EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER
AMONG
SELECTICA, INC.,
INDIGO MERGER CORPORATION
AND
I-MANY, INC.
DATED AS OF DECEMBER 3, 2004
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TABLE OF CONTENTS
Page
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ARTICLE I THE MERGER........................................................... 2
1.01 The Merger....................................................... 2
1.02 Effective Time; Closing.......................................... 2
1.03 Effect of the Merger............................................. 2
1.04 Certificate of Incorporation; Bylaws............................. 2
1.05 Directors and Officers........................................... 3
ARTICLE II CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES.................. 3
2.01 Conversion of Securities......................................... 3
2.02 Exchange of Certificates......................................... 3
2.03 Stock Transfer Books............................................. 5
2.04 Company Stock Options; Warrants.................................. 6
2.05 Dissenting Shares................................................ 7
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY...................... 8
3.01 Organization and Qualification; Subsidiaries..................... 8
3.02 Charters and Bylaws.............................................. 10
3.03 Capitalization................................................... 10
3.04 Authority Relative to This Agreement............................. 11
3.05 No Conflict; Required Filings and Consents....................... 12
3.06 Permits; Compliance.............................................. 13
3.07 SEC Filings; Financial Statements................................ 13
3.08 Undisclosed Liabilities.......................................... 14
3.09 Absence of Certain Changes or Events............................. 14
3.10 Absence of Litigation............................................ 16
3.11 Employee Benefit Plans; Labor Matters............................ 17
3.12 Contracts........................................................ 20
3.13 Environmental Matters............................................ 21
3.14 Title to Properties; Absence of Liens and Encumbrances........... 22
3.15 Intellectual Property............................................ 23
3.16 Taxes............................................................ 27
3.17 Interested Party Transactions.................................... 28
3.18 Insurance........................................................ 29
3.19 Board Approval; Vote Required.................................... 29
3.20 State Takeover Statutes.......................................... 29
3.21 Opinion of Financial Advisor..................................... 29
3.22 Brokers; Advisors................................................ 29
3.23 Customers and Suppliers.......................................... 30
3.24 Restrictions on Business Activities.............................. 30
3.25 No Illegal Payments.............................................. 30
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB............. 31
4.01 Organization and Qualification................................... 31
4.02 Authority Relative to This Agreement............................. 31
4.03 Parent Board Approval............................................ 32
4.04 No Conflict; Required Filings and Consents....................... 32
4.05 Operations of Merger Sub......................................... 32
4.06 Brokers.......................................................... 33
4.07 Financing........................................................ 33
ARTICLE V CONDUCT OF BUSINESS PENDING THE MERGER............................... 33
5.01 Conduct of Business by the Company Pending the Merger............ 33
5.02 Notification of Certain Matters.................................. 36
5.03 Litigation....................................................... 36
5.04 Control of Operations............................................ 36
ARTICLE VI ADDITIONAL AGREEMENTS............................................... 37
6.01 Proxy Statement.................................................. 37
6.02 Company Stockholders' Meeting.................................... 38
6.03 Access to Information; Confidentiality........................... 39
6.04 No Solicitation of Transactions.................................. 39
6.05 Directors' and Officers' Indemnification and Insurance........... 41
6.06 Obligations of Merger Sub........................................ 42
6.07 Further Action; Consents; Filings................................ 42
6.08 Public Announcements............................................. 43
6.09 Commercially Reasonable Efforts and Further Assurances........... 43
6.10 Employee Benefits................................................ 43
6.11 Section 16 Matters............................................... 44
6.12 Employment Agreements............................................ 44
ARTICLE VII CONDITIONS TO THE MERGER........................................... 45
7.01 Conditions to the Obligations of Each Party...................... 45
7.02 Conditions to the Obligations of Parent and Merger Sub........... 45
7.03 Conditions to the Obligations of the Company..................... 47
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER................................ 47
8.01 Termination...................................................... 47
8.02 Effect of Termination............................................ 49
8.03 Amendment........................................................ 49
8.04 Waiver........................................................... 49
8.05 Expenses......................................................... 49
ARTICLE IX GENERAL PROVISIONS.................................................. 50
9.01 Non-Survival of Representations, Warranties and Agreements....... 50
9.02 Notices.......................................................... 51
9.03 Certain Definitions.............................................. 52
9.04 Severability..................................................... 52
9.05 Assignment; Binding Effect; Benefit.............................. 53
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9.06 Specific Performance............................................. 53
9.07 Governing Law; Forum............................................. 53
9.08 Waiver of Jury Trial............................................. 54
9.09 Headings......................................................... 54
9.10 Counterparts..................................................... 54
9.11 Mutual Drafting.................................................. 54
9.12 Entire Agreement................................................. 54
Exhibit A Form of Company Voting Agreement
Exhibit B Form of Certificate of Incorporation of Surviving
Corporation
Exhibit 2.02(b) Form of Letter of Transmittal
Schedule 1.05 Officers of the Surviving Corporation
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of December 3, 2004 (this
"Agreement") among Selectica, Inc., a Delaware corporation ("Parent"), Indigo
Merger Corporation, a Delaware corporation and a wholly owned subsidiary of
Parent ("Merger Sub"), and I-many, Inc., a Delaware corporation (the "Company").
W I T N E S S E T H
WHEREAS, upon the terms and subject to the conditions of this
Agreement and in accordance with the Delaware General Corporation Law (the
"DGCL"), Parent and the Company will enter into a business combination
transaction pursuant to which Merger Sub will merge with and into the Company
(the "Merger");
WHEREAS, the Board of Directors of the Company (i) has approved, and
deems it advisable and in the best interests of the Company and its stockholders
to consummate, the Merger upon the terms and subject to the conditions set forth
in this Agreement and the Certificate of Merger (as defined in Section 1.02) and
the other transactions contemplated by this Agreement and (ii) has, subject to
the terms of this Agreement, unanimously recommended the approval of the Merger
and the adoption of this Agreement by the stockholders of the Company;
WHEREAS, the Boards of Directors of each of Parent and Merger Sub
have (i) determined that the Merger is consistent with and in furtherance of the
long-term business strategy of Parent and (ii) approved this Agreement, the
Merger and the other transactions contemplated by this Agreement;
WHEREAS, concurrently with the execution of this Agreement, and as a
condition and inducement to Parent's willingness to enter into this Agreement,
certain stockholders of the Company are entering into voting agreements (the
"Company Voting Agreements") with Parent in substantially the form attached as
Exhibit A hereto;
WHEREAS, as a condition and inducement to Parent's entering into
this Agreement, certain employees of the Company are entering into employment
and non-competition agreements with Parent;
WHEREAS, pursuant to the Merger, each outstanding share of common
stock of the Company, par value $0.0001 per share (the "Company Common Stock"),
shall be converted into the right to receive $1.55 of cash, without interest;
and
WHEREAS, certain terms used in this Agreement are defined in Section
9.03 of this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Parent, Merger Sub and the Company hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01 The Merger. Upon the terms of this Agreement and
subject to the conditions set forth in this Agreement, and in accordance with
the DGCL, at the Effective Time (as defined below), Merger Sub shall be merged
with and into the Company. As a result of the Merger, the separate corporate
existence of Merger Sub shall cease, and the Company shall continue as the
surviving corporation of the Merger (the "Surviving Corporation") and as a
wholly-owned subsidiary of Parent.
SECTION 1.02 Effective Time; Closing. As promptly as practicable and
in no event later than the second business day following the satisfaction or, if
permissible, waiver of the conditions set forth in Article VII (or such other
date as may be agreed in writing by each of the parties hereto), the parties
hereto shall cause the Merger to be consummated by filing a certificate of
merger (the "Certificate of Merger") with the Secretary of State of the State of
Delaware in such form as is required by, and executed in accordance with, the
relevant provisions of the DGCL and as is otherwise in a form mutually
acceptable to Parent and the Company. The term "Effective Time" means the date
and time of the filing with, and the acceptance by, the Secretary of State of
the State of Delaware of the Certificate of Merger (or such later time as may be
agreed in writing by each of the parties hereto and specified in the Certificate
of Merger). Immediately prior to the filing of the Certificate of Merger, a
closing (the "Closing") will be held at the offices of Xxxxxxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxx Xxxxxxxx & Xxxxxxxxx, LLP ("Xxxxxxxxx Xxxxxxx"), 000 Xxxxxxxxxxxx
Xxxxx, Xxxxx Xxxx, Xxxxxxxxxx 00000 (or such other place as the parties hereto
may agree). The date on which the Closing shall occur is referred to herein as
the "Closing Date."
SECTION 1.03 Effect of the Merger. At and after the Effective Time,
the effect of the Merger shall be as provided in the applicable provisions of
the DGCL. Without limiting the generality of the foregoing, and subject thereto,
at the Effective Time, all the properties, rights, privileges, powers and
franchises of each of the Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities, obligations, restrictions, disabilities
and duties of each of the Company and Merger Sub shall become the debts,
liabilities, obligations, restrictions, disabilities and duties of the Surviving
Corporation.
SECTION 1.04 Certificate of Incorporation; Bylaws.
(a) At the Effective Time, the Certificate of Incorporation of the
Company as the Surviving Corporation shall be amended to read the same as the
Amended and Restated Certificate of Incorporation set forth in Exhibit B hereto.
(b) At the Effective Time, the Bylaws of Merger Sub shall be the
Bylaws of the Surviving Corporation (except that all references to Merger Sub in
the Bylaws of the Surviving Corporation shall be changed to refer to such name
as is set forth in the Certificate of Incorporation of the Surviving
Corporation).
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SECTION 1.05 Directors and Officers. The directors of Merger Sub
immediately prior to the Effective Time shall be the directors of the Surviving
Corporation, each to hold office in accordance with the Certificate of
Incorporation and Bylaws of the Surviving Corporation, and the individuals set
forth on Schedule 1.05 hereto shall be the officers of the Surviving
Corporation, in each case until their respective successors are duly elected or
appointed and qualified.
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.01 Conversion of Securities.
(a) At the Effective Time, by virtue of the Merger and without any
action on the part of Parent, Merger Sub, the Company or the holders of any of
the following securities:
(i) Each share of Company Common Stock (all issued and
outstanding shares of Company Common Stock being hereinafter collectively
referred to as the "Shares"), issued and outstanding immediately prior to the
Effective Time (other than any Shares to be canceled pursuant to Section
2.01(a)(ii) and any Dissenting Shares (as defined in Section 2.05)) shall be
converted into the right to receive, without interest, $1.55 in cash (the "Per
Share Merger Consideration"). At the Effective Time, each such Share shall cease
to be outstanding and cease to exist and each holder of Shares shall thereafter
cease to have any rights with respect to such Shares, except the right to
receive, without interest, the Per Share Merger Consideration in accordance with
this Section 2.01(a)(i).
(ii) Each Share held in the treasury of the Company and each
Share owned by Parent or any direct or indirect wholly owned subsidiary of
Parent or of the Company immediately prior to the Effective Time shall be
canceled and extinguished without any conversion thereof and no payment or
distribution shall be made with respect thereto.
(iii) Each share of common stock of Merger Sub, par value
$0.001 per share, issued and outstanding immediately prior to the Effective Time
shall be converted into and exchanged for one duly authorized, validly issued,
fully paid and nonassessable share of common stock, par value $0.001 per share,
of the Surviving Corporation.
(b) If between the date of this Agreement and the Effective Time,
the outstanding shares of Company Common Stock shall have been changed into a
different number of shares or a different class, by reason of any stock
dividend, subdivision, reclassification, recapitalization, split, combination or
exchange of shares or any similar event, the Per Share Merger Consideration
shall be correspondingly adjusted to the extent appropriate to reflect such
stock dividend, subdivision, reclassification, recapitalization, split,
combination or exchange of shares or similar event.
SECTION 2.02 Exchange of Certificates.
(a) Exchange Agent. Prior to the Effective Time, Parent shall enter
into an agreement (reasonably satisfactory to the Company) with U.S. Stock
Transfer Corporation, or
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such other bank or trust company of recognized standing that may be designated
by Parent and is reasonably satisfactory to the Company (the "Exchange Agent").
Within one business day following the Effective Time, Parent shall deposit, or
shall cause to be deposited, with the Exchange Agent, for the benefit of the
holders of Shares, for exchange in accordance with this Article II through the
Exchange Agent, the aggregate amount of U.S. dollars payable pursuant to Section
2.01 as of the Effective Time (such cash, being hereinafter referred to as the
"Exchange Fund"). The Exchange Agent shall, pursuant to irrevocable
instructions, deliver such cash contemplated to be issued pursuant to Section
2.01, out of the Exchange Fund. The Exchange Fund shall not be used for any
other purpose.
(b) Exchange Procedures. Within 5 days after the Effective Time,
Parent shall cause the Exchange Agent to mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding Shares (the "Certificates") (i) a letter of transmittal
substantially in a form attached hereto as Exhibit 2.02(b) and (ii) instructions
for use in effecting the surrender of the Certificates in exchange for cash
(pursuant to Section 2.01). Upon surrender to the Exchange Agent of a
Certificate for cancellation (or affidavit of loss in accordance with Section
2.02(g)), together with such letter of transmittal, duly executed and completed
in accordance with the instructions thereto, and such other documents as may be
reasonably required pursuant to such instructions, the holder of such
Certificate shall be entitled to receive in exchange therefor that amount of the
Per Share Merger Consideration that such holder has the right to receive in
respect of the Shares formerly represented by such Certificate (after taking
into account all Shares then held by such holder) pursuant to Section 2.01, and
the Certificate so surrendered shall forthwith be canceled. In the event of a
transfer of ownership of Shares that is not registered in the transfer records
of the Company, the Per Share Merger Consideration to which such holder is
entitled pursuant to Section 2.01 may be issued to a transferee if the
Certificate representing such Shares is presented to the Exchange Agent,
accompanied by all documents required to evidence and effect such transfer and
by evidence reasonably satisfactory to the Parent that any applicable share
transfer taxes have been paid. Until surrendered as contemplated by this Section
2.02, each Certificate (other than Certificates representing Dissenting Shares)
shall be deemed at all times after the Effective Time to represent only the
right to receive upon such surrender the Per Share Merger Consideration to which
such holder is entitled pursuant to Section 2.01.
(c) No Further Rights in Company Common Stock. All cash paid upon
conversion of the Shares in accordance with the terms of this Agreement shall be
deemed to have been paid in full satisfaction of all rights pertaining to such
Shares.
(d) Termination of Exchange Fund. Any portion of the Exchange Fund
that remains undistributed to the holders of Shares for twelve months after the
Effective Time shall be delivered to Parent, upon demand, and any holders of
Shares who have not theretofore complied with this Article II shall thereafter
look only to Parent for the Per Share Merger Consideration to which they are
entitled pursuant to Section 2.01. Any portion of the Exchange Fund remaining
unclaimed by holders of Shares as of a date that is immediately prior to such
time as such amounts would otherwise escheat to or become property of any
government entity shall, to the extent permitted by applicable Law, become the
property of Parent free and clear of any claims or interest of any person
previously entitled thereto.
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(e) No Liability. To the fullest extent permitted by law, neither
Parent nor the Surviving Corporation shall be liable to any holder of Shares for
any Per Share Merger Consideration delivered to a public official pursuant to
any applicable abandoned property, escheat or similar Law.
(f) Withholding Rights. Each of the Surviving Corporation, Parent
and the Exchange Agent shall be entitled to deduct and withhold from the Per
Share Merger Consideration otherwise payable pursuant to this Agreement to any
holder of Shares such amounts as it is required to deduct and withhold with
respect to the making of such payment under the Code, or any provision of
applicable state, local or foreign Tax Law. To the extent that amounts are so
withheld in accordance with this Section 2.02(f) by the Surviving Corporation,
Parent or the Exchange Agent, as the case may be, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the holder of
the Shares in respect of which such deduction and withholding was made by the
Surviving Corporation, Parent or the Exchange Agent, as the case may be.
(g) Lost, Stolen or Destroyed Certificates. If any Certificate shall
have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the person claiming such Certificate to be lost, stolen or destroyed,
and, if required by the Surviving Corporation, in its reasonable judgment, or
the Exchange Agent, the posting by such person of a bond, in such reasonable
amount as the Surviving Corporation or Exchange Agent may direct, as indemnity
against any claim that may be made against it with respect to such Certificate
and the payment of any fee charged by the Exchange Agent for such service, the
Exchange Agent will issue in exchange for such lost, stolen or destroyed
Certificate the amount of Per Share Merger Consideration to which the holder
thereof is entitled pursuant to Section 2.01.
(h) No Interest. No interest will be paid or accrued on any cash
payable pursuant to Section 2.01 or Unvested Cash.
(i) Taking of Necessary Action; Further Action. If, at any time
after the Effective Time, any further action is necessary or desirable to carry
out the purposes of this agreement and to vest the Surviving Corporation with
full right, title and interest in, to and under, and/or possession of, all
assets, property, right, privileges, powers and franchises of the Company, the
officers and directors of the Surviving Corporation are fully authorized in the
name and on behalf of the Company or otherwise, to take all lawful action
necessary or desirable to accomplish such purpose or acts, so long as such
action is not inconsistent with this Agreement.
SECTION 2.03 Stock Transfer Books. At the Effective Time, there
shall be no further registration of transfers of Shares thereafter on the
records of the Company. From and after the Effective Time, the holders of
Certificates representing Shares outstanding immediately prior to the Effective
Time shall cease to have any rights with respect to such Shares, except as
otherwise provided in this Agreement or by Law. On or after the Effective Time,
any Certificates presented to the Exchange Agent or Parent for any reason shall
be converted into the amount of Per Share Merger Consideration to which the
holders thereof are entitled pursuant to Section 2.01.
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SECTION 2.04 Company Stock Options; Warrants.
(a) Stock Option Plans.
(i) At the Effective Time, Parent shall assume (y) all stock
option plans of the Company (the "Company Stock Option Plans") and (x)(i) all
options to acquire Company Common Stock under the Company Stock Option Plans
that are outstanding immediately prior to the Effective Time and that have an
exercise price per share that is not less than the Per Share Merger
Consideration and not more than $1.96, whether or not exercisable and whether or
not vested, except options granted prior to the date of this Agreement to A.
