Exhibit 2.1
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
QRS CORPORATION
AND
TRADEWEAVE, INC.
DATED AS OF FEBRUARY 5, 2001
TABLE OF CONTENTS
PAGE
ARTICLE I THE MERGER..................................................... 2
1.1 The Merger ................................................... 2
1.2 Effective Time ............................................... 2
1.3 Effect of the Merger.......................................... 2
1.4 Certificate of Incorporation and Bylaws....................... 2
1.5 Directors and Officers........................................ 2
1.6 Effect of Merger on the Capital Stock of the
Constituent Corporations...................................... 3
1.7 Surrender of Certificates/Exchange Agent ..................... 4
1.8 No Further Ownership Rights in Company Common Stock .......... 6
1.9 Lost, Stolen or Destroyed Certificates ....................... 6
1.10 Tax Consequences ............................................. 6
1.11 Definitions................................................... 7
1.12 Taking of Necessary Action; Further Action.................... 8
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY................. 8
2.1 Organization of the Company................................... 9
2.2 Company Capital Structure..................................... 9
2.3 Authority..................................................... 10
2.4 No Conflict .................................................. 10
2.5 Consents...................................................... 10
2.6 Company Financial Statements ................................. 11
2.7 Absence of Undisclosed Liabilities ........................... 11
2.8 Brokers' and Finders' Fees; Third Party Expenses ............. 11
2.9 Intellectual Property......................................... 11
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT..................... 13
3.1 Organization, Standing and Power ............................. 13
3.2 Authority..................................................... 13
3.3 Consents...................................................... 13
3.4 Parent Common Stock .......................................... 14
ARTICLE IV CONDUCT PRIOR TO THE EFFECTIVE TIME........................... 14
4.1 Conduct of Business of the Company ........................... 14
ARTICLE V ADDITIONAL AGREEMENTS ......................................... 16
5.1 Preparation of Information Statement ......................... 16
5.2 Meeting of Stockholders ...................................... 17
5.3 Confidentiality............................................... 17
5.4 Expenses...................................................... 17
5.5 Public Disclosure ............................................ 18
5.6 Reasonable Efforts ........................................... 18
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TABLE OF CONTENTS
(CONTINUED)
PAGE
5.7 Notification of Certain Matters............................... 18
5.8 Additional Documents and Further Assurances .................. 18
5.9 S-8 Registration ............................................. 18
5.10 Termination of 401(k) Plan ................................... 19
5.11 Termination of Severance Plans ............................... 19
ARTICLE VI CONDITIONS TO THE MERGER ..................................... 19
6.1 Conditions to Obligations of Each Party to Effect the Merger.. 19
6.2 Conditions to the Obligations of Parent ...................... 20
6.3 Conditions to Obligations of the Company ..................... 21
ARTICLE VII SURVIVAL OF REPRESENTATIONS AND WARRANTIES................... 22
7.1 Survival of Representations, Warranties and Covenants......... 22
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER........................... 22
8.1 Termination................................................... 22
8.2 Effect of Termination ........................................ 23
8.3 Amendment..................................................... 23
8.4 Extension; Waiver ............................................ 23
ARTICLE IX GENERAL PROVISIONS............................................ 23
9.1 Notices....................................................... 23
9.2 Interpretation................................................ 24
9.3 Counterparts.................................................. 24
9.4 Entire Agreement; Assignment ................................. 25
9.5 Severability.................................................. 25
9.6 Other Remedies ............................................... 25
9.7 Governing Law................................................. 25
9.8 Rules of Construction......................................... 25
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THIS AGREEMENT AND PLAN OF REORGANIZATION (the "AGREEMENT") is made and
entered into as of February 5, 2001 by and among QRS Corporation, a Delaware
corporation ("PARENT "), and Tradeweave, Inc., a Delaware corporation (the
"COMPANY").
RECITALS
A. The Boards of Directors of each of Parent and the Company believe
it is in the best interests of each company and its respective stockholders that
Parent acquire the Company (the "MERGER") and, in furtherance thereof, have
approved the Merger.
B. Pursuant to the Merger, among other things, (i) all of the issued
and outstanding capital stock of the Company shall be converted into the right
to receive the consideration set forth herein, and (ii) the stock option plans
of the Company and all issued and outstanding options to purchase capital stock
of the Company shall be assumed by Parent with shares of common stock of Parent
being substituted for the shares of Company Capital Stock issuable thereunder.
C. Concurrent with the execution and delivery of this Agreement, as a
material inducement to Parent to enter into this Agreement, certain stockholders
of the Company are entering into Voting Agreements, in the form attached hereto
as EXHIBIT A (the "VOTING AGREEMENT"), with Parent.
D. Concurrent with the execution and delivery of this Agreement, as a
material inducement to certain Stockholders to enter into this Agreement,
certain Stockholders of the Company shall receive the future pro rata right to
purchase shares of common stock of Parent (the "PARENT OPTIONS").
E. 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"), with respect to Company Stockholders other than
Parent and, with respect to Parent, to effect a liquidation of the Company
governed by Section 332 of the Code.
NOW, THEREFORE, in consideration of the mutual agreements, covenants
and other promises set forth herein, the mutual benefits to be gained by the
performance thereof, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged and accepted, the parties
hereby agree as follows:
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ARTICLE I
THE MERGER
1.1 THE MERGER. At the Effective Time (as defined in SECTION 1.2
hereof) and subject to and upon the terms and conditions of this Agreement and
the applicable provisions of the General Corporation Law of the State of
Delaware ("DELAWARE LAW"), the Company shall be merged with and into Parent, the
separate corporate existence of the Company shall cease and Parent shall
continue as the surviving corporation. The surviving corporation after the
Merger is sometimes referred to hereinafter as the "SURVIVING CORPORATION."
1.2 EFFECTIVE TIME. Unless this Agreement is earlier terminated
pursuant to SECTION 8.1 hereof, the closing of the Merger (the "CLOSING") will
take place after the market closes on February 9, 2001 (the "CLOSING DATE"), at
the offices of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional Corporation, Spear
Xxxxxx Xxxxx, Xxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx, 00000, unless another time
and/or place is mutually agreed upon in writing by Parent and the Company.
Immediately following the execution and delivery of all documents required to
effect the Merger, the parties hereto shall cause the Merger to be consummated
by filing a Certificate of Merger (or like instrument) with the Secretary of
State of the State of Delaware (the "CERTIFICATE OF MERGER"), in accordance with
the applicable provisions of Delaware Law. The time of acceptance by the
Secretary of State of the State of Delaware of such filing, or such later time
as may be specified in the Certificate of Merger, shall be referred to herein as
the "EFFECTIVE TIME". The date upon which all documents required to effect the
Merger are delivered shall be referred to herein as the "Closing Date."
1.3 EFFECT OF THE MERGER. At the Effective Time, the effect of the
Merger shall be as provided in the applicable provisions of Delaware Law.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time, except as otherwise agreed to pursuant to the terms of this
Agreement, all the property, rights, privileges, powers and franchises of the
Company shall vest in the Surviving Corporation, and all debts, liabilities and
duties of the Company shall become the debts, liabilities and duties of the
Surviving Corporation.
1.4 CERTIFICATE OF INCORPORATION AND BYLAWS.
(a) Unless otherwise determined by Parent prior to the Effective
Time, the articles of organization of Parent, as in effect immediately prior to
the Effective Time, shall be the articles of organization of the Surviving
Corporation at the Effective Time until thereafter amended in accordance with
Delaware Law and as provided in such articles of organization.
(b) Unless otherwise determined by Parent prior to the Effective
Time, the bylaws of Parent immediately prior to the Effective Time, shall be the
bylaws of the Surviving Corporation at the Effective Time until thereafter
amended in accordance with Delaware Law and as provided in the articles of
organization of the Surviving Corporation and such bylaws.
