EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
CONVERGENT HOLDING CORPORATION
CONVERGENT ACQUISITION SUB, INC.,
SCHLUMBERGER TECHNOLOGY CORP.
AND
CONVERGENT GROUP CORPORATION
DATED AS OF
OCTOBER 13, 2000
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TABLE OF CONTENTS
PAGE
AGREEMENT AND PLAN OF MERGER.............................................................................1
ARTICLE 1 DEFINITIONS AND INTERPRETATION..........................................................................2
Section 1.1 Definitions..................................................................................2
Section 1.2 Interpretation..............................................................................11
ARTICLE 2 THE OFFER AND MERGER...................................................................................11
Section 2.1 The Offer...................................................................................11
Section 2.2 Company Actions.............................................................................13
Section 2.3 Directors...................................................................................14
Section 2.4 The Merger..................................................................................15
Section 2.5 Directors and Officers of the Surviving Corporation.........................................15
Section 2.6 Effective Time..............................................................................15
Section 2.7 Closing.....................................................................................16
Section 2.8 Subsequent Actions..........................................................................16
Section 2.9 Stockholders'Meeting........................................................................16
Section 2.10 Merger Without Meeting of Stockholders.....................................................17
ARTICLE 3 CONVERSION OF SECURITIES...............................................................................17
Section 3.1 Conversion of Capital Stock.................................................................17
Section 3.2 Exchange of Company Certificates............................................................18
Section 3.3 Dissenting Shares...........................................................................19
Section 3.4 Company Stock Option Plans..................................................................19
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE COMPANY..........................................................20
Section 4.1 Organization; Qualification.................................................................21
Section 4.2 Subsidiaries and Affiliates.................................................................21
Section 4.3 Capitalization..............................................................................21
Section 4.4 Authorization, Validity of Agreement, Company Action........................................23
Section 4.5 Board Approvals Regarding Transactions......................................................23
Section 4.6 Vote Required...............................................................................23
Section 4.7 Consents and Approvals, No Violations.......................................................23
Section 4.8 Reports and Financial Statements............................................................24
Section 4.9 Books and Records...........................................................................25
Section 4.10 No Undisclosed Liabilities.................................................................25
Section 4.11 Interim Operations.........................................................................25
Section 4.12 Absence of Certain Changes.................................................................25
Section 4.13 Litigation.................................................................................27
Section 4.14 Company Benefit Plans......................................................................27
Section 4.15 Tax Matters, Government Benefits...........................................................29
Section 4.16 Title to Properties; Encumbrances..........................................................30
Section 4.17 Leases.....................................................................................31
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Section 4.18 Environmental Laws.........................................................................31
Section 4.19 Intellectual Property......................................................................32
Section 4.20 Employment Matters.........................................................................34
Section 4.21 Compliance with Laws.......................................................................35
Section 4.22 Contracts and Commitments..................................................................35
Section 4.23 Customers and Suppliers....................................................................36
Section 4.24 Information in Schedule 14D-9..............................................................37
Section 4.25 Information in Proxy Statement.............................................................37
Section 4.26 Opinion of Financial Advisor...............................................................37
Section 4.27 Absence of Questionable Payments...........................................................37
Section 4.28 Insider Interests..........................................................................38
Section 4.29 Brokers or Finders.........................................................................38
Section 4.30 Insurance..................................................................................38
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF STC, PARENT AND PURCHASER............................................38
Section 5.1 Organization................................................................................38
Section 5.2 Authorization, Validity of Agreement, Necessary Action......................................38
Section 5.3 Consents and Approvals, No Violations.......................................................39
Section 5.4 Information in Documents....................................................................39
Section 5.5 Information in Proxy Statement..............................................................39
Section 5.6 Sufficient Funds............................................................................40
Section 5.7 Share Ownership.............................................................................40
Section 5.8 Parent's and Purchaser's Operations.........................................................40
Section 5.9 Brokers or Finders..........................................................................40
ARTICLE 6 COVENANTS..............................................................................................40
Section 6.1 Interim Operations of the Company...........................................................40
Section 6.2 Access; Confidentiality.....................................................................43
Section 6.3 Reasonable Efforts..........................................................................44
Section 6.4 Notification of Competing Transaction.......................................................45
Section 6.5 Publicity...................................................................................45
Section 6.6 Notification of Certain Matters.............................................................46
Section 6.7 Directors'and Officers'Insurance and Indemnification........................................46
Section 6.8 State Takeover Laws.........................................................................47
Section 6.9 Purchaser Compliance........................................................................47
Section 6.10 Board Meeting..............................................................................47
Section 6.11 Further Action.............................................................................47
Section 6.12 Employees..................................................................................48
ARTICLE 7 CONDITIONS.............................................................................................48
Section 7.1 Conditions to Each Party's Obligation to Effect the Merger..................................48
ARTICLE 8 TERMINATION............................................................................................49
Section 8.1 Termination.................................................................................49
Section 8.2 Effect of Termination.......................................................................50
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ARTICLE 9 MISCELLANEOUS..........................................................................................51
Section 9.1 Fees and Expenses...........................................................................51
Section 9.2 Amendment and Modification..................................................................52
Section 9.3 Nonsurvival of Representations and Warranties...............................................52
Section 9.4 Notices.....................................................................................52
Section 9.5 Counterparts................................................................................53
Section 9.6 Entire Agreement; No Third Party Beneficiaries..............................................53
Section 9.7 Severability................................................................................53
Section 9.8 Governing Law...............................................................................53
Section 9.9 Enforcement.................................................................................54
Section 9.10 Waiver of Jury Trial.......................................................................54
Section 9.11 Extension, Waiver..........................................................................54
Section 9.12 Assignment.................................................................................54
Appendix A - Conditions to the Offer
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EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of October 13, 2000 (this
"AGREEMENT"), by and among Convergent Holding Corporation, a Delaware
corporation ("PARENT"), Convergent Acquisition Sub, Inc., a Delaware corporation
and a wholly owned Subsidiary of Parent ("PURCHASER"), Schlumberger Technology
Corp., a Texas corporation ("STC"), and Convergent Group Corporation, a Delaware
corporation (the "COMPANY"). Certain capitalized terms used in this Agreement
have the respective meanings ascribed to them in ARTICLE 1.
WHEREAS, the board of directors of each of Parent, Purchaser and the
Company have approved, and deems it fair to, advisable and in the best interests
of its respective companies and stockholders to consummate, the acquisition of
the Company by Parent upon the terms and subject to the conditions set forth
herein;
WHEREAS, in furtherance thereof, it is proposed that Purchaser make a
cash tender offer to acquire all shares of the issued and outstanding shares of
common stock, $0.001 par value, of the Company (the "COMPANY COMMON STOCK"), for
$8.00 per share, net to the seller in cash, less any required withholding taxes;
WHEREAS, also in furtherance of such acquisition, the board of
directors of each of Parent, Purchaser and the Company have approved this
Agreement and the Transactions in accordance with the DGCL upon the terms and
subject to the conditions set forth in this Agreement;
WHEREAS, the board of directors of the Company, based upon the
recommendation of the Special Committee, has determined that the consideration
to be paid for each Share in the Offer and the Merger is fair to the holders of
such Shares and has resolved to recommend that the holders of such Shares accept
the Offer and adopt this Agreement and each of the Transactions upon the terms
and subject to the conditions set forth in this Agreement;
WHEREAS, as of the date of this Agreement, the Contributing
Stockholders, Cinergy Ventures, LLC ("CINERGY") and STC entered into a
Subscription Agreement with Parent and certain affiliates of Parent, pursuant to
which each such Contributing Stockholder has, among other things, agreed to
contribute at least 80% of his, her or its Shares and STC has, among other
things, agreed to contribute an amount of cash to the Parent in exchange for
shares of stock in Parent upon the terms and subject to the conditions set forth
in the Subscription Agreement;
WHEREAS, as a condition and inducement to Parent's and Purchaser's
entering into this Agreement and incurring the obligations set forth herein,
each of the Contributing Stockholders and Cinergy, concurrently with the
execution and delivery of this Agreement, is entering into a Voting Agreement,
dated as of the date of this Agreement, with Parent and Purchaser, pursuant to
which each of the Contributing Stockholders is agreeing, among other things, not
to tender a portion of the Shares held by him, her or it in the Offer and to
grant Parent a proxy with respect to the voting of such Shares, all upon the
terms and subject to the conditions set forth in the Voting Agreements;
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WHEREAS, as a condition and inducement to Parent's and Purchaser's
entering into this Agreement and incurring the obligations set forth herein,
each of the Major Stockholders, concurrently with the execution and delivery of
this Agreement, is entering into a Tender Agreement, dated as of the date of
this Agreement, with Parent and Purchaser, pursuant to which each of the Major
Stockholders is agreeing, among other things, to tender the Shares held by it in
the Offer, to grant Parent an option to purchase such Shares and to grant Parent
a proxy with respect to the voting of such Shares, all upon the terms and
subject to the conditions set forth in the Tender Agreements; and
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements in this Agreement, the
parties hereto, intending to be legally bound, agree as follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
Section 1.1 DEFINITIONS. For all purposes of this Agreement, except as otherwise
expressly provided or unless the context clearly requires otherwise:
"ACQUISITION PROPOSAL" means any proposal or offer from any Person
(other than Parent, Purchaser or any of their Affiliates) to acquire (i) all or
a substantial part of the business or properties of the Company or any Company
Significant Subsidiary or any capital stock of the Company, whether by merger,
tender offer, exchange offer, sale of assets, consolidation, other business
combination, recapitalization, reorganization, liquidation, dissolution or other
transactions involving the Company or any Company Significant Subsidiary or (ii)
fifteen percent (15%) or more of the capital stock or other equity interests in
the Company or one hundred percent (100%) of the capital stock or other equity
interests in any Company Significant Subsidiary.
"AFFILIATE" shall have the meaning set forth in Rule 12b-2 of the
Exchange Act.
"AGREEMENT" has the meaning ascribed to it in the forepart of this
Agreement.
"APPOINTMENT DATE" means the time the Persons designated by Purchaser
have been elected to, and shall constitute a majority of, the Company's board of
directors pursuant to SECTION 2.3.
"ASSOCIATE" has the meaning set forth in Rule 12b-2 of the Exchange
Act.
"BALANCE SHEET" means the most recent audited consolidated balance
sheet of the Company and its Subsidiaries included in the Financial Statements.
"BALANCE SHEET DATE" means the date of the Balance Sheet.
"BENEFIT PLAN" means any employee benefit fund, plan, program,
arrangement and contract (including any "pension" plan, fund or program, as
defined in Section 3(2) of ERISA,
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and any "employee benefit plan", as defined in Section 3(3) of ERISA and any
plan, program, arrangement or contract providing for severance; medical, dental
or vision benefits; life insurance or death benefits; disability benefits, sick
pay or other wage replacement; vacation, holiday or sabbatical; pension or
profit-sharing benefits; stock options or other equity compensation; bonus or
incentive pay or other material fringe benefits), whether written or not.
"BENEFICIAL OWNERSHIP", "BENEFICIALLY OWNED", or "BENEFICIALLY OWN",
with respect to any securities, shall mean having "beneficial ownership" of such
securities as determined pursuant to Rule 13d-3 of the Exchange Act.
"BOARD FRACTION" means a fraction, the numerator of which shall be the
number of Shares which Parent and its Subsidiaries beneficially own at the time
of calculation of the Board Fraction, and the denominator of which shall be the
total number of Shares then outstanding.
"BUSINESS DAY" means any day other than a Saturday, a Sunday or a day
on which commercial banks in the City of New York are permitted by law, rule or
regulation to be closed.
"CERTIFICATE OF MERGER" means a certificate of merger, to be reasonably
agreed upon by Parent, Purchaser and the Company, to be filed with the Secretary
of State of the State of Delaware pursuant to the DGCL, as contemplated by
SECTION 2.6.
"CLOSING" means the closing referred to in SECTION 2.7.
"CLOSING DATE" means the date and time on which the Closing occurs.
"COMMON STOCK EXCHANGE RATIO" has the meaning ascribed to it in SECTION
3.4(a).
"COMPANY" has the meaning ascribed to it in the recitals of this
Agreement.
"COMPANY AGREEMENT" means any note, bond, mortgage, indenture, lease,
license, contract, agreement or other instrument or obligation to which the
Company or any Company Subsidiary is a party or by which any of them or any of
their properties or assets may be bound.
"COMPANY BENEFIT PLAN" means any Benefit Plan maintained, sponsored or
contributed to or required to be contributed to by the Company or any Company
Subsidiary.
"COMPANY CERTIFICATE" has the meaning ascribed to it in SECTION 3.1(c).
"COMPANY DISCLOSURE LETTER" means the disclosure letter, dated the date
of this Agreement and prepared by the Company and delivered to Purchaser
simultaneously with the execution of this Agreement.
"COMPANY ERISA AFFILIATE" means the Company, any Company Subsidiary nor
any other trade or business (whether or not incorporated) that is or was under
"common control" with Company or a Company Subsidiary (within the meaning of
ERISA Section 4001) or with respect to which Company or any Company Subsidiary
could otherwise incur liability under Title IV of ERISA.
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"COMPANY INTELLECTUAL PROPERTY" means all patents, registered
trademarks and material unregistered trademarks, trade names, service marks,
trade dress, Internet domain names, copyrights and any renewal rights therefor,
mask works, technology, supplier lists, trade secrets, proprietary know-how,
computer software programs or applications in both source and object code form,
technical documentation of such software programs ("Technical Documentation"),
registrations and applications for any of the foregoing and all other tangible
or intangible proprietary and non-proprietary information or materials that are
or have been used in (including in the development of) the Company's or any
Company Subsidiary's business and/or in any product, technology or process (i)
currently being manufactured, published or marketed by the Company or any
Company Subsidiary, or (ii) currently under development for possible future
manufacturing, publication, marketing or other use by the Company or any Company
Subsidiary.
"COMPANY MATERIAL ADVERSE EFFECT" means any circumstance, change in, or
effect on the Company and the Company Subsidiaries, that is materially adverse
to the business, properties, assets, liabilities (absolute, accrued, contingent
or otherwise), financial condition, operations, earnings or results of
operations of the Company and its Subsidiaries, taking the Company together with
its Subsidiaries as a whole; PROVIDED, HOWEVER, that none of the following shall
be deemed in themselves, either alone or in combination, to constitute, and none
of the following shall be taken into account in determining whether there has
been or will be, a Company Material Adverse Effect: any adverse circumstance,
change in, or effect relating to (i) the announcement or pendency of the
Transactions, (ii) conditions affecting the industries in which the Company or
any Company Subsidiary participates or the U.S. economy as a whole, (iii)
compliance with the terms of, or the taking of any action required or
contemplated by, this Agreement, (iv) any change in accounting requirements or
principles or any change in applicable laws, rules or regulations or the
interpretation thereof; or (v) actions required to be taken under applicable
laws, rules or regulations, so long as any such occurrence or event (with
respect to items (ii), (iv) or (v)) does not disproportionately affect the
Company and the Company Subsidiaries, taken as a whole; PROVIDED, FURTHER, that
a change in the market price or trading volume of the Company Common Stock shall
not, in itself, be deemed to constitute a Company Material Adverse Effect.
"COMPANY OPTION" means an option to purchase Shares which has been
granted by the Company pursuant to the Company's 1999 Stock Option Plan and
which is outstanding at the Effective Time.
"COMPANY SEC DOCUMENTS" means each form, report, schedule, statement
and other document filed or required to be filed by the Company through the date
of this Agreement under the Exchange Act or the Securities Act, including any
amendment to such document filed through the date of this Agreement, whether or
not such amendment is required to be so filed.
"COMPANY SIGNIFICANT SUBSIDIARY" means a Company Subsidiary which would
constitute a "significant subsidiary" within Rule 1-02(w) or Regulation S-X of
the Securities Act.
"COMPANY STOCK OPTION PLAN" means the Company's 1999 Stock Option Plan.
"COMPANY SUBSIDIARY" means each Person which is a Subsidiary of the
Company.
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"COMPANY'S KNOWLEDGE," "the knowledge of the Company", "the knowledge
of the Company and its Subsidiaries", "best knowledge of the Company" and
similar phrases incorporating the word "know" or "known" mean, with respect to
any matter in question, the actual knowledge of such matter held by any of Xxxxx
X. Xxxxxxxxxx, Xx., Xxxxx X. Xxxxxxx, Xxxxx X. Xxxxxx, Xxxxx Xxxxxx, Xxxxxxx X.
Xxxxxxxxxx, Xxxxxx X. Xxxxxx, Xxxxx X. Xxxxxxxxxx or Xxxxx X. Xxxxxxxx.
"CONFIDENTIALITY AGREEMENT" means that certain letter agreement entered
into and as amended prior to the date hereof, between the Company and an
Affiliate of STC.
"CONTRIBUTING STOCKHOLDERS" means the Persons named as Management
Investors in the Subscription Agreement.
"COPYRIGHTS" means U.S. and foreign registered and unregistered
copyrights (including those in computer software and databases), moral rights,
rights of publicity and all registrations and applications to register the same.
"DGCL" means the General Corporation Law of the State of Delaware.
"DISSENTING SHARES" means any Shares as to which the holder thereof has
demanded and perfected their appraisal rights with respect to the Merger in
accordance with Section 262 of the DGCL and as of the Effective Time has neither
effectively withdrawn nor lost the right to such appraisal.
"EFFECTIVE TIME" means the date and time at which the Certificate of
Merger is duly filed with the Secretary of State of the State of Delaware or
such other date and time as is agreed upon by the parties and specified in the
Certificate of Merger.
"END USER LICENSES" means object code end-user licenses granted to end
users in the ordinary course of business that permit use of software products
without a right to modify, distribute or sublicense the same.
"ENVIRONMENTAL CLAIM" means any claim, action, investigation or notice
by any Person or entity alleging potential liability for investigatory, cleanup
or governmental response costs, or natural resources or property damages, or
personal injuries, relating to (i) the presence, or release into the
environment, of any Materials of Environmental Concern at any location owned or
operated by the Company or any Company Subsidiary, now or in the past, or (ii)
any violation, or alleged violation, of any Environmental Law.
"ENVIRONMENTAL LAW" means each federal, state, local and foreign law
and regulation relating to pollution, protection or preservation of the
environment, human health or occupational health and safety, including ambient
air, surface water, groundwater, land surface or subsurface strata, and natural
resources, and including each law and regulation relating to emissions,
discharges, releases or threatened releases of Materials of Environmental
Concern, or otherwise relating to the generation, storage, containment (whether
above ground or underground), disposal, transport or handling of Materials of
Environmental Concern, or the preservation of the environment or mitigation of
adverse effects thereon and each law and regulation with regard to
5
record keeping, notification, disclosure and reporting requirements respecting
Materials of Environmental Concern.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EXPENSES" means an amount equal to all reasonable, documented,
out-of-pocket expenses incurred by the Parent and its Affiliates in connection
with the Transactions; PROVIDED, HOWEVER, that such amount shall not exceed $2.0
million.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXCHANGE AGENT" means the bank or trust company designated by Parent
to act as agent for the holders of the Shares pursuant to SECTION 3.2(a).
"EXPIRATION DATE" has the meaning ascribed to it in SECTION 2.1.
"FINANCIAL STATEMENTS" means each of the audited consolidated financial
statements and unaudited condensed consolidated interim financial statements of
the Company (including any related notes and schedules) included (or
incorporated by reference) in the Company SEC Documents.
"GAAP" means United States generally accepted accounting principles.
"GOVERNMENTAL ENTITY" means a court, arbitral tribunal, administrative
agency or commission or other governmental or other regulatory authority or
agency or any Person exercising the authority of any of the foregoing.
