This AGREEMENT AND PLAN OF MERGER (this “ Agreement
”) is entered into as of May 10, 2008, by and among COMTECH
TELECOMMUNICATIONS CORP., a Delaware corporation (“
Parent
”), COMTECH TA CORP., a Delaware corporation and a
wholly-owned subsidiary of Parent (“ Purchaser
”), and RADYNE CORPORATION, a Delaware corporation (the
“ Company
”).
WHEREAS, the Boards of Directors of Parent, Purchaser and the
Company have each determined that it is in the best interests of
their respective stockholders for Parent to acquire the Company
upon the terms and subject to the conditions set forth
herein;
WHEREAS, in furtherance of such acquisition, it is proposed that
Purchaser shall make a cash tender offer to acquire all the issued
and outstanding shares of common stock, par value $0.001 per share,
of the Company (“ Shares
”) for $11.50 per Share (such amount, or any greater amount
per Share paid pursuant to the Offer, being the “
Per Share
Amount ”), net to the seller in cash (the “
Offer
”), upon the terms and subject to the conditions of this
Agreement and the Offer;
WHEREAS, the Board of Directors of the Company (the “
Board ”)
has unanimously approved the making of the Offer and resolved to
recommend that holders of Shares tender their Shares pursuant to
the Offer; and
WHEREAS, also in furtherance of such acquisition, the Boards of
Directors of Parent, Purchaser and the Company have each approved
this Agreement and declared its advisability and approved the
merger (the “ Merger
”) of Purchaser with and into the Company in accordance with
the General Corporation Law of the State of Delaware (the “
DGCL ”),
following the consummation of the Offer and upon the terms and
subject to the conditions set forth herein.
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:
ARTICLE
I
DEFINITIONS
SECTION 1.01
Definitions.
For
purposes of this Agreement:
“ affiliate
” of a specified person means a person who directly, or
indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such specified
person.
“ beneficial
owner ”, with respect to any Shares, has the meaning
ascribed to such term under Rule 13d-3(a) of the Exchange
Act.
“ business day
” means any day on which the principal offices of the SEC in
Washington, D.C. are open to accept filings, or, in the case of
determining a date when any payment is due, any day
(other than a Saturday or Sunday) on which banks are not required
or authorized to close in the city of Phoenix,
Arizona.
“ code ”
means the Internal Revenue Code of 1986, as amended.
“ control
” (including the terms “ controlled by
” and “ under common control
with ”) means the possession, directly or indirectly,
or as trustee or executor, of the power to direct or cause the
direction of the management and policies of a person, whether
through the ownership of voting securities, as trustee or executor,
by contract or credit arrangement or otherwise.
“ Environmental
Laws ” means any federal, state, local, or foreign
law, regulation, ordinance, code, decree, applicable judgment,
common law standard, or other enforceable requirement of
Governmental Authorities relating to (i) releases of Hazardous
Substances; (ii) the manufacture, handling, transport, use,
treatment, storage or disposal of Hazardous Substances; or (iii)
pollution or protection of the environment.
“ ERISA
Affiliate ” means any trade or business (whether or
not incorporated) under common control with the Company or any
Subsidiary and which, together with the Company or any Subsidiary,
is treated as a single employer within the meaning of Section
414(b), (c), (m) or (o) of the Code.
“ Fully Diluted
Basis ” means after taking into account all
outstanding Shares and assuming the exercise, conversion or
exchange of all options, warrants, convertible or exchangeable
securities and similar rights and the issuance of all Shares that
the Company is obligated to issue thereunder.
“ Hazardous
Substances ” means (i) those substances regulated
under the United States Hazardous Materials Transportation Act, the
Resource Conservation and Recovery Act, the Comprehensive
Environmental Response, Compensation and Liability Act, the Clean
Water Act and the Clean Air Act; (ii) petroleum and petroleum
products; and (iii) any other substance, chemical, pollutant,
contaminant or other material regulated by any Governmental
Authority pursuant to any Environmental Law.
“ Intellectual
Property ” means all intellectual property rights of
any kind or nature, including all United States, non-United States
and international (i) patents, patent applications and statutory
invention registrations, (ii) trademarks, service marks, domain
names, trade dress, logos, slogans, trade names, corporate names
and other source identifiers, and registrations and applications
for registration thereof, (iii) copyrightable works, copyrights,
and registrations and applications for registration thereof, (iv)
rights in computer software and related technology, and (v)
confidential and proprietary information, including trade secrets,
know-how, inventions, proprietary processes, formulae, models, and
methodologies.
“ IP Contracts
” has the meaning set forth in Section 4.15(b).
“ knowledge of the
Company ” means, with respect to any matter in
question, the actual knowledge of the individuals set forth on
Section 1.01 of the Disclosure Schedule.
“ Lien ”
means any mortgage, pledge, lien, hypothecation, charge, security
interest, easement, covenant, encroachment, right of way or other
encumbrance or defect to title, or any option, right of first
refusal, right of first offer or other adverse claim.
“ Material Adverse
Effect ” means, with respect to the Company, any
event, violation, inaccuracy, circumstance or development that,
individually or in the aggregate, with other events, violations,
inaccuracies, circumstances or developments, has or would
reasonably be likely to (i) have a material adverse effect on the
business, financial condition or results of operations of the
Company and the Subsidiaries, taken as a whole, or (ii) prevent,
impair or materially delay the ability of the Company to perform
its obligations under this Agreement or consummate the transactions
contemplated by this Agreement, except to the extent that such
event, violation, inaccuracy, circumstance or development results,
alone or in combination, from the following, none of which shall be
taken into account in determining whether any such Material Adverse
Effect has occurred: (A) general economic, market or political
conditions, or acts of war, terrorism or sabotage, natural
disasters, acts of God or comparable events, in each case except to
the extent that the same disproportionately affect the Company and
the Subsidiaries, taken as a whole, as compared to other companies
in the industries or industry sectors in which the Company and the
Subsidiaries operate; (B) conditions affecting the industries or
industry sectors in which the Company and the Subsidiaries operate,
except to the extent that the same disproportionately affect the
Company and the Subsidiaries, taken as a whole, as compared to
other companies in the industries or industry sectors in which the
Company and the Subsidiaries operate; (C) changes arising out of
the announcement, pendency or consummation of the Offer, the
Merger, this Agreement or any of the transactions contemplated
hereby, including, without limitation, (1) any actions of
competitors, (2) any actions taken by or losses of employees or (3)
any delays or cancellations of orders for products or services; (D)
changes in the market price or trading volume of the
Company’s common stock ( provided ,
that the underlying causes of such changes shall not be excluded
pursuant to this clause (D)); (E) changes in legal requirements or
GAAP, except to the extent that the same disproportionately affect
the Company and its Subsidiaries, taken as a whole, as compared to
other companies affected by the changes in legal requirements or
GAAP; (F) any failure of the Company to meet internal projections
or analysts’ expectations for any period ending after the
date of this Agreement (provided, that the underlying causes of
such failure shall not be excluded pursuant to this clause (F)); or
(G) changes resulting from any action taken pursuant to or in
accordance with this Agreement or at the request of
Parent.
“ Permitted Lien
” means any (A) statutory Lien for current Taxes and
assessments not yet past due or delinquent, (B) inchoate
mechanics’ and materialmen’s Liens for construction in
progress, (C) workmen’s, repairmen’s,
warehousemen’s and carriers’ Liens arising in the
ordinary course of business for sums not yet due and payable, and
(D) all matters of record, Liens and other imperfections of title
and encumbrances that do not, individually or in the aggregate,
have a Material Adverse Effect.
“ person ”
means an individual, corporation, partnership, limited partnership,
limited liability company, syndicate, person (including, without
limitation, a “person” as defined in Section 13(d)(3)
of the Exchange Act), trust, association or entity or government,
political subdivision, agency or instrumentality of a
government.
“ subsidiary
” or “ subsidiaries
” of the Company, the Surviving Corporation (as defined
herein), Parent or any other person means an affiliate controlled
by such person, directly or indirectly, through one or more
intermediaries.
