Certificate, Parent
shall cause the Paying Agent to pay in exchange for such lost,
stolen or destroyed Company Stock Certificate the cash amount
payable in respect thereof pursuant to this Agreement.
9
(e) In the event of a transfer of ownership of Company
Shares which is not registered in the transfer records of the
Company, payment may be made 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
Paying Agent, accompanied by all documents reasonably required by
the Paying 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 shall bear and pay all charges
and expenses, including those of the Paying Agent, incurred in
connection with the payment for Company Shares.
2.8 Appraisal Rights.
(a) Notwithstanding anything to the contrary contained in
this Agreement, any Company Shares that constitute Appraisal Shares
(as defined in Section 2.8(c)) 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. 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 to require the Surviving Corporation to purchase
such Appraisal Shares for cash 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.
(b) The Company: (i) shall give Parent written notice
of any demand by any stockholder of the Company for appraisal of
such stockholder’s Company Shares pursuant to
Section 262 of the DGCL; and (ii) shall give Parent the
opportunity to participate in all negotiations and proceedings with
respect to any such demand. Except with the prior written consent
of Parent, the Company shall not voluntarily make any payment with
respect to any demands for appraisal or settle or offer to settle
any such demands for appraisal.
(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.
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 (in the
name of Acquisition Sub, in the name of the Company or otherwise)
take such action.
SECTION 3 . REPRESENTATIONS AND WARRANTIES OF THE
COMPANY
10
The Company represents and warrants
to Parent and Acquisition Sub 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 its 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 carry on its business as
it is now being conducted. The Company and each of its Subsidiaries
is duly qualified to do business and is in good standing in each
state in which the nature of the business conducted by it makes
such qualification necessary, except where the failure to be so
qualified, individually or in the aggregate, does not constitute a
Company Material Adverse Effect.
(b) Part 3.1 of the Company Disclosure Schedule lists
all Subsidiaries of the Company, together with the jurisdiction of
organization of each such Subsidiary. All the outstanding shares of
capital stock of each Subsidiary of the Company have been duly
authorized and validly issued, are fully paid and nonassessable and
are owned directly or indirectly by the Company free and clear of
all liens, pledges or encumbrances, except for Permitted
Encumbrances.
(c) Other than equity interests in the Subsidiaries held by
the Company or any of its Subsidiaries, there are no outstanding
(i) securities of the Company or any of its Subsidiaries
convertible into or exchangeable for shares of capital stock of or
other voting securities or ownership interests in any Subsidiary of
the Company, (ii) options, warrants or other rights or
arrangements to acquire from the Company or any of its
Subsidiaries, or other obligations or commitments of the Company or
any of its Subsidiaries to issue, any capital stock of or other
voting securities or ownership interests in, or any securities
convertible into or exchangeable for any capital stock of or other
voting securities or ownership interests in, any Subsidiary of the
Company or (iii) restricted shares, restricted share units,
stock appreciation rights, performance shares, contingent value
rights, “phantom” stock or similar securities or rights
to acquire any capital stock or other voting securities or
ownership interests in any Subsidiary of the Company. Except for
securities or interests classified as marketable securities or
short-term investments under GAAP, as of the date hereof, neither
the Company nor any of its Subsidiaries owns any capital stock or
other equity interest in, or any interest convertible, exchangeable
or excisable for, any such capital stock or other equity interest
in, any Person (other than a Subsidiary of the Company).
3.2 Certificate of Incorporation;
Bylaws. The Company has delivered or made available to Parent
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.
11
3.3 Capitalization,
Etc.
(a) The authorized capital stock of the Company consists of
60,000,000 Company Shares and 3,000,000 shares of preferred stock,
par value $0.001 per share (“Preferred Shares”),
600,000 of which are designated as Series A Junior
Participating Preferred Stock (“Junior Preferred
Stock”). As of January 25, 2007: (i) 16,493,470
Company Shares were issued (and not held by the Company as treasury
shares) and outstanding; (ii) 4,317,330 Company Shares were
held by the Company as treasury shares; (ii) no Preferred
Shares were outstanding; (iii) 600,000 shares of Junior
Preferred Stock were reserved for future issuance upon exercise of
the Company Rights; and (iv) 3,492,232 Company Shares were reserved
for future issuance pursuant to the Company Option Plans, of which
2,487,243 Company Shares were subject to outstanding options to
acquire Company Shares from the Company. From January 25, 2007
to the date of this Agreement, the Company has not issued any
Company Shares other than resulting from the exercise of options
reflected in the immediately preceding sentence as outstanding as
of January 25, 2007. The Company has delivered or made
available to Parent 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
forms of all stock option agreements with respect to the Company
Option Plans.
