Exhibit
(d)(1)
Execution Copy
Acer Inc.,
a company organized under the laws of the Republic of China;
Galaxy Acquisition Corp.,
Dated as of August 27, 2007
Table of Contents
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SECTION 1. THE OFFER |
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1 |
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1.1 |
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Tender Offer |
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1 |
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1.2 |
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Actions of Parent and Acquisition Sub |
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3 |
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1.3 |
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Actions of the Company |
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4 |
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1.4 |
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Board of Directors |
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6 |
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1.5 |
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Actions by Directors |
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7 |
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1.6 |
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Top-Up Option |
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7 |
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SECTION 2. THE MERGER; EFFECTIVE TIME |
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9 |
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2.1 |
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Merger of Acquisition Sub into the Company |
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9 |
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2.2 |
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Effect of the Merger |
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9 |
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2.3 |
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Effective Time |
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9 |
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2.4 |
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Certificate of Incorporation and Bylaws; Directors |
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10 |
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2.5 |
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Conversion of Company Shares |
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10 |
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2.6 |
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Company Stock Options; Restricted Company Shares |
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10 |
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2.7 |
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Closing of the Company’s Transfer Books |
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11 |
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2.8 |
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Payment for Company Shares |
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11 |
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2.9 |
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Withholding of Taxes |
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13 |
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2.10 |
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Appraisal Rights |
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13 |
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2.11 |
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Further Action |
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13 |
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SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY |
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14 |
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3.1 |
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Due Organization and Good Standing; Subsidiaries |
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14 |
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3.2 |
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Certificate of Incorporation; Bylaws |
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15 |
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3.3 |
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Capitalization, Etc |
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15 |
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3.4 |
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SEC Filings; Financial Statements; Absence of Undisclosed Liabilities |
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16 |
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3.5 |
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Absence of Certain Changes |
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18 |
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3.6 |
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IP Rights |
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18 |
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3.7 |
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Title to Assets; Real Property |
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20 |
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3.8 |
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Contracts |
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21 |
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3.9 |
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Compliance with Legal Requirements |
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24 |
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Page |
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Table of Contents
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(continued)
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3.10 |
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Legal Proceedings; Orders |
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24 |
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3.11 |
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Governmental Authorizations |
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25 |
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3.12 |
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Tax Matters |
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25 |
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3.13 |
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Employee Benefits |
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27 |
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3.14 |
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Labor Matters |
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30 |
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3.15 |
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Environmental Matters |
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32 |
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3.16 |
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Insurance |
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33 |
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3.17 |
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Transactions with Affiliates |
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33 |
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3.18 |
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Authority; Binding Nature of Agreement |
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33 |
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3.19 |
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Top-Up Option |
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34 |
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3.20 |
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Vote Required |
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34 |
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3.21 |
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Non-Contravention; Consents |
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34 |
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3.22 |
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Board Approvals; Anti-Takeover; Company Rights Agreement; Change in |
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Control Compensation Plan |
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35 |
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3.23 |
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Opinion of Financial Advisor |
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35 |
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3.24 |
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Brokers |
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35 |
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3.25 |
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Letter Agreement |
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35 |
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3.26 |
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Schedule 14D-9 |
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35 |
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3.27 |
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Information in Proxy Statement |
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36 |
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SECTION 4. REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION SUB |
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36 |
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4.1 |
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Due Organization |
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36 |
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4.2 |
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Authority; Binding Nature of Agreement |
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36 |
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4.3 |
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Non-Contravention; Consents |
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37 |
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4.4 |
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Absence of Litigation |
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37 |
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4.5 |
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Financing |
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37 |
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4.6 |
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Ownership and Operations of Acquisition Sub |
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37 |
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4.7 |
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Offer Documents |
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37 |
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4.8 |
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Information in Proxy Statement |
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38 |
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4.9 |
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Brokers |
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38 |
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Page |
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Table of Contents
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(continued)
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SECTION 5. COVENANTS |
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38 |
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5.1 |
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Interim Operations of the Company |
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38 |
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5.2 |
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No Solicitation |
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41 |
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5.3 |
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Meeting of the Company’s Stockholders |
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43 |
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5.4 |
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Filings; Other Action |
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45 |
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5.5 |
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Access |
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46 |
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5.6 |
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Interim Operations of Acquisition Sub |
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47 |
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5.7 |
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Publicity |
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47 |
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5.8 |
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Treatment of Options and Other Stock-Based Awards |
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47 |
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5.9 |
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Employees |
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47 |
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5.10 |
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Indemnification; Directors’ and Officers’ Insurance |
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48 |
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5.11 |
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Exercise of Right |
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49 |
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5.12 |
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Additional Agreements |
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52 |
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5.13 |
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Advice of Changes |
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52 |
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5.14 |
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Company Rights Agreement |
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52 |
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5.15 |
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Rule 14d-10(d) |
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52 |
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5.16 |
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Stockholder Litigation |
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52 |
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5.17 |
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FIRPTA |
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53 |
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SECTION 6. CONDITIONS TO EACH PARTY’S OBLIGATION TO EFFECT THE MERGER |
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53 |
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6.1 |
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Stockholder Approval |
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53 |
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6.2 |
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No Injunctions; Laws |
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53 |
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6.3 |
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Closing of Tender Offer |
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53 |
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SECTION 7. TERMINATION |
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53 |
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7.1 |
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Termination |
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53 |
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7.2 |
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Effect of Termination on the River Transaction |
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55 |
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7.3 |
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Effect of Termination |
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60 |
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7.4 |
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Termination Fee; Expense Reimbursement |
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61 |
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SECTION 8. MISCELLANEOUS PROVISIONS |
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62 |
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8.1 |
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Amendment |
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62 |
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Page |
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Table of Contents
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(continued)
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8.2 |
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Waiver |
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62 |
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8.3 |
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No Survival of Representations and Warranties |
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63 |
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8.4 |
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Entire Agreement; Counterparts |
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63 |
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8.5 |
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Applicable Law |
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63 |
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8.6 |
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Consent to Jurisdiction |
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63 |
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8.7 |
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Waiver of Jury Trial |
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64 |
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8.8 |
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Attorneys’ Fees |
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64 |
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8.9 |
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Payment of Expenses |
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64 |
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8.10 |
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Assignment |
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64 |
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8.11 |
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Notices |
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65 |
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8.12 |
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Severability |
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66 |
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8.13 |
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Specific Performance |
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66 |
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8.14 |
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Construction |
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66 |
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67 |
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ANNEX I Conditions of the Offer |
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69 |
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Exhibit A Certain Definitions |
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A-1 |
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Exhibit B Tender and Support Agreement |
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B-1 |
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Table of Defined Terms
The following terms are defined in the Section of this Agreement set forth after such term below:
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Acceptance Time
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Section 1.4(a) |
Acquisition Sub
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Introductory Paragraph |
Affiliate
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Exhibit A |
Agreement
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Exhibit A |
Appraisal Shares
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Section 2.10(c) |
Assignment Option
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Section 7.2(a)(iii) |
Auction
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Section 7.2(b)(ii) |
Auction Notice
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Section 7.2(b)(i) |
Balance Escrow Deposit
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Section 5.11(c) |
Bidders
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Section 7.2(b)(ii) |
Certificate
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Section 2.7 |
Certificate of Merger
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Section 2.3 |
CFIUS
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Annex I |
CFIUS Approval
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Section 5.4(b) |
Charter Documents
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Section 3.2 |
Closing
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Section 2.3 |
Code
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Exhibit A |
Company
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Introductory Paragraph |
Company Adverse Recommendation Change
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Section 5.2(a) |
Company Convertible Notes
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Exhibit A |
Company Disclosure Schedule
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Section 3 |
Company IP
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Exhibit A |
Company Material Adverse Effect
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Exhibit A |
Company Options
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Exhibit A |
Company Proxy Statement
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Section 5.3 |
Company Returns
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Section 3.12(a) |
Company Rights
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Exhibit A |
Company Rights Agreement
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Exhibit A |
Company SEC Documents
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Section 3.4(a) |
Company Shares
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Exhibit A |
Company Stock Plans
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Exhibit A |
Company Stockholders Meeting
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Section 5.3 |
Company’s Expenses
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Exhibit A |
Confidential Information
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Section 5.5 |
Confidentiality Agreement
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Exhibit A |
Continuing Employees
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Section 5.9(a) |
DGCL
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Section 1.3(a) |
-v-
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Effect
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Exhibit A |
Effective Time
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Section 2.3 |
Employee Benefit Plans
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Section 3.13(a) |
Entity
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Exhibit A |
Environmental Law
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Exhibit A |
ERISA
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Section 3.13(a) |
ERISA Affiliate
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Section 3.13(a) |
Escrow Account
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Section 5.11(c) |
Escrow Agent
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Section 5.11(c) |
Escrow Agreement
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Section 5.11(c) |
Escrow Deposit
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Section 5.11(c) |
Exchange Act
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Exhibit A |
Exon-Xxxxxx
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Section 3.21 |
FIRPTA Certificate
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Section 5.17 |
GAAP
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Exhibit A |
Governmental Authorization
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Exhibit A |
Governmental Entity
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Exhibit A |
Hazardous Substances
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Exhibit A |
HIPPAA
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Section 3.13(c) |
HSR Act
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Exhibit A |
Indemnified Party
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Section 5.10(d) |
Independent Person
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Section 7.2(b)(ii) |
Individual
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Section 3.25 |
Initial Escrow Deposit
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Section 5.11(c) |
Initial Expiration Date
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Section 1.1(d) |
Internal Controls
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Section 3.4(f) |
IP Rights
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Exhibit A |
IRS
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Section 3.13(d) |
Knowledge
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Exhibit A |
Latest Balance Sheet
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Exhibit A |
Leased Real Property
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Section 3.7(c) |
Legal Proceeding
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Exhibit A |
Legal Requirement
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Exhibit A |
Letter Agreement
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Section 3.25 |
Material Contract
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Section 3.8(b) |
Merger
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Recitals |
Merger Consideration
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Section 2.5(c) |
Merger Recommendation
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Section 1.3(a) |
Minimum Amount
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Section 5.11(c) |
Minimum Tender Condition
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Annex I |
Non-Affiliate Plan Fiduciary
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Section 3.13(c) |
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NYSE
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Section 1.2 |
Offer
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Recitals |
Offer Commencement Date
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Section 1.1(a) |
Offer Conditions
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Section 1.1(a) |
Offer Documents
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Section 1.2 |
Offer Price
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Recitals |
Offer Recommendation
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Section 1.3(a) |
Option Consideration
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Section 2.6 |
Parent
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Introductory Paragraph |
Parent’s Expenses
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Exhibit A |
Paying Agent
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Section 2.8(a) |
Pension Plans
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Section 3.13(d) |
Permitted Encumbrances
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Exhibit A |
Person
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Exhibit A |
Preferred Shares
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Section 3.3(a) |
Real Property Leases
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Section 3.7(c) |
Registered IP
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Section 3.6(a) |
Representatives
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Section 5.2(a) |
Restricted Company Shares
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Exhibit A |
River
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Section 5.11(c) |
River Closing Date
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Section 5.11(a) |
River Expenses
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Section 5.11(c) |
River Fee
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Section 7.2(a)(i) |
River Offer
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Section 5.11(a) |
River Shares
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Section 5.11(a) |
River Transaction
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Section 5.11(a) |
Schedule 14D-9
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Section 1.3(b) |
SEC
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Exhibit A |
Securities Act
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Exhibit A |
Series B Preferred
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Section 3.3(a) |
Share Purchase Contract
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Section 5.11(a) |
Software
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Exhibit A |
Subsequent Offering Period
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Section 1.1(e) |
Subsidiary
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Exhibit A |
Superior Proposal
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Exhibit A |
Surviving Corporation
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Section 2.1 |
Takeover Proposal
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Exhibit A |
Tender and Support Agreement
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Recitals |
Termination Amount
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Section 7.4(a) |
Third Party
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Exhibit A |
Third Party Bidder
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Section 7.2(b)(ii) |
-vii-
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Top-Up Closing
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Section 1.6(c) |
Top-Up Notice
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Section 1.6(c) |
Top-Up Option
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Section 1.6(a) |
Top-Up Option Company Shares
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Section 1.6(a) |
Transfer Notice
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Section 5.11(a) |
Walk Away Date
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Exhibit A |
-viii-
This
Agreement and Plan of Merger is made and entered into as of August 27, 2007, by and
among:
Acer Inc., a company organized under the laws of the Republic of China (“
Parent”);
Galaxy Acquisition Corp., a
Delaware corporation and a direct or indirect wholly owned subsidiary
of Parent (“
Acquisition Sub”); and Gateway, Inc., a
Delaware corporation (the
“
Company”). Certain capitalized terms used in this Agreement are defined in Exhibit A.
RECITALS
A. Parent, Acquisition Sub and the Company have determined that it is advisable and in the
best interests of their respective stockholders for the Company to be acquired upon the terms and
subject to the conditions set forth in this Agreement.
B. In furtherance of the contemplated acquisition of the Company, Acquisition Sub shall make a
tender offer to acquire all of the issued and outstanding Company Shares, including the associated
Company Rights, upon the terms and subject to the conditions set forth in this Agreement for a
price per share of $1.90 (such price, or any higher price per share as may be paid pursuant to the
Offer (as defined below), is hereafter referred to as the “Offer Price”), net to the
sellers in cash. Such tender offer, as it may be amended and supplemented from time to time as
permitted by this Agreement, is referred to in this Agreement as the “Offer.”
C. After acquiring Company Shares pursuant to the Offer, Acquisition Sub shall merge with and
into the Company upon the terms and subject to the conditions set forth in this Agreement (the
merger of Acquisition Sub into the Company being referred to in this Agreement as the
“Merger”), which will result in the Company becoming a direct or indirect wholly owned
subsidiary of Parent.
D. Concurrently with the execution and delivery of this Agreement, and as a condition and
inducement to Parent’s and Acquisition Sub’s willingness to enter into this Agreement, Avalon
Capital Group LLC is entering into a Tender and Support Agreement substantially in the form
attached as Exhibit B (the “Tender and Support Agreement”).
AGREEMENT
The parties to this Agreement, intending to be legally bound, agree as follows:
SECTION 1. THE OFFER
1.1 Tender Offer.
(a) Unless this Agreement shall have previously been validly terminated in accordance with
Section 7 or any of the events described in paragraphs (a), (b), (c) (to the extent performance is
required), (d) or (e) of Annex I hereto shall have occurred and be continuing, as promptly as
practicable, but in any event within ten days, after the date of this Agreement, Acquisition Sub
shall commence (within the meaning of
-1-
Rule 14d-2 under the Exchange Act) the Offer to purchase all of the outstanding Company Shares
at the Offer Price (including any Restricted Company Shares). The obligations of Acquisition Sub
to accept for payment and pay for any Company Shares validly tendered pursuant to the Offer (and
not properly withdrawn) shall be subject to the satisfaction or waiver of only those conditions set
forth in Annex I hereto (the “Offer Conditions”). The date on which Acquisition Sub
commences the Offer, within the meaning of Rule 14d-2 under the Exchange Act, is referred to in
this Agreement as the “Offer Commencement Date.”
(b) Subject to the terms and conditions of this Agreement and to the satisfaction or waiver of
the Offer Conditions, as soon as possible after the expiration of the Offer (or, if Acquisition Sub
elects to provide for a Subsequent Offering Period in accordance with Section 1.1(e), as soon as
possible after the expiration of the “initial offering period” (as such term is used in Rule 14d-11
under the Exchange Act)). Acquisition Sub shall (and Parent shall cause Acquisition Sub to) accept
for payment all Company Shares validly tendered (and not properly withdrawn) pursuant to the Offer.
As promptly as practicable after the acceptance for payment of any Company Shares tendered
pursuant to the Offer, Acquisition Sub shall (and Parent shall cause Acquisition Sub to) pay for
such Company Shares. Parent shall provide or cause to be provided to Acquisition Sub on a timely
basis funds in an amount sufficient to purchase all Company Shares that Acquisition Sub becomes
obligated to purchase pursuant to the Offer (including in any Subsequent Offering Period), and
Acquisition Sub shall maintain such funds exclusively for such purpose.
(c) Acquisition Sub expressly reserves the right to waive any of the Offer Conditions without
the prior written consent of the Company, subject to the following sentence. Notwithstanding
anything to the contrary contained in this Agreement, neither Parent nor Acquisition Sub shall
(without the prior written consent of the Company):
(i) change or waive the Minimum Tender Condition (as defined in Annex I);
(ii) reduce the Offer Price or decrease the number of Company Shares sought to be purchased in
the Offer;
(iii) extend or otherwise change the expiration date of the Offer (except to the extent
required or permitted pursuant to Section 1.1(d));
(iv) change the form of consideration payable in the Offer;
(v) impose any condition to the Offer in addition to the Offer Conditions or add to the Offer
Conditions; or
(vi) amend, modify or supplement any of the terms of the Offer in any manner adversely
affecting the holders of Company Shares.
-2-
(d) Unless extended as provided in this Agreement, the Offer shall expire on the date (the
“Initial Expiration Date”) that is 20 business days (calculated as set forth in Rule
14d-1(g)(3) and Rule 14e-1(a) under the Exchange Act) after the Offer Commencement Date.
Notwithstanding the foregoing, if, on the Initial Expiration Date or any subsequent date as of
which the Offer is scheduled to expire, any of the Offer Conditions are not satisfied or waived
then Acquisition Sub shall, until such time as such conditions are satisfied or waived, extend (and
re-extend) the Offer and its expiration date beyond the Initial Expiration Date or such other date
for one or more periods ending no later than the Walk Away Date, until such Offer Conditions are
satisfied or, as applicable, waived by Parent and Acquisition Sub; provided that any such
extension shall be in increments of not more than three business days (unless a longer period of
time is agreed to by the Company in writing, such agreement not to be unreasonably withheld). Any
individual extension of the Offer pursuant to the preceding sentence shall not exceed 10 business
days and in no event shall the Offer extend beyond the Walk Away Date without the mutual written
consent of the Company and Parent. Notwithstanding the foregoing, the Offer also shall be extended
for any period required by any rule, regulation, interpretation or position of the SEC or the staff
thereof applicable to the Offer or any period required by any other Legal Requirement. The Offer
may not be terminated prior to its expiration date (as such expiration date may be extended and
re-extended in accordance with this Agreement), unless this Agreement is validly terminated in
accordance with Section 7. Nothing in this paragraph shall affect any termination rights in
Section 7 hereof.
(e) Acquisition Sub may, in its discretion, elect to provide for a subsequent offering period
(and one or more extensions thereof) in accordance with Rule 14d-11 under the Exchange Act (each a
“Subsequent Offering Period”) following the Acceptance Time (as defined in Section 1.4(a))
if all of the Offer Conditions have been satisfied or waived and Company Shares have been accepted
for payment, but the number of Company Shares acquired by Acquisition Sub (together with other
Company Shares owned of record by Parent, Acquisition Sub and their Affiliates) represent at least
one share less than 90% of the then outstanding number of Company Shares, for an aggregate period
of not more than ten business days. As soon as practicable after the acceptance for payment of any
Company Shares validly tendered (and not properly withdrawn) in any Subsequent Offering Period,
Acquisition Sub shall pay (and Parent shall cause Acquisition Sub to) for such Company Shares.
1.2 Actions of Parent and Acquisition Sub. On the Offer Commencement Date, Parent and
Acquisition Sub shall: (i) cause to be filed with the SEC a Tender Offer Statement on Schedule TO
with respect to the Offer, which will contain or incorporate by reference Acquisition Sub’s offer
to purchase and related letter of transmittal and the related form of summary advertisement and
other ancillary Offer documents and instruments pursuant to which the Offer will be made (such
Tender Offer Statement on Schedule TO and all exhibits, amendments and supplements thereto being
referred to collectively in this Agreement as the “Offer Documents”); and (ii) cause the
Offer Documents to be disseminated to holders of Company Shares to the extent required by
applicable Legal Requirements. Each of Parent and Acquisition Sub agrees promptly to correct the
Schedule TO and the Offer Documents if and to the extent necessary to do so
-3-
such that the Schedule TO and the Offer Documents shall not contain an untrue statement of
material fact or omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which they were made, not
misleading (and the Company, with respect to information provided by it for use in the Schedule TO
and the Offer Documents, shall promptly notify Parent of any required corrections of such
information and cooperate with Parent with respect to correcting such information) and to
supplement the information contained in the Schedule TO and the Offer Documents to include any
information necessary such that the Schedule TO and the Offer Documents shall not contain an untrue
statement of material fact or omit to state any material fact required to be stated therein
necessary in order to make the statements therein, in light of the circumstances under which they
were made, not misleading. Parent and Acquisition Sub agree to cause the Schedule TO as so
corrected to be filed with the SEC and to be disseminated to holders of Company Shares, in each
case as and to the extent required by applicable U.S. federal securities laws or the rules or
regulations of the New York Stock Exchange (the “NYSE”). Without limiting the generality
of the foregoing, the Company shall furnish to Parent the information relating to the Company
required by the Exchange Act to be set forth in the Offer Documents. The Company and its counsel
shall be given a reasonable opportunity to review and comment on the Schedule TO and the Offer
Documents each time before any such document is filed with the SEC, and Parent and Acquisition Sub
shall give reasonable and good faith consideration to any comments made by the Company and its
counsel. Parent and Acquisition Sub shall provide the Company and its counsel with (i) any
comments or other communications, whether written or oral, that Parent, Acquisition Sub or their
counsel may receive from time to time from the SEC or its staff with respect to the Schedule TO or
the Offer Documents promptly after receipt of those comments or other communications and (ii) a
reasonable opportunity to participate in the response of Parent and Acquisition Sub to those
comments and to provide comments on that response (to which reasonable and good faith consideration
shall be given), including by participating with Parent and Acquisition Sub or their counsel in any
discussions or meetings with the SEC.
1.3 Actions of the Company.
(a) The Company hereby consents to the Offer and represents that its Board of Directors, at a
meeting duly called and held, has unanimously (i) determined that this Agreement and the
transactions contemplated hereby, including the Offer and the Merger, are fair to and in the best
interests of the Company and its stockholders, (ii) adopted and approved, and declared advisable,
this Agreement and the transactions contemplated hereby, including the Offer and the Merger, in
accordance with the requirements of the
Delaware General Corporation Law (“
DGCL”), (iii)
approved and adopted an amendment to the Company Rights Agreement to render the Company Rights
inapplicable to this Agreement, the Tender and Support Agreement and the transactions contemplated
hereby and thereby, including the Offer and the Merger, and (iv) subject to Section 5.2, resolved
to recommend acceptance of the Offer (the “
Offer Recommendation”) and approval and adoption
of this Agreement and the Merger (the “
Merger Recommendation”) by the Company’s
stockholders. The Company hereby consents to the inclusion of the determinations and approvals
described in clauses (i)
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through (iii) above in the Offer Documents and, to the extent that no Company Adverse
Recommendation Change shall have occurred in accordance with Section 5.2, the Company hereby
consents to the inclusion of the Offer Recommendation and the Merger Recommendation in the Offer
Documents (it being understood that such consent shall not be deemed to limit the Company’s Board
of Directors rights under Section 5.2); provided, further, that if there has been a
Company Adverse Recommendation Change, such change shall be reflected in the Offer Documents or
amendments or supplements thereto. The Company has been advised that all of its directors and
executive officers who own Company Shares intend either to tender their shares of Company Shares
pursuant to the Offer or to vote in favor of the Merger. The Company shall, or shall request its
transfer agent to, promptly furnish Parent with a list of its stockholders, mailing labels and any
available listing or computer file containing the names and addresses of all record holders of
Company Shares and lists of securities positions of Company Shares held in stock depositories, in
each case true and correct as of the most recent practicable date, and shall provide to Parent such
additional information (including updated lists of stockholders, mailing labels and lists of
securities positions) and such other assistance as Parent may reasonably request in connection with
disseminating the Offer Documents to the Company’s stockholders. Subject to applicable Legal
Requirements and except for such actions as are reasonably necessary to disseminate the Offer
Documents and otherwise to perform their obligations hereunder, including specifically the actions
undertaken by any information agent employed in connection with the Offer, Parent and Acquisition
Sub shall hold all information and documents provided to it under this Section 1.3(a) in confidence
in accordance with the Confidentiality Agreement, and shall use such information and documents only
in connection with the Offer, and if this Agreement shall have been terminated, Parent and
Acquisition Sub shall deliver to the Company or destroy (and provide a certification of an officer
of Parent certifying as to such destruction) all such information and documents (and copies
thereof).
(b) As soon as practicable on the Offer Commencement Date following the filing by Parent and
Acquisition Sub of the Offer Documents with the SEC, the Company shall file with the SEC and
disseminate to holders of shares of Company Shares, in each case as and to the extent required by
applicable U.S. federal securities laws, a Solicitation/Recommendation Statement on Schedule 14D-9
(together with any amendments or supplements thereto, the “
Schedule 14D-9”) that, subject
to Section 5.2, shall reflect the recommendations of the Company’s Board of Directors referred to
in Section 1.3(a), clauses (i) through (iv). The Company agrees promptly to correct the Schedule
14D-9 if and to the extent that it is necessary to do so such that the Schedule 14D-9 shall not
contain an untrue statement of material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading (and Parent and Acquisition Sub, with respect to
information supplied by it for use in the Schedule 14D-9, shall promptly notify the Company of any
required corrections of such information and cooperate with the Company with respect to correcting
such information) and to supplement the information contained in the Schedule 14D-9 to include any
information that shall become necessary such that the Schedule 14D-9 shall not contain an untrue
statement of material fact or omit to state any material fact required to be stated therein
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necessary in order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The Company agrees to cause the Schedule 14D-9 as so corrected to
be filed with the SEC and to be disseminated to holders of shares of Company Shares, in each case
as and to the extent required by applicable U.S. federal securities laws or the rules or
regulations of the NYSE. Without limiting the generality of the foregoing, Parent and Acquisition
Corp shall furnish to the Company such information, if any, relating to Parent and Acquisition Sub
required by the Exchange Act to be set forth in the Schedule 14D-9. Parent and its counsel shall
be given a reasonable opportunity to review and comment on the Schedule 14D-9 each time before it
is filed with the SEC, and the Company shall give reasonable and good faith consideration to any
comments made by Parent, Acquisition Sub and their counsel. The Company shall provide Parent,
Acquisition Sub and their counsel with (i) any comments or other communications, whether written or
oral, that Company or its counsel may receive from time to time from the SEC or its staff with
respect to the Schedule 14D-9 promptly after receipt of those comments or other communications and
(ii) a reasonable opportunity to participate in the Company’s response to those comments and to
provide comments on that response (to which reasonable and good faith consideration shall be
given), including by participating with the Company or its counsel in any discussions or meetings
with the SEC.
1.4 Board of Directors.
(a) If requested by Parent, following the first time Acquisition Sub purchases and pays for
any Company Shares tendered pursuant to the Offer (the “Acceptance Time”) that satisfy the
definition of the Minimum Tender Condition, and from time to time thereafter until completion of
the Offer, the Company will take all actions necessary to cause Persons designated by Parent to
become directors of the Company so that the total number of such Persons equals that number of
directors, rounded up to the next whole number, determined by multiplying: (i) the total number of
directors on the Company’s Board of Directors (after giving effect to any increase in the number of
directors pursuant to this Section 1.4); by (ii) the percentage that the number of Company Shares
purchased by Acquisition Sub pursuant to the Offer (including during any Subsequent Offering
Period) bears to the total number of Company Shares then outstanding. The Company will use its
reasonable best efforts to secure the resignation of directors or to increase the size of the
Company’s Board of Directors (or both) to the extent necessary to permit Parent’s designees to be
elected to the Company’s Board of Directors in accordance with this Section 1.4(a). At such time,
the Company shall also use its reasonable best efforts to cause individuals designated by Parent to
constitute the number of members, rounded up to the next whole number, on (i) each committee of the
Company’s Board of Directors and (ii) each board of directors of each Subsidiary of the Company
(and each committee thereof) that represents the same percentage as such individuals represent on
the Company’s Board of Directors.
