AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
BY AND AMONG
COMMERCE ONE, INC.,
CONSTITUTION ACQUISITION CORPORATION
AND
APPNET, INC.
Dated as of June 20, 2000
PAGE
ARTICLE I.........................................................................2
THE MERGER........................................................................2
1.1 The Merger......................................................2
1.2 Effective Time; Closing.........................................2
1.3 Effect of the Merger............................................2
1.4 Certificate of Incorporation; Bylaws............................2
1.5 Directors and Officers..........................................3
1.6 Effect on Capital Stock.........................................3
1.7 Surrender of Certificates.......................................4
1.8 No Further Ownership Rights in Company Common Stock.............6
1.9 Lost, Stolen or Destroyed Certificates..........................6
1.10 Tax and Accounting Consequences.................................7
1.11 Taking of Necessary Action; Further Action......................7
ARTICLE II REPRESENTATIONS AND WARRANTIES OF COMPANY..............................7
2.1 Organization and Qualification; Subsidiaries....................7
2.2 Certificate of Incorporation and Bylaws.........................8
2.3 Capitalization..................................................8
2.4 Authority Relative to this Agreement...........................10
2.5 No Conflict; Required Filings and Consents.....................10
2.6 Compliance; Permits............................................11
2.7 SEC Filings; Financial Statements..............................12
2.8 No Undisclosed Liabilities.....................................12
2.9 Absence of Certain Changes or Events...........................12
2.10 Absence of Litigation..........................................13
2.11 Employee Matters and Benefit Plans.............................13
2.12 [Reserved].....................................................17
2.13 Registration Statement; Proxy Statement........................17
2.14 Restrictions on Business Activities............................18
2.15 Title to Property..............................................18
2.16 Taxes..........................................................18
2.17 Environmental Matters..........................................20
2.18 Brokers........................................................21
2.19 Intellectual Property..........................................21
2.20 Agreements, Contracts and Commitments..........................24
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2.21 Opinion of Financial Advisor...................................25
2.22 Board Approval.................................................25
2.23 State Takeover Statutes........................................26
2.24 Disclaimer of Other Representation and Warranties..............26
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB..............26
3.1 Organization and Qualification; Subsidiaries...................26
3.2 Certificate of Incorporation and Bylaws........................26
3.3 Capitalization.................................................27
3.4 Authority Relative to this Agreement...........................27
3.5 No Conflict; Required Filings and Consents.....................28
3.6 SEC Filings; Financial Statements..............................28
3.7 Registration Statement; Proxy Statement........................29
3.8 No Undisclosed Liabilities.....................................29
3.9 Absence of Litigation..........................................29
3.10 Vote Required..................................................29
3.11 Brokers........................................................30
3.12 Intellectual Property..........................................30
3.13 Disclaimer of Other Representation and Warranties..............30
ARTICLE IV CONDUCT PRIOR TO THE EFFECTIVE TIME...................................30
4.1 Conduct of Business by Company.................................30
4.2 Conduct of Business by Parent..................................33
ARTICLE V ADDITIONAL AGREEMENTS..................................................34
5.1 Proxy Statement/Prospectus; Registration Statement; Other
Filings; Board Recommendations.................................34
5.2 Meeting of Company Stockholders................................35
5.3 Confidentiality; Access to Information.........................36
5.4 No Solicitation................................................37
5.5 Public Disclosure..............................................38
5.6 Reasonable Efforts; Notification...............................39
5.7 Third Party Consents...........................................40
5.8 Stock Options, Warrants, Employee Benefit and Retention
Bonuses and Options............................................40
5.9 Form S-8.......................................................42
5.10 Indemnification................................................42
5.11 Nasdaq Listing.................................................43
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5.12 Company Affiliate Agreement....................................43
5.13 [Reserved].....................................................43
5.14 Noncompetition Agreements......................................43
5.15 Regulatory Filings; Reasonable Efforts.........................43
5.16 Alternative Transaction Structure..............................43
ARTICLE VI CONDITIONS TO THE MERGER..............................................44
6.1 Conditions to Obligations of Each Party to Effect the Merger...44
6.2 Additional Conditions to Obligations of Company................45
6.3 Additional Conditions to the Obligations of Parent and Merger
Sub............................................................45
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER....................................46
7.1 Termination....................................................46
7.2 Notice of Termination; Effect of Termination...................48
7.3 Fees and Expenses..............................................48
7.4 Amendment......................................................49
7.5 Extension; Waiver..............................................50
ARTICLE VIII GENERAL PROVISIONS..................................................50
8.1 Non-Survival of Representations and Warranties.................50
8.2 Notices........................................................50
8.3 Interpretation; Knowledge......................................51
8.4 Counterparts...................................................52
8.5 Entire Agreement; Third Party Beneficiaries....................52
8.6 Severability...................................................52
8.7 Other Remedies; Specific Performance...........................53
8.8 Governing Law..................................................53
8.9 Rules of Construction..........................................53
8.10 Assignment.....................................................53
8.11 WAIVER OF JURY TRIAL...........................................53
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INDEX OF EXHIBITS
Exhibit A Form of Company Voting Agreement
Exhibit B Form of Stock Option Agreement
Exhibit C Form of Company Affiliate Agreement
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AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
This AGREEMENT AND PLAN OF MERGER AND REORGANIZATION is made and
entered into as of June 20, 2000, among Commerce One, Inc. a Delaware
corporation ("PARENT"), Constitution Acquisition Corporation, a Delaware
corporation and a wholly-owned subsidiary of Parent ("MERGER SUB"), and Appnet,
Inc., a Delaware corporation ("COMPANY").
RECITALS
A. Upon the terms and subject to the conditions of this Agreement
(as defined in Section 1.2 below) and in accordance with the Delaware General
Corporation Law ("DELAWARE LAW"), Parent and Company intend to enter into a
business combination transaction.
B. The Board of Directors of Company (i) has determined that the
Merger (as defined in Section 1.1) is advisable and fair to, and in the best
interests of, Company and its stockholders, (ii) has approved this Agreement,
the Merger (as defined in Section 1.1) and the other transactions contemplated
by this Agreement and (iii) has determined to recommend that the stockholders of
Company adopt and approve this Agreement and approve the Merger.
C. Concurrently with the execution of this Agreement, and as a
condition and inducement to Parent's willingness to enter into this Agreement,
certain affiliates of Company are entering into Voting/Exchange Agreements in
substantially the form attached hereto as Exhibit A (the "COMPANY VOTING
AGREEMENTS").
D. Concurrently with the execution of this Agreement, and as a
condition and inducement to Parent's willingness to enter into this Agreement,
Company shall execute and deliver a Stock Option Agreement in favor of Parent in
substantially the form attached hereto as Exhibit B (the "STOCK OPTION
AGREEMENT"). The Board of Directors of Company has approved the Stock Option
Agreement.
E. Concurrently with the execution of this Agreement, and as a
condition and inducement to Parent's willingness to enter into this Agreement,
certain affiliates of Company (the "COMPANY AFFILIATES") are entering into
Company Affiliate Agreements in substantially the form attached hereto as
Exhibit C (the "COMPANY AFFILIATE AGREEMENTS"). The Agreement, the Company
Voting Agreements, the Stock Option Agreement and the Company Affiliate
Agreements are sometimes referred to herein as, the "TRANSACTION DOCUMENTS."
F. The parties intend, by executing this Agreement, to adopt a
plan of reorganization within the meaning of Section 368 of the Internal Revenue
Code of 1986, as amended (the "CODE").
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. At the Effective Time (as defined in Section 1.2)
and subject to and upon the terms and conditions of this Agreement and the
applicable provisions of Delaware Law, Merger Sub shall be merged with and into
Company (the "MERGER"), the separate corporate existence of Merger Sub shall
cease and Company shall continue as the surviving corporation. Company as the
surviving corporation after the Merger is hereinafter sometimes referred to as
the "SURVIVING CORPORATION."
1.2 EFFECTIVE TIME; CLOSING. Subject to the provisions of this
Agreement, the parties hereto shall cause the Merger to be consummated by filing
a Certificate of Merger with the Secretary of State of the State of Delaware in
accordance with the relevant provisions of Delaware Law (the "CERTIFICATE OF
MERGER") (the time of such filing (or such later time as may be agreed in
writing by Company and Parent and specified in the Certificate of Merger) being
the "EFFECTIVE TIME") as soon as practicable on or after the Closing Date (as
herein defined). Unless the context otherwise requires, the term "AGREEMENT" as
used herein refers collectively to this Agreement and Plan of Reorganization and
the Certificate of Merger. The closing of the Merger (the "CLOSING") shall take
place at the offices of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional
Corporation, at a time and date to be specified by the parties, which shall be
no later than the second business day after the satisfaction or waiver of the
conditions set forth in Article VI, or at such other time, date and location as
the parties hereto agree in writing (the "CLOSING DATE").
1.3 EFFECT OF THE MERGER. At the Effective Time, the effect of the
Merger shall be as provided in this Agreement and the applicable provisions of
Delaware Law including Section 259 of the Delaware Law. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time all the
property, rights, privileges, powers and franchises of Company and Merger Sub
shall vest in the Surviving Corporation, and all debts, liabilities and duties
of Company and Merger Sub shall become the debts, liabilities and duties of the
Surviving Corporation.
1.4 CERTIFICATE OF INCORPORATION; BYLAWS.
(a) At the Effective Time, the Certificate of
Incorporation of Merger Sub, as in effect immediately prior to the Effective
Time, shall be the Certificate of Incorporation of the Surviving Corporation
until thereafter amended as provided by law and such Certificate of
Incorporation of the Surviving Corporation; provided, however, that at the
Effective Time the Certificate of Incorporation of the Surviving Corporation
shall comply with Section 5.10(a) of the
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Agreement and shall be amended so that the name of the Surviving Corporation
shall be "Appnet, Inc."
(b) The Bylaws of Merger Sub, as in effect immediately
prior to the Effective Time, shall be, at the Effective Time, the Bylaws of the
Surviving Corporation until thereafter amended; provided, that the Bylaws of the
Surviving Corporation will comply with Section 5.10(a) of the Agreement.
1.5 DIRECTORS AND OFFICERS. The initial directors of the Surviving
Corporation shall be the directors of Merger Sub immediately prior to the
Effective Time, until their respective successors are duly elected or appointed
and qualified. The initial officers of the Surviving Corporation shall be the
officers of Company immediately prior to the Effective Time, until their
respective successors are duly appointed.
1.6 EFFECT ON CAPITAL STOCK. Subject to the terms and conditions
of this Agreement, at the Effective Time, by virtue of the Merger and without
any action on the part of Merger Sub, Company or the holders of any of the
following securities, the following shall occur:
(a) CONVERSION OF COMPANY COMMON STOCK. Each share of
Common Stock, $0.01 par value per share, of Company including, with respect to
each such share of Company Common Stock, (the "COMPANY COMMON STOCK") issued and
outstanding immediately prior to the Effective Time, other than any shares of
Company Common Stock to be canceled pursuant to Section 1.6(b), will be canceled
and extinguished and automatically converted (subject to Sections 1.6(e) and
(f)) into the right to receive 0.8 shares of Common Stock of Parent (the "PARENT
COMMON STOCK") (the "EXCHANGE RATIO") upon surrender of the certificate
representing such share of Company Common Stock in the manner provided in
Section 1.7 (or in the case of a lost, stolen or destroyed certificate, upon
delivery of an affidavit (and bond, if required) in the manner provided in
Section 1.9). If any shares of Company Common Stock outstanding immediately
prior to the Effective Time are unvested or are subject to a repurchase option,
risk of forfeiture or other condition under any applicable restricted stock
purchase agreement or other agreement with the Company, then the shares of
Parent Common Stock issued in exchange for such shares of Company Common Stock
will also be unvested and subject to the same repurchase option, risk of
forfeiture or other condition, and the certificates representing such shares of
Parent Common Stock may accordingly be marked with appropriate legends. The
Company shall take all action that may be necessary to ensure that, from and
after the Effective Time, Parent is entitled to exercise any such repurchase
option or other right set forth in any such restricted stock purchase agreement
or other agreement.
(b) CANCELLATION OF PARENT-OWNED STOCK. Each share of
Company Common Stock held by Company or owned by Merger Sub, Parent or any
direct or indirect wholly-owned subsidiary of Company or of Parent immediately
prior to the Effective Time shall be canceled and extinguished without any
conversion thereof.
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(c) STOCK OPTIONS; EMPLOYEE STOCK PURCHASE PLANS. At the
Effective Time, all options to purchase Company Common Stock then outstanding
under Company's Incentive Stock Plan (the "CENTURY PLAN"), Company's 1996
Incentive Stock Option Plan (the "1996 PLAN") Company's 1998 Stock Option and
Incentive Plan (the "1998 PLAN"), Company's 1999 Stock Incentive Plan (the "1999
PLAN") and the Company's Stock Purchase Plan (the "STOCK PURCHASE Plan") and,
together with the Century Plan, the 1996 Plan, the 1998 Plan and the Stock
Purchase Plan, the "COMPANY OPTION PLANS", including options under the Company
Option Plans issued after the date hereof in accordance with Section 4.1 of this
Agreement shall be assumed by Parent in accordance with Section 5.8 hereof.
(d) WARRANTS. At the Effective Time, all warrants to purchase
Common Stock then outstanding shall be assumed by Parent in accordance with
Section 5.8 hereof.
(e) CAPITAL STOCK OF MERGER SUB. Each share of Common
Stock, $0.01 par value per share, of Merger Sub (the "MERGER SUB COMMON STOCK")
issued and outstanding immediately prior to the Effective Time shall be
converted into one validly issued, fully paid and nonassessable share of Common
Stock, $0.01 par value per share, of the Surviving Corporation. Each certificate
evidencing ownership of shares of Merger Sub Common Stock shall evidence
ownership of such shares of capital stock of the Surviving Corporation.
(f) ADJUSTMENTS TO EXCHANGE RATIO. The Exchange Ratio
shall be adjusted to reflect appropriately the effect of any stock split,
reverse stock split, stock dividend (including any dividend or distribution of
securities convertible into Parent Common Stock or Company Common Stock),
extraordinary cash dividends, reorganization, recapitalization,
reclassification, combination, exchange of shares or other like change with
respect to Parent Common Stock or Company Common Stock occurring on or after the
date hereof and prior to the Effective Time. In addition, the Exchange Ratio
will be adjusted proportionately and appropriately in the event of any
inaccuracy of the representations and warranties made by the Company in Section
2.3 of the Agreement.
(g) FRACTIONAL SHARES. No fraction of a share of Parent
Common Stock will be issued by virtue of the Merger, but in lieu thereof each
holder of shares of Company Common Stock who would otherwise be entitled to a
fraction of a share of Parent Common Stock (after aggregating all fractional
shares of Parent Common Stock that otherwise would be received by such holder)
shall, upon surrender of such holder's Certificates(s) (as defined in Section
1.7(c)) receive from Parent an amount of cash (rounded to the nearest whole
cent), without interest, equal to the product of (i) such fraction, multiplied
by (ii) the average closing price of one share of Parent Common Stock for the
five (5) most recent days that Parent Common Stock has traded ending on the
trading day immediately prior to the Effective Time, as reported on the Nasdaq
National Market System ("NASDAQ").
1.7 SURRENDER OF CERTIFICATES.
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(a) EXCHANGE AGENT. Parent shall select a bank or trust
company reasonably acceptable to Company to act as the exchange agent (the
"EXCHANGE AGENT") in the Merger.
(b) PARENT TO PROVIDE COMMON STOCK. Promptly after the
Effective Time, Parent shall make available to the Exchange Agent, for exchange
in accordance with this Article I, the shares of Parent Common Stock issuable
pursuant to Section 1.6 in exchange for outstanding shares of Company Common
Stock, and cash in an amount sufficient for payment in lieu of fractional shares
pursuant to Section 1.6(f) and any dividends or distributions to which holders
of shares of Company Common Stock may be entitled pursuant to Section 1.7(d).
(c) EXCHANGE PROCEDURES. Promptly after the Effective
Time, Parent shall cause the Exchange Agent to mail to each holder of record (as
of the Effective Time) of a certificate or certificates (the "Certificates"),
which immediately prior to the Effective Time represented outstanding shares of
Company Common Stock whose shares were converted into the right to receive
shares of Parent Common Stock pursuant to Section 1.6, cash in lieu of any
fractional shares pursuant to Section 1.6(f) and any dividends or other
distributions pursuant to Section 1.7(d), (i) a letter of transmittal in
customary form (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall contain such other provisions as
Parent may reasonably specify) and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for certificates representing shares
of Parent Common Stock, cash in lieu of any fractional shares pursuant to
Section 1.6(f) and any dividends or other distributions pursuant to Section
1.7(d). Upon surrender of Certificates for cancellation to the Exchange Agent or
to such other agent or agents as may be appointed by Parent, together with such
letter of transmittal, duly completed and validly executed in accordance with
the instructions thereto, the holders of such Certificates shall be entitled to
receive in exchange therefor certificates representing the number of whole
shares of Parent Common Stock into which their shares of Company Common Stock
were converted at the Effective Time, payment in lieu of fractional shares which
such holders have the right to receive pursuant to Section 1.6(f) and any
dividends or distributions payable pursuant to Section 1.7(d), and the
Certificates so surrendered shall forthwith be canceled. Except as specified in
Section 1.7(e), no transfer or other taxes will be assessed against the holders
of Company Common Stock in connection with such exchange, except as required by
law. Until so surrendered, outstanding Certificates will be deemed from and
after the Effective Time, for all corporate purposes, subject to Section 1.7(d)
as to dividends and other distributions, to evidence only the ownership of the
number of full shares of Parent Common Stock into which such shares of Company
Common Stock shall have been so converted and the right to receive an amount in
cash in lieu of the issuance of any fractional shares in accordance with Section
1.6(f) and any dividends or distributions payable pursuant to Section 1.7(d).
