RISK FACTORS
The offer and the merger involve a high degree of risk. By participating in the offer, PLX stockholders will be choosing to invest in IDT
common stock. An investment in IDT common stock also involves a high degree of risk. In addition to the other information contained in this prospectus, you should carefully consider the risks involved in the offer and the merger transactions,
including the following risk factors and those incorporated by reference into this prospectus, in deciding whether to tender your shares of PLX common stock.
Risks Related to the Offer and the Merger Transactions
The
per share exchange ratio of the offer is fixed and will not be adjusted. Because the market price of shares of IDT common stock may fluctuate, PLX stockholders cannot be sure of the market value of the shares of IDT common stock that will be issued
in connection with the offer and the merger.
Each outstanding share of PLX common stock will be exchanged for the
right to receive (i) 0.525 of a share of IDT common stock, or the per share exchange ratio, and (i) $3.50 in cash, in each case, subject to adjustment for stock splits, stock dividends and similar events, without interest
thereon and less any applicable withholding taxes, upon consummation of the offer and the merger. The per share exchange ratio is fixed and will not be adjusted in case of any increases or decreases in the price of IDT common stock or PLX common
stock, except as a result of stock splits, stock dividends and similar events or otherwise pursuant to the merger agreement. If the price of IDT common stock declines (which may occur as the result of a number of reasons (many of which are out of
our control), including as a result of the risks described in the section of this prospectus entitled Risk Factors), PLX stockholders will receive less value for their shares upon exchange of tendered shares in the offer or consummation
of the merger than the value calculated pursuant to the per share exchange ratio on the date the offer was announced. Because the offer and the merger may not be completed until certain conditions have been satisfied or, where permissible, waived
(please see the section of this prospectus entitled The Exchange OfferConditions of the Offer), a significant period of time may pass between the commencement of the offer and the time that IDT accepts shares of PLX common stock
for exchange. Therefore, at the time you tender your shares pursuant to the offer, you will not know the exact market value of the shares of IDT common stock that will be issued if IDT accepts such shares for exchange. However, tendered shares of
PLX common stock may be withdrawn at any time prior to the time they are accepted for exchange pursuant to the offer. Please see the section entitled Comparative Market Price and Dividend Information for the historical high and low sales
prices per share of IDT and PLX common stock, as well as cash dividends per share of IDT and PLX common stock respectively.
PLX stockholders are urged to obtain current market quotations for IDT and PLX common stock when they consider whether to tender their
shares of PLX common stock pursuant to the offer.
Even if the offer is completed, full integration of PLXs operations with
IDTs may be delayed if Pinewood does not acquire at least 90% of the issued and outstanding shares pursuant to the offer.
The offer is subject to a condition that, before the expiration of the offer, there shall have been validly tendered and not properly withdrawn at least a majority of PLX common stock on a fully diluted
basis. If Pinewood acquires at least 90% of the issued and outstanding shares, the merger will be able to be effected as a short-form merger under Delaware law. A short form merger would enable IDT to complete the acquisition of PLX
without any action on the part of other PLX stockholders. If Pinewood does not acquire at least 90% of the issued and outstanding shares pursuant to the offer or the top-up option, if exercised, PLX will be required to hold a stockholder meeting
following the filing with the SEC and mailing of a proxy statement or obtain an action by written consent in lieu of such meeting with a requirement to file with the SEC and mail PLXs stockholders an information statement with information
similar to that which would be included in a proxy statement for a meeting, in order to obtain the approval of PLX stockholders to consummate the merger. Although this would not prevent the merger from occurring because Pinewood would hold
sufficient shares to approve the merger without the need for any other PLX stockholders to vote in favor of such adoption, as well as the ability to take action by written consent to approve the merger, it would delay the completion of the merger
and could delay the realization of some or all of the anticipated benefits from integrating PLXs operations with IDTs operations.
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If the value of PLXs business, together with any synergies to be achieved from its combination
with IDT, is less than the value of the cash and stock to be issued in connection with the offer and the merger, the price of IDT common stock could decrease.
It is possible that the price of the common stock of the combined company will decrease following consummation of the offer and/or the merger. To the extent that the price of the common stock declines as
a result of the belief that the value of the cash and stock to be issued in connection with the offer and the merger, plus transaction costs, is greater than the value of PLXs business, together with any synergies to be achieved from its
combination with IDT, the offer and the merger could have a dilutive effect on the value of the common stock held by IDT stockholders.
Uncertainty regarding the offer and the merger may cause customers, suppliers and channel partners to delay or defer decisions concerning IDT and
PLX and adversely affect each companys business, financial condition and operating results.
The offer and the
merger will occur only if stated conditions are met, many of which are outside the control of IDT and PLX, and both parties also have rights to terminate the merger agreement under specified circumstances. Accordingly, there may be uncertainty
regarding the completion of the offer and the merger. This uncertainty may cause customers and suppliers to delay or defer decisions concerning IDT or PLX products, which could negatively affect their respective businesses. Customers and suppliers
may also seek to change existing agreements with IDT or PLX as a result of the offer and the merger. Any delay or deferral of those decisions or changes in existing agreements could have a material adverse effect on the respective businesses of IDT
and PLX, regardless of whether the offer and the merger are ultimately completed. Moreover, diversion of management focus and resources from the day-to-day operation of the business to matters relating to the offer and the merger could have a
material adverse effect on each companys business, regardless of whether the offer and the merger are completed.
Antitrust
authorities may attempt to delay or prevent the consummation of the offer and the merger transactions.
IDT and PLX
made premerger filings under the HSR Act with the Federal Trade Commission and the Antitrust Division of the U.S. Department of Justice on May 7, 2012. Effective June 5, 2012, following consultation with the Federal Trade Commission and
PLX, IDT voluntarily withdrew its Notification and Report Form with respect to the offer and the merger. IDT re-filed its Notification and Report form on June 6, 2012. On July 6, 2012, IDT and PLX each received a request for additional
information from the FTC, or the second request. This second request extends the waiting period applicable to the exchange offer under the HSR Act, which was set to expire on July 6, 2012 at 11:59 p.m., New York City Time. The
waiting period is extended until 11:59 p.m., New York City time, on the thirtieth day (or the next business day) after both IDT and PLX substantially comply with the second request, as specified by the HSR Act and the implementing rules, unless
further extended by agreement with the parties. Until the required governmental approvals pursuant to the HSR Act are obtained, IDT may not accept any shares of PLX common stock that are tendered and not properly withdrawn pursuant to the terms of
the offer. The completion of the offer is conditioned upon the receipt of all required governmental approvals pursuant to the HSR Act for IDTs acquisition of PLX and no court or other governmental authority prohibiting the consummation of the
offer or the merger transactions. PLX stockholders should be aware that all required governmental approvals may not be timely obtained and could result in a significant delay in the consummation of the offer or the merger transactions. In the third
quarter of 2012, IDT and PLX signed a timing agreement with the FTC extending the post-compliance waiting period from 30 to 45 days.
A lawsuit has been filed and other lawsuits may be filed against PLX, the members of its board of directors, IDT and Pinewood challenging the
proposed offer and the merger transactions, and an adverse judgment in any such lawsuit may prevent the offer from being consummated or the merger transactions from becoming effective or from being consummated or becoming effective within the
expected timeframe, and may result in costs to PLX and IDT.
PLX stockholders, as plaintiffs, may initiate stockholder
class action lawsuits seeking, among other things, to enjoin the offer and the merger transactions. One of the conditions to the consummation of the offer is no court
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or governmental entity has issued a judgment, order, injunction, rule or decree, or taken any other action binding upon or applicable to the parties which would make illegal, restrain, or
prohibit the consummation of the transactions contemplated by the merger agreement.
One such lawsuit was filed to date on May
14, 2012, and is described below under Certain Legal MattersStockholder Litigation Relating to the Offer and the Merger.
PLX has obligations under certain circumstances to hold harmless and indemnify each of the defendant directors against judgments, fines, settlements and expenses related to claims against such directors
and otherwise to the fullest extent permitted under Delaware law and PLXs certificate of incorporation and bylaws. Such obligations may apply to any such stockholder class action lawsuits, if initiated. There can be no assurance that PLX and
the other defendants in these lawsuits will be successful in their defenses. An unfavorable outcome in any of the lawsuits could prevent or delay the consummation of the offer and the mergers and result in substantial costs to PLX or IDT or both.
Any delay or failure in the completion of the transaction with IDT could materially and adversely affect PLXs results of
operations and PLXs stock price.
If the offer is not consummated or the merger is not completed for any reason:
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PLX will remain liable for significant transaction costs relating to the offer and the merger;
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under some circumstances, PLX may have to pay a termination fee to IDT of $13.2 million, or if such termination occurs under such circumstances
prior to the no-shop period start date or in connection with a transaction to be entered into with an excluded party (as defined in the merger agreement), a termination fee of $6.27 million, plus any expenses incurred by IDT in seeking the
reimbursement of such termination fee; see The Merger AgreementTermination of the Merger AgreementTermination Fee beginning on page 96 of this prospectus;
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any operational investments that PLX may delay due to the pending transaction would need to be made, potentially on an accelerated time frame, which
could then prove costly and more difficult to implement;
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the market price of PLXs common stock may decline to the extent that the current market price reflects a market belief that the offer and the
merger will be completed; and
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if the offer and the merger transactions are not completed, IDT and PLX would fail to derive the benefits expected to result from the offer and the
merger transactions.
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Additionally, the announcement of the pending offer and merger may lead to uncertainty
for PLXs employees and its customers and suppliers. This uncertainty may mean:
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the attention of PLXs management and employees may be diverted from day-to-day operations; and
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PLXs ability to attract new employees and retain existing employees may be harmed by uncertainties associated with the merger.
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The occurrence of any of these events individually or in combination could materially and adversely affect
PLXs results of operations and stock price.
Consummation of the offer may adversely affect the liquidity of the shares of PLX
common stock not tendered in the offer.
If the offer is completed but not all shares of PLX common stock are tendered
in the offer, the number of PLX stockholders and the number of shares of PLX common stock publicly held will be greatly reduced. As a result, the closing of the offer could adversely affect the liquidity and market value of the remaining shares of
PLX common stock held by the public.
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The merger agreement limits PLXs ability to pursue alternative transactions, and in certain
instances requires payment of a termination fee, which could deter a third party from proposing an alternative transaction.
The merger agreement has terms and conditions that allow PLX to solicit and pursue alternative transactions for a defined period and subject to conditions that keep IDT informed about alternative
transactions and allow IDT to match defined competing proposals. These go shop and no shop provisions limit PLXs ability to discuss, facilitate or commit to an alternative transaction after a designated thirty (30) day
go shop period. See The Merger AgreementCovenantsLimited Solicitation of Acquisition Proposals beginning on page 88 of this prospectus. In addition, under specified circumstances, PLX is required to pay a
termination fee of $13.2 million if the merger agreement is terminated or, if such termination occurs under such circumstances prior to the no-shop period start date or in connection with a transaction to be entered into with an excluded party (as
defined in the merger agreement), $6.27 million.
Although the go shop provision is intended to provide PLX the
ability to conduct a reasonable market check on the adequacy of the consideration payable to PLX stockholders pursuant to the merger agreement, it is possible that these or other provisions of the merger agreement might discourage a
potential competing acquiror that might have an interest in acquiring all or a significant part of PLX from considering or proposing an acquisition, or might result in a potential competing acquiror proposing to pay a lower per share price to
acquire PLX than it might otherwise have proposed to pay.
Officers and directors of PLX have potential conflicts of interest in the
transaction.
PLX stockholders should be aware of potential conflicts of interest and the benefits available to PLX
directors when considering PLXs board of directors recommendation to participate in the offer and approve the merger. PLX officers and directors have compensatory arrangements that may provide them with interests in the transaction that
are different from, or in addition to, the interests of PLX stockholders, including stock options held by PLX directors that are to be cancelled for cash payments under the merger agreement, stock options held by PLX officers that are expected to be
assumed by IDT in connection with the merger agreement, and a PLX severance plan for PLX officers that provides certain double trigger severance benefits consisting of cash payments, continued benefits and accelerated vesting of options
if there is a change in control of PLX (which includes the merger) and a defined termination of the officers employment occurs within two years following the change in control. These and other potentially conflicting interests are described in
further detail in Interests of Certain Persons in the Offer and the MergerInterests of the PLX Directors and Officers beginning on page 72.
In addition, IDT has agreed to indemnify former PLX directors and executive officers for actions or events occurring prior to the consummation of the merger. See Interests of Certain Persons in the
Offer and the MergerInterests of the PLX Directors and Officers beginning on page 72.
PLX stockholders will have a reduced
ownership and voting interest after the merger.
After completion of the merger, PLX stockholders will own a
significantly smaller percentage of the combined company and its voting stock than they currently own of PLX. Following completion of the merger, PLX stockholders will own approximately 14.1% of the combined company based on the number of shares of
IDT common stock and PLX common stock outstanding as of November 7, 2012. Consequently, PLX stockholders will not be able to exercise as much influence over the management and policies of the combined company as they currently exercise over PLX.
IDT and PLX will incur significant costs associated with the offer and the merger transactions.
IDT and PLX expect to incur significant costs associated with transaction fees, professional services and other costs related to the offer
and the merger transactions. IDT estimates that it will incur approximately $13.8 million in transaction costs related to the offer and the merger transactions. PLX estimates that PLX will incur direct transaction
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costs of approximately $9.0 million in connection with the transactions, approximately $6.5 million of which is not contingent upon consummation of the transaction. IDT and PLX believe the
combined entity may incur additional charges to operations, which are not currently reasonably estimable, in the quarter in which the merger is completed or the following quarters, to reflect costs associated with integrating the two companies.
There can be no assurance that the combined company will not incur additional material charges in subsequent quarters to reflect additional costs associated with the merger and the integration of the two companies.
The unaudited pro forma financial information included in this document may not be indicative of what IDTs actual financial position or
results of operations would have been.
The unaudited pro forma financial information in this document is presented for
illustrative purposes only and is not necessarily indicative of what IDTs actual financial position or results of operations would have been had the merger been completed on the dates indicated. The unaudited pro forma financial information
reflects preliminary adjustments determined by IDT management to allocate the purchase price of PLXs net assets. Subsequent to the merger completion date, IDT will retain a valuation professional to assist management with the determination of
the fair value of select tangible and intangible assets. Based on this determination and as other information becomes available, there will be further refinements to the purchase price allocation. Accordingly, the final purchase accounting
adjustments may differ materially from the pro forma adjustments reflected in this document, and in particular, we would expect some amounts to be allocated to intangible assets that are currently allocated to goodwill as described below. See
Unaudited Pro Forma Condensed Combined Financial Statements beginning on page 112 for more information.
The offer and the
merger may be fully taxable to PLX stockholders for U.S. federal income tax purposes.
If the LLC merger is not
completed, either in accordance with the terms of the merger agreement or otherwise, or if the offer, the merger and the LLC merger, taken together, fail to qualify as a reorganization for U.S. federal income tax purposes (including if
the Internal Revenue Service, or the IRS, successfully challenges the treatment of the offer and the merger transactions, taken together, as a reorganization), the receipt of shares of IDT common stock and cash for shares of PLX common stock in the
merger will be fully taxable to PLX stockholders for U.S. federal income tax purposes.
Pursuant to the merger agreement,
the LLC merger will not be completed, and the merger will be structured as a fully taxable transaction to PLX stockholders for U.S. federal income tax purposes, if any of the conditions described in the first paragraph under the section entitled
The OfferMaterial U.S. Federal Income Tax ConsequencesTransaction Structure on page 62 of this prospectus is not satisfied. Accordingly, we cannot assure you that the LLC merger will occur or that the transaction will not be
fully taxable to you. As a result, you should consider the possibility that the offer and the merger will be a fully taxable transaction for U.S. federal income tax purposes.
PLX stockholders are strongly urged to consult their tax advisors to determine the specific tax consequences to them of the offer and the
merger, including any U.S. federal, state or local, or non-U.S. or other tax consequences. For more information, see The OfferMaterial U.S. Federal Income Tax Consequences beginning on page 61 of this prospectus.
Risks Related to IDT and the Combined Company
The integration of the businesses and operations of IDT and PLX involves risks, and the failure to integrate successfully the businesses and operations in the expected time frame may adversely
affect the future results of the combined company.
The failure of the combined company to meet the challenges involved
in integrating the operations of IDT and PLX successfully or to otherwise realize any of the anticipated benefits of the merger could seriously harm the results of operations of the combined company. The ability of the combined company to realize
the benefits
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of the merger will depend in part on the timely integration of organizations, operations, procedures, policies and technologies, as well as the harmonization of differences in the business
cultures of the two companies and retention of key personnel. The integration of the companies will be a complex, time-consuming and expensive process that, even with proper planning and implementation, could significantly disrupt the businesses of
IDT and PLX. The challenges involved in this integration include the following:
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implementing our distribution, point of sale and inventory management systems;
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combining our respective product offerings;
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preserving customer, supplier and other important relationships of both IDT and PLX and resolving potential conflicts that may arise;
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minimizing the diversion of management attention from ongoing business concerns;
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addressing differences in the business cultures of IDT and PLX to maintain employee morale and retain key employees; and
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coordinating and combining geographically diverse operations, relationships and facilities, which may be subject to additional constraints imposed by
distance and local laws and regulations.
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The combined company may not successfully integrate the operations
of IDT and PLX in a timely manner, or at all, and the combined company may not realize the anticipated benefits or synergies of the merger to the extent, or in the time frame, anticipated. The anticipated benefits and synergies are based on
projections and assumptions, not actual experience, and assume a successful integration. In addition to the integration risks discussed above, the combined companys ability to realize these benefits and synergies could be adversely affected by
practical or legal constraints on its ability to combine operations. If IDT fails to manage the integration of these businesses effectively, its growth strategy and future profitability could be negatively affected, and it may fail to achieve the
intended benefits of the offer and the merger transactions.
The offer and the merger transactions may not be accretive and may cause
dilution to the combined companys earnings per share, which may negatively affect the price of IDT common stock following consummation of the offer and the merger.
IDT currently anticipates that the offer and the merger will be accretive to the non-GAAP earnings per share of the combined company by
the first fiscal quarter of 2014, assuming the offer and the merger are consummated as early as IDTs third fiscal quarter of 2013, with more significant accretion throughout fiscal year 2014. This expectation is based on preliminary estimates
and assumes certain synergies expected to be realized by the combined company during such time. Such estimates and assumptions could materially change due to additional transaction-related costs, the failure to realize any or all of the benefits
expected in the transaction or other factors beyond the control of IDT and PLX. All of these factors could delay, decrease or eliminate the expected accretive effect of the offer and the merger transactions and cause resulting dilution to the
combined companys earnings per share which could negatively affect the price of the IDT common stock.
We currently expect to take
on significant debt to finance the transactions contemplated by the merger agreement, and such increased debt levels could adversely affect its business, cash flow and results of operations.
We currently expect to borrow up to $185 million in connection with the consummation of the offer and the merger, which will significantly
increase IDTs outstanding indebtedness and interest expense. In order to provide the merger consideration, prepay PLXs bank indebtedness, and pay related fees and expenses, we currently expect to sell shares of preferred stock of one of
our wholly-owned subsidiaries to Bank of America, N.A., or Bank of America, pursuant to a master repurchase agreement we signed with Bank of America in June 2011, which we refer to as the repurchase agreement. In addition, we
have arranged commitments for $50 million of new financing with J.P. Morgan Securities LLC and J.P. Morgan Chase Bank, N.A., collectively J.P. Morgan, in connection with the offer and the merger, which we refer to as the J.P.
Morgan credit facility.
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The degree to which we are leveraged under the repurchase agreement and the credit facility
will increase our interest expense and could have other important consequences, such as:
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increasing our vulnerability to adverse economic and industry conditions;
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requiring us to dedicate a significant portion of our cash flow from operations and other capital resources to principal and interest, thereby reducing
our ability to fund working capital, capital expenditures and other cash requirements;
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limiting our flexibility to plan for, or react to, changes and opportunities in, our industry, which may place us at a competitive disadvantage; and
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limiting our ability to incur additional debt or obtain other additional financing on acceptable terms, if at all.
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These financing arrangements, and any restrictions included therein, may have an adverse impact on IDTs business, cash flow and results of
operations, and could adversely affect the value of IDTs common stock.
In addition, the terms of the financing
obligations under the repurchase agreement and the J.P. Morgan credit facility include restrictions, such as affirmative and negative covenants, conditions to the transactions and the pledge of security interests in certain of IDTs assets. A
failure to comply with these restrictions could result in a default under the repurchase agreement or the J.P. Morgan credit facility or could require us to obtain waivers from Bank of America or J.P. Morgan for failure to comply with these
restrictions. In addition, our ability to meet our obligations, including any repayment obligations, under the repurchase agreement and the J.P. Morgan credit facility will depend on our future performance, which will be subject to financial,
business, and other factors affecting our operations, many of which are beyond our control. The occurrence of a default that remains uncured or the inability to secure a necessary consent or waiver could have a material adverse effect on IDTs
business, financial condition or results of operations.
Risks related to the combined company and unanticipated fluctuations in the
combined companys quarterly operating results could affect the combined companys stock price.
Each of IDT
and PLX believes that quarter-to-quarter comparisons of its financial results are not necessarily meaningful indicators of the future operating results of the combined company and should not be relied on as an indication of future performance. If
the combined companys quarterly operating results fail to meet the expectations of analysts, the trading price of IDT common stock following the offer and the merger could be negatively affected. IDT and PLX cannot be certain that the business
strategy of the combined company will be successful or that it will successfully manage these risks. If the combined company fails to adequately address any of these risks or difficulties, its business would likely suffer.
IDTs acquisition of PLX could trigger certain provisions contained in PLXs agreements with third parties that could permit such parties
to terminate those agreements.
PLX may be a party to agreements that permit a counter-party to terminate an agreement
or receive payments because the offer or the merger transactions would cause a default or violate an anti-assignment, change of control or similar clause in such agreement. If this happens, IDT may have to seek to replace that agreement with a new
agreement or make additional payments under such agreement. However, IDT may be unable to replace a terminated agreement on comparable terms or at all. Depending on the importance of such agreement to PLXs business, the failure to replace a
terminated agreement on similar terms or at all, and requirements to pay additional amounts, may increase the costs to IDT of operating PLXs business or prevent IDT from operating PLXs business.
Global economic conditions, including those related to the credit markets, may adversely affect our business and results of operations.
Adverse changes in global financial markets and rapidly deteriorating business conditions in the worlds
developed economies in late 2008 and the first half of calendar year 2009 resulted in a significant global
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economic recession. Continuing concerns about the impact of high energy costs, geopolitical issues, the availability and cost of credit, the U.S. mortgage market, a declining real estate market
in the U.S. and sovereign debt crises in Europe and the U.S. have contributed to instability in both U.S. and international capital and credit markets, weakened demand and diminished expectations for the U.S. and global economy. These conditions,
and the resulting low business and consumer confidence, and high unemployment have contributed to substantial volatility in global capital markets and uncertain demand for our products throughout fiscal 2010, fiscal 2011, and in fiscal 2012. It is
difficult for our customers, our vendors, and us to accurately forecast and plan future business activities in this economic environment.
The economic slowdown resulted in reduced customer spending for semiconductors and weakened demand for our products, which had a negative impact on our revenue, gross profit, results of operations and
cash flows during fiscal 2010, 2011 and 2012. Global credit markets continue to be volatile and sustainable improvement in global economic activity is uncertain. Should the rate of global economic growth falter, customer demand for our products may
continue to decline, which is likely to have a negative impact on our revenue, gross profit, results of operations and cash flows. Reduced customer spending and weakened demand may drive the semiconductor industry to reduce product pricing, which
would also have a negative impact on our revenue, gross profit and results of operations and cash flows. In addition, the semiconductor industry has traditionally been highly cyclical and has often experienced significant downturns in connection
with, or in anticipation of, deterioration in general economic conditions and we cannot accurately predict how severe and prolonged any downturn might be.
The cyclicality of the semiconductor industry exacerbates the volatility of our operating results.
The semiconductor industry is highly cyclical. The semiconductor industry has experienced significant downturns, often in connection with product cycles of both semiconductor companies and their
customers, but also related to declines in general economic conditions. These downturns have been characterized by volatile customer demand, high inventory levels and accelerated erosion of average selling prices. Any future economic downturns could
materially and adversely affect our business from one period to the next relative to demand and product pricing. In addition, the semiconductor industry has experienced periods of increased demand, during which we may experience internal and
external manufacturing constraints. We may experience substantial changes in future operating results due to the cyclical nature of the semiconductor industry.
The market price of our common stock may be volatile and could expose us to securities class action litigation.
The stock market and the price of our common stock may be subject to wide fluctuations based on general economic and market conditions. The market price for our common stock may also be affected by our
ability to meet analysts expectations. Failure to meet such expectations, even by slight amounts, could have an adverse effect on the market price of our common stock.
In addition, stock market volatility has had a significant effect on the market prices of securities issued by many companies for reasons unrelated to the operating performance of these companies.
Downturns in the stock market may cause the price of our common stock to decline. In the past, following periods of volatility in the market price of a companys securities, securities class action litigation has often been instituted against
such a company. If similar litigation were instituted against us, it could result in substantial costs and a diversion of our managements attention and resources, which could have an adverse effect on our business.
If we are unable to execute our business strategy successfully, our revenues and profitability may be adversely affected.
Our future financial performance and success are largely dependent on our ability to execute our business strategy successfully. Our
present business strategy to be a leading provider of essential mixed signal semiconductor solutions will be affected by, without limitation (1) our ability to continue to aggressively manage, maintain and refine our product portfolio including
focus on the development and growth of new applications; (2) our ability to continue to maintain existing customers, aggressively pursue and win new customers; (3) our ability to successfully develop, manufacture and market new products in
a timely manner;
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(4) our ability to develop new products in a more efficient manner; (5) our ability to sufficiently differentiate and enhance of our products; (6) our ability to successfully
deploy R&D investment in the areas of displays, silicon timing, power management, signal integrity and radio frequency and (7) our ability to rationalize our manufacturing operations including the transition to wholly outsourced wafer
fabrication operations.
We cannot assure you that we will successfully implement our business strategy or that implementing
our strategy will sustain or improve our results of operations. In particular, we cannot assure you that we will be able to build our position in markets with high growth potential, increase our volume or revenue, rationalize our manufacturing
operations or reduce our costs and expenses.
Our business strategy is based on our assumptions about the future demand for
our current products and the new products and applications that we are developing and on our ability to produce our products profitably. Each of these factors is subject to one or more of the risk factors set forth in this prospectus. Several risks
that could affect our ability to implement our business strategy are beyond our control. In addition, circumstances beyond our control and changes in our business or industry may require us to change our business strategy.
Our results are dependent on the success of new products.
The markets we serve are characterized by competition, rapid technological change, evolving standards, short product life cycles and continuous erosion of average selling prices. Consequently, our
future success will be highly dependent upon our ability to continually develop new products using the latest and most cost-effective technologies, introduce our products in commercial quantities to the marketplace ahead of the competition and have
our products selected for inclusion in leading system manufacturers products. In addition, the development of new products will continue to require significant R&D expenditures. If we are unable to successfully develop, produce and
market new products in a timely manner, have our products available in commercial quantities ahead of competitive products or have our products selected for inclusion in products of systems manufacturers and sell them at gross margins comparable to
or better than our current products, our future results of operations could be adversely affected. In addition, our future revenue growth is also partially dependent on our ability to penetrate new markets in which we have limited experience and
where competitors are already entrenched. Even if we are able to develop, produce and successfully market new products in a timely manner, such new products may not achieve market acceptance. The above described events could have a variety of
negative effects on our competitive position and our financial results, such as reducing our revenue, increasing our costs, lowering our gross margin percentage, and ultimately leading to impairment of assets.
Sales of shares of our common stock eligible for future sale, including the common stock issued to PLX stockholders, could adversely affect our
share price.
All of the shares of our common stock currently held by our affiliates may be sold in reliance upon the
exemptive provisions of Rule 144 of the Securities Act of 1933, as amended, which is referred to throughout this prospectus as the Securities Act, subject to certain volume and other conditions imposed by such rule. Furthermore, all of the shares of
our common stock issued to PLX stockholders upon completion of the offer and the merger that are not held by our affiliates may be sold immediately upon receipt. We cannot predict the effect, if any, which future sales of shares of our common stock
or the availability of such shares for sale will have on the market price of our common stock prevailing from time to time. Sales of substantial amounts of our common stock, or the perception that such sales might occur, could adversely affect the
prevailing market price of our common stock. We believe the current stockholders of PLX include certain arbitrage and investment firms who may be more likely to quickly sell the shares of IDT common stock received in the offer or the merger.
In order to be successful, the combined company will need to retain and motivate key employees, which may be more difficult in light of
uncertainty regarding the merger, and failure to do so could seriously harm the combined company.
In order to be
successful, the combined company will need to retain and motivate executives and other key employees. Experienced management and technical personnel are in high demand and competition for their
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talents is intense. Employee retention may be a particularly challenging issue in connection with the merger. Employees of IDT or PLX may experience uncertainty about their future role with the
combined company until or after strategies with regard to the combined company are announced or executed. The combined company also must continue to motivate employees and keep them focused on the strategies and goals of the combined company, which
may be particularly difficult due to the potential distractions of the merger.
Risks Related to PLX
Under this caption Risks Related to PLX, use of our, we, us and similar
words refers solely to PLX as an independently operated company, and the risks set forth below may also continue to impact the PLX business if the merger is completed.
Global economic conditions may continue to have an adverse effect on our businesses and results of operations.
In late 2008 and 2009, the severe tightening of the credit markets, turmoil in the financial markets, and weakening global economy contributed to slowdowns in the industries in which we operate. Economic
uncertainty exacerbated negative trends in spending and caused certain customers to push out, cancel, or refrain from placing orders, which reduced revenue. We have seen market conditions improve since the second half of 2009 and throughout most of
2010; however, we are seeing that the rate of growth has slowed as inventory levels have balanced themselves out in 2011 and into 2012. Difficulties in obtaining capital and uncertain market conditions may lead to the inability of some customers to
obtain affordable financing, resulting in lower sales. Customers with liquidity issues may lead to additional bad debt expense. These conditions may also similarly affect key suppliers, which could affect their ability to deliver parts and result in
delays in the availability of product. Further, these conditions and uncertainty about future economic conditions make it challenging for us to forecast our operating results, make business decisions, and identify the risks that may affect our
business, financial condition and results of operations. In addition, we maintain an investment portfolio that is subject to general credit, liquidity, market and interest rate risks that may be exacerbated by deteriorating financial market
conditions and, as a result, the value and liquidity of the investment portfolio could be negatively impacted and lead to impairment. If the current improving economic conditions are not sustained or begin to deteriorate again, or if we are not able
to timely and appropriately adapt to changes resulting from the difficult macroeconomic environment, our business, financial condition or results of operations may be materially and adversely affected.
Our operating results may fluctuate significantly due to factors which are not within our control.
Our quarterly operating results have fluctuated significantly in the past and are expected to fluctuate significantly in the future based
on a number of factors, many of which are not under our control. Our operating expenses, which include product development costs and selling, general and administrative expenses, are relatively fixed in the short-term. If our revenues are lower than
we expect because we sell fewer semiconductor devices, delay the release of new products or the announcement of new features, or for other reasons, we may not be able to quickly reduce our spending in response.
Other circumstances that can affect our operating results include:
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the timing of significant orders, order cancellations and reschedulings;
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the loss of one or more significant customers;
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introduction of products and technologies by our competitors;
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the availability of production capacity at the fabrication facilities that manufacture our products;
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our significant customers could lose market share that may affect our business;
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integration of our product functionality into our customers products;
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our ability to develop, introduce and market new products and technologies on a timely basis;
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unexpected issues that may arise with devices in production;
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shifts in our product mix toward lower margin products;
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changes in our pricing policies or those of our competitors or suppliers, including decreases in unit average selling prices of our products;
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the availability and cost of materials to our suppliers;
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general macroeconomic conditions; and
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These
factors are difficult to forecast, and these or other factors could adversely affect our business. Any shortfall in our revenues would have a direct impact on our business. In addition, fluctuations in our quarterly results could adversely affect
the market price of our common stock in a manner unrelated to our long-term operating performance.
The cyclical nature of the
semiconductor industry may lead to significant variances in the demand for our products.
In the past, the
semiconductor industry has been characterized by significant downturns and wide fluctuations in supply and demand. Also, during this time, the industry has experienced significant fluctuations in anticipation of changes in general economic
conditions. This cyclicality has led to significant variances in product demand and production capacity. It has also accelerated erosion of average selling prices per unit on some of our products. We may experience periodic fluctuations in our
future financial results because of industry-wide conditions.
Because a substantial portion of our net sales is generated by a small
number of large customers, if any of these customers delays or reduces its orders, our net revenues and earnings will be harmed.
Historically, a relatively small number of customers have accounted for a significant portion of our net revenues in any particular period.
We have no long-term volume purchase commitments from any of our significant customers. We cannot be certain that our current customers
will continue to place orders with us, that orders by existing customers will continue at the levels of previous periods or that we will be able to obtain orders from new customers. In addition, some of our customers supply products to end-market
purchasers and any of these end-market purchasers could choose to reduce or eliminate orders for our customers products. This would in turn lower our customers orders for our products.
We anticipate that sales of our products to a relatively small number of customers will continue to account for a significant portion of
our net sales. Due to these factors, the following have in the past and may in the future reduce our net sales or earnings:
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the reduction, delay or cancellation of orders from one or more of our customers;
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the selection of competing products or in-house design by one or more of our current customers;
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the loss of one or more of our current customers; or
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a failure of one or more of our current customers to pay our invoices.
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Intense competition in the markets in which we operate may reduce the demand for or prices of our products.
Competition in the semiconductor industry is intense. If our main target market, the microprocessor-based systems market, continues to grow, the number of competitors may increase significantly. In
addition, new semiconductor technology may lead to new products that can perform similar functions as our products. Some of our competitors and other semiconductor companies may develop and introduce products that integrate into a single
semiconductor device the functions performed by our semiconductor devices. This would eliminate the need for our products in some applications.
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In addition, competition in our markets comes from companies of various sizes, many of which
are significantly larger and have greater financial and other resources than we do and thus can better withstand adverse economic or market conditions. Therefore, we cannot assure you that we will be able to compete successfully in the future
against existing or new competitors, and increased competition may adversely affect our business. See BusinessProducts, and Competition in Part I of Item I of our Form 10-K for the year ended December 31,
2011.
In addition, we must continuously develop our products using new process technology with smaller geometries to remain
competitive on a cost and performance basis. Migrating to new technologies is a challenging task requiring new design skills, methods and tools and is difficult to achieve. Any failure on our part to successfully complete such migrations or to
provide cost-competitive, high performance products could materially and adversely affect our business, results of operations and financial condition.
Our independent manufacturers may not be able to meet our manufacturing requirements.
We do not manufacture any of our semiconductor devices. Therefore, we are referred to in the semiconductor industry as a fabless producer of semiconductors. Consequently, we depend upon third
party manufacturers to produce semiconductors that meet our specifications. We currently have third party manufacturers located in China, Japan, Korea, Malaysia, Singapore and Taiwan, that can produce semiconductors which meet our needs. However, as
the semiconductor industry continues to progress towards smaller manufacturing and design geometries, the complexities of producing semiconductors will increase. Decreasing geometries may introduce new problems and delays that may affect product
development and deliveries. Due to the nature of the semiconductor industry and our status as a fabless semiconductor company, we could encounter fabrication-related problems that may affect the availability of our semiconductor devices, delay our
shipments or may increase our costs.
Only a small number of our semiconductor devices are currently manufactured by more than
one supplier. We place our orders on a purchase order basis and do not have a long term purchase agreement with any of our existing suppliers. In the event that the supplier of a semiconductor device was unable or unwilling to continue to
manufacture our products in the required volume, we would have to identify and qualify a substitute supplier. Introducing new products or transferring existing products to a new third party manufacturer or process may result in unforeseen device
specification and operating problems. These problems may affect product shipments and may be costly to correct. Silicon fabrication capacity may also change, or the costs per silicon wafer may increase. Manufacturing-related problems may have a
material adverse effect on our business.
Lower demand for our customers products will result in lower demand for our products.
Demand for our products depends in large part on the development and expansion of the high-performance
microprocessor-based systems markets including networking and telecommunications, enterprise and consumer storage, imaging and industrial applications. The size and rate of growth of these microprocessor-based systems markets may in the future
fluctuate significantly based on numerous factors. These factors include the adoption of alternative technologies, capital spending levels and general economic conditions. Demand for products that incorporate high-performance microprocessor-based
systems may not grow.
Our lengthy sales cycle can result in uncertainty and delays with regard to our expected revenues.
Our customers typically perform numerous tests and extensively evaluate our products before incorporating them into
their systems. The time required for test, evaluation and design of our products into a customers equipment can range from six to twelve months or more. It can take an additional six to twelve months or more before a customer commences volume
shipments of equipment that incorporates our products. Because of this lengthy sales cycle, we may experience a delay between the time when we increase expenses for research and development and sales and marketing efforts and the time when we
generate higher revenues, if any, from these expenditures.
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In addition, the delays inherent in our lengthy sales cycle raise additional risks of
customer decisions to cancel or change product plans. When we achieve a design win, there can be no assurance that the customer will ultimately ship products incorporating our products. Our business, results of operations and financial condition
could be materially and adversely affected if a significant customer curtails, reduces or delays orders during our sales cycle or chooses not to release products incorporating our products.
Failure to have our products designed into the products of electronic equipment manufacturers will result in reduced sales.
Our future success depends on electronic equipment manufacturers that design our semiconductor devices into their systems. We must
anticipate market trends and the price, performance and functionality requirements of current and potential future electronic equipment manufacturers and must successfully develop and manufacture products that meet these requirements. In addition,
we must meet the timing requirements of these electronic equipment manufacturers and must make products available to them in sufficient quantities. These electronic equipment manufacturers could develop products that provide the same or similar
functionality as one or more of our products and render these products obsolete in their applications.
We do not have
purchase agreements with our customers that contain minimum purchase requirements. Instead, electronic equipment manufacturers purchase our products pursuant to short-term purchase orders that may be canceled without charge. We believe that in order
to obtain broad penetration in the markets for our products, we must maintain and cultivate relationships, directly or through our distributors, with electronic equipment manufacturers that are leaders in the embedded systems markets. Accordingly,
we will incur significant expenditures in order to build relationships with electronic equipment manufacturers prior to volume sales of new products. If we fail to develop relationships with additional electronic equipment manufacturers to have our
products designed into new microprocessor-based systems or to develop sufficient new products to replace products that have become obsolete, our business, results of operations and financial condition would be materially and adversely affected.
Defects in our products could increase our costs and delay our product shipments.
Our products are complex. While we test our products, these products may still have errors, defects or bugs that we find only after
commercial production has begun. We have experienced errors, defects and bugs in the past in connection with new products.
Our customers may not purchase our products if the products have reliability, quality or compatibility problems. This delay in acceptance
could make it more difficult to retain our existing customers and to attract new customers. Moreover, product errors, defects or bugs could result in additional development costs, diversion of technical and other resources from our other development
efforts, claims by our customers or others against us, or the loss of credibility with our current and prospective customers. Moreover, the additional time required to correct defects may cause delays in product shipments and result in lower
revenues. We may also need to spend significant amounts of capital and resources to address and fix problems in new products.
Failure
of our products to gain market acceptance would adversely affect our financial condition.
We believe that our growth
prospects depend upon our ability to gain customer acceptance of our products and technology. Market acceptance of products depends upon numerous factors, including compatibility with other products, adoption of relevant interconnect standards,
perceived advantages over competing products and the level of customer service available to support such products. There can be no assurance that growth in sales of new products will continue or that we will be successful in obtaining broad market
acceptance of our products and technology.
We expect to spend a significant amount of time and resources to develop new
products and refine existing products. In light of the long product development cycles inherent in our industry, these expenditures will be made well in advance of the prospect of deriving revenues from the sale of any new products. Our ability to
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commercially introduce and successfully market any new products is subject to a wide variety of challenges during this development cycle, including start-up bugs, design defects and other matters
that could delay introduction of these products to the marketplace. In addition, since our customers are not obligated by long-term contracts to purchase our products, our anticipated product orders may not materialize, or orders that do materialize
may be cancelled or may be placed for a smaller volume of products than anticipated. As a result, if we do not achieve market acceptance of new products, we may not be able to realize sufficient sales of our products in order to recoup research and
development expenditures. The failure of any of our new products to achieve market acceptance would materially and adversely affect our business, results of operations and financial condition.
A large portion of our revenues is derived from sales to third-party distributors who may terminate their relationships with us at any time.
We depend on distributors to sell a significant portion of our products. For the nine months ended
September 30, 2012 and 2011, sales through distributors accounted for approximately 89% and 90%, respectively, of our continuing net revenues. Some of our distributors also market and sell competing products. Distributors may terminate their
relationships with us at any time. Our future performance will depend in part on our ability to attract additional distributors that will be able to market and support our products effectively, especially in markets in which we have not previously
distributed our products. We may lose one or more of our current distributors or may not be able to recruit additional or replacement distributors. The loss of one or more of our major distributors could have a material adverse effect on our
business, as we may not be successful in servicing our customers directly or through manufacturers representatives.
The
demand for our products depends upon our ability to support evolving industry standards.
A majority of our revenues
are derived from sales of products, which rely on the PCI Express, PCI, PCI-X, Serial ATA, Ethernet, 1394 and USB standards. If markets move away from these standards and begin using new standards, we may not be able to successfully design and
manufacture new products that use these new standards. There is also the risk that new products we develop in response to new standards may not be accepted in the market. In addition, these standards are continuously evolving, and we may not be able
to modify our products to address new specifications. Any of these events would have a material adverse effect on our business, results of operations and financial condition.
We must make significant research and development expenditures before we are able to generate revenues from products.
To establish market acceptance of a new semiconductor device, we must dedicate significant resources to research and development, production and sales and marketing. We incur substantial costs in
developing, manufacturing and selling a new product, which often significantly precede meaningful revenues from the sale of this product. Consequently, new products can require significant time and investment to achieve profitability. Investors
should understand that our efforts to introduce new semiconductor devices or other products or services may not be successful or profitable. In addition, products or technologies developed by others may render our products or technologies obsolete
or noncompetitive.
We record as expenses the costs related to the development of new semiconductor devices and other products
as these expenses are incurred. As a result, our profitability from quarter to quarter and from year to year may be adversely affected by the number and timing of our new product launches in any period and the level of acceptance gained by these
products.
We could lose key personnel due to competitive market conditions and attrition.
Our success depends to a significant extent upon our senior management and key technical and sales personnel. The loss of one or more of
these employees could have a material adverse effect on our business. We do not have employment contracts with any of our executive officers.
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Our success also depends on our ability to attract and retain qualified technical, sales and
marketing, customer support, financial and accounting, and managerial personnel. Competition for such personnel in the semiconductor industry is intense, and we may not be able to retain our key personnel or to attract, assimilate or retain other
highly qualified personnel in the future. In addition, we may lose key personnel due to attrition, including health, family and other reasons. We have experienced, and may continue to experience, difficulty in hiring and retaining candidates with
appropriate qualifications. If we do not succeed in hiring and retaining candidates with appropriate qualifications, our business could be materially adversely affected.
The successful marketing and sales of our products depend upon our third party relationships, which are not supported by written agreements.
When marketing and selling our semiconductor devices, we believe we enjoy a competitive advantage based on the availability of development
tools offered by third parties. These development tools are used principally for the design of other parts of the microprocessor-based system but also work with our products. If these third party tool vendors cease to provide these tools for
existing products or do not offer them for our future products, we will lose this advantage, which could have a material adverse effect on our business, results of operations and financial condition. We have no written agreements with these third
parties, and these parties could choose to stop providing these tools at any time.
Our limited ability to protect our intellectual
property and proprietary rights could adversely affect our competitive position.
Our future success and competitive
position depend upon our ability to obtain and maintain proprietary technology used in our principal products. Currently, we have limited protection of our intellectual property through patents and rely instead on trade secret protection. Our
existing or future patents may be invalidated, circumvented, challenged or licensed to others, or the rights granted thereunder may not provide competitive advantages to us. In addition, our future patent applications may not be issued with the
scope of the claims sought by us, if at all. Furthermore, others may develop technologies that are similar or superior to our technology, duplicate our technology or design around the patents owned or licensed by us. In addition, effective patent,
trademark, copyright and trade secret protection may be unavailable or limited in foreign countries where we may need protection. We cannot be sure that steps taken by us to protect our technology will prevent misappropriation of the technology.
We may from time to time receive notifications of claims that we may be infringing patents or other intellectual property
rights owned by third parties.
During the course of the litigation as well as any other future intellectual property
litigations, we will incur costs associated with defending or prosecuting these matters. These litigations could also divert the efforts of our technical and management personnel, whether or not they are determined in our favor. In addition, if
it is determined in such a litigation that we have infringed the intellectual property rights of others, we may not be able to develop or acquire non-infringing technology or procure licenses to the infringing technology under reasonable terms,
which could limit our ability to sell our products and generate revenue and could also require expenditures by us of substantial time and other resources. Any of these developments would have a material adverse effect on our business, results
of operations and financial condition.
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Because we sell our products to customers outside of the United States and because our products are
incorporated with products of others that are sold outside of the United States we face foreign business, political and economic risks.
Sales outside of the United States accounted for approximately 84% of our continuing net revenues for the nine months ended September 30, 2012. In 2011 and 2010, sales outside of the United States
accounted for approximately 79% and 82% of our revenues, respectively. Sales outside of the United States may fluctuate in future periods and are expected to account for a large portion of our revenues. In addition, equipment manufacturers who
incorporate our products into their products sell their products outside of the United States, thereby exposing us indirectly to foreign risks. Further, most of our semiconductor products are manufactured outside of the United States. Accordingly,
we are subject to international risks, including:
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difficulties in managing distributors;
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difficulties in staffing and managing foreign subsidiary and branch operations;
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political and economic instability;
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foreign currency exchange fluctuations;
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difficulties in accounts receivable collections;
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potentially adverse tax consequences;
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timing and availability of export licenses;
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changes in regulatory requirements, tariffs and other barriers;
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difficulties in obtaining governmental approvals for telecommunications and other products; and
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the burden of complying with complex foreign laws and treaties.
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Because sales of our products have been denominated to date exclusively in United States dollars, increases in the value of the United
States dollar will increase the price of our products so that they become relatively more expensive to customers in the local currency of a particular country, which could lead to a reduction in sales and profitability in that country.
We may be required to record a significant charge to earnings if our goodwill or amortizable intangible assets become impaired.
Under generally accepted accounting principles, we review our amortizable intangible and long lived assets for impairment when events or
changes in circumstances indicate the carrying value may not be recoverable. Goodwill is tested for impairment annually during the fourth quarter and between annual tests in certain circumstances. Factors that may be considered a change in
circumstances, indicating that the carrying value of our goodwill, amortizable intangible assets or other long lived assets may not be recoverable, include a persistent decline in stock price and market capitalization, reduced future cash flow
estimates, and slower growth rates in our industry. We have recorded goodwill and other intangible assets related to the acquisitions of Oxford and Teranetics, and may do so in connection with any potential future acquisitions. We may be required to
record a significant charge in our financial statements during the period in which any additional impairment of our goodwill, amortizable intangible assets or other long lived assets is determined, which would adversely impact our results of
operations.
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BACKGROUND AND REASONS FOR THE OFFER AND THE MERGER
Background of the Offer and the Merger
IDT regularly reviews and evaluates potential strategic alternatives, including potential acquisitions of companies and their assets. Over
the past several years, the IDT board of directors, or the IDT board, has discussed PLX as a potential strategic acquisition target in furtherance of IDTs strategic plan, in particular, with respect to broadening solutions for data
center interconnects in cloud computing. During this period, at the direction of the IDT board, Ted Tewksbury, President and Chief Executive Officer of IDT, participated in intermittent informal conversations with Ralph Schmitt, President and Chief
Executive Officer of PLX, with respect to the companies respective strategic planning initiatives, as well as the possibility of a potential strategic transaction between the companies. Although representatives of IDT and PLX have had
historical intermittent contacts relating to the possibility of a potential strategic transaction over the past several years, the chronology below covers only the key events leading up to the Merger agreement, and does not purport to catalogue
every conversation between representatives of IDT and PLX.
On April 13, 2011, Dr. Tewksbury and Mr. Schmitt
met over breakfast, as they had from time to time since Mr. Schmitts appointment as President and Chief Executive Officer of PLX in 2008, and engaged in an informal discussion regarding the semiconductor industry in general, as well as
recent developments in PLXs and IDTs businesses and strategic outlooks. During this conversation, Dr. Tewksbury and Mr. Schmitt informally discussed possible options with respect to any viable strategic transaction that might
be further explored by IDT and PLX, including a potential strategic transaction between the two companies.
At a regularly
scheduled meeting of the IDT board on May 4, 2011, the IDT board conducted its customary review of IDTs strategic planning and initiatives, which included an update with respect to PLX and its current business and operational performance.
The IDT board discussed the merits of a potential strategic transaction with PLX, and determined that IDT management should continue to monitor PLX and revisit the analysis with respect to a potential strategic transaction at a future date.
On June 16, 2011, during a special board meeting to discuss potential acquisition initiatives, the IDT board again
discussed the possibility of a potential strategic transaction with PLX. IDTs management team provided the IDT board with an overview, based on publicly available information, of PLX and its key employees, product portfolio, financial
information, market segments and strategy, as well as a preliminary assessment of potential synergies that might result from a combination of IDTs and PLXs businesses. Following discussion of these matters, the IDT board unanimously
approved the submission of a preliminary non-binding expression of interest with respect to the acquisition of all outstanding equity of PLX at an initial price of $5.00 per share, payable in a combination of 50% cash and 50% IDT common stock. The
IDT board directed Dr. Tewksbury to deliver a preliminary non-binding expression of interest letter to PLX.
On
June 17, 2011, Dr. Tewksbury and Mr. Schmitt met over breakfast to further discuss a possible strategic transaction between IDT and PLX. Dr. Tewksbury previewed his discussion with the IDT board and the potential expression of
interest from IDT. Dr. Tewksbury specifically discussed the strategic merits of an acquisition of PLX by IDT and the general terms of IDTs potential expression of interest with respect to the acquisition of all outstanding equity of PLX
at a price of $5.00 per share. Following the discussion, Dr. Tewksbury, on behalf of IDT, handed Mr. Schmitt an unsolicited letter, or the initial proposal, to PLX, addressed to Mr. Schmitt, which set forth IDTs
preliminary non-binding expression of interest with respect to an acquisition of 100% of the outstanding equity of PLX. The initial proposal further outlined the basic terms on which Dr. Tewksbury was authorized to pursue discussions with
Mr. Schmitt regarding the potential strategic transaction. The initial proposal indicated that, subject to the satisfactory completion of due diligence, IDT was prepared to purchase all of the outstanding equity of PLX at $5.00 per share,
payable in a combination of 50% cash and 50% common stock of IDT.
