Exhibit 2.1
EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
Dated as of April 21, 2003
Among
VERSO TECHNOLOGIES, INC.,
MICKEY ACQUIRING SUB, INC.
and
MCK COMMUNICATIONS, INC.
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TABLE OF CONTENTS
ARTICLE I The Merger............................................................................................1
SECTION 1.01. The Merger...............................................................................1
SECTION 1.02. Closing..................................................................................1
SECTION 1.03. Effective Time...........................................................................1
SECTION 1.04. Effects..................................................................................2
SECTION 1.05. Certificate of Incorporation and By-laws.................................................2
SECTION 1.06. Directors................................................................................2
SECTION 1.07. Officers.................................................................................2
ARTICLE II Effect on the Capital Stock of the Constituent Corporations; Exchange of Certificates................2
SECTION 2.01. Effect on Capital Stock..................................................................2
SECTION 2.02. Exchange of Certificates.................................................................3
SECTION 2.03. Outstanding Company Employee Stock Options...............................................4
SECTION 2.04. Adjustment for Organic Changes...........................................................5
ARTICLE III Representations and Warranties of the Company.......................................................5
SECTION 3.01. Organization, Standing and Power.........................................................5
SECTION 3.02. Company Subsidiaries; Equity Interests...................................................5
SECTION 3.03. Capital Structure........................................................................6
SECTION 3.04. Authority; Execution and Delivery, Enforceability........................................6
SECTION 3.05. No Conflicts; Consents...................................................................7
SECTION 3.06. SEC Documents............................................................................7
SECTION 3.07. Books and Records........................................................................8
SECTION 3.08. Absence of Certain Changes or Events.....................................................8
SECTION 3.09. Taxes....................................................................................8
SECTION 3.10. Intellectual Property....................................................................9
SECTION 3.11. Title to Properties......................................................................9
SECTION 3.12. Contracts and Commitments................................................................9
SECTION 3.13. ERISA; Benefit Plans....................................................................10
SECTION 3.14. Litigation..............................................................................10
SECTION 3.15. Compliance with Applicable Laws.........................................................10
SECTION 3.16. Brokers; Schedule of Fees and Expenses..................................................10
SECTION 3.17. Opinion of Financial Advisor............................................................10
SECTION 3.18. Listings................................................................................10
SECTION 3.19. Tax Treatment...........................................................................10
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Table of Contents
(continued)
ARTICLE IV Representations and Warranties of Purchaser and Merger Sub..........................................10
SECTION 4.01. Organization, Standing and Power........................................................11
SECTION 4.02. Purchaser Subsidiaries; Equity Interests................................................11
SECTION 4.03. Capital Structure.......................................................................11
SECTION 4.04. Authority; Execution and Delivery, Enforceability.......................................12
SECTION 4.05. No Conflicts; Consents..................................................................12
SECTION 4.06. SEC Documents...........................................................................13
SECTION 4.07. Books and Records.......................................................................13
SECTION 4.08. Absence of Certain Changes or Events....................................................14
SECTION 4.09. Taxes...................................................................................14
SECTION 4.10. Intellectual Property...................................................................14
SECTION 4.11. Title to Properties.....................................................................15
SECTION 4.12. Contracts and Commitments...............................................................15
SECTION 4.13. ERISA; Benefit Plans....................................................................15
SECTION 4.14. Litigation..............................................................................15
SECTION 4.15. Compliance with Applicable Laws.........................................................15
SECTION 4.16. Brokers; Schedule of Fees and Expenses..................................................16
SECTION 4.17. Opinion of Financial Advisor............................................................16
SECTION 4.18. Listings................................................................................16
SECTION 4.19. Tax Treatment...........................................................................16
ARTICLE V Covenants Relating to Conduct of Business............................................................16
SECTION 5.01. Conduct of Business.....................................................................16
SECTION 5.02. No Solicitation.........................................................................19
ARTICLE VI Additional Agreements...............................................................................20
SECTION 6.01. Preparation of Proxy Statement; Stockholders Meeting....................................20
SECTION 6.02. Access to Information; Confidentiality..................................................22
SECTION 6.03. Reasonable Efforts; Notification........................................................22
SECTION 6.04. Equity Incentive Plans..................................................................23
SECTION 6.05. Benefit Plans...........................................................................23
SECTION 6.06. Indemnification.........................................................................24
SECTION 6.07. Fees and Expenses.......................................................................24
SECTION 6.08. Public Announcements....................................................................25
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Table of Contents
(continued)
SECTION 6.09. Transfer Taxes..........................................................................25
SECTION 6.10. Affiliates of the Company...............................................................25
SECTION 6.11. Tax Free Reorganization Treatment.......................................................25
SECTION 6.12. Exemption from Liability under Section 16(b)............................................25
SECTION 6.13. Granting of Additional Purchaser Options................................................26
SECTION 6.14. Remedies................................................................................26
ARTICLE VII Conditions Precedent...............................................................................26
SECTION 7.01. Conditions to Each Party's Obligation To Effect The Merger..............................26
SECTION 7.02. Conditions to Obligations of Purchaser and Merger Sub...................................27
SECTION 7.03. Conditions to Obligations of the Company................................................28
ARTICLE VIII Termination, Amendment and Waiver.................................................................29
SECTION 8.01. Termination.............................................................................29
SECTION 8.02. Effect of Termination...................................................................30
SECTION 8.03. Amendment...............................................................................31
SECTION 8.04. Extension: Waiver.......................................................................31
SECTION 8.05. Procedure for Termination, Amendment, Extension or Waiver...............................31
ARTICLE IX General Provisions..................................................................................31
SECTION 9.01. Nonsurvival of Representations and Warranties...........................................31
SECTION 9.02. Notices.................................................................................31
SECTION 9.03. Definitions.............................................................................32
SECTION 9.04. Interpretation; Disclosure Letters......................................................34
SECTION 9.05. Severability............................................................................34
SECTION 9.06. Counterparts............................................................................34
SECTION 9.07. Entire Agreement; Third-Party Beneficiaries.............................................34
SECTION 9.08. Governing Law...........................................................................34
SECTION 9.09. Assignment..............................................................................34
SECTION 9.10. Enforcement.............................................................................35
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EXHIBITS
EXHIBITS:
EXHIBIT A. - Form of Certificate of Incorporation of Surviving Corporation
EXHIBIT B. - Form of Affiliate Agreement
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INDEX OF DEFINED TERMS
Definition Location
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Additional Purchaser Options Section 6.13
Adjusted Working Capital Section 9.03
Agreement Preamble
Appraisal Shares Section 2.01(d)
Certificates Section 2.02(c)
Certificate of Merger Section 1.03
Closing Section 1.02
Closing Date Section 1.02
Code Preamble
Company Preamble
Company Affiliate Section 6.10
Company Benefit Plans Section 3.13
Company Board Section 3.04(b)
Company By-laws Section 3.01
Company Capital Stock Section 3.03
Company Charter Section 3.01
Company Common Stock Section 3.03
Company Disclosure Letter Preamble to Article III
Company Employee Stock Options Section 2.03
Company ESPP Section 3.03
Company Insider Section 6.12
Company Material Adverse Effect Section 9.03
Company Preferred Stock Section 3.03
Company SEC Documents Section 3.06(a)
Company Stockholder Approval Section 3.04(c)
Company Stock Plans Section 2.03
Company Subsidiaries Section 3.01
Company Takeover Proposal Section 9.03
Confidentiality Agreements Section 6.02
Consent Section 3.05(b)
Contract Section 3.05(a)
DGCL Section 1.01
Dividend Amount Section 5.01(a)(i)
Effective Time Section 1.03
ERISA Section 3.13
Estimated Closing Balance Sheet Section 7.02(f)
Exchange Act Section 3.05(b)
Exchange Agent Section 2.02(a)
Expenses Section 9.03
Filed Company SEC Documents Preamble to Article III
Filed Purchaser SEC Documents Preamble to Article IV
Final Deduct Amount Section 9.03
Form S-4 Section 6.01(a)
GAAP Section 3.06(b)
Governmental Entity Section 3.05(b)
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Intellectual Property Rights Section 3.10
Law Section 9.03
Liens Section 3.02
Merger Preamble
Merger Consideration Section 2.01(c)
Merger Sub Preamble
Option Exercise Period Section 2.03
1996 Option Plan Section 2.03
1999 Option Plan Section 2.03
2000 Option Plan Section 2.03
Outside Date Section 8.01(b)(i)
Per Share Dividend Amount Section 5.01(a)(i)
Per Share Merger Consideration Section 2.01(c)
Person Section 9.03
Purchaser Preamble
Purchaser Benefit Plans Section 4.13
Purchaser Board Section 4.04(b)
Purchaser By-laws Section 4.01
Purchaser Capital Stock Section 4.03
Purchaser Charter Section 4.01
Purchaser Common Stock Section 4.03
Purchaser Disclosure Letter Preamble to Article IV
Purchaser Employee Stock Options Section 4.03
Purchaser Material Adverse Effect Section 9.03
Purchaser Preferred Stock Section 4.03
Purchaser SEC Documents Section 4.06(a)
Purchaser Shares Section 2.01(c)
Purchaser Stockholder Approval Section 4.04(c)
Purchaser Stock Plans Section 4.03
Purchaser Subsidiaries Section 4.01
Representatives Section 5.02(a)
Restricted Cash Section 9.03
SEC Preamble to Article III
Section 16 Information Section 6.12
Section 262 Section 2.01(d)
Special Dividend Section 5.01(a)(i)
Subsidiary Section 9.03
Superior Company Proposal Section 9.03
Surviving Corporation Section 1.01
Termination Fee Section 6.07(b)
Taxes Section 9.03
Transactions Section 1.01
Transfer Taxes Section 6.09
Tax Return Section 9.03
Unrestricted Cash Section 9.03
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger, (this "Agreement") is made and
entered into as of April 21, 2003, by and among VERSO TECHNOLOGIES, INC., a
Minnesota corporation ("Purchaser"), MICKEY ACQUIRING SUB, INC., a Delaware
corporation ("Merger Sub") and a wholly-owned Subsidiary of Purchaser, and MCK
COMMUNICATIONS, INC., a Delaware corporation (the "Company").
WHEREAS, the respective Boards of Directors of Purchaser, Merger Sub
and the Company have approved and declared advisable, this Agreement and the
merger (the "Merger") of Merger Sub with and into the Company, on the terms and
subject to the conditions set forth in this Agreement;
WHEREAS, for federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, Purchaser, Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01. THE MERGER. On the terms and subject to the conditions
set forth in this Agreement, and in accordance with the General Corporation Law
of the State of Delaware (the "DGCL"), Merger Sub shall be merged with and into
the Company at the Effective Time (as defined in Section 1.03). At the Effective
Time, the separate corporate existence of Merger Sub shall cease and the Company
shall continue as the surviving corporation (the "Surviving Corporation"). The
Merger and the other transactions contemplated by this Agreement are referred to
in this Agreement collectively as the "Transactions."
SECTION 1.02. CLOSING. The closing (the "Closing") of the Merger shall
take place at the offices of XxXxxxxxx, Will & Xxxxx, 00 Xxxxx Xxxxxx, Xxxxxx,
XX 00000 at 10:00 a.m. on the second business day following the satisfaction
(or, to the extent permitted by Law (as defined in Section 9.03), waiver by all
parties) of the conditions set forth in Section 7.01, or, if on such day any
condition set forth in Section 7.02 or 7.03 has not been satisfied (or, to the
extent permitted by Law, waived by the party or parties entitled to the benefits
thereof), as soon as practicable after all the conditions set forth in Article
VII have been satisfied (or, to the extent permitted by Law, waived by the
parties entitled to the benefits thereof), or at such other place, time and date
as shall be agreed in writing between Purchaser and the Company. The date on
which the Closing occurs is referred to in this Agreement as the "Closing Date."
SECTION 1.03. EFFECTIVE TIME. Prior to the Closing, Purchaser shall
prepare, and on the Closing Date or as soon as practicable thereafter Purchaser
shall file with the Secretary of State of the State of Delaware, a certificate
of merger or other appropriate documents (in any such case, the "Certificate of
Merger") executed in accordance with the relevant provisions of the DGCL and
shall make all other filings or recordings required under the DGCL. The Merger
shall become effective at such time
as the Certificate of Merger is duly filed with such Secretary of State, or at
such other time as Purchaser and the Company shall agree and specify in the
Certificate of Merger (the time the Merger becomes effective being the
"Effective Time").
SECTION 1.04. EFFECTS. The Merger shall have the effects set forth in
the DGCL.
SECTION 1.05. CERTIFICATE OF INCORPORATION AND BY-LAWS.
(a) CERTIFICATE OF INCORPORATION. The Certificate of
Incorporation of the Surviving Corporation shall be amended at the Effective
Time to read in the form of Exhibit A and, as so amended, such Certificate of
Incorporation shall be the Certificate of Incorporation of the Surviving
Corporation until thereafter changed or amended as provided therein or by
applicable Law.
(b) BY-LAWS. The By-laws of Merger Sub as in effect
immediately prior to the Effective Time shall be the By-laws of the Surviving
Corporation until thereafter changed or amended as provided therein or by
applicable Law.
SECTION 1.06. DIRECTORS. The directors of Merger Sub immediately prior
to the Effective Time shall be the directors of the Surviving Corporation, until
the earlier of their resignation or removal or until their respective successors
are duly elected and qualified, as the case may be.
SECTION 1.07. OFFICERS. The officers of Merger Sub immediately prior to
the Effective Time shall be the officers of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective successors are
duly elected or appointed and qualified, as the case may be.
ARTICLE II
EFFECT ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 2.01. EFFECT ON CAPITAL STOCK. At the Effective Time, by virtue
of the Merger and without any action on the part of the holder of any shares of
Company Common Stock (as defined in Section 3.03) or any shares of capital stock
of Merger Sub:
(a) CAPITAL STOCK OF MERGER SUB. Each issued and outstanding
share of capital stock of Merger Sub shall be converted into and become one
fully paid and nonassessable share of common stock, par value $.01 per share, of
the Surviving Corporation.
(b) CANCELLATION OF TREASURY STOCK AND PURCHASER-OWNED STOCK.
Each share of Company Common Stock that is owned by the Company, Purchaser or
Merger Sub shall no longer be outstanding and shall automatically be canceled
and retired and shall cease to exist, and no Purchaser Common Stock (as defined
in Section 4.03) or other consideration shall be delivered or deliverable in
exchange therefor. Each share of Company Common Stock that is owned by any
Subsidiary (as defined in Section 9.03) of the Company or Purchaser (other than
Merger Sub) shall automatically be converted into one fully paid and
nonassessable share of common stock, par value $.01 per share, of the Surviving
Corporation.
(c) CONVERSION OF COMPANY COMMON STOCK. Subject to Sections
2.01(b) and 2.01(d): (i) the aggregate number of shares of Purchaser Common
Stock to be issued in exchange for shares of Company Common Stock in connection
with the Merger (the "Purchaser Shares") shall be determined by dividing (1) the
sum of (A) $13,500,000 less (B) twenty-five percent (25%) of the amount
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of Restricted Cash (as hereinafter defined) up to $2,000,000 by (2) $.6490
(which is the weighted by volume arithmetic average of the daily closing price
per share, rounded to four decimal places, of the Purchaser Common Stock as
reported on Nasdaq SmallCap Market for each of the twenty (20) consecutive
trading days ending (and including) the trading day that occurs two trading days
prior to (and not including) the date hereof); and (ii) each issued and
outstanding share of Company Common Stock shall be converted into the right to
receive such portion of the Purchaser Shares as is determined by dividing the
Purchaser Shares by the total number of shares of Company Common Stock
outstanding at the Effective Time. No fractional shares of Purchaser Common
Stock will be issued in connection with the Merger, with each fractional share
of Purchaser Common Stock which would have been otherwise issued being rounded
to the nearest whole number, with any fraction equal to or higher than one-half
rounded to the next succeeding whole number. The right to receive shares of
Purchaser Common Stock upon the conversion of shares of Company Common Stock
pursuant to this Section 2.01(c) is referred to collectively as the "Merger
Consideration". The shares of Purchaser Common Stock issuable in connection with
the Merger for each outstanding share of Company Common Stock are referred to as
the "Per Share Merger Consideration". As of the Effective Time, all such shares
of Company Common Stock shall no longer be outstanding and shall automatically
be canceled and retired and shall cease to exist, and each holder of a
certificate representing any such shares of Company Common Stock shall cease to
have any rights with respect thereto, except the right to receive the Per Share
Merger Consideration issuable with respect to each share of Company Common Stock
represented by such certificate upon surrender of such certificate in accordance
with Section 2.02, without interest.