1.5 DIRECTORS AND OFFICERS.
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(a) Unless otherwise determined by Parent prior to the Effective
Time, the directors of Parent immediately prior to the Effective Time shall be
the directors of the Surviving Corporation immediately after the Effective Time,
each to hold the office of a director of the Surviving Corporation in accordance
with the provisions of Delaware Law and the articles of organization and bylaws
of the Surviving Corporation until their successors are duly elected and
qualified.
(b) Unless otherwise determined by Parent prior to the Effective
Time or as otherwise provided herein, the officers of Parent immediately prior
to the Effective Time shall be the officers of the Surviving Corporation
immediately after the Effective Time, each to hold office in accordance with the
provisions of the bylaws of the Surviving Corporation.
1.6 EFFECT OF MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS.
(a) CONVERSION OF COMPANY COMMON STOCK. Each share of common
stock, par value $0.00025 per share, of the Company (the "Company Common Stock")
and each share of preferred stock, par value $0.001 per share, of the Company
(the "Preferred") issued and outstanding immediately prior to the Effective Time
(other than any share of Company Common Stock or Preferred to be canceled and
extinguished pursuant to Section 1.7(d)) will be automatically converted into a
fraction of a share of Parent Common Stock (as defined below) (the "Exchange
Ratio") shall be computed by (X) dividing (A) $26.2 million by (B) the average
of the closing sale prices per share of Parent Common Stock for the ten
(10) trading days ending after the market closes on the Closing Date (the
"Average Market Price") and (Y) dividing such quotient by the number of shares
of common stock and Preferred of the Company outstanding, on a fully-diluted and
fully-converted basis, on the day (the "Reference Date") immediately prior to
the Closing Date, rounded down to the nearest whole number of shares of Parent
Common Stock; provided, that if the Average Market Price is (x) less than
$8.00 per share then the Exchange Ratio shall be 0.1125 or (ii) more than
$12.00 per share then the Exchange Ratio shall be 0.0750. The Exchange Ratio
shall be computed to the fourth decimal place. If any shares of Company Common
Stock or Preferred 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 Company, then, except to the extent otherwise provided in such
agreement, the shares of Parent Common Stock issued in exchange for such shares
of Company Common Stock or Preferred 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.
(b) ASSUMPTION OF COMPANY PLAN AND OPTIONS. As soon as practicable
following the Closing but effective as of the Effective Time, the Company's 1999
Stock Option/Stock Issuance Plan (collectively, the "Plan") and each Company
Option shall be assumed by Parent. Each Company Option so assumed by Parent
pursuant to this SECTION 1.6(b) shall continue to have, and be subject to, the
same terms and conditions (including vesting terms) set forth in the Plan, and
the option agreements relating thereto, as in effect immediately prior to the
Effective Time, except that (A) such assumed Company Option will be exercisable
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
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issuable upon exercise of such Company 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 (B) the per share exercise price for the
shares of Parent Common Stock issuable upon exercise of such assumed Company
Option shall be equal to the quotient obtained by dividing the exercise price
per share of Company Common Stock at which such assumed Company Option was
exercisable immediately prior to the Closing Date by the Exchange Ratio, rounded
to the nearest whole cent. Parent will issue to each holder of an outstanding
Company Stock Option a notice describing the foregoing assumption of such
Company Stock Option by Parent. It is intended that Company Stock Options
assumed by Parent shall qualify following the Effective Time as incentive stock
options as defined in Section 422 of the Code to the extent Company Stock
Options qualified as incentive stock options immediately prior to the Effective
Time and the provisions of this Section 1.6(b) shall be applied consistent with
such intent.
(c) WITHHOLDING TAXES. Any amounts payable to any Stockholder
pursuant to SECTION 1.6 hereof shall be subject to, and reduced by an amount
equal to, the amount of any state, federal and foreign withholding taxes
incurred (and not previously paid by or on behalf of such stockholder of the
Company) in connection with the acquisition of Company Common Stock and
Preferred upon the exercise of Company Options, upon the lapsing of repurchase
rights in respect of shares of Company Common Stock, or upon payment of a bonus
in the form of Company Common Stock, if any, to such stockholder.
(d) STOCKHOLDER LOANS. In the event that any Stockholder has
outstanding loans from the Company as of the Effective Time, the consideration
payable to such stockholder pursuant to this SECTION 1.6 shall be reduced by an
amount equal to the outstanding principal plus accrued interest of such
stockholder's loans as of the Effective Time.
(e) SUFFICIENT RESERVED SHARES. Parent will reserve sufficient
shares of Parent Common Stock for issuance under this SECTION 1.6.
(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 or Preferred),
reorganization, recapitalization, reclassification or other like change with
respect to Parent Common Stock or Company Common Stock or Preferred occurring on
or after the date hereof and prior to the Effective Time.
1.7 SURRENDER OF CERTIFICATES/EXCHANGE AGENT.
(a) EXCHANGE AGENT. The Corporate Secretary of Parent shall serve
as the exchange agent (the "EXCHANGE AGENT") for the Merger.
(b) PARENT TO PROVIDE PARENT COMMON STOCK. Promptly after the
Effective Time, Parent shall make available to the Exchange Agent for exchange
in accordance with this Article I the
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shares of Parent Common Stock issuable pursuant to Section 1.6 in exchange for
outstanding shares of Company Common Stock and Preferred.
(c) EXCHANGE PROCEDURES. On or promptly after the Effective Time,
the Stockholders will surrender the certificates representing their Company
Common Stock and Preferred (the "STOCK CERTIFICATES") to the Exchange Agent for
cancellation together with a letter of transmittal in such form and having such
provisions that Parent may reasonably request. Upon surrender of a Stock
Certificate for cancellation to the Exchange Agent, or such other agent or
agents as may be appointed by Parent, together with such letter of transmittal,
duly completed and va lidly executed in accordance with the instructions
thereto, subject to the terms of SECTION 1.7(f) hereof, the holder of such Stock
Certificate shall be entitled to receive from the Exchange Agent in exchange
therefor a certificate representing the number of whole shares of Parent Common
Stock and the Stock Certificate so surrendered shall be canceled. Until so
surrendered, each outstanding Stock Certificate will be deemed from and for all
corporate purposes, to evidence only the ownership of the number of full shares
of Parent Common Stock into which such shares of Company Common Stock and
Preferred shall have been so converted.
(d) DISSENTING SHAREHOLDERS.
(i) Notwithstanding any provision of this Agreement to
the contrary, any shares of Company Common Stock or Preferred held by a holder
who, immediately prior to the Effective Time, acting in accordance with
Section 262 of Subchapter IX of the Delaware Law, (i) prior to the special
meeting at which the Stockholders vote to approve the Merger (the "Special
Meeting") has delivered to the Company written notice of his intention to demand
payment for his shares of the Company Common Stock or Preferred if the Merger is
effectuated and (ii) has not voted in favor of the Merger, shall not have his
shares of the Company Common Stock or Preferred converted into a right to
receive shares of Parent Common Stock. If, however, after the Effective Time
such holder withdraws or loses his right to demand payment for his Company
Common Stock or Preferred, such Company Common Stock or Preferred shall be
treated as if they had been converted as of the Effective Time and, as of the
occurrence of such event, such holder's Company Common Stock or Preferred shall
treated as if they had been converted as of the Effective Time into the right to
receive that number of shares of Parent Common Stock as is set forth Section 1.6
hereof.
(ii) The Company shall give Parent (i) prompt notice of
any written demands for payment of any Company Common Stock or Preferred,
withdrawals of such demands, and any other instruments that relate to such
demands received by the Company and (ii) the opportunity to direct all
negotiations and proceedings with respect to demands for appraisal under the
Delaware Law. The Company shall not, except with the prior written consent of
Parent, make any payment with respect to any demands for appraisal of Company
Common Stock or Preferred or offer to settle or settle any such demands.