"HSR ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
"IPO DATE" means the date of the Company's initial public offering of
its Common Stock.
"IRS" means the United States Internal Revenue Service and any
successor agency performing similar functions under the Internal Revenue Code.
"INDEMNIFIED PARTY" means each present and former officer and director,
fiduciary or agent of the Company or the Company Subsidiaries, and each Person
who become any of the foregoing prior to the Effective Time.
"INTELLECTUAL PROPERTY" means each of the Trademarks, Patents,
Copyrights, Trade Secrets and Licenses.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended, and together with rules and regulations promulgated thereunder.
6
"LICENSES" means all licenses and agreements pursuant to which the
Company has acquired rights in or to any Trademarks, Patents, or Copyrights, or
licenses and agreements pursuant to which the Company has licensed or
transferred the right to use any of the foregoing.
"MAJOR STOCKHOLDERS" means InSight Capital Partners III, L.P., InSight
Capital Partners III (Cayman), L.P., InSight Capital Partners III
(Co-Investors), L.P., GS Private Equity Partners II, L.P., GS Private Equity
Partners II Offshore, L.P., GS Private Equity Partners III, L.P., GS Private
Equity Partners III Offshore, L.P., NBK/GS Private Equity Partners, L.P. and
Cinergy.
"MATERIALS OF ENVIRONMENTAL CONCERN" means pollutants, contaminants,
toxic or hazardous substances, materials and wastes, petroleum and petroleum
products, asbestos and asbestos-containing materials, polychlorinated
biphenyl's, radon and lead or lead-based paints and materials.
"MERGER" means the merger of Purchaser into the Company referred to in
SECTION 2.4.
"MERGER CONSIDERATION" means an amount of cash equal to the Offer
Price, which amount shall not include interest, regardless of when paid.
"MINIMUM CONDITION" means the condition that, pursuant to the Offer,
there shall have been validly tendered and not properly withdrawn prior to the
expiration of the Offer, not less than that number of Shares which, when added
with the Shares beneficially owned by STC, Parent and Purchaser and when added
to the Shares to be contributed to Parent pursuant to the Subscription Agreement
hereof, constitutes at least a majority of the Shares outstanding on a fully
diluted basis (after giving effect to the conversion or exercise of all
outstanding options, warrants and other rights and securities exercisable or
convertible into Shares, whether or not exercised or converted at the time of
determination), excluding any Shares held by the Company or any of its
Subsidiaries).
"OFFER" means the cash tender offer to be made by Purchaser pursuant to
SECTION 2.1 to acquire any and all of the issued and outstanding shares of
common stock, $0.001 par value, of the Company, at the Offer Price.
"OFFER DOCUMENTS" means the Offer to Purchase and a form of letter of
transmittal and summary advertisement filed as exhibits to the Schedule
TO/Schedule 13E-3, together with any amendments and supplements thereto.
"OFFER PRICE" means eight dollars ($8.00) per Share, net to the seller
in cash, less any required withholding Taxes, or such increased amount, if any,
as Purchaser may offer to pay as contemplated by SECTION 2.1(a).
"OFFER TO PURCHASE" means the offer to purchase included in the
Schedule TO/Schedule 13E-3 filed with the SEC pursuant to SECTION 2.1(b).
"PARENT" has the meaning ascribed to it in the forepart of this
Agreement.
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"PARENT COMMON STOCK" means shares of common stock, par value $0.01 per
share, of Parent.
"PARENT MATERIAL ADVERSE EFFECT" means any circumstance, change in, or
effect on Parent and its Subsidiaries that is materially adverse to the
business, properties, assets, liabilities (absolute, accrued, contingent or
otherwise), financial condition, operations, earnings or results of operations
of Parent and its Subsidiaries, taking Parent together with its Subsidiaries as
a whole; PROVIDED, HOWEVER, that none of the following shall be deemed in
themselves, either alone or in combination, to constitute, and none of the
following shall be taken into account in determining whether there has been or
will be, a Parent Material Adverse Effect: any adverse circumstance, change in,
or effect relating to (i) the announcement or pendency of the Transactions, (ii)
conditions affecting the industries in which the Parent or Surviving Corporation
participates or the U.S. economy as a whole, (iii) compliance with the terms of,
or the taking of any action required or contemplated by, this Agreement, (iv)
any change in accounting requirements or principles or any change in applicable
laws, rules or regulations or the interpretation thereof; or (v) actions
required to be taken under applicable laws, rules or regulations, so long as any
such occurrence or event (with respect to items (ii), (iv) or (v)) does not
disproportionately affect Parent.
"PATENTS" means issued U.S. and foreign patents and pending patent
applications, patent disclosures, and any and all divisions, continuations,
continuations-in-part, reissues, reexaminations, and extension thereof, any
counterparts claiming priority therefrom, utility models, patents of
importation/confirmation, certificates of invention and like statutory rights.
"PAYMENT DATE" has the meaning ascribed to it in SECTION 2.1.
"PBGC" means the Pension Benefit Guaranty Corporation.
"PERSON" means any natural person, corporation, limited liability
company, partnership, association, Governmental Entity or other artificial
person or entity.
"PURCHASER" has the meaning ascribed to it in the forepart of this
Agreement.
"PURCHASER COMMON STOCK" means common stock, par value $0.001 per
share, of Purchaser.
"PRODUCT" means any product designed, manufactured, shipped, sold,
marketed, distributed and/or otherwise introduced into the stream of commerce by
or on behalf of the Company or any Company Subsidiary, including any product
sold in the United States by the Company or any Company Subsidiary as the
distributor, agent, or pursuant to any other contractual relationship with a
non-U.S. manufacturer.
"PROXY STATEMENT" means the proxy statement to be filed by the Company
with the SEC pursuant to SECTION 2.9(a)(ii), together with all amendments and
supplements thereto and including the exhibits thereto.
"RETAINED EMPLOYEES" means those Persons who were employees of the
Company or any Company Subsidiary immediately prior to the Effective Time.
8
"SCHEDULE TO/SCHEDULE 13E-3" means the tender offer statement on
Schedule TO filed by Purchaser with the SEC pursuant to SECTION 2.1(b), and
which shall include, if necessary, Schedule 13E-3, which shall be jointly filed
by Purchaser and the Company, together with all amendments and supplements
thereto and including the exhibits thereto.
"SCHEDULE 14D-9" means the Solicitation/Recommendation Statement on
Schedule 14D-9 filed by the Company with the SEC pursuant to SECTION 2.2(a),
together with all amendments and supplements thereto and including the exhibits
thereto.
"SEC" means the United States Securities and Exchange Commission and
any successor agency performing similar functions.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECTION 203 APPROVAL" means the action taken by the Company's board of
directors referred to in SECTION 4.5(b) with respect to Section 203 of the DGCL.
"SEVERANCE AGREEMENTS" means employment and severance agreements and
arrangements, as amended through the date of this Agreement, with respect to
employees and former employees of the Company or the Company Subsidiaries.
"SHARES" means shares of common stock, par value $0.001 per share, of
the Company.
"SPECIAL COMMITTEE" means the special committee of the board of
directors of the Company comprised solely of members who are not employees of
the Company.
"SPECIAL MEETING" means the special meeting of stockholders of the
Company referred to in SECTION 2.9(a)(i).
"SUBSCRIPTION AGREEMENT" means each Subscription and Contribution
Agreement, dated as of the date of this Agreement, by and among the Contributing
Stockholders and Parent.
"SUBSIDIARY" means, with respect to any Person, any corporation or
other organization, whether incorporated or unincorporated, of which at least a
majority of the securities or other interests having by their terms ordinary
voting power to elect a majority of the board of directors or others performing
similar functions with respect to such corporation or other organization is,
directly or indirectly, owned or controlled by such Person or by any one or more
of its Subsidiaries, or by such Person and one or more of its Subsidiaries.
"SUPERIOR PROPOSAL" means an Acquisition Proposal (but changing the
fifteen percent (15%) amount in clause (a)(ii) of the definition of Acquisition
Proposal to fifty percent (50%)) which is (a) (i) a bona fide written offer,
(ii) capable of being, and likely to be, funded on the terms disclosed, and
(iii) likely to be consummated in accordance with its terms, each as determined
in good faith by the board of directors and consistent with the advice of an
independent investment bank and (b) the board of directors determines in good
faith (after (i) receiving advice from the Company's independent investment
banking firm that the Acquisition Proposal is superior, from a financial point
of view, to the Transactions and (ii) consultation with
9
outside legal counsel) that failure to take such action would likely be contrary
to its fiduciary duties to the Company's stockholders under applicable law.
"SURVIVING CORPORATION" has the meaning ascribed to it in SECTION 2.4.
"TAX" and "TAXES" mean all taxes, charges, fees, duties, levies,
penalties or other assessments imposed by any federal, state, local or foreign
governmental authority, including income, gross receipts, excise, property,
sales, gain, use, license, custom duty, unemployment, capital stock, transfer,
franchise, payroll, withholding, social security, minimum estimated,
intangibles, stamp, registration, net worth, tariffs, documentation and other
taxes, and shall include interest, penalties or additions attributable thereto.
"TAX RETURN" means any form, return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
elections, estimates, declarations, disclosures, schedules or attachments
thereto, and including any amendment thereof.
"TENDER AGREEMENT" means each agreement, dated as of the date of this
Agreement, among the Major Stockholders, Parent and Purchaser, pursuant to which
each Major Stockholder has agreed, among other things, to tender the Shares held
by such Major Stockholder in the Offer and to grant Parent the Option and a
proxy with respect to the voting of such Shares upon the terms and subject to
the conditions set forth therein.
"TERMINATION DATE" means March 31, 2001; PROVIDED, HOWEVER, that such
date shall be extended if Purchaser extends the Offer beyond such date pursuant
to SECTION 2.1.
"TERMINATION FEE" means $8 million.
"TITLE IV PLAN" means a Plan that is subject to Section 302 or Title IV
of ERISA or Section 412 of the Internal Revenue Code.
"TRADEMARKS" means U.S. and foreign registered and unregistered
trademarks, trade dress, service marks, logos, trade names, corporate names and
all registrations and applications to register the same.
"TRADE SECRETS" means all computer software; databases; works of
authorship; mask works; trade secrets and, to the extent protectible as a matter
of law, other confidential information, technology; know-how, proprietary
processes, formulae, algorithms, models, user interfaces, customer lists,
inventions, discoveries, concepts, ideas, techniques, methods, source codes,
object codes, methodologies and, with respect to all of the foregoing, related
confidential data or information.
"TRANSACTIONS" means the transactions provided for or contemplated by
this Agreement and the Tender Agreements, including the Offer and the Merger.
"VOTING AGREEMENT" means the Voting Agreement, dated as of the date of
this Agreement, among each Contributing Stockholder, the Parent and the
Purchaser.
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"VOTING DEBT" means indebtedness having general voting rights and debt
convertible into securities having such rights.
Section 1.2 INTERPRETATION. When a reference is made in this Agreement to a
section or article, such reference shall be to a section or article of this
Agreement unless otherwise clearly indicated to the contrary. Whenever the words
"include," "includes" or "including" are used in this Agreement they shall be
deemed to be followed by the words "without limitation." The words "hereof,"
"herein" and "herewith" and words of similar import shall, unless otherwise
stated, be construed to refer to this Agreement as a whole and not to any
particular provision of this Agreement, and article, section, paragraph, exhibit
and schedule references are to the articles, sections, paragraphs, appendix and
schedules of this Agreement unless otherwise specified. The plural of any
defined term shall have a meaning correlative to such defined term, and words
denoting any gender shall include all genders and the neuter. Where a word or
phrase is defined herein, each of its other grammatical forms shall have a
corresponding meaning. A reference to any party to this Agreement or any other
agreement or document shall include such party's successors and permitted
assigns. A reference to any legislation or to any provision of any legislation
shall include any modification, amendment or re-enactment thereof, any
legislative provision substituted therefor and all regulations and statutory
instruments issued thereunder or pursuant thereto. The parties have participated
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties, and no presumption or burden
of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement. No prior draft nor any course of
performance or course of dealing shall be used in the interpretation or
construction of this Agreement.
ARTICLE 2
THE OFFER AND MERGER
Section 2.1 THE OFFER.
(a) Provided that this Agreement shall not have been terminated in
accordance with SECTION 8.1 and none of the events set forth in Appendix A to
this Agreement shall have occurred and be existing, as promptly as
practicable but no later than ten (10) Business Days following the execution
and delivery of this Agreement, Purchaser shall commence (within the meaning
of Rule 14d-2 under the Exchange Act) a cash tender offer to acquire any and
all Shares at the Offer Price. Subject to the Minimum Condition and subject
to the other conditions set forth in Appendix A to this Agreement, Purchaser
shall consummate the Offer in accordance with its terms and to accept for
payment and pay for Shares tendered pursuant to the Offer as soon as
Purchaser is legally permitted to do so under applicable law (such date being
referred to as the "Payment Date"). The Offer shall be made by means of the
Offer to Purchase and shall be subject only to the Minimum Condition and the
other conditions set forth in Appendix A to this Agreement and shall reflect,
as appropriate, the other terms set forth in this Agreement. Purchaser shall
not (i) amend or waive the Minimum Condition, (ii) decrease the Offer Price,
(iii) decrease the number of Shares sought, (iv) change the form of
consideration payable in the Offer, (v) impose additional conditions to, or
change the conditions of, the Offer or (vi) amend
11
any other term of the Offer in any manner that would reasonably be expected
to be materially adverse to the stockholders of the Company, without the
written consent of the Special Committee. If on the expiration date of the
Offer (the "EXPIRATION DATE"), which shall initially be twenty (20) Business
Days after the date the Offer is commenced, all conditions to the Offer
(other than those conditions which by their nature are to be satisfied at the
time Shares are accepted for payment pursuant to the Offer) are not then
satisfied or waived, Purchaser shall extend the Expiration Date until the
time such conditions are satisfied or earlier waived and Parent becomes
obligated to accept for payment and pay for Shares tendered pursuant to the
Offer; PROVIDED, HOWEVER, that (x) in no event shall such extensions extend
beyond the Termination Date and (y) Purchaser shall obtain the Company's
agreement as to the date of any such extension; PROVIDED, FURTHER, HOWEVER,
that if Purchaser and Parent cannot agree to the date of any such extension,
the Expiration Date shall be extended for three Business Days. In addition,
if within three Business Days of the Expiration Date the Company has
delivered a Section 6.4(b) Notice to the Parent, Purchaser shall extend the
Expiration Date to a date four Business Days from the date of such Section
6.4(b) Notice. Purchaser agrees that it shall not terminate or withdraw the
Offer or extend (or request to extend) the Expiration Date unless at the
Expiration Date, all of the conditions to the Offer described in Appendix A
hereto (other than those conditions which by their nature are to be satisfied
at the time Shares are accepted for payment pursuant to the Offer) shall not
have been satisfied or earlier waived. In addition, Purchaser may increase
the amount it offers to pay per Share in the Offer, and the Offer may be
extended to the extent required by applicable law in connection with such
increase, in each case without the consent of the Company; PROVIDED, HOWEVER,
that if any such extension is required by applicable law and such extended
Expiration Date is later than the Termination Date, then the Termination Date
shall be extended until such date as is required to comply with applicable
law. In addition, Purchaser may extend the Offer after the acceptance of
Shares thereunder for a further period of time by means of a subsequent
offering period pursuant to the requirements of Rule 14d-11 under the
Exchange Act, of not more than twenty Business Days to meet the objective
(which is not a condition to the Offer) that there be validly tendered, in
accordance with the terms of the Offer, prior to the Expiration Date (as so
extended) and not withdrawn a number of Shares which, when added to the
Shares, if any, beneficially owned by STC, Parent or Purchaser and when added
to the Shares to be contributed to Parent pursuant to the Subscription
Agreement, represents at least ninety percent of the outstanding Shares.
(b) As soon as practicable, on the date the Offer is commenced, STC,
Purchaser and the Company shall file with the SEC a tender offer statement on
Schedule TO/Schedule 13E-3 with respect to the Offer. The Schedule TO/Schedule
13E-3 will comply in all material respects with the federal securities laws and
will include, as exhibits, the Offer to Purchase and a form of letter of
transmittal and summary advertisement.
(c) Parent and Purchaser will take all steps necessary to cause the
Offer Documents to be filed with the SEC and to be disseminated to holders of
the Shares, in each case as and to the extent required by applicable federal
securities laws. Parent and Purchaser, on the one hand, and the Company (with
respect to written information supplied by the Company specifically for use in
the Schedule TO/Schedule 13E-3 or the Offer Documents, as to which the Company
shall promptly notify Parent of any required corrections of such information and
shall cooperate with Parent and Purchaser with respect to correcting such
information), on the other hand, will promptly correct any information provided
by it for use in the Offer Documents and amend the
12
Schedule TO/Schedule 13E-3, if and to the extent that it shall have become false
or misleading in any material respect. In addition, the Parent and Purchaser
shall supplement the Schedule TO/Schedule 13E-3 or the Offer Documents to
include any information that shall become necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Purchaser will take all steps necessary to cause the Offer
Documents or the Schedule TO/Schedule 13E-3 as so corrected to be filed with the
SEC and to be disseminated to holders of the Shares, in each case as and to the
extent required by applicable federal securities laws. The Company and its
counsel shall be given the opportunity to review the initial Schedule
TO/Schedule 13E-3 before it is filed with the SEC. Parent and Purchaser will
provide the Company and its counsel in writing with any comments or other
communications, whether written or oral, that Parent, Purchaser or their counsel
may receive from time to time from the SEC or its staff with respect to the
Schedule TO/Schedule 13E-3 or the Offer Documents, promptly after the receipt of
such comments or other communications.
Section 2.2 COMPANY ACTIONS.
(a) As soon as practicable on the date the Offer is commenced, the
Company shall file, with the SEC, the Schedule 14D-9, which shall, subject to
the provisions of SECTION 6.4(b), contain the recommendation referred to in
SECTION 4.5(c) and shall file jointly with Parent the Schedule TO/Schedule
13E-3. At the time the Offer Documents are first mailed to the holders of
Shares, the Company shall mail or cause to be mailed to the stockholders of the
Company such Schedule 14D-9 together with such Offer Documents. The Company
further agrees to take all steps necessary to cause the Schedule 14D-9 to be
disseminated to holders of the Shares, as and to the extent required by
applicable federal securities laws. Each of the Company, on the one hand, and
Parent and Purchaser, on the other hand, will promptly correct any information
provided by it for use in the Schedule 14D-9 or the Schedule TO/Schedule 13E-3
if and to the extent that it shall have become false or misleading in any
material respect. The Company further agrees to take all steps necessary to
cause the Schedule 14D-9 or the Schedule TO/Schedule 13E-3 as so corrected to be
filed with the SEC and to be disseminated to holders of the Shares, in each case
as and to the extent required by applicable federal securities laws. Parent and
its counsel shall be given the opportunity to review the Schedule 14D-9 before
it is filed with the SEC. In addition, the Company agrees to provide Parent,
Purchaser and their counsel with any comments, whether written or oral, that the
Company or its counsel may receive from time to time from the SEC or its staff
with respect to the Schedule 14D-9 or the Schedule TO/Schedule 13E-3, promptly
after the receipt of such comments or other communications.