On June 22, 2011, Dr. Tewksbury and
Mr. Schmitt met to discuss the response from the PLX board to the initial proposal. Mr. Schmitt indicated that the proposed transaction value was not acceptable to the PLX board
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and, further, that the PLX board would expect any proposed valuation to meet or exceed a multiple range of two or three times PLXs current stock price (which was approximately $3.30 per
share at such time). In response, Dr. Tewksbury (i) recommended a meeting with the PLX board so that he could directly discuss the potential strategic transaction, its relative merits and valuation and (ii) requested a formal response
to the IDT proposal from the PLX board. Dr. Tewksbury reiterated these requests in email correspondence later that day.
On June 24, 2011, Mr. Schmitt called Dr. Tewksbury to inform him that, following further discussion, the PLX board had
again determined not to pursue a strategic transaction with IDT at such time and was not interested in additional discussion regarding the initial proposal. Mr. Schmitt and Dr. Tewksbury agreed to continue to meet periodically to assess
any business or strategic developments that might inform future discussions with respect to the possibility of a potential strategic transaction between PLX and IDT.
On June 27, 2011, Dr. Tewksbury relayed to the IDT board the response to the initial proposal as communicated by Mr. Schmitt. The IDT board determined not to take further action at such
time. Dr. Tewksbury noted that IDT management would continue to evaluate and monitor other alternatives with respect to a potential strategic transaction with PLX in the future.
On June 30, 2011, IDT formally engaged Latham and Watkins LLP, or Latham, as outside corporate legal counsel to IDT in
connection with any potential strategic transaction with PLX.
On July 8, 2011, at the request of the IDT board, Umesh
Padval, member of the IDT board, met with Tom Riordan, member of the PLX board, to discuss the initial proposal and IDTs interest in a potential strategic transaction. Mr. Riordan reiterated to Mr. Padval that the PLX board was not
interested in a strategic transaction at that time and, further, that any proposed valuation for a potential strategic transaction would have to be significantly increased in order for the PLX board to consider supporting any such transaction.
The IDT board held a regularly scheduled meeting on July 27, 2011 and reviewed IDTs strategic initiatives and the
potential for a strategic transaction with PLX. The IDT board discussed Dr. Tewksburys and Mr. Padvals recent communications with Messrs. Schmitt and Riordan, respectively, and the ongoing strategic rationale for a potential
acquisition of PLX. Following discussion of these matters, the IDT board determined to cease further communications regarding a potential strategic transaction with PLX at that time, but to continue to monitor the business and strategic rationale
for a potential strategic transaction in the future.
At a regularly scheduled meeting of the IDT board on October 26,
2011, the IDT board again reviewed and discussed the possibility of a potential strategic transaction with PLX, including the potential for re-engaging with the PLX board and management team. The IDT board decided to continue to monitor PLX and
revisit the potential strategic transaction in future meetings.
At a regularly scheduled meeting of the IDT board on
January 23 and 24, 2012, the IDT board again discussed the possibility of a potential strategic transaction with PLX. The IDT board discussed with IDT management PLXs financial condition, the strategic and financial rationale for a
potential strategic transaction and the possible submission of another preliminary non-binding expression of interest with respect to a strategic transaction at a valuation higher than that provided in the initial proposal.
In January 2012, following the January 2012 meeting of the IDT board, IDT management began internal discussions regarding re-engaging
with PLX with respect to a potential strategic transaction. Concurrent with this evaluation, IDT senior management team decided to engage outside advisors in connection with any potential strategic transaction and contacted J.P. Morgan Securities
LLC, or JPM, to discuss potential engagement as financial advisor with respect to any strategic transaction process.
On February 3, 2012, IDT verbally engaged JPM as IDTs financial advisor in connection with any potential strategic transaction with PLX. Representatives from JPM met with IDT management to
discuss the background and framework for assessing a potential strategic transaction with PLX. IDT and JPM entered into a formal engagement on March 26, 2012.
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During February and March 2012, IDT management, together with representatives from JPM,
continued to review and assess a potential strategic transaction with PLX, including the possibility of re-engaging in discussions with PLX.
On February 22, 2012, Dr. Tewksbury and Mr. Schmitt met over lunch to informally discuss current business conditions as well as the current interest of the PLX board with respect to
consideration of a potential strategic transaction. Dr. Tewksbury explained to Mr. Schmitt that the IDT board remained committed to exploring a potential strategic transaction and would likely be willing to consider a valuation higher than
what was reflected in the initial proposal (and to maintain both stock and cash components to any potential consideration package). Dr. Tewksbury also mentioned that, at the appropriate time in any formal potential strategic transaction
discussions, IDT would potentially be willing to consider the potential for an IDT board seat to be made available, as well as positions for PLX executive management, in connection with any potential transaction. Mr. Schmitt was receptive to
the idea of continuing to explore additional discussions regarding a potential strategic transaction, particularly given Dr. Tewksburys remarks regarding the potential for increased valuation and a mix of cash and stock consideration. Dr.
Tewksbury suggested a follow-up meeting between John Schofield, Chairman of the IDT board, and D. James Guzy, Chairman of the PLX board.
On February 24, 2012, at a special meeting of the IDT board, IDT management reviewed with the IDT board the status of current and potential acquisition and divestiture activities, including a
potential strategic transaction with PLX. Dr. Tewksbury discussed with the IDT board his conversation with Mr. Schmitt on February 22, 2012. The IDT board agreed that Mr. Schofield should attempt to arrange a meeting with
Mr. Guzy to continue the dialogue between the two companies with respect to a potential strategic transaction.
On
March 7, 2012, Messrs. Schofield and Guzy met. The discussion focused on the general state of the semiconductor industry and Mr. Guzys vision of the future of the industry and PLX. Mr. Schofield offered to engage in more
specific discussions regarding a potential strategic transaction, but Mr. Guzy did not believe that further discussions would be productive at that time. Mr. Schofield suggested a follow-up meeting among Dr. Tewksbury and Messrs.
Schmitt, Schofield and Guzy.
On March 15, 2012, the IDT board held a previously scheduled meeting during which
Dr. Tewksbury provided a mid-quarter update to the IDT board, including an update with respect to a potential strategic transaction with PLX. Mr. Schofield provided the IDT board with a summary of his March 7, 2012 meeting with
Mr. Guzy. Dr. Tewksbury also provided an overview of discussions between IDT management and JPM representatives with respect to alternative strategies for re-engaging in discussions with PLX regarding a potential strategic transaction. The
IDT board directed Dr. Tewksbury to call Mr. Schmitt and agreed that Mr. Schofield should call Mr. Guzy to continue discussions with respect to a potential strategic transaction with PLX.
Later that day Dr. Tewksbury called Mr. Schmitt to informally discuss the ongoing interest of the IDT board with respect to
consideration of a potential strategic transaction. Although no specific transaction details or valuation was discussed, Dr. Tewksbury reiterated the commitment of the IDT board to continue discussions.
On March 22, 2012, Dr. Tewksbury and Messrs. Schmitt, Schofield and Guzy met to discuss a potential strategic transaction
between IDT and PLX. Mr. Schofield and Dr. Tewksbury discussed general terms for a potential strategic acquisition of PLX by IDT, including IDTs willingness to consider a valuation materially higher than what was reflected in the
initial proposal (and to maintain both stock and cash components to any potential consideration package). Dr. Tewksbury also mentioned that, at the appropriate time in any formal potential strategic transaction discussions, IDT would be willing
to consider the potential for an IDT board seat to be made available, as well as positions for PLX executive management, in connection with any potential transaction. Mr. Guzy informed Dr. Tewksbury and Mr. Schofield that the PLX
board was not interested in a potential strategic transaction at that time. Dr. Tewksbury discussed his view of IDTs strategic direction and his belief that the two companies were aligned in many respects, including a shared focus on
system-level
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interconnect solutions for servers and storage appliances in data centers. Dr. Tewksbury suggested that IDT and PLX management should engage in more serious discussion regarding a potential
strategic transaction; Messrs. Schmitt and Guzy again declined to do so at such time.
On March 24, 2012, the IDT board
held a special meeting and reviewed the recent contacts with PLX board members and PLX management. The IDT board discussed Dr. Tewksburys and Mr. Schofields March 22, 2012 meeting with Messrs. Schmitt and Guzy and strategy
for re-engaging with the PLX board to build momentum regarding a potential strategic transaction. The IDT board authorized and directed Dr. Tewksbury to submit a preliminary non-binding expression of interest to the PLX board with respect to
the acquisition of all outstanding equity of PLX at a range of $6.75-$7.00 per share, payable in a combination of 50% cash and 50% IDT common stock. The IDT board also determined that it would not offer any board position in connection with the
potential strategic transaction at that time and, further, that any executive management positions would need to be determined at an appropriate time in any transaction process.
Later that day, Dr. Tewksbury called Mr. Schmitt to inform him that IDT would be delivering a preliminary non-binding
expression of interest to the PLX board with respect to a potential strategic transaction.
On March 25, 2012,
Dr. Tewksbury, on behalf of IDT, submitted an unsolicited preliminary non-binding expression of interest letter, or the second proposal, to the PLX board which set forth IDTs proposal to acquire 100% of the outstanding equity
of PLX at a range of $6.75-$7.00 per share, payable in a combination of 50% cash and 50% IDT common stock. The second proposal also indicated IDTs willingness to consider an all cash transaction if requested by the PLX board. The second
proposal confirmed that the proposal had the support of the IDT board and that the proposed transaction would not be subject to any financing condition. The second proposal was made subject to the satisfactory completion of customary due diligence
and the negotiation of a definitive transaction agreement. IDT stated that it was prepared to enter into a confidentiality agreement and move forward with due diligence immediately and proposed a 60-day exclusivity period as a condition to
proceeding with the proposed strategic transaction.
On March 28, 2012, Dr. Tewksbury and Mr. Schmitt met to
discuss the terms proposed by IDT in the second proposal. Mr. Schmitt communicated the determination of the PLX board that it was prepared to enter into an exclusivity agreement with IDT, begin due diligence and negotiate a definitive
transaction agreement if certain additional transaction terms could be addressed. Specifically, the PLX board requested (i) that the proposed exclusivity period be reduced from 60 days to four weeks and (ii) that the proposed valuation be
increased above the range in the second proposal. Dr. Tewksbury indicated that IDT was not willing to agree to any increase in valuation.
On March 29, 2012, Dr. Tewksbury called Mr. Schmitt to further discuss the open points from the previous days discussion. Mr. Schmitt reiterated the PLX boards commitment
to valuation above the range in the second proposal, particularly in connection with any request for exclusivity. Mr. Schmitt noted that the PLX board was also considering the possibility of a full sale process. Dr. Tewksbury reiterated
that IDT was firm at the $7.00 per share valuation; in response Mr. Schmitt asked if IDT would be willing to consider a customary go-shop provision in any definitive transaction agreement which would allow for the solicitation of
superior transactions for a limited period following the execution of such definitive transaction agreement. Dr. Tewksbury agreed to discuss the requested go-shop provision with the IDT board and advisor teams.
Later that day, at the request of IDT, representatives from JPM called Mr. Schmitt to discuss certain proposed transaction terms,
including (i) the potential value to PLX stockholders of a firm offer price of $7.00 per share, payable in a combination of 50% cash and 50% IDT common stock, (ii) IDTs continued interest in a three to four week exclusivity period
and (iii) the proposal to include a customary go-shop provision in any definitive transaction agreement. Mr. Schmitt confirmed his general understanding that the PLX board would be amendable to the use of a go-shop
provision and agreed to further discuss the matters with the PLX board at the appropriate time.
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On March 30, 2012, Dr. Tewksbury and Mr. Schmitt engaged in additional
discussions regarding the second proposal. Specifically, Mr. Schmitt again reiterated that the PLX board was not interested in providing IDT with any period for exclusive negotiations unless the proposed valuation was higher than the range in
the second proposal. The PLX board also required a customary go-shop provision in the definitive transaction agreement which would allow PLX to canvas the market for alternative superior transaction proposals following execution of any
definitive agreement with IDT. Dr. Tewksbury again explained that the IDT $7.00 per share offer was firm, but that he was reviewing the requested go-shop provision with the IDT board and advisor teams.
Later that day, representatives from Latham and Baker & McKenzie LLP, outside corporate counsel to PLX, or Baker,
held a teleconference to discuss the terms proposed by IDT in the second proposal, as well as recent discussions among principals regarding matters related to transaction valuation and a potential go-shop provision.
Following the discussion among legal advisors, Mr. Schmitt called Dr. Tewksbury to inform him of an update to the PLX board
response to the second proposal. Specifically, Mr. Schmitt confirmed that the PLX board was willing to proceed with a potential strategic transaction at a valuation of $7.00 per share (payable in a combination of 50% cash and 50% IDT common
stock) subject to the inclusion of a customary go-shop provision in the definitive transaction agreement, in each case subject to customary due diligence and the negotiation of the definitive transaction agreement and any related
ancillary arrangements. Mr. Schmitt requested that the IDT board revise the second proposal and submit an updated proposal to the PLX board accordingly.
Following this discussion, the IDT board held a special meeting on the evening of March 30, 2012 to discuss the status of discussions between IDT and PLX. Dr. Tewksbury relayed to the IDT board
his conversations earlier in the day with Mr. Schmitt, including PLXs request for inclusion of a go-shop period in the definitive transaction agreement and a reduction in the exclusivity period. The IDT board authorized IDT
management to convey to PLX a final proposal to acquire all of the outstanding equity of PLX, including a firm purchase price of $7.00 per share with a customary go-shop period and a reduced exclusivity period.
On March 31, 2012 and in response to discussions with Mr. Schmitt, who conveyed the response of the PLX board to the second
proposal, Dr. Tewksbury, on behalf of IDT, sent a revised preliminary non-binding expression of interest letter, or the third proposal, to the PLX board which set forth IDTs final proposal to acquire 100% of the equity of PLX
for $7.00 per share, payable in a combination of 50% cash and 50% common stock of IDT. The third proposal again confirmed IDTs willingness to consider an all cash transaction if requested by the PLX board and that the proposed transaction
would not be subject to any financing condition. The third proposal was also made subject to the satisfactory completion of customary due diligence and the negotiation of a definitive transaction agreement. IDT stated that it was prepared to enter
into a confidentiality agreement and move forward with due diligence immediately and proposed a 21-day initial exclusivity period with one automatic additional 7-day extension, provided that the parties continued to engage, in good faith, in a
potential strategic transaction process, as a condition to proceeding with the proposed transaction. IDT also indicated in response to the PLX boards specific request that it would include in its draft definitive transaction agreement a
customary go-shop provision such that PLX would be permitted to solicit proposals from other interested parties for a specified period following execution of the definitive transaction agreement. IDT also confirmed its expectation that a
customary termination fee would be an important component of any definitive transaction agreement.
On April 1, 2012,
Mr. Schmitt informed Dr. Tewksbury that the PLX board had determined the third proposal set forth a compelling proposition to increase PLX stockholder value. Accordingly, the PLX board had directed Mr. Schmitt to enter an appropriate
exclusivity arrangement with IDT, begin the due diligence process and engage in negotiations with respect to a definitive transaction agreement.
Later that same day, IDT and PLX entered into an exclusivity agreement that provided an initial 21-day period for exclusive negotiations with respect to a strategic transaction with one automatic
additional 7-day
43
extension, provided that the parties continued to engage, in good faith, in a potential strategic transaction process. IDT and PLX also executed a mutual non-disclosure agreement governing the
confidentiality and use of technical and business information to be shared between the parties in connection with their ongoing discussions and due diligence with respect to the potential strategic transaction.
On April 2, 2012, PLX formally engaged Deutsche Bank Securities Inc., or Deutsche Bank, as its financial advisor in
connection with any potential strategic transaction with IDT.
On the same day, representatives of IDT sent a comprehensive
due diligence request list to PLX senior management with respect to certain business, finance, accounting, tax and legal information required in connection with IDTs ongoing review of the potential strategic transaction.
From April 2-7, 2012, representatives of IDT, PLX and their advisors, including JPM, Deutsche Bank, Latham and Baker, engaged in
discussions regarding transaction structuring, regulatory analysis, the potential transaction timeline and the background activity of PLXs activist investor Balch Hill Partners. IDT and its advisors engaged in initial business, financial and
accounting diligence on PLX.
From April 2-5, 2012, members of IDT and PLX senior management, with representatives of JPM
and Deutsche Bank present, held preliminary business, finance and product due diligence meetings. The parties reviewed and discussed PLX managements presentation of a company overview, as well as additional detail regarding company products,
software, systems, foundry relationships, assembly and test segments, research and development, sales geography and channels, operating subsidiaries, real estate matters and the 10G ethernet business. The parties also discussed a proposed timeline
and logistics related to the production and completion of due diligence and the preparation of initial drafts of a definitive transaction agreement and related materials.
On April 4, 2012, representatives from Latham and Baker held a teleconference to discuss the proposed transaction timeline and certain matters contemplated in the proposed transaction agreement,
including structuring of the go-shop provision, determination of the exchange ratio applicable to the stock component of the transaction consideration, regulatory matters, any contemplated employee arrangements and the proposed
structuring for the transaction. On the same day, PLX provided access through an online data room to certain due diligence materials to the IDT management due diligence team, Latham and JPM.
On April 5, 2012, representatives of IDT sent a supplemental legal due diligence request list to PLX senior management, which
addressed additional legal information required in connection with IDTs ongoing due diligence review.
On April 7,
2012, a teleconference was convened by IDT and PLX senior management, as well as representatives from JPM, Deutsche Bank, Latham, Baker and MacKenzie Partners, proxy solicitors for PLX, in order to discuss matters related to transaction timing and
structuring.
During the weeks of April 8, April 15 and April 22, representatives of PLX provided
additional business, finance, accounting, tax and legal due diligence information to IDT, Latham and JPM through the online data room and responded to additional due diligence inquiries from IDT, Latham and JPM with respect to such information.
On April 10, 2012, representatives of IDT and PLX senior management, as well as advisors including JPM, Deutsche Bank,
Latham, Baker and MacKenzie Partners held a teleconference to continue discussions regarding proposed transaction structuring. Following this teleconference and additional discussion among the parties, on April 12, 2012 it was agreed that the
proposed transaction would be structured as a two-step transaction consisting of an exchange offer followed by a merger. The IDT and Latham representatives agreed to provide a draft of the proposed definitive transaction agreement as
expeditiously as possible.
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Between April 11 and April 20, 2012, members of PLX management and IDT management discussed
the potential adoption and implementation by PLX of a severance plan for executive management. On or about April 20, 2012, IDT agreed that in the event the proposed strategic transaction was consummated, IDT would honor the terms of the
arrangements of such a plan following the closing of the proposed transaction in connection with the mutual goals of IDT and PLX with respect to employee retention.
On April 16, 2012, at IDTs request, representatives of Latham distributed an initial draft of the merger agreement to PLX, Baker and Deutsche Bank.
From April 16-22, 2012, representatives of IDT, JPM and Latham continued to conduct their due diligence review of PLX. Members of
IDTs management team, as well as Latham, emphasized to PLX and Baker the importance of the completion of due diligence and the production of all requested materials.
On April 18, 2012, representatives of Baker distributed an issues list which set forth the material open points in the draft merger agreement which included, among other matters, the period of the
proposed go-shop provision and related provisions regarding offers from third parties during such period, termination fee amounts, the method for calculating the exchange ratio to be used for the component of transaction consideration to
be paid in IDT common stock, the scope of representations and warranties, the scope of PLXs and IDTs conduct of business covenants and conditions related to closing of the offer.
On that same day, Deutsche Bank, on behalf of PLX, delivered to JPM a reverse due diligence request list and the representatives
discussed the format of requested reverse due diligence meetings to be held among representatives of IDT, PLX, JPM and Deutsche Bank.
On April 19, 2012, reverse due diligence meetings were held among representatives of IDT and PLX senior management, as well JPM and Deutsche Bank. The attendees discussed IDTs business overview
and its financial performance for the 2012 fiscal year end as well as IDT managements view of the companys future financial outlook. On the same day, at IDTs request, Latham distributed to Baker the form of tender and support
agreement that IDT would expect to be executed by PLXs directors and executive officers in connection with the proposed transaction.
On April 20, 2012, representatives from IDT, PLX, JPM, Deutsche Bank, Latham and Baker held a meeting to discuss material open issues in the draft merger agreement. The parties continued to negotiate
open points related to the period of the proposed go-shop provision and related provisions regarding qualifying offers, termination fee amounts, the method for calculating the exchange ratio to be used for the component of transaction
consideration to be paid in IDT common stock, the scope of representations and warranties, the scope of PLXs conduct of business covenants and IDTs conduct of business covenants and conditions related to the closing of the transaction
(in particular with respect to regulatory matters).
On April 23, 2012, on behalf of PLX, Baker distributed PLXs
initial comments on the draft Merger agreement to Latham, JPM and IDT.
From April 23-29, 2012, at the mutual request of
IDT and PLX, representatives of Latham, JPM, Baker and Deutsche Bank convened by teleconference to discuss and negotiate ongoing open issues in the merger agreement. The parties exchanged drafts of the merger agreement, disclosure schedules and
other transaction related documents. The key open points in the merger agreement that were negotiated by the respective parties included the period of the proposed go-shop provision and related provisions regarding offers from third
parties during such period, termination fee amounts, the method of calculating the exchange ratio to be used for the component of transaction consideration to be paid in IDT common stock, the scope of representations and warranties, the scope of
conduct of business covenants for PLX and IDT, conditions related to the closing of the transaction (in particular with respect to regulatory matters) and the definitions of material adverse effect with respect to IDT and PLX. During
this time period, representatives of IDT and Latham continued their due
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diligence review of PLX. Members of the IDT senior management team, as well as Latham, continued to emphasize to PLX and Baker the importance of the completion of due diligence and the production
of all requested materials.
On April 24th and 25, 2012, during a regularly scheduled meeting of the IDT board at which
JPM representatives had been invited to participate, the IDT board was provided with a detailed status update regarding the PLX transaction, including the discussions with PLX and its advisor teams, the results of diligence to date, valuation,
financing alternatives and the draft merger agreement, and IDT management, the IDT board and JPM discussed the proposed transaction, including plans for communications regarding the transaction in the event the parties reached a definitive
agreement.
On April 28, 2012, representatives from IDT and PLX senior management, Latham and Baker convened a
teleconference to discuss the process for completing due diligence. At the mutual request of IDT and PLX, representatives from Latham and Baker held teleconferences later that same day to review and discuss open items in the disclosure schedules to
the merger agreement. The parties also continued to finalize the form of the merger agreement.
On April 29, 2012,
representatives from Baker conveyed to representatives from Latham that the PLX board had met to review and discuss the proposed form of merger agreement, tender and support agreement and other matters related to the proposed strategic transaction.
At such meeting, representatives of Deutsche Bank rendered the oral opinion (which was confirmed in writing by delivery of Deutsche Banks written opinion dated April 30, 2012), to the effect that, as of such date and based upon and subject to
the various qualifications, limitations, assumptions and conditions set forth in its opinion, the consideration per share to be paid to the holders of PLX common stock (other than IDT and its affiliates) in the offer and the merger was fair from a
financial point of view to such holders. It was further conveyed that after related discussion and evaluation, the PLX board concluded that the proposed strategic transaction with IDT was in the best interests of PLXs stockholders and
unanimously approved the merger agreement, the offer and the mergers and related transactions.
On April 30, 2012, the
IDT board convened to discuss the proposed final form of merger agreement. The IDT board reviewed the transaction materials and process with Latham and JPM, including methodology and analysis regarding transaction structuring, due diligence,
valuation and potential synergy matters. After a detailed review of the transaction structure, potential financing arrangements, potential synergies of the combined businesses, due diligence findings and other financial and legal aspects of the
proposed transaction with Latham and JPM, the IDT board unanimously approved the merger agreement, the tender and support agreement, the offer and the mergers and the related transactions.
Later that same day and following such approval, IDT, Pinewood, Pinewood LLC and PLX entered into the merger agreement, and IDT and
Pinewood entered into the tender and support agreement with the applicable directors and executive officers of PLX.
The
transaction was announced pursuant to a joint press release issued by IDT and PLX following market-close on April 30, 2012.
On May 22, 2012, IDT and Pinewood commenced the Offer.
The
go-shop period terminated as of 11:59 p.m., California time, on May 30, 2012. On May 31, 2012, after the termination of the go-shop period, PLX confirmed that it did not receive any superior proposals during the go-shop period and that
no qualifying excluded party would be permitted to engage in any subsequent negotiations. The terms superior proposal and excluded party are described under The Merger AgreementCovenantsLimited Solicitation
of Acquisition Proposals beginning on page 88.
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IDTs Reasons for Making the Offer
The IDT board believes that the merger with PLX represents an opportunity to enhance value for IDT stockholders. The decision of the IDT
board to enter into the merger agreement was the result of careful consideration by the IDT board of numerous factors. In reaching its conclusion to approve the merger agreement, the offer, the merger transactions and the other transactions
contemplated by the merger agreement, the IDT board considered the following factors as generally supporting its decision to enter into the merger agreement.
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Complementary Product Sets and Technologies
. The IDT board believes the acquisition of PLX facilitates IDTs next step forward in the
expansion of IDTs core serial switching and interface business. PLX brings to IDT a combination of assets, intellectual property and product lines that IDT expects will add to its current offerings to provide a broader set of tools, services
and technologies for its customers.
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Expand Growth Opportunities and Broaden Customer Base
. PLX brings to IDT a combination of assets, intellectual property and product lines that
IDT expects will add to its current offerings to provide a broader set of tools, services and technologies for its customers. The IDT board believes that the combined company can broaden its customer base and expand its serviceable market, combining
IDTs historical strengths with PLXs historical strengths.
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Stronger Customer Relationships
. IDT expects that the combined company will have an improved ability to expand current customer relationships
and increased penetration of new customer accounts. The IDT board believes that the combination of the two companies product lines and technological resources should enable the combined company to meet customer needs more effectively and to
deliver more complete solutions to its customers.
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Technology Opportunities
. PLXs intellectual property and technology portfolio is expected to complement IDTs intellectual property
and technology portfolio, allowing the combined company to further innovate to provide new product offerings, as well as improve current product families, to deliver high-performance system-level interconnect solutions for data centers and other
applications.
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Combination of Significant Talent
. The transaction is expected to afford the opportunity to combine the skills of two well-regarded groups of
engineers as well as experienced managers in the semiconductor industry.
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Cost Savings and Enhanced Operating Results
. The IDT board believes that the combination of IDT and PLX provides the potential for the combined
enterprise to realize cost savings and enhanced operating results through added scale, lower manufacturing costs, and reduced redundancy in research and development, selling, marketing and administrative expenses, which can expand operating profit
margin.
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In addition to considering the factors outlined above, the IDT board considered the following
additional factors, all of which it viewed as generally supporting its decision to enter into the merger agreement:
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the results of the due diligence review of PLXs businesses and operations; and
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the likelihood that the offer and the mergers will be completed on a timely basis, including the likelihood that the mergers will receive all necessary
regulatory antitrust approvals without unacceptable conditions.
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The IDT board also evaluated the risks,
inherent in any transaction such as the merger transactions, that currently unanticipated difficulties could arise in integrating the operations, that there may be disruptions from concerns among employees of the two companies relating to any
potential workforce reductions resulting from combining the two business, that anticipated cost savings may not be achieved, that managements attention may be diverted from other strategic priorities to implement merger integration efforts,
that there may be dilution to IDTs stockholders and that the synergies expected from combining the operations of IDT and PLX may not be realized or, if realized, may not be realized within the period expected. The IDT board believed that these
risks were outweighed by the potential benefits to be realized from the merger transactions.
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The foregoing discussion of factors considered by the IDT board is not meant to be
exhaustive, but includes the material factors considered by the IDT board in approving the merger agreement and the transactions contemplated by the merger agreement. The IDT board did not find it practicable to, and did not, quantify or otherwise
assign relative weights to the specific factors considered in reaching its determination. Rather, the IDT board members made their respective determinations based on the totality of the information presented to them, including the recommendation by
IDT management and input from IDTs advisors, and the judgments of individual members of the IDT board may have been influenced to a greater or lesser degree by different factors.
Other Factors You Should Consider
In deciding
whether or not to tender your shares of PLX common stock, you should consider the factors described above under Background and Reasons for the Offer and the Merger beginning on page 39 as well as the factors set forth under
Risk Factors beginning on page 23 and the other factors set forth in this prospectus.
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RECOMMENDATION OF PLXS BOARD OF DIRECTORS
At a meeting held on April 29, 2012, the PLX board of directors unanimously (i) authorized and approved the execution, delivery
and performance of the merger agreement and the performance of the transactions contemplated by the merger agreement, including the offer, the top-up option, the merger and the LLC merger (ii) approved and declared advisable the merger
agreement, the offer, the merger, the LLC merger and the other transactions contemplated by the merger agreement, (iii) declared that the terms of the merger agreement and the transactions contemplated by the merger agreement, including the
merger, the offer, the LLC merger and the other transactions contemplated by the merger agreement, on the terms and subject to the conditions set forth therein, are fair to and in the best interests of the PLX stockholders (including the
unaffiliated PLX stockholders), (iv) directed that the adoption of the merger agreement be submitted to a vote at a meeting of the PLX stockholders, unless the adoption of the merger agreement by the PLX stockholders is not required by
applicable law, (v) recommended that the PLX stockholders accept the offer and tender their shares of PLX common stock pursuant to the offer and, if required by applicable law, vote their shares of PLX common stock in favor of adoption of the
merger agreement and (vi) approved for all purposes the merger agreement and the transactions contemplated by the merger agreement to be, to the extent permitted by applicable law, exempt from any takeover or anti-takeover laws.
Accordingly, for the reasons described in more detail below, the PLX board of directors unanimously (i) determined that the
transactions contemplated by the merger agreement, including the offer and the merger transactions, are fair and in the best interests of PLX and the PLX stockholders, (ii) approved and declared advisable the merger agreement and the
transactions contemplated thereby, including the offer and the merger transactions and (iii) recommends that the PLX stockholders accept the offer and tender their shares of PLX common stock in the offer, and, if required by applicable law,
vote in favor of the adoption of the merger agreement and thereby approve the merger and the transactions contemplated by the merger agreement.
PLXs Reasons for the Recommendation of the Offer
PLXs board of directors believes that the transactions contemplated by the merger agreement, including the offer and the merger transactions, are fair and in the best interests of the PLX
stockholders, and in reaching its recommendation that stockholders tender their shares of PLX common stock in the offer, and, if required by applicable law, vote in favor of the adoption of the merger agreement, the PLX board of directors considered
a number of factors, including the following material factors, which the PLX board of directors viewed as supporting its recommendation:
PLXs Operating and Financial Condition; Prospects of PLX as an Independent Company; Uncertainty of Potential Proxy Contest.
The PLX board of directors considered its knowledge and familiarity
with PLXs business, its current and historical financial condition and results of operations, as well as PLXs financial plan and prospects, if it were to remain an independent company. The PLX board of directors evaluated PLXs
long-term strategic plan, including the execution risks and uncertainties, and the potential impact on the trading price of shares of PLXs common stock (which is not feasible to quantify numerically) if PLX were to execute or fail to execute
upon its strategic plan. The PLX board of directors weighed the prospects of PLXs ability as a standalone entity to achieve long-term value for the PLX stockholders through execution on its strategic business plan against the near-term
value to the PLX stockholders that could be realized through the offer, the merger and the LLC merger at a significant premium to the then-current market price of the shares of PLX common stock. The PLX board of directors also considered the
potential business disruption PLX and uncertainty for its business, customers and employees created by the prospect of an extended proxy contest with Balch Hill and certain other affiliated parties.
Risks of Execution in a Competitive Marketplace
. In evaluating PLXs long-term prospects as an independent company
against the value to the PLX stockholders that could be realized by the PLX stockholders through the offer, the merger and the LLC merger, the PLX board of directors considered the impact of general economic market trends on PLXs sales, as
well as general market risks that could reduce the market price of
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shares of PLXs common stock. The PLX board of directors also considered the highly competitive marketplace for PLXs products and the fact that many of PLXs competitors are
significantly larger and have greater financial and other resources than PLX, and the impact of this competitive environment on PLXs ability to execute its strategic plan without substantial risk to the value of shares of PLX common stock.
Premia to Market Share Price
. The PLX board of directors considered that the implied value of the offer consideration
as of April 27, 2012 of $7.00 per share represented significant premiums to the trading price of PLX common stock as of recent and historical dates and periods.
Absence of Financing Condition and Other Limited Conditions
. The PLX board of directors considered that, subject to PLXs rights to seek a superior proposal (as defined in the merger
agreement) during the go-shop period, as described below in The Merger AgreementCovenantsLimited Solicitation of Acquisition Proposals, the offer is likely to be completed and the merger transactions are likely to
be consummated, based on, among other things, the absence of a financing condition and the limited number of other conditions to the offer and the merger transactions.
Timing of Completion
. The PLX board of directors considered the fact that the transaction is structured as an exchange offer and a subsequent merger, which can often be completed more promptly than
would have been the case with a merger alone, meaning that all PLX stockholders are likely to receive the offer consideration for their shares of PLX common stock more promptly.
Prospects of the Combined Entity.
The PLX board of directors considered that the combined company would be a stronger and
more financially flexible company than PLX as a stand-alone entity. The PLX board of directors considered that PLX and IDT have complementary product sets, technologies and customers, which the PLX board of directors considers will increase
opportunities for the combined companies to realize PLXs strategic objectives. The PLX board of directors also considered that the offer and the merger presents an opportunity for PLX stockholders to receive common stock in a healthier, more
competitive, and more financially stable company, to have greater liquidity for their shares, to benefit from any synergies experienced by IDT in the acquisition and integration of PLX and to participate in any future growth of IDT and PLX on a
combined basis.
Prospects for Accretion in IDT Value
. The PLX board of directors understanding, based on its
review of IDTs financial position, results of operations and financial forecasts, that the acquisition of PLX by IDT is expected to be accretive to IDTs earnings in future periods, including based upon potential cost savings and
synergies, which would benefit the PLX stockholders who will receive IDT common stock.
Opinion of Deutsche Bank
. The
PLX board of directors considered the oral opinion of Deutsche Bank Securities Inc., or Deutsche Bank, which was confirmed in writing by delivery of Deutsche Banks written opinion dated April 30, 2012, to the effect that, as
of such date and based upon and subject to the various qualifications, limitations, assumptions and conditions set forth therein, the consideration per share to be paid to the PLX stockholders (other than IDT and its affiliates) in the offer and the
merger was fair from a financial point of view to such PLX stockholders.
Regulatory Approvals
. The PLX board of
directors considered that the substantive regulatory approvals that may be required to consummate the offer and the merger would likely be limited to complying with the requirements under the HSR Act.
Tax Treatment
. The PLX board of directors considered that if the LLC Merger is completed and the offer and the merger
transactions, taken together, qualify as a reorganization within the meaning of Section 368(a) of the Code, certain PLX stockholders may receive favorable tax treatment with respect to the gain realized by them.
Additional information about the recommendation of PLXs board of directors, including the reasons for the recommendation, is more
fully set forth in PLXs Solicitation/Recommendation Statement on Schedule 14D-9, which is being mailed to PLX stockholders together with this prospectus.
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THE OFFER
Exchange of Shares of PLX Common Stock
We are proposing to acquire all of the outstanding shares of PLX common stock in exchange for (i) 0.525 of a share of common stock of IDT and (ii) $3.50 in cash, in each case, subject to
adjustment for stock splits, stock dividends and similar events, without interest thereon, less any applicable withholding taxes, for each validly tendered share of PLX common stock. We refer to this consideration, or any different consideration per
share of PLX common stock that may be paid pursuant to the offer, as the offer consideration.
We will not issue
any fractional shares of IDT common stock pursuant to the offer or the merger. Instead, each PLX stockholder who would otherwise be entitled to a fractional share (after aggregating all fractional shares of IDT common stock that otherwise would be
received by such stockholder) will receive (i) for shares of PLX common stock validly tendered and not properly withdrawn pursuant to the offer, cash equal to such fraction multiplied by the closing price of a share of IDT common stock on
NASDAQ on the date that Pinewood accepts for exchange at least a majority of the outstanding shares of PLX common stock, calculated on a fully diluted basis or (ii) for all other shares of PLX common stock that convert into the right to receive the
offer consideration at the effective time of the merger, cash equal to such fraction multiplied by the closing price of a share of IDT common stock on NASDAQ on the date the merger becomes effective.
The expiration of the offer shall refer to the end of the day on December 10, 2012, at 12:00 midnight, New York City time, unless we
extend the period of time for which the offer is open, in which case the term expiration of the offer means the latest time and date on which the offer, as so extended, expires.
We will not acquire any shares of PLX common stock in the offer unless PLX stockholders have validly tendered and not properly withdrawn
prior to the expiration of the offer that a number of shares of PLX common stock that, together with shares of PLX common stock then directly or indirectly owned by IDT, represents at least a majority of fully diluted shares of PLX common stock then
outstanding and no less than a majority of the voting power of the shares of PLXs capital stock then outstanding and entitled to vote upon the adoption of the agreement and approval of the merger, calculated as described in this prospectus. We
refer to this condition as the minimum tender condition.
After completion of the offer, IDT will cause Pinewood
to complete a merger with and into PLX, with PLX continuing as the surviving corporation, in which each outstanding share of PLX common stock (except for shares beneficially owned directly or indirectly by IDT for its own account, shares held in
treasury by PLX and shares held by PLX stockholders who have properly preserved their appraisal rights, if any, under Delaware law) will be converted into the right to receive the same consideration paid in exchange for each share of PLX common
stock in the offer, subject to appraisal rights to the extent applicable under Delaware law. We refer to this merger throughout this prospectus as the merger. If, after the completion of the offer, we beneficially own at least 90% of the
outstanding shares of PLX common stock or if we exercise our option to purchase additional shares directly from PLX to reach the 90% threshold, we may effect the merger without the approval of PLX stockholders, as permitted under Delaware law,
subject to appraisal rights to the extent applicable under Delaware law. If, on the other hand, after the completion of the offer, we beneficially own more than 50%, but less than 90%, of the outstanding shares of PLX common stock, a meeting of PLX
stockholders or an action by written consent and the affirmative vote of at least a majority of the shares of PLX common stock outstanding on the record date for such meeting will be needed to complete the merger. Since IDT will own a majority of
the shares of PLX common stock outstanding on the record date, approval of the merger by PLX stockholders will be assured. See Approval of the Merger on page 65.
Under the merger agreement, if the minimum tender condition is satisfied and we consummate the offer, we have the option, which we refer
to as the top-up option, to purchase from PLX additional shares of PLX common stock equal to the lowest number of shares that, when added to the number of shares already owned by IDT, will constitute one share more than 90% of the shares
of PLX common stock outstanding immediately after the shares subject to the top-up option are issued, at a cash price per share equal to the sum of (i) $3.50 and
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(ii) the product of 0.525 and the closing price of a share of IDT common stock on NASDAQ on the last trading day before we exercise the top-up option.
IDT or Pinewood may exercise this option at any time after the consummation of the offer and prior to the earlier to occur of
(i) the time the merger becomes effective and (ii) the termination of the merger agreement in accordance with its terms. If, as of the expiration of the offer, all of the conditions to the offer have been satisfied or, where permissible,
waived, and the shares to be issued pursuant to the top-up option, if exercised, together with all shares that are validly tendered and not properly withdrawn in the offer, would constitute one share more than 90% of the shares of PLX common stock
then outstanding, we will exercise the top-up option. If we exercise this option, we will pay the aggregate par value of the shares issued pursuant to the top-up option in cash, and we will issue a promissory note for the remainder of the purchase
price, to mature on the first anniversary date of its delivery and bearing interest at the rate of interest per annum equal to the prime lending rate as published in The Wall Street Journal. In no event will the top-up option be exercisable for a
number of shares of PLX common stock in excess of PLXs then authorized and unissued shares of common stock.
The number of shares of IDT common stock issued to PLX stockholders in the offer and the merger will constitute approximately 14.1% of
the outstanding common stock of the combined company after the merger based upon the number of outstanding shares of IDT common stock and PLX common stock on November 7, 2012, disregarding stock options and shares of common stock that may be
issued by IDT or PLX pursuant to an employee stock plan.
The offer consideration, including the exchange ratio
applicable in the offer and merger of 0.525 of a share of IDT common stock for each share of PLX common stock, or the per share exchange ratio, will be adjusted appropriately to reflect the effect of any stock split, reverse stock split,
stock or cash dividend, reorganization, recapitalization, reclassification, combination, exchange of shares or other like change with respect to the shares of IDT or PLX common stock that occurs on or after the date of the merger agreement and prior
to the consummation of the offer, so as to provide to PLX stockholders the same economic effect as contemplated by the merger agreement prior to such adjustment.
If you are the record owner of your shares and you tender your shares directly to the exchange agent, you will not be obligated to pay any charges or expenses of the exchange agent or any brokerage
commissions. If you own your shares through a broker or other nominee, and your broker or nominee tenders the shares on your behalf, your broker or nominee may charge you a fee for doing so. You should consult your broker or nominee to determine
whether any charges will apply.
Timing of the Offer
We commenced the offer on May 22, the date of distribution of the initial prospectus. The offer is scheduled to expire at the end of
the day on December 10, 2012, at 12:00 midnight, New York City time, unless we extend the period of the offer. All references to the expiration of the offer mean the time of expiration, as extended. For more information, see the discussion under
Extension, Termination and Amendment below.
Extension, Termination and Amendment
In the event that the conditions to the offer have not been satisfied or, where permissible, waived, upon the
expiration of the offer (as the same may be extended), we are required to extend the offer for successive periods of up to twenty (20) business days until the earlier of such time that all of the conditions to the offer have been satisfied or,
where permissible, waived, or the merger agreement has been terminated in accordance with its terms. We are also required to extend the offer for any periods required by the SEC or applicable law. As of October 30, 2012, the required governmental
approval under the HSR Act with respect to the merger had not been obtained. Pursuant to the terms of the merger agreement, if, as of such date, all of the conditions to the offer had been satisfied or, where permissible, waived, other than the
expiration or termination of any applicable
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waiting period pursuant to the HSR Act or receipt of any required clearance, consent, authorization or approval related thereto allowing the consummation of the merger or both obtaining such HSR
clearance and the satisfaction of the minimum tender condition, if so elected by either IDT or PLX, we could extend the offer for an additional three (3) month period to January 31, 2013, solely to satisfy such conditions. At the end of
October 2012, IDT and PLX elected to extend the offer until January 31, 2013, solely to satisfy such conditions. Thereafter, if we so elect in our sole discretion, we will extend the offer for an additional three (3) month period to
April 30, 2013, solely to satisfy such conditions, provided that the offer may in no event be extended past April 30, 2013. If, at the expiration of the offer, all of the conditions to the offer have been satisfied or, where permissible,
waived, we will accept for payment and promptly pay for shares of PLX common stock tendered and not properly withdrawn in the offer. During any extension, all shares of PLX common stock previously tendered and not validly withdrawn will remain
deposited with the exchange agent, subject to your right to withdraw your shares of PLX common stock. If we exercise our right to use a subsequent offering period as described below, we will first consummate the exchange with respect to the shares
validly tendered and not properly withdrawn in the initial offer period.
After acceptance for payment of shares of PLX
common stock in the offer, if we do not hold at least 90% of PLXs issued and outstanding shares to permit us to complete the merger pursuant to the short-form merger provisions of Section 253 of the DGCL, then we may provide a
subsequent offering period (and one or more extensions thereof) of up to twenty (20) business days. For more information, see the discussion under Subsequent Offering Period below.
We expressly reserve the right, but shall not be obligated to, waive any conditions to the offer and to make any changes to the terms of
or conditions to the offer, provided that, without the prior written consent of PLX, we cannot:
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reduce the offer consideration;
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change the form of consideration payable in the offer, other than to increase the consideration;
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reduce the number of shares to be purchased in the offer;
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waive or amend the minimum tender condition, the condition that any applicable waiting period under the HSR Act has expired or PLX and IDT have
otherwise received approval or authorization of the merger, the condition that the registration statement has been declared effective and remains effective or the condition that the shares of IDT common stock to be issued in exchange for PLX common
stock have approved for listing on NASDAQ;
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add to or amend any additional conditions to the offer in a manner that is material and adverse to PLX stockholders;
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extend the offer except as permitted by the merger agreement; or
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amend any term of the offer in a manner adverse to PLXs stockholders.
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In the event the merger agreement is terminated in accordance with its terms prior to the acceptance of any shares of PLX common stock
for exchange pursuant to the offer, we will promptly terminate the offer without accepting any shares that were previously tendered.
We will follow any extension, termination, waiver or amendment, as promptly as practicable, with a public announcement. Subject to the requirements of the Exchange Act and other applicable law, and
without limiting the manner in which we may choose to make any public announcement, we assume no obligation to publish, advertise or otherwise communicate any public announcement.
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Subsequent Offering Period
We may elect to provide subsequent offering periods of up to twenty (20) business days after the acceptance of shares of PLX common
stock upon the expiration of the offer in accordance with Rule 14d-11 under the Exchange Act if, as of the expiration of the offer, all of the conditions to the offer have been satisfied or, where permissible, waived, but the total number of shares
of PLX common stock that have been validly tendered and not properly withdrawn pursuant to the offer, together with shares of PLX common stock then directly or indirectly owned by IDT, is less than 90% of the total number of shares of PLX common
stock then outstanding. If we exercise our right to use a subsequent offering period, we will first consummate the exchange with respect to the shares validly tendered and not properly withdrawn in the initial offer period. You will not have the
right to withdraw any shares of PLX common stock that you tender in the subsequent offering period. If we elect to provide a subsequent offering period, we will make a public announcement to that effect no later than 9:00 a.m. New York City time on
the next business day after the previously scheduled expiration.
Conditions of the Offer
The offer is subject to a number of conditions, which we describe below. Notwithstanding any other provisions of the offer, and in
addition to IDTs rights to amend the offer at any time in its sole discretion (subject to the provisions of the merger agreement and any applicable rules and regulations of the SEC, including Rule 14e-l(c) under the Exchange Act), IDT shall
not be required to accept for exchange, or exchange the offer consideration for, any validly tendered shares of PLX common stock if any of these conditions are not satisfied or, where permissible, waived as of the expiration of the offer. The offer
is not subject to any financing condition.
Minimum Tender Condition
There must be validly tendered and not properly withdrawn prior to the expiration of the offer that number of shares of PLX common stock
that, together with shares of PLX common stock then beneficially owned, directly or indirectly, by IDT, represents at least a majority of the outstanding shares of PLX common stock, on a fully diluted basis, and no less than a majority of the voting
power of PLXs capital stock, on a fully diluted basis, and entitled to vote upon the adoption of the merger agreement and approval of the merger.
Regulatory Clearance
Any applicable waiting period pursuant to the
HSR Act must have expired or terminated or the required clearance, consent, authorization or approval pursuant to the HSR Act must have been received for the consummation of the merger.
Registration Condition
The registration statement on Form S-4 of
which this prospectus is a part must have been declared effective by the SEC under the Securities Act and not be the subject of any stop order issued by the SEC or proceeding initiated by the SEC seeking a stop order that has not been concluded or
withdrawn.
NASDAQ Listing Condition
The shares of IDT common stock issuable in exchange for shares of PLX common stock in the offer and the merger shall have been authorized for listing on NASDAQ.
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Additional Conditions
In addition, notwithstanding any other provisions of the offer, subject to the provisions of the merger agreement and any applicable rules and regulations of the SEC (including Rule 14e-1(c) under the
Exchange Act), IDT shall not be required to accept for exchange, or exchange the offer consideration for, any validly tendered shares of PLX common stock if any of the following events has occurred:
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any lawsuit, action or proceeding has been instituted by any governmental entity, other than the required clearance or approval under the HSR Act,
which remains pending, and the outcome of which would reasonably be expected to (i) make illegal, restrain or prohibit the consummation of the offer or the merger, (ii) make illegal, restrain, prohibit or impose limitations on the
ownership or operation of all of the business or assets of IDT, PLX or their respective subsidiaries, or compel IDT or any of its subsidiaries to dispose of or hold separately all or any port of the business or assets of IDT, PLX or their respective
subsidiaries or (iii) make illegal, restrain, prohibit or impose any limitations on the ability of IDT or Pinewood to acquire, hold or exercise full ownership rights with respect to the shares of PLX common stock purchased in the offer or the
merger, or any law, regulation or order by a governmental entity or court has been entered which would reasonably be expected to result in any of the above consequences;
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the representations and warranties of PLX in the merger agreement are not true and correct except as would not have a material adverse effect on PLX,
or in some cases in all material respects, as of the date of the merger agreement and the expiration of the offer;
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PLX has materially breached any of its obligations under the merger agreement and such breach or failure to perform has not been cured prior to the
expiration of the offer;
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any event, change or development shall have occurred that has had or would reasonably be expected to have, individually or in the aggregate, a material
adverse effect on the business, results of operation or condition of PLX and its subsidiaries and such material adverse effect shall not have been cured;
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PLXs board of directors has changed its recommendation of the merger agreement in a manner adverse to IDT and such change has not been withdrawn;
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PLX has approved, endorsed or recommended to PLXs stockholders an acquisition proposal other than the offer or the merger with IDT and Pinewood;
or
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the merger agreement has been terminated in accordance with its terms.
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The offer is not subject to any financing conditions.
General Conditions
All of the foregoing conditions are for our sole
benefit and may be asserted by us regardless of the circumstances giving rise to any such condition, in whole or in part at any time prior to the expiration of the offer or, and all conditions, other than the minimum tender condition, the regulatory
clearance condition, the registration condition and the NASDAQ listing condition, may be waived by us, in our sole discretion, in whole or in part at any applicable time subject in each case to the terms of the merger agreement and the applicable
rules and regulations of the SEC.
Subject to our disclosure and other obligations under SEC rules, and prior to our
acceptance of validly tendered shares of PLX common stock, the failure by us at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right and, each such right shall be deemed an ongoing right that may be
asserted at any time and from time to time.
IDT and PLX cannot assure you that all of the conditions to completing the offer
will be satisfied or, where permissible, waived.