(e) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No dividends
or other distributions declared or made after the Effective Time with respect to
Parent Common Stock with a record date after the Effective Time will be paid to
the holder of any unsurrendered Stock Certificate
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with respect to the shares of Parent Common Stock represented thereby until
the holder of record of such Stock Certificate shall surrender such Stock
Certificate. Subject to applicable law, following surrender of any such Stock
Certificate, there shall be paid to the record holder of the certificates
representing whole shares of Parent Common Stock issued in exchange therefor,
without interest, at the time of such surrender, the amount of dividends or
other distributions with a record date after the Effective Time theretofore paid
with respect to such whole shares of Parent Common Stock.
(f) TRANSFERS OF OWNERSHIP. If any certificate for shares of
Parent Common Stock is to be issued in a name other than that in which the
certificate surrendered in exchange therefor is registered, it will be a
condition of the issuance and/or delivery thereof that the certificate so
surrendered will be properly endorsed and otherwise in proper form for transfer
and that the person 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 a certificate for shares of Parent Common Stock in any name other
than that of the registered holder of the certificate surrendered, or
established to the satisfaction of Parent or any agent designated by it that
such tax has been paid or is not payable.
(g) NO LIABILITY. Notwithstanding anything to the contrary in this
SECTION 1.7 hereof, neither the Exchange Agent, the Surviving Corporation nor
any party hereto shall be liable to a holder of shares of Company Common Stock
or Preferred 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. The shares of
Parent Common Stock paid in respect of the surrender for exchange of shares of
Company Common Stock and Preferred in accordance with the terms hereof, shall be
deemed to be full satisfaction of all rights pertaining to such shares of
Company Common Stock and Preferred, and there shall be no further registration
of transfers on the records of the Surviving Corporation of shares of Company
Common Stock and Preferred which were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Stock 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 any
certificates evidencing shares of Company Common Stock/Preferred 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, such amount, if any, as may be required pursuant to
SECTION 1.6 hereof; PROVIDED, HOWEVER, that Parent may, in its discretion and as
a condition precedent to the issuance thereof, require the stockholder who is
the owner of such lost, stolen or destroyed certificates to deliver a bond in
such amount as it may reasonably direct against any claim that may be made
against Parent or the Exchange Agent with respect to the certificates alleged to
have been lost, stolen or destroyed.
1.10 TAX CONSEQUENCES. It is intended by the parties hereto that the
Merger shall constitute a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "CODE") with respect to
Company Stockholders other than Parent and, with respect to Parent, shall be a
liquidation governed by Section 332 of the Code.
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1.11 DEFINITIONS. For all purposes of this Agreement, the following
terms shall have the following respective meanings:
"AVERAGE MARKET PRICE" shall mean the average of the closing
sale prices per share of Parent Common Stock for the ten (10) trading days
ending on the Reference Date.
"CLOSING DATE" shall mean after the market closes on
February 9, 2001.
"COMPANY COMMON STOCK" shall mean shares of common stock,
$.00025 par value, of the Company.
"COMPANY MATERIAL ADVERSE EFFECT" shall mean, for purposes of
this Agreement, any change, event or effect that is materially adverse to the
business, assets (including intangible assets), condition (financial or
otherwise) or results of operations of the Company and its subsidiaries, taken
as a whole (except for those changes, events and effects that are caused by
(i) conditions affecting the United States economy as a whole, (ii) conditions
affecting the industry in which Company competes as a whole, (iii) conditions
resulting from the announcement or the pendency of the Merger, (iv) or actions
that the Company may take or not take in response to requests made by Parent for
permission to take actions prohibited by, or to refrain from taking actions
required by, SECTION 4.1.
"COMPANY OPTIONS" shall mean all issued and outstanding
options, warrants or other rights to purchase or otherwise acquire Company
Common Stock (whether or not vested) held by any person or entity.
"ESTIMATED THIRD PARTY EXPENSES" shall mean the amount of
Third Party Expenses (as defined in Section 5.4) payable by the Company
estimated by the Company in good faith and based on reasonable assumptions of
the Closing Date.
"EXCHANGE RATIO" shall assume its definition in
SECTION 1.6(a).
"GAAP" shall mean United States generally accepted accounting
princ iples consistently applied.
"KNOWLEDGE" shall mean with respect to the Company, the
knowledge of the Company's officers, directors and other managers, provided that
such persons shall have made due and diligent inquiry of those employees and
contract workers of the Company whom such officers, directors and managers
reasonably believe would have actual knowledge of the matters represented .
"PARENT COMMON STOCK" shall mean shares of common stock, par
value $0.001 per share, of Parent.
"PARENT MATERIAL ADVERSE EFFECT" shall mean, for purposes of
this Agreement, any change, event or effect that is materially adverse to the
business, assets (including intangible assets), condition (financial or
otherwise) or results of operations of Parent and its subsidiaries, taken
7
as a whole (except for those changes, events and effects that are caused by
(i) conditions affecting the United States economy as a whole, (ii) conditions
affecting the industry in which Parent competes as a whole, (iii) conditions
resulting from the announcement or the pendency of the Merger, (iv) or any
decline in Parent's stock price.
"PARENT OPTIONS" shall mean options, warrants, or the right to
purchase shares of Parent Common Stock to be issued to Preferred Stockholders
Xxxxx Xxxxxxx and Xxxxx Xxxxxxx, pro rata in accordance with their relative
holdings of Company Preferred, to purchase shares of Parent Common Stock, at a
price per share equal to the fair market value on the date of grant, as follows:
35,000 shares commencing January 1, 2002 and ending January 31, 2005; 35,000
shares commencing January 1, 2003 and ending January 31, 2005; 35,000 shares
commencing January 1, 2004 and ending January 31, 2005; and 35,000 shares
commencing January 1, 2004, and ending January 31, 2005; in each case subject to
early purchase in the event of a Change in Control or Corporate Transaction (as
defined in the Plan).
"PLAN" shall mean the Company's 1999 Stock Option/Stock
Issuance Plan.
"PREFERRED" shall mean the Series A Preferred Stock, $0.001
par value, of the Company.
"REFERENCE DATE" shall mean the day immediately prior to the
Closing Date.
"RETENTION OPTIONS " shall mean options to purchase up to
200,000 shares of Parent Common Stock to be granted to key Company employees
pursuant to the Plan, on terms to be determined by Parent's Compensation
Committee (including the number of shares and vesting of each such option, with
an exercise price equal to the fair market value of Parent Common Stock on the
date of grant.
"STOCKHOLDER" shall mean each holder of any Company Common
Stock and Preferred immediately prior to the Effective Time.
1.12 TAKING OF NECESSARY ACTION; FURTHER ACTION. If at any time after
the Effective Time, any further action is necessary or desirable to carry out
the purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of the Company, Parent, and the officers and directors of the
Company and Parent are fully authorized in the name of their respective
corporations or otherwise to take, and will take, all such lawful and necessary
action.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY
The Company hereby represents and warrants to Parent, subject to such
exceptions as are specifically disclosed in the disclosure letter (referencing
the appropriate section and paragraph
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numbers) supplied by the Company to Parent (the "COMPANY DISCLOSURE SCHEDULE "),
attached hereto as Schedule 2 and dated as of the date hereof, that on the date
hereof and (except as otherwise noted) as of the Effective Time as though made
at the Effective Time as follows:
2.1 ORGANIZATION OF THE COMPANY. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. The Company has the corporate power to own its properties and to carry
on its business as currently conducted and as currently contemplated to be
conducted. The Company is duly qualified or licensed to do business and in good
standing as a foreign corporation in each jurisdiction in which it conducts
business except where the failure to so qualify would not have a Company
Material Adverse Effect. The Company has delivered a true and correct copy of
its articles of organization and bylaws, each as amended to date and in full
force and effect on the date hereof, to Parent. The operations now being
conducted by the Company are not now and have never been conducted by the
Company under any other name.