(b) In connection with the Offer, the Company will promptly furnish or
cause to be furnished to Purchaser mailing labels, security position listings
and any available listing or computer file containing the names and addresses of
all recordholders of the Shares as of a recent date, and shall furnish Purchaser
with such additional information (including lists of holders of the Shares,
updated upon request, and their addresses, mailing labels and lists of security
13
positions) as Purchaser or its agents may reasonably request in communicating
the Offer to the record and beneficial holders of the Shares. Except for such
steps as are necessary to disseminate the Offer Documents, Parent and Purchaser
shall each hold in confidence the information contained in any of such labels
and lists and the additional information referred to in the preceding sentence,
will use such information only in connection with the Offer, and, if this
Agreement is terminated, will upon request of the Company deliver or cause to be
delivered to the Company all copies of such information then in its possession
or the possession of its agents or representatives.
(c) Solely in connection with the tender and purchase of Shares
pursuant to the Offer and the consummation of the Merger, the Company hereby
waives any and all rights of first refusal it may have with respect to Shares
owned by, or issuable to, any Person, other than rights to repurchase unvested
shares, if any, that may be held by persons following exercise of employee stock
options.
Section 2.3 DIRECTORS.
(a) Parent shall be entitled to designate such number, rounded up to
the next whole number, of directors of the Company as is equal to the product of
the total number of directors on the Company's board of directors (giving effect
to the directors designated by Parent pursuant to this sentence) multiplied by
the Board Fraction. The directors so designated by Parent shall take office
immediately after (i) the purchase of and payment for any Shares by Parent or
any of its Subsidiaries as a result of which Parent and its Subsidiaries
beneficially own at least a majority of then outstanding Shares and (ii)
compliance with Section 14(f) of the Exchange Act and Rule 14f-1 thereunder,
whichever shall occur later. The Company shall, upon request of Parent, use its
best efforts promptly either to increase the size of its board of directors or
to secure the resignations of such number of its incumbent directors, or both as
is necessary to enable such designees of Parent to be so elected or appointed to
the Company's board of directors in accordance with the terms of this SECTION
2.3(a), and the Company shall take all actions available to the Company to cause
such designees of Parent to be so elected or appointed at such time. At such
time, the Company shall, if requested by Parent, also take all action necessary
to cause Persons designated by Parent to constitute the same Board Fraction of
(i) each committee of the Company's board of directors (other than the Special
Committee), (ii) each board of directors (or similar body) of each Company
Subsidiary and (iii) each committee (or similar body) of each such board of
directors.
(b) Subject to applicable law, the Company shall promptly take all
actions required pursuant to Section 14(f) of the Exchange Act and Rule 14f-1
thereunder in order to fulfill its obligations under SECTION 2.3(a), including
mailing to its stockholders the information required by such Section 14(f) and
Rule 14f-1 as is necessary to enable Parent's designees to be elected or
appointed to the Company's board of directors immediately after the purchase of
and payment for any Shares by Parent or any of its Subsidiaries as a result of
which Parent and its Subsidiaries own beneficially at least a majority of then
outstanding Shares. Parent, Purchaser or any Contributing Stockholder will
supply the Company all information with respect to either of them and their
nominees, officers, directors and Affiliates required to be disclosed by such
Section 14(f) and Rule 14f-1 to enable the Company to include the necessary
information in the Schedule 14D-9 to be mailed to holders of Shares on the
commencement date of the Offer. The provisions
14
of this SECTION 2.3 are in addition to and shall not limit any rights which
Purchaser, Parent or any of their Affiliates may have as a matter of law as a
holder or beneficial owner of Shares with respect to the election of directors
or otherwise.
(c) In the event that Parent's designees are elected or appointed to
the Company's board of directors, until the Effective Time, all members of the
Special Committee shall remain on the board of directors. Notwithstanding
anything in this Agreement to the contrary, in the event that Parent's designees
constitute a majority of the directors on the Company's board of directors, the
affirmative vote of a majority of the Special Committee shall be required after
the acceptance for payment of Shares pursuant to the Offer and prior to the
Effective Time, to (i) amend or terminate this Agreement on behalf of the
Company, (ii) exercise or waive any of the Company's rights, benefits or
remedies hereunder if such exercise or waiver adversely affects holders of
Shares (other than Parent or Purchaser); (iii) take any other action under or in
connection with this Agreement if such action adversely affects holders of
Shares (other than Parent or Purchaser or (iv) take any other action by the
Company in connection with this Agreement required to be taken by the Company's
board of directors.
Section 2.4 THE MERGER. Subject to the satisfaction or waiver of
conditions in SECTION 7 of this Agreement, at the Effective Time, the Company
and Purchaser shall consummate a merger pursuant to which (a) Purchaser shall be
merged with and into the Company and the separate corporate existence of
Purchaser shall thereupon cease, (b) the Company shall be the surviving
corporation in the Merger (sometimes referred to as the "SURVIVING CORPORATION")
and shall continue to be governed by the laws of the State of Delaware and (c)
the separate corporate existence of the Company with all its rights, privileges,
immunities, powers and franchises shall continue unaffected by the Merger,
except as set forth in this SECTION 2.4. Pursuant to the Merger, (x) the
certificate of incorporation of the Company, 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 and (y) the by-laws of Purchaser, as in effect immediately prior
to the Effective Time, shall be the by-laws of the Surviving Corporation until
thereafter amended as provided by law, by such certificate of incorporation or
by such by-laws. The Merger shall have the effects specified in the DGCL. The
parties hereby acknowledge that immediately after the Effective Time, the
certificate of incorporation of the Surviving Corporation, shall be amended and
restated in its entirety to be substantially identical to the certificate of
incorporation of the Purchaser as in effect immediately prior to the Effective
Time.
Section 2.5 DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION.
Purchaser's directors at the Effective Time and the Company's officers at the
Effective Time shall, from and after the Effective Time, be the directors and
officers, respectively, of the Surviving Corporation until their successors
shall have been duly elected or appointed or qualified or until their earlier
death, resignation or removal in accordance with the certificate of
incorporation and the by-laws of the Surviving Corporation. If, at the Effective
Time, a vacancy shall exist on the board of directors of the Company or in any
office of the Surviving Corporation, such vacancy may thereafter be filled in
the manner provided by law.
Section 2.6 EFFECTIVE TIME. Parent, Purchaser and the Company will
cause the Certificate of Merger to be executed and filed on the Closing Date (or
on such other date as
15
Parent and the Company may agree) with the Secretary of State of the State of
Delaware as provided in the DGCL. The Merger shall become effective on the date
and at the time the Certificate of Merger is duly filed with the Secretary of
State of the State of Delaware or such other time as is agreed upon by the
parties and specified in the Certificate of Merger.
Section 2.7 CLOSING. The closing of the Merger shall take place at 10
a.m. on a date to be agreed upon by the parties, and if such date is not agreed
upon by the parties, the Closing shall occur on the second Business Day after
satisfaction or waiver of all of the conditions set forth in ARTICLE 7 (other
than those conditions which by their nature are to be satisfied at the Closing),
at the offices of Xxxxxxx, Xxxxxxx & Xxxxxxxx, LLP, 000 Xxxxxxxxxxx Xxxxxxxxx,
Xxxxx 000, Xxxxxxxxxx, Xxxxxxxx 00000.
Section 2.8 SUBSEQUENT ACTIONS. If at any time after the Effective
Time, the Surviving Corporation will consider or be advised that any deeds,
bills of sale, assignments, assurances or any other actions or things are
necessary or desirable to vest, perfect or confirm of record or otherwise in the
Surviving Corporation its right, title or interest in, to or under any of the
rights, properties or assets of either of the Company or Purchaser acquired or
to be acquired by the Surviving Corporation as a result of, or in connection
with, the Merger or otherwise to carry out this Agreement, the officers and
directors of the Surviving Corporation shall be authorized to execute and
deliver, in the name and on behalf of either the Company or Purchaser, all such
deeds, bills of sale, instruments of conveyance, assignments and assurances and
to take and do, in the name and on behalf of each of such corporations or
otherwise, all such other actions and things as may be necessary or desirable to
vest, perfect or confirm any and all right, title and interest in, to and under
such rights, properties or assets in the Surviving Corporation or otherwise to
carry out this Agreement.
Section 2.9 STOCKHOLDERS' MEETING.
(a) If required by applicable law in order to consummate the Merger,
the Company, acting through its board of directors, shall, as promptly as
practicable following the acceptance for payment and purchase of Shares by
Purchaser pursuant to the Offer, in accordance with applicable law:
(i) duly call, give notice of, convene and hold a special
meeting of stockholders of the Company for the purpose of considering
and taking action upon the adoption of this Agreement;
(ii) prepare and file with the SEC a preliminary proxy or
information statement relating to the Merger and this Agreement and use
its best efforts to obtain and furnish the information required to be
included by the SEC in the Proxy Statement and, after consultation with
Parent, to respond promptly to any comments made by the SEC or its
staff with respect to the preliminary proxy or information statement
and cause the Proxy Statement to be mailed to its stockholders,
PROVIDED, that no amendment or supplement to such Proxy Statement will
be made by the Company without the consent of Parent and its counsel,
which consent shall not be unreasonably withheld or delayed;
(iii) subject to the provisions of SECTION 6.4(b), include
in the Proxy
16
Statement the recommendation of the board of directors of the Company
based upon a recommendation of the Special Committee that stockholders
of the Company vote in favor of the adoption of this Agreement;
(iv) use its commercially reasonable efforts to solicit
from holders of Shares proxies in favor of the adoption of this
Agreement and shall take all other action necessary or, in the
reasonable opinion of Parent, advisable to secure any vote or consent
of stockholders required by Delaware law to effect the Merger.
(b) As promptly as practicable following the acceptance for payment and
purchase of Shares by Purchaser pursuant to the Offer, Parent will provide the
Company with the information concerning Parent and Purchaser required to be
included in the Proxy Statement.
(c) Parent shall vote, or cause to be voted, all Shares beneficially
owned by Parent, Purchaser or any of Parent's other Subsidiaries in favor of the
adoption of this Agreement and the Merger.
Section 2.10 MERGER WITHOUT MEETING OF STOCKHOLDERS. Notwithstanding
SECTION 2.9, in the event that Parent, Purchaser and any other Subsidiaries or
Affiliates of Parent or Purchaser shall beneficially own in the aggregate a
number of the outstanding shares of each class of capital stock of the Company,
sufficient to enable Purchaser or the Company to cause the Merger to become
effective without a meeting of stockholders of the Company, the parties hereto
shall, at the request of Parent and subject to the satisfaction or waiver of all
of the conditions set forth in ARTICLE 7, take all necessary and appropriate
action to cause the Merger to become effective as soon as practicable after such
acquisition, without a meeting of stockholders of the Company, in accordance
with Section 253 of the DGCL.
ARTICLE 3
CONVERSION OF SECURITIES
Section 3.1 CONVERSION OF CAPITAL STOCK. As of the Effective Time, by
virtue of the Merger and without any further action on the part of the holders
of any Shares or holders of Purchaser Common Stock:
(a) PURCHASER COMMON STOCK. Each share of Purchaser Common Stock issued
and outstanding immediately prior to the Effective Time shall be converted into
and become one fully paid and nonassessable share of common stock, par value
$0.001 per share, of the Surviving Corporation.
(b) CANCELLATION OF TREASURY STOCK AND PARENT-OWNED STOCK. Each Share
held in the treasury of the Company or owned by any Company Subsidiary and each
Share owned by Parent, Purchaser or any other wholly owned Subsidiary of Parent
(other than shares in trust accounts, managed accounts, custodial accounts and
the like that are beneficially owned by third parties), issued and outstanding
immediately prior to the Effective Time, shall be cancelled and retired and
shall cease to exist, and no consideration shall be delivered in exchange
therefor.
17
(c) CONVERSION OF SHARES. Each issued and outstanding Share (other than
Shares to be cancelled in accordance with SECTION 3.1(b) and other than any
Dissenting Shares) shall be converted into the right to receive the Offer Price,
payable to the holder thereof, without interest, upon surrender of the
certificate formerly representing such Share (each a "COMPANY CERTIFICATE") in
the manner provided in SECTION 3.2. All such converted Shares, when so
converted, shall no longer be outstanding and shall be deemed to be cancelled
and retired and shall cease to exist, and each holder of any such Shares shall
cease to have any rights with respect to any Company Certificate except the
right to receive the Merger Consideration therefor, without interest, upon the
surrender of such Company Certificate in accordance with SECTION 3.2 or the
right, if any, to receive payment from the Surviving Corporation of the "fair
value" of such Shares as determined in accordance with Section 262 of the DGCL.
Section 3.2 EXCHANGE OF COMPANY CERTIFICATES.
(a) Parent shall designate a bank or trust company to act as agent for
the holders of the Shares in connection with the Merger to receive in trust the
funds to which holders of the Shares shall become entitled pursuant to SECTION
3.1(c). At the Effective Time, Parent or Purchaser shall deposit, or cause to be
deposited, with the Exchange Agent for the benefit of holders of Shares the
aggregate consideration to which such holders shall be entitled at the Effective
Time pursuant to SECTION 3.1(c). Such funds shall be invested as reasonably
directed by Parent or the Surviving Corporation in reasonably prudent
investments pending payment thereof by the Exchange Agent to holders of the
Shares. Earnings from such investments shall be the sole and exclusive property
of the Surviving Corporation and no part of such earnings shall accrue to the
benefit of holders of Shares and any Taxes payable on such earnings shall be the
sole obligation of the Surviving Corporation.
(b) As soon as reasonably practicable after the Effective Time, Parent
shall cause the Exchange Agent to mail to each holder of record of one or more
Company Certificates, (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Company
Certificates shall pass, only upon delivery of the Company Certificates to the
Exchange Agent and shall be in such form and have such other provisions not
inconsistent with this Agreement as Parent may reasonably specify) and (ii)
instructions for use in effecting the surrender of Company Certificates in
exchange for payment of Merger Consideration. Upon surrender of a Company
Certificate for cancellation to the Exchange Agent, together with such letter of
transmittal, duly executed, the holder of such Company Certificate shall be
entitled to receive in exchange therefor the Merger Consideration for each Share
formerly represented by such Company Certificate into which such Shares shall
have been converted pursuant to SECTION 3.1, and the Company Certificate so
surrendered shall be cancelled. If payment of the Merger Consideration is to be
made to a Person other than the Person in whose name the surrendered Company
Certificate is registered, it shall be a condition of payment that the Company
Certificate so surrendered shall be properly endorsed or shall be otherwise in
proper form for transfer and that the Person requesting such payment shall have
paid any transfer and other Taxes required by reason of the payment of the
Merger Consideration to a Person other than the registered holder of the Company
Certificate surrendered or shall have established to the satisfaction of the
Surviving Corporation that such Tax either has been paid or is not applicable.
18
(c) At the Effective Time, the stock transfer books of the Company
shall be closed, and thereafter there shall be no further registration of
transfers of the Shares on the records of the Company.
(d) At any time following six (6) months after the Effective Time, the
Surviving Corporation shall be entitled to require the Exchange Agent to deliver
to it any funds (including any earnings with respect thereto) which had been
made available to the Exchange Agent and which have not been disbursed to
holders of Company Certificates, and thereafter such holders shall be entitled
to look only to the Surviving Corporation (subject to abandoned property,
escheat or other similar laws) and only as general creditors thereof with
respect to the Merger Consideration payable upon due surrender of their Company
Certificates, without any interest thereon. Notwithstanding the foregoing,
neither Parent, the Surviving Corporation nor the Exchange Agent shall be liable
to any holder of a Company Certificate for Merger Consideration delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
Section 3.3 DISSENTING SHARES.
(a) Notwithstanding any provision of this Agreement to the contrary,
Dissenting Shares shall not be converted into or represent a right to receive
Merger Consideration, but the holder thereof shall be entitled to only such
rights as are granted by the DGCL.
(b) Notwithstanding the provisions of SECTION 3.3(a), if any holder of
Shares outstanding immediately prior to the Effective Time who demands appraisal
of Shares under the DGCL effectively withdraws or loses (through failure to
perfect or otherwise) the right to appraisal, then after the Effective Time or
the occurrence of such event, whichever later occurs, such holder's Shares shall
automatically be converted into and represent only the right to receive the
Merger Consideration as provided in SECTION 3.1(c), without interest, upon
surrender of the Company Certificates representing such Shares pursuant to
SECTION 3.2.
(c) The Company shall give Parent (i) prompt notice of any written
demands for appraisal or payment of the fair value of any Shares, withdrawals of
such demands, and any other instruments served on the Company pursuant to the
DGCL received by the Company or any of its directors or officers and (ii) the
opportunity to direct all negotiations and proceedings with respect to demands
for appraisal under the DGCL. Except with the prior written consent of Parent,
the Company shall not voluntarily make any payment, admissions or statements
against interest with respect to any demands for appraisal, settle or offer to
settle any such demands.
Section 3.4 COMPANY STOCK OPTION PLANS.
(a) ASSUMPTION OF OPTIONS. At the Effective Time, the Company Stock
Option Plan and each outstanding option to purchase Shares under the Company
Stock Option Plan, whether vested or unvested, will be assumed by Parent. On the
Closing Date, the Company shall deliver to Parent an updated list substantially
similar to that presented in SECTION 4.3(a) OF THE COMPANY DISCLOSURE LETTER,
current as of such date. Each such option so assumed by Parent under this
Agreement shall continue to have, and be subject to, the same terms and
conditions set forth in the Company Stock Option Plan and the applicable stock
option agreement immediately prior to
19
the Effective Time, except that (i) such option will, in accordance with the
Common Stock Exchange Ratio, be exercisable for that number of shares of Parent
Common Stock equal to the number of shares of Company Common Stock subject to
such option immediately prior to the Effective Time, and (ii) the exercise price
per share shall, in accordance with such Common Stock Exchange Ratio, remain as
the exercise price per share in effect for that option immediately prior to the
Effective Time. For purposes of this Agreement, the "Common Stock Exchange
Ratio" shall be one share of Parent Common Stock for each share of Company
Common Stock. Consistent with the terms of the Company Stock Option Plan and the
documents governing the outstanding options under such Plan, the Merger will not
terminate any of the outstanding options under the Company Stock Option Plan. It
is the intention of the parties that the options so assumed by Parent qualify,
to the maximum extent permissible, following the Effective Time as incentive
stock options as defined in Section 422 of the Code to the extent such options
qualified as incentive stock options prior to the Effective Time. Within 20
Business Days after the Effective Time, Parent shall issue to each person who,
immediately prior to the Effective Time was a holder of an outstanding option
under the Company Stock Option Plan, a document in form and substance
satisfactory to Company evidencing the foregoing assumption of such option by
Parent. At or prior to the Effective Time, Parent shall take all corporate
action necessary to reserve for issuance a sufficient number of shares of Parent
Common Stock for delivery of options assigned to and assumed by it in accordance
with this SECTION 3.4(a).
(b) ASSIGNMENT OF REPURCHASE OPTIONS. All outstanding rights of the
Company which it may hold immediately prior to the Effective Time to repurchase
unvested Shares (the "Repurchase Options") shall, at the Effective Time, be
assigned to Parent in the Merger and shall thereafter be exercisable by Parent
upon the same terms and conditions in effect immediately prior to the Effective
Time, except that the shares purchasable pursuant to the Repurchase Options and
the purchase price per share shall be adjusted to reflect the Common Exchange
Ratio.
(c) NOTIFICATION. As soon as practicable after the consummation of the
Merger, Parent shall deliver to the holders of the assumed options to acquire
Parent Common Stock appropriate notices setting forth such holders' rights
pursuant to the applicable stock plans.
ARTICLE 4
REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
Except as set forth in the Company Disclosure Letter or in the Company
SEC Documents, the Company represents and warrants to Parent and Purchaser that
all of the statements contained in this ARTICLE 4 are true and correct as of the
date of this Agreement (or, if made as of a specified date, as of such date).
