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EXHIBIT 2.1
PLAN AND AGREEMENT OF MERGER
BY AND AMONG
AVOCENT CORPORATION
BLUE XXXXXX ACQUISITION CORPORATION,
AND
EQUINOX SYSTEMS INC.
DATED AS OF NOVEMBER 3, 2000
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TABLE OF CONTENTS
PAGE
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ARTICLE I THE MERGER..........................................................................................1
1.1 The Merger..........................................................................................1
1.2 The Closing.........................................................................................2
1.3 Effective Time......................................................................................2
1.4 Effects of Merger...................................................................................2
1.5 The Organization of Subsidiary......................................................................3
ARTICLE II EFFECT OF THE MERGER ON THE STOCK OF THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES................3
2.1 Effect on Stock.....................................................................................3
2.2 Adjustments for Capital Changes.....................................................................4
2.3 Exchange of Certificates............................................................................4
2.4 Investment of Exchange Fund.........................................................................6
2.5 Assumption of Options...............................................................................6
2.6 Taking of Necessary Action; Further Action..........................................................6
ARTICLE III REPRESENTATIONS AND WARRANTIES OF TARGET..................................................................6
3.1 Organization of Target..............................................................................6
3.2 Target Capital Structure............................................................................7
3.3 Obligations With Respect to Capital Stock...........................................................7
3.4 Authority...........................................................................................8
3.5 SEC Filings; Target Financial Statements............................................................9
3.6 Absence of Certain Changes or Events...............................................................10
3.7 Taxes..............................................................................................11
3.8 Intellectual Property..............................................................................12
3.9 Compliance; Permits; Restrictions..................................................................15
3.10 Litigation.........................................................................................15
3.11 Brokers' and Finders' Fees.........................................................................16
3.12 Employee Benefit Plans.............................................................................16
3.13 Absence of Liens and Encumbrances..................................................................20
3.14 Environmental Matters..............................................................................21
3.15 Labor Matters......................................................................................22
3.16 Agreements, Contracts and Commitments..............................................................22
3.17 Proxy Statement....................................................................................24
3.18 Board Approval.....................................................................................25
3.19 State Takeover Statutes............................................................................25
3.20 Fairness Opinion...................................................................................25
3.21 Certain Indebtedness...............................................................................25
3.22 Title Insurance....................................................................................25
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND SUBSIDIARY...................................................25
4.1 Organization of Parent.............................................................................26
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TABLE OF CONTENTS
(CONTINUED)
4.2 Authority..........................................................................................26
4.3 Parent Litigation..................................................................................26
4.4 Information Supplied by Parent.....................................................................26
4.5 Financing..........................................................................................26
ARTICLE V CONDUCT PRIOR TO THE EFFECTIVE TIME........................................................................27
5.1 Conduct of Business................................................................................27
ARTICLE VI ADDITIONAL AGREEMENTS.....................................................................................30
6.1 Proxy Statement; Other Filings.....................................................................30
6.2 Meeting of Shareholders............................................................................30
6.3 Access to Information; Confidentiality.............................................................32
6.4 No Solicitation....................................................................................32
6.5 Public Disclosure..................................................................................34
6.6 Legal Requirements.................................................................................34
6.8 FIRPTA.............................................................................................34
6.9 Notification of Certain Matters....................................................................34
6.10 Commercially Reasonable Efforts and Further Assurances.............................................35
6.11 Indemnification of Target Directors and Officers...................................................35
6.12 Regulatory Filings; Reasonable Efforts.............................................................35
6.13 Registration on From S-8...........................................................................35
6.14 Amendment of Stock Option Agreements...............................................................35
ARTICLE VII CONDITIONS TO THE MERGER.................................................................................36
7.1 Conditions to Obligations of Each Party to Effect the Merger.......................................36
7.2 Additional Conditions to Obligations of Target.....................................................37
7.3 Additional Conditions to the Obligations of Parent.................................................37
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER.......................................................................38
8.1 Termination........................................................................................38
8.2 Notice of Termination; Effect of Termination.......................................................39
8.3 Fees and Expenses..................................................................................40
8.4 Amendment..........................................................................................41
8.5 Extension; Waiver..................................................................................41
ARTICLE IX GENERAL PROVISIONS........................................................................................41
9.1 Non-Survival of Representations and Warranties.....................................................41
9.2 Notices............................................................................................42
9.3 Interpretation; Knowledge..........................................................................42
9.4 Counterparts.......................................................................................43
9.5 Entire Agreement...................................................................................43
9.6 Severability.......................................................................................43
9.7 Other Remedies; Specific Performance...............................................................44
9.8 Governing Law......................................................................................44
9.9 Rules of Construction..............................................................................44
9.10 Assignment.........................................................................................44
9.11 WAIVER OF JURY TRIAL...............................................................................44
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PLAN AND AGREEMENT OF MERGER
This PLAN AND AGREEMENT OF MERGER (this "AGREEMENT"), is entered into
as of November 3, 2000, by and among Avocent Corporation, a Delaware corporation
("PARENT"), Blue Xxxxxx Acquisition Corporation, a Florida corporation and
wholly-owned subsidiary of Parent (the "SUBSIDIARY"), Equinox Systems Inc., a
Florida corporation ("TARGET") (the Subsidiary and Target being sometimes
collectively referred to herein as the "CONSTITUENT CORPORATIONS").
WITNESSETH:
WHEREAS, the respective Board of Directors of Parent, Subsidiary and
Target have approved the merger of the Subsidiary with and into Target (the
"Merger"), upon the terms and subject to the conditions set forth in this
Agreement, whereby all of the issued and outstanding shares of Target common
stock, par value $0.01 per share (the "TARGET COMMON STOCK") not owned directly
or indirectly by Target, will be converted into the Merger Consideration (as
hereinafter defined); and
WHEREAS, each of Parent and Target desires to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger; and
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements contained herein, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto do
hereby agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with Section 607.1101 et seq. of the
Florida Business Corporation Act (the "FLORIDA LAW") and with the effect
provided in Section 607.1106 of the Florida Law, the Subsidiary shall be merged
with and into Target at the Effective Time (as defined in Section 1.3 hereof).
Following the Effective Time, the separate corporate existence of the Subsidiary
shall cease and Target shall continue as the surviving corporation (the
"SURVIVING CORPORATION") under the name "Equinox Systems Inc." and shall succeed
to and assume all the rights and obligations of the Subsidiary and Target in
accordance with the Florida Law. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time of the Merger, (a) the
Surviving Corporation shall possess all assets and property of every
description, and every interest therein, wherever located, and the rights,
privileges, immunities, powers, franchises and authority, of a public as well as
of a private nature, of each of the Constituent Corporations, (b) all
obligations belonging to or due to each of the Constituent Corporations shall be
vested in, and become the obligations of, the Surviving Corporation without
further act or deed, (c) title to any real estate or any interest therein vested
in either of the Constituent Corporations shall not revert or in any way be
impaired by reason of the Merger, (d) all rights of
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creditors and all liens upon any property of either of the Constituent
Corporations shall be preserved unimpaired, (e) the Surviving Corporation shall
be liable for all of the debts and obligations of each of the Constituent
Corporations, and any claim existing, or action or proceeding pending, by or
against either of the Constituent Corporations may be prosecuted to judgment
with right of appeal, as if the Merger had not taken place, and (f) the
Surviving Corporation shall become a wholly-owned subsidiary of Parent.
1.2 THE CLOSING. The closing of the Merger (the "CLOSING") will
take place at such time and on such date as is agreed upon by the parties (the
"CLOSING DATE"), which (subject to satisfaction or waiver of the conditions set
forth in Article VII of this Agreement) shall be no later than the second
business day after satisfaction or waiver of the conditions set forth in Article
VII of this Agreement at such location as the parties may agree, unless another
date is agreed to in writing by the parties hereto.
1.3 EFFECTIVE TIME. Subject to the provisions of this Agreement,
the parties shall file articles of merger (the "ARTICLES OF MERGER") executed in
accordance with the relevant provisions of the Florida Law and shall make all
other filings required under the Florida Law as soon as practical on or after
the Closing Date. The Merger shall become effective at such time as the Articles
of Merger are accepted for filing by the Secretary of State of Florida, or at
such other time as Parent and Target shall agree as specified in the Articles of
Merger but not exceeding 30 days after the Articles of Merger are accepted for
filing by the Secretary of State of Florida (the "EFFECTIVE TIME").
1.4 EFFECTS OF MERGER. The Merger shall have the following effects
on the Constituent Corporations:
(a) Articles of Incorporation of the Surviving
Corporation. The Articles of Incorporation of the Subsidiary shall become the
Articles of Incorporation of the Surviving Corporation from and after the
Effective Time and until thereafter amended as provided by law.
(b) Bylaws of the Surviving Corporation. The Bylaws of
the Subsidiary shall be the Bylaws of the Surviving Corporation from and after
the Effective Time and until thereafter altered, amended or repealed in
accordance with the Florida Law, the Articles of Incorporation of the Surviving
Corporation and the Bylaws.
(c) Directors. The directors of the Subsidiary at the
Effective Time shall, from and after the Effective Time, be the directors of the
Surviving Corporation until their successors have been duly elected or appointed
and qualified or until their earlier death, resignation or removal in accordance
with the Surviving Corporation's Articles of Incorporation, Bylaws and
applicable law.
(d) Officers. The officers of Subsidiary at the Effective
Time shall, from and after the Effective Time, be the officers of the Surviving
Corporation until their successors have been duly elected or appointed and
qualified or until their earlier death, resignation or removal in accordance
with the Surviving Corporation's Articles of Incorporation and Bylaws.
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(e) Assets, Liabilities. At the Effective Time, the
assets, liabilities, reserves and accounts of each of the Constituent
Corporations shall be taken upon the books of the Surviving Corporation at the
amounts at which they respectively shall be carried on the books of said
corporations immediately prior to the Effective Time, except as otherwise set
forth in this Agreement and subject to such adjustments, or elimination of
intercompany items, as may be appropriate in giving effect to the Merger in
accordance with generally accepted accounting principles.
1.5 THE ORGANIZATION OF SUBSIDIARY. The Parent has formed
Subsidiary under the laws of the State of Florida for the purposes of the
transactions contemplated by this Agreement. Parent covenants and agrees that,
until the Effective Time, Subsidiary will conduct no business or operations,
will have no assets and will enter into no agreements or obligations except as
required or contemplated by this Agreement or necessary to perform its
obligations hereunder.
ARTICLE II
EFFECT OF THE MERGER ON THE STOCK OF
THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
2.1 EFFECT ON STOCK. As of the Effective Time, by virtue of the
Merger and without any action on the part of any holder of any stock of either
of the Constituent Corporations:
(a) Cancellation of Treasury Stock. Each share of Target
Common Stock that is owned by Target or by any direct or indirect wholly-owned
subsidiary of Target shall automatically be canceled and retired and shall cease
to exist, and no consideration shall be delivered in exchange therefor.
(b) Conversion of Target Common Stock. Each issued and
outstanding share of Target Common Stock (other than shares to be canceled in
accordance with Section 2.1(a)) that is issued and outstanding immediately prior
to the Effective Time (collectively, the "EXCHANGING TARGET SHARES") shall be
converted into the right to receive from Parent at the Effective Time an amount
(the "MERGER CONSIDERATION") equal to $9.75 for each share of Target Common
Stock (the "EXCHANGE RATIO"). On or prior to the Closing Date, Parent shall
deliver by wire transfer the Merger Consideration to the Exchange Agent (as
defined in Section 2.3(a) hereof) in accordance with Section 2.3 hereof. As of
the Effective Time, all such Exchanging Target Shares shall no longer be
outstanding and shall automatically be canceled and retired and shall cease to
exist, and each holder of a certificate evidencing any Exchanging Target Shares
shall cease to have any rights with respect thereto, except the right to receive
the Merger Consideration therefor without interest upon surrender of such
certificate in accordance with Section 2.2.
(c) Target Stock Options. At the Effective Time, each of
the then outstanding options to purchase Target Common Stock (collectively, the
"TARGET OPTIONS") (consisting of all outstanding options granted under Target's
1988 Non-qualified Stock Option Plan, 1992 Non-qualified Stock Option Plan, 1993
Stock Option Plan, Directors Stock Option Plan and 2000 Directors' Stock Option
Plan (collectively the "TARGET PLANS"), and any
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individual non-Plan options) will by virtue of the Merger, and without any
further action on the part of any holder thereof, be assumed and converted into
an option to purchase that number of shares of Common Stock, $0.001 par value of
Parent ("PARENT COMMON STOCK") determined by dividing the number of shares of
Target Common Stock subject to such Target Option at the Effective Time by seven
(7), at an exercise price per share of Parent Common Stock equal to the exercise
price per share of such Target Option immediately prior to the Effective Time
(provided that the exercise price per share of such Target Option immediately
prior to the Effective Time shall be deemed to be $9.75 with respect to any
Target Option the exercise price per share of which would otherwise have been
greater than $9.75) multiplied by seven (7). If the foregoing calculation
results in an assumed Target Option being exercisable for a fraction of a share
of Parent Common Stock, then the number of shares of Parent Common Stock subject
to such option will be rounded down to the nearest whole number of shares, with
no cash being payable for such fractional share. The term, exerciseability,
vesting schedule, status as an "incentive stock option" under Section 422 of the
Code, if applicable, and all other terms and conditions of the Target Options
will otherwise be unchanged.
