We invite you to attend a special meeting of shareholders of Supertex, Inc., or Supertex or the Company, to be held at Supertexs offices
at 1235 Bordeaux Drive, Sunnyvale, California 94089, at 10:00 a.m., local time, on [
], 2014, or the Special Meeting.
Holders of record of Supertex common stock, no par value per share, or common stock, at the close of business on February 24, 2014, or the record date, will be entitled to vote at the Special Meeting or any adjournment or postponement of the
Special Meeting.
On February 9, 2014, we entered into an Agreement and Plan of Merger with Microchip Technology Incorporated and
Orchid Acquisition Corporation, or the Merger Agreement. At the Special Meeting, we will ask you to adopt the Merger Agreement and approve the principal terms of the Merger as contemplated by the Merger Agreement, or the Merger. As a result of the
Merger, Supertex will become a wholly-owned subsidiary of Microchip Technology Incorporated. Microchip Technology Incorporated is a Delaware corporation. Orchid Acquisition Corporation is a California corporation and is a wholly-owned subsidiary of
Microchip Technology Incorporated.
We are also asking you to (i) approve, on an advisory (non-binding) basis, certain of the
compensation that may be paid or become payable to Supertexs named executive officers that is based on or otherwise relates to the Merger, as well as the agreements pursuant to which such compensation may be paid or become payable and
(ii) expressly grant the authority to vote your shares to adjourn the Special Meeting, if necessary, to permit further solicitation of proxies if there are not sufficient votes at the time of the Special Meeting to approve the principal terms
of the Merger and adopt the Merger Agreement.
If the Merger is consummated, you will be entitled to receive $33.00 in cash, without
interest and less any applicable withholding taxes, for each share of Supertex common stock that you own, and you will have no ongoing ownership interest in the continuing business of Supertex. We cannot complete the Merger unless all of the
conditions to closing are satisfied, including the approval of the Merger Agreement by the affirmative vote of the holders of a majority of the outstanding shares of Supertex common stock as of the record date.
Our board of directors reviewed and considered the terms and conditions of the Merger. Our board of directors also determined that the Merger
Agreement, and the transactions contemplated thereby, including the Merger, are fair to, and in the best interests of, Supertex and our shareholders, declared the Merger Agreement and the transactions contemplated thereby, including the Merger, to
be advisable and recommended that our shareholders vote to approve the principal terms of the Merger and adopt the Merger Agreement.
In the materials accompanying this letter, you will find a Notice of Special Meeting of
Shareholders, a proxy statement relating to the actions to be taken by our shareholders at the Special Meeting and a proxy card. The proxy statement includes other important information about the Merger Agreement and the Merger. We encourage you to
read the entire proxy statement, including its annexes, carefully.
All of our shareholders are cordially invited to attend the Special
Meeting in person. Whether or not you plan to attend the Special Meeting, however, please complete, sign, date and return your proxy card in the enclosed envelope or appoint a proxy over the Internet or by telephone as instructed in these materials.
It is important that your shares be represented and voted at the Special Meeting. If you attend the Special Meeting, you may vote in person as you wish, even though you have previously returned your proxy card or appointed a proxy over the Internet
or by telephone.
On behalf of our board of directors, I thank you for your support and urge you to vote
FOR
the
approval of the principal terms of the Merger and the adoption of the Merger Agreement.
Henry C. Pao
NOTICE OF
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON
[
], 2014
Dear
Shareholder:
You are cordially invited to attend the Special Meeting of Shareholders of Supertex, Inc., a California corporation, or
Supertex, that will be held at our offices at 1235 Bordeaux Drive, Sunnyvale California 94089, at 10:00 a.m., local time, on
[
], 2014, or the Special Meeting, for the following purposes:
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to consider and vote upon a proposal to adopt the Agreement and Plan of Merger, dated as of February 9, 2014, among Microchip Technology Incorporated, Orchid Acquisition Corporation and Supertex, or the Merger
Agreement, and approve the principal terms of the merger as contemplated by the Merger Agreement, or the Mergerreferred to as the Merger Proposal;
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to consider and vote upon a proposal to approve, by an advisory (non-binding) vote, certain of the compensation that may be paid or become payable to our named executive officers that is based on or otherwise relates to
the Merger, as well as the agreements pursuant to which such compensation may be paid or become payablereferred to as the Advisory Compensation Proposal; and
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to consider and vote upon a proposal to approve the grant of authority to vote your shares to adjourn the Special Meeting, if necessary, for the purpose of soliciting additional proxies to vote in favor of the approval
of the Merger Proposalreferred to as the Adjournment Proposal.
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Microchip Technology Incorporated is a Delaware
corporation. Orchid Acquisition Corporation is a California corporation and is a wholly-owned subsidiary of Microchip Technology Incorporated.
Our board of directors reviewed and considered the terms and conditions of the Merger and determined that the Merger and the Merger Agreement
are fair to, and in the best interests of, Supertex and our shareholders, declared the Merger Agreement and the transactions contemplated thereby, including the Merger, to be advisable and recommended that Supertex shareholders vote to approve the
Merger Proposal. This item of business to be submitted to a vote of the shareholders at the Special Meeting is more fully described in the attached proxy statement, which we urge you to read carefully. Our board of directors also recommends that you
approve the Advisory Compensation Proposal and the Adjournment Proposal. No other business may be transacted at the Special Meeting.
Shareholders of record at the close of business on the record date, February 24, 2014, are entitled to notice of and to vote at the
Special Meeting and any adjournment or postponement of the meeting. The proxy statement is dated [
], 2014, and is first
being mailed to shareholders of Supertex on or about [
], 2014. All shareholders are cordially invited to attend the
Special Meeting in person. Approval of the Merger Proposal will require the affirmative vote of the holders of a majority of the outstanding shares of Supertex common stock as of the record date. Approval of the Advisory Compensation Proposal and
the Adjournment Proposal will each require the affirmative vote of the holders of a majority of the shares of Supertex common stock present, in person or by proxy, at the Special Meeting, excluding abstentions.
Supertex shareholders have the right to exercise dissenters rights with respect to their shares of Supertex common stock and may have
the right to obtain payment in cash for the fair market value of their shares of Supertex common stock, but only if they perfect their dissenters rights and comply with the applicable provisions of California law. A copy of the California
statutory provisions relating to dissenters rights is attached as
Annex D
to the attached proxy statement, and a summary of these provisions can be found under The MergerDissenters Rights in the attached proxy
statement.
You should not send any certificates representing shares of Supertex common stock with your proxy
card. Upon the closing of the Merger, you will be sent instructions regarding the procedure to exchange your stock certificates for the cash Merger Consideration.
OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR
(1) THE APPROVAL OF THE PRINCIPAL TERMS OF THE MERGER AND
THE ADOPTION OF THE MERGER AGREEMENT, (2) THE APPROVAL, ON AN ADVISORY
(NON-BINDING) BASIS, OF CERTAIN OF THE COMPENSATION THAT MAY BE PAID OR
BECOME PAYABLE TO OUR NAMED EXECUTIVE OFFICERS THAT IS BASED ON OR
OTHERWISE RELATES TO THE MERGER, AS WELL AS THE AGREEMENTS PURSUANT TO
WHICH SUCH COMPENSATION MAY BE PAID OR BECOME PAYABLE AND (3) THE GRANT
OF AUTHORITY TO VOTE YOUR SHARES TO
ADJOURN THE SPECIAL MEETING, IF NECESSARY, FOR THE PURPOSE OF SOLICITING
ADDITIONAL PROXIES TO VOTE IN FAVOR OF APPROVING THE PRINCIPAL TERMS OF
THE MERGER AND ADOPTING THE MERGER AGREEMENT.
YOUR VOTE IS IMPORTANT.
Your vote is very important, regardless of the number of shares you own. Even if you plan to attend the Special Meeting in person, we request
that you complete, sign, date and return your proxy card in the enclosed envelope, or appoint a proxy over the Internet or by telephone as instructed in these materials, to ensure that your shares will be represented at the Special Meeting if you
are unable to attend. If you sign, date and mail your proxy card without indicating how you wish to vote, your proxy will be counted as a vote in favor of the Merger Proposal, in favor of the Advisory Compensation Proposal, and in favor of the
Adjournment Proposal. If you fail to return your proxy card or if you fail to appoint a proxy over the Internet or by telephone, your shares will not be counted for purposes of determining whether a quorum is present at the Special Meeting and will
have the same effect as a vote against approving the Merger Proposal. If you do attend the Special Meeting and wish to vote in person, you may withdraw your proxy and vote in person. If your shares are held of record in the name of your broker, bank
or other nominee, you must obtain a proxy, executed in your favor, from the holder of record to be able to vote in person at the Special Meeting.
No person has been authorized to give any information or to make any representations other than those set forth in the proxy statement in
connection with the solicitation of proxies made hereby, and, if given or made, such information must not be relied upon as having been authorized by Supertex or any other person.
By Order of the Board of Directors
Henry C. Pao
President and Chief Executive Officer
Sunnyvale,
California
[
], 2014
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION PASSED UPON THE FAIRNESS OR MERITS OF SUCH TRANSACTION NOR
UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED IN THIS
DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
In addition to delivering the proxy materials
for the Special Meeting to be held on [
], 2014 to shareholders by mail, the proxy statement for such meeting is also is
available at w
ww.supertex.com
.
TABLE OF CONTENTS
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ANNEX A
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AGREEMENT AND PLAN OF MERGER, DATED AS OF FEBRUARY 9, 2014, BY AND AMONG MICROCHIP TECHNOLOGY INCORPORATED, ORCHID ACQUISITION CORPORATION AND SUPERTEX, INC.
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A-1
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ANNEX B
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VOTING AGREEMENT, DATED AS OF FEBRUARY 9, 2014, BY AND AMONG MICROCHIP TECHNOLOGY INCORPORATED AND SHAREHOLDERS OF SUPERTEX, INC.
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B-1
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ANNEX C
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OPINION OF OPPENHEIMER & CO., INC.
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C-1
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ANNEX D
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CHAPTER 13 OF THE CALIFORNIA CORPORATIONS CODE
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D-1
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SUMMARY TERM SHEET
This Summary Term Sheet, together with the Questions and Answers About the Special Meeting and Merger, summarizes the material
information in the proxy statement. You should carefully read this entire proxy statement and the other documents to which this proxy statement refers you for a more complete understanding of the matters being considered at the Special Meeting. In
addition, you may obtain additional business and financial information about Supertex, Inc. without charge by following the instructions in Where You Can Find More Information beginning on page 72. We have included page references
in parentheses to direct you to more complete descriptions of the topics presented in this summary. Attached as Annex A to this proxy statement is the Agreement and Plan of Merger, dated as of February 9, 2014, among Microchip Technology
Incorporated, Orchid Acquisition Corporation and Supertex, Inc., or the Merger Agreement. We encourage you to read the Merger Agreement, as it is the legal document that governs the merger, or the Merger. In this proxy statement, we,
us, our and Supertex refer to Supertex, Inc. and, including, where applicable, our subsidiaries.
The Merger and the Merger Agreement.
The Parties to the Merger (see page 14
)
. Supertex,
Inc., a California corporation, is a leading provider of high voltage and mixed signal semiconductor components, including integrated circuits. Microchip Technology Incorporated, a Delaware corporation, or Parent or Microchip, is a leading provider
of microcontroller and analog semiconductors. Orchid Acquisition Corporation, a California corporation and a wholly-owned subsidiary of Parent, or Merger Sub, has not engaged in any business except for the purpose of effecting the Merger.
The Merger
. You are being asked to vote to approve the principal terms of the Merger and adopt the Merger
Agreement, or the Merger Proposal. Pursuant to the Merger Agreement, Merger Sub will merge with and into Supertex with Supertex being the surviving corporation in the Merger, such surviving corporation hereinafter referred to as the Surviving
Corporation. As a result of the Merger, Supertex will cease to be an independent, publicly-traded company. You will no longer have any interest in Supertexs future earnings or growth. Following consummation of the Merger, the
registration of Supertex common stock and our reporting obligations with respect to our common stock under the Securities Exchange Act of 1934, as amended, or the Exchange Act, will be terminated upon application to the Securities and Exchange
Commission, or the SEC. In addition, upon completion of the Merger, shares of our common stock will no longer be listed on any stock exchange, including the NASDAQ Global Market, or quotation system. See The Merger Agreement beginning on
page 51.
Merger Consideration
. If the Merger is consummated, you will be entitled to receive $33.00,
or the Merger Consideration, in cash, without interest and less any applicable withholding taxes, for each share of Supertex common stock that you own (other than shares as to which dissenters rights have been properly exercised). See
The Merger AgreementMerger Consideration beginning on page 52.
Treatment of Options
(see page 52)
. Upon the consummation of the Merger, all outstanding vested options (that is, options then exercisable) to acquire our common stock will be cancelled. In consideration for the cancellation of the options, the holder of any such
option will receive an amount equal to the number of shares of our common stock underlying the option multiplied by the amount (if any) by which $33.00 exceeds the exercise price for each share of Supertex common stock underlying the options,
without interest and less any applicable withholding taxes. If the exercise price of the vested option is equal to or exceeds $33.00, the holder of such option will not be entitled to any Merger Consideration. All outstanding unvested options will
be assumed by Parent and remain subject to substantially the same terms and conditions, except that: (1) the number of shares of Parent common stock subject to each such outstanding unvested option will be equal to the product of the number of
shares of our common stock underlying such option and the Exchange Ratio (as defined in Interests of Directors and Executive Officers in the Merger AgreementTreatment of Stock Options beginning on page 32), rounded down to the
nearest whole share, and (2) the exercise price of each such outstanding unvested option will be equal to the quotient determined by dividing the exercise price by the Exchange Ratio, rounded up to the nearest cent.
1
Treatment of Employee Stock Purchase Plan (see page 53)
. The offering period underway
under our Employee Stock Purchase Plan at the time of the Merger will be shortened and terminate on either the last business day or the last payroll date prior to the consummation of the Merger and Supertex will make such pro-rata adjustments as
necessary to reflect such shortened offering period, but will otherwise treat such shortened offering period as a fully effective and completed offering period for all other purposes. Supertex will provide that no additional offering periods
commence under the plan after March 31, 2014 and the Supertex Employee Stock Purchase Plan will terminate prior to the consummation of the Merger.
Conditions to the Merger (see page 60)
. The consummation of the Merger depends on the satisfaction or
waiver of a number of conditions, including the following:
the Merger Agreement must have been adopted and the principal
terms of the Merger must have been approved by the affirmative vote of the holders of a majority of the outstanding shares of Supertex common stock as of the record date, February 24, 2014;
any applicable waiting period (and any extension thereof) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, or the HSR Act, must have expired or been terminated;
no governmental entity of competent jurisdiction must have
enacted, issued, promulgated, entered or enforced any law that is in effect and has the effect of making the Merger illegal in any jurisdiction or which has the effect of prohibiting or otherwise preventing the consummation of the Merger in any
jurisdiction, and no court of competent jurisdiction must have issued or granted any order (whether temporary, preliminary or permanent) that has the effect of making the Merger illegal in any jurisdiction or which has the effect of prohibiting
or otherwise preventing the consummation of the Merger in any jurisdiction;
there must not have been any Company Material
Adverse Effect (as defined in The Merger AgreementRepresentations and Warranties beginning on page 53) upon Supertex;
Supertexs, Parents and Merger Subs respective representations and warranties in the Merger Agreement must be
true and correct as of the date of the Merger Agreement and on and as of the date of the closing of the Merger in the manner described under the caption The Merger AgreementConditions to the Merger beginning on page 60; and
Supertex, Parent and Merger Sub must have performed or complied with in all material respects all obligations under the
Merger Agreement that each is required to perform or comply with at or prior to the closing of the Merger.
Restrictions on Solicitations of Other Offers and the Recommendation of our Board of Directors (see
pages
62 and 20
)
.
The Merger Agreement provides that we must cause each of our company
representatives to immediately cease any existing activities, discussions or negotiations with any third party conducted prior to the execution of the Merger Agreement with respect to an Acquisition Proposal (as defined in The Merger
AgreementRestrictions on Solicitations of Other Offers beginning on page 62) and, until the consummation of the Merger or its earlier termination, we are generally not permitted to:
solicit, initiate, knowingly encourage or facilitate the making, submission or announcement of, an Acquisition Proposal;
2
furnish to any third party (other than Parent, Merger Sub or any designees of
Parent or Merger Sub) any non-public information relating to us or any of our subsidiaries that we believe or reasonably expect could be used for the purposes of making, submitting or announcing an Acquisition Proposal, or afford access to our
business, properties, assets, books or records to any third party (other than Parent, Merger Sub or any designees of Parent or Merger Sub) that we believe or reasonably expect could be used for the purposes of making, submitting or announcing an
Acquisition Proposal, or take any other action intended to assist or facilitate any inquiries or the making of any proposal that constitutes or would be reasonably expected to lead to an Acquisition Proposal;
participate or engage in discussions or negotiations with any third party with respect to an Acquisition Proposal;
approve, endorse or recommend an Acquisition Proposal;
execute or enter into any letter of intent, memorandum of understanding or contract contemplating or otherwise relating to an
Acquisition Transaction (as defined in The Merger AgreementRestrictions on Solicitations of Other Offers beginning on page 62); or
terminate, amend, modify, waive or fail to enforce any rights under any standstill or other similar agreement
between us or any of our subsidiaries and any third party (other than Parent).
The Merger Agreement provides that (subject
to certain exceptions) neither our board of directors nor any of its committees may:
withhold, withdraw, amend or modify
in a manner adverse to Parent our board of directors recommendation to our shareholders that they approve the principal terms of the Merger and adopt the Merger Agreement;
approve or recommend any Acquisition Proposal of a third party; or
cause or permit Supertex to enter into (or publicly propose that Supertex enter into) any alternative acquisition agreement
with respect to any Acquisition Proposal.
Notwithstanding these restrictions, under certain circumstances, and so long as Supertex
complies with certain terms of the Merger Agreement described under The Merger AgreementRestrictions on Solicitations of Other Offers and The Merger AgreementRecommendation and Recommendation Change, our board of
directors may (1) respond to a bona fide unsolicited Acquisition Proposal not obtained in violation of our covenants in the Merger Agreement which our board of directors reasonably concludes in good faith after consultation with its financial
advisors and outside legal counsel constitutes or is reasonably likely to lead to a Superior Proposal (as defined in The Merger AgreementRestrictions on Solicitations of Other Offers), (2) approve or recommend certain Superior
Proposals and, in connection with such approval or recommendation, withdraw or modify its recommendation of the Merger Agreement and/or terminate the Merger Agreement, and/or (3) withdraw or modify our board of directors recommendation of
the Merger Agreement in response to a material development occurring after the date of the Merger Agreement that was neither known by our board of directors or reasonably foreseeable, where our board of directors determines in good faith, after
consultation with its outside legal counsel, that failure to take such action would reasonably be expected to result in a breach of its fiduciary duties to our shareholders.
Termination of the Merger Agreement (see page 64
)
. The Merger Agreement may be terminated:
by mutual written consent of Supertex and Parent;
by either Supertex or Parent, if:
the Merger is not consummated on or before July 14, 2014, unless the failure of the Merger to be consummated by such date
is primarily caused by the failure of the party seeking to exercise such termination right to fulfill any obligation under the Merger Agreement;
3
any governmental entity having jurisdiction over Supertex, Parent or Merger Sub
has issued a final and non-appealable order, decree or ruling or taken any other action, in each case permanently enjoining or otherwise prohibiting the consummation of the Merger; or
the Special Meeting concludes without the approval by our shareholders of the Merger Agreement in accordance with the
California Corporations Code, or the CCC;
by Parent, if:
we breach any of our covenants or agreements in the Merger Agreement or if any of our representations and warranties in the
Merger Agreement were inaccurate when made or become inaccurate, and such breach or inaccuracy (i) would give rise to the failure of a condition to Parents or Merger Subs obligation to consummate the Merger and (ii) if curable
by the exercise of our commercially reasonable efforts, is not cured within 30 days or by July 14, 2014 after delivery of written notice to us of such breach or inaccuracy;
we breach (or are deemed to have breached) the restrictions on solicitation or board of directors recommendation change
provisions described under The Merger AgreementRestrictions on Solicitations of Other Offers and The Merger AgreementRecommendation and Recommendation Change beginning on pages 62 and 64 in any material
respect, without regard as to whether such breach results in an Acquisition Proposal;
our board of directors or any board
committee withdraws its recommendation that our shareholders approve the principal terms of the Merger and adopt the Merger Agreement;
we fail to include our board of directors recommendation of the Merger Agreement in this proxy statement;
our board of directors or any board committee approves, or recommends that our shareholders approve, any Acquisition Proposal
or Acquisition Transaction;
we enter into a letter of intent, memorandum of understanding or contract (other than a
confidentiality agreement contemplated by the non-solicitation provisions of the Merger Agreement) accepting or agreeing to discuss or negotiate an Acquisition Proposal; or
following the date of any public announcement of a bona fide Acquisition Proposal, our board of directors fails to issue a
press release to unconditionally reaffirm our board of directors recommendation within five business days after Parent or Merger Sub delivers a request in writing to do so (which request may be made only once with respect to an Acquisition
Proposal).
by Supertex, if:
Parent or Merger Sub has breached any of its covenants or agreements in the Merger Agreement or if any of the representations
and warranties of Parent and Merger Sub in the Merger Agreement were inaccurate when made or become inaccurate, and such breach or inaccuracy (i) would give rise to the failure of a condition to our obligation to consummate the Merger and
(ii) if curable by Parent or Merger Sub through the exercise of commercially reasonable efforts, is not cured within 30 days or by July 14, 2014 after delivery of written notice to Parent of such breach or inaccuracy; or
prior to the Special Meeting, in order to enter into a definitive agreement with respect to a Superior Proposal, our board of
directors effects a Recommendation Change and authorizes us to enter into an agreement for a transaction that constitutes a Superior Proposal, provided that immediately prior to such termination, we pay to Parent the termination fee as described
under The Merger AgreementTermination Fees beginning on page 66 and immediately following termination, we enter into a definitive agreement with respect to such Superior Proposal.
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Termination Fees (see page 66
).
If the Merger Agreement
is terminated under certain circumstances, Supertex will be obligated to pay:
a termination fee of $15,760,000, and
the expenses of Parent incurred since January 1, 2014, up to $4.0 million.
The Special Meeting of Supertex Shareholders.
See Questions and Answers About the Special Meeting and Merger beginning on page 7 and The Special Meeting beginning on
page 48.
Other Important Considerations.
Voting Agreement
. In connection with the execution of the Merger Agreement, each of our directors, in his capacity as a shareholder of
Supertex, has entered into a voting agreement with Parent, or the voting agreement, pursuant to which he or she has agreed to vote all of his or her shares of Supertex common stock in favor of the adoption of the Merger Agreement. See The
Voting Agreement beginning on page 66.
Board Recommendation
. Our board of directors
recommends that Supertex shareholders vote
FOR
(1) the approval of the principal terms of the Merger and adoption of the Merger Agreement, or the Merger Proposal, (2) the approval, on an advisory (non-binding) basis, of
certain compensation that may be paid or become payable to Supertexs named executive officers that is based on or otherwise relates to the Merger, as well as the agreements pursuant to which such compensation may be paid or become payable, or
the Advisory Compensation Proposal, and (3) the grant of authority to vote your shares to adjourn of the Special Meeting, if necessary, to solicit additional proxies, or the Adjournment Proposal. See The MergerReasons for the Merger
of Supertex and Recommendation of Our Board of Directors beginning on page 20.
Reasons for the
Merger
. For a discussion of the material factors considered by our board of directors in reaching its conclusions and the reasons why our board of directors determined that the Merger is advisable and fair, see The MergerReasons for
the Merger of Supertex and Recommendation of Our Board of Directors beginning on page 20.
Share
Ownership of Directors and Executive Officers
. See Security Ownership of Certain Beneficial Owners and Management beginning on page 69.
Interests of Supertexs Directors and Executive Officers in the Merger
. In considering the
recommendation of our board of directors in favor of approval of the Merger Proposal, you should be aware that the Merger, certain provisions and conditions of the Merger Agreement and certain board actions taken prior to entry into the Merger
Agreement will result in certain benefits to our directors and executive officers, including the continuation of certain indemnification and insurance arrangements and the acceleration of certain stock options. See The MergerInterests of
Our Directors and Executive Officers in the Merger beginning on page 32.
As of February 21, 2014, our directors and
executive officers collectively beneficially held, including shares subject to options exercisable within 60 days of February 21, 2014, approximately 11.5% of the outstanding shares of Supertex common stock. See Security Ownership of
Certain Beneficial Owners and Management beginning on page 69.
Opinion of
Oppenheimer & Co., Inc.
On February 9, 2014, Oppenheimer & Co., Inc., or Oppenheimer, rendered an oral opinion to the Supertex board of directors (which was confirmed in writing by delivery of Oppenheimers written
opinion dated February 9, 2014), based upon and subject to the procedures followed, assumptions made, qualifications and limitations on the review undertaken and other matters considered by Oppenheimer in preparing its opinion, as to the
fairness, from a financial point of view, of the Merger Consideration to be received by the holders of Supertex common stock, as of February 9, 2014. Oppenheimers opinion was based on the information available to Oppenheimer and the
general economic, financial and stock market conditions and circumstances as they existed.
5
Oppenheimers opinion was directed to the Supertex board of directors and only addressed
the fairness, from a financial point of view, of the Merger Consideration to be received by the holders of Supertex common stock as of February 9, 2014 and does not address any other aspect or implication of the Merger as of any subsequent
date. The full text of Oppenheimers written opinion is included as Annex C to this proxy statement and sets forth the procedures followed, assumptions made, qualifications and limitations on the review undertaken and other matters considered
by Oppenheimer in preparing its opinion. We encourage our shareholders to carefully read the full text of Oppenheimers written opinion. However, neither Oppenheimers opinion nor the summary of its opinion and the related analyses set
forth in this proxy statement are intended to be, and do not constitute, advice or a recommendation to our board of directors or any shareholder as to how to act or vote with respect to the Merger or related matters. See The
MergerOpinion of the Financial Advisor to Supertex Board of Directors beginning on page 25.
Regulatory Approvals (see page 47)
. The Merger Agreement requires us, Parent and Merger Sub to use our and
their reasonable best efforts to prepare any Merger notifications or obtain any government clearances or approvals required to close the Merger under the HSR Act and the rules promulgated thereunder by the Federal Trade Commission, or the FTC. After
signing the Merger Agreement, we and Parent have concluded that we are required to file the notification under the HSR Act and have made such required filing.
Tax Consequences
. Your receipt of cash in exchange for your shares of Supertex common stock in the Merger
generally will cause you to recognize a gain or loss measured by the difference, if any, between the cash you receive in the Merger, determined before the deduction of any applicable withholding taxes, and your adjusted tax basis in your shares of
Supertex common stock. If you are a U.S. person, as defined under The MergerCertain Material U.S. Federal Income Tax Consequences of the Merger to Supertex Shareholders, such recognized gain will generally be subject to U.S.
federal income taxation. If you are a non-U.S. person, also as defined under The MergerCertain Material U.S. Federal Income Tax Consequences of the Merger to Supertex Shareholders, such recognized gain will generally not be subject
to U.S. federal income taxation except in the circumstances described under The MergerCertain Material U.S. Federal Income Tax Consequences of the Merger to Supertex Shareholders. Under U.S. federal income tax law, you will be
subject to information reporting on cash received in the Merger unless an exemption applies. Backup withholding may also apply with respect to cash you receive in the Merger, unless you provide proof of an applicable exemption or a correct taxpayer
identification number and otherwise comply with the applicable requirements of the backup withholding rules. You should consult your own tax advisor for a full understanding of how the Merger will affect your U.S. federal, state and local and/or
foreign tax. See The MergerCertain Material U.S. Federal Income Tax Consequences of the Merger to Supertex Shareholders beginning on page 44.
Dissenters Rights (see page 38)
. If you do not wish to accept the $33.00 per share Merger
Consideration, you may have the right to seek payment in cash of the fair market value of your shares, provided that you comply with certain procedures. These dissenters rights are subject to a number of restrictions and technical
requirements. Generally, in order to exercise dissenters rights, among other things, (1) you must not vote to approve the Merger Proposal, (2) you must make a written demand for appraisal in compliance with California law and submit
to Supertex the certificates representing your shares, which must be received by Supertex not later than 30 days after the date notice is provided that the Merger Agreement has been approved and (3) you must hold shares of Supertex common stock
on the record date and continuously hold such shares through the consummation of the Merger. The fair market value of your shares of Supertex common stock as determined in accordance with California law may be more than, less than or the same as the
Merger Consideration to be paid to non-dissenting shareholders. Merely voting against approval of the principal terms of the Merger and adoption of the Merger Agreement will not preserve your dissenters rights under California law.
Annex
D
to this proxy statement contains a copy of the California statute relating to shareholders dissenters rights. Failure to follow all of the steps required by this statute may result in the loss of your dissenters rights.
6
Market Price of Supertex Common Stock
. Supertex common stock is
listed on the NASDAQ Global Market under the ticker symbol SUPX. The $33.00 per share Merger Consideration represents a premium of approximately 35.4% to the $24.38 per share closing price of Supertex common stock on
February 7, 2014, the last full trading day prior to the public announcement of the Merger.
QUESTIONS
AND ANSWERS ABOUT THE SPECIAL MEETING AND MERGER
Q:
|
What will happen to Supertex as a result of the Merger?
|
A:
|
Upon the consummation of the Merger, Supertex will cease to be a publicly-traded company and will become a wholly-owned subsidiary of Parent. You will no longer have any interest in our future earnings or growth.
Following consummation of the Merger, the registration of Supertex common stock and our reporting obligations with respect to our common stock under the Exchange Act will be terminated upon application to the SEC. In addition, upon completion of the
Merger, shares of our common stock will no longer be listed on any stock exchange, including the NASDAQ Global Market, or quotation system.
|
Q:
|
What will happen to my shares of Supertex common stock after the Merger?
|
A:
|
Upon the consummation of the Merger, each outstanding share of Supertex common stock, other than shares held by Supertex, Parent, Merger Sub, or any of their respective subsidiaries and shareholders who perfect their
dissenters rights, will automatically be cancelled and will be converted into the right to receive $33.00 in cash, without interest and less any applicable withholding taxes.
|
Q:
|
How does the per share Merger Consideration compare to the market price of Supertex common stock?
|
A:
|
The Merger Consideration of $33.00 per share of Supertex common stock represents approximately a 35.4% premium over $24.38, the closing price of Supertex common stock on NASDAQ on February 7, 2014, the last full
trading day before the execution of the Merger Agreement was publicly announced. On [
], 2014, which was the last full
trading day before the date of this proxy statement, the closing sale price of Supertex common stock on NASDAQ was $[] per share. You are encouraged to obtain current market quotations for Supertex common stock in connection with voting your
shares.
|
Q:
|
Will I own any shares of Supertex common stock or Parent common stock after the Merger?
|
A:
|
No. You will be paid cash for your shares of Supertex common stock. Our shareholders will not have the option to receive shares of Parent common stock in exchange for their shares instead of cash.
|
Q:
|
What happens to Supertex stock options in the Merger?
|
A:
|
Upon the consummation of the Merger, all outstanding vested options to acquire Supertex common stock will be cancelled. In consideration for the
cancellation of the options, the holder of any such option will receive an amount equal to the number of shares of our common stock underlying the option multiplied by the amount (if any) by which $33.00 exceeds the exercise price for each share of
Supertex common stock underlying the options, without interest and less any applicable withholding taxes. If the exercise price of the vested option is equal to or exceeds $33.00, the holder of such option will not be entitled to any Merger
Consideration. All outstanding unvested options will be assumed by Parent and remain subject to substantially the same terms and conditions, except that: (1) the number of shares of
|
7
|
Parent common stock subject to each such outstanding unvested option will be equal to the product of the number of shares of our common stock underlying such option and the Exchange Ratio,
rounded down to the nearest whole share, and (2) the exercise price of each such outstanding unvested option will be equal to the quotient determined by dividing the exercise price by the Exchange Ratio, rounded up to the nearest cent.
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Q:
|
What happens to the Supertex Employee Stock Purchase Plan in the Merger?
|
A:
|
The offering period underway at the time of the Merger will be shortened and terminate on either the last business day or the last payroll date prior to the Merger. Supertex will make such pro-rata adjustments as
necessary to reflect such shortened offering period, but will otherwise treat the shortened offering period as a fully effective and completed offering period and rights of plan participants will be exercised at the end of this offering period.
Supertex will provide that no additional offering periods commence under the plan after March 31, 2014 and the Employee Stock Purchase Plan will terminate prior to the consummation of the Merger.
|
Q:
|
Will the Merger be taxable to me?
|
A:
|
If you are a U.S. person, as defined under The MergerCertain Material U.S. Federal Income Tax Consequences of the Merger to Supertex Shareholders, gain recognized as a result of the Merger will
generally be subject to U.S. federal income taxation. If you are a non-U.S. person, also as defined under The MergerCertain Material U.S. Federal Income Tax Consequences of the Merger to Supertex Shareholders, such recognized gain
will generally not be subject to U.S. federal income taxation except in the circumstances described under The MergerCertain Material U.S. Federal Income Tax Consequences of the Merger to Supertex Shareholders. For discussion of
tax-related implications, see The MergerCertain Material U.S. Federal Income Tax Consequences of the Merger to Supertex Shareholders beginning on page 44.
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Q:
|
What am I being asked to vote on?
|
A:
|
Supertex and Parent have entered into a Merger Agreement pursuant to which Parent will acquire Supertex through the merger of Merger Sub with and into Supertex. Supertex will be the surviving corporation in the Merger
and will continue as a wholly-owned subsidiary of Parent. You are being asked to consider and vote upon proposals to (1) adopt the Merger Agreement and approve the principal terms of the Merger, referred to as the Merger Proposal, (2) to
approve, by an advisory (non-binding) vote, certain of the compensation that may be paid or become payable to Supertexs named executive officers that is based on or otherwise relates to the Merger, as well as the agreements pursuant to which
such compensation may be paid or become payable, referred to as the Advisory Compensation Proposal and (3) to approve the grant of authority to vote your shares to adjourn the Special Meeting to a later time or date, if necessary, to solicit
additional proxies in the event there are insufficient votes at the time of such adjournment to adopt the Merger Agreement, referred to as the Adjournment Proposal.
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Q:
|
Does our board of directors recommend approval of the Merger Proposal?
|
A:
|
Yes. Our board of directors reviewed and considered the terms and conditions of the Merger. Our board of directors determined that the Merger and the Merger Agreement are fair to, and in the best interests of, Supertex
and our shareholders, and declared the Merger Agreement and the transactions contemplated thereby, including the Merger, to be advisable. Our board of directors recommends that our shareholders approve the Merger Proposal.
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8
Q:
|
Why am I being asked to consider and cast an advisory (non-binding) vote to approve the Advisory Compensation Proposal?
|
A:
|
In July 2010, the SEC adopted rules that require companies to seek an advisory (non-binding) vote to approve certain compensation that may be paid or become payable to their named executive officers that is based on or
otherwise relates to the Merger and the agreements pursuant to which such compensation may be paid or become payable. In August 2013, our shareholders approved, on an advisory (non-binding) basis, certain of the compensation that may be paid or
become payable to our named executive officers and the agreements pursuant to which such compensation may be paid or become payable. In accordance with the rules promulgated under Section 14A of the Exchange Act, Supertex is providing its
shareholders with the opportunity to cast an advisory (non-binding) vote on the balance of the compensation that may be paid or become payable to Supertexs named executive officers in connection with the Merger, as well as the agreements
pursuant to which such compensation may be paid or become payable.
|
Q:
|
What will happen if Supertexs shareholders do not approve the Advisory Compensation Proposal?
|
A:
|
The vote to approve the Advisory Compensation Proposal is a vote separate and apart from the vote to adopt the Merger Agreement. Approval of the Advisory Compensation Proposal is not a condition to completion of the
Merger and is advisory in nature only, meaning that it will not be binding on Supertex or Microchip or any of their respective subsidiaries. Accordingly, if the Merger Agreement is adopted by the Supertex shareholders and the Merger is consummated,
the compensation that is based on or otherwise relates to the Merger may be paid or be payable to our named executive officers even if the Advisory Compensation Proposal is not approved.
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Q:
|
What vote of the shareholders is required to approve the Merger Proposal?
|
A:
|
To approve the Merger Proposal, shareholders of record as of the record date, February 24, 2014, holding a majority of the outstanding shares of Supertex common stock must vote
FOR
the approval
of the Merger Proposal. There are [] shares of Supertex common stock entitled to be voted at the Special Meeting.
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Q:
|
What vote of the shareholders is required to approve the Advisory Compensation Proposal?
|
A:
|
The approval of the Advisory Compensation Proposal requires the affirmative vote of the holders of a majority of the shares of Supertex common stock present, in person or by proxy, at the Special Meeting, excluding
abstentions.
|
Q:
|
What vote of the shareholders is required to approve the Adjournment Proposal?
|
A:
|
The approval of the Adjournment Proposal requires the affirmative vote of the holders of a majority of the shares of Supertex common stock present, in person or by proxy, at the Special Meeting, excluding abstentions.
|
Q:
|
Who is soliciting my vote?
|
A:
|
This proxy solicitation is being made and paid for by Supertex. In addition, we have retained Innisfree M&A Incorporated, or the proxy solicitor, to assist in the solicitation. We will pay Innisfree M&A
Incorporated approximately $15,000 plus out-of-pocket expenses for its assistance. Our directors, officers and employees may also solicit proxies by personal interview, mail, e-mail, telephone, facsimile or by other means of communication. These
persons will not be paid additional remuneration for their efforts. We will also request brokers and other custodians, nominees and fiduciaries to forward proxy solicitation material to the beneficial owners of shares of Supertex common stock that
the brokers and other custodians, nominees and fiduciaries hold of record. We will reimburse them for their reasonable out-of-pocket expenses.
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9
Q:
|
Am I entitled to dissenters rights?
|
A:
|
Yes. Under California law, you have the right to exercise dissenters rights with respect to your shares and obtain payment in cash for the fair market value of your shares, but only if you do not vote in favor of
the Merger Proposal and comply with the California law procedures explained in this proxy statement in the section entitled The MergerDissenters Rights beginning on page 38.
|
Q:
|
What is the date, time and location of the Special Meeting?
|
A:
|
The Special Meeting will be held at Supertexs offices at 1235 Bordeaux Drive, Sunnyvale, California 94089, at 10:00 a.m., local time, on
[
], 2014.
|
Q:
|
What do I need to do now?
|
A:
|
We urge you to read this proxy statement carefully, including its annexes, and consider how the Merger affects you. Then mail your completed, dated and signed proxy card in the enclosed return envelope or appoint a
proxy over the Internet or by telephone as soon as possible so that your shares can be voted at the Special Meeting.
|
Q:
|
What happens if I do not return a proxy card?
|
A:
|
The failure to return your proxy card (or to appoint a proxy over the Internet or by telephone or to vote in person) will have the same effect as voting
AGAINST
approval of the Merger Proposal.
|
Q:
|
How are votes counted?
|
A:
|
For the proposal relating to the approval of the Merger Proposal, you may vote
FOR
,
AGAINST
or
ABSTAIN
. Abstentions will count for the purpose of determining
whether a quorum is present. However, if you
ABSTAIN
, it has the same effect as if you vote
AGAINST
the approval of the Merger Proposal. For the Advisory Compensation Proposal and the Adjournment Proposal, you
may vote
FOR
,
AGAINST
or
ABSTAIN
. Abstentions will count for the purpose of determining whether a quorum is present. If you
ABSTAIN
, it will have no effect on the vote
concerning the Advisory Compensation Proposal or the Adjournment Proposal. If you sign and return your proxy and do not indicate how you want to vote, your proxy will be voted
FOR
the Merger Proposal,
FOR
the
Advisory Compensation Proposal and
FOR
the Adjournment Proposal. If you hold your shares in street name, follow the instructions from your broker on how to vote your shares. Please do NOT send in your share
certificates with your proxy card.
|
A:
|
Yes. You may vote in person at the Special Meeting, rather than signing and returning your proxy card, if you own shares in your own name. However, we encourage you to return your signed proxy card to ensure that your
shares are voted. You may also vote in person at the Special Meeting if your shares are held in street name through a broker or bank provided that you bring a legal proxy from your broker or bank and present it at the Special Meeting.
You may also be asked to present photo identification for admittance.
|
10
Q:
|
May I appoint a proxy over the Internet or by telephone?
|
A:
|
Yes. You may appoint a proxy over the Internet or by telephone by following the instructions included in these materials. Please have your proxy card in hand when accessing the website over the Internet. See The
Special MeetingVoting over the Internet or by Telephone beginning on page 49.
|
Q:
|
May I change my vote after I have mailed my signed proxy card?
|
A:
|
Yes. You may change your vote at any time before the shares reflected on your proxy card are voted at the Special Meeting. You can do this in one of four ways. First, you can send a written, dated notice to Vote
Processing, c/o Broadridge at the address immediately below, stating that you would like to revoke your proxy. Second, you can complete, sign, date and submit a new proxy card. Third, you can submit a subsequent proxy over the Internet or by
telephone. Fourth, you can attend the meeting and vote in person. Your attendance alone will not revoke your proxy. If you have instructed a broker to vote your shares, you must follow the directions received from your broker to change your
instructions.
|
Written notices of revocation and other communications with respect to revocation of any proxies should be
addressed to: Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
Q:
|
If my shares are held in street name by my broker, will my broker vote my shares for me?
|
A:
|
Your broker will
NOT
vote your shares without instructions from you. You should instruct your broker to vote your shares, following the procedure provided by your broker. Without instructions, your shares will
not be voted, which will have the same effect as voting
AGAINST
approval of the Merger Proposal.
|
Q:
|
Who is entitled to attend and vote at the Special Meeting?
|
A:
|
Only Supertex shareholders of record at the close of business on February 24, 2014, or the record date, are entitled to notice of and to vote at the Special Meeting and any adjournment or postponement of the
meeting. On the record date, there were 11,561,753 issued and outstanding shares of Supertex common stock entitled to vote at the Special Meeting.
|
Q:
|
How many votes am I entitled to cast?
|
A:
|
You are entitled to cast one vote for each share of Supertex common stock that you own on the record date.
|
Q:
|
How many votes must be present to conduct business at the Special Meeting?
|
A:
|
In order for business to be conducted, a quorum must be represented in person or by proxy at the Special Meeting. A quorum is the presence in person, or representation by proxy, of shareholders holding a majority of the
shares of Supertex common stock entitled to vote at the Special Meeting. Shares represented by a proxy marked abstain will be considered present at the Special Meeting for purposes of determining a quorum. If you are a Supertex
shareholder of record and you submit a properly executed proxy card, vote by telephone or via the Internet or vote in person at the Special Meeting, then your shares of Supertex common stock will be counted as part of the quorum. If you are a
street name holder of shares and you provide your bank, broker or other nominee with instructions on how to vote your shares or obtain a legal proxy from such bank, broker or nominee to vote your shares in person at the Special Meeting,
then your shares will be counted as part of the quorum. If you are a street name holder of shares and you do not provide your bank, broker or other nominee with instructions on how to vote your shares and do not obtain a legal proxy from
such bank, broker or nominee to vote your shares in person at the Special Meeting, then shares (also known as broker non-votes) will be counted as part of the quorum. All shares of Supertex common stock held by Supertex shareholders that are present
in person or represented by proxy at the Special Meeting, regardless of how such shares are voted or whether such Supertex shareholders abstain from voting, will be counted in determining the presence of a quorum.
|
11
Q:
|
What does it mean if I receive more than one proxy?
|
A:
|
If you receive more than one proxy, it means that you hold shares of Supertex common stock that are registered in more than one account. For example, if you own your shares in various registered forms, such as jointly
with your spouse, as trustee of a trust or as custodian for a minor, you will receive, and you will need to sign and return, a separate proxy card for those shares because they are held in a different form of record ownership. Therefore, to ensure
that all of your shares are voted, you will need to sign and return each proxy card you receive or vote by telephone or via the Internet by using the different control number(s) on each proxy card.
|
Q:
|
Should I send in my stock certificates now?
|
A:
|
No. After the Merger is consummated, you will receive written instructions for exchanging your shares of Supertex common stock for the Merger Consideration of $33.00 in cash, without interest and less any applicable
withholding taxes, for each share of Supertex common stock.
|
Q:
|
When do you expect the Merger to be consummated?
|
A:
|
We are working toward completing the Merger as soon as possible after the Special Meeting, but we cannot predict the exact timing. We currently expect the Merger to be consummated in the second quarter of 2014. In
addition to obtaining shareholder approval, all other closing conditions must be satisfied or waived. However, we cannot assure you that all conditions to the Merger will be satisfied or, if satisfied, the date by which they will be satisfied.
|
Q:
|
When will I receive the Merger Consideration for my shares of Supertex common stock?
|
A:
|
After the Merger is consummated, you will receive written instructions, including a letter of transmittal, that explain how to exchange your shares for the Merger Consideration of $33.00 in cash, without interest and
less any applicable withholding taxes, for each share of Supertex common stock you own. When you properly return and complete the required documentation described in the written instructions, you will promptly receive from the payment agent a
payment of the Merger Consideration for your shares.
|
Q:
|
What happens if I sell my shares of Supertex common stock before the Special Meeting?
|
A:
|
The record date for shareholders entitled to vote at the Special Meeting is earlier than the date of the Special Meeting and the expected closing date of the Merger. If you transfer your shares of Supertex common stock
after the record date but before the Special Meeting, you will, unless special arrangements are made, retain your right to vote at the Special Meeting but will transfer the right to receive the Merger Consideration to the person to whom you transfer
your shares. In addition, if you sell your shares prior to the Special Meeting or prior to the consummation of the Merger, you will not be eligible to exercise your dissenters rights in respect of the Merger. For a more detailed discussion of
your dissenters rights and the requirements for perfecting your dissenter rights, see The MergerDissenters Rights beginning on page 38.
|
12
Q:
|
Who can help answer my questions?
|
A:
|
If you would like additional copies, without charge, of this proxy statement or if you have questions about the Merger, including the procedures for voting your shares, you should contact us or our proxy solicitor,
Innisfree M&A Incorporated, as follows:
|
|
|
|
Supertex, Inc.