(d) DISTRIBUTIONS With Respect to Unexchanged Shares. No
dividends or other distributions declared or made after the date of this
Agreement with respect to Parent Common Stock with a record date after the
Effective Time 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
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surrender of any such Certificates, the Exchange Agent shall deliver to the
record holders thereof, without interest, certificates representing whole shares
of Parent Common Stock issued in exchange therefor along with payment in lieu of
fractional shares pursuant to Section 1.6(f) hereof and the amount of any such
dividends or other distributions with a record date after the Effective Time
payable with respect to such whole shares of Parent Common Stock.
(e) TRANSFERS OF OWNERSHIP. If certificates representing
shares of Parent Common Stock are to be issued in a name other than that in
which the Certificates surrendered in exchange therefor are registered, it will
be a condition of the issuance thereof that the Certificates so surrendered will
be properly endorsed and otherwise in proper form for transfer and that the
persons requesting such exchange will have paid to Parent or any agent
designated by it any transfer or other taxes required by reason of the issuance
of certificates representing shares of Parent Common Stock in any name other
than that of the registered holder of the Certificates surrendered, or
established to the satisfaction of Parent or any agent designated by it that
such tax has been paid or is not payable.
(f) REQUIRED WITHHOLDING. Each of the Exchange Agent,
Parent and the Surviving Corporation shall be entitled to deduct and withhold
from any consideration payable or otherwise deliverable pursuant to this
Agreement to any holder or former holder of Company Common Stock such amounts as
may be required to be deducted or withheld therefrom under the Code or under any
provision of state, local or foreign tax law or under any other applicable legal
requirement, including, without limitation, any withholding related to Company
Stock Options or "parachute payments" within the meaning of Section 280G(b)(2).
To the extent such amounts are so deducted or withheld, such amounts shall be
treated for all purposes under this Agreement as having been paid to the person
to whom such amounts would otherwise have been paid.
(g) NO LIABILITY. Notwithstanding anything to the
contrary in this Section 1.7, neither the Exchange Agent, Parent, the Surviving
Corporation nor any party hereto shall be liable to a holder of shares of Parent
Common Stock or Company Common Stock for any amount properly paid to a public
official pursuant to any applicable abandoned property, escheat or similar law.
1.8 NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. All
shares of Parent Common Stock issued in accordance with the terms hereof
(including any cash paid in respect thereof pursuant to Section 1.6(f) and
1.7(d)) shall be deemed to have been issued in full satisfaction of all rights
pertaining to such shares of Company Common Stock, and there shall be no further
registration of transfers on the records of the Surviving Corporation of shares
of Company Common Stock which were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates are presented to the
Surviving Corporation for any reason, they shall be canceled and exchanged as
provided in this Article I.
1.9 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, certificates
representing the shares of Parent Common Stock into which the shares of Company
Common Stock
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represented by such Certificates were converted pursuant to Section 1.6, cash
for fractional shares, if any, as may be required pursuant to Section 1.6(f) and
any dividends or distributions payable pursuant to Section 1.7(d); provided,
however, that Parent may, in its discretion and as a condition precedent to the
issuance of such certificates representing shares of Parent Common Stock, cash
and other distributions, require the owner 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 Surviving
Corporation or the Exchange Agent with respect to the Certificates alleged to
have been lost, stolen or destroyed.
1.10 TAX AND ACCOUNTING CONSEQUENCES. The parties hereto intend
that the Merger constitute a reorganization within the meaning of Section 368 of
the Code. The parties hereto adopt this Agreement as a "plan of reorganization"
within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the United States
Income Tax Regulations. The parties hereto intend that the Merger be accounted
for as a "purchase" transaction.
1.11 TAKING OF NECESSARY ACTION; FURTHER ACTION. If, at any time
after the Effective Time, any further action is necessary or desirable to carry
out the purposes of this Agreement and to vest the Surviving Corporation with
full right, title and possession to all assets, property, rights, privileges,
powers and franchises of Company and Merger Sub, the officers and directors of
Company and Merger Sub will take all such lawful and necessary action.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF COMPANY
The Company represents and warrants to Parent and Merger Sub, subject
to such exceptions as are disclosed in writing in the disclosure letter supplied
by Company to Parent dated as of the date hereof (the "COMPANY SCHEDULE"), as
follows:
2.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) Each of Company and its subsidiaries is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has the requisite corporate power and
authority to own, lease and operate its assets and properties and to carry on
its business as it is now being conducted. Each of Company and its subsidiaries
is in possession of all franchises, grants, authorizations, licenses, permits,
easements, consents, certificates, approvals and orders ("APPROVALS") necessary
to own, lease and operate the properties it purports to own, operate or lease
and to carry on its business as it is now being conducted, except where the
failure to have such Approvals would not, individually or in the aggregate, have
a Material Adverse Effect on Company.
(b) Company has no subsidiaries except for the
corporations identified in Section 2.1(b) of the Company Schedule. Neither
Company nor any of its subsidiaries directly or indirectly owns any equity or
similar interest in or any interest convertible, exchangeable or
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exercisable for, any equity or similar interest in, any corporation,
partnership, joint venture or other business, association or entity.
(c) Company and each of its subsidiaries is qualified to
do business as a foreign corporation, and is in good standing, under the laws of
all jurisdictions where the nature of their business requires such qualification
and where the failure to so qualify would have a Material Adverse Effect (as
defined in Section 8.3) on the Company.
2.2 CERTIFICATE OF INCORPORATION AND BYLAWS. Company has
previously furnished to Parent a complete and correct copy of its Certificate of
Incorporation and Bylaws as amended to date (together, the "COMPANY CHARTER
DOCUMENTS"). Such Company Charter Documents and equivalent organizational
documents of each of its subsidiaries are in full force and effect. Company is
not in violation of any of the provisions of the Company Charter Documents, and
no subsidiary of Company is in violation of its equivalent organizational
documents.
2.3 CAPITALIZATION.
(a) The authorized capital stock of Company consists of
75,000,000 shares of Company Common Stock and 116,621 shares of Preferred
Stock ("COMPANY PREFERRED STOCK"), each having a par value of $0.0005 per
share. At the close of business on the date of this Agreement (i) 33,997,491
shares of Company Common Stock were issued and outstanding, all of which are
validly issued, fully paid and nonassessable; (ii) 170,644 shares of Company
Common Stock were held in treasury by Company or by subsidiaries of Company;
(iii) 43,061 shares of Company Common Stock were reserved for issuance upon
the exercise of outstanding options to purchase Company Common Stock under
the Century Plan; (iv) no shares of Company Common Stock were available for
future issuance under the Century Plan; (v) 3,980 shares of Company Common
Stock were reserved for issuance upon the exercise of outstanding options to
purchase Company Common Stock under the 1996 Plan; (vi) 5,660 shares of
Company Common Stock were available for future grant under the 1996 Plan;
(vii) 1,083,915 shares of Company Common Stock were reserved for issuance
upon the exercise of outstanding options to purchase Company Common Stock
under the 1998 Plan; (viii) 277,673 shares of Company Common Stock were
available for future grant under the 1998 Plan; (ix) 6,290,036 shares of
Company Common Stock were reserved for issuance upon the exercise of
outstanding options to purchase Company Common Stock under the 1999 Plan; (x)
3,666,256 shares of Company Common Stock were available for future grant
under the 1999 Plan; (xi) 250,000 shares of Company Common Stock were
reserved for issuance under the Purchase Plan; (xii) 70,175 shares of Company
Common Stock were reserved for future issuance upon conversion of warrants of
the Company (the "WARRANTS") and 121 shares of Preferred Stock were reserved
for future issuance upon conversion of warrants of the Company; (xiii)
342,249 shares of Company Common Stock were reserved for issuance pursuant to
contingent acquisition payouts; and (xiv) 6,765,000 shares of Company Common
Stock were reserved for future issuance pursuant to the Stock Option
Agreement. As of the date hereof, no shares of Company Preferred Stock were
issued or outstanding. Between June 15, 2000 and June 20, 2000, there were no
additional grants of options to purchase securities of the Company or other
instruments exercisable for capital stock of the Company and the Company did
not issue any shares of capital stock of the Company other than
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pursuant to the exercise of Company Stock Options outstanding as of June 15,
2000 and set forth in this Section 2.3(a). Section 2.3(a) of the Company
Schedule sets forth the following information with respect to each Company
Stock Option (as defined in Section 5.8) outstanding as of the date of this
Agreement: (i) the name and address of the optionee; (ii) the particular plan
pursuant to which such Company Stock Option was granted; (iii) the number of
shares of Company Common Stock subject to such Company Stock Option; (iv) the
exercise price of such Company Stock Option; (v) the date on which such
Company Stock Option was granted; (vi) the applicable vesting schedule; (vii)
the date on which such Company Stock Option expires; and (viii) whether the
exercisability of such option will be accelerated in any way by the
transactions contemplated by this Agreement or by the termination or
cessation of the employment of such optionee, and indicates the extent of
acceleration. Company has made available to Parent accurate and complete
copies of all stock option plans pursuant to which the Company has granted
such Company Stock Options that are currently outstanding and the form of all
stock option agreements evidencing such Company Stock Options. All shares of
Company Common Stock subject to issuance as aforesaid, upon issuance on the
terms and conditions specified in the instrument pursuant to which they are
issuable, would be duly authorized, validly issued, fully paid and
nonassessable. Except as set forth in Section 2.3(a) of the Company Schedule,
there are no commitments or agreements of any character to which the Company
is bound obligating the Company to accelerate the vesting of any Company
Stock Option as a result of the Merger. All outstanding shares of Company
Common Stock, all outstanding Company Stock Options, and all outstanding
shares of capital stock of each subsidiary of the Company have been issued
and granted in compliance with (i) all applicable material securities laws
and other applicable material Legal Requirements (as defined below) and (ii)
all material requirements set forth in applicable Contracts. For the purposes
of this Agreement, "LEGAL REQUIREMENTS" means (i) any federal, state, local,
municipal, foreign or other law, statute, constitution, principle of common
law, resolution, ordinance, code, edict, decree, rule, regulation, ruling or
requirement issues, enacted, adopted, promulgated, implemented or otherwise
put into effect by or under the authority of any Governmental Entity (as
defined below) and (ii) all requirements set forth in applicable contracts,
agreements, and instruments.
(b) Except as set forth in Section 2.3(b) of the Company
Schedule or as set forth in Section 2.3(a) hereof and except for the Stock
Option Agreement, there are no subscriptions, options, warrants, equity
securities, partnership interests or similar ownership interests, calls, rights
(including preemptive rights), commitments or agreements of any character to
which Company or any of its subsidiaries is a party or by which it is bound
obligating Company or any of its subsidiaries to issue, deliver or sell, or
cause to be issued, delivered or sold, or repurchase, redeem or otherwise
acquire, or cause the repurchase, redemption or acquisition of, any shares of
capital stock, partnership interests or similar ownership interests of the
Company or any of its subsidiaries or obligating the Company or any of its
subsidiaries to grant, extend, accelerate the vesting of or enter into any such
subscription, option, warrant, equity security, call, right, commitment or
agreement. As of the date of this Agreement, except as set forth in Section
2.7(b) of the Company Schedule and except as contemplated by this Agreement,
there are no registration rights and there is, except for the Company Voting
Agreements, no voting trust, proxy, rights plan, antitakeover plan or other
-9-
agreement or understanding to which the Company or any of its subsidiaries is a
party or by which they are bound with respect to any equity security of any
class of the Company or with respect to any equity security, partnership
interest or similar ownership interest of any class of any of its subsidiaries.
Stockholders of the Company will not be entitled to dissenters' rights under
Delaware Law in connection with the Merger.
2.4 AUTHORITY RELATIVE TO THIS AGREEMENT. Company has all
necessary corporate power and authority to execute and deliver this Agreement
and the Stock Option Agreement and to perform its obligations hereunder and
thereunder and, subject to obtaining the approval of the stockholders of Company
of the Merger, to consummate the transactions contemplated hereby and thereby.
The execution and delivery of this Agreement and the Stock Option Agreement by
Company and the consummation by Company of the transactions contemplated hereby
and thereby have been duly and validly authorized by all necessary corporate
action on the part of Company and no other corporate proceedings on the part of
Company are necessary to authorize this Agreement, the Stock Option Agreement or
to consummate the transactions so contemplated (other than the approval and
adoption of this Agreement and the Merger by holders of a majority of the
outstanding shares of Company Common Stock in accordance with Delaware Law and
the Company Charter Documents). This Agreement and the Stock Option Agreement
have been duly and validly executed and delivered by Company and, assuming the
due authorization, execution and delivery by Parent and Merger Sub, constitute
legal and binding obligations of Company, enforceable against Company in
accordance with their respective terms.
2.5 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement and the
Stock Option Agreement by Company do not, and the performance of this Agreement
and the Stock Option Agreement by Company shall not, (i) conflict with or
violate the Company Charter Documents or the equivalent organizational documents
of any of Company's subsidiaries, (ii) subject to obtaining the approval of
Company's stockholders of this Agreement and the Merger and compliance with the
requirements set forth in Section 2.5(c) below, conflict with or violate any
law, rule, regulation, order, judgment or decree applicable to Company or any of
its subsidiaries or by which its or any of their respective properties is bound
or affected, or (iii) result in any breach of or constitute a default (or an
event that with notice or lapse of time or both would become a default) under,
or materially impair Company's or any of its subsidiaries' rights or alter the
rights or obligations of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the properties or assets of Company
or any of its subsidiaries pursuant to, any material Contract to which Company
or any of its subsidiaries is a party or by which Company or any of its
subsidiaries or its or any of their respective properties are bound or affected
except (A) as set forth in Section 2.5(a) of the Company Schedule or (B) in the
case of clause (ii) or (iii) above, for any such conflicts, breaches,
violations, defaults or other occurrences that could not individually or in the
aggregate, have a Material Adverse Effect on the Company.
-10-
(b) Section 2.5(b) of the Company Schedule lists all
material consents, waivers and approvals under any of the Company's or any of
its subsidiaries' agreements, contracts, licenses or leases required to be
obtained in connection with the consummation of the transactions contemplated
hereby, which, if individually or in the aggregate were not obtained, would
result in a material loss of benefits to the Company, Parent or the Surviving
Corporation as a result of the Merger.
(c) The execution and delivery of this Agreement and the
Stock Option Agreement by Company do not, and the performance of this Agreement
by Company shall not, require any consent, approval, authorization or permit of,
or filing with or notification to, any court, administrative agency, commission,
governmental or regulatory authority, domestic or foreign (a "GOVERNMENTAL
ENTITY"), except (A) for applicable requirements, if any, of the Securities Act
of 1933, as amended (the "SECURITIES ACT"), the Securities Exchange Act of 1934,
as amended (the "EXCHANGE ACT"), state securities laws ("BLUE SKY LAWS"), the
pre-merger notification requirements (the "HSR APPROVAL") of the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR ACT")
and of foreign Governmental Entities and the rules and regulations thereunder,
the rules and regulations of Nasdaq, and the filing and recordation of the
Certificate of Merger as required by Delaware Law and (B) where the failure to
obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, could not, individually or in the aggregate, have a
Material Adverse Effect on Company or, after the Effective Time, Parent, or
prevent consummation of the Merger or otherwise prevent the parties hereto from
performing their obligations under this Agreement.
2.6 COMPLIANCE; PERMITS.
(a) Neither Company nor any of its subsidiaries is in
conflict with, or in default or violation of, (i) any law, rule, regulation,
order, judgment or decree applicable to Company or any of its subsidiaries or by
which its or any of their respective properties is bound or affected, or (ii)
any material Contract to which Company or any of its subsidiaries is a party or
by which Company or any of its subsidiaries or its or any of their respective
properties is bound or affected, except for any conflicts, defaults or
violations that (individually or in the aggregate) would not have a Material
Adverse Effect on the Company. No investigation or review by any governmental or
regulatory body or authority is pending or, to the knowledge of Company,
threatened against Company or its subsidiaries, nor has any governmental or
regulatory body or authority indicated to the Company an intention to conduct
the same, other than, in each such case, those the outcome of which could not,
individually or in the aggregate, reasonably be expected to have the effect of
prohibiting or materially impairing any business practice of the Company or have
a Material Adverse Effect on the Company.
(b) Company and its subsidiaries hold all permits,
licenses, variances, exemptions, orders and approvals from governmental
authorities which are material to operation of the business of Company and its
subsidiaries taken as a whole (collectively, the "COMPANY PERMITS"). Company and
its subsidiaries are in compliance in all material respects with the terms of
the
-11-
Company Permits except, in each case, where the failure, individually or in the
aggregate, would not have a Material Adverse Effect on the Company.
