AGREEMENT AND PLAN OF MERGER

Exhibit 2.1

EXECUTION COPY

AGREEMENT AND PLAN OF MERGER

by and among

CSR PLC,

SHANNON ACQUISITION SUB, INC.

and

SiRF TECHNOLOGY HOLDINGS, INC.

Dated as of February 9, 2009

TABLE OF CONTENTS

 

 

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Exhibit A:         Surviving Corporation Certificate of Incorporation

 

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INDEX OF DEFINED TERMS

 

 

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AGREEMENT AND PLAN OF MERGER

AGREEMENT AND PLAN OF MERGER, dated as of February 9, 2009 (this “ Agreement ”), by and among CSR plc, a company organized under the laws of England and Wales (“ Parent ”), Shannon Acquisition Sub, Inc., a Delaware corporation that is a direct, wholly-owned subsidiary of Parent (“ Merger Sub ”), and SiRF Technology Holdings, Inc., a Delaware corporation (the “ Company ”).

RECITALS

(a) The respective boards of directors of Merger Sub and the Company have approved and declared advisable, and the board of directors of Parent has approved, this Agreement and the merger of Merger Sub with and into the Company (the “ Merger ”) upon the terms and subject to the conditions set forth in this Agreement.

(b) Subject to certain exceptions, by virtue of the Merger, all of the issued and outstanding shares of common stock, par value $0.0001 per share, of the Company (the “ Company Common Stock ”) will be converted into the right to receive ordinary shares, par value £0.001 per share, of Parent (the “ Parent Ordinary Shares ”).

(c) For U.S. federal income tax purposes, it is intended that the Merger shall qualify as a reorganization under the provisions of Section 368(a) of the Code.

Accordingly, the parties to this Agreement, intending to be legally bound, agree as follows:

ARTICLE I

THE MERGER

Section 1.1 The Merger. Upon the terms and subject to the conditions set forth in this Agreement, and in accordance with the General Corporation Law of the State of Delaware (the “ DGCL ”), at the Effective Time, (a) Merger Sub shall be merged with and into the Company, (b) the separate corporate existence of Merger Sub shall cease and the Company shall continue its corporate existence under Delaware law as the surviving corporation in the Merger (the “ Surviving Corporation ”) and (c) the Surviving Corporation shall become a wholly-owned subsidiary of Parent.

Section 1.2 Closing. Subject to the satisfaction or waiver of all of the conditions to closing contained in Article VI, the closing of the Merger (the “ Closing ”) shall take place (a) at the offices of Paul, Weiss, Rifkind, Wharton & Garrison LLP, Alder Castle, 10 Noble Street, London, EC2V 7JU at 3:00 p.m. local time on the second Business Day after the day on which the last of those conditions (other than any conditions that by their nature are to be satisfied at the Closing) is satisfied or waived in accordance with this Agreement or (b) at such other place and time or on such other date as Parent and the Company may agree in writing. The date on which the Closing occurs is referred to as the “ Closing Date ”.

Section 1.3 Effective Time. Upon the Closing, Parent and the Company shall cause a certificate of merger (the “ Certificate of Merger ”) to be executed, signed, acknowledged and filed with the Secretary of State of the State of Delaware as provided in Section 251 of the DGCL. The Merger shall become effective when the Certificate of Merger has been duly filed with the Secretary of State of the State of Delaware or at such other subsequent date or time as Parent and the Company may agree and specify in the Certificate of Merger in accordance with the DGCL (the “ Effective Time ”).

Section 1.4 Effects of the Merger. The Merger shall have the effects set forth in Section 259 of the DGCL.

Section 1.5 Certificate of Incorporation . At the Effective Time, the certificate of incorporation of the Company in effect immediately prior to the Effective Time shall be amended so as to read in its entirety as set forth on Exhibit A and, as so amended, shall be, from and after the Effective Time, the certificate of incorporation of the Surviving Corporation (the “ Surviving Charter ”) until duly amended as provided therein or by applicable Laws.

Section 1.6 Bylaws. The bylaws of Merger Sub in effect immediately prior to the Effective Time shall be, from and after the Effective Time, the bylaws of the Surviving Corporation (the “ Surviving Bylaws ”) until amended as provided in the Surviving Charter, in the Surviving Bylaws or by applicable Laws.

Section 1.7 Directors. The directors of Merger Sub immediately prior to the Effective Time shall be, from and after the Effective Time, the directors of the Surviving Corporation until their successors are duly elected and qualified or until their earlier death, resignation or removal in accordance with the Surviving Charter, the Surviving Bylaws and the DGCL.

Section 1.8 Officers. The officers of the Company immediately prior to the Effective Time shall be, from and after the Effective Time, the officers of the Surviving Corporation until their successors are duly elected or appointed and qualified or until their earlier death, resignation or removal in accordance with the Surviving Charter, the Surviving Bylaws and the DGCL.

Section 1.9 Head Office. The head office of the Company immediately prior to the Effective Time will be the head office of the Surviving Corporation immediately following the Effective Time.

ARTICLE II

EFFECT OF THE MERGER ON CAPITAL STOCK;

EXCHANGE OF CERTIFICATES

Section 2.1 Conversion of Capital Stock. At the Effective Time, by virtue of the Merger and without any action on the part of Parent, Merger Sub, the Company or the holder of any shares of capital stock of Merger Sub or the Company:

(a) Conversion of Merger Sub Capital Stock. Each share of common stock, par value $0.01 per share, of Merger Sub issued and outstanding immediately prior to the Effective Time shall be converted into and become one fully paid and non-assessable share of common stock, par value $0.01 per share, of the Surviving Corporation.

(b) Cancellation of Treasury Stock and Parent-Owned Stock. Each share of Company Common Stock owned by the Company or by Parent or any of its wholly-owned Subsidiaries immediately prior to the Effective Time (collectively, the “ Cancelled Shares ”) shall be canceled automatically and shall cease to exist, and no Parent Ordinary Shares or other consideration shall be paid in exchange for those Excluded Shares. Each share of Company Common Stock owned by any wholly-owned Subsidiary of the Company immediately prior to the Effective Time (collectively with the Cancelled Shares, the “ Excluded Shares ”) shall remain outstanding.

(c) Conversion of Company Common Stock.

(i) Each share of Company Common Stock issued and outstanding immediately prior to the Effective Time (other than Excluded Shares and Dissenting Shares, if any) shall be converted into the right to receive 0.741 (the “ Exchange Ratio ”) fully paid Parent Ordinary Share, subject to (A) the anti-dilution adjustments provided in Section 2.2 and (B) the payment of cash in lieu of fractional Parent Ordinary Shares as provided in Section 2.3(f), and such Parent Ordinary Shares, when issued, shall be free from all Liens and rank pari passu in all respects with the Parent Ordinary Shares then in issue.

 

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(ii) All shares of Company Common Stock that have been converted into the right to receive Parent Ordinary Shares as provided in Section 2.1(c)(i) shall be canceled automatically and shall cease to exist, and the holders of certificates which immediately prior to the Effective Time represented those shares (“ Company Certificates ”) shall cease to have any rights with respect to those shares, other than the right to receive Parent Ordinary Shares and cash in lieu of fractional Parent Ordinary Shares as provided in this Section 2.1 and Section 2.3 upon surrender of Company Certificates in accordance with this Article II, including Section 2.3(c) (together, the “ Merger Consideration ”).

Section 2.2 Adjustments to Prevent Dilution. If, prior to the Effective Time, Parent or the Company changes the number of Parent Ordinary Shares or shares of Company Common Stock outstanding, in each case as a result of share dividends or other distributions payable in Parent Ordinary Shares or Company Common Stock or securities convertible or exchangeable into or exercisable for Parent Ordinary Shares or Company Common Stock or a share or stock split (including a reverse share or stock split), reclassification, combination or other similar change with respect to the Parent Ordinary Shares or the Company Common Stock, then the Exchange Ratio shall be equitably adjusted to eliminate the effects of that share or stock dividend, distribution, share or stock split, reclassification, combination or other change.

Section 2.3 Exchange of Certificates.

(a) Exchange Agent. Prior to the Effective Time, Parent shall (i) select a bank or trust company, satisfactory to the Company in its reasonable discretion, to act as the exchange agent in the Merger (the “ Exchange Agent ”) and (ii) enter into an exchange agent agreement with the Exchange Agent, the terms and conditions of which are satisfactory to the Company in its reasonable discretion (the “ Exchange Agent Agreement ”). Unless and until the Parent Ordinary Shares are listed on a national securities exchange in the United States, the parties shall cooperate to cause the Exchange Agent, Parent’s registrar or other institution reasonably satisfactory to the parties to maintain at Parent’s expense from and after the Effective Time a facility to allow for deposit, custody and trading of Parent Ordinary Shares on the London Stock Exchange by former holders of Company Certificates, or Company Stock Options, RSUs and PSAs, including residents of the United States, and if such entity ceases to maintain such facility for any reason, Parent shall use its reasonable best efforts to cause another facility to be created to provide for the foregoing.