Investor Relations
1235 Bordeaux
Drive
Sunnyvale, California 94089
Telephone: (408) 222-8888
|
|
Innisfree M&A Incorporated
501 Madison Avenue, 20
th
Floor
New York, NY 10022
Shareholders
call toll-free: (888) 750-5834
Banks and brokers call collect: (212) 750-5833
|
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
This proxy statement, and the documents to which we refer you in this proxy statement, include forward-looking statements that involve risks,
uncertainties, estimates and assumptions. If such risks or uncertainties materialize or such estimates or assumptions prove incorrect, the results of Supertex and its consolidated subsidiaries could differ materially from those expressed or implied
by such forward-looking statements and assumptions. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. In many cases you can identify forward-looking statements by the use of words
such as believe, estimate, anticipate, intend, plan, continue, predict, potential, contemplate, expect, may,
will, likely, could, should or would or other similar words or phrases, although the absence of such words or phrases does not necessarily mean that a statement is not forward-looking.
These statements are subject to risks, uncertainties and other factors, including, among others:
|
|
|
the effect of the announcement of the Merger on Supertexs business relationships, operating results and business generally;
|
|
|
|
the retention of certain key employees by Supertex;
|
|
|
|
the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement;
|
|
|
|
the shareholder approval or other conditions to the consummation of the Merger not being satisfied, or the regulatory approvals required for the Merger not being obtained on the terms expected or on the anticipated
schedule;
|
|
|
|
the amount of fees and expenses related to the Merger;
|
|
|
|
the diversion of managements attention from ongoing business concerns;
|
|
|
|
the Merger Agreements contractual restrictions on the conduct of our business prior to the completion of the Merger;
|
|
|
|
the possible adverse effect on our business and the price of our common stock if the Merger is not completed in a timely manner or at all;
|
|
|
|
the outcome of any legal proceedings, regulatory proceedings or enforcement matters that have been or may be instituted against us and others relating to the Merger;
|
|
|
|
the possibility that the selected unaudited prospective financial information in this proxy statement will not turn out to be accurate or necessarily predictive of actual future operating results; and
|
|
|
|
Supertexs and Microchips ability to meet expectations regarding the timing and completion of the Merger.
|
13
In addition, we are subject to risks and uncertainties and other factors detailed in
Supertexs annual report on Form 10-K for the fiscal year ended March 30, 2013, filed with the SEC on June 13, 2013, which should be read in conjunction with this proxy statement. For a detailed discussion of these and other risk
factors, please refer to this and our other filings with the SEC on Forms 10-K, 10-Q and 8-K, which should be read in conjunction with this proxy statement. You can obtain copies of our Forms 10-K, 10-Q and 8-K and other filings for free at the
Investors section of our website at
www.supertex.com
, at the SEC website at
www.sec.gov
or from commercial document retrieval services.
Many of the factors that will determine Supertexs future results are beyond Supertexs ability to control or predict. We cannot
assure you that the actual results or developments reflected in these forward-looking statements will be realized or, even if they are realized, that they will have the expected effects on the Merger or on our business or operations. In light of the
significant uncertainties inherent in the forward-looking statements contained herein, readers should not place undue reliance on forward-looking statements, which reflect managements views only as of the date of this proxy statement. We
cannot guarantee any future results, levels of activity, performance or achievements. The statements made in this proxy statement represent Supertexs views as of the date of this proxy statement, and it should not be assumed that the
statements made herein remain accurate as of any future date. Moreover, we assume no obligation and do not intend to update forward-looking statements or update the reasons for actual results differing materially from those anticipated in
forward-looking statements, except as required by law.
THE PARTIES TO THE MERGER
Supertex, Inc.
Supertex is a California corporation with headquarters in Sunnyvale, California. Supertex designs, manufactures and markets a diversified range
of integrated circuits, or ICs, utilizing high voltage analog and mixed signal technologies. Supertexs principal executive offices are located at 1235 Bordeaux Drive, Sunnyvale, California 94089, and our telephone number is
(408) 222-8888. For more information about Supertex, please visit our website at
www.supertex.com
. Our website address is provided as an inactive textual reference only. The information provided on our website is not part of this proxy
statement, and therefore is not incorporated by reference. Supertex is publicly traded on the NASDAQ Global Market under the ticker symbol SUPX.
Microchip Technology Incorporated
Microchip Technology Incorporated is a Delaware corporation with headquarters in Chandler, Arizona. Microchip Technology Incorporated is a
leading provider of microcontroller and analog ICs. The principal office address of Microchip Technology Incorporated is 2355 W. Chandler Blvd., Chandler, Arizona 85224, and its telephone number is (480) 792-7200. For more information
about Microchip Technology Incorporated, please visit its website at www.microchip.com. This website address is provided as an inactive textual reference only. The information provided on Microchip Technology Incorporateds website is not part
of this proxy statement, and therefore is not incorporated by reference. Microchip Technology Incorporated is publicly traded on the NASDAQ Global Market under the ticker symbol MCHP.
Orchid Acquisition Corporation
Orchid Acquisition Corporation is a California corporation and is a wholly-owned subsidiary of Microchip Technology Incorporated and has not
engaged in any business activity other than in connection with its formation and the Merger. The principal office address of Orchid Acquisition Corporation is 2355 W. Chandler Blvd., Chandler, Arizona 85224, and its telephone number is
(480) 792-7200.
14
THE MERGER
The discussion of the Merger and the Merger Agreement contained in this proxy statement summarizes the material terms of the Merger and the
Merger Agreement. Although we believe that the description covers the material terms of the Merger and the Merger Agreement, this summary may not contain all of the information that is important to you. We urge you to read this proxy statement, the
Merger Agreement, a copy of which is attached to this proxy statement as
Annex A
, and the other documents referred to herein (including the other annexes) carefully for a more complete understanding of the Merger and the Merger Agreement.
Background of the Merger
Over the past several years, Supertexs business has faced increasingly strengthened competition in its end markets and it has become
clear that in order to compete successfully in todays global marketplace, size and scale are crucial. In part because the semiconductor market is characterized by substantial cyclicality and long lead times between the development of products
and revenue-generating shipments, the Supertex board of directors periodically reviews Supertexs business plan and potential strategic opportunities with Supertex management. These discussions focus, among other matters, on the competitive
environment in the semiconductor industry and our specific target markets. The Supertex board of directors and Supertex management have also recognized that many of Supertexs competitors are larger, more diversified companies, with
substantially greater financial resources and capacity to invest in the development and marketing of new products and technologies. Accordingly, in connection with their desire to leverage Supertexs technology and proprietary intellectual
property, members of Supertex senior management and its board of directors have periodically reviewed and assessed its business strategy, the various trends and conditions affecting its business and the semiconductor industry generally, and a
variety of strategic alternatives as part of its long-term strategy to increase revenue and profitability and maximize shareholder value. In light of these market and business dynamics, the Supertex board of directors and Supertex management have
evaluated the strategic alternatives available to Supertex, including Supertexs prospects as a standalone company.
The Supertex
board of directors has continually looked for ways to increase shareholder value. Supertex management has held preliminary strategic discussions with companies that might be potential acquirers over the years, and has explored the potential of an
acquisition when interest was expressed. In addition, Supertex looked for synergistic companies or product lines it could acquire, but did not find a business that it wanted to acquire on terms it deemed attractive. Supertex also deployed
approximately $25 million of cash on stock repurchases and a one-time dividend in an attempt to increase shareholder value.
Despite being
profitable and cash flow positive, Supertex has not been able to consistently materially grow its revenues and, in the past few years, the stock price has typically fluctuated between $18 and $25, with the stock price at the upper end of that range
when the Merger was announced. The Supertex board of directors felt that Supertexs value would increase with revenue growth and that, when the time was right, an acquisition of Supertex by a larger company would provide the size and scope
beneficial for Supertexs technology and products. As a result, Supertexs business focus has been on new product development, design wins, and marketing and sales activity in order to grow its revenues.
Strategic Discussions with Companies other than Microchip in Prior Two Years
The Supertex board of directors, together with Supertex senior management, periodically reviews and considers Supertexs long-term
business strategy and the various strategic opportunities available, including whether the continued execution of Supertexs strategy as a stand-alone company or the sale of Supertex to, or a combination of Supertex with, a third party offers
the best avenue to maximize shareholder value. In connection with such review, members of Supertex senior management have met, from time to time, with various third parties who expressed an interest in engaging in a strategic transaction with
Supertex.
15
In 2012 and 2013, Supertex had discussions with five other strategic parties, not including
Microchip, to explore areas of potential collaboration. During such meetings, Supertex management, accompanied by financial representatives, provided a presentation of Supertexs business. During this period of time, Supertex management and
financial representatives also conducted calls and other interactions with the various potential buyers to respond to initial diligence questions based on meetings with Supertex management. On August 12, 2012, Company A entered into
non-disclosure agreement with Supertex so that Supertex and Company A could exchange confidential due diligence information and engage in discussions concerning a potential transaction in which Supertex would be acquired by Company A. The
discussions did not result in the consummation of a transaction, as Company A never submitted a written proposal, and in part because Company A and Supertex appeared to be far apart on the value of Supertex.
Material Interactions with Microchip
Between November 2008 and December 2010, executives from Supertex and Microchip met on several occasions to explore areas of potential
collaboration between the companies, during which Microchip expressed an interest in exchanging confidential due diligence information. These meetings were held pursuant to mutual non-disclosure agreements between Supertex and Microchip executed on
November 12, 2008 and on November 11, 2010.
Between January and May 2008, Microchip acquired 597,400 shares, or 4.9% of
Supertex common stock, in the open market. Microchip also sold certain put options in Supertex stock in the open market between June and September 2008, the contracts for which had put dates between March 2008 and March 2009. In December 2008 and
March 2009, the exercise of multiple put contracts resulted in Microchip acquiring additional shares of Supertex stock, and by March 2009, Microchip owned 1,187,400 shares, or 9.2% of Supertex common stock. In May 2009, Microchip approached Supertex
with an offer to acquire the remaining Supertex shares. However, this transaction was abandoned in June 2009 after a term sheet had been submitted with a proposed price of $28.73 per share, due diligence had begun, and drafts of a definitive
agreement had been exchanged, although no exclusivity agreement had been executed. The Supertex board of directors met with Supertex management and Supertexs then financial advisor regarding this proposed transaction. Beginning in July 2009,
Microchip began selling its Supertex shares and had sold all of its Supertex shares by the end of September 2009.
In October 2010,
Microchip again approached Supertex. On October 27, 2010, Supertex and Microchip entered into an exclusivity agreement and Microchip submitted a term sheet offering $29.00 per share, which was subsequently negotiated and increased to $30.00 per
share on October 29, 2010, to acquire Supertex by merger. In addition, Supertex and Microchip entered into a new non-disclosure agreement on November 11, 2010. Drafts of a definitive agreement were exchanged and due diligence recommenced.
Supertex management conferred with members of the Supertex board of directors regarding this proposed transaction. However, the discussions did not result in the consummation of a transaction and efforts were abandoned in December 2010. Thereafter,
between March and May 2011, Microchip purchased a total of 248,059 shares of Supertex common stock in the open market, which it then sold between July and August 2013.
On December 9, 2013, Steve Sanghi, the Chairman of the Board, President and Chief Executive Officer of Microchip, called Henry Pao, the
President and Chief Executive Officer of Supertex, to catch up on industry trends and Supertexs business with the aim of seeing whether there could be a transaction between the two companies. On December 19, 2013, Mr. Sanghi and
Dr. Pao had another conversation regarding the possibility of a strategic transaction, during which Mr. Sanghi communicated a price of $30.00 per share of Supertex common stock. Dr. Pao responded that he believed the value of Supertex
to Microchip to be higher. On January 10, 2014, Mr. Sanghi and Dr. Pao spoke by telephone. During this conversation, Mr. Sanghi told Dr. Pao that he had calculated the value of Supertex to Microchip to be in the range of
$30.00 to $31.00 per share of Supertex common stock. This range was consistent with the premium negotiated in 2009 and 2010. After consultation with Benedict Choy, a director and Senior Vice President of Supertex, Dr. Pao responded that he
believed that the value of Supertex to Microchip should be $33.00 per share or higher. Mr. Sanghi indicated that he wished to invite Supertex management to visit Microchip and make a presentation about Supertex. Dr. Pao responded that he
would do so only if Microchip would be willing to pay $33.00 per share for Supertex. Mr. Sanghi replied that he would have to consult with Microchips board of directors.
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Also, on January 10, 2014, in connection with the renewed discussions, Dr. Pao
contacted Oppenheimer because of its qualifications, expertise, reputation and knowledge of Supertexs business and affairs and the industry in which Supertex operates and because representatives from Oppenheimer, when at another firm, had
previously discussed Supertexs strategic positioning, future prospects, and strategic partners with the Supertex board of directors in connection with the Supertex board of directors prior strategic discussions and review of business
performance, risks, strategic direction and opportunities in prior years.
Over the weekend of January 11-12, 2014, Mr. Sanghi
spoke with certain members of Microchips board of directors telephonically as well as with members of Microchips management team to discuss the potential transaction. Subsequently, on January 12, 2014, Mr. Sanghi confirmed to
Dr. Pao that Microchip would offer a price of $33.00 per share, subject to confirmatory due diligence, which he proposed to begin immediately. Consequently, Mr. Sanghi provided a mutual non-disclosure agreement to Dr. Pao, which was
executed on January 14, 2014. At Dr. Paos request, this agreement did not contain any exclusivity provision.
On
January 13, 2014, Mr. Sanghi and Dr. Pao agreed that the Supertex team would visit the Microchip team in Chandler, Arizona on January 25, 2014 to make presentations concerning Supertex, to provide due diligence materials, and to
continue discussions concerning the potential acquisition.
On January 14, 2014, Microchip sent a request for confidential due
diligence information to Supertex, which included requests for a company overview and background and financial information.
Also, on
January 14, 2014, Supertex entered into a letter agreement with Oppenheimer to engage Oppenheimer as its financial advisor.
On
January 17, 2014, after Supertexs audit committee meeting, Dr. Pao told Mark Loveless, a Supertex outside director and audit committee chair, about the discussions he had been having with Mr. Sanghi. Dr. Pao had been
conferring with Mr. Choy throughout regarding his discussions with Mr. Sanghi.
Also, on January 17, 2014, representatives
from Microchip and its outside legal counsel, Wilson Sonsini Goodrich & Rosati, P.C., or WSGR, sent a draft of the Merger Agreement to Oppenheimer. This draft was accompanied by a red-line to Supertexs mark-up of the prior draft
Merger Agreement, which Supertexs outside legal counsel, Pillsbury Winthrop Shaw Pittman LLP, or Pillsbury, had provided to representatives from WSGR in 2010.
On January 22, 2014, Dr. Pao informed the other two outside directors of the discussions with Microchip by email.
On January 25, 2014, the management teams of both Supertex and Microchip met at Microchips headquarters in Chandler, Arizona to
discuss and provide additional background regarding Supertex and to explore the possibility of a strategic transaction. In attendance at the meeting from Microchip were Mr. Sanghi as well as several key Microchip executives. In attendance at
the meeting on behalf of Supertex were Dr. Pao, Mr. Choy and representatives from Oppenheimer. The parties discussed Supertexs business, including its market position, growth drivers, organizational structure and end market
opportunities. The parties also discussed Supertexs product portfolio, manufacturing operations and financial performance. Executives from both Supertex and Microchip agreed that there were merits in pursuing a potential transaction and
Mr. Sanghi and Dr. Pao confirmed their prior understanding regarding a price of $33.00 per share based on the due diligence provided in the interim.
Over the course of the next two weeks, several telephonic meetings occurred between representatives from Microchip and Supertex and their
respective financial and legal advisors, as Microchip updated its due diligence conducted in the fall of 2010. During this time, Supertex and Microchip renewed their negotiations over the terms of the Merger Agreement, including provisions relating
to Supertexs business during the period after execution of the Merger Agreement, but prior to consummation of the Merger, the conditions to the closing of the transaction, the situations under which the parties could terminate the Merger
Agreement and under which termination fees would be payable and the circumstances under which Supertex could
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review and accept alternative transactions. The parties also negotiated a proposed voting agreement to be entered into by members of the Supertex board of directors in their capacity as Supertex
shareholders. In addition, during this time period, Supertex management prepared revenue forecasts and various assumptions regarding operating results for calendar years 2014 through 2018 for use in developing a discounted cash flow analysis.
On January 26, 2014, Dr. Pao sent an email to Supertexs outside directors calling for a board meeting on January 30, 2014
to update them about the results of the meeting in Chandler, Arizona. On January 27, 2014, Mr. Sanghi spoke telephonically with members of Microchips board of directors to apprise them of the transaction and the diligence meeting.
On January 27, 2014, additional due diligence requests were made by Microchip concerning topics such as further financial and
capitalization information and wafer fabrication operations. Supertex provided these additional items on an ongoing basis.
On
January 28, 2014, representatives from Pillsbury and WSGR met telephonically to discuss the proposed transaction and review the draft of the Merger Agreement dated January 17, 2014, during which representatives from WSGR explained their
proposed edits to the 2010 draft agreement from Pillsbury. As a result, representatives from Pillsbury communicated to Supertex and Oppenheimer a variety of issues which Supertex might wish to raise in the next revision of the Merger Agreement.
Also, on January 30, 2014, Supertex received additional due diligence requests from Microchip concerning its manufacturing facilities,
which Supertex provided later that day. Additionally, Microchip requested tax due diligence, which Supertex and representatives from Oppenheimer provided to Microchip.
On January 30, 2014, representatives from Pillsbury sent an initial draft of Supertexs disclosure schedules as related to the draft
of the Merger Agreement dated January 17, 2014 to representatives from WSGR and Microchip. Additionally, representatives from WSGR provided representatives from Pillsbury a draft of the voting agreement. This draft of the voting agreement was
accompanied by a red-line to Supertexs mark-up of the prior draft voting agreement representatives from Pillsbury had provided to representatives from WSGR in 2010.
Later, on January 30, 2014, the Supertex board of directors met telephonically, with representatives from Pillsbury and Oppenheimer
participating, to discuss the valuation proposed by Microchip and to consider a potential strategic transaction with Microchip. At this meeting, a representative of Pillsbury reviewed with the members of the Supertex board of directors the
directors fiduciary duties and Supertex management sought the Supertex board of directors guidance as to key legal and business issues to further negotiate in connection with the draft Merger Agreement. In responding and choosing such
provisions, the Supertex board of directors emphasized the need for assurances that the transaction would close, the need to maintain stability among Supertexs employees both between signing and closing and to ensure that the proposed Merger
Agreement did not unduly restrict the Supertex board of directors ability to take actions necessary to comply with its fiduciary duties during the period following entry into the Merger Agreement. The Supertex board of directors also
highlighted the importance of having appropriate termination rights and remedies available to Supertex under the Merger Agreement. Oppenheimer provided a preliminary financial analysis relating to a potential acquisition of Supertex by Microchip.
The Supertex board of directors also reviewed Supertexs one-year, two-year, four-year and ten-year stock price averages of $22.87 per share, $20.88 per share, $21.78 per share and $25.34 per share, respectively. In addition, the Supertex board
of directors was advised that 99% of the stock traded below $27.00 per share over the last two years.
From January 30, 2014 through
February 7, 2014, representatives from Microchip, Supertex and their respective financial and legal advisors further discussed and negotiated the outstanding issues with respect to the terms of Microchips proposed acquisition of Supertex,
including with respect to mechanics and timing of the potential merger. The management teams and legal and financial advisors of Microchip and Supertex further negotiated the terms and conditions of the Merger Agreement, including, among other
things, the termination provisions, Microchips right to terminate the Merger Agreement in the event of a material adverse effect, the termination fee and transaction expenses provisions, the non-solicitation covenants, the Supertex board of
directors ability to change its recommendation of the Merger and other representations, warranties and covenants. During that period, drafts of the Merger Agreement were exchanged and negotiated between the parties and Supertexs and
Microchips respective legal advisors participated in numerous conference calls.
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On January 31, 2014, Microchip held a tax due diligence call with advisors from both
companies. Microchips representatives were in attendance as well as a representative from KPMG LLP. Representatives from Supertex and Oppenheimer were in attendance on behalf of Supertex.
Also, on January 31, 2014, representatives from Pillsbury provided a revised draft of the Merger Agreement to representatives from WSGR
and Microchip, which was a revision of the draft Merger Agreement dated January 17, 2014 and addressed certain terms including deal certainty provisions as well as deal protection provisions such as the termination fee, non-solicitation
provisions, and termination rights.
On February 1, 2014, after further review with Supertex, representatives from Pillsbury sent a
revised version of Supertexs disclosure schedules to representatives from WSGR and Microchip for review.
On February 3, 2014,
representatives from Pillsbury and WSGR met telephonically to discuss WSGRs comments to the revised Merger Agreement dated February 1, 2014. Subsequently, on February 4, 2014, representatives from Pillsbury provided written feedback
on several open items to representatives from WSGR as a result of the discussion the day prior, which included a proposal covering the major open items, including deal protection terms such as the termination fee and termination rights.
Later, on February 4, 2014, Microchip requested additional financial due diligence from Supertex.
On February 5, 2014, Microchip requested additional due diligence items around the product portfolio from Supertex, after which
Dr. Pao provided feedback concerning any current and new product introductions. Additionally, later that day, Microchip held a board meeting to discuss the proposed transaction with Supertex, review of the results of the due diligence, synergy
and valuation analysis, and as a result decided to move forward with the transaction. Mr. Sanghi called Dr. Pao and a representative of Oppenheimer on separate occasions to discuss some of the key issues outstanding on the Merger Agreement
contained in Pillsburys proposal. Also, representatives from WSGR provided representatives from Pillsbury with some questions and comments regarding the disclosure schedule.
On February 6, 2014, representatives from WSGR provided representatives from Pillsbury with a revised draft of the Merger Agreement which
reflected their discussions earlier during the week and Microchips reaction to Pillsburys proposal. Subsequently, on February 6, 2014, representatives from Pillsbury and WSGR met telephonically to discuss the revisions to the
Merger Agreement and to resolve Pillsburys remaining comments on both the voting agreement and Merger Agreement.
Representatives
from WSGR sent copies of a revised Merger Agreement and voting agreement to representatives from Pillsbury on February 7, 2014, in which they had resolved the remaining open items and finalized the agreements. Also, on February 7, 2014,
representatives from Pillsbury provided an updated draft of Supertexs disclosure schedule to representatives from WSGR.
On
February 7, 2014, the Supertex board of directors met telephonically, with representatives from Pillsbury and Oppenheimer also participating. Representatives from Oppenheimer presented Oppenheimers financial analysis of the consideration
to be received by holders of Supertex common stock pursuant to the Merger Agreement and responded to questions. Representatives from Pillsbury again reviewed the Supertex board of directors fiduciary duties in the context of a merger and
reviewed the draft Merger Agreement circulated previously to the Supertex board of directors, including the resolution of the issues highlighted to the Supertex board of directors at its January 30, 2014, meeting. The Supertex board of
directors discussed the reasons for the Merger and the alternatives, including remaining a stand-alone company, trying to negotiate a higher price from Microchip, or terminating discussions with Microchip and seeking a higher price elsewhere. The
Supertex board of directors then discussed the prospects and risks of remaining a stand-alone company and for a variety of reasons determined that the present time was an optimal time to sell Supertex. The Supertex board of directors also ratified
Supertex entering into the January 14, 2014, letter agreement with Oppenheimer.
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On February 8 and 9, 2014, representatives from Pillsbury and WSGR, together with
representatives from Supertex and Microchip, worked together to resolve Microchips comments to the disclosure schedule and finalize it in the morning of February 9, 2014.
In the afternoon of February 9, 2014, Microchips board of directors met telephonically to review the final terms of the final
Merger Agreement and to consider and approve the transaction.
In the afternoon of February 9, 2014, the Supertex board of directors
then met telephonically, with representatives from Pillsbury and Oppenheimer also participating. Representatives from Oppenheimer responded to questions from the Supertex board of directors regarding its financial analysis presented at the
February 7, 2014 board meeting and orally rendered Oppenheimers opinion, which was confirmed by delivery of written opinion dated February 9, 2014, to the effect that as of February 9, 2014 and based on and subject to the
considerations, limitations, and other matters set forth therein, the Merger Consideration to be received by the holders of shares of Supertex common stock pursuant to the Merger Agreement was fair to such holders from a financial point of view.
Representatives from Pillsbury next reviewed the Supertex board of directors discussion from the prior meeting concerning the reasons for the Merger and the alternatives and the minor changes to the voting agreement and Merger Agreement from
the versions sent to the Supertex board of directors in advance of the prior meeting and responded to questions. After further discussion, the Supertex board of directors, having determined that the terms of the Merger Agreement and the transactions
contemplated thereby on the terms discussed by the board of directors at the meeting, including the Merger, were fair to and in the best interests of the Supertex shareholders, unanimously approved and declared advisable the Merger Agreement and the
transactions contemplated thereby, including the Merger, directed that the Merger Agreement as approved by the board of directors be submitted to the Supertex shareholders for adoption and approval, and recommended that the Supertex shareholders
vote in favor of the adoption and approval for the Merger Agreement and the transactions contemplated thereby, including the Merger.
Later, on February 9, 2014, the Merger Agreement was entered into by Microchip and Supertex and voting agreements were entered into by
Microchip and each of the members of the Supertex board of directors, in their capacities as Supertex shareholders. Microchip and Supertex issued a joint press release announcing the execution of the Merger Agreement before the opening of trading in
Microchip and Supertex common stock on February 10, 2014.
On February 18, 2014, each of Supertex and Microchip filed a
notification and report form with the FTC and the DOJ under the HSR Act and each requested early termination of the waiting period.
Reasons for the Merger of Supertex and Recommendation of our Board of Directors
Reasons for the Recommendation of our Board
of Directors
After careful review and consideration of the terms and conditions of the Merger, as set forth in the Merger
Agreement, the Supertex board of directors determined that the Merger and the Merger Agreement, and the transactions contemplated thereby, are fair to, and in the best interests of, Supertex and its shareholders and declared the Merger Agreement and
the transactions contemplated thereby, including the Merger, to be advisable to Supertex and its shareholders. Accordingly, the Supertex board of directors unanimously approved the Merger and the Merger Agreement and unanimously recommends that
Supertex shareholders vote
FOR
adoption and approval of the Merger Proposal.
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In the course of determining that the Merger, the Merger Agreement and the transactions
contemplated thereby are fair to, in the best interests of and advisable to Supertex and its shareholders, the Supertex board of directors consulted with management as well as its financial and legal advisors and considered a number of factors in
making its determination, including the following substantive factors and potential benefits of the Merger, each of which the Supertex board of directors believed supported its decision (which are not listed in any relative order of importance):
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the current and historical financial condition, results of operations, business and prospects of Supertex if Supertex were to remain an independent company and the potential impact on the trading price of the Supertex
common stock (which is not feasible to quantify numerically). The Supertex board of directors discussed the risks associated with achieving and executing upon Supertexs business plan, the impact of general economic market trends on
Supertexs sales, as well as the general risks of market conditions that could reduce Supertexs stock price. Among the potential risks identified by our board of directors were Supertexs exposure to volatile end-markets, the impact
of pricing pressure and manufacturers capital expenditure dynamics on Supertexs business units and risks associated with Supertex deriving a significant portion of its revenue from mature markets and technologies. In part in light of the
foregoing, the Supertex board of directors believed that the per share amount of $33.00 offered greater certainty of value to Supertex shareholders than continuing to operate on a stand-alone basis;
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possible alternatives to the acquisition by Microchip (including the possibility of continuing to operate Supertex as an independent entity and the desirability and perceived risks of that alternative), potential
benefits to Supertex shareholders of these alternatives and the timing and likelihood of accomplishing the goals of such alternatives, as well as the Supertex board of directors assessment that none of these alternatives was reasonably likely
to present superior opportunities for Supertex to create greater value for Supertex shareholders, taking into account risks of execution as well as business, competitive, industry and market risks;
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the fact that the Merger Consideration of $33.00 per share represents a significant premium over the market price at which Supertex common stock traded prior to the announcement of the execution of the Merger Agreement,
including the fact that the Merger Consideration of $33.00 per share represents an approximate premium of 35.4% based on the closing price per share of $24.38 on February 7, 2014, the last full trading day before the execution of the Merger
Agreement was publicly announced and an enterprise premium of 72%;
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the oral opinion delivered to the Supertex board of directors by Oppenheimer on February 9, 2014 (which was confirmed in writing by delivery of Oppenheimers written opinion dated February 9, 2014) to the
effect that, based upon and subject to the procedures followed, assumptions made, qualifications and limitations on the review undertaken and other matters considered by Oppenheimer in preparing its opinion, the Merger Consideration to be received
by the holders of Supertex common stock pursuant to the Merger Agreement was fair, from a financial point of view, to such shareholders, and Oppenheimers related financial analyses presented to the Supertex board of directors in connection
with the delivery of its oral opinion. You are urged to read Oppenheimers written opinion, which is set forth in its entirety in Annex C to this proxy statement, and the discussion of the opinion and Oppenheimers analyses in The
MergerOpinion of the Financial Advisor to Supertex Board of Directors beginning on page 25;
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the risks and uncertainties associated with maintaining Supertexs existence as an independent company and the opportunities presented by the Merger, including the risks and uncertainties with respect to:
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achieving Supertexs growth plans in light of the current and foreseeable market conditions, including the risks and uncertainties in the U.S. and global economy generally and the semiconductor industries
specifically;
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the general risks and market conditions that could affect the price of Supertex common stock;
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the risk factors set forth in the Supertexs Form 10-Q for the fiscal quarter ended December 28, 2013 and subsequent reports filed with the SEC;
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the advanced age of key members of Supertexs executive management team, including, without limitation, Henry Pao, its Chief Executive Officer and President, who is 76, and its Senior Vice President Benedict Choy,
who is 68 and has cut back to half-time in order to help care for his wife and mother-in-law who are not in good health, which presents Supertex with transition risks associated with replacing these senior executives;
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the implications of the fact that Supertexs lease for its wafer fabrication facility in San Jose, California expires in approximately two years thus presenting Supertex with the potential risks associated with
renewing such lease, finding a new fabrication facility for itself, or outsourcing fabrication by negotiating an agreement with a new fabrication facility and migrating its processes to such new fabrication facility;
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Supertexs business and competitive prospects if it remains an independent company and the scale and other skills and assets required to compete effectively, noting in particular:
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the intensely competitive nature of the semiconductor industry in which Supertex competes, including strategic and financial challenges associated with Supertexs current business structure;
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consolidation trends within the semiconductor industry;
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the importance of scale in a competitive market environment and the associated challenges to growth as a smaller independent company;
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the significant and increasing cost of complying with obligations as a publicly traded micro-cap company and the lack of significant research coverage and trading volume;
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the need to develop new products to remain competitive and relevant to existing and prospective customers, the substantial required investment and long lead times associated with new products, and the risk that Supertex
could make substantial investments in products for markets that do not develop as Supertex may have originally anticipated;
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Supertexs lack of overall revenue growth in recent periods and its prospects for future growth, and the general risks associated with Supertexs ability to execute on a business plan that would create
shareholder value in excess of the consideration offered by Microchip;
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the negotiation process with Microchip, which was conducted at arms length, and the fact that Supertexs senior management and its legal and financial advisors were directly involved throughout the
negotiations and updated the Supertex board of directors directly and regularly;
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the availability of dissenters rights under California law to holders of shares of Supertex common stock who do not vote in favor of the adoption of the Merger Agreement and comply with all of the required
procedures under California law, which provides those eligible shareholders with an opportunity to have a California court determine the fair market value of their shares, which may be more than, less than, or the same as the amount such
shareholders would have received under the Merger Agreement;
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the business reputation, management and substantial financial resources of Microchip, which our board of directors believed supported the conclusion that a transaction with Microchip could be consummated relatively
quickly and in an orderly manner;
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the impact of the Merger on Supertexs employees, business partners and customers and that the timing of the Merger would mean transitioning our manufacturing to Microchip rather than transitioning it first to a
third party and hence to any future acquirer;
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the fact that the proposed Merger Consideration is all cash, which provides certainty of value and liquidity to Supertex shareholders for their shares of Supertex common stock;
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that the members of the Supertex board of directors were unanimous in their determination to recommend the Merger Agreement for adoption by Supertex shareholders; and
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the terms and conditions of the Merger Agreement and related transaction documents, in addition to those described above (relating to regulatory approvals, antitrust approvals and financing) including:
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the relatively limited nature of the closing conditions included in the Merger Agreement, including the likelihood that the Merger would be approved by the relevant regulatory authorities and Supertex shareholders would
vote in favor of the proposals being voted upon at the Special Meeting;
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the requirement that the Merger will only be effective if approved by the holders of a majority of the outstanding shares of Supertex common stock;
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Supertexs ability to seek damages in the event of a knowing and intentional breach by Microchip of its obligations under the Merger Agreement;
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prior to approval of the Merger by Supertex shareholders, Supertexs ability, under certain limited circumstances, to furnish information to, and conduct negotiations with, third parties regarding an Acquisition
Proposal;
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prior to approval of the Merger by Supertex shareholders, Supertexs ability, subject to certain conditions, to terminate the Merger Agreement in order to accept a superior proposal, subject to paying or causing to
be paid to Microchip a termination fee of $15.76 million (equal to approximately 4% of the equity value of the transaction), which the Supertex board of directors determined, with the assistance of its legal advisors, was reasonable in light of,
among other things, the benefits of the Merger to Supertex shareholders, the typical size of such fees in similar transactions and the belief that a fee of such size would not preclude or unreasonably restrict the emergence of alternative
transaction proposals as more fully described in Restrictions on Solicitation of Other Offers beginning on page 62 of this proxy statement;
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our ability to seek to specifically enforce Microchips obligations under the Merger Agreement, including Microchips obligations to consummate the Merger;
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the ability of the Supertex board of directors, subject to certain conditions, to change its recommendation supporting the Merger;
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the customary nature of the other representations, warranties and covenants of Supertex in the Merger Agreement; and
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the fact 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 Supertexs business during the pendency of the Merger.
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The Supertex board of directors also considered a variety of potentially negative factors in its
deliberations concerning the Merger Agreement and the Merger, including the following (not in any relative order of importance):
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the fact that the completion of the Merger will generally preclude Supertex shareholders from having any ongoing equity participation in Supertex and, as such, current shareholders of Supertex will cease to participate
in Supertexs future earnings or growth, if any, or to benefit from increases, if any, in the value of Supertex common stock;
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the risks and costs to Supertex if the Merger does not close, including the diversion of management and employee attention, potential employee attrition and the potential effect on business and customer relationships;
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the risk that certain key members of Supertexs senior management might choose not to remain employed with Supertex prior to the consummation of the Merger;
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that Supertex is obligated to pay Microchip a termination fee of $15.76 million if the Merger Agreement is terminated under certain circumstances, which the Supertex board of directors believes, after consulting with
its legal and financial advisors, would not preclude competing superior offers following the announcement of the transaction;
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that the Merger is conditioned on the receipt of regulatory approvals and clearances, including the expiration or termination of the waiting period under the HSR Act, and, therefore, the Merger may not be consummated in
a timely manner or at all;
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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 Supertex shareholders, including the
possibility that conditions to the parties obligations to complete the Merger may not be satisfied and the potential resulting disruptions to Supertexs business;
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the fact that Supertex may be unable to obtain shareholder approval for the transactions contemplated by the Merger Agreement;
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the Merger Agreements restrictions on the conduct of Supertexs business prior to the completion of the Merger, generally requiring Supertex to conduct its business only in the ordinary course, subject to
specific limitations, which may delay or prevent Supertex from undertaking business opportunities that may arise pending completion of the Merger;
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the fact that Supertex 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
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the fact that the receipt of cash by our shareholders in exchange for their shares of Supertex common stock pursuant to the Merger will be a taxable transaction for U.S. federal income tax purposes.
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The foregoing discussion of the information and factors considered by the Supertex board of directors is not intended to be exhaustive but
includes the material factors considered by the Supertex board of directors. In view of the wide variety of factors considered in connection with its evaluation of the Merger and the complexity of these matters, the Supertex board of directors did
not find it useful to and did not attempt to quantify, rank, or otherwise assign relative weights to these factors. In addition, the Supertex board of directors did not undertake to make any specific determination as to whether any particular
factor, or any aspect of any particular factor, was favorable or unfavorable to its ultimate determination, but rather the Supertex board of directors conducted an overall analysis of the factors described above, including discussions with Supertex
management and its financial and legal advisors. In considering the factors described above, individual members of the Supertex board of directors may have given different weights to different factors.
Our board of directors recommends that you vote FOR the approval of the Merger Proposal.
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Opinion of the Financial Advisor to Supertex Board of Directors
Supertex engaged Oppenheimer as its financial advisor in connection with the Merger. In connection with this engagement, the Supertex
board of directors requested that Oppenheimer evaluate the fairness, from a financial point of view, of the Merger Consideration to be received in the Merger, taken together, by holders of Shares. On February 9, 2014, at a meeting of the
Supertex board of directors held to evaluate the Merger, Oppenheimer rendered to the Supertex board of directors an oral opinion, confirmed by delivery of a written opinion dated February 9, 2014, or the Opinion, to the effect that, as of that
date and based on and subject to the matters described in the Opinion, the $33.00 per share cash consideration to be received in the Merger by holders of Shares was fair, from a financial point of view, to such holders.
The full text of Oppenheimers written Opinion, which describes the assumptions made, procedures followed, matters considered and
limitations on the review undertaken, is attached to this document as
Annex C
and is incorporated by reference in its entirety. Oppenheimers opinion was provided for the use of the Supertex board of directors (in its capacity
as such) in connection with its evaluation of the Merger Consideration from a financial point of view and did not address any other terms, aspects or implications the Merger, including, without limitation, the form or structure of the Merger or any
term, aspect or implication of any other agreement, arrangement or understanding entered into in connection with the Merger or otherwise. Oppenheimer expressed no view as to, and its Opinion did not address, the underlying business decision of
Supertex to proceed with or effect the Merger or the relative merits of the Merger as compared to any alternative business strategies that might exist for Supertex or the effect of any other transaction in which Supertex might
engage. Oppenheimers Opinion should not be construed as creating any fiduciary duty on the part of Oppenheimer to any party and the Opinion does not constitute a recommendation to any shareholder as to how such shareholder should vote or
act with respect to any matters relating to the Merger or otherwise. This summary of Oppenheimers Opinion is qualified in its entirety by reference to the full text of its Opinion.
In arriving at its Opinion, Oppenheimer:
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reviewed a draft of the Merger Agreement and certain related documents;
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reviewed audited financial statements of Supertex for fiscal years ended March 31, 2012 and March 30, 2013, and unaudited financial statements of Supertex for the nine months ended December 28, 2013;
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reviewed financial forecasts and estimates relating to Supertex from Supertex management;
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reviewed the historical market prices and trading volume of Supertex common stock;
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held discussions with the senior management of Supertex with respect to the business and prospects of Supertex;
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reviewed and analyzed certain publicly available financial data for companies that Oppenheimer deemed relevant in evaluating Supertex;
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reviewed and analyzed certain publicly available financial information for transactions that Oppenheimer deemed relevant in evaluating the Merger;
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analyzed the estimated present value of the future cash flows of Supertex based on financial forecasts and estimates from the management of Supertex;
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reviewed and analyzed the premiums paid, based on publicly available information, in merger and acquisition transactions Oppenheimer deemed relevant in evaluating the Merger;
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reviewed other public information concerning Supertex; and
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performed such other analyses, reviewed such other information and considered such other factors as Oppenheimer deemed appropriate.
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25
In rendering its Opinion, Oppenheimer relied upon and assumed, without independent verification
or investigation, the accuracy and completeness of all of the financial and other information provided to or discussed with Oppenheimer by Supertex and its employees, representatives and affiliates or otherwise reviewed by Oppenheimer. With respect
to the financial forecasts and estimates relating to Supertex referred to above, Oppenheimer assumed, at the direction of Supertex management and with Supertexs consent, without independent verification or investigation, that such forecasts
and estimates were reasonably prepared on bases reflecting the best available information, estimates and judgments of the management of Supertex as to the future financial condition and operating results of Supertex and the other matters covered
thereby. At the direction of representatives from Supertex, Oppenheimer also assumed that the final terms of the Merger Agreement did not vary materially from those set forth in the draft reviewed by Oppenheimer. Oppenheimer also assumed, with the
consent of Supertex, that the Merger will be consummated in accordance with its terms without waiver, modification or amendment of any material term, condition or agreement and in compliance with all applicable laws and other requirements and that,
in the course of obtaining the necessary regulatory or third party approvals, consents and releases with respect to the Merger, no delay, limitation, restriction or condition will be imposed that would have an adverse effect on Supertex or the
Merger. Oppenheimer neither made nor obtained any independent evaluations or appraisals of the assets or liabilities, contingent or otherwise, of Supertex.
Oppenheimer expressed no view as to, and its Opinion did not address the underlying valuation, future performance or long term viability of
Supertex or the price at which Supertex common stock will trade at any time. Oppenheimer expressed no view as to, and its Opinion did not address, any terms or other aspects or implications of the Merger (other than the Merger Consideration to the
extent expressly specified therein) or any aspect or implication of any other agreement, arrangement or understanding entered into in connection with the Merger or otherwise, including, without limitation, the fairness of the amount or nature of the
compensation resulting from the Merger to any individual officers, directors or employees of Supertex, or class of such persons, relative to the Merger Consideration. In addition, Oppenheimer expressed no view as to, and its Opinion did not address,
the underlying business decision of Supertex to proceed with or effect the Merger nor did Oppenheimers Opinion address the relative merits of the Merger as compared to any alternative business strategies that might exist for Supertex or the
effect of any other transaction in which Supertex might engage. Oppenheimers Opinion was necessarily based on the information available to it and general economic, financial and stock market conditions and circumstances as they existed and
could be evaluated by Oppenheimer on the date of its Opinion. It should be understood that, although subsequent developments may affect Oppenheimers Opinion, Oppenheimer does not have any obligation to update, revise or reaffirm its Opinion.
Oppenheimer is not a legal, tax, regulatory or accounting advisor and has relied on the assessments made by Supertex and its advisors
with respect to such issues. This Opinion does not address any legal, tax, regulatory or accounting matters. In addition, Oppenheimers Opinion does not constitute a solvency opinion or a fair value opinion, and Oppenheimer has not evaluated
the solvency or fair value of Supertex under any federal or state laws relating to bankruptcy, insolvency or similar matters. Except as described in this summary, Supertex imposed no other instructions or limitations on Oppenheimer with respect to
the investigations made or the procedures followed by it in rendering its Opinion.
This summary is not a complete description of
Oppenheimers Opinion or the financial analyses performed and factors considered by Oppenheimer in connection with its Opinion. The preparation of a financial opinion is a complex analytical process involving various determinations as to
the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances and, therefore, a financial opinion is not readily susceptible to summary description. Oppenheimer arrived at
its ultimate opinion based on the results of all analyses undertaken by it and assessed as a whole, and did not draw, in isolation, conclusions from or with regard to any one factor or method of analysis for purposes of its
Opinion. Accordingly, Oppenheimer believes that its analyses and this summary must be considered as a whole and that selecting portions of its analyses and factors or focusing on information presented in tabular format, without considering all
analyses and factors or the narrative description of the analyses, could create a misleading or incomplete view of the processes underlying Oppenheimers analyses and Opinion.
26
In performing its analyses, Oppenheimer considered industry performance, general business,
economic, market and financial conditions and other matters existing as of the date of its Opinion, many of which are beyond Supertexs control. No company, business or transaction used in the analyses is identical to Supertex or the
Merger, and an evaluation of the results of those analyses is not entirely mathematical. Rather, the analyses involve complex considerations and judgments concerning financial and operating characteristics and other factors that could affect
the acquisition, public trading or other values of the companies, business segments or transactions analyzed.
The assumptions and
estimates contained in Oppenheimers analyses and the ranges of valuations resulting from any particular analysis are not necessarily indicative of actual values or future results, which may be significantly more or less favorable than those
suggested by its analyses. In addition, analyses relating to the value of businesses or securities do not purport to be appraisals or to reflect the prices at which businesses or securities actually may be sold or acquired. Accordingly,
the assumptions and estimates used in, and the results derived from, Oppenheimers analyses are inherently subject to substantial uncertainty.
Oppenheimer was not requested to, and it did not, recommend the specific consideration payable in the Merger. The type and amount of
consideration payable in the Merger was determined through negotiation between Supertex and Microchip and was approved by the Supertex board of directors. The decision to enter into the Merger Agreement was solely that of the Supertex board of
directors. Oppenheimers opinion and financial analysis were only one of many factors considered by the Supertex board of directors in its evaluation of the Merger and should not be viewed as determinative of the views of the Supertex
board of directors or management with respect to the Merger or the consideration payable in the Merger.