(d) APPRAISAL RIGHTS. Notwithstanding anything in this
Agreement to the contrary, shares ("Appraisal Shares") of Company Common Stock
that are outstanding immediately prior to the Effective Time and that are held
by any Person who is entitled to demand and properly demands appraisal of such
Appraisal Shares pursuant to, and who complies in all respects with, Section 262
of the DGCL ("Section 262") shall not be converted into Merger Consideration as
provided in Section 2.01(c), but rather the holders of Appraisal Shares shall be
entitled to payment of the fair market value of such Appraisal Shares in
accordance with Section 262; provided, however, that if any such holder shall
fail to perfect or otherwise shall waive, withdraw or lose the right to
appraisal under Section 262, then the right of such holder to be paid the fair
value of such holder's Appraisal Shares shall cease and such Appraisal Shares
shall be deemed to have been converted as of the Effective Time into, and to
have become exchangeable solely for the right to receive, Merger Consideration
as provided in Section 2.01(c).
SECTION 2.02. EXCHANGE OF CERTIFICATES.
(a) EXCHANGE AGENT. Purchaser shall appoint American Stock
Transfer & Trust Company as the exchange agent, or another bank or trust company
reasonably acceptable to the Company, to act as exchange agent (the "Exchange
Agent") for the exchange of the Merger Consideration upon surrender of
certificates representing issued and outstanding shares of Company Common Stock.
(b) PURCHASER TO PROVIDE MERGER CONSIDERATION. Purchaser shall
provide to the Exchange Agent on or before the Effective Time of the Merger, for
the benefit of the holders of Company Common Stock, the Merger Consideration
issuable in exchange for the issued and outstanding Company Common Stock
pursuant to Section 2.01. The Company shall pay all amounts due to holders of
Appraisal Shares who properly perfect appraisal rights with respect to such
Appraisal Shares in accordance with Section 262 of the DGCL and Section 2.01(d)
of this Agreement.
(c) EXCHANGE PROCEDURE. As soon as reasonably practicable
after the Effective Time, the Exchange Agent shall mail to each holder of record
of a certificate or certificates (the "Certificates") that immediately prior to
the Effective Time represented outstanding shares of Company Common Stock whose
shares were converted into the right to receive Merger Consideration pursuant to
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Section 2.01 (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Exchange Agent and shall be in
such form and have such other provisions as Purchaser may reasonably specify)
and (ii) instructions for use in effecting the surrender of the Certificates in
exchange for Merger Consideration. Upon surrender of a Certificate for
cancellation to the Exchange Agent, together with such letter of transmittal,
duly executed, and such other documents as may reasonably be required by the
Exchange Agent, the holder of such Certificate shall be entitled to receive in
exchange therefor the amount of Merger Consideration into which the shares of
Company Common Stock theretofore represented by such Certificate shall have been
converted pursuant to Section 2.01, and the Certificate so surrendered shall
forthwith be canceled. In the event of a transfer of ownership of Company Common
Stock that is not registered in the transfer records of the Company, payment may
be made to a Person other than the Person in whose name the Certificate so
surrendered is registered, if such Certificate shall be properly endorsed or
otherwise be in proper form for transfer and the Person requesting such payment
shall pay any transfer or other taxes required by reason of the payment to a
Person other than the registered holder of such Certificate or establish to the
satisfaction of Purchaser that such tax has been paid or is not applicable.
Until surrendered as contemplated by this Section 2.02, each Certificate shall
be deemed at any time after the Effective Time to represent only the right to
receive upon such surrender the amount of Merger Consideration, without
interest, into which the shares of Company Common Stock represented by such
Certificate have been converted.
(d) NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. The
Merger Consideration paid in accordance with the terms of this Article II upon
conversion of any shares of Company Common Stock shall be deemed to have been
paid in full satisfaction of all rights pertaining to such shares of Company
Common Stock, subject, however, to the Surviving Corporation's obligation to pay
the Dividend Amount (as defined in Section 5.01(a)(i)), if applicable, and after
the Effective Time there shall be no further registration of transfers on the
stock transfer books of the Surviving Corporation of shares of Company Common
Stock that were outstanding immediately prior to the Effective Time. If, after
the Effective Time, any certificates formerly representing shares of Company
Common Stock are presented to the Surviving Corporation or the Exchange Agent
for any reason, they shall be canceled and exchanged as provided in this Article
II.
(e) NO LIABILITY. None of Purchaser, Merger Sub, the Company
or the Exchange Agent shall be liable to any Person in respect of any property
from the Merger Consideration delivered to a public official pursuant to any
applicable abandoned property, escheat or similar Law. If any Certificate has
not been surrendered prior to five years after the Effective Time (or
immediately prior to such earlier date on which Merger Consideration in respect
of such Certificate would otherwise escheat to or become the property of any
Governmental Entity (as defined in Section 3.05)), any such shares, cash,
dividends or distributions in respect of such Certificate shall, to the extent
permitted by applicable Law, become the property of the Surviving Corporation,
free and clear of all claims or interest of any Person previously entitled
thereto.
SECTION 2.03. OUTSTANDING COMPANY EMPLOYEE STOCK OPTIONS. Neither
Purchaser nor the Surviving Corporation will assume or substitute options for
any stock options (the "Company Employee Stock Options") outstanding and
unexercised pursuant to the Company's 1996 Stock Option Plan, as amended and
restated (the "1996 Option Plan"), the Company's 1999 Stock Option and Grant
Plan (the "1999 Option Plan") or the Company's 2000 Director Stock Option Plan
(the "2000 Option Plan" and, together with the 1996 Option Plan and the 1999
Option Plan, the "Company Stock Plans"). Accordingly, on or before the date that
is eighteen (18) days prior to the anticipated Closing Date, the Company shall
take all necessary actions (including providing all required notices) to ensure
that each outstanding Company Employee Stock Option, whether vested or unvested,
that is then outstanding and unexercised pursuant to any such plan shall,
subject to consummation of the Merger, be fully vested and
4
exercisable for a period of fifteen (15) days from the date of such notice (the
"Option Exercise Period") and that each Company Stock Plan shall terminate as of
the Effective Time. The parties shall take steps to enable the holder of any
options under the aforementioned plans to exercise such options net of the
exercise price and after payment of any required withholding Taxes and receive
in respect thereof the Per Share Merger Consideration and the Per Share Dividend
Amount (as defined in Section 5.01(a)(i)) net of the exercise price thereof.
SECTION 2.04. ADJUSTMENT FOR ORGANIC CHANGES. In the event of any
reclassification, stock split, distribution, stock dividend, reorganization,
reclassification, combination, exchange of shares or other like change with
respect to Purchaser Common Stock, any change or conversion of Purchaser Common
Stock into other securities or any other dividend or distribution in Purchaser
Common Stock with respect to outstanding Purchaser Common Stock (or if a record
date with respect to any of the foregoing should occur) prior to the Effective
Time, appropriate and proportionate adjustments, if any, shall be made to the
number of Purchaser Common Stock provided in exchange for shares of Company
Common Stock.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Purchaser and Merger Sub that,
except as set forth in the reports, schedules, forms, statements and other
documents filed by the Company with the Securities and Exchange Commission (the
"SEC") and publicly available prior to the date of this Agreement (the "Filed
Company SEC Documents") or in the letter, dated as of the date of this
Agreement, from the Company to Purchaser and Merger Sub (the "Company Disclosure
Letter"):
SECTION 3.01. ORGANIZATION, STANDING AND POWER. The Company and each of
its Subsidiaries (the "Company Subsidiaries") is duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it is
organized and has full corporate power and authority and possesses all
governmental franchises, licenses, permits, authorizations and approvals
necessary to enable it to own, lease or otherwise hold its properties and assets
and to conduct its businesses as presently conducted, other than such
franchises, licenses, permits, authorizations and approvals the lack of which,
individually or in the aggregate, has not had and could not reasonably be
expected to have a Company Material Adverse Effect. The Company and each Company
Subsidiary is duly qualified to do business in each jurisdiction where the
nature of its business or their ownership or leasing of its properties make such
qualification necessary, except where the failure to be so qualified would not
reasonably be expected to have a Company Material Adverse Effect. The Company
has made available to Purchaser true and complete copies of the certificate of
incorporation of the Company, as amended to the date of this Agreement (as so
amended, the "Company Charter"), and the By-laws of the Company, as amended to
the date of this Agreement (as so amended, the "Company By-laws"), and the
comparable charter and organizational documents of each Company Subsidiary, in
each case as amended through the date of this Agreement.
SECTION 3.02. COMPANY SUBSIDIARIES; EQUITY INTERESTS.
(a) The Company Disclosure Letter lists each Company
Subsidiary and its jurisdiction of organization. All the outstanding shares of
capital stock of each Company Subsidiary have been validly issued and are fully
paid and nonassessable and are owned by the Company, by another Company
Subsidiary or by the Company and another Company Subsidiary, free and clear of
all pledges, liens, charges, mortgages, encumbrances and security interests of
any kind or nature whatsoever (collectively, "Liens").
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(b) Except for its interests in the Company Subsidiaries, the
Company does not own, directly or indirectly, any capital stock, membership
interest, partnership interest, joint venture interest or other equity interest
(other than investments in short-term investment securities).
SECTION 3.03. CAPITAL STRUCTURE. The authorized capital stock of the
Company consists of 40,000,000 shares of common stock, par value $.001 per share
(the "Company Common Stock"), and 2,000,000 shares of preferred stock, par value
$.001 per share (the "Company Preferred Stock" and, together with the Company
Common Stock, the "Company Capital Stock"). At the close of business on April
21, 2003, (i) 20,528,899 shares of Company Common Stock and no shares of Company
Preferred Stock were issued and outstanding, (ii) 1,749,141 shares of Company
Common Stock were subject to outstanding Company Employee Stock Options and
4,693,642 additional shares of Company Common Stock were reserved for issuance
pursuant to the Company Stock Plans and (iii) 120,501 shares of Company Common
Stock were reserved for issuance pursuant to the Company's 2000 Employee Stock
Purchase Plan (the "Company ESPP"). Except as set forth above, as of the date of
this Agreement, no shares of capital stock or other voting securities of the
Company were issued, reserved for issuance or outstanding. All outstanding
shares of Company Common Stock are, and all such shares that may be issued prior
to the Effective Time will be when issued, duly authorized, validly issued,
fully paid and nonassessable and not subject to or issued in violation of any
purchase option, call option, right of first refusal, preemptive right,
subscription right or any similar right under any provision of the DGCL, the
Company Charter, the Company By-laws or any Contract (as defined in Section
3.05) to which the Company is a party or otherwise bound. There are not any
bonds, debentures, notes or other indebtedness of the Company having the right
to vote (or convertible into, or exchangeable for, securities having the right
to vote) on any matters on which holders of Company Capital Stock may vote.
Except as set forth above, as of the date of this Agreement, there are not any
options, warrants, rights, convertible or exchangeable securities, "phantom"
stock rights, stock appreciation rights, stock-based performance units,
commitments, Contracts, arrangements or undertakings of any kind to which the
Company or any Company Subsidiary is a party or by which any of them is bound
(i) obligating the Company or any Company Subsidiary to issue, deliver or sell,
or cause to be issued, delivered or sold, additional shares of capital stock or
other equity interests in, or any security convertible or exercisable for or
exchangeable into any capital stock of or other equity interest in, the Company
or of any Company Subsidiary or (ii) obligating the Company or any Company
Subsidiary to issue, grant, extend or enter into any such option, warrant, call,
right, security, commitment, Contract, arrangement or undertaking. As of the
date of this Agreement, there are not any outstanding contractual obligations of
the Company or any Company Subsidiary to repurchase, redeem or otherwise acquire
any shares of capital stock of the Company or any Company Subsidiary.
SECTION 3.04. AUTHORITY; EXECUTION AND DELIVERY, ENFORCEABILITY.
(a) The Company has all requisite corporate power and
authority to execute and deliver this Agreement and to consummate the
Transactions. The execution and delivery by the Company of this Agreement and
the consummation by the Company of the Transactions have been duly authorized by
all necessary corporate action on the part of the Company, subject, in the case
of the Merger, to receipt of the Company Stockholder Approval (as defined in
Section 3.04(c)). The Company has duly executed and delivered this Agreement,
and this Agreement constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms.
(b) The Board of Directors of the Company (the "Company
Board"), at a meeting duly called and held, duly and unanimously adopted
resolutions (i) approving this Agreement, the Merger and the other Transactions,
(ii) determining that the terms of the Merger and the other Transactions are
fair to and in the best interests of the Company and its stockholders, (iii)
recommending that the Company's stockholders adopt this Agreement and (iv)
declaring that this Agreement is advisable.
6
(c) The only vote of holders of any class or series of Company
Capital Stock necessary to approve and adopt this Agreement and the Merger is
the approval of this Agreement by the holders of a majority of the outstanding
Company Common Stock (the "Company Stockholder Approval").
SECTION 3.05. NO CONFLICTS; CONSENTS.
(a) The execution and delivery by the Company of this
Agreement does not, and the consummation of the Merger and the other
Transactions and compliance with the terms hereof will not, conflict with, or
result in any violation of or default (with or without notice or lapse of time,
or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a material benefit under, or to
increased, additional, accelerated or guaranteed rights or entitlements of any
Person under, or result in the creation of any Lien upon any of the properties
or assets of the Company or any Company Subsidiary under, any provision of (i)
the Company Charter, the Company By-laws or the comparable charter or
organizational documents of any Company Subsidiary or (ii) any contract, lease,
license, indenture, note, bond, agreement, permit, concession, franchise or
other instrument (a "Contract") to which the Company or any Company Subsidiary
is a party or by which any of their respective properties or assets is bound
other than, in the case of clause (ii) above, any such items that, individually
or in the aggregate, could not reasonably be expected to have a Company Material
Adverse Effect.
(b) No material consent, approval, license, permit, order or
authorization ("Consent") of, or registration, declaration or filing with, or
permit from, any Federal, state, local or foreign government or any court of
competent jurisdiction, administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign (a "Governmental
Entity") is required to be obtained or made by or with respect to the Company or
any Company Subsidiary in connection with the execution, delivery and
performance of this Agreement or the consummation of the Transactions, other
than (i) the filing with the SEC of a proxy or information statement relating to
the approval of this Agreement by the Company's stockholders, and such reports
under Section 13 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as may be required in connection with this Agreement, the
Merger and the other Transactions, (ii) the filing of the Certificate of Merger
with the Secretary of State of the State of Delaware and appropriate documents
with the relevant authorities of the other jurisdictions in which the Company is
qualified to do business, and (iii) such other items (A) that may be required
under the applicable Law of any foreign country, (B) required solely by reason
of the participation of Purchaser (as opposed to any third party) in the
Transactions or (C) that, individually or in the aggregate, could not reasonably
be expected to have a Company Material Adverse Effect.
SECTION 3.06. SEC DOCUMENTS.
(a) The Company has filed all reports, schedules, forms,
statements and other documents required to be filed by the Company with the SEC
since May 1, 2001 pursuant to Sections 13(a) and 15(d) of the Exchange Act (the
"Company SEC Documents").
