PRELIMINARY PROXY STATEMENT
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS
PERMITTED BY RULE 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule ss.240.14a-12
EXCEL TECHNOLOGY, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
N/A
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required.
[X[ Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction
applies:
Common Stock, par value $0.001 per share, of Excel Technology,
Inc. ("Excel Technology common stock")
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(2) Aggregate number of securities to which transaction applies:
12,058,329 shares of Excel Technology common stock 1,317,676
options to purchase shares of Excel Technology common stock
with exercise price less than $30.00
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(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
The filing fee was determined based upon the sum of (A)
12,058,329 shares of Excel Technology common stock multiplied
by $30.00 per share, and (B) options to purchase 1,317,676
shares of Excel Technology common stock with an exercise price
less than $30.00, multiplied by $10.92069591 per share (which
is the difference between $30.00 and the weighted average
exercise price per share). In accordance with Section 14(g) of
the Securities Exchange Act of 1933, as amended (the "Exchange
Act"), the filing fee was determined by multiplying $0.000107
by the sum of the preceding sentence.
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(4) Proposed maximum aggregate value of transaction:
$376,139,808
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(5) Total fee paid:
$40,246.96
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
--------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
--------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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i
PRELIMINARY COPY-SUBJECT TO COMPLETION
EXCEL TECHNOLOGY, INC.
41 RESEARCH WAY
EAST SETAUKET, N.Y. 11733
March , 2006
Dear Excel Technology, Inc. Stockholder:
You are cordially invited to attend a special meeting of the
stockholders of Excel Technology, Inc. to be held on March __, 2006, at 10:00
a.m. local time, at 41 Research Way, E. Setauket, N.Y. 11733.
At the special meeting, you will be asked to consider and vote upon a
proposal to adopt an Agreement and Plan of Merger, dated as of February 20,
2006, among Coherent, Inc., Spider Acquisition Corporation (a wholly owned
subsidiary of Coherent) and Excel Technology, Inc. Pursuant to the Agreement and
Plan of Merger, Spider Acquisition Corporation will merge with and into Excel
Technology, with Excel Technology surviving the merger and becoming a wholly
owned subsidiary of Coherent. For your reference, a copy of the merger agreement
is attached to the enclosed proxy statement as Annex A. We encourage you to read
the accompanying proxy statement, which provides you with detailed information
about the special meeting and the merger.
If the merger agreement is adopted by our stockholders and the merger
is completed, all outstanding shares of Excel Technology common stock will be
cancelled and you will receive $30.00 in cash for each share of our common stock
that you own at the effective time of the merger (except for shares held by
stockholders who have perfected their dissenters' rights of appraisal under
Delaware law). The cash you receive in the merger in exchange for your shares of
Excel Technology common stock will be subject to U.S. federal income tax and
also may be taxed under applicable state, local and foreign tax laws.
AFTER CAREFUL CONSIDERATION, THE EXCEL TECHNOLOGY BOARD OF DIRECTORS
HAS UNANIMOUSLY DETERMINED THAT THE MERGER AGREEMENT AND THE MERGER ARE
ADVISABLE AND IN THE BEST INTERESTS OF EXCEL TECHNOLOGY AND ITS STOCKHOLDERS.
OUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT. OUR BOARD
OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THE ADOPTION OF THE
MERGER AGREEMENT. IN REACHING ITS DETERMINATION, THE EXCEL TECHNOLOGY BOARD OF
DIRECTORS CONSIDERED A NUMBER OF FACTORS DESCRIBED MORE FULLY IN THE
ACCOMPANYING PROXY STATEMENT.
Because the adoption of the merger agreement requires the affirmative
vote of the holders of a majority of the outstanding shares of Excel Technology
common stock entitled to vote at the meeting, a failure to vote will have the
same effect as a vote "against" the merger. Only stockholders who owned shares
of Excel Technology common stock at the close of business on March 6, 2006, the
record date for the special meeting, will be entitled to vote at the special
meeting.
YOUR VOTE IS VERY IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE
MEETING, PLEASE COMPLETE, SIGN, DATE AND MAIL PROMPTLY THE ACCOMPANYING PROXY
CARD IN THE ENCLOSED RETURN ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES, OR VOTE USING THE TELEPHONE OR INTERNET USING THE INSTRUCTIONS ON
THE PROXY CARD. THIS WILL ENSURE THE PRESENCE OF A QUORUM AT THE MEETING. IF YOU
ATTEND THE MEETING, YOU MAY VOTE IN PERSON IF YOU WISH TO DO SO EVEN IF YOU HAVE
PREVIOUSLY SENT IN YOUR PROXY CARD OR VOTED BY TELEPHONE OR INTERNET.
Thank you for your cooperation and continued support.
Very truly yours,
Antoine Dominic
PRESIDENT AND CHIEF EXECUTIVE OFFICER
THE PROXY STATEMENT IS DATED MARCH ___, 2006, AND IS FIRST BEING MAILED
TO STOCKHOLDERS ON OR ABOUT MARCH ___, 2006.
ii
EXCEL TECHNOLOGY, INC.
41 RESEARCH WAY
EAST SETAUKET, N.Y. 11733
---------------------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To our Stockholders:
A special meeting of the stockholders of Excel Technology, Inc., a
Delaware corporation, will be held on March ___, 2006, at 10:00 a.m. local time,
at the offices of Excel Technology, Inc. 41 Research Way, East Setauket, NY
11733, for the following purposes:
1. To adopt an Agreement and Plan of Merger, dated as of February 20,
2006, by and among Coherent, Inc., Spider Acquisition Corporation (a wholly
owned subsidiary of Coherent), and Excel Technology, Inc.;
2. To grant the persons named as proxies discretionary authority to
vote to adjourn or postpone the special meeting, if necessary, to solicit
additional proxies if there are not sufficient votes for the adoption of the
Agreement and Plan of Merger at the time of the special meeting; and
3. To transact such other business as may properly come before the
special meeting or any adjournment or postponement of the special meeting.
These proposals are more fully described in the accompanying proxy
statement, and we have included a copy of the Agreement and Plan of Merger
(which we refer to herein as the "merger agreement") as Annex A to this proxy
statement.
Only stockholders of record at the close of business on March 6, 2006
will be entitled to notice of, and to vote at, such special meeting or any
adjournments or postponements of the special meeting. The adoption of the merger
agreement requires the approval of the holders of a majority of Excel Technology
common stock outstanding at the close of business on the record date.
THE BOARD OF DIRECTORS OF EXCEL TECHNOLOGY HAS UNANIMOUSLY DETERMINED
THAT THE MERGER AGREEMENT AND THE MERGER ARE ADVISABLE AND IN THE BEST INTERESTS
OF EXCEL TECHNOLOGY AND ITS STOCKHOLDERS AND HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT. OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR"
ADOPTION OF THE MERGER AGREEMENT. The board of directors of Excel Technology
also recommends that you expressly grant the authority to the persons named as
proxies to vote your shares to adjourn or postpone the special meeting, if
necessary, to permit the further solicitation of proxies if there are not
sufficient votes at the time of the special meeting to adopt the merger
agreement. We are not aware of any other business to come before the special
meeting.
Under Delaware law, stockholders have the right to dissent from the
merger and obtain payment in cash of the fair value of their Excel Technology
common stock. In order to perfect and exercise appraisal rights, stockholders
must give written demand for appraisal of their shares before the taking of the
vote at the special meeting and must not vote to adopt the merger agreement. A
copy of the applicable Delaware statutory provisions is included as Annex C to
the accompanying proxy statement, and a summary of these provisions can be found
under Dissenters' Rights of Appraisal" on page 37 in the accompanying proxy
statement.
BY ORDER OF THE BOARD OF DIRECTORS
Antoine Dominic
PRESIDENT AND CHIEF EXECUTIVE OFFICER
East Setauket, NY Excel Technology, Inc.
March ___, 2006
iii
TABLE OF CONTENTS
Page
----
FORWARD-LOOKING INFORMATION vi
QUESTIONS AND ANSWERS ABOUT THE MERGER vii
SUMMARY 1
The Parties to the Merger 1
The Merger 1
Merger Consideration 2
Treatment of Stock Options 2
Market Price of Excel Technology Common Stock 2
The Special Meeting of Excel Technology's Stockholders 2
Date, Time and Place 2
Record Date and Voting Power 2
Required Vote 2
Unanimous Board Recommendation 2
Excel Technology's Reasons for the Merger 3
Opinion of USB Securities, LLC -Excel Technology's Financial Advisor 4
When the Merger will be Completed 4
Interests of our Directors and Executive Officers in the Merger 5
Dissenters' Rights of Appraisal 5
Material U.S. Federal Income Tax Consequences 5
Procedure for Receiving Merger Consideration 6
Termination of the Merger Agreement 6
Expenses 7
Regulatory Matters 7
THE SPECIAL MEETING 7
Date, Time and Place of the Special Meeting 7
Matters to be Considered 7
Record Date and Quorum 8
Required Vote 8
Voting; Revocation 8
Voting by Telephone or the Internet 8
Voting by Proxy Card 8
Voting by Attending the Meeting 9
Changing Vote Revocability of Proxy 9
Expenses of Solicitation of Proxies 9
PROPOSAL NO. 1 THE MERGER 10
Background of the Merger 10
Reasons for the Merger 13
Recommendation of Our Board of Directors 15
Opinion of UBS Securities LLC, Excel Technology's Financial Advisor 15
Analysis of Selected Publicly Traded Companies 17
Analysis of Selected Precedent Transactions 18
Other Factors 19
Miscellaneous 20
Interests of Our Directors and Executive Officers in the Merger 20
Employment Agreements and Change of Control Payments 21
iv
Page
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Purchase of Stock Options 22
Indemnification and Insurance 22
Interest of Howard S. Breslow, Esq. and Excel Technology's Law Firm 22
Material U.S. Federal Income Tax Consequences 23
Delisting and Deregistration of Excel Technology Common Stock 23
Regulatory Approvals 24
The Merger Agreement 24
The Merger 24
Effective Time of the Merger 24
Treatment of Our Common Stock and Stock Options in the Merger 24
Exchange and Payment Procedures 24
Representations and Warranties 25
Conduct of Business of Excel Technology Pending the Merger 26
Stockholders Meeting and Duty to Recommend 28
No Solicitation of Transactions 28
Superior Offers 29
Change of Recommendation 29
Agreement to Use Commercially Reasonable Efforts 30
Conditions to Closing of the Merger 30
Termination 31
Fees and Expenses 32
Termination Fees 32
Amendment, Waiver and Extension of the Merger Agreement 33
PROPOSAL NO.2; GRANTING OF PROXY TO ADJOURN OR POSTPONE THE
SPECIAL MEETING 34
MARKET PRICE OF EXCEL TECHNOLOGY COMMON STOCK AND DIVIDENDS 34
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 35
DISSENTERS' RIGHTS OF APPRAISAL 37
MULTIPLE STOCKHOLDERS SHARING ONE ADDRESS 39
FUTURE STOCKHOLDER PROPOSALS 39
OTHER MATTERS 40
WHERE YOU CAN FIND ADDITIONAL INFORMATION 40
ANNEX A - Agreement and Plan of Merger
ANNEX B - Opinion of UBS Securities LLC
ANNEX C - Appraisal Rights-Section 262 of the Delaware General Corporation Law
ANNEX D - Form of Proxy
v
FORWARD-LOOKING INFORMATION
This proxy statement contains "forward-looking statements," as defined
in Section 27A of the Securities Act of 1933, as amended, and Section 2E of the
Securities Exchange Act of 1934, as amended, that are based on our current
expectations, assumptions, beliefs, estimates and projections about our company
and our industry. These forward-looking statements include, among other things,
statements concerning whether and when the proposed merger will close, whether
conditions to the proposed merger will be satisfied, the effect of the proposed
merger on our business and operating results and other statements that can be
identified by the use of forward-looking terminology such as "anticipate,"
"believe," "estimate," "expect," "intend," "project," "should" and similar
expressions. The forward-looking statements are subject to various risks and
uncertainties that could cause actual results to differ materially from those
described in the forward-looking statements. Factors that may affect those
forward-looking statements include, among other things:
o the failure of the merger to be consummated in a timely manner
if at all,
o the requirement that our stockholders adopt the merger
agreement,
o receipt of necessary approval under applicable antitrust laws,
and
o failure by us to satisfy other conditions to the merger.
We caution you that reliance on any forward-looking statement involves
risks and uncertainties, and that although we believe that the assumptions on
which our forward-looking statements are based are reasonable, any of these
assumptions could prove to be inaccurate, and, as a result, the forward-looking
statements based on those assumptions could be incorrect. In light of these and
other uncertainties, you should not conclude that we will necessarily achieve
any plans and objectives or projected financial results referred to in any of
the forward-looking statements. We do not undertake to release the results of
any revisions of these forward-looking statements to reflect future events or
circumstances.
vi
QUESTIONS AND ANSWERS ABOUT THE MERGER
THE FOLLOWING QUESTIONS AND ANSWERS ARE INTENDED TO ADDRESS SOME
COMMONLY ASKED QUESTIONS ABOUT THE MERGER. THESE QUESTIONS AND ANSWERS MAY NOT
ADDRESS ALL QUESTIONS THAT MAY BE IMPORTANT TO YOU AS AN EXCEL TECHNOLOGY
STOCKHOLDER. WE URGE YOU TO READ CAREFULLY THE MORE DETAILED INFORMATION
CONTAINED ELSEWHERE IN THIS PROXY STATEMENT AND THE ANNEXES TO THIS PROXY
STATEMENT.
Q: WHY AM I RECEIVING THIS PROXY STATEMENT?
A: Our board of directors is furnishing this proxy statement in connection
with the solicitation of proxies to be voted at a special meeting of
stockholders, or at any adjournments, postponements or continuations of
the special meeting.
Q: WHAT AM I BEING ASKED TO VOTE ON?
A: You are being asked to vote to adopt a merger agreement that provides
for the acquisition of Excel Technology by Coherent. The acquisition
would be accomplished through a merger of Spider Acquisition
Corporation, a wholly owned subsidiary of Coherent (which we refer to
as "Merger Sub"), with and into Excel Technology. As a result of the
merger, Excel Technology will become a wholly owned subsidiary of
Coherent, and Excel Technology common stock will cease to be listed on
the NASDAQ Stock Market, will not be publicly traded and will be
deregistered under the Securities Exchange Act of 1934, as amended.
In addition, you are being asked to grant Excel Technology management
discretionary authority to adjourn or postpone the special meeting. If,
for example, we do not receive proxies from stockholders holding a
sufficient number of shares to approve the proposed transaction, we
could use the additional time to solicit additional proxies in favor of
approval of the merger agreement.
Q: WHAT VOTE IS REQUIRED BY OUR STOCKHOLDERS TO ADOPT THE MERGER
AGREEMENT?
A: In order for the merger to be approved, holders of a majority of our
outstanding common stock must vote "FOR" adoption of the merger
agreement. Executed proxies returned to us but not marked to indicate
your voting preference will be counted as votes "FOR" adoption of the
merger agreement.
Q: HOW DOES OUR BOARD RECOMMEND THAT I VOTE?
A: At a meeting held on February 17, 2006, our board of directors
determined that the merger agreement and the merger are advisable and
in the bests interests of Excel Technology and its stockholders and
unanimously approved the merger agreement. OUR BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THE ADOPTION OF THE MERGER
AGREEMENT AND "FOR" THE PROPOSAL TO ADJOURN OR POSTPONE THE SPECIAL
MEETING, IF NECESSARY OR APPROPRIATE, TO SOLICIT ADDITIONAL PROXIES IN
THE EVENT THERE ARE NOT SUFFICIENT VOTES FOR ADOPTION OF THE MERGER
AGREEMENT AT THE TIME OF THE SPECIAL MEETING.
Q: WHAT FACTORS DID THE EXCEL TECHNOLOGY'S BOARD OF DIRECTORS CONSIDER IN
MAKING ITS RECOMMENDATION?
A: In making its recommendation, our board of directors took into account,
among other things, the $30.00 per share cash consideration to be
received by holders of our common stock in the merger in relation to
the uncertainties and market risks of building future value of Excel
Technology as an independent entity in what we believe will be a
consolidating industry, the terms and conditions of the merger
agreement, including our ability to furnish information to, and conduct
negotiations with, a third party should we receive a superior offer,
and the process through which we, with the assistance of our financial
advisors, engaged, or sought to engage, in discussions with entities
believed to be the most likely candidates to pursue a business
combination with or acquire us, and the fact that no strategic or
financial buyer other than Coherent made a written proposal to acquire
us.
vii
Q: WHAT WILL I RECEIVE IN THE MERGER?
A: Upon completion of the merger, you will receive $30.00 in cash for each
share of our common stock that you own (except to the extent you
properly exercise your appraisal rights under Delaware law - see page
37 of this proxy statement). After the merger closes, Coherent will
arrange for a letter of transmittal to be sent to each of our
stockholders. The merger consideration will be paid to each stockholder
once that stockholder submits a completed letter of transmittal,
properly endorsed stock certificates and any other required
documentation.
Q: WHAT DO I NEED TO DO NOW?
A: After carefully reading this proxy statement, including its annexes, we
urge you to respond by voting your shares through one of the following
means.
o BY MAIL, by completing, signing, dating and mailing each proxy card
or voting instruction card and returning it in the envelope provided;
o VIA TELEPHONE, using the toll-free number listed on each proxy card
(if you are a registered stockholder, meaning that you hold your stock
in your name) or voting instruction card (if your shares are held in
"street name," meaning that your shares are held in the name of a
broker, bank or other nominee, and your bank, broker or nominee makes
telephone voting available);
o VIA THE INTERNET, at the address provided on each proxy card (if
you are a registered stockholder) or voting instruction card (if your
shares are held in "street name" and your bank, broker or nominee makes
Internet voting available); or
o IN PERSON, by attending the special meeting and submitting your
vote in person.
Q. IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER
VOTE MY SHARES FOR ME?
A. Yes, but only if you provide instructions to your broker on how to
vote. You should follow the directions provided by your broker
regarding how to instruct your broker to vote your shares. Without
those instructions, your shares will not be voted, which will have the
same effect as voting against adoption of the merger agreement.
Q: WHAT IF I DON'T VOTE?
A: If you fail to vote, it will have the same effect as a vote against
adoption of the merger agreement. If you submit your executed proxy but
fail to indicate how you want to vote on the merger, your proxy will be
counted as a vote in favor of adoption of the merger agreement. If you
submit your proxy and indicate that you are abstaining from voting,
your proxy will have the same effect as a vote against adoption of the
merger agreement.
Q: CAN I CHANGE MY VOTE AFTER I HAVE SUBMITTED MY PROXY?
A. Yes. You can change your vote at any time before your proxy is voted at
the special meeting. If you are a registered stockholder, you may
revoke your proxy by notifying our Secretary in writing or by
submitting a new proxy by mail, telephone or the Internet, in each
case, dated after the date of the proxy being revoked. In addition,
your proxy may be revoked by attending the special meeting and voting
in person (you must vote in person, simply attending the special
meeting will not cause your proxy to be revoked). If you hold your
shares in "street name" and you have instructed a broker to vote your
shares, these options for changing your vote do not apply, and you must
instead follow the instructions received from your broker to change
your vote.
viii
Q: WHAT DOES IT MEAN IF I GET MORE THAN ONE PROXY CARD OR VOTING
INSTRUCTION CARD?
A: If your shares are registered differently and are in more than one
account, you will receive more than one card. Please complete and
return all of the proxy cards and voting instruction cards you receive
(or submit your proxy by telephone or the Internet, if available to
you) to ensure that all of your shares are voted.
Q: WHAT HAPPENS IF I SELL MY SHARES OF EXCEL TECHNOLOGY COMMON STOCK
BEFORE THE SPECIAL MEETING?
A: The record date for the special meeting is earlier than the date of the
special meeting and the date the merger is expected to be completed. If
you transfer your shares of Excel Technology common stock after the
record date but before the special meeting, you will retain your right
to vote at the special meeting, but will transfer the right to receive
the merger consideration.
Q: WILL I OWE TAXES AS A RESULT OF THE MERGER?
A: If you are a U.S. holder, for U.S. federal income tax purposes, the
exchange of your shares of Excel Technology common stock for cash
pursuant to the merger will be treated as a taxable exchange by you.
Accordingly, you will recognize a gain or loss equal to the difference
between the amount of cash you receive and your adjusted tax basis in
your shares of Excel Technology common stock for U.S. federal income
tax purposes. If you are a non-U.S. holder of Excel Technology common
stock, the merger will generally not be a taxable transaction to you
under U.S. federal income tax laws unless you have certain connections
to the United States. We recommend that you read the section entitled
"Material U.S. Federal Income Tax Consequences" in this proxy statement
on page 23 for a more detailed explanation of the tax consequences of
the merger. You are urged to consult your tax advisor regarding the
specific tax consequences of the merger applicable to you in light of
your particular circumstances.
Q: SHOULD I SEND IN MY STOCK CERTIFICATES NOW?
A: No. If the merger agreement is adopted by our stockholders, shortly
after the merger is completed, you will receive a letter of transmittal
with instructions informing you how to send in your stock certificates
to the exchange agent in order to receive the per-share cash amount.
You should use the letter of transmittal to exchange stock certificates
for the merger consideration to which you become entitled as a result
of completion of the merger. You will receive your cash payment as soon
as practicable after the exchange agent receives your Excel Technology
stock certificates and any completed documents required in the
instructions. PLEASE DO NOT SEND ANY STOCK CERTIFICATES WITH YOUR
PROXY.
Q; WHEN DO YOU EXPECT THE MERGER TO BE COMPLETED?
A: For the merger to occur, the merger agreement must be adopted by our
stockholders. If the stockholders adopt the merger agreement, we expect
to complete the merger as promptly as practicable following the special
meeting, subject to the closing conditions contained in the merger
agreement (see page 30 of this proxy statement). We currently
anticipate that the closing of the merger will occur during the second
quarter of calendar year 2006, if we have received by that time the
requisite stockholder approvals and antitrust regulatory approvals from
authorities in the United States.
Q: WHO WILL OWN EXCEL TECHNOLOGY AFTER THE MERGER?
A: After the merger, Excel Technology will be a wholly owned subsidiary of
Coherent. Upon completion of the merger, stockholders of Excel
Technology will no longer have any equity or ownership interest in
Excel Technology.
ix
Q: WHAT RIGHTS DO I HAVE IF I OPPOSE THE MERGER?
A: Excel Technology's stockholders are entitled to exercise appraisal
rights in connection with the merger. If you do not vote in favor of
the merger and it is completed, you may dissent and seek payment of the
fair value of your shares under Delaware law. To do so, however, you
must comply with all of the required procedures under Delaware law. See
"Dissenters' Rights of Appraisal" beginning on page 37.
Q: WHO CAN HELP ANSWER MY OTHER QUESTIONS?
A: If you have more questions about the merger, need assistance in voting
your shares or need additional copies of this proxy statement or the
enclosed proxy card, you should contact:
Excel Technology, Inc.
Attention: Investor Relations
41 Research Way
East Setauket, NY 11733
x
SUMMARY
This summary highlights selected information from this proxy statement
and may not contain all of the information important to you. We encourage you to
read carefully the entire proxy statement to fully understand the merger. The
merger agreement is attached as Annex A to this proxy statement. We encourage
you to read the merger agreement as it is the legal document that governs the
terms of the merger.
THE PARTIES TO THE MERGER
EXCEL TECHNOLOGY, INC.
41 Research Way
East Setauket, NY 11733
Phone: (631) 784-6100
We were incorporated under the laws of Delaware in 1985. Through our
subsidiaries, we manufacture and market photonics-based solutions, consisting of
laser systems and electro-optical components primarily for industrial and
scientific applications.
Additional information regarding us is contained in our filings with
the Securities and Exchange Commission. See "Where You Can Find Additional
Information" on page 40.
COHERENT, INC.
5100 Patrick Henry Drive
Santa Clara, CA 94054
Phone: (408) 764-4000
Founded in 1966, Coherent provides laser-based solutions, laser
measurement instruments, and optical components to a broad base of commercial
and scientific research customers.
Additional information regarding Coherent is contained in Coherent's
filings with the Securities and Exchange Commission. See "Where You Can Find
Additional Information" on page 40.
All information related to Coherent in this proxy statement has been
provided by Coherent for inclusion in this document.
SPIDER ACQUISITION CORPORATION
5100 Patrick Henry Drive
Santa Clara, CA 94054
Phone: (408) 764-4000
Spider Acquisition Corporation (which we refer to as "Merger Sub") is a
Delaware corporation and a wholly owned subsidiary of Coherent, Inc. Merger Sub
was organized solely for the purpose of entering into the merger agreement and
completing the transactions contemplated by the merger agreement. It has not
conducted any activities to date other than activities incidental to its
formation and in connection with the transactions contemplated by the merger
agreement.
All information related to Merger Sub in this proxy statement has been
provided by Coherent for inclusion in this document.
THE MERGER (PAGE 10)
You are being asked to vote to adopt the merger agreement which
provides for the acquisition of Excel Technology by Coherent. In the merger,
Merger Sub will merge into Excel Technology, with Excel Technology surviving the
merger and becoming a wholly owned subsidiary of Coherent.
1
MERGER CONSIDERATION. If the merger is completed, each share of Excel
Technology common stock that you own will be converted into the right to receive
$30.00 in cash (unless you exercise your appraisal rights under Delaware law).
TREATMENT OF STOCK OPTIONS. All stock options that are not fully vested
will be vested in connection with the merger. Immediately prior to and
contingent upon the effectiveness of the merger, all outstanding vested stock
options having an exercise price of less than $30.00 per share will be purchased
by Excel Technology for a cash payment equal to the amount by which $30.00 per
share exceeds the exercise price per share for each share of our common stock
subject to the option multiplied by the number of shares issuable upon the
exercise in full of the option (less applicable withholding). See "The
Merger-The Merger Agreement-Treatment of Our Common Stock and Stock Options in
the Merger" on page 24.
MARKET PRICE OF EXCEL TECHNOLOGY COMMON STOCK (PAGE 34)
Our common stock is quoted on The Nasdaq National Market under the
symbol "XLTC." The average closing price of our common stock during the six
month period prior to the announcement of the merger was $24.86. On February 17,
2006, which was the last trading day before we announced the merger, our common
stock closed at $28.34 per share. On March ___, 2006, which was the last trading
day before the date of this proxy statement, our common stock closed at $____
per share.
THE SPECIAL MEETING OF EXCEL TECHNOLOGY'S STOCKHOLDERS (PAGE 7)
DATE, TIME AND PLACE. A special meeting of our stockholders will be
held on ______, March ___, 2006, at the offices of Excel Technology, 41 Research
Way, East Setauket, NY 11733, at 10:00 a.m., local time, to:
o consider and vote upon the adoption of the merger agreement,
o adjourn or postpone the special meeting, if necessary or
appropriate, to solicit additional proxies in the event there
are not sufficient votes in favor of adoption of the merger
agreement at the time of the special meeting, and
o transact such other business as may properly come before the
meeting or any adjournment or postponement of the meeting.
RECORD DATE AND VOTING POWER. You are entitled to vote at the special
meeting if you owned shares of our common stock at the close of business on
March 6, 2006, the record date for the special meeting. You will have one vote
at the special meeting for each share of our common stock you owned at the close
of business on the record date. As of the record date there were 12,058,329
shares of our common stock entitled to be voted at the special meeting.
REQUIRED VOTE. The adoption of the merger agreement requires the
affirmative vote of the holders of a majority of the shares of our common stock
outstanding at the close of business on the record date. Approval of any
proposal to adjourn or postpone the special meeting, if necessary or
appropriate, to solicit additional proxies requires the affirmative vote of a
majority of the votes cast by holders of our common stock present, in person or
represented by proxy, at the special meeting, provided a quorum is present.
UNANIMOUS BOARD RECOMMENDATION (PAGE 15)
Our board of directors has unanimously:
o determined that the merger agreement and the merger are
advisable and in the best interests of Excel Technology and
our stockholders;
o approved the merger agreement; and
o recommended that all of our stockholders vote for the adoption
of the merger agreement.
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EXCEL TECHNOLOGY'S REASONS FOR THE MERGER (PAGE 13)
Our board of directors consulted with senior management and our
financial and legal advisors and considered a number of factors, including those
set forth below, in reaching its decisions to approve the merger agreement and
to recommend that our stockholders vote "FOR" adoption of the merger agreement:
o our belief in the likely consolidation of the laser industry,
our difficulty in acquiring entities larger than ourselves,
and the long term importance of size and mass in reaching
foreign markets;
o future prospects as an independent company given uncertainties
and contingencies associated with projections, economic
conditions, competition, and opportunities to make meaningful
acquisitions at reasonable prices;
o the process through which we, with the assistance of our
financial advisors, engaged, or sought to engage, in
discussions with entities believed to be the most likely
candidates to pursue a business combination with or acquire
us, and the fact that no strategic or financial buyer other
than Coherent made a written proposal to acquire us;
o the unlikely potential for obtaining a superior offer from an
alternative purchaser to Coherent in light of the other
potential purchasers previously identified and contacted by
our management or our financial advisors;
o the belief of our board of directors that we have obtained the
highest price per share that Coherent is willing to pay and
the highest price obtainable on the date of signing of the
merger agreement;
o the adequacy of Coherent's capital resources, including its
borrowing capacity, to pay the merger consideration;
o the amount of the merger consideration and the fact that it
represents a premium of approximately 6% over the closing
price for our common stock on the last trading day prior to
the announcement of the signing of the merger agreement and
approximately 34% over the average closing price of our common
stock during the six month period prior to the announcement of
the signing of the merger agreement;
o the opinion of UBS Securities, LLC, Excel Technology's
financial advisor that, as of the date of such opinion, the
merger consideration to be received by holders of our common
stock was fair, from a financial point of view, to such
holders based on and subject to assumptions made, procedures
followed, matters considered and limitations on the scope of
the review undertaken as described in such opinion;
o the fact that the merger consideration would be paid in cash,
which provides certainty of value to our stockholders;
o the conditions to the completion of the merger and the
circumstances under which Coherent or Excel would have the
right to terminate the merger agreement. In addition, the
board reviewed the provisions of the merger agreement that
prohibits Excel from soliciting any proposal or offer
regarding any acquisition and the requirement for Excel to
recommend adoption of the merger agreement by its stockholders
and the prohibition on the Excel board from withdrawing or
modifying its recommendation unless, subject to specified
conditions, it has received an unsolicited acquisition
proposal. The Excel board also reviewed the various amounts
that might be payable in the event the merger agreement is
terminated under specified circumstance, noting that while
these provisions could have an impact on a third party
considering an unsolicited acquisition proposal, the
provisions were reasonably necessary to protect both
Coherent's and Excel's interests in the context of the
proposed merger. In addition, the Excel board found reasonable
the views of its legal and financial advisors that the fees
were within the range of fees payable in comparable
transactions and would not be expected to preclude an
unsolicited acquisition proposal for Excel;
o the likelihood of closing the merger; and
o the availability of appraisal rights to holders of our common
stock who dissent from the merger.
In the course of its deliberations, our board of directors also
considered, among others, the following risks and other countervailing factors:
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o the risk that the merger might not be completed;
o the fact that our stockholders, by virtue of the merger
consideration consisting solely of cash, will not participate
in any of our future earnings or growth and will not benefit
from any appreciation in our value following the merger unless
they currently have, or acquire in the future, shares of stock
or other equity interests in Coherent independently of this
merger transaction;
o the fact that the merger consideration consists of cash and
will, therefore, be taxable to our stockholders for U.S.
federal income tax purposes;
o the potential disruption to customer, vendor or other
commercial relationships to us as a result of the merger;
o the restrictions on the conduct of our business prior to the
completion of the merger, which may delay or prevent us from
undertaking business opportunities that may arise pending
completion of the merger; and
o the risk of diverting management's focus and resources from
other strategic opportunities and from operational matters
while working to implement the merger, and the possibility of
other management and employee disruption associated with the
merger, including the possible loss of key management,
technical or other personnel.
The information and factors set forth above includes the material factors
considered by our board of directors. In view of the variety of factors
considered in connection with its evaluation of the merger, our board of
directors did not find it practicable to, and did not, quantify or otherwise
assign relative or specific weights or values to any of these factors and
individual directors may have given different weights to different factors.
OPINION OF UBS SECURITIES LLC, EXCEL TECHNOLOGY'S FINANCIAL ADVISOR (PAGE 15)
UBS Securities LLC delivered its opinion to our board of directors
that, as of February 17, 2006 (the date of its written fairness opinion) and
based upon and subject to various assumptions made, matters considered and
limitations described in the written opinion, the merger consideration of $30.00
per share payable in cash to be received by holders of our common stock pursuant
to the merger agreement was fair, from a financial point of view, to such
holders.
The full text of the written opinion of UBS, dated February 17, 2006,
which sets forth the assumptions made, procedures followed, matters considered
and limitations on the review undertaken in connection with the opinion, is
attached as Annex B to this proxy statement and is incorporated into this proxy
statement by reference. You should read the opinion in its entirety. UBS
provided its opinion to inform and assist our board of directors in connection
with its consideration of the merger. The UBS opinion is not a recommendation as
to how any holder of our common stock should vote or act with respect to the
transaction.
WHEN THE MERGER WILL BE COMPLETED (PAGES 24 AND 30)
The merger will become effective when the parties file a certificate of
merger with the Secretary of State of Delaware, which filing shall take place on
the day of the closing of the merger, which shall be no later than the second
business day after satisfaction or waiver of all the closing conditions set
forth in the merger agreement, including the following:
o adoption of the merger agreement by the holders of at least a
majority of our outstanding shares of common stock;
o expiration or termination of the Hart-Scott Rodino Antitrust
Improvements Act of 1976 (which we refer to as the HSR Act);
o the parties respective representations and warranties
contained in the merger agreement must be true and correct,
except as would not have a material adverse effect;
o the parties must each be in compliance in all material
respects with their respective covenants contained in the
merger agreement;
o no material adverse effect with respect to a party shall have
occurred; and
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o that certain non-executive employees agree to payment
agreements whereby they agree that certain retention bonuses
will not be paid by Coherent unless such individuals are
employed on the twelve-month anniversary of the closing of the
merger.
If the law permits, either Excel Technology or Coherent could choose to
waive a condition to its obligation to complete the merger even though that
condition has not been satisfied.
See "The Merger-The Merger Agreement-Conditions to Closing the Merger"
on page 30.
INTERESTS OF OUR DIRECTORS AND EXECUTIVE OFFICERS IN THE MERGER (PAGE 20)
Our directors and executive officers have economic interests in the
merger that are different from, or in addition to, their interests as
stockholders. Our board of directors knew about these additional interests and
considered them when they approved the merger agreement. These interests include
the following:
o Under employment agreements that we have entered into with our
executive officers, upon the closing of the merger, these
executives are entitled to change of control payments, and, if
their employment is not continued, certain severance benefits;
o Our directors and executive officers have options to purchase
Excel Technology common stock at varying prices, all of which
are vested. Immediately prior to and contingent upon the
effectiveness of the merger, we will purchase all such options
having an exercise price of less than $30.00 per share for a
cash payment equal to the amount by which $30.00 per share
exceeds the exercise price per share for each share of our
common stock subject to the option multiplied by the number of
shares issuable upon exercise in full of the option.
o Our directors and officers will continue to be entitled to
indemnification following consummation of the merger pursuant
to provisions of the merger agreement.
o Howard S. Breslow, Esq., a member of our board of directors,
is a member of Breslow & Walker, LLP, our outside general
legal counsel, who has represented us in connection with the
merger and will receive a legal fee for such services.
DISSENTERS' RIGHTS OF APPRAISAL (PAGE 37 AND ANNEX C)
Delaware law provides you with appraisal rights in the merger. This
means that if you comply with the procedures for perfecting appraisal rights
under Delaware law, you are entitled to have the fair value of your shares
determined by the Delaware Court of Chancery and to receive a cash payment based
on that valuation instead of the merger consideration. The ultimate amount you
receive in an appraisal proceeding may be more or less than, or the same as, the
amount you would have received under the merger agreement.
To exercise your appraisal rights, you must deliver a written demand
for appraisal to Excel Technology before the vote on the merger agreement at the
special meeting and you must not vote in favor of the adoption of the merger
agreement. Your failure to follow exactly the procedures specified under
Delaware law will result in the loss of your appraisal rights. A copy of the
relevant provisions of the Delaware General Corporation Law is attached to this
proxy statement as Annex C.
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES (PAGE 23)
If you are a U.S. holder of our common stock, the merger will be a
taxable transaction to you. For U.S. federal income tax purposes, your receipt
of cash in exchange for your shares of Excel Technology common stock generally
will cause you to recognize a gain or loss measured by the difference, if any,
between the cash you receive in the merger and your adjusted tax basis in your
shares. If you are a non-U.S. holder of Excel Technology common stock, the
merger will generally not be a taxable transaction to you under U.S. federal
income tax laws unless you have certain connections to the United States. You
should consult your own tax advisor for a full understanding of the tax
consequences to you of the merger.
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PROCEDURE FOR RECEIVING MERGER CONSIDERATION (PAGE 24)
Coherent has appointed U.S. Bank, as payment agent, to coordinate the
payment of the cash merger consideration following the merger. The payment agent
will send you written instructions for surrendering your certificates and
obtaining the cash merger consideration after we have completed the merger.
TERMINATION OF THE MERGER AGREEMENT (PAGE 31)
The parties may jointly agree to terminate the merger agreement without
completing the merger, even if our stockholders have approved it. In addition,
either party may terminate the merger agreement in the event of any of the
following:
o the consummation of the merger has not occurred by July 31,
2006 (or October 31, 2006, if it has not occurred because
there is in effect an order of a governmental entity that has
the effect of making the merger illegal or otherwise
prohibiting the consummation of the merger, or the waiting
period (or any extensions thereof) to obtain antitrust
approval has not expired or been terminated early, or there is
pending or threatened action by any governmental entity (a)
challenging or seeking to restrain or prohibit completion of
the merger, the effect of which if obtained would make the
merger illegal or otherwise prohibit consummation of the
merger, or (b) seeking to require us or Coherent to divest any
assets), but this termination right is not available to a
party whose failure to comply with the merger agreement was
the principal cause of the failure to complete the merger by
that date;
o any permanent injunction or other order of a court or other
competent authority preventing the consummation of the merger
has become final and nonappealable;
o our stockholders do not adopt the merger agreement (but this
termination right is not available to us if our failure to
comply with the merger agreement caused the failure to obtain
stockholder approval);
o the other party has breached any of its representations,
warranties or covenants and the breach cannot be or is not
cured within the time allowed, and if not cured, the breach
would result in a failure of certain conditions to the merger
(and the terminating party has not materially breached the
merger agreement); or
o an event has occurred which has a material adverse effect on
the other party.
Coherent may also terminate the merger agreement if our board of
directors does or resolves to do any of the following:
o withdraws or amends in a manner adverse to Coherent our
recommendation in favor of the adoption of the merger by our
stockholders;
o does not reaffirm such recommendation if requested in writing
to do so;
o approves or recommends an alternative acquisition proposal;
o enters into any agreement accepting an alternative acquisition
proposal;
o does not send to our stockholders a statement recommending
rejection of any tender or exchange offer by a party unrelated
to Coherent for shares of our common stock within 10 business
days of the announcement of the tender or exchange offer;
o materially breaches its obligations under the merger agreement
with respect to non-solicitation, notification of unsolicited
acquisition proposals, superior offers or changes of our board
of directors' recommendation (see "The Merger-The Merger
Agreement, "No Solicitation of Transactions" on page 28,
"Superior Offers" on page 29 and "Change of Recommendation" on
page 29).
A termination fee of $14,106,154 may be payable by us to Coherent in
connection with the termination of the merger agreement under several
circumstances, including termination by us in connection with a superior offer.
See "Termination Fees" on page 32.
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We may also terminate the merger agreement if, prior to the adoption of
the merger agreement, in connection with an acquisition proposal we wish to
accept, (a) we have not breached our obligations under the merger agreement with
respect to the acquisition proposal, the board of directors has determined that
the acquisition proposal constitutes a superior offer, and (c) we pay Coherent a
termination fee of $14,106,154.
