Exhibit 2.1
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AGREEMENT AND PLAN OF MERGER
Among
LECROY CORPORATION,
COBALT ACQUISITION CORPORATION
and
COMPUTER ACCESS TECHNOLOGY CORPORATION
Dated as of September 1, 2004
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AGREEMENT AND PLAN OF MERGER, dated as of September 1, 2004 (this
"Agreement"), among LeCroy Corporation, a Delaware corporation ("Parent"),
Cobalt Acquisition Corporation, a Delaware corporation and wholly owned
subsidiary of Parent ("Merger Subsidiary"), and Computer Access Technology
Corporation, a Delaware corporation (the "Company").
WHEREAS, the respective Boards of Directors of Parent, Merger Subsidiary
and the Company have approved and declared advisable this Agreement, which
contemplates the merger of Merger Subsidiary with and into the Company, as set
forth below (the "Merger"), in accordance with the General Corporation Law of
the State of Delaware (the "DGCL") and upon the terms and subject to the
conditions set forth in this Agreement;
WHEREAS, upon the consummation of the Merger, each issued and outstanding
share (each a "Share" and, collectively, the "Shares") of the Company's common
stock, par value $0.001 per share (the "Common Stock"), will be converted into
the right to receive $6.00 per Share in cash (without interest) (the "Per Share
Amount") upon the terms and subject to the limitations and conditions of this
Agreement;
WHEREAS, the Board of Directors of the Company is recommending that the
Company's stockholders approve this Agreement and the Merger;
WHEREAS, certain stockholders of the Company have entered into Stockholder
Voting Agreements (each, a "Voting Agreement" and, collectively, the "Voting
Agreements") with Parent and Merger Subsidiary providing for, among other
things, the agreement of such stockholders to vote all Shares owned by them in
favor of the Merger and this Agreement, subject to the terms and conditions
stated therein; and
WHEREAS, Parent, Merger Subsidiary and the Company desire to make certain
representations, warranties and agreements in connection with the Merger and the
other transactions contemplated by this Agreement and to prescribe various
conditions to the Merger and the other transactions contemplated by this
Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, Parent, Merger
Subsidiary and the Company hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01. The Merger. Upon the terms and subject to the conditions set
forth herein, and in accordance with the DGCL, at the Effective Time (as defined
below), Merger Subsidiary shall be merged with and into the Company. As a result
of the Merger,
the separate corporate existence of Merger Subsidiary shall cease, and the
Company shall continue as the surviving corporation of the Merger (the
"Surviving Corporation").
SECTION 1.02. Effective Time; Closing. As promptly as practicable after
the satisfaction or, if permissible, waiver of the conditions set forth in
Article VII hereof, the parties hereto shall cause the Merger to be consummated
by filing a certificate of merger, substantially in the form attached hereto as
Exhibit 1.02 (the "Certificate of Merger"), with the Secretary of State of the
State of Delaware, in such form as is required by, and executed in accordance
with, the relevant provisions of the DGCL. The term "Effective Time" means the
date and time of the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware (or such later time as may be agreed by each of
the parties hereto and specified in the Certificate of Merger). Immediately
prior to the filing of the Certificate of Merger, a closing will be held at the
offices of Fish & Richardson P.C. at 225 Franklin Street, Boston, MA 02110-2804
(or at such other time and place as the parties may agree).
SECTION 1.03. Effect of the Merger. At the Effective Time, the effect of
the Merger shall be as provided in the applicable provisions of the DGCL.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time, all the property, rights, privileges, powers and franchises of
each of the Company and Merger Subsidiary shall vest in the Surviving
Corporation, and all debts, liabilities, obligations and duties of each of the
Company and Merger Subsidiary shall become the debts, liabilities, obligations
and duties of the Surviving Corporation.
SECTION 1.04. Certificate of Incorporation; By-laws.
(a) At the Effective Time, the Certificate of Incorporation of the Company
as in effect immediately prior to the Effective Time shall be the Certificate of
Incorporation of the Surviving Corporation and shall be amended and restated to
read substantially as set forth on Exhibit 1.04 hereto.
(b) At the Effective Time, the By-laws of Merger Subsidiary as in effect
immediately prior to the Effective Time, shall be the By-laws of the Surviving
Corporation unless and until thereafter amended as provided by Law (as defined
in Section 3.05(a) hereof), the Certificate of Incorporation of the Surviving
Corporation and/or such By-laws.
SECTION 1.05. Directors and Officers. The directors of Merger Subsidiary
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Certificate of
Incorporation and By-laws of the Surviving Corporation, and the officers of the
Company immediately prior to the Effective Time shall be the initial officers of
the Surviving Corporation, in each case until their respective successors are
duly elected or appointed and qualified and/or additional persons are selected.
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ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.01. Conversion Of Securities. At the Effective Time, by virtue
of the Merger and without any action on the part of Merger Subsidiary, Parent
the Company or the holders of any of the following securities:
(a) Each Share issued and outstanding immediately prior to the Effective
Time (other than any Shares to be canceled pursuant to Section 2.01(b) hereof
and other than Dissenting Shares (as defined in Section 2.01(e) hereof)) shall
be converted into the right to receive the Per Share Amount in cash, without
interest (the aggregate cash amount paid pursuant to this Section 2.01(a) being
hereinafter referred to as the "Merger Consideration").
(b) Each share of Common Stock held in the treasury of the Company and
each Share owned by Parent or any direct or indirect wholly owned subsidiary of
Parent or of the Company immediately prior to the Effective Time shall be
canceled and extinguished without any conversion thereof, and no payment shall
be made with respect thereto.
(c) Each share of common stock of Merger Subsidiary issued and outstanding
immediately prior to the Effective Time shall be converted into one validly
issued, fully-paid and nonassessable share of common stock of the Surviving
Corporation.
(d) The Shares outstanding immediately prior to the Effective Time (other
than Shares to be canceled pursuant to Section 2.01(b) hereof) shall no longer
be outstanding and shall automatically be canceled and shall cease to exist, and
each holder of a Certificate (as defined in Section 2.02(b) hereof) shall cease
to have any rights with respect thereto, except the right to receive, for each
Share represented by such Certificate, a cash amount equal to the Per Share
Amount, without interest, or, if such holder is a Dissenting Stockholder (as
defined in Section 2.01(e) hereof), the rights, if any, afforded to such holder
under Section 262 of the DGCL.
(e) Notwithstanding anything in this Agreement to the contrary, any Shares
held by a person who shall have properly demanded and perfected a right to
receive payment of the fair value of such Shares (a "Dissenting Stockholder")
pursuant to Section 262 of the DGCL ("Dissenting Shares") shall not be converted
as described in Section 2.01(a) hereof, unless such holder fails to comply with
the provisions of Section 262 of the DGCL or withdraws or otherwise loses its
right to receive such fair value payment. If, after the Effective Time, such
Dissenting Stockholder fails to comply with the provisions of Section 262 of the
DGCL or withdraws or otherwise loses its right to receive such fair value
payment, such Dissenting Stockholder's Shares shall no longer be considered
Dissenting Shares for the purposes of this Agreement and shall thereupon be
deemed to have been converted into and become exchangeable for, at the Effective
Time, the right to receive for
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each such Share, in cash the Per Share Amount, without interest. The Company
shall give Parent (i) prompt written notice of any demands to receive payment of
fair value of Shares received by the Company and (ii) the opportunity to
participate in and direct all negotiations and proceedings with respect to such
demands. The Company shall not, without the prior written consent of Parent,
make any payment with respect to, settle, offer to settle or otherwise negotiate
any such demands.
SECTION 2.02. Exchange of Certificates for Cash.
(a) Exchange Agent. As of the Effective Time, Parent shall deposit, or
shall cause to be deposited, with The Bank of New York or such other bank or
trust company as may be designated by Parent (the "Exchange Agent"), for the
benefit of the holders of Shares, for exchange in accordance with this Article
II through the Exchange Agent, the Merger Consideration (such Merger
Consideration, together with any interest earned thereon, being hereinafter
referred to as the "Exchange Fund") payable pursuant to Section 2.01 hereof in
exchange for Shares. The Exchange Agent shall, pursuant to irrevocable
instructions given by Parent, deliver the cash (excluding any interest earned
thereon) out of the Exchange Fund. All interest earned on the Exchange Fund
shall be payable to Parent. Except as contemplated by this Section 2.02(a), the
Exchange Fund shall not be used for any other purpose.
(b) Exchange Procedures. Parent shall cause the Exchange Agent to mail, as
promptly as practicable after the Effective Time, to each holder of record of
(A) a certificate or certificates which immediately prior to the Effective Time
represented Shares (the "Certificates") or (B) uncertificated shares of Common
Stock which immediately prior to the Effective Time represented Shares (the
"Uncertificated Shares") (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to such Shares shall
pass, only upon proper delivery of the Certificates or transfer of the
Uncertificated Shares to the Exchange Agent and shall be in customary form); and
(ii) instructions for effecting the surrender of the Certificates or transfer of
the Uncertificated Shares in exchange for the appropriate portion of the Merger
Consideration. Upon (x) surrender to the Exchange Agent of a Certificate for
cancellation, together with such letter of transmittal, duly executed, and such
other customary documents as may be required pursuant to such instructions or
(y) receipt of an "agent's message" by the Exchange Agent (or such other
customary evidence, if any, of transfer the Exchange Agent may request) in the
case of a book-entry transfer of Uncertificated Shares, the holder of such
Certificate or such Uncertificated Shares shall be entitled to receive in
exchange therefor the amount in cash which such holder has the right to receive
pursuant to Section 2.01(a) hereof (after giving effect to any required Tax (as
defined in Section 9.03 hereof) withholdings) in respect of the Shares formerly
represented by such Certificate or Uncertificated Shares, and the Certificate or
Uncertificated Shares so surrendered or transferred shall forthwith be canceled.
Parent shall use commercially reasonable efforts to negotiate an agreement with
the Exchange Agent which provides that upon the holder of such Certificate or
such Uncertificated Shares becoming entitled to receive the payment referred to
in the previous sentence of this Section 2.02(b), the Exchange Agent shall make
such payment to such holder within ten (10)
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business days thereafter. No interest will be paid or will accrue on the amount
payable upon the surrender of any Certificate or transfer of any Uncertificated
Shares. In the event of a transfer of ownership of Shares which is not
registered in the transfer records of the Company, the proper amount of cash may
be paid to a transferee if the Certificate representing such Shares is presented
to the Exchange Agent, accompanied by all documents required to evidence and
effect such transfer and by evidence that any applicable stock transfer taxes
have been paid. Until surrendered or transferred as contemplated by this Section
2.02, each Certificate or Uncertificated Share shall be deemed at any time after
the Effective Time to represent only the right to receive, upon such surrender,
the appropriate portion of the Merger Consideration in respect of Share(s)
formerly represented thereby.
(c) No Further Rights in Common Stock. All cash paid upon conversion of
the Shares in accordance with the terms hereof shall be deemed to have been paid
in full satisfaction of all rights pertaining to such Shares.
(d) Termination of Exchange Fund. Any portion of the Exchange Fund which
remains undistributed to the holders of Shares outstanding immediately prior to
the Effective Time for one (1) year after the Effective Time shall be delivered
to Parent, upon demand, and any holders of such Shares who have not theretofore
complied with this Article II shall thereafter look only to Parent for payment
of any cash to which they are entitled. Any portion of the Exchange Fund
remaining unclaimed by such holders as of a date that is immediately prior to
such date as such amounts would otherwise escheat to or become the property of
any Governmental Authority (as defined in Section 9.03 hereof) shall, to the
extent permitted by applicable Law, become the property of Parent, free and
clear of any claims or interest of any person previously entitled thereto.
(e) No Liability. Neither Parent, the Company nor the Surviving
Corporation shall be liable to any holder of Shares for any cash delivered to a
Governmental Authority pursuant to any abandoned property, escheat or similar
Law.
(f) Lost, Stolen or Destroyed Certificates. In the event any Certificate
shall have been lost, stolen or destroyed, upon the making of an affidavit of
that fact by the person claiming such Certificate to be lost, stolen or
destroyed, and, if required by Parent or the Exchange Agent, the posting by such
person of a bond, in such reasonable amount as Parent or the Exchange Agent may
direct as indemnity against any claim that may be made against it with respect
to such Certificate, the Exchange Agent will deliver in exchange for such lost,
stolen or destroyed Certificate the appropriate portion of the Merger
Consideration in respect thereof pursuant to this Article II.
SECTION 2.03. Stock Transfer Books. At the Effective Time, the stock
transfer books of the Company shall be closed and there shall be no further
registration of transfers of Shares thereafter on the records of the Company or
the Surviving Corporation. From and after the Effective Time, the holders of
Certificates shall cease to have any rights with respect to the Shares
represented thereby except as otherwise provided herein or by Law. On or after
the Effective Time, any Certificates duly presented to the Exchange Agent or
Parent
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for any reason shall be converted into the amount of cash to which the holders
thereof are entitled pursuant to this Article II.
SECTION 2.04. Stock Options; ESPP.
(a) Disposition of Options. All options to purchase Company Common Stock
issued under the Company's 2000 Stock Option/Stock Issuance Plan, Special 2000
Stock Option Plan and 2000 Stock Incentive Plan (collectively, the "2000 Stock
Option Plans"), or under the Company's 1994 Stock Option Plan (together with the
2000 Stock Option Plans, the "Company Stock Option Plans"), whether or not
exercisable, whether or not vested, and whether or not performance-based, which
are outstanding at the Effective Time (each a "Company Option"), shall be
cancelled in the Merger, or assumed by Parent in accordance with this Section
2.04, subject to and in accordance with the terms of such Company Stock Option
Plans.
(b) Vested 2000 Option Shares. Each Company Option issued under the
Director Automatic Stock Option Grant Program within the Company's 2000 Stock
Incentive Plan and outstanding as of the effective Time shall be cancelled with
respect to all of the remaining shares subject to such Company Options in
consideration of payment to the holder thereof of an amount equal to the excess,
if any, of the Per Share Amount over the exercise price otherwise payable by the
holder to acquire each remaining share of Company Common Stock subject to such
Company Options. Each other Company Option issued under the Company's 2000 Stock
Option Plans, and outstanding as of the Effective Time, to the extent vested and
exercisable immediately prior to the Effective Time for shares of Company Common
Stock (together with the Company Options described in the preceding sentence,
the "Vested 2000 Option Shares"), shall, to the extent of each remaining share
of Company Common Stock subject to such Company Options, be cancelled in
consideration of payment to the holder thereof of an amount equal to the excess,
if any, of the Per Share Amount over the exercise price otherwise payable by the
holder to acquire such share; provided, that for purposes of this sentence any
accelerated vesting or exercisability which will or might otherwise arise by
reason of the Merger shall not be taken into account. For the avoidance of
doubt, except for the Company Options described in the initial sentence of this
Section 2.04(b), Company Options issued and outstanding under the Company's 2000
Stock Options Plans which would become vested and exercisable by reason of the
transactions contemplated by this Agreement if not assumed by Parent, are to be
assumed by Parent pursuant to subsection 2.04(d) below and therefore will not
become vested and exercisable immediately prior to the Effective Time by reason
of the transaction contemplated by this Agreement. Vested 2000 Option Shares for
which the exercise price is greater than the Per Share Amount shall be cancelled
as of the Effective Time without payment of any consideration whatsoever. All
payments under this Section 2.04(b) shall be made as promptly as practicable
after the Effective Time.
(c) Vested 1994 Option Shares. Each Company Option issued under the
Company's 1994 Stock Option Plan and outstanding as of the Effective Time, to
the extent vested and exercisable immediately prior to the Effective Time for
shares of Company Common Stock (the "Vested 1994 Option Shares"), may, if the
holder so consents, to the
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extent of each such Vested 1994 Option Share, be cancelled in consideration of
payment to the holder thereof of an amount equal to the excess, if any, of the
Per Share Amount over the exercise price otherwise payable by the holder to
acquire each such Vested 1994 Option Share; provided, that for purposes of this
sentence any accelerated vesting or exercisability which will or might otherwise
arise by reason of the Merger shall not be taken into account. For the avoidance
of doubt, Company Options issued and outstanding under the Company's 1994 Stock
Option Plan which would become vested and exercisable by reason of the
transactions contemplated by this Agreement if not assumed by Parent, are to be
assumed by Parent pursuant to subsection 2.04(d) below and therefore will not
become vested and exercisable immediately prior to the Effective Time by reason
of the transactions contemplated by this Agreement. All payments under this
Section 2.04(c) shall be made as promptly as practicable after the Effective
Time.