Xxxxx Xxxxxx or Xxxxxxxx X. Xxxxxxxxx, and (ii) all options to acquire Company
Common Stock granted pursuant to Section 5.01(a) hereof (the "Assumed Company
Stock Options"). The Company's repurchase right with respect to any unvested
shares acquired by the exercise of options granted under a Company Stock Option
Plan (the "Company Stock Options") shall be assigned to Parent without any
further action on the part of the Company or the holders of such unvested
shares. Each Assumed Company Stock Option will continue to have, and be subject
to, the same terms and conditions of such option immediately prior to the
Effective Time (including, without limitation, any repurchase rights or vesting
provisions), except that (A) each Assumed Company Stock Option will be
exercisable (or will become exercisable in accordance with its terms) for that
number of whole shares of Parent's common stock, par value $0.01 per share
("Parent Common Shares"), rounded down to the nearest whole share, equal to (x)
the number of shares of Company Common Stock subject to such Assumed Company
Stock Option multiplied by (y) the Option Exchange Ratio; and (B) the per share
exercise price for the Parent Common Shares issuable upon exercise of such
Assumed Company Stock Option will be equal to (x) the exercise price per share
of such Assumed Company Stock Option in effect immediately prior to the
Effective Time divided by (y) the Option Exchange Ratio (the exercise price per
share, as so determined, being rounded upward to the nearest full cent). At or
before the Effective Time, the Company shall cause to be effected any necessary
amendments to the Company Stock Option Plans to give effect to the foregoing
provisions of this Section 2.04(a). It is the intention of the parties that each
Assumed Company Stock Option shall qualify following the Effective Time as an
incentive stock option as defined in section 422 of the Code ("ISO") to the
extent permitted under section 422 of the Code and to the extent such option
qualified as an incentive stock option prior to the Effective Time.
For purposes of this Section 2.04, "Option Exchange Ratio" shall
mean the quotient of (i) the Per Share Merger Consideration and (ii) the Parent
Market Price. "Parent Market Price" shall mean the average closing price per
share of Parent Common Shares for the ten most recent days that Parent Common
Shares have traded ending on (and including) the trading day one day prior to
the Effective Time, as reported on The Nasdaq National Market (with such average
being calculated using the "simple average" methodology).
(ii) As soon as practicable after the Effective Time, Parent
shall deliver to each person who, immediately prior to the Effective Time, was a
holder of an outstanding Assumed Company Stock Option an appropriate notice
setting forth such holder's rights pursuant thereto and that the agreements
evidencing the grants of such options shall continue in effect on the same terms
and conditions (subject to the adjustments required by this Section 2.04 after
giving effect to the Merger). At or before the Effective Time, Parent shall xxxx
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all corporate action necessary to reserve for issuance a sufficient number of
Parent Common Shares for delivery upon exercise of Assumed Company Stock
Options. As soon as practicable after the Effective Time but no later than five
business days thereafter, Parent shall file a registration statement on Form S-8
(or any successor or other appropriate forms) that will register the Parent
Common Shares subject to such Assumed Company Stock Options to the extent
permitted by federal securities laws and shall maintain the effectiveness of
such registration statement or registration statements for so long as such
options remain outstanding. In addition, Parent shall use all commercially
reasonable efforts to cause the Parent Common Shares subject to Assumed Company
Stock Options to be listed on The Nasdaq National Market and such exchanges as
Parent shall determine.
(iii) At the Effective Time, the Company shall take all
necessary action to cancel each Company Stock Option outstanding immediately
prior to the Effective Time, whether or not exercisable and whether or not
vested, under the Company Stock Option Plans, except the Assumed Company Stock
Options. Each holder of a Company Stock Option outstanding immediately prior to
the Effective Time being cancelled pursuant to this Section 2.04(a)(iii),
whether or not exercisable and whether or not vested, shall be entitled to
receive from the Surviving Corporation, in exchange for the cancellation of such
Company Stock Options, a lump sum cash payment equal to (x) the product of the
Per Share Merger Consideration multiplied by the number of shares of Company
Common Stock subject to such cancelled Company Stock Option reduced by (y) the
aggregate exercise price for such cancelled Company Stock Option. Such payment
shall be reduced by applicable withholding taxes and shall be made promptly
after the Effective Time. The Company Stock Options other than the Assumed
Company Stock Options shall be cancelled without any payment if the exercise
price per share exceeds the Per Share Merger Consideration. The Company shall
take all action necessary to approve the disposition of the Company Stock
Options being cancelled in connection with the transactions contemplated by this
Agreement to the extent necessary to exempt such dispositions under Rule 16b-3
of the Exchange Act.
(b) Stock Purchase Plan. Outstanding purchase rights under the
Company's 2000 Employee Stock Purchase Plan (the "Company Purchase Plan") shall
be cancelled immediately prior to the Effective Time, and the Company shall
refund to each participant in the Company Purchase Plan all payroll deductions
made by each participant pursuant to the Company Purchase Plan. The Company
shall cause the Company Purchase Plan to be terminated as of the Effective Time.
(c) Warrants. At the Effective Time, each warrant to acquire shares
of Company Common Stock granted and outstanding immediately prior to the
Effective Time (each a "Company Warrant"), whether or not contingent or earned
and whether exercisable or unexercisable, that does not terminate by its terms
at or prior to the Effective Time, shall either (i) be converted into a warrant
to acquire Parent Common Shares or (ii) represent the right to receive the Per
Share Merger Consideration, as required by the terms of such Company Warrant.
SECTION 2.05 Dissenting Shares.
(a) Notwithstanding any provision of this Agreement to the contrary,
Shares that are outstanding immediately prior to the Effective Time and that are
held by stockholders
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who have demanded and not effectively withdrawn or lost appraisal rights for
such Shares in accordance with the DGCL (collectively, the "Dissenting Shares")
shall not be converted into or represent the right to receive the applicable
cash. Such stockholders shall be entitled to receive payment of the appraised
value of such shares of Company Common Stock held by them in accordance with the
DGCL, unless and until such stockholders fail to perfect or effectively withdraw
or otherwise lose their appraisal rights under the DGCL. All Shares held by
stockholders who shall have effectively withdrawn or lost (through failure to
perfect of otherwise) their right to appraisal of such Shares under the DGCL
shall thereupon be deemed to have been converted into and to have become
exchangeable for, as of the Effective Time, the right to receive Per Share
Merger Consideration provided for in Section 2.01(a), without any interest
thereon.
(b) The Company shall give Parent (i) prompt notice of any demands
for appraisal received by the Company, withdrawals of such demands, and any
other related instruments served pursuant to the DGCL and received by the
Company prior to the Effective Time and (ii) the opportunity to participate, at
its own expense, in all negotiations and proceedings with respect to demands for
appraisal under the DGCL. The Company shall not, except with the prior written
consent of Parent, make any payment with respect to any demands for appraisal or
offer to settle or settle any such demands.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Merger Sub
as of the date of this Agreement that the statements contained in this Article
III are true and correct, subject to the exceptions set forth in the disclosure
letter delivered by the Company to Parent and Merger Sub concurrently with the
execution of this Agreement dated as of the date of this Agreement (the "Company
Disclosure Letter"). The Company Disclosure Letter shall be arranged according
to specific sections in this Article III and shall provide exceptions to, or
otherwise qualify, only the corresponding section in this Article III and any
other section in this Article III where it is reasonably clear, upon a reading
of such disclosure without any independent knowledge on the part of the reader
regarding the matter disclosed, that the disclosure could reasonably be expected
to apply to such other section.
SECTION 3.01 Organization and Qualification; Subsidiaries.
(a) Section 3.01(a) of the Company Disclosure Letter sets forth the
jurisdiction of incorporation or organization of each of the Company and each
subsidiary of the Company (collectively, the "Company Subsidiaries"). Each of
the Company and the Company Subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of such
incorporation and has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as it is now being
conducted. Each of the Company and the Company Subsidiaries is duly qualified or
licensed as a foreign corporation or organization to do business, and is in good
standing, in each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its business makes such qualification
or licensing necessary, except for such failures to be so qualified or licensed
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and in good standing that have not had, and would not reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect. The
term "Company Material Adverse Effect" means any event, changes in or effects on
the business of the Company or any Company Subsidiary that, individually or in
the aggregate are, or would reasonably be expected to be, materially adverse to
the business, financial condition, results of operations, assets (tangible or
intangible) and liabilities (including contingent liabilities) of the Company
and the Company Subsidiaries, taken as a whole; provided, however, in no event
shall any event, violation, inaccuracy, circumstance or other matters relating
to (directly or indirectly) any of the following be deemed to constitute, nor
shall any of the following, either singly or in the aggregate, be taken into
account in determining whether there has been or will be a Company Material
Adverse Effect: (i) any conditions affecting the industry in which the Company
and the Company Subsidiaries operate that do not have a disproportionate impact
in any material respect on the Company and the Company Subsidiaries, taken as a
whole relative to other business entities engaged in the same or similar
industry; (ii) any conditions affecting the general economy or the capital
markets that do not disproportionately impact in any material respect the
Company and the Company Subsidiaries, taken as a whole relative to other
business entities engaged in the same or similar industry; (iii) any changes or
events primarily attributable to the announcement or the pendency of the
transactions contemplated hereby, including, without limitation, disruption or
loss of customer, business partner, supplier or employee relationships (provided
that the exception in this clause (iii) shall not be used to excuse a breach of
a representation or warranty of the Company contained in Sections 3.04, 3.05,
3.11(d), 3.15(d) or 3.22 that arises from the execution and delivery of this
Agreement or the consummation of the Merger); (iv) any changes or events
primarily resulting from compliance by the Company and the Company Subsidiaries
with the terms, or the taking of any action required by, this Agreement; (v) in
and of itself, any failure by the Company to meet any estimates of revenues or
earnings for any period ending on or after the date of this Agreement and prior
to the Effective Time or any reduction in any revenues or earnings as compared
to prior periods (provided that the exception in this clause (v) shall not
prevent or otherwise affect a determination that any event, change, effect,
circumstance or development underlying such failure has resulted in, or
contributed to, a Company Material Adverse Effect); (vi) in and of itself, any
decline in the market price of the Company Common Stock on The Nasdaq National
Market (provided that the exception in this clause (vi) shall not prevent or
otherwise affect a determination that any event, change, effect, circumstance or
development underlying such decline has resulted in, or contributed to, a
Company Material Adverse Effect); (vii) any actions taken or announced by Parent
or taken or announced by the Company at the written request or direction of
Parent, or any inactions or failures to act by Parent or by the Company at the
written request or direction of Parent; (viii) the failure by Parent to comply
with the terms of or to take actions required by this Agreement; or (ix) any
change in accounting requirements or principles or any change in applicable
laws, rules or regulations or the interpretation thereof.
(b) Neither the Company nor any Company Subsidiary directly or
indirectly owns any equity or similar interest in, or any interest convertible
into or exchangeable or exercisable for, any corporation, partnership, joint
venture or other business association or entity (other than the Company
Subsidiaries in the case of the Company) that is or would reasonably be expected
to be material to the Company and the Company Subsidiaries, taken as a whole.
9
SECTION 3.02 Certificate of Incorporation and Bylaws. The Company
has heretofore made available to Parent a complete and correct copy of the
Certificate of Incorporation and Bylaws of the Company, each as amended as of
the date of this Agreement. Such Certificate of Incorporation and Bylaws are in
full force and effect. Neither the Company nor any Company Subsidiary is in
violation in any material respect of any of the provisions of its Certificate of
Incorporation or Bylaws (or equivalent organizational documents).
SECTION 3.03 Capitalization.
(a) The authorized capital stock of the Company consists of
100,000,000 shares of Company Common Stock and 5,000,000 shares of preferred
stock, par value $0.0001 per share (the "Company Preferred Stock"). As of the
date of this Agreement, (i) 42,628,383 shares of Company Common Stock are issued
and outstanding, all of which are duly authorized, validly issued, fully paid
and nonassessable, (ii) no shares of either Company Common Stock or Company
Preferred Stock are held in the treasury of the Company, (iii) no shares of
Company Common Stock or Company Preferred Stock are held by Company Subsidiaries
and (iv) no shares of Company Preferred Stock are issued and outstanding. Each
outstanding share of stock or other equity interest of each Company Subsidiary
is duly authorized, validly issued, fully paid and nonassessable and each such
share or other equity interest of a Company Subsidiary owned by the Company or
another Company Subsidiary is free and clear of all Liens (as defined in Section
3.14(b)) (other than Permitted Liens), options, rights of first refusal, or
limitations on voting rights. The Company directly owns 100% of the issued and
outstanding capital stock, and all options or other rights to acquire such
capital stock, of each Company Subsidiary.
(b) The Company has duly reserved 16,552,500 shares of Company
Common Stock for future issuance pursuant to the Company Stock Option Plans, of
which options to purchase 9,469,569 shares of Company Common Stock are
outstanding as of the date of this Agreement. The Company has provided to Parent
a report dated as of November 29, 2004 that sets forth with respect to each
Company Stock Option that is outstanding as of such date: (i) the name of the
holder of such Company Stock Option; (ii) the number of shares of Company Common
Stock that remain subject to such Company Stock Option; (iii) the date on which
such Company Stock Option was granted; (iv) the term of such Company Stock
Option; (v) the vesting schedule for such Company Stock Option; (vi) the vesting
commencement date for such Company Stock Option; (vii) the exercise price per
share of Company Common Stock purchasable under such Company Stock Option; and
(viii) the status of such Company Stock Option as an ISO. No Assumed Company
Stock Option will by its terms require an adjustment in connection with the
Merger, except as contemplated by this Agreement. Neither the consummation of
the transactions contemplated by this Agreement, nor any action taken or to be
taken by the Company in connection with such transactions, will result in (i)
any acceleration of exercisability or vesting (including, without limiting the
foregoing, any right to acceleration of vesting that is contingent upon the
occurrence of a subsequent event) in favor of any optionee under any Assumed
Company Stock Option; (ii) any additional benefits for any optionee under any
Assumed Company Stock Option; or (iii) the inability of Parent after the
Effective Time to exercise any right or benefit held by the Company prior to the
Effective Time with respect to any Assumed Company Stock Option or any shares of
Company Common Stock previously issued upon exercise of a Company Stock Option,
including, without limitation, the right to repurchase an optionee's unvested
shares on termination of such optionee's employment. The assumption
10
by Parent of the Assumed Company Stock Option Plans and the Assumed Company
Stock Options issued thereunder in accordance with Section 2.04 hereunder will
not give rise to any event described in clauses (i) through (iii) of the
immediately preceding sentence.
(c) The Company has duly reserved 919,608 shares of Company Common
Stock for future issuance pursuant to the exercise of Company Warrants. Section
3.03(c) of the Company Disclosure Letter sets forth, with respect to each
Company Warrant issued to any person: (i) the name of the holder of such Company
Warrant; (ii) the total number of shares of Company Common Stock that are
subject to such Company Warrant; (iii) the total number of shares of Company
Common Stock with respect to which such Company Warrant is immediately
exercisable; (iv) the exercise price per share of Company Common Stock issuable
under such Company Warrant; and (v) the term of such Company Warrant.
(d) Except for Company Purchase Plan, the Company Stock Options and
the Company Warrants, there are no other options, warrants or other similar
rights outstanding obligating the Company or any Company Subsidiary to issue or
sell any shares of its capital stock or other equity interests. The Company has
no stockholders' rights plan or similar plan in effect. All shares of Company
Common Stock subject to the Company Purchase Plan, and outstanding Company Stock
Options and Company Warrants, upon issuance in accordance with the terms and
conditions specified in the instruments pursuant to which they are issuable,
will be duly authorized, validly issued, fully paid and nonassessable. As a
result of the Merger and without any further action by the Company, all Shares
outstanding immediately prior to the Effective Time that are unvested or are
subject to a repurchase option, risk of forfeiture or other condition under any
applicable restricted stock purchase agreement or other similar agreement with
the Company will fully vest and will no longer be subject to repurchase or
forfeiture. There are no outstanding contractual obligations of the Company to
repurchase, redeem or otherwise acquire any shares of capital stock or other
equity interests of the Company or any Company Subsidiary. Each holder of a
Company Stock Option or Company Warrant will be given, or shall have properly
waived, any required notice of the Merger prior to the Effective Time.
(e) All of the securities sold or issued by the Company and each
Company Subsidiary have been sold or issued in compliance with the requirements
of the federal securities laws and any other applicable securities laws.
(f) There are no stockholder agreements, voting trusts or other
agreements or understandings to which the Company or any Company Subsidiary is a
party (i) relating to voting, registration or disposition of any shares of
capital stock of the Company or any Company Subsidiary; (ii) granting to any
person or group of persons the right to elect, or to designate or nominate for
election, a director to the board of directors of the Company or any Company
Subsidiary; or (iii) granting to any person or group of persons information
rights.
SECTION 3.04 Authority Relative to This Agreement. The Company has
all necessary corporate power and authority to execute and deliver this
Agreement, and, subject to obtaining the approval of the Merger and adoption of
this Agreement by the Company's stockholders by the affirmative vote of the
holders of a majority of the outstanding shares of Company Common Stock at a
meeting duly called and where a quorum is present (the "Company Stockholder
Approval"), to perform its obligations hereunder and to consummate the
11
Merger. The execution and delivery of this Agreement by the Company and the
consummation by the Company of the Merger have been duly and validly authorized
by all necessary corporate action and no other corporate proceedings on the part
of the Company are necessary to authorize this Agreement or to consummate the
Merger (other than with respect to the Company Stockholder Approval, and the
filing of the Certificate of Merger as required by the DGCL). This Agreement has
been duly and validly executed and delivered by the Company and, assuming the
due authorization, execution and delivery by Parent and Merger Sub, constitutes
legal, valid and binding obligations of the Company, enforceable against the
Company in accordance with its terms, except as the enforcement thereof may be
limited by bankruptcy, insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization, moratorium or similar laws
affecting enforcement of creditors' rights generally now or hereafter in effect
and except as enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or at
law).
SECTION 3.05 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by the Company do
not, and the performance of this Agreement by the Company will not, (i) conflict
with or violate the Certificate of Incorporation or Bylaws of the Company or any
equivalent organizational documents of any Company Subsidiary, (ii) assuming
that all consents, approvals, authorizations and other actions described in
Section 3.05(b) have been obtained and all filings and obligations described in
Section 3.05(b) have been made or complied with, conflict with or violate, in
any material respect, any foreign or domestic (federal, state or local) law,
statute, ordinance, writ, rule, regulation, order, injunction, judgment or
decree ("Law") applicable to the Company or any Company Subsidiary or by which
any property or asset of the Company or any Company Subsidiary is bound or
affected, or (iii) result in any material breach of or constitute a material
default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any right of termination, amendment,
acceleration or cancellation of, trigger or change any rights or obligations
under, or require any payment under, or result in the creation of a Lien (other
than Permitted Liens) on any material property or asset of the Company or any
Company Subsidiary pursuant to, any Company Contract.