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Important Definitions
The merger agreement provides that a material adverse effect means, when used in connection with IDT or PLX, any change, event, effect,
occurrence, state of facts or development that, individually or in the aggregate, has had or would reasonably be expected to have a materially adverse effect on the business, results of operations or condition (financial or otherwise) of IDT or PLX
and their respective subsidiaries, taken as a whole, or prevents or materially delays, or would reasonably be expected to prevent or materially delay, the consummation of the offer or the merger or the performance by IDT or PLX and their respective
subsidiaries, including in the case of IDT, Pinewood and Pinewood LLC, of any its respective material obligations under the merger agreement; provided that a material adverse effect shall not include the effect of any of the following and their
effects on the business, results of operations or condition (financial or otherwise) of IDT or PLX and their respective subsidiaries:
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changes in general economic or political conditions or financial or securities markets in general in any location where, respectively, IDT or PLX or
their respective subsidiaries have material operations, provided that the effect of any changes to the extent they, respectively, disproportionately affect IDT or PLX and their respective subsidiaries, taken as a whole, as compared to other entities
operating in the same principal industries and geographical markets shall not be excluded;
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changes in conditions generally affecting the principal industry in which, respectively, IDT or PLX or their respective subsidiaries operate, provided
that the effect of any changes to the extent they, respectively, disproportionately affect IDT or PLX and their respective subsidiaries, taken as a whole, as compared to other entities operating in the same principal industries and geographical
markets shall not be excluded;
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changes in GAAP or applicable law, or enforcement or interpretation thereof, in each case as applicable to IDT or PLX or their respective subsidiaries,
provided that the effect of any changes to the extent they, respectively, disproportionately affect IDT or PLX and their respective subsidiaries, taken as a whole, as compared to other entities operating in the same principal industries and
geographical markets shall not be excluded;
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acts of war, armed hostilities, sabotage or terrorism, or any escalation or worsening of any acts of war, armed hostilities, sabotage or terrorism,
provided that the effect of any changes to the extent they, respectively, disproportionately affect IDT or PLX and their respective subsidiaries, taken as a whole, as compared to other entities operating in the same principal industries and
geographical markets shall not be excluded;
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any hurricane, tornado, flood, earthquake, tsunami, volcano eruption or other natural disaster, provided that the effect of any changes to the extent
they, respectively, disproportionately affect IDT or PLX and their respective subsidiaries, taken as a whole, as compared to other entities operating in the same principal industries and geographical markets shall not be excluded;
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the execution, delivery, announcement or pendency of the merger agreement, the compliance, respectively, by IDT or PLX or their respective subsidiaries
with the terms of this Agreement or the anticipated consummation of the offer or the merger, including the impact thereof on the relationships, contractual or otherwise, respectively, of IDT or PLX or their respective subsidiaries with employees,
labor unions, customers, suppliers or business partners;
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any legal proceedings made or brought by any current or former securityholders, respectively, of IDT or PLX (on their own behalf or on behalf of such
entity) arising out of or related to the merger agreement or any of the transactions contemplated by the merger agreement
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any failure by, respectively, IDT or PLX to meet any internal or published projections, forecasts, estimates or projections in respect of revenues,
cash flow, earnings or other financial or operating metrics for any period, provided that the underlying causes of such failure shall not be excluded; or
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any changes in the market price or trading volume of shares of the common stock, respectively, of IDT or PLX, provided that the underlying causes of
such changes shall not be excluded.
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Procedure for Tendering Shares
For you to validly tender shares of PLX common stock pursuant to the offer:
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the enclosed letter of transmittal, properly completed and duly executed, along with any required signature guarantees, or an agents message (as
defined below) in connection with a book-entry transfer, and any other required documents, must be transmitted to and received by the exchange agent at one of its addresses set forth on the back cover of this prospectus, and certificates for
tendered shares of PLX common stock must be received by the exchange agent at one of its addresses or those shares of PLX common stock must be tendered pursuant to the procedures for book-entry transfer set forth below, and a confirmation of receipt
of the tender received, which confirmation we refer to below as a book-entry confirmation, in each case before the expiration of the offer; or
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you must comply with the guaranteed delivery procedures set forth below.
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The term agents message means a message, transmitted by DTC to, and received by, the exchange agent and forming a part
of a book-entry confirmation, which states that DTC has received an express acknowledgment from the participant in DTC tendering the shares of PLX common stock that are the subject of the book-entry confirmation, that the participant has received
and agrees to be bound by the terms of the letter of transmittal and that we may enforce that agreement against the participant.
The exchange agent will establish accounts at DTC with respect to the shares of PLX common stock for purposes of the offer within two (2) business days after the date of this prospectus, and any
financial institution that is a participant in DTC may make book-entry delivery of the shares of PLX common stock by causing DTC to transfer tendered shares of PLX common stock into the exchange agents account in accordance with DTCs
procedure for the transfer. However, although delivery of shares of PLX common stock may be effected through book-entry at DTC, the letter of transmittal, with any required signature guarantees, or an agents message in connection with a
book-entry transfer, and any other required documents, must, in any case, be transmitted to and received by the exchange agent at one of its addresses set forth on the back cover of this prospectus prior to the expiration of the offer, or the
guaranteed delivery procedures described below must be followed.
Signatures on all letters of transmittal must be guaranteed
by an eligible institution, except in cases in which shares of PLX common stock are tendered either by a registered holder of shares of PLX common stock who has not completed the box entitled Special Payment Instructions or Special
Delivery Instructions on the letter of transmittal or for the account of an eligible institution.
If the certificates
for shares of PLX common stock are registered in the name of a person other than the person who signs the letter of transmittal, or if payment is to be made, or certificates for shares of PLX common stock not tendered or not accepted for payment are
returned, to a person other than the registered holder(s), the certificates must be endorsed or accompanied by appropriate stock powers, in either case signed exactly as the name or names of the registered holder(s) appear(s) on the certificates,
with the signature(s) on the certificates or stock powers guaranteed in the manner we have described above.
Procedure for Tendering ESOP Shares
Under the ESOP, each participant is entitled to instruct Union Bank N.A. (acting on behalf of U.S. Bank National Association), trustee for the ESOP, or the trustee, whether or not to tender
all or a portion of the shares of PLX common stock allocated to such participants ESOP account. The ESOP provides that allocated shares will be tendered in accordance with the affirmative instructions provided to the trustee. If you fail to
affirmatively instruct the trustee whether or not to tender all or a portion of your shares, the ESOP provides that your shares will not be tendered. In addition, ESOP provides that the trustee will tender any unallocated shares held by the ESOP in
the same proportion as the allocated shares are tendered. The trustee must generally follow a participants instructions and the ESOP provisions unless it has a well founded reason to believe that doing so would violate ERISA. Should the
trustee determine that the implementation of a participant instruction or
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adherence to any ESOP provision relative to tender offers would violate ERISA, it must ignore such instruction or ESOP provision and exercise its discretion as trustee in lieu of such instruction
or ESOP provision.
To instruct the trustee to tender any or all of the shares allocated to your ESOP account you must
complete the enclosed ESOP instruction form and return it to Computershare, the tabulation agent for the offer, as set forth below:
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By Mail:
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By Overnight Courier:
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By Facsimile:
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Computershare
c/o Voluntary Corporate Actions
P.O. Box 43011
Providence, RI 02940-3011
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Computershare
c/o Voluntary Corporate Actions
250 Royall Street Suite V
Canton, MA 02021
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Computershare
c/o Voluntary Corporate Actions
(617) 360-6810
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You must return the ESOP instruction form to the tabulation agent at or before 5:00 p.m., New York
City time, on December 5, 2012, unless the offer is extended by IDT. After the deadline for returning the ESOP Instruction Form, the tabulation agent will complete the tabulation of all directions and the trustee will tender the appropriate number
of shares.
In order for the trustee to make a timely tender of your shares, you must complete and return the enclosed ESOP
instruction form so that it is received by the tabulation agent not later than 5:00 p.m., New York City time, on December 5, 2012, unless the offer is extended by IDT. If your ESOP instruction form is not received by this deadline, or if it is not
fully and properly completed, the Trustee will not tender any shares allocated to your ESOP account. If you instruct the trustee to tender all or a portion of the shares held in your ESOP account, you may withdraw your instructions by submitting a
new ESOP instruction form in accordance with the previous instructions for directing the tender of all or a portion of the shares held in your ESOP account to the tabulation agent before 5:00 p.m., New York City time on December 5, 2012, unless
the offer is extended by IDT.
Your ESOP account will receive the merger consideration (without interest and less any
applicable withholding taxes) for each share you tender from your ESOP account. The cash the ESOP receives for any such shares will be invested in a money market account. All such proceeds will remain in the ESOP and may withdrawn only in accordance
with the terms of the ESOP. Any shares that you do not elect to tender will continue to be held in your ESOP account. If the merger is completed, the shares allocated to your ESOP account that have not been tendered and accepted for exchange in the
offer will be converted into the right to receive the merger consideration (without interest and less any applicable withholding taxes) pursuant to the terms of the merger agreement.
Guaranteed Delivery
If you wish to tender shares
of PLX common stock pursuant to the offer and your certificates are not immediately available or you cannot deliver the certificates and all other required documents to the exchange agent prior to the expiration of the offer or cannot complete the
procedure for book-entry transfer on a timely basis, your shares of PLX common stock may nevertheless be tendered, if all of the following conditions are satisfied:
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you make your tender by or through an eligible institution;
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the enclosed notice of guaranteed delivery, properly completed and duly executed, substantially in the form enclosed with this prospectus, is received
by the exchange agent as provided below on or prior to the expiration of the offer; and
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the certificates for all tendered shares of PLX common stock, or a confirmation of a book-entry transfer of tendered shares into the exchange
agents account at DTC as described above, in proper form for transfer, together with a properly completed and duly executed letter of transmittal, with any required signature guarantees, or, in the case of a book-entry transfer, an
agents message, and all other
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documents required by the letter of transmittal are received by the exchange agent within three (3) NASDAQ Stock Market trading days after the date of execution of the notice of guaranteed
delivery. You may deliver the notice of guaranteed delivery by facsimile transmission or mail to the exchange agent and you must include a signature guarantee by an eligible institution in the form set forth in that notice.
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Withdrawal Rights
Shares of PLX common stock that you tender pursuant to the offer may be withdrawn according to the procedures set forth below at any time prior to the expiration of the offer and, unless previously
accepted for exchange in the offer, may also be withdrawn at any time after July 21, 2012.
For your withdrawal to be
effective, the exchange agent must timely receive from you a written or facsimile transmission notice of withdrawal at one of its addresses set forth on the back cover of this prospectus, and your notice must include your name, address, social
security number, the certificate number(s) and the number of shares of PLX common stock to be withdrawn, as well as the name of the registered holder, if it is different from that of the person who tendered those shares of PLX common stock. If
shares of PLX common stock have been tendered pursuant to the procedures for book-entry transfer discussed above under Procedure for Tendering Shares, any notice of withdrawal must specify the name and number of the account at DTC
to be credited with the withdrawn shares of PLX common stock and must otherwise comply with DTCs procedures. If certificates have been delivered or otherwise identified to the exchange agent, the name of the registered holder and the serial
numbers of the particular certificates evidencing the shares of PLX common stock withdrawn must also be furnished to the exchange agent, as stated above, prior to the physical release of the certificates. We will decide all questions as to the form
and validity (including time of receipt) of any notice of withdrawal, in our sole discretion, and our decision will be final and binding.
An eligible institution must guarantee all signatures on the notice of withdrawal unless the shares of PLX common stock have been tendered for the account of an eligible institution.
None of IDT, the exchange agent, the information agent or any other person will be under any duty to give notification of any defects or
irregularities in any notice of withdrawal or will incur any liability for failure to give any notification. Any shares of PLX common stock that you properly withdraw will be deemed not to have been validly tendered for purposes of the offer.
However, you may retender withdrawn shares of PLX common stock by following one of the procedures discussed under Procedure for Tendering Shares or Guaranteed Delivery at any time before the expiration of the
offer.
Effect of a Tender of Shares
In all cases, we will exchange shares of PLX common stock tendered and accepted for exchange pursuant to the offer only after timely receipt by the exchange agent of certificates for shares of PLX common
stock, or timely confirmation of a book-entry transfer of tendered shares into the exchange agents account at DTC as described above, properly completed and duly executed letter(s) of transmittal, or an agents message in connection with
a book-entry transfer, and any other required documents.
By executing a letter of transmittal, you irrevocably appoint our
designees as your attorneys-in-fact and proxies, each with full power of substitution, to vote at the special meeting in connection with the merger, if any, and to the extent permitted by applicable law and under PLXs certificate of
incorporation and bylaws, any other annual, special or adjourned meeting of PLXs stockholders or otherwise to execute any written consent concerning any matter, and to otherwise act as our designees, in their sole discretion, deem proper with
respect to such tendered shares of PLX common stock (and any and all non-cash dividends, distributions, rights, other shares of PLX common stock or other securities issued or issuable in respect thereof on or after the date of this prospectus) that
have been accepted for payment before the time any such action is taken and with respect to
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which you are entitled to vote. That appointment is effective if and when, and only to the extent that, we accept the shares of PLX common stock for exchange pursuant to the offer. All of these
proxies shall be considered coupled with an interest in the tendered shares of PLX common stock and therefore shall not be revocable. Upon the effectiveness of the appointment, all prior proxies that you have given will be revoked, and you may not
give any subsequent proxies, and, if given, they will not be deemed effective.
We will determine questions as to the
validity, form, eligibility (including time of receipt) and acceptance for exchange of any tender of shares of PLX common stock, in our sole discretion, and our determination shall be final and binding. We reserve the absolute right to reject any
and all tenders of shares of PLX common stock that we determine are not in proper form or the acceptance of or exchange for which may, in the opinion of our counsel, be unlawful. We also reserve the absolute right to waive any defect or irregularity
in the tender of any shares of PLX common stock. No tender of those shares of PLX common stock will be deemed to have been validly made until all defects and irregularities in tenders of those shares of PLX common stock have been cured or waived.
Neither we, the exchange agent, the information agent nor any other person will be under any duty to give notification of any defects or irregularities in the tender of any shares of PLX common stock or will incur any liability for failure to give
notification. Our interpretation of the terms and conditions of the offer, including the letter of transmittal and instructions thereto, will be final and binding.
The tender of shares of PLX common stock pursuant to any of the procedures described above will constitute a binding agreement between you and us upon the terms and subject to the conditions of the offer.
Delivery of Shares of IDT Common Stock and Cash
Subject to the satisfaction or, where permissible, waiver of the conditions to the offer as of the expiration of the offer, we will accept
for exchange shares of PLX common stock validly tendered and not properly withdrawn promptly after the expiration of the offer and will exchange such shares of PLX common stock for 0.525 shares of IDT common stock per share and $3.50 per share in
cash, in each case, subject to adjustment for stock splits, stock dividends and similar events, and cash in lieu of fractional shares for the tendered shares of PLX common stock. In all cases, the exchange of shares of PLX common stock tendered and
accepted for exchange pursuant to the offer will be made only if the exchange agent timely receives:
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certificates for those shares of PLX common stock, or a timely confirmation of a book-entry transfer of those shares of PLX common stock in the
exchange agents account at DTC, and a properly completed and duly executed letter of transmittal or a duly executed copy thereof, and any other required documents; or
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a timely confirmation of a book-entry transfer of those shares of PLX common stock in the exchange agents account at DTC, together with an
agents message.
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For purposes of the offer, we will be deemed to have accepted for exchange shares of
PLX common stock validly tendered and not properly withdrawn when, as and if we notify the exchange agent of our acceptance of the tender of those shares of PLX common stock pursuant to the offer. The exchange agent will deliver the shares of IDT
common stock and the cash portion of the offer consideration, in each case, subject to adjustment for stock splits, stock dividends and similar events, and cash in lieu of a fraction of a share of IDT common stock promptly after receipt of our
notice. The exchange agent will act as agent for tendering PLX stockholders for the purpose of receiving the cash portion of the offer consideration, the shares of IDT common stock and cash instead of a fraction of a share of IDT common stock and
transmitting the shares and cash to you. You will not receive any interest on any cash that you are entitled to receive, even if there is a delay in making the exchange. If we do not accept shares of PLX common stock for exchange pursuant to the
offer or if certificates are submitted for more shares of PLX common stock than are tendered in the offer, we will return certificates for these unexchanged shares of PLX common stock without expense to the tendering stockholder. If we do not accept
shares of PLX common stock for exchange pursuant to the offer, shares of PLX common stock tendered by book-entry transfer into the exchange agents account at DTC pursuant to the procedures set forth under
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Procedure for Tendering Shares will be credited to the account maintained with DTC from which those shares were originally transferred, promptly following expiration or
termination of the offer.
Cash Instead of Fractional Shares of IDT Common Stock
We will not issue any fractional shares of IDT common stock pursuant to the offer or the merger. Instead, each PLX stockholder who would
otherwise be entitled to a fractional share (after aggregating all fractional shares of IDT common stock that otherwise would be received by such stockholder) will receive (i) for shares of PLX common stock validly tendered and not properly
withdrawn pursuant to the offer, cash equal to such fraction multiplied by the closing price of a share of IDT common stock on NASDAQ on the date that Pinewood accepts for exchange at least a majority of the outstanding shares of PLX common stock,
calculated on a fully diluted basis or (ii) for all other shares of PLX common stock that convert into the right to receive the offer consideration at the effective time of the merger, cash equal to such fraction multiplied by the closing price of a
share of IDT common stock on NASDAQ on the date the merger becomes effective.
CONVERSION OF SECURITIES IN THE MERGER
2.1
Conversion of
Securities
.
Subject to the terms hereof, at the Effective Time, by virtue of the Merger and without any action on the part
of the Purchaser, the Company or the holders of any of the following securities:
(a)
Conversion of Company Common
Stock
. Each Share issued and outstanding immediately prior to the Effective Time, other than Shares to be cancelled in accordance with
Section 2.1(b)
and any Dissenting Shares, shall be converted into the right to receive the Offer
Price (the
Merger Consideration
), without interest, subject to any withholding of Taxes required by applicable Law, upon surrender of the certificate formerly representing such Shares in accordance with
Section 2.2
.
(b)
Cancellation of Treasury Stock and Parent-Owned Stock
. All Shares that are held in the treasury of the Company,
and all Shares owned of record by Parent or any of its direct or indirect wholly-owned Subsidiaries, including the Purchaser, shall be automatically cancelled and shall cease to exist, with no payment being made in exchange therefor.
(c)
Purchaser Common Stock
. Each share of common stock, par value $0.001 per share, of the Purchaser (the
Purchaser
Common Stock
) issued and outstanding immediately prior to the Effective Time shall be converted into and become one newly and validly issued, fully paid and nonassessable share of common stock of the Surviving Corporation.
(d)
Fractional Shares
. No fractional shares of Parent Common Stock shall be issued in connection with the Merger, no certificates
or scrip for any such fractional shares shall be issued and such fractional share interests will not entitle the owner thereof to vote or to any rights of a shareholder of Parent. Any holder of Shares who would otherwise be entitled to receive a
fraction of a share of Parent Common Stock (after aggregating all fractional shares of Parent Common Stock issuable to such holder) shall, in lieu of such fraction of a share and upon surrender of such holders Company Stock Certificates, be
paid in cash the dollar amount (rounded to the nearest whole cent), without interest, determined by multiplying such fraction by the closing price of a share of Parent Common Stock on NASDAQ on the date the Merger becomes effective.
(e)
Dividends; Distributions
. No dividends or other distributions declared or made after the date hereof with respect to Parent
Common Stock with a record date after the Effective Time and no cash payment in lieu of fractional shares pursuant to
Section 2.1(d)
will be paid to the holders of any unsurrendered Certificates with respect to the shares of Parent
Common Stock represented thereby until the holders of record of such Certificates shall surrender such Certificates. Subject to applicable Law, following surrender of any such Certificates, the Exchange Agent shall deliver to the record holders
thereof, without any interest thereon (i) promptly after such surrender, the Merger Consideration and the amount of any such dividends or other distributions with a record date after the Effective Time and theretofore paid with respect to such
whole shares of Parent Common Stock and (ii) at the appropriate payment date, the amount of dividends or other distributions with a record date after the Effective Time and a payment date subsequent to such surrender payable with respect to
such whole shares of Parent Common Stock.
2.2
Exchange and Payment for Securities; Surrender of Certificates
.
(a)
Exchange Agent
. At or prior to the Effective Time, the Purchaser shall designate a reputable bank or trust company
to act as the Exchange Agent for purposes of effecting the payment and distribution of the Merger Consideration in connection with the Merger (the
Exchange Agent
). At or promptly after the Effective Time (and, in any event, on the
Closing Date), the Purchaser shall (i) deliver, or cause to be delivered, to the Exchange Agent certificates representing the aggregate number of shares of Parent Common Stock sufficient to
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make all share issuances pursuant to this
ARTICLE 2
and (ii) deposit, or cause to be deposited, with the Exchange Agent, cash in an amount sufficient to make all payments pursuant to
this
ARTICLE 2
, in each case to which holders of Shares shall be entitled at the Effective Time pursuant to this Agreement. Such funds, to the extent cash, shall be invested by the Exchange Agent as directed by the Purchaser, in its sole
discretion, pending payment thereof by the Exchange Agent to the holders of the Shares. Earnings from such investments shall be the sole and exclusive property of the Purchaser, and no part of such earnings shall accrue to the benefit of holders of
Shares.
(b)
Procedures for Surrender
. As promptly as practicable after the Effective Time, but in no event later than
5 Business Days thereafter, the Surviving Corporation shall cause the Exchange Agent to mail to each holder of record of a certificate or certificates that represented Shares (the
Certificates
) or non-certificated Shares
represented by book-entry (
Book-Entry Shares
), in each case, which Shares were converted into the right to receive the Merger Consideration at the Effective Time pursuant to this Agreement: (i) a letter of transmittal, which
shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon delivery of the Certificates to the Exchange Agent, and shall otherwise be in such form and have such other provisions as the
Purchaser or the Exchange Agent may reasonably specify and (ii) instructions for effecting the surrender of the Certificates or Book-Entry Shares in exchange for payment of the Merger Consideration. Upon surrender of Certificates and Book-Entry
Shares for cancellation to the Exchange Agent or to such other agent or agents as may be appointed by the Purchaser, and upon delivery of a letter of transmittal, duly executed and in proper form, with respect to such Certificates or Book-Entry
Shares, the holder of such Certificates or Book-Entry Shares shall be entitled to receive the Merger Consideration for each Share formerly represented by such Certificates and for each Book-Entry Share and the Exchange Agent shall deliver the Merger
Consideration that such holder is entitled to receive within 5 Business Days. Any Certificates and Book-Entry Shares so surrendered shall forthwith be cancelled. If payment of the Merger Consideration is to be made to a Person other than the Person
in whose name any surrendered Certificate is registered, it shall be a condition precedent of payment that the Certificate so surrendered shall be properly endorsed or shall be otherwise in proper form for transfer, and the Person requesting such
payment shall have paid any transfer and other similar Taxes required by reason of the payment of the Merger Consideration to a Person other than the registered holder of the Certificate so surrendered and shall have established to the satisfaction
of the Surviving Corporation that such Taxes either have been paid or are not required to be paid. Payment of the Merger Consideration with respect to Book-Entry Shares shall only be made to the Person in whose name such Book-Entry Shares are
registered. Until surrendered as contemplated hereby, each Certificate or Book-Entry Share shall be deemed at any time after the Effective Time to represent only the right to receive the Merger Consideration as contemplated by this Agreement,
without interest thereon.
(c)
Transfer Books; No Further Ownership Rights in Shares
. At the Effective Time, the stock
transfer books of the Company shall be closed and thereafter there shall be no further registration of transfers of Shares on the records of the Company. From and after the Effective Time, the holders of Certificates and Book-Entry Shares
outstanding immediately prior to the Effective Time shall cease to have any rights with respect to such Shares except as otherwise provided for herein or by applicable Law. If, after the Effective Time, Certificates are presented to the Surviving
Corporation for any reason, they shall be cancelled and exchanged as provided in this Agreement.
(d)
Termination of Fund;
Abandoned Property; No Liability
. At any time following six months after the Effective Time, the Surviving Corporation shall be entitled to require the Exchange Agent to deliver to it any shares of Parent Common Stock or cash funds (including
any interest received with respect thereto) made available to the Exchange Agent and not disbursed to holders of Certificates or Book-Entry Shares, and thereafter such holders shall be entitled to look only to the Surviving Corporation (subject to
abandoned property, escheat or other similar Laws) only as general creditors thereof with respect to the Merger Consideration payable upon due surrender of their Certificates or Book-Entry Shares and compliance with the procedures in
Section 2.2(b)
, without interest and subject to any withholding of Taxes required by applicable Law. If, immediately prior to the six year anniversary of the Effective Time (or otherwise immediately prior to such time on which any
payment in
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respect hereof would escheat to or become the property of any Governmental Authority pursuant to any applicable abandoned property, escheat or similar Laws), any holder of Certificates or
Book-Entry Shares has not complied with the procedures in
Section 2.2(b)
to receive payment of the Merger Consideration to which such holder would otherwise be entitled, the payment in respect of such Certificates or Book-Entry Shares
shall, to the extent permitted by applicable Law, become the property of the Surviving Corporation, free and clear of all claims or interest of any Person previously entitled thereto. Notwithstanding the foregoing, neither the Surviving Corporation
nor the Exchange Agent shall be liable to any holder of a Certificate or Book-Entry Shares for Merger Consideration delivered to a public official pursuant to any applicable abandoned property, escheat or similar Law.
(e)
Withholding Rights
. Parent, the Purchaser, the Surviving Corporation and the Exchange Agent shall be entitled to deduct and
withhold from the amounts otherwise payable pursuant to this Agreement such amounts that Parent, the Purchaser, the Surviving Corporation or the Exchange Agent is required to deduct and withhold with respect to the making of such payment under the
Code or any other provision of applicable Law. To the extent that amounts are so withheld, such amounts shall be treated for all purposes of this Agreement as having been paid to the Person in respect of which such deduction and withholding was
made.
(f)
Lost, Stolen or Destroyed Certificates
. In the event that any Certificates shall have been lost, stolen or
destroyed, the Exchange 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 2.1(a)
hereof;
provided
,
however
, that the Purchaser may, in its sole 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 it may reasonably direct as indemnity against any claim that may be made against Parent, the Purchaser, the Surviving Corporation or the Exchange Agent with respect to the Certificates alleged to have
been lost, stolen or destroyed.
(g)
Transfer Taxes
. All transfer, stamp, documentary and similar Taxes incurred in
connection with this Agreement and the transactions contemplated herein shall be the responsibility of the holders of the Shares, unless otherwise required by applicable Law.
2.3
Dissenting Shares
.
Notwithstanding anything to the contrary set forth
in this Agreement, no shares of Company Common Stock issued and outstanding immediately prior to the Effective Time and in respect of which appraisal rights shall have been perfected in accordance with Section 262 of the DGCL in connection with
the Merger (collectively,
Dissenting Shares
) shall be converted into a right to receive that portion of the Merger Consideration otherwise payable to the holder of such Dissenting Shares as provided in
Section 2.1(a)
,
but shall instead be converted into the right to receive such consideration as may be determined to be due with respect to such Dissenting Shares pursuant to the DGCL. Each holder of Dissenting Shares who, pursuant to the provisions of the DGCL,
becomes entitled to payment of the fair value of such shares shall receive payment therefor in accordance with the DGCL (but only after the value therefor shall have been agreed upon or finally determined pursuant to the DGCL). In the event that any
holder of Company Common Stock fails to make an effective demand for payment or fails to perfect its appraisal rights as to its shares of Company Common Stock or any Dissenting Shares shall otherwise lose their status as Dissenting Shares, then any
such shares shall be converted into the right to receive the Merger Consideration issuable pursuant to
Section 2.1(a)
in respect of such shares as if such shares had never been Dissenting Shares, in accordance with and following the
satisfaction of the applicable requirements and conditions set forth in
Section 2.2
. The Company shall give Parent prompt notice (and in no event more than two Business Days) of (i) any demand received by the Company for appraisal
of Company Common Stock (and shall give Parent the opportunity to participate in all negotiations and proceedings with respect to any such demand) or (ii) any notice of exercise by any holder of Company Common Stock of appraisal rights in
accordance with the DGCL. The Company agrees that, except with Parents prior written consent (which shall not be unreasonably withheld, delayed or conditioned), it shall not voluntarily make any payment or offer to make any payment with
respect to, or settle or offer to settle, any such demand for appraisal or exercise of appraisal rights.
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2.4
Treatment of Options and RSUs
.
(a) Immediately prior to the Effective Time, Parent shall assume each outstanding and unexercised option to purchase Shares (each, a
Company Option
) that is outstanding immediately prior to the Effective Time, has an exercise price per share less than $9.00 and is held by an individual who, after the Effective Time, is an employee of Parent or an
Affiliate of Parent within the meaning of General Instruction A(1)(a)(1) of Form S-8 (each, an
Assumed Company Option
) and each stock option plan of the Company or any other equity plan (each, a
Company Stock Option
Plan
) pursuant to which any Assumed Company Option has been granted. The Assumed Company Options shall be assumed in a manner that is in compliance with Section 424 of the Code and the Treasury Regulations thereunder in the case of
Company Options that are intended to be incentive stock options within the meaning of Section 422 of the Code, and in a manner that is in compliance with Section 409A of the Code and the Treasury Regulations thereunder in the
case of Company Options that are non-qualified stock options. Each Assumed Company Option shall thereafter be exercisable, on substantially the same terms and conditions as in effect at the Effective Time, for such number of shares of Parent Common
Stock that equals the number of shares of Company Common Stock subject to such Company Option as of the Effective Time multiplied by the Equity Exchange Ratio (rounded down to the nearest whole number). The exercise price per share of each such
Assumed Company Option shall be equal to the exercise price per share set forth at the Effective Time in the option agreement for such Company Option divided by the Equity Exchange Ratio (rounded up to the next whole cent). The Company shall use its
commercially reasonable efforts to cause the Company Stock Option Plan(s) and all Assumed Company Options to be assumed by Parent on the terms and conditions set forth in this
Section 2.4(a)
.
(b) Immediately prior to the Effective Time, each Company Option that is not an Assumed Company Option shall be cancelled and, in
exchange therefor, each former holder of any such cancelled Company Option shall be entitled to receive from the Company, in consideration of the cancellation of such Company Option and in settlement therefor, a payment in cash (subject to all
applicable withholding or other Taxes required by applicable Law) of an amount equal to the product of (i) the total number of vested Shares (including, in the case of holders of Company Options who cease to be employees or other service
providers immediately prior to the Effective Time or otherwise in connection with the transactions contemplated by this Agreement, any Shares that become vested in connection with the transactions contemplated by this Agreement) subject to such
Company Option immediately prior to such cancellation and (ii) the excess, if any, of the Per Share Option Cash-Out Consideration over the exercise price per Share subject to such Company Option immediately prior to such cancellation (such
amounts payable hereunder being referred to as the
Option Payments
). Notwithstanding the foregoing and for the avoidance of doubt, to the extent the per share exercise price for the shares of Company Common Stock that would have
been issuable upon exercise of such Company Option is greater than or equal to the Per Share Option Cash-Out Consideration, the Company Option shall be terminated and cancelled at the Effective Time and no Option Payment shall be made. From and
after the Effective Time, any such cancelled Company Option shall no longer be exercisable by the former holder thereof, but shall only entitle such holder to the payment of the Option Payment, if any. The Option Payments shall be paid by Parent or
the Surviving Corporation as soon as practicable (and in any event within 15 Business Days) following the Effective Time, without interest. For the avoidance of doubt, each Company Option that is unvested and is not an Assumed Company Option shall
be cancelled as of immediately prior to the Effective Time without payment of any Merger Consideration or other amount with respect thereto or in settlement therefor, and the Company shall take all necessary action to provide for such cancellation
and treatment.
(c) Immediately prior to the Effective Time, Parent shall assume each restricted stock unit representing a
right to receive a Share (each, a
Company RSU
) that is outstanding immediately prior to the Effective Time that is held by an individual who, after the Effective Time, is an employee of Parent (as defined in
Section 2.4(a)
) (each, an
Assumed RSU
). Each Assumed RSU shall thereafter be subject to the same terms and conditions as in effect at the Effective Time for such number of shares of Parent Common Stock that equal the
number of shares of Company Common Stock subject to such Company RSU as of the Effective Time multiplied by the Equity Exchange Ratio and rounded down to the nearest whole share. Each Company RSU that is not an Assumed RSU shall be terminated for no
additional consideration effective as of immediately prior to the Effective Time.
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(d) The Company shall, prior to the Effective Time, take (or cause to be taken) any and all
action, and shall obtain all such consents, as may be necessary to effect the foregoing provisions of this
Section 2.4
, including by amending the applicable Company Stock Options Plans as set forth on
Section 2.4(a)
of the
Company Disclosure Schedule.
(e) Parent will cause Parent Common Stock issuable upon exercise of the Assumed Company Options
or upon settlement of the Assumed RSUs to be registered with the SEC on Form S-8 as soon as practicable (and in any event within 30 Business Days) following the Effective Time, will exercise commercially reasonable efforts to maintain the
effectiveness of such registration statement for so long as such Assumed Company Options and Assumed RSUs remain outstanding and will maintain a sufficient number of reserved shares of Parent Common Stock for issuance upon exercise or vesting, as
applicable, thereof.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except (i) as
expressly disclosed in the Company SEC Documents, in each case filed on or after March 13, 2012 and prior to the date hereof, and only to the extent reasonably apparent from the disclosure therein (but excluding (A) any forward-looking
disclosures contained in Forward Looking Statements and Risk Factors sections of the Company SEC Documents and any other disclosures included therein to the extent they are primarily predictive, cautionary or forward looking
in nature and (B) information included in, or incorporated by reference as, exhibits and schedules to any Company SEC Documents that have been filed with the SEC) (and provided that the representations and warranties set forth in
Section 3.2
shall not be qualified by any information in any Company SEC Documents) and (ii) as set forth in the disclosure schedule delivered by the Company to Parent and the Purchaser prior to the execution of this Agreement (the
Company Disclosure Schedule
), which identifies items of disclosure by reference to a particular Section or Subsection of this Agreement (
provided
,
however
, that any disclosure made in the Company
Disclosure Schedule shall be deemed to be disclosed with respect to any section of this Agreement to the extent the relevance of such disclosure to any such representation or warranty is reasonably apparent from the text of such disclosure), the
Company hereby represents and warrants to Parent and the Purchaser as follows:
3.1
Organization and Qualification;
Subsidiaries
.
(a) The Company and each of its Subsidiaries (each a
Company Subsidiary
) is a
corporation or other legal entity duly organized, validly existing and in good standing under the applicable Law of the jurisdiction of its incorporation or organization and has all requisite corporate or organizational, as the case may be, power
and authority to own, lease and operate its properties and assets and to conduct its business as currently conducted and as currently planned to be conducted. Each of the Company and each Company Subsidiary is duly qualified to do business and is in
good standing in each jurisdiction where the ownership, leasing or operation of its properties or assets or the conduct of its business requires such qualification, except where any failure to be so qualified or in good standing, individually or in
the aggregate, has not had a Company Material Adverse Effect.
(b) The Company has delivered or caused to be delivered to
Parent and the Purchaser accurate and complete copies of the currently effective certificate of incorporation of the Company (the
Company Charter
) and bylaws of the Company (the
Company Bylaws
), and the
certificate of incorporation and bylaws, or equivalent organizational or governing documents, of each Company Subsidiary. The Company is not in violation of the Company Charter or Company Bylaws, and the Company Subsidiaries are not in violation of
their respective organizational or governing documents.
(c)
Section 3.1(c)
of the Company Disclosure Schedule
sets forth an accurate and complete list of: (i) the Company Subsidiaries, together with the jurisdiction of organization or incorporation, as the case may be, of each Company Subsidiary, (ii) the jurisdictions in which the Company and
each Company Subsidiary is qualified to do business as a foreign corporation or other legal entity and (iii) the directors and officers of the Company and each Company Subsidiary, as of the date of this Agreement.
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3.2
Capitalization
.
(a) The authorized capital stock of the Company consists of (i) 200,000,000 shares of common stock, par value $0.001 per share, of
the Company (the
Company Common Stock
), of which, as of the close of business on April 27, 2012, there were 44,743,245 shares issued and outstanding (excluding 26,543 shares of Company Common Stock held in treasury) and
(ii) 5,000,000 shares of preferred stock, par value $0.001 per share (the
Company Preferred Stock
), of which no shares are issued and outstanding or reserved for future issuance under any Contract. All of the outstanding
shares of Company Common Stock have been duly authorized and validly issued and are fully paid, nonassessable and free of preemptive rights.
(b) As of the close of business on April 27, 2012, the Company has no shares of Company Common Stock or Company Preferred Stock reserved for or otherwise subject to issuance, except for 5,243,724
shares of Company Common Stock reserved for issuance pursuant to the exercise of outstanding Company Options under the Company Stock Options Plans. All shares of Company Common Stock subject to issuance under the Company Stock Option Plans, upon
issuance prior to the Effective Time on the terms and conditions specified in the instruments pursuant to which they are issuable, will be duly authorized, validly issued, fully paid, nonassessable and free of preemptive rights. The Company has made
available or will make available as soon as practicable after the date hereof to Parent and the Purchaser an accurate and complete list of all issued and outstanding Company Options, as of the close of business on April 27, 2012, including
(A) the name of each holder of Company Options, (B) the date on which the grant of each Company Option was by its terms to be effective (the
Grant Date
) and the expiration date of such Company Options, (C) the
number of outstanding, unvested Company Options held by each such holder, (D) the total number of shares of Company Common Stock subject to each such Company Option, (E) the exercise price of each Company Option, (F) the vesting
schedule (including any vesting acceleration provisions) and vested status of each such Company Option, and (G) whether such Company Option is intended to qualify as an incentive stock option within the meaning of Section 422
of the Code. All Company Options are evidenced by stock option agreements, in each case in the forms made available by the Company to Parent and the Purchaser, and no stock option agreement contains terms that are inconsistent with or in addition to
such forms.
(c) Each grant of a Company Option was duly authorized no later than the Grant Date of such Company Option by
all necessary corporate action, including, as applicable, approval by the Company Board (or a duly constituted and authorized committee thereof) and any required stockholder approval by the necessary number of votes. Each such grant was made in all
material respects in accordance with the terms of the applicable Company Stock Option Plan, the Exchange Act and all other applicable Laws, including the rules of NASDAQ. The per share exercise price of each Company Option was equal to no less than
the fair market value of a share of Company Common Stock on the applicable Grant Date (as determined in accordance with the terms of the applicable Company Stock Option Plan and Section 409A of the Code), and each such grant was properly
accounted for in accordance with GAAP in the financial statements (including the related notes) of the Company and disclosed in the Company SEC Documents in accordance with the Exchange Act and all other applicable Laws. The Company has not granted,
and there is not, and has not been, any Company policy or practice to grant, Company Options prior to, or otherwise coordinate the grant of Company Options with, the release or other public announcement of material information regarding the Company
or any of the Company Subsidiaries or any of their financial results or prospects.
(d) Except for the Company Options set
forth in
Section 3.2(b)
, there are no options, warrants or other rights, agreements, arrangements or commitments of any character (i) relating, convertible into or exchangeable for capital stock of any other Equity Interests of the
Company or any Company Subsidiary or (ii) obligating the Company or any Company Subsidiary to issue, acquire or sell any Equity Interests of the Company or any Company Subsidiary. Since the close of business on December 31, 2011, the
Company has not issued any shares of its capital stock or other Equity Interests or securities convertible into or exchangeable for capital stock or other Equity Interest of the Company.
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(e) There are no outstanding obligations of the Company or any Company Subsidiary
(i) restricting the transfer of, (ii) affecting the voting rights of, (iii) requiring the repurchase, redemption or disposition of, or containing any right of first refusal with respect to, (iv) requiring the registration for
sale of or (v) granting any preemptive or antidilutive rights with respect to, any shares of Company Common Stock or other Equity Interests in the Company or any Company Subsidiary.
(f)
Section 3.2(f)
of the Company Disclosure Schedule sets forth, for each Company Subsidiary, as applicable: (i) its
authorized capital stock or other Equity Interests, (ii) the number of its outstanding shares of capital stock or other Equity Interests and type(s) of such outstanding shares of capital stock or other Equity Interests and (iii) the record
owner(s) thereof. The Company or another Company Subsidiary owns, directly or indirectly, all of the issued and outstanding shares of capital stock or other Equity Interests of each of the Company Subsidiaries, free and clear of any Liens, and all
of such shares of capital stock or other Equity Interests have been duly authorized and validly issued and are fully paid, nonassessable and free of preemptive rights. Except for Equity Interests in the Company Subsidiaries, neither the Company nor
any Company Subsidiary owns directly or indirectly any Equity Interest in any Person (including the Company), or has any obligation or has made any commitment to acquire any such Equity Interest, to provide funds to, or to make any investment (in
the form of a loan, capital contribution or otherwise) in, any Company Subsidiary or any other Person. Since the close of business on December 31, 2010, no Company Subsidiary has issued any shares of capital stock or other Equity Interests.
3.3
Authority
.
(a) The Company has all necessary corporate power and corporate authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated
hereby, including the Offer, the exercise of the Top-Up Option and, subsequent to obtaining the Company Stockholder Approval, if required, the Mergers. The execution and delivery of this Agreement by the Company and the consummation by the Company
of the transactions contemplated hereby, including the Offer, the exercise of the Top-Up Option and the Mergers, have been duly and validly authorized by all necessary corporate action, and no other corporate proceedings on the part of the Company
and no stockholder votes or consents are necessary to authorize this Agreement or to consummate the transactions contemplated hereby (other than, with respect to the Merger, (i) the Company Stockholder Approval, if required and (ii) the
filing of the Certificate of Merger with the Secretary of State of the State of Delaware in accordance with the DGCL). The Company Board, by resolutions duly adopted by unanimous vote of those voting on such matters at a meeting duly called and
held, has, and as of the date of this Agreement not subsequently rescinded or modified in any way, (x) determined that the transactions contemplated by this Agreement, including the Offer and the Mergers, are fair to, and in the best interests
of, the Company and its stockholders, (y) approved and declared advisable this Agreement and the transactions contemplated hereby, including the Offer and the Mergers and (z) resolved to recommend that the Companys stockholders
accept the Offer, tender their Shares to the Purchaser in the Offer and, to the extent applicable, adopt this Agreement. This Agreement has been duly authorized and validly executed and delivered by the Company and, assuming due authorization,
execution and delivery by Parent and the Purchaser, constitutes a legally valid and binding obligation of the Company, enforceable against the Company in accordance with its terms (except as such enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar Laws affecting creditors rights generally and subject to the effect of general principles of equity, whether considered in a proceeding in equity or at
law).
(b) The Company Board has taken or will take all action necessary on its part to render Section 203 of the DGCL
inapplicable to the execution, delivery or performance of this Agreement, the Offer, the Mergers or the Top-Up Option, including the acquisition of Shares pursuant thereto, the Tender Agreements or any other transaction contemplated by this
Agreement. Assuming the accuracy of the representations and warranties set forth in
Section 4.13
, no other moratorium, fair price, business combination, combinations with interested
stockholders, control share acquisition or similar provision of any state anti-takeover Law or other Law that purports to limit or restrict business combinations or the ability to acquire or vote shares
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(collectively,
Takeover Statutes
) is, or at the Effective Time will be, applicable to the execution, delivery or performance of this Agreement, the Offer, the Mergers or the
Top-Up Option, including the acquisition of Shares pursuant thereto, the Tender Agreements or any other transaction contemplated by this Agreement.
(c) The Company is not a party to any stockholder rights plan or poison pill agreement.
3.4
No Conflict
.
None of the execution, delivery or performance of this
Agreement by the Company, the acceptance for payment or acquisition of Shares pursuant to the Offer, the exercise of the Top-Up Option, the consummation by the Company of the Mergers or any other transaction contemplated by this Agreement, or the
Companys compliance with any of the provisions of this Agreement will (with or without notice or lapse of time, or both): (a) subject to obtaining the Company Stockholder Approval, if required, conflict with or violate any provision of
the Company Charter or Company Bylaws or any equivalent organizational or governing documents of any Company Subsidiary, (b) assuming that all consents, approvals, authorizations and permits described in
Section 3.5
have been
obtained and all filings and notifications described in
Section 3.5
have been made and any waiting periods thereunder have terminated or expired, violate any Law applicable to the Company or any Company Subsidiary or any of their
respective properties or assets or (c) require any consent or approval under, violate, result in any breach of or any loss of any benefit under, or constitute a default under, or result in termination or give to others any right of termination,
vesting, amendment, acceleration or cancellation of, or result in the creation of a Lien upon any of the respective properties or assets of the Company or any Company Subsidiary pursuant to, any Contract, Company Permit or other instrument or
obligation to which the Company or any Company Subsidiary is a party or by which they or any of their respective properties or assets may be bound or affected, except, with respect to clauses (b) and (c), for any such conflicts, violations,
consents, breaches, losses, defaults, other occurrences or Liens which, individually or in the aggregate, have not had a Company Material Adverse Effect.
3.5
Required Filings and Consents
.
Assuming the accuracy of the
representations and warranties of Parent and the Purchaser in
Section 4.4
, none of the execution, delivery or performance of this Agreement by the Company, the acceptance for payment or acquisition of Shares pursuant to the Offer, the
exercise of the Top-Up Option, the consummation by the Company of the Mergers or any other transaction contemplated by this Agreement, or the Companys compliance with any of the provisions of this Agreement will require (with or without notice
or lapse of time, or both) any consent, approval, authorization or permit of, or filing or registration with or notification to, any Governmental Authority or any other Person, other than (a) the filing of the Certificate of Merger as required
by the DGCL, (b) the receipt of the Company Stockholder Approval, if applicable, (c) compliance with the applicable requirements of the Exchange Act and the Securities Act, (d) filings with the SEC as may be required by the Company in
connection with this Agreement and the transactions contemplated hereby, (e) such filings as may be required under the rules and regulations of NASDAQ, (f) compliance with the applicable requirements of the HSR Act, and (g) where the
failure to obtain such consents, approvals, authorizations or permits of, or to make such filings, registrations with or notifications to any Governmental Authority or any other Person, individually or in the aggregate, has not had a Company
Material Adverse Effect.
3.6
Permits; Compliance With Law
.
(a) The Company and each Company Subsidiary holds all authorizations, licenses, permits, certificates, variances, exemptions, approvals,
orders, registrations and clearances of any Governmental Authority necessary for the Company and each Company Subsidiary to own, lease and operate its properties and assets, and to conduct its business as currently conducted and as currently planned
to be conducted (the
Company Permits
), except where the failure to hold the same has not had, individually or in the aggregate, a Company Material Adverse Effect. The Company and each Company Subsidiary is and since
January 1, 2009 has
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been in compliance with the terms of the Company Permits, and all of the Company Permits are valid and in full force and effect, except where the failure to be in compliance with any Company
Permits, or the failure of any Company Permits to be valid or in full force and effect, individually or in the aggregate, has not had a Company Material Adverse Effect. To the Knowledge of the Company, no suspension, modification, revocation or
cancellation of any of the Company Permits is pending or threatened, except for any such actions that, individually or in the aggregate, would not be reasonably expected to have a Company Material Adverse Effect.
(b) Neither the Company nor any Company Subsidiary is or since January 1, 2009 has been in conflict with, default under or
violation of, or is being or since January 1, 2009 has been investigated for, or charged by any Governmental Authority with a violation of, any Law applicable to the Company or any Company Subsidiary or by which any property or asset of the
Company or any Company Subsidiary is bound or affected, except for any conflicts, defaults, violations, investigations or charges that, individually or in the aggregate, have not had or would not reasonably be expected to have a Company Material
Adverse Effect. No investigation or review by any Governmental Authority with respect to the Company or any Company Subsidiary is pending or, to the Knowledge of the Company, threatened, except for such investigations or reviews, the outcomes of
which if determined adversely to the Company or any Company Subsidiary, individually or in the aggregate, have not had or would not reasonably be expected to have a Company Material Adverse Effect.
(c) To the Knowledge of the Company, neither the Company nor any Company Subsidiary, nor any officer, director, agent, consultant,
employee or other Person acting on behalf of the Company or any Company Subsidiary, has, directly or indirectly, given, promised, offered or authorized the same, or paid anything of value to any recipient that was, is or would be prohibited under
(i) the Foreign Corrupt Practices Act of 1977, as amended, or any rules or regulations promulgated thereunder and (ii) any other comparable anti corruption and/or anti bribery Laws of any Governmental Authority of any jurisdiction
applicable to the Company (whether by virtue of jurisdiction or organization or conduct of business).
(d) The books, records
and accounts of the Company and to the Knowledge of the Company, the Company Subsidiaries have at all times accurately and fairly reflected, in reasonable detail, the transactions and disposition of their respective funds and assets. To the
Knowledge of the Company, there have never been any false or fictitious entries made in the books, records, or accounts of the Company or any Company Subsidiary relating to any illegal payment or secret or unrecorded fund, and neither the Company
nor any Company Subsidiary has established or maintained a secret or unrecorded fund.
(e) Since December 31, 2008, to
the Knowledge of the Company, the Company and the Company Subsidiaries have at all times conducted their export and related transactions in all material respects in accordance with (i) all applicable export, re-export, and anti-boycott Laws of
the United States, including the Arms Export Control Act (22 U.S.C.A. § 2278), the Export Administration Act (50 U.S.C. App. §§ 2401-2420), the International Traffic in Arms Regulations (22 C.F.R. 120-130), and United States economic
sanctions Laws administered by the United States Treasury Departments Office of Foreign Assets Control and (ii) all other applicable import and export control Laws in any countries in which the Company or any Company Subsidiary conducts
business.
3.7
SEC Filings; Financial Statements
.
(a) Since January 1, 2009, the Company has timely filed or otherwise furnished (as applicable) all registration statements,
prospectuses, forms, reports, definitive proxy statements, schedules, statements and documents required to be filed or furnished by it under the Securities Act or the Exchange Act, as the case may be, together with all certifications required
pursuant to the Sarbanes-Oxley Act (such documents and any other documents filed by the Company or any Company Subsidiary with the SEC, as have been supplemented, modified or amended since the time of filing, collectively, the
Company SEC
Documents
). As of their respective filing dates the Company SEC Documents (i) did not (or with respect to Company SEC Documents filed after the date hereof, will not) contain any untrue statement of any material fact or omit to state
a material
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fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading and (ii) complied in
all material respects with the applicable requirements of the Exchange Act or the Securities Act, as the case may be, the Sarbanes-Oxley Act and the applicable rules and regulations of the SEC thereunder. None of the Company Subsidiaries is
currently required to file any forms, reports or other documents with the SEC.