(b) Except for options, rights, securities and plans
referred to in Section 3.3(a) and in the Company Rights
Agreement, as of the date of this Agreement, there is no:
(i) outstanding option or right to acquire from the Company
any shares of the capital stock of the Company;
(ii) outstanding security of the Company that is convertible
into or exchangeable for any Company Shares or (iii) securities or
contractual rights that give any Person the right to receive any
economic interest of a nature accruing to the holders of Common
Stock.
3.4 SEC Filings; Financial
Statements.
(a) All registration statements (on a form other than Form
S-8), annual, quarterly and periodic reports and definitive proxy
statements required to be filed by the Company with the SEC between
January 1, 2006 and the date of this Agreement (the
“Company SEC Documents”) have been so filed. As of the
time it was filed with the SEC (or, if amended or superseded by a
filing prior to the date of this Agreement, then on the date of
such filing): (i) each of the Company SEC Documents complied
in all material respects with the applicable requirements of the
Securities Act or the Exchange Act (as the case may be); and
(ii) none of the Company SEC Documents contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in 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, 2006 and relating to the Company SEC
Documents, together with all written responses of the Company
thereto sent to the SEC. As of the date of this Agreement, there
are no outstanding or unresolved comments in any 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 Company SEC
Documents is the subject of any ongoing review by 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
12
position
of the Company and its Subsidiaries as of the respective dates
thereof and the consolidated results of operations of the Company
and its Subsidiaries for the periods covered thereby 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 may not contain footnotes and are subject to year-end
adjustments).
(c) As of the date of this Agreement, neither the Company
nor any of its Subsidiaries has any liabilities of the type
required to be disclosed in the liabilities column of a balance
sheet prepared in accordance with GAAP, except for:
(i) liabilities disclosed in the financial statements
(including any related notes) contained in the Company SEC
Documents; (ii) liabilities incurred in the ordinary course of
business since the date of the Latest Balance Sheet; and (iii)
liabilities that are not material in the aggregate to the Company
and its Subsidiaries taken as a whole.
(d) The Company maintains disclosure controls and procedures
(as defined in Rule 13a-15(e) under the Exchange Act).
(e) The Company maintains a system of internal control over
financial reporting (as defined in Rule 13a-15(f) under the
Exchange Act) (“Internal Controls”). The Company had
disclosed, as of the date of filing with the SEC its Quarterly
Report on Form 10-Q for the quarter ended September 30, 2006,
to the Company’s auditors and audit committee of its Board of
Directors, to its knowledge, (x) all significant deficiencies
and material weaknesses in the design or operation of Internal
Controls which are reasonably likely to adversely affect the
Company’s ability to record, process, summarize and report
financial information and (y) any fraud, whether or not
material, that involves management or other employees who have a
significant role in Internal Controls.
3.5 Absence of Certain
Changes. Between the date of the Latest Balance Sheet and the
date of this Agreement, neither the Company nor any of its
Subsidiaries has: (a) suffered any adverse change with respect
to its business or financial condition that, individually or in the
aggregate, constitutes a Company Material Adverse Effect;
(b) suffered any material loss, damage or destruction to any
of its material assets; (c) amended its certificate of
incorporation or bylaws; (d) incurred any indebtedness for
borrowed money or guaranteed any such indebtedness, except in the
ordinary course of business; (e) changed, in any material
respect, its accounting methods, principles or practices except as
required by changes in GAAP; (f) sold or otherwise transferred
any material assets, except in the ordinary course of business;
(g) declared, set aside or paid any dividend with respect to
the outstanding Company Shares; (h) made or changed any
material tax election or settled any material tax claims, in each
case other than in the ordinary course of business or
(i) entered into any agreement to take any of the actions
referred to in clauses “(c)” through “(h)”
of this sentence.