EXPENSES (PAGE 32)
Generally, all fees and expenses incurred in connection with the merger
agreement and the merger will be paid by the party incurring the expenses. We
will be responsible to pay all fees and expenses incurred in relation to the
printing and filing (with the Securities and Exchange Commission) of this Proxy
Statement and Coherent will be responsible to pay the filing fee for the initial
Notification and Report Forms filed with the Federal Trade Commission and the
Department of Justice under the HSR Act. If the merger agreement is terminated
by Coherent because we breached our obligations under the merger agreement with
respect to non-solicitation, notification of unsolicited acquisition proposals,
superior offers or changes of our board of directors' recommendation, then we
will be required to pay all expenses incurred by Coherent and Merger Sub prior
to the termination of the merger agreement up to a maximum of $1,880,921. In
addition, under certain circumstances, we will also be required to pay the
termination fee noted herein.
REGULATORY MATTERS (PAGE 23)
The HSR Act prohibits us from completing the merger until we have
furnished certain information and materials to the Antitrust Division of the
Department of Justice and the Federal Trade Commission and the required waiting
period has expired or been terminated.
THE SPECIAL MEETING
DATE, TIME AND PLACE OF THE SPECIAL MEETING
This proxy statement is being furnished to our stockholders as part of
the solicitation of proxies by our board of directors for use at the special
meeting to be held on March ___, 2006, at 10:00 a.m., local time, at the offices
of Excel Technology, 41 Research Way, East Setauket, NY 11733 or at any
postponement or adjournment thereof. This proxy statement and the enclosed form
of proxy are first being mailed to our stockholders on or about March __, 2006.
MATTERS TO BE CONSIDERED
At the special meeting, our stockholders will be asked to consider and
vote upon the following two proposals:
o PROPOSAL NO. 1: To adopt the merger agreement, as the
same may be amended from time to time.
o PROPOSAL NO. 2: To grant the persons named as proxies
discretionary authority to vote to adjourn or
postpone the special meeting, if necessary, to
solicit additional proxies if there are not
sufficient votes to adopt the merger agreement.
Our board of directors has unanimously determined that the merger
agreement and the merger are advisable and in the best interests of Excel
Technology and its stockholders and has unanimously approved the merger
agreement. Our board of directors unanimously recommends that you vote "FOR"
adoption of the merger agreement and "FOR" granting the authority to the persons
named as proxies to vote your shares to adjourn or postpone the special meeting,
if necessary, to solicit additional proxies if there are not sufficient votes
for the adoption of the merger agreement.
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RECORD DATE AND QUORUM
The holders of record of Excel Technology common stock as of the close
of business on March 6, 2006, the record date for the special meeting, are
entitled to receive notice of, and to vote at, the special meeting. On the
record date, there were 12,058,329 shares of our common stock outstanding and
entitled to vote.
The holders of a majority of the outstanding shares of our common stock
on the record date represented in person or by proxy will constitute a quorum
for purposes of the special meeting. A quorum is necessary to hold the special
meeting. Stockholders are counted as present at the meeting if they (1) are
present in person or (2) have properly submitted a proxy card or voted by
telephone or by using the Internet. Under the Delaware General Corporation Law,
an abstaining vote and a broker "non-vote" are counted as shares present and
entitled to vote and are, therefore, included for purposes of determining
whether a quorum is present at the special meeting.
Once a share is represented at the special meeting, it will be counted
for the purposes of determining a quorum at the special meeting and any
postponement or adjournment of the special meeting. However, if a new record
date is set for an adjourned special meeting, then a new quorum will have to be
established.
REQUIRED VOTE
The adoption of the merger agreement requires the affirmative vote of
the holders of a majority of Excel Technology common stock outstanding and
entitled to vote on the record date. The affirmative vote of a majority of the
shares of Excel Technology common stock represented at the special meeting and
entitled to vote is required to adjourn or postpone the meeting. Each
outstanding share of Excel Technology common stock on the record date entitles
the holder to one vote at the special meeting. Stockholders do not have
cumulative voting rights.
If your shares are held in "street name" by your broker, bank or other
nominee you should instruct your broker, bank or other nominee how to vote your
shares using the instructions provided by your broker, bank or other nominee. If
you have not received these voting instructions or require further information
regarding these voting instructions, contact your broker, bank or other nominee
and he or she can give you directions on how to vote your shares. You may not
vote such shares unless you have a valid proxy from your broker.
Under the rules of NASDAQ, brokers, banks or other nominees who hold
shares in "street name" for customers may not exercise their voting discretion
with respect to the approval of non-routine matters such as the merger proposal
or the vote to adjourn and postpone the meeting if deemed necessary to
facilitate the approval of the merger proposal, and thus, absent specific
instructions from the beneficial owner of the shares, brokers, banks and other
nominees are not empowered to vote the shares with respect to the adoption of
the merger agreement (i.e., "broker non-votes"). Shares of Excel Technology
common stock held by persons attending the special meeting but not voting, or
shares for which we have received proxies with respect to which holders have
abstained from voting, will be considered abstentions. Thus, while abstentions
and broker non-votes, if any, will be treated as shares that are present and
entitled to vote at the special meeting for purposes of determining whether a
quorum exists, both will have the same effect as a vote "AGAINST" adoption of
the merger agreement, and abstentions, but not broker non-votes, will have the
same effect as a vote "AGAINST" the proposal to adjourn and postpone the
meeting.
VOTING; REVOCATION
VOTING BY TELEPHONE OR THE INTERNET. A stockholder may vote his or her
shares by calling the toll-free number indicated on the enclosed proxy card and
following the recorded instructions or by accessing the website indicated on the
enclosed proxy card and following the instructions provided. When a stockholder
votes via the Internet or by telephone, his or her vote is recorded immediately.
We encourage our stockholders to vote using these methods whenever possible.
VOTING BY PROXY CARD. All shares entitled to vote and represented by
properly executed proxy cards received prior to the special meeting, and not
revoked, will be voted at the special meeting in accordance with the
instructions indicated on those proxy cards. If no instructions are indicated on
a properly executed proxy card, the
8
shares represented by that proxy card will be voted as recommended by our board
of directors. If any other matters are properly presented for consideration at
the special meeting, including, among other things, consideration of a motion to
adjourn the special meeting to another time or place (including, without
limitation, for the purpose of soliciting additional proxies), the persons named
as proxies in the enclosed proxy card and acting thereunder will have discretion
to vote on those matters in accordance with their best judgment. We do not
currently anticipate that any other matters will be raised at the special
meeting. If, however, a matter is properly presented at the special meeting or
any adjournment or postponement of the special meeting, the persons appointed as
proxies will have discretionary authority to vote the shares represented by duly
executed proxies in accordance with their discretion and judgment.
VOTING BY ATTENDING THE MEETING. A stockholder may also vote his or her
shares in person at the special meeting. A stockholder planning to attend the
special meeting should bring proof of identification for entrance to the special
meeting. If a stockholder attends the special meeting, he or she may also submit
his or her vote in person, and any previous votes that were submitted by the
stockholder, whether by Internet, telephone or mail, will be superseded by the
vote that the stockholder casts at the special meeting. If you hold your shares
of Excel Technology common stock in street name and you want to vote these
shares in person at the special meeting, you will need to obtain a written proxy
in your name from the broker, bank or other nominee who holds your shares.
CHANGING VOTE; REVOCABILITY OF PROXY. If a stockholder has voted by
telephone or the Internet or by sending a proxy card, the stockholder may change
his or her vote before the special meeting. A stockholder that has voted by
telephone or the Internet may change his or her vote by making a timely and
valid later telephone or Internet vote, as the case may be. Any proxy card given
pursuant to this solicitation may be revoked by the person giving it at any time
before it is voted. A proxy card may be revoked by (1) filing with Excel
Technology's Secretary, at or before the taking of the vote at the special
meeting, a written notice of revocation or a duly executed proxy card, in either
case dated later than the prior proxy card relating to the same shares, or (2)
attending the special meeting and voting in person (although attendance at the
special meeting will not of itself revoke a proxy). Any written notice of
revocation or subsequent proxy card must be received by Excel Technology's
Secretary prior to the taking of the vote at the special meeting. The written
notice of revocation or subsequent proxy card should be hand delivered to Excel
Technology's Secretary or should be sent so as to be delivered to Excel
Technology, Inc., 41 Research Way, East Setauket, NY 11733, Attention:
Secretary.
If you have instructed your broker, bank or other nominee to vote your
shares, the options for revoking your proxy described in the paragraph above do
not apply and instead you must follow the directions provided by your broker,
bank or other nominee to change these instructions.
EXPENSES OF SOLICITATION OF PROXIES
Excel Technology will pay the cost of this proxy solicitation. In
addition to soliciting proxies by mail, directors, officers and employees of
Excel Technology may solicit proxies personally and by telephone, facsimile or
other electronic means of communication. These persons will not receive
additional or special compensation for the solicitation services. Excel
Technology will, upon request, reimburse brokers, banks and other nominees for
their expenses in sending proxy materials to their customers who are beneficial
owners and obtaining their voting instructions. Excel Technology has retained
____________ to assist it in the solicitation of proxies for the special meeting
and will pay _________________ customary fees expected to be $______________,
plus reimbursement of out-of-pocket expenses and other customary costs.
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PROPOSAL NO. 1: THE MERGER
BACKGROUND OF THE MERGER
Our senior management has periodically reviewed and assessed the
various business trends and conditions impacting Excel Technology and the laser
systems and electro-optical components business generally, and regularly updated
our board of directors regarding these matters. From time to time, our senior
management has also reviewed with our board of directors strategic options
potentially available to us, including growth through customer and product
initiatives, growth by targeted acquisitions of other businesses, and strategic
combination transactions between us and other companies in similar and
complementary lines of business.
In January 2003, John Ambroseo, Coherent's President and Chief
Executive Officer, phoned Antoine Dominic, our President and Chief Executive
Officer, expressing a possible interest in Coherent acquiring us. The
conversation was very general in nature.
In May 2003, Mr. Ambroseo phoned Mr. Dominic and asked to meet with him
at the CLEO show in Baltimore, MD. Mr. Dominic asked Don Hill, our Board
Chairman, to join the meeting. The parties met and talks were centered around
Coherent's interest in acquiring us. Messrs. Dominic and Hill told Mr. Ambroseo
that they would be happy to explore anything that might be in the interest of
our stockholders. Mr. Ambroseo expressed a desire to meet again soon.
In July 2003, Mr. Ambroseo contacted Mr. Dominic and requested that the
parties meet in New York City. A meeting was held at a hotel in New York City.
Present were Mr. Ambroseo, Helene Simonet, an Executive Vice President and the
Chief Financial Officer of Coherent, and Messrs. Dominic and Hill. Mr. Ambroseo
again expressed an interest in acquiring us, and Messrs. Dominic and Hill again
expressed an interest in exploring anything that might be in the interest of our
stockholders. Mr. Ambroseo expressed a desire to intensify talks shortly. Mr.
Dominic again heard from Mr. Ambroseo in August 2003, but further talks did not
take place until March 2005.
Recognizing the growing importance of size and mass in the laser
industry and the opportunities for consolidation, we increased our efforts to
create size and mass during this interim period. At a board of directors meeting
on October 13, 2003, Mr. Dominic discussed with the board the concept of
acquiring entity S, a sizeable subsidiary of a large industrial entity P. In
late 2003 and early 2004, we had several contacts with entity P regarding the
acquisition of its subsidiary S. The effort was not met with a favorable
response. We continued in our expansion mode with the acquisition of D. Green
(Electronics) Ltd., a small U.K. company, in December 2003, and, in early 2004,
we formed Excel Technology Lanka (Private) Ltd. in Sri Lanka for the purpose of
software development, manufacture of components and accessories, and sales and
marketing.
In mid 2004, based on discussion with management, it was becoming clear
to our board of directors that, ultimately, the laser industry would be
consolidated, that we would have difficulty in acquiring entities larger than
ourselves, and that there was a limited number of smaller companies
strategically attractive and available to us. The board of directors felt that
our strength in broad based laser solution technology, including galvos, sealed
co(2) lasers, and lamp pumped, diode pumped, pulsed and ultrafast lasers,
coupled with our ability to integrate them into subsystems, systems and work
stations for marking, micro processing, industrial and scientific applications,
among others, made us a prime acquisition platform for a large industrial
company interested in consolidating the industry. Our other alternatives were to
combine with another entity in the laser field or methodically try to grow
ourselves organically. With this in mind, in June 2004, Mr. Hill met with
investment bankers at UBS Securities LLC, an organization that he considered to
be most knowledgeable in the industrial marketplace, and discussed opportunities
for consolidation in the industry. Back in the fall of 2001, an investment
banker currently with UBS had introduced Mr. Hill to large industrial entity X
that evidenced an interest in acquiring us. Mr. Hill had two or three meetings
with large industrial entity X, but large industrial entity X never pursued the
acquisition. At Mr. Hill's meeting with UBS in June 2004, it identified a number
of potential large industrial entities as possible consolidating partners. Prior
to engaging UBS, Messrs. Dominic and Hill spoke with a number of companies in
the laser industry.
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In July 2004, Messrs. Dominic and Hill had dinner in New York City with
the CEO and CFO of Laser Company A to discuss strategic options, including
merging the two entities. While strong interest was expressed by Laser Company
A, ultimately it had no desire to pursue a transaction.
In September 2004, Mr. Hill had lunch with the Chairman and CEO of
Laser Company B to discuss strategic options, including merging the two
entities. Laser Company B had no interest in pursuing discussions at that time.
In September 2004, we signed an engagement letter with UBS, pursuant to
which we engaged UBS to contact the large industrial entities to explore
consolidation opportunities. UBS proceeded to contact potential partners.
On November 30, 2004, Mr. Dominic and Mr. Hill, after the execution of
a mutual confidentiality agreement, made a presentation to large industrial
entity X at UBS' offices in New York City. Company X declined to pursue a
transaction.
On December 31, 2004, Mr. Dominic and Mr. Hill, after the execution of
a mutual confidentiality agreement, made a presentation to large industrial
entity Y in New York City. Company Y declined to pursue a transaction.
Other entities contacted by UBS at that time declined to meet with us.
UBS had subsequent follow-up conversations with a number of the large industrial
entities, the results of which did not alter their interest in pursuing a
transaction with us.
In December 2004, Mr. Hill received an email from the CEO of Laser
Company B requesting a meeting in New York City in February 2005. A meeting was
held at such time, during which serious interest was expressed by Laser Company
B in pursuing a transaction. This meeting was followed up by numerous telephone
conversations between Mr. Hill and the CEO of Laser Company B and Mr. Dominic
and the CEO of Laser Company B, during which conversations the CEO of Laser
Company B reiterated a desire to pursue a transaction, but stated that Laser
Company B would have difficulty paying anything more than an insignificant
premium to the then prevailing market price of our common stock which was
approximately $26 per share. Talks continued on and off until late spring 2005,
at which time they ceased.
In March 2005, Mr. Ambroseo called Mr. Dominic and requested a meeting
in New York City. On March 13, 2005, Messrs. Dominic and Hill met with Mr.
Ambroseo and Paul Crosby, Coherent's Vice President of Corporate Marketing, in
New York City, at which time Mr. Ambroseo again expressed interest in Coherent
acquiring us in an all cash transaction. Messrs. Dominic and Hill repeated a
willingness to pursue anything that might be in the interest of our
stockholders. On March 25, 2005, we entered into a joint confidentiality
agreement with Coherent.
On April 15, 2005, UBS contacted industrial entity Z. On April 16,
2005, Messrs. Dominic and Hill held a conference call with industrial entity Z,
which declined to pursue a transaction.
In May 2005, at the request of Laser Company C, Messrs. Dominic and
Hill met at our offices with the CEO and CFO of Laser Company C. Laser Company C
was not of sufficient size to buy us for cash, and we believed that there were
not sufficient synergies to justify a combination of the companies.
On June 6, 2005, Mr. Hill was notified that Coherent had retained
Merrill Lynch to act as Coherent's financial advisors in connection with the
proposed transaction.
On June 23, 2005, we received a non-binding term sheet from Coherent
proposing the purchase by Coherent of all of our outstanding shares at a per
share price of $29, representing a premium of 21.9% to the three-month moving
average price of our common stock. On June 29, 2005, our board of directors
considered the
11
proposal. After consultation with our financial advisors, advice from counsel as
to the board's fiduciary obligation to stockholders, and the experience gained
in canvassing the market, the board resolved that UBS communicate a
counter-proposal of $30 per share to Coherent's financial advisors. The
non-binding counter-proposal was agreed to by Coherent as the basus upon which
to continue discussions between the two companies.
On August 11, 2005, Messrs. Dominic and Hill made presentations to
Messrs. Ambroseo, Crosby and Ms. Simonet at UBS' offices in New York City. Also
present at the meeting were representatives from Merrill Lynch and UBS.
Approximately two weeks later, Merrill Lynch contacted UBS to report that
Coherent wanted to alter the mix of consideration from all cash to a combination
of approximately equal parts cash and stock. This was presented to our board of
directors by Mr. Hill on September 1, 2005. The revised terms were acceptable to
our board, subject to appropriate due diligence on Coherent and its operations,
and such fact was conveyed to Coherent.
In September 2005, at Mr. Dominic's request, Mr. Hill asked UBS to
contact selected financial buyers regarding a possible transaction. UBS
contacted several financial buyers, and no contacted party expressed interest in
pursuing a transaction. After UBS contacted several financial buyers, it became
apparent that no counter-proposal transaction with a financial buyer would match
or exceed the $30 per share price being proposed by Coherent.
Beginning in September 2005, we started to provide Coherent with
non-public due diligence information.
On November 14, 2005, Coherent provided a draft of a definitive
agreement to us.
In early January 2006, Mr. Ambroseo had a telephone conversation with
Mr. Hill, and proposed changing the consideration back to all cash to simplify
the transaction, which proposal was amenable to our board. On January 27, 2006,
we received a revised draft of the definitive agreement, which was finalized
over the next few weeks through extensive negotiations between us, our legal
counsel and UBS and Coherent, its legal counsel and its financial advisors on
matters concerning, among other things, the payment of expenses and termination
fees and retention bonuses for non-executive employees.
On February 17, 2006, our board of directors met telephonically to
review and consider the transaction with Coherent. Our legal counsel reviewed
the principal provisions of the proposed merger agreement that had been
distributed to the directors prior to the meeting and discussed the sequence of
events to move to the closing of the merger. Representatives of UBS joined the
meeting and presented their evaluation of the proposed transaction and described
the financial analysis performed and the procedures followed with respect to
such evaluation. UBS also described the bases and methods that were utilized in
developing its fairness opinion. UBS then delivered its oral opinion (later
confirmed in writing) to the effect that, as of such date and based upon and
subject to the various assumptions made, matters considered and limitations
described in its written opinion, the merger consideration of $30.00 per share
to be received by the holders of our common stock was fair, from a financial
point of view, to such holders. In light of these considerations and the factors
described in "The Merger-Reasons for the Merger" in this proxy statement, our
board of directors unanimously determined that the merger agreement and the
merger are advisable and in the best interests of Excel Technology and our
stockholders, approved the merger agreement, and recommended that all of our
stockholders vote for the adoption of the merger agreement. On February 17,
2006, the board of directors of Coherent approved the merger agreement and
authorized the merger.
On February 20, 2006, the parties executed and delivered their
respective signature pages to the merger agreement. On February 21, the parties
issued a press release announcing the execution of the merger agreement.
12
REASONS FOR THE MERGER
In reaching its decision to approve the merger agreement, and to
recommend that our stockholders vote to adopt the merger agreement, our board of
directors consulted with management and our financial and legal advisors. Our
board of directors considered the following factors and potential benefits of
the merger, each of which it believed supported its decision:
o our belief in the likely consolidation of the laser industry,
our difficulty in acquiring entities larger than ourselves,
and the long term importance of size and mass in reaching
foreign markets;
o management's projections of our internal growth and future
earnings, the inherent uncertainties and contingencies
associated with projections, and the economic and competitive
market conditions affecting us;
o our current and future opportunities to grow through
meaningful acquisitions at reasonable prices if we were to
remain as an independent publicly traded company;
o the unlikely potential stockholder value that our board of
directors believed might result from other possible
alternatives to the proposed merger, including the alternative
of continuing to operate on a stand-alone basis or seeking to
grow through acquisitions, as well as the risks and
uncertainties associated with these alternatives;
o the process through which we, with the assistance of our
financial advisors, engaged, or sought to engage, in
discussions with entities believed to be the most likely
candidates to pursue a business combination with or acquire
us, as further described above under "Background of the
Merger," and the fact that no strategic or financial buyer
other than Coherent made a written proposal to acquire us;
o the unlikely potential for obtaining a superior offer from an
alternative purchaser to Coherent in light of the other
potential purchasers previously identified and contacted by
our management or our financial advisors;
o the belief of our board of directors that we have obtained the
highest price per share that Coherent is willing to pay and
the highest price obtainable on the date of signing of the
merger agreement, including the $1.00 per share increase in
the cash merger consideration over the original price offered
by Coherent;
o the adequacy of Coherent's capital resources, including its
borrowing capacity, to pay the merger consideration;
o the historical market prices, volatility and recent trading
activity of our common stock, and the fact that the $30.00 per
share to be paid for each share of our common stock in the
merger represents:
o a premium of approximately 6% over the
closing price of our common stock on
February 17, 2006, which was the last
trading day prior to the announcement of the
merger; and
o a premium of approximately 21% over the
average closing price of our common stock
during the six-month period prior to
February 17 2006;
o the fact that the merger consideration consists solely of
cash, which provides our stockholders with certainty of value
for their shares of our common stock;
o our board of directors' belief, in light of its knowledge of
the business and competitive environment in which we operate,
that the merger is more favorable to our stockholders than any
other alternative reasonably available to us;
o UBS's opinion addressed to our board of directors that, as of
February 17, 2006 (the date of its opinion), and subject to
the various assumptions made, matters considered, and
limitations described in the opinion, the merger consideration
to be received by our holders of common stock pursuant to the
merger agreement was fair, from a financial point of view, to
such holders, together with the financial analyses performed
by UBS in connection with the preparation of its opinion and
presented by UBS to our board of directors (see "The
Merger--Opinion of UBS Securities LLC -Excel Technology's
Financial Advisor" and Annex B to this proxy statement);
13
o the terms and conditions of the merger agreement resulting
from the arm's length negotiations between us and Coherent, as
reviewed by our board of directors with our legal advisors,
including the conditions to the completion of the merger and
the circumstances under which Coherent or Excel would have the
right to terminate the merger agreement. In addition, the
board reviewed the provisions of the merger agreement that
prohibits Excel from soliciting any proposal or offer
regarding any acquisition and the requirement for Excel to
recommend adoption of the merger agreement by its stockholders
and the prohibition on the Excel board from withdrawing or
modifying its recommendation unless, subject to specified
conditions, it has received an unsolicited "superior"
acquisition proposal. The Excel board also reviewed the
various amounts that might be payable in the event the merger
agreement is terminated under specified circumstance, noting
that while these provisions could have an impact on a third
party considering an unsolicited acquisition proposal, the
provisions were reasonably necessary to protect both
Coherent's and Excel's interests in the context of the
proposed merger. In addition, the Excel board found reasonable
the views of its legal and financial advisors that the
termination fee was within the range of fees payable in
comparable transactions and would not be expected to preclude
an unsolicited acquisition proposal for Excel;
o the limited number and nature of the conditions to Coherent's
obligation to complete the merger, including (but not limited
to) the absence of a financing condition;
o the definition of "material adverse effect," which includes
negotiated exceptions providing, among other things, that a
material adverse effect will not include changes, events or
circumstances to the extent resulting from any of the
following:
o compliance by us with the terms and
conditions of the merger agreement;
o the announcement or pendency of the merger
agreement;
o any change in our stock price or trading
volume (although the facts or circumstances
giving rise to such change may be taken into
account);
o any failures by us to meet our revenue or
earnings estimates (although the facts and
circumstances giving rise to such failure
may be taken into account);
o changes affecting the industry generally in
which we operate or the United States
economy generally, that do not
disproportionately affect us in any material
respect;
o changes affecting general worldwide economic
or capital market conditions that do not
disproportionately affect us in any material
respect;
o the availability of appraisal rights to holders of our common
stock who comply with all of the required procedures under
Delaware law, which allow those holders to seek appraisal of
the fair value of their shares as determined by the Delaware
Court of Chancery (see "Rights of Appraisal" and Annex C).
The Excel Technology board of directors also considered, among others,
the following risks and other countervailing factors:
o the risk that the merger might not be completed in a timely
manner or at all;
o the possibility that United States antitrust regulatory
authorities might seek to impose conditions on or enjoin or
otherwise prevent or delay the merger;
o the fact that, in the event that any of the other conditions
to the completion of the merger are not satisfied, Coherent
would not be required to consummate the merger even if the
merger agreement is adopted by our stockholders;
o the interests of our directors and executive officers in the
merger as described under "The Merger-Interests of our
Directors and Executive Officers in the Merger;"
o the fact that our stockholders, by virtue of the merger
consideration consisting solely of cash, will not participate
in any of our future earnings or growth and will not benefit
from any appreciation in our value following the merger unless
they currently have, or acquire in the future, shares of stock
or other equity interests in Coherent independently of this
merger transaction;
o the fact that the merger consideration consists of cash and
will, therefore, be taxable to our stockholders for U.S.
federal income tax purposes;
14
o the restrictions on our ability to solicit or engage in
discussions or negotiations regarding alternative business
combination transactions, subject to specified exceptions, and
the requirement that we pay a termination fee in the event we
receive and close on a superior acquisition proposal, which
may discourage a competing proposal to acquire us that may be
more advantageous to our stockholders;
o the potential disruption to customer, vendor or other
commercial relationships to us as a result of the announcement
of the merger agreement and the ultimate announcement of the
merger;
o the restrictions on the conduct of our business prior to the
completion of the merger, requiring us to conduct our business
in the ordinary course, subject to specific limitations, which
may delay or prevent us from undertaking business
opportunities that may arise pending completion of the merger;
and
o the risk of diverting management's focus and resources from
other strategic opportunities and from operational matters
while working to implement the merger, and the possibility of
other management and employee disruption associated with the
merger, including the possible loss of key management,
technical or other personnel.
After taking into account all of the factors set forth above, as well
as others, our board of directors determined that the potential benefits of the
merger outweigh the potential risks and that the merger is advisable, fair to
and in our best interests and that of our stockholders. While our board of
directors as a whole did not assign relative weights to the above factors or the
other factors considered by it, individual members of our board of directors may
have given different weights to different factors. In addition, our board of
directors did not reach any specific conclusion on each factor considered, but,
with the assistance of its advisors, conducted an overall analysis of these
factors.
RECOMMENDATION OF OUR BOARD OF DIRECTORS
After careful consideration, our board of directors, by unanimous vote:
o has determined that the merger agreement and the merger are
advisable and in the best interests of Excel Technology and
its stockholders;
o has approved the merger agreement; and
o RECOMMENDS THAT EXCEL TECHNOLOGY'S STOCKHOLDERS VOTE "FOR" THE
ADOPTION OF THE MERGER AGREEMENT AND "FOR" GRANTING THE
AUTHORITY TO THE PERSONS NAMED AS PROXIES TO VOTE TO ADJOURN
OR POSTPONE THE SPECIAL MEETING, IF NECESSARY, TO SOLICIT
ADDITIONAL PROXIES IF THERE ARE NOT SUFFICIENT VOTES FOR THE
ADOPTION OF THE MERGER AGREEMENT.
OPINION OF UBS SECURITIES, LLC - EXCEL TECHNOLOGY'S FINANCIAL ADVISOR
On February 17, 2006, UBS delivered to the Excel Technology board of
directors, an oral opinion, which opinion was confirmed by delivery of a written
opinion dated the same date, to the effect that, as of that date and based on
and subject to various assumptions made, matters considered and limitations
described in the opinion, the per share consideration to be received by the
holders of Excel Technology's common stock in the proposed transaction was fair,
from a financial point of view, to such holders.
The full text of UBS' opinion describes the assumptions made,
procedures followed, matters considered and limitations on the review undertaken
by UBS. The opinion is attached as Appendix B and is incorporated into this
proxy statement by reference. UBS' opinion was provided for the benefit of the
Excel Technology's board of directors in connection with, and for the purposes
of, its consideration of the proposed transaction. UBS' OPINION IS DIRECTED ONLY
TO THE FAIRNESS, FROM A FINANCIAL POINT OF VIEW, OF THE PER SHARE CONSIDERATION
TO BE RECEIVED BY EXCEL TECHNOLOGY'S COMMON STOCK HOLDERS AND DOES NOT ADDRESS
ANY OTHER ASPECT OF THE PROPOSED TRANSACTION OR ANY RELATED TRANSACTION. THE
OPINION DOES NOT ADDRESS THE RELATIVE MERITS OF THE PROPOSED TRANSACTION AS
COMPARED TO OTHER BUSINESS STRATEGIES OR TRANSACTIONS THAT MIGHT BE AVAILABLE TO
EXCEL TECHNOLOGY OR THE UNDERLYING BUSINESS DECISION OF EXCEL TECHNOLOGY TO
EFFECT THE PROPOSED TRANSACTION. THE OPINION DOES NOT CONSTITUTE A
RECOMMENDATION TO ANY STOCKHOLDER OF EXCEL TECHNOLOGY AS TO HOW TO VOTE OR ACT
WITH RESPECT TO THE PROPOSED TRANSACTION. YOU ARE ENCOURAGED TO READ THE OPINION
CAREFULLY IN ITS
15
ENTIRETY. The summary of UBS' opinion below is qualified in its entirety by
reference to the full text of UBS' opinion.
At Excel Technology's direction, UBS was not asked to, and it did not,
offer any opinion as to the material terms (other than the merger consideration
to be received by the holders of Excel Technology's common stock) of the merger
agreement or the form of the proposed transaction. In rendering its opinion, UBS
also assumed, with Excel Technology's consent, that the final executed merger
agreement would not differ in any material respect from the draft merger
agreement that UBS examined prior to rendering its opinion, that each of Excel
Technology and Coherent would comply with all the material terms of the merger
agreement, and that the proposed transaction would be consummated in accordance
with the terms of the merger agreement without any adverse waiver or amendment
of any material terms or condition thereof. UBS also assumed that all
governmental, regulatory or other consents and approvals necessary for the
consummation of the proposed transaction will be obtained without any material
adverse effect on Excel Technology or the proposed transaction.
In arriving at its opinion, UBS, among other things:
o reviewed certain publicly available business and historical
financial information relating to Excel Technology and
Coherent;
o reviewed certain internal financial information and other data
relating to the business and financial prospects of Excel
Technology including estimates and financial forecasts for
calendar years 2006 and 2007 prepared by management of Excel
Technology, that were provided to UBS by Excel Technology and
not publicly available, as well as publicly available Wall
Street research estimates for Excel Technology;
o conducted discussions with members of the senior managements
of Excel Technology concerning the businesses and financial
prospects of Excel Technology;
o reviewed publicly available financial and stock market data
with respect to certain other companies UBS believed to be
generally relevant;
o compared the financial terms of the proposed transaction with
the publicly available financial terms of certain other
transactions UBS believed to be generally relevant;
o reviewed current and historical market prices of Excel
Technology's common stock;
o reviewed the merger agreement; and
o conducted such other financial studies, analyses and
investigations, and considered such other information, as UBS
deemed necessary or appropriate.
At Excel Technology's request, UBS contacted third parties to solicit
indications of interest in a possible acquisition of, or possible business
combination with, Excel Technology. In connection with its review, with the
consent of Excel Technology, UBS did not assume any responsibility for
independent verification of any of the information that was reviewed by UBS for
the purpose of its opinion and, with the consent of Excel Technology, UBS relied
on that information being complete and accurate in all material respects. In
addition, with the consent of Excel Technology, UBS did not make any independent
evaluation or appraisal of any of the assets or liabilities, contingent or
otherwise, of Excel Technology or Coherent, and was not furnished with any such
evaluation or appraisal. With respect to the financial forecasts and estimates,
UBS assumed, at the direction of Excel Technology, that they have been
reasonably prepared on a basis reflecting the best currently available estimates
and judgments of the management of Excel Technology as to the future performance
of Excel Technology. UBS' opinion was necessarily based on economic, monetary,
market and other conditions as in effect on, and information made available to
UBS as of, the date of its opinion.
16
In connection with rendering its opinion, UBS performed a variety of
financial and comparative analyses, which are summarized below. The following
summary is not a complete description of all analyses performed and factors
considered by UBS in connection with its opinion. The preparation of a financial
opinion is a complex process involving subjective judgments and is not
necessarily susceptible to partial analysis or summary description.
UBS believes that its analyses and the summary below must be considered
as a whole and that selecting portions of its analyses and factors or focusing
on information presented in tabular format, without considering all analyses and
factors or the narrative description of the analyses, could create a misleading
or incomplete view of the processes underlying UBS' analyses and opinion. None
of the analyses performed by UBS were assigned greater significance or reliance
by UBS than any other. UBS did not form an opinion as to whether any individual
analysis or factor, whether positive or negative, considered in isolation,
supported or failed to support UBS' opinion. UBS arrived at its ultimate opinion
based on the results of all analyses undertaken by it and assessed as a whole.
The estimates of Excel Technology's future performance provided by
Excel Technology management in or underlying UBS's analyses are not necessarily
indicative of future results or values, which may be significantly more or less
favorable than those estimates. In performing its analysis, UBS considered
industry performance, general business and economic conditions and other
matters, many of which are beyond Excel Technology's control. Estimates of the
financial value of companies do not necessarily purport to be appraisals or
reflect the prices at which companies actually may be sold.
The decision to enter into the merger agreement and to agree to the
merger consideration negotiated between Excel Technology and Coherent was solely
that of the Excel Technology board of directors. UBS' opinion and financial
analyses were only one of many factors considered by the Excel Technology board
of directors in its evaluation of the proposed transaction and should not be
viewed as determinative of the views of Excel Technology's board of directors or
management with respect to the merger and the merger consideration.
The following is a brief summary of the material financial analyses
performed by UBS and reviewed with the Excel Technology board of directors in
connection with UBS' opinion relating to the proposed transaction. THE FINANCIAL
ANALYSES SUMMARIZED BELOW INCLUDE INFORMATION PRESENTED IN TABULAR FORMAT. IN
ORDER TO FULLY UNDERSTAND UBS' FINANCIAL ANALYSES, THE TABLES MUST BE READ
TOGETHER WITH THE TEXT OF EACH SUMMARY. THE TABLES ALONE DO NOT CONSTITUTE A
COMPLETE DESCRIPTION OF THE FINANCIAL ANALYSES. CONSIDERING THE DATA BELOW
WITHOUT CONSIDERING THE FULL NARRATIVE DESCRIPTION OF THE FINANCIAL ANALYSES,
INCLUDING THE METHODOLOGIES AND ASSUMPTIONS UNDERLYING THE ANALYSES, COULD
CREATE A MISLEADING OR INCOMPLETE VIEW OF UBS' FINANCIAL ANALYSES.
ANALYSIS OF SELECTED PUBLICLY TRADED COMPANIES
UBS compared selected financial information and operating statistics of
Excel Technology to corresponding financial information and operating statistics
of the following selected publicly held companies that UBS considered reasonably
comparable:
o Coherent, Inc.
o Newport Corporation
o Rofin-Sinar Technologies, Inc.
UBS calculated the multiples of enterprise value (which consists of
market value of the particular company's equity, plus the particular company's
debt and minority interest, less cash and cash equivalents) to the following
financial information and operating statistics for each of Excel Technology and
the selected companies based on closing stock prices as of February 14, 2006:
17
o calendar years 2005 and 2006 estimated revenue;
o calendar years 2005 and 2006 estimated earnings before
interest, taxes, depreciation and amortization, or EBITDA;
UBS calculated the multiples of stock price to the following financial
information for each of Excel Technology and the selected companies based on
closing stock prices as of February 14, 2006, and, in the case of Excel
Technology, at the $30.00 per share merger consideration to be paid in the
proposed transaction:
o calendar years 2005 and 2006 estimated diluted earnings per
share, or EPS
Estimated financial data for the selected companies was based on
various publicly available Wall Street research reports. UBS then calculated the
mean, median, high and low enterprise value and stock price multiples for the
universe of selected publicly traded companies. UBS compared the resulting range
of multiples for the selected companies to Excel Technology's multiples based
(1) on the closing price of Excel Technology's common stock on February 14,
2006, and (2) on the proposed merger consideration of $30.00 per share, in each
case using estimated financial data for Excel Technology (a) based on various
publicly available Wall Street analyst research reports, and (b) provided by
Excel Technology's management. The results of UBS' calculations are presented in
the table below:
ENTERPRISE VALUE/
------------------------------
CALENDAR CALENDAR
CALENDAR YEAR CALENDAR YEAR YEAR YEAR
2005E 2006E 2005E 2006E
------------- ------------- PRICE PER PRICE PER
EBITD EBITD SHARE/EP SHARE/EP
SALES A SALES A S S
- ------------------------------------------------------------------------------------------------------------
OVERALL
Mean 1.7x 11.0x 1.5x 10.2x 24.6x 21.9x
Median 1.8 9.6 1.6 8.2 24.2 23.7
Minimum 1.3 8.2 1.2 7.8 18.4 17.0
Maximum 1.9 15.2 1.8 14.5 31.1 25.0
EXCEL TECHNOLOGY BASED ON CLOSING PRICE OF EXCEL
TECHNOLOGY COMMON STOCK ON FEBRUARY 14, 2006
Wall Street Estimates 2.1x 12.6x 1.9x 9.7x 21.2x 17.5x
Management Estimates 2.1 12.6 1.8 8.2 21.2 14.3
EXCEL TECHNOLOGY BASED ON $30.00 PER SHARE
MERGER CONSIDERATION
Wall Street Estimates 2.4x 13.9x 2.1x 10.7x 22.9x 18.9x
Management Estimates 2.4 13.9 1.9 9.0 22.9 15.4
- ------------------------------------------------------------------------------------------------------------
UBS noted none of the selected companies is either identical or
directly comparable to Excel Technology and that any analyses of selected
companies necessarily involve complex considerations and judgments concerning
financial and operating characteristics and other factors that could affect the
public trading or acquisition values of the companies concerned.
ANALYSIS OF SELECTED PRECEDENT TRANSACTIONS
UBS analyzed certain information for the following nine selected
transactions in the laser and marking industries announced since 1998. The
transactions considered and the month and year each transaction was announced
were as follows:
18
ACQUIROR TARGET ANNOUNCEMENT DATE
- ---------------------------------------------------------------------------------------
Coherent, Inc. Tuilaser AG June 2005
Danaher Corp. Linx Printing Technologies plc October 2004
Newport Corp. Spectra-Physics, Inc. June 2004
Coherent, Inc. Lambda Physik AG (40% stake) April 2003
Danaher Corp. Willett International Limited November 2002
Danaher Corp. Videojet Technologies, Inc. January 2002
Rofin Sinar Technologies, Inc. Carl Baasel Lasertechnik GmbH May 2000
Illinois Tool Works, inc. Trident International January 1999
Lumonics, Inc. General Scanning, Inc. October 1998
- ---------------------------------------------------------------------------------------
For each of the selected transactions, UBS calculated and compared the
resulting multiples of enterprise value (which consists of market value of the
particular company's equity, plus the particular company's debt and minority
interest, less cash and cash equivalents) to the following financial information
and operating statistics for the target company:
o latest twelve-months, or LTM, sales as of the latest fiscal
quarter immediately preceding the announcement of the relevant
transaction for which quarterly financials were available; and
o LTM EBITDA as of the latest fiscal quarter immediately
preceding the announcement of the relevant transaction for
which quarterly financials were available.
Estimated financial data for the selected target companies was based on
public filings. UBS utilized estimated financial data for Excel Technology as
provided by Excel Technology's management. UBS then calculated the mean, median,
high and low enterprise value multiples for the selected companies. The results
of UBS' calculations are presented in the table below:
TOTAL ENTERPRISE VALUE/LTM
----------------------------
SALES EBITDA
- ---------------------------------------------------------------
Mean 1.3x 10.0x
Median 1.2 9.4
High 2.6 13.8
Low 0.5 6.1
Excel Technology at $30.00 per
share Merger Consideration 2.4x 13.9x
- ---------------------------------------------------------------
UBS noted that none of the selected precedent transactions is either
identical or directly comparable to the proposed transaction and that any
analysis of selected precedent transactions necessarily involves complex
considerations and judgments concerning financial and operating characteristics
and the other factors that could affect the acquisition values of the companies
concerned.
