PROPOSAL 1: ADOPTION OF THE MERGER AGREEMENT
Special Factors
Parties Involved in the Merger
Power-One, Inc.
740 Calle Plano
Camarillo, California 93012
Telephone: (805) 987-8741
Power-One, Inc., a Delaware corporation, is a leading provider of high-efficiency and
high-density power supply products for a variety of industries, including renewable energy, servers, storage and networking, industrials and network power systems. Power-One's products
convert, process, and manage both alternating current ("AC") and direct current ("DC") to meet the high levels of quality, reliability and precision required by Power-One's customers.
Power-One established two (2) strategic business units (each a "SBU"), separating functions into the Renewable Energy Solutions SBU and the Power Solutions SBU,
to better address the distinct market segments each SBU serves. The Renewable Energy Solutions SBU offers one of the industry's broadest lines of high-efficiency inverters that provide
superior power harvesting, longer uptime, and ease-of-installation and are supported by a wide range of standard and extended service offerings. Power-One's Power Solutions SBU
provides high-efficiency and high-power density AC/DC and DC/DC converters for a variety of applications, including data center technologies such as routers, data storage,
servers and optical networking.
Power-One
common stock is currently listed on the NASDAQ Global Select Market, which we refer to as "NASDAQ" in this proxy statement, under the symbol "PWER."
Power-One's
principal executive offices are located at 740 Calle Plano, Camarillo, California 93012, its telephone number is (805) 987-8741 and its Internet
website address is www.power-one.com. The information provided on or accessible through Power-One's website is not part of this proxy statement and is not incorporated in this proxy
statement by this or any other reference to its website provided in this proxy statement.
Detailed descriptions about Power-One's business and financial results are contained in its Annual Report on Form 10-K for the fiscal year ended December 30,
2012 and subsequent reports filed with the SEC, which are incorporated in this proxy statement by reference. See "Where Stockholders Can Find More Information" beginning on page 112 of this
proxy statement.
ABB Ltd
Affolternstrasse 44, CH-8050
Zurich, Switzerland
Telephone: +41 (43) 317-7111
ABB is a corporation organized under the laws of Switzerland with its principal executive offices located at
Affolternstrasse 44, CH-8050 Zurich, Switzerland. The telephone number of ABB is +41 (43) 317-7111. ABB is a global leader in power and automation
technologies that are designed to improve performance and lower the environmental impact for its utility and industrial customers. ABB provides a broad range of products, systems, solutions and
services that are designed to improve power grid reliability, increase industrial productivity and enhance energy efficiency. ABB focuses on power transmission, distribution and power-plant automation
and serves electric, gas and water utilities, as well as industrial and commercial customers. ABB also delivers automation systems that measure, control, protect and optimize plant applications across
a full range of industries.
ABB's
American Depositary Shares are currently listed on the New York Stock Exchange under the symbol "ABB."
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Verdi Acquisition Corporation
c/o ABB Holdings Inc.
501 Merritt 7
Norwalk, Connecticut 06851
Telephone: (203) 750-2326
Verdi Acquisition Corporation, an indirect wholly owned Subsidiary of ABB, is a Delaware corporation that was formed on
April 12, 2013 for the sole purpose of effecting the merger. Upon the terms and subject to the conditions of the merger agreement, Merger Sub will be merged with and into Power-One,
with Power-One surviving the merger as an indirect wholly owned subsidiary of ABB.
The
principal executive offices of Merger Sub are located at c/o ABB Holdings Inc., 501 Merritt 7, Norwalk, Connecticut 06851, and its telephone number is
(203) 750-2326.
Effects of the Merger
Pursuant to the terms of the merger agreement, if the merger agreement is adopted by Power-One's stockholders and certain
other conditions to the closing are either satisfied or waived, at the effective time of the merger, Merger Sub will be merged with and into Power-One, with Power-One surviving
the merger as an indirect wholly owned subsidiary of ABB. As a result of the merger, Power-One will cease to be a publicly traded company and your shares of Power-One stock
will be converted into a right to receive the merger consideration (or for those holders of shares of Power-One common stock who properly elect to pursue an appraisal remedy, the right to
such appraisal).
At
the effective time of the merger, (i) each share of Power-One common stock issued and outstanding immediately prior to the effective time of the merger (other than
the excluded shares) will automatically be converted into the right to receive $6.35 in cash, without interest and less any applicable withholding taxes; (ii) each share of
Power-One preferred stock issued and outstanding immediately prior to the effective time of the merger, other than those held by Power-One or its subsidiaries, ABB or Merger Sub, will
automatically be converted into the right to receive $4703.7037037 in cash, which is the equivalent of $6.35 per share of Power-One common stock into which each share of
Power-One preferred stock is convertible, without interest and less any applicable withholding taxes; (iii) each outstanding warrant of Power-One will automatically be
converted into the right to receive, with respect to each share of Power-One common stock subject to such warrant, an amount in cash equal to the excess of the common merger consideration
over the applicable exercise price per share of Power-One common stock, without interest and less any applicable withholding taxes; (iv) each share of Power-One common
stock owned by Power-One or its subsidiaries, ABB or Merger Sub will be canceled and no payment will be made with respect to such shares; and (v) each share of common stock, par
value $0.001 per share, of Merger Sub that is issued and outstanding immediately prior to the effective time of the merger, will be converted into one fully paid share of common stock, par value
$0.001 per share, of Power-One, as the surviving corporation in the merger.
Each
option to acquire Power-One common stock, whether vested or unvested, that is outstanding at the effective time of the merger will fully vest and become exercisable. If
a holder of a Power-One option elects to do so, such holder may, not later than seven (7) business days prior to the effective date of the merger, exercise such Power-One
option immediately prior to the effective time of the merger and receive a payment from the surviving corporation, no later than five (5) business days following the effective time of
the merger, of an amount in cash equal to the product of (i) the total number of shares of Power-One common stock underlying such Power-One option (or portion thereof
that is being exercised) and (ii) the common merger consideration, reduced by the per share exercise price applicable to such Power-One option (or portion thereof that is being
exercised), without interest and less any applicable withholding taxes.
If
the holder of a Power-One option does not elect to exercise such Power-One option prior to the effective time of the merger, at the effective time of the
merger, such Power-One option that is
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outstanding
immediately prior to the effective time of the merger will be converted into an option to acquire a number of ABB American Depositary Shares equal to the product of (A) the number
of shares of Power-One common stock underlying such Power-One option immediately prior to the effective time of the merger and (B) the Option Exchange Ratio (as defined
in the merger agreement), at an exercise price per share equal to (x) the exercise price per share of such Power-One option immediately prior to the effective time of the merger,
divided by
(y) the Option Exchange Ratio. Any outstanding option for which the exercise price exceeds the common merger consideration will automatically be converted into an option to acquire ABB American
Depositary Shares, and will not be subject to cashout regardless of whether the holder makes an election to exercise.
As
of the effective time of the merger, each Power-One restricted share granted and that is outstanding will become fully vested and all restrictions thereon will lapse and
be converted automatically into the right to receive from the surviving corporation, no later than five (5) business days following the effective time of the merger, an amount in cash equal to
the common merger consideration, without interest and less any applicable withholding taxes.
At
the effective time of the merger, each Power-One stock-based award, whether vested or unvested, that is outstanding and, if applicable, unexercised immediately prior the
effective time of the merger will become fully vested and will be converted automatically into the right to receive, no later than five (5) business days following the effective time of the
merger, an amount in cash equal to the product of (i) the total number of shares of Power-One common stock underlying such Power-One stock-based award and
(ii) the common merger consideration (reduced, if applicable, by any exercise price applicable to such Power-One stock-based award), without interest and less any applicable
withholding taxes. With respect to any unvested Power-One stock-based award subject to performance-based vesting conditions, which will be referred to as "performance awards" in this proxy
statement, such performance awards will be deemed fully earned at a level that assumes Power-One attained maximum performance with respect to the applicable performance metrics to which
such performance awards are subject as of the closing date of the merger and will fully vest without any proration based on the extent to which the performance period under the performance award has
lapsed as of the effective time of the merger.
The
certificate of incorporation of Merger Sub attached as Exhibit A to the merger agreement will become the certificate of incorporation of the surviving corporation, until
amended, and the Company bylaws will be amended in their entirety to be the same as the bylaws of Merger Sub immediately prior to the effective time of the merger.
Background of the Merger
The Power-One board of directors and management team continually evaluate the Company's business and periodically review
and assess the Company's performance and industry conditions and consider their potential impact on the Company's long-term strategic plans, with the goal of maximizing stockholder value.
As part of this process, the Power-One board of directors and the management team of the Company periodically evaluate potential strategic alternatives relating to the Company's business,
including business combinations, acquisitions and other financial and strategic alternatives.
2011 Background
From time to time, Power-One has received inquiries from potentially interested parties with regard to a potential business
combination. In approximately June 2011, Richard J. Thompson, Chief Executive Officer and President of Power-One, and Silver Lake Sumeru, Power-One's largest stockholder, received several
inbound inquiries regarding a potential combination with the Company, including (i) an inquiry from ABB and (ii) an informal inquiry Mr. Thompson received while attending an
industry conference. On June 23, 2011, exploratory discussions took place between ABB and Silver
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Lake Sumeru, Power-One's largest stockholder, regarding interest in a potential business combination between ABB and the Company.
On
July 1, 2011, a special meeting of the Power-One board of directors was called to discuss the inquiries received by Mr. Thompson and Silver Lake Sumeru. At
that meeting, the Power-One board of directors determined that it was in the best interests of the Company to create a separate committee authorized to: (i) continue to explore
strategic opportunities for growth; (ii) participate in further discussions and negotiations regarding potential business combinations, (iii) initiate communications with financial
advisors and make recommendations to the Power-One board of directors; and (iv) select legal advisors. Mr. Thompson, Jay Walters and Kyle Ryland were appointed to serve on
the special steering committee created at this meeting (the "2011 Committee") due to their various experience, expertise and contributions to the Power-One board of directors. The 2011
Committee was authorized to advise and make recommendations to the Power-One board of directors with respect to a potential business combination, but was not delegated authority to act on
behalf of the Power-One board of directors.
In
early July 2011, Gibson, Dunn & Crutcher LLP ("Gibson Dunn") was engaged to provide legal advice to the Company in connection with the exploration of alternatives and
any potential business combination. On July 11, 2011, an informational meeting of the Power-One board of directors was held, at which Gibson Dunn advised the Power-One
board of directors in regard to the respective roles and functions of the 2011 Committee and the Power-One board of directors with respect to any potential business combination. On
July 12 and 13, 2011, the 2011 Committee interviewed four (4) investment banking firms, including Goldman, Sachs & Co. ("Goldman Sachs"), who made presentations to the
committee regarding a potential business combination involving the Company.
On July 26, 2011, the Power-One board of directors met and approved the retention of Goldman Sachs as its financial advisor with respect to a potential transaction and
affirmed the retention of Gibson Dunn to serve as the Power-One board of directors' legal advisor. Also at this meeting, the Power-One board of directors determined to focus on
pursuing a potential transaction with ABB and several other strategic buyers. The Power-One board of directors also considered whether to include potential financial buyers in the process.
The Power-One board of directors determined, after discussion and consultation with Goldman Sachs, that financial buyers would not be likely to be competitive with strategic buyers primarily because
of the very limited financing capacity of the Company and the inability of a financial buyer to exploit synergies.
In
early August 2011, members of Power-One's senior management team, after consultation with Goldman Sachs and Gibson Dunn, prepared for meetings with potential interested buyers by
preparing presentations about Power-One's business and drafting a form of non-disclosure and standstill agreement to provide to potential buyers, including ABB.
On August 24, 2011, a meeting took place in New York City, New York among senior executive officers from ABB, Mr. Thompson, Alex Levran, Power-One's President of Renewable
Energy Solutions SBU, representatives from Goldman Sachs and Credit Suisse AG ("Credit Suisse"), ABB's financial advisor. Prior to such meeting, the Company and ABB Asea, an ABB affiliate based in
Switzerland, executed a non-disclosure and standstill agreement dated as of August 23, 2011 to facilitate discussion during the August 24, 2011 meeting.
Also in the second half of 2011, the Company entered into non-disclosure and standstill agreements with two (2) additional potentially interested parties, which are
referred to below as Potential Buyer 2 and Potential Buyer 3. The Company, during this same time period, also entered into a non-disclosure agreement (which did not include a standstill
agreement) with another potentially interested party, referred to as Potential Buyer 4, and entered into negotiations regarding a non-disclosure and standstill agreement with a fifth
potentially interested party, referred to below as Potential Buyer 5, but did not enter into any such agreement with Potential Buyer 5. Each of the
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foregoing potentially interested parties had expressed an interest in a potential transaction with Power-One, in some cases after being contacted by Goldman Sachs. The Company met with,
and made management presentations to, a global, strategic buyer ("Potential Buyer 2") on September 27, 2011 and a diversified company with whom Power-One has a business relationship
("Potential Buyer 3") on October 3, 2011. In addition, separate meetings with a global strategic buyer ("Potential Buyer 4") and a diversified industrial technologies company ("Potential
Buyer 5") were scheduled (October 10 and 11, 2011, respectively), but were canceled by Potential Buyer 4 and Potential Buyer 5 before the October 4th board meeting, described
below. None of these meetings resulted in advanced discussions with any party. In addition to the non-disclosure and standstill agreement with ABB, each of the non-disclosure
and standstill agreements with Potential Buyer 2, Potential Buyer 3 and Potential Buyer 8, identified below, included a term prohibiting the counterparty from asking Power-One to waive the
standstill provision in the agreement (such provision, often referred to as a "don't ask, don't waive" provision). On June 6, 2013, Power-One notified Potential Buyer 2, Potential
Buyer 3 and Potential Buyer 8 in writing that Power-One was waiving the "don't ask, don't waive" provision and that it would not seek to enforce it. None of the other
non-disclosure agreements contained such a "don't ask, don't waive" provision.
On
September 13, 2011, ABB submitted a preliminary, non-binding offer to purchase Power-One, indicating that ABB valued Power-One common stock
in the range of $11 to $13 per share, which representatives of Goldman Sachs communicated to Power-One.
In
September 2011, Power-One's stock price fell by approximately 34% from a closing price of $6.76 on September 13, 2011 to a closing price of $4.50 on September 30, 2011.
The movement in Power-One's stock coincided with negative developments in the solar renewable energy sector, including the September 2011 Solyndra bankruptcy and changes in the industries and markets
in which the Company operates. During September 2011, Credit Suisse contacted representatives of Goldman Sachs to notify the Company that ABB was no longer interested in pursuing an acquisition of the
Company for the foreseeable future.
On
October 4, 2011, the Power-One board of directors met with representatives of Goldman Sachs and Gibson Dunn and, after consultation with Goldman Sachs, considering
the adverse market conditions: (i) determined that it was in the best interests of the Power-One stockholders and the Company to terminate discussions regarding a potential business
combination, and (ii) adopted resolutions to formally dissolve the 2011 Committee. Power-One discontinued discussions with potential buyers following the Power-One board
of directors meeting on October 4, 2011.
2012 to Present
Consistent with the Power-One board of directors' and management's continuous efforts to maximize stockholder value, and
their periodic evaluation of Power-One's business and ongoing consideration of strategic opportunities that are consistent with the Company's long-term goals, Mr. Thompson continued
to communicate with the management of ABB and other potential interested parties from time-to-time regarding a variety of strategic opportunities.
On
June 15, 2012, a meeting of the Power-One board of directors was held. Also in attendance were Dr. Levran and representatives from Goldman Sachs. The
Power-One board of directors and representatives of Goldman Sachs discussed the strategic advisability of renewing discussions with third parties regarding a potential business
combination.
On August 15, 2012, a meeting of the Power-One board of directors was held. A representative of Goldman Sachs reviewed with the Power-One board of
directors Goldman Sachs' preliminary financial analyses of the Company and discussed certain potentially interested buyers, including the five (5) companies that had been previously contacted about
potential business combinations. The Power-One board of directors, based upon its judgment informed by the 2011 process and its knowledge of the characteristics of the other potential
strategic buyers, authorized Goldman Sachs to initiate high-level
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discussions with the five (5) companies that had previously indicated an interest in pursuing a transaction with Power-One and to report back to the Power-One board of
directors. The Power-One board of directors determined, after discussion and consultation with Goldman Sachs, that financial buyers would not be likely to be competitive with strategic buyers
primarily because of the very limited financing capacity of the Company and the inability of a financial buyer to exploit potential synergies.
Also in August 2012, a U.S. based energy company ("Potential Buyer 6") asked to explore a potential combination of the two (2) companies. On August 16, 2012, the Company
executed a non-disclosure agreement with Potential Buyer 6, which agreement did not include a standstill agreement.
In
late August and early September of 2012, the FT Alphaville blog of the London Financial Times published a blog entry making speculative comments regarding potential transactions
involving the Company. As it is not the Company's policy to comment on rumors, the Company did not issue a press release to respond to such comments and did not respond to additional media inquiries
on the subject.
A special steering committee of Mr. Thompson, Ajay Shah, Mr. Ryland, Mark Melliar-Smith and Hartmut Liebel (the "2012 Committee") was formed by the Power-One
board of directors on September 8, 2012 at a special meeting of the Power-One board of directors. Each member of the 2012 Committee was selected due to the member's various
experience, expertise and contributions to the Power-One board of directors. The purpose of the "2012 Committee" was to manage the process of evaluating a potential transaction and to make
proposals
and recommendations to the Power-One board of directors regarding a potential transaction. The meeting was also attended by members of the Company's senior management team, representatives
of Gibson Dunn and representatives of Goldman Sachs. The participants at the meeting discussed briefly the blog entry described above, noting that it contained speculation as to offers made in 2011
for the Company. The discussion then turned to 14 potential strategic buyers (i.e., companies in the same, or a related, industry as Power-One) for the Company, which had been
identified by Goldman Sachs and which included the five (5) potential buyers contacted in 2011. The Power-One board of directors directed Goldman Sachs to initiate discussions with four
(4) of the potential strategic buyers identified by Goldman Sachs considered by the Power-One board of directors, after consultation with Goldman Sachs, to be most likely to have interest
in and the resources necessary to complete a strategic transaction, including a strategic buyer not contacted in 2011 ("Potential Buyer 7").
From
mid-September to mid-October of 2012, representatives of Goldman Sachs contacted each of the potential strategic partners authorized by the
Power-One board of directors on a confidential basis. None (other than ABB) expressed interest in receiving non-public information about the company or pursuing a transaction.
On
October 25, 2012, ABB and Power-One entered into an agreement extending the term of the parties' non-disclosure and standstill agreement dated
August 23, 2011. On October 30, 2012, Mr. Thompson and Dr. Levran met with representatives of ABB at its offices in Zurich, Switzerland. The meeting was attended by Ulrich
Spiesshofer, the head of Discrete Automation and Motion division, and certain other representatives of ABB. Mr. Thompson and Dr. Levran made a presentation about Power-One's business,
providing information regarding market developments, and developments in the business as well as information about the Company's financial performance and projected financial performance for fiscal
years 2011 through 2016.
In late November 2012, at the request of a strategic buyer ("Potential Buyer 8"), who had contacted a stockholder of Power-One in approximately
mid-November, a meeting was organized to discuss business opportunities in the renewable energy market. On December 10, 2012, representatives of Power-One met with
Potential Buyer 8. At the meeting, Potential Buyer 8 expressed an interest in engaging in a merger, acquisition or partnership with Power-One. The Company asked Potential
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Buyer 8 to enter into a non-disclosure and standstill agreement to help facilitate more serious discussions regarding the possibility of engaging in a merger or acquisition
transaction, which the parties negotiated and entered into on December 12, 2012. Although representatives of Potential Buyer 8 and Power-One exchanged correspondence in December
2012 and January 2013, Potential Buyer 8 did not make a proposal containing any price or other material terms.
On
December 10, 2012, Mr. Thompson spoke with Dr. Spiesshofer, who reconfirmed ABB's interest in Power-One and suggested a meeting early in 2013.
On
January 15, 2013, Mr. Thompson and Dr. Levran met with Joe Hogan, the Chief Executive Officer of ABB, and Dr. Spiesshofer of ABB in Zurich, Switzerland to
discuss the merits (including possible synergies, product portfolio and geographic competitive position) of a potential business combination between the two (2) companies and to update and
further discuss Power-One's financial projections for fiscal years 2012 through 2016. The updated financial projections reflected a reduction in projected performance for 2013 and 2014 and fourth
quarter 2012 based on preliminary 2012 financial results.
The
2012 Committee met on February 12, 2013. Also in attendance were representatives of Goldman Sachs and members of the Company's senior management. The members of the 2012
Committee and members of the Company's senior management discussed the Company's current outlook, including management's further updating of its financial projections for 2013, which indicated that
management's projections would be reduced from earlier levels, and the fact that the Company's stock price had eroded by 28% since the Committee's meeting on September 8, 2012. The 2012
Committee noted that these developments reflected uncertainties in the markets in which the Company operates that had arisen since Goldman Sachs had been directed by the Power-One board of
directors to initiate preliminary discussions with potential buyers in September 2012 and the unfavorable results in operating income experienced by the Company during the fourth quarter of 2012.
Goldman Sachs informed the 2012 Committee that Goldman Sachs had re-approached the same potential buyers that it had been authorized by the Power-One board of directors to
contact in September 2012 to gauge their interest in acquiring Power-One and that only ABB had expressed a serious level of interest in pursuing a transaction. ABB stated that it was
willing to meet with Goldman Sachs following an ABB board meeting which was scheduled to be held that week. Subsequently, in February 2013, representatives of Goldman Sachs exchanged emails with a
representative of Credit Suisse, ABB's financial advisor, discussing the possible range of prices ABB would be willing to pay per share of Power-One common stock.
On
February 13, 2013, Dr. Spiesshofer contacted Mr. Thompson by telephone and indicated that ABB was willing to explore a transaction with Power-One at
an offer price in the range of $5.50 to $6.50 per share, subject to further due diligence and negotiation of a definitive agreement. In addition, ABB requested that Power-One enter into an
exclusivity agreement.
On
February 20, 2013, a meeting of the 2012 Committee was held. Also in attendance were representatives of Goldman Sachs. Representatives of Goldman Sachs reviewed with the 2012
Committee preliminary price indications from ABB and Goldman Sachs' preliminary financial analysis of a potential transaction with ABB. The members of the 2012 Committee also discussed ABB's request
for an exclusivity agreement, a potential transaction with ABB and certain prior transactions involving ABB for which there was publicly available information. The members of the 2012 Committee
determined to continue discussions with representatives of ABB.
On
March 6, 2013, at the direction of the Power-One board of directors, representatives of Goldman Sachs discussed with representatives of Credit Suisse
Power-One management's updated financial projections, which incorporated final 2012 financial results that were below both Power-One management's October 2012 projections and
January 2013 updated projections. In addition, representatives of Goldman Sachs and Credit Suisse discussed a potential combination of Power-One
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with
ABB. At the direction of the Power-One board of directors, representatives from Goldman Sachs advised Credit Suisse that any offer would have to be higher than the high end of the
price range ABB had previously indicated of $5.50 to $6.50 per share.
On
March 7, 2013, Dr. Spiesshofer verbally communicated to Mr. Thompson an increased indicative proposal of $6.75 per share, which represented a premium of
approximately 60% over the closing price of Power-One's common stock on March 1, 2013, the first day of trading after Power-One had filed its Form 10-K for the
fiscal year ended December 30, 2012. ABB's representative also indicated that ABB would only be prepared to proceed with discussions with Power-One on an exclusive basis. Later that
day, a 2012 Committee meeting was held. Also in attendance were representatives of Goldman Sachs. Representatives of Goldman Sachs reviewed with the 2012 Committee the revised ABB proposal and Goldman
Sachs' preliminary financial analysis of a potential transaction.
On
March 8, 2013, Mr. Thompson and Dr. Spiesshofer conferred and determined to continue further discussions on behalf of the two (2) companies based on the
indicative price of $6.75 per share. During this conversation Mr. Thompson proposed that the definitive merger agreement the parties would ultimately enter into contain a "go shop" provision,
permitting Power-One to seek out competing offers even after it entered into a definitive agreement with ABB. Dr. Spiesshofer rejected this request, explaining that ABB would not
proceed with the transaction if such a provision were required.
On
March 9, 2013, ABB submitted to Power-One a non-binding offer letter at a price of $6.75 per share, to be paid in cash, and a proposed binding
exclusivity agreement providing for an eight-week exclusivity period for ABB to complete its due diligence and negotiate a definitive agreement to acquire Power-One. ABB's
proposed binding exclusivity agreement would prevent Power-One from engaging in discussions with other potential buyers during the period of exclusivity so long as the parties were
continuing to actively work toward a definitive agreement. The non-binding offer letter contemplated that the definitive merger agreement include a termination fee of 4% of the equity
value of the transaction.
Later
on March 9, 2013, a 2012 Committee meeting was held. Also in attendance were representatives of Goldman Sachs and Gibson Dunn. During the meeting, the terms of the proposed
exclusivity agreement and non-binding offer letter were reviewed in preparation for a more complete discussion with the Power-One board of directors. Also, the 2012 Committee
directed Goldman Sachs to negotiate to attempt to reduce ABB's proposed termination fee and the exclusivity period from eight (8) weeks. Representatives of Goldman Sachs and Credit Suisse held
discussions following the meeting.
On
March 10, 2013, representatives of Goldman Sachs reported to Power-One that during a verbal exchange ABB had revised its offer to reflect a termination fee equal to
2.5% of the equity value of the transaction and an exclusivity period of six (6) weeks.
On
the morning of March 11, 2013, the Power-One board of directors met to discuss ABB's revised indicative offer and the proposal to enter into an exclusivity
agreement. Representatives from Goldman Sachs and Gibson Dunn, and Dr. Levran also attended the meeting. At the direction of the Power-One board of directors, representatives of
Goldman Sachs reviewed the history and current status of discussions with ABB. Representatives of Goldman Sachs noted that Credit Suisse had stated that ABB's proposed price of $6.75 per share was the
highest price that ABB would be willing to pay, and that it was a non-binding offer subject to the completion of ABB's due diligence efforts, which could result in a decreased proposed
price per share, and negotiation of definitive documentation. Representatives of Goldman Sachs also reviewed several other key issues that had arisen during the course of negotiations with ABB,
including ABB's agreement to reduce the size of the termination fee from 4% to 2.5% of the equity value of the transaction and the exclusivity period from eight (8) weeks
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to
six (6) weeks. Representatives of Goldman Sachs also reviewed its preliminary financial analysis of ABB's proposal. After discussion between the board members and Gibson Dunn regarding ABB's
proposed exclusivity period, the Power-One board of directors directed the representatives of Goldman Sachs to communicate to ABB that a six (6) week exclusivity period was too
long.
Representatives
from Gibson Dunn then described and discussed pertinent legal issues surrounding ABB's offer and reviewed with the Power-One board of directors its fiduciary
duties in the context of a sale of the Company. The Power-One board of directors focused on the fact that, as directed by members of the 2012 Committee, Mr. Thompson had attempted
to negotiate a "go shop" provision, which would form part of a final, definitive agreement with ABB and permit the Company to solicit a higher offer from third parties for a period of time after the
signing and announcement of a definitive agreement with ABB. The "go shop" provision would still provide for a termination fee payable to ABB if a superior offer emerged and was agreed to by the
Company, but this termination fee would typically be significantly lower during the "go shop" period. After this
period, assuming no superior offer had emerged, a "no shop" provision that would prohibit the Company from seeking other offers, but would contain customary "fiduciary-out" provisions for
the Power-One board of directors, would come into effect, along with a higher termination fee. Mr. Thompson stated that ABB rejected such a provision and stated that it would not
pursue a strategic transaction with Power-One if a "go shop" provision were required.
The
Power-One board of directors discussed the possible merits of a post-signing "go shop" provision in light of the processes undertaken to date, and the fact
that ABB proposed a reduced termination fee that would not meaningfully impede potential competing offers, and that in all events, the Company would have the ability to terminate the agreement to
accept an unsolicited superior offer. In light of the challenges and prospects of the Company at the time, the Power-One board of directors determined that failing to pursue ABB's offer,
which represented a significant premium over the Company's then-current common stock price, could result in the loss of the opportunity to provide stockholders with value not otherwise
expected to be realized in the foreseeable future.
A
representative from Gibson Dunn then discussed the other elements of the offer letter, which were typical of language used in similar circumstances. During the day of March 11,
2013, ABB provided Power-One with a revised proposed exclusivity agreement, which offered four (4) weeks of exclusivity, to be extended by two (2) additional weeks if the
parties were continuing to negotiate and ABB had not proposed a decrease in the indicated price.
Later
that afternoon, a meeting of the Power-One board of directors was held. Also in attendance were members of the Company's senior management team and representatives from
Goldman Sachs and Gibson Dunn. Representatives of Goldman Sachs reviewed with the Power-One board of directors the status of negotiations with ABB and Goldman Sachs' preliminary financial
analysis of a potential transaction. In determining whether the Company should enter into an exclusivity agreement with ABB, the Power-One board of directors considered several factors,
including, but not limited to: (i) the non-binding offer letter submitted by ABB on March 9, 2013; (ii) the Power-One board of directors' familiarity with
the Company's operations, financial results and financial forecasts; (iii) the challenges currently faced by the Company, including projected reduced revenue for the next four (4)
quarters, due to, among other things, steeper price erosion than expected and slower entry to the U.S. market than projected by management and other challenges; (iv) the financial performance
of the Company since discussions with ABB began in 2011; (v) Goldman Sachs' preliminary financial analysis; (vi) certain strategic alternatives other than the then current ABB proposal;
(vii) the fact that the sale process conducted in 2011 and subsequently in 2012 involving a number of potential strategic buyers did not result in any offers, other than ABB's, being made for
the Company; (viii) the risk that ABB might terminate discussions if the Company did not agree to sign the proposed exclusivity agreement; (ix) concerns regarding potential leaks if the
sale process was prolonged or expanded, including the potential negative impact of such leaks on employees, customers, and other business relations;
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(x) negotiations
conducted to date with ABB on the terms of the exclusivity agreement; and (xi) ABB's willingness to provide for a shorter exclusivity period than its initial offer and
relief from an extension should ABB lower its offer price. After discussing these matters, the Power-One board of directors approved the execution of the exclusivity agreement.
Following
the meeting of the Power-One board of directors, the final terms of the exclusivity agreement were negotiated between Gibson Dunn and ABB's outside counsel, Cleary
Gottlieb Steen & Hamilton LLP ("Cleary Gottlieb"), and the exclusivity agreement was executed on March 13, 2013. In addition, because the exclusivity agreement purported to bind
the Company's largest stockholder, Silver Lake Sumeru, an agreement was prepared and concurrently executed between Power-One and Silver Lake Sumeru confirming Silver Lake Sumeru's
agreement to be bound by the terms of the exclusivity agreement.
Between
March 13, 2013 and March 14, 2013, Mr. Thompson, Dr. Levran, Steven Hogge, Power-One's President of the Power Solutions SBU, and Gary Larsen,
Power-One's Senior Vice President of Finance and Chief Financial Officer, conducted several management presentations in Zurich, Switzerland for ABB's management team. Representatives from Goldman
Sachs and Credit Suisse also attended the meetings.
On March 15, 2013, Power-One received correspondence with regard to an indication of interest from a senior executive of Potential Buyer 8 that did not include a
proposed price or any other material terms. Mr. Thompson responded that he would convey the message to the Power-One board of directors. On March 17, 2013, senior management
of Power-One received an email from a senior executive of Potential Buyer 6 asking to explore a potential combination of the two (2) companies. Discussions with Potential Buyer 6
did not progress because Potential Buyer 6 only inquired of the senior executive of Power-One if Power-One would consider a merger and did not make any proposal as to the
indicated valuation Potential Buyer 6 was considering. Potential Buyer 6 made no further overtures to Power-One. Mr. Thompson discussed the correspondences with Potential
Buyer 8 and Potential Buyer 6 with the Power-One board of directors, noting that they were not viewed as serious offers by Power-One management.
Cleary
Gottlieb provided drafts of a proposed merger agreement and a proposed voting agreement with Silver Lake Sumeru to Gibson Dunn on March 27, 2013. Gibson Dunn reviewed with
Power-One the draft merger agreement and commented on the draft merger agreement. These comments included, among other things, seeking (i) to improve the provisions governing the
Power-One board of directors' ability to pursue superior proposals and exercise its fiduciary out in several respects, including liberalizing the terms of non-disclosure
agreements competing bidders would have to sign, reducing the matching rights period and scope of information regarding competing discussions that would be provided to ABB and broadening the standard
for determining whether the Power-One board of directors would be entitled to
exercise its fiduciary duties; (ii) limiting the circumstances where a termination fee would be payable to ABB; (iii) reducing the maximum amount of expenses for which ABB could be
reimbursed under certain circumstances from $10 million to a lower amount; (iv) limiting the circumstances under which ABB would be permitted to terminate the merger agreement;
(v) extending the outside date for completion of the transaction by several months to account for potential delays in receiving regulatory approvals; (vi) revising the definition of
"material adverse effect" in a manner that would limit the circumstances under which it could be invoked; and (vii) eliminating a provision sought by ABB in the proposed voting agreement that
such agreement would not terminate until six (6) months after a termination of the merger agreement.
At
the direction of Power-One, Gibson Dunn prepared a counter-draft of the merger agreement reflecting these and additional proposed changes. On April 4, 2013, Gibson
Dunn provided the draft document to Cleary Gottlieb. Lawyers from Cleary Gottlieb and Gibson Dunn discussed the issues raised in Gibson Dunn's draft in a conference call on Tuesday, April 9,
2013. On April 10, 2013 Cleary Gottlieb provided Power-One with a revised draft of the merger agreement.
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On April 10, 2013, Power-One and ABB communicated and ABB indicated that as result of its deepened understanding of Power-One
following four (4) weeks of extensive due diligence and particularly in light of a softening in end-market conditions, ABB intended to provide a new proposal as to price that would
be lower than $6.75 per share. ABB advised that the updated indicative offer would be approximately $6.00 per share. Also on April 10, 2013 the Power-One board of directors received
from management the bi-weekly Key Performance Indicator report, indicating a decrease in projected revenue for the second quarter of 2013 approximately $20 million from the
Company's annual operating plan.
On April 11, 2013, the Power-One board of directors met to receive an update on the recent developments in the discussions with ABB regarding the potential
transaction. A member of the Company's senior management team and a representative of Goldman Sachs also attended the meeting. The representatives of Goldman Sachs and Mr. Thompson reviewed with the
Power-One board of directors the explanation for the revised ABB proposal and Goldman Sachs' preliminary financial analysis of a possible transaction. As a result of due diligence, ABB was
concerned about the performance of the business in general, particularly about softening demand and adverse trends in both the Renewable Energy Solutions SBU and the Power Solutions SBU. The
Power-One board of directors discussed the basis for ABB's concerns, the challenges facing the Company thus far in 2013 and the implications for the proposed transaction, including Goldman
Sachs' preliminary financial analysis and ABB's anticipated price reduction. Also during the meeting, Mr. Thompson informed the Power-One board of directors that the Company was
contacted by potentially interested parties, as described above, but that no serious proposal had been made and that the potentially interested third parties made no contact with the Company beyond a
limited number of
communications not containing any specific proposal. Following its deliberations, the Power-One board of directors determined to continue exploring a possible transaction with ABB and
directed Goldman Sachs and the Company's senior management team to seek the highest revised price the Company could obtain from ABB.
On
April 12, 2013, after exchanging several proposals on the revised amount of the common merger consideration, Dr. Spiesshofer called Mr. Thompson and indicated
that ABB was prepared to present a revised proposed transaction offer of $6.35 per share which was its "best and final" offer. He indicated that this price and proposal were contingent upon the terms
of ABB's last draft of the merger agreement being generally agreed upon. ABB also communicated that it would be willing to agree to have the Voting Agreement terminate upon termination of the merger
agreement as opposed to six (6) months after such termination.
Later
on April 12, 2013, a meeting of the Power-One board of directors was held. Also in attendance were members of the Company's senior management team and
representatives of Goldman Sachs and Gibson Dunn. Mr. Thompson gave the Power-One board of directors a detailed update as to the current status of discussions and negotiations with
ABB, noting that ABB stated $6.35 per share represented the "best and final" price per share ABB would be willing to pay for Power-One due to the Company's current performance.
After
Mr. Thompson briefly discussed several due diligence issues at such meeting, representatives of Gibson Dunn then described several outstanding contract issues that remained
under discussion between the parties. Representatives from Goldman Sachs informed the Power-One board of directors that Credit Suisse informed them shortly before the meeting that ABB
would agree to reduce the termination fee to a fixed amount of $20,000,000 or approximately 2.1% of the proposed equity value of the transaction.
Members
of the Power-One board of directors asked Gibson Dunn to discuss the Power-One board of directors' ability to explore and ultimately accept an alternative
acquisition proposal, should one materialize, that it deemed to be superior to that of ABB's. A representative of Gibson Dunn noted that the proposed merger agreement reflected a "fiduciary out"
provision that would permit the Power-One board of directors to explore and accept a superior offer should one eventuate after the
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merger
agreement was signed subject to payment of the termination fee. In this regard, Gibson Dunn noted the concession of ABB to a further reduced termination fee. Gibson Dunn indicated that it had
sought a number of provisions to ensure that the Company would have an adequate opportunity to explore any potential competing bid and would not risk losing the transaction with ABB if it did so.
After further discussion of the contract matters that had been favorably resolved and those that Gibson Dunn proposed to continue to negotiate, the members of the Power-One board of
directors determined it would be in the best interest of the Power-One stockholders to continue negotiations with ABB. At the request of the Power-One board of directors,
representatives of Goldman Sachs reviewed its preliminary financial analysis of the proposed transaction. The Power-One board of directors determined that the possibility of consummating a
transaction at $6.35 per share on acceptable contractual terms would maximize stockholder value and that the Company should continue to pursue the transaction, seeking as favorable a contract as
possible under the circumstances.
On
April 15, 2013, Gibson Dunn provided to Cleary Gottlieb a revised version of the most recent draft of the merger agreement received from Cleary Gottlieb. Later that day,
representatives of Gibson Dunn and Cleary Gottlieb held a conference call during which they identified a number of open points. On April 18, 2013, representatives from ABB and
Power-One held a conference call with regard to open issues Power-One continued to have with regard to the merger agreement. On April 19, 2013, members of senior
management of Power-One and representatives from each of ABB, Cleary Gottlieb and Gibson Dunn held a conference call during which the unresolved issues in the merger agreement were
discussed and resolutions to these issues were explored. At the end of the call, ABB made a proposal that sought to address the significant open issues. After further discussion with its advisors,
Power-One agreed to proceed with negotiating the merger agreement along the lines of the ABB proposal and prepare for a Power-One board of directors meeting to review the final
merger agreement.
On
April 20, 2013, the Power-One board of directors held a special meeting to discuss the proposed merger transaction with ABB. Members of the Company's senior
management team and representatives of Goldman Sachs and Gibson Dunn were also in attendance.
