Exhibit 2.1
.................................................................................
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
XXXXX INC.,
GOLDEN MOUNTAIN ACQUISITION CORPORATION
AND
FACTUAL DATA CORP.
.................................................................................
JUNE 23, 2003
TABLE OF CONTENTS
Page
AGREEMENT AND PLAN OF REORGANIZATION.........................................1
RECITALS 1
ARTICLE I THE MERGER........................................................1
1.1 THE MERGER.......................................................1
1.2 CLOSING; EFFECTIVE TIME..........................................2
1.3 EFFECT OF THE MERGER.............................................2
1.4 ARTICLES OF INCORPORATION; BYLAWS................................2
1.5 DIRECTORS AND OFFICERS...........................................2
1.6 EFFECT ON CAPITAL STOCK..........................................3
1.7 SURRENDER OF CERTIFICATES........................................4
1.8 NO FURTHER OWNERSHIP RIGHTS IN TARGET COMMON STOCK...............6
1.9 RETURN OF EXCHANGE FUND..........................................7
1.10 TAKING OF NECESSARY ACTION; FURTHER ACTION.......................7
ARTICLE II REPRESENTATIONS AND WARRANTIES OF TARGET.........................7
2.1 ORGANIZATION, STANDING AND POWER.................................7
2.2 CAPITAL STRUCTURE................................................8
2.3 AUTHORITY.......................................................10
2.4 SEC DOCUMENTS; TARGET FINANCIAL STATEMENTS......................11
2.5 ABSENCE OF CERTAIN CHANGES......................................12
2.6 ABSENCE OF UNDISCLOSED LIABILITIES; ACQUISITION-RELATED
LIABILITIES AND OBLIGATIONS.....................................13
2.7 CONTRACTS.......................................................14
2.8 LITIGATION......................................................15
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TABLE OF CONTENTS (continued)
Page
2.9 RESTRICTIONS ON BUSINESS ACTIVITIES.............................15
2.10 GOVERNMENTAL AUTHORIZATION......................................15
2.11 TITLE TO PROPERTY...............................................16
2.12 INTELLECTUAL PROPERTY...........................................16
2.13 ENVIRONMENTAL MATTERS...........................................19
2.14 TAXES...........................................................20
2.15 EMPLOYEE BENEFIT PLANS..........................................22
2.16 EMPLOYEES AND CONSULTANTS.......................................24
2.17 RELATED-PARTY TRANSACTIONS......................................25
2.18 INSURANCE.......................................................26
2.19 COMPLIANCE WITH LAWS............................................26
2.20 BROKERS' AND FINDERS' FEES......................................26
2.21 VOTE REQUIRED...................................................26
2.22 REGISTRATION STATEMENT; PROXY STATEMENT/PROSPECTUS..............26
2.23 COMPLETE COPIES OF MATERIALS....................................27
2.24 OPINION OF FINANCIAL ADVISOR....................................27
2.25 BOARD APPROVAL..................................................27
2.26 ILLEGAL PAYMENTS................................................27
2.27 CUSTOMERS.......................................................28
2.28 REPRESENTATIONS COMPLETE........................................28
ARTICLE III REPRESENTATIONS AND WARRANTIES OF ACQUIROR AND MERGER SUB......28
3.1 ORGANIZATION, STANDING AND POWER................................28
3.2 CAPITAL STRUCTURE...............................................29
3.3 AUTHORITY.......................................................29
ii
TABLE OF CONTENTS (continued)
Page
3.4 REGISTRATION STATEMENT; PROXY STATEMENT.........................30
3.5 SEC DOCUMENTS...................................................31
3.6 ABSENCE OF CERTAIN CHANGES......................................31
3.7 BROKERS' AND FINDERS' FEES......................................31
3.8 BOARD APPROVAL..................................................32
3.9 REPRESENTATIONS COMPLETE........................................32
ARTICLE IV CONDUCT PRIOR TO THE EFFECTIVE TIME.............................32
4.1 CONDUCT OF BUSINESS OF TARGET...................................32
4.2 CONDUCT OF BUSINESS.............................................32
4.3 NO CONTROL OF TARGET BUSINESS...................................35
4.4 NOTICES.........................................................36
ARTICLE V ADDITIONAL AGREEMENTS............................................36
5.1 NO SOLICITATION.................................................36
5.2 PROXY STATEMENT, REGISTRATION STATEMENT.........................37
5.3 SHAREHOLDERS MEETING............................................38
5.4 ACCESS TO INFORMATION...........................................38
5.5 CONFIDENTIALITY.................................................39
5.6 PUBLIC DISCLOSURE...............................................39
5.7 CONSENTS; COOPERATION...........................................40
5.8 SHAREHOLDER LISTS...............................................41
5.9 INDEMNIFICATION.................................................41
5.10 IRREVOCABLE PROXIES, LOCK-UP AGREEMENTS.........................42
5.11 NOTIFICATION OF CERTAIN MATTERS.................................43
5.12 STOCK OPTIONS AND STOCK PURCHASE PLAN...........................43
iii
TABLE OF CONTENTS (continued)
Page
5.13 LISTING OF ADDITIONAL SHARES....................................45
5.14 ADDITIONAL AGREEMENTS...........................................45
5.15 EMPLOYEE BENEFITS...............................................45
5.16 FINANCIAL STATEMENTS............................................45
ARTICLE VI CONDITIONS TO THE MERGER........................................46
6.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER....46
6.2 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF TARGET..............47
6.3 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF ACQUIROR AND MERGER
SUB.............................................................47
ARTICLE VII TERMINATION, EXPENSES, AMENDMENT AND WAIVER....................49
7.1 TERMINATION.....................................................49
7.2 EFFECT OF TERMINATION...........................................51
7.3 AMENDMENT.......................................................52
7.4 EXTENSION; WAIVER...............................................52
ARTICLE VIII GENERAL PROVISIONS............................................52
8.1 EFFECTIVENESS OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.....52
8.2 NOTICES.........................................................53
8.3 INTERPRETATION..................................................54
8.4 COUNTERPARTS....................................................54
8.5 ENTIRE AGREEMENT, NO THIRD PARTY BENEFICIARIES..................54
8.6 SEVERABILITY....................................................54
8.7 REMEDIES CUMULATIVE.............................................55
8.8 GOVERNING LAW...................................................55
8.9 ASSIGNMENT......................................................55
iv
TABLE OF CONTENTS (continued)
Page
8.10 RULES OF CONSTRUCTION...........................................55
8.11 WAIVER OF JURY TRIAL............................................55
SCHEDULE A..................................................................58
DEFINITIONS.................................................................58
EXHIBITS
Exhibit A Articles of Merger
Exhibit B Form of Affiliate Letter
Exhibit C Form of Voting Agreement
Exhibit D Form of Lock-Up Agreement
Exhibit E List of Certain Employees
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AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made and
entered on June 23, 2003, by and among Xxxxx Inc., a Delaware corporation
("Acquiror"), Golden Mountain Acquisition Corporation, a Colorado corporation
("Merger Sub"), and Factual Data Corp., a Colorado corporation ("Target").
RECITALS
A. The Boards of Directors of Target, Acquiror and Merger Sub believe it
is in the best interests of their respective companies and the shareholders of
their respective companies that Target and Merger Sub combine into a single
company through the statutory merger of Merger Sub with and into Target (the
"Merger") and, in furtherance thereof, have declared the advisability of and
approved the Merger and the Agreement.
B. Pursuant to the Merger, among other things, each outstanding share of
common stock, no par value, of Target ("Target Common Stock"), shall be
converted into the right to receive the Per Share Consideration (as hereinafter
defined) on the terms and conditions set forth herein.
C. Target, Acquiror and Merger Sub desire to make certain representations
and warranties and other agreements in connection with the Merger.
D. Concurrent with the execution of this Agreement and as an inducement to
Acquiror to enter into this Agreement, certain affiliates of Target are entering
into an agreement to vote the shares of Target Common Stock owned by such
affiliates to approve the Merger and against competing proposals in accordance
with the terms thereof.
E. Certain defined terms not otherwise defined herein shall have the
meanings ascribed thereto in Schedule A hereto.
NOW, THEREFORE, in consideration of the covenants and representations set
forth herein, and for other good and valuable consideration, the parties agree
as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER
At the Effective Time and subject to and upon the terms and conditions of
this Agreement and the Articles of Merger attached hereto as Exhibit A (the
"Articles of Merger") and the applicable provisions of the Colorado Business
Corporation Act ("Colorado Law"), Merger Sub shall be merged with and into
Target, the separate corporate existence of Merger Sub shall cease and Target
shall continue as the surviving corporation under the name "Xxxxx Factual Data,
Inc.". Target as the surviving corporation after the Merger is hereinafter
sometimes referred to as the "Surviving Corporation".
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1.2 CLOSING; EFFECTIVE TIME
Unless this Agreement shall have been terminated and the transactions
herein contemplated shall have been abandoned pursuant to Section 7.1, the
closing of the transactions contemplated hereby (the "Closing") shall take place
as soon as practicable (but in any event within two Business Days) after the
satisfaction or waiver of each of the conditions set forth in Article VI hereof
or at such other time as the parties hereto agree (the date on which the Closing
shall occur, the "Closing Date"). The Closing shall take place at the offices of
Xxxxxx, Xxxx & Xxxxxxxx LLP, 200 Park Avenue, New York, New York, or at such
other location as the parties hereto agree. On the Closing Date, the parties
hereto shall cause the Merger to be consummated by filing the Articles of Merger
with the Secretary of State of the State of Colorado, in accordance with the
relevant provisions of Colorado Law (the time and date of such filing, or such
later time or date as is provided in the Articles of Merger, being the
"Effective Time" and the "Effective Date", respectively).
1.3 EFFECT OF THE MERGER
At the Effective Time, the effect of the Merger shall be as provided in
this Agreement, the Articles of Merger and the applicable provisions of Colorado
Law. Without limiting the generality of the foregoing, and subject thereto, at
the Effective Time, all the property, rights, privileges, powers and franchises
of Target and Merger Sub shall vest in the Surviving Corporation, and all debts,
liabilities and duties of Target and Merger Sub shall become the debts,
liabilities and duties of the Surviving Corporation.
1.4 ARTICLES OF INCORPORATION; BYLAWS
(a) At the Effective Time, the Articles of Incorporation of Target shall
be amended in their entirety to read as the Articles of Incorporation of Merger
Sub as in effect immediately prior to the Effective Time, and shall be the
Articles of Incorporation of the Surviving Corporation until thereafter amended
as provided by Colorado Law, except that as of the Effective Time, Article I of
the Articles of Incorporation shall be amended to read: "The name of the
corporation shall be Xxxxx Factual Data, Inc." and such Articles of
Incorporation shall contain the indemnification provision set forth in Section
5.9(a).
(b) The Bylaws of Merger Sub, as in effect immediately prior to the
Effective Time, and which shall contain the indemnification provisions set forth
in Section 5.9(a), shall be the Bylaws of the Surviving Corporation until
thereafter amended as provided by Colorado Law, the Articles of Incorporation of
the Surviving Corporation and such Bylaws.
1.5 DIRECTORS AND OFFICERS
At the Effective Time, the directors of Merger Sub immediately prior to
the Effective Time shall be the initial directors of the Surviving Corporation,
to hold office until such time as such directors resign, are removed or their
respective successors are duly elected or appointed in accordance with Colorado
Law and the Articles of Incorporation and Bylaws of the Surviving Corporation.
The officers of Merger Sub immediately prior to the Effective Time shall be the
initial officers of the Surviving Corporation, to hold office until such time as
such officers resign, are removed or their respective successors are duly
elected or appointed in accordance with Colorado Law and the Articles of
Incorporation and Bylaws of the Surviving Corporation.
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1.6 EFFECT ON CAPITAL STOCK
By virtue of the Merger and without any action on the part of Acquiror,
Merger Sub, Target or the holders of any of Target's securities:
(a) Cancellation of Target Common Stock Owned by Acquiror or Target.
At the Effective Time, all shares of Target Common Stock that are owned by
Target as treasury stock, and each share of Target Common Stock owned by
Acquiror or any direct or indirect wholly owned subsidiary of Acquiror or of
Target immediately prior to the Effective Time shall be by virtue of the Merger
and without any action on the part of the holder thereof canceled and
extinguished without any conversion thereof or consideration therefor.
(b) Conversion of Merger Sub Common Stock. At the Effective Time,
each share of common stock, no par value, of Merger Sub will be converted
automatically into one fully paid and nonassessable share of common stock of the
Surviving Corporation.
(c) Conversion of Target Common Stock. (i) Subject to Sections
1.6(c)(ii)(A) and (B) below and subject to Section 7.1(j) hereof, at the
Effective Time, each share of Target Common Stock issued and outstanding
immediately prior to the Effective Time (other than any shares of Target Common
Stock to be canceled pursuant to Section 1.6(a) or any shares of Target Common
Stock to which dissenters' rights have been exercised pursuant to Section
1.6(g)) will be converted automatically into the right to receive the Per Share
Consideration (as defined below).
(ii) Per Share Consideration. The term "Per Share
Consideration" means for each share of Target Common Stock, the right to receive
(x) $14.00 (the "Cash Consideration Per Share") and (y) the fraction of one
fully-paid and non-assessable share of common stock, $.01 par value, of Acquiror
(the "Acquiror Common Stock") equal to a fraction (rounded to four decimal
places, with the number five and below being rounded down), the numerator of
which is $3.50 and the denominator of which is the Average Stock Price (subject
to Sections 1.6(c)(ii)(A) and (B) and 7.1(j), such fraction being the "Exchange
Ratio"); provided, however,
(A) if the Average Stock Price is equal to or less
than $23.85 the Exchange Ratio shall, for the purposes of this Agreement be
deemed to equal 0.1467, except as may be otherwise provided in Section 7.1(j);
and
(B) if the Average Stock Price is equal to or
greater than $29.15, the Exchange Ratio shall, for the purposes of this
Agreement, be deemed to equal 0.1201.
(d) Target Stock Option Plans. At the Effective Time, Target's 1997
Stock Incentive Plan, 1999 Employee Formula Award Stock Option Plan, and the
Stock Option Agreements dated May 4, 2001 (collectively, the "Target Stock
Option Plans") and all options to purchase Target Common Stock then outstanding
under the Target Stock Option Plans shall be automatically assumed by Acquiror
in accordance with, and subject to the terms and conditions of, Section 5.12.
3
(e) Adjustments to Exchange Ratios. The Exchange Ratio shall be
adjusted to reflect fully the effect of any stock split, reverse split, stock
dividend (including any dividend or distribution of securities convertible into
Acquiror Common Stock or Target Common Stock), reorganization, recapitalization
or other like change with respect to Acquiror Common Stock or Target Common
Stock having a record date after the date hereof and prior to the Effective
Time.
(f) Fractional Shares. No fraction of a share of Acquiror Common
Stock will be issued, but in lieu thereof each holder of shares of Target Common
Stock who would otherwise be entitled to a fraction of a share of Acquiror
Common Stock (after aggregating all fractional shares of Acquiror Common Stock
to be received by such holder) shall receive from Acquiror an amount of cash
(rounded down to the nearest whole cent, without interest) equal to the product
of (x) such fraction, multiplied by (y) the Average Stock Price (subject to
Sections 1.6(c)(ii)(A) and (B) and 7.1(j)).
(g) Dissenters' Rights. Notwithstanding any provisions of this
Agreement to the contrary, any Target Common Stock outstanding immediately prior
to the Effective Time held by a holder who has demanded and perfected the right,
if any, to receive fair value for such Target Common Stock ("Dissenting Shares")
in accordance with the provisions of Article 0-000-000 et. seq. of Colorado Law
and as of the Effective Time has not withdrawn or lost such dissenter's rights
shall not be converted into or represent a right to receive the consideration
pursuant to Section 1.7(a) (the "Merger Consideration"), but the shareholder
shall only be entitled to such rights as are granted by Colorado Law. If a
holder of Target Common Stock who asserts dissenter's rights under Colorado Law
withdraws or loses such rights (through failure to perfect or otherwise), then,
as of the Effective Time or the occurrence of such event, whichever last occurs,
those shares (the "Unperfected Shares") shall be converted into and represent
only the right to receive the Merger Consideration as provided in Section
1.7(a), without interest, upon the surrender of the certificate or certificates
formerly representing those Unperfected Shares. Target shall give Acquiror (i)
prompt notice of any written notice of intent to demand fair value for any
Unperfected Shares, attempted withdrawals of such demands, the deposit of any
shares for which payment is demanded, and any other instruments served pursuant
to Colorado Law received by the Target relating to dissenters' rights and (ii)
the opportunity to direct all negotiations and proceedings with respect to the
assertion of dissenters' rights under Colorado Law. Target shall not, except
with the prior written consent of Acquiror, given in its sole discretion,
voluntarily make any payment with respect to any such demands for payment of
fair value, offer to settle or settle any such demands or approve any withdrawal
of any such demands.
1.7 SURRENDER OF CERTIFICATES
(a) Exchange Agent; Acquiror to Provide Common Stock and Cash.
Promptly after the date hereof, Acquiror shall appoint a commercial bank or
trust company, or a subsidiary thereof, as an exchange agent (the "Exchange
Agent") for the benefit of holders of Target Common Stock. At or immediately
prior to the Effective Time, Acquiror shall make available to or for such bank
or trust company as shall be designated by Acquiror and reasonably acceptable to
Target for exchange in accordance with this Article I, through such reasonable
procedures as Acquiror may adopt, the shares of Acquiror Common Stock issuable
pursuant to Section 1.6(c) in exchange for shares of Target Common Stock
outstanding immediately prior to the Effective
4
Time, plus cash in an amount sufficient to permit payment of the Per Share Cash
Consideration and cash in lieu of fractional shares pursuant to Section 1.6(f)
(such cash amount and certificates being hereinafter referred to as the
"Exchange Fund"). The Exchange Agent shall, pursuant to irrevocable instructions
in accordance with this Article I, deliver the Acquiror Common Stock and cash
contemplated to be issued and paid pursuant to this Article I out of the
Exchange Fund.
(b) Exchange Procedures. Promptly after the Effective Time, but no
later than five Business Days after the Effective Date, Acquiror shall cause to
be mailed to each holder of record of a certificate or certificates (the
"Certificates") that immediately prior to the Effective Time represented
outstanding shares of Target Common Stock, whose shares were converted into the
right to receive the Per Share Consideration pursuant to Section 1.7, (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 receipt of the
Certificates by the Exchange Agent, and shall be in such form and have such
other provisions as Acquiror may reasonably specify) and (ii) instructions for
use in effecting the surrender of the Certificates in exchange for cash and
certificates representing shares of Acquiror Common Stock. Upon surrender of a
Certificate for cancellation to the Exchange Agent, together with such letter of
transmittal, duly completed and validly executed in accordance with the
instructions thereto and such other customary documents as may be required
pursuant to such instructions, the holder of such Certificate shall be entitled
to receive in exchange therefor, and Acquiror shall cause the Exchange Agent to
promptly send to the holder, one or more certificates as requested by the holder
(properly issued, executed and countersigned, as appropriate) representing the
number of whole shares of Acquiror Common Stock and payment of cash that such
holder has the right to receive pursuant to Section 1.6 and any dividends or
other distributions to which such holder is entitled pursuant to Section 1.7(c),
and the Certificate so surrendered shall forthwith be canceled. In the event of
a transfer of ownership of shares of Target Common Stock which is not registered
in the transfer records of Target as of the Effective Time, shares of Acquiror
Common Stock, dividends, distributions and cash may be issued and paid in
accordance with this Article I to a transferee if the Certificate evidencing
such shares of Target Common Stock is presented to the Exchange Agent,
accompanied by all documents required to evidence and effect such transfer
pursuant to Section 1.7(d) and by evidence that any applicable stock transfer
taxes have been paid. Until so surrendered, each outstanding Certificate that,
prior to the Effective Time, represented shares of Target Common Stock will be
deemed from and after the Effective Time, for all corporate purposes, to
evidence only the right to receive shares of Acquiror Common Stock into which
such shares of Target Common Stock shall have been so converted and an amount in
cash in accordance with Section 1.6.
(c) Distributions with Respect to Unexchanged Shares. No dividends
or other distributions with respect to Acquiror Common Stock with a record date
after the Effective Time shall be paid to the holder of any unsurrendered
Certificate with respect to the shares of Acquiror Common Stock represented
thereby until the holder of record of such Certificate surrenders such
Certificate. Subject to applicable law, following surrender of any such
Certificate, there shall be paid to the record holder of such Certificate one or
more certificates representing whole shares of Acquiror Common Stock issued in
exchange therefor, plus payments of cash in accordance with Section 1.6, plus
the amount of any such dividends or other distributions with a record date after
the Effective Time that would have been previously payable (but for the
provisions of this Section 1.7(c)) with respect to such shares of Acquiror
Common Stock. No interest shall be paid
5
in connection with the issuance of Acquiror Common Stock and payments of cash
contemplated by the preceding sentence.