(b) As of its respective date, except to the extent that
information contained in any Company SEC Document has been revised or superseded
by a later filed Company SEC Document, (i) each Company SEC Document complied in
all material respects with the requirements of the Exchange Act and the rules
and regulations of the SEC promulgated thereunder applicable to such Company SEC
Document, (ii) none of the Company SEC Documents contains any untrue statement
of a material fact or omits 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 and (iii) the
consolidated financial statements of the Company included in the Company SEC
Documents comply as to form in all material respects with applicable accounting
requirements and the published rules and
7
regulations of the SEC with respect thereto, have been prepared in accordance
with generally accepted accounting principles ("GAAP") (except, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present the consolidated financial position of the
Company and its consolidated Subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods shown
(subject, in the case of unaudited statements, to normal year-end audit
adjustments).
SECTION 3.07. BOOKS AND RECORDS.
(a) The books of account and other financial records of the
Company and each of the Company Subsidiaries are true, complete and correct in
all material respects, have been maintained in accordance with good business
practices, and are accurately reflected in all material respects in the
financial statements included in the Company SEC Documents.
(b) The minute books and other records of the Company and each
of the Company Subsidiaries made available to Purchaser contain in all material
respects accurate records of all meetings and accurately reflect in all material
respects all other corporate action of the stockholders and directors and any
committees of the Company Board and each of the Company Subsidiaries.
SECTION 3.08. ABSENCE OF CERTAIN CHANGES OR EVENTS. From the date of
the most recent financial statements included in the Filed Company SEC Documents
to the date of this Agreement, the Company has conducted its business only in
the ordinary course, and during such period there has not been:
(i) any event, change, effect or development that,
individually or in the aggregate, has had or could reasonably be expected to
have a Company Material Adverse Effect;
(ii) any declaration, setting aside or payment of any
dividend or other distribution (whether in cash, stock or property), other than
the Special Dividend (as defined in Section 5.01(a)(i)), with respect to any
Company Capital Stock or any repurchase for value by the Company of any Company
Capital Stock;
(iii) any split, combination or reclassification of
any Company Capital Stock or any issuance or the authorization of any issuance
of any other securities in respect of, in lieu of or in substitution for shares
of Company Capital Stock; or
(iv) any material change in accounting methods,
principles or practices by the Company or any Company Subsidiary, except
insofar as may have been required by a change in GAAP.
SECTION 3.09. TAXES.
(a) Each of the Company and each Company Subsidiary has timely
filed, or has caused to be timely filed on its behalf, all Tax Returns required
to be filed by it, and all such Tax Returns are true, complete and accurate,
except to the extent any failure to file or any inaccuracies in any filed Tax
Returns, individually or in the aggregate, have not had and could not reasonably
be expected to have a Company Material Adverse Effect. All Taxes shown to be due
on such Tax Returns, or otherwise owed, have been timely paid, except to the
extent that any failure to pay, individually or in the aggregate, has not had
and could not reasonably be expected to have a Company Material Adverse Effect.
(b) The most recent financial statements contained in the
Filed Company SEC Documents reflect an adequate reserve for all Taxes payable by
the Company and the Company Subsidiaries (in addition to any reserve for
deferred Taxes to reflect timing differences between book and Tax items) for all
taxable periods and portions thereof through the date of such financial
statements.
8
(c) There are no material Liens for Taxes (other than for
current Taxes not yet due and payable) on the assets of the Company or any
Company Subsidiary. Neither the Company nor any Company Subsidiary is bound by
any agreement with respect to Taxes.
(d) The Company has no reason to believe that any conditions
exist that could reasonably be expected to prevent the Merger from qualifying as
a "reorganization" within the meaning of Section 368(a) of the Code.
SECTION 3.10. INTELLECTUAL PROPERTY. The Company and the Company
Subsidiaries own, or are validly licensed or otherwise have the right to use,
all patents, patent rights, trademarks, trademark rights, trade names, trade
name rights, service marks, service xxxx rights, copyrights and other
proprietary intellectual property rights and computer programs (collectively,
"Intellectual Property Rights") which are material to the conduct of the
business of the Company and the Company Subsidiaries taken as a whole. The
Company Disclosure Letter sets forth a description of all Intellectual Property
Rights which are material to the conduct of the business of the Company and the
Company Subsidiaries taken as a whole. No claims are pending or, to the
knowledge of the Company, threatened that the Company or any of the Company
Subsidiaries is infringing or otherwise adversely affecting the rights of any
Person with regard to any Intellectual Property Rights which are material to the
conduct of the business of the Company and the Company Subsidiaries taken as a
whole. To the knowledge of the Company, no Person is infringing the rights of
the Company or any of the Company Subsidiaries with respect to any Intellectual
Property Rights.
SECTION 3.11. TITLE TO PROPERTIES.
(a) Each of the Company and each of the Company Subsidiaries
has good and marketable title to, or valid leasehold interests in, all its
properties and assets except for such as are no longer used or useful in the
conduct of its businesses or as have been disposed of in the ordinary course of
business and except for defects in title, easements, restrictive covenants and
similar encumbrances or impediments that, in the aggregate, do not and will not
materially interfere with its ability to conduct its business as currently
conducted. All such assets and properties, other than assets and properties in
which the Company or any of the Company Subsidiaries has leasehold interests,
are free and clear of all Liens other than those set forth in the Company
Disclosure Letter and except for Liens that, in the aggregate, do not and will
not materially interfere with the ability of the Company and the Company
Subsidiaries to conduct business as currently conducted.
(b) Each of the Company and each of the Company Subsidiaries
has complied in all material respects with the terms of all material leases to
which it is a party and under which it is in occupancy, and all such leases are
in full force and effect. Each of the Company and each of the Company
Subsidiaries enjoys peaceful and undisturbed possession under all such material
leases.
SECTION 3.12. CONTRACTS AND COMMITMENTS. The Company Disclosure Letter
sets forth (i) all notes, debentures, bonds and other evidences of indebtedness
which are secured or collateralized by mortgages, deeds of trust or other
security interest in the real or personal property of the Company and each of
the Company Subsidiaries and (ii) each Contract entered into by the Company or
any Company Subsidiary which may result in total payments by or liability of the
Company or any Company Subsidiary in excess of $50,000. The Company has
previously made available to Purchaser or its counsel true and correct copies of
all such documents. None of the Company or any or the Company Subsidiaries has
received notice of a default that has not been cured under any of the documents
described above or is in default respecting any payment obligations thereunder
beyond any applicable grace period except where such default would not have a
Company Material Adverse Effect.
9
SECTION 3.13. ERISA; BENEFIT PLANS. The Company Disclosure Letter lists
all of the Company plans, programs, agreements, policies or arrangements,
whether covering a single individual or group of individuals, and whether or not
reduced to writing that is (i) an employee welfare benefit plan within the
meaning of Section 3(1) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"); (ii) a pension benefit plan within the meaning of Section
3(2) of ERISA; or (iii) any other deferred compensation, retirement, severance,
welfare-benefit, bonus, incentive or fringe benefit plan or arrangement of (the
"Company Benefit Plans") that are maintained or administered, or with respect to
which contributions are made, by the Company or any Company Subsidiary, in
respect of the employees of the Company or any Company Subsidiary. Each Company
Benefit Plan has been administered in all material respects in accordance with
its terms and applicable Law.
SECTION 3.14. LITIGATION. There is no suit, action or proceeding
pending or, to the knowledge of the Company, threatened against the Company or
any Company Subsidiary that, individually or in the aggregate, has had or could
reasonably be expected to have a Company Material Adverse Effect. SECTION
SECTION 3.15. COMPLIANCE WITH APPLICABLE LAWS. To the knowledge of the
Company, the Company and the Company Subsidiaries are in compliance in all
material respects with all applicable Laws, including those relating to
occupational health and safety and the environment, except for instances of
noncompliance that, individually and in the aggregate, have not had and could
not reasonably be expected to have a Company Material Adverse Effect.
SECTION 3.16. BROKERS; SCHEDULE OF FEES AND EXPENSES. No broker,
investment banker, financial advisor or other Person, other than Xxxxxxx Xxxxx &
Associates, Inc. (the fees and expenses of which will be paid by the Company),
is entitled to any broker's, finder's, financial advisor's or other similar fee
or commission in connection with the Merger and the other Transactions based
upon arrangements made by or on behalf of the Company.
SECTION 3.17. OPINION OF FINANCIAL ADVISOR. The Company has received
the opinion of Xxxxxxx Xxxxx & Associates, Inc., dated the date of this
Agreement, to the effect that, as of such date, the consideration to be received
in the Merger by the holders of Company Common Stock is fair from a financial
point of view.
SECTION 3.18. LISTINGS. The Company's securities are not listed, or
quoted, for trading on any U.S. domestic or foreign securities exchange or
quotation service, other than the Nasdaq National Market. The Company has not
received any communications (whether written or oral) from the National
Association of Securities Dealers that it does not meet the listing
qualifications of the Nasdaq National Market.
SECTION 3.19. TAX TREATMENT. Neither the Company nor any of its
affiliates has taken any action or knows of any fact, agreement, plan or other
circumstance that is reasonably likely to prevent the Merger from qualifying as
a reorganization under the provisions of Section 368(a) of the Code.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER AND MERGER SUB
Purchaser and Merger Sub, jointly and severally, represent and warrant
to the Company and each of the Company Subsidiaries that, except as set forth in
the reports, schedules, forms, statements and other documents filed by the
Company with the SEC and publicly available prior to the date of this Agreement
10
(the "Filed Purchaser SEC Documents") or in the letter, dated as of the date of
this Agreement, from Purchaser and Merger Sub to the Company (the "Purchaser
Disclosure Letter"):
SECTION 4.01. ORGANIZATION, STANDING AND POWER. Purchaser and each of
its Subsidiaries, including Merger Sub (the "Purchaser Subsidiaries"), is duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized and has full corporate power and authority
and possesses all governmental franchises, licenses, permits, authorizations and
approvals necessary to enable it to own, lease or otherwise hold its properties
and assets and to conduct its businesses as presently conducted, other than such
franchises, licenses, permits, authorizations and approvals the lack of which,
individually or in the aggregate, has not had and could not reasonably be
expected to have a Purchaser Material Adverse Effect. Purchaser and each
Purchaser Subsidiary is duly qualified to do business in each jurisdiction where
the nature of its business or their ownership or leasing of its properties make
such qualification necessary, except where the failure to be so qualified would
not reasonably be expected to have a Purchaser Material Adverse Effect.
Purchaser has made available to the Company true and complete copies of the
articles of incorporation of Purchaser, as amended to the date of this Agreement
(as so amended, the "Purchaser Charter"), and the By-laws of Purchaser, as
amended to the date of this Agreement (as so amended, the "Purchaser By-laws"),
and the comparable charter and organizational documents of each Purchaser
Subsidiary, in each case as amended through the date of this Agreement.
SECTION 4.02. PURCHASER SUBSIDIARIES; EQUITY INTERESTS.
(a) The Purchaser Disclosure Letter lists each Purchaser
Subsidiary and its jurisdiction of organization. All the outstanding shares of
capital stock of each Purchaser Subsidiary have been validly issued and are
fully paid and nonassessable and are owned by Purchaser, by another Purchaser
Subsidiary or by Purchaser and another Purchaser Subsidiary, free and clear of
all Liens.
(b) Except for its interests in the Purchaser Subsidiaries,
Purchaser does not own, directly or indirectly, any capital stock, membership
interest, partnership interest, joint venture interest or other equity interest
(other than investments in short-term investment securities).
SECTION 4.03. CAPITAL STRUCTURE. The authorized capital stock of
Purchaser consists of 200,000,000 shares of common stock, par value $.01 per
share (the "Purchaser Common Stock"), and 1,000,000 shares of preferred stock,
par value $.01 per share (the "Purchaser Preferred Stock" and, together with the
Purchaser Common Stock, the "Purchaser Capital Stock"). At the close of business
on April 11, 2003, (i) 89,706,755 shares of Purchaser Common Stock and no shares
of Purchaser Preferred Stock were issued and outstanding, (ii) 12,728,773 shares
of Purchaser Common Stock were subject to outstanding options to purchase shares
of Purchaser Common Stock ("Purchaser Employee Stock Options") issued pursuant
to Purchaser's equity incentive plans listed in Section 4.03 of the Purchaser
Disclosure Letter (the "Purchaser Stock Plans") and 2,287,099 additional shares
of Purchaser Common Stock were reserved for issuance pursuant to the Purchaser
Stock Plans, (iii) 441,267 shares of Purchaser Common Stock were reserved for
issuance under Purchaser's Employee Stock Purchase Plan, (iv) 23,790,537 shares
of Purchaser Common Stock were subject to options or warrants to purchase shares
of Purchaser Common Stock not issued under any Purchaser Stock Plans and (v)
1,011,236 shares of Purchaser Common Stock were reserved for issuance upon
conversion of outstanding convertible debentures. Except as set forth above, as
of the date of this Agreement, no shares of capital stock or other voting
securities of Purchaser were issued, reserved for issuance or outstanding. All
outstanding shares of Purchaser Capital Stock are, and all such shares that may
be issued prior to the Effective Time will be when issued, duly authorized,
validly issued, fully paid and nonassessable and not subject to or issued in
violation of any purchase option, call option, right of first refusal,
preemptive right, subscription right or any similar right under any provision of
the Minnesota Business Corporation Act, the Purchaser Charter,
11
the Purchaser By-laws or any Contract to which Purchaser is a party or otherwise
bound. There are not any bonds, debentures, notes or other indebtedness of
Purchaser having the right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on which holders of
Purchaser Capital Stock may vote. Except as set forth above, as of the date of
this Agreement, there are not any options, warrants, rights, convertible or
exchangeable securities, "phantom" stock rights, stock appreciation rights,
stock-based performance units, commitments, Contracts, arrangements or
undertakings of any kind to which Purchaser or any Purchaser Subsidiary is a
party or by which any of them is bound (i) obligating Purchaser or any Purchaser
Subsidiary to issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of capital stock or other equity interests in, or any security
convertible or exercisable for or exchangeable into any capital stock of or
other equity interest in, Purchaser or of any Purchaser Subsidiary or (ii)
obligating Purchaser or any Purchaser Subsidiary to issue, grant, extend or
enter into any such option, warrant, call, right, security, commitment,
Contract, arrangement or undertaking. As of the date of this Agreement, there
are not any outstanding contractual obligations of Purchaser or any Purchaser
Subsidiary to repurchase, redeem or otherwise acquire any shares of capital
stock of Purchaser or any Purchaser Subsidiary.
SECTION 4.04. AUTHORITY; EXECUTION AND DELIVERY, ENFORCEABILITY.
(a) Each of Purchaser and Merger Sub has all requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the Transactions. The execution and delivery by Purchaser and Merger
Sub of this Agreement and the consummation by Purchaser and Merger Sub of the
Transactions have been duly authorized by all necessary corporate action on the
part of Purchaser and Merger Sub, respectively. Each of Purchaser and Merger Sub
has duly executed and delivered this Agreement, and this Agreement constitutes
its legal, valid and binding obligation, enforceable against it in accordance
with its terms.
(b) The Board of Directors of Purchaser (the "Purchaser
Board"), at a meeting duly called and held, duly and unanimously adopted
resolutions (i) approving this Agreement, the Merger and the other Transactions,
(ii) determining that the terms of the Merger and the other Transactions are
fair to and in the best interests of Purchaser and its shareholders, (iii)
recommending that Purchaser's shareholders adopt this Agreement, and (iv)
declaring that this Agreement is advisable. The Board of Directors of Merger
Sub, by written consent, duly and unanimously adopted resolutions (i) approving
this Agreement, the Merger and the other Transactions, (ii) determining that the
terms of the Merger and the other Transactions are fair to and in the best
interests of Merger Sub and its stockholder, (iii) recommending that Merger
Sub's stockholders adopt this Agreement, and (iv) declaring that this Agreement
is advisable.