Members of Power-One senior management and representatives of Goldman Sachs and Gibson Dunn updated the Power-One board of directors on the status of negotiations
with ABB and ABB's due diligence efforts. The Power-One board of directors was also briefed on the evolution of management's financial projections over recent periods and there was discussion of the
Company's recent performance and outlook. At the direction of the Power-One board of directors, representatives of Goldman Sachs reviewed with the Power-One board of directors
Goldman Sachs' financial analysis of the $6.35 per share in cash to be paid to the holders (other than ABB and its affiliates) of shares of Power-One common stock in the proposed merger.
Goldman Sachs delivered to the Power-One board of directors its oral opinion, which was subsequently confirmed by delivery of a written opinion dated April 21, 2013, that, as of
April 21, 2013 and based upon and subject to the factors and assumptions set forth therein, the $6.35 per share in cash to be paid to holders (other than ABB and its affiliates) of shares of
Power-One common stock pursuant to the merger agreement was fair from a financial point of view to such holders, as more fully described below under the heading
"Proposal 1: Adoption of the Merger AgreementSpecial FactorsOpinion of Power-One's Financial Advisor" beginning on page 50 of this proxy statement.
The
Gibson Dunn representative then reviewed the terms of the merger agreement, a copy of which had been previously provided to the Power-One board of directors, and
ancillary
documents, including the Voting Agreement agreed to between ABB and Silver Lake Sumeru, and the letter agreement relating to the Voting Agreement between the Company and Silver Lake Sumeru. Gibson
Dunn provided a review of the fiduciary duties of the Power-One board of directors in the context of the transaction, including the mechanics that would apply post-signing for
addressing unsolicited alternative acquisition proposals from third parties. The representative from Gibson Dunn described,
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among
other things, the termination provisions, the scope and projected time frame for antitrust approvals (including filings under the HSR Act in the United States and under the Required Foreign
Antitrust Laws), the events that could trigger Power-One's payment of a termination fee, certain provisions that restrict how Power-One may conduct its business between the effective time
of the merger agreement and the effective time of the merger, and the treatment of stock-based incentive plans.
Following
these presentations and discussion and deliberation, and after considering all of the factors that it deemed relevant, the Power-One board of directors unanimously
determined that the merger agreement and the transactions contemplated by the merger agreement, including the merger, and the consideration to be received in the merger, are advisable, fair to and in
the best interests of Power-One and its stockholders, and unanimously approved resolutions approving the merger agreement and the transactions contemplated by the merger agreement,
including the merger, and certain ancillary documents, including the Voting Agreement among ABB and Silver Lake Sumeru, and the letter agreement relating to the Voting Agreement between the Company
and Silver Lake Sumeru.
Later
that day, members of management of each of Power-One and ABB, along with Gibson Dunn and Cleary Gottlieb, finalized the provisions of the merger agreement and all
ancillary documents and execution versions of the merger agreement and the ancillary documents were circulated reflecting the agreement reached between the two (2) companies. Each of
Power-One, ABB, and Merger Sub executed and delivered the merger agreement, and ABB and Silver Lake Sumeru executed and delivered the Voting Agreement, each effective as of
April 21, 2013.
On
April 22, 2013, Power-One and ABB issued a joint press release announcing the transaction. Also on April 22, 2013, Power-One filed a Current
Report on Form 8-K with the SEC, which disclosed the execution of the merger agreement and the Voting Agreement, summarized the material terms of each of the merger agreement and
the Voting Agreement and contained the joint press release, the merger agreement and the Voting Agreement as exhibits.
On June 14, 2013, the Power-One board of directors met with senior management and representatives of Goldman Sachs, Gibson Dunn and O'Melveny & Myers LLP to receive
an update with regard to the transaction and the Company's recent performance. Management and the legal advisors briefed the board of directors about the progress of regulatory approvals and current
proposed scheduling for the stockholder meeting. The board of directors and management also discussed the Company's performance in the first and second quarters of 2013, which has varied adversely
from management's projections for those periods, and management's view that the current financial performance of the business highlights the risk and uncertainty of achieving the Projections.
Representatives of Goldman Sachs discussed its additional financial analysis relating to the Company's U.S. net operating loss carryforwards ("U.S. NOLs") and informed the Power-One board
of directors that, if Goldman Sachs had included the amount resulting from this financial analysis in its Discounted Cash Flow analysis, it would not have changed Goldman Sachs' conclusion set forth
in its fairness opinion, as described under "Proposal 1: Adoption of the Merger AgreementSpecial FactorsOpinion of Power-One's Financial
AdvisorIllustrative Discounted Cash Flow Analysis" beginning on page 54 of this proxy statement. The Power-One board of directors discussed and confirmed its continued
recommendation of the merger agreement and the transactions contemplated thereby.
Reasons for the Merger
In evaluating the merger agreement and the merger, the Power-One board of directors consulted with Power-One's management
and legal and financial advisors. In reaching its decision to approve the merger agreement and to recommend that Power-One stockholders vote for the adoption of the merger
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agreement,
the Power-One board of directors considered a variety of factors, including the following, which are not intended to be exhaustive and are not presented in any relative order of
importance:
-
-
the opinion of Goldman Sachs delivered to the Power-One board of directors that, as of April 21, 2013
and based upon on and subject to the factors and assumptions set forth therein, the $6.35 per share in cash to be paid to the holders (other than ABB and its affiliates) of shares of
Power-One common stock pursuant to the merger agreement was fair from a financial point of view to such holders, as more fully described below under the heading
"Proposal 1: Adoption of the Merger AgreementSpecial FactorsOpinion of Power-One's Financial Advisor" beginning on page 50 of this proxy statement;
-
-
the fact that the proposed merger consideration is all cash, which provides stockholders certainty of value and liquidity
for their shares of Power-One stock;
-
-
the belief of the Power-One board of directors that at this time the merger consideration is more favorable to
Power-One's stockholders than the potential value that might result from the alternatives reasonably available to Power-One (including the alternative of remaining a stand-alone public
company);
-
-
after reviewing publicly available and other financial information with respect to ABB with the assistance of legal and
financial advisors, the Power-One board of directors' assessment that ABB has adequate financial resources to pay the aggregate merger consideration and ABB's representations and covenants
contained in the merger agreement relating to such;
-
-
the fact that the price proposed by ABB reflected extensive negotiations between the parties and their respective
advisors, and represented the highest offer price that Power-One received for shares of its common stock after several solicitations of interest over a period beginning in July 2011
and the belief of the Power-One board of directors that this was the highest price ABB would agree to;
-
-
the fact that Power-One has conducted a lengthy and thorough process of exploring its strategic alternatives
in light of challenging industry conditions and Power-One's financial results;
-
-
after lengthy meetings with management, the Power-One board of directors' consideration of the Company's
business, strategy, assets, financial condition, capital requirements, results of operations, competitive position and historical and projected financial performance, and the nature of the industry in
which Power-One competes and the potential impact of those factors on the trading price of Power-One common stock;
-
-
the inherent uncertainty of attaining management's internal financial projections, including those set forth in the
section entitled "Proposal 1: Adoption of the Merger AgreementSpecial FactorsCertain Projections Prepared by the Management of Power-One" beginning on
page 69 of this proxy statement, and the fact that actual financial results in future periods could differ materially and adversely from the projected results;
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-
the fact that Power One's performance during the first quarter of 2013 and the performance to-date in the second quarter
of 2013 have varied adversely from management's financial projections for these periods, the likelihood that this trend will not reverse in the near-term, and that management's previous projections
have been revised downward as described elsewhere in this proxy statement, and that management believes the current financial performance of the business has highlighted the risk and uncertainty as to
whether the Projections can be achieved;
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-
the challenges for future financial performance currently faced by the Company, including projected reduced sales for the
current period and next two quarters, due to steeper price erosion, slower entry to the U.S. market than projected in the March 2013 Projections and other challenges such as exhaustion of
subsidies in certain European markets and the potential impact
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-
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the fact that shares of Power-One preferred stock are receiving merger consideration equivalent to that
received by shares of Power-One common stock on an as converted basis, and
-
-
the Power-One board of directors' assessment that the financial and other terms and conditions of the merger
agreement minimize, to the extent reasonably practical, the risk that a condition to closing would not be satisfied and also provide reasonable flexibility to operate Power-One's business during the
pendency of the merger;
-
-
the negotiation process with ABB, which was conducted on an arm's length basis, and the fact that Power-One's senior
management and legal and financial advisors were involved throughout the negotiations and updated the Power-One board of directors directly and regularly;
-
-
the Power-One board of directors' understanding, based upon consultation with counsel and Power-One's
management, that the existing businesses of Power-One and ABB are sufficiently different so as to lessen the risk of the merger not closing for failure to receive any necessary antitrust
clearance;
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-
the fact that Silver Lake Sumeru, the Company's largest shareholder, was willing to enter into a Voting Agreement in
support of the transaction, and the fact that the Voting Agreement does not restrict the Power-One board of directors' ability to consider alternative acquisition proposals as it
terminates by its terms if the Power-One board of directors terminates the merger agreement; and
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-
the availability of appraisal rights under Delaware law to holders of stock who do not vote in favor of the adoption of
the merger agreement and comply with the requisite procedures under Delaware law, which provides those eligible stockholders with an opportunity to have a Delaware court determine the fair value of
their shares, which may be more than, less than, or the same as the amount such stockholders would have received under the merger agreement.
The
Power-One board of directors also considered and balanced against the potentially positive factors enumerated above a variety of risks and other potentially negative
factors, including the following:
-
-
the fact that the common merger consideration of $6.35 per share is slightly less than the highest closing price of the
Power-One common stock during the 52-week period ended on April 18, 2013 (which was $6.51 on September 5, 2012);
-
-
the fact that the completion of the merger will preclude the Company's stockholders from having any ongoing equity
participation in the Company and, as such, current stockholders of the Company will cease to participate in the Company's future earnings or growth, if any, or to benefit from increases, if any, in
the value of the common stock;
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-
the risk that the merger may not be consummated despite the parties' efforts or that consummation may be unduly delayed,
even if the requisite approval is obtained from the Power-One stockholders, including the possibility that conditions to the parties' obligations to complete the merger may not be
satisfied, the potential resulting disruptions to the Company's business, the diversion of management and employee attention, potential employee attrition and the potential effect on customer and
other business relationships;
-
-
the deal protection measures in the merger agreement, including the fact that any time prior to approval of the merger
agreement by the Power-One stockholders, the Company may terminate the merger agreement and pay ABB a termination fee of $20,000,000, or approximately $0.10 per share; however, after
reviewing the termination fee with the assistance of its legal and financial advisors, the Power-One board of directors believed that the termination fee was reasonable and should not be
preclusive of or unreasonably restrict competing offers following the announcement of the transaction;
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-
-
the Company may be unable to obtain stockholder approval for the transactions contemplated by the merger agreement;
-
-
the merger agreement's restrictions on the conduct of the Company's business prior to the completion of the merger,
generally requiring the Company to conduct its business only in the ordinary course, subject to specific limitations, which may delay or prevent the Company from undertaking business opportunities
that may arise pending completion of the merger;
-
-
the fact that the Company has incurred and will continue to incur significant transaction costs and expenses in connection
with the proposed transaction, regardless of whether the merger is consummated; and
-
-
the fact that the receipt of cash in exchange for shares of stock pursuant to the merger will be a taxable transaction.
In addition, the Power-One board of directors was aware at the time of its approval of the merger that certain of Power-One's executive officers may receive certain benefits
that are different from, or in addition to, those of Power-One's other stockholders and that two (2) of the eight (8) directors will receive accelerated vesting of their restricted stock units as
described under "Proposal 1: Adoption of the Merger AgreementSpecial FactorsInterests of Certain Persons in the Merger" beginning on page 60 of this proxy
statement. The Power-One board of directors, however, observed that the majority of the value of such different or additional interests results from change in control benefits that arise
from equity-based compensation, which the Power-One board of directors felt to a significant extent aligned the interests of the directors and executive officers with those of the
stockholders in seeking to maximize the per-share merger consideration.
After
considering the foregoing potentially negative and potentially positive factors, the Power-One board of directors concluded that the potentially positive factors
relating to the merger agreement and the merger substantially outweighed the potentially negative factors.
The
foregoing discussion of the information and factors considered by the Power-One board of directors is not exhaustive but is intended to reflect the material factors
considered by the Power-One board of directors in its consideration of the merger. In view of the complexity, and the large number, of the factors considered, the Power-One
board of directors, both individually and collectively, did not quantify or assign any relative or specific weight to the various factors. Rather, the Power-One board of directors based
its recommendation on the totality of the information presented to and considered by it. In addition, individual members of the Power-One board of directors may have given different
weights to different factors.
The foregoing discussion of the information and factors considered by the Power-One board of directors is forward-looking in nature. This information should be read in light
of the factors described under the section entitled "Cautionary Statement Concerning Forward-Looking Information" beginning on page 25 of this proxy statement.
Recommendation of Our Board of Directors
The Power-One board of directors, after considering all factors that the Power-One board of directors deemed
relevant, unanimously determined that the merger agreement and the consummation of the transactions contemplated therein, including the merger, and the consideration to be received in the merger are
advisable, fair to and in the best interests of Power-One and its stockholders, and unanimously approved the merger agreement and the transactions contemplated by the merger agreement,
including the merger. Certain factors considered by the Power-One board of directors in reaching its decision to approve the merger agreement and the merger can be found in the section
titled "Proposal 1: Adoption of the Merger AgreementSpecial FactorsReasons for the Merger" beginning on page 45 of this proxy statement.
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The Power-One board of directors recommends that the Power-One stockholders vote "FOR" the adoption of the merger agreement, thereby
approving the merger.
Opinion of Power-One's Financial Advisor
Goldman Sachs delivered its opinion to the Power-One board of directors that, as of April 21, 2013 and based upon
and subject to the factors and assumptions set forth therein, the $6.35 per share in cash to be paid to holders (other than ABB and its affiliates) of shares of Power-One common stock
pursuant to the merger agreement was fair from a financial point of view to such holders.
The full text of the written opinion of Goldman Sachs, dated April 21, 2013, which sets forth assumptions made, procedures followed, matters considered and
limitations on the review undertaken in connection with the opinion, is attached as Annex B. Goldman Sachs provided its opinion for the information and assistance of the Power-One
board of directors in connection with its consideration of the merger. The Goldman Sachs opinion does not constitute a recommendation as to
how any holder of Power-One common stock should vote with respect to the merger or any other matter.
In
connection with rendering the opinion described above and performing its related financial analyses, Goldman Sachs reviewed, among other
things:
-
-
the merger agreement;
-
-
annual reports to stockholders and Annual Reports on Form 10-K of the Company for the five (5) fiscal
years ended December 30, 2012;
-
-
certain interim reports to stockholders and Quarterly Reports on Form 10-Q of the Company;
-
-
certain other communications from the Company to its stockholders;
-
-
certain publicly available research analyst reports for the Company; and
-
-
certain internal financial analyses and forecasts for the Company prepared by its management, as approved for Goldman
Sachs' use by the Company (referred to as the "March 2013 Projections" and which are described in the section titled "Proposal 1: Adoption of the Merger AgreementSpecial
FactorsCertain Projections Prepared by the Management of Power-One" beginning on page 69 of this proxy statement).
Goldman
Sachs also held discussions with members of the senior management of the Company regarding their assessment of the past and current business operations, financial condition and
future prospects of the Company; reviewed the reported price and trading activity for the shares of Power-One common stock; compared certain financial and stock market information for
the Company with similar information for certain other companies the securities of which are publicly traded; reviewed the financial terms of certain recent business combinations in the power
conversion industry and in other industries; and performed such other studies and analyses, and considered such other factors, as Goldman Sachs deemed appropriate.
For purposes of rendering the opinion described above, Goldman Sachs, with the Company's consent, relied upon and assumed the accuracy and completeness of all of the financial, legal,
regulatory, tax, accounting and other information provided to, discussed with or reviewed by, Goldman Sachs, without assuming any responsibility for independent verification thereof. In that regard,
Goldman Sachs assumed with the Company's consent that the March 2013 Projections had been reasonably prepared on a basis reflecting the best currently available estimates and judgments of the
management of the Company. Goldman Sachs did not make an independent evaluation or appraisal of the assets and liabilities (including any contingent, derivative or other off-balance-sheet
assets and liabilities) of the Company or any of its subsidiaries and Goldman Sachs was not furnished with any such evaluation or appraisal. Goldman Sachs has assumed that all governmental, regulatory
or other consents and approvals necessary for the consummation of the merger will be obtained without any
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adverse
effect on the expected benefits of the merger in any way meaningful to its analysis. Goldman Sachs has assumed that the merger will be consummated on the terms set forth in the merger
agreement, without the waiver or modification of any term or condition the effect of which would be in any way meaningful to its analysis.
Goldman
Sachs' opinion does not address the underlying business decision of the Company to engage in the merger, or the relative merits of the merger as compared to any strategic
alternatives that may be available to the Company; nor does it address any legal, regulatory, tax or accounting matters. Goldman Sachs' opinion addresses only the fairness from a financial point of
view to the holders (other than ABB and its affiliates) of shares of Power-One common stock, as of the date of the opinion, of the $6.35 per share in cash to be paid to such holders
pursuant to the merger agreement. Goldman Sachs does not express any view on, and its opinion does not address, any other term or aspect of the merger agreement or merger or any term or aspect of any
other agreement or instrument contemplated by the merger agreement or entered into or amended in connection with the merger, including the fairness of the merger to, or any consideration received in
connection therewith by, the holders of any other class of securities, creditors, or other constituencies of the Company; nor as to the fairness of the amount or nature of any compensation to be paid
or payable to any of the officers, directors or employees of the Company, or class of such persons, in connection with the merger, whether relative to the $6.35 per share in cash to be paid to the
holders (other than ABB and its affiliates) of shares of Power-One common stock pursuant to the merger agreement or otherwise. Goldman Sachs does not express any opinion as to the impact
of the merger on the solvency or viability of the Company or ABB or the ability of the Company or ABB to pay their respective obligations when they come due. Goldman Sachs' opinion was necessarily
based on economic, monetary, market and other conditions, as in effect on, and the information made available to Goldman Sachs as of, the date of the opinion and Goldman Sachs assumed no
responsibility for
updating, revising or reaffirming its opinion based on circumstances, developments or events occurring after the date of its opinion. Goldman Sachs' opinion was approved by a fairness committee of
Goldman Sachs.
The
following is a summary of the material financial analyses delivered by Goldman Sachs to the Power-One board of directors in connection with rendering the opinion
described above. The following summary, however, does not purport to be a complete description of the financial analyses performed by Goldman Sachs, nor does the order of analyses described represent
relative importance or weight given to those analyses by Goldman Sachs. Some of the summaries of the financial analyses include information presented in tabular format. The tables must be read
together with the full text of each summary and are alone not a complete description of Goldman Sachs' financial analyses. Except as otherwise noted, the following quantitative information, to the
extent that it is based on market data, is based on market data as it existed on or before April 18, 2013, and is not necessarily indicative of current market conditions.
Goldman
Sachs reviewed the historical trading prices for shares of Power-One common stock for the period beginning on January 1, 2011 and
ending on April 18, 2013. In addition, Goldman Sachs compared the $6.35 per share in cash proposed to be paid to the holders of the shares of Power-One common stock pursuant to the
merger agreement in relation to the closing price for shares of Power-One common stock as of April 18, 2013, the highest and lowest closing prices of the Power-One
common stock for the 52-week period ended April 18, 2013 and the average closing prices of shares of Power-One common stock for the one-month,
six-month and 52-week periods ended April 18, 2013, respectively.
51
Table of Contents
The $6.35 per share in cash to be paid to the Company stockholders pursuant to the merger agreement
represented:
Based
on information obtained from the Company's SEC filings, the March 2013 Projections, Thomson Reuters, estimates from the Institutional Brokers' Estimate System ("IBES") and
Bloomberg market data, Goldman Sachs performed certain analyses and calculated certain financial multiples for the Company based on the closing price of $4.08 per share of Power-One common
stock as of April 18, 2013 and the $6.35 per share in cash to be paid to the holders of shares of Power-One common stock pursuant to the merger agreement. Goldman Sachs first
calculated the implied market capitalization of the Company by multiplying the $6.35 per share price of Power-One common stock by 161,657,675 shares of Power-One common stock,
which represents the number of shares of Power-One common stock on a diluted basis (including options, convertible preferred shares, warrants, restricted share units and performance share units), as
of March 31, 2013, per Power-One management. Goldman Sachs then calculated the implied enterprise value of the Company by subtracting from the implied market capitalization the
amount of the Company's net cash and cash equivalents disclosed by the Company's management as of December 30, 2012 (the date of the latest audited financial statements), as adjusted for the
Company's litigation reserves per the Company's management of $238 million. Goldman Sachs then divided such implied enterprise value by the Company's estimated earnings before interest, taxes
and depreciation and amortization (referred to as "EBITDA") for each of calendar years 2013 and 2014, respectively (by using both the March 2013 Projections and IBES estimates). Based on the same
methodology, Goldman Sachs also calculated the implied enterprise value (based on the closing price of $4.08 per share price of Power-One common stock) as a multiple of EBITDA for each of
calendar years 2013 and 2014, respectively (by using both the March 2013 Projections and IBES estimates). The following table presents the results of Goldman Sachs' analysis:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$4.08 per share price of
Power-One common stock
|
|
$6.35 per share price of
Power-One common stock
|
|
Implied enterprise value as a
multiple of EBITDA:
|
|
Based on
March 2013 Projections
|
|
Based on
IBES estimates
|
|
Based on
March 2013 Projections
|
|
Based on
IBES estimates
|
|
2013E
|
|
|
3.6x
|
|
|
5.4x
|
|
|
6.9x
|
|
|
10.2x
|
|
2014E
|
|
|
2.3x
|
|
|
3.9x
|
|
|
4.4x
|
|
|
7.5x
|
|
Goldman
Sachs also calculated the implied price-to-earnings ratios of the Company based on the $4.08 per share price of Power-One common stock and the
$6.35 per share price of Power-One common stock, respectively, by dividing the implied market capitalization of the Company (calculated as described above) by the estimated earnings of the
Company for each of calendar years 2013 and
52
Table of Contents
2014, respectively (by using both the March 2013 Projections and IBES estimates). The following table presents the results of Goldman Sachs' analysis:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$4.08 per share price of
Power-One common stock
|
|
$6.35 per share price of
Power-One common stock
|
|
Implied price-to earnings ratios:
|
|
Based on
March 2013 Projections
|
|
Based on
IBES estimates
|
|
Based on
March 2013 Projections
|
|
Based on
IBES estimates
|
|
2013E
|
|
|
12.3x
|
|
|
17.7x
|
|
|
19.1x
|
|
|
27.6x
|
|
2014E
|
|
|
6.3x
|
|
|
13.4x
|
|
|
9.7x
|
|
|
20.8x
|
|
Goldman Sachs reviewed and compared certain financial information, ratios and multiples for the Company to corresponding financial
information, ratios and multiples for the following publicly traded corporations in the power conversion industry:
-
-
SMA Solar Technology AG ("SMA Solar")
-
-
Advanced Energy Industries Inc. ("Advanced
Energy")
-
-
Bel Fuse, Inc.
-
-
Littelfuse, Inc.
-
-
International Rectifier
Corp.
-
-
Vicor Corp.
Although none of the selected companies is directly comparable to the Company, the companies included were chosen because they are publicly traded companies with operations that for
purposes of analysis may be considered similar to certain operations of the Company. SMA Solar derives the substantial majority of its revenue from the solar energy business and Advanced Energy
derives approximately 48% of its revenues from the solar energy business. Bel Fuse, Inc., Littelfuse, Inc., International Rectifier Corp. and Vicor Corp. (collectively referred to below as the
"Other Power Peers") each derive all of or substantially all of their revenues from power solutions businesses.
Goldman Sachs calculated and compared various financial multiples and ratios based on information it obtained from SEC filings, IBES estimates, the March 2013 Projections and Bloomberg
market data and market information as of April 18, 2013. The multiples and ratios of each of the selected companies were based on market data and IBES estimates as of April 18, 2013. The
multiples and ratios of the Company were based on market data as of April 18, 2013 and the March 2013 Projections and IBES estimates. With respect to each of the selected companies and the
Company, Goldman Sachs calculated the enterprise value as a multiple of estimated EBITDA for calendar years 2013 and 2014, respectively. The results of these analyses are summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected Companies
|
|
Power-One
|
|
Enterprise value as a
multiple of EBITDA:
|
|
SMA Solar
|
|
Advanced
Energy
|
|
Other
Power Peers
|
|
Based on IBES
estimates
|
|
Based on
March 2013 Projections
|
|
CY2013E
|
|
|
5.3x
|
|
|
6.7x
|
|
|
9.9x
|
|
|
5.4x
|
|
|
3.6x
|
|
CY2014E
|
|
|
2.4x
|
|
|
4.3x
|
|
|
6.3x
|
|
|
3.9x
|
|
|
2.3x
|
|
With respect to each of the selected companies and the Company, Goldman Sachs also calculated and compared the average of the enterprise value to one-year forward EBITDA and
two-year forward EBITDA multiples, respectively, for each trading day over the last 12 months and last three (3) years,
53
Table of Contents
respectively, ended on April 18, 2013 based on market information and IBES estimates. The results of these analyses are summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One-year forward EBITDA
|
|
Two-year forward EBITDA
|
|
Enterprise value as a
multiple of:
|
|
Last 12 months
average
|
|
Last three years
average
|
|
Last 12 months
average
|
|
Last three years
average
|
|
Power-One
|
|
|
3.5x
|
|
|
4.7x
|
|
|
3.3x
|
|
|
4.1x
|
|
SMA Solar
|
|
|
4.1x
|
|
|
4.8x
|
|
|
3.2x
|
|
|
4.7x
|
|
Advanced Energy
|
|
|
7.9x
|
|
|
6.4x
|
|
|
5.7x
|
|
|
4.9x
|
|
Other Power Peers
|
|
|
9.0x
|
|
|
7.5x
|
|
|
6.4x
|
|
|
5.9x
|
|
Goldman
Sachs performed illustrative analyses of the present value of the potential future price per share of Power-One common stock at the year-end of each of
the calendar years 2013 through 2016 using one-year forward EBITDA estimates based on the March 2013 Projections for the calendar years 2014 through 2017, respectively. Goldman Sachs first
calculated illustrative enterprise values of the Company at the year-end of each of the calendar years 2013 through 2016 by multiplying the respective one-year forward EBITDA
estimates for the calendar years 2014 through 2017 by one-year forward enterprise value to EBITDA multiples ranging from 3.0x to 5.0x. These one-year forward enterprise value
to EBITDA multiple estimates were derived by Goldman Sachs utilizing its professional judgment and experience, taking into account the average enterprise value as a multiple of one-year
forward estimated EBITDA for Power-One and SMA Solar over the last three (3) years and 12 months, in each case as set forth above under "Public Trading Multiples
Analysis." Goldman Sachs then added the assumed amount of net cash and cash equivalents (as adjusted for the Company's litigation reserves per the Company's management) as of the relevant
year-end per the March 2013 Projections from the illustrative enterprise values in order to calculate the implied future equity values. The implied future equity values in turn were
divided by the projected year-end diluted shares outstanding (ranging from 160.8 million to 164.3 million in accordance with the EBITDA multiples ranging from 3.0x to 5.0x,
per Power-One management) which included dilution from options, convertible preferred shares, warrants, restricted share units and performance share units), which resulted in an illustrative per share
future value for the Power-One common stock ranging from $5.16 to $13.37. Goldman Sachs then calculated the present values of the implied per share future values for Power-One
common stock by discounting the implied per share future values to December 31, 2012, using a discount rate of 14.0%, reflecting an estimate of the Company's cost of equity. In deriving a
discount rate of 14.0% for the purposes of this analysis, Goldman Sachs utilized the Capital Asset Pricing Model which takes into account certain metrics specific to Power-One, including
Power-One's target capital structure and historical beta, as well as certain financial metrics for the United States financial markets generally. The following table presents the results of Goldman
Sachs' analysis:
|
|
|
|
|
Year
|
|
Implied Future Value Per Share of
Power-One Common Stock
|
|
Implied Present Value Per Share of
Power-One Common Stock
|
YE2013
|
|
$5.16 - $7.32
|
|
$4.53 - $6.42
|
YE2014
|
|
$6.45 - $9.03
|
|
$4.96 - $6.95
|
YE2015
|
|
$7.95 - $11.15
|
|
$5.37 - $7.52
|
YE2016
|
|
$9.59 - $13.37
|
|
$5.68 - $7.92
|
Goldman
Sachs performed an illustrative discounted cash flow analysis for the Company based on the March 2013 Projections to determine a range of equity values per common share for the
Company. Goldman Sachs conducted its discounted cash flow analysis using estimated unlevered free cash flows (calculated as after-tax net operating profit plus depreciation and
amortization, less changes in
54
Table of Contents
operating working capital, less capital expenditures) based on the March 2013 Projections for the Company for the calendar years ending 2013 through 2017. The cash flows were discounted to
December 31, 2012 by assuming mid-year convention and using illustrative discount rates ranging from 12.0% to 16.0% reflecting estimates of the Company's weighted average cost of
capital. In deriving the range of illustrative discount rates of 12.0% to 16.0% for the purposes of this analysis, Goldman Sachs utilized the Capital Asset Pricing Model, which takes into account
certain metrics specific to Power-One, including Power-One's target capital structure, the cost of long-term debt, after-tax yield on permanent excess cash, if any,
forecast tax rate and historical beta, as well as certain financial metrics for the United States financial markets generally. To account for the cyclicality and high volatility of the Company's
business, Goldman Sachs, after discussion with management, also calculated the illustrative free cash flows for an illustrative "terminal year" based on "through-the-cycle"
average numbers for the period of calendar years 2010 through 2017. Goldman Sachs first calculated the illustrative "terminal year" values in calendar year 2017 of (i) revenue, EBITDA and
depreciation and amortization, utilizing the average values of such items for calendar years 2010 through 2017, (ii) capital expenditures (by multiplying the illustrative terminal year
depreciation and amortization value by the average capital expenditures as a percentage of depreciation and amortization for calendar years 2010 through 2017) and (iii) the change in working
capital (by applying the average change in working capital as a percentage change in revenue for calendar years 2010 through 2017 to the implied one-year revenue change calculated based on
the illustrative terminal year revenue with a perpetuity growth rate of 2.5%). Based on these illustrative "terminal year" values, Goldman Sachs then calculated the illustrative free cash flows for
the illustrative "terminal year." By utilizing the perpetual growth rate method and the illustrative free cash flows for the illustrative "terminal year," Goldman Sachs then calculated illustrative
terminal values for the Company in the calendar year 2017 by using perpetuity growth rates ranging from 2.0% to 3.0% and the range of discount rates described above. The range of perpetuity growth
rates was estimated by Goldman Sachs utilizing its professional judgment and experience, taking into account the March 2013 Projections and market expectations regarding long-term real
growth of gross domestic product and inflation. These terminal values were then discounted to December 31, 2012 using the range of illustrative discount rates described above. Goldman Sachs
combined the present value of the estimated cash flows from 2013 through 2017 with the present value of the illustrative terminal values to derive illustrative enterprise values for the Company.
Goldman Sachs also added to these illustrative enterprise values the present values of a working capital adjustment of $62 million (to account for the switch in the growth profile of the
Company from calendar year 2017 to the illustrative "terminal year") and the amount of the Company's net cash and cash equivalents disclosed by the Company's management as of December 30, 2012
(the date of the latest audited financial statements), as adjusted for the Company's litigation reserves per the Company's management, of $238 million, to calculate the present values of illustrative
equity values of the Company as of December 31, 2012. Goldman Sachs divided such present values of such equity values by 161,657,675 shares of Power-One common stock, which
represents the number of shares of Power-One common stock on a fully diluted basis (including options, convertible preferred shares, warrants, restricted share units and performance share units), as
of March 31, 2013, per Power-One management, to calculate the illustrative per-share equity values. This resulted in a range of implied fully diluted per share values
from $6.14 to $8.26 for the Power-One common stock.
Management indicated to Goldman Sachs that, in management's view, there is substantial uncertainty regarding the amount and timing of any future U.S. taxable income given Power-One's
U.S. operations
and tax history and this uncertainty is significantly higher than that associated with other aspects of the March 2013 Projections. Based on discussions with management, the Discounted Cash Flow
analysis performed by Goldman Sachs did not include a net present value of the tax benefits, if any, that might arise in the future from the utilization of U.S. NOLs and assumed a 35% marginal cash
tax rate. Subsequent to the delivery of its opinion, utilizing information and estimates prepared by management for the period through 2017 (including supplemental estimates of U.S. source taxable
income), extrapolating through 2023, based on discussions with management, and applying a discount
55
Table of Contents
rate of 14%, the mid-point of the range of discount rates used in the Discounted Cash Flow analysis, Goldman Sachs calculated an estimated net present value of the U.S. NOLs of approximately 24 cents
per share. Goldman Sachs informed the Power-One board of directors that, if Goldman Sachs had included this amount in its Discounted Cash Flow analysis, it would not have changed Goldman Sachs'
conclusion set forth in its opinion described above.
FUTURE STOCKHOLDER PROPOSALS
If the merger is completed, we will have no public stockholders and there will be no public participation in any of our future
stockholder meetings. If the merger is not completed, however, stockholders will continue to be entitled to attend and participate in meetings of stockholders. If the merger is not completed and the
2013 annual meeting is held, stockholder proposals will be eligible for consideration for inclusion in the proxy statement and form of proxy for our 2013 annual meeting of stockholders in accordance
with Rule 14a-8 under the Exchange Act and our by-laws, as described below.
Any
proposal that a stockholder wishes to include in proxy materials for our 2013 annual meeting pursuant to Rule 14a-8 under the Exchange Act must be received at a
reasonable time before the Company begins to print and send its proxy materials, in order to consider including them in our proxy materials for that meeting. Except as otherwise permitted under
Rule 14a-8, in order for a matter to be acted upon at an annual meeting, notice of stockholder proposals and other nominations must be delivered to us in accordance with the
provisions of Article II, Section 2.10 of our by-laws not less than 90 days nor more than 120 days prior to the annual meeting; provided, however, that in the event that less
than 100 days' notice or prior public disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder to be timely must be so received not later than the close of
business on the tenth (10
th
) day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure was made. All notices must be delivered to
our Corporate Secretary at 740 Calle Plano, Camarillo, California 93012.
111
Table of Contents
WHERE STOCKHOLDERS CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other documents with the SEC under the Exchange Act. These reports,
proxy statements and other information contain additional information about us and will be made available for inspection and copying at our executive offices during regular business hours by any
stockholder or a representative of a stockholder as so designated in writing.
Stockholders
may read and copy any reports, statements or other information filed by us at the SEC's public reference room at Station Place, 100 F Street, N.E., Washington, D.C.
20549. You may also obtain copies of this information by mail from the public reference section of the SEC at Station Place, 100 F Street, N.E., Washington, D.C. 20549, at prescribed rates.
Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference room. Our SEC filings made electronically through the
SEC's EDGAR system are available to the public at the SEC's website located at www.sec.gov. In addition, stockholders may obtain free copies of the documents filed with the SEC by
Power-One through the Investor Relations section of our website, and the "Financial Information" tab therein. The website address is www.power-one.com. The information on our
website is not, and shall not be deemed to be a part of the merger agreement or incorporated into this or any other filings with the SEC. You may also send a written request to our Corporate Secretary
at Power-One, Inc., 740 Calle Plano, Camarillo, California 93012, Attn: Corporate Secretary, or by calling the Corporate Secretary at (805) 987-8741.
A
list of stockholders will be available for inspection by stockholders of record at our executive offices at 740 Calle Plano, Camarillo, California 93012 during ordinary business hours
for ten (10) days prior to the date of the special meeting and will be available for review at the special meeting or any adjournment or postponement thereof.
The
SEC allows us to "incorporate by reference" information that we file with the SEC in other documents into this proxy statement. This means that we may disclose important information
to you by referring you to another document filed separately with the SEC. The information incorporated by reference is considered to be part of this proxy statement. This proxy statement and the
information that we file later with the SEC may update and supersede the information incorporated by reference. Similarly, the information that we later file with the SEC may update and supersede the
information in this proxy statement. Such updated and superseded information will not, except as so modified or superseded, constitute part of this proxy statement.
We
incorporate by reference each document we file under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of the initial filing of this proxy statement and
before the special meeting (other than current reports on Form 8-K furnished pursuant to Item 2.02 or Item 7.01 of Form 8-K, including any exhibits
included with such information, unless otherwise
indicated therein). We also incorporate by reference in this proxy statement the following documents filed by us with the SEC under the Exchange Act:
-
-
our Annual Report on Form 10-K for the fiscal year ended December 30, 2012, filed with the SEC
on February 28, 2013;
-
-
Amendment No. 1 to our Annual Report on Form 10-K/A for the fiscal year ended
December 30, 2012, filed with the SEC on April 29, 2013;
-
-
our Quarterly Report on Form 10-Q for the quarter ended March 31, 2013, filed with the SEC on
May 10, 2013; and
-
-
our Current Reports on Form 8-K filed with the SEC on February 5, 2013 and April 22,
2013.
We
undertake to provide without charge to each person to whom a copy of this proxy statement has been delivered, upon request, by first-class mail or other equally prompt means, within
one (1)
112
Table of Contents
business
day of receipt of such request, a copy of any or all of the documents incorporated by reference in this proxy statement, other than the exhibits to these documents, unless the exhibits are
specifically incorporated by reference into the information that this proxy statement incorporates. You may obtain documents incorporated by reference by requesting them in writing or by telephone at
the following address and telephone number:
Power-One, Inc.
Attention: Corporate Secretary
740 Calle Plano,
Camarillo, California 93012
Telephone number: (805) 987-8741
You may also obtain documents incorporated by reference by requesting them by telephone from AST Phoenix Advisors, our proxy solicitor, at
(800) 249-7148. Documents should be requested by July 13, 2013 in order to receive them before the special meeting. You should be sure to include your complete name and
address in your request.
This proxy statement does not constitute the solicitation of a proxy in any jurisdiction to or from any person to whom it is not lawful to make any solicitation
in that jurisdiction. The delivery of this proxy statement should not create an implication that there has been no change in the affairs of Power-One since the date of this proxy statement
or that the information herein is correct as of any later date.
ABB
and Merger Sub have supplied, and we have not independently verified, the information in this proxy statement exclusively concerning ABB and Merger Sub.
Stockholders should not rely on information other than that contained or incorporated by reference in this proxy statement. We have not authorized anyone to provide information that is
different from that contained in this proxy statement. This proxy statement is dated June 19, 2013. No assumption should be made that the information contained in this proxy statement is
accurate as of any date other than that date, and the mailing of this proxy statement will not create any implication to the contrary. Notwithstanding the foregoing, if there is any material change in
any of the information previously disclosed, we will, where relevant and to the extent required by applicable law, update such information through a supplement to this proxy statement.
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Table of Contents
Annex A
AGREEMENT AND PLAN OF MERGER
By and Among
ABB LTD,
VERDI ACQUISITION CORPORATION,
and
POWER-ONE, INC.