(d) Transfers of Ownership. If any certificate for shares of
Acquiror Common Stock is to be issued in a name or cash is to be payable to a
person other than that in which the Certificate surrendered in exchange therefor
or is registered, it shall be a condition of the issuance and payment thereof
that the Certificate so surrendered is properly endorsed and otherwise in proper
form for transfer and that the person requesting such exchange will have paid to
Acquiror or any agent designated by it any transfer or other taxes required by
reason of the issuance of a certificate for shares of Acquiror Common Stock in
any name and payment of the cash consideration to any person other than that of
the registered holder of the Certificate surrendered, or established to the
satisfaction of Acquiror or the Exchange Agent that such tax has been paid or is
not payable.
(e) No Liability. Notwithstanding anything to the contrary in this
Section 1.7, none of the Exchange Agent, the Surviving Corporation or any party
hereto shall be liable to any person or entity for any amount properly paid to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
(f) Withholding Rights. Acquiror or the Exchange Agent shall be
entitled to deduct and withhold from the Merger Consideration and any dividends
or other distributions to which such holder is entitled pursuant to Section
1.7(c) otherwise payable pursuant to this Agreement to any holder of Target
Common Stock such amounts as Acquiror or the Exchange Agent is required to
deduct and withhold with respect to the making of such payment under the Code,
or any provision of state, local or foreign tax law. To the extent that amounts
are so withheld by Acquiror or the Exchange Agent, such withheld amounts shall
be treated for all purposes of this Agreement as having been paid to the holder
of the shares of Target Common Stock in respect of which such deduction and
withholding was made by Acquiror or the Exchange Agent.
1.8 NO FURTHER OWNERSHIP RIGHTS IN TARGET COMMON STOCK The cash and shares of
Acquiror Common Stock issued upon the surrender for exchange of shares of
Target Common Stock in accordance with the terms hereof shall be deemed to have
been issued in full satisfaction of all rights pertaining to such shares of
Target Common Stock, and there shall be no further registration of transfers on
the records of the Surviving Corporation of shares of Target Common Stock that
were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation for any
reason, they shall be promptly canceled and exchanged as provided in this
Article I.
In the event any Certificates shall have been lost, stolen or destroyed,
the Exchange Agent shall issue in exchange for such lost, stolen or destroyed
Certificates, upon the making of an affidavit of that fact by the holder
thereof, such shares of Acquiror Common Stock and cash as may be required
pursuant to Section 1.6; provided, however, that Acquiror may, in its discretion
and as a condition precedent to the issuance thereof, require the owner of such
lost, stolen or destroyed Certificates to deliver a bond in such sum as it may
reasonably direct as indemnity against any claim that may be made against
Acquiror, the Surviving Corporation or
6
the Exchange Agent with respect to the Certificates alleged to have been lost,
stolen or destroyed.
1.9 RETURN OF EXCHANGE FUND
Any portion of the Exchange Fund that remains unclaimed by shareholders of
Target for six months after the Effective Time shall be returned to Acquiror,
upon demand, and any holder of Target Common Stock as of the Effective Time who
has not theretofore complied with Section 1.7 shall thereafter look only to
Acquiror for issuance of the number of shares of Acquiror Common Stock and cash
to which such holder has become entitled, subject to the terms of this
Agreement.
1.10 TAKING OF NECESSARY ACTION; FURTHER ACTION
If, at any time after the Effective Time, any further action is necessary
or desirable to carry out the purposes of this Agreement and to vest the
Surviving Corporation with full right, title and possession to all assets,
property, rights, privileges, powers and franchises of Target and Merger Sub,
the officers and directors of Target and Merger Sub immediately prior to the
Effective Time are fully authorized in the name of their respective corporations
or otherwise to take, and shall take, all such lawful and necessary action, so
long as such action is not inconsistent with this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF TARGET
Target represents and warrants to Acquiror and Merger Sub that the
statements contained in this Article II are true and correct, except as set
forth in the disclosure letter delivered by Target to Acquiror on the date of
the execution and delivery of this Agreement (the "Target Disclosure Letter").
The Target Disclosure Letter shall be arranged in paragraphs corresponding to
the numbered and lettered paragraphs contained in this Agreement, and the
disclosure in any paragraph shall qualify only the corresponding paragraph in
this Agreement unless a cross-reference is made to another paragraph that such
disclosure also qualifies. Any reference in this Article II to an agreement
being "enforceable" shall be deemed to be qualified to the extent such
enforceability is subject to (a) laws of general application relating to
bankruptcy, insolvency, moratorium and the relief of debtors, and (b) the
availability of specific performance, injunctive relief and other equitable
remedies.
2.1 ORGANIZATION, STANDING AND POWER
Each of Target and its subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization. Target and its subsidiaries have the corporate power to own their
respective properties and to carry on their respective businesses as now being
conducted and are duly qualified to do business and are in good standing in each
jurisdiction in which the failure to be so qualified and in good standing would
have a Material Adverse Effect on Target. Target has made available to Acquiror
a true and correct copy of the Articles of Incorporation and Bylaws or other
charter documents, as applicable, of Target and each of its subsidiaries, each
as amended to date. Neither Target nor any of its subsidiaries are in
7
violation of any of the provisions of its Articles of Incorporation or Bylaws or
equivalent organizational documents.
2.2 CAPITAL STRUCTURE
(a) Except as set forth in Section 2.2(a) of the Target Disclosure
Letter, Target is the record and beneficial owner of all outstanding shares of
capital stock of each of its subsidiaries and all such shares are duly
authorized, validly issued, fully paid and nonassessable. Except as set forth in
Section 2.2(a) of the Target Disclosure Letter, all of the outstanding shares of
capital stock of each such subsidiary are owned by Target free and clear of any
Liens. There are, and as of the Effective Time will be, no outstanding
subscriptions, options, warrants, puts, calls, rights, exchangeable or
convertible securities or other commitments or agreements of any character
relating to the issued or unissued capital stock or other securities of any such
subsidiary, or otherwise obligating Target, any such subsidiary or any other
person or entity to issue, transfer, sell, purchase, redeem or otherwise acquire
any such securities. Target does not directly or indirectly own any equity or
similar interest in, or any interest convertible or exchangeable or exercisable
for, any equity or similar interest in, any corporation, partnership, joint
venture or other business association or entity other than the subsidiaries set
forth in Section 2.2(a) of the Target Disclosure Letter.
(b) The authorized capital stock of Target consists of 50,000,000
shares of Target Common Stock and 1,000,000 shares of Preferred Stock, no par
value, of which there were issued and outstanding as of the date of this
Agreement 6,207,019 shares of Common Stock and no shares of Preferred Stock.
There are no other outstanding shares of capital stock or voting securities and
no outstanding commitments to issue any shares of capital stock or voting
securities after the date of this Agreement, other than pursuant to the exercise
of (i) options outstanding as of the date of this Agreement under the Target
Stock Option Plans or (ii) subscription rights outstanding as of the date of
this Agreement under the Target 1999 Employee Stock Purchase Plan ("Target
ESPP"). All outstanding shares of Target Common Stock are duly authorized,
validly issued, fully paid and non-assessable and are free of any Liens other
than any Liens created by or imposed upon the holders thereof, and are not
subject to preemptive rights, rights of first refusal, rights of first offer or
similar rights created by statute, the Articles of Incorporation or Bylaws of
Target or any agreement to which Target is a party or by which it is bound
except as described in Section 2.2(b) of the Target Disclosure Letter. As of the
date of this Agreement, Target has reserved (i) 1,250,500 shares of Target
Common Stock for issuance pursuant to the Target Stock Option Plans, of which
28,078 shares have been issued pursuant to option exercises or direct stock
purchases, and 628,410 shares are subject to outstanding, unexercised options
and (ii) 75,000 shares of Target Common Stock for issuance to employees pursuant
to the Target ESPP, 19,991 of which have been issued and approximately 1,460
shares are anticipated to be issued based on withholdings through June 30, 2003.
Except for (i) the rights created pursuant to this Agreement, (ii) Target's
right to repurchase any unvested shares under the Target Stock Option Plans,
(iii) acceleration of vesting of stock options outstanding as of the date of
this Agreement pursuant to the Target Stock Option Plans or agreements or grants
entered into thereunder or relating thereto, including without limitation,
employment agreements, change of control agreements, employment letters and
similar agreements or commitments (all of which agreements, grants, letters and
commitments are set forth in Section 2.2(b) of the Target Disclosure Letter), or
(iv) additional subscription rights accruing under the Target ESPP due to
8
additional payroll withholdings after the date of this Agreement through June
30, 2003, there are no other subscriptions, options, warrants, puts, calls,
rights, exchangeable or convertible securities or other commitments or
agreements of any character to which Target or any of its subsidiaries is a
party or by which any such entity is bound obligating Target or any of its
subsidiaries to issue, deliver, sell, repurchase or redeem, or cause to be
issued, delivered, sold, repurchased or redeemed, any shares of Target capital
stock (including Target Common Stock) or other securities or obligating Target
to grant, extend, accelerate the vesting of, change the price of, or otherwise
amend or enter into any such option, warrant, call, right, commitment or
agreement. There are no contracts, commitments or agreements relating to the
voting, purchase or sale of Target Common Stock (i) between or among Target and
any of its shareholders and (ii) to Target's knowledge, among any of Target's
shareholders or between any of Target's shareholders and any third party, except
for the Voting Agreements and the CIVC Agreements. The Target Stock Option Plans
(i) do not prohibit the assumption of such Target Stock Option Plans (and the
options granted thereunder) by Acquiror and the substitution of Acquiror Common
Stock as provided in Section 5.12 of this Agreement and do not require the
consent or approval of the holders of the outstanding options under the Target
Stock Option Plans, the Target shareholders, or otherwise in order to effect
such assumption and substitution and (ii) (other than the May 2001 options)
require the acceleration of the exercise schedule or vesting provisions in
effect for such options. The current "Offering Period" (as defined in the Target
ESPP) commenced under the Target ESPP on April 1, 2003, and such Offering Period
will end at the ESPP Termination Date, and except for the purchase rights
granted on such commencement dates to participants in the current Offering
Period, there are no other purchase rights or options outstanding under the
Target ESPP. True and complete copies of all agreements and instruments (or
representative forms thereof) relating to or issued under the Target Stock
Option Plans and Target ESPP have been made available to Acquiror, and such
agreements and instruments have not been amended, modified or supplemented, and
there are no agreements to amend, modify or supplement such agreements or
instruments from the forms made available to Acquiror. All outstanding shares of
Target Common Stock and all options granted pursuant to the Target Stock Option
Plans were issued in compliance with all applicable federal and state securities
laws.
(c) On or prior to the date hereof (i) Target (and Target's Board of
Directors or appropriate committees thereof) have taken the action contemplated
by the last sentence of Section 5.12(c) hereof and (ii) Target (and Target's
Board of Directors or appropriate committees thereof) have taken all necessary
action to give effect to the terms and conditions set forth in Section 5.12(a)
hereof. True and complete copies of all such actions have heretofore been
delivered to Acquiror.
(d) Except as set forth in Section 2.2(d) of the Target Disclosure
Letter, (i) the outstanding shares of Target Common Stock are listed and traded
on The Nasdaq National Market and Target is in full compliance with all
applicable listing and maintenance requirements of The Nasdaq National Market;
(ii) Target has never received any notification of de-listing or other
proceedings or investigations by Nasdaq and there exists no reasonable basis for
any such proceeding or investigation; and (iii) Target has made available to
Acquiror true, correct and complete copies of all correspondence between Target
and Nasdaq since January 1, 1999.
9
2.3 AUTHORITY
(a) Target has all requisite corporate power and authority to enter
into this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Target, subject only to the approval and
adoption of the Merger and this Agreement by Target's shareholders as
contemplated by Section 6.1(a). This Agreement has been duly executed and
delivered by Target and constitutes the valid and binding obligation of Target,
enforceable against Target in accordance with its terms.
(b) Except as set forth in Section 2.3(b) of the Target Disclosure
Letter, neither the execution, delivery and performance of this Agreement by
Target, nor the consummation by Target of the transactions contemplated hereby,
will (i) conflict with, or result in a breach or violation of, any provision of
the Articles of Incorporation or Bylaws (or similar organizational documents) of
Target or any of its subsidiaries; (ii) conflict with, result in a breach or
violation of, give rise to a default or loss of status or benefits, or result in
the acceleration of performance, or permit the acceleration of performance,
under (whether or not after the giving of notice or lapse of time or both) any
note, bond, indenture, guaranty, lease, license, franchise, permit, agreement,
instrument, writ, injunction, order, judgment or decree to which Target or any
of its subsidiaries is a party or any of their respective properties or assets
is subject; (iii) give rise to a declaration or imposition of any Lien upon any
of the properties or assets of Target or any of its subsidiaries; or (iv)
adversely affect any Target Governmental License necessary to enable Target and
its subsidiaries to carry on their businesses as presently conducted, except, in
the case of clauses (ii), (iii) or (iv), for any conflict, breach, violation,
default, acceleration, declaration, imposition, impairment or effect that could
not individually or in the aggregate reasonably be expected to have a Material
Adverse Effect on Target or impair Target's ability to consummate the
transactions contemplated by this Agreement.
(c) No approval, authorization, consent, license, clearance or order
of, declaration or notification to, or filing or registration with, any
Governmental Entity or other regulatory authority is required in order to (i)
permit Target to consummate the Merger or perform its obligations under this
Agreement or (ii) prevent the termination or modification of any governmental
right, privilege, authority, franchise, license, permit or certificate of Target
or any of its subsidiaries (collectively, "Target Governmental Licenses") to
enable Target and its subsidiaries to own, operate and lease their respective
properties and assets as and where such properties and assets are owned, leased
or operated and to provide service and carry on their respective businesses as
presently provided and conducted, or (iii) prevent any material loss or
disadvantage to the business of Target and its subsidiaries, by reason of the
Merger, except for (the following in clauses (A), (B) and (E), collectively, the
"Target Governmental Approvals") (A) the filing of the Articles of Merger, as
provided in Section 1.2; (B) the filing of the Proxy Statement with the SEC in
accordance with the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and clearance thereof by the Securities and Exchange Commission (the
"SEC"); (C) any other filings or notices required pursuant to the Exchange Act
and the rules promulgated thereunder, including under Regulation M-A; (D) the
filing of a report on Form 8-K in accordance with the Exchange Act disclosing
the existence and terms of this Agreement; (E) such filings as may be required
under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended
("HSR") (and the expiration of the waiting period thereunder) and such filings,
10
consents and approvals as are required under applicable foreign law (including
antitrust or competition law); or (F) such other consents, authorizations,
filings, approvals and registrations of or with any Governmental Entity that, if
not obtained or made, would not have a Material Adverse Effect on Target, would
not prevent or materially alter or delay the transactions contemplated by this
Agreement, or would not prevent the Surviving Corporation from owning or
operating any material portion of Target's or any of its subsidiaries'
businesses.
2.4 SEC DOCUMENTS; TARGET FINANCIAL STATEMENTS
(a) Target has made available to Acquiror a true and complete copy
of each statement, report, registration statement (with the prospectus in the
form filed pursuant to Rule 424(b) of the Securities Act of 1933, as amended
(the "Securities Act")), definitive proxy statement, and other filings filed
with the SEC by Target since January 1, 1998, and, prior to the Effective Time,
Target will have promptly made available to Acquiror true and complete copies of
any additional documents filed with the SEC by Target prior to the Effective
Time (collectively, the "Target SEC Documents"). In addition, Target has made
available to Acquiror all current exhibits to the Target SEC Documents filed
prior to the date hereof, and will promptly make available to Acquiror all
exhibits to any additional Target SEC Documents filed prior to the Effective
Time. All documents required to be filed as exhibits to the Target SEC Documents
have been so filed (and such exhibits are true, correct and complete copies of
such documents), and all contracts so filed as exhibits are in full force and
effect, except those that have expired in accordance with their terms or those
that have been terminated without default by any party thereto, and neither
Target nor any of its subsidiaries, nor any other party, is in material default
thereunder. As of their respective filing dates, (i) the Target SEC Documents
complied as to form in all material respects with the requirements of the
Exchange Act and the Securities Act, as applicable, and (ii) none of the Target
SEC Documents contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances in which they were made,
not misleading, except to the extent corrected by a subsequently filed Target
SEC Document. None of Target's subsidiaries is required to file any forms,
reports or other documents with the SEC.
(b) Target has delivered to Acquiror complete and correct copies of
the following consolidated financial statements (the "Target Financial
Statements"), all of which have been prepared from the books and records of
Target in accordance with United States generally accepted accounting principles
("GAAP") consistently applied and maintained throughout the periods indicated
(except as may be indicated in the notes thereto) and fairly present in all
material respects the consolidated financial condition of Target and its
subsidiaries as at their respective dates and the consolidated results of their
operations and cash flows for the periods covered thereby: (i) audited
consolidated balance sheets at December 31, 2002 (the "Target Balance Sheet"),
2001 and 2000 and audited consolidated statements of operations, cash flows and
shareholders' equity of Target and its subsidiaries for the fiscal years then
ended, audited by BDO Xxxxxxx, LLP (for the fiscal years 2002 and 2001) and
Xxxxxxx Xxxxx Xxxxxxx & Xxxxxxx, P.C. (for the fiscal year 2000); and (ii) an
unaudited consolidated balance sheet at March 31, 2003 and unaudited
consolidated statements of income, cash flows and shareholders' equity for the
three months then ended.
11
(c) The statements of operations or income contained in the Target
Financial Statements do not contain any items of special or nonrecurring revenue
or income or any revenue or income not earned in the ordinary course of
business, except as expressly specified therein.
(d) The carrying value of the Target's assets and properties is not
impaired based on Target's use of such assets and properties.
2.5 ABSENCE OF CERTAIN CHANGES
Except as set forth in Section 2.5 of the Target Disclosure Letter, since
December 31, 2002 (the "Target Balance Sheet Date"), Target and each of its
subsidiaries have conducted their respective businesses in the ordinary course
consistent with past practice and there has not occurred:
(a) any change, event or condition (whether or not covered by
insurance) that has resulted in, or could reasonably be expected to result in, a
Material Adverse Effect on Target;
(b) any acquisition, sale or transfer of any material asset of
Target and its subsidiaries taken as a whole;
(c) any acquisition, directly or indirectly, by merging,
consolidating with, or purchasing a substantial portion of the assets or capital
stock of, or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof, or otherwise
acquire any assets that are material, individually or in the aggregate, to its
and its affiliates business, taken as a whole (an "Acquisition");
(d) any change in accounting methods or practices (including any
change in depreciation or amortization policies or rates) by Target or any of
its subsidiaries, except as required by GAAP, or any revaluation by Target or
any of its subsidiaries of any of their assets;
(e) any declaration, setting aside, or payment of a dividend or
other distribution with respect to any shares of capital stock of Target or any
of its subsidiaries (except to Target or to other parent entities wholly owned
by Target), or any direct or indirect redemption, purchase or other acquisition
by Target or any of its subsidiaries of any of their shares of capital stock;
(f) any material contract entered into by Target or any of its
subsidiaries, other than as made available to Acquiror (without limiting
Sections 4.1 and 4.2(A) hereof, promptly as and when entered into), or any
material amendment or termination of, or default under, any material contract to
which Target or any of its subsidiaries is a party or by which any of them are
bound;
(g) any amendment or change to the Articles of Incorporation or
Bylaws (or similar organizational documents) of Target or any of its
subsidiaries;
(h) any increase in or modification of the compensation or benefits
payable or to become payable by Target or any of its subsidiaries to any of
their respective directors, officers, employees or consultants (other than
12
amendments that may be required to maintain the present tax treatment of such
benefits or otherwise to comply with applicable law), other than with respect to
non-officer employees and consultants only, any increases in the ordinary course
of business consistent with past practice;
(i) any incurrence of indebtedness or Liens (excluding Permitted
Liens) on any of Target's or any of its subsidiary's assets, or issuance of any
debt securities or options, warrants, calls, convertible securities or other
rights to acquire any debt securities of Target or any of its subsidiaries;
(j) any commencement of any lawsuit or arbitration proceeding by or
against Target or any of its subsidiaries, other than for the routine collection
of bills and other litigation not material to the business of Target and its
subsidiaries taken as whole, or any settlement or compromise of any claim by or
against or obligation of Target or any of its subsidiaries of a material nature;
or
(k) any negotiation or agreement (binding or otherwise) by Target or
any of its subsidiaries to do any of the things described in the preceding
clauses (a) through (i) (other than negotiations with Acquiror and its
representatives regarding the transactions contemplated by this Agreement).
2.6 ABSENCE OF UNDISCLOSED LIABILITIES; ACQUISITION-RELATED LIABILITIES AND
OBLIGATIONS
(a) Except as set forth in Section 2.6(a) of the Target Disclosure Letter,
Target and its subsidiaries have no material obligations or liabilities of any
nature (matured or unmatured, fixed or contingent) other than (a) those set
forth or adequately provided for in the Target Balance Sheet (including the
notes thereto), (b) those obligations or liabilities (including contractual
obligations) incurred in the ordinary course of business since the Target
Balance Sheet Date in amounts consistent with prior periods, which obligations
or liabilities have not had and could not reasonably be expected to have a
Material Adverse Effect on Target, (c) those incurred in connection with the
execution of this Agreement, and (d) those disclosed in the Target SEC
Documents.