2.7 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Company has filed all the forms, reports and
documents required to be filed by Company with the SEC since June 30, 1999 (the
"COMPANY SEC REPORTS"). The Company SEC Reports (i) were prepared in accordance
with the requirements of the Securities Act or the Exchange Act, as the case may
be, and (ii) did not at the time they were filed (and if amended or superseded
by a filing prior to the date of this Agreement then on the date of such filing)
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. None of Company's subsidiaries is required to file any reports or
other documents with the SEC.
(b) Each set of consolidated financial statements
(including, in each case, any related notes thereto) contained in the Company
SEC Reports was prepared in accordance with generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto or, in the case of
unaudited statements, do not contain footnotes as permitted by Form 10-Q of the
Exchange Act) and each fairly presents the consolidated financial position of
Company and its subsidiaries at the respective dates thereof and the
consolidated results of its operations and cash flows for the periods indicated,
except that the unaudited interim financial statements were or are subject to
normal and recurring adjustments which were not or are not expected to be
material to the Company.
(c) Company has previously furnished to Parent a complete
and correct copy of any amendments or modifications, which have not yet been
filed with the SEC but which are required to be filed, to agreements, documents
or other instruments which previously had been filed by Company with the SEC
pursuant to the Securities Act or the Exchange Act.
2.8 NO UNDISCLOSED LIABILITIES. Neither Company nor any of its
subsidiaries has any liabilities (absolute, accrued, contingent or otherwise) of
a nature required to be disclosed on a balance sheet or in the related notes to
the consolidated financial statements prepared in accordance with GAAP which
are, individually or in the aggregate, material to the business, results of
operations or financial condition of Company and its subsidiaries taken as a
whole, except (i) liabilities provided for in Company's balance sheet as of
Xxxxx 00, 0000, (xx) liabilities disclosed in Section 2.8 of the Company
Schedule or (iii) liabilities incurred since March 31, 2000 in the ordinary
course of business, none of which is material to the business, results of
operations or financial condition of Company and its subsidiaries, taken as a
whole.
2.9 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in
Section 2.9 of the Company Schedule, since March 31, 2000, there has not been:
(i) any Material Adverse Effect on Company, (ii) any declaration, setting aside
or payment of any dividend on, or other distribution
-12-
(whether in cash, stock or property) in respect of, any of Company's or any of
its subsidiaries' capital stock, or any purchase, redemption or other
acquisition by Company of any of Company's capital stock or any other securities
of Company or its subsidiaries or any options, warrants, calls or rights to
acquire any such shares or other securities except for repurchases from
employees following their termination pursuant to the terms of their
pre-existing stock option or purchase agreements, (iii) any split, combination
or reclassification of any of Company's or any of its subsidiaries' capital
stock, (iv) any granting by Company or any of its subsidiaries of any increase
in compensation or fringe benefits, except for normal increases of cash
compensation in the ordinary course of business consistent with past practice
(other than to officers or directors of the Company), or any payment by Company
or any of its subsidiaries of any bonus, except for bonuses made in the ordinary
course of business consistent with past practice (other than to officers or
directors of the Company), or any granting by Company or any of its subsidiaries
of any increase in severance or termination pay or any entry by Company or any
of its subsidiaries into any currently effective employment, severance,
termination or indemnification agreement or any agreement the benefits of which
are contingent or the terms of which are materially altered upon the occurrence
of a transaction involving Company of the nature contemplated hereby, (v) entry
by Company or any of its subsidiaries into any licensing or other agreement with
regard to the disposition of any Intellectual Property (as defined in Section
2.19), other than licenses or transactions (including entering into Master
Service Agreements) in the ordinary course of business consistent with past
practice or any amendment or consent with respect to any licensing agreement
filed or required to be filed by Company with the SEC, (vi) any material change
by Company in its accounting methods, principles or practices, except as
required by concurrent changes in GAAP, or (vii) any revaluation by Company of
any of its assets, including, without limitation, writing down the value of
capitalized inventory or writing off notes or accounts receivable or any sale of
assets of the Company other than in the ordinary course of business.
2.10 ABSENCE OF LITIGATION. Except as described in Section 2.10 of
the Company Schedule or in the Company's SEC Reports, there are no claims,
actions, suits or proceedings pending or, to the knowledge of Company,
threatened (or, to the knowledge of Company, any governmental or regulatory
investigation pending or threatened) against Company or any of its subsidiaries
or any properties or rights of Company or any of its subsidiaries, before any
court, arbitrator or administrative, governmental or regulatory authority or
body, domestic or foreign, which, if adversely determined, could reasonably be
expected to have a Material Adverse Effect on the Company.
2.11 EMPLOYEE MATTERS AND BENEFIT PLANS
(a) DEFINITIONS. With the exception of the definition
of "Affiliate" set forth in Section 2.11(a)(i) below (which definition shall
apply only to this Section 2.11), for purposes of this Agreement, the following
terms shall have the meanings set forth below:
-13-
(i) "Affiliate" shall mean any other person or entity
under common control with the Company within the meaning of Section 414(b) or
(c) of the Code and the regulations issued thereunder;
(ii) COBRA" shall mean the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended;
(iii) "Code" shall mean the Internal Revenue Code of
1986, as amended;
(iv) "Company Employee Plan" shall mean any plan,
program, policy, practice, contract, agreement or other arrangement providing
for compensation, severance, termination pay, deferred compensation, performance
awards, stock or stock-related awards, fringe benefits or other employee
benefits or remuneration of any kind, whether written or unwritten or otherwise,
funded or unfunded, including without limitation, each "employee benefit plan,"
within the meaning of Section 3(3) of ERISA which is or has been maintained,
contributed to, or required to be contributed to, by the Company or any
Affiliate for the benefit of any Employee, or with respect to which the Company
or any Affiliate has or may have any liability or obligation;
(v) "DOL" shall mean the Department of Labor;
(vi) "Employee" shall mean any current or former or
retired employee, consultant, independent contractor or director of the Company
or any Affiliate;
(vii) "Employment Agreement" shall mean each
management, employment, severance, consulting, relocation, repatriation,
expatriation, visas, work permit or other agreement, contract or understanding
between the Company or any Affiliate and any Employee;
(viii) "ERISA" shall mean the Employee Retirement
Income Security Act of 1974, as amended;
(ix) "FMLA" shall mean the Family Medical Leave Act
of 1993, as amended;
(x) "International Employee Plan" shall mean each
Company Employee Plan that has been adopted or maintained by the Company or any
Affiliate, whether informally or formally, or with respect to which the Company
or any Affiliate will or may have any liability, for the benefit of Employees
who perform services outside the United States;
(xi) "IRS" shall mean the Internal Revenue
Service;
(xii) "Multiemployer Plan" shall mean any "Pension
Plan" (as defined below) which is a "multiemployer plan," as defined in Section
3(37) of ERISA;
-14-
(xiii) "Pension Plan" shall mean each Company
Employee Plan which is an "employee pension benefit plan," within the meaning of
Section 3(2) of ERISA.
(b) SCHEDULE. Section 2.11(b) of the Company Schedule
contains an accurate and complete list of each Company Employee Plan and
International Employee Plan as well as each Employment Agreement (i) which
provides for severance payments and annual cash compensation in excess of
$100,000 or (ii) which does not provide that the employment of a person is
"at-will"; provided, that in the case of employment agreements which are not
"at will" Section 2.11(b) need only list those agreements which, if
terminated by the Company would collectively require the Company to make more
than $100,000 in aggregate payments through the term of such Employment
Agreements. The Company does not have any plan or commitment to establish any
new Company Employee Plan, International Employee Plan, or Employment
Agreement, to modify any Company Employee Plan or Employment Agreement
(except to the extent required by law or to conform any such Company Employee
Plan or Employment Agreement to the requirements of any applicable law, in
each case as previously disclosed to Parent in writing, or as required by
this Agreement), or to adopt or enter into any Company Employee Plan,
International Employee Plan, or Employment Agreement.
(c) DOCUMENTS. With respect to each Company Plan, the Company
has heretofore delivered or made available to Parent true and complete copies of
each Company Plan and any amendments thereto (or if a Company Plan is not a
written Company Plan, a description thereof), any related trust or other funding
vehicle, any reports or summaries required under ERISA or the Code and the most
recent determination letter received from the Internal Revenue Service with
respect to each Company Plan intended to qualify under Section 401 of the Code.
(d) EMPLOYEE PLAN COMPLIANCE. Except as set forth on
Schedule 2.11(d) of the Company Schedule and except in each case where the
failure individually or in the aggregate would not have a Material Adverse
Effect on the Company, (i) the Company has performed in all material respects
all obligations required to be performed by it under, is not in default or
violation of, and has no knowledge of any default or violation by any other
party to each Company Employee Plan, and each Company Employee Plan has been
established and maintained in all material respects in accordance with its terms
and in compliance with all applicable laws, statutes, orders, rules and
regulations, including but not limited to ERISA or the Code; (ii) each Company
Employee Plan intended to qualify under Section 401(a) of the Code and each
trust intended to qualify under Section 501(a) of the Code has either received a
favorable determination, opinion, notification or advisory letter from the IRS
with respect to each such Company Employee Plan as to its qualified status under
the Code, including all amendments to the Code effected by the Tax Reform Act of
1986 and subsequent legislation, or has remaining a period of time under
applicable Treasury regulations or IRS pronouncements in which to apply for such
a letter and make any amendments necessary to obtain a favorable determination
as to the qualified status of each such Company Employee Plan; (iii) no
"prohibited transaction," within the meaning of Section 4975 of the Code or
Sections 406 and 407 of ERISA, and not otherwise exempt under Section 4975 of
the Code or Section 408 of ERISA (or any administrative class exemption issued
thereunder), has occurred with respect to any
-15-
Company Employee Plan; (iv) there are no actions, suits or claims pending, or,
to the knowledge of the Company, threatened or reasonably anticipated (other
than routine claims for benefits) against any Company Employee Plan or against
the assets of any Company Employee Plan; (v) each Company Employee Plan (other
than any stock option plan) can be amended, terminated or otherwise discontinued
after the Effective Time, without material liability to the Parent, Company or
any of its Affiliates (other than ordinary administration expenses); (vi) there
are no audits, inquiries or proceedings pending or, to the knowledge of the
Company or any Affiliates, threatened by the IRS or DOL with respect to any
Company Employee Plan; and (vii) neither the Company nor any Affiliate is
subject to any penalty or tax with respect to any Company Employee Plan under
Section 502(i) of ERISA or Sections 4975 through 4980 of the Code.
(e) PENSION PLAN. Neither the Company nor any Affiliate
has ever maintained, established, sponsored, participated in, or contributed to,
any Pension Plan which is subject to Title IV of ERISA or Section 412 of the
Code.
(f) COLLECTIVELY BARGAINED, MULTIEMPLOYER AND MULTIPLE
EMPLOYER PLANS. At no time has the Company or any Affiliate contributed to or
been obligated to contribute to any Multiemployer Plan. Neither the Company, nor
any Affiliate has at any time ever maintained, established, sponsored,
participated in, or contributed to any multiple employer plan, or to any plan
described in Section 413 of the Code.
(g) NO POST-EMPLOYMENT OBLIGATIONS. Except as set forth
in Schedule 2.11(g) or as is required by law, no Company Employee Plan provides,
or reflects or represents any liability, and the Company has no liability to
provide retiree health to any person for any reason, except as may be required
by COBRA or other applicable statute.
(h) HEALTH CARE COMPLIANCE. Neither the Company nor any
Affiliate has, prior to the Effective Time violated any of the health care
continuation requirements of COBRA, the requirements of FMLA, the requirements
of the Health Insurance Portability and Accountability Act of 1996, the
requirements of the Women's Health and Cancer Rights Act of 1998, the
requirements of the Newborns' and Mothers' Health Protection Act of 1996, or any
amendment to each such act, or any similar provisions of state law applicable to
its Employees, except where the violation, individually or in the aggregate,
would not have a Material Adverse Effect on the Company.
(i) EFFECT OF TRANSACTION.
(i) Except as set forth on Schedule 2.11(i), the
execution of this Agreement and the consummation of the transactions
contemplated hereby will not constitute an event under any Company Employee
Plan, Employment Agreement, trust or loan that will or may result in any payment
(whether of severance pay or otherwise), acceleration, forgiveness of
indebtedness, vesting, distribution, increase in benefits or obligation to fund
benefits with respect to any Employee.
-16-
(ii) Except as set forth on Schedule 2.11(i), no
payment or benefit which will or may be made by the Company or its Affiliates
with respect to any Employee will be characterized as a "parachute payment,"
within the meaning of Section 280G(b)(2) of the Code or will or may be made in
connection with a "gross up" provision related to such "parachute payments".
(j) EMPLOYMENT MATTERS. Except as set forth in Section
2.11(j) of the Disclosure Schedule and except as would not to have a Material
Adverse Effect on the Company, the Company: (i) is in compliance in all respects
with all applicable foreign, federal, state and local laws, rules and
regulations respecting employment, employment practices, terms and conditions of
employment and wages and hours, in each case, with respect to Employees; (ii)
has withheld and reported all amounts required by law or by agreement to be
withheld and reported with respect to wages, salaries and other payments to
Employees; (iii) is not liable for any arrears of wages or any taxes or any
penalty for failure to comply with any of the foregoing; and (iv) is not liable
for any payment to any trust or other fund governed by or maintained by or on
behalf of any governmental authority, with respect to unemployment compensation
benefits, social security or other benefits or obligations for Employees (other
than routine payments to be made in the normal course of business and consistent
with past practice). There are no pending or, to the knowledge of the Company,
threatened or reasonably anticipated claims or actions against the Company under
any worker's compensation policy or long-term disability policy.
(k) LABOR. No work stoppage or labor strike against the
Company is pending or, to the knowledge of the Company, threatened or reasonably
anticipated. The Company does not know of any activities or proceedings of any
labor union to organize any Employees. Except as set forth in Schedule 2.11(k),
there are no actions, suits, claims, labor disputes or grievances pending, or,
to the knowledge of the Company, threatened or reasonably anticipated relating
to any labor, safety or discrimination matters involving any Employee,
including, without limitation, charges of unfair labor practices or
discrimination complaints, which, if adversely determined, would, individually
or in the aggregate, have a Material Adverse Effect on the Company. Neither the
Company nor any of its subsidiaries has engaged in any unfair labor practices
within the meaning of the National Labor Relations Act. Except as set forth in
Schedule 2.11(k), the Company is not presently, nor has it been in the past, a
party to, or bound by, any collective bargaining agreement or union contract
with respect to Employees and no collective bargaining agreement is being
negotiated by the Company.
(l) INTERNATIONAL EMPLOYEE PLAN. The Company does not
now, nor has it ever had the obligation to, maintain, establish, sponsor,
participate in, or contribute to any International Employee Plan.
2.12 [RESERVED].
2.13 REGISTRATION STATEMENT; PROXY STATEMENT. None of the
information supplied or to be supplied by Company for inclusion or incorporation
by reference in the registration statement on Form S-4 to be filed with the SEC
by Parent in connection with the issuance of the Parent Common
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Stock in or as a result of the Merger (the "S-4") will, at the time the S-4
becomes effective under the Securities Act, 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. None of the information
supplied or to be supplied by the Company for inclusion or incorporation by
reference in the proxy statement/prospectus to be filed with the SEC by Company
pursuant to Section 5.1(a) hereof (the "PROXY STATEMENT/PROSPECTUS") will, at
the dates mailed to the stockholders of Company, at the times of the
stockholders meeting of Company (the "COMPANY STOCKHOLDERS' MEETING") in
connection with the transactions contemplated hereby and as of the Effective
Time, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading. The Proxy Statement/Prospectus will comply as to form in all
material respects with the provisions of the Exchange Act and the rules and
regulations promulgated by the SEC thereunder. Notwithstanding the foregoing,
the Company makes no representation or warranty with respect to any information
supplied or filings made by Parent or Merger Sub which is contained in any of
the foregoing documents.
2.14 RESTRICTIONS ON BUSINESS ACTIVITIES. Except as set forth in
Section 2.14 of the Company Schedule, there is no agreement, commitment,
judgment, injunction, order or decree binding upon Company or its subsidiaries
or to which the Company or any of its subsidiaries is a party which has or could
reasonably be expected to have the effect of prohibiting or impairing in any
material respect any business practice of Company or any of its subsidiaries,
any acquisition of property by Company or any of its subsidiaries or the conduct
of business by Company or any of its subsidiaries as currently conducted.
2.15 TITLE TO PROPERTY. Neither Company nor any of its subsidiaries
owns any real property. Schedule 2.15 sets forth a list of all real property
currently leased by the Company, the name of the lessor, the date of the lease
and each amendment thereto and the aggregate annual rental and/or other fees
payable under any such lease.
2.16 TAXES.
(a) DEFINITION OF TAXES. For the purposes of this
Agreement, "TAX" or "TAXES" refers to any and all federal, state, local and
foreign taxes, assessments and other governmental charges, duties, impositions
and liabilities relating to taxes, including taxes based upon or measured by
gross receipts, income, profits, sales, use and occupation, and value added, ad
valorem, transfer, franchise, withholding, payroll, recapture, employment,
excise and property taxes, together with all interest, penalties and additions
imposed with respect to such amounts and any obligations under any agreements or
arrangements with any other person with respect to such amounts and including
any liability for taxes of a predecessor or transferor entity.