Dated as of April 21, 2013
Table of Contents
TABLE OF CONTENTS
A-i
Table of Contents
A-ii
Table of Contents
A-iii
Table of Contents
THIS AGREEMENT AND PLAN OF MERGER, dated as of April 21, 2013 (this "
Agreement
"), is made by and among
ABB Ltd, a corporation organized under the Laws of Switzerland ("
Parent
"), Verdi Acquisition Corporation, a Delaware corporation and an indirect
wholly-owned Subsidiary of Parent ("
Merger Sub
"), and Power-One, Inc., a Delaware corporation (the
"
Company
").
W I T N E S S E T H:
WHEREAS, the board of directors of the Company has unanimously (i) determined that this Agreement and the transactions
contemplated hereby, including the Merger, are advisable, fair to and in the best interests of the Company and the stockholders of the Company and (ii) approved this Agreement and the
transactions contemplated hereby, including the Merger, on the terms and subject to the conditions set forth in this Agreement;
WHEREAS,
the board of directors of the Company has unanimously recommended adoption of this Agreement by its stockholders and directed that this Agreement be submitted to its
stockholders for adoption;
WHEREAS,
Merger Sub will merge with and into the Company, with the Company continuing as the surviving corporation in the merger (the
"
Merger
"), upon the terms and subject to the conditions set forth in this Agreement, whereby, except as expressly provided in
Section 3.1
, each issued
and outstanding share of common stock, par value $0.001 per share, of the Company (the "
Company
Common Stock
") and each issued and outstanding share of Series C Junior Participating Convertible Preferred Stock, par value $0.001 per share, of the Company (the
"
Series C Preferred Stock
"), in each case immediately prior to the Effective Time, will be canceled and converted into the right to receive the
Merger Consideration as provided herein;
WHEREAS,
concurrently with the execution and delivery of this Agreement, certain stockholders of the Company have entered into a voting agreement, dated as of the date hereof, with
Parent (the "
Voting Agreement
"); and
WHEREAS,
each of Parent, Merger Sub and the Company desire to make certain representations, warranties, covenants and agreements in connection with the Merger and also to prescribe
various conditions to the Merger.
NOW,
THEREFORE, in consideration of the foregoing and the mutual representations, warranties and covenants and subject to the conditions herein contained, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto intending to be legally bound hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1
Definitions.
Defined terms used in this Agreement have the
respective meanings ascribed to them by definition in this Agreement and as follows:
"
6.5(e) Notice
" shall have the meaning set forth in
Section 6.5(e)
.
"
Acceptable Confidentiality Agreement
" shall mean a confidentiality agreement containing terms no less restrictive of the Third Party that
is party to such agreement and its Affiliates and Representatives
than the terms set forth in the Confidentiality Agreement with respect to Parent and its Affiliates and Representatives, including with respect to standstill provisions.
"
Acquisition Proposal
" shall have the meaning set forth in
Section 6.5(h)(i)
.
A-1
Table of Contents
"
Affiliate
" of any Person shall mean another Person that directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first Person. For the avoidance of doubt, the Silver Lake Stockholders shall be deemed to be Affiliates of the Company.
"
Affiliated Group
" means an affiliated group as defined in Section 1504 of the Code (or any analogous combined consolidated or
unitary group defined under income Tax Law).
"
Agreement
" shall have the meaning set forth in the Preamble.
"
Alternative Acquisition Agreement
" shall have the meaning set forth in
Section 6.5(c)
.
"
Anticipated Prepayment Date
" shall have the meaning set forth in
Section 6.11
.
"
Anticorruption Laws
" shall mean (i) the FCPA and (ii) any other Law promulgated by any Governmental Authority applicable to
the Company and its Subsidiaries relating to bribery or corruption.
"
Antitrust Laws
" shall have the meaning set forth in
Section 4.4(b)
.
"
Book-Entry Shares
" shall have the meaning set forth in
Section 3.1(b)
.
"
Business Day
" shall mean any day other than a Saturday, Sunday or a day on which all banking institutions in Zurich, Switzerland or New
York, New York are authorized or obligated by Law or executive order to close.
"
By-laws
" shall have the meaning set forth in
Section 4.1
.
"
Certificate of Merger
" shall have the meaning set forth in
Section 2.3
.
"
Certificates
" shall have the meaning set forth in
Section 3.1(c)
.
"
Change in Recommendation
" shall have the meaning set forth in
Section 6.5(c)
.
"
Charter
" shall have the meaning set forth in
Section 4.1
.
"
Code
" shall mean the Internal Revenue Code of 1986, as amended.
"
Common Certificates
" shall have the meaning set forth in
Section 3.1(b)
.
"
Common Merger Consideration
" shall have the meaning set forth in
Section 3.1(b)
.
"
Company
" shall have the meaning set forth in the Preamble.
"
Company Benefit Plan
" shall mean each "employee pension benefit plan" (as defined in Section 3(2) of ERISA), each "employee
welfare benefit plan" (as defined in Section 3(1) of ERISA), and each other material plan, program, agreement, arrangement or policy relating to stock options, stock purchases or other equity
or equity-based compensation, deferred compensation, bonus, incentive, severance, retention, fringe benefits or employee benefits, including individual employment, consulting, change in control and
severance agreements, in each case maintained or contributed to, or required to be maintained or contributed to, by the Company or its Subsidiaries or pursuant to which the Company or its Subsidiaries
have any liability (including a contingent liability) or otherwise providing for payments or benefits for or to any current or former employees, directors, officers or consultants of the Company or
any of its Subsidiaries, including for purposes of clarification the Company Plans, but not including any Multiemployer Plan.
"
Company Board
" shall have the meaning set forth in
Section 4.3(b)
.
"
Company Board Recommendation
" shall have the meaning set forth in
Section 4.3(b)
.
"
Company Common Stock
" shall have the meaning set forth in the Recitals.
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"
Company Disclosure Schedule
" shall mean the disclosure schedule delivered by the Company to Parent concurrently with the execution of
this Agreement (it being understood that the disclosure of any matter or item in the Company Disclosure Schedule shall not be deemed to constitute an acknowledgement that such matter or item is
required to be disclosed therein or is material to a representation or warranty set forth in this Agreement and shall not be used as a basis for interpreting the terms "material," "materially,"
"materiality" or "Material Adverse Effect" or any word or phrase of similar import and does not mean that such matter or item would, alone or together with any other matter or item, have a Material
Adverse Effect).
"
Company Employee
" shall have the meaning set forth in
Section 6.9(b)(i)
.
"
Company Lease
" shall mean any lease, sublease, sub-sublease, license and other agreement under which the Company or any of
its Subsidiaries leases, subleases, licenses, uses or occupies (in each case whether as landlord, tenant, sublandlord, subtenant or by other occupancy arrangement), or has the right to use or occupy,
now or in the future, any real property.
"
Company Material Contract
" shall have the meaning set forth in
Section 4.16(a)
.
"
Company Option
" shall mean each option to purchase shares of Company Common Stock granted pursuant to any Company Plan.
"
Company Owned IP
" shall mean all Intellectual Property Rights owned or purported to be owned by the Company or any of its Subsidiaries.
"
Company Permits
" shall have the meaning set forth in
Section 4.5
.
"
Company Plans
" shall mean any of the Amended and Restated 2004 Stock Incentive Plan (the "
2004
Plan
"), the 2001 Stock Option Plan (the "
2001 Plan
") and the Amended and Restated 1996 Stock Incentive Plan (the
"
1996 Plan
").
"
Company Preferred Stock
" shall mean, collectively, Series A Preferred Stock, Series B Preferred Stock and Series C
Preferred Stock.
"
Company Registered IP
" shall have the meaning set forth in
Section 4.14(a)
.
"
Company Related Parties
" shall have the meaning set forth in
Section 8.3(b)(ii)
.
"
Company Restricted Share
" shall mean each restricted share of Company Common Stock granted pursuant to the Company Plans.
"
Company SEC Documents
" shall have the meaning set forth in
Section 4.7(a)
.
"
Company Source Code
" shall have the meaning set forth in
Section 4.14(i)
.
"
Company Stock
" shall mean, collectively, Company Common Stock and Company Preferred Stock.
"
Company Stock-Based Award
" shall mean each right of any kind to receive shares of Company Common Stock or benefits measured by the value
of shares of Company Common Stock, and each award of any kind consisting of shares of Company Common Stock, granted under the Company Plans (including without limitation stock appreciation rights,
restricted stock units, performance stock units and dividend equivalents), other than Company Options and Company Restricted Shares.
"
Company Termination Fee
" shall have the meaning set forth in
Section 8.3(a)(i)
.
"
Company Warrants
" shall mean Warrant No. 1 for the Purchase of 8,628,941 Shares of Company Common Stock, dated May 8, 2009,
and Warrant No. 2 for the Purchase of 71,059 Shares of Company Common Stock, dated May 8, 2009.
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"
Confidentiality Agreement
" shall mean the confidentiality agreement dated August 23, 2011 between ABB Asea Brown Boveri Ltd
and the Company, as amended on October 25, 2012.
"
Contract
" shall mean any binding contract, agreement, arrangement, understanding, commitment, franchise, indenture, lease, purchase order
or license, whether written or otherwise.
"
control
" (including the terms "controlled by" and "under common control with") shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, as trustee or executor, by Contract or otherwise.
"
Controlled Group Liability
" means any and all liabilities (a) under Title IV of ERISA, (b) under Section 302 of
ERISA, (c) under Sections 412 and 4971 of the Code, (d) as a result of a failure to comply with the continuation coverage requirements of Section 601 et seq. of ERISA and
Section 4980B of the Code, and (e) under corresponding or similar provisions of foreign laws or regulations, other than such liabilities that arise solely out of, or relate solely to,
the Company Benefit Plans listed in
Section 4.13(a)
of the Company Disclosure Schedule.
"
Conversion
" shall have the meaning set forth in
Section 3.2(g)
.
"
Credit Facility
" shall mean the credit facility under the Credit Facility Agreement.
"
Credit Facility Agent
" shall mean Bank of America, N.A., in its capacity as administrative agent under the Credit Facility Agreement.
"
Credit Facility Agreement
" shall mean the Amended and Restated Credit Agreement, dated as of January 30, 2013 (as amended,
supplemented, restated or otherwise modified from time to time), by and
among the Company, the Credit Facility Lenders and the Credit Facility Agent and all Loan Documents (as defined in the Credit Facility Agreement) related thereto.
"
Credit Facility Lenders
" shall mean the several banks and other financial institutions or entities from time to time parties to the
Credit Facility Agreement.
"
Customs and International Trade Laws
" shall mean any Law, Order, permit or other decision or requirement having the force or effect of
Law and as amended from time to time, of any Governmental Authority, concerning the importation of products, the exportation or reexportation of products (including technology and services), the terms
and conduct of international transactions, and the making or receiving of international payments, including, as applicable, the Tariff Act of 1930 and other Laws and programs administered or enforced
by U.S. Customs and Border Protection and U.S. Immigration and Customs Enforcement, and their predecessor agencies, Export Administration Act of 1979, Export Administration Regulations, International
Emergency Economic Powers Act, Trading With the Enemy Act, Arms Export Control Act, International Traffic in Arms Regulations, Executive Orders of the President regarding embargoes and restrictions on
transactions with designated entities, the embargoes and restrictions administered by the U.S. Department of the Treasury, Office of Foreign Assets Control and the antiboycott Laws administered by the
U.S. Departments of Commerce and Treasury.
"
Damages
" shall mean damages, costs, fees, expenses, liabilities, penalties or losses of any kind;
provided
, that Damages shall not include any special, punitive,
incidental or consequential damages other than special, incidental or consequential
damages to the extent reasonably foreseeable as of the date hereof.
"
DGCL
" shall mean the General Corporation Law of the State of Delaware.
"
Dissenting Shares
" shall have the meaning set forth in
Section 3.5
.
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"
EBITDA
" shall mean, with respect to a Person, the net income of such Person (as determined in accordance with GAAP) before interest,
Taxes, depreciation and amortization.
"
Effective Time
" shall have the meaning set forth in
Section 2.3
.
"
Electronic Data Room
" shall mean the electronic data room maintained by Merrill Corporation (as long as the applicable document or
information was available in the electronic data room before 9:00 a.m. (Pacific time)) on April 21, 2013.
"
Environmental Claim
" shall mean any written claim, action, cause of action, suit, proceeding, order, demand or notice alleging potential
liability (including potential liability for investigatory costs, cleanup costs, governmental response costs, property damages, and personal injuries), based on Environmental Laws or arising out of or
resulting from: (i) the Release of Hazardous Substance at any location; or (ii) exposure to any Hazardous Substance.
"
Environmental Laws
" shall mean all Laws in effect as of the date hereof relating to pollution or protection of human health or safety or
the environment, including Laws relating to the exposure to, Release, or threatened Release of Hazardous Substances, or relating to the manufacture, use, treatment, storage, transport, presence,
investigation, remediation or handling of Hazardous Substances and all Laws regarding recordkeeping, notification, disclosure and reporting requirements for Hazardous Substances.
"
Environmental Permits
" shall mean any permit, license, approval or other authorization under any Environmental Law.
"
ERISA
" shall mean the Employee Retirement Income Security Act of 1974, as amended.
"
Exchange Act
" shall mean the Securities Exchange Act of 1934, as amended.
"
Exchange Fund
" shall have the meaning set forth in
Section 3.2(a)
.
"
FCPA
" shall mean the U.S. Foreign Corrupt Practices Act of 1977, as amended, and any regulations issued thereunder.
"
Foreign Antitrust Laws
" shall have the meaning set forth in
Section 4.4(b)
.
"
GAAP
" shall mean the United States generally accepted accounting principles.
"
Government Official
" shall mean any (i) officer or employee of a Governmental Authority or any department, agency or
instrumentality thereof (including any state-owned or -controlled enterprise), or of a public organization, (ii) officer or employee of a public international organization
(e.g., The World Bank), (iii) political party or party official or candidate for political or government office or (iv) or any Person acting for or on behalf of any of the
foregoing.
"
Governmental Authority
" shall mean any foreign, domestic, federal, territorial, national, state or local governmental authority of any
nature(including any government and any governmental agency, instrumentality, court, tribunal or commission, or any department, subdivision or branch of any of the foregoing) or body exercising, or
entitled to exercise, any administrative, executive, judicial, legislative, police, regulatory or taxing authority or power of any nature.
"
Hazardous Substance
" shall mean (i) substances defined, listed, classified or regulated as "hazardous substances", "hazardous
wastes", "hazardous materials", "extremely hazardous wastes", "restricted hazardous wastes", "toxic substances", "toxic pollutants", "contaminants", "pollutants", "radioactive materials, "petroleum",
"petroleum by-product", or words of similar import under any Environmental Law; (ii) asbestos and asbestos containing materials; and (iii) polychlorinated biphenyls.
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"
Highly Paid Employees
" shall mean the Company's and its Subsidiaries' fifty (50) most highly compensated employees, determined
based on the employee's annual base salary and bonus with respect to the immediately preceding fiscal year.
"
HSR Act
" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations
thereunder.
"
Indebtedness
" shall mean, with respect to any Person, without duplication: (a) any obligations for borrowed money, (b) any
obligations evidenced by bonds, notes, debentures, letters of credit or similar instruments, (c) any obligations under conditional sale, title retention or similar agreements or arrangements
creating an obligation with respect to the deferred purchase price of property, securities or other assets (including "earn-out" payments) (excluding accounts payable and accrued
liabilities incurred in the ordinary course of business), (d) any capital lease obligations, (e) any net obligations in respect of interest rate, currency or commodity swaps, collars,
caps, hedges, futures contract, forward contract, option or other derivative instruments or arrangements, (f) any accrued interest, premiums, penalties, breakages, "make whole amounts" and
other obligations relating to the foregoing that would be payable in connection with the repayment of the foregoing clauses (a) through (e), and (g) any obligations to guarantee any of
the foregoing types of obligations on behalf of any
Person;
provided
,
however
, that, with respect to the Company or any of its Subsidiaries, any
intercompany Indebtedness owing by the Company to any of its wholly-owned Subsidiaries, by a wholly-owned Subsidiary of the Company to the Company, or by one wholly-owned Subsidiary of the Company to
another wholly-owned Subsidiary of the Company, in each case, shall not constitute "Indebtedness" hereunder.
"
Indemnitee
" shall mean any individual who, on or prior to the Effective Time, was an officer, director, manager or employee of the
Company or served on behalf of the Company as an officer, director, manager, employee, trustee or fiduciary of any of another corporation, partnership, joint venture, trust, pension or other employee
benefit plan or enterprise or any of their predecessors in their capacities as such.
"
Intellectual Property Rights
" shall mean all industrial and intellectual property and other similar proprietary rights, in any
jurisdiction, whether registered or unregistered, including all such rights in and to (i) patents, patent applications, utility models, and all continuations,
continuations-in-part, divisionals, reissues, re-examinations, renewals, and extensions thereof, and any counterparts claiming priority therefrom
("
Patents
"), (ii) trademarks, service marks, logos, trade dress, trade names, and all other designations of origin of a product or service
("
Trademarks
") together with the goodwill symbolized by any of the foregoing, (iii) moral rights and copyrights
("
Copyrights
"), (iv) rights in computer programs and software (whether in source code, object code, or other form), application programming
interfaces, algorithms, databases, compilations and data, firmware, development tools and documentation supporting the foregoing, (v) trade secrets and rights in other confidential information,
including rights in ideas, proprietary information, know-how, inventions (whether patentable or unpatentable and whether or not reduced to practice), invention disclosures, improvements,
proprietary processes, technology, technical data, algorithms, specifications, formulae, models, and methodologies, customer lists and supplier lists, and industrial designs
("
Trade Secrets
"), (vi) Internet domain names and World Wide Web URLs or addresses, (vii) mask works, and any equivalent or similar rights
in semiconductor masks, layouts, architectures, or topology, (viii) all rights of publicity and other rights to use the names and likeness of individuals, (ix) designs and (x) all
applications and registrations for the foregoing.
"
Intentional Breach
" shall mean, with respect to any representation, warranty, agreement or covenant, an action or omission (including a
failure to cure circumstances) taken or omitted to be taken that the breaching Person intentionally takes (or fails to take) and knows (or should reasonably have known) would, or would reasonably be
expected to, cause a material breach of such representation, warranty, agreement or covenant.
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"
Investments
" shall have the meaning set forth in
Section 4.2(d)
.
"
IRS
" shall mean the Internal Revenue Service.
"
Knowledge
" shall mean (i) with respect to the Company, the actual knowledge of the individuals set forth on
Section 1.1(a)
of the Company Disclosure Schedule
after reasonable inquiry and (ii) with respect to Parent or Merger Sub, the actual
knowledge of the individuals set forth on
Section 1.1(a)
of the Parent Disclosure Schedule after reasonable inquiry.
"
Law
" shall mean any and all domestic (federal, state or local), tribal or foreign laws, rules, regulations, orders, judgments or decrees
promulgated by any Governmental Authority.
"
Leased Real Property
" shall have the meaning set forth in
Section 4.17(b)
.
"
License Agreement
" shall mean any Contract pursuant to which the Company or any of its Subsidiaries is granted a license to or right to
use or exploit (including by means of a covenant not to sue) Intellectual Property Rights owned or controlled by third parties.
"
Licensed IP Rights
" shall mean any Intellectual Property Rights licensed to the Company or its Subsidiaries or that the Company or any of
its Subsidiaries is granted a right to use or exploit (including by means of a covenant not to sue) pursuant to a License Agreement.
"
Lien
" shall mean any mortgage, pledge, security interest, encumbrance, lien or charge of any kind (including any conditional sale or
other title retention agreement or lease in the nature thereof).
"
Malicious Code
" shall have the meaning set forth in
Section 4.14(h)
.
"
Material Adverse Effect
" shall mean any change, event, effect or circumstance (a) which, individually or in the aggregate, has
resulted, or would reasonably be expected to result, in a material adverse effect on the business, assets, liabilities, financial condition or results of operations of the Company and its
Subsidiaries, taken as a whole;
provided
,
however
, that changes, events, effects or circumstances to the
extent resulting from the following shall be excluded from the determination of Material Adverse Effect: (i) any change, event, effect or circumstance arising after the date hereof generally
affecting the principal industries in which the Company and its Subsidiaries operate; (ii) any change (or any prospective change that has become publicly known) in any Law or GAAP (or changes
in interpretations or enforcement of any Law or GAAP) in each case arising after the date hereof; (iii) changes arising after the date hereof in general economic, regulatory or political
conditions or the financial, credit, securities or capital markets in general; (iv) any acts of God, calamities, natural disasters, earthquakes, hurricanes, terrorism, general national,
political, or social conditions including
the engagement by any country in hostilities, war or any escalation or worsening thereof arising after the date hereof; (v) changes (including any loss of employees or any loss of, or any
disruption in, customer, distributor, dealer, supplier, partner or similar relationships) resulting from the execution of this Agreement or the announcement of this Agreement or the announcement of
the transactions contemplated hereby; (vi) any changes in the market price or trading volume of the Company Common Stock after the date hereof or the fact that the Company has failed to meet
any estimates, projections or forecasts for any period (other than, in each case for purposes of this clause (vi), any change, event, effect or circumstance giving rise to any such change or
failure); or (vii) any action taken by the Company or any of its Subsidiaries that is not required to be taken pursuant to the terms of the Agreement and which is taken at Parent's express
written request or any action expressly required to be taken by the Company or any of its Subsidiaries pursuant to this Agreement or the failure to take any action by the Company or any of its
Subsidiaries if that action is expressly prohibited by this Agreement (provided that any effect of compliance with the terms of
Section 6.1
shall
not be considered for purposes of this clause (vii)); but only if, in the case of clauses (i), (ii), (iii) or (iv), such change, event, effect or circumstance does not materially
disproportionately impact the Company and its Subsidiaries, taken as a whole, relative to other companies in the industries or markets in which the
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Company
or its Subsidiaries operate; or (b) that prevents or materially delays the ability of the Company to consummate the Merger and the other transactions contemplated by this Agreement.
"
Material Company Lease
" shall mean any Company Lease (a) which has annual rent obligations in excess of $400,000 and has a
remaining term (excluding any renewal options), as of the date hereof, in excess of 12 months or (b) for the Company's headquarters or a manufacturing facility.
"
Merger
" shall have the meaning set forth in the Recitals.
"
Merger Closing
" shall have the meaning set forth in
Section 2.2
.
"
Merger Closing Date
" shall have the meaning set forth in
Section 2.2
.
"
Merger Consideration
" shall have the meaning set forth in
Section 3.1(c)
.
"
Merger Sub
" shall have the meaning set forth in the Preamble.
"
Multiemployer Plan
" shall mean any "multiemployer plan" within the meaning of Section 3(37) of ERISA.
"
NASDAQ
" shall mean The NASDAQ Stock Market LLC (NASDAQ Global Select Market).
"
New Plans
" shall have the meaning set forth in
Section 6.9(b)(ii)
.
"
Open Source Materials
" shall have the meaning set forth in
Section 4.14(g)
.
"
Option Exchange Ratio
" shall mean a fraction having a numerator equal to the Merger Consideration and having a denominator equal to the
Parent American Depositary Share Price.
"
Order
" shall mean any decree, order, judgment, injunction, temporary restraining order or other order in any suit or proceeding by or
with any Governmental Authority.
"
Outside Date
" shall have the meaning set forth in
Section 8.1(b)(i)
.
"
Owned Real Property
" shall have the meaning set forth in
Section 4.17(a)
.
"
Parent
" shall have the meaning set forth in the Preamble.
"
Parent American Depositary Shares
" shall mean the American Depositary Shares, each representing, as of the date hereof, on share of
Parent's registered shares, par value CHF 1.03, issued under and pursuant to that certain Amended and Restated Deposit Agreement, dated as of May 7, 2001, by and among Parent, Citibank,
N.A., as Depositary, and the holders and beneficial owners of American Depositary Shares evidenced by American Depositary Receipts issued thereunder.
"
Parent American Depositary Share Price
" shall mean an amount equal to the volume weighted average price per share (or "VWAP") of the
Parent American Depositary Shares on the NYSE, based on information as reported through Bloomberg, for the ten (10) consecutive trading days ending on and including the last trading day prior
to the Closing Date. For the avoidance of doubt, the VWAP is calculated using the standard VWAP formula in Bloomberg over the ten (10) consecutive trading days
and not by taking the volume-weighted average of the VWAP for each of the ten (10) consecutive trading days.
"
Parent Disclosure Schedule
" shall have the meaning set forth in
Article V
.
"
Parent Expenses
" shall have the meaning set forth in
Section 8.3(a)(iv)
.
"
Parent Information
" shall have the meaning set forth in
Section 6.2(c)
.
"
Parent Organizational Documents
" shall have the meaning set forth in
Section 5.1
.
"
Paying Agent
" shall have the meaning set forth in
Section 3.2(a)
.
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"
Performance Awards
" shall have the meaning set forth in
Section 3.3(a)(iv)
.
"
Permitted Liens
" shall mean (a) any statutory Lien for Taxes, assessments and other governmental charges not yet delinquent or, if
delinquent, are being contested in good faith and for which adequate accruals or reserves have been established on the financial statements of the Company in accordance with GAAP (if required);
(b) construction, mechanic's, materialmen's, laborer's, workmen's, repairmen's, carrier's and similar Liens, arising or incurred in the ordinary course of business;
provided
, that the underlying
obligations (i) are not yet due and payable or delinquent or (ii) if delinquent, are being contested in good
faith by appropriate proceeding and, in the case of each of clauses (b)(i) and (b)(ii), which would not reasonably be expected to result in forfeiture of the involved assets; (c) with
respect to real properties, (i) any zoning and other land use restrictions not violated by the current improvements or current use in any material respect, (ii) survey exceptions,
utility easements, rights of way and similar agreements, easements, covenants, reservations, restrictions and Liens that are imposed by any Governmental Authority having jurisdiction thereon or by Law
or otherwise or typical for the applicable property type and locality, and (iii) Liens disclosed on existing title reports or existing surveys;
provided
, that, in the case of clauses (c)(i),
(c)(ii) and (c)(iii), none of the foregoing, individually or in the aggregate, materially impairs
current occupancy, materially detracts from the value of, or materially impairs, and is not reasonably expected to, materially impair, the present or continued use and operation of the affected assets
(and excluding in all events any Liens securing the payment of money); (d) non-exclusive licenses of Intellectual Property Rights in the ordinary course
of business; (e) other than the Liens described in the other clauses of this definition, all exceptions, restrictions, easements, imperfections of title, charges, rights of way and other
similar Liens that do not, individually or in the aggregate, materially impair current occupancy, materially detract from the value of, or materially impair, and are not reasonably expected to,
materially impair, the present or continued use and operation of the affected assets (and excluding in all events any Liens securing the payment of money); (f) Liens required to be granted in
connection with the Credit Facility as in effect as of the date hereof, to the extent such Liens are fully released without any further liabilities (other than contingent indemnity and expense
reimbursement obligations that survive the repayment of the loans and other financial accommodation) on the part of the Company or the Surviving Corporation upon full repayment of the Credit Facility
in accordance with
Section 6.11
of this Agreement; and (g) Liens granted in connection with capital lease obligations for office equipment
entered into by the Company or a Subsidiary of the Company.
"
Person
" shall mean an individual, a corporation (including non-for-profit corporation), general or limited
partnership, limited liability company, unlimited liability company, joint venture, association, Governmental Authority, unincorporated organization, trust or any other entity of any kind or nature.
"
Preferred Certificates
" shall have the meaning set forth in
Section 3.1(c)
.
"
Preferred Merger Consideration
" shall have the meaning set forth in
Section 3.1(c)
.
"
Proceeding
" shall have the meaning set forth in
Section 4.11
.
"
Proposed Changed Terms
" shall have the meaning set forth in
Section 6.5(e)(ii)
.
"
Proxy Date
" shall have the meaning set forth in
Section 6.2(d)
.
"
Proxy Statement
" shall have the meaning set forth in
Section 6.2(a)
.
"
Proxy Statement Clearance Date
" shall mean the first date on which the SEC (or staff of the SEC) has, orally or in writing, confirmed
that (a) it has no further comments on the Proxy Statement, or (b) it does not intend to review the Proxy Statement.
"
Release
" shall mean any release, spill, emission, discharge, leaking, pumping, injection, deposit, disposal, dispersal, leaching or
migration into the environment (including ambient air, surface water, groundwater and surface or subsurface strata) or into or out of any property, of Hazardous Substances.
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"
Representatives
" shall mean, with respect to any Person, any Subsidiary of such Person and such Person's and each of its respective
Subsidiaries' directors (in their capacity as such), officers, employees, investment bankers, financial advisors, attorneys, accountants or other advisors or agents.
"
Requisite Common Stockholder Approval
" shall have the meaning set forth in
Section 4.3(a)
.
"
Requisite Preferred Stockholder Approval
" shall have the meaning set forth in
Section 4.3(a)
.
"
Requisite Stockholder Approval
" shall have the meaning set forth in
Section 4.3(a)
.
"
Restraints
" shall have the meaning set forth in
Section 7.1(c)
.
"
SEC
" shall mean the Securities and Exchange Commission.
"
Secretary of State
" shall mean the Secretary of State of the State of Delaware.
"
Securities Act
" shall mean the Securities Act of 1933, as amended.
"
Series A Preferred Stock
" shall have the meaning set forth in
Section 4.2(a)
.
"
Series B Preferred Stock
" shall have the meaning set forth in
Section 4.2(a)
.
"
Series C Preferred Stock
" shall have the meaning set forth in the Recitals.
"
Silver Lake Stockholders
" shall have the meaning set forth in
Section 4.16(a)(xv)
.
"
Stockholders' Meeting
" shall have the meaning set forth in
Section 6.2(d)
.
"
Subsidiary
" of any Person, shall mean any corporation, partnership, joint venture or other legal entity of which such Person (itself or
together with any other Subsidiary or Subsidiaries), owns, directly or indirectly, more than fifty percent (50%) of the stock or other equity interests, the holders of which are generally entitled to
vote for the election of the board of directors or other governing body of such corporation or other legal entity.
"
Superior Proposal
" shall have the meaning set forth in
Section 6.5(h)(ii)
.
"
Surviving Corporation
" shall have the meaning set forth in
Section 2.1
.
"
Tail Period
" shall have the meaning set forth in
Section 6.6(b)
.
"
Tax
" shall mean any and all taxes, assessments, levies, duties, tariffs, imposts, and other similar charges in the nature of taxes
(together with any and all interest, penalties, and additions to tax, related thereto) imposed by any Law, including taxes imposed on income, franchises, windfall or other profits, gross receipts,
property, sales, use, capital stock, payroll, employment, social security, workers' compensation, unemployment compensation, or net worth; excise, withholding, ad valorem, stamp, transfer, value
added, or gains taxes; license, registration and documentation taxes.
"
Tax Return
" shall mean any return, declaration, report information statement, or claim for refund, including any schedule or attachment
thereto, filed or required to be filed with any Taxing Authority in connection with the determination, assessment or collection of any Tax of any party or the administration of any Law relating to any
Tax.
"
Taxing Authority
" shall mean any Governmental Authority having the power under Law to impose, assess or collect Taxes.
"
Termination Date
" shall have the meaning set forth in
Section 8.1(b)(i)
.
"
Third Party
" shall mean any Person or group other than Parent, Merger Sub and their respective Affiliates.
"
Total Common Merger Consideration
" shall have the meaning set forth in
Section 3.1(b)
.
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"
Total Merger Consideration
" shall have the meaning set forth in
Section 3.1(c)
.
"
Total Preferred Merger Consideration
" shall have the meaning set forth in
Section 3.1(c)
.
"
Total Warrant Payment
" shall have the meaning set forth in
Section 3.1(e)
.
"
Transfer Restrictions
" shall mean any material transfer restrictions, rights of first offer or refusal, limitation on voting rights or
similar restrictions (other than under the Securities Act, the Exchange Act or other similar securities Laws).
"
Voting Agreement
" shall have the meaning set forth in the Recitals.
"
Warrant Payment
" shall have the meaning set forth in
Section 3.1(e)
.
ARTICLE II
THE MERGER
Section 2.1
The Merger.
Upon the terms and subject to the conditions of
this Agreement, and in accordance with the DGCL, at the Effective Time, Merger Sub shall be merged with and into the Company, whereupon the separate corporate existence of Merger Sub shall cease, and
the Company shall continue its corporate existence under the name "Power-One, Inc." as the surviving corporation (the "
Surviving
Corporation
") and shall continue to be governed by the laws of the State of Delaware.
Section 2.2
Merger Closing.
The closing of the Merger (the
"
Merger Closing
") will take place at the offices of Cleary Gottlieb Steen & Hamilton LLP, One Liberty Plaza, New York, New York 10006
(a) at 9:00 a.m., New York City time, on the fourth Business Day after satisfaction or (to the extent permitted by Law) waiver of the conditions set forth in
Article VII
(other than those
conditions that require the delivery of a document or certificate or taking of any other action at the Closing, but
subject to the satisfaction or, to the extent permitted by applicable Law, waiver by the appropriate party of all such conditions at the Closing) or (b) such other time or date as agreed to in
writing by the parties hereto. The date on which the Merger Closing occurs is referred to in this Agreement as the "
Merger Closing Date
."
Section 2.3
Effective Time.
Subject to the provisions of this Agreement,
as promptly as reasonably practicable on the Merger Closing Date, the parties shall cause a certificate of merger, or a certificate of ownership and merger, as applicable (the
"
Certificate of Merger
"), with respect to the Merger to be filed with the Secretary of State in such form as is required by, and executed and
acknowledged in accordance with, the relevant provisions of the DGCL, and shall make all other filings and recordings required under the DGCL. The Merger shall become effective on such date and time
as the Certificate of Merger is filed with the Secretary of State or at such other date and time as Parent and the Company shall agree and specify in the Certificate of Merger. The date and time at
which the Merger becomes effective is referred to in this Agreement as the "
Effective Time
".
Section 2.4
Effects of the Merger.
The Merger shall have the effects set
forth in the applicable provisions of the DGCL. Without limiting the generality of the foregoing, from and after the Effective Time, the Surviving Corporation shall possess all properties, rights,
privileges, powers and franchises of the Company and Merger Sub, and all of the claims, obligations, liabilities, debts and duties of the Company and Merger Sub shall become the claims, obligations,
liabilities, debts and duties of the Surviving Corporation.
Section 2.5
Certificate of Incorporation and Bylaws of the Surviving
Corporation.
Subject to
Section 6.6
, at the Effective Time, (a) the certificate of incorporation of
the Surviving Corporation shall be amended in its entirety to read as set forth on
Exhibit A
attached hereto, except that the name of the
Surviving Corporation shall be "Power-One, Inc." and (b) the bylaws of the Surviving Corporation shall be amended in its entirety to be identical to the bylaws of Merger Sub
as in effect immediately
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prior
to the Effective Time, except that all references to Merger Sub in the bylaws of the Surviving Corporation shall be changed to references to "Power-One, Inc.", in each case,
until thereafter amended in accordance with applicable Law and the applicable provisions of the certificate of incorporation and bylaws of the Surviving Corporation.
Section 2.6
Board of Directors.
Subject to applicable Law, each of the
parties hereto shall take all necessary action to ensure that the board of directors of the Surviving Corporation effective as of, and immediately following, the Effective Time shall consist of the
members of the board of directors of Merger Sub immediately prior to the Effective Time, each to hold office in accordance with the certificate of incorporation and bylaws of the Surviving Corporation
until their respective successors shall have been duly elected, designated or qualified, or until their earlier death, incapacitation, retirement, resignation or removal in accordance with the
certificate of incorporation and bylaws of the Surviving Corporation.
Section 2.7
Officers.
From and after the Effective Time, the officers of
the Company at the Effective Time shall be the officers of the Surviving Corporation, until their respective successors are duly elected or appointed and qualified in accordance with applicable Law or
their earlier death, incapacitation, retirement, resignation or removal.
ARTICLE III
EFFECT OF THE MERGER ON CAPITAL STOCK; EXCHANGE OF CERTIFICATES
Section 3.1
Effect on Securities and Company Warrants.
At the Effective
Time, by virtue of the Merger and without any action on the part of the Company, Merger Sub or the holders of any securities of the Company or Merger Sub:
(a)
Cancellation of Treasury Stock and Certain Other Company Securities.
Each share of Company Stock held by the
Company or any Subsidiary of the Company (as treasury stock or otherwise) or held by Parent or Merger Sub, in each case, immediately prior to the Effective Time, shall automatically be canceled and
retired and shall cease to exist, and no consideration or payment shall be delivered in exchange therefor or in respect thereof.
(b)
Conversion of Company Common Stock.
Each share of Company Common Stock issued and outstanding immediately
prior to the Effective Time (other than shares canceled pursuant to
Section 3.1(a)
, the Company Restricted Shares (which are addressed in
Section 3.3
) and, except as provided in
Section 3.5
, the Dissenting Shares) shall be
converted into the right to receive $6.3500 in cash (such sum, the "
Common Merger Consideration
"), without interest. For purposes of this Agreement,
"
Total Common Merger Consideration
" shall mean the product of (x) the number of shares of Company Common Stock issued and outstanding (other than
shares canceled pursuant to
Section 3.1(a)
and, except as provided in
Section 3.5
, the
Dissenting Shares) immediately prior to the Effective Time and (y) the Common Merger Consideration. Each share of Company Common Stock to be converted into the right to receive the Common
Merger Consideration as provided in the first sentence of this
Section 3.1(b)
shall, by virtue of the Merger and without any action on the part
of the holders thereof, be automatically canceled and shall cease to exist, and the holders of certificates (the "
Common Certificates
") or
book-entry shares ("
Book-Entry Shares
") which immediately prior to the Effective Time represented such Company Common Stock
shall cease to have any rights with respect to such Company Common Stock other than the right to receive, upon surrender of such Certificates (or affidavits of loss in lieu thereof in accordance with
Section 3.4
) or Book-Entry Shares in accordance with
Section 3.2
, the Common
Merger Consideration, without interest thereon, for each such share of Company Common Stock held by them.
(c)
Conversion of Company Preferred Stock.
Each share of Company Preferred Stock issued and outstanding
immediately prior to the Effective Time (other than shares canceled pursuant to
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Section 3.1(a)
) shall be converted into the right to receive $4703.7037037 in cash (such sum, the "
Preferred Merger
Consideration
", and together with the Common Merger Consideration, as applicable, the "
Merger Consideration
"), without interest.
For purposes of this Agreement, "
Total Preferred Merger Consideration
" shall mean the product of (x) the number of shares of Company
Preferred Stock issued and outstanding (other than shares canceled pursuant to
Section 3.1(a)
) immediately prior to the Effective Time and
(y) the Preferred Merger Consideration, and "
Total Merger Consideration
" shall mean the sum of the Total Common Merger Consideration and the
Total Preferred Merger Consideration. Each share of Company Preferred Stock to be converted into the right to receive the Preferred Merger Consideration as provided in the first sentence of this
Section 3.1(c)
shall, by virtue of the Merger and without any action on the part of the holders thereof, be automatically canceled and shall
cease to exist, and the holders of certificates (the "
Preferred Certificates
" and together with the Common Certificates, the
"
Certificates
") which immediately prior to the Effective Time represented such Company Preferred Stock shall cease to have any rights with respect to
such Company Preferred Stock other than the right to receive, upon surrender of such Certificates (or affidavits of loss in lieu thereof in accordance with
Section 3.4
) in accordance with
Section 3.2
, the Preferred Merger Consideration, without
interest thereon, for each such share of Company Preferred Stock held by them.