(b) Except as set forth in Section 2.6(b) of the Target Disclosure Letter,
Target and its subsidiaries have no material obligations or liabilities of any
nature (matured or unmatured, fixed or contingent, known or unknown) relating to
or arising out of any Acquisitions, including without limitation liabilities or
obligations with respect to purchase price adjustments, contingent purchase
price payments, earn-out payments, unpaid installment purchase price payments,
indemnity or make whole covenants, or relating to integration, consolidation or
restructuring of acquired operations, including without limitation for severance
of employees, closing of facilities, termination or subleasing of leases for
physical property or real property, unpaid taxes, failure to obtain or transfer
of material permits, registrations or authorization, failure to obtain consent
to assignment or change of control for any material Contract, and any other
obligations or liabilities for payment or assumption of liabilities. The parties
agree that for all purposes within this Agreement, Acquisitions shall not be
considered to be in the ordinary course of business of the Target, regardless of
the quantitative or qualitative number, frequency, planning and budgeting of
such Acquisitions.
13
2.7 CONTRACTS
(a) Set forth in Section 2.7(a) of the Target Disclosure Letter is a
complete and correct list of each of the following agreements, leases and other
instruments, both oral and written, to which Target or any of its subsidiaries
is a party or by which Target or any of its subsidiaries or their respective
properties or assets are bound:
(i) each material license or other agreement under which any
Target Intellectual Property is licensed by or to Target or any of its
subsidiaries;
(ii) each agreement that restricts the operation of the
business of Target or any of its subsidiaries or the ability of Target or any of
its subsidiaries to solicit customers or employees;
(iii) each operating lease (as lessor, lessee, sublessor or
sublessee) relating to any real or tangible personal property or assets that are
material to Target and its subsidiaries, taken as a whole;
(iv) each agreement (including capital leases) under which any
money has been or may be borrowed or loaned or any note, bond, indenture, or
other evidence of indebtedness has been issued or assumed (other than those
under which there remain no ongoing obligations of Target or any of its
subsidiaries), and each guaranty of any evidence of indebtedness or other
obligation, or of the net worth, of any person or entity (other than
endorsements for the purpose of collection in the ordinary course of business),
and each agreement granting or creating a Lien (other than Permitted Liens) on
any of Target's assets or any of its subsidiary's assets;
(v) each agreement providing for accelerated or special
payments as a result of the Merger, including any severance or "golden
parachute" agreement or any shareholder rights plan or other instrument referred
to as a "poison pill";
(vi) each written (and a description of any oral) employment
agreement, consulting agreement, non-compete agreement, confidentiality
agreement or termination or severance agreement;
(vii) each franchise or license arrangement, contract or
agreement;
(viii) each contract for the supply of information or data to
Target;
(ix) each contract, arrangement or agreement with Xxxxxx Xxx
or Xxxxxxx Mac;
(x) each contract, arrangement or agreement related to an
Acquisition; and
(xi) each agreement with any Governmental Entity or otherwise
which requires Target, any of its subsidiaries and/or any of their respective
employees to have been granted security or similar clearances.
14
A complete and correct copy of each written agreement, lease or other type
of document (or representative forms thereof), and a true, complete and correct
summary of each oral agreement, lease or other type of document, required to be
disclosed pursuant to this Section 2.7 has been made available to Acquiror.
(b) Each agreement, lease or other type of document required to be
disclosed pursuant to this Section 2.7, each agreement or other type of document
required to be filed with the SEC pursuant to Item 601 of Regulation S-K under
the Securities Act, and each agreement or other type of document which is
material to the Target and its subsidiaries taken as a whole (collectively, the
"Target Contracts") is valid, binding and in full force and effect and is
enforceable by Target or its applicable subsidiary in accordance with its terms.
Neither Target nor any of its subsidiaries that is a party to such Target
Contract is (with or without the lapse of time or the giving of notice, or both)
in breach of or in default under any of the Target Contracts, and, no other
party to any of the Target Contracts is (with or without the lapse of time or
the giving of notice, or both) in material breach of or in default under any of
the Target Contracts. No existing or completed agreement to which Target or any
of its subsidiaries is a party, is subject to renegotiation with any
Governmental Entity.
2.8 LITIGATION
All litigation to which Target or any of its subsidiaries is a party (or,
to the knowledge of Target, threatened to become a party) is disclosed in
Section 2.8 of the Target Disclosure Letter. Except as set forth in Section 2.8
of the Target Disclosure Letter, there is no private or governmental action,
suit, proceeding, claim, arbitration or investigation pending before any agency,
court or tribunal, foreign or domestic, or, to the knowledge of Target,
threatened (including allegations that could form the basis for future action)
against Target or any of its subsidiaries or their properties or officers or
directors (in their capacities as such), which, if adversely determined could
reasonably be expected to have a Material Adverse Effect on Target. There is no
judgment, decree or order against Target or its subsidiaries, or, to the
knowledge of Target, any of their directors or officers (in their capacities as
such), that could prevent, enjoin, or materially alter or delay any of the
transactions contemplated by this Agreement, or that could reasonably be
expected to have a Material Adverse Effect on Target. Neither Target nor any of
its subsidiaries has any plans to initiate any litigation, arbitration or other
proceeding against any third party, other than litigation related to the routine
collection of past due receivables and other litigation not material to the
business of Target or any of its subsidiaries.
2.9 RESTRICTIONS ON BUSINESS ACTIVITIES
Except as set forth in Section 2.9 of the Target Disclosure Letter, there
is no agreement, judgment, injunction, order or decree binding upon Target that
has or could reasonably be expected to have the effect of prohibiting or
impairing in any material respect any current business practice of Target or its
subsidiaries, any acquisition of property by Target or its subsidiaries or the
conduct of business by Target and its subsidiaries as currently conducted.
2.10 GOVERNMENTAL AUTHORIZATION
Target and each of its subsidiaries have obtained each federal, state,
county, local or foreign governmental consent, license, permit, grant, or other
authorization of a Governmental
15
Entity (a) pursuant to which Target or any of its subsidiaries currently operate
or hold any interest in any of their properties or (b) that is required for the
operation of the business of Target or any of its subsidiaries or the holding of
any such interest ((a) and (b) herein collectively called "Target
Authorizations"), and all of such Target Authorizations are in full force and
effect, except where the failure to obtain or have any such Target
Authorizations could not reasonably be expected to have a Material Adverse
Effect on Target.
2.11 TITLE TO PROPERTY
Except as set forth in Section 2.11 of the Target Disclosure Letter,
Target and its subsidiaries have good and marketable title to all of their
properties, interests in properties and assets, real and personal, necessary for
the conduct of their businesses as presently conducted or which are reflected in
the Target Balance Sheet or acquired after the Target Balance Sheet Date (except
properties, interests in properties and assets sold or otherwise disposed of in
the ordinary course of business since the Target Balance Sheet Date), or, with
respect to leased properties and assets, valid leasehold interests therein, in
each case free and clear of all Liens of any kind or character, except (a) Liens
for current taxes not yet due and payable, (b) such imperfections of title,
Liens and easements as do not and will not materially detract from or interfere
with the use or value of the properties subject thereto or affected thereby, or
otherwise materially impair business operations of Target and its subsidiaries,
taken as a whole and as currently conducted, involving such properties, and (c)
Liens securing debts that are reflected on the Target Balance Sheet. The plants,
property and equipment of Target and each of its subsidiaries that are used in
the operations of their respective businesses are in good operating condition
and repair (normal wear and tear excepted). All properties used in the
operations of Target or any of its subsidiaries are reflected in the Target
Balance Sheet to the extent GAAP requires the same to be reflected. Except as
set forth in Section 2.11 of the Target Disclosure Letter, Target and its
subsidiaries do not own or lease any real property. For purposes of this Section
2.11, the term "property" or "properties" does not include intellectual
property.
2.12 INTELLECTUAL PROPERTY
Except as set forth in Section 2.12 of the Target Disclosure Letter:
(a) All trademark registrations and applications for
registrations, patents and applications for patents, and any copyrights and
applications for copyrights or other forms of Intellectual property controlled
by Target ("Target Intellectual Property") are completely and correctly listed
in Section 2.12(a) of the Target Disclosure Letter.
(b) All programs for Developed Software are completely and correctly
described in Section 2.12(b) of the Target Disclosure Letter (wherein only the
core programs need be identified without identifying the modification or updates
thereto).
(c) Except as set forth in Section 2.12(c) of the Target Disclosure
Letter, Target and its subsidiaries have not conveyed, assigned or encumbered
any of their rights to the Target Intellectual Property.
(d) Target or its subsidiaries are the sole and exclusive owners of,
all right, title and interest in and to the Target Intellectual Property (with
no breaks in the chain of the title
16
thereof) and otherwise have the unrestricted and perpetual right to use any
third party Intellectual Property required for the carrying on of the business
of Target and its subsidiaries in the manner currently conducted (which,
collectively with Target Intellectual Property, shall be referred to as
"Required Intellectual Property") except where such failure to have such right
would not have a Material Adverse Effect on Target.
(e) The Target Intellectual Property is in full force and effect and
has not been used or enforced or failed to be used or enforced in a manner that
would result in the abandonment, cancellation or unenforceability of such Target
Intellectual Property.
(f) Neither Target nor any of its subsidiaries has knowledge of nor
has received any notice of any claim of adverse ownership, invalidity or other
opposition to or conflict with any Target Intellectual Property nor is there any
pending or, to the knowledge of Target, threatened suit, proceeding, claim,
demand, action or investigation of any nature or kind against Target or any of
its subsidiaries relating to the Target Intellectual Property that, if
determined adversely, could be reasonably expected to challenge the ownership,
legality, enforceability, validity or otherwise prevent use, exploitation,
modification or license of such Target Intellectual Property.
(g) Other than for Target Contracts, neither Target nor its
subsidiaries are required to pay any royalty, fee or other payment to any third
party in connection with their use of the Required Intellectual Property except
where the failure to pay such royalty, fee or other payment and the resulting
inability to use such Required Intellectual Property could not reasonably be
expected to have a Material Adverse Effect on Target.
(h) No activity in which Target or its subsidiaries are engaged nor
any product that Target or its subsidiaries manufacture, use, sell, license or
offer, nor any process, method, packaging, advertising, or any material that
Target or its subsidiaries employ in the manufacture, marketing, sale, licensing
or offering of any such product or service, nor the use of any of the Required
Intellectual Property by Target or its subsidiaries breaches, violates,
infringes or interferes with any rights of any third party.
(i) Target and its subsidiaries have taken commercially reasonable
steps (including measures to protect secrecy and confidentiality) to protect all
their right, title and interest in and to all Target Intellectual Property. All
employees, agents, consultants and other representatives of Target and its
subsidiaries who have access to confidential or proprietary information of
Target and its subsidiaries have a legal obligation of confidentiality to Target
or its subsidiaries with respect to such information.
(j) Xxxxxxx Xxxxxx, Xxxxxx Xxxxxx and Xxxxxxx Xxxxxx have each duly
executed and delivered agreements to Target or its subsidiaries pertaining to
the assignment to Target or its subsidiaries of all Target Intellectual
Property, conceived or reduced to practice by them during the course of their
employment or engagement by Target or its subsidiaries. Xxxxxxx Xxxxxx, Xxxxxx
Xxxxxx and Xxxxxxx Xxxxxx have each assigned or granted to the Target or a
subsidiary in a written assignment full right, title and interest in and to what
they created or developed, without any limitations, exceptions, or exclusions,
which assignment or agreement has not been revoked, invalidated or terminated.
No event has occurred, and no circumstance or condition exists, that with or
without notice or lapse of time will, or could reasonably be
17
expected to, result in the disclosure or delivery to any person of such source
code, or any portion or aspect of such source code, or such proprietary
information or algorithm.
(k) There has been no public disclosure, sale or offer for sale of
any invention forming a part of any patent application (in preparation or filed)
or patent for an invention within the Target Intellectual Property owned by
Target or one of its subsidiaries, that was directly or indirectly derived from
the inventor(s) (such as a non-confidential publication or presentation by an
inventor, employee, officer, director or other representative of Target or its
subsidiaries) that could reasonably be expected to affect the ability of Target
or its subsidiaries to obtain or sustain valid patent rights to such invention
in any jurisdiction where it is desirable and commercially reasonable for Target
or its subsidiaries to obtain patent protection.
(l) There is no publication, such as a patent, published or
laid-open patent application, journal article, catalogue, promotion, or
specification, of another person which may prevent Target or its subsidiaries
from obtaining or sustaining valid patent rights to any patent application (in
preparation or filed) or patent for an invention within the Target Intellectual
Property owned by Target or its subsidiaries in any jurisdiction where it is
desirable and commercially reasonable for Target or its subsidiaries to obtain
patent protection.
(m) In relation to each patent application (in preparation or filed)
or patent for an invention within the Target Intellectual Property owned by
Target or one of its subsidiaries, Target is not aware of any professional
opinion, such as the opinion of a patent agent or patent attorney, whether
preliminary in nature or in any other manner qualified, to the effect that the
chances of obtaining or sustaining valid patent rights to the invention are
considered to be unlikely, or less than even, or about even, or in any other
manner doubtful in any jurisdiction where it is desirable and commercially
reasonable for Target or its subsidiaries to obtain patent protection.
(n) Except as otherwise evidenced by or described in a Target
Contract, (i) each item of Developed Software was written by employees of the
Target or its subsidiaries, or, if by a third party, was properly assigned to
Target, (ii) each item of Developed Software is an original work, (iii) no
portion of the Developed Software uses, copies or comprises the work owned by
any third party and (iv) no royalty or other consideration is due to any third
party arising out of the creation, copying or distribution of the Developed
Software.
(o) Except as set forth in Section 2.12(o) of the Target Disclosure
Letter, Target and its subsidiaries have not provided the source code for the
Developed Software to any other person, directly or indirectly, by license,
transfer, sale, escrow, or otherwise. The Target and its subsidiaries have not
permitted any other person or entity to reverse engineer, disassemble or
decompile the Developed Software to create such source code.
(p) The Required Intellectual Property has not been imported or
exported in violation of any export or import restrictions in any jurisdictions
where Target or any of its subsidiaries conducts business.
(q) Neither the past nor current use of any data bases related to
the business of Target or any of its subsidiaries or the information contained
therein: (i) has violated or infringed upon, or is violating or infringing upon,
the legal rights of any person; (ii) breaches any legal
18
duty or legal obligation owed to any person; or (iii) violates any law relating
to the privacy of any person.
(r) No Target Intellectual Property was conceived or developed
jointly with a third party or directly or indirectly with or pursuant to
government funding or a government contract in a manner that would result in the
creation of "March-in" rights under 35 U.S.C. Section 203.
(s) There has been no unauthorized use, disclosure, infringement or
misappropriation of any Target Intellectual Property by any third party
including, without limitation any employee or former employee of Target or its
subsidiaries.
2.13 ENVIRONMENTAL MATTERS
Target and its subsidiaries have at all times operated their businesses in
material compliance with all Environmental Laws and all permits, licenses and
registrations required under applicable Environmental Laws ("Environmental
Permits") and, to Target's knowledge, no material expenditures are or will be
required by Target or its subsidiaries in order to comply with such
Environmental Laws. Neither Target nor any of its subsidiaries has received any
written communication from any Governmental Entity or other person or entity
that alleges that Target or its subsidiaries have violated or is, or may be,
liable under any Environmental Law. There are no material Environmental Claims
pending or, to the knowledge of Target, threatened (a) against Target or any of
its subsidiaries, or (b) against any person or entity whose liability for any
Environmental Claim Target or any of its subsidiaries has retained or assumed,
either contractually or by operation of law. Neither Target nor any of its
subsidiaries have contractually retained or assumed any liabilities or
obligations that could reasonably be expected to provide the basis for any
material Environmental Claim.
"Environmental Laws" means all applicable statutes, rules, regulations,
ordinances, orders, decrees, judgments, permits, licenses, consents, approvals,
authorizations, and governmental requirements or directives or other obligations
lawfully imposed by governmental authority under federal, state or local law
pertaining to the protection of the environment, protection of public health,
protection of worker health and safety, the treatment, emission and/or discharge
of gaseous, particulate and/or effluent pollutants, and/or the handling of
hazardous materials, including without limitation, the Clean Air Act, 42 U.S.C.
xx.xx. 7401, et seq., the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 ("CERCLA"), 42 U.S.C. xx.xx. 9601, et seq., the Federal
Water Pollution Control Act, 33 U.S.C. xx.xx. 1321, et seq., the Hazardous
Materials Transportation Act, 49 U.S.C. xx.xx. 1801, et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. xx.xx. 6901, et seq. ("RCRA") and the
Toxic Substances Control Act, 15 U.S.C. xx.xx. 2601, et seq. "Environmental
Claims" means any and all actions, orders, decrees, suits, demands, directives,
claims, liens, investigations, proceedings or notices of violation by any
Governmental Entity or other person or entity alleging potential responsibility
or liability arising out of, based on or related to (a) the presence, release or
threatened release of, or exposure to, any Hazardous Materials (as defined under
applicable Environmental Laws) or (b) circumstances forming the basis of any
violation or alleged violation of any Environmental Law.
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2.14 TAXES
(a) Target and each of its subsidiaries have timely filed (including
after giving effect to any extensions) all tax returns (as defined below in
clause (k)) required to be filed by them. All such tax returns are true,
complete and correct. Target and each of its subsidiaries have timely paid or
caused to be timely paid all taxes due with respect to the taxable periods
covered by such tax returns and all other taxes otherwise due, and the Target
Balance Sheet reflects an adequate reserve (in addition to any reserve for
deferred taxes established to reflect timing differences between book and tax
income) for all taxes payable by Target or its subsidiaries for all taxable
periods and portions thereof through the Target Balance Sheet Date.
(b) Except as set forth in Section 2.l4(b) of the Target Disclosure
Letter, no tax return of Target or any of its subsidiaries is under audit or, to
the knowledge of Target, examination by any taxing authority, and no notice of
such an audit or examination has been received by Target or its subsidiaries.
Except as set forth in Section 2.l4(b) of the Target Disclosure Letter there is
no deficiency, litigation, proposed adjustment or matter in controversy with
respect to any taxes due and owing by Target or its subsidiaries. Except as set
forth in Section 2.14(b) of the Target Disclosure Letter, each deficiency
resulting from any completed audit or examination relating to taxes by any
taxing authority has been timely paid. Except as set forth in Section 2.14(b) of
the Target Disclosure Letter, no issues relating to taxes were raised by the
relevant taxing authority in any completed audit or examination that could
reasonably be expected to recur in a later taxable period. No claim has been
made by any taxing authority in any jurisdiction where Target does not file tax
returns that it is or may be subject to tax in that jurisdiction. The United
States federal income tax returns of Target and its subsidiaries have either
been examined and settled with the Internal Revenue Service or closed by virtue
of the expiration of the applicable statute of limitations for all years through
1998.
(c) Except as set forth in Section 2.14(c) of the Target Disclosure
Letter, there is no currently effective agreement or other document extending,
or having the effect of extending, the period of assessment or collection of any
taxes and no power of attorney (other than powers of attorney authorizing
employees of Target or its subsidiaries to act on behalf of Target or such
subsidiaries) with respect to any taxes has been executed or filed with any
taxing authority.
(d) No Liens for taxes exist with respect to any assets or
properties of Target or any of its subsidiaries, except for statutory Liens for
taxes not yet due.
(e) Neither Target nor any of its subsidiaries will be required to
include in a taxable period ending after the Effective Time any material taxable
income attributable to income that accrued in a prior taxable period but was not
recognized for tax purposes in any prior taxable period as a result of the
installment method of accounting, the completed contract method of accounting,
the long-term contract method of accounting, the cash method of accounting,
Section 263A, or Section 481 of the Code or comparable provisions of any other,
domestic or foreign (whether national, federal, state, provincial, local or
otherwise) tax laws, or for any other reason.
(f) Target and each of its subsidiaries has complied in all material
respects with all applicable statutes, laws, ordinances, rules and regulations
relating to the payment and
20
withholding of taxes (including withholding of taxes pursuant to Sections 1441,
1442, 3121 and 3402 of the Code and similar provisions under any other domestic
or foreign (whether national, federal, state, provincial, local or otherwise)
tax laws) and have in all material respects, within the time and the manner
prescribed by law, withheld from and paid over to the proper Governmental
Entities all amounts required to be so withheld and paid over under applicable
laws.
(g) Target has not constituted either a "distributing corporation"
or a "controlled corporation" (in each case, within the meaning of Section
355(a)(1)(A) of the Code) in a distribution of stock qualifying for tax-free
treatment under Section 355(a) of the Code (A) in the two years prior to the
date of this Agreement or (B) in a distribution that could otherwise constitute
part of a "plan" or "series of related transactions" (within the meaning of
Section 355(a) of the Code) in conjunction with the Merger.
(h) Target was not, at any time during the period specified in
Section 897(c) (1) (A) (ii) of the Code, a United States real property holding
corporation within the meaning of Section 897(c) (2) of the Code.
(i) There is no agreement, contract or arrangement to which Target
or any of its subsidiaries is a party that could, individually or collectively,
result in the payment of any amount that would not be deductible by reason of
Sections 280G (as determined without regard to Section 280G(b)(4)) or Section
162(m) of the Code.
