AGREEMENT AND PLAN OF MERGER among PERSEUS HOLDING CORP., 406 ACQUISITION CORP. and PEGASUS SOLUTIONS, INC. Dated as of December 19, 2005
EXHIBIT 2.1
Execution Copy
among
PERSEUS HOLDING CORP.,
406 ACQUISITION CORP.
and
PEGASUS SOLUTIONS, INC.
Dated as of December 19, 2005
TABLE OF CONTENTS
Page | ||||
ARTICLE I THE MERGER |
1 | |||
Section 1.1 The Merger |
1 | |||
Section 1.2 Effective Time |
1 | |||
Section 1.3 Effect of the Merger |
2 | |||
Section 1.4 Certificate of Incorporation; By-laws |
2 | |||
Section 1.5 Directors and Officers |
2 | |||
ARTICLE II EFFECT OF THE MERGER ON THE STOCK OF THE CONSTITUENT ENTITIES; EXCHANGE OF CERTIFICATES |
2 | |||
Section 2.1 Conversion of Securities |
2 | |||
Section 2.2 Treatment of Options and Other Equity Awards |
3 | |||
Section 2.3 Employee Stock Purchase Plan |
4 | |||
Section 2.4 Dissenting Shares |
4 | |||
Section 2.5 Surrender of Shares; Stock Transfer Books |
4 | |||
Section 2.6 Withholding |
6 | |||
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY |
6 | |||
Section 3.1 Organization and Qualification; Subsidiaries |
6 | |||
Section 3.2 Certificate of Incorporation and By-laws |
6 | |||
Section 3.3 Capitalization |
7 | |||
Section 3.4 Authority Relative to the Merger |
8 | |||
Section 3.5 No Conflict; Required Filings and Consents |
9 | |||
Section 3.6 Permits; Compliance |
9 | |||
Section 3.7 SEC Filings; Financial Statements |
10 | |||
Section 3.8 Absence of Certain Changes or Events |
11 | |||
Section 3.9 Absence of Litigation |
11 | |||
Section 3.10 Employee Benefit Plans |
12 | |||
Section 3.11 Labor and Employment Matters |
15 | |||
Section 3.12 Intellectual Property |
16 | |||
Section 3.13 Taxes |
19 | |||
Section 3.14 Environmental Matters |
20 | |||
Section 3.15 Amendment to Company Rights Agreement |
21 | |||
Section 3.16 Material Contracts |
21 | |||
Section 3.17 Proxy Statement |
23 | |||
Section 3.18 Opinion of Financial Advisor |
24 | |||
Section 3.19 Brokers |
24 | |||
Section 3.20 Title to Assets |
24 | |||
Section 3.21 Insurance |
24 | |||
Section 3.22 Restrictions on Business Activities |
24 | |||
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB |
24 | |||
Section 4.1 Corporate Organization |
25 |
i
Page | ||||
Section 4.2 Authority Relative to the Merger |
25 | |||
Section 4.3 No Conflict; Required Filings and Consents |
25 | |||
Section 4.4 Financing |
26 | |||
Section 4.5 Proxy Statement |
27 | |||
Section 4.6 Brokers |
27 | |||
ARTICLE V CONDUCT OF BUSINESS PENDING THE MERGER |
27 | |||
Section 5.1 Conduct of Business by the Company Pending the Effective Time |
27 | |||
ARTICLE VI ADDITIONAL AGREEMENTS |
31 | |||
Section 6.1 Stockholders’ Meeting |
31 | |||
Section 6.2 Proxy Statement; Schedule 13E-3 |
31 | |||
Section 6.3 Access to Information; Confidentiality |
31 | |||
Section 6.4 No Solicitation of Competing Transactions |
32 | |||
Section 6.5 Employee Benefits Matters |
34 | |||
Section 6.6 Directors’ and Officers’ Indemnification and Insurance |
35 | |||
Section 6.7 Notification of Certain Matters |
37 | |||
Section 6.8 Further Action; Reasonable Commercial Efforts |
37 | |||
Section 6.9 Financing Arrangements |
39 | |||
Section 6.10 Public Announcements |
39 | |||
ARTICLE VII CONDITIONS TO THE MERGER |
40 | |||
Section 7.1 Conditions to Each Party’s Obligation to Effect the Merger |
40 | |||
Section 7.2 Conditions to Obligations of Parent and Merger Sub |
40 | |||
Section 7.3 Conditions to Obligation of the Company |
41 | |||
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER |
42 | |||
Section 8.1 Termination |
42 | |||
Section 8.2 Effect of Termination |
43 | |||
Section 8.3 Fees and Expenses |
43 | |||
Section 8.4 Amendment |
44 | |||
Section 8.5 Waiver |
44 | |||
ARTICLE IX GENERAL PROVISIONS |
44 | |||
Section 9.1 Non-Survival of Representations, Warranties and Agreements |
44 | |||
Section 9.2 Notices |
45 | |||
Section 9.3 Certain Definitions |
45 | |||
Section 9.4 Severability |
51 | |||
Section 9.5 Entire Agreement; Assignment |
51 | |||
Section 9.6 Parties in Interest |
51 | |||
Section 9.7 Specific Performance |
51 | |||
Section 9.8 Governing Law |
51 | |||
Section 9.9 Headings |
51 | |||
Section 9.10 Counterparts |
52 | |||
Section 9.11 Company Disclosure Schedule |
52 |
ii
AGREEMENT AND PLAN OF MERGER, dated as of December 19, 2005 (this “Agreement”), among Perseus
Holding Corp., a Delaware corporation (“Parent”), 406 Acquisition Corp., a Delaware corporation and
a wholly owned subsidiary of Parent (“Merger Sub”), and Pegasus Solutions, Inc., a Delaware
corporation (the “Company”).
WHEREAS, a Special Committee of the Board of Directors of the Company has (i) determined that
the Merger (as defined below) is advisable and in the best interests of the Company’s stockholders
(other than the Buying Parties (as defined below)), and (ii) approved the Merger and recommended
approval of the Merger by the Board of Directors of the Company;
WHEREAS, the Boards of Directors of Parent and the Merger Sub and, subsequent to the
recommendation of such Special Committee, the Board of Directors of the Company have each approved
and declared advisable the merger of Merger Sub with and into the Company (the “Merger”) in
accordance with the General Corporation Law of the State of Delaware (the “DGCL”) upon the terms
and subject to the conditions set forth herein, whereby each issued and outstanding share of common
stock, par value $0.01 per share, of the Company (“Shares”), not owned directly or indirectly by
Parent or the Company, will be exchanged for $9.50 in cash (the “Merger Consideration”);
WHEREAS, the Boards of Directors of Parent and Merger Sub have each declared the Merger to be
in the best interests of their respective stockholders and the Board of Directors of the Company
has declared the Merger to in the best interest of the Company’s stockholders (other than the
Buying Parties); and
WHEREAS, simultaneously with the execution of this Agreement, Parent, Merger Sub and certain
stockholders of the Company (each a “Buying Party”) have entered into a contribution and voting
agreement (the “Contribution and Voting Agreement”), which is in the form attached hereto as
Exhibit A, pursuant to which, among other things, those stockholders have agreed to exchange
certain of their Shares for shares of common stock of Parent and to vote their Shares in favor of
approving and adopting this Agreement and the Merger.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements
herein contained, and intending to be legally bound hereby, Parent, Merger Sub and the Company
hereby agree as follows:
ARTICLE I
THE MERGER
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the conditions set forth in
Article VII, and in accordance with the DGCL, at the Effective Time (as defined below), Merger Sub
shall be merged with and into the Company. As a result of the Merger, the separate corporate
existence of Merger Sub shall cease and the Company shall continue as the surviving corporation of
the Merger (the “Surviving Corporation”).
Section 1.2 Effective Time. Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to Section 8.1, as promptly as
practicable after the satisfaction or, if permissible, waiver of the conditions set forth in
Article VII, the parties hereto shall cause the Merger to be consummated by filing a certificate of
merger
1
or certificate of ownership and merger (in either case, the “Certificate of Merger”) with the
Secretary of State of the State of Delaware, in such form as is required by, and executed in
accordance with, the relevant provisions of the DGCL (the date and time of such filing of the
Certificate of Merger (or such later time as may be agreed by each of the parties hereto and
specified in the Certificate of Merger) being the “Effective Time”).
Section 1.3 Effect of the Merger. At the Effective Time, the effect of the Merger
shall be as provided in the applicable provisions of the DGCL. Without limiting the generality of
the foregoing, and subject thereto, at the Effective Time, all the property (including real,
personal and mixed), rights, privileges, powers and franchises, both public and private, of the
Company and Merger Sub shall vest in the Surviving Corporation, and all debts, liabilities,
obligations, restrictions, disabilities and duties of each of the Company and Merger Sub shall
become the debts, liabilities, obligations, restrictions, disabilities and duties of the Surviving
Corporation.
Section 1.4 Certificate of Incorporation; By-laws.
(a) At the Effective Time, the Certificate of Incorporation of the Company shall be amended in
the Merger to be identical to the Certificate of Incorporation of Merger Sub as in effect
immediately prior to the Effective Time (except that such Certificate of Incorporation shall be
amended to provide the name of the Surviving Corporation shall be the name of the Company), and
shall be the Certificate of Incorporation of the Surviving Corporation until thereafter amended as
provided by Law and such Certificate of Incorporation.
(b) Unless otherwise determined by Parent prior to the Effective Time, subject to Section 6.6,
at the Effective Time, the By-laws of Merger Sub, as in effect immediately prior to the Effective
Time, shall be the By-laws of the Surviving Corporation until thereafter amended as provided by
Law, the Certificate of Incorporation of the Surviving Corporation and such By-laws.
Section 1.5 Directors and Officers. The directors of Merger Sub immediately prior to
the Effective Time shall be the initial directors of the Surviving Corporation, each to hold office
in accordance with the Certificate of Incorporation and By-laws of the Surviving Corporation, and
the officers of the Company immediately prior to the Effective Time shall be the initial officers
of the Surviving Corporation, in each case until their respective successors are duly elected or
appointed and qualified or until their earlier death, resignation or removal.
ARTICLE II
EFFECT OF THE MERGER ON THE STOCK OF THE CONSTITUENT ENTITIES;
EXCHANGE OF CERTIFICATES
EFFECT OF THE MERGER ON THE STOCK OF THE CONSTITUENT ENTITIES;
EXCHANGE OF CERTIFICATES
Section 2.1 Conversion of Securities. At the Effective Time, by virtue of the Merger
and without any action on the part of Merger Sub, the Company or the holders of any of the
following securities:
(a) each Share issued and outstanding immediately prior to the Effective Time (other than any
Shares to be canceled pursuant to Section 2.1(b), Shares owned by any wholly-owned subsidiary of
the Company which shall remain outstanding (but shall not be entitled to any Merger Consideration)
and any Dissenting Shares (as defined below)) shall be canceled and
2
shall be converted automatically into the right to receive an amount equal to the Merger
Consideration payable, without interest, to the holder of such Share, upon surrender, in the manner
provided in Section 2.5, of the certificate that formerly evidenced such Share;
(b) each Share held in the treasury of the Company and each Share owned by Merger Sub or
Parent or any direct or indirect subsidiary of Parent immediately prior to the Effective Time shall
be canceled and retired without any conversion thereof and no payment or distribution shall be made
with respect thereto; and
(c) each share of common stock, par value $0.01 per share, of Merger Sub issued and
outstanding immediately prior to the Effective Time shall be converted into and exchanged for one
validly issued, fully paid and nonassessable share of common stock, par value $0.01 per share, of
the Surviving Corporation.
Section 2.2 Treatment of Options and Other Equity Awards.
(a) The Company has awarded stock options and restricted shares under (i) the 1996 Stock
Option Plan, (ii) the 2002 Stock Incentive Plan, and (iii) individual stock option agreements not
pursuant to a plan (which, for purposes of this Agreement, themselves constitute separate plans)
(each, as amended through the date of this Agreement, and collectively referred to as the “Company
Stock Option Plans”). Between the date of this Agreement and the Effective Time, the Company shall
take all necessary action (which action shall be effective as of the Effective Time) to (A)
terminate the Company Stock Option Plans and (B) cancel, as of the Effective Time, each outstanding
option to purchase shares of Company Common Stock granted under the Company Stock Option Plans
(each, a “Company Stock Option”) that is outstanding and unexercised, whether or not vested or
exercisable, as of such date (in each case, without the creation of additional liability to the
Company or any subsidiary of the Company (each, a “Subsidiary”)).
(b) As of the Effective Time, each holder of a Company Stock Option immediately prior to the
Effective Time shall be entitled to receive an amount of cash, without interest, equal to the
product of (i) the total number of shares of Company Common Stock subject to such Company Stock
Option multiplied by (ii) the excess, if any, of the Merger Consideration over the exercise price
per share of such Company Stock Option (with the aggregate amount of such payment to the holder to
be rounded to the nearest cent), less applicable withholding taxes, if any, required to be withheld
with respect to such payment. No holder of a Company Stock Option that has an exercise price per
Share that is equal to or greater than the Merger Consideration shall be entitled to any payment
with respect to such cancelled Company Stock Option before or after the Effective Time.
(c) As of the Effective Time, each outstanding share of restricted Company Common Stock
granted under the Company Stock Option Plans (each, a “Company Restricted Stock Award”), the
restrictions of which have not lapsed immediately prior to the Effective Time, shall become fully
vested and the holder thereof shall be entitled to receive an amount in cash, without interest,
equal to the Merger Consideration, less applicable withholding taxes, if any, required to be
withheld with respect to such payment.
3
Section 2.3 Employee Stock Purchase Plan. The Company has taken all actions necessary
under the Company’s 2002 Third Amended and Restated Employee Stock Purchase Plan (formerly called
the 1997 Employee Stock Purchase Plan) (the “ESPP”) to provide that (a) all participants’ rights
under all current Offering Periods (as such term is defined in the ESPP) shall terminate on
December 31, 2005, and on such date all accumulated payroll deductions allocated to each
participant’s account under the ESPP shall thereupon be used to purchase from the Company whole
Shares at a price determined under the terms of the ESPP for that Offering Period, (b) no new
Offering Period shall commence on or after December 31, 2005, and (c) as of the close of business
on December 31, 2005, the ESPP shall terminate. The Company shall take all necessary actions so
that on and after the date hereof (a) no new offering or Offering Period shall commence under the
ESPP, (b) no new participant shall be admitted to participation in the ESPP and (c) no current
participant shall be entitled to increase any payroll deduction contributions for any current
Offering Period. At the Effective Time, any Shares acquired under the ESPP will be treated as
provided in Section 2.1.
Section 2.4 Dissenting Shares.
(a) Notwithstanding any provision of this Agreement to the contrary and to the extent
available under the DGCL, Shares that are outstanding immediately prior to the Effective Time and
that are held by stockholders who shall have neither voted in favor of the Merger nor consented
thereto in writing and who shall have demanded properly in writing appraisal for such Shares in
accordance with Section 262 of the DGCL (or any successor provision) (collectively, the “Dissenting
Shares”) shall not be converted into, or represent the right to receive, the Merger Consideration.
Such stockholders shall be entitled to receive payment of the appraised value of such Shares held
by them in accordance with the provisions of such Section 262 (or any successor provision), except
that all Dissenting Shares held by stockholders who shall have failed to perfect or who effectively
shall have withdrawn or lost their rights to appraisal of such Shares under such Section 262 (or
any successor provision) shall thereupon be deemed to have been converted into, and to have become
exchangeable for, as of the Effective Time, the right to receive the Merger Consideration, without
any interest thereon, upon surrender, in the manner provided in Section 2.5, of the certificate or
certificates that formerly evidenced such Shares.
(b) The Company shall give Parent (i) prompt notice of any demands for appraisal received by
the Company, withdrawals of such demands, and any other instruments served pursuant to the DGCL and
received by the Company and (ii) the opportunity to direct all negotiations and proceedings with
respect to demands for appraisal or the payment of the fair cash value of such Shares under the
DGCL. The Company shall not, except with the prior written consent of Parent, make any payment
with respect to any demands for appraisal or the payment of the fair cash value of such Shares or
offer to settle or settle any such demands.
Section 2.5 Surrender of Shares; Stock Transfer Books.
(a) Prior to the Effective Time, Merger Sub shall designate a bank or trust company to act as
agent (the “Exchange Agent”) for the holders of Shares to receive the funds to which holders of
Shares shall become entitled pursuant to Section 2.1(a) and shall deposit with the Exchange Agent
cash in an amount sufficient to pay the aggregate Merger Consideration
4
(such cash being hereinafter referred to as the “Exchange Fund”). The Exchange Fund shall be
invested by the Exchange Agent as directed by the Surviving Corporation. As soon as reasonably
practicable after the Effective Time, the Exchange Agent, pursuant to irrevocable instructions,
shall deliver the aggregate Merger Consideration to be paid pursuant to Section 2.1(a) out of the
Exchange Fund. The Exchange Fund shall not be used for any other purpose.
(b) Promptly after the Effective Time, the Surviving Corporation shall cause to be mailed to
each person who was, at the Effective Time, a holder of record of Shares entitled to receive the
Merger Consideration pursuant to Section 2.1(a) a form of letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the certificates evidencing
such Shares (the “Certificates”) shall pass, only upon proper delivery of the Certificates to the
Exchange Agent) and instructions for use in effecting the surrender of the Certificates pursuant to
such letter of transmittal. Upon surrender to the Exchange Agent of a Certificate, together with
such letter of transmittal, duly completed and validly executed in accordance with the instructions
thereto, and such other documents as may be required pursuant to such instructions, the holder of
such Certificate shall be entitled to receive in exchange therefor the Merger Consideration for
each Share formerly evidenced by such Certificate, and such Certificate shall then be canceled. No
interest shall accrue or be paid on the Merger Consideration payable upon the surrender of any
Certificate for the benefit of the holder of such Certificate. If the payment equal to the Merger
Consideration is to be made to a person other than the person in whose name the surrendered
certificate formerly evidencing Shares is registered on the stock transfer books of the Company, it
shall be a condition of payment that the certificate so surrendered shall be endorsed properly or
otherwise be in proper form for transfer and that the person requesting such payment shall have
paid all transfer and other taxes required by reason of the payment of the Merger Consideration to
a person other than the registered holder of the certificate surrendered, or shall have established
to the satisfaction of the Surviving Corporation that such taxes either have been paid or are not
applicable. If any holder of Shares is unable to surrender such holder’s Certificates because such
Certificates have been lost, stolen, mutilated or destroyed, such holder may deliver in lieu
thereof an affidavit and indemnity bond in form and substance and with surety reasonably
satisfactory to the Surviving Corporation.