(b) All of the audited consolidated financial
statements and unaudited consolidated interim financial statements of the Company and the consolidated Company Subsidiaries included in the Company SEC Documents (A) have been or will be, as the case may be, prepared from, are in accordance
with, and accurately reflect the books and records of the Company and the consolidated Company Subsidiaries in all material respects, (B) have been or will be, as the case may be, prepared in accordance with GAAP applied on a consistent basis
during the periods involved (except as may be indicated in the notes thereto or, in the case of interim financial statements, for normal and recurring year-end adjustments that are not material in amount or nature and as may be permitted by the SEC
on Form 10-Q, Form 8-K or any successor or like form under the Exchange Act) and (C) fairly present in all material respects the consolidated financial position and the consolidated results of operations, cash flows and changes in
stockholders equity of the Company and the consolidated Company Subsidiaries as of the dates and for the periods referred to therein. Without limiting the generality of this
Section 3.7(b)
, since January 1, 2009, (i) no
independent public accountant of the Company has resigned or been dismissed as independent public accountant of the Company as a result of or in connection with any disagreement with the Company on a matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedure, (ii) no executive officer of the Company has failed in any respect to make, without qualification, the certifications required of him or her under Section 302 or 906 of the
Sarbanes-Oxley Act with respect to any form, report or schedule filed by the Company with the SEC since the enactment of the Sarbanes-Oxley Act, and (iii) no enforcement action has been initiated or, to the Knowledge of the Company, threatened
against the Company by the SEC relating to disclosures contained in any Company SEC Document.
3.8
Internal Controls;
Sarbanes-Oxley Act
.
(a) The Company has designed and maintains a system of internal controls over financial reporting (as
defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) sufficient to provide reasonable assurances regarding the reliability of financial reporting for the Company and the Company Subsidiaries. The Company (i) has designed and maintains
disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) to ensure that material information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms and is accumulated and communicated to the Companys management as appropriate to allow timely decisions regarding required
disclosure and (ii) since January 1, 2010, has disclosed to the Companys auditors and the audit committee of the Company Board (and made summaries of such disclosures available to Parent) (A) any known significant deficiencies
and material weaknesses in the design or operation of internal controls over financial reporting that are reasonably likely to adversely affect in any material respect the Companys ability to record, process, summarize and report financial
information and (B) any fraud, whether or not material, that involves management or other employees who have a significant role in the Companys internal controls over financial reporting.
(b) Neither the Company nor any Company Subsidiary nor, to the Knowledge of the Company, any director, officer, auditor, accountant or
representative of the Company or any Company Subsidiary 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 Company Subsidiary has engaged
in questionable accounting or auditing practices. No current or former attorney representing the Company or any Company Subsidiary has reported evidence of a material violation of securities Laws, breach of fiduciary duty or similar violation by the
Company or any Company Subsidiary, or any of their respective officers, directors, employees or agents, to the current Company Board or any committee thereof or to any current director or executive officer of the Company.
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(c) To the Knowledge of the Company, no employee of the Company or any Company Subsidiary
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 legal requirements of the type described in Section 806
of the Sarbanes-Oxley Act by the Company or any Company Subsidiary. Neither the Company nor any Company Subsidiary nor, to the Knowledge of the Company, any director, officer, employee, contractor, subcontractor or agent of the Company or any
Company Subsidiary, has discharged, demoted, suspended, threatened, harassed or in any other manner discriminated against an employee of the Company or any Company Subsidiary in the terms and conditions of employment because of any lawful act of
such employee described in Section 806 of the Sarbanes-Oxley Act.
(d) As of the date of this Agreement, there are no
outstanding or unresolved comments in comment letters received from the SEC with respect to the Company SEC Documents. To the Knowledge of the Company, none of the Company SEC Documents is the subject of ongoing SEC review and there are no inquiries
or investigations by the SEC or any Governmental Authority or any internal investigations pending or threatened, in each case regarding any accounting practices of the Company or any Company Subsidiary.
(e) The Company is in compliance in all material respects with the applicable listing and corporate governance rules and regulations of
NASDAQ.
3.9
Books and Records
.
The books and records of the Company and each Company Subsidiary have been, and are being fully, properly and accurately maintained in accordance with GAAP (to the extent applicable) and any other
applicable legal and accounting requirements and reflect only actual transactions. The minute books of the Company and each Company Subsidiary, all of which have been made available by the Company to Parent, contain in all material respects complete
and correct records of all meetings and other corporate actions held or taken since January 1, 2007 by their respective stockholders (or equivalent) and boards of directors (or equivalent), including committees of their respective boards of
directors (or equivalent).
3.10
No Undisclosed Liabilities
.
Except for those liabilities and obligations (a) specifically reserved against or provided for in the audited condensed consolidated
balance sheet of the Company as of December 31, 2011 or in the notes thereto, (b) incurred in the ordinary course of business consistent with past practice since December 31, 2011, which have not had a Company Material Adverse Effect,
or (c) incurred under this Agreement or in connection with the transactions contemplated hereby, including the Offer and the Mergers, neither the Company nor any Company Subsidiary has incurred any liabilities or obligations of the type
required to be disclosed in the liabilities column of a balance sheet prepared in accordance with GAAP.
3.11
Absence of
Certain Changes or Events
.
(a) Since December 31, 2011, (i) except for the execution and performance of this
Agreement and the discussions and negotiations related thereto, the Company and the Company Subsidiaries have conducted their respective businesses in all material respects in the ordinary course of business consistent with past practice and
(ii) there has not been any Company Material Adverse Effect.
(b) There has not been any action taken by the Company or
any Company Subsidiary from December 31, 2011 through the date of this Agreement that, if taken during the period from the date of this Agreement through the Effective Time, would constitute a breach of
Section 5.1
.
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3.12
Employee Benefit Plans
.
(a)
Section 3.12(a)
of the Company Disclosure Schedule sets forth a complete and accurate list of each material Company
Employee Plan. With respect to each Company Employee Plan, the Company has provided to the Purchaser complete and accurate copies of (A) each such Company Employee Plan, including any material amendments thereto, and descriptions of all
material terms of any such plan that is not in writing, (B) each trust, insurance, annuity or other funding Contract related thereto, (C) all summary plan descriptions, including any summary of material modifications, and any other
material notice or description provided to employees, (D) the three most recent financial statements and actuarial or other valuation reports prepared with respect thereto, (E) the most recently received IRS determination letter, if any,
issued by the IRS with respect to any Company Employee Plan that is intended to qualify under Section 401(a) of the Code, (F) the three most recent annual reports on Form 5500 (and all schedules thereto) required to be filed with the IRS
with respect thereto and (G) all other material filings and material correspondence with any Governmental Authority (including any correspondence regarding actual or, to the Knowledge of the Company, threatened audits or investigations) with
respect to each Company Employee Plan.
(b) Each Company Employee Plan (and any related trust or other funding vehicle) has
been maintained and administered in all material respects in accordance with its terms and is in compliance in all material respects with ERISA, the Code and all other applicable Laws. Each of the Company and the Company Subsidiaries has performed
all material obligations required to be performed by it under all Company Employee Plans.
(c) No Company Employee Plan is,
and none of the Company, any of the Company Subsidiaries or any ERISA Affiliate thereof sponsors, maintains, contributes to, or has ever sponsored, maintained, contributed to, or has any actual or contingent liability with respect to any
(i) single employer plan or other pension plan that is subject to Section 302 or Title IV of ERISA or Section 412 of the Code, (ii) multiple employer plan within the meaning of Section 413(c) of the Code,
(iii) any multiemployer plan within the meaning of Section 3(37) of ERISA) or (iv) multiple employer welfare arrangement (within the meaning of Section 3(4) of ERISA).
(d) Each Company Employee Plan that is intended to be qualified under Section 401(a) of the Code has timely received or applied for
a favorable determination letter or is entitled to rely on a favorable opinion letter from the IRS, in either case, that has not been revoked and, to the Knowledge of the Company, no event or circumstance exists that has adversely affected or would
reasonably be expected to materially and adversely affect such qualification or exemption. Each trust established in connection with any Company Employee Plan which is intended to be exempt from federal income taxation under Section 501(a) of
the Code is so exempt, and, to the Knowledge of the Company, no fact or event has occurred that would reasonably be expected to materially and adversely affect the exempt status of any such trust. Neither the Company nor any Company Subsidiary, with
respect to any Company Employee Plan, has engaged in any non-exempt prohibited transaction (within the meaning of Section 406 of ERISA or Section 4975 of the Code) which could result in the imposition of a material penalty assessed
pursuant to Section 502(i) of ERISA or a material tax imposed by Section 4975 of the Code on the Company or any Company Subsidiary.
(e) None of the execution, delivery or performance of this Agreement by the Company, the acceptance for payment or acquisition of Shares pursuant to the Offer, the exercise of the Top-Up Option, the
consummation by the Company of the Mergers or any other transaction contemplated by this Agreement, or the Companys compliance with any of the provisions of this Agreement will (either alone or in conjunction with any other event, including
any termination of employment on or following the Effective Time) (i) entitle any Participant to any compensation or benefit, (ii) accelerate the time of payment or vesting, increase the amount of payment, or trigger any payment or
funding, of any compensation or benefit or trigger any other material obligation under any Company Employee Plan, or (iii) trigger any funding (through a grantor trust or otherwise) of compensation, equity award or other benefits.
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(f) With respect to each disqualified individual (as defined in
Section 280G(c) of the Code) who could receive any excess parachute payment (as defined in Section 280G(b)(1) of the Code), the Company has made available or will make available as soon as reasonably practicable following the
date hereof to Parent and the Purchaser (i) a list of such Persons name and title (ii) Form W-2s for the five years ending 2012 (or for such shorter period during which a disqualified individual provided service to the Company) and
(iii) a list of Company Employee Plans providing for parachute payments (as defined in Section 280G(b)(2) of the Code) such Person could receive. Except as set forth in
Section 3.12(f)
of the Company Disclosure
Schedule, none of the execution, delivery or performance of this Agreement by the Company, the acceptance for payment or acquisition of Shares pursuant to the Offer, the exercise of the Top-Up Option, the consummation by the Company of the Mergers
or any other transaction contemplated by this Agreement, nor the Companys compliance with any of the provisions of this Agreement (alone or in conjunction with any other event, including any termination of employment on or following the
Effective Time), will result in any parachute payment under Section 280G of the Code.
(g) No Company
Employee Plan provides for any gross-up, reimbursement or additional payment by reason of any Tax imposed under Section 409A or Section 4999 of the Code.
(h) Each material Company Employee Plan that constitutes a nonqualified deferred compensation plan (within the meaning of Section 409A of the Code) is set forth in
Section 3.12(h)
of the
Company Disclosure Schedule and has been maintained and operated in material documentary and operational compliance with Section 409A or the Code or an available exemption therefrom.
(i) Each material Company Employee Plan maintained or contributed to by the Company or any Company Subsidiary under the law or
applicable custom or rule of the relevant jurisdiction outside of the United States (each such Company Employee Plan, a
Foreign Plan
) is listed in
Section 3.12(i)
of the Company Disclosure Schedule. As regards each
Foreign Plan, (i) such Foreign Plan is in material compliance with the provisions of applicable Law of each jurisdiction in which such Foreign Plan is maintained, (ii) such Foreign Plan has been administered in all material respects at all
times in accordance with its terms and applicable Laws, and (iii) such Foreign Plan has obtained from the Governmental Authority having jurisdiction with respect to such Foreign Plan any required determinations, if any, that such Foreign Plan
is in compliance in all material respects with the Laws of the relevant jurisdiction if such determinations are required in order to give effect to such Foreign Plan. No Foreign Plan has unfunded liabilities that will not be offset by insurance or
that are not fully accrued on the financial statements of the Company.
(j) Neither the Company nor any Company Subsidiary is
a party to any Contract or plan that would reasonably be likely to result, separately or in the aggregate, in the payment of any material amount that will not be fully deductible as a result of Section 162(m) of the Code (or any corresponding
provision of any other applicable Tax Laws).
(k) Neither the Company nor any Company Subsidiary has any liability in respect
of, or obligation to provide, post-retirement health, medical, disability or life insurance benefits for retired, former or current employees, consultants or directors of the Company or Company Subsidiaries (or the spouses, dependent or
beneficiaries of any of the foregoing), whether under a Company Employee Plan or otherwise, except as required to comply with Section 4980B of the Code or any similar Law.
3.13
Labor and Other Employment Matters
.
(a) Each of the Company and the Company Subsidiaries is in compliance in all material respects with all applicable Laws respecting labor, employment, immigration, fair employment practices, terms and
conditions of employment, worker classification, workers compensation (including the proper classification of workers as independent contractors and consultants and of employees as exempt or non-exempt, in each case, under the Fair Labor
Standards Act of 1938, as amended, and any similar applicable Law), occupational health
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and safety, plant closings, compensation and benefits, wages and hours, meal and rest periods, human rights, pay equity, and industrial awards or agreements. The Company has made available to
Parent and the Purchaser a true and complete list of the names and current annual salary rates or current hourly wages, bonus opportunity, hire date, credited service, accrued vacation or paid-time-off, principal work location and leave status of
all present employees of the Company and each Company Subsidiary and each such employees status as being exempt or nonexempt from the application of state and federal wage and hour Laws applicable to employees who do not occupy a managerial,
administrative, or professional position.
(b) As of the Closing Date, the Company and each Company Subsidiary has paid in
full all liabilities in respect of employees, including premium contributions, remittance and assessments for unemployment insurance, employer health tax, income tax, workers compensation and any liabilities under any other employment-related
legislation, accrued wages, taxes, salaries, commissions, bonuses, benefits, compensation and employee benefit plan payments. Neither the Company nor any Company Subsidiary has an obligation to re-instate any former employees or independent
contractors.
(c) Neither the Company nor any of the Company Subsidiaries is or has been a party to any collective
bargaining, employee association or works council or similar Contract, and there are not, to the Knowledge of the Company, any union, employee association or works council organizing activities concerning any employees of the Company or any of the
Company Subsidiaries. There are no unfair labor practice charges pending before the National Labor Relations Board or any other Governmental Authority, or any Actions which are pending or, to the Knowledge of the Company, threatened by or on behalf
of any employees. Neither the Company nor any of the Company Subsidiaries has recognized any trade union, whether voluntarily or in terms of any statutory procedure as set out in any applicable Law. There have been no labor strikes, slowdowns, work
stoppages, picketings, negotiated industrial actions or lockouts pending or, to the Knowledge of the Company, threatened, against the Company or any of the Company Subsidiaries.
(d) In the three years prior to the date of this Agreement, neither the Company nor any Company Subsidiary has effectuated (i) a
plant closing (as defined in the Worker Adjustment and Retraining Notification Act (the
WARN Act
) or any similar Law) affecting any site of employment or one or more facilities or operating units within any site of
employment or facility of the Company or any Company Subsidiary or (ii) a mass layoff (as defined in the WARN Act, or any similar Law) affecting any site of employment or facility of the Company or any Company Subsidiary.
(e) The Company has made available to Parent and the Purchaser a list of all independent contractors, consultants, agents or
agency employees currently engaged by the Company and each Company Subsidiary, along with the position, date of retention and rate of remuneration for each such individual. Except as set forth on such list, neither the Company nor any Company
Subsidiary engages or retains any independent contractors, consultants, agents or agency employees.
(f) The compensation
committee of the Company Board is (and at all times during the past 18 months was, and at all times from the date of this Agreement to the first date on which the Parents designees constitute a majority of the Company Board pursuant to
Section 1.3
will be) composed solely of independent directors within the meaning of Rule 14d-10(d)(2) under the Exchange Act and the instructions thereto. The Company Board, at a meeting duly called and held, has determined
that each of the members of the Compensation Committee of the Company Board is such an independent director. On or prior to the date hereof, the compensation committee of the Company Board, at a meeting duly called and held, approved
each Company Compensation Arrangement as an employment compensation, severance or other employee benefit arrangement within the meaning of Rule 14d-10(d)(1) under the Exchange Act (an
Employment Compensation
Arrangement
), and has taken all other action necessary to satisfy the requirements of the non-exclusive safe-harbor with respect to such Company Compensation Arrangements in accordance to Rule 14d-10(d)(2) under the Exchange Act. For
purposes of this Agreement,
Company Compensation Arrangement
means (i) any employment agreement, severance agreement or change of control agreement between the Company, Parent or
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any Company Subsidiary, on the one hand, and any holder of Shares who is or was a director, officer or employee of the Company or any Company Subsidiary, on the other hand, (ii) any Company
Options awarded to, or any acceleration of vesting of any Company Options held by, any holder of Shares who is or was a director, officer or employee of the Company or any Company Subsidiary and (iii) other Employment Compensation Arrangements
entered into or proposed to be entered into between Parent or its direct or indirect Subsidiaries, on the one hand, and certain officers of the Company, on the other hand, each as described on
Section 3.13(e)
of the Company Disclosure
Schedule.
3.14
Contracts; Indebtedness
.
(a)
Section 3.14(a)
of the Company Disclosure Schedule sets forth an accurate and complete list of each Contract to which the Company or any Company Subsidiary is a party or which binds or
affects their respective properties or assets, and which falls within any of the following categories:
(i) Contracts between
the Company or any Company Subsidiary and any of the 10 largest licensees or other customers of such Persons (determined on the basis of aggregate revenues recognized by the Company and the Company Subsidiaries during the fiscal year ended
December 31, 2011);
(ii) Contracts between the Company or any Company Subsidiary and any (A) Third Party pursuant
to which the Company or any Company Subsidiary has acquired or is authorized to use any Third Party Intellectual Property (other than Standard Software), (B) of the 10 largest suppliers (other than a licensor) that are material, including any
supplier of manufacturing, outsourcing, foundry, assembly (packaging), design or development services (determined on the basis of aggregate payments recognized by the Company and the Company Subsidiaries during the fiscal year ended
December 31, 2011) and (C) any sales representative, distributor, original equipment manufacturer, manufacturing, value added, remarketer, reseller, or independent software vendor agreement that is material for the use or distribution
of Company Products or Company IP (provided, however, that for listing purposes under this subsection (C), the foregoing Contracts do not need to include Contracts on Standard Forms, so long as all Contracts described by this subsection
(C) constitute Material Contracts whether or not executed on Standard Forms);
(iii) except for the Contracts disclosed
in clauses (i) or (ii) above, each Contract that involves performance of services or delivery of goods, materials, supplies or equipment or developmental, consulting or other services commitments by the Company or any Company Subsidiary,
or the payment therefor by the Company or any Company Subsidiary, providing for either (A) recurring annual payments after the date hereof of $100,000 or more or (B) aggregate payments or potential aggregate payments after the date hereof
of $200,000 or more (
provided
however
, that such thresholds shall be $200,000 and $400,000, respectively, with respect to the purchase of Company Products in the ordinary course of business pursuant to Standard Forms);
(iv) Contracts providing for any contingent payments by the Company or any Company Subsidiary exceeding $100,000 in any one case;
(v) Contracts that (A) restrict the Company or its Subsidiaries or Affiliates from competing or engaging in any
material respect in any line of business of the Company and its Subsidiaries or with any Person or in any geographic area or (B) require any material benefit be granted to a Third Party, or material right be lost by Company, its Subsidiaries or
Affiliates, or the successors to either, as a result of competing in or engaging in any line of business of the Company and its Subsidiaries, or with any Person or in any geographic area;
(vi) Contracts that (A) grant any exclusive license or exclusive supply or distribution agreement to any Company Products or
Company IP, (B) grant any right of first refusal, or similar right to acquire exclusive rights or ownership with respect to any Company Product, or Company IP, (C) contain any provision that requires the purchase of all or a given portion
of the Companys or any Company Subsidiarys
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requirements for products or services from a given Third Party, or any other similar provision, (D) grant most favored nation rights, (E) grant material guaranteed
availability of supply of Company Products for a period greater than twenty-four months, (F) grant exclusive rights to purchase any Company Products, including products produced through foundry services, (G) guarantee as to foundry
capacity or priority, or (H) guarantee prices for a period of greater than twenty-four months;
(vii) Contracts pursuant
to which the Company or any Company Subsidiary has agreed to provide source code of Company Proprietary Software to be put in escrow or to be provided to any Third Party (other than source code for software drivers, APIs and similar tools, or
immaterial portions of source code of Company Proprietary Software provided pursuant to a software development kit license or disclosed in connection with trials, demonstrations or similar arrangements, in each case on a non-exclusive basis and
subject to written non-disclosure and non-use restrictions imposed on the recipient);
(viii) Company IP Contracts, except
for Contracts where Company or its Subsidiaries grant non-exclusive licenses relating to Company Products in the ordinary course of business of the Company and its Subsidiaries;
(ix) [reserved]
(x) Leases, subleases, occupancy agreements and other agreements (whether of real or personal property) to which the Company or any Company Subsidiary is party as either lessor or lessee, providing for
either (A) annual payments after the date hereof of $100,000 or more or (B) aggregate payments after the date hereof of $100,000 or more;
(xi) Contracts relating to Indebtedness for borrowed money or the deferred purchase price of property (in either case, whether incurred, assumed, guaranteed or secured by any asset), except any such
agreement with an aggregate outstanding principal amount not exceeding $100,000 and which may be prepaid on not more than thirty (30) days notice without the payment of any penalty;
(xii) Contracts pursuant to which the Company or any Company Subsidiary is a party that creates or grants a material Lien (including
Liens upon properties acquired under conditional sales, capital leases or other title retention or security devices), other than Permitted Liens and other than Contracts with customers entered into in the ordinary course of business consistent with
past practice;
(xiii) Contracts under which the Company or any Company Subsidiary has, directly or indirectly, made any
loan, capital contribution to, or other investment in, any Person (other than the Company or any Company Subsidiary and other than (i) extensions of credit in the ordinary course of business consistent with past practice and
(ii) investments in marketable securities in the ordinary course of business);
(xiv) Contracts under which the Company
or any Company Subsidiary have any obligations which have not been satisfied or performed (other than confidentiality obligations) relating to the acquisition or disposition of any business (whether by merger, sale of stock, sale of assets or
otherwise) with a purchase price in excess of $100,000;
(xv) any Contracts (A) (1) between the Company or any
Company Subsidiary and any Governmental Authority or (2) between the Company or any Company Subsidiary, as a subcontractor and any prime contractor to any Governmental Authority or (B) to the Knowledge of the Company, financed by any
Governmental Authority and subject to the rules and regulations of any Governmental Authority concerning procurement;
(xvi)
partnership, joint venture or other similar Contract or arrangement material to the Company and the Company Subsidiaries, taken as a whole;
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(xvii) Contracts providing for the development of any material Technology or any material
Intellectual Property Right, independently or jointly, by or for the Company or any Company Subsidiary;
(xviii) collective
bargaining agreement or other Contract with any labor union;
(xix) severance agreements, programs, policies, arrangements or
Contracts providing any individual with severance payments and/or benefits in excess of $75,000 in the aggregate;
(xx) all
employment agreements or Contracts for the employment or engagement of any officer, individual employee, consultant or other Person on a full time, part time, consulting or other basis (A) providing annual compensation (whether cash and/or
otherwise) in excess of $150,000, (B) providing for the payment of any cash or other compensation or benefits upon the consummation of the transactions contemplated by this Agreement or (C) otherwise restricting the Companys (or any
Company Subsidiarys) ability to terminate the employment or engagement of any employee or consultant at any time for any lawful reason or for no reason without penalty or liability;
(xxi) Contract entered into in the last three years in connection with the settlement or other resolution of any Action or Order that
has any continuing material obligations, liabilities or restrictions or involved payment of more than $100,000;
(xxii)
Contract providing for indemnification of any Person with respect to material liabilities relating to any current or former business of the Company, any Company Subsidiary or any predecessor Person other than indemnification obligations of the
Company or any Company Subsidiary pursuant to the provisions of a Contract entered into by the Company or any Company Subsidiary in the ordinary course of business consistent with past practice; and
(xxiii) any other material contract (as such term is defined in Item 601(b)(10) of Regulation S-K of the SEC).
(b) Each Contract of the type described in
Section 3.14(a)
is referred to herein as a
Company Material
Contract
. Accurate and complete copies of each Company Material Contract have been provided by the Company to Parent, or publicly filed with the SEC.
(c) (i) Each Company Material Contract is a legally valid, binding and enforceable obligation of the Company or the Company Subsidiaries, as applicable, and, to the Knowledge of the Company, of the other
party or parties thereto, in accordance with its terms, subject to applicable bankruptcy, insolvency and similar Laws affecting creditors rights generally and subject, as to enforceability, to general principles of equity, (ii) each of
the Company and each Company Subsidiary has in all material respects performed the obligations required by it under each Company Material Contract, (iii) to the Knowledge of the Company, none of the Company or any Company Subsidiary knows of,
or has received written notice of, any violation or default under (nor does there exist any condition which upon the passage of time or the giving of notice or both would cause such a violation of or default under) any Company Material Contract and
(iv) neither the Company nor any Company Subsidiary has received any written notice from any other party to terminate any such Company Material Contract, and otherwise has no Knowledge, that such party intends to terminate, or not renew, any
such Company Material Contract.
(d) No director, officer, employee, Affiliate (which for purposes of this
Section 3.14(d)
shall include any stockholder of the Company that owns more than 5% of the Company Common Stock) or associate or members of any of their immediate family (as such terms are respectively defined in
Rule 12b-2 and Rule 16a-1 of the Exchange Act) of the Company or any Company Subsidiary, other than in its capacity as a director, officer or employee of such Person (i) is involved, directly or indirectly, in any material business arrangement
or other material relationship with the Company or any Company Subsidiary (whether written or oral), (ii) directly or indirectly owns, or otherwise has any right, title, interest in, to or under, any material
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property or right, tangible or intangible, that is used by the Company or any Company Subsidiary or (iii) is engaged, directly or indirectly, in the conduct of the business of the Company
and the Company Subsidiaries.
3.15
Litigation
.
(a) There is no Order or Action pending or, to the Knowledge of Company, threatened in writing against the Company or any Company
Subsidiary or their respective assets or properties, or for which the Company or any Company Subsidiary has potential liability (including by virtue of indemnification or otherwise), and (b) to the Knowledge of the Company, there is no Action
pending against any executive officer or director of the Company or any Company Subsidiary in their capacity as such that, in each case under clause (a) and clause (b), has had a Company Material Adverse Effect. As of the date of this
Agreement,
Section 3.15
of the Company Disclosure Schedule sets forth a description of each current Action or Order pending, instituted or, to the Knowledge of the Company, threatened in writing against the Company or any Company
Subsidiary or their respective assets or properties, or any executive officer of the Company or any Company Subsidiary in their capacity as such, or for which the Company or any Company Subsidiary has potential liability (including by virtue of
indemnification or otherwise). To the Knowledge of the Company, neither the Company nor any Subsidiary is subject to any continuing investigation by any Governmental Authority.
3.16
Environmental Matters
.
Except in each case as would not be reasonably expected to be material and adverse to the business of the Company and the Company Subsidiaries, taken as a whole:
(a) no notice, demand, request for information, citation, summons or Order has been received, no complaint has been filed, no penalty
has been assessed, and no Action is pending and, to the Knowledge of the Company, is threatened by any Governmental Authority or other Person relating to or arising out of any failure of the Company or any Company Subsidiary to comply with any
Environmental Law;
(b) the Company and each Company Subsidiary is and has been in compliance with all Environmental Laws and
all Environmental Permits of the Company;
(c) there has been no release by the Company or any Company Subsidiary, or for
which the Company or any Company Subsidiary would reasonably be expected to be liable by Contract or by operation of Law, of any Hazardous Substance at, under, from or to any facility or real property currently or formerly owned, leased or operated
by any the Company or any Company Subsidiary;
(d) there are no liabilities of the Company or any Company Subsidiary of any
kind whatsoever, whether accrued, contingent, absolute, determined, determinable or otherwise arising under or relating to any Environmental Law or any Hazardous Substance and, to the Knowledge of the Company, there is no condition, situation or set
of circumstances that could reasonably be expected to result in or be the basis for any such liability;
(e) neither the
Company nor any Company Subsidiary has disposed or arranged for the disposal of any Hazardous Substance at any off-site location;
(f) the Company has provided all documents related to the Companys (and the Company Subsidiaries) compliance with all Environmental Laws, including all Phase I and Phase II environmental
reports, environmental assessments, studies, correspondence and permits; and
(g) neither the Company nor any Company
Subsidiary owns, leases or operates or has owned, leased or operated any real property, or conducts or has conducted any operations, in New Jersey or Connecticut.
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(h) For purposes of this
Section 3.16
, the terms Company and
Company Subsidiary shall include any entity that is, in whole or in part, a predecessor of the Company or any Company Subsidiary.
3.17
Intellectual Property
.
(a)
Products and Services
.
3.17(a)(i)
of the Company Disclosure Schedule identifies as of the date of this Agreement each Company Product currently made available to Third Parties for sale, license or lease, together with any Company Product currently under development
by the Company or any Company Subsidiary, as reflected by the Companys and its Subsidiaries product road maps as of the date of the Agreement.
Section 3.17(a)(ii)
of the Company Disclosure Schedule contains a list of all
Contracts pursuant to which the Company or of its Subsidiaries is obligated to pay royalties, fees, commissions, and other amounts to Third Parties for the manufacture, sale, or distribution of any Company Product or the use of any Company IP or
Third Party Intellectual Property.
(b)
Registered IP
.
Section 3.17(b)
of the Company Disclosure Schedule
accurately identifies as of the date of this Agreement (i) each item of Registered IP in which the Company or any Company Subsidiary has or purports to have an ownership interest (whether exclusively, jointly with another Person, or otherwise),
(ii) for Patents, Trademarks, mask works and Copyrights the jurisdiction in which such item of Registered IP has been registered or filed and the applicable application, registration, or serial or other similar identification number, and
(iii) any other Person who has an ownership interest in such item of Registered IP and the nature of such ownership interest.
(c) [reserved]
(d)
Licenses Granted
.
Licenses Granted
.
Section 3.17(d)
of the Company Disclosure Schedule accurately identifies as of the date of this Agreement each Contract pursuant to which any Person has been granted any license under, or otherwise has received or acquired any right
(whether or not currently exercisable) or interest in, any Company IP, other than non-exclusive licenses granted in the ordinary course of business consistent with past practice.
(e)
Ownership
. The Company and/or the Company Subsidiaries exclusively own all right, title, and interest in and to the Company
IP free and clear of any Liens (other than Permitted Liens and nonexclusive licenses granted in the ordinary course of business). Neither the Company nor any Company Subsidiary has transferred ownership of (whether a whole or partial interest), or
granted any exclusive right to use, any Company IP to any Person. Since May 1, 2006, neither the Company nor any Company Subsidiary has received any written claims challenging the Companys or the Company Subsidiarys exclusive
ownership of any Company IP or the validity or enforceability of any Company IP. Each Person who is or was an employee, officer, director or contractor of the Company or any Company Subsidiary and who contributed to the conception or development of
any Company IP has signed an agreement containing an assignment to the Company and the Company Subsidiaries, as applicable, of all Intellectual Property Rights in such Persons contribution to the Company IP except to the extent such
Intellectual Property Rights are not legally assignable. No Person has notified the Company or any Company Subsidiary in writing that it is claiming any ownership of or right to use any Company IP (other than the right to use Company IP expressly
granted to such Person under a Contract with the Company).
(f)
Registration; Validity
. The Company IP is, to the
Knowledge of the Company, valid, subsisting, and enforceable. The Company and each Company Subsidiary has made all filings and payments and taken all other actions required by law to be made or taken to maintain each item of Company IP that is
Registered IP in full force and effect by the applicable deadline, except where Company has decided to allow any such registration to lapse. To the knowledge of the Company, no interference, opposition, reissue, reexamination, or other Action is or
since January 1, 2010, has been pending or threatened, in which the scope, validity, or enforceability of any Company IP is being or has been contested or challenged. No application for a Patent or a material copyright, mask work, or Trademark
registration or any other type of material Registered IP filed by or
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on behalf of the Company or any Company Subsidiary at any time since January 1, 2011 has been abandoned, allowed to lapse, or rejected.
Section 3.17(f)
of the Company Disclosure
Schedule sets forth a summary listing with respect to each item of Registered IP and all legally required actions, filings and payment obligations known to Company as of the Closing Date hereof and due to be made to any Governmental Authority within
one hundred and eighty (180) days following the Closing Date.
(g)
Non-infringement
. Except as set forth in
Section 3.17(g)
of the Company Disclosure Schedule, to the Knowledge of the Company, since May 1, 2006, with respect to a claim under a Patent, and since January 1, 2010, with respect to a claim under any other Intellectual
Property Right of a Third Party, neither the Company Products nor the operation of the business of the Company and its Subsidiaries has infringed, misappropriated or violated, or infringes, misappropriates, or violates, any Intellectual Property
Right of any Third Party. To the knowledge of the Company, no infringement, misappropriation, or similar claim or Action is pending or has been threatened in writing against any Person who may be entitled to be indemnified by the Company or any
Company Subsidiary under a Contract with the Company or a Company Subsidiary, and who has provided notice of such claim to the Company or a Company Subsidiary, with respect to such claim. Since May 1, 2006 neither the Company nor any Company
Subsidiary has received any written claim alleging (i) the invalidity of any of the Company IP or (ii) any infringement, misappropriation, or violation of any Intellectual Property Right of another Person by the Company or any Company
Subsidiary.
(h)
Infringement of Company IP
. To the Knowledge of the Company, no Person is currently infringing,
misappropriating, or otherwise violating, the Intellectual Property Rights in any Company IP.
(i)
Sufficiency
. The
Company and the Company Subsidiaries own or otherwise have the right to use all Intellectual Property Rights and to the Companys Knowledge, Technology, used in or necessary for the conduct of the business of the Company and the Company
Subsidiaries as currently conducted. The Company IP together with all Company-owned Technology and the Third Party Intellectual Property constitutes all of the Technology and Intellectual Property Rights necessary to operate the business of the
Company and the Company Subsidiaries as currently conducted, provided that as to Technology, the foregoing is only to the Companys Knowledge.
(j)
Effect of Transaction
. Except with respect to any Contract to which Purchaser or any of its Subsidiaries is a party prior to the Closing and which are unrelated to this transaction, the
execution, delivery and performance of this Agreement, and the Closing, will not, with or without notice or the lapse of time, result in or give any other Person the right or option to cause: (i) a loss of, or Lien on, any Company IP
(ii) a material breach of, termination of, or acceleration or modification of any right under any Contract listed or required to be listed in
Sections 3.14(a)(ii)
and
3.17(d)
of the Company Disclosure Schedule; (iii) the
release, disclosure, or delivery of any Company IP by or to any escrow agent or other Person; or (iv) the grant, assignment or transfer to any other Person of any license or other right or interest under, to or in any of the Company IP.
(k)
Source Code
. Except as set forth in
Section 3.17(k)
of the Company Disclosure Schedule, neither the
Company nor any Company Subsidiary has disclosed, licensed, made available or delivered to any escrow agent or any Third Party any of the source code for any Company Proprietary Software (other than source code for software drivers, APIs and
similar tools, or immaterial portions of source code of Company Proprietary Software provided pursuant to a software development kit license or disclosed in connection with trials, demonstrations or similar arrangements, in each case on a
non-exclusive basis and subject to written non-disclosure and non-use restrictions imposed on the recipient). To the knowledge of the Company, no event has occurred, and no circumstance or condition exists, that (with or without notice or lapse of
time) legally entitles a Person to delivery, license, or disclosure of any source code for any Company Proprietary Software where such Person is not, as of the date of this Agreement, an employee of the Company or any Company Subsidiary.
(l)
Open Source
. No Company Proprietary Software is subject to any copyleft or other obligation or condition
(including any obligation or condition under any open source license such as the GNU
A-29
Public License, Lesser GNU Public License, or Mozilla Public License) that (i) requires, or conditions the use or distribution of such Company Proprietary Software, (A) the disclosure,
licensing, or distribution of the source code for such Company Proprietary Software or portion thereof or (B) the granting to licensees of the right to make derivative works or other modifications to such Company Proprietary Software or portion
thereof.
(m)
Confidentiality; Trade Secrets
. The Company and each Company Subsidiary, as applicable, has taken
commercially reasonable measures to protect and maintain (i) the confidentiality of all material proprietary information that the Company and the Company Subsidiaries hold, as a trade secret, and (ii) its ownership of, and rights in, all
Company IP owned by the Company or any Company Subsidiary. Without limiting the foregoing, neither the Company nor any Company Subsidiary has made any of its material trade secrets or other material confidential or proprietary information that it
intended to maintain as confidential information (including source code with respect to Company IP) available to any other Person except pursuant to written agreements requiring such Person to maintain the confidentiality of such confidential
information.
(n)
Malicious Code
. To the Knowledge of the Company, no Company Product or Company Proprietary Software
contains any back door, drop dead device, time bomb, Trojan horse, virus, worm, spyware or adware (as such terms are commonly understood in the software
industry) or any other code designed or intended to have, or capable of performing or facilitating, any of the following functions: disrupting, disabling, harming, or otherwise impeding in any manner the operation of, or providing unauthorized
access to, a computer system or network or other device on which such code is stored or installed. The Company and the Company Subsidiaries implement reasonable measures designed to prevent the introduction of Malicious Code into Company Proprietary
Software, including firewall protections and regular virus scans.
(o)
Funding Sources
. To the Knowledge of the
Company, no funding, facilities (if provided by specific grant or authorization), or personnel of any public or private university, college or other educational or research institution or Governmental Authority were used, to develop or create, any
Company IP.
(p)
Standards Bodies
. Except as set forth in
Section 3.17(p)
of the Company Disclosure
Schedule, neither the Company nor any of the Company Subsidiaries is or has ever been a member of, or a contributor to, any industry standards body or similar organization that could compel the Company or any Company Subsidiary to grant or offer to
any Third Party any license or right to any Company IP.
3.18
Product Warranty
.
(a) The Company has made available to Parent the Standard Forms of product warranties used by the Company and the Company Subsidiaries.
Except as set forth on
Section 3.18(a)
of the Company Disclosure Schedule, to the Knowledge of the Company, none of the Company Products (i) contains any bug, defect, or error that is likely to materially and adversely affect the
use, functionality, or performance of such Company Product or any product or systems reasonably anticipated by the Company or its Subsidiaries to be contained in or used in conjunction with such Company Product or (ii) fails to comply with any
applicable warranty or other contractual commitment relating to the use, functionality, or performance of such Company Product (such warranties and contractual commitments, each a
Product Warranty
), except where such failure to
comply has not been material to the business of the Company and the Company Subsidiaries, taken as a whole.
(b) Each of the
Company Products, other than Company Products currently in development, is, and at all times up to and including the sale thereof has been, in compliance in all material respects with applicable Law.
(c)
Section 3.18(c)
of the Company Disclosure Schedule sets forth, a complete and accurate listing of all Product Warranty
claims resulting in a likely potential liability to the Company or a Company Subsidiary of at least $10,000 received and logged by the Company or any Company Subsidiary regarding any Company Product since January 1, 2010, including a listing of
the resolution of all such Product Warranty claims.
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3.19
Tax Matters
.
(a) (i) All income and other material Tax Returns required by applicable Law to be filed with any Taxing Authority by, or on behalf of,
the Company or any Company Subsidiary have been filed when due (taking into account extensions) in accordance with all applicable Laws, (ii) all such Tax Returns are true, correct and complete in all material respects, (iii) the Company
and each Company Subsidiary has paid (or has had paid on their behalf) all material Taxes due and owing (whether or not shown on any Tax Return), (iv) all Taxes that the Company or any Company Subsidiary is or was required to withhold or
collect in connection with any amounts paid or owing to any employee, independent contractor, creditor, stockholder or other Person have been duly withheld or collected and have been timely paid, to the extent required, to the proper Taxing
Authority and (v) since the date of the most recent Company SEC Documents, neither the Company nor any Company Subsidiary has incurred any material liability for Taxes outside the ordinary course of business.
(b) Neither the Company nor any Company Subsidiary has granted any currently effective extension or waiver of the statute of limitations
period applicable to any federal or material state income Tax Return, which period (after giving effect to such extension or waiver) has not yet expired (other than pursuant to extensions of time to file Tax Returns obtained in the ordinary course).
(c) (i) Subject to exceptions as would not be material, no deficiencies for Taxes with respect to the Company or any Company
Subsidiary have been claimed, proposed or assessed in writing by any Taxing Authority, except for deficiencies that have been paid or otherwise resolved; (ii) as of the date hereof, there is no Action pending or, to the Knowledge of the
Company, threatened in writing against or with respect to the Company or any Company Subsidiary in respect of material Taxes; and (iii) subject to exceptions as would not be material, no claim has ever been made in writing by a Governmental
Authority in a jurisdiction where the Company or any Company Subsidiary does not file a Tax Return that such Person is or may be subject to taxation by that jurisdiction in respect of Taxes that would be covered by or the subject of such Tax Return.
(d) There are no material Liens for Taxes on any assets of the Company or any Company Subsidiary, other than Permitted
Liens.
(e) During the two-year period ending on the date hereof, neither the Company nor any Company Subsidiary was a
distributing corporation or a controlled corporation in a transaction intended to be governed by Section 355 of the Code.
(f) Neither the Company nor any Company Subsidiary has participated in any listed transaction within the meaning of Treasury Regulations Section 1.6011-4(b)(2) or
Section 301.6111-2(b)(2).
(g) (i) Neither the Company nor any Company Subsidiary is or has been a member of an
affiliated group of corporations for Tax purposes (including within the meaning of Section 1504 of the Code) or any group that has filed a combined, consolidated or unitary Tax Return (other than the group of which the Company is or was the
common parent) and (ii) neither the Company nor any Company Subsidiary has any liability for the Taxes of any Person (other than the Company or any Company Subsidiary) under Treasury Regulations Section 1.1502-6 (or any similar provision
of state, local or foreign law), as a transferee or successor, by Contract or otherwise.
(h) There are no Tax sharing
agreements or similar arrangements (including Tax indemnity arrangements) with respect to or involving the Company or any Company Subsidiary (other than any such agreement solely among the Company and/or any Company Subsidiaries).
(i) Neither the Company nor any Company Subsidiary will be required to include any material item of income in, or exclude any material
item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Effective Time as a result of (i) change in the method of accounting for a taxable period ending on or prior to the date hereof or (ii) any
closing agreement as described in Section 7121 of the Code (or any corresponding or similar provision of state, local or foreign income Tax Law) executed on or prior to the date hereof.
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3.20
Insurance
.
The Company has made available to Parent accurate and complete copies of all material insurance policies relating to the business, assets
and operations of the Company and the Company Subsidiaries (the
Insurance Policies
).
Section 3.20
of the Company Disclosure Schedule contains an accurate and complete list of the Insurance Policies. Each of the
Insurance Policies is in full force and effect, all premiums currently due thereon have been paid in full and the Company and the Company Subsidiaries are in compliance in all material respects with the terms and conditions of such Insurance
Policies. Since January 1, 2009, none of the Company or any Company Subsidiary has received any notice or other communication regarding any actual or possible (a) cancellation of any Insurance Policy that has not been renewed in the
ordinary course without any lapse in coverage, (b) invalidation of any Insurance Policy, (c) refusal of any coverage, limitation in coverage or rejection of any material claim under any Insurance Policy or (d) material adjustment in
the amount of the premiums payable with respect to any Insurance Policy, except as would not be material and adverse to the business of the Company and the Company Subsidiaries taken as a whole. There is no material claim by the Company or any
Company Subsidiary pending under any of the Insurance Policies and no material claim made since January 1, 2009, in the case of any pending claim, has been questioned or disputed by the underwriters of such Insurance Policies. None of the
Insurance Policies will terminate or lapse (or be affected in any other materially adverse manner) by reason of the transactions contemplated by this Agreement.
3.21
Properties and Assets
.
The Company and the Company Subsidiaries have,
and immediately following the Effective Time will continue to have, good and valid title to their owned assets and properties, or in the case of assets and properties they lease, license, or have other rights in, good and valid rights by lease,
license or other agreement to use, all assets and properties (in each case, tangible and intangible) (i) necessary and desirable to permit the Company and the Company Subsidiaries to conduct their businesses in all material respects as
currently conducted and (ii) free and clear of all Liens other than Permitted Liens. Notwithstanding the foregoing, it is understood and agreed that matters regarding Company Intellectual Property are addressed solely in
Section 3.17
and not in this
Section 3.21
.
3.22
Real Property
.
(a) (i) The Company and each Company Subsidiary has good and marketable fee simple title to all of its Owned Real Property (as defined
below), and valid leasehold interests in all of its Leased Real Property (as defined below) in each case free and clear of all Liens, except for Permitted Liens.
(b)
Section 3.22(b)
of the Company Disclosure Schedule sets forth a complete and correct list of all real property and interests in real property currently owned by the Company or any Company
Subsidiary (each, an
Owned Real Property
).
Section 3.22(b)
of the Company Disclosure Schedule sets forth (i) a true and complete list of all real property that is leased, subleased or otherwise occupied by the
Company or any Company Subsidiary (each, a
Leased Real Property
), (ii) the address for each Leased Real Property, (iii) current monthly rent amounts payable by the Company or any Company Subsidiary related to such Leased
Real Property and (iv) a description of the agreement evidencing the applicable lease or sublease, and any and all amendments, modifications, and side letters relating thereto, if any (each a
Lease Agreement
). All Lease
Agreements are the valid, binding obligations of the Company and the Company Subsidiaries, as applicable, and, to the Knowledge of the Company, of the other party or parties thereto, and are in full force and effect, without penalty, acceleration,
termination, default, breach, repurchase right or other adverse consequence on account of the execution, delivery or performance of this Agreement by the Company and the Company Subsidiaries, as applicable and the consummation of the transactions
contemplated hereby. The Company has provided Parent with true, correct, accurate and complete copies of each Lease Agreement, and each Lease Agreement represents the entire agreement between the Company or any Company Subsidiary and the
counterparty thereto. Except for Permitted Liens, no Owned Real Property or Leased Real Property is subject to any Lien or agreement granting to any Third Party any interest in such Owned Real Property or Leased Real Property or any right to the use
or
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occupancy of any Owned Real Property or Leased Real Property. The Company and each Company Subsidiary has performed all material obligations required to be performed by it to date under each
Lease Agreement, and there are no outstanding defaults or circumstances which, upon the giving of notice or passage of time or both, would constitute a default or breach by any party under any Lease Agreement.
(c) The Owned Real Property and the Leased Real Property constitute all real property currently used in connection with the business of
the Company and the Company Subsidiaries and which are necessary for the continued operation of the business as the business is currently conducted. Except as would not materially affect the ability of the Company and the Company Subsidiaries, taken
as a whole, to operate their business as currently conducted, there are no structural, electrical, mechanical or other defects in any improvements located on any of the Owned Real Property or the Leased Real Property. Neither the Company nor any
Company Subsidiary has received written notice of any pending, and to the Knowledge of the Company there is no threatened, condemnation proceeding with respect to any of the Owned Real Property or the Leased Real Property. Neither the Company nor
any Company Subsidiary has received written notice of, or, to the Knowledge of the Company, oral notice of, any zoning, ordinance, building, land use, fire or health code or other legal violation affecting such Owned Real Property or Leased Real
Property.
(d) Each Owned Real Property and Leased Real Property and the improvements located thereon are supplied with
utilities and other services necessary for the operation of the business of the Company and the Company Subsidiaries, as applicable, at such Owned Real Property or Leased Real Property and improvements, including gas, electricity, water, telephone,
sanitary sewer and storm sewer, all of which services are adequate in accordance with all applicable laws and are provided via public roads or via permanent, irrevocable, appurtenant easements benefitting such Owned Real Property or Leased Real
Property.
(e) The Company has delivered to Parent correct and complete copies of all surveys of, and title insurance
policies with respect to, each Owned Real Property and Leased Real Property in such Partys possession or reasonably available to such Party, and, to the Knowledge of the Company, there are no material changes in the facts depicted in such
surveys or reflected on such title insurance policies.
3.23
Opinion of Financial Advisor
.
The Company Board has received the written opinion (the
Fairness Opinion
) of Deutsche Bank Securities Inc. (the
Company Financial Advisor
), dated as of the date of this Agreement, to the effect that, as of the date of this Agreement, the consideration to be paid to the stockholders of the Company pursuant to the Offer and Merger is fair to
such stockholders (other than Parent and its Affiliates) from a financial point of view. The Company shall provide an accurate and complete signed copy of such opinion to Parent solely for information purposes as soon as practicable after the date
of this Agreement.
3.24
Information in the Offer Documents and Schedule 14D-9
.
The information supplied by the Company expressly for inclusion or incorporation by reference in the Offer Documents (and any amendment
thereof or supplement thereto) will not, when filed with the SEC, at the time the Registration Statement becomes effective under the Securities Act, when distributed or disseminated to the Companys stockholders, and at the Expiration Date,
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 made therein, in the light of the circumstances under which they were made, not misleading.
The Schedule 14D-9 (and any amendment thereof or supplement thereto) will comply as to form in all material respects with the provisions of Rule 14d-9 of the Exchange Act, Regulation M-A and any other applicable federal securities Laws and will not,
when filed with the SEC, when distributed or disseminated to the Companys stockholders, and at the Expiration Date, 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 made therein, in the light of the circumstances under which they were made, not misleading, except that the Company makes no representation or warranty with respect to statements made in the Schedule 14D-9 based on
information furnished by the Purchaser in writing expressly for inclusion therein.
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3.25
Information in the Proxy Statement
.
The Proxy Statement, if any (and any amendment thereof or supplement thereto), at the date mailed to the Companys stockholders and
at the time of any Special Meeting, will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances
under which they were made, not misleading, except that no representation or warranty is made by the Company with respect to statements made therein based on information supplied by Parent or the Purchaser in writing expressly for inclusion in the
Proxy Statement. The Proxy Statement will comply as to form in all material respects with the provisions of the Exchange Act and any other applicable federal securities Laws.
3.26
Required Vote
.
The affirmative vote of the holders of shares
representing a majority of the voting power of the outstanding shares of the Company Common Stock is the only vote required, if any, of the holders of any class or series of capital stock or other Equity Interests of the Company to approve and adopt
this Agreement and the transactions contemplated hereby, including the Merger (the
Company Stockholder Approval
).
3.27
Brokers
.
