Exhibit 2.1
AGREEMENT AND PLAN OF
MERGER
by and among:
CYPRESS SEMICONDUCTOR
CORPORATION ,
a Delaware corporation;
COPPER ACQUISITION
CORPORATION ,
a Delaware corporation; and
SIMTEK CORPORATION,
a Delaware corporation
___________________________
Dated as of August 1, 2008
___________________________
AGREEMENT AND PLAN OF
MERGER
THIS AGREEMENT AND PLAN OF
MERGER (“
Agreement ”) is made and entered into as of August 1,
2008, by and among, CYPRESS SEMICONDUCTOR CORPORATION , a
Delaware corporation (“ Parent ”); Copper
Acquisition Corporation, a Delaware corporation and a wholly owned
subsidiary of Parent (“ Acquisition Sub ”); and
SIMTEK CORPORATION , a Delaware corporation (the “
Company ”). Certain capitalized terms used in
this Agreement are defined in Exhibit A .
RECITALS
A .
It is proposed that Acquisition Sub make
a tender offer to acquire all of the issued and outstanding Company
Shares at a price of $2.60 per Company Share (the “ Per
Share Amount ”), net to the holder thereof in cash, all
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 .”)
B.
It is further proposed that, after the
acceptance for payment of Company Shares tendered pursuant to the
Offer, Acquisition Sub merge with and into the Company, and each
Company Share that is not tendered and accepted for payment
pursuant to the Offer will thereupon be cancelled and converted
into the right to receive the Per Share Amount 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 ”).
C .
Each of the Boards of Directors of
Parent, Acquisition Sub and the Company has (i) determined
that this Agreement is advisable, (ii) determined that this
Agreement and the transactions contemplated hereby, including the
Offer and the Merger, are at a price and on terms that are in the
best interests of their respective stockholders and
(iii) approved this Agreement and the transactions
contemplated hereby, including the Offer and the Merger, all upon
the terms and subject to the conditions set forth
herein.
D .
Concurrently with the execution and
delivery of this Agreement, and as a material inducement to Parent
to enter into this Agreement, certain stockholders of the Company
are executing and delivering Transaction Support Agreements in
favor of Parent and Acquisition Sub (the “ Transaction
Support Agreements ”).
E .
Concurrently with the execution and
delivery of this Agreement, and as a material inducement to Parent
to enter into this Agreement, certain key employees are entering
into offer letters with Parent.
F.
Concurrently with the execution and
delivery of this Agreement, and as a condition and inducement to
Parent and Sub to enter into this Agreement, the Selected
Stockholder is entering into a Non-Competition Agreement with
Parent.
G.
For U.S. federal income tax purposes, the
parties to this Agreement will treat the Offer and the Merger as
integrated transactions that result in Parent’s taxable
acquisition of all of the issued and outstanding Company Shares in
exchange for the Per Share Amount.
AGREEMENT
In consideration of the foregoing
premises and the representations, warranties, covenants and
agreements set forth herein, as well as other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged and accepted, and intending to be legally bound
hereby, Parent, Acquisition Sub and the Company hereby agree as
follows:
SECTION 1 . THE OFFER
1.1
Tender Offer .
(a)
Provided that this Agreement shall not
have been previously terminated in accordance with Section 7
, as promptly as practicable, but in any event within ten business
days after the date of this Agreement (unless the Company is not
prepared to file the Schedule 14D-9 with the SEC on the same
day that Parent and Acquisition Sub are prepared to commence
(within the meaning of Rule 14d-2 under the Exchange Act) the
Offer, in which event Parent and Acquisition Sub shall not be
required to commence the Offer until the Company is prepared to
file the Schedule 14D-9 with the SEC), Acquisition Sub shall
commence (within the meaning of Rule 14d-2 under the Exchange Act)
the Offer for all of the outstanding Company Shares, at a price per
Company Share equal to the Per Share Amount (subject to the terms
of Section 1.1(f) ). (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 .”). The obligation of
Acquisition Sub to accept for payment Company Shares tendered
pursuant to the Offer shall be subject only to the satisfaction or
waiver of each of the conditions set forth in Annex I (the
“ Offer Conditions ”) (and shall not be subject
to any other conditions).
(b)
Subject to the terms and conditions of
this Agreement, Acquisition Sub shall (and Parent shall cause
Acquisition Sub to) accept for payment and pay for all Company
Shares tendered pursuant to the Offer (and not validly withdrawn)
as promptly as practicable after the expiration date of the Offer
(as it may be extended pursuant to Section 1.1(d) ).
The Per Share Amount payable in respect of each Company
Share validly tendered and not withdrawn pursuant to the Offer
shall be paid net to the holder thereof in cash, subject to
Section 1.1(g) .
(c)
Parent and Acquisition Sub expressly
reserve the right to increase the Per Share Amount or to make any
other changes in the terms and conditions of the Offer;
provided, however , that unless previously approved by the
Company in writing, neither Parent nor Acquisition Sub shall:
(i)
change or waive the Minimum Condition (as
defined in Annex I );
(ii)
decrease the number of Company Shares
sought to be purchased in the Offer;
(iii)
subject to Section 1.1(f) , reduce
the Per Share Amount;
(iv)
extend the expiration date of the Offer
(other than pursuant to and in accordance with Section
1.1(d) );
(v)
change the form of consideration payable
in the Offer;
(vi)
impose any condition to the Offer in
addition to the Offer Conditions; or
(vii)
amend, modify or supplement the
conditions to the Offer set forth in Annex I hereto so
as to broaden the scope of such conditions to the Offer or
otherwise in a manner that materially and adversely affects the
terms or conditions on which holders of Company Shares may
participate in the Offer.
(d)
Subject to the terms and conditions of
this Agreement and the Offer, the Offer shall expire at midnight,
Eastern time, on the date that is twenty (20) business days (for
this purpose calculated in accordance with Section 14d-1(g)(3)
under the Exchange Act) after the Offer Commencement Date;
provided, however , that notwithstanding the foregoing or
anything to the contrary set forth in this Agreement,
(i) Acquisition Sub shall extend the Offer for any period
required by any rule, regulation, interpretation or position of the
SEC or its staff or the Nasdaq that is applicable to the Offer,
(ii) in the event that any of the conditions to the Offer,
including the Minimum Condition and the other conditions set forth
on Annex I hereto, are not satisfied or waived as of any
then scheduled expiration date of the Offer, Acquisition Sub
shall, at the request of the Company or may, at its option, extend
the Offer for one (1) successive ten (10) Business Day period in
order to permit the satisfaction of such conditions to the Offer,
after which ten (10) Business Day period, Acquisition Sub may (but
shall not be required to) extend the Offer for one (1) or more
successive extension periods of ten (10) Business Days each in
order to permit the satisfaction of the conditions to the Offer;
(iii) in the event that the condition to the Offer set forth
in clause 2 of Annex I hereto is not satisfied or waived as
of any then scheduled expiration date of the Offer, but all of the
other conditions to the Offer set forth on Annex I hereto
(other than the condition to the Offer set forth in clause 3 of
Annex I hereto, and other than the condition set forth in
clause 4(e)(ii) of Annex I hereto to the extent arising out
of the same group of facts and circumstances that have led to the
failure of the condition to the Offer set forth in clause 2 of
Annex I hereto to be satisfied) shall have been satisfied or
waived on or prior to such time, then Acquisition Sub shall extend
the Offer for successive ten (10) Business Day periods each in
order to permit the satisfaction of such condition to the Offer;
(iv) in the event that (A) the Minimum Condition has been
satisfied, (B) there is a breach of a covenant of the Company or an
inaccuracy in a representation or warranty of the Company, in
either case such that one or more of the conditions set forth in
clause 4(a) or clause 4(b) of Annex I hereto have not been
satisfied or waived as of any then scheduled expiration date of the
Offer and (C) the breach or inaccuracy is capable of being cured
within twenty (20) calendar days after delivery of written notice
from Parent to the Company of such breach or inaccuracy, then,
Acquisition Sub shall, at the request of the Company, extend the
Offer for one (1) or more successive extension periods of up to ten
(10) Business Days each in order to permit the satisfaction of such
conditions to the Offer, with the last such extension period ending
not earlier than the date on which Parent would be entitled to
terminate this Agreement pursuant to Section 7.1(f)(i) on
account of such breach or inaccuracy, and (v) in the event
that all of the conditions to the Offer set forth in Annex I
, except the Minimum Condition, are satisfied or waived as of any
then scheduled expiration date of the Offer, Acquisition Sub shall,
at the request of the Company or may, at its option, extend the
Offer for one (1) successive ten (10) Business Day period in order
to permit the satisfaction of the Minimum Condition, after which
ten (10) Business Day period, Acquisition Sub may (but shall not be
required to) extend the Offer for one (1) or more successive
extension periods of ten (10) Business Days each in order to permit
the satisfaction of the Minimum Condition; provided, however
, that notwithstanding the foregoing clauses (ii) - (v) of this
Section 1.1(d) , inclusive, in no event shall
Acquisition Sub be required to extend the Offer beyond the
Termination Date; and provided further , that the foregoing
clauses (ii) - (v) of this Section 1.1(d) , inclusive,
shall not be deemed to impair, limit or otherwise restrict in any
manner the right of Parent or the Company to terminate this
Agreement pursuant to the terms of Section 7
hereof.