(b) The execution and delivery of this Agreement by the Company do
not, and the performance of this Agreement by the Company will not, require any
consent, approval, order, authorization, registration or permit of, or filing
with or notification to, any domestic, foreign or supranational governmental,
regulatory or administrative authority, agency or commission, any court,
tribunal, or arbitral body, or any quasi-governmental or private body exercising
regulatory, taxing, importing or other governmental authority (a "Governmental
Entity") in the United States, and to the knowledge of the Company, any other
Governmental Entity, except (i) for applicable requirements, if any, of the
Securities Exchange Act of 1934, as amended (together with the rules and
regulations promulgated thereunder, the "Exchange Act"), state securities or
"blue sky" laws ("Blue Sky Laws"), The Nasdaq National Market, state takeover
laws, the pre-merger notification requirements of the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended, and the rules and regulations
thereunder (the "HSR Act"), any filings under similar competition or merger
notification laws or regulations of foreign Governmental Entities that the
parties mutually agree are necessary and the filing and recordation of the
Certificate of Merger as required by the DGCL, and (ii) for such other
12
consents, approvals, orders, authorizations, registrations, permits, filings or
notifications, which if not obtained or made would not reasonably be expected,
individually or in the aggregate to be material to the Company or prevent or
materially delay the consummation of the Merger.
SECTION 3.06 Permits; Compliance.
(a) Each of the Company and the Company Subsidiaries is in
possession of all material franchises, grants, authorizations, licenses,
permits, easements, variances, exceptions, consents, certificates, approvals and
orders of any Governmental Entity necessary for the Company or any Company
Subsidiary to own, lease and operate its material properties or to carry on its
business as it is now being conducted (the "Company Permits").
(b) Neither the Company nor any Company Subsidiary is in conflict in
any material respect with, or in default or violation in any material respect
of, (i) any material Law applicable to the Company or any Company Subsidiary or
by which any material property or asset of the Company or any Company Subsidiary
is bound or affected or (ii) any Company Permits.
SECTION 3.07 SEC Filings; Financial Statements.
(a) The Company has filed all forms, reports and documents required
to be filed by it with the Securities and Exchange Commission (the "SEC") since
January 1, 2001 (collectively, the "Company SEC Reports"). As of the respective
dates they were filed (and if amended or superseded by a filing prior to the
date of this Agreement then on the date of such filing), (i) each Company SEC
Report complied in all material respects with the requirements of the Securities
Act of 1933, as amended (together with the rules and regulations promulgated
thereunder, the "Securities Act") or the Exchange Act, as the case may be, and
(ii) none of the Company SEC Reports contained any untrue statement of a
material fact or omitted 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. No Company Subsidiary
is required to file any form, report or other document with the SEC.
(b) The consolidated financial statements (including, in each case,
any notes thereto) contained in the Company SEC Reports (the "Company Financial
Statements") were prepared in accordance with generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the periods
indicated (except as may be indicated in the notes thereto or, in the case of
unaudited statements, as permitted by Forms 10-Q and 8-K of the SEC) and present
fairly, in all material respects, the consolidated financial position, results
of operations and cash flows of the Company and the consolidated Company
Subsidiaries as at the respective dates thereof and for the respective periods
indicated therein, except as otherwise noted therein (subject, in the case of
unaudited statements, to normal and recurring year-end adjustments which would
not reasonably be expected to, individually or in the aggregate, to be material
in nature). The most recent balance sheet of the Company contained in the
Company SEC Reports as of September 30, 2004 is hereinafter referred to as the
"Company Balance Sheet". Since the date of the most recent Company SEC Report,
the Company's auditor has not been engaged by the Company to perform any
"prohibited activities" (as defined in Section 10A of the Exchange Act).
13
(c) Since the date of the latest Company SEC Report that included
the certifications required by Rule 13a-14(a) of the Exchange Act, the Company
has not materially and adversely amended its disclosure controls and procedures
(as defined in Rule 13a-15(e) of the Exchange Act) or its internal controls over
financial reporting (as defined in Rule 13a-15(f) of the Exchange Act), as
previously described in its Company SEC Reports. Section 3.07(c) of the Company
Disclosure Letter lists, and the Company has made available to Parent, complete
and correct copies of, all formally written descriptions of, and all policies,
manuals and other documents promulgating, such disclosure controls and
procedures.
(d) Since May 1, 2003, neither the Company nor any Subsidiary nor,
to the Company's knowledge, any member of the audit committee or executive
officer of the Company or any Subsidiary, has received any complaint,
allegation, assertion or claim, whether made in writing or made orally to any
such person, regarding the accounting, internal accounting controls or auditing
matters of the Company or any Subsidiary, including any complaint, allegation,
assertion or claim that the Company or any Subsidiary has engaged in
questionable accounting or auditing matters. Since May 1, 2003, no U.S. attorney
representing the Company or any Subsidiary, whether or not employed by the
Company or any Subsidiary, has reported evidence of a material violation of the
U.S. securities laws, or a material breach of fiduciary duty by the Company or
any of its officers or directors to the Company's Board of Directors or any
committee thereof or to any director or executive officer of the Company. Since
May 1, 2003, there have been no internal investigations regarding improper
accounting or revenue recognition initiated at the direction of the chief
executive officer, chief financial officer, general counsel, the Company's Board
of Directors or any committee thereof.
(e) Except as provided in the Company SEC Reports, there are no
material off-balance sheet arrangements (as defined in Item 303 of Regulation
S-K) that have or are reasonably likely to have a material current or future
effect on the Company's financial liquidity, capital expenditures or capital
resources.
(f) The Company is in compliance in all material respects with the
applicable provisions of the Xxxxxxxx-Xxxxx Act of 2002 in effect as of the date
hereof, other than those set forth in the preceding paragraphs of this Section
3.07 or as otherwise incorporated in the Exchange Act.
SECTION 3.08 Undisclosed Liabilities. Except for (a) liabilities
that are fully reflected or reserved against on the Company Balance Sheet, or in
the notes thereto, (b) liabilities incurred in the ordinary course of business
consistent with past practice, and (c) liabilities arising out of any Company
Contracts or any other contracts that have been entered into by the Company in
the ordinary course of business, since the date of the Company Balance Sheet,
neither the Company nor any Company Subsidiary has incurred any liability of any
nature whatsoever (whether absolute, accrued, contingent or otherwise and
whether due or to become due) that would be material to the business, results of
operations or financial condition of the Company and the Company Subsidiaries
taken as a whole.
SECTION 3.09 Absence of Certain Changes or Events. Since December
31, 2003 and except as otherwise disclosed in the Company SEC Reports filed and
publicly available prior to the date of this Agreement, each of the Company and
the Company Subsidiaries has
14
conducted its business only in the ordinary course and in a manner consistent
with past practice and, since such date, there has not been any:
(a) Company Material Adverse Effect through the date of this
Agreement;
(b) amendment or any other change to the Certificate of
Incorporation or Bylaws or equivalent organizational documents of the Company or
any Company Subsidiary;
(c) sale, pledge, lease, license, disposition, grant, encumbrance,
or authorization for any sale, pledge, lease, license, disposition, grant or
encumbrance, of any material assets of the Company excluding any Company
Intellectual Property, except in the ordinary course of business;
(d) authorization, declaration, set aside, dividend payment or other
distribution, payable in cash, stock, property or otherwise, with respect to any
of the capital stock of the Company or any Company Subsidiary;
(e) reclassification, combination, split, subdivision or redemption,
purchase or other acquisition, directly or indirectly, of any of the capital
stock of the Company or any Company Subsidiary except for such purchases or
acquisition of capital stock pursuant to agreements under which the Company has
the option to repurchase such shares;
(f) acquisition (including, without limitation, by merger,
consolidation, or acquisition of stock or assets) of any interest in any
corporation, partnership, other business organization or any division thereof or
any assets, other than acquisitions of assets for consideration which is not, in
the aggregate, in excess of $100,000;
(g) incurrence of any indebtedness for borrowed money (other than
accounts payable in the ordinary course of business) or issuance of any debt
securities or assumption, guarantee or endorsement of the obligations of any
person, or any loans or advances made;
(h) waiver of any stock repurchase rights involving Company Stock
with a market value in excess of $100,000, acceleration (or grant of any right
to acceleration, whether or not contingent), amendment or change in the period
of exercisability or the vesting schedule of options or restricted stock, or the
repricing of options granted under the Company Stock Option Plans or
authorization of cash payments in exchange for any options granted under any
such plans (excluding any net exercise provisions under the Company Stock Option
Plans);
(i) increase in, or agreement to increase, the compensation
(including base salary, target bonus and other compensation) payable or to
become payable to its officers or employees, except for increases in accordance
with past practices, or the grant of any rights to severance or termination pay
to, or the entering into of any employment, consulting, termination, or
severance agreement with, any director, officer or other employee of the Company
or any Company Subsidiary who earns at least $50,000, or the establishment,
adoption, entering into or amendment of any collective bargaining, bonus, profit
sharing, thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination, severance or other
plan, agreement, trust, fund, policy or arrangement for the benefit of any
director, officer or employee; provided, however, that the foregoing provisions
of this subsection
15
shall not apply to any amendments to employee benefits plans described in
section 3(3) of the Employee Retirement Security Act of 1974, as amended
("ERISA") that may be required by law;
(j) action to make or change any material Tax (as defined in Section
3.16 below) election (including any election relating to the Company's Tax
accounting period or Tax accounting method), file any amended Tax Return (as
defined in Section 3.16 below) which amends the Tax Return in any material
respect, enter into any closing agreement, settle any material Tax claim or
assessment relating to the Company or any Company Subsidiary, surrender any
right to claim a refund of Taxes in any material amount, consent to any
extension or waiver of the limitation period applicable to any material Tax
claim or assessment relating to the Company or any Company Subsidiary, or take
any other action or omit to take any action, other than actions taken or not
taken in the ordinary course of business, that would have the effect of
increasing the Tax liability, in any material respect, of the Company or any
Company Subsidiary;
(k) other than as required by GAAP or by the SEC, changes with
respect to accounting principles or procedures, including, without limitation,
any revaluation of assets;
(l) (i) sale, assignment, lease, termination, abandonment, transfer,
authorization to encumber or to otherwise dispose of or grant of any security
interest in and to any material Company Intellectual Property, in whole or in
part, except in the ordinary course of business, (ii) grant of any license with
respect to any Company Intellectual Property, other than license of Company
software to customers of the Company or any Company Subsidiary in the ordinary
course of business, (iii) development, creation or invention of any Intellectual
Property jointly with any third party, or (iv) to the Company's knowledge,
disclosure, or authorization for disclosure, of any confidential material
Company Intellectual Property, unless such Company Intellectual Property is
subject to a confidentiality or non-disclosure covenant protecting against
disclosure thereof; or
(m) any authorization, agreement or commitment by the Company or any
Company Subsidiary to do any of the things described in this Section 3.09.
SECTION 3.10 Absence of Litigation. There is no litigation, suit,
claim, action, proceeding ("Legal Proceeding") pending or, to the knowledge of
the Company, threatened, nor to the knowledge of the Company is there any
investigation pending or threatened, against the Company or any Company
Subsidiary, or any property or asset of the Company or any Company Subsidiary,
before any domestic Governmental Entity or, to the knowledge of the Company,
foreign Governmental Entity that (i) would reasonably be expected to,
individually or in the aggregate, materially and adversely affect the operations
of the Company as currently conducted or result in damages settlement or an
award in excess of $100,000 or (ii) would reasonably be expected to result in
the Company having to license the intellectual property rights of a third party
or the granting of a license to Company Intellectual Property to a third party.
None of the Company, the Company Subsidiaries, or, to the Company's knowledge,
the directors and officers of the Company and the Company Subsidiaries in their
capacity as such, nor any material property or asset of the Company or any
Company Subsidiary is subject to any continuing order of, or consent decree,
settlement agreement or other similar written agreement with, any Governmental
Entity. As of the date of this Agreement, neither the Company nor any Company
Subsidiary has commenced, with the assistance of external legal counsel, actions
that are
16
reasonably likely to result in the Company or any Company Subsidiary initiating
any litigation, arbitration or other proceeding involving material rights of the
Company or any Company Subsidiary against any third party after the date hereof.
SECTION 3.11 Employee Benefit Plans; Labor Matters.
(a) Schedule 3.11(a) of the Company Disclosure Letter lists all
employee benefit plans (as defined in section 3(3) of ERISA) and all material
bonus, stock option, stock purchase, stock appreciation right, restricted stock,
phantom stock, incentive, deferred compensation, executive compensation,
cafeteria benefit, dependent care, director or employee loan, fringe benefit,
retiree medical or life insurance, disability, supplemental retirement,
employment, severance, termination pay or other benefit plans, programs or
arrangements to which the Company or any Company Subsidiary is a party, with
respect to which the Company or any Company Subsidiary has any obligation or
which are maintained, contributed to or sponsored by the Company or any Company
Subsidiary for the benefit of any current or former employee, officer or
director of the Company or any Company Subsidiary (collectively, the "Company
Benefit Plans").
(b) Each Company Benefit Plan is in writing and the Company has made
available to Parent a true and complete copy of each Company Benefit Plan and
will furnish to Parent upon request a true and complete copy of each material
document, if any, prepared in connection with each such Company Benefit Plan,
including, without limitation, (i) a copy of each trust or other funding
arrangement, (ii) each summary plan description and summary of material
modifications, (iii) the three most recent annual reports (Form 5500 series and
all schedules and financial statements attached thereto), if any, required under
ERISA or the Code in connection with each Company Benefit Plan, (iv) the most
recently received IRS determination letter for each such Company Benefit Plan,
if such plan is intended to qualify under Section 401 of the Code, (v) any
actuarial report and financial statement in connection with each such Company
Benefit Plan for the three most recent plan years, (vi) any correspondence with
the IRS or the Department of Labor with respect to each such Company Benefit
Plan and (vii) each form of notice of grant or stock option agreement used to
document Company Stock Options. Neither the Company nor any Company Subsidiary
has any express or implied commitment (x) to create, incur material liability
with respect to, or cause to exist, any other material employee benefit plan,
program or arrangement, (y) to enter into any material contract or agreement to
provide compensation or benefits to any individual, or (z) to modify, change or
terminate any Company Benefit Plan that could reasonably be expected to
materially increase the cost of maintaining such Company Benefit Plan, other
than with respect to a modification, change or termination required by ERISA or
the Code.
(c) None of the Company Benefit Plans is a multiemployer plan
(within the meaning of section 3(37) or 4001(a)(3) of ERISA) (a "Multiemployer
Plan") or a single employer pension plan (within the meaning of section
4001(a)(15) of ERISA) for which the Company or any Company Subsidiary could
incur liability under section 4063 or 4064 of ERISA (a "Multiple Employer
Plan"). None of the Company Benefit Plans provides for or promises retiree
medical, disability or life insurance benefits to any current or former
employee, officer or director of the Company or any Company Subsidiary other
than procedures intended to comply with the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended ("COBRA").
17
(d) None of the Company Benefit Plans provides for the payment of
separation, severance, termination or similar-type benefits to any person or
obligates the Company or any Company Subsidiary to pay separation, severance,
termination or similar benefits solely or partially as a result of any
transaction contemplated by this Agreement. There is no Company Benefit Plan or
other agreement, contract or arrangement to which the Company is a party that
could, individually or collectively, result in the payment of any amount that
would not be deductible by reason of section 280G (as determined without regard
to section 280G(b)(4)) of the Code. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby, either
alone or together with another event, will (i) increase any benefits otherwise
payable or other obligations under any Company Benefit Plan or other
arrangement, (ii) result in the acceleration of the time of payment, vesting or
funding of any benefits including, but not limited to, the acceleration of the
vesting and exercisability of any Company Stock Options, or (iii) affect in any
material respects any Company Benefit Plan's current treatment under any Laws
including any tax or social contribution law.
(e) Each Company Benefit Plan has been operated in accordance in all
material respects with its terms and the requirements of all applicable Laws,
regulations and rules promulgated thereunder including, without limitation,
ERISA, COBRA, the Family Medical Leave Act of 1993, as amended ("FMLA"), and the
Code. The Company and each Company Subsidiary has performed in all material
respects all obligations required to be performed by it under, is not in any
material respect in default under or in violation of, and has no knowledge of
any default or violation by any third party to, any Company Benefit Plan. No
material action, claim or proceeding is pending or, to the knowledge of the
Company, threatened with respect to any Company Benefit Plan (other than claims
for benefits in the ordinary course) and, to the knowledge of the Company, no
fact or event exists that could reasonably be expected to give rise to any such
action, claim or proceeding. Neither the Company nor any person that is a member
of the same controlled group as the Company or under common control with the
Company within the meaning of section 414 of the Code (each, an "ERISA
Affiliate") is subject to any material penalty or tax with respect to any
Company Benefit Plan under section 402(i) of ERISA or sections 4975 through 4980
of the Code. Each Company Benefit Plan can be amended, terminated or otherwise
discontinued as of or after the Effective Time, without liability to Parent, the
Company or any of its ERISA Affiliates (other than ordinary administration
expenses).
(f) Each Company Benefit Plan intended to qualify under section
401(a) of the Code and each trust intended to qualify under section 501(a) of
the Code has either received a favorable determination, opinion, notification or
advisory letter from the IRS (which may be the favorable opinion letter of the
master and prototype or volume submitter plan sponsor of such Company Benefit
Plan) with respect to each such Company Benefit Plan as to its qualified status
under the Code, including all amendments to the Code effected by the Tax Reform
Act of 1986 and subsequent legislation, and, to the knowledge of the Company, no
fact or event has occurred since the date of such determination letter or
letters from the IRS that could reasonably be expected to adversely affect the
qualified status of any such Company Benefit Plan or the exempt status of any
such trust, or has remaining a period of time under applicable Treasury
regulations or IRS pronouncements in which to apply for such a letter and make
any amendments necessary to obtain a favorable determination as to the qualified
status of each such Company Benefit Plan.
18
(g) No Company Benefit Plan is subject to Section 412 of the Code or
Title IV of ERISA.
(h) Neither the Company nor any Subsidiary has, since January 1,
1998, terminated, suspended, discontinued contributions to or withdrawn from any
employee pension benefit plan, as defined in section 3(2) of ERISA, including,
without limitation, any multiemployer plan, as defined in section 3(37) of
ERISA. All contributions, premiums or payments required to be made or accrued
with respect to any Company Benefit Plan have been made on or before their due
dates.