(b) The Company’s obligation to cause Parent’s designees to be elected or appointed to the
Company’s Board of Directors shall be subject to Section 14(f) of the Exchange Act and Rule 14f-1
thereunder. The Company shall promptly take all actions, and shall include in the Schedule 14D-9
such information with
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respect to the Company and its officers and directors, as Section 14(f) of the Exchange Act
and Rule 14f-1 thereunder require in order to fulfill its obligations under this Section 1.4.
Parent and Acquisition Sub shall supply to the Company in writing and be solely responsible for any
information with respect to themselves and their respective nominees, officers, directors and
affiliates required by Section 14(f) of the Exchange Act and Rule 14f-1 thereunder.
1.5 Actions by Directors. Following the election or appointment of Parent’s designees
pursuant to Section 1.4 and until the Effective Time, the approval of a majority of the directors
of the Company then in office who were not designated by Parent and are not officers, directors or
employees of Parent, Acquisition Sub or their respective Affiliates shall be required to authorize
(and such authorization shall constitute the authorization of the Company’s Board of Directors and
no other action on the part of the Company, including any action by any other director of the
Company, shall be required to authorize) (a) any termination of this Agreement by the Company, (b)
any amendment of this Agreement, (c) any extension of time for performance of any obligation or
action hereunder by Parent or Acquisition Sub, any waiver of compliance with any of the agreements
or conditions contained herein that are for the benefit of the Company, (d) any exercise of the
Company’s rights or remedies under this Agreement, (e) any action seeking to enforce any obligation
of Parent or Acquisition Sub under this Agreement or, (f) any other action with respect to this
Agreement, or any transactions contemplated hereby if such other action would or could adversely
affect, any holders of Company Shares other than Parent or Acquisition Sub.
1.6 Top-Up Option.
(a) Subject to Sections 1.6(b) and 1.6(c), the Company hereby grants to Acquisition Sub an
irrevocable option (the “
Top-Up Option”), exercisable subject to and upon the terms and
conditions set forth in this Section 1.6 and for so long as this Agreement has not been terminated
pursuant to Section 7, to purchase from the Company at a price per share equal to the Offer Price,
that number of authorized and unissued Company Shares (the “
Top-Up Option Company Shares”)
equal to the number of Company Shares that, when added to the number of Company Shares directly or
indirectly owned by Parent or Acquisition Sub at the time of such exercise, shall constitute one
share more than 90% of the then outstanding Company Shares (taking into account the issuance of the
Top-Up Option Company Shares);
provided that in no event shall the Top-Up Option be
exercisable for a number of Company Shares in excess of the Company’s then authorized and unissued
Company Shares (giving effect to Company Shares reserved for issuance under the Company Stock Plans
and for conversion of the Company Convertible Notes as if such shares were outstanding) or if any
Legal Requirement (not including NYSE rules and regulations) shall prohibit, or require any action,
consent, approval, authorization or permit of, action by, or filing with or notification to, any
Governmental Entity in connection with the exercise of the Top-Up Option or the delivery of the
Top-Up Option Company Shares pursuant to the Top-Up Option in respect of such exercise, which
action, consent, approval, authorization or permit, action, filing or notification has not
theretofore been obtained or made, as applicable (other than notice filings that may be required
under federal or state securities
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laws). The aggregate purchase price for the Top-Up Option Company Shares purchased by
Acquisition Sub pursuant to the Top-Up Option shall be paid by the Acquisition Sub or the Parent,
either (i) entirely in cash or, at its election, (ii) by paying in cash an amount equal to not less
than the aggregate par value of the Top-Up Option Company Shares and by executing and delivering to
the Company a promissory note having a principal amount equal to the aggregate purchase price
pursuant to the Top-Up Option. Any such promissory note shall bear interest at the rate of 3% per
annum, shall mature on the first anniversary of the date of execution and delivery of such
promissory note and may be prepaid, in whole or in part, without premium or penalty.
Notwithstanding the foregoing sentence, the terms and provisions of the promissory note shall be
such that the promissory note can be sold to an unrelated third party without a discount.
(b) Provided that no Legal Requirement or other event or circumstance described in Section
1.6(a) shall prohibit the exercise of the Top-Up Option or the delivery of the Top-Up Option
Company Shares in respect thereof, Acquisition Sub may exercise the Top-Up Option, in whole or in
part, at any one time within the 10 business day period after the Acceptance Time or, if a
Subsequent Offering Period is made available, during the 10 business day period following the
expiration date of the Subsequent Offering Period and prior to the earlier to occur of (i) the
Effective Time and (ii) the termination of this Agreement pursuant to Section 7, and, in each case,
only if at such time of exercise Parent and Acquisition Sub collectively shall own Company Shares
constituting at least one share less than 90% of the then outstanding Company Shares.
(c) In the event that Acquisition Sub wishes to exercise the Top-Up Option, Parent shall send
to the Company a written notice (the “
Top-Up Notice”) specifying (i) the number of Top-Up
Option Company Shares, (ii) the aggregate purchase price therefor, (iii) the manner in which Parent
or Acquisition Sub intends to pay the applicable exercise price, and (iv) the place, time and date
for the closing of the purchase and sale pursuant to the Top-Up Option (the “
Top-Up
Closing”). If, as of the Top-Up Closing, Parent and Acquisition Sub would collectively own
Company Shares constituting 90% or more of the then outstanding Company Shares, the Top-Up Notice
also shall include an undertaking signed by Parent and Acquisition Sub that, as promptly as
practicable following such exercise of the Top-Up Option, Acquisition Sub intends to (and
Acquisition Sub shall, and Parent shall cause Acquisition Sub to, as promptly as practicable after
such exercise) consummate the Merger in accordance with Section 253 of the DGCL as contemplated in
Section 5.3. At the closing of the purchase of the Top-Up Shares, Parent or Acquisition Sub shall
cause to be delivered to the Company the consideration required to be delivered in exchange for the
Top-Up Option Company Shares, and the Company shall cause to be issued to Parent or Acquisition Sub
(as the case may be) a certificate representing the Top-Up Option Company Shares or shall cause
such Top-Up Option Company Shares to be created by book-entry transfer to Acquisition Sub. The
parties hereto agree to use their reasonable best efforts to cause the closing of the purchase of
the Top-Up Option Company Shares to occur on the same day that the Top-Up Notice is deemed received
by the Company pursuant to Section 8.11, and if not so consummated on such day, as promptly
thereafter as possible. The parties further agree to use their reasonable best efforts to cause
the Merger to be consummated in accordance with Section 253 of the DGCL as contemplated in Section
5.3 as close in
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time as possible to (including, to the extent possible, on the same day as) the issuance of
the Top-Up Shares.
(d) Parent and Acquisition Sub acknowledge that the Company Shares that Acquisition Sub may
acquire upon exercise of the Top-Up Option will not be registered under the Securities Act and will
be issued in reliance upon an exemption thereunder for transactions not involving a public
offering. Each of Parent and Acquisition Sub hereby represents and warrants to the Company that
Acquisition Sub is, and will be, upon the purchase of the Top-Up Option Company Shares, an
“accredited investor,” as defined in Rule 501 of Regulation D under the Securities Act.
Acquisition Sub agrees that the Top-Up Option and the Top-Up Option Company Shares to be acquired
upon exercise of the Top-Up Option are being and will be acquired by Acquisition Sub for the
purpose of investment and not with a view to, or for resale in connection with, any distribution
thereof (within the meaning of the Securities Act). Any certificates representing Top-Up Option
Company Shares may include any legends required by applicable securities laws.
SECTION 2. THE MERGER; EFFECTIVE TIME
2.1 Merger of Acquisition Sub into the Company. Upon the terms and subject to the
conditions set forth in this Agreement and in accordance with the DGCL, at the Effective Time (as
defined in Section 2.3), Acquisition Sub shall be merged with and into the Company, and the
separate corporate existence of Acquisition Sub shall cease. The Company will continue as the
surviving corporation of the Merger (the “Surviving Corporation”).
2.2 Effect of the Merger. The Merger shall have the effects set forth in this
Agreement and in the applicable provisions of the DGCL.
2.3
Effective Time. As soon as practicable after the satisfaction or waiver of the
conditions set forth in Section 6, the parties hereto shall cause a properly executed certificate
of merger conforming to the requirements of the DGCL (the “
Certificate of Merger”) to be
filed with the Secretary of State of the State of
Delaware. The Merger shall become effective at
the time the Certificate of Merger is filed with the Secretary of State of the State of
Delaware,
or at such later time as is agreed to by the parties hereto and specified in the Certificate of
Merger (the time at which the Merger becomes effective being referred to in this Agreement as the
“
Effective Time”). At 10:00 a.m. (Pacific time) on the date on which the Certificate of
Merger is to be so filed, a closing (the “
Closing”) shall be held at the offices of Xxxxxx,
Xxxxxxxxxx & Xxxxxxxxx LLP, 000 Xxxxxx Xxxxxx, Xxx Xxxxxxxxx, XX 00000 (or such other place or time
as Parent and the Company may jointly designate) for the purpose of confirming the satisfaction or
waiver of each of the conditions set forth in Section 6.
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2.4 Certificate of Incorporation and Bylaws; Directors. Unless otherwise jointly
determined by Parent and the Company prior to the Effective Time:
(a) the Certificate of Incorporation of the Surviving Corporation shall be amended and
restated as of the Effective Time to conform to the Certificate of Incorporation of Acquisition
Sub;
(b) subject to Section 5.10(a), the Bylaws of the Surviving Corporation shall be amended and
restated as of the Effective Time to conform to the Bylaws of Acquisition Sub as in effect
immediately prior to the Effective Time; and
(c) the directors of the Surviving Corporation immediately after the Effective Time shall be
the respective individuals who are directors of Acquisition Sub immediately prior to the Effective
Time.
2.5 Conversion of Company Shares. At the Effective Time, by virtue of the Merger and
without any further action on the part of Parent, Acquisition Sub, the Company or any stockholder
of the Company:
(a) any Company Shares then held by the Company (or held in the Company’s treasury) shall
cease to exist, and no consideration shall be paid in exchange therefor;
(b) any Company Shares then held by Parent, Acquisition Sub or any other wholly owned
Subsidiary of Parent shall cease to exist, and no consideration shall be paid in exchange therefor;
(c) except as provided in clauses (a) and (b) above, each Company Share then outstanding
(including any Restricted Company Shares), shall be converted into the right to receive an amount
equal to the Offer Price in cash without interest (the “Merger Consideration”); and
(d) each share of common stock, par value $0.01 per share, of Acquisition Sub then outstanding
shall be converted into one share of the common stock of the Surviving Corporation.
If, between the date of this Agreement and the Effective Time, the outstanding Company Shares
are changed into a different number or class of shares by reason of any stock split, division or
subdivision of shares, stock dividend, reverse stock split, consolidation of shares,
reclassification, recapitalization or other similar transaction, then the Merger Consideration
shall be adjusted to the extent appropriate.
2.6 Company Stock Options; Restricted Company Shares. At the Effective Time, each
outstanding Company Stock Option, granted under any of the Company Stock Plans, that is outstanding
and unexercised immediately prior thereto (including any Company Option granted as a result of a
change in control of the Company) shall become fully vested as of the Effective Time and shall by
virtue of the Merger and without any action on the part of any holder of any Company Option be
converted into the right to
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receive a cash payment (without interest) upon exercise equal to the product of (i) the Merger
Consideration and (ii) the number of shares covered by the Company Stock Options. Such Company
Stock Options shall be cancelled and the holder thereof shall receive as soon as reasonably
practicable following the Effective Time a cash payment (without interest) with respect thereto
equal to the product of (i) the excess, if any, of the Merger Consideration over the exercise price
per share of such Company Option and (ii) the number of shares of Company Shares issuable upon
exercise of such Company Option (collectively, the “Option Consideration”). As of the
Effective Time, all Company Options, whether or not vested or exercisable, shall no longer be
outstanding and shall automatically cease to exist, and each holder of a Company Option shall cease
to have any rights with respect thereto, except the right to receive the Option Consideration. As
of the Effective Time, each Company Restricted Share shall automatically become fully vested and
free of any forfeiture restrictions, and shall be converted into the right to receive the Merger
Consideration.
2.7 Closing of the Company’s Transfer Books. At the Effective Time: (a) all Company
Shares outstanding immediately prior to the Effective Time shall cease to exist as provided in
Section 2.5 and all holders of certificates representing Company Shares that were outstanding
immediately prior to the Effective Time shall cease to have any rights as stockholders of the
Company; and (b) the stock transfer books of the Company shall be closed with respect to all
Company Shares outstanding immediately prior to the Effective Time. No further transfer of any
such Company Shares shall be made on such stock transfer books after the Effective Time. If, after
the Effective Time, a valid certificate previously representing any of such Company Shares (or, in
the case of uncertificated shares, evidence of shares in book-entry form) which immediately prior
to the Effective Time represented any such shares of Company Shares (each a “Certificate”)
is presented to the Paying Agent (as defined in Section 2.8(a)) or to the Surviving Corporation or
Parent, such Certificate shall be canceled and shall be exchanged as provided in Section 2.8.
2.8 Payment for Company Shares.
(a) Prior to the Effective Time: (i) Parent shall select a reputable bank or trust company
reasonably acceptable to the Company to act as paying agent with respect to the Merger (the
“
Paying Agent”); and (ii) Parent shall cause Acquisition Sub to make available to the
Paying Agent cash amounts sufficient to enable the Paying Agent to make payments of the Merger
Consideration to holders of Company Shares outstanding immediately prior to the Effective Time.
Such aggregate Merger Consideration deposited with the Paying Agent may, pending its disbursement
to such holders, be invested by the Paying Agent as directed by Parent in (i) direct obligations of
the United States of America, (ii) obligations for which the full faith and credit of the United
States of America is pledged to provide for the payment of principal and interest, (iii) commercial
paper rated the highest quality by either Xxxxx’x Investors Service, Inc. or Standard and Poor’s
Ratings Services or (iv) money market funds investing solely in a combination of the foregoing.
Any interest or income produced by such investments will be payable to the Surviving Corporation or
Parent, as Parent directs. Any portion of the Merger Consideration made available to the Paying
Agent pursuant to this Section 2.8(a)
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to pay for shares of Company Shares for which appraisal rights have been properly demanded
shall be returned to Parent, upon demand.
(b) As soon as reasonably practicable after the Effective Time, the Surviving Corporation
shall cause the Paying Agent to mail to each holder of record of a Certificate (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Paying Agent, and which
shall be in such form and shall have such other customary provisions (including customary
provisions with respect to delivery of an “agent’s message” with respect to shares held in
book-entry form) as the Surviving Corporation or the Paying Agent may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange for payment of the
Merger Consideration. Upon surrender of a Certificate for cancellation to the Paying Agent,
together with such letter of transmittal, duly completed and validly executed in accordance with
the instructions (and such other customary documents as may reasonably be required by the Paying
Agent), the holder of such Certificate shall be entitled to receive, and Parent shall cause the
Paying Agent to promptly pay to such holder, in exchange therefor the Merger Consideration, without
interest, for each share of Company Shares formerly represented by such Certificate and such
Certificate so surrendered shall be forthwith cancelled. The Paying Agent shall accept such
Certificates upon compliance with such reasonable terms and conditions as the Paying Agent may
impose to effect an orderly exchange thereof in accordance with normal exchange practices.
(c) Any portion of the Merger Consideration made available to the Paying Agent pursuant to
Section 2.8(a) that remains undistributed to the holders of Company Shares for 12 months after the
Effective Time and any interest received with respect thereto shall be delivered to the Surviving
Corporation, and thereafter such holders shall be entitled to look only to Parent and the Surviving
Corporation with respect to the cash amounts payable upon surrender of their Certificates. Neither
the Paying Agent nor the Surviving Corporation shall be liable to any holder of a Certificate for
any amount properly paid to a public official pursuant to any applicable abandoned property or
escheat law.
(d) If any Certificate shall have been lost, stolen or destroyed, then, upon the making of an
affidavit reasonably acceptable to the Surviving Corporation of that fact by the Person claiming
such Certificate to be lost, stolen or destroyed, and, if required by the Surviving Corporation,
the posting by such Person of such bond or surety as is customary and reasonable as indemnity
against any claim that may be made against the Surviving Corporation with respect to such
Certificate, the Surviving Corporation shall cause the Paying Agent to pay in exchange for such
lost, stolen or destroyed Certificate the Merger Consideration payable in respect thereof pursuant
to this Agreement.
(e) In the event of a transfer of ownership of Company Shares which is not registered in the
transfer records of the Company, payment may be made with respect to such Company Shares to a
transferee of such Company Shares if the Certificate representing such Company Shares is presented
to the Paying Agent, accompanied by all
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documents reasonably required by the Paying Agent to evidence and effect such transfer and to
evidence that any applicable stock transfer taxes relating to such transfer have been paid.
2.9 Withholding of Taxes. Parent, Acquisition Sub, the Company or their respective
agents may deduct and withhold from any payment otherwise payable pursuant to this Agreement, the
amounts required to be deducted and withheld under the Code, or any provision of any Federal,
state, local or foreign tax law. To the extent that amounts are so deducted and withheld, such
deducted and withheld amounts shall be treated for all purposes of this Agreement as having been
paid to such holder in respect of whom such deduction and withholding was made.
2.10 Appraisal Rights.
(a) Notwithstanding anything to the contrary contained in this Agreement, any Company Shares
that constitute Appraisal Shares (as defined in Section 2.10(c)) shall not be converted into or
represent the right to receive payment in accordance with Section 2.5, and each holder of Appraisal
Shares shall be entitled only to such rights with respect to such Appraisal Shares as may be
granted to such holder pursuant to Section 262 of the DGCL. From and after the Effective Time, a
holder of Appraisal Shares shall not have and shall not be entitled to exercise any of the voting
rights or other rights of a stockholder of the Surviving Corporation. If any holder of Appraisal
Shares shall fail to perfect or shall otherwise lose such holder’s right of appraisal under Section
262 of the DGCL, then: (i) any right of such holder to require the Surviving Corporation to
purchase such Appraisal Shares for cash shall be extinguished; and (ii) such Appraisal Shares shall
automatically be converted into and shall represent only the right to receive (upon the surrender
of the Certificate(s)) to receive the Merger Consideration in accordance with Section 2.5.
(b) The Company shall give Parent: (i) prompt written notice of any demand by any stockholder
of the Company for appraisal of such stockholder’s Company Shares pursuant to Section 262 of the
DGCL; and (ii) the opportunity to direct all negotiations and proceedings with respect to any such
demand. Except with the prior written consent of Parent, the Company shall not make any payment
with respect to any demands for appraisal or settle or offer to settle any such demands for
appraisal.
(c) For purposes of this Agreement, “Appraisal Shares” shall refer to any Company
Shares outstanding immediately prior to the Effective Time that are held by stockholders who have
perfected their appraisal rights under Section 262 of the DGCL with respect to such Company Shares.
2.11 Further Action. If, at any time after the Effective Time, any further action is
necessary to carry out the purposes of this Agreement, the officers and directors of the Surviving
Corporation and Parent shall (in the name of Acquisition Sub, in the name of the Company or
otherwise) take such action.
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SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except (a) as set forth in any Company SEC Document filed with the SEC after January 1, 2007
and prior to the date of this Agreement (other than the “Risk Factors” section or any similar
section), (b) as set forth in the disclosure schedule delivered to Parent on the date hereof (the
“Company Disclosure Schedule”); provided, however, that a matter disclosed
with respect to one representation or warranty shall also be deemed to be disclosed with respect to
each other representation or warranty to which the matter disclosed reasonably relates, but only to
the extent such relationship is reasonably apparent on the face of the disclosure contained in the
Company Disclosure Schedule with respect to such matter, or (c) as arising after the date of this
Agreement from any actions taken by the Company or any of its Subsidiaries after the date hereof
at, and in accordance with the request of Parent or Acquisition Sub, the Company represents and
warrants to Parent and Acquisition Sub that:
3.1 Due Organization and Good Standing; Subsidiaries.
(a) Each of the Company and its Subsidiaries is a corporation, partnership or limited
liability company duly organized, validly existing and in good standing under the laws of their
respective jurisdictions of organization and, except for certain non-operating Subsidiaries of the
Company, has all requisite corporate power and authority necessary to own, lease or operate all of
its properties and assets and to carry on its business as it is now being conducted. The Company
and each of its Subsidiaries is duly qualified to do business and is in good standing in each state
in which the nature of the business conducted by it makes such qualification necessary, except
where the failure to be so qualified, individually or in the aggregate, would not have a Company
Material Adverse Effect.
(b) Section 3.1 of the Company Disclosure Schedule lists all Subsidiaries of the Company,
together with the jurisdiction of organization of each such Subsidiary. All the outstanding shares
of capital stock or other equity interests of each Subsidiary of the Company have been duly
authorized and validly issued, are fully paid and nonassessable and are owned directly or
indirectly by the Company free and clear of all liens, pledges or encumbrances or agreements with
respect thereto, including any restriction on the right to vote, sell or otherwise dispose of such
capital stock or other equity interest, except for restrictions imposed by applicable securities
laws.
(c) Other than equity interests in the Subsidiaries held by the Company or any of its
Subsidiaries and except as set forth in Section 3.1(c) of the Company Disclosure Schedule, there
are no outstanding (i) securities of the Company or any of its Subsidiaries convertible into or
exchangeable for shares of capital stock of or other voting securities or equity interests in any
Subsidiary of the Company, or (ii) options, warrants or other rights or arrangements to acquire
from the Company or any of its Subsidiaries, or other obligations or commitments of the Company or
any of its Subsidiaries to issue, any capital stock of or other voting securities or ownership
interests in, or any securities convertible into or exchangeable for any capital stock of or other
voting securities or ownership interests in, any Subsidiary of the Company. Except for
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securities or interests classified as marketable securities or short-term investments under
GAAP or as set forth on Section 3.1(c) of the Company Disclosure Schedule, neither the Company nor
any of its Subsidiaries owns any capital stock or other equity interest in, or any interest
convertible, exchangeable or excisable for, any such capital stock or other equity interest in, any
Person with material net worth or operations (other than a Subsidiary of the Company).
3.2 Certificate of Incorporation; Bylaws. The Company has delivered or made available
to Parent true, complete and correct (a) copies of the certificate of incorporation (including any
certificate of designations) and bylaws of the Company, including all amendments thereto, and (b)
the certificate of incorporation (including any certificate of designations) and bylaws, or like
organizational documents, of each Subsidiary that has been listed as such (or would currently be
required to be listed as such) in Exhibit 21 to the Company’s Annual Report in Form 10-K (the
“Charter Documents”), and each such instrument is in full force and effect. Neither the
Company nor any such Subsidiary is in violation of its respective Charter Documents.
3.3 Capitalization, Etc.
(a) The authorized capital stock of the Company consists of 1,000,000,000 Company Shares,
1,000,000 shares of Class A Common Stock, par value $0.01, and 5,000,000 shares of Preferred Stock,
par value $0.01 per share (“Preferred Shares”), (i) 50,000 of which are designated as
Series A Convertible Preferred Stock, (ii) 1,000,000 shares of which are designated as Series B
Junior Participating Preferred Stock (“Series B Preferred”) and (iii) 50,000 of which are
designated as Series C Redeemable Convertible Preferred Stock. As of August 23, 2007: (i)
373,641,481 Company Shares were issued (and not held by the Company as treasury shares) and
outstanding; (ii) 5,347,296 Company Shares were held by the Company as treasury shares; (ii) no
Preferred Shares were outstanding; (iii) 1,000,000 shares of Series B Preferred were reserved for
future issuance upon exercise of the Company Rights; (iv) 40,468,000 Company Shares were reserved
for future issuance pursuant to the Company Stock Plans, of which 27,876,699 Company Shares were
subject to outstanding Company Options and 2,876,177 were Restricted Company Shares; and (v)
approximately 34,762,457 Company Shares were reserved for future issuance upon conversion of the
Company Convertible Notes. Since August 23, 2007, the Company has not issued any Company Shares
other than as a result of the exercise of Company Options reflected in the immediately preceding
sentence as outstanding as of August 23, 2007. All of the outstanding Company Shares are, and all
Company Shares which may be issued, upon exercise of Company Options and upon conversion of Company
Convertible Notes, will be, when issued, duly authorized, validly issued, fully paid and
nonassessable and not subject to any preemptive rights.
(b) The Company has delivered or made available to Parent copies of: (A) the Company Stock
Plans, which cover the Company Options and Restricted Company Shares that are outstanding as of the
date of this Agreement; and (B) the forms of all award agreements with respect to the Company Stock
Plans. The Company does not maintain an employee stock purchase plan.
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(c) Except for options, rights, securities, convertible notes and plans referred to in Section
3.3(a) and in the Company Rights Agreement, there are no outstanding (i) securities of the Company
convertible into or exchangeable for shares of capital stock of or other voting securities or
equity interests in the Company, (ii) options, warrants or other rights or arrangements to acquire
or other obligations or commitments to issue, any capital stock of or other voting securities or
ownership interests in, or any securities convertible into or exchangeable for any capital stock of
or other voting securities or ownership interests in the Company or (iii) restricted shares,
restricted share units, stock appreciation rights, performance shares, contingent value rights,
“phantom” stock or similar securities or rights to acquire any capital stock or other voting
securities or ownership interests in the Company.
(d) Section 3.3(d) of the Company Disclosure Schedule sets forth (i) the date each Company
Option was granted, (ii) the number of shares of Company Shares subject to each such Company
Option, (iii) the number of vested Company Shares subject to each such Company Option, (vi) the
expiration date of each such Company Option, and (vi) the price at which each such Company Option
may be exercised. Except as set forth in Section 3.3(d) of the Company Disclosure Schedule with
respect to Restricted Company Shares, there are no Company Shares outstanding which are subject to
vesting over time or upon the satisfaction of any condition precedent.
(e) There are (i) no bonds, debentures, notes or other indebtedness of the Company having the
right to vote outstanding and (ii) no outstanding obligations of the Company or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any of their respective capital stock or
other equity interests. No Subsidiary of the Company owns any capital stock of the Company.
(f) All outstanding Company Shares (including Restricted Company Shares) and all outstanding
Company Options and all outstanding shares of capital stock or other equity interests of each
Subsidiary have been issued and granted in compliance in all material respects with (i) the
Securities Act and other Legal Requirements and (ii) all requirements of Material Contracts.
3.4 SEC Filings; Financial Statements; Absence of Undisclosed Liabilities.
(a) The Company has timely filed all registration statements, prospectuses, forms, reports,
statements, schedules, certifications and other documents (including all exhibits, amendments and
supplements thereto and all information incorporated by reference) required to be filed by the
Company with the SEC since January 1, 2005 (the “
Company SEC Documents”). As of the time
it was filed with the SEC (or, if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing): (i) each of the Company SEC Documents complied in all
material respects with the applicable requirements of the Securities Act or the Exchange Act (as
the case may be) and the rules and regulations of SEC thereunder applicable to such Company SEC
Documents; and (ii) none of the Company SEC Documents contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the
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circumstances under which they were made, not misleading. The Company has made available to
Parent copies of all comment letters received by the Company from the SEC since January 1, 2005 and
relating to the Company SEC Documents, together with all written responses of the Company thereto
sent to the SEC. As of the date of this Agreement, there are no outstanding or unresolved comments
in any comment letters received by the Company from the SEC. As of the date of this Agreement, to
the Knowledge of the Company, none of the Company SEC Documents is the subject of any ongoing
review by the SEC. None of the Company’s Subsidiaries is required to file any forms, reports or
other documents with the SEC.
(b) The financial statements (including any related notes) contained in the Company SEC
Documents (including each Company SEC Document filed after the date hereof until the Acceptance
Time) complied (and will comply) in all material respects with applicable accounting requirements
and with the published rules and regulations of the SEC with respect thereto and fairly present, in
all material respects, the consolidated financial position of the Company and its Subsidiaries as
of the respective dates thereof and the consolidated results of operations of the Company and its
Subsidiaries for the periods covered thereby in accordance with GAAP applied on a consistent basis
throughout the periods covered (except as may be indicated in the notes to such financial
statements or, in the case of unaudited statements, as permitted by Form 10-Q of the SEC).