(e)
Acquisition Sub may (but shall not be
required to), in its discretion, elect to provide for a subsequent
offering period in accordance with Rule 14d-11 under the Exchange
Act of not less than three (3) nor more than twenty (20) Business
Days, which subsequent offering period shall commence immediately
following the Acceptance Time. Subject to the terms and
conditions of this Agreement and the Offer, Acquisition Sub shall
(and Parent shall cause Acquisition Sub to) accept for payment, and
pay for, all Company Shares validly tendered and not withdrawn
pursuant to the Offer as so extended by such subsequent offering
period, as promptly as practicable after any such Company Shares
are tendered during such subsequent offering period. The Per
Share Amount payable in respect of each Company Share validly
tendered and not withdrawn pursuant to the Offer, as so extended by
such subsequent offering period, shall be paid net to the holder
thereof in cash, subject to reduction only for any applicable U.S.
federal withholding or back-up withholding or other Taxes payable
by such holder.
(f)
If, between the date of this Agreement
and the Acceptance 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.
(g)
Each of Acquisition Sub, Parent and the
depositary for the Offer shall be entitled to deduct and withhold
from any amounts payable pursuant to the Offer such amounts as are
required to be deducted or withheld therefrom under U.S. federal or
state, local or non-U.S. law. To the extent that such amounts
are so deducted or withheld, such amounts shall be treated for all
purposes under this Agreement as having been paid to the Person to
whom such amounts would otherwise have been paid.
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 (together with all amendments
and supplements thereto, including all exhibits thereto, the
“Schedule TO”) with respect to the Offer, which will
contain as an exhibit or incorporate by reference Acquisition
Sub’s offer to purchase, or portions thereof (the
“Offer to Purchase”) and related letter of transmittal
(the forms of which shall be reasonably acceptable to the Company)
and the related form of summary advertisement, if any, in respect
of the Offer (such 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 and Acquisition
Sub in writing all information concerning the Company that may be
reasonably requested by Parent and Acquisition Sub for inclusion in
the Offer Documents. 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 and all other Legal Requirements. The
Company and its counsel shall be given a reasonable opportunity to
review and comment on the Offer Documents prior to the filing
thereof with the SEC or the dissemination thereof to the
Company’s stockholders. 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 and
shall, to the extent practicable, give the Company and its counsel
a reasonable opportunity to review and comment on any response to
such comments proposed to be provided to the SEC or its
staff.
(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 promptly correct any information provided by it for use in
the Offer Documents if such information shall have become false or
misleading in any material respect and (ii) each of Parent and
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 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(b) .
(c)
Without limiting the generality of
Section 8.10 , 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)
Company Determinations, Approvals and
Recommendations . The
Company hereby approves and consents to the Offer and represents
and warrants to Parent and Acquisition Sub that, at a meeting duly
called and held on or prior to the date hereof, the Board of
Directors of the Company has, upon the terms and subject to the
conditions set forth herein:
(i)
unanimously determined that this
Agreement is advisable;
(ii)
unanimously determined that this
Agreement and the transactions contemplated hereby, including the
Offer and the Merger are at a price and on terms that are in the
best interests of the Company and the holders of Company
Shares;
(iii)
unanimously approved this Agreement and
the transactions contemplated hereby, including the Offer and the
Merger, and the Transaction Support Agreements, and the
transactions contemplated thereby; and
(iv)
unanimously resolved to recommend that
the holders of Company Shares accept the Offer, tender their
Company Shares to Acquisition Sub pursuant to the Offer and, if
adoption of this Agreement by the holders of Company Shares is
required by applicable Legal Requirements, adopt this Agreement in
accordance with the applicable provisions of the DGCL (the “
Company Board Recommendation ”);
provided, however
, that the Company Board Recommendation
may be withheld, withdrawn, amended or modified in accordance with
the terms of Section 5.3 .
(b)
Concurrently with the filing of the
Schedule TO, the Company shall file with the SEC and (following or
contemporaneously with the initial dissemination of the Offer
Documents to holders of Company Shares to the extent required by
applicable federal securities laws and subject to the final
sentence of Section 1.3(c) ) disseminate to holders of
Company Shares a Solicitation/Recommendation Statement on Schedule
14D-9 (together with any amendments or supplements thereto and
including all exhibits thereto, the “Schedule 14D-9”)
that, subject to Section 5.3 , shall contain the
determinations and approvals of the Company’s Board of
Directors and the Company Board Recommendation. Each of
Parent and Acquisition Sub shall promptly furnish to the Company in
writing all information concerning Parent and Acquisition Sub that
may be reasonably requested by the Company for inclusion in the
Schedule 14D-9. The Company shall cause the
Schedule 14D-9 to comply in all material respects with the
Exchange Act and all other Legal Requirements. Parent and its
counsel shall be given a reasonable opportunity to review and
comment on the Schedule 14D-9 (including any amendment or
supplement thereto) prior to the filing thereof with the SEC or the
dissemination thereof to the Company’s stockholders.
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. The Company shall respond promptly to any
comments of the SEC or its staff with respect to the Schedule 14D-9
and give Parent and its counsel a reasonable opportunity to review
and comment on any response to such comments provided to the SEC or
its staff.
(c)
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 such information shall have become false or
misleading in any material respect, and (ii) the Company shall take
all steps necessary to promptly cause the Schedule 14D-9, as
supplemented or amended to correct such information, to be filed
with the SEC and to be disseminated to holders of Company Shares
(subject to the final sentence of this Section 1.3(c )).
Parent and Acquisition Sub shall promptly furnish to the Company
all information concerning Parent or Acquisition Sub that may be
reasonably requested by the Company in connection with any action
contemplated by this Section 1.3(c) . To the
extent requested by the Company, Parent shall cause the Schedule
14D-9 and any supplement or amendment thereto to be mailed or
otherwise disseminated to the Company’s stockholders together
with the Offer Documents disseminated to the Company’s
stockholders.
(d)
Subject to the provisions of
Section 5.3 , the Offer Documents may include a
description of the determinations and approvals of the Board of
Directors of the Company set forth in Section 1.3(a)
and the Company Board Recommendation. Subject to the
provisions of Section 5.3 , the Schedule 14D-9
shall include a description of the determinations and approvals of
the Board of Directors of the Company set forth in
Section 1.3(a) and the Company Board
Recommendation.
(e)
In connection with the Offer, the Company
shall instruct its transfer agent to furnish to Parent or
Acquisition Sub, promptly following a request by Parent or
Acquisition Sub, a list, as of the most recent practicable date,
but in no event as of a date more than 10 Business Days prior to
the date of the request, of the record holders of Company Shares
and their addresses, as well as mailing labels containing such
names and addresses and any available listing or computer files
containing the names and addresses of all record and beneficial
holders of Company Shares, and lists of security positions of
Company Shares held in stock depositories (including updated lists
of stockholders, mailing labels, listings or files of securities
positions), and such assistance as Parent or Acquisition Sub may
reasonably request for purposes of communicating the Offer to the
record and beneficial holders of Company Shares. Subject to
any and all Legal Requirements, and except for such steps as are
necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Merger, all information
furnished in accordance with this Section 1.3(e) shall be
(i) held in confidence by Parent and Acquisition Sub in accordance
with the requirements of the letter agreement, dated February 4,
2008, between Parent and the Company (the “
Confidentiality Agreement ”) and (ii) 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
and Committees; Section 14(f) of the Exchange Act
.
(a)
If requested by Parent, immediately
following the first time at which Acquisition Sub accepts for
payment any Company Shares tendered pursuant to the Offer (the
“ Acceptance Time ”) and from time to time
thereafter, the Company will 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 (after giving effect to any
increase in the number of directors pursuant to this Section
1.4(a) ) by (ii) the percentage that the total number of
Company Shares held by Parent and Acquisition Sub (after giving
effect to the Company Shares purchased pursuant to the Offer),
bears to the total number of the Company Shares then outstanding.
The Company will, at the election of Parent, either seek and
accept or otherwise secure the resignation of incumbent directors
or 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 have at least two (2) Continuing Directors; and provided
further, however , that notwithstanding the foregoing or
anything to the contrary set forth herein, the Company may, but
shall not be required to, take any reasonable action to replace any
of the Continuing Directors (or otherwise appoint any person to
serve as a “Continuing Director”) if no Continuing
Directors remain on the Board of Directors of the Company. In
the event that only one Continuing Director shall remain on the
Board of Directors of the Company (whether as a result of the
resignation of other Continuing Directors or for any other reason),
the sole remaining Continuing Director shall be entitled to elect
or designate another person to serve as a “Continuing
Director,” and the Company shall take all action to cause any
person so elected or designated to be appointed to the Board of
Directors of the Company (any person so appointed to the Board of
Directors of the Company being deemed to be a “Continuing
Director” for all purposes hereunder).
(b)
From time to time after the Acceptance
Time, the Company shall take all action necessary to cause the
individuals so designated by Parent to constitute substantially the
same percentage (rounding up where appropriate) as is on the Board
of Directors of the Company on (i) each committee of the Board
of Directors of the Company, (ii) each board of directors of
each Subsidiary of the Company and (iii) each committee of
each such board of directors of each Subsidiary of the Company, in
each case to the fullest extent permitted by all applicable Legal
Requirements, and specifically including the Marketplace Rules of
the Nasdaq Stock Market (the “ Nasdaq Marketplace
Rules ”). Promptly after the Acceptance Time, the
Company shall take all action necessary to elect to be treated as a
“controlled company” as defined by Rule 4350(c) of
the Nasdaq Marketplace Rules and make all necessary filings and
disclosures associated with such status.