2.2 COMPANY CAPITAL STRUCTURE.
(a) The authorized capital stock of the Company consists of
100,000,000 shares of Common Stock, of which 21,683,503 shares are issued and
outstanding and 5,628,886 shares of Preferred of which 5,628,886 shares are
issued and outstanding as of the date hereof. The Company Common Stock and
Preferred is held by the persons and in the amounts set forth in SECTION 2.2(a)
of the Company Disclosure Schedule. All outstanding shares of Company Common
Stock and Preferred are duly authorized, validly issued, fully paid and
non-assessable and not subject to preemptive rights created by statute, the
articles of organization or bylaws of the Company, and were issued free of any
similar rights under any agreement to which the Company is a party or by which
it is bound, and have been issued in compliance with federal and state
securities laws. There are no declared or accrued but unpaid dividends with
respect to any shares of Company Common Stock and Preferred. The Company has no
other capital stock authorized, issued or outstanding.
(b) Except for the Plan, the Company has never adopted or
maintained any stock option plans or other plans providing for equity
compensation of any person. The Company has reserved 4,000,000 shares of Company
Common Stock for issuance to emplo yees, contract workers and directors of, and
consultants to, the Company upon the exercise of options granted under the Plan,
of which 1,797,000 shares are issuable (subject to vesting), as of the date
hereof, upon the exercise of outstanding, unexercised options granted under the
Plan. SECTION 2.2(b) of the Company Disclosure Schedule sets forth for each
outstanding Company Option, the name of the holder of such option and the number
of shares of Company Common Stock issuable upon the exercise of such option, the
exercise price of such option, the vesting schedule for such option, including
the extent vested to date and whether the vesting of such option will be
accelerated by the transactions contemplated by this Agreement, and whether such
option is intended to qualify as an incentive stock option as defined in Section
422 of the Code. Except for the Company Options, there are no options, warrants,
calls, rights, commitments or agreements of any character, written or oral, to
which the Company is a party or by which it is bound obligating the Company to
issue, deliver, sell, repurchase or redeem, or cause to be issued, delivered,
sold, repurchased or redeemed, any shares of
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the capital stock of the Company or obligating the Company to grant, extend,
accelerate the vesting of, change the price of, otherwise amend or enter into
any such option, warrant, call, right, commitment or agreement. There are no
outstanding or authorized stock appreciation, phantom stock, profit
participation, or other similar rights with respect to the Company. Except as
contemplated hereby, there are no voting trusts, proxies, or other agreements or
understandings with respect to the voting stock of the Company.
2.3 AUTHORITY. The Company has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby and thereby, subject to approval of this Agreement and the
Merger by the Stockholders. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action on the part of the Company, and no
further action is required on the part of the Company to authorize the Agreement
and the transactions contemplated hereby and thereby, subject only to the
approval of this Agreement and the Merger by the Stockholders. This Agreement
and the Merger have been unanimously approved by the Board of Directors of the
Company. This Agreement has been duly executed and delivered by the Company and
assuming the due authorization, execution and delivery by the other parties
hereto and thereto, constitute the valid and binding obligations of the Company,
enforceable against the Company in accordance with their respective terms,
except as such enforceability may be subject to the laws of general application
relating to bankruptcy, insolvency and the relief of debtors and rules of law
governing specific performance, injunctive relief or other equitable remedies.
2.4 NO CONFLICT. Except as set forth in Schedule 2.4 of the Company
Disclosure Schedule, the execution and delivery by the Company of this Agreement
and any Related Agreement to which the Company is a party, and the consummation
of the transactions contemplated hereby and thereby, will not conflict with or
result in any violation of or default under (with or without notice or lapse of
time, or both) or give rise to a right of termination, cancellation,
modification or acceleration of any obligation or loss of any benefit under (any
such event, a "Conflict") (i) any provision of the articles of organization or
bylaws of the Company, (ii) any mortgage, indenture, lease, contract, covenant
or other agreement, instrument or commitment, permit, concession, franchise or
license to which the Company or any of its properties or assets (including
intangible assets), is subject, or (iii) any judgment, order, decree, statute,
law, ordinance, rule or regulation applicable to the Company or any of its
properties (tangible and intangible) or assets except with respect to such
conflicts, violations or defaults, in the case of clauses (ii) and (iii), that
would not in the aggregate have a Company Material Adverse Effect. Following the
Effective Time, the Company will be permitted to exercise all of its rights
under the Contracts without the payment of any additional amounts or
consideration other than ongoing fees, royalties or payments which the Company
would otherwise be required to pay pursuant to the terms of such Contracts had
the transactions contemplated by this Agreement not occurred.
2.5 CONSENTS. No consent, waiver, approval, order or authorization of,
or registration, declaration or filing with any court, administrative agency or
commission or other federal, state, county, local or other foreign governmental
authority, instrumentality, agency or commission (each,
10
a "GOVERNMENTAL ENTITY") or any third party, including a party to any agreement
with the Company (so as not to trigger any Conflict), is required by or with
respect to the Company in connection with the execution and delivery of this
Agreement and any Related Agreement to which the Company is a party or the
consummation of the transactions contemplated hereby and thereby, except for
(i) orders, authorizations, registrations, declarations and filings as may be
required under applicable securities laws, (ii) the filing of the Certificate of
Merger with the Secretary of State of the State of Delaware, and (iii) such
other consents, waivers, approvals, orders, authorizations, registrations,
declarations or filings which if not obtained or made would not have a Company
Material Adverse Effect or otherwise have a material adverse effect on the
ability of the parties to consummate the Merger.
2.6 COMPANY FINANCIAL STATEMENTS. The Company has provided to Parent
its unaudited balance sheet as of December 31, 2000 (the "Financials Date"), and
the related unaudited statements of income and stockholders' equity for the
periods then ended (collectively, the "FINANCIALS"). The Financials are correct
in all material respects and have been prepared in accordance with GAAP
consistently applied on a basis consistent throughout the periods indicated and
consistent with each other (except that such financials do not contain footnotes
and other presentation items that may be required by GAAP). The Financials
present fairly the financial condition, operating results and cash flows of the
Company as of the dates and during the periods indicated therein.
2.7 ABSENCE OF UNDISCLOSED LIABILITIES. The Company has no material
obligations or liabilities of any nature (matured or unmatured, fixed or
contingent) other than (i) those set forth or adequately provided for in the
Financials, (ii) those incurred in the ordinary course of business and not
required to be set forth in the Financials under generally accepted accounting
principles, (iii) those incurred in the ordinary course of business since the
Financials Date and consistent with past practice; and (iv) those incurred in
connection with the execution of this Agreement.
2.8 BROKERS' AND FINDERS' FEES; THIRD PARTY EXPENSES. Except as set
forth in Section 2.8 of the Company Disclosure Schedule, the Company has not
incurred, nor will it incur, directly or indirectly, any liability for brokerage
or finders' fees or agents' commissions or any similar charges in connection
with the Agreement or any transaction contemplated hereby. SECTION 2.8 of the
Company Disclosure Schedule sets forth the Company's current estimate of all
Third Party Expenses (as defined in SECTION 5.4 hereof) expected to be incurred
by the Company in connection with the negotiation and effectuation of the terms
and conditions of this Agreement and the transactions contemplated hereby.
2.9 INTELLECTUAL PROPERTY.
(a) The Company owns, licenses or otherwise possesses legally
enforceable rights to use all patents, trademarks, trade names, service
marks, copyrights, and any applications therefor, maskworks, net lists,
schematics, technology, know- how, trade secrets, inventions, ideas,
algorithms, processes, computer software programs or applications (in source
code and/or object code form), and tangible or intangible proprietary
information or material ("Intellectual Property") that are used or proposed
to be used in the business of the Company as currently conducted or as
proposed to be
11
conducted by the Company. The Company has not (i) licensed any of its
Intellectual Property in source code form to any party or (ii) entered into
any exclusive agreements relating to its Intellectual Property with any
party.