(b) TAX RETURNS AND AUDITS.
-18-
(i) The Company and each of its subsidiaries have
timely filed all federal, state, local and foreign returns, estimates,
information statements and reports ("RETURNS") relating to Taxes required to be
filed by the Company and each of its subsidiaries with any Tax authority, except
such Returns which are not, individually or in the aggregate, material to the
Company and such returns are true and correct in all material respects and have
been completed in accordance with applicable law. The Company and each of its
subsidiaries have paid all Taxes shown to be due on such Returns.
(ii) The Company and each of its subsidiaries as of
the Effective Time will have withheld with respect to its employees or other
third parties all federal and state income Taxes, Taxes pursuant to the Federal
Insurance Contribution Act, Taxes pursuant to the Federal Unemployment Tax Act
and other Taxes required to be withheld, except such Taxes which are not,
individually or in the aggregate, material to the Company.
(iii) Neither the Company nor any of its subsidiaries
has been delinquent in the payment of any material Tax nor is there any material
Tax deficiency outstanding, proposed or assessed against the Company or any of
its subsidiaries, nor has the Company or any of its subsidiaries executed any
unexpired waiver of any statute of limitations on or extending the period for
the assessment or collection of any Tax.
(iv) Except as stated in Section 2.16 of the Company
Schedule, no audit or other examination of any Return of the Company or any of
its subsidiaries by any Tax authority is presently in progress, nor has the
Company or any of its subsidiaries been notified of any request for such an
audit or other examination.
(v) No adjustment relating to any Returns filed by
the Company or any of its subsidiaries has been proposed, formally or
informally, by any Tax authority to the Company or any of its subsidiaries or
any representative thereof.
(vi) Neither the Company nor any of its subsidiaries
has any liability for any material unpaid Taxes which has not been accrued for
or reserved on the Company balance sheet dated March 31, 2000 in accordance with
GAAP, whether asserted or unasserted, contingent or otherwise, other than any
liability for unpaid Taxes that may have accrued since March 31, 2000 in
connection with the operation of the business of the Company and its
subsidiaries in the ordinary course.
(vii) Neither the Company nor any of its subsidiaries
is liable for any material Taxes of any other person under Treasury Regulation
1.1502-6 (or any similar provision of state, local or foreign law) other than a
member of the "affiliated group" (as defined in Section 1504(a) of the Code) of
which the Company is the common parent (the "Company Group"). Neither the
Company nor any of its subsidiaries is party to or has any obligation under any
tax-sharing, tax indemnity or tax allocation agreement or arrangement, including
any partnership
-19-
agreement or other arrangement that could be treated as a partnership for a Tax
purpose other than with a member of the Company Group.
(viii) Neither the Company nor any of its
subsidiaries has distributed the stock of any corporation in a transaction
satisfying the requirements of Section 355 of the Code. The stock of neither the
Company nor any of its subsidiaries has been distributed in a transaction
satisfying the requirements of Section 355 of the Code.
(ix) The Company is not and has never been a United
States real property holding corporation (as defined in Section 897(c)(2) of the
Code.
2.17 ENVIRONMENTAL MATTERS.
(a) HAZARDOUS MATERIAL. Except as would not reasonably be
expected to have a Material Adverse Effect on the Company or any of its
subsidiaries, no underground storage tanks and no amount of any substance that
has been designated by any Governmental Entity or by applicable federal, state
or local law to be radioactive, toxic, hazardous or otherwise a danger to health
or the environment, including, without limitation, PCBs, asbestos, petroleum,
urea-formaldehyde and all substances listed as hazardous substances pursuant to
the Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended, or defined as a hazardous waste pursuant to the United States
Resource Conservation and Recovery Act of 1976, as amended, and the regulations
promulgated pursuant to said laws, but excluding office and janitorial supplies,
(a "HAZARDOUS MATERIAL") are present, as a result of the actions of the Company
or any of its subsidiaries or any affiliate of the Company, or, to the Company's
knowledge, as a result of any actions of any third party or otherwise, in, on or
under any property, including the land and the improvements, ground water and
surface water thereof, that the Company or any of its subsidiaries has at any
time owned, operated, occupied or leased.
(b) HAZARDOUS MATERIALS ACTIVITIES. Except as would not
reasonably be expected to have a Material Adverse Effect on the Company (in any
individual case or in the aggregate) (i) neither the Company nor any of its
subsidiaries has transported, stored, used, manufactured, disposed of, released
or exposed its employees or others to Hazardous Materials in violation of any
law in effect on or before the Closing Date, and (ii) neither the Company nor
any of its subsidiaries has disposed of, transported, sold, used, released,
exposed its employees or others to or manufactured any product containing a
Hazardous Material (collectively "HAZARDOUS MATERIALS Activities") in violation
of any rule, regulation, treaty or statute promulgated by any Governmental
Entity in effect prior to or as of the date hereof to prohibit, regulate or
control Hazardous Materials or any Hazardous Material Activity.
(c) PERMITS. The Company and its subsidiaries currently
hold all environmental approvals, permits, licenses, clearances and consents
(the "COMPANY ENVIRONMENTAL PERMITS") necessary for the conduct of the Company's
and its subsidiaries' Hazardous Material Activities and other businesses of the
Company and its subsidiaries as such activities and businesses
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are currently being conducted except where the failure to hold such approvals,
permits, clearances or consents would not reasonably be expected to have a
Material Adverse Effect on the Company.
(d) ENVIRONMENTAL LIABILITIES. Except as set forth in
Section 2.17 of the Company Schedule, no action, proceeding, revocation
proceeding, amendment procedure, writ or injunction is pending, and to the
Company's knowledge, no action, proceeding, revocation proceeding, amendment
procedure, writ or injunction has been threatened by any Governmental Entity
against the Company or any of its subsidiaries in a writing delivered to the
Company or any of its subsidiaries concerning any Company Environmental Permit,
Hazardous Material or any Hazardous Materials Activity of the Company or any of
its subsidiaries.
2.18 BROKERS. Except for the fees payable to Lazard Freres & Co.
LLC pursuant to an engagement letter, a copy of which has been provided to
Parent, Company has not incurred, nor will it incur, directly or indirectly, any
liability for brokerage or finders fees or agent's commissions or any similar
charges in connection with this Agreement or any transaction contemplated
hereby.
2.19 INTELLECTUAL PROPERTY. For the purposes of this Agreement, the
following terms have the following definitions:
"INTELLECTUAL PROPERTY" shall mean any or all of the following and all
worldwide common law and statutory rights in, arising out of, or
associated therewith: (i) patents and applications therefor and all
reissues, divisions, renewals, extensions, provisionals, continuations
and continuations-in-part thereof ("PATENTS"); (ii) inventions (whether
patentable or not), invention disclosures, improvements, trade secrets,
proprietary information, know how, technology, technical data and
customer lists, and all documentation relating to any of the foregoing;
(iii) copyrights, copyrights registrations and applications therefor,
and all other rights corresponding thereto throughout the world; (iv)
domain names, uniform resource locators ("URLS") and other names and
locators associated with the Internet ("DOMAIN NAMES"); (v) industrial
designs and any registrations and applications therefor; (vi) trade
names, logos, common law trademarks and service marks, trademark and
service xxxx registrations and applications therefor; (vii) all
databases and data collections and all rights therein; (viii) all moral
and economic rights of authors and inventors, however denominated, and
(ix) any similar or equivalent rights to any of the foregoing (as
applicable).
"COMPANY INTELLECTUAL PROPERTY" shall mean any Intellectual Property
that is owned by, or exclusively licensed to, Company and it
subsidiaries.
"REGISTERED INTELLECTUAL PROPERTY" means all Intellectual Property that
is the subject of an application, certificate, filing, registration or
other document issued, filed with, or recorded by any private, state,
government or other legal authority.
"COMPANY REGISTERED INTELLECTUAL PROPERTY" means all of the Registered
Intellectual Property owned by, or filed in the name of, the Company or
any of its subsidiaries.
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(a) Section 2.19(a) of the Company Schedule is a complete
and accurate list of all Company Registered Intellectual Property and specifies,
where applicable, the jurisdictions in which each such item of Company
Registered Intellectual Property has been issued or registered and lists any
proceedings or actions before any court or tribunal (including the United States
Patent and Trademark Office (the "PTO") or equivalent authority anywhere in the
world) related to any of the Company Registered Intellectual Property.
(b) [RESERVED]
(c) No Company Intellectual Property or Company Product
is subject to any proceeding or outstanding decree, order, judgment, contract,
license, agreement, or stipulation restricting in any manner the use, transfer,
or licensing thereof by Company or any of its subsidiaries, or which may affect
the validity, use or enforceability of such Company Intellectual Property or
Company Product.
(d) Each material item of Company Registered Intellectual
Property is valid and subsisting, all necessary registration, maintenance and
renewal fees currently due in connection with such Company Registered
Intellectual Property have been made and all necessary documents, recordations
and certificates in connection with such Company Registered Intellectual
Property have been filed with the relevant patent, copyright, trademark or other
authorities in the United States or foreign jurisdictions, as the case may be,
for the purposes of maintaining such Company Registered Intellectual Property.
(e) Section 2.19(e) of the Company Schedule is a complete
and accurate list of all material actions that are required to be taken by the
Company within one hundred eighty (180) days of the date hereof with respect to
any of the foregoing Company Registered Intellectual Property, except, in each
case, where the failure to take such actions, individually or in the aggregate,
would not have a Material Adverse Effect on the Company.
(f) Company owns and has good and exclusive title to each
material item of Company Intellectual Property purported to be owned by it free
and clear of any lien or encumbrance (excluding non-exclusive licenses and
related restrictions granted in the ordinary course). Without limiting the
foregoing: (i) except as specified in Section 2.19(f) of the Company Schedule,
Company is the exclusive owner of all trademarks and trade names used in
connection with the operation or conduct of the business of Company and its
subsidiaries, including the sale, distribution or provision of any Company
Products by Company or its subsidiaries; (ii) Company owns exclusively, and has
good title to, all copyrighted works that are Company Products or which Company
or any of its subsidiaries otherwise purports to own; and (iii) to the extent
that any Patents would be infringed by any Company Products, Company is the
exclusive owner of such Patents.
(g) To the extent that any material technology, software
or Intellectual Property has been developed or created independently or jointly
by a third party for Company or any of its subsidiaries or is incorporated into
any of the Company Products, Company has a written agreement
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with such third party with respect thereto and Company thereby either (i) has
obtained ownership of, and is the exclusive owner of, or (ii) has obtained a
perpetual, non-terminable license (sufficient for the conduct of its business as
currently conducted) to all such third party's Intellectual Property in such
work, material or invention by operation of law or by valid assignment.
(h) Neither Company nor any of its subsidiaries has
transferred ownership of, or granted any exclusive license with respect to, any
Intellectual Property that is material Company Intellectual Property, to any
third party, or knowingly permitted Company's rights in such material Company
Intellectual Property to lapse or enter the public domain.
(i) Section 2.19(i) of the Company Schedule lists all
material contracts, licenses and agreements to which Company or any of its
subsidiaries is a party: (i) with respect to Company Intellectual Property
licensed or transferred to any third party (other than end-user licenses in the
ordinary course); or (ii) pursuant to which a third party has licensed or
transferred any material Intellectual Property to Company.
(j) All material contracts, licenses and agreements
relating to either (i) Company Intellectual Property or (ii) Intellectual
Property of a third party licensed to Company or any of its subsidiaries, are in
full force and effect. Except as specified in Section 2.19(j) of the Company
Schedule, the consummation of the transactions contemplated by this Agreement
will neither violate nor result in the breach, modification, cancellation,
termination or suspension of such contracts, licenses and agreements. Each of
Company and its subsidiaries is in material compliance with, and has not
materially breached any term of any such contracts, licenses and agreements and,
to the knowledge of Company, all other parties to such contracts, licenses and
agreements are in compliance with, and have not materially breached any term of,
such contracts, licenses and agreements. Except as specified in Section 2.19(j)
of the Company Schedule, following the Closing Date, the Surviving Corporation
will be permitted to exercise all of Company's rights under such contracts,
licenses and agreements to the same extent Company and its subsidiaries would
have been able to had the transactions contemplated by this Agreement not
occurred and without the payment of any additional amounts or consideration
other than ongoing fees, royalties or payments which Company would otherwise be
required to pay. Except as specified in Section 2.19(j) of the Company Schedule,
neither this Agreement nor the transactions contemplated by this Agreement,
including the assignment to Parent or Merger Sub by operation of law or
otherwise of any contracts or agreements to which the Company is a party, will
result in (i) either Parent's or the Merger Sub's granting to any third party
any right to or with respect to any material Intellectual Property right owned
by, or licensed to, either of them, (ii) either the Parent's or the Merger Sub's
being bound by, or subject to, any non-compete or other material restriction on
the operation or scope of their respective businesses, or (iii) either the
Parent's or the Merger Sub's being obligated to pay any royalties or other
material amounts to any third party in excess of those payable by Parent or
Merger Sub, respectively, prior to the Closing.
(k) The operation of the business of the Company and its
subsidiaries as such business currently is conducted, including (i) Company's
and its subsidiaries' design, development,
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manufacture, distribution, reproduction, marketing or sale of the products or
services of Company and its subsidiaries and (ii) the Company's use of any
product, device or process, has not, does not and, to its knowledge, will not
infringe or misappropriate the Intellectual Property of any third party or
constitute unfair competition or trade practices under the laws of any
jurisdiction.
(l) Except as specified in Section 2.19(l) of the Company
Schedule, neither Company nor any of its subsidiaries has received notice from
any third party that the operation of the business of Company or any of its
subsidiaries or any act, product or service of Company or any of its
subsidiaries, infringes or misappropriates the Intellectual Property of any
third party or constitutes unfair competition or trade practices under the laws
of any jurisdiction.
(m) Except as specified in Section 2.19(m) of the Company
Schedule, to the knowledge of Company, no person has or is infringing or
misappropriating any Company Intellectual Property.
(n) Company and each of its subsidiaries has taken
reasonable steps to protect Company's and its subsidiaries' rights in Company's
confidential information and trade secrets that it wishes to protect or any
trade secrets or confidential information of third parties provided to Company
or any of its subsidiaries. Substantially all employees and all employees at the
director level and above and all engineers of the Company have entered into a
proprietary information/ confidentiality agreement substantially in the form
provided to Parent.
2.20 AGREEMENTS, CONTRACTS AND COMMITMENTS. Except as set forth in
Section 2.20 of the Company Schedule, neither Company nor any of its
subsidiaries is a party to or is bound by:
(a) any employment or consulting agreement, contract or
commitment with any officer, director, Company employee currently earning an
annual salary in excess of $100,000 or member of Company's Board of Directors,
other than those that are terminable by Company or any of its subsidiaries on no
more than thirty (30) days' notice without liability or financial obligation to
the Company;
(b) any agreement or plan, including, without limitation,
any stock option plan, stock appreciation right plan or stock purchase plan, any
of the benefits of which will be increased, or the vesting of benefits of which
will be accelerated, by the occurrence of any of the transactions contemplated
by this Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement;
(c) any agreement of indemnification or any guaranty other
than any agreement of indemnification or warranty entered into in the ordinary
course of business in connection with the sale of products or the provision of
services;
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(d) any agreement, contract or commitment containing any
covenant limiting in any respect the right of Company or any of its subsidiaries
to engage in any line of business or to compete with any person or granting any
exclusive distribution rights;
(e) any agreement, contract or commitment currently in force
relating to the disposition or acquisition by Company or any of its subsidiaries
after the date of this Agreement of a material amount of assets not in the
ordinary course of business or pursuant to which Company or any of its
subsidiaries has any material ownership interest in any corporation,
partnership, joint venture or other business enterprise other than Company's
subsidiaries;
(f) any mortgages, indentures, guarantees, loans or credit
agreements, security agreements or other agreements or instruments relating to
the borrowing of money or extension of credit;
(g) any material settlement agreement entered into within five
(5) years prior to the date of this Agreement; or
(h) any other agreement, contract or commitment that has
a value of $500,000 or more individually or which relates to one of Company's
customers listed on Schedule 2.20(h) of the Company Schedule which sets forth a
list of the Company's top twenty customers by revenue for fiscal year end 1999.
Neither Company nor any of its subsidiaries, nor to Company's knowledge
any other party to a Company Contract (as defined below), is in breach,
violation or default under, and neither Company nor any of its subsidiaries has
received written notice that it has breached, violated or defaulted under, any
of the material terms or conditions of any of the agreements, contracts or
commitments to which Company or any of its subsidiaries is a party or by which
it is bound that are required to be disclosed in the Company Schedule (any such
agreement, contract or commitment, a "COMPANY CONTRACT") in such a manner as
would permit any other party to cancel or terminate any such Company Contract,
or would permit any other party to seek material damages or other remedies (for
any or all of such breaches, violations or defaults, in the aggregate).
2.21 OPINION OF FINANCIAL ADVISOR. Company has been advised in
writing by its financial advisor, Lazard Freres & Co. LLC, that in its opinion,
as of the date of this Agreement, the Exchange Ratio is fair to the stockholders
of Company from a financial point of view.
2.22 BOARD APPROVAL. The Board of Directors of Company has, as of
the date of this Agreement unanimously (i) approved, subject to stockholder
approval, this Agreement and the transactions contemplated hereby, (ii)
determined that the Merger is fair, advisable and in the best interests of the
stockholders of Company and (iii) recommended that the stockholders of Company
approve this Agreement and the Merger.