Each exception set forth in the Company Disclosure Letter and each other
response to this Agreement set forth in the Company Disclosure Letter is
identified by reference to, or has been grouped under a heading referring to, a
section of this Agreement and relates only to such section, except to the extent
that one portion of the Company Disclosure Letter specifically refers to another
portion thereof, identifying such other
20
portion by cross reference, or a reasonable interpretation from a reading of the
specific disclosure (without any additional knowledge, facts or disclosures) is
that such disclosure is also applicable to another section of this Agreement.
Section 4.1 ORGANIZATION; QUALIFICATION. The Company (a) is a
corporation duly organized, validly existing and in good standing under the laws
of its state of incorporation; (b) has all requisite corporate power and
authority to carry on its business as it is now being conducted and to own the
properties and assets it now owns; and (c) is duly qualified or licensed to do
business as a foreign corporation in good standing in every jurisdiction in
which such qualification is required except where the failure to be so
qualified, licensed or in good standing could not reasonably be expected to have
a Company Material Adverse Effect. The Company has made available to Parent and
Purchaser true, complete and correct copies of the Company's Amended and
Restated Certificate of Incorporation and Amended By-Laws (the "COMPANY
ORGANIZATIONAL DOCUMENTS"), which Company Organizational Documents are in full
force and effect.
Section 4.2 SUBSIDIARIES AND AFFILIATES. SECTION 4.2 OF THE COMPANY
DISCLOSURE LETTER sets forth the name, jurisdiction of incorporation and
authorized and outstanding capital of each Company Subsidiary and the
jurisdictions in which each Company Subsidiary is qualified to do business. The
Company does not own, directly or indirectly, any capital stock or other equity
securities of any corporation or have any direct or indirect equity or ownership
interest in any business or other Person, other than publicly traded securities
constituting less than five percent (5%) of the outstanding equity of the
issuing entity. All the outstanding capital stock of each Company Subsidiary is,
directly or indirectly, owned (of record and beneficially) by the Company free
and clear of any liens, options or encumbrances of any kind, restrictions on
transfers (other than restrictions on transfer arising under applicable
securities laws), claims of any kind, and is validly issued, fully paid and
nonassessable, and there is no outstanding option, right or agreement of any
kind relating to the issuance, sale or transfer of any capital stock or other
equity securities of any such Company Subsidiary to any Person except the
Company. Each Company Subsidiary (a) is a corporation duly organized, validly
existing and in good standing under the laws of its state of incorporation; (b)
has all requisite corporate power and authority to carry on its business as it
is now being conducted and to own the properties and assets it now owns; and (c)
is duly qualified or licensed to do business as a foreign corporation in good
standing in every jurisdiction in which such qualification is required, except
where the failure to be so qualified, licensed or in good standing could not
reasonably be expected to have a Company Material Adverse Effect. The Company
has made available to Parent complete and correct copies of the certificate of
incorporation, by-laws or similar organizational documents of each Company
Subsidiary, as presently in effect. With respect to any exception to ownership
set forth in SECTION 4.2 OF THE COMPANY DISCLOSURE LETTER, the schedule
completely and correctly identifies the record and the beneficial owner of any
such shares, whether such record or beneficial owner is an employee, agent or
affiliate of the Company, and any agreement, arrangement or understanding,
whether written or oral, with respect to such ownership.
Section 4.3 CAPITALIZATION.
(a) The authorized capital stock of the Company consists of 125,000,000
Shares and 75,000,000 shares of preferred stock, par value $0.001 per share. As
of the date of this
21
Agreement, (i) 43,414,402 Shares are issued and outstanding, (ii) 5,000 Shares
are issued and held in the treasury of the Company, (iii) no shares of preferred
stock are issued and outstanding, and (iv) 4,484,786 Shares are reserved for
issuance upon exercise of Company Options under the Company Stock Option Plan.
SECTION 4.3(a) OF THE COMPANY DISCLOSURE LETTER lists the holder of each
outstanding Company Option, the number of Shares for which such Company Option
is exercisable, the exercise price of such Company Option, the extent to which
such Company Option will vest upon consummation of any of the Transactions and
the vesting schedule of such Company Option. The terms of the Company Stock
Option Plan and each Company Option permit the Parent's assumption of each
outstanding Company Option and the conversion of that option into an option to
purchase Parent Common Stock as provided in SECTION 3.4 of this Agreement and
the assignment of the Company's repurchase rights with respect to any
outstanding unvested shares of Company Common Stock under the Plan to Parent as
provided in SECTION 3.4 of this Agreement, in each instance without the consent
or approval of the holders of the Company Options or the unvested shares of
Company Common Stock or the Company's stockholders. All the outstanding shares
of the Company's capital stock are, duly authorized, validly issued, fully paid
and nonassessable. There is no Voting Debt of the Company or any Company
Subsidiary issued and outstanding. Except as set forth above and except for the
Transactions, as of the date hereof, (x) there is no capital stock of the
Company authorized, issued or outstanding; (y) there is no existing option,
warrant, call, pre-emptive right, subscription or other right, agreement,
arrangement, understanding or commitment of any character, relating to the
issued or unissued capital stock of the Company or any Company Subsidiary,
obligating the Company or any Company Subsidiary to issue, transfer or sell or
cause to be issued, transferred or sold any shares of capital stock or Voting
Debt of, or other equity interest in, the Company or any Company Subsidiary or
securities convertible into or exchangeable for such shares, equity interests or
Voting Debt, or obligating the Company or any Company Subsidiary to grant,
extend or enter into any such option, warrant, call, subscription or other
right, agreement, arrangement or commitment; and (z) there is no outstanding
contractual obligation of the Company or any Company Subsidiary to repurchase,
redeem or otherwise acquire any Shares, or the capital stock of the Company, or
any Company Subsidiary or Affiliate of the Company or to provide funds to make
any investment (in the form of a loan, capital contribution or otherwise) in any
Company Subsidiary or any other entity or Person. With respect to any exception
to the contractual obligations of the Company set forth in SECTION 4.3(a) OF THE
COMPANY DISCLOSURE LETTER, the schedule completely and correctly identifies the
parties to such obligations and the nature of any relationship of such party or
any third party beneficiary of such obligations to the Company and any
agreement, arrangement or understanding, whether written or oral, with respect
to such relationship.
(b) There is no voting trust or other agreement or understanding to
which the Company or any Company Subsidiary is a party with respect to the
voting of the capital stock of the Company or any Company Subsidiary.
(c) No indebtedness of the Company or any Company Subsidiary contains
any restriction upon (i) the prepayment of any indebtedness of the Company or
any Company Subsidiary, (ii) the incurrence of indebtedness by the Company or
any Company Subsidiary or (iii) the ability of the Company or any Company
Subsidiary to grant any lien on the properties or assets of the Company or any
Company Subsidiary.
22
Section 4.4 AUTHORIZATION, VALIDITY OF AGREEMENT, COMPANY ACTION. The
Company has all requisite corporate power and authority to execute and deliver
this Agreement, to perform its obligations under this Agreement and to
consummate the Transactions. The execution and delivery of this Agreement by the
Company and the performance by the Company of its obligations under this
Agreement and the consummation by the Company of the Transactions, have been
duly authorized by the Company's board of directors and, except for obtaining
the approval of its stockholders as contemplated by SECTION 2.9, no other
corporate action on the part of the Company or its stockholders is necessary to
authorize the execution and delivery by the Company of this Agreement or the
consummation by it of the Transactions. This Agreement has been duly executed
and delivered by the Company and, assuming due and valid authorization,
execution and delivery thereof by Parent and Purchaser, this Agreement is a
valid and binding obligation of the Company enforceable against the Company in
accordance with its terms subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium or other similar laws generally applicable
to or affecting the enforcement of creditors' rights generally and except as to
the extent the availability of equitable remedies may be limited by general
principles of equity.
Section 4.5 BOARD APPROVALS REGARDING TRANSACTIONS.
(a) The Special Committee, at a meeting duly called and held, has (a)
determined that each of the Agreement, the Offer and the Merger are fair to,
advisable and in the best interests of the Company and the stockholders of the
Company, (b) recommended that the board of directors of the Company approve the
Transactions, and (c) recommended that the board of directors of the Company
recommend that stockholders of the Company accept the Offer, tender their Shares
to Purchaser pursuant to the Offer and adopt this Agreement. None of the
aforesaid actions of the Special Committee has been amended, rescinded or
modified.
(b) The Company's board of directors, at a meeting duly called and
held, has (a) determined that each of the Agreement, the Offer and the Merger
are fair to, advisable and in the best interests of the Company and the
stockholders of the Company, (b) approved the Transactions and (c) resolved to
recommend that the stockholders of the Company accept the Offer, tender their
Shares to Purchaser pursuant to the Offer and adopt this Agreement, and none of
the aforesaid actions by the Company's board of directors has been amended,
rescinded or modified. Subject to SECTION 6.8, the action taken by the Company's
board of directors constitutes approval of the Merger and each of the other
Transactions, considered as a unitary transaction and not separately, by the
Company's board of directors under the provisions of Section 203 of the DGCL
such that Section 203 of the DGCL does not apply to this Agreement or any of the
other Transactions. No other state takeover, antitakeover, moratorium, fair
price, interested stockholder, business combination or similar statute or rule
is applicable to the Merger or the other Transactions.
Section 4.6 VOTE REQUIRED. The affirmative vote of the holders of at
least a majority of the outstanding Shares is the only vote of the holders of
any class or series of the Company's capital stock necessary to approve the
Merger or adopt this Agreement. No vote of any class or series of the Company's
capital stock is necessary to approve any of the Transactions other than the
Merger Agreement as contemplated by SECTION 2.9.
Section 4.7 CONSENTS AND APPROVALS, NO VIOLATIONS. Except for the
filings, permits,
23
authorizations, consents and approvals as may be required under, and other
applicable requirements of, the Exchange Act, the HSR Act, state securities or
blue sky laws, and the filing of the Certificate of Merger, none of the
execution, delivery or performance of this Agreement by the Company, the
consummation by the Company of the Transactions or compliance by the Company
with any of the provisions of this Agreement will (a) conflict with or result in
any breach of any provision of the Amended and Restated Certificate of
Incorporation, the Amended By-Laws or similar organizational documents of the
Company or any Company Subsidiary, (b) require any filing with, or permit,
authorization, consent or approval of, any Governmental Entity, (c) result in a
violation or breach of, or constitute (with or without due notice or the passage
of time or both) a default (or give rise to any right of termination, amendment,
cancellation or acceleration or loss of any rights) under, any of the terms,
conditions or provisions of any Company Agreement or (d) violate any order,
writ, injunction, decree, statute, rule or regulation applicable to the Company,
any Company Subsidiary or any of their properties or assets other than such
breaches or violations that individually or in the aggregate could not
reasonably be expected to (x) have a Company Material Adverse Effect, (y)
materially impair the Company's ability to perform its obligations under this
Agreement or (z) prevent or materially delay the consummation of the
Transactions contemplated by this Agreement. There is no third party
non-governmental consent, notice or approval related to the Company, any Company
Subsidiary or any of their respective assets or properties required to be
obtained prior to the consummation of any of the Transactions, the failure of
which to be made or obtained individually or in the aggregate could not
reasonably be expected to (x) have a Company Material Adverse Effect, (y)
materially impair the Company's ability to perform its obligations under this
Agreement or (z) prevent or materially delay the consummation of the
Transactions contemplated by this Agreement.
Section 4.8 REPORTS AND FINANCIAL STATEMENTS.
(a) The Company has filed with the SEC the Company SEC Documents. As of
their respective dates or, if amended, as of the date of the last such amendment
filed prior to the date of this Agreement, the Company SEC Documents, including
any financial statements or schedules included therein (a) did not 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 made therein, in
the light of the circumstances under which they were made, not misleading and
(b) complied in all material respects with the applicable requirements of the
Exchange Act and the Securities Act, as the case may be, and the applicable
rules and regulations of the SEC thereunder. None of the Company Subsidiaries is
required to file any forms, reports or other documents with the SEC, other than
as contemplated by this Agreement.
(b) Each of the Financial Statements have been prepared from, and are
in accordance with, the books and records of the Company and the Company
Subsidiaries. The Financial Statements complied, as of their respective dates,
in all material respects with applicable accounting requirements and rules and
regulations of the SEC. The Financial Statements have been prepared in
accordance with GAAP applied on a consistent basis (except as may be indicated
in the notes thereto and subject, in the case of interim condensed consolidated
financial statements, to normal, recurring and immaterial year-end adjustments
and the absence of certain notes) and fairly present in all material respects,
(i) the consolidated financial position of the Company and the Company
Subsidiaries as of the dates thereof and (ii) the consolidated results
24
of operations, changes in stockholders equity and cash flows of the Company and
the Company Subsidiaries for the periods presented therein.
Section 4.9 BOOKS AND RECORDS. The books of account, minute books,
stock record books and other records of the Company and the Company Subsidiaries
are complete and correct in all material respects and have been maintained in
accordance with sound business practices and the requirements of Section
13(b)(2) of the Exchange Act, including an adequate system of internal controls.
The minute books of the Company contain accurate and complete records of all
meetings held of, and corporate action taken by, the stockholders, the Company's
board of directors and committees of the Company's board of directors, and no
meeting of any of such stockholders, the Company's board of directors or such
committees has been held for which minutes have not been prepared and are not
contained in such minute books.
Section 4.10 NO UNDISCLOSED LIABILITIES. Except (a) as disclosed in the
Financial Statements and (b) for liabilities and obligations incurred in the
ordinary course of business and consistent with past practice since the Balance
Sheet Date, neither the Company nor any Company Subsidiary has any liability or
obligation of any nature, whether or not accrued, contingent or otherwise which,
individually, or in the aggregate, could reasonably be expected to have a
Company Material Adverse Effect.
Section 4.11 INTERIM OPERATIONS. Since the IPO Date, the business of
the Company and each Company Subsidiary has been conducted only in the ordinary
and usual course consistent with past practice and there has not been any change
in the financial condition, properties, businesses or results of operations of
the Company or any of the Company Subsidiaries or any development or combination
of developments of which the Company has knowledge that, individually or in the
aggregate, has resulted in or is reasonably likely to have a Company Material
Adverse Effect.
Section 4.12 ABSENCE OF CERTAIN CHANGES. Since the IPO Date, neither
the Company nor any Company Subsidiary has:
(a) suffered any Company Material Adverse Effect;
(b) incurred any liabilities or obligations (absolute, accrued,
contingent or otherwise) except non-material items incurred in the ordinary
course of business and consistent with past practice, none of which exceeds five
hundred thousand dollars ($500,000) (counting obligations or liabilities arising
from one transaction or a series of similar transactions, and all periodic
installments or payments under any lease or other agreement providing for
periodic installments or payments, as a single obligation or liability), or
increased, or experienced any material change in any assumptions underlying or
methods of calculating, any bad debt, contingency or other reserves or
allowances;
(c) paid, discharged or satisfied any claim, liability or obligation
(whether absolute, accrued, contingent or otherwise) other than the payment,
discharge or satisfaction in the ordinary course of business and consistent with
past practice of liabilities and obligations reflected or reserved against in
the Balance Sheet or incurred in the ordinary course of business
25
and consistent with past practice since the IPO Date which could reasonably be
expected to have a Company Material Adverse Effect;
(d) permitted or allowed any of its properties or assets (real,
personal or mixed, tangible or intangible) to be subjected to any mortgage,
pledge, claim, lien, security interest, encumbrance or restriction of any kind,
except for liens for current Taxes not yet due or for Taxes being contested in
good faith;
(e) written down the value of any inventory (including write-downs by
reason of shrinkage or xxxx-down) or written off as uncollectible any notes or
accounts receivable, except for immaterial write-downs and write-offs in the
ordinary course of business and consistent with past practice;
(f) cancelled any debt or waived any claim or right of substantial
value which could reasonably be expected to have a Company Material Adverse
Effect;
(g) sold, transferred, or otherwise disposed of any of its properties
or assets (real, personal or mixed, tangible or intangible), except in the
ordinary course of business and consistent with past practice;
(h) disposed of or permitted to lapse any right to the use of any
Intellectual Property, or disposed of or disclosed to any Person, other than
representatives of Parent, any trade secret, formula, process, know-how or other
Intellectual Property not yet a matter of public knowledge except in the
ordinary course of business consistent with past practice;
(i) granted any material increase in the compensation of officers or
employees as a group (including any such increase pursuant to any bonus,
pension, profitsharing or other plan or commitment) or any material increase in
the compensation payable or to become payable to any officer or employee, and no
material increase is customary on a periodic basis or required by agreement or
understanding;
(j) except in the ordinary course of business consistent with past
practice, made any single capital expenditure or commitment in excess of
$500,000 for additions to property, plant, equipment or intangible capital
assets or made aggregate capital expenditures and commitments in excess of the
amounts set forth in the Company's capital plan previously delivered or made
available to Parent for additions to property, plant, equipment or intangible
capital assets;
(k) declared, paid or set aside for payment any dividend or other
distribution in respect of its capital stock or redeemed, purchased or otherwise
acquired, directly or indirectly, any shares of capital stock or other
securities of the Company or any Company Subsidiary;
(l) made any change in any method of Tax or GAAP accounting or
accounting practice except as required by applicable law or by changes in GAAP
after the date of this Agreement;
(m) paid, loaned or advanced any amount to, or sold, transferred or
leased any properties or assets (real, personal or mixed, tangible or
intangible) to, or entered into any agreement or arrangement with, any of its
officers or directors or any Affiliate or Associate of any, of its
26
officers or directors, except for directors' fees, and compensation to officers
at rates not exceeding the rates of compensation paid during the year ended
1999;
(n) accelerated, terminated, made modifications to, or cancelled, and
no other party has accelerated, terminated, made modifications to, or cancelled
any agreement, contract, lease, or license to which the Company or its
Subsidiaries is a party or by which it or its Subsidiaries is bound, the
acceleration, termination, cancellation of, or the modification to, which could
reasonably be expected to have a Company Material Adverse Effect;
(o) agreed, whether in writing or otherwise, to take any action
described in this section; or
(p) adopted or amended any Benefit Plan, entered into or terminated any
employment agreement, paid any special bonus or incentive remuneration to any
individual in the Company's employ or service, entered into or implemented any
severance or change in control benefit agreement or program with any such
individual, or made any loans or extensions of credit to any such individual,
except in the ordinary course of business consistent with past practice.
Section 4.13 LITIGATION. There is no action, suit, inquiry, proceeding
or investigation by or before any Governmental Entity or, to the knowledge of
the Company, threatened against or involving the Company or any Company
Subsidiary, or which questions or challenges the validity of this Agreement or
any action taken or to be taken by the Company or any Company Subsidiary
pursuant to this Agreement or in connection with the Transactions. The Company
does not know of any valid basis for any such action, proceeding or
investigation. Neither the Company nor any Company Subsidiary is in default
under or in violation of any Company Agreement or commitment or restriction to
which the Company or any Company Subsidiary is a party or by which any of them
or any of their assets is bound, the violation of which could reasonably be
expected to have a Company Material Adverse Effect. Neither the Company nor any
Company Subsidiary is subject to any judgment, order or decree which could
reasonably be expected to have a Company Material Adverse Effect or could have a
material adverse effect on its business practices, reasonably expected to delay
or prevent consummation of any of the Transactions or be reasonably expected to
limit the Company's ability to acquire any property or conduct its business in
any area.
Section 4.14 COMPANY BENEFIT PLANS.
(a) SECTION 4.14 OF THE COMPANY DISCLOSURE LETTER lists each Company
Benefit Plan.