Except for the Companys obligations to the Company
Financial Advisor, neither the Company nor any stockholder, director, officer, employee or Affiliate of the Company, has incurred or will incur on behalf of the Company or any Company Subsidiary, any brokerage, finders, advisory or similar fee
in connection with the transactions contemplated by this Agreement, including the Offer and the Mergers. The Company has heretofore made available to Parent accurate and complete copies of all Contracts between the Company and the Company Financial
Advisor pursuant to which such firm would be entitled to any payment or commission relating to the Offer or the Mergers or any other transactions contemplated by this Agreement.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PARENT, THE PURCHASER AND MERGER LLC
Except (i) as expressly disclosed in the Parent SEC Documents, in each case filed on or after May 31, 2011 and prior to the
date hereof, and only to the extent reasonably apparent from the disclosure therein (but excluding (A) any forward-looking disclosures contained in Forward Looking Statements and Risk Factors sections of the Parent SEC
Documents and any other disclosures included therein to the extent they are primarily predictive, cautionary or forward looking in nature and (B) information included in, or incorporated by reference as, exhibits and schedules to any Parent SEC
Documents that have been filed with the SEC) (and provided that the representations and warranties set forth in
Section 4.5
shall not be qualified by any information in any Parent SEC Documents) and (ii) as set forth in the
disclosure schedule delivered by Parent to the Company prior to the execution of this Agreement (the
Parent Disclosure Schedule
), which identifies items of disclosure by reference to a particular Section or Subsection of this
Agreement (
provided
,
however
, that any disclosure made in the Parent Disclosure Schedule shall be deemed to be disclosed with respect to any section of this Agreement to the extent the relevance of such disclosure to any such
representation or warranty is reasonably apparent from the text of such disclosure), Parent, the Purchaser and Merger LLC hereby represent and warrant to the Company as follows:
4.1
Organization and Qualification
.
Each of Parent, the Purchaser and Merger LLC is an entity duly organized, validly existing and in good standing under the Laws of its jurisdiction of incorporation and has all requisite organizational
power and
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authority to own, lease and operate its properties and assets and to carry on its business as currently conducted. Each of Parent, the Purchaser and Merger LLC is duly qualified to do business
and is in good standing in each jurisdiction where the ownership, leasing or operation of its properties or assets or the conduct of its business requires such qualification, except where the failure to be so qualified or in good standing,
individually or in the aggregate, would not materially impair the ability of Parent, the Purchaser and Merger LLC to consummate, or prevent or materially delay, the Offer, Mergers or any of the other transactions contemplated by this Agreement.
4.2
Authority
.
(a) Each of Parent, the Purchaser and Merger LLC has all necessary organizational power and corporate authority to execute and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby, including the Offer, the exercise of the Top-Up Option and the Mergers. The execution and delivery of this Agreement by each of Parent, the Purchaser and Merger LLC, as applicable, and the
consummation by Parent, the Purchaser and Merger LLC of the transactions contemplated hereby, including the Offer, the exercise of the Top-Up Option and the Mergers, have been duly and validly authorized by all necessary organizational action, and
no other organizational proceedings on the part of Parent, the Purchaser and Merger LLC and no stockholder votes are necessary to authorize this Agreement or to consummate the transactions contemplated hereby other than, with respect to the Merger
and the Second Merger, the filing of the Certificate of Merger with the Secretary of State of the State of Delaware in accordance with the DGCL. This Agreement has been duly authorized and validly executed and delivered by Parent, the Purchaser and
Merger LLC, and, assuming due authorization, execution and delivery by the Company, constitutes a legally valid and binding obligation of Parent, the Purchaser and Merger LLC, enforceable against Parent, the Purchaser and Merger LLC in accordance
with its terms (except as such enforceability may be limited by applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar Laws affecting creditors rights generally and subject to the effect of general
principles of equity, whether considered in a proceeding in equity or at law).
(b) Further to
Section 4.2(a)
, no vote
or consent of the holders of any class or series of capital stock of Parent is necessary or required (including under the NASDAQ rules, the amended and restated certificate of incorporation or bylaws of Parent or applicable Law) to approve this
Agreement or the other transactions contemplated hereby, including the Offer, the exercise of the Top-Up Option and the Mergers. Each of the vote or consent of Parent as the sole member of Merger LLC and the vote or consent of Merger LLC as sole
stockholder of the Purchaser (both which shall have occurred prior to the Effective Time) is the only vote or consent of the holders of any membership units of Merger LLC or any class or series of capital stock of the Purchaser necessary to approve
this Agreement or the other transactions contemplated hereby, including the Offer, the exercise of the Top-Up Option and the Mergers.
4.3
No Conflict
.
None of the execution, delivery or performance of this
Agreement by Parent, the Purchaser and Merger LLC, the acceptance for payment or acquisition of Shares pursuant to the Offer, the exercise of the Top-Up Option, the consummation by Parent, the Purchaser and Merger LLC of the Mergers or any other
transaction contemplated by this Agreement, or compliance by Parent, the Purchaser and Merger LLC with any of the provisions of this Agreement will (with or without notice or lapse of time, or both): (a) conflict with or violate any provision
of the certificate of incorporation or bylaws (or any equivalent organizational or governing documents) of Parent, the Purchaser and Merger LLC; (b) assuming that all consents, approvals, authorizations and permits described in
Section 4.4
have been obtained and all filings and notifications described in
Section 4.4
have been made and any waiting periods thereunder have terminated or expired, violate any Law applicable to Parent, the Purchaser,
Merger LLC or any other Subsidiary of Parent (each a
Parent Subsidiary
) or any of their respective properties or assets or (c) require any consent or approval under, violate, result in any breach of or any loss of any benefit
under, or constitute a default under, or result in termination or give to others any right of termination, vesting, amendment, acceleration or cancellation of, or result in the creation of a Lien upon any of the respective properties or assets of
Parent, the Purchaser, Merger LLC or any Parent Subsidiary pursuant to any
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Contract or permit to which Parent, the Purchaser, Merger LLC or any Parent Subsidiary is a party or by which they or any of their respective properties or assets may be bound or affected,
except, with respect to clauses (b) and (c), for any such conflicts, violations, consents, breaches, losses, defaults, other occurrences or Liens which, individually or in the aggregate, would not materially impair the ability of Parent, the
Purchaser and Merger LLC to consummate, or prevent or materially delay, the Offer, the Mergers or any of the other transactions contemplated by this Agreement.
4.4
Required Filings and Consents
.
Assuming the accuracy of the
representations and warranties of the Company in
Section 3.5
, none of the execution, delivery or performance of this Agreement by Parent, the Purchaser and Merger LLC, the acceptance for payment or acquisition of Shares pursuant to the
Offer, the exercise of the Top-Up Option, the consummation by Parent, the Purchaser and Merger LLC of the Mergers or any other transaction contemplated by this Agreement, or compliance by Parent, the Purchaser or Merger LLC with any of the
provisions of this Agreement will require (with or without notice or lapse of time, or both) any consent, approval, authorization or permit of, or filing or registration with or notification to, any Governmental Authority or any other Person, other
than (a) the filing of the Certificates of Merger as required by the DGCL, (b) compliance with the applicable requirements of the Exchange Act and the Securities Act, (c) filings with the SEC as may be required by the Company in
connection with this Agreement and the transactions contemplated hereby, (d) such filings as may be required under the rules and regulations of NASDAQ, (e) compliance with the applicable requirements of the HSR Act and (f) where the
failure to obtain such consents, approvals, authorizations or permits of, or to make such filings, registrations with or notifications to any Governmental Authority or any other Person, individually or in the aggregate, would not materially impair
the ability of Parent, the Purchaser and Merger LLC to consummate, or prevent or materially delay, the Offer, the Mergers or any of the other transactions contemplated by this Agreement.
4.5
Capitalization
.
The authorized capital stock of Parent consists of (i) 350,000,000 shares of common stock of Parent Common Stock and (ii) 10,000,000 shares of preferred stock, par value $0.001 per share (the
Parent Preferred Stock
). The rights and privileges of the Parent Common Stock and the Parent Preferred Stock are as set forth in the Parents amended and restated certificate of incorporation, as amended. As of April 27,
2012, 142,270,615 shares of Parent Common Stock were issued and outstanding, 90,426,490 shares of Parent Common Stock were held by Parent as treasury shares, and zero shares of Parent Preferred Stock were issued and outstanding; an aggregate of
100,652,850 shares of Parent Common Stock are authorized for issuance under employee or director stock option, stock purchase or equity compensation plans, arrangements or agreements of Parent, of which 19,489,512 shares of Parent Common Stock are
subject to outstanding, unexercised options or other rights. The shares of Parent Common Stock to be issued pursuant to the Offer and the Merger will be duly authorized and validly issued and, at the Acceptance Date and at the Effective Time, as
applicable, all such shares will be fully paid and nonassessable, free and clear of all Liens, and free of preemptive rights. Parent has sufficient authorized but unissued shares of Parent Common Stock available under Parents amended and
restated certificate of incorporation to issue as the applicable portion of the Offer Price in the Offer and as the applicable portion of the Merger Consideration in the Merger. Parent has reserved from its duly authorized capital stock the number
of shares of Parent Common Stock issuable pursuant to this Agreement as of the Closing Date.
4.6
SEC Filings; Financial
Statements; Sarbanes-Oxley Act
.
(a) Since January 1, 2010, Parent has timely filed or otherwise furnished (as
applicable) all registration statements, prospectuses, forms, reports, definitive proxy statements, schedules, statements and documents required to be filed or furnished by it under the Securities Act or the Exchange Act, as the case may be,
together with all certifications required pursuant to the Sarbanes-Oxley Act (such documents and any other documents filed by Parent or any Subsidiary of Parent with the SEC, as have been supplemented, modified or amended since the time of filing,
collectively, the
Parent SEC Documents
). As of their respective filing dates
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the Parent SEC Documents (i) did not (or with respect to Parent SEC Documents filed after the date hereof, will not) contain any untrue statement of any material fact or omit to state a
material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading and (ii) complied in all material respects with the applicable
requirements of the Exchange Act or the Securities Act, as the case may be, the Sarbanes-Oxley Act and the applicable rules and regulations of the SEC thereunder.
(b) All of the audited consolidated financial statements and unaudited consolidated interim financial statements of Parent and the consolidated Subsidiaries of Parent included in the Parent SEC Documents
(i) have been or will be, as the case may be, prepared from, are in accordance with, and accurately reflect the books and records of Parent and the consolidated Subsidiaries of Parent in all material respects, (ii) have been or will be, as
the case may be, prepared in accordance with GAAP applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto or, in the case of interim financial statements, for normal and recurring year-end
adjustments that are not material in amount or nature and as may be permitted by the SEC on Form 10-Q, Form 8-K or any successor or like form under the Exchange Act) and (iii) fairly present in all material respects the consolidated financial
position and the consolidated results of operations, cash flows and changes in stockholders equity of Parent and the consolidated Subsidiaries of Parent as of the dates and for the periods referred to therein. Without limiting the generality
of this
Section 4.6(b)
, since January 1, 2010, (i) no independent public accountant of Parent has resigned or been dismissed as independent public accountant of Parent as a result of or in connection with any disagreement of
Parent on a matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, (ii) no executive officer of Parent has failed in any respect to make, without qualification, the certifications required
of him or her under Section 302 or 906 of the Sarbanes-Oxley Act with respect to any form, report or schedule filed by Parent with the SEC since the enactment of the Sarbanes-Oxley Act, and (iii) no enforcement action has been initiated
or, to the Knowledge of Parent, threatened against Parent by the SEC relating to disclosures contained in any Parent SEC Document.
(c) Parent and its Subsidiaries have designed and maintain a system of internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) sufficient to provide
reasonable assurances regarding the reliability of financial reporting for the Parent and its Subsidiaries. Parent and its Subsidiaries (i) have designed and maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and
15d-15(e) of the Exchange Act) to ensure that material information required to be disclosed by Parent in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in
the SECs rules and forms and is accumulated and communicated to Parents management as appropriate to allow timely decisions regarding required disclosure and (ii) since January 1, 2010, have disclosed to Parents auditors
and audit committee (A) any known significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting that are reasonably likely to adversely affect in any material respect Parents
ability to record, process, summarize and report financial information and (B) any fraud, whether or not material, that involves management or other employees who have a significant role in Parents internal controls over financial
reporting.
4.7
Absence of Certain Changes or Events; Compliance with Law
.
(a) Since April 3, 2011, there has not been any Parent Material Adverse Effect.
(b) Since April 3, 2011, neither Parent, nor any Subsidiary of Parent has been in violation of any applicable Law, except as would
not, individually or in the aggregate, materially impair the ability of Parent, the Purchaser or Merger LLC to consummate, or prevent or materially delay, the Mergers or any of the other transactions contemplated by this Agreement.
4.8
Litigation
.
(a) There is no Order or Action pending or, to the Knowledge of Parent, threatened in writing against Parent, the Purchaser or Merger LLC (including by virtue of indemnification or otherwise) or
their respective
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assets or properties and (b) to the Knowledge of Parent, there is no Order or Action pending against any executive officer or director of Parent, the Purchaser or Merger LLC, that, in each
case under clause (a) and clause (b), has had a Purchaser Material Adverse Effect.
4.9
Information in the Proxy
Statement and Schedule 14D-9
.
The information supplied by Parent and the Purchaser in writing expressly for inclusion or
incorporation by reference in any Proxy Statement and Schedule 14D-9 (and any amendment thereof or supplement thereto) will not, at the date mailed to the Companys stockholders and at the time of the Special Meeting, 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 made therein, in light of the circumstances under which they are made, not misleading.
4.10
Information in the Offer Documents
.
The Offer Documents (and any amendment thereof or supplement thereto) will not, when filed with the SEC, at the time the Registration Statement becomes effective under the Securities Act, at the time of
distribution or dissemination thereof to the stockholders of the Company, and at the Expiration Date, 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, except that no representation or warranty is made by the Purchaser with respect to statements made in the Offer Documents based on information supplied by
the Company in writing expressly for inclusion therein. The Offer Documents (and any amendment thereof or supplement thereto) will comply as to form in all material respects with the provisions of the Exchange Act and any other applicable federal
securities Laws.
4.11
Sufficiency of Funds
.
As of the Acceptance Time and the Effective Time, Parent will have sufficient funds to consummate the transactions contemplated by this Agreement and to satisfy all of Parents, the Purchasers
and Merger LLCs monetary and other obligations under this Agreement, and will make available to the Purchaser such funds, including the payment of the cash component of the Offer Price in respect of each Share validly tendered and accepted in
the Offer, the payment of the cash component of the Merger Consideration in respect of the Merger and the payment of all associated Expenses of the Offer and the Merger to be paid by Parent.
4.12
Ownership of the Purchaser; No Prior Activities
.
The Purchaser was formed solely for the purpose of engaging in the transactions contemplated by this Agreement. Except for obligations or liabilities incurred in connection with its incorporation or
organization and the transactions contemplated by this Agreement, the Purchaser has not and will not prior to the Closing Date have incurred, directly or indirectly, through any Subsidiary or otherwise, any obligations or liabilities or engaged in
any business activities of any type or kind whatsoever or entered into any Contracts with any Person.
4.13
DGCL
Section 203
.
Neither the Parent, the Purchaser, nor any of their Affiliates (excluding the Company and the Company
Subsidiaries) are subject to any written agreements, arrangements or understandings as such terms are used in Section 203 of the DGCL, as of the date hereof, that relate in any way to the Company or the transactions contemplated by
this Agreement.
4.14
Ownership of Shares
.
Neither Parent, Merger LLC nor the Purchaser or any of their Subsidiaries beneficially owns any Shares.
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4.15
Brokers
.
Except for J.P. Morgan Securities LLC, neither Parent, the Purchaser, Merger LLC nor any of their respective stockholders, directors,
officers, employees or Affiliates, has incurred or will incur on behalf of Parent, the Purchaser, Merger LLC or any Parent Subsidiary, any brokerage, finders, advisory or similar fee in connection with the transactions contemplated by this
Agreement.
ARTICLE 5
COVENANTS
5.1
Conduct of Business
.
(a)
Conduct of Business by the Company Pending the Closing.
The Company agrees that, between the date of this Agreement and the Effective Time, except as set forth in
Section 5.1(a)
of
the Company Disclosure Schedule, as expressly required by applicable Law or this Agreement or otherwise with the prior written consent of Parent (which consent shall not be unreasonably withheld, conditioned or delayed), the Company will, and will
cause each Company Subsidiary to, (i) conduct its business only in the ordinary course of business consistent with past practice, (ii) use its commercially reasonable efforts to keep available the services of the current officers,
employees and consultants of the Company and each Company Subsidiary and preserve the goodwill and current relationships of the Company and each Company Subsidiary with customers, suppliers and other Persons with which the Company or any Company
Subsidiary has significant business relations and (iii) use its commercially reasonable efforts to preserve intact its business organization. Without limiting the foregoing, and as an extension thereof, except as set forth in
Section 5.1
of the Company Disclosure Schedule, as expressly required by applicable Law or this Agreement, or otherwise with the prior written consent of Parent (which consent shall not be unreasonably withheld, conditioned or delayed),
the Company shall not, and shall not permit any Company Subsidiary to, between the date of this Agreement and the Effective Time, directly or indirectly, do any of the following:
(i) amend the certificate of incorporation, bylaws or other comparable charter or organizational documents (whether by merger,
consolidation or otherwise) of the Company or any Company Subsidiary;
(ii) (A) declare, set aside or pay any dividends
on, or make any other distributions (whether in cash, stock, property or otherwise) in respect of, or enter into any agreement with respect to the voting of, any capital stock of the Company or any Company Subsidiary (other than dividends and
distributions by a direct or indirect wholly-owned Subsidiary of the Company to its parent, distributions under the ESOP as permitted by this Agreement and distributions resulting from the vesting or exercise of Company Options outstanding on the
date of this Agreement), (B) split, combine or reclassify any capital stock of the Company or any Company Subsidiary, (C) issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for, shares of
capital stock of the Company or any Company Subsidiary, (D) purchase, redeem or otherwise acquire any Equity Interest in the Company or any Company Subsidiary except for acquisitions of Company Common Stock by the Company in satisfaction by
holders of Company Options, outstanding on the date of this Agreement, of the applicable exercise price and/or withholding taxes or (E) take any action that would result in any amendment, modification or change of any term of any Indebtedness
of the Company or any Company Subsidiary;
(iii) (A) issue, deliver, sell, grant, pledge, transfer, subject to any Lien
(other than Permitted Liens) or otherwise encumber or dispose of any Equity Interest in the Company or any Company Subsidiary, other than the issuance of shares of Company Common Stock upon the exercise of Company Options that are outstanding on the
date of this Agreement, in each case in accordance with the applicable equity awards terms as in effect on the date of this Agreement or (B) amend any term of any Equity Interest of the Company or any Company Security (in each case,
whether by merger, consolidation or otherwise);
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(iv) adopt a plan or agreement of, or resolutions providing for or authorizing, complete or
partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization, each with respect to the Company or any Company Subsidiary;
(v) incur any capital expenditures or any obligations or liabilities in respect thereof in excess of $200,000 in the aggregate in any fiscal quarter;
(vi) acquire (A) any material business, assets or capital stock of any Person or division thereof, whether in whole or in part (and
whether by purchase of stock, purchase of assets, merger, consolidation, or otherwise), (B) any other assets other than assets acquired in the ordinary course of business consistent with past practice or (C) acquire or license from any
Person any Intellectual Property Rights or Technology other than in the ordinary course of business consistent with past practice;
(vii) (A) sell, lease, license, pledge, transfer, subject to any Lien or otherwise dispose of any of its Intellectual Property Rights or Technology, material assets or material properties (including
Company Products) except (1) pursuant to existing Contracts or commitments in effect prior to the execution of this Agreement, (2) sales of Inventory or used equipment in the ordinary course of business consistent with past practice or
(3) Permitted Liens incurred in the ordinary course of business consistent with past practice; (B) sell, dispose of, disclose, or license the source code for Company Proprietary Software to any Person (other than immaterial portions of
source code of Company Proprietary Software provided pursuant to a software development kit license or disclosed in connection with trials, demonstrations or similar arrangements, in each case on a non-exclusive basis and subject to written
non-disclosure and non-use restrictions imposed on and agreed to by the recipient), (C) disclose any material trade secrets or other proprietary and confidential information to any Person that is not subject to any confidentiality or
non-disclosure agreement or (D) enter into any arrangement, the result of which is the loss, expiration or termination of any license or right under or to any Third Party Intellectual Property;
(viii) (A) hire any new employee to whom a written offer of employment has not previously been offered and accepted prior to the date of
this Agreement or, after the date of this Agreement, extend any new offers of employment with the Company or any Company Subsidiary to any individual, (B) grant to any current or former director, officer, employee or consultant of the Company
or any Company Subsidiary any (1) increase in compensation, (2) bonus or (3) other benefits, except as agreed to prior to the date of this Agreement (C) grant to any current or former director, officer, employee or consultant of
the Company or any Company Subsidiary any severance or termination pay or benefits or any increase in severance, change of control or termination pay or benefits, (D) except as otherwise contemplated pursuant to
Section 5.11
hereof,
establish, adopt, enter into or amend any Company Employee Plan (other than offer letters that contemplate at will employment without severance benefits) or collective bargaining agreement, in each case except as required by applicable
Law, (E) take any action to amend or waive any performance or vesting criteria or accelerate any rights or benefits or take any action to fund or in any other way secure the payment of compensation or benefits under any Company Employee Plan
except to the extent required pursuant to the terms thereof or applicable Law or (F) make any Person a beneficiary of any retention plan under which such Person is not as of the date of this Agreement a beneficiary which would entitle such
Person to vesting, acceleration or any other right as a consequence of consummation of the transactions contemplated by this Agreement;
(ix) (A) write-down any of its material assets, including any capitalized Inventory or Company IP, in excess of $150,000, except for depreciation and amortization in accordance with GAAP or in accordance
with the ordinary course of business consistent with past practice or (B) make any change in any method of financial accounting principles, method or practices, in each case except for any such change required by GAAP or applicable Law,
including Regulation S-X under the Exchange Act (in each case following consultation with the Companys independent auditor);
(x) (A) incur any Indebtedness in an amount in excess of $50,000 or modify in any material respect the terms of any Indebtedness, including by way of a guarantee or an issuance or sale of debt securities,
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or issue and sell options, warrants, calls or other rights to acquire any debt securities of the Company or any Company Subsidiary or (B) make any loans, advances or capital contributions
to, or investments in, any other Person in excess of $50,000, other than (1) to the Company or any Company Subsidiary or (2) accounts receivable and extensions of credit in the ordinary course of business, and advances in expenses to
employees, in each case in the ordinary course of business consistent with past practice;
(xi) agree to any exclusivity,
non-competition, most favored nation, or similar provision or covenant restricting the Company, any Company Subsidiary, or any of their respective Affiliates, from competing in any line of business or with any Person or in any area or engaging in
any activity or business (including with respect to the development, manufacture, marketing or distribution of their respective products or services), or pursuant to which any benefit or right would be required to be given or lost as a result of so
competing or engaging, or which would have any such effect on Parent or any of its Affiliates after the consummation of the Mergers or the Closing Date;
(xii) enter into any Contract or materially amend any Contract, or relinquish or terminate any Contract, in any individual case with an annual value in excess of $75,000 or with a value over the life of
the Contract in excess of $200,000, other than (A) entering into non-exclusive software license agreements where the Company or any Company Subsidiary is the licensor in the ordinary course of business consistent with past practice,
(B) service or maintenance Contracts entered into in the ordinary course of business consistent with past practice pursuant to which the Company or any Company Subsidiary is providing services to customers, (C) non-exclusive distribution,
marketing, reselling or consulting agreements entered into in the ordinary course of business consistent with past practice that provide for distribution of a Company Product by a Third Party or (D) non-exclusive OEM agreements entered into in
the ordinary course of business consistent with past practice that are terminable without penalty within twelve months;
(xiii) make or change any material Tax election, change any annual Tax accounting period, adopt or change any material method of Tax
accounting, amend any material Tax Returns or file any material claim for Tax refunds, enter into any material closing agreement, enter into any Tax allocation agreement, Tax sharing agreement or Tax indemnity agreement, settle any material Tax
claim, audit or assessment, or surrender any right to claim a material Tax refund or credit;
(xiv) (A) institute, compromise
or settle (or agree to do any of the preceding with respect to) any Actions, (B) waive, relinquish, release, grant, transfer or assign any right with a value of more than $100,000 in any individual case except in the ordinary course of business
consistent with past practice or (C) commence any material litigation, investigation, arbitration or other Action against any Third Party;
(xv) engage in (A) any trade loading practices or any other promotional sales or discount activity with any customers or distributors with any intent of accelerating to prior fiscal quarters
(including the current fiscal quarter) sales to the trade or otherwise that would otherwise be expected (based on past practice) to occur in subsequent fiscal quarters, (B) any practice which would reasonably be expected to have the effect of
accelerating to prior fiscal quarters (including the current fiscal quarter) collections of receivables that would otherwise be expected (based on past practice) to be made in subsequent fiscal quarters, (C) any practice which would reasonably
be expected to have the effect of postponing to subsequent fiscal quarters payments by the Company or any Company Subsidiary that would otherwise be expected (based on past practice) to be made in prior fiscal quarters (including the current fiscal
quarter) or (D) any other promotional sales or discount activity, in each case in clauses (A) through (C) in a manner outside the ordinary course of business consistent with past practice;
(xvi) cancel or terminate or allow to lapse without commercially reasonably substitute policy therefor, or amend in any material respect
or enter into, any material Insurance Policy, other than the renewal of existing Insurance Policies or enter into commercial reasonable substitute policies therefor;
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(xvii) take any action that is intended or would reasonably be expected to result in any of
the conditions and requirements of the Offer set forth in
Annex I
or the conditions to the Merger set forth in
Article 6
not being satisfied;
(xviii) except as required by applicable Law, convene any regular or special meeting (or any adjournment thereof) of the stockholders of the Company other than the Special Meeting;
(xix) make any material change in its investment policies with respect to cash or marketable securities; or
(xx) authorize or enter into any Contract or otherwise make any commitment to do any of the foregoing.
(b)
Conduct of Business by Parent Pending the Closing
.
Parent agrees that, between the date of this Agreement and the Effective Time, except as set forth in
Section 5.1(b)
of the Parent Disclosure Schedule, as expressly required by applicable Law
or this Agreement or otherwise with the prior written consent of the Company (which consent shall not be unreasonably withheld, conditioned or delayed), Parent shall not, and shall not permit any Parent Subsidiary to, between the date of this
Agreement and the Effective Time, directly or indirectly, do any of the following:
(i) amend or propose to amend
Parents certificate of incorporation or bylaws or similar governing documents in a manner adverse to the Companys stockholders as opposed to any other holders of shares of Parent Common Stock;
(ii) acquire, in one transaction or any series of related transactions, any equity interests in any Person or any business, division or
other assets of any Person, unless such acquisition would not be reasonably be expected to impose any material delay in the obtaining of, or materially increase the risk of not obtaining, any authorizations, consents, orders, declarations or
approvals of any Governmental Authority necessary to consummate the Offer or the Mergers, in each case as applies to the HSR Act, or the expiration or termination of any applicable waiting period under the HSR Act;
(iii) split, combine, subdivide or reclassify any shares of Parent Common Stock;
(iv) make any material change in any method of financial accounting principles, method or practices, in each case except for any such
change required by GAAP or applicable Law, including Regulation S-X under the Exchange Act (in each case following consultation with Parents independent auditor); or
(v) authorize or otherwise make any commitment to do any of the foregoing.
5.2
Meeting of Stockholders to Approve the Merger
.
(a) Subject to
Section 1.6
and solely to the extent
approval of the stockholders of the Company is required under applicable Law to complete the Merger, promptly after the Acceptance Time, (i) the Company shall, with the assistance and approval of Parent (not to be unreasonably withheld or
delayed) prepare a proxy statement or information statement for the Special Meeting or, if applicable in accordance with
Section 5.2(b)
, action by written consent in lieu of the Special Meeting (together with any amendments and
supplements thereto and any other required proxy materials, the
Proxy Statement
), in either case, relating to the adoption and approval of this Agreement and the Merger and (ii) Parent shall, with the assistance and approval
of the Company (not to be unreasonably withheld or delayed), prepare a post-effective amendment to the Registration Statement (the
Post-Effective Amendment
) for the offer and sale of the Parent Common Stock pursuant to the Merger
and in which the Proxy Statement will be included as a prospectus. Each of the Company and Parent
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shall use its commercially reasonable efforts to have the Post-Effective Amendment declared effective under the Securities Act as promptly as practicable after such filing. The Company will use
all reasonable efforts to cause the Proxy Statement to be mailed to the Companys stockholders as promptly as practicable after the Post-Effective Amendment is declared effective under the Securities Act. The Company shall include the Company
Board Recommendation and the Fairness Opinion, together with a summary thereof in accordance with Item 1015(b) of Regulation M-A under the Exchange Act (regardless of whether such item is applicable), in the Proxy Statement. No filing of, or
amendment or supplement to, or correspondence to the SEC or its staff with respect to, the Post-Effective Amendment will be made by Parent, or with respect to the Proxy Statement will be made by the Company, without providing the other party a
reasonable opportunity to review and comment thereon. Parent will advise the Company, promptly after it receives notice thereof, of the time when the Post-Effective Amendment has become effective or any supplement or amendment has been filed, the
issuance of any stop order, the suspension of the qualification of the Parent Common Stock issuable in connection with the Merger for offering or sale in any jurisdiction, or any request by the SEC for amendment of the Post-Effective Amendment or
comments thereon and responses thereto or requests by the SEC for additional information. The Company will advise Parent, promptly after it receives notice thereof, of any request by the SEC for the amendment of the Proxy Statement or comments
thereon and responses thereto or requests by the SEC for additional information. If at any time prior to the Effective Time any information relating to the Company or Parent, or any of their respective Affiliates, officers or directors, should be
discovered by the Company or Parent that should be set forth in an amendment or supplement to either of the Post-Effective Amendment or the Proxy Statement, so that any of such documents would not include any misstatement of a material fact or omit
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 parties hereto and an
appropriate amendment or supplement describing such information shall be promptly filed with the SEC and, to the extent required by Law, disseminated to the stockholders of the Company. Each of the parties hereto shall cause the Proxy Statement to
comply as to form and substance to such party in all material respects with the applicable requirements of (i) the Exchange Act, (ii) the Securities Act and (iii) the rules and regulations of NASDAQ.
(b) If approval of the stockholders of the Company is required under applicable Law to consummate the Merger, the Company, acting
through the Company Board, shall, in accordance with and subject to the requirements of applicable Law: (i) as promptly as practicable following the clearance of the Proxy Statement by the SEC, in consultation with the Purchaser, duly set a
record date for, call and give notice of a special meeting of its stockholders (the
Special Meeting
) for the purpose of considering and taking action upon this Agreement (with the record date to be set in consultation with the
Purchaser for a date after the Acceptance Time) and (ii) use its commercially reasonable efforts to solicit from its stockholders proxies in favor of the approval of this Agreement and the Merger, and secure any approval of stockholders of the
Company that is required by applicable Law to effect the Merger. Notwithstanding the foregoing, if approval of the stockholders of the Company is required under applicable Law to consummate the Merger, at Parents election, Parent may act by
written consent in lieu of the Special Meeting to adopt this Agreement, in which case the Company shall, in accordance with and subject to the requirements of applicable Law, as promptly as practicable following the clearance of the Proxy Statement
by the SEC, cause the Proxy Statement to be printed and mailed to the stockholders of the Company so as to enable the action by written consent to become effective as promptly as practicable under applicable Law.
(c) At the Special Meeting or any postponement or adjournment thereof, or with respect to any action by written consent in lieu of the
Special Meeting, Parent shall vote, or cause to be voted, or deliver consents or cause consents to be delivered as to, all of the Shares then owned by Parent or any of its direct or indirect wholly-owned Subsidiaries, including the Purchaser, or
with respect to which Parent or any of its direct or indirect wholly-owned Subsidiaries, including the Purchaser otherwise has, directly or indirectly, voting power in favor of the approval of this Agreement and the Merger, and to deliver or
provide, in its capacity as a stockholder of the Company, any other approvals that are required by applicable Law to effect the Merger.
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5.3
Access to Information
.
(a) From the date of this Agreement until the Effective Time, upon reasonable prior written notice by the Parent or the Purchaser, the
Company shall, and shall use commercially reasonable efforts to cause each Company Subsidiary and each of their respective Representatives: (i) provide to Parent and the Purchaser and their respective Representatives access at reasonable times
to the officers, employees, agents, properties, offices and other facilities of the Company and each Company Subsidiary and to the books and records thereof (including Tax Returns) and (ii) furnish such information concerning the business,
properties, offices and other facilities, Contracts, assets, liabilities, employees, officers and other aspects of the Company and each Company Subsidiary as Parent or its Representatives may reasonably request. The Company and Parent may, as each
deems advisable and necessary, reasonably designate any competitively sensitive material provided to the other pursuant to this
Section 5.3(a)
as Outside Counsel Only Material. Notwithstanding anything to the contrary in this
Section 5.3(a)
, materials provided to the other party or its counsel may be redacted to remove references concerning the valuation of the Company and any Company Subsidiary. No investigation conducted pursuant to this
Section 5.3(a)
shall affect or be deemed to modify or limit any representation or warranty made by the Company in this Agreement.
(b) With respect to the information disclosed pursuant to
Section 5.3(a)
, Parent shall comply with, and shall cause its Representatives to comply with, all of its obligations under the
Confidentiality Agreement.
5.4
Go-Shop; Competing Proposals
.
(a) Notwithstanding any other provision of this Agreement to the contrary, during the period beginning on the date of this Agreement and
continuing until 11:59 p.m. (California time) on May 30, 2012, the Company and its Representatives shall, solely as provided in this
Section 5.4
, be permitted to, directly or indirectly: (i) initiate, solicit and encourage,
whether publicly or otherwise, Competing Proposals or Competing Inquiries, including by way of providing access to non-public information pursuant to (but only pursuant to) one or more Acceptable Confidentiality Agreements;
provided
, that the
Company shall promptly (and in any event within 48 hours) provide to Parent any material non-public information concerning the Company and the Company Subsidiaries that is provided to any Person given such access which was not previously provided to
Parent or its Representatives and (ii) enter into, engage in, and maintain discussions or negotiations with respect to Competing Proposals or Competing Inquiries or otherwise cooperate with or assist or participate in or facilitate any such
discussions or negotiations or any effort or attempt to make any Competing Proposal or Competing Inquiry.
(b) Except as
permitted by this
Section 5.4
, the Company shall and shall cause each of the Company Subsidiaries and its Representatives to:
(i) from 12:00 a.m. (California time) May 31, 2012 (the
No-Shop Period Start Date
), (A) immediately cease and cause to be terminated any solicitation, encouragement,
discussions or negotiations with any Persons that may be ongoing with respect to a Competing Proposal or Competing Inquiry and (B) request, and thereafter use best efforts to cause, each Person that has previously executed a confidentiality
agreement in connection with such Persons consideration of a Competing Proposal to return to the Company or destroy any non-public information previously furnished to such Person or to any Persons Representatives by or on behalf of the
Company or any Company Subsidiary; and
(ii) from the No-Shop Period Start Date until the Effective Time or, if earlier, the
termination of this Agreement in accordance with
ARTICLE 7
, not, directly or indirectly, (A) solicit, initiate, knowingly facilitate or encourage (including by way of furnishing non-public information) any Competing Proposal or Competing
Inquiry, (B) engage in, continue or otherwise participate in any discussions or negotiations regarding, or furnish to any other Person any non-public information in connection with or for the purpose of encouraging or facilitating, a Competing
Proposal or Competing Inquiry, (C) approve, endorse, recommend, execute or enter into, or publicly propose to approve, endorse, recommend, execute or enter into any letter of intent,
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memorandum of understanding, agreement in principle, acquisition agreement, merger agreement or similar definitive Contract (other than an Acceptable Confidentiality Agreement) with respect to
any Competing Proposal (an
Alternative Acquisition Agreement
), (D) take any action to make the provisions of any Takeover Statute (including Section 203 of the DGCL) or any applicable anti-takeover provision in the
Companys organizational documents inapplicable to any transactions contemplated by a Competing Proposal, (E) terminate, amend, release, modify or knowingly fail to enforce any provision of, of grant any permission, waiver or request
under, any standstill, confidentiality of similar contract entered into by the Company in respect of or in contemplation of a Competing Proposal (other than to the extent the Company Board determines in good faith, after consultation with its
independent financial advisors and outside legal counsel, that failure to take any such actions under this
Section 5.4(b)(ii)(E)
would be reasonably likely to result in a breach of its fiduciary duties under applicable Law) or
(F) propose, resolve or agree to do any of the foregoing.
No later than 24 hours after the No-Shop Period Start Date, the Company shall
notify Parent in writing of the identity of each Person that submitted a Competing Proposal prior to the No-Shop Period Start Date. Notwithstanding the commencement of the obligations of the Company under this
Section 5.4(b)
on the
No-Shop Period Start Date, the Parties agree that the Company may continue to engage in the activities described in clause (ii) of
Section 5.4(a)
with respect to each Excluded Party on and after the No-Shop Period Start Date until
the earlier to occur of (x) the Cut-off Date and (y) such time as such Person is no longer an Excluded Party;
provided
that (i) the provisions of
Sections 5.4(c), (d), (e), (f), (g) and (h)
shall apply and
(ii) the Company shall promptly provide to Parent with its notice pursuant to this
Section 5.4(b)(ii)
a copy of any Competing Proposal (or, where no such copy is available, a reasonably detailed description of such Competing
Proposal), in each case including the identity of each Person submitting such proposal, as well as any modifications thereto, submitted by any Excluded Party on or prior to the No-Shop Period Start Date.
(c) Notwithstanding anything to the contrary contained in
Section 5.4(b)
or any other provisions of this Agreement, if, at
any time on or after the No-Shop Period Start Date and prior to the Acceptance Time, (i) the Company, any Company Subsidiary or any of its Representatives receives a written, bona-fide Competing Proposal from any Person or group of Persons
(including but not limited to an Excluded Party) which did not result from any breach by the Company, any Company Subsidiary or their Representatives of this
Section 5.4
, (ii) the Company Board determines in good faith, after
consultation with its independent financial advisors and outside legal counsel, that such Competing Proposal constitutes or would reasonably be expected to lead to a Superior Proposal and (iii) the Company Board determines in good faith, after
consultation with its legal advisors, that failure to take such action would be reasonably likely to result in a breach of its fiduciary duties under applicable Law, then the Company and its Representatives may (A) furnish, pursuant to an
Acceptable Confidentiality Agreement, information (including non-public information) with respect to the Company and the Company Subsidiaries to the Person or group of Persons who has made such Competing Proposal;
provided
that the Company
shall promptly (and in any event within 24 hours) provide to Parent any material non-public information concerning the Company or any Company Subsidiary that is provided to any Person given such access which was not previously provided to Parent or
its Representatives and (B) engage in or otherwise participate in discussions or negotiations with the Person or group of Persons making such Competing Proposal.
(d) From and after the No-Shop Period Start Date, the Company shall promptly (and in any event within 24 hours), notify Parent in the event that the Company, any Company Subsidiary or any of their
Representatives receives (i) any Competing Proposal or a Competing Inquiry, (ii) any request for non-public information relating to the Company or any Company Subsidiary or requests for information in the ordinary course of business
consistent with past practice and unrelated to a Competing Proposal or (iii) any Competing Inquiry or request for discussions or negotiations regarding any Competing Proposal. In connection with such notice, the Company shall indicate the
identity of such Person or group of Persons and shall provide a copy of such Competing Inquiry, Competing Proposal, indication, or request (or, where no such copy is available, a reasonably detailed description of such Competing Inquiry, Competing
Proposal, indication, or request), including any modifications thereto. Thereafter, the Company shall keep Parent informed (orally and in writing) on a current basis (and in any event at Parents request and otherwise no later than 24 hours
after the occurrence
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of any material changes, developments, discussions or negotiations) of the status of any Competing Inquiry, Competing Proposal, indication, or request (including the material terms and conditions
thereof and of any modification thereto), and any material developments, discussions and negotiations, including furnishing copies of any revised written proposals or offers relating thereto. Neither the Company nor any Company Subsidiary will enter
into any confidentiality agreement with any Person subsequent to the date hereof which prohibits the Company from providing any information to Parent in accordance with this
Section 5.4
.
(e) From and after the date of this Agreement, except as expressly permitted by this
Section 5.4(e)
and subject in all
respects to
Section 5.4(f)
, neither the Company Board nor any committee thereof shall (i) withhold, withdraw, qualify or modify, or publicly propose to withhold, withdraw, qualify or modify, in a manner adverse to Parent or the
Purchaser, the Company Board Recommendation, (ii) fail to include the Company Board Recommendation in the Schedule 14D-9 or the Proxy Statement, (iii) if a tender offer or exchange offer for shares of capital stock of the Company that
constitutes a Competing Proposal is commenced, fail to publicly recommend against acceptance of such tender offer or exchange offer by the stockholders of the Company (taking no position with respect to the acceptance of such tender offer or
exchange offer by the stockholders of the Company, shall constitute a failure to recommend against acceptance of such tender offer or exchange offer) within 10 Business Days after commencement thereof or fail to reaffirm the Company Board
Recommendation within four Business Days after Parent so requests in writing (provided that Parent shall be not be entitled to request such reaffirmation more than three times), (iv) adopt, approve or recommend, or publicly propose to adopt,
approve or recommend, any Competing Proposal made or received after the date of this Agreement (any of the actions described in clauses (i) through (iv) of this
Section 5.4(e)
, an
Adverse Recommendation
Change
) or (v) cause or permit the Company or any Company Subsidiary to enter into any Alternative Acquisition Agreement. Notwithstanding anything to the contrary set forth in this Agreement, at any time prior to the Acceptance Time,
the Company Board shall be permitted to effect any Adverse Recommendation Change (x) described in clause (i) of such definition or otherwise terminate this Agreement to concurrently enter into a definitive Alternative Acquisition
Agreement, in each case solely, under this clause (x), with respect to a Superior Proposal, subject in each case to compliance with
Section 5.4(f)
and the concurrent payment of any amount owed Parent pursuant to
Section 7.2
,
if the Company Board (A) has received a bona fide written Competing Proposal that the Company Board determines in good faith, after consultation with its independent financial advisors and outside legal counsel, constitutes a Superior Proposal,
after having complied with, and giving effect to all of the adjustments which may be offered by Parent and the Purchaser pursuant to
Section 5.4(f)
and (B) determines in good faith, after consultation with its legal advisors, that
failure to take such action would be reasonably likely to result in a breach of its fiduciary duties under applicable Law or (y) in response to a material development or change in circumstances (that is not a Competing Inquiry or Competing
Proposal) and that was not known to the Company Board as of the date of this Agreement (an
Intervening Event
) if the Company Board determines in good faith, after consultation with its legal advisors, that failure to make an
Adverse Recommendation Change would be reasonably likely to result in a breach of its fiduciary duties under applicable Law;
provided
that, the Company Board may not make an Adverse Recommendation Change in response to an Intervening Event
unless the Company (A) provides Parent with a written description of such Intervening Event in reasonable detail, (B) keeps Parent reasonably informed of material developments with respect to such Intervening Event, (C) notifies
Parent in writing at least four Business Days before making an Adverse Recommendation Change with respect to such Intervening Event of its intention to do so and specifying the reasons therefor and (D) prior to the expiration of such four
Business Day period, Parent does not make a bona fide proposal to amend the terms of this Agreement that the Company Board determines in good faith would obviate the need to make an Adverse Recommendation Change in accordance with its fiduciary
duties under applicable Law.
(f) From and after the date of this Agreement, the Company Board shall not be entitled to
effect an Adverse Recommendation Change or terminate this Agreement, in each case, with respect to a Superior Proposal unless (i) none of the Company, any Company Subsidiary or any of their Representatives has breached this
Section 5.4
in any respect as relates to such Superior Proposal, (ii) the Company has provided written notice (a
Notice of Superior Proposal
) to Parent and the Purchaser that the Company intends to take such
action, which notice includes an unredacted copy of the Superior Proposal that is the basis of such action (including the identity
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of the Third Party making the Superior Proposal) and copies of all relevant documents relating to such Superior Proposal, (iii) during the four Business Days period following
Parents and the Purchasers receipt of the Notice of Superior Proposal, the Company shall, and shall cause the its Representatives to, negotiate with Parent and the Purchaser in good faith (to the extent Parent and the Purchaser desire to
negotiate) to make such adjustments in the terms and conditions of this Agreement so that such Superior Proposal would cease to constitute a Superior Proposal and (iv) following the end of the four Business Days period, the Company Board
shall have determined in good faith, after consultation with its independent financial advisors and outside legal counsel, taking into account any changes to this Agreement proposed in writing by Parent and the Purchaser in response to the Notice of
Superior Proposal or otherwise, that the Superior Proposal giving rise to the Notice of Superior Proposal continues to constitute a Superior Proposal. Any amendment to the financial terms or any other material amendment of such Superior Proposal
shall require a new Notice of Superior Proposal and the Company shall be required to comply again with the requirements of this
Section 5.4(f)
;
provided
,
however
, that for purposes of this sentence, references to the
four Business Day period above shall be deemed to be references to a two Business Day period.
(g) Nothing contained in
this Agreement shall prohibit the Company or the Company Board, directly or indirectly through the its Representatives, from (i) taking and disclosing to the Companys stockholders a position with respect to a tender or exchange offer by a
Third Party pursuant to Rule 14d-9 or Rule 14e-2 under the Exchange Act or (ii) making any stop, look and listen communication to the Companys stockholders pursuant to Rule 14d-9(f) under the Exchange Act if the
Company Board has determined in good faith, after consultation with its outside legal counsel, that failure to take such action would be reasonably likely to result in a breach of the directors fiduciary duties under applicable Law;
provided
,
however
, that any disclosure permitted under
Section 5.4(g)(i)
that is not an express rejection of any applicable Competing Proposal or an express reaffirmation of the Company Boards recommendation in favor
of the transactions contemplated by this Agreement shall be deemed an Adverse Recommendation Change.
(h) The Company agrees
that any violation of the restrictions set forth in this
Section 5.4
by any of its Representatives shall be deemed a breach of this Agreement (including this
Section 5.4
) by the Company.
5.5
Appropriate Action; Consents; Filings
.
(a) The Company and Parent shall use (and cause their respective Subsidiaries to use) their commercially reasonable efforts to (i) take, or cause to be taken, all appropriate action and do, or cause
to be done, all things necessary, proper or advisable under applicable Law or otherwise to consummate and make effective the transactions contemplated by this Agreement as promptly as practicable, (ii) obtain from any Governmental Authorities
any consents, licenses, permits, waivers, approvals, authorizations or orders required to be obtained by Parent or the Company or any of their respective Subsidiaries, or to avoid any Action or Order by any Governmental Authority, in connection with
the authorization, execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, including without limitation the Offer, the exercise of the Top-Up Option and the Mergers and (iii) promptly make all
necessary filings, and thereafter make any other required submissions, and pay any fees due in connection therewith, with respect to this Agreement, the Offer, the Top-Up Option and the Mergers required under (A) the Exchange Act, the
Securities Act and any other applicable securities Laws, (B) the HSR Act and any other applicable competition Laws and (C) any other applicable Law, if any;
provided
, that the Company and Parent shall cooperate with each other in
all respects in connection with (x) preparing and filing the Offer Documents, the Schedule 14D-9, the Proxy Statement and any other filings made or required to be made with the SEC in connection with the Offer or the Mergers and the
transactions contemplated thereby, (y) making an appropriate filing pursuant to the HSR Act as set forth in
Section 5.5(d
) and determining whether any other action by or in respect of, or filing with, any Governmental Authority is
required, in connection with the consummation of the Offer, the exercise of the Top-Up Option or the Mergers and (z) seeking any such actions, consents, approvals or waivers or timely making any such filings. The Company and Parent shall
furnish to each other all information required for any application or other filing under the rules and regulations of any applicable Law in connection with the transactions contemplated by this
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Agreement. The Company and Parent may, as each deems advisable and necessary, reasonably designate any competitively sensitive material provided to the other pursuant to this
Section 5.5
as Outside Counsel Only Material. Notwithstanding anything to the contrary in this
Section 5.5
, materials provided to the other party or its counsel may be redacted to remove references concerning the
valuation of the Company and any Company Subsidiaries.
(b) The Company and Parent shall give (or shall cause their
respective Subsidiaries to give) any notices to Third Parties, and use, and cause their respective Subsidiaries to use, their commercially reasonable efforts to obtain any Third Party consents (i) necessary, proper or advisable to consummate
the transactions contemplated by this Agreement, (ii) required to be disclosed in the Company Disclosure Schedule or the Parent Disclosure Schedule, as applicable or (iii) required to prevent a Company Material Adverse Effect from
occurring prior to or after the Effective Time;
provided
,
however
, that the Company and Parent shall coordinate and cooperate in determining whether any actions, consents, approvals or waivers are required to be obtained from parties
to any Company Material Contracts in connection with consummation of the Offer, the exercise of the Top-Up Option or the Mergers and seeking any such actions, consents, approvals or waivers. In the event that either party shall fail to obtain any
Third Party consent described in the first sentence of this
Section 5.5(b)
, such party shall use its commercially reasonable efforts, and shall take any such actions reasonably requested by the other party hereto, to minimize any adverse
effect upon the Company and/or Parent, their respective Subsidiaries, and their respective businesses resulting, or which could reasonably be expected to result, after the consummation of the Offer or the Effective Time, from the failure to obtain
such consent. Notwithstanding anything to the contrary in this Agreement, in connection with obtaining any approval or consent from any Person with respect to the Offer, the exercise of the Top-Up Option or the Mergers, (i) without the prior
written consent of Parent, none of the Company or any Company Subsidiary shall pay or commit to pay to such Person whose approval or consent is being solicited any cash or other consideration, make any commitment or incur any liability or other
obligation due to such Person and (ii) neither Parent nor the Purchaser shall be required to pay or commit to pay to such Person whose approval or consent is being solicited any cash or other consideration, make any commitment or incur any
liability or other obligation due to such Person.