“ Taxes ”
means any and all taxes, fees, levies, duties, tariffs, imposts and
other similar charges of any kind imposed by any Governmental
Authority, including, without limitation (A) all federal, state,
local, foreign and other net income, gross income, gross receipts,
sales, use, ad valorem, transfer, franchise, profits, license,
lease, service, service use, withholding, estimated, payroll,
employment, excise, severance, stamp, occupation, premium,
property, windfall profits, customs, duties or other taxes, fees,
assessments or charges of any kind whatsoever, together with any
interest and any penalties, additions to tax or additional amounts
with respect thereto, (B) any liability for payment of amounts
described in clause (A) whether as a result of transferee
liability, of being a member of an affiliated, consolidated,
combined or unitary group for any period, or otherwise through
operation of Law, and (C) any liability for the payment of amounts
described in clauses (A) or (B) as a result of any tax sharing, tax
indemnity or tax allocation agreement or any other express or
implied agreement to indemnify any other person; and
“ Tax Return
” means any report, return, document, declaration or other
information or filing (including elections, declarations,
disclosures, schedules, estimates and information returns
(including Form 1099 and partnership returns filed on Form 1065))
required to be supplied to any taxing authority or jurisdiction
(foreign or domestic) with respect to Taxes.
ARTICLE
II
THE
OFFER
SECTION 2.01
The
Offer
.
(a)
Provided that this
Agreement shall not have been terminated in accordance with Section
9.01 and that none of the events or conditions set forth in
Annex
A shall have
occurred and be existing and shall not have been waived by Parent
(the conditions set forth in Annex
A , the
“ Tender
Offer Conditions ”), Purchaser shall
commence (within the meaning of Rule 14d-2 under the U.S.
Securities Exchange Act of 1934, as amended (together with the
rules and regulations thereunder, the “ Exchange
Act ”))
the Offer as promptly as practicable and in any event within ten
(10) business days after the date hereof. The obligation of
Purchaser to accept for payment Shares validly tendered pursuant to
the Offer and to pay the Per Share Amount for each such tendered
and not subsequently withdrawn Share shall be subject only to the
Tender Offer Conditions. Purchaser expressly reserves the right to
waive any such condition, to increase the Per Share Amount payable
in the Offer, and to make any other changes to the terms and
conditions of the Offer; provided
, however
, that without the
prior written consent of the Company (i) the Minimum Condition (as
defined in Annex
A ) may not be
waived and (ii) no change may be made that (A) changes the form of
consideration to be paid pursuant to the Offer, (B) decreases the
Per Share Amount payable in the Offer, (C) reduces the maximum
number of Shares to be purchased in the Offer, (D) imposes
conditions to the Offer in addition to those set forth in
Annex
A hereto, or
(E) amends the conditions set forth in Annex
A hereto in
any manner materially adverse to the holders of
Shares.
(b)
Subject to the terms
and conditions thereof, the Offer shall remain
open until midnight, New York City time, at the end of the
twentieth (20th) business day after the date that the Offer is
commenced (the “ Expiration
Date ”),
unless Purchaser shall have extended the period of time for which
the Offer is open pursuant to, and in accordance with, this Section
2.01(b) or as may be required by applicable Law, in which event the
term “Expiration Date” shall mean the latest time and
date as the Offer, as so extended, may expire . Unless this Agreement or the
Offer is terminated in accordance with its terms,
Purchaser
shall extend the
Offer from time to time : (i) if the Minimum Condition is
not satisfied on or before the Expiration Date; (ii) if any of the
conditions of the Offer set forth in clause (ii) of the second
paragraph of the Tender Offer Conditions are not satisfied on or before
the Expiration Date; (iii) if the condition set forth
in clause (d) of Annex
A is not
satisfied and is the sole condition remaining unsatisfied and the
Company is using its reasonable best efforts to satisfy such
condition; or (iv) if any applicable Law, rule, regulation
, interpretation
or position
of the Securities and
Exchange Commission (the “ SEC
”
) or the staff of the SEC (the “
SEC
Staff ”) thereof applicable to the Offer requires
such extension. Purchaser shall extend the Offer for up to five (5)
business days after the satisfaction or waiver of the conditions
set forth in clauses (i), (ii) or (iii) in the immediately
preceding sentence, or for such period as may be required by any
applicable Law, rule, regulation, interpretation or position set
forth with respect to the condition in clause (iv) in the
immediately preceding sentence; provided
, however
, that Purchaser
shall not be required to extend the Offer beyond the Outside Date.
Unless this Agreement or the Offer is terminated in accordance with
its terms, Purchaser may in its sole election extend the Offer from
time to time if any of the Tender Offer Conditions, other than the
conditions set forth in the second sentence of this Section
2.01(b), are not satisfied or waived on or before the Expiration
Date. If all of the Tender Offer Conditions are satisfied
, but the number of
Shares that
have been validly tendered and not
withdrawn in
the Offer, together with any Shares then owned by Parent is
less than 90%
of the outstanding
Shares on a Fully Diluted Basis , Purchaser may, in its sole
discretion, and subject to the first sentence of subsection (c),
commence a subsequent offering period (as provided in Rule 14d-11
under the Exchange Act) for three to 20 business days to acquire
additional outstanding Shares .
(c)
Subject to the terms
and conditions set forth in this Agreement and to the satisfaction
or waiver of the Tender Offer Conditions, Purchaser shall, and
Parent shall cause it to, promptly after the Expiration Date,
accept for payment and pay for (after giving effect to any required
withholding Tax) all Shares that have been validly tendered and not
withdrawn pursuant to the Offer. If Purchaser shall commence a
subsequent offering period in connection with the Offer, Purchaser
shall accept for payment and pay for (after giving effect to any
required withholding Tax) all additional Shares validly tendered
during such subsequent offering period.
(d)
As promptly as
reasonably practicable on the date of commencement of the Offer,
Purchaser shall file with the SEC a Tender Offer Statement on
Schedule TO (together with all amendments and supplements thereto,
the “ Schedule
TO ” ) with respect to the Offer. The
Schedule TO shall contain or shall incorporate by reference an
offer to purchase (the “ Offer
to Purchase ” ) and forms of the related letter
of transmittal and forms of notice of guaranteed
delivery and any related summary advertisement
(the Schedule TO, the Offer to Purchase and such other documents,
together with all supplements and amendments thereto, being
referred to herein collectively as the “ Offer
Documents ” ). Each of Parent, Purchaser and
the Company agrees to correct promptly any information provided by
it for use in the Offer Documents if and
to the extent
that
it
shall have become
false or misleading in any material respect, and Parent and
Purchaser further agree to take all steps necessary to cause the
Schedule TO, as so corrected, to be filed with the SEC, and the
other Offer Documents, as so corrected, to be disseminated to
holders of Shares, in each case as and to the extent required by
applicable Law. The Company shall promptly
furnish to Parent and Purchaser all information concerning the
Company that is required or reasonably requested by Parent or
Purchaser in connection with the obligations relating to the Offer
Documents contained in this Section 2.01(d) . Parent and Purchaser shall give
the Company and its counsel a reasonable opportunity to review and
comment on the Offer Documents prior to such documents being filed
with the SEC or disseminated to holders of Shares. Parent and
Purchaser shall provide the Company and its counsel with any
comments that Parent, Purchaser or their counsel may receive from
the SEC or the SEC Staff with respect to the
Offer Documents promptly after the receipt of such comments and
shall provide the Company and its counsel with a reasonable
opportunity to participate in the response of Parent or Purchaser
to such comments.
SECTION 2.02
Company
Action
.
(a)
The Company hereby
approves of and consents to the Offer and represents
and warrants
that the Board, at a
meeting duly called and held on May 8, 2008, has
, subject to the
terms and conditions set forth in this Agreement,
unanimously (i)
determined that this Agreement and the transactions contemplated
hereby, including each of the Offer and the Merger (collectively,
the “ Transactions
”
), are fair to, and
in the best interests of, the holders of Shares, (ii) approved and
declared advisable this Agreement and the Transactions (such
approval having been made in accordance with the DGCL, including,
without limitation, Section 203 thereof), and (iii) resolved to
recommend that the holders of Shares accept the Offer and tender
their Shares pursuant to the Offer, and that the holders of Shares
adopt this Agreement
and approve the Transactions to the extent required by
applicable Law . The Company further represents
that Needham & Company, LLC has delivered to the Board a
written opinion that, as of the date of this Agreement, the
consideration to be received by the holders of Shares pursuant to
each of the Offer and the Merger is fair to the holders of Shares
from a financial point of view (the “ Fairness
Opinion ” ). The Company hereby consents to the
inclusion in the Offer Documents of the recommendation of the Board
described in this Section 2.02(a).