OTHER FACTORS
In rendering its opinion, UBS also reviewed and considered other
information and data, including:
19
o historical and expected financial results of Excel Technology;
o historical trading prices and trading volumes of Excel
Technology's common stock during the period from February 14,
2003 through February 14, 2006;
o the premiums implied in the proposed transaction based on the
merger consideration of $30.00 per share and (a) the closing
price of Excel Technology's common stock on February 14, 2006
and on the one week, one month, three months, six months and
one year immediately preceding February 14, 2006 and (b) the
average daily closing prices of Excel Technology's common
stock over the one-week, one-month, three-month, six-month and
one-year periods preceding February 14, 2006;
o certain publicly available Wall Street research reports for
Excel Technology;
o historical and expected financial statistics of selected
publicly held companies that UBS considered reasonably
comparable; and
o a comparison of financial forecasts and estimates provided by
Excel Technology in November 2004 to the actual financial
results of Excel Technology for calendar years 2004 and 2005.
MISCELLANEOUS
Under the terms of its engagement, Excel Technology has agreed to pay
UBS a $500,000 fee upon delivery of its opinion and a $2,500,000 transaction fee
payable upon consummation of the proposed transaction, against which the opinion
fee will be credited. UBS may also be entitled to receive additional
compensation for its financial advisory services, in an amount not to exceed
$500,000, payable at the sole and absolute discretion of the Board of Directors
of Excel Technology upon consummation of the proposed transaction. In addition,
Excel Technology has agreed to reimburse UBS for its reasonable expenses,
including fees and disbursements of counsel, and to indemnify UBS and related
parties against liabilities, including liabilities under federal securities
laws, relating to, or arising out of, its engagement.
Excel Technology selected UBS as a financial advisor in connection with
the transaction because UBS is an internationally recognized investment banking
firm with substantial experience in similar transactions and is familiar with
Excel Technology and its business. UBS is continually engaged in the valuation
of businesses and their securities in connection with mergers and acquisitions,
leveraged buyouts, negotiated underwritings, competitive bids, secondary
distributions of listed and unlisted securities and private placements.
In the ordinary course of business, UBS, its successors and affiliates
may hold or trade, for their own accounts and the accounts of their customers,
securities of Excel Technology and Coherent and, accordingly, may at any time
hold a long or short position in such securities.
INTERESTS OF OUR DIRECTORS AND EXECUTIVE OFFICERS IN THE MERGER
In considering the recommendation of our board of directors with
respect to the merger, you should be aware that our directors and executive
officers have interests in the merger that are different from, or in addition
to, the interests of our stockholders generally. These interests may create
potential conflicts of interests and, to the extent material, are described
below. Our board of directors was aware of these interests and considered them,
among other matters, in approving the merger agreement.
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EMPLOYMENT AGREEMENTS AND CHANGE OF CONTROL PAYMENTS
We have entered into employment agreements with our executive officers
that contain protective change in control arrangements. A summary of the
material provisions of these agreements is provided below:
J. DONALD HILL. Mr. Hill, our Chairman of the Board, has an employment
agreement which expires on October 9, 2007. Mr. Hill's employment agreement
provides that (a) in the event his employment is terminated without cause, he is
entitled to receive his base salary ($175,000) for a period of two years from
termination, and (b) in the event of a Change of Control, he is entitled to a
payment of $1,000,000, plus a gross up of any excise tax payable by him with
respect to any portion of such payment constituting an excess parachute payment
under Section 280G of the Internal Revenue Code. Change of Control, as defined
in Mr. Hill's employment agreement, will include the merger with Coherent. In
connection with the merger, Mr. Hill's employment agreement will be cancelled
and he will receive a payment of $500,000 ($850,000 less than that to which he
would be otherwise entitled) in complete satisfaction of the obligation for a
Change of Control Payment and severance. Coherent is not entering into a new
employment agreement with Mr. Hill in connection with the merger.
ANTOINE DOMINIC. Mr. Dominic, our President and Chief Executive
Officer, has an employment agreement which has an expiration date of October 9,
2006; but, unless the parties reach an agreement for continued employment prior
to the expiration of the term (there being an obligation for the parties to
enter into good faith negotiations regarding continued employment at least 90
days prior to the expiration thereof), the employment agreement automatically is
renewed for a period of one year, and continues to renew at the end of each
subsequent year until (a) the parties agree to new terms of employment, or (b)
employment is terminated pursuant to the express provisions of the employment
agreement (e.g. he is terminated without cause). Currently, Mr. Dominic receives
a base salary of $550,000 and has a bonus plan providing for bonus payments, on
a quarterly basis, equal to 3% of pre-tax profits if such profits for the
quarter do not exceed $1,500,000, 4% of pre-tax profits if such profits for the
quarter exceed $1,500,000 but do not exceed $2,500,000, and 5% of pre-tax
profits if such profits for the quarter exceed $2,500,000. Mr. Dominic's
employment agreement provides that (a) in the event his employment is terminated
without cause, he is entitled to receive (1) his base salary for a period of two
years from termination, and (2) his bonus compensation through (A) October 9,
2006 (in the event his employment is terminated without cause prior thereto), or
(B) the date of termination (in the event his employment agreement is terminated
without cause after October 9, 2006), in either case (A) or (B), in an amount
not less than that received for the same applicable period of the prior year,
and (b) in the event of a Change of Control, he is entitled to a payment equal
to 300% of his base salary for the year in which the Change of Control takes
place (but in no event less than $1,000,000) plus a gross up of any excise tax
payable by him with respect to any portion of such payment constituting an
excess parachute payment under Section 280G of the Internal Revenue Code. Change
of Control, as defined in Mr. Dominic's employment agreement, will include the
merger with Coherent. In connection with the merger, Mr. Dominic's employment
agreement will be cancelled and he will receive a payment of $4,700,000 in
complete satisfaction of the obligation for a Change of Control payment,
severance and future bonuses. Coherent is not entering into a new employment
agreement with Mr. Dominic in connection with the merger.
ALICE VARISANO. Ms. Varisano, our Chief Financial Officer, has an
employment agreement which expires on December 28, 2008. Ms. Varisano's
employment agreement provides that (a) in the event her employment agreement is
terminated due to a Change of Control she is entitled to receive a severance
payment equal to two years of compensation (including base salary of $275,000,
expense allowance of $25,000, and a minimum bonus of $50,000), and (b) in the
event of a Change of Control, she is entitled to receive a payment of $300,000,
plus a gross up of any excise tax payable by her with respect to any portion of
such payment constituting an excess parachute payment under Section 280G of the
Internal Revenue Code. Change of Control, as determined in Ms. Varisano's
employment agreement, will include the merger with Coherent. In connection with
the merger, Ms. Varisano's employment agreement will be cancelled and she will
receive a payment of $900,000 in complete satisfaction of the obligation for a
change of Control payment and severance. Coherent is not entering into a new
employment agreement with Ms. Varisano in connection with the merger.
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PURCHASE OF STOCK OPTIONS
Our directors and executive officers have options to purchase shares of
Excel Technology common stock at varying prices, all of which are fully vested.
Immediately prior to and contingent upon the effectiveness of the merger, Excel
Technology will purchase all of such options having an exercise price of less
than $30.00 per share for a cash payment equal to the amount by which $30.00 per
share exceeds the exercise price per share for each share of our common stock
subject to the option multiplied by the number of shares issuable upon exercise
in full of the option. The following table sets forth the number of stock
options owned by each of our directors and executive officers which will be
purchased in connection with the merger, the weighted average exercise price,
and the aggregate consideration to be received therefor:
Name of Director Number of Options Weighted Average Aggregate
Or Executive Officer to be Purchased Exercise Price Consideration*
- -------------------- --------------- -------------- --------------
Donald Hill 416,667 $15.1980 $6,167,524
Antoine Dominic 469,792 $20.2773 $4,567,630
Alice Varisano 40,000 $26.5100 $139,600
Howard S. Breslow 60,000 $21.8667 $488,000
Steve Georgiev 20,000 $22.5900 $148,200
Ira Lamel 40,000 $25.000 $200,000
Donald Weeden 30,000 $22.4476 $226,600
* These amounts may be reduced by any applicable withholding
requirements.
INDEMNIFICATION AND INSURANCE
For six years after the completion of the merger, the certificate of
incorporation and bylaws of the company surviving the merger will contain
provisions regarding exculpation, indemnification and advancement of expenses
which are at least as favorable, to the directors and officers who were
indemnified by Excel Technology immediately prior to completion of the merger,
as the exculpation, indemnification and advancement provisions that were
contained in the certificate of incorporation and bylaws of Excel Technology in
effect at the time the merger agreement was executed.
Coherent has also agreed to have the Company surviving the merger use
all reasonable efforts to cause to be maintained directors' and officers'
liability insurance, for events occurring prior to the effective time,
containing terms no less favorable to the insured than the current insurance
maintained by us to cover the persons serving as officers and directors
immediately prior to the effective time, for a period of six years after
completion of the merger, although Coherent will not be obligated to make annual
premium payments in excess of 200% of the premiums currently paid by Excel
Technology for insurance.
This continued indemnification and coverage merely extends beyond
closing of the merger the protections for our directors and officers that
existed prior to the date of the merger agreement.
INTEREST OF HOWARD S. BRESLOW, ESQ. AND EXCEL TECHNOLOGY'S LAW FIRM
Howard S. Breslow, Esq., a member of our board of directors, is a
member of Breslow & Walker, LLP, our outside general legal counsel. Breslow &
Walker, LLP has represented Excel Technology in connection with the merger and
will receive a fee for legal services of $1,300,000 in connection with the
merger.
THE INTERESTS DESCRIBED ABOVE MAY INFLUENCE OUR DIRECTORS AND EXECUTIVE
OFFICERS IN MAKING THEIR RECOMMENDATIONS THAT YOU VOTE IN FAVOR OF THE ADOPTION
OF THE MERGER AGREEMENT. YOU SHOULD BE AWARE OF THESE INTERESTS WHEN YOU
CONSIDER OUR BOARD'S RECOMMENDATION THAT YOU VOTE IN FAVOR OF THE MERGER
AGREEMENT.
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MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES
The following is a discussion of the material federal income tax
consequences of the merger to holders of Excel Technology common stock. The
discussion is based upon the Internal Revenue Code, Treasury regulations, IRS
rulings and judicial and administrative decisions in effect as of the date of
this proxy statement, all of which are subject to change (possibly with
retroactive effect) or to different interpretations. The following discussion is
limited to the material federal income tax aspects of the merger to a
stockholder of Excel Technology who is a citizen or resident of the United
States and who, on the date on which the merger is completed, holds shares of
Excel Technology common stock as a capital asset. The following discussion does
not address taxpayers subject to special treatment under federal income tax
laws, such as insurance companies, financial institutions, dealers in
securities, tax-exempt organizations, S corporations and taxpayers subject to
the alternative minimum tax. In addition, the following discussion may not apply
to stockholders who acquired their shares of Excel Technology common stock upon
the exercise of employee stock options or otherwise as compensation for services
or who hold their shares as part of a hedge, straddle or conversion transaction.
The following discussion does not address potential foreign, state,
local and other tax consequences of the merger. All stockholders are urged to
consult their own tax advisors regarding the federal income tax consequences, as
well as the foreign, state and local tax consequences, of the disposition of
their shares in the merger.
For federal income tax purposes, the merger will be treated as a
taxable sale or exchange of Excel Technology common stock for cash by each Excel
Technology stockholder (including any stockholder who properly exercises
dissenters' rights). Accordingly, the federal income tax consequences to the
Excel Technology stockholders receiving cash generally will be as follows:
o The stockholder will recognize a capital gain or loss upon the
disposition of the stockholder's shares of Excel Technology
common stock pursuant to the merger.
o The capital gain or loss, if any, will be long-term with
respect to shares of Excel Technology common stock held for
more than twelve months as of the effective time of the
merger.
o The amount of capital gain or loss recognized by each
stockholder will be measured by the difference between the
amount of cash received by the stockholder in connection with
the merger, or cash received in connection with the exercise
of dissenters' rights, and the stockholder's adjusted tax
basis in the shares of Excel Technology common stock at the
effective time of the merger.
Cash payments made pursuant to the merger, including any cash paid to a
stockholder who properly exercises dissenters' rights, will be reported to Excel
Technology stockholders and the Internal Revenue Service to the extent required
by the Internal Revenue Code and applicable regulations. These amounts will
ordinarily not be subject to withholding of U.S. federal income tax. However, a
backup withholding of the tax at a rate of 28% may apply to a stockholder who
fails to supply Excel Technology or U.S. Bank, as payment agent, with the
stockholder's taxpayer identification number or has received notice from the
Internal Revenue Service of a failure to report all interest and dividends
required to be shown on the stockholder's federal income tax returns.
Accordingly, each Excel Technology stockholder will be asked to provide a
correct taxpayer identification number on a Substitute Form W-9 which is to be
included in the appropriate letter of transmittal for the shares of Excel
Technology common stock.
DELISTING AND DEREGISTRATION OF EXCEL TECHNOLOGY COMMON STOCK
Following the completion of the merger, our common stock will be
delisted from the Nasdaq National Market and deregistered under the Exchange
Act, and we will no longer file periodic reports with the Securities Exchange
Commission.
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REGULATORY APPROVALS
Under the HSR Act and related rules, Excel Technology and Coherent may
not complete the merger until the expiration of a 30-day waiting period
following the filing of notification reports with the Department of Justice and
the Federal Trade Commission by Coherent and Excel Technology, unless a request
for additional information or documentary material is received from the Federal
Trade Commission or the Department of Justice or unless early termination of the
waiting period is granted. If, within the initial 30-day waiting period, either
the Department of Justice or the Federal Trade Commission requests additional
information or documentary material concerning the merger, then the waiting
period will be extended until the 30th calendar day after the date of
substantial compliance with the request by both parties, unless earlier
terminated by the Federal Trade Commission or Department of Justice. Only one
extension of the waiting period pursuant to a request for additional information
is authorized by the HSR Act. Thereafter, the waiting period may be extended
only by court order or with the consent of the parties.
THE MERGER AGREEMENT
The following summary describes the material provisions of the merger
agreement. This summary does not purport to be complete and may not contain all
of the information about the merger agreement that is important to you. The
following summary is qualified in its entirety by reference to the complete text
of the merger agreement, which is attached to this proxy statement as Annex A.
We encourage you to read it carefully in its entirety for a more complete
understanding of the merger agreement.
THE MERGER
Merger Sub, a wholly owned subsidiary of Coherent, will merge with an
into Excel Technology with Excel Technology surviving as a wholly owned
subsidiary of Coherent. Merger Sub was created solely for the purpose of the
merger and has no significant assets and no operations of its own.
EFFECTIVE TIME OF THE MERGER
The merger will become effective when Excel Technology and Coherent
file a certificate of merger with the Secretary of State of the State of
Delaware (or at such later time as may be agreed upon in writing by Excel
Technology and Coherent and specified in the certificate of merger), which
filing will take place on the day of the closing of the merger. The closing of
the merger will take place no later than the second business day after the
satisfaction or waiver of all of the closing conditions set forth in the merger
agreement or at such other time as Excel Technology and Coherent agree upon in
writing.
TREATMENT OF OUR COMMON STOCK AND STOCK OPTIONS IN THE MERGER
COMMON STOCK. At the effective time of the merger, each issued and
outstanding share of our common stock will be cancelled and converted into the
right to receive $30.00 in cash, without interest (other than shares held by our
stockholders exercising dissenters' rights to appraisal).
STOCK OPTIONS. Immediately prior to and contingent upon the
effectiveness of the merger, each outstanding stock option (all of which are
vested or will vest as a result of the merger) having an exercise price of less
than $30.00 per share will be purchased by Excel Technology for a cash payment
equal to the amount by which $30.00 per share exceeds the exercise price per
share for each share of our common stock subject to the option multiplied by the
number of shares issuable upon the exercise in full of the option.
EXCHANGE AND PAYMENT PROCEDURES
At or prior to the effective time of the merger, Coherent will deposit
an amount of cash sufficient to pay the merger consideration to each of our
stockholders with a payment agent. As promptly as reasonably practicable after
the effective time, the payment agent will mail a letter of transmittal and
instructions to the Excel Technology stockholders. The letter of transmittal and
instructions will instruct you how to surrender Excel Technology common stock
certificates in exchange for the merger consideration.
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You will not be entitled to receive the merger consideration until you
surrender your Excel Technology stock certificate or certificates to the payment
agent, together with a duly completed and executed letter of transmittal.
No interest will be paid or will accrue on the cash payable upon
surrender of the certificates. Coherent or the payment agent will be entitled to
deduct and withhold, and pay to the appropriate taxing authorities, any
applicable taxes from the merger consideration. Any sum which is withheld and
paid to a taxing authority by the payment agent will be deemed to have been paid
to the person to whom the consideration would otherwise have been paid.
None of the payment agent, Excel Technology or Coherent will be liable
to any person for any cash delivered to a public official under any applicable
abandoned property, escheat or similar law. Any portion of the merger
consideration deposited with the payment agent that remains undistributed to the
holders of certificates evidencing shares of our common stock for nine months
after the effective time of the merger, will be delivered to the surviving
corporation to be held in trust for the holders. Holders of certificates who
have not surrendered their certificates prior to the delivery of the funds to
the surviving corporation may only look to the surviving corporation for the
payment of the merger consideration.
If you have lost a certificate, or if it has been stolen or destroyed,
then before you will be entitled to receive the merger consideration, you will
have to make an affidavit of the loss, theft or destruction before the payment
agent issues the cash constituting the merger consideration and Coherent may, in
its discretion and as a condition precedent to the issuance of the cash, require
you to post a bond in an amount as it may reasonably direct as indemnity against
any claim that may be made against Coherent, Excel Technology or the payment
agent.
In all cases, the merger consideration will be paid only in accordance
with the procedures set forth in the merger agreement and letter of transmittal.
REPRESENTATIONS AND WARRANTIES
We make various representations and warranties to Coherent and Merger
Sub in the merger agreement. Our representations and warranties relate to, among
other things:
o corporate organization, good standing, power to do business
and subsidiaries;
o our capital structure;
o our corporate power and authority to enter into the merger
agreement and to complete the transactions contemplated by the
merger agreement;
o the absence of violations of or conflicts with our governing
documents, applicable law or certain agreements as a result of
entering into the merger agreement and completing the merger;
o the required consents and approvals of governmental entities
in connection with the transactions contemplated by the merger
agreement;
o our Securities and Exchange Commission filings since December
31, 2001, including the financial statements contained in
those filings, and the establishment and maintenance of
disclosure controls and procedures and a system of internal
control over financial reporting;
o the absence of certain changes or events since September 30,
2005;
o the proper preparation and timely filing of tax returns and
timely payment of taxes;
o our intellectual property;
o compliance with applicable laws; possession of necessary
governmental authorizations;
o litigation;
o disclosure of brokers' and finder's fees;
o disclosure of transactions with affiliates;
o our employee benefit plans and agreements and employment and
labor matters;
o title to our properties;
25
o environmental matters;
o disclosure of, and the absence of a default under, material
contracts;
o accuracy of information supplied for the proxy statement in
connection with the merger;
o board of directors approval of the merger agreement and its
recommendation that our stockholders adopt the merger
agreement;
o the receipt by our board of directors of a fairness opinion
from our financial advisor; and
o the inapplicability of state anti-takeover statutes and
regulations to the merger.
The merger agreement also contains various representations and
warranties made by Coherent and Merger Sub to us. The representations and
warranties relate to, among other things:
o their corporate organization, good standing, power to do
business and Merger Sub;
o their corporate power and authority to enter into the merger
agreement and to complete the transactions contemplated by the
merger agreement;
o the absence of violations of or conflicts with their governing
documents, applicable law or certain agreements as a result of
entering into the merger agreement and completing the merger;
o the required consents and approvals of governmental entities
in connection with the transactions contemplated by the merger
agreement;
o Coherent's Securities and Exchange Commission filings for the
fiscal year ended September 30, 2005 and the fiscal quarter
ended December 31, 2005;
o accuracy of information supplied for the proxy statement in
connection with the merger;
o board of directors approval of the merger agreement;
o absence of operations of Merger Sub other than in connection
with the merger;
o the availability of cash at closing to pay the merger
consideration.
The representations and warranties of each of the parties to the merger
agreement will expire upon the effective time of the merger.
The representations and warranties of each of the parties to the merger
agreement have been made solely for the benefit of the other party or parties,
as applicable, to the merger agreement, and such representations and warranties
should not be relied on by any other person. In addition, our representations
and warranties were made as of a specified date, may be qualified by a standard
of materiality different from what might be viewed as material to stockholders,
may have been used for the purpose of allocating risk between the respective
parties rather than establishing matters as facts, or are qualified by the
information in the disclosure schedules that we have delivered to Coherent in
connection with signing the merger agreement. The disclosure schedules referred
to above contain information (including information that has been included in
our prior public disclosures, as well as potential additional non-public
information) that modifies, qualifies and creates exceptions to the
representations and warranties set forth in the merger agreement, regardless of
whether an exception is noted. Accordingly, you should not rely on the
representations and warranties as current characterizations of factual
information about us, Coherent or Merger Sub. Moreover, information concerning
the subject matter of the representations and warranties may have changed since
the date of the merger agreement, which subsequent information may or may not be
fully reflected in our public disclosures.
CONDUCT OF BUSINESS OF EXCEL TECHNOLOGY PENDING THE MERGER
We have agreed that prior to completion of the merger, unless Coherent
otherwise consents in writing, we will conduct our business in the ordinary
course of business consistent with past practice, continue to pay our debts and
taxes when due, and use all reasonable efforts consistent with past practice, to
preserve intact our business organization, keep available the services of our
present executive officers and employees, and preserve our relationships with
customers, suppliers, licensors, licensees and other persons with whom we do
business consistent with our past practices.
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We have also agreed that prior to the merger, subject to certain
exceptions or unless Coherent gives its prior written consent, we will not, nor
will we permit any of our subsidiaries to, do any of the following:
o enter into a new line of business;
o declare or pay dividends or other distributions on capital
stock, or split, combine, reclassify or otherwise issue
capital stock, except for any such transaction in the ordinary
course of business consistent with past practice by a wholly
owned subsidiary that remains a wholly owned subsidiary;
o purchase, redeem or acquire any of our capital stock or the
capital stock of any of our subsidiaries;
o issue, sell, pledge or otherwise encumber any capital stock or
other voting securities or other securities convertible into
capital stock or other voting securities, except: issuances on
exercise of outstanding options and limited grants of new
options in the ordinary course of business consistent with
past practice;
o amend our governing documents or those of our subsidiaries;
o acquire by merger, consolidation, purchase of equity or asset
purchase any business or any party or division thereof;
o enter into any joint venture, strategic partnership or
alliance;
o sell, lease, license or encumber any assets, except for the
sale, license, encumbrance or disposition of property or
assets which are not material to us or in the ordinary course
of business;
o make any loans, advances or capital contributions to, or
investments in, any other person, except for loans to or
investments in any of our subsidiaries, employee loans or
advances for expenses in the ordinary course of business
consistent with past practice;
o change our methods or principles of accounting, except as
required by U.S. generally accepted accounting principles;
o make any tax election or accounting method change reasonably
likely to materially adversely affect our tax liability or tax
attributes, or settle any material income tax liability or
consent to any extension or waiver of any limitation period
with respect to taxes;
o revalue any assets;
o pay or settle liabilities or litigation other than in the
ordinary course of business and requiring monetary payment not
in excess of certain specified thresholds or fail to enforce
any confidentiality or similar agreement;
o make certain changes in employee compensation, employee plans,
company options or employment agreements;
o grant any exclusive rights with respect to our intellectual
property;
o enter into contracts binding us, the surviving corporation, or
Coherent (after the completion of the merger) to any
noncompetition, exclusivity or similar restrictions;
o enter into any agreement that would give a third party after
the merger any right to any intellectual property or access to
any source code;
o hire employees other than in the ordinary course of business;
o incur any indebtedness or guarantee any indebtedness of
another person, issue any debt securities or other rights to
acquire any debt securities, guarantee any debt securities of
another person, or enter into an agreement to maintain any
financial statement condition of any other person, or enter
into any arrangement having the economic effect of any of the
foregoing, except in the ordinary course of business
consistent with past practice;
o make any payments outside of the ordinary course of business
or capital expenditure beyond those budgeted;
o amend adversely or terminate any material contract or waive or
assign any rights under a material contract other than in the
ordinary course of business consistent with past practice;
o enter into any contracts requiring payments in the aggregate
of more than $1,500,000 individually, or $5,000,000 in the
aggregate; or
o agree in writing or otherwise to take any of the actions
listed above.
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STOCKHOLDERS MEETING AND DUTY TO RECOMMEND
We have agreed to call a meeting of our stockholders promptly following
the execution of the merger agreement (in any event within 45 days after this
proxy statement is cleared by the Securities and Exchange Commission, or if no
comments are received from the Securities and Exchange Commission on or prior to
the expiration of the ten day waiting period, within 55 days after the filing of
this proxy statement with the Securities and Exchange Commission) for the
purpose of obtaining adoption by our stockholders of the merger agreement and to
use all reasonable efforts to solicit the adoption of the merger agreement by
our stockholders. Our board of directors has unanimously agreed to recommend the
adoption of the merger agreement by our stockholders. Subject to certain
restrictions, prior to the adoption by our stockholders of the merger agreement
with Coherent, our board, however, is permitted to withhold, withdraw or modify,
in a manner adverse to Coherent, its recommendation, in each case if our board
determines in good faith, after consultation with its outside financial and
legal advisors, that the failure to do so would reasonably be expected to breach
its fiduciary duties under applicable law. See "The Merger-The Merger
Agreement-Change of Recommendation" on page 28 for more details on our board of
directors' rights to withdraw its recommendation in any manner adverse to
Coherent.
NO SOLICITATION OF TRANSACTIONS
The merger agreement contains detailed provisions prohibiting us from
seeking an alternative transaction to the merger. Under these "no solicitation"
provisions, we agree that we may not, subject to specific exceptions described
below, directly or indirectly:
o solicit, initiate, encourage, knowingly facilitate or induce
any inquiry with respect to, or the making, submission or
announcement of, any acquisition proposal (as described
below);
o participate in any discussions or negotiations regarding, or
furnish to any person any nonpublic information with respect
to, or take any other action to facilitate any inquiries or
the making of any proposal that constitutes or may reasonably
be expected to lead to, any acquisition proposal;
o engage in discussions with any person with respect to any
acquisition proposal, except as to the existence of these "no
solicitation" provisions;
o approve, endorse or recommend any acquisition proposal;
o release any third party from any confidentiality or standstill
agreement, or fail to enforce or grant any waiver, consent or
request to, any acquisition proposal under such agreement; or
o enter into any letter of intent or other agreement related to
any acquisition proposal.
For purposes of the merger agreement, an "acquisition proposal" is any
offer or proposal with respect to Excel Technology or its subsidiaries relating
to any of the following:
o the acquisition by a third party or group unrelated to
Coherent of more than a 10% interest in our outstanding voting
securities or those of any of our subsidiaries;
o any tender offer or exchange offer that would result in a
third party or group unrelated to Coherent beneficially owning
securities representing 10% or more of our outstanding voting
securities or those of any of our subsidiaries;
o any merger, consolidation, business combination or similar
transaction;
o any sale, lease (other than in the ordinary course of
business), exchange, transfer, license (other than in the
ordinary course of business), acquisition or disposition of
more than 10% of our consolidated assets; or
o any liquidation or dissolution of Excel Technology.
Under the merger agreement, we agreed to cease all existing activities,
discussions or negotiations with any third parties conducted prior to February
20, 2006, with respect to any acquisition proposal.
As promptly as practicable (and in any event no later than 24 hours)
after our receipt of any acquisition proposal or any related request for
nonpublic information or inquiry, we must notify Coherent of the material terms
and conditions of the proposal, request or inquiry, the identity of the person
or group making the proposal, request or inquiry, and all related written
materials provided in connection with the proposal, request or inquiry. We also
28
agreed to provide Coherent with two (2) business days prior notice (or such
lesser prior notice as is provided to our board of directors) of any meeting of
our board of directors to discuss the acquisition proposal.
SUPERIOR OFFERS
If at any time prior to the adoption of the merger agreement by our
stockholders, we receive an unsolicited bona fide written acquisition proposal
that our board of directors determines in good faith, after consultation with
our outside legal counsel and our financial advisor, is or is reasonably likely
to result in a superior offer (as described below), then we may, but only if and
to the extent our board of directors reasonably determines in good faith, after
receipt of advice from our outside legal counsel, that the failure to provide
the information or enter into the negotiations would reasonably be expected to
result in a breach of fiduciary duties under applicable law, (a) furnish
nonpublic information to the third party making the proposal as long as (i)
before providing any nonpublic information, we give Coherent no less than 24
hours written notice of our intention to do so, and (ii) we receive from the
third party a customary confidentiality agreement, and we furnish any nonpublic
information provided to the third party at the same time to Coherent (to the
extent not previously provided to Coherent), and (b) enter into negotiations
with the third party as long as we give Coherent 24 hours prior written notice
thereof.
For purposes of the merger agreement, a superior offer is defined as an
unsolicited, bona fide written acquisition proposal (except that each reference
to 10% described above under the description of an acquisition proposal is
substituted by 50%) that the board of directors has in good faith concluded,
after consultation with our outside legal counsel and financial advisor, taking
into account among other things, all legal, financial, regulatory or other
aspects of the offer and the person making the offer, to be more favorable from
a financial point of view, to our stockholders than the terms of the merger
agreement with Coherent (taking into account all of the terms of any proposal by
Coherent to amend or modify the merger agreement) and reasonably capable of
being consummated without unreasonable delay.
CHANGE OF RECOMMENDATION
Solely in response to the receipt of a superior offer, our board of
directors is permitted to withhold, withdraw, modify or amend its unanimous
recommendation in favor of the merger and enter into a written agreement
memorializing such superior offer, and, in the case of a superior offer that is
a tender offer or exchange offer made directly to our stockholders, may
recommend that our stockholders accept the tender offer or exchange offer, if
all of the following conditions are met:
o a superior offer has been made and not withdrawn;
o our stockholders meeting has not yet occurred;
o we have (a) provided Coherent prior written notice stating
expressly (i) that we have received a superior offer, (ii) the
final terms and conditions of the superior offer and the
identity of the third party making the superior offer, and
(iii) that we intend to withhold, withdraw, amend or modify
our recommendation in favor of the merger with Coherent, and
the manner in which we intend to do so, (b) provided Coherent
all written materials delivered to the third person in
connection with the superior offer, and (c) made available to
Coherent all other information made available to the third
person in connection with the superior offer;
o our board of directors has concluded in good faith, after
receipt of advice of its outside legal counsel, that the
failure to change the recommendation or enter into an
agreement with respect to the superior offer is reasonably
likely to result in a breach of its fiduciary obligations to
our stockholders under applicable law;
o we have not breached our obligations with respect to the
stockholder meeting, non-solicitation of acquisition
proposals, notification of acquisition proposals, superior
offers and change of our board of directors' recommendation;
o at least two (2) business days shall have elapsed since we
gave Coherent notice of our intent to change our
recommendations;
o during such two day period, we engage in good faith
negotiations with Coherent with respect to adjustments to the
terms of the merger agreement that Coherent may suggest; and
29
o our board of directors, after consultation with our legal
counsel and financial advisor does not conclude that the
acquisition proposal no longer constitutes a superior offer.
Unless the merger agreement is terminated, our obligation to hold the
stockholders' meeting to adopt the merger agreement is not limited by the
receipt of any acquisition proposal, or by any change of recommendation, and we
cannot submit any acquisition proposal to our stockholders.
The merger agreement permits us and our board of directors to comply
with Rule 14d-9 and Rule 14e-2 under the Exchange Act, with regard to an
acquisition proposal that we receive.
If we enter into an agreement with respect to a superior offer, we may
terminate the merger agreement, subject to payment to Coherent of a $14,106,154
termination fee as further described under "The Merger -The Merger
Agreement-Termination" on page 31 and "Termination Fees" on page 32.
AGREEMENT TO USE COMMERCIALLY REASONABLE EFFORTS
We and Coherent have agreed to use all commercially reasonable efforts
to consummate the merger and any other transactions contemplated by the merger
agreement, including to cause the conditions of the merger to be satisfied,
obtain governmental approvals, defend any suits challenging the merger and
obtain third party consents, except that neither we nor Coherent will be
required to take any action of divestiture.
We and Coherent have also agreed to use all reasonable efforts to
obtain any antitrust regulatory approvals, including without limitation U.S.
antitrust approval.
CONDITIONS TO CLOSING OF THE MERGER
Each party's obligation to effect the merger is subject to the
satisfaction or waiver of various conditions, which include the following:
MUTUAL CONDITIONS OF EXCEL TECHNOLOGY AND COHERENT. Both our
obligation and Coherent's to complete the merger are subject to the satisfaction
or waiver of the following conditions:
o our stockholders adopt the merger agreement;
o no governmental entity shall have enacted or issued
any statute, regulation, order, decree, injunction or
other order which makes illegal or otherwise
prohibits or prevents the merger; and
o the waiting periods (and any extensions thereof)
under the HSR Act with respect to the merger have
expired or been terminated early.
ADDITIONAL CONDITIONS OF EXCEL TECHNOLOGY. Our obligation to
complete the merger is also subject to the satisfaction or waiver of the
following conditions:
o the truth and correctness of Coherent's and Merger
Sub's representations and warranties in all material
respects, except as would not have a material adverse
effect on Coherent at the closing;
o the performance, in all material respects, by
Coherent and Merger Sub of their respective covenants
and agreements in the merger agreement; and
o no change, event, violation, inaccuracy,
circumstances or effect that has had or would
reasonably be expected to have a material adverse
effect on Coherent has occurred and is continuing.
30
ADDITIONAL CONDITIONS OF COHERENT. The obligation of Coherent
to complete the merger is also subject to the satisfaction or waiver of the
following conditions:
o our representations and warranties are true and
correct, except (other than with respect to our
representations and warranties concerning our capital
structure and approval of the merger agreement by our
board of directors which shall be true and correct in
all material respects), as would not have a material
adverse effect on us at the closing;
o our performance, in all material respects, of our
covenants and agreements in the merger agreement;
o no change, event, violation, inaccuracy, circumstance
or effect that has had or would reasonably be
expected to have a material adverse effect on us has
occurred and is continuing;
o there is no pending or threatened action by any
governmental authority (a) challenging or seeking to
restrain or prohibit the completion of the merger,
the effect of which if obtained would make the merger
illegal or otherwise prohibit consummation of the
merger, or (b) seeking to require us or Coherent to
divest any assets; and
o certain of our non-executive employees enter into a
payment agreement with Coherent regarding the payment
of retention bonuses tied to continued employment
with Coherent.
TERMINATION
The merger agreement may be terminated and the merger may be abandoned
at any time prior to the effective time of the merger, and, except as provided
below, whether before or after stockholder approval has been obtained, as
follows:
o by mutual written consent of the parties;
o by either us or Coherent;
o if the closing of the merger has not
occurred by July 31, 2006 (or October 31,
2006 if it is not consummated because there
is in effect an order of a governmental
entity that has the effect of making the
merger illegal or otherwise prohibiting the
consummation of the merger, or the waiting
period (or any extension thereof) to obtain
antitrust approval has not expired or been
terminated early, or there is pending or
threatened any action by any governmental
entity (a) challenging or seeking to
restrain or prohibit completion of the
merger, the effect of which if obtained
would make the merger illegal or otherwise
prohibit consummation of the merger, or (b)
seeking to require us or Coherent to divest
any assets), provided that the right to
terminate the merger agreement for this
reason will not be available to a party
whose failure to comply with the merger
agreement was the principal cause of the
failure to close the merger by that date);
o if any permanent injunction or other order
of a court or other competent authority
preventing the consummation of the merger
has become final and nonappealable;
o if our stockholders do not adopt the merger
agreement, provided that the right to
terminate the merger agreement for this
reason will not be available to us if the
failure to obtain stockholder approval was
caused by our action or failure to act and
that action or failure to act was a breach
of the merger agreement; or
o upon a breach by the other party of a
representation, warranty or covenant, or if
any representation or warranty of the other
party shall have become untrue, if as a
result thereof the closing conditions
regarding accuracy of the representations
and warranties and compliance with the
covenants would not be satisfied as of the
time of such breach or as of the time such
representation or warranty became untrue and
the breach is incapable of being cured or
has not been cured within 30 days after
written notice, provided that the
terminating party has not materially
breached the merger agreement;
o if an event has occurred which has a
material adverse effect on the other party;
31
o by Coherent, if:
o any of the following has occurred (each of
which is referred to as a "triggering
event"):
o our board of directors withdraws or
amends in a manner adverse to
Coherent the recommendation in
favor of the adoption of the merger
by our stockholders;
o we fail to include such
recommendation in this proxy
statement;
o our board of directors does not
reaffirm such recommendation within
five (5) days after Coherent
requests in writing that such
recommendation be reaffirmed;
o our board of directors approves or
recommends an alternative
acquisition proposal;
o we enter into a letter of intent or
any agreement accepting an
alternative acquisition proposal;
o we do not send our stockholders a
statement that our board of
directors recommends rejection of a
tender or exchange offer commenced
by a party unrelated to Coherent
within 10 business days of the
announcement of any tender or
exchange offer for our shares; or
o we have materially breached in any material
respect our obligations under the merger
agreement with respect to non-solicitation
of acquisition proposals, notification of
unsolicited acquisition proposals, superior
offers or change of recommendation.
o by us if, prior to the adoption of the merger agreement by our
stockholders, in connection with an acquisition proposal we
wish to accept, (a) we have not willfully breached our
obligations under the merger agreement with respect to
non-solicitation of acquisition proposals, notification of
unsolicited acquisition proposals, superior offers or change
of recommendation, (b) the board of directors has determined
that the acquisition proposal constitutes a superior offer,
and (c) we pay Coherent a termination fee of $14,106,154.
FEES AND EXPENSES
The merger agreement provides, generally, that regardless of whether
the merger is consummated, all fees and expenses incurred by the parties in
connection with the merger will be borne by the party incurring such fees and
expenses. We will be responsible to pay all fees and expenses incurred in
relation to the printing and filing (with the Securities and Exchange
Commission) of this Proxy Statement, and Coherent is responsible to pay the
filing fee for the initial Notification and Report forms filed with the Federal
Trade Commission and the Department of Justice under the HSR Act. If the merger
agreement is terminated by Coherent because we breached our obligations under
the merger agreement with respect to non-solicitation, notification of
unsolicited acquisition proposals, superior offers or changes of our board of
directors' recommendation, then we will be required to pay all expenses incurred
by Coherent and Merger Sub prior to the termination of the merger agreement, up
to a maximum of $1,880,821.
TERMINATION FEES
We are to pay Coherent a termination fee of $14,106,154, if the merger
agreement is terminated under certain circumstances.
If we terminate the merger agreement because we accept a superior offer
or Coherent terminates the merger agreement because a triggering event (as
described above) has occurred or because we materially breached our obligations
under the merger agreement with respect to non-solicitation, notification of
unsolicited acquisition proposals, superior offers or changes of our board of
directors' recommendation, we must pay the termination fee to
32
Coherent no later than two business days after we terminate the merger
agreement. In the latter case, the termination fee is to be reduced by the
expenses paid to Coherent as discussed above.
If an alternative acquisition proposal has been publicly disclosed at
the date the merger agreement is terminated, and within 12 months following the
termination of this agreement an acquisition of the Company is consummated or
the Company enters into an agreement providing for the acquisition of the
Company and such acquisition is consummated within 18 months of the termination
of the merger agreement, then within two (2) business days after the
consummation of the acquisition, we must pay the termination fee to Coherent if
the merger agreement was terminated as follows:
o by either us or Coherent because the merger is not
consummated by July 31, 2006 (or October 31, 2006 if
it is not consummated because of an order of a
governmental entity that has the effect of making the
merger illegal or otherwise prohibiting the
consummation of the merger, or the waiting period (or
any extension thereof) to obtain antitrust approval
has not expired or been terminated early, or there is
pending or threatened any action by a governmental
entity (a) challenging or seeking to restrain or
prohibit completion of the merger, the effect of
which if obtained would make the merger illegal or
otherwise prohibit consummation of the merger, or (b)
seeking to require us or Coherent to divest any
assets;
o by either us or Coherent because our stockholders
fail to approve the transaction;
o by Coherent due to our breach of our representations,
warranties, or covenants that would result in the
failure to satisfy the closing conditions relating to
our representations, warranties or covenants, which
we fail to cure within the specified period.