(d)
Conversion of Merger Sub Capital Stock.
Each share of common stock, par value of $0.001 per share, of Merger
Sub issued and outstanding immediately prior to the Effective Time shall be converted into and become one (1) fully paid share of common stock, par value $0.001 per share, of the Surviving
Corporation and constitute the only outstanding shares of capital stock of the Surviving Corporation.
(e)
Treatment of Company Warrants.
Each Company Warrant shall be, at the Effective Time, converted into the
right to receive the Warrant Payment payable in respect of such Company Warrant, without interest, and shall be cancelled upon payment of the Warrant Payment therefor without any further action on the
part of the Company or the holder thereof. For purposes of this Agreement, "
Warrant Payment
" means, with respect to each share of Company Common Stock
subject to the Company Warrants outstanding and unexercised as of the Effective Time, a payment equal to the excess of the Common Merger Consideration over the applicable exercise price per share of
Company Common Stock and "
Total Warrant Payment
" means the aggregate Warrant Payments payable in respect of all Company Warrants.
Section 3.2
Exchange of Certificates and Company Warrants.
(a)
Designation of Paying Agent; Deposit of Exchange Fund.
Prior to the Effective Time, Parent shall designate
and enter into an agreement with a bank or trust company, which bank or trust company and the agreement to be entered into pursuant to this
Section 3.2(a)
shall, in each case, be reasonably
acceptable to the Company (the "
Paying Agent
"), it being agreed by the parties that American
Stock Transfer & Trust Company, LLC is acceptable, for the payment of the Merger Consideration and Warrant Payment as provided in
Sections 3.1(b), 3.1(c)
and
3.1(e)
. Substantially concurrently with the filing of the Certificate of Merger with the Secretary of State, Parent shall
deposit, or cause to be deposited with the Paying Agent (i) for the benefit of the holders of Company Common Stock and Company Preferred Stock outstanding immediately prior to the Effective
Time (other than holders of shares to be canceled pursuant to
Section 3.1(a)
and, except as provided in
Section 3.5
, the Dissenting Shares) cash
constituting an amount equal to the Total Merger Consideration and (ii) for the benefit of the holders of Company
Warrants outstanding immediately prior to the Effective Time cash constituting an amount equal to the Total Warrant Payment (such Total Merger Consideration and Total Warrant Payment as deposited with
the Paying Agent, the "
Exchange Fund
"). In the event the Exchange Fund shall be insufficient to make the payments contemplated
by
Sections 3.1(b), 3.1(c)
and
3.1(e)
, Parent
shall promptly deposit, or cause to be deposited, additional funds with the Paying Agent in an amount which is equal to the deficiency in the
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amount
required to make such payment. Parent shall cause the Exchange Fund to be (i) held for the benefit of the holders of Company Common Stock, Company Preferred Stock and Company Warrants,
as applicable, and (ii) applied promptly to making the payments pursuant to
Sections 3.1(b), 3.1(c)
and
3.1(e)
. The Exchange Fund shall not be
used for any purpose other than to fund payments pursuant to
Section 3.1
. The
Surviving Corporation shall pay all charges and expenses, including those of the Paying Agent, incurred by it in connection with the exchange of shares of Company Stock for the Merger Consideration
and the exchange of Company Warrants for the Warrant Payment and other actions contemplated by this
Article III
.
(b) As
promptly as practicable following the Effective Time and in any event not later than the fourth (4th) Business Day thereafter, the Surviving Corporation shall cause
the Paying Agent to mail (and to make available for collection by hand) to each holder of record of a Certificate that immediately prior to the Effective Time represented outstanding shares of Company
Common Stock or Company Preferred Stock (i) a letter of transmittal, which shall specify that delivery shall be effected (and risk of loss and title to the Certificates, as applicable, shall
pass) only upon proper delivery of the Certificates (or affidavits of loss in lieu thereof) to the Paying Agent and which shall be in the form (including customary provisions with respect to delivery
of an "agent's message" with respect to Book-Entry Shares) and have such other provisions as Parent may, with the consent of the Company (which consent shall not be unreasonably withheld),
reasonably specify and (ii) instructions for use in effecting the surrender of the Certificates in exchange for the Merger Consideration.
(c)
Surrender Procedures.
(i)
Certificates.
Upon the later of the Effective Time and surrender of a Certificate (or affidavit of loss in
lieu thereof) for cancellation to the Paying Agent, together with a letter of transmittal duly completed and validly executed in accordance with the instructions thereto, and such other documents as
may be reasonably required pursuant to such instructions, the holder of such Certificate shall be entitled to receive in exchange therefor and Parent shall cause the Paying Agent to pay in exchange
therefor as promptly as practicable, the Merger Consideration pursuant to the provisions of this
Article III
, and the Certificates surrendered
shall forthwith be canceled. In the event of a transfer of ownership of Company Stock that is not registered in the transfer records of the Company, payment of the appropriate amount of Merger
Consideration may be made to a Person other than the Person in whose name the Certificate so surrendered is registered, if such Certificate shall be properly endorsed or otherwise be in proper form
for transfer (and accompanied by all documents reasonably required by the Paying Agent) and the Person requesting such payment shall pay, or cause to be paid, any transfer or other taxes required by
reason of the payment to a Person other than the registered holder of such
Certificate or establish to the satisfaction of Parent that such tax has been paid or is not applicable. Except with respect to Dissenting Shares, until surrendered as contemplated by this
Section 3.2
, each Certificate shall be deemed at any time after the Effective Time to represent only the right to receive upon such surrender the
Merger Consideration into which the shares of Company Stock theretofore represented by such Certificate have been converted pursuant to
Sections 3.1(b)
or
3.1(c)
. No interest shall be paid or accrue on any cash payable upon surrender
of any Certificate.
(ii)
Book-Entry Shares.
Notwithstanding anything to the contrary contained in this Agreement, any
holder of Book-Entry Shares shall not be required to deliver a Certificate or an executed letter of transmittal to the Paying Agent to receive the Merger Consideration that such holder is
entitled to receive pursuant to this
Article III
. In lieu thereof, each holder of record of Book-Entry Shares whose shares of Company
Common Stock were converted into the right to receive the Merger Consideration shall automatically upon the Effective Time (or, at any later time at which such Book-Entry Shares shall be
so converted) be entitled to receive, and Parent shall cause the Paying Agent to pay and deliver as promptly as practicable after the Effective Time, in respect of each such Book-Entry
Share, the Merger Consideration.
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(iii)
Company Warrants.
The Company shall deliver a written notice to the holders of Company Warrants no less
than three (3) Business Days prior to the Merger Closing Date specifying the date on which the Merger Closing Date is expected to occur and requesting surrender of all Company Warrants to the
Company on or prior to the Merger Closing Date. Upon receipt of such written notice, each holder of Company Warrants shall use its reasonable best efforts to surrender its Company Warrants to the
Company on or prior to the Merger Closing Date (it being understood that the failure of any holder of Company Warrants to surrender its Company Warrants to the Company shall not delay or impair such
holder's right to receive the Warrant Payment). Parent shall cause the Paying Agent to pay, as promptly as practicable on or following the Merger Closing Date, to each holder of Company Warrants, the
Warrant Payment payable in respect of the Company Warrants held by such holder pursuant to the provisions of this
Article III
, and such Company
Warrants, upon payment of the Warrant Payment therefor, shall be canceled without any further action on the part of the Company or such holder and regardless of whether such Company Warrants were
surrendered to the Company. No interest shall be paid or accrue on any cash payable upon surrender of Company Warrants.
(d)
Termination of Exchange Fund.
Any portion of the Exchange Fund which remains unclaimed by the applicable
former stockholders of the Company or holders of Company Warrants twelve (12) months after the Effective Time shall be delivered to the Surviving Corporation or Parent (as directed by Parent),
upon demand, and any such holders prior to the Merger who have not theretofore complied with this
Article III
shall thereafter look only to the
Parent or the Surviving Corporation (as applicable) for payment of their claims for Merger Consideration or Warrant Payment, as applicable, in respect thereof.
(e)
No Liability.
None of Parent, Merger Sub, the Company, the Surviving Corporation or the Paying Agent shall
be liable to any Person in respect of any cash held in the Exchange Fund properly delivered to a public official pursuant to any applicable abandoned property, escheat or similar Law. If any
Certificate shall not have been surrendered prior to the date on which any Merger Consideration in respect thereof would otherwise escheat to or become the property of any Governmental Authority, any
such Merger Consideration in respect of such Certificate shall, to the extent permitted by applicable Law, become the property of the Surviving Corporation, and any holder of such Certificate who has
not theretofore complied with this
Article III
with respect thereto shall thereafter look only to the Surviving Corporation for payment of its
claim for Merger Consideration in respect thereof (if any).
(f)
Investment of Exchange Fund.
The Paying Agent shall invest any cash included in the Exchange Fund as
directed by Parent or, after the Effective Time, the Surviving Corporation;
provided
, that (i) no such investment shall relieve Parent or the
Paying Agent from making the payments required by this
Article III
, and following any losses Parent shall promptly provide additional funds to
the Paying Agent for the benefit of the holders of Company Stock and Company Warrants in the amount of such losses, (ii) no such investment shall have maturities that could prevent or delay
payments to be made pursuant to this Agreement, and (iii) such investments shall be in short-term obligations of the United States of America with maturities of no more than thirty
days or guaranteed by the United States of America and backed by the full faith and credit of the United States of America. Any interest or income produced by such investments will be payable to the
Surviving Corporation or Parent, as directed by Parent.
(g)
Conversion of Series C Preferred Stock.
Within ten (10) Business Days of Parent's request, the
Company shall send the Silver Lake Stockholders a notice requesting the Silver Lake Stockholders to convert as soon as reasonably practicable and in no event later than the record date for the
Stockholders' Meeting, shares of Series C Preferred Stock into Company Common Stock as contemplated by Section 10 of the Voting Agreement (the
"
Conversion
"). Such notice shall specify the procedures to be followed and the regulatory approvals the Company reasonably determines will be
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necessary
(including under all applicable Antitrust Laws) to effect the Conversion. The Company shall provide the Silver Lake Stockholders all reasonable cooperation necessary to effect the
Conversion.
Section 3.3
Equity-Based Awards.
(a)
Treatment of Equity-Based Awards
(i)
Rollover of Company Options.
Except to the extent otherwise elected by the holder pursuant to
Section 3.3(a)(ii)
hereof, as of the Effective Time, without any action on the part of Parent, Merger Sub, the Company or the holders of the
Company Options, each Company Option that is outstanding and unexercised immediately prior to the Effective Time, whether vested or unvested, shall (i) fully vest and become exercisable and
(ii) be converted into an option to acquire a number of Parent American Depositary Shares equal to the product (rounded down to the nearest number of whole shares) of (A) the number of
shares of Company Common Stock underlying such Company Option immediately prior to the Effective Time and (B) the Option Exchange Ratio, at an exercise price per share (rounded up to the
nearest whole cent) equal to (x) the exercise price per share of such Company Option immediately prior to the Effective Time, divided by (y) the Option Exchange Ratio;
provided
,
however
, that the exercise price and the number of Parent American Depositary Shares
purchasable pursuant to the Company Options (as converted) shall be subject to such adjustments as Parent determines are reasonably necessary for the foregoing conversion to satisfy the requirements
of Sections 409A, 422 and 424 of the Code and Treasury Regulation Section 1.424-1. Except as specifically provided herein, following the Effective Time, each Company Option
shall continue to be governed by the same terms and conditions as set forth in the applicable Company Plan and any agreements thereunder as were applicable immediately prior to the Effective Time.
(ii)
Elective Exercise of Company Options.
Notwithstanding
Section 3.3(a)(i)
, the Company shall, promptly following the
date of this Agreement, and in any event no later than thirty (30) Business Days prior to the
Closing, deliver written notice to each holder of a Company Option giving each such holder the opportunity to make an irrevocable election in writing, no later than seven (7) Business Days
prior to the Effective Time, with respect to all or a portion of such Company Option, whether vested or unvested, to the extent such Company Option remains outstanding and unexercised immediately
prior the Effective Time, to exercise such Company Option immediately prior to the Effective Time and receive a payment therefor from the Surviving Corporation following the Effective Time an amount
in cash, in lieu of any rollover of such Company Option pursuant to
Section 3.3(a)(i)
no later than five (5) Business Days following the
Effective Time and conditioned upon the occurrence thereof, equal to the product of (i) the total number of shares of Company Common Stock underlying such Company Option (or portion thereof)
and (ii) the Common Merger Consideration, reduced by the exercise price applicable to such Company Option (or portion thereof), subject to any applicable income and employment withholding
Taxes; provided that if the exercise price per share of any such Company Option (or portion thereof) is equal to or greater than the per share Common Merger Consideration, such Company Option (or
portion thereof) shall be treated as provided in
Section 3.3(a)(i)
. Any holder of a Company Option who makes an election under
this
Section 3.3(a)(ii)
shall cease to have any rights with respect to the Company Option (or portion thereof) for which an election is made and
has become irrevocable, other than to receive the payment specified in this
Section 3.3(a)(ii)
. Any Company Option for which the election
described in this
Section 3.3(a)(ii)
is not timely received shall be treated as provided in
Section 3.3(a)(i)
.
(iii)
Company Restricted Shares.
As of the Effective Time, each Company Restricted Share granted prior to the
date hereof and that is outstanding shall become fully vested and all restrictions thereon shall lapse and be converted automatically into the right to receive from the Surviving Corporation, no later
than five (5) Business Days following the Effective Time, an
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amount
in cash equal to the Common Merger Consideration, subject to applicable income and employment withholding Taxes.
(iv)
Other Company Stock-Based Awards.
At the Effective Time, each other Company Stock-Based Award, whether
vested or unvested, that is outstanding and, if applicable, unexercised immediately prior the Effective Time shall become fully vested and shall be converted automatically into the right to receive,
no later than five (5) Business Days following the Effective Time, an amount in cash equal to the product of (i) the total number of shares of Company Common Stock underlying such
Company Stock-Based Award and (ii) the Common Merger Consideration (reduced, if applicable, by any exercise price applicable to such Company Stock-Based Award), subject to applicable income and
employment withholding Taxes;
provided
, that with respect to any unvested Company Stock-Based Award subject to performance-based vesting conditions
("
Performance Awards
"), such Performance Awards shall be deemed fully earned at a level that assumes the Company attained maximum performance with
respect to the applicable performance metrics to which such Performance Awards are subject as of the Closing Date and shall fully vest without any pro ration based on the extent to which the
performance period under the Performance Award has lapsed.
(v) The
Company shall, in consultation with Parent, take any and all actions reasonably necessary to effectuate the provisions of this
Section 3.3
;
provided
,
that Parent shall have the opportunity to review, for a period of at least
three (3) Business Days, and comment on any resolutions the Board or any committee thereof intends to approve with respect thereto. Any notice the Company intends to deliver to the holders of
Company Options, or other Company Stock-Based Awards or the participants in any other Company Plan setting forth such holders' or participants' rights pursuant to this Agreement, shall be subject to
Parent's opportunity to review, for a period of at least three (3) Business Days, and consent, which consent shall not be unreasonably withheld, delayed or conditioned.
(vi) Parent
shall, at or promptly following the Effective Time, deposit, or cause to be deposited, with the Surviving Corporation sufficient cash funds to make all payments
owed pursuant to this
Section 3.3
, including payments in respect of Company Options in which the holder has timely elected the "cashout option,"
Company Restricted Shares and the Performance Awards, and Parent shall cause the Surviving Corporation to make such payments after the Effective Time to all holders of equity based awards in
accordance with the terms of this
Section 3.3
.
Section 3.4
Lost Certificates.
If any Certificate shall have been lost,
stolen or destroyed, then upon the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed and, if required by the Surviving Corporation, the
posting by such Person of a bond, in such customary and reasonable amount as the Surviving Corporation may
direct, as indemnity against any claim that may be made against it with respect to such Certificate, the Paying Agent will issue in exchange for such lost, stolen or destroyed Certificate the Merger
Consideration to which the holder thereof is entitled pursuant to this
Article III
.
Section 3.5
Dissenting Shares.
Notwithstanding anything to the contrary
contained in this Agreement, shares of Company Common Stock issued and outstanding immediately prior to the Effective Time that are held by any holder who is entitled to appraisal rights under
Section 262 of the DGCL, and who has properly exercised and perfected his or her demand for appraisal rights under Section 262 of the DGCL (the "
Dissenting
Shares
"), shall not be converted into the right to receive the Common Merger Consideration as provided in
Section 3.1(b)
,
but instead the holders of such Dissenting Shares shall be entitled to receive such consideration from the Surviving Corporation as shall be determined pursuant to Section 262 of the DGCL. At
the Effective Time, the Dissenting Shares shall no longer be outstanding and shall automatically be canceled and shall cease to exist, and
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each
holder of Dissenting Shares shall cease to have any rights with respect thereto, except the right to receive the fair value of such Dissenting Shares in accordance with the provisions of
Section 262 of the DGCL. Notwithstanding the foregoing, if any such holder shall have failed to perfect or shall have otherwise waived, effectively withdrawn or lost his or her right to
appraisal under Section 262 of the DGCL or a court of competent jurisdiction shall determine that such holder is not entitled to the relief provided by Section 262 of the DGCL, then the
right of such holder to be paid the fair value of such holder's Dissenting Shares under Section 262 of the DGCL shall cease and such shares shall no longer be considered Dissenting Shares for
purposes hereof and such holder's shares of Company Common Stock shall thereupon be deemed to have been converted as of the Effective Time into the right to receive the Merger Consideration, without
any interest thereon, as provided in
Section 3.1(b)
.
Section 3.6
Withholdings.
Parent, the Surviving Corporation and the
Paying Agent shall be entitled to deduct and withhold from the Merger Consideration, the Warrant Payment and any amounts otherwise payable pursuant to this Agreement to any holder of Company Common
Stock, Company Preferred Stock, Company Options, Company Restricted Shares, Company Stock-Based Awards or Company Warrants, if any, such amounts as Parent, the Surviving Corporation or the Paying
Agent are required to deduct and withhold with respect to the making of such payment under the Code or any provision of applicable Tax Law. To the extent that amounts are so withheld and paid over to
the appropriate Taxing Authority by Parent, the Surviving Corporation or the Paying Agent, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the Person
in respect of which such deduction and withholding was made by Parent, the Surviving Corporation or the Paying Agent.
Section 3.7
Transfers; No Further Ownership Rights.
At the Effective
Time, the stock transfer books of the Company shall be closed, and there shall be no
registration of transfers on the stock transfer books of the Company or the Surviving Company of shares of Company Stock that were outstanding immediately prior to the Effective Time. If Certificates
are presented to the Surviving Corporation or Parent for transfer following the Effective Time, they shall be canceled against delivery of the Merger Consideration, as provided for in
Sections 3.1(b)
and
3.1(c)
, for each share of Company Stock formerly represented by such
Certificates. All Merger Consideration paid in accordance with the terms hereof shall be deemed to have been paid in full satisfaction of all rights pertaining to such Company Stock.
Section 3.8
Change in Shares.
If between the date of this Agreement and
the Effective Time any outstanding shares of Company Stock shall have been changed into a different number of shares or a different class, solely by reason of any stock dividend, subdivision,
reclassification, recapitalization, split, reverse split, combination or exchange of shares or any other similar transaction, the Merger Consideration shall be correspondingly adjusted to reflect such
stock dividend, subdivision, reclassification, recapitalization, split, reverse split, combination or exchange of shares or any other similar transaction and to provide to the holders of Company Stock
the same economic effect as contemplated by this Agreement prior to such action;
provided
, that nothing in this
Section 3.8
shall be construed to
permit the Company to take any action with respect to its securities that is prohibited by the terms of this
Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed in (i) the Company SEC Documents filed prior to the date hereof (but excluding any forward-looking
disclosures set forth in any risk factor section, any disclosure in any section relating to "forward-looking statements" and any other disclosures included in any such form, report, schedule,
statement or other document to the extent they are predictive or forward-looking in nature);
provided
, that in no event shall any disclosure in such
Company SEC Documents qualify or
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limit
the representations and warranties in
Section 4.2(a)
, the first three sentences of
Section 4.2(b)
or
Section 4.3
or (ii) the corresponding section of the Company
Disclosure Schedule (it being understood that any information set forth in one section or subsection of the Company Disclosure Schedule shall be deemed to apply to and qualify the representation and
warranty set forth in this Agreement to which it corresponds in number and each other representation and warranty set forth in this
Article IV
to
the extent that it is reasonably apparent on its face that such information is relevant to such other
representation and warranty), the Company hereby represents and warrants to Parent and Merger Sub as follows:
Section 4.1
Organization and Qualification; Subsidiaries.
The Company is
a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware. Each of the Company's Subsidiaries is a corporation or legal entity duly organized or
formed, validly existing and (where such concept is recognized) in good standing, under the laws of its jurisdiction of organization or formation, except to the extent the failure of any such
Subsidiary to be in good standing has not had, individually or in the aggregate, a Material Adverse Effect. Each of the Company and each of its Subsidiaries has the requisite corporate or similar
entity power and authority to conduct its business as it is now being conducted, except where the failure to have such power or authority has not had, individually or in the aggregate, a Material
Adverse Effect. The Company and each of its Subsidiaries is duly qualified or licensed as a foreign entity to do business, and (where such concept is recognized) is in good standing, in each
jurisdiction in which the character of the properties owned, leased or operated by it or the nature of its business makes such qualification or licensing necessary, except where the failure to be so
qualified or licensed or to be in good standing has not had, individually or in the aggregate, a Material Adverse Effect. The copies of the Amended and Restated Certificate of Incorporation of the
Company (the "
Charter
") and Amended and Restated By-laws of the Company (the
"
By-laws
"), in each case, as most recently filed with the Company SEC Documents, are, in each case, true, complete and correct copies of
such documents. The Company has made available to Parent complete and correct copies of the charter and bylaws (or similar organizational documents) of each Subsidiary of the Company, each as in full
force and effect as of the date hereof.
Section 4.2
Capitalization; Subsidiaries.
(a) As of the date
hereof, the authorized capital stock of the Company consists of 300,000,000 shares of Company Common Stock and 30,000,000 shares of Company Preferred Stock. As of the date hereof, the Company has
authorized (i) 23,625 shares of Series A Convertible Preferred Stock, par value $0.001 per share (the "
Series A Preferred Stock
"),
(ii) 23,625 shares of Series B Junior Participating Convertible Preferred Stock, par value $0.001 per share (the "
Series B Preferred
Stock
") and (iii) 36,900 shares of Series C Preferred Stock. As of April 15, 2013, (i) 122,104,193 shares of Company Common Stock were issued and
outstanding, (ii) no shares of Series A Preferred Stock or Series B Preferred Stock were issued and outstanding, (iii) 36,375 shares of Series C Preferred Stock were
issued and outstanding and (iv) no shares of Company Common Stock were held in treasury. As of the date hereof, there were (i) 37,532,585 shares of Company Common Stock reserved for
issuance under Company Plans (including, as of April 17, 2013, there were 2,147,183 shares of Company Common Stock issuable upon exercise of outstanding Company Options and 4,628,418 shares
underlying Company Stock-Based Awards) and, except as set forth in this clause (i), no other outstanding awards under any Company Plan denominated in or otherwise tied to the value of a share
of Company Common Stock, (ii) 26,944,444 shares of Company Common Stock reserved for issuance under the outstanding shares of Series C Preferred Stock and (iii) 8,700,000 shares
of Company Common Stock reserved for issuance under the Company Warrants. Except as set forth above, as of April 15, 2013, no shares of capital stock of, or other equity or voting interests in,
the Company, or options, warrants or other rights to acquire any such stock or securities were issued, reserved for issuance or outstanding. All outstanding shares of capital stock of the Company are,
and all shares that may be issued pursuant to the Company Plans, the conversion of the Series C Preferred Stock and exercise of the Company Warrants will be, when issued in accordance with the
terms thereof, duly authorized, validly issued, fully paid and non-assessable and not subject to
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preemptive
rights.
Section 4.2(a)
of the Company Disclosure Schedule sets forth, as of the date hereof, with respect to each Company Option,
Company Restricted Share and Company Stock Based Award outstanding under any Company Plan, the number of Shares underlying such award, expiration date and exercise or conversion price, if applicable,
relating thereto.
(b) Except
as set forth in
Section 4.2(a)
and except as expressly permitted under
Section 6.1
, there are no outstanding subscriptions, options, warrants,
calls, convertible securities or other similar rights, agreements,
commitments or contracts of any kind to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound obligating the Company or any of its
Subsidiaries to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital stock of, or other equity or voting interests in, or securities convertible into, or
exchangeable or exercisable for, shares of capital stock of, or other equity or voting interests in, the Company or any of its Subsidiaries or obligating the Company or any of its Subsidiaries to
issue, grant, extend or enter into any such security, option, warrant, call, right or contract. Except as set forth in
Section 4.2(a)
, there are
no outstanding contractual obligations of the Company or any of its Subsidiaries affecting the voting rights of or requiring the repurchase, redemption, issuance, creation or disposition of any equity
interests in the Company. Except as set forth in
Section 4.2(b)
of the Company Disclosure Schedule, since the close of business on
April 15, 2013, the Company has not issued any shares of its capital stock, or securities convertible into or exchangeable for such capital stock or any other equity interests in the Company as
of such date, except for issuances pursuant to the exercise, conversion or settlement of Company Options, Company Restricted Shares and Company Stock-Based Awards, the Series C Preferred Stock
and the Company Warrants. There are no outstanding bonds, debentures, notes or other indebtedness of the Company having the right to vote (or convertible into, or exchangeable for, securities having
the right to vote) on any matter on which the stockholders of the Company may vote.
(c) Each
outstanding share of capital stock of, or other equity interests in, each Subsidiary of the Company (i) is (to the extent such concept is applicable) duly
authorized, validly issued, fully paid, nonassessable and not subject to preemptive rights, and (ii) is owned, directly or indirectly, by the Company or one of its Subsidiaries, free and clear
of all Liens and Transfer Restrictions, or such other Person listed in
Section 4.2(c)(i)
of the Company Disclosure Schedule as owning such share.
Section 4.2(c)(ii)
of the Company Disclosure Schedule contains a true, correct and complete list of all the Subsidiaries of the Company
(including their names and jurisdictions of organization), the percentage ownership interest of the Company in each of its Subsidiaries, and the percentage ownership interest of any other Person or
Persons in each Subsidiary of the Company, in each case as of the date hereof.
(d)
Section 4.2(d)
of the Company Disclosure Schedule sets forth the name, jurisdiction of organization and the
Company's (or the Subsidiary of the Company's) percentage ownership of any and all Persons in which the Company or any Subsidiary of the Company owns, or has the right or obligation to acquire, any
equity interests (other than any Subsidiary of the Company) (collectively, the "
Investments
"). All of the Investments are owned by the Company or by a
Subsidiary of the Company free and clear of all Liens (other than Permitted Liens) and Transfer Restrictions. As of the date of this Agreement, except for the capital stock or other equity interests
of the Subsidiaries of the Company and the Investments, the Company does not, directly or indirectly, own any capital stock or other voting or equity securities or interests in any Person that is
material to the business of the Company and its Subsidiaries, taken as a whole.
(e) Neither
the Company nor any of its Subsidiaries has entered into any commitment, arrangement or agreement, or are otherwise obligated, to contribute capital, loan money
or otherwise provide funds or make additional investments in any other Person, other than any such commitment, arrangement or agreement in the ordinary course of business consistent with past practice
with respect to wholly-owned Subsidiaries of the Company. There are no shareholder agreements, voting trusts, proxies or other agreements or understandings to which the Company or any of its
Subsidiaries is a
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party
or by which it is bound relating to the voting or registration of any shares of capital stock of the Company, any Subsidiary or any Investment.
(f) All
Company Options and other equity-based awards under the Company Plans (i) have been granted in compliance with the material terms of the applicable Company
Plans, with applicable Laws, and with the applicable provisions of the Company's certificate of incorporation and bylaws as in effect at the time of the applicable grant, and (ii) are in all
material respects accurately disclosed as required by applicable Law in the Company SEC Documents and the financial statements set forth therein. Any actions of the Company, the Company Board of
Directors or its designee referred to in
Section 3.3
are valid and binding in accordance with the Company Plans.
Section 4.3
Authority Relative to Agreement.
(a) The Company has
all necessary corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder and to consummate the transactions contemplated hereby, including the Merger,
subject solely in the case of the performance of the Merger to obtaining, at the Stockholders' Meeting, (i) the affirmative vote of the holders of a majority of the outstanding shares of
Company Common Stock (the "
Requisite Common Stockholder Approval
") and (ii) the affirmative vote of the holders of a majority of the outstanding
shares of Series C Preferred Stock (the "
Requisite Preferred Stockholder Approval
" and together with the Requisite Common Stockholder Approval,
the "
Requisite Stockholder Approval
"), in each case entitled to vote thereon at the Stockholders' Meeting in favor of the adoption of the "agreement of
merger" (as such term is used in Section 251 of the DGCL) contained in this Agreement. The execution and delivery of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby, including the Merger, have been duly and validly authorized by all necessary corporate action, and no other corporate proceedings
on the part of the Company are necessary to authorize the execution and delivery of this Agreement or to consummate the transactions contemplated hereby, including the Merger (other than, with respect
to the consummation of the Merger, the receipt of the Requisite Stockholder Approval, as well as the filing and recordation of the Certificate of Merger with the Secretary of State). This Agreement
has been duly and validly executed and delivered by the Company and, assuming this Agreement is a valid and binding obligation of Parent and Merger Sub, constitutes a legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with its terms (except as such enforceability may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and other similar Laws of general applicability relating to or affecting creditor's rights, and subject to general equitable principles (the "
Bankruptcy
Exceptions
").
(b) The
board of directors of the Company (the "
Company Board
"), by resolutions adopted at a meeting duly called and held,
has, subject to the terms and conditions of this Agreement, unanimously (i) determined that this Agreement, the Merger and the other transactions contemplated by this Agreement is advisable,
fair to and in the best interests of the Company and the Company's stockholders, (ii) approved this Agreement and the Voting Agreement (including for purposes of Section 203 of the
DGCL), (iii) approved the Merger and the other transactions contemplated by this Agreement and the Voting Agreement and (iv) resolved to recommend that the stockholders of the Company
approve the adoption of this Agreement (the "
Company Board Recommendation
") and directed that such matter be submitted for the consideration of the
stockholders of the Company at the Stockholders' Meeting, which resolutions have not been rescinded, modified or withdrawn in any way.
Section 4.4
No Conflict; Required Filings and Consents.
(a) None
of the execution and delivery of this Agreement by the Company, the consummation by the Company of the Merger or any other transaction contemplated by this Agreement, or the Company's performance of
its obligations hereunder will (i) subject to obtaining the Requisite Stockholder Approval, conflict with or violate the Charter or By-laws, (ii) assuming the consents,
registrations, filings, notices, approvals and authorizations specified in
Section 4.4(b)
have been obtained or made and the waiting periods
referred to therein have expired, and any condition precedent to such consent, approval, authorization, or
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waiver
has been satisfied, conflict with or violate any Law applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound or
affected or (iii) result in any breach of, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any right of
termination, amendment, acceleration or cancellation of, or result in the creation of a Lien (other than a Permitted Lien) or Transfer Restrictions upon any of the properties or assets of the Company
or any of its Subsidiaries pursuant to, any Company Material Contract, other than, in the case of clauses (ii) and (iii), any such violation, breach, default, right of termination, amendment,
acceleration, cancellation, Lien or Transfer Restriction that has not had, individually or in the aggregate, a Material Adverse Effect.
(b) None
of the execution and delivery of this Agreement by the Company, the consummation by the Company of the Merger or any other transaction contemplated by this
Agreement, or the Company's performance of its obligations hereunder will require any consent, approval, authorization, waiver or permit of, or filing with or notification to, any Governmental
Authority, except for (i) the filing with the SEC of such reports under the Exchange Act as may be required in connection with this Agreement and the transactions contemplated by this
Agreement, (ii) compliance with, and the filing of a premerger notification and report form by the Company under, the HSR Act and the filings and receipt, termination or expiration, as
applicable, of such other approvals or waiting periods required under any other applicable non-U.S. Laws designed or intended to prohibit, restrict or regulate actions or transactions
having the purpose or effect of monopolization, restraint of trade, harm to competition or effectuating foreign investment ("
Foreign Antitrust Laws
"
and, together with the HSR Act, "
Antitrust Laws
"), (iii) the filing and recordation of the Certificate of Merger with the Secretary of State, the
other filings required under the DGCL by the Secretary of State and appropriate documents with the relevant authorities of the other jurisdictions in which the Company is qualified to do business,
(iv) any filings required under the rules and regulations of NASDAQ, or (v) where the failure to obtain such consents, approvals, authorizations or permits, or to make such filings or
notifications, has not had, individually or in the aggregate, a Material Adverse Effect.
Section 4.5
Permits and Licenses.
Except as has not had, individually or
in the aggregate, a Material Adverse Effect, the Company and each of its Subsidiaries are in possession of all material franchises, grants, authorizations, licenses, permits, easements, variances,
exceptions, consents, certificates, approvals and orders necessary for the Company and its Subsidiaries to carry on their respective businesses as they are now being conducted (the
"
Company Permits
") and (b) all such Company Permits are in full force and effect and none of the Company or its Subsidiaries is in default or
violation of any such Company Permit. To the Knowledge of the Company, neither the Company nor any of its Subsidiaries has received any written notice since January 3, 2010 from any
Governmental Authority threatening to suspend, revoke or withdraw any such material Company Permit.
Section 4.6
Compliance with Laws.
Except for instances of
non-compliance, default or violation that have not had, individually or in the aggregate, a Material Adverse Effect, (i) each of Company and its Subsidiaries is in compliance with,
and has not received written notice of any default or violation of, any Laws applicable to the Company or such Subsidiary or by which any property, asset or right of the Company or such Subsidiary is
bound or affected and (ii) the Company is in compliance in all respects with the applicable listing, corporate governance and other rules and regulations of NASDAQ.
Section 4.7
Company SEC Documents; Financial Statements.
(a) Since January 3, 2010, the Company has filed or otherwise transmitted with the SEC all forms, documents and reports required under the Exchange Act or the Securities
Act to be filed or furnished prior to the date of this Agreement by the Company with the SEC (the forms, documents, and reports so filed, transmitted or furnished since January 3, 2010 with the
SEC, including any amendments thereto since the date of their filing, furnishing or transmittal and all documents, Contracts and other information incorporated therein, the
"
Company SEC Documents
"). As of their respective filing dates, or, if amended or restated after the date of filing, as of the date of the last such
amendment or applicable subsequent filing, the
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Company
SEC Documents (i) complied in all material respects with the requirements of the Securities Act or the Exchange Act, as the case may be, and the applicable rules and regulations
promulgated thereunder, and (ii) did not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made not misleading. The Company has made available to Parent copies of all comment letters and other correspondence received by the
Company from the SEC since January 3, 2010 and relating to the Company SEC Documents, together with all written responses of the Company thereto. No executive officer of the Company or any of
its Subsidiaries has failed in any respect to make the certifications required of him or her under Section 302 or 906 of the Sarbanes-Oxley Act of 2002 with respect to any Company SEC
Documents. As of the date of this Agreement, to the Knowledge of the Company, there are no outstanding or unresolved comments in such 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, or since
January 3, 2010 has been, required to file periodic reports with the SEC pursuant to the Exchange Act.
(b) The
consolidated financial statements (including all related notes and schedules) of the Company included in the Company SEC Documents fairly present in all material
respects the consolidated financial position of the Company and its consolidated Subsidiaries as at the respective dates thereof and their consolidated results of operations and consolidated cash
flows for the respective periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments which are not material in amounts or significance and the
absence of notes) in conformity with GAAP (except in the case of the unaudited statements, as permitted by Form 10-Q or other rules and regulations of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated therein or in the notes thereto).
Section 4.8
Disclosure Controls and Procedures; Internal Controls over Financial
Reporting.
The Company has established and maintains disclosure controls and procedures over financial reporting (as such terms are defined in
paragraphs (e) and (f), respectively, of Rule 13a-15 promulgated under the Exchange Act) as required by Rule 13a-15 promulgated under the Exchange Act
designed to ensure that material information relating to the Company, including its consolidated Subsidiaries, is made known to the appropriate management personnel of the Company by others within
those entities. The Company's management has completed an assessment of the effectiveness of the Company's system of internal controls over financial reporting in compliance with the requirements of
Section 404 of the United States Sarbanes-Oxley Act of 2002, as amended, for the fiscal year ended December 30, 2012, and such assessment concluded that such controls were effective and
the Company's auditors has issued (and subsequently withdrawn or qualified) an attestation report concluding that the Company maintained effective internal controls over financial reporting as of
December 30, 2012. To the Knowledge of the Company, since January 1, 2012, neither the Company nor the Company's auditors has identified or been made aware of (i) any significant
deficiencies or material weakness in the design or operation of internal controls which are reasonably likely to adversely affect in any material respect the Company's
ability to record, process, summarize and report financial data and (ii) any fraud, whether or not material, that involves the Company's management or other employees who have a significant
role in the Company's internal controls. As and to the extent described in the Company SEC Documents, the Company and the Subsidiaries of the Company have devised and maintain a system of internal
accounting controls sufficient to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP. Since the
enactment of the Sarbanes-Oxley Act of 2002, neither the Company nor any of its Subsidiaries has made any prohibited loans to any executive officer of the Company (as defined in
Rule 3b-7 of the Exchange Act) or director of the Company or any Subsidiary of the Company. There are no outstanding loans or other extensions of credit made by the Company or any
of its Subsidiaries to any executive officer (as defined in Rule 3b-7 under the Exchange Act) or director of the Company.
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Section 4.9
Absence of Certain Changes or
Events.
Since December 30, 2012 and to the date hereof, there has not been any change, event, effect or circumstance that has had, individually or in the
aggregate, a Material Adverse Effect. Since such date to the date hereof, except for transactions contemplated hereby, the Company and its Subsidiaries have conducted their businesses only in the
ordinary course of business consistent with past practice, and none of the Company or any of its Subsidiaries has taken any action that if taken after the date of this Agreement would constitute a
violation of
Section 6.1(a)
,
(h)
,
(r)
,
(t)
or
(v)
, or, to the extent related to the foregoing sections,
Section 6.1(z)
Section 4.10
No Undisclosed Liabilities.
Except (a) as reflected
or reserved against in the Company's financial statements or the notes thereto included in the Company SEC Documents, (b) for liabilities or obligations incurred in the ordinary course of
business consistent with past practice since December 30, 2012, (c) for liabilities or obligations that have not had, individually or in the aggregate, a Material Adverse Effect, and
(d) for liabilities or obligations incurred in connection with the transactions contemplated by this Agreement, neither the Company nor any of its Subsidiaries has any liabilities or
obligations of any nature, whether or not accrued, contingent or otherwise, whether due or to become due, that are required by GAAP to be reflected or reserved against on a consolidated balance sheet
(or the notes thereto) of the Company and its Subsidiaries.
Section 4.11
Absence of Litigation.