(b) SCHEDULE 2.9 of the Company Disclosure Schedule lists (i) all
patents and patent applications and all registered and unregistered
trademarks, trade names and service marks, registered and unregistered
copyrights, and maskworks, included in the Intellectual Property, including
the jurisdictions in which each such Intellectual Property right has been
issued or registered or which any application for such issuance and
registration has been filed, (ii) all licenses, sublicenses and other
agreements as to which the Company is a party and pursuant to which any
person is authorized to use any Intellectual Property, and (iii) all
licenses, sublicenses and other agreements as to which the Company is a party
and pursuant to which the Company is aut horized to use any third party
patents, trademarks or copyrights, including software ("Third Party
Intellectual Property Rights") which are incorporated in, are, or form a part
of any Company product.
(c) There is no unauthorized use, disclosure, infringement or
misappropriation of any Intellectual Property Rights of the Company, or any
Third Party Intellectual Property Rights, by any third party, including any
employee or former employee of the Company. The Company has not entered into
any agreement to indemnify any other person against any charge of
infringement of any Intellectual Property, other than indemnification
provisions contained in purchase orders or license agreements arising in the
ordinary course of business.
(d) The Company is not, nor will it be as a result of the execution
and delivery of this Agreement or the performance of its obligations under
this Agreement, in breach of any license, sublicense or other agreement of
the Company relating to the Intellectual Property or Third Party Intellectual
Property Rights.
(e) All patents, registered trademarks, service marks and copyrights
held by the Company are valid and subsisting. The Company has not been sued
in any suit, action or proceeding which involves a claim of infringement of
any patents, trademarks, service marks, copyrights or violation of any trade
secret or other proprietary right of any third party. The manufacturing,
marketing, licensing or sale of the Company's products do not infringe any
patent, trademark, service xxxx, copyright, trade secret or other proprietary
right of any third party. The Company has not brought any action, suit or
proceeding for infringement of Intellectual Property or breach of any license
or agreement involving Intellectual Property against any third party.
(f) The Company has secured from all consultants and employees who
contributed to the creation or development of Intellectual Property valid
written assignments of the rights to such contributions that the Company does
not already own by operation of law.
(g) The Company has taken all reasonable necessary and appropriate
steps to protect and preserve the confidentiality of all Intellectual
Property not otherwise protected by patents, patent applications or copyright
("Confidential Information"). All use, disclosure or appropriation of
Confidential Information owned by the Company by or to a third party has been
12
pursuant to the terms of a written agreement between the Company and such
third party. All use, disclosure or appropriation of Confidential Information
not owned by the Company has been pursuant to the terms of a written
agreement between the Company and the owner of such Confidential Information,
or is otherwise lawful.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF PARENT
Parent hereby represents and warrants to the Company, subject to
such exceptions as are specifically disclosed in the disclosure letter
(referencing the appropriate section and paragraph numbers) supplied by
Parent to the Company (the "PARENT DISCLOSURE SCHEDULE") and dated as of the
date hereof, that on the date hereof and as of the Effective Time as though
made at the Effective Time as follows:
3.1 ORGANIZATION, STANDING AND POWER. Parent is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Delaware. Parent has the corporate power to own its properties and to
carry on its business as now being conducted and is duly qualified or
licensed to do business and is in good standing in each jurisdiction in which
the failure to be so qualified or licensed would have a material adverse
effect on the business, assets (including intangible assets), condition
(financial or otherwise), results of operations, prospects or capitalization
of Parent (a "PARENT MATERIAL ADVERSE EFFECT"), provided that a drop in
Parent's stock price shall not constitute such a material adverse effect.
3.2 AUTHORITY. Parent has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby and thereby have
been duly authorized by all necessary corporate action on the part of Parent,
subject only to shareholder approval. This Agreement has been duly executed
and delivered by Parent and constitutes the valid and binding obligations of
Parent, enforceable in accordance with its terms, except as such
enforceability may be limited by principles of public policy and subject to
the laws of general application relating to bankruptcy, insolvency and the
relief of debtors and rules of law governing specific performance, injunctive
relief or other equitable remedies.
3.3 CONSENTS. No consent, waiver, approval, order or authorization
of, or registration, declaration or filing with, any Governmental Entity, or
any third party is required by or with respect to Parent in connection with
the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby and thereby, except for (i) such consents,
waivers, approvals, orders, authorizations, registrations, declarations and
filings as may be required under applicable securities laws, (ii) such
consents, waivers, approvals, orders, authorizations, registrations,
declarations and filings which, if not obtained or made, would not have a
Parent Material Adverse Effect, and (iii) the filing of the Merger Agreement
with the Secretary of State of the State of Delaware.
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3.4 PARENT COMMON STOCK. Parent Common Stock which constitutes the
Merger consideration has been duly authorized, and upon consummation of the
transactions contemplated by this Agreement, will be validly issued, fully
paid and nonassessable.
ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME
4.1 CONDUCT OF BUSINESS OF THE COMPANY. During the period from the
date of this Agreement and continuing until the earlier of the termination of
this Agreement or the Effective Time, the Company agrees, except to the
extent that Parent shall otherwise consent in writing, to carry on the
Company's business in the usual, regular and ordinary course in substantially
the same manner as heretofore conducted, to pay the debts and Taxes of the
Company when due, to pay or perform other obligations when due, and, to the
extent consistent with such business, use its reasonable best efforts
consistent with past practice and policies to preserve intact the Company's
present business organizations, keep available the services of the Company's
present officers and key employees and preserve the Company's relationships
with customers, suppliers, distributors, licensors, licensees, and others
having business dealings with it, all with the goal of preserving unimpaired
the Company's goodwill and ongoing businesses at the Effective Time. The
Company shall promptly notify Parent of any event or occurrence or emergency
not in the ordinary course of business of the Company and any material event
involving the Company. Except as expressly required by this Agreement or as
set forth in SECTION 4.1 of the Company Disclosure Schedule, the Company
shall not, without the prior written consent of Parent:
(a) make any expenditures or enter into any commitment or
transaction exceeding $100,000;
(b) (i) sell, license or transfer to any person or entity any rights
to any Company Intellectual Property except for non-exclusive license
agreements entered into in the ordinary course of business or enter into any
agreement with respect to any intellectual property of any person or entity,
except for licenses or commercially available software, (ii) enter into any
agreement with respect to the development of any intellectual property with a
third party except for consulting agreements entered in to in the ordinary
course of business which provide for exclusive ownership by the Company of
any Intellectual Property developed thereunder or (iii) or change the methods
of establishing pricing or royalties charged by the Company to its customers
or licensees, or the methods of establishing pricing or royalties set or
charged by persons who have licensed intellectual property to the Company
except as required by the terms of agreements currently in effect;
(c) enter into or amend any Contract pursuant to which any other
party is granted marketing, distribution, development or similar rights of
any type or scope with respect to any products or technology of the Company;
(d) amend or otherwise modify (or agree to do so), or violate the
terms of, any Company Contracts or License Agreements;
14
(e) commence or settle any litigation;
(f) declare, set aside or pay any dividends on or make any other
distributions (whether in cash, stock or property) in respect of any Company
Common Stock or Preferred, or split, combine or reclassify any Company Common
Stock or Preferred or issue or aut horize the issuance of any other
securities in respect of, in lieu of or in substitution for shares of Company
Common Stock or Preferred, or repurchase, redeem or otherwise acquire,
directly or indirectly, any shares of Company Common Stock or Preferred (or
options, warrants or other rights exercisable therefor) except in accordance