AMENDMENT, WAIVER AND EXTENSION OF THE MERGER AGREEMENT
The merger agreement may be amended by mutual written consent of the
parties, subject to applicable laws. Any amendment proposed after obtaining the
required approval of our stockholders may not be made without the further
approval of our stockholders if stockholder approval is required by applicable
law or Nasdaq rules.
At any time prior to completion of the merger, either we or Coherent
may extend the other's time for the performance of any of the obligations or
other acts under the merger agreement, waive any inaccuracies in the other's
representations and warranties and waive compliance by the other with respect to
any of the agreements or conditions contained in the merger agreement.
33
PROPOSAL NO. 2: GRANTING OF PROXY TO ADJOURN OR POSTPONE THE SPECIAL MEETING
If we fail to receive a sufficient number of votes to approve Proposal
No. 1 to adopt the merger agreement, we may propose to adjourn the special
meeting for the purpose of soliciting additional proxies to approve such
Proposal No. 1. We will not propose to adjourn or postpone the special meeting
if there are sufficient votes to approve Proposal No. 1. If Proposal No. 2 to
adjourn or postpone our special meeting for the purpose of soliciting additional
proxies is submitted to our stockholders for approval, the affirmative vote of
the holders of a majority of our outstanding shares of common stock, present in
person or represented by proxy at the special meeting and entitled to vote
thereon, that are voted for or against Proposal No. 2 will be required.
THE EXCEL TECHNOLOGY BOARD OF DIRECTORS RECOMMENDS THAT OUR
STOCKHOLDERS VOTE TO GRANT THE PERSONS NAMED AS PROXIES DISCRETIONARY AUTHORITY
TO VOTE TO ADJOURN OR POSTPONE THE SPECIAL MEETING, IF NECESSARY, TO SOLICIT
ADDITIONAL PROXIES IF THERE ARE NOT SUFFICIENT VOTES TO APPROVE PROPOSAL NO. 1
TO ADOPT THE MERGER AGREEMENT.
MARKET PRICE OF EXCEL TECHNOLOGY COMMON STOCK AND DIVIDENDS
Our common stock is quoted on The Nasdaq National Market under the
symbol "XLTC." The following table sets forth the high and low reported closing
sales prices per share of our common stock on The Nasdaq National Market.
PRICE RANGE OF
EXCEL TECHNOLOGY
COMMON STOCK
------------
HIGH LOW
---- ---
Fiscal Year Ended December 31, 2004
1st Quarter $36.84 $29.58
2nd Quarter 35.80 29.90
3rd Quarter 33.65 23.52
4th Quarter 28.95 23.40
Fiscal Year Ended December 31, 2005
1st Quarter 26.66 21.04
2nd Quarter 27.21 20.13
3rd Quarter 26.77 22.44
4th Quarter 26.49 23.03
Fiscal Year Ending December 31, 2006
1st Quarter (through _____________, 2006)
We have never paid dividends on our capital stock.
The closing sale price of our common stock on The Nasdaq National
Market on February 17, 2006, which was the last trading day prior to our
announcement of the merger, was $28.34 per share. On March ___, 2006, the last
trading day before the date of this proxy statement, the closing price for Excel
Technology common stock on The Nasdaq National Market was $_____. You are
encouraged to obtain current market quotations for Excel Technology common stock
in connection with voting your shares.
As of March ___, 2006, the last trading day before the date of this
proxy statement, there were ____ record holders of Excel Technology common
stock.
34
If the merger is completed, Excel Technology common stock will be
delisted from The Nasdaq National Market, and there will be no further public
market for shares of Excel Technology common stock. Each share of Excel
Technology common stock will be cancelled and converted into the right to
receive $30.00 in cash, except as discussed in "Dissenters' Rights of Appraisal"
on page 37.
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of February 13,
2006, with respect to the beneficial ownership of our common stock by (i) each
director of Excel Technology, (ii) each of our executive officers, (iii) all of
our directors and executive officers as a group and (iv) each person known by us
to own more than five percent of our common stock.
NAME NUMBER PERCENTAGE
(AND ADDRESS OF 5% HOLDERS) OWNED(1) OF CLASS
- --------------------------- -------- ----------
CAM North America, LLC 1,806,558(2) 15%
Smith Barney Fund Management LLC &
Solomon Brothers Asset Management, Inc.
399 Park Avenue
New York, NY 10022
Columbia Wanger Asset Management, L.P., 804,000(3) 6.7%
WAM Acquisition GP, Inc. &
Columbia Acorn Trust
227 West Monroe Street, Suite 3000
Chicago, IL 60606
Royce & Associates, LLC 709,700(4) 5.9%
1414 Avenue of the Americas
New York, NY 10019
J. Donald Hill 617,100(5) 4.9%
Antoine Dominic 528,825(6) 4.2%
Alice Varisano 40,000(7) *
Steven Georgiev 40,000(8) *
Howard S. Breslow 92,000(9) *
Donald E. Weeden 50,000(10) *
Ira Lamel 60,000(11) *
Executive officers and directors
as a group (seven persons) 1,427,925(12) 10.8%
* Less than 1%.
** Based on the number of shares outstanding on the Record Date.
35
(1) Unless otherwise indicated below, all shares are owned beneficially and of
record.
(2) Information with respect to CAM North America, LLC ("CAM"), Smith Barney
Fund Management LLC ("SBFM") and Solomon Brothers Asset Management, Inc.
("SBAM") is based on the Schedule 13G, dated January 9, 2006, filed
jointly by those parties. Of the total shares reported, CAM has shared
voting and dispositive power with respect to 1,095,708 shares, SBFM has
shared voting and dispositive power with respect to 705,100 shares, and
SBAM has shared voting and dispositive power with respect to 5,750 shares.
(3) Information with respect to Columbia Wanger Asset Management, L.P.
("WAM"), WAM Acquisition GP, Inc., the general partner of WAM ("WAM GP")
and Columbia Acorn Trust ("Acorn") is based on the Schedule 13G, dated
February 13, 2006, filed by those parties. Of the total shares reported,
WAM and WAM GP have shared voting and dispositive power with respect to
804,000 shares and Acorn has shared voting and dispositive power with
respect to 625,000 shares.
(4) Information with respect to Royce & Associates, LLC ("Royce") is based on
the Schedule 13G, dated January 20, 2006, filed by that party. Of the
total shares reported, Royce has sole voting and dispositive power with
respect to 709,700 shares.
(5) Includes 436,667 shares of Common Stock underlying exercisable stock
options.
(6) Includes 489,793 shares of Common Stock underlying exercisable stock
options.
(7) Consists of 40,000 shares of Common Stock underlying exercisable stock
options.
(8) Consists of 40,000 shares of Common Stock underlying exercisable stock
options.
(9) Includes 80,000 shares of Common Stock underlying exercisable stock
options.
(10) Consists of 50,000 shares of Common Stock underlying exercisable stock
options.
(11) Consists of 60,000 shares of Common Stock underlying exercisable stock
options.
(12) Includes 1,196,460 shares of Common Stock underlying exercisable stock
options.
36
DISSENTERS' RIGHTS OF APPRAISAL
Under Delaware law, you have the right to demand appraisal in
connection with the merger and to receive, instead of the merger consideration,
payment in cash for the fair value of your Excel Technology common stock as
determined by the Delaware Court of Chancery. Excel Technology stockholders
electing to exercise appraisal rights must comply with the provisions of Section
262 of the Delaware General Corporation law in order to perfect their rights.
Excel Technology will require strict compliance with the statutory procedures.
The following is intended as a brief summary of the material provisions
of the Delaware statutory procedures required to be followed by a stockholder in
order to demand and perfect appraisal rights. This summary, however, is not a
complete statement of all applicable requirements and is qualified in its
entirety by reference to Section 262 of the Delaware General Corporation Law,
the full text of which appears in Annex C to this proxy statement.
Section 262 requires that stockholders be notified not less than 20
days before the special meeting to vote on the adoption of the merger agreement
that appraisal rights will be available. A copy of Section 262 must be included
with that notice. This proxy statement constitutes our notice to our
stockholders of the availability of appraisal rights in connection with the
merger in compliance with the requirements of Section 262. If you wish to
consider exercising your appraisal rights, you should carefully review the text
of Section 262 contained in Annex C since failure to timely and properly comply
with the requirements of Section 262 will result in the loss of your appraisal
rights under Delaware law.
If you elect to demand appraisal of your shares, you must satisfy each
of the following conditions:
o You must deliver to Excel Technology a written demand for
appraisal of your shares before the vote with respect to the
merger agreement is taken at the special meeting. This written
demand for appraisal must be in addition to and separate from
any proxy or vote abstaining from or voting against the
adoption of the merger agreement. Voting against or failing to
vote for the adoption of the merger agreement by itself does
not constitute a demand for appraisal within the meaning of
Section 262. Failure to vote against adoption of the merger
agreement will not constitute a waiver of your appraisal
rights.
o You must not vote in favor of the adoption of the merger
agreement. A vote in favor of the adoption of the merger
agreement, by proxy or in person, will constitute a waiver of
your appraisal rights in respect of the shares so voted and
will nullify any previously filed written demands for
appraisal.
o You must continuously hold the shares from the date of making
the demand through the effective time of the merger since
appraisal rights will be lost if the shares are transferred
before the effective time of the merger.
o You must file a petition in the Chancery Court demanding a
determination of the fair value of the shares within 120 days
after the effective time of the merger.
If you fail to comply with any of these conditions and the merger is
completed, you will be entitled to receive the cash payment for your shares of
Excel Technology common stock as provided for in the merger agreement, but you
will have no appraisal rights with respect to your shares of Excel Technology
common stock. A proxy card which is signed and does not contain voting
instructions will, unless revoked, be voted "FOR" the adoption of the merger
agreement and will constitute a waiver of your right of appraisal and will
nullify any previous written demand for appraisal.
All demands for appraisal should be in writing and addressed to Excel
Technology, Inc. 41 Research Way, East Setauket, NY 11733, Attention: Secretary,
and must be delivered before the vote on the merger agreement is taken at the
special meeting, and should be executed by, or on behalf of, the record holder
of the shares in respect of which appraisal is being demanded. The demand must
reasonably inform Excel Technology of the identity of the stockholder and the
intention of the stockholder to demand appraisal of his, her or its shares.
37
To be effective, a demand for appraisal by a holder of Excel Technology
common stock must be made by, or in the name of, the registered stockholder,
fully and correctly, as the stockholder's name appears on his or her stock
certificate(s). The demand should specify the holder's name and mailing address
and the number of shares registered in the holder's name and must state that the
person intends thereby to demand appraisal of the holder's shares in connection
with the merger. BENEFICIAL OWNERS WHO DO NOT ALSO HOLD THE SHARES OF RECORD MAY
NOT DIRECTLY MAKE APPRAISAL DEMANDS TO EXCEL TECHNOLOGY. THE BENEFICIAL HOLDER,
IN THESE CASES, MUST HAVE THE REGISTERED OWNER SUBMIT THE REQUIRED DEMAND IN
RESPECT OF THOSE SHARES. If shares are owned of record in a fiduciary capacity,
such as by a trustee, guardian or custodian, execution of a demand for appraisal
should be made in that capacity; and if the shares are owned of record by more
than one person, as in a joint tenancy or tenancy in common, the demand should
be executed by or for all joint owners. An authorized agent, including an
authorized agent for two or more joint owners, may execute the demand for
appraisal for a stockholder of record; however, the agent must identify the
record owner or owners and expressly disclose the fact that, in executing the
demand, he or she is acting as agent for the record owner. A record owner, such
as a broker, who holds shares as a nominee for others may exercise his or her
right of appraisal with respect to the shares held for one or more beneficial
owners, while not exercising this right for other beneficial owners. In that
case, the written demand should state the number of shares as to which appraisal
is sought. Where no number of shares is expressly mentioned, the demand will be
presumed to cover all shares held in the name of the record owner.
IF YOU HOLD YOUR SHARES OF EXCEL TECHNOLOGY COMMON STOCK IN A BROKERAGE
ACCOUNT OR IN OTHER NOMINEE FORM AND YOU WISH TO EXERCISE APPRAISAL RIGHTS, YOU
SHOULD CONSULT WITH YOUR BROKER OR THE OTHER NOMINEE TO DETERMINE THE
APPROPRIATE PROCEDURES FOR THE MAKING OF A DEMAND FOR APPRAISAL BY THE NOMINEE.
Within 10 days after the effective time of the merger, the surviving
corporation must give written notice that the merger has become effective to
each Excel Technology stockholder who has properly filed a written demand for
appraisal and who did not vote in favor of the merger agreement. At any time
within 60 days after the effective time, any stockholder who has demanded an
appraisal has the right to withdraw the demand and to accept the cash payment
specified by the merger agreement for the stockholder's shares of Excel
Technology common stock. Within 120 days after the effective time, either the
surviving corporation or any stockholder who has complied with the requirements
of Section 262 may file a petition in the Delaware Court of Chancery demanding a
determination of the fair value of the shares held by all stockholders entitled
to appraisal. The surviving corporation has no obligation and has no present
intention to file a petition in the event there are dissenting stockholders.
Accordingly, it is the obligation of the applicable stockholders to initiate all
necessary action to perfect their appraisal rights in respect of shares of Excel
Technology common stock within the time prescribed in Section 262. The failure
of a stockholder to file a petition within the period specified could nullify
the stockholder's previously written demand for appraisal.
If a petition for appraisal is duly filed by a stockholder and a copy
of the petition is delivered to the surviving corporation, the surviving
corporation will then be obligated, within 20 days after receiving service of a
copy of the petition, to provide the Chancery Court with a duly verified list
containing the names and addresses of all stockholders who have demanded an
appraisal of their shares and with whom agreements as to the value of their
shares have not been reached. After notice to dissenting stockholders, the
Chancery Court is empowered to conduct a hearing upon the petition, and to
determine those stockholders who have complied with Section 262 and who have
become entitled to the appraisal rights provided thereby. The Chancery Court may
require the stockholders who have demanded payment for their shares to submit
their stock certificates to the Register in Chancery for notation of the
pendency of the appraisal proceedings; and if any stockholder fails to comply
with that direction, the Chancery Court may dismiss the proceedings as to that
stockholder.
After determination of the stockholders entitled to appraisal of their
shares of Excel Technology common stock, the Chancery Court will appraise the
shares, determining their fair value exclusive of any element of value arising
from the accomplishment or expectation of the merger, together with a fair rate
of interest, if any, to be paid upon the amount determined to be the fair value.
When the value is determined, the Chancery Court will direct the payment of the
value, with interest thereon accrued during the pendency of the proceeding, if
the Chancery Court so determines, to the stockholders entitled to receive the
same, upon surrender by the holders of the certificates representing those
shares.
38
In determining fair value and, if applicable, a fair rate of interest,
the Chancery Court is required to take into account all relevant factors. YOU
SHOULD BE AWARE THAT THE FAIR VALUE OF YOUR SHARES AS DETERMINED UNDER SECTION
262 COULD BE MORE, THE SAME, OR LESS THAN THE VALUE THAT YOU ARE ENTITLED TO
RECEIVE UNDER THE TERMS OF THE MERGER AGREEMENT.
Costs of the appraisal proceeding may be imposed upon the surviving
corporation and the stockholders participating in the appraisal proceeding by
the Chancery Court as the Chancery Court deems equitable in the circumstances.
Upon the application of a stockholder, the Chancery Court may order all or a
portion of the expenses incurred by any stockholder in connection with the
appraisal proceeding, including, without limitation, reasonable attorneys' fees
and the fees and expenses of experts, to be charged pro rata against the value
of all shares entitled to appraisal. Any stockholder who had demanded appraisal
rights will not, after the effective time, be entitled to vote shares subject to
that demand for any purpose or to receive payments of dividends or any other
distribution with respect to those shares, other than with respect to payment as
of a record date prior to the effective time; however, if no petition for
appraisal is filed within 120 days after the effective time of the merger, or if
the stockholder delivers a written withdrawal of the stockholder's demand for
appraisal and an acceptance of the terms of the merger within 60 days after the
effective time of the merger, then the right of that stockholder to appraisal
will cease and that stockholder will be entitled to receive the cash payment for
shares of his, her or its Excel Technology common stock pursuant to the merger
agreement. Any withdrawal of a demand for appraisal made more than 60 days after
the effective time of the merger may only be made with the written approval of
the surviving corporation. Once a petition for appraisal has been filed, the
appraisal proceeding may not be dismissed as to any stockholder without the
approval of the Chancery Court.
Failure to comply with all of the procedures set forth in Section 262
will result in the loss of a stockholder's statutory appraisal rights. IN VIEW
OF THE COMPLEXITY OF SECTION 262, STOCKHOLDERS WHO MAY WISH TO DISSENT FROM THE
MERGER AND PURSUE APPRAISAL RIGHTS SHOULD CONSULT THEIR LEGAL ADVISORS.
MULTIPLE STOCKHOLDERS SHARING ONE ADDRESS
In accordance with Rule 14a-3(e)(1) under the Exchange Act, one proxy
statement will be delivered to two or more stockholders who share an address,
unless we have received contrary instructions from one or more of the
stockholders. We will deliver promptly upon written or oral request a separate
copy of the proxy statement to a stockholder at a shared address to which a
single copy of the proxy statement was delivered. Requests for additional copies
of the proxy statement, and requests that in the future separate proxy
statements be sent to stockholders who share an address, should be directed to
Excel Technology, Inc., 41 Research Way, East Setauket, NY 11733, Attention:
Investor Relations, telephone: (631) 784-6100. In addition, stockholders who
share a single address but receive multiple copies of the proxy statement may
request that in the future they receive a single copy by contacting us at the
address and phone number set forth in the prior sentence.
FUTURE STOCKHOLDER PROPOSALS
If the merger is completed, we will not hold a 2006 annual meeting of
stockholders. If the merger is not completed, you will continue to be entitled
to attend and participate in our stockholder meetings and we will hold a 2006
annual meeting of stockholders. To be eligible for consideration for inclusion
in the proxy statement and form of proxy for our 2006 annual meeting of
stockholders in accordance with Rule 14a-8 under the Securities Exchange Act of
1934, as amended, a stockholder proposal must have been received by November 7,
2005.
Stockholders who did not submit a proposal for inclusion in the Proxy
Statement, as described in the previous paragraph, but who intended to present a
proposal, nomination for director or other business for consideration at a 2006
annual meeting, were required to notify our Corporate Secretary of their
proposal, nomination or other business by no later than January 31, 2006.
39
OTHER MATTERS
At this time, we know of no other matters to be submitted at the
special meeting. If any other matters properly come before the special meeting,
it is the intention of the persons named in the enclosed proxy card to vote the
shares they represent as our board of directors may recommend.
It is important that your shares be represented at the special meeting,
regardless of the number of shares which you hold. Therefore, we urge you to
complete, sign, date and return the accompanying proxy card as promptly as
possible in the postage-prepaid envelope enclosed for that purpose or to vote
via the Internet or telephone.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We file annual, quarterly and current reports, proxy statements and
other information with the Securities and Exchange Commission, as does Coherent.
You may read and copy any reports, proxy statements or other information that we
and Coherent file with the Securities and Exchange Commission at the Securities
and Exchange Commission's public reference room at the following location:
Public Reference Room
100 F Street, N.E.
Room 1580
Washington, D.C. 20549
Please call the Securities and Exchange Commission at 1-800-SEC-0330
for further information on the public reference room. You may also obtain copies
of these filings at prescribed rates by writing to the Public Reference Section
of the Securities and Exchange Commission at the above address. These Securities
and Exchange Commission filings are also available to the public from document
retrieval services and the Internet website maintained by the SEC at
www.sec.gov.
You should rely only on the information contained in this proxy
statement to vote on the merger proposal. We have not authorized anyone to
provide you with information that is different from what is contained in this
proxy statement. This proxy statement is dated March , 2006. You should not
assume that the information contained in this proxy statement is accurate as of
any date other than that date. The mailing of this proxy statement to
stockholders does not create any implication to the contrary. This proxy
statement does not constitute a solicitation of a proxy in any jurisdiction
where, or to or from any person to whom, it is unlawful to make a proxy
solicitation.
If you have questions about the special meeting or the merger after
reading this proxy statement, or if you would like additional copies of this
proxy statement or the proxy card, you should contact:
Excel Technology, Inc.
41 Research Way
East Setauket, New York 11733
Phone: (631) 784-6100
40
ANNEX A
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
COHERENT, INC.,
SPIDER ACQUISITION CORPORATION
AND
EXCEL TECHNOLOGY, INC.
Dated as of February 20, 2006
TABLE OF CONTENTS
PAGE
----
ARTICLE I THE MERGER 1
1.1 THE MERGER..................................................................................................1
1.2 EFFECTIVE TIME; CLOSING.....................................................................................2
1.3 EFFECT OF THE MERGER........................................................................................2
1.4 CERTIFICATE OF INCORPORATION AND BYLAWS.....................................................................2
1.5 DIRECTORS AND OFFICERS......................................................................................3
1.6 EFFECT ON CAPITAL STOCK.....................................................................................3
1.7 SURRENDER OF CERTIFICATES...................................................................................4
1.8 NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK.........................................................6
1.9 LOST, STOLEN OR DESTROYED CERTIFICATES......................................................................6
1.10 DISSENTING SHARES...........................................................................................6
1.11 FURTHER ACTION..............................................................................................7
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY 7
2.1 ORGANIZATION; STANDING AND POWER; CHARTER DOCUMENTS; SUBSIDIARIES...........................................7
2.2 CAPITAL STRUCTURE...........................................................................................8
2.3 AUTHORITY; NON-CONTRAVENTION; NECESSARY CONSENTS...........................................................10
2.4 SEC FILINGS; FINANCIAL STATEMENTS; CONTROLS................................................................12
2.5 ABSENCE OF CERTAIN CHANGES OR EVENTS.......................................................................14
2.6 TAXES ..................................................................................................14
2.7 INTELLECTUAL PROPERTY......................................................................................17
2.8 COMPLIANCE; PERMITS........................................................................................22
2.9 LITIGATION.................................................................................................22
2.10 BROKERS' AND FINDERS' FEES; FEES AND EXPENSES..............................................................22
2.11 TRANSACTIONS WITH AFFILIATES...............................................................................23
2.12 EMPLOYEE BENEFIT PLANS.....................................................................................23
2.13 TITLE TO PROPERTIES........................................................................................26
2.14 ENVIRONMENTAL MATTERS......................................................................................27
2.15 CONTRACTS..................................................................................................29
2.16 DISCLOSURE.................................................................................................31
2.17 BOARD APPROVAL.............................................................................................32
2.18 FAIRNESS OPINION...........................................................................................32
2.19 TAKEOVER STATUTES..........................................................................................32
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ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB 32
3.1 ORGANIZATION; STANDING AND POWER; CHARTER DOCUMENTS; MERGER SUB............................................32
3.2 AUTHORITY; NON-CONTRAVENTION; NECESSARY CONSENTS...........................................................33
3.3 SEC FILINGS; FINANCIAL STATEMENTS..........................................................................34
3.4 DISCLOSURE.................................................................................................34
3.5 BOARD APPROVAL.............................................................................................35
3.6 NO PRIOR MERGER SUB OPERATIONS.............................................................................35
3.7 FINANCING..................................................................................................35
ARTICLE IV CONDUCT BY THE COMPANY PRIOR TO THE EFFECTIVE TIME 35
4.1 CONDUCT OF BUSINESS BY THE COMPANY.........................................................................35
ARTICLE V ADDITIONAL AGREEMENTS 39
5.1 PROXY STATEMENT............................................................................................39
5.2 MEETING OF COMPANY STOCKHOLDERS; BOARD RECOMMENDATION......................................................40
5.3 ACQUISITION PROPOSALS......................................................................................41
5.4 CONFIDENTIALITY; ACCESS TO INFORMATION; NO MODIFICATION OF REPRESENTATIONS, WARRANTIES OR COVENANTS........45
5.5 PUBLIC DISCLOSURE..........................................................................................46
5.6 REGULATORY FILINGS; COMMERCIALLY REASONABLE EFFORTS........................................................46
5.7 NOTIFICATION OF CERTAIN MATTERS............................................................................48
5.8 THIRD-PARTY CONSENTS.......................................................................................49
5.9 TERMINATION OF 401(k) PLANS................................................................................49
5.10 INDEMNIFICATION............................................................................................49
5.11 MERGER SUB COMPLIANCE......................................................................................50
5.12 [Reserved].................................................................................................50
5.13 SECTION 83(b) ELECTIONS....................................................................................50
5.14 SPREADSHEET................................................................................................51
5.15 TAKEOVER LAWS..............................................................................................51
5.16 COOPERATION WITH FINANCING.................................................................................51
5.17 COMPANY OPTIONS............................................................................................52
5.18 COMPANY FAIRNESS OPINION...................................................................................52
5.19 PAYMENTS ..................................................................................................52
ARTICLE VI CONDITIONS TO THE MERGER 52
6.1 CONDITIONS TO THE OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER...........................................52
6.2 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF THE COMPANY....................................................53
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6.3 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF PARENT.........................................................54
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER 55
7.1 TERMINATION................................................................................................55
7.2 NOTICE OF TERMINATION; EFFECT OF TERMINATION...............................................................57
7.3 FEES AND EXPENSES..........................................................................................58
7.4 AMENDMENT..................................................................................................59
7.5 EXTENSION; WAIVER..........................................................................................60
ARTICLE VIII GENERAL PROVISIONS 60
8.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES.............................................................60
8.2 NOTICES ...................................................................................................60
8.3 INTERPRETATION; KNOWLEDGE..................................................................................61
8.4 COUNTERPARTS...............................................................................................63
8.5 ENTIRE AGREEMENT; THIRD-PARTY BENEFICIARIES................................................................63
8.6 SEVERABILITY...............................................................................................63
8.7 OTHER REMEDIES; SPECIFIC PERFORMANCE.......................................................................63
8.8 GOVERNING LAW..............................................................................................64
8.9 RULES OF CONSTRUCTION......................................................................................64
8.10 ASSIGNMENT.................................................................................................64
8.11 WAIVER OF JURY TRIAL.......................................................................................64
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INDEX OF DEFINED TERMS
DEFINED TERM DEFINED IN SECTION
- ------------ ------------------
Acquisition 7.3(b)(iii)
Acquisition Proposal 5.3(g)(i)
Action of Divestiture 5.6(e)
Affiliate 5.12(a)
Agreement Forepart
Approval 2.12(c)(ii)
Average Stock Price 1.6(f)
Certificate of Merger 1.2
Certificates 1.7(c)
Change of Recommendation 5.3(d)
Closing 1.2
Closing Date 1.2
COBRA 2.12(b)
Code Recitals
Company Forepart
Company Affiliate 5.12
Company Balance Sheet 2.4(b)
Company Benefit Plans 2.12(a)
Company Board Approval 2.17
Company Charter Documents 2.1(b)
Company Common Stock 1.6(a)
Company Disclosure Letter Article II
Company Environmental Permits 2.14(c)
Company Fairness Opinion 2.18
Company Financials 2.4(b)
Company Intellectual Property 2.7(a)(ii)
Company Material Contract 2.15(a)
Company Options 2.2(b)
Company Permits 2.8(b)
Company Plans 5.9(c)
Company Preferred Stock 2.2(a)
Company Products 2.7(c)
Company Registered Intellectual Property 2.7(a)(iv)
Company Restricted Stock 1.6(b)
Company Retirement Plan 2.12(a)
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DEFINED TERM DEFINED IN SECTION
- ------------ ------------------
Company SEC Reports 2.4(a)
Company Stock Option Plans 2.12(a)
Company Voting Debt 2.2(c)
Confidentiality Agreement 5.4(a)
Contracts 2.15(d)
Delaware Law Recitals
Dissenting Shares 1.10
DOJ 5.6(a)
DOL 2.12(b)
Domain Names 2.7(a)(i)
Effect 8.3(c)
Effective Time 1.2
Employee 2.12(a)
Employment Agreements Recitals
End Date 7.1(b)(i)
Environmental Law 2.14(c)
ERISA 2.12(c)(i)
Exchange Act 2.3(c)
Exchange Fund 1.7(b)
Exchange Ratio 1.6(a)
FTC 5.6(a)
Funded Retirement Plan 2.12(d)
GAAP 2.4(b)
Governmental Entity 2.3(c)
Hazardous Material 2.14(a)
Hazardous Materials Activities 2.14(b)
HSR Act 2.3(c)
Indemnified Parties 5.11(a)
Intellectual Property 2.7(a)(i)
International Employee Plan 2.12(g)
IRS 2.12(b)
Knowledge 8.3(b)
Leased Real Property 2.13(a)
Leases 2.13(a)
Legal Requirements 2.2(d)
Marketplace Rule 1.6(a)
Material Adverse Effect 8.3(c)
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DEFINED TERM DEFINED IN SECTION
- ------------ ------------------
Merger 1.1
Merger Consideration 1.6(a)
Merger Sub Forepart
Merger Sub Common Stock 1.6(d)
Nasdaq 1.6(f)
Necessary Consents 2.3(c)
Option Ratio 5.9(a)
Owned Real Property 2.13(a)
Parent Forepart
Parent Balance Sheet 3.4(b)
Parent Charter Documents 3.1(b)
Parent Common Stock 1.6(a)
Parent Disclosure Letter Article III
Parent Financials 3.4(b)
Parent Options 3.2(b)
Parent Preferred Stock 3.2(a)
Parent Rights 1.6(a)
Parent Rights Agreement 1.6(a)
Parent SEC Reports 3.4(a)
Parent Stock Option Plans 3.2(b)
Parent Voting Debt 3.2(c)
Payment Agent 1.7(a)
Payment Agreement 5.19
Per Share Amount 1.6(a)
Per Share Merger Consideration 1.6(a)
Permits 2.8(b)
Person 8.3(d)
Proxy Statement 2.16
PTO 2.7(b)
Registered Intellectual Property 2.7(a)(iii)
Registration Statement 2.16
Retirement Benefit Rights 2.12(d)
Retirement Plan 2.12(d)
Rights 2.15(e)
RoHS Directive 2.14(b)
Routine Grants 4.1(b)(iv)
Section 262 1.10
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DEFINED TERM DEFINED IN SECTION
- ------------ ------------------
Securities Act 2.4(a)
Spreadsheet 5.17
Stockholders' Meeting 5.2(a)
Subsidiary 2.1(a)
Subsidiary Charter Documents 2.1(b)
Superior Offer 5.3(g)(ii)
Surviving Corporation 1.1
Tax 2.6(a)
Tax Returns 2.6(b)
Taxes 2.6(a)
Termination Fee 7.3(b)(i)
Triggering Event 7.1(d)(iii)
URLs 2.7(a)(i)
WEEE Directive 2.14(b)
A-vii
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "AGREEMENT") is made and entered into as
of February 20, 2006, by and among Coherent, Inc., a Delaware corporation
("PARENT"), Spider Acquisition Corporation, a Delaware corporation and direct
wholly-owned subsidiary of Parent ("MERGER SUB"), and Excel Technology, Inc., a
Delaware corporation (the "COMPANY").
RECITALS
A. The respective Boards of Directors of Parent, Merger Sub and the
Company have deemed it advisable and in the best interests of their respective
corporations and stockholders that Parent and the Company consummate the
business combination and other transactions provided for herein in order to
advance their respective long-term strategic business interests.
B. The respective Boards of Directors of Parent, Merger Sub and the
Company have approved, in accordance with applicable provisions of the laws of
the state of Delaware ("DELAWARE LAW"), this Agreement and the transactions
contemplated hereby, including the Merger.
C. The Board of Directors of the Company has resolved to recommend to its
stockholders approval and adoption of this Agreement and approval of the Merger.
D. Parent, as the sole stockholder of Merger Sub, has approved and
adopted this Agreement and approved the Merger.
E. Parent, Merger Sub and the Company desire to make certain
representations, warranties and agreements in connection with the Merger and
also to prescribe certain conditions to the Merger.
NOW, THEREFORE, in consideration of the covenants, promises and representations
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. At the Effective Time and subject to and upon the terms
and conditions of this Agreement and the applicable provisions of Delaware Law,
Merger Sub shall be merged with and into the Company (the "MERGER"), the
separate corporate existence of Merger Sub shall cease
and the Company shall continue as the surviving corporation. The Company, as the
surviving corporation after the Merger, is hereinafter sometimes referred to as
the "SURVIVING CORPORATION."
1.2 EFFECTIVE TIME; CLOSING. Subject to the provisions of this Agreement,
the parties hereto shall cause the Merger to be consummated by filing a
Certificate of Merger with the Secretary of State of the State of Delaware in
accordance with the relevant provisions of Delaware Law (the "CERTIFICATE OF
MERGER") (the time of such filing with the Secretary of State of the State of
Delaware or such later time as may be agreed in writing by the Company and
Parent and specified in the Certificate of Merger being the "EFFECTIVE TIME") on
the Closing Date. The closing of the Merger (the "CLOSING") shall take place at
the offices of Wilson Sonsini Goodrich & Rosati, Professional Corporation,
located at 650 Page Mill Road, Palo Alto, California, at a time and date to be
specified by the parties, which shall be no later than the second business day
after the satisfaction or waiver of the conditions set forth in Article VI
(other than those conditions that by their terms are to be satisfied or waived
at the Closing, but subject to the satisfaction or waiver thereof), or at such
other time, date and location as the parties hereto agree in writing; PROVIDED,
HOWEVER, that if all the conditions set forth in Article VI shall not have been
satisfied or waived on such second business day, then the Closing shall take
place on the first business day on which all such conditions shall have been
satisfied or waived. The date on which the Closing occurs is referred to herein
as the "CLOSING DATE."
1.3 EFFECT OF THE MERGER. At the Effective Time, the effect of the Merger
shall be as provided in this Agreement and the applicable provisions of Delaware
Law, including Section 259 of the General Corporation Law of the State of
Delaware. Without limiting the generality of the foregoing, and subject thereto,
at the Effective Time all the property, rights, privileges, powers and
franchises of the Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and Merger Sub
shall become the debts, liabilities and duties of the Surviving Corporation.
1.4 CERTIFICATE OF INCORPORATION AND BYLAWS. At the Effective Time, the
Certificate of Incorporation of the Surviving Corporation shall be amended and
restated to read the same as the Certificate of Incorporation of Merger Sub, as
in effect immediately prior to the Effective Time, until thereafter amended in
accordance with Delaware Law and as provided in such Certificate of
Incorporation; PROVIDED, HOWEVER, that at the Effective Time, Article I of the
Certificate of Incorporation of the Surviving Corporation shall be amended and
restated in its entirety to read as follows: "The name of the corporation is
Excel Technology, Inc." and, to the extent necessary, the Certificate of
Incorporation shall be amended so as to comply with Section 5.10(a). At the
Effective Time, the Bylaws of the Surviving Corporation shall be amended and
restated to read the same as the Bylaws of Merger Sub, as in effect immediately
prior to the Effective Time, until thereafter amended in accordance with
Delaware Law and as provided in such Bylaws; PROVIDED, HOWEVER, that at the
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Effective Time, the Bylaws shall be amended, to the extent necessary, so as to
comply with Section 5.10(a).
1.5 DIRECTORS AND OFFICERS. The initial directors of the Surviving
Corporation shall be the directors of Merger Sub immediately prior to the
Effective Time, until their respective successors are duly elected or appointed
and qualified. The initial officers of the Surviving Corporation shall be the
officers of Merger Sub immediately prior to the Effective Time, until their
respective successors are duly appointed.
1.6 EFFECT ON CAPITAL STOCK. Subject to the terms and conditions of this
Agreement, at the Effective Time, by virtue of the Merger and without any action
on the part of Parent, Merger Sub, the Company or the holders of any shares of
capital stock of the Company, the following shall occur:
(a) COMPANY COMMON STOCK. Each share of the Common Stock, par value
$0.001 per share, of the Company ("COMPANY COMMON STOCK") issued and outstanding
immediately prior to the Effective Time, other than any shares of Company Common
Stock to be canceled pursuant to Section 1.6(c) and any Dissenting Shares, will
be canceled and extinguished and automatically converted (subject to Section
1.6(f)) into the right to receive $30.00 in cash, without interest (as may be
adjusted, the "PER SHARE AMOUNT" and the sum of the Per Share Amounts, the
"MERGER CONSIDERATION"), upon surrender of the certificate representing such
share of Company Common Stock in the manner provided in Section 1.7 (or in the
case of a lost, stolen or destroyed certificate, upon delivery of an affidavit
(and bond, if required) in the manner provided in Section 1.9).
(b) REPURCHASE RIGHTS. If any shares of Company Common Stock
outstanding immediately prior to the Effective Time are unvested or are subject
to a repurchase option, risk of forfeiture or other condition under any
applicable restricted stock purchase agreement or other agreement with the
Company ("COMPANY RESTRICTED STOCK"), then the portion of the Merger
Consideration payable in exchange for such shares of Company Common Stock will
also be unvested and subject to the same repurchase option, risk of forfeiture
or other condition. The Company shall take all action that may be necessary to
ensure that, from and after the Effective Time, the Surviving Corporation is
entitled to exercise any such repurchase option or other right set forth in any
such restricted stock purchase agreement or other agreement. The portion of the
Merger Consideration payable upon conversion of the Company Restricted Stock
shall be withheld and paid by the Merger Sub to such holder in accordance with
the vesting and other provisions set forth in the applicable restricted stock
purchase agreement or other agreement.
(c) CANCELLATION OF TREASURY AND PARENT OWNED STOCK. Each share of
Company Common Stock held by the Company or Parent or any direct or indirect
wholly-owned Subsidiary of the Company or of Parent immediately prior to the
Effective Time shall be canceled and extinguished without any conversion
thereof.
A-3
(d) CAPITAL STOCK OF MERGER SUB. Each share of common stock, par
value $0.001, of Merger Sub (the "MERGER SUB COMMON STOCK") issued and
outstanding immediately prior to the Effective Time shall evidence ownership of
such shares of capital stock of the Surviving Corporation.
(e) STOCK OPTIONS. At the Effective Time, no outstanding Company
Options will be assumed by Parent, and unless otherwise exercised by the holder
thereof or purchased by the Company under Section 5.17, any outstanding Company
Options shall terminate on the Effective Time in accordance with their terms.
(f) ADJUSTMENTS TO PER SHARE AMOUNT. The Per Share Amount shall be
adjusted to reflect fully the appropriate effect of any stock split, reverse
stock split, stock dividend (including any dividend or distribution of
securities convertible into Company Common Stock), reorganization,
recapitalization, reclassification or other like change with respect to Company
Common Stock having a record date on or after the date hereof and prior to the
Effective Time.
1.7 SURRENDER OF CERTIFICATES.
(a) PAYMENT AGENT. Parent shall select an institution to act as
the payment agent (the "PAYMENT AGENT") for the Merger.
(b) PARENT TO PROVIDE CASH. On or before the Effective Time,
Parent shall make available to the Payment Agent for exchange in accordance with
this Article I, the Merger Consideration deliverable pursuant to Section 1.6(a)
in exchange for the outstanding shares of Company Common Stock. Any cash
deposited with the Payment Agent shall hereinafter be referred to as the
"EXCHANGE FUND."
(c) EXCHANGE PROCEDURES. As promptly as reasonably practicable
after the Effective Time, Parent shall cause the Payment Agent to mail to each
holder of record (as of the Effective Time) of a certificate or certificates
(the "CERTIFICATES") which immediately prior to the Effective Time represented
outstanding shares of Company Common Stock whose shares were converted into the
right to receive a portion of the Merger Consideration pursuant to Section
1.6(a): (i) a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
delivery of the Certificates to the Payment Agent and shall be in such form and
have such other provisions as Parent may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for a portion of the Merger Consideration. Upon surrender of Certificates for
cancellation to the Payment Agent or to such other agent or agents as may be
appointed by Parent, together with such letter of transmittal, duly completed
and validly executed in accordance with the instructions thereto and such other
documents as may reasonably be required by the Payment Agent, the holder of
record of such Certificates shall be entitled to receive in exchange therefor
the portion of the Merger Consideration
A-4
(after taking into account all Certificates surrendered by such holder of
record) to which such holder is entitled pursuant to Section 1.6(a), and the
Certificates so surrendered shall forthwith be canceled. Until so surrendered,
outstanding Certificates will be deemed from and after the Effective Time, for
all corporate purposes, to evidence the ownership of the portion of the Merger
Consideration for which such shares of Company Common Stock shall have been so
converted.
(d) REQUIRED WITHHOLDING. Each of the Payment Agent and the
Surviving Corporation shall be entitled to deduct and withhold from any
consideration payable or otherwise deliverable pursuant to this Agreement to any
holder or former holder of Company Common Stock such amounts as may be required
to be deducted or withheld therefrom under the Code or under any provision of
state, local or foreign Tax law or under any other applicable Legal Requirement.