Except for matters that,
individually or in the aggregate, have not had a Material Adverse Effect, there is no claim, suit, action, litigation, arbitration, mediation, proceeding or investigation (each, a
"
Proceeding
") pending or, to the Knowledge of the Company, threatened against the Company or any of its Subsidiaries. As of the date hereof, there are
no Proceedings pending or, to the Knowledge of the Company, threatened against the Company or any of its Subsidiaries challenging or seeking to prohibit the execution, delivery or performance of this
Agreement or any of the transactions contemplated hereby. To the Knowledge of the Company, (x) no officer or director of the Company or any of its Subsidiaries is a defendant in any Proceeding
in connection with his or her status as an officer or director of the Company or any of its Subsidiaries, and (y) no such Proceeding is threatened in writing, in either case that has had,
individually or in the aggregate, a Material Adverse Effect.
Section 4.12
Environmental Matters.
Except as has not had, individually
or in the aggregate, a Material Adverse Effect, (a) the Company and its Subsidiaries are and have been since January 1, 2010 in compliance with all applicable Environmental Laws and, to
the Knowledge of the Company, are in possession of all Environmental Permits and compliance with the terms and conditions thereof; (b) each such Environmental Permit is valid, subsisting and in
full force and effect, and no appeals or other proceedings are pending or threatened with respect to the issuance, terms or conditions of any such Environmental Permit; (c) neither the Company
nor its Subsidiaries has received any written notice alleging any unresolved violation of any Environmental Law; (d) there is no Environmental Claim pending; and (e) at any time since
January 1, 2010, the Company and its Subsidiaries have not caused or permitted and, to the Knowledge of the Company, neither the Company nor any of its Subsidiaries is liable for the presence
of, any exposure to or any Releases of Hazardous Substances on, at, in or underneath any property, whether or not currently owned or leased by the Company or any of its Subsidiaries.
Section 4.13
Employee Benefit
Plans.
(a)
Section 4.13(a)
of the Company Disclosure Schedule lists the name of each Company Benefit
Plan. The Company has made available to Parent prior to the date hereof copies of the following: (i) the most recent Company Benefit Plan document and all amendments and exhibits thereto;
(ii) the most recent annual report on Form 5500 filed with respect to each Company Benefit Plan (if required by applicable Law), and any exhibits thereto, and the most recent actuarial
report in respect of any Company Benefit Plan that is a single employer pension plan subject to Title IV of ERISA; (iii) the most recent summary plan description for each Company Benefit Plan
for which a summary plan description is required by applicable Law and all related
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summaries
of material modifications; (iv) the most recent IRS determination, notification, or opinion letter, if any, received with respect to each applicable Company Benefit Plan; and
(v) each trust agreement, insurance Contract, annuity Contract, or other funding arrangement in effect as of the date hereof and relating to any Company Benefit Plan. Except as otherwise
contemplated by this Agreement, neither the Company nor any of its Subsidiaries has undertaken or committed to (whether
or not in writing and whether or not legally binding) make any material amendments or to terminate, adopt or approve any new Company Benefit Plan.
(b) Each
Company Benefit Plan (i) has been established, operated and administered in accordance with its terms and applicable Law, including ERISA and the Code except
for instances of noncompliance that have not had, individually or in the aggregate, a Material Adverse Effect and (ii) all contributions, premiums and other payments required to be made with
respect to each Company Benefit Plan have been made on or before their due dates under applicable Law and the terms of such Company Benefit Plan or, to the extent not required to be made or paid on or
prior to the date hereof, have been fully reflected on the Company's financial statements in accordance with GAAP, except for instances of non-payment that have not had, individually or in
the aggregate, a Material Adverse Effect. There are no pending or, to the Knowledge of the Company, threatened investigations by any Governmental Authority, termination proceedings or other claims
(except routine claims for benefits in the ordinary course) against any Company Benefit Plan. Each Company Benefit Plan that is a nonqualified deferred compensation plan (as defined under Code
Section 409A) has, since January 1, 2005, been operated in material good faith compliance with Sections 409A(a)(2), (3), and (4) of the Code.
(c) None
of the Company, any of its Subsidiaries nor any other Person that, together with the Company or any of its Subsidiaries, is or was treated as a single employer
under Section 414(b), (c), (m) or (o) of the Code (each, together with the Company, an "ERISA Affiliate"), is now contributing to or has any liability to, or has at any time in
the six years preceding the Closing Date, maintained, contributed to or had any liability to (i) a pension plan (within the meaning of Section 3(2) of ERISA) subject to
Section 412 of the Code or Title IV of ERISA; (ii) a Multiemployer Plan or a "multiple employer plan" within the meaning of Sections 4063/4064 of ERISA or Section 413(c) of
the Code; or (iii) a single employer pension plan (within the meaning of Section 4001(a)(15) of ERISA) for which an ERISA Affiliate would reasonably be expected to incur liability under
Section 4063 or 4064 of ERISA.
(d) Each
Company Benefit Plan intended to be qualified under Section 401(a) of the Code, and the trust (if any) forming a part thereof, has received a favorable
determination or opinion letter from the IRS as to its qualification under the Code and to the effect that each such trust is exempt from taxation under Section 501(a) of the Code or has
satisfied the applicable requirements for qualification outside the United States, and, to the Knowledge of the Company, nothing has occurred since the date of such determination or opinion letter
that would reasonably be expected to result in such Company Benefit Plan ceasing to qualify or be tax-exempt.
(e) Except
as set forth in
Section 4.13(e)
of the Company Disclosure Schedule, no Company Benefit Plan provides
post-termination welfare benefits, and neither the Company nor any of its Subsidiaries has any obligation to provide any post-termination welfare benefits, in each case, other
than health care continuation as required by Section 601 of ERISA, Section 4980B of the Code, ERISA or any other applicable Law.
(f) Neither
the execution by the Company of this Agreement nor the consummation of the transactions contemplated hereby (either alone or upon occurrence of any additional or
subsequent events) (i) will result in any payment, acceleration, forgiveness of indebtedness, vesting, distribution, increase in the amount or value of, or any payment or benefits or obligation
to fund benefits with respect to any Person, (ii) will result in the triggering or imposition of any restrictions or limitations on
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the
right of the Company to amend, merge, terminate or receive a reversion of assets from any Company Benefit Plan or related trust, or (iii) could reasonably be expected to result in any
amount failing to be deductible by reason of Section 280G of the Code. Except as set forth in
Section 4.13(f)
of the Company Disclosure
Schedule, none of the Company or any of its Subsidiaries has the obligation to indemnify, hold harmless or gross-up any individual with respect to any Tax, penalty or interest under
Section 280G or 409A of the Code.
Section 4.14
Intellectual Property.
(a)
Section 4.14(a)(1)
of the Company Disclosure Schedule sets forth a list of all (i) issued Patents and
Patent applications, (ii) Trademark registrations and applications, (iii) Copyright applications and registrations, and (iv) Internet domain names; in each case, owned or filed by
or held in the name of the Company or any of its Subsidiaries ("
Company Registered IP
"); indicating with respect to all items listed under
clauses (i) through (iii), where applicable, the jurisdiction in which each of the items of Company Registered IP has been applied for, filed, issued or registered, the application/registration
number and, if the Company or one of its Subsidiaries is not the current owner of record, the current owner of record. Except as otherwise specified in
Section 4.14(a)(1)
of the Company Disclosure
Schedule, the Company Registered IP (other than any pending application included therein) is in
effect and subsisting and, to the Knowledge of the Company, valid and enforceable. The Company and its Subsidiaries have complied with and are in compliance in all material respects with all Laws
(including payment of all applicable fees) with respect to any Company Registered IP. The Company exclusively owns all right, title and interest in, to and under the items listed in
Section 4.14(a)(1)
of the Company Disclosure Schedule.
(b) The
Company or one of its Subsidiaries own or have the valid right or license to use and exploit all Intellectual Property Rights used or exploited by, and material to,
the business of the Company and its Subsidiaries, free and clear of any Liens other than Permitted Liens;
provided
, that no representation and warranty
is made in this
Section 4.14(b)
as to the non-infringement of any Intellectual Property Rights of any other Person.
(c) Neither
the execution, delivery and performance of this Agreement nor the consummation of the Merger and other transactions contemplated by this Agreement will without
further action by any Person: (i) impair the right of the Company or its Subsidiaries to use or exploit any Company Owned IP or the Licensed IP Rights or any portion thereof that are material
to the business of the Company and its Subsidiaries or (ii) result in or require the licensing or non-assertion of any Intellectual Property Rights of the Parent or its Affiliates
(other than the Company or its Subsidiaries) to or against any other Person. No Company Owned IP is exclusively licensed to any Person.
(d) There
is no pending, or to the Company's Knowledge, threatened Proceeding concerning the validity, enforceability, ownership of Company Owned IP, or the right of the
Company or its Subsidiaries, as applicable, to use or exploit any Company Owned IP or Licensed IP Rights. None of the Company Owned IP is subject to any action, Order or stipulation restricting in any
manner its use, distribution, transfer, licensing or other exploitation by the Company or its Subsidiaries.
(e) To
the Company's Knowledge and except as would not, individually or in the aggregate, have a Material Adverse Effect, neither the conduct of the businesses of the
Company or its Subsidiaries, as currently conducted and as have been conducted in the past six (6) years, nor any products or services of the Company or its Subsidiaries, infringes, violates or
misappropriates or infringed, violated or misappropriated any Intellectual Property Rights of any other Person. None of the Company or any of its Subsidiaries has received, since March 1, 2010,
any written charge, complaint, claim, demand or notice, including for indemnification, nor is there any pending or, to the Company's Knowledge, threatened Proceeding, alleging any such infringement,
violation or misappropriation or claiming indemnification for, any such infringement, violation or misappropriation that has not been settled or otherwise fully resolved. To the Company's Knowledge,
no other Person has infringed, violated or
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misappropriated
any Intellectual Property Rights owned by the Company or any of its Subsidiaries except as has not had, individually or in the aggregate, a Material Adverse Effect. None of the Company
or any of its Subsidiaries has sent any written charge, complaint, claim, demand or notice alleging such infringement, violation or misappropriation since March 1, 2010.
(f) The
Company and its Subsidiaries have taken reasonable steps to protect, preserve and maintain the secrecy and confidentiality of the Trade Secrets included in Company
Owned IP except as has not had, individually or in the aggregate, a Material Adverse Effect. All current and former officers, employees, consultants and independent contractors of the Company and its
Subsidiaries having access to proprietary information, inventions or Trade Secrets of the Company or its Subsidiaries, or their customers, licensors or business partners have executed and delivered to
the Company or the respective Subsidiary a confidentiality agreement protecting such proprietary information, inventions and Trade Secrets, and, to the Company's Knowledge there has not been any
breach by any party to such confidentiality agreements, in each case, except as has not had, individually or in the aggregate, a Material Adverse Effect. The Company and its Subsidiaries have secured
valid written assignments from all of the Company's and its Subsidiaries' current and former consultants, independent contractors and employees who were involved in, or who contributed to, the
creation or development of any Patents or any other material Intellectual Property Rights for or on behalf of the Company or such Subsidiaries, including any Company Owned IP, and such assignments
assign to the Company or the respective Subsidiary all rights, title and interest in and to any such contributions that the Company or the Subsidiary does not already own by operation of Law. No
current or former employee, officer, director, stockholder, consultant or independent contractor has any right, claim or interest in or with respect to the material Patents listed in
Section 4.14(a)(1)
of the Company Disclosure Schedule or any other material Company Owned IP. Neither the Company nor any of the Subsidiaries has
developed jointly with any third party any material Intellectual Property Rights with respect to which such other party has any rights and neither the Company nor the Subsidiaries have obligations to
any current or former officers, employees, consultants or independent contractors with respect to the material Patents listed on
Section 4.14(a)(1)
of the Company Disclosure Schedule or any other
material Company Owned IP. No inventor of any of the Company's or its
Subsidiaries' material Patents is under any obligation to assign its rights in such Patents to a former employer or other Person.
(g)
Section 4.14(g)
of the Company Disclosure Schedule lists all Open Source Materials (as defined below)
(i) that have been incorporated into, linked to, combined with or distributed with any proprietary software used in any products (including software products) or services that currently are
being provided or supported by the Company or its Subsidiaries or (ii) from which any such proprietary software, products or services were derived.
Section 4.14(g)
of the Company Disclosure
Schedule also lists in each case such relevant products or services of the Company or its Subsidiaries.
As used in this
Section 4.14(g)
, "
Open Source Materials
" means any "open source" or other
software (e.g., without limitation, Linux) that is licensed, distributed or conveyed under a Contract that requires as a condition of its use, modification or distribution that it, or other
software incorporated into, combined or distributed with, linked to or derived from it, be disclosed or distributed in source code form, delivered at no charge or be licensed, distributed or conveyed
under the same terms as such Contract; without limiting the foregoing, Open Source Materials includes software licensed under the GNU's General Public License (GPL) or Lesser/Library GPL and
the Mozilla Public License. Neither the Company nor its Subsidiaries has distributed, licensed or conveyed to any Person any software that is, or that is included in or forms part of any products or
services of the Company or its Subsidiaries, listed in
Section 4.14(g)
of the Company Disclosure Schedule, and has not otherwise used any Open
Source Materials, in any manner that has subjected any proprietary software of the Company or its Subsidiaries that is material to the business of the Company and its Subsidiaries to any of the
conditions set forth in the immediately preceding sentence.
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(h) Except
as has not had, individually or in the aggregate, a Material Adverse Effect and to the Knowledge of the Company, none of the products or services of the Company
or its Subsidiaries or their information technology systems contains any "back door," "drop dead device," "time bomb," "Trojan horse," "virus" or "worm" (as such terms are commonly understood in the
software industry) or any other code designed or intended to have any of the following functions: (i) disrupting, disabling, harming or otherwise impeding in any manner the operation of, or
providing unauthorized access to, a computer system or network or other device on which such code is stored or installed; (ii) damaging or destroying any data or file without the user's
consent; or (iii) sending information to the Company or its Subsidiaries (in the case of products deployed outside the Company) or any third party (other than sending information to users of
the products or services of the Company or its Subsidiaries in the ordinary operation and use of the products or services of the Company or its Subsidiaries) (collectively,
"
Malicious Code
"). The Company has taken industry standard (and in any event no less than reasonable) precautions to protect the products or services of
the Company or its Subsidiaries and their information technology systems and networks from Malicious Code, security breaches and loss of data, except as has not had, individually or in the aggregate,
a Material Adverse Effect. To the Company's Knowledge, there have been no breaches of security that resulted in a disclosure or potential disclosure of any personally identifiable information or other
customer or employee information, or any confidential business information. The hardware, IP addresses and information technology systems and networks currently used by the Company and its
Subsidiaries are sufficient for the Company's and its Subsidiaries' businesses except as has not had, individually or in the aggregate, a Material Adverse Effect. The Company and its Subsidiaries have
complied with all applicable Law and contractual requirements regarding the security of the products or services of the Company and its Subsidiaries and their information technology systems except as
has not had, individually or in the aggregate, a Material Adverse Effect.
(i) Neither
the Company or its Subsidiaries nor any other party acting on their behalf has disclosed or delivered to any Person, or permitted the disclosure or delivery to
any escrow agent or other Person of, any Company Source Code (as defined below) that is material to the business of the Company and its Subsidiaries. As used in this
Section 4.14(i)
, "
Company Source Code
" means, collectively, any human readable software code, or
any material portion or aspect of the software code, or any material proprietary information or algorithm contained in or relating to any software code, that is included in Company Owned IP.
(j) Neither
the Company nor any of its Subsidiaries has granted any exclusive licenses under any Company Owned IP.
Section 4.15
Taxes.
Except to the extent a breach or inaccuracy of one
or more of the following clauses in this
Section 4.15
has not had, individually or in the aggregate, a Material Adverse Effect:
(a) All
Tax Returns required by applicable Law to be filed with any Taxing Authority by, or on behalf of, the Company or any of its Subsidiaries have been duly filed when
due (including extensions) in accordance with all applicable Laws and such Tax Returns are true and complete;
(b) The
Company and each of its Subsidiaries has duly and timely paid or has duly and timely withheld and remitted to the appropriate Taxing Authority all Taxes required by
applicable Law to be paid or withheld and remitted or (i) where payment is not yet due, has adequate reserves to pay such Taxes or (ii) for Taxes attributable to periods (or portions of
period) ending on or prior to the date of the balance sheet included in the most recent Company SEC Documents and where payment is being contested in good faith pursuant to appropriate procedures, has
established an adequate reserve in accordance with GAAP;
(c) There
are no Liens for Taxes upon any property or assets of the Company or any of its Subsidiaries except for Permitted Liens;
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(d) There
is no proceeding pending or, to the Knowledge of the Company, threatened in writing against the Company or any of its Subsidiaries in respect of any Tax;
(e) Neither
the Company nor any of its Subsidiaries has constituted either a "distributing corporation" or a "controlled corporation" (within the meaning of
Section 355(a)(1)(A) of the Code) in a distribution of stock qualifying for tax-free treatment under Section 355 of the Code (i) in the two (2) years prior to
the date of this Agreement or (ii) in a distribution that would otherwise constitute part of a "plan" or "series of related transactions" (within the meaning of Section 355(e) of the
Code) in conjunction with this Agreement;
(f) Neither
the Company nor any of its Subsidiaries has participated in a "listed transaction" as defined in Treasury Regulation §1.6011-4(b)(2);
(g) Neither
the Company nor any of its Subsidiaries (i) has been a member of an Affiliated Group (other than a group of which the Company or such entity is or was the
parent) or (ii) has any liability for any Tax or any portion of a Tax of any Person other than any such Company or its Subsidiaries, including under Treasury Regulations
Section 1.1502-6 (or any similar provision of Law), as transferee or successor, or by Contract;
(h) No
written claim has been made by any Taxing Authority in any jurisdiction where the Company or any Subsidiary does not file Tax Returns that it or such Subsidiary is,
or may be, subject to Tax by that jurisdiction; and
(i) Neither
the Company nor any of its Subsidiaries will be required to include any item of income in, or exclude any item of deduction from, taxable income for a taxable
period (or portion thereof) beginning after the Closing Date as a result of: (i) a change in method of accounting initiated by the Company or any of its Subsidiaries on or prior to the Closing
Date for a taxable period ending on or prior to the Closing Date; (ii) a "closing agreement" as described in Section 7121 of the Code or any corresponding or similar provision of state,
local or foreign income Tax law , a gain recognition agreement, Tax holiday, Tax exemption, or other agreement with a Taxing Authority executed on or prior to the Closing Date; (iii) an
installment sale or open transaction disposition made on or prior to the Closing Date other than in the ordinary course of business; or (iv) a prepaid amount received on or prior to the Closing
Date other than in the ordinary course of business.
Section 4.16
Material
Contracts.
(a)
Section 4.16
of the Company Disclosure Schedule sets forth a true, correct and
complete list, as of the date of this Agreement, of each Company Material Contract. For purposes of this Agreement, "
Company Material Contract
" means
any Contract to which the Company or any of its Subsidiaries is a party that:
(i) constitutes
a "material contract" (as such term is defined in Item 601(b)(10) of Regulation S-K promulgated under the Exchange Act);
(ii) creates
(or governs the operation of) a joint venture, alliance or partnership that is material to the operation of the Company and its Subsidiaries, taken as whole;
(iii) is
an acquisition agreement, stock purchase agreement, asset purchase agreement or other similar agreement entered into after January 1, 2006 pursuant to which
the Company or any of its Subsidiaries has made a material acquisition or disposition or pursuant to which the Company or any of its Subsidiaries has continuing material indemnification,
"earn-out" or other contingent payment obligations;
(iv) is
a Contract or form of Contract that is a contract manufacturing agreement, and, in each case, such Contract, including any purchase orders under any such form of
Contract, involves payments by the Company or its Subsidiaries or other consideration between the parties with a value in excess of $10,000,000 per year;
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(v) relates
to (A) Indebtedness having an outstanding principal amount (or equivalent) in excess of $5,000,000 other than any such Contract solely among the Company
and any of its wholly-owned Subsidiaries or among any of such Subsidiaries or (B) conditional sale arrangements, the sale, securitization or servicing of loans or loan portfolios, in each case
in connection with which the aggregate actual or contingent obligations of the Company and its Subsidiaries under such contract are greater than $5,000,000;
(vi) obligates
the Company or any of its Subsidiaries to provide a guarantee of the performance or payment of obligations of any third party (other than guarantee of payment
of Indebtedness) that would reasonably be expected to result in payments in excess of $2,000,000;
(vii) constitutes
a License Agreement that is material to the business of the Company and its Subsidiaries (other than with respect to software licenses for
off-the-shelf, commercially available software with a license fee of less than $50,000 annually);
(viii) prohibits
the Company or any of its Subsidiaries (or which, following the consummation of the Merger, could restrict the ability of the Surviving Corporation or any
of its Affiliates) from (a) engaging or competing in any material line of business, in any geographical location or with any Person or (b) selling any products or services of or to any
other Person or in any geographic region;
(ix) involves
any exchange traded, over-the-counter or other swap, cap, floor, collar, futures contract, forward contract, option or any other
derivative financial instrument or contract, based on any commodity, security, instrument, asset, rate or index of any kind or nature whatsoever, whether tangible or intangible, including commodities,
emissions allowances, renewable energy credits, currencies, interest rates, foreign currency and other indices, in each case, that is material to the business of the Company and its Subsidiaries;
(x) is
a Material Company Lease;
(xi) contains
a standstill or similar agreement pursuant to which the Company or any Subsidiary of the Company has agreed not to acquire assets or securities of any other
Person that, following the consummation of the Merger, would by its terms restrict actions taken by Parent, the Surviving Corporation, or their respective Subsidiaries or Affiliates;
(xii) is
a Contract with any of the Governmental Authorities or entities set forth on
Section 4.16(a)(xii)
of the
Company Disclosure Schedule that would reasonably be expected to result in payments in excess of $1,000,000;
(xiii) is
a collective bargaining agreement;
(xiv) is
a settlement or conciliation agreement entered into since January 1, 2010 with any Governmental Authority or which would require the Company or any of its
Subsidiaries to pay consideration of more than $500,000; or
(xv) is
a Contract between the Company or any of its Subsidiaries and Silver Lake Sumeru Fund, L.P. or Silver Lake Technology Investors Sumeru, L.P. (together,
the "
Silver Lake Stockholders
") or any of their respective Affiliates.
(b) Except
for matters that, individually or in the aggregate, have not had a Material Adverse Effect, (i) neither the Company nor any Subsidiary of the Company is in
breach of or default under the terms of any Company Material Contract; (ii) to the Knowledge of the Company, no other party to any Company Material Contract is in breach of or default under the
terms of any Company Material Contract; (iii) each Company Material Contract is a valid and binding obligation of the Company or the relevant Subsidiary party thereto, as applicable, and, to
the Knowledge of the Company, is in full force and effect;
provided
,
however
, that such enforcement may
be subject to applicable Bankruptcy
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Exceptions;
(iv) neither the Company nor any of its Subsidiaries has received any written claim of material default under any Company Material Contract; (v) the Company has not received
any written notice from any other party to any Company Material Contract, and otherwise has no Knowledge that such third party intends to terminate or not renew any Company Material Contract, or is
seeking renegotiation thereof or substitute performance thereunder. Subject to the portions of the Contracts included in the Electronic Data Room that have been redacted, complete and correct copies
of all Company Material Contracts have been made available to Parent by the Company in the Electronic Data Room or are included in the Company SEC Documents.
Section 4.17
Real Property.
(a) Except for matters that,
individually or in the aggregate, have not had a Material Adverse Effect, the Company or one of its Subsidiaries has marketable fee simple title to all real property owned by the Company or any of its
Subsidiaries and to all of the buildings, structures and other improvements thereon (the "
Owned Real
Property
"), free and clear of all Liens (other than Permitted Liens).
Section 4.17(a)
of the Company Disclosure Schedule
sets forth, as of the date hereof, a list of the Owned Real Property, including a street address or equivalent of the premises constituting the Owned Real Property, that is material to the business
operations of the Company and its Subsidiaries, taken as a whole. Except as has not had, individually or in the aggregate, a Material Adverse Effect, there are no pending, or, to the Knowledge of the
Company, threatened in writing, appropriation, condemnation, eminent domain or like proceedings relating to the Owned Real Property.
(b)
Section 4.17(b)
of the Company Disclosure Schedule sets forth, as of the date hereof, a list of the Material
Company Leases (the "
Leased Real Property
"), including a street address or other description of the premises leased, use and the Company or Subsidiary
that leases the same. Copies of all Material Company Leases (including all modifications, amendments, supplements, waivers and side letters thereto) have been made available to Parent. Except as has
not had, individually or in the aggregate, a Material Adverse Effect, the Company or one of its Subsidiaries has a good and valid leasehold interest in each Material Company Lease, free and clear of
all Liens (other than Permitted Liens), and, to the Knowledge of the Company, each Material Company Lease is in full force and effect (subject to the Bankruptcy Exceptions) and is the valid and
binding obligation of each party thereto in accordance with its terms. Neither the Company nor any of its Subsidiaries has received any written notice of any material event of default under any of the
Material Company Leases, nor, to the Knowledge of the Company, is there any condition or event which, with notice or lapse of time or both, would constitute a material default under a Material Company
Lease.
Section 4.18
Labor Matters.
Except as set forth in
Section 4.18
of the Company
Disclosure Schedule, neither the Company nor any of its Subsidiaries are a party to any collective bargaining
agreement with a labor union in the United States or any agreement with any works council, labor union or other similar organization outside the United States. Neither the Company nor any of its
Subsidiaries are the subject of any proceeding before the National Labor Relations Board or any comparable body outside the United States asserting that the Company or any of its Subsidiaries have
committed an unfair labor practice or seeking to compel the Company or any of its Subsidiaries to bargain with any labor union, nor is there pending or, to the Knowledge of the Company, threatened in
writing, nor has there been for the past five (5) years, any labor strike, walkout, work stoppage, or lockout involving the Company or any of its Subsidiaries, except for any such
(i) proceeding, the outcome of which has not had, individually or in the aggregate, a Material Adverse Effect; or (ii) labor strike, walkout, work stoppage, or lockout which has not had,
individually or in the aggregate, a Material Adverse Effect.
Section 4.19
Insurance.
Except for matters that, individually or in the
aggregate, have not had a Material Adverse Effect, (i) all insurance policies maintained by the Company and its Subsidiaries are in full force and effect (and were in full force and effect
during the periods of time such insurance policies were purported to be in effect) and the Company and its Subsidiaries have paid, or caused to
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be
paid, all premiums due under such policies; and (ii) the Company and its Subsidiaries have not received written notice that the Company or its Subsidiaries are in default with respect to any
obligations under such policies. Neither the Company nor any of its Subsidiaries has received any written notice of cancellation or termination with respect to any existing material insurance policy
that is held by, or for the benefit of, any of the Company or any of its Subsidiaries, other than as has not had, individually or in the aggregate, a Material Adverse Effect.
Section 4.20
Suppliers and
Customers.
Section 4.20
of the Company Disclosure Schedule sets forth the names of the 10 largest customers
of the Company and its Subsidiaries (as measured by revenue for the twelve-month period ended on December 30, 2012 and the 10 largest suppliers of the Company and its Subsidiaries (as measured
by aggregate cost of items or services purchased for the twelve-month period ended on December 30, 2012). To the Knowledge of the Company, neither the Company nor any of its Subsidiaries
(a) has been notified in writing of any material dispute with any such customer or supplier, or (b) has been notified in writing by any such customer or supplier that it intends or is
threatening to terminate or otherwise materially and adversely alter the terms of its business with the Company or any of its Subsidiaries).
Section 4.21
Questionable Payments.
(a) Neither
the Company, its Subsidiaries, the Company and its Subsidiaries' respective directors, officers, or employees, nor, to the Company's Knowledge, any of the
Company's or its Subsidiaries' agents or other persons acting on the Company's or its Subsidiaries' behalf has:
(i) violated
the FCPA or taken any act comprising a violation of any other applicable Anticorruption Laws;
(ii) taken
any act, directly or indirectly, in furtherance of a payment, offer or promise to pay, or authorization of any payment of a gift, money or anything of value to
(1) a Government Official or (2) any person while knowing or having reasonable grounds to believe that all or a portion of such payment or thing of value will be passed on to a
Government Official, in each case to obtain or retain business or to secure an improper advantage (e.g. a tax rate lower than allowed by law); or
(iii) each
of the Company and its Subsidiaries has made and continues to make and keep books, records, and accounts, which, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the Company.
(b) The
Company has not received any request for information from the Company or its Subsidiaries since January 3, 2010 by law enforcement officials regarding a
violation or potential violation of the Anticorruption Laws. Neither the Company nor any of its Subsidiaries is conducting or has identified information that would lead a reasonable person to believe
that it should conduct any internal investigation related to Anticorruption Laws.
(c) Each
of the Company and its Subsidiaries has established and continues to maintain internal controls and procedures reasonably designed to ensure compliance with the
Anticorruption Laws.
Section 4.22
Product Warranties.
Neither the Company nor any of its
Subsidiaries has any outstanding product warranty claims with respect to its products, other than those arising in the ordinary course of business consistent with past practice. The consolidated
warranty expense of the Company and its Subsidiaries has not exceeded $49,200,000 in any of the last five fiscal years.
Section 4.23
Customs and International Trade Laws.
Each of the Company
and its Subsidiaries is in compliance in all material respects with all applicable Customs and International Trade Laws, at no time since January 3, 2010 has either the Company or any Company
Subsidiary committed any material violation of applicable Customs and International Trade Laws, and there are no material unresolved questions or claims concerning any material liability of the
Company and its Subsidiaries with respect
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to
any false statement or omissions made by the Company or any of its Subsidiaries related to applicable Customs and International Trade Laws.
Section 4.24
Opinion of Financial Advisor.
The Company Board has
received the opinion of Goldman, Sachs & Co. on or prior to the date of this Agreement, to the effect that, as of the date of such opinion, and based upon, and subject to the
limitations, qualifications and assumptions set forth in such opinion, the Common Merger Consideration to be received by the holders (other than Parent, Merger Sub and their respective Affiliates) of
the outstanding shares of Company Common Stock pursuant to this Agreement is fair from a financial point of view, to such holders. The Company will furnish a complete and correct copy of such opinion
to Parent promptly after receipt of a written copy thereof by the Company for informational purposes only; provided, however, that neither Parent nor Merger Sub may rely upon such opinion.
Section 4.25
Takeover Statutes.
The Company Board has taken all action
necessary to render inapplicable Section 203 of the DGCL as it relates to the execution, delivery and performance of this Agreement and the Voting Agreement and the consummation of the Merger
and the other transactions contemplated by this Agreement and the Voting Agreement, and no takeover-related provision in the Charter or By-laws, nor any stockholder rights plan or similar
agreement is applicable to Parent, this Agreement, the Voting Agreement or the Merger that would (a) prohibit or restrict the ability of the Company in any material respect from performing its
obligations under this Agreement or its ability to consummate the Merger or the other transactions contemplated hereby, (b) have the effect of invalidating or voiding this Agreement, the Voting
Agreement or the Certificate of Merger, or any provision hereof or thereof or (c) subject Parent to any impediment or condition in connection with the exercise of any of its rights under this
Agreement, the Voting Agreement or the Certificate of Merger.
Section 4.26
Brokers.
No broker, finder or investment banker (other than
Goldman, Sachs & Co.) is entitled to any brokerage, finder's, financial advisor's or other fee or commission from the Company or any of its Subsidiaries or Affiliates in connection with
the Merger and any of the other transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Company. The Company has made available to Parent complete and correct
copies of all letter agreements between the Company and Goldman, Sachs & Co., pursuant to which Goldman, Sachs & Co. could be entitled to any payment from the Company or
any of its Subsidiaries in connection with the Merger and the other transactions contemplated hereby.
Section 4.27
Affiliate Transactions.
There are no transactions, or
series of related transactions, agreements, arrangements or understandings that are required to be disclosed under Item 404 of Regulation S-K promulgated under the Securities
Act that have not been disclosed in the Company SEC Documents filed prior to the date hereof.
Section 4.28
No Other Representations or Warranties.
Except for the
representations and warranties expressly set forth in this
Article IV
, none of the Company or any of its Affiliates nor any other Person on
behalf of the Company makes any express or implied representation or warranty (and there is and has been no reliance by Parent, Merger Sub or any of their respective Affiliates or Representatives on
any such representation or warranty) with respect to the Company, its Subsidiaries or their respective businesses or with respect to any other information provided, or made available, to Parent,
Merger Sub or their respective Representatives or Affiliates in connection with the transactions contemplated hereby, including the accuracy or completeness thereof. Except in the case of fraud or
Intentional Breach and except (as to the Company) as such information is explicitly referred to in a representation or warranty in this
Article IV
, neither the Company nor any other Person will
have or be subject to any liability to Parent, Merger Sub or any other Person resulting
from the distribution to Parent or Merger Sub, or Parent's or Merger Sub's use of, any such information, including any information, documents, projections, forecasts or other material made available
to Parent or Merger
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Sub
in certain "data rooms" (including the Electronic Data Room) or management presentations in expectation of the transactions contemplated by this Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except as disclosed in the corresponding section of the separate disclosure schedule which has been delivered by Parent to the Company
prior to the execution of this Agreement (the "
Parent Disclosure Schedule
") (it being understood that any information set forth in one section or
subsection of the Parent Disclosure Schedule shall be deemed to apply to and qualify the representation and warranty set forth in this Agreement to which it corresponds in number and any other
representation and warranty set forth in this
Article V
to the extent that it is reasonably apparent on its face that such information is
relevant to such other representation or warranty), Parent and Merger Sub hereby jointly and severally represent and warrant to the Company as follows:
Section 5.1
Organization and Qualification; Subsidiaries.
Parent is a
corporation duly organized and validly existing under the laws of Switzerland. Merger Sub is a corporation duly organized, validly existing and in good standing, under the laws of Delaware. Each of
Parent and Merger Sub is duly qualified or licensed as a foreign corporation to do business, and (where such concept is recognized) is in good standing, in each jurisdiction in which the character of
the properties owned, leased or operated by it or the nature of its business makes such qualification or licensing necessary, except where the failure to be so qualified or licensed or to be in good
standing would not reasonably be expected to, individually or in the aggregate, prevent or materially impair the ability of Parent and Merger Sub to consummate the Merger and the other transactions
contemplated hereby. A true, complete and correct copy of the organizational or governing documents of Parent and Merger Sub (the "
Parent Organizational
Documents
") have previously been provided to the Company, and each such Parent Organizational Document is in full force and effect as of the date hereof.
Section 5.2
Authority Relative to Agreement.
Each of Parent and Merger
Sub has all necessary corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby, including the
Merger. The execution and delivery of this Agreement by Parent and Merger Sub and the consummation by Parent and Merger Sub of the transactions contemplated hereby, including the Merger, have been
duly and validly authorized by all necessary corporate action of Parent and Merger Sub (and, with respect to Merger Sub, by its sole stockholder), and no other corporate proceedings on the part of
Parent or Merger Sub are necessary to authorize the execution and delivery of this Agreement or to consummate the transactions contemplated hereby, including the Merger
(other than, with respect to the consummation of the Merger, the filing and recordation of the Certificate of Merger with the Secretary of State). This Agreement has been duly and validly executed and
delivered by Parent and Merger Sub and, assuming this Agreement is a valid and binding obligation of the Company, this Agreement constitutes a legal, valid and binding obligation of Parent and Merger
Sub, enforceable against Parent and Merger Sub in accordance with its terms (except as such enforceability may be limited by Bankruptcy Exceptions).
Section 5.3
No Conflict; Required Filings and Consents.
(a) None
of the execution and delivery of this Agreement by Parent and Merger Sub, the consummation by Parent or Merger Sub of the Merger or any other transactions contemplated by this Agreement, or
performance of their obligations hereunder will (i) conflict with or violate the Parent Organizational Documents, (ii) assuming the consents, registrations, filings, notices, approvals
and authorizations specified in
Section 5.3(b)
have been obtained or made and the waiting periods referred to therein have expired, and any
condition precedent to such consent, approval, authorization, or waiver has been satisfied, conflict with or violate any Law applicable to Parent or Merger Sub or by which any property or asset of
Parent or Merger
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Sub
is bound or affected or (iii) result in any breach of, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any
right of termination, amendment, acceleration or cancellation of, or result in the creation of a Lien (other than a Permitted Lien) or Transfer Restrictions upon any of the properties or assets of
Parent or Merger Sub pursuant to, any note, bond, mortgage, indenture or credit agreement, or any other Contract or other instrument or obligation to which Parent or Merger Sub is a party or by which
Parent or Merger Sub or any property or asset of Parent or Merger Sub is bound, other than, in the case of clauses (ii) and (iii), for any such violation, breach, default, right, termination,
amendment, acceleration, or cancellation that would not reasonably be expected to, individually or in the aggregate, materially delay the ability of Parent and Merger Sub to consummate the Merger and
the other transactions contemplated by this Agreement.
(b) None
of the execution and delivery of this Agreement by Parent and Merger Sub, the consummation by Parent and Merger Sub of the Merger or any other transactions
contemplated by this Agreement, or performance of their obligations hereunder will require any consent, approval, authorization, waiver or permit of, or filing with or notification to, any
Governmental Authority, except for (i) the filing with the SEC of such reports under the Exchange Act as may be required in connection with this Agreement and the transactions contemplated by
this Agreement, (ii) compliance with, and the filing of a premerger notification and report form by the Company under, the HSR Act and the filings and receipt, termination or expiration, as
applicable, of such other approvals or waiting periods as may be required under applicable Foreign Antitrust Laws, (iii) the filing and recordation of the Certificate of Merger with the
Secretary of State, the other filings required under the DGCL by the Secretary of State and appropriate documents with the relevant authorities of the other jurisdictions in which the Company is
qualified to do business and (iv) such other consents, approvals, authorizations or permits, filings or notifications, the failure of which to have, make or obtain, as applicable, would not
reasonably be expected to, individually or in the aggregate, materially delay the ability of Parent and Merger Sub to consummate the Merger and the other transactions contemplated by this Agreement.
Section 5.4
Absence of Litigation.
As of the date of this Agreement,
there is no Proceeding pending or, to the Knowledge of Parent, threatened against either Parent or Merger Sub which seeks to, or would reasonably be expected to, individually or in the aggregate,
materially impair the ability of Parent and Merger Sub to consummate the Merger or any of the other transactions provided for herein.
Section 5.5
Available Funds.
Parent has or will have sufficient funds to
consummate the Merger on the terms contemplated by this Agreement and, at the Effective Time, Parent will have available, and will make available to Merger Sub, all of the funds necessary to
consummate the Merger. The obligations of Parent and Merger Sub under this Agreement are not subject to any conditions regarding Parent's, Merger Sub's, any Affiliate's or any other Person's ability
to obtain financing for the consummation of the Merger.
Section 5.6
Capitalization of Merger Sub.
As of the date of this
Agreement, the authorized share capital of Merger Sub consists of 1,000 shares of common stock, par value $0.001 per share, all of which are validly issued and outstanding. All of the issued and
outstanding share capital of Merger Sub is, and at the Effective Time will be, indirectly owned by Parent. Merger Sub was formed solely for the purpose of engaging in the transactions contemplated
hereby, and it has not conducted any business prior to the date hereof. Except for obligations or liabilities incurred in connection with its formation and the transactions contemplated by this
Agreement, Merger Sub has not and will not have incurred, directly or indirectly, through any Subsidiary or Affiliate, any obligations or liabilities or engaged in any business activities of any type
or kind whatsoever or entered into any agreements or arrangements with any Person.