(c) The only vote of holders of any class or series of
Purchaser Capital Stock necessary to approve and adopt this Agreement and the
Merger is the approval thereof by the holders of a majority of the outstanding
Purchaser Common Stock present and voting at the meeting called for such
purposes (the "Purchaser Stockholder Approval").
SECTION 4.05. NO CONFLICTS; CONSENTS.
(a) The execution and delivery by Purchaser of this Agreement
does not, and the consummation of the Merger and the other Transactions and
compliance with the terms hereof will not, conflict with, or result in any
violation of or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation or to loss of a material benefit under, or to increased,
additional, accelerated or guaranteed rights or entitlements of any Person
under, or result in the creation of any Lien upon any of the properties or
assets of Purchaser or any Purchaser Subsidiary under, any provision of (i) the
Purchaser Charter, the Purchaser By-laws or the
12
comparable charter or organizational documents of any Purchaser Subsidiary or
(ii) any Contract to which Purchaser or any Purchaser Subsidiary is a party or
by which any of their respective properties or assets is bound other than, in
the case of clause (ii) above, any such items that, individually or in the
aggregate, could not reasonably be expected to have a Purchaser Material Adverse
Effect.
(b) No Consent of, or registration, declaration or filing
with, or permit from, any Governmental Entity is required to be obtained or made
by or with respect to Purchaser or any Purchaser Subsidiary in connection with
the execution, delivery and performance of this Agreement or the consummation of
the Transactions, other than (i) the filing with the SEC of a proxy or
information statement relating to the approval of this Agreement Purchaser's
stockholders, and such reports under Section 13 of the Exchange Act, as may be
required in connection with this Agreement, the Merger and the other
Transactions, (ii) the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware and appropriate documents with the relevant
authorities of the other jurisdictions in which Purchaser is qualified to do
business, and (iii) such other items (A) that may be required under the
applicable Law of any foreign country, (B) required solely by reason of the
participation of Purchaser (as opposed to any third party) in the Transactions
or (C) that, individually or in the aggregate, could not reasonably be expected
to have a Purchaser Material Adverse Effect.
SECTION 4.06. SEC DOCUMENTS.
(a) Purchaser has filed all reports, schedules, forms,
statements and other documents required to be filed by Purchaser with the SEC
since May 1, 2001 pursuant to Sections 13(a) and 15(d) of the Exchange Act (the
"Purchaser SEC Documents").
(b) As of its respective date, except to the extent that
information contained in any Purchaser SEC Document has been revised or
superseded by a later filed Purchaser SEC Document, (i) each Purchaser SEC
Document complied in all material respects with the requirements of the Exchange
Act and the rules and regulations of the SEC promulgated thereunder applicable
to such Purchaser SEC Document, (ii) none of the Purchaser SEC Documents
contains any untrue statement of a material fact or omits 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 and (iii) the consolidated financial statements of Purchaser included
in the Purchaser SEC Documents comply as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, have been prepared in accordance with GAAP
(except, in the case of unaudited statements, as permitted by Form 10-Q of the
SEC) applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto) and fairly present the consolidated financial
position of Purchaser and its consolidated Subsidiaries as of the dates thereof
and the consolidated results of their operations and cash flows for the periods
shown (subject, in the case of unaudited statements, to normal year-end audit
adjustments).
SECTION 4.07. BOOKS AND RECORDS.
(a) The books of account and other financial records of
Purchaser and each of the Purchaser Subsidiaries are true, complete and correct
in all material respects, have been maintained in accordance with good business
practices, and are accurately reflected in all material respects in the
financial statements included in the Purchaser SEC Documents.
(b) The minute books and other records of Purchaser and each
of the Purchaser Subsidiaries made available to the Company contain in all
material respects accurate records of all meetings and accurately reflect in all
material respects all other corporate action of the stockholders and directors
and any committees of the Purchaser Board and each of the Purchaser
Subsidiaries.
13
SECTION 4.08. ABSENCE OF CERTAIN CHANGES OR EVENTS. From the date of
the most recent financial statements included in the Filed Purchaser SEC
Documents to the date of this Agreement, Purchaser has conducted its business
only in the ordinary course, and during such period there has not been:
(i) any event, change, effect or development that,
individually or in the aggregate, has had or could reasonably be expected to
have a Purchaser Material Adverse Effect;
(ii) any declaration, setting aside or payment of any
dividend or other distribution (whether in cash, stock or property) with respect
to any Purchaser Capital Stock or any repurchase for value by Purchaser of any
Purchaser Capital Stock;
(iii) any split, combination or reclassification of
any Purchaser Capital Stock or any issuance or the authorization of any issuance
of any other securities in respect of, in lieu of or in substitution for shares
of Purchaser Capital Stock; or
(iv) any material change in accounting methods,
principles or practices by Purchaser or any Purchaser Subsidiary, except insofar
as may have been required by a change in GAAP.
SECTION 4.09. TAXES.
(a) Each of Purchaser and each Purchaser Subsidiary has timely
filed, or has caused to be timely filed on its behalf, all Tax Returns required
to be filed by it, and all such Tax Returns are true, complete and accurate,
except to the extent any failure to file or any inaccuracies in any filed Tax
Returns, individually or in the aggregate, have not had and could not reasonably
be expected to have a Purchaser Material Adverse Effect. All Taxes shown to be
due on such Tax Returns, or otherwise owed, have been timely paid, except to the
extent that any failure to pay, individually or in the aggregate, has not had
and could not reasonably be expected to have a Purchaser Material Adverse
Effect.
(b) The most recent financial statements contained in the
Filed Purchaser SEC Documents reflect an adequate reserve for all Taxes payable
by Purchaser and the Purchaser Subsidiaries (in addition to any reserve for
deferred Taxes to reflect timing differences between book and Tax items) for all
taxable periods and portions thereof through the date of such financial
statements.
(c) There are no material Liens for Taxes (other than for
current Taxes not yet due and payable) on the assets of Purchaser or any
Purchaser Subsidiary. Neither Purchaser nor any Purchaser Subsidiary is bound by
any agreement with respect to Taxes.
(d) The Purchaser has no reason to believe that any conditions
exist that could reasonably be expected to prevent the Merger from qualifying as
a "reorganization" within the meaning of Section 368(a) of the Code.
SECTION 4.10. INTELLECTUAL PROPERTY. Purchaser and the Purchaser
Subsidiaries own, or are validly licensed or otherwise have the right to use,
Intellectual Property Rights which are material to the conduct of the business
of Purchaser and the Purchaser Subsidiaries taken as a whole. The Purchaser
Disclosure Letter sets forth a description of all Intellectual Property Rights
which are material to the conduct of the business of Purchaser and the Purchaser
Subsidiaries taken as a whole. No claims are pending or, to the knowledge of
Purchaser, threatened that Purchaser or any of the Purchaser Subsidiaries is
infringing or otherwise adversely affecting the rights of any Person with regard
to any Intellectual Property Rights which are material to the conduct of the
business of Purchaser and the Purchaser Subsidiaries taken as a whole. To the
knowledge of Purchaser, no Person is infringing the rights of Purchaser or any
of the Purchaser Subsidiaries with respect to any Intellectual Property Rights.
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SECTION 4.11. TITLE TO PROPERTIES.
(a) Each of Purchaser and each of the Purchaser Subsidiaries
has good and marketable title to, or valid leasehold interests in, all its
properties and assets except for such as are no longer used or useful in the
conduct of its businesses or as have been disposed of in the ordinary course of
business and except for defects in title, easements, restrictive covenants and
similar encumbrances or impediments that, in the aggregate, do not and will not
materially interfere with its ability to conduct its business as currently
conducted. All such assets and properties, other than assets and properties in
which Purchaser or any of the Purchaser Subsidiaries has leasehold interests,
are free and clear of all Liens other than those set forth in the Purchaser
Disclosure Letter and except for Liens that, in the aggregate, do not and will
not materially interfere with the ability of Purchaser and the Purchaser
Subsidiaries to conduct business as currently conducted.
(b) Each of Purchaser and each of the Purchaser Subsidiaries
has complied in all material respects with the terms of all material leases to
which it is a party and under which it is in occupancy, and all such leases are
in full force and effect. Each of Purchaser and each of the Purchaser
Subsidiaries enjoys peaceful and undisturbed possession under all such material
leases.
SECTION 4.12. CONTRACTS AND COMMITMENTS. The Purchaser Disclosure
Letter sets forth (i) all notes, debentures, bonds and other evidences of
indebtedness which are secured or collateralized by mortgages, deeds of trust or
other security interest in the real or personal property of Purchaser and each
of the Purchaser Subsidiaries and (ii) each Contract entered into (other than
those entered into in the ordinary course of business) by Purchaser or any
Purchaser Subsidiary which may result in total payments by or liability of
Purchaser or any Purchaser Subsidiary in excess of $150,000. The Purchaser has
previously made available to the Company or its counsel true and correct copies
of all such documents. None of Purchaser or any or the Purchaser Subsidiaries
has received notice of a default that has not been cured under any of the
documents described above or is in default respecting any payment obligations
thereunder beyond any applicable grace period except where such default would
not have a Purchaser Material Adverse Effect.
SECTION 4.13. ERISA; BENEFIT PLANS. The Purchaser Disclosure Letter
lists all of the Purchaser plans, programs, agreements, policies or
arrangements, whether covering a single individual or group of individuals, and
whether or not reduced to writing that is (i) an employee welfare benefit plan
within the meaning of Section 3(1) of ERISA; (ii) a pension benefit plan within
the meaning of Section 3(2) of ERISA; or (iii) any other deferred compensation,
retirement, severance, welfare-benefit, bonus, incentive or fringe benefit plan
or arrangement of (the "Purchaser Benefit Plans") that are maintained or
administered, or with respect to which contributions are made, by Purchaser or
any Purchaser Subsidiary, in respect of the employees of Purchaser or any
Purchaser Subsidiary. Each Purchaser Benefit Plan has been administered in all
material respects in accordance with its terms and applicable Law.
SECTION 4.14. LITIGATION. There is no suit, action or proceeding
pending or, to the knowledge of Purchaser, threatened against Purchaser or any
Purchaser Subsidiary that, individually or in the aggregate, has had or could
reasonably be expected to have a Purchaser Material Adverse Effect.
SECTION 4.15. COMPLIANCE WITH APPLICABLE LAWS. To the knowledge of
Purchaser, Purchaser and the Purchaser Subsidiaries are in compliance in all
material respects with all applicable Laws, including those relating to
occupational health and safety and the environment, except for instances of
noncompliance that, individually and in the aggregate, have not had and could
not reasonably be expected to have a Purchaser Material Adverse Effect.
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SECTION 4.16. BROKERS; SCHEDULE OF FEES AND EXPENSES. No broker,
investment banker, financial advisor or other Person, other than Pacific Growth
Equities, Inc. (the fees and expenses of which will be paid by Purchaser), is
entitled to any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the Merger and the other Transactions based upon
arrangements made by or on behalf of Purchaser.
SECTION 4.17. OPINION OF FINANCIAL ADVISOR. Purchaser has received the
opinion of Pacific Growth Equities, Inc., dated the date of this Agreement, to
the effect that, as of such date, the consideration to be paid by the Purchaser
in the Merger is fair to the Purchaser from a financial point of view.
SECTION 4.18. LISTINGS. Purchaser's securities are not listed, or
quoted, for trading on any U.S. domestic or foreign securities exchange or
quotation service, other than the Nasdaq SmallCap Market. Purchaser has not
received any communications (whether written or oral) from the National
Association of Securities Dealers that it does not meet the listing
qualifications of the Nasdaq SmallCap Market.
SECTION 4.19. TAX TREATMENT. Neither Purchaser nor any of its
affiliates has taken any action or knows of any fact, agreement, plan or other
circumstance that is reasonably likely to prevent the Merger from qualifying as
a reorganization under the provisions of 368(a) of the Code.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 5.01. CONDUCT OF BUSINESS.
(a) CONDUCT OF BUSINESS BY THE COMPANY. Except for matters set
forth in the Company Disclosure Letter or otherwise contemplated by this
Agreement, from the date of this Agreement to the Effective Time the Company
shall, and shall cause each Company Subsidiary to, conduct its business in the
usual, regular and ordinary course in substantially the same manner as
previously conducted and, to the extent consistent therewith, use all reasonable
efforts to preserve intact its current business organization, keep available the
services of its current officers and employees and keep its relationships with
customers, suppliers, licensors, licensees, distributors and others having
business dealings with them to the end that its goodwill and ongoing business
shall be unimpaired at the Effective Time. In addition, and without limiting the
generality of the foregoing, except for matters set forth in the Company
Disclosure Letter or otherwise contemplated by this Agreement, from the date of
this Agreement to the Effective Time, the Company shall not, and shall not
permit any Company Subsidiary to, do any of the following without the prior
written consent of Purchaser:
(i) (A) declare, set aside or pay any dividends on,
or make any other distributions in respect of, any of its capital stock, other
than the declaration and payment of a cash dividend (the "Special Dividend") in
an amount determined by the Company Board (but in no event in an amount that
would cause the Company to not satisfy the conditions in Section 7.02(h)) to all
holders of Company Common Stock on the record date for such dividend (the
"Dividend Amount" and, if such dividend is declared and paid, the amount of such
dividend payable in respect of each share of Company Common Stock as of the
record date shall be referred to as the "Per Share Dividend Amount"), (B) split,
combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock, or (C) purchase, redeem or otherwise acquire
any shares of capital stock of the Company or any Company Subsidiary or any
other securities thereof or any rights, warrants or options to acquire any such
shares or other securities;
16
(ii) issue, deliver, sell or grant (A) any shares of
its capital stock, (B) any voting securities or (C) any securities convertible
into or exchangeable for, or any options, warrants or rights to acquire, any
such shares, voting securities or convertible or exchangeable securities, other
than (1) the issuance of Company Common Stock upon the exercise of Company
Employee Stock Options outstanding on the date of this Agreement and in
accordance with their present terms, (2) the issuance of additional Company
Employee Stock Options pursuant to the Company Stock Plans in accordance with
their present terms and consistent with prior practice and the issuance of
Company Common Stock upon the exercise of such Company Employee Stock Options,
(3) the issuance of Company Common Stock pursuant to the Company Stock Plans or
the Company ESPP and (4) in connection with the replacement of lost, stolen or
destroyed certificates;
(iii) amend its certificate of incorporation, by-laws
or other comparable charter or organizational documents, except for such
amendments to its certificate of incorporation, by-laws and other comparable
charter or organizational documents that do not have an adverse affect on the
Merger and the other Transactions;
(iv) acquire or agree to acquire (A) by merging or
consolidating with, or by purchasing a substantial equity interest in or portion
of the assets of, or by any other manner, any business or any corporation,
partnership, joint venture, association or other business organization or
division thereof or (B) any assets that are material, individually or in the
aggregate, to the Company and the Company Subsidiaries, taken as a whole, except
purchases of inventory in the ordinary course of business consistent with past
practice;
(v) (A) grant to any executive officer or director of
the Company or any Company Subsidiary any increase in compensation, except in
the ordinary course of business consistent with prior practice or to the extent
required under employment agreements in effect as of the date of this Agreement,
(B) grant to any executive officer or director of the Company or any Company
Subsidiary any increase in severance or termination pay, except to the extent
required under any agreement in effect as of the date of this Agreement, (C)
enter into any severance or termination agreement with any such executive
officer or director, (D) establish, adopt, enter into or amend in any material
respect any collective bargaining agreement or Company Benefit Plan or (E) take
any action to accelerate any rights or benefits, or make any material
determinations not in the ordinary course of business consistent with prior
practice, under any collective bargaining agreement or Company Benefit Plan;
(vi) make any change in accounting methods,
principles or practices materially affecting the reported consolidated assets,
liabilities or results of operations of the Company, except insofar as may have
been required by a change in GAAP;
(vii) sell, lease (as lessor), license or otherwise
dispose of or subject to any Lien any properties or assets that are material,
individually or in the aggregate, to the Company and the Company Subsidiaries,
taken as a whole, except sales of inventory and excess or obsolete assets in the
ordinary course of business consistent with past practice;
(viii) incur any indebtedness for borrowed money or
guarantee any such indebtedness of another Person, issue or sell any debt
securities or warrants or other rights to acquire any debt securities of the
Company or any Company Subsidiary, guarantee any debt securities of another
Person, enter into any "keep well" or other agreement to maintain any financial
statement condition of another Person or enter into any arrangement having the
economic effect of any of the foregoing, except for short-term borrowings
incurred in the ordinary course of business consistent with past practice;
(ix) make or agree to make any new capital
expenditure or expenditures that, individually, is in excess of $25,000 or, in
the aggregate, are in excess of $250,000;
(x) make or change any material Tax election or
settle or compromise any material Tax liability or refund;
17
(xi) (A) pay, discharge or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or satisfaction, in
the ordinary course of business consistent with past practice or in accordance
with their terms, of liabilities reflected or reserved against in, or
contemplated by, the most recent consolidated financial statements (or the notes
thereto) of the Company included in the Filed Company SEC Documents or incurred
in the ordinary course of business consistent with past practice, or (B) cancel
any material indebtedness (individually or in the aggregate) or waive any claims
or rights of substantial value;
(xii) take, or permit any Company Subsidiary to take,
any action that could reasonably be expected to prevent the Merger from
qualifying as a "reorganization" within the meaning of Section 368(a) of the
Code; or
(xiii) authorize any of, or commit or agree to take
any of, the foregoing actions.