To the extent such amounts are so deducted or withheld, the amount of such
consideration shall be treated for all purposes under this Agreement as having
been paid to the Person to whom such consideration would otherwise have been
paid.
(e) NO LIABILITY. Notwithstanding anything to the contrary in
this Section 1.7, neither the Payment Agent, the Surviving Corporation nor any
party hereto shall be liable to a holder of shares of Company Common Stock for
any amount paid to a public official pursuant to any applicable abandoned
property, escheat or similar law.
(f) INVESTMENT OF EXCHANGE FUND. The Payment Agent shall invest
the cash included in the Exchange Fund as directed by Parent on a daily basis;
PROVIDED that no such investment or loss thereon shall affect the amounts
payable to Company stockholders pursuant to this Article I. Any interest and
other income resulting from such investment shall become a part of the Exchange
Fund, and any amounts in excess of the amounts payable to Company stockholders
pursuant to this Article I shall promptly be paid to Parent.
(g) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange
Fund which remains undistributed to the holders of Certificates nine (9) months
after the Effective Time shall, at the request of Parent or the Surviving
Corporation, be delivered to the Surviving Corporation or Parent or otherwise
according to the instruction of the Surviving Corporation or Parent, and any
holders of the Certificates who have not surrendered such Certificates in
compliance with this Section 1.7 shall after such delivery to Surviving
Corporation look only to Parent or the Surviving Corporation for the portion of
the Merger Consideration deliverable pursuant to Section 1.6(a) with respect to
the shares of Company Common Stock formerly represented thereby. If any
Certificate shall not have been surrendered prior to two (2) years after the
Effective Time (or immediately prior to such time as such amounts would
otherwise escheat to or become property of any Governmental Entity), any such
portion of the Exchange Fund remaining unclaimed by holders of shares of Company
Common Stock immediately prior to such time shall, to the extent permitted by
law,
A-5
become the property of Parent free and clear of any claims or interest of any
Person previously entitled thereto.
1.8 NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. The Merger
Consideration paid upon the surrender for exchange of shares of Company Common
Stock in accordance with the terms hereof shall be deemed to have been paid in
full satisfaction of all rights pertaining to such shares of Company Common
Stock, and there shall be no further registration of transfers on the records of
the Surviving Corporation of shares of Company Common Stock which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation for any reason,
they shall be canceled and exchanged as provided in this Article I.
1.9 LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any Certificates
shall have been lost, stolen or destroyed, the Payment Agent shall deliver in
exchange for such lost, stolen or destroyed Certificates, upon the making of an
affidavit of that fact by the holder thereof, the portion of the Merger
Consideration to which the holder thereof would have been entitled upon the
delivery of such Certificate; PROVIDED, HOWEVER, that Parent or the Payment
Agent may, in their sole discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed Certificates to
deliver a bond in such sum as it may reasonably direct as indemnity against any
claim that may be made against Parent, the Company or the Payment Agent with
respect to the Certificates alleged to have been lost, stolen or destroyed.
1.10 DISSENTING SHARES. Notwithstanding anything in this Agreement to the
contrary, shares of Company Common Stock which are issued and outstanding
immediately prior to the Effective Time and which are held by stockholders
properly exercising appraisal rights (the "DISSENTING SHARES") available under
Section 262 ("SECTION 262") of Delaware Law shall not be converted into or be
exchangeable for the right to receive the portion of the Merger Consideration
for which such shares of Company Common Stock would otherwise have been
entitled, unless and until such holders shall have failed to perfect or shall
have effectively withdrawn or lost their rights to appraisal under Section 262.
If any such holder shall have failed to perfect or shall have effectively
withdrawn or lost such right to appraisal, such holder's shares of Company
Common Stock shall thereupon be converted into and be exchangeable only for the
right to receive, as of the Effective Time, the portion of the Merger
Consideration to which such holder would have been entitled pursuant to this
Article I for such shares of Company Common Stock. The Company shall give Parent
and Merger Sub (a) prompt notice of any written demands for appraisal of any
shares of Company Common Stock, attempted withdrawals of such demands and any
other instruments served pursuant to Delaware Law and received by the Company
relating to rights to be paid the "fair value" of Dissenting Shares, as provided
in Section 262 and (b) the opportunity to participate in, and after the Closing,
direct all negotiations and proceedings with respect to demands for appraisal
under Section 262. The Company
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shall not, except with the prior written consent of Parent, voluntarily make or
agree to make any payment with respect to any demands for appraisals, or offer
to settle or settle any such demands or approve any withdrawals of any such
demands.
1.11 FURTHER ACTION. At and after the Effective Time, the officers and
directors of Parent and the Surviving Corporation will be authorized to execute
and deliver, in the name and on behalf of the Company and Merger Sub, any deeds,
bills of sale, assignments or assurances and to take and do, in the name and on
behalf of Company and Merger Sub, any other actions and things to vest, perfect
or confirm of record or otherwise in the Surviving Corporation any and all
right, title and interest in, to and under any of the rights, properties or
assets acquired or to be acquired by the Surviving Corporation as a result of,
or in connection with, the Merger.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Sub, subject to the
exceptions specifically disclosed in writing in the disclosure letter supplied
by Company to Parent dated as of the date hereof (the "COMPANY DISCLOSURE
LETTER"), as follows:
2.1 ORGANIZATION; STANDING AND POWER; CHARTER DOCUMENTS; SUBSIDIARIES.
(a) ORGANIZATION; STANDING AND POWER. The Company and each of its
Subsidiaries (i) is a corporation or other organization duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization (except, in the case of good standing, for
entities organized under the laws of any jurisdiction that does not recognize
such concept), (ii) has the requisite power and authority to own, lease and
operate its properties and to carry on its business as now being conducted, and
(iii) is duly qualified or licensed and in good standing to do business in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification or licensing necessary, other than in
such jurisdictions where the failure to so qualify or to be in good standing,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect on the Company. For purposes of this Agreement,
"SUBSIDIARY," when used with respect to any party, shall mean any corporation or
other organization, whether incorporated or unincorporated, at least a majority
of the securities or other interests of which having by their terms ordinary
voting power to elect a majority of the Board of Directors or others performing
similar functions with respect to such corporation or other organization is
directly or indirectly owned or controlled by such party or by any one or more
of its Subsidiaries, or by such party and one or more of its Subsidiaries.
(b) CHARTER DOCUMENTS. The Company has furnished to Parent: (i) a
true and correct copy of the Certificate of Incorporation and Bylaws of the
Company, each as amended to date (collectively, the "COMPANY CHARTER DOCUMENTS")
and (ii) the certificate of incorporation and
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bylaws, or like organizational documents (collectively, "SUBSIDIARY CHARTER
DOCUMENTS"), of each of its Subsidiaries, and each such instrument is in full
force and effect. The Company is not in violation of any of the provisions of
the Company Charter Documents and no Subsidiary of the Company is in violation
of its respective Subsidiary Charter Documents.
(c) MINUTES. The Company has furnished to Parent and its
representatives true and complete copies of the minutes of all meetings of the
stockholders, the Board of Directors and each committee of the Board of
Directors of the Company and each of its Subsidiaries held since December 31,
2002.
(d) SUBSIDIARIES. Section 2.1(d) of the Company Disclosure Letter
sets forth each Subsidiary of the Company. All the outstanding shares of capital
stock of, or other equity or voting interests in, each such Subsidiary have been
validly issued and are fully paid and nonassessable and, except as set forth in
the footnotes to Section 2.1(d) of the Company Disclosure Letter, are owned by
the Company, a wholly-owned Subsidiary of the Company, or the Company and
another wholly-owned Subsidiary of the Company, free and clear of all pledges,
claims, liens, charges, encumbrances, options and security interests of any kind
or nature whatsoever (any, a "LIEN"), including any restriction on the right to
vote, sell or otherwise dispose of such capital stock or other ownership
interests, except for restrictions imposed by applicable securities laws, and
are duly authorized, validly issued, full paid and nonassessable. Other than the
Subsidiaries of the Company, except as set forth in Section 2.1(d) of the
Company Disclosure Letter, neither the Company nor any of its Subsidiaries owns
any capital stock of, or other equity or voting interests of any nature in, or
any interest convertible, exchangeable or exercisable for, capital stock of, or
other equity or voting interests of any nature in, any other Person.
2.2 CAPITAL STRUCTURE.
(a) CAPITAL STOCK. The authorized capital stock of Company consists
of: (i) 20,000,000 shares of Company Common Stock, par value $0.001 per share
and (ii) 2,000,000 shares of preferred stock, par value $0.001 per share (the
"COMPANY PREFERRED STOCK"). At the close of business on the date hereof: (i)
12,058,329 shares of Company Common Stock were issued and outstanding, excluding
shares of Company Common Stock held by the Company in its treasury, (ii) no
shares of Company Common Stock were issued and held by the Company in its
treasury, and (iii) no shares of Company Preferred Stock were issued and
outstanding. No shares of Company Common Stock are owned or held by any
Subsidiary of the Company. All of the outstanding shares of capital stock of the
Company are, and all shares of capital stock of the Company which may be issued
as contemplated or permitted by this Agreement will be, when issued, duly
authorized and validly issued, fully paid and nonassessable and not subject to
any preemptive rights. Section 2.2(a) of the Company Disclosure Letter sets
forth a list of each holder of Company Restricted Stock and (a)
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the name and location of the holder of such Company Restricted Stock, (b) the
number of shares of Company Restricted Stock held by such holder, (c) the
repurchase price of such Company Restricted Stock, (d) the date on which such
Company Restricted Stock was purchased or granted, (e) the applicable vesting
schedule pursuant to which the Company's right of repurchase or forfeiture
lapses, and (f) the extent to which such Company right of repurchase or
forfeiture has lapsed as of the date hereof. There are no commitments or
agreements of any character to which the Company is bound obligating Company to
waive its right of repurchase or forfeiture with respect to any Company
Restricted Stock as a result of the Merger (whether alone or upon the occurrence
of any additional or subsequent events).
(b) STOCK OPTIONS. As of the close of business on the date hereof
1,437,676 shares of Company Common Stock are subject to issuance pursuant to
outstanding options to purchase Company Common Stock under each stock option
plan, stock award plan, stock appreciation right plan, phantom stock plan, stock
option, other equity or equity-based compensation plan, equity or other equity
based award to any Person (whether payable in cash, shares or otherwise) (to the
extent not issued pursuant to any of the foregoing plans) or other plan or
Contract of any nature with any Person (whether or not an Employee) pursuant to
which any stock, option, warrant or other right to purchase or acquire capital
stock of the Company or right to payment based on the value of the Company
capital stock has been granted or otherwise issued (collectively, "COMPANY STOCK
OPTION PLANS") (equity or other equity-based awards, whether payable in cash,
shares or otherwise granted under or pursuant to the Company Stock Option Plans
are referred to in this Agreement as "COMPANY OPTIONS"). Section 2.2(b) of the
Company Disclosure Letter sets forth a list of each outstanding Company Stock
Option issued, and (a) the particular Company Stock Option Plan (if any)
pursuant to which such Company Option was granted) (b) the name and location of
the holder of such Company Option, (c) the number of shares of Company Common
Stock subject to such Company Option, (d) the exercise price of such Company
Option, (e) the date on which such Company Option was granted, (f) the
applicable vesting schedule, and the extent to which such Company Option is
vested and exercisable as of the date hereof, and (g) the date on which such
Company Option expires. All shares of Company Common Stock subject to issuance
under the Company Stock Option Plans, upon issuance on the terms and conditions
specified in the instruments pursuant to which they are issuable, will be duly
authorized, validly issued, fully paid and nonassessable. Except as set forth in
Section 2.2(b) of the Disclosure Letter, there are no commitments or agreements
of any character to which the Company is bound obligating Company to accelerate
the vesting of any Company Option as a result of the Merger (whether alone or
upon the occurrence of any additional or subsequent events). There are no
outstanding or authorized stock appreciation, phantom stock, equity based profit
participation or other similar rights with respect to the Company.
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(c) VOTING DEBT. No bonds, debentures, notes or other indebtedness of
the Company or any of its Subsidiaries (i) having the right to vote on any
matters on which stockholders may vote (or which is convertible into, or
exchangeable for, securities having such right) or (ii) the value of which is
any way based upon or derived from capital or voting stock of the Company, is
issued or outstanding as of the date hereof (collectively, "COMPANY VOTING
DEBT").
(d) OTHER SECURITIES. Except as otherwise set forth in this Section
2.2 or the Company Disclosure Letter, as of the date hereof, there are no
securities, options, warrants, calls, rights, contracts, commitments,
agreements, instruments, arrangements, understandings, obligations or
undertakings of any kind to which the Company or any of its Subsidiaries is a
party or by which any of them is bound obligating Company or any of its
Subsidiaries to (including on a deferred basis) issue, deliver or sell, or cause
to be issued, delivered or sold, additional shares of capital stock, Company
Voting Debt or other voting securities of Company or any of its Subsidiaries, or
obligating the Company or any of its Subsidiaries to issue, grant, extend or
enter into any such security, option, warrant, call, right, commitment,
agreement, instrument, arrangement, understanding, obligation or undertaking.
All outstanding shares of Company Common Stock, all outstanding Company Options,
and all outstanding shares of capital stock of, or equity interest in, each
Subsidiary of the Company have been issued and granted in compliance in all
material respects with (i) all applicable securities laws and all other
applicable Legal Requirements and (ii) all requirements set forth in applicable
material Contracts. Except for shares of Restricted Stock, there are not any
outstanding Contracts of the Company or any of its Subsidiaries to (i)
repurchase, redeem or otherwise acquire any shares of capital stock of, or other
equity or voting interests in, the Company or any of its Subsidiaries or (ii)
dispose of any shares of the capital stock of, or other equity or voting
interests in, any of its Subsidiaries. The Company is not a party to any voting
agreement with respect to shares of the capital stock of, or other equity or
voting interests in, the Company or any of its Subsidiaries and, to the
Knowledge of the Company, there are no irrevocable proxies and no voting
agreements, voting trusts, rights plans, anti-takeover plans or registration
rights agreements with respect to any shares of the capital stock of, or other
equity or voting interests in, the Company or any of its Subsidiaries. For
purposes of this Agreement, "LEGAL REQUIREMENTS" shall mean any federal, state,
local, municipal, foreign or other law, statute, constitution, principle of
common law, resolution, ordinance, code, order, edict, decree, rule, regulation,
ruling or requirement issued, enacted, adopted, promulgated, implemented or
otherwise put into effect by or under the authority of any Governmental Entity.
2.3 AUTHORITY; NON-CONTRAVENTION; NECESSARY CONSENTS.
(a) AUTHORITY. The Company has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby has been duly authorized by
all necessary corporate action on the part of the Company and no other
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corporate proceedings on the part of the Company are necessary to authorize the
execution and delivery of this Agreement or to consummate the Merger and the
other transactions contemplated hereby, subject only to the approval and
adoption of this Agreement and the approval of the Merger by the Company's
stockholders and the filing of the Certificate of Merger pursuant to Delaware
Law. The affirmative vote of the holders of a majority of the outstanding shares
of Company Common Stock to approve and adopt this Agreement and approve the
Merger is the only vote of the holders of any class or series of Company capital
stock necessary to approve and adopt this Agreement, approve the Merger and
consummate the Merger and the other transactions contemplated hereby (the
"COMPANY STOCKHOLDER APPROVAL"). This Agreement has been duly executed and
delivered by the Company and, assuming due execution and delivery by Parent and
Merger Sub, constitute valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms.
(b) NON-CONTRAVENTION. The execution and delivery of this Agreement
by the Company does not, and performance of this Agreement by the Company will
not: (i) conflict with or violate the Company Charter Documents or any
Subsidiary Charter Documents, (ii) subject to obtaining the approval and
adoption of this Agreement and the approval of the Merger by the Company's
stockholders as contemplated in Section 5.2 and compliance with the requirements
set forth in Section 2.3(c), conflict with or violate any material Legal
Requirement applicable to the Company or any of its Subsidiaries or by which the
Company or any of its Subsidiaries or any of their respective properties is
bound or affected, or (iii) result in any breach of or constitute a default (or
an event that with notice or lapse of time or both would become a default)
under, or materially impair the Company's rights or alter the rights or
obligations of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a Lien on any of the properties or assets of the Company or any of
its Subsidiaries pursuant to, any Company Material Contract. Section 2.3(b) of
the Company Disclosure Letter lists all consents, waivers and approvals under
any of the Company's or any of its Subsidiaries' Contracts required to be
obtained in connection with the consummation of the transactions contemplated
hereby, which, if individually or in the aggregate were not obtained, would
result in a material loss of benefits to the Company, Parent or the Surviving
Corporation as a result of the Merger.
(c) NECESSARY CONSENTS. No consent, approval, order or authorization
of, or registration, declaration or filing with any supranational, national,
state, municipal, local or foreign government, any instrumentality, subdivision,
court, administrative agency or commission or other governmental authority or
instrumentality, or any quasi-governmental or private body exercising any
regulatory, taxing, importing or other governmental or quasi-governmental
authority (a "GOVERNMENTAL ENTITY") or any other Person is required to be
obtained or made by the Company in connection with the execution and delivery of
this Agreement or the consummation of the Merger and other transactions
contemplated hereby, except for: (i) the filing of the Certificate of Merger
with the
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Secretary of State of the State of Delaware and appropriate documents with the
relevant authorities of other states in which the Company and/or Parent are
qualified to do business, (ii) the filing of the Proxy Statement with the SEC in
accordance with the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT"), (iii) such consents, approvals, orders, authorizations, registrations,
declarations and filings as may be required under applicable federal, foreign
and state securities (or related) laws and the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR ACT") and satisfaction of such
other requirements of the comparable laws of other jurisdictions that the Parent
reasonably determines to apply, and (iv) such other consents, authorizations,
filings, approvals and registrations which if not obtained or made would not be
material to the Company, Parent or Merger Sub or materially adversely affect the
ability of the parties hereto to consummate the Merger within the time frame in
which the Merger would otherwise be consummated in the absence of the need for
such consent, approval, order, authorization, registration, declaration or
filings. The consents, approvals, orders, authorizations, registrations,
declarations and filings set forth in (i) through (iv) are referred to herein as
the "NECESSARY CONSENTS."
2.4 SEC FILINGS; FINANCIAL STATEMENTS; CONTROLS.
(a) SEC FILINGS. The Company has filed all required registration
statements, prospectuses, reports, schedules, forms, statements and other
documents (including exhibits and all other information incorporated by
reference) required to be filed by it with the SEC since December 31, 2001. All
such required registration statements, prospectuses, reports, schedules, forms,
statements and other documents (including those that the Company may file
subsequent to the date hereof) are referred to herein as the "COMPANY SEC
REPORTS." As of their respective dates, the Company SEC Reports (i) were
prepared in accordance and complied in all material respects with the
requirements of the Securities Act of 1933, as amended (the "SECURITIES ACT"),
or the Exchange Act, as the case may be, and the rules and regulations of the
SEC thereunder applicable to such Company SEC Reports and (ii) did not at the
time they were filed (or if amended or superseded by a filing prior to the date
of this Agreement then on the date of such filing) contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. None of the
Company's Subsidiaries is required to file any forms, reports or other documents
with the SEC. The Company has previously furnished to Parent a complete and
correct copy of any amendments or modifications, which have not yet been filed
with the SEC but which are required to be filed, to agreements, documents or
other instruments which previously had been filed by Company with the SEC
pursuant to the Securities Act or the Exchange Act.
(b) FINANCIAL STATEMENTS. Each of the consolidated financial
statements (including, in each case, any related notes thereto) contained in the
Company SEC Reports (the "COMPANY FINANCIALS"), including each Company SEC
Report filed after the date hereof until the Closing:
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(i) complied as to form in all material respects with the published rules and
regulations of the SEC with respect thereto, (ii) was prepared in accordance
with United States generally accepted accounting principles ("GAAP") applied on
a consistent basis throughout the periods involved (except as may be indicated
in the notes thereto or, in the case of unaudited interim financial statements,
as may be permitted by the SEC on Form 10-Q, 8-K or any successor form under the
Exchange Act), and (iii) fairly presented in all material respects the
consolidated financial position of the Company and its consolidated Subsidiaries
as at the respective dates thereof and the consolidated results of the Company
operations and cash flows for the periods indicated. The Company does not intend
to correct or restate, nor is there any basis for any correction or restatement
of, any aspect of the Company Financials. The balance sheet of the Company
contained in the Company SEC Reports as of September 30, 2005 is hereinafter
referred to as the "COMPANY BALANCE SHEET." Except as disclosed in the Company
Financials, since the date of the Company Balance Sheet, neither the Company nor
any of its Subsidiaries has any liabilities (absolute, accrued, contingent or
otherwise) of a nature required to be disclosed on a consolidated balance sheet
or in the related notes to the consolidated financial statement prepared in
accordance with GAAP which are, individually or in the aggregate, material to
the business, results of operations or financial condition of the Company and
its Subsidiaries taken as a whole.
(c) DISCLOSURE CONTROLS AND PROCEDURES. The Company has established
and maintains disclosure controls and procedures (as defined in Rule 13a-15
under the Exchange Act). Such disclosure controls and procedures are designed to
ensure that material information relating to the Company, including its
Subsidiaries, is made known to the Company's principal executive officer and its
principal financial officer by others within those entities. To the knowledge of
the Company, based on its evaluation of the Company's disclosure controls and
procedures as of the end of the Company's most recently completed fiscal
quarter, such disclosure controls and procedures are currently effective in
timely alerting the Company's principal executive officer and principal
financial officer to material information required to be included in the
Company's periodic and current reports required under the Exchange Act.
(d) INTERNAL CONTROL OVER FINANCIAL REPORTING. The Company has
established and maintains a system of internal control over financial reporting
(as defined in Rule 13a-15 under the Exchange Act). Based on its evaluation of
its internal control over financial reporting as of the end of the Company's
most recently completed fiscal quarter, such internal control over financial
reporting is sufficient to provide reasonable assurance regarding the
reliability of the Company's financial reporting and the preparation of the
Company's financial statements for external purposes in accordance with GAAP.
Based on its most recent evaluation of internal control over financial reporting
and, to the knowledge of the Company, since such evaluation, there are not any
significant deficiencies or material weaknesses known to the Company in the
design or operation of internal control over financial reporting which could
reasonably be expected to adversely affect in a material
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respect the Company's ability to record, process, summarize and report financial
information or any material fraud known to the Company that involves management
or other employees who have a significant role in internal control over
financial reporting. The Company has furnished to Parent disclosures regarding
material weaknesses, significant deficiencies and fraud involving management or
other employees who have a significant role in internal control over financial
reporting since December 31, 2002.
2.5 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in Section
2.5 of the Company Disclosure Letter, since the date of the Company Balance
Sheet there has not been: (i) any Material Adverse Effect on the Company, (ii)
any declaration, setting aside or payment of any dividend on, or other
distribution (whether in cash, stock or property) in respect of, any of the
Company's or any of its Subsidiaries' capital stock, or any purchase, redemption
or other acquisition by the Company or any of its Subsidiaries of any of the
Company's capital stock or any other securities of the Company or its
Subsidiaries or any options, warrants, calls or rights to acquire any such
shares or other securities except for repurchases from Employees following their
termination pursuant to the terms of their pre-existing stock option or purchase
agreements, (iii) any split, combination or reclassification of any of the
Company's or any of its Subsidiaries' capital stock; (iv) any granting by the
Company or any of its Subsidiaries of any increase in compensation or fringe
benefits, except for normal increases of cash compensation in the ordinary
course of business consistent with past practice (other than to directors or
executive officers of the Company), or any payment by the Company or any of its
Subsidiaries of any bonus, except for bonuses made in the ordinary course of
business consistent with past practice (other than to directors or executive
officers of the Company), or any granting by the Company or any of its
Subsidiaries of any increase in severance or termination pay or any entry by the
Company or any of its Subsidiaries into any currently effective employment,
severance, termination or indemnification agreement or any agreement the
benefits of which are contingent or the terms of which are materially altered
upon the occurrence of a transaction involving the Company of the nature
contemplated hereby, (v) entry by the Company or any of its Subsidiaries into
any licensing or other agreement with regard to the acquisition or disposition
of any material Intellectual Property other than licenses, distribution
agreements, advertising agreements, sponsorship agreements or merchant program
agreements entered into in the ordinary course of business consistent with past
practice, (vi) any amendment with respect to any Company Material Contract in
effect, (vii) any material change by the Company in its accounting methods,
principles or practices, except as required by concurrent changes in GAAP, or
(viii) any material revaluation by the Company of any of its assets, including
writing down the value of capitalized inventory or writing off notes or accounts
receivable other than in the ordinary course of business consistent with past
practice.
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2.6 TAXES.
(a) DEFINITION. For the purposes of this Agreement, the term "TAX"
or, collectively, "TAXES" shall mean (i) any and all federal, state, local and
foreign taxes, assessments and other governmental charges, duties, impositions
and liabilities, including taxes based upon or measured by gross receipts,
income, profits, sales, use and occupation, and value added, ad valorem,
transfer, franchise, withholding, payroll, recapture, employment, excise and
property taxes, together with all interest, penalties and additions imposed with
respect to such amounts, (ii) any liability for the payment of any amounts of
the type described in clause (i) of this Section 2.6(a) as a result of being a
member of an affiliated, consolidated, combined or unitary group for any period,
and (iii) any liability for the payment of any amounts of the type described in
clauses (i) or (ii) of this Section 2.6(a) as a result of any express or implied
obligation to indemnify any other person or as a result of any obligations under
any agreements or arrangements with any other person with respect to such
amounts and including any liability for taxes of a predecessor entity.
(b) TAX RETURNS AND AUDITS.
(i) The Company and each of its Subsidiaries have prepared and
timely filed all required federal, state, local and foreign returns, estimates,
information statements and reports ("TAX RETURNS") relating to any and all Taxes
concerning or attributable to the Company, its Subsidiaries or their respective
operations and such Returns are true and correct and have been completed in
accordance with applicable law.
(ii) The Company and each of its Subsidiaries have timely paid
all Taxes required to be paid and withheld with respect to their Employees (and
paid over to the appropriate Taxing authority) all federal and state income
taxes, Federal Insurance Contribution Act, Federal Unemployment Tax Act and
other Taxes required to be withheld.
(iii) Neither the Company nor any of its Subsidiaries has been
delinquent in the payment of any Tax, nor is there any Tax deficiency
outstanding, assessed or proposed against the Company or any of its
Subsidiaries, nor has the Company or any of its Subsidiaries executed any waiver
of any statute of limitations on or extending the period for the assessment or
collection of any Tax.
(iv) No audit or other examination of any Tax Return of the
Company or any of its subsidiaries is presently in progress, nor has the Company
or any of its Subsidiaries been notified of any request for such an audit or
other examination.
(v) Neither the Company nor any of its Subsidiaries has any
liabilities for unpaid Taxes which have not been accrued or reserved on the
Company Balance Sheet, whether asserted or unasserted, contingent or otherwise,
and neither the Company nor any of its subsidiaries
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has incurred any liability for Taxes since the date of the Company Balance Sheet
other than in the ordinary course of business.
(vi) The Company has made available to Parent or its legal
counsel, copies of all Tax Returns for the Company and each of its Subsidiaries
filed for all periods since inception.
(vii) There are no Liens on the assets of the Company or any of
its Subsidiaries relating to or attributable to Taxes other than Liens for Taxes
not yet due and payable. There is no basis for the assertion of any claim
relating or attributable to Taxes which, if adversely determined, would result
in any Lien for Taxes on the assets of the Company or any of its subsidiaries.
(viii) None of the assets of the Company or any of its
Subsidiaries is treated as "tax-exempt use property," within the meaning of
Section 168(h) of the Code.
(ix) Neither the Company nor any of its Subsidiaries is, nor has
been at any time, a "United States Real Property Holding Corporation" within the
meaning of Section 897(c)(2) of the Code.
(x) No adjustment relating to any Return filed by the Company or
any of its Subsidiaries has been proposed formally or, to the Knowledge of the
Company or any of its Subsidiaries, informally by any tax authority to the
Company, any of its Subsidiaries or any representative thereof.
(xi) Neither the Company nor any of its Subsidiaries has (a) ever
been a member of an affiliated group (within the meaning of Code ss.1504(a))
filing a consolidated federal income Tax Return (other than a group the common
parent of which was Company), (b) ever been a party to any Tax sharing,
indemnification or allocation agreement, nor does the Company or any of its
Subsidiaries owe any amount under any such agreement (c) any liability for the
Taxes of any person (other than Company or any of its Subsidiaries) under Treas.
Reg. ss. 1.1502-6 (or any similar provision of state, local or foreign law), as
a transferee or successor, by contract, or otherwise and (d) ever been a party
to any joint venture, partnership or other agreement that could be treated as a
partnership for Tax purposes.
(xii) Neither the Company nor any of its Subsidiaries has
constituted either a "distributing corporation" or a "controlled corporation" in
a distribution of stock intended to qualify for tax-free treatment under Section
355 of the Code (x) in the two years prior to the date of this Agreement or (y)
in a distribution which could otherwise constitute part of a "plan" or "series
of related transactions" (within the meaning of Section 355(e) of the Code) in
conjunction with the Merger.
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(xiii) [Reserved]
(xiv) No claim has ever been made by any taxing authority in a
jurisdiction where the Company or any of its Subsidiaries do not file Tax
Returns that the Company or any of its Subsidiaries is or may be subject to
taxation within that jurisdiction.
(xv) Neither the Company nor any of its Subsidiaries has
consummated, has participated in, or is currently participating in any
transaction which was or is a "tax shelter," "listed transaction" or "reportable
transaction" as defined in Sections 6662, 6662A, 6011, 6012 or 6707A of the Code
or the Treasury Regulations promulgated thereunder, including, but not limited
to, transactions identified by the Internal Revenue Service by notice,
regulation or other form of published guidance as set forth in Treasury
Regulations Section 1.6011-4(b)(2).
2.7 INTELLECTUAL PROPERTY.
(a) DEFINITIONS. For the purposes of this Agreement, the following
terms have the following meanings:
(i) "INTELLECTUAL PROPERTY" shall mean any or all of the
following and all rights in, arising out of, or associated therewith: (a) all
United States, international and foreign patents and applications therefor and
all reissues, divisions, renewals, extensions, provisionals, continuations and
continuations-in-part thereof; (b) all inventions (whether patentable or not),
invention disclosures, improvements, trade secrets, proprietary information,
know how, technology, technical data and customer lists, and all documentation
relating to any of the foregoing; (c) all copyrights, copyrights registrations
and applications therefor, and all other rights corresponding thereto throughout
the world; (d) all mask works, mask work registrations and applications
therefor, and any equivalent or similar rights in semiconductor masks, layouts,
architectures or topology; (e) domain names, uniform resource locators ("URLs")
and other names and locators associated with the Internet (collectively, "DOMAIN
NAMES"), (f) all computer software, including all source code, object code,
firmware, development tools, files, records and data, and all media on which any
of the foregoing is recorded; (g) all industrial designs and any registrations
and applications therefor throughout the world; (h) all trade names, logos,
common law trademarks and service marks, trademark and service mark
registrations and applications therefor throughout the world; (i) all databases
and data collections and all rights therein throughout the world; (j) all moral
and economic rights of authors and inventors, however denominated, throughout
the world, and (k) any similar or equivalent rights to any of the foregoing
anywhere in the world.
(ii) "COMPANY INTELLECTUAL PROPERTY" shall mean any Intellectual
Property that is owned by, or created, invented, authored or acquired by, or
exclusively licensed to, the Company or any of its Subsidiaries.
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(iii) "REGISTERED INTELLECTUAL PROPERTY" shall mean all United States,
international and foreign: (a) patents and patent applications (including
provisional applications); (b) registered trademarks, applications to register
trademarks, intent-to-use applications, or other registrations or applications
related to trademarks; (c) registered copyrights and applications for copyright
registration; (d) Domain Name Registrations; and (e) any other Intellectual
Property that is the subject of an application, certificate, filing,
registration or other document issued, filed with, or recorded by any
Governmental Authority.
(iv) "COMPANY REGISTERED INTELLECTUAL PROPERTY" shall mean all of the
Registered Intellectual Property owned by, or filed in the name of, the Company
or any of its Subsidiaries.
(b) REGISTERED INTELLECTUAL PROPERTY; PROCEEDINGS. Section
2.7(b) of the Company Disclosure Letter sets forth (a) all Company Registered
Intellectual Property and specifies, where applicable, the jurisdictions in
which each such item of Company Registered Intellectual Property has been
issued, applied for or registered, and (b) all proceedings or actions before any
court or tribunal (including the United States Patent and Trademark Office (the
"PTO") or equivalent authority anywhere else in the world) related to any of the
Company Registered Intellectual Property.
(c) COMPANY PRODUCTS. Section 2.7(c) of the Company Disclosure
Letter sets forth a list (by name) of all products or service offerings of the
Company or any of its Subsidiaries (collectively, "COMPANY PRODUCTS") that
currently or within the 90-day period preceding the date hereof have been sold,
offered for sale, distributed or otherwise disposed of or which the Company or
any of its Subsidiaries currently intends to license, sell, offer for sale or
otherwise distribute in the future, including any products or service offerings
under development.
(d) NO ORDER. Except as set forth in Section 2.7(d) of the
Company Disclosure Letter, no Company Intellectual Property or Company Product
is subject to any proceeding or outstanding order, Contract or stipulation
restricting in any manner the use, transfer, or licensing thereof by Company or
any of its Subsidiaries, or which may affect the validity, use or enforceability
of such Company Intellectual Property or Company Product.
(e) REGISTRATION. Each item of Company Registered Intellectual
Property is valid and subsisting, all necessary registration, maintenance and
renewal fees currently due in connection with such Company Registered
Intellectual Property have been made and all necessary documents, recordations
and certificates in connection with such Company Registered Intellectual
Property have been filed with the relevant patent, copyright, trademark or other
authorities in the United States or foreign jurisdictions, as the case may be,
for the purposes of prosecuting, maintaining or perfecting such Company
Registered Intellectual Property.
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(f) FURTHER ACTIONS. Section 2.7(f) of the Company Disclosure
Letter sets forth a list of all actions that are required to be taken by the
Company within 120 days of the date hereof with respect to any of the Company
Registered Intellectual Property.
(g) ABSENCE OF LIENS. The Company owns and has good and
exclusive title to each item of Company Intellectual Property owned by it, free
and clear of any Liens (excluding non-exclusive licenses and related
restrictions granted in the ordinary course of business consistent with past
practice).
(h) THIRD-PARTY DEVELOPMENT. To the extent that any product,
technology, software or Intellectual Property has been developed or created
independently or jointly (with the Company) by a third party for the Company or
any of its Subsidiaries, or is incorporated into any of the Company Products,
the Company and its Subsidiaries have a written agreement (which is listed on
Section 2.7(j)(ii) of the Company Disclosure Letter) with such third party with
respect thereto and, except as set forth in Section 2.7(h) of the Company
Disclosure Letter the Company and its Subsidiaries thereby either (a) have
obtained ownership of, and are the exclusive owners of, or (b) have obtained
perpetual, non-terminable licenses (sufficient for the conduct of its business
as currently conducted and as proposed to be conducted) to all such third
party's Intellectual Property in such work, material or invention by operation
of law or by valid assignment, to the fullest extent it is legally possible to
do so.
(i) TRANSFERS. Neither the Company nor any of its Subsidiaries
has transferred ownership of, or granted any exclusive license with respect to,
any Intellectual Property that is or was Company Intellectual Property, to any
third party. Neither the Company nor any of its Subsidiaries has permitted the
Company's rights in such Company Intellectual Property to lapse or enter the
public domain except where such Intellectual Property is not material to the
Company and the Company has made a reasonable business judgment to permit such
Company Intellectual Property to lapse or enter the public domain.
(j) LICENSES. Section 2.7(j)(i) of the Company Disclosure Letter
sets forth a list of all contracts, licenses and agreements to which the Company
or any of its Subsidiaries is a party with respect to Company Intellectual
Property licensed, disclosed or transferred to any third party or under which
any third party has otherwise been granted or has any right with respect to any
Company Intellectual Property ("OUT-LICENSES"). Section 2.7(j)(ii) of the
Company Disclosure Letter sets forth a list of all contracts, licenses and
agreements to which the Company or any of its Subsidiaries is a party
("IN-LICENSES"), other than "shrink wrap" and similar widely available
commercial end-user licenses, pursuant to which a third party has licensed,
extended or permitted to use or transferred, any Intellectual Property to the
Company or any of its Subsidiaries. The Out-Licenses together with the
In-Licenses, the "COMPANY IP LICENSES".
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(k) NO CONFLICT. All Company IP Licenses are in full force and
effect. The consummation of the transactions contemplated by this Agreement will
neither violate nor result in the breach, modification, cancellation,
termination, suspension of, or acceleration of any payments with respect to, any
Company IP Licenses. Each of the Company and its Subsidiaries is in material
compliance with, and has not materially breached any term of any Company IP
License and, to the Knowledge of the Company, all other parties to the Company
IP Licenses are in compliance with, and have not materially breached any term
of, any Company IP Licenses. Following the Closing Date, the Surviving
Corporation will be permitted to exercise all of the Company's and its
Subsidiaries' rights under the Company IP Licenses to the same extent the
Company and its Subsidiaries would have been able to had the transactions
contemplated by this Agreement not occurred and without the payment of any
additional amounts or consideration other than ongoing fees, royalties or
payments which the Company or any of its Subsidiaries would otherwise be
required to pay. Neither this Agreement nor the transactions contemplated by
this Agreement, including the assignment to Parent or Merger Sub by operation of
law or otherwise of any contracts or agreements to which the Company or any of
its Subsidiaries are a party, will result in (A) either Parent or the Merger Sub
granting to any third party any right to or with respect to any material
Intellectual Property right owned by, or licensed to, either of them, (B) either
Parent or Merger Sub being bound by, or subject to, any non-compete or other
material restriction on the operation or scope or their respective businesses,
or (C) either Parent or Merger Sub being obligated to pay any royalties or other
material amounts to any third party in excess of those payable by Parent or
Merger Sub, respectively, prior to the Closing.
(l) NO INFRINGEMENT. The operation of the business of the
Company and its Subsidiaries as such business was conducted prior hereto, as
currently is conducted, and reasonably contemplated to be conducted, including
(a) the Company's and its Subsidiaries' design, development, manufacture,
distribution, reproduction, marketing or sale of the products, software or
services of the Company and its Subsidiaries (including Company Products), and
(b) the Company's use of any product, device or process, has not, does not and
will not infringe or misappropriate the Intellectual Property of any third party
or, constitute unfair competition or unfair trade practices under the laws of
any jurisdiction.
(m) ALL NECESSARY INTELLECTUAL PROPERTY. The Company
Intellectual Property constitutes all the material Intellectual Property used in
and/or necessary to the conduct of the business of the Company and its
Subsidiaries as it currently is conducted, and as it is currently planned to be
conducted by the Company and its Subsidiaries, including the design,
development, manufacture, use, import and sale of products, technology and
performance of services (including the Company Products).
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(n) NO NOTICE OF INFRINGEMENT. Neither the Company nor any of
its Subsidiaries has received notice from any third party that the operation of
the business of the Company or any of its Subsidiaries or any act, product or
service of the Company or any of its Subsidiaries, infringes or misappropriates
the Intellectual Property of any third party or constitutes unfair competition
or unfair trade practices under the laws of any jurisdiction.
(o) NO THIRD PARTY INFRINGEMENT. Except as set forth in Section
2.7(o) of the Company Disclosure Letter, to the Knowledge of the Company, no
person has or is infringing or misappropriating any Company Intellectual
Property.
(p) PROPRIETARY INFORMATION AGREEMENTS. The Company and each of
its Subsidiaries has taken reasonable steps to protect the Company's and its
Subsidiaries' rights in the Company's confidential information and trade secrets
that it wishes to protect or any trade secrets or confidential information of
third parties provided to the Company or any of its Subsidiaries, and, without
limiting the foregoing, each of the Company and its Subsidiaries has and
enforces a policy requiring each Employee to execute a proprietary
information/confidentiality agreement substantially in the form provided to
Parent, and all Employees of the Company and any of its Subsidiaries have
executed such an agreement. The Company and its Subsidiaries take reasonable
steps to protect the confidentiality and security of their software, databases,
systems, networks and Internet Sites from any unauthorized use, access,
interruption or modification by third parties.