(c) Without limiting the generality of anything contained in this
Section 5.5
, each party hereto shall: (i) give the other parties prompt notice of any request, inquiry, objection, charge or other Action, actual or threatened, by or before the United States Federal Trade Commission
(
FTC
), the United States Department of Justice (
DOJ
) or any other applicable Governmental Authority or any Third Party with respect to the Offer, the exercise of the Top-Up Option, the Mergers or any of the
other transactions contemplated by this Agreement, (ii) keep the other parties informed as to the status of any such request, inquiry, objection, charge or other Action and (iii) promptly inform the other parties of any communication to or
from any Governmental Authority or any Third Party regarding the Offer, the Top-Up Option or the Mergers. Each party hereto will (i) use its commercially reasonable efforts to resolve any such request, inquiry, objection, charge or other
Action, and to have vacated, lifted, reversed or overturned any Order, whether temporary, preliminary or permanent, that is in effect and that prohibits, prevents or restricts consummation of the transactions contemplated by this Agreement so as to
permit consummation of the transactions contemplated by this Agreement and (ii) consult and cooperate with the other parties and consider in good faith the views of the other parties in connection with any filing, analysis, appearance,
presentation, memorandum, brief, argument, opinion or proposal made or submitted in connection with the Offer, the Top-Up Option, the Mergers or any of the other transactions contemplated by this Agreement (such cooperation shall include
consultation with each other in advance of any meeting or conference with the FTC, the DOJ or any other Governmental Authority or, in connection with any Action by a Third Party, with any other Person, and to the extent permitted by the FTC, the DOJ
or such other applicable Governmental Authority or other Person, providing the other party the opportunity to attend and participate in such meetings and conferences).
(d) Without limiting the generality of anything contained in this
Section 5.5
, each party hereto agrees to: (i) on the date of the commencement of the Offer, make an appropriate filing of
a Notification and Report Form pursuant to the HSR Act (including seeking early termination of the waiting period under the HSR
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Act) with respect to the transactions contemplated by this Agreement, (ii) supply as promptly as reasonably practicable any additional information and documentary material that may be
requested pursuant to the HSR Act by the FTC or the DOJ and (iii) use its commercially reasonable efforts to take or cause to be taken all other actions necessary, proper or advisable consistent with this
Section 5.5
to cause the
expiration or termination of the applicable waiting periods, or receipt of required authorizations, as applicable, under the HSR Act as soon as practicable. Parent shall be entitled to direct the antitrust defense of the Offer, the Mergers or any
other transactions contemplated thereby, or negotiations with, any Governmental Authority or other Third Party relating to the Offer, the Mergers or regulatory filings under applicable competition Law, subject to the provisions of this
Section 5.5
. The Company shall use its commercially reasonable efforts to provide full and effective support of Parent in all material respects in all such negotiations and other discussions or actions to the extent requested by Parent.
The Company shall not make any offer, acceptance or counter-offer to or otherwise engage in negotiations or discussions with any Governmental Authority with respect to any proposed settlement, consent decree, commitment or remedy, or, in the event
of litigation, discovery, admissibility of evidence, timing or scheduling, except as specifically requested by or agreed with Parent. Each party hereto shall bear its own Expenses in connection with any such filings and actions contemplated pursuant
to this
Section 5.5(d)
. None of Parent, the Purchaser or the Company shall commit to or agree with any Governmental Authority to stay, toll or extend any applicable waiting period under the HSR Act or applicable competition Laws, without
the prior written consent of the other parties. If any request for additional information and documents, including a second request under the HSR Act, is received from any Governmental Authority then the Parties shall substantially
comply with any such request at the earliest practicable date. If any administrative or judicial action or proceeding is instituted (or threatened to be instituted) by a Governmental Authority challenging the transactions contemplated by this
Agreement as violative of the HSR Act or any applicable antitrust or competition Law, each of the Parent and the Company shall, and shall cause their respective Representatives to, cooperate to contest and resist, except insofar as the Parent and
the Company may otherwise agree, any such action or proceeding, including any action or proceeding that seeks a temporary restraining order or preliminary injunction that would prohibit, prevent or restrict consummation of the transactions
contemplated by this Agreement.
(e) Notwithstanding the foregoing or any other provision of this Agreement (but subject in
all respects to
Section 5.1
), (i) nothing in this
Section 5.5
shall limit a partys right to terminate this Agreement pursuant to
Article 7
hereof and (ii) nothing in this Agreement shall obligate
Parent, the Purchaser or any of their respective Affiliates to agree to (and none of the Company or any Company Subsidiary shall, without the prior written consent of Parent): (A) sell, hold separate or otherwise dispose of all or a portion of
its respective business, assets or properties, or conduct its business in a specified manner, (B) pay any amounts (other than the payment of filing fees and expenses and fees of counsel), or grant any counterparty to any Contract any material
accommodation, (C) limit in any manner whatsoever the ability of such entities to conduct, own, operate or control any of their respective businesses, assets or properties or of the businesses, properties or assets of the Company and the
Company Subsidiaries or (D) waive any of the conditions set forth in
Annex I
of this Agreement
.
(f)
Parent and the Purchaser agree that, between the date of this Agreement and the Effective Time, each of Parent and the Purchaser shall not, and shall ensure that none of their Subsidiaries or other Affiliates shall, take any action or propose,
announce an intention or agree, in writing or otherwise, to take any action that would reasonably be expected to materially delay or prevent the consummation of the transactions contemplated hereby.
5.6
Certain Notices
.
From and after the date of this Agreement until the Effective Time, each party hereto shall promptly notify the other party hereto of (a) the occurrence, or non-occurrence, of any event that would be
likely to cause any condition to the obligations of any party to effect the Offer, the Mergers, or any other transaction contemplated by this Agreement not to be satisfied or (b) the failure of the Company or Parent, as the case may be, to
comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it pursuant
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to this Agreement which would reasonably be expected to result in any condition to the obligations of any party to effect the Offer, the Mergers or any other transaction contemplated by this
Agreement not to be satisfied;
provided
,
however
, that the delivery of any notice pursuant to this
Section 5.6
shall not cure any breach of any representation, warranty, covenant or agreement contained in this Agreement or
otherwise limit or affect the remedies available hereunder to the party receiving such notice.
5.7
Public
Announcements
.
The initial press release with respect to this Agreement, the Offer, the Mergers and the other transactions
contemplated hereby shall be a joint release mutually agreed upon by the Company and Parent. Thereafter, none of the parties shall (and each of the parties shall cause its Representatives and Affiliates, if applicable, not to) issue any press
release or make any public announcement concerning this Agreement, the Offer, the Mergers or the other transactions contemplated hereby without obtaining the prior written consent of (a) the Company, in the event the disclosing party is Parent,
the Purchaser, any of its Affiliates or Representatives or (b) Parent, in the event the disclosing party is the Company, any Company Subsidiary or any of their Representatives, in each case, with such consent not to be unreasonably conditioned,
delayed or withheld;
provided
,
however
, that (i) if a party determines in good faith and based upon advice of counsel, that a press release or public announcement is required by applicable Law or the rules or regulations of any
applicable stock exchange, such party may make such press release or public announcement, in which case the disclosing party shall use its commercially reasonable efforts to provide the other parties reasonable time to comment on such release or
announcement in advance of such issuance, (ii) this
Section 5.7
shall terminate upon an Adverse Recommendation Change and (iii) each of the parties may make public statements in response to specific questions by the press,
analysts, investors or those attending industry conferences or financial analyst conference calls, so long as any such statements are not materially inconsistent with previous press releases, public disclosures or public statements made jointly by
Parent and the Company and do not reveal material, non-public information regarding the other parties, the Offer, the Mergers or the transactions contemplated hereby.
5.8
Indemnification of Directors and Officers
.
(a) Parent and the
Surviving Corporation agree that all rights of indemnification, exculpation and limitation of liabilities existing in favor of past and present directors and officers of the Company as provided in the Company Charter, the Company Bylaws or under any
indemnification, employment or other similar Contracts between such past and present directors and officers of the Company and the Company, in each case as in effect on the date of this Agreement with respect to acts or omissions in their capacity
as directors or officers occurring at or prior to the Effective Time, shall survive the Mergers and continue in full force and effect in accordance with their respective terms (unless otherwise required by applicable Law). From and after the
Effective Time, Parent shall cause the Surviving Corporation, and from and after the Second Merger, the Surviving Company to pay and perform in a timely manner such indemnification obligations. Subject to
Section 5.8(c)
, for a period of
six years from and after the Effective Time, Parent shall cause the certificate of incorporation and bylaws of the Surviving Corporation, and from and after the Second Merger, Parent shall cause the certificate of formation and organizational
documents of the Surviving Company to contain provisions no less favorable with respect to indemnification, exculpation, and advancement of expenses of directors and officers of the Company for periods at or prior to the Effective Time than are
currently set forth in the Company Charter and the Company Bylaws (unless otherwise required by applicable Law).
(b) For a
period of six years from and after the Effective Time, the Surviving Corporation (and from and after the Second Merger, the Surviving Company) shall maintain for the benefit of the Companys directors and officers, as of the Effective Time, an
insurance and indemnification policy that provides coverage for events occurring prior to the Effective Time (the
D&O Insurance
) that is substantially equivalent to and in any event not less favorable in the aggregate than the
Companys existing policy (accurate and complete copies of which have been previously provided to Parent) or, if substantially equivalent insurance coverage is unavailable, the best available coverage;
provided
,
however
, that the
Surviving Corporation shall not be required
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to pay an annual premium for the D&O Insurance in excess of 250% of the last annual premium paid prior to the date of this Agreement, which premium the Company represents and warrants to be
as set forth on
Section 5.8(b)
of the Company Disclosure Schedule. The provisions of the immediately preceding sentence shall be deemed to have been satisfied if prepaid policies are obtained by Parent prior to the Effective Time, which
policies provide such directors and officers with substantially equivalent coverage for an aggregate period of six years with respect to claims arising from facts or events that occurred on or before the Effective Time, including, without
limitation, in respect of the transactions contemplated by this Agreement. If such prepaid policies have been obtained prior to the Effective Time, the Surviving Corporation shall maintain such policies in full force and effect, and continue to
honor the obligations thereunder.
(c) In the event that Parent, the Surviving Corporation or the Surviving Company
(i) consolidates with or merges into any other Person and shall not be the continuing or surviving corporation or entity of such consolidation or merger or (ii) transfers all or substantially all of its properties and assets to any Person,
then proper provision shall be made so that such continuing or surviving corporation or entity or transferee of such assets, as the case may be, shall assume the obligations set forth in this
Section 5.8
.
(d) The obligations under this
Section 5.8
shall not be terminated or modified in such a manner as to adversely affect in
any material respect any indemnitee to whom this
Section 5.8
applies without the consent of such affected indemnitee, subject to applicable Law (it being expressly agreed that the indemnitees to whom this
Section 5.8
applies
shall be third party beneficiaries of this
Section 5.8
).
5.9
State Takeover Laws
.
If any Takeover Statute becomes or is deemed to be applicable to the Company, Parent or the Purchaser, the execution, delivery or
performance of this Agreement, the Offer, the Mergers or the Top-Up Option, including the acquisition of Shares pursuant thereto, the Tender Agreements or any other transaction contemplated by this Agreement, then the Company Board shall take all
action necessary to render such Law inapplicable to the foregoing.
5.10
Section 16 Matters
.
Prior to the Effective Time, each of Parent and the Company will take all such steps as may be required to cause any dispositions of
Company equity securities (including derivative securities with respect to Company Common Stock) or acquisitions of Parent equity securities (including derivative securities with respect to Parent Common Stock) resulting from the transactions
contemplated by this Agreement by each individual who is subject to the reporting requirements of Section 16(a) of the Exchange Act to be exempt under Rule 16b-3 promulgated under the Exchange Act.
5.11
Employees and Employee Benefit Plan Matters
.
(a) For a period of twelve months following the Effective Time, Parent shall provide, or shall cause to be provided, to those employees of the Company and the Company Subsidiaries who continue to be
employed by the Parent and Parent Subsidiaries (individually,
Company Employee
and collectively,
Company Employees
) (i) annual base salary or base wages and short-term incentive compensation opportunities
and (ii) benefits (including severance benefits) that are substantially comparable, in the aggregate, to the benefits provided to similarly situated employees of Parent or the Parent Subsidiaries.
(b) For purposes of vesting, eligibility to participate and levels of benefits (but not benefit accrual under any defined benefit plan
or vesting under any equity incentive plan) under the employee benefit plans of Parent and the Parent Subsidiaries in which Company Employees first become eligible to participate after the Effective Time (including any Company Employee Plans) (the
New Plans
), each Company Employee shall be credited with his or her years of service with the Company and the Company Subsidiaries and their respective
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predecessors before the Effective Time, to the same extent as such Company Employee was entitled, before the Effective Time, to credit for such service under any similar Company Employee Plan in
which such Company Employee participated or was eligible to participate immediately prior to the Effective Time; provided that the foregoing shall not apply to the extent that its application would result in a duplication of benefits with respect to
the same period of service. In addition, Parent shall use its commercially reasonable efforts to cause (i) each Company Employee to be immediately eligible to participate, without any waiting time, in any and all New Plans, and (ii) for
purposes of each New Plan providing medical, dental, pharmaceutical and/or vision benefits to any Company Employee, all pre-existing condition exclusions and actively-at-work requirements of such New Plan to be waived for such Company Employee and
his or her covered dependents, to the extent such conditions were inapplicable or waived under the comparable Company Employee Plans in which such Company Employee participated immediately prior to the Effective Time. Parent shall cause any eligible
expenses incurred by any Company Employee and his or her covered dependents during the plan year that includes the Effective Time to be taken into account for purposes of satisfying all deductible, coinsurance and maximum out-of-pocket requirements
applicable to such Company Employee and his or her covered dependents under any New Plan (to the extent such amounts would have been taken into account for such requirements under any comparable Company Employee Plan prior to the Effective Time).
(c) Effective as of the day immediately preceding the date that the Purchaser and the Company become part of the same
controlled group pursuant to Sections 414(b), (c), (m) or (o) of the Code (the
Controlled Group Date
), unless otherwise directed in writing by Parent at least ten Business Days prior to the Controlled Group Date, the
Company shall take or cause to be taken all actions necessary to effect the termination of any and all Company Employee Plans intended to qualify as qualified cash or deferred arrangements under Section 401(k) of the Code (each, a
401(k) Plan
). The Company shall provide Parent with evidence that each such 401(k) Plan has been terminated pursuant to an action by the Company Board.
(d) The Company shall take such action as may be necessary under the Companys Employee Stock Ownership Plan (the
ESOP
) to terminate the ESOP effective as of the day immediately
preceding the Controlled Group Date. The Company shall make the final contribution to the ESOP immediately after the date of this Agreement and shall not make any additional contributions to the ESOP thereafter. The Company shall provide timely
notice of termination of the ESOP in accordance with the terms of the ESOP.
5.12
Rule 14d-10(d) Matters
.
Notwithstanding anything in this Agreement to the contrary, neither the Company nor any Company Subsidiary shall, from and after
the date hereof and until the Effective Time, enter into, establish, amend or modify any plan, program or Contract pursuant to which compensation is paid or payable, or pursuant to which benefits are provided, in each case to any current or former
director, manager, officer, employee or independent contractor of the Company or any Company Subsidiary unless, prior to such entry into, establishment, amendment or modification, the Compensation Committee (each member of which the Company Board
determined is an independent director within the meaning of Listing Rule 5605(a)(2) of the NASDAQ rules and shall be an independent director in accordance with the requirements of Rule 14d-10(d)(2) under the Exchange Act at
the time of any such action) shall have taken all such steps as may reasonably be necessary to (a) approve as an Employment Compensation Arrangement each such plan, program or Contract and (b) satisfy the requirements of the non-exclusive
safe harbor under Rule 14d-10(d)(2) under the Exchange Act with respect to such plan, program or Contract;
provided
, that nothing in this
Section 5.12
shall be construed to permit the Company to take any action with respect to its
securities that is prohibited by the terms of this Agreement.
5.13
Stockholder Litigation
.
The Company shall control, and the Company shall give Parent the opportunity to participate in the defense of, any Action brought by
stockholders of the Company against the Company and/or its directors relating to the transactions contemplated by this Agreement, including the Offer, the exercise of the Top-Up Option and
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the Mergers;
provided
,
however
, that the Company shall not compromise, settle, come to an arrangement regarding or agree to compromise, settle or come to an arrangement regarding
any Action arising or resulting from the transactions contemplated by this Agreement, or consent to the same without the prior written consent of Parent (not to be unreasonably withheld, conditioned or delayed).
5.14
NASDAQ Matters
.
(a) Prior to the Closing Date, the Company shall cooperate with Parent and use its commercially reasonable efforts to take, or cause to be taken, all actions, and do or cause to be done all things,
necessary, proper or advisable on its part under applicable Laws and rules and policies of NASDAQ to cause the delisting of the Company and of the Company Common Stock from NASDAQ as promptly as practicable after the Effective Time and the
deregistration of the Common Stock under the Exchange Act as promptly as practicable after such delisting.
(b) Prior to the
earlier of the consummation of the Offer and the Effective Time, Parent agrees to use its commercially reasonable efforts to authorize for listing on NASDAQ, the shares of Parent Common Stock issuable, and those required to be reserved for issuance,
in connection with the Offer and the Merger, subject to official notice of issuance. Parent agrees to promptly make such other additional filings with NASDAQ as may be required in connection with the consummation of the transactions contemplated by
this Agreement.
5.15
Obligations of the Purchaser
.
Parent will take all actions necessary to cause the Purchaser and Merger LLC to perform its obligations under this Agreement and to
consummate the Offer and the Mergers on the terms and conditions set forth in this Agreement, including making available to the Purchaser the funds and Parent Common Stock necessary for the exchange of all Shares that the Purchaser becomes obligated
to exchange pursuant to the Offer.
5.16
FIRPTA Certificate
.
At or prior to the Closing, the Company shall deliver to the Purchaser or Parent an affidavit that meets the requirements of Treasury
Regulation Sections 1.1445-2(c)(3) and 1.897-2(h), dated as of the Closing Date and in form and substance reasonably acceptable to Parent.
5.17
Tax-Free Reorganization Treatment
.
(a) If the conditions to the
Second Merger set forth in
Section 6.2
are satisfied and the Second Merger is effected, (i) Parent, the Company, and the Purchaser intend that the Offer, the Merger and the Second Merger, taken together, be considered a single
integrated transaction for United States federal income Tax purposes qualifying as a reorganization within the meaning of Section 368(a) of the Code, and (ii) each shall, and shall cause its respective Subsidiaries to, file all
Tax Returns consistent with such treatment unless otherwise required by applicable Law. Subject to
Section 1.1(c)
, the parties to this Agreement shall use commercially reasonable efforts to execute and deliver tax certificates
substantially in the forms set forth in
Exhibits E
and
F
to counsel for the Company for purposes of the opinion described in
Section 6.2
.
(b) Subject to
Section 6.2
, Parent, the Company, and the Purchaser hereby adopt this Agreement as well as any other agreements entered into pursuant to this Agreement as a plan of
reorganization within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the Regulations.
(c) Prior to Closing, the
Company shall take, and shall cause its Subsidiaries to take, any action reasonably requested by Parent to minimize any current or future Tax of the Company, Parent or any of their Affiliates resulting from the transactions contemplated by this
Agreement, provided such action would not adversely affect (i) the ability of counsel to provide the opinion referred to in
Section 6.2
or (ii) the satisfaction of the conditions to closing set forth in ARTICLE 6.
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5.18
IP Transfer
.
Immediately prior to the Acceptance Time, the Company shall have effected a transfer of all rights in the UK Subsidiarys
intellectual property from its UK Subsidiary to the Company on terms and conditions reasonably satisfactory to Parent;
provided
however
, that in no event shall the obligations pursuant to this
Section 5.18
be considered for
purposes of any condition pursuant
to Section 7.1(f)
or clauses (e)(iv), e(v) or (e)(vi) of
Annex I
.
ARTICLE 6
CONDITIONS TO CONSUMMATION OF THE MERGERS
6.1
Conditions to Obligations of Each Party Under This Agreement
.
The
respective obligations of each party to consummate the Merger shall be subject to the satisfaction at or prior to the Effective Time of each of the following conditions:
(a) The Purchaser shall have accepted for payment, or caused to be accepted for payment, all Shares validly tendered and not withdrawn in the Offer.
(b) This Agreement shall have been adopted and the Merger approved by the requisite vote or written consent of the stockholders of the
Company, if required by applicable Law.
(c) If approval of the Merger by the Companys stockholders is required by
applicable Law, the Post-Effective Amendment, shall have been declared effective by the SEC under the Securities Act and no stop order suspending the effectiveness of the Post-Effective Amendment shall have been issued by the SEC and no proceeding
for that purpose shall have been initiated by the SEC and not concluded or withdrawn.
6.2
Conditions to the Second
Merger
.
The respective obligations of the parties to effect the Second Merger are subject to the satisfaction of each of
the following conditions: (a) the acquisition of Shares pursuant to the Offer, (b) the consummation of the Merger, (c) the absence of any legal prohibition on completing the Second Merger and (d) the receipt by the Company of a
written opinion of Baker & McKenzie LLP, substantially in the form of Exhibit G attached hereto, to the effect that the Offer, the Merger and the Second Merger, taken together, will constitute a reorganization within the meaning
of Section 368(a) of the Code, and such opinion shall not have been withdrawn. Such opinion may rely on customary representations made by the parties in tax certificates substantially in the form of Exhibits E and F attached hereto.
Notwithstanding anything to the contrary in this Agreement, if any of the foregoing conditions is not satisfied, the Second Merger shall not occur and the provisions of this Agreement pertaining to the Offer, the Merger and the Second Merger
qualifying collectively as a reorganization within the meaning of Section 368(a) of the Code shall not apply.
6.3
Frustration of Closing Conditions
.
None of the Company, Parent, the Purchaser or Merger LLC may rely on the failure of any condition set forth in this
ARTICLE 6
to be satisfied if such failure was primarily caused by or primarily
resulted from such partys breach of this Agreement.
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ARTICLE 7
TERMINATION, AMENDMENT AND WAIVER
7.1
Termination
.
Subject to
Sections 1.3(c)
and
1.3(d)
, this Agreement may be terminated, and the Offer, the Mergers and the other
transactions contemplated hereby may be abandoned by action taken or authorized by the board of directors (or appropriate committee or designee) of the terminating party or parties, whether before or after approval of the Merger by the stockholders
of the Company:
(a) By mutual written consent of Parent and the Company at any time prior to the Effective Time;
(b) By either the Company or Parent, if the Offer (as it may have been extended pursuant to
Section 1.1
) expires on or after
the Outside Date as a result of the non-satisfaction of any condition or requirement of the Offer set forth in
Annex I
or is terminated or withdrawn pursuant to its terms without any Shares being purchased thereunder;
provided
,
however
, that the right to terminate the Agreement pursuant to this
Section 7.1(b)
shall not be available to any party whose breach of this Agreement has been the primary cause of or primarily resulted in the failure or the
non-satisfaction of any condition or requirement of the Offer set forth in
Annex I
or the termination or withdrawal of the Offer pursuant to its terms without any Shares being purchased thereunder;
(c) By either the Company or Parent, if any court or other Governmental Authority, in each case of competent jurisdiction, shall have
issued an Order or taken any other action permanently restraining, enjoining or otherwise prohibiting (i) prior to the Acceptance Time, the acceptance for payment of, or payment for, Shares pursuant to the Offer or (ii) prior to the
Effective Time, the Merger, and such Order or other action shall have become final and nonappealable (which Order or other action the party seeking to terminate this Agreement shall have used its commercially reasonable efforts to resist, resolve or
lift, as applicable, subject to the provisions of
Section 5.5
);
provided
,
however
, that the right to terminate this Agreement pursuant to this
Section 7.1(c)
shall not be available to any party if the issuance
of such final and non-appealable Order or action was due to the failure by such party (including, in the case of Parent, the Purchaser) to perform any of its obligations under this Agreement;
(d) By Parent, at any time prior to the Acceptance Time if (i) an Adverse Recommendation Change shall have occurred (whether or not
in compliance with
Section 5.4
), (ii) the Company shall have breached in any material respect its obligations under
Section 5.4
, (iii) the Company shall have failed to include the Company Board Recommendation in the
Schedule 14D-9 or to permit Parent to include the Company Board Recommendation in the Offer Documents, (iv) within seven Business Days of the date any Competing Proposal or any material modification thereto is first publicly announced or
otherwise communicated to the stockholders of the Company, or otherwise within five Business Days following Parents written request, the Company fails to issue a press release that expressly reaffirms the Company Board Recommendation to the
extent required pursuant to
Section 5.4(e)(iii)
or (v) the Company or the Company Board (or any committee thereof) shall authorize or publicly propose to do any of the foregoing;
(e) By the Company, at any time prior to the Acceptance Time if the Company Board determines to enter into a definitive written
Alternative Acquisition Agreement with respect to a Superior Proposal, but only if the Company shall have complied in all respects with its obligations under
Section 5.4
with respect to such Superior Proposal (and any Competing Proposal
that was a precursor thereto) and is otherwise permitted to accept such Superior Proposal pursuant to
Section 5.4(e)
;
provided
,
however
, that the Company shall simultaneously with such termination enter into the Alternative
Acquisition Agreement and pay the Breakup Fee to Parent pursuant to
Section 7.2
;
(f) By Parent, at any time
prior to the Acceptance Time if: (i) there shall be an Uncured Inaccuracy in any representation or warranty of the Company contained in this Agreement or breach of any covenant of the Company contained in this Agreement, in any case, such that
any condition to the Offer
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contained in paragraph (e)(iii) or (e)(iv) of
Annex I
is not or is not reasonably likely to be satisfied, (ii) Parent shall have delivered to the Company written notice of such
Uncured Inaccuracy or breach and (iii) either such Uncured Inaccuracy or breach is not capable of cure or at least 20 calendar days shall have elapsed since the date of delivery of such written notice to the Company and such Uncured Inaccuracy
or breach shall not have been cured;
(g) By the Company, at any time prior to the Acceptance Time if: (i) there shall
be an Uncured Inaccuracy in any representation or warranty of Parent or the Purchaser contained in this Agreement or breach of any covenant of Parent or the Purchaser contained in this Agreement that shall have had or is reasonably like to have, a
Parent Material Adverse Effect; (ii) the Company shall have delivered to Parent written notice of such Uncured Inaccuracy or breach; and (iii) either such Uncured Inaccuracy or breach is not capable of cure or at least 20 calendar days
shall have elapsed since the date of delivery of such written notice to Parent and such Uncured Inaccuracy or breach shall not have been cured;
(h) By Parent, at any time prior to the Acceptance Time if there has been a Company Material Adverse Effect since the date hereof and the same is continuing;
(i) By the Company, at any time prior to the Acceptance Time if there has been a Parent Material Adverse Effect since the date hereof
and the same is continuing; or
(j) By the Company at any time prior to the Acceptance Time if the Purchaser shall fail to
accept for exchange and exchange Shares validly tendered and not withdrawn in the Offer subject to the terms of and in accordance with
Section 1.1
and at such time all of the conditions and requirements of the Offer set forth on
Annex I
are satisfied or have been waived.
7.2
Effect of Termination
.
(a) In the event of termination of this Agreement by either the Company or Parent as provided in
Section 7.1
, this Agreement
shall become void and there shall be no liability or obligation on the part of Parent, the Purchaser or the Company or their respective Subsidiaries, officers or directors except (i) with respect to
Section 5.3(b)
,
Section 5.7
, this
Section 7.2
and
ARTICLE 8
, each of which shall remain in full force and effect and (ii) with respect to any liabilities or damages incurred or suffered as a result of the intentional and material
breach by the Company, on the one hand, or Parent or the Purchaser, on the other hand, of any of their respective representations, warranties, covenants or other agreements set forth in this Agreement.
(b) Parent and the Company agree that if this Agreement is terminated by Parent or the Company pursuant to
Section 7.1(d)
(i)
(but only with respect to an Adverse Recommendation Change arising in connection with a Superior Proposal),
Sections 7.1(d)(d)(ii) (v)
or
Section 7.1(e)
, then the Company shall pay to Parent immediately prior to such
termination, in the case of a termination by the Company, or within two Business Days thereafter, in the case of a termination by Parent, a termination fee equal to $13.20 million (the
Breakup Fee
);
provided
,
however
, that if any such termination pursuant to
Section 7.1(e)
(i) is effected pursuant to entry into an Alternative Acquisition Agreement with a Person that is an Excluded Party or (ii) is prior to the No-Shop Period
Start Date, then in the case of clause (i) or (ii) the Breakup Fee shall be an amount equal to $6.27 million;
provided
further
, that such termination shall not be effective until the Company pays the Breakup Fee.
(c) Parent and the Company agree that if this Agreement is terminated by Parent or the Company pursuant to
Section 7.1(b)
(by reason of a failure of the Minimum Condition or any of the conditions of the Offer specified in paragraphs (e)(iv) or (e)(vi) (to the extent the same relates to a matter under paragraph (e)(iv)) of
Annex I
) or
Section 7.1(f)
(to the extent such termination right arises from to a breach of a covenant under this Agreement) and prior to the date of termination of this Agreement a Competing Proposal shall have been publicly announced or otherwise become publicly known, then
the Company shall pay the Breakup Fee to Parent no later than two Business Days after the earlier to occur of (A) the date of entrance by the Company or any Company Subsidiary into a definitive agreement concerning a transaction that
constitutes a Competing Proposal;
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(
provided
, that for purposes of this
Section 7.2(c)
, the term
Competing Proposal
shall have the meaning assigned to such term, except that the references to
15% shall be replaced by 50%) or (B) the date any Person (other than Parent or any Parent Subsidiary) purchases (in one or a series of transactions) assets of the Company or any Company Subsidiary representing 50% or
more of the consolidated assets of the Company and the Companies Subsidiaries, or Equity Interests representing 50% or more of the voting power of the Company;
provided
, that any definitive agreement or purchase referred to in clauses
(A) and (B), respectively, of this sentence that is entered into or consummated by the Company or any Company Subsidiary within 12 months of the termination of this Agreement, or if there is no such definitive agreement with respect to a
purchase contemplated by clause (B), such purchase described in clause (B) is consummated within 12 months of the termination of this Agreement.
(d) All payments under this
Section 7.2
shall be made by wire transfer of immediately available funds to an account designated by in writing by Parent. For the avoidance of doubt, in no event
shall the Company be obligated to pay, or cause to be paid, the Breakup Fee on more than one occasion.
(e) In the event that
the Company shall fail to pay the Breakup Fee when due, the Company shall reimburse Parent for all reasonable Expenses actually incurred or accrued by Parent and the Purchaser (including reasonable Expenses of counsel) in connection with the
collection under and enforcement of this
Section 7.2
.
(f) Each of Parent, the Purchaser and the Company
acknowledges that the agreements contained in this
Section 7.2
are an integral part of the transactions contemplated by this Agreement.
7.3
Amendment
.
Subject to
Section 1.3(c)
, this Agreement may
be amended by the Company, Parent and the Purchaser by action taken by or on behalf of their respective boards of directors at any time prior to the Effective Time;
provided
,
however
, that, after approval of the Merger by the
Companys stockholders, no amendment may be made which, by Law or in accordance with the rules of any relevant stock exchange, requires further approval by such stockholders. This Agreement may not be amended except by an instrument in writing
signed by the parties hereto.
7.4
Waiver
.
Subject to
Section 1.3(c)
, at any time prior to the Effective Time, Parent and the Purchaser, on the one hand, and the Company, on the other hand, may (i) extend the time for the
performance of any of the obligations or other acts of the other, (ii) waive any Uncured Inaccuracies in the representations and warranties of the other contained herein or in any document delivered pursuant hereto and (iii) waive
compliance by the other with any of the agreements or covenants contained herein;
provided
,
however
, that after any approval of this Agreement by the Companys stockholders, there may not be any extension or waiver of this
Agreement which decreases the Merger Consideration or which adversely affects the rights of the Companys stockholders hereunder without the approval of such stockholders. Any such extension or waiver shall be valid only if set forth in an
instrument in writing signed by the party or parties to be bound thereby, but such extension or waiver or failure to insist on strict compliance with an obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure.
ARTICLE 8
GENERAL PROVISIONS
8.1
Non-Survival of Representations and Warranties
.
None of the
representations and warranties in this Agreement shall survive the Acceptance Time. None of the covenants in this Agreement, nor any representations, warranties or covenants in any instrument delivered pursuant to this Agreement, shall survive the
effective time of the Second Merger (or if the Second Merger does
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not occur, the Effective Time);
provided
however
, that this
Section 8.1
shall not limit any covenant or agreement of the parties which by its terms contemplates
performance after the effective time of the Second Merger (or if the Second Merger does not occur, the Effective Time).
8.2
Fees and Expenses
.
Subject to
Section 7.2
hereof, all Expenses incurred by the parties hereto (including,
without limitation, any Expenses incurred in connection with obtaining any Third Party consents or any filings to be made pursuant to (i) the Exchange Act, the Securities Act or the rules and regulations of the NASDAQ, (ii) the HSR Act or
other competition Laws or (iii) the DGCL or any Takeover Laws), shall be borne solely and entirely by the party which has incurred the same.
8.3
Notices
.
All notices and other communications required or permitted
under this Agreement shall be in writing and shall be either hand delivered in person, sent by facsimile, sent by electronic mail (if also confirmed by facsimile sent during normal business hours of the recipient, effective as of the delivery of the
facsimile; if not sent via facsimile during normal business hours, then on the next Business Day), sent by certified or registered first-class mail, postage prepaid, or sent by nationally recognized express courier service. Such notices and other
communications shall be effective upon receipt if hand delivered or sent by facsimile or electronic mail, three Business Days after mailing if sent by mail, and one Business Day after dispatch if sent by express courier, to the following addresses,
or such other addresses as any party may notify the other parties in accordance with this
Section 8.3
.
If to
Parent, the Purchaser or Merger LLC, addressed to it at:
|
|
|
Integrated Device Technology, Inc.
|
6024 Silver Creek Valley Road
|
San Jose, CA 95138
|
Phone:
|
|
(408) 284-8200
|
Fax:
|
|
(408) 284-8454
|
E-mail:
|
|
Vince.Tortolano@idt.com
|
Attention:
|
|
General Counsel
|
with a copy to (for information purposes only):
|
|
|
Latham & Watkins LLP
|
140 Scott Drive
|
Menlo Park, CA 94025
|
Phone:
|
|
(650) 328-4600
|
Fax:
|
|
(650) 463-2600
|
E-mail:
|
|
mark.roeder@lw.com
|
|
|
jamie.leigh@lw.com
|
Attention:
|
|
Mark Roeder
|
|
|
Jamie Leigh
|
|
If to the Company, addressed to it at:
|
|
PLX Technology, Inc.
|
870 W. Maude Avenue
|
Sunnyvale, CA 94083
|
Phone:
|
|
(408) 774-9060
|
Fax:
|
|
(408) 774-2169
|
E-mail:
|
|
awhipple@plxtech.com
|
Attention:
|
|
Arthur Whipple
|
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|
|
|
with a copy to (for information purposes only):
|
|
Baker & McKenzie LLP
|
Two Embarcadero Center, 11th Floor
|
San Francisco, CA 94111
|
Phone:
|
|
(415) 576-3000
|
Fax:
|
|
(415) 576-3099
|
E-mail:
|
|
stephen.schrader@bakermckenzie.com
|
|
|
emery.mitchell@bakermckenzie.com
|
Attention:
|
|
Stephen Schrader
|
|
|
Emery Mitchell
|
8.4
Certain Definitions
.
For purposes of this Agreement, the term:
Acceptable Confidentiality
Agreement
means any customary confidentiality agreement that (i) does not contain any provision prohibiting or otherwise restricting the Company or any Company Subsidiary from making any of the disclosures required to be made by
Section 5.4
or any other provision of this Agreement and (ii) contains provisions that are no less favorable in the aggregate to the Company than those contained in the Confidentiality Agreement.
Action
means any suit, claim, action, proceeding, litigation, hearing, writ, injunction, notice of violation,
investigation, arbitration, mediation, audit, dispute or demand letter.
Affiliate
means, with respect to
any Person, any other Person directly or indirectly controlling, controlled by, or under common control with such Person. As used in this definition, the term control (including the terms controlling, controlled
by and under common control with) means possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by contract or
otherwise.
Applicable Parent Stock Price
means the average closing sales price for a share of Parent
Common Stock on the Nasdaq Global Select Market for the 20 consecutive trading days ending with, and including, the trading day that is two trading days prior to the Closing Date.
beneficial ownership
(and related terms such as beneficially owned or beneficial owner) has
the meaning set forth in Rule 13d-3 under the Exchange Act.
Business Day
means a day, other than Saturday,
Sunday or other day on which commercial banks in New York, New York or San Francisco, California are authorized or required by applicable Law to close.
Code
means the Internal Revenue Code of 1986, as amended.
Company Balance Sheet
means the consolidated balance sheet of the Company and the Company Subsidiaries as of
December 31, 2011.
Company Employee Plan
means each employee benefit plan, as defined in
Section 3(3) of ERISA, and each employment, consulting, severance, termination, retention, change-in-control or similar contract, plan, arrangement or policy and each other plan or arrangement (written or oral) providing for compensation,
bonuses or other incentive compensation, profit-sharing, stock options, restricted stock, deferred stock, performance stock, stock appreciation rights, phantom stock or other stock or equity-related rights, deferred compensation, vacation or
paid-time-off, insurance (including any self-insured arrangements), health or medical benefits, retiree
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medical benefits, dental or vision benefits, employee assistance program, life, accident, disability or sick leave benefits, other welfare fringe benefits, workers compensation,
supplemental unemployment benefits, severance benefits and post-employment or retirement benefits (including compensation, pension, health, medical or life insurance benefits) which is maintained, administered, participated in or contributed to by
the Company or any Company Subsidiary, or with respect to which the Company or any Company Subsidiary has or may have any liability (whether actual or contingent, direct or direct).
Company IP
means any and all Intellectual Property Rights and Technology owned or purported to be owned by the Company
or any Company Subsidiary.
Company IP Contract
means any Contract to which the Company or any Company
Subsidiary is party, or by which the Company or any Company Subsidiary is bound, that contains any assignment or license of, or covenant not to assert or enforce, any Intellectual Property Rights or rights in or to Technology.
Company Material Adverse Effect
means any change, event, effect, occurrence, state of facts or development that,
individually or in the aggregate, (i) has had or would reasonably be expected to have a materially adverse effect on the business, results of operations or condition (financial or otherwise) of the Company and the Company Subsidiaries, taken as
a whole or (ii) prevents or materially delays, or would reasonably be expected to prevent or materially delay, consummation of the Offer or the Merger or the performance by the Company (including Company Subsidiaries) of any of its material
obligations under this Agreement,
except
for
, in the case of clause (i), any changes, events, effects, occurrences, state of facts or developments attributable to: (a) changes in general economic or political conditions or
financial or securities markets in general in any location where the Company or the Company Subsidiaries have material operations, (b) changes in conditions generally affecting the principal industry in which the Company and the Company
Subsidiaries operate, (c) changes in GAAP or applicable Law, or enforcement or interpretation thereof, in each case as applicable to the Company and the Company Subsidiaries, (d) acts of war, armed hostilities, sabotage or terrorism, or
any escalation or worsening of any acts of war, armed hostilities, sabotage or terrorism, (e) any hurricane, tornado, flood, earthquake, tsunami, volcano eruption or other natural disaster, (f) the execution, delivery, announcement or
pendency of this Agreement, the Companys compliance with the terms of this Agreement or the anticipated consummation of the Offer or the Merger, including the impact thereof on the relationships, contractual or otherwise, of the Company or any
of the Company Subsidiaries with employees, labor unions, customers, suppliers or business partners, (g) any legal proceedings made or brought by any current or former securityholders of the Company (on their own behalf or on behalf of the
Company) arising out of or related to this Agreement or any of the transactions contemplated by this Agreement, (h) any failure by the Company to meet any internal or published projections, forecasts, estimates or projections in respect of
revenues, cash flow, earnings or other financial or operating metrics for any period or (i) any changes in the market price or trading volume of shares of Company Common Stock;
provided
,
however
, that (1) the underlying
cause(s) of such change or failure shall not be excluded in the case of clauses (h) and (i) and (2) any changes, events, effects, occurrences, state of facts or developments to the extent the same disproportionately affect
(individually or together with other changes, events, effects, occurrences, state of facts or developments) the Company and the Company Subsidiaries, taken as a whole, as compared to other Persons operating in the same principal industries and
geographic markets in which the Company and the Company Subsidiaries operate shall be excluded to such extent in the case of clauses (a), (b), (c), (d) and (e).
Company Products
means each product (including Company Proprietary Software) that is designed, developed, manufactured, sold, licensed, leased, distributed, or made generally
commercially available to Third Parties by or on behalf of the Company or any Company Subsidiary.
Company
Proprietary Software
means Software owned by the Company or any Company Subsidiary.
Competing
Inquiry
means any inquiry, indication of interest or request for information (other than an inquiry, indication of interest or request for information made or submitted by Parent or any of its Subsidiaries) that may reasonably be expected
to lead to a Competing Proposal.
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Competing Proposal
shall mean, other than the transactions contemplated
by this Agreement, any proposal or offer from a Third Party relating to (i) a merger, reorganization, sale of assets, share exchange, consolidation, business combination, recapitalization, dissolution, liquidation, joint venture or similar
transaction involving the Company or any of the Company Subsidiaries whose assets, individually or in the aggregate, constitute 15% or more of the consolidated assets of the Company and the Company Subsidiaries, as determined on a book-value or
fair-market-value basis, (ii) the acquisition (whether by merger, consolidation, equity investment, joint venture or otherwise) or license by any Person of 15% or more of the consolidated assets of the Company and the Company Subsidiaries,
as determined on a book-value or fair-market-value basis, (iii) the purchase or acquisition, in any manner, directly or indirectly, by any Person of 15% or more of the issued and outstanding shares of Company Common Stock or any other
Equity Interests in the Company, (iv) any purchase, acquisition, tender offer or exchange offer that, if consummated, would result in any Person beneficially owning 15% or more of the shares of Company Common Stock or any other Equity
Interests of the Company or any of the Company Subsidiaries whose assets, individually or in the aggregate, constitute 15% or more of the consolidated assets of the Company and the Company Subsidiaries, as determined on a book-value or
fair-market-value basis or (v) any combination of the foregoing.
Confidentiality Agreement
means the
Mutual Non-Disclosure Agreement, dated as of March 31, 2012, by and between Parent and the Company.
Contracts
means any of the legally binding agreements, arrangements, commitments, understandings, contracts, leases
(whether for real or personal property), powers of attorney, notes, bonds, mortgages, indentures, deeds of trust, loans, evidences of Indebtedness, purchase and sales orders, letters of credit, undertakings, licenses, instruments, obligations and
other legally binding commitments to which a Person is a party or to which any of the assets of such Person or its Subsidiaries are subject, whether oral or written.
control
(including the terms controlled by and under common control with) means the possession, directly or indirectly or as trustee or executor, of the power to
direct or cause the direction of the management or policies of a Person, whether through the ownership of stock or as trustee or executor, by Contract or credit arrangement or otherwise.
Cut-off Date
means the date that is the
15
th
day after the No-Shop Period Start Date.
Environmental Law
means any applicable Law or any agreement with any Governmental Authority or other Person, relating
to human health and safety, based on the exposure of Persons to Hazardous Substances, the environment or any Hazardous Substance.
Environmental Permits
means, with respect to any Person, all licenses, permits, certificates, waivers, consents, franchises (including similar authorizations or permits), exemptions,
variances, expirations and terminations of any waiting period requirements and other authorizations and approvals issued to such Person by or obtained by such Person from any Governmental Authority relating to or required by Environmental Law and
affecting, or relating in any way to, the business of such Person or any of its Subsidiaries.
Equity Exchange
Ratio
means the quotient obtained by dividing (x) the Per Share Option Assumption Factor by (y) the Applicable Parent Stock Price.
Equity Interest
means any share, capital stock, partnership, member or similar equity interest in any entity, and any option, warrant, right or security convertible, exchangeable or
exercisable therefor.
ERISA
means the Employee Retirement Income Security Act of 1974, as amended.
ERISA Affiliate
of any entity means any other entity that, together with such entity, would be treated as
a single employer within the meaning of Section 414(b), (c) or (m) of the Code or Section 4001(b)(1) of ERISA.
Exchange Act
means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
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Excluded Party
means any Person, group of Persons or group that includes
any Person (so long as such Person, together with all other members of such group, if any, who were members of such group or another group that included such Person immediately prior to the No-Shop Period Start Date, represent more than 50% of the
equity financing of such group at all times following the No-Shop Period Start Date and prior to the termination of this Agreement) from whom the Company, any Company Subsidiary or any of their Representatives has received, after the execution of
this Agreement and prior to the No-Shop Period Start Date, a written Competing Proposal that (i) remains pending as of, and shall not have been withdrawn prior to, the No-Shop Period Start Date and (ii) the Company Board determines, in
good faith, prior to or as of the No-Shop Period Start Date and after consultation with its independent financial advisors and outside legal counsel, constitutes, or would reasonably be expected to lead to, a Superior Proposal;
provided
,
however
, that notwithstanding anything to the contrary contained herein, any Excluded Party shall cease to be an Excluded Party upon the earliest of (a) the withdrawal, termination or expiration of such Competing Proposal, (b) the
time as of which such Competing Proposal no longer constitutes a Superior Proposal (subject to the four Business Day period following any determination by the Company Board that such Competing Proposal no longer constitutes a Superior Proposal, as
compared to another Competing Proposal or otherwise) or (c) in the case of a financial buyer, any change of greater than 50% of the actual or proposed equity ownership of such Excluded Party.
Expenses
includes all out-of-pocket expenses (including all fees and expenses of counsel, accountants, investment
bankers, financing sources, experts and consultants to a party hereto and its Affiliates) incurred by a party or on its behalf in connection with or related to the authorization, preparation, negotiation, execution and performance of this Agreement
and the transactions contemplated hereby, including the preparation, printing, filing and mailing of the Offer Documents, the Schedule 14D-9 and the Proxy Statement, and any solicitation of stockholder approvals and all other matters related to the
transactions contemplated by this Agreement.
GAAP
means generally accepted accounting principles in the
United States, as in effect on the date hereof.
Governmental Authority
means (i) any federal, state,
provincial, county, municipal or other local or foreign government or other political subdivision thereof or (ii) any governmental or quasi-governmental body, agency, authority (including any Taxing Authority or transgovernmental or
supranational entity or authority), minister or instrumentality (including any court or tribunal) exercising executive, legislative, judicial, regulatory or administrative authority.
Hazardous Substance
means any pollutant, contaminant, waste or chemical or any toxic, radioactive, ignitable,
corrosive, reactive or otherwise hazardous substance, waste or material, or any substance, waste or material having any constituent elements displaying any of the foregoing characteristics, including any substance, waste or material regulated under
any Environmental Law because of its dangerous or deleterious characteristics.
HSR Act
means the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.
Indebtedness
means, collectively, any (i) indebtedness for borrowed money, (ii) indebtedness evidenced by
any bond, debenture, note, mortgage, indenture or other debt instrument or debt security, (iii) amounts owing as deferred purchase price for the purchase of any property or (iv) guarantees with respect to any indebtedness or obligation of
a type described in clauses (i) through (iii) above of any other Person.
Intellectual Property
Rights
means and includes all rights in and to the following types of intellectual property, which may exist or be created under the laws of any jurisdiction: (i) Patents, (ii) Trademarks; (iii) rights in works of
authorship, including any copyrights and rights under copyrights, whether registered or unregistered, moral rights, and any registrations and applications for registration thereof; (iv) mask work rights, and any registrations and applications
for registration therefor; (v) rights in databases and data collections (including
A-62
rights (if any) in design databases, knowledge databases, customer lists and customer databases) under the laws of the United States or any other jurisdiction, whether registered or unregistered,
and any applications for registration therefore; (vi) trade secret rights, including trade secret rights in and to the following: know how (including any ideas, formulas, compositions, inventions (whether patentable or not and however
documented), processes, techniques, specifications, business plans, proposals, designs, technical data, invention disclosures, customer data, financial information, pricing and cost information, bills of material or other similar information);
(vii) rights to any URL and domain name registrations; (viii) all claims and causes of actions arising out of or related to any past, current or future infringement or misappropriation of any of the foregoing and (ix) any other
proprietary or intellectual property rights now known or hereafter recognized in any jurisdiction worldwide.
Inventory
means all inventory, merchandise, finished goods, and raw materials, packaging, labels, supplies and other
personal property maintained, held or stored by or for the Company or any Company Subsidiary and any prepaid deposits for any of the same.
Knowledge of the Company
means knowledge, after reasonable inquiry, of each of the individuals identified in
Section 8.4(i)
of the Company Disclosure Schedule.
Knowledge of Parent
means knowledge, after reasonable inquiry, of each of the individuals identified in
Section 8.4(ii)
of the Company Disclosure Schedule.
Law
means, with respect to any Person, any
international, national, federal, state or local law (statutory, common or otherwise), constitution, treaty, convention, ordinance, code, rule, regulation or other similar requirement enacted, adopted, promulgated or applied by a Governmental
Authority that is binding upon or applicable to such Person, as amended unless expressly specified otherwise.
Lien
means, with respect to any property or asset, any lien, pledge, security interest or other charge, encumbrance or
adverse claim of any kind in such property or asset, or any other type of preferential arrangement.
NASDAQ
means the NASDAQ Global Market or the NASDAQ Global Select Market, as applicable.
on a fully diluted basis
means, as of any date, (i) the number of Shares outstanding, plus (ii) the number of Shares the Company is then required to issue pursuant to options, warrants, rights or other obligations outstanding at such date under any employee stock
option, ESOP or other benefit plans, warrant agreements or otherwise (assuming all options and other rights to acquire or obligations to issue such Shares are fully vested and exercisable and all Shares issuable at any time have been issued),
including pursuant to the Company Stock Option Plans.
Order
means, with respect to any Person, any order,
writ, injunction, judgment, decree, decision, determination, subpoena, verdict, award, settlement agreement, ruling or similar action enacted, adopted, promulgated or applied by a Governmental Authority or arbitrator that is binding upon or
applicable to such Person or its property.
Parent Common Stock
means shares of common stock, par value
$0.001 per share, of Parent.