(c) At any time following the sixth month after the Effective Time, the Surviving Corporation
shall be entitled to require the Exchange Agent to deliver to it any funds which have been made
available to the Exchange Agent and not disbursed to holders of Shares (including, without
limitation, all interest and other income received by the Exchange Agent in respect of all funds
made available to it), and, thereafter, such holders shall be entitled to look to the Surviving
Corporation (subject to abandoned property, escheat and other similar laws) only as general
creditors thereof with respect to any Merger Consideration that may be payable upon due surrender
of the Certificates held by them. Notwithstanding the foregoing, neither the Surviving Corporation
nor the Exchange Agent shall be liable to any holder of a Share for any Merger Consideration
delivered in respect of such Share to a public official pursuant to any abandoned property, escheat
or other similar laws.
(d) At the close of business on the day of the Effective Time, the stock transfer books of the
Company shall be closed and thereafter there shall be no further registration of transfers of
Shares on the records of the Company. From and after the Effective Time, the
5
holders of Shares outstanding immediately prior to the Effective Time shall cease to have any
rights with respect to such Shares except as otherwise provided herein or by applicable Law.
Section 2.6 Withholding. Each of Parent, Merger Sub, the Surviving Corporation and
the Exchange Agent shall be entitled to deduct and withhold from any amounts otherwise payable
pursuant to this Agreement in respect of Shares such amount as it is required to deduct and
withhold with respect to the making of such payment under the Code or any applicable Tax Law. To
the extent that amounts are so withheld, such withheld amounts shall be treated for purposes of
this Agreement as having been paid to the holder of the Shares in respect of which such deduction
and withholding was made by Parent, Merger Sub, the Surviving Corporation or the Exchange Agent,
respectively.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
As an inducement to Parent and Merger Sub to enter into this Agreement, the Company hereby
represents and warrants to Parent and Merger Sub that:
Section 3.1 Organization and Qualification; Subsidiaries.
(a) Each of the Company and each Subsidiary is a corporation, limited liability company,
limited partnership or other entity duly formed, validly existing and in good standing under the
laws of the jurisdiction of its formation and has the requisite power and authority and all
necessary governmental approvals to own, lease and operate its properties and to carry on its
business as it is now being conducted. Each of the Company and each Subsidiary is duly qualified
or licensed as a foreign corporation, limited liability company or limited partnership to do
business, and is in good standing, in each jurisdiction where the character of the properties
owned, leased or operated by it or the nature of its business makes such qualification or licensing
necessary, except for such failures to be so qualified or licensed and in good standing that would
not reasonably be expected to have a Company Material Adverse Effect.
(b) A true and complete list of all the Subsidiaries, together with the jurisdiction of
formation of each Subsidiary and the percentage of the outstanding equity interests of each
Subsidiary owned by the Company, each other Subsidiary and, to the knowledge of the Company, each
other holder of equity, is set forth in Section 3.1(b) of the company disclosure schedule (the
“Company Disclosure Schedule”). Except as disclosed in Section 3.1(b) of the Company Disclosure
Schedule, the Company does not directly or indirectly own any equity or similar interest in, or any
right, warrant, option or other interest convertible into or exchangeable or exercisable for any
equity or similar interest in, any corporation, partnership, Joint Venture or other business
association or entity.
Section 3.2 Certificate of Incorporation and By-laws. The Company has made available
to Parent true and correct copies of (a) the Certificates of Incorporation, By-laws or equivalent
organizational documents of the Company and each of its Subsidiaries and (b) any investor rights,
voting, co-sale or other agreements applicable to Company or any of its Subsidiaries with respect
to each of its Joint Ventures (the “Joint Venture Documents”). The Certificates of Incorporation
and By-laws, or equivalent governing or organizational documents
6
and the Joint Venture Documents of the Company and each of its Subsidiaries are in full force
and effect. Neither the Company nor any Subsidiary is in violation of any of the provisions of its
Joint Venture Documents, Certificate of Incorporation or By-laws or equivalent organizational
documents.
Section 3.3 Capitalization.
(a) The authorized capital stock of the Company consists of (i) 50,000,000 shares of common
stock, par value $0.01 per share (“Company Common Stock”) and (ii) 2,000,000 shares of preferred
stock, par value $0.01 per share (“Company Preferred Stock”). As of December 15, 2005, (i)
20,766,199 Shares are issued and outstanding, all of which are validly issued, fully paid and
nonassessable, (ii) no Shares are held in the treasury of the Company and (iii) 3,726,000 Shares
(or such greater number as may be issuable from time to time upon conversion pursuant to the
indenture relating to such notes) are reserved for issuance upon conversion of the Company’s 3.875%
Convertible Senior Notes due 2023. As of December 15, 2005, the Company has sufficient Shares
authorized and reserved for any and all future issuances pursuant to outstanding Company Stock
Options and other rights (together with the Company Restricted Stock Awards, the “Company Stock
Awards”) granted pursuant to the Company Stock Option Plans and the ESPP. As of the date of this
Agreement, no shares of Company Preferred Stock are issued and outstanding. Except as set forth in
this Section 3.3 or in Section 3.3(a) of the Company Disclosure Schedule, and except for the Rights
(as defined below) issued pursuant to the Company Rights Agreement (as defined below), there are no
options, warrants or other rights, agreements, arrangements or commitments of any character that
are binding on the Company or any Subsidiary and that relate to the issued or unissued capital
stock or any other equity interest of the Company or any Subsidiary or that obligate the Company or
any Subsidiary to issue, sell, repurchase, redeem or otherwise acquire any shares of capital stock
of, or other equity interests in, the Company or any Subsidiary. Section 3.3(a) of the Company
Disclosure Schedule sets forth the following information with respect to each Company Stock Award
outstanding as of the date of this Agreement: (i) the name of the Company Stock Award recipient;
(ii) the particular plan pursuant to which such Company Stock Award was granted; (iii) the number
of Shares subject to such Company Stock Award; (iv) the exercise or purchase price of such Company
Stock Award; (v) the date on which such Company Stock Award was granted; (vi) the applicable
vesting schedule; (vii) the date on which such Company Stock Award expires; and (viii) whether the
exercisability of or right to repurchase of such Company Stock Award will be accelerated in any way
by the Merger, and indicates the extent of acceleration. All Shares subject to issuance as set
forth in this Section 3.3, upon issuance on the terms and conditions specified in the instruments
pursuant to which they are issuable, will be duly authorized, validly issued, fully paid and
nonassessable. There are no outstanding contractual obligations of the Company or any Subsidiary
to repurchase, redeem or otherwise acquire any Shares or any capital stock or any other equity
interest of any Subsidiary or to provide funds to, or make any investment (in the form of a loan,
capital contribution or otherwise) in, any Subsidiary or any other person. Except as set forth in
Section 3.3(a) of the Company Disclosure Schedule, there are no commitments or agreements of any
character to which the Company is bound obligating the Company to accelerate the vesting of any
Company Stock Award as a result of the Merger. All outstanding Shares, all outstanding Company
Stock Awards and all outstanding shares of capital stock or other equity interest of each
Subsidiary have been issued and granted in compliance in all material respects with (i) all
applicable federal and state
7
securities laws and other applicable Laws and (ii) all requirements set forth in applicable
contracts (including, without limitation, any preemptive or similar rights). Since April 1, 2005,
the Company has not declared or paid any dividend or distribution in respect of any Shares or any
other of its equity interests and has not repurchased or redeemed any Shares or other equity
interests, and its Board of Directors has not resolved to do any of the foregoing.
(b) Each outstanding share of capital stock or other equity interest of each Subsidiary is
duly authorized, validly issued, fully paid and nonassessable, and, except as set forth in Section
3.3(b) to the Company Disclosure Schedule, each share or other equity interest that is owned
directly or indirectly by the Company is owned by the Company or another Subsidiary free and clear
of all security interests, liens, claims, pledges, options, rights of first refusal, preemptive
rights, agreements, limitations on the Company’s or any Subsidiary’s voting rights, charges and
other encumbrances of any nature whatsoever.
(c) As of the date hereof, except as set forth in Section 3.3(c) to the Company Disclosure
Schedule, there is no indebtedness for borrowed money of the Company or any Subsidiary outstanding.
Section 3.4 Authority Relative to the Merger. The Company has all necessary corporate
power and authority to execute and deliver this Agreement, to perform its obligations hereunder and
to consummate the Merger and the transactions contemplated hereby (the “Transactions”). The
execution and delivery by the Company of this Agreement and the consummation by the Company of the
Merger and the Transactions have been duly and validly authorized by all necessary corporate
action, and no other corporate proceedings on the part of the Company are necessary to authorize
this Agreement or to consummate the Merger (other than the approval and adoption of this Agreement
by the holders of a majority of the then outstanding shares of Company Common Stock and the filing
and recordation of appropriate merger documents as required by the DGCL). This Agreement has been
duly and validly executed and delivered by the Company and, assuming the due authorization,
execution and delivery by the other parties hereto, constitutes the legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with its terms, subject to
the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar Laws (as
defined below) affecting creditors’ rights generally and subject to the effect of general
principles of equity (regardless of whether considered in a proceeding at law or in equity). The
Board of Directors of the Company (the “Company Board”), at a meeting duly called and held, has
unanimously (i) determined that this Agreement and the Merger are fair to, and in the best
interests of, the holders of Shares, (ii) approved, adopted and declared advisable this Agreement,
the Merger and the Transactions (such approval and adoption having been made in accordance with the
DGCL, including, without limitation, Section 203 thereof) and (iii) resolved, subject to Section
6.4(c), to recommend that the holders of Shares approve and adopt this Agreement and the Merger.
To the knowledge of the Company, no state takeover statute (other than Section 203(a) of the DGCL)
is applicable to the Merger or the Transactions and no provision of the Company’s Certificate of
Incorporation or By-Laws or similar governing or organizational instruments of any Subsidiary
would, directly or indirectly, restrict or impair the ability of Parent or any affiliate of Parent
to vote, or otherwise to exercise the rights of a stockholder with respect to, the Shares and any
Subsidiary that may be acquired or controlled by Parent, as a result of the Merger or otherwise.
The only vote required of the holders of the Shares or of any other equity
8
interests of the Company necessary to adopt this Agreement and to approve the Merger and the
Transactions is the approving vote of a majority of the outstanding Shares.
Section 3.5 No Conflict; Required Filings and Consents.
(a) The execution and delivery by the Company of this Agreement do not, and the performance by
the Company of this Agreement will not, (i) conflict with or violate the Certificate of
Incorporation or By-laws or equivalent governing documents of the Company or any Subsidiary, (ii)
assuming that all consents, approvals, authorizations and other actions described in Section 3.5(b)
have been obtained or taken and all filings and obligations described in Section 3.5(b) have been
made or fulfilled, conflict with or violate any statute, law, ordinance, regulation, rule, code,
executive order, injunction, judgment, decree or other order (“Law”) applicable to the Company or
any Subsidiary or by which any property or asset of the Company or any Subsidiary is bound or
affected, or (iii) except as set forth in Section 3.5(a) of the Company Disclosure Schedule, result
in any breach of or constitute a default (or an event which, with notice or lapse of time or both,
would become a default) under, or give to others any right of termination, amendment, acceleration
or cancellation of, or result in the creation of a lien or other encumbrance on any property or
asset of the Company or any Subsidiary pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation, except, with
respect to clause (iii), for any such conflicts, violations, breaches, defaults or other
occurrences which would not be reasonably expected to have a Company Material Adverse Effect or
would not reasonably be expected to prevent or materially delay the ability of the Company to
consummate the Merger and the Transactions.
(b) Except as set forth in Section 3.5(b) of the Company Disclosure Schedule, the execution
and delivery by the Company of this Agreement does not, and the performance by the Company of this
Agreement will not, require any consent, approval, authorization or permit of, or filing with or
notification to, any United States federal, state, county or local or non-United States government,
governmental, regulatory or administrative authority, agency, instrumentality or commission or any
court, tribunal, or judicial or arbitral body (a “Governmental Authority”), except for (i) the
pre-merger notification requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976
(the “HSR Act”), (ii) any applicable requirements of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), and state takeover laws, (iii) the filing and recordation of
appropriate merger documents as required by the DGCL and (iv) where the failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or notifications, would not
reasonably be expected to have a Company Material Adverse Effect or materially delay consummation
of the Merger and the Transactions.
Section 3.6 Permits; Compliance.
(a) Except as set forth in Section 3.6(a) of the Company Disclosure Schedule, each of the
Company and the Subsidiaries is in possession of all franchises, grants, authorizations, licenses,
permits, easements, variances, exceptions, consents, certificates, approvals and orders of any
Governmental Authority, in each case that are material to the Company and its Subsidiaries, taken
as a whole, necessary for each of the Company or the Subsidiaries to own, lease and operate its
properties or to carry on its business as it is now being
9
conducted (the “Company Permits”). No suspension or cancellation of any of the Company
Permits is pending or, to the knowledge of the Company, threatened.
(b) Each of the Company and its Subsidiaries is, and has been for the past four years, in
compliance, except for such lack of compliance that would not reasonably be expected to have a
Company Material Adverse Effect, with (i) all Laws applicable to the Company or each such
Subsidiary or by which any property or asset of the Company or each such Subsidiary is bound or
affected, and (ii) all notes, bonds, mortgages, indentures, contracts, agreements, leases,
licenses, Company Permits, franchises or other instruments or obligations to which the Company or
any such Subsidiary is a party or by which the Company or each such Subsidiary or any property or
asset of the Company or each such Subsidiary is bound. Except as set forth in Section 3.6(b) of
the Company Disclosure Schedule, there are no proceedings pending before any Governmental Authority
or, to the Company’s knowledge, any pending or threatened inquiries or investigations or threatened
proceedings by any Governmental Authority, with respect to the Company or any of its Subsidiaries.
Neither the Company nor any of its Subsidiaries has in the past four years received notice of (x)
any violation of the Foreign Corrupt Practices Act (the “FCPA”) or (y) any material breach
of the Company’s or its Subsidiaries’ policies regarding the FCPA by any employees or agents of the
Company or its Subsidiaries.
Section 3.7 SEC Filings; Financial Statements.
(a) The Company has filed or furnished, as the case may be, all forms, reports and documents
required to be filed or furnished by it with the Securities and Exchange Commission (the “SEC”)
since December 31, 2001 (such forms, reports and other documents, collectively, the “Company SEC
Reports”). The Company SEC Reports (i) complied as to form and were prepared in accordance in all
material respects with either 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
promulgated thereunder as in effect on the date so filed, amended or supplemented and (ii) did not,
at the time they were filed, or, if amended or supplemented, as of the date of such amendment or
supplement, contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading. No Subsidiary is required
to file any form, report or other document with the SEC.
(b) Each of the audited and unaudited consolidated financial statements (including, in each
case, any notes thereto) contained in the Company SEC Reports was prepared in accordance with
United States generally accepted accounting principles (“GAAP”) applied on a consistent basis
throughout the periods indicated (except as may be indicated in the notes thereto or, in the case
of unaudited interim statements, the omission of footnotes and otherwise as permitted by Form 10-Q
of the SEC) and each fairly presents, in all material respects, the consolidated financial
position, results of operations and cash flows of the Company and its consolidated Subsidiaries as
at the respective dates thereof and for the respective periods indicated therein, except as
otherwise noted therein.
(c) Neither the Company nor any Subsidiary has any liability or obligation of any nature
(whether accrued, absolute, contingent or otherwise) that would be required to be
10
reflected, reserved for or disclosed in a consolidated balance sheet of the Company and its
consolidated Subsidiaries, including the notes thereto, prepared as of the date of this Agreement
in accordance with GAAP and consistent with the consolidated balance sheet of the Company and the
consolidated Subsidiaries as at December 31, 2004, including the notes thereto (the “Latest Balance
Sheet”), except for (i) liabilities and obligations that are reflected, reserved for or disclosed
in the Latest Balance Sheet or in the consolidated balance sheet of the Company and the
consolidated Subsidiaries as at June 30, 2005, including the notes thereto, included in the
Company’s quarterly report on Form 10-Q for the quarter ended June 30, 2005, (ii) liabilities and
obligations that were incurred in the ordinary course of business consistent with past practice
since June 30, 2005 or (iii) as set forth in Section 3.7(c) of the Company Disclosure Schedule.
(d) The Company has timely filed all certifications and statements required by (x) Rule 13a-14
or Rule 15d-14 under the Exchange Act or (y) 18 U.S.C. Section 1350 (Section 906 of the
Xxxxxxxx-Xxxxx Act of 2002) with respect to any Company SEC Report. The Company maintains
disclosure controls and procedures required by Rule 13a-15 or Rule 15d-15 under the Exchange Act;
such controls and procedures are effective to provide reasonable assurance that all material
information concerning the Company and its Subsidiaries is made known on a timely basis to the
individuals responsible for the preparation of the Company’s SEC filings and other public
disclosure documents. The Company has disclosed, based on its most recent evaluations, to the
Company’s outside auditors and the audit committee of the Company Board (A) all significant
deficiencies and material weaknesses in the design or operation of internal control over financial
reporting (as defined in Rule 13a-15(f) of the Exchange Act) which are known to the Company and
reasonably likely to adversely affect the Company’s ability to record, process, summarize and
report financial data and (B) any fraud, whether or not material, known to the Company that
involves management or other employees who have a significant role in the Company’s internal
control over financial reporting. The Company is in compliance with the applicable listing and
other rules and regulations of The NASDAQ National Market. As used in this Section 3.7, the term
“file” shall be broadly construed to include any manner in which a document or information is
furnished, supplied or otherwise made available to the SEC.
Section 3.8 Absence of Certain Changes or Events. Since December 31, 2004, except as
set forth in Section 3.8 of the Company Disclosure Schedule, or as expressly contemplated by this
Agreement, (a) the Company and the Subsidiaries have conducted their businesses only in the
ordinary course and in a manner consistent with past practice, (b) there has not been any event,
development or circumstance constituting or that would be reasonably likely to constitute a Company
Material Adverse Effect and (c) none of the Company or any Subsidiary has taken any action that, if
taken after the date of this Agreement, would constitute a breach of any of the covenants set forth
in Section 5.1.