(c) The books and records of the Company and its Subsidiaries have been, and are being,
maintained in all material respects in accordance with GAAP and any other applicable Legal
Requirements and accounting requirements and reflect only actual transactions.
(d) Neither the Company nor any of its Subsidiaries has any liabilities or obligations
(whether absolute, accrued, contingent or otherwise) of any nature of the type required to be
disclosed in the liabilities column of a balance sheet prepared in accordance with GAAP, except
for: (i) liabilities disclosed in the financial statements (including any related notes) contained
in the Company SEC Documents; (ii) liabilities incurred in the ordinary course of business and
consistent with past practices since the date of the Latest Balance Sheet; and (iii) liabilities
that are not material in the aggregate to the Company and its Subsidiaries taken as a whole.
(e) The Company maintains disclosure controls and procedures (as defined in Rule 13a-15(e)
under the Exchange Act).
(f) The Company maintains a system of internal control over financial reporting (as defined in
Rule 13a-15(f) under the Exchange Act) (“Internal Controls”). The Company had disclosed,
as of the date of filing with the SEC its Quarterly Report on Form 10-Q for the quarter ended June
30, 2007, to the Company’s auditors and audit committee of its Board of Directors, (i) all
significant deficiencies and material weaknesses in the design or operation of Internal Controls
which are reasonably likely to adversely affect the Company’s ability to record, process, summarize
and report financial
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information, and (ii) any fraud, whether or not material, that involves management or other
employees who have a significant role in Internal Controls.
3.5 Absence of Certain Changes. Since the date of the Latest Balance Sheet, neither
the Company nor any of its Subsidiaries has: (a) suffered any adverse change with respect to its
business or financial condition results of operations, assets, liabilities (absolute, accrued or
contingent), reserves, operations or prospects that, individually or in the aggregate, constitutes
a Company Material Adverse Effect; (b) suffered any material loss, damage or destruction to any of
its material assets; (c) incurred any indebtedness for borrowed money or guaranteed any such
indebtedness; (d) changed, in any material respect, its accounting methods, principles or practices
except as required by changes in GAAP; (e) sold or otherwise transferred any material assets,
except in the ordinary course of business; (f) declared, set aside or paid any dividend or other
distribution with respect to its outstanding capital stock or other equity interests, or
repurchased or redeemed or otherwise acquired any outstanding capital stock or other equity
interests; (g) made or changed any material tax election or settled any material tax claims, in
each case, other than in the ordinary course of business; (h) granted any increase in the
compensation payable or to become payable to any officers, directors, or key employees, or agents
or consultants other than in the ordinary course of business; or (i) entered into any agreement to
take any of the actions referred to in clauses (c) through (h) of this sentence. Since date of the
Latest Balance Sheet the Company and each of its Subsidiaries have conducted its respective
business in the ordinary course consistent with past practices.
3.6 IP Rights.
(a) (i) Section 3.6(a)(i) of the Company Disclosure Schedule sets forth a complete list of
all patents, registered marks, registered trade dress, registered copyrights, and registered domain
names, along with all pending applications for any of the foregoing, owned by the Company or any
Subsidiary as of the date hereof (the “Registered IP”); (ii) the Company or one of its
Subsidiaries is the sole and exclusive owner of all Registered IP and all Company IP, free of all
liens other than Permitted Encumbrances; and (iii) neither the Company nor any of its Subsidiaries
has granted any licenses to such Registered IP or to any other Company IP to any other Person,
other than (A) nonexclusive licenses granted in the ordinary course in conjunction with the
distribution or provision of components, products or services of Company and its Subsidiaries, or
(B) licenses which have expired, been terminated or are no longer in effect for any other reason.
The Registered IP that is issued or registered is valid, subsisting and enforceable, and, to the
Knowledge of the Company, no action is threatened in writing or pending challenging the validity or
enforceability of any Registered IP or other Company IP that is issued or registered. To the
Knowledge of the Company, no third party is infringing any material IP Right of the Company or any
Subsidiary.
(b) The Company and/or its wholly owned Subsidiaries have entered into valid and enforceable
agreements under which the Company or its wholly owned Subsidiaries have acquired all of the
membership interests in AD Technologies LLC.
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(c) Except as would not reasonably be expected to cause a Company Material Adverse Effect, (i)
the Company and each of its Subsidiaries has the right and operational ability to exploit all IP
Rights necessary to enable the Company to conduct its business substantially in the manner in which
its business is currently being conducted; (ii) neither the Company nor any Subsidiary has
infringed, improperly disclosed or misappropriated the IP Rights of any third party; and (iii)
neither the Company nor any Subsidiary has been the subject of any Legal Proceeding, or received
any other written notices from any third party: (1) alleging that the Company or any Subsidiary
has infringed, improperly disclosed, misappropriated, converted or otherwise damaged the IP Rights
of any third party; or (2) inviting or demanding that the Company or a Subsidiary take a license
in order to avoid the future infringement of IP Rights of a third party.
(d) Neither the Company nor any Subsidiary has entered into, except in the ordinary course of
business, any written agreement to indemnify, defend or hold harmless any third party for or
against any infringement, misappropriation or other conflict with the IP rights of any third party.
Except as set forth on Section 3.6(d) of the Company Disclosure Schedule, there are no Legal
Proceedings pending against the Company or any Subsidiary in which it is alleged that the Company
or any Subsidiary has infringed, misappropriated or improperly disclosed the IP Rights of any third
party.
(e) The Company and its Subsidiaries have taken and are taking the following steps, to the
extent that such steps are commercially reasonable and necessary to establish, perfect, and defend
their ownership of Registered IP and Company IP or their right to use licensed third party IP
Rights: (i) using appropriate patent, trademark and copyright designations on products and in
marketing materials; (ii) requiring all employees and contractors who have invented inventions
covered by patents owned by the Company or Subsidiary to assign all rights and interests in such
inventions to the Company or the relevant Subsidiary; and (iii) taking reasonable steps to protect
trade secret information, including requiring a non-disclosure agreement before trade secret
information is disclosed to a third party. The Company and its Subsidiaries, have complied, in all
material respects, with applicable Legal Requirements relating to the fair and proper use of
personally identifiable information of customers, employees and contractors of the Company and its
Subsidiaries. To the Knowledge of the Company, no confidential or trade secret information of the
Company, or personally identifiable information in the possession, custody or control of the
Company or any Subsidiary has been lost, stolen or improperly disclosed. All persons identified as
inventors in the patents solely owned by the Company or any Subsidiary have assigned all of their
rights in the relevant inventions to the Company, relevant Subsidiary or predecessor in interest
thereof.
(f) Except for third party Software commercially available in the market for licensing on
standard or original equipment manufacturer terms, all Software sold or licensed by Company or its
Subsidiaries to the customers of the Company and its Subsidiaries independently or bundled with
other components, products or services of the Company and its Subsidiaries, is free to be licensed
or sold on the terms such Software is licensed or sold.
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(g) The Company, directly or through its Subsidiaries, is in actual possession of or has
necessary control over the source code and object code of all material Software owned by the
Company or any Subsidiary. Neither the Company nor any Subsidiary has disclosed to any third party
any source code of such Software owned by the Company or any Subsidiary except pursuant to
development agreements, manufacturing agreements or written source code escrow agreements
containing license and confidentiality terms that reasonably protect the Company’s rights in such
Software; and neither the Company nor any of its Subsidiaries is obligated to support or maintain
any of such Software except pursuant to agreements that will terminate by their terms or are
terminable by the Company (other than for cause) on a periodic basis and that provide for one or
more payments to the Company or Subsidiary for the period of such services.
(h) No Governmental Entity, nor any university, college or academic institution has
financially sponsored research and development conducted by the Company or its Subsidiaries, or, to
the Knowledge of the Company, has rights in Software or IP Rights purported to be owned by the
Company or any Subsidiary; and neither the Company nor any Subsidiary has participated in any
standards-setting activities or joined any standards-setting or similar organizations that, to the
Knowledge of the Company, would affect the proprietary nature of any Software or IP Rights
purported to be owned by the Company or any Subsidiary or restrict the ability of the Company or
any of its Subsidiaries to enforce, license or exclude others from using any Software or IP Rights
purported to be owned by the Company or any Subsidiary.
(i) None of the Software owned, used or distributed by the Company or any Subsidiary and
incorporated by the Company or any Subsidiary into its products or services contain any open source
code or other code or technology which would (1) require the public disclosure, third party
distribution, or general licensing of material Software or other IP Rights owned by the Company or
any Subsidiary, (2) materially limit the ability of the Company or a Subsidiary to license or
charge fees or royalties for such Software or IP Rights, or (3) require the Company or a Subsidiary
to permit the reverse engineering, decompilation, disassembly or creation of derivative works based
upon of material Software owned by the Company or a Subsidiary.
3.7 Title to Assets; Real Property.
(a) Except as would not reasonably be expected to result in a Company Material Adverse Effect,
the Company or one of its Subsidiaries owns, and has good title to or a valid leasehold interest in
(i) all property and assets necessary to conduct the business of the Company and its Subsidiaries
as currently conducted and (ii) each of the tangible assets reflected as owned by the Company or
its Subsidiaries on the Latest Balance Sheet (except for tangible assets sold or disposed of since
that date and except for tangible assets being leased to the Company or one of its Subsidiaries),
in all cases free and clear of any liens or encumbrances, except for Permitted Encumbrances.
(b) Section 3.7(b) of the Company Disclosure Schedule sets forth a list of all real property
and interests in real property owned by the Company or any of its
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Subsidiaries. Neither the Company nor any of its Subsidiaries is a party to any material
written or oral leases, subleases, licenses, concessions, occupancy agreements or other contractual
obligations granting the right of use or occupancy of Company real property to any other Person.
(c) Section 3.7(c) of the Company Disclosure Schedule sets forth a list of all material real
estate leases pursuant to which the Company or any of its Subsidiaries leases real property (the
“Leased Real Property”) from any other Person (collectively, the “Real Property
Leases”). Except as set forth in Section 3.7(c) of the Company Disclosure Schedule, neither
the Company nor any of its Subsidiaries is a party to any material written or oral leases,
subleases, licenses, concessions, occupancy agreements or other contractual obligations granting
the right of use or occupancy of the Leased Real Property to any other Person.
(d) The Company or one of its Subsidiaries has a valid and enforceable leasehold interest in
each Leased Real Property, free and clear of all liens and encumbrances of the lessee or, to the
Knowledge of the Company, the lessor, except for Permitted Encumbrances and other limitations of
any kind, if any, that have not resulted, or would not reasonably be excepted to result,
individually or in aggregate, a Company Material Adverse Effect.
3.8 Contracts.
(a) Section 3.8(a) of the Company Disclosure Schedule sets forth a list of each of the
following contracts that are in force and effect as of the date of this Agreement to which the
Company or any of its Subsidiaries is a party:
(i) each contract that would be required to be filed as an exhibit to a Registration Statement
on Form S-1 under the Securities Act or an Annual Report on Form 10-K under the Exchange Act (if
such registration statement or report was filed by the Company with the SEC on the date of this
Agreement);
(ii) each contract that restricts in any material respect the ability of the Company or any of
its Subsidiaries to compete in any geographic area or line of business or to make use of any
material IP Rights, develop market or distribute material products or services or compete with any
Person;
(iii) each contract granting any exclusive rights or otherwise limiting the right of the
Company or any of its Subsidiaries to sell, distribute or manufacture any material products or
services or to purchase or otherwise obtain any material Software, components, parts, subassemblies
or services;
(iv) each indemnification, employment, severance or change of control contract with any
director or officer of the Company or its Subsidiaries or with any employee or consultant of the
Company or its Subsidiaries providing for an annual base salary or annual consulting fee to such
employee or consultant of $300,000 or more in fiscal year 2007 (other than offer letters with
employees providing for at-will employment);
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(v) each collective bargaining agreement, memorandum of understanding, settlement or other
labor agreement with any union or labor organization applicable to the Company or its Subsidiaries;
(vi) each loan or credit agreement, mortgage, note or other contract evidencing indebtedness
for money borrowed by the Company or any of its Subsidiaries from a third party lender and each
contract pursuant to which any such indebtedness for borrowed money is guaranteed by the Company or
any of its Subsidiaries;
(vii) each customer or supply contract (excluding purchase orders given or received in the
ordinary course of business) under which the Company or any Subsidiary of the Company paid to or
received from such customer or supplier in excess of $2,000,000 in fiscal year 2006;
(viii) each material contract to license to any third party to manufacture or reproduce any of
the products, services or technology of the Company or any of its Subsidiaries or any material
contract to sell or distribute any of the products, services or technology of the Company or any of
its Subsidiaries;
(ix) each operating system software license or other contract with the top two providers (as
measured by fees paid under such contracts) in fiscal 2006 pursuant to which the Company licenses
operating system software for use in its end-user products;
(x) each contract with the top two providers (as measured by fees paid under such contracts)
in fiscal 2006 pursuant to which the Company purchases microprocessors;
(xi) each contract with the top five third-party manufacturers (as measured by fees paid under
such contracts) in fiscal 2006 pursuant to which such Company products (or subassemblies thereof)
are manufactured;
(xii) each material contract containing any support, service or maintenance obligation on the
part of the Company or any of its Subsidiaries outside of the ordinary course of business
consistent with past practice;
(xiii) each Real Property Lease;
(xiv) each lease or rental contract involving personal property (and not relating primarily to
real property) pursuant to which the Company or any of its Subsidiaries is required to make rental
payments in excess of $250,000 per year;
(xv) each contract relating to a joint venture, partnership or other strategic arrangement
involving a sharing of material costs, profits or losses with another Person;
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(xvi) each contract which would reasonably be expected to prohibit or delay the consummation
of any material transaction contemplated in this Agreement;
(xvii) each material agreement that includes the grant to the Company or any of its
Subsidiaries of a license or cross-license to material IP Rights owned by a third party and that is
not a standard license agreement for a commercially available product;
(xviii) any material agreement pursuant to which the Company or any of its Subsidiaries have
continuing obligations to jointly develop any material item of IP Right;
(xix) each material contract to provide source code to any third party for any material
product or technology of the Company or its Subsidiaries;
(xx) each material contract for indemnification or any guaranty by the Company or any of its
Subsidiaries other than any agreement of indemnification entered into in connection with the sale
or license of the Company’s or any of its Subsidiaries’ products in the ordinary course of
business;
(xxi) each contract relating to the disposition or acquisition by the Company or any of its
Subsidiaries after the date of this Agreement of a material amount of assets not in the ordinary
course of business, or pursuant to which the Company or any of its Subsidiaries has any material
ownership interest or a right to any ownership interest, in any other Person or other business
enterprise other than the Company’s Subsidiaries;
(xxii) each material contract which grant or benefit a right of first refusal or first offer
or similar rights;
(xxiii) each agreement, contract or commitment pursuant to which the Company or any of its
Subsidiaries is obligated to pay in the future in excess of $1,000,000 in any one-year period which
is not terminable by the Company or its Subsidiaries without penalty in excess of $100,000 upon
notice of 30 days or less, other than any agreement, contract or commitment to purchase inventory
in the ordinary course of business consistent with past practice;
(xxiv) each material “single source” supply contract pursuant to which goods or materials are
supplied to the Company or any Subsidiary of the Company from an exclusive source;
(xxv) each material contract which following the Offer or the Merger that would by its terms
contain a material restriction on sales in any jurisdiction or which by its terms would impose any
material financial obligation, in each case, on the Parent or its Affiliates (other than the
Company and its Subsidiaries);
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(xxvi) each material executory settlement agreement entered into within three years prior to
the date of this Agreement; and
(xxvii) any contract, or group of contracts with a Person (or group of affiliated Persons),
not described in clauses (i) through (xxvi) above the termination or breach of which would be
reasonably expected to have a material adverse effect on any material product or service offerings
of the Company or its Subsidiaries or otherwise have a Company Material Adverse Effect.
(b) Each contract listed in Section 3.8(a) of the Company Disclosure Schedule is referred to
as a “Material Contract”. Each of the Material Contracts is valid and binding on the
Company or the Subsidiary of the Company that is a party thereto and, to the Knowledge of the
Company, each other party thereto, and is in full force and effect.
(c) There is no existing breach or default on the part of the Company or any of its
Subsidiaries under any Material Contract except for breaches and defaults that do not constitute a
Company Material Adverse Effect and, to the Knowledge of the Company, there is no existing breach
or default on the part of any other Person under any Material Contract except for breaches and
defaults that do not constitute a Company Material Adverse Effect. No event has occurred that,
with notice or lapse of time, would constitute a breach or default by the Company or any of its
Subsidiaries, or permit termination, material modification or acceleration, under any Material
Contract, except for breaches and defaults that do not constitute a Company Material Adverse
Effect.
(d) The Company has made available to Parent correct and complete copies of each Material
Contract, together with all amendments and supplements thereto.
3.9 Compliance with Legal Requirements. The Company and its Subsidiaries are in
compliance with and, since January 1, 2002, have complied in a timely manner and in all material
respects with all Legal Requirements applicable to the Company and its Subsidiaries or their
businesses or relating to any of the property owned, leased or used by them (including the Foreign
Corrupt Practices Act of 1977, any other Legal Requirements regarding use of funds for political
activity or commercial bribery, the Xxxxxxxx-Xxxxx Act of 2002, the USA PATRIOT Act of 2001, Legal
Requirements relating to equal employment opportunity, discrimination, occupational safety and
health, interstate commerce, anti-kickback, healthcare and antitrust, export control (including
those Legal Requirements administered by the U.S. Department of Commerce and the U.S. Department of
State) and asset control (including those Legal Requirements administered by the U.S. Department of
the Treasury)), except for any such conflicts, breaches, defaults or violations which would not,
individually or in the aggregate, reasonably be excepted to have a Company Material Adverse Effect.
3.10 Legal Proceedings; Orders.
(a) There is no Legal Proceeding pending (or, to the knowledge of the Company, threatened)
against the Company or any of its Subsidiaries, any present or
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former executive officer, director or employee of the Company or any of its Subsidiaries
relating to his or her actions or inactions in such status or any other Person for whom the Company
or any of its Subsidiaries would be liable, which would, individually or in the aggregate, have a
Company Material Adverse Effect.
(b) Neither the Company nor any Subsidiary nor any property or asset of the Company or any
Subsidiary is subject to any continuing order of or investigation consent decree, settlement
agreement or similar agreement with any Governmental Entity or any order, writ, judgment,
injunction, decree, determination or award of any Governmental Entity or arbitrator that has or (i)
would reasonably be expected to have the effect of materially restricting or materially impairing
any current or future business practice of, or acquisition of property by, the Company or any of
its Subsidiaries or (ii) would, individually or in the aggregate, a Company Material Adverse
Effect.
3.11 Governmental Authorizations. The Company and its Subsidiaries hold all
Governmental Authorizations necessary to enable them to conduct their businesses in the manner in
which such businesses are currently being conducted, except where failure to hold such Governmental
Authorizations does not have a Company Material Adverse Effect. The material Governmental
Authorizations held by the Company and its Subsidiaries are valid and in full force and effect.
The Company and its Subsidiaries are in compliance in all material respects with the terms and
requirements of such Governmental Authorizations. Since January 1, 2004, neither the Company nor
any of its Subsidiaries has received any notice from any Governmental Entity: (a) asserting any
material violation of any term or requirement of any material Governmental Authorization; or (b)
notifying the Company or one of its Subsidiaries of the revocation of any material Governmental
Authorization.
3.12 Tax Matters.
(a) All material federal, state, local and foreign tax returns, estimates, information
statements and reports required to be filed by the Company and its Subsidiaries with any
Governmental Entities (including any schedule or attachment thereto or any amendment thereof) (the
“
Company Returns”): (i) have been filed, and such filing has occurred on a timely basis
for all Company Returns that have been required to be filed during the 48-month period ending at
the Acceptance Time that are (x) income tax returns or (y) any other Company Return reflecting a
liability in excess of $100,000 but in the case of any such other Company Return with respect to a
Subsidiary then only with respect to the time the Company has directly or indirectly owned such
Subsidiary during the 48-month period ending at the Acceptance Time, and (ii) are true, accurate
and complete in all material respects. The Company and its Subsidiaries have paid in full all
material taxes due (whether or not shown or required to be shown on any Company Returns) except to
the extent such taxes are being contested in good faith and for which the Company or the
appropriate Subsidiary has set aside adequate reserves (in accordance with GAAP), and such payments
have been made on a timely basis during the 48-month period ending at the Acceptance Time that are
(x) with respect to income taxes or (y) with respect to other taxes regarding a liability in excess
of $100,000 but in the case of any such other taxes with respect to a Subsidiary then only with
respect to the
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time the Company has directly or indirectly owned such Subsidiary during the 48-month period
ending at the Acceptance Time. All material taxes that the Company or any of its Subsidiaries is
obligated to withhold from amounts owning to any employee, creditor or other third party have been
paid over to the proper tax authority, to the extent due and payable, and such payments have been
made on a timely basis during the four-year period ending at the Acceptance Time.
(b) The Latest Balance Sheet fully accrues the material liabilities of the Company and its
Subsidiaries for taxes with respect to all periods through June 30, 2007 in accordance with GAAP,
and the unpaid taxes of the Company and its Subsidiaries as of the Acceptance Time will not exceed
by a material amount the reserve for taxes set forth on the Latest Balance Sheet as adjusted for
liabilities arising during the passage of time through the Acceptance Time in accordance with the
past custom or practice of the Company and its Subsidiaries.
(c) (i) There are no examinations or audits of any Company Return currently underway in
respect of a material tax liability; (ii) no extension or waiver of the limitation period
applicable to any Company Return is in effect or has been requested in writing and, in either case,
in connection with a pending examination or audit in respect of a material tax liability; (iii) no
Legal Proceeding is pending by any tax authority against the Company or any of its Subsidiaries in
respect of any material tax; (iv) there are no material unsatisfied liabilities for taxes with
respect to which the Company or any of its Subsidiaries has received any notice of deficiency in
writing or similar document (other than liabilities for taxes asserted under any such notice of
deficiency or similar document which are being contested in good faith and for which adequate
reserves have been established in accordance with GAAP); (v) there are no liens for material taxes
upon any of the assets of the Company or any of its Subsidiaries; (vi) for the four-year period
ending at the Acceptance Time neither the Company nor any of its Subsidiaries has distributed stock
of another corporation, or has had its stock distributed by another corporation, in a transaction
that was governed, or purported or intended to be governed, in whole or in part, by Section 355 of
the Code, (vii) neither the Company nor any of its Subsidiaries has participated, within the
meaning of Treasury Regulation Section 1.6011-4(c), in any “listed transactions,” “confidential
transactions” or “transactions with contractual protections” within the meaning of Section 6011 of
the Code and the Treasury Regulations thereunder (or similar provisions of state, local or foreign
law); (viii) neither the Company nor any of its Subsidiaries anticipate that it will be required to
include any material adjustment in taxable income for any tax period following the Acceptance Time
pursuant to Section 481 or 263A of the Code, and there are no applications pending with any
Governmental Entity requesting permission for changes in any of the accounting methods of the
Company or any of its Subsidiaries for tax purposes; (ix) neither the Company nor any of its
Subsidiaries anticipate that it will be required to include any material item of income in, or
exclude any material item of deduction from, taxable income for any taxable period (or portion
thereof) ending after the Acceptance Time as a result of any installment sale or open transaction
disposition made, or any prepaid amount received, on or prior to the Acceptance Time; (x) during
the four-year period ending at the Acceptance Time neither the Company nor any of its Subsidiaries
has been a member of any combined, consolidated or unitary group (except a
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group of which the Company or any of its Subsidiaries is the common parent) for which it is or
will be liable for taxes under principles of or similar to Section 1.1502-6 of the Treasury
Regulations; (xi) neither the Company nor any of its Subsidiaries is a party to any material tax
indemnity agreement, tax sharing agreement, tax allocation agreement or similar contract with a
third party which will remain in force after the Acceptance Time.
(d) No current or former director, officer, employee, contractor or consultant of the Company
or any of its Subsidiaries is entitled to any gross-up, make-whole or other additional payment from
the Company or any of its Subsidiaries in respect of any tax (including taxes imposed under
Sections 4999 or 409A of the Code) or interest or penalty related thereto.
(e) For purposes of this Agreement, “tax” or “taxes” shall mean (i) any and all federal,
state, local, or foreign income, gross receipts, license, payroll, employment, excise, severance,
stamp, occupation, premium, windfall profits, environmental, customs duties, capital stock,
franchise, profits, withholding, social security (or similar, including FICA), unemployment,
disability, real property, personal property, sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated, or other tax of any kind or any charge of any kind in the
nature of (or similar to) taxes whatsoever, including any interest, penalty, or addition thereto,
whether disputed or not, and (ii) any liability for the payment of any amounts of the type
described in clause (i) of this sentence as a result of being a member of an affiliated,
consolidated, combined or unitary group for any period, as a result of any tax sharing or tax
allocation agreement, arrangement or understanding, or as a result of being liable for another
person’s taxes as a transferee or successor, by contract or otherwise.
3.13 Employee Benefits.
(a) Section 3.13(a) of the Company Disclosure Schedule lists: each medical plan, life
insurance plan, short-term or long-term disability plan, excess benefit plan, top hat plan or other
material deferred compensation plan or arrangement, nonqualified retirement plan or arrangement,
qualified defined contribution or defined benefit plan; and all other material benefit plans,
policies, programs, arrangements or agreements (including, but not limited to, any fringe benefit
plan or program, bonus or incentive plan, stock option, restricted stock, stock bonus, vacation
pay, sick pay, bonus program, service award, salary reduction agreement, change-of-control plan or
agreement and each employment agreement or consulting agreement for the benefit of current or
former officers, employees or directors of the Company or any Subsidiary or any ERISA Affiliate),
whether or not subject to the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”), which in all cases, is sponsored or maintained by the Company, any Subsidiary or
any ERISA Affiliate (collectively, the “Employee Benefit Plans”). For this purpose,
“ERISA Affiliate” means any entity treated as a single employer with the Company under
Section 414 of the Code or Section 4001 of ERISA.
(b) The Company has made available to Parent: (i) a complete copy of each Employee Benefit
Plan as amended (or a summary of any oral Employee Benefit Plan); (ii) a copy of the most recently
received determination letter or opinion letter, if
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any, and any and all rulings or notices issued by a Governmental Entity, with respect to each
such Employee Benefit Plan; (iii) a copy of the Form 5500 Annual Report, if any, for the three most
recent plan years for each such Employee Benefit Plan; (iv) a copy of the most recent summary plan
description and/or summary of material modifications, if any, with respect to each such Employee
Benefit Plan; (v) all material contracts and agreements (and any amendments thereto) relating to
each such Employee Benefit Plan, including, without limitation, all trust agreements, investment
management agreements, annuity contracts, insurance contracts, bonds, indemnification agreements
and service provider agreements; (vi) the most recent annual actuarial valuation, if any, prepared
for each such Employee Benefit Plan; (vii) all material written communications during the last
three years relating to the creation, amendment or termination of each such Employee Benefit Plan,
or an increase or decrease in benefits, acceleration of payments or vesting or other events that
could result in material liability to the Company or any Subsidiary; (viii) all material
correspondence to or from any governmental or quasi-governmental agency relating to each such
Employee Benefit Plan; and (ix) all coverage, nondiscrimination, and other qualification-related
tests, if any, performed with respect to each such Employee Benefit Plan for the last three years.