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2.23 STATE TAKEOVER STATUTES. The Board of Directors of the Company
has approved the Merger and the Transaction Documents, and such approval is
sufficient to render inapplicable to the Merger, the Transaction Documents and
the transactions contemplated by the Transactions Documents, the provisions of
Section 203 of the Delaware Law to the extent, if any, such section is
applicable to the Merger, the Transaction Documents and the transactions
contemplated by the Transaction Documents.
2.24 DISCLAIMER OF OTHER REPRESENTATION AND WARRANTIES. The Company
does not make, and has not made, any representations or warranties relating to
the Company or in connection with the transactions contemplated hereby other
than those expressly set forth in this Section 2. No person has been authorized
by the Company to make any representation or warranty relating to the Company or
any Subsidiary, the businesses of the Company or otherwise in connection with
the transactions contemplated hereby except as set forth in this Section 2 and
in the Option Agreement and, if made, such representation or warranty must not
be relied upon as having been authorized by the Company.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub jointly and severally represent and warrant to
Company, subject to such exceptions as are specifically disclosed in writing in
the disclosure letter and referencing a specific representation supplied by
Parent to Company dated as of the date hereof and certified by a duly authorized
officer of Parent (the "PARENT SCHEDULE"), as follows:
3.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. Each of Parent
and its subsidiaries is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation and has
the requisite corporate power and authority to own, lease and operate its assets
and properties and to carry on its business as it is now being conducted. Each
of Parent and its subsidiaries is in possession of all Approvals necessary to
own, lease and operate the properties it purports to own, operate or lease and
to carry on its business as it is now being conducted, except where the failure
to have such Approvals would not, individually or in the aggregate, have a
Material Adverse Effect on Parent. Each of Parent and its subsidiaries is duly
qualified or licensed as a foreign corporation to do business, and is in good
standing, in each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its activities makes such
qualification or licensing necessary, except for such failures to be so duly
qualified or licensed and in good standing that would not, either individually
or in the aggregate, have a Material Adverse Effect on Parent.
3.2 CERTIFICATE OF INCORPORATION AND BYLAWS. Parent has previously
furnished to Company complete and correct copies of its Certificate of
Incorporation and Bylaws as amended to date (together, the "PARENT CHARTER
DOCUMENTS"). Such Parent Charter Documents and equivalent organizational
documents of each of its subsidiaries are in full force and effect. Parent is
not in
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violation of any of the provisions of the Parent Charter Documents, and no
subsidiary of Company is in violation of any of its equivalent organizational
documents.
3.3 CAPITALIZATION.
(a) As of May 15, 2000, the authorized capital stock of
Parent consisted of 250,000,000 shares of Parent Common Stock, $0.0001 par
value, of which 155,657,799 shares were issued and outstanding on such date, and
10,000,000 shares of undesignated Preferred Stock ("PARENT PREFERRED STOCK"),
$0.0001 par value, none of which were issued or outstanding on such date. Parent
has also reserved 66,060,944 shares of Parent Common Stock for issuance pursuant
to its employee and director stock and option and stock purchase plans,
28,289,507 of which were issuable upon exercise of such outstanding stock
options ("PARENT OPTIONS") as of May 15, 2000. In addition, 38,000,000 other
shares of Parent Common Stock are issuable pursuant to outstanding stock options
(other than those described above), warrants, rights, convertible or
exchangeable securities or other agreements as of May 15, 2000. The authorized
capital stock of Merger Sub consists of 1,000 shares of common stock, par value
$0.001 per share, all of which, as of the date hereof, are issued and
outstanding. All of the outstanding shares of Parent's and Merger Sub's
respective capital stock have been duly authorized and validly issued and are
fully paid and nonassessable. All shares of Parent Common Stock subject to
issuance as aforesaid, upon issuance on the terms and conditions specified in
the instruments pursuant to which they are issuable, shall, and the shares of
Parent Common Stock to be issued pursuant to the Merger will be, duly
authorized, validly issued, fully paid and nonassessable. All of the outstanding
shares of capital stock (other than directors' qualifying shares) of each of
Parent's subsidiaries is duly authorized, validly issued, fully paid and
nonassessable and all such shares (other than directors' qualifying shares) are
owned by Parent or another subsidiary free and clear of all security interests,
liens, claims, pledges, agreements, limitations in Parent's voting rights,
charges or other encumbrances of any nature whatsoever. On May 31, 2000, Parent
stockholders approved (i) an increase of 3,500,000 shares in the number of
shares authorized under Parent's 1997 Incentive Stock Option Plan, (ii) an
increase of 3,700,000 in the number of shares authorized under Parent's 1999
Employee Stock Purchase Plan, (iii) an increase in the number of authorized
shares of Parent Common Stock to 950,000,000 and (iv) an increase in the number
of authorized shares of Preferred Stock to 50,000,000. On June 14, 2000, Parent
issued 3,851,233 shares of Parent Common Stock to SAP AG and agreed to issue up
to an additional $75 million worth of Parent Common Stock to SAP AG upon the
satisfaction of certain conditions. With the exception of the previous two
sentences, no material change in the capitalization of Parent has occurred since
May 15, 2000.
3.4 AUTHORITY RELATIVE TO THIS AGREEMENT. Each of Parent and
Merger Sub has all necessary corporate power and authority to execute and
deliver this Agreement and the Stock Option Agreement, and to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and the Stock Option Agreement by Parent and Merger Sub and the consummation by
Parent and Merger Sub of the transactions contemplated hereby and thereby have
been duly and validly authorized by all necessary corporate action on the part
of Parent and Merger Sub, and no other corporate
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proceedings on the part of Parent or Merger Sub are necessary to authorize this
Agreement and the Stock Option Agreement, or to consummate the transactions so
contemplated. This Agreement and the Stock Option Agreement have been duly and
validly executed and delivered by Parent and Merger Sub and, assuming the due
authorization, execution and delivery by Company, constitute legal and binding
obligations of Parent and Merger Sub, enforceable against Parent and Merger Sub
in accordance with their respective terms.
3.5 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by
Parent and Merger Sub and the Stock Option Agreement by Parent do not, and the
performance of this Agreement by Parent and Merger Sub and the Stock Option
Agreement by Parent shall not, (i) conflict with or violate the Certificate of
Incorporation, Bylaws or equivalent organizational documents of Parent or any of
its subsidiaries, (ii) subject to compliance with the requirements set forth in
Section 3.5(b) below, conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to Parent or any of its subsidiaries or by which
it or their respective properties are bound or affected, or (iii) result in any
breach of or constitute a default (or an event that with notice or lapse of time
or both would become a default) under, or impair Parent's or any such
subsidiary's rights or alter the rights or obligations of any third party under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or encumbrance on any of
the properties or assets of Parent or any of its subsidiaries pursuant to, any
material note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which Parent or any of
its subsidiaries is a party or by which Parent or any of its subsidiaries or its
or any of their respective properties are bound or affected, except to the
extent such conflict, violation, breach, default, impairment or other effect
could not in the case of clauses (ii) or (iii) individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Parent.
(b) The execution and delivery of this Agreement by
Parent and Merger Sub and the Stock Option Agreement by Parent do not, and the
performance of this Agreement by Parent and Merger Sub shall not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any Governmental Entity except (i) for applicable requirements, if any, of
the Securities Act, the Exchange Act, Blue Sky Laws, the pre-merger notification
requirements of the HSR Act and of foreign governmental entities and the rules
and regulations thereunder, the rules and regulations of Nasdaq, and the filing
and recordation of the Certificate of Merger as required by Delaware Law and
(ii) where the failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, (A) would not prevent
consummation of the Merger or otherwise prevent Parent or Merger Sub from
performing their respective obligations under this Agreement or (B) could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Parent.
3.6 SEC FILINGS; FINANCIAL STATEMENTS. Parent has made available
to Company a correct and complete copy of each report, schedule, registration
statement and definitive proxy statement
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filed by Parent with the SEC on or after July 1, 1999 (the "PARENT SEC
REPORTS"), which are all the forms, reports and documents required to be filed
by Parent with the SEC since July 1, 1999. The Parent SEC Reports (i) were
prepared in accordance with the requirements of the Securities Act or the
Exchange Act, as the case may be, and (ii) did not at the time they were filed
(or if amended or superseded by a filing prior to the date of this Agreement,
then on the date of such filing) contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. None of Parent's subsidiaries is required to
file any reports or other documents with the SEC. Since March 31, 2000, there
has not been a Parent Material Adverse Effect.
3.7 REGISTRATION STATEMENT; PROXY STATEMENT. None of the
information supplied or to be supplied by Parent for inclusion or incorporation
by reference in (i) the S-4 will, at the time the S-4 becomes effective under
the Securities Act, 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; and (ii) the Proxy Statement/Prospectus will, at the dates
mailed to the stockholders of Company, at the time of the Company Stockholders'
Meeting and as of the Effective Time, contain any untrue statement of a material
fact or, to Parent's knowledge, 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. The S-4 will comply
as to form in all material respects with the provisions of the Securities Act
and the rules and regulations promulgated by the SEC thereunder. Notwithstanding
the foregoing, Parent makes no representation or warranty with respect to any
information supplied by the Company which is contained in any of the foregoing
documents .
3.8 NO UNDISCLOSED LIABILITIES. Neither Parent nor any of its
subsidiaries has any material liabilities (absolute, accrued, contingent or
otherwise) of a nature required to be disclosed on a balance sheet or in the
related notes to the consolidated financial statements prepared in accordance
with GAAP which are, individually or in the aggregate, material to the business,
results of operations or financial condition of Parent and its subsidiaries
taken as a whole, except (i) liabilities provided for in Parent's balance sheet
as of March 31, 2000 or (ii) liabilities incurred since March 31, 2000 in the
ordinary course of business, none of which is material to the business, results
of operations or financial condition of Parent and its subsidiaries, taken as a
whole.
3.9 ABSENCE OF LITIGATION. There are no material claims, actions,
suits or proceedings pending or, to the knowledge of Parent, threatened (or, to
the knowledge of Parent, any governmental or regulatory investigation pending or
threatened) against Parent or any of its subsidiaries or any properties or
rights of Parent or any of its subsidiaries, before any court, arbitrator or
administrative, governmental or regulatory authority or body, domestic or
foreign.
3.10 VOTE REQUIRED. Subject to the accuracy of the Company's
representations and warranties in Section 2.3 hereof, no vote of the holders of
any class or series of Parent's capital stock is necessary to approve this
Agreement and the transactions contemplated hereby.
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3.11 BROKERS. Except for the fees payable to X.X. Xxxxxx & Co.,
Inc. pursuant to an engagement letter, a copy of which has been provided to
Company, Parent has not incurred, nor will it incur, directly or indirectly, any
liability for brokerage or finders fees or agent's commissions or any similar
charges in connection with this Agreement or any transaction contemplated
hereby.
3.12 INTELLECTUAL PROPERTY. (i) The Parent owns, is validly
licensed or otherwise has the right to use all Intellectual Property that is
material to the conduct of the business of the Parent as it is presently
conducted; (ii) as of the date of this Agreement, no suits, actions or
proceedings are pending, and no person has threatened in writing to commence any
suit, action or proceeding, alleging that the Parent is materially infringing or
misappropriating the rights of any person with regard to any Intellectual
Property, except for suits, actions or proceedings that, individually or in the
aggregate, would not have a Material Adverse Effect on the Parent; and (iii) no
person is infringing the Intellectual Property rights of the Parent, except for
infringements which, individually or in the aggregate, would not have a Material
Adverse Effect on the Parent.
3.13 DISCLAIMER OF OTHER REPRESENTATION AND WARRANTIES. The Parent
does not make, and has not made, any representations or warranties relating to
the Parent or in connection with the transactions contemplated hereby other than
those expressly set forth in this Section 3. No person has been authorized by
the Parent to make any representation or warranty relating to the Parent, the
businesses of the Parent or otherwise in connection with the transactions
contemplated hereby except as set forth in this Section 3 and, if made, such
representation or warranty must not be relied upon as having been authorized by
the Parent.
ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME
4.1 CONDUCT OF BUSINESS BY COMPANY. During the period from the
date of this Agreement and continuing until the earlier of the termination of
this Agreement pursuant to its terms or the Effective Time, Company and each of
its subsidiaries shall, except to the extent that Parent shall otherwise consent
in writing, carry on its business, in the ordinary course, in substantially the
same manner as heretofore conducted and in compliance with all applicable laws
and regulations, pay its debts and taxes when due subject to good faith disputes
over such debts or taxes, pay or perform other material obligations when due,
and use its commercially reasonable efforts consistent with past practices and
policies to preserve intact its present business organization, keep available
the services of its present officers and employees and preserve its
relationships with customers, suppliers, distributors, licensors, licensees, and
others with which it has significant business dealings. In addition, Company
will promptly notify in writing Parent of any material adverse event involving
its business or operations.
In addition, except as permitted by the terms of this Agreement, and
except as provided in Section 4.1 of the Company Schedule and as contemplated by
Section 5.8(d) of the Parent Schedule,
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without the prior written consent of Parent, during the period from the date of
this Agreement and continuing until the earlier of the termination of this
Agreement pursuant to its terms or the Effective Time, Company shall not do any
of the following and shall not permit its subsidiaries to do any of the
following:
(a) Waive any stock repurchase rights, accelerate, amend
or change the period of exercisability of options or restricted stock, or
reprice options granted under any employee, consultant, director or other stock
plans or authorize cash payments in exchange for any options granted under any
of such plans;
(b) Grant any severance or termination pay to any officer
or employee except pursuant to written agreements outstanding, or policies
existing, on the date hereof and as contained in the Company Schedule, or adopt
any new severance plan, or amend or modify or alter in any manner any severance
plan, agreement or arrangement existing on the date hereof;
(c) Transfer or license to any person or entity or
otherwise extend, amend or modify any rights to the Company Intellectual
Property, or enter into grants to transfer or license to any person future
patent rights, except in connection with customer contracts consistent with past
practice in the ordinary course of business;
(d) Declare, set aside or pay any dividends on or make
any other distributions (whether in cash, stock, equity securities or property)
in respect of any capital stock or split, combine or reclassify any capital
stock or issue or authorize the issuance of any other securities in respect of,
in lieu of or in substitution for any capital stock;
(e) Purchase, redeem or otherwise acquire, directly or
indirectly, any shares of capital stock of Company or its subsidiaries, except
repurchases of unvested shares at cost in connection with the termination of the
employment relationship with any employee pursuant to stock option or purchase
agreements in effect on the date hereof;
(f) Issue, deliver, sell, authorize, pledge or otherwise
encumber or propose any of the foregoing with respect to, any shares of capital
stock or any securities convertible into shares of capital stock, or
subscriptions, rights, warrants or options to acquire any shares of capital
stock or any securities convertible into shares of capital stock, or enter into
other agreements or commitments of any character obligating it to issue any such
shares or convertible securities, other than (x) the issuance delivery and/or
sale of shares of Company Common Stock pursuant to the exercise of stock
options, convertible securities or warrants outstanding as of the date of this
Agreement or hereafter issued in accordance with this Agreement and (y) the
issuance of shares of capital stock pursuant to the acquisitions described in
Section 4.1(h) of the Company Schedule;
(g) Cause, permit or propose any amendments to the Company
Charter Documents (or similar governing instruments of any of its subsidiaries);
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(h) Except as set forth in Section 4.1(h) of the Company
Schedule, acquire or agree to acquire by merging or consolidating with, or by
purchasing any equity interest in or a portion of the assets of, or by any other
manner, any business or any corporation, partnership, association or other
business organization or division thereof, or otherwise acquire or agree to
enter into any joint ventures, strategic partnerships or alliances;
(i) Sell, lease, license, encumber or otherwise dispose
of any properties or assets except (i) sales of inventory in the ordinary course
of business consistent with past practice, (ii) the sale, lease or disposition
(other than through licensing) of property or assets which are not material,
individually or in the aggregate, to the business of Company and its
subsidiaries, (iii) the sale of goods or licenses of Intellectual Property in
the ordinary course of business and in a manner consistent with past practice
(x) involving annual revenues or receipts of less than or equal to $500,000, or
involving annual expenditures or liabilities of less than or equal to $250,000
and (y) having a term of less than or equal to twelve months, or (iv)
dispositions of other immaterial assets in the ordinary course of business and
in a manner consistent with past practice;
(j) Incur any indebtedness for borrowed money or
guarantee any such indebtedness of another person, issue or sell any debt
securities or options, warrants, calls or other rights to acquire any debt
securities of Company, enter into any "keep well" or other agreement to maintain
any financial statement condition or enter into any arrangement having the
economic effect of any of the foregoing other than in connection with the
financing of ordinary course trade payables consistent with past practice and
other than the replacement of the Company's current line of credit for $25
million with a similar line of credit having more favorable terms to the Company
and any drawdowns thereunder;
(k) Adopt or amend any employee benefit plan, policy or
arrangement, any employee stock purchase or employee stock option plan, or enter
into any employment contract or collective bargaining agreement (other than
offer letters and letter agreements entered into in the ordinary course of
business consistent with past practice with employees who are terminable "at
will"), pay any special bonus or special remuneration to any director or
employee, or increase the salaries or wage rates or fringe benefits (including
rights to severance or indemnification) of its directors, officers, employees or
consultants;
(l) (i) pay, discharge, settle or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), or litigation (whether or not commenced prior to the
date of this Agreement) in excess of $750,000 individually or $1,500,000 in the
aggregate other than the payment, discharge, settlement or satisfaction, in the
ordinary course of business consistent with past practice or in accordance with
their terms, or liabilities recognized or disclosed in the most recent
consolidated financial statements (or the notes thereto) of Company included in
the Company SEC Reports or incurred since the date of such financial statements,
or (ii) waive the benefits of, agree to modify in any manner, terminate, release
any person from or knowingly fail to enforce any confidentiality or similar
agreement to which Company or any of its subsidiaries is a party or of which
Company or any of its subsidiaries is a beneficiary;
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(m) Make any individual or series of related payments outside
of the ordinary course of business or make or commit to make capital
expenditures beyond those contained in the Company's capital expenditure budget
in effect on the date hereof, a copy of which has been provided to Parent;
(n) Except in the ordinary course of business consistent with
past practice, modify, amend or terminate any material Contract or agreement;
(o) Enter into or renew any contracts, agreements, or
obligations containing any non-competition or exclusivity restrictions on the
Company;
(p) Revalue any of its assets or make any change in accounting
methods, principles or practices;
(q) Incur or enter into any agreement, contract or commitment
requiring Company or any of its subsidiaries to pay in excess of an aggregate of
$500,000 other than in the ordinary course of the Company's business;
(r) Engage in any action that could reasonably be expected to
cause the Merger to fail to qualify as a "reorganization" under Section 368(a)
of the Code;
(s) Hire employees other than in the ordinary course of
business consistent with past practice;
(t) Make any Tax election or accounting method change that,
individually or in the aggregate, is reasonably likely to adversely affect in
any material respect the tax liability or tax attributes of Company or any of
its subsidiaries or settle or compromise any material income tax liability or
consent to any extension or waiver of any limitation period with respect to
Taxes;
(u) Agree in writing or otherwise to take any of the actions
described in Section 4.1 (a) through (t) above.