(b) With respect to each Company Benefit Plan, Company has delivered or
made available to Parent a true, complete and correct copy of (i) such Company
Benefit Plan (of, if not written, a written summary of its material terms) and
the most recent summary plan description and summary of material modifications,
if any, related to such Company Benefit Plan, (ii) each trust agreement,
insurance contract or other funding arrangement, (iii) the most recent annual
report (Form 5500) filed with the IRS) (and, if the most recent annual report is
a Form 5500R, the most recent Form 5500C filed with respect to such Company
Benefit Plan), (iv) the most recent actuarial report or financial statement, (v)
the most recent determination letter, if any, issued by the IRS and any pending
request for a determination letter and (vi) each registration
27
statement, permit application and prospectus. Neither the Company nor any
Company Subsidiary nor, to the knowledge of the Company, any other Person or
entity, has any express or implied commitment, whether legally enforceable or
not, to continue (for any period), modify, change or terminate any Company
Benefit Plan, other than with respect to a modification, change or termination
required by ERISA or the Internal Revenue Code.
(c) Each Company Benefit Plan has been administered in all material
respects in accordance with its terms and all applicable laws, including ERISA
and the Internal Revenue Code (including the prohibited transaction rules
thereunder), and contributions required to be made under the terms of any of the
Company Benefit Plans as of the date of this Agreement have been timely made or,
if not yet due, have been properly reflected on the most recent consolidated
balance sheet filed or incorporated by reference in the Company SEC Documents
prior to the date of this Agreement. No suit, administrative proceeding, action
or other adverse proceeding or claim has been brought or threatened against or
with respect to any such Company Benefit Plan (other than routine benefits
claims) and to the knowledge of the Company there is no pending audit or inquiry
by the Internal Revenue Service or United States Department of Labor with
respect to any Company Benefit Plan. No event has occurred and, to the knowledge
of Company, there exists no condition or set of circumstances that could subject
the Company or any Company Subsidiary to any material liability (other than for
routine benefit liabilities) relating in any way to any Company Benefit Plan.
(d) Each Company Benefit Plan can be amended, discontinued or
terminated at any time (including after the Effective Time) in accordance with
its terms, without liability (other than (A) liability for ordinary
administrative expenses typically incurred in a termination event or (B)
liabilities for which sufficient assets are set aside in a trust or insurance
contract to satisfy such liability or which are reflected on the Company's most
recent consolidated balance sheet).
(e) Each Company Benefit Plan and its related trust that is intended to
qualify under Section 401(a) or 4975(e)(7) and Section 501(a), respectively, of
the Internal Revenue Code has received a favorable determination letter from the
IRS as to such qualified status or has been established under a standardized
prototype plan for which an Internal Revenue Service opinion letter has been
obtained by the plan sponsor and is valid as to the adopting employer and
nothing has occurred that could reasonably be expected to cause the loss of such
qualified status.
(f) No Company Benefit Plan is a multiemployer pension plan (as defined
in Section 3(37) of ERISA) or other pension plan subject to Title IV of ERISA or
the minimum funding rules of ERISA or the Internal Revenue Code and no Company
ERISA Affiliate has sponsored or contributed to or been required to contribute
to any such pension plan.
(g) With respect to each Benefit Plan required to be set forth in the
Company Disclosure Letter that is subject to Title IV of ERISA or the minimum
funding rules of ERISA or the Internal Revenue Code, (i) no reportable event
(within the meaning of Section 4043 of ERISA, other than an event that is not
required to be reported before or within thirty (30) days of such event) has
occurred or is expected to occur, (ii) there was not an accumulated funding
deficiency (within the meaning of Section 302 of ERISA or Section 412 of the
Internal Revenue Code), whether or not waived, as of the most recently ended
plan year of such Benefit Plan; and (iii) there is no "unfunded benefit
liability" (within the meaning of Section 4001(a)(18) of ERISA).
28
No material liability under Title IV of ERISA has been incurred by the Company
or any other Company ERISA Affiliate that has not been satisfied in full, and,
to the knowledge of the Company, no condition exists that presents a material
risk to Company or any Company Subsidiary of incurring or being subject (whether
primarily, jointly or secondarily) to a material liability thereunder. To the
knowledge of the Company, none of the assets of the Company or any Company
Subsidiary is, or may reasonably be expected to become, the subject of any lien
arising under ERISA or Section 412(n) of the Internal Revenue Code.
(h) Except as required by Law, no Company Benefit Plan provides any of
the following retiree or post-employment benefits to any person: medical,
disability or life insurance benefits. To knowledge of the Company, the Company
and each of the Company Subsidiaries are in compliance with (i) the requirements
of the applicable health care continuation and notice provisions of the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, and (ii) the
applicable requirements of the Health Insurance Portability and Accountability
Act of 1996, as amended.
(i) The Company has delivered or made available to Parent true,
complete and correct copies of (i) all employment agreements with officers and
all consulting agreements of the Company and each Company Subsidiary providing
for annual compensation in excess of one hundred thousand dollars ($100,000),
(ii) all severance plans, agreements, programs and policies of the Company and
each Company Subsidiary with or relating to their respective employees,
directors or consultants, and (iii) all plans, programs, agreements and other
arrangements of the Company and each Company Subsidiary with or relating to
their respective employees, directors or consultants which contain "change of
control" provisions.
(j) Except as set forth on SECTION 4.14(j) OF THE COMPANY DISCLOSURE
LETTER, to the knowledge of the Company (after due inquiry), the execution of,
and performance of the transactions contemplated by, this Agreement will not
(either along with or upon the occurrence of any additional or subsequent
events) constitute an event under any Company Benefit Plan or agreement that
will or may reasonably be expected to result in any payment (whether severance
pay or otherwise), acceleration, vesting or increase in benefits with respect to
any employee, former employee or director of the Company, or its Subsidiaries,
whether or not any such payment would be an "excess parachute payment" (within
the meaning of Section 280G of the Internal Revenue Code). Section 4.14(j) OF
THE COMPANY DISCLOSURE LETTER sets forth a list of all persons who the Company
reasonably believes are, with respect to the Company or any Company Subsidiary,
"disqualified individuals" (within the meaning of Section 280G of the Internal
Revenue Code and the regulations promulgated thereunder) as of the date of this
Agreement and the projected amount of any excess parachute payments.
(k) No administrator or similar Person or body has exercised its
discretion under the Company's 1999 Stock Option Plan to cause any outstanding
Company Option to terminate in connection with any of the Transactions.
Section 4.15 TAX MATTERS, GOVERNMENT BENEFITS.
(a) The Company and each Company Subsidiary have duly filed all
material Tax Returns that are required to be filed, and have duly paid or caused
to be duly paid in full all Taxes
29
reflected on such Tax Returns. All such Tax Returns were correct and complete in
all material respects and accurately reflected all material liability for Taxes
for the periods covered thereby at the time such Tax returns were filed. Since
the IPO Date, the Company and the Company Subsidiaries have not incurred any
liability for any Taxes other than in the ordinary course of business that could
reasonably be expected to have a Company Material Adverse Effect. Neither the
Company nor any Company Subsidiary has received written notice of any claim made
by an authority in a jurisdiction where the Company or the Company Subsidiary,
as the case may be, does not file Tax Returns, that the Company or the Company
Subsidiary is or may be subject to taxation by that jurisdiction.
(b) The federal income Tax Returns of the Company and each of the
Company Subsidiaries have been filed with the Internal Revenue Service (or the
applicable statutes of limitation for the assessment of federal income Taxes for
such periods have expired) for all periods through and including the date
hereof, and no material deficiencies were asserted as a result of such
examinations that have not been resolved or fully paid. Neither the Company nor
any Company Subsidiary has waived any statute of limitations in any jurisdiction
in respect of Taxes or Tax Returns or agreed to any extension of time with
respect to a Tax assessment or deficiency.
(c) No federal, state, local or foreign audit, examination or other
administrative proceeding is pending or, to the knowledge of the Company,
threatened with regard to any Taxes or Tax Returns of the Company or of any
Company Subsidiary. There is no material dispute or claim concerning any Tax
liability of the Company or any Company Subsidiary either claimed or raised by
any taxing authority in writing.
(d) Neither the Company nor any Company Subsidiary has filed a consent
pursuant to Section 341(f) of the Internal Revenue Code (or any predecessor
provision) concerning collapsible corporations, or agreed to have Section
341(f)(2) of the Internal Revenue Code apply to any disposition of a "subsection
(f) asset" (as such term is defined in Section 341(f)(4) of the Internal Revenue
Code) owned by the Company or any Company Subsidiary.
(e) The Company has at no time been a "United States real property
holding corporation" within the meaning of Section 897(c) of the Internal
Revenue Code.
(f) Neither the Company nor any Company Subsidiary is a party to any
material Tax sharing, Tax indemnity or other agreement or arrangement with any
entity not included in the Company's consolidated financial statements most
recently filed by the Company with the SEC.
(g) None of the Company or any Company Subsidiary has been a member of
any affiliated group within the meaning of Section 1504(a) of the Internal
Revenue Code, or any similar affiliated or consolidated group for Tax purposes
under state, local or foreign law (other than a group the common parent of which
is the Company), or has any liability for Taxes of any Person (other than the
Company and the Company Subsidiaries) under Treasury Regulation Section 1.1502-6
(or any similar provision of state, local or foreign law), as a transferee or
successor, by contract or otherwise.
Section 4.16 TITLE TO PROPERTIES; ENCUMBRANCES. Each of the Company and
the Company
30
Subsidiaries has good and valid title to all the properties and assets which it
purports to own (real, personal and mixed, tangible and intangible) and which
are reflected in the Balance Sheet, and all the properties and assets purchased
by the Company and the Company Subsidiaries since the IPO Date, in each case
free and clear of all mortgages, title defects or objections, liens, claims,
charges, security interests or other encumbrances of any nature whatsoever
including, leases, chattel mortgages, conditional sales contracts, collateral
security arrangements and other title or interest retention arrangements,
except, with respect to all such properties and assets: (a) liens shown on the
Balance Sheet as securing specified liabilities or obligations, with respect to
which no default exists; (b) minor imperfections of title, if any, none of which
are substantial in amount, materially detract from the value or impair the use
of the property subject thereto, or impair the operations of the Company or any
Company Subsidiary and which have arisen only in the ordinary course of business
and consistent with past practice since the IPO Date; and (c) liens for current
Taxes not yet due. The rights, properties and other assets presently owned,
leased or licensed by the Company and the Company Subsidiaries and described
elsewhere in this Agreement include all rights, properties and other assets
necessary to permit the Company and the Company Subsidiaries to conduct their
businesses in all material respects in the same manner as their businesses have
been conducted prior to the date hereof.
Section 4.17 LEASES. SECTION 4.17 OF THE COMPANY DISCLOSURE LETTER
contains a true and complete list of all material leases pursuant to which the
Company or any Company Subsidiary leases real or personal property. All such
leases are valid, binding and enforceable in accordance with their terms, are in
full force and effect and there is no existing material default by the Company
or any Company Subsidiary thereunder and no material event of default has
occurred which (whether with or without notice, lapse of time or the happening
or occurrence of any other event) would constitute a material default
thereunder; and all lessors under such leases have consented (where such consent
is necessary) to the consummation of the Transactions without requiring
modification in the rights or obligations of the lessee under such leases.
Section 4.18 ENVIRONMENTAL LAWS. (a) The Company and each Company
Subsidiary are in compliance in all material respects with all Environmental
Laws, including compliance with any permits or other governmental authorizations
or the terms and conditions thereof, (b) to the knowledge of the Company,
neither the Company nor any Company Subsidiary has received any communication or
notice, whether from a governmental authority or otherwise, alleging any
violation of or noncompliance with any Environmental Laws by the Company, any
Company Subsidiary or for which the any of them is responsible, and there is no
pending or, to the knowledge of the Company, threatened Environmental Claim; and
(c) to the knowledge of the Company, there is no past or present fact or
circumstance that could reasonably be expected to form the basis of any material
Environmental Claim against the Company or any Company Subsidiary or against any
Person or entity whose liability for any Environmental Claim the Company or any
Company Subsidiary has retained or assumed either contractually or by operation
of law. The Company has provided to Parent all assessments, reports, data,
results of investigations or audits, and other information that is in the
possession of or reasonably available to the Company or any Company Subsidiary
regarding environmental matters pertaining to or the environmental condition of
the business of the Company or any of the Company Subsidiaries, or the
compliance (or noncompliance) by the Company or any Company Subsidiary with any
Environmental Laws.
31
Section 4.19 INTELLECTUAL PROPERTY.
(a) SECTION 4.19(a) OF THE COMPANY DISCLOSURE LETTER contains a true
and complete list of all of the Company's and the Company Subsidiaries' patents,
patent applications, trademarks, trademark applications, trade names, service
marks, service xxxx applications, Internet domain names, Internet domain name
applications, copyrights and copyright registrations and applications and any
other filings and formal actions made or taken pursuant to Federal, state, local
and foreign laws by the Company and/or any Company Subsidiary to protect its
interests in the Company Intellectual Property.
(b) TRADEMARKS. The Company's sole Trademark registration is currently
in compliance in all material respects with all legal requirements (including
the timely post-registration filing of affidavits of use and incontestability
and renewal applications) other than any requirement that, if not satisfied,
would not result in a cancellation of any such registration or otherwise
materially affect the priority and enforceability of the Trademark in question.
No registered Trademark has been within the last three (3) years or is now
involved in any opposition or cancellation proceeding in the United States
Patent and Trademark Office. To the knowledge of the Company, no such action has
been threatened in writing within the one (1) year period prior to the date of
this Agreement. To the knowledge of the Company, there has been no prior use of
any material Trademark by any third party that confers upon said third party
superior rights in any such Trademark. The Company and its Subsidiaries have
taken all reasonable measures to protect the Trademarks against third party
infringement, and the Trademarks registered in the United States have been
continuously used by the Company or one of its Subsidiaries since the date set
forth in, the form appearing in, and in connection with the goods and services
listed in, their respective registration certificates or renewal certificates,
as the case may be.
(c) PATENTS. All issued Patents are currently in material compliance
with legal requirements (including payment of filing, examination, and
maintenance fees and proofs of working or use) other than any requirement that,
if not satisfied, would not result in a revocation or otherwise materially
affect the enforceability of the Patent in question. To the knowledge of the
Company, no Patent has been or is now involved in any interference, reissue,
reexamination or opposing proceeding in the United States Patent and Trademark
Office. To the knowledge of the Company, no such action has been threatened
within the one (1) year period prior to the date of this Agreement. To the
knowledge of the Company, there is no patent or patent application of any person
that invalidates any claim the Company or any of its Subsidiaries has in any
issued Patent.
(d) TRADE SECRETS. The Company and each of its Subsidiaries have taken
reasonable steps in accordance with normal industry practice to protect their
respective rights in confidential information and Trade Secrets. Without
limiting the generality of the foregoing, the Company and each of its
Subsidiaries enforces a policy of requiring each relevant employee, consultant
and contractor to execute agreements that contain provisions designed to prevent
unauthorized disclosure of the Company's confidential information and Trade
Secrets. With respect to employees, such agreements are substantially in the
Company's standard forms and also assign to the Company or such Subsidiary, as
the case may be, all rights to any Intellectual Property relating to the
Company's or such Subsidiary's business that is developed by the employee in the
course of his or her activities for the Company or any of its Subsidiaries or is
developed during
32
working hours using the resources of the Company or any such Subsidiary. With
respect to contractors and consultants, the agreements either assign all
Intellectual Property Rights developed pursuant to the agreement or license such
rights on agreed-upon terms. Except under confidentiality obligations, to the
knowledge of the Company, there has been no disclosure by the Company or any
Subsidiary of material confidential information or Trade Secrets.
(e) LICENSE AGREEMENTS. SECTION 4.19(e)(i) OF THE COMPANY DISCLOSURE
LETTER sets forth a complete and accurate list of each license agreement
granting to the Company or any of its Subsidiaries any material right to use or
practice any rights under any Intellectual Property other than software
commercially available on reasonable terms to any person for a license fee of no
more than fifty thousand dollars ($50,000) or shrink wrap licenses to
commercially available software sold at retail (collectively, the "INBOUND
LICENSE AGREEMENTS"), indicating for each the title and the parties thereto and
the amount of any future royalty or license fee payable thereunder. SECTION
4.19(e)(ii) OF THE COMPANY DISCLOSURE LETTER sets forth a complete and accurate
list of all material license agreements in effect during the period from the IPO
Date to the date hereof under which the Company or any of its Subsidiaries
licenses software or grants other rights in to use or practice any rights under
any Intellectual Property, excluding licenses or licensed products for which the
total payments to the Company and its Subsidiaries did not exceed fifty thousand
dollars ($50,000) and otherwise are not material to the Company and its
Subsidiaries, taking the Company together with its Subsidiaries as a whole
(collectively, the "OUTBOUND LICENSE AGREEMENTS"), indicating for each the title
and the parties thereto. There is no material outstanding or, to the knowledge
of the Company, threatened dispute or disagreement with respect to any Inbound
License Agreement or any Outbound License Agreement.
(f) OWNERSHIP; SUFFICIENCY OF IP ASSETS. The Company or one of its
Subsidiaries owns or possesses adequate licenses or other rights to use, free
and clear of Liens, orders and arbitration awards, all of its Intellectual
Property used in its business. No person other than the Company, its
Subsidiaries or any of their customers, in the ordinary course of business, has
been granted any interest in a right to use all or any portion of the
Intellectual Property necessary or required for the conduct of the Company's
business.
(g) PROTECTION OF IP. The Company has taken reasonable steps to protect
the Intellectual Property of the Company and its Subsidiaries.
(h) NO INFRINGEMENT BY THE COMPANY. To the knowledge of the Company,
the products used, manufactured, marketed, sold or licensed by the Company and
its Subsidiaries, and all Intellectual Property used in the conduct of the
Company's and its Subsidiaries' businesses as currently conducted, do not
infringe upon, violate or constitute the unauthorized use of any valid and
enforceable rights owned or controlled by any third party.
(i) NO PENDING OR THREATENED INFRINGEMENT CLAIMS. No litigation is now
or, within the three (3) years prior to the date of this Agreement, was pending
and, to the knowledge of the Company, no notice or other claim in writing has
been received by the Company or any of its Subsidiaries within the one (1) year
prior to the date of this Agreement, (i) alleging that the Company or any of its
Subsidiaries has engaged in any activity or conduct that infringes upon,
violates or constitutes the unauthorized use of the Intellectual Property rights
of any third party
33
or (ii) challenging the ownership, use, validity or enforceability of any
Intellectual Property owned or exclusively licensed by or to the Company, except
where such violation could not reasonably be expected to have a Company Material
Adverse Effect. No Intellectual Property (y) that is owned by the Company or any
of its Subsidiaries is subject to any outstanding order, judgment, decree,
stipulation or agreement restricting the use, sale, transfer, assignment or
licensing thereof by the Company or any such Subsidiary, except as may be
specifically provided in any such Outbound License Agreement, or (z) that is the
subject of an Inbound License Agreement is, to the knowledge of the Company,
subject to any outstanding judgment, decree, stipulation or agreement
restricting the use, sale, transfer, assignment or licensing thereof by the
Company or any of its Subsidiaries, except as provided in the Inbound License
Agreements.
(j) NO INFRINGEMENT BY THIRD PARTIES. To the knowledge of the Company,
no third party is misappropriating, infringing, diluting or violating any
Intellectual Property owned or exclusively licensed to the Company or any of its
Subsidiaries, and no such claims have been brought against any third party by
the Company or any of its Subsidiaries.