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Section 5.7
Brokers.
Other than Credit Suisse AG,
whose fees and expenses shall be borne solely by Parent, no broker, finder, financial advisor, investment banker or other Person is entitled to any brokerage, finder's, financial advisor's or other
fee or commission in connection with the Merger or any of the other transactions contemplated by this Agreement based upon arrangements made by or on behalf of Parent or Merger Sub.
Section 5.8
Disclosure in Proxy Statement.
The information with respect
to Parent, Merger Sub and any of their Subsidiaries that Parent furnished or will furnish to the Company expressly for use in the Proxy Statement, including the Parent Information, will not contain
any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not
misleading, at the time such information is first furnished to the Company.
Section 5.9
Ownership of Company Common Stock.
Subject to the accuracy of
the representations and warranties of the Company set forth in
Section 4.3(b)
and
Section 4.25
, neither Parent nor Merger Sub is, nor at any time
during the last three (3) years has been, an "interested shareholder" of
the Company as defined in the DGCL.
Section 5.10
No Other Representations or Warranties.
Except for the
representations and warranties expressly set forth in this
Article V
, none of Parent, Merger Sub or any of their respective Affiliates nor any
other Person on behalf of any of them makes any express or implied representation or warranty (and there is and has been no reliance by the Company or any of its Affiliates or Representatives on any
such representation or warranty) with respect to Parent, Merger Sub or their respective businesses or with respect to any other information provided, or made available, to the Company or any of its
Representatives or Affiliates in connection with the transactions contemplated hereby, including the accuracy or completeness thereof.
Section 5.11
Access to Information.
Each of Parent and Merger Sub
acknowledges and agrees that it (a) has had an opportunity to discuss and ask questions regarding the Company and its Subsidiaries' businesses with the management of the Company, (b) has
had access to the Electronic Data Room and (c) has conducted its own independent investigation of the Company and its Subsidiaries and the transactions contemplated hereby, and has not relied
on any representation, warranty, or other statement by any Person regarding the Company and its Subsidiaries, except as expressly set forth in
Article IV
.
ARTICLE VI
COVENANTS AND AGREEMENTS
Section 6.1
Conduct of Business by the Company Pending the
Merger.
Between the date of this Agreement and the earliest to occur of the Effective Time and the date, if any, on which this Agreement is terminated pursuant to
Section 8.1
, except as set forth in
Section 6.1
of the Company Disclosure Schedule, as
expressly required by this Agreement, as may be required by Law, or as may be consented to in writing by Parent (which consent shall not be unreasonably withheld, conditioned or delayed),
(x) the Company shall, and shall cause each of its Subsidiaries to, carry on its business in the ordinary course consistent with past practice and, to the extent consistent therewith, use
commercially reasonable efforts to preserve substantially intact its current business organizations, to keep available the services of its current officers and key employees and to preserve its
current relationships with customers, suppliers, licensors, licensees, distributors, wholesalers, lessors and others, in each case, with whom the Company or any of its Subsidiaries has material
business or other material relations. Without limiting the generality of the foregoing, except as set forth in
Section 6.1
of the Company
Disclosure Schedule, as expressly required by this Agreement, as may be required by Law, or as may be consented to in writing by Parent (which consent shall not be unreasonably withheld, conditioned
or delayed), the Company shall not and shall not permit any of its Subsidiaries to, between the date of this Agreement
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and
the earliest to occur of the Effective Time and the date, if any, on which this Agreement is terminated pursuant to
Section 8.1
:
(a) amend
or otherwise modify the Charter or the By-laws (or, in any material respect, such equivalent organizational or governing documents of any of the
Subsidiaries of the Company);
(b) except
for transactions among the Company and its wholly-owned Subsidiaries or among the Company's wholly-owned Subsidiaries, or as otherwise contemplated in
Section 6.1(g)
, issue, sell, pledge, dispose,
encumber or grant any shares of capital stock of the Company or any of its Subsidiaries, or any
options, warrants, convertible securities or other rights of any kind to acquire any such shares of capital stock or rights settled in cash or other property based in whole or in part on the value of
such shares of capital stock;
provided
,
however
that the Company may issue shares of Company Common
Stock upon the exercise of any outstanding Company Option or Company Warrant as required pursuant to and in accordance with the terms thereof or the vesting and settlement as required pursuant to and
in accordance with the terms thereof of any Company Stock-Based Award, in each case, issued prior to the date hereof (or permitted hereunder to be granted after the date hereof pursuant to
Section 6.1(g)
);
(c) (i)
declare, authorize, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to the Company's or any of its
Subsidiaries' capital stock, other than dividends paid by any Subsidiary of the Company to the Company or any wholly-owned Subsidiary of the Company; (ii) split, combine or reclassify any
shares of capital stock or other equity interests of the Company or any of its Subsidiaries; or (iii) redeem, purchase or otherwise acquire any shares of the Company's capital stock or other
securities convertible or exchangeable into or exercisable for any shares of capital stock of the Company; except (A) for the repurchase of Company Common Stock of an employee prior to the
lapse of any vesting period upon termination of such employee's employment or any other repurchases required under any Company Plan or (B) in connection with cashless exercises or similar
transactions pursuant to the exercise of Company Options or settlement (including settlement of Tax withholding obligations) of other awards or obligations outstanding as of the date hereof (including
any Company Stock-Based Awards) or permitted to be granted after the date hereof pursuant to
Section 6.1(g)
;
(d) except
as required pursuant to the Company Benefit Plans in effect as of the date hereof or as otherwise required by Law, (i) increase the compensation or other
benefits payable or to become payable to employees, directors or executive officers of the Company or any of its Subsidiaries or grant any new short or long term incentive compensation awards except
for increases in base salary for employees (other than Highly Paid Employees) in the ordinary course of business and consistent with past practice, including in respect of the timing of any such
determinations and payments, (ii) grant any severance or termination pay to, or enter into any severance agreement with, any employee, director or executive officer of the Company or any of its
Subsidiaries other than severance required or paid in the ordinary course of business consistent with past practice under the Company's severance practices as
existing on the date hereof, (iii) hire or enter into, terminate or renew any employment agreement, other than hiring or entering into a new offer letter or employment agreement incident to the
hiring or promotion of any individual who is expected to earn less than any of the Highly Paid Employees with respect to the current fiscal year and which hiring is, or agreement is entered into, in
the ordinary course of business and on terms and conditions and otherwise consistent with past practice, (iv) terminate, establish, adopt, enter into or amend or terminate any Company Benefit
Plan (or arrangement that would be a Company Benefit Plan were it effective as of the date hereof) or other plan, trust, fund, policy or arrangement maintained for the benefit of any current or former
directors, officers or employees or any of their beneficiaries or (v) enter into any new, or amend any existing, collective bargaining agreement or indemnification agreement of the type listed
on
Section 6.6
of the Company Disclosure Schedule;
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(e) (A)
terminate the employment of any employee (other than a Highly Paid Employee) other than in the ordinary course of business and consistent with past practice or
(B) terminate any Highly Paid Employee, except as a direct result of such Highly Paid Employee's (i) willful failure to perform the duties or responsibilities of his employment,
(ii) engaging in serious misconduct, or (iii) being convicted of or entering a plea of guilty to any crime;
(f) forgive
any loans to employees, officers or directors or any of their respective affiliates;
(g) except
as required pursuant to the terms of this Agreement or any Company Benefit Plan in existence as of the date hereof, or except as set forth in
Section 6.1(g)
of the Company Disclosure Schedule,
grant, accelerate the vesting of, confer or award options, convertible securities, restricted
stock, restricted stock units, performance stock units, stock appreciation rights or other rights to acquire any capital stock of the Company or any of its Subsidiaries or any equity-based award based
in whole or in part on the capital stock of the Company or any of its Subsidiaries, whether settled in cash, securities or other property, or take any action not otherwise contemplated by this
Agreement to cause to be exercisable any otherwise unexercisable option under any existing stock plan;
(h) acquire
(including by merger, consolidation, or acquisition of stock or assets), any material ownership interests in any corporation, partnership, limited liability
company, other business organization or any division or material amount of assets thereof, other than, in the case of acquisition of assets, purchases of inventory and other goods in the ordinary
course of business consistent with past practice or pursuant to Contracts as in effect as of the date hereof;
(i) dispose
of, transfer, lease or license, any material assets of the Company and its Subsidiaries, taken as a whole, other than (i) Company Owned IP, to the extent
permitted in
Section 6.1(k)
below or (ii) sales
of inventory or other assets (including obsolete equipment) in the ordinary course of business consistent with past practice or pursuant to Contracts in effect as of the date hereof;
(j) grant
any Lien (other than a Permitted Lien) on any asset of the Company and its Subsidiaries (other than Company Owned IP to the extent permitted in
Section 6.1(k)
below), that is material to the
Company and its Subsidiaries, taken as a whole, other than any Lien on additional assets of the
Company or any of its Subsidiaries required to be granted pursuant to the terms of the Credit Facility;
(k) dispose
of, transfer, lease, license or grant any Lien (other than a Permitted Lien) on, any Company Owned IP (other than non-exclusive licenses granted to
end users in the ordinary course of business);
(l) abandon,
allow to lapse or fail to maintain any Intellectual Property Rights except where the Company or any of its Subsidiaries has reasonably determined, in the
exercise of good faith business judgment, that such Intellectual Property Rights are not material and it is in the interest of the Company and its Subsidiaries to abandon, allow to lapse or cease to
maintain such Intellectual Property Rights;
(m) incur
any Indebtedness, except for Indebtedness incurred (i) in respect of capital leases for office equipment entered into by the Company or a Subsidiary of the
Company in the ordinary course of business consistent with past practice and (ii) under the Company's or its Subsidiaries' existing credit facilities set forth on
Section 6.1(m)
of the Company
Disclosure Schedule as in effect as of the date hereof in the ordinary course of business;
provided
,
however
, that for the avoidance of doubt, amounts under the Credit Facility may be repaid
and/or re-borrowed to the extent permitted thereunder;
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(n) Other
than cash held in operating accounts not exceeding the amount set forth on
Section 6.1(n)
of the Company
Disclosure Schedule, invest the cash of the Company or any of its Subsidiaries other than in (i) demand deposits in or certificates of deposit issued by a bank or financial institution which
has a rating for its long-term unsecured and non-credit enhanced debt obligations of BB or higher by Standard & Poor's Rating Services or Fitch Ratings Ltd or Ba2
or higher by Moody's Investor Services Limited, (ii) marketable debt obligations issued or guaranteed by the government of the United States of America, Germany, United Kingdom or Switzerland,
(iii) commercial paper not convertible or exchangeable to any other security: (A) for which a recognized trading market exists; (B) which matures within one year after the date
hereof; and (C) which has a credit rating of either A-1/F1 by Standard & Poor's Rating Services or Fitch Ratings Ltd or P-1 or higher by Moody's Investor
Services Limited, or, if no rating is available in
respect of the commercial paper, the issuer of which has, in respect of its long-term unsecured and non-credit enhanced debt obligations, an equivalent rating; or
(iv) money market funds which: (A) have a credit rating of either AAA or higher by Standard & Poor's Rating Services or Fitch Rating Ltd or Aaa or higher by Moody's
Investor Services Limited; (B) invest substantially all their assets in securities of the types described in paragraphs (i) to (iii) above; and (C) can be turned into cash
on not more than 60 days' notice;
(o) other
than the extension of credit to customers in the ordinary course of business consistent with past practice (including accounts receivable in connection with
customer orders, prepaid expenses, investments received in satisfaction or partial satisfaction from financially troubled account debtors, together with investments received in satisfaction of
judgments, foreclosure of Liens or the settlement of any obligations, in each case in the ordinary course of business consistent with past practice), loan, advance, invest or make a capital
contribution to or in any Person, other than the Company or a Subsidiary of the Company;
(p) authorize,
make any commitment with respect to, or make any capital expenditure in excess of $1,000,000 individually or $5,000,000 in the aggregate, except for capital
expenditures that are set forth in
Section 6.1(p)
of the Company Disclosure Schedule;
(q) materially
modify or amend, cancel or terminate or waive, release or assign any material rights or claims with respect to, any Company Material Contract or enter into
any contract which, if entered into prior to the date hereof, would be a Company Material Contract, in each case, other than in the ordinary course of business consistent with past practice and other
than additional related agreements that are contemplated to be entered into by the terms of a Company Material Contract as in effect on the date hereof and otherwise are in compliance with this
Section 6.1
;
(r) make
any material change in accounting principles, policies, practices, procedures or methods in effect at December 30, 2012, except (i) as required by
GAAP (or any interpretation or enforcement thereof), Regulation S-X of the Exchange Act or a Governmental Authority or quasi-Governmental Authority (including the Financial
Accounting Standards Board or any similar organization), or (ii) as required by a change in applicable Law;
(s) waive,
release, assign, settle or compromise any (i) governmental complaint or (ii) claims, liabilities or obligations arising out of, related to or in
connection with (A) litigation other than litigation concerning this Agreement and other than, in the case of this clause (ii)(A) only, for compromises, settlements or agreements that
(X) do not (I) with respect to litigation matters in which the Company has recorded a reserve in the Company's quarterly financial statements for the quarter ended on March 30,
2013 and filed with SEC on Form 10-Q after the date hereof (the amounts of which reserves have been provided to Parent prior to the date hereof), exceed such amount reserved by the
Company or (II) for all other litigation matters and those matters covered by the foregoing clause (X)(I) to the extent they exceed such amount reserved, involve the
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payment
of monetary damages in excess of $1,000,000 in any single instance and $3,000,000 in the aggregate and (Y) do not (I) create obligations that would impose any material
restrictions on the business of the Company and its Subsidiaries or (II) involve the admission of wrongdoing by the Company or any of its Subsidiaries, or (B) litigation brought by any
current, former or purported holder of any capital stock of the Company concerning the transactions contemplated by this Agreement;
(t) except
as required by applicable Law or the published interpretation or enforcement thereof or as is consistent with past practice, make or rescind any material Tax
election, change any material Tax method, file any amended Tax Return that is material, or settle or compromise any material U.S. federal, state, or foreign income Tax liability in excess of any
reserve therefor reflected in the financial statements included in the Company SEC Documents;
(u) fail
to maintain in full force and effect material insurance policies covering the Company and its Subsidiaries and their respective properties, assets and businesses in
a form and amount consistent with past practice;
(v) adopt
or enter into a plan of complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization of the Company or any of its
Subsidiaries (other than the Merger);
(w) except
as required by applicable Law, (i) convene any regular or special meeting (or any adjournment thereof) of the stockholders of the Company other than the
Stockholders' Meeting, or (ii) enter into any Contract or understanding or arrangement with respect to the voting or registration of the Company's capital stock;
(x) enter
into any new line of business outside the Company's existing business segments unless the decision to enter was made in the ordinary course of business prior to
the date of the Agreement;
(y) amend
or modify the engagement letter of any of the Company's financial advisors in a manner that materially increases the fees, expenses or commissions payable by the
Company; or
(z) enter
into any Contract to do any of the foregoing.
Nothing
contained in this Agreement is intended to give Parent, directly or indirectly, the right to control or direct the operations of the Company or any of the Company's Subsidiaries prior to the
Effective Time. Prior to the Effective Time, each of Parent and the Company shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over its and
its Subsidiaries' respective operations.
Section 6.2
Proxy Statement; Stockholders' Meeting.
(a)
Preparation and Filing of Proxy Statement.
As promptly as reasonably practicable following the date of this
Agreement (and in any event, no later than 30 days after the date hereof), the Company shall, with the assistance of Parent, prepare and cause to be filed with the SEC in preliminary
form a proxy statement relating to the Stockholders' Meeting (together with any amendments or supplements thereto, the "
Proxy Statement
"). Except
as expressly contemplated by
Section 6.5(c)
and
Section 6.5(e)
, the Proxy Statement shall
include the Company Board Recommendation with respect to the Merger. The Company shall promptly notify Parent upon the receipt of any comments or other correspondence from the SEC (or the staff of the
SEC) or any request from the SEC (or the staff of the SEC) regarding the Proxy Statement, including with respect to amendments or supplements to the Proxy Statement, and shall provide Parent with
copies of all correspondence between the Company and its Representatives, on the one hand, and the SEC (or the staff of the SEC), on the other hand. The Company shall use its reasonable best efforts
to respond as promptly as reasonably practicable to any comments of the SEC (or the staff of the SEC) or any
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request
from the SEC (or the staff of the SEC) for amendments or supplements with respect to the Proxy Statement and to cause the Proxy Statement to be cleared by the SEC as promptly as reasonably
practicable. The Proxy Statement shall comply as to form in all material respects with the provisions of the Exchange Act and the rules and regulations promulgated thereunder. Prior to filing or
mailing the Proxy Statement (or any amendment or supplement thereto) or responding to any comments of the SEC (or the staff of the SEC) with respect thereto, the Company shall provide Parent a
reasonable opportunity to review and to propose comments on such document or response and shall consider any such comments in good faith. The Company, commencing 10 days after the submission to
the SEC of the Preliminary Proxy Statement, shall on a weekly basis run a broker search for a deemed record date of 20 Business Days after the date of each such search.
(b)
Covenants of the Company with respect to the Proxy Statement.
The Company shall cause the Proxy Statement,
at the date it is first mailed to the stockholders of the Company and at the time of the Stockholders' Meeting, not to contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they are made, not misleading. Notwithstanding the foregoing, the
Company shall have no obligation pursuant to this
Section 6.2(b)
with respect to any of the Parent Information.
(c)
Covenants of Parent with Respect to the Proxy Statement.
Parent shall furnish to the Company all information
concerning Parent and Merger Sub as may be reasonably requested by the Company in connection with the Proxy Statement or such information that is required by the Exchange Act and the rules and
regulations promulgated thereunder to be set forth in the Proxy Statement (the "
Parent Information
"), and shall otherwise reasonably assist and
cooperate with the Company in the preparation of the Proxy Statement and the resolution of comments from the SEC (or the staff of the SEC). The information relating to Parent, Merger Sub and any of
their Subsidiaries supplied by Parent to the Company for inclusion in the Proxy Statement shall, at the time supplied by Parent, 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 light of the circumstances under which they were made, not misleading.
(d)
Mailing of Proxy Statement; Stockholders' Meeting.
The Company shall, as promptly as practicable (and in any
event within five (5) Business Days following the Proxy Statement Clearance Date), (x) by resolutions of its Board of Directors establish the earliest reasonably practicable record date
and date for a meeting of its stockholders, for the purpose of voting upon the adoption of this Agreement (including any adjournment or postponement thereof, the "
Stockholders'
Meeting
") and (y) mail to the holders of Company Common Stock and the holders of Series C Preferred Stock as of the record date established for the Stockholders'
Meeting the Proxy Statement (such date, the "
Proxy Date
"). The Company shall duly call, convene and hold the Stockholders' Meeting as promptly as
reasonably practicable after the Proxy Date;
provided
,
however
, that the Company may postpone, recess or
adjourn the Stockholders' Meeting: (i) with the consent of Parent (which consent shall not be unreasonably withheld, conditioned or delayed), (ii) for the absence of a quorum or
(iii) to allow reasonable additional time for the filing and distribution of any supplemental or amended disclosure which the Company Board has determined in good faith (after consultation with
its outside legal counsel) is required under applicable Laws and for such supplemental or amended disclosure to be disseminated to and reviewed by the Company's stockholders prior to the Stockholders'
Meeting. Once the Company has established a record date for the Stockholders' Meeting, the Company shall not change such record date or establish a different record date for the Stockholders' Meeting
without the prior written consent of Parent, unless required to do so by applicable Law or the By-laws. Unless the Company Board shall have effected a Change in Recommendation as permitted
by
Section 6.5(d)
, the Company shall use its reasonable best efforts to solicit proxies in favor of the adoption of this Agreement as
contemplated by
Section 4.3(a)(i)
and shall ensure that all proxies solicited in connection
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with
the Stockholders' Meeting are solicited in compliance in all material respects with all applicable Laws and all rules of NASDAQ.
(e)
Amendments to Proxy Statement.
If at any time prior to the Effective Time any event or circumstance relating
to the Company or Parent or any of the Company's or Parent's Subsidiaries, or their respective officers or directors, is discovered by the Company or Parent, respectively, which, pursuant to the
Exchange Act, should be set forth in an amendment or a supplement to the Proxy Statement, such party shall promptly inform the others. Each of Parent, Merger Sub and the Company agree to correct any
information provided by it for use in the Proxy Statement which shall have become false or misleading.
Section 6.3
Appropriate Action; Consents; Filings.
(a) Upon the
terms and subject to the conditions set forth in this Agreement, each of the parties hereto shall (and shall cause each of their applicable Affiliates and Subsidiaries) use its reasonable best efforts
to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other parties in doing, all things necessary, proper or advisable to consummate, as
promptly as practicable, the Merger and the other transactions contemplated by this Agreement. Without limiting the foregoing, each of the parties agree to use its respective reasonable best efforts
to (i) cause the conditions to the Merger set forth in
Article VII
to be satisfied as promptly as practicable, (ii) obtain all
necessary consents, approvals, orders, waivers, finding of suitability and authorizations of, actions or nonactions by, any Governmental Authority or any third party necessary in connection with the
consummation of the transactions contemplated by this Agreement, including the Merger and make all necessary registrations, declarations and filings with, and notices to, any Governmental Authorities
(including pursuant to the HSR Act any other applicable Antitrust Law necessary to start any applicable waiting period) and take all reasonable steps as may be necessary to obtain an approval from, or
to avoid a suit, action, proceeding or investigation by, any Governmental Authority or other Persons necessary in connection with the consummation of the transactions contemplated by this Agreement,
including the Merger, and (iii) execute and deliver any additional instruments necessary to consummate the Merger and any other transactions to be performed or consummated by such party in
accordance with the terms of this Agreement and to carry out fully the purposes of this Agreement. Notwithstanding anything in this Agreement to the contrary but subject to
Section 6.3(b)
, the
obligations of Parent under this
Section 6.3
shall include Parent, as
a condition to obtaining any and all expirations of waiting periods under the HSR Act or any other Antitrust Law or consents, clearances, or approvals from any Governmental Authority necessary to
consummate the Merger and the other transactions contemplated hereby: (A) selling, divesting, or otherwise conveying particular assets, categories, portions or parts of assets or businesses of
Parent and its Affiliates; (B) agreeing to sell, divest, or otherwise convey any particular asset, category, portion or part of an asset or business of the Company and its Subsidiaries
contemporaneously with or subsequent to the Effective Time; (C) permitting the Company to sell, divest, or otherwise convey any of the particular assets, categories, portions or parts of assets
or business of the Company or any of its Subsidiaries prior to the Effective Time; (D) licensing, holding separate or entering into arrangements, commitments, or restrictions with respect to
its respective assets or the assets of the Company or the conduct of business arrangements of the Parent or the Company or terminating any and all existing relationships, contractual rights or
obligations; and (E) effectuating any other change or restructuring of Parent or the Company, in each case so as to enable the Effective Time to occur prior to the Termination Date.
(b) Notwithstanding
anything in this Agreement to the contrary (including
Section 6.3(a)
), the parties hereby agree
and acknowledge that nothing in this
Section 6.3
shall require, or be construed to require, Parent or any of its Subsidiaries or Affiliates to
take or agree to take any of the actions contemplated by clauses (A) through (E) of
Section 6.3(a)
if such actions, individually or
in the aggregate, are reasonably likely to have a material and adverse impact on the business, financial
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condition
or results of operations of Parent and its Subsidiaries (including, after the Effective Time, the Company and its Subsidiaries), taken as a whole.
(c) Subject
to the terms and conditions of this Agreement, each of the Company, Parent and Merger Sub agrees (i) as promptly as reasonably practicable after the date
hereof, to file all Notification and Report Forms required under the HSR Act with respect to the transactions contemplated hereby, (ii) to file all other notifications, which the parties
mutually agree are required under any other Antitrust Law with respect to this Agreement and are set forth on
Section 6.3(c)(ii)
of the Company
Disclosure Schedule, (iii) to supply as promptly as reasonably practicable any additional information and documentary material that may be requested pursuant to the HSR Act or any other
Antitrust Law, and (iv) to use its reasonable best efforts to take or cause to be taken all actions necessary, proper or advisable consistent with, and subject to, the other provisions of this
Section 6.3
, to cause the expiration or termination of the applicable waiting periods under the HSR Act or any other Antitrust Law and the
granting of any required approvals under any Antitrust Law as promptly as reasonably practicable, including, if possible under applicable Law, by requesting early termination thereof. Each of Parent
and Merger Sub, on the one hand, and the Company, on the other hand, shall, in connection with the efforts referred to in
Section 6.3(a)
to
obtain all requisite approvals and authorizations for the transactions contemplated by this Agreement under the HSR Act and any other Antitrust Law, use reasonable best efforts to (A) cooperate
in all respects with each other in connection with any filing or submission and in connection with any investigation or other inquiry, including any proceeding initiated by a private party;
(B) keep the other party reasonably informed of any communication received by such party from, or given by such party to, any Governmental Authority and of any communication received or given
in connection with any proceeding by a private party, in each case regarding any of the transactions contemplated hereby; and (C) permit the other party to review any material communication
given by it to, and, to the extent reasonably practicable, consult with each other in advance of any meeting or conference with, any Governmental Authority or, in connection with any proceeding by a
private party, with any other person, and to the extent permitted by such applicable Governmental Authority or other person, give the other party the opportunity to attend and participate in such
meetings and conferences.
(d) In
furtherance and not in limitation of the covenants of the parties contained in
Sections 6.3(a)
,
6.3(b)
and
6.3(c)
, if any objections are asserted with respect to the transactions contemplated hereby
under any Antitrust Law or if any suit is instituted (or threatened to be instituted) by any Governmental Authority or any private party challenging any of the transactions contemplated hereby as
violative of any Antitrust Law or which would otherwise prevent, materially impede or materially delay the consummation of the transactions contemplated hereby, each of Parent and the Company shall
use its reasonable best efforts to contest, resist and resolve any such objections or suits and to have vacated, lifted, reversed or overturned any Order, whether temporary, preliminary or permanent,
that is in effect and that prohibits, prevents or restricts consummation of the transactions contemplated by this Agreement so as to permit consummation of the transactions contemplated by this
Agreement. Without limiting the obligations of Parent under
Section 6.3(a)
, (i) Parent, in the exercise of its reasonable judgment, shall
be entitled to extend any deadline or waiting period or to enter any arrangement with any Governmental Authority or other Person to delay the consummation of the Merger, including in connection with
litigation; and (ii) Parent shall be entitled to make material filings with any Governmental Authority and direct the defense of the transactions contemplated by this Agreement in each case in
its reasonable judgment, and in any investigation or litigation by, or negotiations with, any Governmental Authority or other Person, or in connection with any regulatory filings under applicable
Antitrust Laws, Parent shall be entitled in its reasonable judgment to initiate and conduct any communications or negotiations with or make any proposals to any Governmental Authority relating to any
contemplated or proposed agreements to divest or hold separate assets or limit activities or lines of business;
provided
, that Parent shall to the
extent practicable consult in advance with the Company and in good faith take the Company's views into
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account
regarding the overall strategic direction of the defense of any such litigation and other matters contemplated by this
Section 6.3(d)(ii)
and consult with the Company prior to making any material substantive filings.
Section 6.4
Access to Information; Confidentiality.
From the date of this
Agreement to the earlier of the Effective Time or the date, if any, on which this Agreement is terminated pursuant to
Section 8.1
, the Company
will, and will cause its Subsidiaries to, provide to Parent and its authorized Representatives (x) reasonable access during normal business hours to their respective officers, employees,
agents, properties, books, contracts and records as Parent may reasonably request and (y) such financial and operating data of the Company and its Subsidiaries as Parent may reasonably request
within a reasonable period of time following such request;
provided
,
however
, until the Effective Time,
the Company shall not be required to furnish, or provide any access to, any information to any Person not a party to, or otherwise covered by, the Confidentiality Agreement or any similar agreement
with the Company, or not otherwise bound by a similar confidentiality obligation, with respect to such information. Notwithstanding the foregoing, the Company shall not be required to provide access
to, or cause its Subsidiaries to provide access to, or disclose any information or documents which would (in the reasonable judgment of the Company) (i) unreasonably disrupt the operations of
the Company or any of its Subsidiaries, (ii) cause a violation of any confidentiality provision under any material Contract to which the Company or any of its Subsidiaries is a party (provided
that the Company shall have used commercially reasonable efforts to obtain a waiver from the counterparty to any such Contract so as to allow the Company to provide
access to or furnish the relevant information), (iii) constitute a waiver of the attorney-client or other privilege held by the Company or any of its Subsidiaries or (iv) violate any
applicable Laws;
provided
, that each party shall use its reasonable best efforts to obtain any required consents and take such other action (such as the
entry into a joint defense agreement or other arrangement to avoid loss of attorney client privilege) to permit such access or disclosure. All information exchanged pursuant to this
Section 6.4
shall be subject to the Confidentiality Agreement and the parties shall comply with, and shall cause their respective Representatives
(as defined in the Confidentiality Agreement) to comply with, all of their respective obligations thereunder. The Confidentiality Agreement shall continue in full force and effect in accordance with
its terms until the earlier of the Effective Time and the expiration of the Confidentiality Agreement according to its terms.
Section 6.5
Acquisition Proposals.
(a) Except as expressly
permitted by this
Section 6.5
, from the date of this Agreement until the Effective Time or, if earlier, the termination of this Agreement in
accordance with its terms, the Company will not, and shall cause its Affiliates and its and their respective Representatives not to, directly or indirectly (i) initiate, solicit or knowingly
encourage or facilitate the making of any Acquisition Proposal or any inquiry, proposal or request for information that may reasonably be expected to lead to an Acquisition Proposal, (ii) other
than informing Third Parties of the existence of the provisions contained in this
Section 6.5
, engage in negotiations or discussions with, or
furnish any information concerning the Company or any of its Subsidiaries to, any Third Party relating to an Acquisition Proposal or any inquiry, proposal or request for information that may
reasonably be expected to lead to an Acquisition Proposal or (iii) resolve or agree to do any of the foregoing. The Company shall, and shall cause its Affiliates and its and their respective
Representatives to, immediately cease and cause to be terminated all existing discussions or negotiations with any Person conducted heretofore with respect to any Acquisition Proposal, or any inquiry
or proposal that may reasonably be expected to lead to an Acquisition Proposal. It is agreed that any violation of the restrictions set forth in this
Section 6.5
by any Representative of the
Company or any of its Affiliates shall constitute a breach of this
Section 6.5
by the Company
(b) Notwithstanding
anything to the contrary contained in this Agreement, at any time prior to the date that the Requisite Stockholder Approval is obtained at the
Stockholders' Meeting, in the event that the Company receives an unsolicited written Acquisition Proposal (which Acquisition Proposal was
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made
after the date of this Agreement and did not result from a breach of this
Section 6.5
), the Company and the Company Board and their
Representatives may, subject to compliance with this
Section 6.5(b)
, engage in negotiations or substantive discussions with, or furnish any
information and reasonable access to, any Third Party making such Acquisition Proposal and its Representatives if the Company Board determines in good faith, after consultation with the Company's
outside legal and financial advisors, and based on information then available, that such Acquisition Proposal constitutes, or is reasonably expected to result in, a Superior Proposal;
provided
, that
(x) prior to furnishing any material nonpublic information, the Company receives from such Third Party an executed Acceptable
Confidentiality Agreement and (y) any such material nonpublic information so furnished has been previously provided or made available to Parent or is provided or made available (including
through
posting on the Electronic Data Room) to Parent substantially concurrently with or promptly following it being so furnished to such Third Party.
(c) Except
as otherwise provided in the last sentence of this
Section 6.5(c)
and
Section 6.5(d)
, until the termination of this Agreement, neither the
Company Board nor any committee thereof shall (i) (A) withdraw (or
qualify or modify in any manner adverse to Parent), or publicly propose to withdraw (or so qualify or modify), the Company Board Recommendation, (B) take any action to exempt any Person (other
than Parent and its Affiliates) from the provisions of Section 203 of the DGCL or any other state takeover statute, (C) fail to publicly reaffirm the Company Board Recommendation within
four (4) Business Days after Parent so requests in writing if an Acquisition Proposal or any material modification thereto shall have been made public or sent or given to the stockholders of
the Company (or any Person shall have publicly announced an intention, whether or not conditional, to make an Acquisition Proposal), (D) fail to recommend, in a Solicitation/Recommendation
Statement on Schedule 14D-9, against any Acquisition Proposal subject to Regulation 14D under the Exchange Act within ten (10) Business Days after the commencement of
such Acquisition Proposal, or (E) approve, adopt or recommend any Acquisition Proposal, or propose publicly to approve, adopt or recommend, any Acquisition Proposal (any action described in
this clause (i) being referred to as a "
Change in Recommendation
") or (ii) approve, adopt or recommend, or propose publicly to approve,
adopt or recommend, or allow the Company or any of its Subsidiaries to execute or enter into any letter of intent, memorandum of understanding, agreement in principle, merger agreement, acquisition
agreement, option agreement, joint venture agreement, alliance agreement, partnership agreement or similar agreement (other than an Acceptable Confidentiality Agreement) with any Third Party
constituting or relating to, or that is intended to or would reasonably be expected to lead to, any Acquisition Proposal (an "
Alternative Acquisition
Agreement
"). Notwithstanding anything to the contrary contained in this Agreement, at any time prior to the receipt of the Requisite Stockholder Approval, in the event a
material development or material change in circumstances (other than an Acquisition Proposal) occurs or arises after the date of this Agreement that was not known and not reasonably foreseeable by the
Company Board as of the date of this Agreement, the Company Board may make a Change in Recommendation if the failure to take such action would be inconsistent with the Company Board's fiduciary duties
to the stockholders of the Company under applicable Law;
provided
, that the Company has provided Parent four (4) Business Days' prior written
notice advising Parent that it intends to take such action and specifying, in reasonable detail, the reasons for such action.
(d) At
any time prior to receipt of the Requisite Stockholder Approval, in response to an unsolicited written Acquisition Proposal made after the date of this Agreement that
(i) the Company Board determines in good faith (after consultation with its outside counsel and financial advisor) constitutes a Superior Proposal and (ii) the failure to approve or
recommend such Superior Proposal would be inconsistent with the Company Board's fiduciary duties to the stockholders of the Company under applicable Law, the Company may terminate this Agreement
pursuant to
Section 8.1(c)(ii)
and this
Section 6.5(d)
;
provided
,
however
, that the Company shall not terminate this Agreement pursuant to
Section 8.1(c)(ii)
and this
Section 6.5(d)
unless the Company (x) has complied with
its obligations under
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this
Section 6.5
, including its obligations set forth in
Section 6.5(e),
(y) pays,
or causes to be paid, to Parent the Company Termination Fee payable pursuant to
Section 8.3(a)(ii)
prior to or concurrently with such termination
and (z) substantially concurrently with such termination, enters into a definitive Alternative Acquisition Agreement that documents the terms and conditions of such Superior Proposal.
(e) Notwithstanding
anything to the contrary contained in this Agreement, the Company shall not be entitled to terminate this Agreement pursuant to
Section 8.1(c)(ii)
and
Section 6.5(d)
, (x) unless the Company shall have provided
to Parent four (4) Business Days' prior written notice (the "
6.5(e) Notice
") advising Parent that the Company intends to take such action (and
specifying, in reasonable detail, the reasons for such action and the material terms and conditions of any such Superior Proposal) and, if applicable, a copy of the relevant proposed transaction
agreement, and (y):
(i) during
such four (4) Business Day period, if requested by Parent, the Company shall have engaged in good faith negotiations with Parent regarding changes to the
terms of this Agreement intended to cause such Acquisition Proposal to no longer constitute a Superior Proposal; and
(ii) the
Company shall have considered any adjustments to this Agreement (including a change to the price terms hereof) and any other agreements that may be proposed in
writing by Parent (the "
Proposed Changed Terms
") no later than 5:00 p.m., New York City time, on the fourth (4th) Business Day of such four
(4) Business Day period and shall have determined in good faith (after consultation with its outside legal counsel and financial advisors) that the Superior Proposal would continue to
constitute a Superior Proposal if such Proposed Changed Terms were to be given effect.
For
the avoidance of doubt, (A) if Parent, within four (4) Business Days following its receipt of a 6.5(e) Notice makes an offer that, as determined in good faith by the Company Board
(after consultation with its outside counsel and financial advisors) results in the applicable Acquisition Proposal no longer being a Superior Proposal, then the Company shall have no right to
terminate this Agreement pursuant to
Section 8.1(c)(ii)
and
Section 6.5(d)
as a result of
such Acquisition Proposal, and (B) any (1) material revisions to the terms of a Superior Proposal or (B) material revisions to an Acquisition Proposal that the Company Board had
determined no longer constitutes a Superior Proposal, shall constitute a new Acquisition Proposal and shall in each case require the Company to deliver to Parent a new 6.5(e) Notice and a new four
(4) Business Day period shall commence thereafter.
(f) The
Company shall promptly (and in any event within 24 hours) advise Parent orally or in writing in the event that the Company receives any Acquisition Proposal
or any inquiry, proposal or request for information that may reasonably be expected to lead to an Acquisition Proposal, and in connection with such notice, provide to Parent the material terms and
conditions (including the identity of the Third Party making any such Acquisition Proposal) of any such Acquisition Proposal. The Company shall (i) keep Parent reasonably informed of the status
and material details (including any material change to the terms thereof) of any such Acquisition Proposal (including any determination by the Company Board pursuant to
Section 6.5(b)
) and any
discussions and negotiations concerning the material terms and conditions thereof and (ii) provide to Parent as
soon as practicable (and in any event within 24 hours) after receipt or delivery thereof of any written indication of interest (or amendment thereto) or any written material that constitutes an
offer (or amendment thereto).
(g) Nothing
contained in this Agreement shall prohibit the Company or the Company Board, directly or indirectly through their respective Representatives, from
(i) taking and disclosing any position or disclosing any information reasonably required under Rule 14d-9, Rule 14e-2 or Item 1012(a) of
Regulation M-A promulgated under the Exchange Act (or any similar communication to stockholders in connection with the making or amendment of a tender offer or exchange offer) or
(ii) making any "stop, look and listen" communication to the Company's stockholders pursuant to Rule 14d-9(f) promulgated under the Exchange Act;
provided
, that in all cases, any such action
or disclosure shall comply with
Section 6.5(c)
,
Section 6.5(d)
, and
Section 6.5(e)
.