The following is a summary of the
material financial analyses reviewed with the Supertex board of directors in connection with the Opinion dated February 9, 2014.
The financial analyses summarized below include information presented in tabular format. In order to
fully understand Oppenheimers financial analyses, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses. Considering the data in the tables
below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of Oppenheimers financial analyses.
Selected Companies Analysis
.
Oppenheimer reviewed publicly available financial information of the following
twenty-two selected publicly traded companies, which are providers of semiconductors and analog and mixed signal integrated circuits:
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Infineon Technologies AG
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Microchip Technology Inc.
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Maxim Integrated Products, Inc.
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Skyworks Solutions Inc.
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Power Integrations Inc.
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International Rectifier Corporation
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Integrated Device Technology, Inc.
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Dialog Semiconductor Plc
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Monolithic Power Systems Inc.
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Wolfson Microelectronics plc
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Pericom Semiconductor Corp.
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O2Micro International Ltd.
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Oppenheimer reviewed (a) enterprise values of the selected
companies, calculated as fully-diluted equity values based on closing stock prices on February 5, 2014 plus debt less cash and cash equivalents, as multiples of calendar years 2013 and 2014 (i) estimated revenue and (ii) estimated
earnings before interest, taxes, depreciation and amortization as adjusted for non-cash compensation expense and one-time, non-recurring items, referred to as Adjusted EBITDA, and (b) equity values for the selected companies, as multiples of
calendar years 2013 and 2014 estimated earnings per share, or EPS. Financial data of the selected companies were based on publicly available research analysts estimates, public filings and other publicly available information. The overall low
to high ranges of calendar year 2013 and calendar year 2014 estimated revenue multiples observed for the selected companies were 0.7x to 4.6x (with a mean of 2.5x) and 0.7x to 4.1x (with a mean of 2.3x), respectively. The overall low to high ranges
of calendar year 2013 and calendar year 2014 estimated Adjusted EBITDA multiples observed for the selected companies were 3.8x to 18.1x (with a mean of 10.6x) and 5.6x to 14.1x (with a mean of 8.9x), respectively. The overall low to high ranges of
calendar year 2013 and calendar year 2014 EPS multiples observed for the selected companies were 6.1x and 30.0x (with a mean of 20.0x) and 10.1x and 25.0x (with a mean of 16.8x), respectively. Oppenheimer then applied the low to high selected ranges
of calendar year 2013 and calendar year 2014 estimated (i) revenue multiples of 2.1x to 2.9x and 2.0x to 2.7x, respectively, and (ii) Adjusted EBITDA multiples of 9.0x to 12.2x and 7.6x to 10.3x, respectively, derived from the selected
companies to corresponding data of Supertex. Financial data of Supertex were based on Supertexs public filings, internal estimates of Supertex management, and calculations based on such estimates. This analysis resulted in low to high
enterprise value ranges for Supertex of (i) $141.4 million to $191.4 million and $144.0 million to $194.8 million, based on the selected calendar year 2013 and calendar year 2014 revenue multiples, respectively, and (ii) $111.3 million to
$150.5 million and $103.9 million to $140.6 million, based on calendar year 2013 and calendar year 2014 Adjusted EBITDA multiples, respectively. Oppenheimer then calculated implied per share equity values based on (i) debt of $0.0 million and
cash of $158.8 million, in each case, as of December 28, 2013 and (ii) shares outstanding using the treasury stock method, and based on applying EPS selected multiples of 17.0x to 23.0x and 14.3x to 19.4x calendar year 2013 and calendar
year 2014 earnings of Supertex, respectively, as derived from the selected companies analysis. These calculations yielded the following per share equity value ranges:
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Per Share Equity Value
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Low
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High
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Revenue
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CY 2013A
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$
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25.79
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$
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29.64
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CY 2014E
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$
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25.99
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$
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29.90
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Adjusted EBITDA
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CY 2013A
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$
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23.40
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$
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26.50
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CY 2014E
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$
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22.82
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$
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25.72
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Adjusted EPS
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CY 2013A
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$
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18.10
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$
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24.48
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CY 2014E
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$
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14.43
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$
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19.52
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From these calculations Oppenheimer selected the following implied per Share equity reference
ranges for Supertex, as compared to the Merger Consideration:
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Implied Per Share
Equity Reference Range
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Merger Consideration
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$21.75 $25.96
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$
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33.00
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Selected Precedent Transactions Analysis.
Oppenheimer reviewed, to the extent publicly
available, financial information relating to the following twenty-two selected transactions, which transactions involve companies that are providers of semiconductors and analog and mixed signal integrated circuits:
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Announcement
Date
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Acquiror
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Target
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16-Dec-13
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AVAGO Technologies Wireless (U.S.A) Manufacturing Inc.
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LSI Corporation
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26-Nov-13
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Microsemi Corporation
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Symmetricom Inc.
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5-Nov-13
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M/A-Com Technology Solutions Holdings, Inc.
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Mindspeed Technologies
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15-Aug-13
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Maxim Integrated Products, Inc.
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Volterra Semiconductor Corporation
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26-Dec-13
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Diodes Incorporated
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BCD Semiconductor Manufacturer Limited
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12-Jun-12
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Cypress Semiconductor Corporation
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Ramtron International Corp.
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2-May-12
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Microchip Technology Inc.
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Standard Microsystems Corporation
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23-Jan-12
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Semtech Corporation
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Gennum Corporation
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20-Jul-11
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Microsemi Corporation
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Zarlink Semiconductor Inc.
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26-May-11
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Skyworks Solutions Inc.
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Advanced Analogic Technologies Incorporated
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21-Feb-11
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CSR plc
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Zoran Corporation
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4-Oct-10
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Microsemi Corporation
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Actel Corporation
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8-Sep-10
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Zoran Corporation
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Microtune, Inc.
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30-Mar-10
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Microsemi Corporation
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White Electronic Designs Corporation
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11-Mar-10
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Ralink Technology, Corp.
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Trendchip Technologies Corp.
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3-Feb-10
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Microchip Technology Inc.
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Silicon Storage Technology, Inc.
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14-Dec-09
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ON Semiconductor Corp.
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California Micro Devices Corporation
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7-Dec-09
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IXYS Corp.
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Zilog Inc.
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27-Apr-09
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Integrated Device Technology, Inc.
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Tundra Semiconductor Corporation
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16-Jul-08
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ON Semiconductor Corp.
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Catalyst Semiconductor, Inc.
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4-Apr-08
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Diodes Incorporated
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Zetex Semiconductors plc
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13-Dec-07
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ON Semiconductor Corp.
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AMIS Holdings, Inc.
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Oppenheimer reviewed enterprise values, calculated as the purchase prices paid for the target
companies in the selected transactions plus debt less cash and cash equivalents, (i) as multiples of such target companies latest 12 months for which financial information was available at the time of announcement, or LTM, revenue and LTM
Adjusted EBITDA and (ii) as multiples of such target companies next twelve months immediately following LTM, or NTM, revenue and NTM Adjusted EBITDA. Financial data of the selected transactions were based on research analysts
estimates, public filings and other information publicly available (at the announcement of the applicable transaction). The overall low to high range of LTM revenue multiples observed for the selected transactions was 0.6x to 3.6x (with a mean of
1.6x) and the overall low to high range of LTM Adjusted EBITDA multiples observed for the selected transactions was 6.1x to 19.4x (with a mean of 12.5x). The overall low to high range of NTM revenue multiples observed for the selected transactions
was 0.4x to 3.2x (with a mean of 1.5x) and the overall low to high range of NTM Adjusted EBITDA multiples observed for the selected transactions was 5.3x to 15.7x (with a mean of 9.7x). Oppenheimer then applied (i) a selected low to high range
of LTM revenue and LTM Adjusted EBITDA multiples of 1.4x to 1.9x and 10.6x to 14.4x, respectively, derived from the selected transactions to the LTM revenue (as of December 28, 2013) and LTM Adjusted EBITDA of Supertex and (ii) a selected
low to high range of NTM revenue and NTM Adjusted EBITDA multiples of 1.3x to 1.8x and 8.2x to 11.2x, respectively, derived from the selected transactions to the NTM revenue (as of December 28, 2013) and NTM Adjusted EBITDA of Supertex.
Financial data of Supertex were based on Supertexs public filings, internal estimates of Supertex management, and calculations based on such estimates. This analysis resulted in low to high enterprise value ranges for Supertex of
(i) $92.3 million to $124.8 million and $131.0 million to $177.3 million, based on the selected LTM revenue and LTM Adjusted EBITDA multiples, respectively, and (ii) $95.6 million to $129.4 million and $112.7 million to $152.4 million,
based on the selected NTM revenue and NTM Adjusted EBITDA multiples, respectively. Oppenheimer then calculated implied per share equity values based on (i) debt of $0.0 million and cash of $158.8 million, in each case, as of December 28,
2013 and (ii) shares outstanding using the treasury stock method:
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Per Share Equity Value
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Low
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High
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LTM Revenue
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$
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21.90
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$
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24.47
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LTM Adjusted EBITDA
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$
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24.96
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$
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28.56
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NTM Revenue
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$
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22.17
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$
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24.83
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NTM Adjusted EBITDA
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$
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23.51
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$
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26.65
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From these calculations Oppenheimer selected the following implied per Share equity reference ranges for
Supertex, as compared to the Merger Consideration:
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Implied Per Share
Equity Reference Range
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Merger Consideration
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$23.14 $26.13
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$
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33.00
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Discounted Cash Flow Analysis
.
Oppenheimer conducted an illustrative
discounted cash flow analysis, which is designed to imply a potential value of Supertex by calculating the estimated present value of the standalone after-tax free cash flows that Supertex was forecasted to generate during the calendar year ending
December 28, 2014 through the full calendar year ending December 28, 2018 (refer to section entitled Selected Unaudited Prospective Financial Information beginning on page 40). For purposes of this analysis, stock-based
compensation was treated as a cash expense. Oppenheimer calculated terminal values for Supertex by applying to Supertexs estimated calendar year 2018 adjusted EBITDA a selected range of terminal value adjusted EBITDA multiples of 12.0x to
14.0x. The cash flows and terminal values were then discounted to present value using discount rates ranging from 13.2% to 17.2%, which were based on an estimated weighted average cost of capital. This analysis indicated the following approximate
implied per share equity reference range for Supertex common stock, as compared to the Merger Consideration:
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Implied Per Share
Equity Reference Range
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Merger Consideration
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$22.65 $25.43
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$
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33.00
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Other Factors.
Oppenheimer also noted certain additional factors that were not considered
part of Oppenheimers financial analyses with respect to its opinion but were referenced for informational purposes, including, among other things, the following:
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premiums paid in 54 selected all-cash transactions involving public targets with transaction values of between $100 million and $1,000 million, in the technology (or related) industry, announced between January 31,
2009 and February 5, 2014 and successfully closed; Oppenheimer applied to the closing prices of shares of Supertex common stock for the one-day, one-week and one-month periods ended on February 5, 2014 a selected range of premiums derived
from the 25
th
to 75
th
percentiles of the implied premiums in such transactions, which indicated an average implied per share equity reference
range for Supertex of approximately $24.71 to $29.45 per share; and
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historical trading prices of shares of Supertex common stock during the 52-week period ended on February 5, 2014, noting that the overall low to high range of closing prices of shares of Supertex common stock
during such period was $19.53 to $27.14 per Share.
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Miscellaneous
In the ordinary course of business, Oppenheimer and its affiliates may actively trade securities of Supertex, securities of Microchip and their
respective affiliates for Oppenheimers and its affiliates own accounts and for the accounts of customers and, accordingly, may at any time hold a long or short position in such securities.
Supertex selected Oppenheimer to act as its financial advisor in connection with the Merger based on Oppenheimers reputation and
experience. Oppenheimer is an internationally recognized investment banking firm and, as a part of its investment banking business, is regularly engaged in valuations of businesses and securities in connection with acquisitions and mergers,
underwritings, secondary distributions of securities, private placements and valuations for other purposes. The issuance of Oppenheimers opinion was approved by an authorized committee of Oppenheimer.
Supertex has entered into a written agreement with Oppenheimer which provides for Supertex to pay Oppenheimer for its financial advisory
services in connection with the Merger an aggregate fee currently estimated to be approximately $3.95 million, $250,000 of which was payable in connection with Oppenheimers delivery of its Opinion and approximately $3.70 million of which is
contingent upon consummation of the Merger. During the two-year period prior to the date of Oppenheimers Opinion, no material investment banking, financial services or other commercial services were provided by Oppenheimer or any of their
affiliates to Supertex or Microchip for which Oppenheimer received fees.
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Neither Supertex nor any person acting on its behalf has employed, retained or compensated any
person to make solicitations or recommendations to security holders of Supertex with respect to the Merger.
Delisting and
Deregistration of Supertex Common Stock
If the Merger is consummated, Supertex common stock will be delisted from the NASDAQ Global
Market and deregistered under the Exchange Act. Therefore, the provisions of the Exchange Act will no longer apply to Supertex, including the requirement that Supertex furnish a proxy or information statement to Supertex shareholders in connection
with meetings of Supertex shareholders. Supertex will also no longer be required to file periodic reports with the SEC.
Accounting
For
financial reporting purposes, the Merger will be accounted for by Parent under a purchase price allocation where the assets and liabilities will be presented at their fair value.
Effects on Supertex if the Merger is Not Consummated
If Supertex shareholders do not approve the Merger Proposal, or if the Merger is not consummated for any other reason, shareholders will not
receive any payment for their shares in connection with the Merger. Instead, Supertex will remain an independent public company and the Supertex common stock will continue to be listed and traded on the NASDAQ Global Market. In addition, if the
Merger is not consummated, we expect that management will operate the business in a manner similar to that in which it is being operated today and that Supertex shareholders will continue to be subject to the same risks and opportunities as they
currently are, including, among other things, the nature of the semiconductor component industry on which Supertexs business largely depends, and general industry, economic, regulatory and market conditions. Accordingly, if the Merger is not
consummated, there can be no assurance as to the effect of these risks and opportunities on the future value of your Supertex shares. In such event, from time to time, we expect that the Supertex board of directors will evaluate and review, among
other things, the business operations, properties, dividend policy and capitalization of Supertex and make such changes as are deemed appropriate and continue to seek to identify strategic alternatives to enhance shareholder value. If Supertex
shareholders do not approve the Merger Proposal, or if the Merger is not consummated for any other reason, there can be no assurance that any other transaction acceptable to Supertex will be offered, or that the business, prospects or results of
operations of Supertex will not be adversely impacted. We may be required to pay the Parents expenses and the termination fees as described in The Merger AgreementTermination Fees.
Interests of Our Directors and Executive Officers in the Merger
In considering the recommendation of the Supertex board of directors with respect to the Merger, you should be aware that some of the Supertex
directors and executive officers have interests in the Merger that are different from, or in addition to, the interests of our shareholders generally. These interests may present them with actual or potential conflicts of interest, and these
interests, to the extent material, are described below. The Supertex board of directors was aware of these interests and considered them, among other matters, in approving the Merger Agreement and the Merger.
Treatment of Stock Options
As of the record date, there were 577,900 shares of Supertex common stock subject to stock options granted under our equity incentive plans to
our current ten executive officers and directors.
Upon the consummation of the Merger, all outstanding vested options to acquire Supertex
common stock pursuant to our 2001 Stock Option Plan and our 2009 Equity Incentive Plan held by our executive officers and employee directors, like all other outstanding and vested stock options held by our other employees, will be cancelled, and in
consideration for the cancellation of vested options, the holder of any such option will receive an amount equal to the number of shares of our common stock underlying the option multiplied by the amount (if any) by which $33.00 exceeds the exercise
price for each share of Supertex common stock underlying the options, without interest and less any applicable withholding taxes. If the exercise price of the vested option is equal to or exceeds $33.00, the holder of such option will not be
entitled
32
to any Merger Consideration. Pursuant to our 2009 Equity Incentive Plan, all outstanding options to acquire our common stock held by our non-employee directors will accelerate and vest in full on
a change of control, which includes the Merger, and will likewise be cancelled in exchange for the consideration described above.
All
outstanding unvested options held by our executive officers and employee directors, like all other outstanding unvested options held by our other employees will be assumed by Parent and remain subject to substantially the same terms and conditions,
except that: (1) the number of shares of Parent common stock subject to each such outstanding unvested option will be equal to the product of the number of shares of our common stock underlying such option and the Exchange Ratio, rounded down
to the nearest whole share, and (2) the exercise price of each such outstanding unvested option will be equal to the quotient determined by dividing the exercise price by the Exchange Ratio, rounded up to the nearest cent.
Our seven executive officers as a group will receive $2,758,050 pursuant to the Merger Agreement in connection with the cancellation of their
227,000 vested options with exercise prices less than $33.00 per share upon the consummation of the Merger, of which Henry C. Pao, our President, CEO and director, and Benedict C.K. Choy, our Senior Vice President and director, will each receive
$607,500 in connection with 50,000 vested options each holds. A total of 78,000 vested options held by our seven executive officers as a group will be cancelled for no consideration since the options have an exercise price in excess of $33.00, of
which 15,000 are held by each of Mr. Pao and Mr. Choy. Our seven executive officers as a group will hold 128,900 unvested options, which will be assumed by Microchip pursuant to the Merger Agreement, of which 20,000 are held by each of
Mr. Pao and Mr. Choy.
Shareholder Proposals
We will hold an Annual Meeting of Shareholders in 2014, or the 2014 Annual Meeting, only if the Merger is not consummated. Proposals of
shareholders that are intended to be presented at the 2014 Annual Meeting must have been received at our executive offices in Sunnyvale, California no later than
[
], 2014 to be included in the proxy statement and proxy card related to such meeting.
Pursuant to our bylaws, shareholders who wish to bring matters to be transacted or propose nominees for director at our 2014 Annual Meeting,
if any, must have provided certain information to us by [
], 2014. Shareholders are also advised to review our bylaws,
which contain additional requirements with respect to advance notice of shareholder proposals and director nominations.
71
Where You Can Find More Information
We file annual, quarterly and special reports, proxy statements and other information with the SEC. You may read and copy any reports,
statements or other information that we file with the SEC at the SEC public reference room at the following location: Public Reference Room, 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference room. These SEC filings are also available to the public from commercial document retrieval services and at the website maintained by the SEC at
www.sec.gov
. Reports, proxy statements and other information
concerning us may also be inspected at the offices of the NASDAQ Stock Market at 1735 K Street, N.W., Washington, D.C. 20006.
Parent has
supplied all information contained in this proxy statement relating to Parent and Merger Sub and we have supplied all information relating to Supertex.
* * *
You should rely only on
the information contained in this proxy statement. We have not authorized anyone to provide you with information that is different from what is contained in this proxy statement. This proxy statement is dated
[
], 2014. You should not assume that the information contained in this proxy statement is accurate as of any date other
than that date. Neither the mailing of this proxy statement to shareholders nor the issuance of cash in the Merger creates any implication to the contrary.
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By Order of the Board of Directors
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HENRY C. PAO
President and Chief Executive Officer
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[
],
2014
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72
Annex A
CONFIDENTIAL
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
by and among
MICROCHIP
TECHNOLOGY INCORPORATED,
ORCHID ACQUISITION CORPORATION
and
SUPERTEX, INC.
Dated as of February 9, 2014
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ARTICLE I DEFINITIONS & INTERPRETATIONS
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A-1
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1.1
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Certain Definitions
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A-1
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1.2
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Additional Definitions
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A-8
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1.3
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Certain Interpretations
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A-10
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ARTICLE II THE MERGER
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A-10
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2.1
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The Merger
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A-10
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2.2
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The Effective Time
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A-10
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2.3
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The Closing
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A-11
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2.4
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Effect of the Merger
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A-11
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2.5
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Articles of Incorporation and Bylaws
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A-11
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2.6
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Directors and Officers
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A-11
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2.7
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Effect on Capital Stock
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A-12
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2.8
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Exchange of Certificates
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A-13
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2.9
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No Further Ownership Rights in Company Common Stock
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A-14
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2.10
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Lost, Stolen or Destroyed Certificates
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A-14
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2.11
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Taking of Necessary Action; Further Action
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A-14
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ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY
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A-14
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3.1
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Organization and Standing
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A-14
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3.2
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Subsidiaries
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A-15
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3.3
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Authorization
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A-15
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3.4
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Capitalization
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A-16
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3.5
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Non-contravention; Required Consents
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A-16
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3.6
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SEC Reports
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A-17
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3.7
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Financial Statements
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A-18
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3.8
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Proxy Statement
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A-19
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3.9
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No Undisclosed Liabilities
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A-19
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3.10
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Absence of Certain Changes
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A-19
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3.11
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Material Contracts
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A-19
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3.12
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Compliance with Laws
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A-21
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3.13
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Permits
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A-21
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3.14
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Litigation
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A-22
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3.15
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Antitrust Matters
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A-22
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3.16
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Taxes
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A-22
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3.17
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Environmental Matters
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A-24
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3.18
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Employee Benefit Plans
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A-25
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3.19
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Labor Matters
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A-27
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3.20
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Real Property
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A-27
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3.21
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Assets; Personal Property
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A-29
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3.22
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Intellectual Property
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A-29
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3.23
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Export Control and Import Laws
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A-33
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3.24
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Insurance
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A-34
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3.25
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Foreign Corrupt Practices Act
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A-34
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3.26
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Related Party Transactions
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A-34
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3.27
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Brokers; Fees and Expenses
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A-34
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3.28
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Opinion of Financial Advisors
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A-34
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3.29
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State Anti-Takeover Statutes
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A-35
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3.30
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Customers and Suppliers
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A-35
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
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A-35
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4.1
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Organization
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A-35
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4.2
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Authorization
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A-35
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A-i
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4.3
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Non-contravention; Required Consents
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A-36
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4.4
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Proxy Statement
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A-36
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4.5
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Funds
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A-36
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ARTICLE V INTERIM CONDUCT OF BUSINESS
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A-36
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5.1
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Affirmative Obligations of the Company
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A-36
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5.2
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Negative Obligations of the Company
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A-36
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ARTICLE VI ADDITIONAL AGREEMENTS
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A-39
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6.1
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No Solicitation
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A-39
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6.2
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Company Board Recommendation
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A-40
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6.3
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Company Shareholders Meeting
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A-42
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6.4
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Proxy Statement
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A-42
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6.5
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Reasonable Best Efforts to Complete
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A-43
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6.6
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Access
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A-44
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6.7
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Notification
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A-45
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6.8
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Certain Litigation
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A-46
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6.9
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Confidentiality
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A-46
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6.10
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Public Disclosure
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A-46
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6.11
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Company Options
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A-46
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6.12
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Employee Matters
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A-47
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6.13
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Directors and Officers Indemnification and Insurance
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A-48
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6.14
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Obligations of Merger Sub
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A-49
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6.15
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Insurance Policies
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A-49
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ARTICLE VII CONDITIONS TO THE MERGER
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A-49
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7.1
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Conditions to the Obligations of Each Party to Effect the Merger
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A-49
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7.2
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Additional Conditions to the Obligations of Parent and Merger Sub to Effect the Merger
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A-50
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7.3
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Additional Conditions to the Obligations of the Company to Effect the Merger
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A-51
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ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER
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A-51
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8.1
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Termination
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A-51
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8.2
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Notice of Termination; Effect of Termination
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A-53
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8.3
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Fees and Expenses
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A-53
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8.4
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Amendment
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A-54
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8.5
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Extension; Waiver
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A-54
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ARTICLE IX GENERAL PROVISIONS
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A-54
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9.1
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Survival of Representations, Warranties and Covenants
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A-54
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9.2
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Notices
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A-54
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9.3
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Assignment
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A-55
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9.4
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Entire Agreement
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A-55
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9.5
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Third Party Beneficiaries
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A-55
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9.6
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Severability
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A-55
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9.7
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Other Remedies
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A-56
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9.8
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Specific Performance
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A-56
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9.9
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Governing Law
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A-56
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9.10
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Consent to Jurisdiction
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A-56
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9.11
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WAIVER OF JURY TRIAL
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A-56
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9.12
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Counterparts
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A-57
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A-ii
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this
Agreement
) is made and entered into as of February 9, 2014 by and among
MICROCHIP TECHNOLOGY INCORPORATED, a Delaware corporation (
Parent
), ORCHID ACQUISITION CORPORATION, a California corporation and a wholly-owned subsidiary of Parent (
Merger Sub
), and SUPERTEX, INC., a California
corporation (the
Company
). All capitalized terms used in this Agreement shall have the respective meanings ascribed thereto in
Article I
.
W I T N E S S E T H:
WHEREAS, it is proposed that Merger Sub will merge with and into the Company (the
Merger
), and each share (each, a
Share
, and collectively, the
Shares
) of Common Stock, no par value, of the Company (the
Company Common Stock
) that is then outstanding will thereupon be cancelled and converted into the right
to receive cash in an amount equal to thirty-three dollars ($33.00) (the
Merger Consideration
), all upon the terms and subject to the conditions set forth herein.
WHEREAS, the Board of Directors of the Company (the
Company Board
) has unanimously (i) determined that this Agreement
and the transactions contemplated hereby, including the Merger, are advisable, (ii) determined that this Agreement and the transactions contemplated hereby, including the Merger, are fair to and in the best interests of the Company and its
shareholders, (iii) approved this Agreement and the transactions contemplated hereby, including the Merger, and (iv) resolved to recommend that the holders of Shares approve this Agreement, all upon the terms and subject to the conditions
set forth herein.
WHEREAS, the Board of Directors of Parent and Merger Sub have unanimously (i) determined that this Agreement and
the transactions contemplated hereby, including the Merger, are advisable, and (ii) approved this Agreement and the transactions contemplated hereby, including the Merger, all upon the terms and subject to the conditions set forth herein.
WHEREAS, concurrently with the execution and delivery of this Agreement, as a condition and inducement to the willingness of Parent and Merger
Sub to enter into this Agreement, each of the directors of the Company, in their respective capacities as shareholders of the Company, have entered into Voting Agreements with Parent substantially in the form attached hereto as
Annex A
(each,
a
Voting Agreement
and collectively, the
Voting Agreements
).
NOW, THEREFORE, in consideration of the
foregoing premises and the representations, warranties, covenants and agreements set forth herein, as well as other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and accepted, and intending to be
legally bound hereby, Parent, Merger Sub and the Company hereby agree as follows:
ARTICLE I
DEFINITIONS & INTERPRETATIONS
1.1
Certain Definitions
. For all purposes of and under this Agreement, the following capitalized terms shall have the following
respective meanings:
Acquisition Proposal
shall mean any offer or proposal (other than an offer or proposal by Parent
or Merger Sub) relating to any Acquisition Transaction.
Acquisition Transaction
shall mean any transaction or series of
related transactions (other than the transactions contemplated by this Agreement) involving: (i) any acquisition or purchase from the Company or any of its Subsidiaries by any Person or group (as defined in or under
Section 13(d) of the Exchange Act), directly or indirectly, of more than a fifteen percent (15%) interest in the total outstanding voting securities of the Company or any of its Subsidiaries, or any tender offer or exchange offer that if
consummated would result in
A-1
any Person or group (as defined in or under Section 13(d) of the Exchange Act) beneficially owning fifteen percent (15%) or more of the total outstanding voting securities
of the Company or any of its Subsidiaries; (ii) any merger, consolidation, business combination or other similar transaction involving the Company or any of its Subsidiaries pursuant to which the shareholders of the Company immediately
preceding such transaction hold less than eighty-five percent (85%) of the equity interests in the surviving or resulting entity of such transaction; (iii) any sale, lease (other than in the ordinary course of business), exchange,
transfer, license (other than in the ordinary course of business), acquisition or disposition of more than fifteen percent (15%) of the assets of the Company or any of its Subsidiaries other than those involving movement of investments between
cash, short-term, and long term securities; (iv) any liquidation, dissolution, recapitalization or other significant corporate reorganization of the Company or any of its Subsidiaries or (v) any combination of the foregoing.
Affiliate
shall mean, with respect to any Person, any other Person which directly or indirectly controls, is controlled by
or is under common control with such Person. For purposes of the immediately preceding sentence, the term control (including, with correlative meanings, the terms controlling, controlled by and under common
control with), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities, by
contract or otherwise.
Associate
shall have the meaning ascribed to such term in Rule 12b-2 under the Exchange
Act.
Balance Sheet
shall mean the consolidated balance sheet of the Company and its Subsidiaries as of April 3,
2010.
Business Day
shall mean any day, other than a Saturday, Sunday and any day which is a legal holiday under the
Laws of the State of California or New York or is a day on which banking institutions located in such States are authorized or required by Law or other governmental action to close.
Business Facility
shall mean any property including the land, improvements, indoor air, groundwater, and surface water that
is or at any time has been owned, operated, occupied, controlled or leased by the Company, its Subsidiaries or any of their predecessors in connection with the operation of their respective business.
California Law
shall mean the CGCL and any other applicable Law of the State of California.
CGCL
shall mean the General Corporation Law of the State of California, or any successor statute thereto.
Code
shall mean the Internal Revenue Code of 1986, as amended, or any successor statute thereto.
Company Capital Stock
shall mean the Company Common Stock, the Company Preferred Stock and any other shares of capital stock
of the Company.
Company ESPP
shall mean the Company 2000 Employee Stock Purchase Plan.
Company IP
shall mean all Technology and Intellectual Property Rights that are used, held for use, or otherwise licensed to
or owned by the Company or any of its Subsidiaries.
Company Intellectual Property Rights
shall mean all of the
Intellectual Property Rights owned by, or filed in the name of, or exclusively licensed to the Company or any of its Subsidiaries.
Company Material Adverse Effect
shall mean any fact, event, circumstance, change or effect (each a
Change
, and collectively,
Changes
) that, individually or in the aggregate, (x) has or would reasonably be expected to have a material adverse effect on the business, operations, assets, liabilities,
properties, financial condition or results of operations of the Company and its Subsidiaries, taken as a whole or (y) has or would reasonably be expected to materially impede the ability of the Company to consummate the transactions
contemplated by this Agreement in accordance with the terms hereof or applicable Law; provided, however, that to the extent any Change is caused by, results from or is attributable to any of the following, it shall not be taken into account when
determining whether there has been or would reasonably be expected to be a material adverse effect on the business, operations, assets, liabilities, properties, financial condition or results of operations of
A-2
Company and its Subsidiaries: (1) general economic conditions (or changes in such conditions) in the United States or any other country or region in the world, or economic conditions in the
global economy generally; (2) conditions (or changes in such conditions) in the financial markets, credit markets or capital markets in the United States or any other country or region in the world, including (A) changes in interest rates
in the United States or any other country and changes in exchange rates for the currencies of any countries and (B) any suspension of trading in securities (whether equity, debt, derivative or hybrid securities) generally on any securities
exchange or over-the-counter market operating in the United States or any other country or region in the world; (3) conditions (or changes in such conditions) in the industries in which the Company conducts business; (4) political
conditions (or changes in such conditions) in the United States or any other country or region in the world; (5) acts of war, sabotage or terrorism (including any escalation or general worsening of any such acts of war, sabotage or terrorism)
in the United States or any other country or region in the world; (6) earthquakes, hurricanes, tsunamis, tornadoes, floods, mudslides, wildfires or other natural disasters, weather conditions and other force majeure events in the United States
or any other country or region in the world; (7) the public announcement or pendency of the Merger (including by way of example the termination of relationships by the Companys customers or the delay or cancellation of orders or products
by the Customers customers caused by, resulting from or attributable to the public announcement or pendency of the Merger); (8) changes after the date of this Agreement in GAAP (or the interpretations thereof); (9) changes in the
Companys stock price or the trading volume of the Companys stock (it being understood that the cause or causes of any such change that are not otherwise excluded from the definition of Company Material Adverse Effect may be deemed either
alone or in combination with other events to constitute a Company Material Adverse Effect and may be taken into account in determining whether a Company Material Adverse Effect has occurred); (10) any failure by the Company to meet any public
estimates or expectations of the Companys revenue, earnings or other financial performance or results of operations for any period, or any failure by the Company to meet its internal budgets, plans or forecasts of its revenues, earnings or
other financial performance or results of operations (it being understood that the cause or causes of any such failure that are not otherwise excluded from the definition of Company Material Adverse Effect may be considered either alone or in
combination with other events to constitute a Company Material Adverse Effect and may be taken into account in determining whether a Company Material Adverse Effect has occurred); and (11) any legal proceedings made or brought by any of the
current or former shareholders of the Company (on their own behalf or on behalf of the Company) against the Company that assert allegations of a breach of fiduciary duty relating to this Agreement, violations of securities laws in connection with
the Proxy Statement or otherwise arising out of the transactions contemplated by this Agreement, except to the extent that, in the cases of clauses (1), (2), (3), (4), (5) and (6) above, the same affect the Company and its Subsidiaries in
a disproportionate manner when compared to other companies in the industry in which the Company primarily operates.
Company
Options
shall mean any options to purchase Shares outstanding under any of the Company Option Plans.
Company Option
Plans
shall mean the Companys 2001 Stock Option Plan, and the Companys 2009 Equity Incentive Plan and any other compensatory option plans or Contracts of the Company, including option plans or Contracts assumed by the Company
pursuant to a merger or acquisition.
Company Preferred Stock
shall mean shares of the undesignated preferred stock, no
par value, of the Company.
Company Products
shall mean any and all items, products and services marketed, sold,
licensed, provided or distributed by Company and its Subsidiaries, and refers also to (i) all User Documentation and related technical documentation and (ii) all prior, present and future versions thereof (which includes works under
development as of the date hereof and that the Company expects or intends to make available commercially after the date hereof).
Confidential Technology
shall mean Source Code and other Technology embodied in or related to the Company Products that is
preserved as a Trade Secret or is otherwise confidential.
A-3
Continuing Employees
shall mean all employees of the Company or its
Subsidiaries who are offered and timely accept employment by Parent or any Subsidiary of Parent, who continue their employment with the Company or its Subsidiaries at the request of Parent or, outside the U.S., who remain or become employees of the
Company its Subsidiaries, Parent or any Subsidiary of Parent as required by applicable Laws.
Contract
shall mean any
contract, subcontract, agreement, commitment, note, bond, mortgage, indenture, lease, license, sublicense, permit, franchise or other instrument, obligation or binding arrangement or understanding of any kind or character, whether oral or in
writing.
Disposal Site
shall mean any landfill, disposal site, disposal agent, waste hauler or recycler of Hazardous
Materials, or any real property other than a Business Facility receiving Hazardous Materials used or generated by a Business Facility.
DOJ
shall mean the United States Department of Justice, or any successor thereto.
DOL
shall mean the United States Department of Labor, or any successor thereto.
Environmental Laws
shall mean all applicable Laws (including common laws, directives, guidance, rules, regulations, orders,
treaties, statutes and codes) promulgated by any Governmental Entity which prohibit, regulate or control any Hazardous Material or any Hazardous Material Activity, including the Comprehensive Environmental Response, Compensation, and Liability Act
of 1980, the Resource Recovery and Conservation Act of 1976, the Federal Water Pollution Control Act, the Clean Air Act, the Hazardous Materials Transportation Act, the Clean Water Act, the Occupational Safety and Health Act, the European Union
Directive 2002/96/EC and 2012/19/EU and all implementing Laws on waste electrical and electronic equipment (
WEEE Directive
), the European Union Directive 2002/95/EC and 2011/65/EU and all implementing Laws on the restriction on
the use of hazardous substances (
EU RoHS Directive
), and the Administrative Measures on the Control of Pollution Caused by Electronic Information Products (
China RoHS
), all as amended at any time.
Environmental Permit
is any approval, permit, registration, certification, license, clearance or consent required to be
obtained from any private person or any Governmental Entity with respect to a Hazardous Materials Activity which is or was conducted by the Company or any of its Subsidiaries.
ERISA
shall mean the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated
thereunder, or any successor statue, rules and regulations thereto.
Exchange Act
shall mean the Securities Exchange Act
of 1934, as amended, and the rules and regulations promulgated thereunder, or any successor statute, rules and regulations thereto.
Exchange Ratio
means the quotient obtained by dividing (A) the Merger Consideration by (B) the average closing
sales price for a share of Parent Common Stock, rounded to the nearest one-tenth of a cent, as reported on Nasdaq for the ten (10) most recent days ending on the last trading day immediately prior to the date on which the Effective Time occurs.
FTC
shall mean the United States Federal Trade Commission, or any successor thereto.
GAAP
shall mean generally accepted accounting principles, as applied in the United States.
Governmental Entity
shall mean any government, any governmental or regulatory entity or body, department, commission, board,
agency or instrumentality, and any court, tribunal or judicial body, in each case whether federal, state, county, provincial, and whether local or foreign.
Hazardous Material
shall mean any material, chemical, substance or waste that has been designated by any Governmental Entity
to be radioactive, toxic, hazardous, a pollutant, a contaminant, or otherwise a danger to health, reproduction or the environment, including the emission of carbon dioxide and other substances deemed by any Governmental Entity to contribute to
global warming.
Hazardous Materials Activity
shall mean the transportation, transfer, recycling, collection, labeling,
storage, use, treatment, manufacture, removal, disposal, remediation, release, exposure of others to, sale, or distribution of any Hazardous Material or any product or waste containing a Hazardous Material, or product
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manufactured with ozone depleting substances, including, without limitation, any required labeling, payment of waste fees or charges (including so-called e-waste fees) and compliance with any
recycling, product take-back or product content requirements, including the EU RoHS Directive, WEEE Directive, and China RoHS.
HSR Act
shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations
promulgated thereunder, or any successor statute, rules and regulations thereto.
Intellectual Property Rights
shall
mean any or all of the following and all statutory and/or common law rights throughout the world in, arising out of, or associated therewith: (i) all United States and foreign patents and utility models and applications therefore (including
provisional applications) and all reissues, divisions, renewals, extensions, provisionals, continuations and continuations in part thereof (collectively,
Patents
); (ii) all inventions (whether or not patentable, reduced to
practice or made the subject of a pending patent application), invention disclosures and improvements, all trade secrets, proprietary information, know-how and technology, confidential information and all documentation therefore (
Trade
Secrets
); (iii) all works of authorship, copyrights (registered or otherwise), mask works, copyright and mask work registrations and applications and all other rights corresponding thereto throughout the world, and all rights therein
provided by international treaties or conventions (collectively,
Copyrights
); (iv) all industrial designs and any registrations and applications therefore; (v) all trade names, logos, trademarks and service marks,
whether or not registered, including all common law rights, and trademark and service mark registrations and applications, including but not limited to all marks registered in the United States Patent and Trademark Office, the Trademark Offices of
the States and Territories of the United States of America, and the Trademark Offices of other nations throughout the world, and all rights therein provided by international treaties or conventions (collectively,
Trademarks
);
(vi) all other rights in databases and data collections (including knowledge databases, customer lists and customer databases) and Software and Technology; (viii) all rights to Uniform Resource Locators, Web site addresses and domain names
(collectively,
Domain Names
); (ix) all Moral Rights, however denominated; and (x) any similar, corresponding or equivalent rights to any of the foregoing.
IRS
shall mean the United States Internal Revenue Service, or any successor thereto.
Laws
shall mean any and all applicable federal, state, local, municipal, foreign or other law, statute, constitution,
principle of common law, resolution, ordinance, directive, code, edict, decree, rule, regulation, ruling or requirement issues, enacted, adopted, promulgated, implemented or otherwise put into effect by or under the authority of any Governmental
Entity.
Legal Proceeding
shall mean any action, claim, suit, litigation, proceeding (public or private), criminal
prosecution, audit or investigation by or before any Governmental Entity.
Liabilities
shall mean any liability,
indebtedness, obligation or commitment of any kind (whether accrued, absolute, contingent, matured, unmatured or otherwise and whether or not required to be recorded or reflected on a balance sheet under GAAP).
Lien
shall mean any lien, pledge, hypothecation, charge, mortgage, security interest, encumbrance, claim, infringement,
interference, option, right of first refusal, preemptive right, community property interest or restriction of any nature (including any restriction on the voting of any security, any restriction on the transfer of any security or other asset, any
restriction on the possession, exercise or transfer of any other attribute of ownership of any asset).
Moral Rights
means any right to claim authorship to or to object to any distortion, mutilation, or other modification or other derogatory action in relation to a work, whether or not such would be prejudicial to the authors reputation, and any similar
right, such as recognition of authorship or access to work, existing under common or statutory law of any country in the world or under any treaty, regardless of whether or not such right is denominated or generally referred to as a moral
right.
Nasdaq
shall mean the Nasdaq Global Market, or any successor inter-dealer quotation system operated by
Nasdaq Stock Market, Inc., or any successor thereto or affiliated quotation system on which shares of the Company Common Stock are listed.
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Object Code
shall mean computer software, substantially or entirely in binary
form, which is intended to be directly executable by a computer after suitable processing and linking but without the intervening steps of compilation or assembly.
Order
shall mean any judgment, decision, decree, injunction, ruling, writ, assessment or order of any Governmental Entity
that is binding on any Person or its property under applicable Laws.
Parent Common Stock
shall mean shares of common
stock, par value $0.001 per share, of Parent.
Parent Material Adverse Effect
shall mean any Change that materially
impedes or would reasonably be expected to materially impede the ability of Parent or Merger Sub to consummate the transactions contemplated by this Agreement in accordance with the terms hereof or applicable Law.
Permitted Liens
shall mean (i) such Liens as are set forth in
Section 3.16(f)
of the Company Disclosure
Letter, (ii) mechanics, carriers, workmens, repairmens or other like Liens arising or incurred in the ordinary course of business that are being contested in good faith by the Company by appropriate proceedings and for
which adequate reserves have been established in accordance with GAAP on the Financial Statements, Liens arising under original purchase price conditional sales contracts, personal property leases and equipment leases with third parties entered into
in the ordinary course of business and liens for Taxes that are not due and payable or being contested in good faith by the Company by appropriate proceedings and for which adequate reserves have been established in accordance with GAAP on the
Financial Statements, (iii) Liens, if any, that individually or in the aggregate, do not materially impair the continued use and operation of the Companys assets or business, (iv) easements, covenants, rights-of-way, and other
similar encumbrances of record, and (v) any conditions that are shown by a current, accurate survey of any Owned Real Property made available to Parent prior to the date hereof or physical inspection of any Owned Real Property made by Parent
prior to the date hereof, (vi) (A) zoning, land use, building and other similar ordinances and governmental regulations, (B) Liens that have been placed by any developer, landlord or other third party on property over which the
Company has easement rights or on any Leased Real Property and subordination or similar agreements relating thereto and (C) unrecorded easements, covenants, rights of way and other similar restrictions.
Person
shall mean any individual, corporation (including any non-profit corporation), general partnership, limited
partnership, limited liability partnership, joint venture, estate, trust, company (including any limited liability company or joint stock company), firm or other enterprise, association, organization, entity or Governmental Entity.
Public Software
means any Software that contains, includes, incorporates, or has instantiated therein, or is derived in any
manner (in whole or in part) from, any software that is distributed pursuant to a license that (1) requires the licensee to distribute or provide access to the source code of such software or any portion thereof when the object code is
distributed, (2) requires the licensee to distribute the software or any portion thereof for free or at some reduced price, or (3) requires that other software or any portion thereof combined with, linked to, or based upon such software
(
Combined Software
) be licensed pursuant to the same license or requires the distribution of all or any portion of such Combined Software for free or at some reduced price or otherwise adversely affects the Companys or a
Subsidiarys exclusive ownership of such Combined Software. The term Public Software includes, without limitation, software licensed or distributed under any of the following licenses or distribution models, or licenses or
distribution models similar to any of the following: (i) GNUs General Public License (GPL) or Lesser/Library GPL (LGPL); (ii) the Artistic License (e.g., PERL); (iii) the Mozilla Public License; (iv) the Netscape Public
License; (iv) the Sun Community Source License (SCSL); (vi) the Sun Industry Standards License (SISL); (vii) the BSD License; and (viii) the Apache License.
Registered IP
shall mean all United States, international and foreign: (i) Patents; (ii) Trademarks;
(iii) Copyrights; (iv) Domain Names; and (v) any other Intellectual Property Rights that are the subject of an application, certificate, filing, registration or other document issued, filed with, or recorded by any state, government
or other public legal authority.
Sarbanes-Oxley Act
shall mean the Sarbanes-Oxley Act of 2002.
SEC
shall mean the United States Securities and Exchange Commission, or any successor thereto.
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Securities Act
shall mean the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder, or any successor statute, rules or regulations thereto.
Shrink-Wrap Code
shall mean generally commercially available Object Code where available for an average cost of not more than $1,000 for a perpetual license for a single user or work station (or $50,000 in the aggregate for all users and work stations) that is used
by the Company or its Subsidiaries but not incorporated into any Company Products and that has not been customized for use by Company or its Subsidiaries.
Software
shall mean any and all (i) computer programs, including any and all software implementations of algorithms,
models and methodologies, whether in Source Code or Object Code, (ii) databases and compilations, including any and all data and collections of data, whether machine readable or otherwise, (iii) descriptions, flow-charts and other work
product used to design, plan, organize and develop any of the foregoing and (iv) all User Documentation, including user manuals and training materials, relating to any of the foregoing.
Source Code
shall mean computer software and code, in form other than Object Code or machine readable form, including
related programmer comments and annotations, help text, data and data structures, instructions and procedural, object-oriented and other code, which may be printed out or displayed in human readable form.