(c) Except as otherwise provided in Section 3.13(c) of the Company Disclosure Schedule, each
Employee Benefit Plan and each trust or other funding medium, if any, established in connection
therewith has at all times been established, maintained and operated in substantial compliance with
its terms and the requirements prescribed by applicable Legal Requirement, including, but not
limited to, ERISA, the Code and the provisions imposed by the Health Insurance Portability and
Accountability Act of 1996, as amended (“
HIPAA”). All amendments and actions required to
bring each of the Employee Benefit Plans into conformity with all of the applicable provisions of
ERISA, the Code, HIPAA and other applicable Legal Requirements have been made or taken except to
the extent that such amendments or actions are not required by Legal Requirement to be made or
taken until a date after the Effective Time. All reports, tax returns, information returns and
other information relating to such Employee Benefit Plan required to be filed with any Governmental
Entity have been accurately, timely and properly filed other than any failure to accurately, timely
or properly file that would not result in a material liability to the Company; all notices,
statements, reports and other disclosure required to be given or made to participants in such
Employee Benefit Plan or their beneficiaries have been accurately, timely and properly disclosed or
provided; none of the Company, any of its Subsidiaries or any of their respective officers,
directors or employees or, to the knowledge of the Company, any trustee or other fiduciary or
administrator of any Employee Benefit Plan or trust created thereunder, in each case, who is not an
officer, director or employee of the Company or any of its Subsidiaries (a “
Non-Affiliate Plan
Fiduciary”) has engaged in any transaction or acted or failed to act in a manner that is
reasonably likely to subject the Company, any of its Subsidiaries or any of their respective
officers, directors or employees or, to the knowledge of the Company, any Non-Affiliate Plan
Fiduciary, to a material tax or penalty on prohibited transactions imposed by Section 4975 of the
Code or sanctions imposed under Title I of ERISA or any other applicable Legal Requirements; and
none of the Company, any of its Subsidiaries or any of their respective officers, directors or
employees, or, to the knowledge of the Company, any Non-Affiliate Plan Fiduciary, or any agent of
any of the foregoing, has
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engaged in any transaction or acted in a manner, or failed to act in a manner, that is
reasonably likely to subject the Company, any of its Subsidiaries or, to the knowledge of the
Company, any Non-Affiliate Plan Fiduciary to any material liability for breach of fiduciary duty
under ERISA or any other applicable Legal Requirements.
(d) With respect to those Employee Benefit Plans which are “pension plans” within the meaning
of Section 3(2) of ERISA (“Pension Plans”) that are intended to be qualified under Section
401(a) of the Code, such Pension Plans are the subject of determination letters or opinion letters
from the Internal Revenue Service (“IRS”) or applications therefor filed within the
appropriate remedial amendment period to the effect that such Pension Plans are qualified and
exempt from taxes under Sections 401(a) and 501(a), respectively, of the Code, and no such
determination letter has been revoked nor has any event occurred since the date of its most recent
determination letter, opinion letter or application therefore that would adversely affect its
qualification or increase its costs or require security under Section 307 of ERISA. All Pension
Plans required to have been approved by an non-United States Governmental Entity (or permitted to
have been approved to obtain any beneficial tax or other status) have been so approved or timely
submitted for approval, no such approval has been revoked (nor has revocation been threatened in
writing) and no event has occurred since the date of the most recent approval relating to any such
Pension Plan that is reasonably likely to adversely affect any such approval relating thereto.
None of the Pension Plans are subject to Title IV of ERISA or Section 412 of the Code.
(e) Neither the Company nor any ERISA Affiliate has sponsored, maintained, contributed to or
been obligated to maintain or contribute to, or has any actual or contingent liability under, (i)
any “multiemployer plan” (as defined in Section 3(37) of ERISA), or (ii) any “multiple employer
welfare arrangement” (as defined in Section 3(40) of ERISA).
(f) All Employee Benefit Plans are in material compliance, to the extent applicable, with the
requirements of Section 4980B of the Code and Part 6 of Subtitle B of Title I of ERISA (or such
similar state law). Except as required pursuant to the preceding sentence, no Employee Benefit
Plan provides for post-retirement medical, life insurance or disability benefits.
(g) There are no actions, disputes, claims (other than routine claims for benefits), Legal
Proceedings or other proceedings pending or, to the knowledge of the Company, threatened,
anticipated or expected to be asserted with respect to any Employee Benefit Plan or any related
trust or other funding medium thereunder or with respect to the Company or any Subsidiary, as the
sponsor or fiduciary thereof or with respect to any other fiduciary thereof. No Employee Benefit
Plan or any related trust or other funding medium thereunder or any fiduciary thereof is the
subject of an audit, investigation or examination by a governmental or quasi-governmental agency.
(h) Except as provided in Section 3.13(h) of the Company Disclosure Schedule, (i) neither the
Company nor any of its ERISA Affiliates has any commitment, intention or understanding to create,
terminate or adopt any Employee Benefit Plan; and
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(ii) since the beginning of the current fiscal year of the Company, no event has occurred and
no condition or circumstance has existed that reasonably would be expected to result in an increase
in the benefits under or the expense of maintaining a Employee Benefit Plan from the level of
benefits or expense incurred for the most recently completed fiscal year of the Company.
(i) All contributions required to be made under the terms of any Employee Benefit Plan as of
the date hereof have been timely made or, if not yet due, have been fully reserved for and
specifically identified in the Latest Balance Sheet. Neither the Company nor any of its ERISA
Affiliates has incurred, or is reasonably likely to incur, any unfunded liabilities in relation to
any Employee Benefit Plan that have not been properly accounted for under GAAP.
(j) Except as set forth in Section 3.13(j) of the Company Disclosure Schedule, the execution
of, and performance of the transactions contemplated by, this Agreement will not (either along with
or upon the occurrence of any additional or subsequent events) constitute an event under any
Employee Benefit Plan or agreement that will or may reasonably be expected to result in any payment
(whether severance pay or otherwise), acceleration, vesting or increase in benefits with respect to
any employee, former employee or director of the Company or any Subsidiary, whether or not any such
payment would be a “parachute payment” (within the meaning of Section 280G of the Code). Except as
set forth in Section 3.13(j) of the Company Disclosure Schedule, none of the payments described
therein is a parachute payment (within the meaning of Section 280G of the Code). No deduction of
any amount payable pursuant to the terms of the Employee Benefit Plans has been disallowed or is
subject to disallowance under Section 162(m) of the Code.
(k) Except as set forth in Section 3.13(k) of the Company Disclosure Schedule, the Company or
one or more of its Subsidiaries, as applicable, may terminate any Employee Benefit Plan maintained
by the Company or such Subsidiary or may cease contributions to the Employee Benefit Plans without
incurring any liability other than (i) a benefit liability accrued in accordance with the terms of
each such Employee Benefit Plan immediately prior to such termination or ceasing of contributions;
or (ii) expenses attendant to the termination of each such Employee Benefit Plan. Except as set
forth in Section 3.13(k) of the Company Disclosure Schedule, the execution and delivery of this
Agreement, the consummation of the Offer and the Merger and the other transactions contemplated by
this Agreement (alone or in combination with any other event) and compliance by the Company with
the provisions of this Agreement do not and will not (i) trigger any funding (through a grantor
trust or otherwise) of, or increase the cost of, or give rise to any other obligation under, any
Employee Benefit Plan, (ii) trigger the forgiveness of indebtedness owed by any employee, former
employee or director of the Company or any of its affiliates or (iii) result in any violation or
breach of, or a default (with or without notice or lapse of time or both) under, or limit to the
Company’s ability to amend, or modify, any Employee Benefit Plan.
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3.14 Labor Matters.
(a) None of the employees of Company or any of its Subsidiaries is represented in his or her
capacity as an employee of such company by any labor organization. Neither the Company nor any of
its Subsidiaries has recognized any labor organization nor has any labor organization been elected
as the collective bargaining agent of any of their employees. To the Knowledge of the Company,
there is no active or current union organization activity involving the employees of the Company or
any of its Subsidiaries, nor has there ever been union representation involving employees of the
Company or any of its Subsidiaries.
(b) (i) Since August 1, 2003, to the Knowledge of the Company, neither the Company nor any of
its Subsidiaries is, nor has been, delinquent in payments to any of its employees for any material
wages, salaries, commissions, bonuses, vacation pay or other direct compensation for any services
performed for it or amounts required to be reimbursed to such employees; (ii) the Company and each
of its Subsidiaries is in compliance with all applicable Legal Requirements respecting labor,
employment, fair employment practices, terms and conditions of employment, workers’ compensation,
occupational safety, plant closings, classification and compensation of employees and independent
contractors, and wage and hours except for such noncompliance that could not reasonably be expected
to have, individually or in the aggregate, a Company Material Adverse Effect; (iii) to the
Knowledge of the Company, the Company and each of its Subsidiaries has withheld all amounts
required by applicable Legal Requirements or by agreement to be withheld from the wages, salaries
and other payments to employees; and is not liable for any arrears of wages or any taxes or any
penalty for failure to comply with any of the foregoing, except for noncompliance that could not
reasonably be expected to have, individually or in the aggregate, a Company Material Adverse
Effect; (iv) to the Knowledge of the Company neither the Company nor any of its Subsidiaries is
liable for any payment to any trust or other fund or to any Governmental Entity, with respect to
unemployment compensation benefits, social security, disability, paid family leave or other
benefits or obligations for employees (other than routine payments to be made in the ordinary
course of business consistent with past practice), except for noncompliance that could not
reasonably be expected to have, individually or in the aggregate, a Company Material Adverse
Effect; (v) there are no pending claims against the Company or any of its Subsidiaries under any
workers’ compensation plan or policy or for long-term disability that could reasonably be expected
to result in a Company Material Adverse Effect; (vi) there are no controversies pending or, to the
knowledge of the Company, threatened, between the Company or any of its Subsidiaries and any of
their respective current or former employees, which controversies have or could reasonably be
expected to result in an action, suit, proceeding, claim, arbitration or investigation before any
Governmental Entity which controversies could reasonably be expected to have a Company Material
Adverse Effect; and (vii) there are no proceedings pending or, to Company’s Knowledge, reasonably
expected or threatened, between Company, on the one hand, and any or all of its current employees,
on the other hand, which proceedings could reasonably be expected to have a Company Material
Adverse Effect. To the Knowledge of the Company, no officer of the Company or any of its
Subsidiaries is in any material respect in violation of any term of any employment contract,
non-disclosure agreement, noncompetition agreement or any restrictive covenant to a former employer
relating to the right of any such employee to be employed
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by the Company or any of its Subsidiaries because of the nature of the business conducted or
presently proposed to be conducted by the Company or any of its Subsidiaries or to the use of any
material trade secrets or proprietary information of others. As of the date hereof, no employee of
the Company or any of its Subsidiaries, at the officer level or above, has given notice to the
Company or any of its Subsidiaries that any such employee intends to terminate his or her
employment with the Company or any of its Subsidiaries.
3.15 Environmental Matters. Except as would not result in a Company Material Adverse
Effect, to the Knowledge of the Company:
(a) The Company and each of its Subsidiaries is, and the Company and each of its Subsidiaries
during the period of ownership or control by the Company, have been in material compliance with
applicable Environmental Laws, including possessing all Governmental Authorizations required for
their operations under applicable Environmental Laws and filing all applications for Governmental
Authorizations as and when required to prevent expiration. There is no pending or, to the
Company’s Knowledge, threatened Legal Proceeding against the Company or any of its Subsidiaries,
pursuant to Environmental Law. Neither the Company nor any of its Subsidiaries has received
written notice that remains outstanding from any Person, including any Governmental Entity,
alleging that the Company or any of the Subsidiaries is in violation of applicable Environmental
Law or that the Company or any Subsidiary of the Company is liable under applicable Environmental
Law, which violation or liability is unresolved;
(b) With respect to the real property that is currently owned, leased or operated by the
Company or any of its Subsidiaries, there have been no releases of Hazardous Substances by the
Company or any Subsidiary on, onto, from, or into any of such real property that are required to be
reported to Governmental Authorities or that currently require investigation, cleanup or other
material response under Environmental Laws, or that are in violation of applicable Environmental
Law. There are no material, non-privileged environmental site assessments, environmental
investigations, studies, audits, or tests conducted by, on behalf of, and in the possession of the
Company or any of its Subsidiaries, with respect to any property now owned, operated or leased by
the Company or any of its Subsidiaries, that have not been made available to Parent or Acquisition
Sub prior to the execution of this Agreement;
(c) Neither the Company nor any of its Subsidiaries has transported, stored, used,
manufactured, disposed of, or released Hazardous Substance currently requiring reporting,
investigation, cleanup or other response under Environmental Law or in violation of then-applicable
Environmental Law; and.
(d) This Section 3.15 constitutes the sole and exclusive representations of the Company
regarding or pertaining to environmental matters, environmental obligations, or under Environmental
Laws.
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3.16 Insurance. The Company and its Subsidiaries are insured with reputable insurers
against such risks and in such amounts as the management of the Company reasonably has determined
to be prudent in accordance with industry practice (taking into account the cost and availability
of such insurance) except as would not reasonably be expected to result in, individually or in the
aggregate, a Company Material Adverse Effect. The Company and its Subsidiaries are in compliance
with their insurance policies, including any state self insurance program, and are not in default
under any of the terms thereof, except for any such non-compliance or default that would not
reasonably be expected to result in a Company Material Adverse Effect. All premiums and other
payments due under any such policy have been paid when due. Between January 1, 2006 and the date
of this Agreement, the Company has not received any written communication notifying the Company of
any: (a) cancellation or invalidation of any material insurance policy held by the Company (except
with respect to policies that have been replaced with similar policies); (b) refusal of any
coverage or rejection of any material claim under any material insurance policy held by the
Company; or (c) material adjustment in the amount of the premiums payable with respect to any
insurance policy held by the Company. Except as set forth in Section 3.16 of the Company
Disclosure Schedule, there is no pending material claim by the Company under any insurance policy
held by the Company.
3.17 Transactions with Affiliates. To the Knowledge of the Company, between the date
of the Company’s last proxy statement filed with the SEC and the date of this Agreement, no event
has occurred that would be required to be reported by the Company pursuant to Item 404 of
Regulation S-K promulgated by the SEC.
3.18 Authority; Binding Nature of Agreement. The Company has the requisite corporate
power and authority to enter into and to perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. The Company’s Board of Directors has: (a)
determined that the Offer and Merger are fair to, and in the best interests of, the Company’s
stockholders; (b) authorized and approved the execution, delivery and performance of this Agreement
by the Company; (c) declared that this Agreement is advisable; and (d) resolved to make the Offer
Recommendation and the Merger Recommendation. The execution and delivery of this Agreement by the
Company and the consummation by the Company of the Merger and the other transactions contemplated
by this Agreement have been duly authorized by all necessary corporate action on the part of the
Company, and no other corporate proceedings on the part of the Company are necessary to authorize
this Agreement other than, with respect to the Merger, the adoption of this Agreement by the
holders of a majority of the then outstanding Company Shares (if required under the DGCL) and the
filing of the appropriate merger documents as required by the DGCL. This Agreement has been duly
executed and delivered by the Company and, assuming the due authorization, execution and delivery
of this Agreement by Parent and Acquisition Sub, constitutes the valid and binding obligation of
the Company, enforceable against the Company in accordance with its terms, subject to (i) laws of
general application relating to bankruptcy, insolvency and the relief of debtors, and (ii) rules of
law governing specific performance, injunctive relief and other equitable remedies.
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3.19 Top-Up Option. The Company’s Board of Directors has duly and validly approved
and taken all corporate action required to be taken by the Company’s Board of Directors to grant
the Top-Up Option and to issue the Top-Up Option Company Shares upon the exercise thereof. None of
the grant of the Top-Up Option by the Company, or, subject to applicable rules and regulations of
the NYSE, the exercise thereof by Acquisition Sub or the issuance of the Top-Up Option Company
Shares to Acquisition Sub in respect of such exercise, in each case in accordance with Section 1.6,
will conflict with, or result in a violation of breach of, any Legal Requirements or require any
Governmental Authorization. The Top-Up Option Company Shares, if and when issued in accordance
with the terms of this Agreement, and paid for by Acquisition Sub in accordance with this
Agreement, will be duly authorized, validly issued, fully paid and nonassessable.
3.20 Vote Required. If required under applicable Legal Requirements in order to
permit the consummation of the Merger, the affirmative vote of the holders of a majority of the
Company Shares outstanding on the record date for the Company Stockholders Meeting described in
Section 5.3 is the only vote of the holders of any class or series of the Company’s capital stock
necessary to adopt this Agreement.
3.21 Non-Contravention; Consents. The execution and delivery of this Agreement and
the consummation of the transactions contemplated by this Agreement will not: (a) conflict with or
cause a violation of any of the provisions of the Charter Documents of the Company or any of its
Subsidiaries; (b) conflict with or cause a material violation by the Company or any of its
Subsidiaries of any Legal Requirement applicable to the Company or any of its Subsidiaries; (c)
constitute a breach or violation of, cause a default on the part of the Company or any of its
Subsidiaries under, result in the termination or expiration of, result in an alteration of the
terms of or result in a loss of rights or options or create a lien or encumbrance on any of the
properties of the Company or its Subsidiaries under any Material Contract; or (d) result in any
entitlement to or acceleration of any right to any payment or vesting owed by the Company or any of
its Subsidiaries under any Material Contract, in the case of clauses (c) and (d) other than any
such breach, violation, default or right to payment or vesting that would not, individually or in
the aggregate, have a Company Material Adverse Effect. Section 3.21 of the Company Disclosure
Schedule lists all consents, waivers and approvals under any of the Company’s or its Subsidiaries’
Material Contracts required to be obtained in connection with the consummation of the transactions
contemplated hereby, which, if not obtained, would individually or in the aggregate have a Company
Material Adverse Effect. Except as may be required by the Exchange Act, the Exon-Xxxxxx Amendment
to the Defense Production Act of 1950, as amended by the Foreign Investment and National Security
Act of 2007 (“Exon-Xxxxxx”), the DGCL, the HSR Act or the antitrust or competition laws of
foreign jurisdictions and set forth in Section 3.21 of the Company Disclosure Schedule, the Company
is not required to make any filing with or to obtain any consent from any Person at or prior to the
Acceptance Time or the Effective Time in connection with the execution and delivery of this
Agreement by the Company or the consummation by the Company of any of the transactions contemplated
by this Agreement, except where the failure to make any such filing or obtain any such consent,
individually or in the aggregate, would not have a Company Material Adverse Effect.
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3.22 Board Approvals; Anti-Takeover; Company Rights Agreement; Change in Control
Compensation Plan. The Company’s Board of Directors has taken all action necessary to render
Section 203 of the DGCL inapplicable to the execution and delivery of this Agreement and the
performance of the Company’s obligations under this Agreement, the Offer and the Merger. No other
U.S. state takeover statute is applicable to the execution and delivery of this Agreement and the
performance of the Company’s obligations under this Agreement, the Offer or the Merger. The
Company has amended the Company Rights Agreement (the form of which amendment has been made
available to Parent) to provide that neither Parent nor Acquisition Sub shall be deemed to be an
Acquiring Person (as such term is defined in the Company Rights Agreement), that none of a Stock
Acquisition Date, a Distribution Date nor a Triggering Event (as such terms are defined in the
Company Rights Agreement) shall be deemed to occur and that the Company Rights will not separate
from the Company Shares as a result of the execution, delivery or performance of this Agreement or
the consummation of any of the transactions contemplated hereby. The Company’s Board of Directors
has taken all action necessary to terminate the “Gateway, Inc. Change in Control Compensation Plan,
as amended,” effective as of the date hereof.
3.23 Opinion of Financial Advisor. The Company’s Board of Directors has received the
opinion of Xxxxxxx, Xxxxx & Co. to the effect that, as of the date of such opinion and subject to
various qualifications and assumptions, the Offer Price in cash proposed to be received by holders
of Company Shares in the Offer and Merger pursuant to this Agreement is fair from a financial point
of view to such holders.
3.24 Brokers. No broker, finder or investment banker (other than Xxxxxxx, Sachs &
Co.) is entitled to any brokerage, finder’s or other similar fee or commission in connection with
the transactions contemplated by this Agreement based upon arrangements made by or on behalf of the
Company.
3.25 Letter Agreement. The agreement, dated as of June 12, 2006 (the “Letter
Agreement”), between the Company and Lap Shun (Xxxx) Hui (the “Individual”), has been
duly executed and delivered by the Company and, to the Knowledge of the Company, the Individual,
and constitutes the valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms, subject to (i) laws of general application relating to bankruptcy,
insolvency and the relief of debtors, and (ii) rules of law governing specific performance,
injunctive relief and other equitable remedies. The Company has not received an opinion of counsel
as to the enforceability of the Letter Agreement at the time of its execution or thereafter.
3.26 Schedule 14D-9. The Schedule 14D-9 will comply as to form in all material
respects with the requirements of the Exchange Act and, on the date filed with the SEC and on the
date first published, sent or given to the holders of Company Shares the Schedule 14D-9 will not
contain any untrue statement of a material fact or omit to state any material fact required to be
stated therein necessary in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading, except that no representation is made by the Company
with respect to any information supplied by Parent or Acquisition Sub for inclusion in the Schedule
14D-9.
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3.27 Information in Proxy Statement. If a Company Stockholders Meeting is to be held
pursuant to Section 5.3, the Company Proxy Statement (as defined in Section 5.3) will comply as to
form in all material respects with the requirements of the Exchange Act and, at the time the
Company Proxy Statement is mailed to the stockholders of the Company and at the time of such
Company Stockholders Meeting described in Section 5.3 (or any adjournment or postponement thereof),
will not contain any untrue statement of a material fact or omit to state any material fact
required to be stated therein necessary in order to make the statements therein, in the light of
the circumstances under which they are made, not misleading, except that no representation is made
by the Company with respect to any information supplied by Parent or Acquisition Sub for inclusion
in the Company Proxy Statement.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION SUB
Parent and Acquisition Sub hereby jointly and severally represent and warrant to the Company
that:
4.1
Due Organization. Parent is a company organized under the laws of the Republic of
China. Acquisition Sub is a corporation duly organized, validly existing and in good standing
under the laws of the State of
Delaware.
4.2 Authority; Binding Nature of Agreement. Parent has the requisite corporate power
and authority to enter into and to perform its obligations under this Agreement and to consummate
the transactions contemplated hereby. The execution and delivery of this Agreement by Parent and
the consummation by Parent of the transactions contemplated by this Agreement have been duly
authorized by all necessary corporate action on the part of Parent, and no other corporate
proceedings on the part of Parent are necessary to authorize this Agreement. This Agreement has
been duly executed and delivered by Parent and, assuming the due authorization, execution and
delivery of this Agreement by the Company, constitutes the valid and binding obligation of Parent,
enforceable against Parent in accordance with its terms, subject to: (i) laws of general
application relating to bankruptcy, insolvency and the relief of debtors; and (ii) rules of law
governing specific performance, injunctive relief and other equitable remedies. Acquisition Sub is
a Subsidiary of Parent and has the requisite corporate power and authority to enter into and to
perform its obligations under this Agreement. The execution and delivery of this Agreement by
Acquisition Sub and the consummation by Acquisition Sub of the Merger and the other transactions
contemplated by this Agreement have been duly authorized by all necessary corporate action on the
part of Acquisition Sub, and no other corporate proceedings on the part of Acquisition Sub are
necessary to authorize this Agreement other than, with respect to the Merger, the filing of the
appropriate merger documents as required by the DGCL. This Agreement has been duly executed and
delivered by Acquisition Sub and, assuming the due authorization, execution and delivery of this
Agreement by the Company, constitutes the valid and binding obligation of Acquisition Sub,
enforceable against Acquisition Sub in accordance with its terms, subject to: (i) laws of general
application relating to bankruptcy,
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insolvency and the relief of debtors; and (ii) rules of law governing specific performance,
injunctive relief and other equitable remedies.
4.3 Non-Contravention; Consents. The execution and delivery of this Agreement by
Parent and Acquisition Sub, and the consummation of the transactions contemplated by this
Agreement, will not: (a) conflict with or cause a violation of any of the provisions of the
organizational documents of Parent or the certificate of incorporation or bylaws or Acquisition
Sub; (b) conflict with or cause a violation by Parent or Acquisition Sub of any Legal Requirement
applicable to Parent or Acquisition Sub; or (c) constitute a breach or violation of or cause a
default on the part of Parent or Acquisition Sub under any material contract, other than any such
breach, violation or default that would not individually or in the aggregate, have a material
adverse effect on Parent or Acquisition Sub’s ability to complete the transactions contemplated by
this Agreement. Except as may be required by the Exchange Act, Exon-Xxxxxx, the DGCL, the HSR Act
or the antitrust or competition laws of foreign jurisdictions, neither Parent nor Acquisition Sub,
is required to make any filing with or to obtain any consent from any Person at or prior to the
Acceptable Time or the Effective Time in connection with the execution and delivery of this
Agreement by Parent or Acquisition Sub or the consummation by Parent or Acquisition Sub of any of
the transactions contemplated by this Agreement, except where the failure to make any such filing
or obtain any such consent would not materially and adversely affect Parent’s or Acquisition Sub’s
ability to consummate any of the transactions contemplated by this Agreement. No vote of Parent’s
stockholders is necessary to adopt this Agreement or to approve any of the transactions
contemplated by this Agreement.
4.4 Absence of Litigation. There are no material Legal Proceedings pending or, to the
knowledge of Parent, threatened against Parent or any of its Subsidiaries that could adversely
affect Parent or Acquisition Sub’s ability to consummate the transactions contemplated by this
Agreement. As of the date hereof, neither Parent nor any of its Subsidiaries nor any of their
respective properties is or are subject to any material order, writ, judgment, injunction, decree
or award that could adversely affect Parent or Acquisition Sub’s ability to consummate the
transactions contemplated by this Agreement.
4.5 Financing. Parent has available cash resources and financing in an amount
sufficient to enable Acquisition Sub to purchase Company Shares pursuant to the Offer and to
consummate the Merger and perform its other obligations under this Agreement.
4.6 Ownership and Operations of Acquisition Sub. Parent owns beneficially all of the
outstanding capital stock of Acquisition Sub. Acquisition Sub was formed solely for the purpose of
engaging in business activities and conducting its operations and, has engaged in no other business
activities and has conducted its operations, only as contemplated hereby.
4.7 Offer Documents. The Offer Documents will comply as to form in all material
respects with the requirements of the Exchange Act and on the date filed with the SEC, on the date
first published, sent or given to holders of Company Shares or at any
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other time at or prior to the Acceptance Time, the Offer Documents will not contain any untrue
statement of a material fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the circumstances under which
they were made, not misleading, except that no representation is made by Parent or Acquisition Sub
with respect to any information supplied by the Company for inclusion in the Offer Documents.
4.8 Information in Proxy Statement. If a Company Stockholders Meeting is to be held
pursuant to Section 5.3, none of the information supplied or to be supplied by or on behalf of
Parent for inclusion in the Company Proxy Statement (as defined in Section 5.3) will, at the time
the Company Proxy Statement is mailed to the stockholders of the Company or at the time of such
Company Stockholders Meeting described in Section 5.3 (or any adjournment or postponement thereof),
contain any untrue statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading.
4.9 Brokers. No broker, finder or investment banker (other than Citi) is entitled to
any brokerage, finder’s or other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of Parent or
Acquisition Sub.