Section 3.9 Absence of Litigation. There is no litigation, suit, claim, action,
proceeding or investigation (which investigation has been communicated to the Company or of which
the Company has knowledge) (an “Action”) pending or, to the knowledge of the Company, threatened
against the Company or any Subsidiary, or any property or asset of the Company or any Subsidiary,
or before any Governmental Authority, which is reasonably likely to result in a Company Material
Adverse Effect. Except as set forth in Section 3.9 of the Company Disclosure Schedule, there is no
Action pending or, to the knowledge of the Company,
11
threatened against the Company or any Subsidiary, or any property or asset of the Company or
of any Subsidiary, or before any Governmental Authority, except for Actions that, if determined
adversely to the Company or any Subsidiary, would not result in losses and expenses (including
reasonable expenses of counsel) in excess of $500,000 or would not otherwise be material to the
Company. Except as set forth in Section 3.9 of the Company Disclosure Schedule, neither the
Company nor any Subsidiary nor any property or asset of the Company or any Subsidiary is subject to
any continuing order of, consent decree, settlement agreement or other similar written agreement
with, or, to the knowledge of the Company, continuing investigation by, any Governmental Authority,
or any order, writ, judgment, injunction, decree, determination or award of any Governmental
Authority.
Section 3.10 Employee Benefit Plans.
(a) Section 3.10(a) of the Company Disclosure Schedule lists all employee benefit plans (as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”)) and all bonus, stock option, stock purchase, restricted stock, incentive, deferred
compensation, retiree medical or life insurance, supplemental retirement, severance, change in
control, employee loan or other benefit plans, programs, policies or arrangements, and all
employment, retention, termination, severance or other contracts or agreements, whether or not
subject to ERISA (including any funding mechanism therefor now in effect or required in the future
as a result of the transaction contemplated by this Agreement or otherwise), whether legally
enforceable or not, with respect to which the Company or any Subsidiary has any present or future
liability (or a pension plan (within the meaning of Section 3(2) of ERISA) subject to Section 412
of the Code or Title IV of ERISA, a multiemployer plan (within the meaning of Section 3(37) or
4001(a)(3) of ERISA), or a plan subject to non-U.S. laws or regulations similar to each of the
foregoing with respect to which the Company or any Subsidiary has within the past six (6) years had
any liability) or which are maintained, contributed to or sponsored by the Company or any
Subsidiary and under which any current or former employee, officer or director of the Company or
any Subsidiary (the “Company Employees”) has any present or future right to benefits (collectively,
the “Plans”). Except as disclosed in Section 3.10(a) of the Company Disclosure Schedule, neither
the Company nor any Subsidiary has any express or implied commitment, whether legally enforceable
or not, (i) to create, incur liability with respect to or cause to exist any other employee benefit
plan, program or arrangement, (ii) to enter into any contract or agreement to provide compensation
or benefits to any individual, or (iii) to modify, change or terminate any Plan, other than with
respect to a modification, change or termination required by this Agreement, the Merger, ERISA, the
Code or to otherwise comply with applicable Laws.
(b) With respect to each Plan, the Company has provided to Parent a current, accurate and
complete copy (or, to the extent no such copy exists, an accurate description) thereof and, to the
extent applicable: (i) any related trust agreement or other funding instrument; (ii) the most
recent determination letter, if applicable; (iii) any summary plan description and other written
communications (or a description of any oral communications) by the Company or its Subsidiaries to
the Company Employees concerning the extent of the benefits provided under a Plan; (iv) a summary
of any proposed amendments or changes anticipated to be made to the Plans at any time within the
twelve months immediately following the date hereof, and (v) for
12
the three most recent years (A) the Form 5500 and attached schedules, (B) audited financial
statements and (C) actuarial valuation reports.
(c) Neither the Company nor any Subsidiary (including any entity that during the past six
years was a Subsidiary) either directly or by reason of their affiliation with any member of their
“Controlled Group” (defined as any organization which is a member of a controlled group of
organizations within the meaning of Sections 414(b), (c), (m) or (o) of the Code) has now or at any
time contributed to, sponsored, maintained, or had any liability or obligation in respect of (i) a
pension plan (within the meaning of Section 3(2) of ERISA) subject to Section 412 of the Code or
Title IV of ERISA, (ii) a multiemployer plan (within the meaning of Section 3(37) or 4001(a)(3) of
ERISA) (a “Multiemployer Plan”), or (iii) a single employer pension plan (within the meaning of
Section 4001(a)(15) of ERISA) for which the Company or any Subsidiary could incur liability under
Section 4063 or 4064 of ERISA (a “Multiple Employer Plan”). Except as disclosed in Section 3.10(c)
of the Company Disclosure Schedule, no Plan exists that, as a result of the execution of this
Agreement, shareholder approval of this Agreement, or the transactions contemplated by this
Agreement (whether alone or in connection with any subsequent event(s)), (i) will entitle any
Company Employee to severance pay or any increase in severance pay upon any termination of service
after the date of this Agreement, (ii) could accelerate the time of payment or vesting or result in
any payment or funding (through a grantor trust or otherwise) of compensation or benefits under,
increase the amount payable or result in any other material obligation pursuant to, any of the
Plans, (iii) could limit or restrict the right of the Company or its Subsidiaries to merge, amend
or terminate any of the Plans, (iv) could cause the Company or its Subsidiaries to record
additional compensation expense on its respective income statement with respect to any outstanding
stock option or other equity-based award, or (v) could result in payments under any Plan that would
not be deductible under Section 280G of the Code, except as disclosed in Section 3.10(c) of the
Company Disclosure Schedule. Except to the extent required under ERISA Section 601 et. seq. and
Code Section 4980B, none of the Plans provide for or promises post employment or post-retirement
medical, disability or life insurance benefits to any current, former or retired employee,
consultant or director of the Company or of its Subsidiaries. Except as disclosed in Section
3.10(c) of the Company Disclosure Schedule, each of the Plans is subject only to the Laws of the
United States or a political subdivision thereof.
(d) Except as disclosed in Section 3.10(d) of the Company Disclosure Schedule, each Plan has
been established and operated in all material respects in accordance with its terms and the
requirements of all applicable Laws including, without limitation, ERISA and the Code. Except as
disclosed in Section 3.10(d) of the Company Disclosure Schedule, the Company and the Subsidiaries
have performed all material obligations required to be performed by them under, and are not in
default in any material respect under or in violation of any party to, any Plan. No Action is
pending or, to the knowledge of the Company, threatened with respect to any Plan (other than
routine claims for benefits in the ordinary course) and except as disclosed in Section 3.10(d) of
the Company Disclosure Schedule, none of the Company or its Subsidiaries have any knowledge of any
fact or event that could reasonably be expected to give rise to any such Action. No event has
occurred and no condition exists that would subject the Company or its Subsidiaries, either
directly or by reason of their affiliation with any member of their Controlled Group to any tax,
fine, lien, penalty or other liability imposed by ERISA, the Code or other applicable Laws. No
administrative investigation, audit or other administrative proceeding
13
by the Department of Labor, the Internal Revenue Service or other Governmental Agencies are
pending, threatened or in progress. Except as disclosed in Section 3.10(d) of the Company
Disclosure Schedule, no material operational or plan failure (within the meaning of Rev. Proc.
2003-44) exists or has existed with respect to any Plan that is intended to be qualified under
Section 401(a) of the Code.
(e) Each Plan that is intended to be qualified under Section 401(a) of the Code has timely
received a favorable determination letter or prototype opinion letter from the Internal Revenue
Service (the “IRS”) that the Plan is so qualified and each trust established in connection with any
Plan which is intended to be exempt from federal income taxation under Section 501(a) of the Code
is so exempt, and no fact or event exists that could reasonably be expected to result in the
revocation of such exemption.
(f) None of the Company or its Subsidiaries has any knowledge of any prohibited transaction
(within the meaning of Section 406 of ERISA or Section 4975 of the Code) with respect to any Plan.
(g) All contributions, premiums or payments required to be made with respect to any Plan have
been made on or before their due dates. Except with regard to contributions or payments to the
Deferred Compensation Trust, all such contributions have been fully deducted for income tax
purposes and no such deduction has been challenged or disallowed by any Governmental Authority and,
to the knowledge of the Company, no fact or event exists which could reasonably be expected to give
rise to any such challenge or disallowance.
(h) The Company and the Subsidiaries are in compliance with the requirements of the Workers
Adjustment and Retraining Notification Act and any similar state, local or non-United States law
(the “WARN Act”) and have no liabilities pursuant to the WARN Act determined without regard to any
terminations of employment that occur on or after the Effective Time.
(i) In addition to the foregoing, with respect to each Plan listed in Section 3.10(a) of the
Company Disclosure Schedule that is not subject to United States law (a “Non-U.S. Benefit Plan”):
(i) all employer and employee contributions to each Non-U.S. Benefit Plan required by
law or by the terms of such Non-U.S. Benefit Plan have been made, or, if applicable, accrued
in accordance with normal accounting practices;
(ii) except as set forth in Section 3.10(a) of Company Disclosure Schedule, the fair
market value of the assets of each funded Non-U.S. Benefit Plan, the liability of each
insurer for any Non-U.S. Benefit Plan funded through insurance or the book reserve
established for any Non-U.S. Benefit Plan, together with any accrued contributions, is
sufficient to procure or provide for the benefits determined as if such plan is maintained
on an ongoing basis (actual or contingent) accrued to the date of this Agreement with
respect to all current and former participants under such Non-U.S. Benefit Plan according to
the actuarial assumptions and valuations most recently used to determine employer
contributions to such Non-U.S. Benefit Plan, and no Transaction
14
shall cause such assets or insurance obligations to be less than such benefit
obligations; and
(iii) each Non-U.S. Benefit Plan maintained by the Company or any Subsidiary required
to be registered or approved has been registered or approved and has been maintained in good
standing with applicable regulatory authorities. Each Non-U.S. Benefit Plan has been
operated in material compliance with all applicable non-United States Laws.
Section 3.11 Labor and Employment Matters.
(a) Section 3.11(a) of the Company Disclosure Schedule lists all employees of the Company and
the Subsidiaries as of December 15, 2005 and designates each such employee by the correct employer
and business division for which the employee primarily performs services.
(b) Except as required by applicable Law in Brazil, neither the Company nor any Subsidiary is
a party to any collective bargaining agreement or other labor union contract applicable to persons
employed by the Company or any Subsidiary, nor, to the knowledge of the Company, are there any
activities or proceedings of any labor union to organize any such employees. As of the date
hereof, there are no unfair labor practice complaints pending against the Company or any Subsidiary
before the National Labor Relations Board or any other Governmental Authority or any current union
representation questions involving employees of the Company or any Subsidiary. As of the date
hereof, there is no strike, controversy, slowdown, work stoppage or lockout occurring, or, to the
knowledge of the Company, any threat thereof in writing, by or with respect to any employees of the
Company or any Subsidiary.
(c) The Company and its Subsidiaries are in compliance in all material respects with all
applicable Laws relating to the employment of labor, including those related to wages, hours,
immigration and naturalization, collective bargaining and the payment and withholding of taxes and
other sums as required by the appropriate Governmental Authority and have withheld and paid to the
appropriate Governmental Authority or are holding for payment not yet due to such Governmental
Authority all amounts required to be withheld from employees of the Company or any Subsidiary and
are not liable for any arrears of wages, taxes, penalties or other sums for failure to comply with
any of the foregoing. Neither the Company nor any Subsidiary is a party to, or otherwise bound by,
any consent decree with, or citation by, any Governmental Authority relating to employees or
employment practices. Except as disclosed in Section 3.11(c) of the Company Disclosure Schedule,
there is no charge or proceeding with respect to a violation of any occupational safety or health
standards asserted or pending with respect to the Company. Except as disclosed in Section 3.11(c)
of the Company Disclosure Schedule, there is no charge of discrimination in employment or
employment practices, for any reason, including, without limitation, age, gender, race, religion or
other legally protected category, pending before the United States Equal Employment Opportunity
Commission, or any other Governmental Authority in any jurisdiction in which the Company or any
Subsidiary has employed or employ any person.
15
Section 3.12 Intellectual Property.
(a) Section 3.12(a) of the Company Disclosure Schedule sets forth a true and complete list as
of December 16, 2005 of all United States and foreign (i) patents and patent applications, (ii)
registrations and applications for registration of Trademarks, (iii) registrations and applications
for registration of copyrights, (iv) invention or technology disclosures (other than those subject
to issued patents or pending patent applications), in each case, with respect to the foregoing in
subsections (i) through (iv), as included in the Owned Intellectual Property and (v) all Licensed
Intellectual Property.
(b) Except as set forth in Section 3.12(b)(i) of the Company Disclosure Schedule, the Company
or a Subsidiary (i) is the exclusive owner of the entire and unencumbered right, title and interest
in and to the Owned Intellectual Property, and (ii) has a valid right to use the Licensed
Intellectual Property in the ordinary course of their business as presently conducted or as
contemplated to be conducted. Except as set forth in Section 3.12(b)(ii) of the Company Disclosure
Schedule, the Owned Intellectual Property and, to knowledge of the Company, the Licensed
Intellectual Property, are subsisting, valid and enforceable.
(c) The development, marketing, sale and use of the material products and services of the
Company and the Subsidiaries, and the use of the Owned Intellectual Property and Licensed
Intellectual Property in connection therewith, do not conflict with, infringe, misappropriate or
otherwise violate in any material respect the Intellectual Property rights of any third party.
Except as disclosed in Section 3.12(c) of the Company Disclosure Schedule, no Actions have been
asserted or are pending or, to the Company’s knowledge, threatened (whether in writing or orally,
and whether explicitly or indirectly through a request to license the Intellectual Property rights
of any third party) against the Company or any Subsidiary (i) based upon or challenging or seeking
to deny or restrict the use by the Company or any Subsidiary of any of the Owned Intellectual
Property or Licensed Intellectual Property, (ii) alleging that any services provided by, processes
used by, or products manufactured or sold by the Company or any Subsidiary infringe, misappropriate
or otherwise violate the Intellectual Property right of any third party, or (iii) alleging that the
Licensed Intellectual Property is being licensed or sublicensed in conflict with the terms of any
license or other agreement. Except as disclosed in Section 3.12(c) of the Company Disclosure
Schedule, no Owned Intellectual Property or Licensed Intellectual Property is subject to any
outstanding decree, order, injunction, judgment or ruling restricting the use of such Intellectual
Property or that would impair the validity or enforceability of such Intellectual Property.
(d) To the knowledge of the Company, except as disclosed in Section 3.12(d) of the Company
Disclosure Schedule, no person is engaging in any activity that infringes or misappropriates the
Owned Intellectual Property or Licensed Intellectual Property.
(e) The Owned Intellectual Property and the Licensed Intellectual Property constitutes all of
the Intellectual Property used or held for use or intended to be used in the conduct of the
business of the Company and the Subsidiaries as presently conducted, and there are no other items
of Intellectual Property that are used in the conduct of the business of the Company and the
Subsidiaries as presently conducted. Except as disclosed in Section 3.12(e) of
16
the Company Disclosure Schedule, the consummation of the Merger will not result in the
termination or impairment of any of the Owned Intellectual Property or the right to use any of the
Licensed Intellectual Property or require the payment of additional royalties or fees to third
parties for the continued use of the Licensed Intellectual Property as currently conducted by the
Company and the Subsidiaries.
(f) The Company and the Subsidiaries have acted in a commercially reasonable manner to
maintain the confidentiality of, and legal protection pertaining to, the trade secrets and other
confidential Intellectual Property used or held for use or intended to be used by the Company or
the Subsidiaries according to the laws of the applicable jurisdictions where such trade secrets are
developed, practiced or disclosed. Without limiting the generality of the foregoing, the Company
and the Subsidiaries use a business practice of enforcing a policy requiring all personnel and
third parties having access to such trade secrets to execute a written agreement which provides
necessary protection for such trade secrets and which does not allow the use or disclosure of such
trade secrets upon the expiration of any specified period of time. To the Company’s knowledge,
there have been no disclosures by the Company or any Subsidiary of any trade secrets, and no party
to any such agreement is in breach thereof.
(g) Except as set forth on Schedule 3.12(g), (which schedule shall identify any such open
source licensed software, the governing Open Source License (as defined herein below), and the
products or services of the Company or any Subsidiary which utilizes such open source licensed
software) none of the material Owned Intellectual Property, and no material products or services
marketed or sold by the Company or any Subsidiary, 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”)). The operation of the business of the Company and the Subsidiaries will neither subject
any of the Company’s or any Subsidiary’s products to the terms of any Open Source License nor
require the Company or any Subsidiary to provide the source code to any Company or Subsidiary
Software to any person except as could not reasonably be expected to result in Company Material
Adverse Effect.
(h) Except as set forth on Schedule 3.12(h), neither the Company nor any Subsidiary has
deposited, is obligated to deposit, or reasonably expects that it will be obligated to deposit, the
source code of any of the Software of the Company or its Subsidiaries pursuant to a source code
escrow agreement or similar arrangement for the benefit of any person, nor has the Company nor any
Subsidiary made the source code of any Company or Subsidiary product available to any person.
(i) To the Company’s knowledge, except as set forth on Schedule 3.12(i), all software,
databases, systems, networks and Internet sites used by the Company and the Subsidiaries and/or
included within the Owned Intellectual Property are free from any material defect, bug, “Trojan
Horse”, malware, spyware or other virus or programming design or documentation error or corruptant.
The Company and its Subsidiaries have acted in a commercially reasonable manner to protect the
confidentiality, integrity and security of their Software, databases, systems, networks and
Internet sites and all information stored or contained
17
therein or transmitted thereby from any unauthorized use, access, interruption or modification
by third parties. The Company and its Subsidiaries comply, in all material respects, with (a) all
relevant laws and regulations (except with respect to the relevant laws and regulations for
jurisdictions other than the United States, Canada, and the European Union and its member states,
in which case the Company and its Subsidiaries comply with all relevant laws and regulations except
as would not reasonably be expected to cause a Company Material Adverse Effect), and (b) the
Company’s own policies, in each case with respect to the privacy of all users and customers and any
of their personally identifiable information, and no written claims have been asserted or, to the
Company’s knowledge, threatened in writing against the Company or any Subsidiary by any person
alleging a violation of any of the foregoing.
(j) To the knowledge of the Company, no employee of or consultant to the Company or the
Subsidiaries is obligated under any agreement or subject to any judgment, decree or order of any
court or administrative agency, or any other restriction that would interfere with the use of his
or her best efforts to carry out his or her duties for the Company or to promote the interests of
the Company or that would conflict with the Company’s business. To the knowledge of the Company,
there exist no inventions by current and former employees or consultants of the Company or the
Subsidiaries, made or otherwise conceived prior to their beginning employment or consultation with
the Company, that have been or will be incorporated into any of the Company’s Intellectual Property
or any products.