Subsidiary
of any Person shall mean (i) a corporation more than fifty percent (50%) of the combined voting power
of the outstanding voting stock of which is owned, directly or indirectly, by such Person or by one of more other Subsidiaries of such Person or by such Person and one or more other Subsidiaries thereof, (ii) a partnership of which such Person,
or one or more other Subsidiaries of such Person or such Person and one or more other Subsidiaries thereof, directly or indirectly, is the general partner and has the power to direct the policies, management and affairs of such partnership,
(iii) a limited liability company of which such Person or one or more other Subsidiaries of such Person or such Person and one or more other Subsidiaries thereof, directly or indirectly, is the managing member and has the power to direct the
policies, management and affairs of such company or (iv) any other Person (other than a corporation, partnership or limited liability company) in which such Person, or one or more other Subsidiaries of such Person or such Person and one or more
other Subsidiaries thereof, directly or indirectly, has at least a majority ownership and power to direct the policies, management and affairs thereof.
Superior Proposal
shall mean any
bona fide
, written Acquisition Proposal that did not result from a breach of
Section 6.1
(i) which, if any cash consideration is involved, is not subject to any financing contingencies (and if financing is required, such financing is then fully committed to the third party making such Acquisition Proposal
pursuant to a customary commitment letter from a nationally recognized financial institution) and (ii) with respect to which the Company Board determines in good faith, after consultation with its financial advisor of nationally recognized
standing and its outside legal counsel, and after taking into account (A) all legal, financial, regulatory and other aspects of such Acquisition Proposal (including the Person or group of related Persons making the proposal), (B) all of
the terms and conditions of such Acquisition Proposal (including any conditions, potential time delays or other risks to the consummation of such Acquisition Proposal), and (C) any counter offer or proposal made by Parent pursuant hereto and
within the time period required in
Section 6.2(b)
hereof, would be more favorable to the Companys shareholders from a financial point of view than the transactions contemplated hereby;
provided
, that for purposes of this
definition, each reference in the definition of Acquisition Transaction to 15% or 85% shall be deemed to be references to 50%.
Tax
shall mean (i) any and all U.S. federal, state, local and non-U.S. taxes, including taxes based upon or measured by
gross receipts, income, profits, sales, use and occupation, and value added, goods and services, ad valorem, transfer, franchise, withholding, payroll, recapture, employment, excise and property taxes, together with all interest, penalties and
additions imposed with respect to such amounts, (ii) any Liability for the payment of any amounts of the type described in clause (i) as a result of being or ceasing to be a member of an affiliated, consolidated, combined or unitary group
for any period (including any Liability under Treasury Regulation Section 1.1502-6 or any comparable provision of foreign, state or local Law (including any arrangement for group or consortium relief or similar arrangement)) and (iii) any
Liability for the payment of any amounts of the type described in clause (i) or (ii) as a result of any express or implied obligation to indemnify
A-7
any other Person or as a result of any obligations under any agreements or arrangements with any other Person with respect to such amounts and including any Liability for taxes of a predecessor
or transferor or by operation of law.
Tax Returns
shall mean all returns, declarations, estimates, reports, statements
and other documents required to be filed in respect of any Taxes.
Technology
shall mean all tangible items related to,
constituting, disclosing or embodying any or all of the following: technology, information, know how, works of authorship, trade secrets, inventions (whether or not patented or patentable), show how, techniques, design rules, algorithms, routines,
models, methodologies, Software, computer programs (whether Source Code or Object Code), files, compilations, including any and all data and collections of data, databases processes, prototypes, schematics, netlists, test methodologies, development
work and tools and all User Documentation.
User Documentation
shall mean explanatory and informational materials
concerning the Company Products, in printed or electronic format, which Company or its Subsidiaries has released for distribution to end users or customers with such Company Products, which may include manuals, descriptions, user and/or installation
instructions, diagrams, printouts, listings, flow-charts and training materials, contained on visual media such as paper or photographic film, or on other physical storage media in machine readable form.
1.2
Additional Definitions
. The following capitalized terms shall have the respective meanings ascribed thereto in the respective
sections of this Agreement set forth opposite each of the capitalized terms below:
|
|
|
Term
|
|
Section Reference
|
Agreement
|
|
Preamble
|
Agreement of Merger
|
|
2.2
|
Antitrust Restraint
|
|
6.5(d)
|
Assets
|
|
3.21
|
Assumed Option
|
|
6.11(b)
|
California Secretary of State
|
|
2.2
|
Cancelled Option
|
|
6.11(a)
|
Capitalization Representation
|
|
7.2(a)
|
Certificates
|
|
2.8(c)
|
Change
|
|
1.1
|
Changes
|
|
1.1
|
China RoHS
|
|
1.1
|
Closing
|
|
2.3
|
Closing Date
|
|
2.3
|
Collective Bargaining Agreements
|
|
3.19(a)
|
Combined Software
|
|
1.1
|
Company
|
|
Preamble
|
Company Board
|
|
Recitals
|
Company Board Recommendation
|
|
6.2(a)
|
Company Board Recommendation Change
|
|
6.2(b)
|
Company Common Stock
|
|
Recitals
|
Company Disclosure Letter
|
|
Article III
|
Company Form 10-K
|
|
Article III
|
Company IP Agreements
|
|
3.22(f)
|
Company Registered IP
|
|
3.22(b)
|
Company Representatives
|
|
6.1(b)
|
Company Securities
|
|
3.4(c)
|
Company Shareholders Meeting
|
|
6.3
|
Confidentiality Agreement
|
|
6.9
|
Consent
|
|
3.5(b)
|
A-8
|
|
|
Term
|
|
Section Reference
|
Copyrights
|
|
1.1
|
D&O Insurance
|
|
6.13(b)
|
Demand Notice
|
|
2.7(c)(i)
|
Dissenting Shares
|
|
2.7(c)(i)
|
Domain Names
|
|
1.1
|
EAR
|
|
3.23(a)
|
ECCNs
|
|
3.23(b)
|
Effective Time
|
|
2.2
|
Employee Plans
|
|
3.18(a)
|
ERISA Affiliate
|
|
3.18(a)
|
EU RoHS Directive
|
|
1.1
|
Exchange Fund
|
|
2.8(b)
|
Export Controls
|
|
3.23(a)
|
FIN 48
|
|
3.16(n)
|
Foreign Employees
|
|
3.18(l)
|
Funded International Employee Plan
|
|
3.18(b)
|
Import Restrictions
|
|
3.23(a)
|
Indemnified Parties
|
|
6.13(a)
|
International Employee Plans
|
|
3.18(a)
|
ITAR
|
|
3.23(a)
|
Leased Real Property
|
|
3.20(b)
|
Leases
|
|
3.20(b)
|
Material Contract
|
|
3.11(a)
|
Maximum Annual Premium
|
|
6.13(b)
|
Merger
|
|
Recitals
|
Merger Consideration
|
|
Recitals
|
Merger Sub
|
|
Preamble
|
NQDCP
|
|
5.2(g)
|
OFAC
|
|
3.23(a)
|
Option Consideration
|
|
6.11(a)
|
Owned Real Property
|
|
3.20(a)
|
Parent
|
|
Preamble
|
Patents
|
|
1.1
|
Payment Agent
|
|
2.8(a)
|
Permits
|
|
3.13
|
Proxy Statement
|
|
3.8
|
Real Property
|
|
3.20(b)
|
Requisite Shareholder Approval
|
|
3.3(c)
|
Retirement Plan Termination Date
|
|
6.12(a)
|
Retirement Plans
|
|
6.12(a)
|
SEC Reports
|
|
3.6
|
Shares
|
|
Recitals
|
Significant Customer
|
|
3.30(a)
|
Significant Supplier
|
|
3.30(b)
|
Specified Representations
|
|
7.2(a)
|
Subsidiary Securities
|
|
3.2(c)
|
Surviving Corporation
|
|
2.1
|
Tail Policy
|
|
6.13(b)
|
Takeover Laws
|
|
3.29
|
Tax Incentive
|
|
3.16(k)
|
Termination Date
|
|
8.1(c)
|
A-9
|
|
|
Term
|
|
Section Reference
|
Termination Fee Amount
|
|
8.3(b)(i)
|
Third Party Leases
|
|
3.20(b)
|
Trade Secrets
|
|
1.1
|
Trademarks
|
|
1.1
|
Triggering Event
|
|
8.1(e)(ii)
|
USML
|
|
3.23(b)
|
Voting Agreement
|
|
Recitals
|
Voting Agreements
|
|
Recitals
|
Warranties
|
|
3.22(s)
|
WEEE Directive
|
|
1.1
|
1.3
Certain Interpretations
.
(a) Unless otherwise indicated, all references herein to Sections, Articles, Annexes, Exhibits or Schedules, shall be deemed to refer to
Sections, Articles, Annexes, Exhibits or Schedules of or to this Agreement, as applicable.
(b) Unless otherwise indicated, the words
include, includes and including, when used herein, shall be deemed in each case to be followed by the words without limitation.
(c) The table of contents and headings set forth in this Agreement are for convenience of reference purposes only and shall not affect or be
deemed to affect in any way the meaning or interpretation of this Agreement or any term or provision hereof.
(d) When reference is made
herein to a Person, such reference shall be deemed to include all direct and indirect Subsidiaries of such Person unless otherwise indicated or the context otherwise requires.
(e) Unless otherwise indicated, all references herein to the Subsidiaries of a Person shall be deemed to include all direct and indirect
Subsidiaries of such Person unless otherwise indicated or the context otherwise requires.
(f) Unless otherwise specifically provided, all
references in this Agreement to Dollars or $ shall mean means United States Dollars.
(g) As used in this
Agreement, the singular or plural number shall be deemed to include the other whenever the context so requires. Article, Section, clause and Schedule references contained in this Agreement are references to Articles, Sections, clauses and Schedules
in or to this Agreement, unless otherwise specified.
(h) The parties hereto agree that they have been represented by counsel during the
negotiation and execution of this Agreement and, therefore, waive the application of any Law or rule of construction providing that ambiguities in an agreement or other document will be construed against the party drafting such agreement or
document.
ARTICLE II
THE MERGER
2.1
The
Merger
. Upon the terms and subject to the conditions set forth in this Agreement and the applicable provisions of California Law, at the Effective Time, Merger Sub shall be merged with and into the Company, the separate corporate existence
of Merger Sub shall thereupon cease and the Company shall continue as the surviving corporation. The Company, as the surviving corporation of the Merger, is sometimes hereinafter referred to as the
Surviving Corporation
.
2.2
The Effective Time
. Upon the terms and subject to the conditions set forth in this Agreement, on the Closing Date, Parent,
Merger Sub and the Company shall cause the Merger to be consummated under California Law by filing an agreement of merger in customary form and substance (the
Agreement of Merger
) with the
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Secretary of State of the State of California (the
California Secretary of State
) in accordance with the applicable provisions of California Law (the time of such filing and
acceptance by the California Secretary of State, or such later time as may be agreed in writing by Parent, Merger Sub and the Company and specified in the Agreement of Merger, being referred to herein as the
Effective Time
).
2.3
The Closing
. The consummation of the Merger shall take place at a closing (the
Closing
) to occur at the
offices of Wilson Sonsini Goodrich & Rosati, Professional Corporation, One Market Plaza, Spear Tower, San Francisco, California, 94105, on a date and at a time to be agreed upon by Parent, Merger Sub and the Company, which date shall be no
later than the second (2
nd
) Business Day after the satisfaction or waiver (to the extent permitted hereunder) of the last to be satisfied or waived of the conditions set forth in
Article VII
(other than those conditions that by their terms are to be satisfied at the Closing, but subject to the satisfaction or waiver (to the extent permitted hereunder), of such conditions), or at such other location, date and time
as Parent, Merger Sub and the Company shall mutually agree upon in writing (the date upon which the Closing shall actually occur pursuant hereto being referred to herein as the
Closing Date
).
2.4
Effect of the Merger
. At the Effective Time, the effect of the Merger shall be as provided in this Agreement and the applicable
provisions of California Law. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time all of the property, rights, privileges, powers and franchises of the Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, Liabilities and duties of the Company and Merger Sub shall become the debts, Liabilities and duties of the Surviving Corporation.
2.5
Articles of Incorporation and Bylaws
.
(a)
Articles of Incorporation
. At the Effective Time, the articles of incorporation of the Company shall be amended and restated in its
entirety to read as set forth on Exhibit A, and such amended and restated articles of incorporation shall become the articles of incorporation of the Surviving Corporation until thereafter amended in accordance with the applicable provisions of
California Law and such articles of incorporation
(b)
Bylaws
. At the Effective Time, the bylaws of the Company shall be amended and
restated in their entirety to read as set forth on Exhibit B, and shall become the bylaws of the Surviving Corporation until thereafter amended in accordance with the applicable provisions of California Law, the articles of incorporation of the
Surviving Corporation and such bylaws.
2.6
Directors and Officers
.
(a)
Directors of the Surviving Corporation
. At the Effective Time, the directors of the Company shall hereby be deemed to have resigned,
and the directors of the Merger Sub immediately prior to the Effective Time shall become the directors of the Surviving Corporation, each to hold office in accordance with the articles of incorporation and bylaws of the Surviving Corporation until
their respective successors are duly elected or appointed and qualified.
(b)
Officers of the Surviving Corporation
. At the
Effective Time, the officers of the Company shall hereby be deemed to have resigned, and the officers of the Merger Sub immediately prior to the Effective Time shall become the officers of the Surviving Corporation, each to hold office in accordance
with the articles of incorporation and bylaws of the Surviving Corporation until their respective successors are duly appointed.
(c)
Directors of Company Subsidiaries
. At the Effective Time, the directors of each Company Subsidiary shall hereby be deemed to have resigned, and the directors of Merger Sub immediately prior to the Effective Time shall become the directors of
each Company Subsidiary, each to hold office in accordance with the articles of incorporation and bylaws of the Company Subsidiary until their respective successors are duly elected or appointed and qualified.
(d)
Officers of Company Subsidiaries
. At the Effective Time, the officers of each Company Subsidiary shall hereby be deemed to have
resigned, and the officers of Merger Sub immediately prior to the Effective Time shall become the officers of each Company Subsidiary, each to hold office in accordance with the articles of incorporation and bylaws of the Company Subsidiary until
their respective successors are duly elected or appointed and qualified.
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2.7
Effect on Capital Stock.
(a)
Capital Stock
. Upon the terms and subject to the conditions set forth in this Agreement, at the Effective Time, by virtue of the
Merger and without any action on the part of Parent, Merger Sub, the Company, or the holders of any of the following securities, the following shall occur:
(i)
Company Common Stock
. Each Share issued and outstanding immediately prior to the Effective Time (other than (A) Shares owned
by Parent, Merger Sub or the Company, or by any direct or indirect wholly-owned Subsidiary of Parent, Merger Sub or the Company, in each case immediately prior to the Effective Time and (B) Dissenting Shares) shall be canceled and extinguished
and automatically converted into the right to receive cash in an amount equal to the Merger Consideration, without interest thereon, upon the surrender of the certificate representing such Share in the manner provided in
Section 2.8
(or
in the case of a lost, stolen or destroyed certificate, upon delivery of an affidavit (and bond, if required) in the manner provided in
Section 2.10
).
(ii)
Owned Company Common Stock
. Each Share owned by Parent, Merger Sub or the Company, or by any direct or indirect wholly-owned
Subsidiary of Parent, Merger Sub or the Company, in each case immediately prior to the Effective Time shall be cancelled and extinguished without any conversion thereof or consideration paid therefor.
(iii)
Capital Stock of Merger Sub
. Each share of common stock, no par value, of Merger Sub that is issued and outstanding immediately
prior to the Effective Time shall be converted into one (1) validly issued, fully paid and nonassessable share of common stock of the Surviving Corporation. Each certificate evidencing ownership of such shares of common stock of Merger Sub
shall thereafter evidence ownership of shares of common stock of the Surviving Corporation.
(b)
Adjustment to Merger Consideration
.
The Merger Consideration shall be adjusted appropriately to reflect the effect of any stock split, reverse stock split, stock dividend (including any dividend or distribution of securities convertible into Shares), cash dividends, reorganization,
recapitalization, reclassification, combination, exchange of shares or other like change with respect to Shares occurring on or after the date hereof and prior to the Effective Time.
(c)
Statutory Rights of Appraisal
.
(i) Notwithstanding anything to the contrary set forth in this Agreement, Shares that are issued and outstanding immediately prior to the
Effective Time and held by holders of Shares that have made written demand upon the Company for the purchase of such Shares and payment to the holders in cash of the fair market value of such Shares (the
Demand Notice
)
and perfected their rights in accordance with Chapter 13 of the CGCL (collectively,
Dissenting Shares
) shall not be converted into, or represent the right to receive, the Merger Consideration pursuant to this
Section 2.7
. Such holders of Shares shall be entitled to only such rights as are granted by Chapter 13 of the CGCL, except that all such holders that have failed to perfect or who shall have effectively waived, withdrawn or lost their
rights under Chapter 13 of the CGCL shall thereupon be deemed to have been converted into, and to have become exchangeable for, as of the Effective Time, the right to receive the Merger Consideration, without any interest thereon, upon surrender of
the certificate or certificates that formerly evidenced such Shares in the manner provided in
Section 2.8
.
(ii) The Company
shall give Parent (A) prompt notice of any Demand Notice received by the Company, withdrawals thereof, and any other instruments served pursuant to Chapter 13 of the CGCL and received by the Company in respect of Dissenting Shares and
(B) the opportunity to direct all negotiations and proceedings with respect to the exercise of any rights of the holder of Dissenting Shares under Chapter 13 of the CGCL. The Company shall not, except with the prior written consent of Parent,
make any payment with respect to any such exercise of any such rights of the holder of Dissenting Shares under Chapter 13 of the CGCL or settle or offer to settle any such demands for payment in respect of any such exercise of any such rights of the
holder of Dissenting Shares under Chapter 13 of the CGCL.
(d)
Company Options
. At the Effective Time, each Company Option then
outstanding under any of the Company Option Plans shall be treated in accordance with the provisions of
Section 6.11
.
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2.8
Exchange of Certificates
.
(a)
Payment Agent
. Prior to the Effective Time, Parent shall select a bank or trust company reasonably acceptable to the Company to act
as the payment agent for the Merger (the
Payment Agent
).
(b)
Exchange Fund
. Promptly following the Effective
Time, Parent shall deposit (or cause to be deposited) with the Payment Agent, for payment to the holders of Shares pursuant to the provisions of this
Article II
, an amount of cash equal to the product obtained by multiplying (x) the
Merger Consideration and (y) the aggregate number of Shares issued and outstanding immediately prior to the Effective Time (excluding Shares then owned by Parent, Merger Sub, the Company, or any direct or indirect wholly-owned Subsidiary of
Parent, Merger Sub or the Company immediately prior to the Effective Time) (such cash amount being referred to herein as the
Exchange Fund
).
(c)
Payment Procedures
. Promptly following the Effective Time, Parent and Merger Sub shall cause the Payment Agent to mail to each
holder of record (as of immediately prior to the Effective Time) of a certificate or certificates (the
Certificates
), which immediately prior to the Effective Time represented outstanding Shares (other than Dissenting Shares) a
letter of transmittal in customary form (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon delivery of the Certificates to the Payment Agent) and instructions for use in
effecting the surrender of the Certificates in exchange for the Merger Consideration payable in respect thereof pursuant to the provisions of this
Article II
. Upon surrender of Certificates for cancellation to the Payment Agent or to
such other agent or agents as may be appointed by Parent, together with such letter of transmittal, duly completed and validly executed in accordance with the instructions thereto, the holders of such Certificates shall be entitled to receive in
exchange therefor the Merger Consideration payable in respect thereof pursuant to the provisions of this
Article II
, and the Certificates so surrendered shall forthwith be canceled. The Payment Agent shall accept such Certificates upon
compliance with such reasonable terms and conditions as the Payment Agent may impose to effect an orderly exchange thereof in accordance with normal exchange practices. No interest shall be paid or accrued for the benefit of holders of the
Certificates on the Merger Consideration payable upon the surrender of such Certificates pursuant to this
Section 2.8
. Until so surrendered, outstanding Certificates shall be deemed from and after the Effective Time, to evidence only the
right to receive the Merger Consideration payable in respect thereof pursuant to the provisions of this
Article II
.
(d)
Transfers of Ownership
. In the event that a transfer of ownership of Shares is not registered in the stock transfer books or ledger of the Company, or if Merger Consideration is to be paid in a name other than that in which the Certificates
surrendered in exchange therefor are registered in the stock transfer books or ledger of the Company, the Merger Consideration may be paid to a Person other than the Person in whose name the Certificate so surrendered is registered in the stock
transfer books or ledger of the Company only if such Certificate is properly endorsed and otherwise in proper form for surrender and transfer and the Person requesting such payment has paid to Parent (or any agent designated by Parent) any transfer
or other Taxes required by reason of the payment of Merger Consideration to a Person other than the registered holder of such Certificate, or established to the satisfaction of Parent (or any agent designated by Parent) that such transfer or other
Taxes have been paid or are otherwise not payable.
(e)
Required Withholding
. Each of the Payment Agent, Parent and the Surviving
Corporation shall be entitled to deduct and withhold from any amounts payable pursuant to this Agreement such amounts as may be required to be deducted or withheld therefrom under U.S. federal or state, local or non-U.S. Law. To the extent that such
amounts are so deducted or withheld, such amounts shall be treated for all purposes under this Agreement as having been paid to the Person to whom such amounts would otherwise have been paid.
(f)
No Liability
. Notwithstanding anything to the contrary set forth in this Agreement, none of the Payment Agent, Parent, the Surviving
Corporation or any other party hereto shall be liable to a holder of Shares for any amount properly paid to a public official pursuant to any applicable abandoned property, escheat or similar Law.
(g)
Unclaimed Property
. Subject to applicable unclaimed property Laws, Parent will cause the Payment Agent to initiate unclaimed
property reporting services for unclaimed Shares and related cash distributions that
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may be deemed abandoned or otherwise subject to applicable unclaimed property Law. Such services may include preparation of unclaimed property reports, delivery of abandoned property to various
states, completion of required due diligence notifications, responses to inquiries from owners, and such other services as may reasonably be necessary to comply with applicable unclaimed property Laws.
2.9
No Further Ownership Rights in Company Common Stock
. From and after the Effective Time, all Shares shall no longer be
outstanding and shall automatically be cancelled, retired and cease to exist, and each holder of a Certificate theretofore representing any Shares (other than Dissenting Shares) shall cease to have any rights with respect thereto, except the right
to receive the Merger Consideration payable therefor upon the surrender thereof in accordance with the provisions of
Section 2.8
. The Merger Consideration paid in accordance with the terms of this
Article II
shall be deemed
to have been paid in full satisfaction of all rights pertaining to such shares of the Company Common Stock. From and after the Effective Time, there shall be no further registration of transfers on the records of the Surviving Corporation of Shares
that were issued and outstanding immediately prior to the Effective Time, other than transfers to reflect, in accordance with customary settlement procedures, trades effected prior to the Effective Time. If, after the Effective Time, Certificates
are presented to the Surviving Corporation for any reason, they shall be canceled and exchanged as provided in this
Article II
.
2.10
Lost, Stolen or Destroyed Certificates
. In the event that any Certificates shall have been lost, stolen or destroyed, the
Payment Agent shall issue in exchange for such lost, stolen or destroyed Certificates, upon the making of an affidavit of that fact by the holder thereof, the Merger Consideration payable in respect thereof pursuant to
Section 2.7
;
provided, however
, that Parent or the Payment Agent may, in their discretion and as a condition precedent to the payment of such Merger Consideration, require the owners of such lost, stolen or destroyed Certificates to deliver a bond in such
sum as they may reasonably direct as indemnity against any claim that may be made against Parent, the Surviving Corporation or the Payment Agent with respect to the Certificates alleged to have been lost, stolen or destroyed.
2.11
Taking of Necessary Action; Further Action
. If, at any time after the Effective Time, any further action is necessary or
desirable to carry out the purposes of this Agreement and to vest the Surviving Corporation with full right, title and possession to all assets, property, rights, privileges, powers and franchises of the Company and Merger Sub, the directors and
officers of the Surviving Corporation shall take all such lawful and necessary action on behalf of the Company and Merger Sub.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except, with respect to any Section of this
Article III
, as set forth in the section of the disclosure letter delivered by the
Company to Parent on the date of this Agreement (the
Company Disclosure Letter
) that specifically relates to such Section or in another section of the Company Disclosure Letter to the extent it is readily apparent from the text of
such disclosure that such disclosure is applicable to such Section, the Annual Report on Form 10-K of the Company for the fiscal year ended March 30, 2013 (the
Company Form 10-K
) and the SEC Reports filed after the Company
Form 10-K and prior to February 1, 2014 (other than disclosures in the Risk Factors or Forward-Looking Statements sections of such reports, other disclosures that are similarly non-specific or are predictive or
forward-looking in nature and excluding any exhibits incorporated by reference in such reports), the Company hereby represents and warrants to Parent and Merger Sub as follows:
3.1
Organization and Standing
. The Company is a corporation duly organized, validly existing and in good standing under California
Law. Each of the Companys Subsidiaries is duly organized, validly existing and in good standing under the Laws of the jurisdiction of its respective organization (to the extent the good standing concept is applicable in the case of
any jurisdiction outside the United States). Each of the Company and its Subsidiaries has the requisite corporate power and authority to carry on its respective business as it is presently being conducted and to own, lease or operate its respective
properties and assets. Each of the Company and its Subsidiaries is duly qualified to do business and is in good standing in each jurisdiction where the character of its properties owned or leased or the nature of its activities make such
qualification necessary (to the extent the
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good standing concept is applicable in the case of any jurisdiction outside the United States), except where the failure to be so qualified or in good standing would not have,
individually or in the aggregate, a Company Material Adverse Effect. The Company has delivered or made available to Parent complete and correct copies of (a) the certificates of incorporation and bylaws or other constituent documents, as
amended to date, of the Company and its Subsidiaries and (b) the minutes (or, in the case of draft minutes, the most recent drafts thereof) of all meetings of the shareholders, the Company Board and each committee of the Company Board since
January 1, 2009. Neither the Company nor any of its Subsidiaries is in violation of its articles of incorporation, bylaws or other applicable constituent documents.
3.2
Subsidiaries
.
(a)
Section 3.2(a)
of the Company Disclosure Letter contains a complete and accurate list of the name, jurisdiction of organization and function (i.e., sales, manufacturing, administration, etc.) of each Subsidiary of the Company.
Except for the Companys Subsidiaries, the Company does not own, directly or indirectly, any capital stock of, or other equity or voting interest in, any Person.
(b) All of the outstanding capital stock of, or other equity or voting interest in, each Subsidiary of the Company (i) have been duly
authorized, validly issued and are fully paid and nonassessable and (ii) are owned, directly or indirectly, by the Company, free and clear of all Liens and free of any other restriction (including any restriction on the right to vote, sell or
otherwise dispose of such capital stock or other equity or voting interest) that would prevent the operation by the Surviving Corporation of such Subsidiarys business as presently conducted.
(c) There are no outstanding (i) securities of the Company or any of its Subsidiaries convertible into or exchangeable for shares of
capital stock of, or other equity or voting interest in, any Subsidiary of the Company, (ii) options, warrants, rights or other commitments or agreements to acquire from the Company or any of its Subsidiaries, or that obligate the Company or
any of its Subsidiaries to issue, any capital stock of, or other equity or voting interest in, or any securities convertible into or exchangeable for shares of capital stock of, or other equity or voting interest in, any Subsidiary of the Company,
(iii) obligations of the Company to grant, extend or enter into any subscription, warrant, right, convertible or exchangeable security or other similar agreement or commitment relating to any capital stock of, or other equity or voting interest
(including any voting debt) in, any Subsidiary of the Company (the items in clauses (i), (ii) and (iii), together with the capital stock of the Subsidiaries of the Company, being referred to collectively as
Subsidiary
Securities
) or (iv) other obligations by the Company or any of its Subsidiaries to make any payments based on the price or value of any Subsidiary Securities. There are no Contracts of any kind which obligate the Company or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any outstanding Subsidiary Securities.
3.3
Authorization.
(a) The Company has all requisite power and authority to execute and deliver this Agreement and subject, in the case of the Merger to obtaining
the Requisite Shareholder Approval, to consummate the transactions contemplated hereby and to perform its obligations hereunder. 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 authorized by all necessary corporate action on the part of the Company and no additional corporate proceedings on the part of the Company are necessary to authorize this Agreement or the
consummation of the transactions contemplated hereby (including the Merger), other than in the case of the Merger obtaining the Requisite Shareholder Approval. This Agreement has been duly executed and delivered by the Company and, assuming the due
authorization, execution and delivery by Parent and Merger Sub, constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except that such enforceability (a) may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium and other similar Laws affecting or relating to creditors rights generally and (b) is subject to general principles of equity.
(b) At a meeting duly called and held prior to the date hereof, the Company Board has unanimously (i) determined that this Agreement and
the transactions contemplated hereby, including the Merger, are
advisable, (ii) unanimously determined that this Agreement and the transactions
contemplated hereby, including
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the Merger, are fair to and in the best interests of the Company and its shareholders, (iii) approved this Agreement and the transactions contemplated hereby, including the Merger, and the
Voting Agreements, and (iv) resolved to recommend that the holders of Shares approve this Agreement in accordance with the applicable provisions of California Law.
(c) The affirmative vote of the holders of a majority of the outstanding Shares, voting together as a class (the
Requisite Shareholder
Approval
), is the only vote of the holders of any class or series of Company Capital Stock necessary (under applicable Laws or otherwise) to approve this Agreement and the Merger.
3.4
Capitalization
.
(a)
The authorized capital stock of the Company consists of (i) thirty million (30,000,000) Shares and (ii) ten million (10,000,000) shares of Company Preferred Stock. As of the close of business on the Business Day immediately prior
to the date of this Agreement: (A) 11,426,781 Shares were issued and outstanding and (B) no shares of Company Preferred Stock were issued and outstanding. All outstanding Shares are validly issued, fully paid, nonassessable and free of any
preemptive rights. Since the close of business on the Business Day immediately prior to the date of this Agreement, the Company has not issued any shares of Company Capital Stock other than pursuant to the exercise of Stock Options granted under a
Company Option Plan or issued under the Company Employee Stock Purchase Plan.
(b)
Section 3.4(b)
of the Company Disclosure
Letter specifies (i) the number of Shares that are subject to issuance pursuant to Company Options outstanding as of the close of business on December 28, 2013 and (ii) the number of Company Options with an exercise price in excess of
the Merger Consideration. As of December 28, 2013, 397,131 Shares were reserved for future issuance pursuant to stock awards not yet granted under the Company Option Plans and, since December 28, 2013, the Company has not granted,
committed to grant or otherwise created or assumed any obligation with respect to any Stock Options, other than as permitted by
Section 5.2(b)
. All Company Options have been validly issued and properly approved by the Company Board in
accordance with all applicable Laws and the Company Option Plans.
(c) Except as set forth in this
Section 3.4
, there are
(i) no outstanding shares of capital stock of, or other equity or voting interest in, the Company, (ii) no outstanding securities of the Company convertible into or exchangeable for shares of capital stock of, or other equity or voting
interest in, the Company, (iii) no outstanding options, warrants, rights or other commitments or agreements to acquire from the Company, or that obligates the Company to issue, any capital stock of, or other equity or voting interest in, or any
securities convertible into or exchangeable for shares of capital stock of, or other equity or voting interest in, the Company, (iv) no obligations of the Company to grant, extend or enter into any subscription, warrant, right, convertible or
exchangeable security or other similar agreement or commitment relating to any capital stock of, or other equity or voting interest (including any voting debt) in, the Company (the items in clauses (i), (ii), (iii) and (iv), together with the
capital stock of the Company, being referred to collectively as
Company Securities
) and (v) no other obligations by the Company or any of its Subsidiaries to make any payments based on the price or value of the Company
Securities. There are no outstanding Contracts of any kind which obligate the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any Company Securities.
(d) Neither the Company nor any of its Subsidiaries is a party to any Contracts restricting the transfer of, relating to the voting of,
requiring registration of, or granting any preemptive rights, anti-dilutive rights or rights of first refusal or similar rights with respect to any securities of the Company.
3.5
Non-contravention; Required Consents
.
(a) The execution, delivery or performance by the Company of this Agreement, the consummation by the Company of the transactions contemplated
hereby (including the Merger) and the compliance by the Company with any of the provisions hereof do not and will not (i) violate or conflict with any provision of the articles of incorporation or bylaws or other constituent documents of the
Company or any of its Subsidiaries, (ii) subject to obtaining such Consents set forth in
Section 3.5(a)(ii)
of the Company Disclosure Letter, violate, conflict with, or result in the breach of or constitute a default (or an event
which with notice or lapse of time or
both would become a default) under, or result in the termination of, or accelerate the performance required by, or
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result in a right of termination or acceleration under, any material Contract to which the Company or any of its Subsidiaries is a party or by which the Company, any of its Subsidiaries or any of
their material properties or assets may be bound, (iii) assuming compliance with the matters referred to in
Section 3.5(b)
and, in the case of the consummation of the Merger, subject to obtaining the Requisite Shareholder Approval,
violate or conflict with any Law or Order applicable to the Company or any of its Subsidiaries or by which any of their properties or assets are bound or (iv) result in the creation of any Lien upon any of the properties or assets of the
Company or any of its Subsidiaries, except in the case of each of clauses (ii), (iii) and (iv) above, for such violations, conflicts, breaches, defaults, terminations, accelerations or Liens which, individually or in the aggregate, would
not reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole, and would not reasonably be expected to materially impede the ability of the Company to consummate the transactions contemplated by this Agreement in
accordance with the terms hereof or applicable Law.
(b) No consent, approval, Order or authorization of, or filing or registration with,
or notification to (any of the foregoing being a
Consent
), any Governmental Entity is required on the part of the Company or any of its Subsidiaries in connection with the execution, delivery and performance by the Company of this
Agreement and the consummation by the Company of the transactions contemplated hereby (including the Merger), except (i) the filing and recordation of the Agreement of Merger with the California Secretary of State as required by the CGCL,
(ii) such filings and approvals as may be required by any federal or state securities Laws, including compliance with any applicable requirements of the Exchange Act, (iii) compliance with any applicable requirements of the HSR Act and any
applicable foreign antitrust, competition or merger control Laws and (iv) such other Consents, the failure of which to obtain, individually or in the aggregate, would not reasonably be expected to be material to the Company and its
Subsidiaries, taken as a whole, and would not reasonably be expected to materially impede the ability of the Company to consummate the transactions contemplated by this Agreement in accordance with the terms hereof or applicable Law.
3.6
SEC Reports
. Since January 1, 2010, the Company has filed or furnished (as applicable) all forms, reports, schedules,
statements and documents with the SEC that have been required to be so filed or furnished (as applicable) by it under applicable Laws prior to the date hereof, and, after the date of this Agreement and until the Effective Time, the Company will file
all forms, reports, schedules, statements and documents with the SEC that are required to be filed by it under applicable Laws prior to such time (all such forms, reports and documents, together with any other forms, reports or other documents filed
or furnished (as applicable) by the Company with the SEC at or prior to the Effective Time that are not required to be so filed or furnished, the
SEC Reports
). Each SEC Report complied, or will comply, as the case may be, as of
its filing date, as to form in all material respects with the applicable requirements of the Securities Act or the Exchange Act, as the case may be, and with all applicable provisions of the Sarbanes-Oxley Act, each as in effect on the date such SEC
Report was, or will be, filed. As of its filing date (or, if amended or superseded by a filing prior to the date of this Agreement, on the date of such amended or superseded filing), each SEC Report did not, and 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. Since January 1, 2010, neither the Company nor
any of its Subsidiaries has received from the SEC or any other Governmental Entity any written comments or questions with respect to any of the SEC Reports (including the financial statements included therein) or any registration statement filed by
any of them with the SEC or any notice from the SEC or other Governmental Entity that such SEC Reports (including the financial statements included therein) or registration statements are being reviewed or investigated. None of the Companys
Subsidiaries is required to file any forms, reports, schedules, statements or other documents with the SEC. No executive officer of the Company has failed to make the certifications required of him or her under Section 302 or 906 of the
Sarbanes-Oxley Act with respect to any SEC Report, except as disclosed in certifications filed with the SEC Reports. Neither the Company nor any of its executive officers has received notice from any Governmental Entity challenging or questioning
the accuracy, completeness, form or manner of filing of such certifications.
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3.7
Financial Statements
.
(a) The consolidated financial statements of the Company and its Subsidiaries contained in the SEC Reports at the time filed were prepared in
accordance with GAAP then in effect consistently applied by the Company during the periods and at the dates involved (except as may be indicated in the notes thereto or, in the case of unaudited statements, as permitted by the SEC for filings on
Form 10-Q under the Exchange Act), and fairly presented in all material respects the consolidated financial position of the Company and its Subsidiaries as of the dates thereof and the consolidated results of operations and cash flows for the
periods then ended, except that the unaudited interim financial statements were subject to normal year-end adjustments which were not material in amount or effect.
(b) The Company and each of its Subsidiaries have established and maintain, adhere to and enforce a system of internal accounting controls
which are effective in providing reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP, including policies and procedures that (i) require the maintenance of
records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company and its Subsidiaries, (ii) provide assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with GAAP, and that receipts and expenditures of the Company and its Subsidiaries are being made only in accordance with appropriate authorizations of management and the Company Board and (iii) provide
assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the assets of the Company and its Subsidiaries. Neither the Company nor any of its Subsidiaries nor, to the knowledge of the Company, the
Companys independent auditors has identified or been made aware of (A) any significant deficiency or material weakness in the system of internal accounting controls utilized by the Company and its Subsidiaries, (B) any fraud, whether
or not material, that involves the Companys management or other employees who have a role in the preparation of financial statements or the internal accounting controls utilized by the Company and its Subsidiaries or (C) any claim or
allegation regarding any of the foregoing.
(c) Neither the Company nor any of its Subsidiaries is a party to, or has any commitment to
become a party to, any joint venture, partnership agreement or any similar Contract (including any Contract relating to any transaction, arrangement or relationship between or among the Company or any of its Subsidiaries, on the one hand, and any
unconsolidated affiliate, including any structured finance, special purpose or limited purpose entity or Person, on the other hand (such as any arrangement described in Section 303(a)(4) of Regulation S-K of the SEC)) where the purpose or
effect of such arrangement is to avoid disclosure of any material transaction involving the Company or any its Subsidiaries in the Companys consolidated financial statements.
(d) Neither the Company nor any of its Subsidiaries nor, to the knowledge of the Company, any director, officer, employee, auditor, accountant,
consultant or representative of the Company or any of its Subsidiaries has received or otherwise had or obtained knowledge of any substantive complaint, allegation, assertion or claim, whether written or oral, that the Company or any of its
Subsidiaries has engaged in questionable accounting or auditing practices. No current or former attorney representing the Company or any of its Subsidiaries has reported evidence of a material violation of securities Laws, breach of fiduciary duty
or similar violation by the Company or any of its officers, directors, employees or agents to the Company Board or any committee thereof or to any director or executive officer of the Company.
(e) To the knowledge of the Company, no employee of the Company or any of its Subsidiaries has provided or is providing information to any law
enforcement agency regarding the commission or possible commission of any crime or the violation or possible violation of any applicable Laws of the type described in Section 806 of the Sarbanes-Oxley Act by the Company or any of its
Subsidiaries. Neither the Company nor any of its Subsidiaries nor, to the knowledge of the Company, any director, officer, employee, contractor, subcontractor or agent of the Company or any such Subsidiary has discharged, demoted, suspended,
threatened, harassed or in any other manner discriminated against an employee of the Company or any of its Subsidiaries in the terms and conditions of employment because of any lawful act of such employee described in Section 806 of the
Sarbanes-Oxley Act.
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(f) The Company is in compliance in all material respects with all effective provisions of the
Sarbanes-Oxley Act.
(g) The Company has provided to Parent copies of all SAB 99 memoranda, reports, white papers or similar documents
prepared by, on behalf of or for the benefit of the Company since January 1, 2010.
3.8
Proxy Statement
. The proxy
statement, letter to shareholders, notice of meeting and form of proxy accompanying the Proxy Statement that will be provided to shareholders of the Company in connection with the solicitation of proxies for use at the Company Shareholders
Meeting, and any schedules required to be filed with the SEC in connection therewith (collectively, as amended or supplemented, the
Proxy Statement
), when filed with the SEC and on the date first mailed to shareholders of the
Company and at the time of the Company Shareholders Meeting, will comply as to form in all material respects with the applicable requirements of the Exchange Act and will not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading;
provided, however
, that notwithstanding the foregoing, no representation or warranty is made by the
Company with respect to information supplied by Parent or Merger Sub or any of their officers, directors, representatives, agents or employees in writing specifically for inclusion or incorporation by reference in the in the Proxy Statement.
3.9
No Undisclosed Liabilities
. Neither the Company nor any of its Subsidiaries has any Liabilities other than (a) Liabilities
either (i) reflected or otherwise reserved against in the Balance Sheet or in the consolidated financial statements of the Company and its Subsidiaries included in the SEC Reports filed prior to the date of this Agreement, or (ii) to the
extent disclosed in the notes to such financial statements, (b) Liabilities under this Agreement, (c) Liabilities incurred in connection with the transactions contemplated by this Agreement (including the Merger), (d) executory
obligations under any Contract to which the Company or its Subsidiaries is a party, (e) Liabilities incurred since the date of the Balance Sheet in the ordinary course of business consistent with past practice and (f) other Liabilities
that, individually or in the aggregate, are not and would not reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole.
3.10
Absence of Certain Changes
.
(a) Since September 28, 2013, except for actions expressly contemplated by this Agreement, the business of the Company and its
Subsidiaries has been conducted, in all material respects, in the ordinary course consistent with past practice, and there has not been or occurred or there does not exist, as the case may be:
(i) any Company Material Adverse Effect; or
(ii) any damage, destruction or other casualty loss (whether or not covered by insurance) with respect to any Real Property or Assets that,
individually or in the aggregate, are material to the Company and its Subsidiaries, taken as a whole.
(b) Since September 28, 2013,
except for actions expressly contemplated by this Agreement, the business of the Company and its Subsidiaries has been conducted, in all material respects, in the ordinary course consistent with past practice, and there has not been or occurred or
there does not exist, as the case may be any action that, if taken after the date of this Agreement without the prior written consent of Parent, would constitute a breach of
Section 5.2
.
3.11
Material Contracts
.
(a) For purposes of this Agreement, a
Material Contract
shall mean each of the following:
(i) any material contract (as such term is defined in Item 601(b)(10) of Regulation S-K of the SEC, other than those
agreements and arrangements described in Item 601(b)(10)(iii)) with respect to the Company and its Subsidiaries;
(ii) other than
at-will offer letters on the Companys standard form containing no severance provisions or consulting Contracts which may be cancelled on less than ninety (90) days notice without penalty to the Company, any employment or independent
contractor Contract (in each case, under which the Company
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has continuing obligations as of the date hereof) with any current or former executive officer, consultant, independent contractor, or employee of the Company or its Subsidiaries or member of the
Company Board providing for an annual base compensation in excess of $100,000;
(iii) any Contract or plan, including any stock option
plan, stock appreciation right plan or stock purchase plan, any of the benefits of which will be increased, or the vesting of benefits of which will be accelerated, by the consummation of the transactions contemplated hereby (including the Merger)
or the value of any of the benefits of which will be calculated on the basis of any of the transactions contemplated by this Agreement (including the Merger);
(iv) any Contract providing for indemnification or any guaranty (in each case, under which the Company has continuing obligations as of the
date hereof), other than (A) any guaranty by the Company of any of its Subsidiarys obligations or (B) any Contract providing for indemnification entered into in connection with the distribution, sale or license of services or
hardware or software products in the ordinary course of business, which indemnification does not materially differ from the provisions embedded in Companys standard forms of software license agreements as provided or made available to Parent;
(v) any Contract containing any covenant, commitment or other obligation (A) limiting the right of the Company or any of its
Subsidiaries to engage in any line of business, to make use of any Company Intellectual Property Rights or to compete with any Person in any line of business, (B) granting any exclusive rights, (C) containing a most favored
nation or similar provision, (D) including any take or pay or requirements obligation, (E) prohibiting the Company or any of its Subsidiaries (or, after the Effective Time, Parent) from engaging in business
with any Person or levying a fine, charge or other payment for doing so or (F) otherwise prohibiting or limiting the right of the Company or its Subsidiaries to sell, distribute or manufacture any products or services or to purchase or
otherwise obtain any software, components, parts or subassemblies in any material respect;
(vi) any Contract that is royalty-bearing;
(vii) any Contract (A) relating to the disposition or acquisition by the Company or any of its Subsidiaries after the date of this
Agreement of a material amount of assets other than in the ordinary course of business or (B) pursuant to which the Company or any of its Subsidiaries will acquire any material ownership interest in any other Person or other business enterprise
other than the Companys Subsidiaries;
(viii) the top ten (10) Contracts (as measured by aggregate dollar amount contemplated
under each Contract) in each of the following categories: (i) end-user or customer contracts, (ii) value added reseller contracts, (iii) distributor contracts, (iv) supplier contracts, (v) OEM contracts, and
(vi) development contracts;
(ix) any Contract to provide source code to any third party for any Company Product, including any
Contract to put such source code in escrow with a third party on behalf of a licensee or contracting party;
(x) any Contract
(A) containing any financial penalty for the failure by the Company or any of its Subsidiaries to comply with any support or maintenance obligation except for such Contracts on the Companys standard form of customer agreement or
(B) containing any obligation to provide support or maintenance for the Company Products for any period in excess of twelve (12) months;
(xi) the top ten (10) Contracts containing any service obligation on the part of the Company or any of its Subsidiaries (as measured by
continuing costs to be incurred by the Company or any of its Subsidiaries in connection with those services);
(xii) any Contract
authorizing another Person to provide support or maintenance to the Companys customers on behalf of the Company, including distributors or resellers that are obligated to provide such support or maintenance pursuant to the Companys
standard form of distributor or reseller agreement;
(xiii) (A) any Contract to license any third party to manufacture or reproduce any
Company Products or (B) any Contract to authorize any third party to sell, license or distribute any Company Products;
(xiv) any
mortgages, indentures, guarantees, loans or credit agreements, security agreements or other Contracts relating to the borrowing of money or extension of credit, in each case in excess of $100,000,
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other than (A) accounts receivables and payables and (B) loans to direct or indirect wholly-owned Subsidiaries, in each case in the ordinary course of business consistent with past
practice;
(xv) any settlement Contract other than (A) releases immaterial in nature or amount entered into with former employees or
independent contractors of the Company in the ordinary course of business or (B) settlement agreements for cash only (which has been paid) and does not exceed $100,000 as to such settlement;
(xvi) any other Contract that provides for payment obligations by the Company or any of its Subsidiaries of $100,000 or more in any individual
case and is not disclosed pursuant to clauses (i) through (xv) above;
(xvii) any Contract with the federal government, any
foreign government, any state or local government or any division, subdivision, department, agency or instrumentality thereof; and
(xviii) any Lease of any real property; and
(xix) any Contract, or group of Contracts with a Person (or group of affiliated Persons), the termination or breach of which would be
reasonably expected to have a material adverse effect on any material product or service offerings of the Company or otherwise reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole, and is not disclosed pursuant
to clauses (i) through (xviii) above.