with the agreements evidencing Company Options or restricted stock awards;
(g) issue, grant, deliver or sell or authorize or propose the
issuance, grant, delivery or sale of, or purchase or propose the purchase of,
any shares of capital stock of the Company or securities convertible into, or
subscriptions, rights, warrants or options to acquire, or other agreements or
commitments of any character obligating it to issue or purchase any such
shares or other convertible securities, except for shares of Company Common
Stock issued upon exercise of Company Options outstanding on the date hereof;
(h) cause or permit any amendments to its articles of organization,
bylaws or other organizational documents of the Company;
(i) acquire or agree to acquire by merging or consolidating with, or
by purchasing any assets or equity securities 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 acquire
any assets which are material, individually or in the aggregate, to the
Company's business;
(j) except as allowed pursuant to SECTION 4.1(b) hereof, sell,
lease, license or otherwise dispose of any of its properties or assets,
except properties or assets which are not Company Intellectual Property and
only in the ordinary course of business and consistent with past practices;
(k) incur any indebtedness or guarantee any indebtedness or issue or
sell any debt securities or guarantee any debt securities of others;
(l) grant any loans to others or purchase debt securities of others
or amend the terms of any outstanding loan agreement;
(m) grant any severance or termination pay (i) to any director or
officer, or (ii) to any other employee or contract worker except payments
made pursuant to standard written agreements outstanding on the date hereof
and disclosed in the Company Disclosure Schedule;
(n) adopt or amend any employee benefit plan, or enter into any
employment contract, pay or agree to pay any special bonus or special
remuneration to any director, employee or contract worker, or increase the
salaries or wage rates of its employees or contract workers except
15
payments made pursuant to standard written agreements in place on the date
hereof and disclosed in the Company Disclosure Schedule;
(o) revalue any of its assets, including without limitation writing
down the value of inventory or writing off notes or accounts receivable other
than in the ordinary course of business;
(p) pay, discharge or satisfy, in an amount in excess of $100,000 in
any one case, any claim, liability or obligation (absolute, accrued, asserted
or unasserted, contingent or otherwise), other than such payment, discharge
or satisfaction in the ordinary course of business of liabilities reflected
or reserved against in the Financials or arising in the ordinary course of
business after the date of the Current Balance Sheet;
(q) make or change any material election in respect of Taxes, adopt
or change any material accounting method in respect of Taxes, enter into any
material closing agreement, settle any material claim or assessment in
respect of Taxes, or consent to any extension or waiver of the limitation
period applicable to any claim or assessment in respect of Taxes;
(r) enter into any strategic alliance or joint marketing arrangement
or agreement;
(s) take any action to accelerate the vesting schedule of any of the
outstanding Company Options or Company Common Stock;
(t) hire or terminate any employees or contract workers, or
encourage any employees or contract workers to resign from the Company; or
(u) take, or agree in writing or otherwise to take, any of the
actions described in SECTIONS 4.1(a) through 4.1(u) hereof, or any other
action that would (x) prevent the Company from performing or cause the
Company not to perform their respective covenants hereunder or (y) cause or
result in any representations and warranties contained in Article II herein
being untrue or incorrect.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 PREPARATION OF INFORMATION STATEMENT. As promptly as
practicable after the execution of this Agreement, the Company shall prepare
an Information Statement for the Stockholders of the Company to approve this
Agreement and the transactions contemplated hereby. The Information Statement
shall constitute a disclosure document for the offer and issuance of the
shares of Parent Common Stock to be received by the holders of Company
Capital Stock in the Merger and an information statement for solicitation of
shareholder approval of the Merger. Parent and the Company shall each use its
commercially reasonable efforts to cause the Information Statement to comply
with applicable federal and state securities laws requirements. Each of
Parent and the Company agrees to provide promptly to the other such
information concerning its business and
16
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 Information Statement, 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 Information Statement. The Company
will promptly advise Parent, and Parent will promptly advise the Company, in
writing if at any time prior to the Effective Time either the Company or
Parent shall obtain knowledge of any facts that might make it necessary or
appropriate to amend or supplement the Information Statement in order to make
the statements contained or incorporated by reference therein not misleading
or to comply with applicable law. The Information Statement shall contain the
recommendation of the Board of Directors of the Company that the Company
Stockholders approve the Merger and this Agreement and the conclusion of the
Board of Directors that the terms and conditions of the Merger are fair and
reasonable to the Stockholders of the Company. Anything to the contrary
contained herein notwithstanding, the Company shall not include in the
Information Statement any information with respect to Parent or its
affiliates or associates, the form and content of which information shall not
have been approved by Parent prior to such inclusion.
5.2 MEETING OF STOCKHOLDERS. The Company shall promptly after the
date hereof take all action necessary in accordance with Delaware Law and its
Certificate of Incorporation and Bylaws to convene the Company Stockholders
Meeting or to secure the written consent of its Stockholders within thirty
(30) days of the date of this Agreement. The Company shall consult with
Parent regarding the date of the Company Stockholders Meeting and use all
reasonable efforts and shall not postpone or adjourn (other than for the
absence of a quorum) the Company Stockholders Meeting without the consent of
Parent. The Company shall use its best efforts to solicit from Stockholders
of the Company proxies or shareholder consents in favor of the Merger and
shall take all other action necessary or advisable to secure the vote or
consent of the Stockholders required to effect the Merger.
5.3 CONFIDENTIALITY. Each of the parties hereto hereby agrees not
to disclose the information obtained in any investigation pursuant to
SECTION 5.1 hereof, or pursuant to the negotiation and execution of this
Agreement or the effectuation of the transactions contemplated hereby to a
third party (other than to its respective representatives and, as
appropriate, employees) without the prior written consent of the other,
except to the extent required by law or legal process. Each party agrees that
it shall hold in confidence any and all proprietary, confidential, trade
secrets and other non-public information and data relating to the business
and affairs of the other furnished or disclosed pursuant to this Agreement or
otherwise, and shall not disclose, publish, or make use of any such
information without the prior written consent of the party disclosing the
same unless the information otherwise becomes general public knowledge or was
independently known to the receiving party or hereafter becomes lawfully
known by the receiving party other than from the disclosing party.
5.4 EXPENSES. Whether or not the Merger is consummated, all fees and
expenses incurred in connection with the Merger including, without
limitation, all legal, accounting, financial advisory, consulting and all
other fees and expenses of third parties ("Third Party Expenses") incurred by
a
17
party in connection with the negotiation and effectuation of the terms and
conditions of this Agreement and the transactions contemplated hereby, shall
be the obligation of the respective party incurring such fees and expenses;
provided that Parent agrees to pay up to $700,000 of such reasonable and
documented Third Party Expenses incurred by the Company.
5.5 PUBLIC DISCLOSURE. Neither party shall issue any statement or
communication to any third party (other than their respective agents)
regarding the subject matter of this Agreement or the transactions
contemplated hereby, including, if applicable, the termination of this
Agreement and the reasons therefor, without the consent of the other party,
which consent shall not be unreasonably withheld, except that this
restriction shall be subject to Parent's obligation to comply with applicable
securities laws.
5.6 REASONABLE EFFORTS. Subject to the terms and conditions
provided in this Agreement, each of the parties hereto shall use commercially
reasonable efforts to take promptly, or cause to be taken, all actions, and
to do promptly, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated hereby, to obtain all necessary
waivers, consents and approvals and to effect all necessary registrations and
filings and to remove any injunctions or other impediments or delays, legal
or otherwise, in order to consummate and make effective the transactions
contemplated by this Agreement for the purpose of securing to the parties
hereto the benefits contemplated by this Agreement.