(c)
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 required pursuant to this
Section 1.4 and Section 14(f) and Rule 14f-1
in order to fulfill its obligations under this
Section 1.4 , and shall include in the Schedule 14D-9
such information with respect to the Company and its officers and
directors, as Section 14(f) of the Exchange Act and Rule 14f-1
thereunder require in order to fulfill its obligations under this
Section 1.4 , so long as Parent shall have provided to the
Company all information with respect to Parent and its designees,
officers, directors and Affiliates required by Section 14(f) of the
Exchange Act and Rule 14f-1 thereunder. Parent shall promptly
supply to the Company in writing, and shall be solely responsible
for, all such information.
1.5
Actions by Directors
.
Following the election or appointment of Parent’s
designees to the Company’s Board of Directors pursuant to
Section 1.4(a) , and until the Effective Time, the approval
of a majority of the Continuing Directors (or the sole
Continuing Director if there shall be only one (1) Continuing
Director) shall be required to authorize (i) any amendment to or
termination of this Agreement by the Company, (ii) any amendment to
the Company’s Organizational Documents, (iii) any extension
of time for the performance of any of the obligations or other acts
of Parent or Acquisition Sub under this Agreement, (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, or (v) any other consent
or action by the Company’s Board of Directors with respect to
this Agreement or the Merger. The authorization of any such
matter by a majority of the Continuing Directors shall constitute
the authorization of such matter by the Board of Directors of the
Company, and no other action on the part of the Company or any
other director of the Company shall be required to authorize such
matter.
1.6
Top-Up
Option .
(a)
Subject to Sections 1.6(b) and
1.6(c) , the Company grants to Parent and Acquisition Sub an
assignable and irrevocable option (the “ Top-Up Option
”) to purchase from the Company at a per share price equal to
the Per Share Amount, the number of newly-issued Company Shares
(the “ Top-Up Option Shares ”) equal to the
number of Company Shares that, when added to the number of Company
Shares owned by Parent or Acquisition Sub at the time of exercise
of the Top-Up Option, constitutes 91% of the number of Company
Shares that would be outstanding immediately after the issuance of
all Company Shares Stock subject to the Top-Up Option);
provided, however , that (x) the Top-Up Option shall
not be exercisable unless, immediately after such exercise and the
issuance of Company Shares pursuant thereto, the Short Form
Threshold (as defined in Section 5.4(b) ) would be reached
(assuming the issuance of the Top-Up Option Shares); and
(y) that in no event shall the Top-Up Option be exercisable
for a number of Company Shares in excess of the Company’s
total authorized and unissued Company Shares.
(b)
Provided that no Legal Requirement shall
prohibit the granting or exercise of the Top-Up Option or the
issuance of Company Shares pursuant to such exercise, the Top-Up
Option may be exercised by Parent or Acquisition Sub, at any time
at or after the Acceptance Time. The aggregate purchase price
payable for the Company Shares being purchased by Parent or
Acquisition Sub pursuant to the Top-Up Option shall be determined
by multiplying the number of such shares by the Per Share Amount.
Such purchase price may be paid by Parent or Acquisition Sub,
at its election, either entirely in cash or by paying in cash an
amount equal to not less than the aggregate par value of such
shares and by executing and delivering to the Company a promissory
note having a principal amount equal to the balance of such
purchase price. Any such promissory note shall bear simple
interest at the rate of 3% per annum.
(c)
In the event Parent or Acquisition Sub
wishes to exercise the Top-Up Option, Parent or Acquisition Sub
shall deliver to the Company a notice setting forth (i) the number
of Company Shares that Parent or Acquisition Sub intends to
purchase pursuant to the Top-Up Option, (ii) the manner in which
Parent or Acquisition Sub intends to pay the applicable exercise
price and (iii) the place and time at which the closing of the
purchase of such Company Shares by Parent or Acquisition Sub is to
take place. At the closing of the purchase of such Company
Shares, Parent or Acquisition Sub shall cause to be delivered to
the Company the consideration required to be delivered in exchange
for such shares, and the Company shall cause to be issued to Parent
or Acquisition Sub (as the case may be) a certificate representing
such shares. The obligation of the Company to issue such
shares will be subject to compliance with all applicable regulatory
requirements.
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, the separate existence of Acquisition Sub shall
cease and the Company will continue as the surviving corporation in
the Merger. The Company, as the surviving corporation of the
Merger is sometimes referred to as 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 .
Upon the terms and subject to the
conditions set forth in this Agreement, as soon as practicable
following the Acceptance Time and the satisfaction or waiver of the
conditions set forth in Section 6 , the parties hereto shall
cause a properly executed certificate of merger (or, if applicable,
a certificate of ownership and 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 in accordance with the applicable provisions of the DGCL.
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 Wilson
Sonsini Goodrich & Rosati, Professional Corporation, One
Market Street, Spear Tower, Suite 3300, San Francisco, California
94105-1126 (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 and Officers . Unless
otherwise jointly determined by Parent and the Company prior to the
Effective Time, at the Effective Time:
(a)
the Certificate of Incorporation of the
Company shall, subject to the provisions of Section 5.15 ,
be amended and restated in its entirety to be identical to the
certificate of incorporation of Acquisition Sub as in effect
immediately prior to the Effective Time until thereafter amended in
accordance with the DGCL and as provided in such certificate of
incorporation, provided, that, Article I of the certificate
of incorporation of Acquisition Sub shall be amended and restated
in its entirety to read as follows: “The name of the
corporation is Simtek Corporation”;
(b)
subject to Section 5.15 , 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;
(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, each to hold office in
accordance with the Certificate of Incorporation and Bylaws of the
Surviving Corporation until their respective successors are duly
elected or appointed and qualified; and
(d)
the initial officers of the Surviving
Corporation immediately after the Effective Time shall be the
officers of Acquisition Sub immediately prior to the Effective
Time, each to hold office in accordance with the Certificate of
Incorporation and Bylaws of the Surviving Corporation until their
respective successors are duly appointed.
2.5
Effect on Capital Stock .
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 any wholly owned Subsidiary of the Company (or held in
the Company’s treasury) shall cease to exist, and no
consideration shall be paid in exchange therefor;
(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 (excluding any Appraisal Shares (as defined in
Section 2.8(c) ), shall be converted into the right to
receive, in cash, without interest, the Per Share Amount or such
greater cash amount as may have been paid to any holder of Company
Shares pursuant to the Offer;
(d)
each share of common stock, par value
$0.01 per share, of Acquisition Sub then outstanding shall be
converted into one share of the common stock of the Surviving
Corporation; and
(e)
each Company Option then outstanding
under any of the Company Option Plans shall be treated in
accordance with the provisions of Section 5.10(a)
.
Without duplication of the effects of
Section 1.1(f) , 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 payable
pursuant to Section 2.5(c) shall be adjusted to the extent
appropriate.
2.6
Closing of the Company’s Transfer
Books . From and
after the Effective Time: (a) all Company Shares outstanding
immediately prior to the Effective Time shall no longer be
outstanding and shall automatically be cancelled, retired and cease
to exist and all holders of certificates previously representing
Company Shares that were outstanding immediately prior to the
Effective Time (other than Appraisal Shares) shall cease to have
any rights as stockholders of the Company, except for the right to
receive the amount payable therefor pursuant to Section
2.5(c) upon the surrender of Company Stock Certificate (as
defined below); 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 from and after the Effective Time, other than transfers to
reflect, in accordance with customary settlement procedures, trades
effected prior to 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(a) ) or to the Surviving Corporation or Parent, such
Company Stock Certificate shall be canceled and shall be exchanged
as provided in Section 2.7 .
2.7
Exchange of Certificates
.
(a)
Prior to the Effective Time, Parent shall
select a reputable bank or trust company to act as paying agent
with respect to the Merger (the “ Paying Agent
”).
(b)
Immediately following the Effective Time,
Parent shall deposit (or cause to be deposited) with the Paying
Agent, for payment to the holders of Company Shares pursuant to the
provisions of this Section 2 , an amount of cash equal to
the product obtained by multiplying (x) the amount payable
therefor pursuant to Section 2.5(c) and (y) the
aggregate number of shares of Company Shares issued and outstanding
immediately prior to the Effective Time (excluding Company Shares
then owned by Parent, Acquisition Sub, the Company, or any direct
or indirect, wholly-owned Subsidiary of Parent, Acquisition Sub or
the Company immediately prior to the Effective Time (whether
pursuant to the Offer or otherwise)).
(c)
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 a
Company Stock Certificate and each holder of record of Company
Shares held in book-entry form, in each case which immediately
prior to the Effective Time represented outstanding Company Shares
(other than Appraisal Shares), a form of letter of transmittal in
customary form (which shall specify that delivery shall be
effected, and risk of loss and title to the Company Stock
Certificates shall pass, only upon delivery of the Company Stock
Certificates to the Paying Agent) and instructions for use in
effecting the surrender of Company Stock Certificates previously
representing such Company Shares in exchange for payment therefor.