(i) (A) Neither the Company nor any Company Subsidiary is a party to
any collective bargaining agreement or other labor union contract applicable to
persons employed by the Company or any Company Subsidiary or in the Company's or
any Company Subsidiary's business, and currently there are no organizational
campaigns, petitions or other unionization activities seeking recognition of a
collective bargaining unit which could affect the Company or any Company
Subsidiary; (B) there are no controversies, strikes, slowdowns or work stoppages
pending or, to the knowledge of the Company after reasonable due inquiry,
threatened between the Company or any Company Subsidiary and any of its
employees, and neither the Company nor any Company Subsidiary has experienced
any such controversy, strike, slowdown or work stoppage within the past three
years; (C) neither the Company nor any Company Subsidiary has breached or
otherwise failed to comply with the provisions of any collective bargaining or
union contract and there are no grievances outstanding against the Company or
any Company Subsidiary under any such agreement or; (D) there are no unfair
labor practice complaints pending against the Company or any Company Subsidiary
before the National Labor Relations Board or any other Governmental Entity or
any current union representation questions involving employees of the Company or
any Company Subsidiary; (E) the Company and each Company Subsidiary is currently
in compliance in all material respects with all applicable Laws relating to the
employment of labor, including, without limitation, those related to wages,
hours, worker classification, collective bargaining and the payment and
withholding of Taxes and other sums as required by the appropriate Governmental
Entity and has withheld and paid to the appropriate Governmental Entity or is
holding for payment not yet due to such Governmental Entity all amounts required
to be withheld from employees of the Company or any Company Subsidiary and is
not liable for any arrears of wages, Taxes, penalties or other sums for failure
to comply with any of the foregoing; (F) the Company and each Company Subsidiary
has paid in full to all employees or adequately accrued for in accordance with
GAAP consistently applied all wages, salaries, commissions, bonuses, benefits
and other compensation due to or on behalf of such employees; (G) there is no
claim with respect to payment of wages, salary or overtime pay that has been
asserted or is now pending or, to the knowledge of the Company, threatened
before any Governmental Entity with respect to any persons currently or formerly
employed by the Company or any Company Subsidiary; (H) neither the Company nor
any Company Subsidiary is a party to, or otherwise bound by, any consent decree
with, or citation by, any Governmental Entity relating to employees or
employment practices; (I) there is no charge or proceeding with respect to a
violation of any occupational safety or health standards that has been asserted
or is now pending or, to the knowledge of the Company, threatened with respect
to the Company or any Company Subsidiary; (J) there is no charge of
discrimination in employment or employment practices, for any reason, including,
without limitation, age, gender, race, religion or other legally protected
category, which has been asserted or is now pending or, to the knowledge of the
19
Company, threatened before the United States Equal Employment Opportunity
Commission, or any other Governmental Entity with respect to the Company or any
Company Subsidiary; and (K) the Company is not aware that any employees will
terminate their employment with the Company as a result of the announcement of
the Merger.
(j) Section 3.11(j) of the Company Disclosure Letter accurately sets
forth the name and title of each employee of the Company with the title of vice
president or higher.
SECTION 3.12 Contracts. Except as set forth in the Company
Disclosure Letter or as described in the Company SEC Reports, neither the
Company nor any Company Subsidiary is a party to, or is bound by, any:
(a) employment, consulting, termination or severance agreement,
contract or commitment with any officer or other employee with the title of vice
president or higher or any member of the Company's Board of Directors;
(b) agreement, contract or commitment that materially restricts or
purports to materially restrict the right of the Company or any Company
Subsidiary to engage in any line of business, acquire any property, develop or
distribute any product or provide any service (including geographic
restrictions) or to compete with any person or granting any exclusive
distribution rights, in any market, field or territory;
(c) agreement, contract or commitment (i) relating to the
disposition or acquisition by the Company or any Company Subsidiary of material
assets not in the ordinary course of business, (ii) relating to the acquisition
by the Company or any Company Subsidiary of any other entity, whether by means
of merger, consolidation, purchase of assets or otherwise, or (iii) pursuant to
which the Company or any Company Subsidiary has any ownership interest in any
corporation, partnership, joint venture or other business enterprise (other than
the Company Subsidiaries) that is material to the Company's business as
currently conducted;
(d) distributor, reseller or dealer agreement for the Company's
products or services;
(e) contract relating to any outstanding commitment for capital
expenditures in excess of $100,000;
(f) indenture, mortgage, promissory note, loan agreement, credit
agreement, security agreement, guarantee of borrowed money or other agreement or
instrument relating to the borrowing of money or extension of credit, not
including accounts payable, in excess of $100,000;
(g) off-balance sheet arrangement (as defined in Item 303(a)(4)(ii)
of Regulation S-K promulgated under the Exchange Act);
(h) contractual obligation (as defined in Item 303(a)(5)(ii) of
Regulation S-K) of the Company or any Company Subsidiary that involves or would
reasonably be expected to involve payments of more than $100,000 over the term
of the contract;
20
(i) contract providing for an "earn-out" or other contingent payment
by the Company or any Company Subsidiary that involves or would reasonably be
expected to involve more than $100,000 over the term of the contract;
(j) contract (other than the Company's Certificate of Incorporation
or Bylaws) providing for the indemnification of any officer, director, employee
or independent contractor of the Company;
(k) contract providing for any obligation of the Company or any
Company Subsidiary to provide funds to, or make any investment (in the form of a
loan, capital contribution or otherwise) in, any Company Subsidiary or any other
person;
(l) other than customer contracts entered into in the ordinary
course of business, other agreement, contract, license or commitment that is
material to the business of the Company and the Company Subsidiaries, taken as a
whole, as currently conducted; or
(m) customer contract that involves or would reasonably be expected
to involve payments of more than $100,000 in any 12 month period.
Neither the Company nor any Company Subsidiary, nor to the Company's
knowledge any other party to a Company Contract (as defined below), is in breach
or violation of or default under in any material respect (nor, to the Company's
knowledge, does there exist any condition which with the passage of time or
giving of notice or both would result in such a material breach, violation or
default), and neither the Company nor any Company Subsidiary has received
written notice that it has breached, violated or defaulted under in any material
respect, any of the material terms or conditions of any of the agreements,
contracts or commitments to which the Company or any Company Subsidiary is a
party or by which it is bound that (A) are required to be disclosed in the
Company Disclosure Letter pursuant to clauses (a) through (m) above or Section
3.15 hereof or (B) are required to be filed with any Company SEC Report (any
such agreement, contract or commitment, a "Company Contract"). Each Company
Contract is valid and binding in all material respects on the Company or Company
Subsidiary and, to the knowledge of the Company, on the other parties thereto
and is in full force and effect except to the extent they have previously
expired in accordance with their terms. The Company has delivered or made
available to Parent accurate and complete copies of all Company Contracts,
including all amendments thereto.
SECTION 3.13 Environmental Matters.
(a) The Company and the Company Subsidiaries (i) are in compliance
in all material respects with all applicable Environmental Laws (as defined
below), (ii) hold all material Environmental Permits (as defined below) and
(iii) are in compliance in all material respects with their respective
Environmental Permits.
(b) Neither the Company nor any of the Company Subsidiaries has
released, and to their knowledge no other person has released, Hazardous
Materials (as defined below) in any amount that could reasonably be required to
be remediated under applicable Environmental Laws (as defined below) on any real
property owned or leased by the Company or the Company
21
Subsidiaries or, during their ownership or occupancy of such property, on any
property formerly owned or leased by the Company or any Company Subsidiary.
(c) Neither the Company nor any Company Subsidiary has received any
written request for information, or been notified that it is a potentially
responsible party, under CERCLA (as defined below), or any similar Law of any
state, locality or any other jurisdiction.
(d) Neither the Company nor any Company Subsidiary has entered into
or agreed to any consent decree or order or is subject to any judgment, decree
or judicial order that remains outstanding or unresolved and relates to
compliance with Environmental Laws, Environmental Permits or the investigation,
sampling, monitoring, treatment, remediation, removal or cleanup of Hazardous
Materials and, to the knowledge of Company, no investigation, litigation or
other proceeding is pending or threatened in writing with respect thereto.
(e) Neither the Company nor any Company Subsidiary has received any
written notice that the real property currently or formerly owned or leased by
the Company or any Company Subsidiary is listed or, to the knowledge of the
Company, proposed for listing on the "National Priorities List" under CERCLA, as
updated through the date of this Agreement, or any similar list of sites in the
United States or any other jurisdiction requiring investigation or cleanup.
For purposes of this Agreement:
"CERCLA" means the U.S. Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended as of the date hereof.
"Environmental Laws" means any federal, state or local statute, law,
ordinance, regulation, rule, code or order, including any judicial or
administrative order, consent decree or judgment, relating to pollution or
protection of the environment or natural resources, including, without
limitation, those relating to the use, handling, transportation, treatment,
storage, disposal, release or discharge of Hazardous Materials, as in effect as
of the date of this Agreement.
"Environmental Permits" means any permit, approval, license and
other authorization required under any applicable Environmental Law.
"Hazardous Materials" means (i) any petroleum, petroleum products,
by-products or breakdown products, radioactive materials, asbestos-containing
materials or polychlorinated biphenyls or (ii) any chemical, material or
substance defined and regulated as toxic or hazardous or as a pollutant or
contaminant or waste under any applicable Environmental Law.
SECTION 3.14 Title to Properties; Absence of Liens and Encumbrances.
(a) Neither the Company nor any of the Company Subsidiaries owns any
real property. Section 3.14(a) of the Company Disclosure Letter lists all real
property leases to which the Company or any Company Subsidiary is a party and
each amendment thereto. All such current leases are in full force and effect,
and, to the Company's knowledge, there is not, under any of such leases, any
existing default or event of default (or event which with notice or lapse of
22
time, or both, would constitute a default) that would give rise to a material
claim. The Company and the Company Subsidiaries have no leasehold interest in
any real property.
(b) Each of the Company and the Company Subsidiaries has good and
valid title to, or, in the case of leased properties, valid leasehold interests
in, all of its material tangible personal property, used or held for use in its
business, free and clear of any liens, pledges, charges, claims, security
interests or other encumbrances of any sort ("Liens") except for Liens (i)
securing Taxes, assessments and other governmental charges or levies not yet due
and payable (excluding any imposed pursuant to any of the provisions of ERISA),
and statutory Liens for Taxes that are not yet delinquent or Taxes that are
being contested in good faith by any appropriate proceedings for which adequate
reserves have been established in the financial statements included in the
Company SEC Reports, (ii) such imperfections in title, Liens and easements as do
not materially detract from or interfere with the use of the properties subject
thereto or affected thereby or otherwise materially impair business operations
involving such properties, (iii) Liens securing debt that is reflected in the
financial statements included in the Company SEC Reports, (iv) statutory or
common law Liens to secure landlords, lessors or renters under leases or rental
agreements, (v) statutory or common law Liens in favor of carriers,
warehousemen, mechanics and materialmen to secure claims for labor, materials or
supplies and other like Liens, (vi) Liens imposed on the underlying fee interest
of a landlord or owner in leased property, and (vii) Liens in favor of customs
and revenue authorities arising as a matter of legal requirements to secure
payments of customs duties in connection with the importation of goods (each of
the Liens set forth in (i) - (vii), a "Permitted Liens")
SECTION 3.15 Intellectual Property.
(a) The Company and the Company's Subsidiaries each own or are
licensed for, or possess sufficient rights in and to, all Company Intellectual
Property (as defined below) with respect to their respective businesses, as
presently conducted or proposed to be conducted (except for such items as have
yet to be conceived or developed), or necessary to conduct any such business
without, to the knowledge of the Company and the Subsidiaries, any infringement
or misappropriation of any rights or property of any person ("Infringement").
Except as set forth in the Company Disclosure Letter, all Company Intellectual
Property is either owned by or is exclusively licensed to the Company except
with respect to standard, generally commercially available, "off-the-shelf"
third party products that are not incorporated into, or tools for production of,
any previous, current or proposed product (except for such items as have yet to
be conceived or developed), service or Intellectual Property offering of the
Company or any Subsidiary, which products are licensed non-exclusively to
Company or its Subsidiaries only pursuant to the standard commercial license
terms therefor ("Commodity Software"). "Intellectual Property" means (i)
inventions (whether or not patentable); trade names, trade and service marks,
logos, and domain names, URLs, addresses and other designations ("Marks"); works
of authorship; mask works; data; technology, know-how, trade secrets, ideas and
information; designs; formulas; algorithms; processes; methods; schematics;
computer software (in source code and/or object code form); and all other
intellectual property of any sort (collectively, "Inventions") and (ii) patent
rights; Xxxx rights; copyrights; mask work rights; sui generis database rights;
trade secret rights; moral rights; and all other intellectual and industrial
property rights of any sort throughout the world, and all applications,
registrations, issuances and the like with respect thereto (collectively, "IP
Rights"). "Company Intellectual Property" means
23
all Intellectual Property that is used, exercised, or exploited ("Used") or
proposed to be Used (except for such items as have yet to be conceived or
developed) in any business of the Company or any Subsidiary, or that may be
necessary to conduct any such business; this term will also include all other
Intellectual Property owned by or licensed to the Company or any Subsidiary now
or in the past (and with respect to any Intellectual Property which is not owned
by the Company, all representations and warranties herein shall be deemed made
solely to the Company's knowledge). All copyrightable matter within Company
Intellectual Property that is material to the business of the Company or any
Subsidiary has been created by persons who were employees of the Company or such
Subsidiary at the time of creation or has otherwise been assigned to the Company
or a Subsidiary and no third party has or will have "moral rights" or rights to
terminate any assignment or license with respect thereto.
(b) To the extent included in Company Intellectual Property
(but excluding Intellectual Property licensed to the Company and its
Subsidiaries only as part of Commodity Software), Section 3.15(b) of the Company
Disclosure Letter lists (by name, number, jurisdiction, status, and owner, as
well as next filing, response, payment, appeal, maintenance and other applicable
dates and deadlines) all patents and patent applications; all registered and
unregistered Marks; and all registered copyrights and mask works; and all other
issuances, registrations, applications and the like with respect to those or any
other IP Rights. All the foregoing (i) are, to the knowledge of the Company and
the Company Subsidiaries, valid, enforceable and subsisting, and (ii) along with
all related material filings, registrations and correspondence, have been
provided to Parent. To the knowledge of the Company and the Subsidiaries, all
applicable filings and payments have been made and no cancellation, termination,
expiration or abandonment of any of the foregoing (except natural expiration or
termination at the end of the full possible term, including extensions and
renewals) is currently anticipated by the Company or any Subsidiary. To the
Company's knowledge, there is no basis for a challenge that would materially
affect the patentability or validity of claims of any of the foregoing patents
or patent applications or the validity (or any other aspect or status) of any
such IP Rights.
(c) Section 3.15(c) of the Company Disclosure Letter lists
separately for each of the following categories: (i) all material licenses,
sublicenses and other agreements to which the Company or a Subsidiary is a party
other than the following agreements (except for entities that the Company
believes are competitors of the Company or any Subsidiary): (A) distribution of
standard object code product pursuant to Company's standard form end-user,
object code, internal-use software license and support/maintenance agreements
entered into in the ordinary course of business or (B) access provided under
Company's standard form nondisclosure/nonuse agreement, (ii) all licenses,
sublicenses and other agreements pursuant to which the Company or a Subsidiary
has been or may be assigned or authorized to Use, or has incurred or may incur
any obligation in connection with, (A) any third party Intellectual Property or
(B) any Company Intellectual Property, and (iii) each agreement pursuant to
which the Company or a Subsidiary has deposited or is required to deposit with
an escrowholder or any other person all or part of the source code (or any
algorithm or documentation contained in or relating to any source code) of any
Company Intellectual Property owned by the Company ("Source Materials"); for the
avoidance of doubt this sentence applies, without limitation, to open source
licenses, public licenses and other similar licenses of any sort ("Open Source
Licenses"). Except as set forth in the Company's Disclosure Letter, neither the
Company nor
24
any of its Subsidiaries has entered into any agreement to indemnify, hold
harmless or defend any other person with respect to any assertion of
Infringement or warranting the lack thereof, other than indemnification
provisions contained in Company's standard forms of end user licenses used in
transactions arising in the ordinary course of business. The Company has
provided to Parent all current forms and all forms used by the Company within
the past 24 months. Except as set forth in the Company Disclosure Letter, there
are no Open Source Licenses to which the Company or any Subsidiary is a party or
is bound and no Company Intellectual Property is subject to any Open Source
License.
(d) To the knowledge of the Company, no event or circumstance
exists (including, without limitation, the authorization, execution or delivery
of this Agreement or the consummation of any of the transactions contemplated
hereby) that (with or without notice or the lapse of time) could reasonably be
expected to result in (i) the material breach or violation of any material
license, sublicense or other agreement required to be listed in Section 3.15 of
the Company Disclosure Letter, (ii) the loss or expiration of any material right
or option by the Company or any of its Subsidiaries (or the gain thereof by any
third party) under any such license, sublicense or other agreement or (iii) the
release, disclosure or delivery to any third party of any part of the Source
Materials.
(e) To the knowledge of the Company and its Subsidiaries,
there is no unauthorized Use, disclosure, or Infringement of any Company
Intellectual Property by any third party, including, without limitation, any
employee or former employee of the Company or any of its Subsidiaries. Neither
the Company nor any Subsidiary has brought or threatened any action, suit or
proceeding against any third party for any Infringement of any Company
Intellectual Property or any breach of any license, sublicense or agreement
involving Company Intellectual Property.
(f) The Company and its Subsidiaries have taken commercially
reasonable steps to protect and preserve the confidentiality of all Company
Intellectual Property not otherwise disclosed in published patents or patent
applications or registered copyrights ("Company Confidential Information").
Except as set forth in the Company Disclosure Letter, none of the Company or any
of its Subsidiaries has disclosed or delivered to any third party, or permitted
the disclosure or delivery to any escrow agent or other third party, any part of
the Source Materials.
(g) (i) Except as set forth in the Company Disclosure Letter,
each current employee and contractor of the Company or any Subsidiary has
executed and delivered (and to the Company's knowledge, is not in material
breach of) an agreement in substantially the form of the Company's standard
Proprietary Information and Inventions Agreement (in the case of an employee) or
Consulting Agreement (in the case of a contractor), which agreements provide (A)
written assignments to the Company or such Subsidiary of all title and rights to
any Company Intellectual Property conceived or developed thereunder but not
already owned by the Company or a Subsidiary by operation of Law and (B) written
confidentiality and nonuse restrictions intended to protect and preserve the
confidentiality of all Company Intellectual Property not otherwise disclosed in
published patents or patent applications or registered copyrights.