(d) Other Option Shares. Each Company Option issued under the 2000 Stock
Option Plans and outstanding as of the Effective Time to the extent that any
shares of Company Common Stock subject to such Company Option are not Vested
2000 Option Shares, and each Company Option issued and outstanding as of the
Effective Time under the Company's 1994 Stock Option Plan to the extent not
otherwise cancelled in consideration of payment pursuant to paragraph (c) above
(together with unvested Company Options issued under the 2000 Stock Option
Plans, the "Other Option Shares"), shall be assumed by Parent with the
adjustments described herein, each such assumed option referred to herein as an
"Assumed Option", subject to the following terms and conditions:
(i) the number of shares of common stock of the Parent, $0.01 par
value per share ("Parent Common Stock") which shall be subject to such
Assumed Option shall be (A) the number of Other Option Shares under the
applicable Company Option, multiplied by (B) the quotient (the "Conversion
Ratio") obtained by dividing the Per Share Amount by the average closing
price of Parent Common Stock on the last five (5) trading days ending
immediately prior to the Effective Time, with any fraction of a share of
Parent Common Stock rounded down to the nearest whole share;
(ii) the exercise price, per share, at the Effective Time of the
Assumed Option shall be equal to (A) the per share exercise price of the
Company Option immediately prior to the Effective Time, divided by (B) the
Conversion Ratio, with any fraction of a cent rounded up to the nearest
whole cent; and
(iii) except as required to reflect the adjustments made pursuant to
(i) and (ii) above, the Assumed Option shall otherwise retain the same
terms (i.e., with respect to vesting schedule and acceleration provisions)
as the original Company Option.
At the Effective Time the Company Stock Option Plans shall be assumed by Parent.
The number of shares of Parent Common Stock available for issuance under each
Company Stock Option Plan shall be the number of shares of Company Common Stock
that remain
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available for issuance under the applicable Company Stock Option Plan
immediately prior to the Effective Time multiplied by the Conversion Ratio. All
Company Common Stock numbers that appear in the Company Stock Option Plans shall
be multiplied by the Conversion Ratio. Following the assumption of the Other
Option Shares and the Company Stock Option Plans, all references to the Company
in the Company Options and the Company Stock Option Plans shall be deemed to
refer to the Parent.
(e) Assumed Options. As soon as practicable after the Effective Time,
Parent will issue to each person who, immediately prior to the Effective Time
was a holder of a Company Option covering Other Option Shares a written document
evidencing the foregoing Assumed Option. Parent shall take all corporate action
necessary to reserve for issuance a sufficient number of shares of Parent Common
Stock for delivery upon exercise of Assumed Options pursuant to the terms set
forth in this Section 2.04.
(f) Tax Treatment of Replacement Options. It is the intention of the
parties that, insofar as consistent with the foregoing conversion procedures,
the Assumed Options shall continue to qualify following the Effective Time as
incentive stock options as defined in Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code"), to the extent the Company Option was intended
to so qualify prior to the assumption of the Company Option.
(g) Form S-8. Parent agrees to use commercially reasonable efforts to file
with the Securities and Exchange Commission (the "SEC"), within fifteen (15)
business days after the Effective Time, a registration statement on Form S-8 or
other appropriate form under the Securities Act of 1933, as amended (together
with the rules and regulations thereunder, the "Securities Act"), to register
Parent Common Shares issuable upon exercise of the Parent Exchange Options and
to use its commercially reasonable efforts to cause such registration statement
to remain effective until the exercise or expiration of the Parent Exchange
Options.
(h) Section 16 of the Securities Exchange Act of 1934. Prior to the
Effective Time, the boards of directors of Parent and the Company, or an
appropriate committee of non-employee directors thereof, shall each comply as
applicable with the provisions of the SEC's No Action Letter dated January 12,
1999 addressed to Skadden, Arps, Slate, Meagher and Flom LLP relating to Rule
16b-3 of the Securities Exchange Act of 1934 so that any disposition of a
Company Option or assumption of Other Option Shares pursuant to this Agreement
shall be an exempt transaction for purposes of Section 16 of the Securities
Exchange Act of 1934 by any officer or director of the Company who may become a
covered person for purposes of Section 16.
(i) ESPP. The Company shall take all actions necessary pursuant to the
terms of the Company's 2000 Employee Stock Purchase Plan (the "Employee Stock
Purchase Plan") in order to (i) preclude the commencement of any new offering
period or purchase interval subsequent to the date of this Agreement and (ii)
shorten the offering periods and purchase intervals under such plan which
includes the Effective Time (the "Current Offerings"), such
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that the Current Offerings shall terminate immediately prior to the Effective
Time. Any purchase rights existing immediately prior to the Effective Time under
the Employee Stock Purchase Plan to acquire a share of Company Common Stock
shall be cancelled in consideration of payment to the holder thereof of an
amount equal to the excess, if any, of the Per Share Amount over the purchase
price otherwise payable by the holder to acquire such share.
(j) Optionee Acknowledgement and Acceptance. No payment in respect of a
Company Option issued under the Company's 2000 Stock Option Plans or the
Company's 1994 Stock Option Plan, no payment in respect of any purchase right
under the Employee Stock Purchase Plan, and no assumption of a Company Option
issued under the Company's 2000 Stock Option Plans in respect of Other Option
Shares, otherwise required by this Section 2.04 shall be required pursuant to
this Section 2.04 until the holder thereof shall have signed and returned to the
Parent an acknowledgement and acceptance, in such form as Parent shall have
requested, acceding to the foregoing treatment of the holder's Company Options
so issued and purchase rights in their entirety. Until, if ever, that condition
shall have been satisfied, as of the Effective Time each holder's Company
Options issued under the Company's 2000 Stock Option Plans and purchase rights
under the Employee Stock Purchase Plan, if any, shall constitute solely the
right to receive payments and Assumed Options, as applicable, in accordance with
this Section 2.04, upon satisfaction of that condition. The Company shall use
commercially reasonable efforts to procure such executed acknowledgements and
acceptances from each holder of Company Options so issued and purchase rights
under the Employee Stock Purchase Plan prior to the Effective Time.
SECTION 2.05. Withholding Rights. Each of the Surviving Corporation,
Parent and the Exchange Agent shall be entitled to deduct and withhold from the
cash consideration otherwise payable pursuant to this Agreement to any holder of
Shares or Company Options such amounts as it is required to deduct and withhold
with respect to the making of such payment under the Code, or any provision of
state, local or foreign Tax Law, including any amounts required to be so
deducted and withheld in respect of the exercise of Company Options prior to the
Effective Time. To the extent that amounts are so withheld, such withheld
amounts shall be treated for all purposes of this Agreement as having been paid
to the holder of such Shares in respect of which such deduction and withholding
were made.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed in a document of even date herewith and attached to
this Agreement and delivered by the Company to Parent upon the execution of this
Agreement and referring by section number to the representations and warranties
in this Agreement (the "Company Disclosure Schedule"), the Company hereby
represents and warrants to Parent and Merger Subsidiary that:
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SECTION 3.01. Organization and Qualification; Subsidiaries. The Company
and each subsidiary of the Company (a "Subsidiary") is a corporation duly
organized, validly existing and in good standing under the Laws of the
jurisdiction of its incorporation and has the requisite power and authority to
own, lease and operate its properties and to carry on its business as it is now
being conducted. The Company and each Subsidiary is duly qualified or licensed
as a foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its business makes such qualification or licensing
necessary, except for any failure(s) to be so qualified or licensed or in good
standing that would not, individually or in the aggregate, have a Company
Material Adverse Effect (as hereinafter defined). The term "Company Material
Adverse Effect" means any change or effect that is or is reasonably likely to be
materially adverse to the business, results of operations or condition
(financial or otherwise) of the Company and the Subsidiaries, taken as a whole,
or otherwise materially and adversely affects the ability of the Company to
consummate the transactions contemplated hereby; provided, however, that, none
of the following shall be deemed in themselves, either alone or in combination,
to constitute, and none of the following shall be taken into account in
determining whether there has been or will be, a Company Material Adverse
Effect: (a) any change in the market price or trading volume of the Company's
stock after the date hereof; (b) any adverse change, effect, event, occurrence,
state of facts or development to the extent attributable to the announcement or
pendency of the Merger (including any cancellation of or delays in customer
orders, any reduction in sales, any disruption in supplier, distributor, partner
or similar relationships or any loss of employees); (c) any adverse change,
effect, event, occurrence, state of facts or development attributable to
conditions affecting the industries as a whole in which the Company
participates, the U.S. economy as a whole or the foreign economies as a whole in
any locations where the Company or any of its Subsidiaries has material
operations or sales; (d) any adverse change, effect, event, occurrence, state of
facts or development arising from or relating to compliance with the terms of,
or the taking of any action required by, this Agreement; or (e) any suit, claim,
action or other proceeding brought by any shareholder, Governmental Authority or
third-party competitor of the Company or Parent after the date hereof that (x)
is brought or threatened against the Company or any of its Subsidiaries or any
member of its Board of Directors in respect of this Agreement or the
transactions contemplated hereby or (y) in the case of a third-party competitor
is brought or threatened against the Company or any of its Subsidiaries or any
member of its Board of Directors and is reasonably likely to have been brought
with the intended purpose or effect of preventing, enjoining, materially
altering or delaying or otherwise interfering with the transactions contemplated
by this Agreement. A true and complete list of all the Subsidiaries, together
with the jurisdiction of incorporation of each Subsidiary and the percentage of
the outstanding capital stock of each Subsidiary owned by the Company and each
other Subsidiary, is set forth on Schedule 3.01-1 of the Company Disclosure
Schedule. A true and complete list of all the Subsidiaries, together with the
jurisdiction of incorporation of each Subsidiary and the percentage of the
outstanding capital stock of each Subsidiary owned by the Company and each other
Subsidiary, is set forth on Schedule 3.01-1 of the Company Disclosure Schedule.
Except as set forth on Schedule 3.01-1 of the Company Disclosure Schedule, the
Company does not directly or indirectly own any equity or similar interest in,
or any interest convertible into or
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exchangeable or exercisable for, any equity or similar interest in, any
corporation, partnership, joint venture or other business association or entity
and is not subject to any obligation or requirement to provide funds or make any
investment (in the form of a loan, capital contribution or otherwise) in any
such entity or any other person.
SECTION 3.02. Certificate of Incorporation and By-laws. The Company has
heretofore furnished to Parent a complete and correct copy of the Certificate of
Incorporation and the By-laws or equivalent organizational documents, each as
amended to date, of the Company and each Subsidiary (collectively, the
"Organizational Documents"). The Organizational Documents are in full force and
effect. Neither the Company nor any Subsidiary is in violation of any provision
of its Organizational Documents.
SECTION 3.03. Capitalization. The authorized capital stock of the Company
consists solely of 100,000,000 shares of Common Stock and 25,000,000 shares of
preferred stock. As of the close of business on August 30, 2004, (a) 19,650,329
Shares were issued and outstanding, all of which were duly authorized, validly
issued, fully paid and nonassessable and none of which were issued in violation
of any preemptive or similar rights, (b) 432,727 shares of Common Stock were
held in the treasury of the Company, (c) no shares of Common Stock were held by
any of the Subsidiaries, (d) no shares of preferred stock were outstanding, (e)
3,850,776 shares of Common Stock were reserved for future issuance pursuant to
stock options granted and outstanding pursuant to the Company Stock Option Plans
and (f) 400,498 shares of Common Stock were reserved for future issuance
pursuant to the Employee Stock Purchase Plan (the Employee Stock Purchase Plan,
together with the Company Stock Option Plans, being referred to hereinafter
collectively as the "Stock Incentive Plans"). Since August 30, 2004, the Company
has not issued any shares of its capital stock, other than any shares of Common
Stock issued upon the valid exercise of Company Options in accordance with the
terms thereof, or granted any stock options. Set forth on Schedule 3.03-1 of the
Company Disclosure Schedule is a complete and accurate description of the grant
date, vesting schedule, number of shares of Common Stock available under, strike
or exercise price and holder of each outstanding grant of options to acquire
shares of Common Stock pursuant to the Company Stock Option Plans and the
Company Stock Option Plan and related program, if applicable, under which such
options were granted. Each outstanding grant of options under any of the Company
Stock Option Plans is evidenced by a Stock Option Agreement. Parent has been
furnished with a true and complete copy of each form of Stock Option Agreement
evidencing an outstanding option grant. No outstanding grant of options has been
made which varies from such forms. Each election to purchase shares of Common
Stock under the Employee Stock Purchase Plan is evidenced by an enrollment form
as prescribed by the plan administrator of the Employee Stock Purchase Plan.
Except for the options and rights to purchase shares of Common Stock granted
under the Stock Incentive Plans as expressly set forth in this Section 3.03 and
except as set forth on Schedule 3.03-2 of the Company Disclosure Schedule, there
are no outstanding options, warrants or other rights, agreements, arrangements
or commitments of any character relating to the issued or unissued capital stock
of the Company or any Subsidiary (provided that such representation with respect
to the issued capital stock of the Company or any Subsidiary shall be made to
the Company's knowledge where neither the
11
Company nor any Subsidiary is party to such option, warrant or other right,
agreement, arrangement or commitment) or obligating the Company or any
Subsidiary to issue or sell any shares of capital stock of, or other equity
interests in, the Company or any Subsidiary. All shares of Common Stock subject
to issuance as aforesaid, upon issuance on the terms and conditions specified in
the agreements pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and nonassessable. Except as set forth on Schedule
3.03-3 of the Company Disclosure Schedule, there are no contractual or other
obligations of the Company or any Subsidiary to repurchase, redeem, otherwise
acquire or pay any amounts in connection with any Shares or any capital stock
of, or any other equity interests in, any Subsidiary. Each outstanding share of
capital stock of each Subsidiary is duly authorized, validly issued, fully paid
and nonassessable and, except as set forth on Schedule 3.03-4 of the Company
Disclosure Schedule, each such share owned by the Company or any Subsidiary is
free and clear of all security interests, liens, claims, pledges, options, tag
along rights, rights of first refusal, agreements, limitations on the Company's
or such other Subsidiary's voting rights, charges and other encumbrances of any
nature whatsoever.
SECTION 3.04. Authority Relative to this Agreement. The Company has all
necessary corporate power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and to consummate the Merger and the other
transactions contemplated hereby except that consummation of the Merger shall
require the requisite approval of the Company's stockholders as contemplated
herein. The execution and delivery of this Agreement by the Company and the
consummation by the Company of the Merger and the other transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action and no other corporate proceedings on the part of the Company
are necessary to authorize this Agreement or to consummate the Merger (other
than, with respect to the Merger, the approval and adoption of this Agreement by
the holders of a majority of the then outstanding Shares and the filing and
recordation of appropriate merger documents as required by the DGCL) and the
other transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by the Company and, assuming the due authorization,
execution and delivery by Parent and Merger Subsidiary, constitutes a legal,
valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws and equitable principles
relating to or limiting creditors' rights generally and by general principles of
equity.
SECTION 3.05. No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by the Company do not,
and the performance of this Agreement by the Company will not, (i) conflict with
or violate the Organizational Documents of the Company or any Subsidiary; (ii)
conflict with or violate in any material respect any United States (federal,
state or local) or foreign law, statute, rule, regulation, order, judgment,
writ, injunction or decree (collectively, "Laws") applicable to the Company or
any Subsidiary or by which any material property or asset of the Company
12
or any Subsidiary is bound or affected; or (iii) except as set forth on Schedule
3.05(a) of the Company Disclosure Schedule, require a consent under, violate,
conflict with, result in any breach of or constitute a default (or an event
which with notice or lapse of time or both would become a default) under, or
give to others any right of termination, amendment, acceleration or cancellation
of, or result in the creation of a lien or other encumbrance on any property or
asset of the Company or any Subsidiary pursuant to, any material promissory
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the Company or any
Subsidiary is a party or by which the Company or any Subsidiary or any property
or asset of the Company or any Subsidiary is otherwise bound or affected.