(q) OPEN SOURCE. No Company Product uses, incorporates or has
embedded in it any source, object or other software code subject to an open
source license or other similar type of license (including without limitation,
the GNU General Public License, Library Generally Public License, Lesser General
Public License, Mozilla License, Berkeley Software Distribution License, Open
Source Initiative license, MIT, Apache or Public Domain Licenses), (each an
"Open Source License"), and no software subject to an Open Source License was
used in the development or design of any Company Product.
(r) SOURCE CODE ESCROW. Neither the Company nor any of its
Subsidiaries is a party to any Contract which will require that the computer
software source code owned by the Company or any Subsidiary be released from
escrow, or access to such source code otherwise be provided to any third party,
as a result of the execution, delivery or effectiveness of this Agreement or the
consummation of any of the transactions contemplated by this Agreement.
(s) NO DEFECT. All Company Products are free from any material
defect, bug, malware, virus or programming design or documentation error or
corruptant.
(t) PRIVACY. The Company and its Subsidiaries fully comply in
all material respects with all relevant laws and regulations, and with the
Company's own policies with respect to
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the privacy of all users and customers and any of their personally identifiable
information, and no written claims have been asserted or threatened against the
Company or any of its Subsidiaries by any person alleging a violation of any of
the foregoing.
2.8 COMPLIANCE; PERMITS.
(a) COMPLIANCE. Neither the Company nor any of its Subsidiaries is in
conflict with, or in default or in violation of, any Legal Requirement
applicable to the Company or any of its Subsidiaries or by which the Company or
any of its Subsidiaries or any of their respective businesses or properties is,
or the Company believes is reasonably likely to be, bound or affected, except
for those conflicts, defaults or violations that, individually or in the
aggregate, would not cause the Company to lose any material benefit or incur any
material liability. No investigation or review by any Governmental Entity is
pending or, to the Knowledge of the Company, has been threatened, against the
Company or any of its Subsidiaries. There is no material judgment, injunction,
order or decree binding upon the Company or any of its Subsidiaries which has or
would reasonably be expected to have the effect of prohibiting or materially
impairing any business practice of the Company or any of its Subsidiaries, any
acquisition of material property by the Company or any of its Subsidiaries or
the conduct of business by the Company and its Subsidiaries as currently
conducted.
(b) PERMITS. The Company and its Subsidiaries hold, to the extent
legally required, all material permits, licenses, variances, clearances,
consents, commissions, franchises, exemptions, orders and approvals from
Governmental Entities ("PERMITS") that are required for the operation of the
business of the Company (collectively, "COMPANY PERMITS"). As of the date
hereof, no suspension or cancellation of any of the Company Permits is pending
or, to the Knowledge of the Company, threatened. The Company and its
Subsidiaries are in compliance in all material respects with the terms of the
Company Permits.
2.9 LITIGATION. Except as set forth in Section 2.9 of the Company
Disclosure Letter, there are no claims, suits, actions or proceedings pending
or, to the Knowledge of the Company, threatened against the Company or any of
its Subsidiaries, before any court, governmental department, commission, agency,
instrumentality or authority, or any arbitrator that seeks to restrain or enjoin
the consummation of the transactions contemplated hereby or which would
reasonably be expected, either singularly or in the aggregate with all such
claims, actions or proceedings, to be material to the Company.
2.10 BROKERS' AND FINDERS' FEES; FEES AND EXPENSES. Except for fees payable
to UBS Securities LLC pursuant to an engagement letter dated August 11, 2004, as
amended by letter agreement dated July 1, 2005, a copy of which (including
exhibits) has been provided to Parent, the Company has not incurred, nor will it
incur, directly or indirectly, any liability for brokerage or finders' fees or
agents' commissions or any similar charges in connection with this Agreement or
any
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transaction contemplated hereby, and, except for an Indemnification Agreement,
dated August 11, 2004, with UBS Securities LLC, the Company has not entered into
an indemnification agreement or arrangement with any Person in connection with
this Agreement and the transactions contemplated hereby. An itemized good faith
estimate of the fees and expenses of any accountant, broker, financial advisor,
consultant, legal counsel or other Person retained by the Company in connection
with this Agreement or the transactions contemplated hereby incurred or to be
incurred by the Company in connection with this Agreement and the transactions
contemplated thereby is set forth in Section 2.10 of the Company Disclosure
Letter.
2.11 TRANSACTIONS WITH AFFILIATES. Except as set forth in the Company SEC
Reports, since the date of the Company's last proxy statement filed with the
SEC, no event has occurred that would be required to be reported by the Company
pursuant to Item 404 of Regulation S-K promulgated by the SEC under the
Securities Act.
2.12 EMPLOYEE BENEFIT PLANS.
(a) SCHEDULE. All employee compensation, incentive, fringe or benefit
plans, programs, policies, commitments, contracts (including each material
employment, severance, consulting, relocation, repatriation, expatriation or
other contract between the Company or any Affiliate (as defined below) and any
Employee (as defined below)) or other arrangements (whether or not set forth in
a written document and including, without limitation, all "employee benefit
plans" within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) covering any active, former
employee, director or consultant of Company (an "EMPLOYEE," which shall for this
purpose mean an Employee of Company or any Affiliate (as defined below)), any
subsidiary of Company or any trade or business (whether or not incorporated)
which is a member of a controlled group or which is under common control with
Company within the meaning of Section 414 of the Code (an "AFFILIATE"), or with
respect to which Company has or may have liability, are listed in Section
2.12(a) of the Company Schedule (the "COMPANY BENEFIT PLANS").
(b) DOCUMENTS. The Company has provided to Parent: (i) correct and
complete copies of all documents embodying each Company Benefit Plan, including
(without limitation) all amendments to each such Company Benefit Plan, and all
material written agreements and contracts relating to each such Company Benefit
Plan (including, but not limited to, administrative service agreements, group
annuity contracts and group insurance contracts, trust agreements, and policies
pertaining to fiduciary liability insurance covering the fiduciaries for each
Company Benefit Plan); (ii) the three (3) most recent annual reports (Form
Series 5500 and all schedules and financial statements attached thereto), if
any, required under ERISA or the Code in connection with each Company Benefit
Plan; (iii) the most recent summary plan description together with the
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summary(ies) of material modifications thereto, if any, required under ERISA
with respect to each Plan; (iv) all Internal Revenue Service (the "IRS")
determination, opinion, notification and/or advisory letters; (v) all
correspondence to or from any governmental agency relating to any Company
Benefit Plan; (vi) all forms and notices pursuant to the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended ("COBRA"); (vii) all
discrimination tests for each Company Benefit Plan for the most recent three (3)
plan years; (viii) the most recent annual actuarial valuations, if any, prepared
for each Company Employee Plan; (ix) if the Company Employee Plan is funded, the
most recent annual and periodic accounting of plan assets; (x) all
communications to Employees relating to any Company Employee Plan and any
proposed Company Employee Plan, in each case, relating to any amendments,
terminations, establishments, increases or decreases in benefits, acceleration
of payments or vesting schedules, or other events which would result in any
material liability to Company or any Affiliate; and (xi) all registration
statements, annual reports (Form 11-K and all attachments thereto) and
prospectuses prepared in connection with any Company Employee Plan.
(c) COMPLIANCE. Company has performed in all material respects all
obligations required to be performed by it under, is not in default or violation
of, and has no knowledge of any default or violation by any other party to, each
Company Employee Plan, and each Company Employee Plan has been maintained and
administered in all material respects in compliance with its terms and with the
requirements prescribed by any and all statutes, orders, rules and regulations,
including but not limited to ERISA and the Code, which are applicable to each
such plan. No suit, action or other litigation (excluding claims for benefits
incurred in the ordinary course of plan activities) has been brought, or to the
knowledge of Company is threatened, against or with respect to any such Company
Employee Plan. There are no audits, inquiries or proceedings pending or, to the
knowledge of Company, threatened by the IRS or Department of Labor (the "DOL")
with respect to any Company Employee Plan. All contributions, reserves or
premium payments required to be made or accrued as of the date hereof to any
Company Employee Plan has been timely made or accrued. Any Company Employee Plan
intended to be qualified under Section 401(a) of the Code and each trust
intended to qualify under Section 501(a) of the Code: (i) has either obtained a
favorable determination, notification, advisory and/or opinion letter, as
applicable, as to its tax-qualified status from the IRS or still has a remaining
period of time under applicable Treasury Regulations or IRS pronouncements in
which to apply for such letter and to make any amendments necessary to obtain a
favorable determination, and (ii) incorporates or has been amended to
incorporate all provisions required to comply with the Tax Reform Act of 1986
and subsequent legislation. Company does not have any plan or commitment to
establish any new Company Employee Plan, to modify any Company Employee Plan
(except to the extent required by law or to conform any such Company Employee
Plan to the requirements of any applicable law, in each case as previously
disclosed to Parent in writing, or as required by this Agreement), or to enter
into any new Company Employee Plan. Each Company Employee Plan (other than any
stock option plan) can be amended, terminated or otherwise discontinued after
the Effective Time in accordance with its terms, without liability to
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Parent, Company or any of its Affiliates (other than ordinary administration
expenses and expenses for benefits accrued but not yet paid). No Company
Employee Plan that is subject to Section 409A of the Code has been materially
modified (as defined under Section 409A of the Code) since October 3, 2004 and
all such non-qualified deferred compensation plans or arrangements have been
operated in good faith compliance with Section 409A of the Code from December
31, 2004 through the date hereof.
(d) MULTIPLE EMPLOYER AND MULTIEMPLOYER PLANS. Neither Company nor
any of its Affiliates has at any time ever maintained, established, sponsored,
participated in, or contributed to any plan subject to Title IV of ERISA or
Section 412 of the Code. At no time has Company or any of its Affiliates
contributed to or been obligated to contribute to any "multiemployer plan," as
such term is defined in Section 3(37) of ERISA or to any plan described in
Section 413 of the Code. Neither Company nor any of its Affiliates, nor any
officer or director of Company or any of its Affiliates is subject to any
liability or penalty under Section 4975 through 4980B of the Code or Title I of
ERISA. No "prohibited transaction," within the meaning of Section 4975 of the
Code or Sections 406 and 407 of ERISA, and not otherwise exempt under Section
4975 of the Code, and Section 408 of ERISA, has occurred with respect to any
Company Employee Plan which could subject Company or its Affiliates to material
liabilities.
(e) CONTINUATION COVERAGE. No Company Benefit Plan provides health
benefits (whether or not insured), with respect to Employees after retirement or
other termination of service (other than coverage mandated by applicable Legal
Requirements or benefits, the full cost of which is borne by the Employee) other
than individual arrangements the amounts of which are not material.
(f) INTERNATIONAL EMPLOYEE PLANS. Except as set forth in Section
2.12(f) of the Disclosure Letter, the Company does not now, nor has it ever had
the obligation to, maintain, establish, sponsor, participate in, or contribute
to any International Employee Plan. As used in this Agreement, "INTERNATIONAL
EMPLOYEE PLAN" shall mean each Company Benefit Plan that has been adopted or
maintained by the Company or any Affiliate, whether informally or formally, or
with respect to which the Company or any Affiliate will or may have any
liability, for the benefit of Employees who perform services outside the United
States.
(g) EFFECT OF TRANSACTION. Except as set forth in Section 2.12(g) of
the Company Disclosure Letter, the execution of this Agreement and the
consummation of the transactions contemplated hereby will not (either alone or
upon the occurrence of any additional or subsequent events) constitute an event
under any Company Benefit Plan that will or may result in any material payment
(whether of severance pay or otherwise), acceleration of payment, forgiveness of
indebtedness, vesting, distribution, increase in benefits or obligation to fund
benefits with respect to any Employee. There is no contract, agreement, plan or
arrangement with an Employee to which the
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Company or any of its Subsidiaries is a party as of the date of this Agreement,
that, individually or collectively and as a result of the transaction
contemplated hereby (whether alone or upon the occurrence of any additional or
subsequent events), would reasonably be expected to give rise to the payment of
any amount that would not be deductible pursuant to Section 280G of the Code.
(h) HEALTHCARE COMPLIANCE. Neither the Company nor any Affiliate has,
prior to the Effective Time, violated any of the health care continuation
requirements of COBRA, the requirements of Family Medical Leave Act of 1993, as
amended, or the requirements of the Health Insurance Portability and
Accountability Act of 1996, or any amendment to each such act, or any similar
provisions of state law applicable to its Employees, except where the violation,
individually or in the aggregate, would not be material the Company.
(i) LABOR. The Company is not presently, nor has it been in the past,
a party to, or bound by, any collective bargaining agreement or union contract
with respect to Employees and no collective bargaining agreement is being
negotiated by the Company or any of its Subsidiaries. To the Knowledge of the
Company, there are no activities or proceedings of any labor union to organize
any Employees. There is no labor dispute, strike or work stoppage against the
Company or any of its Subsidiaries pending or, to the Knowledge of the Company,
threatened or reasonably anticipated which may materially interfere with the
respective business activities of the Company or any of its Subsidiaries. None
of the Company, any of its Subsidiaries or any of their respective
representatives or Employees has committed any material unfair labor practice in
connection with the operation of the respective businesses of the Company or any
of its Subsidiaries. There are no actions, suits, claims, labor disputes or
grievances pending, or, to the knowledge of the Company, threatened or
reasonably anticipated relating to any labor, safety or discrimination matters
involving any Employee, including charges of unfair labor practices or
discrimination complaints, which, if adversely determined, would, individually
or in the aggregate, be material to the Company. Neither the Company nor any of
its Subsidiaries has engaged in any unfair labor practices within the meaning of
the National Labor Relations Act.
2.13 TITLE TO PROPERTIES.
(a) PROPERTIES. Section 2.13(a)(i) of the Company Disclosure Letter
sets forth a list of all real property currently owned by the Company or any of
its Subsidiaries (the "OWNED REAL PROPERTY"). Section 2.13(a)(ii) of the Company
Disclosure Letter sets forth a list of all real property currently leased,
licensed, subleased or otherwise occupied by the Company or any of its
Subsidiaries excluding the Owned Real Property (collectively, the "LEASED REAL
PROPERTY"), the name of the lessor, the date of the relevant occupancy agreement
and each amendment thereto and the aggregate annual rental and/or other fees
payable under any such lease (collectively, the "LEASES"). All such current
Leases are in full force and effect, are valid and effective in accordance with
their respective
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terms, and there is not, under any of such Leases, any existing default or event
of default (or event which with notice or lapse of time, or both, would
constitute a default). The Leased Real Property and the Owned Real Property
shall be collectively referred to herein as the "COMPANY REAL PROPERTY").
(b) CONDITION OF COMPANY REAL PROPERTY. Except as otherwise described
in Section 2.13(b) of the Company Disclosure Letter: (i) there are no
structural, electrical, mechanical, plumbing, roof, paving or other defects in
any improvements located on any of the Owned Real Property as could, either
individually or in the aggregate, have a material and adverse effect on the use,
development, occupancy or operation thereof, (ii) to the Knowledge of the
Company, there are no natural or artificial conditions upon any Owned Real
Property or any other facts or conditions which could, in the aggregate, have a
material and adverse effect on the transferability, financeability, ownership,
leasing, use, development, occupancy or operation of any such real property,
(iii) neither the Company nor any of its Subsidiaries has received any notice
from any insurance company of any defects or inadequacies in any Company Real
Property or any part thereof which could materially and adversely affect the
insurability of such property or the premiums for the insurance thereof, nor has
any notice been given by any insurer of any such property requesting the
performance of any repairs, alterations or other work with which compliance has
not been made, and (iv) there are no pending, or, to the Knowledge of the
Company, threatened condemnation or eminent domain actions or proceedings, or
any special assessments or other activities of any public or quasi-public body
that are reasonably likely to materially and adversely affect the Owned Real
Property. To the Knowledge of the Company, neither the Company nor any of its
Subsidiaries will be required to incur more than $100,000 to restore any Leased
Real Property at the end of the term of any Lease.
(c) VALID TITLE. The Company and each of its Subsidiaries has good
and valid title to, or, in the case of leased properties and assets, valid
leasehold interests in, all of its tangible properties and assets, real,
personal and mixed, used or held for use in its business, free and clear of any
Liens, except for Liens imposed by law in respect of obligations not yet due
which are owed in respect of taxes and Liens which are not material in
character, amount or extent, and which do not materially detract from the value,
or materially interfere with the present use, of the property subject thereto or
affected thereby.
2.14 ENVIRONMENTAL MATTERS.
(a) HAZARDOUS MATERIAL. Except as would not reasonably be expected to
result in a material liability to the Company or any of its Subsidiaries, no
underground storage tanks and no amount of any substance that has been
designated by any Governmental Entity or by applicable foreign, federal, state,
provincial or local Legal Requirement to be radioactive, toxic, hazardous or
otherwise a danger to health or the environment, including PCBs, asbestos,
petroleum, toxic mold,
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urea-formaldehyde and all substances listed as hazardous substances pursuant to
the Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended, or defined as a hazardous waste pursuant to the United States
Resource Conservation and Recovery Act of 1976, as amended, and the regulations
promulgated pursuant to said laws, but excluding office and janitorial supplies
properly and safely maintained, (a "HAZARDOUS MATERIAL") are present, as a
result of the actions of the Company or any of its Subsidiaries or any affiliate
of the Company, or, to the Company's Knowledge, as a result of any actions of
any third party or otherwise, in, on or under any property, including the land
and the improvements, ground water and surface water thereof, that the Company
or any of its Subsidiaries has at any time owned, operated, occupied or leased.
(b) HAZARDOUS MATERIALS ACTIVITIES. Neither the Company nor any of
its Subsidiaries has transported, stored, used, manufactured, disposed of,
released, removed or exposed its Employees or others to Hazardous Materials or
manufactured any product containing a Hazardous Material (collectively
"HAZARDOUS MATERIALS ACTIVITIES") in violation, in any material respect, of any
Legal Requirement or in a manner which has caused or could reasonably be
expected to cause an adverse health effect to any such person. There are no
facts or circumstances likely to prevent or delay the ability of the Company or
any its Subsidiaries to comply, when required, with the European Directive
2002/96/EC on waste electrical and electronic equipment ("WEEE DIRECTIVE") or
European Directive 2002/95/EC on the restriction of the use of certain hazardous
substances in electrical and electronic equipment ("RoHS DIRECTIVE") and Section
2.14(b) of the Company Disclosure Letter lists all products of the Company or
any of its Subsidiaries which are subject to the RoHS Directive which will not
be in compliance with the RoHS Directive as of the Closing.
(c) Neither the Company nor any of its Subsidiaries have entered into
any agreement that may require any of them to guarantee, reimburse, pledge,
defend, hold harmless, or indemnify any other party with respect to any material
liabilities arising out of the Hazardous Material Activities of the Company or
any of its Subsidiaries or any Legal Requirement relating to the environment,
natural resources, pollution, worker safety or exposure of any individual to a
Hazardous Material ("ENVIRONMENTAL LAW").
(d) PERMITS. The Company and its subsidiaries currently hold all
Permits (the "COMPANY ENVIRONMENTAL PERMITS") necessary for the conduct of the
Company's and its Subsidiaries' Hazardous Material Activities and other
businesses of the Company and its Subsidiaries as such activities and businesses
are currently being conducted.
(e) ENVIRONMENTAL LIABILITIES. No action, proceeding, revocation
proceeding, amendment procedure, writ or injunction is pending, and to the
Company's Knowledge, no action, proceeding, revocation proceeding, amendment
procedure, writ or injunction has been threatened by any Governmental Entity,
against the Company or any of its Subsidiaries concerning any Company
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Environmental Permit, Hazardous Material or any Hazardous Materials Activity of
the Company or any of its Subsidiaries. The Company is not aware of any fact or
circumstance which could reasonably be expected to result in a material
liability to the Company or any of its Subsidiaries arising out of the Hazardous
Materials Activities of the Company or any of its Subsidiaries or pursuant to
any Environmental Law.
(f) ENVIRONMENTAL DOCUMENTS. The Company has made available for
inspection by Parent and its agents and representatives all records in the
Company's or any Subsidiary's possession or control concerning the Hazardous
Material Activities of the Company or its Subsidiaries, all environmental
assessments, audits, and sampling reports, Company Environmental Permits, and
material correspondence with any Governmental Entity relating to Environmental
Laws.
2.15 CONTRACTS.
(a) MATERIAL CONTRACTS. For purposes of this Agreement, "COMPANY
MATERIAL CONTRACT" shall mean:
(i) any "material contracts" (as such term is defined in Item
601(b)(10) of Regulation S-K of the SEC) with respect to the Company and its
Subsidiaries;
(ii) any employment or consulting Contract with any executive
officer or other employee of the Company earning an annual salary in excess of
$100,000 or member of the Company's Board of Directors, other than those that
are terminable by the Company or any of its Subsidiaries on no more than 30 days
notice without liability or financial obligation to the Company;
(iii) any Contract or plan, including any stock option plan,
stock appreciation right plan or stock purchase plan, any of the benefits of
which will be increased, or the vesting of benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated by this
Agreement or the value of any of the benefits of which will be calculated on the
basis of any of the transactions contemplated by this Agreement;
(iv) any agreement of indemnification or any guaranty other than
any agreement of indemnification entered into in connection with the sale or
license of hardware or software products in the ordinary course of business;
(v) any Contract containing any covenant (A) limiting in any
respect the right of the Company or any of its Subsidiaries to engage in any
line of business, to make use of any material Intellectual Property or compete
with any Person in any material line of business or to compete with any person,
(B) granting any exclusive distribution rights, or (C) otherwise having an
adverse effect on the right of the Company and its Subsidiaries to sell,
distribute or manufacture any
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material products or services or to purchase or otherwise obtain any material
software, components, parts or subassemblies;
(vi) any Contract relating to the disposition or acquisition by
the Company or any of its Subsidiaries, after the date of this Agreement, of a
material amount of assets not in the ordinary course of business or pursuant to
which the Company or any of its Subsidiaries has any material ownership interest
in any other Person or other business enterprise other than the Company's
Subsidiaries;
(vii) any dealer, distributor, joint marketing or development
agreement under which the Company or any of its Subsidiaries have continuing
material obligations to jointly market any product, technology or service and
which may not be canceled without penalty upon notice of 30 days or less, or any
material agreement pursuant to which the Company or any of its Subsidiaries have
continuing material obligations to jointly develop any Intellectual Property
that will not be owned, in whole or in part, by the Company or any of its
Subsidiaries and which may not be terminated without liability or financial
obligation to the Company upon notice of 30 days or less;
(viii) any Contract to provide source code to any third party for
any product or technology that is material to the Company and its Subsidiaries
taken as a whole;
(ix) any Contract containing any material support, maintenance or
service obligation on the part of the Company or any of its Subsidiaries, other
than those obligations that are terminable by the Company or any of its
Subsidiaries on no more than 30 days notice without liability or financial
obligation to the Company or its Subsidiaries;
(x) any Contract to license any third party to manufacture or
reproduce any of the Company's products, services or technology or any Contract
to sell or distribute any of the Company's products, services or technology,
except agreements with distributors or sales representative in the ordinary
course of business consistent with past practice and terminable without
liability or financial obligation to the Company upon notice of 30 days or less
and substantially in the form previously provided to Parent;
(xi) any mortgages, indentures, guarantees, loans or credit
agreements, security agreements or other Contracts relating to the borrowing of
money or extension of credit, other than accounts receivables and payables in
the ordinary course of business;
(xii) any material settlement agreement entered into within five
(5) years prior to the date of this Agreement;
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(xiii) any other agreement, contract or commitment (other than
purchase orders from customers in the ordinary course of business consistent
with past practices for the Company's standard products) that has a value of
$250,000 or more in any individual case or which relates to one of Company's
customers or affiliates listed on Section 2.15(a)(xiii) of the Company
Disclosure Letter which sets forth a list of the Company's top ten customers by
related revenue for the four fiscal quarters ended September 30, 2005; or
(xiv) any Contract, or group of Contracts with a Person (or group
of affiliated Persons), the termination or breach of which would be reasonably
expected to have a material adverse effect on any material division or business
unit or other material operating group of product or service offerings of the
Company or otherwise have a Material Adverse Effect on the Company.
(b) SCHEDULE. Section 2.15(b) of the Company Disclosure Letter sets
forth a list of all Company Material Contracts to which the Company or any of
its Subsidiaries is a party or is bound by as of the date hereof which are
described in Sections 2.15(a)(i) through 2.15(a)(xiv) hereof.
(c) NO BREACH. All Company Material Contracts are valid and in full
force and effect except to the extent they have previously expired in accordance
with their terms or if the failure to be in full force and effect, individually
or in the aggregate, would not reasonably be expected to be material to the
Company. Neither the Company nor any of its Subsidiaries has violated any
provision of, or committed or failed to perform any act which, with or without
notice, lapse of time or both would constitute a default under the provisions
of, any Company Material Contract, except in each case for those violations and
defaults which, individually or in the aggregate, would not reasonably be
expected to be material to the Company.
(d) CONTRACTS. For purposes of this Agreement, "CONTRACTS" shall mean
any written, oral or other agreement, contract, subcontract, settlement
agreement, lease, binding understanding, instrument, note, option, warranty,
purchase order, license, sublicense, insurance policy, benefit plan or legally
binding commitment or undertaking of any nature, as in effect as of the date
hereof or as may hereinafter be in effect.
(e) RIGHTS. Upon consummation of the Merger, Parent will
automatically succeed to, and become entitled to, exercise the Company's rights
and remedies under any Contract to which the Company or any of its Subsidiaries
is a party.
2.16 DISCLOSURE. None of the information supplied or to be supplied by or
on behalf of the Company for inclusion or incorporation by reference in the
proxy statement to be filed by the Company with the SEC (the "PROXY STATEMENT"),
will, at the time the Proxy Statement is mailed to the stockholders of the
Company, at the time of the Stockholders' Meeting or as of the Effective Time,
contain any untrue statement of a material fact or omit to state any material
fact required to be
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stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they are made, not misleading. The Proxy
Statement will comply as to form in all material respects with the provisions of
the Exchange Act and the rules and regulations promulgated by the SEC
thereunder. Notwithstanding the foregoing, no representation or warranty is made
by the Company with respect to statements made or incorporated by reference
therein about Parent supplied by Parent for inclusion or incorporation by
reference in the Proxy Statement.
2.17 BOARD APPROVAL. The Board of Directors of the Company has, by
resolutions duly adopted by unanimous vote at a meeting of all Directors duly
called and held and not subsequently rescinded or modified in any way (the
"COMPANY BOARD APPROVAL") has duly (i) determined that the Merger is fair to,
and in the best interests of, the Company and its stockholders and declared the
Merger to be advisable, (ii) approved this Agreement and the transactions
contemplated thereby, including the Merger, and (iii) recommended that the
stockholders of the Company approve and adopt this Agreement and approve the
Merger and directed that such matter be submitted to Company's stockholders at
the Stockholders' Meeting.
2.18 FAIRNESS OPINION. The Company's Board of Directors has received a
written opinion from UBS Securities LLC, dated as of February 17, 2006, in
customary form to the effect that, as of such date, the Per Share Merger
Consideration is fair, from a financial point of view, to the Company
stockholders (the "COMPANY FAIRNESS OPINION").
2.19 TAKEOVER STATUTES. The Board of Directors of the Company has taken all
steps necessary to exclude the applicability of any "moratorium", "control share
acquisition", "business combination", "fair price" or other form of
anti-takeover Legal Requirements of any jurisdiction that may purport to be
applicable to this Agreement and no such Legal Requirement will apply to Parent
or Merger Sub during the pendency of this Agreement, including the execution,
delivery or performance of this Agreement and the consummation of the Merger and
the other transactions contemplated hereby.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT
AND MERGER SUB
Parent and Merger Sub represent and warrant to the Company, subject to the
exceptions specifically disclosed in writing in the disclosure letter supplied
by Parent and Merger Sub to the Company dated as of the date hereof (the "PARENT
DISCLOSURE LETTER"), as follows:
3.1 ORGANIZATION; STANDING AND POWER; CHARTER DOCUMENTS; MERGER SUB.
(a) ORGANIZATION; STANDING AND POWER. Each of Parent and Merger Sub
is a corporation or other organization duly organized, validly existing and in
good standing under the laws
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of the jurisdiction of its incorporation or organization (except, in the case of
good standing, for entities organized under the laws of any jurisdiction that
does not recognize such concept), has the requisite power and authority to own,
lease and operate its properties and to carry on its business as now being
conducted and is duly qualified or licensed and in good standing to do business
in each jurisdiction in which the nature of its business or the ownership or
leasing of its properties makes such qualification necessary, other than in such
jurisdictions where the failure to be so organized, existing and in good
standing or so qualified, individually or in the aggregate, would not reasonably
be expected to have a Material Adverse Effect on Parent.
(b) CHARTER DOCUMENTS. Parent has delivered or made available to the
Company a true and correct copy of the Certificate of Incorporation and Bylaws
of Parent and Merger Sub, each as amended to date (collectively, the "PARENT
CHARTER DOCUMENTS"). Parent is not in violation of any of the provisions of the
Parent Charter Documents.
3.2 AUTHORITY; NON-CONTRAVENTION; NECESSARY CONSENTS.
(a) AUTHORITY. Each of Parent and Merger Sub has all requisite
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Parent and Merger
Sub and no other corporate proceedings on the part of Parent or Merger Sub are
necessary to authorize the execution and delivery of this Agreement or to
consummate the Merger and the other transactions contemplated hereby, subject
only to the approval and adoption of this Agreement and the approval of the
Merger by Parent as Merger Sub's sole stockholder and the filing of the
Certificate of Merger pursuant to Delaware Law. This Agreement has been duly
executed and delivered by Parent and Merger Sub and, assuming due execution and
delivery by the Company, constitutes valid and binding obligations of Parent,
enforceable against Parent and Merger Sub in accordance with its terms.
(b) NON-CONTRAVENTION. The execution and delivery of this Agreement
by Parent and Merger Sub does not, and performance of this Agreement by Parent
will not: (i) conflict with or violate the Parent Charter Documents or the
certificate of incorporation or bylaws of Merger Sub, (ii) subject to compliance
with the requirements set forth in Section 3.2(c), conflict with or violate any
material Legal Requirement applicable to Parent, Merger Sub or any of Parent's
other Subsidiaries or by which Parent, Merger Sub or any of Parent's other
Subsidiaries or any of their respective properties is bound or affected, or
(iii) result in any breach of or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, or materially
impair Parent's rights or alter the rights or obligations of any third party
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a Lien on any of
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the properties or assets of Parent or any of its Subsidiaries pursuant to, any
Contract to which Parent or any of its Subsidiaries is a party the termination
or breach of which would have a Material Adverse Effect on Parent. Section
3.2(b) of the Parent Disclosure Letter lists all consents, waivers and approvals
under any of Parent's Contracts required to be obtained in connection with the
consummation of the transactions contemplated hereby, which, if individually or
in the aggregate were not obtained, would result in a Material Adverse Effect on
Parent or the Surviving Corporation.
(c) NECESSARY CONSENTS. No consent, approval, order or authorization
of, or registration, declaration or filing with any Governmental Entity or any
other Person is required to be obtained or made by Parent in connection with the
execution and delivery of this Agreement or the consummation of the Merger and
other transactions contemplated hereby, except for the Necessary Consents.
3.3 SEC FILINGS; FINANCIAL STATEMENTS. Each of the consolidated financial
statements (including, in each case, any related notes thereto) contained in the
Form 10-K for the fiscal year ended September 30, 2005 (as amended prior to the
date hereof) and the Form 10-Q for the fiscal quarter ended December 31, 2005
(the "PARENT FINANCIALS"): (i) complied as to form in all material respects with
the published rules and regulations of the SEC with respect thereto, (ii) was
prepared in accordance with GAAP applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes thereto or, in the
case of unaudited interim financial statements, as may be permitted by the SEC
on Form 10-Q, 8-K or any successor form under the Exchange Act), and (iii)
fairly presented in all material respects the consolidated financial position of
Parent and its consolidated Subsidiaries as at the respective dates thereof and
the consolidated results of Parent's operations and cash flows for the periods
indicated. The balance sheet of Parent contained in the Form 10-Q for the
quarter ended December 31, 2005 as of December 31, 2005 is hereinafter referred
to as the "PARENT BALANCE SHEET." Except as disclosed in the Parent Financials,
since the date of the Parent Balance Sheet, neither Parent nor any of its
Subsidiaries has any liabilities required under GAAP to be set forth on a
consolidated balance sheet (absolute, accrued, contingent or otherwise) which,
individually or in the aggregate, would have a Material Adverse Effect on
Parent.
3.4 DISCLOSURE. None of the information supplied or to be supplied by or
on behalf of Parent and Merger Sub for inclusion or incorporation by reference
in the Proxy Statement, will, at the time the Proxy Statement is mailed to the
stockholders of Company, the time of the Stockholders' Meeting or as of the
Effective Time, 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 the light of the circumstances under which they are
made, not misleading. Notwithstanding the foregoing, no representation or
warranty is made by Parent with respect to statements made or incorporated by
reference therein about the Company.
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3.5 BOARD APPROVAL. The Board of Directors of Parent has, by resolutions
duly adopted by unanimous vote at a meeting of all Directors duly called and
held and not subsequently rescinded or modified in any way, duly (i) determined
that the Merger is fair to, and in the best interests of, Parent and its
stockholders and declared the Merger to be advisable, and (ii) approved this
Agreement and the transactions contemplated hereby, including the Merger.
3.6 NO PRIOR MERGER SUB OPERATIONS. Merger Sub was formed solely for the
purpose of effecting the Merger and has not engaged in any business activities
or conducted any operations other than in connection with the transactions
contemplated hereby.
3.7 FINANCING. Parent will have at the Closing, after taking into account
cash on hand of Parent and Company immediately prior to the Closing and proceeds
from a planned Financing, sufficient cash to satisfy its obligations under
Section 1.7(b).
ARTICLE IV
CONDUCT BY THE COMPANY PRIOR TO THE EFFECTIVE TIME
4.1 CONDUCT OF BUSINESS BY THE COMPANY.
(a) ORDINARY COURSE. During the period from the date hereof and
continuing until the earlier of the termination of this Agreement pursuant to
its terms or the Effective Time, the Company and each of its Subsidiaries shall,
except as otherwise expressly contemplated by this Agreement or to the extent
that Parent shall otherwise consent in writing, (i) carry on its business in the
usual, regular and ordinary course, in substantially the same manner as
heretofore conducted and in material compliance with all applicable laws and
regulations, (ii) pay its debts and taxes when due, pay or perform other
material obligations when due, and (iii) use all reasonable efforts consistent
with past practices and policies to (x) preserve intact its present business
organization, (y) keep available the services of its present executive officers
and Employees, and (z) preserve its relationships with customers, suppliers,
licensors, licensees, and others with which it has business dealings. In
addition, the Company shall promptly notify in writing Parent of any material
adverse event involving its business or operations.
(b) REQUIRED CONSENT. In addition, without limiting the generality of
Section 4.1(a), except as permitted by the terms of this Agreement, and except
as provided in Article IV of the Company Disclosure Letter, without the prior
written consent of Parent, during the period from the date hereof and continuing
until the earlier of the termination of this Agreement pursuant to its terms or
the Effective Time, the Company shall not do any of the following, and shall not
permit any of its Subsidiaries to do any of the following:
(i) Enter into any new line of business;
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(ii) Declare, set aside or pay any dividends on or make any other
distributions (whether in cash, stock, equity securities or property) in respect
of any capital stock or split, combine or reclassify any capital stock or issue
or authorize the issuance of any other securities in respect of, in lieu of or
in substitution for any capital stock, other than any such transaction by a
wholly-owned Subsidiary of it that remains a wholly-owned Subsidiary of it after
consummation of such transaction, in the ordinary course of business consistent
with past practice;
(iii) Purchase, redeem or otherwise acquire, directly or
indirectly, any shares of its capital stock or the capital stock of its
Subsidiaries, except repurchases of unvested shares at cost in connection with
the termination of the employment relationship with any Employee pursuant to
stock option or purchase agreements in effect on the date hereof;
(iv) Issue, deliver, sell, authorize, pledge or otherwise
encumber any shares of capital stock, Company Voting Debt or any securities
convertible into shares of capital stock or Company Voting Debt, or
subscriptions, rights, warrants or options to acquire any shares of capital
stock or Company Voting Debt or any securities convertible into shares of
capital stock or Company Voting Debt, or enter into other agreements or
commitments of any character obligating it to issue any such securities or
rights, other than: (A) issuances of Company Common Stock upon the exercise of
Company Options, warrants or other rights of the Company existing on the date
hereof in accordance with their present terms or granted pursuant to clause (B)
hereof, (B) grants of stock options or other stock based awards of or to
acquire, Company Common Stock granted under the Company Stock Option Plans
outstanding on the date hereof, in each case in the ordinary course of business
consistent with past practices to new hires and which options or stock based
awards have a vesting schedule no more favorable than one-quarter (1/4) on the
first anniversary of the date of hire, and one-forty-eighth (1/48) on each
monthly anniversary of the date of hire thereafter and do not accelerate, or
become subject to acceleration, directly or indirectly, as a result of the
approval or consummation of the Merger and/or termination of employment
following the Merger, but in no event shall the period for exercisability under
such option following termination of employment be extended beyond 90 days
following a termination of employment for any reason other than retirement,
death or total and permanent disability ("ROUTINE GRANTS");
(v) Cause, permit or propose any amendments to the Company
Charter Documents or any of the Subsidiary Charter Documents of the Company's
Subsidiaries;
(vi) Acquire or agree to acquire by merging or consolidating
with, or by purchasing any equity or voting interest in or a portion of the
assets of, or by any other manner, any business or any Person or division
thereof, or otherwise acquire or agree to acquire any assets which are material,
individually or in the aggregate, to the business of the Company;
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(vii) Enter into any binding agreement, agreement in principle,
letter of intent, memorandum of understanding or similar agreement with respect
to any material joint venture, strategic partnership or alliance;
(viii) Sell, lease, license, encumber or otherwise dispose of any
properties or assets except (A) the sale, lease or disposition (other than
through licensing) of property or assets which are not material, individually or
in the aggregate, to the business of Company and its subsidiaries or (B) the
licenses of current Company Products in the ordinary course of business and in a
manner consistent with past practice having a term of less than or equal to 12
months, and having no material support, maintenance or service obligation, other
than those obligations that are terminable by the Company or any of its
Subsidiaries on no more than 30 days notice without liability or financial
obligation to the Company;
(ix) Make any loans, advances or capital contributions to, or
investments in, any other Person, other than: (A) loans or investments by it or
a wholly-owned Subsidiary of it to or in it or any wholly-owned Subsidiary of
it, or (B) employee loans or advances for travel and entertainment expenses made
in the ordinary course of business consistent with past practices;
(x) Except as required by GAAP or the SEC as concurred in by its
independent registered public accounting firm, make any material change in its
methods, principles or practices of accounting since the date of the Company
Balance Sheet;
(xi) Make any Tax election or accounting method change that,
individually or in the aggregate, is reasonably likely to adversely affect in
any material respect the tax liability or tax attributes of the Company or any
of its subsidiaries or settle or compromise any material income tax liability or
consent to any extension or waiver of any limitation period with respect to
Taxes;
(xii) Revalue any of its assets;
(xiii) (A) Pay, discharge, settle or satisfy any claims
(including any Tax claim), liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise), or litigation (whether or not
commenced prior to the date of this Agreement) other than the payment,
discharge, settlement or satisfaction for money, of claims, liabilities,
obligations or litigation (x) in the ordinary course of business consistent with
past practice or in accordance with their terms, of claims not in excess of
$500,000 individually or $1,000,000 in the aggregate or (y) to the extent
subject to reserves on the Company Financials existing as of the date hereof in
accordance with GAAP, or (B) waive the benefits of, agree to modify in any
manner, terminate, release any person from or knowingly fail to enforce any
confidentiality or similar agreement to which Company or any of its subsidiaries
is a party or of which Company or any of its subsidiaries is a beneficiary;
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(xiv) Except as required by Legal Requirements or Contracts
binding on the Company or its Subsidiaries as of the date hereof, (1) increase
in any manner the amount of compensation or fringe benefits of, or pay any bonus
to or grant severance or termination pay to, any Employee or director of the
Company or any Subsidiary of the Company, (2) make any increase in or commitment
to increase any Company Benefit Plan (including any severance plan), adopt or
amend or make any commitment to adopt or amend any Company Benefit Plan or make
any contribution, other than regularly scheduled contributions, to any Company
Benefit Plan, (3) waive any stock repurchase rights, accelerate, amend or change
the period of exercisability of Company Options or Company Restricted Stock, or
reprice any Company Options or authorize cash payments in exchange for any
Company Options, (4) enter into any employment, severance, termination or
indemnification agreement with any Employee or enter into any collective
bargaining agreement (other than offer letters and letter agreements entered
into in the ordinary course of business consistent with past practice with
employees who are terminable "at will"), (5) make any material oral or written
representation or commitment with respect to any material aspect of any Company
Benefit Plan that is not materially in accordance with the existing written
terms and provision of such Company Benefit Plan, (6) grant any stock
appreciation right, phantom stock award, stock-related award or performance
award (whether payable in cash, shares or otherwise) to any Person (including
any Company Employee), or (7) enter into any agreement with any Company Employee
the benefits of which are (in whole or in part) contingent or the terms of which
are materially altered upon the occurrence of a transaction involving Company of
the nature contemplated hereby; PROVIDED, HOWEVER, that nothing herein shall be
construed as prohibiting the Company from (a) granting Company Options that are
Routine Grants;
(xv) Grant any exclusive rights with respect to any Company
Intellectual Property;
(xvi) Enter into or renew any Contracts containing, or otherwise
subject the Surviving Corporation or Parent to, any non-competition, exclusivity
or other material restrictions on the Company or the Surviving Corporation or
Parent, or any of their respective businesses, following the Closing;
(xvii) Enter into any agreement or commitment the effect of which
would be to grant to a third party following the Merger any actual or potential
right of license to any material Intellectual Property owned by Parent or any of
its Subsidiaries or access to any source code owned by the Company;
(xviii) Hire employees other than in the ordinary course of
business consistent with past practice;
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(xix) Incur any indebtedness for borrowed money or guarantee any
such indebtedness of another Person, issue or sell any debt securities or
options, warrants, calls or other rights to acquire any debt securities of the
Company or any of its Subsidiaries, guarantee any debt securities of another
Person, enter into any "keep well" or other agreement to maintain any financial
statement condition of any other Person (other than any wholly-owned Subsidiary
of it) or enter into any arrangement having the economic effect of any of the
foregoing, other than in connection with the financing of ordinary course trade
payables consistent with past practice;
(xx) Make any individual or series of related payments outside of
the ordinary course of business or make or commit to make capital expenditures
beyond those contained in the Company's capital expenditure budget in effect on
the date hereof, a copy of which is included in Section 4.1(b)(xxi) of the
Company Disclosure Letter ;
(xxi) Enter into, modify or amend in a manner adverse in any
material respect to the Company, or terminate any Company Material Contract
currently in effect, or waive, release or assign any material rights or claims
thereunder, in each case, in a manner adverse in any material respect to the
Company, other than any modification, amendment or termination of any such
Company Material Contract in the ordinary course of business, consistent with
past practice;
(xxii) Enter into any Contract requiring the Company or any of
its Subsidiaries to pay in excess of an aggregate of $1,500,000 individually, or
$5,000,000 in the aggregate;
(xxiii) Agree in writing or otherwise to take any of the actions
described in (i) through (xxii) above.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 PROXY STATEMENT.