25
(ii) Except as set forth in the Company Disclosure Letter,
each former employee and contractor of the Company or any Subsidiary who
materially contributed to the Company Intellectual Property or had access to
material Company Confidential Information executed and delivered (and to the
Company's knowledge, is not in material breach of) an agreement in substantially
the form of the Company's standard Proprietary Information and Inventions
Agreement (in the case of an employee) or Consulting Agreement (in the case of a
contractor), which agreements provided (A) written assignments to the Company or
such Subsidiary of all title and rights to any Company Intellectual Property
conceived or developed thereunder but not already owned by the Company or a
Subsidiary by operation of Law and (B) written confidentiality and nonuse
restrictions intended to protect and preserve the confidentiality of all Company
Intellectual Property not otherwise disclosed in published patents or patent
applications or registered copyrights.
(h) None of the Company or its Subsidiaries has received any written
notice alleging that the Company or any Subsidiary has been or may be (whether
in its past, current or proposed business or otherwise) engaged in, liable for
or contributing to any Infringement or may need a license.
(i) To the Company's knowledge, none of its employees or contractors
who earn more than $50,000 is obligated under any agreement, judgment, decree or
order (an "Employee Obligation") that could reasonably be expected to interfere
with the use of his or her commercially reasonably efforts to promote the
interests of the Company and its Subsidiaries.
(j) All Software is tested by the Company using industry standard
technologies and Company or its Subsidiaries have not intentionally inserted
into any Software any viruses, worms, trojan horses and other infections or
harmful routines and, to the knowledge of the Company, the Software does not
contain any of the foregoing or any bugs, errors, or problems that, to the
Company's or any Subsidiary's knowledge, could reasonably be expected to disrupt
its operation or have a materially adverse impact on the operation of other
software programs or operating systems. "Software" means software, programs,
databases and related documentation, in any form (including Internet sites,
Internet content and links) that is (i) material to the operation of the
business of the Company or any Subsidiary, including, but not limited to, that
operated by the Company or any Subsidiary on its web sites or used by the
Company or any Subsidiary in connection with processing customer orders, storing
customer information, or storing or archiving data, or (ii) manufactured,
distributed, sold, licensed or marketed by the Company or any Subsidiary.
(k) Except as set forth in the Company Disclosure Letter, the
Company and its Subsidiaries have obtained all approvals and agreements required
(including, without limitation, assurance from customers regarding further
export) for exporting any Company Intellectual Property outside the United
States and all such export approvals in the United States are current,
outstanding and, to the knowledge of the Company, in full force and effect. The
Company has disclosed any export restrictions or limitations to Parent.
26
(l) As of the date of this Agreement, the current version of the
Company's Enterprise Contract Management Foundation version 3.0 is generally
available for licensing.
SECTION 3.16 Taxes.
(a) All income Tax (as defined below) and other material Tax
returns, statements, reports, declarations and other forms and documents
(including, without limitation, estimated Tax returns and reports and material
information returns and reports) required to be filed with any Tax Authority (as
defined below) with respect to any Taxable (as defined below) period ending on
or before the Closing, by or on behalf of the Company (collectively, "Tax
Returns" and individually a "Tax Return"), have been or will be completed and
filed when due (including any extensions of such due date) and all amounts shown
due on such Tax Returns and all Taxes otherwise due on or before the Effective
Time have been or will be paid on or before such date. Except to the extent that
an appropriate reserve for Taxes has been established on the Company Financial
Statements, all information included on such Tax Returns is correct and complete
in all material respects. The Company Financial Statements contained in the
Company SEC Reports (i) accrue in accordance with GAAP all actual and contingent
liabilities for Taxes (as defined below) with respect to all periods through the
date of the Company Balance Sheet and the Company has not and will not incur any
Tax liability in excess of the amount reflected (excluding any amount thereof
that reflects timing differences between the recognition of income for purposes
of GAAP and for Tax purposes) on the Company Balance Sheet included in the
Company Financial Statements with respect to such periods, and (ii) properly
accrues in accordance with GAAP all material liabilities for Taxes payable after
the date of the Company Balance Sheet, with respect to all transactions and
events occurring on or prior to such date. All information set forth in the
notes to the Company Financial Statements relating to Tax matters is correct and
complete in all material respects. No material Tax liability since the date of
the Company Balance Sheet has been incurred by the Company other than in the
ordinary course of business and adequate provision has been made by the Company
for all Taxes since that date in accordance with GAAP on at least a quarterly
basis.
(b) The Company has withheld and paid to the applicable financial
institution or Tax Authority all material amounts required to be so withheld and
paid. To the best knowledge of the Company, no Tax Returns filed with respect to
Taxable years through the Taxable year ended December 31, 2003, have been
examined and closed. No notice of deficiency or similar document of any Tax
Authority has been received by the Company, and there are no liabilities for
Taxes (including liabilities for interest, additions to Tax and penalties
thereon and related expenses) with respect to the issues that have been raised
(and are currently pending) by any Tax Authority that could, if determined
adversely to the Company, materially and adversely affect the liability of the
Company for Taxes. The Company (or any member of any affiliated or combined
group of which the Company has been a member) has not granted any extension or
waiver of the limitation period applicable to any Tax Returns that is still in
effect and there is no material claim, audit, action, suit, proceeding, or (to
the knowledge of the Company) investigation now pending or threatened in writing
against or with respect to the Company in respect of any Tax or assessment.
There are no liens for Taxes (other than Permitted Liens) upon the assets of the
Company. The Company has never been a member of an affiliated group of
corporations, within the meaning of section 1504 of the Code. The Company
27
is not a party to or bound by any Tax indemnity, Tax sharing or Tax allocation
agreement (whether written or arising under operation of federal Law as a result
of being a member of a group filing consolidated Tax Returns, under operation of
certain state Laws as a result of being a member of a unitary group, or under
comparable Laws of other states or foreign jurisdictions) which includes a party
other than the Company nor does the Company owe any amount under any such
agreement. The Company is not, and has not been, a United States real property
holding corporation (as defined in section 897(c)(2) of the Code) during the
applicable period specified in section 897(c)(1)(A)(ii) of the Code. Other than
by reason of the Merger, the Company has not been and will not be required to
include any material adjustment in Taxable income for any Tax period (or portion
thereof) pursuant to section 481 or 263A of the Code or any comparable provision
under state or foreign Tax Laws as a result of transactions, events or
accounting methods employed prior to the Merger. All material elections with
respect to the Company's Taxes made during the fiscal years ending December 31,
2001, 2002 and 2003 are reflected on the Company's Tax Returns for such periods,
copies of which have been provided to Parent. The Company has not entered into
any transaction that constitutes a "reportable transaction" within the meaning
of Treasury Regulation Section 1.6011-4(b).
(c) For purposes of this Agreement, the following terms have the
following meanings: "Tax" (and, with correlative meaning, "Taxes" and "Taxable")
means any and all taxes including, without limitation, (i) any net income,
alternative or add-on minimum tax, gross income, gross receipts, sales, use, ad
valorem, transfer, franchise, profits, value added, net worth, license,
withholding, payroll, employment, excise, severance, stamp, occupation, premium,
property, environmental or windfall profit tax, custom, duty or other tax,
governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest or any penalty, addition to tax or additional amount
imposed by any Governmental Entity responsible for the imposition of any such
tax (domestic or foreign) (a "Tax Authority"), (ii) any liability for the
payment of any amounts of the type described in (i) as a result of being a
member of an affiliated, consolidated, combined or unitary group for any Taxable
period or as the result of being a transferee or successor thereof and (iii) any
liability for the payment of any amounts of the type described in (i) or (ii) as
a result of any express or implied obligation to indemnify any other person. As
used in this Section 3.16, the term "the Company" means the Company and any
entity included in, or required under GAAP to be included in, any of the Company
Financial Statements.
SECTION 3.17 Interested Party Transactions. No director, officer or
other affiliate of the Company (or any member of the immediate family of any
director or officer) has, directly or indirectly, (i) an economic interest in
any person who is a Significant Customer or Significant Supplier; (ii) an
economic interest in any Contract included in Section 3.12 of the Company
Disclosure Letter; or (iii) any contractual or other arrangement with the
Company or any Subsidiary; provided, however, that ownership of no more than
five percent (5%) of the outstanding voting stock of a publicly traded
corporation shall not be deemed an "economic interest in any person" for
purposes of this Section 3.17. The Company and the Company Subsidiaries have
not, since December 31, 2003, (i) extended or maintained credit, arranged for
the extension of credit or renewed an extension of credit in the form of a
personal loan to or for any director or executive officer (or equivalent
thereof) of the Company, or (ii) materially modified any term of any such
extension or maintenance of credit. There are no extensions of credit maintained
by the Company or any of the Company Subsidiaries to which the second
28
sentence of Section 13(k)(1) of the Exchange Act applies. To the Company's
knowledge, no officer or director of the Company or any Company Subsidiary has
asserted any claim, charge, action or cause of action against the Company or any
Company Subsidiary, except for immaterial claims for accrued vacation pay,
accrued benefits under any employee benefit plan and similar matters and
agreements existing on the date hereof.
SECTION 3.18 Insurance. The Company has provided or made available
to Parent true, correct and complete copies of all policies of insurance to
which each of the Company and the Company Subsidiaries are a party or are a
beneficiary or named insured. There is no material claim pending under any of
such policies as to which coverage has been questioned, denied or disputed by
the underwriters of such policies. All premiums due and payable on or prior to
the date of this Agreement under all such policies have been paid and the
Company is otherwise in compliance in all material respects with the terms of
such policies. The Company has no knowledge of any threatened termination of, or
material premium increase with respect to, any of such policies.
SECTION 3.19 Board Approval; Vote Required.
(a) The Board of Directors of the Company, by resolutions duly
adopted by unanimous vote of those voting (who constituted all of the directors
then in office) at a meeting duly called and held and not subsequently rescinded
or modified in any way (the "Company Board Approval"), has duly (i) determined
that this Agreement and the Merger are advisable, fair to and in the best
interests of the Company and its stockholders, (ii) approved this Agreement and
the Merger and (iii) recommended that the stockholders of the Company adopt this
Agreement.
(b) The only vote of the holders of any class or series of stock of
the Company necessary to adopt this Agreement and the other transactions
contemplated by this Agreement is the Company Stockholder Approval.
SECTION 3.20 State Takeover Statutes. The Board of Directors of the
Company has taken all actions so that the restrictions contained in Section 203
of the DGCL applicable to a "business combination" (as defined in Section 203)
will not apply to the execution, delivery or performance of this Agreement and
the Company Voting Agreements or the consummation of the Merger. No other state
takeover statute is applicable to this Agreement, the Company Voting Agreements
or the Merger.
SECTION 3.21 Opinion of Financial Advisor. The Company has received
the opinion (which shall be confirmed in writing) of First Albany Capital Inc.
(the "Company Financial Advisor"), dated the date of this Agreement, to the
effect that, as of the date of this Agreement, the Per Share Merger
Consideration to be received by the holders of the Company Common Stock (other
than holders who are parties to a Company Voting Agreement) is fair from a
financial point of view to such holders, a copy of which opinion will be
delivered to Parent solely for informational purposes promptly after the date of
this Agreement.
SECTION 3.22 Brokers; Advisors. No broker, finder or investment
banker (other than the Company Financial Advisor) is entitled to any brokerage,
finder's or other fee or
29
commission in connection with the Merger or the other transactions contemplated
by this Agreement based upon arrangements made by or on behalf of the Company.
The Company has delivered to Parent a true and complete copy of the agreement
pursuant to which the Company Financial Advisor is entitled to fees and expenses
in connection with the transactions contemplated by this Agreement.
SECTION 3.23 Customers and Suppliers.
(a) The Company has no outstanding material dispute concerning its
products and/or services with any customer or distributor who, in the year ended
December 31, 2003 or the nine months ended September 30, 2004 was one of the ten
largest sources of revenue for the Company, based on amounts paid or payable
during such periods (each, a "Significant Customer"). Each Significant Customer
is listed on the Schedule 3.23(a) of the Company Disclosure Letter. The Company
has not received any written notice from any Significant Customer, nor does the
Company have any other knowledge (without any inquiry by the Company of the
Significant Customer), that such Significant Customer will not continue as a
customer or distributor of the Company after the Closing or that any such
customer intends to terminate or materially modify existing contracts with the
Company, including, without limitation, reducing the amount paid to the Company
for products and services.
(b) The Company has no outstanding material dispute concerning
products and/or services provided by any supplier who, in the year ended
December 31, 2003 or the nine months ended September 30, 2004 was one of the ten
largest suppliers of goods and/or services to the Company, based on amounts paid
or payable during such periods (each, a "Significant Supplier"). Each
Significant Supplier is listed on Schedule 3.23(b) of the Company Disclosure
Letter. Neither the Company nor any Subsidiary has received any written notice
from any Significant Supplier, nor does the Company have any knowledge (without
any inquiry by the Company of the Significant Supplier) that, such supplier
shall not continue as a supplier to the Company or such Subsidiary after the
Closing or that such supplier intends to terminate or materially modify existing
contracts with the Company or such Subsidiary.
SECTION 3.24 Restrictions on Business Activities. There is no
agreement, commitment, judgment, injunction, order or decree binding upon the
Company or any Company Subsidiary or to which the Company or any Company
Subsidiary is a party which has or would reasonably be expected to have the
effect of prohibiting or materially impairing any business practice material to
the Company or any Company Subsidiary, any acquisition of property by the
Company or any Company Subsidiary or the conduct of business by the Company or
any Company Subsidiary as currently conducted.
SECTION 3.25 No Illegal Payments Neither the Company nor any
Company Subsidiary, nor, to the Company's knowledge, any director, officer or
employee of the Company or any Company Subsidiary, has used any corporate or
other funds for unlawful contributions, payments, gifts or entertainment, or
made any unlawful expenditures 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, to the Company's knowledge, any current director,
officer or employee of the
30
Company or any Company Subsidiary has accepted or received any unlawful
contributions, payments, gifts or expenditures.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub hereby represent and warrant to the Company as
of the date of this Agreement that the statements contained in this Article IV
are true and correct, subject to the exceptions set forth in the disclosure
letter delivered by Parent and Merger Sub to the Company concurrently with the
execution of this Agreement dated as of the date of this Agreement (the "Parent
Disclosure Letter"). The Parent Disclosure Letter shall be arranged according to
specific sections in this Article IV and shall provide exceptions to, or
otherwise qualify, only the corresponding section in this Article IV and any
other section in this Article IV where it is reasonably clear, upon a reading of
such disclosure without any independent knowledge on the part of the reader
regarding the matter disclosed, that the disclosure could reasonably be expected
to apply to such other section.
SECTION 4.01 Organization and Qualification. Each of Parent and
Merger Sub is a corporation duly organized, validly existing and in good
standing under the laws of such jurisdiction and has all requisite corporate
power and authority and all necessary governmental approvals to own, lease and
operate its properties and to carry on its business as it is now being
conducted, except where the failure to have such governmental approvals has not
had, and could not reasonably be expected to have, individually or in the
aggregate, a material adverse effect on Parent or Merger Sub or on the ability
of Parent or Merger Sub to consummate the Merger. Parent is duly qualified or
licensed as a foreign corporation or organization to do business, and is in good
standing, in each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its business makes such qualification
or licensing necessary, except for such failures to be so qualified or licensed
and in good standing that have not had, and would not reasonably be expected to
have, individually or in the aggregate, a material adverse effect on Parent or
Merger Sub or on the ability of Parent or Merger Sub to consummate the Merger.
SECTION 4.02 Authority Relative to This Agreement. Each of Parent
and Merger Sub has all necessary corporate power and authority to execute and
deliver this Agreement, and to perform its obligations hereunder and to
consummate the Merger. The execution and delivery of this Agreement by each of
Parent and Merger Sub and the consummation by each of Parent and Merger Sub of
the Merger and have been duly and validly authorized by all necessary corporate
action, and no other corporate proceedings on the part of Parent or Merger Sub
are necessary to authorize this Agreement or to consummate the Merger (other
than the filing of the Certificate of Merger as required by the DGCL). This
Agreement has been duly and validly executed and delivered by each of Parent and
Merger Sub and, assuming the due authorization, execution and delivery by the
Company, constitutes legal, valid and binding obligations of each of Parent and
Merger Sub, enforceable against each of Parent and Merger Sub in accordance with
its terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or similar laws affecting enforcement of
creditors' rights
31
generally now or hereafter in effect and except as enforcement thereof is
subject to general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law).
SECTION 4.03 Parent Board Approval. The Board of Directors of the
Parent, by resolutions duly adopted by unanimous vote of those voting (who
constituted all of the directors then in office) at a meeting duly called and
held and not subsequently rescinded or modified in any way, has duly (i)
determined that this Agreement and the Merger are advisable and in the best
interests of the Parent and its stockholders, and (ii) approved this Agreement
and the Merger.
SECTION 4.04 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by each of Parent
and Merger Sub do not, and the performance of this Agreement by each of Parent
and Merger Sub will not, (i) conflict with or violate the Certificate of
Incorporation or Bylaws of Parent, (ii) assuming that all consents, approvals,
authorizations and other actions described in Section 4.03(b) have been obtained
and all filings and obligations described in Section 4.03(b) have been made or
complied with, conflict with or violate any Law applicable to Parent or Merger
Sub by which any property or asset of Parent or Merger Sub is bound or affected,
or (iii) result in any breach of or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to others
any right of termination, amendment, acceleration or cancellation of, or require
any payment under, or result in the creation of a lien, claim, security interest
or other charge or encumbrance on any property or asset of Parent or Merger Sub
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which Parent or
any Parent Subsidiary is a party or by which any asset of Parent or Merger Sub
is bound or affected, except, with respect to clauses (ii) and (iii), for any
such conflicts, violations, breaches, defaults or other occurrences that could
not reasonably be expected to have, individually or in the aggregate, a material
adverse effect on the Parent and Merger Sub.
(b) The execution and delivery of this Agreement by each of Parent
and Merger Sub do not, and the performance of this Agreement by each of Parent
and Merger Sub will not, require any consent, approval, order, authorization,
registration or permit of, or filing with or notification to, any Governmental
Entity, except (i) for applicable requirements, if any, of the Exchange Act,
Blue Sky Laws, The Nasdaq National Market, state takeover laws, the pre-merger
notification requirements of the HSR Act, any filings under similar competition
or merger notification laws or regulations of foreign Governmental Entities that
the parties mutually agree are necessary and the filing and recordation of the
Certificate of Merger as required by the DGCL, and as set forth in Section
4.03(b) of the Parent Disclosure Letter and (ii) for such other consents,
approvals, orders, authorizations, registrations, permits, filings or
notifications which if not obtained or made could not reasonably be expected to
be material to the Company or Parent or to prevent or materially delay the
consummation of the transactions contemplated by this Agreement.