2.2 ADJUSTMENTS FOR CAPITAL CHANGES. If, prior to the Effective
Time, Target recapitalizes through a subdivision of its outstanding shares into
a greater number of shares, or a combination of its outstanding shares into a
lesser number of shares, or reorganizes, reclassifies or otherwise changes its
outstanding shares into the same or a different number of shares of other
classes, or declares a dividend on its outstanding shares payable in shares of
its capital stock or securities convertible into shares of its capital stock,
then the Exchange Ratio will be adjusted appropriately so as to maintain the
aggregate Merger Consideration at the same amount it would have been had such
recapitalization, reclassification, dividend or other change not occurred.
2.3 EXCHANGE OF CERTIFICATES.
(a) Exchange Agent. Prior to the Effective Time, Parent
shall enter into an agreement with ChaseMellon Shareholder Services, L.L.C. or
such other bank or trust company as may be designated by Parent and agreed to by
Target (the "EXCHANGE AGENT") providing that Parent shall deposit with the
Exchange Agent as of the Effective Time, for the benefit of the holders of
Exchanging Target Shares, for exchange in accordance with this Article II
through the Exchange Agent, cash in an amount sufficient to pay the Merger
Consideration required to be paid pursuant to Section 2.1 (such cash being
hereinafter referred to as the "EXCHANGE FUND").
(b) Exchange Procedures. As soon as reasonably
practicable (and in any event no later than ten days) after the Effective Time,
the Surviving Corporation shall cause the Exchange Agent to mail to each holder
of record of a certificate or certificates which immediately prior to the
Effective Time evidenced issued and outstanding shares of Target Stock
(including persons who purchase Target Common Stock prior to the Effective Time
upon the exercise of Target Options), which shall be converted into the right to
receive the Merger Consideration pursuant to Section 2.1 (collectively, the
"CERTIFICATES"), (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass
only upon delivery of the Certificates, to the Exchange Agent and shall be in
such form and have such other provisions as Parent may reasonably specify), and
(ii) instructions for use in effecting the surrender of the Certificates in
exchange for the Merger Consideration.
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Upon surrender of a Certificate for cancellation to the Exchange Agent or to
such other agent or agents as may be appointed by Parent, together with a duly
executed letter of transmittal and such other documents as may reasonably be
required by the Exchange Agent, the holder of such Certificate shall be entitled
to receive in exchange therefor the amount of cash from the Exchange Fund, which
such holder has the right to receive pursuant to the provisions of this Article
II, 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, payment of the Merger
Consideration may be made to a person other than the person in whose name the
Certificate so surrendered is registered, if such Certificate shall be properly
endorsed or otherwise in proper form for transfer and the person requesting such
payment shall pay any transfer or other taxes required by reason of the payment
of the Merger Consideration to a person other than the registered holder of such
Certificate or establish to the satisfaction of Parent that such tax has been
paid or is not applicable. Until surrendered as contemplated by this Section
2.2, each Certificate shall be deemed at any time after the Effective Time to
evidence only the right to receive upon such surrender the Merger Consideration
which the holder thereof has the right to receive in respect of such Certificate
pursuant to this Article II. No interest will be paid or will accrue on any cash
payable to holders of Certificates pursuant to the provisions of this Article
II.
(c) Lost, Stolen or Destroyed Certificates. In the event
that 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, the Merger
Consideration payable to such holder pursuant to Section 2.2 hereof; provided,
however, that Parent 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 Parent Surviving
Corporation or the Exchange Agent with respect to the Certificates alleged to
have been lost, stolen or destroyed.
(d) No Further Ownership Rights in Exchanging Target
Shares. All cash paid upon the surrender for exchange of Certificates in
accordance with the terms of this Article II shall be deemed to have been paid
in full satisfaction of all rights pertaining to the Exchanging Target Shares
theretofore evidenced by such Certificates. After the Effective Time there shall
be no further registration of transfers on the stock transfer books of the
Surviving Corporation of the shares of Target Common Stock which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation or the Exchange
Agent for any reason, they shall be canceled and exchanged as provided in this
Article II, except as otherwise provided by law.
(e) Termination of Exchange Fund. Any portion of the
Exchange Fund which remains undistributed to the holders of the Certificates six
months after the Effective Time shall be delivered to Parent, on demand, and any
holders of the Certificates who have not theretofore complied with this Article
II shall thereafter look only to Parent for payment of their claim for Merger
Consideration.
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(f) No Liability. None of Parent, Target or the Exchange
Agent shall be liable to any person in respect of any cash from the Exchange
Fund delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law. If any Certificates shall not have been
surrendered prior to seven years after the Effective Time (or immediately prior
to such earlier date on which any Merger Consideration would otherwise escheat
to or become the property of any governmental entity under applicable law), any
such Merger Consideration shall, to the extent permitted by applicable law,
become the property of the Surviving Corporation, free and clear of all claims
or interest of any person previously entitled thereto.
2.4 INVESTMENT OF EXCHANGE FUND. The Exchange Agent shall invest
the Exchange Fund in deposit accounts or short-term money market instruments, as
directed by Parent, on a daily basis. Any interest and other income resulting
from such investments shall be paid to Parent.
2.5 ASSUMPTION OF OPTIONS. Promptly after the Effective Time,
Parent shall notify in writing each holder of a Target Option of the assumption
of such Target Option by Parent, the number of shares of Target Common Stock
that are then subject to such and the exercise price of such Target Option, as
determined pursuant to Sections 2.1(c) hereof.
2.6 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, the officers and directors of Target will take
all such lawful and necessary 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
Subsidiary, the officers and directors of Subsidiary will take all such lawful
and necessary action.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF TARGET
Target represents and warrants to Parent, subject to the exceptions
specifically disclosed in writing in the disclosure letter supplied by Target to
Parent (the "DISCLOSURE SCHEDULES"), that the statements in this Article III are
true. The Disclosure Schedules shall be arranged in sections and paragraphs
corresponding to the numbered sections and paragraphs (and subparagraphs)
contained in this Article III, and the disclosure in any paragraph shall qualify
only the corresponding Section or paragraph in this Article III or other
sections to which it is clearly apparent (from a plain reading of the disclosure
or by cross reference) that such disclosure relates.
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3.1 ORGANIZATION OF TARGET.
(a) Target and each of its subsidiaries is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation; has the corporate power and authority to own,
lease and operate its assets and property and to carry on its business as now
being conducted and as proposed to be conducted; and is duly qualified to do
business and in good standing as a foreign corporation in each jurisdiction in
which the failure to be so qualified would have a Material Adverse Effect (as
defined in Section 9.3) on Target.
(b) Target has delivered to Parent a true and complete
list of all of Target's subsidiaries, indicating the jurisdiction of
incorporation of each subsidiary and Target's equity interest therein. All
outstanding shares of capital stock or other equity interests of the
subsidiaries of Target are owned by Target or a direct or indirect wholly-owned
subsidiary of Target, free and clear of all liens, pledges, charges,
encumbrances, security interests, claims and options of any nature
(collectively, "LIENS").
(c) Target has delivered or made available to Parent a
true and correct copy of the Articles of Incorporation and Bylaws of Target and
similar governing instruments of each of its material subsidiaries, each as
amended to date, and each such instrument is in full force and effect. Neither
Target nor any of its subsidiaries is in violation of any of the provisions of
its Articles of Incorporation or Bylaws or equivalent governing instruments.
3.2 TARGET CAPITAL STRUCTURE. The authorized capital stock of
Target consists of 15,000,000 shares of Common Stock, par value $0.01 per share,
of which there were 5,458,241 shares issued and outstanding as of November 3,
2000, and 1,000,000 shares of Preferred Stock, par value $0.01 per share, of
which no shares are issued or outstanding. All outstanding shares of Target
Common Stock are duly authorized, validly issued, fully paid and nonassessable
and are not subject to preemptive rights created by statute, the Articles of
Incorporation or Bylaws of Target or any agreement or document to which Target
is a party or by which it is bound. As of November 3, 2000, Target had reserved
an aggregate of 2,515,000 shares of Target Common Stock, net of exercises, for
issuance to employees, consultants and non-employee directors pursuant to the
Target Plans, under which options are outstanding to purchase an aggregate of
1,731,634 shares and under which no (0) shares are available for grant as of
November 3, 2000. All shares of Target Common Stock subject to issuance as
aforesaid, upon issuance on the terms and conditions specified in the
instruments pursuant to which they are issuable, would be duly authorized,
validly issued, fully paid and nonassessable. Section 3.2 of the Disclosure
Schedules list each outstanding option to acquire shares of Target Common Stock
at November 3, 2000, the name of the holder of such option, the number of shares
subject to such option, the exercise price of such option, the number of shares
as to which such option will have vested at such date, the vesting schedule for
such option and whether the exerciseability of such option will be accelerated
in any way by the transactions contemplated by this Agreement or for any other
reason, and indicate the extent of acceleration, if any.
3.3 Obligations With Respect to Capital Stock. Except as set forth
in Section 3.2, there are no equity securities or similar ownership interests of
any class of Target capital stock, or any securities exchangeable or convertible
into or exercisable for such equity securities, partnership interests or similar
ownership interests issued, reserved for issuance or outstanding. Except for
securities Target owns, directly or indirectly through one or more subsidiaries,
there
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are no equity securities, partnership interests or similar ownership interests
of any class of any subsidiary of Target, or any security exchangeable or
convertible into or exercisable for such equity securities, partnership
interests or similar ownership interests issued, reserved for issuance or
outstanding. Except as set forth in Section 3.2, there are no options, warrants,
equity securities, partnership interests or similar ownership interests, calls,
rights (including preemptive rights), commitments or agreements of any character
to which Target or any of its subsidiaries is a party or by which it is bound
obligating Target or any of its subsidiaries to issue, deliver or sell, or cause
to be issued, delivered or sold, or repurchase, redeem or otherwise acquire, or
cause the repurchase, redemption or acquisition, of any shares of capital stock
of Target or any of its subsidiaries or obligating Target or any of its
subsidiaries to grant, extend, accelerate the vesting of or enter into any such
option, warrant, equity security or similar ownership interest, call, right,
commitment or agreement. There are no registration rights and, to the knowledge
of Target, there are no voting trusts, proxies or other agreements or
understandings with respect to any equity security of any class of Target or
with respect to any equity security or similar ownership interest of any class
of any of its subsidiaries. Target has no outstanding stock appreciation rights,
phantom stock or similar rights.
3.4 AUTHORITY.
(a) Target has all requisite corporate power and
authority to enter into this Agreement. 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 this Agreement and the approval of the
Merger by the holders of the issued and outstanding Target Common Stock ("Target
Shareholders") and the filing and recordation of the Articles of Merger pursuant
to Florida Law. A vote of the holders of at least a majority of the outstanding
shares of the Target Common Stock is required for the Target Shareholders to
approve and adopt this Agreement and approve the Merger. This Agreement has been
duly executed and delivered by Target and, assuming the due authorization,
execution and delivery by Parent and Subsidiary, constitutes the valid and
binding obligation of Target, enforceable in accordance with its terms, except
as enforceability may be limited by bankruptcy and other similar laws and
general principles of equity. The execution and delivery of this Agreement by
Target does not, and the performance of this Agreement by Target will not (i)
conflict with or violate the Articles of Incorporation or Bylaws of Target or
the equivalent organizational documents of any of its subsidiaries, (ii) subject
to obtaining the approval and adoption of this Agreement and the approval of the
Merger by the Target Shareholders as contemplated in Section 6.2 and compliance
with the requirements set forth in Section 3.4(b) below, conflict with or
violate any law, rule, regulation, order, judgment, injunction or decree
applicable to Target or any of its subsidiaries or by which its or any of their
respective properties is bound or affected, or (iii) result in any breach of or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or impair Target's rights or alter the rights or
obligations of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the properties or assets of Target
or any of its subsidiaries pursuant to, any material note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, authorization, consent,
approval, franchise or other instrument or obligation to which
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Target or any of its subsidiaries is a party or by which Target or any of its
subsidiaries or its or any of their respective properties are bound or affected,
authorization, consent, approval, except to the extent such conflict, violation,
breach, default, impairment or other effect could not, in the case of clause
(ii) or (iii), individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect on Target.
(b) No consent, approval, order or authorization of, or
registration, declaration or filing with any federal, state or local government
or any court, administrative agency or commission or other governmental
authority or instrumentality, domestic or foreign ("GOVERNMENTAL ENTITY") is
required by or with respect to Target in connection with the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby, except for (i) the filing of the Articles of Merger with the Secretary
of State of Florida, (ii) the filing of the Proxy Statement (as defined in
Section 3.17) with the SEC in accordance with the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT"), (iii) such consents, approvals, orders,
authorizations, declarations and filings as may be required under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR ACT")
and the laws of any foreign country and (iv) such other consents,
authorizations, filings, approvals and registrations which, if not obtained or
made, would not be material to Target or have a Material Adverse Effect on the
ability of the parties to consummate the Merger.