(b) Exchange Fund. As of the Effective Time, Parent shall (i) allot to each holder of Company Certificates such whole number of Parent Ordinary Shares as such holder is entitled to receive under Section 2.1(c) which allotment shall be conditional only upon compliance with Section 2.3(c)(ii), (ii) subject to Section 2.3(f)(ii), allot to the Exchange Agent the Excess Parent Shares, and (iii) deposit with the Exchange Agent, for the benefit of holders of Company Certificates, certificates representing such Parent Ordinary Shares and, if applicable, Excess Parent Shares (collectively, “ Parent Certificates ”). Notwithstanding Section 2.3(b)(i) above, the parties will endeavour to permit, to the extent reasonably practicable, allotment and issue of the Parent Ordinary Shares referred to in Section 2.3(b)(i) at the Effective Time to the Exchange Agent as nominee for the holders of Company Certificates at such time, in which case the transfer of legal title to the Parent Ordinary Shares to such holders shall be conditional only upon compliance by those holders with Section 2.3(c)(ii). Such Parent Ordinary Shares as are allotted to the holder of Company Certificates or as are allotted to the Exchange Agent as nominee for such holders and, if applicable, Excess Parent Shares, together with (i) any cash in lieu of fractional Parent Ordinary Shares to which holders of Company Certificates may be entitled under Section 2.3(f) and (ii) any dividends or other distributions paid with respect to those shares and to which the holders of Company Certificates may be entitled under Section 2.3(d), are collectively referred to as the “ Exchange Fund .”

(c) Exchange Procedures.

(i) Letter of Transmittal. Promptly after the Effective Time, and in any event within 10 Business Days thereof, Parent shall cause the Exchange Agent to mail to each holder of record of a Company Certificate (A) a letter of transmittal in customary form, specifying that delivery shall be effected, and

 

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risk of loss and title to the Company Certificates shall pass, only upon proper delivery of Company Certificates to the Exchange Agent and (B) instructions for surrendering Company Certificates.

(ii) Surrender of Company Certificates. Upon surrender of a Company Certificate for cancellation to the Exchange Agent, together with a duly executed letter of transmittal, the holder of that Company Certificate shall be entitled to receive in exchange therefor the number of whole Parent Ordinary Shares and cash in lieu of fractional Parent Ordinary Shares payable in respect of that Company Certificate less any required withholding of Taxes, which Parent shall issue and/or shall cause the Exchange Agent to issue (or, if applicable, transfer the legal title to, for nil consideration) and/or pay in accordance with the Exchange Agent Agreement and Parent’s register of members shall be updated accordingly. The Parent Ordinary Shares shall be issued in uncertificated form to such account as shall be specified in the completed letter of transmittal, unless a physical share certificate is requested or is otherwise required by applicable Laws, in which case Parent shall cause the Exchange Agent to send such Parent Certificates to such holder promptly in accordance with the Exchange Agent Agreement. Any Company Certificates so surrendered shall be canceled immediately. No interest shall accrue or be paid on any amount payable upon surrender of Company Certificates.

(iii) Unregistered Transferees. In the event of a transfer of ownership of Company Common Stock which is not registered in the transfer records of the Company, then the Merger Consideration may be issued and/or paid in accordance with this Section 2.3(c) to a person other than the person in whose name the Company Certificate so surrendered is registered if (A) such Company Certificate is properly endorsed or otherwise in proper form for transfer and (B) the person requesting such payment (1) pays any transfer or other Taxes required by reason of the transfer or (2) establishes to the reasonable satisfaction of Parent and the Exchange Agent that such Taxes have been paid or are not applicable.

(iv) No Other Rights. Until surrendered in accordance with this Section 2.3(c), each Company Certificate shall be deemed, from and after the Effective Time, to represent only the right to receive the aggregate Merger Consideration payable in respect of the shares represented by such Company Certificate. The Merger Consideration issued or paid upon the surrender of any Company Certificate will be deemed to have been issued or paid in full satisfaction of all rights pertaining to that Company Certificate and the shares of Company Common Stock formerly represented by it.

(d) Distributions with Respect to Unexchanged Shares. No dividends or other distributions payable with respect to Parent Ordinary Shares that have a record date after the Effective Time shall be paid to a holder of an unsurrendered Company Certificate until that Company Certificate is properly surrendered in accordance with this Article II. Subject to applicable Laws, following the proper surrender of any such Company Certificate, there shall be issued or paid to the Person to whom the Parent Certificate is issued in exchange therefor, without interest, (i) at the time of such surrender, the dividends or other distributions payable (if any) with respect to the Parent Ordinary Shares represented by that Parent Certificate that have a record date after the Effective Time and a payment date on or prior to the date of issuance of that Parent Certificate and (ii) at the appropriate payment date, the dividends or other distributions payable with respect to such Parent Ordinary Shares that have a record date after the Effective Time and a payment date after the date of issuance of that Parent Certificate.

(e) No Further Transfers. At the Effective Time, the stock transfer books of the Company shall be closed and there shall be no further registration of transfers of the shares of Company Common Stock that were outstanding immediately prior to the Effective Time.

(f) Fractional Shares.

(i) No certificates or scrip representing fractional Parent Ordinary Shares shall be issued upon the surrender of Company Certificates, and such fractional share interests will not entitle their owners to vote, to receive dividends or other distributions or to any other rights of a shareholder of Parent. Each holder of Company Certificates who would otherwise have been entitled to receive a fraction of a Parent Ordinary Share under this Article II (after taking into account all Company Certificates

 

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delivered by such holder) shall receive from the Exchange Agent, in accordance with the provisions of this Article II, a cash payment in United States dollars in lieu of such fractional share interest either (A) representing that holder’s proportionate interest in the net proceeds from the sale by the Exchange Agent in one or more transactions of the aggregate of the fractional Parent Ordinary Shares which would otherwise have been issued under this Article II (the “ Excess Parent Shares ”) or (B) in accordance with Section 2.3(f)(ii). The sale of the Excess Parent Shares shall be (A) executed on the London Stock Exchange and (B) made at such times, in such manner and on such terms as the Exchange Agent shall determine in its reasonable discretion. Funds received from the sale of the Excess Parent Shares denominated in pounds sterling shall be exchanged for United States dollars at the best rate of exchange reasonably available to the Exchange Agent on or immediately after the date of such sale. Until the net proceeds of such sale or sales have been distributed to the holders of Company Certificates in accordance with this Section 2.3, the Exchange Agent shall hold the net proceeds in trust (the “ Exchange Trust ”) for those holders. All commissions, fees, transfer taxes and other out-of-pocket transaction costs, including the expenses and compensation of the Exchange Agent, incurred in connection with the sale of the Excess Parent Shares shall be paid by Parent and the Surviving Corporation. As soon as practicable after the determination of the amount of cash to be paid to holders of Company Certificates in lieu of fractional Parent Ordinary Shares, the Exchange Agent shall make that amount available to those holders, without interest. The Exchange Agent shall determine the portion of the net proceeds to which each holder of Company Certificates shall be entitled by multiplying the aggregate amount of the net proceeds by a fraction of which (1) the numerator is the amount of the fractional share interest to which such holder of Company Certificates is entitled (after taking into account all Company Certificates delivered by such holder) and (2) the denominator is the aggregate amount of fractional share interests to which all holders of Company Certificates are entitled.

(ii) Notwithstanding the provisions of Section 2.3(f)(i), Parent may elect, at its option exercised prior to the Effective Time, to pay to the Exchange Agent an amount in cash in United States dollars, to be deposited on the first Business Day following the Effective Time, sufficient for the Exchange Agent to pay each holder of Company Certificates an amount in cash equal to the product obtained by multiplying (A) the fraction of a Parent Ordinary Share to which such holder would otherwise have been entitled by (B) the closing price for a Parent Ordinary Share on the London Stock Exchange on the first Business Day immediately following the Effective Time. In such event, all references in this Agreement to the net proceeds from the sale of the Excess Parent Shares and similar references shall be deemed to refer to the payments calculated in the manner set forth in this Section 2.3(f)(ii).

(g) Required Withholding. Parent, the Company, the Surviving Corporation and the Exchange Agent shall be entitled to deduct and withhold from any cash payments made pursuant to this Agreement such amounts as they may be required to deduct and withhold from such payment under any applicable tax Laws. If Parent, the Company, the Surviving Corporation or the Exchange Agent, as the case may be, deducts or withholds any such amounts, such amounts shall be treated for all purposes as having been paid to the Person in respect of whom Parent, the Company, the Surviving Corporation or the Exchange Agent, as the case may be, made such deduction and withholding.