(k) Section 3.12(k) of the Company Disclosure Schedule sets forth a true and complete list as
of December 15, 2005 of all In-Bound IP Agreements (identifying the parties to each such agreement,
the Intellectual Property licensed to the Company or any Subsidiary thereby, and the product(s)
and/or services of the Company which utilize such Licensed Intellectual Property) pursuant to which
(i) the Company or any Subsidiary was required in the Company’s fiscal year ending December 31,
2004 to make payments to any third party totaling in excess of $500,000, and (ii) the Company or
any Subsidiary licenses from any third party Intellectual Property (including without limitation,
any software) which is incorporated into, or distributed with, any products or services of the
Company or any Subsidiary (the foregoing being collectively, the “Key In-Bound IP Agreements”).
Except as set forth in Section 3.12(k)(iii) of the Company Disclosure Schedule, (A) each Key
In-Bound IP Agreement is a legal, valid and binding agreement of the Company or the applicable
Subsidiary, as the case may be, and, to the Company’s knowledge, of the other party(ies) thereto;
(B) neither the Company nor any Subsidiary is in material breach or violation of, or material
default under, any Key In-Bound IP Agreement; (C) to the Company’s knowledge, no other party is in
material breach or violation of, or material default under, any Key In-Bound IP Agreement; (D) the
Company and the Subsidiaries have not received any notice of default under any Key In-Bound IP
Agreement which remains uncured; (E) neither the Company nor any Subsidiary has received written
notice of the termination of, or intention to terminate, any Key In-Bound IP Agreement; and (F)
except as set forth in Section 3.12(k)(iv) of the Company Disclosure Schedule, neither the
execution of this Agreement nor the consummation of any Transaction shall constitute a default
under, give rise to cancellation rights under, or otherwise adversely affect any of the rights of
the Company or any Subsidiary under any Key In-Bound IP Agreement.
(l) Section 3.12(l) of the Company Disclosure Schedule sets forth a true and complete list as
of December 15, 2005 of all Out-Bound IP Agreements (identifying the parties
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to each such agreement and the Intellectual Property licensed by the Company or any Subsidiary
thereby) which generated in the Company’s fiscal year ending December 31, 2004 in excess of
$1,000,000 in revenues to the Company and its Subsidiaries (the “Key Out-Bound IP Agreements”).
Except as set forth in Section 3.12(l)(i) of the Company Disclosure Schedule, (A) each Key
Out-Bound IP Agreement is a legal, valid and binding agreement of the Company or the applicable
Subsidiary, as the case may be, and, to the Company’s knowledge, of the other party(ies) thereto;
(B) neither the Company nor any Subsidiary is in material breach or violation of, or material
default under, any Key Out-Bound IP Agreement; (C) to the Company’s knowledge, no other party is in
material breach or violation of, or material default under, any Key Out-Bound IP Agreement; (D) the
Company and the Subsidiaries have not received any notice of default under any Key Out-Bound IP
Agreement which remains uncured; (E) neither the Company nor any Subsidiary has received written
notice of the termination of, or intention to terminate, any Key Out-Bound IP Agreement; and (F)
except as set forth in Section 3.12(k)(iv) of the Company Disclosure Schedule, neither the
execution of this Agreement nor the consummation of any Transaction shall constitute a default
under, give rise to cancellation rights under, or otherwise adversely affect any of the rights of
the Company or any Subsidiary under any Key Out-Bound IP Agreement.
Section 3.13 Taxes.
(a) The Company and the Subsidiaries have timely filed (or caused to be timely filed) all Tax
Returns required to be filed by them and have paid and discharged all Taxes required to be paid or
discharged by them (whether or not shown on such Tax Returns). All such Tax Returns are true,
correct and complete in all material respects. Except as set forth in Section 3.13(a)(i) of the
Company Disclosure Schedule, neither the Company nor any Subsidiary has granted any waiver of any
statute of limitations with respect to, or any extension of a period for the assessment of, any
Tax. All amounts of Taxes required to be withheld by or with respect to the Company or any
Subsidiary have been timely withheld and remitted to the applicable Governmental Authority. The
accruals and reserves for Taxes reflected in the Latest Balance Sheet are adequate to satisfy all
Taxes accruable through such date (including interest and penalties, if any, thereon) in accordance
with GAAP. Except as set forth in Section 3.13(a)(ii) of the Company Disclosure Schedule, the
Company and each Subsidiary is a member of the same affiliated group (within the meaning of Section
1504(a)(1) of the Code) for which the Company files a consolidated U.S. federal income Tax Return
as the common parent, and neither the Company nor any Subsidiary has been included in any U.S.
federal, state and local consolidated combined or united Tax Returns for any taxable period for
which the statute of limitations has not expired or has any liability for Taxes of any person
(other than the Company or any of its Subsidiaries) arising from the application of Treasury
Regulation 1.1502-6 or any analogous provision of state, local or foreign law or as a transferee or
successor, by contract or otherwise. Neither the Company nor any Subsidiary is required to make
any disclosure to the IRS or has a list maintenance obligation with respect to any “reportable
transaction” pursuant to Sections 6011, 6111 or 6112 of the Code or the Treasury Regulations
promulgated thereunder. Neither the Company nor any Subsidiary is a party to, is bound by or has
an obligation under any indemnification, allocation or sharing agreement with respect to Taxes
that could give rise to a payment or indemnification obligation (other than agreements among the
Company and its Subsidiaries and other than customary Tax indemnifications contained in credit or
other commercial agreements the primary purpose of which does not relate to Taxes).
19
(b) Except as set forth in Section 3.13(b) of the Company Disclosure Schedule, (i) there are
no pending or, to the knowledge of the Company, threatened, audits, examinations, investigations or
other proceedings in respect of any Tax matter of the Company or any Subsidiary, (ii) no
Governmental Authority is now asserting or, to the knowledge of the Company, threatening to assert
against the Company or any Subsidiary any deficiency or claim for any Taxes, (iii) no power of
attorney has been granted with respect to any matter relating to Taxes that could affect the
Company or any Subsidiary for a taxable period ending after the Effective Time.
(c) There are no Tax Liens upon any property or assets of the Company or any of the
Subsidiaries except liens for current Taxes not yet due and payable. Except as set forth in
Section 3.13(c) of the Company Disclosure Schedule, neither the Company nor any Subsidiary will be
required to include any item of income in, or exclude any deduction from, taxable income for any
taxable period (or portion thereof) after the Effective Time that is attributable to (i) any
transaction occurring in, or a change in accounting method made for, any taxable period ending on
or before the date of the Effective Time that resulted in a deferred reporting of income from such
transaction or from such change in accounting method, (ii) “closing agreement” as described in
Section 7121 of the Code (or any corresponding or similar provision of state, local or foreign
income Tax law) executed on or prior to the Effective Time, (iii) intercompany transaction
described in the Treasury Regulations under Section 1502 of the Code (or any corresponding or
similar provision of state, local or foreign income Tax law), (iv) installment sale or open
transaction disposition made on or prior to the Effective Time, or (v) prepaid amount received on
or prior to the Effective Time. As of December 31, 2004, the tax basis in the stock of each of
those Subsidiaries described in Section 3.13(c)(A) of the Company Disclosure Schedule was at least
the respective amounts set forth in such Company Disclosure Schedule. Neither the Company nor any
Subsidiary has been a “distributing corporation” or a “controlled corporation” in a distribution
intended to qualify under Section 355(e) of the Code within the past five years.
(d) Except as set forth in Section 3.13(d) of the Company Disclosure Schedule, neither the
Company nor any Subsidiary has made or is obligated to make any payment or is a party to an
agreement that would require it to make any payments that would not be fully deductible pursuant to
Section 162(m) of the Code.
(e) Neither the Company nor any of its Subsidiaries has made any payments, is obligated to
make any payments, or is a party to any agreement or Plan that could obligate it to provide any
Company Employee with any payments or benefits as a result of any excise tax imposed on such
Company Employee by Section 4999 of the Code or any comparable federal, state, local or foreign
excise tax rule or regulation, except as set forth on Schedule 3.13(e), and with respect to those
itemized payments and benefits set forth on Schedule 3.13(e), such payments and benefits shall not
exceed $800,000 in the aggregate.
Section 3.14 Environmental Matters. Except as described in Section 3.14 of the
Company Disclosure Schedule, (a) none of the Company, any of the Subsidiaries or any predecessor of
any of the foregoing is, or to the knowledge of the Company has been, in material violation of any
Environmental Law; (b) none of the properties currently or formerly owned, leased or operated by
the Company, any Subsidiary or any predecessor of any of the foregoing
20
(including, without limitation, soils and surface and ground waters) have been contaminated by
the dumping, discharge, spillage, disposal or other release of Hazardous Substances that requires
investigation, removal, remediation or corrective action by Company or any Subsidiary under
applicable Environmental Laws; and Hazardous Substances are not otherwise present at such
properties in circumstances that would reasonably be expected to result in material liability or
costs to the Company or any of its Subsidiaries under any applicable Environmental Law; (c) none of
the Company or any of the Subsidiaries (1) has entered into any consent decree or other agreement
related to, or has been notified that it is actually or potentially liable under, any Environmental
Law, or (2) received any requests for information or other correspondence or written notice that it
is considered potentially liable for any investigation, removal, remediation or corrective action
with respect to any Hazardous Substances; (d) each of the Company and each Subsidiary has all
material permits, licenses and other authorizations required under any Environmental Law
(“Environmental Permits”); (f) each of the Company and each Subsidiary is in material compliance
with all, and to the knowledge of the Company has not violated any, such Environmental Permits; (g)
neither the execution of this Agreement nor the consummation of the Merger will require any
investigation, remediation or other action with respect to Hazardous Substances, or any notice to
or consent of Governmental Authorities or third parties, pursuant to any Environmental Law or
Environmental Permit; (h) no judicial, administrative, or arbitral proceeding under any
Environmental Laws to which the Company or any of its Subsidiaries is a party is pending or, to the
knowledge of the Company, threatened; (i) none of the Company or its Subsidiaries is subject to any
judgment, decree, order or similar requirement, in either case relating to any Environmental Laws
or to any investigation, removal, remediation or corrective action with respect to Hazardous
Substances; and (j) neither the Company nor any of its Subsidiaries has assumed or retained, by
contract or operation of law, any material liabilities under any Environmental Laws or concerning
any Hazardous Substances.
The Company has provided to Parent true and complete copies of all Environmental Reports in the
possession or control of the Company or any of its Subsidiaries, regarding any matter that could
reasonably be expected to materially affect the Company or any of its Subsidiaries.
Section 3.15 Amendment to Company Rights Agreement. The Company has irrevocably
amended, and the Company Board has taken all necessary action to irrevocably amend, the Rights
Agreement, dated as of September 28, 1998 (the “Company Rights Agreement”), between the Company and
American Securities Transfer & Trust, Inc., as rights agent, so that (a) none of the execution or
delivery of this Agreement, the consummation of the Merger or the consummation of any other
Transaction will result in (i) the occurrence of a “Flip-in Event” described in the Company Rights
Agreement, (ii) the occurrence of the “Flip-Over Event” described in the Company Rights Agreement,
or (iii) the associated Preferred Stock Purchase Rights (the “Rights”) becoming evidenced by, and
transferable pursuant to, certificates separate from the certificates representing Shares and (b)
the Rights will expire pursuant to the terms of the Company Rights Agreement immediately prior to
the Effective Time. The Company has provided Parent with a copy of such amendment to the Company
Rights Agreement. Such amendment has been duly authorized and executed by the parties thereto and
is in full force and effect.
Section 3.16 Material Contracts. (a) Set forth in Section 3.16(a) of the Company
Disclosure Schedule is a list of the following contracts, undertakings, commitments, licenses or
21
agreements, written or verbal, to which the Company or any Company Subsidiary is a party or
which are applicable to any of their respective assets or properties (true and complete copies (or
written summaries, if verbal) of which have been made available to Parent prior to the date hereof)
(each a “Material Contract”):
(i) contracts which have a remaining term in excess of ninety (90) days or are not
cancelable (without material penalty, cost or other liability) within ninety (90) days that
in the Company’s fiscal year ended December 31, 2004 (A) generated in excess of $1,000,000
in revenues to the Company and its Subsidiaries or (B) resulted in expenses to the Company
and its Subsidiaries in excess of $500,000;
(ii) contracts containing covenants limiting the ability of the Company or any
Subsidiary or other affiliates of the Company (including Parent and its affiliates after the
Effective Time) to engage in any line of business or compete with any person, in any market
or line of business, or operate at any geographic location;
(iii) promissory notes, loans, agreements, indentures, evidences of indebtedness or
other instruments and contracts providing for the borrowing or lending of money, whether as
borrower, lender or guarantor, and any agreements or instruments pursuant to which any cash
of the Company or any Subsidiary is held in escrow or its use by the Company and its
Subsidiaries is otherwise restricted;
(iv) all contracts pursuant to which any material property or assets of the Company or
any Subsidiary is, or may become subject to, a lien;
(v) joint venture, alliance, affiliation or partnership agreements or joint development
or similar agreements pursuant to which any third party is entitled to develop or market any
products or services on behalf of, or together with, the Company or any Subsidiary or
receive referrals of business from, or provide referrals of business to, the Company or any
Subsidiary;
(vi) contracts for the acquisition or sale, directly or indirectly (by merger or
otherwise) of material assets (whether tangible or intangible) or the capital stock of
another person, including, without limitation, contracts for any such completed acquisitions
or sales pursuant to which an “earn out” or similar form of obligation (whether absolute or
contingent) is pending or for which there are any continuing indemnification or similar
obligations, in each case excluding any such contract entered into prior to January 1, 2001
and with respect to which there are no remaining obligations on the party of any party
(including, without limitation, any indemnification obligations);
(vii) contracts under which the Company or any Subsidiary has granted any exclusive
rights;
(viii) any interest rate or currency swaps, caps, floors or option agreements or any
other interest rate or currency risk management arrangement or foreign exchange contracts
with settlement terms greater than 120 days following the trade date of such arrangement or
contract;
22
(ix) contracts with, or commitments to, affiliates of the Company;
(x) contracts with “change of control” or similar provisions which would be triggered
by the Merger or the Transactions; and
(xi) any material contracts of the Company as such term is defined in Item 601(b)(10)
of Regulation S-K of the SEC.
(b) (i) Except as set forth in Section 3.16(b)(i) of the Company Disclosure Schedule, each
Material Contract is a legal, valid and binding agreement of the Company or the applicable
Subsidiary, as the case may be, and, to the Company’s knowledge, of the other party(ies) thereto;
(ii) neither the Company nor any Subsidiary is in material breach or violation of, or material
default under, any Material Contract; (iii) to the Company’s knowledge, no other party is in
material breach or violation of, or material default under, any Material Contract; (iv) the Company
and the Subsidiaries have not received any notice of default under any Material Contract which
remains uncured; (v) neither the Company nor any Subsidiary has received written notice of the
termination of, or intention to terminate, any Material Contract; and (vi) except as set forth in
Section 3.16(b)(vi) of the Company Disclosure Schedule, neither the execution of this Agreement nor
the consummation of any Transaction shall constitute a default under, give rise to cancellation
rights under, or otherwise adversely affect any of the rights of the Company or any Subsidiary
under any Material Contract.
Section 3.17 Proxy Statement. The proxy statement to be sent to the stockholders of
the Company in connection with the Stockholders’ Meeting (as defined below) (such proxy statement,
as amended or supplemented, being referred to herein as the “Proxy Statement”), shall not, at the
date the Proxy Statement (or any amendment or supplement thereto) is first mailed to stockholders
of the Company, at the time of the Stockholders’ Meeting or at 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 light of the circumstances under
which they were made, not false or misleading or necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for the Stockholders’ Meeting which shall
have become false or misleading. The Statement on Schedule 13E-3 (such Statement, as amended or
supplemented, is being referred to herein as the “Schedule 13E-3”), to be filed by the Company
concurrently with the filing of the Proxy Statement, shall not, at the date of the Schedule 13E-3
(or any amendment or supplement thereto), at the time of the Stockholders’ Meeting or at 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 light of the
circumstances under which they were made, not false or misleading. The Proxy Statement and
Schedule 13E-3, insofar as each relates to the Company or its Subsidiaries or other information
supplied by the Company for inclusion or incorporation by reference therein, will comply as to form
in all material respects with the provisions of the Exchange Act and the rules and regulations
thereunder and other applicable law. Notwithstanding the foregoing, the Company makes no
representation or warranty with respect to any information supplied in writing by Parent, Merger
Sub or any of Parent’s or Merger Sub’s Representatives for inclusion in the Proxy Statement.
23
Section 3.18 Opinion of Financial Advisor. The Company has received the written
opinion (the “Fairness Opinion”) of Bear Xxxxxxx & Co., Inc., dated the date of this Agreement, to
the effect that, as of the date of this Agreement, the Merger Consideration is fair, from a
financial point of view, to the holders of Company Common Stock, excluding Prides Capital Partners,
L.L.C. and any of its affiliates or other holders of Company Common Stock that are or that may
become co-investors in Parent and any of their affiliates, a copy of which opinion will be
delivered to Parent promptly after the date of this Agreement.
Section 3.19 Brokers. No broker, finder or investment banker (other than Bear Xxxxxxx
& Co., Inc.) is entitled to any brokerage, finder’s or other fee or commission in connection with
the Merger based upon arrangements made by or on behalf of the Company. The Company has heretofore
furnished to Parent a complete and correct copy of all agreements between the Company and Bear
Xxxxxxx & Co., Inc. pursuant to which such firm would be entitled to any payment relating to the
Merger.
Section 3.20 Title to Assets. The Company and each Subsidiary has good title to, or
valid leasehold interests in, all their respective properties and tangible assets, except for those
which are no longer used or useful in the conduct of their businesses or where the absence thereof
would not be reasonably likely to have a Company Material Adverse Effect. All of these properties
and assets, other than assets in which the Company or any Subsidiary has leasehold interests, are
free and clear of all liens, except for liens that would not be reasonably likely to have a Company
Material Adverse Effect.
Section 3.21 Insurance. Section 3.21 of the Company Disclosure Schedule contains a
list of all material fire and casualty, general liability, business interruption and other
insurance policies (collectively, “Insurance Policies”) maintained by the Company or any of
its Subsidiaries. Such policies are in effect as of the date of this Agreement. Such Insurance
Policies are in such amounts and cover such risks as are reasonably adequate for the conduct of the
business of the Company and its Subsidiaries as currently conducted and the value of their
respective properties and assets on the date hereof.