(j) Neither Target nor any of its subsidiaries is a party to or
bound by any tax indemnity, tax sharing or tax allocation agreement nor does
Target or any of its subsidiaries owe any amount under any such agreement.
(k) As used in this Agreement, (i) "taxes" shall include (A) any and
all taxes, whenever created or imposed, and whether domestic or foreign, and
whether imposed by a national, federal, state, provincial, local or other
Governmental Entity, including all interest, penalties and additions imposed
with respect to such amounts, (B) liability for the payment of any amounts of
the type described in clause (A) as a result of being a member of an affiliated,
consolidated, combined or unitary group and (C) liability for the payment of any
amounts as a result of being party to any tax sharing agreement or as a result
of any express or implied obligation to indemnify any other person with respect
to the payment of any amount described in clause (A) or (B) and (ii) "tax
returns" shall mean all domestic or foreign (whether national, federal, state,
provincial, local or otherwise) returns, declarations, statements, reports,
schedules, forms and information returns relating to taxes and any amended tax
return.
(l) Target and its subsidiaries have not been members of an
affiliated group of corporations, within the meaning of Section 1504 of the
Code, or members of a combined, consolidated or unitary group for state, local
or foreign tax purposes other than a group of which Target or any of its current
subsidiaries is or was the parent. Neither Target nor any of its subsidiaries
has liability for taxes of any person (other than Target and its subsidiaries)
under Treasury Regulation Section 1.1502-6 (or any corresponding provision of
state, local or foreign income tax law), as transferee or successor, by contract
or otherwise.
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(m) Neither Target nor any of its subsidiaries has filed a consent
pursuant to the collapsible corporation provisions of Section 341(f) of the Code
(or any corresponding provision of state, local or foreign income tax law) or
agreed to have Section 341(f)(2) of the Code (or any corresponding provision of
state, local or foreign income tax law) apply to any disposition of any asset
owned by it.
(n) None of the assets of Target or any of its subsidiaries is
property that Target or any of its subsidiaries is required to treat as being
owned by any other person pursuant to the so-called "safe harbor lease"
provisions of former Section 168(f)(8) of the Internal Revenue Code of 1954, as
amended; none of the assets of Target or any of its subsidiaries directly or
indirectly secures any debt the interest on which is tax exempt under Section
103(a) of the Code; none of the assets of Target or any of its subsidiaries is
"tax-exempt use property" within the meaning of Section 168(h) of the Code; and
none of the assets of Target or any of its subsidiaries is required to be or is
being depreciated pursuant to the alternative depreciation system under Section
168(g)(2) of the Code.
2.15 EMPLOYEE BENEFIT PLANS
Set forth in Section 2.15 of the Target Disclosure Letter is a correct and
complete list of each "employee benefit plan" within the meaning of Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")
(each, an "ERISA Plan") Section 2.15 of the Target Disclosure Schedule also sets
forth any other bonus, profit sharing, pension, compensation, deferred
compensation, stock option, stock purchase, fringe benefit, severance,
post-retirement, scholarship, disability, sick leave, vacation or retention plan
or arrangement sponsored or maintained by Target or any of its subsidiaries, or
to which Target or any of its subsidiaries is or may be required to make
contributions, as well as all employment agreements (such plans and related
trusts, insurance and annuity contracts, funding media, employment agreements
and related agreements and arrangements being hereinafter referred to as the
"Benefit Plans"), and which are governed by the laws of the United States or any
State thereof (those Benefit Plans which are so governed and all ERISA Plans,
collectively, the "Target Benefit Plans"). Target has made available to
Acquiror, to the extent applicable with respect to each Target Benefit Plan,
copies of (i) all Target Benefit Plans and their related trusts, (ii) all
financial statements, (iii) all summary plan descriptions and other employee
communications, (iv) actuarial reports and (v) annual reports and returns filed
with the Internal Revenue Service or Department of Labor with respect to such
Target Benefit Plans for a period of three years prior to the date hereof. In
addition, except as set forth in Section 2.15 of the Target Disclosure Letter:
(a) Each Target Benefit Plan and Non-U.S. Benefit Plan has been
operated and administered in compliance with its terms in all material respects;
(b) Each Target Benefit Plan complies in all material respects with
all requirements of applicable law, including without limitation, ERISA and the
Code;
(c) Each Target Benefit Plan intended to qualify under Section
401(a) of the Code has received a favorable determination letter from the
Internal Revenue Service as to its qualification under Section 401(a) of the
Code, and nothing has occurred that could reasonably be expected to cause the
loss of such qualification;
22
(d) Neither Target nor any of its subsidiaries maintains, sponsors
or contributes to, and neither Target nor any of its subsidiaries has
maintained, sponsored or contributed in the past six years to, any "defined
benefit plan" (within the meaning of Section 3(35) of ERISA) or any
"multiemployer plan" (within the meaning of Section 3(37) of ERISA) or any other
plan subject to Title IV of ERISA;
(e) No "prohibited transaction" (within the meaning of Section 406
of ERISA or Section 4975 (c) of the Code) has occurred with respect to any
Target Benefit Plan;
(f) No provision of any Target Benefit Plan or Non-U.S. Benefit Plan
limits the right of Target to amend or terminate any Target Benefit Plan on no
more than ninety days notice, subject to the requirements of applicable law;
(g) All contributions required to have been made to trusts in
connection with any Target Benefit Plan that would constitute a "defined
contribution plan" (within the meaning of Section 3(34) of ERISA) through the
date hereof have been made;
(h) Other than claims in the ordinary course for benefits with
respect to the Target Benefit Plans or the Non-U.S. Benefit Plans, there are no
actions, suits or claims pending, or, to Target's knowledge, threatened, with
respect to any Target Benefit Plan or any Non-U.S. Benefit Plan;
(i) All reports, returns and similar documents with respect to the
Target Benefit Plans and the Non-U.S. Benefit Plans required to be filed with
any Governmental Entity have been timely filed;
(j) Neither Target nor any of its subsidiaries has any obligation to
provide health or other welfare benefits to former, retired or terminated
employees, except as specifically required under Section 4980B of the Code or
Section 601 of ERISA. Target and each of its subsidiaries have complied in all
material respects with the notice and continuation requirements of Section 4980B
of the Code and Section 601 of ERISA and the regulations thereunder and the
applicable requirements under Sections 9801 and 9802 of the Code;
(k) All contributions, insurance premiums, taxes, or other
liabilities or charges with respect to any Target Benefit Plan or any Non-U.S.
Benefit Plan required to be paid on or prior to the Closing Date have been or
will be paid in full on or prior to the Closing Date. All unpaid contributions,
insurance premiums, taxes, or other liabilities or charges with respect to any
Target Benefit Plan or any Non-U.S. Benefit Plan attributable to periods prior
to the Closing Date, including, to the extent required to be accrued on the
Target Financial Statements under GAAP consistently applied, the pre-Closing
portion of any period ending after the Closing Date, have been accrued and
properly reflected as liabilities on Target Financial Statements. Contributions
for purposes of this Section 2.15 shall include, without limitation, any
matching or employer profit sharing contributions required or customarily made
under a "defined contribution plan" (within the meaning of Section 3(34) of
ERISA) sponsored by Target;
(l) All amendments required to bring the Target Benefit Plans into
conformity with applicable law, including, without limitation, ERISA and the
Code, have been or will be timely adopted;
23
(m) No Target Benefit Plan or Non-U.S. Benefit Plan is under audit
or investigation by the IRS or the Department of Labor or any other Governmental
Entity, and no such completed audit, if any, has resulted in the imposition of
any tax, interest or penalty that remains unpaid as of the Closing Date;
(n) Neither Target nor any of its subsidiaries is subject to any
Liens (except Permitted Liens), or excise or other taxes, under ERISA, the Code
or other applicable law relating or with respect to any Target Benefit Plan or
any Non-U.S. Benefit Plan; and
(o) Except as set forth in Section 2.15(0) of the Target Disclosure
Letter, there will be no payment, accrual of additional benefits, acceleration
of payments or vesting (except for the May 2001 options) of any benefit under
any Target Benefit Plan, Non-U.S. Benefit Plan or any other agreement or
arrangement to which Target or a subsidiary is a party, and no employee, officer
or director of the Target or a subsidiary will become entitled to severance,
termination allowance or similar payments, solely by reason of entering into or
in connection with the transactions contemplated by this Agreement.
2.16 EMPLOYEES AND CONSULTANTS
(a) Target has made available to Acquiror a complete list of all
individuals employed by Target and each of its subsidiaries as of the date
hereof and the position and base compensation payable to each such individual.
(b) Neither Target nor any of its subsidiaries is a party to or
subject to a labor union or a collective bargaining agreement or arrangement or
party to any general labor or employment dispute. There are no labor unions
representing, purporting to represent or, to Target's knowledge, attempting to
represent any employee of Target or any of its subsidiaries.
(c) Except as set forth in Section 2.16(c) of the Target Disclosure
Letter, the consummation of the transactions contemplated herein will not result
in (i) any amount becoming payable to any employee, director or independent
contractor of Target or its subsidiaries, (ii) the acceleration of payment or
vesting (except for the May 2001 options) of any benefit, option or right to
which any employee, director or independent contractor of Target or its
subsidiaries may be entitled, (iii) the forgiveness of any indebtedness of any
employee, director or independent contractor of Target or its subsidiaries, or
(iv) any cost becoming due or accruing to Target or its subsidiaries with
respect to any employee, director or independent contractor of Target or its
subsidiaries, other than as accrued on the Target Financial Statements.
(d) To the knowledge of Target, no employee of Target or any of its
subsidiaries has been injured in the work place or in the course of his or her
employment except for: (i) injuries that are covered by insurance, or (ii)
injuries for which a claim has been made under workers' compensation or similar
laws.
(e) Target and each of its subsidiaries has complied in all material
respects with the verification requirements and the record-keeping requirements
of the Immigration Reform and Control Act of 1986 ("IRCA"). To the knowledge of
Target, the information and documents on which Target and its subsidiaries
relied to comply with IRCA are true and correct, and there have not been any
discrimination complaints filed against Target or its subsidiaries
24
pursuant to IRCA, and, there is no basis for the filing of such a complaint that
could reasonably be expected to have a Material Adverse Effect on Target.
(f) Neither Target nor any of its subsidiaries has received or been
notified of any written complaint by any employee, applicant, union or other
party of any discrimination or other conduct forbidden by law or contract, nor
to the knowledge of Target, is there a basis for any complaint, except such
complaints as could not reasonably be expected to have a Material Adverse Effect
on Target.
(g) Target's action in complying with the terms of this Agreement
will not violate any agreements with any of the employees of Target or any of
its subsidiaries.
(h) Target and each of its subsidiaries has filed or will file all
required reports and information with respect to their employees that are due
prior to the Closing Date and otherwise have complied in their hiring,
employment, promotion, termination and other labor practices with all applicable
federal, state and foreign law and regulations, including without limitation
those within the jurisdiction of the United States Equal Employment Opportunity
Commission, United States Department of Labor and state and local human rights
or civil rights agencies, except to the extent that any such failure to file or
comply would not have a Material Adverse Effect on Target.
(i) To the knowledge of Target, none of its or its subsidiaries'
employees or contractors is obligated under any agreement, commitments,
judgment, decree, order or otherwise (an "Employee Obligation") that could
reasonably be expected to interfere with the use of his or her best efforts to
promote the interests of Target and its subsidiaries or that could reasonably be
expected to have a Material Adverse Effect on Target. Neither the execution nor
delivery of this Agreement nor the conduct of the business after the Closing
Date of Target and its subsidiaries in the manner currently conducted, will
conflict with or result in a material breach of the terms, conditions or
provisions of, or constitute a default under, any Employee Obligation.
(j) There are no strikes, slowdowns or work stoppages pending or, to
the knowledge of Target, threatened with respect to the employees of Target or
its subsidiaries, nor has any such strike, slowdown or work stoppage occurred
or, to the knowledge of Target, been threatened since January 1, 1998. There is
no representation claim or petition or complaint pending before the National
Labor Board or any state or local agency and, to Target's knowledge, no question
concerning representation has been raised or threatened since January 1, 1998
respecting the employees of Target and its subsidiaries.
(k) Except as set forth in Section 2.16(k) of the Target Disclosure
Letter, Target is not a contractor or subcontractor under any federal, state,
local or foreign government contract.
2.17 RELATED-PARTY TRANSACTIONS
No employee, officer, or director of Target or any of its subsidiaries or
member of his or her immediate family is indebted to Target or any of its
subsidiaries, nor is Target or any of its subsidiaries indebted (or committed to
make loans or extend or guarantee credit) to any of them. None of such persons
has any direct or indirect ownership interest in any firm or corporation with
which Target or any of its
25
subsidiaries is affiliated or with which Target or any of its subsidiaries have
a business relationship, or any firm or corporation that competes with Target or
any of its subsidiaries, except to the extent that employees, officers, or
directors of Target or any of its subsidiaries and members of their immediate
families own less than 1% of the outstanding stock in publicly traded companies.
No member of the immediate family of any officer or director of Target and its
subsidiaries is directly or indirectly interested in any Target Contract.
2.18 INSURANCE
Target has made available to Acquiror copies of all policies of insurance
and bonds of Target and its subsidiaries. Such policies and bonds are with
reputable insurers, provide adequate coverage for all normal risks incident to
the assets, properties and business operations of Target and its subsidiaries
and are in character and amount (including deductibles) at least substantially
equivalent to that carried by persons and entities engaged in a business subject
to the same or similar perils or hazards. There is no material claim pending
under any of such policies or bonds as to which coverage has been questioned,
denied or disputed by the underwriters of such policies or bonds. All premiums
due and payable under all such policies and bonds have been paid and Target and
its subsidiaries are otherwise in compliance with the terms of such policies and
bonds in all material respects. Target has no knowledge of any threatened
termination of, or material premium increase with respect to, any of such
policies.
2.19 COMPLIANCE WITH LAWS
Target and each of its subsidiaries have complied with, are not in
violation of, and have not received any written notices of violation with
respect to, any federal, state, local or foreign statute, law or regulation with
respect to the conduct of their respective businesses, or the ownership or
operation of their respective businesses, assets or properties, except for such
violations or failures to comply as could not be reasonably expected to have a
Material Adverse Effect on Target.
2.20 BROKERS' AND FINDERS' FEES
Except as set forth in Section 2.20 of the Target Disclosure Letter,
neither Target nor any of its subsidiaries has incurred, nor will any such
entity incur, directly or indirectly, any liability for brokerage or finders'
fees or agents' commissions or investment bankers' fees or any similar charges
in connection with this Agreement or any transaction contemplated hereby.
2.21 VOTE REQUIRED
The affirmative vote of the holders of two-thirds of the Target Common
Stock outstanding on the record date set for the Target Shareholders Meeting is
the only vote of the holders of any of Target's capital stock necessary to adopt
and approve this Agreement, the Merger and the other transactions contemplated
hereby.
2.22 REGISTRATION STATEMENT; PROXY STATEMENT/PROSPECTUS
The written information supplied by Target expressly for the purpose of
inclusion in the registration statement on Form S-4 (or such other or successor
form as shall be appropriate) pursuant to which the issuance of the shares of
Acquiror Common Stock to be issued in
26
connection with the Merger will be registered with the SEC (the "Registration
Statement") shall not at the time the Registration Statement (including any
amendments or supplements thereto) is filed or declared effective by the SEC
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein not misleading. The
written information supplied by Target expressly for the purpose of inclusion in
the proxy statement/prospectus to be sent to the shareholders of Target in
connection with the meeting of Target's shareholders (the "Shareholder Meeting")
to be held in connection with the Merger (such proxy statement/prospectus as
amended or supplemented is referred to herein as the "Proxy Statement") shall
not, on the date the Proxy Statement is first mailed to Target's shareholders
and, at the time of Shareholder Meeting, contain any untrue statement of a
material fact, or omit to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading. If at any time prior to the Effective Time any event or
information should be discovered by Target that should be set forth in an
amendment to the Registration Statement or a supplement to the Proxy Statement,
Target shall promptly inform Acquiror and Merger Sub. Notwithstanding the
foregoing, Target makes no representation, warranty or covenant with respect to
any information supplied by Acquiror or Merger Sub that is contained in any of
the foregoing documents.
2.23 COMPLETE COPIES OF MATERIALS
Each document that has been requested by Acquiror or its counsel, and made
available by Target, in connection with Acquiror's technical, legal and
accounting review of Target and its subsidiaries is true and complete in all
material respects.
2.24 OPINION OF FINANCIAL ADVISOR
Target has been advised in writing by its financial advisor, Xxxx Capital
Partners, LLC ("RCP"), that in RCP's opinion, as of the date of such opinion,
the Per Share Consideration to be paid for Target Common Stock under the
applicable provisions of this Agreement is fair, from a financial point of view,
to the holders of Target Common Stock. Target has delivered, or promptly upon
receipt will deliver, to Acquiror a true and complete copy of such written
opinion.
2.25 BOARD APPROVAL
The Board of Directors of Target has unanimously (by affirmative vote of
each member thereof) (a) declared the advisability and approved this Agreement
and the Merger, (b) determined that the Merger is in the best interest of the
shareholders of Target and is on terms that are fair to such shareholders and
(c) recommended that the shareholders of Target adopt and approve this Agreement
and the Merger. The provisions in the CIVC Agreements with respect to formation
of a special committee of the Target Board of Directors have been waived or
suspended with respect to this Agreement and the Merger.
2.26 ILLEGAL PAYMENTS
Neither Target nor any of its subsidiaries, nor any director, officer,
agent, or employee thereof, nor, to the knowledge of Target, any other person or
entity associated with or acting for or on behalf of Target or any of its
subsidiaries, has directly or indirectly in violation of any legal requirement
(a) made any contribution, gift, bribe, rebate, payoff, influence payment,
kickback
27
or other payment to any person or entity, private or public, regardless of form,
whether in money, property, or services (i) to obtain favorable treatment in
securing business, (ii) to pay for favorable treatment for business secured, or
(iii) to obtain special concessions or for special concessions already obtained,
for or in respect to Target or its subsidiaries, or (b) established or
maintained any fund or asset that has not been recorded in the books and records
of Target or its subsidiaries.
2.27 CUSTOMERS
Set forth in Section 2.27 of the Target Disclosure Letter is a complete
list of the one hundred largest clients and customers of Target and its
subsidiaries, taken as a whole in each of the last four fiscal years, including
the amounts such customers paid to Target and its subsidiaries, taken as a
whole, in each such year. There are no facts or circumstances that are
reasonably likely to result in the loss of any such client or customer of Target
or any of its subsidiaries or a material adverse change in the relationship of
Target or any of its subsidiaries with any such client or customer prior to the
completion of the applicable current engagement.
2.28 REPRESENTATIONS COMPLETE
None of the representations or warranties made by Target herein or in any
Schedule hereto, including the Target Disclosure Letter, or in any certificate
furnished by Target pursuant to this Agreement, or in the Target SEC Documents,
when all such documents are read together in their entirety, contains any untrue
statement of a material fact, or omits to state any material fact necessary in
order to make the statements contained herein or therein, in the light of the
circumstances under which made, not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ACQUIROR AND MERGER SUB
Acquiror and Merger Sub represent and warrant to Target that the
statements contained in this Article III are true and correct, except as set
forth in the disclosure letter delivered by Acquiror to Target on the date of
the execution and delivery of this Agreement (the "Acquiror Disclosure Letter").
The Acquiror Disclosure Letter shall be arranged in paragraphs corresponding to
the numbered and lettered paragraphs contained in this Agreement, and the
disclosure in any paragraph shall qualify only the corresponding paragraph in
this Agreement unless a cross reference is made to another paragraph that such
disclosure also qualifies. Any reference in this Article III to an agreement
being "enforceable" shall be deemed to be qualified to the extent such
enforceability is subject to (a) laws of general application relating to
bankruptcy, insolvency, moratorium and the relief of debtors, and (b) the
availability of specific performance, injunctive relief and other equitable
remedies.
3.1 ORGANIZATION, STANDING AND POWER
Each of Acquiror and its material subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization. Acquiror and each of its material subsidiaries
have the corporate power to own their properties and to carry on
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their respective businesses as now being conducted and are duly qualified to do
business and are in good standing in each jurisdiction in which the failure to
be so qualified and in good standing would have a Material Adverse Effect on
Acquiror. Acquiror has made available a true and correct copy of the Certificate
of Incorporation and Bylaws (or similar organizational documents) of Acquiror,
as amended to date, to Target. Neither Acquiror nor any of its material
subsidiaries are in violation of any of the provisions of their Articles of
Incorporation or Bylaws (or equivalent organizational documents).