(b)
As promptly as
reasonably practicable on the date of commencement of the Offer,
the Company shall file with the SEC a Tender Offer
Solicitation/Recommendation Statement on Schedule 14D-9 (together
with all amendments and supplements thereto, the
“
Schedule
14D-9 ” ) containing, subject to Section 7.05(c)
, the Fairness
Opinion and the recommendation of the Board described in Section
2.02 (a), and
shall disseminate the Schedule 14D-9 to the extent required by Rule
14d-9 promulgated under the Exchange Act, and any other
applicable Law. The Company will use its
reasonable best efforts to cause the Schedule 14D-9 to comply in
all material respects with the applicable requirements under
Law . Each of
the Company, Parent and Purchaser agrees to correct promptly any
information provided by it for use in the Schedule 14D-9
if and to the extent
that it shall
have become false or misleading in any material respect, and the
Company further agrees to take all steps necessary to cause the
Schedule 14D-9, as so corrected, to be
filed with the SEC and disseminated to holders of Shares, in each
case as and to the extent required by applicable
Law
. The Company shall
give Parent and its counsel a reasonable opportunity to review and
comment on the Schedule 14D-9 prior to such
document being filed
with the SEC or disseminated to holders of Shares. The Company
shall provide Parent and its counsel with any comments that the
Company or its counsel may receive from the SEC or
the
SEC Staff with
respect to the Schedule 14D-9 promptly after the receipt of such
comments and shall provide Parent and its counsel with a reasonable
opportunity to participate in the response of the Company to such
comments.
(c)
The Company shall
promptly furnish Purchaser with mailing labels containing the names
and addresses of all record holders of Shares and with security
position listings of Shares held in stock depositories, each as of
a recent date, together with all other available listings and
computer files containing names, addresses and security position
listings of record holders and beneficial owners of Shares. The
Company shall furnish Parent and Purchaser with such additional
information, including, without limitation, updated listings and
computer files of stockholders, mailing labels and security
position listings, and such other assistance in disseminating the
Offer Documents to holders of Shares as Parent or Purchaser may
reasonably request. Subject to the requirements of applicable Law,
and except for such steps as are necessary to disseminate the Offer
Documents and any other documents necessary to consummate the Offer
or the Merger, Parent and Purchaser shall hold in confidence the
information contained in such labels, listings and files, shall use
such information only in connection with the Transactions, and, if
this Agreement shall be terminated in accordance with Article IX,
shall deliver to the Company all copies of such information then in
their possession.
SECTION 2.03
Top-Up
Option
.
(a)
The Company hereby
grants to Parent and Purchaser an irrevocable option (the
“
Top-Up
Option ” ) to purchase up to that number
of newly issued Shares (the “ Top-Up
Option Shares ” ) equal to the number of Shares
that, when added to the number of Shares owned by Parent and
Purchaser immediately following consummation of the Offer, shall
constitute one Share more than 90% of the Shares then outstanding
on a Fully Diluted Basis (after giving effect to the issuance of
the Top-Up Option Shares) for consideration per Top-Up Option Share
equal to the Per Share Amount.
(b)
The Top-Up Option
shall be exercisable only after the purchase of and payment for
Shares pursuant to the Offer by Parent or Purchaser as a result of
which Parent and Purchaser own beneficially at least a majority of
the outstanding Shares. The Top-Up Option shall not be exercisable
if the number of Shares subject thereto exceeds the number of
authorized Shares available for issuance.
(c)
In the event that
Parent or Purchaser wish to exercise the Top-Up Option, Purchaser
shall give the Company one day’s prior written notice
specifying the number of Shares that are or will be owned by Parent
and Purchaser immediately following consummation of the Offer and
specifying a place and a time for the closing of the purchase. The
Company shall, as soon as practicable following receipt of such
notice, deliver written notice to Purchaser specifying the number
of Top-Up Option Shares. At the closing of the purchase of the
Top-Up Option Shares, the portion of the purchase price owing upon
exercise of the Top-Up Option that equals the product of (i) the
number of Shares purchased pursuant to the Top-Up Option,
multiplied by (ii) the Per Share Amount, shall be paid to the
Company, at the election of Parent
and Purchaser, in
cash (by wire transfer or cashier’s check) or by delivery of
a promissory note having full recourse to
Parent.
(d)
Parent and Purchaser
acknowledge that the Top-Up Option Shares that Purchaser may
acquire pursuant to the Top-Up Option will not be registered under
the Securities Act and will be issued in reliance upon an exemption
thereunder for transactions not involving a public offering. Parent
and Purchaser represent and warrant to the Company that Purchaser
is, or will be upon the purchase of the Top-Up Options Shares, an
“accredited investor,” as defined in Rule 501 of
Regulation D under the Securities Act. Purchaser agrees that the
Top-Up Option and the Top-Up Option Shares to be acquired upon
exercise of the Top-Up Option are being and will be acquired by
Purchaser 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 Securities Act).
ARTICLE
III
THE
MERGER
SECTION 3.01
The
Merger
. Upon the terms and subject to the conditions set forth in Article
VIII, and in accordance with the DGCL, at the Effective Time (as
defined in Section 3.02), Purchaser shall be merged with and into
the Company.
SECTION 3.02
Effective
Time
. As promptly as practicable after the satisfaction or,
if permissible, waiver of the conditions set forth in Article VIII,
the parties hereto shall cause the Merger to be consummated by
filing this Agreement or a certificate of merger or certificate of
ownership and merger (in either case, the “ Certificate of
Merger ”) with the Secretary of State of the State of
Delaware, in such form as is required by, and executed in
accordance with, the relevant provisions of the DGCL (the date and
time of such filing of the Certificate of Merger (or such later
time as may be agreed by each of the parties hereto and specified
in the Certificate of Merger) being the “ Effective Time
”).
SECTION 3.03
Effect
of the Merger
. As a result of the Merger, the separate corporate existence of
Purchaser shall cease and the Company shall continue as the
surviving corporation of the Merger (the “ Surviving
Corporation ”). At the Effective Time, the effect of
the Merger shall be as provided in the applicable provisions of the
DGCL. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time, all the property, rights,
privileges, powers and franchises of the Company and Purchaser
shall vest in the Surviving Corporation, and all debts,
liabilities, obligations, restrictions, disabilities and duties of
the Company and Purchaser shall become the debts, liabilities,
obligations, restrictions, disabilities and duties of the Surviving
Corporation.
SECTION 3.04
Certificate
of Incorporation; By-laws
.
(a)
At the Effective
Time, the Certificate of Incorporation of the Company shall be
amended so as to read in the form of Exhibit
A hereto and,
as so amended, shall be the Certificate of Incorporation of the
Surviving Corporation until thereafter amended as provided
by L
aw
and such Certificate
of Incorporation.
(b)
At the Effective
Time, the By-laws of the Company shall be amended so as to read in
the form of Exhibit
B hereto and,
as so amended, shall be the By-laws of the
Surviving Corporation
until thereafter amended as provided by L aw , the Certificate of
Incorporation of the Surviving Corporation and such
By-laws.
SECTION 3.05
Directors
and Officers
. The directors of Purchaser immediately prior to the Effective
Time shall be the initial directors of the Surviving Corporation,
each to hold office in accordance with the Certificate of
Incorporation and By-laws of the Surviving Corporation, and the
officers of the Company immediately prior to the Effective Time
shall be the initial officers of the Surviving Corporation, in each
case until their respective successors are duly elected or
appointed and qualified or until their earlier death, resignation
or removal.
SECTION 3.06
Conversion
of Securities
. At the Effective Time, by virtue of the Merger and without any
action on the part of Purchaser, the Company or the holders of any
of the following securities:
(a)
Each Share issued and
outstanding immediately prior to the Effective Time (other than any
Shares to be canceled pursuant to Section 3.06(b) and any
Dissenting Shares (as hereinafter defined)) shall be canceled and
shall be converted automatically into the right to receive an
amount equal to the Per Share Amount (the “ Merger
Consideration ” ) payable, without interest, to
the holder of such Share, upon surrender, in the manner provided in
Section 3.10, of the C ertificate that formerly evidenced such
Share;
(b)
Each Share held in
the treasury of the Company and each Share owned by Purchaser,
Parent or any direct or indirect wholly- owned subsidiary of Parent or of
the Company immediately prior to the Effective Time shall be
canceled without any conversion thereof and no payment or
distribution shall be made with respect thereto;
and
(c)
Each share of common
stock, par value $.01 per share, of Purchaser issued and
outstanding immediately prior to the Effective Time shall be
converted into and exchanged for one validly issued, fully paid and
nonassessable share of common stock, par value $.01 per share, of
the Surviving Corporation.