3.5 SEC FILINGS; TARGET FINANCIAL STATEMENTS.
(a) Target has filed all forms, reports and documents
required to be filed with the SEC since January 1, 1998, and has made available
to Parent such forms, reports and documents in the form filed with the SEC. All
such required forms, reports and documents (including those that Target may file
subsequent to the date hereof) are referred to herein as the "TARGET SEC
REPORTS." As of their respective dates, the Target SEC Reports (i) were prepared
in accordance with the requirements of the Securities Act of 1933, as amended
(the "SECURITIES ACT") or the Exchange Act, as the case may be, and the rules
and regulations of the SEC thereunder applicable to such Target SEC Reports, and
(ii) did not at the time they were filed (or if amended or superseded by a
filing prior to the date of this Agreement, then on the date of such filing)
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. None of Target's subsidiaries is required to file any forms, reports
or other documents with the SEC.
(b) Each of the consolidated financial statements
(including, in each case, any related notes thereto) contained in the Target SEC
Reports (the "TARGET FINANCIALS"), including any Target SEC Reports filed after
the date hereof until the Closing, (i) complied as to form in all material
respects with the published rules and regulations of the SEC with respect
thereto, (ii) was prepared in accordance with generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto or, in the case of
unaudited interim financial statements, as may be permitted by the SEC on Form
10-Q under the Exchange Act) and (iii) fairly presented in all material respects
the consolidated financial position of Target and its subsidiaries at the
respective dates thereof and the consolidated results of its operations and cash
flows for the periods indicated, except that the
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unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments which were not, or are not expected to be,
material in amount. The balance sheet of Target contained in the Target SEC
Reports as of June 30, 2000 is hereinafter referred to as the "TARGET BALANCE
SHEET." Except as disclosed in the Target Financials, neither Target nor any of
its subsidiaries has any liabilities (absolute, accrued, contingent or
otherwise) of a nature required to be disclosed on a balance sheet or in the
related notes to the consolidated financial statements prepared in accordance
with GAAP which are, individually or in the aggregate, material to the business,
results of operations or financial condition of Target and its subsidiaries
taken as a whole, except liabilities (i) provided for in the Target Balance
Sheet, or (ii) incurred since the date of the Target Balance Sheet in the
ordinary course of business consistent with past practices.
(c) Target has heretofore furnished to Parent a complete
and correct copy of any amendments or modifications, which have not yet been
filed with the SEC but which are required to be filed, to agreements, documents
or other instruments which previously had been filed by Target with the SEC
pursuant to the Securities Act or the Exchange Act.
3.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the date of the
Target Balance Sheet, the business of Target and its subsidiaries has been
carried on only in the ordinary and usual course. Since the date of the Target
Balance Sheet:
(a) there has not been any Material Adverse Effect on
Target and no event has occurred and no fact or set of circumstances has arisen
which has resulted in or could reasonably be expected to result in a Material
Adverse Effect on Target;
(b) there has not been any material change by Target in
its accounting methods, principles or practices, except as required by
concurrent changes in GAAP;
(c) there has not been any revaluation by Target of any
of its assets, including, without limitation, writing down the value of
capitalized inventory or writing off notes or accounts receivable other than in
the ordinary course of business;
(d) no material customer or supplier of Target or its
subsidiaries has threatened to alter materially and adversely its relationship
with Target or its subsidiaries;
(e) there has not been any agreement by Target or any of
its subsidiaries to waive or release of any material right or claim (including
without limitation to any write off or other compromise of any material account
receivable) outside of the ordinary course of business consistent with past
practice;
(f) Target has not paid or satisfied any material
obligation or liability (absolute, accrued, contingent or otherwise) other than
(i) liabilities shown in the Target Financials or (ii) liabilities incurred
since the date of the last-filed Target SEC Document in the ordinary course of
business, which payment or satisfaction would have a Material Adverse Effect on
Target;
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(g) Target has not increased or established any reserve
for taxes or any other liability on its books or otherwise provided therefor
which would have a Material Adverse Effect on Target, except as may have been
required due to income or operations of Target since the date of the last-filed
Target SEC Report;
(h) Target has not sold, transferred, mortgaged, pledged
or subjected to any lien, charge or other encumbrance any of its assets which
are material to its business or financial condition, other than in the ordinary
course of business; and
(i) Target has not granted any material increase in
salary payable or to become payable by Target to any officer or employee,
consultant or agent (other than normal merit increases), or by means of any
bonus or pension plan, contract or other commitment, increased in any material
respect the compensation of any officer, employee, consultant or agent.
3.7 TAXES.
(a) Definition of Taxes. For the purposes of this
Agreement, "TAX" or "TAXES" refers to any and all federal, state, local and
foreign taxes, assessments and other governmental charges, duties, impositions
and liabilities relating to taxes, including taxes based upon or measured by
gross receipts, income, profits, sales, use and occupation, and value added, ad
valorem, transfer, franchise, withholding, payroll, recapture, employment,
excise and property taxes, together with all interest, penalties and additions
imposed with respect to such amounts and any obligations under any agreements or
arrangements with any other person with respect to such amounts and including
any liability for taxes of a predecessor entity.
(b) Tax Returns and Audits.
(i) Target and each of its subsidiaries have
timely filed all federal, state, local and foreign returns, estimates,
information statements and reports ("RETURNS") relating to Taxes required to be
filed by Target and each of its subsidiaries with any Tax authority. Target and
each of its subsidiaries have paid all Taxes shown to be due on such Returns.
(ii) Target and each of its subsidiaries as of
the Effective Time will have withheld with respect to its employees all material
federal and state income taxes, Taxes pursuant to the Federal Insurance
Contribution Act, Taxes pursuant to the Federal Unemployment Tax Act and other
Taxes required to be withheld.
(iii) Neither Target nor any of its subsidiaries
has been delinquent in the payment of any Tax nor is there any Tax deficiency
outstanding, proposed or assessed against Target or any of its subsidiaries, nor
has Target or any of its subsidiaries executed any unexpired waiver of any
statute of limitations on or extending the period for the assessment or
collection of any Tax.
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(iv) No audit or other examination of any Return
of Target or any of its subsidiaries by any Tax authority is presently in
progress, nor has Target or any of its subsidiaries been notified of any request
for such an audit or other examination.
(v) No adjustment relating to any Returns filed
by Target or any of its subsidiaries has been proposed in writing formally or
informally by any Tax authority to Target or any of its subsidiaries or any
representative thereof.
(vi) Neither Target nor any of its subsidiaries
has any liability for any unpaid Taxes which has not been accrued for or
reserved on the Target Balance Sheet in accordance with GAAP, whether asserted
or unasserted, contingent or otherwise, which is material to Target, other than
any liability for unpaid Taxes that may have accrued since the date of the
Target Balance Sheet in connection with the operation of the business of Target
and its subsidiaries in the ordinary course.
(vii) There is no contract, agreement, plan or
arrangement to which Target or any of its subsidiaries is a party as of the date
of this Agreement, including but not limited to the provisions of this
Agreement, covering any employee or former employee of Target or any of its
subsidiaries that, individually or collectively, would reasonably be expected to
give rise to the payment of any amount as a result of the Merger that would not
be deductible pursuant to Sections 280G, 404 or 162(m) of the Code. There is no
contract, agreement, plan or arrangement to which Target is a party or by which
it is bound to compensate any individual for excise taxes paid pursuant to
Section 4999 of the Code.
(viii) Neither Target nor any of its subsidiaries
has filed any consent agreement under Section 341(f) of the Code or agreed to
have Section 341(f)(2) of the Code apply to any disposition of a subsection (f)
asset (as defined in Section 341(f)(4) of the Code) owned by Target or any of
its subsidiaries.
(ix) Neither Target nor any of its subsidiaries
is party to or has any obligation under any tax-sharing, tax indemnity or tax
allocation agreement or arrangement.
(x) None of Target's or its subsidiaries' assets
are tax exempt use property within the meaning of Section 168(h) of the Code.
(xi) Neither Target nor any of its subsidiaries
was a "distributing corporation" or a "controlling corporation" in a
distribution of stock to which Section 355 of the Code applied and that occurred
within two years before the date of this Agreement or as part of a plan or
series of transactions that includes the Merger.
3.8 INTELLECTUAL PROPERTY. For the purposes of this Agreement, the
following terms have the following definitions:
"INTELLECTUAL PROPERTY" shall mean any or all of the following and all
rights in, arising out of, or associated therewith: (i) all United States,
international and foreign patents and applications therefor and all reissues,
divisions, renewals, extensions, provisionals, continuations
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and continuations-in-part thereof; (ii) all inventions (whether patentable or
not), invention disclosures, improvements, trade secrets, proprietary
information, know how, technology, technical data and customer lists, and all
documentation relating to any of the foregoing; (iii) all copyrights, copyrights
registrations and applications therefor, and all other rights corresponding
thereto throughout the world; (iv) all industrial designs and any registrations
and applications therefor throughout the world; (v) all trade names, logos,
common law trademarks and service marks, trademark and service xxxx
registrations and applications therefor throughout the world; (vi) all databases
and data collections and all rights therein throughout the world; (vii) all
moral and economic rights of authors and inventors, however denominated,
throughout the world; and (viii) any similar or equivalent rights to any of the
foregoing anywhere in the world.
"TARGET INTELLECTUAL PROPERTY" shall mean any Intellectual Property
that is owned by, or exclusively licensed to, Target or any of its subsidiaries.
"REGISTERED INTELLECTUAL PROPERTY" means all United States,
international and foreign: (i) patents and patent applications (including
provisional applications); (ii) registered trademarks, applications to register
trademarks, intent-to-use applications, or other registrations or applications
related to trademarks; (iii) registered copyrights and applications for
copyright registration; and (iv) any other Intellectual Property that is the
subject of an application, certificate, filing, registration or other document
issued, filed with, or recorded by any state, government or other public legal
authority.
"TARGET REGISTERED INTELLECTUAL PROPERTY" means all of the Registered
Intellectual Property owned by, or filed in the name of, Target or any of its
subsidiaries.
(a) Set forth in Section 3.8(a) of the Disclosure
Schedules is a complete and accurate list of all Target Registered Intellectual
Property and specifies, where applicable, the jurisdictions in which each such
item of Target Registered Intellectual Property has been issued or registered.
(b) No Target Intellectual Property or product or service
of Target or any of its subsidiaries is subject to any proceeding or outstanding
decree, order, judgment, contract, license, agreement, or stipulation
restricting in any manner the use, transfer, or licensing thereof by Target or
any of its subsidiaries, or which may affect the validity, use or enforceability
of such Target Intellectual Property.
(c) Target owns and has good and exclusive title to, or
has license (sufficient for the conduct of its business as currently conducted
and as proposed to be conducted), each material item of Target Intellectual
Property or other Intellectual Property used by Target free and clear of any
lien or encumbrance (excluding licenses and related restrictions); and, except
with respect to products sold to Target's original equipment manufacturing
customers, Target is the exclusive owner of all trademarks and trade names used
in connection with the operation or conduct of the business of Target and its
subsidiaries, including the sale of any products or the provision of any
services by Target and its subsidiaries.
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(d) Target owns exclusively, and has good title to, all
copyrighted works that are Target products or which Target or any of its
subsidiaries otherwise expressly purports to own.
(e) To the extent that any material Intellectual Property
has been developed or created by a third party for Target or any of its
subsidiaries, Target has a written agreement with such third party with respect
thereto and Target thereby either (i) has obtained ownership of, and is the
exclusive owner of, or (ii) has obtained a license (sufficient for the conduct
of its business as currently conducted and as proposed to be conducted) to all
such third party's Intellectual Property in such work, material or invention by
operation of law or by valid assignment, to the fullest extent it is legally
possible to do so.
(f) Neither Target nor any of its subsidiaries has
transferred ownership of, or granted any exclusive license with respect to, any
Intellectual Property that is or was material Target Intellectual Property, to
any third party.
(g) To the knowledge of Target, the operation of the
business of Target and its subsidiaries as such business currently is conducted,
including Target's and its subsidiaries' design, development, manufacture,
marketing and sale of the products or services of Target and its subsidiaries
(including products currently under development) has not, does not and will not
infringe or misappropriate the Intellectual Property of any third party or, to
its knowledge, constitute unfair competition or trade practices under the laws
of any jurisdiction.
(h) Except as set forth on Section 3.8(h) of the
Disclosure Schedules, since January 1, 1998, neither Target nor any of its
subsidiaries has received notice from any third party that the operation of the
business of Target or any of its subsidiaries or any act, product or service of
Target or any of its subsidiaries, infringes or misappropriates the Intellectual
Property of any third party or constitutes unfair competition or trade practices
under the laws of any jurisdiction.
(i) To the knowledge of Target, no person has or is
infringing or misappropriating any Target Intellectual Property.
(j) Target and each of its subsidiaries has taken
reasonable steps to protect Target's and its subsidiaries' rights in Target's
confidential information and trade secrets that it wishes to protect and any
trade secrets or confidential information of third parties provided to Target or
any of its subsidiaries, and, without limiting the foregoing, each of Target and
its subsidiaries has and enforces a policy requiring each employee and
contractor to execute a proprietary information/confidentiality agreement
substantially in the form provided to Parent and all current and former
employees and contractors of Target and any of its subsidiaries have executed
such an agreement, except where the failure to do so is not reasonably expected
to have a Material Adverse Effect on Target.