SECTION 4.05 Operations of Merger Sub. Merger Sub is a direct,
wholly owned subsidiary of Parent, was formed solely for the purpose of engaging
in the transactions
32
contemplated by this Agreement, has engaged in no other business activities and
has conducted its operations only as contemplated by this Agreement.
SECTION 4.06 Brokers. No broker, finder or investment banker (other
than Bear Xxxxxxx & Co. Inc.) is entitled to any brokerage, finder's or other
fee or commission in connection with the Merger or the other transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
Parent.
SECTION 4.07 Financing. Parent possesses and will possess at the
Effective Time sufficient cash funds to pay all required cash amounts to the
Company's stockholders pursuant to Article II of this Agreement.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.01 Conduct of Business by the Company Pending the Merger.
The Company agrees that, between the date of this Agreement and continuing until
the earlier of the termination of this Agreement pursuant to Article VIII hereof
and the Effective Time, except as set forth in Section 5.01 of the Company
Disclosure Letter or as specifically contemplated or required by any other
provision of this Agreement, unless Parent shall otherwise consent in writing
(which consent shall not be unreasonably withheld):
(i) the businesses of the Company and the Company Subsidiaries
shall be conducted only in, and the Company and the Company Subsidiaries shall
not take any action except in, the ordinary course of business and in a manner
consistent with past practice; and
(ii) the Company shall use its commercially reasonable efforts
to preserve substantially intact the business organization of the Company and
the Company Subsidiaries, to keep available the services of the current
officers, key employees and consultants of the Company and the Company
Subsidiaries and to preserve the current relationships of the Company and the
Company Subsidiaries with customers, suppliers, licensors, licensees, alliance
partners and other persons with which the Company or any Company Subsidiary has
business relations.
By way of amplification and not limitation, except as contemplated
or required by this Agreement, as would otherwise be inconsistent with
applicable Law, or as set forth in Section 5.01 of the Company Disclosure
Letter, the Company shall not, and shall not permit any Company Subsidiary to,
between the date of this Agreement and the Effective Time, directly or
indirectly, do, or propose to do, any of the following without the prior written
consent of Parent (provided, however, that with respect to paragraphs (c), (f),
(g), (h), (i), (j), (k), (l), (m) or (n), such consent shall not be unreasonably
withheld):
(a) issue, deliver or sell, or authorize or propose the issuance,
delivery or sale of, any shares of capital stock of any class or any securities
convertible into, or any right, warrants, calls, subscriptions or options to
acquire, any such shares or convertible securities, or any other ownership
interest in the Company or any of its Subsidiaries other than (i) the issuance
of shares of Company Common Stock upon the exercise of Company Stock Options
outstanding
33
on the date of this Agreement under the Company Stock Option Plans or pursuant
to the Company Purchase Plan, (ii) the issuance of shares of Company Common
Stock upon the exercise of Company Warrants outstanding on the date of this
Agreement, (iii) the grant of options to purchase up to 1,500,000 shares of
Company Common Stock in the aggregate, with each such grant to be made in the
ordinary course of business consistent with past practice, and at an exercise
price equal to the then fair market value of a Share, provided that (x) no such
options may be issued that will provide for acceleration as a result of the
consummation of the transactions contemplated by this Agreement (other than any
options issued pursuant to existing agreements that expressly provide for the
issuance of options upon such terms) whether or not in connection with any other
event, including termination of employment and (y) the vesting and other
principal terms of such options shall be consistent with the description set
forth in Section 5.01(a) of the Company Disclosure Letter, and provided further
that no such options may be granted to senior vice-presidents or other executive
officers, or (iv) the grant of options under one or more Company Stock Option
Plans to one or more of A. Xxxxx Xxxxxx, Xxxxxxxx X. Xxxxxxxxx, Xxxxxxx Xxxxxx,
Xxxxx Xxxxxx and Xxxxxx Xxxxxxxx, with each such grant to be made at an exercise
price equal to the Per Share Merger Consideration, provided that number of
shares subject to such options and the vesting and other principal terms of such
options shall be as prescribed by the Employment Agreements between such
individuals and Parent;
(b) amend or change the Certificate of Incorporation or Bylaws or
equivalent organizational documents of the Company or any Company Subsidiary;
(c) sell, assign, pledge, lease, license, dispose of, grant,
encumber, terminate, abandon, transfer or authorize for any sale, assignment,
pledge, lease, license, disposition, grant, encumbrance, termination,
abandonment or transfer any material assets of the Company or any Company
Subsidiary, including, without limitation, any Company Intellectual Property of
the Company or any Company Subsidiary, except (i) in the ordinary course of
business and in a manner consistent with past practice or (ii) involving
obsolete or worthless assets;
(d) authorize, declare, set aside, or make a dividend payment or
other distribution, payable in cash, stock, property or otherwise, with respect
to any of the capital stock of the Company or any Company Subsidiary other than
payment of dividends to wholly-owned Company Subsidiaries;
(e) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of the capital stock of the
Company or any Company Subsidiary (other than pursuant to the repurchase of
shares of Company Common Stock from employees, officers, directors, consultants
or other persons performing services for the Company pursuant to terms of
agreements (including at the purchase price specified therein) under which the
Company has the option to repurchase such shares upon the termination of
employment or service);
(f) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets) any interest in or any assets
of any corporation, partnership, other business organization or any division
thereof other than purchases of goods, services and other assets made in the
ordinary course of business consistent with past practice;
34
(g) incur any indebtedness for borrowed money (other than accounts
payable incurred in the ordinary course of business) or issue any debt
securities or assume, guarantee or endorse the obligations of any person, or
make any loans or advances except to employees in the ordinary course of
business;
(h) other than contracts or agreements entered into in the ordinary
course of business, enter into contracts or agreements that would be considered
Company Contracts, or materially modify, amend or terminate any such existing
contract or agreement;
(i) make or authorize any capital expenditures in excess of $100,000
in the aggregate, other than capital expenditures reflected in the Company's
capital expenditure budget for the 2004 or 2005 fiscal years each as set forth
in Schedule 5.01 of the Company Disclosure Letter;
(j) waive any stock repurchase rights or accelerate, amend or change
the period of exercisability of options or restricted stock, or reprice options
granted under the Company Stock Option Plans or authorize cash payments in
exchange for any options granted under any such plans (excluding any net
exercise provisions under the Company Stock Option Plans), except as
specifically required by the terms of such plans or any agreements in effect as
of the date of this Agreement and disclosed in the Company Disclosure Letter;
(k) except as required by applicable Law or the terms of an existing
agreement, increase, or agree to increase, the compensation (including base
salary, target bonus and other compensation) payable or to become payable to the
Company's officers or employees who earn more than $50,000, except for increases
in accordance with past practices or in compliance with existing agreements, or
grant any rights to severance or termination pay to, or enter into any
employment, consulting, termination, indemnification or severance agreement
with, any director, officer or other employee of the Company or any Company
Subsidiary who earns at least $50,000, or hire any individual for a
vice-president or other executive officer position, or establish, adopt, enter
into or amend any collective bargaining, bonus, profit sharing, thrift,
compensation, stock option, restricted stock, pension, retirement, deferred
compensation, employment, termination, severance or other plan, agreement,
trust, fund, policy or arrangement for the benefit of any director, officer or
employee; provided, however, that the foregoing provisions of this subsection
shall not apply to any amendments to employee benefits plans described in
section 3(3) of ERISA that may be required by law;
(l) make or change any material Tax election (including any election
relating to the Company's Tax accounting period or Tax accounting method),
change any annual accounting period, file any amended Tax Return involving any
material amount of Taxes, enter into any material closing agreement, settle any
material Tax claim or assessment relating to the Company or any Company
Subsidiary, surrender any right to claim a refund of Taxes in any material
amount, consent to any extension or waiver of the limitation period applicable
to any material Tax claim or assessment relating to the Company or any Company
Subsidiary, or take any other action or omit to take any action, other than
actions taken or not taken in the ordinary course of business consistent with
past practice, that would have the effect of increasing the Tax liability in any
material respect of the Company or any Company Subsidiary or Parent;
35
(m) take any action, other than as required by GAAP or by the SEC,
with respect to accounting principles or procedures, including, without
limitation, any revaluation of assets;
(n) (i) grant any license with respect to any Company Intellectual
Property, other than the license of Company software in the ordinary course of
business, or (ii) other than in the ordinary course of business, disclose, or
authorize for disclosure, any confidential Company Intellectual Property, unless
such Company Intellectual Property is subject to a confidentiality or
non-disclosure covenant protecting against disclosure thereof; or
(o) agree in writing or otherwise to take any of the actions
described in Section 5.01(a) through (n) above.
SECTION 5.02 Notification of Certain Matters. The Company shall give
prompt notice to Parent, of (a) the occurrence or nonoccurrence of any event the
occurrence or nonoccurrence of which would be reasonably likely to cause (i) any
representation or warranty contained in this Agreement made by it to be untrue
or inaccurate such that the conditions to closing in Section 7.02(a) hereof
would not be satisfied as of the Closing Date or (ii) any covenant, condition or
agreement contained in this Agreement not to be complied with or satisfied by it
in any material respect, (b) any failure or inability of the Company to comply
with or satisfy any covenant, condition or agreement to be complied with or
satisfied by it hereunder and (c) the termination of employment, whether
voluntary or involuntary, of any employee of the Company or any Company
Subsidiary who earns more than $50,000; provided, however, that the delivery of
any notice pursuant to this Section 5.02 shall not limit or otherwise affect the
representations, warranties, covenants or agreements of the Company, as the case
may be, or the conditions to the obligations of the parties hereto to consummate
the Merger.
SECTION 5.03 Litigation. The Company shall notify Parent in writing
promptly after learning of any claim, action, suit, arbitration, mediation,
proceeding or investigation by or before any court, arbitrator or arbitration
panel, board or other Governmental Entity initiated by it or against it, or
known by the Company to be threatened against the Company or any of its
officers, directors, employees or stockholders in their capacity as such that
(i) would reasonably be expected to, individually or in the aggregate,
materially and adversely affect the operations of the Company as currently
conducted or result in damages settlement or award in excess of $100,000 or (ii)
could result in the Company having to license the intellectual property rights
of a third party or the granting of a license to Company Intellectual Property
to a third party.
SECTION 5.04 Control of Operations. Nothing contained in this
Agreement shall give the Parent, directly or indirectly, rights to control or
direct the Company's operations prior to the Effective Time. Subject to Section
5.01, the Company shall have complete control and supervision of its operations.
36
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01 Proxy Statement.
(a) As promptly as practicable after the execution of this
Agreement, the Company shall prepare and file with the SEC a proxy statement
(together with any amendments thereof or supplements thereto, the "Proxy
Statement") relating to the meeting of the Company's stockholders (the "Company
Stockholders' Meeting") to be held to consider approval of the Merger and
adoption of this Agreement. Each of Parent and the Company shall furnish all
information concerning itself as the other may reasonably request in connection
with the preparation of the Proxy Statement. As promptly as practicable
following approval by the SEC, the Company shall mail the Proxy Statement to its
stockholders.
(b) Subject to paragraph (c) of this Section 6.01, the Proxy
Statement shall include the unanimous recommendation of the Board of Directors
of the Company to the stockholders of the Company to vote in favor of the
adoption of this Agreement and neither the Board of Directors of the Company nor
any committee thereof shall withhold, withdraw, amend, modify or change, or
propose or resolve to withhold, withdraw, amend, modify or change, in each case
in a manner adverse to Parent, the unanimous recommendation of the Board of
Directors of the Company that the Company's stockholders adopt this Agreement.
(c) Prior to the adoption and approval of this Agreement and the
approval of the Merger by the requisite vote of the stockholders of the Company,
nothing in this Agreement shall prevent the Company's Board of Directors from
withholding, withdrawing, amending, modifying or changing its recommendation in
favor of the Merger in a manner adverse to Parent if (i) a Superior Proposal (as
defined in Section 6.04 below) is made and is not withdrawn, (ii) the Company
shall have provided written notice to Parent as promptly as practicable (and, in
any event, within the next business day) advising Parent that the Company has
received a Superior Proposal, specifying the terms and conditions of such
Superior Proposal in reasonable detail and identifying the person or entity
making such Superior Proposal (a "Notice of Superior Proposal"), (iii) Parent
shall not have, within five business days of Parent's receipt of the Notice of
Superior Proposal, made an offer that the Company's Board of Directors
determines in its good faith judgment to be at least as favorable to the Company
and its stockholders as such Superior Proposal (it being agreed that the
Company's Board of Directors shall convene a meeting to consider any such offer
by Parent promptly following the receipt thereof), (iv) the Board of Directors
of the Company concludes in good faith, after consultation with its external
legal counsel, that, in light of such Superior Proposal, the failure of the
Company's Board of Directors to withhold, withdraw, amend, modify or change its
recommendation is reasonably likely to result in a breach of its fiduciary
obligations to the Company and its stockholders under applicable Law and (v) the
Company shall not have intentionally breached any of the restrictions set forth
in Section 6.04 or this Section 6.01(c). The Company shall use its commercially
reasonable efforts to provide Parent with at least one business day's notice of
any meeting of the Company's Board of Directors at which the Company's Board of
Directors is reasonably expected to consider any Competing Transaction (as
defined in Section 6.04 below). Nothing contained in this Section 6.01(c) shall
limit the Company's obligation to convene and hold the
37
Company Stockholders' Meeting for the purpose of considering approval of the
Merger and adoption of this Agreement (regardless of whether the recommendation
of the Board of Directors of the Company shall have been withheld, withdrawn,
amended, modified or changed).
(d) No amendment or supplement to the Proxy Statement will be made
by the Company without the approval of the Parent (such approval not to be
unreasonably withheld or delayed) or as otherwise required by Law. The Company
will advise Parent, promptly after it receives notice thereof, of any request by
the SEC for amendment of the Proxy Statement or comments thereon and responses
thereto or requests by the SEC for additional information. The Company shall
supply Parent with copies of all correspondence between the Company or any of
its representatives, on the one hand, and the SEC, or is staff or any other
government officials, on the other hand.
(e) The information supplied by Parent for inclusion or
incorporation by reference into in the Proxy Statement shall not, at (i) the
time the Proxy Statement (or any amendment thereof or supplement thereto) is
first mailed to the stockholders of the Company, and (ii) the time of the
Company Stockholders' Meeting, contain any untrue statement of a material fact
or fail to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. If, at any time prior to the Effective Time, any
event or circumstance relating to Parent or any Parent Subsidiary, or their
respective officers or directors, that should be set forth in an amendment or a
supplement to the Proxy Statement should be discovered by Parent, Parent shall
promptly inform the Company.
(f) The information supplied by the Company for inclusion or
incorporation by reference into in the Proxy Statement shall not, at (i) the
time the Proxy Statement (or any amendment thereof or supplement thereto) is
first mailed to the stockholders of the Company, and (ii) the time of the
Company Stockholders' Meeting, contain any untrue statement of a material fact
or fail to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. If, at any time prior to the Effective Time, any
event or circumstance relating to the Company or any Company Subsidiary, or
their respective officers or directors, that should be set forth in an amendment
or a supplement to the Proxy Statement should be discovered by the Company, the
Company shall promptly inform Parent. All documents that the Company is
responsible for filing with the SEC in connection with the Merger or the other
transactions contemplated by this Agreement will comply as to form and substance
in all material respects with the applicable requirements of the Securities Act
and the Exchange Act.
SECTION 6.02 Company Stockholders' Meeting. The Company shall (i)
call and hold the Company Stockholders' Meeting as promptly as practicable for
the purpose of voting upon the adoption of this Agreement, (ii) use its
commercially reasonable efforts to hold the Company Stockholders' Meeting as
soon as practicable after the date on which the Proxy Statement is deemed
definitive following the resolution of any comments from the SEC or its staff
and (iii) in any event call such Company Stockholders' Meeting so that such
meeting is scheduled to be held within 45 days after the date on which the Proxy
Statement is deemed definitive. Subject to Section 6.01(c), the Company shall
use its commercially reasonable efforts to solicit from its stockholders proxies
in favor of the approval of the Merger and adoption of
38
this Agreement, and shall take all other action necessary or advisable to secure
the vote or consent of stockholders required by the rules of The Nasdaq National
Market and the DGCL, to obtain such approvals.
SECTION 6.03 Access to Information; Confidentiality.
(a) Except as required pursuant to applicable Law, from the date of
this Agreement to the Effective Time, the Company shall (and shall its
subsidiaries to): (i) provide to Parent (and its officers, directors, employees,
subsidiaries, accountants, consultants, legal counsel, investment bankers,
advisors, agents and other representatives, collectively, "Representatives")
access at reasonable times upon prior notice to the appropriate individuals,
properties, offices and other facilities of the Company and its subsidiaries and
to the books and records thereof and (ii) furnish promptly such information
concerning the business, properties, contracts, assets, liabilities, personnel
and other aspects of the Company and its subsidiaries as Parent or its
Representatives may reasonably request.
(b) The parties shall comply with, and shall cause their respective
Representatives to comply with, all of their obligations under the
Non-Disclosure Agreement dated June 14, 2004 (the "Non-Disclosure Agreement"),
between the Company and Parent. All information obtained by the parties pursuant
to (a) above shall be subject to the Non-Disclosure Agreement.
(c) No investigation pursuant to this Section 6.03 shall affect any
representation or warranty in this Agreement or any condition to the obligations
of the parties hereto to consummate the Merger.
SECTION 6.04 No Solicitation of Transactions.