(b) The execution and delivery of this Agreement by the Company do not,
and the performance of this Agreement, the consummation of the Merger and the
other transactions contemplated hereby and compliance with the provisions of
this Agreement by the Company will not, require any consent, approval,
authorization or permit of, or filing with or notification to, any Governmental
Authority, except: (i) registrations or other actions required under United
States federal and state securities laws as are contemplated by this Agreement;
(ii) actions required by the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations thereunder (the "HSR Act");
(iii) the filing and recordation of appropriate merger documents as required by
the DGCL; (iv) as set forth on Schedule 3.05(b) of the Company Disclosure
Schedule; and (v) where failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not
prevent or materially delay consummation of the Merger or any other transaction
contemplated hereby, or, individually or in the aggregate, have a Company
Material Adverse Effect.
SECTION 3.06. Permits; Compliance with Law. Except as set forth on
Schedule 3.06-1 of the Company Disclosure Schedule, the Company and each
Subsidiary is in possession of all franchises, grants, authorizations, licenses,
permits, easements, variances, exemptions, consents, certificates, approvals and
orders necessary for the Company and each Subsidiary to own, lease and operate
its properties or to carry on its business as it is now being conducted (the
"Company Permits"), and no suspension or cancellation of any of the Company
Permits is pending or, to the knowledge of the Company, threatened, except where
the failure to have, or the suspension or cancellation of, any of the Company
Permits would not, individually or in the aggregate, have a Company Material
Adverse Effect. Set forth on Schedule 3.06-2 of the Company Disclosure Schedule
is a list of those Company Permits, the loss or suspension of any of which
would, individually or in the aggregate, have a Company Material Adverse Effect.
Neither the Company nor any Subsidiary is in conflict with or in default or
violation of, and at all times since January 1, 2000, has not been in conflict
with or in default or violation of, (i) any Laws applicable to the Company or
any Subsidiary or by which any property or asset of the Company or any
Subsidiary is bound or affected; (ii) any of the Company Permits; or (iii) any
promissory note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which the Company or any
Subsidiary is a party or by which the Company or any Subsidiary or any property
or asset of the
13
Company or any Subsidiary is bound or affected, except for any such conflicts,
defaults or violations that would not, individually or in the aggregate, have a
Company Material Adverse Effect. Except as set forth on Schedule 3.06-3, no
material investigation or review by any Governmental Authority with respect to
the Company or any Subsidiary is pending, or to the knowledge of the Company,
threatened, nor has any Governmental Authority indicated in writing an intention
to conduct such an investigation or review.
SECTION 3.07. SEC Filings; Financial Statements.
(a) The Company has timely filed with the SEC all forms, reports,
schedules, statements and other documents required to be filed by it since
November 13, 2000 (as supplemented and amended since the time of filing,
collectively, the "Company SEC Documents"). The Company SEC Documents, including
any financial statements or schedules included in the Company SEC Documents, at
the time filed (and, in the case of registration statements and proxy
statements, on the dates of effectiveness and the dates of mailing,
respectively, and, in the case of any Company SEC Document amended or superseded
by a filing prior to the date of this Agreement, then on the date of such
amending or superseding filing) (i) complied in all material respects with the
applicable requirements of the United States federal securities Laws; and (ii)
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading. No Subsidiary is subject to the periodic reporting
requirements of the Securities Exchange Act of 1934, as amended (together with
the rules and regulations thereunder, the "Exchange Act"), or required to file
any form, report, schedule, statement or other document with the SEC, the Nasdaq
National Market, any stock exchange or, except as set forth on Schedule 3.07(a),
any other comparable Governmental Authority.
(b) Each of the consolidated financial statements (including, in each
case, any notes thereto) contained in the Company SEC Documents at the time
filed (and, in the case of registration statements and proxy statements, on the
dates of effectiveness and the dates of mailing, respectively, and, in the case
of any Company SEC Document amended or superseded by a filing prior to the date
of this Agreement, then on the date of such amending or superseding filing) (i)
complied in all material respects with applicable accounting requirements and
with the published rules and regulations of the SEC with respect thereto, (ii)
was prepared in accordance with United States generally accepted accounting
principles applied on a consistent basis throughout the periods indicated
(except as may be indicated in the notes thereto), and (iii) fairly presented in
all material respects (subject, in the case of unaudited statements, to normal
and recurring year-end adjustments) the consolidated financial position, results
of operations and cash flows of the Company and the consolidated Subsidiaries as
at the respective dates thereof and for the respective periods indicated
therein.
(c) With respect to each Annual Report on Form 10-K and each Quarterly
Report on Form 10-Q (in each case as supplemented and amended since the time of
filing as set forth on Schedule 3.07(c)) included in the Company SEC Documents
filed since August 29,
14
2002, the financial statements and other financial information included in such
reports fairly present (within the meaning of the Sarbanes-Oxley Act of 2002) in
all material respects the financial condition and results of operations of the
Company as of, and for, the periods presented in the Company SEC Documents. The
Company's principal executive officer and its principal financial officer have
disclosed, based on their most recent evaluation, to the Company's auditors and
the audit committee of the Company's Board of Directors (i) all significant
deficiencies in the design or operation of internal controls that could
adversely affect the Company's ability to record, process, summarize and report
financial data and have identified for the Company's auditors any material
weaknesses in internal controls and (ii) any fraud, whether or not material,
that involves management or other employees who have a significant role in the
Company's internal controls. The Company has established and maintains
disclosure controls and procedures (as such term is defined in Rule 13a-14 under
the Exchange Act); such disclosure controls and procedures are designed to
ensure that material information relating to the Company, including its
consolidated Subsidiaries, is made known to the Company's principal executive
officer and its principal financial officer by others within those entities,
particularly during the periods in which the periodic reports required under the
Exchange Act are being prepared; and, to the knowledge of the Company, such
disclosure controls and procedures are effective at the reasonable assurance
level in timely alerting the Company's principal executive officer and its
principal financial officer to material information required to be included in
the Company's periodic reports required under the Exchange Act. There are no
outstanding loans made by the Company or any of its Subsidiaries to any
executive officer (as defined in Rule 3b-7 under the Exchange Act) or director
of the Company. Since the enactment of the Sarbanes-Oxley Act of 2002, neither
the Company nor any of its Subsidiaries has made any loans to any executive
officer or director of the Company or any of its Subsidiaries.
(d) Except as and to the extent set forth on the consolidated balance
sheet of the Company and the consolidated Subsidiaries as at December 31, 2003,
including the notes thereto, included in the Company SEC Documents (the "Company
2003 Balance Sheet"), neither the Company nor any Subsidiary has any liability
or obligation of any nature (whether accrued, absolute, contingent or otherwise)
that would be required to be disclosed on a balance sheet prepared in accordance
with United States generally accepted accounting principles, except for
liabilities and obligations (i) incurred since December 31, 2003 in the ordinary
course of business consistent with past practice which would not, individually
or in the aggregate, have a Company Material Adverse Effect; or (iii) incurred
pursuant to this Agreement.
(e) The Company has heretofore furnished to Parent complete and correct
copies of all material amendments and modifications that have not been filed by
the Company with the SEC to all agreements, documents and other instruments that
previously had been filed by the Company with the SEC as exhibits to Company SEC
Documents and are currently in effect. A true and complete list of such
amendments and modifications is set forth on Schedule 3.07(e) of the Company
Disclosure Schedule.
15
SECTION 3.08. Disclosure Documents. The preliminary proxy statement
relating to the meeting of the Company's stockholders in connection with the
Merger (together with any amendments thereof or supplements thereto, the
"Company Proxy Statement") will not, when filed with the SEC, at the date mailed
to the Company's stockholders and at the time of such meeting of stockholders to
be held in connection with the Merger, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading or necessary to correct
any statement in any earlier communication with respect to any solicitation of
proxies or otherwise. The Company Proxy Statement will, when filed with the SEC,
at the date mailed to the Company's stockholders and at the time of such meeting
of stockholders to be held in connection with the Merger, comply in all material
respects with the applicable requirements of the United States federal
securities Laws. Notwithstanding the foregoing, the Company makes no
representation or warranty with respect to any information supplied by Parent or
Merger Subsidiary or any of their respective representatives in writing
specifically for inclusion in the Company Proxy Statement.
SECTION 3.09. Absence of Certain Changes or Events. Since December 31,
2003, except as contemplated by this Agreement or as set forth on Schedule 3.09
of the Company Disclosure Schedule, the Company and the Subsidiaries have
conducted their businesses in the ordinary course and in a manner consistent
with past practice, and there has not been (a) any event or events having a
Company Material Adverse Effect, (b) any change by the Company in its accounting
methods, principles or practices, (c) any revaluation by the Company of any
material asset (including, without limitation, any writing down of the value of
inventory or writing off of notes or accounts receivable), other than in the
ordinary course of business consistent with past practice, (d) any entry by the
Company or any Subsidiary into any commitment or transaction material to the
Company and the Subsidiaries taken as a whole, except in the ordinary course of
business and consistent with past practice, (e) any declaration, setting aside
or payment of any dividend or distribution in respect of any capital stock of
the Company or any redemption, purchase or other acquisition of any of its
securities, (f) any material damage, destruction or loss to material property,
whether or not covered by insurance, (g) any settlement or compromise of any
material litigation, action or claim, or (h) other than pursuant to the
contracts and Plans expressly referred to in Section 3.11 hereof, any increase
in, establishment or material amendment of any bonus, insurance, severance,
deferred compensation, pension, retirement, profit sharing, stock option
(including, without limitation, the granting of stock options, stock
appreciation rights, performance awards, or restricted stock awards), stock
purchase or other employee benefit plan, or any other increase in the
compensation payable or to become payable to any officers or key employees of
the Company or any Subsidiary, except for salary increases and benefit accruals
in the ordinary course of business consistent with past practice.
SECTION 3.10. Absence of Litigation. Except as set forth on Schedule
3.10-1 of the Company Disclosure Schedule, there is no suit, claim, action,
proceeding, compliance review or investigation pending or, to the knowledge of
the Company, threatened against the Company or any Subsidiary, or any property
or asset of the Company or any Subsidiary,
16
before any court, arbitrator or Governmental Authority, which (a) individually
or in the aggregate, would have a Company Material Adverse Effect, or (b) seeks
to delay or prevent the consummation of the Merger or the other transactions
contemplated hereby. Except as set forth on Section 3.10-2 of the Company
Disclosure Schedule, neither the Company nor any Subsidiary nor any property or
asset of the Company or any Subsidiary is subject to any order, writ, judgment,
injunction, decree, determination or award which would have, individually or in
the aggregate, a Company Material Adverse Effect.
SECTION 3.11. Employee Benefit Plans. Schedule 3.11 of the Company
Disclosure Schedule sets forth a true and complete list of (i) all the employee
benefit plans and programs maintained and currently in effect or for which the
Company or any Subsidiary may have any responsibility or liability for the
benefit of any current or former employee, officer or director of the Company or
any Subsidiary, as amended to date (the "Plans"); and (ii) all contracts and
agreements relating to employment which provide for annual compensation in
excess of $150,000 and all severance or change of control agreements, with any
of the directors, officers or employees of the Company or its Subsidiaries
(other than, in each case, any such contract or agreement that is terminable at
any time by the Company or a Subsidiary at will and without penalty or other
adverse consequence) (the "Employment Contracts"). Parent has been furnished
with a true and complete copy of each Plan, and with respect to each such Plan
true, correct and complete copies of (a) any associated trust, custodial,
insurance or service agreements, (b) any annual report, actuarial report, or
disclosure materials (including specifically any summary plan descriptions)
submitted to any governmental agency or distributed to participants or
beneficiaries thereunder in the current or any of the three (3) preceding
calendar years and (c) the most recently received IRS determination letters and
any governmental advisory opinions, rulings, compliance statements, closing
agreements, or similar materials specific to such Plan and each Employment
Contract. Except as set forth in Schedule 3.11 of the Company Disclosure
Schedule: (i) none of the Plans is a multiemployer plan within the meaning of
Section 4001(a)(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"); (ii) none of the Plans or Employment Contracts promises or
provides retiree medical or life insurance benefits to any person except as
required by Part 6 of Title I of ERISA, Section 4980B of the Code or any similar
state Law relating to the continuation of health insurance coverage; (iii) each
Plan intended to be qualified under Section 401(a) of the Code has received a
favorable determination letter from the Internal Revenue Service that it is so
qualified and nothing has occurred since the date of such letter that could
reasonably be expected to adversely affect the qualified status of such Plan;
(iv) none of the Plans or Employment Contracts promises or provides severance
benefits or benefits contingent upon a change in ownership or control within the
meaning of Section 280G of the Code; (v) each Plan has been operated in all
material respects in accordance with its terms and the requirements of
applicable Law; (vi) none of the Plans is subject to Title IV of ERISA; (vii)
neither the Company nor any Subsidiary has incurred any direct or indirect
liability under, arising out of, or by operation of Title IV of ERISA in
connection with, the termination of, or withdrawal from, any Plan or other
retirement plan or arrangement; and (viii) the Company and the Subsidiaries have
not incurred any liability under, and have complied in all material respects
with, the Worker Adjustment Retraining Notification Act.
17
Other than routine claims for benefits under the Plans, no claim with respect
to, or legal proceeding involving, any Plan or a breach of any Employment
Contract is pending or, to the knowledge of the Company, threatened.
SECTION 3.12. Labor Matters. Neither the Company nor any Subsidiary is a
party to any collective bargaining agreement or other labor union contract
applicable to persons employed by the Company or any Subsidiary, and since
January 1, 2001 there has not occurred any strike, work stoppage or union
organizing effort and, to the knowledge of the Company, no such action is
threatened or contemplated. Neither the Company nor any Subsidiary is engaged in
any material unfair labor practice (as defined in the National Labor Relations
Act).
SECTION 3.13. Personal Property, Real Property and Leases.
(a) The Company has never owned any real property. Schedule 3.13-1 of the
Company Disclosure Schedule sets forth a true and complete list of all real
property leased by the Company or any Subsidiary since 1991, and separately
identifies that which is, or was previously, leased. The Company and the
Subsidiaries have valid leasehold interests to or in all of the properties and
assets necessary to conduct their respective businesses as currently conducted
and, except as set forth on Schedule 3.13-2 of the Company Disclosure Schedule,
there are no material security interests or encumbrances on such owned
properties and assets. The owned properties and assets and, to the knowledge of
the Company, the leased properties and assets, necessary to conduct the business
of the Company and the Subsidiaries as currently conducted are structurally
sound in all material respects, are in good operating condition and repair,
normal wear and tear excepted, and are adequate for the uses to which they are
being put, and none of such properties or assets is in need of maintenance or
repairs, except for ordinary, routine maintenance and repairs that are not
material in nature or cost.
(b) All leases of real property leased for the use or benefit of the
Company or any Subsidiary to which the Company or any Subsidiary is a party
requiring rental payments in excess of $50,000 during the period of the lease,
and all amendments and modifications thereto, are in full force and effect and
have not been modified or amended, and there exists no material default under
any such lease by the Company, any Subsidiary, or, to the knowledge of the
Company, by any other party thereto, nor any event which with notice or lapse of
time or both would constitute a material default thereunder by the Company or
any Subsidiary or, to the knowledge of the Company, by any other party thereto.