(k) To Target's knowledge, all of Target's and its
subsidiaries' current products (including products currently under development)
(i) will record, store, process, calculate and present calendar dates falling on
and after (and if applicable, spans of time
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including) January 1, 2000, and will calculate any information dependent on or
relating to such dates in the same manner, and with the same functionality, data
integrity and performance, as the products record, store, process, calculate and
present calendar dates on or before December 31, 1999, or calculate any
information dependent on or relating to such dates (collectively, "YEAR 2000
COMPLIANT") and (ii) will lose no functionality with respect to the introduction
of records containing dates falling on or after January 1, 2000. To Target's
knowledge, all of Target's or its subsidiaries' material Target Information
Technology (as defined below) is Year 2000 Compliant, and will not cause an
interruption in the ongoing operations of Target's or any of its subsidiaries'
business on or after January 1, 2000. For purposes of the foregoing, the term
"TARGET INFORMATION TECHNOLOGY" shall mean and include all software, hardware,
firmware, telecommunications systems, network systems, embedded systems and
other systems, components and/or services (other than general utility services
including gas, electric, telephone and postal) that are currently used by Target
or any of its subsidiaries in the conduct of their business.
3.9 COMPLIANCE; PERMITS; RESTRICTIONS.
(a) Neither Target nor any of its subsidiaries is, in any
material respect, in conflict with, or in default or violation of (i) any law,
rule, regulation, order, judgment or decree applicable to Target or any of its
subsidiaries or by which its or any of their respective properties is bound or
affected, or (ii) any material note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which Target or any of its subsidiaries is a party or by which Target or any
of its subsidiaries or its or any of their respective properties is bound or
affected. To the knowledge of Target, no investigation or review by any
Governmental Entity is pending or threatened against Target or its subsidiaries,
nor has any Governmental Entity indicated an intention to conduct the same.
There is no material agreement, judgment, injunction, order or decree binding
upon Target or any of its subsidiaries which has or could reasonably be expected
to have the effect of prohibiting or materially impairing any business practice
of Target or any of its subsidiaries, any acquisition of material property by
Target or any of its subsidiaries or the conduct of business by Target as
currently conducted.
(b) Target and its subsidiaries have in effect all
authorizations, certificates, filings, franchises, notices, rights, permits,
licenses, variances, exemptions, orders and approvals from Governmental Entities
which are material to the operation of the business of Target including all
authorizations under Environmental Laws (as defined in Section 3.14)
(collectively, the "TARGET PERMITS"). Target and its subsidiaries are in
compliance in all material respects with the terms of the Target Permits.
3.10 LITIGATION. As of the date of this Agreement, there is no
action, suit, proceeding, claim, arbitration or investigation pending, or as to
which Target or any of its subsidiaries has received any notice of assertion
nor, to Target's knowledge, is there a threatened action, suit, proceeding,
claim, arbitration or investigation against Target or any of its subsidiaries
which, if determined adversely to Target or any subsidiary of Target, reasonably
would be likely to have a Material Adverse Effect on Target, or which in any
manner challenges or seeks to prevent, enjoin, alter or delay any of the
transactions contemplated by this Agreement.
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3.11 BROKERS' AND FINDERS' FEES. Except as set forth in Section
3.11 of the Disclosure Schedules, Target has not incurred, nor will it incur,
directly or indirectly, any liability for brokerage or finders' fees or agents'
commissions or any similar charges in connection with this Agreement or any
transaction contemplated hereby.
3.12 EMPLOYEE BENEFIT PLANS.
(a) Definitions. With the exception of the definition of
"Target Affiliate" set forth in Section 3.12(a)(i) below (which definition shall
apply only to this Section 3.12), for purposes of this Agreement, the following
terms shall have the meanings set forth below:
(i) "TARGET AFFILIATE" shall mean any other
person or entity under common control with the Target within the meaning of
Section 414(b), (c), (m) or (o) of the Code and the regulations issued
thereunder;
(ii) "CODE" shall mean the Internal Revenue Code
of 1986, as amended;
(iii) "TARGET EMPLOYEE PLAN" shall mean any plan,
program, policy, practice, contract, agreement or other arrangement providing
for compensation, severance, termination pay, deferred compensation, performance
awards, stock or stock-related awards, fringe benefits or other employee
benefits or remuneration of any kind, whether written or unwritten or otherwise,
funded or unfunded, including without limitation, each "employee benefit plan,"
within the meaning of Section 3(3) of ERISA which is or has been maintained,
contributed to, or required to be contributed to, by Target or any Target
Affiliate for the benefit of any Target Employee, or with respect to which
Target or any Target Affiliate has or may have any liability or obligation;
(iv) "COBRA" shall mean the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended;
(v) "DOL" shall mean the Department of Labor;
(vi) "TARGET EMPLOYEE" shall mean any current or
former employee, consultant or director of Target or any Target Affiliate;
(vii) "TARGET EMPLOYMENT AGREEMENT" shall mean
each management, employment, severance, consulting, relocation, repatriation,
expatriation, visas, work permit or other agreement, contract or understanding
between Target or any Target Affiliate and any Target Employee;
(viii) "ERISA" shall mean the Employee Retirement
Income Security Act of 1974, as amended;
(ix) "FMLA" shall mean the Family Medical Leave
Act of 1993, as amended;
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(x) "IRS" shall mean the Internal Revenue
Service;
(xi) "TARGET MULTIEMPLOYER PLAN" shall mean any
"Target Pension Plan" (as defined below) which is a "multiemployer plan," as
defined in Section 3(37) of ERISA;
(xii) "PBGC" shall mean the Pension Benefit
Guaranty Corporation; and
(xiii) "TARGET PENSION PLAN" shall mean each Target
Employee Plan which is an "employee pension benefit plan," within the meaning of
Section 3(2) of ERISA.
(b) Schedule. Section 3.12(b) of the Disclosure Schedules
contains an accurate and complete list of each Target Employee Plan and each
Target Employment Agreement. Target does not have any plan or commitment to
establish any new Target Employee Plan, or Target Employment Agreement, to
modify any Target Employee Plan or Target Employment Agreement (except to the
extent required by law or to conform any such Target Employee Plan or Target
Employment Agreement to the requirements of any applicable law, in each case as
previously disclosed to Parent in writing, or as required by this Agreement), or
to adopt or enter into any Target Employee Plan or Target Employment Agreement.
(c) Documents. Target has provided to Parent: (i) correct
and complete copies of all documents embodying each Target Employee Plan and
each Target Employment Agreement including (without limitation) all amendments
thereto and all related trust documents, administrative service agreements,
group annuity contracts, group insurance contracts, and policies pertaining to
fiduciary liability insurance covering the fiduciaries for each Plan; (ii) the
most recent annual actuarial valuations, if any, prepared for each Target
Employee Plan; (iii) the two (2) most recent annual reports (Form Series 5500
and all schedules and financial statements attached thereto), if any, required
under ERISA or the Code in connection with each Target Employee Plan; (iv) if
the Target Employee Plan is funded, the most recent annual and periodic
accounting of Target Employee Plan assets; (v) the most recent summary plan
description together with the summary(ies) of material modifications thereto, if
any, required under ERISA with respect to each Target Employee Plan; (vi) all
IRS determination, opinion, notification and advisory letters, and all
applications and correspondence to or from the IRS or the DOL with respect to
any such application or letter; (vii) all communications material to any Target
Employee or Target Employees relating to any Target Employee Plan and any
proposed Target Employee Plans, in each case, relating to any amendments,
terminations, establishments, increases or decreases in benefits, acceleration
of payments or vesting schedules or other events which would result in any
material liability to Target; (viii) all correspondence to or from any
governmental agency relating to any Target Employee Plan; (ix) all COBRA forms
and related notices (or such forms and notices as required under comparable
law); (x) the three (3) most recent plan years discrimination tests for each
Target Employee Plan, if applicable; and (xi) all registration statements,
annual reports (Form 11-K and all attachments thereto) and prospectuses prepared
in connection with each Target Employee Plan.
(d) Employee Plan Compliance. Except as set forth on
Section 3.12(d) of the Disclosure Schedules, (i) Target has performed in all
material respects all obligations required to
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be performed by it under, is not in default or violation of, and has no
knowledge of any default or violation by any other party to each Target Employee
Plan, and each Target Employee Plan has been established and maintained in all
material respects in accordance with its terms and in compliance with all
applicable laws, statutes, orders, rules and regulations, including but not
limited to ERISA or the Code; (ii) each Target Employee Plan intended to qualify
under Section 401(a) of the Code and each trust intended to qualify under
Section 501(a) of the Code has either received a favorable determination,
opinion, notification or advisory letter from the IRS with respect to each such
Target Employee Plan as to its qualified status under the Code, including all
amendments to the Code effected by the Tax Reform Act of 1986 and subsequent
legislation, or has remaining a period of time under applicable Treasury
regulations or IRS pronouncements in which to apply for such a letter and make
any amendments necessary to obtain a favorable determination as to the qualified
status of each such Target Employee Plan; (iii) no "prohibited transaction,"
within the meaning of Section 4975 of the Code or Sections 406 and 407 of ERISA,
and not otherwise exempt under Section 4975 of the Code or Section 408 of ERISA
(or any administrative class exemption issued thereunder), has occurred with
respect to any Target Employee Plan; (iv) there are no actions, suits or claims
pending, or, to the knowledge of Target, threatened or reasonably anticipated
(other than routine claims for benefits) against any Target Employee Plan or
against the assets of any Target Employee Plan; (v) each Target Employee Plan
(other than any stock option plan) can be amended, terminated or otherwise
discontinued after the Effective Time, without material liability to the Parent,
Target or any of its Target Affiliates (other than ordinary administration
expenses); (vi) there are no audits, inquiries or proceedings pending or, to the
knowledge of Target or any Target Affiliates, threatened by the IRS or DOL with
respect to any Target Employee Plan; and (vii) neither Target nor any Target
Affiliate is subject to any penalty or tax with respect to any Target Employee
Plan under Section 502(i) of ERISA or Sections 4975 through 4980 of the Code.
(e) Pension Plan. Neither Target nor any Target Affiliate
has previously maintained or currently maintains, sponsors, participates in or
contributes to a pension plan which is subject to Title IV of ERISA or Section
412 of the Code. As of the Effective Time: (i) no legal or administrative action
has been taken by the PBGC to terminate or to appoint a trustee to administer
the Target Pension Plan; (ii) no liability to the PBGC under Title IV of ERISA
has been incurred by Target or an Target Affiliate that has not been satisfied
in full; (iii) each Target Pension Plan was fully-funded on a termination basis;
(iv) each Target Pension Plan has been maintained in compliance with the minimum
funding standards of ERISA and the Code where applicable and has not incurred
any "accumulated funding deficiency," as defined in Section 302 of ERISA and
Section 412 of the Code, whether or not waived; and (v) no Target Pension Plan
has a reportable event within the meaning of Section 4043 of ERISA and the
regulations thereunder; and (vi) no Target Pension Plan has incurred any event
described in Section 4041 (other than the standard termination contemplated
herein), 4062 or 4063 of ERISA.
(f) Collectively Bargained, Multiemployer and Multiple
Employer Plans. At no time has Target or any Target Affiliate contributed to or
been obligated to contribute to any Target Multiemployer Plan. Neither Target,
nor any Target Affiliate has at any time ever
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maintained, established, sponsored, participated in, or contributed to any
multiple employer plan, or to any plan described in Section 413 of the Code.
(g) No Post-Employment Obligations. Except as set forth
in Section 3.12(g) of the Disclosure Schedules, no Target Employee Plan
provides, or reflects or represents any liability to provide retiree health
benefits to any person for any reason, except as may be required by COBRA or
other applicable statute, and Target has never represented, promised or
contracted (whether in oral or written form) to any Target Employee (either
individually or to Target Employees as a group) or any other person that such
Target Employee(s) or other person would be provided with retiree health, except
to the extent required by statute.
(h) Health Care Compliance. Neither Target nor any Target
Affiliate has, prior to the Effective Time and in any material respect, violated
any of the health care continuation requirements of COBRA, the requirements of
FMLA, the requirements of the Health Insurance Portability and Accountability
Act of 1996, the requirements of the Women's Health and Cancer Rights Act of
1998, the requirements of the Newborns' and Mothers' Health Protection Act of
1996, or any amendment to each such act, or any similar provisions of state law
applicable to Target Employees.
(i) Effect of Transaction.
(1) Except as set forth on Section
3.12(i)(1) of the Disclosure Schedules, the execution of this Agreement and the
consummation of the transactions contemplated hereby will not (either alone or
upon the occurrence of any additional or subsequent events) constitute an event
under any Target Employee Plan, Target Employment Agreement, trust or loan that
will or may result in any payment (whether of severance pay or otherwise),
acceleration, forgiveness of indebtedness, vesting, distribution, increase in
benefits or obligation to fund benefits with respect to any Target Employee.
(2) Except as set forth on Section
3.12(i)(2) of the Disclosure Schedules, no payment or benefit, which will or may
be made by Target or its Target Affiliates with respect to any Target Employee,
will be characterized as a "parachute payment," within the meaning of Section
280G(b)(2) of the Code.