Section 3.22 Restrictions on Business Activities. To the Knowledge of the Company,
there is no agreement, 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
impairing the conduct of business by the Company or any of its Subsidiaries as currently conducted
by the Company or such Subsidiary, including agreements that expressly limit the ability of the
Company or any of its Subsidiaries to compete in or conduct any line of business or compete with
any person in any geographic area or during any period of time, except for any prohibition or
impairment as would not reasonably be expected to have a Company Material Adverse Effect.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
As an inducement to the Company to enter into this Agreement, Parent and Merger Sub hereby,
jointly and severally, represent and warrant to the Company that:
24
Section 4.1 Corporate Organization. Each of Parent and Merger Sub is a corporation
duly organized, validly existing and in good standing under the laws of the State of Delaware, and
has the requisite corporate power and authority and all necessary governmental approvals to own,
lease and operate its properties and to carry on its business as it is now being conducted.
Section 4.2 Authority Relative to the Merger. Each of Parent and Merger Sub has all
necessary corporate power and authority to execute and deliver this Agreement, to perform its
respective obligations hereunder and to consummate the Merger and the Transactions. The execution
and delivery by Parent and Merger Sub of this Agreement and the consummation by Parent and Merger
Sub of the Merger and the Transactions have been duly and validly authorized by all necessary
corporate action, and no other corporate proceedings on the part of Parent or Merger Sub are
necessary to authorize this Agreement or to consummate the Merger or the Transactions (other than
the filing and recordation of appropriate merger documents as required by the DGCL). This
Agreement has been duly and validly executed and delivered by Parent and Merger Sub and, assuming
due authorization, execution and delivery by the Company, constitutes the legal, valid and binding
obligation of each of Parent and Merger Sub, enforceable against each of Parent and Merger Sub in
accordance with its terms, subject to the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar Laws affecting creditors’ rights generally and subject to the
effect of general principles of equity (regardless of whether considered in a proceeding at law or
in equity).
Section 4.3 No Conflict; Required Filings and Consents.
(a) The execution and delivery by Parent and Merger Sub of this Agreement do not, and the
performance by Parent and Merger Sub of this Agreement will not, (i) conflict with or violate the
Certificate of Incorporation or By-laws or equivalent governing documents of either Parent or
Merger Sub, (ii) assuming that all consents, approvals, authorizations and other actions described
in Section 4.3(b) have been obtained or taken and all filings and obligations described in Section
4.3(b) have been made or fulfilled, conflict with or violate any Law applicable to Parent or Merger
Sub or by which any property or asset of either of them is bound or affected, or (iii) result in
any breach of, or constitute a default (or an event which, with notice or lapse of time or both,
would become a default) under, or give to others any rights of termination, amendment, acceleration
or cancellation of, or result in the creation of a lien or other encumbrance on any property or
asset of Parent or Merger Sub pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation to which Parent or
Merger Sub is a party or by which Parent or Merger Sub or any property or asset of either of them
is bound or affected, except, with respect to clause (iii), for any such conflicts, violations,
breaches, defaults or other occurrences which would not reasonably be expected to have a Parent
Material Adverse Effect or would not reasonably be expected to prevent or materially delay the
ability of the Parent or Merger Sub to consummate the Merger or the Transactions.
(b) The execution and delivery by Parent and Merger Sub of this Agreement do not, and the
performance by Parent and Merger Sub of this Agreement will not, require any consent, approval,
authorization or permit of, or filing with or notification to, any Governmental Authority, except
(i) for applicable requirements, if any, of the HSR Act, the Exchange Act, and filing and
recordation of appropriate merger documents as required by the DGCL and (ii) where
25
the failure to obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, would not reasonably be expected to have a Parent Material Adverse Effect
or materially delay the ability of the Parent or Merger Sub to consummate the Merger or the
Transactions.
Section 4.4 Financing.
(a) As of the date of this Agreement, Parent has received an executed commitment letter dated
December 19, 2005 (the “Debt Commitment Letter”) from JPMorgan Chase Bank, N.A. and X.X. Xxxxxx
Securities Inc. (collectively, “JPMorgan”), pursuant to which JPMorgan has committed, subject to
the terms and conditions set forth therein, to provide to Parent the amount of financing set forth
in the Debt Commitment Letter (the “Debt Financing”), to complete the Transactions. A true and
complete copy of the Debt Commitment Letter has been previously provided to the Company.
(b) Parent
has entered into a Contribution and Voting Agreement dated December 19, 2005 (the
“Equity Commitment Agreement” and together with the Debt Commitment Letter, the “Commitment
Letters”) with certain existing stockholders of Parent named therein (including affiliates of
Prides Capital Fund I, L.P.), pursuant to which such stockholders (or their assignees or designees)
have committed, subject to the terms and conditions set forth therein, to provide to Parent $169.7
million of equity financing (the “Equity Financing” and together with the Debt Financing, the
“Financing”) to complete the Transactions. A true and complete copy of the Equity Commitment
Agreement has been previously provided to the Company.
(c) As of the date hereof, the Commitment Letters have not been amended or modified. As of
the date hereof, the obligations to fund the commitments under the Commitment Letters are not
subject to any conditions other than as set forth in the Commitment Letters. Parent and Merger Sub
have fully paid any and all commitment fees or other fees required by such Commitment Letters to be
paid as of the date hereof (and will duly pay any such fees after the date hereof in accordance
with such Commitment Letters). As of the date hereof, the Commitment Letters are valid and in full
force and effect and no event has occurred which (with or without notice, lapse of time or both)
would constitute a default thereunder on the part of Parent or Merger Sub. As of the date hereof,
Parent has no knowledge of any facts or circumstances that could reasonably be expected to result
in (i) any of the conditions set forth in the Commitment Letters not being satisfied to the extent
such conditions can be satisfied by, or are under the control of, Parent or Merger Sub or (ii) the
funding contemplated in the Commitment Letters not being made available to Parent on a timely basis
in order to consummate the transactions contemplated by this Agreement. Except for inaccuracies
caused by the Company or its Subsidiaries, neither the Parent nor the Merger Sub has, as of the
date hereof, been informed by any person that is a financing source that is a party to any
Commitment Letter of any fact, occurrence or condition that makes any of the assumptions or
statements set forth in the Commitment Letters inaccurate in any material respect or that would
cause the commitments provided in such Commitment Letters to be terminated or ineffective or any of
the conditions contained therein not to be met.
26
(d) The aggregate proceeds contemplated by the Commitment Letters, if and when funded in
accordance with the Commitment Letters, together with the available cash of the Company, will be
sufficient for Parent and the Surviving Corporation to pay the aggregate Merger Consideration
pursuant to the Merger and to pay all related fees and expenses.
(e) Parent and Merger Sub are not entering into the transactions contemplated by this
Agreement with the actual intent to hinder, delay or defraud either present or future creditors.
Section 4.5 Proxy Statement. The information supplied by Parent for inclusion in the
Proxy Statement shall not, at the date the Proxy Statement (or any amendment or supplement thereto)
is first mailed to stockholders of the Company, at the time of the Stockholders’ Meeting or at the
Effective Time, (i) contain any untrue statement of a material fact or (ii) omit to state any
material fact required to be stated therein or necessary in order to make the statements therein,
in light of the circumstances under which they were made, not false or misleading or necessary to
correct any statement in any earlier communication with respect to the solicitation of proxies for
the Stockholders’ Meeting which shall have become false or misleading. The information supplied by
Parent for inclusion in the Schedule 13E-3 shall not, at the date of the Schedule 13E-3 (or any
amendment or supplement thereto), at the time of the Stockholders’ Meeting or at 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 light of the
circumstances under which they were made, not false or misleading. The Proxy Statement and
Schedule 13E-3, insofar as each relates to the Parent or Merger Sub or other subsidiaries of Parent
or Merger Sub or other information supplied by Parent or Merger Sub for inclusion or incorporation
by reference therein, will comply as to form in all material respects with the provisions of the
Exchange Act and the rules and regulations thereunder and other applicable law. Notwithstanding
the foregoing, Parent and Merger Sub make no representation or warranty with respect to any
information supplied by the Company or any of its Representatives for inclusion in the Proxy
Statement or Schedule 13E-3.
Section 4.6 Brokers. No broker, finder or investment banker is entitled to any
brokerage, finder’s or other fee or commission in connection with the Merger based upon
arrangements made by or on behalf of Parent or Merger Sub.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
CONDUCT OF BUSINESS PENDING THE MERGER
Section 5.1 Conduct of Business by the Company Pending the Effective Time. The
Company covenants and agrees that, between the date of this Agreement and the Effective Time,
except as expressly contemplated by any other provision of this Agreement or as set forth in
Section 5.1 of the Company Disclosure Schedule, unless Parent shall otherwise consent in writing:
(i) the businesses of the Company and its Subsidiaries shall be conducted only in, and the Company
and its Subsidiaries shall not take any action except in, the ordinary course of business and in a
manner consistent with past practice; and (ii) the Company shall use reasonable commercial efforts
to preserve substantially intact the business organization of the Company and the Subsidiaries, to
maintain in effect all Company Permits that are required for the Company or such Subsidiary to
carry on its business, to keep available the services of the current officers,
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employees, independent contractors and consultants of the Company and the Subsidiaries and to
preserve the current relationships of the Company and the Subsidiaries with customers, suppliers
and other persons with which the Company or any Subsidiary has significant business relations. By
way of amplification and not limitation, except as expressly contemplated by any other provision of
this Agreement or as set forth in Section 5.1 of the Company Disclosure Schedule, neither the
Company nor any Subsidiary shall, between the date of this Agreement and the Effective Time,
directly or indirectly, do, or propose to do, any of the following without the prior written
consent of Parent:
(a) amend or otherwise change its Certificate of Incorporation or By-laws or equivalent
organizational documents;
(b) issue, sell, pledge, dispose of, grant or encumber, or otherwise subject to any lien, or
authorize such issuance, sale, pledge, disposition, grant or encumbrance of, or subjection to, any
such lien, (i) any shares of any class of capital stock of the Company or any Subsidiary, or any
options, warrants, convertible securities or other rights of any kind to acquire any shares of such
capital stock, or any other ownership interest (including, without limitation, any phantom
interest), of the Company or any Subsidiary (except for the issuance of Shares issuable pursuant to
employee stock options outstanding on the date of this Agreement and granted under Company Stock
Option Plans in effect on the date of this Agreement) or (ii) any assets of the Company or any
Subsidiary, except in the case of clause (ii), in the ordinary course of business and in a manner
consistent with past practice;
(c) declare, set aside, make or pay any dividend or other distribution, payable in cash,
stock, property or otherwise, with respect to any of its capital stock or other equity interest;
(d) reclassify, combine, split, subdivide or redeem, or purchase or otherwise acquire,
directly or indirectly, any of its capital stock or other equity interest;
(e) except as required by the terms of any security as in effect on the date hereof and set
forth in Section 5.1(e) of the Company Disclosure Schedule, amend the terms or change the period of
exercisability of, purchase, repurchase, redeem or otherwise acquire any of the Company’s
securities, including shares of Company Common Stock, or any option, warrant or right, directly or
indirectly, to acquire any such securities;
(f) settle, pay or discharge any claim, suit or other action brought or threatened against the
Company with respect to or arising out of any capital stock or other equity interest in the
Company;
(g) (i) acquire (including, without limitation, by merger, consolidation, or acquisition of
stock or assets or any other business combination) any corporation, partnership, other business
organization or any division thereof or any significant amount of assets, except pursuant to
transactions between the Company and its Subsidiaries or between Subsidiaries; (ii) incur any
funded indebtedness or issue any debt securities or warrants or other rights to acquire any debt
securities of the Company or any of its Subsidiaries or assume, guarantee or endorse, or otherwise
become responsible for, the obligations of any person, or make any loans
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or advances other than in the ordinary course of business and consistent with past practice
and not in excess of $500,000; (iii) make any capital contributions to, or investments in, any
other person, other than the Company or any direct or indirect Subsidiary of the Company; (iv)
enter into any contract or agreement other than in the ordinary course of business and consistent
with past practice; (v) authorize, or make any commitment with respect to aggregate capital
expenditures of the Company and its Subsidiaries, taken together, in excess of $10,000,000 so long
as such expenditures (other than any capital expenditure that does not exceed $100,000 individually
or capital expenditures that exceed $250,000 in the aggregate) are contemplated by Section 5.1(g)
of the Company Disclosure Schedule; or (vi) enter into or amend any contract, agreement, commitment
or arrangement with respect to any matter set forth in this Section 5.1(g);
(h) (i) hire any additional employees, except to fill current vacancies or vacancies arising
after the date of this Agreement and only if the expected total annual compensation for such person
is no greater than $200,000, (ii) make any offers to any executive officer of an employment
position, (iii) increase the compensation payable or to become payable or the benefits provided to
its present or former directors, employees or executive officers, except for increases in salary or
hourly wage rates in the ordinary course of business and consistent with past practice, (iv) grant
any new or additional retention, severance or termination pay to, or enter into any new or
additional employment, bonus, change of control or severance agreement with, any present or former
director, officer or other employee of the Company or of any of its Subsidiaries, (v) establish,
adopt, enter into, terminate or amend any Plan or establish, adopt or enter into any plan,
agreement, program, policy, trust, fund or other arrangement that would be a Plan if it were in
existence as of the date of this Agreement, except as required by this Agreement or the Merger
contemplated hereby, or as required by ERISA, the Code or to otherwise comply with applicable Law,
(vi) loan or advance money or other property to any current or former director, officer or employee
of the Company or any of its Subsidiaries or (vii) grant any equity or equity based awards
(provided that equity awards may be transferred in accordance with the applicable plan document or
agreement);
(i) effectuate a “plant closing” or “mass layoff,” as those terms are defined in the WARN Act
(determined without regard to terminations of employment occurring on or after the Effective Time);
(j) take any action, other than actions required to be taken in response to changes in GAAP or
in Law after the date hereof, to change any accounting policies or procedures used by it (including
procedures with respect to revenue recognition, payments of accounts payable and collection of
accounts receivable);
(k) make, revoke or change any material Tax election or material method of Tax accounting,
change any annual Tax accounting period, file any amended Tax Return (unless required by Law),
enter into any closing agreement relating to a material amount of Taxes, settle or compromise any
material liability with respect to Taxes or consent to any material claim or assessment relating to
Taxes or any waiver of the statute of limitations for any such claim or assessment, surrender any
right to claim a refund of Taxes or take any other similar action relating to the filing of any Tax
Return or the payment of any Tax;
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(l) pay, discharge or satisfy any claim, liability or obligation (absolute, accrued, asserted
or unasserted, contingent or otherwise) in excess of $250,000 in any individual case or $500,000 in
the aggregate, other than (i) in the ordinary course of business and consistent with past practice,
or (ii) liabilities reflected or reserved against in the financial statements contained in the
Company SEC Reports and such payment, discharge or satisfaction is made in accordance with the
terms of such claim, liability or obligation as such terms exist on the date of this Agreement;
(m) pay accounts payable, utilize cash, draw down on lines of credit, delay or accelerate
capital expenditures, incur expenditures on research and development, other than in the ordinary
course of business and consistent with past practice;
(n) amend or modify in any material respect, or consent to the termination of, any Material
Contract, or amend, waive or modify in any material respect, or consent to the termination of, the
Company’s or any Subsidiary’s rights thereunder;
(o) (i) abandon, sell, assign, or grant any security interest in or to any item of the Owned
Intellectual Property, Licensed Intellectual Property or IP Agreements, (ii) grant to any third
party any license, sublicense or covenant not to xxx with respect to any Owned Intellectual
Property or Licensed Intellectual Property, other than in the ordinary course of business
consistent with past practice, (iii) develop, create or invent any Intellectual Property jointly
with any third party (other than such joint development, creation or invention with a third party
that is under contract, in progress or currently contemplated as of the date hereof), (iv)
disclose, or allow to be disclosed, any confidential Owned Intellectual Property, unless such Owned
Intellectual Property is subject to a confidentiality or non-disclosure covenant protecting against
the further disclosure thereof, or (v) fail to perform or cause to be performed all applicable
filings, recordings and other acts, and pay or caused to be paid all required fees and taxes, to
maintain and protect its interest in each item of the Owned Intellectual Property and the Licensed
Intellectual Property, except for those items shown in Section 3.12(a) of the Company Disclosure
Schedule as abandoned;
(p) fail to make in a timely manner any filings with the SEC required under the Securities Act
or the Exchange Act or the rules and regulations promulgated thereunder;
(q) enter into any contract or agreement with any director or officer of the Company or any
Subsidiary or any of their respective affiliates (including any immediate family member of such
person) or any other affiliate of the Company or any Subsidiary;
(r) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries
(other than the Merger and the Transactions) except for any such matters that occur with respect to
any of the Subsidiaries listed on Schedule 5.1(r));
(s) open any office in a new geographical territory, create any new business division or
otherwise enter into any new line of business;
(t) fail to continuously maintain in full force and effect its current Insurance Policies; or
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(u) announce an intention, enter into any formal or informal agreement or otherwise make a
commitment, to do any of the foregoing.
ARTICLE VI
ADDITIONAL AGREEMENTS
ADDITIONAL AGREEMENTS
Section 6.1 Stockholders’ Meeting. The Company, acting through the Company Board,
shall (i) in accordance with applicable Law and the Company’s Certificate of Incorporation and
By-laws, duly call, give notice of, convene and hold an annual or special meeting of its
stockholders as promptly as practicable following the date hereof, but no sooner than 20 business
days following the date that the Proxy Statement is mailed to holders of Shares, for the purpose of
considering and taking action on this Agreement and the Merger (the “Stockholders’ Meeting”) and
(ii) (A) include in the Proxy Statement, and not subsequently withdraw or modify in any manner
adverse to Merger Sub or Parent, the recommendation of the Company Board that the stockholders of
the Company approve and adopt this Agreement, the Merger and the Transactions and (B) use its
reasonable commercial efforts to obtain such approval and adoption. At the Stockholders’ Meeting,
Parent and Merger Sub shall cause all Shares then beneficially owned by them and their subsidiaries
and all other persons included among the Buying Parties to be voted in favor of the approval and
adoption of this Agreement, the Merger and the Transactions.
Section 6.2 Proxy Statement; Schedule 13E-3. The Company shall file as soon as
reasonably practicable the Proxy Statement and the Schedule 13E-3 with the SEC under the Exchange
Act in form and substance reasonably satisfactory to each of the Company, Parent and Merger Sub,
and each shall use its reasonable commercial efforts to have the Proxy Statement cleared by the SEC
as promptly as practicable. Parent, Merger Sub and the Company shall cooperate with each other in
the preparation of the Proxy Statement and the Schedule 13E-3 and in responding to any comments of
the SEC with respect to the Proxy Statement or the Schedule 13E-3 or any requests by the SEC for
any amendment or supplement thereto or for additional information. Each of the Company, Parent and
Merger Sub and their respective counsel shall have a reasonable opportunity to review and comment
on (i) the Proxy Statement and the Schedule 13E-3, including all amendments and supplements
thereto, prior to such documents being filed with the SEC or disseminated to holders of Shares and
(ii) all responses to requests for additional information and replies to comments from the SEC or
the staff thereof prior to their being filed with, or sent to, the SEC. Each of the Company,
Parent and Merger Sub agrees to use its reasonable commercial efforts, after consultation with the
other parties hereto, to respond promptly to all such comments of and requests by the SEC and to
cause the Proxy Statement and all required amendments and supplements thereto to be mailed to the
holders of Shares entitled to vote at the Stockholders’ Meeting at the earliest practicable time.