Upon surrender of Company Stock Certificates for cancellation
to the Paying Agent or to such other agent or agents as may be
appointed by Parent or delivery of an agents’ message in
respect of Company Shares held in book-entry form, together with
such letter of transmittal, duly completed and validly executed in
accordance with the instructions thereto, the holders of such
Company Stock Certificates or the holders of shares held in
book-entry form shall be entitled to receive in exchange therefor
the amount payable in respect thereof pursuant to the provisions of
this Section 2 , and the Company Stock Certificates so
surrendered shall forthwith be canceled. The Paying Agent shall
accept such Company Stock Certificates upon compliance with such
reasonable terms and conditions as the Paying Agent may impose to
effect an orderly exchange thereof in accordance with normal
exchange practices. No interest shall be paid or accrued for
the benefit of holders of the Company Stock Certificates on the
cash amounts payable upon the surrender of such Company Stock
Certificates pursuant to this Section 2.7 . Until
so surrendered, outstanding Company Stock Certificates shall be
deemed from and after the Effective Time, to evidence only the
right to receive the amount payable in respect thereof pursuant to
the provisions of this Section 2 .
(d)
On or after the first anniversary of the
Effective Time, the Paying Agent shall deliver to the Surviving
Corporation any funds made available by Parent to the Paying Agent
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, as general creditors
thereof, with respect to the cash amounts that may be 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.
(e)
If any Company Stock Certificate shall
have been lost, stolen or destroyed, then, upon the making of an
affidavit of that fact by the Person claiming such Company Stock
Certificate to be lost, stolen or destroyed, 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; provided, however , that
Parent or the Paying Agent may, in its discretion and as a
condition precedent to the payment of the cash amount payable in
respect of any lost, stolen or destroyed Company Stock Certificate,
require the owners of such lost, stolen or destroyed Company Stock
Certificates to deliver a bond in such sum as it may reasonably
direct as indemnity against any claim that may be made against
Parent, the Surviving Corporation or the Paying Agent with respect
to the Company Stock Certificates alleged to have been lost, stolen
or destroyed.
(f)
In the event of a transfer of ownership
of Company Shares which is not registered in the transfer records
of the Company, or if payment is to be made with respect to Company
Shares in a name other than that in which the Company Stock
Certificates surrendered in exchange therefor are registered in the
stock transfer books or ledger of the Company, payment may be made
to a Person other than the Person in whose name the Certificate so
surrendered is registered in the stock transfer books or ledger of
the Company only if the Company Stock Certificate previously
representing such Company Shares is presented to the Paying Agent
properly endorsed and accompanied by all documents reasonably
required by the Paying Agent to evidence and effect such transfer
and the Person requesting such payment has paid to Parent (or any
agent designated by Parent) any transfer or other Taxes required by
reason of the payment of the amount payable in respect thereof to a
Person other than the registered holder of such Company Stock
Certificate, or presented evidence that any applicable stock
transfer taxes relating to such transfer have been paid or are
otherwise not payable.
(g)
Parent, the Company, the Surviving
Corporation and the Paying Agent shall be entitled to deduct and
withhold from any payment pursuant to this Section 2 such
amounts as are required by applicable law to be deducted or
withheld therefrom under U.S. federal or state, local or non-U.S.
law, and to request any necessary Tax forms, including
Form W-9 or the appropriate series of Form W-8, as
applicable, or any similar information, from any recipient of any
payment hereunder. To the extent that any amounts are so
deducted or withheld, such amounts shall be treated for all
purposes of this Agreement as having been paid to the Person to
whom such amounts would otherwise have been paid.
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 2.7 , 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) previously
representing such Appraisal Shares) payment for such Appraisal
Shares without any interest thereon in accordance with this
Section 2 .
(b)
The Company (i) shall promptly 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. Any communication to be made by the
Company to any Company Stockholder with respect to such demands
shall be submitted to Parent in advance and shall not be presented
to any Company Stockholder prior to the Company’s receipt of
Parent’s consent, which consent shall not be unreasonably
withheld, conditioned or delayed. The Company shall not make
any payment with respect to any demands for appraisal or settle or
offer to settle any such demands for payment in respect of
Appraisal Shares without the prior consent of Parent.
(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 neither voted in favor of adoption of this
Agreement nor consented thereto in writing and who shall have
properly and validly exercised their statutory 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
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 ”)
(the disclosures in which Company Disclosure Schedule shall qualify
only (i) the representations and warranties of the Company set
forth in the corresponding Section of this Agreement, and (ii) the
representations and warranties set forth in any other Section of
this Agreement, but in the case of this clause (ii) if and to the
extent that it is reasonably apparent from the text of such
disclosure that it is applicable to the representations and
warranties set forth in such other Sections of this
Agreement):
3.1
Due Organization and Good Standing;
Subsidiaries.
(a)
The Company and each of its Subsidiaries
is a corporation or Gesellschaft mit beschränkter
Haftung (“G.m.b.H”), duly organized and 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 organized, 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 jurisdiction in which the nature of the
business conducted by it makes such qualification necessary, except
where the failure to be so qualified would not have 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 of
the outstanding shares of capital stock or membership interests, as
the case may be, of each of the Company’s Subsidiaries are
owned directly or indirectly by the Company free and clear of all
liens, pledges or encumbrances.
3.2
Certificate of Incorporation;
Bylaws. The Company has delivered or made available to Parent
copies of the Organizational Documents of the Company and each of
its Subsidiaries, including all amendments thereto. Neither the
Company nor any Subsidiary is in violation of its Organizational
Documents.
3.3
Capitalization, Etc.
(a)
The authorized capital stock of the
Company consists of 30,000,000 Company Shares and 200,000 shares of
preferred stock (“ Preferred Shares ”). As
of July 30, 2008: (i) 16,580,886 Company Shares were issued
and 16,579,886 Company shares were outstanding; (ii) no Preferred
Shares were outstanding; (iii) 3,043,646 Company Shares were
issuable upon exercise of Company Warrants that were issued and
outstanding; (iii)(A) 1,613,535 Company Shares were issuable upon
exercise of options issued pursuant to the Company’s 2007
Equity Incentive Plan and (B) 600,666 Company Shares were issuable
upon exercise of options issued pursuant to the Company’s
1994 Non-Qualified Stock Option Plan, as amended; and (iv) 954,545
Company Shares were issuable upon conversion of the Company
Debentures. As of
July 30, 2008, 1,185,694 Company Shares were reserved for future
issuance pursuant to the Company’s 2007 Equity Incentive
Plan, 431,797 Company Shares were reserved for future issuance
pursuant to the Company’s Employee Stock Purchase Plan and 0
Company Shares were reserved for future issuance pursuant to the
Company’s 1994 Non-Qualified Stock Option Plan, as amended.
The Company has delivered or made available to Parent copies
of each of (A) the Company Equity Plans, which cover the stock
options and restricted stock awards granted by the Company that are
outstanding as of the date of this Agreement, and (B) the forms of
all stock option agreements and restricted stock award agreements
evidencing such options and stock awards.
(b)
Except for options, rights, securities
and plans referred to in Section 3.3(a) , there is no: (i)
outstanding option or right to acquire from the Company any shares
of the capital stock of the Company; or (ii) outstanding security
of the Company that is convertible into or exchangeable for any
Company Shares.
(c)
There are no outstanding
(i) securities of any of the Company’s Subsidiaries
convertible into or exchangeable for shares of capital stock of, or
other equity or voting interest in, any Subsidiary of the Company,
(ii) options, warrants, rights or other commitments or
agreements to acquire from any of the Company’s Subsidiaries,
or that obligate any of the Company’s Subsidiaries to issue,
any capital stock of, or other equity or voting interest in, or any
securities convertible into or exchangeable for shares of capital
stock of, or other equity or voting interest in, any Subsidiary of
the Company, (iii) obligations of the Company to grant, extend
or enter into any subscription, warrant, right, convertible or
exchangeable security or other similar agreement or commitment
relating to any capital stock of, or other equity or voting
interest (including any voting debt) in, any Subsidiary of the
Company (the items in clauses (i), (ii) and (iii), together with
the capital stock of the Subsidiaries of the Company, being
referred to collectively as “ Subsidiary Securities
”) or (iv) other obligations by the Company or any of
its Subsidiaries to make any payments based on the price or value
of any Subsidiary Securities. There are no Contracts or
arrangements of any kind which obligate any of the Company’s
Subsidiaries to repurchase, redeem or otherwise acquire any
outstanding Subsidiary Securities.
3.4
SEC Filings; Financial
Statements.
(a)
All registration statements,
prospectuses, reports required by Section 13 or 15(d) of the
Exchange Act and filings pursuant to Regulation D promulgated under
the Securities Act (including, in each case, all exhibits and
schedules thereto) required to be filed or furnished by the Company
with the SEC since January 1, 2006 have been so filed or furnished,
and the Company will file prior to the expiration date of the Offer
all forms, reports and documents with the SEC that are required to
be filed or furnished by it prior to such time (all such forms,
reports and documents, together with any other forms, reports or
other documents filed or furnished (as applicable) by the Company
with the SEC after January 1, 2006 and on or prior to the
expiration date of the Offer that are not required to be so filed
or furnished, the “ Company SEC Documents ”).
As of the time it was filed or will be filed (as the case may
be) with the SEC (or, if amended or superseded by a filing, then on
the date of such filing): (i) each of the Company SEC
Documents complied or will comply (as the case may be) in all
material respects with the applicable requirements of the
Securities Act or the Exchange Act (as the case may be), and with
all applicable provisions of the Sarbanes-Oxley Act, each as in
effect on the date such Company SEC Document was, or will be,
filed; and (ii) none of the Company SEC Documents contained or will
contain (as the case may be) any untrue statement of a material
fact or omitted or will omit (as the case may be) 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. True and correct copies
of all Company SEC Documents filed prior to the date hereof,
whether or not required under applicable laws, have been furnished
to Parent or are publicly available in the Electronic Data
Gathering, Analysis and Retrieval (EDGAR) database of the SEC.