SECTION 5. COVENANTS
5.1 Interim Operations of the Company. Except (i) as contemplated or expressly
permitted by this Agreement, (ii) as required by Legal Requirements, or (iii) as contemplated by
Section 5.1 of the Company Disclosure Schedule, during the period from the date of this Agreement
until the Effective Time, unless Parent otherwise consents in writing, which consent shall not be
unreasonably withheld, the Company shall, and shall cause its Subsidiaries to, conduct their
business only in the ordinary course of business consistent with past practice and to comply with
all Legal Requirements in all material respects and use commercially reasonable efforts to preserve
intact their present business organizations, keep available the services of their present executive
officers and key employees, and to preserve the goodwill of those having material business
relationships with it. Without limiting the generality of the foregoing, except (1) as
contemplated or permitted by this Agreement, (2) as required by Legal Requirements or existing
Employee Benefit Plans, or (3) as contemplated by Section 5.1 of the Company Disclosure Schedule,
during the period from the date of this Agreement until the Effective Time, unless Parent otherwise
consents in writing, which consent shall not be unreasonably withheld, neither the Company nor its
Subsidiaries shall:
(a) amend the certificate of incorporation or bylaws (or similar organizational documents) of
the Company or its Subsidiaries other than the liquidation of non-operating Subsidiaries that are
not material to the Company;
(b) split, combine or reclassify any shares of the Company’s capital stock;
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(c) declare, set aside or pay any dividend or make any other distribution (whether payable in
cash, stock or property) with respect to any shares of the Company’s capital stock;
(d) enter into any joint venture or partnership;
(e) issue any additional shares of, or securities convertible or exchangeable for, or options
or other rights to acquire, any shares of its capital stock, other than Company Shares issuable
upon exercise of Company Options or upon conversion of the Company Convertible Notes;
(f) except in the ordinary course of business, consistent with past practices, sell, rent,
lease, license, pledge, mortgage, transfer, leaseback or otherwise dispose of any of its properties
or assets, except (A) sales of inventory in the ordinary course of business, (B) pursuant to
contracts in force on the date of this Agreement, (C) dispositions of obsolete or worthless assets,
(D) pursuant to transactions solely among the Company and its wholly owned Subsidiaries or (E)
lease or sublease of real property on market terms;
(g) except as permitted under existing equity compensation plans, repurchase, redeem or
otherwise acquire any shares of the capital stock of the Company;
(h) incur any indebtedness for borrowed money or guarantee any such indebtedness, except for
short-term borrowings incurred in the ordinary course of business pursuant to existing credit
facilities or any replacement of credit facilities;
(i) adopt or enter into any plan, program or arrangement that would be an Employee Benefit
Plan if it were in effect as of the date of this Agreement, or materially amend (including to
provide for additional acceleration of vesting or additional rights under) any an Employee Benefit
Plan, or otherwise increase the compensation or (except in connection with an increase of a
particular benefit for all employees eligible under such benefit arrangement as permitted under
this Section 5.1(i)) the fringe benefits of any director, officer or employee of the Company or any
of its Subsidiaries; provided, however, that nothing in this Section 5.1(i) shall
prohibit the Company and its Subsidiaries from (A) entering into at-will employment agreements with
new employees below the level of executive officers or (B) making such increases in compensation
and fringe benefits to employees below the level of executive officers, either in the ordinary
course of business or that, in the aggregate, do not result in a material increase in the aggregate
compensation expenses of the Company and its Subsidiaries, taken as a whole;
(j) other than in the ordinary course of business consistent with past practices, enter into,
renew, modify or amend any contracts with a term in excess of 12 months that are not terminable by
the Company and its Subsidiaries on less than 120 days’ notice without material penalty to the
Company or such Subsidiary, involving payment obligations for any single contract from and after
the Effective Time (after giving effect to any reduction in payment obligations under such
contracts upon a proper termination of such contracts in accordance with their terms) in excess of
$5,000,000 in
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the aggregate; provided, however, that the Company shall not, and shall cause
its Subsidiaries not to, without the prior written consent of Parent, enter into any Contract that
if in effect on the date hereof would be required to be disclosed on Section 3.8(a) of the Company
Disclosure Schedule other than in the ordinary course of business, consistent with past practices,
or that would require consent of a third party in the event of or with respect to the Offer or the
Merger;
(k) change any of its methods of accounting or accounting practices in any material respect
other than changes required under GAAP;
(l) make or change any material tax election, file any amended Company Returns, settle or
compromise any material tax liability, or agree to any extension of a statute of limitations with
respect to material taxes;
(m) authorize or make capital expenditures which are in excess of $2,000,000 in the aggregate;
(n) acquire (by merger, consolidation, acquisition of stock or material assets or otherwise),
directly or indirectly, any assets, securities, properties, interests or businesses, except for the
purchase of components, raw materials or other inventory or supplies in the ordinary course of
business in a manner that is consistent with past practice;
(o) settle any material Legal Proceeding or other claim involving or against the Company or
any of its Subsidiaries, except for settlements that would not be material to the Company and its
Subsidiaries, taken as a whole, after taking into account existing reserves in the Latest Balance
Sheet;
(p) fail to take any commercially reasonable action in connection with paying any fee or
making any filing necessary to maintain any material Registered IP of the Company or any Subsidiary
of the Company;
(q) (i) amend or terminate the Company Rights Agreement or (ii) amend, terminate, waive,
release or assign any material rights or claims under any standstill or similar Agreement, except,
in the case of this clause (q)(ii), to the extent the Company’s Board of Directors determines in
good faith (after consultation with counsel) that the failure to do so would create a material risk
of a breach by the Company’s Board of Directors of its fiduciary duties to the Company’s
stockholders;
(r) fail to use commercially reasonable efforts to maintain existing insurance policies or
comparable replacement policies to the extent available for a reasonable cost;
(s) take any action that would reasonably be expected to result in any of the conditions to
the Offer set forth in Annex I or any of the conditions to the Merger set forth in Section 6 not
being satisfied or that would reasonably be expected to materially delay the consummation of, or
materially impair the ability of the Company to
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consummate, the transactions contemplated by this Agreement in accordance with the terms
hereof;
(t) adopt a plan or agreement of complete or partial liquidation or dissolution, merger,
consolidation, recapitalization or other similar reorganization;
(u) enter into, amend, modify or supplement any contract, transaction, commitment or
arrangement with any officer, director or other Affiliate (or any Affiliate of any of the
foregoing); or
(v) agree in writing to take or commit to any of the foregoing actions.
5.2 No Solicitation.
(a) Subject to Section 5.2(b), the Company shall not, nor shall it authorize or permit any of
its Subsidiaries or any of its or their respective directors, officers or employees, investment
bankers, financial advisors, attorneys, accountants or other advisors, agents or representatives
(collectively, “Representatives”) to, directly or indirectly; (i) solicit, initiate or
knowingly encourage or facilitate any inquiries or the making of any proposal that constitutes or
is reasonably likely to lead to a Takeover Proposal; (ii) enter into or participate in any
discussions or negotiations regarding any Takeover Proposal, furnish to any Third Party any
information (whether orally or in writing) in connection with, or in furtherance, of any Takeover
Proposal, or afford access to the business, properties, assets, books or records of the Company or
any of its Subsidiaries, otherwise cooperate in any way with, or knowingly assist, participate in,
facilitate or encourage any effort by, any Third Party that has made, is seeking to make or has
informed the Company of any intention to make, or has publicly announced an intention to make, a
Takeover Proposal; (iii) fail to make, withdraw or modify in a manner adverse to Parent or publicly
propose to withdraw or modify in a manner adverse to Parent the Offer Recommendation or Merger
Recommendation (it being understood that taking a neutral position or no position with respect to
any Takeover Proposal shall be considered an adverse modification), recommend, adopt or approve, or
publicly propose to recommend, adopt or approve, a Takeover Proposal, or take any action or make
any statement inconsistent with the Offer Recommendation or Merger Recommendation (any of the
foregoing in this clause (iii), a “Company Adverse Recommendation Change”); (iv) take any
action not already taken to make the provisions of any “fair price,” “moratorium,” “control share
acquisition,” “business combination” or other similar anti-takeover statute or regulation
(including approving any transaction under, or a Third Party becoming an “interested stockholder”
under Section 203 of the DGCL, or any restrictive provision of any applicable anti-takeover
provision in the Company’s certificate of incorporation or bylaws, inapplicable to any transactions
contemplated by a Takeover Proposal; (v) enter into any agreement in principle, letter of intent,
term sheet, merger agreement, acquisition agreement, option agreement, joint venture agreement,
partnership agreement or other similar instrument constituting or relating to a Takeover Proposal
(other than a confidentiality agreement of the type referred to in Section 5.2(b)); or (vi) grant
any Third Party any waiver or release under any standstill or similar agreement with respect to any
class of equity securities of the
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Company or any of its Subsidiaries. Without limiting the foregoing, it is agreed
that any violation of the restrictions on the Company set forth in the preceding sentence by any
Representative of the Company or any of its Subsidiaries shall be a breach of this Section 5.2(a)
by the Company.
(b) Notwithstanding anything to the contrary in Section 5.2(a), at any time prior to the
Acceptance Time (and in no event after the Acceptance Time), the Board of Directors of the Company,
directly or indirectly through advisors, agents or other intermediaries, may, subject to compliance
with Section 5.2(c), (i) engage in negotiations or discussions with any Third Party that has made
after the date of this Agreement a Superior Proposal or a bona fide Takeover Proposal that the
Board of Directors of the Company determines in good faith (after consultation with a financial
advisor of nationally recognized reputation and outside legal counsel) may be reasonably likely to
lead to the receipt of a Superior Proposal and the making of such Superior Proposal or such
Takeover Proposal did not result from a breach of Section 5.2(a); (ii) thereafter, furnish to such
Third Party nonpublic information relating to the Company or any of its Subsidiaries pursuant to a
confidentiality agreement with terms overall no less favorable to the Company than those contained
in the Confidentiality Agreement (a copy of which shall, subject to Section 5.2(c), be provided,
promptly after its execution, for informational purposes only to Parent, and which copy and the
terms and existence thereof shall be subject to the confidentiality obligations imposed on Parent
pursuant to the Confidentiality Agreement); provided, that, subject to Section 5.2(c), all such
information (to the extent that such information has not been previously provided or made or had
been previously made available to Parent) is provided or made or had been previously made available
to Parent, as the case may be, prior to or substantially concurrently with the time it is provided
or made available to such Third Party), and provided, further, that if such Superior Proposal or
Takeover Proposal is made by a Third Party who or which, on the date hereof, is party to a
confidentiality agreement with the Company which would prohibit the Company from complying with any
of the terms of this Section 5.2(b) or Section 5.2(c) requiring the provision by the Company of
information, agreements or the documents to Parent, then the Company may take the actions described
in clauses (i) and (ii) of this Section 5.2(b) only if such confidentiality agreement with such
Third Party has been amended (and the Company shall be permitted to amend such confidentiality
agreement) to allow the Company to fully comply with
such terms of this Section 5.2(b) and Section 5.2(c) without violating such confidentiality
agreement; and (iii) following receipt of a Superior Proposal after the date of this Agreement,
pursuant to Section 5.2(e) and subject to compliance with Section 5.2(d), make a Company Adverse
Recommendation Change and terminate this Agreement pursuant to Section 7.1(f) (provided that
clauses (i) through (iii) thereof and Section 5.2(d) have been satisfied), but in each case
referred to in the foregoing clauses (i) through (iii) only if the Board of Directors of the
Company determines in good faith by a majority vote, after consultation with outside legal counsel
to the Company, that its failure to take such action would be inconsistent with its fiduciary
duties under applicable Legal Requirements.
(c) The Board of Directors of the Company shall not take any of the actions referred to in
clauses (i) and (ii) of Section 5.2(b) unless the Company shall have
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delivered to Parent a prior
written notice advising Parent that it intends to take such action, and the Company shall continue
to advise Parent after taking such action of the status and terms of any discussions and
negotiations with the Third Party. In addition, the Company shall notify Parent promptly (but in
no event later than 24 hours) after receipt by the Company (or any of its Representatives) of any
Takeover Proposal or of any request for information relating to the Company or any of its
Subsidiaries or for access to the business, properties, assets, books or records of the Company or
any of its Subsidiaries by any Third Party that may be considering making, or has made, a Takeover
Proposal, which notice shall be provided orally and in writing and shall identify the Third Party
making, and the material terms and conditions of, any such Takeover Proposal, indication or request
(including any changes thereto). The Company shall keep Parent reasonably informed on a current
basis of the status and details of any such Takeover Proposal, indication or request (including any
material changes thereto) and shall promptly (but in no event later than 24 hours after receipt)
provide to Parent copies of all correspondence and written materials sent or provided to the
Company or any of its Subsidiaries that describe the material terms and conditions of any Takeover
Proposal.
(d) Notwithstanding Section 5.2(b), the Board of Directors of the Company shall not take an
action described in clause (iii) of Section 5.2(b) unless (i) the Company promptly notifies Parent,
in writing at least five business days before taking that action, of its intention to do so in
response to a Takeover Proposal that constitutes a Superior Proposal, attaching the most current
version of any proposed agreement or a detailed summary of the material terms of any such proposal
and the identity of the offeror, and (ii) Parent does not make, within such five-business-day
period, an offer that is at least as favorable to the stockholders of the Company, as determined by
the Board of Directors of the Company in good faith (after considering the advice of a financial
advisor of nationally-recognized reputation), as such Superior Proposal (it being understood that
the Company shall not take any action described in clause (iii) of Section 5.2(b) during such
five-business-day period, and that any material amendment to the financial terms or other material
terms of such Superior Proposal shall require a new written notification from the Company and an
additional five-business-day period).
(e) The Company shall, and shall cause its Subsidiaries and its and their respective
Representatives to, cease immediately and cause to be terminated any and
all existing soliciting activities, discussions or negotiations and nonpublic information
access, if any, with or to any Third Party conducted prior to the date hereof with respect to any
Takeover Proposal. The Company shall promptly request that each Third Party, if any, in possession
of the confidential information about the Company or any of its Subsidiaries that was furnished by
or on behalf of the Company or any of its Subsidiaries in connection with its consideration of any
potential Takeover Proposal to return or destroy all confidential information heretofore furnished
to such Third Party.
5.3 Meeting of the Company’s Stockholders. If required by applicable Legal
Requirements following the purchase of Company Shares by Acquisition Sub pursuant to the Offer, or
the expiration of any subsequent offering period provided in accordance with Rule 14d-11 under the
Exchange Act, the Company will, as soon as practicable after the Acceptance Time, take all action
necessary to convene a meeting of holders of
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Company Shares to vote upon the Merger (the
“Company Stockholders Meeting”). The Company’s Board of Directors shall recommend adoption
of this Agreement, and the Company shall take all lawful action to solicit such adoption, except to
the extent that the Company’s Board of Directors determines in good faith (after consultation with
outside legal counsel to the Company) that to do so would be inconsistent with its fiduciary duties
to the Company’s stockholders. In connection therewith, the Company shall (i) prepare and file
with the SEC a proxy statement (the “Company Proxy Statement”), (ii) mail to its
stockholders the Company Proxy Statement a sufficient time prior to the Company Stockholders
Meeting, and (iii) otherwise comply in all material respects with all Legal Requirements applicable
to the Company Stockholders Meeting. Parent, Acquisition Sub and the Company will cooperate and
consult with each other in the preparation of the Company Proxy Statement. Without limiting the
generality of the foregoing, each of Parent and Acquisition Sub will furnish as soon as reasonably
practicable to the Company the information relating to it required by the Exchange Act and the
rules and regulations promulgated thereunder to be set forth in the Company Proxy Statement. The
Company shall as promptly as practicable (i) notify Parent and Acquisition Sub of the receipt of
any oral or written comments from the SEC with respect to the Company Proxy Statement and any
request by the SEC for any amendment to the Company Proxy Statement or for additional information
and (ii) provide Parent with copies of all written correspondence between the Company and its
Representatives, on the one hand, and the SEC, on the other hand, with respect to the Company Proxy
Statement. The Company shall use its commercially reasonable efforts to resolve all SEC comments
(in consultation with Parent) with respect to the Company Proxy Statement as promptly as
practicable after receipt thereof and to cause the Company Proxy Statement to be mailed to the
Company’s stockholders as promptly as practicable after the Company Proxy Statement is cleared with
the SEC. Each of Parent, Acquisition Sub and the Company agree to correct as soon as reasonably
practicable any information provided by it for use in the Company Proxy Statement which shall have
become false or misleading. If at any time prior to the Effective Time, any information should be
discovered by any party which should be set forth in an amendment or supplement to the Company
Proxy Statement so that the Company Proxy Statement would not include any misstatement of a
material fact or omit to state any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading, the party which discovers such information shall promptly notify the other parties
hereto and, to the extent required by Legal Requirements, an appropriate amendment or supplement
describing such information shall be promptly filed by the Company with the SEC and disseminated by
the Company to the stockholders of the Company. At any such meeting of holders of Company Shares,
Parent shall ensure that all Company Shares owned beneficially or of record by Parent, Acquisition
Sub or any of Parent’s other Affiliates will be voted in favor of the adoption of this Agreement.
Notwithstanding anything to the contrary contained in this Agreement, if, at any time after the
purchase of Company Shares pursuant to the Offer by Acquisition Sub, the Company Shares
beneficially owned by Acquisition Sub, together with any Company Shares beneficially owned by
Parent and Parent’s other Affiliates, shall collectively represent at least 90% of the outstanding
Company Shares, then Parent shall take all actions necessary and appropriate to cause the Merger to
become effective as soon as
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practicable without a meeting of the Company’s stockholders in
accordance with Section 253 of the DGCL.
5.4 Filings; Other Action.
(a) Subject to Section 5.4(b), each of the Company, Parent and Acquisition Sub shall: (i)
promptly make and effect all registrations, filings and submissions required to be made or effected
by it pursuant to the HSR Act, the Exchange Act and other applicable Legal Requirements with
respect to the Offer and the Merger; (ii) defend any lawsuits or other legal proceedings, whether
judicial or administrative, challenging this Agreement or the consummation of the transactions
contemplated by this Agreement and (iii) execute and deliver any additional instruments necessary
to consummate the transactions contemplated by this Agreement. Without limiting the generality of
the foregoing, each of Parent and Acquisition Sub: (y) shall promptly provide all information
requested by any Governmental Entity in connection with the Offer, the Merger or any of the other
transactions contemplated by this Agreement; and (z) shall use its commercially reasonable best
efforts to promptly take, and cause its Affiliates to take, all actions and steps necessary to
obtain any clearance or approval required to be obtained from the U.S. Federal Trade Commission,
the U.S. Department of Justice, any Republic of China or other foreign competition authority or any
other Governmental Entity in connection with the transactions contemplated by this Agreement.
Subject to Section 5.4(b) below and notwithstanding the foregoing, nothing in this Agreement will
require Parent, any of its Subsidiaries, Acquisition Sub or the Surviving Corporation to take or
refrain from taking any action that would (A) restrict, prohibit or limit the ownership or
operation by Parent or Acquisition Sub or their subsidiaries of all or any material portion of the
business or assets of the Company or any of their respective subsidiaries or compel Parent or
Acquisition Sub or any of their respective subsidiaries to dispose of or hold separately all or any
material portion of the business or assets of Parent or Acquisition Sub or Company or any of their
respective subsidiaries, or impose any material limitation, restriction or prohibition on the
ability of Parent or Company or their subsidiaries to conduct its business or own such assets, (B)
impose material limitations on the ability of Parent or the Acquisition Sub or their subsidiaries
to acquire, hold or exercise full rights of ownership of the Company Shares, including, without
limitation, the right to vote any Company Shares acquired or owned
by Acquisition Sub or Parent or their subsidiaries pursuant to the Offer on all matters
properly presented to the Company’s stockholders, or (C) require divestiture by Parent or the
Acquisition Sub or their subsidiaries of any Company Shares.
(b) Each of the Company, Parent and Acquisition Sub shall: (i) promptly make all filings and
submissions required to be made or effected by it pursuant to Exon Xxxxxx and (ii) use its
commercially reasonable best efforts to promptly take, and cause its Affiliates to take, all
actions and steps necessary to obtain any clearance or approval required to be obtained from CFIUS
in connection with the transactions contemplated by this Agreement (such clearance or approval, the
“CFIUS Approval”). Without limiting the foregoing, the requirement of Company, Parent and
Acquisition Sub to use their commercially reasonable best efforts to obtain the CFIUS Approval
shall include: (y) providing any information requested by CFIUS or any other agency or
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branch of
the United States Government in connection with their review of the transactions contemplated by
this Agreement and (z) in the case of Parent or Acquisition Sub, agreeing to a mitigation agreement
with the United States Government containing customary terms and conditions for transactions in the
personal computing industry, provided that such mitigation agreement would not (A) restrict,
prohibit or limit the ownership or operation by Parent or Acquisition Sub or their Subsidiaries of
all or any material portion of the business or assets of the Company or any of their respective
subsidiaries or compel Parent or Acquisition Sub or any of their respective subsidiaries to dispose
of or hold separately all or any material portion of the business or assets of Parent or
Acquisition Sub or Company or any of their respective subsidiaries, or impose any material
limitation, restriction or prohibition of the ability of Parent or Company or their Subsidiaries to
conduct its business or own such assets, (B) impose material limitations on the ability of Parent
or the Acquisition Sub or their subsidiaries to acquire, hold or exercise full rights of ownership
of the Company Shares, including, without limitation, the right to vote any Company Shares acquired
or owned by Acquisition Sub or Parent or their Subsidiaries pursuant to the Offer on all matters
properly presented to the Company’s stockholders, or (C) require divestiture by Parent or the
Acquisition Sub or their Subsidiaries of any Company Shares.
(c) Without limiting the generality of anything contained in Section 5.4(a) or Section 5.4(b),
and except as may be prohibited by any Governmental Entity or by any Legal Requirement, each party
hereto shall: (i) give the other parties prompt notice of the making or commencement of any request
or Legal Proceeding by or before any Governmental Entity with respect to the Offer or the Merger or
any of the other transactions contemplated by this Agreement; (ii) keep the other parties informed
as to the status of any such request or Legal Proceeding; (iii) promptly inform the other parties
of any communication to or from the Federal Trade Commission, the Department of Justice, CFIUS or
any other Governmental Entity regarding the Offer or the Merger or any of the other transactions
contemplated by this Agreement; (iv) permit the other to review and discuss in advance any proposed
written or any oral communication with any such Governmental Entity; (v) not participate in any
meeting or have any communication with any such Governmental Entity unless it has given the other
an opportunity to consult with it in advance and, to the extent permitted by such Governmental
Entity, give the other party the opportunity to attend and participate therein; and (vi) furnish
the other
party with copies of all filings and communications between it (or its advisors) and any such
Governmental Entity with respect to the transactions contemplated by this Agreement. Each party
hereto will consult and cooperate with the other parties and will consider in good faith the views
of the other parties in connection with any analysis, appearance, presentation, memorandum, brief,
argument, opinion or proposal made or submitted in connection with any such request or Legal
Proceeding.
5.5 Access. Upon reasonable notice, the Company shall afford the officers and other
authorized representatives of Parent and Acquisition Sub reasonable access, during normal business
hours throughout the period prior to the Effective Time, to the Company’s and its Subsidiaries’
books and records and, during such period, the Company shall furnish promptly to Parent all readily
available information concerning its and its Subsidiaries’ businesses as Parent may reasonably
request, as well as reasonable
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access to the Company’s and its Subsidiaries’ officers, employees
and agents; provided, however, that the Company shall not be required to permit any
inspection or other access, or to disclose any information, that would violate any Legal
Requirement. All information obtained by Parent and its representatives pursuant to this Section
5.5 shall be treated as “Confidential Information” for purposes of the Confidentiality
Agreement.
5.6 Interim Operations of Acquisition Sub. Prior to the Effective Time, Acquisition
Sub shall not engage in any activities of any nature except as provided in or contemplated by this
Agreement.
5.7 Publicity. Until Effective Time, neither the Parent nor the Company shall, or
shall permit any of its Subsidiaries to, issue or cause the publication of any press release or
other public announcement with respect to, or otherwise make any public statement concerning, the
transactions contemplated by this Agreement without the consent of the other party, which consent
shall not be unreasonably withheld or delayed, except as may be required by applicable Legal
Requirements or the applicable rules of any stock exchange.
5.8 Treatment of Options and Other Stock-Based Awards. The Board of Directors of the
Company or compensation committee of the Board of Directors of the Company shall make such
amendments and adjustments to or make such determinations with respect to the Company Options, as
are necessary to implement the provisions of Section 2.6 herein and this Section 5.8. Without
limiting the foregoing, the Company shall take all actions necessary to ensure that the Company
will not following the Effective Time, be bound by any options, stock appreciation rights, warrants
or other rights or agreements which would entitle any Person, other than Parent and its
Subsidiaries, to own any capital stock of the Surviving Company or to receive any payment in
respect thereof other than with respect to the payment of the Option Consideration as provided in
Section 2.6.
5.9 Employees.
(a) Beginning at the Effective Time and continuing through the first anniversary thereof,
Parent shall ensure that employees of the Company and its Subsidiaries immediately before the
Effective Time who remain in the employment of Parent or its Affiliates after the Effective Time
(the “Continuing Employees”) shall be eligible to receive compensation and employee
benefits that, in the aggregate, are no less favorable to those provided to the Continuing
Employees immediately prior to the Effective Time (not taking into account the value of any equity
grants). Nothing in this Section 5.9 (a) shall be construed as requiring Parent or any of its
Affiliates to continue any Employee Benefit Plan, or restrict in any way Parent’s (or any of its
Affiliate’s) rights to amend or terminate any Employee Benefit Plan; provided that Parent shall not
amend, modify or terminate the Company’s bonus plans in effect at the Effective Time prior to
January 1, 2008, and Parent shall cause payment of any earned but unpaid bonuses in respect of 2007
to be paid in accordance with the Company’s historical bonus payment policies in 2008.
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(b) With respect to any welfare plan maintained by Parent or its Affiliates in which
Continuing Employees will be eligible to participate after the Effective Time, Parent shall, and
shall cause the Surviving Corporation and its other Affiliates, to the extent permitted by the
relevant welfare plan, to (i) waive all limitations as to preexisting conditions and exclusions
with respect to participation and coverage requirements applicable to such employees to the extent
such conditions and exclusions were satisfied or did not apply to such employees under the welfare
plans maintained by the Company or its Affiliates prior to the Effective Time, and (ii) provide
each such employee with credit for any co-payments and deductibles paid prior to the Effective Time
in satisfying any analogous deductible or out-of-pocket requirements to the extent applicable under
any such plan.
(c) Each Continuing Employee shall be given credit for all service with the Company (or
service credited by the Company) under all employee benefit plans, programs policies and
arrangements maintained by the Surviving Corporation or the Parent or its Affiliates in which they
participate or in which they become participants for purposes of eligibility and vesting such
service shall also be included for benefit accruals, solely for purposes of determining (i)
short-term and long-term disability benefits, (ii) severance benefits, and (iii) vacation benefits.
(d) Notwithstanding anything in Sections 5.9(b) or (c) to the contrary, service shall not be
included for any of the purposes described in those Sections to the extent the inclusion of such
service results in the duplication of any benefit.
(e) To the extent requested in writing by the Parent, prior to the Effective Time, the Company
shall take all reasonable actions necessary to terminate any Employee Benefit Plan, and, to the
extent permitted by such Employee Benefit Plan (including any requisite consents) and applicable
law, with such termination to be effective at or before the Effective Time.
(f) No provision of this Section 5.9 shall create any third-party beneficiary rights in any
employee or former employee (including any beneficiary or
dependent thereof) of the Company or any Subsidiary of the Company in any respect, including
in respect of continued employment (or resumed employment) with the Parent, the Surviving
Corporation or any of the Parent’s Subsidiaries, and no provision of this Section 5.9 shall create
such rights in any such Persons in respect of any benefits that may be provided, directly or
indirectly, under any pension plan, benefit plan, or any employee program or any plan or
arrangement of Parent or any of its Subsidiaries. No provision of this Agreement shall constitute
a limitation on the rights to amend, modify or terminate after the Effective Time any such plans or
arrangements of Parent or any of its Subsidiaries.
5.10 Indemnification; Directors’ and Officers’ Insurance.
(a) From and after the Effective Time, Parent will cause the Surviving Corporation and its
Subsidiaries to fulfill and honor in all respects the obligations of the Company and its
Subsidiaries pursuant to: (i) each indemnification agreement in effect
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between the Company or any
of its Subsidiaries and any Indemnified Party (as defined in Section 5.10(d)); which is listed in
Section 5.10(a) of the Company Disclosure Schedule; and (ii) any indemnification provision and any
exculpation provision set forth in the certificate of incorporation, bylaws or other charter or
organizational documents of the Company or any of its Subsidiaries as in effect on the date of this
Agreement. The certificate of incorporation and bylaws of the Surviving Corporation shall contain
the provisions with respect to indemnification and exculpation from liability set forth in the
Company’s certificate of incorporation and bylaws on the date of this Agreement, and, from and
after the Effective Time, except as required by applicable Legal Requirements, such provisions
shall not be amended, repealed or otherwise modified in any manner that would adversely affect the
rights thereunder of any Indemnified Party.