SECTION 3.07
Employee
Stock Options
. Effective as of the Effective Time, the Company shall take all
necessary action, including obtaining the consent of the individual
option holders, if necessary, to (i) terminate the Company’s
1996 Stock Option Plan, 2000 Long-Term Incentive Plan, and 2007
Stock Incentive Plan, each as amended through the date of this
Agreement (the “ Company Stock Option
Plans ”), (ii) provide that each outstanding option to
purchase shares of Company common stock granted under the Company
Stock Option Plans (each, a “ Company Stock
Option ”) that is outstanding and unexercised as of
immediately prior to the Effective Time, whether or not vested or
exercisable, shall become fully vested and exercisable as of the
Effective Time, and (iii) cancel as of the Effective Time each
Company Stock Option that is outstanding and unexercised at the
Effective Time. Each holder of a Company Stock Option that is
outstanding and unexercised at the Effective Time and that has an
exercise price per Share that is less than the Merger Consideration
shall be entitled (subject to the provisions of this Section 3.07)
to be paid by the Surviving Corporation immediately after the
Effective Time, in exchange for the cancellation of such Company
Stock Option, an amount in cash (subject to any applicable
withholding taxes) with respect to each Share subject to the
Company Stock Option equal to the excess, if any, of the Merger
Consideration over the
applicable per share exercise price of such Company Stock Option
(the “ Option Payment
”). Any such payment shall be subject to all applicable
federal, state and local tax withholding requirements. The Company
shall take all necessary action to approve the disposition of the
Company Stock Options in connection with the transactions
contemplated by this Agreement to the extent necessary to exempt
such dispositions under Rule 16b-3 of the Exchange Act. Prior to
the Effective Time, Parent shall cause to be wired to an account
designated by the Company an amount sufficient to enable the
Company to make the payments required pursuant to this Section
3.07.
SECTION 3.08
Restricted
Stock Units
. Effective as of the Effective Time, the Company shall take all
necessary action, including obtaining the consent of the individual
restricted stock unit holders, if necessary, to (i) provide that
each outstanding restricted stock unit granted under the Company
Stock Option Plans (each, a “ Restricted Stock
Unit ”) that is outstanding as of immediately prior to
the Effective Time, whether or not vested, shall become fully
vested as of the Effective Time, and (ii) cancel as of the
Effective Time each Restricted Stock Unit that is outstanding at
the Effective Time. Each holder of a Restricted Stock Unit that is
outstanding at the Effective Time shall be entitled (subject to the
provisions of this Section 3.08) to be paid by the Surviving
Corporation immediately after the Effective Time, in exchange for
the cancellation of such Restricted Stock Unit, an amount in cash
(subject to any applicable withholding taxes) with respect to each
Share subject to the Restricted Stock Unit equal to the Merger
Consideration (the “ Restricted Stock
Unit Payment
”). Any such payment shall be subject to all applicable
federal, state and local tax withholding requirements. The Company
shall take all necessary action to approve the disposition of the
Restricted Stock Units in connection with the transactions
contemplated by this Agreement to the extent necessary to exempt
such dispositions under Rule 16b-3 of the Exchange Act. Prior to
the Effective Time, Parent shall cause to be wired to an account
designated by the Company an amount sufficient to enable the
Company to make the payments required pursuant to this Section
3.08.
SECTION 3.09
Employee
Stock Purchase Plan
. The Company shall take all actions necessary to suspend any
pending Purchase Period (as such term is defined in the
Company’s 1999 Employee Stock Purchase Plan ( as amended
through the date of this Agreement, the “ ESPP ”))
as of the date hereof. As of the Effective Time,
conditioned upon the consummation of the Merger, the Company shall
take all actions necessary to terminate the ESPP. Upon
the termination of the ESPP, all amounts in the Stock Purchase
Accounts (as such term is defined in the ESPP) as of the Effective
Time shall be returned to such participants as soon as reasonably
practicable.
SECTION 3.10
Dissenting
Shares
.
(a)
Notwithstanding any
provision of this Agreement to the contrary, Shares that are
outstanding immediately prior to the Effective Time and that are
held by stockholders who shall have neither voted in favor of the
Merger nor consented thereto in writing and who shall have demanded
properly in writing appraisal for such Shares in accordance with
Section 262 of the DGCL (collectively, the “ Dissenting
Shares ” ) shall not be converted into, or
represent the right to receive, the Merger Consideration. Such
stockholders shall be entitled to receive payment of the appraised
value of such Shares held by them in accordance with the provisions
of such Section 262, except that Dissenting Shares held by
stockholders who shall have failed to
perfect or who
effectively shall have withdrawn or lost their rights to appraisal
of such Shares under such Section 262 shall thereupon be deemed to
have been converted into, and to have become exchangeable for, as
of the Effective Time, the right to receive the Merger
Consideration, without any interest thereon, upon surrender, in the
manner provided in Section 3.11, of the C ertificate or C ertificates that formerly evidenced such
Shares.
(b)
The Company shall
give Parent and Purchaser (i) prompt notice of any
demand for
appraisal received by the Company, withdrawals of such demands, and
any other instruments served pursuant to the DGCL and received by
the Company and (ii) the opportunity to direct all negotiations and
proceedings with respect to demands for appraisal under the DGCL.
The Company shall not, except with the prior written consent of
Parent, make any payment with respect to any demands for appraisal
or offer to settle or settle any such demands.
SECTION 3.11
Surrender
of Shares; Stock Transfer Books
.
(a)
Prior to the
Effective Time, Purchaser shall designate a bank or trust company
reasonably acceptable to the Company to act as agent (the
“
Paying
Agent ” ) for the holders of Shares and
Company Stock Options to receive the funds to which holders of
Shares and Company Stock Options shall become entitled pursuant to
Section 3.06(a) and Section 3.07, respectively. Such funds shall be
invested by the Paying Agent as directed by the Surviving
Corporation; provided
, that such investments shall be in
obligations of or guaranteed by the United States of America or of
any agency thereof and backed by the full faith and credit of the
United States of America, in commercial paper obligations rated A-1
or P-1 or better by Moody’s Investors Service, Inc. or
Standard & Poor’s Corporation, respectively, or in
deposit accounts, certificates of deposit or banker’s
acceptances of, repurchase or reverse repurchase agreements with,
or Eurodollar time deposits purchased from, commercial banks with
capital, surplus and undivided profits aggregating in excess of
$500 million (based on the most recent financial statements of such
bank which are then publicly available at the SEC or
otherwise).
(b)
Promptly after the
Effective Time, the Surviving Corporation shall cause to be mailed
to each person who was, at the Effective Time, a holder of record
of Shares entitled to receive the Merger Consideration pursuant to
Section 3.06(a) a form of letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title
to the certificates evidencing such Shares (the “ Certificates
”
) shall pass, only
upon proper delivery of the Certificates to the Paying Agent) and
instructions for use in effecting the surrender of the Certificates
pursuant to such letter of transmittal. Upon surrender to the
Paying Agent of a Certificate, together with such letter of
transmittal, duly completed and validly executed in accordance with
the instructions thereto, and such other documents as may be
required pursuant to such instructions, the holder of such
Certificate shall be entitled to receive in exchange therefor the
Merger Consideration for each Share formerly evidenced by such
Certificate, and such Certificate shall then be canceled. No
interest shall accrue or be paid on the Merger Consideration
payable upon the surrender of any Certificate for the benefit of
the holder of such Certificate. If the payment equal to the Merger
Consideration is to be made to a person other than the person in
whose name the surrendered certificate formerly evidencing Shares
is registered on the stock transfer books of the Company, it shall
be a condition of payment that the certificate so surrendered shall
be endorsed properly or otherwise be in proper form for transfer
and that the person requesting such payment shall have paid all
transfer and other taxes required by reason of
the payment of the
Merger Consideration to a person other than the registered holder
of the certificate surrendered, or shall have established to the
satisfaction of the Surviving Corporation that such taxes either
have been paid or are not applicable. If any holder of Shares is
unable to surrender such holder’s Certificates because such
Certificates have been lost, mutilated or destroyed, such holder
may deliver in lieu thereof an affidavit and indemnity bond in form
and substance and with surety reasonably satisfactory to the
Surviving Corporation. Each of Parent, Purchaser, the Surviving
Corporation and the Paying Agent shall be entitled to deduct and
withhold from any amounts otherwise payable pursuant to this
Agreement in respect of Shares such amount as it is required to
deduct and withhold with respect to the making of such payment
under the Code or any Law. To the extent that amounts are so
withheld, such withheld amounts shall be treated for purposes of
this Agreement as having been paid to the holder of the Shares in
respect of which such deduction and withholding was
made.