(b) CONDUCT OF BUSINESS BY PURCHASER. Except for matters set
forth in the Purchaser Disclosure Letter or otherwise contemplated by this
Agreement, from the date of this Agreement to the Effective Time the Purchaser
shall, and shall cause each Purchaser Subsidiary to, conduct its business in the
usual, regular and ordinary course in substantially the same manner as
previously conducted and, to the extent consistent therewith, use all reasonable
efforts to preserve intact its current business organization, keep available the
services of its current officers and employees and keep its relationships with
customers, suppliers, licensors, licensees, distributors and others having
business dealings with them to the end that its goodwill and ongoing business
shall be unimpaired at the Effective Time. In addition, and without limiting the
generality of the foregoing, except for matters set forth in the Purchaser
Disclosure Letter or otherwise contemplated by this Agreement, from the date of
this Agreement to the Effective Time, the Purchaser shall not, and shall not
permit any Purchaser Subsidiary to, do any of the following without the prior
written consent of the Company:
(i) (A) declare, set aside or pay any dividends on,
or make any other distributions in respect of, any of its capital stock, (B)
split, combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock, or (C) purchase, redeem or otherwise acquire
any shares of capital stock of the Purchaser or any Purchaser Subsidiary or any
other securities thereof or any rights, warrants or options to acquire any such
shares or other securities;
(ii) issue, deliver, sell or grant (A) any shares of
its capital stock, (B) any voting securities or (C) any securities convertible
into or exchangeable for, or any options, warrants or rights to acquire, any
such shares, voting securities or convertible or exchangeable securities, other
than (1) the issuance of Purchaser Common Stock upon the exercise of Purchaser
Employee Stock Options outstanding on the date of this Agreement and in
accordance with their present terms, (2) the issuance of additional Purchaser
Employee Stock Options pursuant to the Purchaser Stock Plans in accordance with
their present terms and consistent with prior practice and the issuance of
Purchaser Common Stock upon the exercise of such Purchaser Employee Stock
Options and (3) the issuance of Purchaser Common Stock pursuant to the Purchaser
Stock Plans or the Purchaser Employee Stock Purchase Plan, (4) the issuance of
Purchaser Common Stock upon the exercise or conversion of warrants or
convertible debentures outstanding as of the date hereof in accordance with
their present terms and (5) in connection with the replacement of lost, stolen
or destroyed certificates;
(iii) amend its certificate of incorporation, by-laws
or other comparable charter or organizational documents, except for such
amendments to its certificate of incorporation, by-laws and other comparable
charter or organizational documents that do not have an adverse affect on the
Merger and the other Transactions;
18
(iv) acquire or agree to acquire (A) by merging or
consolidating with, or by purchasing a substantial equity interest in or portion
of the assets of, or by any other manner, any business or any corporation,
partnership, joint venture, association or other business organization or
division thereof or (B) any assets that are material, individually or in the
aggregate, to the Purchaser and the Purchaser Subsidiaries, taken as a whole,
except purchases of inventory in the ordinary course of business consistent with
past practice;
(v) (A) grant to any executive officer or director of
the Purchaser or any Purchaser Subsidiary any increase in compensation, except
in the ordinary course of business consistent with prior practice or to the
extent required under employment agreements in effect as of the date of this
Agreement, (B) grant to any executive officer or director of the Purchaser or
any Purchaser Subsidiary any increase in severance or termination pay, except to
the extent required under any agreement in effect as of the date of this
Agreement, (C) enter into any severance or termination agreement with any such
executive officer or director, (D) establish, adopt, enter into or amend in any
material respect any collective bargaining agreement or Purchaser Benefit Plan
or (E) take any action to accelerate any rights or benefits, or make any
material determinations not in the ordinary course of business consistent with
prior practice, under any collective bargaining agreement or Purchaser Benefit
Plan;
(vi) make any change in accounting methods,
principles or practices materially affecting the reported consolidated assets,
liabilities or results of operations of the Purchaser, except insofar as may
have been required by a change in GAAP;
(vii) sell, lease (as lessor), license or otherwise
dispose of or subject to any Lien any properties or assets that are material,
individually or in the aggregate, to the Purchaser and the Purchaser
Subsidiaries, taken as a whole, except sales of inventory and excess or
obsolete assets in the ordinary course of business consistent with past
practice;
(viii) take, or permit any Purchaser Subsidiary to
take, any action that could reasonably be expected to prevent the Merger from
qualifying as a "reorganization" within the meaning of Section 368(a) of the
Code; or
(ix) authorize any of, or commit or agree to take any
of, the foregoing actions.
(c) OTHER ACTIONS. The Company and Purchaser shall not, and
shall not permit any of their respective Subsidiaries to, take any action that
would, or that could reasonably be expected to, result in (i) any of the
representations and warranties of such party set forth in this Agreement that is
qualified as to materiality becoming untrue, (ii) any of such representations
and warranties that is not so qualified becoming untrue in any material respect
or (iii) except as otherwise permitted by Section 5.02, any condition to the
Merger set forth in Article VII, not being satisfied.
(d) ADVICE OF CHANGES. The Company shall promptly advise
Purchaser orally and in writing of any change or event that has or could
reasonably be expected to have a Company Material Adverse Effect. Purchaser
shall promptly advise the Company orally and in writing of any change or event
that has or could reasonably be expected to have a Purchaser Material Adverse
Effect.
SECTION 5.02. NO SOLICITATION.
(a) The Company shall not, nor shall it authorize or permit
any Company Subsidiary to, nor shall it authorize or permit any officer,
director or employee of, or any investment banker, attorney or other advisor or
representative (collectively, "Representatives") of, the Company or any Company
Subsidiary to, (i) solicit, initiate or encourage the submission of any Company
Takeover Proposal, or take any action designed to facilitate any inquiries or
the making of any proposal that constitutes, or may
19
reasonably be expected to lead to, any Company Takeover Proposal, (ii) enter
into any agreement with respect to any Company Takeover Proposal or (iii) enter
into, participate in or continue any discussions or negotiations regarding, or
furnish to any Person any information with respect to, any Company Takeover
Proposal; provided, however, that prior to the receipt of the Company
Stockholder Approval, the Company and its Representatives may, to the extent
required by the fiduciary obligations of the Company Board, as determined in
good faith by it after consultation with outside counsel, in response to a
Company Takeover Proposal, that is made by a Person the Company Board
determines, in good faith, is reasonably likely to result in a transaction
meeting the requirements of a "Superior Company Proposal" that was not solicited
by the Company and that did not otherwise result from a breach or a deemed
breach of this Section 5.02(a), and subject to compliance with Section 5.02(c),
(x) furnish information with respect to the Company to the Person making such
Company Takeover Proposal and its Representatives pursuant to a customary
confidentiality agreement and (y) participate in discussions or negotiations
(including solicitation of a revised Company Takeover Proposal) with such Person
and its Representatives regarding any Company Takeover Proposal.
(b) Neither the Company Board nor any committee thereof shall
(i) withdraw or propose publicly to withdraw the approval or recommendation by
the Company Board or any such committee of this Agreement or the Merger, (ii)
approve any letter of intent, agreement in principle, acquisition agreement or
similar agreement relating to any Company Takeover Proposal or (iii) approve or
recommend, or propose publicly to approve or recommend, any Company Takeover
Proposal. Notwithstanding the foregoing, if, prior to the receipt of the Company
Stockholder Approval, the Company Board receives a Superior Company Proposal and
as a result thereof the Company Board determines in good faith, after
consultation with outside counsel, that it is necessary to do so in order to
comply with its fiduciary obligations, the Company Board may withdraw or modify
its approval or recommendation of the Merger and this Agreement and, in
connection therewith, approve or recommend such Superior Company Proposal.
(c) The Company promptly shall advise Purchaser orally and in
writing if it shall receive any Company Takeover Proposal or any inquiry with
respect to or that could reasonably be expected to lead to any Company Takeover
Proposal. The Company shall keep Purchaser informed of the status of any such
Company Takeover Proposal or inquiry. The Company shall not be required to
comply with this Section 5.02(c) in any instance to the extent that the Company
Board determines in good faith, after consultation with outside counsel, that
such compliance would in such instance breach or violate their fiduciary duties.
(d) Nothing contained in this Section 5.02 shall prohibit the
Company from taking and disclosing to its stockholders a position contemplated
by Rule 14d-9 or Rule 14e-2(a) promulgated under the Exchange Act or from making
any disclosure to the Company's stockholders if, in the good faith judgment of
the Company Board, after consultation with outside counsel, failure so to
disclose would breach or violate its obligations under applicable Law; provided,
however, that in no event shall the Company, the Company Board or any committee
thereof take, agree or resolve to take any action prohibited by Section 5.02(b).
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. PREPARATION OF PROXY STATEMENT; STOCKHOLDERS MEETING.
(a) FORM S-4. Each of the Company and Purchaser shall
cooperate and promptly prepare under the Securities Act, with respect to the
shares of Purchaser Common Stock issuable in the
20
Merger, a portion of which Form S-4 shall also serve as the joint proxy
statement with respect to the meetings of the stockholders of the Company and of
Purchaser in connection with the Merger (in its entirety, the "Form S-4"). The
respective parties will cause the Form S-4 to comply as to form in all material
respects with the applicable provisions of the Securities Act, the Exchange Act,
and the rules and regulations thereunder. Each of the Company and Purchaser
shall furnish all information about itself and its business and operation and
all necessary financial information to the other as the other may reasonably
request in connection with the preparation of the Form S-4. Purchaser shall use
its reasonable best efforts, and the Company will cooperate with the Purchaser,
to have the Form S-4 declared effective by the SEC as promptly as practicable
following the date of this Agreement. Purchaser shall use its reasonable best
efforts to obtain, prior to the effective date of the Form S-4, all necessary
state securities law or "blue sky" permits or approvals required to carry out
the transactions contemplated by this Agreement and will pay all expenses
incident thereto. Purchaser agrees that the Form S-4 and each amendment or
supplement thereto at the time of mailing thereof and at the time of the
respective meetings of stockholder of the Company and Purchaser, will not
include an untrue statement of a material fact or omit to state a material fact
required to be stated therein, in light of the circumstances under with they
were made, not misleading; provided, however, that the foregoing shall not apply
to the extent that any such untrue statement of a material fact or omission to
state a materiel fact was made by Purchaser in reliance upon and in conformity
with information concerning the Company furnished to Purchaser by the Company
for use in the Form S-4. The Company agrees that the information provided by it
for inclusion in the Form S-4 and each amendment or supplement thereto, at the
time of mailing thereof and at the time of the respective meetings of
stockholders of the Company and Purchaser, will not include any untrue statement
of a material fact or omit to state a materiel fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Purchaser will advise
and deliver copies (if any) to the Company, promptly after it receives notice
thereof, of the time when the Form S-4 has become effective, any supplement or
amendment has been filed, the issuance of any stop order, the suspension of the
qualification of the Purchaser Common Stock issuable in connection with the
Merger for offering or sale in any jurisdiction, or any request by the SEC for
amendment of the Form S-4 or comments thereon and responses thereto or requests
by the SEC for additional information.
(b) STOCKHOLDERS MEETINGS. Each of the Company and Purchaser
will take all action necessary in accordance with applicable Law and, in the
case of the Company, the Company's Charter and the Company's By-laws and, in the
case of Purchaser, the Purchaser's Charter and the Purchaser's By-laws, to
convene a meeting of its stockholders as promptly as practicable to consider and
vote upon the approval of this Agreement and the transactions contemplated
hereby. The Company Board and the Purchaser Board each shall recommend that its
stockholders approve this Agreement and the transactions contemplated hereby,
and the Company and Purchaser shall use their reasonable best efforts to obtain
such approval, including, without limitation, by timely filing and mailing the
joint proxy statement/prospectus contained in the Form S-4 to their respective
stockholders; provided, however, that nothing contained in this Section 6.01(b)
shall prohibit the Company Board from failing to make such recommendation or
using their reasonable best efforts to obtain such approval if the Company Board
has determined in good faith, after consultation with outside counsel, that such
action is necessary for the Company Board to comply with its fiduciary duties to
its stockholders under applicable Law. The Company and Purchaser shall
coordinate and cooperate with respect to the timing of such meetings and shall
use their reasonable best efforts to hold such meetings on the same day. It
shall be a condition to mailing the Form S-4 that (i) Purchaser shall have
received a "comfort" letter from Ernst & Young LLP, independent public
accountants for the Company, dated as of a date within two business days before
the date on which the Form S-4 shall become effective, with respect to the
financial statements of the Company included or incorporated in the Form S-4, in
form and substance reasonably satisfactory to Purchaser, and customary in scope
and substance for "comfort" letters delivered by independent public accountants
in connection with registration statements and proxy statements similar to the
Form S-4, and
21
(ii) the Company shall have received a "comfort" letter from KPMG LLP,
independent public accountants for Purchaser, dated as of a date within two
business days before the date on which the Form S-4 shall become effective, with
respect to the financial statements of Purchaser included or incorporated in the
Form S-4, in form and substance reasonably satisfactory to the Company, and
customary in scope and substance for "comfort" letters delivered by independent
public accountants in connection with registration statements and proxy
statements similar to the Form S-4.
(c) LISTING APPLICATION. Purchaser shall promptly prepare and
submit to the Nasdaq SmallCap Market a listing application covering the shares
of Purchaser Common Stock issuable in the Merger, and shall obtain prior the
Effective Time approval for the listing of such Purchaser Common Stock, subject
to official notice of the issuance.
SECTION 6.02. ACCESS TO INFORMATION; CONFIDENTIALITY. Each of the
Company and Purchaser shall, and shall cause each of its Subsidiaries to, afford
to the other party and to the other party's officers, employees, accountants,
counsel, financial advisors and other representatives, reasonable access during
normal business hours during the period prior to the Effective Time to all their
respective properties, books, contracts, commitments, personnel and records and,
during such period, each of the Company and Purchaser shall, and shall cause
each of its Subsidiaries to, furnish promptly to the other party (a) a copy of
each report, schedule, registration statement and other document filed by it
during such period pursuant to the requirements of Federal or state securities
laws and (b) all other information concerning its business, properties and
personnel as the other party may reasonably request. All information exchanged
pursuant to this Section 6.02 shall be subject to the confidentiality agreements
dated January 30, 2003 and March 5, 2003 between the Company and Purchaser (the
"Confidentiality Agreements").