(a) The Company will not, directly or indirectly, and will instruct
its Representatives not to, directly or indirectly, solicit, initiate or
encourage (including by means of furnishing nonpublic information), or take any
other action to facilitate, any inquiries or the making of any proposal or offer
(including, without limitation, any proposal or offer to its stockholders) that
constitutes, or is reasonably likely to lead to, any Competing Transaction (as
defined in paragraph (b) of this Section 6.04), or enter into or maintain or
continue discussions or negotiate with any person or entity in furtherance of
such inquiries or to obtain a Competing Transaction, or agree to or endorse any
Competing Transaction, or authorize or permit any of its Representatives to take
any such action. The Company shall promptly notify Parent if any proposal, offer
or inquiry regarding a Competing Transaction is made, and the Company shall
promptly inform Parent as to the material details of any such proposal, offer or
inquiry, including, without limitation, the identity of the party making any
such proposal, offer or inquiry. The Company immediately shall cease and cause
to be terminated all existing discussions or negotiations with any parties
conducted heretofore with respect to a Competing Transaction. The Company shall
not release any third party from, or waive any provision of, any confidentiality
or standstill agreement relating to a Competing Transaction to which it is a
party. Notwithstanding anything to the contrary in this Section 6.04, the
Company may furnish information to, and enter into discussions or negotiations
with, a person who has made an unsolicited, bona fide proposal or offer
regarding a Competing Transaction only if the
39
Company's Board of Directors has (i) concluded after consultation with the
Company's external legal counsel and its financial advisor that such proposal or
offer constitutes or could reasonably lead to a Superior Proposal (as defined
below), (ii) has concluded, after consultation with its external legal counsel,
that, in light of such Competing Transaction, the failure to furnish such
information or enter into discussions or negotiations is reasonably likely to
result in a breach of its fiduciary obligations to the Company and its
stockholders under applicable Law, (iii) provided notice to Parent of its intent
to furnish information or enter into discussions or negotiations with such
person at least one business day prior to taking any such action and (iv)
obtained from such person an executed confidentiality agreement on terms no less
favorable to the Company than those contained in the Non-Disclosure Agreement;
provided, however, that no information may be furnished and no discussions may
be entered into in the event that the Company has intentionally breached this
Section 6.04(a); provided further, however, that the Company's Board of
Directors shall furnish to Parent all information provided to the person who has
made the Competing Transaction to the extent that such information has not been
previously provided to Parent and shall keep Parent promptly and reasonably
informed as to the status of any discussions regarding such Competing
Transaction.
(b) A "Competing Transaction" means any of the following involving
the Company (other than the Merger and the other transactions contemplated by
this Agreement): (i) a merger, consolidation, share exchange, business
combination or other similar transaction; (ii) any sale, lease, exchange,
mortgage, pledge, transfer or other disposition of 15% or more of the assets of
the Company and the Company Subsidiaries, taken as a whole; or (iii) a tender
offer or exchange offer for, or an offer to purchase directly from the Company,
15% or more of the outstanding voting securities of the Company.
(c) A "Superior Proposal" means an unsolicited written bona fide
offer or proposal made by a third party to consummate a merger, consolidation,
business combination, recapitalization, liquidation, dissolution, sale or
disposition or similar transaction involving the Company pursuant to which a
person (or its stockholders) would own, if consummated, at least 80% of the
outstanding capital stock of the Company (or of the surviving entity in a merger
or the direct or indirect parent of the surviving entity in a merger) or at
least 80% of the overall fair market value of the assets of the Company and the
Company Subsidiaries taken as a whole (i) that is not attributable to a material
breach by the Company of Section 6.04(a) hereof and (ii) on terms (including
conditions to consummation of the contemplated transaction) that the Board of
Directors of the Company determines, in its good faith, reasonable judgment
(after consultation with the Company's external legal counsel and its financial
advisor), to be more favorable to the Company stockholders than the terms of the
Merger after taking into account whether any financing required to consummate
the transaction contemplated by such offer or proposal is committed or
reasonably likely to be obtained by such third party on a timely basis.
(d) Nothing contained in this Agreement shall prohibit the Company
or its Board of Directors from taking and disclosing to its stockholders a
position contemplated by Rules 14d-9 and 14e-2(a) promulgated under the Exchange
Act.
40
SECTION 6.05 Directors' and Officers' Indemnification and Insurance.
(a) The Certificate of Incorporation and Bylaws of the Surviving
Corporation shall contain the same provisions with respect to indemnification,
advancement and director and officer exculpation set forth in the Certificate of
Incorporation and Bylaws of the Company on the date of this Agreement, which
provisions shall not be amended, repealed or otherwise modified for a period of
six years from the Effective Time in any manner that would affect adversely the
rights thereunder of persons who at any time prior to the Effective Time were
entitled to indemnification, advancement or exculpation under the Certificate of
Incorporation or Bylaws of the Company in respect of actions or omissions
occurring at or prior to the Effective Time (including, without limitation, the
transactions contemplated by this Agreement), unless such modification is
required by Law and prior notification is given to such affected persons.
(b) After the Effective Time, the Surviving Corporation shall, to
the fullest extent permitted under applicable Law and as required by any
indemnification agreements of the Company (as each is in effect on the date
hereof), indemnify and hold harmless, each present and former director or
officer of the Company and each Company Subsidiary and each such person that
served at the request of the Company or any Company Subsidiary as a director,
officer, trustee, partner, fiduciary, employee or agent of another corporation,
partnership, joint venture, trust, pension or other employee benefit plan or
enterprise (collectively, the "Indemnified Parties") against all costs and
expenses (including reasonable attorneys' fees), judgments, fines, losses,
claims, damages, liabilities and settlement amounts paid in connection with any
claim, action, suit, proceeding or investigation (whether arising before or
after the Effective Time), whether civil, administrative or investigative,
arising out of or pertaining to any action or omission in their capacities as
officers or directors, in each case occurring before the Effective Time
(including the transactions contemplated by this Agreement). Nothing contained
herein shall make Parent, Merger Sub, the Company or the Surviving Corporation
an insurer, a co-insurer or an excess insurer in respect of any insurance
policies that may provide coverage for any of the foregoing, nor shall this
Section 6.05 relieve the obligations of any insurer in respect thereto. Without
limiting the foregoing, in the event of any such claim, action, suit, proceeding
or investigation, (i) the Surviving Corporation shall advance or pay the
reasonable fees and expenses of counsel selected by any Indemnified Party, which
counsel shall be reasonably satisfactory to the Surviving Corporation, promptly
after statements therefor are received (unless the Surviving Corporation shall
elect to defend such action) and following the execution of an undertaking by
the Indemnified Party to repay such advanced amounts if upon final resolution it
is ultimately determined such Indemnified Person is not entitled to
indemnification and (ii) the Surviving Corporation shall cooperate in the
defense of any such matter; provided, however, that the Surviving Corporation
shall not be liable for any settlement effected without its written consent
(which consent shall not be unreasonably withheld or delayed). Nothing in this
Section 6.05 shall supersede any agreements in effect as of the date hereof
between the Company and an Indemnified Party
(c) Subject to the next sentence, for a period of six years after
the Effective Time, Parent shall cause to be maintained in effect the current
directors' and officers' liability insurance policies maintained by the Company
with respect to claims arising from facts or events that occurred prior to the
Effective Time (including with respect to the transactions contemplated by this
Agreement); provided, however, that in no event shall Parent be required to
expend
41
pursuant to this Section 6.05(c) more than an amount per year equal to 150% of
current annual premiums paid by the Company for such insurance; provided further
that if the existing directors' and officers' liability insurance policy
expires, is terminated or cancelled during such six-year period, Parent shall
cause to be obtained as much directors' and officers' liability insurance as can
be obtained for the remainder of such period for a premium not in excess (on an
annualized basis) of 150% of the current annual premium paid by the Company for
such insurance. The provisions of this Section 6.05(c) shall be deemed to have
been satisfied if, with the cooperation of the Company, Parent obtains prepaid
policies prior to the Closing which policies provide such directors and officers
with coverage no less advantageous to the insured for an aggregate period of six
years with respect to claims arising from facts or events that occurred on or
before the Effective Time.
(d) This Section 6.05 is intended to be for the benefit of, and
shall be enforceable by, the Indemnified Parties and their heirs and personal
representatives and shall be binding on the Surviving Corporation and its
successors and assigns.
SECTION 6.06 Obligations of Merger Sub. Parent shall take all action
necessary to cause Merger Sub to perform its obligations under this Agreement
and to consummate the Merger on the terms and subject to the conditions set
forth in this Agreement.
SECTION 6.07 Further Action; Consents; Filings.
(a) Upon the terms and subject to the conditions hereof, each of the
parties hereto shall use its commercially reasonable efforts to (i) take, or
cause to be taken, all appropriate action and do, or cause to be done, all
things necessary, proper or advisable under applicable Law or otherwise to
consummate and make effective the Merger, (ii) obtain from Governmental Entities
any consents, licenses, permits, waivers, approvals, authorizations or orders
required to be obtained or made by Parent or the Company or any of their
subsidiaries in connection with the authorization, execution and delivery of
this Agreement and the consummation of the Merger and (iii) make all necessary
filings, and thereafter make any other submissions, with respect to this
Agreement, the Merger and the other transactions contemplated by this Agreement
that are required under (A) the Exchange Act, (B) the HSR Act and foreign
antitrust regulations, if any, applicable to the Merger and as agreed by Parent
and the Company and (C) any other applicable Law. The parties hereto shall
cooperate with each other in connection with the making of all such filings.
(b) Parent and the Company shall, as soon as practicable after the
date of this Agreement, file notifications under the HSR Act (requesting early
termination of the waiting period under the HSR Act) and make any required
antitrust filings in foreign jurisdictions and shall respond as promptly as
practicable to all inquiries or requests received from the Federal Trade
Commission or the Antitrust Division of the Department of Justice for additional
information or documentation and shall respond as promptly as practicable to all
inquiries and requests received from any state attorney general or other
Governmental Entity in connection with antitrust matters. Each of the parties
shall defend against and respond to any action, suit, proceeding, or
investigation, whether judicial or administrative, challenging or relating to
the Merger, including using reasonable commercial efforts to have lifted,
vacated or reversed any injunction, order, decree, stay or temporary restraining
order entered by any court or other
42
Governmental Entity or any other legal bar to the consummation of Merger,
including all possible appeals. The parties shall cooperate with each other in
connection with the making of all such filings or responses. Notwithstanding
anything to the contrary in this Section 6.07, Parent shall not be required to
agree to (i) the divestiture (including, without limitation, through a licensing
arrangement) by Parent, any of Parent's subsidiaries, the Company or any Company
Subsidiary of any material part of any of their respective businesses, product
lines or assets, taken as a whole, or (ii) the imposition of any material
limitation on the ability of any of them to conduct their business or to own or
exercise control of such assets, properties and stock.
(c) Each party shall promptly notify the other party in writing of
any pending or, to the knowledge of such party, threatened action, proceeding or
investigation by any Governmental Entity or any other person (i) challenging or
seeking damages in connection with this Agreement or the transactions
contemplated hereunder or (ii) seeking to restrain or prohibit the consummation
of the Merger or the transactions contemplated hereunder or otherwise limit the
right of Parent or its subsidiaries to own or operate all or any portion of the
business, assets or properties of the Company.
SECTION 6.08 Public Announcements. The initial press release
relating to this Agreement shall be a joint press release the text of which has
been agreed to by each of Parent and the Company. Thereafter, unless otherwise
required by applicable Law or the requirements of The Nasdaq National Market,
each of Parent and the Company shall use its commercially reasonable efforts to
consult with the other before issuing any press release or otherwise making any
public statements with respect to this Agreement, the Merger or any of the other
transactions contemplated by this Agreement.
SECTION 6.09 Commercially Reasonable Efforts and Further Assurances.
Subject to the terms and conditions hereof, each of the parties to this
Agreement shall use commercially reasonable efforts to effect the transactions
contemplated hereby and to fulfill and cause to be fulfilled the conditions to
the Merger under this Agreement. Subject to the terms and conditions hereof,
each party hereto, at the reasonable request of another party hereto, shall
execute and deliver such other instruments and do and perform such other acts
and things as may be necessary or desirable for effecting completely the
consummation of this Agreement and the transactions contemplated hereby.
SECTION 6.10 Employee Benefits.
(a) All employees of the Company shall continue in their existing
benefit plans until such time as, in Parent's sole discretion, an orderly
transition can be accomplished to employee benefit plans and programs maintained
by Parent for its and its affiliates' employees. The employees of the Company
shall be eligible to participate in the employee benefit plans of Parent on
terms and conditions no less favorable than those offered to similarly situated
employees of Parent. Parent will cause such employee benefit plans to take into
account, for purposes of eligibility and vesting, services by employees of the
Company and the Company Subsidiaries as if such services were with Parent to the
same extent that such service was credited under a comparable plan of the
Company.
43
(b) Parent agrees that, from and after the first enrollment date
under the Parent Purchase Plan following the Effective Time, the employees of
Company or any Company Subsidiary that become employees of Parent or any Parent
Subsidiary may participate in the Parent Purchase Plan.
(c) The Company shall take all necessary corporate action to
terminate its 401(k) plan (the "401(k) Plan") effective as of the date
immediately prior to the Closing Date, but contingent on the Closing. Parent
shall receive from the Company evidence that the Company's Board of Directors
has adopted resolutions to terminate the 401(k) Plan (the form and substance of
which resolutions shall be subject to reasonable review of Parent), effective as
of the date immediately preceding the Closing Date.
(d) The Company shall take all necessary corporate action to
terminate prior to the Closing, the Company Benefit Plans identified by Parent
in writing to the Company at least ten business days prior to the Closing. The
Company shall provide Parent with evidence, reasonably satisfactory to Parent,
as to the termination of such Company Benefit Plans.
SECTION 6.11 Section 16 Matters. Provided that the Company delivers
to Parent the Section 16 Information (as defined below) in a timely fashion, the
Board of Directors of Parent, or an appropriate committee of non-employee
directors thereof, shall adopt resolutions prior to the consummation of the
Merger providing that the receipt by the Company Insiders (as defined below) of
options for Parent Common Shares upon conversion of the Assumed Company Stock
Options, in each case pursuant to the transactions contemplated hereby and to
the extent such securities are listed in the Section 16 Information, are
intended to be exempt from liability pursuant to Section 16(b) under the
Exchange Act. Such resolutions shall comply with the approval conditions of Rule
16b-3 under the Exchange Act for purposes of such Section 16(b) exemption,
including, but not limited to, specifying the name of the Company Insiders, the
number of securities to be acquired or disposed of for each such person, the
material terms of any derivative securities, and that the approval is intended
to make the receipt of such securities exempt pursuant to Rule 16b-3(d).
"Section 16 Information" shall mean information regarding the Company Insiders,
and the number and description of the Assumed Company Stock Options held by each
such Company Insider and expected to be converted into options for Parent Common
Shares in connection with the Merger. "Company Insiders" shall mean those
officers and directors of the Company who will be subject to the reporting
requirement of Section 16(b) of the Exchange Act with respect to Parent and who
are listed in the Section 16 Information.
SECTION 6.12 Employment Agreements. Simultaneously with the
execution of this Agreement, the employees of the Company identified in Section
6.12 of the Company Disclosure Letter shall enter into employment agreements
(the "Employment Agreements") with Parent.
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ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.01 Conditions to the Obligations of Each Party. The
obligations of the Company, Parent and Merger Sub to consummate the Merger are
subject to the satisfaction or waiver (where permissible) of each party of the
following conditions:
(a) Company Stockholder Approval. The Company Stockholder Approval
shall have been obtained.
(b) No Order. No Governmental Entity or court of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
Law or executive order, whether temporary, preliminary or permanent (an
"Order"), that is then in effect and has, or would reasonably be expected to
have, the effect of making the Merger illegal or otherwise prohibiting
consummation of the Merger.
(c) Antitrust Waiting Periods. Any waiting period (and any extension
thereof) applicable to the consummation of the Merger under the HSR Act shall
have expired or been terminated and any waiting period (and any extension
thereof) applicable to the consummation of the Merger under any foreign
antitrust Law (or any approval thereunder) shall have expired or been
terminated.
SECTION 7.02 Conditions to the Obligations of Parent and Merger Sub.
The obligations of Parent and Merger Sub to consummate the Merger are subject to
the satisfaction or waiver (where permissible) of the following additional
conditions:
(a) Representations and Warranties. Each of the representations and
warranties of the Company contained in this Agreement shall be true and correct
(i) as of the date of this Agreement and (ii) as of the Closing Date, as though
made at and as of the Closing Date, except, in the case of clause (ii), (A) for
such failures to be true and correct that do not individually or in the
aggregate constitute a Company Material Adverse Effect; provided, however, that
with respect to representations and warranties contained in Section 3.03, such
representations and warranties shall be true and correct in all respects (other
than for such changes resulting from (v) the granting of Company Stock Options
permitted under Section 5.01(a), (w) the forfeiture of Company Stock Options by
the holders of such Company Stock Options, (x) the issuance of shares of Company
Common Stock pursuant to the exercise of Company Stock Options or Company
Warrants, (y) the issuance of securities for which the Company has received
prior approval from Parent, and (z) the issuance of Company Common Stock
pursuant to the Company Purchase Plan), and (B) for those representations and
warranties that address matters only as of a particular date, which
representations and warranties shall remain true and correct in all respects as
of such date (it being understood that, for purposes of determining the accuracy
of the Company's representations and warranties, (i) all "Material Adverse
Effect" qualifications and other qualifications based on the word "material" or
similar phrases contained in such representations and warranties shall be
disregarded and (ii) any update of or modification to the Company Disclosure
Letter made or purported to have been made after
45
the date of this Agreement shall be disregarded). Parent shall have received a
certificate of the Chief Executive Officer or Chief Financial Officer of the
Company with respect to the foregoing.
(b) Agreements and Covenants. The Company shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it on or prior to the
Effective Time, and Parent shall have received a certificate of the Chief
Executive Officer or Chief Financial Officer of the Company to that effect.
(c) Employment Agreements. The Employment Agreements between Parent
and each of the individuals listed on Schedule 7.02(c) of the Company Disclosure
Letter shall be in full force and effect as of the Effective Time and shall not
have been anticipatorily breached or repudiated by any such individual.
(d) No Restraints. There shall not be instituted or pending any
suit, action or proceeding in which a Governmental Entity is (i) challenging the
Merger or the other transactions contemplated by this Agreement or (ii) seeking
to (A) prohibit or impair Parent's ability to own or operate a material portion
of the business and assets of the Company and the Company Subsidiaries, taken as
a whole, from and after the Effective Time or a material portion of the business
or assets of Parent and its Subsidiaries, taken as a whole (including, without
limitation, through any divestiture, licensing or hold separate arrangement), or
(B) prohibit or materially limit Parent's ability to vote, transfer, receive
dividends with respect to or otherwise exercise ownership rights with respect to
the stock of the Surviving Corporation.
(e) Consents. All consents, approvals and authorizations set forth
on Section 7.02(e) of the Company Disclosure Letter shall have been obtained.
(f) Dissenters. No more than 5% of the Company Common Stock
outstanding shall have demanded appraisal rights under the DGCL.
(g) Board and Officer Resignations. The Company shall have received
written letters or resignation from the members of the Board of Directors and
officers of the Company and the Company Subsidiaries that are listed on Section
7.02(g) of the Company Disclosure Letter, in each case effective at the
Effective Time.