3.6 IP Rights.
(a) (i) Part 3.6(a)(i) of the Company Disclosure
Schedule sets forth a complete list of all patents, registered
marks or trade dress, registered copyrights, registered designs,
and registered domain names, along with all pending applications to
issue or register the
13
same,
owned by the Company or any Subsidiary (the “Registered
IP”); (ii) the Company or one of its Subsidiaries is the
sole and exclusive owner of all Registered IP and all Company IP,
free of all liens and security interests (other than Permitted
Encumbrances); (iii) neither the Company nor any of its
Subsidiaries has granted any exclusive license to any such
Registered IP or Company IP to any other Person (other than
licenses which have expired, been terminated or are no longer in
effect for any other reason). The Registered IP that is issued or
registered is valid, subsisting and enforceable, and, to the
knowledge of the Company as of the date of this Agreement, no
action is threatened in writing or pending challenging the validity
or enforceability of any Registered IP that is issued or
registered; and (iv) to the knowledge of the Company, no third
party is infringing any material IP Right of the Company or any
Subsidiary.
(b) (i) Except as would not cause a Company Material
Adverse Effect, the Company and each of its Subsidiaries has the
right and operational ability to exploit all IP Rights necessary to
enable the Company to conduct its business substantially in the
manner in which its business is currently being conducted. Except
as would not cause a Company Material Adverse Effect, neither the
Company nor any Subsidiary has infringed, improperly disclosed or
misappropriated the IP Rights of any third party since
January 1, 2005; and (ii) neither the Company nor any
Subsidiary has been the subject of any suit, arbitration or
administrative proceeding between January 1, 2005 and the date
of this Agreement alleging, or received any other written notices
from any third party between January 1, 2005 and the date of
this Agreement alleging: (1) that the Company or any
Subsidiary has infringed, improperly disclosed, misappropriated,
converted or otherwise damaged the IP Rights of any third party; or
(2) inviting or demanding that the Company or a Subsidiary
take a license in order to avoid the future infringement of IP
Rights of a third party.
(c) Neither the Company nor any Subsidiary has entered into,
except in the ordinary course of business, any written agreement to
indemnify, defend or hold harmless any third party for or against
any infringement, misappropriation, or other conflict with the IP
rights of any third party. There are no suits or actions pending
against the Company or any Subsidiary in which it is alleged that
the Company or any Subsidiary has infringed, misappropriated or
improperly disclosed the IP Rights of any third party.
(d) The Company and its Subsidiaries have taken and are
taking the following steps, to the extent that such steps are
commercially reasonable and necessary to establish, perfect, and
defend their ownership of Registered IP and Company IP or their
right to use licensed third party IP Rights: (i) using
appropriate patent, trademark and copyright designations on
products and in marketing materials; (ii) requiring all
employees and contractors who have invented inventions covered by
patents owned by the Company or Subsidiary to assign all rights and
interests in such inventions to the Company or relevant Subsidiary;
and (iii) taking reasonable steps to protect trade secret
information, including requiring a non-disclosure agreement before
trade secret information is disclosed to a third party. The Company
and its Subsidiaries, have complied, in all material respects, with
all internal policies, applicable statutes, regulations, orders,
and other legal requirements relating to the fair and proper use of
personally identifiable information of employees and contractors of
the Company and its Subsidiaries. To the knowledge of the officers
of the Company who are aware of the transaction contemplated by
this Agreement, no confidential or trade secret information of the
Company, or personally identifiable information in the possession,
custody or control of the Company or any
14
Subsidiary has been lost, stolen, or improperly disclosed. All
persons identified as inventors in the patents owned by the Company
or any Subsidiary have assigned all of their rights in the relevant
inventions to the Company, relevant Subsidiary or predecessor in
interest thereof.