SECTION 3.14. Intellectual Property. "Company Intellectual Property" means
all trademarks, trademark rights, trade names, trade name rights, patents,
patent rights, industrial models, inventions, copyrights, servicemarks, trade
secrets, know-how, computer software programs and other proprietary rights and
information used or held for use in connection with the business of the Company
and the Subsidiaries as currently conducted, together with all applications
currently pending for any of the foregoing. Except as (i) set forth in Schedule
3.14-1 of the Company Disclosure Schedule; or (ii) would not have, individually
or in the aggregate, a Company Material Adverse Effect, the Company and the
18
Subsidiaries own or have legally enforceable rights to use all of the Company
Intellectual Property, and no assertion or claim in writing has been received by
the Company or any Subsidiary (or, to the knowledge of the Company, is there any
basis therefor) challenging the validity of the Company's or any Subsidiary's
ownership of, or right to use, any Company Intellectual Property. Except as set
forth on Schedule 3.14-2 of the Company Disclosure Schedule, neither the Company
nor any Subsidiary is party to any material license or other agreement pursuant
to which it has the right to use any Company Intellectual Property utilized in
connection with any product or process of the Company or any of its
Subsidiaries. Except as set forth on Schedule 3.14-3 of the Company Disclosure
Schedule, there are no pending, or to the knowledge of the Company, threatened,
interferences, re-examinations, oppositions or nullities involving any patents,
patent rights or applications therefor of the Company or any Subsidiary that,
individually or in the aggregate, would have a Company Material Adverse Effect.
Except as set forth on Schedule 3.14-4, all employees of the Company and the
Subsidiaries since January 1, 2000 have executed confidentiality and invention
assignment agreements in the forms previously delivered to the Parent. Except as
set forth in Schedule 3.14-5 of the Company Disclosure Schedule, there have been
no notices received by the Company from, or claims made against the Company or
any Subsidiary by, or to the knowledge of the Company, claims against the
Company or any Subsidiary threatened by, third parties regarding actual or
potential infringements of any Company Intellectual Property. Except as
disclosed in Schedule 3.14-6 of the Company Disclosure Schedule, there are no
infringements by third parties of any Company Intellectual Property which,
individually or in the aggregate, would have a Company Material Adverse Effect.
Except as set forth on Schedule 3.14-7 of the Company Disclosure Schedule,
neither the Company nor any Subsidiary has licensed or otherwise permitted the
use by any third party of any Company Intellectual Property (other than end-user
licenses to customers in the ordinary course of business consistent with past
practice).
SECTION 3.15. Taxes. Except as set forth on Schedule 3.15 of the Company
Disclosure Schedule, (i) the Company and the Subsidiaries have filed all
federal, state, local and foreign Tax returns and reports required to be filed
by them on or prior to the date hereof, and all such Tax returns are true,
correct, and complete in all material respects; (ii) each of the Company and the
Subsidiaries have paid on a timely basis all Taxes when and as due under
applicable Law, other than such payments as are immaterial in amount or are
being contested in good faith by appropriate proceedings (each of which is
described on Schedule 3.15 of the Company Disclosure Schedule); (iii) neither
the Company nor any of the Subsidiaries has ever been subject to any Tax audit;
(iv) neither the Internal Revenue Service (the "IRS") nor any other Taxing
authority or agency, domestic or foreign, is now asserting or, to the knowledge
of the Company, threatening to assert against the Company or any Subsidiary any
deficiency or claim for additional Taxes; (v) none of the Tax returns of the
Company and its Subsidiaries contains or will contain a disclosure statement
under Code Section 6662 of the Code or any similar provision of state, local, or
foreign Law; (vi) neither the Company nor any Subsidiary has granted any waiver
of any statute of limitations with respect to, or any extension of a period for
the assessment of, any federal, state, county, municipal or foreign Tax, which
waiver or extension remains in effect; (vii) the accruals and reserves for Taxes
reflected in the Company 2003 Balance Sheet and the Company's most
19
recent quarterly financial statements, adjusted to reflect additions and
deletions thereto since the date thereof arising in the ordinary course of
business and consistent with past practice, are adequate to cover all Taxes
accruable in accordance with United States generally accepted accounting
principles through the Effective Time; (viii) the Company and the Subsidiaries
have withheld or collected and paid over to the appropriate Governmental
Authorities or are properly holding for such payment all Taxes required by Law
to be withheld or collected, and the Company and the Subsidiaries have complied
in all material respects with all information reporting and backup withholding
requirements, including maintenance of required records with respect thereto, in
connection with amounts paid or owing to any employee, creditor, independent
contractor, or other third party; (ix) there are no liens for Taxes upon the
assets of the Company or the Subsidiaries, other than liens for Taxes not yet
due or owing or that are being contested in good faith by appropriate
proceedings (each of which is described on Schedule 3.15 of the Company
Disclosure Schedule); (x) neither the Company nor any of its Subsidiaries is
party to or bound by (nor will the Company or any of its Subsidiaries, prior to
the Effective Time, become a party to or become bound by) any Tax indemnity, Tax
sharing or Tax allocation agreement; (xi) except for the group of which the
Company is presently the common parent, the Company has never been a member of
an affiliated group of corporations, within the meaning of Section 1504 of the
Code, other than as a common parent corporation, and none of the Subsidiaries of
the Company has ever been a member of an affiliated group of corporations,
within the meaning of Section 1504 of the Code, except where the Company was the
common parent corporation of such affiliated group; (xii) all material elections
with respect to Taxes affecting the Company and the Subsidiaries as of the date
of this Agreement are reflected on the Tax returns made available to Parent;
(xiii) neither the Company nor any Subsidiary is currently nor has ever been
subject to the reporting requirements of Code Section 6038A; (xiv) none of the
assets of the Company nor of any Subsidiary is property which the Company or any
such Subsidiary is required to treat as being owned by any other person pursuant
to the so-called "safe harbor lease" provisions of former Section 168(f) of the
Code; (xv) none of the assets of the Company or of any Subsidiary directly or
indirectly secures any debt the interest on which is tax exempt under Section
103(a) of the Code; (xvi) none of the assets of the Company or of any Subsidiary
is "tax exempt use property" within the meaning of Section 168(h) of the Code;
(xvii) neither the Company nor any Subsidiary has participated in, nor will it
participate in, an international boycott within the meaning of Section 999 of
the Code; (xviii) neither the Company nor any Subsidiary is a party to any
Employment Contract or Plan that has resulted or would result, separately or in
the aggregate, in the payment of any "excess parachute payments" within the
meaning of Section 280G of the Code; (xix) neither the Company nor any
Subsidiary is, nor has it ever been, a United States real property holding
corporation (as defined in Section 897(c)(2) of the Code) during the applicable
period specified in Section 897(c)(1)(A)(ii)of the Code; (xx) neither the
Company nor any Subsidiary has, nor has it ever had, a permanent establishment
in any foreign country, as defined in any applicable Tax treaty or convention
between the United States of America and such foreign country nor, in the
absence of such Treaty, in the manner contemplated under the Laws of such
foreign country; (xxi) the Company is not a party to any joint venture,
partnership or other arrangement or contract which could be treated as a
partnership for federal income tax purposes; and (xxii) neither the Company nor
any
20
Subsidiary has taken any action that would have the effect of deferring any
material liability for Taxes from any taxable period ending on or before the
Closing Date to any taxable period ending thereafter.
SECTION 3.16. Environmental Matters.
(a) For purposes of this Agreement, the following terms shall have the
following meanings: (i) "Hazardous Substances" means (A) those substances
defined in or regulated under any of the following U.S. federal statutes and/or
their state or foreign counterparts, as each may be amended from time to time,
and all regulations thereunder: the Hazardous Materials Transportation Act, the
Resource Conservation and Recovery Act, the Comprehensive Environmental
Response, Compensation and Liability Act, the Clean Water Act, the Safe Drinking
Water Act, the Toxic Substances Control Act, the Atomic Energy Act, the Federal
Insecticide, Fungicide, and Rodenticide Act, the Occupational Health and Safety
Act and the Clean Air Act; (B) petroleum and petroleum products including crude
oil and any fractions thereof; (C) natural gas, synthetic gas, and any mixtures
thereof; (D) radon; (E) asbestos; (F) any other pollutant or contaminant; and
(G) any substance with respect to which a federal, state or local agency
requires environmental investigation, monitoring, reporting or remediation; and
(ii) "Environmental Laws" means any U.S. federal, state or local or foreign law,
including, without limitation, any code or rule of common law, relating to (A)
releases or threatened releases of Hazardous Substances or materials containing
Hazardous Substances; (B) the manufacture, handling, transport, use, treatment,
management, storage or disposal of, or exposure to, Hazardous Substances or
materials containing Hazardous Substances; or (C) otherwise relating to
pollution of the environment or the protection of natural resources or human
health.
(b) Except as set forth on Schedule 3.16 of the Company Disclosure
Schedule (which description shall include an estimate of the Company's potential
financial liability with respect to each matter so described) or as would not,
individually or in the aggregate, have a Company Material Adverse Effect: (i)
neither the Company nor any of its Subsidiaries has violated or is in violation
of any Environmental Law; (ii) there is and has been no release, threatened
release, contamination, disposal, spilling, dumping, incineration, discharge,
storage or treatment of any Hazardous Substance, at, on, under or from any of
the properties owned or, to the knowledge of the Company, leased by the Company
or any of its Subsidiaries (including, without limitation, soils and surface and
ground waters); (iii) to the knowledge of the Company, neither the Company nor
any of its Subsidiaries is liable for any contamination, release or threatened
release of Hazardous Substances at any location off of the properties and
facilities owned or operated by the Company or any Subsidiary; (iv) neither the
Company nor any Subsidiary is liable with respect to any pending claims that
have been or, to the Company's knowledge, are threatened to be asserted under
any Environmental Law; (v) the Company and each of its Subsidiaries has all
permits, licenses and other authorizations and has made all registrations,
notifications, reports and submissions required under any Environmental Law
("Environmental Permits"); (vi) each of the Company and its Subsidiaries has
been and is in compliance with its Environmental Permits; (vii) there are no
pending, or, to the knowledge of the Company, threatened claims
21
against the Company or any Subsidiary arising under or relating to any
Environmental Law or Hazardous Substance; (viii) neither the Company nor any of
its Subsidiaries is subject to or has entered into any order, consent, decree or
other agreement under or relating to any Environmental Law or Hazardous
Substance; and (ix) neither the Company nor any of its Subsidiaries has entered
into any written or unwritten agreement pursuant to which the Company or any of
the Subsidiaries are obligated to assume, indemnify, defend, hold harmless,
release or perform any liabilities, claims or obligations arising under or
related to any Environmental Law or Hazardous Substance.
SECTION 3.17. Material Contracts and Government Contracts.
(a) Subsections (i) through (viii) of Schedule 3.17(a) of the Company
Disclosure Schedule set forth a true and complete list of all of the following
contracts and agreements (including, without limitation, oral agreements) to
which the Company or any Subsidiary is a party (each of such contracts and
agreements and each other contract or agreement of the Company or any Subsidiary
entered into after the date of this Agreement that would have been required to
be set forth on Schedule 3.17(a) of the Company Disclosure Schedule, had such
contract or agreement been entered into prior to the date of this Agreement,
collectively, the "Material Contracts"):
(i) each contract and agreement (other than any routine purchase
order or pricing quote made in the ordinary course of business involving
less than $50,000) for the purchase of inventory, spare parts, other
materials or personal property with any supplier or for the furnishing of
services to the Company or any Subsidiary under the terms of which the
Company or any Subsidiary: (A) paid or otherwise gave consideration of
more than $100,000 in the aggregate during the calendar year ended
December 31, 2003, (B) is likely to pay or otherwise give consideration of
more than $100,000 in the aggregate during the calendar year ending
December 31, 2004, (C) is likely to pay or otherwise give consideration of
more than $100,000 in the aggregate over the remaining term of the
contract or agreement or (D) cannot be canceled by the Company or such
Subsidiary on thirty (30) or fewer days notice without penalty or further
payment of less than $25,000;
(ii) each customer contract and agreement (other than routine
purchase orders or pricing quotes made in the ordinary course of business
involving less than $20,000 individually) to which the Company or any
Subsidiary is a party which: (A) involved consideration of more than
$20,000 in the aggregate during the calendar year ended December 31, 2003,
(B) is likely to involve consideration of more than $20,000 in the
aggregate during the calendar year ending December 31, 2004, (C) is likely
to involve consideration of more than $20,000 in the aggregate over the
remaining term of the contract or (D) cannot be canceled by the Company or
such Subsidiary on thirty (30) or fewer days notice without penalty or
further payment of less than $20,000;
22
(iii) each management contract and each contract with an independent
contractor or consultant (or similar arrangement) to which the Company or
any Subsidiary is a party and which: (A) involved consideration of more
than $10,000 in the aggregate during the calendar year ended December 31,
2003, (B) is likely to involve consideration of more than $10,000 in the
aggregate during the calendar year ending December 31, 2004, (C) is likely
to involve consideration of more than $10,000 in the aggregate over the
remaining term of the contract, or (D) cannot be canceled by the Company
or such Subsidiary on thirty (30) or fewer days notice without penalty or
further payment of less than $10,000;
(iv) all contracts and agreements (excluding routine checking
account overdraft agreements involving petty cash amounts) under which the
Company or any Subsidiary has created, incurred, assumed, agreed to
indemnify against or guaranteed (or may so create, incur, assume, agree to
indemnify against or guarantee) indebtedness involving an amount in excess
of $25,000 in any individual case or $50,000in the aggregate or under
which the Company or any Subsidiary has granted or incurred (or may grant
or incur) a security interest or lien on any of their respective assets,
whether tangible or intangible, to secure indebtedness of an amount in
excess of $25,000 in any individual case or $50,000 in the aggregate or
under which the Company or any Subsidiary has agreed to indemnify against
or guarantee obligations (other than indebtedness) involving an amount in
excess of $25,000 in any individual case or $50,000 in the aggregate;
(v) each contract and agreement that limits the ability of the
Company or and Subsidiary or, after the Effective Time, Parent or any of
its affiliates, to compete in any line of business or with any person or
in any geographic area or during any period of time, or to solicit any
customer or client;
(vi) each contract and agreement between or among the Company or any
Subsidiary, on the one hand, and any affiliate (as defined in Section
9.03(a) hereof) of the Company, including without limitation, present and
former officers or directors of the Company or any Subsidiary or any of
their respective associates, on the other hand, including, without
limitation, any agreement to indemnify, advance expenses and/or defend any
of the foregoing in respect of any matter;
(vii) each contract and agreement to which the Company or any
Subsidiary is a party under which it has agreed to supply products to a
customer at specified prices, whether directly or through a specific
distributor, manufacturer's representative or dealer, which contract
involves products or sales of at least $100,000 and extends for more than
one year; and
(viii) each other contract and agreement (A) the absence or breach
of which would have a Company Material Adverse Effect, or (B) that would
be deemed to be material pursuant to Item 601 of Regulation S-K under the
Securities Act.
23
(b) Each Material Contract is a legal, valid and binding agreement of the
Company or a Subsidiary, as the case may be, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium and other similar laws and
equitable principles relating to or limiting creditors' rights generally and by
general principles of equity, and none of the Company, any Subsidiary or, to the
knowledge of the Company, any other party thereto, is in material default under
any Material Contract; neither the Company nor any Subsidiary is in receipt of
any notice of default under any Material Contract; and none of the Company or
any of the Subsidiaries anticipates any termination or change to, or receipt of
a proposal with respect to, any of the Material Contracts as a result of the
Merger or otherwise. Except as set forth on Schedule 3.17(b) of the Company
Disclosure Schedule, the Company has furnished Parent with true and complete
copies of all Material Contracts, together with all amendments, waivers, or
other changes thereto.
(c) For purposes of this Section 3.17, (i) the term "Government" shall
mean any entity within the U.S. federal government; and (ii) the term
"Government Contract" shall mean any Government prime contract, cooperative
research and development agreement, "other transaction", or any subcontract at
any tier under a Government prime contract, or any basic ordering agreement,
letter contract, purchase order or delivery order of any kind, including without
limitation, as to all of the foregoing, all amendments, modifications and
options thereunder or relating thereto.
(d) Schedule 3.17(d) of the Company Disclosure Schedule sets forth a true
and complete list of: (i) all Government Contracts currently in force between
the Company or any Subsidiary and the Government or any prime contractor or
subcontractor; (ii) all outstanding quotations, bids and proposals submitted by
the Company or any Subsidiary, which the Company believes are still subject to
acceptance, to the Government or any prime contractor or subcontractor; and
(iii) any Government Contract that by its terms remains subject to audit.