Parent Material Adverse Effect
means any change, event, effect, occurrence,
state of facts or development that, individually or in the aggregate, (i) has had or would reasonably be expected to have a materially adverse effect on the business, results of operations or condition (financial or otherwise) of Parent and the
Parent Subsidiaries, taken as a whole or (ii) prevents or materially delays, or would reasonably be expected to prevent or materially delay, consummation of the Offer or the Merger or the performance by Parent (including the Parent
Subsidiaries) of any of its material obligations under this Agreement,
except
for
, in the case of clause (i), any changes, events, effects, occurrences, state of facts or developments attributable to: (a) changes in general
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economic or political conditions or financial or securities markets in general in any location where Parent or the Parent Subsidiaries have material operations, (b) changes in conditions
generally affecting the principal industry in which Parent and the Parent Subsidiaries operate, (c) changes in GAAP or applicable Law, or enforcement or interpretation thereof, in each case as applicable to the Parent and the Parent
Subsidiaries, (d) acts of war, armed hostilities, sabotage or terrorism, or any escalation or worsening of any acts of war, armed hostilities, sabotage or terrorism, (e) any hurricane, tornado, flood, earthquake, tsunami, volcano eruption
or other natural disaster, (f) the execution, delivery, announcement or pendency of this Agreement, Parents, the Purchasers or the Merger LLCs compliance with the terms of this Agreement or the anticipated consummation of the
Offer or the Merger, including the impact thereof on the relationships, contractual or otherwise, of Parent or any of the Parent Subsidiaries with employees, labor unions, customers, suppliers or business partners, (g) any legal proceedings
made or brought by any current or former securityholders of Parent (on their own behalf or on behalf of Parent) arising out of or related to this Agreement or any of the transactions contemplated by this Agreement, (h) any failure by Parent to
meet any internal or published projections, forecasts, estimates or projections in respect of revenues, cash flow, earnings or other financial or operating metrics for any period or (i) any changes in the market price or trading volume of
shares of Parent Common Stock;
provided
,
however
, that (1) the underlying cause(s) of such change or failure shall not be excluded in the case of clauses (h) and (i) and (2) any changes, events, effects,
occurrences, state of facts or developments to the extent the same disproportionately affect (individually or together with other changes, events, effects, occurrences, state of facts or developments) the Parent and the Parent Subsidiaries, taken as
a whole, as compared to other Persons operating in the same principal industries and geographic markets in which Parent and the Parent Subsidiaries operate shall be excluded to such extent in the case of clauses (a), (b), (c), (d) and (e).
Patents
means any and all patents, utility models, industrial designs and design patents, worldwide, and
applications therefor (and any patents that issue as a result of those patent applications), and includes all divisions, continuations, continuations in part, reissues, renewals, re-examinations, provisionals and extensions thereof, and any
counterparts worldwide claiming priority therefrom, and all rights in and to any of the foregoing.
Per Share Option
Assumption Factor
means the sum of (A) $3.50 plus (B) the product of the Applicable Parent Stock Price, multiplied by the Per Share Exchange Ratio.
Per Share Option Cash-Out Consideration
means the sum of (A) $3.50 plus (B) the product of the closing price of a share of Common Stock on the Closing Date, multiplied by the
Per Share Exchange Ratio.
Permitted Liens
means (i) Liens disclosed on the Company Balance Sheet,
(ii) Liens for Taxes that are (a) not yet due and payable as of the Closing Date or (b) being contested in good faith (and for which adequate accruals or reserves have been established on the most recent financial statements of the
Company included in the most recent Form 10-K filed by the Company with the SEC prior to the date of this Agreement), (iii) mechanics, materialmens, carriers, workmens, warehousemans, repairmens,
landlords and similar liens granted or which arise in the ordinary course of business, (iv) with respect to real property, easements, rights of way, zoning ordinances, and other similar land use and environmental regulations affecting
Real Property which are not, individually or in the aggregate, material in amount or effect to the business of the Company or the Company Subsidiaries, and (v) such other Liens or encumbrances which arise in the ordinary course of business that
are not material in amount or that, in the aggregate, do not materially impair the value or the continued use and operation of the assets to which they relate.
Person
means an individual, corporation, partnership, limited liability company, association, trust or other entity or organization, including a government or political subdivision or
an agency or instrumentality thereof.
Registered IP
means all Intellectual Property Rights that are
registered, filed, or issued under the authority of any Governmental Authority, including all Patents, registered copyrights, registered Trademarks, registered mask works, and domain names, and all applications for any of the foregoing.
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Representatives
means, with respect to any Person, the directors,
officers, employees, financial advisors, attorneys, accountants, consultants, agents and other authorized representatives of such Person, acting in such capacity.
Sarbanes-Oxley Act
means the Sarbanes-Oxley Act of 2002, and the rules and regulations promulgated thereunder.
Securities Act
means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
Software
means any computer program, firmware or software code of any nature, including all object code, source code,
and related developers notes, including comments and annotations related thereto, whether in machine-readable form, programming language or any other language or symbols and whether stored, encoded, recorded or written on disk, tape, film,
memory device, paper or other media of any nature.
Standard Forms
means the standard forms of the Company
and its Subsidiaries as disclosed or made available to Parent.
Standard Software
means generally
commercially available, off-the-shelf or shrink-wrapped Software that is not redistributed with or used in the development or provision of the Company Products and that has an annual support cost of $25,000 or less.
Subsidiary
of Parent, the Company or any other Person means any corporation, partnership, joint venture or
other legal entity of which Parent, the Company or such other Person, as the case may be (either alone or through or together with any other Subsidiary), owns, directly or indirectly, a majority of the stock or other Equity Interests the holders of
which are generally entitled to vote for the election of the board of directors or other governing body of such corporation, partnership, joint venture or other legal entity, or otherwise owns, directly or indirectly, such Equity Interests, that
would confer control of any such corporation, partnership, joint venture or other legal entity, or any Person that would otherwise be deemed a subsidiary under Rule 12b-2 promulgated under the Exchange Act.
Superior Proposal
means an unsolicited bona fide written Competing Proposal (except the references therein to
15% shall be replaced by 85%) made by a Third Party which was not solicited by the Company (other than as permitted by
Section 5.4(a)
prior to the No-Shop Period Start Date), any Company Subsidiary or any of their
respective Representatives and which, in the good faith judgment of the Company Board, after consultation with its independent financial advisors and outside legal counsel, taking into account the various legal, financial and regulatory aspects of
the Competing Proposal, including the financing terms thereof, if any, and the Third Party making such Competing Proposal, (i) if accepted, is reasonably capable of being consummated and (ii) if consummated would in the good faith judgment
of the Company Board, after consultation with the Companys Financial Advisor, result in a transaction that is more favorable to the Companys stockholders, from a financial point of view, than the Offer and the Mergers (after giving
effect to all adjustments to the terms thereof which may have been offered in writing by Parent, including pursuant to
Section 5.4(f)
).
Tax
means any tax or other like governmental assessment or charge of any kind whatsoever (including, without limitation, any national insurance contributions or withholding required by
applicable Tax law on amounts paid to or by any Person), together with any interest, penalty, addition to tax or additional amount with respect thereto, whether disputed or not.
Tax Return
means any report, election, return, document, declaration or other information filed or required to be
filed with a Taxing Authority, including any schedule, notice, supplement, information returns, any document with respect to or accompanying payments of estimated Taxes, or with respect to or accompanying requests for the extension of time in which
to file any such report, election, return, document, declaration or other information.
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Taxing Authority
means any Governmental Authority responsible for the
imposition of any Tax.
Technology
means tangible embodiments of Intellectual Property Rights including
know-how, trade secrets and other proprietary information contained with, protecting, covering or relating to mask sets, wafers, products, development tools, algorithms, APIs, databases, data collections, diagrams, inventions, methods and processes
(whether or not patentable), assembly designs, assembly methods, network configurations and architectures, proprietary information, protocols, layout rules, schematics, packaging and other specifications, Software (in any form, including without
limitation source code, executable code, firmware, hardware configuration data, RTL code, Gerber files and GDSII files), techniques, interfaces, verification tools, technical documentation (including instruction manuals, samples, studies and
summaries), designs, bills of material, build instructions, test automation, test reports, performance data, optical quality data, routines, formulae, test vectors, IP cores, net lists, lab notebooks, invention disclosures, prototypes, samples,
studies, process flow, process module data, yield data, reliability data, engineering data, test results and all other forms of technical information and technology that are used in, held for use in, or relating to the Company Products and the
business of the Company and the Company Subsidiaries. Technology does not include Intellectual Property Rights, including any Intellectual Property Rights in any of the foregoing.
Third Party
means any Person or group (as defined under Section 13(d) of the Exchange Act) of
Persons, other than Parent or any of its Affiliates or Representatives.
Third Party Intellectual Property
means all Intellectual Property Rights and Technology owned by Third Parties, including Third Party Software, that is either (i) licensed, offered or provided to customers of the Company or any Company Subsidiary as part of or in conjunction
with any Company Product or (ii) otherwise used by or licensed to the Company or any Company Subsidiary in connection with the Company Products.
Third Party Software
means all Software owned by third parties that is either (i) licensed, offered or provided to customers of the Company as part of or in conjunction with any
Company Product or (ii) otherwise used by or licensed to the Company or any Company Subsidiary in connection with the Company Products, excluding Standard Software.
Trademarks
means any and all registered and unregistered trademarks, trade names, company names, logos, trade dress, service marks, and other forms indicia of origin, whether or not
registerable as a trademark in any given country, together with registrations and applications therefore and the goodwill associated with any of the foregoing.
Treasury Regulations
means the regulations promulgated under the Code by the United States Department of Treasury.
UK Subsidiary
means PLX Technology Limited.
Uncured Inaccuracy
with respect to a representation or warranty of a party to the Agreement as of a particular date shall be deemed to exist only if such representation or warranty
shall be inaccurate as of such date as if such representation or warranty were made as of such date, and the inaccuracy in such representation or warranty shall not have been cured since such date;
provided
,
however
, that if such
representation or warranty by its terms speaks as of the date of the Agreement or as of another specific date, then there shall not be deemed to be an Uncured Inaccuracy in such representation or warranty unless such representation or warranty shall
have been inaccurate as of the date of the Agreement or such other specific date, respectively, and the inaccuracy in such representation or warranty shall not have been cured since such date.
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8.5
Terms Defined Elsewhere
.
The following terms are defined elsewhere in this Agreement, as indicated below:
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401(k) Plan
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Section 5.11(c)
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Acceptance Time
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Section 1.3(a)
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Adverse Recommendation Change
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Section 5.4(e)
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Agreement
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Preamble
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Alternative Acquisition Agreement
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Section 5.4(b)(ii)
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Assumed Company Option
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Section 2.4(a)
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Assumed RSU
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Section 2.4(c)
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Book-Entry Shares
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Section 2.2(b)
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Breakup Fee
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Section 7.2(b)
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Certificate of Merger
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Section 1.5(a)
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Certificates
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Section 2.2(b)
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Closing
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Section 1.5(a)
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Closing Date
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Section 1.5(a)
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Company
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Preamble
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Company Board
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Recitals
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Company Board Recommendation
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Recitals
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Company Bylaws
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Section 3.1(b)
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Company Charter
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Section 3.1(b)
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Company Common Stock
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Section 3.2(a)
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Company Compensation Arrangement
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Section 3.13(f)
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Company Disclosure Schedule
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ARTICLE 3
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Company Employee
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Section 5.11(a)
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Company Financial Advisor
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Section 3.23
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Company Material Contract
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Section 3.14(b)
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Company Option
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Section 2.4(a)
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Company Permits
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Section 3.6(a)
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Company Preferred Stock
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Section 3.2(a)
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Company RSU
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Section 2.4(c)
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Company SEC Documents
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Section 3.7(a)
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Company Stock Option Plan
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Section 2.4(a)
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Company Stockholder Approval
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Section 3.26
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Company Subsidiary
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Section 3.1(a)
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Continuing Directors
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Section 1.3(a)
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A-67
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Controlled Group Date
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Section 5.11(c)
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Dissenting Shares
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Section 2.3
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DGCL
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Recitals
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DOJ
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Section 5.5(c)
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D&O Insurance
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Section 5.8(b)
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Effective Time
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Section 1.5(a)
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Employment Compensation Arrangement
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Section 3.13(f)
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ESOP
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Section 5.11(c)
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Exchange Agent
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Section 2.2(a)
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Expiration Date
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Section 1.1(d)
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Fairness Opinion
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Section 3.23
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Foreign Plan
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Section 3.12(i)
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FTC
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Section 5.5(c)
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Grant Date
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Section 3.2(b)
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Independent Directors
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Section 1.3(c)
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Initial Expiration Date
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Section 1.1(d)
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Insurance Policies
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Section 3.20
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Intervening Event
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Section 5.4(e)
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LLC Act
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Recitals
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Lease Agreement
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Section 3.22(b)
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Leased Real Property
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Section 3.22(b)
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Merger
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Recitals
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Mergers
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Recitals
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Merger Agreement
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Annex I
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Merger Consideration
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Section 2.1(a)
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Merger LLC
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Preamble
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Minimum Condition
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Section 1.1(a)
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New Plans
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Section 5.11(b)
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No-Shop Period Start Date
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Section 5.4(b)(i)
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Notice of Superior Proposal
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Section 5.4(f)
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Offer
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Recitals
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Offer Documents
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Section 1.1(h)
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Offer Price
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Recitals
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Offer to Purchase
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Section 1.1(c)
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Option Payments
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Section 2.4(b)
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A-68
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Outside Date
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Section 1.1(e)
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Owned Real Property
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Section 3.22(b)
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Parent
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Preamble
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Parent Disclosure Schedule
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ARTICLE 4
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Parent Preferred Stock
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Section 4.5
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Parent SEC Documents
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Section 4.6(a)
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Parent Subsidiary
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Section 4.3
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Per Share Exchange Ratio
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Recitals
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Post-Effective Amendment
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Section 5.2(a)
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Product Warranty
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Section 3.18(a)
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Promissory Note
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Section 1.7(a)
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Proxy Statement
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Section 5.2(a)
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Purchaser
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Preamble
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Purchaser Common Stock
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Section 2.1(c)
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Registration Statement
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Section 1.1(h)
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Required Governmental Approval
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Annex I
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Requisite Top-Up Shares
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Section 1.7(b)
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Schedule 14D-9
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Section 1.2(a)
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Schedule TO
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Section 1.1(h)
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SEC
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Section 1.1(e)
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Second Merger
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Recitals
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Shares
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Recitals
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Short Form Threshold
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Section 1.6
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Special Meeting
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Section 5.2(b)
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Surviving Company
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Section 1.5(b)
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Surviving Corporation
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Section 1.4(a)
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Takeover Statutes
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Section 3.3(b)
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Tender Agreement
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Recitals
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Top-Up Closing
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Section 1.7(c)
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Top-Up Exercise Notice
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Section 1.7(c)
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Top-Up Notice Receipt
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Section 1.7(c)
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Top-Up Option
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Section 1.7(a)
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Top-Up Option Shares
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Section 1.7(a)
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WARN Act
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Section 3.13(d)
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A-69
8.6
Headings
.
The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
8.7
Severability
.
If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of Law or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that
transactions contemplated hereby are fulfilled to the extent possible.
8.8
Entire Agreement
.
This Agreement, together with the Exhibits, Parent Disclosure Schedule and Company Disclosure Schedule and the other documents delivered
pursuant hereto, and the Confidentiality Agreement, constitute the entire agreement of the parties and supersede all prior agreements and undertakings, both written and oral, among the parties, or any of them, with respect to the subject matter
hereof and, except as otherwise expressly provided herein, are not intended to confer upon any other Person any rights or remedies hereunder.
8.9
Assignment
.
The Agreement shall not be assigned by any party by
operation of law or otherwise without the prior written consent of the other parties; any assignment without such prior consent shall be null and void.
8.10
No Third-Party Beneficiaries
.
This Agreement shall be binding upon
and inure solely to the benefit of each party hereto and their respective successors and assigns, and nothing in this Agreement, express or implied, other than pursuant to
Section 5.8
, is intended to or shall confer upon any other Person
any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
8.11
Mutual Drafting;
Interpretation
.
Each party hereto has participated in the drafting of this Agreement, which each party acknowledges is the
result of extensive negotiations between the parties. If an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring
or disfavoring any party by virtue of the authorship of any provision. For purposes of this Agreement, whenever the context requires: the singular number shall include the plural, and vice versa, the masculine gender shall include the feminine and
neuter genders, the feminine gender shall include the masculine and neuter genders and the neuter gender shall include masculine and feminine genders. As used in this Agreement, the words include and including, and variations
thereof, shall not be deemed to be terms of limitation, but rather shall be deemed to be followed by the words without limitation. Except as otherwise indicated, all references in this Agreement to Articles,
Sections, Exhibits, Annexes and Schedules are intended to refer to Sections of this Agreement and Exhibits, Annexes and Schedules to this Agreement. The schedules and exhibits attached to this
Agreement constitute a part of this Agreement and are incorporated herein for all purposes. The words hereof, hereto, hereby, herein, hereunder and words of similar import, when used in
this Agreement, shall refer to this Agreement as a whole and not to any particular section or article in which such words appear. All references in this Agreement to $ are references to United States dollars. Unless otherwise
specifically provided for herein, the term or shall not be deemed to be exclusive.
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8.12
Governing Law; Consent to Jurisdiction; Enforcement; Waiver of Trial by Jury
.
(a) This Agreement and all claims and causes of action arising out of, based upon, or related to this Agreement or the
negotiation, execution or performance hereof, shall be governed by and construed, interpreted and enforced in accordance with, the Laws of the State of Delaware (without regard to Laws that may be applicable under conflicts of Laws principles,
whether of the State of Delaware or any other jurisdiction).
(b) Any action, claim, suit or proceeding between the parties
hereto arising out of, based upon or relating to this Agreement or the transactions contemplated hereby shall be brought solely in the Court of Chancery of the State of Delaware and any state appellate court therefrom within the State of Delaware
(or, if the Court of Chancery of the State of Delaware declines to accept jurisdiction over a particular matter, any state or federal court within the State of Delaware and any direct appellate court therefrom). Each party hereby irrevocably submits
to the exclusive jurisdiction of such courts in respect of any such action, claim, suit or proceeding and agrees that it will not bring any such action, claim, suit or proceeding in any other court. Furthermore, each party hereby irrevocably waives
and agrees not to assert as a defense, counterclaim or otherwise, in any such action, claim, suit or proceeding, (i) any claim that it is not personally subject to the jurisdiction of the above named courts for any reason other than the failure
to serve process in accordance with
Section 8.3
, (ii) any claim that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice,
attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (iii) to the fullest extent permitted by applicable Law, any claim that (A) the action, claim, suit or proceeding in such
court is brought in an inconvenient forum, (B) the venue of the action, claim, suit or proceeding is improper or (C) this Agreement, or the subject matter hereof, may not be enforced in or by such courts. Each party agrees that notice or
the service of process in any action, claim, suit or proceeding arising out of, based upon or relating to this Agreement or the transactions contemplated hereby shall be properly served or delivered if delivered in the manner contemplated by
Section 8.3
or in such other manner as may be permitted by applicable Law.
(c) EACH OF THE PARTIES HERETO
IRREVOCABLY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY AND ALL RIGHT SUCH PARTY MAY HAVE TO TRIAL BY JURY IN ANY LEGAL ACTION, SUIT OR PROCEEDING BETWEEN THE PARTIES HERETO ARISING OUT OF, BASED UPON OR RELATING TO THIS AGREEMENT
OR THE NEGOTIATION, EXECUTION OR PERFORMANCE HEREOF. EACH OF THE PARTIES (A) CERTIFIES THAT NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS
SECTION 8.12(c)
.
8.13
Counterparts
.
This Agreement may be executed in one or more counterparts (including via facsimile, .pdf or other electronic means), and by the different
parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.
8.14
Specific Performance
.
The parties hereto agree that if any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached, irreparable damage would occur, no adequate
remedy at law would exist and damages would be difficult to determine. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and
provisions of this Agreement exclusively in the Chancery Court of the State of Delaware and any
A-71
state appellate court therefrom within the State of Delaware (or, if the Chancery Court of the State of Delaware declines to accept jurisdiction over a particular matter, any state or federal
court within the State of Delaware) and any such injunction shall be in addition to any other remedy to which any party is entitled, at law or in equity. In connection with any action for specific performance, each party hereby irrevocably waives
any requirement for the securing or posting of any bond in connection with the remedies referred to in this
Section 8.14
.
[
signature page follows
]
A-72
IN WITNESS WHEREOF, Parent, the Purchaser, Merger LLC and the Company have caused this
Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.
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INTEGRATED DEVICE TECHNOLOGY, INC.
|
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By:
|
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/s/ Theodore L. Tewksbury, III
|
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a duly authorized signatory
|
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PINEWOOD ACQUISITION CORP.
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By:
|
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/s/ J. Vincent Tortolano
|
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a duly authorized signatory
|
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PINEWOOD MERGER SUB, LLC
|
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By:
|
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/s/ J. Vincent Tortolano
|
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a duly authorized signatory
|
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PLX TECHNOLOGY, INC.
|
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By:
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/s/ Ralph Schmitt
|
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a duly authorized signatory
|
ANNEX I
CONDITIONS TO THE OFFER
Notwithstanding any other provisions of the Offer and in addition to the Purchasers rights to extend, amend or terminate the Offer in accordance
with the provisions of the Merger Agreement and applicable Law, the Purchaser shall not be required to accept for exchange, and may delay the acceptance for exchange, any validly tendered Shares, if (a) the Minimum Condition shall not have been
satisfied at the Expiration Date, (b) the Required Governmental Approval shall not have been obtained or any waiting period (or extension thereof) or mandated filing shall not have lapsed at or prior to the Expiration Date, (c) the
Registration Statement shall not have been declared effective by the SEC under the Securities Act or a stop order suspending the effectiveness of the Registration Statement shall have been issued by the SEC or a proceeding for that purpose shall
have been initiated by the SEC and not concluded or withdrawn, (d) the shares of Parent Common Stock to be issued in exchange for Shares pursuant to the Offer and in the Merger shall not have been authorized for listing on NASDAQ or
(e) any of the following events, conditions, state of facts or developments exists or has occurred and is continuing at the Expiration Date:
(i) there shall be instituted any Action by any Governmental Authority of competent jurisdiction, other than with respect to the Required Governmental Approval, against Parent, the Purchaser, the Company
or any Company Subsidiary, or otherwise in connection with the Offer or the Merger, which remains pending and the outcome of which would reasonably be expected to (A) make illegal, restrain, prohibit the making or consummation of the Offer or
the Merger, (B) make illegal, restrain or prohibit the ownership or operation by Parent, the Company or any of their respective Subsidiaries, of all or any portion of the assets or businesses of Parent, the Company or any of their respective
Subsidiaries as a result of or in connection with the Offer or the Merger or compel Parent or any of its Subsidiaries to dispose of or hold separately all or any portion of the business or assets of Parent, the Company or any of their respective
Subsidiaries or impose any limitations on the ability of Parent, the Company or any of their respective Subsidiaries to conduct its business or own such assets or (C) make illegal, restrain, prohibit or impose any limitations on the ability of
Parent or the Purchaser effectively to acquire, hold or exercise full rights of ownership of the Shares to be acquired pursuant to the Offer or otherwise in the Merger, including the right to vote any Shares acquired or owned by Purchaser, the
Purchaser or their respective Subsidiaries on all matters properly presented to the stockholders of the Company;
(ii) there
shall be any Law or Order enacted, entered, enforced, promulgated or which is deemed applicable pursuant to an authoritative interpretation by or on behalf of a Governmental Authority of competent jurisdiction with respect to the Offer or the
Merger, other than the application to the Offer or the Merger of any applicable waiting period or other requirement under any Required Governmental Approval, which would reasonably expected to result in any of the consequences referred to in clauses
(A) through (C) of paragraph (i) above;
(iii) (A) any representation or warranty of the Company contained in
Sections 3.2
, or
3.3
, of the Merger Agreement shall fail to be true and correct in all material respects, as of the date of the Merger Agreement or as of the Expiration Date with the same force and effect as if made on and as of such
date, except for representations and warranties that relate to a specific date or time (which need only be true and correct in all material respects as of such date or time) or (B) any other representation or warranty of the Company contained
in the Merger Agreement (without giving effect to any references to any Company Material Adverse Effect or materiality qualifications and other qualifications based upon the concept of materiality or similar phrases contained therein) shall fail to
be true and correct in any respect as of the date of the Merger Agreement or as of the Expiration Date with the same force and effect as if made on and as of such date, except for representations and warranties that relate to a specific date or time
(which need only be true and correct as of such date or time), except as has not had, individually or in the aggregate with all other failures to be true or correct, a Company Material Adverse Effect;
provided
,
however
, the actual
combined aggregate number of Shares referred to in clause (i) of the first sentence of
Section 3.2(a)
, and the numbers of Shares subject to outstanding Equity Interests
Annex
I
-1
referred to in the first sentence of
Section 3.2(b)
, exceeds the combined aggregate number of such shares disclosed in the Merger Agreement and any applicable schedules, by 250,000 or
more shares, such representations and warranties in
Section 3.2
shall be deemed to fail to be true and correct in all material respects;
(iv) the Company shall have breached or failed, in any material respect, to perform or to comply with any material agreement or covenant to be performed or complied with by it under the Merger Agreement
and such breach or failure shall not have been cured prior to the Expiration Date;
(v) there shall have occurred since the
date of the Merger Agreement and shall be continuing a Company Material Adverse Effect;
(vi) the Company shall have failed to
deliver a certificate of the Company, executed by the Chief Executive Officer and the Chief Financial Officer of the Company, dated as of the Expiration Date, to the effect that the conditions set forth in paragraphs (iii), (iv) and (v) of
this
Annex I
have been satisfied;
(vii) an Adverse Recommendation Change shall have occurred and not been withdrawn or
the Company shall have approved, endorsed or recommended a Competing Proposal other than the Offer or the Mergers; or
(viii)
the Merger Agreement shall have been terminated in accordance with its terms.
The foregoing conditions
(including those set forth in clauses (a), (b), (c), (d) and (e) of the initial paragraph) of this
Annex I
are, for the sole benefit of the Purchaser and may be asserted by the Purchaser regardless of the circumstances giving rise
to any such conditions (except if any breach of the Merger Agreement by Parent or the Purchaser has been the primary cause of or primarily resulted in the failure or the non-satisfaction of any such condition) and, except as set forth in the
following proviso, may be waived by the Purchaser in whole or in part at any time and from time to time in its sole discretion, in each case subject to the terms of the Merger Agreement and the applicable rules and regulations of the SEC;
provided
however
, that clauses (a), (b), (c) and (d) shall not be waivable and may not be waived by the Purchaser. Any reference in this
Annex I
or the Merger Agreement to a condition or requirement contained in this
Annex I
being satisfied shall be deemed to be satisfied if such condition or requirement is so waived. The foregoing conditions shall be in addition to, and not a limitation of, the rights of the Purchaser to extend, terminate, amend and/or
modify the Offer pursuant to the terms and conditions of the Merger Agreement. The failure by the Purchaser at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right and each such right shall be deemed an
ongoing right which may be asserted at any time and from time to time.
As used in this
Annex I
and the Merger Agreement, the term:
Required Governmental Approval
shall mean the expiration or early termination of any applicable waiting period or receipt of required clearance, consent authorization or approval under the HSR Act.
The capitalized terms used in this
Annex I
and not defined in this
Annex I
shall have the meanings set forth in the Agreement and Plan of
Merger (the
Merger Agreement
), dated as of April 30, 2012, by and among Integrated Device Technology, Inc., Pinewood Acquisition Corp., Pinewood Merger Sub, LLC and PLX Technology, Inc.
Annex
I
-2
EXHIBIT A
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
PLX TECHNOLOGY, INC.
The undersigned, for the purpose of amending and restating the Amended and Restated Certificate of Incorporation of PLX Technology, Inc., a Delaware corporation (the
Corporation
), does
hereby certify that:
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1.
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This Amended and Restated Certificate of Incorporation has been duly adopted pursuant to Sections 242 and 245 of the General Corporation Law of the State of Delaware.
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2.
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The Certificate of Incorporation of the Corporation is hereby amended and restated in its entity as follows:
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FIRST
: The name of this corporation is PLX Technology, Inc. (the
Corporation
).
SECOND
: The address of the Corporations registered office in the State of Delaware is 1209 Orange Street, Wilmington, County
of New Castle, Delaware 19801-1120, and the name of its registered agent at such address is The Corporation Trust Company.
THIRD
: The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the
General Corporation Law of the State of Delaware (the
DGCL
) as it now exists or may hereafter be amended and supplemented.
FOURTH
: The total number of shares of stock which the Corporation shall have authority to issue is 100 having a par value of $0.001 per share. All such shares are common stock.
FIFTH
: In furtherance and not in limitation of the powers conferred by statute, the Board of Directors of the Corporation is
expressly authorized to make, alter or repeal the bylaws of the Company.
SIXTH
: To the fullest extent that the DGCL,
as it exists on the date hereof or as it may hereafter be amended, permits the limitation or elimination of the liability of directors, no director of the Corporation shall be personally liable to the Corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director except to the extent that exculpation from liability is not permitted under the DGCL as in effect at the time such liability is determined. Neither the amendment or repeal of this Article SIXTH, nor
the adoption of any provisions in this Certificate of Incorporation inconsistent with this Article SIXTH, shall eliminate or impair any right or protection of a director of the Corporation under this Article SIXTH existing at the time of such
amendment or repeal.
SEVENTH
: To the fullest extent that the DGCL, as it exists on the date hereof or as it may
hereafter be amended, permits, the Corporation shall indemnify and upon request advance expenses to any person who is or was a party or is threatened to be made a party to any threatened, pending, or completed action, suit, proceeding, or claim,
whether civil, criminal, administrative, or investigative, by reason of the fact that such person is or was or has agreed to be a director or officer of the Corporation or while a director or officer is or was serving at the request of the
Corporation as a director, officer, partner, trustee, employee, or agent of another corporation, partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, against expenses (including
attorneys fees), judgments, fines, penalties and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit, proceeding, or claim. The indemnification and advancement of expenses provided by
or granted pursuant to this Article SEVENTH shall not limit the Corporation from providing any other indemnification or advancement of expenses permitted by law and shall not be deemed exclusive of any other rights to which those seeking
indemnification or advancement of
Exhibit A-1
expenses may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise. Such indemnification and advancement of expenses shall continue as to a person
who has ceased to be a director or officer of the Corporation and shall inure to the benefit of the heirs, executors and administrators of such a person. Neither the amendment or repeal of this Article SEVENTH, nor the adoption of any provisions in
this Certificate of Incorporation inconsistent with this Article SEVENTH, shall eliminate or impair any right or protection of a director or officer of the Corporation under this Article SEVENTH existing at the time of such amendment or repeal.
EIGHTH
: Election of directors need not be by written ballot unless the bylaws of the Corporation shall so provide.
Exhibit A-2
IN WITNESS WHEREOF, PLX Technology, Inc. has caused this Amended and Restated Certificate of
Incorporation to be executed by its duly authorized officer on [ ].
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PLX TECHNOLOGY, INC.
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By:
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Name:
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Title:
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Exhibit A-3
EXHIBIT C
AMENDED AND RESTATED
CERTIFICATE OF FORMATION
OF
PINEWOOD MERGER SUB, LLC
The undersigned, for the purpose of amending and restating the Certificate of Formation of Pinewood Merger Sub, LLC, a Delaware corporation (the
Corporation
), does hereby certify that:
FIRST: The name of the limited liability company is Pinewood Merger Sub, LLC.
SECOND: The address of its registered office in the State of Delaware is c/o The Corporation Trust Company, Corporation Trust Center,
1209 Orange Street, in the City of Wilmington, County of New Castle, Delaware 19801. The name of its registered agent at such address is The Corporation Trust Company.
IN WITNESS WHEREOF, the undersigned has executed this Amended and Restated Certificate of Formation of Pinewood Merger Sub, LLC this
[ ] day of [ ].
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J. Vincent Tortolano, Authorized Person
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Exhibit C-1
ANNEX B
EXECUTION VERSION
TENDER AND SUPPORT AGREEMENT
This TENDER AND SUPPORT AGREEMENT (this
Agreement
), dated as of April 30, 2012, is entered into by and among Integrated Device Technology, Inc., a Delaware corporation (
Parent
), ) Pinewood Acquisition Corp., a Delaware corporation and a
wholly-owned subsidiary of Parent (the
Purchaser
), and each of the Persons set forth on
Schedule A
hereto (each, a
Stockholder
). All capitalized terms used but not otherwise defined in this Agreement
shall have the respective meanings ascribed to such terms in the Merger Agreement (as defined below).
WHEREAS
, as of
the date hereof, each Stockholder is the record and beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of the number of shares of common stock (
Common Stock
), par value $0.001, of PLX Technology, Inc., a Delaware
corporation (the
Company
) set forth opposite such Stockholders name on
Schedule A
(all such shares set forth on
Schedule A
, together with any shares of Common Stock of the Company that are hereafter issued to
or otherwise acquired or owned by any Stockholder prior to the termination of this Agreement, being referred to herein as the
Subject Shares
;
provided
,
however
, no such shares held in the ESOP shall constitute
Subject Shares);
WHEREAS
, Parent, the Purchaser, Pinewood Merger Sub, LLC, a Delaware limited liability company and
wholly-owned subsidiary of Parent (
Merger LLC
) and the Company intend to enter into an Agreement and Plan of Merger, dated as of the date hereof and as it may be amended from time to time (the
Merger Agreement
),
which provides, among other things, for the Purchaser to commence an offer to purchase all of the issued and outstanding Common Stock of the Company and the Merger of the Company and the Purchaser, upon the terms and subject to the conditions set
forth in the Merger Agreement; and
WHEREAS
, as a condition to their willingness to enter into the Merger Agreement,
Parent, the Purchaser and Merger LLC have required that each Stockholder, and as an inducement and in consideration therefor, each Stockholder (in such Stockholders capacity as a holder of the Subject Shares) has agreed to, enter into this
Agreement.
NOW, THEREFORE
, in consideration of the foregoing and the respective representations, warranties, covenants
and agreements set forth below and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, do hereby agree as follows:
ARTICLE I
AGREEMENT TO TENDER
1.1.
Agreement to Tender
. Each Stockholder agrees to validly tender or cause to be tendered in the Offer all of such Stockholders Subject Shares pursuant to and in accordance with the
terms of the Offer, free and clear of all Encumbrances (other than Permitted Encumbrances). Without limiting the generality of the foregoing, as promptly as practicable after, but in no event later than fifteen Business Days after, the commencement
of the Offer, each Stockholder shall deliver pursuant to the terms of the Offer (A) a letter of transmittal with respect to such Stockholders Subject Shares complying with the terms of the Offer, (B) a certificate representing such
Subject Shares or an agents message (or such other evidence, if any, of transfer as the Exchange Agent may reasonably request) in the case of a book-entry share of any uncertificated Subject Shares and (C) all other documents
or instruments required to be delivered by other Company stockholders pursuant to the terms of the Offer. Each Stockholder agrees that, once such Stockholders Subject Shares are tendered, such Stockholder will
B-1
not withdraw any of such Subject Shares from the Offer, unless and until (A) the Offer shall have been terminated in accordance with the terms of the Merger Agreement, (B) the Merger
Agreement is terminated, pursuant to its terms, prior to the purchase of the Subject Shares in the Offer, (C) the Company Board shall have made an Adverse Recommendation Change (in connection with a Competing Proposal), or (D) this
Agreement shall have been terminated in accordance with its terms;
provided
,
however
, that a Stockholder shall not be required to (x) exercise any unexercised Company Options for the purposes of this Agreement or (y) tender
any Subject Shares into the Offer if such tender could cause such Stockholder to incur liability under Section 16(b) of the Exchange Act (
provided
,
however
, for the avoidance of doubt, that nothing in this
Section 1.1
shall be deemed a waiver or an amendment of the provisions set forth in Section 5.10 of the Merger Agreement).
ARTICLE
II
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
Each Stockholder represents and warrants to Parent and the Purchaser as to such Stockholder on a several basis, that:
2.1.
Authorization; Binding Agreement
. If such Stockholder is a corporation, limited partnership or limited liability
company, such Stockholder is duly organized, validly existing and in good standing under the Laws of the jurisdiction in which it is incorporated or constituted and the consummation of the transactions contemplated hereby are within such
Stockholders corporate or organizational powers and have been duly authorized by all necessary corporate or organizational actions on the part of such Stockholder, and such Stockholder has full power and authority to execute, deliver and
perform this Agreement and to consummate the transactions contemplated hereby. If such Stockholder is an individual, he or she has full legal capacity, right and authority to execute, deliver and perform this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by such Stockholder, and constitutes a valid and binding obligation of such Stockholder enforceable against such Stockholder in accordance with its
terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar Laws relating to or affecting creditors rights generally and general equitable principles (whether considered in a
proceeding in equity or at law).
2.2.
Non-Contravention
. The execution and delivery of this Agreement by such
Stockholder does not, and the performance by such Stockholder of such Stockholders obligations hereunder and the consummation by such Stockholder of the transactions contemplated hereby will not (i) except for applicable requirements
under federal securities Law, the securities Laws of any state or other jurisdiction, the rules of any applicable securities exchange, state takeover Laws, the pre-merger notification requirements of the HSR Act, and filings and recordation of
appropriate merger documents as required by the DGCL or any other applicable Law or regulation, require any consent, approval, order, authorization or other action by, or filing with or notice to, any Person (including any Governmental Authority)
under, constitute a default (with or without the giving of notice or the lapse of time or both) under, or give rise to any right of termination, cancellation or acceleration under, or result in the creation of any Encumbrances on any of the Subject
Shares pursuant to, any Contract, Order or other instrument binding on such Stockholder or any applicable Law, except, in each case, for matters that, individually or in the aggregate, would not reasonably be expected to prevent or materially delay
or impair the consummation by such Stockholder of the transactions contemplated by this Agreement or otherwise adversely impact such Stockholders ability to perform its obligations hereunder or (ii) violate any provision of such
Stockholders organizational documents.
2.3.
Ownership of Subject Shares; Total Shares
. Such Stockholder
is the record and beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of such Stockholders Subject Shares and has good and marketable title to such Subject Shares free and clear of any liens, claims, proxies, voting trusts
or agreements, options, rights, understandings or arrangements or any other encumbrances or restrictions whatsoever on title, transfer or exercise of any rights of a stockholder in respect of such Subject Shares (collectively,
Encumbrances
), except (i) as provided hereunder or (ii) pursuant to any applicable restrictions on transfer
B-2
under the Securities Act (collectively,
Permitted Encumbrances
). The Subject Shares listed on
Schedule A
opposite such Stockholders name constitute all of the
shares of Common Stock of the Company beneficially owned by such Stockholder as of the date hereof. Except pursuant to the Merger Agreement, no Person has any contractual or other right or obligation to purchase or otherwise acquire any of such
Stockholders Subject Shares.
2.4.
Voting Power
. Such Stockholder has full voting power with respect to
such Stockholders Subject Shares, and full power of disposition, full power to issue instructions with respect to the matters set forth herein and full power to agree to all of the matters set forth in this Agreement, in each case with respect
to all of such Stockholders Subject Shares. None of such Stockholders Subject Shares are subject to any stockholders agreement, proxy, voting trust or other agreement or arrangement with respect to the voting of such Subject
Shares, except as provided hereunder.
2.5.
Reliance
. Such Stockholder understands and acknowledges that Parent
and the Purchaser are entering into the Merger Agreement in reliance upon such Stockholders execution, delivery and performance of this Agreement.
2.6.
Absence of Litigation
. With respect to such Stockholder, as of the date hereof, there is no Action pending against, or, to the actual knowledge of such Stockholder, threatened in
writing against such Stockholder or any of such Stockholders properties or assets (including the Subject Shares) before or by any Governmental Authority that could reasonably be expected to prevent or materially delay or impair the
consummation by such Stockholder of the transactions contemplated by this Agreement or otherwise materially impair such Stockholders ability to perform its obligations hereunder.
2.7.
Brokers
. No broker, finder, financial advisor, investment banker or other Person is entitled to any brokerage,
finders, financial advisors or other similar fee or commission in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of such Stockholder.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER
Each of Parent and the Purchaser represent and warrant to the Stockholders, jointly and severally, that:
3.1.
Organization; Authorization
. Parent and the Purchaser are each duly organized, validly existing and in good standing under the Laws of the State of Delaware. The consummation of
the transactions contemplated hereby are within each of Parents and the Purchasers corporate powers and have been duly authorized by all necessary corporate actions on the part of Parent and the Purchaser. Parent and the Purchaser have
full corporate power and authority to execute, deliver and perform this Agreement and to consummate the transactions contemplated hereby.
3.2.
Binding Agreement
. This Agreement has been duly authorized, executed and delivered by each of Parent and the Purchaser and constitutes a legal, valid and binding obligation of
Parent and the Purchaser enforceable against Parent and the Purchaser in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar Laws relating to or affecting
creditors rights generally and general equitable principles (whether considered in a proceeding in equity or at law).
3.3
Non-Contravention
. The execution and delivery of this Agreement by Parent and the Purchaser does not, and the
performance by each of them of its obligations hereunder and the consummation by each of them of the transactions contemplated hereby will not except for applicable requirements under federal securities Law, the securities Laws of any state or other
jurisdiction, the rules of any applicable securities exchange, state takeover Laws, the pre-merger notification requirements of the HSR Act, and filings and recordation of
B-3
appropriate merger documents as required by the DGCL or any other applicable Law or regulation, require any consent, approval, order, authorization or other action by, or filing with or notice
to, any Person (including any Governmental Authority) under, constitute a default (with or without the giving of notice or the lapse of time or both) under, or give rise to any right of termination, cancellation or acceleration under, or result in
the creation of any Encumbrances on any of on the properties or assets of Parent or the Purchaser pursuant to, any Contract, Order or other instrument binding on Parent or the Purchaser or any applicable Law, except, in each case, for matters that,
individually or in the aggregate, would not reasonably be expected to prevent or materially delay or impair the consummation by Parent and the Purchaser of the transactions contemplated by this Agreement or otherwise adversely impact Parents
and the Purchasers ability to perform its obligations hereunder.
ARTICLE IV
ADDITIONAL COVENANTS OF THE STOCKHOLDERS
Each Stockholder hereby covenants and agrees that until the termination of this Agreement:
4.1.
Voting of Subject Shares; Proxy
.
(a) At any meeting of the
stockholders of the Company held while this Agreement is in effect, and at every adjournment or postponement thereof, such Stockholder shall include such Stockholders Subject Shares in any computation for purposes of establishing a quorum at
any such meeting and vote such Stockholders Subject Shares (to the extent that any of the Subject Shares are not purchased in the Offer) (the Vote Shares) (i) in favor of (A) approval of the Merger Agreement and the
transactions contemplated thereunder or any other transaction pursuant to which Parent proposes to acquire the Company (whether by tender offer or merger) in which the stockholders of the Company would receive aggregate consideration per share of
Company Common Stock equal to or greater than the consideration to be received by such stockholders in the Offer and the Merger and (B) approval of any proposal to adjourn or postpone the meeting to a later date, if there are not sufficient
votes for the approval of the Merger Agreement or such other transaction on the date on which such meeting is held, (ii) against (A) any action or agreement which would in any material respect impede, interfere with or prevent the Offer or
the Merger, including, but not limited to, any other extraordinary corporate transaction, including, a merger, acquisition, sale, consolidation, reorganization, recapitalization, extraordinary dividend or liquidation involving the Company and any
Person (other than Parent, the Purchaser or their affiliates), or any other proposal of any Person (other than Parent, the Purchaser or their affiliates) to acquire the Company or all or substantially all of the assets thereof, (B) any
Competing Proposal and any action in furtherance of any Competing Proposal or (C) any action, proposal, transaction or agreement that would reasonably be expected to result in the occurrence of any condition set forth in Annex I to the Merger
Agreement or result in a breach of any covenant, representation or warranty or any other obligation or agreement of such Stockholder under this Agreement and/or (iii) in favor of any other matter necessary for consummation of the transactions
contemplated by the Merger Agreement, which is considered at any such meeting of the Company stockholders.
(b) Such
Stockholder hereby revokes (or agrees to cause to be revoked) any proxies that such Stockholder has heretofore granted with respect to the Subject Shares. Solely with respect to the matters described in
Section 4.1(a)
, while this
Agreement is in effect, such Stockholder hereby irrevocably grants to, and appoints, Parent and any designee thereof, as such Stockholders proxy and attorney-in-fact, for and in the name, place and stead of such Stockholder, to (i) attend
any meeting of the stockholders of the Company stockholders on behalf of such Stockholder with respect to the matters set forth in
Section 4.1(a)
, (ii) include such Subject Shares in any computation for purposes of establishing a
quorum at any such meeting and (iii) vote all Vote Shares, or grant or withhold a consent or approval in respect of the Vote Shares, or issue instructions to the record holder of such Stockholders Vote Shares to do any of the foregoing,
in connection with any meeting of the stockholders of the Company or any action by written consent in lieu of a meeting of the stockholders of the Company with respect to the matters set forth in
Section 4.1(a)
, in a manner consistent
with the provisions of
Section 4.1(a)
. Such Stockholder authorizes such proxy and attorney-in-fact to substitute any other Person to act hereunder, to revoke any substitution and to file this proxy and any substitution or revocation with
the Secretary of the Company. Such
B-4
Stockholder hereby affirms that the irrevocable proxy set forth in this
Section 4.1(b)
is given in connection with the execution of the Merger Agreement and granted in consideration
of and as an inducement to Parent and the Purchaser to enter into the Merger Agreement, and that such irrevocable proxy is given to secure the performance of the duties of such Stockholder under this Agreement, subject to the termination of this
Agreement pursuant to
Section 5.2
. Such Stockholder hereby further affirms that the proxy set forth in this
Section 4.1(b)
is coupled with an interest, is intended to be irrevocable (and as such shall survive and shall not be
affected by the death, incapacity, mental illness or insanity of such Stockholder, as applicable), subject, however, to its automatic termination upon the termination of this Agreement pursuant to
Section 5.2
, and shall not be terminated
by operation of Law or upon the occurrence of any other event other than the termination of this Agreement pursuant to
Section 5.2
. Parent agrees not to exercise the proxy granted herein for any purpose other than the purposes described
in this Agreement.
4.2.
No Transfer; No Inconsistent Arrangements
. Except as provided hereunder (including
pursuant to
Section 1.1
or
Section 4.1
) or under the Merger Agreement, from and after the date hereof and until this Agreement is terminated, such Stockholder shall not, directly or indirectly, (i) create or permit to
exist any Encumbrance, other than Permitted Encumbrances, on any such Stockholders Subject Shares, (ii) transfer, sell, assign, gift, hedge, pledge or otherwise dispose of, or enter into any derivative arrangement with respect to
(collectively, Transfer), any or all of such Stockholders Equity Interests in the Company, including any Subject Shares, or any right or interest therein (or consent to any of the foregoing), (iii) enter into any Contract with
respect to any Transfer of such Subject Shares or any interest therein, (iv) grant or permit the grant of any proxy, power-of-attorney or other authorization or consent in or with respect to any such Stockholders Subject Shares,
(v) deposit or permit the deposit of any of such Stockholders Equity Interests in the Company, including any Subject Shares, into a voting trust or enter into a voting agreement or arrangement with respect to any of such
Stockholders Equity Interests in the Company, including the Subject Shares or (vi) take or permit any other action that would in any way restrict, limit or interfere with the performance of such Stockholders obligations hereunder or
otherwise make any representation or warranty of such Stockholder herein untrue or incorrect,
provided
that the restrictions contained in this
Section 4.2
shall not apply to any with respect to any transfer of the Subject Shares
by a Stockholder pursuant to applicable Laws of descent and distribution, and
provided
,
further
that any such proposed transferee must agree in writing to take such Subject Shares subject to and to be bound by the terms and conditions
of this Agreement applicable to such Subject Shares. Any action taken in violation of the foregoing sentence shall be null and void ab initio and such Stockholder agrees that any such prohibited action may and should be enjoined. If any involuntary
Transfer of any of the Subject Shares shall occur (including, but not limited to, a sale by such Stockholders trustee in any bankruptcy, or a sale to a purchaser at any creditors or court sale), the transferee (which term, as used
herein, shall include any and all transferees and subsequent transferees of the initial transferee) shall take and hold such Subject Shares subject to all of the restrictions, liabilities and rights under this Agreement, which shall continue in full
force and effect until valid termination of this Agreement. Such Stockholder agrees that it shall not, and shall cause each of its affiliates not to, become a member of a group (as defined under Section 13(d) of the Exchange Act)
with respect to any Equity Interests in the Company for the purpose of opposing or competing with or taking any actions inconsistent with the transactions contemplated by the Merger Agreement. Notwithstanding the foregoing, such Stockholder may make
Transfers of Subject Shares (a) to any wholly-owned Subsidiary of such Stockholder, in which case the Subject Shares shall continue to be bound by this Agreement and
provided
that any such transferee agrees in writing to be bound by the
terms and conditions of this Agreement prior to the consummation of any such Transfer or (b) as Parent may agree in writing in its sole discretion. If so requested by Parent, such Stockholder agrees that the Subject Shares shall bear a legend
stating that such Subject Shares are subject to this Agreement,
provided
such legend shall be removed upon the valid termination of this Agreement.
4.3.
No Exercise of Appraisal Rights
. Such Stockholder waives and agrees not to exercise any appraisal rights or dissenters rights in respect of such Stockholders Subject Shares
that may arise with respect to the Merger.
B-5
4.4.
Documentation and Information
. Such Stockholder shall not make any public
announcement regarding this Agreement and the transactions contemplated hereby without the prior written consent of Parent, except as may be required by applicable Law (
provided
that reasonable notice of any such disclosure will be provided
to Parent). Such Stockholder consents to and hereby authorizes Parent and the Purchaser to publish and disclose in all documents and schedules filed with the SEC, and any press release or other disclosure document that Parent or the Purchaser
reasonably determines to be necessary in connection with the Offer, the Merger and any transactions contemplated by the Merger Agreement, such Stockholders identity and ownership of the Subject Shares, the existence of this Agreement and the
nature of such Stockholders commitments and obligations under this Agreement, and such Stockholder acknowledges that Parent and the Purchaser may, in Parents sole discretion, file this Agreement or a form hereof with the SEC or any other
Governmental Authority.
Such Stockholder agrees to promptly give Parent any information it may reasonably require for the preparation of any such disclosure documents, and such Stockholder agrees to promptly notify Parent of any required
corrections with respect to any written information supplied by such Stockholder specifically for use in any such disclosure document, if and to the extent that any such information shall have become false or misleading in any material respect.
4.5.
Adjustments
. In the event (a) of any stock split, stock dividend, merger, reorganization,
recapitalization, reclassification, combination, exchange of shares or the like of the capital stock of the Company affecting the Subject Shares or (b) that such Stockholder shall become the beneficial owner of any additional shares of Company
Common Stock, then the terms of this Agreement shall apply to the shares of Company Common Stock held by such Stockholder immediately following the effectiveness of the events described in clause (a) or such Stockholder becoming the beneficial
owner thereof as described in clause (b), as though, in either case, they were Subject Shares hereunder. In the event that such Stockholder shall become the beneficial owner of any other Equity Interests entitling the holder thereof to vote or give
consent with respect to the matters set forth in
Section 4.1
hereof, then the terms of
Section 4.1
hereof shall apply to such other Equity Interests as though they were Subject Shares hereunder.