(b)
Neither the Company nor any of its
Subsidiaries has received from the SEC or any other Governmental
Entity any written comments or questions with respect to any of the
Company SEC Documents (including the financial statements included
therein) or any registration statement filed by any of them with
the SEC or any notice from the SEC or other Governmental Entity
that such Company SEC Documents (including the financial statements
included therein) or registration statements are being reviewed or
investigated, and, to the Company’s knowledge, there is not
any investigation or review being conducted by the SEC or any other
Governmental Entity of any Company SEC Documents (including the
financial statements included therein). Except for filings
pursuant to Regulation D promulgated under the Securities Act, none
of the Company’s Subsidiaries is required to file any forms,
reports or other documents with the SEC. No executive officer
of the Company has failed to make the certifications required of
him or her under Section 302 or 906 of the Sarbanes-Oxley Act
with respect to any Company SEC Documents, except as disclosed in
certifications filed with the Company SEC Documents. Neither
the Company nor any of its executive officers has received notice
from any Governmental Entity challenging or questioning the
accuracy, completeness, form or manner of filing of such
certifications.
(c)
The consolidated financial statements of
the Company and its Subsidiaries (including any related notes)
contained in the Company SEC Documents fairly present, in all
material respects, or will present in all material respects, as the
case may be, the consolidated financial position of the Company and
its Subsidiaries as of the respective dates thereof and the
consolidated results of operations and cash flows of the Company
and its Subsidiaries for the periods covered thereby. The
consolidated financial statements of the Company and its
Subsidiaries (including any related notes) contained in the Company
SEC Documents have been or will be (as the case may be) prepared in
accordance with GAAP applied on a consistent basis throughout the
periods and at the dates 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).
(d)
The Company and each of its Subsidiaries
has established and maintains, adheres to and enforces a system of
internal accounting controls which are effective in providing
assurance regarding the reliability of financial reporting and the
preparation of financial statements in accordance with GAAP,
including policies and procedures that (i) require the
maintenance of records that in reasonable detail accurately and
fairly reflect the transactions and dispositions of the assets of
the Company and its Subsidiaries, (ii) provide assurance that
transactions are recorded as necessary to permit preparation of
financial statements in accordance with GAAP, and that receipts and
expenditures of the Company and its Subsidiaries are being made
only in accordance with appropriate authorizations of management
and the Board of Directors of the Company and (iii) provide
assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the assets of the Company and
its Subsidiaries. Since January 1, 2005, neither the Company
nor any of its Subsidiaries (including any employee thereof) nor,
to the Company’s knowledge, the Company’s independent
auditors has identified or been made aware of (A) any
significant deficiency or material weakness in the system of
internal accounting controls utilized by the Company and its
Subsidiaries, (B) any fraud, whether or not material, that
involves the Company’s management (including management of
the Company’s Subsidiaries) or other employees who have a
role in the preparation of financial statements or the internal
accounting controls utilized by the Company and its Subsidiaries or
(C) any claim or allegation regarding any of the
foregoing.
(e)
Neither the Company nor any of its
Subsidiaries is a party to, or has any commitment to become a party
to, any joint venture, partnership agreement or any similar
Contract (including any Contract relating to any transaction,
arrangement or relationship between or among the Company or any of
its Subsidiaries, on the one hand, and any unconsolidated
affiliate, including any structured finance, special purpose or
limited purpose entity or Person, on the other hand (such as any
arrangement described in Section 303(a)(4) of
Regulation S-K of the SEC)) where the purpose or effect of
such arrangement is to avoid disclosure of any material transaction
involving the Company or any its Subsidiaries in the
Company’s consolidated financial statements.
(f)
Since January 1, 2005, neither the
Company nor any of its Subsidiaries nor, to the Company’s
knowledge, any director, officer, employee, auditor, accountant,
consultant or representative of the Company or any of its
Subsidiaries has received or otherwise had or obtained knowledge of
any substantive complaint, allegation, assertion or claim, whether
written or oral, that the Company or any of its Subsidiaries has
engaged in questionable accounting or auditing practices. To
the Company’s knowledge, no current or former attorney
representing the Company or any of its Subsidiaries has reported
evidence of a material violation of securities laws, breach of
fiduciary duty or similar violation by the Company or any of its
officers, directors, employees or agents to the Board of Directors
of the Company or any committee thereof or to any director or
executive officer of the Company.
(g)
To the Company’s knowledge, no
employee of the Company or any of its Subsidiaries has provided or
is providing information to any law enforcement agency regarding
the commission or possible commission of any crime or the violation
or possible violation of any applicable Legal Requirements of the
type described in Section 806 of the Sarbanes-Oxley Act by the
Company or any of its Subsidiaries. Neither the Company nor
any of its Subsidiaries nor, to the knowledge of the Company, any
director, officer, employee, contractor, subcontractor or agent of
the Company or any such Subsidiary has discharged, demoted,
suspended, threatened, harassed or in any other manner
discriminated against an employee of the Company or any of its
Subsidiaries in the terms and conditions of employment because of
any lawful act of such employee described in Section 806 of
the Sarbanes-Oxley Act.
(h)
The Company is in compliance in all
material respects with all effective provisions of the
Sarbanes-Oxley Act applicable to the Company.
(i)
Neither the Company nor any of its
Subsidiaries has any liabilities except for: (i) liabilities
disclosed in the financial statements (including any related notes)
for the quarter ended June 30, 2008 and attached hereto as
Schedule 3.4(i) ; (ii) liabilities incurred in connection
with this Agreement; and (iii) liabilities that would not have,
individually or in the aggregate, a Company Material Adverse
Effect.
3.5
Absence of Certain Changes
.
Between January 1, 2008 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 which has had a Company Material
Adverse Effect; (b) suffered any material loss, damage or
destruction to any of its assets; (c) amended its
Organizational Documents; (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 or Tax election,
except as required by changes in GAAP; (f) sold or otherwise
transferred any material portion of its assets, except for sales of
equipment and inventory in the ordinary course of business; (g)
declared, set aside or paid any dividend with respect to the
outstanding Company Shares; (h) acquired any equity interest or
voting interest in any Entity; (i) received any resignation of any
officer or key employee of the Company or (j) entered into any
agreement to take any of the actions referred to in clauses
“(c)” through “(i)” of this
sentence.
3.6
IP Rights.
(a)
Part 3.6(a) of the Company Disclosure
Schedule accurately identifies:
(i)
In Part 3.6(a)(i) of the Company
Disclosure Schedule: (A) each item of Registered IP in which the
Company or any of its Subsidiaries has an ownership interest of any
nature (whether exclusively, jointly with another Person or
otherwise but excluding any interest arising out of any exclusive
or nonexclusive license) (“ Company Registered IP
”); (B) the jurisdiction in which such item of Company
Registered IP has been registered or filed and the applicable
registration or serial number; and (C) any other Person that has an
ownership interest in such item of Company Registered IP and the
nature of such ownership interest;
(ii)
in Part 3.6(a)(ii) of the Company
Disclosure Schedule each Contract to which the Company is currently
bound pursuant to which any Intellectual Property or Intellectual
Property Rights are licensed to the Company or any of its
Subsidiaries (other than the licenses to Open Source Material
listed in Part 3.6(h)(i) of the Company Disclosure Schedule and
other than non-exclusive licenses for any third-party software or
other third-party Intellectual Property or Intellectual Property
Rights, including, without limitation, shrink-wrap, off-the-shelf
or commercially available software, that: (1) in the case of third
party software, is so licensed in executable or object code form
pursuant to a nonexclusive software license, (2) is not, and is not
intended by Company to be, incorporated into or used in the design,
development, manufacture or provision of any Company Product; or
(3) is generally available on standard terms for less than $25,000
per year or $50,000 in perpetuity for all licenses for such item of
third-party software or other third-party Intellectual Property or
Intellectual Property Rights held by Company and its
Subsidiaries);
(iii)
in Part 3.6(a)(iii) of the Company
Disclosure Schedule, each Contract under which an express license
or express covenant not to sue is held by any third party in or to
any of the Company IP, or pursuant to which Company or any of its
Subsidiaries has granted an express license or express covenant not
to sue under any Intellectual Property Rights to any third
party;
(iv)
in Part 3.6(a)(iv) of the Company
Disclosure Schedule, each Company Product currently made
commercially available or under development by the Company (except
for Company Products being jointly developed by Parent and the
Company) and each Company Product made commercially available by
the Company during the three (3) year period preceding the date of
this Agreement;
(v)
to the Company’s knowledge, in Part
3.6(a)(v) of the Company Disclosure Schedule, for each Company
Product required to be disclosed under Part 3.6(a)(iv) of the
Company Disclosure Schedule, all Intellectual Property or
Intellectual Property Rights licensed to the Company or any of it
Subsidiaries, except for standard building blocks ( i.e. ,
transistors and capacitors) from standard foundry libraries
(“Third Party IP”), that are used or embodied in or
would otherwise be infringed by such Company Product, and for each
such item of Third Party IP, the agreement pursuant to which the
Company or its Subsidiary has a license to such Third Party IP.