(j) Employment Matters. Target: (i) is in compliance in
all respects with all applicable foreign, federal, state and local laws, rules
and regulations respecting employment, employment practices, terms and
conditions of employment and wages and hours, in each case, with respect to
Target Employees, except as would not have a Material Adverse Effect on Target;
(ii) has withheld and reported all amounts required by law or by agreement to be
withheld and reported with respect to wages, salaries and other payments to
Target Employees; (iii) is not liable for any arrears of wages or any taxes or
any penalty for failure to comply with any of the foregoing; and (iv) is not
liable for any payment to any trust or other fund governed by or maintained by
or on behalf of any governmental authority, with respect to unemployment
compensation benefits, social security or other benefits or obligations for
Target Employees (other than routine payments to be made in the normal course of
business and consistent with
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past practice). There are no pending, threatened or reasonably anticipated
claims or actions against Target under any worker's compensation policy or
long-term disability policy.
(k) Labor. No work stoppage or labor strike against
Target is pending, threatened or reasonably anticipated. Target does not know of
any activities or proceedings of any labor union to organize any Target
Employees. Except as set forth in Section 3.12(k) of the Disclosure Schedules,
there are no actions, suits, claims, labor disputes or grievances pending, or,
to the knowledge of Target, threatened or reasonably anticipated relating to any
labor, safety or discrimination matters involving any Target Employee,
including, without limitation, charges of unfair labor practices or
discrimination complaints, which, if adversely determined, would, individually
or in the aggregate, result in any material liability to Target. Neither Target
nor any of its subsidiaries has engaged in any unfair labor practices within the
meaning of the National Labor Relations Act. Except as set forth in Section
3.12(k) of the Disclosure Schedules, Target is not presently, nor has it been in
the past, a party to, or bound by, any collective bargaining agreement or union
contract with respect to Target Employees and no collective bargaining agreement
is being negotiated by Target.
3.13 ABSENCE OF LIENS AND ENCUMBRANCES. Target and each of its
subsidiaries has good and marketable title to, or valid leasehold interests in,
all its material properties and assets except for such as are no longer used or
useful in the conduct of its businesses or as have been disposed of in the
ordinary course of business and except for defects in title, easements,
restrictive covenants and similar encumbrances that individually or in the
aggregate would not materially interfere with the ability of Target or any of
its subsidiaries to conduct its business as currently conducted. All such
material assets and properties, other than assets and properties in which Target
or any of its subsidiaries has a leasehold interest, are free and clear of all
Liens except for Liens that (a) are created, arise or exist under or in
connection with any of the contracts or other matters referred to in the
Disclosure Schedules or in the Target SEC Reports or the exhibits thereto, (b)
relate to any taxes or other governmental charges or levies that are not yet due
and payable, (c) relate to, or are created, arise or exist in connection with,
any legal proceeding that is being contested in good faith, or (d) individually
or in the aggregate would not materially interfere with the ability of Target
and each of its subsidiaries to conduct their business as currently conducted
and would not materially and adversely impact the transferability,
financeability, ownership, leasing, use, or occupancy of any such properties or
assets ("PERMITTED LIENS"). To the knowledge of Target, there are no natural or
artificial conditions upon any real property owned by Target ("OWNED REAL
PROPERTY"), or any other facts or conditions which could, in the aggregate, have
a material and adverse impact on the transferability, financeability, ownership,
leasing, use, occupancy or operation of any such Owned Real Property. There are
no parties in possession of any portion of any Owned Real Property, whether as
tenants, trespassers or otherwise, except Target. There are no pending, or, to
the knowledge of Target, threatened assessments, improvements or activities of
any public or quasi-public body either planned, in the process of construction
or completed which may give rise to any assessment against any Owned Real
Property. Target and each of its subsidiaries has complied in all material
respects with and is not in default under the terms of all material leases to
which it is a party, and all such leases are in full force and effect. To the
knowledge of Target, no party to any material lease is in default of such lease
and there exists no event or circumstance
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with respect to such lease which with the giving of notice or the passage of
time, or both, would constitute a default by any party to such lease.
3.14 ENVIRONMENTAL MATTERS.
(a) The term "HAZARDOUS MATERIAL" means any material or
substance that is prohibited or regulated by any Environmental Law or that has
been designated by any Governmental Entity to be radioactive, toxic, hazardous
or otherwise a danger to health, reproduction or the environment. The term
"TARGET BUSINESS FACILITY" means any property including the land, the
improvements thereon, the groundwater thereunder and the surface water thereon,
that is or at any time has been owned, operated, occupied, controlled or leased
by Target or any of its subsidiaries in connection with the operation of its
business. The term "DISPOSAL SITE" means a landfill, disposal agent, waste
hauler or recycler of Hazardous Materials. The term "ENVIRONMENTAL LAWS" means
all applicable laws, rules, regulations, orders, treaties, statutes, and codes
promulgated by any Governmental Entity which prohibit, regulate or control any
Hazardous Material or any Hazardous Material Activity, including, without
limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, the Resource Conservation and Recovery Act of 1976, the
Federal Water Pollution Control Act, the Clean Air Act, the Hazardous Materials
Transportation Act, the Clean Water Act, comparable laws, rules, regulations,
orders, treaties, statutes, and codes of other Governmental Entities, the
regulations promulgated pursuant to any of the foregoing, and all amendments and
modifications of any of the foregoing, all as amended to date. The term
"HAZARDOUS MATERIALS ACTIVITY" means the transportation, transfer, recycling,
storage, use, treatment, manufacture, removal, remediation, release, exposure of
others to, sale, or distribution of any Hazardous Material or any product
containing a Hazardous Material. The term "TARGET ENVIRONMENTAL PERMIT" means
any approval, permit, license, clearance, registration or consent required to be
obtained from any private person or any Governmental Entity with respect to a
Hazardous Materials Activity which is or was conducted by Target or any of its
subsidiaries.
(b) Except in compliance with Environmental Laws and in a
manner that could not reasonably be expected to subject Target or any of its
subsidiaries to material liability, no Hazardous Materials are present on any
Target Business Facility.
(c) Target and each of its subsidiaries have conducted
all Hazardous Material Activities in compliance in all material respects with
all applicable Environmental Laws. To the knowledge of Target the Hazardous
Materials Activities of Target and each of its subsidiaries have not resulted in
the exposure of any person to a Hazardous Material in a manner which has caused
or could reasonably be expected to cause an adverse health effect to said
person.
(d) Section 3.14(d) of the Disclosure Schedules
accurately describes all of the Target Environmental Permits currently held by
Target and each of its subsidiaries. Such Target Environmental Permits are all
of the Target Environmental Permits necessary for the continued conduct of any
Hazardous Material Activity of Target and each of its subsidiaries as such
activities are currently being conducted, except for those permits the absence
of which could not reasonably be expected to result in a Material Adverse Effect
on Target. All such Target Environmental Permits are valid and in full force and
effect. Target and its subsidiaries have
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complied in all material respects with all covenants and conditions of any
Target Environmental Permit which is or has been in force with respect to its
Hazardous Materials Activities. To the knowledge of Target, no circumstance
exists which could cause any Target Environmental Permit to be revoked,
modified, or rendered non-renewable upon payment of the permit fee.
(e) No action, proceeding, revocation proceeding,
amendment procedure, writ, injunction or claim is pending, or to the knowledge
of Target, threatened, concerning or relating to any Target Environmental Permit
or any Hazardous Materials Activity of Target or any of its subsidiaries, or to
any Target Business Facility currently owned, operated, occupied, controlled or
leased by Target or any of its subsidiaries, or to the knowledge of Target,
pending or threatened with respect to any other Target Business Facility.
(f) To the knowledge of Target, Target and each of its
subsidiaries have transferred or released Hazardous Materials only to those
Disposal Sites described on Section 3.14(f) of the Disclosure Schedules; and no
action, proceeding, liability or claim exists or is threatened against Target or
any of its subsidiaries with respect to any transfer or release of Hazardous
Materials to a Disposal Site which could reasonably be expected to subject
Target or any of its subsidiaries to liability.
(g) Target is not aware of any fact or circumstance which
could result in any environmental liability which could reasonably be expected
to result in a Material Adverse Effect on Target.
(h) Target has delivered to Parent or made available for
inspection by Parent and its agents and employees all records in Target's
possession concerning the Hazardous Materials Activities of Target and each of
its subsidiaries and all environmental audits and environmental assessments of
any Target Business Facility conducted at the request of, or otherwise in the
possession of, Target or any of its subsidiaries. Target has complied with all
environmental disclosure obligations imposed by applicable law upon Target and
any of its subsidiaries with respect to the Merger.
3.15 LABOR MATTERS. (i) There are no disputes or claims pending or,
to the knowledge of each of Target and its respective subsidiaries, threatened,
between Target or any of its subsidiaries and any of their respective employees;
(ii) as of the date of this Agreement, neither Target nor any of its
subsidiaries is a party to any collective bargaining agreement or other labor
union contract applicable to persons employed by Target or its subsidiaries nor
does Target or its subsidiaries know of any activities or proceedings of any
labor union to organize any such employees; and (iii) as of the date of this
Agreement, neither Target nor any of its subsidiaries has any knowledge of any
strikes, slowdowns, work stoppages or lockouts, or threats thereof, by or with
respect to any employees of Target or any of its subsidiaries.
3.16 AGREEMENTS, CONTRACTS AND COMMITMENTS. Except as set forth on
Section 3.16 to the Disclosure Schedules, neither Target nor any of its
subsidiaries is a party to or is bound by:
(a) any employment or consulting agreement, contract or
commitment with any officer or director or higher level employee or member of
Target's Board of Directors, other
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than those that are terminable by Target or any of its subsidiaries on no more
than thirty (30) days' notice without liability or financial obligation to
Target;
(b) any agreement or plan, including, without limitation,
any stock option plan, stock appreciation right plan or stock purchase plan, any
of the benefits of which will be increased, or the vesting of benefits of which
will be accelerated, by the occurrence of any of the transactions contemplated
by this Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement;
(c) any agreement of indemnification or any guaranty
other than any agreement of indemnification entered into in connection with the
sale or license of computer or communications hardware products in the ordinary
course of business;
(d) any agreement, contract or commitment containing any
covenant limiting in any respect the right of Target or any of its subsidiaries
to engage in any line of business, conduct business in any geographical area or
to compete with any person or granting any exclusive distribution rights;
(e) any agreement, contract or commitment currently in
force relating to the disposition or acquisition by Target or any of its
subsidiaries after the date of this Agreement of a material amount of assets not
in the ordinary course of business or pursuant to which Target has any material
ownership interest in any corporation, partnership, joint venture or other
business enterprise other than Target's subsidiaries;
(f) any dealer, distributor, joint marketing or
development agreement currently in force under which Target or any of its
subsidiaries have continuing material obligations to jointly market any product,
technology or service and which may not be canceled without penalty upon notice
of ninety (90) days or less, or any material agreement pursuant to which Target
or any of its subsidiaries have continuing material obligations to jointly
develop any intellectual property that will not be owned, in whole or in part,
by Target or any of its subsidiaries and which may not be canceled without
penalty upon notice of ninety (90) days or less;
(g) any agreement, contract or commitment currently in
force to provide source code to any third party for any product or technology
that is material to Target and its subsidiaries taken as a whole;
(h) any agreement, contract or commitment currently in
force to license any third party to manufacture or reproduce any Target product,
service or technology or any agreement, contract or commitment currently in
force to sell or distribute any Target products, service or technology except
agreements with distributors or sales representative in the normal course of
business cancelable without penalty upon notice of ninety (90) days or less and
substantially in the form previously provided to Parent;
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(i) any mortgages, indentures, guarantees, loans or
credit agreements, security agreements or other agreements or instruments
relating to the borrowing of money or extension of credit;
(j) any settlement agreement entered into within five (5)
years prior to the date of this Agreement; or
(k) any other agreement, contract or commitment that has
a value of $1,000,000 or more individually.
Neither Target nor any of its subsidiaries, nor to Target's knowledge
any other party to a Target Contract (as defined below), is (or with nothing
more than notice and/or the passage of time will be) in breach, violation or
default under, and neither Target nor any of its subsidiaries has received
written notice that it has breached, violated or defaulted under, any of the
material terms or conditions of any of the agreements, contracts or commitments
to which Target or any of its subsidiaries is a party or by which it is bound
that are required to be disclosed in the Disclosure Schedules (any such
agreement, contract or commitment, a "TARGET CONTRACT") in such a manner as
would permit any other party to cancel or terminate any such Target Contract, or
would permit any other party to seek material damages or other remedies (for any
or all of such breaches, violations or defaults, in the aggregate). Each Target
Contract is in full force and effect, and is a legal, valid and binding
obligation of Target or a subsidiary of Target and, to the knowledge of Target,
each of the other parties thereto, enforceable in accordance with its terms,
except (a) that the enforcement thereof may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and (ii) general principles of
equity (regardless of whether enforceability is considered in a proceeding in
equity or at law) and (b) as would not, individually or in the aggregate, be
reasonably expected to result in a Material Adverse Effect on Target.