(h) Termination of Exchange Fund and Exchange Trust. Any portion of the Exchange Fund or the Exchange Trust that remains unclaimed by the holders of Company Certificates one year after the Effective Time shall be delivered by the Exchange Agent to Parent upon demand. Any holder of Company Certificates who has not complied with this Article II shall look thereafter only to Parent for payment of the Merger Consideration.

(i) No Liability. None of Parent, the Surviving Corporation or the Exchange Agent shall be liable to any holder of Company Certificates for any Merger Consideration properly delivered to a public official under any applicable abandoned property, escheat or similar Laws.

 

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(j) Lost, Stolen or Destroyed Certificates. If any Company Certificate is lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Company Certificate to be lost, stolen or destroyed, the Exchange Agent shall issue the Merger Consideration in exchange for such lost, stolen or destroyed Company Certificate.

Section 2.4 Treatment of Stock Options, RSUs, Performance Awards and ESPP.

(a) As of the Effective Time, each option to acquire shares of Company Common Stock outstanding immediately prior to the Effective Time (“ Company Stock Options ”) and issued under any “Company Option Plans” (as defined below), shall be converted (as converted, a “ Converted Stock Option ”), by virtue of the Merger and without any action on the part of the holder of that Company Stock Option, into an option exercisable for that number of Parent Ordinary Shares equal to the product of (i) the aggregate number of shares of Company Common Stock for which such Company Stock Option was exercisable multiplied by (ii) the Exchange Ratio, rounded down to the nearest whole share. The exercise price per share of such Converted Stock Option shall be equal to (x) the aggregate exercise price of such Company Stock Option immediately prior to the Effective Time divided by (y) the number of Parent Ordinary Shares for which such Converted Stock Option shall be exercisable, as determined in accordance with the prior sentence, rounded up to the nearest cent. “ Company Option Plans ” means the 1995 Stock Plan, the 2004 Stock Incentive Plan, the TrueSpan 2004 Stock Incentive Plan and the Centrality 1999 Stock Plan.

(b) As of the conversion pursuant to Section 2.4(a), each Converted Stock Option shall have, and be subject to, the same terms and conditions set forth in the applicable Company Option Plan and the option agreement pursuant to which the corresponding Company Stock Option was granted, as in effect immediately prior to the Effective Time) except as otherwise provided herein.

(c) To the extent that any Company Stock Option constituted an “incentive stock option” (within the meaning of Section 422 of the Code) immediately prior to the Effective Time, such Company Stock Option shall continue to qualify as an “incentive stock option” to the maximum extent permitted by Section 422 of the Code.

(d) No later than five Business Days following the Effective Time, Parent shall file a registration statement on Form S-8 (or any successor or other appropriate form) with respect to the issuance of Parent Ordinary Shares upon exercise of all Converted Stock Options and shall use commercially reasonable efforts to maintain the effectiveness of such registration statement(s) (and maintain the current status of any prospectus contained therein) for so long as any Converted Stock Options remain outstanding.

(e) As of the Effective Time, each restricted stock unit with respect to shares of Company Common Stock granted under a Company Option Plan that is outstanding immediately prior to the Effective Time (each, an “ RSU ”) shall, by virtue of the Merger and without any action on the part of the holder thereof, be converted into a restricted stock unit, on the same terms and conditions (including applicable vesting requirements and deferral provisions) as applied to each such RSU immediately prior to the Effective Time, with respect to the number of Parent Ordinary Shares that is equal to the number of shares of Company Common Stock subject to the RSU immediately prior to the Effective Time multiplied by the Exchange Ratio (rounded to the nearest whole share) (a “ Parent RSU ”). As of the Effective Time, each Parent RSU shall have, and be subject to, the same terms and conditions set forth in the applicable Company Option Plan and the RSU agreement pursuant to which the corresponding RSU was granted, as in effect immediately prior to the Effective Time) except as otherwise provided herein.

(f) [Reserved]

(g) Each outstanding right to purchase shares of Company Common Stock under any outstanding offering period as of the date of this Agreement under the 2004 Employee Stock Purchase Plan (the “ ESPP ”) shall terminate not later than the day immediately prior to the day on which occurs the Effective Time, provided that the Company may permit each participant in the ESPP to purchase from the Company as many whole shares of Company Common Stock as the balance of the participant’s account will allow, at

 

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the applicable price determined under the terms of the ESPP for each such outstanding offering period, using such date as the final purchase date for such offering period, and any amounts remaining in any participant’s account after any such purchase will be refunded to the participant.

Section 2.5 Appraisal Rights. Unless the Parent Ordinary Shares are listed on a “national securities exchange” (as such term is used in the DGCL) at the Effective Time (a “ Timely Listing ”), any provision of this Agreement to the contrary notwithstanding, all shares of Company Common Stock that are issued and outstanding immediately prior to the Effective Time (other than Cancelled Shares) and that are held by holders who have demanded and perfected their right to dissent from the Merger and to be paid the fair value of such shares in accordance with the DGCL and, as of the Effective Time, have not effectively withdrawn or lost such dissenters’ rights (such shares, if any, the “ Dissenting Shares ”) shall not be converted into or represent the right to receive the Merger Consideration, but instead holders of such Dissenting Shares shall be entitled only to such rights as are granted by the DGCL. If any holder of shares of Company Common Stock who demands dissenters’ rights under the DGCL with respect to such holder’s shares effectively withdraws or loses such rights (whether through failure to perfect or otherwise) in accordance with the DGCL, then, as of the Effective Time or the occurrence of such event, whichever occurs later, such holder’s shares shall automatically be converted into and represent only the right to receive the Merger Consideration in accordance with this Article II, without interest thereon, upon surrender of the certificate or certificates formerly representing such shares. The Company shall give Parent (i) prompt written notice of any notice of intent to demand appraisal of any Dissenting Shares that may be received by the Company, withdrawals of such notices or demands, and any other instruments relating to stockholders’ rights of appraisal that are served pursuant to the DGCL and received by the Company and (ii) the opportunity to participate in all negotiations and proceedings with respect to such notices and demands. The Company shall not, except with the prior written consent of Parent (which consent shall not be unreasonably withheld), settle, or offer to agree to settle, any such demands. In the event of a Timely Listing, no appraisal rights will be available to the stockholders of the Company in connection with the Merger.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company represents and warrants to Parent and Merger Sub, (i) subject to such exceptions or qualifications to representations and warranties as are disclosed in the Company Disclosure Letter and (ii) except as set forth in the Company Public Reports filed prior to the date of this Agreement, other than any disclosures set forth in any risk factor section contained in such Company Public Reports (it being understood that any matter disclosed in the Company Disclosure Letter or in or incorporated by reference in such Company Public Reports shall be deemed disclosed with respect to any section of this Agreement to which the matter relates to the extent the relevance to each such section is reasonably apparent) and (B) 2008 Company Condensed Accounts, as follows:

Section 3.1 Organization and Power.

(a) The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has the requisite power and authority to own, lease and operate its assets and properties and to carry on its business as now conducted.

(b) Each of the Company’s Subsidiaries is a corporation, limited liability company or other legal entity duly organized, validly existing and (where such term is of legal significance) in good standing under the laws of its jurisdiction of organization and has the requisite power and authority to own, lease and operate its assets and properties and to carry on its business as now conducted, except where the failure to be so organized, existing and in good standing does not have and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

Section 3.2 Foreign Qualifications. The Company and each of its Subsidiaries is duly qualified or licensed to do business as a foreign corporation, limited liability company or other legal entity and (where such term is of

 

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legal significance) is in good standing in each jurisdiction where the character of the assets and properties owned, leased or operated by it or the nature of its business makes such qualification or license necessary, except where failures to be so qualified or licensed or in good standing would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

Section 3.3 Corporate Authorization. The Company has all necessary corporate power and authority to enter into this Agreement and, subject to adoption of this Agreement by the affirmative vote of the holders of a majority of the outstanding shares of Company Common Stock (the “ Requisite Company Vote ”), to consummate the transactions contemplated by this Agreement. The board of directors of the Company has unanimously adopted resolutions: (a) approving and declaring advisable the Merger, this Agreement and the transactions contemplated by this Agreement; (b) declaring that it is in the best interests of the stockholders of the Company that the Company enters into this Agreement and consummates the Merger upon the terms and subject to the conditions set forth in this Agreement; (c) directing that adoption of this Agreement be submitted to a vote at a meeting of the stockholders of the Company; (d) unequivocally recommending to the stockholders of the Company that they adopt this Agreement (the “ Company Board Recommendation ”); and (e) to include the Company Board Recommendation in the Company Proxy Statement. The execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated by this Agreement have been duly and validly authorized by all necessary corporate action on the part of the Company, subject to the Requisite Company Vote.