3.2 CAPITAL STRUCTURE
(a) The authorized capital stock of Acquiror consists of 100,000,000
shares of Common Stock and 5,000,000 shares of Preferred Stock, $.01 par value,
of which there were issued and outstanding as of the date of this Agreement
40,464,215 shares of Common Stock and no shares of Preferred Stock. The
authorized capital stock of Merger Sub consists of 1,000 shares of Common Stock,
no par value, all of which were issued and outstanding as of the date of this
Agreement. All outstanding shares of Common Stock of Merger Sub are held by
Acquiror. All outstanding shares of Acquiror Common Stock and Merger Sub Common
Stock are duly authorized, validly issued, fully paid and non-assessable and are
free of any Liens other than any Liens created by or imposed upon the holders
thereof, and are not subject to preemptive rights, rights of first refusal,
rights of first offer or similar rights created by statute, the Certificate of
Incorporation or the Bylaws (or similar organizational documents) of Acquiror or
Merger Sub or any agreement to which Acquiror or Merger Sub is a party or by
which it is bound. The shares of Acquiror Common Stock to be issued pursuant to
the Merger will, upon their issuance, be duly authorized, validly issued, fully
paid, and non-assessable, and will not be subject to any statutory preemptive
rights of Acquiror's shareholders and will be free of any Liens other than any
Liens created by or imposed on the holders thereof. As of the date of this
Agreement, Acquiror had granted options, entered into contingent issuance
agreements and otherwise reserved or committed to issue up to 5,377,455 shares
of Acquiror Common Stock.
(b) (i) The outstanding shares of Acquiror Common Stock are listed
and traded on the Nasdaq National Market and the Acquiror is in full compliance
with all applicable listing and maintenance requirements of the Nasdaq National
Market; and (ii) Acquiror has not within the past 24 months received any
notification of de-listing or other proceedings or investigations by Nasdaq.
3.3 AUTHORITY
(a) Each of Acquiror and Merger Sub has all requisite corporate
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of each of Acquiror and
Merger Sub. This Agreement has been duly executed and delivered by each of
Acquiror and Merger Sub and constitutes the valid and binding obligations of
each of Acquiror and Merger Sub, enforceable against Acquiror and Merger Sub in
accordance with its terms.
(b) Neither the execution, delivery and performance of this
Agreement by Acquiror or Merger Sub, nor the consummation by Acquiror and Merger
Sub of the transactions
29
contemplated hereby, will (i) conflict with, or result in a breach or violation
of, any provision of the Certificate of Incorporation or Bylaws (or similar
organizational documents) of Acquiror or Merger Sub, (ii) conflict with, result
in a breach or violation of, give rise to a default or loss of benefits, or
result in the acceleration of performance, or permit the acceleration of
performance, under (whether or not after the giving of notice or lapse of time
or both) any note, bond, indenture, guaranty, lease, license agreement,
instrument, writ, injunction, order, judgment or decree to which Acquiror or
Merger Sub is a party or any of their respective properties or assets is
subject; (iii) give rise to a declaration or imposition of any Lien upon any of
the properties or assets of Acquiror or Merger Sub; or (iv) adversely affect any
Acquiror Governmental License necessary to enable Acquiror or Merger Sub to
carry on their businesses as presently conducted, except, in the case of clauses
(ii), (iii) or (iv), for any conflict, breach, violation, default, declaration,
acceleration, imposition, impairment or effect that could not individually or in
the aggregate reasonably be expected to have a Material Adverse Effect on
Acquiror.
(c) No approval, authorization, consent, license, clearance or order
of, declaration or notification to, or filing or registration with, any
Governmental Entity or other regulatory authority is required in order to (i)
permit Acquiror and Merger Sub to consummate the Merger or perform their
obligations under this Agreement, (ii) prevent the termination or modification
of any governmental right, privilege, authority, franchise, license, permit or
certificate of Acquiror or Merger Sub (collectively, "Acquiror Governmental
Licenses") to enable Acquiror and Merger Sub, operate and lease their respective
properties and assets as and where such properties and assets are owned, leased
or operated and to provide service and carry on their respective businesses as
presently provided and conducted, or (iii) prevent any material loss or
disadvantage to the business of Acquiror and its subsidiaries, by reason of the
Merger, except for (the following in clauses (A), (B), (E) and (F),
collectively, the "Acquiror Governmental Approvals") (A) the filing of the
Articles of Merger, as provided in Section 1.2; (B) the filing of the
Registration Statement with the SEC in accordance with the Securities Act and
clearance thereof by the SEC; (C) any other filings or notices required pursuant
to the Securities Act or the Exchange Act and the rules promulgated thereunder,
including under Regulation M-A; (D) the filing of a report on Form 8-K in
accordance with the Exchange Act disclosing the existence and terms of this
Agreement; (E) such filings as may be required under HSR (and the expiration of
the waiting period thereunder) and such filings, consents and approvals as are
required under applicable foreign law (including antitrust or competition law);
(F) the filing with the Nasdaq National Market of a Notification Form for
Listing of Additional Shares with respect to the shares of Acquiror Common Stock
to be issued pursuant to the Merger and pursuant to stock options to purchase
shares of Target Common Stock which have been assumed by Acquiror in accordance
with Section 5.12 hereof; or (G) such other consents, authorizations, filings,
approvals and registrations of or with any Governmental Entity that, if not
obtained or made, would not have a Material Adverse Effect on Acquiror, and that
would not prevent or materially alter or delay the transactions contemplated by
this Agreement, or would not prevent the Surviving Corporation from owning or
operating any material portion of Target's or any of its subsidiaries'
businesses.
3.4 REGISTRATION STATEMENT; PROXY STATEMENT
The written information supplied by Acquiror and Merger Sub expressly for
the purpose of inclusion in the Registration Statement shall not at the time the
Registration Statement
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(including any amendments or supplements thereto) is filed or declared effective
by the SEC contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein not misleading.
The written information supplied by Acquiror and Merger Sub expressly for the
purpose of inclusion in the Proxy Statement shall not, on the date the Proxy
Statement is first mailed to Target's shareholders and at the time of the
Shareholder Meeting, contain any untrue statement of a material fact, or omit to
state any material fact necessary in order to make the statements made therein,
in light of the circumstances under which they were made, not misleading. If at
any time prior to the Effective Time any event or information should be
discovered by Acquiror or Merger Sub that should be set forth in an amendment to
the Registration Statement or a supplement to the Proxy Statement, Acquiror and
Merger Sub shall promptly inform Target. Notwithstanding the foregoing, Acquiror
and Merger Sub make no representation, warranty or covenant with respect to any
information supplied by Target that is contained in any of the foregoing
documents.
3.5 SEC DOCUMENTS
All documents required to be filed as exhibits to the Acquiror SEC
Documents have been so filed, and such exhibits are true, correct and complete
copies in all material respects of such documents. As of their respective filing
dates, (i) the Acquiror SEC Documents complied as to form in all material
respects with the requirements of the Exchange Act and the Securities Act, as
applicable, and (ii) none of the Acquiror SEC Documents contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances in which they were made, not misleading, except to the extent
corrected by a subsequently filed Acquiror SEC Document.
3.6 ABSENCE OF CERTAIN CHANGES
Since March 31, 2003, Acquiror and its material subsidiaries have
conducted their respective business in the ordinary course consistent with past
practice and there has not occurred:
(a) any change, event or condition (whether or not covered by
insurance) that has resulted in, or could reasonably be expected to result in, a
Material Adverse Effect on Acquiror;
(b) any declaration, setting aside, or payment of a dividend or
other distribution with respect to any shares of capital stock of Acquiror or
any of its material subsidiaries (except to Acquiror or to other parent entities
wholly owned by Acquiror), or any direct or indirect redemption, purchase or
other acquisition by Acquiror of any its shares of capital stock; or
(c) any amendment or change to the Certificate of Incorporation or
Bylaws of Acquiror.
3.7 BROKERS' AND FINDERS' FEES
Acquiror has not incurred, nor will it incur, directly or indirectly, any
liability for brokerage or finders' fees or agents' commissions or investment
bankers' fees or any similar charges in connection with this Agreement or any
transaction contemplated hereby.
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3.8 BOARD APPROVAL
The Board of Directors of Acquiror and Merger Sub have unanimously
approved this Agreement and the Merger and the issuance of the shares of
Acquiror Common Stock contemplated by this Agreement and the Merger.
3.9 REPRESENTATIONS COMPLETE
None of the representations, warranties or statements made by Acquiror or
Merger Sub herein or in any Schedule hereto, including the Acquiror Disclosure
Letter, or in any certificate furnished by Acquiror pursuant to this Agreement,
or in the Acquiror SEC Documents, when all such documents are read together in
their entirety, contains any untrue statement of a material fact, or omits to
state any material fact necessary in order to make the statements contained
herein or therein, in the light of the circumstances under which made, not
misleading.
ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME
4.1 CONDUCT OF BUSINESS OF TARGET
During the period from the date of this Agreement and continuing until the
earlier of the termination of this Agreement or the Effective Time, except as
expressly contemplated by this Agreement, or as set forth in Section 4.1 of the
Target Disclosure Letter or as previously expressly consented to in writing by
Acquiror, Target agrees to carry on its and its subsidiaries' businesses in the
usual, regular and ordinary course in substantially the same manner as
heretofore conducted, including without limitation, to use all commercially
reasonable efforts consistent with past practice and policies to preserve intact
its and its subsidiaries' present business organizations, keep available the
services of its and its subsidiaries' present officers and key employees and
preserve its and its subsidiaries' relationships with customers, suppliers,
distributors, licensors, licensees, and others having business dealings with it
or any of its subsidiaries, to the end that its and its subsidiaries' goodwill
and ongoing businesses shall be unimpaired at the Effective Time in any material
respect.
4.2 CONDUCT OF BUSINESS
(A) Without limiting the foregoing provisions of Section 4.1, except as
set forth in Section 4.2 of the Target Disclosure Letter, Target shall not do,
cause or permit any of the following, or allow, cause or permit any of its
subsidiaries to do, cause or permit any of the following, without the prior
written consent of Acquiror:
(a) Charter Documents. Cause or permit any amendments to its
Articles of Incorporation or Bylaws (or similar organizational documents);
(b) Dividends; Changes in Capital Stock. Declare or pay any
dividends on or make any other distributions (whether in cash, stock or
property) in respect of any of its capital stock (provided that Target's
subsidiaries may pay dividends and make other distributions to Target), or
split, combine, recapitalize 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
00
xxxxxxx xxxxx, xx xxxxxxxxxx or otherwise acquire, directly or indirectly, any
shares of its capital stock;
(c) Contracts. (i) Enter into, modify, amend or terminate any
contract, agreement, license, instrument, document or commitment ("Contract")
which if so entered into, modified, amended or terminated could be reasonably
expected to (A) have a Material Adverse Effect on Target, (B) impair in any
material respect the ability of Target to perform its obligations under this
Agreement or (C) prevent or materially delay the consummation of the
transactions contemplated by this Agreement, (ii) enter into any material
Contract to the extent consummation of the transactions contemplated by this
Agreement or compliance by Target or any of its subsidiaries with the provisions
of this Agreement could reasonably be expected to conflict with, or result in a
violation or breach of, or default (with or without notice or lapse of time, or
both) under, or give rise to a right of, or result in, termination, cancellation
or acceleration of any obligation or to a loss of a benefit under, or result in
the creation of any Lien in or upon any of the properties or assets of Target or
any of its subsidiaries under, or give rise to any increased, additional,
accelerated, or guaranteed right or entitlements of any third party under, or
result in any material alteration of, any provision of such Contract; or (iii)
enter into any Contract containing any restriction on the ability of the Target
or any of its subsidiaries to assign its rights, interests or obligations
thereunder, unless such restriction expressly excludes any assignment to
Acquiror or any of its subsidiaries in connection with or following the
consummation of the Merger, or to compete in any line of business;
(d) Stock Option Plans, etc. Adopt any stock option or similar plan,
amend any of the Target Stock Options Plans, or, except as provided in Section
5.12 hereof or pursuant to the terms of the Target Stock Option Plans,
accelerate, amend or change the period of exercisability or vesting of options
or other rights granted under either of the Target Stock Option Plans or
authorize cash payments in exchange for any options or other rights granted
under any of such plans;
(e) Issuance of Securities. Issue, deliver or sell or authorize or
propose the issuance, delivery or sale of, or purchase or propose the purchase
of, any shares of its capital stock or securities convertible into, or
subscriptions, rights, warrants or options to acquire, or other agreements or
commitments of any character (including stock appreciation rights or other
rights that are linked in any way to the price of Acquiror Common Stock or
Target Common Stock), or amend the terms of any of the foregoing, obligating it
to issue any such shares or other securities, other than the issuance of shares
of Target Common Stock pursuant to the exercise of stock options under the
Target Stock Option Plans outstanding on the date of this Agreement or pursuant
to the Target ESPP as in effect on the date of this Agreement;
(f) Intellectual Property. Transfer to or license any person or
entity or otherwise extend, amend or modify in any material respect any rights
to any Target Intellectual Property, other than the grant of non-exclusive
licenses in the ordinary course of business and consistent with past practice;
(g) Exclusive Rights. Enter into or amend any agreements pursuant to
which any person or entity is granted exclusive or restrictive marketing,
manufacturing or other exclusive or restrictive rights of any type or scope with
respect to any of its products, services or technology;
33
(h) Dispositions. Directly or indirectly sell, lease, license,
mortgage or otherwise dispose of or encumber any of its properties or assets
that are material, individually or in the aggregate, to its and its
subsidiaries' businesses, taken as a whole, or sell, assign, transfer or
otherwise dispose of any of its properties or assets at a discount from the fair
market value thereof;
(i) Indebtedness; Liens. Repurchase, prepay or incur any
indebtedness or guarantee any indebtedness of another person or entity or issue
or sell any debt securities or options, warrants, calls or other rights to
acquire any debt securities of Target or any of its subsidiaries, enter into any
"keep well" or other agreement to maintain any financial statement condition of
another person or entity or enter into any arrangement having the economic
effect of any of the foregoing, make any loans, advances (other than in respect
of travel expenses advanced to employees in the ordinary course of business) or
capital contributions to or investments in, any other person or entity, other
than Target and any of its respective subsidiaries, or incur any Liens
(excluding Permitted Liens).
(j) Leases. Enter into any real estate or operating leases requiring
payments in excess of $100,000 annually in the aggregate;
(k) Payment of Obligations. Pay, discharge or satisfy in an amount
in excess of $100,000 in any one case or $250,000 in the aggregate, any claim,
liability or obligation (absolute, accrued, asserted or unasserted, contingent
or otherwise) arising other than in the ordinary course of business, other than
the payment, discharge or satisfaction of liabilities reflected or reserved
against in the Target Financial Statements and the payment of reasonable
professional fees related to the transactions contemplated by this Agreement;
(l) Capital Expenditures. Incur or commit to incur any capital
expenditures in excess of $300,000 in any one case, or $600,000 in the
aggregate;
(m) Insurance. Reduce in any material manner in any instance the
amount of any insurance coverage provided by existing insurance policies as of
the date hereof;
(n) Termination or Waiver. Terminate or waive any right of
substantial value other than upon notice to Acquiror and in the ordinary course
of business and consistent with past practice;
(o) Employee Benefits; Severance. Take any of the following actions:
(i) increase or agree to increase the compensation payable or to become payable
to its officers or employees, except for increases in salary or wages of
non-officer employees in the ordinary course of business and consistent with
past practices, (ii) grant any severance or termination pay to, or enter into,
modify or amend any employment or severance agreements with, any officer or
employee, (iii) enter into any collective bargaining agreement, or (iv)
establish, adopt, enter into, modify or amend (other than amendments required to
maintain the present tax treatment of such plan or program) any bonus, profit
sharing, thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination, severance or other
plan, trust, fund, policy, agreement or arrangement for the benefit of any
director, officer or employee;
(p) Lawsuits. Commence a lawsuit or arbitration proceeding other
than (i) for the routine collection of bills and other litigation not material
to the business of Target and its
34
subsidiaries, taken as a whole, (ii) in such cases where it in good faith
determines that failure to commence suit would result in the material impairment
of a valuable asset of its business, provided that Target consults with Acquiror
prior to the filing of such a suit, or (iii) for a breach of this Agreement;
(q) Acquisitions. Except as set forth in Section 4.2(q) of the
Target Disclosure Letter, directly or indirectly make, or agree to make or
negotiate towards making, an Acquisition;
(r) Taxes. Make any tax election other than in the ordinary course
of business and consistent with past practice, change any tax election, adopt
any tax accounting method other than in the ordinary course of business and
consistent with past practice, change any tax accounting method, file any tax
return (other than any required estimated tax returns, information returns,
payroll tax returns or sales tax returns) or any amendment to a tax return,
enter into any closing agreement, settle any tax claim or assessment or consent
to any tax claim or assessment, provided that Acquiror shall not unreasonably
withhold or delay approval of any of the foregoing actions;
(s) Revaluation; Change of Fiscal Year. Revalue any of its assets,
including without limitation writing down the value of inventory or writing of
notes or accounts receivable other than in the ordinary course of business
consistent with past practice, or change its fiscal year;
(t) Accounts Payable and other Obligations. Prepay or otherwise
accelerate the payment of, any accounts payable or other obligation (other than
reasonable professional fees payable in connection with the transactions
contemplated hereby) or, except as contested in good faith and provided that
adequate reserves are established in accordance with GAAP, fail to pay any of
its accounts payable or other obligations in a timely manner and otherwise in
the ordinary course of business consistent with past practice; and
(u) Other. Take or agree in writing or otherwise to take, any of the
actions described in Sections 4.2(a) through (t) above, or any action that would
make any of its representations or warranties contained in this Agreement untrue
or incorrect in any material respect or prevent it from performing or cause it
not to perform any of its covenants hereunder.
(B) Acquiror shall not, without the prior written consent of Target, (i)
make any amendments to Target's Certificate of Incorporation or Bylaws, except
as shall not adversely affect the rights of holders of Acquiror Common Stock, or
(ii) enter into any material contract, agreement, license, instrument, document
or commitment which prevents or materially delays the consummation of the
transactions contemplated by this Agreement.
4.3 NO CONTROL OF TARGET BUSINESS
Nothing contained in this Agreement shall give Acquiror, directly or
indirectly, the right to control or direct the Target's or its subsidiaries'
operations prior to the Effective Time. Prior to the Effective Time, the Target
shall exercise, consistent with the terms and conditions of this Agreement,
complete control and supervision over its and its subsidiaries' operations.
35
4.4 NOTICES
Target and its subsidiaries shall give all notices and other information
required to be given to the employees of Target or its subsidiaries, any
collective bargaining unit representing any group of employees of Target or its
subsidiaries, and any applicable Governmental Entity under the National Labor
Relations Act, the Code, and other applicable law in connection with the
transactions provided for in this Agreement.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 NO SOLICITATION
(a) Upon execution of this Agreement, Target shall immediately
terminate any discussions with any Third Party concerning an Acquisition
Proposal (as defined below). Target shall not, directly or indirectly, through
any officer, director, employee, shareholder, financial advisor, attorney,
representative, subsidiary or agent of such person or entity (i) take any action
to solicit, initiate, facilitate, continue or encourage any inquiries or
proposals that constitute, or could reasonably be expected to lead to, a
proposal or offer for a merger, consolidation, business combination, sale of
substantial assets, sale of shares of capital stock or other securities
(including by way of a tender offer) or similar transaction involving Target or
any of its subsidiaries, other than the transactions contemplated by this
Agreement (any of the foregoing inquiries or proposals being referred to as an
"Acquisition Proposal"), (ii) engage in negotiations or discussions (whether
such discussions or negotiations are initiated by Target, such other person or
entity or otherwise) concerning, or provide any non-public information to any
person or entity relating to, any possible Acquisition Proposal, (iii) enter
into an agreement with any person or entity providing for a possible Acquisition
Proposal or make or authorize any statement, recommendation or solicitation in
support of any possible Acquisition Proposal by any person or entity, in each
case other than Acquiror, or (iv) agree to, enter into a letter of intent or
similar document or recommend any Acquisition Proposal; provided, however, that
nothing contained in this Agreement shall prevent Target, or its Board of
Directors, to the extent such Board of Directors determines, in good faith
(after consultation with independent legal advisors), that such Board of
Directors' fiduciary duties under applicable law require it to do so, from (A)
furnishing non-public information to, or entering into discussions or
negotiations with, any person or entity in connection with an unsolicited, bona
fide, written Acquisition Proposal obtained not in breach of this Agreement by
such person or entity or recommending an unsolicited, bona fide, written
Acquisition Proposal obtained not in breach of this Agreement by such person or
entity to the shareholders of Target, if and only to the extent that (l) the
Board of Directors of Target determines in good faith (after consultation with
independent financial and legal advisors) that such Acquisition Proposal was
obtained not in breach of this Agreement, is reasonably capable of being
completed on the terms proposed and, after taking into account all relevant
factors, including the long-term prospects of Acquiror and Target as a combined
company, would, if consummated, result in a transaction more favorable to
Target's shareholders from a financial point of view than the transaction
contemplated by this Agreement (any such more favorable Acquisition Proposal
being referred to in this Agreement as a "Superior Proposal") and the Board of
Directors of Target determines in good faith (after consultation with
independent legal advisors) that such action is necessary for such Board of
Directors to comply
36
with its fiduciary duties to shareholders under applicable law and (2) prior to
furnishing such non-public information to, or entering into discussions or
negotiations with, such person or entity, (x) such Board of Directors receives
from such person or entity an executed confidentiality agreement with terms no
less favorable to Target and no more favorable to such person or entity than
those terms contained in the Confidentiality Agreement dated February 5, 2003
between Acquiror and Target (the "Confidentiality Agreement"), (y) such
non-public information has been previously delivered to Acquiror, and (z) Target
immediately advises Acquiror in writing of such disclosure or discussions or
negotiations, including the person or entity to whom disclosed or with whom
discussions or negotiations will occur; or (B) complying with Rules 14d-9 and
14e-2 promulgated under the Exchange Act with regard to an Acquisition Proposal.