(e) (i) Except for third party Software commercially
available in the market for licensing on standard terms, all
Software sold or licensed by Company or its Subsidiaries to the
customers of the Company and its Subsidiaries independently or
bundled with other components, products or services of Company and
its Subsidiaries, is owned entirely and exclusively by the Company
or a Subsidiary and is free to be licensed or sold on the terms
such Software is licensed or sold. The Company, directly or through
its Subsidiaries, is in actual possession of or has necessary
control over the source code and object code of all Software owned
by the Company or any Subsidiary; (ii) neither the Company nor any
Subsidiary has disclosed to any third party any source code of
Software owned by the Company or any Subsidiary except pursuant to
written source code escrow agreements containing license and
confidentiality terms that reasonably protect the Company’s
rights in such Software; and (iii) neither the Company nor any
of its Subsidiaries is obligated to support or maintain any of the
Software except pursuant to agreements that will terminate by their
terms or are terminable by the Company (other than for cause) on a
periodic basis and that provide for one or more payments to the
Company or Subsidiary for the period of such services. To the
knowledge of the Company, none of the Software owned the Company or
its Subsidiaries contain any time bomb, virus, worm, trojan horse,
back door, drop dead device, or any other code that would
intentionally interfere with the normal operation of such Software,
or that is intended to allow circumvention of security controls for
the same, or that is intended to cause damage to hardware, software
or data.
(f) (i) No federal, state, local or other governmental
entity, nor any university, college, or academic institution has
financially sponsored research and development conducted by the
Company or its Subsidiaries since January 1, 2005, or has
rights in Software or IP Rights created since January 1, 2005
and purported to be owned by the Company or any Subsidiary;
(ii) neither the Company nor any Subsidiary has participated
in any standards-setting activities or joined any standards-setting
or similar organizations that would affect the proprietary nature
of any Software or IP Rights purported to be owned by the Company
or any Subsidiary, or restrict the ability of the Company or any of
its Subsidiaries to enforce, license or exclude others from using
any Software or IP Rights purported to be owned by the Company or
any Subsidiary; and (iii) none of the Software purported to be
owned by the Company or any Subsidiary and incorporated by the
Company or any Subsidiary into its products or services contain any
open source code or other code or technology which would
(1) require the public disclosure, third party distribution,
or general licensing of Software or other IP Rights owned by the
Company or any Subsidiary, (2) limit the ability of the
Company or a Subsidiary to license or charge fees or royalties for
such Software or IP Rights, or (3) require the Company or a
Subsidiary to permit the reverse engineering, decompilation,
disassembly, or creation of derivative works based upon of Software
owned by the Company or a Subsidiary.
3.7 Title to Assets; Real
Property.
(a) The Company or one of its Subsidiaries owns, and has
good title to, each of the tangible assets reflected as owned by
the Company or its Subsidiaries on the Latest
15
Balance
Sheet (except for tangible assets sold or disposed of since that
date and except for tangible assets being leased to the Company or
one of its Subsidiaries) free of any liens or encumbrances (other
than Permitted Encumbrances).
(b) Neither the Company nor any of its Subsidiaries owns any
real property.
(c) Part 3.7 of the Company Disclosure Schedule sets
forth a list of all real estate leases pursuant to which the
Company or any of its Subsidiaries leases real property (the
“Leased Real Property”) from any other Person
(collectively, the “ Real Property Leases ”).
Neither the Company nor any of its Subsidiaries is a party to any
written or oral leases, subleases, licenses, concessions, occupancy
agreements or other contractual obligations granting the right of
use or occupancy of the Leased Real Property to any other
Person.
(d) The Company or one of its Subsidiaries has a valid and
enforceable leasehold interest in each Leased Real Property with
respect to which the gross monthly rent (including all base or
minimum rent and all additional rent) under the applicable Real
Property Lease equals or exceeds $25,000 (each a “Material
Leased Location”), free and clear of all liens and
encumbrances except for Permitted Encumbrances.