Section 3.4 Enforceability. This Agreement has been duly executed and delivered by the Company and, assuming the due authorization, execution and delivery hereof by the other parties hereto, constitutes a legal, valid and binding agreement of the Company, enforceable against the Company in accordance with its terms.

Section 3.5 Organizational Documents. The Company has made available to Parent correct and complete copies of the certificate of incorporation and bylaws of the Company, as in effect on the date of this Agreement (collectively, the “ Company Organizational Documents ”). The Company has made available to Representatives of Parent correct and complete copies of the minutes of all meetings of the board of directors and the audit committee of the board of directors of the Company held since January 1, 2006 (except for such minutes where disclosure of the proceedings might jeopardize attorney-client privilege, fail to comply with confidentiality obligations to third parties, concern discussions relating to this Agreement or alternative transactions, or would disclose information that in the good faith belief of the Company is restricted by Law, which minutes do not reflect matters, excluding matters relating to Legal Actions, that would reasonably be expected individually or in the aggregate, to have a Company Material Adverse Effect).

Section 3.6 Subsidiaries. A correct and complete list of all Subsidiaries of the Company and their respective jurisdictions of organization is set forth in Section 3.6 of the Company Disclosure Letter. Each of the Subsidiaries of the Company is wholly-owned by the Company, directly or indirectly, free and clear of any Liens and the Company does not own, directly or indirectly, any capital stock of, or any other securities convertible or exchangeable into or exercisable for capital stock of, any Person other than the Subsidiaries of the Company.

Section 3.7 Governmental Authorizations. The execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated by this Agreement do not and will not require any consent, approval or other authorization of, or filing with or notification to (collectively, “ Governmental Authorizations ”), any international, national, federal, state, provincial or local governmental, regulatory or administrative authority, agency, commission, court, tribunal, arbitral body or self-regulated entity, whether of the United States, the United Kingdom, or otherwise (each, a “ Governmental Entity ”), other than:

(a) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware;

(b) the filing with the United States Securities and Exchange Commission (the “ SEC ”) of (i) a proxy statement (the “ Company Proxy Statement ”) relating to the special meeting of the stockholders of the Company to be held to consider the adoption of this Agreement (the “ Company Stockholders Meeting ”) and (ii) any other filings and reports that may be required in connection with this Agreement and the

 

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transactions contemplated by this Agreement under the Securities Act of 1933 (the “ Securities Act ”) and the Securities Exchange Act of 1934 (the “ Exchange Act ”);

(c) compliance with the rules and regulations of The NASDAQ Stock Market;

(d) compliance with the pre-merger notification requirement under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “ HSR Act ”).

Section 3.8 Non-Contravention . The execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated by this Agreement do not and will not:

(a) contravene or conflict with, or result in any violation or breach of, any provision of the Company Organizational Documents;

(b) contravene or conflict with, or result in any violation or breach of, any Laws or Orders applicable to the Company or any of its Subsidiaries, assuming that all consents, approvals, authorizations, filings and notifications described in Section 3.7 and the Requisite Company Vote have been obtained or made;

(c) result in any violation or breach of, or constitute a default (with or without notice or lapse of time or both) under, any Contracts to which the Company or any of its Subsidiaries is a party or by which any of their assets are bound (collectively, “ Company Contracts ”), other than such as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect;

(d) require any consent, approval or other authorization of, or filing with or notification to, any Person under any Company Contracts, other than such as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect;

(e) give rise to any termination, cancellation, amendment, modification or acceleration of any rights or obligations under any Company Contracts, other than such as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect; or

(f) cause the creation or imposition of any Liens on any assets of the Company or its Subsidiaries, other than such as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

Section 3.9 Capitalization .

(a) The authorized capital stock of the Company consists solely of (i) 250,000,000 shares of Company Common Stock and (ii) 5,000,000 shares of preferred stock, par value $0.0001 per share (“ Company Preferred Stock ”).

(b) As of the close of business on February 6, 2009, (i) 62,694,816 shares of Company Common Stock were issued and outstanding (not including any such shares held in treasury by the Company and its Subsidiaries), (ii) no shares of Company Common Stock were held in treasury by the Company and its Subsidiaries, (iii) 16,576,796 shares of Company Common Stock were reserved for issuance under the Company Option Plans, (iv) 1,206,676 shares of Company Common Stock reserved for issuance under the ESPP, (v) 245,337 shares of Company Common Stock were reserved for issuance in connection with the Company Warrants and (vi) no shares of Company Preferred Stock were issued and outstanding or reserved for issuance.

(c) Since the close of business on February 6, 2009, no shares of capital stock of the Company, or securities convertible or exchangeable into or exercisable for shares of capital stock of the Company, have been issued, other than upon exercise of the Company Stock Options outstanding on that date (or granted thereafter in compliance with this Agreement) or Company Warrants or as a result of vesting of RSUs or performance share awards granted under a Company Option Plan (each, a “ PSA ”) outstanding on that date (or granted thereafter in compliance with this Agreement) or purchases of Company Common Stock under the ESPP.

 

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(d) All shares of Company Common Stock that are issued and outstanding or are subject to issuance prior to the Effective Time (i) are or, upon such issuance on the terms and subject to the conditions specified in the instruments under which they are issuable, will be duly authorized, validly issued, fully paid and non-assessable and (ii) will not have been issued in violation of any pre-emptive rights.

(e) There are no outstanding contractual obligations of the Company or any of its Subsidiaries (i) to repurchase, redeem or otherwise acquire any shares of Company Common Stock or capital stock of any Subsidiary of the Company or (ii) to make any investment in (A) any Subsidiary of the Company that is not wholly owned by the Company or (B) any other Person.

(f) Each outstanding share of capital stock of each Subsidiary of the Company is duly authorized, validly issued, fully paid and non-assessable and was not issued in violation of any pre-emptive rights.

Section 3.10 Options; RSUs; PSAs; ESPP; Warrants .

(a) As of the date of this Agreement, (i) Company Stock Options to acquire an aggregate of 7,079,452 shares of Company Common Stock have been granted and are outstanding under the Company Option Plans, (ii) RSUs to acquire 2,738,965 shares of Company Common Stock have been granted and are outstanding under Company Option Plans, (iii) no PSAs to acquire shares of Company Common Stock have been granted and are outstanding under Company Option Plans, (iv) elections have been made under the ESPP to purchase $266,798 of Company Common Stock pursuant to the terms thereof which remain unsatisfied, and (v) Company Warrants to purchase an aggregate of 245,337 shares of the Company Common Stock are outstanding. Except for (i) such Company Stock Options, RSUs, PSAs and Company Warrants and (ii) an aggregate of 6,758,379 shares of Company Common Stock that remain available for future grant under the Company Option Plans and 1,206,676 shares of Company Common Stock reserved for issuance under the ESPP, as of the date of this Agreement, there are no options, warrants, calls, conversion rights, stock appreciation rights, phantom stock awards, redemption rights, repurchase rights or other rights, agreements, arrangements or commitments to which the Company or any of its Subsidiaries is a party (A) relating to the issued or unissued capital stock or other securities of the Company or any of its Subsidiaries or (B) obligating the Company or any of its Subsidiaries to issue or sell any shares of their capital stock or other securities.

(b) The Company has made available to Parent (i) correct and complete copies of all Company Option Plans, the ESPP and all forms of award agreements with respect to options and other stock awards issued under those Company Option Plans, including all Company Stock Options, RSUs and PSAs and (ii) a correct and complete list of the following information, as of the date of this Agreement and in each case as applicable, with respect to each Company Stock Option, RSU and PSA: (A) the exercise price per share of Company Common Stock; (B) the number of shares of Company Common Stock subject to the award; (C) the Company Option Plan under which the award was granted; and (D) the dates on which the award was granted.

(c) The Company has made available to Parent correct and complete copies of all agreements relating to Company Warrants. Section 3.10(c) of the Company Disclosure Letter sets forth a correct and complete list of the following information, as of the date of this Agreement, with respect to each Company Warrant: (i) the name of the holder of that warrant; (ii) the price at which shares of Company Common Stock may be purchased pursuant to that warrant; (iii) the number of shares of Company Common Stock subject to that warrant; and (v) the dates on which that warrant was issued and will expire.

Section 3.11 Voting .

(a) The Requisite Company Vote is the only vote of the holders of any class or series of the capital stock of the Company or any of its Subsidiaries necessary (under the Company Organizational Documents, the DGCL, other applicable Laws or otherwise) to approve and adopt this Agreement, the Merger and the other transactions contemplated by this Agreement.

 

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(b) There are no voting trusts, proxies or similar agreements, arrangements or commitments to which the Company or any of its Subsidiaries is a party or of which the Company has Knowledge with respect to the voting of any shares of capital stock of the Company or any of its Subsidiaries. There are no bonds, debentures, notes or other instruments of indebtedness of the Company or any of its Subsidiaries that have the right to vote, or that are convertible or exchangeable into or exercisable for securities having the right to vote, on any matters on which stockholders of the Company may vote.