As promptly as practicable after the execution of this Agreement, the Company
shall prepare, and file with the SEC, the Proxy Statement relating to the
Company Stockholder Approval. Parent shall provide promptly to the Company such
information concerning Parent as, in the reasonable judgment of Parent, the
Company or their respective counsel, may be required or appropriate for
inclusion in the Proxy Statement, or in any amendments or supplements thereto.
At the earliest practicable time following the later of (i) receipt and
resolution of SEC comments thereon, or (ii) the expiration of the 10-day waiting
period provided in Rule 14a-6(a) promulgated under the Exchange Act, the Company
shall file definitive proxy materials with the SEC and cause the Proxy Statement
to be mailed to its stockholders. The Company will use commercially reasonable
efforts to cause all documents that it is responsible for filing with the SEC or
other regulatory authorities in connection with the Merger (or
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as required or appropriate to facilitate the Merger) to comply in all material
respects with all applicable Legal Requirements. Prior to filing the preliminary
proxy materials, definitive proxy materials or any other filing with the SEC,
any other Governmental Entity or other regulatory authorities, the Company shall
provide Parent (which term shall in all instances in this Section 5.1 also
include Parent's counsel) with reasonable opportunity to review and comment on
each such filing in advance and the Company shall in good faith consider
including in such filings all comments reasonably proposed by Parent. The
Company will notify Parent promptly of the receipt of any comments from the SEC
or its staff (or of notice of the SEC's intent to review the Proxy Statement)
and of any request by the SEC or its staff or any other government or regulatory
officials for amendments or supplements to the Proxy Statement or any other
filing or for additional/supplemental 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 or any other government or regulatory
officials, on the other hand, with respect to the Proxy Statement or any such
other filing. The Company and its outside counsel shall permit Parent to
participate in all communications with the SEC and its staff (including all
meetings and telephone conferences) relating to the Proxy Statement, this
Agreement or the Merger. The Company shall consult with Parent prior to
responding to any comments or inquiries by the SEC, any other Governmental
Entity or regulatory authority with respect to any filings related to (or
necessary or appropriate to facilitate) the Merger, shall provide Parent with
reasonable opportunity to review and comment on any such written response in
advance and shall in good faith consider including in such response all comments
reasonably proposed by Parent. Whenever any event occurs that is required to be
set forth in an amendment or supplement to the Proxy Statement or any other
filing, the Company shall promptly inform Parent of such occurrence, provide
Parent with reasonable opportunity to review and comment on any such amendment
or supplement in advance, shall in good faith consider including in such
amendment or supplement all comments reasonably proposed by Parent, and shall
cooperate in filing with the SEC or its staff, any other Governmental Entity or
regulatory authority, and/or mailing to the stockholders of the Company, such
amendment or supplement.
5.2 MEETING OF COMPANY STOCKHOLDERS; BOARD RECOMMENDATION.
(a) MEETING OF COMPANY STOCKHOLDERS. Promptly after the date hereof,
the Company will take all action necessary in accordance with Delaware Law and
its Certificate of Incorporation and Bylaws to call, hold and convene a meeting
of its stockholders to consider adoption and approval of this Agreement and
approval of the Merger (the "STOCKHOLDERS' MEETING"). The Stockholder's Meeting
shall be held as promptly as practicable, and in any event (to the extent
permissible under applicable law) within 45 days after the Proxy Statement is
cleared by the SEC (or if no SEC comments are received on or prior to the
expiration of the 10-day waiting period provided in Rule 14a-6(a) promulgated
under the Exchange Act, within 55 days after such initial filing). Subject to
Section 5.3(d), the Company will use all reasonable efforts to solicit from its
stockholders
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proxies in favor of the adoption and approval of this Agreement and the approval
of the Merger, and will take all other action necessary or advisable to secure
the vote or consent of its stockholders required by the rules of Nasdaq or
Delaware Law to obtain such approvals. Notwithstanding anything to the contrary
contained in this Agreement, the Company may adjourn or postpone the
Stockholders' Meeting to the extent necessary to ensure that any necessary
supplement or amendment to the Proxy Statement is provided to its stockholders
in advance of a vote on the Merger and this Agreement or if, as of the time for
which the Stockholders' Meeting is originally scheduled (as set forth in the
Proxy Statement), there are insufficient shares of Company Common Stock
represented (either in person or by proxy) to constitute a quorum necessary to
conduct the business of such Stockholders' Meeting or there are not sufficient
votes for the adoption of this Agreement and the approval of the Merger. The
Company shall ensure that the Stockholders' Meeting is called, noticed,
convened, held and conducted, and that all proxies solicited by it in connection
with the Stockholders' Meeting are solicited in compliance with Delaware Law,
its Certificate of Incorporation and Bylaws, the rules of Nasdaq and all other
applicable Legal Requirements.
(b) BOARD RECOMMENDATION. Except to the extent expressly permitted by
Section 5.3(d): (i) the Board of Directors of the Company shall unanimously
recommend that its stockholders vote in favor of adoption and approval of this
Agreement and approval of the Merger at the Stockholders' Meeting, (ii) the
Proxy Statement shall include a statement to the effect that the Board of
Directors of the Company has unanimously recommended that the Company's
stockholders vote in favor of adoption and approval of this Agreement and
approval of the Merger at the Stockholders' Meeting, and (iii) neither the Board
of Directors of the Company nor any committee thereof shall withdraw, amend or
modify, or propose or resolve to withdraw, amend or modify, in a manner adverse
to Parent and Merger Sub, the unanimous recommendation of its Board of Directors
that the Company's stockholders vote in favor of adoption and approval of this
Agreement and the Merger. Without limitation, the recommendation of the Board of
Directors of the Company shall be deemed to have been modified in a manner
adverse to Parent if the recommendation shall no longer be unanimous.
5.3 ACQUISITION PROPOSALS.
(a) NO SOLICITATION. Except to the extent expressly permitted by
Section 5.3(c), the Company agrees that neither it nor any of its Subsidiaries,
nor any of the officers and directors of it or its Subsidiaries shall, and that
it shall not permit its and its Subsidiaries' Employees, agents and
representatives (including any investment banker, attorney or accountant
retained by it or any of its Subsidiaries) to, directly or indirectly: (i)
solicit, initiate, encourage, knowingly facilitate or induce any inquiry with
respect to, or the making, submission or announcement of, any Acquisition
Proposal, (ii) participate in any discussions or negotiations regarding, or
furnish to any Person any nonpublic information with respect to, or take any
other action to facilitate any inquiries or the
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making of any proposal that constitutes or may reasonably be expected to lead
to, any Acquisition Proposal, (iii) engage in discussions with any Person with
respect to any Acquisition Proposal, except as to the existence of these
provisions, (iv) approve, endorse or recommend any Acquisition Proposal (except
to the extent specifically permitted pursuant to Section 5.3(d)), (v) release
any third Person from any confidentiality or standstill agreement to which the
Company is a party (or its investment banker on behalf of the Company), or fail
to enforce or grant any material waiver, consent or request to, any Acquisition
Proposal, under such agreement, or (vi) enter into any letter of intent or
similar document or any contract agreement or commitment contemplating or
otherwise relating to any Acquisition Proposal or transaction contemplated
thereby. The Company and its Subsidiaries will immediately cease any and all
existing activities, discussions or negotiations with any third parties
conducted heretofore with respect to any Acquisition Proposal. The Company
acknowledges that any violation of the restrictions set forth in this Section
5.3(a) by any officer, director, employee, representative, investment banker,
attorney, accountant or agent of the Company or any of its Subsidiaries shall be
deemed to be a breach of this Section 5.3(a) by the Company.
(b) NOTIFICATION OF UNSOLICITED ACQUISITION PROPOSALS.
(i) As time is of the essence, as promptly as practicable (and
in any event no later than 24 hours) after receipt of any Acquisition Proposal
or any request for nonpublic information or inquiry which it reasonably believes
would lead to an Acquisition Proposal, the Company shall provide Parent with
oral and written notice of the material terms and conditions of such Acquisition
Proposal, request or inquiry, and the identity of the Person or group making any
such Acquisition Proposal, request or inquiry and a copy of all written
materials provided in connection with such Acquisition Proposal, request or
inquiry.
(ii) As time is of the essence, the Company shall provide Parent
with two (2) business days prior written notice (or such lesser prior notice as
is provided to the members of its Board of Directors) of any meeting of the its
Board of Directors at which its Board of Directors is reasonably expected to
consider any Acquisition Proposal.
(c) SUPERIOR OFFERS. Notwithstanding anything to the contrary
contained in Section 5.3(a), in the event that the Company receives an
unsolicited, bona fide written Acquisition Proposal from a third party that its
Board of Directors has in good faith concluded (following consultation with its
outside legal counsel and its financial advisor), is, or is reasonably likely to
result in, a Superior Offer, the Company may then take the following actions
(but only if and to the extent that the Board of Directors of the Company
concludes in good faith, following the receipt of advice of the Company's
outside legal counsel, that the failure to do so is reasonably likely to result
in a breach of its fiduciary obligations under applicable Legal Requirements):
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(i) Furnish nonpublic information to the third party making such
Acquisition Proposal, PROVIDED that (A) (1) prior to furnishing any such
nonpublic information to such party, the Company gives Parent no less than 24
hours written notice of its intention to furnish such nonpublic information and
(2) the Company receives from the third party an executed confidentiality
agreement containing customary limitations on the use and disclosure of all
nonpublic written and oral information furnished to such third party on the
Company's behalf, the terms of which are at least as restrictive as the terms
contained in the Confidentiality Agreement and (B) contemporaneously with
furnishing any such nonpublic information to such third party, the Company
furnishes such nonpublic information to Parent (to the extent such nonpublic
information has not been previously so furnished); and
(ii) Engage in negotiations with the third party with respect to
the Acquisition Proposal, PROVIDED that no less than 24 hours prior to entering
into negotiations with such third party, the Company gives Parent written notice
of the Company's intention to enter into negotiations with such third party.
(d) CHANGE OF RECOMMENDATION. In response to the receipt of a
Superior Offer, the Board of Directors of the Company may withhold, withdraw,
amend or modify its unanimous recommendation in favor of the Merger and enter
into a written agreement memorializing such Superior Proposal, and, in the case
of a Superior Offer that is a tender or exchange offer made directly to the
stockholders of the Company, may recommend that the stockholders of the Company
accept the tender or exchange offer (any of the foregoing actions, whether by
the Board of Directors of the Company or a committee thereof, a "CHANGE OF
RECOMMENDATION"), only if all of the following conditions in clauses (i) through
(viii) are met:
(i) A Superior Offer with respect to it has been made and has
not been withdrawn;
(ii) The Stockholders' Meeting has not occurred;
(iii) The Company shall have (A) provided to Parent written
notice which shall state expressly (1) that the Company has received a Superior
Offer, (2) the material terms and conditions of the Superior Offer and the
identity of the Person or group making the Superior Offer, and (3) that the
Company intends to effect a Change of Recommendation and the manner in which it
intends to do so, (B) provided to Parent a copy of all written materials
delivered to the Person or group making the Superior Offer in connection with
such Superior Offer, and (C) made available to Parent all other materials and
information made available to the Person or group making the Superior Offer in
connection with such Superior Offer;
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(iv) The Board of Directors of the Company has concluded in good
faith, after receipt of advice of its outside legal counsel, that, in light of
such Superior Offer, the failure of the Board of Directors to effect a Change of
Recommendation is reasonably likely to result in a breach of its fiduciary
obligations to the stockholders of the Company under applicable law;
(v) The Company shall not have breached any of the provisions
set forth in Section 5.2 or this Section 5.3;
(vi) At least two (2) business days shall have elapsed from the
provision by the Company to Parent of the information specified in Section
5.3(d)(iii);
(vii) During the two (2) business day period specified in Section
5.3(d)(vi), the Company negotiates with Parent in good faith with respect to
adjustments to the terms and conditions of this Agreement that Parent may
suggest during such period; and
(viii) During or following the two (2) business day period
specified in Section 5.3(d)(vi), the Board of Directors of the Company does not
conclude in good faith (after consultation with its outside legal counsel and
its financial advisor) that such Acquisition Proposal no longer constitutes a
Superior Offer.
(e) CONTINUING OBLIGATION TO CALL, HOLD AND CONVENE STOCKHOLDERS'
MEETING; NO OTHER VOTE. Notwithstanding anything to the contrary contained in
this Agreement, unless this Agreement is earlier terminated pursuant to Section
7.1, the obligation of the Company to call, give notice of, convene and hold the
Stockholders' Meeting shall not be limited or otherwise affected by the
commencement, disclosure, announcement or submission to it of any Acquisition
Proposal, or by any Change of Recommendation and, the Company shall not submit
to the vote of its stockholders any Acquisition Proposal, or propose to do so.
(f) COMPLIANCE WITH TENDER OFFER RULES. Nothing contained in this
Agreement shall prohibit the Company or its Board of Directors from taking and
disclosing to the stockholders of the Company a position contemplated by Rules
14d-9 and 14e-2(a) promulgated under the Exchange Act; PROVIDED that the content
of any such disclosure thereunder shall be governed by the terms of this
Agreement. Without limiting the foregoing proviso, the Company shall not effect
a Change of Recommendation unless specifically permitted pursuant to the terms
of Section 5.3(d).
(g) CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms shall have the following meanings:
(i) "ACQUISITION PROPOSAL," with respect to the Company, shall
mean any offer or proposal, relating to any transaction or series of related
transactions involving: (A) any
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purchase from such party or acquisition by any PERSON or "group" (as defined
under Section 13(d) of the Exchange Act and the rules and regulations
thereunder) of more than a ten percent (10%) interest in the total outstanding
voting securities of the Company or any of its Subsidiaries or any tender offer
or exchange offer that if consummated would result in any Person or group
beneficially owning ten percent (10%) or more of the total outstanding voting
securities of the Company or any of its Subsidiaries or any merger,
consolidation, business combination or similar transaction involving the Company
or any of its Subsidiaries, (B) any sale, lease (other than in the ordinary
course of business), exchange, transfer, license (other than in the ordinary
course of business), acquisition or disposition of more than ten percent (10%)
of the assets of the Company (including its Subsidiaries taken as a whole), or
(C) any liquidation or dissolution of the Company (PROVIDED, HOWEVER, the
transactions contemplated hereby by Parent and Merger Sub shall not be deemed an
Acquisition Proposal); and
(ii) "SUPERIOR OFFER," with respect to the Company, shall mean an
unsolicited, bona fide written offer made by a third party to acquire, directly
or indirectly, pursuant to a tender offer, exchange offer, merger, consolidation
or other business combination, all or substantially all of the assets of the
Company or a majority of the total outstanding voting securities of the Company
as a result of which the stockholders of the Company immediately preceding such
transaction would hold less than fifty percent (50%) of the equity interests in
the surviving or resulting entity of such transaction or any direct or indirect
parent or subsidiary thereof, on terms that the Board of Directors of the
Company has in good faith concluded (following consultation with its outside
legal counsel and its financial adviser), taking into account, among other
things, all legal, financial, regulatory and other aspects of the offer and the
Person making the offer (including committed borrowing capacity to the extent
necessary to finance such Acquisition Proposal), to be more favorable, from a
financial point of view, to the Company's stockholders (in their capacities as
stockholders) than the terms of the Merger (taking into account all of the terms
of any proposal by Parent to amend or modify the terms of this Agreement and the
Merger) and is reasonably capable of being consummated without unreasonable
delay.
5.4 CONFIDENTIALITY; ACCESS TO INFORMATION; NO MODIFICATION OF
REPRESENTATIONS, WARRANTIES OR COVENANTS.
(a) CONFIDENTIALITY. The parties acknowledge that the Company and
Parent have previously executed a Confidential Disclosure Agreement dated March
25 2005 (the "CONFIDENTIALITY AGREEMENT"), which Confidentiality Agreement will
continue in full force and effect in accordance with its terms and each of
Parent and the Company will hold, and will cause its respective directors,
officers, Employees, agents and advisors (including attorneys, accountants,
consultants, bankers and financial advisors) to hold, any Confidential
Information (as defined in the
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Confidentiality Agreement) confidential in accordance with the terms of the
Confidentiality Agreement.
(b) ACCESS TO INFORMATION. The Company shall afford Parent (and its
advisors) reasonable access during normal business hours to the Company
properties, books, records and personnel during the period prior to the
Effective Time to obtain all information concerning its business, including the
status of product development efforts, properties, results of operations and
personnel, as Parent may reasonably request (including for the purpose of
performing such environmental tests and investigations as Parent may desire);
PROVIDED, HOWEVER, that the Company may restrict the foregoing access to the
extent that any law, treaty, rule or regulation of any Governmental Entity
applicable to such party requires such party or its Subsidiaries to restrict or
prohibit access to any such properties or information.
(c) NO MODIFICATION OF REPRESENTATIONS AND WARRANTIES OR COVENANTS.
No information or knowledge obtained in any investigation or notification
pursuant to this Section 5.4, Section 5.6 or Section 5.7 shall affect or be
deemed to modify any representation or warranty contained herein, the covenants
or agreements of the parties hereto or the conditions to the obligations of the
parties hereto under this Agreement.
5.5 PUBLIC DISCLOSURE. Without limiting any other provision of this
Agreement, Parent and the Company will consult with each other before issuing,
and provide each other the opportunity to review, comment upon and concur with,
and use all reasonable efforts to agree on, any press release or public
statement with respect to this Agreement and the transactions contemplated
hereby, including the Merger, and any Acquisition Proposal and will not issue
any such press release or make any such public statement prior to such
consultation and (to the extent practicable) agreement, except as may be
required by law or any listing agreement with the Nasdaq or any other applicable
national or regional securities exchange or market. The parties have agreed to
the text of the joint press release announcing the signing of this Agreement.
5.6 REGULATORY FILINGS; COMMERCIALLY REASONABLE EFFORTS.
(a) REGULATORY FILINGS. Each of Parent, Merger Sub and the Company
shall coordinate and cooperate with one another and shall each use all
reasonable efforts to comply with, and shall each refrain from taking any action
that would impede compliance with, all Legal Requirements, and as promptly as
practicable after the date hereof, each of Parent, Merger Sub and the Company
shall make all filings, notices, petitions, statements, registrations,
submissions of information, application or submission of other documents
required by any Governmental Entity in connection with the Merger and the
transactions contemplated hereby, including: (i) each party using its respective
best efforts to file Notification and Report Forms with the United States
Federal Trade Commission (the "FTC") and the Antitrust Division of the United
States Department of Justice
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("DOJ") as required by the HSR Act no later than two (2) business days following
the date hereof, (ii) any other filing necessary to obtain any Necessary
Consent, (iii) filings under any other comparable pre-merger notification forms
reasonably determined by Parent to be required by the merger notification or
control laws of any applicable jurisdiction, as agreed by the parties hereto,
and (iv) any filings required under the Securities Act, the Exchange Act, any
applicable state securities or "blue sky" laws and the securities laws of any
foreign country, or any other Legal Requirement relating to the Merger. Each of
Parent and the Company will cause all documents that it is responsible for
filing with any Governmental Entity under this Section 5.6(a) to comply in all
material respects with all applicable Legal Requirements.
(b) EXCHANGE OF INFORMATION. Parent, Merger Sub and the Company each
shall promptly supply the other with any information which may be required in
order to effectuate any filings or application pursuant to Section 5.6(a).
Except where prohibited by applicable Legal Requirements, and subject to the
Confidentiality Agreement and any joint defense agreement entered into between
the parties or their counsel, each of the Company and Parent shall consult with
the other prior to taking a position with respect to any such filing, shall
permit the other to review and discuss in advance, and consider in good faith
the views of the other in connection with any analyses, appearances,
presentations, memoranda, briefs, white papers, arguments, opinions and
proposals before making or submitting any of the foregoing to any Governmental
Entity by or on behalf of any party hereto in connection with any investigations
or proceedings in connection with this Agreement or the transactions
contemplated hereby (including under any antitrust or fair trade Legal
Requirement), coordinate with the other in preparing and exchanging such
information and promptly provide the other (and its counsel) with copies of all
filings, presentations or submissions (and a summary of any oral presentations)
made by such party with any Governmental Entity in connection with this
Agreement or the transactions contemplated hereby, PROVIDED that with respect to
any such filing, presentation or submission, each of Parent and the Company need
not supply the other (or its counsel) with copies (or in case of oral
presentations, a summary) to the extent that any law, treaty, rule or regulation
of any Governmental Entity applicable to such party requires such party or its
Subsidiaries to restrict or prohibit access to any such properties or
information. It is acknowledged and agreed by the parties hereto that Parent
shall have, except where prohibited by applicable Legal Requirements, primary
responsibility for determining the strategy for dealing with the FTC, DOJ, EC or
any other Governmental Authority with responsibility for reviewing the Merger
with respect to antitrust or competition issues.
(c) NOTIFICATION. Each of Parent, Merger Sub and the Company will
notify the other promptly upon the receipt of: (i) any comments from any
officials of any Governmental Entity in connection with any filings made
pursuant hereto and (ii) any request by any officials of any Governmental Entity
for amendments or supplements to any filings made pursuant to, or information
provided to comply in all material respects with, any Legal Requirements.
Whenever any event
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occurs that is required to be set forth in an amendment or supplement to any
filing made pursuant to Section 5.6(a), Parent, Merger Sub or the Company, as
the case may be, will promptly inform the other of such occurrence and cooperate
in filing with the applicable Governmental Entity such amendment or supplement.
(d) COMMERCIALLY REASONABLE EFFORTS. Subject to the express
provisions of Section 5.2 and Section 5.3 hereof and upon the terms and subject
to the conditions set forth herein, each of the parties agrees to use
commercially reasonable efforts to take, or cause to be taken, all actions, and
to do, or cause to be done, and to assist and cooperate with the other parties
in doing, all things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the Merger and the other
transactions contemplated by this Agreement, including using commercially
reasonable efforts to accomplish the following: (i) the taking of commercially
reasonable acts necessary to cause the conditions precedent set forth in Article
VI to be satisfied, (ii) the obtaining of all necessary actions or nonactions,
waivers, consents, approvals, orders and authorizations from Governmental
Entities and the making of all necessary registrations, declarations and filings
(including registrations, declarations and filings with Governmental Entities,
if any) and the taking of all reasonable steps as may be necessary to avoid any
suit, claim, action, investigation or proceeding by any Governmental Entity,
(iii) the obtaining of all necessary consents, approvals or waivers from third
parties, including all Necessary Consents, (iv) the defending of any suits,
claims, actions, investigations or proceedings, whether judicial or
administrative, challenging this Agreement or the consummation of the
transactions contemplated hereby and (v) the execution or delivery of any
additional instruments necessary to consummate the transactions contemplated by,
and to fully carry out the purposes of, this Agreement. In connection with and
without limiting the foregoing, the Company and its Board of Directors shall, if
any takeover statute or similar Legal Requirement is or becomes applicable to
the Merger, this Agreement or any of the transactions contemplated by this
Agreement, use all reasonable efforts to ensure that the Merger and the other
transactions contemplated by this Agreement may be consummated as promptly as
practicable on the terms contemplated by this Agreement and otherwise to
minimize the effect of such Legal Requirement on the Merger, this Agreement and
the transactions contemplated hereby.
(e) LIMITATION ON DIVESTITURE. Notwithstanding anything in this
Agreement to the contrary, nothing contained in this Agreement shall be deemed
to require Parent or the Company or any Subsidiary or affiliate thereof to agree
to any Action of Divestiture. The Company shall not take or agree to take any
Action of Divestiture without the prior written consent of Parent. For purposes
of this agreement, an "ACTION OF DIVESTITURE" shall mean any divestiture by
Parent or the Company or any of their Subsidiaries or affiliates of shares of
capital stock or of any business, assets or property, or the imposition of any
material limitation on the ability of any of them to conduct their businesses or
to own or exercise control of such assets, properties and stock.
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5.7 NOTIFICATION OF CERTAIN MATTERS.
(a) BY THE COMPANY. The Company shall give prompt notice to Parent
and Merger Sub of any representation or warranty made by it contained in this
Agreement becoming untrue or inaccurate, or any failure of the Company to comply
with or satisfy in any material respect any covenant, condition or agreement to
be complied with or satisfied by it under this Agreement, in each case, such
that the conditions set forth in Section 6.3(a) or 6.3(b) would not be
satisfied.
(b) BY PARENT. Parent and Merger Sub shall give prompt notice to the
Company of any representation or warranty made by it contained in this Agreement
becoming untrue or inaccurate, or any failure of Parent to comply with or
satisfy in any material respect any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement, in each case, such that
the conditions set forth in Section 6.2(a) or 6.2(b) would not be satisfied. 5.8
THIRD-PARTY CONSENTS. As soon as practicable following the date hereof, Parent
and the Company will each use all reasonable efforts to obtain any material
consents, waivers and approvals under any of its or its Subsidiaries' respective
Contracts required to be obtained in connection with the consummation of the
transactions contemplated hereby.
5.9 TERMINATION OF 401(K) PLANS. Effective no later than the day
immediately preceding the Closing Date, the Company and its Affiliates, as
applicable, shall each terminate any and all group severance, separation or
salary continuation plans, programs or arrangements and any and all plans
intended to include a Code Section 401(k) arrangement (unless Parent provides
written notice to the Company that such 401(k) plans shall not be terminated)
(collectively, "Company Plans"). Unless Parent provides such written notice to
the Company, no later than five business days prior to the Closing Date, the
Company shall provide Parent with evidence that such Company Plan(s) have been
terminated (effective as of the day immediately preceding the Closing Date)
pursuant to resolutions of the Company's Board of Directors. The form and
substance of such resolutions shall be subject to prior review and approval of
Parent. The Company also shall take such other actions in furtherance of
terminating such Company Plan(s) as Parent may reasonably require. In the event
that the distribution or rollover of assets from the trust of a Company Plan
that is terminated is reasonably anticipated to trigger liquidation charges,
surrender charges, or other fees to be imposed upon the account of any
participant or beneficiary of such terminated plan or upon the Company or plan
sponsor, then the Company shall take such all such actions as are necessary to
reasonably estimate the amount of such charges and/or fees and provide such
estimate in writing to Parent prior to the Closing Date.
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5.10 INDEMNIFICATION.
(a) INDEMNITY. From and after the Effective Time, Parent will cause
the Surviving Corporation to, fulfill and honor in all respects the obligations
of the Company pursuant to any indemnification agreements between the Company
and its directors and officers immediately prior to the Effective Time and
identified on Schedule 5.10 (the "INDEMNIFIED PARTIES"), subject to applicable
law. The Certificate of Incorporation and Bylaws of the Surviving Corporation
will contain provisions with respect to exculpation, indemnification and
advancement of expenses that are at least as favorable to the Indemnified
Parties as those contained in the Certificate of Incorporation and Bylaws of the
Company as in effect on the date hereof, which provisions will not be amended,
repealed or otherwise modified for a period of six (6) years from the Effective
Time in any manner that would adversely affect the rights thereunder of
Indemnified Parties, unless such modification is required by law.
(b) INSURANCE. For a period of six (6) years after the Effective
Time, Parent will cause the Surviving Corporation to use all reasonable efforts
to cause to be maintained directors' and officers' liability insurance
maintained by the Company covering those persons who are covered by the
Company's directors' and officers' liability insurance policy as of the date
hereof for events occurring prior to the Effective Time on terms comparable to
those applicable to the current directors and officers of the Company; PROVIDED,
HOWEVER, that in no event will the Surviving Corporation be required to expend
in excess of 200% of the annual premium currently paid by the Company for such
coverage and which is set forth on Schedule 5.10 of the Company Disclosure
Letter (and to the extent annual premium would exceed 200% of the annual premium
currently paid by the Company for such coverage, the Surviving Corporation or
Parent shall use all reasonable efforts to cause to be maintained the maximum
amount of coverage as is available for such amount that is 200% of such annual
premium).
(c) THIRD-PARTY BENEFICIARIES. This Section 5.10 is intended to be
for the benefit of, and shall be enforceable by the Indemnified Parties and
their heirs and personal representatives and shall be binding on Parent and the
Surviving Corporation and its successors and assigns. In the event Parent or the
Surviving Corporation or its successor or assign (i) consolidates with or merges
into any other Person and shall not be the continuing or surviving corporation
or entity in such consolidation or merger or (ii) transfers all or substantially
all of its properties and assets to any Person, then, and in each case, proper
provision shall be made so that the successor and assign of Parent or the
Surviving Corporation, as the case may be, honor the obligations set forth with
respect to Parent or the Surviving Corporation, as the case may be, in this
Section 5.10.
5.11 MERGER SUB COMPLIANCE. Parent shall cause Merger Sub to comply with
all of Merger Sub's obligations under or relating to this Agreement. Merger Sub
shall not engage in any business which is not in connection with the Merger with
and into the Company pursuant to this Agreement.
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5.12 [Reserved]
5.13 SECTION 83(b) ELECTIONS. The Company shall use commercially reasonable
efforts to deliver to Parent at or before the Closing, a true, correct and
complete copy of each election statement made under Section 83(b) of the Code,
filed by each person who acquired Company Restricted Stock, together with
evidence of the timely filing of such election with the appropriate Internal
Revenue Service Center.
5.14 SPREADSHEET. The Company shall prepare and deliver to Parent at or
prior to the Closing a spreadsheet in a form acceptable to Parent, which
spreadsheet shall be dated as of the Closing Date, and which spreadsheet (the
"SPREADSHEET") shall set forth as of immediately prior to the Effective Time:
(a) the names and holders of all Company Options and Company Restricted Stock;
(b) the number of shares of Company Common Stock underlying such Company
Options, and the number of shares of Company Restricted Stock, held by such
Persons; (c) the exercise price per share in effect as of immediately prior to
the Effective Time for each such Company Option; (d) the vesting status and
schedule for such Company Options and Company Restricted Stock held by each
holder; and (e) the tax status of each Company Option held by such holder under
Section 422 of the Code. A draft of the Spreadsheet shall be provided to Parent
by the Company no later than two (2) business days prior to the Closing.
5.15 TAKEOVER LAWS. The Company shall, upon the request of Parent, take all
reasonable steps to exclude the applicability of, or to assist in any challenge
by Parent or Merger Sub to the validity or applicability to the Merger or any
other transaction contemplated by this Agreement of, any "moratorium", "control
share acquisition", "business combination", "fair price" or other form of
anti-takeover Legal Requirements of any jurisdiction that may purport to be
applicable to this Agreement.
5.16 COOPERATION WITH FINANCING. The Company acknowledges that to fund
partially or in whole the Merger Consideration, Parent intends to raise capital
pursuant to a bank borrowing under a secured or unsecured loan, the issuance of
debt, equity or hybrid securities in a private placement or public offering or
some combination thereof (any of the foregoing, a "FINANCING"). The Company
agrees to provide Parent with such cooperation as may be reasonably requested by
Parent in connection with the arrangement and obtaining of any Financing,
including (a) participation in meetings, drafting sessions, due diligence
sessions, management presentation sessions, "road shows" and sessions with
rating agencies, (b) preparation of business projections, financial statements
(including pro forma financial statements), offering memoranda, private
placement memoranda, prospectuses, marketing materials and similar documents,
(c) providing access to the Company's senior officers and representatives and
the books and records, contracts and properties of the Company and its
Subsidiaries, (d) the execution and delivery of any pledge and security
documents,
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other financing documents, including any indemnity agreements, and (e)
furnishing, or causing to be furnished, such other requested certificates or
documents, comfort letters (including "negative assurance" comfort) of
accountants, consents of accountants for use of their reports (which shall be
unqualified) in any materials relating to the financing to be used in connection
with the transactions contemplated by this Agreement, legal opinions, surveys
and title insurance. The Company will use all commercially reasonable efforts to
assist Parent with the full satisfaction, on a timely basis, of the terms,
conditions, representations and warranties set forth in any commitment letter,
credit agreement, purchase agreement, underwriting agreement, placement agent
agreement or other definitive agreement for any such Financing. Notwithstanding
anything herein to the contrary, neither the Company, any of its Subsidiaries
nor any of their respective officers or directors shall be required to file any
registration statement with the SEC or pay any commitment or other similar fee
or incur any other liability in connection with the Financings contemplated
hereby prior to the Effective Time, including, without limitation, any pledge or
security documents or other definitive Financing documents. The terms of this
Section 5.16 relate only to the Company's obligation to cooperate with Parent in
connection with the arrangement of the Financing, and shall not be deemed to
create any additional condition on the obligations of Parent and Merger Sub to
consummate and effect the Merger; provided, however, that any noncompliance or
breach of this Section 5.16 is subject to the provisions of Section 6.3.
5.17 COMPANY OPTIONS. The Company agrees that immediately prior to and
contingent upon the effectiveness of the Merger, all Company Options with an
exercise price less than $30.00 per share shall be purchased by the Company for
a cash payment equal to the amount by which $30.00 per share exceeds the
exercise price per share for each share of Company Common Stock subject to such
Company Options, multiplied by the number of shares issuable upon exercise in
full of such Company Options, such that there shall be no outstanding Company
Options as of the effectiveness of the Merger. The Company shall make all
appropriate withholding as may be required in accordance with applicable laws
and regulations for such purchase.
5.18 COMPANY FAIRNESS OPINION. As soon as practicable following the date
hereof, the Company shall deliver to Parent and its legal counsel a copy of the
Company Fairness Opinion.
5.19 PAYMENTS. No later than two (2) Business Days following the Closing,
the Parent shall deposit in escrow the aggregate amount of cash set forth in
Section 5.19 to the Company Disclosure Letter. This cash shall be used to fund
the payment terms set forth in the executed Payment Agreements. Company shall
use all commercially reasonable efforts to cause the individuals set forth on
Schedule 5.19 to the Company Disclosure Letter hereto to deliver Parent an
executed Payment Agreement at the Closing.
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ARTICLE VI
CONDITIONS TO THE MERGER
6.1 CONDITIONS TO THE OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER. The
respective obligations of each party to this Agreement to consummate and effect
the Merger shall be subject to the satisfaction at or prior to the Closing Date
of the following conditions:
(a) COMPANY STOCKHOLDER APPROVAL. This Agreement shall have been
approved and adopted, and the Merger shall have been duly approved, by the
requisite vote under applicable law, by the stockholders of the Company.
(b) NO ORDER. No Governmental Entity of competent jurisdiction shall
have enacted, issued, promulgated, enforced or entered any statute, rule,
regulation, executive order, decree, injunction or other order (whether
temporary, preliminary or permanent) which (i) is in effect and (ii) has the
effect of making the Merger illegal or otherwise prohibiting consummation of the
Merger.
(c) HSR ACT. All waiting periods (and any extension thereof) under
the HSR Act relating to the transactions contemplated hereby will have expired
or terminated early. All other material foreign antitrust approvals reasonably
determined by Parent to be required to be obtained prior to the Merger in
connection with the transactions contemplated hereby shall have been obtained.
6.2 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The
obligation of the Company to consummate and effect the Merger shall be subject
to the satisfaction at or prior to the Closing Date of each of the following
conditions, any of which may be waived, in writing, exclusively by the Company:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Parent and Merger Sub contained in this Agreement shall be true
and correct on the date hereof and as of the Closing Date with the same force
and effect as if made on the Closing Date (except that those representations and
warranties which address matters only as of a particular date shall have been
true and correct only on such date), except, in each case, or in the aggregate,
as does not constitute a Material Adverse Effect on Parent at the Closing Date
(it being understood that, for purposes of determining the accuracy of such
representations and warranties, any update of or modification to the Parent
Disclosure Letter made or purported to have been made after the execution of
this Agreement and any materiality and Material Adverse Effect qualifications
with respect to such representations and warranties shall be disregarded). The
Company shall have received a certificate with respect to the foregoing signed
on behalf of Parent by an executive officer of Parent.
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(b) AGREEMENTS AND COVENANTS. Parent and Merger Sub shall have
performed or complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it on or prior to
the Closing Date, and the Company shall have received a certificate with respect
to the foregoing signed on behalf of Parent, with respect to the covenants of
Parent, by an authorized executive officer of Parent and a certificate with
respect to the foregoing signed on behalf of Merger Sub, with respect to the
covenants of Merger Sub, by an authorized executive officer of Merger Sub.
(c) MATERIAL ADVERSE EFFECT. No Material Adverse Effect on Parent
shall have occurred since the date hereof and be continuing.
6.3 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF PARENT. The obligations of
Parent and Merger Sub to consummate and effect the Merger shall be subject to
the satisfaction at or prior to the Closing Date of each of the following
conditions, any of which may be waived, in writing, exclusively by Parent and
Merger Sub:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company contained in this Agreement shall be true and correct
on the date hereof and as of the Closing Date with the same force and effect as
if made on the Closing Date (except that those representations and warranties
which address matters only as of a particular date shall have been true and
correct only on such date), except, in each case or in the aggregate (other than
the representations and warranties of the Company contained in Section 2.2 and
2.17 which shall be true and correct in all material respects), as does not
constitute a Material Adverse Effect on the Company at the Closing Date (it
being understood that, for purposes of determining the accuracy of such
representations and warranties, any update of or modification to the Company
Disclosure Letter made or purported to have been made after the execution of
this Agreement and any materiality and Material Adverse Effect qualifications
with respect to such representations and warranties shall be disregarded).
Parent and Merger Sub shall have received a certificate with respect to the
foregoing signed on behalf of the Company by an executive officer of the
Company.