Target shall ensure that the officers, directors and Affiliates of Target and
its subsidiaries and any investment banker or other financial advisor or
representative retained by Target or any of its subsidiaries are aware of the
restrictions described in this Section 5.1. Without limiting the foregoing, it
is understood that any violations of the restrictions set forth in this Section
5.1 by any officer, director, employee, financial advisor, attorney,
representative, subsidiary or agent of Target, when acting on behalf of Target
or any of its subsidiaries, shall be deemed to be a breach of this Section 5.1
by Target.
(b) Target shall notify Acquiror immediately after receipt by Target
(or its advisors) of any Acquisition Proposal or any request for non-public
information in connection with an Acquisition Proposal or for access to the
properties, books or records of Target or any of its subsidiaries by any person
or entity that informs such party that it is considering making, or has made, an
Acquisition Proposal. Such notice shall be made orally and in writing and shall
indicate in reasonable detail the identity of the person or entity and the terms
and conditions of such proposal, inquiry or contact. Target shall continue to
keep Acquiror informed, on a current basis, of the status of any such
discussions or negotiations and the terms being discussed or negotiated.
(c) In addition to the foregoing, Target shall not accept or enter
into any agreement, letter of intent or similar document concerning an
Acquisition Proposal for a period of not less than seventy-two hours after
Acquiror's receipt of a notice of the material terms of such Acquisition
Proposal and the identity of the person or entity making such Acquisition
Proposal, and during such seventy-two hour period Target shall negotiate with
Acquiror in good faith any proposal submitted to Target by Acquiror which
addresses such Acquisition Proposal.
5.2 PROXY STATEMENT, REGISTRATION STATEMENT
As promptly as practicable after the execution of this Agreement,
Target and Acquiror shall prepare proxy materials relating to the adoption and
approval of this Agreement and the Merger and the other transactions
contemplated hereby by the shareholders of Target and, as promptly as
practicable, Acquiror shall file with the SEC the Registration Statement, which
complies in form in all material respects with applicable law and SEC
requirements and each of Target and Acquiror shall use all commercially
reasonable efforts to cause the Registration Statement to become effective as
soon thereafter as practicable. Each of Target and Acquiror shall use all
commercially reasonable efforts to respond as promptly as practicable to any
comments of the SEC with respect thereto and to cause the Proxy Statement to be
mailed to the shareholders of Target as promptly as practicable after the
Registration Statement is declared
37
effective under the Securities Act. Each of Target and Acquiror shall furnish
all information concerning it (and its respective subsidiaries) to the other as
may be reasonably requested in connection with any such action and the
preparation, filing and distribution of the Registration Statement and the Proxy
Statement. Each of Target and Acquiror shall promptly notify the other upon the
receipt of any comments from the SEC or its staff or any request from the SEC or
its staff for amendments or supplements to the Registration Statement or the
Proxy Statement and shall promptly provide the other with copies of all
correspondence between it and its representatives, on the one hand, and the SEC
and its staff, on the other hand. Notwithstanding the foregoing, prior to filing
the Registration Statement (or any amendment or supplement thereto) or filing or
mailing the Proxy Statement (or any amendment or supplement thereto) or
responding to any comments of the SEC with respect thereto, each of Target and
Acquiror, as the case may be, (a) shall provide the other party with a
reasonable opportunity to review and comment on such document or response, (b)
shall include in such document or response all comments reasonably proposed by
such other party and (c) shall not file or mail such document or respond to the
SEC prior to receiving such other party's approval, which approval shall not be
unreasonably withheld or delayed. Subject to the provisions of Section 5.1, the
Proxy Statement shall include the unanimous recommendation of the Board of
Directors of Acquiror in favor of the issuance of shares of Acquiror Common
Stock pursuant to the Merger and the unanimous recommendation of the Board of
Directors of Target in favor of the Merger; provided that the recommendation of
Target's Board of Directors may not be included or may be withdrawn if
previously included if Target's Board of Directors believes in good faith (after
consultation with independent financial and legal advisors) that a Superior
Proposal has been made not in breach of this Agreement and shall determine in
good faith (after consultation with independent legal advisors) that to include
such recommendation or not withdraw such recommendation if previously included
would constitute a breach of the Target's Board of Directors' fiduciary duty
under applicable law.
5.3 SHAREHOLDERS MEETING
Target shall promptly after the date hereof take all actions
necessary to call a meeting of its shareholders to be held as promptly as
practicable for the purpose of voting upon this Agreement and the Merger which
meeting shall be held (to the extent permitted by law) within forty-five days of
the date on which the Registration Statement is declared effective, provided
that, Target may adjourn the Shareholder Meeting until such time as its
conditions to the consummation of the transactions contemplated hereby set forth
in Sections 6.1(b), (c), (d) and (e) and 6.2(c) hereof have been, or within two
Business Days are reasonably expected to be, satisfied or waived by Target.
Subject to Section 5.1, Target shall, through its Board of Directors,
unanimously recommend to its shareholders approval of such matters. Target shall
use all commercially reasonable efforts to solicit from its shareholders proxies
or, subject to Section 5.1, regarding such matters (whether or not the Board of
Directors of Target shall have withdrawn or modified its recommendation of this
Agreement or the Merger).
5.4 ACCESS TO INFORMATION
(a) Target shall afford Acquiror and its accountants, counsel and
other representatives, access during normal business hours and upon reasonable
prior notice during the period prior to the Effective Time to (i) all of
Target's and its subsidiaries' properties, books,
38
contracts, commitments and records, and (ii) all other information concerning
the business, properties and personnel of Target and its subsidiaries as the
other party may reasonably request. Target agrees to provide to Acquiror and its
accountants, counsel and other representatives copies of available internal
financial statements promptly upon request. Acquiror and its representatives
shall keep such information confidential in accordance with the terms of the
Confidentiality Agreement.
(b) Subject to compliance with applicable law and the terms of the
Confidentiality Agreement, from the date hereof until the Effective Time, the
parties shall confer on a regular and frequent basis with one or more
representatives of the other party to report operational matters of materiality
and the general status of ongoing operations of the Target.
(c) Acquiror and Target shall promptly furnish or make available to
each other a copy of each report, schedule, registration statement or other
document filed by it after the date of this Agreement pursuant to the
requirements of Federal or state securities laws.
(d) No information or knowledge obtained in any investigation
pursuant to this Section 5.4 or otherwise shall affect or be deemed to modify
any representation or warranty contained herein or the conditions to the
obligations of the parties to consummate the Merger.
5.5 CONFIDENTIALITY
The parties acknowledge that Acquiror and Target have previously executed
the Confidentiality Agreement, which Confidentiality Agreement shall continue in
full force and effect in accordance with its terms.
5.6 PUBLIC DISCLOSURE
Unless otherwise permitted by this Agreement, Acquiror and Target shall
consult with each other before issuing any press release or otherwise making any
public statement or making any other public (or non-confidential) disclosure
(whether or not in response to an inquiry) regarding the terms of this Agreement
and the transactions contemplated hereby, and neither shall issue any such press
release or make any such statement or disclosure without the prior written
approval of the other (which approval shall not be unreasonably withheld or
delayed), except as may be required by applicable law or to comply with the
rules and regulations of the SEC or any obligations pursuant to any listing
agreement with any national securities exchange or with Nasdaq, in which event,
the party who is required to make disclosure shall notify the other party as
soon as reasonably possible of the nature and timing of the required disclosure.
Notwithstanding anything herein or in the Confidentiality Agreement to the
contrary, any party to this Agreement (and their employees, representatives, or
other agents) may disclose to any and all persons, without limitation of any
kind, the tax treatment and tax structure of the transactions contemplated by
this Agreement (the "Transactions") and all materials of any kind (including
opinions or other tax analyses) that are provided to it relating to such tax
treatment and tax structure; provided, however, that this sentence shall not
permit any disclosure that otherwise is prohibited by this Agreement (i) until
the earlier of (x) the date of the public announcement of discussions relating
to the Transactions, (y) the date of the public announcement of the
Transactions, and (z) the date of the execution of an agreement (with or without
conditions) to enter into the Transactions; or (ii) if such disclosure would
result in a violation of federal or state
39
securities laws; or (iii) to the extent not related to the tax aspects of the
transaction. Moreover, nothing in this Agreement shall be construed to limit in
any way any party's ability to consult any tax advisor regarding the tax
treatment or tax structure of the Transactions.
5.7 CONSENTS; COOPERATION
(a) Each of Acquiror and Target shall promptly apply for or
otherwise seek, and use all commercially reasonable efforts to obtain, all
consents and approvals (including, without limitation, all consents and
approvals required by United States and foreign governmental or regulatory
agencies) required to be obtained by it for the consummation of the Merger,
including those required under HSR, and shall use all commercially reasonable
efforts to obtain all necessary consents, waivers and approvals under, or to
deliver notice of the Merger as required by, any of their respective material
contracts in connection with the Merger for the assignment thereof or otherwise.
The parties hereto will consult with, and provide the necessary information to,
one another, in connection with any analyses, appearances, presentations,
memoranda, briefs, arguments, opinions and proposals made or submitted by or on
behalf of any party hereto in connection with proceedings under or relating to
HSR or any other federal, state or foreign antitrust or fair trade law.
(b) Each of Acquiror and Target shall use all commercially
reasonable efforts to resolve such objections, if any, as may be asserted by any
Governmental Entity with respect to the transactions contemplated by this
Agreement under HSR, the Xxxxxxx Act, as amended, the Xxxxxxx Act, as amended,
the Federal Trade Commission Act, as amended, and any other Federal, state or
foreign statutes, rules, regulations, orders or decrees that are designed to
prohibit, restrict or regulate actions having the purpose or effect of
monopolization or restraint of trade (collectively, "Antitrust Laws"). In
connection therewith, if any administrative or judicial action or proceeding is
instituted (or threatened to be instituted) challenging any transaction
contemplated by this Agreement as violative of any Antitrust Law, each of
Acquiror and Target shall cooperate and use all commercially reasonable efforts
vigorously to contest and resist any such action or proceeding and to have
vacated, lifted, reversed, or overturned any decree, judgment, injunction or
other order, whether temporary, preliminary or permanent (each an "Order"), that
is in effect and that prohibits, prevents, conditions or restricts consummation
of the Merger or any such other transactions, unless by mutual agreement
Acquiror and Target decide that litigation is not in their respective best
interests. Notwithstanding the provisions of the immediately preceding sentence,
it is expressly understood and agreed that neither Acquiror nor Target shall
have any obligation to litigate or contest any administrative or judicial action
or proceeding or any Order beyond the earlier of (i) September 30, 2003, or (ii)
the date of a ruling preliminarily enjoining the Merger issued by a court of
competent jurisdiction. Each of Acquiror and Target shall use all commercially
reasonable efforts to take such action as may be required to cause the
expiration of the notice periods under the HSR or other Antitrust Laws with
respect to such transactions as promptly as possible after the execution of this
Agreement.
(c) Notwithstanding the foregoing, neither Acquiror nor Target shall
be required to agree, as a condition to any approval, to accept any operational
restriction or divest itself of or hold separate any subsidiary, division or
business unit that is material to the business of such party and its
subsidiaries, taken as a whole, or if such restriction, divestiture or holding
40
separate would be reasonably likely to have a Material Adverse Effect on such
party or result in a material adverse effect on the benefits intended to be
derived as a result of the Merger.
5.8 SHAREHOLDER LISTS
Section 5.8 of the Target Disclosure Letter sets forth a list of those
persons or entities who are on the date hereof and who are anticipated at the
time of the Shareholder Meeting to be, "affiliates" of Target within the meaning
of Rule 145 under the Securities Act ("Rule 145"). Each such person or entity
who is an "affiliate" of Target within the meaning of Rule 145 is referred to
herein as an "Affiliate". Target shall provide such information and documents as
Acquiror shall reasonably request for purposes of reviewing such list and shall
notify Acquiror in writing regarding any change in the identity of its
Affiliates prior to the Closing Date. Target shall use its commercially
reasonable efforts to cause each person or entity who is identified as an
Affiliate of Target to deliver to Acquiror, no less than twenty Business Days
prior to the date of the Target Shareholders Meeting, a written agreement in
connection with restrictions on Affiliates under Rule 145, in form attached
hereto as Exhibit B.
5.9 INDEMNIFICATION
(a) The Bylaws and Articles of Incorporation of the Surviving
Corporation shall contain provisions no less favorable with respect to
indemnification of present and former directors, officers and employees of
Target than those set forth in Target's Bylaws and Articles of Incorporation on
the date of this Agreement, which provisions shall not be amended, repealed or
otherwise modified for a period of six years from the Effective Time in any
manner that would adversely affect the rights thereunder as of the Effective
Time of individuals who at the Effective Time are present or former directors,
officers or employees of Target, unless such modification is required after the
Effective Time by applicable law.
(b) From and after the Effective Time, the Surviving Corporation and
the Acquiror jointly and severally shall indemnify and hold harmless each
present and former director, officer and employee of Target (each, together with
each such person's heirs, executors or administrators, an "Indemnified Party"
and collectively, the "Indemnified Parties") against any costs or expenses
(including, prior to the final disposition of any claim, suit, proceeding or
investigation to each Indemnified Party, to the fullest extent permitted by
applicable law, reasonable attorneys' fees), judgments, fines, losses, claims,
damages, liabilities and amounts paid in settlement in connection with any
claim, action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative (collectively, "Actions"), (i) arising out of or
pertaining to the transactions contemplated by this Agreement, or (ii) otherwise
with respect to any acts or omissions occurring at or prior to the Effective
Time, in each case, only to the extent provided in Target's Articles of
Incorporation or By-Laws as in effect on the date hereof, in each case for a
period of six years after the Effective Time; provided, however, that, any claim
or claims for indemnification in accordance with this Section 5.9(b) shall
continue until the disposition of any such claims. In the event of any Action
(whether arising before or after the Effective Time), the Indemnified Parties
shall promptly notify the Surviving Corporation in writing, and the Surviving
Corporation shall have the right to assume the defense thereof, including the
employment of counsel reasonably satisfactory to such Indemnified Parties. The
Indemnified Parties shall have the right to employ separate counsel, in any such
Action and to participate in (but not control) the defense thereof, but the fees
and expenses of such counsel
41
shall be at the expense of such Indemnified Parties unless (A) the Surviving
Corporation has agreed to pay such fees and expenses, (B) the Surviving
Corporation shall have failed to assume the defense of such Action, or (C) the
named parties to any such Action (including any impleaded parties) include both
the Surviving Corporation and the Indemnified Parties and such Indemnified
Parties shall have been reasonably advised in writing by counsel that there may
be one or more legal defenses available to the Indemnified Parties which are in
conflict with those available to the Surviving Corporation. In the event such
Indemnified Parties employ separate counsel at the expense of the Surviving
Corporation pursuant to clauses (B) or (C) of the previous sentence, (w) any
counsel retained by the Indemnified Parties for any period after the Effective
Time shall be reasonably satisfactory to the Surviving Corporation; (x) the
Indemnified Parties as a group may retain only one law firm to represent them in
each applicable jurisdiction with respect to any single Action unless there is,
under applicable standards of professional conduct, a conflict on any
significant issue between the positions of any two or more Indemnified Parties,
in which case each Indemnified Person with respect to whom such a conflict
exists (or group of such Indemnified Persons who among them have no such
conflict) may retain one separate law firm in each applicable jurisdiction; (y)
after the Effective Time, the Surviving Corporation shall pay the reasonable
fees and expenses of such counsel, promptly after statements therefore are
received; and (z) the Surviving Corporation will cooperate in the defense of any
such Action. Neither the Acquiror nor the Surviving Corporation shall be liable
for any settlement of any such Action effected without their prior written
consent.
(c) For a period of six years after the Effective Time, Acquiror and
the Surviving Corporation shall use commercially reasonable efforts to cause to
be maintained in effect directors and officers liability insurance covering
those persons who are currently covered by policies of directors and officers
liability insurance maintained by Target on terms substantially similar to those
applicable under such current policies with respect to claims arising from and
related to facts or events which occurred at or before the Effective Time
provided, however, that in no event will Acquiror or the Surviving Corporation
be required to expend in excess of $300,000 in the aggregate (i.e. for six years
coverage) for such coverage (or such coverage as is available for such
$300,000).
(d) In the event Acquiror, the Surviving Corporation or any
successor to Acquiror or the Surviving Corporation (i) consolidates with or
merges into any other person or entity and shall not be the continuing or
surviving corporation or entity in such consolidation or merger or (ii)
transfers all or substantially all of its properties or assets to any person or
entity, then, and in each case, proper provision shall be made so that the
successors of the Acquiror or the Surviving Corporation honor the obligations of
the Acquiror and the Surviving Corporation set forth in this Section 5.9.
(e) The provisions of this Section 5.9 shall survive the
consummation of the Merger and expressly are intended to benefit each of the
Indemnified Parties.
5.10 IRREVOCABLE PROXIES, LOCK-UP AGREEMENTS
(a) Target shall use its best efforts, on behalf of Acquiror and pursuant
to the request of Acquiror, to cause X.X. Xxxxxx, Xxxxx X. Xxxxxx, Xxxxxx X.
Xxxxxx, Xxxxxxx X. Xxxxxx, Xxxx X. Xxxxxxxxx, Xxxxx Xxxxxx, Xxxxxx X. Xxxxx,
CIVC Fund, L.P., and BCI Growth V, L.P. to
42
execute and deliver to Acquiror, a Voting Agreement in the form of Exhibit C
attached hereto (each, a "Voting Agreement") concurrently with the execution and
delivery of this Agreement.
(b) Target shall use its best efforts, on behalf of Acquiror and pursuant
to the request of Acquiror, to cause X.X. Xxxxxx, Xxxxx X. Xxxxxx, Xxxxxx X.
Xxxxxx, and Xxxxxxx X. Xxxxxx to execute and deliver to Acquiror, a Lock-Up
Agreement in the form of Exhibit D attached hereto (each, a "Lock-up Agreement")
concurrently with the execution and delivery of this Agreement.
(c) Target shall use its best efforts, on behalf of Acquiror and pursuant
to the request of Acquiror, to cause each of X.X. Xxxxxx, Xxxxx X. Xxxxxx,
Xxxxxxx X. Xxxxxx, and Xxxx X. Xxxxxxxxx (the "Key Employees") to execute and
deliver to Acquiror, an Employment Agreement in form and substance acceptable to
Acquiror (each, an "Employment Agreement") concurrently with the execution and
delivery of this Agreement.
(d) Acquiror and Target shall use their commercially reasonable efforts to
cause the employees listed on Exhibit E to execute and deliver to Acquiror, an
Employment Agreement in form and substance acceptable to Acquiror on or before
the Closing Date.
5.11 NOTIFICATION OF CERTAIN MATTERS
Target shall give prompt notice to Acquiror, and Acquiror shall give
prompt notice to Target, of (a) any event or occurrence of which could
reasonably be expected to have a Material Adverse Effect or to cause any
representation or warranty by such party contained in this Agreement to be
materially untrue or inaccurate, or (b) any failure of Target, Acquiror or
Merger Sub, as the case may be, materially to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice pursuant to this
Section 5.11 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice; and provided further that failure
to give such notice shall not be treated as a breach of covenant for the
purposes of this Agreement unless the failure to give such notice results in
material prejudice to the other party.
5.12 STOCK OPTIONS AND STOCK PURCHASE PLAN
(a) At the Effective Time, the Target Stock Option Plans and each
outstanding option to purchase shares of Target Common Stock under the Target
Stock Option Plans, whether vested or unvested, shall be, and they hereby are,
assumed by Acquiror. Section 5.12 of the Target Disclosure Letter sets forth a
true and correct schedule (the "Option Schedule") as of the date hereof (and as
of the Closing Date) of all holders of outstanding options under the Target
Stock Option Plans, the number of shares of Target Common Stock subject to each
such option, the exercise or vesting schedule of each such option, the exercise
price per share of each such option, and the term of each such option. Each such
option so assumed by Acquiror under this Agreement shall continue to have, and
be subject to, the same terms and conditions set forth in (1) the Target Stock
Option Plans, (2) the terms and conditions of each grant and (3) the option
agreements evidencing, or other agreements relating to, such options (the items
set forth clauses (2) and (3), an "Option Agreement") immediately prior to the
Effective Time, except that (i) such option shall be exercisable for that number
of whole shares of Acquiror Common Stock equal to the product of the number of
shares of Target Common Stock that were issuable upon
43
exercise of such option immediately prior to the Effective Time multiplied by
the quotient (such quotient, the "Option Ratio") of $17.50 divided by the
quotient of $3.50 divided by the Exchange Ratio, and rounded to the nearest
whole number of shares of Acquiror Common Stock, (ii) the per share exercise
price for the shares of Acquiror Common Stock issuable upon exercise of such
option shall be equal to the quotient determined by dividing the exercise price
per share of Target Common Stock at which such option was exercisable
immediately prior to the Effective Time, by the Option Ratio, rounded to the
nearest whole cent, and (iii) in the case of only the May 2001 options, such
options shall be fully vested and exercisable. The following is an illustrative
example for a Target stock option for 50 shares of Target Common Stock with an
exercise price of $10.00 per share and assuming an Average Stock Price of
$24.00:
Exchange Ratio: $3.50 / $24.00 = 0.1458
Option Ratio: $17.50 / ($3.50 / 0.1458) = 0.7291
Adjusted number of shares: 50 x 0.7291 = 36 shares
Adjusted exercise price: $10.00 / 0.7291 = $13.72
(b) The options so assumed by Acquiror are intended to qualify
following the Effective Time as incentive stock options as defined in Section
422 of the Code to the extent such options qualified as incentive stock options
prior to the Effective Time. As soon as practicable, and in any event within
thirty days, after the Effective Time, Acquiror will issue to each person whose
option was assumed in accordance with this Section 5.12, a document evidencing
the foregoing assumption of such option by Acquiror. Acquiror shall take all
corporate action necessary to reserve and make available for issuance a
sufficient number of shares of Acquiror Common Stock for delivery under Target
Stock Options assumed in accordance with this Section 5.12. Within twenty
Business Days after the Effective Time, Acquiror shall file a registration
statement on Form S-8 (or any successor or other appropriate forms) which will
register the shares of Acquiror Common Stock subject to assumed options to the
extent permitted by Federal securities laws and shall use its commercially
reasonable efforts to maintain the effectiveness of such registration statement
or registration statements (and maintain the current status of the prospectus or
prospectuses contained therein) for so long as such options remain outstanding.