(b) At the Effective Time, Parent shall cause to be obtained prepaid (or “tail”) directors’
and officers’ liability insurance policies for the benefit of the Indemnified Parties at the
current coverage level and scope of liability insurance coverage as set forth in the Company’s
current directors’ and officers’ liability insurance policy in effect as of the date of this
Agreement. Such “tail” insurance policies shall provide coverage through the sixth anniversary of
the Effective Time, so long as the aggregate annual premium is not greater than 250% of the annual
premium paid by the Company for its existing directors’ and officers’ liability insurance policies
during 2006. In the event that such amount is insufficient for such coverage then the Surviving
Corporation may spend up to that amount to purchase such lesser coverage as may be obtained with
such amount.
(c) This Section 5.10 shall survive the Acceptance Time and shall also survive consummation of
the Merger and the Effective Time. This Section 5.10 is intended to benefit, and may be enforced
by, the Indemnified Parties and their respective heirs, representatives, successors and assigns,
and shall be binding on all successors and assigns of Parent and the Surviving Corporation.
(d) For purposes of this Agreement, each individual who is or was an officer or director of
the Company at or at or at any time prior to the Acceptance Time shall be deemed to be an
“Indemnified Party”.
5.11 Exercise of Right.
(a) It is the shared intention and desire of the parties to effect the River Transaction (as
defined below) as promptly as possible. To this end, as promptly as practicable after the date of
this Agreement, the Company agrees to use its commercially reasonable best efforts to acquire the
Shares (as defined in the Letter Agreement) (the “River Shares”), pursuant to the terms and
conditions set forth in the Letter Agreement, including (i) notifying the Individual that the
Company is exercising its right to purchase all of the River Shares subject to the transfer notice
(the “Transfer Notice”) delivered by the Individual to the Company pursuant to the Letter
Agreement (the “River Offer”), (ii) negotiating and executing definitive documentation (the
“Share Purchase Contract”) with respect to the purchase of the River Shares (and the
Company and Parent shall use commercially reasonable best efforts to cause such Share Purchase
Contract to contain
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such provisions with respect to the assignment of the Company’s rights
thereunder as shall be necessary in order for the Company to satisfy its obligations under this
Agreement) within the period set forth in the Letter Agreement for closing such transaction (the
“River Transaction”), (iii) obtaining or making all necessary consents, approvals,
authorizations or permits of, action by, or filing with or notification to, any Governmental Entity
or any other Person, including labor councils, necessary or appropriate to close the River
Transaction, (iv) closing the River Transaction as soon as reasonably practicable after the
satisfaction of any regulatory and other conditions set forth in the definitive documents relating
to the River Transaction (the “River Closing Date”), and (v) filing and defending any
litigation or disputes related to the River Transaction or any actions taken by the Company in
accordance with this Section 5.11; provided, however, the Company’s obligations
under clauses (i) through (v) above shall be subject to there being at all times sufficient funds
in the Escrow Account to satisfy such obligations; and provided further, that
nothing in this Section 5.11(a) shall require the Company to increase the purchase price set forth
in the Transfer Notice or otherwise incur any financial liability in excess of the purchase price
(as may be increased from time to time) unless and until the amount of such increase or additional
amounts are deposited into the Escrow Account and subject to drawdown by the Company pursuant to
the terms of the Escrow Agreement. Parent and Acquisition Sub each will promptly provide any
information reasonably requested by the Company, and will fully cooperate with the Company, in
connection with taking of any of the required actions of the Company under this Section 5.11,
including providing any information relating to Parent, Acquisition Sub or any of their directors,
officers or affiliates required for any regulatory approvals or filings necessary in connection
with the consummation of the River Transaction. The Parent and Acquisition Sub each recognize that
the failure of the Company to enter into a Share Purchase Contract or close the River Transaction
shall not constitute a breach of this Section 5.11 if the Company has complied with its obligations
herein in all material respects.
(b) To the extent permitted by applicable Legal Requirements (as advised by Company counsel),
Parent shall have the right to direct (i) all negotiations and preparation of the Share Purchase
Contract, (ii) the taking, or failure to take, any action necessary to close the River Transaction,
and (iii) the filing or defense of any litigation or arbitration proceedings or resolutions of any
disputes related to the exercise of the right of first refusal under the Letter Agreement or any
other actions taken by the Company pursuant to Section 5.11(a).
(c) Parent shall (i) within one business day after the date of this Agreement, enter into a
mutually acceptable Escrow Agreement with a mutually acceptable escrow agent in the United
States(the “Escrow Agent”) and the Company (the “Escrow Agreement”), and deposit
the cash sum of $10,000,000 (the “Initial Escrow Deposit”) into the escrow account created
pursuant to the Escrow Agreement (the “Escrow Account”), and (ii) within ten calendar days
after the date of this Agreement (or, if earlier, the date the Company would be required to pay the
purchase price of the River Shares), deposit a cash sum equal to the United States Dollar
equivalent of €35,000,000 less the amount of the Initial Deposit (the “Balance Escrow
Deposit” and, the sum of the Balance Escrow Deposit and the Initial Escrow Deposit, the
“Escrow Deposit”) into the
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escrow account created pursuant the Escrow Agreement. The
Company shall have the right to withdraw funds from the Escrow Account from time to time in its
sole discretion to (A) pay the purchase price for the River Shares (including any increase in the
purchase price or deposit authorized by Parent), (B) pay all reasonable and documented
out-of-pocket expenses incurred, or reasonably expected to be incurred, by the Company in
connection with the closing of the River Transaction and the Company’s taking of any actions
pursuant to Section 5.11(a), and (C) fund the working capital requirements of Xxxxxxx-Xxxx B.V.
(“River”) if the closing of the River Transaction occurs prior to the Acceptance Time
(collectively, the “River Expenses”). As a condition to and in conjunction with the
performance by the Company of its obligations under this Section 5.11, Parent shall, to the extent
necessary and in a timely fashion, deposit into the Escrow Account sufficient funds to permit the
Company to pay all River Expenses. Notwithstanding the foregoing, in the event (i) the balance of
the Escrow Account at any time is less than $5,000,000 (the “Minimum Amount”) or (ii) the
Parent, the Acquisition Sub, the Company or any of their respective representatives offers to
increase the purchase price for the River Shares from the price set forth in the Transfer Notice,
Parent shall transfer to the Escrow Agent within two business days, in the case of (i), an amount
sufficient to bring the balance in the Escrow Account up to or in excess of the Minimum Amount, and
in the case of (ii) an amount equal to the increase in such purchase price. Under no circumstances
shall the Company have any obligation to pay any River Expenses from its own funds and the Company
shall not be in breach of any obligation under this Section 5.11 if Parent fails to make available
to the Company through the Escrow Account sufficient funds to pay for River Expenses incurred, or
reasonably expected to be incurred, by the Company in the performance of such obligation. The
Company shall use funds withdrawn from the Escrow Account solely to pay River Expenses.
Notwithstanding the foregoing, except in respect of payment of the purchase price of the River
Shares at the closing of the River Transaction or any deposit required in connection therewith, the
Company shall not withdraw funds in excess of, with respect to any single drawdown, (x) $250,000
without the prior written notification of Parent or (y) $500,000 without prior approval of Parent, which approval shall be granted within three
business days after notice of such drawdown unless Parent disputes that such drawdown is in respect
of River Expenses. The Company shall provide monthly statements to Parent providing a reasonably
detailed accounting of the use of any funds withdrawn from the Escrow Account and Parent shall have
the right to obtain invoices to verify any withdrawals from the Escrow Account shown in such
monthly statements.
(d) So long as Company has not breached or failed to perform its obligations in any material
respect under this Section 5.11, which breach or failure to perform is either incurable or, if
curable is not cured by the Company within 20 days following receipt by the Company of written
notice of such breach of failure, then to the maximum extent permitted by Legal Requirements,
Parent and Acquisition Sub, jointly and severally, shall indemnify, defend and hold the Company and
its directors, managers, officers, employees and agents harmless from any and all liabilities,
obligations, claims, contingencies, losses, damages, costs and expenses, including all court costs,
litigation expenses and reasonable attorneys’ fees, that any of such Persons may suffer or incur as
a result of or relating to the performance of any of the Company’s obligations under this Section
5.11 and the Share Purchase Contract and all actions taken by the Company and
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its directors,
managers, officers, employees and agents in connection therewith, including without limitation (i)
the acceptance of the River Offer, (ii) the acquisition and ownership of the River Shares (as
defined in the Letter Agreement) by the Company, and (iii) the entry into and consummation of the
Share Purchase Contract.
5.12 Additional Agreements. In case at any time after the Acceptance Time (including
after the Effective Time) any further action is necessary or desirable to carry out the
transactions contemplated hereby or to vest the Surviving Corporation with full title to all
properties, assets, rights, approvals, immunities and franchises of any of the parties to the
Merger, the proper officers and directors of each party to this Agreement and their respective
subsidiaries shall take all such necessary action as may be reasonably required.
5.13 Advice of Changes. The Company shall promptly notify Parent of (a) any
inaccuracy of any representation or warranty contained in this Agreement at any time during the
term hereof that could reasonably be expected to cause the conditions set forth in paragraph (c) of
Annex I not to be satisfied; (b) any failure of the Company to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder that could reasonably be
expected to cause the condition set forth in paragraph (d) of Annex I not to be satisfied; or (c)
any change or event having a material adverse effect on it or which it believes would otherwise be
reasonably likely to cause or constitute a material breach of any of its representations,
warranties or covenants contained herein; provided, however, that the delivery of
any notice pursuant to this Section 5.13 shall not limit or otherwise affect the remedies available
hereunder to Parent.
5.14 Company Rights Agreement. The Company Board shall take all further actions (in
addition to those referred to in Section 1.3(a)) reasonably requested by Parent
in order to render the Company Rights inapplicable to this Agreement and the transactions
contemplated hereby and thereby, including the Offer and the Merger.
5.15 Rule 14d-10(d). Prior to the Acceptance Time, the Company (acting through the
compensation committee of the Company’s Board of Directors) shall use reasonable efforts to (i)
take all such steps as may be required to cause each agreement, arrangement or understanding
entered into by the Company or its Subsidiaries since January 1, 2007 with any of its officers,
directors or employees pursuant to which consideration is paid to such officer, director or
employee to be approved as an “employment compensation, severance or other employee benefit
arrangement” within the meaning as set forth in Rule 14d-10(d) of the Exchange Act, and (ii) take
all such steps necessary as may be required or advisable to satisfy the requirements of the
non-exclusive safe harbor with respect to such employment, compensation, severance or other
employee benefit arrangement or payment in accordance with Rule 14d-10(d) under the Exchange Act.
5.16 Stockholder Litigation. The Company shall give Parent the opportunity to
participate in the defense of any stockholder litigation against the Company or its officers or
directors relating to the transactions contemplated by this Agreement.
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5.17 FIRPTA. At or prior to the Acceptance Time (and thereafter until the Closing as
requested by the Parent or applicable transferee), the Company shall have delivered to Parent or
applicable transferee a form of notice to the Internal Revenue Service in accordance with the
requirements of Treasury Regulation Section 1.897-2(h)(2) (the “FIRPTA Certificate”) along
with written authorization for Parent or applicable transferee to deliver such FIRPTA Certificate
to the Internal Revenue Service on behalf of the Company; provided, however, that if the Company
fails to provide the FIRPTA Certificate, the transaction shall nonetheless close and Parent or
applicable transferee shall withhold from the Merger Consideration and pay over to the appropriate
taxing authorities the amount required to be withheld under section 1445 of the Code as determined
by Parent.
SECTION 6. CONDITIONS TO EACH PARTY’S OBLIGATION TO EFFECT THE MERGER
The obligation of each party to effect the Merger shall be subject to the satisfaction of the
following conditions prior to the Effective Time:
6.1 Stockholder Approval. If adoption of this Agreement by the holders of Company
Shares is required by applicable Legal Requirements, this Agreement shall have been adopted by the
requisite vote of such holders.
6.2 No Injunctions; Laws. No injunction shall have been issued by a court of
competent jurisdiction and shall be continuing that prohibits the consummation of the Merger, and
no law shall have been enacted since the date of this Agreement and shall remain in effect that
prohibits the consummation of the Merger; provided, however, that
prior to invoking this provision, each party shall use its reasonable best efforts to have any
such injunction lifted.
6.3 Closing of Tender Offer. Acquisition Sub shall have purchased, or caused to be
purchased, all Company Shares properly tendered (and not properly withdrawn) pursuant to the Offer.
SECTION 7. TERMINATION
7.1 Termination. This Agreement may be terminated and the Merger may be abandoned
(before or after the adoption of this Agreement by the stockholders of the Company):
(a) by mutual consent of the Company (subject to Section 1.5) and Parent at any time prior to
the Acceptance Time;
(b) by the Company, prior to commencement of the Offer if Acquisition Sub shall have failed to
commence (within the meaning of Rule 14d-2 under the Exchange Act) the Offer within ten days after
the date of this Agreement (provided that the right to terminate this Agreement pursuant to
this Section 7.1(b) shall not be available to the Company if the failure to commence the Offer
within ten days after the date of this Agreement is attributable to the failure of the Company or
any of its
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Subsidiaries to perform any covenant in this Agreement required to be performed by the
Company or any of its Subsidiaries at or prior to commencement of the Offer);
(c) by Parent or the Company, at any time after the Walk Away Date and prior to the Acceptance
Time if the Acceptance Time shall not have occurred on or before the close of business on the Walk
Away Date; provided, that the right to terminate this Agreement pursuant to this Section 7.1(c)
shall not be available to any party where the failure of such party (or any Affiliate of such
party) to fulfill any obligation under this Agreement has resulted in the failure of the Acceptance
Time to have occurred on or before the Walk Away Date;
(d) by Parent or the Company, at any time prior to the Acceptance Time if there shall be any
Legal Requirement in effect that makes the acceptance for payment of Company Shares tendered
pursuant to the Offer illegal or that prohibits the Merger, or any court of competent jurisdiction
shall have issued a permanent injunction prohibiting the Merger and such injunction shall have
become final and non-appealable; provided, however, that a party shall not be permitted to
terminate this Agreement pursuant to this Section 7.1(d) if the issuance of any such injunction
prohibiting the acceptance for payment of Company Shares tendered pursuant to the Offer or is
attributable to the failure of such party (or any Affiliate of such party) to perform in any
material respect any covenant in this Agreement required to be performed by such party (or any
Affiliate of such party) at or prior to the Acceptance Time;
(e) by Parent, if prior to the Acceptance Time, and after a public announcement with respect
to a Takeover Proposal (with all references to 20% in the definition thereof being treated as
references to 50% for purposes hereof), (i) a Company
Adverse Recommendation Change shall have occurred or (ii) the Board of Directors of the
Company shall have failed to publicly confirm the Offer Recommendation or Merger Recommendation
within ten business days of a written request by Parent that it do so; provided that Parent
may only exercise its termination right under this Section 7.1(e) following a scheduled expiration
date of the Offer and if the Minimum Tender Condition has not been met;
(f) by the Company, if, (i) the Company has effected a Company Adverse Recommendation Change
in accordance with (and after compliance with) the provisions of Section 5.2(b)(iii), (ii) if
adoption of this Agreement by holders of Company Shares is required by applicable Legal
Requirements, such adoption has not been obtained, and (iii) substantially contemporaneously with
such termination the Company enters into a definitive agreement providing for a Superior Proposal
in accordance with Section 5.2; provided, that prior to such termination or simultaneously
therewith the Company shall have paid or caused to be paid the Termination Amount in accordance
with Section 7.3 (and such termination of this Agreement by the Company shall not take effect
unless and until the Termination Amount shall have been paid);
(g) by Parent, if prior to the Acceptance Time, the Company shall have breached or failed to
perform any of its representations, warranties, covenants or agreements set forth in this
Agreement, which breach or failure to perform (A) would
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give rise to the failure of a condition set
forth in paragraph (b) or (c) of Annex I and (B) is either incurable, or if curable, is not cured
by the Company by the earlier of (x) 30 days following receipt by the Company of written notice of
such breach or failure and (y) the Walk Away Date provided, at the time of the delivery of such
written notice, neither Parent or Acquisition Sub shall be in material breach of its obligations
under this Agreement; or
(h) by the Company, if prior to the Acceptance Time, Parent or Acquisition Sub shall have (A)
failed to perform in any material respect any of its obligations required to be performed by it
under this Agreement or (B) breached any of Parent’s or Acquisition Sub’s representations and
warranties (without regard to materiality qualifiers contained therein), which breach or failure to
perform, in the case of clause (B), would reasonably be expected to, individually or in the
aggregate, adversely affect Parent or Acquisition Sub’s ability to consummate the transactions
contemplated by this Agreement and, in the case of either clause (A) or (B) is either incurable, or
if curable, is not cured by Parent by the earlier of (x) 30 days following receipt by Parent of
written notice of such breach or failure and (y) the Walk Away Date, provided, at the time of the
delivery of such written notice, the Company shall not be in material breach of its obligations
under this Agreement, and provided, further, that for purposes of this Section 7.1(h), Acquisition
Sub’s failure in any material respect to commence or extend the Offer, or to purchase Company
Shares validly tendered and not properly withdrawn in accordance with the terms of this Offer or
this Agreement, in any such case in violation of the terms of the Offer or this Agreement, shall be
deemed an incurable breach of this Agreement by Acquisition Sub.
7.2 Effect of Termination on the River Transaction.
(a) Termination Without Superior Proposal.
(i) If the Closing of the purchase of the River Shares has occurred and this Agreement is
terminated pursuant to the provisions of Section 7.1(a), Section 7.1(c), Section 7.1(d), Section
7.1(g) or Section 7.1(h) (other than a termination pursuant to Section 7.1(h) effected because of
Parent’s (A) failure to accept for payment and pay for Company Shares validly tendered and not
properly withdrawn in accordance with the terms of this Agreement or (B) failure to enter into the
Escrow Agreement, make the Initial Escrow Deposit or the Balance Escrow Deposit into the Escrow
Account or restore the amount subject to immediate drawdown held in the Escrow Account to the
Minimum Amount, in each case, in accordance with the terms of this Agreement) when the Acceptance
Time has not occurred, the Company shall assign, transfer and deliver the River Shares to Parent,
free and clear of all liens and encumbrances created by the Company, and assign, to the extent it
can be assigned, to Parent, without any representation or warranty, all of the Company’s rights and
obligations, if any, under the Share Purchase Contract within three business days after the date of
termination of this Agreement. In consideration of such assignment and transfer, Parent shall,
concurrently with such transfer, pay to the Company $10 million by wire transfer of immediately
available funds (the “River Fee”).
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(ii) If the Share Purchase Contract has been executed and delivered but a closing in respect
of the Share Purchase Contract has not occurred, upon termination of this Agreement pursuant to the
provisions of Section 7.1(a), Section 7.1(c), Section 7.1(d), Section 7.1(g) or Section 7.1(h)
(other than a termination pursuant to Section 7.1(h) effected because of Parent’s (A) failure to
accept for payment and pay for Company Shares validly tendered and not properly withdrawn in
accordance with the terms of this Agreement or (B) failure to enter into the Escrow Agreement, make
the Initial Escrow Deposit or the Balance Escrow Deposit into the Escrow Account or restore the
amount subject to immediate drawdown held in the Escrow Account to the Minimum Amount, in each
case, in accordance with the terms of this Agreement), the Company shall assign to Parent all of
the Company’s rights and obligations under the Share Purchase Contract (if such rights and
obligations under the Share Purchase Contract can be so assigned) within three business days after
the date of termination of this Agreement. In consideration of such assignment and transfer,
Parent shall, concurrently with such transfer, pay to the Company the River Fee by wire transfer of
immediately available funds.
(iii) If either (x) a Share Purchase Contract has not been executed and delivered or (y) the
Share Purchase Contract has been executed and delivered but a closing in respect of the Share
Purchase Contract has not occurred and the Company’s rights and obligations under such Share
Purchase Contract cannot be assigned to Parent, then upon termination of this Agreement pursuant to
the provisions of Section 7.1(a), Section 7.1(c), Section 7.1(d), Section 7.1(g) or Section 7.1(h)
(other than a termination pursuant to Section 7.1(h) effected because of Parent’s (A) failure to
accept for payment and pay for Company Shares validly tendered and not properly withdrawn in
accordance with the terms of this Agreement or (B) failure to enter into the Escrow Agreement,
make the Initial Escrow Deposit or the Balance Escrow Deposit into the Escrow Account or restore
the amount subject to immediate drawdown held in the Escrow Account to the Minimum Amount, in each
case, in accordance with the terms of this Agreement), the Company , effective upon such
termination of this Agreement, shall grant to Parent an irrevocable option to assignment of the
Share Purchase Contract upon the execution thereof or, if the Company’s rights and obligations
under such Share Purchase Contract cannot be assigned to Parent, to assignment of the River Shares
(such applicable option, the “Assignment Option”). In consideration of such delivery,
Parent shall, concurrently with such assignment of the Share Purchase Contract or delivery of the
River Shares, respectively, pay to the Company the River Fee by wire transfer of immediately
available funds.
(iv) Upon a termination of this Agreement pursuant to the provisions of Section 7.1(a),
Section 7.1(c), Section 7.1(d), Section 7.1(g) or Section 7.1(h) (other than a termination pursuant
to Section 7.1(h) effected because of Parent’s (A) failure to accept for payment and pay for
Company Shares validly tendered and not properly withdrawn in accordance with the terms of this
Agreement or (B) failure to enter into the Escrow Agreement, make the Initial Escrow Deposit or the
Balance Escrow Deposit into the Escrow Account or restore the amount subject to immediate drawdown
held in the Escrow Account to the Minimum Amount, in each case, in accordance with the terms of
this Agreement), any funds remaining in the Escrow Account, less any River
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Expenses not previously
withdrawn from the Escrow Account, shall be disbursed to Parent within three business days after
the date of termination; provided, however, that if the provisions of clause (iii) above
apply in respect of any such termination, such funds shall be disbursed within three business days
after the date that the River Shares are required to be delivered to Parent.
(b) Termination Upon a Superior Proposal Failure to Commerce Tender Offer; Failure to
Maintain Minimum Amount.
(i) In the event this Agreement is terminated pursuant to the provisions of Section 7.1(h) (if
termination is effected because of Parent’s (A) failure to accept for payment and pay for Company
Shares validly tendered and not properly withdrawn in accordance with the terms of this Agreement
or (B) failure to enter into the Escrow Agreement, make the Initial Escrow Deposit or the Balance
Escrow Deposit into the Escrow Account or restore the amount subject to immediate drawdown held in
the Escrow Account to the Minimum Amount, in each case, in accordance with the terms of this
Agreement), Section 7.1(b) or Section 7.1(f), the Company shall have the right, in its sole
discretion, to either (A) subject to the last sentence of this Section 7.2(b)(i), (x) assign and
transfer the River Shares to Parent if the Closing of the purchase of the River Shares has occurred
or (y) assign to Parent all of the Company’s rights and obligations under the Share Purchase
Contract if the Share Purchase Contract has been executed and delivered but a closing in respect of
the Share Purchase Contract has not occurred and if such rights and obligations under the Share
Purchase Contract can be so assigned, or (z) grant to Parent the applicable Assignment Option, if
either a Share Purchase Contract has not been executed and delivered or the Share Purchase Contract
has been executed and
delivered but a closing in respect of the Share Purchase Contract has not occurred and the
Company’s rights and obligations under such Share Purchase Contract cannot be assigned to Parent,
then , in each case, in accordance with Section 7.2(a), and in consideration of such assignment,
Parent shall, concurrently with such assignment (or in the case of clause (z), concurrently with
such assignment of the Share Purchase Contract or delivery of the River Shares, as the case may
be), pay to the Company the River Fee by wire transfer of immediately available funds, or (B) in
the case of a termination pursuant to Section 7.1(f) only, implement the process set forth in
clause (ii) below. If this Agreement is terminated pursuant to the provisions of Section 7.1(f),
the Company shall notify in writing the Third Party that made such Superior Proposal of its
obligations under this Section 7.2(b)(i) and Section 7.2(b)(ii) (the “Auction Notice”) and
shall not take make the election described in clause (A) of this Section 7.2(b)(i) if such Third
Party notifies the Company in writing within five business days after the date of such Auction
Notice that such Third Party desires to participate in the Auction referred to in Section
7.2(b)(ii).
(ii) If this Agreement is terminated pursuant to the provisions of Section 7.1(f) and the
Company does not make the election set forth in clause (i)(A) above, the Company shall, within
three business days after termination of this Agreement, commence an auction (the
“Auction”) between Parent and the Third Party that has made the Superior Proposal (the
“Third Party Bidder” and collectively with Parent for purposes of the Auction, the
“Bidders”) of the Company’s rights in respect of
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the River Transaction, whether such
auction be for the River Shares (if the closing of the purchase of the River Shares has occurred),
the rights and obligations of the Company under the Share Purchase Contract (if the Share Purchase
Contract has been executed but a closing in respect of the Share Purchase Contract has not occurred
and to the extent that the Company’s rights and obligations under the Share Purchase Contract can
be assigned) or the applicable Assignment Option (if a Share Purchase Contract has not been
executed or if the Share Purchase Contract has been executed but a closing in respect of the Share
Purchase Contract has not occurred and the Company’s rights and obligations under the Share
Purchase Contract are not assignable). Prior to the commencement of the bidding, each of Parent
and the Third Party Bidder shall enter into an escrow agreement with the Escrow Agent, which shall
provide that until the completion of the Auction, information as to amounts held in each such
account must be held in confidence and only be made available to Parent or the Third Party Bidder
(as the case may be) and a Person mutually agreeable to Parent and the Company (the
“Independent Person”), who would agree to hold this information in confidence. All bids in
the Auction must be for cash with a minimum first bid equal to the sum of (i) $10 million and (ii)
the purchase price provided for in the River Transaction. Prior to making a bid, a Bidder would be
required to deposit the amount of its bid in its respective escrow account; provided that
the Parent shall receive a credit for the amount of such purchase price then on deposit in the
Escrow Account, less any River Expenses not previously withdrawn from the Escrow Account. Bids
would be submitted to the Independent Person at the time and place established by the Independent
Person who would agree to hold the bid confidential until the bids of both Bidders were received,
at which time the Escrow Agent would verify that funds in at least an amount necessary to satisfy
such bid had been deposited in the respective Bidder’s escrow account and notify the Company,
Parent and the Third Party
Bidder of the amounts of the bids. Following the first submission of bids, additional
submission of bids shall occur, in each which submission the minimum bid of each Bidder bidding
shall be at least equal to the higher bid in the immediately preceding submission and each of
which submissions would be conducted in accordance with the procedures set forth in the immediately
preceding sentence. At such time as only one of the Bidders submits a bid in accordance with the
procedures set forth in this clause (ii), that Bidder (provided it has sufficient funds then on
deposit in the escrow account) would be obligated, at such Bidder’s final submitted bid, to acquire
the Company’s rights in respect of the River Transaction.
(iii) When the Auction terminates and the proceeds are received, the Company shall cause such
amounts to be distributed to the Company’s stockholders as merger or tender offer consideration in
connection with the Superior Proposal.
(iv) If the Third Party Bidder is the successful Bidder, the Third Party Bidder must (A)
reimburse Parent for all amounts distributed from the Escrow Account (including the amount of any
River Expenses not previously withdrawn from the Escrow Account with respect to which the Company
withholds amounts in the Escrow Account as described below), and the Company must cause any amounts
remaining in the Escrow Account, less any River Expenses not previously withdrawn from the Escrow
Account, to be distributed to Parent prior to the closing of the acquisition by the Third
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Party
Bidder of the Company’s rights in respect of the River Transaction, (B) assume all obligations of
Parent under Section 5.11 of this Agreement (including the obligation to deposit into the Escrow
Account a cash amount equal to the Escrow Deposit within two business days after being determined
to be the successful Bidder, and restore amounts in the Escrow Account subject to immediate
drawdown in accordance with Section 5.11(b)) and (C) indemnify, defend and hold the Parent and it
directors, managers, officers, employees and agents harmless from any and all liabilities,
obligations, claims, contingencies, losses, damages, costs and expenses, including all court costs,
litigation expenses and reasonable attorneys’ fees, that any of such Persons may suffer or incur in
connection with the performance by Parent and the Company of their rights and obligations under
Section 5.11 of this Agreement.