4.2 CONDUCT OF BUSINESS BY PARENT. During the period from the date
of this Agreement and continuing until the earlier of the termination of this
Agreement pursuant to its terms or the Effective Time, except as permitted by
the terms of this Agreement and the Stock Option Agreement, without the prior
written consent of Company, Parent shall not engage in any action that could
reasonably be expected to cause the Merger to fail to qualify as a
"reorganization" under Section 368(a) of the Code.
In addition, except as permitted by the terms of this Agreement and
except as provided in Article 4 of the Parent Schedules, without the prior
written consent of the Company (which consent shall not be unreasonably
withheld), during the period from the date of this Agreement and continuing
until the earlier of the termination of this Agreement pursuant to its terms or
the Effective Time, Parent shall not do any of the following:
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(a) Declare, set aside or pay any dividends on or make
any other distributions (whether in cash, stock, equity securities or property)
in respect of any capital stock or split, combine or reclassify any capital
stock or issue or authorize the issuance of any other securities in respect of,
in lieu of or in substitution for any capital stock;
(b) Purchase, redeem or otherwise acquire, directly or
indirectly, any shares of capital stock of Parent or its subsidiaries, except
repurchases of unvested shares at cost in connection with the termination of the
employment relationship with any employee pursuant to stock option or repurchase
agreements in effect on the date hereof; or
(c) Agree in writing or otherwise to take any of the actions
described in Section 4.2(a) or (b) above.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 PROXY STATEMENT/PROSPECTUS; REGISTRATION STATEMENT; OTHER FILINGS;
BOARD RECOMMENDATIONS.
(a) As promptly as practicable after the execution of this
Agreement, Company and Parent will prepare, and file with the SEC, the Proxy
Statement/Prospectus, and Parent will prepare and file with the SEC the S-4 in
which the Proxy Statement/Prospectus will be included as a prospectus. Each of
Parent and Company shall provide promptly to the other such information
concerning its business and financial statements and affairs as, in the
reasonable judgment of the providing party or its counsel, may be required or
appropriate for inclusion in the Proxy Statement/Prospectus and the S-4, or in
any amendments or supplements thereto, and to cause its counsel and auditors to
cooperate with the other's counsel and auditors in the preparation of the Proxy
Statement/Prospectus and the S-4. Each of Company and Parent will respond to any
comments of the SEC, and will use its respective commercially reasonable efforts
to have the S-4 declared effective under the Securities Act as promptly as
practicable after such filing, and Company will cause the Proxy
Statement/Prospectus to be mailed to its stockholders at the earliest
practicable time after the S-4 is declared effective by the SEC. As promptly as
practicable after the date of this Agreement, each of Company and Parent will
prepare and file any other filings required to be filed by it under the Exchange
Act, the Securities Act or any other Federal, foreign or Blue Sky or related
laws relating to the Merger and the transactions contemplated by this Agreement
(the "OTHER FILINGS"). Each of Company and Parent will notify the other promptly
upon the receipt of any comments from the SEC or its staff or any other
government officials and of any request by the SEC or its staff or any other
government officials for amendments or supplements to the S-4, the Proxy
Statement/Prospectus or any Other Filing or for additional information and will
supply the other with copies of all correspondence between such party or any of
its representatives, on the one hand, and the SEC or its staff or any other
government officials, on the other hand, with respect to the S-4, the Proxy
Statement/Prospectus, the Merger or any Other Filing. Each of Company and Parent
will
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cause all documents that it is responsible for filing with the SEC or other
regulatory authorities under this Section 5.1(a) to comply in all material
respects with all applicable requirements of law and the rules and regulations
promulgated thereunder. Whenever any event occurs which is required to be set
forth in an amendment or supplement to the Proxy Statement/Prospectus, the S-4
or any Other Filing, Company or Parent, as the case may be, will promptly inform
the other of such occurrence and cooperate in filing with the SEC or its staff
or any other government officials, and/or mailing to stockholders of Company,
such amendment or supplement.
(b) The Company shall cause the Proxy Statement/Prospectus to
include the unanimous recommendation of the Board of Directors of Company in
favor of adoption and approval of this Agreement and approval of the Merger.
5.2 MEETING OF COMPANY STOCKHOLDERS.
(a) Promptly after the date hereof, Company will take all
action necessary in accordance with Delaware Law and the Company Charter
Documents to convene the Company Stockholders' Meeting to be held as promptly as
practicable, and in any event (to the extent permissible under applicable law)
within 45 days after the declaration of effectiveness of the S-4, for the
purpose of voting upon this Agreement and the Merger. Subject to Section 5.2(c),
Company will use its reasonable best efforts to solicit from its stockholders
proxies in favor of the adoption and approval of this Agreement and the approval
of the Merger and will take all other action necessary or advisable to secure
the vote or consent of its stockholders required by the rules of Nasdaq or
Delaware Law to obtain such approvals. Notwithstanding anything to the contrary
contained in this Agreement, Company may adjourn or postpone the Company
Stockholders' Meeting to the extent there are insufficient shares of Company
Common Stock represented (either in person or by proxy) to constitute a quorum
necessary to conduct the business of the Company Stockholders' Meeting.
Company's obligation to call, give notice of, convene and hold the Company
Stockholders' Meeting in accordance with this Section 5.2(a) shall not be
limited to or otherwise affected by the commencement, disclosure, announcement
or submission to Company of any Acquisition Proposal.
(b) Subject to Section 5.2(c): (i) the Board of Directors
of Company shall unanimously recommend that Company's stockholders vote in favor
of and adopt and approve this Agreement and the Merger at the Company
Stockholders' Meeting; (ii) the Prospectus/Proxy Statement shall include a
statement to the effect that the Board of Directors of the Company has
unanimously recommended that Company's stockholders vote in favor of and adopt
and approve this Agreement and the Merger at the Company Stockholders' Meeting;
and (iii) neither the Board of Directors of Company nor any committee thereof
shall withdraw, amend or modify, or propose or resolve to withdraw, amend or
modify in a manner adverse to Parent, the unanimous recommendation of the Board
of Directors of Company that Company's stockholders vote in favor of and adopt
and approve this Agreement and the Merger. For purposes of this Agreement, said
recommendation of the Board of Directors shall be deemed to have been modified
in a manner adverse to Parent if said recommendation shall no longer be
unanimous.
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(c) Nothing in this Agreement shall prevent the Board of
Directors of Company from withholding, withdrawing, amending or modifying its
unanimous recommendation in favor of the Merger if (i) a Superior Offer (as
defined below) is made to the Company and is not withdrawn, (ii) neither Company
nor any of its representatives shall have violated any of the restrictions set
forth in Section 5.4, and (iii) the Board of Directors of Company concludes in
good faith, after consultation with its outside counsel, that, in light of such
Superior Offer, the withholding, withdrawal, amendment or modification of such
recommendation is required in order for the Board of Directors of Company to
comply with its fiduciary obligations to Company's stockholders under applicable
law. Nothing contained in this Section 5.2 shall limit Company's obligation to
hold and convene the Company Stockholders' Meeting (regardless of whether the
unanimous recommendation of the Board of Directors of the Company shall have
been withdrawn, amended or modified). For purposes of this Agreement, "SUPERIOR
OFFER" shall mean an unsolicited, bona fide written offer made by a third party
to consummate any of the following transactions: (i) a merger, consolidation,
business combination, recapitalization, liquidation, dissolution or similar
transaction involving Company pursuant to which the stockholders of Company
immediately preceding such transaction hold less than 35% of the equity interest
in the surviving or resulting entity of such transaction; (ii) a sale or other
disposition by Company of assets (excluding inventory and used equipment sold in
the ordinary course of business) representing in excess of 85% of the fair
market value of Company's business immediately prior to such sale, or (iii) the
acquisition by any person or group (including by way of a tender offer or an
exchange offer or issuance by Company), directly or indirectly, of beneficial
ownership or a right to acquire beneficial ownership of shares representing in
excess of 85% of the voting power of the then outstanding shares of capital
stock of the Company, in each case on terms that the Board of Directors of
Company determines, in its reasonable judgment (after consultation with a
financial advisor of nationally recognized reputation as to whether such offer
is more favorable to the Company Stockholders from a financial point of view
than the terms of the Merger) to be more favorable to the Company stockholders
from a financial point of view than the terms of the Merger; provided, however,
that any such offer shall not be deemed to be a "Superior Offer" if any
financing required to consummate the transaction contemplated by such offer is
not committed and is not likely in the judgment of Company's Board of Directors
to be obtained by such third party on a timely basis.
5.3 CONFIDENTIALITY; ACCESS TO INFORMATION.
(a) The parties acknowledge that the Company and Parent
have each previously executed and delivered confidentiality agreements dated
June 3, 2000 (each, a "CONFIDENTIALITY AGREEMENT"), which Confidentiality
Agreements will continue in full force and effect in accordance with their
respective terms; provided, however, that the "standstill" provisions of the
Confidentiality Agreement delivered by Parent for the benefit of Company shall
terminate on the date of this Agreement.
(b) Company will afford Parent and its accountants,
counsel and other representatives reasonable access during normal business hours
to the properties, books, records and personnel of Company during the period
prior to the Effective Time to obtain all information
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concerning the business, including the status of product development efforts,
properties, results of operations and personnel of Company, as Parent may
reasonably request. No information or knowledge obtained by Parent in any
investigation pursuant to this Section 5.3 will affect or be deemed to modify
any representation or warranty contained herein or the conditions to the
obligations of the parties to consummate the Merger.
(c) Parent will afford Company and its accountants,
counsel and other representatives reasonable access during normal business hours
to the properties, books, records and personnel of Parent during the period
prior to the Effective Time to obtain all information concerning the business,
including the status of product development efforts, properties, results of
operations and personnel of Parent, as Company may reasonably request. No
information or knowledge obtained by Company in any investigation pursuant to
this Section 5.3 will affect or be deemed to modify any representation or
warranty contained herein or the conditions to the obligations of the parties to
consummate the Merger.
5.4 NO SOLICITATION.
(a) From and after the date of this Agreement until the
Effective Time or termination of this Agreement pursuant to Article VII, Company
and its subsidiaries will not, nor will they authorize or permit any of their
respective officers, directors, affiliates or employees or any investment
banker, attorney or other advisor or representative retained by any of them to,
directly or indirectly (i) solicit, initiate, encourage or induce the making,
submission or announcement of any Acquisition Proposal (as defined below), (ii)
participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to, or take any other action to facilitate
any inquiries or the making of any proposal that constitutes or may reasonably
be expected to lead to, any Acquisition Proposal, (iii) engage in discussions
with any person with respect to any Acquisition Proposal, (iv) subject to
Section 5.2(c), approve, endorse or recommend any Acquisition Proposal or (v)
enter into any letter of intent or similar document or any contract, agreement
or commitment contemplating or otherwise relating to any Acquisition Transaction
(as defined below). Company and its subsidiaries will immediately cease any and
all existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any Acquisition Proposal. Notwithstanding the
foregoing two sentences, the Company may participate in discussions or
negotiations with, or furnish information with respect to the Company pursuant
to a confidentiality agreement (including a standstill agreement therein) with
terms no less favorable to the Company than those in effect between the Company
and Parent to any Person if and only if (x) such Person has submitted an
unsolicited bona fide written Acquisition Proposal to the Company's Board of
Directors, (y) neither the Company nor any of the Company Representatives shall
have violated the foregoing two sentences and (z) the Board of Directors of the
Company (i) determines by a majority vote in its good faith judgment, after
consultation with outside counsel, that such Acquisition proposal is a Superior
Offer and taking such action is necessary to satisfy the fiduciary duties of
such Board under applicable law and (ii) provides prior written notice to Parent
of its decision to so participate or furnish. Without limiting the foregoing, it
is understood that any violation of the restrictions set forth in the preceding
two sentences by any officer or director of Company or any of its subsidiaries
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or any investment banker, attorney or other advisor or representative of Company
or any of its subsidiaries shall be deemed to be a breach of this Section 5.4 by
Company. In addition to the foregoing, the Company shall (i) provide Parent with
at least twenty-four (24) hours prior notice (or such lesser prior notice as
provided to the members of Company's Board of Directors but in no event less
than eight hours) of any meeting of Company's Board of Directors at which
Company's Board of Directors is reasonably expected to consider a Superior Offer
and (ii) provide Parent with at least one (1) business day prior written notice
of a meeting of Company's Board of Directors at which Company's Board of
Directors is reasonably expected to recommend a Superior Offer to its
stockholders and together with such notice a copy of the definitive
documentation relating to such Superior Offer.
For purposes of this Agreement, "ACQUISITION PROPOSAL" shall mean any
offer or proposal (other than an offer or proposal by Parent) relating to any
Acquisition Transaction. For the purposes of this Agreement, "ACQUISITION
TRANSACTION" shall mean any transaction or series of related transactions other
than the transactions contemplated by this Agreement involving: (A) any
acquisition or purchase from the Company by any person or "group" (as defined
under Section 13(d) of the Exchange Act and the rules and regulations
thereunder) of more than a 20% interest in the total outstanding voting
securities of the Company or any tender offer or exchange offer that if
consummated would result in any person or "group" (as defined under Section
13(d) of the Exchange Act and the rules and regulations thereunder) beneficially
owning 20% or more of the total outstanding voting securities of the Company or
any merger, consolidation, business combination or similar transaction involving
the Company pursuant to which the stockholders of the Company immediately
preceding such transaction hold less than 80% of the equity interests in the
surviving or resulting entity of such transaction; (B) any sale, lease (other
than in the ordinary course of business), exchange, transfer, license (other
than in the ordinary course of business), acquisition or disposition of more
than 20% of the assets of the Company; or (C) any liquidation or dissolution of
the Company.
(b) In addition to the obligations of Company set forth
in paragraph (a) of this Section 5.4, Company as promptly as practicable shall
advise Parent orally and in writing of any request received by Company for
information which Company reasonably believes would lead to an Acquisition
Proposal or of any Acquisition Proposal, or any inquiry received by Company with
respect to or which Company reasonably should believe would lead to any
Acquisition Proposal, the material terms and conditions of such request,
Acquisition Proposal or inquiry, and the identity of the person or group making
any such request, Acquisition Proposal or inquiry.
5.5 PUBLIC DISCLOSURE. Parent and Company will consult with each
other, and to the extent practicable, agree, before issuing any press release or
otherwise making any public statement with respect to the Merger, this Agreement
or an Acquisition Proposal and will not issue any such press release or make any
such public statement prior to such consultation, except as may be required by
law or by the rules of the Nasdaq Stock Market. The parties have agreed to the
text of the joint press release announcing the signing of this Agreement.
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5.6 REASONABLE EFFORTS; NOTIFICATION.