(c)
At any time following
the ninth (9
th ) month
after the Effective Time, the Surviving Corporation shall be
entitled to require the Paying Agent to deliver to it any funds
which had been made available to the Paying Agent and not disbursed
to holders of Shares (including, without limitation, all interest
and other income received by the Paying Agent in respect of all
funds made available to it), and, thereafter, such holders shall be
entitled to look to the Surviving Corporation (subject to abandoned
property, escheat and other similar laws) only as general creditors
thereof with respect to any Merger Consideration that may be
payable upon due surrender of the Certificates held by them.
Notwithstanding the foregoing, neither the Surviving Corporation
nor the Paying Agent shall be liable to any holder of a Share for
any Merger Consideration delivered in respect of such Share to a
public official pursuant to any abandoned property, escheat or
other similar law.
(d)
At the close of
business on the day of the Effective Time, the stock transfer books
of the Company shall be closed and thereafter there shall be no
further registration of transfers of Shares on the records of the
Company. From and after the Effective Time, the holders of Shares
outstanding immediately prior to the Effective Time shall cease to
have any rights with respect to such Shares except as otherwise
provided herein or by applicable Law.
(e)
All amounts payable
by the Surviving Company in respect of Option Payments and
Restricted Stock Unit Payments shall be paid as provided in
Sections 3.07 and 3.08, respectively, above.
ARTICLE
IV
REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
Except (A) as set forth in the Disclosure Schedule that has been
prepared by the Company and delivered by the Company to Parent and
Purchaser in connection with the execution and delivery of this
Agreement (the “ Disclosure
Schedule ”) (which Disclosure Schedule shall be
arranged in sections corresponding to the numbered and lettered
sections of this Article IV, and any information disclosed in any
such section of the Disclosure Schedule shall be deemed to be
disclosed only for purposes of the corresponding section of this
Article IV, unless it is readily apparent that the disclosure
contained in such section of the Disclosure Schedule contains
enough information regarding the subject matter of other
representations and warranties contained in this Article IV as to
clearly qualify or otherwise clearly apply to such
other representations and warranties) or (B) as disclosed in the
SEC Reports (as defined below) filed after January 1, 2007 and
prior to the date of this Agreement, other than any disclosure set
forth in (x) any document incorporated by reference in any such SEC
Report and (y) any “risk factors” section or in any
section relating to “forward looking” statements, in
each case of such SEC Report, except to the extent that the
applicability of such disclosure to a section is readily apparent
from such disclosure, the Company hereby represents and warrants to
Parent and Purchaser that:
SECTION 4.01
Organization
and Qualification; Subsidiaries
.
(a)
Each of the Company
and each subsidiary of the Company (each a “ Subsidiary
”
) is an entity
duly incorporated, organized, validly existing and
in good standing under the L aws of the jurisdiction of its
incorporation or organization
and has the requisite
corporate power and authority to own, lease and operate its
properties and assets and to carry on its business as it is
now being conducted, except where the failure to be so organized,
existing or in good standing or to have such power and authority
would not ,
individually or in the aggregate, have a Material Adverse Effect.
The Company and each Subsidiary is duly qualified or licensed as a
foreign entity to do business, and is in good standing, in each
jurisdiction where the character of the properties
and assets
owned, leased or
operated by it or the nature of its business makes such
qualification or licensing necessary, except for such failures to
be so qualified , licensed or in good standing that would
not ,
individually or in the aggregate, have a Material Adverse
Effect.
(b)
A true
, correct
and complete list of
each Subsidiary , together with the jurisdiction
of incorporation of each Subsidiary and the percentage of
the outstanding capital stock of each Subsidiary owned by the Company
and each other Subsidiary, is set forth in Section 4.0
1(b) of the
Disclosure Schedule. Except as disclosed in Section 4.01(b) of the
Disclosure Schedule, the Company does not directly or
indirectly own any equity or similar interest in, or any interest
convertible into or exercisable or exchangeable for any equity or
similar interest in, any corporation, partnership, joint venture or
other business association or entity.
SECTION 4.02
Certificate
of Incorporation and By-laws
. The Company has heretofore made available to Parent a true,
complete and correct copy of the Certificate of Incorporation and
the By-laws or equivalent organizational documents, each as amended
to date, of the Company and each Subsidiary. Such Certificates of
Incorporation, By-laws or equivalent organizational documents are
in full force and effect. Neither the Company nor any Subsidiary is
in violation of any of the provisions of its Certificate of
Incorporation, By-laws or equivalent organizational documents,
except, in the case of any Subsidiary, for violations that would
not have a Material Adverse Effect.
SECTION 4.03
Capitalization
.
(a)
The authorized
capital stock of the Company consists of 50,000,000 Shares. As
of May
1 ,
2008, (i)
18,808,528
Shares
were
issued and
outstanding, all of which are duly authorized,
validly issued, fully
paid and nonassessable, (ii) no Shares are held in the treasury of
the Company, and (iii) 3,790,84 4 Shares are reserved for future issuance
pursuant to
Company Stock
Options or
stock incentive rights granted pursuant to the Company Stock Option
Plans. Except as set forth in this Section 4.03, there are no
options, warrants or other rights, agreements, arrangements or
commitments of any character relating to the issued or unissued
capital stock of the Company or any Subsidiary or obligating the
Company or any Subsidiary to issue
, deliver
or sell any shares of
capital stock of, or other equity interests in, the Company or
any Subsidiary. All Shares subject to
issuance as aforesaid, upon issuance on the terms and conditions
specified in the instruments pursuant to which they are issuable,
will be duly authorized, validly issued, fully paid and
nonassessable. There are no material outstanding contractual
obligations of the Company or any Subsidiary to repurchase, redeem
or otherwise acquire any Shares or any capital stock of any
Subsidiary or to
provide funds to, or make any investment (in the form of a loan,
capital contribution or otherwise) in, any Subsidiary or any other
person.
(b)
Each outstanding
share of capital stock of, or other equity interest in, each
Subsidiary is duly
authorized, validly issued, fully paid and nonassessable, and each
such share, or other equity interest in, is owned by the Company or
another Subsidiary free and clear of all security interests, liens,
claims, pledges, options, rights of first refusal, agreements,
limitations on the Company’s or any Subsidiary’s voting
rights, charges and other encumbrances of any nature
whatsoever.
(c)
The Company has
delivered to Parent a correct and complete list as of the date set
forth in Section 4.03(c) of the Disclosure Schedule of each option
and restricted stock unit outstanding immediately prior to the
Effective Time (whether or not then vested or exercisable) to
purchase Shares issued under any Company Stock Option Plan, which
list includes the holder, date of grant, exercise price (if
applicable), number of Shares subject thereto, the Company Stock
Option Plan under which such option or restricted stock unit, as
applicable, was granted and, with respect to any option, whether
the option is vested and exercisable and with respect to any
restricted stock unit, whether the restricted stock unit is
vested.
SECTION 4.04
Relative
to This Agreement Authority
.
(a)
The Company has all
necessary corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate
the Transactions. The execution , delivery and performance
of this Agreement by
the Company and the consummation by the Company of the Transactions
have been duly and validly 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 or to consummate the Transactions (other than, with
respect to the Merger, the adoption of this Agreement by the
holders of a majority of the then-outstanding Shares, if and to the
extent required by applicable Law, and the filing and recordation
of the Certificate of Merger and other documents as required by the
DGCL). This Agreement has been duly and validly executed and
delivered by the Company and, assuming the due authorization,
execution and delivery by Parent and Purchaser, constitutes a
legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, subject to the
effect of any applicable bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or similar laws affecting
creditors’ rights generally and subject to
the
effect of general
principles of equity (regardless of whether considered in a
proceeding at law or in equity).
(b)
Assuming the accuracy
of the representations set forth in Section 5.06, the Company has
taken all appropriate actions so that the restrictions on business
combinations contained in each “fair price”,
“moratorium”, “control share acquisition”,
“business combination” or other similar anti-takeover
statute or regulation enacted under Delaware law applicable to the
Company (the “ Anti-takeover
Laws ”),
including without limitation Section 203 of the DGCL, will not
apply with respect to or as a result of this Agreement and the
transactions contemplated hereby, including the Merger, without any
further action on the part of the stockholders of the Company or
the Board. True, correct and complete copies of all resolutions of
the Board reflecting such actions have been previously provided to
Parent. Other than Section 203 of the DGCL, no Anti-takeover Law is
applicable to, or purports to be applicable to, the Merger or the
other transactions contemplated by this
Agreement.