3.8 Contracts.
(a) Part 3.8(a) of the Company Disclosure Schedule
contains a list of each of the following contracts that is in force
and effect as of the date of this Agreement to which the Company or
any of its Subsidiaries is a party: (i) each contract that
would be required to be filed as an exhibit to a Registration
Statement on Form S-1 under the Securities Act or an Annual Report
on Form 10-K under the Exchange Act (if such registration statement
or report was filed by the Company with the SEC on the date of this
Agreement); (ii) each contract that restricts in any material
respect the ability of the Company or any of its Subsidiaries to
compete in any geographic area or line of business; (iii) each
indemnification or employment contract with any director or officer
of the Company or its Subsidiaries or with any employee or
consultant of the Company or its Subsidiaries providing for an
annual base salary or annual consulting fee to such employee or
consultant of $150,000 or more in fiscal year 2006 (other than
offer letters with employees providing for at-will employment);
(iv) each loan or credit agreement, mortgage, note or other
contract evidencing indebtedness for money borrowed by the Company
or any of its Subsidiaries from a third party lender, and each
contract pursuant to which any such indebtedness for borrowed money
is guaranteed by the Company or any of its Subsidiaries;
(v) each customer or supply contract (excluding purchase
orders given or received in the ordinary course of business) under
which the Company or any Subsidiary of the Company paid to or
received from such customer or supplier in excess of $500,000 in
fiscal year 2005 or fiscal year 2006; (vi) each material
“single source” supply contract pursuant to which goods
or materials are supplied to the Company or any Subsidiary of the
Company from an exclusive source; (vii) each collective
bargaining agreement; (viii) each Real Property Lease for a
Material Leased Location; (ix) each lease or rental contract
involving personal property (and not relating primarily to real
property) pursuant to which the Company or any of its Subsidiaries
is required to make rental payments in excess of $500,000 per year;
(x) each contract relating to a joint venture, partnership or
other strategic arrangement involving a sharing of costs, profits
or losses with another Person; (xi) each contract with a
distributor of the Company or any of its Subsidiaries (whether or
not
16
exclusive); and (xii) each agreement that includes the grant
to the Company or any of its Subsidiaries of a license to IP Rights
owned by a third party and that is not a standard license agreement
for a commercially available product (each contract listed in
Part 3.8(a) of the Company Disclosure Schedule being referred
to as a “Material Contract”). Each of the Material
Contracts is valid and binding on the Company or the Subsidiary of
the Company that is a party thereto and, to the knowledge of the
Company, each other party thereto, and is in full force and effect,
except where such failures to be valid and binding or to be in full
force and effect do not constitute a Company Material Adverse
Effect.
(b) There is no existing breach or default on the part of
the Company or any of its Subsidiaries under any Material Contract
except for breaches and defaults that do not constitute a Company
Material Adverse Effect and, to the knowledge of the Company, there
is no existing breach or default on the part of any other Person
under any Material Contract except for breaches and defaults that
do not constitute a Company Material Adverse Effect. To the
knowledge of the Company, no event has occurred that, with notice
or lapse of time, would constitute a breach or default by the
Company or any of its Subsidiaries, or permit termination, material
modification or acceleration, under any Material Contract.
(c) The Company has made available to Parent correct and
complete 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.
3.9 Compliance with Legal
Requirements. The Company and its Subsidiaries are in
compliance with and have complied in a timely manner and in all
respects with all Legal Requirements applicable to their businesses
or relating to any of the property owned, leased or used by them
(including the Foreign Corrupt Practices Act of 1977, any other
Legal Requirements regarding use of funds for political activity or
commercial bribery, the Sarbanes-Oxley Act of 2002, Legal
Requirements relating to equal employment opportunity,
discrimination, occupational safety and health, environmental
matters, interstate commerce, anti-kickback, healthcare and
antitrust, export control (including those Legal Requirements
administered by the U.S. Department of Commerce and the U.S.
Department of State) and asset control (including those Legal
Requirements administered by the U.S. Department of the Treasury)),
in each case except for non-compliance that individually or in the
aggregate does not constitute a Company Material Adverse
Effect.
3.10 Legal Proceedings;
Orders.
(a) There is no Legal Proceeding pending (or, to the
knowledge of the Company, being threatened) against the Company or
any of its Subsidiaries, any present or former executive officer,
director or employee of the Company or any of its Subsidiaries
relating to his or her actions or inactions in such status or any
other Person for whom the Company or any of its Subsidiaries would
be liable, in each case that, individually or in the aggregate,
constitutes a Company Material Adverse Effect.
(b) There is no material court order or judgment specific to
the Company or any of its Subsidiaries to which the Company or any
of its Subsidiaries is subject.