(a) Upon the terms and subject to the conditions set
forth in this Agreement, each of the parties agrees to use all reasonable best
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, and to assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective, in the most
expeditious manner practicable, the Merger and the other transactions
contemplated by this Agreement, including using reasonable best efforts to
accomplish the following: (i) the taking of all reasonable acts necessary to
cause the conditions precedent set forth in Article VI to be satisfied, (ii) the
obtaining of all necessary actions or nonactions, waivers, consents, approvals,
orders and authorizations from Governmental Entities and the making of all
necessary registrations, declarations and filings (including registrations,
declarations and filings with Governmental Entities, if any) and the taking of
all reasonable steps as may be necessary to avoid any suit, claim, action,
investigation or proceeding by any Governmental Entity, (iii) the obtaining of
all consents, approvals or waivers from third parties required as a result of
the transactions contemplated in this Agreement, (iv) the defending of any
suits, claims, actions, investigations or proceedings, whether judicial or
administrative, challenging this Agreement or the consummation of the
transactions contemplated hereby, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental Entity
vacated or reversed, (v) lift or rescind the effects of any injunction, judgment
or order adversely affecting the ability of the parties to consummate the
transaction contemplated hereby and (vi) the execution or delivery of any
additional instruments reasonably necessary to consummate the transactions
contemplated by, and to fully carry out the purposes of, this Agreement. In
connection with and without limiting the foregoing, Company and its Board of
Directors shall, if any state takeover statute or similar statute or regulation
is or becomes applicable to the Merger, this Agreement or any of the
transactions contemplated by this Agreement, use all reasonable efforts to
ensure that the Merger and the other transactions contemplated by this Agreement
may be consummated as promptly as practicable on the terms contemplated by this
Agreement and otherwise to minimize the effect of such statute or regulation on
the Merger, this Agreement and the transactions contemplated hereby.
Notwithstanding anything herein to the contrary, nothing in this Agreement shall
be deemed to require Parent or Company or any subsidiary or affiliate thereof to
agree to any divestiture by itself or any of its affiliates of shares of capital
stock or of any business, assets or property, or the imposition of any material
limitation on the ability of any of them to conduct their business or to own or
exercise control of such assets, properties and stock.
(b) Company shall give prompt notice to Parent of any
representation or warranty made by it contained in this Agreement becoming
untrue or inaccurate, or any failure of Company to comply with or satisfy in any
material respect any covenant, condition or agreement to be complied with or
satisfied by it under this Agreement, in each case, such that the conditions set
forth in Section 6.3(a) or 6.3(b) would not be satisfied; provided, however,
that no such notification shall affect the representations, warranties,
covenants or agreements of the parties or the conditions to the obligations of
the parties under this Agreement.
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(c) Parent shall give prompt notice to Company of any
representation or warranty made by it or Merger Sub contained in this Agreement
becoming untrue or inaccurate, of any failure of Parent or Merger Sub to comply
with or satisfy in any material respect any covenant, condition or agreement to
be complied with or satisfied by it under this Agreement, in each case, such
that the conditions set forth in Section 6.2(a) or 6.2(b) would not be
satisfied; provided, however, that no such notification shall affect the
representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement.
5.7 THIRD PARTY CONSENTS. As soon as practicable following the
date hereof, Parent and Company will each use its commercially reasonable best
efforts to obtain any consents, waivers and approvals under any of its or its
subsidiaries' respective agreements, contracts, licenses or leases required to
be obtained in connection with the consummation of the transactions contemplated
hereby.
5.8 STOCK OPTIONS, WARRANTS, EMPLOYEE BENEFIT AND RETENTION
BONUSES AND OPTIONS.
(a) STOCK OPTIONS. At the Effective Time, each
outstanding option to purchase shares of Company Common Stock and any right to
purchase shares of Company Common Stock (each, a "COMPANY STOCK OPTION") under
the Company Option Plans, whether or not vested, shall by virtue of the Merger
be assumed by Parent. Each Company Stock Option so assumed by Parent under this
Agreement will continue to have, and be subject to, the same (but no additional
restrictions on vesting or other requirements) terms and conditions of such
options immediately prior to the Effective Time (including, without limitation,
qualified or nonqualified option status and any repurchase rights or vesting
provisions and provisions regarding the acceleration of vesting on certain
transactions, other than the transactions contemplated by this Agreement),
except that (i) each Company Stock Option will be exercisable (or will become
exercisable in accordance with its terms) for that number of whole shares of
Parent Common Stock equal to the product of the number of shares of Company
Common Stock that were issuable upon exercise of such Company Stock Option
immediately prior to the Effective Time multiplied by the Exchange Ratio,
rounded down to the nearest whole number of shares of Parent Common Stock and
(ii) the per share exercise price for the shares of Parent Common Stock issuable
upon exercise of such assumed Company Stock Option will be equal to the quotient
determined by dividing the exercise price per share of Company Common Stock at
which such Company Stock Option was exercisable immediately prior to the
Effective Time by the Exchange Ratio, rounded up to the nearest whole cent.
(b) WARRANTS. At the Effective Time, the Warrants will be
assumed by Parent. Each Warrant so assumed by Parent under this Agreement will
continue to have, and be subject to, the same (but no additional restrictions on
vesting or other requirements) terms and conditions set forth in the applicable
warrant agreement immediately prior to the Effective Time (including, without
limitation, any repurchase rights or vesting provisions), except that (i) each
Warrant will be exercisable (or will become exercisable in accordance with its
terms) for that number of whole shares of Parent Common Stock equal to the
product of the number of shares of Company Common Stock that were issuable upon
exercise of such Warrant immediately prior to the Effective Time
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multiplied by the Exchange Ratio, rounded to the nearest whole number of shares
of Parent Common Stock and (ii) the per share exercise price for the share of
Parent Common Stock issuable upon exercise of such assumed Warrant will be equal
to the quotient determined by dividing the exercise price per share of Company
Common Stock at which such Warrant was exercisable immediately prior to the
Effective Time by the Exchange Ratio, rounded to the nearest whole cent.
(c) EMPLOYEE BENEFITS.
(i) Parent agrees that individuals who are employed
by the Company or any Subsidiary of the Company immediately prior to the
Effective Time shall become employees of the Surviving Corporation or one of its
Subsidiaries upon the Effective Time (each such employee, a "COMPANY EMPLOYEE");
provided, however, that this Section 5.8(c) shall not be construed to limit the
ability of the Company or any of its Subsidiaries to terminate the employment of
any Company Employee at any time.
(ii) After the Effective Time and on a schedule
determined by Parent in connection with its integration of its business with
that of the Company, the Company Employees shall be eligible to participate in
the employee benefit plans of Parent (including Parent's employee stock purchase
plan) to the same extent as any similarly situated and geographically located
employee of Parent. The Company Employees will be allowed credit for their
service with the Company and its Subsidiaries for purposes of vesting,
calculating the number of vacation days to which such employees are entitled,
and participation only and for entitlement and benefit accrual purposes, with
respect to the employee benefit plans in which such Company Employees
participate following the Effective Time.
(iii) Unless otherwise requested by Parent in writing
prior to the Effective Time, the Company shall cause to be adopted prior to the
Effective Time resolutions of the Company's Board of Directors to cease all
contributions to the any and all 401(k) plans maintained or sponsored by the
Company or any of its subsidiaries (collectively, the "401(k) PLANS"), and to
terminate the 401(k) Plans, on the day preceding the Effective Time. Such
resolutions shall provide (to the extent required under Section 411 of the Code)
that all participants shall be fully vested in their account balances under the
401(k) Plans. Such resolutions shall also authorize distributions of 401(k)
Plans balances to participants (to the extent permitted under Section 401(k)(10)
of the Code) as soon as practicable following the termination of each such
401(k) Plan and, if elected by Parent, the Company's receipt from the Internal
Revenue Service of a favorable determination letter regarding the tax-qualified
status of the 401(k) Plans following its termination. The Company shall deliver
to Parent an executed copy of such resolutions as soon as practicable following
their adoption by Company's Board of Directors and shall fully comply with such
resolutions.
(d) RETENTION BONUSES AND OPTIONS. Following the date
hereof and prior to the Effective Time, Parent and Company will use best efforts
to implement the performance incentives described in Section 5.8(d) of the
Parent Schedule.
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5.9 FORM S-8. Parent agrees to file, if available for use by
Parent, a registration statement on Form S-8 for the shares of Parent Common
Stock issuable with respect to assumed Company Stock Options as soon as is
reasonably practicable after the Effective Time.
5.10 INDEMNIFICATION.
(a) From and after the Effective Time, Parent will cause
the Surviving Corporation to fulfill and honor in all respects the obligations
of Company pursuant to any indemnification agreements between Company and its
directors and officers in effect immediately prior to the Effective Time (the
"INDEMNIFIED PARTIES") and any indemnification provisions under the Company
Charter Documents as in effect on the date hereof. The Certificate of
Incorporation and Bylaws of the Surviving Corporation will contain provisions
with respect to exculpation and indemnification that are at least as favorable
to the Indemnified Parties as those contained in the Company Charter Documents
as in effect on the date hereof, which provisions will not be amended, repealed
or otherwise modified for a period of six (6) years from the Effective Time in
any manner that would adversely affect the rights thereunder of individuals who,
immediately prior to the Effective Time, were directors, officers, employees or
agents of Company, unless such modification is required by law.
(b) Parent shall cause to be maintained for a period of
three years from the Effective Time the Company's current directors and officers
insurance policy (the "COMPANY'S D&O INSURANCE") to the extent that it provides
coverage for events occurring prior to the Effective Time for all Persons who
are directors and officers of the Company on the date of this Agreement, so long
as the annual premium therefor would not be in excess of the lesser of $750,000
or 150% of the last annual premium paid prior to the date of this Agreement
(such amount, the "MAXIMUM PREMIUM"). Upon request by Parent, the Company shall
use its reasonable best efforts to extend coverage under the Company's D&O
Insurance by obtaining a three-year "tail" policy (provided, that the lump sum
payment to purchase such coverage does not exceed three times the Maximum
Premium) and such "tail" policy shall satisfy Parent's obligations under this
Section 5.10(b). Parent's obligations under this Section 5.10(b) shall also be
satisfied if Parent's directors and officers insurance provides (or is amended
to provide) substantially similar coverage for events occurring prior to the
Effective Time for Persons who are directors and officers of the Company on the
date of this Agreement. If the Company's existing directors and officers
insurance expires, is terminated or canceled during such three-year period or a
"tail" policy cannot be purchased on the terms set forth above and Parent cannot
or determines not to satisfy its obligations under this Section 5.10(b) pursuant
to the preceding sentence, Parent shall use its reasonable best efforts to cause
to be obtained as much directors and officers insurance as can be obtained for
the remainder of such period for an annualized premium not in excess of the
Maximum Premium, on terms and conditions no less advantageous than the Company's
D&O Insurance.
(c) The provisions of this Section 5.10 are intended to
be for the benefit of, and shall be enforceable by, each Person entitled to
indemnification hereunder and the heirs and representatives of such Person.
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5.11 NASDAQ LISTING. Parent agrees to cause the listing prior to
the Effective Time on Nasdaq the shares of Parent Common Stock issuable, and
those required to be reserved for issuance pursuant to the Company Stock Options
and Company Warrants, in connection with the Merger, subject to official notice
of issuance.
5.12 COMPANY AFFILIATE AGREEMENT. Set forth in Section 5.12 of the
Company Schedule is a list of those persons who may be deemed to be, in
Company's reasonable judgment, affiliates of Company within the meaning of Rule
145 promulgated under the Securities Act (each, a "COMPANY AFFILIATE"). Company
will provide Parent with such information and documents as Parent reasonably
requests for purposes of reviewing such list. Company has caused each Company
Affiliate to enter into a Company Affiliate Agreement concurrently herewith and
each Company Affiliate Agreement will be in full force and effect as of the
Effective Time. Parent will be entitled to place appropriate legends on the
certificates evidencing any Parent Common Stock to be received by a Company
Affiliate pursuant to the terms of this Agreement, and to issue appropriate stop
transfer instructions to the transfer agent for the Parent Common Stock,
consistent with the terms of the Company Affiliate Agreement.
5.13 [RESERVED]
5.14 NONCOMPETITION AGREEMENTS. Following the date hereof and prior
to the Effective Time, Parent and Company will use best efforts to enter into or
confirm the non-competition arrangements as described in Section 5.8(d) of the
Parent Schedule.
5.15 REGULATORY FILINGS; REASONABLE EFFORTS. As soon as may be
reasonably practicable, Company and Parent each shall file with the United
States Federal Trade Commission (the "FTC") and the Antitrust Division of the
United States Department of Justice ("DOJ") Notification and Report Forms
relating to the transactions contemplated herein as required by the HSR Act, as
well as comparable pre-merger notification forms required by the merger
notification or control laws and regulations of any applicable jurisdiction, as
agreed to by the parties. Company and Parent each shall promptly (a) supply the
other with any information which may be required in order to effectuate such
filings and (b) supply any additional information which reasonably may be
required by the FTC, the DOJ or the competition or merger control authorities of
any other jurisdiction and which the parties may reasonably deem appropriate;
provided, however, that Parent shall not be required to agree to any divestiture
by Parent or the Company or any of Parent's subsidiaries or affiliates of shares
of capital stock or of any business, assets or property of Parent or its
subsidiaries or affiliates or of the Company, its affiliates, or the imposition
of any material limitation on the ability of any of them to conduct their
businesses or to own or exercise control of such assets, properties and stock.
5.16 ALTERNATIVE TRANSACTION STRUCTURE. At the election of Parent
and upon the consent of the Company (which shall not be reasonably withheld),
the parties agree to amend the Agreement to provide that the acquisition of
Company by Parent be accomplished by means of an exchange offer of Parent Common
Stock for all of the issued and outstanding shares of Company Common Stock
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pursuant to a Solicitation/Recommendation Statement filed with the SEC on
Schedule 14D-9; provided, however, that the parties will not adopt such
alternative transaction structure if such structure, by itself, would (i) fail
to result in a "reorganization" within the meaning of Section 368 of the Code,
(ii) change the Exchange Ratio, or (iii) otherwise adversely affect the Company
or its stockholders in connection with the transactions contemplated hereby.
ARTICLE VI
CONDITIONS TO THE MERGER
6.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER.
The respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction at or prior to the Closing Date of the
following conditions:
(a) COMPANY STOCKHOLDER APPROVAL. This Agreement shall
have been approved and adopted, and the Merger shall have been duly approved, by
the requisite vote under applicable law, by the stockholders of Company.
(b) REGISTRATION STATEMENT EFFECTIVE; PROXY STATEMENT.
The SEC shall have declared the S-4 effective. No stop order suspending the
effectiveness of the S-4 or any part thereof shall have been issued and no
proceeding for that purpose, and no similar proceeding in respect of the Proxy
Statement/Prospectus, shall have been initiated or threatened in writing by the
SEC.
(c) NO ORDER; HSR ACT. No Governmental Entity shall have
enacted, issued, promulgated, enforced or entered any statute, rule, regulation,
executive order, decree, injunction or other order (whether temporary,
preliminary or permanent) which is in effect and which has the effect of making
the Merger illegal or otherwise prohibiting consummation of the Merger. All
waiting periods, if any, under the HSR Act relating to the transactions
contemplated hereby will have expired or terminated early and all material
foreign antitrust approvals required to be obtained prior to the Merger in
connection with the transactions contemplated hereby shall have been obtained.
(d) TAX OPINIONS. Parent and the Company shall each have
received written opinions from their respective tax counsel (Xxxxxx Xxxxxxx
Xxxxxxxx & Xxxxxx, Professional Corporation, and Xxxxx, Xxxxx and Xxxxx,
respectively), in form and substance reasonably satisfactory to them, to the
effect that the Merger will constitute a tax-free reorganization within the
meaning of Section 368(a) of the Code and such opinions shall not have been
withdrawn; PROVIDED, HOWEVER, that if the counsel to either Parent or the
Company does not render such opinion, this condition shall nonetheless be deemed
to be satisfied with respect to such party if counsel to the other party renders
the opinion to such party that the Merger will constitute a tax-free
reorganization within the meaning of Section 368(a) of the Code. The parties to
this Agreement agree to make such customary representations as requested by such
counsel for the purpose of rendering such opinions.
(e) NASDAQ LISTING. The shares of Parent Common Stock
issuable to the stockholders of Company pursuant to this Agreement and such
other shares required to be reserved
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for issuance in connection with the Merger shall have been authorized for
listing on Nasdaq upon official notice of issuance.
6.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF COMPANY. The
obligation of Company to consummate and effect the Merger shall be subject to
the satisfaction at or prior to the Closing Date of each of the following
conditions, any of which may be waived, in writing, exclusively by Company:
(a) REPRESENTATIONS AND WARRANTIES. Each representation
and warranty of Parent and Merger Sub contained in this Agreement (i) shall have
been true and correct as of the date of this Agreement and (ii) shall be true
and correct on and as of the Closing Date with the same force and effect as if
made on the Closing Date except (A) in each case, or in the aggregate, as does
not constitute a Material Adverse Effect on Parent and Merger Sub, (B) for
changes contemplated by this Agreement and (C) for those representations and
warranties which address matters only as of a particular date (which
representations shall have been true and correct (subject to the qualifications
as set forth in the preceding clause A) as of such particular date) (it being
understood that, for purposes of determining the accuracy of such
representations and warranties, (i) all "Material Adverse Effect" qualifications
and other qualifications based on the word "material" or similar phrases
contained in such representations and warranties shall be disregarded and (ii)
any update of or modification to the Parent Schedule made or purported to have
been made after the date of this Agreement shall be disregarded). Company shall
have received a certificate with respect to the foregoing signed on behalf of
Parent by the Chief Executive Officer and Chief Financial Officer of Parent.