(k) ASSIGNMENT; CHANGE OF CONTROL. The execution, delivery and
performance by the Company of this Agreement, and the consummation of the
transactions contemplated hereby, will not result in the loss or impairment of,
or give rise to any right of any third party to terminate or alter, any of the
Company's or any of its Subsidiaries' rights to own any of its Intellectual
Property or their respective rights under any Inbound License Agreement or
Outbound License Agreement, nor require the consent of any Governmental
Authority or third party in respect of any such Intellectual Property, except
where such loss or impairment could not reasonably be expected to have a Company
Material Adverse Effect.
Section 4.20 EMPLOYMENT MATTERS.
(a) To the knowledge of the Company, the Company and each Company
Subsidiary are in compliance in all material respects with all currently
applicable laws and regulations respecting employment, discrimination in
employment, terms and conditions of employment, wages, hours and occupational
safety and health and employment practices, and is not engaged in any unfair
labor practice. To the knowledge of the Company, the Company and each Company
Subsidiary have withheld all amounts required by law or by agreement to be
withheld from the wages, salaries, and other payments to employees, and neither
the Company nor any Company Subsidiary is liable for any arrears of wages or any
Taxes or any penalty for failure to comply with any of the foregoing which could
reasonably be expected to have a Company Material Adverse Effect. To the
knowledge of the Company, neither the Company nor any Company Subsidiary is
liable for any payment to any trust or other fund or to any Governmental Entity,
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 is no
pending claim against the Company or any Company Subsidiary under any workers
compensation plan or policy or for long-term disability. There is no controversy
pending or, to the knowledge of the Company, threatened, between the Company or
any Company Subsidiary, on the one hand, and any of their respective employees,
on the other hand, which controversies have resulted, or could reasonably be
expected to result, in an action, suit, proceeding, claim, arbitration or
investigation before any U.S. Governmental Entity. Neither the Company nor any
Company Subsidiary is a party to any
34
collective bargaining agreement or other labor union contract, and neither the
Company nor any Company Subsidiary knows of any activities or proceedings of any
labor union in connection with an attempt to organize any such employees. To the
Company's knowledge, no employees of the Company or any Company Subsidiary are
in violation of any term of any employment contract, patent disclosure
agreement, noncompetition agreement, or any restrictive covenant to a former
employer relating to the right of any such employee to be employed by the
Company or Company Subsidiary because of the nature of the business conducted or
presently proposed to be conducted by the Company or any Company Subsidiary or
to the use of trade secrets or proprietary information of others. No employee of
the Company or any Company Subsidiary have given notice to the Company or any
Company Subsidiary, and neither the Company nor any of its Subsidiaries is
otherwise aware, that any such employee intends to terminate his or her
employment with the Company or any Company Subsidiary.
(b) SECTION 4.20(b) OF THE COMPANY DISCLOSURE LETTER lists the name,
place of employment, the current annual salary rates, bonuses, deferred or
contingent compensation, pension, accrued vacation, "golden parachute" and other
like benefits paid or payable (in cash or otherwise), the date of employment and
a description of position and job function of each current salaried employee,
officer, director, consultant or agent of the Company or any Company Subsidiary
whose annual compensation exceeded (or, in 2000, is expected to exceed) one
hundred thousand dollars ($100,000).
(c) All officers, employees and consultants of the Company and each
Company Subsidiary have signed proprietary rights and confidentiality agreements
in substantially the form set forth in SECTION 4.20(c) OF THE COMPANY DISCLOSURE
LETTER.
Section 4.21 COMPLIANCE WITH LAWS. The Company and each of the Company
Subsidiaries are in compliance in all material respects with and, to the
knowledge of the Company, have not violated in any material respect any
applicable law, rule or regulation of any United States federal, state, local,
or foreign Governmental Entity applicable to the Company or any of its
Subsidiaries, and no notice, charge, claim, action or assertion has been
received by the Company or any Company Subsidiary or has been filed, commenced
or, to the knowledge of the Company, threatened against the Company or any
Company Subsidiary alleging any such violation. All licenses, permits and
approvals required under such laws, rules and regulations are in full force and
effect except where the failure to obtain such licenses and permits or approvals
could not reasonably be expected to have a Company Material Adverse Effect.
Section 4.22 CONTRACTS AND COMMITMENTS.
Except as set forth in SECTION 4.22 OF THE DISCLOSURE SCHEDULE:
(a) Except for agreements, contracts and commitments filed as exhibits
to the Company SEC Documents, neither the Company nor any Company Subsidiary has
any agreements, contracts and commitments having a value of in excess of $1
million or which are otherwise material to the Company and its Subsidiaries,
taking the Company together with its Subsidiaries as a whole.
35
(b) No purchase contract or commitment of the Company or any Company
Subsidiary continues for a period of more than twelve (12) months or is in
excess of the normal, ordinary and usual requirements of business or at any
excessive price, except for contracts and commitments made in the ordinary
course of business and consistent with past practices.
(c) There is no outstanding sales contract, commitment or proposal of
the Company or any Company Subsidiary which would, to the knowledge of the
Company, result in any material loss to the Company or any Company Subsidiary
upon completion or performance thereof, after allowance for direct distribution
expenses nor is there any outstanding contract, bid or sales or service proposal
quoting price which could result in a loss.
(d) Neither the Company nor any Company Subsidiary has any collective
bargaining or union contracts or agreements.
(e) Neither the Company nor any Company Subsidiary has any outstanding
contracts having a value individually or in the aggregate exceeding $100,000
with any officer, employee, agent, consultant, advisor, salesperson or sales
representative that is not cancelable by it on notice of not longer than thirty
(30) days and without liability, penalty or premium or any agreement or
arrangement providing for the payment of any bonus or commission based on sales
or earnings.
(f) Neither the Company nor any Company Subsidiary is in material
default, nor has the Company or any Company Subsidiary received notice of, any
valid claim of material default, under any agreement, contract or commitment
which is material to the Company and its Subsidiaries, taking the Company
together with its Subsidiaries as a whole.
(g) To the knowledge of the Company, neither the Company nor any
Company Subsidiary is restricted or prohibited by agreement, order or decree
from, directly or indirectly, carrying on its business anywhere in the world.
(h) To the knowledge of the Company, neither the Company nor any
Company Subsidiary has any power of attorney outstanding or any obligation or
liability (whether absolute, accrued, contingent or otherwise) as guarantor,
surety, co-signer, endorser, co-maker, indemnitor or otherwise in respect of the
obligation of any Person, corporation, partnership, joint venture, association,
organization or other entity.
(i) Neither the Company, nor any Company Subsidiary is a party to any
agreement or arrangement or is otherwise under any obligation or commitment to
provide any type of tax subsidy, tax gross-up payment or other form of tax
reimbursement or indemnity to any person with respect to any excise tax
liability such person may incur under Internal Revenue Code Section 4999 (or any
successor provision) in connection with the consummation of the transactions
contemplated by this Agreement or upon the occurrence of any additional or
subsequent events following the consummation of such transactions.
Section 4.23 CUSTOMERS AND SUPPLIERS. Since the Balance Sheet Date, to
the Company's knowledge, neither the Company nor any Company Subsidiary has
received any notice of termination or to the knowledge of the Company, threat of
termination from any of the ten (10) largest suppliers or the ten (10) largest
customers of the Company and its Subsidiaries. There
36
has not been any material adverse change in the business relationship of the
Company or any Company Subsidiary with any customer who accounted for more than
five percent (5%) of the Company's sales (on a consolidated basis) since the
Balance Sheet Date, or any supplier from whom the Company and the Company
Subsidiaries purchased more than five percent (5%) of the goods or services (on
a consolidated basis) which it purchased during the same period.
Section 4.24 INFORMATION IN SCHEDULE 14D-9. The information supplied by
the Company for inclusion in the Offer Documents, the Schedule 14D-9 and the
Schedule TO/Schedule 13E-3 will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. The Schedule 14D-9 and
the Schedule TO/Schedule 13E-3 will comply in all material respects with the
provisions of applicable federal securities laws and, on the date filed with the
SEC and on the date first published or sent or given to the Company's
stockholders, shall not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements made therein, in the light of the circumstances under
which they were made, not misleading, except that no representation is made by
the Company with respect to statements made therein based on information
furnished by Parent or Purchaser for inclusion in the Schedule 14D-9 or the
Schedule TO/Schedule 13E-3.
Section 4.25 INFORMATION IN PROXY STATEMENT. The Proxy Statement, if
any, will not, at the date mailed to Company stockholders and at the time of the
Special Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements made therein, in the light of the circumstances under which
they are made, not misleading, except that no representation is made by the
Company with respect to statements made therein based on information furnished
by Parent or Purchaser for inclusion in the Proxy Statement. The Proxy Statement
will comply in all material respects with the provisions of the Exchange Act.
Section 4.26 OPINION OF FINANCIAL ADVISOR. The Special Committee has
received the opinion of Xxxxxx Xxxxxxx & Co. Incorporated (the "FINANCIAL
ADVISOR") dated the date of this Agreement, to the effect that, as of such date,
the consideration to be received in the Offer and the Merger by the holders of
Shares (other than Parent and Purchaser) in the Tender Offer and the Merger is
fair to such holders from a financial point of view. After delivery of such
opinion, the Company will promptly provide an accurate and complete copy of such
opinion to Purchaser.
Section 4.27 ABSENCE OF QUESTIONABLE PAYMENTS. Neither the Company nor
any Company Subsidiary nor any director, officer, agent, employee or other
Person acting on behalf of the Company or any Company Subsidiary, has used any
corporate or other funds for any unlawful contribution, payment, gift, or
entertainment, or made any unlawful expenditure relating to political activity
to government officials or others or established or maintained any unlawful or
unrecorded funds in violation of Section 30A of the Exchange Act. Neither the
Company nor any Company Subsidiary nor any current director, officer, agent,
employee or other Person acting on behalf of the Company or any Company
Subsidiary, has accepted or received any unlawful contribution, payment, gift or
expenditure. The Company and each Company Subsidiary which is required to file
reports pursuant to Section 12 or 15(d) of the Exchange Act is in compliance
with the provisions of Section 13(b) of the Exchange Act.
37
Section 4.28 INSIDER INTERESTS. Except as disclosed in the Company SEC
Documents, to the knowledge of the Company, no present or former Affiliate of
the Company has, or since December 31, 1998 has had, (i) any interest in any
property (whether real, personal or mixed and whether tangible or intangible)
used in or pertaining to any of the businesses of the Company or any of the
Company Subsidiaries, (ii) has had business dealings or a material financial
interest in any transaction with the Company or any of the Company Subsidiaries
(other than compensation and benefits received in the ordinary course of
business as an employee or director of the Company or any of the Company
Subsidiaries) or (iii) an equity interest or any other financial or profit
interest in any Person that has had business dealings or a material financial
interest in any transaction with the Company or any of the Company Subsidiaries.
Section 4.29 BROKERS OR FINDERS. No agent, broker, investment banker,
financial advisor or other firm or Person is or will be entitled to any brokers'
or finder's fee or any other commission or similar fee in connection with any of
the Transactions except for the Financial Advisor. True and correct copies of
all agreements between the Company and the Financial Advisor including any fee
arrangements are included in SECTION 4.29 OF THE COMPANY DISCLOSURE LETTER.
Section 4.30 INSURANCE. SECTION 4.30 OF THE COMPANY DISCLOSURE LETTER
sets forth a true and complete list of all insurance policies carried by, or
covering the Company and the Company Subsidiaries with respect to their
businesses, assets and properties, together with, in respect of each such
policy, the name of the insurer, the policy number, the type of policy, the
amount of coverage and the deductible. True and complete copies of each such
policy have previously been made available to Parent. All such policies are in
full force and effect, and no notice of cancellation has been given with respect
to any such policy. All premiums due on such policies have been paid in a timely
manner and the Company and the Company Subsidiaries have complied in all
material respects with the terms and provisions of such policies.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
OF STC, Parent AND Purchaser
STC, Parent and Purchaser represent and warrant to the Company that:
Section 5.1 ORGANIZATION. Each of STC, Parent and Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of their respective states of incorporation and has all requisite corporate or
other power and authority and all necessary governmental approvals to own, lease
and operate its properties and to carry on its business as now being conducted,
except where the failure to be so organized, existing and in good standing or to
have such power, authority, and governmental approvals would not have,
individually or in the aggregate, a Parent Material Adverse Effect or the
ability of STC, Parent or Purchaser to timely consummate any of the
Transactions.
Section 5.2 AUTHORIZATION, VALIDITY OF AGREEMENT, NECESSARY ACTION.
Each of STC, Parent and Purchaser has all requisite corporate power and
authority to execute and deliver this
38
Agreement and to consummate the Transactions. The execution, delivery and
performance by STC, Parent and Purchaser of this Agreement and the consummation
of the Merger and the other Transactions have been duly authorized by the boards
of directors of each of STC, Parent and Purchaser, by STC as the sole
stockholder of Parent, and by Parent as the sole stockholder of Purchaser, and
no other corporate action on the part of STC, Parent or Purchaser is necessary
to authorize the execution and delivery by STC, Parent and Purchaser of this
Agreement or the consummation of the Transactions. This Agreement has been duly
executed and delivered by STC, Parent and Purchaser, and, assuming due and valid
authorization, execution and delivery by the Company, is a valid and binding
obligation of each of STC, Parent and Purchaser, enforceable against each of
them in accordance with its terms.
Section 5.3 CONSENTS AND APPROVALS, NO VIOLATIONS. Except for the
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Exchange Act, the HSR Act,
state securities or blue sky laws and the DGCL, none of the execution, delivery
or performance of this Agreement by STC, Parent or Purchaser, the consummation
by STC, Parent or Purchaser of the Transactions or compliance by STC, Parent or
Purchaser with any of the provisions hereof will (a) conflict with or result in
any breach of any provision of the respective certificate of incorporation or
by-laws of STC, Parent or Purchaser; (b) require any filing with, or permit,
authorization, consent or approval of, any Governmental Entity; (c) result in a
violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, cancellation
or acceleration) under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, lease, license, contract, agreement or other
instrument or obligation to which Parent, or any of its Subsidiaries is a party
or by which any of them or any of their respective properties or assets may be
bound; or (d) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to Parent, any of its Subsidiaries or any of their
properties or assets, or on the ability of STC, Parent or Purchaser to timely
consummate any of the Transactions.
Section 5.4 INFORMATION IN DOCUMENTS. The Offer Documents and the
Schedule TO/Schedule 13E-3 will comply in all material respects with the
provisions of applicable federal securities laws and, on the date filed with the
SEC and on the date first published or sent or given to the Company's
stockholders, shall not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements made therein, in the light of the circumstances under
which they were made, not misleading, except that no representation is made by
STC, Parent or Purchaser with respect to information furnished by the Company
expressly for inclusion in the Offer Documents. The information supplied by STC,
Parent and Purchaser for inclusion in the Schedule 14D-9 and the Schedule
TO/Schedule 13E-3 will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading.
Section 5.5 INFORMATION IN PROXY STATEMENT. None of the information
furnished by STC, Parent or Purchaser for inclusion in the Proxy Statement, if
any, will, at the date mailed to stockholders or the time of the Special
Meeting, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they are
made, not
39
misleading.
Section 5.6 SUFFICIENT FUNDS. Either STC, Parent or Purchaser has
available and will have available at the Payment Date and the Closing,
sufficient funds to purchase all of the Shares outstanding on a fully diluted
basis at the Offer Price and to pay all fees and expenses of Parent and
Purchaser related to the Transactions.
Section 5.7 SHARE OWNERSHIP. Except as set forth in SCHEDULE 5.7, none
of STC, Parent, Purchaser or any of their respective Affiliates or Associates
owns any Shares.
Section 5.8 PARENT'S AND PURCHASER'S OPERATIONS. Parent and Purchaser
were formed solely for the purpose of engaging in the Transactions and have not
engaged in any business activities or conducted any operations other than in
connection with, the Subscription Agreement, the Tender Agreements and the
Transactions.
Section 5.9 BROKERS OR FINDERS. None of STC, Parent nor any of their
respective Subsidiaries or Affiliates has entered into any agreement or
arrangement entitling any agent, broker, investment banker, financial advisor or
other firm or Person to any brokers' or finders' fee or any other commission or
similar fee in connection with any of the Transactions, except Xxxxxxx Xxxxx
Barney Inc., whose fees and expenses will be paid by Parent in accordance with
Parent's agreement with such firm.