(h) FIRPTA Compliance. The Company shall, prior to the Closing Date,
provide Parent with a properly executed Foreign Investment in Real Property Tax
Act of 1980 "FIRPTA" Notification Letter, in form and substance satisfactory to
Parent, which states that shares of capital stock of the Company do not
constitute "United States real property interests" under Section 897(c) of the
Code, for purposes of satisfying Parent's obligations under Treasury Regulation
Section 1.1445-2(c)(3). In addition, simultaneously with delivery of such
Notification Letter, the Company shall have provided to Parent, as agent for the
Company, a form of notice to the Internal Revenue Service in accordance with the
requirements of Treasury Regulation Section 1.897-2(h)(2) along with written
authorization for Parent to deliver such notice form to the Internal Revenue
Service on behalf of the Company upon the consummation of the Merger.
46
SECTION 7.03 Conditions to the Obligations of the Company. The
obligations of the Company to consummate the Merger are subject to the
satisfaction or waiver (where permissible) of the following additional
conditions:
(a) Representations and Warranties. Each of the representations and
warranties of Parent and Merger Sub contained in this Agreement shall be true
and correct in all material respects (i) as of the date of this Agreement and
(ii) as of the Closing Date, as though made at and as of the Closing Date,
except, for those representations and warranties that address matters only as of
a particular date, which representations and warranties shall remain true and
correct in all material respects as of such date. The Company shall have
received a certificate of the Chief Executive Officer or Chief Financial Officer
of Parent with respect to the foregoing.
(b) Agreements and Covenants. Parent and Merger Sub shall have
performed or complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it on or prior to
the Effective Time, and the Company shall have received a certificate of the
Chief Executive Officer or Chief Financial Officer of Parent to that effect.
(c) Employment Agreements. The Employment Agreements between Parent
and each of the individuals listed on Section 7.02(c) of the Company Disclosure
Letter shall be in full force and effect as of the Effective Time (other than
any such Employment Agreement that has been breached, or anticipatorily breached
or repudiated, by a party thereto other than Parent).
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01 Termination. This Agreement may be terminated and the
Merger and the other transactions contemplated by this Agreement may be
abandoned at any time prior to the Closing Date, notwithstanding any requisite
approval and adoption of this Agreement and the transactions contemplated by
this Agreement, as follows:
(a) by mutual written consent duly authorized by the Boards of
Directors of each of Parent and the Company;
(b) by either Parent or the Company:
(i) if the Effective Time shall not have occurred on or before
May 1, 2005; provided, however, that the right to terminate this Agreement under
this Section 8.01(b)(i) shall not be available to any party whose failure to
perform any of its obligations under this Agreement has caused the failure of
the Merger to occur on or before such date; provided, further, if the Effective
Time shall not have occurred due to the need to comply with domestic or foreign
regulatory requirements, the date set forth above in this clause (i) shall be
extended to July 1, 2005;
(ii) if there shall be any Order which is final and
nonappealable (a) preventing the consummation of the Merger, (b) prohibiting
Parent's or the Company's
47
ownership or operation of a material portion of the business of the Company as a
result of the Merger or (c) compelling Parent or the Company to dispose of or
hold separate, as a result of the Merger, a material portion of the business or
assets of the Company or Parent (provided, that the party seeking to terminate
pursuant to this Section 8.01(b)(ii) shall have used commercially reasonable
efforts to have any such Order vacated or lifted); or
(iii) if the Company Stockholder Approval shall not have been
obtained at the Company Stockholders' Meeting or any adjournment or postponement
thereof.
(c) by Parent if (i) the Board of Directors of the Company
withholds, withdraws, amends, modifies or changes its recommendation of the
adoption of this Agreement or the approval of the Merger in a manner adverse to
Parent or shall have resolved to do so, (ii) the Board of Directors of the
Company shall have recommended to the stockholders of the Company a Competing
Transaction or shall have resolved to do so or shall have entered into any
letter of intent or similar document or any agreement, contract or commitment
accepting any Competing Transaction, (iii) the Board of Directors of the Company
fails to reject a Competing Transaction within 15 business days, or such shorter
period as required by Law, following receipt by the Company of the written
proposal for such Competing Transaction, (iv) the Company shall have failed to
include in the Proxy Statement the recommendation of the Company's Board of
Directors in favor of the approval of the Merger or adoption of this Agreement,
(v) the Company shall have intentionally breached its obligations under Section
6.04 or (vi) a tender offer or exchange offer for 15% or more of the outstanding
shares of stock of the Company is commenced, and the Board of Directors of the
Company fails to recommend within 15 business days, or such shorter period as
required by Law, against acceptance of such tender offer or exchange offer by
its stockholders (including by taking no position with respect to the acceptance
of such tender offer or exchange offer by its stockholders);
(d) by Parent upon a breach of any representation, warranty,
covenant or agreement on the part of the Company set forth in this Agreement, or
if any representation or warranty of the Company shall have become untrue, in
either case such (and only such) that the conditions set forth either in Section
7.02(a) or (b) would not be satisfied ("Terminating Company Breach"); provided,
however, that if such Terminating Company Breach is curable by the Company
within 30 days from notice to the Company of the occurrence of such Terminating
Company Breach through the exercise of its commercially reasonable efforts and
for as long as the Company continues to exercise such commercially reasonable
efforts, Parent may not terminate this Agreement under this Section 8.01(d)
until the expiration of such 30-day period; provided, further, that Parent shall
not be entitled to terminate this Agreement pursuant to this Section 8.01(d) at
any time during which Parent would be unable to satisfy the conditions to
closing in Sections 7.03(a) or (b);
(e) by the Company upon a breach of any representation, warranty,
covenant or agreement on the part of Parent and Merger Sub set forth in this
Agreement, or if any representation or warranty of Parent and Merger Sub shall
have become untrue, in either case such (and only such) that the conditions set
forth either in Section 7.03(a) or (b) would not be satisfied ("Terminating
Parent Breach"); provided, however, that if such Terminating Parent Breach is
curable by Parent and Merger Sub within 30 days from notice to Parent of the
occurrence of such Terminating Parent Breach through the exercise of their
respective
48
commercially reasonable efforts and for as long as Parent and Merger Sub
continue to exercise such commercially reasonable efforts, the Company may not
terminate this Agreement under this Section 8.01(e) until the expiration of such
30-day period; provided, further, that the Company shall not be entitled to
terminate this Agreement pursuant to this Section 8.01(e) at any time during
which the Company would be unable to satisfy the conditions to closing in
Sections 7.02(a) or (b).
SECTION 8.02 Effect of Termination. Except as provided in Sections
8.05 and 9.01, in the event of termination of this Agreement pursuant to Section
8.01, this Agreement shall forthwith become void, there shall be no liability
under this Agreement on the part of Parent, Merger Sub or the Company or any of
their respective officers or directors, and all rights and obligations of each
party hereto shall cease; provided, however, that nothing herein shall relieve
any party from liability for the breach of any of its representations and
warranties or the willful breach of any of its covenants or agreements set forth
in this Agreement unless the Company is obligated to pay the Termination Fee, in
which case neither Parent nor Merger Sub shall have any further remedies against
the Company, its officers, directors, employees, stockholders or agents as a
result of a breach of any of the Company's representations and warranties or a
willful breach of any of the Company's covenants or agreements set forth in this
Agreement.
SECTION 8.03 Amendment. This Agreement may be amended by the parties
hereto to the fullest extent permitted by law by action taken by or on behalf of
their respective Boards of Directors at any time prior to the Effective Time;
provided, however, that, after the adoption of this Agreement by the
stockholders of the Company, no amendment may be made that would require the
approval of the stockholders of the Company under applicable law without such
approval. This Agreement may not be amended, except by an instrument in writing
signed by each of the parties hereto.
SECTION 8.04 Waiver. At any time prior to the Effective Time, any
party hereto may (a) extend the time for the performance of any obligation or
other act of any other party hereto, (b) waive any inaccuracy in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (c) waive compliance with any agreement or condition
contained herein. Any such extension or waiver shall be valid if set forth in an
instrument in writing signed by the party or parties to be bound thereby.
SECTION 8.05 Expenses.
(a) Except as set forth in this Section 8.05, all Expenses (as
defined below) incurred in connection with this Agreement, the Merger and the
other transactions contemplated by this Agreement shall be paid by the party
incurring such expenses if the Merger is not consummated, except that the
Company and Parent each shall pay one-half of all Expenses relating to printing,
filing and mailing the Proxy Statement and all SEC and other regulatory filing
fees incurred in connection with the Proxy Statement and filing fees payable
under the HSR Act and foreign antitrust filings; provided, further that if the
Merger is consummated all other Expenses shall be paid by Parent. "Expenses" as
used in this Agreement shall include all reasonable out-of-pocket expenses
(including, without limitation, all fees and expenses of counsel, accountants,
investment bankers, experts and consultants to a party hereto and its
49
affiliates) incurred by a party or on its behalf in connection with or related
to the authorization, preparation, negotiation, execution and performance of
this Agreement, the preparation, printing, filing and mailing of the Proxy
Statement, the solicitation of stockholder approval, the filing of any required
notices under the HSR Act or other similar domestic or foreign regulations and
all other matters related to the closing of the Merger and the other
transactions contemplated by this Agreement.
(b) The Company agrees that the Company shall pay to Parent an
amount equal to the sum of $2,450,000 (the "Termination Fee"):
(i) if Parent shall terminate this Agreement pursuant to
Section 8.01(c); or
(ii) if the Company or Parent, as the case may be, shall
terminate this Agreement pursuant to Section 8.01(b)(iii) hereof and at or prior
to the time of the Company Stockholders' Meeting a Competing Transaction shall
have been disclosed, announced, commenced, submitted or made to the stockholders
of the Company or to the Company, the Company's Board of Directors shall have
withdrawn, withheld, amended, modified or changed its recommendation of the
adoption of this Agreement in response to, or failed to recommend against, such
Competing Transaction and within 12 months of the date of the termination of
this Agreement a Competing Transaction shall have been consummated.
(c) Any payment required to be made pursuant to Section 8.05(b)
shall be made to Parent not later than two business days after delivery to the
Company of notice of demand for payment and an itemization setting forth in
reasonable detail all Expenses of Parent (which itemization may be supplemented
and updated from time to time by Parent until the 60th day after Parent delivers
such notice of demand for payment), and shall be made by wire transfer of
immediately available funds to an account designated by Parent.
(d) In the event that the Company shall fail to pay the Termination
Fee when due, Parent shall be entitled to collect the costs and expenses
actually incurred or accrued by Parent (including, without limitation, fees and
expenses of counsel), in connection with the collection under and enforcement of
this Section 8.05, together with interest on such Termination Fee, commencing on
the date that such Termination Fee became due, at a rate equal to the rate of
interest publicly announced by Citibank, N.A., from time to time, in The City of
New York, as such bank's Prime Rate plus 1.00%.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01 Non-Survival of Representations, Warranties and
Agreements. The representations, warranties and agreements in this Agreement and
in any certificate delivered pursuant hereto shall terminate at the Effective
Time or upon the termination of this Agreement pursuant to Section 8.01, as the
case may be, except that the agreements set forth in Articles I and II, Sections
6.03(b), 6.05, 6.08 and 6.10 and this Article IX shall survive the
50
Effective Time and those set forth in Sections 6.03(b), 6.08, 8.02 and 8.05 and
this Article IX shall survive termination of this Agreement.
SECTION 9.02 Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given (and shall
be deemed to have been duly given upon receipt) by delivery in person, by cable,
telecopy, facsimile, telegram or telex or by registered or certified mail
(postage prepaid, return receipt requested) to the respective parties at the
following addresses (or at such other address for a party as shall be specified
in a notice given in accordance with this Section 9.02):
if to Parent or Merger Sub:
Selectica, Inc.
0 Xxxx Xxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxx, President and Chief Executive
Officer
with a copy to:
Xxxxxxxxx Xxxxxxx Xxxxxx Xxxxxxxxxx Xxxxxxxx & Xxxxxxxxx, LLP
000 Xxxxxxxxxxxx Xxxxx
Xxxxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxxxxxxx X. Xxxxxx
Xxxxxx Xxxxxx
if to the Company:
I-many, Inc.
000 Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: A. Xxxxx Xxxxxx, President and Chief Executive
Officer
with a copy to:
Proskauer Rose LLP
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx
51
SECTION 9.03 Certain Definitions. For purposes of this Agreement,
the term:
(a) "affiliate" of a specified person means a person who directly or
indirectly through one or more intermediaries controls, is controlled by, or is
under common control with such specified person;
(b) "beneficial owner" with respect to any shares means a person who
shall be deemed to be the beneficial owner of such shares (i) that such person
or any of its affiliates or associates (as such term is defined in Rule 12b-2
promulgated under the Exchange Act) beneficially owns, directly or indirectly,
(ii) that such person or any of its affiliates or associates has, directly or
indirectly, (A) the right to acquire (whether such right is exercisable
immediately or subject only to the passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of consideration rights,
exchange rights, warrants or options, or otherwise, or (B) the right to vote
pursuant to any agreement, arrangement or understanding, or (iii) that are
beneficially owned, directly or indirectly, by any other persons with whom such
person or any of its affiliates or associates or person with whom such person or
any of its affiliates or associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of any
Shares;
(c) "business day" means any day on which the principal offices of
the SEC in Washington, D.C. are open to accept filings, or, in the case of
determining a date when any payment is due, any day on which banks are not
required or authorized to close in The City of San Francisco or in the City of
New York;
(d) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the management and
policies of a person, whether through the ownership of voting securities, as
trustee or executor, by contract or credit arrangement or otherwise;
(e) "knowledge" or "known" means, with respect to the Company, the
actual knowledge, after reasonable due inquiry, of A. Xxxxx Xxxxxx, Xxxxxxxx X.
Xxxxxxxxx, Xxxxx X. Xxxxxx, Xxxxxx X. Xxxxxxxx, Xx. or Xxxxxxx Xxxxxx.
(f) "person" means an individual, corporation, partnership, limited
partnership, syndicate, person (including, without limitation, a "person" as
defined in section 13(d)(3) of the Exchange Act), trust, association or entity
or government, political subdivision, agency or instrumentality of a government;
and
(g) "subsidiary" or "subsidiaries" of any person means any
corporation, partnership, joint venture or other legal entity of which such
person (either alone or through or together with any other subsidiary) owns,
directly or indirectly, more than 50% of the stock or other equity interests,
the holders of which are generally entitled to vote for the election of the
board of directors or other governing body of such corporation or other legal
entity.
SECTION 9.04 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of Law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect as
52
long as the economic or legal substance of the transactions contemplated by this
Agreement is not affected in any manner materially adverse to any party. Upon
such determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as
closely as possible in a mutually acceptable manner in order that the
transactions contemplated by this Agreement be consummated as originally
contemplated to the fullest extent possible.
SECTION 9.05 Assignment; Binding Effect; Benefit. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto (whether by operation of law or otherwise)
without the prior written consent of the other parties, except that Merger Sub
may assign, in it sole discretion and without the consent of any other party,
any or all of its rights, interests and obligations hereunder to (a) Parent, (b)
Parent and one or more direct or indirect wholly-owned subsidiaries of Parent or
(c) one or more direct or indirect wholly-owned subsidiaries of Parent (each, an
"Assignee"), provided, however, that (1) no such assignment shall relieve Merger
Sub of any of its obligations under this Agreement and (2) to the extent
required by Section 251 of the DGCL in order for this Agreement, with such
rights assigned, to be valid from and after such assignment, such assignment
shall be effective only after (a) an appropriate amendment to this Agreement to
effectuate such assignment shall have been executed by the parties here to and
any such Assignee and (b) such amendment, or this Agreement as so amended, shall
have received all approvals required by the DGCL. Subject to the preceding
sentence, this Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and assigns. Expect as
provided for in Article II and Section 6.05, nothing in this Agreement,
expressed or implied, is intended to confer on any person other than the parties
hereto or their respective successors and assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
SECTION 9.06 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
SECTION 9.07 Governing Law; Forum.
(a) This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Delaware, without giving effect to the principles
of conflicts of law thereof.
(b) Each party hereby irrevocably submits to the exclusive
jurisdiction of the Court of Chancery in the State of Delaware (or, in the event
that the Court of Chancery in the State of Delaware may not exercise
jurisdiction, the federal courts of the United States of America located in
Delaware) in any action, suit or proceeding arising in connection with this
Agreement, and agrees that any such action, suit or proceeding shall be brought
only in such court (and waives any objection based on forum non conveniens or
any other objection to venue therein); provided, however, that such consent to
jurisdiction is solely for the purpose referred to in this Section 9.07(b) and
shall not be deemed to be a general submission to the jurisdiction of such court
or in the State of Delaware other than for such purposes.
53
SECTION 9.08 Waiver of Jury Trial. EACH OF PARENT, THE COMPANY AND
MERGER SUB HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF PARENT, THE
COMPANY OR MERGER SUB IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND
ENFORCEMENT THEREOF.
SECTION 9.09 Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
SECTION 9.10 Counterparts. This Agreement may be executed and
delivered (including by facsimile transmission) in one or more counterparts, and
by the different parties hereto in separate counterparts, each of which when
executed and delivered shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
SECTION 9.11 Mutual Drafting. Each party hereto has participated in
the drafting of this Agreement, which each party acknowledges is the result of
extensive negotiations between the parties.
SECTION 9.12 Entire Agreement. This Agreement (including the
Exhibits, the Company Disclosure Letter and the Parent Disclosure Letter), the
Company Voting Agreements and the Employment Agreements constitute the entire
agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings among the parties with respect
thereto. No addition to or modification of any provision of this Agreement shall
be binding upon any party hereto unless made in writing and signed by all
parties hereto.
54
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused
this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
SELECTICA, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: President & CEO
INDIGO MERGER CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: President & CEO
I-MANY, INC.
By: /s/ A. Xxxxx Xxxxxx
------------------------------
Name: A. Xxxxx Xxxxxx
Title: CEO
SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER
EXHIBIT A
FORM OF COMPANY VOTING AGREEMENT
EXHIBIT B
FORM OF CERTIFICATE OF INCORPORATION OF
SURVIVING CORPORATION
EXHIBIT 2.02(b)
FORM OF LETTER OF TRANSMITTAL
SCHEDULE 1.05
OFFICERS OF SURVIVING CORPORATION
President Xxxxxxx X. Xxxxxxxx
Chief Financial Officer and Xxxxxxx Xxxxxxx
Secretary