(c) Outstanding purchase rights under the Target ESPP shall be
exercised immediately prior to the Effective Time, and each participant in the
Target ESPP accordingly shall be issued shares of Target Common Stock at that
time in accordance with the terms and conditions of this Section 5.12(c) and the
Target ESPP, which shares of Target Common Stock shall be converted into the
right to receive shares of Acquiror Common Stock in the Merger in accordance
with the terms hereof. On or prior to the Effective Time, Target shall have
taken all action necessary to terminate the Target ESPP on the last Business Day
of the pay period immediately preceding the Effective Time (such Business Day,
the "ESPP Termination Date"), and, for all purposes, notwithstanding the terms
of the Target ESPP, no purchase rights shall be granted or exercised under the
Target ESPP subsequent to the ESPP Termination Date.
44
5.13 LISTING OF ADDITIONAL SHARES
Prior to the Effective Time, Acquiror shall file with Nasdaq National
Market a Notification Form for Listing of Additional Shares with respect to the
shares of Acquiror Common Stock referred to in Section 6.1(d) below.
5.14 ADDITIONAL AGREEMENTS
Each of the parties agrees to use all commercially reasonable efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement,
subject to the appropriate vote of shareholders of Target described in Section
6.1(a), including cooperating fully with the other party, including by provision
of information. In case at any time after the Effective Time any further action
is necessary or desirable to carry out the purposes of this Agreement or to vest
the Surviving Corporation with full title to all properties, assets, rights,
approvals, immunities and franchises of either of the constituent corporations,
the proper officers and directors of each party to this Agreement shall take all
such necessary action.
5.15 EMPLOYEE BENEFITS
(a) Except as may be provided in the Employment Agreements with any
employee, for the first year following the Effective Time while employed by the
Surviving Corporation or Acquiror, employees of the Surviving Corporation or
Acquiror who were employees of Target at the Effective Time will each (i)
receive base wages, benefits, stock options and other incentives at rates and in
amounts no less favorable, in the aggregate, to such employees than are paid to
other employees of Acquiror at equivalent levels, (ii) be eligible for
participation in Acquiror's bonus plan at levels that, at a minimum, equal the
bonuses for which such employees were eligible immediately prior to the
Effective Time, and (iii) not have their respective annual base salaries reduced
below their annual base salaries in effect on date of this Agreement.
(b) For purposes of determining eligibility to participate, vesting
and accrual or entitlement to benefits where length of service is relevant under
any employee benefit plan or arrangement of Acquiror or the Surviving
Corporation, employees of Target and its subsidiaries as of the Effective Time
shall receive service credit for service with Acquiror for all past service
during such person's employment with Target (subject to offsets for previously
accrued benefits and no duplication of benefits).
5.16 FINANCIAL STATEMENTS
Target shall cooperate with Acquiror in all reasonable respects in
connection with the preparation and filing with the SEC of the Registration
Statement and Proxy Statement (and any amendment or supplement to either
thereof). Without limiting the foregoing, Target shall (a) prepare interim
financial statements for Target and its subsidiaries ("Interim Financials"), if
required in connection with the Registration Statement or Proxy Statement that
are suitable for inclusion by Acquiror in the Public Filings (as defined below),
including compliance with the applicable provisions of Regulation S-X, (b) use
its best efforts to obtain written consents of its independent public
accountants, when required, with respect to the Target Financial Statements
45
and any Interim Financials so that such financial statements can be used in
registration statements filed under the Securities Act and reports under the
Securities Exchange Act ("Public Filings"), issued or filed by Acquiror, and (c)
cooperate with Acquiror so Acquiror can obtain information sufficient for
Acquiror to comply with the requirements of the Management's Discussion and
Analysis portion of the Public Filings, as it may relate to Target and its
subsidiaries.
ARTICLE VI
CONDITIONS TO THE MERGER
6.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER
The respective obligations of each party to this Agreement to consummate
and effect this Agreement and the transactions contemplated hereby shall be
subject to the satisfaction at or prior to the Effective Time of each of the
following conditions, any of which may be waived, in writing, by agreement of
all the parties hereto:
(a) Shareholder Approval. This Agreement and the Merger shall have
been approved and adopted by the holders of at least two-thirds of the shares of
Target Common Stock outstanding as of the record date set for the Shareholder
Meeting.
(b) No Injunctions or Restraints; Illegality. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction, or other valid and binding legal or
regulatory restraint or prohibition of a Governmental Entity, preventing the
consummation of the Merger shall be in effect, nor shall any proceeding brought
by a Governmental Entity seeking any of the foregoing be pending; nor shall
there be any action taken, nor any statute, rule or regulation enacted, enforced
or deemed applicable to the Merger, by a Governmental Entity, which makes the
consummation of the Merger illegal. In the event an injunction or other order
shall have been issued, each party agrees to use its commercially reasonable
efforts to have such injunction or other order lifted.
(c) Governmental Approval. Acquiror and Target and their respective
subsidiaries shall have timely obtained from each Governmental Entity all
approvals, authorizations, consents, clearances, waivers and consents that are
either Acquiror Governmental Approvals or Target Governmental Approvals.
(d) Listing of Additional Shares. The filing with the Nasdaq
National Market of a Notification Form for Listing of Additional Shares with
respect to the shares of Acquiror Common Stock issuable to holders of Target
Common Stock and Target stock options in connection with the Merger shall have
been made.
(e) Registration Statement. The Registration Statement shall have
become effective under the Securities Act and shall not be the subject of any
stop order or proceedings by a Governmental Entity seeking a stop order. The
Proxy Statement shall have been delivered to the shareholders of Target in
accordance with the requirements of the Securities Act and the Exchange Act.
46
6.2 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF TARGET The obligations of
Target to consummate and effect this Agreement and
the transactions contemplated hereby shall be subject to the satisfaction at or
prior to the Effective Time of each of the following conditions, any of which
may be waived, in writing, by Target:
(a) Representations, Warranties and Covenants. (i) The
representations and warranties of Acquiror in this Agreement shall be true and
correct in all material respects (except for such representations and warranties
that are qualified by their terms by a reference to materiality, which
representations and warranties as so qualified shall be true in all respects) on
and as of the Effective Time as though such representations and warranties were
made on and as of such time except that the accuracy of representations and
warranties that by their terms speak as of a specified date will be determined
as of such date, and (ii) Acquiror and Merger Sub shall have performed and
complied in all material respects with all covenants, obligations and conditions
of this Agreement required to be performed and complied with by them as of the
Effective Time.
(b) Certificate of Acquiror. Target shall have been provided with a
certificate executed on behalf of Acquiror by an executive officer of Acquiror
to the effect that, as of the Effective Time, the conditions set forth in
Section 6.2(a) have been satisfied.
(c) No Litigation. There shall not be pending any suit, action or
proceeding brought by any Governmental Entity seeking (i) to prohibit or limit
in any material respect the ownership or operation by Target, Acquiror or any of
their respective Affiliates of a material portion of the business or assets of
Target and its subsidiaries, taken as a whole, or of Acquiror and its
subsidiaries, taken as a whole, or to require any such entity to dispose of or
hold separate any material portion of the business or assets of Target and its
subsidiaries, taken as a whole, or of Acquiror and its subsidiaries, taken as a
whole, as a result of the Merger, or (ii) to prohibit Acquiror or any of its
affiliates from effectively controlling in any material respect a material
portion of the business or operations of Target or its subsidiaries.
(d) Market Closure. There shall not have occurred and be continuing
a general suspension of trading in securities on the Nasdaq National Market, nor
such a general suspension of at least two consecutive Business Days during the
five Business Days immediately preceding the Effective Time.
6.3 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF ACQUIROR AND MERGER SUB
The obligations of Acquiror and Merger Sub to consummate and effect this
Agreement and the transactions contemplated hereby shall be subject to the
satisfaction at or prior to the Effective Time of each of the following
conditions, any of which may be waived, in writing, by Acquiror:
(a) Representations, Warranties and Covenants. (i) The
representations and warranties of Target in this Agreement shall be true and
correct in all material respects (except for such representations and warranties
that are qualified by their terms by a reference to materiality, which
representations and warranties as so qualified shall be true in all respects) on
and as of the Effective Time as though such representations and warranties were
made on and as
47
of such time except that the accuracy of representations and warranties that by
their terms speak as of a specified date will be determined as of such date, and
(ii) Target shall have performed and complied in all material respects with all
covenants, obligations and conditions of this Agreement required to be performed
and complied with by it as of the Effective Time.
(b) Certificate of Target. Acquiror shall have been provided with a
certificate executed on behalf of Target by an executive officer of Target to
the effect that, as of the Effective Time, the conditions set forth in Section
6.3(a) have been satisfied.
(c) No Material Adverse Changes. Since December 31, 2002, there
shall not have occurred any material adverse change in the condition (financial
or otherwise), properties, assets (including intangible assets), liabilities,
businesses, operations or results of operations of Target and its subsidiaries
taken as a whole.
(d) Resignation of Directors. The directors of Target and each of
Target's subsidiaries in office immediately prior to the Effective Time shall
have resigned as directors of Target and each of Target's subsidiaries effective
as of the Effective Time.
(e) No Litigation. There shall not be pending any suit, action or
proceeding brought by any Governmental Entity seeking (i) to prohibit or limit
in any material respect the ownership or operation by Target, Acquiror or any of
their respective Affiliates of a material portion of the business or assets of
Target and its subsidiaries, taken as a whole, or of Acquiror and its
subsidiaries, taken as a whole, or to require any such entity to dispose of or
hold separate any material portion of the business or assets of Target and its
subsidiaries, taken as a whole, or of Acquiror and its subsidiaries, taken as a
whole, as a result of the Merger, (ii) to prohibit Acquiror or any of its
Affiliates from effectively controlling in any material respect a material
portion of the business or operations of Target or its subsidiaries, or (iii) to
impose material limitations on the ability of Acquiror or any of its Affiliates
to acquire or hold, or exercise full rights of ownership of, any shares of
Target Common Stock, including the right to vote the Target Common Stock on all
matters properly presented to the shareholders of Target.
(f) Affiliate Agreements. Acquiror shall have received the written
agreements from Rule 145 Affiliates of Target as described in Section 5.8.
(g) Force Majeure. There shall not have occurred and be continuing
(i) any general suspension of trading in, or limitation on prices for,
securities in either the New York Stock Exchange or the Nasdaq National Market
for a period in excess of three hours (excluding suspensions in limitations
resulting solely from physical damage or interference with such exchanges not
related to market conditions), (ii) any decline in the Nasdaq composite index by
an amount in excess of 25% measured from the close of business on the date of
this Agreement or (iii) a general suspension of trading in, or limitation on
prices for, securities on the Nasdaq National Market for a period of at least
two consecutive Business Days during the five Business Days immediately
preceding the Effective Time. There shall not have occurred any armed
hostilities or other national or international calamity, or one or more acts of
terrorism, which has had or could reasonably be expected to result in a Material
Adverse Effect with respect to Target and its subsidiaries.
48
(h) Voting Agreements. The Voting Agreements shall have been
executed on the date hereof and continue in full force and effect.
(i) Lock-up Agreements. The Lock-Up Agreements shall have been
executed on the date hereof and continue in full force and effect.
(j) Consents. Target shall have obtained or made all consents,
approvals, actions, orders authorizations, registrations, declarations,
announcements and filings contemplated by Section 2.3. With respect to the
agreements set forth on Schedule 6.3(j) of the Target Disclosure Letter,
Acquiror and the parties to such agreements shall have entered into written
agreements which shall provide for the assignment, consent to change of control,
cancellation or other resolution of the status of such agreements upon the
consummation of the transactions contemplated herein, acceptable to Acquiror in
its sole discretion.
(k) Employment Agreements. The Employment Agreements with each of
the Key Employees shall have been executed on the date hereof and continue in
full force and effect.
(l) FIRPTA Certificate. Acquiror shall have received a statement
meeting the requirements of Treasury Regulation Section 1.1445-2(c)(3) that
neither Target nor any of its subsidiaries is a United States real property
holding corporation.
(m) CIVC Agreements. The CIVC Agreements shall have been duly
terminated without payment or penalty.
(n) Experian Consent. The consent to assignment of or change of
control with respect to the three Affiliate Services Agreements with Experian
Information Solutions, Inc. obtained from Experian Information Solutions, Inc.
shall continue to be in full effect;
ARTICLE VII
TERMINATION, EXPENSES, AMENDMENT AND WAIVER
7.1 TERMINATION
This Agreement may be terminated at any time prior to the Effective Time
(with respect to Sections 7.1(b) through 7.1(j), by written notice by the
terminating party to the other party), whether before or after approval of the
matters presented in connection with the Merger by the shareholders of Target:
(a) by mutual written consent of Target and Acquiror;
(b) by either Target or Acquiror, if the Merger shall not have been
consummated by October 31, 2003 (the "Outside Date") (provided that the right to
terminate this Agreement under this Section 7.1(b) shall not be available to any
party whose failure to fulfill any obligation under this Agreement has been a
significant cause of or resulted in the failure of the Merger to occur on or
before the Outside Date);
(c) by Acquiror, if the consent to assignment of or change of
control obtained with respect to the three Affiliate Services Agreements with
Experian Information Solutions, Inc.
49
obtained from Experian Information Solutions, Inc. ceases to be in full effect
at any time prior to the Effective Time;
(d) by either Acquiror or Target, if a Governmental Entity shall
have issued a nonappealable final order, decree or ruling or taken any other
nonappealable final action, in each case, having the effect of permanently
restraining, enjoining or otherwise prohibiting the Merger;
(e) by either Acquiror or Target, if at the Shareholder Meeting
(including any adjournment or postponement), the requisite vote of the
shareholders of Target in favor of this Agreement and the Merger (the "Target
Shareholder Approval") shall not have been obtained (provided that the right to
terminate this Agreement under this Section 7.1(e) shall not be available to
Target where the failure to obtain Target Shareholder Approval shall have been
caused by the action or failure to act of Target and such action or failure to
act constitutes a material breach by Target of this Agreement or shall have been
caused by a breach of any Voting Agreement). A material breach by Target of
Sections 5.1, 5.2 or 5.3 hereof will constitute a material breach hereunder;
(f) by Acquiror, if (i) the Board of Directors of Target shall have
withdrawn or modified its recommendation of this Agreement or the Merger in a
manner adverse to Acquiror; (ii) the Board of Directors of Target fails to
reaffirm its recommendation of this Agreement or the Merger within ten Business
Days after Acquiror requests in writing that such recommendation be reaffirmed
at any time following the public announcement of an Acquisition Proposal; (iii)
the Board of Directors of Target shall have recommended to the shareholders of
Target an Alternative Transaction; (iv) a tender offer or exchange offer for 15%
or more of the outstanding shares of Target Common Stock is commenced (other
than by Acquiror or an affiliate of Acquiror) and the Board of Directors of
Target shall not have sent to its security holders pursuant to Rule 14e-2 within
forty-five days after such tender or exchange offer is first published, sent or
given, a statement disclosing that Target recommends rejection of such tender or
exchange offer; or (v) for any other reason Target fails to call and hold the
Shareholder Meeting in accordance with Section 5.3 hereof;
(g) by Acquiror, if any representation or warranty of Target shall
have become untrue such that the condition set forth in Section 6.3(a) (i) would
not be satisfied (a "Target Terminating Change"), or by Target, if any
representation or warranty of Acquiror and Merger Sub shall have become untrue
such that the condition set forth in Section 6.2(a)(i) would not be satisfied
(an "Acquiror Terminating Change" and together with a Target Terminating Change,
a "Terminating Change"); provided, however, that if any such Terminating Change
is curable prior to the date first established by Target for the Shareholder
Meeting to occur through the exercise of Target's or Acquiror's commercially
reasonable efforts, as the case may be, and for so long as Target or Acquiror,
as the case may be, continues to exercise such commercially reasonable efforts,
neither Acquiror nor Target, respectively, may terminate this Agreement under
this Section 7.1(g) until at least fifteen days (or the remaining number of days
prior to the Outside Date, if shorter) have elapsed following receipt of the
written notice of termination pursuant to this Section 7.1(g);
(h) by Target or Acquiror, if there has been a breach of any
covenant or agreement on the part of the other party set forth in this
Agreement, which breach (i) would cause the condition set forth in Section
6.2(a)(ii) (in the case of termination by Target) or in
50
6.3(a)(ii) (in the case of termination by Acquiror) not to be satisfied, and
(ii) except in the case of a breach of any covenant or agreement set forth in
Section 5.1 (as to which breach this clause (ii) shall not be applicable), shall
not have been cured within fifteen days (or prior to the Outside Date, if
earlier) following receipt by the breaching party of written notice of such
breach from the other party;
(i) by Target, if it accepts or proposes to accept, or recommends to
shareholders, a Superior Proposal; provided that simultaneously with such
termination Target complies with Section 7.2(b)(ii) hereof; or
(j) by Target, if (i) the Average Stock Price is less than $23.85,
(ii) at or before 5:00 P.M. (Eastern Time) on the date which is two trading days
(on the Nasdaq National Market) prior to the Shareholder Meeting and Target
delivers to Acquiror written notice, subject to the following clause (iii),
terminating this Agreement (the "Target's Notice") and such Target's Notice is
not withdrawn in writing prior to the Shareholder Meeting and (iii) Acquiror has
not agreed, by written notice to Target (the "Acquiror's Notice") given at or
before 5:00 P.M. (Eastern Time) one trading day prior to the Shareholder
Meeting, to convert, in the Merger, each share of Target Common Stock (other
than any shares of Target Common Stock to be canceled pursuant to Section 1.6(c)
or any shares of Target Common Stock to which dissenters' rights have been
exercised pursuant to Section 1.6(g)) into the right to receive the Cash
Consideration Per Share and the fraction of one fully paid and non-assessable
share of Acquiror Common Stock (subject to Section 1.6(f) hereof) equal to, at
minimum, a fraction (rounded to four decimal places, with the number five and
below being rounded down), the numerator of which is $3.50 and the denominator
of which is the Average Stock Price. In the event that Acquiror delivers an
Acquiror's Notice, Target shall not have the right to terminate this Agreement
pursuant to this Section 7.1(j), and the Target's Notice shall have no force or
effect.
7.2 EFFECT OF TERMINATION
In the event of termination of this Agreement as provided in Section 7.1,
this Agreement shall forthwith become void, the Merger shall be abandoned and
there shall be no liability or obligation on the part of Acquiror, Merger Sub or
Target or their respective officers, directors, shareholders or other
Affiliates, except as otherwise set forth in Section 7.3 and except to the
extent that such termination results from the intentional breach by a party
hereto of any of its representations, warranties or covenants set forth in this
Agreement (in which case the nonbreaching party may seek any and all remedies
available to it under applicable law); provided that, the provisions of Section
5.5, Section 7.3 and this Section 7.2 shall remain in full force and effect and
survive any termination of this Agreement.
(a) Except as set forth in this Section 7.3, all fees and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses, whether or not the
Merger is consummated; provided, however, that Acquiror and Target shall share
equally any fees imposed by a governmental agency in connection with filings
under HSR and all fees and expenses, other than their respective accountants and
attorneys' fees, incurred in relation to the filing and printing of the Proxy
Statement (including any related preliminary materials) and the Registration
Statement (including financial statements and exhibits) and any amendments or
supplements; provided, further, that Acquiror shall pay the SEC registration fee
with respect to the Registration
51
Statement and that Target shall bear the expenses of mailing the Proxy Statement
and any other materials to its shareholders.
(b) Target shall pay Acquiror a termination fee of $3,500,000 in
immediately available funds (i) within two Business Days after the termination
of this Agreement by Acquiror pursuant to Section 7.1(f) or (ii) simultaneously
with the termination of this Agreement by Target pursuant to Section 7.1(i).