(c)
The Board, at a
meeting duly called and held and at which all directors were
present, has (i) unanimously approved and declared advisable this
Agreement, including the Merger and the Transactions contemplated
hereby, (ii) determined that this Agreement and the Transactions
contemplated hereby are fair to, and in the best interests of, the
holders of Shares, and (ii) approved the making of the Offer and
resolved to recommend that stockholders of the Company adopt this
Agreement and that such matter be submitted for consideration at
the Stockholders’ Meeting.
(d)
The Board has duly
and validly approved and taken all corporate action required to be
taken by the Board to grant the Top-Up Option and to issue the
Top-Up Option Shares upon the exercise thereof. True, correct and
complete copies of all resolutions of the Board reflecting such
actions have been previously provided to Parent. Assuming that the
authorizations, consents and approvals referred to in Section
4.05(b) and the filings referred to in Section 4.05(b) are timely
made, none of the grant of the Top-Up Option by the Company, the
exercise thereof by Parent and Purchaser or the issuance and sale
of the Top-Up Option Shares to Parent and Purchaser in respect of
such exercise, in each case, subject to and in accordance with
Section 2.03, will conflict with, or result in a violation or
breach of, any provision of applicable Laws or any judgment,
injunction, order or decree of any Governmental Authority, or
require any action, consent, approval, authorization or permit of,
action by, or filing with or notification to, any Governmental
Authority.
(e)
A compensation
committee or a committee of the Board that performs functions
similar to a compensation committee has duly and validly approved
and taken all corporate action required to be taken by the Board to
(i) defer the annual non-management director option grants, (ii) to
grant the bonuses to non-management directors at the December 2007
Board meeting in accordance with Rule 14d-10 of the Exchange Act
and (iii) except as set forth in Section 4.04(e) of the Disclosure
Schedule, to cause management’s employment or change in
control agreements to comply with Section 409A of the Code. True,
correct and complete copies of all resolutions of the committee
reflecting such actions have been previously provided to
Parent.
(f)
The affirmative vote
(in person or represented by proxy) at the Stockholders’
Meeting, or at any adjournment or postponement thereof, of a
majority of the votes entitled to be cast by the holders of
outstanding Shares in favor of the adoption of this Agreement, is
(unless the Merger is consummated in accordance with Section 253 of
the DGCL as contemplated by Section 7.01(b)) the only vote or
approval of the holders of any class or series of capital stock of
the Company or any Subsidiary necessary to adopt this
Agreement.
SECTION 4.05
No
Conflict; Required Filings and Consents
.
(a)
The execution and
delivery of this Agreement by the Company do not, and the
performance of this Agreement and the consummation of the
Transactions by the Company will not, (i) conflict with
, violate or result in any breach of
the Certificate of
Incorporation or By-laws or any equivalent organizational documents
of the Company or any Subsidiary, (ii) assuming that all consents,
approvals and other authorizations described in Section
4.05(b) and
the approval of the holders of the Shares described in Section
4.04(f) have
been obtained and that all filings and other actions described in
Section 4.05(b) have been made or taken, conflict with or
violate or
result in any breach of any federal or state statute,
law, regulation, judgment or decree ( a “ Law
”
) applicable to the
Company or any Subsidiary or by which any property or asset of the
Company or any Subsidiary is bound or affected, or (iii) result in
any breach of or constitute a default (or an event which, with
notice or lapse of time or both, would become a default) under, or
give to others any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a L ien or other encumbrance on any
property or asset of the Company or any Subsidiary pursuant to, any
note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to
which the Company or any Subsidiary is a party or by which the
Company or a Subsidiary or any property or asset of the Company or
any Subsidiary is bound or affected, except, with respect to
clauses (ii) and (iii), for any such conflicts, violations,
breaches, defaults or other occurrences which would not
, individually or in
the aggregate, have a Material Adverse
Effect.
(b)
The execution and
delivery of this Agreement by the Company do not, and the
performance of this Agreement by the Company and consummation of the
Transactions will not, require any consent,
approval, waiver authorization or permit of, or
filing with or notification to, any United States federal, state or
foreign government, regulatory authority, or any court, tribunal or
judicial body (a “ Governmental
Authority ” ), except for (i) applicable
requirements, if any, of the Exchange Act, the NASDAQ rules,
state securities or
“blue sky” laws ( “ Blue
Sky Laws ” ) and state takeover laws, (ii)
the pre-merger notification requirements of the HSR Act,
and filings under
foreign competition laws, (iii) the filing and recordation of the
Certificate of Merger and other documents as required by the DGCL,
and (iv) where the failure to obtain such consents,
approvals, waivers authorizations or permits, or to
make such filings or notifications, would not , individually or in the
aggregate, have a Material Adverse
Effect.
SECTION 4.06
Permits;
Compliance
. Each of the Company and the Subsidiaries is in possession of all
material licenses, permits certificates, and approvals of any
Governmental Authority necessary for each of the Company or the
Subsidiaries to own, lease and operate its properties and assets or
to carry on its business as it is now being conducted (the “
Permits
”). As of the date of this Agreement, no suspension or
cancellation of any of the Permits is pending or, to the knowledge
of the Company, threatened. Neither the Company nor any Subsidiary
is in
conflict with, or in default, breach or violation of, (a) any Law
applicable to the Company or any Subsidiary or by which any
property or asset of the Company or any Subsidiary is bound or
affected or (b) any contract, Permit or other instrument or
obligation to which the Company or any Subsidiary is a party or by
which the Company or any Subsidiary or any property or asset of the
Company or any Subsidiary is bound, except for any such conflicts,
defaults, breaches or violations that would not, individually or in
the aggregate, have a Material Adverse Effect.
SECTION 4.07
SEC
Filings; Financial Statements
.
(a)
The Company
has timely filed all forms, reports and
documents required to be filed by it with the SEC since December
31, 200
5 (the
“
SEC
Reports ” ). No Subsidiary is required to file
any report, proxy statement, registration statement, form, schedule
or other document with the SEC . The SEC Reports (i) were
prepared in accordance with either the requirements of the
Securities Act of 1933, as amended ( together with the rules and
regulations thereunder, the “ Securities
Act ” ), or the Exchange Act, as the
case may be, and (ii) did not, at the time
they were filed, or, if amended, as of the date of such amendment,
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 made therein, in the light of the
circumstances under which they were made, not
misleading.
(b)
The Company has
devised and maintains a system of internal accounting controls
(within the meaning of Rules 13a-15(f) and 15d-15(f) of the
Exchange Act) sufficient to provide reasonable assurances regarding
the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with
United States generally accepted accounting principles
(“ GAAP
”). The Company
(i) has designed disclosure controls and procedures (within the
meaning of Rules 13a-15(e) and 15d-15(e) of the Exchange Act) to
ensure that information material to the Company and the
Subsidiaries, taken as a whole, relating to it and any Subsidiary
is made known to the management of the Company by others within the
Company or any Subsidiary as appropriate to allow timely decisions
regarding required disclosure and to make the certifications
required by the Exchange Act with respect to the SEC Reports and
(ii) has disclosed, based upon the Company’s most recent
evaluation, to its auditors and the audit committee of the Board
(1) any significant deficiencies in the design or operation of
internal controls which could adversely affect in any material
respect the Company’s ability to record, process, summarize
and report financial data and have disclosed to its auditors any
material weaknesses in internal controls and (2) any fraud, whether
or not material, that involves management or other employees who
have a significant role in the Company’s internal controls.
The Company has provided to Parent copies of any such disclosure
set forth in clause (1) or clause (2) of the preceding
sentence.
(c)
Neither the Company
nor any Subsidiary nor the chief executive officer or the chief
financial officer of the Company or any Subsidiary is aware of, and
neither the Board nor the board of directors of any Subsidiary nor,
to the knowledge of the Company, the Company's auditors or the
auditors of any Subsidiary has been advised of (i) any fact,
circumstance or change that is reasonably likely to result in a
"significant deficiency" or a "material weakness" (each as defined
in Public Company Accounting Oversight Board Auditing Standard 2)
in the Company's internal controls over its consolidated financial
reporting or (ii)
any fraud, whether or
not material, that involves management or other employees who have
a significant role in the Company's internal controls over its
consolidated financial reporting.
(d)
The Company and each
of its officers and directors are in compliance with, and has
complied with, in each case in all material respects, the
provisions of the Sarbanes-Oxley Act of 2002 and the rules and
regulations promulgated under such act and the Exchange Act
(collectively, “ Sarbanes
Oxley ”)
and the rules and regulations of the NASDAQ that are applicable to
the Company. The Company’s auditors and Chief Executive
Officer and Chief Financial Officer have given all certifications,
attestations and reports required pursuant to the rules and
regulations adopted pursuant to Section 404 of the
Sarbanes-Oxley.