SECTION 6.03. REASONABLE EFFORTS; NOTIFICATION.
(a) Upon the terms and subject to the conditions set forth in
this Agreement, unless, to the extent permitted by Section 5.02(b), the Company
Board approves or recommends a Superior Company Proposal, each of the parties
shall use all reasonable efforts to take, or cause to be taken, all actions, and
to do, or cause to be done, and to assist and cooperate with the other parties
in doing, all things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the Merger and the other
Transactions, including (i) the obtaining of all necessary actions or
nonactions, waivers, consents and approvals from Governmental Entities and the
making of all necessary registrations and filings (including filings with
Governmental Entities, if any) and the taking of all reasonable steps as may be
necessary to obtain an approval or waiver from, or to avoid an action or
proceeding by, any Governmental Entity, (ii) the obtaining of all necessary
consents, approvals or waivers from third parties, (iii) the defending of any
lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement or the consummation of the Transactions, including
seeking to have any stay or temporary restraining order entered by any court or
other Governmental Entity vacated or reversed and (iv) the execution and
delivery of any additional instruments necessary to consummate the Transactions
and to fully carry out the purposes of this Agreement. Notwithstanding the
foregoing, the Company and its Representatives shall not be prohibited under
this Section 6.03(a) from taking any action permitted by Section 5.02(b).
(b) The Company shall give prompt notice to Purchaser, and
Purchaser or Merger Sub shall give prompt notice to the Company, of (i) any
representation or warranty made by it contained in this Agreement that is
qualified as to materiality becoming untrue or inaccurate in any respect or any
such representation or warranty that is not so qualified becoming untrue or
inaccurate in any material respect or (ii) the failure by it to comply with or
satisfy in any material respect any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement; provided, however, that
no such
22
notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under this Agreement.
(c) The Company shall use its reasonable best efforts to
complete the audit of its consolidated financial statements for the fiscal year
ending April 30, 2003 as soon as practicable.
SECTION 6.04. EQUITY INCENTIVE PLANS.
(a) COMPANY STOCK PLANS. Prior to the Effective Time, the
Company Board (or, if appropriate, any committee administering the Company Stock
Plans) shall adopt such resolutions or take such other actions as may be
required to ensure that each outstanding Company Employee Stock Option, whether
vested or unvested, that is then outstanding and unexercised pursuant to the
Company Stock Plans shall be fully vested and exercisable for a period of
fifteen (15) days prior to the Effective Time and that each Company Stock Plan
shall terminate as of the Effective Time.
(b) COMPANY ESPP. Any offering underway as of May 31, 2003 or
that is scheduled to end on such date under the Company ESPP shall, to the
extent necessary, be accelerated such that on May 31, 2003 all offerings under
the Company ESPP shall be determined by treating this date as the last day of
such offering periods (and making such other pro-rata adjustments as may be
necessary to reflect the shortened offering). Outstanding rights to purchase
shares of Company Common Stock shall be exercised in accordance with the terms
of the Company ESPP. The Company ESPP shall remain in effect until otherwise
terminated by the Company Board; provided, however, that the Company will not
permit an offering period to commence after the date hereof (unless this
Agreement is terminated); and provided, further, that, in the event the Merger
is consummated, the Company ESPP shall be terminated effective as of the
Effective Time.
SECTION 6.05. BENEFIT PLANS. For the one (1) year period following the
Effective Time and except as set forth in Section 6.04, Purchaser shall cause
the Surviving Corporation to maintain the Company Benefit Plans in effect on the
date of this Agreement or to provide benefits to each current employee of the
Company and its Subsidiaries that are not less favorable in the aggregate to
such employees than those in effect on the date of this Agreement.
(a) From and after the Effective Time, Purchaser shall, and
shall cause the Surviving Corporation to honor in accordance with their
respective terms (as in effect on the date of this Agreement), all the Company's
employment, severance and termination agreements.
(b) With respect to any Purchaser Benefit Plan (including any
severance plan), for all purposes, including determining eligibility to
participate, level of benefits and vesting, service with the Company or any
Company Subsidiary shall be treated as service with Purchaser or any of its
Subsidiaries; provided, however, that such service need not be recognized to the
extent that such recognition would result in any duplication of benefits.
(c) To the extent permitted by the applicable Purchaser
Benefit Plan, Purchaser shall waive, or cause to be waived, any pre-existing
condition limitation under any Purchaser Benefit Plan in which employees of the
Company and the Company Subsidiaries (and their eligible dependents) will be
eligible to participate from and after the Effective Time, except to the extent
that such pre-existing condition limitation would have been applicable under the
comparable Company Benefit Plan immediately prior to the Effective Time.
Purchaser shall recognize, or cause to be recognized, the dollar amount of all
expenses incurred by each Company employee (and his or her eligible dependents)
during the calendar year in which the Effective Time occurs for purposes of
satisfying such year's deductible and
23
co-payment limitations under the relevant Purchaser Benefit Plans in which they
will be eligible to participate from and after the Effective Time.
SECTION 6.06. INDEMNIFICATION. Purchaser shall, and shall cause the
Surviving Corporation to, honor all the Company's obligations to indemnify
(including any obligations to advance funds for expenses) the current or former
directors and officers of the Company for acts or omissions by such directors
and officers occurring prior to the Effective Time to the extent that such
obligations of the Company exist on the date of this Agreement, whether pursuant
to the Company Charter, the Company By-laws, individual indemnity agreements or
otherwise, and such obligations shall survive the Merger and shall continue in
full force and effect in accordance with the terms of the Company Charter, the
Company By-laws and such individual indemnity agreements from the Effective Time
until the expiration of the applicable statute of limitations with respect to
any claims against such directors or officers arising out of such acts or
omissions. The certificate of incorporation and bylaws of the Surviving
Corporation will contain provisions with respect to such indemnification and
elimination of liability for monetary damages at least as favorable to the
directors and officers of the Company as those set forth in the current
certificate of incorporation and bylaws of the Company, and for a period of six
(6) years from the Effective Time, those provisions will not be repealed or
amended or otherwise modified in any manner that would adversely affect the
rights thereunder of the directors and officers of the Company, except to the
extent, if any, that such modification is required by applicable law. At or
prior to the Effective Time, the Company shall purchase directors' and officers'
liability insurance coverage for the Company's directors and officers which
shall provide them with at least the same coverage and amounts containing terms
and conditions which are no less advantageous to the Company's current or former
directors and officers with respect to claims arising from or related to facts
or events which occurred at or before the Effective Time for up to six years
following the Effective Time. In the event that Purchaser or the Surviving
Corporation or any of their respective successors or assigns (i) consolidates
with or merges into any other Person and shall not be the continuing or
surviving corporation or entity of such consolidation or merger, or (ii)
transfers all or substantially all of its properties and assets to any Person in
a single transaction or a series of transactions, then, and in each such case,
Purchaser or the Surviving Corporation, as applicable, shall make or cause to be
made proper provision so that the successors and assigns of Purchaser or the
Surviving Corporation, as applicable, assume the indemnification obligations of
Purchaser or the Surviving Corporation, as applicable, under this Section 6.06
for the benefit of the directors and officers of the Company. The obligations of
Purchaser and the Surviving Corporation under this Section 6.06 shall not be
terminated or modified in such a manner as to adversely affect any persons
entitled to indemnification under this Section 6.06 without the consent of such
affected indemnified persons (it being expressly agreed that such indemnified
persons to whom this Section 6.06 applies shall be third party beneficiaries of
this Section 6.06) unless such modification or termination is required by Law.
At or before the Effective Time, the Company shall execute and deliver to each
of its directors and officers an indemnification agreement in a form reasonably
acceptable to Purchaser.
SECTION 6.07. FEES AND EXPENSES.
(a) All fees and expenses incurred in connection with the
Merger and the other Transactions shall be paid by the party incurring such fees
or expenses, whether or not the Merger is consummated, except those fees and
expenses incurred in connection with printing and filing the Form S-4 shall be
shared equally by Purchaser and the Company, provided that all such fees and
expenses payable by the Company shall be paid on or before the Effective Time.
(b) The Company shall pay to Purchaser a fee of $600,000 (the
"Termination Fee") if this Agreement is terminated pursuant to (i) Section
8.01(b)(v) or Section 8.01(c)(ii); or (ii) Section 8.01(c)(i), Section
8.01(b)(i) or Section 8.01(b)(iii) (as a result of the failure of the Company to
satisfy any of the conditions set forth in Article VII to be satisfied by it),
and at the time of termination there
24
exists a Company Takeover Proposal and within twelve (12) months of such
termination pursuant to Section 8.01(c)(i), Section 8.01(b)(i) or Section
8.01(b)(iii), the Company enters into a definitive agreement to consummate, or
consummates, the transactions contemplated by such Company Takeover Proposal. If
this Agreement is terminated (x) by Purchaser pursuant to Section 8.01(b)(iv),
then the Company shall pay to Purchaser an amount equal to all of Purchaser's
Expenses, as evidenced by reasonable documentation, up to an aggregate of
$600,000; or (y) by the Company pursuant to Section 8.01(b)(vi), then Purchaser
shall pay to the Company an amount equal to all of the Company's Expenses, as
evidenced by reasonable documentation, up to an aggregate of $600,000; provided,
however, that in the event that both Purchaser and the Company would otherwise
be entitled to payments under this Section 6.07 in connection with the
termination of this Agreement pursuant to both Sections 8.01(b)(iv) and
8.01(b)(vi), neither party shall be required to make any such payment under this
Section 6.07. Any fee due under this Section 6.07(b) (other than Section
6.07(b)(ii)) shall be paid by wire transfer of same-day funds within two (2)
business days of the date of the termination of this Agreement, and any fee due
under Section 6.07(b)(ii) shall be paid by wire transfer of same-day funds no
later than the date the Company enters into a definitive agreement to
consummate, or consummates, the transactions contemplated by a Company Takeover
Proposal.
SECTION 6.08. PUBLIC ANNOUNCEMENTS. Purchaser and Merger Sub, on the
one hand, and the Company, on the other hand, shall consult with each other
before issuing, and provide each other the opportunity to review and comment
upon, any press release or other public statements with respect to the Merger
and the other Transactions and shall not issue any such press release or make
any such public statement prior to such consultation, except as may be required
by applicable Law, court process or by obligations pursuant to any listing
agreement with any national securities exchange or The Nasdaq Stock Market.
SECTION 6.09. TRANSFER TAXES. All stock transfer, real estate transfer,
documentary, stamp, recording and other similar Taxes (including interest,
penalties and additions to any such Taxes) ("Transfer Taxes") incurred in
connection with the Transactions shall be paid by either Merger Sub or the
Surviving Corporation, and the Company shall cooperate with Merger Sub and
Purchaser in preparing, executing and filing any Tax Returns with respect to
such Transfer Taxes.
SECTION 6.10. AFFILIATES OF THE COMPANY. The Company has identified the
Persons listed on the Company Disclosure Letter as Persons whom the Company
reasonably believes are "affiliates" of the Company for purposes of Rule 145
promulgated under the Securities Act (each, a "Company Affiliate"). The Company
will use its reasonable best efforts to obtain as promptly as practicable from
each Company Affiliate a written agreement in substantially the form of Exhibit
B hereto to the effect that such Company Affiliate will not sell, pledge,
transfer or otherwise dispose of any Purchaser Common Stock issued to such
Company Affiliate pursuant to the Merger, except in compliance with Rule 145
promulgated under the Securities Act or an exemption from the registration
requirements of the Securities Act.
SECTION 6.11. TAX FREE REORGANIZATION TREATMENT. The parties shall use
their commercially reasonable efforts to cause the Merger to be treated as a
reorganization within the meaning of Section 368(a) of the Code and shall not
knowingly take or fail to take any action which action or failure to act would
jeopardize the qualification of the Merger as a reorganization within the
meaning of Section 368(a) of the Code. Each of Purchaser, Merger Sub, and the
Company (i) shall not file any tax return or take any position inconsistent with
the treatment of the Merger as a reorganization described in Section 368(a) of
the Code.
SECTION 6.12. EXEMPTION FROM LIABILITY UNDER SECTION 16(B). If, prior
to the Effective Time, the Company delivers to Purchaser (i) a resolution of the
Company Board, or a committee
25
of Non-Employee Directors thereof (as such term is defined for purposes of Rule
16b-3(d) under the Exchange Act), providing that the conversion into Purchaser
Common Stock by Company Insiders (as defined below) of Company Common Stock or
options to purchase Company Common Stock pursuant to the transactions
contemplated hereby are intended to be exempt from liability pursuant to Rule
16b-3 under the Exchange Act and (ii) the Section 16 Information (as defined
below) with respect to the Company prior to the Effective Time, the Purchaser
Board, or a committee of Non-Employee Directors thereof (as such term is defined
for purposes of Rule 16b-3(d) under the Exchange Act), shall adopt a resolution
in advance of the Effective Time providing that the receipt by the Company
Insiders of Purchaser Common Stock in exchange for Company Common Stock and of
options to purchase Company Common Stock, 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
Rule 16b-3 under the Exchange Act. "Section 16 Information" shall mean
information accurate in all respects regarding the Company Insiders, the number
of shares of Company Common Stock or other Company equity securities deemed to
be beneficially owned by each Company Insider and expected to be exchanged for
Purchaser Common Stock in connection with the Merger. "Company Insiders" shall
mean those officers and directors of the Company who are subject to the
reporting requirements of Section 16(a) of the Exchange Act who are listed in
the Section 16 Information.
SECTION 6.13. GRANTING OF ADDITIONAL PURCHASER OPTIONS. At the
Effective Time, Purchaser shall grant options ("Additional Purchaser Options")
to purchase 300,000 shares of Purchaser Common Stock under the Purchaser Stock
Plans to such employees of the Company that will become employees of Purchaser
as may be determined by Purchaser and in the amounts as may be determined by
Purchaser. The Additional Purchaser Options shall be subject to Purchaser's
standard terms and conditions, including vesting schedules. The exercise price
for the Additional Purchaser Options shall be the fair market value of a share
of Purchaser Common Stock at the Effective Time, as determined in good faith by
the Purchaser Board. The number of Additional Purchaser Options granted
hereunder shall be adjusted to reflect fully the effect of any stock split,
reverse stock split, stock dividend (including any dividend or distribution of
securities convertible into or exchangeable for Purchaser Common Stock),
reorganization, recapitalization or other like change with respect to Purchaser
Common Stock occurring after the date hereof and prior to the Effective Time.
The Purchaser Common Stock to be issued upon the exercise of such Additional
Purchaser Options has been duly and validly reserved for issuance and, upon
issuance in accordance with the terms of the Purchaser Stock Plans, will be duly
and validly issued, fully paid, nonassessable, free of any liens or encumbrances
(other than any liens or encumbrances created by the holder thereof) and free of
restrictions on transfer.
SECTION 6.14. REMEDIES. Notwithstanding anything to the contrary
contained herein, in the event of a willful breach by the any party to this
Agreement of any covenant contained in this Agreement, the other party hereto
shall have all rights, powers and remedies against the other party that may be
available at law or in equity. All rights, powers and remedies provided under
this Agreement or otherwise available in respect hereof at law or in equity
shall be cumulative and not alternative, and the exercise of any such right,
power or remedy by any party shall not preclude the simultaneous or later
exercise of any other such right, power or remedy by such party.
ARTICLE VII
CONDITIONS PRECEDENT
SECTION 7.01. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligation of each party to effect the Merger is subject
to the satisfaction or waiver on or prior to the Closing Date of the following
conditions:
26
(a) STOCKHOLDER APPROVAL. The Company and Purchaser shall have
obtained the Company Stockholder Approval and the Purchaser Stockholder
Approval, as applicable.