Complete and accurate copies of each
Contract identified in Part 3.6(a)(ii), Part 3.6(a)(iii) or Part
3.6(a)(v) of the Company Disclosure Schedule have been provided or
made available to Parent. The consummation of the
transactions contemplated by this Agreement will neither violate
nor result in the breach, modification, cancellation, termination
or suspension of such Contracts. Each of Company and its
Subsidiaries is in material compliance with, and has not materially
breached any term of any such Contracts and, to the knowledge of
Company, all other parties to such Contracts are in compliance
with, and have not materially breached any term of, such Contracts,
other than such breaches for which no legal or equitable remedy is
available to the counterparty under such Contract. Following
the Effective Time, the Surviving Corporation will be permitted to
exercise all of Company’s and its Subsidiaries’ rights
under such Contracts to the same extent Company and its
Subsidiaries would have been able to had the transactions
contemplated by this Agreement not occurred and without the payment
of any additional amounts or consideration other than ongoing fees,
royalties or payments which Company or its Subsidiaries would
otherwise be required to pay. No Company Product or other
material Company IP is subject to any covenant or other restriction
(including exclusivity, non-competition and most-favored pricing
restrictions) that materially limits or restricts the ability of
the Company or any of its Subsidiaries to use, exploit, assert, or
enforce such Company Product or material Company IP anywhere in the
world.
(b)
Without expanding the scope of Section
3.6(f) , the Company and its Subsidiaries exclusively own all
right, title and interest to and in, and, have the sole and
exclusive right to bring a claim or suit against a third party for
infringement or misappropriation of, the Company IP (other than
Company Registered IP identified in Part 3.6(a)(i) of the Company
Disclosure Schedule as being subject to the ownership interest of
another Person) free and clear of any liens or encumbrances (other
than pursuant to the Contracts listed in Part 3.6(a)(iii) of the
Company Disclosure Schedule). Without limiting the generality
of the foregoing, other than as identified in Part 3.6(b) of the
Company Disclosure Schedule:
(i)
all documents and instruments necessary
to perfect the rights of the Company and its Subsidiaries in the
Company Registered IP have been validly executed, delivered and
filed (on or before any applicable deadline) with the appropriate
Governmental Entity;
(ii)
each Person who is or was an employee,
consultant or independent contractor of the Company or any of its
Subsidiaries and who is or was involved in the creation or
development of any Company IP (or any Intellectual Property or
Intellectual Property Rights developed for the Company that the
Company intended to be Company IP), or who is or was named as an
inventor on any patent application filed or owned by the Company or
any of its Subsidiaries, has signed one or more agreements
containing an assignment of that Person’s rights in such
Company IP (or other Intellectual Property or Intellectual Property
Rights) to the Company or one of its Subsidiaries;
(iii)
to the knowledge of the Company, no past
or current employee of the Company or any of its Subsidiaries has
any claim, right (whether or not currently exercisable) or interest
to or in any material Company IP;
(iv)
to the knowledge of the Company, no past
or current employee, consultant or independent contractor of the
Company or any of its Subsidiaries is in material breach of any
Contract with any former employer or other Person concerning
Intellectual Property Rights or confidentiality where the cause or
nature of the breach arises directly out of any services, including
the development of any Company IP, performed by such employee,
consultant or independent contractor for the Company or any of its
Subsidiaries;
(v)
no funding, facilities or personnel of
any Governmental Entity or any university or other educational
institution were used to develop or create, in whole or in part,
any Company IP; and
(vi)
neither the Company nor any of its
Subsidiaries has assigned or otherwise transferred ownership of, or
agreed to assign or otherwise transfer ownership of, any material
Company IP (or anything that was material Company IP immediately
prior to such assignment or transfer) to any other
Person.
(c)
To the knowledge of the Company, all
Company Registered IP (other than pending applications for
Registered IP) is valid, and is enforceable in all material
respects. Without limiting the generality of the foregoing:
(i)
to the knowledge of the Company, no
registered trademark owned by the Company or any of its
Subsidiaries, and no other trademark currently being used by the
Company or any of its Subsidiaries in the ordinary course of
business (collectively, “ Company Trademarks ”),
conflicts with any registered trademark of any other Person in any
jurisdiction where the Company or any of its Subsidiaries currently
sells, markets or promotes (directly or through any Person who is
authorized by the Company or any of its Subsidiaries to so sell,
market or promote) any of their products or services using such
Company Trademarks;
(ii)
each item of Company Registered IP is in
compliance with all material Legal Requirements, and all filings,
payments and other actions required to be made or taken to maintain
each item of Company Registered IP in full force and effect have
been made by the applicable deadline or, if not made, will not
adversely affect such Company Registered IP or the rights of
Company in such Company Registered IP; and
(iii)
no interference, opposition, reissue,
reexamination or other Legal Proceeding of any nature is pending
or, to the knowledge of the Company, threatened, in which the
scope, validity or enforceability of any Company Registered IP is
being, has been or would reasonably be expected to be contested or
challenged.
(d)
Neither the execution, delivery or
performance of this Agreement, nor the consummation of any of the
transactions contemplated by this Agreement, including the
assignment to Parent or Acquisition Sub by operation of law of any
Contracts or agreements to which Company or any of its Subsidiaries
is a party, will, with or without notice or the lapse of time,
result in, or give any other Person the right or option to cause:
(i) either Parent or Acquisition Sub granting to any third
party any right to or with respect to any material Intellectual
Property or Intellectual Property Rights owned by, or licensed to,
either of them; (ii) any Person receiving a license or right under
any Intellectual Property or Intellectual Property Rights from
Company or any of its Subsidiaries that was either not granted or
not exercisable prior to the Closing; (iii) either Parent or
Acquisition Sub being bound by, or subject to, any non-compete or
other material restriction on the operation or scope of their
respective businesses, or (iv) either Parent or Acquisition
Sub being obligated to pay any royalties or other material amounts
to any third party in excess of those payable by Parent or the
Company, respectively prior to the Closing; (v) a loss of, or
Encumbrance on, any Company IP; or (vi) the release, disclosure or
delivery of any Company IP by any escrow agent to any other
Person.
(e)
To the knowledge of the Company as of the
date of this Agreement: (i) no Person has materially infringed or
misappropriated any Company IP; and (ii) no Person is currently
materially infringing or misappropriating any Company IP.
(f)
To the knowledge of the Company, the
operation of the business of Company and its Subsidiaries as such
business currently is conducted or contemplated to be conducted,
including the design, development, manufacture, distribution,
import, reproduction, marketing, licensing or sale of the Company
Products, has not, does not and will not infringe (directly,
contributorily, by inducement or otherwise), misappropriate or
otherwise violate any Intellectual Property Right of any other
Person. Without limiting the generality of the
foregoing:
(i)
no infringement, misappropriation or
similar Legal Proceeding is pending or, to the knowledge of the
Company, threatened against the Company or any of its Subsidiaries
or, to the Company's knowledge, against any other Person who, as a
party to Contract to which the Company or any Subsidiary is a
party, may be entitled to be indemnified, defended, held harmless
or reimbursed by the Company or any of its Subsidiaries with
respect to such Legal Proceeding;
(ii)
in the three (3) year period prior to the
date of this Agreement, neither the Company nor any of its
Subsidiaries has received any written notice (nor, to the knowledge
of the Company, any non-written notice) alleging infringement,
misappropriation or violation by the Company or any of its
Subsidiaries of any Intellectual Property Right of another Person,
except in the case of any such non-written notice would not
reasonably be expected to have a material and adverse effect on any
Company Product or the business of the Company or any of its
Subsidiaries as currently conducted or proposed to be conducted;
and
(iii)
Company has not received written notice
(or, to the knowledge of the Company, any non-written notice) of
any pending Legal Proceeding involving any Intellectual Property
Right licensed to the Company or any of its Subsidiaries, except
for any such Legal Proceeding that would not reasonably be expected
to have a material and adverse effect on the use or exploitation of
such Intellectual Property Right by the Company or any of its
Subsidiaries.
(g)
Neither the Company nor any of its
Subsidiaries nor any other party acting on its behalf has
disclosed, licensed, delivered or made available to any Person any
Company Source Material, except for disclosures to Company
employees, consultants or independent contractors under agreements
that prohibit use or disclosure except in the performances of
services to or for (directly or indirectly) the Company or any
Subsidiary thereof. No Company Source Material has been
delivered or made available to any third party escrow agent and
neither the Company nor any of its Subsidiaries has, as of the date
of this Agreement, any duty or obligation (whether present,
contingent or otherwise) to deliver or make available any Company
Source Material to any third party escrow agent. No event has
occurred, and, to the knowledge of the Company, no circumstance or
condition exists, that (with or without notice or lapse of time)
will, or would reasonably be expected to, result in the release
from any third party escrow agent, or the license or delivery to
any other Person, of any Company Source Material. Neither the
execution, delivery or performance of this Agreement, nor the
consummation of the Merger or any other transactions contemplated
by this Agreement, including the assignment to Parent or
Acquisition Sub by operation of law of any Contracts or agreements
to which Company or any of its Subsidiaries is a party, (with or
without notice or lapse of time) will, or would reasonably be
expected to, result in the release from any third party escrow
agent, or the license or delivery to any other Person, of any
Company Source Material.