(e) Except as set forth on Schedule 3.17(e) of the Company Disclosure
Schedule, with respect to Government Contracts, there is no pending or, to the
knowledge of the Company, threatened, (i) civil fraud or criminal action,
proceeding or investigation by any Governmental Authority, (ii) suspension or
debarment action or proceeding against the Company or any Subsidiary, (iii)
request by the Government for a contract price adjustment based on a claimed
disallowance by the Government in excess of $25,000, (iv) dispute between the
Company or any of its Subsidiaries and the Government which has resulted in a
government contracting officer's determination and finding final decision where
the amount in controversy exceeds, or is reasonably likely to exceed, $25,000 or
(v) claim or equitable adjustment by the Company or any of its Subsidiaries
against the Government in excess of $25,000.
SECTION 3.18. Opinion of Financial Advisor. The Company's Board of
Directors has received the opinion of Needham & Company, Inc. ("Needham") to the
effect that, as of the date of this Agreement, the Per Share Amount to be
received by the holders of Common Stock pursuant to the Merger is fair to such
holders from a financial point of view.
24
The Company has provided a copy of such opinion to Parent. The Company has
received the consent of Needham to include such opinion in the Company Proxy
Statement.
SECTION 3.19. Board Approval; Vote Required. The Company's Board of
Directors, at a meeting duly called and held on September 1, 2004, at which all
directors were present, duly and unanimously adopted resolutions: (i) approving
this Agreement and the transactions contemplated hereby, including the Merger;
(ii) declaring that this Agreement is advisable; (iii) determining that this
Agreement and the transactions contemplated hereby, including the Merger, are
fair to, and in the best interests of, the Company and its stockholders and that
the consideration to be paid for each Share in the Merger is fair to the holders
of Shares; and (iv) recommending that the Company's stockholders approve and
adopt this Agreement and the transactions contemplated hereby, including the
Merger. None of the aforesaid resolutions by the Company's Board of Directors
has been amended, rescinded or modified. The affirmative vote of the holders of
a majority of the Shares outstanding as of the record date for the Company
Stockholders' Meeting is the only vote of the holders of any class or series of
capital stock of the Company necessary to adopt this Agreement and approve the
transactions contemplated by this Agreement, including the Merger.
SECTION 3.20. Brokers. No broker, finder, investment banker or other
person (other than Needham) is entitled to or will be paid any brokerage,
finder's or similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
the Company or any Subsidiary. The Company has heretofore furnished to Parent a
complete and correct copy of all agreements between the Company and Needham
pursuant to which such firm would be entitled to any payment relating to the
transactions contemplated by this Agreement. Schedule 3.20 of the Company
Disclosure Schedule discloses the maximum aggregate amount of all costs, fees
and expenses that will be paid or will be payable by the Company and its
Subsidiaries to all attorneys, accountants and investment bankers and other
experts and consultants and all printing and advertising expenses in connection
with the Merger and the transactions contemplated by this Agreement.
SECTION 3.21. Customers. Schedule 3.21 of the Company Disclosure Schedule
sets forth the twenty-five (25) largest customers of the Company, each ranked by
revenue, for the most recent fiscal year. Except as set forth on Schedule 3.21
of the Company Disclosure Schedule, since January 1, 2003, no customer named on
Schedule 3.21 has canceled, otherwise terminated or materially curtailed, or, to
the knowledge of the Company, threatened to cancel, otherwise terminate or
materially curtail its relationship with the Company, except as would not,
individually or in the aggregate, have a Company Material Adverse Effect.
SECTION 3.22. Suppliers. Except as set forth on Schedule 3.22 of the
Company Disclosure Schedule, since December 31, 2003 no material supplier or
service provider of the Company or any Subsidiary has indicated it will stop or
materially decrease the supply or materials, products or services to the Company
or such Subsidiary or is
25
otherwise involved in or, to the knowledge of the Company, is threatening a
material dispute with the Company or such Subsidiary.
SECTION 3.23. Certain Payments. Neither the Company nor any Subsidiary or
any director, officer, agent or employee of the Company or any Subsidiary, or
any other person associated with or acting for or on behalf of the Company or
any Subsidiary, has directly or indirectly (a) made any contribution, gift,
bribe, rebate, payoff, influence payment, kickback or other payment to any
person or Governmental Authority, regardless of form, whether in money, property
or services (i) to obtain favorable treatment in securing business, (ii) to pay
for favorable treatment for business secured, (iii) to obtain special
concessions or for special concessions already obtained, for or in respect of
the Company, any Subsidiary or any affiliate of the Company or any Subsidiary or
(iv) in violation of any federal, state, territorial, local or foreign Law or
(b) established or maintained any fund or asset that has not been recorded in
the books and records of the Company or any Subsidiary.
SECTION 3.24. Section 203 of the DGCL. No state anti-takeover statute or
similar charter or bylaw provisions of the Company are applicable to the Merger,
this Agreement or the transactions contemplated hereby.
SECTION 3.25. Insurance. Schedule 3.25-1 of the Company Disclosure
Schedule contains a true and complete list of all material insurance policies
and binders, insurance policies which have retrospective premium mechanisms and
programs of self-insurance owned, held or maintained by the Company on the date
of this Agreement or at any time during the previous three calendar years that
afford or afforded, as the case may be, coverage to the Company, its assets or
businesses. The Company's insurance policies are in full force and effect in
accordance with their terms, no notice of cancellation has been received, and
there is no existing material default or event that, with the giving of notice
or lapse of time or both, would constitute a default thereunder. All premiums to
date have been paid in full. The Company and any of its covered Subsidiaries is
a "named insured" or an "insured" under such insurance policies. The Company and
its Subsidiaries have not been refused any insurance, nor has the coverage of
the Company or any of its Subsidiaries been limited, by any insurance carrier to
which it has applied for insurance or with which it has carried insurance during
the past three (3) years. Except as set forth on Schedule 3.25-2 of the Company
Disclosure Schedule, the policies of fire, theft, liability and other insurance
maintained with respect to the assets or businesses of the Company and its
Subsidiaries may be continued by the Company and its Subsidiaries without
modification or premium increase after the Effective Time and for the duration
of their current terms, which terms expire as set forth on Schedule 3.25-3 of
the Company Disclosure Schedule. Set forth on Schedule 3.25-4 of the Company
Disclosure Schedule is the amount of the annual premium currently paid by the
Company for its directors' and officers' liability insurance.
26
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
AND MERGER SUBSIDIARY
Parent and Merger Subsidiary hereby, jointly and severally, represent and
warrant to the Company that:
SECTION 4.01. Organization and Qualification; Subsidiaries. Each of Parent
and Merger Subsidiary is a corporation duly organized, validly existing and in
good standing under the Laws of the jurisdiction of its incorporation and has
the requisite power and authority to own, lease and operate its properties and
to carry on its business as it is now being conducted. Each of Parent and Merger
Subsidiary is duly qualified or licensed as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character of
the properties owned, leased or operated by it or the nature of its business
makes such qualification or licensing necessary, except for any failure(s) to be
so qualified or licensed or in good standing that would not, individually or in
the aggregate, have a Parent Material Adverse Effect (as hereinafter defined).
The term "Parent Material Adverse Effect" means any change or effect that is or
is reasonably likely to be materially adverse to the business, results of
operations or condition (financial or otherwise) of Parent and its subsidiaries,
taken as a whole, or otherwise materially and adversely affects the ability of
the Parent and Merger Subsidiary to consummate the transactions contemplated
hereby.
SECTION 4.02. Certificate of Incorporation and By-laws. Parent has
heretofore furnished to the Company a complete and correct copy of the
Certificate of Incorporation and the By-laws, each as amended to date, of Parent
and Merger Subsidiary. Such Certificates of Incorporation and By-laws are in
full force and effect. Neither Parent nor Merger Subsidiary is in violation of
any provision of its Certificate of Incorporation or By-laws.
SECTION 4.03. Authority Relative to this Agreement. Each of Parent and
Merger Subsidiary has all necessary corporate power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate
the Merger and the other transactions contemplated hereby. The execution and
delivery of this Agreement by Parent and Merger Subsidiary and the consummation
by Parent and Merger Subsidiary of the Merger and the other transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action, and no other corporate proceedings on the part of Parent or
Merger Subsidiary are necessary to authorize this Agreement or to consummate the
Merger and the other transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by Parent and Merger Subsidiary and,
assuming due authorization, execution and delivery by the Company, constitutes a
legal, valid and binding obligation of each of Parent and Merger Subsidiary
enforceable against each of Parent and Merger Subsidiary in accordance with its
terms, except as may be limited by bankruptcy,
27
insolvency, reorganization, moratorium and other similar laws and equitable
principles relating to or limiting creditors' rights generally and by general
principles of equity.
SECTION 4.04. No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by Parent and Merger
Subsidiary do not, and the performance of this Agreement by Parent and Merger
Subsidiary will not, (i) conflict with or violate the Certificate of
Incorporation or By-laws of Parent or Merger Subsidiary; (ii) conflict with or
violate in any material respect any Laws applicable to Parent or Merger
Subsidiary or by which any property or asset of either of them is bound or
affected; or (iii) except as specified in Schedule 4.04(a) of the separate
Disclosure Schedule previously delivered by Parent to the Company (the "Parent
Disclosure Schedule"), require a consent under, violate, conflict with, result
in any breach of or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or give to others any right of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or other encumbrance on any property or asset of Parent or
Merger Subsidiary pursuant to, any material promissory note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which Parent or Merger Subsidiary is a party or by
which Parent or Merger Subsidiary or any property or asset of either of them is
otherwise bound or affected.
(b) The execution and delivery of this Agreement by Parent and Merger
Subsidiary do not, and the performance of this Agreement, the consummation of
the Merger and the other transactions contemplated hereby and compliance with
the provisions of this Agreement by Parent and Merger Subsidiary will not,
require any consent, approval, authorization or permit of, or filing with or
notification to, any Governmental Entity, except (i) registrations or other
actions required under United States federal and state securities laws as are
contemplated by this Agreement; (ii) actions required by the HSR Act; (iii) the
filing and recordation of appropriate merger documents as required by the DGCL;
(iv) as set forth on Schedule 4.04(b) of the Parent Disclosure Schedule; and (v)
where failure to obtain such consents, approvals, authorizations or permits, or
to make such filings or notifications, would not prevent or materially delay
consummation of the Merger or any other transaction contemplated hereby, and
would not, individually or in the aggregate, have a Parent Material Adverse
Effect.
SECTION 4.05. Absence of Litigation. There is no claim, action, proceeding
or investigation pending or, to the knowledge of the Parent, threatened against
the Parent before any court, arbitrator or Governmental Authority, which seeks
to delay or prevent the consummation of the Merger and or any other transaction
contemplated hereby.
SECTION 4.06 Disclosure Documents. None of the information supplied or to
be supplied by Parent or Merger Subsidiary in writing specifically for inclusion
or incorporation by reference in the Company Proxy Statement will, when filed
with the SEC, at the date mailed to the Company's stockholders and at the time
of the meeting of the Company's stockholders to be held in connection with the
Merger, contain any untrue
28
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
SECTION 4.07 Brokers. No broker, finder or investment banker (other than
BNY Capital Markets, Inc.) is entitled to any brokerage or finder's fee or
commission in connection with the Merger based upon arrangements made by or on
behalf of Parent or Merger Subsidiary.
SECTION 4.08 Board Approval. The Board of Directors of Parent has approved
this Agreement and the Merger and has determined that the Merger is in the best
interests of Parent. No action is necessary on the part of the stockholders of
Parent in connection with this Agreement or the Merger.
SECTION 4.09 Investigation by Parent; Company's Liability. Parent and
Merger Subsidiary acknowledge and agree that, except for the representations and
warranties of the Company contained in this Agreement, the Company makes no
representation or warranty. Notwithstanding Parent's investigation into the
affairs of the Company, or any knowledge of facts determined or determinable
pursuant to such investigation, the Parent shall have the right to rely fully
upon the representations and warranties of the Company set forth in this
Agreement.
SECTION 4.10 Third-Party Financing. Parent has obtained a firm commitment
financing arrangement from a nationally recognized third-party lender to finance
Parent's payment of the Merger Consideration.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE EFFECTIVE TIME
SECTION 5.01. Conduct of Business by the Company Pending the Effective
Time. The Company covenants and agrees that, between the date of this Agreement
and the earlier of the termination of this Agreement pursuant to Article VIII or
the Effective Time, except as set forth on Schedule 5.01 of the Company
Disclosure Schedule or unless Parent shall otherwise consent in writing, which
consent shall not be unreasonably withheld, the businesses of the Company and
the Subsidiaries shall be conducted only in, and the Company and the
Subsidiaries shall not take any action except in, the ordinary course of
business and in a manner consistent with past practice or in furtherance of the
transactions contemplated by this Agreement; and the Company shall use all
commercially reasonable efforts to preserve intact its business organization, to
keep available the services of the current officers, employees and consultants
of the Company and the Subsidiaries and to preserve the current relationships of
the Company and the Subsidiaries with customers, suppliers and other persons
with which the Company or any Subsidiary has business relations. By way of
amplification and not limitation, except as contemplated by this Agreement or as
expressly set forth on Schedule 5.01 of the Company Disclosure Schedule,
29
neither the Company nor any of the Subsidiaries shall, between the date of this
Agreement and the earlier of the termination of this Agreement pursuant to
Article VIII or the Effective Time, directly or indirectly do, propose or commit
to do, or authorize any of the following, without the prior written consent of
Parent, which consent shall not be unreasonably withheld:
(a) amend, repeal or otherwise change the Company's or any of its
Subsidiary's Organizational Documents;
(b) issue, sell, pledge, dispose of, grant or encumber, or authorize the
issuance, sale, pledge, disposition, grant or encumbrance of, any Shares or any
shares of any class of capital stock of the Company or the Subsidiaries, or any
options, warrants, convertible securities or other rights of any kind to acquire
any Shares or shares of such capital stock, or any other ownership interest
(including, without limitation, any phantom interest), of the Company or any
Subsidiary (except, subject to Section 2.04 hereof, for the issuance of shares
of Common Stock pursuant to the exercise or purchase, in accordance with their
respective terms, of employee stock options or other awards outstanding on the
date hereof as set forth on Schedule 3.03-1 to the Company Disclosure Schedule,
provided that if any payment is required in connection therewith, such payment
shall be in cash or by net exercise, if permitted under the terms of such stock
options);
(c) transfer, lease, license, sell, mortgage, pledge, dispose of or
encumber any assets of the Company or any Subsidiary, except for sales of
finished goods in the ordinary course of business and in a manner consistent
with past practice;
(d) declare, set aside, make or pay any dividend or other distribution,
payable in cash, stock, property or otherwise, with respect to any of its
capital stock, except that a wholly owned Subsidiary may declare and pay a
dividend to its parent;
(e) reclassify, combine, split or subdivide, or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock;
(f) (i) acquire (including, without limitation, by merger, consolidation
or acquisition of capital stock or assets) (A) any corporation, partnership,
other business organization or any division thereof or (B) any assets outside
the ordinary course of business; (ii) incur any indebtedness for borrowed money
or issue any debt securities or assume, guarantee or endorse, or otherwise as an
accommodation become responsible for, the obligations of any person, or make any
loans or advances, except in the ordinary course of business to vendors and/or
employees and consistent with past practice; (iii) authorize any single capital
expenditure which is in excess of $25,000 or capital expenditures, in the
aggregate, in excess of $200,000 for the Company and the Subsidiaries taken as a
whole; or (iv) enter into or amend in any respect any Material Contract or enter
into or amend in any respect any contract, agreement, commitment or arrangement
with respect to any matter set forth in this subsection (f);
30
(g) hire any employees or increase (except salary increases in the
ordinary course of business and consistent with past practice) the compensation
payable or to become payable to its officers or employees generally or to any
employee with an annual salary in excess of $150,000, or grant any bonus,
severance or termination pay to, or enter into any employment or severance
agreement with any director, officer or other employee of the Company or any
Subsidiary, or establish, adopt, enter into or amend any collective bargaining,
bonus, profit sharing, thrift, compensation, stock option, restricted stock,
pension, retirement, deferred compensation, employment, termination, severance
or other plan, agreement, trust, fund, policy or arrangement for the benefit of
any director, officer or employee;
(h) take any action, other than reasonable and usual actions in the
ordinary course of business and consistent with past practice, with respect to
accounting policies or procedures (including, without limitation, procedures
with respect to the payment of accounts payable and collection of accounts
receivable);
(i) pay, discharge or otherwise satisfy any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction, in the ordinary course of business and
consistent with past practice, of liabilities reflected or reserved against in
the Company 2003 Balance Sheet, or subsequently incurred in the ordinary course
of business and consistent with past practice;
(j) fail to comply in all material respects with applicable Laws;
(k) fail to pay and discharge any Taxes on the Company (or any of its
Subsidiaries) or against any of its properties or assets before the same shall
become delinquent and before penalties accrue thereon, except to the extent and
so long as the same are being contested in good faith and by appropriate
proceedings;
(l) fail to perform any of its obligations under any of the Material
Contracts, or modify or terminate any of the Material Contracts; or
(m) settle or compromise any material claims or litigation.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Company Proxy Statement. As promptly as practicable after
the date of this Agreement, and, in any event, within ten (10) business days
thereafter, the Company shall prepare and file with the SEC the Company Proxy
Statement and shall cause the Company Proxy Statement to be mailed to the
Company's stockholders as promptly as practicable and, in any event, within five
(5) business days after the Company Proxy Statement is cleared by the SEC.