Section 6.3 Access to Information; Confidentiality.
(a) Subject to applicable Law and confidentiality agreements, including that certain
confidentiality agreement dated June 27, 2005 between Parent and the Company (the “Confidentiality
Agreement”), from the date of this Agreement until the Effective Time, the Company shall (and shall
cause its Subsidiaries to): (i) provide to Parent and Parent’s Representatives access, during
normal business hours and upon reasonable notice by Parent, to
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the officers, employees, agents, properties, offices and other facilities of the Company and
its Subsidiaries and to the books and records thereof, (ii) furnish to Parent all monthly and
quarterly statements of revenue and expense, earnings, sales, trial balances and such other similar
statements as are regularly and customarily provided to senior management of the Company promptly
following delivery to such senior management and (iii) furnish promptly to Parent such information
concerning the business, properties, contracts, assets, liabilities, personnel and other aspects of
such party and its Subsidiaries as Parent or its Representatives may reasonably request.
(b) Each party shall, and shall cause its affiliates and Representatives to, (i) comply with
the Confidentiality Agreement as if a party thereto and (ii) hold in strict confidence as
Evaluation Material (as defined in the Confidentiality Agreement) all nonpublic documents and
information furnished or made available by one party to the other(s) and their respective
affiliates and Representatives.
(c) No investigation pursuant to this Section 6.3 shall affect any representation or warranty
in this Agreement of any party hereto or any condition to the obligations of the parties hereto or
any condition to the Offer.
Section 6.4 No Solicitation of Competing Transactions.
(a) The Company agrees that neither it nor any Subsidiary nor any Representative of it or any
Subsidiary will, directly or indirectly, (i) solicit, initiate or encourage (including by way of
furnishing nonpublic information), or take any other action for the purpose of facilitating, any
inquiries or the making of any proposal or offer (including, without limitation, any proposal or
offer to its stockholders) that constitutes, or may reasonably be expected to lead to, any
Competing Transaction (as defined below), or (ii) enter into, participate in or maintain or
continue discussions or negotiations with any person or entity for the purpose of facilitating such
inquiries or to obtain a proposal or offer for a Competing Transaction, or (iii) agree to, approve,
endorse or recommend any Competing Transaction or enter into any letter of intent or other
contract, agreement or commitment providing for or otherwise relating to any Competing Transaction,
or (iv) authorize or permit any Representative of the Company or any of its Subsidiaries to take
any such action. The Company shall notify Parent as promptly as practicable (and in any event
within one business day) after the Company receives any oral or written proposal or offer or any
inquiry or contact with any person regarding a potential proposal or offer regarding a Competing
Transaction, specifying the material terms and conditions thereof and the identity of the party
making such proposal or offer (including material amendments or proposed material amendments). The
Company immediately shall cease and cause to be terminated all existing discussions or negotiations
with any parties conducted heretofore with respect to a Competing Transaction and shall request any
such parties in possession of confidential information about the Company or its Subsidiaries that
was furnished by or on behalf of the Company or its Subsidiaries to return or destroy all such
information in the possession of any such party or in the possession of any Representative of any
such party. The Company shall not release any third party from, or waive any provision of, any
confidentiality or standstill agreement to which it is a party.
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(b) Notwithstanding anything to the contrary in this Section 6.4, the Company Board may
furnish information to, and enter into discussions with, a person who has made an unsolicited,
written, bona fide proposal or offer regarding a Competing Transaction, and the Company Board has
(i) determined, in its good faith judgment (after consulting with its financial advisor), that such
proposal or offer constitutes or would be reasonably expected to lead to a Superior Proposal (as
defined below), (ii) determined, in its good faith judgment after consulting with its outside legal
counsel (who may be the Company’s regularly engaged outside legal counsel), that, in light of such
proposal or offer, the failure to furnish such information or enter into discussions would be
inconsistent with its fiduciary duties to the stockholders of the Company under applicable Law,
(iii) provided written notice to Parent of its intent to furnish information or enter into
discussions with such person prior to taking any such action and (iv) obtained from such person an
executed confidentiality agreement on terms no less favorable to the Company than those contained
in the Confidentiality Agreement (it being understood that such confidentiality agreement and any
related agreements shall not include any provision calling for any exclusive right to negotiate
with such party or having the effect of prohibiting the Company from satisfying its obligations
under this Agreement), except that such confidentiality agreement may permit such person to share
Evaluation Material (as defined in the Confidentiality Agreement) with its financing sources;
provided that such financing sources shall be bound by the terms thereof.
(c) Except as set forth in this Section 6.4(c) and subject to Section 8.1(e), neither the
Company Board nor any committee thereof shall withdraw or modify, or propose publicly to withdraw
or modify, in a manner adverse to Parent or Merger Sub, the approval or recommendation by the
Company Board or any such committee of this Agreement or the Merger (a “Change in the Company
Recommendation”) or approve or recommend, or cause or permit the Company to enter into any letter
of intent, agreement or obligation with respect to, any Competing Transaction (except for a
confidentiality agreement as provided in Section 6.4(b) above). Notwithstanding the foregoing, if
the Company Board determines, in its good faith judgment at any time prior to the approval of the
Merger by the holders of Shares after consulting with outside legal counsel (who may be the
Company’s regularly engaged outside legal counsel), that the failure to make a Change in the
Company Recommendation would be inconsistent with its fiduciary duties to the Company’s
stockholders under applicable Law, the Company Board may make a Change in the Company
Recommendation and/or recommend a Superior Proposal, but only (i) after providing written notice to
Parent (a “Notice of Superior Proposal”) advising Parent that the Company Board has received a
Superior Proposal, specifying the material terms and conditions (including material amendments or
proposed material amendments) of such Superior Proposal and identifying the person making such
Superior Proposal and indicating that the Company Board intends to effect a Change in the Company
Recommendation and (ii) if Parent does not, prior to five days after Parent’s receipt of the Notice
of Superior Proposal make an offer that the Company Board determines, in its good faith judgment
(after consulting with its financial advisor) to be at least as favorable to the Company’s
stockholders as such Superior Proposal. Any disclosure that the Company Board may be compelled to
make with respect to the receipt of a proposal or offer for a Competing Transaction or otherwise in
order to comply with its fiduciary duties under applicable Law or Rule 14d-9 or 14e-2, will not
constitute a violation of this Agreement.
33
(d) A “Competing Transaction” means any of the following (other than the Merger): (i) any
merger, consolidation, share exchange, business combination, recapitalization, liquidation,
dissolution or other similar transaction involving the Company or any Subsidiary; (ii) any sale,
lease, exchange, transfer or other disposition of all or substantially all of the assets of the
Company or of any Subsidiary; (iii) any sale, exchange, transfer or other disposition in which the
Company or any Subsidiary participates (including by way of redeeming the Rights or taking any
action to comply with Section 203 of the DGCL, but excluding typical stock transfer functions) and
which results in any person beneficially owning more than 25% of any class of equity securities of
the Company or of any Subsidiary; (iv) any tender offer or exchange offer that, if consummated,
would result in any person beneficially owning more than 25% of any class of equity securities of
the Company or of any Subsidiary; or (v) any transaction in which the Company participates which
would result in any person owning 25% or more of the fair market value on a consolidated basis of
the assets (including, without limitation, the capital stock or other equity interests of
Subsidiaries) of the Company and its Subsidiaries immediately prior to such transaction (whether by
purchase of assets, acquisition of stock of a Subsidiary or otherwise).
(e) A “Superior Proposal” means an unsolicited written bona fide offer made by a third party
with respect to a Competing Transaction (except that for purposes of this definition all
percentages included in the definition of “Competing Transaction” shall be raised to 50%), in each
case on terms that the Company Board determines, in its good faith judgment (after consulting with
its financial advisor) and taking into account all legal, financial, regulatory and other aspects
of the offer that it deems relevant, to be more favorable to the Company’s stockholders than the
Merger and the Transactions, is reasonably capable of being completed and for which financing, to
the extent it is a condition of such offer, is then committed; provided, however,
that any such offer shall not be deemed to be a “Superior Proposal” if any financing on which the
offer is conditioned is not committed and is not likely in the good faith judgment of the Company
Board (after having received the advice of its financial advisor) to be obtained by such third
party on a basis the Company Board deems timely.
Section 6.5 Employee Benefits Matters.
(a) On and after the Effective Time, Parent shall, and shall cause the Surviving Corporation
to, honor in accordance with their terms all employment agreements and all bonus, retention and
severance obligations, of the Company or any Subsidiary, all of which are listed in Section 6.5(a)
of the Company Disclosure Schedule, except as may otherwise be agreed to by the parties thereto,
and the Company or Parent shall pay at the Effective Time to the applicable officers and employees
listed in said Section 6.5(a) of the Company Disclosure Schedule, any amounts with respect to such
agreements and obligations that are payable by their terms at the Effective Time or upon
consummation of the Merger.
(b) For a period of one (1) year following the Closing, Parent shall cause the Surviving
Corporation to provide substantially similar employee benefits in the aggregate to the benefits
provided under the Plans set forth in Schedule 3.10(a) (which have not been terminated prior to the
Closing with the exception of any equity compensation programs, foreign retirement programs and the
Supplemental Executive Retirement Plan). Parent shall, and shall cause the Surviving Corporation
to, treat, and cause the applicable benefit plans to treat, the service of the
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employees of the Company and the Subsidiaries who remain employed by Parent, Merger Sub or
their subsidiaries after the Effective Time (the “Company Employees”) with the Company or the
Subsidiaries attributable to any period before the Effective Time as service rendered to Parent or
the Surviving Corporation for purposes of eligibility to participate, vesting and for other
appropriate benefits, including, but not limited to, applicability of minimum waiting periods for
participation, but excluding benefit accrual under any defined benefit pension plan. Without
limiting the foregoing, Parent shall not, and shall cause the Surviving Corporation to not, treat
any Company Employee as a “new” employee for purposes of any exclusions under any health or similar
plan of Parent or the Surviving Corporation for a pre-existing medical condition, and any
deductibles and co-pays paid under any of the Company’s or any of the Subsidiaries’ health plans
shall be credited towards deductibles and co-pays under the health plans of Parent or the Surviving
Corporation. Without limiting the foregoing, with respect to any welfare benefit plans maintained
by Parent or the Surviving Corporation for the benefit of Company Employees on and after the
Closing Date, Parent shall, and shall cause the Surviving Corporation to, (i) cause there to be
waived any eligibility requirements or pre-existing condition limitations to the same extent waived
under comparable plans maintained by the Company or its Subsidiaries and (ii) give effect, in
determining any deductible and maximum out-of-pocket limitations, amounts paid by such Company
Employees with respect to similar plans maintained by the Company or its Subsidiaries.
(c) After the Effective Time, Parent shall cause the Surviving Corporation to honor all
obligations which accrued prior to the Effective Time under the Plans.
(d) The parties hereto acknowledge and agree that all provisions contained in this Section 6.5
with respect to employees of the Company and its Subsidiaries are included for the sole benefit of
the respective parties hereto and shall not create any right (i) in any other person, including,
without limitation, any employees, former employees, any participant in any Plan or any beneficiary
thereof or (ii) to continued employment with the Company or any of its Subsidiaries or Purchaser.
After the Effective Time, nothing contained in this Section 6.5 shall interfere with Purchaser’s
right to amend, modify or terminate any Plan (subject to the provisions of Section 6.5(a) above) or
to terminate the employment of any employee of the Company or its Subsidiaries for any reason.
Section 6.6 Directors’ and Officers’ Indemnification and Insurance.
(a) In the event of any threatened or actual claim, action, suit, proceeding or investigation,
whether civil, criminal or administrative, including, without limitation, any such claim, action,
suit, proceeding or investigation in which any person who is now, or has been at any time prior to
the date hereof, or who becomes prior to the Effective Time, a director, officer, employee,
fiduciary or agent of the Company or any Subsidiary (each, an “Indemnified Party” and collectively,
the “Indemnified Parties”) is, or is threatened to be, made a party based in whole or in part on,
or arising in whole or in part out of, or pertaining to (i) the fact that he or she is or was a
director, officer, employee, fiduciary or agent of the Company or any Subsidiary, or is or was
serving at the request of the Company or any Subsidiary as a director, officer, employee, fiduciary
or agent of another corporation, partnership, joint venture, trust or other enterprise, or (ii) the
negotiation, execution or performance of this Agreement, any agreement or document contemplated
hereby or delivered in connection herewith, or any of the transactions
35
contemplated hereby, or thereby whether in any case asserted or arising at or before or after
the Effective Time, the parties hereto agree to cooperate and use their reasonable best efforts to
defend against and respond thereto. It is understood and agreed that the Company shall indemnify
and hold harmless, and for six years after the Effective Time, the Surviving Corporation and Parent
shall indemnify and hold harmless, as and to the full extent permitted by applicable law, each
Indemnified Party against any losses, claims, damages, liabilities, costs, expenses (including
reasonable attorneys’ fees and expenses), judgments, fines and amounts paid in settlement in
connection with any such threatened or actual claim, action, suit, demand, proceeding or
investigation, and in the event of any such threatened or actual claim, action, suit, proceeding or
investigation (whether asserted or arising before or after the Effective Time), (A) the Company,
and the Surviving Corporation and Parent for six years after the Effective Time, shall promptly pay
expenses in advance of the final disposition of any claim, suit, proceeding or investigation to
each Indemnified Party to the full extent permitted by law, (B) the Indemnified Parties may retain
counsel satisfactory to them, and the Company, Parent and the Surviving Corporation shall pay all
reasonable fees and expenses of such counsel for the Indemnified Parties within 30 days after
statements therefor are received, and (C) the Company, Parent and the Surviving Corporation will
use their respective reasonable best efforts to assist in the vigorous defense of any such matter;
provided, however, that none of the Company, the Surviving Corporation or Parent
shall be liable for any settlement effected without its prior written consent (which consent shall
not be unreasonably withheld or delayed); provided, further, that the Company, the
Surviving Corporation and Parent shall have no obligation hereunder to any Indemnified Party when
and if a court of competent jurisdiction shall ultimately determine, and such determination shall
have become final and non appealable, that indemnification by such entities of such Indemnified
Party in the manner contemplated hereby is prohibited by applicable law. Any Indemnified Party
wishing to claim indemnification under this Section 6.6(a), upon learning of any such claim,
action, suit, proceeding or investigation, shall promptly notify the Company and, after the
Effective Time, the Surviving Corporation and Parent thereof; provided that the failure to so
notify shall not affect the obligations of the Company, the Surviving Corporation and Parent except
to the extent, if any, such failure to promptly notify materially prejudices such party.
(b) Parent and Merger Sub each agree that all rights to indemnification or exculpation
existing in favor of, and all limitations on the personal liability of, each present and former
director, officer, employee, fiduciary and agent of the Company and the Subsidiaries provided for
in the respective charters or bylaws (or other applicable organizational documents) or otherwise in
effect as of the date hereof shall continue in full force and effect for a period of three years
from the Effective Time; provided, however, that all rights to indemnification in
respect of any claims (each a “Claim”) asserted or made within such period shall continue until the
disposition of such Claim. From and after the Effective Time, Parent and Merger Sub each also
agree to indemnify and hold harmless the present and former officers and directors of the Company
and the Subsidiaries in respect of acts or omissions occurring prior to the Effective Time to the
extent provided in any written indemnification agreements between the Company and/or one or more
Subsidiaries and such officers and directors as listed in Section 6.6(b) of the Company Disclosure
Schedule.
(c) Prior to the Effective Time, the Company shall purchase a noncancelable extended and
reporting period endoresement under the Company’s existing directors’ and
36
officers’ liability insurance coverage for the Company’s directors and officers in the same
form as presently maintained by the Company, which shall provide such directors and officers with
coverage for six years following the Effective Time of not less than the existing coverage under,
and have other terms not less favorable to, the insured persons than the directors’ and officers’
liability insurance coverage presently maintained by the Company; provided,
however, that the Company shall not without Parent’s prior written consent obtain coverage
under such a policy in excess of the amount that can be obtained for a cost equal to 200% of the
current annual premiums paid by the Company for the current coverage period.
(d) The obligations under this Section 6.6 shall not be terminated or modified in such a
manner as to adversely affect any indemnitee to whom this Section 6.6 applies without the consent
of such affected indemnitee (it being expressly agreed that the indemnities to whom this Section
6.6 applies shall be third party beneficiaries of this Section 6.6 and shall be entitled to enforce
the covenants contained herein).
(e) In the event Parent or the Surviving Corporation or any of their respective successors or
assigns (i) consolidates with or merges into any other person and shall not be the continuing or
surviving corporation or entity of such consolidation or merger, or (ii) transfers or conveys all
or substantially all of its properties and assets to any person, then, and in each such case, to
the extent necessary proper provision shall be made so that the successors and assigns of Parent or
the Surviving Corporation, as the case may be, assume the obligations set forth in this Section
6.6.
Section 6.7 Notification of Certain Matters. The Company shall give prompt notice to
Parent, and Parent shall give prompt notice to the Company, of (a) the occurrence, or
non-occurrence, of any event the occurrence, or non-occurrence, of which could be reasonably be
expected to cause any representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect, (b) any failure of the Company, Parent or Merger Sub, as the
case may be, to comply in any material respect with or satisfy in any material respect any covenant
or agreement to be complied with or satisfied by it hereunder, (c) any notice or other
communication from any person alleging that the consent of such person is or may be required in
connection with the Transactions and (d) the occurrence of any event, development or circumstance
which is known (or knowable following a reasonable investigation) to the Company or Parent, as the
case may be, which has had or would be reasonably likely to result in a Company Material Adverse
Effect or Parent Material Adverse Effect; provided, however, that the delivery of
any notice pursuant to this Section 6.7 shall not limit or otherwise affect the remedies available
hereunder to the party giving or receiving such notice; and provided further that the failure to
give such notice shall not be a breach of covenant for the purposes of Section 7.2(b) or 7.3(b) or
affect the rights and remedies of the party obligated to give any notice pursuant to clause (c) of
this Section 6.7 unless the failure to give such notice results in material prejudice to the other
party.
Section 6.8 Further Action; Reasonable Commercial Efforts.