(h)
Part 3.6(h)(i) of the Company Disclosure
Schedule lists all Open Source Material that, to the knowledge of
the Company, has been incorporated into any Company Software or
Company Product in any way, identifies the license terms applicable
thereto (complete copies of which have been made available to
Parent) and describes the manner in which such Open Source Material
was incorporated (such description shall include whether (and, if
so, how) the Open Source Material was modified and/or distributed
by the Company or any of its Subsidiaries and whether (and if so,
how) such Open Source Material was incorporated into and/or linked
with any Company Software or Company Product). Except as set
forth in Part 3.6(h)(ii) of the Company Disclosure Schedule, to the
knowledge of the Company, neither the Company nor any of its
Subsidiaries has used Open Source Material in any manner that would
or could (i) require the disclosure or distribution in source
code, Source Material or equivalent human-readable form of any
portion of any Company Software or Company Product,
(ii) require the licensing of any portion of any Company
Software or Company Product for the purpose of making derivative
works, (iii) impose any restriction on the consideration to be
charged for the distribution of any Company Software or Company
Product, (iv) create, or purport to create, obligations for
the Company with respect to Company IP or grant, or purport to
grant, to any third party, any rights or immunities under Company
IP or (v) impose any other material limitation, restriction,
or condition on the right of the Company to use or distribute any
Company Product. With respect to any Open Source Material
that is or has been used by the Company or any of its Subsidiaries
in any way, to the knowledge of the Company, the Company and each
of its Subsidiaries has been and is in material compliance with all
applicable licenses with respect thereto.
(i)
The collection by the Company or any of
its Subsidiaries of any personally identifiable information from
any Persons (if any), and the storage and use of any such
information have materially complied with all applicable Laws and
the Company’s and its Subsidiaries’ privacy policies
(copies of which have been made available to Parent).
3.7
Title to Assets; Real
Property.
(a)
The Company or one of its Subsidiaries
owns, and has good title to, or in the case of assets purported to
be leased by the Company or its Subsidiaries, leases and has valid
leasehold interest in, each of the tangible assets reflected as
owned or leased by the Company or its Subsidiaries on the Most
Recent 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). Neither the
Company nor any Subsidiary owns any real property or interest in
real property nor has the Company or any Subsidiary ever owned any
real property or interest in real property.
(b)
Part 3.7(b) of the Disclosure
Schedule contains a complete and accurate list of all of the
existing leases, subleases, licenses, or other agreements
(collectively, the “ Real Property Leases ”)
under which the Company or any of its Subsidiaries uses or occupies
or has the right to use or occupy, now or in the future, any real
property (the “Leased Premises ”). The
Company has heretofore made available to Parent true, correct and
complete copies of all Real Property Leases (including all
modifications, amendments, supplements, consents, waivers and side
letters thereto and all agreements in connection therewith,
including all work letters, improvement agreements, estoppel
certificates, subordination agreements, and guarantees).
The Closing will not affect the
enforceability against any Person of any Real Property Lease or any
rights of the Company or any of its Subsidiaries thereunder or
otherwise with respect to any Leased Premises, including, the right
to the continued use and possession of the Leased Premises for the
conduct of business as presently conducted.
(c)
The Real Property Leases are each in full
force and effect and the Company or any of its Subsidiaries are not
in breach of or default under, nor have they received written
notice of any breach of or default under any Real Property Lease,
and, to the knowledge of the Company, no event has occurred that
with notice or lapse of time or both would constitute a breach or
default thereunder by the Company or any other party thereto.
Neither the Company nor any of its Subsidiaries have
transferred or assigned any interest in any Real Property Lease,
nor have they subleased or otherwise granted rights of use or
occupancy of any of the premises described therein to any other
person or entity. The Company or a Subsidiary currently
occupies all of the Leased Premises for the operation of its
business and there is no other person or entity with a right to
occupy the Leased Premises.
(d)
The Leased Premises and the personal
property owned or leased by the Company or any of its Subsidiaries
are in good operating condition and repair and free from any
material defects, reasonable wear and tear excepted, and are
suitable for the uses for which they are being used in all material
respects. The operations of the Company and each of its
Subsidiaries do not, nor to the Company’s knowledge, do any
Leased Premises violate in any material respect any applicable
building code, zoning requirement or other law relating to such
property or operations thereon. To the knowledge of the
Company, (i) there are no laws, statutes, rules, regulations
or orders now in existence or under active consideration by any
Governmental Authority which are reasonably likely to require the
tenant of any Leased Premises to make any expenditure in excess of
$25,000 to modify or improve such Leased Premises to bring it into
compliance therewith, and (ii) the Company or any of its
Subsidiaries shall not be required to expend more than $25,000 in
the aggregate under all Real Property Leases to restore the Leased
Premises at the end of the term of the applicable Real Property
Lease to the condition required under the Real Property Lease
(assuming the conditions existing in such Leased Premises as of the
date hereof). Neither the Company, nor any of its
Subsidiaries, owe any brokerage commissions or finders fees with
respect to any Leased Premises, nor would the Company or any of its
Subsidiaries owe any such fees if any existing Real Property Lease
were renewed pursuant to any renewal options contained in such Real
Property Lease. The Company and each of its Subsidiaries have
performed all of their obligations under any termination agreements
pursuant to which it has terminated any leases of real property
that are no longer in effect and which were used in the operation
of the business, and have no continuing liability with respect to
such terminated real property leases.
3.8
Contracts. Part 3.8 of the Company Disclosure
Schedule contains a list of each of the following Contracts,
whether oral or written, to which the Company or any of its
Subsidiaries is a party:
(a)
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 pursuant
to Item 601(b)(10) of Regulation S-K promulgated under the Exchange
Act (if such registration statement or report was filed by the
Company with the SEC on the date of this Agreement);
(b)
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;
(c)
each partnership, joint venture or other
agreement pursuant to which revenue or income is or would be shared
with another party;
(d)
each indemnification or employment
Contract with any director, officer or employee of the Company or
its Subsidiaries;
(e)
each employment Contract with any
Employee requiring severance payments and each employment
Contract with any Employee that is not terminable by the Company
upon 30 days or less notice without cost or other liability to the
Company or any of its Subsidiaries;
(f)
each loan or credit agreement, indenture,
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;
(g)
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 or received in excess of $250,000 in fiscal year 2007,
or is expected to pay or receive in excess of $250,000 in fiscal
year 2008;
(h)
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;
(i)
each material exclusive sales
representative, distribution or drop-ship Contract;
(j)
each collective bargaining
agreement;
(k)
each Real Property Lease;
(l)
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 $250,000 per
year;
(m)
each consulting Contract that is not
terminable by the Company or any of its Subsidiaries on notice of
90 days or less;
(n)
each Contract relating to the
acquisition, sale or disposition of any material business unit or
product line of the Company and its Subsidiaries that occurred
after December 31, 2003;
(o)
any Contract relating to the creation of
a Lien (other than Permitted Encumbrances) with respect to any
asset of the Company or any of its Subsidiaries;
(p)
any commercial Contract with the federal
government, any foreign government, any state or local government
or any division, subdivision, department, agency or instrumentality
thereof;
(q)
any material non-disclosure,
confidentiality or similar agreement pursuant to which the Company
or its Subsidiaries has ongoing obligations, including any such
agreements that are being negotiated, but have not yet been
executed;
(r)
any current Contract that provides for
indemnification or any guaranty (in each case, under which the
Company has continuing obligations as of the date hereof), other
than any Contract providing for indemnification entered into in
connection with the distribution, sale or license of the Company
Products in the ordinary course of business, which indemnification
does not materially differ from the provisions embedded in
Company’s standard forms of customer agreements as provided
or made available to Parent;
(s)
any Contract with a third party with
respect to the development of any Intellectual Property Rights
other than Contracts with the Company's professional legal,
financial or business advisors with respect to Intellectual
Property Rights that are not incorporated into, used in or
necessary for any Company Product;
(t)
any Contract with non-solicitation or
non-hire provisions pursuant to which the Company has ongoing
obligations; and
(u)
each Contract under which the Company is
liable for benefits (including but not limited to severance pay,
accelerated vesting, bonuses, and relocation expenses) to be
provided to any Employee, director or officer upon or in connection
with a change in control of the Company or any of its
Subsidiaries.
Each Contract listed in Part 3.8 or Part
3.6 of the Company Disclosure Schedule shall be referred to as a
“ Material Contract ”. There are no
existing material breaches or defaults on the part of the Company
or any of its Subsidiaries under any Material Contract; and, to the
knowledge of the Company, there are no existing material breaches
or defaults on the part of any other Person under any Material
Contract. Each Material Contract is valid, has not been
terminated prior to the date of this Agreement, is enforceable
against the Company or the applicable Subsidiary of the Company
that is a party to such Material Contract, and, to the knowledge of
the Company, is enforceable against the other parties thereto,
subject to (i) laws of general application relating to bankruptcy,
insolvency and the relief of debtors, and (ii) rules of law
governing specific performance, injunctive relief and other
equitable remedies. The Company has made available to Parent
copies (or in the case of oral agreements, a written summary) of
each Material Contract, together with all amendments and
supplements thereto. :
3.9
Compliance with Legal
Requirements. The Company and its Subsidiaries are in compliance in
all material respects with all Legal Requirements applicable to
their businesses. Since January 1, 2005, neither the Company
nor any Subsidiary has (a) received any written notice from any
Governmental Entity regarding any actual or possible violation of,
or failure to comply with any material provision of, any Legal
Requirement or (b) filed or otherwise provided any written notice
to any Governmental Entity regarding any actual or possible
material violation of, or failure to comply with any material
provision of, any Legal Requirement, which notice in either case
remains outstanding or unresolved.
3.10
Export and Import Control Laws.