(b) AGREEMENTS AND COVENANTS. Parent and Merger Sub shall
have performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with by them on
or prior to the Closing Date, and Company shall have received a certificate to
such effect signed on behalf of Parent by an authorized officer of Parent.
6.3 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF PARENT AND MERGER
SUB. The obligations of Parent and Merger Sub to consummate and effect the
Merger shall be subject to the satisfaction at or prior to the Closing Date of
each of the following conditions, any of which may be waived, in writing,
exclusively by Parent:
(a) REPRESENTATIONS AND WARRANTIES. Each representation
and warranty of Company contained in this Agreement (i) shall have been true and
correct as of the date of this Agreement and (ii) shall be true and correct on
and as of the Closing Date with the same force and effect as if made on and as
of the Closing Date except (A) in each case, or in the aggregate, as does not
constitute a Material Adverse Effect on Company (B) for changes contemplated by
this Agreement; and (C) for those representations and warranties which address
matters only as of a particular date (which representations shall have been true
and correct (subject to the qualifications as set forth in the preceding clause
A) as of such particular date) (it being understood that, for purposes of
determining the accuracy of such representations and warranties, (i) all
"Material
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Adverse Effect" qualifications and other qualifications based on the word
"material" or similar phrases contained in such representations and warranties
shall be disregarded and (ii) any update of or modification to the Company
Schedule made or purported to have been made after the date of this Agreement
shall be disregarded). Parent shall have received a certificate with respect to
the foregoing signed on behalf of Company by the Chief Executive Officer and
Chief Financial Officer of Company.
(b) AGREEMENTS AND COVENANTS. Company shall have
performed or complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it at or prior to
the Closing Date, and Parent shall have received a certificate to such effect
signed on behalf of Company by the Chief Executive Officer and the Chief
Financial Officer of Company.
(c) AFFILIATE AGREEMENTS. Each of the Company Affiliates shall
have entered into the Company Affiliate Agreement and each of such agreements
will be in full force and effect as of the Effective Time.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 TERMINATION. This Agreement may be terminated at any time prior to
the Effective Time, whether before or after the requisite approval of the
stockholders of Company:
(a) by mutual written consent duly authorized by the Boards of
Directors of Parent and Company;
(b) by either Company or Parent if the Merger shall not
have been consummated by January 31, 2001 for any reason; provided, however,
that the right to terminate this Agreement under this Section 7.1(b) shall not
be available to any party whose action or failure to act has been a principal
cause of or resulted in the failure of the Merger to occur on or before such
date and such action or failure to act constitutes a breach of this Agreement;
(c) by either Company or Parent if a Governmental Entity
shall have issued an order, decree or ruling or taken any other action, in any
case having the effect of permanently restraining, enjoining or otherwise
prohibiting the Merger, which order, decree, ruling or other action is final and
nonappealable;
(d) by either Company or Parent if the required approval
of the stockholders of Company contemplated by this Agreement shall not have
been obtained by reason of the failure to obtain the required vote at a meeting
of Company stockholders duly convened therefor or at any adjournment thereof;
provided, however, that the right to terminate this Agreement under this
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Section 7.1(d) shall not be available to Company where the failure to obtain
Company stockholder approval shall have been caused by the action or failure to
act of Company and such action or failure to act constitutes a breach by Company
of this Agreement;
(e) by Company, upon a breach of any representation,
warranty, covenant or agreement on the part of Parent and Merger Sub set forth
in this Agreement, or if any representation or warranty of Parent and Merger Sub
shall have become untrue, in either case such that the conditions set forth in
Section 6.2(a) or Section 6.2(b) would not be satisfied as of the Closing Date,
provided, that if such inaccuracy in Parent's and Merger Sub's representations
and warranties or breach by Parent and Merger Sub is curable by Parent through
the exercise of its commercially reasonable efforts, then Company may not
terminate this Agreement under this Section 7.1(e) for thirty (30) days after
delivery of written notice from Company to Parent of such breach, provided
Parent continues to exercise commercially reasonable efforts to cure such breach
(it being understood that Company may not terminate this Agreement pursuant to
this paragraph (e) if it shall have materially breached this Agreement or if
such breach by Parent is cured during such thirty (30)-day period);
(f) by Parent, upon a breach of any representation,
warranty, covenant or agreement on the part of Company set forth in this
Agreement, or if any representation or warranty of Company shall have become
untrue, in either case such that the conditions set forth in Section 6.3(a) or
Section 6.3(b) would not be satisfied as of the Closing Date, provided, that if
such inaccuracy in Company's representations and warranties or breach by Company
is curable by Company through the exercise of its commercially reasonable
efforts, then Parent may not terminate this Agreement under this Section 7.1(f)
for thirty (30) days after delivery of written notice from Parent to Company of
such breach, provided Company continues to exercise commercially reasonable
efforts to cure such breach (it being understood that Parent may not terminate
this Agreement pursuant to this paragraph (f) if it shall have materially
breached this Agreement or if such breach by Company is cured during such thirty
(30)-day period);
(g) by Parent, upon a material breach of the provisions of
Section 5.4 of this Agreement; or
(h) by Parent if a Triggering Event (as defined below)
shall have occurred. For the purposes of this Agreement, a "Triggering Event"
shall be deemed to have occurred if: (i) the Board of Directors of Company or
any committee thereof shall for any reason have withdrawn or shall have amended
or modified in a manner adverse to Parent its unanimous recommendation in favor
of, the adoption and approval of the Agreement or the approval of the Merger;
(ii) Company shall have failed to include in the Proxy Statement/Prospectus the
unanimous recommendation of the Board of Directors of Company in favor of the
adoption and approval of the Agreement and the approval of the Merger; (iii)
Board of Directors of Company fails to reaffirm its unanimous recommendation in
favor of the adoption and approval of the Agreement and the approval of the
Merger within five (5) business days after Parent requests in writing that such
recommendation be reaffirmed at any time following the announcement or receipt
of an Acquisition Proposal; (iv) the
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Board of Directors of Company or any committee thereof shall have approved or
recommended any Acquisition Proposal; (v) Company shall have entered into any
letter of intent or similar document or any agreement, contract or commitment
accepting any Acquisition Proposal; or (vi) a tender or exchange offer relating
to securities of Company shall have been commenced by a person unaffiliated with
Parent and Company shall not have sent to its securityholders pursuant to Rule
14e-2 promulgated under the Securities Act, within ten (10) business days after
such tender or exchange offer is first published sent or given, a statement
disclosing that Company recommends rejection of such tender or exchange offer.
7.2 NOTICE OF TERMINATION; EFFECT OF TERMINATION. Any termination
of this Agreement under Section 7.1 above will be effective immediately upon
(or, if the termination is pursuant to Section 7.1(e) or Section 7.1(f) and the
proviso therein is applicable, thirty (30) days after) the delivery of written
notice of the terminating party to the other parties hereto. In the event of the
termination of this Agreement as provided in Section 7.1, this Agreement shall
be of no further force or effect, except (i) as set forth in this Section 7.2,
Section 7.3 and Article 8 (General Provisions), each of which shall survive the
termination of this Agreement, and (ii) nothing herein shall relieve any party
from liability for any willful or intentional breach of this Agreement. No
termination of this Agreement shall affect the obligations of the parties
contained in the Confidentiality Agreement, all of which obligations shall
survive termination of this Agreement in accordance with their terms.
7.3 FEES AND EXPENSES.
(a) GENERAL. Except as set forth in this Section 7.3, all
fees and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses whether or not the Merger is consummated; provided, however, that
Parent and Company shall share equally all fees and expenses, other than
attorneys' and accountants fees and expenses, incurred in relation to the
printing and filing (with the SEC) of the Proxy Statement/Prospectus (including
any preliminary materials related thereto), the S-4 (including financial
statements and exhibits) and any amendments or supplements thereto and any
filing required under the HSR Act or any other applicable antitrust or
competition law.
(b) COMPANY PAYMENTS. The Company shall pay to Parent in
immediately available funds, within one (1) business day after demand by Parent,
an amount equal to $38.472 million plus any Parent Stipulated Expenses (as
defined below) incurred by Parent in connection with the transaction
contemplated hereby (the "Termination Fee") if:
(i) this Agreement is terminated by Parent pursuant
to Section 7.1(g) or (h).
(ii) this Agreement is terminated by Parent or the
Company, as applicable, pursuant to Sections 7.1(b) or (d) and any of the
following shall occur (provided, however, that in the case of termination
pursuant to Section 7.1(d), Company shall pay to Parent the Parent Stipulated
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Expenses immediately after such termination regardless of whether either of the
following shall occur):
a) if following the date hereof and prior to
the Company Stockholders Meeting, a third party has announced an Acquisition
Proposal and within twelve (12) months following the termination of this
Agreement a Company Acquisition (as defined below) is consummated; or
b) if following the date hereof and prior to
the Company Stockholders Meeting, a third party has announced an Acquisition
Proposal and within twelve (12) months following the termination of this
Agreement the Company enters into an agreement or letter of intent providing for
a Company Acquisition. As used in this Agreement, the term "PARENT STIPULATED
EXPENSES" shall mean those fees and expenses actually incurred by Parent in
connection with this Agreement, and the transactions contemplated hereby and
thereby, including fees and expenses of counsel, investment bankers,
accountants, experts, consultants and other representatives; provided that such
amount shall not exceed $2.0 million.
(iii) The Company acknowledges that the agreements
contained in this Section 7.3(b) are an integral part of the transactions
contemplated by this Agreement, and that, without these agreements, Parent would
not enter into this Agreement; accordingly, if the Company fails to pay in a
timely manner the amounts due pursuant to this Section 7.3(b) and, in order to
obtain such payment, Parent makes a claim that results in a judgment against the
Company for the amounts set forth in this Section 7.3(b), the Company shall pay
to Parent its reasonable costs and expenses (including reasonable attorneys'
fees and expenses) in connection with such suit, together with interest on the
amounts set forth in this Section 7.3(b) at the prime rate of The Chase
Manhattan Bank in effect on the date such payment was required to be made.
Payment of the fees described in this Section 7.3(b) shall not be in lieu of
damages incurred in the event of breach of this Agreement. For the purposes of
this Agreement, "COMPANY ACQUISITION" shall mean any of the following
transactions (other than the transactions contemplated by this Agreement): (i) a
merger, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving the Company pursuant to which the
stockholders of the Company immediately preceding such transaction hold less
than 40% of the aggregate equity interests in the surviving or resulting entity
of such transaction, (ii) a sale or other disposition by the Company of assets
representing in excess of 40% of the aggregate fair market value of the
Company's business immediately prior to such sale or (iii) the acquisition by
any person or group (including by way of a tender offer or an exchange offer or
issuance by the Company), directly or indirectly, of beneficial ownership or a
right to acquire beneficial ownership of shares representing in excess of 40% of
the voting power of the then outstanding shares of capital stock of the Company.
7.4 AMENDMENT. Subject to applicable law, this Agreement may be
amended by the parties hereto at any time by execution of an instrument in
writing signed on behalf of each of Parent and Company; provided, however, that,
after approval of the Merger by the stockholders of the Company, no amendment
may be made which would reduce the amount or change the type of
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consideration into which each share of Company Common Stock shall be converted
upon consummation of the Merger. This Agreement may not be amended except by an
instrument in writing signed by all of the parties hereto.
7.5 EXTENSION; WAIVER. At any time prior to the Effective Time,
Parent or Company may, to the extent legally allowed, (i) extend the time for
the performance of any of the obligations or other acts of the other party
hereto, (ii) waive any inaccuracies in the representations and warranties made
to such party contained herein or in any document delivered pursuant hereto and
(iii) waive compliance with any of the agreements or conditions for the benefit
of such party contained herein. Any agreement on the part of a party hereto to
any such extension or waiver shall be valid only if set forth in an instrument
in writing signed on behalf of such party. Delay in exercising any right under
this Agreement shall not constitute a waiver of such right.
ARTICLE VIII
GENERAL PROVISIONS
8.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Company, Parent and Merger Sub contained in
this Agreement shall terminate at the Effective Time, and only the covenants
that by their terms survive the Effective Time shall survive the Effective Time.
8.2 NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally or by commercial
delivery service, or sent via telecopy (receipt confirmed) to the parties at the
following addresses or telecopy numbers (or at such other address or telecopy
numbers for a party as shall be specified by like notice):
(a) if to Parent or Merger Sub, to:
Commerce Once, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxx, Esq.
Telephone No.: 000-000-0000
Telecopy No.: 000-000-0000
with a copy to:
-00-
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
Professional Corporation
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxxx, Esq.
N. Xxxxxxx Xxxxxxxx, Esq.
Telephone No.:(000) 000-0000
Telecopy No.:(000) 000-0000
(b) if to Company, to:
Appnet, Inc.
0000 Xxxxxxxxx Xxxxxxxxx
Xxxxx 0000
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxx Xxxxx
Telephone No.: 000-000-0000
Telecopy No.: 000-000-0000
with a copy to:
Xxxxx, Xxxxx & Xxxxx
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
8.3 INTERPRETATION; KNOWLEDGE.
(a) When a reference is made in this Agreement to
Exhibits, such reference shall be to an Exhibit to this Agreement unless
otherwise indicated. When a reference is made in this Agreement to Sections,
such reference shall be to a Section of this Agreement. Unless otherwise
indicated the words "include," "includes" and "including" when used herein shall
be deemed in each case to be followed by the words "without limitation." The
table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. When reference is made herein to "the business of" an entity,
such reference shall be deemed to include the business of all direct and
indirect subsidiaries of such entity. Reference to the subsidiaries of an entity
shall be deemed to include all direct and indirect subsidiaries of such entity.
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(b) For purposes of this Agreement, the term "KNOWLEDGE"
means with respect to a party hereto, with respect to any matter in question,
that any of the executive officers of such party has actual knowledge of such
matter.
(c) For purposes of this Agreement, the term "MATERIAL
ADVERSE EFFECT" when used in connection with an entity means any change, event,
violation, inaccuracy, circumstance or effect that is materially adverse to the
business, assets (including intangible assets), capitalization, financial
condition or results of operations of such entity and its subsidiaries taken as
a whole; provided, however, that in no event shall a decline in the market price
of an entity's publicly traded securities, general economic conditions or
industry-wide developments generally affecting substantially all comparable
companies constitute a Material Adverse Effect.
(d) For purposes of this Agreement, the term "PERSON"
shall mean any individual, corporation (including any non-profit corporation),
general partnership, limited partnership, limited liability partnership, joint
venture, estate, trust, company (including any limited liability company or
joint stock company), firm or other enterprise, association, organization,
entity or Governmental Entity.
8.4 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
8.5 ENTIRE AGREEMENT; THIRD PARTY BENEFICIARIES. This Agreement
and the documents and instruments and other agreements among the parties hereto
as contemplated by or referred to herein, including the Company Schedule and the
Parent Disclosure Schedule (a) constitute the entire agreement among the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, it being understood that the Confidentiality Agreement
shall continue in full force and effect until the Closing and shall survive any
termination of this Agreement; and (b) are not intended to confer upon any other
person any rights or remedies hereunder, except as specifically provided in
Section 5.10.
8.6 SEVERABILITY. In the event that any provision of this
Agreement, or the application thereof, becomes or is declared by a court of
competent jurisdiction to be illegal, void or unenforceable, the remainder of
this Agreement will continue in full force and effect and the application of
such provision to other persons or circumstances will be interpreted so as
reasonably to effect the intent of the parties hereto. The parties further agree
to replace such void or unenforceable provision of this Agreement with a valid
and enforceable provision that will achieve, to the extent possible, the
economic, business and other purposes of such void or unenforceable provision.
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8.7 OTHER REMEDIES; SPECIFIC PERFORMANCE. Except as otherwise
provided herein, any and all remedies herein expressly conferred upon a party
will be deemed cumulative with and not exclusive of any other remedy conferred
hereby, or by law or equity upon such party, and the exercise by a party of any
one remedy will not preclude the exercise of any other remedy. The parties
hereto agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to seek an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having jurisdiction, this
being in addition to any other remedy to which they are entitled at law or in
equity.
8.8 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
law thereof.
8.9 RULES OF CONSTRUCTION. The parties hereto agree that they have
been represented by counsel during the negotiation and execution of this
Agreement and, therefore, waive the application of any law, regulation, holding
or rule of construction providing that ambiguities in an agreement or other
document will be construed against the party drafting such agreement or
document.
8.10 ASSIGNMENT. No party may assign either this Agreement or any
of its rights, interests, or obligations hereunder without the prior written
approval of the other parties. Subject to the preceding sentence, this Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors and permitted assigns.
8.11 WAIVER OF JURY TRIAL. EACH OF PARENT, COMPANY AND MERGER SUB
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE ACTIONS OF PARENT, COMPANY OR MERGER SUB IN
THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.
*****
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized respective officers as of the date first
written above.
COMMERCE ONE
By: /s/ Xxxx Xxxxxxx
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Name: Xxxx Xxxxxxx
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Title: President and Chief Executive Officer
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CONSTITUTION ACQUISITION CORPORATION
By: /s/ Xxxx Xxxxxxx
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Name: Xxxx Xxxxxxx
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Title: President and Chief Executive Officer
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APPNET, INC.
By: /s/ Xxx Xxxxx
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Name: Xxx Xxxxx
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Title: President and Chief Executive Officer
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**** REORGANIZATION AGREEMENT ****