(b)
Section 3.11(b)
of the Company Disclosure Letter contains a complete
and accurate list of all Material Contracts to or by which the Company or any of its Subsidiaries is a party or is bound as of the date hereof, and identifies each subsection of
Section 3.11(a)
that describes such Material Contract. The
Company has delivered or made available to Parent complete and correct copies of each such Material Contract.
(c) Each Material Contract
is valid and binding on the Company (and/or each such Subsidiary of the Company party thereto) and is in full force and effect, and neither the Company nor any of its Subsidiaries party thereto, nor, to the knowledge of the Company, any other party
thereto, is in breach of, or default under, any such Material Contract, and no event has occurred that with notice or lapse of time or both would constitute such a breach or default thereunder by the Company or any of its Subsidiaries, or, to the
knowledge of the Company, any other party thereto, except for such failures to be in full force and effect and such breaches and defaults that, individually or in the aggregate, would not reasonably be expected to be material to the Company and its
Subsidiaries, taken as a whole. Neither the Company nor any of its Subsidiaries has received any written notice or other communication regarding any actual or possible violation or breach of or default under, or intention to cancel or modify, any
Material Contract.
3.12
Compliance with Laws
. The Company and each of its Subsidiaries, and, to the knowledge of the Company,
their respective properties (including the Assets and the Real Property), are, and since January 1, 2010 have been, in compliance with all Laws and Orders applicable to the Company and its Subsidiaries or such properties or to the conduct of
the business or operations of the Company and its Subsidiaries, except for such violations or noncompliance that, individually or in the aggregate, would not reasonably be expected to be material to the Company and its Subsidiaries, taken as a
whole. Since January 1, 2010, neither the Company nor any of its Subsidiary (a) has received any written notice from any Governmental Entity regarding any potential violation by the Company or any Company Subsidiary of any Law or
(b) has provided any written notice to any Governmental Entity regarding any potential violation by the Company or any of its Subsidiaries of any Law and no such notice remains outstanding or unresolved as of the date of this Agreement.
3.13
Permits
. The Company and its Subsidiaries have, and are and since January 1, 2010 have been, in compliance with the terms
of all permits, licenses, authorizations, consents, approvals and franchises from Governmental Entities required to occupy and operate each Real Property and to conduct their businesses as currently conducted (
Permits
), and no
suspension or cancellation of any such Permits is pending or, to the knowledge of the Company, threatened, except for such noncompliance, suspensions or cancellations that, individually or in the aggregate, would not reasonably be expected to be
material to the Company and its Subsidiaries, taken as a whole. Since January 1, 2010, neither the Company nor any of its Subsidiaries has
received
any written notice from any Governmental Entity regarding (a) any violation by the Company or any of
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its Subsidiaries in any material respect of any Permits, or (b) any revocation, cancellation or termination of any Permits, in each case in any material respect, held by the Company or any
of its Subsidiaries and no such notice in either case remains outstanding or unresolved as of the date of this Agreement.
3.14
Litigation
. There is no Legal Proceeding pending or, to the knowledge of the Company, threatened (a) against the Company, any of its Subsidiaries or any of the respective properties of the Company or any of its Subsidiaries,
including the Assets and the Real Property, or (to the knowledge of the Company) against third parties affecting such properties that (i) involves an amount in controversy in excess of $100,000, (ii) seeks material injunctive relief, or
(iii) seeks to impose any legal restraint on or prohibition against or limit the Surviving Corporations ability to operate the business of the Company and its Subsidiaries substantially as it was operated immediately prior to the date of
this Agreement or (b) against any current or former director or officer of the Company or any of its Subsidiaries (in their respective capacities a such), whether or not naming the Company or any of its Subsidiaries. Neither the Company nor any
of its Subsidiaries nor any of their respective properties, including the Assets and the Real Property, nor (to the knowledge of the Company) any third party owning or having any other interest in such properties is subject to any outstanding Order.
3.15
Antitrust Matters
. As of the date hereof, the Company and its Subsidiaries are not subject to any Order issued by any
Governmental Entity in relation to antitrust Laws, which is still in force.
3.16
Taxes
.
(a) Each of the Company and its Subsidiaries has prepared and timely filed all material U.S. federal, state, local and non-U.S. Tax Returns
required to be filed relating to any and all Taxes concerning or attributable to the Company, any of its Subsidiaries or their respective operations, and such Tax Returns in all material respects are true and correct and have been completed in
accordance with applicable Laws.
(b) Each of the Company and its Subsidiaries has (i) timely paid all material Taxes it is required
to pay, and (ii) timely paid or withheld (and timely paid over any withheld amounts to the appropriate Taxing authority) all federal and state income taxes, Federal Insurance Contribution Act and Federal Unemployment Tax Act amounts, and other
Taxes (including, but not limited to, all Taxes required to be reported and withheld on any U.S or non-U.S. stock options) required to be withheld.
(c) Neither the Company nor any of its Subsidiaries had any Liabilities for material unpaid Taxes as of the date of the Balance Sheet that had
not been accrued or reserved on the Balance Sheet in accordance with GAAP, and neither the Company nor any of its Subsidiaries has incurred any Liability for Taxes since the date of the Balance Sheet other than in the ordinary course of business
consistent with past practice.
(d) Neither the Company nor any of its Subsidiaries has executed any outstanding waiver of any statute of
limitations on or extension of the period for the assessment or collection of any Tax.
(e) No audit or other examination of any Tax Return
of the Company or any of its Subsidiaries is presently in progress, nor has the Company or any of its Subsidiaries been notified in writing of any request for such an audit or other examination. No material adjustment relating to any Tax Return
filed by the Company has been proposed in writing by any Governmental Entity. No claim has ever been made by any Governmental Entity that the Company or any of its Subsidiaries is or may be subject to taxation in a jurisdiction in which it does not
file Tax Returns.
(f) There are (and immediately following the Effective Time there will be) no Liens on the assets of the Company or any
of its Subsidiaries relating or attributable to Taxes, other than Permitted Liens.
(g) Neither the Company nor any of its Subsidiaries has
(i) ever been a member of an affiliated group (within the meaning of Code §1504(a)) filing a consolidated federal income Tax Return (other than a group the common parent of which was the Company), (ii) ever been a party to any Tax
sharing, indemnification or allocation agreement, nor does the Company or any of its Subsidiaries owe any amount under any such agreement, (iii) any Liability for the Taxes of any person other than the Company or any of its Subsidiaries under
Treas. Reg. § 1.1502-6 (or any similar provision of state, local or foreign Law, including any arrangement for group or consortium relief or similar arrangement), as a transferee or successor, by contract, by operation of law
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or otherwise and (iv) ever been a party to any joint venture, partnership or other agreement that could be treated as a partnership for Tax purposes.
(h) Neither the Company nor any of its Subsidiaries will be required to include any income or gain or exclude any deduction or loss from
Taxable income for any period or portion thereof after the Effective Time as a result of (i) any change in method of accounting made prior to the Effective Time, (ii) closing agreement under Section 7121 of the Code entered into prior
to the Effective Time, (iii) deferred intercompany gain or excess loss account under Section 1502 of the Code attributable to transactions occurring prior to the Effective Time (or in the case of clauses (i), (i) and (iii) above,
under any similar provision of applicable Law), (iv) installment sale or open transaction disposition made prior to the Effective Time or (v) prepaid amount received prior to the Effective Time.
(i) The Company has not constituted either a distributing corporation or a controlled corporation in a distribution of
stock intended to qualify for tax-free treatment under Section 355 of the Code.
(j) The Company has not engaged in a reportable
transaction under Treas. Reg. § 1.6011-4(b), including any transaction that is the same as or substantially similar to one of the types of transactions that the Internal Revenue Service has determined to be a tax avoidance transaction and
identified by notice, regulation, or other form of published guidance as a listed transaction, as set forth in Treas. Reg. § 1.6011-4(b)(2).
(k) The Company and each of its subsidiaries is in full compliance with all terms and conditions of any Tax exemption, Tax holiday or other Tax
reduction agreement or order (each, a
Tax Incentive
) and the consummation of the transactions contemplated by this Agreement will not have any adverse effect on the continued validity and effectiveness of any such Tax Incentive.
(l) Neither the Company nor any of its Subsidiaries is subject to Tax in any country other than its country of incorporation or formation
by virtue of having a permanent establishment or other place of business or by virtue of having a source of income in that country.
(m)
The transactions contemplated by this Agreement (including the Merger) will not result in the payment or series of payments by the Company or any of its Subsidiaries to any person of an excess parachute payment within the meaning of
Section 280G of the Code, or any other similar payment, which is not deductible for federal, state, local or foreign Tax purposes. Additionally, there is no Contract to which the Company or any of its Subsidiaries is a party, including the
provisions of this Agreement which, individually or collectively, (i) could give rise to the payment of any amount that would not be deductible pursuant to Section 162(m), Section 404 or Section 280G of the Code, (ii) is
subject to Section 409A of the Code, or (iii) could require Parent or any affiliate of Parent to gross up a payment to any employee of the Company or any of its Subsidiaries for Tax related payments or cause a penalty tax under
Section 409A of the Code.
(n) Each of the Company and its Subsidiaries is in compliance in all material respects with all applicable
transfer pricing laws and regulations, including the execution and maintenance of contemporaneous documentation substantiating its transfer pricing practices and methodology, and such documents support a more likely than not standard as required
under Financial Interpretation No. 48 of FASB Statement No. 109 (
FIN 48
). The prices for any property or services (or for the use of any property) provided by or to the Target or any of its Subsidiaries are arms
length prices for purposes of the relevant transfer pricing Laws, including Treasury Regulations promulgated under Section 482 of the Code.
(o) The Company and its Subsidiaries have identified all uncertain tax positions contained in all Tax Returns filed by the Company and/or its
Subsidiaries and have established adequate reserves and made any appropriate disclosures in the financial statements in accordance with the requirements of FIN 48.
(p) The Company has made available to Parent or its legal counsel or accountants copies of all Tax Returns and all FIN 48 work papers of
the Company and each of its Subsidiaries for all periods since January 1, 2010.
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3.17
Environmental Matters
.
(a)
Condition of Property
. Except in compliance with Environmental Laws in a manner that would not reasonably be expected to subject the
Company or any of its Subsidiaries to material Liability, no Hazardous Materials are present on any Business Facility currently owned, operated, occupied, controlled or leased by the Company or any Subsidiary or were present on any other Business
Facility at the time it ceased to be owned, operated, occupied, controlled or leased by the Company or any Subsidiary. There are no underground storage tanks, asbestos which is friable or likely to become friable or PCBs present on any Business
Facility currently owned, operated, occupied, controlled or leased by the Company or any of its Subsidiaries or as a consequence of the acts of the Company , and of its Subsidiaries or any of their respective agents.
(b)
Hazardous Materials Activities
. The Company and its Subsidiaries have conducted all Hazardous Material Activities relating to the
business in compliance in all respects with all applicable Environmental Laws, except for those Hazardous Materials Activities that the failure to comply with applicable Environmental Laws would not reasonably be expected to result in material
Liability to the Company and its Subsidiaries, taken as a whole. The Hazardous Materials Activities of the Company and its Subsidiaries prior to the Closing have not resulted in the exposure of any person to a Hazardous Material in a manner which
has caused or would reasonably be expected to cause an adverse health effect to any such person and which would reasonably be expected to result in material Liability to the Company and its Subsidiaries, taken as a whole.
(c)
Permits
.
Section 3.17(c)
of the Company Disclosure Letter accurately describes all of the material Environmental Permits
held by the Company and its Subsidiaries as of the date hereof relating to the business and the listed Environmental Permits are all of the Environmental Permits necessary for the continued conduct of any Hazardous Material Activity of the Company
or any Subsidiary relating to the business as such activities are being conducted as of the date hereof. All such Environmental Permits are valid and in full force and effect. The Company and its Subsidiaries have complied in all material respects
with all covenants and conditions of any Environmental Permit which is or has been in force with respect to their Hazardous Materials Activities. No circumstances exist relating to activities under the control of the Company and its Subsidiaries
which would reasonably be expected to result in any Environmental Permit to be revoked, modified in a material way, or rendered non-renewable upon payment of the permit fee.
(d)
Environmental Litigation
. No Legal Proceeding is pending, or to the knowledge of the Company, threatened, concerning or relating to
any Environmental Permit or any Hazardous Materials Activity of the Company or any Subsidiary relating to the business, or any Business Facility.
(e)
Environmental Liabilities
. The Company is not aware of any fact or circumstance, which could result in any environmental Liability
that would reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole. Neither the Company nor any of its Subsidiaries has entered into any material Contract that requires it to guarantee, reimburse, pledge, defend,
hold harmless or indemnify any other party with respect to liabilities arising out of Environmental Laws or the Hazardous Materials Activities of the Company or any Subsidiary.
(f)
Offsite Hazardous Material Disposal.
The Company and its Subsidiaries have transferred or released Hazardous Materials only to those
Disposal Sites set forth in
Section 3.17(f)
of the Company Disclosure Letter; and, to the knowledge of the Company, no Legal Proceeding exists or is threatened against any Disposal Site or and no Legal Proceeding exists or, to the
knowledge of the Company, no Legal Proceeding is threatened against the Company or any of its Subsidiaries with respect to any transfer or release of Hazardous Materials relating to the business of the Company or any of its Subsidiaries to a
Disposal Site which could reasonably be expected to result in material Liability to the Company and its Subsidiaries, taken as a whole.
(g)
Reports and Records
. The Company has delivered to Parent all material records in the Companys and its Subsidiaries
possession as of the date hereof concerning the Hazardous Materials Activities of the Company and its Subsidiaries since January 1, 2010, relating to the business and all environmental audits and environmental assessments of any Business
Facility, including documentation relating to environmental reserves and asset retirement obligations.
Section 3.17(g)
of the Company Disclosure Letter lists all products of the
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Company or any Subsidiary which are subject to the EU RoHS Directive as of the date hereof and all such products listed comply with the EU RoHS Directive.
3.18
Employee Benefit Plans
.
(a)
Sections 3.18(a)(i)
and
Section 3.18(a)(ii)
of the Company Disclosure Letter, respectively, set forth a complete and
accurate list of (i) all employee benefit plans (as defined in Section 3(3) of ERISA), whether or not subject to ERISA and (ii) all other employment, consulting and independent contractor agreement, bonus, stock option,
stock purchase or other equity-based, benefit, incentive compensation, profit sharing, savings, retirement (including early retirement and supplemental retirement), disability, insurance, vacation, incentive, deferred compensation, supplemental
retirement (including termination indemnities and seniority payments), severance, termination, retention, change of control and other similar fringe, welfare or other employee benefit plans, programs, agreement, contracts, policies or arrangements
(whether or not in writing) maintained or contributed to for the benefit of or relating to any current or former employee, consultant or independent contractor or director of the Company, any of its Subsidiaries or any other trade or business
(whether or not incorporated) which would be treated as a single employer with the Company or any of its Subsidiaries under Section 414 of the Code (an
ERISA Affiliate
), or with respect to which the Company or any of its
Subsidiaries has any material Liability (together the
Employee Plans
). With respect to each Employee Plan, to the extent applicable, the Company has made available to Parent complete and accurate copies of (A) the most recent
annual report on Form 5500 required to have been filed with the IRS for each Employee Plan, including all schedules thereto; (B) the most recent determination letter, if any, from the IRS for any Employee Plan that is intended to qualify under
Section 401(a) of the Code; (C) the plan documents and summary plan descriptions, or a written description of the terms of any Employee Plan that is not in writing; (D) any related trust agreements, insurance contracts, insurance
policies or other documents of any funding arrangements; (E) any notices to or from the IRS or any office or representative of the DOL or any similar Governmental Entity relating to any compliance issues in respect of any such Employee Plan;
(F) with respect to each Employee Plan that is maintained in any non-U.S. jurisdiction (the
International Employee Plans
), to the extent applicable, (x) the most recent annual report or similar compliance documents
required to be filed with any Governmental Entity with respect to such plan and (y) any document comparable to the determination letter referenced under clause (B) above issued by a Governmental Entity relating to the satisfaction of Laws
necessary to obtain the most favorable tax treatment and (G) all other material Contracts relating to each Employee Plan, including administrative service agreements.
(b) Each Employee Plan has been maintained, operated and administered in compliance in all material respects with its terms and with all
applicable Laws, including the applicable provisions of ERISA, the Code and any applicable regulatory guidance issued by any Governmental Entity. To the extent applicable, each International Employee Plan has been approved by the relevant taxation
and other Governmental Entities so as to enable: (i) the Company or any of its Subsidiaries and the participants and beneficiaries under the relevant International Employee Plan and (ii) in the case of any International Employee Plan under
which resources are set aside in advance of the benefits being paid (a
Funded International Employee Plan
), the assets held for the purposes of the Funded International Employee Plans, to enjoy the most favorable taxation status
possible and the Company is not aware of any ground on which such approval may reasonably be expected to cease to apply.
(c) Each Employee
Plan that is intended to be qualified under Section 401 of the Code has received a favorable determination or opinion letter from the IRS to such effect and nothing has occurred or exists since the date of such determination or
opinion letter that would reasonably be expected to materially and adversely affect the qualified status of any such Employee Plan.
(d)
All contributions, premiums and other payments required to be made with respect to any Employee Plan have been timely made, accrued or reserved for. Except as required by Law, neither the Company nor any of its Subsidiaries has any plan or
commitment to amend or establish any new Employee Plan or to increase any benefits under any Employee Plan.
(e) There are no Legal
Proceedings pending or, to the knowledge of the Company, threatened on behalf of or against any Employee Plan, the assets of any trust under any Employee Plan, or the plan sponsor, plan
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administrator or any fiduciary or any Employee Plan with respect to the administration or operation of such plans, other than routine claims for benefits that have been or are being handled
through an administrative claims procedure.
(f) None of the Company, any of its Subsidiaries, or, to the knowledge of the Company, any of
their respective directors, officers, employees or agents has, with respect to any Employee Plan, engaged in or been a party to any non-exempt prohibited transaction, as such term is defined in Section 4975 of the Code or
Section 406 of ERISA, which could reasonably be expected to result in the imposition of a penalty assessed pursuant to Section 502(i) of ERISA or a tax imposed by Section 4975 of the Code.
(g) Neither the Company, nor any of its Subsidiaries, nor any of their respective ERISA Affiliates has ever maintained, participated in or
contributed to (or been obligated to contribute to) (i) an Employee Plan which was ever subject to Section 412 of the Code or Title IV of ERISA, (ii) a multiemployer plan (as defined in Section 4001(a)(3) of
ERISA), (iii) a multiple employer plan as defined in ERISA or the Code, or (iv) a funded welfare plan within the meaning of Section 419 of the Code. No Employee Plan provides material welfare benefits that are
not fully insured through an insurance contract.
(h) No Employee Plan provides post-termination or retiree life insurance, health or other
welfare benefits to any person, other than pursuant to Section 4980B of the Code or any similar state, local or foreign Law.
(i) No
Employee Plan that is subject to Section 409A of the Code has been materially modified (as defined under Section 409A of the Code) since October 3, 2004 and all such non-qualified deferred compensation plans or arrangements have been
operated and administered in good faith compliance with Section 409A of the Code from the period beginning December 31, 2004 through December 31, 2008 and thereafter in compliance with the Final Treasury Regulations issued under
Section 409A of the Code. Each Company Option, stock appreciation right, or other similar right to acquire Company Common Stock or other equity of the Company, granted to or held by an individual or entity who is or may be subject to United
States taxation, (1) has an exercise price that is not less than the fair market value of the underlying equity as of the date such Company Option, stock appreciation right or other similar right was granted, and (2) has been properly
accounted for in accordance with GAAP on the consolidated financial statements of the Company and its Subsidiaries filed in or furnished with the SEC Reports.
(j) Neither the execution or delivery of this Agreement nor the consummation of the transactions contemplated by this Agreement (including the
Merger) will, either alone or in conjunction with any other event, (i) result in any payment or benefit becoming due or payable, or required to be provided, to any director, employee or independent contractor of the Company or any of its
Subsidiaries, (ii) increase the amount or value of any benefit or compensation otherwise payable or required to be provided to any such director, employee or independent contractor, (iii) result in the acceleration of the time of payment,
vesting or funding of any such benefit or compensation or (iv) result in the payment of any amount that would not be deductible by reason of Section 280G of the Code. There is no contract, agreement, plan or arrangement to which the
Company or any of its Subsidiaries is a party or by which it is bound to compensate any current or former employee or other disqualified individual for excise taxes which may be required pursuant to Section 4999 of the Code.
(k) No deduction for federal income tax purposes has been nor is any such deduction expected by the Company to be disallowed for remuneration
paid by the Company or any of its Subsidiaries by reason of Section 162(m) of the Code including by reason of the transactions contemplated hereby.
(l) All contracts of employment or for services with any employee of the Company or any of its Subsidiaries who provide services outside the
United States (
Foreign Employees
), or with any director, independent contractor or consultant of or to the Company or any of its Subsidiaries, can be terminated by three (3) months notice or less given at any time
without giving rise to any claim for damages, severance pay, or compensation (other than a statutory redundancy payment required by applicable Laws).
(m) No International Employee Plan has Liabilities, that as of the Closing Date, will not be offset in full by insurance or otherwise be fully
accrued.
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(n) Each Employee Plan (not including any Employee Plan which is an individual employment
Contract) can be amended, terminated or otherwise discontinued following the Effective for any reason without Liability to Parent or the Surviving Corporation or any of its Subsidiaries (other than ordinary administration expenses or routine claims
for benefits).
3.19
Labor Matters
.
(a) Neither the Company nor any of its Subsidiaries is a party to any Contract or arrangement between or applying to, one or more employees and
a trade union, works council, group of employees or any other employee representative body, for collective bargaining or other negotiating or consultation purposes or reflecting the outcome of such collective bargaining or negotiation or
consultation with respect to their respective employees with any labor organization, union, group, association, works council or other employee representative body, or is bound by any equivalent national or sectoral agreement (
Collective
Bargaining Agreements
). There are no activities or proceedings pending or, to the knowledge of the Company, threatened or reasonably anticipated by any labor organization, union, group or association or representative thereof to organize
any such employees. There are no lockouts, strikes, slowdowns, work stoppages or, to the knowledge of the Company, threats thereof by or with respect to any employees of the Company or any of its Subsidiaries nor have there been any such lockouts,
strikes, slowdowns or work stoppages or threats thereof with respect to any employees or the Company or any of its Subsidiaries.
(b) The
Company and its Subsidiaries have complied in all material respects with applicable Laws and Orders relating to employment, employment practices, terms and conditions of employment, worker classification, tax withholding, prohibited discrimination,
equal employment, fair employment practices, meal and rest periods, immigration status, employee safety and health, wages (including overtime wages), compensation, and hours of work, and in each case, with respect to employees: (i) has withheld
and reported all amounts required by Law or by agreement to be withheld and reported with respect to wages, salaries and other payments to employees, (ii) is not liable for any arrears of wages, severance pay or any taxes or any penalty for
failure to comply with any of the foregoing, and (iii) is not liable for any payment to any trust or other fund governed by or maintained by or on behalf of any governmental authority, with respect to unemployment compensation benefits, social
security or other benefits or obligations for employees (other than routine payments to be made in the normal course of business and consistent with past practice). Neither the Company nor any of its Subsidiaries has any material Liability with
respect to any misclassification of: (x) any Person as an independent contractor rather than as an employee, (y) any employee leased from another employer, or (z) any employee currently or formerly classified as exempt from overtime
wages.
(c) Neither the Company nor any Subsidiary has taken any action which would constitute a plant closing or mass
layoff within the meaning of the WARN Act or similar state or local Law, issued any notification of a plant closing or mass layoff required by the WARN Act or similar state or local Law, or incurred any Liability or obligation under WARN or
any similar state or local Law that remains unsatisfied. No terminations prior to the Closing would trigger any notice or other obligations under the WARN Act or similar state or local Law.
3.20
Real Property
.
(a)
Section 3.20(a)
of the Company Disclosure Letter sets forth a true and complete list of all of the real property owned by the Company or any of its Subsidiaries as of the date hereof (the
Owned Real Property
). Except
as set forth in
Section 3.20(a)
of the Company Disclosure Letter, the Company owns the Owned Real property free and clear of all Liens, except for Permitted Liens. The Company has delivered a true and correct copy of a title policy for
the Owned Real Property to Parent.
(b)
Section 3.20(b)(i)
of the Company Disclosure Letter contains a complete and
accurate list of all of the material leases, subleases, licenses, or other agreements in existence as of the date hereof under which the Company or any of its Subsidiaries uses or occupies or has the right to use or occupy, now or in the future, any
real property (collectively, the
Leases
; such property, the
Leased Real Property
and, collectively with the Owned Real Property, the
Real Property
) including, with respect to each Lease, the
name of the lessor, or the master lessor and sublessor, the date and term of the Lease and each amendment thereto, the square footage of
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the premises leased thereunder, and the aggregate annual rental payable thereunder. The Company has heretofore made available to Parent true, correct and complete copies of all Leases (including
all modifications, amendments, supplements, consents, waivers and side letters thereto and all agreements in connection therewith, including all work letters, improvement agreements, estoppel certificates, and subordination agreements). The Company
and/or its Subsidiaries have and own valid leasehold estates in the Leases and the Leased Real Property, free and clear of all Liens except Permitted Liens.
Section 3.20(b)(ii)
of the Company Disclosure Letter contains a complete and
accurate list of all of the leases, subleases, licenses, or other agreements in existence as of the date hereof granting to any Person, other than the Company or any of its Subsidiaries, any right to use or occupy, now or in the future, any of the
Real Property (collectively, the
Third Party Leases
) including, with respect to each such Third Party Lease, the name of the master lessor, sublessor and sublessee, the date of the Third Party Lease and each amendment thereto, the
square footage of the premises leased thereunder, and the aggregate annual rental payable thereunder. The Leases and the Third Party Leases are each in full force and effect and neither the Company nor any of its Subsidiaries is in breach of or
default under, or has received written notice of any breach of or default under, any Lease or Third Party Lease, and, to the knowledge of the Company, no event has occurred that with notice or lapse of time or both would constitute a breach or
default thereunder by the Company or any of its Subsidiaries or any other party thereto. Neither the Company nor any of its Subsidiaries would be reasonably required to expend more than $25,000 in causing any Real Property to comply with the
surrender conditions set forth in the applicable Lease. The Company and each of its Subsidiaries has performed all of its obligations under any termination agreements pursuant to which it has terminated any leases of real property that are no longer
in effect and has no continuing liability with respect to such terminated real property leases.
(c) Neither the Company nor any of its
Subsidiaries owes brokerage commissions or finders fees with respect to any Real Property. The Company and its Subsidiaries as of the date hereof occupy all of the Real Property for the operation of their business except as set forth in
Section 3.20(b)(ii)
of the Company Disclosure Letter and, except pursuant to Third Party Leases, there are no other parties occupying or with a right to occupy the Real Property. The Company and its Subsidiaries do not use or occupy or
have the right to use or occupy any real property other than the Real Property. The Company has not transferred or assigned any interest in any Lease, nor has the Company subleased or otherwise granted rights of use or occupancy of any of the
premises described therein to any other person or entity, except as described in
Section 3.20(b)(ii)
of the Company Disclosure Letter.
(d) Each Real Property and all of its operating systems are in good operating condition and repair, and free from material structural,
physical, mechanical, electrical, plumbing, roof or other defects, is maintained in a manner consistent with industry standards generally followed with respect to similar property, and is suitable for the conduct of the business of the Company and
its Subsidiaries as presently conducted.
(e) The Company has not received any written notice from any insurance company of any defects or
inadequacies in any Real Property or any part thereof which would reasonably be expected to materially and adversely affect the insurability of such Real Property or the premiums for the insurance thereof. No written notice has been given by any
insurance company which has issued a policy with respect to any portion of any Real Property or by any board of fire underwriters (or other body exercising similar functions) requesting the performance of any repairs, alterations or other work with
which compliance has not been made.
(f) Neither the operations of the Company or any of its Subsidiaries on the Real Property nor, to the
knowledge of the Company, any Real Property, including the improvements thereon, violate in any material respect any applicable building code, zoning requirement or other Law relating to such property.
(g) Except to the extent that such would not reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole:
(i) there is no pending or, to the knowledge of the Company, threatened condemnation or similar proceeding affecting any Real Property or any portion thereof, and the Company has no knowledge that any such action is currently contemplated,
(ii) there are no Legal Proceedings pending or, to the knowledge of the Company, threatened against the Company, or, to the knowledge of the Company, against third parties affecting any Real Property, and the Company is not aware of any facts
which might result in any such Legal Proceeding, and (iii) there are no pending or, to the knowledge of the Company, threatened special
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assessments or improvements or activities of any public or quasi-public body either planned, in process, or completed which may give rise to any special assessment against any Real Property.
3.21
Assets; Personal Property
. The machinery, equipment, furniture, fixtures and other tangible personal property and assets
owned, leased or used by the Company or any of its Subsidiaries (the
Assets
) are, in the aggregate, sufficient and adequate to carry on their respective businesses in all material respects as conducted as of the date hereof, and
the Company and its Subsidiaries are in possession of and have good title to, or valid leasehold interests in or valid rights under contract to use, such Assets that are material to the Company and its Subsidiaries, taken as a whole, free and clear
of all Liens, except for conditions, Permitted Liens, or defects in title that, individually or in the aggregate, are not and would not reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole.
3.22
Intellectual Property.
(a)
Section 3.22(a)
of the Company Disclosure Letter contains a complete and accurate list of all Company Products and all Domain
Names under which Company operates its business as of the date hereof.
(b)
Section 3.22(b)
of the Company Disclosure Letter
contains a complete and accurate list of the Company Intellectual Property Rights as of the date hereof that are Registered IP and material unregistered Trademarks (
Company Registered IP
), in each case listing, as applicable,
(i) the name of the applicant/registrant, inventor/author and current owner, (ii) the jurisdiction where the application/registration is located, (iii) the application or registration number, (iv) the filing date, and
issuance/registration/grant date, and (v) the prosecution status thereof.
(c) The Company Registered IP is subsisting and, to the
knowledge of the Company, valid and enforceable. The Company has no knowledge of any information, materials, facts or circumstances, including any information or fact that would constitute prior art, that would render any of such Company Registered
IP invalid or unenforceable, or would materially affect any pending application for any Company Registered IP. The Company has not misrepresented, or knowingly failed to disclose, any facts or circumstances in any application or proceedings for any
Company Registered IP that would constitute fraud or a misrepresentation with respect to such application or that would otherwise affect the enforceability of any Company Registered IP.
(d) With respect to each item of Company Registered IP: (i) all necessary registration, maintenance and renewal fees have been paid, and
all necessary documents and certificates have been filed with the relevant patent, copyright, trademark, domain registrars or other authorities in the United States or foreign jurisdictions, as the case may be, for the purposes of maintaining such
Company Registered IP; (ii) is in compliance with all formal legal requirements with respect thereto (including payment of filing, examination and maintenance fees and proofs of use), and (iii) is not subject to any unpaid maintenance fees
or taxes. There are no actions that must be taken by Company or its Subsidiaries within ninety (90) days of the Termination Date, including, with respect to each item of Company Registered IP, the payment of any registration, maintenance or
renewal fees or the filing of any documents, applications or certificates for the purposes of maintaining, perfecting or preserving or renewing any Company Registered IP.
(e) The Company or one of its Subsidiaries has valid and enforceable written agreements with respect to Company Intellectual Property Rights,
pursuant to which: (i) the Company or one of its Subsidiaries has obtained complete, unencumbered, irrevocable, unrestricted and exclusive ownership of, or exclusive license rights to all such Company Intellectual Property Rights by valid
assignment or otherwise (including the rights to recover unrecovered past, present and future damages for infringement or misappropriation of such Intellectual Property Rights) and (ii) the other parties thereto have not retained and do not
have any rights or licenses with respect to the Company Intellectual Property Rights. This Agreement and the transactions contemplated hereunder do not conflict with or violate such third party agreements and no basis exists for such third party to
challenge or object to this Agreement. In each case in which the Company or any of its Subsidiaries have acquired ownership of any Company Registered IP, the Company or one of its Subsidiaries has recorded each such acquisition with the U.S. Patent
and Trademark Office, the U.S. Copyright Office, or their respective equivalents in the applicable jurisdiction, in each case in accordance with applicable Laws.
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(f)
Section 3.22(f)
of the Company Disclosure Letter contain a complete and accurate
list of all Contracts as of the date hereof (i) under which the Company or any of its Subsidiaries use or have acquired ownership or the right to use any Company IP, other than Shrink-Wrap Code or (ii) under which the Company or any of its
Subsidiaries have licensed to others the right to use or agreed to transfer to others any Technology or Intellectual Property Rights that are or were Company IP and/or Company Products, other than non-disclosure agreements the Company has entered
into in the ordinary course of business (such Contacts, the
Company IP Agreements
). The Company has delivered or made available to Parent complete and correct copies of each such Company IP Agreement. Each Company IP Agreement is
valid and binding on the Company (and/or each such Subsidiary of the Company party thereto) and is in full force and effect. Neither the Company nor any of its Subsidiaries party thereto, nor, to the knowledge of the Company, any other party
thereto, is in breach of, or default under, any such Company IP Agreement, and no event has occurred that with notice or lapse of time or both would constitute such a breach or default thereunder by the Company or any of its Subsidiaries, or, to the
knowledge of the Company, any other party thereto. To the knowledge of the Company, there are no pending disputes regarding the scope of such Company IP Agreements, performance under the Company IP Agreements, or with respect to payments made or
received under such Company IP Agreements.
(g) The Company and its Subsidiaries own or have sufficient rights to all Intellectual Property
Rights and Technology that are either used in, necessary for, or that would be infringed by, the conduct of the business of the Company and its Subsidiaries as currently conducted and as currently contemplated to be conducted. Without limiting the
foregoing, the Company and its Subsidiaries have the right to use all software development tools, library functions, or compilers that the Company or its Subsidiaries (i) use to create, modify, compile, or support the Company Products that are
Software or (ii) use to provide any Company Products that are services. Neither the operation of the business of the Company nor the use, provision, support, reproduction, making, distribution, marketing, sale, license or display of the Company
Products by Company or its Subsidiaries, did, or do, or will: (A) infringe or misappropriate the Intellectual Property Rights of any Person; (B) violate the rights of any Person (including rights to privacy or publicity); or
(C) constitute unfair competition or trade practices under the Laws of any jurisdiction (nor does Company have knowledge of any basis therefore).
(h) The Company and its Subsidiaries own all right, title and interest in, or have exclusive license rights to, the Company Intellectual
Property Rights, free and clear of all Liens other than (i) obligations arising under the terms of any of the Company IP Agreements listed on
Section 3.22(f)
of the Company Disclosure Letter and (ii) Permitted Liens. All
Company Intellectual Property Rights will be fully transferable, alienable or licensable by Parent without restriction and without payment of any kind to any third party. The Company and its Subsidiaries have, and following the Effective Time, the
Parent will have the exclusive right to bring actions against any person that is infringing any Company Intellectual Property Rights and to retain for themselves any damages recovered in any such action. Neither the Company nor any of its
Subsidiaries have transferred ownership of, let lapse or enter into the public domain or granted any exclusive license of or exclusive right to use, or authorized the retention of any exclusive rights to use or joint ownership of any Company
Intellectual Property Rights to any other Person. No Person other than the Company and its Subsidiaries has ownership rights or exclusive license rights to any improvement or derivative works made by or for Company or one of its Subsidiaries in any
Company IP or Company Intellectual Property Rights.
(i) The Company and each of its Subsidiaries have taken commercially reasonable steps
to protect and preserve the confidentiality of the Trade Secrets that comprise any part of the Company IP, and to the knowledge of the Company, there is no unauthorized use, disclosure or misappropriation of any such Trade Secrets by any Person. To
the knowledge of the Company, all use and disclosure of Trade Secrets owned by another Person by the Company or any of its Subsidiaries have been pursuant to the terms of a written agreement with such Person or such use and disclosure by the Company
or any of its Subsidiaries was otherwise lawful. Without limiting the foregoing, the Company and its Subsidiaries have a policy requiring employees and certain consultants and contractors to execute a confidentiality and assignment agreement
substantially in the Companys standard form previously provided to Parent which (i) assigns to the Company or one of its Subsidiaries all right, title and interest (including the sole right to enforce) in any Intellectual Property Rights
arising therefrom and (ii) provides commercially reasonable protection for Trade Secrets of the Company and its Subsidiaries. All current or former
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employees, consultants and contractors of the Company or any Subsidiary that have created any Company IP have executed such agreements, and, to the knowledge of the Company, no party to any such
agreement is in material breach thereof.
(j) To the knowledge of the Company, no Person (or any of such Persons products or services
or other operation of such Persons business) is infringing upon or otherwise violating any Company Intellectual Property Rights, and neither the Company nor any of its Subsidiaries have asserted or threatened any claim against any Person
alleging the same.
(k) There is and has not been in the prior six (6) years any Legal Proceeding made, conducted or brought by a
third party that has been served upon, filed or threatened in writing, or, to the knowledge of the Company, otherwise threatened, with respect to (i) any alleged infringement or other violation by the Company or any of its Subsidiaries or any
of its or their current products or services or other operation of the Companys or any of its Subsidiaries business of the Intellectual Property Rights of such third party or (ii) any challenge to the validity or enforceability of,
or contesting the Companys or any of its Subsidiaries rights with respect to, any of the Company IP or Company Intellectual Property Rights. The Company and its Subsidiaries are not subject to any Order of any Governmental Entity that
restricts or impairs the use, transfer or licensing of any Company IP or Company Intellectual Property Rights or other Intellectual Property Rights.
(l) The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby (including the Merger) will not
result in (i) the Company or its Subsidiaries granting to any third party any rights or licenses to any Intellectual Property Rights, (ii) any right of termination or cancellation under any Company IP Agreement, (iii) any payment of
fees, penalties, royalties or expenses under any Company IP Agreement that would not have been payable absent this Agreement and the consummation of the transactions contemplated hereby, (iv) change in the scope or nature of any Intellectual
Property Rights granted to, or by, the Company or its Subsidiaries, (v) the imposition of any Lien on any Owned Company IP, or (vi) after the Merger, (A) Parent or any of its Subsidiaries or Affiliates being required to grant any
third party any rights or licenses to any of Parents or any of its Subsidiaries or Affiliates Intellectual Property Rights, (B) Parent or any of its Subsidiaries or Affiliates being bound by, or subject to, any
non-competition, non-solicitation, exclusivity or other material restriction on the operation or scope of their respective business, or (C) Parent or any of its Subsidiaries or Affiliates being obligated to pay any incremental royalties or
other material amounts, offer any incremental discounts or being bound by any most favored pricing terms to any third party except to the extent, in each case with respect to clause (A), (B) or (C), caused by a contract to which
Parent or any of its Subsidiaries or Affiliates is a party.
(m) Except as set forth in
Section 3.22(m)
of the Company
Disclosure Letter, no Software that constitutes Public Software was or is used in, incorporated into, integrated or bundled with any Company Product, Company IP, or incorporated in or used in the development or compilation of any Company Products or
otherwise distributed by the Company or its Subsidiaries.
Section 3.22(m)
of the Company Disclosure Letter sets forth a list of all Public Software that is included in, or provided or distributed with, any Company Product as of the date
hereof and for each use of Public Software: (i) the name of the Public Software; (ii) a description of the functionality of the Public Software, (iii) the applicable license terms and website (or other source) from which it was
obtained, (iv) the applicable Company Product, (v) whether or not the Public Software has been modified, (vi) to the knowledge of Company, the copyright holder(s) of such Public Software, and (vii) a description of any
modifications to such Public Software made by the Company or its Subsidiaries.
(n) The Company and its Subsidiaries are in full compliance
with all Public Software license agreements to which the Company or a Subsidiary, as applicable, is a party, and the Companys and its Subsidiaries use or incorporation of Public Software has not and does not (i) grant to any third
party any rights in the Companys or a Subsidiarys products, services or intellectual property, (ii) require the licensing, disclosure, or distribution of any Software developed by or for the Company or a Subsidiary,
(iii) require the Company or a Subsidiary to license the use of its products or services to third parties without charge, or (iv) create restrictions on or immunities to the Companys or its Subsidiaries enforcement of its
intellectual property rights.
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(o) Neither the Company nor any of its Subsidiaries have granted any Intellectual Property Rights
or any licenses to use any Source Code, including Confidential Technology escrow agreements. None of the Confidential Technology for the Company Products has been published or disclosed by the Company or any of its Subsidiaries, except to its
employees or advisers or pursuant to non-disclosure agreements, or, to the knowledge of the Company, by any other person except as authorized by the Company under a non-disclosure agreement. No condition has occurred that would be sufficient to
entitle the beneficiary under any technology escrow arrangement under which the Company or any of its Subsidiaries have deposited any material Confidential Technology for any Company Product to require release of such Confidential Technology. The
consummation of the transactions contemplated hereby (including the Merger) will not constitute a condition sufficient to entitle the beneficiary under any Confidential Technology escrow arrangement under which the Company or any of its Subsidiaries
have deposited any material Confidential Technology for any Company Product to require release of such Confidential Technology.
(p) All
data which has been collected, stored, maintained or otherwise used by the Company and its Subsidiaries has been collected, stored, maintained and used in accordance with all applicable U.S. and foreign Laws, guidelines, contracts, and industry
standards. Neither the Company nor its Subsidiaries has received a notice of noncompliance with applicable data protection Laws, guidelines or industry standards. The Company and its Subsidiaries have made all registrations that the Company and its
Subsidiaries are required to have made in relation to the processing of data, and are in good standing with respect to such registrations, with all fees due within ninety (90) days of the date hereof duly made. The Companys and its
Subsidiaries practices are, and have always been, in compliance with (i) their then-current privacy policy, including the privacy policy posted on the Companys and its Subsidiaries websites, and (ii) their customers
privacy policies, when required to do so by contract. The Company and its Subsidiaries have implemented and maintained commercially reasonable measures to protect and maintain the confidential nature of any personal information. The Company and its
Subsidiaries have adequate technological and procedural measures in place to protect personal information collected by Company or a Subsidiary of the Company against loss, theft and unauthorized access or disclosure. The Company and its Subsidiaries
have the full power and authority to transfer any and all rights in any personal information in the Companys and its Subsidiaries possession or control to Parent, there are no provisions in any applicable privacy policy that would
prevent or restrict such transfer and, to the knowledge of the Company, there are no applicable Laws that would prevent or restrict such transfer. Neither the Company nor any of its Subsidiaries is subject to any obligation that would prevent Parent
from using the personal information in a manner consistent with any law or industry standard regarding the collection, retention, use, or disclosure of such information.
(q) To the knowledge of the Company, there are no design, manufacturing, or other defects or errors in the Company Products or Company IP, that
have not been fully resolved, including without limitation (i) defects or errors that permit unauthorized access to computers or systems of users through those Company Products or Company IP, (ii) any disabling codes or instructions and
any back door, time bomb, Trojan horse, worm, drop dead device, virus or other software routines or hardware components that permit unauthorized access or the unauthorized
disruption, impairment, disablement or erasure of such Company Product or Company IP (or all parts thereof) or data or other software of users, (iii) any defects or errors which have led or would reasonably be expected to lead to any broad or
limited recall of the Company Products, (iv) any defects or errors which affect the safety, functionality or use of the Company Products for their intended purposes or (v) any defects or errors which would breach any Contract entered into
by the Company or its Subsidiaries with respect to the Company Products.