3.17 PROXY STATEMENT. None of the information supplied or to be
supplied by Target for inclusion or incorporation by reference in the definitive
proxy statement to be sent to the Target Shareholders in connection with the
meeting of the Target Shareholders to consider the approval and adoption of this
Agreement and the approval of the Merger (the "SHAREHOLDERS' MEETING") (such
proxy statement as amended or supplemented is referred to herein as the "PROXY
STATEMENT") shall not, on the date the Proxy Statement is first mailed to the
Target Shareholders, at the time of the Shareholders' Meeting and at the
Effective Time, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they are made,
not false or misleading, or omit to state any material fact necessary to correct
any statement in any earlier communication with respect to the solicitation of
proxies for the Shareholders' Meeting has become false or misleading. The Proxy
Statement will comply as to form in all material respects with the provisions of
the Exchange Act and the rules and regulations thereunder. If at any time prior
to the Effective Time, any event relating to Target or any of its affiliates,
officers or directors should be discovered by Target which should be set forth
in a supplement to the Proxy Statement, Target shall promptly inform Parent.
Notwithstanding the foregoing, Target makes no representation or warranty with
respect to any information supplied by Parent which is contained in the Proxy
Statement.
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3.18 BOARD APPROVAL. The Board of Directors of Target has, as of
the date of this Agreement, determined (i) that the Merger is fair to, advisable
and in the best interests of Target and its shareholders, and (ii) to recommend
that the shareholders of Target approve and adopt this Agreement and approve the
Merger.
3.19 STATE TAKEOVER STATUTES. Other than the Florida Control Share
Act (Section 607.0902 of the Florida Law), no state takeover statute or similar
statute or regulation applies to or purports to apply to the Merger, this
Agreement, or the transactions contemplated hereby and thereby.
3.20 FAIRNESS OPINION. Target has received a written opinion from
Xxxxxxx Xxxxx & Associates, Inc., dated as of the date hereof, to the effect
that as of the date hereof, the Exchange Ratio is fair to the Target
Shareholders from a financial point of view and has delivered to Parent a copy
of such opinion.
3.21 CERTAIN INDEBTEDNESS. Except as disclosed on Section 3.21 to
the Disclosure Schedules, neither Target nor any Target subsidiary is indebted
for money borrowed, either directly or indirectly, from any of its officers,
directors, or any Affiliate (as defined below), in any amount whatsoever (except
for expenses incurred in the ordinary course of business in amounts not
exceeding $5000 per person); nor are any of its officers, directors, or
Affiliates indebted for money borrowed from Target or any Target subsidiary, nor
are there any transactions of a continuing nature between Target or any Target
subsidiary and any of its officers, directors, or Affiliates (other than by or
through the regular employment thereof by Target) not subject to cancellation
which will continue beyond the Effective Time, including use of Target's or any
Target subsidiary's assets for personal benefit with or without adequate
compensation. As used herein, the term "AFFILIATE" shall mean any Person (as
defined below) that, directly or indirectly, through one or more intermediaries,
controls or is controlled by, or is under common control with, the Person
specified. As used in the foregoing definition, the term (i) "CONTROL" shall
mean the power through the ownership of voting securities, contract, or
otherwise to direct the affairs of another Person and (ii) "PERSON" shall mean
an individual, firm, trust, association, corporation, limited liability company,
partnership, government (whether federal, state, local or other political
subdivision, or any agency or bureau of any of them) or other entity.
3.22 TITLE INSURANCE. Target has delivered to Parent a true and
accurate copy of each owner's policy of title insurance for each Owned Real
Property which insures the fee simple or leasehold ownership interest of Target
or the appropriate Target subsidiary in each Owned Real Property subject only to
Permitted Liens.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUBSIDIARY
Parent represents and warrants to Target that the statements in this
Article IV are true.
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4.1 ORGANIZATION OF PARENT. Each of Parent and the Subsidiary is
a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation; has the corporate power and
authority to own, lease and operate its assets and property and to carry on its
business as now being conducted and as proposed to be conducted; and is duly
qualified to do business and in good standing as a foreign corporation in each
jurisdiction in which the failure to be so qualified would have a Material
Adverse Effect (as defined in Section 9.3) on Parent.
4.2 AUTHORITY.
(a) Each of Parent and Subsidiary has all requisite
corporate power and authority to enter into this Agreement. 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 Parent and Subsidiary. This Agreement has been duly executed and delivered by
Parent and Subsidiary, and assuming the due authorization, execution and
delivery by Target, constitutes the valid and binding obligation of Parent and
Subsidiary, enforceable in accordance with its terms, except as enforceability
may be limited by bankruptcy and other similar laws and general principles of
equity. The execution and delivery of this Agreement by Parent and Subsidiary
does not, and the performance of this Agreement by Parent and Subsidiary will
not (i) conflict with or violate the certificate or articles of incorporation or
bylaws of Parent or Subsidiary; (ii) subject to obtaining the approval and
adoption of this Agreement and the approval of the Merger by the Target
Shareholders as contemplated in Section 6.2 and compliance with the requirements
set forth in Section 4.2(b) below, conflict with or violate any law, rule,
regulation, order, judgment, injunction or decree applicable to Parent or the
Subsidiary or by which its or any of their respective properties is bound or
affected, or (iii) result in any breach of or constitute a default (or an event
that with notice or lapse of time or both would become a default) under, or
impair Parent's rights or alter the rights or obligations of any third party
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or encumbrance on any of
the properties or assets of Parent or any of its subsidiaries pursuant to, any
material note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, authorization, consent, approval, franchise or other instrument or
obligation to which Parent or any of its subsidiaries is a party or by which
Parent or any of its subsidiaries or its or any of their respective properties
are bound or affected, except to the extent such conflict, violation, breach,
default, impairment or other effect could not, in the case of clause (ii) or
(iii), individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on Parent.
(b) No consent, approval, order or authorization of, or
registration, declaration or filing with any Governmental Entity is required by
or with respect to Parent in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby, except
for (i) the filing of the Articles of Merger with the Secretary of State of
Florida, (ii) such consents, approvals, orders, authorizations, declarations and
filings as may be required under the HSR Act, and (iii) such other consents,
authorizations, filings, approvals and registrations which, if not obtained or
made, would not be material to Parent or Target or have a Material Adverse
Effect on the ability of the parties to consummate the Merger.
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4.3 PARENT LITIGATION. As of the date of this Agreement, there is
no action, suit, proceeding, claim, arbitration or investigation pending, or as
to which Parent or Subsidiary has received any notice of assertion, nor, to
Parent's knowledge, is there a threatened action, suit, proceeding, claim,
arbitration or investigation against Parent or any of its subsidiaries which in
any manner challenges or seeks to prevent, enjoin, alter or delay any of the
transactions contemplated by this Agreement.
4.4 INFORMATION SUPPLIED BY PARENT. None of the information
supplied or to be supplied by Parent for inclusion or incorporation by reference
in the Proxy Statement or the Other Filings shall, on the date filed with the
SEC, the date the Proxy Statement is first mailed to the Target Shareholders, at
the time of the Shareholders' Meeting and at the Effective Time, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they are made not false or misleading, or omit to
state any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for the Shareholders'
Meeting which has become false or misleading. If at any time prior to the
Effective Time, any event relating to Parent or any of its affiliates, officers
or directors should be discovered by Parent which should be set forth in a
supplement to the Proxy Statement or Other Filing, Parent shall promptly inform
Target.
4.5 FINANCING. Parent has, and will at all times prior to the
earlier of the Effective Time or the termination of this Agreement in accordance
with its terms maintain, sufficient funds or available credit to pay the Merger
Consideration.
ARTICLE V
CONDUCT PRIOR TO THE EFFECTIVE TIME
5.1 CONDUCT OF BUSINESS. During the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
pursuant to its terms or the Effective Time, Target (which for the purposes of
this Article V shall include Target and each of its subsidiaries) agrees, except
(i) as provided in Article V of the Disclosure Schedules, or (ii) to the extent
that Parent shall otherwise consent in writing, to carry on its business
diligently and in accordance with good commercial practice and to carry on its
business in the ordinary course, in substantially the same manner as heretofore
conducted and in compliance in all material respects with all applicable laws
and regulations, to pay its debts and taxes when due subject to good faith
disputes over such debts or taxes, to pay or perform other material obligations
when due, and use its commercially reasonable efforts consistent with past
practices and policies to preserve intact its present business organization,
keep available the services of its present officers and employees and preserve
its relationships with customers, suppliers, distributors, licensors, licensees
and others with which it has business dealings. In furtherance of the foregoing
and subject to applicable law, Target agrees to confer with Parent, as promptly
as practicable, prior to taking any material actions or making any material
management decisions with respect to the conduct of business. In addition,
except as provided in Article V of the Disclosure Schedules, without the prior
written consent of Parent, Target shall not do any of the following, and Target
shall not permit its subsidiaries to do any of the following:
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(a) Waive any stock repurchase rights, accelerate, amend
or change the period of exerciseability of options or restricted stock, or
re-price options granted under any employee, consultant or director stock plans
or authorize cash payments in exchange for any options granted under any of such
plans;
(b) Enter into any material partnership arrangements,
joint development agreements or strategic alliances;
(c) Grant any severance or termination pay to any officer
or employee except pursuant to written agreements outstanding, or policies
existing, on the date hereof and as previously disclosed in the Disclosure
Schedules, or adopt any new severance plan or amend or modify or alter in any
manner any severance plan, agreement or arrangement existing on the date hereof;
(d) Transfer or license to any person or entity or
otherwise extend, amend or modify in any material respect any rights to the
Intellectual Property, or enter into grants to transfer or license to any person
future patent rights, other than in the ordinary course of business;
(e) Declare, set aside or pay any dividends on or make
any other distributions (whether in cash, stock, equity securities or property)
in respect of any capital stock or split, combine or reclassify any capital
stock or issue or authorize the issuance of any other securities in respect of,
in lieu of or in substitution for any capital stock;
(f) Purchase, redeem or otherwise acquire, directly or
indirectly, any shares of capital stock of Target or its subsidiaries, except
repurchases of unvested shares at cost in connection with the termination of the
employment relationship with any employee pursuant to stock option or purchase
agreements in effect on the date hereof;
(g) Issue, deliver, sell, authorize, pledge or otherwise
encumber or propose any of the foregoing with respect to any shares of capital
stock or any securities convertible into shares of capital stock, or
subscriptions, rights, warrants or options to acquire any shares of capital
stock or any securities convertible into shares of capital stock, or enter into
other agreements or commitments of any character obligating it to issue any such
shares or convertible securities, other than the issuance, delivery and/or sale
of shares of Target Common Stock pursuant to the exercise of stock options
therefor outstanding as of the date of this Agreement;
(h) Cause, permit or propose any amendments to its
Articles of Incorporation or Bylaw (or similar governing instruments of any
subsidiaries);
(i) Acquire or agree to acquire by merging or
consolidating with, or by purchasing any equity interest in or a material
portion of the assets of, or by any other manner, any business or any
corporation, partnership, association or other business organization or division
thereof, or otherwise acquire or agree to acquire any assets which are material,
individually or in the aggregate, to the business of Target or enter into any
joint ventures,
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strategic partnerships or alliances, other than in the ordinary course of
business consistent with past practice;
(j) Sell, lease, license, encumber or otherwise dispose
of any properties or assets except (i) sales of inventory in the ordinary course
of business consistent with past practice and (ii) the sale, lease or
disposition (other than through licensing) of property or assets which are not
material, individually or in the aggregate, to the business of Target;
(k) Incur any indebtedness for borrowed money or
guarantee any such indebtedness of another person, issue or sell any debt
securities or options, warrants, calls or other rights to acquire any debt
securities of Target enter into any "keep well" or other agreement to maintain
any financial statement condition or enter into any arrangement having the
economic effect of any of the foregoing other than (i) in connection with the
financing of ordinary course trade payables consistent with past practice or
(ii) pursuant to existing credit facilities in the ordinary course of business;
(l) Adopt or amend any employee benefit plan or employee
stock purchase or employee stock option plan, or enter into any employment
contract or collective bargaining agreement (other than offer letters and letter
agreements entered into in the ordinary course of business consistent with past
practice with employees who are terminable "at will"), pay any special bonus or
special remuneration to any director or employee, or increase the salaries or
wage rates or fringe benefits (including rights to severance or indemnification)
of its directors, officers, employees or consultants;
(m) Make any individual or series of related payments
outside of the ordinary course of business in excess of $50,000 individually or
$100,000 in the aggregate (with a series of related payments being treated for
this purpose as a single payment).
(n) Except in the ordinary course of business consistent
with past practice, modify, amend or terminate any material contract or
agreement to which Target or any of its subsidiaries is a party or waive, delay
the exercise of, release or assign any material rights or claims thereunder;
(o) Enter into or materially modify any contracts,
agreements or obligations relating to the distribution, sale, license or
marketing by third parties of Target's products, as the case may be, or products
licensed by Target;
(p) Revalue any of its assets or, except as required by
GAAP, make any change in accounting methods, principles or practices;
(q) Incur or enter into any agreement or commitment
outside of the ordinary course of business in excess of $50,000 individually or
$100,000 in the aggregate (with a series of related agreements and or
commitments being treated for this purpose as a single agreement or commitment);
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(r) Hire any employee with an annual compensation level
in excess of $100,000;
(s) Pay, discharge or satisfy any claim, liability or
obligation (absolute, accrued, asserted or unasserted, contingent or otherwise),
other than the payment, discharge or satisfaction in the ordinary course of
business;
(t) Make any grant of exclusive rights to any third
party; or
(u) Agree in writing or otherwise to take any of the
actions described in Section 5.1 (a) through (t) above.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 PROXY STATEMENT; OTHER FILINGS.