Section 3.12 Public Reports .

(a) The Company has timely filed with the SEC, and has made available to Parent correct and complete copies of, all forms, reports, schedules, statements and other documents required to be filed by the Company with the SEC since January 1, 2008 (collectively, the “ Company Public Reports ”). The Company Public Reports (i) were prepared in accordance with the requirements of the Securities Act and the Exchange Act and (ii) did not, at the time they were filed, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which such statements were made, not misleading.

(b) Neither the Company nor any of its Subsidiaries is a party to, or has any commitment to become a party to, any off-balance sheet partnership or any Contract or arrangement relating to any transaction or relationship between or among the Company and 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, or any “off-balance sheet arrangement” (as defined in Item 303(a) of Regulation S-K of the SEC).

(c) Each of the principal executive officers of the Company and the principal financial officer of the Company (or each former principal executive officer of the Company and each former principal financial officer of the Company, as applicable) has made all certifications required by Rule 13a-14 or 15d-14 under the Exchange Act and Sections 302 and 906 of the Sarbanes-Oxley Act with respect to the Company Public Reports, and the statements contained in each such certification, at the time of filing or submission of such certification, were true and accurate. For purposes of this Agreement, “principal executive officer” and “principal financial officer” shall have the meanings given to such terms in the Sarbanes-Oxley Act. Neither the Company nor any of its Subsidiaries has outstanding, or has arranged any outstanding, “extensions of credit” to directors or executive officers in violation of Section 402 of the Sarbanes-Oxley Act. As of the date hereof, the Company has no reason to believe that its outside auditors and its principal executive officer and principal financial officer will not be able to give, without qualification, the certificates and attestations required pursuant to the Sarbanes-Oxley Act when next due.

(d) No Subsidiary of the Company is subject to the periodic reporting requirements of the Exchange Act or is otherwise required to file any forms, reports, schedules, statements or other documents with the SEC, any other Governmental Entity (whether or not located in the United States) that performs a similar function to that of the SEC or any securities exchange or quotation service.

Section 3.13 SEC Disclosure Controls and Procedures .

(a) The Company has (i) designed disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) to provide reasonable assurance that material information relating to the Company, including its consolidated subsidiaries, is made known to its principal executive officer and principal financial officer; (ii) designed internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP; and (iii) evaluated the effectiveness of the Company’s disclosure controls and procedures.

(b) The Company has disclosed, based on the most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (i) all significant deficiencies and material weaknesses in the design or operation of internal control over financial

 

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reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information, and (ii) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

(c) Since January 1, 2006, (i) neither the Company, nor, to the Knowledge of the Company, any director or officer of the Company, has received or otherwise had or obtained Knowledge of any written material complaint, allegation, assertion or claim regarding the accounting or auditing practices, procedures, methodologies or methods of the Company or any of its Subsidiaries, or their respective internal accounting controls, including any written material complaint, allegation, assertion or claim that the Company or any of its Subsidiaries has engaged in accounting or auditing practices that do not comply with U.S. GAAP or the Company’s published internal accounting controls, and (ii) no attorney representing the Company or any of its Subsidiaries, whether or not employed by the Company or any of its Subsidiaries, has rendered a written report to the board of directors of the Company or any committee thereof containing evidence of a material violation of applicable securities Laws, breach of fiduciary duty or similar violation by the Company or any of its officers or directors.

Section 3.14 Financial Statements . The audited consolidated financial statements and unaudited consolidated interim financial statements of the Company and its consolidated Subsidiaries for the periods from January 1, 2006 included or incorporated by reference in the Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q that are included in the Company Public Reports: (a) complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC in effect at the time of filing; (b) were prepared in accordance with U.S. GAAP (except, in the case of unaudited statements, as permitted by the rules and regulations of the SEC) applied on a consistent basis (except as may be indicated in the notes to those financial statements); and (c) fairly presented in all material respects the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof and their consolidated results of operations and cash flows for the periods then ended (subject, in the case of any unaudited interim financial statements, to normal year-end adjustments). The Company has delivered to Parent a correct and complete copy of the 2008 Company Condensed Accounts. The 2008 Company Condensed Accounts fairly present in all material respects the consolidated financial position of the Company and its consolidated Subsidiaries as of December 27, 2008 and the consolidated results of operations for the periods then ended, except to the extent that such 2008 Company Condensed Accounts are unaudited, do not contain full financial statements or notes thereto, are not presented in accordance with U.S. GAAP and remain subject to adjustment.

Section 3.15 Liabilities . There are no liabilities or obligations of any kind, whether accrued, contingent, absolute, inchoate or otherwise (collectively, “ Liabilities ”) of the Company or any of its Subsidiaries which are required to be reflected or reserved against on a consolidated balance sheet of the Company, including the notes thereto, under U.S. GAAP, other than: (a) Liabilities reflected or reserved against in the consolidated balance sheet of the Company and its consolidated Subsidiaries as of December 27, 2008 included in the 2008 Company Condensed Accounts; (b) Liabilities incurred since December 27, 2008 in the ordinary course of business consistent with past practice that would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect; (c) Liabilities or obligations incurred directly pursuant to this Agreement; and (d) any other Liabilities that would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

Section 3.16 Absence of Certain Changes . Since December 31, 2008, there has not been any Company Material Adverse Effect. Except for Liabilities incurred in connection with this Agreement, since December 27, 2008, (a) the Company and each of its Subsidiaries have conducted their business in the ordinary course consistent with past practice and (b) neither the Company nor any of its Subsidiaries has taken any action which, if taken after the date of this Agreement, would be prohibited by Section 5.1.

Section 3.17 Litigation . Except as set forth in Section 3.17(f) of the Company Disclosure Letter, as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect or as is

 

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reasonably foreseeable based on or relating to existing Legal Actions disclosed to Parent as of the date of this Agreement, (a) are no Legal Actions pending or, to the Knowledge of the Company, threatened against the Company or any of its Subsidiaries or any director, officer or employee of the Company or any of its Subsidiaries or other Person for whom the Company or any of its Subsidiaries may be liable, and (b) there have been no adverse developments concerning such pending Legal Actions. Except as set forth in Section 3.17 of the Company Disclosure Letter or as is reasonably foreseeable based on or relating to existing Legal Actions disclosed to Parent as of the date of this Agreement, there are no Orders outstanding against the Company or any of its Subsidiaries that would reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

Section 3.18 Contracts .

(a) There are no Company Contracts required to be described in, or filed as an exhibit to, any Company SEC Report that are not so described or filed as required by the Securities Act or the Exchange Act, as the case may be. Section 3.18 of the Company Disclosure Letter sets forth, as of the date hereof, a list of (i) all Company Contracts described in the preceding sentence and (ii) all material Company Contracts that (x) restrict the ability of the Company or any of its Subsidiaries to compete in any line of business or to engage in business in any geographic area, (y) contain any so-called “most favored nation” provision or similar provisions requiring the Company or any of its Subsidiaries to offer to a Person any terms or conditions that are at least as favorable as those offered to one or more other Persons or (z) contain any non-assertion covenant or similar provisions explicitly restricting the ability of the Company or any of its Subsidiaries to assert Patent-related claims or initiate any Patent-related Legal Action against any other Person concerning Patents owned by the Company or any of its Subsidiaries other than IP Licenses granted to customers by the Company or its Subsidiaries in the ordinary course of their business (collectively, “ Company Material Contracts ”). The Company has made available to Parent or its Representatives correct and (except for redaction of certain information in certain Company Contracts) complete copies of all Company Material Contracts.

(b) Except for such matters as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, (i) all Company Material Contracts are valid and binding, in full force and effect and enforceable in accordance with their respective terms, except (A) as may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or similar Laws of general application affecting or relating to the enforcement of creditors’ rights generally and (B) subject to general principals of equity, whether considered in a proceeding in Law or in equity (the “ Bankruptcy and Equity Exception ”), (ii) neither the Company nor any of its Subsidiaries is in violation or breach of, or in default (with or without notice or the lapse of time or both) under, any Company Material Contracts and, (iii) to the Knowledge of the Company, no other Person is in violation or breach of, or in default (with or without notice or the lapse of time or both) under, any Company Material Contracts.

Section 3.19 Benefit Plans .