(b) AGREEMENTS AND COVENANTS. The Company shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it at or prior to the Closing
Date, and Parent and Merger Sub shall have received a certificate to such effect
signed on behalf of the Company by an executive officer of the Company.
(c) MATERIAL ADVERSE EFFECT. No Material Adverse Effect on the
Company shall have occurred since the date hereof and be continuing.
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(d) NO GOVERNMENTAL RESTRICTION. There shall not be any pending or
threatened suit, action or proceeding asserted by any Governmental Entity (i)
challenging or seeking to restrain or prohibit the consummation of the Merger or
any of the other transactions contemplated by this Agreement, the effect of
which restraint or prohibition if obtained would cause the condition set forth
in Section 6.1(b) to not be satisfied or (ii) seeking to require Parent or the
Company or any Subsidiary or affiliate to effect an Action of Divestiture.
(e) PAYMENT AGREEMENT. Each of the individuals set forth on Section
5.19 of the Company Disclosure Letter shall have delivered to Parent an executed
and binding agreement in the form attached hereto as EXHIBIT A (the "PAYMENT
AGREEMENT").
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 TERMINATION. This Agreement may be terminated at any time prior to the
Effective Time, by action taken or authorized by the Board of Directors of the
terminating party or parties, and except as provided below, whether before or
after the requisite approvals of the stockholders of the Company:
(a) by mutual written consent of Parent and the Company;
(b) by either the Company or Parent if:
(i) the Merger shall not have been consummated by July 31, 2006
(which date shall be extended to October 31, 2006, if the Merger shall not have
been consummated as of the result of a failure to satisfy the conditions set
forth in Section 6.1(b), Section 6.1(c) or Section 6.3(d)) (as appropriate, the
"END DATE"); PROVIDED, HOWEVER, that the right to terminate this Agreement under
this Section 7.1(b)(i) shall not be available to any party whose action or
failure to act has been a principal cause of or resulted in the failure of the
Merger to occur on or before such date and such action or failure to act
constitutes a breach of this Agreement;
(ii) if a Governmental Entity shall have issued an order, decree
or ruling or taken any other action (including the failure to have taken an
action), in any case having the effect of permanently restraining, enjoining or
otherwise prohibiting the Merger, which order, decree, ruling or other action is
final and nonappealable; or
(iii) if the required approval of the stockholders of the Company
contemplated by this Agreement shall not have been obtained by reason of the
failure to obtain the required vote at a meeting of the Company stockholders
duly convened therefor or at any adjournment thereof; PROVIDED, HOWEVER, that
the right to terminate this Agreement under this
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Section 7.1(b)(iii) shall not be available to the Company where the failure to
obtain Company stockholder approval shall have been caused by the action or
failure to act of the Company and such action or failure to act constitutes a
breach by the Company of this Agreement;
(c) by Parent:
(i) if a Triggering Event with respect to the Company shall have
occurred;
(ii) upon a breach of any representation, warranty, covenant or
agreement on the part of the Company set forth in this Agreement, or if any
representation or warranty of the Company shall have become untrue, in either
case such that the conditions set forth in Section 6.3(a) or Section 6.3(b)
would not be satisfied as of the time of such breach or as of the time such
representation or warranty shall have become untrue, PROVIDED, that if such
inaccuracy in the Company's representations and warranties or breach by the
Company is curable by the Company prior to the End Date through the exercise of
reasonable efforts, then Parent may not terminate this Agreement under this
Section 7.1(c)(ii) prior to the date that is 30 days following the receipt of
written notice from Parent to the Company of such breach, PROVIDED that the
Company continues to exercise all reasonable efforts to cure such breach through
such 30-day period (it being understood that Parent may not terminate this
Agreement pursuant to this Section 7.1(c)(ii) if it shall have materially
breached this Agreement or if such breach by the Company is cured within such
30-day period);
(iii) if a Material Adverse Effect on the Company shall have
occurred since the date hereof; or
(iv) if a material breach of Section 5.3 of this Agreement shall
have occurred.
(d) by the Company:
(i) upon a breach of any representation, warranty, covenant or
agreement on the part of Parent set forth in this Agreement, or if any
representation or warranty of Parent shall have become untrue, in either case
such that the conditions set forth in Section 6.2(a) or Section 6.2(b) would not
be satisfied as of the time of such breach or as of the time such representation
or warranty shall have become untrue, PROVIDED that if such inaccuracy in
Parent's representations and warranties or breach by Parent is curable by Parent
prior to the End Date through the exercise of reasonable efforts, then the
Company may not terminate this Agreement under this Section 7.1(d)(i) prior to
20 days following the receipt of written notice from the Company to Parent of
such breach, PROVIDED that Parent continues to exercise all reasonable efforts
to cure such breach through such 20-day period (it being understood that the
Company may not terminate this Agreement
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pursuant to this 7.1(d)(i) if it shall have materially breached this Agreement
or if such breach by Parent is cured within such 20-day period); or
(ii) if, prior to the adoption of this Agreement or the approval
of the Merger by the stockholders of the Company, in connection with an
Acquisition Proposal it wishes to accept, (A) the Company has complied with
Section 5.3 with respect to such Acquisition Proposal, (B) the Board of
Directors of the Company has determined, and has not changed its determination
prior to the two (2) business day period provided for in Section 5.3(d)(vi),
that such Acquisition Proposal constitutes a Superior Offer, and (C) the Company
pays the Termination Fee prior to or simultaneously with such termination; or
(iii) if a Material Adverse Effect on Parent shall have occurred
since the date hereof.
For the purposes of this Agreement, a "TRIGGERING EVENT," with respect to the
Company, shall be deemed to have occurred if: (i) its Board of Directors or any
committee thereof shall for any reason have withdrawn or shall have amended or
modified in a manner adverse to Parent its unanimous recommendation in favor of,
the adoption and approval of the Agreement or the approval of the Merger, (ii)
it shall have failed to include in the Proxy Statement the unanimous
recommendation of its Board of Directors in favor of the adoption and approval
of the Agreement and the approval of the Merger, (iii) its Board of Directors
fails to reaffirm (publicly, if so requested) its recommendation in favor of the
adoption and approval of the Agreement and the approval of the Merger within
five (5) calendar days after Parent requests in writing that such recommendation
be reaffirmed, (iv) its Board of Directors or any committee thereof shall have
approved or recommended any Acquisition Proposal, (v) the Company shall have
entered into any letter of intent or similar document or any agreement, contract
or commitment accepting any Acquisition Proposal, or (vi) a tender or exchange
offer relating to its securities shall have been commenced by a Person
unaffiliated with Parent and the Company shall not have sent to its security
holders pursuant to Rule 14e-2 promulgated under the Securities Act, within ten
(10) business days after such tender or exchange offer is first published, sent
or given, a statement disclosing that the Board of Directors of the Company
recommends rejection of such tender or exchange offer.
7.2 NOTICE OF TERMINATION; EFFECT OF TERMINATION. Any termination of this
Agreement under Section 7.1 above will be effective immediately upon the
delivery of a valid written notice of the terminating party to the other party
hereto. In the event of the termination of this Agreement as provided in Section
7.1, this Agreement shall be of no further force or effect, except (i) as set
forth in Section 5.4(a), this Section 7.2, Section 7.3 and Article VIII, each of
which shall survive the termination of this Agreement and (ii) nothing herein
shall relieve any party from liability for any willful breach of this Agreement.
No termination of this Agreement shall affect the obligations of the
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parties contained in the Confidentiality Agreement, all of which obligations
shall survive termination of this Agreement in accordance with their terms.
7.3 FEES AND EXPENSES.
(a) GENERAL. Except as set forth in this Section 7.3, all fees and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses whether
or not the Merger is consummated; PROVIDED, HOWEVER, that:
(i) The Company shall pay all fees and expenses incurred in
relation to the printing and filing (with the SEC) of the Proxy Statement
(including any preliminary materials related thereto).
(ii) Parent shall pay the filing fee for the initial Notification
and Report Forms filed with the FTC and DOJ under the HSR Act and premerger
notification and reports forms under similar applicable laws of other
jurisdictions, in each case pursuant to Section 5.6(a).
(iii) The Company shall pay to Parent all reasonable and
documented out-of-pocket expenses (excluding any wages or salaries of any of
Parent's or Merger Sub's or any of their affiliates' employees) incurred by
Parent and/or Merger Sub prior to the termination of this Agreement in
connection with the Merger and the other transactions contemplated hereby if
this Agreement is terminated pursuant to Section 7.1(c)(iv); PROVIDED, HOWEVER,
that in no event shall payments by the Company to Parent under this Section
7.3(b)(iii) exceed $1,880,821.
(b) COMPANY PAYMENT.
(i) PAYMENT. In the event that this Agreement is terminated by
Parent or the Company, as applicable pursuant to Sections 7.1(b)(i),
7.1(b)(iii), 7.1(c)(i), 7.1(c)(ii), 7.1(c)(iv) or 7.1(d)(ii), the Company shall
promptly (simultaneously in connection with a termination pursuant to Section
7.1(d)(ii)), but in no event later than two (2) business days after the date of
such termination, pay Parent a fee equal to Fourteen Million One Hundred Six
Thousand One Hundred Fifty Four Dollars ($14,106,154) in immediately available
funds (the "TERMINATION FEE"); PROVIDED, that in the case of termination under
Sections 7.1(b)(i), 7.1(b)(iii) or 7.1(c)(ii): (A) such payment shall be made
only if following the date hereof and prior to the termination of this
Agreement, there has been a public disclosure of an Acquisition Proposal with
respect to the Company and (1) within 12 months following the termination of
this Agreement an Acquisition of the Company is consummated or (2) within 12
months following the termination of this Agreement the Company enters into an
agreement providing for an Acquisition of the Company and an Acquisition of the
Company is consummated within 18 months of the termination of this Agreement and
(B) such payment shall be made promptly, but in no event later than two (2)
business days after the consummation of such Acquisition of the
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Company; PROVIDED FURTHER, that in the case of termination under Section
7.1(c)(iv): (A) such payment shall be made only if following the date hereof and
prior to the termination of this Agreement, there has been disclosure (whether
private, public or confidential) of an Acquisition Proposal with respect to the
Company and (1) within 12 months following the termination of this Agreement an
Acquisition of the Company is consummated or (2) within 12 months following the
termination of this Agreement the Company enters into an agreement providing for
an Acquisition of the Company and an Acquisition of the Company is consummated
within 18 months of the termination of this Agreement, (B) such payment shall be
made promptly, but in no event later than two (2) business days after the
consummation of such Acquisition of the Company and (C) such payment shall be
reduced for any amounts paid to Parent by the Company pursuant to Section
7.3(a)(iii).
(ii) INTEREST AND COSTS; OTHER REMEDIES. The Company acknowledges
that the agreements contained in this Section 7.3(b) are an integral part of the
transactions contemplated by this Agreement, and that, without these agreements,
Parent would not enter into this Agreement; accordingly, if the Company fails to
pay in a timely manner the amounts due pursuant to this Section 7.3(b), and, in
order to obtain such payment, Parent makes a claim that results in a judgment
against the Company for the amounts set forth in this Section 7.3(b), the
Company shall pay to Parent the reasonable costs and expenses of Parent
(including reasonable attorneys' fees and expenses) in connection with such
suit, together with interest on the amounts set forth in this Section 7.3(b) at
the prime rate of Citibank, N.A. in effect on the date such payment was required
to be made. Payment of the fees described in this Section 7.3(b) shall not be in
lieu of damages incurred in the event of breach of this Agreement.
(iii) CERTAIN DEFINITIONS. For the purposes of this Section
7.3(b) only, "ACQUISITION," with respect to a party hereto, shall mean any of
the following transactions (other than the transactions contemplated by this
Agreement): (i) a merger, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction involving the party pursuant to
which the stockholders of the party immediately preceding such transaction hold
less than 50% of the aggregate equity interests in the surviving or resulting
entity of such transaction or any direct or indirect parent thereof, (ii) a sale
or other disposition by the party of assets representing in excess of 40% of the
aggregate fair market value of the party's business immediately prior to such
sale, or (iii) the acquisition by any Person or group (including by way of a
tender offer or an exchange offer or issuance by the party or such Person or
group), directly or indirectly, of beneficial ownership or a right to acquire
beneficial ownership of shares representing in excess of 40% of the voting power
of the then outstanding shares of capital stock of the party.
7.4 AMENDMENT. Subject to applicable law, this Agreement may be amended by
the parties hereto, by action taken or authorized by their respective Boards of
Directors, at any time
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before or after approval of the Merger by the stockholders of the Company,
PROVIDED, after approval of the Merger by the stockholders of the Company, no
amendment shall be made which by law or in accordance with the rules of Nasdaq
requires further approval by the stockholders of the Company without such
further stockholder approval. This Agreement may not be amended except by
execution of an instrument in writing signed on behalf of each of Parent, Merger
Sub and the Company.
7.5 EXTENSION; WAIVER. At any time prior to the Effective Time either
party hereto, by action taken or authorized by their respective Board of
Directors, may, to the extent legally allowed: (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto, and (iii)
waive compliance with any of the agreements or conditions for the benefit of
such party contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party. Delay in exercising any right under this
Agreement shall not constitute a waiver of such right.
ARTICLE VIII
GENERAL PROVISIONS
8.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of the Company, Parent and Merger Sub contained in this
Agreement, or any instrument delivered pursuant to this Agreement, shall
terminate at the Effective Time, and only the covenants that by their terms
survive the Effective Time and this Article VIII shall survive the Effective
Time.
8.2 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed duly given (i) on the date of delivery if delivered
personally, (ii) on the date of confirmation of receipt (or the first business
day following such receipt if the date is not a business day) of transmission by
telecopy or telefacsimile, or (iii) on the date of confirmation of receipt (or
the first business day following such receipt if the date is not a business day)
if delivered by a nationally recognized courier service. All notices hereunder
shall be delivered as set forth below, or pursuant to such other instructions as
may be designated in writing by the party to receive such notice:
(a) if to Parent or Merger Sub, to:
Coherent, Inc.
5100 Patrick Henry Drive, PO Box
Santa Clara, CA 95054
Attention: Chief Executive Officer
Telephone No.: (408) 764-4000
Telecopy No.: (408) 970-9998
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with copies to (which shall not constitute notice):
Coherent, Inc.
5100 Patrick Henry Drive, PO Box 54980
Santa Clara, CA 95054
Attention: General Counsel
Telephone No.: (408) 764-4000
Telecopy No.: (408) 970-9998
Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, California 94304-1050
Attention: Larry W. Sonsini, Esq.
David J. Segre, Esq.
Bret M. DiMarco, Esq.
Telephone No.: (650) 493-9300
Telecopy No.: (650) 493-6811
(b) if to the Company, to:
Excel Technology, Inc.
41 Research Way
East Setauket, N.Y. 11753
Attention: Chief Executive Officer
Telephone No.: (631) 784-6100
Telecopy No.: (631) 784-6196
with a copy to (which shall not constitute notice):
Breslow Walker, LLP
100 Jericho Quadrangle
Jericho, NY 11753
Attention: Howard S. Breslow, Esq.
Telephone No.: (516) 822-6505
Telecopy No.: (516) 822-6544
8.3 INTERPRETATION; KNOWLEDGE.
(a) When a reference is made in this Agreement to Exhibits, such
reference shall be to an Exhibit to this Agreement unless otherwise indicated.
When a reference is made in this Agreement to Sections, such reference shall be
to a section of this Agreement unless otherwise
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indicated. For purposes of this Agreement, the words "INCLUDE," "INCLUDES" and
"INCLUDING," when used herein, shall be deemed in each case to be followed by
the words "without limitation." The table of contents and headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. When reference is made herein
to "THE BUSINESS OF" an entity, such reference shall be deemed to include the
business of such entity and its Subsidiaries, taken as a whole. An exception or
disclosure made in the Company Disclosure Letter with regard to a representation
of the Company, or in the Parent Disclosure Letter with regard to a
representation of Parent or Merger Sub, shall be deemed made with respect to any
other representation by such party to which such exception or disclosure is
clearly relevant on its face based on the content of such disclosure. The term
"BUSINESS DAY" means a day other than a Saturday, Sunday or other day in which
banks located in New York, New York are required or authorized not to open for
business.
(b) For purposes of this Agreement, the term "KNOWLEDGE" means, with
respect to a party hereto, with respect to any matter in question, that any of
the "officers" (as such term is defined in Rule 16a-1(f) promulgated under the
Exchange Act) of such party, has actual knowledge of such matter, after due
inquiry of their respective direct reports (including outside legal counsel and
accountants).
(c) For purposes of this Agreement, the term "MATERIAL ADVERSE
EFFECT," when used in connection with an entity, means any change, event,
violation, inaccuracy, circumstance, occurrence, state of facts, development or
effect (any such item, an "EFFECT"), individually or when taken together with
all other Effects that have occurred on or prior to the date of determination of
the occurrence of the Material Adverse Effect, that is or is reasonably likely
to (i) be materially adverse to the business, assets (including intangible
assets), capitalization, condition (financial or otherwise) or results of
operations of such Person taken as a whole with its Subsidiaries or (ii)
materially impede the authority of such entity to consummate the transactions
contemplated by this Agreement in accordance with the terms hereof and
applicable Legal Requirements; PROVIDED, HOWEVER, that, for purposes of clause
(i) above, in no event shall any of the following, alone or in combination, be
deemed to constitute, nor shall any of the following be taken into account in
determining whether there has been or is reasonably likely to be, a Material
Adverse Effect on any Person: (A) any Effect resulting from compliance with the
requirements of this Agreement or proximately from the public announcement of
the execution of this Agreement or the pendency of the Merger, (B) any Effect
resulting from the announcement or pendency of the Merger, (C) any change in
such Person's stock price or trading volume (it being understood that the facts
or circumstances giving rise to such change in stock price or trading volume may
be taken into account in determining whether there has been or is reasonably
likely to be a Material Adverse Effect on any Person), (D) any failure by such
Person to meet revenue or earnings projections (it being understood that the
facts or circumstances giving rise to or contributing to such failure may be
taken into account in determining whether there has been or
A-62
is reasonably likely to be a Material Adverse Effect on any Person), (E) any
Effect that results from changes affecting any of the industries in which such
Person operates generally or the United States economy generally (which changes
in each case do not disproportionately affect such Person in any material
respect), or (F) any Effect that results from changes affecting general
worldwide economic or capital market conditions (which changes in each case do
not disproportionately affect such Person in any material respect).
(d) For purposes of this Agreement, the term "PERSON" shall mean any
individual, corporation (including any non-profit corporation), general
partnership, limited partnership, limited liability partnership, joint venture,
estate, trust, company (including any limited liability company or joint stock
company), firm or other enterprise, association, organization, entity or
Governmental Entity.
8.4 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
8.5 ENTIRE AGREEMENT; THIRD-PARTY BENEFICIARIES. This Agreement and the
documents and instruments and other agreements among the parties hereto as
contemplated by or referred to herein, including the Company Disclosure Letter
and the Parent Disclosure Letter, (i) constitute the entire agreement among the
parties with respect to the subject matter hereof and supersede all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof, it being understood that the
Confidentiality Agreement shall continue in full force and effect until the
Closing and shall survive any termination of this Agreement and (ii) are not
intended, whether express or implied, to confer upon any other Person any legal
or equitable rights, benefits or remedies hereunder, except as specifically
provided, following the Effective Time, in Section 5.10.
8.6 SEVERABILITY. In the event that any provision of this Agreement or the
application thereof, becomes or is declared by a court of competent jurisdiction
to be illegal, void or unenforceable, the remainder of this Agreement will
continue in full force and effect and the application of such provision to other
Persons or circumstances will be interpreted so as reasonably to effect the
intent of the parties hereto. The parties further agree to replace such void or
unenforceable provision of this Agreement with a valid and enforceable provision
that will achieve, to the greatest extent possible, the economic, business and
other purposes of such void or unenforceable provision.
8.7 OTHER REMEDIES; SPECIFIC PERFORMANCE.
(a) OTHER REMEDIES. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party will be deemed cumulative with
and not exclusive of any
A-63
other remedy conferred hereby, or by law or equity upon such party, and the
exercise by a party of any one remedy will not preclude the exercise of any
other remedy. The parties hereto agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached.
(b) SPECIFIC PERFORMANCE. It is accordingly agreed that the parties
shall be entitled to seek an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions hereof in
any court of the United States or any state having jurisdiction, this being in
addition to any other remedy to which they are entitled at law or in equity, and
each party hereby waives any requirement to post a bond in connection with any
such proceeding.
8.8 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of law thereof.
8.9 RULES OF CONSTRUCTION. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document will
be construed against the party drafting such agreement or document.
8.10 ASSIGNMENT. No party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other parties. Any purported assignment in violation of this Section 8.10
shall be void. Subject to the preceding sentence, this Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
8.11 WAIVER OF JURY TRIAL. EACH OF PARENT, MERGER SUB AND THE COMPANY
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE ACTIONS OF PARENT, MERGER SUB OR THE COMPANY
IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.
*****
A-64
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorized respective officers as of the date first written above.
COHERENT, INC.
By: /s/ John Ambroseo
---------------------------------------
Name: John Ambroseo
Title: Chief Executive Officer
SPIDER ACQUISITION CORPORATION
By: /s/ Helene Simonet
---------------------------------------
Name: [_____________]
Title: President and Chief Executive Officer
EXCEL TECHNOLOGY, INC.
By: /s/ Antoine Dominic
---------------------------------------
Name: Antoine Dominic
Title: Chief Executive Officer
****AGREEMENT AND PLAN OF MERGER***
ANNEX B
UBS Securities LLC
299 Park Avenue
New York, NY 10171
www.ubs.com
February 17, 2006
The Board of Directors
Excel Technology, Inc.
41 Research Way
E. Setauket Way, NY 11733
Dear Members of the Board:
We understand that Excel Technology, Inc., a Delaware corporation (the
"Company"), is considering a transaction whereby Coherent, Inc., a Delaware
corporation ("Coherent"), will acquire the Company (the "Transaction"). Pursuant
to the terms of an Agreement and Plan of Merger, draft dated February 16, 2006
(the "Agreement"), each issued and outstanding share of the common stock of the
Company, par value of $0.001 per share (the "Company Common Stock") (other than
certain shares specified in the Agreement), will be converted into the right to
receive $30.00 in cash (the "Consideration") and the Company will become a
wholly owned subsidiary of Coherent. The terms and conditions of the Transaction
are more fully set forth in the Agreement.
You have requested our opinion as to the fairness from a financial
point of view to holders of the Company Common Stock of the Consideration to be
received by such holders in the Transaction.
UBS Securities LLC ("UBS") has acted as financial advisor to the Board
of Directors of the Company in connection with the Transaction and will receive
a fee for its services, a portion of which is payable in connection with this
opinion and a significant portion of which is contingent upon consummation of
the Transaction. In the ordinary course of business, UBS, its successors and
affiliates may hold or trade, for their own accounts and the accounts of their
customers, securities of the Company and Coherent and, accordingly, may at any
time hold a long or short position in such securities.
Our opinion does not address the relative merits of the Transaction as
compared to other business strategies or transactions that might be available
with respect to the Company or the Company's underlying business decision to
effect the Transaction or constitute a recommendation to any shareholder of the
Company as to how such shareholder should vote with respect to the Transaction.
At your direction, we have not been asked to, nor do we, offer any opinion as to
the material terms (other than the Consideration) of the Agreement or the form
of the Transaction. In rendering this opinion, we have assumed, with your
consent, that (i) the final executed form of the Agreement does not differ in
any material respect from the draft that we have examined, (ii) Coherent and the
Company will comply with all the material terms of the Agreement and (iii) the
Transaction will be consummated in accordance with the terms of the Agreement
without any adverse waiver or amendment of any material term or condition
thereof. We have also assumed that all governmental, regulatory or other
consents and approvals
B-1
necessary for the consummation of the Transaction will be obtained without any
material adverse effect on the Company or the Transaction.
In arriving at our opinion, we have, among other things: (i) reviewed
certain publicly available business and historical financial information
relating to the Company and Coherent; (ii) reviewed certain internal financial
information and other data relating to the business and financial prospects of
the Company, including estimates and financial forecasts for calendar years 2006
and 2007 prepared by management of the Company, that were provided to us by the
Company and not publicly available, as well as publicly available Wall Street
research estimates for the Company; (iii) conducted discussions with members of
the senior management of the Company concerning the business and financial
prospects of the Company; (iv) reviewed publicly available financial and stock
market data with respect to certain other companies we believe to be generally
relevant; (v) compared the financial terms of the Transaction with the publicly
available financial terms of certain other transactions we believe to be
generally relevant; (vi) reviewed the current and historical market prices of
the Company Common Stock; (vii) reviewed the Agreement; and (viii) conducted
such other financial studies, analyses and investigations, and considered such
other information, as we deemed necessary or appropriate. At your request, we
have contacted third parties to solicit indications of interest in a possible
Transaction with the Company and held discussions with certain of these parties
prior to the date hereof.
In connection with our review, with your consent, we have not assumed
any responsibility for independent verification of any of the information
reviewed by us for the purpose of this opinion and have, with your consent,
relied on such information being complete and accurate in all material respects.
In addition, with your consent, we have not made any independent evaluation or
appraisal of any of the assets or liabilities (contingent or otherwise) of the
Company or Coherent, nor have we been furnished with any such evaluation or
appraisal. With respect to the financial forecasts and estimates referred to
above, we have assumed, at your direction, that they have been reasonably
prepared on a basis reflecting the best currently available estimates and
judgments of the management of the Company as to the future performance of the
Company. Our opinion is necessarily based on economic, monetary, market and
other conditions as in effect on, and the information made available to us as
of, the date hereof.
Based upon and subject to the foregoing, it is our opinion that, as of
the date hereof, the Consideration to be received by the holders of the Company
Common Stock in the Transaction is fair, from a financial point of view, to such
holders.
This opinion is provided for the benefit of the Board of Directors of
the Company in connection with, and for the purpose of, its consideration of the
Transaction.
Very truly yours,
UBS SECURITIES LLC
B-2
ANNEX C
DELAWARE GENERAL CORPORATION LAW
SECTION 262 APPRAISAL RIGHTS.
(a) Any stockholder of a corporation of this State who holds
shares of stock on the date of the making of a demand pursuant to subsection of
this section with respect to such shares, who continuously holds such shares
through the effective date of the merger or consolidation, who has otherwise
complied with subsection (d) of this section and who has neither voted in favor
of the merger or consolidation nor consented thereto in writing pursuant to
ss.228 of this title shall be entitled to an appraisal by the Court of Chancery
of the fair value of the stockholder's shares of stock under the circumstances
described in subsections (b) and (c) of this section. As used in this section,
the word "stockholder" means a holder of record of stock in a stock corporation
and also a member of record of a nonstock corporation; the words "stock" and
"share" mean and include what is ordinarily meant by those words and also
membership or membership interest of a member of a nonstock corporation; and the
words "depository receipt" mean a receipt or other instrument issued by a
depository representing an interest in one or more shares, or fractions thereof,
solely of stock of a corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any
class or series of stock of a constituent corporation in a merger or
consolidation to be effected pursuant to ss. 251 (other than a merger effected
pursuant to ss.251(g) of this title), ss.252, ss.254, ss.257, ss.258, ss.263 or
ss.264 of this title:
(1) Provided, however, that no appraisal rights under
this section shall be available for the shares of any class or series of stock,
which stock, or depository receipts in respect thereof, at the record date fixed
to determine the stockholders entitled to receive notice of and to vote at the
meeting of stockholders to act upon the agreement of merger or consolidation,
were either (i) listed on a national securities exchange or designated as a
national market system security on an interdealer quotation system by the
National Association of Securities Dealers. Inc. or (ii) held of record by more
than 2,000 holders; and further provided that no appraisal rights shall be
available for any shares of stock of the constituent corporation surviving a
merger if the merger did not require for its approval the vote of the
stockholders of the surviving corporation as provided in subsection (f) of
ss.251 of this title.
(2) Notwithstanding paragraph (1) of this subsection,
appraisal rights under this section shall be available for the shares of any
class or series of stock of a constituent corporation if the holders thereof are
required by the terms of an agreement of merger or consolidation pursuant to
ss.ss. 251, 252, 254, 257, 258, 263 and 264 of this title to accept for such
stock anything except:
a. Shares of stock of the corporation surviving
or resulting from such merger or consolidation, or depository receipts
in respect thereof;
b. Shares of stock of any other corporation, or
depository receipts in respect thereof, which shares of stock (or
depository receipts in respect thereof) or depository receipts at the
effective date of the merger or consolidation will be either listed on
a national securities exchange or designated as a national market
system security on an interdealer quotation system by the National
Association of Securities Dealers, Inc. or held of record by more than
2,000 holders;
C-1
c Cash in lieu of fractional shares or
fractional depository receipts described in the foregoing subparagraphs
a. and b. of this paragraph; or
d. Any combination of the shares of stock,
depository receipts and cash in lieu of fractional shares or fractional
depository receipts described in the foregoing subparagraphs a., b. and
c. of this paragraph.
(3) In the event all of the stock of a subsidiary
Delaware corporation party to a merger effected under ss. 253 of this title is
not owned by the parent corporation immediately prior to the merger, appraisal
rights shall be available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of
incorporation that appraisal rights under this section shall be available for
the shares of any class or series of its stock as a result of an amendment to
its certificate of incorporation, any merger or consolidation in which the
corporation is a constituent corporation or the sale of all or substantially all
of the assets of the corporation. If the certificate of incorporation contains
such a provision, the procedures of this section, including those set forth in
subsections (d) and (e) of this section, shall apply as nearly as is
practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which
appraisal rights are provided under this section is to be submitted for approval
at a meeting of stockholders, the corporation, not less than 20 days prior to
the meeting, shall notify each of its stockholders who was such on the record
date for such meeting with respect to shares for which appraisal rights are
available pursuant to subsection (b) or (c) hereof that appraisal rights are
available for any or all of the shares of the constituent corporations, and
shall include in such notice a copy of this section. Each stockholder electing
to demand the appraisal of such stockholder's shares shall deliver to the
corporation, before the taking of the vote on the merger or consolidation, a
written demand for appraisal of such stockholder's shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the appraisal of
such stockholder's shares. A proxy or vote against the merger or consolidation
shall not constitute such a demand. A stockholder electing to take such action
must do so by a separate written demand as herein provided. Within 10 days after
the effective date of such merger or consolidation, the surviving or resulting
corporation shall notify each stockholder of each constituent corporation who
has complied with this subsection and has not voted in favor of or consented to
the merger or consolidation of the date that the merger or consolidation has
become effective; or
(2) If the merger or consolidation was approved pursuant
to ss.228 or ss.253 of this title, then, either a constituent corporation before
the effective date of the merger or consolidation, or the surviving or resulting
corporation within ten days thereafter, shall notify each of the holders of any
class or series of stock of such constituent corporation who are entitled to
appraisal rights of the approval of the merger or consolidation and that
appraisal rights are available for any or all shares of such class or series of
stock of such constituent corporation, and shall include in such notice a copy
of this section. Such notice may, and, if given on or after the effective date
of the merger or consolidation, shall, also notify such stockholders of the
effective date of the merger or consolidation. Any stockholder entitled to
appraisal rights may, within 20 days after the date of mailing of such notice,
demand in writing from the surviving or resulting corporation the appraisal of
such holder's shares. Such demand will be sufficient if it reasonably informs
the corporation of the identity of the stockholder and that the stockholder
intends thereby to demand the appraisal of such holder's shares. If such notice
did not notify stockholders of the effective date of the merger or
consolidation, either (i) each such constituent corporation shall send a second
notice before the effective date of the merger or consolidation notifying each
of the holders of any class or series of stock of such constituent corporation
that are entitled to appraisal rights of the effective date of the merger or
C-2
consolidation or (ii) the surviving or resulting corporation shall send such a
second notice to all such holders on or within 10 days after such effective
date; provided, however, that if such second notice is sent more than 20 days
following the sending of the first notice, such second notice need only be sent
to each stockholder who is entitled to appraisal rights and who has demanded
appraisal of such holder's shares in accordance with this subsection. An
affidavit of the secretary or assistant secretary or of the transfer agent of
the corporation that is required to give either notice that such notice has been
given shall, in the absence of fraud, be prima facie evidence of the facts
stated therein. For purposes of determining the stockholders entitled to receive
either notice, each constituent corporation may fix, in advance, a record date
that shall be not more than 10 days prior to the date the notice is given,
provided, that if the notice is given on or after the effective date of the
merger or consolidation, the record date shall be such effective date. If no
record date is fixed and the notice is given prior to the effective date, the
record date shall be the close of business on the day next preceding the day on
which the notice is given.
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who has
complied with subsections (a) and (d) hereof and who is otherwise entitled to
appraisal rights, may file a petition in the Court of Chancery demanding a
determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any stockholder shall have the right to
withdraw such stockholder's demand for appraisal and to accept the terms offered
upon the merger or consolidation. Within 120 days after the effective date of
the merger or consolidation, any stockholder who has complied with the
requirements of subsections (a) and (d) hereof upon written request, shall be
entitled to receive from the corporation surviving the merger or resulting from
the consolidation a statement setting forth the aggregate number of shares not
voted in favor of the merger or consolidation and with respect to which demands
for appraisal have been received and the aggregate number of holders of such
shares. Such written statement shall be mailed to the stockholder within 10 days
after such stockholder's written request for such a statement is received by the
surviving or resulting corporation or within 10 days after expiration of the
period for delivery of demands for appraisal under subsection (d) hereof,
whichever is later.
(f) Upon the filing of any such petition by a stockholder, service
of a copy thereof shall be made upon the surviving or resulting corporation,
which shall within 20 days after such service file in the office of the Register
in Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the addresses
therein stated. Such notice shall also be given by 1 or more publications at
least 1 week before the day of the hearing, in a newspaper of general
circulation published in the City of Wilmington, Delaware or such publication as
the Court deems advisable. The forms of the notices by mail and by publication
shall be approved by the Court, and the costs thereof shall be borne by the
surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.
C-3
(h) After determining the stockholders entitled to an appraisal,
the Court shall appraise the shares, determining their fair value exclusive of
any element of value arising from the accomplishment or expectation of the
merger or consolidation, together with a fair rate of interest, if any, to be
paid upon the amount determined to be the fair value. In determining such fair
value, the Court shall take into account all relevant factors. In determining
the fair rate of interest, the Court may consider all relevant factors,
including the rate of interest which the surviving or resulting corporation
would have had to pay to borrow money during the pendency of the proceeding.
Upon application by the surviving or resulting corporation or by any stockholder
entitled to participate in the appraisal proceeding, the Court may, in its
discretion, permit discovery or other pretrial proceedings and may proceed to
trial upon the appraisal prior to the final determination of the stockholder
entitled to an appraisal. Any stockholder whose name appears on the list filed
by the surviving or resulting corporation pursuant to subsection (f) of this
section and who has submitted such stockholder's certificates of stock to the
Register in Chancery, if such is required, may participate fully in all
proceedings until it is finally determined that such stockholder is not entitled
to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the
shares, together with interest, if any, by the surviving or resulting
corporation to the stockholders entitled thereto. Interest may be simple or
compound, as the Court may direct. Payment shall be so made to each such
stockholder, in the case of holders of uncertificated stock forthwith, and the
case of holders of shares represented by certificates upon the surrender to the
corporation of the certificates representing such stock. The Court's decree may
be enforced as other decrees in the Court of Chancery may be enforced, whether
such surviving or resulting Corporation be a corporation of this State or of any
state.
(j) The costs of the proceeding maybe determined by the Court and
taxed upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or
consolidation, no stockholder who has demanded appraisal rights as provided in
subsection (d) of this section shall be entitled to vote such stock for any
purpose or to receive payment of dividends or other distributions on the stock
(except dividends or other distributions payable to stockholders of record at a
date which is prior to the effective date of the merger or consolidation);
provided, however, that if no petition for an appraisal shall be filed within
the time provided in subsection (e) of this section, or if such stockholder
shall deliver to the surviving or resulting corporation a written withdrawal of
such stockholder's demand for an appraisal and an acceptance of the merger or
consolidation, either within 60 days after the effective date of the merger or
consolidation as provided in subsection (e) of this section or thereafter with
the written approval of the corporation, then the right of such stockholder to
an appraisal shall cease. Notwithstanding the foregoing, no appraisal proceeding
in the Court of Chancery shall be dismissed as to any stockholder without the
approval of the Court, and such approval may be conditioned upon such terms as
the Court deems just.
(l) The shares of the surviving or resulting corporation to which
the shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation.
C-4
PRELIMINARY COPY-SUBJECT TO COMPLETION
ANNEX D
EXCEL TECHNOLOGY, INC.
SPECIAL MEETING OF STOCKHOLDERS
MARCH ___, 2006
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of Excel Technology, Inc., a Delaware
corporation, hereby appoints Antoine Dominic and J. Donald Hill, and each of
them, with the full power and authority to act as proxy of the undersigned, with
full power of substitution, to vote all shares of common stock which the
undersigned may be entitled to vote at the special meeting of stockholders of
Excel Technology, Inc. to be held at the offices of Excel Technology, Inc. 41
Research Way, East Setauket, NY 11733, at 10:00 a.m., local time, on March ___,
2006, and at any adjournment thereof, on the matters set forth in this form of
proxy and described in the Proxy Statement, and in their discretion with respect
to such other matters as may be properly brought before the meeting or any
adjournment thereof.
THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE,
THIS PROXY WILL BE VOTED FOR EACH OF THE MATTERS LISTED. If more than one of the
proxies named shall be present in person or by substitution at the meeting or at
any adjournment thereof, the majority of the proxies so present and voting,
either in person or by substitute, shall exercise all of the powers hereby
given.
(CONTINUED)
D-1
EXCEL TECHNOLOGY, INC.
SPECIAL MEETING OF STOCKHOLDERS
MARCH ___, 2006
-------------------------
PROXY VOTING INSTRUCTIONS
-------------------------
MAIL-Date, sign and mail your proxy card --------------------------------
in the envelope provided
as soon as possible COMPANY NUMBER
-OR-
TELEPHONE - Call toll-free 1-800-PROXIES --------------------------------
from any touch-tone telephone and follow
the instructions. Have your control number ACCOUNT NUMBER
and proxy card available when you call.
-OR- --------------------------------
INTERNET- Access "www.voteproxy.com" and
follow the on-screen instructions. Have CONTROL NUMBER
your control number available when you
access the web page. --------------------------------
Please detach along perforated line and mail in the envelope provided IF you
are not voting via telephone or the Internet.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE
MARK YOUR VOTE IN BLUE OR BLACK INK, AS SHOWN HERE |X|
- --------------------------------------------------------------------------------
1. To adopt the Agreement and 2. To approve adjournments of the
Plan of Merger, dated as of special meeting if deemed
February 20, 2006, by and necessary to facilitate the
among Coherent, Inc., a approval of the merger proposal,
Delaware corporation, Spider including to permit the
Acquisition Corporation, a solicitation of additional proxies
Delaware corporation and a if there are not sufficient votes
wholly owned subsidiary of at the time of the special meeting
Coherent, Inc., and Excel to approve the merger proposal
Technology, Inc. (proposal 1).
[ ] FOR [ ] AGAINST [ ] ABSTAIN [ ] FOR [ ] AGAINST [ ] ABSTAIN
In the discretion of the proxies
to transact such other business as
may properly come before the
special meeting or any adjournment
thereof.
The undersigned acknowledges
receipt of the Notice of Special
Meeting of Stockholders and Proxy
Statement dated March ___, 2006.
PLEASE DATE, SIGN AND MAIL THIS
PROXY CARD IN THE ENCLOSED
ENVELOPE. NO POSTAGE IS REQUIRED
IF MAILED IN THE UNITED STATES.
TO CHANGE THE ADDRESS ON YOUR
ACCOUNT, PLEASE CHECK THE BOX AT
RIGHT TO INDICATE YOUR NEW ADDRESS
IN THE SPACE ABOVE. PLEASE NOTE
THAT CHANGES TO REGISTERED NAME(S)
ON THE ACCOUNT MAY NOT BE SUBMITTED
VIA THIS METHOD. [ ]
Signature of Signature of
Stockholder ____________ Date_______ Stockholder ____________ Date_______
D-2
NOTE: Please sign exactly as your name or names appear on this Proxy. When
shares are held jointly, each holder should sign. When signing as executive,
administrator, attorney or guardian, give full title as such. If the signer is a
corporation, please sign full corporate name by duly authorized officer, giving
full title as such. If signer is a partnership, please sign in partnership name
by authorized person.
D-3