Notwithstanding the foregoing, any delay caused by Parent's or its
representative's review of the Company Proxy Statement shall toll the
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applicable periods set forth above. The Company will notify Parent promptly of
the receipt of, and will respond promptly to, any comments from the SEC or its
staff and any request by the SEC or its staff for amendments or supplements to
the Company Proxy Statement or for additional information, and will supply
Parent with copies of all correspondence between the Company or any of its
representatives, on the one hand, and the SEC or its staff, on the other hand,
with respect to the Company Proxy Statement or the Merger. If at any time prior
to the approval of this Agreement by the Company's stockholders there shall
occur any event that is required to be set forth in an amendment or supplement
to the Company Proxy Statement, the Company will promptly notify Parent thereof
and prepare and mail to its stockholders such amendment or supplement. The
Company shall give Parent and its counsel a reasonable opportunity to be
involved in the drafting of and review and comment upon any Company Proxy
Statement and any amendment or supplement thereto and any such correspondence
prior to its filing with the SEC or dissemination to the Company's stockholders
and the Company shall not mail any Company Proxy Statement, or any amendment or
supplement thereto, to which Parent reasonably objects. Unless and until the
Board of Directors of the Company shall withdraw its approval or recommendation
of this Agreement or the Merger if and to the extent permitted by, and in
accordance with, Section 6.05 hereof, the Company shall include in the Company
Proxy Statement the recommendation set forth in Section 3.19 hereof and shall
use commercially reasonable efforts to solicit from holders of Common Stock
proxies in favor of the Merger and this Agreement and take all other actions
reasonably necessary or, in the reasonable opinion of Parent, advisable to
secure the approval of stockholders required by the DGCL, the Company's
Certificate of Incorporation and By-Laws and any other applicable Law in order
to effect the Merger.
SECTION 6.02. Company Stockholders' Meeting. The Company shall, in
accordance with applicable Law and its Organizational Documents (as in effect on
the date of this Agreement), duly call, give notice of, convene and hold a
special meeting of its stockholders (the "Company Stockholders' Meeting") for
the purpose of considering and voting upon approval of this Agreement, the
Merger and related matters as promptly as practicable after the date hereof. The
Company shall, through its Board of Directors, recommend (and continue to
recommend) to its stockholders their approval and adoption of this Agreement and
approval of the Merger, unless and until the Board of Directors of the Company
shall withdraw its approval or recommendation of this Agreement or the Merger if
and to the extent permitted by, and in accordance with, Section 6.05 hereof. The
obligations of the Company contained in the first sentence of this Section 6.02
shall apply and remain in full force and effect regardless of whether the
Company shall have withdrawn its approval or recommendation of this Agreement or
the Merger or taken any other actions described in Section 6.05 hereof.
SECTION 6.03. Appropriate Action; Consents; Filings.
(a) The Company and Parent shall use their respective commercially
reasonable efforts to (i) take, or cause to be taken, all appropriate action,
and do, or cause to be done, all things necessary, proper or advisable under
applicable Law or otherwise to consummate and
32
make effective the Merger and the other transactions contemplated hereby as
promptly as practicable; (ii) obtain in a timely manner from Governmental
Authorities any consents, licenses, permits, waivers, approvals, authorizations
or orders required to be obtained or made by Parent or the Company or any of
their respective subsidiaries in connection with the authorization, execution
and delivery of this Agreement and the consummation of the Merger and the other
transactions contemplated hereby; and (iii) as promptly as practicable make all
necessary filings, and thereafter make any other required submissions, with
respect to this Agreement, the Merger or the other transactions contemplated
hereby that are required under (A) the Exchange Act, and any other applicable
federal or state securities Laws, (B) the HSR Act and any related governmental
request(s) thereunder, and (C) any other applicable Law; provided that Parent
and the Company shall cooperate with each other in connection with the making of
all such filings, including providing copies of all such documents to the
non-filing party and its advisors prior to filing and, if requested, to accept
all reasonable additions, deletions or changes suggested in connection
therewith. Each of the Company and Parent shall furnish to each other all
information required from it for any application or other filing to be made
pursuant to any applicable Law (including all information required to be
included in the Company Proxy Statement) in connection with the transactions
contemplated by this Agreement.
(b) Without limiting the generality of its undertakings pursuant to
Section 6.03(a) hereof, each party hereto shall (i) use its commercially
reasonable efforts to prevent the entry, in a judicial or administrative
proceeding brought under any antitrust Law by any Governmental Authority with
jurisdiction over enforcement of any applicable antitrust Laws or any other
party of any permanent or preliminary injunction or other order that would make
consummation of the Merger or any other transaction contemplated hereby in
accordance with the terms of this Agreement unlawful or would prevent or delay
it and (ii) take promptly, in the event that such an injunction or order has
been issued in such a proceeding, all steps necessary to take an appeal of such
injunction or order; provided, however, that Parent and Merger Subsidiary,
together, shall not be required to undertake more than one such appeal.
(c) Notwithstanding anything to the contrary in this Section 6.03 or
elsewhere in this Agreement, the parties agree that, in response to any action
taken or threatened to be taken by any court or Governmental Authority, Parent
shall not be required to (i) take any action or agree to the imposition of any
order that would compel Parent or the Company (or any of their respective
subsidiaries) to sell, license or otherwise dispose of, hold separate or
otherwise divest itself of any portion of its respective business, operations or
assets in order to consummate the Merger or any other transaction contemplated
hereby or (ii) impose any limitation(s) on Parent's ability to own or operate
the business and operations of the Company and its Subsidiaries.
(d) Each of Parent and the Company shall give (or shall cause its
respective subsidiaries to give) any notices to applicable third parties, and
use, and cause its respective subsidiaries to use, their commercially reasonable
efforts to obtain any third party consents or waivers, (A) required in
connection with the transactions contemplated in this Agreement,
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(B) disclosed or required to be disclosed in Schedule 3.05(a) of the Company
Disclosure Schedule or Schedule 4.04(a) of the Parent Disclosure Schedule or (C)
required to prevent a Company Material Adverse Effect from occurring prior to or
after the Effective Time or a Parent Material Adverse Effect from occurring
after the Effective Time; provided, however, that, without the written consent
of Parent, the Company and its Subsidiaries shall not incur fees and expenses in
excess of $10,000.00 in the aggregate in order to obtain, and/or in seeking to
obtain, any such third party consents or waivers.
(e) From the date of this Agreement until the Effective Time or the
earlier termination of this Agreement pursuant to Article VIII hereof, each
party shall promptly notify the other party in writing of any pending or
threatened action, proceeding or investigation by any Governmental Authority or
any other person known to it (i) challenging or seeking material damages in
connection with the Merger or any other transaction contemplated hereby; or (ii)
seeking to delay, restrain or prohibit the consummation of the Merger or any
other transaction contemplated hereby or otherwise limit the right of Parent or
Parent's subsidiaries to own or operate all or any portion of the businesses or
assets of the Company or its Subsidiaries, which in either case would have,
individually or in the aggregate, a Company Material Adverse Effect prior to or
after the Effective Time, or a Parent Material Adverse Effect after the
Effective Time.
SECTION 6.04. Access to Information; Confidentiality.
(a) From the date hereof to the earlier of the termination of this
Agreement pursuant to Article VIII hereof and the Effective Time, upon
reasonable notice and subject to restrictions contained in confidentiality
agreements to which the Company is subject (from which the Company shall use
reasonable efforts to be released), the Company will provide to Parent (and its
representatives) full access to all information and documents which Parent may
reasonably request regarding the financial condition, business, assets,
liabilities, employees and other aspects of the Company, other than information
and documents that in the opinion of the Company's counsel may not be disclosed
under applicable Law. Parent shall keep such information confidential in
accordance with the terms of the Confidentiality and Non-Circumvention
Agreement, effective as of May 12, 2004 (the "Confidentiality Agreement"),
between Parent and the Company. The Confidentiality Agreement shall remain in
full force and effect.
(b) No investigation pursuant to this Section 6.04 shall affect any
representation or warranty in this Agreement of any party hereto or any
condition to the obligations of the parties hereto.
SECTION 6.05. No Solicitation of Competing Transactions. Neither the
Company nor any Subsidiary shall, directly or indirectly, including through any
officer, director, employee, stockholder, investment banker, financial advisor,
agent or attorney, initiate, solicit or knowingly encourage (including by way of
furnishing non-public information or assistance), or take any other action
knowingly to facilitate, any inquiries about or the making of any proposal that
the Company enter into any Competing Transaction
34
(as defined below), or enter into, maintain or have discussions or negotiate
with any person in furtherance of such inquiries or to obtain or seek to obtain
a Competing Transaction, or agree to, recommend or endorse any Competing
Transaction or withdraw or modify, or propose publicly to withdraw or modify,
its recommendation set forth in Section 3.19 hereof, or authorize or permit any
person to take any such action, and the Company shall notify Parent orally
(within one (1) calendar day) and in writing (as promptly as practicable) after
receipt by any officer or director of the Company or any Subsidiary or any
investment banker, financial advisor, agent or attorney retained by the Company
or any Subsidiary, of any inquiry concerning, or proposal for, a Competing
Transaction, or of any request for non-public information relating to the
Company or any of its Subsidiaries either in connection with such an inquiry or
proposal or when such request for non-public information could reasonably be
expected to lead to such a proposal, provided, however, that nothing contained
in this Section 6.05 or any other provision hereof shall prohibit the Board of
Directors of the Company from (i) at any time prior to the Effective Time,
furnishing information to, or entering into discussions or negotiations with,
any person that makes an unsolicited, bona fide proposal for a Competing
Transaction, if, and only to the extent that, (A) the Board of Directors of the
Company, after consultation with independent legal counsel (who may be the
Company's regularly engaged independent legal counsel), determines in good faith
that failure to take such action would constitute a breach of the fiduciary
duties of the Board of Directors of the Company to the Company's stockholders
under applicable Law, and, solely with respect to entering into such discussions
or negotiations, the Board of Directors of the Company determines in good faith,
based on the advice of its financial advisors, that such Competing Transaction
is or is reasonably likely to be more favorable to the Company's stockholders,
from a financial point of view, than the Merger and the other transactions
contemplated hereby and (B) prior to furnishing such information to, or entering
into discussions or negotiations with, such person, the Company (x) provides at
least two (2) business days prior written notice to Parent to the effect that it
is furnishing information to, or entering into discussions or negotiations with,
such person and provides in such notice, in reasonable detail, the identity of
the person making such proposal and the terms and conditions of such proposal,
(y) provides Parent with all information to be provided to such person which
Parent has not previously been provided, and (z) receives from such person an
executed confidentiality agreement in reasonably customary form and having terms
no less favorable to the Company than those contained in the Confidentiality
Agreement; (ii) complying with Rule 14e-2 (and any associated obligation under
Rule 14D-9) promulgated under the Exchange Act with regard to a third party
tender or exchange offer, provided, however, that the Board of Directors of the
Company shall not recommend acceptance of such tender or exchange offer unless,
the Board of Directors of the Company, after consultation with independent legal
counsel (who may be the Company's regularly engaged independent legal counsel),
determines in good faith that failure to take such action would constitute a
breach of the fiduciary duties of the Board of Directors of the Company to the
Company's stockholders under applicable Law; (iii) referring any third party to
this Section 6.05 or making a copy of this Section 6.05 available to any third
party; or (iv) failing to make or withdrawing or modifying its recommendation in
Section 3.19 hereof following the making of an unsolicited, bona fide proposal
relating to a Competing Transaction if the Board of Directors of the Company,
after consultation with independent legal counsel (who
35
may be the Company's regularly engaged independent legal counsel) determines in
good faith that failure to take such action would constitute a breach of the
fiduciary duties of the Board of Directors of the Company to the Company's
stockholders under applicable Law and the Board of Directors of the Company
determines in good faith, based on the advice of its financial advisors, that
such Competing Transaction is reasonably likely to be more favorable to the
Company's stockholders, from a financial point of view, than the Merger and the
other transactions contemplated hereby. The Company agrees not to release any
third party from, or waive any provision of, any confidentiality or standstill
agreement to which the Company is a party. For purposes of this Agreement,
"Competing Transaction" shall mean: (i) any merger, consolidation, liquidation,
share exchange, business combination, recapitalization or other similar
transaction involving the Company or any Subsidiary; (ii) any sale, lease,
exchange, mortgage, pledge, transfer or other disposition of fifteen percent
(15%) or more of the assets of the Company and the Subsidiaries, taken as a
whole, in a single transaction or series of transactions; (iii) any tender offer
or exchange offer for fifteen (15%) or more of the Shares (other than by the
Company or any affiliate thereof) or the filing of a registration statement
under the Securities Act in connection therewith; (iv) any person having
acquired beneficial ownership or the right to acquire beneficial ownership of,
or any "group" (as such term is defined under Section 13(d) of the Exchange Act
and the rules and regulations promulgated thereunder) having been formed which
beneficially owns or has the right to acquire beneficial ownership of, fifteen
(15%) or more of the Shares or any other class of capital stock of the Company;
or (v) any public announcement of a proposal, plan or intention to do any of the
foregoing or any agreement to engage in any of the foregoing. For a Competing
Transaction to be more favorable to the Company's stockholders, it must be a
bona fide proposal made by a third party to acquire for consideration consisting
solely of cash and/or equity securities, more than fifty percent (50%) of the
voting power of the outstanding Shares or all, or substantially all, of the
assets of the Company and for which financing, to the extent required, is then
committed, or which in the good faith, reasonable judgment of the Board of
Directors of the Company is capable of being obtained by such third party.
SECTION 6.06. Directors' and Officers' Indemnification and Insurance.
(a) No later than thirty (30) days after the Effective Time, Parent shall,
or shall cause the Surviving Corporation to, purchase tail coverage, covering a
period of six (6) years from the Effective Time, under the current directors'
and officers' liability insurance policies maintained by the Company covering
only those persons covered under such policies and at coverage levels in effect
as of the date of this Agreement, with respect to acts or omissions occurring on
or prior to the Effective Time.
(b) From and after the Effective Time, to the fullest extent permitted by
Law, Parent shall cause the Surviving Corporation to indemnify, hold harmless
and advance expenses to the present and former officers, directors and employees
of the Company (the "Indemnified Parties") in respect of acts or omissions
occurring prior to the Effective Time to the extent provided under the Company's
Organizational Documents and each indemnification agreement with the Company's
officers and directors to which the Company
36
is a party and listed on Schedule 6.06(b) to the Company Disclosure Schedule, in
each case as in effect on the date of this Agreement.
(c) Parent shall pay all expenses, including reasonable attorneys' fees,
that may be incurred by any Indemnified Party in enforcing the indemnity and
other obligations provided for in this Section 6.06 to the extent that such
Indemnified Party is finally determined by a court or other tribunal of
competent jurisdiction to be entitled to indemnification under this Section
6.06.