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3.11 Governmental
Authorizations. The Company and its Subsidiaries hold all
Governmental Authorizations necessary to enable them to conduct
their businesses in the manner in which such businesses are
currently being conducted, except where failure to hold such
Governmental Authorizations does not constitute a Company Material
Adverse Effect. The material Governmental Authorizations held by
the Company and its Subsidiaries are, in all material respects,
valid and in full force and effect. The Company and its
Subsidiaries are in compliance with the terms and requirements of
such Governmental Authorizations, except where failure to be in
compliance, individually or in the aggregate, does not constitute a
Company Material Adverse Effect. Between January 1, 2006 and
the date of this Agreement, neither the Company nor any of its
Subsidiaries has received any written notice from any Governmental
Entity: (a) asserting any material violation of any term or
requirement of any material Governmental Authorization; or
(b) notifying the Company or one of its Subsidiaries of the
revocation of any material Governmental Authorization.
3.12 Tax Matters.
(a) All material tax returns required to be filed by the
Company and its Subsidiaries with any Governmental Entities with
respect to taxable periods ending before the Acceptance Time
(including any schedule or attachment thereto or any amendment
thereof) (the “Company Returns”): (i) have been or
will be filed on or before the applicable due date (as such due
date may have been or may be extended), and are, or will be when
filed, true and accurate in all material respects. The Company and
its Subsidiaries have timely paid or will timely pay any taxes due
except to the extent such taxes are being contested in good faith
and for which the Company or the appropriate Subsidiary has set
aside adequate reserves. The Company has not been a United States
real property holding corporation within the meaning of
Section 897(c)(2) of the Code during the applicable period
specified in Section 897(c)(1)(A)(ii) of the Code.
(b) The Latest Balance Sheet fully accrues the material
liabilities of the Company and its Subsidiaries for taxes with
respect to all periods through September 30, 2006 in
accordance with GAAP and the unpaid taxes of the Company and its
Subsidiaries as of the Acceptance Time will not exceed by a
material amount the reserve for taxes set forth on the Latest
Balance Sheet as adjusted for the passage of time through the
Acceptance Time in accordance with the past custom and practice of
the Company and its Subsidiaries in filing the Company
Returns.
(c) (i) There are no examinations or audits of any
Company Return currently underway; (ii) no extension or waiver
of the limitation period applicable to any Company Return is in
effect; (iii) no Legal Proceeding is pending (or, to the knowledge
of the Company, is being overtly threatened) by any tax authority
against the Company or any of its Subsidiaries in respect of any
material tax; (iv) there are no material unsatisfied
liabilities for taxes with respect to any notice of deficiency or
similar document received by the Company or any of its Subsidiaries
with respect to any tax (other than liabilities for taxes asserted
under any such notice of deficiency or similar document which are
being contested in good faith); (v) there are no liens for
material taxes (other than Permitted Encumbrances) upon any of the
assets of the Company or any of its Subsidiaries; (vi) neither the
Company nor any of its Subsidiaries has distributed stock of
another corporation, or has had its stock distributed by another
corporation, in a transaction that was governed, or purported or
intended to be governed, in whole or in part, by section 355 of the
18
Code,
(vii) neither the Company nor any of its Subsidiaries has
entered into any transaction defined in Treasury Regulation section
1.6011-4(b) or has entered into a “potentially abusive tax
shelter” (as defined in Treasury Regulation section
301.6112-1(b)); and (viii) neither the Company nor any of its
Subsidiaries is bound by any agreement or consent entered into
pursuant to Section 341(f) of the Code. Neither the Company nor any
of its Subsidiaries is required to include any adjustment in
taxable income for any tax period pursuant to Section 481 or
263A of the Code, and there are no applications pending with any
Governmental Entity requesting permission for changes in any of the
accounting methods of the Company or any of its Subsidiaries for
tax purposes. Neither the Company nor any of its Subsidiaries has
been a member of any combined, consolidated or unitary group for
which it is or will be liable for taxes under principles of or
similar to Section 1.1502-6 of the Treasury Regulations.
(d) There is no agreement between the Company or any of its
Subsidiaries and any employee or independent contractor of the
Company or any of its Subsidiaries that will give rise to any
payment that would not be deductible pursuant to Section 280G
or Section 162 of the Code. Neither the Company nor any of its
Subsidiaries is a party to any material tax indemnity agreement,
tax sharing agreement, tax allocation agreement or similar contract
with a third party.
(e) For purposes of this Agreement, “tax” or
“taxes” shall mean (i) any and all federal, state,
local, or foreign income, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation, premium, windfall
profits, environmental, customs duties, capital stock, franchise,
profits, withholding, social security (or similar, including FICA),
unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added,
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