(a) Upon the terms and subject to the conditions of this Agreement, each of the parties hereto
shall (i) make promptly its respective filings, and thereafter make any other required submissions,
under the HSR Act or other applicable foreign, federal or state antitrust,
37
competition or fair trade Laws with respect to the Merger and the Transactions and (ii) use
its reasonable commercial efforts to take, or cause to be taken, all appropriate action, and to do,
or cause to be done, all things necessary, proper or advisable under applicable Laws or otherwise
to consummate and make effective the Merger and the Transactions, including, without limitation,
using its reasonable commercial efforts to obtain all Permits, consents, approvals, authorizations,
qualifications and orders of Governmental Authorities and parties to contracts with the Company and
the Subsidiaries as are necessary for the consummation of the Merger and the Transactions and to
fulfill the conditions to the Merger and the Transactions; provided that neither Merger Sub nor
Parent will be required by this Section 6.8 to take any action, including entering into any consent
decree, hold separate orders or other arrangements, that (x) requires the divestiture of any assets
of any of Merger Sub, Parent, the Company or any of their respective subsidiaries or (y) limits
Parent’s freedom of action with respect to, or its ability to retain, the Company and the
Subsidiaries or any portion thereof or any of Parent’s or its affiliates’ other assets or
businesses. In case, at any time after the Effective Time, any further action is necessary or
desirable to carry out the purposes of this Agreement, the proper officers and directors of each
party to this Agreement shall use their reasonable commercial efforts to take all such action.
(b) The Company agrees to provide, and will cause its Subsidiaries and its and their
respective officers, employees and advisers to provide, such cooperation as is reasonably necessary
in connection with the arrangement of any financing to be consummated contemporaneously with or at
or after the Effective Time in respect of the Merger and the Transactions, including (i)
participation in meetings, due diligence sessions and road shows, (ii) the preparation of offering
memoranda, private placement memoranda, prospectuses and similar documents, (iii) the execution and
delivery of any commitment or financing letters, solvency certificates, underwriting or placement
agreements, pledge and security documents, other definitive financing documents, or other requested
certificates or documents and comfort letters and consents of accountants as may be reasonably
requested by Merger Sub and taking such other actions as are reasonably required to be taken by the
Company in connection with the Financing. Merger Sub agrees that the payment of any fees by the
Company in connection with the Financing, other than pursuant to Section 8.3, shall be subject to
the occurrence of the Merger. Notwithstanding the foregoing of this Section 6.8(b), (A) the terms
and conditions of any of the agreements and other documents referred to in clause (iii) shall be
consistent with the terms and conditions of the Financing contemplated by Section 4.4 (or any
alternate commitment letter contemplated by Section 6.9(c)), (B) the Company shall be given a
reasonable amount of time to review and comment on the terms and conditions of any of the
agreements and other documents set forth in clause (iii) prior to the execution of those documents,
(C) the terms and conditions of such Financing may not require the payment of any commitment or
other fees by the Company or any of its Subsidiaries, or the incurrence of any liabilities by the
Company or any of its Subsidiaries, prior to the Effective Time and the obligation to make any such
payment shall be subject to the occurrence of the Merger, (D) the Company shall not be required to
provide any such assistance which would interfere unreasonably with the business or operations of
the Company or its Subsidiaries, and (E) the Company shall not be required to call for prepayment
or redemption, or to prepay, redeem and/or renegotiate, as the case may be, any then existing
indebtedness of the Company, except to the extent necessary such that the Debt Financing will not
cause a default under, breach or conflict with any of the terms of such existing indebtedness.
38
Section 6.9 Financing Arrangements.
(a) Parent and Merger Sub shall, at their expense, use their reasonable commercial efforts to
(i) fully satisfy, on a timely basis, all terms, conditions, representations and warranties set
forth in the Commitment Letters and (ii) enforce their rights under the Commitment Letters. The
Parent will use reasonable commercial efforts (including, without limitation, not to amend the
Equity Commitment Letter in a manner that would be reasonably likely to result in a failure of any
condition to the Debt Financing pursuant to the Debt Commitment Letter) to enter into definitive
agreements with respect to the Financing contemplated by the Commitment Letters as soon as
reasonably practicable on terms and conditions no less favorable to the Parent in the aggregate
than the Commitment Letters and on such other terms and conditions as shall be satisfactory to the
Parent.
(b) At the Company’s request, the Parent shall keep the Company reasonably informed with
respect to all material activity concerning the status of the Financing and shall give the Company
prompt notice of any material adverse change with respect to such Financing. Without limiting the
foregoing, the Parent agrees to notify the Company promptly, and in any event within two (2)
Business Days, if at any time prior to the Effective Time (i) any Commitment Letter shall expire or
be terminated for any reason or (ii) any financing source that is a party to any Commitment Letter
notifies the Parent that such source no longer intends to provide financing to the Parent on the
material terms set forth therein. The Parent shall not amend or alter, or agree to amend or alter,
any Debt Commitment Letter in any manner that would materially impair or delay or prevent the
transactions contemplated by this Agreement without the prior written consent of the Company.
(c) If any Commitment Letter shall be terminated or modified in a manner materially adverse to
the Parent for any reason, the Parent shall use its reasonable commercial efforts to obtain, and,
if obtained, will provide the Company with a copy of, an alternate financing commitment that
provides for at least the same amount of financing as such Commitment Letter as originally issued;
provided that the terms and conditions of such alternate financing are not less favorable to Parent
than those contemplated by the applicable Debt Commitment Letter (including, with respect to the
Debt Commitment Letter, having interest rates, fees, repayment obligations and other financial
terms that are no less favorable to the Parent than those set forth in the Debt Commitment Letter).
(d) Prior to the Effective Time, Parent shall deliver, or cause to be delivered, to the
Company and the Company’s board of directors a counterpart of any solvency opinion, solvency
certificate or document of similar import (each, a “Solvency Letter”) delivered to JPMorgan or any
alternate debt financing source, with any such Solvency Letter being expressly addressed to such
persons or being in such form and manner as may be required for such Persons to be entitled to rely
on such Solvency Letter in the same manner as if such Solvency Letter had been addressed to such
Persons.
Section 6.10 Public Announcements. The initial press release relating to this
Agreement shall be a joint press release the text of which has been agreed to by each of Parent and
the Company. Thereafter, unless otherwise required by applicable Law or the requirements of the
Nasdaq, each of Parent and the Company shall each use its reasonable commercial efforts
39
to consult with each other before issuing any press release or otherwise making any public
statements with respect to this Agreement or the Merger.
ARTICLE VII
CONDITIONS TO THE MERGER
CONDITIONS TO THE MERGER
Section 7.1 Conditions to Each Party’s Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger is subject to the satisfaction or waiver
(where permissible) at or prior to the Effective Time of each of the following conditions:
(a) Company Stockholder Approval. This Agreement and the Merger shall have been
approved and adopted by the requisite affirmative vote of the stockholders of the Company in
accordance with, and to the extent required by, the DGCL and the Company’s Certificate of
Incorporation.
(b) No Order. No Governmental Authority shall have enacted, issued, promulgated,
enforced or entered any law, rule, regulation, judgment, decree, executive order or award that is
then in effect and has the effect of making the Merger illegal or otherwise restricting, preventing
or prohibiting consummation of the Merger; provided, however, that the parties hereto shall use
their reasonable commercial efforts to have any such restraint vacated.
(c) Antitrust Waiting Periods. Any waiting period (and any extension thereof)
applicable to the consummation of the Merger under the HSR Act or any other applicable foreign,
federal or state antitrust, competition or fair trade Law shall have expired or been terminated or
received.
Section 7.2 Conditions to Obligations of Parent and Merger Sub. The obligations of
Parent and Merger Sub to effect the Merger are also subject to the satisfaction or waiver (where
permissible) by Parent at or prior to the Effective Time of each of the following conditions.
(a) Representations and Warranties. Each of the representations and warranties of the
Company contained in this Agreement that is qualified by materiality shall have been true and
correct when made and shall be true and correct at and as of the Effective Time as if made at and
as of the Effective Time and each of such representations and warranties that is not so qualified
shall have been true and correct in all material respects when made and shall be true and correct
in all material respects at and as of the Effective Time as if made at and as of the Effective
Time, in each case except as contemplated or permitted by this Agreement; and Parent shall have
received a certificate signed on behalf of the Company by its Chief Executive Officer and its Chief
Financial Officer to such effect.
(b) Performance of Obligations of the Company. The Company shall have performed in
all material respects all obligations required to be performed by it under this Agreement at or
prior to the Effective Time and Parent shall have received a certificate signed on behalf of the
Company by its Chief Executive Officer and its Chief Financial Officer to such effect.
(c) Consents Under Agreements. The Company shall have obtained the consent or
approval of each person whose consent or approval shall be required under any
40
contract to which the Company or any of its Subsidiaries is a party, except those for which
the failure to obtain such consent or approval is not reasonably likely to have a Company Material
Adverse Effect.
(d) Governmental Consents. The Company shall have obtained or made all consents,
approvals, authorizations, permits, filings or notifications set forth in Section 3.5(b) of the
Company Disclosure Schedule.
(e) Financing. The Parent or Merger Sub shall have received the proceeds of the
Financing contemplated by the Debt Commitment Letter in an amount not less than the amount set
forth in the Debt Commitment Letter and otherwise on the terms and conditions as set forth therein
or upon terms and conditions which are, in the reasonable judgment of the Parent and Merger Sub,
substantially equivalent thereto; provided, however, that if (i) the funding under the Equity
Commitment Letter has not occurred, and (ii) the only condition under the definitive documents
contemplated by the Debt Commitment Letter that is not satisfied is the funding under the Equity
Commitment Letter, then the condition under this Section 7.2(e) shall be deemed satisfied or
waived.
Section 7.3 Conditions to Obligation of the Company. The obligation of the Company to
effect the Merger is also subject to the satisfaction or waiver (where applicable) by the Company
at or prior to the Effective Time of each of the following conditions:
(a) Representations and Warranties. Each of the representations and warranties of
Parent and Merger Sub contained in this Agreement that is qualified by materiality shall have been
true and correct when made and shall be true and correct at and as of the Effective Time as if made
at and as of the Effective Time and each of such representations and warranties that is not so
qualified shall have been true and correct in all material respects when made and shall be true and
correct in all material respects at and as of the Effective Time as if made at and as of the
Effective Time, in each case except as contemplated or permitted by this Agreement; and the Company
shall have received a certificate signed on behalf of Parent by its Chief Executive Officer and its
Chief Financial Officer.
(b) Performance of Obligations of Parent and Merger Sub. Each of Parent and Merger
Sub shall have performed in all material respects all obligations required to be performed by it
under this Agreement at or prior to the Effective Time and the Company shall have received a
certificate signed on behalf of Parent by its Chief Executive Officer and its Chief Financial
Officer to such effect.
(c) Consents Under Agreements. Parent shall have obtained the consent or approval of
each person whose consent or approval shall be required in order to consummate the transactions
contemplated by this Agreement under any contract to which Parent or its Subsidiaries is a party,
except those for which failure to obtain such consents and approvals is not reasonably likely to
have a Parent Material Adverse Effect.
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ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
TERMINATION, AMENDMENT AND WAIVER
Section 8.1 Termination. This Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time, whether before or after approval of this
Agreement and the Merger by the stockholders of the Company, as follows:
(a) by mutual written consent of Parent, Merger Sub and the Company;
(b) by the Company, on one hand, or Parent or Merger Sub, on the other hand, by written notice
to the other:
(i) if, upon a vote at the Stockholder’s Meeting (or any adjournment or postponement
thereof), the stockholders of the Company do not approve this Agreement and the Merger;
(ii) if any Governmental Authority of competent jurisdiction shall have issued an
injunction or taken any other action (which injunction or other action the parties hereto
shall use their best efforts to lift), which permanently restrains, enjoins or otherwise
prohibits the consumption of the Merger, and such injunction shall have become final and
non-appealable; or
(iii) if the consummation of the Merger shall not have occurred on or before July 15,
2006 (the “Drop Dead Date”); provided, however, that the right to terminate
this Agreement under this Section 8.1(b)(iii) shall not be available to any party whose
breach of one or more representations or warranties contained in this Agreement or whose
failure to comply with any provision of this Agreement has been the cause of, or resulted
in, the failure of the Merger to occur on or before such date.
(c) by written notice from Parent to the Company, if the Company (i) breaches in any material
respect any of its representations or warranties contained in this Agreement, or (ii) breaches or
fails to perform in any material respect any of its covenants contained in this Agreement, in any
event which breach or failure to perform would give rise to the failure of a condition set forth in
Section 7.2(a) or 7.2(b) and such condition is incapable of being satisfied by the Drop Dead Date;
(d) by written notice from the Company to Parent, if Parent or Merger Sub (i) breaches in any
material respect any of its representations or warranties contained in this Agreement, or (ii)
fails to perform in any material respect any of its covenants contained in this Agreement, in any
event which breach or failure to perform would give rise to the failure of a condition set forth in
Section 7.3(a) or 7.3(b) and such condition is incapable of being satisfied by the Drop Dead Date;
(e) by written notice from the Company to Parent, in connection with entering into a
definitive agreement to effect a Superior Proposal in accordance with Section 6.4;
provided, however, that (i) prior to terminating this Agreement pursuant to this
Section 8.1(e), the Company shall have provided Parent with at least 48 hours prior written notice
of the Company’s decision to so terminate, (ii) such termination shall not be effective until such
time as
42
the payment of the Fee shall have been made by the Company and (iii) the Company’s right to
terminate this Agreement under this Section 8.1(e) shall not be available if the Company is then in
material breach of Section 6.4. Such notice shall indicate in reasonable detail the material terms
and conditions of such Superior Proposal, including the amount and form of the proposed
consideration and whether such Superior Proposal is subject to any material conditions; or
(f) by written notice of Parent or Merger Sub to the Company, if (i) the Company Board shall
(A) fail to include a recommendation in the Proxy Statement that the stockholders of the Company
vote in favor of this Agreement and the Merger, (B) withdraw, modify or change, or propose or
announce any intention to withdraw, modify or change, in a manner material and adverse to Parent or
Merger Sub, such recommendation, (C) approve or recommend, or announce any intention to approve or
recommend, any Competing Transaction, or (D) approve or recommend that the Company stockholders
tender, or otherwise fail to recommend the Company stockholders not to tender, their Shares in any
tender or exchange offer that is a Competing Transaction; (ii) the Company Board or any other duly
authorized committee of the Company Board shall approve a resolution or agree to do any of the
matters set forth in the immediately foregoing clause (i); or (iii) any person or group (other than
Parent, Merger Sub or their affiliates) acquires beneficial ownership of a majority of the
outstanding Shares.
Section 8.2 Effect of Termination. In the event of the termination of this Agreement
pursuant to Section 8.1, this Agreement shall forthwith become void, and there shall be no
liability under this Agreement on the part of any party hereto, except (a) as set forth in Section
8.3 and (b) nothing herein shall relieve any party from liability for any willful breach of any of
its representations, warranties, covenants or agreements set forth in this Agreement prior to such
termination; provided, however, that the terms of Sections 6.3(b) and (c) shall
survive any termination of this Agreement.
Section 8.3 Fees and Expenses.
(a) Except as set forth in this Section 8.3, all Expenses (as defined below) incurred in
connection with this Agreement and the Merger shall be paid by the party incurring such expenses,
whether or not the Merger or any other transaction is consummated. “Expenses,” as used in this
Agreement, shall include all reasonable out-of-pocket expenses (including, without limitation, all
reasonable fees and expenses of counsel, accountants, auditors, investment bankers, experts and
consultants to a party hereto and its affiliates) incurred by a party or on its behalf in
connection with or related to the authorization, preparation, negotiation, execution and
performance of this Agreement, the preparation, printing, filing and mailing of the Proxy
Statement, the solicitation of proxies, the filing of any required notices under the HSR Act or
other similar regulations and all other matters related to consummation of the Merger and the
Transactions.
(b) If this Agreement is terminated by the Company pursuant to Section 8.1(e), or by Parent or
Merger Sub pursuant to Section 8.1(f), then the Company shall pay to Parent promptly (but in any
event no later than one business day after the first of such events shall have occurred) a fee of
$8,250,000 plus all of its Expenses (but not in excess of $1,000,000) (the “Fee”), which amount
shall be payable in immediately available funds.
43
(c) If a Competing Transaction is commenced, publicly disclosed, publicly proposed or
otherwise communicated to the Company at any time on or after the date of this Agreement and prior
to the termination of this Agreement and thereafter the Company terminates this Agreement pursuant
to Section 8.1(b)(i) or Section 8.1(b)(iii) and thereafter, within twelve months of the date of
such termination, the Company enters into a definitive agreement with respect to, or consummates,
any such Competing Transaction, then the Company shall pay to Parent an amount equal to the Fee,
less any amount previously paid or due to Merger Sub pursuant to paragraph (d) of this Section 8.3
in respect of Expenses.
(d) The Company shall (provided that Merger Sub or Parent is not then in material breach of
its obligations under this Agreement) promptly following the termination of this Agreement in
accordance with Section 8.1(c), but in no event later than one business day following written
notice thereof, together with reasonable supporting documentation, reimburse Merger Sub and Parent
for all of their Expenses (but not in excess of $1,000,000).
(e) The Company acknowledges that the agreements contained in this Section 8.3 are an integral
part of the transactions contemplated by this Agreement. In the event that the Company shall fail
to pay the Fee or any Expenses when due, the term “Expenses” shall be deemed to include the costs
and expenses actually incurred or accrued by Parent, to the extent such accrued expenses are, in
fact, paid (including, without limitation, reasonable fees and expenses of counsel) in connection
with the collection under and enforcement of this Section 8.3. Payment of the fees and expenses
described in this Section 8.3 shall not be in lieu of any damages incurred in the event of willful
breach of this Agreement.
Section 8.4 Amendment. This Agreement may be amended by the parties hereto by action
taken by or on behalf of their respective Boards of Directors at any time prior to the Effective
Time; provided, however, that, after the approval and adoption of this Agreement
and the Merger by the stockholders of the Company, no amendment may be made that would require
further approval by such stockholders without such further approval. This Agreement may not be
amended except by an instrument in writing signed by each of the parties hereto.
Section 8.5 Waiver. At any time prior to the Effective Time, any party hereto may (a)
extend the time for the performance of any obligation or other act of any other party hereto, (b)
waive any inaccuracy in the representations and warranties of any other party contained herein or
in any document delivered pursuant hereto and (c) waive compliance with any agreement of any other
party or any condition to its own obligations contained herein. Any such extension or waiver shall
be valid if set forth in an instrument in writing signed by the party or parties to be bound
thereby. No such extension or waiver shall be deemed or construed as a continuing extension or
waiver on any occasion other than the one on which such extension or waiver was granted or as an
extension or waiver with respect to any provision of this Agreement not expressly identified in
such extension or waiver on the same or any other occasion.