(a) Section 3.19(a) of the Company Disclosure Letter lists all material “employee benefit plans” within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974 (“ ERISA ”), stock purchase, stock option, severance, employment, consulting, change-of-control, bonus, incentive, deferred compensation and other benefit plans (including the Company Options Plans), agreements, programs, policies or commitments, whether or not subject to ERISA, (i)(A) under which any current or former director, officer, employee or consultant of the Company or any of its Subsidiaries has any right to benefits and (B) which are or have been maintained, sponsored or contributed to by the Company or any of its Subsidiaries or to which the Company or any of its Subsidiaries makes or is or has been required to make contributions with respect to such directors, officers, employees or consultants or (ii) with respect to which the Company or any of its Subsidiaries has any direct or indirect liability, whether contingent or otherwise. All such plans, agreements, programs, policies and commitments are collectively referred to as the “ Company Benefit Plans .”

 

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(b) With respect to each Company Benefit Plan, if applicable, the Company has made available to Parent true, complete and correct copies of (i) the plan document and any amendments, (ii) the most recent summary plan description, (iii) the most recent annual report on Form 5500 (including all schedules), (iv) the most recent annual audited financial statements, actuarial reports and opinion, and (v) if the Company Benefit Plan is intended to qualify under Section 401(a) of the Code, the most recent determination letter received from the Internal Revenue Service (the “ IRS ”).

(c) Neither the Company nor any of its Subsidiaries, nor any other entity which, together with the Company or any of its Subsidiaries would be treated as a single employer under Section 4001 of ERISA or Section 414 of the Code (an “ ERISA Affiliate ”) maintains, sponsors or contributes to or has any obligation to contribute to, and has not within the preceding six years maintained, sponsored or contributed or incurred any liability to or had any obligation to contribute to, any employee benefit plan subject to Section 412 of the Code or Title IV of ERISA.

(d) Except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, each Company Benefit Plan is in compliance with ERISA, the Code and other applicable Laws. For each Company Benefit Plan that is intended to qualify under Section 401(a) of the Code, (i) a favorable determination letter has been issued by the IRS with respect to such qualification, (ii) its related trust has been determined to be exempt from taxation under Section 501(a) of the Code and (iii) except as would not reasonably be expected to result in, individually or in the aggregate, a Company Material Adverse Effect, no event has occurred since the date of such qualification or exemption that would adversely affect such qualification or exemption. Except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, no individual who has performed services for the Company or any of its Subsidiaries has been improperly excluded from participation in any Company Benefit Plan, and neither the Company nor any of its Subsidiaries has any direct or indirect liability, whether actual or contingent, with respect to any misclassification of any person as an independent contractor rather than as an employee, or with respect to any employee leased from another employer.

(e) None of the Company, any of its Subsidiaries or any Company Benefit Plan has any liability or obligation with respect to or provides health, medical, life insurance or death benefits to current or former employees of the Company or any of its Subsidiaries beyond their retirement or other termination of service, other than coverage mandated by the Consolidated Omnibus Budget Recommendation Act of 1985 (“ COBRA ”) or Section 4980B of the Code, or any similar state group health plan continuation Laws, the cost of which is fully paid by such current or former employees or their dependents.

(f) The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby will not (either alone or in combination with another event) (i) result in any payment becoming due, or increase the amount of any compensation due, to any current or former employee of the Company or any of its Subsidiaries, (ii) increase any benefits otherwise payable under any Company Benefit Plan, (iii) result in the acceleration of the time of payment or vesting of any compensation or benefits to any current or former employee of the Company or any of its Subsidiaries, or (iv) result in any funding, through a grantor trust or otherwise, of any compensation or benefits to any current or former employee of the Company or any of its Subsidiaries.

(g) There are no pending, or, to the Knowledge of the Company, threatened, claims or litigation against any Company Benefit Plan, other than ordinary claims for benefits by participants and beneficiaries or as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

(h) Except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, each Company Benefit Plan providing for deferred compensation that constitutes a “nonqualified deferred compensation plan” (as defined in Section 409A(d)(1) of the Code and applicable regulations (including IRS Notice 2005-1)) for any service provider to either the Company, its Subsidiaries or any of their respective ERISA Affiliates (i) complies with the requirements of Section 409A of the Code and the regulations promulgated thereunder or (ii) is exempt from compliance under the “grandfather”

 

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provisions of IRS Notice 2005-1 and applicable regulations, and has not been “materially modified” (within the meaning of IRS Notice 2005-1 and Treas. Reg. §1.409A-6(a)(4)) since October 3, 2004.

Section 3.20 Labor Relations .

(a) (i) No employee of the Company or any of its Subsidiaries is represented by a union and, to the Knowledge of the Company, no union organizing efforts have been conducted within the last three years or are now being conducted, (ii) neither the Company nor any of its Subsidiaries is a party to any material collective bargaining agreement or other labor contract, and (iii) except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, neither the Company nor any of its Subsidiaries currently has, or, to the Knowledge of the Company, is there now threatened, a strike, picket, work stoppage, work slowdown or other organized labor dispute.

(b) Except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, (i) each of the Company and its Subsidiaries is in compliance with all applicable Laws relating to the employment of labor, including all applicable Laws relating to wages, hours, collective bargaining, employment discrimination, civil rights, safety and health, workers’ compensation, pay equity and the collection and payment of withholding and/or social security taxes, and (ii) neither the Company nor any of its Subsidiaries has incurred any liability or obligation under the Worker Adjustment and Retraining Notification Act or any similar state or local Law within the last six months that remains unsatisfied.

Section 3.21 Taxes .

(a) All Tax Returns required to be filed by or with respect to the Company or any of its Subsidiaries have been timely filed, and all such Tax Returns are true, complete and correct in all material respects, except for Tax Returns as to which the failure to so file or be so true, complete and correct would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

(b) The Company and its Subsidiaries have fully and timely paid all Taxes shown to be due on the Tax Returns referred to in Section 3.21(a), except for Taxes as to which the failure to pay or adequately provide for would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

(c) There are no outstanding agreements extending or waiving the statutory period of limitations applicable to any claim for, or the period for the collection, assessment or reassessment of, Taxes due from the Company or any of its Subsidiaries for any taxable period and no request for any such waiver or extension is currently pending, except for such agreements or requests that would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

(d) No audit or other proceeding by any Governmental Entity is pending or, to the Knowledge of the Company, threatened in writing with respect to any Taxes due from or with respect to the Company or any of its Subsidiaries, except for such audits and proceedings that would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

(e) All deficiencies for Taxes asserted or assessed in writing against the Company or any of its Subsidiaries have been fully and timely paid, settled or properly reflected in the most recent financial statements contained in the Company Public Reports except for such deficiencies that would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

(f) Neither the Company nor any of its Subsidiaries has taken or agreed to take any action or failed to take any action, and to the Knowledge of the Company, no other person has taken or failed to take any action which could reasonably be expected to prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code.

(g) Neither the Company nor any of its Subsidiaries will be required to include in a taxable period ending after the Closing Date material taxable income attributable to income that accrued in a taxable period

 

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prior to the Closing Date but was not recognized for Tax purposes in such prior taxable period (other than as properly reflected in the Company’s financial statements as reserves) as a result of the installment method of accounting, the completed contract method of accounting, the long-term contract method of accounting, the cash method of accounting, Section 481 of the Code, or otherwise.

Section 3.22 Environmental Matters . Except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, the operations of the Company and each of its Subsidiaries comply with applicable Laws relating to (i) pollution, contamination, protection of the environment or employee health and safety, (ii) emissions, discharges, disseminations, releases or threatened releases of Hazardous Substances into the air (indoor or outdoor), surface water, groundwater, soil, land surface or subsurface, buildings, facilities, real or personal property or fixtures or (iii) the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Substances (collectively, “ Environmental Laws ”). Except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, the Company and its Subsidiaries possess all Permits required under Environmental Laws necessary for their respective operations, and such operations are in compliance with applicable Permits. Except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, no claim, suit or proceeding arising under or pursuant to Environmental Laws is pending, or to the Knowledge of the Company, threatened in writing against the Company or any of its Subsidiaries. Except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, to the Knowledge of the Company, no condition exists on any property, currently or formerly, owned or operated by the Company that has given rise to, or would reasonably be expected to give rise to, any liability or obligation under Environmental Laws. This Section 3.22 shall be the only representation made by the Company with respect to Environmental Laws, Hazardous Substances or actual or potential cleanup, remediation, removal or other response costs (including the cost of coming into compliance with Environmental Laws), investigation costs (including fees of consultants, counsel and other experts in connection with any environmental investigation, testing, audits or studies), losses, Liabilities, payments, Damages (including any actual, punitive or consequential damages (A) under any Environmental Laws, contractual obligations or otherwise or (B) to third parties for personal injury or property damage), civil or criminal fines or penalties, judgments or amounts paid in settlement, in each case arising out of or relating to any obligation or liability under any Environmental Laws.

Section 3.23 Intellectual Property .