ARTICLE 6
COVENANTS
Section 6.1 INTERIM OPERATIONS OF THE COMPANY. The Company covenants
and agrees that during the period from the date of this Agreement until the
earlier to occur of (a) the termination of this Agreement or (b) the Appointment
Date, except (i) as contemplated by the Transactions, (ii) as set forth in
SECTION 6.1 OF THE COMPANY DISCLOSURE LETTER or (iii) as consented to in writing
by Parent (which consent shall not be unreasonably withheld):
(a) the business of the Company and each of the Subsidiaries shall be
conducted only in the usual, regular and ordinary course and substantially in
the same manner as heretofore conducted, and the Company and each Company
Subsidiary shall use its commercially reasonable efforts to preserve its
business organization substantially intact, keep available the services of its
current officers and employees and maintain its existing relations with
franchisees, customers, suppliers, creditors, business partners and others
having significant business dealings with it, to the end that the goodwill and
ongoing business of each of them shall be materially unimpaired at the Effective
Time;
(b) neither the Company nor any Company Subsidiary shall: (i) amend its
Amended and Restated Certificate of Incorporation or Amended By-Laws or similar
organizational documents, (ii) issue, sell, transfer, pledge, dispose of or
encumber any shares of any class or series of its capital stock or Voting Debt,
or securities convertible into or exchangeable for, or options, warrants, calls,
commitments or rights of any kind to acquire, any shares of any class or series
of its capital stock or any Voting Debt, other than Shares reserved for issuance
on the date of this
40
Agreement pursuant to the exercise of Company Options outstanding on the date of
this Agreement or Company Options issued in compliance with this Agreement,
(iii) declare, set aside or pay any dividend or other distribution payable in
cash, stock or property with respect to any shares of any class or series of its
capital stock, (iv) split, combine or reclassify any outstanding shares of any
class or series of its stock or (v) redeem, purchase or otherwise acquire
directly or indirectly any shares of any class or series of its capital stock,
or any instrument or security which consists of or includes a right to acquire
such shares;
(c) neither the Company nor any Company Subsidiary shall materially
modify, amend or terminate any of its material contracts or waive, release or
assign any material rights or claims, except in the ordinary course of business
and consistent with past practice;
(d) neither the Company nor any Company Subsidiary shall (i) incur or
assume any long-term debt, or except in the ordinary course of business, incur
or assume any short-term indebtedness in excess of $500,000; (ii) materially
modify the terms of any indebtedness or other liability, other than
modifications of short term debt in the ordinary and usual course of business
and consistent with past practice; (iii) assume, guarantee, endorse or otherwise
become liable or responsible (whether directly, contingently or otherwise) for
the obligations of any other Person in excess of $500,000, except as described
in SECTION 6.1(d) OF THE COMPANY DISCLOSURE LETTER as being in the ordinary
course of business; (iv) make any loan, advance or capital contribution to, or
investment in, any other Person (other than to or in wholly owned Company
Subsidiaries) in excess of $500,000; or (v) enter into any commitment or
transaction (including any capital expenditure or purchase, sale or lease of
assets or real estate) requiring payments in excess of $500,000;
(e) neither the Company nor any Company Subsidiary shall transfer,
lease, license, sell or dispose of any assets except for (i) sales of assets
pursuant to existing contracts or commitments in the ordinary and usual course
of business and (ii) dispositions of useless or worthless assets;
(f) except as otherwise specifically provided in this Agreement or in
the Schedule 14D-9, make or offer to make any material change in the
compensation payable or to become payable to any of its officers, directors,
employees, agents or consultants (other than normal recurring increases in wages
to employees who are not officers or directors or Affiliates in the ordinary
course of business and consistent with past practice) or to Persons providing
management services, or enter into or amend any material employment, severance,
consulting, termination or other agreement or employee benefit plan or make any
loans to any of its officers, directors, employees, Affiliates, agents or
consultants or make any material change in its existing borrowing or lending
arrangements for or on behalf of any of such Persons pursuant to an employee
benefit plan or otherwise; or
(g) except as otherwise contemplated by this Agreement or by the
Schedule 14D-9 or as specifically set forth in SECTION 6.1(g) OF THE COMPANY
DISCLOSURE LETTER, (i) pay or make any accrual or arrangement for payment of any
pension, retirement allowance or other employee benefit pursuant to any existing
plan, agreement or arrangement to any officer, director, employee or Affiliate
(except for payments and accruals made in the ordinary course of business and
consistent with past practice), (ii) pay, offer to pay or agree to pay or make
any accrual or
41
arrangement for payment to any officers, directors, employees or Affiliates of
the Company or any Company Subsidiary of any amount relating to unused vacation
days in excess of $50,000 (except payments and accruals made in the ordinary
course of business consistent with past practice), (iii) adopt or pay, grant,
issue, accelerate or accrue salary or other payments or benefits in excess of
$50,000 pursuant to any pension, profit-sharing, bonus, extra compensation,
incentive, deferred compensation, stock purchase, stock option, stock
appreciation right, group insurance, severance pay, retirement or other employee
benefit plan, agreement or arrangement, or any employment or consulting
agreement with or for the benefit of any director, officer, employee, agent or
consultant, whether past or present, or amend in any material respect any such
existing plan, agreement or arrangement in a manner inconsistent with the
foregoing;
(h) neither the Company nor any Company Subsidiary shall exercise its
discretion or otherwise voluntarily accelerate the vesting of any Company Stock
Option as a result of the Merger, any other "change in control" of the Company
(as defined in the Company Benefit Plans) or otherwise;
(i) neither the Company nor any Company Subsidiary shall revalue in any
material respect any of its assets, including writing down the value of
inventory or writing-off notes or accounts receivable, other than in the
ordinary course of business consistent with past practice or as required by
GAAP;
(j) neither the Company nor any Company Subsidiary shall permit any
material insurance policy naming it as a beneficiary or a loss payable payee to
be cancelled or terminated without notice to and the prior consent of Parent,
except policies providing coverage for losses not in excess of fifty thousand
dollars ($50,000);
(k) neither the Company nor any Company Subsidiary shall settle or
compromise any pending or threatened suit, action or claim that relates to the
transactions contemplated hereby, except to the extent the amount of any such
settlement or compromise has been reserved for on the Financial Statements
contained in any Company SEC Documents or could not reasonably be expected to
have a Company Material Adverse Effect;
(l) neither the Company nor any Company Subsidiary shall pay, purchase,
discharge or satisfy any of its claims, liabilities or obligations (absolute,
accrued, asserted or unasserted, contingent or otherwise) in excess of $250,000,
other than the payment, discharge or satisfaction in the ordinary course of
business and consistent with past practice, of claims, liabilities or
obligations reflected or reserved against in, or contemplated by, the Financial
Statements or as required by all applicable law;
(m) neither the Company nor any Company Subsidiary will adopt a plan of
complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of the Company or any
Company Subsidiary (other than the Merger);
(n) neither the Company nor any Company Subsidiary will (i) change
any of the accounting methods used by it unless required by GAAP or (ii) make
any material election relating to Taxes, change any material election
relating to Taxes already made, adopt any material accounting method relating
to Taxes, change any material accounting method relating to
42
Taxes unless required by GAAP or change in the Internal Revenue Code or the
regulations under the Internal Revenue Code, enter into any closing agreement
relating to Taxes, settle any claim or assessment relating to Taxes or
consent to any claim or assessment relating to Taxes or any waiver of the
statute of limitations for any such claim or assessment;
(o) neither the Company nor any Company Subsidiary will take, or agree
to commit to take, any action that would be reasonably likely to result in any
of the conditions to the Offer set forth in Appendix A to this Agreement or any
of the conditions set forth in ARTICLE 7 not being satisfied, or would make any
representation or warranty of the Company contained in this Agreement inaccurate
in any material respect at, or as of any time prior to, the Effective Time, or
that would materially impair the ability of the Company, Parent, Purchaser or
the holders of Shares to consummate the Offer or the Merger in accordance with
the terms thereof or materially delay such consummation;
(p) the Company shall not permit its plan administrator or similar
Person or body to cause any outstanding Company Option to terminate in
connection with any of the Transactions; and
(q) neither the Company nor any Company Subsidiary will enter into an
agreement, contract, commitment, understanding or arrangement to do any of the
foregoing, or to authorize, recommend, propose or announce an intention to do
any of the foregoing (and the Company shall use all reasonable efforts not to
take any action that would make any of the representations or warranties of the
Company contained in this Agreement untrue or incorrect).
Section 6.2 ACCESS; CONFIDENTIALITY. (a) The Company shall (and shall
cause each Company Subsidiary to) afford to the officers, employees,
accountants, counsel, financing sources and other representatives of Parent upon
reasonable notice given by the Parent to the Company, reasonable access during
the period from the date of this Agreement until the earlier of (i) the
termination of this Agreement or (ii) the Appointment Date, to all its
properties, books, contracts, commitments and records and, during such period,
the Company shall (and shall cause each Company Subsidiary to) furnish
reasonably promptly to Parent (x) a copy of each report, schedule, registration
statement and other document filed or received by it during such period pursuant
to the requirements of federal securities laws and (y) all other information
concerning its business, properties and personnel as Parent may reasonably
request. Notwithstanding the foregoing, access to the Company shall not
interfere with the day-to-day operation of the Company's business except in a
commercially reasonable manner. After the Appointment Date, the Company shall
provide Parent and such Persons as Parent shall designate with all such
information, at anytime as Parent shall reasonably request.
(b) Until the Appointment Date, unless otherwise required by law or in
order to comply with disclosure requirements applicable to the Offer Documents
or the Proxy Statement, Parent will hold any such information which is nonpublic
in confidence in accordance with the provisions of the Confidentiality
Agreement.
43
Section 6.3 REASONABLE EFFORTS.
(a) Prior to the Closing, upon the terms and subject to the conditions
set forth of this Agreement, Parent, Purchaser and the Company agree to use
commercially reasonable efforts to take, or cause to be taken, all actions, and
to do, or cause to be done, all things necessary, proper or advisable (under
this Agreement and subject to any applicable laws) to consummate the Offer and
the Merger and make effective the Merger and the other Transactions as promptly
as practicable including, (i) the preparation and filing of all forms,
registrations and notices required to be filed to consummate the Offer, the
Merger and the other Transactions and the taking of such actions as are
necessary to obtain any requisite approvals, consents, orders, exemptions or
waivers by any third party or Governmental Entity and (ii) the satisfaction of
the other parties' conditions to Closing. In addition, no party hereto shall
take any action after the date of this Agreement to materially delay the
obtaining of, or result in not obtaining, any permission, approval or consent
from any Governmental Entity necessary to be obtained prior to Closing.
(b) Prior to the Closing upon the terms and subject to the conditions
set forth herein, each party shall promptly consult with the other parties
hereto with respect to, provide any necessary information with respect to, and
provide the other parties (or their respective counsel) with copies of, all
filings made by such party with any Governmental Entity or any other information
supplied by such party to a Governmental Entity in connection with this
Agreement, the Offer, the Merger and the other Transactions. Each party hereto
shall promptly inform the other of any communication from any Governmental
Entity regarding any of the Transactions. If any party hereto or Affiliate
thereof receives a request for additional information or documentary material
from any such Governmental Entity with respect to any of the Transactions, then
such party shall endeavor in good faith to make, or cause to be made, as soon as
reasonably practicable and after consultation with the other parties, an
appropriate response in compliance with such request. To the extent that
transfers, amendments or modifications of permits (including environmental
permits) are required as a result of the execution of this Agreement or
consummation of any of the Transactions, the Company shall and shall cause the
Company Subsidiaries to use commercially reasonable efforts to effect such
transfers, amendments or modifications. Subject to applicable laws relating to
the exchange of information, Parent and the Company shall have the right to
review in advance, and to the extent reasonably practicable each will consult
the other on, all the information relating to the other and its subsidiaries,
that appear in any filing made with, or written materials submitted to, any
third party or any Governmental Entity in connection with the transactions
contemplated by this Agreement; PROVIDED, HOWEVER, that with respect to
documents that one party reasonably believes should not be disclosed to the
other party, such party shall furnish those documents to counsel for the other
party pursuant to a mutually satisfactory confidentiality agreement. In
exercising the foregoing right, each of the Company and Parent shall act
reasonably and as promptly as reasonably practicable.
(c) The Company and Parent shall file as soon as practicable, but in no
event later than two (2) Business Days after the commencement of the Offer,
notifications under the HSR Act and respond as promptly as reasonably
practicable to any inquiries received from the Federal Trade Commission and the
Antitrust Division of the Department of Justice for additional information or
documentation and respond as promptly as reasonably practicable to all inquiries
and requests received from any State Attorney General or other Governmental
Entity in connection with antitrust matters. Concurrently with the filing of
notifications under the HSR
44
Act or as soon thereafter as practicable, the Company and Parent shall each
request early termination of the HSR Act waiting period.
(d) Notwithstanding the foregoing, nothing in this Agreement shall be
deemed to require Parent or Purchaser to commence any litigation against any
entity in order to facilitate the consummation of any of the Transactions or to
defend against any litigation brought by any Governmental Entity seeking to
prevent the consummation of any of the Transactions.
Section 6.4 NOTIFICATION OF COMPETING TRANSACTION.
(a) The Company will promptly, but in any event within 24 hours, notify
Parent of the existence of any proposal, discussion, negotiation or inquiry,
which could reasonably be expected to lead to an Acquisition Proposal, received
by the Company, and the Company will promptly, but in any event within 24 hours,
communicate to Parent the material terms of any such proposal, discussion,
negotiation or inquiry, which it may receive (and will promptly, but in any
event within 24 hours, provide to Parent copies of any written materials
received by the Company, any Company Subsidiary or their respective
representatives in connection with such proposal, discussion, negotiation or
inquiry) and the identity of the Person making such proposal or inquiry or
engaging in such discussion or negotiation and shall immediately communicate to
Parent the status of such proposal, discussion or inquiry. The Company will
promptly, but in any event within 24 hours, provide to Parent any non-public
information concerning the Company provided to any other Person which was not
previously provided to Parent.
(b) Except as set forth in this SECTION 6.4(b), neither the Company's
board of directors nor any committee thereof shall (i) withdraw or modify, or
propose to withdraw or modify in a manner adverse to Parent or Purchaser, the
approval or recommendation by such board of directors or any such committee of
the Offer, this Agreement or the Merger, (ii) approve or recommend or propose to
approve or recommend any Acquisition Proposal or (iii) enter into any agreement
with respect to any Acquisition Proposal. Notwithstanding the foregoing, prior
to the time of acceptance for payment of Shares pursuant to the Offer, the
Company's board of directors may (x) withdraw or modify its approval or
recommendation of the Offer, this Agreement or the Merger, (y) approve or
recommend a Superior Proposal, or (z) enter into an agreement with respect to a
Superior Proposal, in each case at any time after the third Business Day
following Parent's receipt of written notice (such notice being referred to
herein as the "SECTION 6.4(b) NOTICE") from the Company advising Parent that the
board of directors of the Company has received a Superior Proposal which it
intends to accept, specifying the material terms and conditions of such Superior
Proposal, identifying the Person making such Superior Proposal, but only if the
Company shall have caused its financial and legal advisors to negotiate in good
faith with Parent to make such adjustments in the terms and conditions set forth
in this Agreement as would enable the Company to proceed with the transactions
contemplated herein on such adjusted terms. If the terms of this Agreement, as
adjusted, are identical to the Superior Proposal, this Agreement shall not be
terminated pursuant to Section 8.1(c)(ii). The Company shall not be entitled to
enter into any agreement with respect to a Superior Proposal unless and until
this Agreement is terminated pursuant to SECTION 8.1 and the Company has paid
all amounts due to Parent pursuant to SECTION 9.1.
Section 6.5 PUBLICITY. The initial press release with respect to the
execution of this
45
Agreement shall be a joint press release reasonably acceptable to Parent and the
Company. Thereafter, until the Appointment Date, or the date this Agreement is
terminated pursuant to ARTICLE 8 (whichever occurs first), neither the Company,
Parent nor any of their respective Affiliates shall issue or cause the
publication of any press release or other announcement with respect to the
Merger, this Agreement or the other Transactions without prior consultation with
the other party, except as may be required by law or by any listing agreement
with a national securities exchange or trading market.
Section 6.6 NOTIFICATION OF CERTAIN MATTERS. Prior to the Appointment
Date, the Company shall give reasonably prompt notice to Parent, and Parent,
Purchaser and STC shall give reasonably prompt notice to the Company, of (i) the
occurrence of any event which caused any representation or warranty contained in
this Agreement to be untrue or inaccurate in any material respect at or prior to
the Effective Time and (ii) any material failure of such party, to comply with
or satisfy any covenant, condition or agreement to be complied with or satisfied
by it hereunder, PROVIDED, HOWEVER, that the delivery of, or failure to deliver,
any notice pursuant to this SECTION 6.6 shall not limit or otherwise affect the
remedies available hereunder to the party receiving such notice.
Section 6.7 DIRECTORS' AND OFFICERS' INSURANCE AND INDEMNIFICATION.
(a) It is understood and agreed that, subject to the limitations on
indemnification contained in the DGCL, the Company shall, to the fullest extent
permitted under applicable law and regardless of whether the Merger becomes
effective, indemnify and hold harmless, and after the Effective Time, the
Surviving Corporation shall following the Effective Time, to the fullest extent
permitted under applicable law, indemnify, defend and hold harmless each
Indemnified Party against all losses, claims, damages, liabilities, costs, fees
and expenses, including reasonable fees and disbursements of counsel and
judgments, fines, losses, claims, liabilities and amounts paid in settlement
(PROVIDED, that any such settlement is effected with the written consent of
Parent or the Surviving Corporation, such consent not to be unreasonably
withheld) arising out of actions or omissions occurring at or prior to the
Effective Time to the full extent permitted under applicable law, the terms of
the Company's certificate of incorporation or the by-laws, as in effect at the
date hereof.
(b) Parent or the Surviving Corporation shall maintain the Company's
existing officers' and directors' liability insurance for a period of not less
than six (6) years after the Effective Date, PROVIDED, that Parent may
substitute therefor policies of substantially equivalent coverage and amounts
containing terms no less favorable to such former directors or officers;
PROVIDED, FURTHER, that in no event shall Parent or the Surviving Corporation be
required to pay aggregate premiums for insurance under this SECTION 6.7(b) in
excess of two hundred percent (200%) of the aggregate premiums paid by the
Company in the twelve months prior to the date of this Agreement, on an
annualized basis for such purpose; and PROVIDED, FURTHER, that if Parent or the
Surviving Corporation is unable to obtain the amount of insurance required by
this SECTION 6.7(b) for such aggregate premium, Parent or the Surviving
Corporation shall obtain as much insurance as can be obtained for an annual
premium not in excess of two hundred percent (200%) of the aggregate premiums
paid by the Company in the twelve months prior to the date of this Agreement, on
an annualized basis for such purpose.
46
(c) The provisions of this SECTION 6.7 shall survive any termination of
this Agreement pursuant to Article 8. Notwithstanding SECTION 9.6, this SECTION
6.7 is intended to be for the benefit of and to grant third-party rights to
Indemnified Parties whether or not parties to this Agreement, and each of the
Indemnified Parties shall be entitled to enforce the covenants contained herein.
(d) If the Surviving Corporation or any of its successors or assigns
(i) consolidates with or merges into any other Person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger or
(ii) transfers all or substantially all of its properties and assets to any
Person, then and in each such case, proper provision shall be made so that the
successors and assigns of the Surviving Corporation assume the obligations set
forth in this SECTION 6.7.
Section 6.8 STATE TAKEOVER LAWS. Notwithstanding any other provision in
this Agreement, in no event shall the Section 203 Approval be withdrawn, revoked
or modified by the board of directors of the Company; PROVIDED, HOWEVER, that
the Section 203 Approval may be withdrawn, revoked or modified by the board of
directors of the Company if this Agreement is terminated pursuant to Article 8
hereof. If any state takeover statute other than Section 203 of the DGCL becomes
or is deemed to become applicable to the Agreement, the Offer, the acquisition
of Shares pursuant to the Offer or the Merger or the other Transactions, the
Company or the applicable Company Subsidiary, on the one hand, and if required
by applicable law STC, the Parent or the Purchaser on the other hand, shall take
all action necessary to render such statute inapplicable to all of the
foregoing.
Section 6.9 PURCHASER COMPLIANCE. STC shall cause Parent and Purchaser
to comply with all of its obligations under or related to this Agreement,
including to consummate the Offer and the Merger on the terms and conditions set
forth in this Agreement.
Section 6.10 BOARD MEETING. Prior to the consummation of the Merger,
Parent and the Company shall take all such steps as may be required to cause the
Transactions contemplated by this Agreement and any dispositions of equity
securities of the Company or acquisitions of equity securities of Parent in
connection with this Agreement or the Subscription Agreement by each individual
who is a director or officer of the Company to be exempt under Rule 16b-3
promulgated under the Exchange Act, such steps to be taken in accordance with
the No-Action Letter dated January 12, 1999, issued by the SEC to Skadden, Arps,
Slate, Xxxxxxx & Xxxx LLP.
Section 6.11 FURTHER ACTION. Upon the terms and subject to the
conditions hereof, STC, Parent and Purchaser in good faith shall use
commercially reasonable efforts to take, or cause to be taken, all actions and
to, or cause to be done, all other things necessary, proper or advisable to
consummate and make effective as promptly as practicable the Transactions, to
obtain in a timely manner all necessary waivers, consents and approvals and to
effect all necessary registrations and filings, and to otherwise satisfy or
cause to be satisfied all conditions precedent to its obligations under this
Agreement.
47
Section 6.12 EMPLOYEES.
(a) Parent and STC agree to cause the Surviving Corporation to honor in
accordance with their terms all Company Benefit Plans and all employment and
severance agreements in each case listed in Section 6.12 of the Company
Disclosure Letter (or filed as exhibits to the Company SEC Documents), and all
accrued benefits vested thereunder.
(b) Parent agrees to cause the Surviving Corporation to provide as of
the Closing employees of the Company and its Subsidiaries retained by the
Surviving Corporation with employee benefits substantially similar to the
Company Benefit Plans set forth in SECTION 4.14 of the Company Disclosure
Letter; PROVIDED, HOWEVER, that the Parent shall be entitled to implement a
stock option plan in its discretion, without regard to the terms of the Company
Stock Option Plan.