(a) As promptly as practicable after the execution of
this Agreement, Target will prepare and file with the SEC the preliminary Proxy
Statement. Target will respond promptly to any comments of the SEC, will use its
best efforts to complete the definitive Proxy Statement and will cause such
definitive Proxy Statement to be mailed to the Target Shareholders at the
earliest practicable time. As promptly as practicable after the date of this
Agreement, or the Effective Time, whichever is applicable, Target and Parent
will prepare and file any other filings required under the Exchange Act, the
Securities Act or the rules and regulations of the National Association of
Securities Dealers, Inc. (the "NASD") or NASDAQ relating to the Merger and the
transactions contemplated by this Agreement (the "OTHER FILINGS"). Target will
notify Parent promptly upon the receipt of any comments from the SEC or its
staff and of any request by the SEC or its staff or any other government
officials for amendments or supplements to the Proxy Statement or any Other
Filing made by Target or for additional information and will supply Parent with
copies of all correspondence between Target or any of its representatives, on
the one hand, and the SEC, or its staff or any other government officials, on
the other hand, with respect to the Proxy Statement, the Merger or any Other
Filing. The Proxy Statement and Other Filings made by Target or Parent will
comply in all material respects with all applicable requirements of law and the
rules and regulations promulgated thereunder. Whenever any event occurs which is
required to be set forth in an amendment or supplement to the Proxy Statement,
or any Other Filing, Target will promptly inform Parent of such occurrence and
cooperate in filing with the SEC or its staff or any other government officials,
and/or mailing to the Target Shareholders, such amendment or supplement.
(b) Subject to Section 6.2(c), the Proxy Statement will
also include the recommendation of the Board of Directors of Target in favor of
adoption and approval of this Agreement and approval of the Merger.
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6.2 MEETING OF SHAREHOLDERS.
(a) Promptly after the date hereof, Target will take all
action necessary in accordance with Florida Law and its Articles of
Incorporation and Bylaws to convene the Shareholders' Meeting to be held as
promptly as practicable, for the purpose of voting upon this Agreement and the
Merger. Subject to Section 6.2(c), Target will use its commercially reasonable
best efforts (as defined in Section 9.3) to solicit from the Target
Shareholders, proxies in favor of the adoption and approval of this Agreement
and the approval of the Merger. Subject to Section 6.2(c), Target will take all
other action necessary or advisable to secure the vote or consent of the Target
Shareholders required by Florida Law and all other applicable legal requirements
to obtain such approvals.
(b) Subject to Section 6.2(c): (i) the Board of Directors
of Target shall unanimously recommend that the Target Shareholders vote in favor
of and adopt and approve this Agreement and the Merger at the Shareholders'
Meeting; (ii) the Proxy Statement shall include a statement to the effect that
the Board of Directors of Target has unanimously recommended that the Target
Shareholders vote in favor of and adopt and approve this Agreement and approve
the Merger at the Shareholders' Meeting; and (iii) neither the Board of
Directors of Target, nor any committee thereof shall withdraw, amend or modify,
or propose or resolve to withdraw, amend or modify in a manner adverse to
Parent, the unanimous recommendation of the Board of Directors of Target that
the Target Shareholders vote in favor of and adopt and approve this Agreement
and approve the Merger. For purposes of this Agreement, said recommendation of
the Board of Directors shall be deemed to have been modified in a manner adverse
to the Parent if said recommendation shall no longer be unanimous.
(c) Nothing in this Agreement shall prevent the Board of
Directors of Target from withholding, withdrawing, amending or modifying its
unanimous recommendation in favor of this Agreement and the Merger if (i) a
Superior Offer (as defined below) is made to Target and is not withdrawn, (ii)
neither Target nor any of its representatives shall have violated any of the
restrictions set forth in Section 6.4(a), and (iii) the Board of Directors of
Target concludes in good faith, after consultation with its outside counsel,
that, in light of such Superior Offer, the withholding, withdrawal, amendment or
modification of such recommendation is required in order for the Board of
Directors of Target to comply with its fiduciary obligations to the Target
Shareholders under applicable law. Nothing contained in this Section 6.2 shall
limit Target's obligation to hold and convene the Shareholders' Meeting
(regardless of whether the unanimous recommendation of the Board of Directors of
Target shall have been withdrawn, amended or modified). For purposes of this
Agreement, a "SUPERIOR OFFER" shall mean an unsolicited, bona fide written offer
made by a third party to consummate any of the following transactions: (i) a
merger, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving Target, pursuant to which the
shareholders of Target immediately preceding such transaction hold less than 50%
of the equity interest in the surviving or resulting entity of such transaction;
(ii) a sale or other disposition by Target of assets (excluding inventory and
used equipment sold in the ordinary course of business) representing in excess
of 50% of the fair market value of Target's business immediately prior to such
sale, or (iii) the acquisition by any person or group (including by way of a
tender offer or an exchange offer or issuance by Target), directly or
indirectly, of beneficial ownership or a right to acquire beneficial ownership
of shares representing in excess of 50% of the voting power of the then
outstanding shares of
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capital stock of Target, in each case on terms that the Board of Directors of
Target determines, in its reasonable judgment (after consultation with its
financial advisor) to be more favorable to the Target Shareholders from a
financial point of view than the terms of the Merger; provided, however, that
any such offer shall not be deemed to be a "Superior Offer" if any financing
required to consummate the transaction contemplated by such offer is not
committed and is not likely in the judgment of Target's Board of Directors to be
obtained by such third party on a timely basis.
6.3 ACCESS TO INFORMATION; CONFIDENTIALITY.
(a) Target will afford the Parent and its accountants, counsel and
other representatives reasonable access during normal business hours to the
properties, books, records and personnel of the Target during the period prior
to the Effective Time or until this Agreement is terminated in accordance with
its terms, to obtain all information concerning the business, properties,
results of operations and personnel of Target, as Parent may reasonably request.
No information or knowledge obtained in any investigation pursuant to this
Section 6.3 will 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.
(b) The parties acknowledge that Target and Parent have previously
executed a Confidentiality Agreement, dated October 3, 2000 (the
"CONFIDENTIALITY AGREEMENT"), which Confidentiality Agreement will continue in
full force and effect in accordance with its terms.
6.4 NO SOLICITATION.
(a) Except as otherwise provided in this Section 6.4(a), from and
after the date of this Agreement until the Effective Time or termination of this
Agreement pursuant to Article VIII, Target and its subsidiaries will not, nor
will they authorize or permit any of their respective officers, directors,
affiliates or employees or any investment banker, attorney or other advisor or
representative retained by any of them to, directly or indirectly (A) solicit,
initiate, encourage or induce the making, submission or announcement of any
Acquisition Proposal (as defined below), (B) participate in any discussions or
negotiations regarding, or furnish to any person any non-public information with
respect to, or take any other action to facilitate any inquiries or the making
of any proposal that constitutes or may reasonably be expected to lead to, any
Acquisition Proposal, (C) engage in discussions with any person with respect to
any Acquisition Proposal, except as to the existence of these provisions, (D)
subject to Section 6.2(c), approve, endorse or recommend any Acquisition
Proposal or (E) enter into any letter of intent or similar document or any
contract, agreement or commitment contemplating or otherwise relating to any
Acquisition Transaction (as defined below); provided, however, until the date on
which this Agreement is approved by the required vote of the Target
Shareholders, this Section 6.4(a) shall not prohibit Target from furnishing
nonpublic information regarding Target and its subsidiaries to, entering into a
confidentiality agreement with or entering into discussions with, any person or
group in response to a Superior Offer submitted by such person or group (and not
withdrawn) if (1) neither Target nor any representative of Target and its
subsidiaries shall have violated any of the restrictions set forth in this
Section 6.4(a), (2) the Board of Directors of Target concludes in good faith,
after consultation with its outside legal counsel, that such action is required
in order
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for the Board of Directors of Target to comply with its fiduciary obligations to
the Target Shareholders under applicable law, (3) (x) at least three (3) days
prior to furnishing any such nonpublic information to, or entering into
discussions or negotiations with, such person or group, Target gives Parent
written notice of the identity of such person or group and of Target's intention
to furnish nonpublic information to, or enter into discussions or negotiations
with, such person or group and (y) Target receives from such person or group an
executed confidentiality agreement containing customary limitations on the use
and disclosure of all nonpublic written and oral information furnished to such
person or group by or on behalf of Target and containing terms no less favorable
to the disclosing party than the terms of the Confidentiality Agreement, and (4)
contemporaneously with furnishing any such nonpublic information to such person
or group, Target furnishes such nonpublic information to Parent (to the extent
such nonpublic information has not been previously furnished by Target to
Parent). Target and its subsidiaries will immediately cease any and all existing
activities, discussions or negotiations with any parties conducted heretofore
with respect to any Acquisition Proposal. Without limiting the foregoing, it is
understood that any violation of the restrictions set forth in the preceding two
sentences by any officer or director of Target or any of its subsidiaries or any
investment banker, attorney or other advisor or representative of Target or any
of its subsidiaries shall be deemed to be a breach of this Section 6.4(a) by
Target. In addition to the foregoing, Target shall (i) provide Parent with at
least forty-eight (48) hours prior notice (or such lesser prior notice as
provided to the members of Target's Board of Directors but in no event less than
eight hours) of any meeting of Target's Board of Directors at which Target's
Board of Directors is reasonably expected to consider a Superior Offer and (ii)
provide Parent with at least three (3) business days prior written notice of a
meeting of Target's Board of Directors at which Target's Board of Directors is
reasonably expected to recommend a Superior Offer to its shareholders and
together with such notice a copy of the definitive documentation relating to
such Superior Offer.
(b) For purposes of this Agreement, an "ACQUISITION
PROPOSAL" shall mean any offer or proposal (other than an offer or proposal by
Parent) relating to any Acquisition Transaction. For the purposes of this
Agreement, an "ACQUISITION TRANSACTION" shall mean any transaction or series of
related transactions other than the transactions contemplated by this Agreement
involving: (A) any acquisition or purchase from Target by any person or "group"
(as defined under Section 13(d) of the Exchange Act and the rules and
regulations thereunder) of more than a 5% interest in the total outstanding
voting securities of Target or any of its subsidiaries or any tender offer or
exchange offer that if consummated would result in any person or "group" (as
defined under Section 13(d) of the Exchange Act and the rules and regulations
thereunder) beneficially owning 5% or more of the total outstanding voting
securities of Target or any of its subsidiaries or any merger, consolidation,
business combination or similar transaction involving Target pursuant to which
the shareholders of Target immediately preceding such transaction hold less than
95% of the equity interests in the surviving or resulting entity of such
transaction; (B) any sale, lease (other than in the ordinary course of
business), exchange, transfer, license (other than in the ordinary course of
business), acquisition or disposition of more than 5% of the assets of Target;
or (C) any liquidation or dissolution of Target.
(c) In addition to the obligations of Target set forth in
paragraph (a) of this Section 6.4, Target as promptly as practicable, and in any
event within twenty-four (24) hours,
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shall advise Parent orally and in writing of any request received by Target for
non-public information which Target reasonably believes would lead to an
Acquisition Proposal or of any Acquisition Proposal, the material terms and
conditions of such request, Acquisition Proposal or inquiry, and the identity of
the person or group making any such request, Acquisition Proposal or inquiry.
Target will keep Parent informed in all material respects of the status and
details (including material amendments or proposed amendments) of any such
request, Acquisition Proposal or inquiry.
6.5 PUBLIC DISCLOSURE. Parent and Target will consult with each
other and agree before issuing any press release or otherwise making any public
statement with respect to the Merger, this Agreement, or an Acquisition Proposal
and will not issue any such press release or make any such public statement
prior to such agreement, except as may be required by law or any listing
agreement with a national securities exchange or NASDAQ, in which case
reasonable efforts to consult with the other party will be made prior to such
release or public statement; provided, however, that no such consultation or
agreement shall be required if, prior to the date of such release or public
statement, either party shall have withheld, withdrawn, amended or modified its
unanimous recommendation in favor of the Merger.
6.6 LEGAL REQUIREMENTS. Each of Parent and Target will take all
reasonable actions necessary or desirable to comply promptly with all legal
requirements which may be imposed on them with respect to the consummation of
the transactions contemplated by this Agreement (including furnishing all
information required in connection with approvals of or filings with any
Governmental Entity, and prompt resolution of any litigation prompted hereby)
and will promptly cooperate with and furnish information to any party hereto
necessary in connection with any such requirements imposed upon any of them or
their respective subsidiaries in connection with the consummation of the
transactions contemplated by this Agreement.
6.7 THIRD PARTY CONSENTS. As soon as practicable following the
date hereof, Target will use its commercially reasonable best efforts to obtain
all material consents, waivers and approvals under any of its or its
subsidiaries' agreements, contracts, licenses or leases required to be obtained
in connection with the consummation of the transactions contemplated hereby.
6.8 FIRPTA. At or prior to the Closing, Target, if requested by
Parent, shall deliver to the IRS a notice that the Target Common Stock is not a
"U.S. Real Property Interest" as defined and in accordance with the requirements
of Treasury Regulation Section 1.897-2(h)(2).