(b) ANTITRUST. Any consents, approvals and filings under any
foreign antitrust Law, the absence of which would prohibit the consummation of
Merger, shall have been obtained or made.
(c) NO INJUNCTIONS OR RESTRAINTS. No temporary judgment issued
by any court of competent jurisdiction or other law preventing the consummation
of the Merger shall be in effect; provided, however, that prior to asserting
this condition, each of the parties shall have used all reasonable efforts to
prevent the entry of any such injunction or other order and to appeal as
promptly as possible any such judgment that may be entered.
(d) FORM S-4 EFFECTIVENESS. The Form S-4 shall have been
declared effective by the SEC in accordance with the provisions of the
Securities Act, and no stop order suspending such effectiveness shall have been
issued and remain in effect and no proceeding for that purpose shall have been
instituted by the SEC or any state regulatory authorities;
(e) CONSENTS AND APPROVALS. All governmental waivers,
consents, orders and approvals legally required for the consummation of the
Merger and the Transactions and all consents from lenders, lessors, or other
third parties required to consummate the Merger and the Transactions, shall have
been obtained and be in effect at the Effective Time, except where the failure
to obtain the same would not be reasonably likely, individually or in the
aggregate, to have a Purchaser Material Adverse Effect or a Company Material
Adverse Effect following the Effective Time.
SECTION 7.02. CONDITIONS TO OBLIGATIONS OF PURCHASER AND MERGER SUB.
The obligations of Purchaser and Merger Sub to effect the Merger are further
subject to the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company in this Agreement shall be true and correct in all
material respects as of the Closing Date as though made on the Closing Date,
except to the extent such representations and warranties expressly relate to an
earlier date (in which case such representations and warranties shall be true
and correct in all material respects, on and as of such earlier date), other
than for such failures to be true and correct that, individually and in the
aggregate, have not had and could not reasonably be expected to have a Company
Material Adverse Effect. Purchaser shall have received a certificate signed on
behalf of the Company by the chief executive officer and the chief financial
officer of the Company to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF THE COMPANY. The Company
shall have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing Date, and
Purchaser shall have received a certificate signed on behalf of the Company by
the chief executive officer and the chief financial officer of the Company to
such effect.
(c) NO LITIGATION. There shall not be pending or threatened
any suit, action or proceeding by any Governmental Entity, in each case that has
a substantial likelihood of success, (i) challenging the acquisition by
Purchaser or Merger Sub of any Company Common Stock, seeking to restrain or
prohibit the consummation of the Merger or any other Transaction or seeking to
obtain from the Company, Purchaser or Merger Sub any damages that are material
in relation to the Company and the Company Subsidiaries taken as a whole, or
(ii) seeking to prohibit or limit the ownership or operation by the Company,
Purchaser or any of their respective Subsidiaries of any material portion of the
business or assets of the Company, Purchaser or any of their respective
Subsidiaries, or to compel the Company,
27
Purchaser or any of their respective Subsidiaries to dispose of or hold separate
any material portion of the business or assets of the Company, Purchaser or any
of their respective Subsidiaries, as a result of the Merger or any other
Transaction.
(d) ABSENCE OF COMPANY MATERIAL ADVERSE EFFECT. Except as
disclosed in the Filed Company SEC Documents or in the Company Disclosure
Letter, since the date of this Agreement there shall not have been any event,
change, effect or development that, individually or in the aggregate, has had a
Company Material Adverse Effect.
(e) PURCHASER TAX OPINION. Xxxxxx & Xxxxxx LLP, legal counsel
to Purchaser, shall have issued its opinion, such opinion dated on or about the
date of the Closing, addressed to Purchaser, and reasonably satisfactory in form
and substance to it, based upon certain representations of the Company,
Purchaser and the Merger Sub and certain assumptions, to the effect that: (i)
the Merger will qualify as a tax-free "reorganization" under Section 368(a) of
the Code, and (ii) no gain or loss will be recognized by Purchaser or the
Company by reason of the Merger, which opinion shall not have been withdrawn or
modified in any material respect. The opinion referred to in this Section
7.02(e) shall not be waivable after receipt of the Company Stockholder Approval
or the Purchaser Stockholder Approval unless further stockholder approval is
obtained with appropriate disclosure.
(f) ESTIMATED CLOSING BALANCE SHEET. A preliminary projected
balance sheet as of the estimated Effective Time (the "Estimated Closing Balance
Sheet") shall be prepared by the Company in good faith in accordance with GAAP
consistent with the Company's past practices and delivered to Purchaser at least
five (5) business days prior to the estimated Effective Time and reasonably
accepted and agreed to by Purchaser within two (2) business days of the
estimated Effective Time.
(g) ADJUSTED WORKING CAPITAL. At the Effective Time, the
Adjusted Working Capital shall be no less than $1,933,000, as evidenced by the
Estimated Closing Balance Sheet
(h) UNRESTRICTED CASH; RESTRICTED CASH. At the Effective Time,
(A) the sum of Unrestricted Cash and Restricted Cash shall equal no less than
$7.5 million and (B) the Restricted Cash shall equal no more than $2.0 million.
SECTION 7.03. CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligations
of the Company to effect the Merger are further subject to the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Purchaser and Merger Sub in this Agreement shall be true and
correct in all material respects as of the Closing Date as though made on the
Closing Date, except to the extent such representations and warranties expressly
relate to an earlier date (in which case such representations and warranties
shall be true and correct in all material respects, on and as of such earlier
date), other than for such failures to be true and correct that, individually
and in the aggregate, have not had and could not reasonably be expected to have
a Purchaser Material Adverse Effect. The Company shall have received a
certificate signed on behalf of Purchaser by the chief executive officer and the
chief financial officer of Purchaser to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF PURCHASER AND MERGER SUB.
Purchaser and Merger Sub shall have performed in all material respects all
obligations required to be performed by them under this Agreement at or prior to
the Closing Date, and the Company shall have received a certificate signed on
behalf of Purchaser by the chief executive officer and the chief financial
officer of Purchaser to such effect.
28
(c) NO LITIGATION. There shall not be pending or threatened
any suit, action or proceeding by any Governmental Entity, in each case that has
a substantial likelihood of success, (i) challenging the acquisition by
Purchaser or Merger Sub of any Company Common Stock, seeking to restrain or
prohibit the consummation of the Merger or any other Transaction or seeking to
obtain from the Company, Purchaser or Merger Sub any damages that are material
in relation to the Company and the Company Subsidiaries taken as a whole, or
(ii) seeking to prohibit or limit the ownership or operation by the Company,
Purchaser or any of their respective Subsidiaries of any material portion of the
business or assets of the Company, Purchaser or any of their respective
Subsidiaries, or to compel the Company, Purchaser or any of their respective
Subsidiaries to dispose of or hold separate any material portion of the business
or assets of the Company, Purchaser or any of their respective Subsidiaries, as
a result of the Merger or any other Transaction.
(d) ABSENCE OF PURCHASER MATERIAL ADVERSE EFFECT. Except as
disclosed in the Filed Purchaser SEC Documents or in the Purchaser Disclosure
Letter, since the date of this Agreement there shall not have been any event,
change, effect or development that, individually or in the aggregate, has had a
Purchaser Material Adverse Effect.
(e) SPECIAL DIVIDEND. The Company Board shall have declared
and set a record date for holders of Company Common Stock entitled to payment of
the Special Dividend as contemplated by Section 5.01(a)(i).
(f) TAX FREE REORGANIZATION. The Company shall have not become
aware of any action or condition that could reasonably be expected to prevent
the Merger from qualifying as a "reorganization" within the meaning of Section
368(a) of the Code.
(g) COMPANY TAX OPINION. XxXxxxxxx, Will & Xxxxx, legal
counsel to the Company, or Xxxxxx & Xxxxxx LLP, legal counsel to Purchaser,
shall have issued its opinion, such opinion dated on or about the date of the
Closing, addressed to the Company, and reasonably satisfactory in form and
substance to it, based upon certain representations of the Company, Purchaser
and the Merger Sub and certain assumptions, to the effect that: (i) the Merger
will qualify as a tax-free "reorganization" under Section 368(a) of the Code,
(ii) no gain or loss will be recognized by any shareholder of the Company upon
the exchange of Company Common Stock solely for Purchaser Common Stock in the
Merger, (iii) the basis of the Purchaser Common Stock received by each Company
shareholder who exchanges the Company Common Stock for Purchaser Common Stock in
the Merger will be the same as such shareholder's basis in the Company Common
Stock surrendered in exchange therefor (subject to any adjustments required as
the result of receipt of cash in lieu of a fractional share of Purchaser Common
Stock), and (iv) the holding period of the Purchaser Common Stock received by
each Company shareholder in the Merger will include the holding period of the
Company Common Stock surrendered in exchange therefor, provided that such shares
of Company Common Stock were held as a capital asset by such shareholder at the
Effective Time, which opinion shall not have been withdrawn or modified in any
material respect. The opinion referred to in this Section 7.03(g) shall not be
waivable after receipt of the Company Stockholder Approval or the Purchaser
Stockholder Approval unless further stockholder approval is obtained with
appropriate disclosure.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after receipt of either Company
Stockholder Approval or Purchaser Stockholder Approval:
29
(a) by mutual written consent of Purchaser and the Company;
(b) by either Purchaser or the Company:
(i) if the Merger is not consummated on or before
December 31, 2003 (the "Outside Date"), unless the failure to consummate the
Merger is the result of a willful and material breach of this Agreement by the
party seeking to terminate this Agreement;
(ii) if any Governmental Entity issues an order,
decree or ruling or take any other action permanently enjoining, restraining or
otherwise prohibiting the Merger and such order, decree, ruling or other action
shall have become final and nonappealable;
(iii) if any condition to the obligation of such
party to consummate the Merger set forth in Section 7.02 (in the case of
Purchaser) or 7.03 (in the case of the Company) becomes incapable of
satisfaction prior to the Outside Date; provided, however, that the terminating
party is not then in willful and material breach of any representation, warranty
or covenant contained in this Agreement);
(iv) if, upon a vote at a duly held meeting to obtain
the Company Stockholder Approval, the Company Stockholder Approval is not
obtained; or
(v) if the Company Board or any committee thereof
withdraws, or proposes publicly to withdraw, its approval or recommendation of
this Agreement or the Merger, fails to recommend to the Company's stockholders
that they give the Company Stockholder Approval or approves or recommends, or
proposes publicly to approve or recommend, any Company Takeover Proposal;
(vi) if, upon a vote at a duly held meeting to obtain
the Purchaser Stockholder Approval, the Purchaser Stockholder Approval is not
obtained.
(c) by Purchaser, (i) if the Company breaches or fails to
perform in any material respect any of its representations, warranties or
covenants contained in this Agreement, which breach or failure to perform (x)
would give rise to the failure of a condition set forth in Section 7.02(a) or
7.02(b), and (y) cannot be or has not been cured within 30 days after the giving
of written notice to the Company of such breach (provided that Purchaser is not
then in willful and material breach of any representation, warranty or covenant
contained in this Agreement); or (ii) if the Company or any of its officers,
directors, employees, representatives or agents takes any of the actions that
would be proscribed by Section 5.02 but for the exceptions therein allowing
certain actions to be taken pursuant to the proviso in the first sentence of
Section 5.02(a);
(d) by the Company, if Purchaser breaches or fails to perform
in any material respect any of its representations, warranties or covenants
contained in this Agreement, which breach or failure to perform (i) would give
rise to the failure of a condition set forth in Section 7.03(a) or 7.03(b), and
(ii) cannot be or has not been cured within 30 days after the giving of written
notice to Purchaser of such breach (provided that the Company is not then in
willful and material breach of any representation, warranty or covenant
contained in this Agreement).
SECTION 8.02. EFFECT OF TERMINATION. In the event of termination of
this Agreement by either the Company or Purchaser as provided in Section 8.01,
this Agreement shall forthwith become void and have no effect, without any
liability or obligation on the part of Purchaser, Merger Sub or the Company,
other than the last sentence of Section 6.02, Section 6.07, this Section 8.02
and Article IX, which provisions shall survive such termination, and except to
the extent that such termination results from the willful and material breach by
a party of any representation, warranty or covenant set forth in this Agreement,
in which event the other party shall have all rights, powers and remedies
available at law
30
or in equity. Notwithstanding the foregoing, if this Agreement is terminated
under circumstances in which Purchaser is entitled to receive the Termination
Fee, the payment of the Termination Fee shall be the sole and exclusive remedy
available to Purchaser.
SECTION 8.03. AMENDMENT. This Agreement may be amended by the parties
at any time before or after receipt of the Company Stockholder Approval;
provided, however, that after receipt of the Company Stockholder Approval, there
shall be made no amendment that by Law requires further approval by the
stockholders of the Company without the further approval of such stockholders.
This Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties.
SECTION 8.04. EXTENSION: WAIVER. At any time prior to the Effective
Time, the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties contained in this Agreement or in any
document delivered pursuant to this Agreement or (c) subject to the proviso of
Section 8.03, waive compliance with any of the agreements or conditions
contained in this Agreement. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party. The failure of any party to this Agreement to
assert any of its rights under this Agreement or otherwise shall not constitute
a waiver of such rights.
SECTION 8.05. PROCEDURE FOR TERMINATION, AMENDMENT, EXTENSION OR
WAIVER. A termination of this Agreement pursuant to Section 8.01, an amendment
of this Agreement pursuant to Section 8.03 or an extension or waiver pursuant to
Section 8.04 shall, in order to be effective, require in the case of Purchaser,
Merger Sub or the Company, action by its Board of Directors or the duly
authorized designee of its Board of Directors.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of
the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time. This
Section 9.01 shall not limit any covenant or agreement of the parties which by
its terms contemplates performance after the Effective Time.
SECTION 9.02. NOTICES. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given upon receipt by the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to Purchaser or Merger Sub, to:
Verso Technologies, Inc.
000 Xxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Chief Financial Officer
with a copy to:
31
Xxxxxx X. Hussle, Esq.
Xxxxxx & Xxxxxx LLP
2700 International Tower
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
(b) if to the Company, to:
MCK Communications, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Chief Financial Officer
with a copy to:
Xxxx X. Xxxx III, P.C.
XxXxxxxxx, Will & Xxxxx
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
SECTION 9.03. DEFINITIONS. For purposes of this Agreement:
"ADJUSTED WORKING CAPITAL" means the Company's working capital
determined in accordance with GAAP less the amount of the Company's cash, cash
equivalents and marketable securities (whether or not restricted); provided,
however, that the liabilities associated with the matters set forth on Schedule
9.03 shall be excluded from the calculation of Adjusted Working Capital for all
purposes.
"COMPANY MATERIAL ADVERSE EFFECT" means any change, effect,
event, occurrence or state of facts that is materially adverse to the business,
assets, condition (financial or otherwise), or results of operations of the
Company and the Company Subsidiaries, taken as a whole, other than effects
relating to (A) changes, effects, events, occurrences or circumstances that
generally affect the industries in which the Company operates, and that do not
have a materially disproportionate impact on the Company and the Company
Subsidiaries, taken as a whole, (B) general economic, financial or securities
market conditions in the United States or elsewhere, or (C) the announcement of
the Transactions.
"COMPANY TAKEOVER PROPOSAL" means (i) any proposal or offer
for a merger, share exchange, business combination, consolidation, dual listed
structure, liquidation, dissolution, recapitalization, reorganization or other
similar transaction involving the Company, (ii) any proposal or offer to acquire
in any manner, directly or indirectly, over twenty-five percent (25%) of the
equity securities of the Company or (iii) any proposal or offer to acquire,
lease, exchange, mortgage, pledge, dispose of or otherwise transfer, in any
manner (including through any arrangement having substantially the same economic
effect as a sale of assets), directly or indirectly, a substantial portion of
the assets of the Company in a single transaction or a series of related
transactions, in each case other than the Transactions and other than any
acquisition transaction permitted by Section 5.01.