(c) For purposes of all employee benefit plans, programs and
arrangements maintained by or contributed to by Parent and its Subsidiaries
(including, after the Closing, the Surviving Corporation), Parent shall, or
shall cause its Subsidiaries to, cause each such plan, program or arrangement to
treat the prior service with the Company and its Affiliates of each Person who
is an employee or former employee of the Company or its Subsidiaries immediately
prior to the Closing (a "COMPANY EMPLOYEE") (to the same extent such service is
recognized under analogous plans, programs or arrangements of the Company or its
affiliates prior to the Closing) as service rendered to Parent or its
Subsidiaries, as the case may be, for purposes of eligibility to participate in
and vesting thereunder; PROVIDED, HOWEVER, that such crediting of service shall
not operate to duplicate any benefit or the funding of such benefit. Company
Employees shall also be given credit for any deductible or co-payment amounts
paid in respect of the plan year in which the Closing occurs, to the extent
that, following the Closing, they participate in any other plan for which
deductibles or co-payments are required. Parent shall also cause each Parent
benefit plan to waive any preexisting condition which was waived or otherwise
covered under the terms of any Benefit Plan immediately prior to the Closing or
waiting period limitation which would otherwise be applicable to a Company
Employee on or after the Closing. Parent shall recognize any accrued but unused
vacation and sabbatical time of the Company Employees as of the date of Closing,
in accordance with the terms of such Company policies, and Parent shall provide
such vacation and sabbatical time in accordance with the terms of such Company
policies but in no event will Parent be obligated to extend or enlarge the
benefits available under such Company policies. Nothing in this Section 6.12
shall be construed to create any entitlement to employment other than "at will"
or any other entitlement.
ARTICLE 7
CONDITIONS
Section 7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligation of each party to effect the Merger shall be subject to
the satisfaction at or prior to the Effective Time of each of the following
conditions:
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(a) STOCKHOLDER APPROVAL. This Agreement shall have been adopted by the
requisite vote of the holders of the Shares, if required by applicable law, in
order to consummate the Merger.
(b) STATUTES; COURT ORDERS. No statute, law or regulation shall have
been enacted or promulgated by any Governmental Entity which prohibits the
consummation of the Merger, and there shall be no order or injunction of a court
of competent jurisdiction in effect precluding consummation of the Merger.
(c) PURCHASE OF SHARES IN OFFER. Parent, Purchaser or their Affiliates
shall have purchased the Shares pursuant to the Offer.
(d) GOVERNMENTAL APPROVAL. Any governmental or regulatory notices,
approvals or other requirements necessary to consummate the Merger shall have
been given, obtained or complied with, other than notices, approvals or other
requirements the failure to obtain which would not reasonably be expected to
have a Company Material Adverse Effect.
ARTICLE 8
TERMINATION
Section 8.1 TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after stockholder approval
thereof:
(a) Subject to SECTION 2.3(c), by the mutual written consent of Parent
and the Company;
(b) By either of the Company or Parent:
(i) if the Offer shall have expired without any Shares
being accepted for payment by the Purchaser pursuant to the Offer by
the Termination Date; PROVIDED, HOWEVER, that the right to terminate
this Agreement under this SECTION 8.1(b)(i) shall not be available to
any party whose failure to fulfill any obligation under this Agreement
has been the cause of, or resulted in, the failure of Purchaser to
accept for payment the Shares pursuant to the Offer on or prior to such
date; or
(ii) if any Governmental Entity shall have issued an
order, decree or ruling or taken any other action (which order, decree,
ruling or other action the parties hereto shall use their reasonable
efforts to lift), which permanently restrains, enjoins or otherwise
prohibits the acceptance for payment of, or payment for, Shares
pursuant to the Offer or the Merger and such order, decree, ruling or
other action shall have become final and non-appealable.
(c) By the Company:
(i) if Parent or Purchaser shall have failed to commence
the Offer within fifteen (15) Business Days following the date of the
initial public announcement of the Offer; PROVIDED, that the Company
may not terminate this Agreement pursuant to this SECTION 8.1(c)(i) if
the Company is at such time in material breach of its obligations
49
under this Agreement;
(ii) in connection with entering into a definitive
agreement as permitted by SECTION 6.4(b), PROVIDED, that the Company
has complied with all provisions thereof, including the notice
provisions therein, and that the Company makes simultaneous payment to
Parent of funds as required by SECTION 9.1(b);
(iii) if Parent or Purchaser shall have breached in any
material respect any of their respective representations, warranties,
covenants or other agreements contained in this Agreement, which breach
is incapable of being cured or cannot be or has not been cured by
Parent or Purchaser within twenty (20) days after the giving of written
notice by the Company to Parent or Purchaser, as applicable.
(d) By Parent (on behalf of itself, STC and Purchaser):
(i) if, due to an occurrence, involving a material breach
by the Company of its obligations hereunder, Purchaser shall have
failed to commence the Offer within fifteen (15) Business Days
following the date of the initial public announcement of the Offer;
(ii) if, prior to the purchase of Shares by Purchaser
pursuant to the Offer, the Company's board of directors shall have
withdrawn, modified or changed in a manner adverse to Parent or
Purchaser its approval or recommendation of the Offer, this Agreement
or the Merger or shall have recommended the approval or acceptance of
an Acquisition Proposal or shall have executed a letter of intent,
agreement in principle or definitive agreement relating to an
Acquisition Proposal with a Person (other than Parent, Purchaser or
their Affiliates); or
(iii) if, prior to the purchase of Shares by Purchaser
pursuant to the Offer, the Company shall have breached any
representation, warranty, covenant or other agreement contained in this
Agreement which causes the failure of a condition set forth in
paragraph (d) or (e) of APPENDIX A to this Agreement and such breach
has not been cured within twenty (20) days after the giving of written
notice of such breach.
Section 8.2 EFFECT OF TERMINATION. In the event of the termination of
this Agreement or abandonment of the Merger by any party hereto pursuant to the
terms of this Agreement, written notice thereof shall forthwith be given to the
other party or parties specifying the provision hereof pursuant to which such
termination or abandonment is made, this Agreement shall become void and have no
further effect, without any liability or obligation on the part of STC, Parent,
Purchaser or the Company; PROVIDED, HOWEVER, that (i) the provisions of SECTION
4.29, SECTION 5.9 and SECTION 6.2(b), this SECTION 8.2 and ARTICLE 9, which
shall survive any such termination; and (ii) nothing herein shall relieve the
Company or any of its Affiliates from liability or damages resulting from any
willful and material breach of this Agreement; and (iii) nothing herein shall
relieve STC, Parent or Purchaser or any of its Affiliates from liability or
damages resulting from any breach of this Agreement.
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ARTICLE 9
MISCELLANEOUS
Section 9.1 FEES AND EXPENSES.
(a) Except as specifically provided to the contrary in this Agreement,
all costs and expenses incurred in connection with this Agreement and the
consummation of the Transactions shall be paid by the party incurring such
expenses.
(b) If
(i) the Company shall enter into a definitive written
agreement which accepts or implements a Superior Proposal, the Company
shall pay Parent an amount equal to the Termination Fee concurrently
with its execution of such agreement;
(ii) either the Company or Parent terminates this
Agreement pursuant to SECTION 8.1(b)(i) and prior thereto there shall
have been publicly announced another Acquisition Proposal by a Person
other than Parent, Purchaser or any of their Affiliates (and such
Acquisition Proposal has not been withdrawn prior to the time of such
termination), and at any time prior to, or within twelve months after
the termination of this Agreement, the Company shall have consummated a
transaction with respect to such Acquisition Proposal, the Company
shall pay Parent an amount equal to the Termination Fee concurrently
with the consummation of the transaction contemplated by such
Acquisition Proposal;
(iii) the Company shall terminate this Agreement pursuant
to SECTION 8.1(c)(ii), the Company shall pay Parent an amount equal to
the Termination Fee concurrently with the Company's termination of this
Agreement; or
(iv) Parent shall terminate this Agreement pursuant to
SECTION 8.1(d)(ii), the Company shall pay Parent an amount equal to the
Termination Fee within two (2) Business Days after Parent's termination
of this Agreement;
The Company hereby waives any right to set off or counterclaim against such
amount solely to the extent that such right to set off or counterclaim does not
arise out of this Agreement or the Transactions. The Termination Fee shall be
paid in same day funds.
(c) The Company and Company Subsidiaries expressly acknowledge that the
agreements contained in this SECTION 9.1(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 or any
Company Subsidiary fail promptly to pay the Termination Fee, and, in order to
obtain such payment, Parent commences a suit which results in a judgment against
the Company or any Company Subsidiary for the Termination Fee, the Company and
the Company Subsidiaries expressly shall be obligated, jointly and severally, to
pay to Parent its reasonable costs and expenses (including reasonable attorneys'
fees and expenses) in connection with such suit, together with interest on the
amount of the Termination Fee at the prime rate of Citibank N.A. in effect on
the date such payment was required to be made.
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(d) If this Agreement is terminated pursuant to SECTION 8.1(c)(ii) OR
8.1(d), the Company shall reimburse Parent for Parent's Expenses within two (2)
Business Days after invoice of such Expenses.
Section 9.2 AMENDMENT AND MODIFICATION. Subject to applicable law and
SECTION 2.3, this Agreement may be amended, modified and supplemented in any and
all respects, whether before or after any vote of the shareholders of the
Company contemplated hereby, by written agreement of all of the parties hereto,
by action taken by their respective boards of directors (which in the case of
the Company shall include approvals as contemplated in SECTION 2.3(c)), at any
time prior to the Closing Date with respect to any of the terms contained
herein; PROVIDED, HOWEVER, that after the approval of this Agreement by the
stockholders of the Company, no such amendment, modification or supplement shall
reduce the amount or change the form of the Merger Consideration nor shall there
be made any amendment that by law requires further approval by such stockholders
without the further approval of such stockholders.
Section 9.3 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties in this Agreement or in any schedule, instrument
or other document delivered pursuant to this Agreement shall survive the
Effective Time. The foregoing sentence shall not limit any covenant or agreement
of the parties which by its terms contemplates performance after the Effective
Time.
Section 9.4 NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or sent by an internationally recognized
overnight courier service, such as Federal Express, to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) if to Parent or Purchaser, to:
Convergent Holding Corporation
c/o Schlumberger Technology Corp.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP
000 Xxxxxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
52
and
if to the Company, to:
Convergent Group Corporation
0000 Xxxxx Xxxxxxx'x Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxxxxxx, Xx.
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
with a copy (which shall not constitute notice) to:
X'Xxxxxxxx Graev & Karabell, LLP
00 Xxxxxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Nissan
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
Section 9.5 COUNTERPARTS. This Agreement may be executed in one or more
counterparts (whether delivered by facsimile or otherwise), each of which shall
be considered one and the same agreement and shall become effective when two (2)
or more counterparts have been signed by each of the parties and delivered to
the other parties.
Section 9.6 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This
Agreement, the Tender Agreement, the Voting Agreements, the Subscription
Agreement and the Confidentiality Agreement (including the documents and the
instruments referred to herein and therein): (a) constitute the entire agreement
and supersede all prior agreements, negotiations, arrangements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof and thereof, and (b) except as provided in SECTION 6.7 are
not intended to confer upon any Person other than the parties hereto and subject
to SECTION 9.12, their respective successors or assigns, and thereto any rights
or remedies hereunder.
Section 9.7 SEVERABILITY. Any term or provision of this Agreement that
is held by a court of competent jurisdiction or other authority to be invalid,
void or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the invalid, void or unenforceable term or
provision in any other situation or in any other jurisdiction. If the final
judgment of a court of competent jurisdiction or other authority declares that
any term or provision hereof is invalid, void or unenforceable, the parties
agree that the court making such determination shall have the power to and
shall, subject to the discretion of such court, reduce the scope, duration, area
or applicability of the term or provision, to delete specific words or phrases,
or to replace any invalid, void or unenforceable term or provision with a term
or provision that is valid and enforceable and that comes closest to expressing
the intention of the invalid or unenforceable term or provision.
Section 9.8 GOVERNING LAW. This Agreement shall be governed by and
construed
53
in accordance with the laws of the State of Delaware without giving effect to
the principles of conflicts of law thereof.
Section 9.9 ENFORCEMENT. The parties 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 an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of Delaware or in Delaware state court, this being in
addition to any other remedy to which they are entitled at law or in equity. In
addition, each of the parties (a) consents to submit itself to the personal
jurisdiction of any Federal court located in the State of Delaware or any
Delaware state court in the event any dispute arises out of this Agreement or
any of the Transactions, (b) agrees that it will not attempt to deny or defeat
such personal jurisdiction by motion or other request for leave from any such
court, and (c) agrees that it will not bring any action relating to this
Agreement or any of the Transactions in any court other than a Federal court
sitting in the State of Delaware or a Delaware state court.
Section 9.10 WAIVER OF JURY TRIAL. Each party acknowledges and agrees
that any controversy which may arise under this agreement is likely to involve
complicated and difficult issues, and therefore each such party hereby
irrevocably and unconditionally waives any right such party may have to a trial
by jury in respect of any litigation directly or indirectly arising out of or
relating to this agreement or the transactions contemplated by this agreement.
Each party certifies and acknowledges that (i) no representative, agent or
attorney of any other party has represented, expressly or otherwise, that such
other party would not, in the event of litigation, seek to enforce the foregoing
waiver, (ii) each such party understands and has considered the implications of
this waiver, (iii) each such party makes this waiver voluntarily, and (iv) each
such party has been induced to enter into this agreement by, among other things,
the waivers and certifications in this SECTION 9.10.
Section 9.11 EXTENSION, WAIVER. At any time prior to the Effective
Time, the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties of the other parties contained in this
Agreement or in any document delivered pursuant to this Agreement or (c) subject
to the proviso of SECTION 9.2, waive compliance by the other parties with any of
the agreements or conditions contained in this Agreement. Any agreement on the
part of a party to any such extension or waiver shall be valid only if set forth
in an instrument in writing signed on behalf of such party. The failure of any
party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of those rights.
Section 9.12 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
(whether by operation of law or otherwise) without the prior written consent of
the other parties, except that Purchaser may assign, in its sole discretion, any
or all of its rights, interests and obligations hereunder to Parent or to any
direct or indirect wholly owned Subsidiary of Parent and such assignment shall
not relieve Purchaser of any obligation under this Agreement. Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit of
and be enforceable by the parties and their respective successors and assigns.
Notwithstanding anything to the contrary contained in
54
this Agreement, in the event of an assignment by Purchaser of its obligations
hereunder in accordance with this SECTION 9.12, the obligations of Purchaser
shall be deemed to be the obligations of such assignee.
55
IN WITNESS WHEREOF, STC, Parent, Purchaser and the Company have caused
this Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
SCHLUMBERGER TECHNOLOGY CORP.
By /s/ Xxxx Xxxxxxxxxx
-------------------------------------------------
Name: Xxxx Xxxxxxxxxx
Title: Attorney-In-Fact
CONVERGENT HOLDING CORPORATION
By /s/ Xxxx Xxxxxxxxxx
-------------------------------------------------
Name: Xxxx Xxxxxxxxxx
Title: President
CONVERGENT ACQUISITION SUB, INC.
By /s/ Xxxx Xxxxxxxxxx
-------------------------------------------------
Name: Xxxx Xxxxxxxxxx
Title: President
CONVERGENT GROUP CORPORATION
By /s/ Xxxxx X. Xxxxxxxxxx, Xx.
-------------------------------------------------
Name: Xxxxx X. Xxxxxxxxxx, Xx.
Title: President and Chief Executive Officer
APPENDIX A
CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other provisions
of the Offer, and in addition to (and not in limitation of) Purchaser's rights,
subject to the provisions of the Agreement, to extend and amend the Offer at any
time in its sole discretion, Purchaser shall not be required to accept for
payment or, subject to any applicable rules and regulations of the SEC,
including Rule 14e-1(c) under the Exchange Act (relating to Purchaser's
obligation to pay for or return tendered Shares promptly after termination or
withdrawal of the Offer), pay for, and may delay the acceptance for payment of
or, subject to the restriction referred to above, the payment for, any tendered
Shares, if (i) any applicable waiting period under the HSR Act has not expired
or been terminated, (ii) the Minimum Condition has not been satisfied, or (iii)
at any time on or after the date of the Agreement and before the Expiration Date
(as then extended), any of the following events shall have occurred and be
continuing:
(a) there shall be pending any suit, action or proceeding by
any Governmental Entity (i) seeking to prohibit or impose any material
limitations on Parent's or Purchaser's ownership or operation (or that of any of
their respective Subsidiaries or Affiliates) of all or a material portion of
their or the Company's or any Company Subsidiaries' businesses or assets, or to
compel Parent or Purchaser or their respective Subsidiaries and Affiliates to
dispose of or hold separate any material portion of the business or assets of
the Company, any Company Subsidiaries', Parent's or any of its Subsidiaries,
(ii) seeking to prohibit the acquisition by Parent or Purchaser of any Shares
under the Offer or pursuant to the Subscription Agreement, seeking to restrain
or prohibit the making or consummation of the Offer or the Merger or the
performance of any of the other Transactions or the Tender Agreement, (iii)
seeking to obtain from the Company, Parent or Purchaser any monetary damages
related to a violation of the HSR Act that are material in relation to the
Company and the Company Subsidiaries, taking the Company together with its
Subsidiaries as a whole, (iv) seeking to render illegal the ability of
Purchaser, or rendering Purchaser unable, to accept for payment, pay for or
purchase some or all of the Shares pursuant to the Offer or the Merger, (v)
seeking to impose material limitations on the ability of Purchaser or Parent
effectively to exercise full rights of ownership of the Shares, including the
right to vote the Shares purchased by it on all matters properly presented to
the Company's stockholders or (vi) which otherwise is reasonably likely to have
a Company Material Adverse Effect;
(b) there shall be any statute, rule, regulation, judgment,
order or injunction enacted, entered, enforced, promulgated or deemed applicable
to the Offer or the Merger by any Governmental Entity, or any other action shall
be taken by any Governmental Entity, other than the application to the Offer or
the Merger of applicable waiting periods under the HSR Act, that is reasonably
likely to result, directly or indirectly, in any of the consequences referred to
in clauses (i) through (iv) of paragraph (a) above;
(c) the Company's board of directors or any committee thereof
(i) shall have withdrawn, modified or changed in a manner adverse to Parent or
Purchaser its approval or recommendation of the Offer, the Agreement or the
Merger, (ii) shall have recommended the approval or acceptance of an Acquisition
Proposal or (iii) shall have executed an agreement in principle or definitive
agreement relating to an Acquisition Proposal;
A-1
(d) any of the representations and warranties of the Company
contained in the Agreement shall not be true and correct as of the date of the
Agreement or as of the scheduled Expiration Date (taking such representations
and warranties with the same effect as if made on and as of such scheduled
Expiration Date and without giving effect to any "material," "Company Material
Adverse Effect" or similar qualifications), except for representations and
warranties specifically made as of an earlier date, which shall only be required
to be true and correct as of such earlier date, and except to the extent that
the aggregate of all breaches of the representations and warranties of the
Company could not reasonably be expected to have a Company Material Adverse
Effect;
(e) the Company shall have failed to perform in any material
respect any material obligation or to comply in any material respect with any
agreement or covenant of the Company to be performed or complied with by it
prior to the scheduled Expiration Date under the Agreement;
(f) all consents set forth in SECTION 4.7 of the Company
Disclosure Letter from Governmental Entities, shall not have been obtained and
be in full force and effect, other than consents the failure to obtain which
would not reasonably be expected to have a Company Material Adverse Effect;
(g) the Agreement shall have been terminated in accordance
with its terms;
(h) the Employment Agreement with Xxxxx X. Xxxxxxxxxx, Xx.,
shall remain in full force and effect and shall not have expressed an intention
not to continue his employment with the Surviving Corporation, PROVIDED, that
this condition shall be deemed satisfied in the event that he has died or become
permanently disabled.
The foregoing conditions are for the sole benefit of Parent and
Purchaser, may be waived by Parent or Purchaser, in whole or in part, at any
time and from time to time in the reasonable discretion of Parent or Purchaser.
Subject to the terms of the Agreement, including the automatic waiver of the
conditions set forth in SECTION 2.1(d), the failure by Parent or Purchaser at
any time to exercise any of the foregoing rights shall not be deemed a waiver of
any such right and each such right shall be deemed an ongoing right which may be
asserted at any time and from time to time.
A-2