5.7 NOTIFICATION OF CERTAIN MATTERS. Each of the Company and Parent
shall give prompt notice to the other of: (i) the occurrence or
non-occurrence of any event, the occurrence or non-occurrence of which is
likely to cause any representation or warranty made by it in this Agreement
to be materially untrue or inaccurate at or prior to the Effective Time, and
(ii) any failure by it to materially comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder;
PROVIDED, HOWEVER, that the delivery of any notice pursuant to this
SECTION 5.8 shall not (a) limit or otherwise affect any remedies available to
the party receiving such notice or (b) constitute an acknowledgment or
admission of a breach of this Agreement. No disclosure by either party
pursuant to this SECTION 5.8, however, shall be deemed to amend or supplement
the Company Disclosure Schedule or prevent or cure any misrepresentations,
breach of warranty or breach of covenant.
5.8 ADDITIONAL DOCUMENTS AND FURTHER ASSURANCES. Each party hereto,
at the request of another party hereto, shall execute and deliver such other
instruments and do and perform such other acts and things as may be necessary
or desirable for effecting completely the consummation of the Merger and the
transactions contemplated hereby.
5.9 S-8 REGISTRATION. Not later than forty-five (45) days after the
Effective Time, Parent agrees to file, if available for use by Parent, with
the Securities and Exchange Commission a registration statement on Form S-8
registering a number of shares of Parent Common Stock equal to the number of
shares of Parent Common Stock issuable upon the exercise of all Company
Options assumed by Parent pursuant to SECTION 1.6(b) hereof.
18
5.10 TERMINATION OF 401(k) PLAN. The Company and its Affiliates, as
applicable, each agrees to terminate its 401(k) plan immediately prior to
Closing, unless Parent, in its sole and absolute discretion, agrees to sponsor
and maintain such plans by providing the Company with written notice of such
election at least three (3) days before the Effective Time. Unless Parent
provides such notice to the Company, Parent shall receive from the Company
evidence that the Company's and each Affiliate's (as applicable) 401(k) plan has
been terminated pursuant to resolutions of each such entity's Board of Directors
(the form and substance of which resolutions shall be subject to review and
approval of Parent), effective as of the day immediately preceding the Closing
Date.
5.11 TERMINATION OF SEVERANCE PLANS. The Company and its Affiliates,
as applicable, each agrees to terminate any and all group severance,
separation or salary continuation plans, programs or arrangements that are
covered under ERISA immediately prior to Closing. Parent shall receive from
the Company evidence that the Company's and each Affiliate's (as applicable)
plan(s) has been terminated pursuant to each such entity's Board of Directors
(the form and substance of which resolutions shall be subject to review and
approval of Parent), effective as of the day immediately preceding the
Closing Date.
ARTICLE VI
CONDITIONS TO THE MERGER
6.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER.
The respective obligations of the Company and Parent to effect the Merger
shall be subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) NO ORDER. 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.
(b) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No temporary
restraining order, preliminary or permanent injunction or other order issued
by any court of competent jurisdiction or other legal restraint or
prohibition preventing the consummation of the Merger shall be in effect, nor
shall any proceeding brought by an administrative agency or commission or
other governmental authority or instrumentality, domestic or foreign, seeking
any of the foregoing be pending.
(c) VOTES. This Agreement shall have been approved by the
requisite vote of the Company's Stockholders by written consent or at a duly
called meeting of Company's Stockholders.
(d) RETENTION OPTIONS. Parent shall have granted the Retention
Options by the Closing Date.
19
(e) PARENT OPTIONS. Parent shall have granted the Parent
Options by the Closing Date.
(f) TAX OPINION. Parent shall have received a written opinion
from its tax counsel (Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional
Corporation ("Xxxxxx Xxxxxxx")) to the effect that with respect to Parent the
Merger will qualify as a complete liquidation of a subsidiary to which
Section 332 of the Code applies, and the Company shall have received a
written opinion from its counsel (Xxxxxxxxx & Xxxxxxxx LLP ("Xxxxxxxxx &
Xxxxxxxx")) to the effect that with respect to the Stockholders other than
Parent the Merger will constitute a reorganization within the meaning of
Section 368(a) of the Code, each such opinion being in form and substance
reasonably satisfactory to Parent and the Stockholders other than Parent,
respectively, and such opinion shall not have been withdrawn; provided,
however, that if counsel to either Parent or the Company does not render its
respective opinion, this condition shall nonetheless be deemed to be
satisfied with respect to suc h party if counsel to the other party renders
the opinion to have been rendered by its tax counsel to such party. The
parties to this Agreement each agree to make such reasonable representations
as requested by Xxxxxx Xxxxxxx and Xxxxxxxxx & Xxxxxxxx for the purpose of
rendering such opinions.
(g) GOVERNMENTAL APPROVAL. Approvals from any court,
administrative agency or commission or other federal, state, county, local or
other foreign governmental authority, instrumentality, agency or commission
that are required to consummate the Merger shall have been timely obtained.
6.2 CONDITIONS TO THE OBLIGATIONS OF PARENT. The obligation of
Parent to effect the Merger shall be subject to the satisfaction at or prior
to the Effective Time of each of the following conditions, any of which may
be waived, in writing, exclusively by Parent:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company contained in this Agreement shall have been true
and correct as of the date of this Agreement and as of the Effective Time
except (i) to the extent that the failure of such representations and
warranties to be true and correct in each case or in the aggregate does not
constitute a Company Material Adverse Effect, (ii) for changes contemplated
by this Agreement and (iii) for those representations and warranties which
address matters only as of the date of this Agreement or any other particular
date (which shall have been true and correct as of such particular date
except to the extent that the failure of such representations and warranties
to be true and correct as of such particular date does not constitute a
Company Material Adverse Effect) (it being understood that, for purposes of
determining the accuracy of such representations and warranties 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). Parent shall have received a certificate
with respect to the foregoing signed on behalf of the Company by the Chief
Executive Officer and the Chief Financial Officer of the Company.
(b) AGREEMENTS AND COVENANTS. The 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 Effective Time, and Parent shall have received a
20
certificate to such effect signed on behalf of the Company by the Chief
Executive Officer and the Chief Financial Officer of the Company.
(c) LITIGATION. There shall be no action, suit, claim or
proceeding of any nature pending, or overtly threatened, against Parent or
the Company, their respective properties or any of their respective officers
or directors, arising out of, or in any way connected with, the Merger or the
other transactions contemplated by the terms of this Agreement.
(d) NO DISSENTERS. Holders of no more than 1.0% of the
outstanding shares of Company Common Stock and Preferred shall have exercised
dissenters' rights with respect to the transactions contemplated by this
Agreement.
(e) THIRD PARTY CONSENTS. Parent shall have received all
consents, waivers, approvals, and assignments listed in SCHEDULE 6.2(d) to
this Agreement.
(f) RESIGNATION OF DIRECTORS. Parent shall have received a
written resignation from each of the directors of the Company effective as of
the Effective Time.
(g) VOTING AGREEMENTS. Parent shall have received from each of
Xxxxx Xxxxxxx and Xxxxx Xxxxxxx an executed Voting Agreement and Irrevocable
Proxy in substantially the form attached hereto as EXHIBIT A.
6.3 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligations of
the Company to consummate and effect this Agreement and the transactions
contemplated hereby shall be subject to the satisfaction at or prior to the
Effective Time of each of the following conditions, any of which may be
waived, in writing, exclusively by the Company:
(a) REPRESENTATIONS AND Warranties .The representations and
warranties of Parent contained in this Agreement shall have been true and
correct as of the date of this Agreement and as of the Effective Time except
(i) to the extent that the failure of such representations and warranties to
be true and correct in each case or in the aggregate does not constitute a
Parent Material Adverse Effect, (ii) for changes contemplated by this
Agreement and (iii) for those representations and warranties which address
matters only as of the date of this Agreement or any other particular date
(which shall have been true and correct as of such particular date except to
the extent that the failure of such representations and warranties to have
been true and correct as of such particular date does not constitute a Parent
Material Adverse Effect) (it being understood that, for purposes of
determining the accuracy of such representations and warranties 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). The Company shall have received a
certificate with respect to the foregoing signed on behalf of Parent by the
Chief Executive Officer and the Chief Financial Officer of Parent.