(r) The Company and its Subsidiaries have taken reasonable steps
and implemented reasonable procedures to prevent viruses and other disabling codes from entering Company Products and Company IP and otherwise safeguard the information technology systems of the Company and its Subsidiaries. To the knowledge of the
Company, there have been no successful unauthorized intrusions or breaches of the security of information technology systems of the Company and its Subsidiaries. The Company and its Subsidiaries have sufficient and industry-standard disaster
recovery plans procedures and facilities for the business.
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(s) To the knowledge of the Company, neither the Company nor any of its Subsidiaries have
extended or granted any refund rights with respect to any Company Products other than in the ordinary course of business consistent with past practices. None of the Companys or its Subsidiaries customers, the distributors of the Company
Products, or end users have claimed to Company or its Subsidiaries (or to their distributors), that the Company Products are defective or otherwise not in compliance with the applicable Warranties other than any such claim that does not exceed
$100,000 individually and any such claims that do not exceed $500,000 in the aggregate. The Company has no knowledge of any fact, or of the occurrence of any event, that might reasonably form the basis of any present or future claim against the
Company or its Subsidiaries, whether or not fully covered by insurance, for Liability on account of negligence or product liability or on account of any Warranties other than any such claim that would not exceed $100,000 individually and any such
claims that would not exceed $500,000 in the aggregate.
Warranties
shall mean all obligations to service, repair (including, without limitation, to provide fixes to program errors), replace, credit, refund and other obligations
based upon or arising out of express and implied warranties made or deemed made in connection with the provision, license or sale of Company Products.
(t)
Section 3.22(t)(i)
of the Company Disclosure Letter sets forth a true and complete list of all industry standards bodies or
similar organizations related to the business in which the Company and/or any of its Subsidiaries has participated and
Section 3.22(t)(ii)
of the Company Disclosure Letter sets forth a true and complete list of all industry standards
bodies or similar organizations related to the business in which the Company and/or any of its Subsidiaries is or was a member. None of the Company IP or
Company Intellectual Property Rights
is subject to any claim, right to use, license or
obligation to license as a result of the participation or membership in, or utilization of the work of, any standards body, consortium or organization, nor is there any claim, license, right to use or obligation to license any of the Company IP or
Company Intellectual Property Rights to any third party as a result of the participation or membership in, or utilization of the work of, any standards body, consortium or organization.
(u) No rights have been granted to any Governmental Entity with respect to any Company Product, Company Technology or under any Intellectual
Property, other than the same standard commercial rights as are granted by the Company to commercial end users of the Company Products in the ordinary course of business consistent with past practices.
3.23
Export Control and Import Laws.
(a) The Company and each of its Subsidiaries have complied in all material respects with all applicable export and reexport control and trade
and economic sanctions Laws (
Export Controls
), including the Export Administration Regulations (
EAR
) maintained by the U.S. Department of Commerce, trade and economic sanctions maintained by the Treasury
Departments Office of Foreign Assets Control (
OFAC
), and the International Traffic in Arms Regulations (
ITAR
) maintained by the Department of State and any applicable anti-boycott compliance regulations
except for such noncompliance that would not reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole. Neither the Company nor any of its Subsidiaries has directly or indirectly sold, exported, reexported,
transferred, diverted, or otherwise disposed of any products, software, technology, or technical data to any destination, entity, or person prohibited by the Laws of the United States, without obtaining prior authorization from the competent
government authorities as required by Export Controls. The Company and its Subsidiaries are in compliance with all applicable import Laws (
Import Restrictions
), including Title 19 of the U.S. Code and Title 19 of the Code of
Federal Regulations
(b)
Section 3.23
of the Company Disclosure Letter accurately describes all of (1) the goods,
services, items, software, technology, and technical data of the Company and its subsidiaries along with the appropriate classification, including their Export Control Classification Numbers (
ECCNs
) or designation on the U.S.
Munitions List (
USML
); (2) the countries to which these goods, services, items, software, technology, or technical data have been exported; and (3) the licenses and license exceptions currently held or claimed by the
Company and its Subsidiaries for the export of goods, services, items, software, technology, or technical data. The listed licenses and license exceptions are all of the licenses and exceptions necessary for the continued export or reexport of
goods, services, items, software, technology, or technical data of the Company or any
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Subsidiary. All such licenses are valid and in full force and effect. The Company and its Subsidiaries have complied with all terms and conditions of any license issued or approved by the
Directorate of Defense Trade Controls, the Bureau of Industry and Security, or the Office of Foreign Assets Control which is or has been in force or other authorization issued pursuant to Export Controls.
(c) Except as authorized under applicable Laws or pursuant to valid licenses, the Company and its Subsidiaries have not released, disclosed, or
allowed access to technical data or technology to any foreign national whether in the United State or abroad.
(d) No Legal Proceeding,
claim, request for information, or subpoena is pending, or to the knowledge of the Company, threatened, concerning or relating to any export, reexport, or import activity of the Company or any of its Subsidiaries. No voluntary self disclosures have
been filed by or for the Company or any of its Subsidiaries with respect to possible violations of Export Controls and Import Restrictions.
(e) Neither the Company nor any of its Subsidiaries is aware of any fact or circumstance that would result in any Liability for any violation
of Export Control and Import Restrictions.
(f) The Company and its Subsidiaries, including, to the knowledge of the Company, all of their
customs brokers and freight forwarders, have maintained all records required to be maintained regarding the business of the Company and its Subsidiaries as required under the Export Control and Import Restrictions.
3.24
Insurance
. All material policies of insurance covering the Company, its Subsidiaries or any of their respective employees,
properties or assets, including policies of life, property, title, fire, workers compensation, products liability, directors and officers liability and other casualty and liability insurance, are listed in
Section 3.24
of the Company Disclosure Schedule. All such insurance policies are in full force and effect, no written notice of cancellation has been received, and there is no existing default or event which, with the giving of written notice or lapse of time or
both, would constitute a default, by any insured thereunder, except for such defaults that would not be, individually or in the aggregate, material to the Company and its Subsidiaries, taken as a whole. There is no material claim pending under any
of such policies as to which coverage has been questioned, denied or disputed by the underwriters of such policies and there has been no threatened termination of, or material premium increase with respect to, any such policies.
3.25
Foreign Corrupt Practices Act
. Neither the Company nor any of its Subsidiaries (including any of their respective officers,
directors, agents, employees or other Person associated with or acting on their behalf) have, directly or indirectly, taken any action which would cause it to be in violation of the Foreign Corrupt Practices Act of 1977, as amended, or any rules or
regulations thereunder, used any corporate funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity, made, offered or authorized any unlawful payment to foreign or domestic government officials
or employees, whether directly or indirectly, or made, offered or authorized any bribe, rebate, payoff, influence payment, kickback or other similar unlawful payment, whether directly or indirectly.
3.26
Related Party Transactions.
Except as set forth in the SEC Reports or compensation or other employment arrangements in the
ordinary course, there are no transactions, agreements, arrangements or understandings between the Company or any of its Subsidiaries, on the one hand, and any Affiliate (including any officer or director) thereof, but not including any wholly owned
Subsidiary of the Company, on the other hand.
3.27
Brokers; Fees and Expenses
. Except for Oppenheimer & Co., Inc.
(true and correct copies of whose engagement letter has been furnished to Parent), there is no investment banker, broker, finder, agent or other Person that has been retained by or is authorized to act on behalf of the Company or any of its
Subsidiaries who is entitled to any financial advisors, brokerage, finders or other fee or commission in connection with the transactions contemplated hereby (including the Merger). Any engagement with any investment banker, broker,
finder, agent or other Person other than Oppenheimer & Co., Inc. has expired and is no longer in effect.
3.28
Opinion of
Financial Advisors
. The Company has received the oral opinion of Oppenheimer & Co., Inc. (to be confirmed in writing) to the effect that, as of the date of the approval of this Agreement by the
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Company Board, the Merger Consideration is fair to the holders of Company Common Stock from a financial point of view, and, as of the date of this Agreement, such opinion has not been withdrawn,
revoked or modified.
3.29
State Anti-Takeover Statutes
. No moratorium, control share acquisition,
business combination, fair price or other form of anti-takeover Law or regulation (collectively,
Takeover Laws
) of any jurisdiction is applicable to the Company, any of its Subsidiaries, the Shares, this
Agreement, the Voting Agreements or any of the transactions contemplated hereby (including the Merger) or thereby.
3.30
Customers and
Suppliers.
(a) Neither the Company nor any of its Subsidiaries has any outstanding disputes concerning any Company Products with any
customer, who in either (i) the three fiscal years ended March 30, 2013 was, and/or (ii) the fiscal year ending March 31, 2014 is projected to be, one of the twenty (20) largest customers of Company Products based on amounts
paid or payable to the Company or its Subsidiaries by such customers (each, a
Significant Customer
) other than any such dispute that did not, and/or is not projected to, exceed $100,000 individually and any such disputes that did
not, and/or are not projected to, exceed $500,000 in the aggregate. Neither the Company nor any of its Subsidiaries has received any written or, to the knowledge of the Company, oral notice from any Significant Customer that such Significant
Customer shall not continue as a customer of the Company (or the Surviving Corporation or Parent) or any of its Subsidiaries after the consummation of the transactions contemplated hereby or that such Significant Customer intends to terminate or
materially modify any existing Contracts with the Company (or the Surviving Corporation or Parent) or any of its Subsidiaries.
(b) Neither
the Company nor any of its Subsidiaries has any outstanding dispute concerning products and/or services provided by any supplier, who in either (i) the fiscal year ended March 30, 2013 was, and/or (ii) in the fiscal year ending
March 31, 2014 is projected to be, one of the ten (10) largest suppliers of products and/or services to the Company and its Subsidiaries based on amounts paid or payable by the Company and its Subsidiaries to such supplier (each, a
Significant Supplier
) other than any such dispute that did not, and/or is not projected to, exceed $50,000 individually and any such disputes that did not, and/or are not projected to, exceed $150,000 in the aggregate. Neither the
Company nor any of its Subsidiaries has received any written or, to the knowledge of the Company, oral notice from any Significant Supplier that such Significant Supplier shall not continue as a supplier to the Company (or the Surviving Corporation
or Parent) or any of its Subsidiaries after the Closing or that such Significant Supplier intends to terminate or materially modify existing Contracts with the Company (or the Surviving Corporation or Parent) of any of its Subsidiaries.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub hereby represent and warrant to the Company as follows:
4.1
Organization
. Each of Parent and Merger Sub is duly organized, validly existing and in good standing under the laws of the
state of their respective incorporation and has the requisite corporate power and authority to conduct its business as it is presently being conducted and to own, lease or operate its respective properties and assets.
4.2
Authorization
. Each of Parent and Merger Sub has all requisite corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby and to perform its obligations hereunder. 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 authorized by all necessary corporate action on the part of Parent and Merger Sub, and no other corporate proceedings on the part of Parent or Merger Sub are necessary to authorize this
Agreement or the consummation of the transactions contemplated hereby (including the Merger). This Agreement has been duly executed and delivered by each of Parent and Merger Sub and, assuming the due authorization, execution and delivery by the
Company, constitutes a legal, valid and binding obligation of each of Parent and Merger Sub,
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enforceable against each in accordance with its terms, except that such enforceability (a) may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and other similar
Laws affecting or relating to creditors rights generally and (b) is subject to general principles of equity.
4.3
Non-contravention; Required Consents
.
(a) The execution, delivery or performance by Parent and Merger Sub of this Agreement, the
consummation by Parent and Merger Sub of the transactions contemplated hereby (including the Merger) and the compliance by Parent and Merger Sub with any of the provisions hereof do not and will not (i) violate or conflict with any provision of
the certificates of incorporation or bylaws or other constituent documents of Parent or Merger Sub or, (ii) assuming compliance with the matters referred to in
Section 4.3(b)
, violate or conflict with any Law or Order applicable to
Parent or Merger Sub or by which any of their properties or assets are bound except in the case of clause (ii) above, for such violations or conflicts which, individually or in the aggregate, could not have a Parent Material Adverse Effect.
(b) No Consent of any Governmental Entity is required on the part of Parent, Merger Sub or any of their Affiliates in connection with the
execution, delivery and performance by Parent and Merger Sub of this Agreement and the consummation by Parent and Merger Sub of the transactions contemplated hereby (including the Merger), except (i) the filing and recordation of the Agreement
of Merger with the California Secretary of State, (ii) such filings and approvals as may be required by any federal or state securities Laws, including compliance with any applicable requirements of the Exchange Act, (iii) compliance with
any applicable requirements of the HSR Act and any applicable foreign antitrust, competition or merger control Laws and (iv) such other Consents, the failure of which to obtain, individually or in the aggregate, could not have a Parent Material
Adverse Effect.
4.4
Proxy Statement
. None of the information supplied by Parent, Merger Sub or their officers, directors,
representatives, agents or employees for inclusion in Proxy Statement, when filed with the SEC and on the date the Proxy Statement is first sent to shareholders of the Company or at the time of the Company Shareholders Meeting, will contain
any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading.
4.5
Funds
. Parent has, or will have at the Effective Time, the funds necessary to consummate the Merger.
ARTICLE V
INTERIM
CONDUCT OF BUSINESS
5.1
Affirmative Obligations of the Company
. Except (a) as contemplated or permitted by this
Agreement, (b) as set forth in
Section 5.1
of the Company Disclosure Letter or (c) as approved in advance by Parent in writing (which approval shall not be unreasonably withheld, conditioned, or delayed), at all times during
the period commencing with the execution and delivery of this Agreement and continuing until the earlier to occur of (x) the termination of this Agreement pursuant to
Article VIII
and (y) the Effective Time, each of the Company
and each of its Subsidiaries shall (i) carry on its business in the usual, regular and ordinary course in substantially the same manner as heretofore conducted and in compliance with all applicable Laws, (ii) pay its debts and Taxes when
due, in each case subject to good faith disputes over such debts or Taxes for which adequate reserves have been established in accordance with GAAP on the appropriate financial statements, (iii) pay or perform all material obligations when due
and (iv) use commercially reasonable efforts, consistent with past practices and policies, to (A) preserve intact its present business organization, (B) keep available the services of its present officers and employees and
(C) preserve its relationships with customers, suppliers, distributors, licensors, licensees and others with which it has significant business dealings.
5.2
Negative Obligations of the Company
. Except (i) as contemplated or permitted by this Agreement, (ii) as set forth in
Section 5.2
of the Company Disclosure Letter or (iii) as approved in advance by Parent in writing, which approval shall not be unreasonably withheld, conditioned or delayed, at all times during the period
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commencing with the execution and delivery of this Agreement and continuing until the earlier to occur of (x) the termination of this Agreement pursuant to
Article VIII
and
(y) the Effective Time, the Company shall not do any of the following and shall not permit its Subsidiaries to do any of the following:
(a) propose to adopt any amendments to or amend its articles of incorporation or bylaws or comparable organizational documents;
(b) authorize for issuance, issue, sell, deliver or agree or commit to issue, sell or deliver (whether through the issuance or granting
of options, warrants, commitments, subscriptions, rights to purchase or otherwise) any Company Securities or any Subsidiary Securities, except for the issuance and sale of Shares pursuant to Company Options or other equity awards outstanding prior
to the date hereto;
provided, however,
that if the Merger has not been consummated on or prior to the date that is sixty (60) days from the date hereof, the Company may make option grants consistent with past practices to new hires;
(c) acquire or redeem, directly or indirectly, or amend any Company Securities or Subsidiary Securities;
(d) other than cash dividends made by any direct or indirect wholly-owned Subsidiary of the Company to the Company or one of its Subsidiaries,
split, combine or reclassify any shares of capital stock, declare, set aside or pay any dividend or other distribution (whether in cash, shares or property or any combination thereof) in respect of any shares of capital stock, or make any other
actual, constructive or deemed distribution in respect of the shares of capital stock;
(e) propose or adopt a plan of complete or partial
liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries (other than the transactions contemplated hereby, including the Merger);
(f) (i) incur or assume any long-term or short-term debt or issue any debt securities, except for (A) short-term debt incurred to
fund operations of the business in the ordinary course of business consistent with past practice and (B) loans or advances to direct or indirect wholly-owned Subsidiaries, (ii) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the obligations of any other Person except with respect to obligations of direct or indirect wholly-owned Subsidiaries of the Company, (iii) make any loans, advances or capital
contributions to or investments in any other Person except for travel advances in the ordinary course of business consistent with past practice to employees of the Company or any of its Subsidiaries or (iv) mortgage or pledge any of its or its
Subsidiaries assets, tangible or intangible, or create or suffer to exist any Lien thereupon (other than Permitted Liens);
(g)
except as may be required by applicable Laws, enter into, adopt, amend (including acceleration of vesting), modify or terminate any bonus, profit sharing, compensation, severance, termination, option, restricted stock, restricted stock unit,
appreciation right, performance unit, stock equivalent, share purchase agreement, pension, retirement, deferred compensation, employment, severance or other employee benefit agreement, trust, plan, fund or other arrangement for the compensation,
benefit or welfare of any director, officer or employee in any manner or increase in any manner the compensation or fringe benefits of any director, officer or employee, pay any special bonus or special remuneration to any director, officer or
employee, or pay any benefit not required by any plan or arrangement as in effect as of the date hereof except that the Company may make awards under the Profit Sharing Bonus Incentive Plan consistent with past practices and may terminate and make
distributions under its Non-Qualified Deferred Compensation Plan (
NQDCP
);
(h) forgive any loans to any employees,
officers or directors of the Company or any of its Subsidiaries, or any of their respective Affiliates or Associates;
(i) make any
deposits or contributions of cash or other property to or take any other action to fund or in any other way secure the payment of compensation or benefits under the Employee Plans or agreements subject to the Employee Plans or any other Contract of
the Company other than deposits and contributions that are required pursuant to the terms of the Employee Plans or any agreements subject to the Employee Plans in effect as of the date hereof;
(j) enter into, amend, or extend any Collective Bargaining Agreement;
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(k) acquire, sell, lease, license or dispose of any property or assets in any single transaction
or series of related transactions, except either (i) transactions pursuant to existing Contracts which are not material to the Company, individually or in the aggregate, or (ii) in connection with the manufacture or sale of goods or grants
of non-exclusive licenses with respect to Company IP in the ordinary course of business consistent with past practice or (iii) transactions involving movement of investments between cash and short-term securities;
(l) except as may be required as a result of a change in applicable Laws or in GAAP, make any change in any of the accounting principles or
practices used by it;
(m) (i) make or change any material Tax election, (ii) file any material Tax Return or any amended Tax
Return, (iii) settle or compromise any material Liability for Taxes, (iv) adopt or change any Tax accounting method or (v) consent to any extension or waiver of any limitation period with respect to any material claim or assessment
for Taxes;
(n) enter into or amend a Company IP Agreement (except for the grants of non-exclusive licenses with respect to Company IP in
the ordinary course of business consistent with past practice) or grant any release or relinquishment of any rights under any Company IP Agreement;
(o) (i) enter into any lease or sublease of real property (whether as a lessor, sublessor, lessee or sublessee) or (ii) modify, amend
or exercise any right to renew any lease or sublease of real property or waive or violate any term or condition thereof or grant any consents thereunder; grant or otherwise create or consent to the creation of any easement, covenant, restriction,
assessment, Lien or charge affecting any real property or any part thereof; convey any interest in any Real Property; commit any waste or nuisance on any such property; or make any material changes in the construction or condition of any such
property;
(p) (i) sell, lease, license (except as provided in
Section 5.2(k)
) or transfer to any person or entity any
rights to any Company IP, (ii) purchase or license (except as provided in
Section 5.2(k)
) any Intellectual Property Rights or enter into any agreement or modify any existing agreement with respect to the Intellectual Property Rights
of any person or entity (except as provided in
Section 5.2(k)
), (iii) enter into any agreement or modify any existing agreement with respect to the development of any Intellectual Property or Intellectual Property Rights with a
third party, or (iv) change pricing or royalties set or charged by the Company to its customers or licensees, or the pricing or royalties set or charged by persons who have licensed Intellectual Property or Intellectual Property Rights to the
Company; (v) enter into or amend any agreement pursuant to which any other party is granted marketing, distribution, or similar rights of any type or scope with respect to any products or technology of the Company; or (vi) enter into or
amend any agreement pursuant to which any other party is granted development, manufacturing or similar rights of any type or scope with respect to any products or technology of the Company;
(q) (i) acquire (by merger, consolidation or acquisition of stock or assets) any other Person or any equity interest therein,
(ii) enter into any Material Contract (other than in the ordinary course of business consistent with past practice) or amend any Material Contract or grant any release or relinquishment of any rights under any Material Contract or
(iii) authorize, incur or commit to incur any new capital expenditure(s), individually or in the aggregate, with obligations to the Company or any of its Subsidiaries in excess of $250,000;
provided
that Parent approval of capital
expenditures in excess of $250,000 which are necessary to fulfill existing Contracts shall not be unreasonably withheld;
(r)
settle or compromise any pending or threatened Legal Proceeding or pay, discharge or satisfy or agree to pay, discharge or satisfy any claim, Liability or obligation (absolute or accrued, asserted or unasserted, contingent or otherwise), other than
the settlement, compromise, payment, discharge or satisfaction of Legal Proceedings, claims and other Liabilities (i) reflected or reserved against in full in the Balance Sheet or incurred since the date of the Balance Sheet in the ordinary
course of business consistent with past practice or (ii) the settlement, compromise, discharge or satisfaction of which does not include any obligation (other than the payment of money) to be performed by the Company or its Subsidiaries
following the Effective Time that, individually or in the aggregate, is not and could not be material to the Company and its Subsidiaries, taken as a whole;
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(s) except as required by applicable Laws or GAAP, revalue in any material respect any of its
properties or assets including without limitation writing-off notes or accounts receivable other than in the ordinary course of business consistent with past practice;
(t) except as required by applicable Laws, convene any regular or special meeting (or any adjournment or postponement thereof) of the
shareholders of the Company other than the Company Shareholders Meeting;
(u) hire any employee without requiring them to execute the
Companys standard form of confidentiality and inventions assignment agreement; or
(v) enter into a Contract to do any of the
foregoing.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1
No Solicitation
.
(a) The Company and its Subsidiaries shall, and shall cause each of the Company Representatives to, immediately
cease any and all existing activities, discussions or negotiations with any Persons conducted heretofore with respect to any Acquisition Proposal. The Company shall promptly (and in any event within three (3) Business Days following the date
hereof) request in writing each Person which has heretofore executed a confidentiality agreement in connection with its consideration of acquiring the Company or any portion thereof to return or destroy all confidential information heretofore
furnished to such Person by or on behalf of the Company, and the Company shall use its reasonable best efforts to have such information returned or destroyed (to the extent destruction of such information is permitted by such confidentiality
agreement) and to enforce the provisions of any standstill or other similar agreement between the Company or any of its Subsidiaries and any Person (other than Parent). Such written requests shall contain a notice to each Person that any
information that is sent to the Company in the future will not be treated as confidential pursuant to such confidentiality agreement.
(b) At all times during the period commencing with the execution and delivery of this Agreement and continuing until the earlier to
occur of (x) the termination of this Agreement pursuant to
Article VIII
and (y) the Effective Time, the Company and its Subsidiaries shall not, and shall use their reasonable best efforts to cause any of their respective
directors, officers or other employees, controlled affiliates, or any investment banker, attorney or other advisors or representatives retained by any of them (collectively, the
Company Representatives
) not to (and shall not
authorize or permit any of them to), directly or indirectly, (i) solicit, initiate, knowingly encourage or facilitate the making, submission or announcement of, an Acquisition Proposal, (ii) furnish to any Person (other than Parent, Merger
Sub or any designees of Parent or Merger Sub) any non-public information relating to the Company or any of its Subsidiaries that the Company believes or should reasonably expect could be used for the purposes of making, submitting or announcing an
Acquisition Proposal, or afford access to the business, properties, assets, books or records of the Company or any of its Subsidiaries to any Person (other than Parent, Merger Sub or any designees of Parent or Merger Sub) that the Company believes
or should reasonably expect could be used for the purposes of making, submitting or announcing an Acquisition Proposal, or take any other action intended to assist or facilitate any inquiries or the making of any proposal that constitutes or would
be reasonably
expected to lead to an Acquisition Proposal, (iii) participate or engage in discussions or negotiations with any Person with respect to an Acquisition Proposal, (iv) approve, endorse or recommend an Acquisition
Proposal, (v) execute or enter into any letter of intent, memorandum of understanding or Contract contemplating or otherwise relating to an Acquisition Transaction or (vi) terminate, amend, modify, waive or fail to enforce any rights under
any standstill or other similar agreement between the Company or any of its Subsidiaries and any Person (other than Parent);
provided, however
, that notwithstanding the foregoing, prior to obtaining the Requisite Shareholder
Approval, the Company Board may, directly or indirectly through Representatives, advisors, agents or other intermediaries, subject to the Companys compliance with the provisions of this
Section 6.1
, with respect to any Person that
has made
(and not withdrawn) a
bona fide
, written Acquisition Proposal that did not result from a breach of this
Section 6.1
, and that the Company Board
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reasonably concludes in good faith (after consultation with a financial advisor of nationally recognized standing and its outside legal counsel) constitutes or is reasonably likely to lead to
a Superior Proposal, (A) engage or participate in discussions or negotiations with such Person and/or (B) furnish to such Person any non-public information relating to the Company or any of its Subsidiaries pursuant to a confidentiality
agreement, the terms of which are no less favorable to the Company than those contained in the Confidentiality Agreement,
provided
that in the case of any action taken pursuant to the foregoing clauses (A) or (B), (1) none of the
Company or any of its Subsidiaries shall have breached or violated (or be deemed, pursuant to the terms of this
Section 6.1
, to have breached or violated) the terms of this
Section 6.1
in any material respect, (2) the
Company Board determines in good faith (after consultation with outside legal counsel) that the failure to take such action would reasonably be expected to result in a breach of its fiduciary duties to the shareholders of the Company under
California Law, (3) solely with respect to the initial contact with such Person, at least forty-eight (48) hours prior to engaging or participating in any such discussions or negotiations with, or furnishing any non-public information to,
such Person, the Company gives Parent written notice of the identity of such Person and all of the terms and conditions of such Acquisition Proposal (and if such Acquisition Proposal is in written form, the Company shall give Parent a copy thereof)
and of the Companys intention to engage or participate in discussions or negotiations with, or furnish non-public
information to, such Person and (4) contemporaneously with
furnishing any non-public information to such
Person, the Company furnishes such non-public information to Parent (to the extent such information has not been previously furnished by the Company to Parent).
(c) Without limiting the generality of the foregoing, Parent, Merger Sub and the Company acknowledge and hereby agree that any violation of the
restrictions set forth in this
Section 6.1
by any Company Representative shall be deemed to be a breach of this
Section 6.1
by the Company. The Company shall not enter into any letter of intent, memorandum of understanding or
Contract (other than a confidentiality agreement as permitted by
Section 6.1(b)
) contemplating or otherwise relating to an Acquisition Proposal unless and until this Agreement is terminated pursuant to
Article VIII
and the
Company has paid all amounts due to Parent pursuant to
Section 8.3
, if any.
(d) In addition to the obligations of the Company
set forth in
Section 6.1(b)
, the Company shall promptly, and in all cases within twenty four (24) hours of its receipt, advise Parent orally and in writing of (i) any Acquisition Proposal, (ii) any request for information
that the Company believes or should reasonably expect could be used for the purposes of making, submitting or announcing an Acquisition Proposal or (iii) any inquiry that contributes or would reasonably be expected to lead to, any Acquisition
Proposal, the terms and conditions of such Acquisition Proposal, request or inquiry, and the identity of the Person or group making any such Acquisition Proposal, request or inquiry.
(e) The Company shall keep Parent promptly (and in all cases within twenty-four (24) hours) informed of the status, details, terms and
conditions (including all amendments or proposed amendments) of any such Acquisition Proposal, request or inquiry, and shall promptly (and in all cases within twenty-four (24) hours) provide Parent with copies of all documents and written or
electronic communications comprising part of any such Acquisition Proposal exchanged between the Company or any Company Representative, on the one hand, and the Person from which such Acquisition Proposal was received (or such Persons
representatives), on the other hand. In addition to the foregoing, the Company shall provide Parent with at least seventy-two (72) hours (or such shorter period as provided to the members of the Company Board) prior written notice of a meeting
of the Company Board at which the Company Board is reasonably expected to consider an Acquisition Proposal, an inquiry relating to a potential Acquisition Proposal, or a request to provide nonpublic information to any Person.
6.2
Company Board Recommendation
.
(a) Subject to the terms of
Section 6.2(b)
, the Company Board shall (i) recommend that the holders of Shares approve this
Agreement in accordance with the applicable provisions of California Law (the
Company Board Recommendation
) and (ii) include the Company Board Recommendation in the Proxy Statement.
(b) Subject to the terms of this
Section 6.2(b)
, neither the Company Board nor any committee thereof shall withhold, withdraw,
amend or modify in a manner adverse to Parent, or publicly propose to withhold, withdraw, amend or modify in a manner adverse to Parent, the Company Board Recommendation (a
Company
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Board Recommendation Change
);
provided, however
, that notwithstanding the foregoing, the Company Board may effect a Company Board Recommendation Change at any time prior to
obtaining the Requisite Shareholder Approval, if and only if:
(i) (A) the Company Board has received a
bona fide
, written
Acquisition Proposal that did not result from a breach of
Section 6.1
that constitutes a Superior Proposal, (B) neither the Company nor any of its Subsidiaries shall have breached or violated (or be deemed, pursuant to the terms
hereof, to have breached or violated) the provisions of
Section 6.1
in any material respect, (C) the Company Board determines in good faith (after consultation with outside legal counsel and after considering in good faith any
counter-offer or proposal made by Parent pursuant to clause (E) below), that, in light of such Superior Proposal, the failure of the Company Board to effect a Company Board Recommendation Change would reasonably be expected to result in a
breach of its fiduciary duties to shareholders of the Company under California Law, (D) prior to effecting such Company Board Recommendation Change, the Company Board shall have given Parent at least five (5) Business Days notice
thereof (which notice shall include the most current version of such definitive agreement and, to the extent not included therein, the material terms and conditions of such Superior Proposal and the identity of the Person making such Superior
Proposal) and the opportunity to meet with the Company Board and its outside legal counsel during such five (5) Business Day period, all with the purpose and intent of enabling Parent and the Company to discuss in good faith a modification of
the terms and conditions of this Agreement so as to obviate the need for the Company Board to effect a Company Board Recommendation Change, and (E) Parent shall not have made, within five (5) Business Days after receipt of the
Companys written notice of its intention to effect a Company Board Recommendation Change, a counter-offer or proposal that the Company Board reasonably determines in good faith, after consultation with a financial advisor of nationally
recognized standing and its outside legal counsel, is at least as favorable to shareholders of the Company as such Superior Proposal (it being understood that any change to the financial terms or any other material term or condition of such Superior
Proposal shall require a new notice pursuant to clause (D) above and a new five (5) Business Day period pursuant to this clause (D)); or
(ii) (A) an Intervening Event as defined below shall have occurred and be continuing, (B) the Company Board determines in
good faith (after consultation with outside legal counsel and after considering in good faith any counter-offer or proposal made by Parent pursuant to clause (D) below), that, in light of such Intervening Event, the failure of the Company Board
to effect a Company Board Recommendation Change would reasonably be expected to result in a breach of its fiduciary duties to shareholders of the Company under California Law, (C) prior to effecting such Company Board Recommendation Change, the
Company Board shall have given Parent at least five (5) Business Days notice thereof (which notice shall include a written explanation of the Company Boards basis and rationale for proposing to effect such Company Board
Recommendation Change) and the opportunity to meet with the Company Board and its outside legal counsel during such five (5) Business Day period, all with the purpose and intent of enabling Parent and the Company to discuss in good faith a
modification of the terms and conditions of this Agreement so as to obviate the need for the Company Board to effect a Company Board Recommendation Change, and (D) Parent shall not have made, within five (5) Business Days after receipt of
the Companys written notice of its intention to effect a Company Board Recommendation Change, a counter-offer or proposal that the Company Board reasonably determines in good faith, after consultation with a financial advisor of nationally
recognized standing and its outside legal counsel, would obviate the need for the Company Board to effect such Company Board Recommendation Change. For these purposes, an Intervening Event means a material fact, event, change,
development or set of circumstances occurring or existing after the date of this Agreement with respect to the business, operations, financial condition or results of operations of the Company or any of its Subsidiaries (and not relating in any way
to (x) an Acquisition Proposal or (y) any fluctuation in the market price or trading volume of the Shares, in and of itself) that was not known to the Company Board nor reasonably foreseeable by the Company Board as of or prior to the date
of this Agreement.
(c) Nothing in this Agreement shall prohibit the Company Board from taking and disclosing to shareholders of the
Company a position contemplated by Rule 14e-2(a) under the Exchange Act that the Company Board determines in good faith (after consultation with outside legal counsel) that such disclosure is
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likely required in order to comply with its fiduciary duties to shareholders of the Company under California Law;
provided
that any statement(s) made by the Company Board pursuant to this
sentence shall be subject to the terms and conditions of this Agreement, including the provisions of
Article VIII
(it being acknowledged and agreed that any such disclosure, other than a stop, look and listen communication of
the type contemplated by Section 14d-9(f) of the Exchange Act or any other disclosure made pursuant to
Section 6.2(c)
that is limited to describing the existence and terms of any Acquisition Proposal, shall be deemed to be in a
Company Board Recommendation Change unless the Company Board expressly publicly reaffirms the Company Board Recommendation in such communication).
(d) The Company shall not take any action to exempt any Person (other than Parent, Merger Sub and their respective Affiliates) from the
provisions on control share acquisitions contained in any Takeover Law or otherwise cause such restrictions not to apply. To the extent permitted thereunder, the Company shall promptly take all steps necessary to terminate any waiver or
other exemption that may have been heretofore granted to any such Person or any Acquisition Proposal under any such provision.
6.3
Company Shareholders Meeting
. The Company shall establish a record date for, call, give notice of, convene and hold a meeting of the shareholders of the Company (the
Company Shareholders Meeting
) as
promptly as practicable following the date of this Agreement (and in no event later than 30 days after the commencement of the mailing of the Proxy Statement to the Companys shareholders) for the purpose of voting upon the adoption of this
Agreement in accordance with California Law. Notwithstanding the foregoing, (i) if there are insufficient shares of the Company Common Stock necessary to conduct business at the Company Shareholders Meeting, the Company may extend the
date of the Company Shareholders Meeting to the extent (and only to the extent) necessary in order to conduct business at the Company Shareholders Meeting, (ii) the Company may delay the Company Shareholders Meeting to the
extent (and only to the extent) the Company reasonably determines that such delay is required by applicable Law to comply with comments made by the SEC with respect to the Proxy Statement, and (iii) with the prior written consent of Parent or
if Parent requests an extension, the Company shall delay the Company Shareholders Meeting for a period not to exceed ten (10) Business Days. The Company shall solicit from shareholders of the Company proxies in favor of the adoption of
this Agreement in accordance with California Law, and shall use its reasonable best efforts to secure the Requisite Shareholder Approval at the Company Shareholders Meeting. Unless this Agreement is earlier terminated pursuant to
Article VIII
, the Company shall establish a record date for, call, give notice of, convene and hold the Company Shareholders Meeting for the purpose of voting upon the adoption of this Agreement in accordance with California Law,
whether or not the Company Board at any time subsequent to the date hereof shall have effected a Company Board Recommendation Change or otherwise shall determine that this Agreement is no longer advisable or recommends that shareholders of the
Company reject it. Unless this Agreement has been terminated pursuant to
Section 8.1(d)(ii)
, the Companys obligation to establish a record date for, call, give notice of, convene and hold the Company Shareholders Meeting
pursuant to this
Section 6.3
shall not be limited to, or otherwise affected by, the commencement, disclosure, announcement or submission to the Company of any Acquisition Proposal.
6.4
Proxy Statement.
(a)
As soon as practicable following the date of this Agreement, the Company shall prepare and no later than the tenth (10
th
) Business Day following the public announcement of the execution and
delivery of this Agreement, the Company shall file with the SEC the Proxy Statement for use in connection with the solicitation of proxies from shareholders of the Company in connection with the Merger and the Company Shareholders Meeting. The
Company and Parent, as the case may be, shall furnish all information concerning the Company or Parent as the other party hereto may reasonably request in connection with the preparation and filing with the SEC of the Proxy Statement. Subject to all
applicable Laws, the Company shall use its reasonable best efforts to cause the Proxy Statement to be disseminated to shareholders of the Company as promptly as practicable following the filing thereof with the SEC. Notwithstanding anything to the
contrary set forth in this Agreement, the Company shall file with the SEC the definitive Proxy Statement, and shall cause the mailing of the definitive Proxy Statement to the shareholders of the Company, on or prior to the second (2
nd
) Business Day immediately following the later of (i) receipt and resolution of SEC comments thereon, or (ii) the expiration of the 10-day
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waiting period provided in Rule 14a-6(a) promulgated under the Exchange Act. No filing of, or amendment or supplement to, or correspondence with the SEC or its staff with respect to the Proxy
Statement shall be made by the Company without providing Parent a reasonable opportunity to review and comment thereon, including in such filings, amendments, supplements and correspondence all comments reasonably proposed by Parent and receiving
the approval of Parent (which approval shall not be unreasonably withheld or delayed). The Company shall advise Parent, promptly after it receives notice thereof, of any request by the SEC or its staff for an amendment or revisions to the Proxy
Statement, or comments thereon and responses thereto, or requests by the SEC or its staff for additional information in connection therewith, and shall provide Parent with copies of all correspondence between the Company or any of its advisors or
representatives, on the one hand, and the SEC, or its staff or any other government officials, on the other hand, with respect to the Proxy Statement or other filing with the SEC. If the Company or its outside legal counsel intends to initiate a
telephone conference or meet with the SEC and its staff related to the Proxy Statement, this Agreement or the Merger, the Company shall so inform the Parent and solicit input on the items planned to be discussed during such telephone conference or
meeting. If at any time prior to the Company Shareholders Meeting, any information relating to the Company or Parent, or any of their respective directors, officers or Affiliates, should be discovered by the Company or Parent which should be
set forth in an amendment or supplement to the Proxy Statement so that the Proxy Statement does not include any untrue statement of a material fact or omits to state any material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, the party which discovers such information shall promptly notify the other party or parties hereto, as the case may be, and an appropriate amendment or supplement to the Proxy Statement
describing such information shall be promptly prepared and filed with the SEC and, to the extent required by applicable Law, disseminated to the shareholders of the Company. The Company shall cause the Proxy Statement to comply as to form and
substance in all material respects with the applicable requirements of the Exchange Act, California Law and the rules of the Nasdaq.
(b)
Unless this Agreement is earlier terminated pursuant to
Article VIII
, subject to the terms of
Section 6.2(b)
, the Company shall include in the Proxy Statement the Company Board Recommendation.
6.5
Reasonable Best Efforts to Complete
.
(a) Upon the terms and subject to the conditions set forth in this Agreement, each of Parent, Merger Sub and the Company shall use their
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 party or parties hereto in doing, all things reasonably necessary, proper or advisable to consummate and
make effective, in the most expeditious manner practicable, the transactions contemplated by this Agreement (including the Merger), including using reasonable best efforts to: (i) cause the conditions to the Merger set forth in
Article VII
hereof to be satisfied or fulfilled; (ii) obtain all necessary or appropriate consents, waivers and approvals under any Contracts to which the Company or any of its Subsidiaries is a party in connection with this
Agreement and the consummation of the transactions contemplated hereby (including the Merger) so as to maintain and preserve the benefits under such Contracts following the consummation of the transactions contemplated hereby (including the Merger);
(iii) obtain all necessary actions or non-actions, waivers, consents, approvals, Orders and authorizations from Governmental Entities, the expiration or termination of any applicable waiting periods, making all necessary registrations,
declarations and filings (including registrations, declarations and filings with Governmental Entities, if any) and (iv) execute or deliver any additional instruments reasonably necessary to consummate the transactions contemplated by, and to
fully carry out the purposes of, this Agreement.
(b) Without limiting the generality of the foregoing provisions of
Section 6.5(a)
, as soon as may be reasonably practicable following the execution and delivery of this Agreement, each of Parent and the Company shall file with the FTC and the Antitrust Division of the DOJ a Notification and Report Form
relating to this Agreement and the transactions contemplated hereby (including the Merger) as required by the HSR Act, as well as comparable pre-merger notification filings, forms and submissions with any foreign Governmental Entity that may be
required by the merger notification or control Laws and regulations of any applicable foreign jurisdiction or be deemed desirable by Parent, in each case as Parent may deem necessary and/or appropriate. Each of Parent and the Company shall promptly
(i) cooperate and coordinate with the other in the making of such filings,
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(ii) supply the other with any information that may be required in order to effectuate such filings, and (iii) supply any additional information that reasonably may be required or
requested by the FTC, the DOJ or the competition or merger control authorities of any other jurisdiction and that Parent reasonably deems necessary and/or appropriate. Parent and the Company shall share equally all fees and expenses incurred in
connection with filings made in connection with this
Section 6.5(b)
. Each party hereto shall promptly inform the other party or parties hereto, as the case may be, of any communication from any Governmental Entity regarding any of the
transactions contemplated by this Agreement (including the Merger). If any party hereto or Affiliate thereof receives a request for additional information or documentary material from any such Governmental Entity with respect to the transactions
contemplated by this Agreement (including the Merger), then such party shall use reasonable best efforts to make, or cause to be made, as soon as reasonably practicable and after consultation with the other party, an appropriate response in
compliance with such request.
(c) Without limiting the generality of the foregoing provisions of
Section 6.5(a)
, in the event
that any Takeover Law is or becomes applicable to this Agreement or any of the transactions contemplated by this Agreement (including the Merger), the Company, at the direction of the Company Board, shall use reasonable best efforts to ensure that
the transactions contemplated by this Agreement (including the Merger) may be consummated as promptly as practicable on the terms and subject to the conditions set forth in this Agreement, and otherwise to minimize the effect of such statute or
regulation on this Agreement and the transactions contemplated hereby (including the Merger).
(d) Notwithstanding anything in this
Agreement to the contrary, it is expressly understood and agreed that: (i) neither Parent nor Merger Sub shall have any obligation to litigate or contest any administrative or judicial action or proceeding or any decree, judgment, injunction or
other order, whether temporary, preliminary or permanent; and (ii) neither Parent nor Merger Sub shall be under any obligation to make proposals, execute or carry out agreements, enter into consent decrees or submit to orders providing for
(A) the sale, divestiture, license or other disposition or holding separate (through the establishment of a trust or otherwise) of any assets or categories of assets of Parent or any of its Subsidiaries or the Company or any of its
Subsidiaries, (B) the imposition of any limitation or regulation on the ability of Parent or any of its Subsidiaries to freely conduct their business or own such assets, or (C) the holding separate of the shares of Company Common Stock or
any limitation or regulation on the ability of Parent or any of its Subsidiaries to exercise full rights of ownership of the shares of Company Common Stock, other than, in the case of clauses (A), (B) and (C) above, for any such sale,
divestiture, license, disposition, holding separate, limitation or regulation that, individually or in the aggregate, would be immaterial to Parent and/or the Company and their respective Subsidiaries, taken as a whole (with materiality, for
purposes of this provision, being measured in relation to the Company and its Subsidiaries taken as a whole) (any of the foregoing, an
Antitrust Restraint
).
6.6
Access
.
(a) At
all times during the period commencing with the execution and delivery of this Agreement and continuing until the earlier to occur of (x) the termination of this Agreement pursuant to
Article VIII
and (y) the Effective Time,
the Company shall afford Parent and its accountants, legal counsel and other representatives full
and complete access during normal business hours, upon reasonable notice, to the assets (including the Company IP, design processes and source
code), properties (including the right to conduct an environmental site assessment and audit of the properties), books and records and personnel of the Company to enable Parent to obtain all information concerning the business, including the status
of product development efforts, properties, results of operations and personnel of the Company, as Parent may request;
provided, however
, that no information or knowledge obtained by Parent in any investigation conducted pursuant to this
Section 6.6
shall affect or be deemed to modify any representation or warranty of the Company set forth herein or the conditions to the obligations of Parent and Merger Sub to consummate the transactions contemplated hereby, including
the Merger, or the remedies available to the parties hereunder; and
provided further
, that the terms and conditions of the Confidentiality Agreement (as amended pursuant to
Section 6.9
) shall apply to any information provided to
Parent pursuant to this
Section 6.6
.
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(b) In particular, but without limitation, from and after the date of this Agreement, Parent and
its agents, contractors and representatives shall have the right and privilege of entering upon all properties leased or occupied by the Company or any of its Subsidiaries and of reviewing the Companys books and records regarding such
properties from time to time as needed to make any inspections, evaluations, surveys or tests which Parent may deem necessary or appropriate. Parents exercise of its right to inspect such properties, or Parents election not to inspect
any property, shall in no way be interpreted as a waiver of any of Parents rights or remedies contained in this Agreement, including, without limitation, Parents right to rely upon the Companys representations and warranties in
this Agreement.
(c) Parent and the Company agree to mutually cooperate in testing the Companys IT systems for compatibility and
interoperability with Parents IT systems and in other like matters as reasonably requested by Parent prior to Closing. In particular, but without limitation, from and after the date of the satisfaction of the condition set forth in
Section 7.1(b)
, the Company shall provide to Parent the information described on
Schedule 6.6(c)
for purposes of allowing Parent to test its internal business systems ability to accept and process Company data.
6.7
Notification
.