"EXPENSES" means, with respect to any party hereto, all
reasonable out-of-pocket expenses (including all fees and expenses of counsel,
accountants, investment bankers, experts and consultants to a party hereto and
its affiliates, but excluding any allocation of overhead) incurred by such party
or on its behalf in connection with or related to the authorization,
preparation, negotiation, execution
32
and performance of its obligations pursuant to this Agreement and the
consummation of the Merger, the preparation, printing, filing and mailing of the
Form S-4, the solicitation of shareholder or shareholder approvals and all other
matters related to the Closing.
"FINAL DEDUCT AMOUNT" shall mean the aggregate amount of
expense anticipated to be incurred by Purchaser and/or the Company after the
Effective Time for the matters and in the aggregate amount set forth on Schedule
9.03 less the amount of any such expenses satisfied by the Company prior to the
Effective Time, with the prior written consent of the Purchaser (which consent
shall not be unreasonably withheld).
"LAW" means any material statute, law, ordinance, rule or
regulation.
"PERSON" means any individual, firm, corporation, partnership,
company, limited liability company, trust, joint venture, association,
Governmental Entity or other entity.
"PURCHASER MATERIAL ADVERSE EFFECT" means any change, effect,
event, occurrence or state of facts that is materially adverse to the business,
assets, condition (financial or otherwise), or results of operations of
Purchaser and the Purchaser Subsidiaries, taken as a whole, other than effects
relating to (A) changes, effects, events, occurrences or circumstances that
generally affect the industries in which Purchaser operates, and that do not
have a materially disproportionate impact on Purchaser and the Purchaser
Subsidiaries, taken as a whole, (B) general economic, financial or securities
market conditions in the United States or elsewhere, or (C) the announcement of
the Transactions.
"RESTRICTED CASH" shall mean the amount of restricted
securities and restricted cash shown on the Estimated Closing Balance Sheet.
"SUBSIDIARY" of any Person means another Person, an amount of
the voting securities, other voting ownership or voting partnership interests of
which is sufficient to elect at least a majority of its Board of Directors or
other governing body (or, if there are no such voting interests, 50% or more of
the equity interests of which) is owned directly or indirectly by such first
Person.
"SUPERIOR COMPANY PROPOSAL" means a Company Takeover
Proposal, not subject to financing, made by a third party on terms that the
Company Board determines in good faith, after consultation with its financial
advisor and its outside counsel, to be more favorable to the holders of Company
Common Stock than the Transactions, taking into account the termination
provisions of this Agreement and all the terms and conditions of such proposal
and this Agreement (including any proposal by Purchaser to amend the terms of
the Transactions or this Agreement), and is, in the good faith judgment of the
Company Board, reasonably likely to be completed.
"TAXES" includes all forms of taxation, whenever created or
imposed, and whether of the United States or elsewhere, and whether imposed by a
local, municipal, governmental, state, foreign, Federal or other Governmental
Entity, or in connection with any agreement with respect to Taxes, including all
interest, penalties and additions imposed with respect to such amounts.
"TAX RETURN" means all Federal, state, local, provincial and
foreign Tax returns, declarations, statements, reports, schedules, forms and
information returns and any amended Tax return relating to Taxes.
"UNRESTRICTED CASH" shall mean the amount of cash, cash
equivalents and marketable securities (and, in no event, any Restricted Cash)
shown on the Estimated Closing Balance Sheet less the
33
Dividend Amount and less any amounts payable pursuant to the Company Incentive
Bonus Plan to the extent unpaid at the Effective Time and less the Final Deduct
Amount.
SECTION 9.04. INTERPRETATION; DISCLOSURE LETTERS. When a reference is
made in this Agreement to a Section, such reference shall be to a Section of
this Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"include", "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation". Any matter disclosed in
any section of the Company Disclosure Letter shall be deemed disclosed for all
purposes and all sections of the Company Disclosure Letter. Any matter disclosed
in any section of the Purchaser Disclosure Letter shall be deemed disclosed for
all purposes and all sections of the Purchaser Disclosure Letter.
SECTION 9.05. SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule or Law,
or public policy, all other terms, conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner to the end that transactions contemplated hereby are fulfilled to the
extent possible.
SECTION 9.06. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties.
SECTION 9.07. ENTIRE AGREEMENT; THIRD-PARTY BENEFICIARIES. This
Agreement, taken together with the Company Disclosure Letter, the Purchaser
Disclosure Letter and the Confidentiality Agreements, (a) constitute the entire
agreement, and supersede all prior agreements and understandings, both written
and oral, among the parties with respect to the Transactions and (b) except for
the provisions of Section 6.05 and Section 6.06, are not intended to confer upon
any Person other than the parties any rights or remedies.
SECTION 9.08. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
SECTION 9.09. ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned, in whole or in
part, by operation of law or otherwise by any of the parties without the prior
written consent of the other parties, except that Merger Sub may assign, in its
sole discretion, any of or all its rights, interests and obligations under this
Agreement to Purchaser or to any direct or indirect wholly owned Subsidiary of
Purchaser, provided that such assignment does not prevent the Merger from
qualifying as a "reorganization" within the meaning of Section 368(a) of the
Code and provided further, that no such assignment shall relieve Merger Sub of
any of its obligations under this Agreement. Any purported assignment without
such consent shall be void. Subject to the preceding sentences, this Agreement
will be binding upon, inure to the benefit of, and be enforceable by, the
parties and their respective successors and assigns.
34
SECTION 9.10. ENFORCEMENT. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in the State of Delaware or in any
Delaware state court, this being in addition to any other remedy to which they
are entitled at law or in equity. In addition, each of the parties hereto (a)
consents to submit itself to the personal jurisdiction of the State of Delaware
or any Delaware state court in the event any dispute arises out of this
Agreement or any Transaction, (b) agrees that it will not attempt to deny or
defeat such personal jurisdiction by motion or other request for leave from any
such court, (c) agrees that it will not bring any action relating to this
Agreement or any Transaction in any court other than the State of Delaware or
any Delaware state court and (d) waives any right to trial by jury with respect
to any action related to or arising out of this Agreement or any Transaction.
[SIGNATURES ON FOLLOWING PAGE]
35
IN WITNESS WHEREOF, Purchaser, Merger Sub and the Company have
duly executed this Agreement, all as of the date first written above.
VERSO TECHNOLOGIES, INC.
By: /s/ Xxxxxx X. Xxxx
_____________________________
Name: Xxxxxx X. Xxxx
Title: Chairman and Chief Executive Officer
MICKEY ACQUIRING SUB, INC.
By: /s/ Xxxxxx X. Xxxx
_____________________________
Name: Xxxxxx X. Xxxx
Title: Chief Executive Officer
MCK COMMUNICATIONS, INC.
By: /s/ Xxxxxx X. Xxxxxxx
_____________________________
Name: Xxxxxx X. Xxxxxxx
Title: Chief Executive Officer
36
EXHIBIT A
RESTATED CERTIFICATE OF INCORPORATION
OF
MCK COMMUNICATIONS, INC.
ARTICLE 1
The name of the Corporation is MCK COMMUNICATIONS, INC.
ARTICLE 2
The address of the Corporation's registered office in the State of
Delaware is 0000 Xxxxxx Xxxxxx, in the City of Wilmington, County of Xxx Xxxxxx,
Xxxxxxxx 00000. The name of its registered agent at such address is The
Corporation Trust Company.
ARTICLE 3
The nature of the business or the purposes to be conducted or promoted
are to engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of the State of Delaware.
ARTICLE 4
The total number of shares of all classes of stock which the
Corporation has authority to issue is 1,000 shares, which shall be Common Stock,
with par value of $.01 per share (the "Common Stock"). The designation and the
powers, preferences and rights of the shares of Common Stock are as follows:
1. Shares of Common Stock may be issued from time to time as
the Board of Directors shall determine and on such terms and for such
consideration as shall be fixed by the Board of Directors. Each share of Common
Stock shall be equal to every other share of Common Stock in every respect.
2. Each holder of Common Stock shall be entitled at all
meetings of stockholders to one vote for each share of Common Stock held by each
such holder of record on the books of the Corporation.
ARTICLE 5
In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors shall have the power to make, adopt, amend and
repeal the Bylaws of the Corporation, including, to the extent permitted by law,
any bylaw adopted by the stockholders of the Corporation unless such bylaw
specifically provides that it may not be amended or repealed by the Board of
Directors.
ARTICLE 6
Meetings of stockholders may be held within or without the State of
Delaware, as the Bylaws may provide. The books of the Corporation may be kept
outside the State of Delaware at such place or places as may be designated from
time to time by the Board of Directors or in the Bylaws of the Corporation.
Election of directors need not be by written ballot unless the Bylaws of the
Corporation so provide.
ARTICLE 7
Except as otherwise set forth herein, the Corporation reserves the
right to amend, alter, change or repeal any provision contained in this
Certificate of Incorporation in the manner now or hereafter prescribed herein
and by the laws of the State of Delaware, and all rights conferred upon
stockholders herein are granted subject to this reservation.
ARTICLE 8
The Corporation shall have the power and authority to indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative and whether or not by or in the right
of the Corporation, by reason of the fact that he or she is or was a director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses, judgments, fines and amounts paid in settlement to the maximum extent
permitted by the General Corporation Law of the State of Delaware or other
applicable law.
2
ARTICLE 9
No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director; provided, however, that the foregoing clause shall not apply
to any liability of a director (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the General Corporation Law of the State of
Delaware, or (iv) for any transaction from which the director derived an
improper personal benefit. If the General Corporation Law of the State of
Delaware is amended after the effective date of this Certificate of
Incorporation to authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a director of the
Corporation shall be eliminated or limited to the fullest extent permitted by
the General Corporation Law of the State of Delaware, as so amended.
Any repeal or modification of this Article 9 by either of (i) the
stockholders of the Corporation or (ii) an amendment to the General Corporation
Law of the State of Delaware, shall not adversely affect any right or protection
existing at the time of such repeal or modification with respect to any acts or
omissions occurring before such repeal or modification of a person serving as a
director at the time of such repeal or modification.
For a period of six years from the effective date of this Certificate
of Incorporation, the provisions of this Article 9 may not be repealed, amended
or otherwise modified in any manner that would adversely affect the rights
hereunder of the directors of the Corporation, except to the extent, if any,
that such modification is required by applicable law.
3
Exhibit B
AFFILIATE AGREEMENT
________, 2003
VERSO TECHNOLOGIES, INC.
000 Xxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Re: MCK COMMUNICATIONS, INC.
Gentlemen:
Verso Technologies, Inc., a Minnesota corporation ("Purchaser"), Mickey
Acquiring Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of
Purchaser ("Merger Sub"), and MCK Communications, Inc., a Delaware corporation
(the "Company"), have entered into an Agreement and Plan of Merger dated as of
April 21, 2003 (the "Merger Agreement"), pursuant to which Merger Sub is to be
merged with and into the Company (the "Merger"), and each outstanding share of
common stock of the Company is to be converted into the right to receive shares
of common stock of Purchaser ("Purchaser Common Stock"). Capitalized terms not
defined herein shall have the meanings ascribed to such terms in the Merger
Agreement.
The undersigned has been advised that as of the date the Merger
Agreement is submitted to shareholders of the Company for approval, the
undersigned may be an "affiliate" of the Company, as such term is defined for
purposes of paragraph (c) of Rule 145 promulgated by the Securities and Exchange
Commission ("SEC") under the Securities Act of 1933, as amended (the "Securities
Act"). Execution of this Agreement by the undersigned should not be construed as
an admission of "affiliate" status or as a waiver of any rights the undersigned
may have to object to any claim that the undersigned is an "affiliate" on or
after the date of this Agreement.
In connection with the Merger, Purchaser has requested the undersigned
to agree, and the undersigned hereby agrees, with Purchaser as follows:
Purchaser has filed a Joint Proxy Statement/Prospectus with the
Company, pursuant to which the Purchaser Common Stock to be received by the
undersigned pursuant to the Merger will be registered.
The undersigned understands and agrees that any sales of Purchaser
Common Stock will be made pursuant to an effective registration statement or in
compliance with Rule 145, or in a transaction which, in the opinion of legal
counsel satisfactory to Purchaser, is exempt from the
Verso Technologies, Inc.
___________, 2003
Page 2
registration requirements of the Securities Act, and that stop-transfer
instructions to this effect will be given to Purchaser's transfer agent with
respect to the shares of Purchaser Common Stock to be received by the
undersigned in the Merger, and there will be placed on the certificate
representing such stock, or any certificates delivered in substitution therefor,
a legend stating in substance:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF
1933 APPLIES. THESE SECURITIES MAY ONLY BE SOLD, TRANSFERRED, PLEDGED
OR HYPOTHECATED (1) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR
(2) IN ACCORDANCE WITH RULE 145 OR A TRANSACTION WHICH IS EXEMPT FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933 AND, IN
EITHER CASE, ALONG WITH AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO
THE COMPANY TO SUCH EFFECT."
The undersigned further understands and agrees that unless the transfer
by the undersigned of the Purchaser Common Stock to be received by the
undersigned pursuant to the Merger has been registered under the Securities Act
or is a sale made in conformity with the provisions of Rule 145, Purchaser
reserves the right to put the following legend on the certificates issued to the
undersigned's transferee:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND WERE ACQUIRED FROM A PERSON WHO
RECEIVED SUCH SHARES IN A TRANSACTION TO WHICH RULE 145 PROMULGATED
UNDER THE SECURITIES ACT OF 1933 APPLIES. THE SHARES HAVE BEEN ACQUIRED
BY THE HOLDER NOT WITH A VIEW TO, OR FOR RESALE IN CONNECTION WITH, ANY
DISTRIBUTION THEREOF WITHIN THE MEANING OF THE SECURITIES ACT OF 1933
AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN
ACCORDANCE WITH AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT OF 1933."
It is understood and agreed that the legends set forth in the
immediately preceding two paragraphs shall be removed by delivery of substitute
certificates without such legend if such legend is not required for purposes of
the Securities Act or this Agreement. It is understood and agreed that such
legends and the stop orders referred to above will be removed if (i) evidence or
representations satisfactory to Purchaser that the securities represented by
such certificates are being or have been sold in a transaction made in
conformity with the provisions of Rule 145(d) (as such rule may be hereafter
from time to time amended) or (ii) Purchaser has received either an opinion of
counsel, which opinion and counsel shall be reasonably satisfactory to
Purchaser, or a "no-action" letter
Verso Technologies, Inc.
___________, 2003
Page 3
obtained by the undersigned from the staff of
the SEC, to the effect that the restrictions imposed by Rule 145 under the Act
no longer apply to the undersigned.
Purchaser agrees and covenants that for so long as is necessary to
permit the undersigned to sell the Purchaser Common Stock pursuant to Rule 145
and, to the extent applicable, Rule 144 under the Securities Act, Purchaser
shall (i) file, on a timely basis, all reports and data required to be filed
with the SEC by it pursuant to Section 13 or Section 15 of the Exchange Act, and
(ii) furnish to the undersigned upon request a written statement as to whether
Purchaser has complied with such reporting requirements during the 12 months
preceding any proposed sale of Purchaser Common Stock by the undersigned under
Rule 145 and Rule 144. Purchaser represents and warrants to the undersigned that
it has filed all reports required to be filed with the SEC under Section 13 or
Section 15 of the Exchange Act during the preceding 12 months. Although this
letter references sales of Purchaser Common Stock pursuant to an effective
registration statement, the undersigned acknowledges and agrees that Purchaser
has no obligation to file such a registration statement.
Very truly yours,
_______________________________
Accepted this ___ day
of ____________, 2003 by
PURCHASER:
By:_______________________________
Its:______________________________