(b) AGREEMENTS AND COVENANTS. Parent shall have performed or
complied in all material respects with all agreements and covenants required
by this Agreement to be performed or
21
complied with by them on or prior to the Effective Time, and the Company
shall have received a certificate to such effect signed on behalf of Parent
by the Chief Executive Officer and the Chief Financial Officer of Parent.
ARTICLE VII
SURVIVAL OF REPRESENTATIONS
AND WARRANTIES
7.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations and warranties of the Company contained in this Agreement, or
in any certificate or other instrument delivered pursuant to this Agreement,
shall terminate at the Closing.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.1 TERMINATION. Except as provided in SECTION 8.2 hereof, this
Agreement may be terminated and the Merger abandoned at any time prior to the
Closing:
(a) by mutual agreement of the Company and Parent;
(b) by Parent or the Company if the Effective Time shall not
have occurred by March 31, 2001; PROVIDED, HOWEVER, that the right to
terminate this Agreement under this SECTION 8.1(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 breach of this Agreement;
(c) by Parent or the Company if: (i) there shall be a final
non-appealable order of a federal or state court in effect preventing
consummation of the Merger, or (ii) there shall be any statute, rule,
regulation or order enacted, promulgated or issued or deemed applicable to
the Closing by any Governmental Entity that would make consummation of the
Closing illegal;
(d) by Parent if there shall be any action taken, or any statute,
rule, regulation or order enacted, promulgated or issued or deemed applicable
to the Merger by any Governmental Entity, which would: (i) prohibit Parent's
ownership or operation of any portion of the business of the Company or (ii)
compel Parent or the Company to dispose of or hold separate all or any
portion of the business or assets of the Company or Parent as a result of the
Merger;
(e) by Parent if there has been a breach of any representation,
warranty, covenant or agreement of the Company contained in this Agreement
such that the conditions set forth in Section 6.2(a) would not be satisfied
and such breach has not been cured within ten (10) calendar days after
written notice thereof to the Company; PROVIDED, HOWEVER, that no cure period
shall be required for a breach which by its nature cannot be cured; or
22
(f) by the Company if there has been a breach of any
representation, warranty, covenant or agreement contained in this Agreement
such that the conditions set forth in Section 6.3(a) would not be satisfied
and such breach has not been cured within ten (10) calendar days after
written notice thereof to Parent; PROVIDED, HOWEVER, that no cure period
shall be required for a breach which by its nature cannot be cured.
8.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement as provided in SECTION 8.1 hereof, this Agreement shall forthwith
become void and there shall be no liability or obligation on the part of
Parent or the Company, or their respective officers, directors or
stockholders, if applicable; PROVIDED, HOWEVER, that each party hereto shall
remain liable for any breaches of this Agreement prior to its termination;
and PROVIDED FURTHER, HOWEVER, that, the provisions of SECTIONS 5.3, 5.4 and
5.5 hereof, ARTICLE IX hereof and this SECTION 8.2 shall remain in full force
and effect and survive any termination of this Agreement pursuant to the
terms of this ARTICLE VIII.
8.3 AMENDMENT. 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 the parties hereto. For purposes of this SECTION 8.3, the Stockholders
agree that any amendment of this Agreement signed by the Stockholder
Representative shall be binding upon and effective against the Stockholders
whether or not they have signed such amendment.
8.4 EXTENSION; WAIVER. At any time prior to the Closing, Parent, on
the one hand, and the Company, on the other hand, may, to the extent legally
allowed, (i) extend the time for the performance of any of the obligations 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. For
purposes of this SECTION 8.4, the Stockholders agree that any extension or
waiver signed by the Stockholder Representative shall be binding upon and
effective against all Stockholders whether or not they have signed such
extension or waiver.
ARTICLE IX
GENERAL PROVISIONS
9.1 NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally or by
commercial messenger or courier service, or mailed by registered or certified
mail (return receipt requested) or sent via facsimile (with acknowledgment of
complete transmission) to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice); PROVIDED,
HOWEVER, that notices sent by mail will not be deemed given until received:
23
(a) if to Parent, to:
QRS Corporation
0000 Xxxxxx Xxx Xxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxx, Esq.
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
Professional Corporation
Spear Street Tower
Xxx Xxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Facsimile No.: (000) 000-0000
(b) if to the Company, to:
Tradeweave, Inc.
000 Xxxxxx Xxxxxx, Xxxxx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxx
Facsimile No.: (415)
with a copy to:
Xxxxxxxxx & Xxxxxxxx LLP
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxx
Facsimile No.: (000) 000-0000
9.2 INTERPRETATION. 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.
9.3 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
24
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.
9.4 ENTIRE AGREEMENT; ASSIGNMENT. This Agreement, the exhibits
hereto, the Company Disclosure Schedule, the Confidential Disclosure
Agreement, and the documents and instruments and other agreements among the
parties hereto referenced herein: (i) 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, (ii) are not intended to confer upon
any other person any rights or remedies hereunder, and (iii) shall not be
assigned by operation of law or otherwise, except that Parent may assign its
rights and delegate its obligations hereunder to its affiliates as long as
Parent remains ultimately liable for all of Parent's obligations hereunder.
9.5 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.
9.6 OTHER REMEDIES. Except as otherwise provided herein, any and
all remedies herein expressly conferred upon a party will be deemed
cumulative with and not exclusive of any other remedy conferred hereby, or by
law or equity upon such party, and the exercise by a party of any one remedy
will not preclude the exercise of any other remedy.
9.7 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 laws thereof. Each of the parties hereto irrevocably consents to the
exclusive jurisdiction and venue of any court within the State of Delaware,
in connection with any matter based upon or arising out of this Agreement or
the matters contemplated herein, agrees that process may be served upon them
in any manner authorized by the laws of the State of Delaware for such
persons and waives and covenants not to assert or plead any objection which
they might otherwise have to such jurisdiction, venue and such process.
9.8 RULES OF CONSTRUCTION. The parties hereto agree that they have
been represented by counsel during the negotiation and execution of this
Agreement and, therefor, 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.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
25
IN WITNESS WHEREOF, Parent and the Company have caused this
Agreement to be signed, all as of the date first written above.
TRADEWEAVE, INC. QRS CORPORATION
By:______________________________ By:______________________________
Name:_________________________ Name:_________________________
Title:________________________ Title:________________________
[SIGNATURE PAGE TO AGREEMENT AND PLAN OF REORGANIZATION]
26
INDEX OF EXHIBITS
EXHIBIT DESCRIPTION
------- -----------
Exhibit A Form of Voting Agreement
SCHEDULE 2 Company Disclosure Schedule
SCHEDULE 2.2(a) Capitalization
SCHEDULE 2.2(b) Company Stock Options
QRS Corporation agrees to furnish supplementally a copy of any of
the foregoing exhibits not already included to the SEC upon request.
SCHEDULE 2.2(a)--COMPANY CAPITALIZATION
-------------------------------------------------------------------------------------------------------------------------
CAPITALIZATION: Total QRS X. Xxxxxxx X. Xxxxxxx Employees
-------------------------------------------------------------------------
Preferred stock (5,628,886 shares authorized)
Series A 5,628,886 4,964,678 529,115 135,093
Common stock (40,000,000 shares authorized)
Round 1 20,000,000 18,000,000 1,520,000 480,000
PRJ Stock Issuance 542,503 542,503
Employee Options exercised 1,141,000 1,141,000
Employee Options unexercised 1,797,000 1,797,000
-------------------------------------------------------------------------
TOTAL 29,109,389 22,964,678 2,591,618 615,093 2,938,000
=========================================================================
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