(a) The Company and its Subsidiaries (i) own, free and clear of any Liens, or otherwise have the right to use under valid and enforceable IP Licenses, the Intellectual Property used in connection with their respective businesses as presently conducted (the “ Company Intellectual Property ”) and (ii) have the unrestricted right to use, make, have made, sell, offer to sell, import, license, sublicense and otherwise exploit the Company Intellectual Property, subject to the terms and conditions of such IP Licenses.

(b) Section 3.23(b) of the Company Disclosure Letter sets forth, as of the date of this Agreement, a correct and complete list of all registrations, issuances and applications for all material Intellectual Property owned by the Company or any of its Subsidiaries, specifying as to each item, as applicable: (i) the title of the item; (ii) the owner of the item; (iii) the jurisdictions in which the item is registered, issued or in which an application for registration or issuance has been filed; and (iv) the registration, issuance or application numbers and dates.

(c) Section 3.23(c) of the Company Disclosure Letter sets forth, as of the date of this Agreement, a correct and complete list of all material IP Licenses under which the Company or any of its Subsidiaries is a licensor, licensee, distributor or reseller. The Company and its Subsidiaries have substantially performed all material obligations imposed on them under such IP Licenses, except for obligations that may be imposed under licenses relating to off-the-shelf software as such term is commonly understood and that is used solely on proprietary computers (“ Off-the-Shelf Software ”) of the Company and its Subsidiaries. The transactions contemplated by this Agreement will not result in the termination of, or otherwise require the consent, approval or other authorization of any party to, or materially alter the terms of, any IP License other than

 

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those for Off-the-Shelf Software. In relation to any material IP License under which the Company or any of its Subsidiaries is a licensor of Company Intellectual Property, such licenses have been granted in the ordinary course of business and have not materially diminished the value of the business of the Company and its Subsidiaries, taken as a whole.

(d) Section 3.23(d) of the Company Disclosure Letter lists, to the Knowledge of the Company, as of the date of this Agreement, all Open Source Materials that the Company or any of its Subsidiaries has utilized in any way in the development, testing, production or sale of the Company Intellectual Property. Section 3.23(d) of the Company Disclosure Letter identifies, to the Knowledge of the Company, as of the date of this Agreement, all of the Company’s current and proposed products that use or contain such Open Source Materials, including whether and how the Open Source Materials have been modified and/or distributed by the Company.

(e) To the Knowledge of the Company, all of the Company’s and any of its Subsidiary’s material rights in the Company Intellectual Property are valid and enforceable. The Company and its Subsidiaries have taken all commercially reasonable actions to maintain and protect each item of registered or issued Company Intellectual Property owned or purported to be owned by them.

(f) The Company and its Subsidiaries have taken all commercially reasonable precautions to protect (i) the secrecy, confidentiality, and value of their Trade Secrets and (ii) the proprietary nature and value of the Company Intellectual Property. To the Knowledge of the Company, none of the material Trade Secrets, the value of which is contingent upon maintenance of confidentiality, have been disclosed to any employee, representative or agent of the Company or any of its Subsidiaries or any other Person not obligated to maintain such Trade Secret in confidence pursuant to a confidentiality agreement, except as required by the applicable patent office pursuant to the filing of a Patent application by the Company.

(g) The Company and its Subsidiaries are diligently prosecuting all Patent applications they have filed. The Company and its Subsidiaries are diligently preparing and filing Patent applications for all identified inventions that have come to the attention of senior engineering management personnel and have been deemed, in the ordinary course, to be appropriate subjects for Patent protection, in a manner and within a sufficient time period to avoid statutory disqualification of any potential Patent application.

(h) Each present or past employee, officer, consultant or any other Person who developed any part of any product or Intellectual Property that is owned or purported to be owned by the Company or any of its Subsidiaries has executed a valid and enforceable agreement with the Company or one of its Subsidiaries that (i) conveys any and all right, title and interest in and to all Intellectual Property developed by such person in connection with such person’s employment or contract to the Company or the applicable Subsidiary, (ii) requires such person, during and after the term of employment or contract, to cooperate with the Company or the applicable Subsidiary in the prosecution of any Patent applications filed in connection with such Intellectual Property, (iii) establishes that to the extent such person is an author of a copyrighted work created in connection with such person’s employment or contract, such work is a “work made for hire,” as set forth in 17 U.S.C. § 101, or is otherwise owned by the Company or the applicable Subsidiary, and (iv) obligates the employee or contractor to keep any confidential information of the Company and its Subsidiaries, including Trade Secrets, confidential both during and, for a reasonable time, after the term of employment or contract. To the Knowledge of the Company, no employee or consultant of the Company or any of its Subsidiaries is in violation of any Laws applicable to such employee, or any term of any employment agreement, confidentiality agreement, patent or invention disclosure agreement or other Contract relating to the relationship of such employee or consultant with the Company, any of its Subsidiaries or any prior employer or client, as the case may be. To the Knowledge of the Company, no such employee, consultant or other person has excluded works or inventions made prior to his employment with or work for the Company or any of its Subsidiaries from his assignment of inventions pursuant to such proprietary invention agreements.

(i) No former employer or client of any employee of the Company or any of its Subsidiaries, and no current or former client of any consultant of the Company or any of its Subsidiaries, has made an

 

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outstanding claim against the Company or any of its Subsidiaries or, to the Knowledge of the Company, against such employee, consultant or any other Person, that such employee or consultant is utilizing or infringing upon Intellectual Property of such former employer or client.

(j) To the Knowledge of the Company, it is not necessary for the business of the Company or any of its Subsidiaries as presently conducted to use any material Intellectual Property owned by any present or past director, officer, employee or consultant of the Company (or persons the Company presently intends to hire).

(k) To the Knowledge of the Company, none of the Intellectual Property owned by the Company or any of its Subsidiaries, nor the conduct of the Company or its Subsidiaries’ business, infringes, misappropriates or otherwise violates, any Intellectual Property rights of any other Person. No claims have been made against the Company or any of its Subsidiaries within the previous five (5) years that the Intellectual Property owned by them or the conduct of their business, has infringed, misappropriated or otherwise violated any Intellectual Property rights of any other Person, and, to the Knowledge of the Company, there is no fact, event, condition or circumstance that would reasonably be expected to give rise to or serve as a basis for the commencement of any such claim. To the Knowledge of the Company, no claim has been asserted that any Person is infringing upon or otherwise violating the Intellectual Property rights of the Company or any of its Subsidiaries in any material respect.

Section 3.24 Real Property; Personal Property .

(a) The Company and its Subsidiaries do not hold fee or comparable title to any real property. Except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, the Company and its Subsidiaries have good and legal title to, or have a valid and enforceable right to use or a valid and enforceable leasehold interest in, all real property (including all buildings, fixtures and other improvements thereto) used by them. None of the Company’s and any of its Subsidiaries’ ownership of or leasehold interest in any such property is subject to any Lien, except for such Liens as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

(b) Section 3.24(b) of the Company Disclosure Letter sets forth, as of the date of this Agreement, a list (identifying the names of the parties, the term, the address and the use thereof) of each of the material leases, subleases and other agreements (and any amendments thereto) 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 material real property (“ Company Leases ”) and the Company has made available to Parent correct and complete copies of each Company Lease. Each Company Lease is valid, binding and enforceable, subject to any applicable bankruptcy, insolvency (including all Laws related to fraudulent transfers), reorganization, moratorium or similar Law, and no termination event or condition or uncured default on the part of the Company or any such Subsidiary exists under any Company Lease, except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

(c) Except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, the Company and its Subsidiaries have good and legal title to, or a valid and enforceable leasehold interest in, all personal assets used by them sufficient to conduct their respective businesses as currently conducted. None of the Company’s and any of its Subsidiaries’ ownership of or leasehold interest in any such personal assets is subject to any Liens, except for Liens that would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

Section 3.25 Permits; Compliance with Laws .

(a) Except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, each of the Company and its Subsidiaries is in possession of all franchises, grants, authorizations, licenses, easements, variances, exceptions, consents, certificates, approvals and other permits of any Governmental Entity (“ Permits ”) necessary for it to own, lease and operate its properties and assets

 

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or to carry on its business as it is now being conducted (collectively, the “ Company Permits ”), and all such Company Permits are in full force and effect. Except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, (i) no suspension or cancellation of any of the Company Permits is pending or threatened, and (ii) no such suspension or cancellation will result from the transactions contemplated by this Agreement.

(b) Except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, neither the Company nor any of its Subsidiaries is in conflict with, or in default or violation of, (i) any Laws applicable to the Company or such Subsidiary or by which any of their assets are bound or (ii) any Company Permits.

(c) No representation is made under this Section 3.25 with respect to employee benefits, labor or environmental matters, which matters are addressed in Section 3.19, Section 3.20 and Section 3.22, respectively.