(a)
The Company and each of its Subsidiaries
have complied in all material respects with all applicable export
and reexport control laws and regulations (“ Export
Controls ”), including but not limited the Export
Administration Regulations (15 C.F.R. §§ 730-774); the
International Traffic in Arms Regulations (22 C.F.R. §§
120-130); the Foreign Assets Control Regulations (31 C.F.R.
§§ 500-598); the Customs Regulations (19 C.F.R.
§§ 1-357) and any applicable anti-boycott compliance
regulations. To the knowledge of the Company, neither the
Company nor any of its Subsidiaries has directly or indirectly
sold, exported, reexported, transferred, diverted, or otherwise
disposed of any products, software, or technology (including
products derived from or based on such technology) to any
destination, entity, or person prohibited by the laws or
regulations of the United States, without obtaining prior
authorization or a license exception from the competent government
authorities as required by those laws and regulations. To the
knowledge of the Company, the Company and its Subsidiaries are in
compliance with all applicable import laws and regulations (“
Import Restrictions ”), including Title 19 of the
U.S. Code and Title 19 of the Code of Federal
Regulations.
(b)
Part 3.10 of the Company Disclosure
Schedule lists all of the Export Control Classification Numbers for
Company Products. No Company Products require a license for
the export of commercial encryption items.
(c)
No action, proceeding, writ, injunction,
claim, request for information or subpoena is pending, or the
Company’s knowledge, threatened, concerning or relating to
any export or import activity of the Company or any Subsidiary.
No voluntary self disclosures have been filed by or for the
Company or any of its Subsidiaries with respect to any violations
of Export Controls and Import Restrictions.
3.11
Legal Proceedings; Orders.
(a)
There is no Legal Proceeding pending (or,
to the knowledge of the Company, threatened) against the Company or
any of its Subsidiaries that (i) involves an amount in
controversy in excess of $250,000 or the subject matter of which
involves allegations of fraud or intentional or willful
misrepresentation by the Company or its Subsidiaries,
(ii) seeks material injunctive relief, or (iii) would,
individually or in the aggregate with all other pending or
threatened Legal Proceedings, have a Company Material Adverse
Effect.
(b)
To the knowledge of the Company, there is
no Legal Proceeding pending or threatened against any current or
former director or officer of the Company or any of its
Subsidiaries (in their respective capacities as such), whether or
not naming the Company or any of its Subsidiaries.
(c)
There is no court order or judgment
specific to the Company or any of its Subsidiaries to which the
Company or any of its Subsidiaries is subject.
(d)
No investigation or audit by any
Governmental Entity with respect to the Company or any of its
Subsidiaries is pending or, to the knowledge of the Company, is
being threatened.
(e)
To the knowledge of the Company, no
Governmental Entity is challenging the right of the Company or any
Subsidiary to design, manufacture, license, offer or sell any of
its products or services.
3.12
Governmental Authorizations
.
As of the date of this Agreement, the
Company and its Subsidiaries hold all material Governmental
Authorizations necessary to enable them to conduct their respective
businesses in the manner in which such businesses, respectively,
are currently being conducted. Such material Governmental
Authorizations held by the Company and its Subsidiaries are valid
and in full force and effect. The Company and its Subsidiaries are
in material compliance with the terms and requirements of such
Governmental Authorizations. Since January 1, 2006, neither
the Company nor any Subsidiary has received any written notice from
any Governmental Entity regarding (a) any actual or possible
violation of or failure to comply with any term or requirement of
any material Governmental Authorization, or (b) any actual or
possible revocation, withdrawal, suspension, cancellation,
termination or modification of any material Governmental
Authorization.
3.13
Tax Matters.
(a)
All material Tax Returns required to have
been filed by the Company and its Subsidiaries (i) have been
filed on or before the applicable due date (as such due date may
have been extended) and (ii) have been prepared in material
compliance with applicable Legal Requirements. All Taxes
required to have been paid have been timely paid. The Company
is not and has never been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the
Code.
(b)
The Most Recent Balance Sheet fully
accrues the material liabilities of the Company and its
Subsidiaries for Taxes with respect to all periods through June 30,
2008 in accordance with GAAP. The Company will establish, in
the ordinary course of business, appropriate reserves for the
payment of Taxes due and payable by the Company and its
Subsidiaries for the period from June 30, 2008 through the
Acceptance Time.
(c)
The Company and its Subsidiaries have
timely paid or withheld with respect to their employees (and paid
over any amounts withheld to the appropriate Governmental Entity)
all federal and state income Taxes, Federal Insurance Contribution
Act, Federal Unemployment Tax Act and other similar Taxes required
to be paid or withheld.
(d)
As of the date of this Agreement, (i)
there are no examinations or audits of any Tax Return currently
underway, (ii) no extension or waiver of the limitation period
applicable to any Tax 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
in respect of any material Tax, (iv) there are no 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 material 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, and (vi) the
Company has not entered into or become bound by any agreement or
consent pursuant to former Section 341(f) of the Code.
The Company is not required to include any adjustment in
taxable income for any Tax period pursuant to Section 481 or
263A of the Code as a result of transactions or events occurring,
or accounting methods employed, prior to the date of this Agreement
or currently contemplated by the Company. The Company has not
been a member of any combined, consolidated or unitary group (other
than the group of which the Company is currently a member) for
which it is or will be liable for Taxes under principles of Section
1.1502-6 of the Treasury Regulations.
(e)
Neither the Company nor any of its
Subsidiaries has constituted either a “distributing
corporation” or a “controlled corporation” in a
distribution of stock intended to qualify for tax-free treatment
under Section 355 of the Code (A) in the two years prior
to the date of this Agreement or (B) in a distribution which
otherwise constitutes part of a “plan” or “series
of related transactions” (within the meaning of
Section 355(e) of the Code) that includes the
Merger.
(f)
Neither the Company nor any of its
Subsidiaries has engaged in a “reportable transaction,”
as set forth in Treas. Reg. § 1.6011-4(b), including any
“listed transaction” as defined in Treas. Reg.
§ 1.6011-4(b)(2).
(g)
Neither the Company nor any of its
Subsidiaries have received a written notice from any Governmental
Entity in any jurisdiction in which the Company and its
Subsidiaries do not currently pay Tax claiming that either the
Company or any of its Subsidiaries is subject to Tax in such
jurisdiction.
(h)
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 material 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.
3.14
Employee Benefit Plans
.
(a)
The Company has provided or made
available to Parent copies of all material employee benefit plans,
policies, practices, Contracts, agreements, programs or other
arrangements providing for compensation, severance, termination
pay, deferred compensation, stock or stock related awards, fringe
benefits, welfare benefits or other remuneration maintained or
contributed to by the Company or any of its Subsidiaries for the
benefit of any Employee (the “ Company Plans
”).
(b)
Each Company Plan that is intended to be
qualified under Section 401(a) of the Code has received a favorable
determination letter (or opinion letter, if applicable) from the
U.S. Internal Revenue Service stating that such Company Plan is so
qualified. Each Company Plan has been operated in material
compliance with its terms and with all applicable Legal
Requirements.
(c)
To the extent applicable, each Company
Plan in a foreign jurisdiction (“ International Company
Plan ”) has been approved by the relevant taxation and
other Governmental Entity so as to enable: (i) the Company or
any of its Subsidiaries and the participants and beneficiaries
under the relevant International Company Plan and (ii) in the
case of any International Company Plan under which resources are
set aside in advance of the benefits being paid (a “
Funded International Company Plan ”), the assets held
for the purposes of the Funded International Company Plans, to
enjoy the most favorable taxation status possible and the Company
is not aware of any ground on which such approval may cease to
apply.
(d)
All contributions, premiums and other
payments required to be made with respect to any Company Plan have
been timely made under applicable Legal Requirements, any
applicable collective bargaining agreement and the terms of such
Plan. To the knowledge of the Company, no event has occurred
and there currently exists no condition or set of circumstances in
connection with which the Company or any of its Subsidiaries could
reasonably be expected to be subject to any material liability
under the terms of any Company Plan, ERISA, the Code or codes of
practice issued by any Governmental Entity, collective bargaining
agreement or any other applicable Legal Requirements. Except
as required by Legal Requirements, neither the Company nor any of
its Subsidiaries has any plan or commitment to amend or establish
any new Company Plan or to increase any benefits under any Company
Plan.
(e)
There are no Legal Proceedings pending
or, to the knowledge of the Company, threatened on behalf of or
against any Company Plan, the assets of any trust under any Company
Plan, or the plan sponsor, plan administrator or any fiduciary or
any Company Plan with respect to the administration or operation of
such plans, other than routine claims for benefits that have been
or are being handled through an administrative claims
procedure.
(f)
None of the Company, any of its
Subsidiaries, or, to the knowledge of the Company, any of their
respective directors, officers, Employees or agents has, with
respect to any Company Plan, engaged in or been a party to any
non-exempt “prohibited transaction,” as such term is
defined in Section 4975 of the Code or Section 406 of
ERISA, which could reasonably be expected to result in the
imposition of a material penalty assessed pursuant to
Section 502(i) of ERISA or a material tax imposed by
Section 4975 of the Code, in each case applicable to the
Company, any of its Subsidiaries or any Company Plan or for which
the Company or any of its Subsidiaries has any indemnification
obligation.
(g)
No Company Plan is (1) a
“defined benefit plan” (as defined in Section 414
of the Code), (2) a “multiemployer plan” (as
de