ARTICLE IX
GENERAL PROVISIONS
GENERAL PROVISIONS
Section 9.1 Non-Survival of Representations, Warranties and Agreements. The
representations, warranties and agreements in this Agreement and in any certificate delivered
44
pursuant hereto shall terminate at the Effective Time or upon the termination of this
Agreement pursuant to Section 8.1, as the case may be, except that the covenants and agreements set
forth in Articles I and II and Sections 6.3(b), 6.5, 6.6, 6.8, 6.10, 8.3, Article IX and any other
covenant or agreement in this Agreement which contemplates performance after the Effective Time
shall survive the Effective Time.
Section 9.2 Notices. All notices, requests, claims, demands and other communications
hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon
receipt) by delivery in person, by telecopy or by registered or certified mail (postage prepaid,
return receipt requested) to the respective parties at the following addresses (or at such other
address for a party as shall be specified in a notice given in accordance with this Section 9.1):
if to Parent or Merger Sub: | Perseus Holding Corp. | |||
c/o Prides Capital Partners, LLC | ||||
00 Xxxxxxxxxx Xxxxxx | ||||
Xxxxx 000 | ||||
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000 | ||||
Facsimile No.: (000) 000-0000 | ||||
Attention: Xxxxxx Xxxxxx | ||||
with a copy to: | Xxxxxxx Xxxxxxx & Xxxxxxxx LLP | |||
0000 Xxxxxxxx Xxxxxx | ||||
Xxxx Xxxx, Xxxxxxxxxx 00000 | ||||
Facsimile No.: 000-000-0000 | ||||
Attention: Xxxxxxx Xxxxxx, Esq. | ||||
if to the Company: | Pegasus Solutions, Inc. | |||
Xxxxxxxx Centre 1 | ||||
0000 Xxxxx Xxxxxxx Xxxxxxxxxx, Xxxxx 0000 | ||||
Xxxxxx, Xxxxx 00000 | ||||
Facsimile No.: (000) 000-0000 | ||||
Attention: Xxxx X. Xxxxx, III | ||||
with a copy to: | Xxxxx Xxxxxxx & Xxxx LLP | |||
0000 Xxxx Xxxxxx, Xxxxx 0000 | ||||
Xxxxxx, Xxxxx 00000 | ||||
Facsimile No.: (000) 000-0000 | ||||
Attention: Xxxx Xxxxxxx |
Section 9.3 Certain Definitions.
(a) For purposes of this Agreement:
(i) “affiliate” of a specified person means a person who, directly or indirectly
through one or more intermediaries, controls, is controlled by, or is under common control
with, such specified person.
45
(ii) “beneficial owner”, with respect to any Shares, has the meaning ascribed to such
term under Rule 13d-3(a) of the Exchange Act.
(iii) “business day” means any day on which the principal offices of the SEC in
Washington, D.C. are open to accept filings, or, in the case of determining a date when any
payment is due, any day on which banks are not required or authorized to close in The City
of New York.
(iv) “Code” means the United States Internal Revenue Code of 1986, as amended.
(v) “Company Material Adverse Effect” means any event, circumstance, change or effect,
that, individually or in the aggregate with all other events, circumstances, changes and
effects, is or would reasonably be expected to be materially adverse to (i) the business,
assets, liabilities, financial condition or results of operations of the Company and the
Subsidiaries taken as a whole or (ii) the ability of the Company to consummate the Merger or
the Transactions; provided, however, that the foregoing shall not include
any event, circumstance, change or effect resulting from (A) changes in general economic
conditions that do not have a materially disproportionate effect (relative to other industry
participants) on the Company or its Subsidiaries, (B) general changes in the industries in
which the Company and the Subsidiaries operate, except those events, circumstances, changes
or effects that adversely affect the Company and its Subsidiaries to a greater extent than
they affect other entities operating in such industries, (C) changes in the trading price of
the Shares between the date hereof and the Effective Time (it being understood that any fact
or development giving rise to or contributing to such change in the trading price of the
Shares may be the cause of a Company Material Adverse Effect) or (D) changes in Law or GAAP.
(vi) “Company Restricted Stock Award” means each Share outstanding immediately prior to
the Effective Time that is subject to a repurchase option, risk of forfeiture or other
condition under the Company Stock Option Plans or any applicable restricted stock purchase
agreement or other agreement with the Company.
(vii) “control” (including the terms “controlled by” and “under common control with”)
means the possession, directly or indirectly, or as trustee or executor, of the power to
direct or cause the direction of the management and policies of a person, whether through
the ownership of voting securities, as trustee or executor, by contract or credit
arrangement or otherwise.
(viii) “Environmental Laws” means any United States federal, state, local or foreign
laws (including, without limitation, common law), rules, orders, statutes, ordinances,
codes, decrees, regulations or other legally enforceable requirement relating to pollution
or protection of the environment, human health, or natural resources, including, without
limitation the Comprehensive Environmental Response Compensation and Liability Act, 42
U.S.C. Sections 9601 et seq. (“CERCLA”), and the Resource Conservation and Recovery
Act, 42 U.S.C. Sections 6901 et seq. (“RCRA”).
46
(ix) “Environmental Report” means any report, study, assessment, audit, or other
similar document that addresses any material issue of actual or potential noncompliance
with, actual or potential liability under or cost arising out of, or actual or potential
impact on business in connection with, any Environmental Law or any proposed or anticipated
change in or addition to any Environmental Law.
(x) “Hazardous Substances” means any gasoline or petroleum (including crude oil or any
fraction thereof) or petroleum products, polychlorinated biphenyls, urea-formaldehyde
insulation, asbestos, pollutants, contaminants, molds, radioactivity, and any other
hazardous or toxic substances, chemicals, wastes and pollutants defined in, regulated under,
or that could reasonably expected to give rise to liability under any Environmental Law,
including, without limitation, RCRA hazardous wastes and CERCLA hazardous substances.
(xi) “Intellectual Property” means all intellectual property rights arising from or
associated with the following, whether protected, created or arising under the laws of the
United States of America or any other jurisdiction (i) patents, patent applications and
statutory invention registrations (including continuation, divisional, continuation-in-part,
reexamination and reissue patent applications, and any patents issuing therefrom), and
rights in respect of utility models or industrial designs, (ii) Trademarks, (iii) copyrights
in both published and unpublished works, including without limitation all compilations,
databases and computer programs, manuals and other documentation, including registrations
and applications for registration thereof, (iv) Software and (v) confidential and
proprietary information, including trade secrets, know-how, technology, processes, products
and methods.
(xii) “IP Agreements” means all Material Contracts to which the Company or a Subsidiary
is a party governing (i) licenses of Intellectual Property by third parties to the Company
or a Subsidiary (the “In-Bound IP Agreements”), (ii) licenses of Intellectual Property by
the Company or Subsidiary to third parties (the “Out-Bound IP Agreements”), (iii) the rights
between the Company or a Subsidiary and third parties relating to the development, ownership
or use of Intellectual Property and (iv) or the right to manufacture, sell or distribute any
product or process of the Company or a Subsidiary or a third party.
(xiii) “Joint Venture” means, with respect to any person, any corporation limited
liability company, partnership or other entity (including a division or line of business of
such entity) (A) of which such person and/or any of its subsidiaries beneficially owns a
portion of the equity interests that is insufficient to make such entity a subsidiary of
such person, and (B) that is engaged in the same business as such person or its subsidiaries
or in a related or complementary business.
(xiv) “knowledge of the Company” and the “Company’s knowledge” and words of similar
import mean the actual knowledge, after due inquiry, of any executive officer of the
Company, including due inquiry of the appropriate employees of its Subsidiaries.
47
(xv) “Licensed Intellectual Property” means all Intellectual Property licensed to the
Company or a Subsidiary pursuant to the IP Agreements.
(xvi) “Owned Intellectual Property” means all Intellectual Property owned by the
Company and its Subsidiaries.
(xvii) “Parent Material Adverse Effect” means any event, circumstance, change or effect
that, individually or in the aggregate with all other events, circumstances, changes and
effects, is or would reasonably be expected to be materially adverse to (i) the business,
assets, liabilities, financial condition or results of operations of Parent and its
subsidiaries taken as a whole or (ii) the ability of Parent to consummate the Merger and the
Transactions; provided, however, that the foregoing shall not include any
event, circumstance, change or effect resulting from (x) changes in general economic
conditions that do not have a materially disproportionate effect (relative to other industry
participants) on Parent or its subsidiaries, (y) general changes in the industries in which
Parent and its subsidiaries operate, except those events, circumstances, changes or effects
that adversely affect Parent and its subsidiaries to a greater extent than they affect other
entities operating in such industries or (z) changes in Law or GAAP.
(xviii) “person” means an individual, corporation, partnership, limited partnership,
limited liability company, syndicate, person (including, without limitation, a “person” as
defined in Section 13(d)(3) of the Exchange Act), trust, association or entity or
government, political subdivision, agency or instrumentality of a government.
(xix) “Representative” means, with respect to any person, such person’s officers,
directors, employees, accountants, auditors, attorneys, consultants, legal counsel, agents,
investment banker, financial advisor and other representatives.
(xx) “Software” means computer software and programs in any form, including source
code, object code, encryption keys and other security features, all versions, conversions,
updates, patches, corrections, enhancements and modifications thereof and all related
documentation, developer notes, comments and annotations thereto.
(xxi) “subsidiary” or “subsidiaries” of the Company, the Surviving Corporation, Parent
or any other person means any corporation, limited liability company, partnership or other
entity (including joint ventures) that is an affiliate controlled by such person, directly
or indirectly, through one or more intermediaries.
(xxii) “Tax Returns” means any return, declaration, report, election, claim for refund
or information return or other statement, form or disclosure relating to, filed or required
to be filed with any Governmental Authority or taxing authority, including any schedule or
attachment thereto, and including any amendment thereof.
(xxiii) “Taxes” shall mean (a) any and all taxes, fees, levies, duties, tariffs,
imposts and other charges of any kind (together with any and all interest, penalties,
additions to tax and additional amounts imposed with respect thereto) imposed by any
Governmental Authority or taxing authority, including, without limitation: taxes
48
or other charges on or with respect to income, franchise, windfall or other profits,
gross receipts, property, sales, use, capital stock, payroll, employment, social security,
workers’ compensation, unemployment compensation or net worth; taxes or other charges in the
nature of excise, withholding, ad valorem, stamp, transfer, value-added or gains taxes;
license, registration and documentation fees; and customers’ duties, tariffs and similar
charges, (b) any liability for the payment of Tax as a result of membership in any
consolidated, affiliated, combined or unitary group of corporations with respect to which
the Company or any Subsidiary is or has been a member on or prior to the date of the
Effective Time and (c) any transferee or secondary liability in respect of any Tax (whether
imposed by Law or contractual arrangement).
(xxiv) “Trademarks” means trademarks, service marks, domain name registrations, trade
dress, logos, and other source identifiers, including registrations and applications for
registration thereof.
(b) The following terms have the meaning set forth in the Sections set forth below:
Defined Term | Location | |
Action
|
Section 3.9 | |
Agreement
|
Preamble | |
Buying Party
|
Preamble | |
Certificate of Merger
|
Section 1.2 | |
Certificates
|
Section 2.5(b) | |
Change in the Company Recommendation
|
Section 6.4(c) | |
Claim
|
Section 6.6(b) | |
Commitment Letters
|
Section 4.4(b) | |
Company
|
Preamble | |
Company Board
|
Section 3.4 | |
Company Common Stock
|
Section 3.3(a) | |
Company Disclosure Schedule
|
Section 3.1(b) | |
Company Employees
|
Section 3.10(a) | |
Company Permits
|
Section 3.6(a) | |
Company Preferred Stock
|
Section 3.3(a) | |
Company Restricted Stock Award
|
Section 2.2(c) | |
Company Rights Agreement
|
Section 3.15 | |
Company SEC Reports
|
Section 3.7(a) | |
Company Stock Awards
|
Section 3.3(a) | |
Company Stock Option
|
Section 2.2(a) | |
Company Stock Option Plans
|
Section 2.2(a) | |
Competing Transaction
|
Section 6.4(d) | |
Confidentiality Agreement
|
Section 6.3(a) | |
Debt Commitment Letter
|
Section 4.4(a) | |
Debt Financing
|
Section 4.4(a) | |
DGCL
|
Recitals | |
Dissenting Shares
|
Section 2.4(a) | |
Drop Dead Date
|
Section 8.1(b)(iii) |
49
Defined Term | Location | |
Effective Time
|
Section 1.2 | |
Environmental Permits
|
Section 3.14 | |
Equity Commitment Agreement
|
Section 4.4(b) | |
Equity Financing
|
Section 4.4(b) | |
ERISA
|
Section 3.10(a) | |
ESPP
|
Section 2.3 | |
ESPP Date
|
Section 2.3 | |
Exchange Act
|
Section 3.5(b) | |
Exchange Agent
|
Section 2.5(a) | |
Exchange Fund
|
Section 2.5(a) | |
Expenses
|
Section 8.3(a) | |
Fairness Opinion
|
Section 3.18 | |
FCPA
|
Section 3.6(b) | |
Fee
|
Section 8.3(b) | |
Financing
|
Section 4.4(b) | |
GAAP
|
Section 3.7(b) | |
Governmental Authority
|
Section 3.5(b) | |
HSR Act
|
Section 3.5(b) | |
Indemnified Party
|
Section 6.6(a) | |
Insurance Policies
|
Section 3.21 | |
IRS
|
Section 3.10(e) | |
Latest Balance Sheet
|
Section 3.7(c) | |
Law
|
Section 3.5(a) | |
Merger
|
Recitals | |
Merger Consideration
|
Recitals | |
Merger Sub
|
Preamble | |
Multiemployer Plan
|
Section 3.10(c) | |
Multiple Employer Plan
|
Section 3.10(c) | |
Non-U.S. Benefit Plan
|
Section 3.10(i) | |
Notice of Superior Proposal
|
Section 6.4(c) | |
Parent
|
Preamble | |
Plans
|
Section 3.10(a) | |
Proxy Statement
|
Section 3.17 | |
Rights
|
Section 3.15 | |
SEC
|
Section 3.7(a) | |
Schedule 13E-3
|
Section 3.17 | |
Securities Act
|
Section 3.7(a) | |
Shares
|
Recitals | |
Stockholders
|
Recitals | |
Stockholders’ Meeting
|
Section 6.1(a) | |
Subsidiary
|
Section 2.2(a) | |
Superior Proposal
|
Section 6.4(e) | |
Surviving Corporation
|
Section 1.1 | |
Transactions
|
Section 3.4 | |
WARN Act
|
Section 3.10(h) |
50
Section 9.4 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law, or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full force and effect so
long as the economic or legal substance of the Merger is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision is invalid, illegal
or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as possible in a mutually
acceptable manner in order that the Merger be consummated as originally contemplated to the fullest
extent possible.
Section 9.5 Entire Agreement; Assignment. This Agreement and the Confidentiality
Agreement constitute the entire agreement among the parties with respect to the subject matter
hereof and supersede all prior agreements and undertakings, both written and oral, among the
parties, or any of them, with respect to the subject matter hereof. This Agreement shall not be
assigned (whether pursuant to a merger, by operation of law or otherwise), except that Parent and
Merger Sub may assign all or any of their rights and obligations hereunder to any affiliate of
Parent; provided that no such assignment shall relieve the assigning party of its obligations
hereunder if such assignee does not perform such obligations.
Section 9.6 Parties in Interest. This Agreement shall be binding upon and inure
solely to the benefit of each party hereto, and nothing in this Agreement, express or implied, is
intended to or shall confer upon any other person any right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement, other than as set forth in Section 6.6.
Section 9.7 Specific Performance. The parties hereto agree that irreparable damage
would occur in the event any provision of this Agreement were not performed in accordance with the
terms hereof and that the parties shall be entitled to specific performance of the terms hereof, in
addition to any other remedy at law or equity.
Section 9.8 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware applicable to contracts executed in and to be
performed in that State. All actions and proceedings arising out of or relating to this Agreement
shall be heard and determined exclusively in the Chancery Court of the State of Delaware (or other
appropriate state court in the State of Delaware or any federal court sitting in the State of
Delaware. The parties hereto hereby (a) submit to the exclusive jurisdiction of any such state or
federal court sitting in the State of Delaware for the purpose of any Action arising out of or
relating to this Agreement brought by any party hereto and (b) irrevocably waive, and agree not to
assert by way of motion, defense, or otherwise, in any such Action, any claim that it is not
subject personally to the jurisdiction of the above-named courts, that its property is exempt or
immune from attachment or execution, that the Action is brought in an inconvenient forum, that the
venue of the Action is improper, or that this Agreement or the Merger may not be enforced in or by
any of the above-named courts.
Section 9.9 Headings. The descriptive headings contained in this Agreement are
included for convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
51
Section 9.10 Counterparts. This Agreement may be executed and delivered (including by
facsimile transmission) in one or more counterparts, and by the different parties hereto in
separate counterparts, each of which when executed shall be deemed to be an original but all of
which taken together shall constitute one and the same agreement.
Section 9.11 Company Disclosure Schedule. Disclosures included in the Company
Disclosure Schedule shall be considered made for purposes of all other sections of the Company
Disclosure Schedule to the extent that the relevance of any disclosure to any such other section of
the Disclosure Schedule is reasonably apparent and to the extent that such fact or combination of
facts has been disclosed in sufficient detail to put a reasonable person on notice of the relevance
of the facts or circumstances so disclosed. The inclusion of any item in any Section of the
Company Disclosure Schedule (i) does not represent a determination by the Company that such item is
“material” and (ii) does not represent a determination by the Company that such item did not arise
in the ordinary course of business.
[Signature page follows]
52
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this Agreement to
be executed as of the date first written above by their respective officers thereunto duly
authorized.
be executed as of the date first written above by their respective officers thereunto duly
authorized.
PERSEUS HOLDING CORP. | ||||
By: | /s/ Xxxxxx Xxxxxx | |||
Name: Xxxxxx Xxxxxx | ||||
Title: President | ||||
406 ACQUISITION CORP. | ||||
By: | /s/ Xxxxxx Xxxxxx | |||
Name: Xxxxxx Xxxxxx | ||||
Title: President | ||||
PEGASUS SOLUTIONS, INC. | ||||
By: | /s/ Xxxx X. Xxxxx, III | |||
Name: Xxxx X. Xxxxx, III | ||||
Title: Chairman and Chief Executive Officer |
53