(v) In the event this Agreement is terminated pursuant to the provisions of Section 7.1(h) (if
effected because of Parent’s (A) failure to accept for payment and pay for Company Shares validly
tendered and not properly withdrawn in accordance with the terms of this Agreement or (B) failure
to enter into the Escrow Agreement, make the Initial Escrow Deposit or the Balance Escrow Deposit
into the Escrow Account or restore the amount subject to immediate drawdown held in the Escrow
Account to the Minimum Amount, in each case, in accordance with the terms of this Agreement),
Section 7.1(b) or Section 7.1(f) and the Company does not make the election set forth in clause
(i)(A) above, then the Company shall reimburse the Parent for all amounts deposited by Parent into
the Escrow Account, which payment shall constitute the full satisfaction, discharge and release of
all of the Company’s obligations under this Section 5.11..
(c) Termination Upon A Company Adverse Recommendation Change.
(i) In the event this Agreement is terminated pursuant to the provisions of Section 7.1(e) and
the Company is acquired within 12 months following such termination, the Company shall have the
right, in its discretion, to either (A) (x) assign and transfer the River Shares to Parent if the
closing of the purchase of the River Shares has occurred or (y) assign to Parent all of the
Company’s rights and obligations under the Share Purchase Contract if the Share Purchase Contract
has been executed and delivered but a closing in respect of the Share Purchase Contract has not
occurred and if such rights and obligations under the Share Purchase Contract can be assigned or
(z) grant to Parent the applicable Assignment Option, if either a Share Purchase Contract has not
been executed and delivered or the Share Purchase Contract has been executed and delivered but a
closing in respect of the Share Purchase Contract has not occurred and the Company’s rights and
obligations under such Share Purchase Contract cannot be assigned to Parent, then , in each case,
in accordance with Section 7.2(a), and in consideration of such assignment, Parent shall,
concurrently with such assignment (or in the case of clause (z), concurrently with such assignment
of the Share Purchase Contract or delivery of the River Shares, as the case may be), pay to the
Company the River Fee by wire transfer of immediately available funds, or (B) implement the process
set forth in clause (ii) of Section 7.2(b) above.
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(ii) In the event this Agreement is terminated pursuant to the provisions of Section 7.1(e)
and the Company is not acquired within 12 months following such termination, the Company shall, at
the end of such 12-month period, (x) assign and transfer the River Shares to Parent if the closing
of the purchase of the River Shares has occurred, (y) assign to Parent all of the Company’s rights
and obligations under the Share Purchase Contract if the Share Purchase Contract has been executed
and delivered but a closing in respect of the Share Purchase Contract has not occurred and if such
rights and obligations under the Share Purchase Contract can be so assigned, or (z) grant to Parent
the applicable Assignment Option, if either a Share Purchase Contract has not been executed and
delivered or the Share Purchase Contract has been executed and delivered but a closing in respect
of the Share Purchase Contract has not occurred and the Company’s rights and obligations under such
Share Purchase Contract cannot be assigned to Parent, then , in each case, in accordance with
Section 7.2(a), and in consideration of such assignment, Parent shall, concurrently with such
assignment (or in the case of clause (z), concurrently with such assignment of the Share Purchase
Contract or delivery of the River Shares, as the case may be), pay to the Company the River Fee by
wire transfer of immediately available funds.
7.3 Effect of Termination.
(a) In the event of the termination of this Agreement as provided in Section 7.1, this
Agreement shall be of no further force or effect; provided, however, that: (a) Section 7.2,
Section 7.3, Section 7.4, Section 8 and all other obligations of the parties specifically intended
to be performed after termination of this Agreement shall survive the termination of this Agreement
and shall remain in full force and effect; (b)(x) if termination is pursuant to the provisions of
Section 7.1(a), Section 7.1(c),
Section 7.1(d), Section 7.1(g), or Section 7.1(h) (other than a termination pursuant to
Section 7.1(h) effected because of Parent’s (A) failure to accept for payment and pay for Company
Shares validly tendered and not properly withdrawn in accordance with the terms of this Agreement
or (B) failure to enter into the Escrow Agreement, make the Initial Escrow Deposit or the Balance
Escrow Deposit into the Escrow Account or restore the amount subject to immediate drawdown held in
the Escrow Account to the Minimum Amount, in each case, in accordance with the terms of this
Agreement), or (y) if termination is in accordance with 7.1(h) (if effected because of Parent’s (A)
failure to accept for payment and pay for Company Shares validly tendered and not properly
withdrawn in accordance with the terms of this Agreement or (B) failure to enter into the Escrow
Agreement, make the Initial Escrow Deposit or the Balance Escrow Deposit into the Escrow Account or
restore the amount subject to immediate drawdown held in the Escrow Account to the Minimum Amount,
in each case, in accordance with the terms of this Agreement), Section 7.1(b), Section 7.1(e) (if
Section 7.2(c)(ii) applies, if the Company makes the election pursuant to Section 7.2(c)(i)(B) or,
in the case of an election pursuant to Section 7.2(c)(i)(B) if Parent is the successful Bidder in
the Auction under Section 7.2(b)(ii)) or Section 7.1(f) (if the Company makes the election pursuant
to Section 7.2(b)(i)(A) or pursuant to 7.2(b)(i)(C) or, in the case of an election under Section
7.2(b)(i)(C)Parent is the successful Bidder in the Auction under Section 7.2(b)(ii)), Section 5.11
shall survive the termination of this Agreement and shall remain in full force and effect; and (c)
the termination of this Agreement shall not relieve any
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party from any liability for any willful
breach of any representation or covenant contained in this Agreement or any fraud.
(b) The parties acknowledge that the Termination Amount set forth in Section 7.4 constitutes a
reasonable estimate of the damages that will be suffered by reason of the termination of this
Agreement and shall be in full and complete satisfaction of any and all damages arising as a result
of such termination.
7.4 Termination Fee; Expense Reimbursement.
(a) In the event this Agreement is terminated by the Parent pursuant to Section 7.1(e), then
the Company shall make a cash payment to the Parent in the amount of $21.3 million (the
“Termination Amount”).
(b) In the event this Agreement is terminated by the Parent pursuant to Section 7.1(c), if
both (A) prior to the termination of this Agreement, a Takeover Proposal (with all references to
20% in the definition thereof being treated as references to 50% for purposes hereof) with any
Person other than the Parent or any Affiliate of the Parent, shall have been made to the Company
Board or publicly announced and not withdrawn, revoked or rejected prior to the date of termination
of the Agreement pursuant to Section 7.1(c) and (B) within 12 months following such termination,
the Company shall have entered into a definitive agreement to engage in, or there has otherwise
occurred, a Takeover Proposal (with all references to 20% in the definition thereof being treated
as references to 50% for purposes hereof) with any Person other than the Parent or any Affiliate of
the Parent, which transaction is subsequently consummated, then Company shall make a cash payment
to the Parent of the Termination Amount.
(c) In the event this Agreement is terminated by the Parent pursuant to Section 7.1(g), (i)
Company shall then make a cash payment to the Parent in the amount equal to the Parent’s Expenses,
and (ii) if both (A) prior to the termination of this Agreement, a Takeover Proposal (with all
references to 20% in the definition thereof being treated as references to 50% for purposes hereof)
with any Person other than the Parent or any Affiliate of the Parent, shall have been made to the
Company Board or publicly announced and not withdrawn, revoked or rejected prior to the date of
termination of the Agreement pursuant to Section 7.1(g) and (B) within 12 months following such
termination, the Company shall have entered into a definitive agreement to engage in, or there has
otherwise occurred, a Takeover Proposal (with all references to 20% in the definition thereof being
treated as references to 50% for purposes hereof) with any Person other than the Parent or any
Affiliate of the Parent, which transaction is subsequently consummated, then Company shall make a
cash payment to the Parent of the Termination Amount, less the amount previously received by the
Parent relating to the Parent’s Expenses.
(d) In the event that this Agreement is terminated by the Company pursuant to Section 7.1(b)
or (h), the Parent shall make a cash payment to the Company in the amount equal to the Company’s
Expenses.
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(e) In the event this Agreement is terminated by the Company pursuant to Section 7.1(f) after
a public announcement with respect to a Takeover Proposal (with all references to 20% in the
definition thereof being treated as references to 50% for purposes hereof), then the Company shall
make a cash payment to the Parent of the Termination Amount.
(f) If required under this Section 7.4, the Termination Amount and Parent’s Expenses or the
Company’s Expenses, as the case may be, shall be paid in immediately available funds within two
business days after the date of the event giving rise to the obligation to make such payment except
as provided in Section 7.1(f). The parties acknowledge and agree that the provisions for payment
of the Termination Amount and Parent’s Expenses are an integral part of the transactions
contemplated by this Agreement and are included herein in order to induce the Parent to enter into
this Agreement and to reimburse the Parent for incurring the costs and expenses related to entering
into this Agreement and consummating the transactions contemplated by this Agreement.
SECTION 8. MISCELLANEOUS PROVISIONS
8.1 Amendment. Subject to Section 1.5, this Agreement may be amended with the
approval of the respective parties at any time prior to the Effective Time; provided,
however, that, (i) after Acquisition Sub purchases any Company Shares pursuant to the
Offer, no amendment shall be made which decreases the Merger Consideration, and (ii) that after any
adoption of this Agreement by the Company’s stockholders, no amendment shall be made which by
applicable Legal Requirement requires further approval of the stockholders of the Company without
the further approval
of such stockholders. This Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties hereto.
8.2 Waiver.
(a) At any time prior to the Effective Time, any party hereto may, to the extent legally
allowed, (i) extend the time for the performance of any of the obligations or other acts of any
other party hereto, (ii) waive any inaccuracies in the representations and warranties of any other
party hereto contained herein or in any document delivered pursuant hereto and (iii) waive
compliance by any other party hereto with any of the agreements or conditions contained herein;
provided, however, that after any adoption of this Agreement by the Company’s stockholders, no
extension or waiver of this Agreement or any portion thereof shall be made which applicable Legal
Requirement requires further approval by the stockholders of the Company without obtaining such
further approval.
(b) No failure on the part of any party to exercise any power, right, privilege or remedy
under this Agreement, and no delay on the part of any party in exercising any power, right,
privilege or remedy under this Agreement, shall operate as a waiver of such power, right, privilege
or remedy; and no single or partial exercise of any
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such power, right, privilege or remedy shall
preclude any other or further exercise thereof or of any other power, right, privilege or remedy.
(c) No party shall be deemed to have waived any claim arising out of this Agreement, or any
power, right, privilege or remedy under this Agreement, unless the waiver of such claim, power,
right, privilege or remedy is expressly set forth in a written instrument duly executed and
delivered on behalf of such party; and any such waiver shall not be applicable or have any effect
except in the specific instance in which it is given.
(d) The rights and remedies herein provided shall be cumulative and not exclusive of rights or
remedies provided by law.
8.3 No Survival of Representations and Warranties. None of the representations and
warranties contained in this Agreement, or contained in any certificate delivered pursuant to this
Agreement or in connection with any of the transactions contemplated by this Agreement, shall
survive the Effective Time.
8.4 Entire Agreement; Counterparts. This Agreement and the Confidentiality Agreement
constitute the entire agreement and supersede all prior agreements and understandings, both written
and oral, among or between any of the parties with respect to the subject matter hereof and thereof
and, except as otherwise expressly provided in Section 5.10 are not intended to confer on any
Person any rights or remedies.
8.5
Applicable Law. This Agreement shall be governed by and construed and enforced in
accordance with, the laws of the State of
Delaware applicable to agreements made and to be
performed solely therein, without giving effect to principles of conflicts of law.
8.6
Consent to Jurisdiction. Each of the parties hereto hereby irrevocably and
unconditionally submits, for itself and its property, to the exclusive jurisdiction of any
Delaware
State court, or Federal court of the United States of America, sitting in Delaware, and any
appellate court from any thereof, in any action or proceeding arising out of or relating to this
Agreement or the agreements delivered in connection herewith or the transactions contemplated
hereby or thereby or for recognition or enforcement of any judgment relating thereto, and each of
the parties hereby irrevocably and unconditionally (i) agrees not to commence any such action or
proceeding except in such courts, (ii) agrees that any claim in respect of any such action or
proceeding may be heard and determined in such Delaware State court or, to the extent permitted by
Law, in such Federal court, (iii) waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of any such action or
proceeding in any such Delaware State or Federal court, (iv) waives, to the fullest extent
permitted by Law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such Delaware State or Federal court, and (v) to the extent such party is not
otherwise subject to service of process in the State of Delaware, appoints Corporation Service
Company as such party’s agent in the State of Delaware for acceptance of legal process and agrees
that service made on any such agent shall have the
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same legal force and effect as if served upon
such party personally within such state. Each of the parties hereto agrees that a final judgment
in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by Law. Each party to this Agreement
irrevocably consents to service of process in the manner provided for notices in Section 8.11
hereof. Nothing in this Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by Law.
8.7 Waiver of Jury Trial. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY
THAT MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND
THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH
PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY
CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION,
SEEK TO ENFORCE THE FOREGOING WAIVER, (B) EACH SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE
IMPLICATIONS OF THIS WAIVER, (C) EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) EACH SUCH
PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 8.7.
8.8 Attorneys’ Fees. In any action at law or suit in equity to enforce this Agreement
or the rights of any of the parties hereunder, the prevailing party in such
action or suit shall be entitled to receive a reasonable sum for its attorneys’ fees and all
other reasonable costs and expenses incurred in such action or suit.
8.9 Payment of Expenses. Except as provided in Section 7.4, whether or not Company
Shares are purchased pursuant to the Offer and whether or not the Merger is consummated, each party
hereto shall pay its own expenses incident to preparing for, entering into and carrying out this
Agreement and the transactions contemplated hereby, including all attorneys’ and accountants’ fees
and expenses; provided, however, that Parent and the Company shall share equally
all fees and expenses incurred for the filing fee of any documents required under the HSR Act or
any comparable provisions under any applicable pre-merger notification laws or regulations of
foreign jurisdictions. Nothing contained in this Agreement shall be deemed to limit the right or
ability of any party to this Agreement to pay such expenses, as and when due and payable.
8.10 Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned or delegated, in whole or in part, by operation of any
applicable Legal Requirement or otherwise, by any of the parties without the prior written consent
of the other parties; provided, that Parent and the Acquisition Sub may assign any of its
rights and obligations hereunder, in whole or in part, to any Affiliate or
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Subsidiary of Parent
without obtaining the consent of the Company and any such assignment shall not relieve Parent or
Acquisition Sub of its obligations hereunder. Subject to the preceding sentence, this Agreement
shall be binding upon, inure to the benefit of, and be enforceable by, the parties hereto and their
respective successors and permitted assigns. Any purported assignment not permitted under this
Section 8.10 shall be null and void.
8.11 Notices. All notices, requests, demands and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given or made as follows: (a)
if sent by registered or certified mail in the United States return receipt requested, upon
receipt; (b) if sent designated for overnight delivery by nationally recognized overnight air
courier (such as DHL or Federal Express), two business days after delivery to such courier; (c) if
sent by facsimile transmission before 5:00 p.m. Pacific Time, when transmitted and receipt is
confirmed; (d) if sent by facsimile transmission after 5:00 p.m. Pacific Time and receipt is
confirmed, on the following business day; and (e) if otherwise actually personally delivered, when
delivered, provided that such notices, requests, demands and other communications are delivered to
the address set forth below, or to such other address as any party shall provide by like notice to
the other parties to this Agreement:
if to Parent or Acquisition Sub:
Acer Inc.
Galaxy Acquisition Corp.
8F, 88, Sec. 1
Hsin Xxx Xx Road
Hsichih
Taipei, Hsien 221
Taiwan, R.O.C.
Attention: General Counsel
Fax: 000-0-0000-0000
with a copy to:
Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP
000 Xxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Fax: (000) 000-0000
if to the Company:
Gateway, Inc.
0000 Xxxxxx Xxxxxx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxx Xxxx
Fax: (000) 000-0000
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with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 X. Xxxxx Xxxxxx, Xxx. 0000
Xxx Xxxxxxx, XX 00000
Attention: Xxxxx X. XxXxxxxx, Esq.
Fax: (000) 000-0000
8.12 Severability. In the event that any one or more provisions of this Agreement
shall for any reason be held invalid, illegal or unenforceable in any respect, by any court of
competent jurisdiction, such invalidity, illegality or unenforceability shall not affect any other
provisions of this Agreement and the parties shall use their reasonable best efforts to substitute
a valid, legal and enforceable provision which, insofar as practicable, implements the original
purposes and intents of this Agreement.
8.13 Specific Performance. The parties hereto agree that irreparable damage would
occur in the event that any of the provisions contained in this Agreement were not performed in
accordance with its specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to seek an injunction or injunctions, without the posting of any bond, to
prevent breaches of this Agreement and to enforce
specifically the terms and provisions thereof in any federal court located in the State of
Delaware or any Delaware state court, this being in addition to any other remedy to which they are
entitled at law or in equity.
8.14 Construction.
(a) For purposes of this Agreement, whenever the context requires: the singular number shall
include the plural, and vice versa; the masculine gender shall include the feminine and neuter
genders; the feminine gender shall include the masculine and neuter genders; and the neuter gender
shall include masculine and feminine genders.
(b) The parties hereto agree that any rule of construction to the effect that ambiguities are
to be resolved against the drafting party shall not be applied in the construction or
interpretation of this Agreement.
(c) As used in this Agreement, the words “include” and “including,” and variations thereof,
shall not be deemed to be terms of limitation, but rather shall be deemed to be followed by the
words “without limitation.”
(d) Except as otherwise indicated, all references in this Agreement to “Sections,” “Exhibits,”
“Annexes” and “Schedules” are intended to refer to Sections of this Agreement and Exhibits, Annexes
and Schedules to this Agreement.
(e) All references in this Agreement to “$” are intended to refer to U.S. dollars.
(f) All references in this Agreement to “€” are intended to refer to Euro dollars.
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(g) As used in this Agreement, the words “herein,” “hereof,” “herewith,” “hereby,” “hereunder”
and “hereto” and other words of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision.
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Parent, Acquisition Sub and the Company have caused this Agreement to be executed as of the
date first written above.
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ACER INC. |
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By: |
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/s/ X.X. Xxxx |
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Name: |
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X.X. Xxxx |
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Title:
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Chairman |
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GALAXY ACQUISITION CORP. |
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/s/ Xxxxxx Xxxx |
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Name: |
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Xxxxxx Xxxx |
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Title: |
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Chief Financial Officer |
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GATEWAY, INC. |
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By: |
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/s/ J. Xxxxxx Xxxxxxx |
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Name: |
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J. Xxxxxx Xxxxxxx |
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Title: |
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Chief Executive Officer |
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ANNEX I
Conditions of the Offer
Acquisition Sub shall not be obligated to accept for payment, and (subject to the rules and
regulations of the SEC) shall not be obligated to pay for, any Company Shares tendered pursuant to
the Offer (and not theretofore accepted for payment or paid for) unless, prior to the expiration of
the Offer (as it may have been extended pursuant to Section 1.1(d) of this Agreement):
(1) there shall have been validly tendered and not properly withdrawn Company Shares that,
considered together with all other Company Shares (if any) beneficially owned by Parent and its
Affiliates, represent at least a majority of the total number of Company Shares outstanding at the
time of the expiration of the Offer on a “fully diluted basis"(which assumes conversion or exercise
of all then outstanding warrants, options, benefit plans or obligations or securities convertible
or exchangeable into or exercisable for Company Shares, but only to the extent then so convertible,
exchangeable or exercisable, vested (if applicable), and in-the-money at the Offer Price, in each
case, other than potential dilution attributable to Company Rights) on the date Company Shares are
accepted for payment (the “Minimum Tender Condition”); or
(2) the waiting periods under the HSR Act, the Canadian Competition Act and the review period
under the Fair Trade Act of 2002 of the Republic of China (Taiwan) shall have expired or otherwise
been terminated; or
(3) the period of time for any applicable review process by the Committee on Foreign
Investment in the United States (“CFIUS”) under Exon-Xxxxxx (including, if applicable, any
investigation commenced thereunder) shall have expired or been terminated, CFIUS shall have
provided a written notice to the effect that review of the transactions contemplated by this
Agreement has been concluded and that a determination has been made that there are no issues of
national security sufficient to warrant investigation under Exon-Xxxxxx, or the President shall
have made a decision not to block the transaction.
Furthermore, Acquisition Sub shall not be required to accept for payment, and (subject to the
rules and regulations of the SEC) shall not be obligated to pay for, any Company Shares tendered
pursuant to the Offer (and not theretofore accepted for payment or paid for) if, upon the
expiration of the Offer (as it may have been extended pursuant to Section 1.1(d) of this Agreement)
and before acceptance of such Company Shares for payment, any of the following events has occurred
and is at such time continuing:
(a) there shall be any action taken, or any statute, rule, regulation, legislation,
interpretation, judgment, order or injunction enacted, enforced, amended, issued or deemed
applicable to the Offer, by any legislative body, court, government or governmental, administrative
or regulatory authority or agency, domestic or foreign, other than the application of the waiting
period provisions of the HSR Act and the
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Canadian Competition Act, the review period under the Fair Trade Act of 2002 of the Republic
of China (Taiwan) and the review period of CFIUS to the Offer or to the consummation of the
Merger, which is then in effect and: (i) makes illegal or otherwise prohibits the acceptance for
payment of, and payment for Company Shares, pursuant to the Offer or the Merger, (ii) restricts,
prohibits or limits the ownership or operation by Parent or Acquisition Sub or their subsidiaries
of all or any material portion of the business or assets of the Company or any of their respective
subsidiaries or compel Parent or Acquisition Sub or any of their respective Subsidiaries to
dispose of or hold separately all or any material portion of the business or assets of Parent or
Acquisition Sub or Company or any of their respective subsidiaries, or imposes any material
limitation, restriction or prohibition on the ability of the Parent or Company or their
Subsidiaries to conduct its business or own such assets, (iii) imposes material limitations on the
ability of Parent or the Acquisition Sub or their subsidiaries to acquire, hold or exercise full
rights of ownership of the Company Shares, including, without limitation, the right to vote any
Company Shares acquired or owned by Acquisition Sub or Parent or their Subsidiaries pursuant to the
Offer on all matters properly presented to the Company’s stockholders, or (iv) requires divestiture
by Parent or the Acquisition Sub or their Subsidiaries of any Company Shares; or
(b) any of the representations and warranties of the Company set forth in this Agreement shall
not be true and correct (without giving effect to any limitation as to “materiality” or “Company
Material Adverse Effect” or similar terms set forth therein) except where the failure to be so true
and correct does not have, and would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect as if such representations and warranties were made at
the time of such determination (except to the extent such representations and warranties relate to
an earlier date, in which case only as of such earlier date); or
(c) the Company shall have failed to perform in any material respect any obligation, agreement
or covenant required to be performed by it under this Agreement; or
(d) there shall have occurred any Effect arising after the date of this Agreement which has
had or would reasonably be expected have, either individually or in the aggregate, a Company
Material Adverse Effect; or
(e) the Company and Parent shall have reached a mutual written agreement either that the Offer
be terminated or this Agreement be terminated, or this Agreement shall have been validly terminated
in accordance with Section 7 thereof.
At the request of Parent, immediately prior to the Acceptance Time, the Company shall deliver
to Parent a certificate executed on behalf of the Company by the chief executive officer or chief
financial officer of the Company certifying that the conditions set forth in paragraphs (b), (c)
and (d) are satisfied as of such time and date.
The foregoing conditions are for the sole benefit of Parent and Acquisition Sub, may be asserted
only by Parent or Acquisition Sub regardless of the circumstances giving rise to
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such condition except as provided by this Agreement (other than any such circumstances caused by or
substantially contributed to by any breach by Parent or Acquisition Sub of any of their
representations, warranties, covenants, agreements or obligations under this Agreement), and may be
waived only by Parent or Acquisition Sub in whole or in part at any time and from time to time and
in the sole discretion of Parent or Acquisition Sub, subject in each case to the terms of this
Agreement. Subject to the terms of this Agreement, the failure by Parent or Acquisition Sub at any
time to exercise any of the foregoing rights shall not be deemed a waiver of any such right and,
each such right shall be deemed an ongoing right which may be asserted at any time and from time to
time, in each case, prior to the acceptance for payment of, and payment for, tendered Company
Shares.
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Exhibit A
Certain Definitions
For purposes of this Agreement (including Annex I and this Exhibit A):
Affiliate. A Person shall be deemed to be an “Affiliate” of another Person if such
Person directly or indirectly controls, is directly or indirectly controlled by or is directly or
indirectly under common control with such other Person.
Code. “Code” shall mean the Internal Revenue Code of 1986, as amended.
Company Convertible Notes. “Company Convertible Notes” shall mean, collectively, the
Company’s 1.5% Senior Convertible Notes due December 31, 2009 and the Company’s 2.0% Senior
Convertible Notes due December 31, 2011.
Company IP. “Company IP” shall mean all material IP Rights that are owned by, or that
another Person has an obligation to assign to, the Company or its Subsidiaries and that are
necessary to enable the Company to conduct its business substantially in the manner in which its
business is currently being conducted, whether or not such rights are registered, recorded, or
associated with an issued patent.
Company Material Adverse Effect. “Company Material Adverse Effect” shall mean any
event, change, circumstance, effect or state of facts (each, an “Effect”) that,
individually or in the aggregate when taken together with all other Effects, has had or would
reasonably be expected to have a material adverse effect on the business, operations, results of
operations or condition (financial or otherwise) of the Company and its Subsidiaries, taken as a
whole or would reasonably be expected to prevent or materially delay the consummation of the Offer,
the Merger or the other transactions contemplated by this Agreement or prevent or materially impair
or delay the ability of the Company to perform its obligations under this Agreement;
provided, however, that none of the following shall be taken into account in
determining whether a Company Material Adverse Effect exists: (a) any adverse Effect that results
from general economic, financial or market conditions to the extent that such Effect does not have
a materially disproportionate impact on the Company and its Subsidiaries, taken as a whole; (b) any
adverse Effect arising from or otherwise relating to any act of terrorism, war, national or
international calamity or any other similar event to the extent that such Effect does not have a
materially disproportionate impact on the Company and its Subsidiaries, taken as a whole; (c) any
adverse Effect (including any loss of employees, any cancellation of or delay in customer orders or
any litigation) arising from or otherwise relating to the announcement or pendency of this Agreement, the
Offer or the Merger; (d) any adverse Effect resulting from or arising out of actions taken pursuant
to (and required by) this
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Agreement or at the request of Parent or Acquisition Sub or the failure
to take any actions due to restrictions set forth in this Agreement; (e) any changes in the price
or trading volume of the Company’s stock, in and of itself (provided that the exception in this
clause (e) shall not prevent or otherwise affect a determination that any effect underlying such
change has resulted in a Company Material Adverse Effect); (f) any failure by the Company to meet
published revenue or earnings projections, in and of itself (provided that the exception in this
clause (f) shall not prevent or otherwise affect a determination that any effect underlying such
change has resulted in a Company Material Adverse Effect); (g) any adverse Effect arising out of or
resulting from any legal claims or other proceedings made by any of the Company’s stockholders
arising out of or related to this Agreement, the Offer or the Merger; (h) other changes reasonably
foreseeable as a result of the announcement of the transactions contemplated hereby; (i)
disruptions in the availability or quality of components available to Company or its suppliers or
finished goods available to the Company as a result of market constraints or transportation
conditions or similar factors to the extent that such Effect does not have a materially
disproportionate impact on the Company and its Subsidiaries, taken as a whole; (j) any adverse
Effect resulting from or arising out of the announcement, pendency, consummation, non-consummation,
or terms and conditions, of the sale of the Company’s “Professional Division” or that portion of
the Company’s consumer direct division that provides business-related products and technical
services to small to medium-sized businesses (collectively, the
“Pro Business”); or
(k) any adverse Effect resulting from any changes in applicable law, rules, regulations or GAAP or
other accounting standards, or authoritative interpretations thereof.
Company Options. “Company Options” shall mean options to purchase Company Shares from
the Company, whether granted by the Company pursuant to the Company Stock Plans or otherwise.