Section 3.26 Unlawful Payments . To the Knowledge of the Company, neither the Company nor any of its Subsidiaries, nor any director or officer of the Company has made, directly or indirectly, any (a) bribe or kickback, (b) unlawful payment or political contribution from corporate funds to governmental officials or political parties for the purpose of influencing their actions or the actions of the Governmental Entity which they represent or (c) unlawful payment from corporate funds to obtain or retain any business.

Section 3.27 Insurance . The Company and its Subsidiaries have made copies of their material insurance policies available to Parent.

Section 3.28 Takeover Statutes . The board of directors of the Company has taken all necessary action to ensure that the restrictions on business combinations contained in Section 203 of the DGCL will not apply to this Agreement, the Merger or the other transactions contemplated by this Agreement, including by approving this Agreement, the Merger and the other transactions contemplated by this Agreement. No other “fair price”, “moratorium”, “control share acquisition” or other similar anti-takeover laws (“ Takeover Statutes ”) apply or purport to apply to this Agreement, the Merger or any of the other transactions contemplated by this Agreement.

Section 3.29 Opinion of Financial Advisor . Goldman, Sachs & Co. (the “ Company Financial Advisor ”) has delivered to the board of directors of the Company its opinion to the effect that, as of the date of this Agreement and based upon and subject to the matters and assumptions set forth therein, the Exchange Ratio is fair from a financial point of view to the stockholders of the Company.

Section 3.30 Brokers and Finders . No broker, finder or investment banker other than the Company Financial Advisor is entitled to any brokerage, finder’s or other fee or commission in connection with the Merger or the other transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Company or any of its Subsidiaries. The Company has made available to Parent correct and complete details of any remuneration the Company Financial Advisor could receive in connection with the transactions contemplated by this Agreement.

Section 3.31 Information . To the Knowledge of the Company, none of the information to be supplied by the Company for inclusion or incorporation by reference in the Proxy Statement or the Registration Statement will, in the case of the Registration Statement, at the time it becomes effective and at the Effective Time, contain any untrue statement of a material fact required to be stated in that Registration Statement or necessary to make the statements in that Registration Statement, in light of the circumstances under which they are made, not misleading, or, in the case of the Proxy Statement or any amendments of or supplements to the Proxy Statement and at the time of the Company Stockholders Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated in that Proxy Statement or necessary in order to make the statements in that Proxy Statement, in light of the circumstances under which they are made, not misleading. The Proxy

 

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Statement (except for those portions of the Proxy Statement that relate only to Parent and its Subsidiaries) will comply as to form in all material respects with the provisions of the Exchange Act.

Section 3.32 No Other Representations or Warranties . Except for the representations and warranties contained in this Agreement, neither the Company nor any other person (i) makes any representation or warranty express or implied, including any implied representation or warranty, as to condition, merchantability, suitability or fitness for a particular purpose of any of the assets used in the business of or held by the Company or any of its Subsidiaries, (ii) makes any representation or warranty, express or implied, as to the accuracy or completeness of any information regarding the Company or any of its Subsidiaries or the business conducted by the Company or any of its Subsidiaries, in each case except as expressly set forth in this Agreement or as and to the extent required by this Agreement to be set forth in the Company Disclosure Letter or (iii) makes any representation or warranty of any kind, express or implied, with respect to any projections, forecasts or other estimates, plans or budgets of future revenues, expenses or expenditures, future results of operations (or any component thereof), future cash flows (or any component thereof) or future financial condition (or any component thereof) of the Company or any of its Subsidiaries or the future business, operations or affairs of the Company or any of its Subsidiaries heretofore or hereafter delivered to or made available to Parent, Merger Sub or their respective Representatives or Affiliates.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF PARENT

Parent represents and warrants to the Company, (i) subject to such exceptions or qualifications to representations and warranties as are disclosed in the Parent Disclosure Letter and (ii) except as set forth in the (A) Parent Public Reports after January 1, 2008 and prior to the date of this Agreement other than disclosures set forth in the sections of such Parent Public Reports describing risks and uncertainties relating to Parent and its Subsidiaries (it being understood that any matter disclosed in the Parent Disclosure Letter or in or incorporated by reference in such Parent Public Reports shall be deemed disclosed with respect to any section of this Agreement to which the matter relates to the extent the relevance to each such section is reasonably apparent) and (B) 2008 Parent Financial Statements, as follows:

Section 4.1 Organization and Power .

(a) Parent is duly organized and validly existing under the laws of England and Wales and has the requisite power and authority to own, lease and operate its assets and properties and to carry on its business as now conducted.

(b) Each of Parent’s Subsidiaries is duly organized, validly existing and (where such term is of legal significance) in good standing under the laws of its jurisdiction of organization and has the requisite power and authority to own, lease and operate its assets and properties and to carry on its business as now conducted, except where the failure to be so organized, existing and in good standing does not have and would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect.

Section 4.2 Foreign Qualifications . Parent and each of its Subsidiaries is duly qualified or licensed to do business as a foreign corporation or other legal entity and (where such term is of legal significance) is in good standing in each jurisdiction where the character of the assets and properties owned, leased or operated by it or the nature of its business makes such qualification or license necessary, except where failures to be so qualified or licensed or in good standing would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect.

Section 4.3 Corporate Authorizations . Each of Parent and Merger Sub has all necessary corporate power and authority to enter into this Agreement and, subject to: (a) approval as a Class 1 transaction by the holders of

 

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Parent Ordinary Shares of the transactions contemplated by this Agreement and (b) related requisite shareholder authorities and approvals to (i) increase the authorized share capital of Parent (to the extent that an increase sufficient to allow for the issue of the Parent Ordinary Shares pursuant to this Agreement and the conversion of the options and restricted stock units referred to in Sections 2.4(a) and 2.4(e) is not approved by Parent shareholders at Parent’s 2009 annual general meeting held prior to the Effective Time) and (ii) authorize the directors of Parent to allot the Parent Ordinary Shares pursuant to the Merger and any shares to be issued pursuant to the exercise of the converted options and restricted stock units referred to in Sections 2.4(a) and 2.4(e) respectively at a duly convened and held general meeting of the Parent (each of such approvals requiring the affirmative vote of a majority of the holders of Parent Ordinary Shares (or their proxies, if applicable) as (being entitled to do so) are present and vote or, in the case of a vote taken on a poll, the affirmative vote by the shareholders or their proxies representing a majority of the Parent Ordinary Shares in respect of which votes are validly exercised) in accordance with the Companies Acts and the listing rules made by the United Kingdom Listing Authority (the “ UKLA ”) under Part VI of the Financial Services and Markets Act 2000 (such rules, the “ Listing Rules ” and such approvals collectively, the “ Requisite Parent Vote ”), to consummate the transactions contemplated by this Agreement, in accordance with Article 11 of the Listing Rules. The board of directors of Parent unanimously consider that the transactions contemplated by this Agreement will promote the success of Parent and Parent’s shareholders as a whole, and are in the best interests of the Parent shareholders as a whole and has unanimously adopted resolutions (a) approving this Agreement and the transactions contemplated by this Agreement, (b) appointing, with effect from Closing, two designees of the Company to the board of directors of Parent in accordance with Section 5.11, (c) unequivocally recommending to the stockholders of Parent that they vote in favor of the transactions contemplated by this Agreement (the “ Parent Board Recommendation ”) and (d) to include the Parent Board Recommendation, together with the resolutions to effect such approval, in the Parent Shareholder Circular. Following careful consideration of the Merger, and financial advice received from UBS Limited and N.M. Rothschild & Sons, Ltd, the board of directors of Merger Sub has unanimously adopted resolutions approving this Agreement and the transactions contemplated by this Agreement. The execution and delivery and performance of this Agreement by each of Parent and Merger Sub and the consummation by each of Parent and Merger Sub of the transactions contemplated by this Agreement have been duly and validly authorized by all necessary corporate action on the part of Parent and Merger Sub, subject to the Requisite Parent Vote.

Section 4.4 Enforceability . This Agreement has been duly executed and delivered by each of Parent and Merger Sub and, assuming the due authorization, execution and delivery hereof by the other parties hereto, constitutes a legal, valid and binding agreement of each of Parent and Merger Sub, enforceable against each of them in accordance with its terms.

Section 4.5 Organizational Documents . Parent has made available to the Company correct and complete copies of the memorandum and articles of association of Parent and the certificate of incorporation and bylaws Merger Sub, in each case as in effect on the date of this Agreement (collectively, the “ Parent Organizational Documents ”). Parent has made available to Representatives of the Company correct and (except for redactions from such minutes to protect attorney-client privilege, to comply with confidentiality obligations to third parties and to preserve the confidentiality of discussions relating to this Agreement) complete copies of the minutes of all meetings of the board of directors and the audit committee of the board of directors of Parent held since January 1, 2006.

Section 4.6 Subsidiaries . A correct and complete list of all Subsidiaries of Parent and their respective jurisdictions of organization is set forth in Section 4.6 of the Parent Di