ARTICLE V
MISCELLANEOUS
5.1.
Notices
. All notices and other communications required or permitted under this Agreement shall be in writing and shall be either hand delivered in person, sent by facsimile, sent by
electronic mail (if also confirmed by facsimile sent during normal business hours of the recipient, effective as of the delivery of the facsimile; if not sent via facsimile during normal business hours, then on the next Business Day), sent by
certified or registered first-class mail, postage prepaid, or sent by nationally recognized express courier service. Such notices and other communications shall be effective upon receipt if hand delivered or sent by facsimile or electronic mail,
three Business Days after mailing if sent by mail, and one Business Day after dispatch if sent by express courier, (i) if to Parent or the Purchaser, to the address, facsimile number or e-mail address set forth in Section 8.3 of the Merger
Agreement and (ii) if to a Stockholder, to such Stockholders address, facsimile number or e-mail address set forth on a signature page hereto, or to such other address, facsimile number or e-mail address as such party may hereafter
specify for the purpose by notice to each other party hereto.
5.2.
Termination
. This Agreement shall terminate
automatically, without any notice or other action by any Person, upon the first to occur of (i) the termination of the Merger Agreement in accordance with its terms, (ii) the Effective Time and (iii) the mutual written consent of all
of the parties hereto. Upon termination of this Agreement, no party shall have any further obligations or liabilities under this Agreement; provided, however, that (x) nothing set forth in this Section 5.2 shall relieve any party from
liability for any breach of this Agreement prior to termination hereof and (y) the provisions of this Article V shall survive any termination of this Agreement.
5.3.
Amendments and Waivers
. Any provision of this Agreement may be amended or waived if such amendment or waiver is in writing and is signed, in the case of an amendment, by each party
to this Agreement
B-6
or, in the case of a waiver, by each party against whom the waiver is to be effective. No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.
5.4.
Expenses
. All fees and expenses incurred in connection herewith and the transactions contemplated hereby shall be paid by the party incurring such fees and expenses, whether or not
the Offer or the Merger is consummated.
5.5.
Assignment; No Third-Party Beneficiaries
. Neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties (whether by operation of law or otherwise) without the prior written consent of the other parties and any assignment without such prior written consent
shall be null and void. This Agreement shall be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and permitted assigns and nothing in this Agreement, express or implied, is intended to or shall
confer upon any other Person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement (including the right to rely upon the representations and warranties set forth herein).
5.6.
Governing Law; Venue
.
(a) This Agreement and all claims and causes of action arising out of, based upon, or related to this Agreement or the negotiation, execution or performance hereof, shall be governed by and construed,
interpreted and enforced in accordance with, the Laws of the State of Delaware (without giving effect to principles or rules of conflict of Laws, whether of the State of Delaware or any other jurisdiction, to the extent such principles or rules
would require or permit the application of the Laws of another jurisdiction).
(b) Any action, claim, suit or proceeding
between the parties hereto arising out of, based upon or relating to this Agreement or the transactions contemplated hereby shall be brought solely in the Court of Chancery of the State of Delaware and any state appellate court therefrom within the
State of Delaware (or, if the Court of Chancery of the State of Delaware declines to accept jurisdiction over a particular matter, any state or federal court within the State of Delaware and any direct appellate court therefrom). Each party hereby
irrevocably submits to the exclusive jurisdiction of such courts in respect of any such action, claim, suit or proceeding and agrees that it will not bring any such action, claim, suit or proceeding in any other court. Furthermore, each party hereby
irrevocably waives and agrees not to assert as a defense, counterclaim or otherwise, in any such action, claim, suit or proceeding, (i) any claim that it is not personally subject to the jurisdiction of the above named courts for any reason
other than the failure to serve process in accordance with
Section 5.1
, (ii) any claim that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether
through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (iii) to the fullest extent permitted by applicable Law, any claim that (A) the action, claim,
suit or proceeding in such court is brought in an inconvenient forum, (B) the venue of the action, claim, suit or proceeding is improper or (C) this Agreement, or the subject matter hereof, may not be enforced in or by such courts. Each
party agrees that notice or the service of process in any action, claim, suit or proceeding arising out of, based upon or relating to this Agreement or the transactions contemplated hereby shall be properly served or delivered if delivered in the
manner contemplated by
Section 5.1
or in such other manner as may be permitted by applicable Law.
(c) EACH OF THE
PARTIES HERETO IRREVOCABLY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY AND ALL RIGHT SUCH PARTY MAY HAVE TO TRIAL BY JURY IN ANY LEGAL ACTION, SUIT OR PROCEEDING BETWEEN THE PARTIES HERETO ARISING OUT OF, BASED UPON OR RELATING TO
THIS AGREEMENT OR THE NEGOTIATION, EXECUTION OR PERFORMANCE HEREOF. EACH OF THE PARTIES (1) CERTIFIES THAT NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING
B-7
WAIVER AND (2) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AS APPLICABLE, BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION 5.6(c)
.
5.7.
Counterparts
.
This Agreement may be executed in one or more counterparts (including via facsimile, .pdf or other electronic means), and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all
of which taken together shall constitute one and the same agreement. This Agreement, and any amendments hereto, waivers hereof or consents or notifications hereunder, to the extent signed and delivered by means of facsimile, .pdf or other electronic
means, shall be treated in all manner and respects as an original contract and shall be considered to have the same binding legal effects as if it were the original signed version thereof delivered in person. At the request of any party, each other
party shall re-execute original forms thereof and deliver them to all other parties. No party shall raise the use of a facsimile machine or email to deliver a signature or the fact that any signature or Contract was transmitted or communicated by
facsimile, .pdf or other electronic means as a defense to the formation of a contract, and each such party forever waives any such defense.
5.8.
Entire Agreement
. This Agreement, together with
Schedule A
, constitutes the entire agreement of the parties and supersedes all prior agreements and undertakings, both
written and oral, among the parties, or any of them, with respect to the subject matter hereof and thereof.
5.9.
Severability
. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of Law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in
full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that transactions contemplated hereby
are fulfilled to the extent possible.
5.10.
Specific Performance
. The parties hereto agree that if any of the
provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached, irreparable damage would occur, no adequate remedy at law would exist and damages would be difficult to determine. It is accordingly
agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement exclusively in the Chancery Court of the State of Delaware and any
state appellate court therefrom within the State of Delaware (or, if the Chancery Court of the State of Delaware declines to accept jurisdiction over a particular matter, any state or federal court within the State of Delaware) and any such
injunction shall be in addition to any other remedy to which any party is entitled, at law or in equity. In connection with any action for specific performance, each party hereby irrevocably waives (i) the defense of adequacy of a remedy at law
and (ii) any requirement for the securing or posting of any bond in connection with the remedies referred to in this
Section 5.10
.
5.11.
Headings
. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.
5.12.
Mutual Drafting; Interpretation
. Each party hereto has participated in the drafting of this Agreement, which each
party acknowledges is the result of extensive negotiations between the parties. If an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision. For purposes of this Agreement, whenever the context requires: the singular number shall include the plural, and vice versa, the masculine gender shall
include the feminine and neuter genders, the feminine gender shall include the masculine and neuter genders and the neuter gender shall include masculine and feminine genders. As used in this Agreement, the words include and
including, and variations thereof,
B-8
shall not be deemed to be terms of limitation, but rather shall be deemed to be followed by the words without limitation. Except as otherwise indicated, all references in this
Agreement to Sections, Articles and Schedules are intended to refer to Sections, Articles and Schedules to this Agreement.
Schedule A
attached to this Agreement constitutes a part of this Agreement and is
incorporated herein for all purposes. The words hereof, hereto, hereby, herein, hereunder and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole
and not to any particular section or article in which such words appear. All references in this Agreement to $ are references to United States dollars. Unless otherwise specifically provided for herein, the term or shall not
be deemed to be exclusive.
5.13.
Further Assurances
. Parent, the Purchaser and each Stockholder will execute
and deliver, or cause to be executed and delivered, all further documents and instruments and use their respective reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or
advisable under applicable Laws and regulations, to perform their respective obligations under this Agreement.
5.14.
Capacity as Stockholder
. Each Stockholder signs this Agreement solely in such Stockholders capacity as a
Stockholder of the Company, and not in such Stockholders capacity as a director, officer or employee of the Company or any Company Subsidiary. Notwithstanding anything herein to the contrary, nothing herein shall in any way restrict a director
or officer of the Company in the taking of any actions (or failure to act) in his or her capacity as a director or officer of the Company, or in the exercise of his or her fiduciary duties as a director or officer of the Company, or prevent or be
construed to create any obligation on the part of any director or officer of the Company from taking any action in his or her capacity as such director, officer, trustee or fiduciary.
5.15.
No Agreement Until Executed
. This Agreement shall not be effective unless and until (i) the Merger Agreement is
executed by all parties thereto and (ii) this Agreement is executed by all parties hereto.
5.16.
Stockholder
Obligation Several and Not Joint
.
The obligations of each Stockholder hereunder shall be several and not joint, and no Stockholder shall be liable for any breach of the terms of this Agreement by any other Stockholder.
5.17.
No Ownership Interest
. Except as otherwise provided herein, nothing contained in this Agreement shall be deemed to
vest in Parent or the Purchaser any direct or indirect ownership or incidence of ownership of or with respect to the Subject Shares. Except as otherwise provided herein or in the Merger Agreement, all rights, ownership and economic benefits of and
relating to the Subject Shares shall remain vested in and belong to each applicable Stockholder, and neither Parent nor the Purchaser shall have any authority to manage, direct, restrict, regulate, govern, or administer any of the policies or
operations of the Company or exercise any power or authority to direct such Stockholder in the voting of any of the Shares.
[
Signature Page Follows
]
B-9
The parties are executing this Agreement on the date set forth in the introductory clause.
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INTEGRATED DEVICE TECHNOLOGY, INC.
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By:
|
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/s/ Theodore L. Tewksbury, III
|
Name:
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Theodore L. Tewksbury, III
|
Title:
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President, CEO
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PINEWOOD ACQUISITION CORP.
|
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By:
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/s/ J. Vincent Tortolano
|
Name:
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J. Vincent Tortolano
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Title:
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Vice President
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[
Signature Page to Tender and Support Agreement
]
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STOCKHOLDERS
|
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/s/ D. James Guzy, Sr.
|
D. James Guzy, Sr.
|
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/s/ Robert H. Smith
|
Robert H. Smith
|
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/s/ Thomas Riordan
|
Thomas Riordan
|
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/s/ John H. Hart
|
John H. Hart
|
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/s/ Patrick Verderico
|
Patrick Verderico
|
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/s/ Michael J. Salameh
|
Michael J. Salameh
|
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/s/ Ralph Schmitt
|
Ralph Schmitt
|
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/s/ David Raun
|
David Raun
|
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/s/ Arthur O. Whipple
|
Arthur O. Whipple
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/s/ Lamar Eugene Schaeffer
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Lamar Eugene Schaeffer
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/s/ Vijay Meduri
|
Vijay Meduri
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[
Signature Page to Tender and Support Agreement
]
Schedule A
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Name of Stockholder
|
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Number of Subject
Shares as
of the
Date Hereof
|
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D. James Guzy, Sr.
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0
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Robert H. Smith
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0
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Thomas Riordan
|
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0
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John H. Hart
|
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0
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Patrick Verderico
|
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0
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Michael J. Salameh
|
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329,726
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Ralph Schmitt
|
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18,000
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David Raun
|
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27,000
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Arthur O. Whipple
|
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25,200
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Lamar Eugene Schaeffer
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5,000
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Vijay Meduri
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14,756
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[
Schedule A to Tender and Support Agreement
]
ANNEX C
Section 262 of the Delaware General Corporation Law
§ 262. Appraisal rights
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(a)
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Any stockholder of a corporation of this State who holds shares of stock on the date of the making of a demand pursuant to subsection (d) of this section with
respect to such shares, who continuously holds such shares through the effective date of the merger or consolidation, who has otherwise complied with subsection (d) of this section and who has neither voted in favor of the merger or
consolidation nor consented thereto in writing pursuant to § 228 of this title shall be entitled to an appraisal by the Court of Chancery of the fair value of the stockholders shares of stock under the circumstances described in
subsections (b) and (c) of this section. As used in this section, the word stockholder means a holder of record of stock in a corporation; the words stock and share mean and include what is ordinarily
meant by those words; and the words depository receipt mean a receipt or other instrument issued by a depository representing an interest in 1 or more shares, or fractions thereof, solely of stock of a corporation, which stock is
deposited with the depository.
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(b)
|
Appraisal rights shall be available for the shares of any class or series of stock of a constituent corporation in a merger or consolidation to be effected pursuant to
§ 251 (other than a merger effected pursuant to § 251(g) of this title), § 252, § 254, § 255, § 256, § 257, § 258, § 263 or § 264 of this title:
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(1)
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Provided, however, that no appraisal rights under this section shall be available for the shares of any class or series of stock, which stock, or depository receipts in
respect thereof, at the record date fixed to determine the stockholders entitled to receive notice of the meeting of stockholders to act upon the agreement of merger or consolidation, were either (i) listed on a national securities exchange or
(ii) held of record by more than 2,000 holders; and further provided that no appraisal rights shall be available for any shares of stock of the constituent corporation surviving a merger if the merger did not require for its approval the vote
of the stockholders of the surviving corporation as provided in § 251(f) of this title.
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(2)
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Notwithstanding paragraph (b)(1) of this section, appraisal rights under this section shall be available for the shares of any class or series of stock of a constituent
corporation if the holders thereof are required by the terms of an agreement of merger or consolidation pursuant to §§ 251, 252, 254, 255, 256, 257, 258, 263 and 264 of this title to accept for such stock anything except:
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a.
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Shares of stock of the corporation surviving or resulting from such merger or consolidation, or depository receipts in respect thereof;
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b.
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Shares of stock of any other corporation, or depository receipts in respect thereof, which shares of stock (or depository receipts in respect thereof) or depository
receipts at the effective date of the merger or consolidation will be either listed on a national securities exchange or held of record by more than 2,000 holders;
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c.
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Cash in lieu of fractional shares or fractional depository receipts described in the foregoing paragraphs (b)(2)a. and b. of this section; or
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d.
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Any combination of the shares of stock, depository receipts and cash in lieu of fractional shares or fractional depository receipts described in the foregoing
paragraphs (b)(2)a., b. and c. of this section.
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(3)
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In the event all of the stock of a subsidiary Delaware corporation party to a merger effected under § 253 or § 267 of this title is not owned by the parent
immediately prior to the merger, appraisal rights shall be available for the shares of the subsidiary Delaware corporation.
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(c)
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Any corporation may provide in its certificate of incorporation that appraisal rights under this section shall be available for the shares of any class
or series of its stock as a result of an amendment to its
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C-1
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certificate of incorporation, any merger or consolidation in which the corporation is a constituent corporation or the sale of all or substantially all of the assets of the corporation. If the
certificate of incorporation contains such a provision, the procedures of this section, including those set forth in subsections (d) and (e) of this section, shall apply as nearly as is practicable.
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(d)
|
Appraisal rights shall be perfected as follows:
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(1)
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If a proposed merger or consolidation for which appraisal rights are provided under this section is to be submitted for approval at a meeting of stockholders, the
corporation, not less than 20 days prior to the meeting, shall notify each of its stockholders who was such on the record date for notice of such meeting (or such members who received notice in accordance with § 255(c) of this title) with
respect to shares for which appraisal rights are available pursuant to subsection (b) or (c) of this section that appraisal rights are available for any or all of the shares of the constituent corporations, and shall include in such notice
a copy of this section and, if 1 of the constituent corporations is a nonstock corporation, a copy of § 114 of this title. Each stockholder electing to demand the appraisal of such stockholders shares shall deliver to the corporation,
before the taking of the vote on the merger or consolidation, a written demand for appraisal of such stockholders shares. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the
stockholder intends thereby to demand the appraisal of such stockholders shares. A proxy or vote against the merger or consolidation shall not constitute such a demand. A stockholder electing to take such action must do so by a separate
written demand as herein provided. Within 10 days after the effective date of such merger or consolidation, the surviving or resulting corporation shall notify each stockholder of each constituent corporation who has complied with this subsection
and has not voted in favor of or consented to the merger or consolidation of the date that the merger or consolidation has become effective; or
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(2)
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If the merger or consolidation was approved pursuant to § 228, § 253, or § 267 of this title, then either a constituent corporation
before the effective date of the merger or consolidation or the surviving or resulting corporation within 10 days thereafter shall notify each of the holders of any class or series of stock of such constituent corporation who are entitled to
appraisal rights of the approval of the merger or consolidation and that appraisal rights are available for any or all shares of such class or series of stock of such constituent corporation, and shall include in such notice a copy of this section
and, if 1 of the constituent corporations is a nonstock corporation, a copy of § 114 of this title. Such notice may, and, if given on or after the effective date of the merger or consolidation, shall, also notify such stockholders of the
effective date of the merger or consolidation. Any stockholder entitled to appraisal rights may, within 20 days after the date of mailing of such notice, demand in writing from the surviving or resulting corporation the appraisal of such
holders shares. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such holders shares. If such notice did not
notify stockholders of the effective date of the merger or consolidation, either (i) each such constituent corporation shall send a second notice before the effective date of the merger or consolidation notifying each of the holders of any
class or series of stock of such constituent corporation that are entitled to appraisal rights of the effective date of the merger or consolidation or (ii) the surviving or resulting corporation shall send such a second notice to all such
holders on or within 10 days after such effective date; provided, however, that if such second notice is sent more than 20 days following the sending of the first notice, such second notice need only be sent to each stockholder who is entitled to
appraisal rights and who has demanded appraisal of such holders shares in accordance with this subsection. An affidavit of the secretary or assistant secretary or of the transfer agent of the corporation that is required to give either notice
that such notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein. For purposes of determining the stockholders entitled to receive either notice, each constituent corporation may fix, in advance, a
record date that shall be not more than
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C-2
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10 days prior to the date the notice is given, provided, that if the notice is given on or after the effective date of the merger or consolidation, the record date shall be such effective date.
If no record date is fixed and the notice is given prior to the effective date, the record date shall be the close of business on the day next preceding the day on which the notice is given.
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(e)
|
Within 120 days after the effective date of the merger or consolidation, the surviving or resulting corporation or any stockholder who has complied with subsections
(a) and (d) of this section hereof and who is otherwise entitled to appraisal rights, may commence an appraisal proceeding by filing a petition in the Court of Chancery demanding a determination of the value of the stock of all such
stockholders. Notwithstanding the foregoing, at any time within 60 days after the effective date of the merger or consolidation, any stockholder who has not commenced an appraisal proceeding or joined that proceeding as a named party shall have the
right to withdraw such stockholders demand for appraisal and to accept the terms offered upon the merger or consolidation. Within 120 days after the effective date of the merger or consolidation, any stockholder who has complied with the
requirements of subsections (a) and (d) of this section hereof, upon written request, shall be entitled to receive from the corporation surviving the merger or resulting from the consolidation a statement setting forth the aggregate number
of shares not voted in favor of the merger or consolidation and with respect to which demands for appraisal have been received and the aggregate number of holders of such shares. Such written statement shall be mailed to the stockholder within 10
days after such stockholders written request for such a statement is received by the surviving or resulting corporation or within 10 days after expiration of the period for delivery of demands for appraisal under subsection (d) of this
section hereof, whichever is later. Notwithstanding subsection (a) of this section, a person who is the beneficial owner of shares of such stock held either in a voting trust or by a nominee on behalf of such person may, in such persons
own name, file a petition or request from the corporation the statement described in this subsection.
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(f)
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Upon the filing of any such petition by a stockholder, service of a copy thereof shall be made upon the surviving or resulting corporation, which shall within 20 days
after such service file in the office of the Register in Chancery in which the petition was filed a duly verified list containing the names and addresses of all stockholders who have demanded payment for their shares and with whom agreements as to
the value of their shares have not been reached by the surviving or resulting corporation. If the petition shall be filed by the surviving or resulting corporation, the petition shall be accompanied by such a duly verified list. The Register in
Chancery, if so ordered by the Court, shall give notice of the time and place fixed for the hearing of such petition by registered or certified mail to the surviving or resulting corporation and to the stockholders shown on the list at the addresses
therein stated. Such notice shall also be given by 1 or more publications at least 1 week before the day of the hearing, in a newspaper of general circulation published in the City of Wilmington, Delaware or such publication as the Court deems
advisable. The forms of the notices by mail and by publication shall be approved by the Court, and the costs thereof shall be borne by the surviving or resulting corporation.
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(g)
|
At the hearing on such petition, the Court shall determine the stockholders who have complied with this section and who have become entitled to appraisal rights. The
Court may require the stockholders who have demanded an appraisal for their shares and who hold stock represented by certificates to submit their certificates of stock to the Register in Chancery for notation thereon of the pendency of the appraisal
proceedings; and if any stockholder fails to comply with such direction, the Court may dismiss the proceedings as to such stockholder.
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(h)
|
After the Court determines the stockholders entitled to an appraisal, the appraisal proceeding shall be conducted in accordance with the rules of the
Court of Chancery, including any rules specifically governing appraisal proceedings. Through such proceeding the Court shall determine the fair value of the shares exclusive of any element of value arising from the accomplishment or expectation of
the merger or consolidation, together with interest, if any, to be paid upon the amount determined to be the fair value. In determining such fair value, the Court shall take into account all relevant factors. Unless the Court in its discretion
determines otherwise for good cause shown, interest from the effective date
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C-3
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of the merger through the date of payment of the judgment shall be compounded quarterly and shall accrue at 5% over the Federal Reserve discount rate (including any surcharge) as established from
time to time during the period between the effective date of the merger and the date of payment of the judgment. Upon application by the surviving or resulting corporation or by any stockholder entitled to participate in the appraisal proceeding,
the Court may, in its discretion, proceed to trial upon the appraisal prior to the final determination of the stockholders entitled to an appraisal. Any stockholder whose name appears on the list filed by the surviving or resulting corporation
pursuant to subsection (f) of this section and who has submitted such stockholders certificates of stock to the Register in Chancery, if such is required, may participate fully in all proceedings until it is finally determined that such
stockholder is not entitled to appraisal rights under this section.
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(i)
|
The Court shall direct the payment of the fair value of the shares, together with interest, if any, by the surviving or resulting corporation to the stockholders
entitled thereto. Payment shall be so made to each such stockholder, in the case of holders of uncertificated stock forthwith, and the case of holders of shares represented by certificates upon the surrender to the corporation of the certificates
representing such stock. The Courts decree may be enforced as other decrees in the Court of Chancery may be enforced, whether such surviving or resulting corporation be a corporation of this State or of any state.
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(j)
|
The costs of the proceeding may be determined by the Court and taxed upon the parties as the Court deems equitable in the circumstances. Upon application of a
stockholder, the Court may order all or a portion of the expenses incurred by any stockholder in connection with the appraisal proceeding, including, without limitation, reasonable attorneys fees and the fees and expenses of experts, to be
charged pro rata against the value of all the shares entitled to an appraisal.
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(k)
|
From and after the effective date of the merger or consolidation, no stockholder who has demanded appraisal rights as provided in subsection (d) of this section
shall be entitled to vote such stock for any purpose or to receive payment of dividends or other distributions on the stock (except dividends or other distributions payable to stockholders of record at a date which is prior to the effective date of
the merger or consolidation); provided, however, that if no petition for an appraisal shall be filed within the time provided in subsection (e) of this section, or if such stockholder shall deliver to the surviving or resulting corporation a
written withdrawal of such stockholders demand for an appraisal and an acceptance of the merger or consolidation, either within 60 days after the effective date of the merger or consolidation as provided in subsection (e) of this section
or thereafter with the written approval of the corporation, then the right of such stockholder to an appraisal shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery shall be dismissed as to any stockholder
without the approval of the Court, and such approval may be conditioned upon such terms as the Court deems just; provided, however that this provision shall not affect the right of any stockholder who has not commenced an appraisal proceeding or
joined that proceeding as a named party to withdraw such stockholders demand for appraisal and to accept the terms offered upon the merger or consolidation within 60 days after the effective date of the merger or consolidation, as set forth in
subsection (e) of this section.
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(l)
|
The shares of the surviving or resulting corporation to which the shares of such objecting stockholders would have been converted had they assented to the merger or
consolidation shall have the status of authorized and unissued shares of the surviving or resulting corporation.
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C-4
ANNEX D
Information Concerning Directors and Executive Officers of IDT, Pinewood and Pinewood LLC
1.
Directors and Officers of IDT
. The following table sets forth the name and present principal occupation or employment and
material occupations, positions, offices or employments for the past five years, of each director and executive officer of IDT. Each such person is a citizen of the United States, unless otherwise noted, and the business address of each person is
6024 Silver Creek Valley Road, San Jose, California 95138, and the phone number of each person is (408) 284-8200.
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|
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Name
|
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Age
|
|
Office(s)
|
|
Present Principal Occupation or Employment History
and
Five-Year Employment History
|
John Schofield
|
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63
|
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Chairman of the Board
|
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Mr. Schofield has been a director of IDT since April 2001 and has served as the Chairman of the Board of Directors since January 2008. Mr. Schofield brings to IDT extensive
experience in the areas of executive management, global sales and marketing, risk analysis, corporate governance and administration. Mr. Schofields experience is especially relevant to his roles as Chairman of the Board and the Nominating
& Governance Committee. Mr. Schofield has been a private investor since his retirement from Tellabs, Inc. (Tellabs) in January 2005. Mr. Schofield served as the Chief Executive Officer and President of Advanced Fibre Communications,
Inc. (AFC) from 1999 until the acquisition of AFC by Tellabs on November 30, 2004, at which time AFC became the Access Division of Tellabs. Mr. Schofield also served as a member of the board of directors of AFC, and in October 2001, he
was elected to the position of chairman of the board of directors of AFC. From 1992 to 1999, Mr. Schofield served as Senior Vice President, and later, President, of the Integrated Solutions Group of ADC Telecommunications, Inc., a world-wide
supplier of network equipment, software solutions and integration services for broadband and multiservice networks. Mr. Schofield also serves as a director of Sonus Networks, Inc., a supplier of telecommunications network equipment and services. Mr.
Schofield is a 2011 and 2012 National Association of Corporate Directors (NACD) Board Leadership Fellow. He has demonstrated his commitment to boardroom excellence by completing NACDs comprehensive program of study for experienced corporate
directors a rigorous suite of courses spanning leading practices for boards and committees. Mr. Schofield supplements his board leadership skills through ongoing engagement with the director community and access to leading practices. Mr.
Schofield holds a Diploma of Electronics and Communications Engineering (the equivalent of a Bachelor of Science degree in electrical engineering) from NSW Institute of Technology in Sydney,
Australia.
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D-1
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Name
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|
Age
|
|
Office(s)
|
|
Present Principal Occupation or Employment History
and
Five-Year Employment History
|
|
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|
|
Peter A. Feld
|
|
33
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|
Director
|
|
Mr. Feld has been a director of IDT since June 2012, and joined the Board of Directors as part of a settlement agreement between IDT and Starboard Value LP and certain of its
affiliates. Mr. Feld contributes extensive knowledge of the capital markets and corporate governance practices as a result of his investment and private equity background. Since April 2011, Mr. Feld has served as a member of Starboard
Principal Co GP LLC and a member of the Management Committees of Starboard Value GP LLC and Starboard Principal Co GP LLC. From November 2008 to April 2011, Mr. Feld served as a Managing Director of Ramius LLC and a Portfolio Manager of Ramius Value
and Opportunity Master Fund Ltd. From February 2007 to November 2008, Mr. Feld served as a Director at Ramius LLC. Mr. Feld joined Ramius LLC as an Associate in February 2005. From June 2001 to June 2004, Mr. Feld was an investment banking analyst
at Banc of America Securities, LLC, the investment banking arm of Bank of America Company, a bank and financial holding company. Mr. Feld has served as a member of the board of directors of Unwired Planet, Inc. (f/k/a Openwave Systems Inc.), a
software provider delivering mediation and message solutions, since July 2011, and currently serves as its chairman of the board. Mr. Feld has also served on the board of directors of SeaChange International, Inc., a company engaged in the delivery
of multi-screen video, since December 2010. Mr. Feld previously served on the board of directors of CPI Corp. from July 2008 to July 2009 and on the board of directors of Sharper Image Company from August 2007 to January 2008. Mr. Feld received a BA
in economics from Tufts University.
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D-2
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Name
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|
Age
|
|
Office(s)
|
|
Present Principal Occupation or Employment History
and
Five-Year Employment History
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Jeffrey S. McCreary
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55
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|
Director
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|
Mr. McCreary has been a director of IDT since June 2012, and joined the Board of Directors as part of a settlement agreement between IDT and Starboard Value LP and certain of
its affiliates. Mr. McCrearys extensive technology expertise, together with his extensive experience as an executive and director of technology companies, well qualifies him to serve on the IDT board of directors. Mr. McCreary has
been an independent management consultant since 2006. Mr. McCreary is a former Senior Vice President at Texas Instruments, which develops analog, digital signal processing RF and DLP semiconductor technologies. Mr. McCreary was the Manager
of Texas Instruments Worldwide Sales and Marketing, from 1998 through 2005, where he directed the global sales organization. Mr. McCreary held a variety of other executive positions within Texas Instruments, including the General Manager
of Advanced Logic Products and General Manager of Worldwide Military Semiconductors. Mr. McCreary has also served on a number of public and private company boards. Mr. McCreary has served on the board of directors of MIPS Technologies,
Inc., a provider of industry-standard processor architectures and cores for digital home, networking and mobile applications, since 2011, and on the board of directors of Isola Group, a provider of materials used to manufacture printed circuit
boards, since 2006. Mr. McCreary also served on the board of directors of Gennum Corporation, a provider of semiconductor solutions and intellectual property cores, from 2008 to 2012. He is also currently working as a special consultant to the
National Hockey League (NHL) Coaches Association. Additionally, Mr. McCreary is a long-time member of the Board of Trustees of the Rose-Hulman Institute of Technology. Mr. McCreary holds a bachelors degree in electrical engineering
from the Rose-Hulman Institute of Technology and received an honorary doctorate in engineering from the Rose-Hulman Institute of Technology in 2004.
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D-3
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Name
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Age
|
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Office(s)
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Present Principal Occupation or Employment History
and
Five-Year Employment History
|
Umesh Padval
|
|
54
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|
Director
|
|
Mr. Padval has been a director of IDT since October 2008. Mr. Padval currently serves as a Partner at Bessemer Venture Partners. Mr. Padval brings to IDT more than 25 years of
experience in marketing, sales, and general management in high tech industries, including computing, mobile communications, and consumer digital entertainment. From August 2004 to August 2007, Mr. Padval served as Executive Vice President of the
Consumer Products Group at LSI Logistic Corporation (LSI), and from June 2001 to August 2004, Senior Vice President of the Broadband Entertainment Division at LSI. Mr. Padval served as the Chief Executive Officer and Director of C-Cube
Microsystems Incorporated (C-Cube) from May 2000 until June 2001, when C-Cube was sold to LSI, and prior to that, as President of the Semiconductor Division of C-Cube from October 1998 to May 2000. Prior to joining C-Cube, Mr. Padval
held senior management positions at VLSI Technology, Inc. and Advanced Micro Devices, Inc. (AMD). He currently serves on the boards of several private companies, including Avnera Corporation, Berkeley Design Automation, Avalanche
Technologies, Tigo Energy, Ultrasolar, Xtreme Power and Pinnacle Engines. Mr. Padval also serves on the board of Entropic Communications, Inc. a fabless semiconductor company that designs, develops and markets system solutions to enable connected
home entertainment. Mr. Padval is also active on advisory boards for Stanford University. Mr. Padval holds a Bachelor of Technology from Indian Institute of Technology, Mumbai, and an M.S. in Engineering from Stanford University.
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Gordon Parnell
|
|
62
|
|
Director
|
|
Mr. Parnell has been a director of IDT since January 2008. Mr. Parnell brings to IDT extensive general and financial management experience, which is especially relevant to his role
as Chairman of the Audit Committee. Mr. Parnell has served as Vice President, Business Development and Investor Relations of Microchip Technology Incorporated (Microchip) since January 2009. Prior to this role, Mr. Parnell served as Vice
President and Chief Financial Officer of Microchip from May 2000 to December 2008. Prior to his role as CFO, Mr. Parnell served as Vice President, Controller, and Treasurer of Microchip. Mr. Parnell holds a finance/accounting qualification with the
Association of Certified Accountants from Edinburgh College, Scotland.
|
D-4
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Name
|
|
Age
|
|
Office(s)
|
|
Present Principal Occupation or Employment History
and
Five-Year Employment History
|
Donald Schrock
|
|
66
|
|
Director
|
|
Mr. Schrock has been a director of IDT since September 2009. Mr. Schrocks brings to IDT extensive management experience in semiconductors, wireless, and consumer markets, as
well as marketing and operational expertise, all of which have particular relevance to IDTs significant presence in the wireless and wireline communications markets. Mr. Schrock is retired from his positions as President of Qualcomm CDMA
Technologies Group and Executive Vice-President of Qualcomm, Inc. (Qualcomm), which he held from 2001 to 2003. Prior to joining Qualcomm, Mr. Schrock held key executive positions at GM Hughes Electronics, Applied Micro Circuit
Corporation, Burr-Brown Corporation, and Motorola. He currently serves on the board of directors of Global Foundries, a semiconductor wafer fabrication company, and the board of directors of Maxlinear, a fabless semiconductor company that provides
radio-frequency analog and mixed-signal SoC solutions for broadband communications applications. Mr. Schrock also served on the board of directors of Jazz Semiconductor Inc., a privately held mixed signal and RF wafer foundry, until its merger with
Acquicor Technology in 2007.
|
|
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|
Ron Smith, Ph.D.
|
|
62
|
|
Director
|
|
Dr. Smith has been a director of IDT since March 2004. Dr. Smith brings to IDT extensive experience in executive management, engineering and product development, risk analysis,
marketing, industry association and corporate governance. Dr. Smith is retired from Intel Corporation, where he last served as Senior Vice President and General Manager of the Wireless Communications and Computing Group from December 1999 to January
2004. Prior to this role, Dr. Smith held various senior executive positions in group and division general business management, product and technology development, and marketing during his 26-year tenure at Intel. Dr. Smith serves (since 2005) on the
board of directors of RagingWire Enterprise Solutions, Inc, a premier data center and managed Information Technology services provider, and served (2004-2012) on the board of directors of Arcsoft, Inc, an industry leading software developer of
multimedia applications for both desktop and embedded platforms. Dr. Smith also serves (since 2006) as a Trustee of Gettysburg College where he is a member of the executive, compensation, finance, campaign, and audit committees and he chairs the
Information Technology committee. He is a member of the Association of Governing Boards (AGB) of Universities and Colleges. Dr. Smith served as the Chairman of the Technology Strategy Committee and as Intels alternate Board of Directors member
for the Semiconductor Industry Association (SIA) from 1999-2004. Dr. Smith is a 2011 NACD Board Governance Fellow. Dr. Smith holds a Ph.D. and a masters degree in physics from the University of Minnesota and a bachelors degree in physics
from Gettysburg College.
|
D-5
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|
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|
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|
Name
|
|
Age
|
|
Office(s)
|
|
Present Principal Occupation or Employment History
and
Five-Year Employment History
|
|
|
|
|
Norm Taffe
|
|
46
|
|
Director
|
|
Mr. Taffe has been a director of IDT since October 2012. Mr. Taffe brings to IDT extensive experience and significant knowledge of mixed-signal engineering, production
definition and marketing from his management and leadership roles in the semiconductor industry. Since June 2012, Mr. Taffe has served as a consultant to SunPower Corporation. Mr. Taffe has served on the board of directors of Cypress
Envirosystems, a Cypress Semiconductor-funded company that develops system-level products for reducing energy costs with wireless technology, since September 2007. Mr. Taffe served from 2005 to June 2012 as executive vice president of Cypress
Semiconductor where he ran the Consumer and Computation Division, including the PSoCTM microcontroller business, the largest and fastest growing business within the company. Under Mr. Taffes leadership, revenue in the Consumer and
Computation Division grew to over $400 million in 2011. Mr. Taffe also currently holds the position of Board Chairman to the Second Harvest Food Bank, which is a nonprofit organization that serves nearly 250,000 needy families in Santa Clara
and San Mateo counties each month. Mr. Taffe holds a Bachelor of Science in Electrical Engineering from The University of Michigan.
|
|
|
|
|
Theodore L. Tewksbury III
|
|
55
|
|
Director, President and Chief Executive Officer
|
|
Dr. Tewksbury joined IDT as President and Chief Executive Officer in March 2008 and was appointed to the Board of Directors in April 2008. Dr. Tewksbury brings extensive general
management and technical experience to his roles as Director, President and Chief Executive Officer. Prior to joining IDT, Dr. Tewksbury served as President and Chief Operating Officer of AMI Semiconductor from October 2006 to February 2008.
Prior to that, Dr. Tewksbury served as general manager and managing director at Maxim Integrated Products, Inc. from February 2000 to August 2006, where he built and ran eleven product lines and established their high-speed data converter and
high-performance RF businesses. Dr. Tewksbury also held senior business and technology leadership positions at IBM Microelectronics and Analog Devices, Inc. Dr. Tewksbury currently serves on the boards of Global Semiconductor Alliance (GSA) and
Entropic Communications, Inc., a fabless semiconductor company that designs, develops, and markets system solutions to enable connected home entertainment. Dr. Tewksbury holds a BS, an MS and a Ph.D. in Electrical Engineering from the
Massachusetts Institute of Technology.
|
D-6
|
|
|
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|
|
|
Name
|
|
Age
|
|
Office(s)
|
|
Present Principal Occupation or Employment History
and
Five-Year Employment History
|
|
|
|
|
Richard D. Crowley, Jr.
|
|
55
|
|
Senior Vice President, Chief Financial Officer
|
|
Mr. Crowley joined IDT as Vice President and Chief Financial Officer in October 2008. Mr. Crowley was promoted to Senior Vice President and Chief Financial Officer in May 2012.
Prior to joining IDT, Mr. Crowley served as Vice President, Finance and Chief Financial Officer of Micrel, Inc. Prior to Micrel, Mr. Crowley served as Vice President and Chief Financial Officer of Vantis Corporation. Prior to Micrel, Mr.
Crowley was employed by National Semiconductor Corporation, where his last position was Vice President and Corporate Controller.
|
|
|
|
|
Subramanyan Dakshinamoorthy
|
|
60
|
|
Vice President, Quality
|
|
Mr. Dakshinamoorthy joined IDT as Vice President, Quality in 2011. Prior to joining IDT, Mr. Dakshinamoorthy held several management positions at Freescale Semiconductor, serving
most recently as Freescales Vice President, Final Manufacturing Engineering and Probe Operations. Between 2004 and 2009, Mr. Dakshinamoorthy was the Vice President of Quality for Freescale. Prior to Freescale, Mr. Dakshinamoorthy held
various management positions in Motorola as Senior Director for the Reticle Technology Centre, Vice President for Tohoku Semiconductor Corp., a wholly-owned Motorola Company, and Director of Operations for Motorolas MOS15 Wafer Fab in Research
Triangle Park, North Carolina and Western Digital.
|
|
|
|
|
Thomas Sparkman
|
|
50
|
|
Senior Vice President, Worldwide Sales and Marketing and Vice President, Communications Division
|
|
Mr. Sparkman joined IDT in November 2011 as general manager and Vice President for the Communications division, and currently also serves as Senior Vice President of Worldwide Sales
for IDT. Prior to joining IDT, Mr. Sparkman was the chief executive officer of Samplify Systems, Inc., a leader in data compression technologies, in which IDT was a strategic investor.
|
|
|
|
|
Christian Kermarrec
|
|
63
|
|
Vice President and General Manager, Timing and Synchronization Division and Wireless Systems Division
|
|
Mr. Kermarrec joined IDT in 2012 as General Manager of Wireless Systems for the Companys Communications Division. Mr. Kermerrec was appointed to the position of Vice President
and General Manager, Timing and Synchronization Division and Wireless Systems Division in October 2012. Prior to joining IDT, Mr. Kermarrec served as corporate vice president and president of MediaTeks wireless operations in the United States
and Europe. Mr. Kermarrec joined MediaTek in 2008 through its acquisition of Analog Devices RF and Wireless Business Unit, where Mr. Kermarrec served as vice president. During his 18 years of services at Analog Devices, Mr. Kermarrec was
responsible for building the Companys wireless business to reach over $500 million in annual sales. Mr. Kermarrec has also held various technical and management functions at M/A-COM and Tachonics in the United States, Spar Aeroscape in Canada,
and Philips and Alcatel in France. Kermarrec holds an M.S. in electrical engineering from the Conservatoire des Arts et Metiers (CNAM), France.
|
D-7
|
|
|
|
|
|
|
Name
|
|
Age
|
|
Office(s)
|
|
Present Principal Occupation or Employment History
and
Five-Year Employment History
|
|
|
|
|
Mario Montana
|
|
50
|
|
Vice President and General Manager, Enterprise Computing Division
|
|
Mr. Montana has been with IDT since 1997 and was appointed Vice President and General Manager, Enterprise Computing Division in February 2007. Prior to his current role, Mr. Montana
was General Manager, IDT Serial Switching Division, Director, IDT Serial-Switching Division and Director, IDT Strategic Marketing Group. Mr. Montana has also served as Product Line Director for IDTs Telecommunications, FIFO, Logic and Timing
groups, respectively. Prior to joining IDT, Mr. Montana held various product marketing and engineering positions at Zarlink Semiconductor, IDT, Raytheon and Hewlett Packard.
|
|
|
|
|
Arman Naghavi
|
|
50
|
|
Vice President and General Manager, Analog and Power Division
|
|
Mr. Naghavi joined IDT as Vice President and General Manager, Audio and Power Division in October 2009 and became Vice President and General Manager, Analog and Power Division in
2010. Prior to joining IDT, Mr. Naghavi served as Vice President and General Manager of Analog, Mixed-signal, and Power Division at Freescale Semiconductor. Prior to Freescale, Mr. Naghavi held various engineering and management positions at
Intersil Corporation and Analog Devices, Inc.
|
|
|
|
|
Graham Robertson
|
|
44
|
|
Vice President, Corporate Marketing
|
|
Mr. Robertson joined IDT in March 2010 as Vice President, Corporate Marketing. Prior to joining IDT, Mr. Robertson served as Vice President of Global Marketing and Corporate
Communications at International Rectifier. Prior to International Rectifier, Mr. Robertson held sales and marketing communications positions at Future Electronics, and other senior marketing positions within various marketing and promotion solutions
organizations in Europe. Mr. Robertson earned his Master of Business Administration degree from Edinburghs Heriot Watt University and a Master of Science degree in Marketing from the University of Glamorgan South Wales, United Kingdom. He is
currently completing his Doctorate degree in Business from Heriot Watt University.
|
|
|
|
|
Sean Fan
|
|
46
|
|
Vice President and General Manager, IDT China
|
|
Mr. Fan joined IDT in 1999 as marketing manager for the Companys telecommunications business unit. In 2011, Mr. Fan became vice president and general manager of IDT China. In
his current position, Mr. Fan is also responsible for managing multiple business and functional units of IDT located in China. Prior to his current position, Mr. Fan held various management roles at IDT, including Vice President and General Manager
of the Memory Interface Division, General Manager of Standard Product Operations, and Senior Director of Silicon Timing Solutions. Prior to joining IDT, Mr. Fan served in various engineering and management roles with Lucent Microelectronics, Mitel
Semiconductor, and the National Lab of Telecom Research in China. Mr. Fan holds a Master of Science degree in Computer Engineering from University of Cincinnati, and a Bachelor of Science degree in Computer and Telecommunications from Beijing
University of Posts and Telecommunications.
|
D-8
|
|
|
|
|
|
|
Name
|
|
Age
|
|
Office(s)
|
|
Present Principal Occupation or Employment History
and
Five-Year Employment History
|
|
|
|
|
Anja Hamilton
|
|
42
|
|
Vice President, Global Human Resources
|
|
Ms. Hamilton joined IDT in February 2011 as Senior Director, Global Compensation and HRIS and was promoted to Vice President, Global Human Resources in October 2012.
Ms. Hamilton has been with IDT for a combined 4 years. Prior to re-joining IDT, Ms. Hamilton served as Director for Compensation & HRIS with Atmel, and prior to that managed eBays Global Compensation Programs. Prior to eBay, she
worked in compensation management positions at IDT, Electronic Arts, Kintana and Message Media.
|
|
|
|
|
Matthew Brandalise
|
|
47
|
|
General Counsel and Secretary
|
|
Mr. Brandalise has been with IDT since 2000 and was appointed General Counsel and Secretary in October 2012. Prior to his current role,
Mr. Brandalise served as Senior Director, Legal Department, and previously held various other senior corporate counsel positions in IDTs legal department. Prior to joining IDT, Mr. Brandalise was an associate attorney with Brooks &
Hess.
|
D-9
2.
Directors and Officers of Pinewood
. The following table sets forth the name and
present principal occupation or employment, and material occupations, positions, offices or employments for the past five years, of each director and executive officer of Pinewood. Each such person is a citizen of the United States, unless otherwise
noted, and the business address of each person is 6024 Silver Creek Valley Road, San Jose, California 95138, and the phone number of each person is (408) 284-8200.
|
|
|
|
|
|
|
Name
|
|
Age
|
|
Office(s)
|
|
Present Principal Occupation or Employment History
and
Five-Year Employment History
|
Theodore L. Tewksbury III
|
|
55
|
|
Director and President
|
|
Dr. Tewksbury joined IDT as President and Chief Executive Officer in March 2008 and was appointed to the Board of Directors in April 2008. Dr. Tewksbury brings extensive general
management and technical experience to his roles as Director, President and Chief Executive Officer. Prior to joining IDT, Dr. Tewksbury served as President and Chief Operating Officer of AMI Semiconductor from October 2006 to February 2008. Prior
to that, Dr. Tewksbury served as general manager and managing director at Maxim Integrated Products, Inc. from February 2000 to August 2006, where he built and ran eleven product lines and established their high-speed data converter and
high-performance RF businesses. Dr. Tewksbury also held senior business and technology leadership positions at IBM Microelectronics and Analog Devices, Inc. Dr. Tewksbury currently serves on the boards of Global Semiconductor Alliance (GSA) and
Entropic Communications, Inc., a fabless semiconductor company that designs, develops, and markets system solutions to enable connected home entertainment. Dr. Tewksbury holds a BS, an MS and a Ph.D. in Electrical Engineering from the Massachusetts
Institute of Technology.
|
|
|
|
|
Richard D. Crowley, Jr.
|
|
55
|
|
Director, Treasurer and Chief Financial Officer
|
|
Mr. Crowley joined IDT as Vice President and Chief Financial Officer in October 2008. Prior to joining IDT, Mr. Crowley served as Vice President, Finance and Chief Financial Officer
of Micrel, Inc. Prior to Micrel, Mr. Crowley served as Vice President and Chief Financial Officer of Vantis Corporation. Prior to Micrel, Mr. Crowley was employed by National Semiconductor Corporation, where his last position was Vice President and
Corporate Controller.
|
|
|
|
|
Matthew Brandalise
|
|
47
|
|
Secretary
|
|
Mr. Brandalise has been with IDT since 2000 and was appointed General Counsel and Secretary in October 2012. Prior to his current role,
Mr. Brandalise served as Senior Director, Legal Department, and previously held various other senior corporate counsel positions in IDTs legal department. Prior to joining IDT, Mr. Brandalise was an associate attorney with Brooks &
Hess.
|
D-10
2.
Directors and Officers of Pinewood LLC
. The following table sets forth the name
and present principal occupation or employment, and material occupations, positions, offices or employments for the past five years, of each director and executive officer of Pinewood LLC. Each such person is a citizen of the United States, unless
otherwise noted, and the business address of each person is 6024 Silver Creek Valley Road, San Jose, California 95138, and the phone number of each person is (408) 284-8200.
|
|
|
|
|
|
|
Name
|
|
Age
|
|
Office(s)
|
|
Present Principal Occupation or Employment History
and
Five-Year Employment History
|
Theodore L. Tewksbury III
|
|
55
|
|
Director and President
|
|
Dr. Tewksbury joined IDT as President and Chief Executive Officer in March 2008 and was appointed to the Board of Directors in April 2008. Dr. Tewksbury brings extensive general
management and technical experience to his roles as Director, President and Chief Executive Officer. Prior to joining IDT, Dr. Tewksbury served as President and Chief Operating Officer of AMI Semiconductor from October 2006 to February 2008. Prior
to that, Dr. Tewksbury served as general manager and managing director at Maxim Integrated Products, Inc. from February 2000 to August 2006, where he built and ran eleven product lines and established their high-speed data converter and
high-performance RF businesses. Dr. Tewksbury also held senior business and technology leadership positions at IBM Microelectronics and Analog Devices, Inc. Dr. Tewksbury currently serves on the boards of Global Semiconductor Alliance (GSA) and
Entropic Communications, Inc., a fabless semiconductor company that designs, develops, and markets system solutions to enable connected home entertainment. Dr. Tewksbury holds a BS, an MS and a Ph.D. in Electrical Engineering from the Massachusetts
Institute of Technology.
|
|
|
|
|
Richard D. Crowley, Jr.
|
|
55
|
|
Director, Treasurer and Chief Financial Officer
|
|
Mr. Crowley joined IDT as Vice President and Chief Financial Officer in October 2008. Prior to joining IDT, Mr. Crowley served as Vice President, Finance and Chief Financial Officer
of Micrel, Inc. Prior to Micrel, Mr. Crowley served as Vice President and Chief Financial Officer of Vantis Corporation. Prior to Micrel, Mr. Crowley was employed by National Semiconductor Corporation, where his last position was Vice President and
Corporate Controller.
|
|
|
|
|
Matthew Brandalise
|
|
47
|
|
Secretary
|
|
Mr. Brandalise has been with IDT since 2000 and was appointed General Counsel and Secretary in October 2012. Prior to his current role,
Mr. Brandalise served as Senior Director, Legal Department, and previously held various other senior corporate counsel positions in IDTs legal department. Prior to joining IDT, Mr. Brandalise was an associate attorney with Brooks &
Hess.
|
D-11
During the past five years, none of the directors and officers of IDT, Pinewood or Pinewood
LLC listed above has (a) been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (b) been a party to any judicial or administrative proceeding (except for matters that went dismissed without
sanction or settlement) that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of federal or state
securities laws.
D-12