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(h) For
purposes of this Agreement:
(i) "
Acquisition Proposal
" shall mean, other than the transactions contemplated by this Agreement, any bona fide proposal or
offer from a Third Party relating to (i) a merger, reorganization, sale of assets, share exchange, consolidation, business combination, recapitalization, dissolution, liquidation, joint venture
or similar transaction involving the Company or any of its Subsidiaries whose revenues, income, EBITDA or assets, individually or in the aggregate, constitute twenty percent (20%) or more of the
consolidated revenues, income, EBITDA or assets of the Company and its Subsidiaries; (ii) the acquisition (whether by merger, consolidation, equity investment, joint venture or otherwise) by
any Person of twenty percent (20%) or more of the assets of the Company and its Subsidiaries, taken as a whole (based on fair market value, as determined in good faith by the Company Board);
(iii) the acquisition in any manner, directly or indirectly, by any Person of twenty percent (20%) or more of the issued and outstanding shares of Company Common Stock; (iv) any
purchase, acquisition, tender offer or exchange offer that, if consummated, would result in any Person beneficially owning twenty percent (20%) or more of the Company Common Stock or any class of
equity or voting securities of the Company or any of its Subsidiaries whose revenues, income, EBITDA or assets, individually or in the aggregate, constitute twenty percent (20%) or more of the
consolidated revenues, income, EBITDA or assets of the Company and its Subsidiaries, or (v) any combination of the foregoing.
(ii) "
Superior Proposal
" shall mean an Acquisition Proposal (
provided
, that
the references to "
twenty percent (20%
)" in the definition of Acquisition Proposal shall be deemed to be references to "
ninety
percent (90%
)") made by a Third Party that the Company Board determines in good faith, after consultation with the Company's financial and legal advisors, and considering such
factors as the Company Board considers in good faith to be appropriate (including the conditionality and the timing and likelihood of consummation of such proposal), (A) is on terms that are
more favorable to the holders of Company Stock than the transactions contemplated by this Agreement (after giving effect to all Proposed Changed Terms) from a financial point of view and (B) is
reasonably expected to be consummated on a timely basis.
Section 6.6
Directors' and Officers' Indemnification and
Insurance.
(a) Parent and Merger Sub agree that all rights to exculpation and indemnification (and all rights to advancement of expenses relating thereto)
for acts or omissions occurring at or prior to the Effective Time, whether asserted or claimed prior to, at or after the Effective Time (including any matters arising in connection with the
transactions contemplated by this Agreement, including the Merger), existing in favor of the Indemnitees as provided in the Charter or By-laws as in effect on the date of this Agreement
(or such equivalent organizational or governing documents of any of the Company's Subsidiaries as in effect on the date of this Agreement) or under the indemnification, employment or other similar
agreements between any Indemnitee and the Company or any of its Subsidiaries set forth on
Section 6.6
of the Company Disclosure Schedule (a
complete and correct copy of each such agreement having been made available to Parent by the Company prior to the date hereof), shall survive the Merger and shall continue in full force and effect in
accordance with their respective terms to the extent permitted by applicable Law. From and after the Effective Time, the Surviving Corporation shall, and Parent shall cause the Surviving Corporation
to (including by providing funding to the extent the Surviving Corporation does not have sufficient funds), indemnify, defend and hold harmless, and advance expenses to, Indemnitees with respect to
(x) all acts or omissions by them in their capacities as such at any time at or prior to the Effective Time or (y) any costs or expenses (including attorneys' fees and expenses in
advance of the final disposition of any Proceeding to each Indemnitee), judgments, fines, losses, claims, damages, liabilities and amounts paid in settlement in connection with any actual or
threatened Proceeding by reason of the fact that such Person was acting in such capacity or anything done or not done by such Person in such capacity at or prior to the Effective Time, whether such
Proceeding is initiated before or after the Effective Time, in either case, to the extent required by
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(X) the
Charter or By-laws (or such equivalent organizational or governing documents of any of the Company's Subsidiaries as in effect on the date of this Agreement) or
(Y) to the extent an Indemnitee is afforded greater rights or remedies than provided under the Charter or Bylaws, the agreements set forth on
Section 6.6
of the Company Disclosure Schedule. In
the event of any such Proceeding, Parent and the Surviving Corporation shall control the
defense of such Proceeding;
provided
,
however
, that neither Parent nor the Surviving Corporation shall
settle any such Proceeding without the prior written consent of the Indemnitee unless the Surviving Corporation assumes full responsibility for such settlement, the settlement grants the Indemnitee a
complete release in respect of the potential liability relating to the claims underlying such Proceeding and such settlement does not contain any admission detrimental to the Indemnitee. For a period
of six (6) years after the Effective
Time, Parent shall, to the extent permitted by applicable Law, cause the certificate of incorporation, bylaws or other organizational documents of the Surviving Corporation and its Subsidiaries to
contain provisions with respect to indemnification, advancement of expenses and limitation of director, officer and employee liability that are no less favorable to the Indemnitees than those set
forth in the Charter and By-laws and the Company's Subsidiaries' organizational documents as in effect on the date of this Agreement, which provisions thereafter shall not be amended,
repealed or otherwise modified in any manner that would adversely affect the rights thereunder of any Indemnitees. From and after the Effective Time, in the event the Surviving Corporation or any of
its Subsidiaries does not have sufficient funds to honor each of the respective agreements contained in this
Section 6.6(a)
in accordance with
their respective terms, Parent shall provide or cause to be provided to the Surviving Corporation or such Subsidiary, as the case may be, sufficient funds so that such Person may honor the applicable
agreements contained in this
Section 6.6(a)
.
(b) From
the Effective Time through the sixth (6th) anniversary of the Effective Time (the "
Tail Period
"), Parent shall, or
shall cause the Surviving Corporation to, maintain in effect the Company's current directors' and officers' liability insurance policies and fiduciary liability insurance policies covering each
officer and director currently covered by the Company's directors' and officers' liability insurance policies and fiduciary liability insurance policies for acts or omissions occurring prior to the
Effective Time with respect to any matter claimed against such Person by reason of him or her serving in such capacity on terms with respect to such coverage and amounts no less favorable in the
aggregate than those of such policies in effect on the date of this Agreement;
provided
, that the Surviving Corporation may (i) substitute
therefor policies of any reputable insurance company or (ii) satisfy its obligation under this
Section 6.6(b)
by obtaining prepaid (or
"tail") directors' and officers' liability insurance policies and fiduciary liability insurance policies, in each case, the material terms of which, including coverage and amount, are no less
favorable in the aggregate to such directors and officers than the insurance coverage otherwise required under this
Section 6.6(b)
;
provided
,
further
, that in no event shall the aggregate costs of any of the foregoing insurance policies
exceed in any one year during the Tail Period 250% of the current aggregate annual premiums paid by the Company for such purpose (the Company's current aggregate annual premiums are set forth in
Section 6.6(b)
of the Company Disclosure Schedule); for the avoidance of doubt, it being understood that in such case Parent or the Surviving
Corporation shall nevertheless be obligated to obtain such coverage, with respect to each year during the Tail Period, as may be obtained for 250% of the current aggregate annual premium paid by the
Company.
(c) The
Indemnitees to whom this
Section 6.6
applies shall be third party beneficiaries of this
Section 6.6
. The provisions of this
Section 6.6
are intended to be for the benefit of each
Indemnitee and his or her successors, heirs or representatives. Parent shall pay or cause to be paid all reasonable expenses, including attorneys' fees, that may be incurred by any Indemnitee in
successfully enforcing the indemnity and other obligations provided in this
Section 6.6
.
(d) The
rights of each Indemnitee under this
Section 6.6
shall be in addition to any rights such Person may have under
the Charter or By-laws (or equivalent organizational or governing documents of
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any
of the Company's Subsidiaries), certificate of incorporation, bylaws or other organizational documents of the Surviving Corporation, the indemnification, employment or other similar agreements
between any Indemnitee and the Company or any of its Subsidiaries set forth on
Section 6.6
of the Company Disclosure Schedule, or under any
applicable Law.
(e) Notwithstanding
any other provision of this Agreement, this
Section 6.6
shall survive the consummation of the
Merger indefinitely and shall be binding on all successors and assigns of the Surviving Corporation and its Subsidiaries, and shall be enforceable by the Indemnitees and their successors, heirs or
representatives. In the event that the Surviving Corporation or any of its successors or assigns consolidates with or merges into any other Person and shall not be the continuing or surviving
corporation or entity of such consolidation or merger or transfers or conveys all or a majority of its properties and assets to any Person, then, and in each such case, Parent shall ensure that proper
provision shall be made so that the successors and assigns of the Surviving Corporation shall assume and succeed to the obligations set forth in this
Section 6.6
.
Section 6.7
Notification of Certain Matters.
From and after the date
hereof until the earlier to occur of the termination of this Agreement pursuant to
Section 9.1
and the Effective Time, the Company shall give
prompt notice to Parent, and Parent and Merger Sub shall give prompt notice to the Company, upon receiving Knowledge of (a) any notice, complaint, investigation or hearing (or communications
indicating that the same may be contemplated) of any Governmental Authority in connection with this Agreement, the Merger or the transactions contemplated hereby, (b) any written notice of any
Person (other than a Governmental Authority) alleging that the consent of such Person is or may be required in connection with the Merger or the transactions contemplated hereby, if the subject matter
of such communication could be material to the Company, the Surviving Corporation or Parent, (c) any Proceeding commenced or, to such party's Knowledge, threatened in writing against, relating
to or involving or otherwise affecting such party or any of its Subsidiaries which relate to this Agreement, the Merger or the transactions contemplated hereby, (d) any fact, event or
circumstance that would cause or constitute a material breach of any of its representations, warranties, covenants or agreements contained herein, or (e) any material change, effect or
circumstance that would reasonably be expected to give rise to a failure of a condition precedent in
Section 7.2
(in the case of the Company) and
Section 7.3
(in the case of Parent);
provided
,
however
, that no such notification shall affect the representations,
warranties, covenants or agreements of the parties herein or the conditions to the
obligations of the parties hereunder or the remedies available hereunder to any Party;
provided, further
, that a failure to give prompt notice pursuant
to this
Section 6.7
shall not of itself constitute a breach giving rise to the failure of a condition to the Merger set forth in
Article VII
except to the extent that the underlying fact or circumstance not so notified would standing alone constitute a breach giving rise to
such a failure.
Section 6.8
Public Announcements.
The initial press release(s) announcing
the execution of this Agreement shall be in a form mutually agreed upon by Parent and the Company. Parent and the Company shall consult with each other before issuing, and, to the extent practicable,
give each other a reasonable opportunity to review and comment on, any other press release or other public announcements with respect to this Agreement or the transactions contemplated
hereby, and shall not issue any such press release or make any such public announcement prior to such consultation, except to the extent the disclosing party determines based on advice of counsel it
is required to do so by applicable Law, court process or the rules and regulations of any national securities exchange or national securities quotation system, in which case such party shall use
reasonable best efforts to consult with the other party before issuing any such release or making any such public announcement. Notwithstanding any other provision of this Agreement, (i) the
Company will no longer be required to consult with Parent in connection with any such press release or public announcement if the Company Board has effected any Change in Recommendation or shall have
resolved to do so and (ii) the requirements of this
Section 6.8
shall not apply to any disclosure by Company or Parent of any
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information
concerning this Agreement or the transactions contemplated hereby in connection with any dispute between the parties regarding this Agreement, the Merger or the transactions contemplated
by this Agreement. Upon Parent's request, (x) the Company and Parent shall promptly prepare a mutually acceptable joint written presentation to Institutional Shareholder Services recommending
this Agreement and the transactions contemplated hereby, including the Merger, (y) the Company shall request a meeting with Institutional Shareholder Services for purposes of obtaining its
recommendation of the approval of this Agreement by the stockholders of the Company and (z) the Company shall reasonably cooperate with Parent to obtain such recommendation.
Section 6.9
Employee Matters.
(a) From
and after the Effective Time, Parent will, and will cause the Surviving Corporation to, honor, in accordance with their terms, all existing employment, change in
control and severance agreements between the Company or any of its Subsidiaries and any officer, director or employee of the Company or any of its Subsidiaries.
(b)
Continuing Employees
.
(i) During
the one (1)-year period commencing at the Effective Time or such shorter period as the applicable employee may be employed, Parent shall provide or
shall cause the Surviving Corporation to provide to each person who is an employee of the Company or any of its Subsidiaries immediately prior to the Effective Time and who continues as an employee of
the Surviving Corporation or any of its affiliates (each, a "
Company Employee
") a base salary or wage rate and annual cash bonus opportunity at least
equal to the Company Employee's base salary or wage rate and annual bonus opportunity in effect as of immediately prior to the Effective Time and benefits (other than with respect to equity or equity
based-awards) that are, in the aggregate, substantially no less favorable than those in effect immediately prior to the Effective Time.
(ii) For
purposes of eligibility and vesting under the compensation and benefit plans, programs agreements and arrangements of Parent, the Company, the Surviving Corporation
or any respective Subsidiary and Affiliate thereof providing benefits to any Company Employees after the Merger Closing (the "
New Plans
"), and benefit
accrual solely for purposes of determining accrual of vacation and severance benefits under New Plans, if applicable, each Company Employee shall be credited with his or her years of service with the
Company (including any predecessor), the Company Subsidiaries and their respective Affiliates (and any additional service with any predecessor employer) before the Merger Closing, to the same extent
as such Company Employee was entitled, before the Merger Closing, to credit for such service under any similar Company Benefit Plan. In addition, and without limiting the generality of the foregoing:
(i) each Company Employee shall be immediately eligible to participate, without any waiting time, in any and all New Plans to the extent coverage under such New Plan replaces coverage under a
comparable Company Benefit Plan in which such Company Employee participated immediately before the replacement; and (ii) for purposes of each New Plan providing medical, dental, pharmaceutical
and/or vision benefits to any Company Employee, Parent shall cause all pre-existing condition exclusions and actively-at-work requirements of such New Plan to be
waived for such employee and his or her covered dependents to the extent such exclusions or requirements were waived or satisfied under the comparable Company Benefit Plan, and Parent shall cause any
eligible expenses incurred by such employee and his or her covered dependents under a Company Benefit Plan during the portion of the plan year prior to the Effective Time to be taken into account
under such New Plan for purposes of satisfying all deductible, co-insurance, co-payment and maximum out-of-pocket requirements applicable to such
Company Employee and his or her covered dependents for the applicable plan year as if such amounts had been paid in accordance with such New Plan.
(iii) Notwithstanding
anything in this
Section 6.9
, the terms and conditions of employment for any Company Employees
that are governed by a collective bargaining agreement immediately prior
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to
the Merger Closing shall continue to be governed by such collective bargaining agreement as of the Merger Closing until the expiration, termination or modification of such agreement in accordance
with its terms or applicable Law.
(c) Prior
to making any broad-based or otherwise material written communication to any current or former employee of the Company or any of its Subsidiaries relating to the
transactions contemplated hereby, the Company or its Subsidiaries shall provide Parent with a reasonable opportunity to review and comment on, and consent to (which consent shall not be unreasonably
withheld, conditioned or delayed) such communication.
(d) This
Section 6.9
shall be binding upon and inure solely to the benefit of each of the parties to this Agreement,
and nothing in this
Section 6.9
or any other provision in this Agreement, express or implied, is intended to confer upon any other Person any
rights or remedies of any nature whatsoever under or by reason of this
Section 6.9
or any other provision of this Agreement or is intended to be,
shall constitute or be construed as an amendment to or modification of the Company Benefit Plans or any other employee benefit plan or arrangement of the Company, Parent or any of their respective
Affiliates unless this Agreement explicitly states that the provision "amends" such Company Benefit Plan, or any other employee benefit plans or arrangements, or limit in any way the right of the
Company, Parent or any of their respective Affiliates to amend, modify or terminate any Company Benefit Plan or any other employee benefit plans or arrangements. This shall not prevent the parties
entitled to enforce this Agreement from enforcing any provision in this Agreement, but no other party shall be entitled to enforce any provision in this Agreement on the grounds that it is an
amendment to such Company Benefit Plan or arrangement. If a party not entitled to enforce this Agreement brings a lawsuit or other action to enforce any provision in this Agreement as an amendment to
such Company Benefit Plan or arrangement and that provision is construed to be such an amendment despite not being explicitly designated as one in this Agreement, that provision shall lapse
retroactively as of its inception, thereby precluding it from having any amendatory effect. Nothing in this
Section 6.9
or any other provision in
this Agreement shall limit the right of Parent, the Surviving Corporation or any of their Subsidiaries to terminate the employment of any Company Employee at any time following the Effective Time.
Section 6.10
Rule 16b-3 Matters.
Prior to the
Effective Time, the Company may take such further actions, if any, as may be reasonably necessary or appropriate to ensure that the dispositions of equity securities of the Company (including
derivative securities) pursuant to the transactions contemplated by this Agreement by any officer or director of the Company who is subject to Section 16 of the Exchange Act are exempt under
Rule 16b-3 promulgated under the Exchange Act.
Section 6.11
Credit Facility.
The Company shall, with immediately
available funds provided by Parent or otherwise available to the Company, at the Effective Time, repay in full all indebtedness (and other amounts required to be repaid) under the Credit Facility and
terminate all commitments, obligations and agreements under the Credit Facility, and the Company shall obtain customary pay-off letters and the release of related Liens, including the
related filings and return of collateral (including certificated securities), in each case in form and substance reasonably acceptable to Parent. In connection therewith, Parent shall take all actions
reasonably requested by the Company to facilitate such prepayment and termination which actions shall include, without limitation, Parent depositing or causing to be deposited, not later than the
Effective Time, with the Credit Facility Agent all amounts specified by the Credit Facility Agent as being necessary to cash collateralize any letters of credit and bankers acceptances outstanding
under the Credit Facility and to prepay all indebtedness under the Credit Facility (including any fees, expenses, costs, commitment fees, penalties, and other amounts payable to the Credit Facility
Agent or the Credit Facility Lenders under the Credit Facility). Unless the Credit Facility Agent has otherwise waived or
modified any notice requirements under the Credit Facility Agreement, the Company, in consultation with Parent, will provide the advance notice required under the Credit Facility Agreement, if any, of
its intention to repay all indebtedness under the Credit
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Facility
and to terminate the commitments of the Credit Facility Lenders thereunder as of the anticipated date that the Effective Time will occur, as determined by mutual agreement of the Company and
Parent, as specified in such notice (the "
Anticipated Prepayment Date
"). In the event that the actual date of such repayment and termination does not
occur on the Anticipated Prepayment Date as a result of the breach of this Agreement by Parent or Merger Sub, Parent shall reimburse the Company for any actual out-of-pocket
costs or expenses that the Company or any of its Subsidiaries incurs as a direct result of the failure of the Company to so repay such indebtedness and terminate such commitments on the Anticipated
Prepayment Date.
Section 6.12
Stockholder Litigation.
The Company shall give Parent
reasonable opportunity to participate in the defense or settlement of any stockholder litigation against the Company and/or its directors relating to the transactions contemplated by this Agreement;
provided
, that neither the Company nor any of its Subsidiaries or their respective Representatives shall compromise, settle, come to an arrangement
regarding any such stockholder litigation or consent to the same unless Parent shall have consented in writing (such consent not to be unreasonably withheld, conditioned or delayed);
provided
,
further
, that after receipt of the Requisite Stockholder Approval, the Company shall cooperate
with Parent with respect to, and, if requested by Parent, use its reasonable best efforts to defend or to settle, any unresolved stockholder litigation in accordance with Parent's direction. Any such
participation by Parent will be at Parent's sole cost and expense.
ARTICLE VII
CONDITIONS TO THE MERGER
Section 7.1
Conditions to the Obligations of Each Party.
The respective
obligations of each party to consummate the Merger are subject to the satisfaction or (to the extent permitted by Law) waiver by the Company and Parent at or prior to the Merger Closing Date of the
following conditions:
(a) the
Requisite Stockholder Approval shall have been obtained;
(b) (i)
The waiting period (or any extension thereof) applicable to the consummation of the Merger under the HSR Act shall have expired or early termination thereof shall
have been obtained and (ii) antitrust approval of, or expiration or early termination of waiting period (or any extension thereof) applicable to, the consummation of the Merger under the
Foreign Antitrust Laws listed on
Section 7.1(b)
of the Company Disclosure Schedule shall have been granted or shall have occurred; and
(c) no
Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Law or Order (collectively,
"
Restraints
") or commenced any Proceeding, which is then pending or in effect that, in any case, seeks to enjoin, prohibit or make illegal or enjoins,
prohibits or makes illegal the consummation of the Merger.
Section 7.2
Conditions to the Obligations of Parent and Merger Sub.
In
addition to the conditions set forth in
Section 7.1
, the respective obligations of Parent and Merger Sub to consummate the Merger are subject to
the satisfaction or (to the extent permitted by Law) waiver by Parent at or prior to the Merger Closing Date of the following further conditions:
(a) each
of the representations and warranties of the Company (i) set forth in
Section 4.2(a)
and the first
three sentences of
Section 4.2(b)
(Capitalization; Subsidiaries),
Section 4.3
(Authority
Relative to Agreement) and the first sentence of
Section 4.9(a)
(Absence of Certain Changes or Events), shall be true and correct in all respects
at and as of the date of this Agreement and the Merger Closing Date (except, with respect to
Section 4.2(a)
, to the extent that any inaccuracies
would be de minimis, in the aggregate) and (ii) set forth in
Article IV
hereof (other than
Section 4.2(a)
, the first three sentences of
Section 4.2(b)
,
Section 4.3
, and the first sentence of
Section 4.9(a)
), without giving effect
to any
qualifications as to materiality or Material Adverse
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Effect
or other similar qualifications contained therein, shall be true and correct at and as of the date of this Agreement and the Merger Closing Date (except to the extent expressly made as of an
earlier date, in which case as of such date), except in the case of this clause (ii) for such failures to be true and correct as have not had, individually or in the aggregate, a Material
Adverse Effect;
(b) the
Company shall have performed or complied in all material respects with each agreement and covenant required by this Agreement to be performed or complied with by it
on or prior to the Merger Closing Date;
(c) since
the date of this Agreement, there shall not have occurred any change, event, effect or circumstance that, individually or in the aggregate, has had a Material
Adverse Effect; and
(d) the
Company shall have delivered to Parent a certificate, dated the Merger Closing Date and signed by an executive officer of the Company, certifying to the effect that
the conditions set forth in
Section 7.2(a), Section 7.2(b)
and
Section 7.2(c)
have
been satisfied.
Section 7.3
Conditions to the Obligations of the Company.
In addition to
the conditions set forth in
Section 7.1
, the obligations of the Company to consummate the Merger are subject to the satisfaction or (to the
extent permitted by Law) waiver by the Company at or prior to the Merger Closing Date of the following further conditions:
(a) each
of the representations and warranties of Parent and Merger Sub contained in this Agreement, without giving effect to any qualifications as to materiality or other
similar qualifications contained therein, shall be true and correct at and as of the date of this Agreement and the Merger Closing Date (except to the extent expressly made as of an earlier date, in
which case as of such date), except for such failures to be true and correct as would not reasonably be expected to, individually or in the aggregate, materially impair the ability of Parent or Merger
Sub to consummate the Merger;
(b) Parent
and Merger Sub shall have performed or complied in all material respects with each agreement and covenant required by this Agreement to be performed or complied
with by them on or prior to the Merger Closing Date; and
(c) Parent
shall have delivered to the Company a certificate, dated the Merger Closing Date and signed by an executive officer of Parent, certifying to the effect that the
conditions set forth in
Section 7.3(a)
and
Section 7.3(b)
have been satisfied.
Section 7.4
Frustration of Closing Conditions.
Neither Parent nor Merger
Sub may rely on the failure of any conditions set forth in
Section 7.1
or
Section 7.2
to
be satisfied if such failure was caused by Parent's or Merger Sub's breach of this Agreement. The Company may not rely on the failure of any conditions set forth in
Section 7.1
or
Section 7.3
to be satisfied if such failure was caused by the Company's
breach of this Agreement.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
Section 8.1
Termination.
Notwithstanding anything to the contrary
contained in this Agreement, this Agreement may be terminated at any time prior to the Effective Time, whether before or after the Requisite Stockholder Approval is obtained (except as otherwise
expressly noted), as follows:
(a) by
mutual written consent of each of Parent and the Company; or
(b) by
either Parent or the Company, if:
(i) the
Effective Time shall not have occurred on or before 5:00 p.m. (New York City time) on January 21, 2014 (the "
Outside
Date
");
provided
,
however
, that if the conditions set
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forth
in
Section 7.1(b)
or
Section 7.1(c)
shall not have been satisfied or duly waived by
all parties entitled to the benefit of such condition by the second (2nd) Business Day prior to the Outside Date (and all other conditions set forth in
Article VII
have been satisfied or shall be
capable of being satisfied), either Parent or the Company may, by written notice delivered to such
other party, extend the Outside Date until April 21, 2014 (such date as may be extended, the "
Termination Date
");
provided
,
further
, that the right to terminate this Agreement pursuant to this
Section 8.1(b)(i)
shall not be available to a party if such party has breached or violated any
of its covenants, agreements or other obligations
hereunder and such breach or violation has been the principal cause of or directly resulted in (1) the failure to satisfy the conditions to the obligations of the terminating party to
consummate the Merger set forth in
Article VII
prior to the Termination Date or (2) the failure of the Merger Closing to occur by the
Termination Date; or
(ii) any
Restraint shall be in effect enjoining or otherwise prohibiting the consummation of the Merger, and such Restraint shall have become final and
non-appealable;
provided
,
however
, that the party seeking to terminate this Agreement
pursuant to this
Section 8.1(b)(ii)
shall have complied with its obligations under
Section 6.3
to prevent, oppose or remove such Restraint; or
(iii) the
Requisite Stockholder Approval shall not have been obtained at the Stockholders' Meeting duly convened therefor or at any adjournment or postponement thereof; or
(c) by
the Company if:
(i) Parent
or Merger Sub shall have breached or failed to perform any of their respective representations, warranties, covenants or other agreements set forth in this
Agreement, which breach or failure to perform (x) would give rise to a failure of a condition set forth in
Section 7.1
,
Section 7.3(a)
or
Section 7.3(b)
and (y) (A) is not capable of being cured prior to
the Termination Date or (B) is not cured by Parent or Merger Sub on or before the earlier of (i) the Termination Date and (ii) the date that is thirty (30) days following
the receipt by Parent of written notice from the Company of such breach or failure;
provided
,
however
,
that if such notice is received within five (5) Business Days of the Termination Date, the Termination Date shall be extended by five (5) Business Days; and
provided
,
further
, that the Company shall not have a right to terminate this Agreement pursuant to this
Section 8.1(c)(i)
if the Company is then in material breach of any of
its representations, warranties, covenants or agreements hereunder; or
(ii) prior
to receipt of the Requisite Stockholder Approval, the Company Board has determined to enter into a definitive Alternative Acquisition Agreement with respect to a
Superior Proposal to the extent permitted by, and subject to the terms and conditions of
Section 6.5(d)
and
Section 6.5(e)
, so long as the
Company (A) concurrently with such termination pays, or causes to be paid, to Parent the Company
Termination Fee specified in
Section 8.3(a)(ii)
and (B) substantially concurrently with such termination enters into such Alternative
Acquisition Agreement.
(d) by
Parent:
(i) if
the Company shall have breached or failed to perform any of its representations, warranties, covenants or other agreements set forth in this Agreement, which breach
or failure to perform (x) would give rise to the failure of any condition set forth in
Section 7.1
,
Section 7.2(a)
or
Section 7.2(b)
and (y) (A) is not capable of being cured prior to
the Termination Date or (B) is not cured by the Company on or before the earlier of (i) the Termination Date and (ii) the date that is thirty (30) days following the
receipt by the
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Company
of written notice from Parent of such breach or failure;
provided
,
however
, that if such notice
is received within five (5) Business Days of the Termination Date, the Termination Date shall be extended by five (5) Business Days; and
provided
,
further
, that Parent shall not have a right to terminate this Agreement pursuant to this
Section 8.1(d)(i)
if Parent or Merger Sub is then in material breach of any of its representations, warranties, covenants or agreements
hereunder; or
(ii) in
the event that (A) the Company shall have failed to include the Company Board Recommendation in the Proxy Statement distributed to its stockholders,
(B) a Change in Recommendation has occurred, or (C) the Company, any Affiliate of the Company, or any employee, officer or director of the Company or of any Affiliate of the Company
shall have committed an Intentional Breach of the obligations or agreements contained in
Section 6.5
in any material respect or authorized or
permitted any of their respective Representatives to take any action in breach of the obligations or agreements contained in
Section 6.5
in any
material respect, and, in either case, such breach gave rise to an Acquisition Proposal;
provided
,
however
, that Parent shall no longer be entitled to
terminate this Agreement pursuant to this
Section 8.1(d)(ii)
once the Requisite Stockholder Approval has been obtained at the Stockholders' Meeting.
Section 8.2
Effect of Termination.
In the event that this Agreement is
terminated in accordance with
Section 8.1
, written notice thereof shall be given to the other party or parties, specifying the provisions hereof
pursuant to which such termination is made and the basis therefor described in reasonable detail, and, except as set forth in this
Section 8.2
,
this Agreement shall forthwith become null and void and of no effect without liability on the part of any party hereto (or any of its Representatives), and all rights and obligations of any party
hereto shall cease;
provided
, that if (x) such termination resulted, directly or indirectly, from the Intentional Breach of any representation,
warranty, covenant or other agreement contained herein or (y) the Intentional Breach of any representation, warranty, covenant or other agreement contained herein shall cause the Merger Closing
not to occur, then, notwithstanding such termination, such breaching party shall be fully liable for any and all Damages as a result of such Intentional Breach;
provided
,
further
that the Confidentiality Agreement, and the provisions of
Section 4.26
,
Section 5.7
,
Section 6.4
(last two sentences only),
Section 6.11
(last sentence only)
Article I
,
Article VIII
and
Article IX
shall survive any termination of this Agreement.
Section 8.3
Termination Fees.
(a)
Termination Fees Payable.
If the Agreement is terminated by:
(i) (x)
either Parent or the Company pursuant to
Section 8.1(b)(iii)
or by Parent pursuant to
Section 8.1(d)(i)
, and (y) (A) the Company receives or
has received an Acquisition Proposal from a Third Party after the date hereof or an
Acquisition Proposal shall have become publicly known prior to such termination, and (B) within twelve (12) months of such termination of this Agreement, the Company enters into a
definitive agreement with respect to an Acquisition Proposal or the Company Board (or a committee thereof) recommends an Acquisition Proposal to the stockholders of the Company and an Acquisition
Proposal is subsequently consummated (for the avoidance of doubt, such consummation may be during or after such 12-month period), then the Company shall pay, or cause to be paid, to Parent
an amount equal to $20,000,000 (Twenty Million Dollars) (the "
Company Termination Fee
") by wire transfer of immediately available funds not later than
the second (2nd) Business Day following the date of the consummation of an Acquisition Proposal (
provided
,
however
, that for purposes of this
Section 8.3(a)(i)
, the references to "twenty percent (20%)" in
the definition of Acquisition Proposal shall be deemed to be references to "fifty percent (50%)");
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(ii) the
Company pursuant to
Section 8.1(c)(ii)
, then the Company shall pay, or cause to be paid, to Parent the
Company Termination Fee by wire transfer of immediately available funds substantially concurrently with, and as a condition to, such termination;
(iii) Parent
pursuant to
Section 8.1(d)(ii)
, then the Company shall pay, or cause to be paid, to Parent the Company
Termination Fee by wire transfer of immediately available funds not later than the second (2nd) Business Day following such termination; and
(iv) either
Parent or the Company pursuant to
Section 8.1(b)(iii)
or by Parent pursuant to
Section 8.1(d)(i)
, then the Company shall pay to Parent an amount
equal to the sum of all documented, reasonable
out-of-pocket expenses (including all fees and expenses of counsel, accountants, investment bankers, experts and consultants to a party hereto and its Affiliates) incurred by
Parent or Merger Sub or on their behalf in connection with or related to the authorization, preparation, negotiation, execution and performance of this Agreement not to exceed $7,500,000 (the
"
Parent Expenses
") by wire transfer of immediately available funds not later than the second (2nd) Business Day following such termination.
(b)
Certain Limitations.
(i) Notwithstanding
anything to the contrary contained in this Agreement:
(1) in
no event shall the Company be required to pay the Parent Expenses on more than one occasion, and
(2) (x)
in no event shall the Company be required to pay the Company Termination Fee on more than one occasion, and (y) in the event the Parent Expenses have already
been paid under
Section 8.3(a)(iv)
, the Company shall be entitled to credit the amount of the Parent Expenses actually paid against the amount of
the Company Termination Fee it is required to pay under
Section 8.3(a)(i)
.
(ii) Notwithstanding
anything to the contrary contained in this Agreement, but subject to
Section 9.9
(which shall not
be limited by this
Section 8.3(b)(ii)
), in the event the Termination Fee is paid by the Company as required pursuant to
Section 8.3(a)
, Parent's
right to receive payment from the Company of the Company Termination Fee and the Parent Expenses pursuant to
Section 8.3(a)
shall constitute the sole and exclusive remedy of Parent, Merger Sub and
their Affiliates and Representatives against the Company
and its Subsidiaries and any of their respective former, current or future general or limited partners, stockholders, members, managers, directors, officers, employees, agents, Affiliates or assignees
(collectively, the "
Company Related Parties
") for all Damages suffered as a result of the failure of the transactions contemplated by this Agreement to
be consummated or for a breach or failure to perform hereunder or otherwise, and upon payment of such amount, none of the Company Related Parties shall have any further liability or obligation
relating to or arising out of this Agreement or the transactions contemplated thereby (except that, to the extent any termination of this Agreement resulted, directly or indirectly, from an
Intentional Breach of this Agreement by the Company, Parent shall be entitled to both the payment of the Company Termination Fee and/or the Parent Expenses (in each case to the extent owed pursuant to
Section 8.3(a)
) and to any Damages, to the extent proven, in respect of such Intentional Breach (as reduced by any Company Termination Fee or
Parent Expenses previously paid by the Company).
(c)
Integral Part of Transaction.
Each of the parties hereto acknowledges that (i) the agreements
contained in this
Section 8.3
are an integral part of the transactions contemplated by this Agreement, (ii) the Company Termination Fee is
not a penalty, and except as set forth in
Section 8.3(b)(ii)
, constitutes liquidated damages, in a reasonable amount that will compensate Parent
in the circumstances in which such fee is payable for the efforts and resources expended and opportunities foregone while negotiating this Agreement and in reliance on this Agreement and on the
expectation of
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the
consummation of the transactions contemplated hereby, which amount would otherwise be impossible to calculate with precision, and (iii) without these agreements, the parties would not enter
into this Agreement. If the Company fails to pay the Company Termination Fee and/or the Parent Expenses pursuant to this
Section 8.3
when due,
and, in order to obtain such payment, Parent commences a suit that results in a judgment against the Company for the Company Termination Fee and/or the Parent Expenses, as the case may be, the Company
shall pay to Parent its costs and expenses (including attorneys' fees and expenses) incurred in connection with such suit, together with interest on the amount of the Company Termination Fee or the
Parent Expenses, as the case may be, from the date such payment was required to be made until the date of payment at the prime rate of JPMorgan Chase Bank, N.A. in effect on the date such payment was
required to be made.
Section 8.4
Amendment.
This Agreement may be amended by mutual agreement
of the parties hereto by action taken by or on behalf of their respective boards of directors at any time before or after receipt of the Requisite Stockholder Approval;
provided
,
however
, that after the Requisite Stockholder Approval has been obtained, there shall not be
any amendment that by Law requires further approval by the stockholders of the Company without such further approval of such stockholders. This Agreement may not be amended except by an instrument in
writing signed by each of the parties hereto.
Section 8.5
Extension; Waiver.
At any time prior to the Effective Time,
subject to applicable Law, any party hereto may (a) extend the time for the performance of any obligation or other act of any other party hereto, (b) waive any inaccuracy in the
representations and warranties of the other party contained herein or in any document delivered pursuant hereto, and (c) subject to the proviso of the first sentence of
Section 8.4
, waive
compliance with any agreement or condition contained herein. Notwithstanding the foregoing, no failure or delay by the
Company, Parent or Merger Sub in exercising any right hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise of any other
right hereunder. Any agreement on the part of a party to any extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party.
Section 8.6
Expenses.
Except as expressly set forth herein (including
Section 8.2
and
Section 8.3
), all fees and expenses incurred in connection with this
Agreement, the Merger and the other transactions contemplated by this Agreement shall be paid by the party incurring such fees or expenses, whether or not the Merger or any of the other transactions
contemplated by this Agreement are consummated.
ARTICLE IX
GENERAL PROVISIONS
Section 9.1
Non-Survival of Representations, Warranties and
Agreements.
The representations, warranties, covenants and agreements in this Agreement and any certificate delivered pursuant hereto by any Person shall terminate
at the Effective Time, except that this
Section 9.1
shall not limit any covenant or agreement of the parties which by its terms contemplates
performance in whole or in part after the Effective Time, including those contained in
Article III
,
Section 6.6
, and
Section 6.9
.
Section 9.2
Notices.
Any notice or other communication required to be
given hereunder shall be sufficient if in writing and sent by facsimile transmission (providing confirmation of transmission by the transmitting equipment) or e-mail of a .pdf attachment
(with confirmation of receipt by non-automated reply e-mail from the recipient);
provided
, that any notice received by facsimile
or e-mail transmission or otherwise at the addressee's location on any Business Day after 5:00 p.m. (New York City time) shall be deemed to have been received at 9:00 a.m.
(New York City time) on the next Business Day), by reliable overnight delivery service (with proof of service), hand delivery or certified or registered mail
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(return
receipt requested and first-class postage prepaid), addressed as follows (or at such other address for a party as shall be specified in a notice given in accordance with this
Section 9.2
):
if
to Parent or Merger Sub:
with
a copy (which shall not constitute notice) to:
if
to the Company:
Power-One, Inc.
740 Calle Plano
Camarillo, CA 93012
Phone: (805) 987-8741
Fax: (805) 383-5898
e-mail: Tina.Mcknight@power-one.com
Attention: Tina McKnight, Esq., General Counsel
with
a copy (which shall not constitute notice) to:
Section 9.3
Interpretation; Certain Definitions.
The parties have
participated jointly in the negotiation and drafting of this Agreement. Consequently, in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if
drafted jointly by the parties hereto, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement. When a
reference is made in this Agreement to an Article, Section, Appendix, Schedule, Annex or Exhibit, such reference shall be to an Article or Section of, or an Appendix, Schedule, Annex or Exhibit to,
this Agreement, unless otherwise indicated. The table of contents and headings for this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include," "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation." The words "hereof," "herein,"
"hereby," "hereto" and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole, including all Exhibits,
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Schedules
and Annexes and Appendices, and not to any particular provision of this Agreement. All terms defined in this Agreement shall have the defined meanings when used in any certificate or other
document made or delivered pursuant hereto unless otherwise defined herein. References to a Person are also to its successors and permitted assigns. The words "made available to Parent" or words of
similar import refer to documents (x) posted to the Electronic Data Room or (y) delivered in Person or electronically to Parent, Merger Sub or any of their respective Representatives.
The specification of any dollar amount in any representation or warranty contained in
Article IV
or
Article V
is not intended to imply that such
amount, or higher or lower amounts, are or are not material for purposes of this Agreement, and no
party shall use the fact of the setting forth of any such amount in any dispute or controversy between or among the parties as to whether any obligation, item or matter not described herein or
included in the Company Disclosure Schedule or the Parent Disclosure Schedule is or is not material for purposes of this Agreement. Words describing the singular number shall be deemed to include the
plural and vice versa, and words denoting any gender shall be deemed to include all genders.