SECTION 4.08
Financial
Statements; No Undisclosed Liabilities
.
(a)
The audited
consolidated financial statements of the Company (including any
related notes thereto) included in the SEC Reports complied, as of
their respective dates, with applicable accounting requirements,
were prepared in accordance with GAAP as in effect on the dates of
such financial statements, applied on a consistent basis throughout
the periods involved (except as may be indicated in the notes
thereto), and fairly present in all material respects the
consolidated financial position of the Company and the Subsidiaries
at the respective dates thereof and the consolidated statements of
operations and cash flows for the periods indicated therein. The
unaudited consolidated financial statements of the Company
(including any related notes thereto) for all interim periods
included in the SEC Reports complied, as of their respective dates,
with applicable accounting requirements, have been prepared in
accordance with GAAP as in effect on the dates of such financial
statements, applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto), and
fairly present in all material respects the consolidated financial
position of the Company and the Subsidiaries at of the respective
dates thereof and the consolidated statements of operations and
cash flows for the periods indicated therein (subject to normal
period-end adjustments).
(b)
Except (i) as set
forth, reflected or reserved against in the consolidated balance
sheet (including the notes thereto) of the Company included in the
Company’s Form 10-K for the 2007 calendar year, as amended,
(the “ Company
2007 Form 10-K ”) or (ii) for liabilities
and obligations incurred since December 31, 2007 in the ordinary
course of business consistent with past practice, neither the
Company nor any Subsidiary has any liabilities or obligations of
any nature (whether known or unknown, accrued, absolute, contingent
or otherwise and whether due or to become due) except for such
liabilities and obligations which would not, individually or in the
aggregate, reasonably be expected to be material to the Company and
the Subsidiaries, taken as a whole.
SECTION 4.09
Absence
of Certain Changes or Events
. Since December 31, 2007, except as contemplated by this
Agreement, (a) the Company and the Subsidiaries have conducted
their respective businesses in the ordinary course consistent with
past practice, (b) since such date there has not been any change,
event, fact, occurrence, effect or development (including the
incurrence of liabilities of any nature) which, (i) individually or
in the aggregate, has had or would have a Material Adverse Effect
or (ii) would, individually or in the aggregate, reasonably be
expected to prevent or materially delay the performance of this
Agreement by the Company
or the consummation of the Transactions, and (c) none of the
Company or any Subsidiary has taken any action that, if taken after
the date of this Agreement, would require the consent of Parent
under Section 6.01.
SECTION 4.10
Absence
of Litigation
. Section 4.10 of the Disclosure Schedule, sets forth any
litigation, action or proceeding (an “ Action
”) pending or, to the knowledge of the Company, threatened
against the Company or any Subsidiary, any employee benefit plan,
any present or former officer or director of the Company or any
Subsidiary in their respective capacities as such, or any property
or asset of the Company or any Subsidiary, before any Governmental
Authority. Neither the Company nor any Subsidiary nor any property
or asset of the Company or any Subsidiary is subject to any
continuing order of, or consent decree, settlement agreement or
similar written agreement with, any Governmental Authority, or any
order, judgment, injunction or decree of any Governmental
Authority. No investigation or inquiry by any Governmental
Authority with respect to the Company or any Subsidiary is pending
or, to the knowledge of the Company, threatened, in each case with
respect to any alleged or claimed violation of Law applicable to
the Company or any Subsidiary, or by which any property or asset of
the Company or any Subsidiary is bound or affected.
SECTION 4.11
Employee
Benefit Plans
.
(a)
Section
4.11
(a)(i) of the
Disclosure Schedule lists (i) all employee benefit plans (as
defined in Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ( “ ERISA
”
)) and all bonus,
stock option, stock purchase, restricted stock, incentive, deferred
compensation, retiree medical or life insurance, supplemental
retirement, severance or other benefit plans, programs or
arrangements, and all employment, termination, severance or other
contracts or agreements to which the Company or any Subsidiary is a
party, with respect to which the Company or any Subsidiary has any
obligation or which are maintained, contributed to or sponsored by
the Company or any Subsidiary for the benefit of any
current or
former employee, officer or director of
the Company or any Subsidiary, (ii) each employee benefit plan for
which the Company or any Subsidiary could incur liability under
Section 4069 of ERISA in the event such plan has been or were to be
terminated, (iii) any plan in respect of which the Company or any
Subsidiary could incur liability under Section 4212(c) of ERISA,
and (iv) any contracts, arrangements or understandings between the
Company or any Subsidiary and any current or former
employee of the
Company or any Subsidiary, including, without limitation, any
contracts, arrangements or understandings relating to a sale
of or similar
transaction involving the Company or any Subsidiary
(collectively, the “ Plans
”
). Except as set
forth on Section 4.11(a)(ii) of the Disclosure Schedule, the
Company has provided or made available to Parent a true
and complete copy (or if such Plan is not contained
in a written document, a description thereof) of (A) such Plans,
including all
amendments thereto, and (B) the most recent
summary plan
description for each Plan, if any, (C) the two most recent annual
reports (Form
5500) filed with the Internal Revenue Service ( the “ IRS
”
), if any, (
D ) the most recently received IRS
determination letter, if any, relating to a Plan, and (
E ) the most recently prepared
actuarial report or financial statement, if any, relating to a
Plan. All items listed on Section 4.11(a)(ii) of the Disclosure
Schedule will be provided or made available to Parent as soon as
reasonably practicable following the date
hereof.
(b)
Each Plan has been
operated in all material respects in accordance with its terms and
the requirements of all applicable Laws, including, without
limitation, ERISA and the Code . No Action is pending or, to the
knowledge of the Company, threatened with respect to any Plan
(other than claims for benefits in the ordinary course) that
would be
expended to result in a material liability .
(c)
Each Plan that is
intended to be qualified under Section 401(a) of the Code or
Section 401(k) of the Code has received a favorable determination
letter from the IRS and each trust established in connection with
any Plan which is intended to be exempt from federal income
taxation under Section 501(a) of the Code has received a
determination letter from the IRS that it is so exempt, and no fact
or event has occurred since the date of such determination letter
or letters from the IRS to adversely affect the qualified status of
any such Plan or the exempt status of any such
trust.
(d)
Except as set forth
in Section 4.11(d) of the Disclosure Schedule, neither the
execution and delivery of this Agreement nor the consummation of
the transactions contemplated hereby (either alone or in
conjunction with any other event) will (i) result in any payment
(including, without limitation, severance, unemployment
compensation, “excess parachute payment” (within the
meaning of Section 280G of the Code), forgiveness of indebtedness
or otherwise) becoming due to any director or any employee of the
Company or any Subsidiary from the Company or any Subsidiary under
any Plan or otherwise, (ii) increase any benefits otherwise payable
under any Plan, (iii) result in any acceleration of the time of
payment or vesting of any such benefits, except as specifically
contemplated herein, or (iv) require the funding of any such
benefits.
(e)
The Company has no
plan or commitment, whether legally binding or otherwise, to create
any additional Plan or to modify or change any existing Plan,
except as may be required by applicable Law , including Section 409A of the
Code.
(f)
No Plan is subject to
Title IV of ERISA. Neither the Company nor any ERISA Affiliate
made, or was required to make, contributions to any plan subject to
Title IV of ERISA during the five (5) year period ending on the
last day of the most recent plan year ended prior to the Effective
Time. No liability under Title IV or Section 302 of ERISA has been
incurred by the Company or an ERISA Affiliate that has not been
satisfied in full, and no condition exists that presents a risk of
such liability. No Plan is a “multiemployer plan” (as
such term is defined in section 3(37) of
ERISA).
(g)
No employee, director
or consultant of the Company or any Subsidiary is or will become
entitled to post-employment benefits by reason of service to the
Company or the Subsidiaries, other than coverage mandated by
applicable Law or contracts or plans as set forth in Section
4.11(g) of the Disclosure Schedule.
(h)
None of the Plans
restrict the ability of the Company or the Subsidiaries to amend or
terminate such Plan , except as set forth therein or
as required by Law.
(i)
To the extent
applicable, all amounts paid by the Company or any Subsidiary to
any of their respective “covered employees” (as such
term is defined in Section
162(m) of the Code)
have been deducted by the Company or the Subsidiaries, as
applicable, in accordance with the provisions of Section 162(m) of
the Code.
(j)
Each Plan that is a
“nonqualified deferred compensation plan” (as defined
in Section 409A(d)(1) of the Code) has been operated and
administered in good faith compliance with Section 409A of the Code
and the regulations and other authoritative guidance
thereunder.