Company Rights. “Company Rights” shall mean the rights issued pursuant to the Company
Rights Agreement.
Company Rights Agreement. “Company Rights Agreement” shall mean the Rights Agreement
dated as of January 19, 2000 between the Company and UMB Bank, N.A., as Rights Agent.
Company Shares. “Company Shares” shall mean shares of common stock, $0.01 par value
per share, of the Company. Except where the context otherwise requires, all references in this
Agreement to Company Shares shall include the associated Company Rights.
Company Stock Plans. “Company Stock Plans” shall mean the following stock option
plans of the Company: the 1996 Long-Term Incentive Equity Plan, the 2000 Equity Incentive Plan,
the 1996 Non-Employee Directors Stock Option Plan and the Employee Equity Incentive Plan (also
known as the 2000 Employee Equity Incentive Plan).
A-2
Company’s Expenses. “Company’s Expenses” shall mean the cash amount necessary to
reimburse the Company and its Affiliates for their documented out-of-pocket fees and expenses
incurred by them or on their behalf at any time prior to the termination of this Agreement in
connection with the Offer, the Merger and the other transactions contemplated by this Agreement.
Confidentiality Agreement. “Confidentiality Agreement” shall mean the Non-Disclosure
Agreement dated August 3, 2007 between Parent and the Company.
Entity. “Entity” shall mean any corporation (including any non-profit corporation),
general partnership, limited partnership, limited liability partnership, joint venture, estate,
trust, company (including any company limited by shares, limited liability company or joint stock
company), firm, society or other enterprise, association, organization or entity (including any
Governmental Entity).
Environmental Law. “Environmental Law” shall mean applicable foreign, federal, state
and local laws, regulations, rules and ordinances regulating pollution or protection of human
health or the environment.
Exchange Act. “Exchange Act” shall mean the Securities Exchange Act of 1934, as
amended.
GAAP. “GAAP” shall mean United States generally accepted accounting principles.
Governmental Authorization. “Governmental Authorization” shall mean any permit,
license, registration, qualification or authorization granted by any Governmental Entity.
Governmental Entity. “Governmental Entity” shall mean any federal, state, local or
foreign governmental authority as well as private arbitral authorities whose orders are binding.
Hazardous Substances. “Hazardous Substances” shall mean any substance, whether solid,
liquid or gaseous, which is regulated as a “hazardous substance,” “hazardous waste,” “oil,”
“pollutant,” “toxic substance,” “hazardous material,” or “contaminant” pursuant to applicable
Environmental Laws, including asbestos, polychlorinated biphenyls or petroleum compounds.
HSR Act. “HSR Act” shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
IP Rights. “IP Rights” shall mean intellectual property rights, however denominated
throughout the world, including: (a) patents, patent applications, patent disclosures, and all
related continuations, continuations-in-part, divisionals, reissues, re-examinations,
substitutions, and extensions thereof; (b) industrial property rights; (c) trademarks, trade names
and service marks; (d) copyrights, mask works and proprietary works of authorship; (e) trade secrets; and (f) computer software (in any code
format).
A-3
Knowledge. “Knowledge” of the Company shall mean the knowledge of the individuals set
forth in Exhibit A to the Company Disclosure Schedule after due and diligent inquiry.
Latest Balance Sheet. “Latest Balance Sheet” shall mean the unaudited consolidated
balance sheet of the Company and its Subsidiaries as of June 30, 2007, which is included in the
Company’s Report on Form 10-Q filed with the SEC for the fiscal quarter ended June 30, 2007.
Legal Proceeding. “Legal Proceeding” shall mean any lawsuit, court action or legal,
governmental, administrative or arbitration proceeding or any investigation or inquiry by a
Governmental Entity, in all cases of which, the Company has received notice.
Legal Requirement. “Legal Requirement” shall mean any law, rule, obligation, duty,
regulation, statute, treaty, ordinance, judgment, decree, order, writ or injunction of, or adopted,
promulgated or imposed by, any Governmental Entity.
Parent’s Expenses. “Parent’s Expenses” shall mean the cash amount necessary to
reimburse Parent, Acquisition Sub and their Affiliates for their documented out-of-pocket fees and
expenses incurred by them or on their behalf at any time prior to the termination of this Agreement
in connection with the Offer, the Merger and the other transactions contemplated by this Agreement.
Permitted Encumbrances. “Permitted Encumbrances” shall mean: (a) liens for taxes not
yet due and payable; (b) liens, encumbrances or imperfections of title, other than mortgages and
other voluntary monetary liens and encumbrances, that have arisen in the ordinary course of
business and that do not materially adversely affect the current use or value of the properties or
assets subject thereto or affected thereby; (c) liens or encumbrances disclosed in the Company SEC
Documents; and (d) liens, pledges or encumbrances arising from or otherwise relating to transfer
restrictions under the Securities Act and the securities laws of the various states of the United
States or foreign jurisdictions.
Person. “Person” shall mean any individual or Entity.
Restricted Company Shares. “Restricted Company Shares” shall mean those Company
Shares issued under Company Stock Plans that are subject to forfeiture in favor of the Company that
lapses over a vesting period related to the holder’s period of employment.
SEC. “SEC” shall mean the United States Securities and Exchange Commission.
Securities Act. “Securities Act” shall mean the Securities Act of 1933, as amended.
Software. “Software” shall mean all (a) computer programs, software applications and
code, including software implementations of algorithms, models and
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methodologies, and source code
and object code, and (b) software development and design tools, and software libraries and
compilers.
Subsidiary. An Entity shall be deemed to be a “Subsidiary” of another Person if such
Person directly or indirectly owns, beneficially or of record: (a) an amount of voting securities
or other interests in such Entity that is sufficient to enable such Person to elect at least a
majority of the members of such Entity’s board of directors or comparable governing body; (b) at
least 50% of the outstanding equity interests issued by such Entity; or (c) any Entity for which
the Company exercises operational control.
Superior Proposal. “Superior Proposal” shall mean any bona fide written proposal (on
its most recently amended or modified terms, if amended or modified) made by a Third Party to enter
into a Takeover Proposal (a) which, if consummated, would result in such Third Party (or in the
case of a direct merger between such Third Party or any Subsidiary of such Third Party and the
Company, the equity holders of such Third Party) owning, directly or indirectly, 75% of the
outstanding Company Shares or all or substantially all of the consolidated assets of the Company
and its Subsidiaries, and (b) which is otherwise on terms and conditions which the Board of
Directors of the Company determines by a majority vote in its good faith (after consultation with a
financial advisor of national reputation and outside legal counsel) and in light of all relevant
circumstances and all the terms and conditions of such proposal and this Agreement, including any
break-up fees, expense reimbursement provisions, conditions to consummation and the likelihood of
consummation (taking into account all financing, regulatory, legal and other aspects, including
whether the Takeover Proposal is subject to a financing contingency, the availability of financing
and the terms and conditions of any financing commitments or agreements), to be more favorable from
a financial point of view to the Company’s stockholders than the Offer, the Merger and the other
transactions contemplated hereby; provided, however, that such proposal made
pursuant to this clause (b) shall not be adjusted by or be contingent upon any proceeds to be paid
to the stockholders by the Company pursuant to the Auction provided for in Section 7.2(b)(ii).
Takeover Proposal. “Takeover Proposal” shall mean any inquiry, proposal or offer from
any Third Party relating to any (a) acquisition of assets of the Company and its Subsidiaries
(including securities of Subsidiaries of the Company) equal to 20% or more of the Company’s
consolidated assets or to which 20% or more of the Company’s revenues or earnings on a consolidated
basis are attributable, (b) acquisition of 20% or more of the outstanding shares of capital stock
or any other voting securities of the Company, (c) tender offer (including a self-tender offer) or
exchange offer that if consummated would result in any Third Party beneficially owning 20% or more
of the outstanding shares of capital stock or any other voting securities of the Company or (d) merger, consolidation, share exchange, business combination,
recapitalization, liquidation, dissolution or similar transaction involving the Company or any of
its Subsidiaries whose assets, individually or in the aggregate, constitute more than 20% of the
consolidated assets of the Company, in each case other than the transactions contemplated hereby.
A-5
Third Party. “Third Party” shall mean any Person, including as defined in Section
13(d) of the Exchange Act, other than Parent or any of its Affiliates, and the representatives of
such Person, in each case, acting in such capacity.
Walk Away Date. “Walk Away Date” shall mean December 31, 2007; provided,
however, if all of the Offer Conditions set forth in Annex I, other than (2), (3) and (a)
are satisfied as of such date, then the Walk Away Date shall mean February 29, 2008.
A-6
EXHIBIT B
Tender and Support Agreement
TENDER AND SUPPORT AGREEMENT (this “Agreement”) dated as of
, 2007 among
Acer Inc., a
corporation (“Parent”), Galaxy Acquisition Corp., a Delaware corporation and a direct or
indirect wholly owned subsidiary of Parent (“Acquisition Sub”), and the Person listed on
Annex
I (the “Stockholder”), an owner of shares of common stock of Target, Inc., a Delaware
corporation (the “Company”).
WHEREAS, as of the date hereof, the Stockholder is the “beneficial owner” (as defined in Rule
13d-3 under the Exchange Act) of the number of shares of Company Shares set forth opposite the
Stockholder’s name under the heading “Shares Beneficially Owned as of [ ], 2007”
on Annex I (all such directly owned shares of Company Common Stock which are outstanding as
of the date hereof and which may hereafter be issued pursuant to any exercise of Company Stock
Options or vesting of Restricted Company Shares, acquisition by purchase, or stock dividend,
distribution, split-up, recapitalization, combination or similar transaction, being referred to
herein as the “Subject Shares”);
WHEREAS, as a condition to their willingness to enter into the
Agreement and Plan of Merger
(the “Merger Agreement”) dated as of the date hereof among Parent, Acquisition Sub and the Company,
Parent and Acquisition Sub have requested that the Stockholder, and in order to induce Parent and
Acquisition Sub to enter into the Merger Agreement the Stockholder (only in the Stockholder’s
capacity as a stockholder of the Company) has agreed to, enter into this Agreement;
WHEREAS, capitalized terms used but not otherwise defined herein shall have the respective
meanings ascribed to such terms in the Merger Agreement.
NOW, THEREFORE, in consideration of the foregoing and the respective representations,
warranties, covenants and agreements set forth below, the parties hereto agree as follows:
ARTICLE I
AGREEMENT TO TENDER
Section 1.01 Agreement to Tender. (a) The Stockholder shall duly tender, or cause to be
tendered, in the Offer, all of the Subject Shares (excluding for purposes of this Section 1.01
Subject Shares that are the subject of unexercised Company Options) pursuant to and in accordance
with the terms of the Offer. No later than five business days prior to the Initial Expiration
Date, the Stockholder shall (i) deliver to the depositary designated in the Offer (the
“Depositary”) (A) a letter of transmittal with respect to such Subject Shares complying with the
terms of the Offer, (B) a certificate or certificates representing such Subject Shares or an
“agent’s message” (or such other evidence, if any, of transfer as the Depositary may reasonably
request) in the case of a book-entry transfer of any uncertificated Subject Shares and (C) all
other documents or instruments required to be delivered pursuant to the terms of the Offer, and/or
(ii) instruct its broker or such other Person that is the holder of record of any Subject Shares
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beneficially owned by the Stockholder to tender such Subject Shares pursuant to and in accordance
with the terms of the Offer.
(b) The Stockholder agrees that once its Subject Shares are tendered by it, the Stockholder
will not withdraw, nor permit the withdrawal of, any tender of such Subject Shares, unless and
until (i) the Offer shall have been terminated by Acquisition Sub in accordance with the terms of
the Merger Agreement, or (ii) this Agreement shall have been terminated in accordance with Section
5.03.
ARTICLE II
ADDITIONAL COVENANTS OF THE STOCKHOLDER
Subject to Section 5.15, the Stockholder hereby covenants and agrees that:
Section 2.01 Voting Of Subject Shares. At every meeting of the stockholders of the Company
called for such purpose, and at every adjournment or postponement thereof, the Stockholder shall,
or shall cause the holder of record on any applicable record date to, vote its Subject Shares (to
the extent that any of the Stockholder’s Subject Shares are not purchased in the Offer) (i) in
favor of the adoption of the Merger Agreement and the transactions contemplated thereby, (ii)
against (A) any agreement or arrangement related to any Takeover Proposal, or (B) any liquidation,
dissolution, recapitalization, extraordinary dividend or other significant corporate reorganization
of the Company or any of its Subsidiaries, and (iii) in favor of any other matter necessary for
consummation of the transactions contemplated by the Merger Agreement which is considered at any
such meeting of stockholders, and in connection therewith to execute any documents which are
necessary or appropriate in order to effectuate the foregoing. In the event that any meeting of the
stockholders of the Company is held, the Stockholder shall, or shall cause the holder of record on
any applicable record date to, appear at such meeting or otherwise cause its Subject Shares (to the
extent that any of the Stockholder’s Subject Shares are not purchased in the Offer) to be counted
as present thereat for purposes of establishing a quorum.
Section 2.02 No Transfers; No Inconsistent Arrangements. (a) Except as provided hereunder or
under the Merger Agreement, the Stockholder shall not, directly or indirectly, (i) transfer (which
term shall include any sale, assignment, gift, pledge, hypothecation or other disposition), or
consent to or permit any such transfer of, any or all of its Subject Shares or any interest
therein, or create or permit to exist any lien or other encumbrance, other than any restrictions
imposed by Legal Requirements or pursuant to this Agreement, on any such Subject Shares, (ii) enter
into any agreements or commitments (written or oral) with respect to any transfer of such Subject
Shares or any interest therein, (iii) grant or permit the grant of any proxy, power of attorney or
other authorization in or with respect to such Subject Shares, (iv) deposit or permit the deposit
of such Subject Shares into a voting trust or enter into a voting agreement or arrangement with
respect to such Subject Shares, or (v) take or permit any other action that would in any way
restrict, limit or interfere with the performance of its obligations hereunder or the transactions
contemplated hereby or otherwise make any representation or warranty of the Stockholder herein
untrue or incorrect; provided that the actions described in clauses (i) and (ii) above shall be permitted hereunder as a result of any donative transfer
to any immediate family member of the Stockholder, any charity to which the Stockholder wishes to
contribute and/or any entity controlled by such family member or charity, or a trust, including,
but not limited to, a charitable remainder trust, for the exclusive benefit of the Stockholder, any
immediate family member of the Stockholder, any charity to which the Stockholder wishes to
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contribute and/or any entity controlled by such trusts; provided further that prior to such
transfer, the transferee shall agree in writing to be bound by the terms hereof (a copy of which
written agreement shall promptly be provided to Parent) and such transfer shall not relieve the
Stockholder of any of its obligations hereunder.
(b) Any attempted transfer of Subject Shares or any interest therein in violation of this
Section 2.02 shall be null and void. In furtherance of this Agreement, the Stockholder shall and
hereby does authorize the Company and Acquisition Sub’s counsel to notify the Company’s transfer
agent that there is a stop transfer restriction with respect to all of its Subject Shares (and that
this Agreement places limits on the voting and transfer of its Subject Shares); provided that any
such stop transfer restriction shall terminate upon the termination of this Agreement in accordance
with its terms and, upon such event, Parent shall notify the Company’s transfer agent of such
termination.
Section 2.03 Dissenter’s Rights. The Stockholder agrees not to exercise any dissenter’s
rights in respect of its Subject Shares which may arise with respect to the Merger.
Section 2.04 Documentation and Information. To the extent required by law, as advised by
Parent’s outside counsel, the Stockholder consents to and authorizes the publication and disclosure
by Parent of the Stockholder’s identity and holding of Subject Shares, and the nature of its
commitments, arrangements and understandings under this Agreement.
Section 2.05 Irrevocable Proxies. In order to secure the performance of the Stockholder’s
obligations under this Agreement, by entering into this Agreement and solely with respect to the
matters described in Section 2.01, the Stockholder hereby irrevocably grants a proxy appointing
such persons as Parent designates as the Stockholder’s attorney-in-fact and proxy, with full power
of substitution, for and in its name, place and stead, to vote, express consent or dissent, or
otherwise to utilize such voting power in the manner contemplated by and in accordance with Section
2.01, in such person’s discretion, with respect to the Stockholder’s Subject Shares, in each case,
until the termination of this Agreement in accordance with Section 5.03. The Stockholder hereby
revokes any and all previous proxies granted with respect to the Stockholder’s Subject Shares. The
Stockholder hereby affirms that the irrevocable proxy set forth in this Section 2.05 is given in
connection with the execution of the Merger Agreement and affirms that such irrevocable proxy is
coupled with an interest and may under no circumstances be revoked, except that such irrevocable
proxy shall be revoked automatically, without any notice or other action by any person, upon the
termination of this Agreement in accordance with Section 5.03. The Stockholder hereby ratifies and
confirms all that such irrevocable proxy may lawfully do or cause to be done by virtue hereof. THE
PROXY AND POWER OF ATTORNEY SET FORTH IN THIS SECTION 2.05 IS IRREVOCABLE AND COUPLED WITH AN
INTEREST. The Stockholder shall execute and deliver to Parent any proxy cards that the Stockholder
receives to vote in favor of the adoption of the Merger Agreement and the transactions contemplated
thereby.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER
The Stockholder represents and warrants to Parent as follows (it being understood that, except
where expressly stated to be given or made as of the date hereof only, the representations and
warranties contained in this Agreement shall be made as of the date hereof and as of the date of
each meeting of the stockholders of the Company and of the date of the Merger):
Section 3.01 Organization. The Stockholder, if it is a corporation, partnership, limited
liability company, trust or other entity, is duly organized and validly existing and in good
standing under the laws of the jurisdiction of its organization.
Section 3.02 Authorization. If the Stockholder is not an individual, it has full corporate,
limited liability company, partnership or trust power and authority to execute and deliver this
Agreement and to perform its obligations hereunder. If the Stockholders is an individual, he has
full legal capacity, right and authority to execute and deliver this Agreement and to perform his
obligations hereunder. The execution and delivery by the Stockholder of this Agreement and the
consummation by the Stockholder of the transactions contemplated hereby have been duly authorized
by all necessary action on the part of the Stockholder. This Agreement has been duly executed and
delivered by the Stockholder and constitutes a valid and legally binding obligation of the
Stockholder, enforceable against the Stockholder in accordance with its terms, subject to the
effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws relating to or affecting creditors’ rights generally and general equitable principles
(whether considered in a proceeding in equity or at law).
Section 3.03 No Violation. (a) The execution and delivery of this Agreement by the
Stockholder does not, and the performance by the Stockholder of the Stockholder’s obligations
hereunder will not, conflict with, or result in any violation of, or constitute a default (with or
without notice or lapse of time, or both) under, or give rise to a right of, or result by its terms
in the, termination, amendment, cancellation or acceleration of any obligation or the loss of a
material benefit under, or to increased, additional, accelerated or guaranteed rights or
entitlements of any Person under, or create any obligation to make a payment to any other Person
under, or result in the creation of a lien or encumbrance on, or the loss of, any of the properties
or assets of the Stockholder (including the Stockholder’s Subject Shares) pursuant to: (i) if the
Stockholder is not an individual, any provision of its certificate of incorporation, bylaws or
similar organizational documents; or (ii) any contract to which the Stockholder is a party or by
which any of its properties or assets is bound or any order or law applicable to the Stockholder or
its properties or assets.
(b) No consent, approval, order, authorization or permit of, or registration, declaration or
filing with or notification to, any Governmental Authority or any other Person is required by or
with respect to the Stockholder in connection with the execution and delivery of this Agreement by
the Stockholder or the performance by the Stockholder of the Stockholder’s obligations hereunder,
except for the filing with the SEC of any Schedules 13D or 13G or amendments to Schedules 13D or
13G and filings under Section 16 of the Exchange Act as may be required in connection with this
Agreement and the transactions contemplated hereby.
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Section 3.04 Ownership of Shares. As of the date hereof, the Stockholder is, and will be
(except with respect to any Shares transferred in accordance with Section 2.02(a) hereof), at all
times during the period beginning on the date of this Agreement and ending on the date of
termination of this Agreement, a beneficial owner of such Subject Shares listed on Annex I.
As of the date hereof, except as set forth on Annex II, the Subject Shares together
constitute all of the Company Shares beneficially owned by the Stockholder, and are owned free and
clear of any pledge, lien, security interest, mortgage, charge, claim, equity, option, proxy,
voting restriction, voting trust or agreement, understanding, arrangement, right of first refusal,
limitation on disposition, adverse claim of ownership or use or encumbrance of any kind.
Section 3.05 Absence of Litigation. With respect to the Stockholder, as of the date hereof,
there is no action, suit, investigation or proceeding pending against, or, to the knowledge of the
Stockholder, threatened against or affecting, the Stockholder or any of its properties or assets
(including such Subject Shares) that could reasonably be expected to impair the ability of the
Stockholder to perform its obligations hereunder or to consummate the transactions contemplated
hereby on a timely basis.
Section 3.06 Opportunity to Review; Reliance. The Stockholder has had the opportunity to
review this Agreement and the Merger Agreement with counsel of its own choosing. The Stockholder
understands and acknowledges that Parent is entering into the Merger Agreement in reliance upon the
Stockholder’s execution, delivery and performance of this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to the Stockholder, as of the date hereof and as of the date of
each meeting of the stockholders of the Company and the date of the Merger, that it has full
corporate or other power and authority to execute and deliver this Agreement and, subject to
obtaining the Parent Stockholder Approvals, to perform its obligations hereunder. The execution and
delivery by Parent of this Agreement and the consummation by Parent of the transactions
contemplated hereby have been duly authorized by all necessary action on the part of Parent. This
Agreement has been duly executed and delivered by Parent and constitutes a valid and legally
binding obligation of Parent, enforceable against Parent in accordance with its terms, subject to
the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws relating to or affecting creditors’ rights generally and general equitable principles
(whether considered in a proceeding in equity or at law).
ARTICLE V
MISCELLANEOUS
Section 5.01 Notices. All notices, requests and other communications to any party hereunder
shall be in writing (including facsimile transmission) and shall be given,
if to Parent or Acquisition Sub, to:
Acer Inc.
0X, 00, Xxx.0, Xxxx Xxx Xx Xx., Xxxxxxx
X-0
Xxxxxx, Xxxxx 000
Xxxxxx, X.X.X.
Attention: General Counsel
Facsimile No.: x000-0-0000-0000
with a copy to:
Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP
The Xxxxxx Building
000 Xxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxx Xxxxx
Facsimile No.: (000) 000-0000
if to the Stockholder, to:
[ ]
[ ]
[ _]
Attention: [ ]
Facsimile No.: [ ]
with a copy to:
[ ]
[ ]
[ _]
Attention: [ ]
Facsimile No.: [ ]
or to such other address or facsimile number as such party may hereafter specify for the purpose by
notice to each other party hereto. All such notices, requests and other communications shall be
deemed received on the date of receipt by the recipient thereof if received prior to 5:00 p.m. on a
Business Day in the place of receipt. Otherwise, any such notice, request or communication shall
be deemed to have been received on the next succeeding Business Day in the place of receipt.
Section 5.02 Further Assurances. The Stockholder will, from time to time, execute and
deliver, or cause to be executed and delivered, such additional or further transfers, assignments,
endorsements, consents and other instruments as Parent or Acquisition Sub may reasonably request
for the purpose of effectively carrying out the transactions contemplated by this Agreement and to
vest the power to vote its Subject Shares as contemplated by Section 2.01.
Section 5.03 Termination. This Agreement shall terminate upon the earlier of (i) the
termination of the Merger Agreement in accordance with its terms, (ii) the Effective Time or (iii)
a reduction of the Offer Price.
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Section 5.04 Survival of Representations and Warranties. The representations and warranties
contained herein and in any certificate or other writing delivered pursuant hereto shall not
survive the Effective Time.
Section 5.05 Amendments and Waivers. (a) Any provision of this Agreement may be amended or
waived if such amendment or waiver is in writing and is signed, in the case of an amendment, by
each party to this Agreement or, in the case of a waiver, by each party against whom the waiver is
to be effective.
(b) No failure or delay by any party in exercising any right, power or privilege hereunder
shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
Section 5.06 Expenses. Except as otherwise provided herein, all costs and expenses incurred
in connection with this Agreement shall be paid by the party incurring such cost or expense.
Section 5.07 Binding Effect; Benefit; Assignment. (a) The provisions of this Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns. No provision of this Agreement is intended to confer any rights, benefits,
remedies, obligations or liabilities hereunder upon any Person other than the parties hereto and
their respective successors and assigns.
(b) No party may assign, delegate or otherwise transfer any of its rights or obligations under
this Agreement without the consent of each other party hereto, except that each of Parent and
Acquisition Sub may assign its rights and obligations under this Agreement, in whole or from time
to time in part, to any Affiliates or Subsidiary of Parent at any time; provided that such
assignment shall not relieve Parent or Acquisition Sub of its obligations hereunder.
Section 5.08 Governing Law. This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Delaware, without giving effect to principles of conflicts
of law.
Section 5.09 Jurisdiction. The parties hereto agree that any Legal Proceeding seeking to
enforce any provision of, or based on any matter arising out of or in connection with, this
Agreement or the transactions contemplated hereby shall be brought in any federal court located in
the State of Delaware or any Delaware state court, and each of the parties hereby irrevocably
consents to the exclusive jurisdiction of such courts (and of the appropriate appellate courts
therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent
permitted by law, any objection that it may now or hereafter have to the laying of the venue of any
such Legal Proceeding in any such court or that any such suit, action or proceeding brought in any
such court has been brought in an inconvenient forum. Without limiting the foregoing, each party
agrees that service of process on such party as provided in Section 5.01 shall be deemed effective
service of process on such party.
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Section 5.10 Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY
AND ALL RIGHT TO TRIAL BY JURY IN ANY PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
Section 5.11 Counterparts; Effectiveness. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument. This Agreement shall become effective when each party
hereto shall have received a counterpart hereof signed by all of the other parties hereto. Until
and unless each party has received a counterpart hereof signed by each other party hereto, this
Agreement shall have no effect and no party shall have any right or obligation hereunder (whether
by virtue of any other oral or written agreement or other communication).
Section 5.12 Entire Agreement. This Agreement constitutes the entire agreement between the
parties with respect to the subject matter of this Agreement and supersedes all prior agreements
and understandings, both oral and written, between the parties with respect to its subject matter.
Section 5.13 Severability. If any term, provision, covenant or restriction of this Agreement
is held by a court of competent jurisdiction or other Governmental Authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired or invalidated so
long as the economic or legal substance of the transactions contemplated hereby is not affected in
any manner materially adverse to any party. Upon such a determination, the parties shall negotiate
in good faith to modify this Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner in order that the transactions contemplated hereby be
consummated as originally contemplated to the fullest extent possible.
Section 5.14 Specific Performance. The parties hereto agree that each of Parent and
Acquisition Sub would be irreparably damaged if for any reason the Stockholder fails to perform any
of its obligations under this Agreement, and that each of Parent and Acquisition Sub would not have
an adequate remedy at law for money damages in such event. Accordingly, each of Parent and
Acquisition Sub shall be entitled to specific performance and injunctive and other equitable relief
to prevent breaches of this Agreement or to enforce specifically the performance of the terms and
provisions hereof in any federal court located in the State of Delaware or any Delaware state
court, in addition to any other remedy to which they are entitled at law or in equity.
Section 5.15 Stockholder Capacity. Notwithstanding any provision of this Agreement to the
contrary, nothing in this Agreement shall (or shall require the Stockholder to attempt to) limit or
restrict the Stockholder who is a director or officer of the Company from acting in such capacity
(it being understood that this Agreement shall apply to the Stockholder solely in the Stockholder’s
capacity as a stockholder of the Company).
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their
respective authorized officers as of the day and year first above written.
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ACER INC. |
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GALAXY ACQUISITION CORP. |
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ANNEX I
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Shares Beneficially Owned as of ______ _, 2007 |
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ANNEX II
Certain Company Shares that are not Subject Shares
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Company Shares Owned as of ______ __, 2007 |
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[__________] disclaims beneficial ownership of such shares.
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