Section 9.4
Severability.
If any term or other provision of this
Agreement is held by a court of competent jurisdiction or other authority to be invalid, void, illegal or incapable of being enforced under any present or future Law or public policy, (a) such
term or other provision shall be fully separable, (b) this Agreement shall be construed and enforced as if such invalid, illegal or unenforceable provision had never comprised a part hereof,
and (c) all other conditions and provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable term or other provision or
by its severance herefrom 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 determination that
any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible to the fullest extent permitted by applicable Law in a mutually acceptable manner in order that the transactions contemplated hereby are fulfilled as originally
contemplated to the fullest extent possible.
Section 9.5
Assignment.
Neither this Agreement nor any rights, interests
or obligations hereunder shall be assigned or delegated by any of the parties hereto (whether by operation of Law or otherwise) without the prior written consent of the other parties hereto, except
that Parent may assign its rights and delegate its obligations hereunder to any direct or indirect wholly owned subsidiary of Parent so long as Parent remains ultimately liable for all of Parent's
obligations hereunder. No assignment by any party hereto shall relieve such party of any of its obligations hereunder. Subject to the foregoing, this Agreement will be binding upon, inure to the
benefit of, and be enforceable by, the parties and their respective successors and assigns.
Section 9.6
Entire Agreement.
This Agreement (including the Exhibits,
Schedules, Annexes and Appendices hereto and other documents delivered pursuant hereto) constitutes, together with the Confidentiality Agreement, the Company Disclosure Schedule and the Parent
Disclosure Schedule, the entire agreement, and supersedes all other prior agreements and understandings, both written and oral, among the parties and their Affiliates, or any of them, with respect to
the subject matter hereof.
Section 9.7
No Third-Party Beneficiaries.
This Agreement is not intended
to and shall not confer any rights or remedies upon any Person other than the parties hereto and their respective successors and permitted assigns, except for the rights to receive consideration after
the Effective Time under
Article III
(which shall be enforceable by the applicable holders of equity securities issued by the Company if the
Effective Time shall occur) and
Section 6.6
(which shall be enforceable by the Indemnitees). The representations and warranties in this Agreement
are the product of negotiations among the parties hereto and are for the sole benefit of the parties hereto. Any inaccuracies in such representations and warranties are subject to waiver by the
parties hereto in accordance with
Section 8.5
without notice or liability to any other Person. The representations and warranties in this
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Agreement
may represent an allocation among the parties hereto of risks associated with particular matters regardless of the Knowledge of any of the parties hereto. Accordingly, Persons other than the
parties hereto may not rely upon the representations and warranties in this Agreement as characterizations of actual facts or circumstances as of the date of this Agreement or as of any other date.
Section 9.8
Governing Law.
This Agreement and all actions, proceedings or
counterclaims (whether based on contract, tort or otherwise) arising out of or relating to this Agreement shall be governed by, and construed in accordance with the laws of the State of Delaware,
without giving effect to any choice or conflict of laws provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the Laws of any jurisdiction
other than the State of Delaware.
Section 9.9
Specific Performance.
(a) The parties agree that
irreparable damage for which monetary damages, even if available, would not be an adequate remedy, may occur in the event that the parties hereto do not perform the provisions of this Agreement
(including failing to take such actions as are required of it hereunder to consummate the transactions contemplated by this Agreement) in accordance with its specified terms or otherwise breach such
provisions. Accordingly, except as otherwise set forth in this
Section 9.9
, each of the parties acknowledges and agrees that the parties hereto
shall be entitled, without posting a bond or other indemnity, to an injunction, specific performance and other equitable relief to prevent breaches of this Agreement and to enforce specifically the
terms and provisions hereof, in addition to any other remedy to which they are entitled at law or in equity.
(b) Each
party hereby agrees not to raise any objections to the availability of the equitable remedy of specific performance to prevent or restrain breaches of this
Agreement by such party, and to specifically enforce the terms and provisions of this Agreement to prevent breaches or threatened breaches of, or to enforce compliance with, the covenants and
obligations of such Party under this Agreement all in accordance with the terms of this
Section 9.9
. Any party seeking an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement shall not be required to provide any bond or other security in connection with
such order or injunction all in accordance with the terms of this
Section 9.9
. The parties hereto further agree that (i) by seeking the
remedies provided for in this
Section 9.9
, a party shall not in any respect waive its right to seek any other form of relief that may be
available to a party under this Agreement in the event that this Agreement has been terminated or in the event that the remedies provided for in this
Section 9.9
are not available or otherwise are
not granted, and (ii) nothing set forth in this
Section 9.9
shall require any party hereto to institute any proceeding for (or limit any party's right to institute any proceeding for) specific
performance under this
Section 9.9
prior or as a condition to exercising any termination right under
Article VIII
, nor shall the commencement of
any legal proceeding pursuant to this
Section 9.9
or anything set forth in this
Section 9.9
restrict or limit any party's right
to terminate this Agreement in accordance with the terms of
Article VIII
or pursue any other remedies under this Agreement that may be available
then or thereafter.
Section 9.10
Consent to Jurisdiction.
(a) Each of Parent, Merger
Sub and the Company hereby irrevocably submits to the exclusive jurisdiction of the Court of Chancery of the State of Delaware and to the jurisdiction of the United States District Court for the State
of Delaware, for the purpose of any action, proceeding or counterclaim (whether based on contract, tort or otherwise) arising out of or relating to this Agreement and each of the parties hereto hereby
irrevocably agrees that all claims in respect to such action or proceeding may be heard and determined exclusively in any Delaware state or federal court.
(b) Each
of the parties hereto (a) irrevocably consents to the service of the summons and complaint and any other process in any other action or proceeding relating
to the transactions
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contemplated
by this Agreement, on behalf of itself or its property, by personal delivery of copies of such process to such party and nothing in this
Section 9.10
shall affect the right of any party to serve
legal process in any other manner permitted by Law, (b) consents to submit
itself to the personal jurisdiction of the Delaware Court of Chancery, any other court of the State of Delaware and any Federal court sitting in the State of Delaware in the event any dispute arises
out of this Agreement or the transactions contemplated by this Agreement, (c) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave
from any such court and (d) agrees that it will not bring any action relating to this Agreement or the transactions contemplated by this Agreement in any court other than the Delaware Court of
Chancery (or, if (but only if) the Delaware Court of Chancery shall be unavailable, any other court of the State of Delaware or any Federal court sitting in the State of Delaware). Each of Parent,
Merger Sub and the Company agrees that a final judgment in any action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner
provided by Law.
Section 9.11
Counterparts.
This Agreement may be executed in two or more
counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the
same agreement. Delivery of an executed counterpart of a signature page to this Agreement by facsimile transmission or by e-mail of a .pdf attachment shall be effective as delivery of a
manually executed counterpart of this Agreement.
Section 9.12
WAIVER OF JURY TRIAL.
EACH OF PARENT, MERGER SUB AND THE
COMPANY HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
THE ACTIONS OF PARENT, MERGER SUB OR THE COMPANY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT THEREOF.
Section 9.13
Parent Role.
Parent is acting solely as an obligor under
this Agreement, and not as a broker for Merger Sub.
[
Remainder of page intentionally left blank; signature page follows.
]
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IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this Agreement to be executed as of the date first written above by their respective officers
thereunto duly authorized.
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ABB LTD
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By:
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/s/ DR. ULRICH SPIESSHOFER
Name: Dr. Ulrich Spiesshofer
Title: Member of the Group Executive Committee
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By:
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/s/ DIANE DE SAINT VICTOR
Name: Diane de Saint Victor
Title: Member of the Group Executive Committee
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VERDI ACQUISITION CORPORATION
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By:
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/s/ DIANE DE SAINT VICTOR
Name: Diane de Saint Victor
Title: Secretary and General Counsel
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POWER-ONE, INC.
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By:
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/s/ RICHARD J. THOMPSON
Name: Richard J. Thompson
Title: President and Chief Executive Officer
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Exhibit A
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
POWER-ONE, INC.
I,
THE UNDERSIGNED, in order to form a corporation for the purposes hereinafter stated, under and pursuant to the provisions of the General Corporation Law of the State of
Delaware (the "
Delaware General Corporation Law
"), do hereby certify as follows:
FIRST: The
name of the corporation is Power-One, Inc. (hereinafter referred to as the "
Corporation
").
SECOND: The
registered office of the Corporation is to be located at 1209 Orange Street, in the City of Wilmington, in the County of New Castle, in the State of Delaware,
19801. The name of its registered agent at that address is The Corporation Trust Company.
THIRD: The
purpose of the Corporation is to engage in any lawful act or activity for which a corporation may be organized under the Delaware General Corporation Law. The
Corporation shall have perpetual existence.
FOURTH: The
total number of shares of capital stock that the Company has authority to issue is 1,000 shares, which will be designated common stock, par value $0.001 per
share.
FIFTH: The
following provisions are inserted for the management of the business and for the conduct of the affairs of the Corporation, and for further definition, limitation
and regulation of the powers of the Corporation and of its directors and stockholders:
(1) The
number of directors of the Corporation shall be such as from time to time shall be fixed by, or in the manner provided in, the by-laws. Election of
directors need not be by ballot unless the by-laws so provide.
(2) The
Board of Directors shall have powers without the assent or vote of the stockholders to make, alter, amend, change, add to or repeal the by-laws of the
Corporation; to fix and vary the amount to be reserved for any proper purpose; to authorize and cause to be executed mortgages and liens upon all or any part of the property of the Corporation; to
determine the use and disposition of any surplus or net profits; and to fix the times for the declaration and payment of dividends.
(3) The
directors in their discretion may submit any contract or act for approval or ratification at any annual meeting of the stockholders or at any meeting of the
stockholders called for the purpose of considering any such act or contract, and any contract or act that shall be approved or be ratified by the vote of the holders of a majority of the stock of the
Corporation which is represented in person or by proxy at such meeting and entitled to vote thereat (provided that a lawful quorum of stockholders
be there represented in person or by proxy) shall be as valid and as binding upon the Corporation and upon all the stockholders as though it had been approved or ratified by every stockholder of the
Corporation, whether or not the contract or act would otherwise be open to legal attack because of directors' interest, or for any other reason.
(4) In
addition to the powers and authorities hereinbefore or by statute expressly conferred upon them, the directors are hereby empowered to exercise all such powers and do
all such acts and things as may be exercised or done by the Corporation; subject, nevertheless, to the provisions of the statutes of Delaware, of this certificate, and to any by-laws from
time to time made by the
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stockholders;
provided, however, that no by-laws so made shall invalidate any prior act of the directors which would have been valid if such by-law had not been made.
SIXTH: The
Corporation shall, to the full extent permitted by Section 145 of the Delaware General Corporation Law, as the same exists or may hereafter be amended,
indemnify all persons whom it may indemnify pursuant thereto. To the fullest extent permitted by the Delaware General Corporation Law, as the same exists or may hereafter be amended, a director of the
Corporation shall not be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director. The liability of a director of the Corporation to the
Corporation or its stockholders for monetary damages shall be eliminated to the fullest extent permissible under applicable law in the event it is determined that Delaware law does not apply. The
Corporation is authorized to provide by bylaw, agreement or otherwise for indemnification of directors, offices, employees and agents for breach of duty to the Corporation and its stockholders in
excess of the indemnification otherwise permitted by applicable law. Any repeal or modification of this Article shall not result in any liability for a director with respect to any action or omission
occurring prior to such repeal or modification.
SEVENTH: Whenever
a compromise or arrangement is proposed between the Corporation and its creditors or any class of them and/or between the Corporation and its stockholders
or any class of them, any court of equitable jurisdiction within the State of Delaware, may, on the application in a summary way of the Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for the Corporation under the provisions of section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of
any receiver or receivers appointed for the Corporation under the provisions of section 279 of Title 8 of the Delaware Code order a meeting of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the Corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of
the creditors or class of creditors, and/or of
the stockholders or class of stockholders of the Corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of the Corporation as consequence of such compromise
or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class
of creditors, and/or on all the stockholders or class of stockholders, of the Corporation, as the case may be, and also on the Corporation.
EIGHTH: The
Corporation reserves the right to amend, alter, change or repeal any provision contained in this certificate of incorporation in the manner now or hereafter
prescribed by law, and all rights and powers conferred herein on stockholders, directors and officers are subject to this reserved power.
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Annex B
PERSONAL AND CONFIDENTIAL
April 21,
2013
Board
of Directors
Power-One, Inc.
740 Calle Plano
Camarillo, CA, 93012
Gentlemen:
You
have requested our opinion as to the fairness from a financial point of view to the holders (other than ABB Ltd ("ABB") and its affiliates) of the outstanding shares of common
stock, par value $0.001 per share (the "Shares"), of Power-One, Inc. (the "Company") of the $6.35 per Share in cash to be paid to such holders pursuant to the Agreement and Plan of
Merger, dated as of April 21, 2013 (the "Agreement"), by and among ABB, Verdi Acquisition Corporation, an indirect wholly owned subsidiary of ABB, and the Company.
Goldman,
Sachs & Co. and its affiliates are engaged in advisory, underwriting and financing, principal investing, sales and trading, research, investment management and
other financial and non-financial activities and services for various persons and entities. Goldman, Sachs & Co. and its affiliates and employees, and funds or other entities
in which they invest or with which they co-invest, may at any time purchase, sell, hold or vote long or short positions and investments in securities, derivatives, loans, commodities,
currencies, credit default swaps and other financial instruments of the Company, ABB, any of their respective affiliates and third parties, including Silver Lake Management, L.L.C. ("Silver Lake"), an
affiliate of the Company, and its affiliates and portfolio companies, or any currency or commodity that may be involved in the transaction contemplated by the Agreement (the "Transaction") for the
accounts of Goldman, Sachs & Co. and its affiliates and employees and their customers. We have acted as financial advisor to the Company in connection with, and have participated in
certain of the negotiations leading to, the Transaction. We expect to receive fees for our services in connection with the Transaction, all of which are contingent upon consummation of the
Transaction, and the Company has agreed to reimburse our expenses arising, and indemnify us against certain liabilities that may arise, out of our engagement. We have provided certain investment
banking services to ABB and its affiliates from time to time for which our Investment Banking Division has received, and may receive, compensation, including having acted as co-manager
with respect to the offering by ABB Finance B.V., a subsidiary of ABB, of its 2.625% Bonds due 2019 (aggregate principal amount €1,250,000,000) in March 2012; and as joint
bookrunner with respect to the offering by ABB Finance (USA) Inc., a subsidiary of ABB, of its 1.625% Notes due 2017 (aggregate principal amount $500,000,000) in May 2012, 2.875% Notes due 2022
(aggregate principal amount $1,250,000,000) in May 2012 and 4.375% Notes due 2042 (aggregate principal amount $750,000,000) in May 2012. We also have provided certain investment banking services to
Silver Lake and its affiliates and portfolio companies from time to time for which our Investment Banking Division has received, and may receive, compensation, including having acted as financial
advisor to Skype Global S.a.r.l., a former portfolio company of funds affiliated with Silver Lake, in connection with its sale to Microsoft Corporation in October 2011; and as joint bookrunner
with respect to the public offering by Intelsat (Luxembourg) S.A., a portfolio company of funds affiliated with Silver Lake, of its 6.75% Senior Notes due 2018 (aggregate principal amount
$500,000,000) in March 2013, 7.75% Notes due 2021 (aggregate principal amount $2,000,000,000) in March 2013, and 8.125% Notes due 2023 (aggregate principal amount $1,000,000,000) in March 2013. We may
also in the future provide investment banking services to the Company, ABB and their respective affiliates and Silver Lake and its affiliates and its affiliated portfolio companies for which our
Investment Banking Division may receive compensation. Affiliates of Goldman, Sachs & Co. also may have co-invested with Silver Lake and its affiliates from time to time
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Board
of Directors
Power-One, Inc.
April 21, 2013
Page 2
and
may have invested in limited partnership units of affiliates of Silver Lake from time to time and may do so in the future.
In
connection with this opinion, we have reviewed, among other things, the Agreement; annual reports to stockholders and Annual Reports on Form 10-K of the Company for
the five fiscal years ended December 30, 2012; certain interim reports to stockholders and Quarterly Reports on Form 10-Q of the Company; certain other communications from
the Company to its stockholders; certain publicly available research analyst reports for the Company; and certain internal financial analyses and forecasts for the Company prepared by its management,
as approved for our use by the Company (the "Forecasts"). We have also held discussions with members of the senior management of the Company regarding their assessment of the past and current business
operations, financial condition and future prospects of the Company; reviewed the reported price and trading activity for the Shares; compared certain financial and stock market information for the
Company with similar information for certain other companies the securities of which are publicly traded; reviewed the financial terms of certain recent business combinations in the power conversion
industry and in other industries; and performed such other studies and analyses, and considered such other factors, as we deemed appropriate.
For
purposes of rendering this opinion, we have, with your consent, relied upon and assumed the accuracy and completeness of all of the financial, legal, regulatory, tax, accounting and
other
information provided to, discussed with or reviewed by, us, without assuming any responsibility for independent verification thereof. In that regard, we have assumed with your consent that the
Forecasts have been reasonably prepared on a basis reflecting the best currently available estimates and judgments of the management of the Company. We have not made an independent evaluation or
appraisal of the assets and liabilities (including any contingent, derivative or other off-balance-sheet assets and liabilities) of the Company or any of its subsidiaries and we have not
been furnished with any such evaluation or appraisal. We have assumed that all governmental, regulatory or other consents and approvals necessary for the consummation of the Transaction will be
obtained without any adverse effect on the expected benefits of the Transaction in any way meaningful to our analysis. We have assumed that the Transaction will be consummated on the terms set forth
in the Agreement, without the waiver or modification of any term or condition the effect of which would be in any way meaningful to our analysis.
Our
opinion does not address the underlying business decision of the Company to engage in the Transaction, or the relative merits of the Transaction as compared to any strategic
alternatives that may be available to the Company; nor does it address any legal, regulatory, tax or accounting matters. This opinion addresses only the fairness from a financial point of view to the
holders (other than ABB and its affiliates) of Shares, as of the date hereof, of the $6.35 per Share in cash to be paid to such holders pursuant to the Agreement. We do not express any view on, and
our opinion does not address, any other term or aspect of the Agreement or Transaction or any term or aspect of any other agreement or instrument contemplated by the Agreement or entered into or
amended in connection with the Transaction, including, the fairness of the Transaction to, or any consideration received in connection therewith by, the holders of any other class of securities,
creditors, or other constituencies of the Company; nor as to the fairness of the amount or nature of any compensation to be paid or payable to any of the officers, directors or employees of the
Company, or class of such persons, in connection with the Transaction, whether relative to the $6.35 per Share in cash to be paid to the holders (other than ABB and its affiliates) pursuant to the
Agreement or otherwise. We are not expressing any opinion as to the impact of the Transaction on the solvency or viability of the Company or ABB or the ability of
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Board
of Directors
Power-One, Inc.
April 21, 2013
Page 3
the
Company or ABB to pay their respective obligations when they come due. Our opinion is necessarily based on economic, monetary, market and other conditions as in effect on, and the
information made available to us as of, the date hereof and we assume no responsibility for updating, revising or reaffirming this opinion based on circumstances, developments or events occurring
after the date hereof. Our advisory services and the opinion expressed herein are provided for the information and assistance of the Board of Directors of the Company in connection with its
consideration of the Transaction and such opinion does not constitute a recommendation as to how any holder of Shares should vote with respect to such Transaction or any other matter. This opinion has
been approved by a fairness committee of Goldman, Sachs & Co.
Based
upon and subject to the foregoing, it is our opinion that, as of the date hereof, the $6.35 per Share in cash to be paid to the holders (other than ABB and its affiliates) of
Shares pursuant to the Agreement is fair from a financial point of view to such holders.
Very
truly yours,
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Annex C
SECTION 262 OF THE GENERAL CORPORATIONS LAW OF THE STATE OF DELAWARE
§ 262.
Appraisal rights.
(a) Any
stockholder of a corporation of this State who holds shares of stock on the date of the making of a demand pursuant to subsection (d) of this section with
respect to such shares, who continuously holds such shares through the effective date of the merger or consolidation, who has otherwise complied with subsection (d) of this section and who has
neither voted in favor of the merger or consolidation nor consented thereto in writing pursuant to § 228 of this title shall be entitled to an appraisal by the Court of Chancery of
the fair value of the stockholder's shares of stock under the circumstances described in subsections (b) and (c) of this section. As used in this section, the word "stockholder" means a
holder of record of stock in a corporation; the words "stock" and "share" mean and include what is ordinarily meant by those words; and the words "depository receipt" mean a receipt or other
instrument issued by a depository representing an interest in 1 or more shares, or fractions thereof, solely of stock of a corporation, which stock is deposited with the depository.
(b) Appraisal
rights shall be available for the shares of any class or series of stock of a constituent corporation in a merger or consolidation to be effected pursuant to
§ 251 (other than a merger effected pursuant to § 251(g) of this title), § 252, § 254, § 255,
§ 256, § 257, § 258, § 263 or § 264 of this title:
(1) Provided,
however, that no appraisal rights under this section shall be available for the shares of any class or series of stock, which stock, or depository receipts in
respect thereof, at the record date fixed to determine the stockholders entitled to receive notice of the meeting of stockholders to act upon the agreement of merger or consolidation, were either
(i) listed on a national securities exchange or (ii) held of record by more than 2,000 holders; and further provided that no appraisal rights shall be available for any shares of stock
of the constituent corporation surviving a merger if the merger did not require for its approval the vote of the stockholders of the surviving corporation as provided in § 251(f) of
this title.
(2) Notwithstanding
paragraph (b)(1) of this section, appraisal rights under this section shall be available for the shares of any class or series of stock of a
constituent corporation if the holders thereof are required by the terms of an agreement of merger or consolidation pursuant to §§ 251, 252, 254, 255, 256, 257, 258, 263
and 264 of this title to accept for such stock anything except:
a. Shares
of stock of the corporation surviving or resulting from such merger or consolidation, or depository receipts in respect thereof;
b. Shares
of stock of any other corporation, or depository receipts in respect thereof, which shares of stock (or depository receipts in respect thereof) or depository
receipts at the effective date of the merger or consolidation will be either listed on a national securities exchange or held of record by more than 2,000 holders;
c. Cash
in lieu of fractional shares or fractional depository receipts described in the foregoing paragraphs (b)(2)a. and b. of this section; or
d. Any
combination of the shares of stock, depository receipts and cash in lieu of fractional shares or fractional depository receipts described in the foregoing
paragraphs (b)(2)a., b. and c. of this section.
(3) In
the event all of the stock of a subsidiary Delaware corporation party to a merger effected under § 253 or § 267 of this title is
not owned by the parent immediately prior to the merger, appraisal rights shall be available for the shares of the subsidiary Delaware corporation.
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(c) Any
corporation may provide in its certificate of incorporation that appraisal rights under this section shall be available for the shares of any class or series of its
stock as a result of an amendment to its certificate of incorporation, any merger or consolidation in which the corporation is a constituent corporation or the sale of all or substantially all of the
assets of the corporation. If the certificate of incorporation contains such a provision, the procedures of this section, including those set forth in subsections (d) and (e) of this
section, shall apply as nearly as is practicable.
(d) Appraisal
rights shall be perfected as follows:
(1) If
a proposed merger or consolidation for which appraisal rights are provided under this section is to be submitted for approval at a meeting of stockholders, the
corporation, not less than 20 days prior to the meeting, shall notify each of its stockholders who was such on the record date for notice of such meeting (or such members who received notice in
accordance with § 255(c) of this title) with respect to shares for which appraisal rights are available pursuant to subsection (b) or (c) of this section that
appraisal rights are available for any or all of the shares of the constituent corporations, and shall include in such notice a copy of this section and, if 1 of the constituent corporations is a
nonstock corporation, a copy of § 114 of this title. Each stockholder electing to demand the appraisal of such stockholder's shares shall deliver to the corporation, before the
taking of the vote on the merger or consolidation, a written demand for appraisal of such stockholder's shares. Such demand will be sufficient if it reasonably informs the corporation of the identity
of the stockholder and that the stockholder intends thereby to demand the appraisal of such stockholder's shares. A proxy or vote against the merger or consolidation shall not constitute such a
demand. A stockholder electing to take such action must do so by a separate written demand as herein provided. Within 10 days after the effective date of such merger or consolidation, the
surviving or resulting corporation shall notify each stockholder of each constituent corporation who has complied with this subsection and has not voted in favor of or consented to the merger or
consolidation of the date that the merger or consolidation has become effective; or
(2) If
the merger or consolidation was approved pursuant to § 228, § 253, or § 267 of this title, then either a
constituent corporation before the effective date of the merger or consolidation or the surviving or resulting corporation within 10 days thereafter shall notify each of the holders of any
class or series of stock of such constituent corporation who are entitled to appraisal rights of the approval of the merger or consolidation and that appraisal rights are available for any or all
shares of such class or series of stock of such constituent corporation, and shall include in such notice a copy of this section and, if 1 of the constituent corporations is a nonstock corporation, a
copy of § 114 of this title. Such notice may, and, if given on or after the effective date of the merger or consolidation, shall, also notify such stockholders of the effective date
of the merger or consolidation. Any stockholder entitled to appraisal rights may, within 20 days after the date of mailing of such notice, demand in writing from the surviving or resulting
corporation the appraisal of such holder's shares. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby
to demand the appraisal of such holder's shares. If such notice did not notify stockholders of the effective date of the merger or consolidation, either (i) each such constituent corporation
shall send a second notice before the effective date of the merger or consolidation notifying each of the holders of any class or series of stock of such constituent corporation that are entitled to
appraisal rights of the effective date of the merger or consolidation or (ii) the surviving or resulting corporation shall send such a second notice to all such holders on or within
10 days after such effective date; provided, however, that if such second notice is sent more than 20 days following the sending of the first notice, such second notice need only be sent
to each stockholder who is entitled to appraisal rights and who has demanded appraisal of such holder's shares in accordance with this subsection. An affidavit of the secretary or assistant secretary
or of the transfer agent of the corporation that is required to give
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either
notice that such notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein. For purposes of determining the stockholders entitled to receive
either notice, each constituent corporation may fix, in advance, a record date that shall be not more than 10 days prior to the date the notice is given, provided, that if the notice is given
on or after the effective date of the merger or consolidation, the record date shall be such effective date. If no record date is fixed and the notice is given prior to the effective date, the record
date shall be the close of business on the day next preceding the day on which the notice is given.
(e) Within
120 days after the effective date of the merger or consolidation, the surviving or resulting corporation or any stockholder who has complied with
subsections (a) and (d) of this section hereof and who is otherwise entitled to appraisal rights, may commence an appraisal proceeding by filing a petition in the Court of Chancery
demanding a determination of the value of the stock of all such stockholders. Notwithstanding the foregoing, at any time within 60 days after the effective date of the merger or consolidation,
any stockholder who has not commenced an appraisal proceeding or joined that proceeding as a named party shall have the right to withdraw such stockholder's demand for appraisal and to accept the
terms offered upon the merger or consolidation. Within 120 days after the effective date of the merger or consolidation, any stockholder who has complied with the requirements of
subsections (a) and (d) of this section hereof, upon written request, shall be entitled to receive from the corporation surviving the merger or resulting from the consolidation a
statement setting forth the aggregate number of shares not voted in favor of the merger or consolidation and with respect to which demands for appraisal have been received and the aggregate number of
holders of such shares. Such written statement shall be mailed to the stockholder within 10 days after such stockholder's written request for such a statement is received by the surviving or
resulting corporation or within 10 days after expiration of the period for delivery of demands for appraisal under subsection (d) of this section hereof, whichever is later.
Notwithstanding subsection (a) of this section, a person who is the beneficial owner of shares of such stock held either in a voting trust or by a nominee on behalf of such person may, in such
person's own name, file a petition or request from the corporation the statement described in this subsection.
(f) Upon
the filing of any such petition by a stockholder, service of a copy thereof shall be made upon the surviving or resulting corporation, which shall within
20 days after such service file in the office of the Register in Chancery in which the petition was filed a duly verified list containing the names and addresses of all stockholders who have
demanded payment for their shares and with whom agreements as to the value of their shares have not been reached by the surviving or resulting corporation. If the petition shall be filed by the
surviving or resulting corporation, the petition shall be accompanied by such a duly verified list. The Register in Chancery, if so ordered by the Court, shall give notice of the time and place fixed
for the hearing of such petition by registered or certified mail to the surviving or resulting corporation and to the stockholders shown on the list at the addresses therein stated. Such notice shall
also be given by 1 or more publications at least 1 week before the day of the hearing, in a newspaper of general circulation published in the City of Wilmington, Delaware or such publication as
the Court deems advisable. The forms of the notices by mail and by publication shall be approved by the Court, and the costs thereof shall be borne by the surviving or resulting corporation.
(g) At
the hearing on such petition, the Court shall determine the stockholders who have complied with this section and who have become entitled to appraisal rights. The
Court may require the stockholders who have demanded an appraisal for their shares and who hold stock represented by certificates to submit their certificates of stock to the Register in Chancery for
notation thereon of the pendency of the appraisal proceedings; and if any stockholder fails to comply with such direction, the Court may dismiss the proceedings as to such stockholder.
(h) After
the Court determines the stockholders entitled to an appraisal, the appraisal proceeding shall be conducted in accordance with the rules of the Court of Chancery,
including any rules specifically governing appraisal proceedings. Through such proceeding the Court shall determine the
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fair
value of the shares exclusive of any element of value arising from the accomplishment or expectation of the merger or consolidation, together with interest, if any, to be paid upon the amount
determined to be the fair value. In determining such fair value, the Court shall take into account all relevant factors. Unless the Court in its discretion determines otherwise for good cause shown,
interest from the effective date of the merger through the date of payment of the judgment shall be compounded quarterly and shall accrue at 5% over the Federal Reserve discount rate (including any
surcharge) as established from time to time during the period between the effective date of the merger and the date of payment of the judgment. Upon application by the surviving or resulting
corporation or by any stockholder entitled to participate in the appraisal proceeding, the Court may, in its discretion, proceed to trial upon the appraisal prior to the final determination of the
stockholders entitled to an appraisal. Any stockholder whose name appears on the list filed by the surviving or resulting corporation pursuant to subsection (f) of this section and who has
submitted such stockholder's certificates of stock to the Register in Chancery, if such is required, may participate fully in all proceedings until it is finally determined that such stockholder is
not entitled to appraisal rights under this section.
(i) The
Court shall direct the payment of the fair value of the shares, together with interest, if any, by the surviving or resulting corporation to the stockholders
entitled thereto. Payment shall be so made to each such stockholder, in the case of holders of uncertificated stock forthwith, and the case of holders of shares represented by certificates upon the
surrender to the corporation of the certificates representing such stock. The Court's decree may be enforced as other decrees in the Court of Chancery may be enforced, whether such surviving or
resulting corporation be a corporation of this State or of any state.
(j) The
costs of the proceeding may be determined by the Court and taxed upon the parties as the Court deems equitable in the circumstances. Upon application of a
stockholder, the Court may order all or a portion of the expenses incurred by any stockholder in connection with the appraisal proceeding, including, without limitation, reasonable attorney's fees and
the fees and expenses of experts, to be charged pro rata against the value of all the shares entitled to an appraisal.
(k) From
and after the effective date of the merger or consolidation, no stockholder who has demanded appraisal rights as provided in subsection (d) of this section
shall be entitled to vote such stock for any purpose or to receive payment of dividends or other distributions on the stock (except dividends or other distributions payable to stockholders of record
at a date which is prior to the effective date of the merger or consolidation); provided, however, that if no petition for an appraisal shall be filed within the time provided in subsection (e)
of this section, or if such stockholder shall deliver to the surviving or resulting corporation a written withdrawal of such stockholder's demand for an appraisal and an acceptance of the merger or
consolidation, either within 60 days after the effective date of the merger or consolidation as provided in subsection (e) of this section or thereafter with the written approval of the
corporation, then the right of such stockholder to an appraisal shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery shall be dismissed as to any stockholder
without the approval of the Court, and such approval may be conditioned upon such terms as the Court deems just; provided, however that this provision shall not affect the right of any stockholder who
has not commenced an appraisal proceeding or joined that proceeding as a named party to withdraw such stockholder's demand for appraisal and to accept the terms offered upon the merger or
consolidation within 60 days after the effective date of the merger or consolidation, as set forth in subsection (e) of this section.
(l) The
shares of the surviving or resulting corporation to which the shares of such objecting stockholders would have been converted had they assented to the merger or
consolidation shall have the status of authorized and unissued shares of the surviving or resulting corporation.
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8
Del. C. 1953, § 262;
56 Del. Laws, c. 50
;
56 Del. Laws, c. 186,
§ 24
;
57 Del. Laws, c. 148, §§ 27-29
;
59 Del. Laws, c. 106, § 12
;
60 Del. Laws, c. 371,
§§ 3-12
;
63 Del. Laws, c. 25, § 14
;
63 Del. Laws, c. 152, §§ 1, 2
;
64 Del. Laws, c. 112,
§§ 46-54
;
66 Del. Laws, c. 136,
§§ 30-32
;
66 Del. Laws, c. 352, § 9
;
67 Del. Laws, c. 376, §§ 19, 20
;
68 Del. Laws, c. 337,
§§ 3, 4
;
69 Del. Laws, c. 61, § 10
;
69 Del.
Laws, c. 262, §§ 1-9
;
70 Del. Laws, c. 79, § 16
;
70 Del. Laws, c. 186, § 1
;
70 Del. Laws, c. 299, §§ 2,
3
;
70 Del. Laws, c. 349, § 22
;
71 Del. Laws, c. 120,
§ 15
;
71 Del. Laws, c. 339, §§ 49-52
;
73 Del. Laws, c. 82, § 21
;
76 Del. Laws, c. 145,
§§ 11-16
;
77 Del. Laws, c. 14, §§ 12, 13
;
77 Del. Laws, c. 253, §§ 47-50
;
77 Del. Laws, c. 290,
§§ 16, 17.
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1 1 12345678
12345678 12345678 12345678 12345678 12345678 12345678 12345678 000000000000
NAME THE COMPANY NAME INC. - COMMON 123,456,789,012.12345 THE COMPANY NAME
INC. - CLASS A 123,456,789,012.12345 THE COMPANY NAME INC. - CLASS B
123,456,789,012.12345 THE COMPANY NAME INC. - CLASS C 123,456,789,012.12345
THE COMPANY NAME INC. - CLASS D 123,456,789,012.12345 THE COMPANY NAME INC. -
CLASS E 123,456,789,012.12345 THE COMPANY NAME INC. - CLASS F
123,456,789,012.12345 THE COMPANY NAME INC. - 401 K 123,456,789,012.12345 . x
02 0000000000 JOB # 1 OF 2 1 OF 2 PAGE SHARES CUSIP # SEQUENCE # THIS PROXY
CARD IS VALID ONLY WHEN SIGNED AND DATED. KEEP THIS PORTION FOR YOUR RECORDS
DETACH AND RETURN THIS PORTION ONLY TO VOTE, MARK BLOCKS BELOW IN BLUE OR
BLACK INK AS FOLLOWS: Signature (Joint Owners) Signature [PLEASE SIGN WITHIN
BOX] Date Date CONTROL # SHARES 0 0 0 0 0 0 0 0 0 0000182091_1 R1.0.0.51160
POWER-ONE, INC. LEGAL DEPARTMENT 740 CALLE PLANO CAMARILO, CA 93012 Investor
Address Line 1 Investor Address Line 2 Investor Address Line 3 Investor
Address Line 4 Investor Address Line 5 John Sample 1234 ANYWHERE STREET ANY
CITY, ON A1A 1A1 Investor Address Line 1 Investor Address Line 2 Investor
Address Line 3 Investor Address Line 4 Investor Address Line 5 John Sample
1234 ANYWHERE STREET ANY CITY, ON A1A 1A1 VOTE BY INTERNET -
www.proxyvote.com Use the Internet to transmit your voting instructions and
for electronic delivery of information up until 11:59 P.M. Eastern Time the
day before the cut-off date or meeting date. Have your proxy card in hand
when you access the web site and follow the instructions to obtain your
records and to create an electronic voting instruction form. ELECTRONIC
DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs
incurred by our company in mailing proxy materials, you can consent to
receiving all future proxy statements, proxy cards and annual reports
electronically via e-mail or the Internet. To sign up for electronic
delivery, please follow the instructions above to vote using the Internet
and, when prompted, indicate that you agree to receive or access proxy
materials electronically in future years. VOTE BY PHONE - 1-800-690-6903 Use
any touch-tone telephone to transmit your voting instructions up until 11:59
P.M. Eastern Time the day before the cut-off date or meeting date. Have your
proxy card in hand when you call and then follow the instructions. VOTE BY
MAIL Mark, sign and date your proxy card and return it in the postage-paid
envelope we have provided or return it to Vote Processing, c/o Broadridge, 51
Mercedes Way, Edgewood, NY 11717. The Board of Directors recommends you vote
"FOR" proposals 1, 2 and 3. For Against Abstain 1 Proposal to adopt
the Agreement and Plan of Merger, as it may be amended from time to time,
dated as of April 21, 2013("Merger Agreement"), by and among
Power-One, Inc.("Power-One"), ABB Ltd. and Verdi Acquisition
Corporation ("Merger Sub"), which provides for the merger of Merger
Sub with and into Power-One, with Power-One continuing as the surviving
corporation. 2 Proposal to approve, by a nonbinding advisory vote, the
specified compensation disclosed in the accompanying proxy statement that may
be payable to Power-Ones named executive officers in connection with the
consummation of the merger. 3 Proposal to approve the adjournment or
postponement of the special meeting, if necessary or appropriate, to solicit
additional proxies if there are not sufficient votes at the time of the
special meeting to adopt the Merger Agreement. NOTE: Such other business as
may properly come before the meeting or any adjournment thereof. Please sign
exactly as your name(s) appear(s) hereon. When signing as attorney, executor,
administrator, or other fiduciary, please give full title as such. Joint
owners should each sign personally. All holders must sign. If a corporation
or partnership, please sign in full corporate or partnership name, by
authorized officer.
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0000182091_2
R1.0.0.51160 Important Notice Regarding the Availability of Proxy Materials
for the Special Meeting: The Notice & Proxy Statement is/are available at
www.proxyvote.com . POWER-ONE, INC. Special Meeting of Stockholders July 23,
2013 8:00 AM This proxy is solicited by the Board of Directors The
stockholder(s) hereby appoint(s) Richard J. Thompson and Tina D. McKnight, or
either of them, as proxies, each with the power to appoint his or her
substitute, and hereby authorizes them to represent and to vote, as
designated on the reverse side of this ballot, all of the shares of common
stock of POWER-ONE, INC. that the stockholder(s) is/are entitled to vote at
the Special Meeting of Stockholders to be held at 8:00 AM, PDT on July 23,
2013, at The Courtyard Marriott, 4994 Verdugo Way, Camarillo, California
93012, and any adjournment or postponement thereof. This proxy, when properly
executed, will be voted in the manner directed herein. If no such direction
is made, this proxy will be voted in accordance with the Board of Directors'
recommendations. CONTINUED AND TO BE SIGNED ON REVERSE SIDE
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