(a) At all times during the period commencing with the execution and delivery of this Agreement and continuing until the earlier to
occur of (x) the termination of this Agreement pursuant to
Article VIII
and (y) the Effective Time, the Company shall give prompt notice to Parent upon becoming aware that any representation or warranty made by it in this
Agreement has become untrue or inaccurate in any material respect if such would
give rise to the ability of the Parent not to close under
Section 7.2(a)
, or of any
failure of the Company to comply with or satisfy in any
material respect any covenant, condition or agreement to be complied with or satisfied by it
under this Agreement;
provided, however
, that no such notification shall affect or be deemed to modify any representation or warranty of the
Company set forth herein or the conditions to the obligations of Parent and Merger Sub to consummate the transactions contemplated hereby, including the Merger, or the remedies available to the parties hereunder; and
provided further
, that
the terms and conditions of the Confidentiality Agreement (as amended pursuant to
Section 6.9
) shall apply to any information provided to Parent pursuant to this
Section 6.7(a)
.
(b) At all times during the period commencing with the execution and delivery of this Agreement and continuing until the earlier to
occur of (x) the termination of this Agreement pursuant to
Article VIII
and (y) the Effective Time, the Company shall give
prompt notice to Parent of any notice or other communication received by the Company or any of
its Subsidiaries from any third party, subsequent to the date of this Agreement and prior to the Effective Time, alleging that the consent of such third party is or may be required in connection with the transactions contemplated by this Agreement
(including the Merger);
provided, however
, that no such notification shall affect or be deemed to modify any representation or warranty of the Company set forth herein or the conditions to the obligations of Parent and Merger Sub to
consummate the transactions contemplated hereby, including the Merger, or the remedies available to the parties hereunder; and
provided further
, that the terms and conditions of the Confidentiality Agreement (as amended pursuant to
Section 6.9
) shall apply to any information provided to Parent pursuant to this
Section 6.7(b)
.
(c) At
all times during the period commencing with the execution and delivery of this Agreement and continuing until the earlier to occur of (x) the termination of this Agreement pursuant to
Article VIII
and (y) the Effective Time,
Parent shall give prompt notice to the Company upon becoming aware that any representation or warranty made by it or Merger Sub in this Agreement has become untrue or inaccurate in any material respect if such would give rise to the ability of the
Company not to close under
Section 7.3(a)
, or of any failure of Parent or Merger Sub to comply with or satisfy in any material respect any covenant, condition or agreement to be complied with or satisfied by it under this Agreement;
provided, however
, that no such notification shall affect or be deemed to modify any representation or warranty of the Company set forth herein or the conditions to the obligations of Parent and Merger Sub to consummate the transactions
contemplated hereby, including the Merger, or the remedies available to the parties hereunder and
provided further
, that the terms and conditions of the Confidentiality Agreement (as amended pursuant to
Section 6.9
) shall apply to
any information provided to the Company pursuant to this
Section 6.7(c)
.
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6.8
Certain Litigation
. The Company shall promptly advise Parent orally and in
writing of any litigation commenced after the date hereof against the Company or any of its directors by any shareholder of the Company (on their own behalf or on behalf of the Company) relating to this Agreement or the transactions contemplated
hereby (including the Merger) and shall keep Parent reasonably informed regarding any such litigation. The Company shall give Parent the opportunity to consult with the Company regarding the defense or settlement of any such shareholder litigation
and shall consider Parents views with respect to such shareholder litigation and shall not settle any such shareholder litigation without the prior written consent of Parent.
6.9
Confidentiality.
Parent, Merger Sub and the Company hereby acknowledge that Parent and the Company have previously executed a
Confidentiality Agreement, dated January 14, 2014 (the
Confidentiality Agreement
), which will continue in full force and effect in accordance with its terms;
provided, however
, that notwithstanding the foregoing,
effective as of the execution and delivery hereof, the Confidentiality Agreement shall be deemed to be amended so as to permit Parent to take any action contemplated by this Agreement, including the making of any counter-offer or proposal
contemplated by
Section 6.2(b)
(which deemed amendment shall survive any termination of this Agreement in accordance with its terms or otherwise).
6.10
Public Disclosure
. None of the parties shall, without the prior written consent of other party or parties, as applicable,
issue any press release or otherwise make any public statement with respect to this Agreement or the transactions contemplated hereby (including the Merger), except as may be required by applicable Law or any listing agreement with a national
securities exchange, in which case such party shall make commercially reasonable efforts to consult with the other party or parties prior to any such release or public statement. Notwithstanding the foregoing, Parent and the Company may make public
statements in response to specific questions by the press, analysts or investors so long as any such statement is consistent with previous public statements permitted by this
Section 6.10
.
6.11
Company Options
.
(a)
At the Effective Time, each Company Option (or portion thereof) that is outstanding and vested as of immediately prior to the Effective Time (or vests as a result of the consummation of the transactions contemplated hereby) (each, a
Cancelled Option
) shall, by virtue of the Merger and at the direction of Parent (which is hereby given pursuant to this Agreement), be cancelled and terminated and converted into the right to receive an amount in cash, without
interest, with respect to each share underlying such Cancelled Option, equal to the excess, if any, of the Merger Consideration over the per share exercise price of such Cancelled Option (such amount being hereinafter referred to as the
Option Consideration
). The holder of each Cancelled Option shall receive at the Effective Time from the Company, or as soon as practicable thereafter (but in no even later than the Companys first full payroll after the
Effective Time) from the Surviving Corporation, an amount in cash equal to the Option Consideration. If the exercise price per share of any such Cancelled Option is equal to or greater than the Merger Consideration, such Company Option shall, by
direction of Parent (which is hereby given pursuant to this Agreement), be cancelled without any cash payment being made in respect thereof. The payment of Option Consideration to the holder of a Cancelled Option shall be reduced by any income or
employment tax withholding required under the Code, any applicable Law, or as otherwise agreed by the parties at the time the Company Option was granted.
(b) At the Effective Time, each Company Option (or portion thereof) that is outstanding and unvested as of immediately prior to the Effective
Time (and does not vest as a result of the consummation of the transactions contemplated hereby) shall be assumed by Parent (each, an
Assumed Option
). Each such Assumed Option shall be subject to substantially the same terms and
conditions as applied to the related Company Option immediately prior to the Effective Time, including the vesting schedule applicable thereto, except that (A) the number of shares of Parent Common Stock subject to each Assumed Option shall be
equal to the product of (x) the number of shares of Company Common Stock underlying such unvested Assumed Option as of immediately prior to the Effective Time multiplied by (y) the Exchange Ratio (with the resulting number rounded down to
the nearest whole share), and (B) the per share exercise price of each Assumed Option shall be equal to the quotient determined by dividing (x) the exercise price per share at which such Assumed Option was exercisable immediately prior to
the Effective Time by (y) the Exchange Ratio (with the resulting price per share
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rounded up to the nearest whole cent). Each Assumed Option so assumed by Parent shall qualify following the Effective Time as an incentive stock option as defined in Section 422 of the Code
to the extent permitted under Section 422 of the Code and to the extent such Assumed Option qualified as an incentive stock option prior to the Effective Time, and, further, that the assumption of Assumed Options pursuant to this
Section 6.11(b)
shall be effected in a manner that satisfies the requirements of Sections 409A and 424(a) of the Code and the Treasury Regulations promulgated thereunder, and this
Section 6.11(b)
will be construed consistent
with this intent.
6.12
Employee Matters
.
(a) The Company shall terminate, effective no later than the day immediately preceding the date the Company becomes a member of the same
Controlled Group of Corporations (as defined in Section 414(b) of the Code) as Parent (the
Retirement Plan Termination Date
), any and all employee retirement plans qualified under Section 401(a) of the Code (the
Retirement Plans
) maintained by the Company or any of its Subsidiaries, unless Parent provides written notice to the Company at least three (3) Business Days prior to the Effective Time that such Retirement Plans shall not be
terminated. The Company shall provide Parent evidence that the Retirement Plans of the Company and its Subsidiaries have been terminated pursuant to resolutions of the Company Board or the board of directors of its Subsidiaries, as applicable. The
form and substance of such resolutions shall be subject to the review and approval of Parent. The Company shall also take such other actions in furtherance of terminating any such Retirement Plans as Parent may reasonably request. As soon as
practicable following the Retirement Plan Termination Date, Parent shall permit all Continuing Employees who were eligible to participate in any 401(k) plan maintained by the Company or any of its Subsidiaries immediately prior to the Retirement
Plan Termination Date to participate in Parents 401(k) plan, and shall permit each such Continuing Employee to elect to transfer his or her account balance when distributed from any terminated 401(k) plan maintained by the Company or any of
its Subsidiaries, including any outstanding participant loans from such 401(k) plans, to Parents 401(k) plan, except to the extent accepting such transfers would adversely affect the tax-qualified status of the Parent 401(k) plan, or as may be
prohibited by Parents 401(k) plan.
(b) From and after the Effective Time through the date which is five (5) months after the
date on which the Effective Time occurs, or such longer period as may be required by applicable Law, Parent will provide, or will cause to be provided, to all Continuing Employees who remain employed by Parent or any Subsidiary of Parent,
compensation and benefits that are substantially comparable in the aggregate to the compensation and benefits provided to such Continuing Employees immediately prior to the Effective Time (excluding benefits derived from awards under any equity
incentive plan). Following the Effective Time and to the extent permitted by applicable Laws, Parent shall, or shall cause any Subsidiary of Parent, including the Surviving Corporation to, recognize the prior service with the Company or its
Subsidiaries of Continuing Employees in connection with all employee benefit plans, programs or policies of Parent or its Subsidiaries in which Continuing Employees first become eligible to participate following the Effective Time for purposes of
eligibility and vesting and determination of level of benefits (including vacation), including applicability of minimum waiting periods for participation, (but not to the extent that such recognition would result in duplication of benefits). In
these regards, for purposes of determining the annual deductible, co-pay and out-of pocket expense limitation under its health plan for Continuing Employees who become eligible during the 2014 plan year, Parent will credit health plan expenses
incurred by Continuing Employees during 2014 prior to the Effective Time as though they were incurred immediately after the Effective Time. Parent shall use commercially reasonable efforts to provide that no such Continuing Employee, or any of his
or her eligible dependents, who are participating in the Companys group health plan shall be excluded from Parents group health plan, or limited in coverage thereunder, by reason of any waiting period restriction or pre-existing
condition limitation.
(c) The Company shall terminate any and all group severance, separation, deferred compensation or salary
continuation plans, programs or arrangements maintained by the Company or any of its Subsidiaries, effective in each case no later than the day immediately preceding the Effective Time. The Company shall provide Parent evidence that such plans have
been terminated pursuant to resolutions of the Company Board or the board of directors of its Subsidiaries, as applicable (the form and substance of which resolutions shall be subject to review and approval of Parent).
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(d) Prior to the Effective Time, the Company ESPP shall be terminated. The rights of participants
in the Company ESPP with respect to any offering period then underway under such Company ESPP shall be determined by treating the last business day prior to, or if preferable administratively, the last payroll date of the Company immediately prior
to, the Effective Time, as the last day of such offering period and by making such other pro-rata adjustments as may be necessary to reflect the shortened offering period but otherwise treating such shortened offering period as a fully effective and
completed offering period for all purposes under such Company ESPP. The Company shall provide that no additional offering period or purchase period shall commence under the Company ESPP after March 31, 2014. Prior to the Effective Time, and
subject to the reasonable review and approval by Parent, the Company shall take all actions necessary give effect to the transactions contemplated by this
Section 6.12(d)
.
(e) Nothing in this Agreement shall (x) create any third-party beneficiary rights in any employee or former employee (including any
beneficiary or dependent thereof) or service provider or former service provider (including any beneficiary or dependent thereof) of the Company in any respect, or (y) constitute or be construed to constitute an amendment to any of the
compensation or benefit plans maintained for or provided to employees or other persons prior to or following the Closing. Nothing in this Agreement shall constitute a limitation on the rights to amend, modify or terminate any such plans or
arrangements of Parent or any of its subsidiaries.
6.13
Directors and Officers Indemnification and Insurance
.
(a) For six (6) years after the Effective Time, Parent shall cause the Surviving Corporation and its Subsidiaries to, honor and fulfill in
all respects the obligations (including the financial obligations) of the Company and its Subsidiaries under their respective certificates of incorporation and bylaws (and other similar organizational documents) and all indemnification agreements in
effect immediately prior to the Effective Time between the Company or any of its Subsidiaries and any of their respective current or former directors and officers and any person who becomes a director or officer of the Company or any of its
Subsidiaries prior to the Effective Time (the
Indemnified Parties
). In addition, for a period of six (6) years following the Effective Time, Parent shall (and shall cause the Surviving Corporation and its Subsidiaries to)
cause the articles of incorporation and bylaws (and other similar organizational documents) of the Surviving Corporation and its Subsidiaries to contain provisions with respect to indemnification and exculpation that are at least as favorable as the
indemnification and exculpation provisions contained in the articles of incorporation and bylaws (or other similar organizational documents) of the Company and its Subsidiaries immediately prior to the Control Time, and during such six (6) year
period, such provisions shall not be amended, repealed or otherwise modified in any manner that would adversely affect the rights thereunder of individuals who were covered by such provisions, except as required by Laws.
(b) For a period of six (6) years after the Effective Time, Parent and the Surviving Corporation shall maintain in effect the
Companys current directors and officers liability insurance (
D&O Insurance
) in respect of acts or omissions occurring at or prior to the Effective Time, covering each person covered by the D&O Insurance
immediately prior to the Effective Time, on terms with respect to the coverage and amounts no less favorable, in the aggregate, than those of the D&O Insurance in effect on the date of this Agreement;
provided, however
, that the Surviving
Corporation may, at its option, substitute therefor policies of Parent, the Surviving Corporation or any of their respective Subsidiaries containing terms with respect to coverage and
amounts no less favorable, in the aggregate, to such
persons than the D&O Insurance,
provided further, however
, that in satisfying its obligations under this
Section 6.13(b)
Parent and the
Surviving Corporation shall not be obligated to pay annual premiums in excess of
two hundred percent (200%) of the amount paid by the Company for coverage for its last full fiscal year (such two hundred percent (200%) amount, the
Maximum Annual Premium
) (which premiums the Company represents and
warrants to be as set forth in
Section 6.13
of the Company Disclosure Letter), provided that if the annual premiums of such insurance coverage exceed such amount, Parent and the Surviving Corporation shall be obligated to obtain a policy
with the greatest coverage available for a cost not exceeding the Maximum Annual Premium. Prior to the Effective Time, notwithstanding anything to the contrary set forth in this Agreement, the Company may purchase a six-year tail prepaid
policy (the
Tail Policy
) on the D&O Insurance on terms and conditions no less favorable, in the aggregate, than the D&O Insurance and for an amount not to exceed three hundred fifty percent (350%) of the amount paid
by the
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Company for coverage for its last full fiscal year. In the event that the Company does not purchase the Tail Policy, Parent may purchase a Tail Policy on the D&O Insurance on terms and
conditions no less favorable, in the aggregate, than the D&O Insurance. In the event that either the Company or Parent shall purchase such a Tail Policy prior to the Effective Time, Parent and the Surviving Corporation shall maintain such Tail
Policy in full force and effect and continue to honor their respective obligations thereunder, in lieu of all other obligations of Parent and the Surviving Corporation under the first sentence of this
Section 6.13(b)
for so long as such
Tail Policy shall be maintained in full force and effect.
(c) If Parent or the Surviving Corporation or any of its successors or
assigns shall (i) consolidate with or merge into any other entity and shall not be the continuing or surviving corporation or entity of such consolidation or merger or (ii) transfer all or substantially all of its properties and assets to
any entity, then, and in each such case, proper provision shall be made so that the successors and assigns of such surviving corporation shall expressly assume all of the obligations of Parent and the Surviving Corporation set forth in this
Section 6.13
and have at least substantially equal financial ability as the Company (immediately prior to such transaction) to satisfy the obligations of the parties pursuant to this
Section 6.13
prior to such merger,
consolidation or transfer becoming effective.
(d) The obligations under this
Section 6.13
shall not be terminated, amended or
otherwise modified in such a manner as to adversely affect any Indemnified Party (or any other person who is a beneficiary under the Tail Policy referred to in
Section 6.13(b)
(and their heirs and representatives)) without the prior
written consent of such affected Indemnified Party or other person who is a beneficiary under the Tail Policy referred to in
Section 6.13(b)
(and their heirs and representatives). Each of the Indemnified Parties or other persons who are
beneficiaries under the D&O Insurance or the Tail Policy referred to in
Section 6.13(b)
(and their heirs and representatives) are intended to be third party beneficiaries of this
Section 6.13
, with full rights of
enforcement as if a party thereto. The rights of the Indemnified Parties (and other persons who are beneficiaries under the Tail Policy referred to in
Section 6.13(b)
(and their heirs and representatives)) under this
Section 6.13
shall be in addition to, and not in substitution for, any other rights that such persons may have under the certificate or articles of incorporation, bylaws or other equivalent organizational documents, any and all
indemnification agreement of or entered into by the Company or any of its Subsidiaries, or applicable Laws.
6.14
Obligations of Merger
Sub
. Parent shall take all action necessary to cause Merger Sub and the Surviving Corporation to perform their respective obligations under this Agreement and to consummate the transactions contemplated by this Agreement, including the
Merger, upon the terms and subject to the conditions set forth in this Agreement.
6.15
Insurance Policies
. The Company shall
take all actions reasonably necessary to ensure that all of its current and legacy insurance policies are available for the benefit of the Surviving Corporation, including with respect any instances where an occurrence and/or claim takes place
before the Effective Time and is not made known until after the Effective Time.
ARTICLE VII
CONDITIONS TO THE MERGER
7.1
Conditions to the Obligations of Each Party to Effect the Merger
. The respective obligations of Parent, Merger Sub and the
Company to consummate the Merger shall be subject to the satisfaction or waiver (where permissible under applicable Law) prior to the Effective Time, of each of the following conditions:
(a)
Requisite Shareholder Approval
. The Requisite Shareholder Approval shall have been obtained.
(b)
Antitrust and Other Governmental Approvals
. The waiting period (and any extension thereof) applicable to the consummation of the
transactions contemplated by this Agreement (including the Merger) under the HSR Act shall have expired or been terminated.
(c)
No
Legal Prohibition
. No Governmental Entity of competent jurisdiction shall have enacted, issued, promulgated, entered or enforced any Law that is in effect and has the effect of making the Merger illegal in any
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jurisdiction or which has the effect of prohibiting or otherwise preventing the consummation of the Merger in any jurisdiction. No court of competent jurisdiction shall have issued or
granted any Order (whether temporary, preliminary or permanent) that has the effect of making the Merger illegal in any jurisdiction or which has the effect of prohibiting or otherwise preventing the consummation of the Merger in any jurisdiction.
7.2
Additional Conditions to the Obligations of Parent and Merger Sub to Effect the Merger
. The obligations of Parent and
Merger Sub to consummate the Merger shall be further subject to the satisfaction or waiver (where permissible under applicable Law) prior to the Effective Time, of each of the following conditions, any of which may be waived (in writing) exclusively
by Parent and Merger Sub:
(a)
Representations and Warranties
. (i) Each of the representations and warranties of the Company
set forth in this Agreement (other than the Capitalization Representation and the Specified Representations) shall have been true and correct in all respects as of the date of this Agreement and shall be true and correct in all respects on and as of
the Closing Date with the same force and effect as if made on and as of such date (except for those representations and warranties which address matters only as of a particular date (the accuracy of which shall be determined as of such particular
date)), except for any failure to be so true and correct that does not have, individually or in the aggregate, a Company Material Adverse Effect, (ii) each of the representations and warranties set forth in
Section 3.1
(Organization
and Standing),
Section 3.2
(Subsidiaries),
Section 3.3
(Authorization),
Section 3.27
(Brokers; Fees and Expenses),
Section 3.28
(Opinion of Financial Advisors) and
Section 3.29
(State
Anti-Takeover Statutes) of this Agreement (collectively, the
Specified Representations
) shall have been true and correct in all materials respects as of the date of this Agreement and shall be true and correct in all material
respects on and as of the Closing Date with the same force and effect as if made on and as of such date (except for those representations and warranties which address matters only as of a particular date (the accuracy of which shall be determined as
of such particular date)), and (iii) the representations and warranties set forth in
Section 3.4
(Capitalization) of this Agreement (the
Capitalization Representation
) shall have been true and correct in all
respects as of the date of this Agreement and shall be true and correct in all respects as of the Closing Date with the same force and effect as if made on and as of such date (except for those representations and warranties which address matters
only as of a particular date (the accuracy of which shall be determined as of such particular date)), except for any failure to be so true and correct that would not result in Liabilities to Parent (including as a result of the payment of
consideration in respect of additional Shares, shares of other Company Capital Stock, Company Options, Company Securities or Subsidiary Securities in connection with the Merger) that exceed One Million Dollars ($1,000,000.00); and
provided
further
that, for purposes of determining the accuracy of the representations and warranties of the Company set forth in this Agreement for purposes of
Section 7.2(a)(i)
, (A) all Company Material Adverse Effect and
materiality qualifications and other qualifications based on the word material or similar phrases contained in such representations and warranties shall be disregarded (it being understood and hereby agreed that (x) the phrase
similar phrases as used in this proviso shall not be deemed to include any dollar thresholds contained in any such representations and warranties and (y) such qualifications shall not be disregarded pursuant to the terms of this
proviso in the representation and warranty set forth in
Section 3.10(a)(i)
) and (B) any update of or modification to the Company Disclosure Letter made or purported to have been made after the date of this Agreement shall be
disregarded).
(b)
Covenants and Agreements
. The Company shall have performed or complied with in all material respects each of its
obligations, covenants and agreements under this Agreement required to be performed or complied with at or prior to the Closing Date.
(c)
Company Material Adverse Effect
. No Company Material Adverse Effect shall have occurred or exist following the execution and delivery of this Agreement (whether or not events or circumstances occurring prior to the execution and delivery of
this Agreement caused or contributed to the occurrence of such Company Material Adverse Effect) and shall be continuing.
(d)
Closing
Certificate
. Parent shall have received a certificate signed on behalf of the Company by the chief executive officer and chief financial officer of the Company certifying as to the satisfaction of the matters set forth in paragraphs (a),
(b) and (c) of this
Section 7.2
.
(e)
Government Actions
. No Governmental Entity of competent jurisdiction
shall have instituted any action, which is pending, seeking to impose an Antitrust Restraint in connection with the Merger.
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7.3
Additional Conditions to the Obligations of the Company to Effect the Merger
. The
obligations of the Company to consummate the Merger shall be further subject to the satisfaction or waiver (where permissible under applicable Law) prior to the Effective Time, of each of the following conditions, any of which may be waived (in
writing) exclusively by the Company:
(a)
Representations and Warranties
. (i) Each of the representations and warranties of
Parent and Merger Sub set forth in
Section 4.1
and
Section 4.2
shall have been true and correct in all material respects as of the date of this Agreement and shall be true and correct in all material respects on and as of the
Closing Date with the same force and effect as if made on and as of such date, and (ii) each of the representations and warranties of Parent and Merger Sub set forth in this Agreement other than those set forth in
Section 4.1
and
Section 4.2
shall have been true and correct in all respects as of the date of this Agreement and shall be true and correct in all respects on and as of the Closing Date with the same force and effect as if made on and as of such date,
except for any failure to be so true and correct that does not have, individually or in the aggregate, a Parent Material Adverse Effect, except for those representations and warranties which address matters only as of a particular date (the accuracy
of which shall be determined as of such particular date) and
provided further
that, for purposes of determining the accuracy of the representations and warranties of the Company set forth in this Agreement for purposes of
Section 7.3(a)(ii)
, (A) all Parent Material Adverse Effect and materiality qualifications and other qualifications based on the word material or similar phrases contained in such representations and
warranties shall be disregarded.
(b)
Covenants and Agreements
. Each of Parent and Merger Sub shall have performed or complied with
in all material respects each of their respective obligations, covenants and agreements under this Agreement required to be performed or complied with at or prior to the Closing Date.
(c)
Closing Certificate
. The Company shall have received a certificate signed on behalf of Parent and Merger Sub by a duly authorized
officer of Parent and Merger Sub as to the satisfaction of the matters set forth in paragraphs (a) and (b) of this
Section 7.3
.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.1
Termination
. This Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time, whether
before or after receipt of the Requisite Shareholder Approval (except as provided below), provided that the party desiring to terminate this Agreement pursuant to this
Section 8.1
(other than pursuant to
Section 8.1(a)
) shall
give notice of such termination to the other party or parties hereto, only as follows (with any termination by Parent also being an effective termination by Merger Sub):
(a) by mutual written agreement of Parent and the Company; or
(b) by either Parent or the Company, if (i) the Company Shareholders Meeting shall have been held and the Requisite Shareholder
Approval shall not have been obtained thereat or at any adjournment or postponement thereof, or (ii) any applicable Law makes consummation of the Merger illegal or any Governmental Entity of competent jurisdiction shall have issued a final and
non-appealable Order enjoining, restraining or otherwise prohibiting the consummation of the Merger; or
(c) by either Parent or the
Company, if the Effective Time shall not have occurred on or before July 14, 2014 (the
Termination Date
);
provided however
, that the right to terminate this Agreement pursuant to this
Section 8.1(c)
shall
not be available to any party hereto whose failure to fulfill any obligation under this Agreement has been the principal cause of or resulted in the failure of the Effective Time to have occurred on or before the Termination Date; or
(d) by the Company:
(i)
in the event (A) of a breach of any covenant or agreement on the part of Parent or Merger Sub set forth in this Agreement or (B) that any of the representations and warranties of Parent and Merger Sub set
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forth in this Agreement shall have been inaccurate when made or shall have become inaccurate, in either case such that the conditions set forth in
Section 7.3(a)
or
Section 7.3(b)
would not be satisfied as of the time of such breach or as of the time such representation or warranty shall have become inaccurate;
provided, however
, that notwithstanding the foregoing, in the event that such
breach by Parent or Merger Sub or such inaccuracies in the representations and warranties of Parent or Merger Sub are curable by Parent or Merger Sub through the exercise
of commercially reasonable efforts, then the Company shall not be
permitted to terminate this Agreement pursuant to this
Section 8.1(d)(i)
until the earlier to occur of (1) thirty (30) calendar days after delivery of written notice from the Company to Parent of such breach or inaccuracy, as
applicable or (2) the Termination Date (it being understood that the Company may not terminate this Agreement pursuant to this
Section 8.1(d)(i)
if such breach or inaccuracy by Parent or Merger Sub is cured within such period or if
the Company is then in material breach of any covenant, agreement, representation or warranty contained in this Agreement; or
(ii)
prior to obtaining the Requisite Shareholder Approval, in order to enter into a definitive agreement with respect to a Superior Proposal, provided that (A) in accordance with
Section 6.2(b)(i)
, the Company Board has effected a
Company Board Recommendation Change and authorized the Company to enter into a definitive agreement for a transaction that constitutes a Superior Proposal, (B) immediately prior to the termination of this Agreement, the Company pays to Parent
the Termination Fee Amount payable pursuant to
Section 8.3(b)(ii)
and (C) immediately following such termination, the Company enters into a definitive agreement with respect to such Superior Proposal; or
(e) by Parent:
(i) in
the event (A) of a breach of any covenant or agreement on the part of the Company set forth in this Agreement or (B) that any representation or warranty of the Company set forth in this Agreement shall have been inaccurate when made or
shall have become inaccurate, in either case such that such that the conditions set forth in
Section 7.2(a)
or
Section 7.2(b)
would not be satisfied as of the time of such breach or as of the time such representation or
warranty shall have become inaccurate;
provided, however
, that notwithstanding the foregoing, in the event that such breach by the Company or such inaccuracies in the representations and warranties of the Company are curable by the Company
through the exercise of
commercially reasonable efforts, then Parent shall not be permitted to terminate this Agreement pursuant to this
Section 8.1(e)(i)
until the earlier to occur of (1) thirty (30) calendar days
period after delivery of written notice from Parent to the Company of such breach or inaccuracy, as applicable, or (2) the Termination Date (it being understood that Parent may not terminate this Agreement pursuant to this
Section 8.1(e)(i)
if such breach or inaccuracy by the Company is cured within such period or if Parent or Merger Sub is then in material breach of any covenant, agreement, representation or warranty contained in this Agreement; or
(ii) in the event that a Triggering Event shall have occurred. For all purposes of and under this Agreement, a
Triggering
Event
shall be deemed to have occurred if, prior to the Effective Time, any of the following shall have occurred: (A) the Company shall have breached or violated (or be deemed, pursuant to the terms thereof, to have breached or
violated) the provisions of
Section 6.1
or
Section 6.2
in any material respect (without regard to whether such breach or violation results in an Acquisition Proposal); (B) the Company Board or any committee thereof shall
have for any reason effected a Company Board Recommendation Change; (C) the Company shall have failed to include the Company Board Recommendation in the Proxy Statement; (D) the Company Board or any committee thereof shall have for any
reason approved, or recommended that shareholders of the Company approve, any Acquisition Proposal or Acquisition Transaction (whether or not a Superior Proposal); (E) the Company shall have entered into a letter of intent, memorandum of
understanding or Contract (other than a confidentiality agreement contemplated by
Section 6.1(b)
) accepting or agreeing to discuss or negotiate any Acquisition Proposal or Acquisition Transaction (whether or not a Superior Proposal); or
(F) following the date any bona fide Acquisition Proposal is first publicly announced, the Company Board shall have failed to issue a press release that unconditionally reaffirms the Company Board Recommendation within five (5) Business
Days after Parent or Merger Sub delivers to the Company a request in writing to do (which request may be made only once with respect to such Acquisition Proposal absent further material changes to such Acquisition Proposal).
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8.2
Notice of Termination; Effect of Termination
. Any proper termination of this
Agreement pursuant to
Section 8.1
shall be effective immediately upon the delivery of written notice of the terminating party to the other party or parties hereto, as applicable. In the event of the termination of this Agreement pursuant
to
Section 8.1
, this Agreement shall be of no further force or effect without Liability of any party or parties hereto, as applicable (or any shareholder, director, officer, employee, agent, consultant or representative of such party or
parties) to the other party or parties hereto, as applicable, except (a) for the terms of
Section 6.9
and
Section 6.10
, this
Section 8.2
, and
Section 8.3
and
Article IX
, each of which
shall survive the termination of this Agreement and (b) that nothing herein shall relieve any party or parties hereto, as applicable, from Liability for any knowing and intentional breach of, or fraud in connection with, this Agreement. In
addition to the foregoing, no termination of this Agreement shall affect the obligations of the parties hereto set forth in the Confidentiality Agreement (as amended pursuant to
Section 6.9
), all of which obligations shall survive
termination of this Agreement in accordance with their terms.
8.3
Fees and Expenses
.
(a)
General
. Except as set forth in
Section 6.5
and
Section 8.3(b)
, all fees and expenses incurred in connection
with this Agreement and the transactions contemplated hereby (including the Merger) shall be paid by the party or parties, as applicable, incurring such expenses whether or not the Merger is consummated. Expenses incurred under the HSR Act or any
comparable pre-merger notification filings, forms and submissions with any foreign Governmental Entity that may be required by the merger notification or control Laws of any applicable foreign jurisdiction shall be shared equally by Parent and the
Company.
(b)
Company Payments
.
(i) In the event that this Agreement is terminated pursuant to
Section 8.1(e)(ii)
, within one Business Day after demand by Parent,
the Company shall pay to Parent a fee equal to Fifteen Million Seven Hundred Sixty Thousand Dollars ($15,760,000.00) (the
Termination Fee Amount
) by wire transfer of immediately available funds to an account or accounts designated
in writing by Parent.
(ii) In the event that this Agreement is terminated pursuant to
Section 8.1(d)(ii)
, prior to and as a
condition to the effectiveness of such termination, the Company shall pay to Parent a fee equal to the Termination Fee Amount by wire transfer of immediately available funds to an account or accounts designated in writing by Parent.
(iii) The Company shall pay to Parent a fee equal to the Termination Fee Amount (less any amounts previously paid by the Company pursuant to
Section 8.3(b)(iv)
), by wire transfer of immediately available funds to an account or accounts designated in writing by Parent, within one Business Day after demand by Parent, in the event that (A)(1) this Agreement is terminated
pursuant to
Section 8.1(b)(i)
or
Section 8.1(c)
or (2) this Agreement is terminated pursuant to
Section 8.1(e)(i)
, (B) following the execution and delivery of this Agreement and prior to such termination
of this Agreement (in the case of any termination referred to in clause (A)(1) above) or prior to the breach or inaccuracy that forms the basis for the termination of this Agreement (in the case of any termination referred to in clause (A)(2)
above), an Acquisition Proposal shall have been publicly announced or shall have become publicly known, or shall have been communicated or otherwise made known to the Company, and (C) within twelve (12) months following such termination of
this Agreement, either an Acquisition Transaction (whether or not the Acquisition Transaction referenced in the preceding clause (B)) is consummated or the Company enters into a definitive agreement with respect to an Acquisition Transaction
(whether or not the Acquisition Transaction referenced in the preceding clause (B)) (for purposes of this
Section 8.3(b)(iii)
, the references to 15% in the definition of Acquisition Transaction shall be deemed to
be references to 50%.
(iv) In the event that this Agreement is terminated pursuant to
Section 8.1(b)(i)
, or by
Parent pursuant to
Section 8.1(e)(i)
, the Company shall cause to be paid to Parent, in cash, by wire transfer of immediately available funds to an account designated by Parent, within one (1) Business Day thereafter, up to an
aggregate amount of $4.0 million of all reasonable and documented out of pocket expenses of Parent and its Affiliates incurred on or after January 1, 2014, including reasonable and documented fees and expenses of
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financial advisors, outside legal counsel, accountants, experts, consultants and other service providers, incurred by Parent and its Affiliates or on their respective behalf in connection with or
related to the authorization, preparation, negotiation, execution and performance of this Agreement and the Voting Agreements and the transactions contemplated hereby and thereby.
(c)
Enforcement
. The Company acknowledges and hereby agrees that the provisions of
Section 8.3(b)
are an integral part of
the transactions contemplated by this Agreement (including the Merger), and that, without such provisions, Parent would not have entered into this Agreement. Accordingly, if the Company shall fail to pay in a timely manner the amounts due pursuant
to
Section 8.3(b)
, and, in order to obtain such payment, Parent makes a claim that results in a judgment against the Company, the Company shall pay to Parent its reasonable costs and expenses (including its reasonable attorneys
fees and expenses) incurred in connection with such suit, together with interest on the amounts set forth in
Section 8.3(b)
at the prime rate of Citibank N.A. in effect on the date such payment was required to be made. Payment of the
fees described in
Section 8.3(b))
shall not be in lieu of, or replacement or substitution for, damages incurred in the event of any breach of this Agreement.
8.4
Amendment
. Subject to applicable Law and subject to the other provisions of this Agreement (including
Section 1.3(c)
), this Agreement may be amended by the parties hereto at any time by execution of an instrument in writing signed on behalf of each of Parent, Merger Sub and the Company;
provided, however
, that in the event that
this Agreement has been approved by shareholders of the Company in accordance with California Law, no amendment shall be made to this Agreement that requires the approval of such shareholders of the Company without such approval.
8.5
Extension; Waiver
. At any time and from time to time prior to the Effective Time, any party or parties hereto may, to the
extent legally allowed and except as otherwise set forth herein, (a) extend the time for the performance of any of the obligations or other acts of the other party or parties hereto, as applicable, (b) waive any inaccuracies in the
representations and warranties made to such party or parties hereto contained herein or in any document delivered pursuant hereto and (c) waive compliance with any of the agreements or conditions for the benefit of such party or parties hereto
contained herein. Any agreement on the part of a party or parties hereto to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party or parties, as applicable. Any delay in exercising
any right under this Agreement shall not constitute a waiver of such right.
ARTICLE IX
GENERAL PROVISIONS
9.1
Survival of Representations, Warranties and Covenants
. The representations, warranties and covenants of the Company, Parent and Merger Sub contained in this Agreement shall terminate at the Effective Time, and only the covenants that by
their terms survive the Effective Time shall so survive the Effective Time.
9.2
Notices
. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered personally or by commercial delivery service, or sent via telecopy (receipt confirmed) to the parties at the following addresses or telecopy numbers (or at such other address or
telecopy numbers for a party as shall be specified by like notice):
|
(a)
|
if to Parent or Merger Sub, to:
|
Microchip Technology Incorporated
2355 W. Chandler Blvd.
Chandler, AZ 85224
Attention:
Kim van Herk
Vice President, General Counsel and Corporate Secretary
Telecopy No: (480) 792-4112
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with copies (which shall not constitute notice) to:
Wilson Sonsini Goodrich & Rosati
Professional Corporation
900
South Capital of Texas Highway
Las Cimas IV, Fifth Floor
Austin, TX 78746
Attention:
J. Robert Suffoletta, Jr.
Telecopy No.: (512) 338-5499
and copies (which shall not constitute notice) to:
Wilson Sonsini Goodrich & Rosati
Professional Corporation
One
Market Street
Spear Tower, Suite 3300
San Francisco, CA 94105
Attention: Robert T. Ishii and Denny Kwon
Telecopy No.: (415) 947-2099
|
(b)
|
if to the Company, to:
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Supertex, Inc.
1235 Bordeaux Drive
Sunnyvale,
CA 94089
Attention: Henry C. Pao, CEO
Telecopy No.: (408) 222-4869
with copies (which shall not constitute notice) to:
Pillsbury Winthrop Shaw Pittman LLP
2550 Hanover Street
Palo Alto,
CA 94304-1115
Attention: Steve Wurzburg and Tom Chaffin
Telecopy No.: (866) 741-1919 and (650) 233-4545
9.3
Assignment.
No party may assign either this Agreement or any of its rights, interests, or obligations hereunder without the
prior written approval of the other parties. Subject to the preceding sentence, this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns.
9.4
Entire Agreement
. This Agreement and the documents and instruments and other agreements among the parties hereto as
contemplated by or referred to herein, including the Company Disclosure Letter, constitute the entire agreement among the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof;
provided, however
, the Confidentiality Agreement (as amended pursuant to
Section 6.9
) shall not be superseded, shall survive any termination of this Agreement and shall
continue in full force and effect until the earlier to occur of (a) the Effective Time and (b) the date on which the Confidentiality Agreement is terminated in accordance with its terms.
9.5
Third Party Beneficiaries
. Except as set forth in or contemplated by the provisions of
Section 6.13
, this Agreement
is not intended to confer upon any other Person any rights or remedies hereunder.
9.6
Severability
. In the event that any
provision of this Agreement, or the application thereof, becomes or is declared by a court of competent jurisdiction to be illegal, void or unenforceable, the remainder of this Agreement will continue in full force and effect and the application of
such provision to other persons or circumstances will be interpreted so as reasonably to effect the intent of the parties hereto. The parties further
A-55
agree to replace such void or unenforceable provision of this Agreement with a valid and enforceable provision that will achieve, to the extent possible, the economic, business and other purposes
of such void or unenforceable provision.
9.7
Other Remedies
. Except as otherwise provided herein, any and all remedies herein
expressly conferred upon a party will be deemed cumulative with and not exclusive of any other remedy conferred hereby, or by law or equity upon such party, and the exercise by a party of any one remedy will not preclude the exercise of any other
remedy.
9.8
Specific Performance
. The parties hereto hereby agree that irreparable damage would occur in the event that any
provision of this Agreement were not performed in accordance with its specific terms or were otherwise breached, and that money damages or other legal remedies would not be an adequate remedy for any such damages. Accordingly, the parties hereto
acknowledge and hereby agree that in the event of any breach or threatened breach by the Company, on the one hand, or Parent and/or Merger Sub, on the other hand, of any of their respective covenants or obligations set forth in this Agreement, the
Company, on the one hand, and Parent and Merger Sub, on the other hand, shall be entitled to an injunction or injunctions to prevent or restrain breaches or threatened breaches of this Agreement, by the other (as applicable), 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 the other under this Agreement. The Company, on the one hand, and Parent and Merger
Sub, on the other hand hereby agree not to raise any objections to the availability of the equitable remedy of specific performance to prevent or restrain breaches or threatened breaches of this Agreement by such party (or parties), 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 (or parties) under this Agreement.
9.9
Governing Law
. This Agreement shall be governed by and construed in accordance with the Laws of the State of Delaware,
regardless of the Laws that might otherwise govern under applicable principles of conflicts of law thereof, except to the extent that provisions of California Law are mandatorily applicable to the Merger.
9.10
Consent to Jurisdiction
. Each of the parties hereto (a) irrevocably consents to the service of the summons and complaint
and any other process in any action or proceeding relating to the transactions contemplated by this Agreement, for and on behalf of itself or any of its properties or assets, in accordance with
Section 9.2
or in such other manner as may
be permitted by applicable Law, and nothing in this
Section 9.10
shall affect the right of any party to serve legal process in any other manner permitted by applicable Law; (b) irrevocably and unconditionally consents and submits
itself and its properties and assets in any action or proceeding to the exclusive jurisdiction of the Court of Chancery of the State of Delaware (or, only if the Court of Chancery of the State of Delaware declines to accept jurisdiction over a
particular matter, any federal court within the State of Delaware) in the event any dispute or controversy arises out of this Agreement or the transactions contemplated hereby (including the Merger), or for recognition and enforcement of any
judgment in respect thereof; (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; (d) agrees that any actions or proceedings arising in connection with
this Agreement or the transactions contemplated hereby (including the Merger) shall be brought, tried and determined only in the Court of Chancery of the State of Delaware (or, only if the Court of Chancery of the State of Delaware declines to
accept jurisdiction over a particular matter, any federal court within the State of Delaware); (e) waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim the same; and (f) agrees that it will not bring any action relating to this Agreement or the transactions contemplated hereby (including the Merger) in any court
other than the aforesaid courts. Each of Parent, Merger Sub and the Company agrees that a final judgment in any action or proceeding in such courts as provided above shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by applicable Law.
9.11
WAIVER OF JURY TRIAL
. EACH OF PARENT, COMPANY AND MERGER SUB
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
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RELATING TO THIS AGREEMENT OR THE ACTIONS OF PARENT, COMPANY OR MERGER SUB IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.
9.12
Counterparts
. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party, it being understood that all parties need not sign the same counterpart.
A-57
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed by their respective
duly authorized officers to be effective as of the date first above written.
|
|
|
MICROCHIP TECHNOLOGY INC.
|
|
|
By:
|
|
/s/ Steve Sanghi
|
Name:
|
|
Steve Sanghi
|
Title:
|
|
President and Chief Executive Officer
|
[AGREEMENT AND PLAN OF MERGER]
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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed by their respective
duly authorized officers to be effective as of the date first above written.
|
|
|
ORCHID ACQUISITION CORPORATION
|
|
|
By:
|
|
/s/ Ganesh Moorthy
|
Name:
|
|
Ganesh Moorthy
|
Title:
|
|
Chief Executive Officer
|
[AGREEMENT AND PLAN OF MERGER]
A-59
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed by their respective
duly authorized officers to be effective as of the date first above written.
|
|
|
SUPERTEX INC.
|
|
|
By:
|
|
/s/ Henry C. Pao
|
Name:
|
|
Henry C. Pao
|
Title:
|
|
President and CEO
|
[AGREEMENT AND PLAN OF MERGER]
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Annex A
Form of Voting Agreement
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Annex B
EXECUTION COPY
VOTING AGREEMENT
THIS
VOTING AGREEMENT (this
Agreement
) is made and entered into as of February , 2014 by and among MICROCHIP TECHNOLOGY INCORPORATED, a Delaware corporation (
Parent
), and the undersigned
shareholders (each, a
Shareholder
and collectively, the
Shareholders
) of SUPERTEX, INC., a California corporation (the
Company
).
W I T N E S S E T H:
WHEREAS, Parent, Orchid Acquisition Corporation, a California corporation and a wholly-owned subsidiary of Parent (
Merger
Sub
), and the Company have entered into an Agreement and Plan of Merger of even date herewith (as it may be amended, supplemented or otherwise modified from time to time, the
Merger Agreement
), which provides for, among
other things, the merger of Merger Sub with and into the Company (the
Merger
) pursuant to which all outstanding shares of Common Stock, no par value , of the Company (the Company Common Stock) will be converted into
the right to receive cash in an amount equal to Thirty Three Dollars ($33.00) per share in cash (the
Merger Consideration
).
WHEREAS, as of the date hereof, each Shareholder is the Beneficial Owner (as defined below) of the securities of the Company, including Shares
and/or options to purchase Shares (including any Company Options) and/or any other rights to purchase Shares (collectively, the
Company Securities
) as is indicated on the signature page of this Agreement.
WHEREAS, in consideration of the execution of the Merger Agreement by Parent and Merger Sub, each Shareholder (in such Shareholders
capacity as such) is hereby agreeing to vote the Shares (as defined below) in accordance with the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing premises and the representations, warranties, covenants and agreements set forth herein, as
well as other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and accepted, and intending to be legally bound hereby, the parties hereto hereby agree as follows:
1.
Certain Definitions
. All capitalized terms that are used but not defined herein shall have the respective meanings ascribed to them
in the Merger Agreement. For all purposes of and under this Agreement, the following terms shall have the following respective meanings:
(a)
Beneficially Own
or
Beneficial Ownership
with respect to any securities means having beneficial
ownership of such securities as determined pursuant to
Rule 13d-3
under the Exchange Act, including pursuant to any Contract. A
Beneficial Owner
is a Person who Beneficially Owns
securities.