(d) This Section 6.06 shall survive the consummation of the Merger, is
intended to benefit the Surviving Corporation and the directors and officers of
the Company in office immediately prior to the Effective Time and the
Indemnified Parties (the "Insured Parties"), shall be binding, on all successors
and assigns of the Surviving Corporation and the Parent, and shall be
enforceable by the Insured Parties.
SECTION 6.07. Notification of Certain Matters. From and after the date of
this Agreement until the Effective Time or the earlier termination of this
Agreement pursuant to Article VIII hereof, each party hereto shall promptly
notify the other party hereto of (a) the occurrence, or nonoccurrence, of any
event the occurrence, or non-occurrence of which would be likely to cause: (i)
any representation or warranty made in this Agreement by such party, or any
information furnished in the Parent Disclosure Schedule or the Company
Disclosure Schedule by such party, as the case may be, to be inaccurate either
at the time such representation or warranty was made, or such information is
furnished, or at the time of the occurrence or non-occurrence of such event; or
(ii) any failure by such party to comply with or satisfy any condition to the
obligations of such party to effect the Merger and the other transactions
contemplated by this Agreement, or (b) the failure of the Company or Parent, as
the case may be, to comply with or satisfy any covenant, condition or agreement
to be complied with or satisfied by it pursuant to this Agreement which would be
likely to result in any of the conditions to the obligations of any party to
effect the Merger and the other transactions contemplated by this Agreement not
to be satisfied; provided, however, that the delivery of any notice pursuant to
this Section 6.07 shall not be deemed to be an amendment of this Agreement or
any schedule in the Parent Disclosure Schedule or the Company Disclosure
Schedule and shall not cure any breach of any representation or warranty
requiring disclosure of such matter on the date of this Agreement. No delivery
of any notice pursuant to this Section 6.07 shall limit or affect the remedies
available hereunder to the party receiving such notice.
SECTION 6.08. Public Announcements. Parent and the Company shall consult
with each other before issuing any press release or otherwise making any public
statement with respect to this Agreement, the Merger and the other transactions
contemplated hereby and shall not issue any such press release or make any such
public statement prior to such consultation, except as may be required by Law or
any listing agreement with the Nasdaq National Market or any other national
securities exchange to which Parent or the Company may be a party. The parties
have agreed on the text of a joint press release by which Parent and the Company
will announce the execution of this Agreement.
37
SECTION 6.09. Stockholder Litigation. The Company shall use its reasonable
best efforts to defend any stockholder litigation or claims against the Company
and its directors (and/or officers) relating to the Merger or any of the other
transactions contemplated by this Agreement (including any derivative claims)
and shall give Parent the opportunity to participate, at Parent's expense, in,
and shall actively cooperate with Parent in, the defense or (subject to Section
5.01(m) hereof) settlement of any such litigation or claims.
SECTION 6.10. Additional Company SEC Documents; Financial Statements. From
and after the date of this Agreement until the Effective Time: (i) the Company
shall timely file all forms, reports and documents required to be filed by it
with the SEC; (ii) each of such forms, reports and documents shall comply in all
material respects with the applicable requirements of the United States federal
securities Laws; and (iii) each of such forms, reports and documents will not at
the time it is 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 made therein, in light of the circumstances under which they
are made, not misleading. Each of the consolidated financial statements
(including, in each case, the notes thereto) contained in the SEC forms, reports
and documents referred to in the previous sentence shall be prepared in
accordance with United States generally accepted accounting principles applied
on a consistent basis throughout the periods indicated (except as may be
indicated in the notes thereto) and each will fairly present in all material
respects (subject, in the case of unaudited statements, to normal and recurring
year-end adjustments) the consolidated financial position, results of operations
and cash flows of the Company and its Subsidiaries as at the respective dates
thereof and for the respective periods indicated therein
SECTION 6.11. Limitation on Expenses. The Company shall not incur Actual
Transaction Expenses, other than in connection with litigation, in excess of the
amount set forth on Schedule 3.20 of the Company Disclosure Schedule, without
the prior written consent of Parent.
SECTION 6.12. Company Actions with Respect to Plans. Prior to the
Effective Time, the Company shall take all actions necessary or appropriate in
the reasonable opinion of Parent, and permissible under the Company Stock Option
Plans, the related stock option agreements and applicable law, and as would not
require approval of the Company's stockholders, to amend each of the 2000 Stock
Option Plans and the 1994 Stock Option Plan (1) to transfer all rights and
responsibilities of the Company thereunder to Parent, for the purpose of
administering the Assumed Options and such other purposes as Parent may
thereafter, consistent with the terms of said Plans as amended from time to
time, deem appropriate from time to time (including but not limited to the
granting of further options and other permissible awards), (2) to provide that
further awards under said Plans, if any, shall only be granted in respect of
Parent Common Stock, and (3) to adjust any share number appearing in said Plans
on the basis of the Conversion Ratio. Prior to the Effective Time, the Company
shall take all actions necessary or appropriate in the reasonable opinion of
Parent, and permissible under the Company Employee
38
Stock Purchase Plan and Company Stock Option Plans, the related agreements and
applicable law, and as would not require approval of the Company's stockholders,
to terminate its ESPP, and each stock option plan of the Company other than the
2000 Stock Option Plans and the 1994 Stock Option Plan. All such actions shall
be effective only as of the Effective Time, and then only upon the occurrence of
the Merger.
SECTION 6.13. Employment Agreements, Etc. Parent and Carmine Napolitano
shall enter into an Employment Agreement as of the date of this Agreement and
attached hereto as Exhibit 6.13(e)-1 and such Employment Agreement shall
automatically become effective at the Effective Time. Parent and the Company
shall use their respective commercially reasonable efforts to have Parent and
each of Kevin Fitzgerald and Jason LeBeck, Al Lee, Frederick Rastgar, and James
Wright enter into an Employment Agreement substantially in the form attached
hereto as Exhibit 6.13(e)-2 on or prior to the Effective Date, and each such
Employment Agreement shall automatically become effective at the Effective Time.
Each of Dan Wilnai and Peretz Tzarnotzki shall have entered into agreements with
the Company as of the date of this Agreement and attached hereto as Exhibits
6.13(e)-3 and 6.13(e)-4 and the non-compete provision of each such agreement
shall automatically become effective at the Effective Time.
ARTICLE VII
CONDITIONS
SECTION 7.01. Conditions to the Obligations of Each Party. The obligation
of each of the Company, Parent and Merger Subsidiary to consummate the Merger is
subject to the satisfaction of each of the following conditions:
(a) This Agreement and the Merger contemplated hereby shall have been
approved and adopted by the requisite affirmative vote of the stockholders of
the Company in accordance with the DGCL and the Company's Certificate of
Incorporation and By-Laws; and
(b) All applicable waiting periods (and any extensions thereof) under the
HSR Act shall have expired or otherwise been terminated and all other required
authorizations, consents and approvals of any Governmental Authority shall have
been obtained.
SECTION 7.02. Conditions to the Obligations of Parent and Merger
Subsidiary. The obligations of Parent and Merger Subsidiary to consummate the
Merger are subject to the satisfaction of the following further conditions:
(a) Each of the representations and warranties of the Company set forth in
this Agreement which is qualified as to materiality shall be true and correct
and each such representation and warranty that is not so qualified shall be true
and correct in all material respects, in each case as of the date hereof and at
and as of the Effective Time as if made at and as of such time, except to the
extent such representations and warranties are specifically
39
made as of a particular date (in which case such representations and warranties
shall be true and correct as of such date);
(b) The Company shall have performed or complied with in all material
respects its covenants and obligations under this Agreement required to be
performed or complied with by it at or prior to the Effective Time;
(c) The Company shall have delivered to Parent and Merger Subsidiary a
certificate, dated as of the Effective Time, to the effect that the conditions
in Sections 7.02(a) and 7.02(b) hereof have been satisfied;
(d) A Company Material Adverse Effect shall not have occurred;
(e) the Company shall have obtained the consents set forth on Schedule
3.05(a) of the Company Disclosure Schedule;
(f) Consummation of the Merger shall not be restrained, enjoined or
prohibited by any order, judgment, decree, injunction or ruling of a court of
competent jurisdiction or any Governmental Authority and there shall not have
been any statute, rule or regulation enacted, promulgated or deemed applicable
to the Merger by an Governmental Authority which prevents consummation of the
Merger or has the effect of making the Merger illegal or substantially deprives
Parent of any of the anticipated benefits of the Merger; provided, however, that
with respect to any order, judgment, decree, injunction or ruling issued at the
behest of any court of competent jurisdiction or Governmental Authority, the
Parent shall have performed its obligations under Sections 6.03(a) and (b)
hereof, subject to the terms of Section 6.03(c) hereof; and
(g) There shall not have been instituted by any Governmental Authority and
be pending, or threatened in writing by any Governmental Authority, any suit,
action or proceeding (i) seeking to restrain or prohibit the consummation of the
Merger or to substantially deprive Parent of any of its anticipated benefits of
the Merger, (ii) seeking to prohibit or materially limit the ownership or
operation by the Company, Parent or any of their respective subsidiaries of any
material portion of the business or assets of the Company, Parent or any of
their respective subsidiaries, or to compel the Company, Parent or any of their
respective subsidiaries to dispose of or hold separate any material portion of
the business or assets of the Company, Parent or any of their respective
subsidiaries, as a result of the Merger, (iii) seeking to impose material
limitations on the ability of Parent or Merger Subsidiary to acquire or hold, or
exercise full rights of ownership of, any shares of capital stock of the Company
or the Surviving Corporation or (iv) seeking to prohibit Parent or any of its
subsidiaries from effectively controlling in any material respect the business
or operations of the Company or its Subsidiaries.
SECTION 7.03. Conditions to the Obligations of the Company. The obligation
of the Company to consummate the Merger is subject to the satisfaction of the
following further conditions:
40
(a) Each of the representations and warranties of the Parent set forth in
this Agreement which is qualified as to materiality shall be true and correct
and each such representation and warranty that is not so qualified shall be true
and correct in all material respects, in each case as of the date hereof and at
and as of the Effective Time as if made at and as of such time, except to the
extent such representations and warranties are specifically made as of a
particular date (in which case such representations and warranties shall be true
and correct as of such date);
(b) Parent and Merger Subsidiary shall have performed or complied with in
all material respects all of their respective covenants and obligations
hereunder required to be performed or complied with by them at or prior to the
Effective Time;
(c) Parent and Merger Subsidiary shall have delivered to the Company a
certificate, dated as of the Effective Time, to the effect that the conditions
in Sections 7.03(a) and 7.03(b) hereof have been satisfied; and
(d) Consummation of the Merger shall not be restrained, enjoined or
prohibited by any order, judgment, decree, injunction or ruling of a court of
competent jurisdiction or any Governmental Authority and there shall not have
been any statute, rule or regulation enacted, promulgated or deemed applicable
to the Merger by an Governmental Authority which prevents consummation of the
Merger or has the effect of making the Merger illegal; provided, however, that
with respect to any order, judgment, decree, injunction or ruling issued at the
behest of any court of competent jurisdiction or Governmental Authority, the
Company shall have performed its obligations under Sections 6.03(a) and (b)
hereof, subject to the terms of Section 6.03(c) hereof.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. Termination. This Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Time, notwithstanding any
requisite approval and adoption of this Agreement and the transactions
contemplated hereby by the stockholders of the Company:
(a) by mutual written consent duly authorized by the Boards of Directors
of each of Parent, Merger Subsidiary and the Company; or
(b) by Parent, Merger Subsidiary or the Company if either (i) the
Effective Time shall not have occurred on or before December 31, 2004 (the
"Termination Date"); provided, however, that the right to terminate this
Agreement under this Section 8.01(b)(i) shall not be available to any party
whose failure to fulfill any of its obligations under this Agreement has been
the cause of the failure of the Effective Time to occur on or before such
Termination Date and such failure constitutes a breach of this Agreement; and
provided, further, that, if a
41
Request for Additional Information is received from a Governmental Authority
pursuant to the HSR Act, such Termination Date shall be extended up to the 90th
day following acknowledgment by such Governmental Authority that Parent and the
Company have complied with such Request, but in any event not later than March
31, 2005; or (ii) there shall be any Law that makes consummation of the Merger
illegal or otherwise prohibited or if any court of competent jurisdiction or
other Governmental Authority shall have issued an order, judgment, decree,
ruling, injunction or taken any other action restraining, enjoining or otherwise
prohibiting or materially altering the terms of the Merger and such order,
judgment, decree, ruling, injunction or other action shall have become final and
nonappealable (any such order, judgment, decree, ruling, injunction or action
shall be deemed final and nonappealable if Parent or Merger Subsidiary is
exercising its right to terminate under this Section 8.01(b)(ii) and Parent or
Merger Subsidiary has unsuccessfully appealed the same on at least one (1)
occasion), except that no party may terminate pursuant to this Section
8.01(b)(ii) unless such party shall have complied with its obligations under
Section 6.03(a) and (b) hereof, subject to the terms of Section 6.03(c) hereof,
and Section 6.10 hereof, as applicable; or
(c) by Parent, if (i) the Company's Board of Directors shall have
withdrawn, modified, or changed its approval or recommendation in respect of
this Agreement or the Merger in a manner adverse to the Merger, or adverse to
Parent or Merger Subsidiary, (ii) the Company's Board of Directors shall have
approved or recommended any Competing Transaction, (iii) the Company shall have
violated or breached any of its obligations under Section 6.05 hereof or (iv)
the Board of Directors of the Company shall have resolved to take any of the
foregoing actions; or
(d) by the Company, if the Board of Directors of the Company, after its
compliance with its obligations under Section 6.05 hereof, shall have
recommended or resolved to recommend to the stockholders of the Company a
proposal for a Competing Transaction in accordance with Section 6.05 hereof;
provided, that any termination of this Agreement by the Company pursuant to this
Section 8.01(d) shall not be effective unless and until (A) the Board of
Directors of the Company has provided Parent with written notice that the
Company intends to enter into a binding written agreement in respect of such
Competing Transaction, (B) the Company shall have attached thereto the most
current, written version of such Competing Transaction, (C) Parent does not
make, within two (2) business days after receipt of the Company's written
notice, a written offer (which, upon execution by the Company, will constitute
an agreement between Parent and the Company) that the Board of Directors of the
Company (which shall be obligated to timely review in good faith any such
revised or new offer) shall have determined in good faith (after consultation
with its aforementioned outside legal and financial advisors) is at least as
favorable to the stockholders of the Company, from a financial point of view, as
such Competing Transaction and (D) the Company has made payment of the full
Termination Fee required by Section 8.03(a) hereof as a condition to its ability
to terminate under this subsection (d); provided, further, that the parties
hereto acknowledge and agree that, notwithstanding any other provision of this
Agreement, a Competing Transaction may not be deemed to be more favorable to the
Company's stockholders unless it is a bona fide proposal made by a third
42
party to acquire, for consideration consisting solely of cash and/or equity
securities, more than fifty (50%) percent of the voting power of the outstanding
Shares or all, or substantially all, of the assets of the Company and for which
financing, to the extent required, is then committed or which in the good faith,
reasonable judgment of the Board of Directors of the Company, is capable of
being obtained by such third party; or
(e) By Parent, (i) if the Company shall have failed to perform in any
material respect any of its covenants or agreements contained in this Agreement
or (ii) if any of the representations and warranties of the Company set forth in
this Agreement shall fail to be true and correct (without giving effect to any
materiality qualifications or references to Company Material Adverse Effect
contained in any specific representation or warranty) as if such representations
and warranties were made at the time of any such determination except to the
extent any such representation and warranty speaks as of a specific date (in
which case as of such date), except for any such failures or breaches that do
not have, individually or in the aggregate, a Company Material Adverse Effect;
provided, that such failure or breach is incapable of being cured or has not
been cured within twenty (20) calendar days after written notice from Parent to
the Company of such failure or breach; and provided, further, that the right to
terminate this Agreement by Parent under this Section 8.01(e) shall not be
available to Parent where Parent is at that time in material breach of this
Agreement; or
(f) By the Company, if Parent or Merger Subsidiary shall have breached or
failed to perform in any material respect any of its representations,
warranties, covenants or agreements contained in this Agreement, which breach or
failure to perform is incapable of being cured or, with respect to a breach or
failure that is curable, has not been cured within twenty (20) days after the
giving of written notice thereof by the Company to Parent or Purchaser, as
applicable, except in any case under this subsection (f) for such breaches or
failures which are not reasonably likely to have a material adverse effect on
Parent's or Merger Subsidiary's ability to complete the Merger; provided, that
the right to terminate this Agreement by the Company under this Section 8.01(f)
shall not be available to the Company where the Company is at that time in
material breach of this Agreement.