(k)
Each Plan that is
maintained pursuant the Laws of a country other than the United
States is in material compliance with all such applicable Laws,
including relevant Laws with respect to Taxes and the requirements
of any trust deed under which such Plan is
established.
SECTION 4.12
Labor
Matters
. (a) There are no material controversies pending or, to the
knowledge of the Company, threatened between the Company or any
Subsidiary and any of their respective employees; (b) neither the
Company nor any Subsidiary is a party to any collective bargaining
agreement or other labor union contract applicable to persons
employed by the Company or any Subsidiary, nor, to the knowledge of
the Company, are there any activities or proceedings of any labor
union to organize any such employees; and (c) there is no strike,
slowdown, work stoppage or lockout by or with respect to any
employees of the Company or any Subsidiary.
SECTION 4.13
Offer
Documents; Schedule 14D-9; Proxy Statement
. Neither the Schedule 14D-9 nor any information supplied by the
Company for inclusion in the Offer Documents shall, at the times
the Schedule 14D-9, the Offer Documents or any amendments or
supplements thereto are filed with the SEC or are first published,
sent or given to stockholders of the Company, as the case may be,
contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances
under which they were made, not misleading. Neither the proxy
statement to be sent to the stockholders of the Company in
connection with the Stockholders’ Meeting (as defined in
Section 7.01) nor the information statement to be sent to such
stockholders, as appropriate (such proxy statement or information
statement, as amended or supplemented, being referred to herein as
the “ Proxy
Statement ”), shall, at the date the Proxy Statement
is first mailed to stockholders of the Company or at the time of
the Stockholders’ Meeting, contain any statement which, at
the time and in light of the circumstances under which it was made,
is false or misleading with respect to any material fact, or which
omits to state any material fact necessary in order to make the
statements therein not false or misleading or necessary to correct
any statement in any earlier communication with respect to the
solicitation of proxies for the Stockholders’ Meeting which
shall have become false or misleading. Notwithstanding the
foregoing, the Company makes no representation or warranty with
respect to any information supplied by Parent, Purchaser or any of
Parent’s or Purchaser’s representatives for inclusion
in the foregoing documents. The Schedule 14D-9, the Offer Documents
and the Proxy Statement shall comply in all material respects as to
form with the requirements of the Exchange Act.
SECTION 4.14
Property
and Leases
.
(a)
The Company and the
Subsidiaries have good and valid title to all their
personal properties and assets reflected on the Company’s
audited balance sheet (including in any related notes thereto) and
included in the Company Form 10-K for the year ended December 31,
2007 or acquired after December 31, 2007 (other than assets
disposed of since December 31, 2007 in the ordinary course of
business consistent with past practice), (the “
Personal
Property ”) to conduct their respective
businesses as currently conducted or as contemplated to be
conducted .
The Personal Property comprises all of the personal property and
assets necessary to carry on the Company’s and each
Subsidiary’s respective business, as currently conducted and
consistent with past practice. All Personal Property is in good
condition and in a state of good maintenance and repair (ordinary
wear and tear excepted) and are suitable for the use to which they
are presently put.
(b)
Neither the Company
nor any Subsidiary (i) owns or has any ownership interest in any
real property or (ii) is obligated under, or a party to, any
contract to purchase any real property, including, without
limitation, any Leased Property (as defined below)
.
(c)
Section
4.14(c
) of the Disclosure
Schedule sets
forth a true, correct and complete list of (i) all real property
leased, subleased, licensed or otherwise used or occupied by the
Company or any Subsidiary’s (the “ Leased
Property ”), which list includes the
name of the entity leasing such property, the legal address and the
use thereof, and (ii) each lease, sublease, license or other
agreement granting to any person or group of persons, other than
Company and its affiliates, a right to the use, occupancy or
enjoyment of any Leased Property or any portion thereof (the
“ Company
Subleases ”). The Company or a
Subsidiary has a good and valid leasehold or other interest in the
Leased Property, free and clear of any Liens other than Permitted
Liens. The Leased Property is neither subject to any
governmental decree or order to be sold nor is being condemned,
expropriated or otherwise taken by any public authority
, with or without payment of
adequate
compensation
therefor, nor, to the knowledge of the Company, has any such
condemnation, expropriation or taking been proposed in writing to
the Company or any Subsidiary. The Company has made available to
Parent correct and complete copies of all leases, subleases,
licenses and other agreements (including all amendments,
modifications, supplements, and extensions thereof) granting rights
of use, occupancy or enjoyment to the Company and/or any Subsidiary
with respect to the Leased Property (the “
Company Leases ” and together with the
Company Subleases, the “ Leases
”) and copies
of all Company Subleases (including all amendments, modifications,
supplements, and extensions thereof).
(d)
Each Lease is a valid
and binding obligation of the Company (or, if a Subsidiary is a
party, such Subsidiary) and is in full force and effect. Neither
the Company nor any Subsidiary (i) is in default under any Lease
nor does any condition exist that, with the passage of time or the
giving of notice, would cause such a default under such Lease, or
(ii) has received written notice of any cancellation or termination
of any Lease. Except as covered by adequate insurance, there is no
material physical damage caused by any casualty to any Leased
Property. The Leased Property comprises all of the real property
necessary to carry on the Company’s and each
Subsidiary’s respective business as currently conducted and
consistent with past practice. The Leased Property and the
buildings, fixtures and improvements located
thereon
are in good operating
condition and repair (subject to normal wear and tear), and
suitable for the use to which they are presently
put.
SECTION 4.15
Intellectual
Property
.
(a)
Section 4.15(a) of
the Disclosure Schedule sets forth a true, correct, and complete
list of all U.S. and foreign applications and registrations for any
patents, trademarks, service marks, copyrights, and domain names
owned by the Company or any Subsidiary. The Company or a Subsidiary
is the sole and exclusive beneficial and record owner of all of the
Intellectual Property items set forth in Section 4.15(a) of the
Disclosure Schedule, all such Intellectual Property is subsisting,
no claim has been made by any third party in writing to the Company
or a Subsidiary challenging the validity or enforceability of such
Intellectual Property and, to the knowledge of the Company, there
is no valid basis for such a claim.
(b)
Section 4.15(b) of
the Disclosure Schedule sets forth a true, correct, and complete
list of all contracts in effect to which the Company or any
Subsidiary is a party or to which the Company or any Subsidiary is
bound as of the date of this Agreement (i) granting or obtaining
any right to use any material Intellectual Property (other than
contracts granting rights to use commercially available computer
software having an acquisition price of less than $250,000 in the
aggregate for any contract or group of related contracts), (ii)
permitting any person (other than the Company’s or a
Subsidiary’s counsel on behalf and in the name of such
Company or Subsidiary) to register any material Intellectual
Property owned or purported to be owned by the Company or any
Subsidiary, or settlement, coexistence, non-assertion or covenant
not to sue agreements in each case restricting the Company’s
or a Subsidiary’s rights to use or register material
Intellectual Property, or (iii) requiring Parent to license or make
available its or its affiliates’ owned material Intellectual
Property to any other person as a result of the transactions
contemplated by this Agreement, including the Merger (collectively,
the “ IP
Contracts ”) , provided
, that the term IP
Contracts and the requirements of (i) above shall not include (a)
purchaser orders or sales contracts issued by or entered into by
the Company in the ordinary course of business, or (b)
non-exclusive license agreements entered into by the Company in the
ordinary course of business, if and to the extent that the
contracts in the foregoing clauses (a) and (b) either are not
material or otherwise are disclosed in Section 4.19(a) of the
Disclosure Schedule.
(c)
Except as would
not ,
individually or in the aggregate, have a Material Adverse
Effect, (i ) to the knowledge of the
Company, the conduct of the business of the Company and the
Subsidiaries as currently conducted does not infringe the
Intellectual Property rights of any third party and there is no such claim
pending or, to the knowledge of the Company, threatened against any
of the Company or the Subsidiaries, (ii) to the knowledge of the
Company, no person is infringing or otherwise violating any
Intellectual Property owned by or exclusively licensed to the
Company or the Subsidiaries, and no such claims are pending or
threatened against any person by any of the Company or the
Subsidiaries, (iii ) with respect to Intellectual
Property owned by , licensed to or used by the Company or a
Subsidiary ,
to the Company's knowledge, such Company or Subsidiary has the right to use
such Intellectual Property in the operation of its business as
currently conducted, ( iv ) the Company and the
Subsidiaries have taken reasonable steps in accordance with normal
industry practice to maintain the