(c) Acquiror shall pay Target's out-of-pocket expenses (in an amount
not to exceed $750,000) incurred in connection with this Agreement (and the
transactions contemplated hereby), including the fees and expenses of financial
advisors, accountants and legal counsel and printing and filing and mailing fees
and expenses (collectively, "Termination Expenses"), in immediately available
funds within two Business Days following termination of this Agreement by Target
pursuant to Section 7.1(g) or Section 7.1(h), and Target shall pay Acquiror's
and Merger Sub's Termination Expenses (in an amount not to exceed $750,000) in
immediately available funds within two Business Days following termination of
this Agreement by Acquiror pursuant to Section 7.1(g) or Section 7.1(h).
7.3 AMENDMENT
This Agreement may be amended by the parties hereto by action taken by or
on behalf of their respective boards of directors at any time prior to the
Effective Time; provided, however, that, after the Target Shareholder Approval,
no amendment may be made which by applicable law requires further approval by
such shareholders without such further approval. This Agreement may not be
amended except by an instrument in writing signed by the parties hereto.
7.4 EXTENSION; WAIVER
At any time prior to the Effective Time any party hereto may, to the
extent legally allowed, (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties made to such party contained
herein or in any document delivered pursuant hereto, and (c) waive compliance
with any of the agreements or conditions for the benefit of such party contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party.
ARTICLE VIII
GENERAL PROVISIONS
8.1 EFFECTIVENESS OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS
Except as otherwise provided in this Section 8.1, the representations,
warranties, covenants and agreements of each party hereto shall remain operative
and in full force and effect regardless of any investigation made (or knowledge
obtained) by or on behalf of any other party hereto, any person or entity
controlling any such party or any of their officers, directors or
representatives, whether prior to or after the execution of this Agreement. The
representations,
52
warranties and agreements in this Agreement and in the Target Disclosure Letter
and the Acquiror Disclosure Letter shall terminate at the earlier to occur of
the Effective Time or upon the termination of this Agreement pursuant to Article
VII, except that the covenants and agreements set forth in Article I, Section
5.9, Section 5.11, Section 5.12, Section 5.14 and Section 5.15 shall survive the
Effective Date and the covenants and agreements set forth in Section 5.5,
Section 7.2 and Section 7.3 shall survive such termination.
8.2 NOTICES
All notices and other communications hereunder shall be in writing and
shall be deemed given when actually received if delivered personally, or by
commercial delivery service, or mailed by registered or certified mail (return
receipt requested), or sent via facsimile (with confirmation of receipt), to the
parties at the following address (or at such other address for a party as shall
be specified by like notice)
(a) if to Acquiror or Merger Sub, to:
Xxxxx Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
with a copy to:
Xxxxxx, Xxxx & Xxxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
Factual Data Corp.
0000 Xxxxx Xxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Chief Executive Officer
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
with a copy to:
Xxxxx & Xxxxxx P.C.
0000 Xxxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxx, Esq.
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
53
8.3 INTERPRETATION
When a reference is made in this Agreement to Exhibits, such reference
shall be to an Exhibit to this Agreement unless otherwise indicated. The words
"include", "includes" and "including" when used herein shall be deemed in each
case to be followed by the words "without limitation". In this Agreement, any
reference to any event, change, condition or effect being "material" with
respect to any entity or group of entities means any material event, change,
condition or effect related to the condition (financial or otherwise),
properties, assets (including intangible assets), liabilities, business,
operations or results of operations of such entity or group of entities. In this
Agreement, any reference to a party's "knowledge" means such party's actual
knowledge after due and diligent inquiry of officers, directors and other
employees of such party and its subsidiaries reasonably believed to have
knowledge of such matters. The phrase "made available" in this Agreement shall
mean that the information referred to has been made available if requested by
the party to whom such information is to be made available. The phrases "the
date of this Agreement", "the date hereof", and terms of similar import, unless
the context otherwise requires, shall be deemed to refer to the date set forth
on the cover page of this Agreement. 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.
8.4 COUNTERPARTS
This Agreement may be executed by facsimile signature and in two 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, it being understood that all
parties need not sign the same counterpart.
8.5 ENTIRE AGREEMENT, NO THIRD PARTY BENEFICIARIES
This Agreement, and the documents and instruments and other agreements
specifically referred to herein or delivered pursuant hereto, including the
Exhibits, the Schedules, including the Target Disclosure Letter and the Acquiror
Disclosure Letter (a) constitute the entire agreement among the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, except for the Confidentiality Agreement, which shall
continue in full force and effect, and shall survive any termination of this
Agreement or the Closing, in accordance with its terms, and (b) do not, and are
not intended to, confer upon any other person or entity any rights or remedies
hereunder or otherwise, except for the rights of the holders of Target Common
Stock to receive the consideration set forth in Article I, and except for the
provisions of Section 5.9.
8.6 SEVERABILITY
In the event that any provision of this Agreement, or the application
thereof, becomes or is declared by a court of competent jurisdiction to be
illegal, void or unenforceable, the remainder of this Agreement will continue in
full force and effect and the application of such provision to other persons or
circumstances will be interpreted so as reasonably to effect the intent of the
parties hereto. The parties further agree to replace such void or unenforceable
provision of this Agreement with a valid and enforceable provision that will
achieve, to the
54
extent possible, the economic, business and other purposes of such void or
unenforceable provision.
8.7 REMEDIES CUMULATIVE
Except as otherwise provided herein, any and all remedies herein expressly
conferred upon a party will be deemed cumulative with and not exclusive of any
other remedy conferred hereby, or by law or equity upon such party, and the
exercise by a party of any one remedy will not preclude the exercise of any
other remedy.
8.8 GOVERNING LAW
Except to the extent that the laws of Colorado are mandatorily applicable
to the Merger, this Agreement shall be construed in accordance with and this
Agreement and any disputes or controversies related hereto shall be governed by
the laws of the State of Delaware without regard to applicable principles of
conflicts of law that would apply the laws of any other jurisdiction. Each of
the parties hereto irrevocably consents to the exclusive jurisdiction of any
court located within the State of Delaware, in connection with any matter based
upon or arising out of this Agreement or the matters contemplated herein, agrees
that process may be served upon them in any manner authorized by the laws of the
State of Delaware for such persons and waives and covenants not to assert or
plead any objection that they might otherwise have to such jurisdiction and such
process. Each of the parties to this Agreement hereby irrevocably and
unconditionally, to the extent such party is not otherwise subject to service of
process in the State of Delaware, appoints RL&F Service Corp. which is located
at One Xxxxxx Square, 10th Floor, Tenth and King Streets, in the City of
Wilmington, County of New Castle, 19801, as such party's agent in the State of
Delaware for acceptance of legal process in connection with any matter based
upon or arising out of this Agreement or the matters contemplated herein and
agrees that service made on any such agent shall have the same legal force and
effect as if served upon such party personally within the State of Delaware.
8.9 ASSIGNMENT
Neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto (whether by operation
of law or otherwise) without the prior written consent of the other parties.
Subject to the preceding sentence, this Agreement will be binding upon, inure to
the benefit of, and be enforceable by the parties and their respective
successors and permitted assigns.
8.10 RULES OF CONSTRUCTION
The parties hereto agree that they have been represented by counsel during
the negotiation, preparation and execution of this Agreement and, therefore,
waive the application of any law, regulation, holding or rule of construction
providing that ambiguities in an agreement or other document will be construed
against the party drafting such agreement or document.
8.11 WAIVER OF JURY TRIAL
55
Each party acknowledges and agrees that any controversy which may arise
under this Agreement is likely to involve complicated and difficult issues, and
therefore each such party hereby irrevocably and unconditionally waives any
right such party may have to a trial by jury in respect of any litigation
directly or indirectly arising out of or relating to this Agreement or the
transactions contemplated by this Agreement. Each party certifies and
acknowledges that (i) no representative, agent or attorney of any other party
has represented, expressly or otherwise, that such other party would not, in the
event of litigation, seek to enforce the foregoing waiver, (ii) each such party
understands and has considered the implications of this waiver, (iii) each such
party makes this waiver voluntarily, and (iv) each such party has been induced
to enter into this Agreement by, among other things, the waivers and
certifications in this Section 8.11.
56
IN WITNESS WHEREOF, Target, Acquiror and Merger Sub have caused this
Agreement to be executed and delivered by their respective officers thereunto
duly authorized, all on the date first written above.
FACTUAL DATA CORP.
By: _______________________
Name:
Title:
XXXXX INC.
By: _________________
Name:
Title:
GOLDEN MOUNTAIN ACQUISITION CORPORATION
By: _________________
Name:
Title:
SIGNATURE PAGE TO AGREEMENT AND PLAN OF REORGANIZATION
57
SCHEDULE A
DEFINITIONS
"Acquiror" shall have the meaning set forth in the Preamble hereof.
"Acquiror Common Stock" shall have the meaning set forth in Section 1.6(c)(ii).
"Acquiror Disclosure Letter" shall have the meaning set forth in the first
paragraph of Article III hereof.
"Acquiror Governmental Approvals" shall have the meaning set forth in Section
3.3(c) hereof.
"Acquiror Governmental Licenses" shall have the meaning set forth in Section
3.3(c) hereof.
"Acquiror SEC Documents" means each statement, report, registration statement
(with the prospectus in the form filed pursuant to Rule 424(b) of the Securities
Act), definitive proxy statement, and other filings filed with the SEC by
Acquiror since January 1, 2001.
"Acquiror's Notice" shall have the meaning set forth in Section 7.1(j) hereof.
"Acquiror Terminating Change" shall have the meaning set forth in Section 7.1(g)
hereof.
"Acquisition" shall have the meaning set forth in Section 2.5(c) hereof.
"Acquisition Proposal" shall have the meaning set forth in Section 5.1(a)
hereof.
"Actions" shall have the meaning set forth in Section 5.9(b) hereof.
"Affiliate(s)" shall have the meaning set forth in Section 5.8 hereof.
"Agreement" shall have the meaning set forth in the Preamble hereof.
"Alternative Transaction" means either (i) a transaction pursuant to which any
person or entity (or group of persons or entities) other than Acquiror or its
respective affiliates a "Third Party"), acquires more than 15% of the
outstanding shares of Target Common Stock pursuant to a tender offer or exchange
offer or otherwise, (ii) a merger or other business combination involving Target
pursuant to which any Third Party acquires more than 15% of the outstanding
equity securities of Target or the entity surviving such merger or business
combination, (iii) any other transaction pursuant to which any Third Party
acquires control of assets (including for this purpose the outstanding equity
securities of subsidiaries of Target, and the entity surviving any merger or
business combination including any of them) of Target and its subsidiaries
having a fair market value (as determined by the Board of Directors of Acquiror
in good faith) equal to more than 15% of the fair market value of all the assets
of Target and its subsidiaries, taken as a whole, immediately prior to such
transaction, or (iv) any public announcement by a Third Party of a proposal,
plan or intention to do any of the foregoing or any agreement to engage in any
of the foregoing.
"Antitrust Laws" shall have the meaning set forth in Section 5.7(b) hereof.
58
"Articles of Merger" shall have the meaning set forth in Section 1.1 hereof.
"Average Stock Price" shall mean the volume weighted average price of Acquiror
Common Stock on the Nasdaq National Market for the twenty consecutive trading
days ending three trading days prior to the date of the vote taken in respect of
the Merger at the Shareholder Meeting as calculated on the VAP screen on the
Bloomberg Professional(TM) Service and shown as VWAP for such period, as
adjusted for any stock split, recapitalization, reorganization or other similar
corporate transaction.
"Benefit Plans" shall have the meaning set forth in Section 2.15 hereof.
"Business Day" shall mean a day other than a Saturday or Sunday or other day on
which commercial banks in New York, New York are authorized or required to
close.
"Cash Consideration Per Share" shall have the meaning set forth in Section
1.6(c)(ii) hereof.
"CERCLA" shall have the meaning set forth in Section 2.13 hereof.
"Certificates" shall have the meaning set forth in Section 1.7(b) hereof.
"CIVC Agreements" means that certain Investors Agreement by and among X.X.
Xxxxxx, Xxxxxx Xxxxxx, Xxxxx Xxxxxx, Xxxxxxx Xxxxxx and CIVC Fund, L.P., and
that certain Voting Agreement among the same parties.
"Closing" shall have the meaning set forth in Section 1.2 hereof.
"Closing Date" shall have the meaning set forth in Section 1.2 hereof.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Colorado Law" shall have the meaning set forth in Section 1.1 hereof.
"Confidentiality Agreement" shall have the meaning set forth in Section 5.1(a)
hereof.
"Contract" shall have the meaning set forth in Section 4.2(c) hereof.
"Developed Software" means all computer programs developed by or for Target or
its subsidiaries and currently utilized in a product or service offering of
Target or its subsidiaries, in each format and medium in which such computer
programs is recorded or stored, including: (i) all source and all object code
versions of such programs; (ii) all design specifications, flow chats,
programmers' notes, tests and test results; (iii) all documentation of the
features of such software; and (iv) all associated instruction manuals,
documentation and supporting material made available to users of the software.
"Dissenting Shares" shall have the meaning set forth in Section 1.6(g) hereof.
"Effective Date" shall have the meaning set forth in Section 1.2 hereof.
"Effective Time" shall have the meaning set forth in Section 1.2 hereof.
"Employee Obligation" shall have the meaning set forth in Section 2.16(i)
hereof.
59
"Employment Agreement" shall have the meaning set forth in Section 5.10(c)
hereof.
"Environmental Claims" shall have the meaning set forth in Section 2.13 hereof.
"Environmental Laws" shall have the meaning set forth in Section 2.13 hereof.
"Environmental Permits" shall have the meaning set forth in Section 2.13 hereof.
"ERISA" shall have the meaning set forth in Section 2.15 hereof.
"ERISA Plan" shall have the meaning set forth in Section 2.15 hereof.
"ESPP Termination Date" shall have the meaning set forth in Section 5.12(c)
hereof.
"Exchange Act" shall have the meaning set forth in Section 2.3(c) hereof.
"Exchange Agent" shall have the meaning set forth in Section 1.7(a) hereof.
"Exchange Fund" shall have the meaning set forth in Section 1.7(a) hereof.
"Exchange Ratio" shall have the meaning set forth in Section 1.6(c)(ii) hereof.
"GAAP" shall have the meaning set forth in Section 2.4(b) hereof.
"Governmental Entity" shall mean the collective reference to any court of
competent jurisdiction, administrative agency, tribunal, authority, commission
or other governmental or administrative agency, authority or instrumentality,
whether Federal, state, local or foreign.
"HSR" shall have the meaning set forth in Section 2.3(c) hereof.
"Indemnified Parties" shall have the meaning set forth in Section 5.9(b) hereof.
"Intellectual Property" shall mean (I) any and all subject matter that is
entitled to protection of rights under (i) patent law; (ii) copyright law
(including moral rights); (iii) trademark law (including common law protection);
(iv) design patent or industrial design law; (v) semi-conductor chip or mask
work law; or (vi) any other statutory provision or common law principle in any
jurisdiction, including legal provisions governing the protection of
confidential information and trade secrets, which may provide a right in any of
ideas, formulae, algorithms, computer programs, data, databases, concepts,
inventions, know-how, business methods, brands or indicia of the source of goods
and services or the expression or use of such ideas, formulae, algorithms,
computer programs, data, databases, concepts, inventions, know-how, business
methods, brands or indicia of the source of goods or services and (II) all
registrations and applications for registration of the subject matter identified
in (I) above.
"Interim Financials" shall have the meaning set forth in Section 5.16 hereof.
"IRCA" shall have the meaning set forth in Section 2.16(e) hereof.
"Key Employees" shall have the meaning set forth in Section 5.10(c) hereof.
"knowledge" shall have the meaning set forth in Section 8.3 hereof.
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"Lien" shall mean any mortgage, charge, security interest, encumbrance, claim,
or other lien of any kind or nature whatsoever.
"Lock-Up Agreement" shall have the meaning set forth in Section 5.10(b) hereof.
"material" shall have the meaning set forth in Section 8.3 hereof.
"Material Adverse Effect" with respect to any entity or group of entities means
any event, change, condition or effect that is materially adverse to the
condition (financial or otherwise), properties, assets (including intangible
assets), liabilities, businesses, operations or results of operations of such
entity and its subsidiaries, taken as a whole.
"Merger" shall have the meaning set forth in Section A of the Recitals hereof.
"Merger Consideration" shall have the meaning set forth in Section 1.6(g)
hereof.
"Merger Sub" shall have the meaning set forth in the Preamble hereof.
"Non-U.S. Benefit Plan" shall mean all Benefit Plans, contracts and arrangements
(statutory, regulatory or otherwise) covering or applicable to non-U.S.
employees of Target or any of its subsidiaries.
"Offering Period" shall have the meaning set forth in Section 2.2(b) hereof.
"Option Agreement" shall have the meaning set forth in Section 5.12(a) hereof.
"Option Ratio" shall have the meaning set forth in Section 5.12(a) hereof.
"Option Schedule" shall have the meaning set forth in Section 5.12(a) hereof.
"Order" shall have the meaning set forth in Section 5.7(b) hereof.
"Outside Date" shall have the meaning set forth in Section 7.1(b) hereof.
"Permitted Liens" shall mean (a) Liens for taxes, assessments or other
governmental charges not delinquent or being contested in good faith and by
appropriate proceedings and with respect to which proper reserves have been
taken; (b) deposits or pledges to secure obligations under worker's
compensation, social security or similar laws, or under unemployment insurance;
(c) deposits or pledges to secure bids, tenders, contracts (other than contracts
for the payment of money), eases, statutory obligations, surety and appeal bonds
and other obligations of like nature arising in the ordinary course of business;
(d) judgment Liens that have been stayed or bonded; and (e) mechanics',
workers', materialmen's or other like Liens arising in the ordinary course of
business with respect to obligations which are not due or which are being
contested in good faith.
"Per Share Consideration" shall have the meaning set forth in Section 1.6(c)(ii)
hereof.
"Plan of Reorganization" shall have the meaning set forth in Section 1.10
hereof.
"Prohibited Transaction" shall have the meaning set forth in Section 2.15(e)
hereof.
"Proxy Statement" shall have the meaning set forth in Section 2.22 hereof.
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"Public Filings" shall have the meaning set forth in Section 5.16 hereof.
"RCP" shall have the meaning set forth in Section 2.24 hereof.
"RCRA" shall have the meaning set forth in Section 2.13 hereof.
"Registration Statement" shall have the meaning set forth in Section 2.22
hereof.
"Required Intellectual Property" shall have the meaning set forth in Section
2.12(d) hereof.
"Rule 145" shall have the meaning set forth in Section 5.8 hereof.
"SEC" shall have the meaning set forth in Section 2.3(c) hereof.
"Securities Act" shall have the meaning set froth in Section 2.4(a) hereof.
"Shareholder Meeting" shall have the meaning set forth in Section 2.22 hereof.
"Superior Proposal" shall have the meaning set forth in Section 5.1(a) hereof.
"Surviving Corporation" shall have the meaning set forth in Section 1.1 hereof.
"Target" shall have the meaning set forth in the Preamble hereof.
"Target Authorizations" shall have the meaning set forth in Section 2.10 hereof.
"Target Balance Sheet" shall have the meaning set forth in Section 2.4(b)
hereof.
"Target Balance Sheet Date" shall have the meaning set forth in Section 2.5
hereof.
"Target Benefit Plan" shall have the meaning set forth in Section 2.15 hereof.
"Target Common Stock" shall have the meaning set forth in Section B of the
Recitals hereof.
"Target Contracts" shall have the meaning set forth in Section 2.7(b) hereof.
"Target Disclosure Letter" shall have the meaning set forth in the first
paragraph of Article II hereof.
"Target ESPP" shall have the meaning set forth in Section 2.2(b) hereof.
"Target Financial Statements" shall have the meaning set forth in Section 2.4(b)
hereof.
"Target Governmental Approvals" shall have the meaning set forth in Section
2.3(c) hereof.
"Target Governmental Licenses" shall have the meaning set forth in Section
2.3(c) hereof.
"Target Intellectual Property" shall have the meaning set forth in Section
2.12(a) hereof.
"Target SEC Documents" shall have the meaning set forth in Section 2.4(a)
hereof.
"Target Shareholder Approval" shall have the meaning set forth in Section 7.1(e)
hereof.
"Target's Notice" shall have the meaning set forth in Section 7.1(j) hereof.
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"Target Stock Option Plans" shall have the meaning set forth in Section
1.6(d) hereof.
"Target Terminating Change" shall have the meaning set forth in Section 7.1(g)
hereof.
"taxes" shall have the meaning set forth in Section 2.14(k) hereof.
"tax
returns" shall have the meaning set forth in Section 2.14(k) hereof.
"Terminating Change" shall have the meaning set forth in Section 7.1(g) hereof.
"Termination Expenses" shall have the meaning set forth in Section 7.2(c)
hereof.
"Third Party" shall have the meaning set forth in the definition of
Alternative Transaction.
"Transactions" shall have the meaning set forth in Section 5.6 hereof.
"Unperfected Shares" shall have the meaning set forth in Section 1.6(g) hereof.
"Voting Agreement" shall have the meaning set forth in Section 5.10(a) hereof.
* * *
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