SECTION 8.02. Effects of Termination. Except as provided in Section 9.01
hereof and Section 6.04 hereof, in the event of the termination of this
Agreement pursuant to Section 8.01 hereof, this Agreement shall forthwith become
void, there shall be no liability under this Agreement on the part of Parent,
Merger Subsidiary or the Company or any of their respective officers or
directors and all rights and obligations of any party hereto shall cease,
subject to the sole and exclusive remedies of the parties set forth in Section
8.03 hereof. The payment of any termination fee under Section 8.03 hereof by the
Company shall constitute liquidated damages in consideration of the time and
opportunity and related costs of Parent and Merger Subsidiary and upon receipt
of such termination fee Parent and Merger Subsidiary shall have no further
recourse in law or equity against the Company.
43
SECTION 8.03. Fees and Expenses.
(a) The Company shall pay Parent a cash fee of $4,500,000.00 plus Expenses
(as hereinafter defined) upon the termination of this Agreement pursuant to
Sections 8.01(c) or 8.01(d) hereof. In the event that Parent terminates this
Agreement pursuant to Section 8.01(e) hereof, the Company shall pay the Expenses
of Parent in accordance with Section 8.03(d) hereof and (ii) in the event the
Company enters into a definitive agreement with respect to a Competing
Transaction or consummates a Competing Transaction (provided that if a
transaction is a Competing Transaction by reason of subparts (iii), (iv) or (v)
of the definition thereof, and, with respect to subpart (v), only to the extent
of an announcement of a transaction referred to in such (iii) or (iv), that such
Competing Transaction has been authorized, recommended, or approved by the
Company's Board of Directors) within six (6) months after the date of such
termination, a cash fee of $4,500,000.00.
(b) In the event that the Company terminates this Agreement pursuant to
Section 8.01(f) hereof, Parent shall pay the Expenses of the Company in
accordance with Section 8.03(d). In the event that this Agreement is terminated
pursuant to Section 8.01(f) and any person or "group" shall have made an offer
for a Parent Competing Transaction (as defined below), Parent shall pay the
Company a fee of $4,500,000.00 plus Expenses within five (5) business days of
the consummation of a Parent Competing Transaction that occurs within six (6)
months of such termination. For purposes of this Section 8.03(b), "Parent
Competing Transaction" shall mean: (i) any merger, consolidation, liquidation,
share exchange, business combination, recapitalization or other similar
transaction involving Parent; (ii) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition of fifteen percent (15%) or more of the assets of
Parent and its subsidiaries, taken as a whole, in a single transaction or series
of transactions; (iii) any tender offer or exchange offer for fifteen (15%) or
more of the outstanding capital stock of Parent (other than by Parent or any
affiliate thereof) or the filing of a registration statement under the
Securities Act in connection therewith; or (iv) any person having acquired
beneficial ownership or the right to acquire beneficial ownership of, or any
"group" having been formed which beneficially owns or has the right to acquire
beneficial ownership of, fifteen (15%) or more of any class of capital stock of
the Company. In the event that the Company terminates this Agreement pursuant to
Section 8.01(f) as a result of Parent's failure to obtain the funds to
consummate the Merger (except for any such failure arising as a result of (a)
any change in the market price or trading volume of Parent's stock after the
date hereof; (b) any adverse change, effect, event, occurrence, state of facts
or development to the extent attributable to the announcement or pendency of the
Merger (including any cancellation of or delays in customer orders, any
reduction in sales, any disruption in supplier, distributor, partner or similar
relationships or any loss of employees); (c) any adverse change, effect, event,
occurrence, state of facts or development attributable to conditions affecting
the industries as a whole in which Parent participates, the U.S. economy as a
whole or the foreign economies as a whole in any locations where the Parent or
any of its subsidiaries has material operations or sales; or (d) any adverse
change, effect, event, occurrence, state of facts or development arising from or
relating to compliance with the terms of, or the taking of any action required
by, this Agreement; or (e) any suit, claim,
44
action or other proceeding brought by any shareholder, Governmental Authority or
third-party competitor of the Company or Parent after the date hereof that (x)
is brought or threatened against Parent or the Company or any of their
subsidiaries or any member of their Board of Directors in respect of this
Agreement or the transactions contemplated hereby or (y) in the case of a
third-party competitor is brought or threatened against the Parent or the
Company or any of their subsidiaries or any member of their Board of Directors
and is reasonably likely to have been brought with the intended purpose or
effect of preventing, enjoining, materially altering or delaying or otherwise
interfering with the transactions contemplated by this Agreement), Parent shall
pay the Company a fee of $4,500,000.00 plus Expenses within five (5) business
days after the date of such termination.
(c) Notwithstanding any other provision of this Agreement, as used in this
Article 8, "Expenses" means all reasonable and documented out-of-pocket expenses
and fees incurred by a party prior to the termination of this Agreement
(including, without limitation, all fees and expenses of counsel, financial
advisors, accountants, environmental and other experts and consultants to such
party, and its affiliates and all commitment fees and printing and advertising
expenses) actually incurred or accrued by either of them or on their behalf in
connection with the Merger or any other transaction contemplated hereby, and
actually incurred or accrued by any of the foregoing persons and assumed by such
party or its affiliates in connection with the negotiation, preparation,
execution, performance and termination of this Agreement, the structuring of the
Merger or any other transaction contemplated hereby and any agreements relating
thereto.
(d) Any payment required to be made pursuant to this Section 8.03 shall be
made as promptly as practicable but not later than five (5) business days after
the final determination by the party entitled to such payment of such amount and
shall be made by wire transfer of immediately available funds to an account
designated by the party entitled to such payment.
(e) Except as otherwise provided in this Section 8.03, all costs and
expenses incurred in connection with this Agreement and the Merger or any other
transaction contemplated hereby shall be paid by the party incurring such
expenses, whether or not the Merger or any other transaction contemplated hereby
is consummated.
(f) In the event that any party shall fail to pay the Termination Fee
and/or any Expenses when due, the term "Expenses" shall be deemed to include the
costs and expenses actually incurred or accrued by such party and its affiliates
(including, without limitation, fees and expenses of counsel) in connection with
the collection under and enforcement of this Section 8.03, together with
interest on such unpaid Termination Fee and/or Expenses, commencing on the date
that such Termination Fee and/or such Expenses became due, at a rate equal to
the rate of interest publicly announced by The Bank of New York, from time to
time, in the City of New York, as such bank's Base Rate plus two percent (2%).
SECTION 8.04. Amendment. This Agreement may be amended by the parties
hereto by action taken by or on behalf of their respective Boards of Directors
at any time
45
prior to the Effective Time; provided, however, that, after the approval and
adoption of this Agreement and the transactions contemplated hereby by the
stockholders of the Company, if required, no amendment may be made which would
reduce the Per Share Amount or change the type of consideration into which each
Share shall be converted upon consummation of the Merger. This Agreement may not
be amended except by an instrument in writing signed by the parties hereto.
SECTION 8.05. Waiver. At any time prior to the Effective Time, any party
hereto may, to the extent legally permitted by applicable Law, (a) extend the
time for the performance of any obligation or other act of any other party
hereto, (b) waive any inaccuracy in the representations and warranties contained
herein or in any document delivered pursuant hereto and (c) waive compliance
with any agreement or condition contained herein. Any such extension or waiver
shall be valid if set forth in an instrument in writing signed by the party or
parties to be bound thereby.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Non-Survival of Representations, Warranties and Agreements.
The representations, warranties and agreements in this Agreement and any
certificate delivered pursuant hereto by any person shall terminate at the
Effective Time or upon the termination of this Agreement pursuant to Section
8.01 hereof, as the case may be, except that the agreements set forth in
Articles I and II and Section 6.06 hereof shall survive the Effective Time in
accordance with their respective terms and those agreements set forth in
Sections 6.08, 8.02, 8.03 hereof and in this Article IX shall survive the
termination of this Agreement indefinitely.
SECTION 9.02. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by cable,
facsimile, telegram or telex or by registered or certified mail (postage
prepaid, return receipt requested) to the respective parties at the following
addresses (or at such other address for a party as shall be specified in a
notice given in accordance with this Section 9.02):
if to Parent or Merger Subsidiary:
Chief Executive Officer
LeCroy Corporation
700 Chestnut Ridge Road
Chestnut Ridge, NY 10977
Facsimile: (845) 578-5985
46
with a copy to:
Roger D. Feldman, Esq.
Fish & Richardson P.C.
225 Franklin Street
Boston, MA 02110
Facsimile: (617) 542-8906
if to the Company:
Chief Executive Officer
Computer Access Technology Corporation
3385 Scott Boulevard
Santa Clara, CA 95054
Facsimile: (408) 727-6622
with a copy to:
Richard Scudellari, Esq.
Morrison & Foerster LLP
755 Page Mill Road
Palo Alto, CA 94304-1018
Facsimile: (650) 494-0792
SECTION 9.03. Certain Definitions. For purposes of this Agreement, the
term:
(a) "affiliate" of a specified person means a person who, directly or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with, such specified person;
(b) "associate" shall have the meaning ascribed thereto under Rule 405
promulgated under the Securities Act;
(c) "beneficial owner", with respect to any shares of capital stock, means
a person who shall be deemed to be the beneficial owner of such shares (i) which
such person or any of its affiliates or associates beneficially owns, directly
or indirectly; (ii) which such person or any of its affiliates or associates
has, directly or indirectly, (A) the right to acquire (whether such right is
exercisable immediately or subject only to the passage of time), pursuant to any
agreement, arrangement or understanding or upon the exercise of consideration
rights, exchange rights, warrants or options, or otherwise, or (B) the right to
vote pursuant to any agreement, arrangement or understanding; or (iii) which are
beneficially owned, directly or indirectly, by any other persons with whom such
person or any of its affiliates or associates or any person with whom such
person or any of its affiliates or associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of any
such shares;
47
(d) "business day" means any day on which the principal offices of the SEC
in Washington, DC are open to accept filings, or, in the case of determining a
date when any payment is due, any day on which banks are not required or
authorized to close in the City of New York, New York;
(e) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a person,
whether through the ownership of voting securities, as trustee or executor, by
contract or credit arrangement or otherwise;
(f) "Governmental Authority" means any United States (federal, state or
local) or foreign government, or governmental, regulatory or administrative
authority, agency, instrumentality or commission;
(g) "knowledge of the Company" means the actual knowledge of any of the
following individuals, after their making reasonable inquiries of appropriate
persons within the Company: Dan Wilnai, Carmine J. Napolitano, Peretz
Tzarnotzky, Albert Lee, Kevin Fitzgerald, Jason LeBeck, Howard Borchew, James
Wright and Fred Rastgar.
(h) "person" means a natural person, corporation, partnership, limited
partnership, syndicate, person (including, without limitation, a "person" as
defined in Section 13(d)(3) of the Exchange Act), trust, association or entity;
(i) "subsidiary" or "subsidiaries" of any person means any corporation,
partnership, joint venture or other legal entity of which such person (either
alone or through or together with any other subsidiary), owns, directly or
indirectly, more than 50% of the stock or other equity interests, the holders of
which are generally entitled to vote for the election of the board of directors
or other governing body of such corporation or other legal entity; and
(j) "Tax" means any U.S. federal, state, local or foreign income, gross
receipts, franchise, estimated, alternative minimum, add-on minimum, sales, use,
transfer, registration, value added, excise, natural resources, severance,
stamp, occupation, premium, windfall profit, environmental, customs, duties,
real property, personal property, capital stock, intangibles, social security,
unemployment, disability, payroll, license, employee, or other tax or levy, of
any kind whatsoever, including any interest, penalties, or additions to tax in
respect of the foregoing.
SECTION 9.04. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced under applicable
Law, or public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the Merger and the other transactions contemplated hereby are not
affected in any manner materially adverse to any party. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to
48
effect the original intent of the parties as closely as possible in order that
the Merger and the other transactions contemplated hereby be consummated as
originally contemplated to the fullest extent possible.
SECTION 9.05. Entire Agreement; Assignment. This Agreement constitutes the
entire agreement among the parties with respect to the subject matter hereof and
supersedes all prior agreements and undertakings, both written and oral, among
the parties, or any of them, with respect to the subject matter hereof. This
Agreement shall not be assigned by operation of law or otherwise, except that
Parent and Merger Subsidiary may assign all or any of their rights and
obligations hereunder to any affiliate of Parent provided that no such
assignment shall relieve the assigning party of its obligations hereunder if
such assignee does not perform such obligations.
SECTION 9.06. Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of the parties hereto and their respective
successors and permitted assigns, and nothing in this Agreement, express or
implied, is intended to or shall confer upon any other person any right, benefit
or remedy of any nature whatsoever under or by reason of this Agreement, other
than Section 6.06(a) hereof (which is intended to be for the benefit of the
persons covered thereby and may be enforced by such persons).
SECTION 9.07. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
SECTION 9.08. Governing Law. This Agreement shall be governed by, and
construed in accordance with the laws of the State of Delaware applicable to
contracts executed in and to be performed in that State, regardless of the laws
that might otherwise govern under applicable principles of conflicts of laws
thereof. All actions and proceedings arising out of or relating to this
Agreement shall be heard and determined exclusively in any state or federal
court sitting in the City of Wilmington.
SECTION 9.09. Consent to Jurisdiction.
(a) EACH OF PARENT, THE COMPANY AND MERGER SUBSIDIARY HEREBY IRREVOCABLY
SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE COURTS OF THE STATE OF
DELAWARE AND TO THE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE
DISTRICT OF DELAWARE, FOR THE PURPOSE OF ANY ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT AND EACH OF PARENT, THE COMPANY AND MERGER
SUBSIDIARY HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT TO SUCH ACTION
OR PROCEEDING MAY BE HEARD AND DETERMINED EXCLUSIVELY IN ANY DELAWARE STATE OR
FEDERAL COURT SITTING IN THE CITY OF WILMINGTON. EACH OF PARENT, THE COMPANY AND
MERGER SUBSIDIARY HEREBY IRREVOCABLY WAIVES ANY OBJECTION THAT SUCH
49
PARTY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE IN SUCH ACTION OR
PROCEEDING IN SUCH FORUM AND ANY OBJECTION TO SUCH FORUM ON THE BASIS OF IT
BEING AN INCONVENIENT FORUM. EACH OF PARENT, THE COMPANY AND MERGER SUBSIDIARY
AGREES THAT A FINAL JUDGMENT IN ANY ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND
MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER
MANNER PROVIDED BY LAW.
(b) EACH OF PARENT, THE COMPANY AND MERGER SUBSIDIARY IRREVOCABLY CONSENTS
TO ANY SERVICE OF A SUMMONS AND COMPLAINT AND ANY OTHER PROCESS IN ANY OTHER
ACTION OR PROCEEDING RELATING TO THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT, ON BEHALF OF ITSELF OR ITS PROPERTY, BY THE PERSONAL DELIVERY OF
COPIES OF SUCH PROCESS TO SUCH PARTY. NOTHING IN THIS SECTION 9.09 SHALL AFFECT
THE RIGHT OF ANY PARTY TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW.
SECTION 9.10. Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
SECTION 9.11. Counterparts. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
and delivered shall be deemed to be an original but all of which taken together
shall constitute one and the same agreement.
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, Parent, Merger Subsidiary and the Company have caused
this Agreement to be executed as of the date first written above by their
respective executive officers thereunto duly authorized.
LeCroy Corporation
By:
----------------------------------
Name:
Title:
COBALT ACQUISITION CORPORATION
By:
----------------------------------
Name:
Title:
Computer Access Technology Corporation
By:
----------------------------------
Name:
Title:
51