(b)
Covered Shares
shall mean, with respect to each Shareholder, (i) all Company Securities
Beneficially Owned by such Shareholder as of the date hereof, and (ii) all additional Company Securities, including any Shares issuable upon the exercise of any options and/or other rights to purchase Shares, of which such Shareholder acquires
Beneficial Ownership during the period from the date of this Agreement through the Expiration Date (including by way of stock dividend or distribution,
split-up,
recapitalization, combination, exchange of
shares and the like).
(c)
Expiration Date
shall mean the earliest to occur of (i) such date and time as the Merger
Agreement shall have been terminated pursuant to Article VIII thereof, (ii) such date and time as the Merger shall become effective in accordance with the terms and provisions of the Merger Agreement, or (iii) the making of any
waiver, amendment or other modification of the Merger Agreement that reduces the amount of, or changes the form or type of, consideration to be received by Company shareholders in the Merger.
(d) A Person shall be deemed to have effected a
Transfer
of a Covered Share if such Person, whether by operation of law or
otherwise, directly or indirectly (i) sells, pledges, encumbers, assigns, grants an option
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with respect to, transfers, gifts over or disposes of such Covered Share or any interest in such Covered Share, or (ii) enters into a Contract providing for the sale of, pledge of,
encumbrance of, assignment of, grant of an option with respect to, transfer of, gift over of or disposition of such Covered Share or any interest therein.
2.
Transfer of Covered Shares
.
(a)
Transfer Restrictions
. Each Shareholder shall not Transfer or cause or permit any Transfer of any of such Shareholders Covered
Shares other than to Merger Sub (or Parent on Merger Subs behalf) pursuant to the Merger. Notwithstanding the forgoing, if Shareholder is an individual, then Shareholder may Transfer the Covered Shares to Shareholders family or trusts
established for the benefit of members of Shareholders family and if Shareholder is a corporation, then Shareholder may Transfer the Covered Shares to Shareholders Affiliates provided that, as a condition to such transfer, the transferee
of such shares agrees in writing to be bound by the terms hereof in form and substance reasonably satisfactory to Parent.
(b)
Transfer
of Voting Rights
. Each Shareholder shall not deposit, or permit the deposit of, any of such Shareholders Covered Shares in a voting trust, grant, or permit the granting of, any proxy or power of attorney in respect of any of such
Shareholders Covered Shares, or enter into any voting or similar Contract the terms and conditions of which are inconsistent with the obligations of such Shareholder under this Agreement with respect to any of such Shareholders Covered
Shares.
3.
Agreement to Vote Covered Shares
.
(a) At every meeting of the shareholders of the Company (including the Company Shareholders Meeting) called, and at every adjournment or
postponement thereof, and on every action or approval by written consent of the shareholders of the Company, each Shareholder shall, or shall cause the holder of record on any applicable record date to, vote or provide a consent with respect to, all
of such Shareholders Covered Shares:
(i) in favor of the approval of the Merger Agreement, each of the other transactions
contemplated by the Merger Agreement, and each other action the taking of which would reasonably be expected to facilitate the consummation of the Merger and the other transactions contemplated by the Merger Agreement;
(ii) against approval of any proposal made in opposition to, or in competition with, consummation of the Merger or any other transactions
contemplated by the Merger Agreement; and
(iii) against any of the following actions (other than those actions that relate to the Merger
and any other transactions contemplated by the Merger Agreement): (A) any merger, consolidation, business combination, sale of assets, or reorganization of the Company or any of its Subsidiaries, (B) any sale, lease or transfer of any
significant part of the assets of the Company or any of its Subsidiaries, (C) any reorganization, recapitalization, dissolution, liquidation or winding up of the Company or any of its Subsidiaries, (D) any material change in the
capitalization of the Company or any of its Subsidiaries, or the corporate structure of the Company or any of its Subsidiaries, or (E) any other action that is intended, or would reasonably be expected to, impede, interfere with, delay,
postpone, discourage or adversely affect the Merger or any other transaction contemplated by the Merger Agreement.
(b) In the event that a
meeting of the shareholders of the Company (including the Company Shareholders Meeting) is held, each Shareholder shall, or shall cause the holder of record on any applicable record date to, appear at such meeting or otherwise cause such
Shareholders Covered Shares to be counted as present thereat for purposes of establishing a quorum.
4.
No Solicitation
. Each
Shareholder shall, and shall cause any of its directors, officers or other employees, controlled affiliates, or any investment banker, attorney or other advisors or representatives retained by any of them (collectively, the
Representatives
) to, immediately cease any and all existing activities, discussions or negotiations with any Persons conducted heretofore with respect to any Acquisition Proposal. Subject to Section 6, each Shareholder shall
not, and shall use its reasonable best efforts to cause each of its Representatives, if any, not to (and shall not authorize or permit any of them to), directly or indirectly, (i) solicit, initiate, knowingly encourage, facilitate or induce the
making, submission or announcement of, an Acquisition Proposal, (ii) furnish to any Person (other than Parent, Merger Sub or any designees of Parent or Merger Sub)
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any non-public information relating to the Company or any of its Subsidiaries, or afford access to the business, properties, assets, books or records of the Company or any of its Subsidiaries to
any Person (other than Parent, Merger Sub or any designees of Parent or Merger Sub), or take any other action intended to assist or facilitate any inquiries or the making of any proposal that constitutes or could lead to an Acquisition Proposal,
(iii) participate or engage in discussions or negotiations with any Person with respect to an Acquisition Proposal, (iv) approve, endorse or recommend an Acquisition Proposal, (v) execute or enter into any letter of intent, memorandum
of understanding or Contract contemplating or otherwise relating to an Acquisition Transaction or (vi) terminate, amend, modify, waive or fail to enforce any rights under any standstill or other similar agreement between the Company
or any of its Subsidiaries and any Person (other than Parent). Without limiting the generality of the foregoing, Parent, Merger Sub and each Shareholder acknowledge and hereby agree that any violation of the restrictions set forth in this
Section 4
by any Representative of such Shareholder shall be deemed to be a breach of this
Section 4
by such Shareholder.
5.
Agreement Not to Exercise Appraisal Rights
. Each Shareholder hereby irrevocably and unconditionally waives any appraisal rights or
dissenters rights relating to the Merger or any other transaction contemplated by the Merger Agreement that such Shareholder may have with respect to such Shareholders Covered Shares pursuant to applicable Law.
6.
Directors and Officers
. Notwithstanding any provision of this Agreement to the contrary, nothing in this Agreement shall (or require
any Shareholder to attempt to) limit or restrict any Shareholder (or any designee of any Shareholder) who is a director or officer of the Company from acting in such capacity on any matter (it being understood that this Agreement shall apply to each
Shareholder solely in such Shareholders capacity as a holder of Shares and/or holder of options to purchase Shares);
provided
,
however
, that nothing in this
Section 6
is intended to modify or otherwise obviate any of
the rights or obligations under the Merger Agreement.
7.
Irrevocable Proxy
. Concurrently with the execution of this Agreement, each
Shareholder shall deliver to Parent and Merger Sub a proxy in the form attached hereto as
Annex A
(the
Proxy
), which shall be irrevocable to the fullest extent permissible by applicable Law, with respect to all of such
Shareholders Covered Shares.
8.
No Ownership Interest
. Nothing contained in this Agreement shall be deemed to vest in Parent
and/or Merger Sub any direct or indirect ownership or incidence of ownership of or with respect to any Shareholders Covered Shares. All rights, ownership and economic benefits of and relating to each Shareholders Covered Shares shall
remain vested in and belong to each Shareholder, and Parent and Merger Sub shall have no authority to manage, direct, superintend, restrict, regulate, govern, or administer any of the policies or operations of the Company or exercise any power or
authority to direct such Shareholder in the voting of any of such Shareholders Covered Shares, except as otherwise provided herein. Notwithstanding anything in this Agreement to the contrary, nothing herein shall require such Shareholder to
exercise any option and/or other rights to purchase Shares (including Company Options).
9.
Representations and Warranties of
Shareholders
. Each Shareholder hereby represents and warrants to Parent, severally and not jointly, and solely as to itself and its Covered Shares, as of the date hereof that:
(a)
Power; Binding Agreement
. Such Shareholder has full power and authority to execute and deliver this Agreement and the Proxy, to
perform such Shareholders obligations hereunder and to consummate the transactions contemplated hereby. The execution, delivery and performance by such Shareholder of this Agreement, the performance by such Shareholder of its obligations
hereunder and the consummation by such Shareholder of the transactions contemplated hereby have been duly and validly authorized by such Shareholder and no other actions or proceedings on the part of such Shareholder are necessary to authorize the
execution and delivery by it of this Agreement or the Proxy, the performance by such Shareholder of its obligations hereunder or thereunder or the consummation by such Shareholder of the transactions contemplated hereby or thereby. This Agreement
and the Proxy have been duly executed and delivered by such Shareholder, and, assuming this Agreement constitutes a legal valid and binding obligation of Parent and Merger Sub, constitute a valid and binding obligation of such Shareholder,
enforceable against such Shareholder in accordance with their terms, except as such enforceability (i) may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and other similar Laws affecting or relating to
creditors rights generally and (ii) is subject to general principles of equity.
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(b)
No Conflicts
. Except for filings that may be required under the Exchange Act and the
HSR Act, and any applicable foreign antitrust, competition or merger control Laws, no Consent of any Governmental Entity is required on the part of such Shareholder in connection with the execution, delivery and performance by such Shareholder of
this Agreement and the Proxy and the consummation by such Shareholder of the transactions contemplated hereby and thereby. None of the execution, delivery or performance by such Shareholder of this Agreement or the Proxy, the performance by such
Shareholder of its obligations hereunder or thereunder or the consummation by such Shareholder of the transactions contemplated hereby or thereby will (i) violate or conflict with any provisions of the articles of incorporation or bylaws or
other constituent documents applicable to such Shareholder, (ii) violate, conflict or result in the breach of, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or result in the
termination of, or accelerate the performance required by, or result in a right of termination or acceleration under, any Contract to which such Shareholder is a party or by which such Shareholders properties or assets may be bound, or
(iii) violate or conflict with any Law or Order applicable to such Shareholder or by which any of such Shareholders properties or assets are bound, or (iv) result in the creation of any Lien upon any of the properties or assets of
such Shareholder.
(c)
Ownership of Shares
. Such Shareholder (i) is the Beneficial Owner of the Company Securities as indicated
forth on the signature page to this Agreement, all of which are free and clear of any Liens, (except any Liens arising under securities Laws or arising hereunder), and (ii) does not own, beneficially or otherwise, any Company Securities other
than the Company Securities indicated on the signature page to this Agreement.
(d)
Voting Power
. Such Shareholder has or will have
sole voting power, sole power of disposition, sole power to issue instructions with respect to the matters set forth herein, and sole power to agree to all of the matters set forth in this Agreement, in each case with respect to all of such
Shareholders Covered Shares, with no limitations, qualifications or restrictions on such rights, subject to applicable federal securities laws and the terms of this Agreement.
(e)
No Finders Fees
. No broker, investment banker, financial advisor or other person other than [Oppenheimer] (true and correct
copies of whose engagement letter and other compensation arrangements have been furnished to Parent) is entitled to any brokers, finders, financial advisers or other similar fee or commission in connection with the transactions
contemplated by the Merger Agreement or this Agreement based upon arrangements made by or on behalf of such Shareholder.
(f)
Reliance
by Parent
. Such Shareholder understands and acknowledges that Parent is entering into the Merger Agreement in reliance upon such Shareholders execution and delivery of this Agreement.
10.
Certain Restrictions
. Each Shareholder shall not, directly or indirectly, take any action that would make any representation or
warranty of such Shareholder contained herein untrue or incorrect or enter into any Contract with any Person in any manner inconsistent with the terms of this Agreement or the Proxy.
11.
Disclosure
. Subject to reasonable prior notice and approval (which shall not be unreasonably withheld or delayed), each Shareholder
shall permit and hereby authorizes Parent and Merger Sub to publish and disclose in all documents and schedules filed with the SEC, and any press release or other disclosure document that Parent and/or Merger Sub determines to be necessary or
desirable in connection with the Merger and any transactions related to thereto, such Shareholders identity and ownership of Covered Shares and the nature of such Shareholders commitments, arrangements and understandings under this
Agreement.
12.
Consents and Waivers
. Each Shareholder hereby gives any consents or waivers that are reasonably required for the
consummation of the Merger under the terms of any Contracts to which such Shareholder is a party or pursuant to any rights such Shareholder may have.
13.
Further Assurances
. Subject to the terms and conditions of this Agreement, each Shareholder, in such Shareholders capacity as
a Company shareholder, shall use commercially reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary to fulfill such Shareholders obligations under this Agreement.
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14.
Merger Agreement
. Each Shareholder hereby acknowledges receipt of, and has had an
opportunity to read and understand and consult with independent counsel concerning, the Merger Agreement (including exhibits and schedules thereto).
15.
Termination
. This Agreement and the Proxy shall terminate and shall have no further force or effect as of the Expiration Date.
Notwithstanding the foregoing, nothing set forth in this
Section 16
or elsewhere in this Agreement shall relieve either party hereto from any liability, or otherwise limit the liability of either party hereto, for any breach of this
Agreement.
16.
Miscellaneous
.
(a)
Severability
. In the event that any provision of this Agreement, or the application thereof, becomes or is declared by a court of
competent jurisdiction to be illegal, void or unenforceable, the remainder of this Agreement will continue in full force and effect and the application of such provision to other persons or circumstances will be interpreted so as reasonably to
effect the intent of the parties hereto. The parties further agree to replace such void or unenforceable provision of this Agreement with a valid and enforceable provision that will achieve, to the extent possible, the economic, business and other
purposes of such void or unenforceable provision.
(b)
Assignment
. No party may assign either this Agreement or any of its rights,
interests, or obligations hereunder (whether by operation of law or otherwise) without the prior written approval of the other parties. Subject to the preceding sentence, this Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
(c)
Amendments; Waiver
. This Agreement may be amended by the
parties hereto, and the terms and conditions hereof may be waived, only by an instrument in writing signed on behalf of each of the parties hereto, or, in the case of a waiver, by an instrument signed on behalf of the party waiving compliance with
any of the terms or conditions of this Agreement.
(d)
Specific Performance
. The parties hereto agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not performed by the Shareholder in accordance with their specific terms or were otherwise breached. It is accordingly agreed that Parent and/or Merger Sub shall be entitled to
seek an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any court of the United States or any state having jurisdiction, this being in addition to any other remedy to
which they are entitled at law or in equity.
(e)
Other Remedies
. Except as otherwise provided herein, any and all remedies herein
expressly conferred upon a party will be deemed cumulative with and not exclusive of any other remedy conferred hereby, or by law or equity upon such party, and the exercise by a party of any one remedy will not preclude the exercise of any other
remedy.
(f)
Notices
. All notices and other communications hereunder shall be in writing and shall be deemed given if delivered
personally or by commercial delivery service, or sent via telecopy (receipt confirmed) to the parties at the following addresses or telecopy numbers (or at such other address or telecopy numbers for a party as shall be specified by like notice):
If to Parent or Merger Sub, to:
Microchip Technology Incorporated
2355 W. Chandler Blvd.
Chandler, AZ 85224
Attention:
Kim van Herk
Vice President, General Counsel and Corporate Secretary
Telecopy No: (480) 792-4112
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with copies (which shall not constitute notice) to:
Wilson Sonsini Goodrich & Rosati
Professional Corporation
900
South Capital of Texas Highway
Las Cimas IV, Fifth Floor
Austin, TX 78746
Attention:
J. Robert Suffoletta, Jr.
Telecopy No.:
(512) 338-5499
and copies (which shall not constitute notice) to:
Wilson Sonsini Goodrich & Rosati
Professional Corporation
One
Market Street
Spear Tower, Suite 3300
San Francisco, CA 94105
Attention: Robert T. Ishii and Denny Kwon
Telecopy No.:
(415) 947-2099
If to Shareholder to:
To the
address for notice set forth the signature page hereto.
with a copy (which shall not constitute notice) to:
Pillsbury Winthrop Shaw Pittman LLP
2550 Hanover Street
Palo Alto,
CA 94304-1115
Attention: Steve Wurzburg and Tom Chaffin
Telecopy No.: (866) 741-1919 and (650) 233-4545
(g)
No Waiver
. The failure of either party hereto to exercise any right, power or remedy provided under this Agreement or otherwise
available in respect of this Agreement at law or in equity, or to insist upon compliance by any other party with its obligation under this Agreement, and any custom or practice of the parties at variance with the terms of this Agreement, shall not
constitute a waiver by such party of such partys right to exercise any such or other right, power or remedy or to demand such compliance.
(h)
No Third Party Beneficiaries
. This Agreement is not intended to confer upon any person other than the parties hereto any rights or
remedies hereunder.
(i)
Governing Law
. This Agreement shall be governed by and construed in accordance with the Laws of the State
of Delaware, regardless of the Laws that might otherwise govern under applicable principles of conflicts of law thereof, except to the extent that provisions of California Law are mandatorily applicable to the Merger.
(j)
Consent to Jurisdiction
. Each of the parties hereto (a) irrevocably consents to the service of the summons and complaint and
any other process in any action or proceeding relating to the transactions contemplated by this Agreement, for and on behalf of itself or any of its properties or assets, in accordance with
Section 17(f)
or in such other manner as may be
permitted by applicable Law, and nothing in this
Section 17(j)
shall affect the right of any party to serve legal process in any other manner permitted by applicable Law; (b) irrevocably and unconditionally consents and submits
itself and its properties and assets in any action or proceeding to the exclusive jurisdiction of the Court of Chancery of the State of Delaware (or, only if the Court of Chancery of the State of Delaware declines to accept jurisdiction over a
particular matter, any federal court within the State of Delaware) in the event any dispute or controversy arises out of this Agreement or the transactions contemplated hereby, or for recognition and enforcement of any judgment in respect thereof;
(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; (d) agrees that any actions or proceedings arising in connection with this Agreement or the
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transactions contemplated hereby shall be brought, tried and determined only in the Court of Chancery of the State of Delaware (or, only if the Court of Chancery of the State of Delaware declines
to accept jurisdiction over a particular matter, any federal court within the State of Delaware); (e) waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim the same; and (f) agrees that it will not bring any action relating to this Agreement or the transactions contemplated hereby in any court other than the aforesaid
courts. Each of Parent, Merger Sub and each Shareholder agrees that a final judgment in any action or proceeding in such courts as provided above shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by applicable Law.
(k)
WAIVER OF JURY TRIAL
. EACH OF THE PARTIES HERETO 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 ANY PARTY HERETO IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT
HEREOF.
(l)
Entire Agreement
. This Agreement and the Proxy contain the entire understanding of the parties hereto in respect of the
subject matter hereof, and supersede all prior negotiations, agreements and understandings, both written and oral, between the parties hereto with respect to the subject matter hereof.
(m)
Certain Interpretations
.
(i) Whenever the words include, includes or including are used in this Agreement they shall be deemed to be
followed by the words without limitation.
(ii) The article and section headings contained in this Agreement are solely for the
purpose of reference, are not part of the agreement of the parties hereto and shall not in any way affect the meaning or interpretation of this Agreement.
(iii) The parties hereto agree that they have been represented by counsel during the negotiation and execution of this Agreement and,
therefore, waive the application of any law, regulation, holding or rule of construction providing that ambiguities in an agreement or other document will be construed against the party drafting such agreement or document.
(n)
Expenses
. All fees and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by
the party incurring the expenses, whether or not the Merger is consummated.
(o)
Counterparts
. This Agreement may be executed in one
or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party, it being understood that all parties
need not sign the same counterpart.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly executed to be
effective as of the date first above written.
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MICROCHIP TECHNOLOGY
INCORPORATED
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By:
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Name:
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Steve Sanghi
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Title:
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President and Chief Executive Officer
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(SIGNATURE PAGE TO VOTING AGREEMENT)
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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly executed to be
effective as of the date first above written.
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SHAREHOLDER:
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(Name of Entity, if an
entity)
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By:
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Name:
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Title:
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Address:
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Facsimile:
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Share that are Beneficially Owned:
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shares of Company Common Stock
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shares of Company Common Stock issuable upon exercise of outstanding options or other rights to purchase Company Common Stock
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(SIGNATURE PAGE TO VOTING AGREEMENT)
B-9
ANNEX A
IRREVOCABLE PROXY
The
undersigned shareholder (
Shareholder
) of SUPERTEX, INC., a California corporation (the
Company
), hereby irrevocably (to the fullest extent permitted by law) appoints Steve Sanghi, Ganesh Moorthy and Kim van Herk
of MICROCHIP TECHNOLOGY INCORPORATED, a Delaware Corporation (
Parent
), and each of them, as the sole and exclusive attorneys and proxies of the undersigned, with full power of substitution and resubstitution, to vote and exercise
all voting and related rights (to the full extent that the undersigned is entitled to do so) with respect to all of the shares of capital stock of the Company that now are or hereafter may be beneficially owned by the undersigned, and any and all
other shares or securities of the Company issued or issuable to Shareholder on or after the date hereof (collectively, the
Proxy Shares
) in accordance with the terms of this Irrevocable Proxy until the Expiration Date (as defined
below). Upon Shareholders execution of this Irrevocable Proxy, any and all prior proxies given by Shareholder with respect to any Proxy Shares are hereby revoked and Shareholder agrees not to grant any subsequent proxies with respect to the
Proxy Shares until after the Expiration Date.
This Irrevocable Proxy is irrevocable to the fullest extent permitted by law, is coupled
with an interest and is granted pursuant to that certain Voting Agreement of even date herewith by and among Parent and Shareholder and the other shareholders of the Company named therein (the
Voting Agreement
), and is granted in
consideration of Parent entering into that certain Agreement and Plan of Merger of even date herewith (as it may be amended, supplemented or otherwise modified from time to time, the
Merger Agreement
), among Parent, Orchid
Acquisition Corporation, a California corporation and wholly-owned subsidiary of Parent (
Merger Sub
), and the Company. The Merger Agreement provides for, among other things, the merger of Merger Sub with and into the Company (the
Merger
) pursuant to which all outstanding shares of Common Stock, no par value, of the Company (the Company Common Stock) will be converted into the right to receive cash in an amount equal to Thirty Three Dollars
($33.00) per share in cash (the
Merger Consideration
).
As used herein, the term
Expiration Date
shall mean the earliest to occur of (i) such date and time as the Merger Agreement shall have been terminated pursuant to Article VIII thereof, (ii) such date and time as the Merger shall become effective in accordance with the terms
and provisions of the Merger Agreement, or (iii) the making of any waiver, amendment or other modification of the Merger Agreement that reduces the amount of, or changes the form or type of, consideration to be received by Company shareholders
in the Merger.
(i) The attorneys and proxies named above, and each of them, are hereby authorized and empowered by Shareholder, at any
time prior to the Expiration Date, to act as the undersigneds attorney and proxy to vote the Proxy Shares, and to exercise all voting, consent and similar rights of Shareholder with respect to the Proxy Shares (including, without limitation,
the power to execute and deliver written consents) at every annual, special, adjourned or postponed meeting of shareholders of the Company and in every written consent in lieu of such meeting: (i) in favor of the approval of the Merger
Agreement, each of the other transactions contemplated by the Merger Agreement, and each other action the taking of which would reasonably be expected to facilitate the consummation of the Merger and the other transactions contemplated by the Merger
Agreement; (ii) against approval of any proposal made in opposition to, or in competition with, consummation of the Merger or any other transactions contemplated by the Merger Agreement; and (iii) against any of the following actions
(other than those actions that relate to the Merger and any other transactions contemplated by the Merger Agreement): (A) any merger, consolidation, business combination, sale of assets, or reorganization of the Company or any of its
subsidiaries, (B) any sale, lease or transfer of any significant part of the assets of the Company or any if its subsidiaries, (C) any reorganization, recapitalization, dissolution, liquidation or winding up of the Company or any of its
subsidiaries, (D) any material change in the capitalization of the Company or any of its subsidiaries, or the corporate structure of the Company or any of its subsidiaries, or (E) any other action that is intended, or would reasonably be
expected to, impede, interfere with, delay, postpone, discourage or adversely affect the Merger or any other transactions contemplated by the Merger Agreement.
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The attorneys and proxies named above may not exercise this Irrevocable Proxy on any other matter
except as provided herein. Shareholder may vote the Proxy Shares on all other matters.
Any obligation of Shareholder hereunder shall be
binding upon the successors and assigns of Shareholder.
This Irrevocable Proxy shall terminate, and be of no further force and effect,
automatically upon the Expiration Date.
Dated:
, 2014
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SHAREHOLDER
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(Name of Entity, if an entity)
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By:
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Name:
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Title:
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(SIGNATURE PAGE TO IRREVOCABLE PROXY)
B-11
Annex C
February 9, 2014
The Board of Directors
Supertex, Inc.
1235 Bordeaux Drive
Sunnyvale, CA 94089
Dear Board of Directors:
You have asked Oppenheimer & Co. Inc. (Oppenheimer) to render a written opinion (Opinion) to the Board of Directors of
Supertex, Inc. (Supertex) as to the fairness, from a financial point of view, to the holders of common stock, no par value, of Supertex (Supertex Common Stock), of the Merger Consideration (as defined below) provided for in
the Agreement and Plan of Merger, dated as of February 9, 2014, by and among Microchip Technology Incorporated (MTI), Orchid Acquisition Corporation, a wholly-owned subsidiary of MTI (Merger Sub), and Supertex (the
Agreement). The Agreement provides for, among other things, the merger of Merger Sub with and into Supertex (the Merger) pursuant to which each outstanding share of Supertex Common Stock will be converted, subject to certain
exceptions, into the right to receive $33.00 in cash (the Merger Consideration).
In arriving at our Opinion, we:
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a)
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reviewed the draft labeled Execution Copy of the Agreement and certain related documents;
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b)
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reviewed audited financial statements of Supertex for fiscal years ended March 31, 2012 and March 30, 2013, and unaudited financial statements of Supertex for the nine months ended December 28, 2013;
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c)
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reviewed financial forecasts and estimates relating to Supertex from the management of Supertex;
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d)
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reviewed the historical market prices and trading volume of Supertex Common Stock;
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e)
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held discussions with the senior management of Supertex with respect to the business and prospects of Supertex;
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f)
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reviewed and analyzed certain publicly available financial data for companies that we deemed relevant in evaluating Supertex;
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g)
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reviewed and analyzed certain publicly available financial information for transactions that we deemed relevant in evaluating the Merger;
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h)
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analyzed the estimated present value of the future cash flows of Supertex based on financial forecasts and estimates from the management of Supertex;
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i)
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reviewed and analyzed the premiums paid, based on publicly available information, in merger and acquisition transactions we deemed relevant in evaluating the Merger;
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j)
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reviewed other public information concerning Supertex; and
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k)
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performed such other analyses, reviewed such other information and considered such other factors as we deemed appropriate.
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In rendering our Opinion, we relied upon and assumed, without independent verification or investigation, the accuracy and completeness of all of the financial
and other information provided to or discussed with us by Supertex and its employees, representatives and affiliates or otherwise reviewed by us. With respect to the financial forecasts and estimates relating to Supertex referred to above, we have
assumed, at the direction of the management of Supertex and with Supertexs consent, without independent verification or investigation, that such forecasts and estimates were reasonably prepared on bases reflecting the best available
information,
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estimates and judgments of the management of Supertex as to the future financial condition and operating results of Supertex and the other matters covered thereby. At the direction of
representatives from Supertex, we also assumed that the final terms of the Agreement will not vary materially from those set forth in the draft reviewed by us. We also have assumed, with the consent of Supertex, that the Merger will be consummated
in accordance with its terms without waiver, modification or amendment of any material term, condition or agreement and in compliance with all applicable laws and other requirements and that, in the course of obtaining the necessary regulatory or
third party approvals, consents and releases with respect to the Merger, no delay, limitation, restriction or condition will be imposed that would have an adverse effect on Supertex or the Merger. We have neither made nor obtained any independent
evaluations or appraisals of the assets or liabilities, contingent or otherwise, of Supertex.
We are not expressing any opinion as to the underlying
valuation, future performance or long term viability of Supertex or the price at which Supertex Common Stock will trade at any time. We express no view as to, and our Opinion does not address, any terms or other aspects or implications of the Merger
(other than the Merger Consideration to the extent expressly specified herein) or any aspect or implication of any other agreement, arrangement or understanding entered into in connection with the Merger or otherwise, including, without limitation,
the fairness of the amount or nature of the compensation resulting from the Merger to any individual officers, directors or employees of Supertex, or class of such persons, relative to the Merger Consideration. In addition, we express no view as to,
and our Opinion does not address, the underlying business decision of Supertex to proceed with or effect the Merger nor does our Opinion address the relative merits of the Merger as compared to any alternative business strategies that might exist
for Supertex or the effect of any other transaction in which Supertex might engage. Our Opinion is necessarily based on the information available to us and general economic, financial and stock market conditions and circumstances as they exist and
can be evaluated by us on the date hereof. It should be understood that, although subsequent developments may affect this Opinion, we do not have any obligation to update, revise or reaffirm the Opinion.
We are not legal, tax, regulatory or accounting advisors and have relied on the assessments made by the Company and its advisors with respect to such issues.
This Opinion does not address any legal, tax, regulatory or accounting matters. In addition, this Opinion does not constitute a solvency opinion or a fair value opinion, and we have not evaluated the solvency or fair value of the Company under any
federal or state laws relating to bankruptcy, insolvency or similar matters.
The issuance of this Opinion was approved by an authorized committee of
Oppenheimer & Co. Inc. As part of our investment banking business, we are regularly engaged in valuations of businesses and securities in connection with acquisitions and mergers, underwritings, secondary distributions of securities,
private placements and valuations for other purposes.
We have acted as financial advisor to Supertex in connection with the Merger and will receive a fee
for our services, a portion of which will be payable upon delivery of this Opinion and a significant portion of which is contingent upon consummation of the Merger. Supertex has agreed to indemnify us against certain liabilities and reimburse us for
our time and expenses in connection with our services. In the ordinary course of business, we and our affiliates may actively trade securities of Supertex and MTI for our and our affiliates own accounts and for the accounts of customers and,
accordingly, may at any time hold a long or short position in such securities.
Based upon and subject to the foregoing, and such other factors as we
deemed relevant, it is our opinion that, as of the date hereof, the Merger Consideration provided for in the Agreement is fair, from a financial point of view, to the holders of Supertex Common Stock. This Opinion is for the use of the Board of
Directors of Supertex in its evaluation of the Merger and does not constitute a recommendation to any stockholder as to how such stockholder should vote or act with respect to any matters relating to the Merger.
Very truly yours,
OPPENHEIMER & CO. INC.
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Annex D
CHAPTER 13 OF THE CALIFORNIA CORPORATIONS CODE
DISSENTERS RIGHTS
§ 1300.
Shareholder in short-form merger; Purchase at fair market value; Dissenting shares; Dissenting shareholder
(a) If
the approval of the outstanding shares (Section 152) of a corporation is required for a reorganization under subdivisions (a) and (b) or subdivision (e) or (f) of Section 1201, each shareholder of the corporation entitled to
vote on the transaction and each shareholder of a subsidiary corporation in a short-form merger may, by complying with this chapter, require the corporation in which the shareholder holds shares to purchase for cash at their fair market value the
shares owned by the shareholder which are dissenting shares as defined in subdivision (b). The fair market value shall be determined as of the day of, and immediately prior to, the first announcement of the terms of the proposed reorganization or
short-form merger, excluding any appreciation or depreciation in consequence of the proposed reorganization or short-form merger, as adjusted for any stock split, reverse stock split, or share dividend that becomes effective thereafter.
(b) As used in this chapter, dissenting shares means shares to which all of the following apply:
(1) That were not, immediately prior to the reorganization or short-form merger, listed on any national securities exchange
certified by the Commissioner of Corporations under subdivision (o) of Section 25100, and the notice of meeting of shareholders to act upon the reorganization summarizes this section and Sections 1301, 1302, 1303 and 1304; provided,
however, that this provision does not apply to any shares with respect to which there exists any restriction on transfer imposed by the corporation or by any law or regulation; and provided, further, that this provision does not apply to any shares
where the holder of those shares is required, by the terms of the reorganization or short-form merger, to accept for the shares anything except: (A) shares of any other corporation, which shares, at the time the reorganization or short-form
merger is effective, are listed on any national securities exchange certified by the Commissioner of Corporations under subdivision (o) of Section 25100; (B) cash in lieu of fractional shares described in the foregoing subparagraph
(A); or (C) any combination of the shares and cash in lieu of fractional shares described in the foregoing subparagraphs (A) and (B).
(2) That were outstanding on the date for the determination of shareholders entitled to vote on the reorganization and
(A) were not voted in favor of the reorganization or, (B) if described in paragraph (1), were voted against the reorganization, or were held of record on the effective date of a short-form merger; provided, however, that subparagraph
(A) rather than subparagraph (B) of this paragraph applies in any case where the approval required by Section 1201 is sought by written consent rather than at a meeting.
(3) That the dissenting shareholder has demanded that the corporation purchase at their fair market value, in accordance with
Section 1301.
(4) That the dissenting shareholder has submitted for endorsement, in accordance with
Section 1302.
(c) As used in this chapter, dissenting shareholder means the recordholder of dissenting shares and
includes a transferee of record.
§ 1301. Notice to holder of dissenting shares of reorganization approval; Demand for purchase of shares;
Contents of demand
(a) If, in the case of a reorganization, any shareholders of a corporation have a right under Section 1300,
subject to compliance with paragraphs (3) and (4) of subdivision (b) thereof, to require the corporation to purchase their shares for cash, that corporation shall mail to each of those shareholders a notice of the approval of
the reorganization by its outstanding shares (Section 152) within 10 days after the date of that approval,
D-1
accompanied by a copy of Sections 1300, 1302, 1303, and 1304 and this section, a statement of the price determined by the corporation to represent the fair market value of the dissenting
shares, and a brief description of the procedure to be followed if the shareholder desires to exercise the shareholders right under those sections. The statement of price constitutes an offer by the corporation to purchase at the price stated
any dissenting shares as defined in subdivision (b) of Section 1300, unless they lose their status as dissenting shares under Section 1309.
(b) Any shareholder who has a right to require the corporation to purchase the shareholders shares for cash under Section 1300,
subject to compliance with paragraphs (3) and (4) of subdivision (b) thereof, and who desires the corporation to purchase shares shall make written demand upon the corporation for the purchase of those shares and payment to the
shareholder in cash of their fair market value. The demand is not effective for any purpose unless it is received by the corporation or any transfer agent thereof (1) in the case of shares described in subdivision (b) of Section 1300,
not later than the date of the shareholders meeting to vote upon the reorganization, or (2) in any other case
,
within 30 days after the date on which the notice of the approval by the outstanding shares pursuant to subdivision
(a) or the notice pursuant to subdivision (
h
) of Section 1110 was mailed to the shareholder.
(c) The demand shall
state the number and class of the shares held of record by the shareholder which the shareholder demands that the corporation purchase and shall contain a statement of what the shareholder claims to be the fair market value of those shares as
determined pursuant to subdivision (a) of Section 1300. The statement of fair market value constitutes an offer by the shareholder to sell the shares at that price.
§ 1302. Stamping or endorsing dissenting shares
Within 30 days after the date on which notice of the approval by the outstanding shares or the notice pursuant to subdivision (h) of
Section 1110 was mailed to the shareholder, the shareholder shall submit to the corporation at its principal office or at the office of any transfer agent thereof, (a) if the shares are certificated securities, the shareholders
certificates representing any shares which the shareholder demands that the corporation purchase, to be stamped or endorsed with a statement that the shares are dissenting shares or to be exchanged for certificates of appropriate denomination so
stamped or endorsed or (b) if the shares are uncertificated securities, written notice of the number of shares which the shareholder demands that the corporation purchase. Upon subsequent transfers of the dissenting shares on the books of the
corporation, the new certificates, initial transaction statement, and other written statements issued therefor shall bear a like statement, together with the name of the original dissenting holder of the shares.
§ 1303. Dissenting shareholder entitled to agreed price with interest thereon; When price to be paid
(a) If the corporation and the shareholder agree that the shares are dissenting shares and agree upon the price of the shares, the dissenting
shareholder is entitled to the agreed price with interest thereon at the legal rate on judgments from the date of the agreement. Any agreements fixing the fair market value of any dissenting shares as between the corporation and the holders thereof
shall be filed with the secretary of the corporation.
(b) Subject to the provisions of Section 1306, payment of the fair market value
of dissenting shares shall be made within 30 days after the amount thereof has been agreed or within 30 days after any statutory or contractual conditions to the reorganization are satisfied, whichever is later, and in the case of certificated
securities, subject to surrender of the certificates therefor, unless provided otherwise by agreement.
§ 1304. Action by dissenters to
determine whether shares are dissenting shares or fair market value of dissenting shares or both; Joinder of shareholders; Consolidation of actions; Determination of issues; Appointment of appraisers
(a) If the corporation denies that the shares are dissenting shares, or the corporation and the shareholder fail to agree upon the fair market
value of the shares, then the shareholder demanding purchase of such shares as dissenting shares or any interested corporation, within six months after the date on which notice of the approval
D-2
by the outstanding shares (Section 152) or notice pursuant to subdivision (
h
) of Section 1110 was mailed to the shareholder, but not thereafter, may file a complaint in the
superior court of the proper county praying the court to determine whether the shares are dissenting shares or the fair market value of the dissenting shares or both or may intervene in any action pending on such a complaint.
(b) Two or more dissenting shareholders may join as plaintiffs or be joined as defendants in any such action and two or more such actions may
be consolidated.
(c) On the trial of the action, the court shall determine the issues. If the status of the shares as dissenting shares is
in issue, the court shall first determine that issue. If the fair market value of the dissenting shares is in issue, the court shall determine, or shall appoint one or more impartial appraisers to determine, the fair market value of the shares.
§ 1305. Duty and report of appraisers; Courts confirmation of report; Determination of fair market value by court; Judgment and payment;
Appeal; Costs of action
(a) If the court appoints an appraiser or appraisers, they shall proceed forthwith to determine the fair market
value per share. Within the time fixed by the court, the appraisers, or a majority of them, shall make and file a report in the office of the clerk of the court. Thereupon, on the motion of any party, the report shall be submitted to the court and
considered on such evidence as the court considers relevant. If the court finds the report reasonable, the court may confirm it.
(b) If a
majority of the appraisers appointed fail to make and file a report within 10 days from the date of their appointment or within such further time as may be allowed by the court or the report is not confirmed by the court, the court shall determine
the fair market value of the dissenting shares.
(c) Subject to the provisions of Section 1306, judgment shall be rendered against the
corporation for payment of an amount equal to the fair market value of each dissenting share multiplied by the number of dissenting shares which any dissenting shareholder who is a party, or who has intervened, is entitled to require the corporation
to purchase, with interest thereon at the legal rate from the date on which judgment was entered.
(d) Any such judgment shall be payable
forthwith with respect to uncertificated securities and, with respect to certificated securities, only upon the endorsement and delivery to the corporation of the certificates for the shares described in the judgment. Any party may appeal from the
judgment.
(e) The costs of the action, including reasonable compensation to the appraisers to be fixed by the court, shall be assessed or
apportioned as the court considers equitable, but, if the appraisal exceeds the price offered by the corporation, the corporation shall pay the costs (including in the discretion of the court attorneys fees, fees of expert witnesses and
interest at the legal rate on judgments from the date of compliance with Sections 1300, 1301 and 1302 if the value awarded by the court for the shares is more than 125 percent of the price offered by the corporation under subdivision (a) of
Section 1301).
§ 1306. Prevention of payment to holders of dissenting shares of fair market value; Effect
To the extent that the provisions of Chapter 5 prevent the payment to any holders of dissenting shares of their fair market value, they shall
become creditors of the corporation for the amount thereof together with interest at the legal rate on judgments until the date of payment, but subordinate to all other creditors in any liquidation proceeding, such debt to be payable when
permissible under the provisions of Chapter 5.
§ 1307. Disposition of dividends upon dissenting shares
Cash dividends declared and paid by the corporation upon the dissenting shares after the date of approval of the reorganization by the
outstanding shares (Section 152) and prior to payment for the shares by the corporation shall be credited against the total amount to be paid by the corporation therefor.
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§ 1308. Rights and privileges of dissenting shares; Withdrawal of demand for payment
Except as expressly limited in this chapter, holders of dissenting shares continue to have all the rights and privileges incident to their
shares, until the fair market value of their shares is agreed upon or determined. A dissenting shareholder may not withdraw a demand for payment unless the corporation consents thereto.
§ 1309. When dissenting shares lose their status
Dissenting shares lose their status as dissenting shares and the holders thereof cease to be dissenting shareholders and cease to be entitled
to require the corporation to purchase their shares upon the happening of any of the following:
(a) The corporation abandons the
reorganization. Upon abandonment of the reorganization, the corporation shall pay on demand to any dissenting shareholder who has initiated proceedings in good faith under this chapter all necessary expenses incurred in such proceedings and
reasonable attorneys fees.
(b) The shares are transferred prior to their submission for endorsement in accordance with
Section 1302 or are surrendered for conversion into shares of another class in accordance with the articles.
(c) The dissenting
shareholder and the corporation do not agree upon the status of the shares as dissenting shares or upon the purchase price of the shares, and neither files a complaint or intervenes in a pending action as provided in Section 1304, within six
months after the date on which notice of the approval by the outstanding shares or notice pursuant to subdivision (h) of Section 1110 was mailed to the shareholder.
(d) The dissenting shareholder, with the consent of the corporation, withdraws the shareholders demand for purchase of the dissenting
shares.
§ 1310. Suspension of proceedings for compensation or valuation pending litigation
If litigation is instituted to test the sufficiency or regularity of the votes of the shareholders in authorizing a reorganization, any
proceedings under Sections 1304 and 1305 shall be suspended until final determination of such litigation.
§ 1311. Shares to which chapter
inapplicable
This chapter, except Section 1312, does not apply to classes of shares whose terms and provisions specifically set forth
the amount to be paid in respect to such shares in the event of a reorganization or merger.
§ 1312. Attack on validity of reorganization or
short-form merger; Rights of shareholders; Burden of proof
(a) No shareholder of a corporation who has a right under this chapter to
demand payment of cash for the shares held by the shareholder shall have any right at law or in equity to attack the validity of the reorganization or short-form merger, or to have the reorganization or short-form merger set aside or rescinded,
except in an action to test whether the number of shares required to authorize or approve the reorganization have been legally voted in favor thereof; but any holder of shares of a class whose terms and provisions specifically set forth the amount
to be paid in respect to them in the event of a reorganization or short-form merger is entitled to payment in accordance with those terms and provisions or, if the principal terms of the reorganization are approved pursuant to subdivision
(b) of Section 1202, is entitled to payment in accordance with the terms and provisions of the approved reorganization.
(b) If
one of the parties to a reorganization or short-form merger is directly or indirectly controlled by, or under common control with, another party to the reorganization or short-form merger, subdivision (a) shall not apply to any shareholder of
such party who has not demanded payment of cash for such shareholders shares pursuant to this chapter; but if the shareholder institutes any action to attack the validity of the reorganization or short-form merger or to have the reorganization
or short-form merger set aside or rescinded, the shareholder shall not thereafter have any right to demand payment of cash for the shareholders shares pursuant to this chapter.
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The court in any action attacking the validity of the reorganization or short-form merger or to have the reorganization or short-form merger set aside or rescinded shall not restrain or enjoin
the consummation of the transaction except upon 10 days prior notice to the corporation and upon a determination by the court that clearly no other remedy will adequately protect the complaining shareholder or the class of shareholders of
which such shareholder is a member.
(c) If one of the parties to a reorganization or short-form merger is directly or indirectly
controlled by, or under common control with, another party to the reorganization or short-form merger, in any action to attack the validity of the reorganization or short-form merger or to have the reorganization or short-form merger set aside or
rescinded, (1) a party to a reorganization or short-form merger which controls another party to the reorganization or short-form merger shall have the burden of proving that the transaction is just and reasonable as to the shareholders of the
controlled party, and (2) a person who controls two or more parties to a reorganization shall have the burden of proving that the transaction is just and reasonable as to the shareholders of any party so controlled.
§ 1313. Conversion deemed to constitute reorganization for purposes of chapter
A conversion pursuant to Chapter 11.5 (commencing with Section 1150) shall be deemed to constitute a reorganization for purposes of
applying the provisions of this chapter, in accordance with and to the extent provided in Section 1159.
D-5
YOUR VOTE IS IMPORTANT
Please take a moment now to vote your shares of Supertex, Inc.
common stock for the 2014 Special Meeting of Shareholders.
YOU CAN VOTE TODAY IN ONE OF THREE WAYS:
1.
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Vote by Telephone
Please
call toll-free at 1 (800) 690-6903 on a touch-tone telephone
and follow the simple recorded instructions. Your vote will be confirmed and cast as you directed.
(Toll-free telephone voting is available for residents of the U.S. and Canada only)
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2.
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Vote by Internet
Please access www.proxyvote.com and follow the simple instructions on the screen. Use the Internet to transmit your voting instructions and for electronic delivery of information up until
11:59 p.m. Eastern Standard Time the day before the cut-off date or meeting date ([
], 2014). 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.
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You may vote by telephone or
Internet 24 hours a day, 7 days a week. Your telephone or
Internet vote authorizes the named proxies to vote your shares in the same manner
as if you
had executed a proxy card.
OR
3.
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Vote by Mail
If you do not have access to a touch-tone telephone or to the Internet, please complete, sign, date and return the proxy card in the postage-paid envelope we have provided to: Vote Processing,
c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
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