6.9 NOTIFICATION OF CERTAIN MATTERS. Parent and Target will give
prompt notice to the other of the occurrence, or failure to occur, of any event,
which occurrence or failure to occur would be reasonably likely to cause (a) any
representation or warranty contained in this Agreement to be untrue or
inaccurate at any time from the date of this Agreement to the Effective Time,
such that the conditions set forth in Section 7.2(a) or 7.3(a), as the case may
be, would not be satisfied as a result thereof, or (b) any material failure of
Parent or Target, as the case may be, or of any officer, director, employee or
agent thereof, to comply with or satisfy any covenant, condition or agreement to
be complied with or satisfied by it under this Agreement. Notwithstanding the
above, the delivery of any notice pursuant to this Section will not limit or
otherwise affect the remedies available hereunder to the party receiving such
notice.
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6.10 COMMERCIALLY REASONABLE EFFORTS AND FURTHER ASSURANCES.
Subject to the respective rights and obligations of Parent and Target under this
Agreement, each of the parties to this Agreement will use its commercially
reasonable best efforts (as defined in Section 9.3) to effectuate the Merger and
the other transactions contemplated hereby and to fulfill and cause to be
fulfilled the conditions to closing under this Agreement. Each party hereto, at
the reasonable request of another party hereto, will execute and deliver such
other instruments and do and perform such other acts and things as may be
necessary or desirable for effecting completely the consummation of the
transactions contemplated hereby.
6.11 INDEMNIFICATION OF TARGET DIRECTORS AND OFFICERS.
(a) From and after the Effective Time, Parent and the
Surviving Corporation will fulfill and honor in all respects the obligations of
Target pursuant to any indemnification obligations set forth in the Target's
Articles of Incorporation and Bylaws and any Florida Law, and any obligations
under agreements between Target and its directors and officers existing prior to
the date hereof. The Articles of Incorporation and Bylaws of the Surviving
Corporation will contain the provisions with respect to indemnification and
elimination of liability for monetary damages set forth in the Articles of
Incorporation and Bylaws of Target, which provisions will not be amended,
repealed or otherwise modified for a period of six (6) years from the Effective
Time in any manner that would adversely affect the rights thereunder of
individuals who, at the Effective Time, were directors, officers, employees or
agents of Target, unless such modification is required by law.
(b) For a period of six (6) years after the Effective
Time, Parent will, or will cause the Surviving Corporation to, use its
commercially reasonable best efforts (as defined in Section 9.3) to maintain in
effect, if available, directors' and officers' liability insurance covering
those persons who are currently covered by Target's directors' and officers'
liability insurance policy on terms comparable to those applicable to the then
current directors and officers of Parent; provided, however, that in no event
will Parent or the Surviving Corporation be required to expend in an annual
premium for such coverage (or such coverage as is available for such annual
premium) in excess of 200% of the last annual premium paid immediately prior to
the date hereof by the Target for such coverage.
(c) This Section 6.11 will survive any termination of
this Agreement and the consummation of the Merger at the Effective Time and will
be binding on all successors and assigns of Parent and the Surviving
Corporation. In the event that Parent, the Surviving Corporation or any of their
respective successors or assigns (i) consolidates with or merges into any other
person or entity and shall not be the continuing or surviving corporation or
entity of such consolidation or merger, or (ii) transfers or conveys all or a
substantial portion of its properties or assets to any person or entity, then,
and in each such case, to the extent necessary to effectuate the purposes of
this Section 6.11, proper provision shall be made so that the successors and the
assigns of Parent and the Surviving Corporation assume the obligations set forth
in this Section 6.11.
6.12 REGULATORY FILINGS; REASONABLE EFFORTS. As soon as may be
reasonably practicable, Target and Parent each shall file with the United States
Federal Trade Commission
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(the "FTC") and the Antitrust Division of the United States Department of
Justice ("DOJ") Notification and Report Forms relating to the transactions
contemplated herein as required by the HSR Act, as well as comparable pre-merger
notification forms required by the merger notification or control laws and
regulations of any applicable jurisdiction, as agreed to by the parties. Target
and Parent each shall promptly (a) supply the other with any information which
may be required in order to effectuate such filings and (b) supply any
additional information which reasonably may be required by the FTC, the DOJ or
the competition or merger control authorities of any other jurisdiction and
which the parties may reasonably deem appropriate.
6.13 REGISTRATION ON FROM S-8. Parent agrees to file a registration
statement on From S-8 for the shares of Parent Common Stock issuable with
respect to assumed Target Options as soon as is reasonably practicable after the
Effective time. Parent shall maintain the effectiveness of such registration
statement (or a successor or substitute registration) thereafter for so long as
any of such Target Options remain outstanding.
6.14 AMENDMENT OF STOCK OPTION AGREEMENTS. Prior to Closing, Target
shall amend any stock option agreement granting Target Options the exercise
price per share of which is greater than $9.75 to reduce the exercise price per
share to $9.75, it being the intent of the parties hereto that at Closing there
will be no Target Options with an exercise price per share in excess of $9.75.
ARTICLE VII
CONDITIONS TO THE MERGER
7.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER.
The respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) Shareholder Approval. This Agreement shall have been
approved and adopted, and the Merger shall have been duly approved, by the
requisite vote under applicable law by the shareholders of Target.
(b) Proxy Statement. The definitive Proxy Statement shall
have been released for mailing to the Target Shareholders and no stop order
suspending the effectiveness of the Proxy Statement or any part thereof shall
have been issued and no proceeding for that purpose shall have been initiated or
threatened in writing by the SEC.
(c) No Order; HSR Act. No Governmental Entity shall have
enacted, issued, promulgated, enforced or entered any statute, rule, regulation,
executive order, decree, injunction or other order (whether temporary,
preliminary or permanent) which is in effect and which has the effect of making
the Merger illegal or otherwise prohibiting consummation of the Merger. All
waiting periods, if any, under the HSR Act relating to the transactions
contemplated hereby will have expired or terminated early.
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7.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF TARGET. The obligation
of Target to consummate and effect the Merger shall be subject to the
satisfaction at or prior to the Effective Time of each of the following
conditions, any of which may be waived, in writing, exclusively by Target:
(a) Representations and Warranties. The representations
and warranties of Parent contained in this Agreement shall have been true and
correct as of the date of this Agreement, except where the failure to be so true
and correct would not, in the aggregate, have a Material Adverse Effect on
Parent. In addition, the representations and warranties of Parent contained in
this Agreement shall be true and correct on and as of the Effective Time except
for changes contemplated by this Agreement and except for those representations
and warranties which address matters only as of a particular date (which shall
remain true and correct as of such particular date), with the same force and
effect as if made on and as of the Effective Time, except in such cases where
the failure to be so true and correct would not, in the aggregate, have a
Material Adverse Effect on Parent. Target shall have received a certificate with
respect to the foregoing signed on behalf of Parent by the Chief Executive
Officer and the Chief Financial Officer of Parent; and
(b) Agreements and Covenants. Parent and Subsidiary shall
have performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with by them on
or prior to the Effective Time, and Target shall have received a certificate to
such effect signed on behalf of Parent by the Chief Executive Officer and the
Chief Financial Officer of Parent.
7.3 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF PARENT. The
obligations of Parent and the Subsidiary to consummate and effect the Merger
shall be subject to the satisfaction at or prior to the Effective Time of each
of the following conditions, any of which may be waived, in writing exclusively
by Parent:
(a) Representations and Warranties. The representations
and warranties of Target contained in this Agreement shall have been true and
correct as of the date of this Agreement, except where the failure to be so true
and correct would not, in the aggregate, have a Material Adverse Effect on
Target. In addition, the representations and warranties of Target contained in
this Agreement shall be true and correct on and as of the Effective Time except
for changes contemplated by this Agreement and except for those representations
and warranties which address matters only as of a particular date (which shall
remain true and correct as of such particular date), with the same force and
effect as if made on and as of the Effective Time, except in such cases (other
than the representations in Sections 3.2 and 3.3) where the failure to be so
true and correct would not, in the aggregate, have a Material Adverse Effect on
Target. Parent shall have received a certificate with respect to the foregoing
signed on behalf of Target by the President and the Chief Financial Officer of
Target; and
(b) Agreements and Covenants. Target shall have performed
or complied in all material respects with all agreements and covenants required
by this Agreement to be performed or complied with by it on or prior to the
Effective Time, and the Parent shall have
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received a certificate to such effect signed on behalf of Target by the
President and the Chief Financial Officer of Target.
(c) Employment Agreement. An employment agreement,
reasonably acceptable to Parent and Xxxxxxx Xxxxxxxxxx, shall have been executed
by each of them.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.1 TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval of the Merger by
the shareholders of Target:
(a) by mutual written consent duly authorized by the
Boards of Directors of Parent and Target;
(b) by either Target or Parent if the Merger shall not
have been consummated by January 31, 2001; provided, however, that the right to
terminate this Agreement under this Section 8.1(b) shall not be available to any
party whose action or failure to act has been a principal cause of or resulted
in the failure of the Merger to occur on or before such date and such action or
failure to act constitutes a breach of this Agreement;
(c) by either Target or Parent if a governmental entity
shall have issued an order, decree or ruling or taken any other action, in any
case having the effect of permanently restraining, enjoining or otherwise
prohibiting the Merger, which order, decree or ruling is final and
nonappealable;
(d) by either Target or Parent if the required approvals
of the shareholders of Target contemplated by this Agreement shall not have been
obtained by reason of the failure to obtain the required vote upon a vote taken
at a meeting of shareholders duly convened therefor or at any adjournment
thereof; provided, however, that the right to terminate this Agreement under
this Section 8.1(d) shall not be available to Target where such failure to
obtain shareholder approval shall have been caused by the action or failure to
act of Target in breach of this Agreement;
(e) by Target, upon a breach of any representation,
warranty, covenant or agreement on the part of Parent set forth in this
Agreement, or if any representation or warranty of Parent shall have become
untrue, in either case such that the conditions set forth in Section 7.2(a) or
Section 7.2(b) would not be satisfied as of the time of such breach or as of the
time such representation or warranty shall have become untrue, provided, that if
such inaccuracy in Parent's representations and warranties or breach by Parent
is curable by Parent through the exercise of its commercially reasonable best
efforts, then Target may not terminate this Agreement under this Section 8.1(e)
for thirty (30) days after delivery of written notice from Target to Parent of
such breach, provided Parent continues to exercise commercially reasonable best
efforts to cure such breach (it being understood that Target may not terminate
this Agreement pursuant to this paragraph (e) if such breach by Parent is cured
during such thirty (30)-day period);
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(f) by Parent, upon a breach of any representation,
warranty, covenant or agreement on the part of Target set forth in this
Agreement, or if any representation or warranty of Target shall have become
untrue, in either case such that the conditions set forth in Section 7.3(a) or
Section 7.3(b) would not be satisfied as of the time of such breach or as of the
time such representation or warranty shall have become untrue, provided, that if
such inaccuracy in Target's representations and warranties or breach by Target
is curable by Target through the exercise of its commercially reasonable best
efforts, then Parent may not terminate this Agreement under this Section 8.1(f)
for thirty (30) days after delivery of written notice from Parent to Target of
such breach, provided Target continues to exercise commercially reasonable best
efforts to cure such breach (it being understood that Parent may not terminate
this Agreement pursuant to this paragraph (f) if such breach by Target is cured
during such thirty (30)-day period);
(g) by Parent or Target if a Triggering Event (as defined
below) shall have occurred.
For the purposes of this Agreement, a "TRIGGERING EVENT" shall be
deemed to have occurred if: (i) the Board of Directors of Target or any
committee thereof shall for any reason have withdrawn or shall have amended or
modified in a manner adverse to Parent its unanimous recommendation in favor of
the adoption and approval of the Agreement or the approval of the Merger; (ii)
Target shall have failed to include in the Proxy Statement the unanimous
recommendation of the Board of Directors of Target in favor of the adoption and
approval of the Agreement and the approval of the Merger; (iii) the Board of
Directors of Target fails to reaffirm its unanimous recommendation in favor of
the adoption and approval of the Agreement and the approval of the Merger within
ten (10) business days after Parent requests in writing that such recommendation
be reaffirmed at any time following the announcement of an Acquisition Proposal;
(iv) the Board of Directors of Target or any committee thereof shall have
approved or recommended any Acquisition Proposal; (v) Target shall have entered
into any letter of intent or similar document or any agreement, contract or
commitment accepting any Acquisition Proposal; (vi) a tender or exchange offer
relating to securities of Target shall have been commenced by a person
unaffiliated with Parent and Target shall not have sent to its security holders
pursuant to Rule 14e-2 promulgated under the Securities Act, within ten (10)
business 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 (vii) Target shall have breached any of the provisions of
Section 6.4(a) of this Agreement.
8.2 NOTICE OF TERMINATION; EFFECT OF TERMINATION. Any termination
of this Agreement under Section 8.1 above will be effective immediately upon the
delivery of written notice of the terminating party to the other parties hereto.
In the event of the termination of this Agreement as provided in Section 8.1,
this Agreement shall be of no further force or effect, except (i) as set forth
in this Section 8.2, Section 8.3 and Article X (General Provisions), each of
which shall survive the termination of this Agreement, and (ii) nothing herein
shall relieve any party from liability for any willful breach of this Agreement.
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8.3 FEES AND EXPENSES.
(a) General. Except as set forth in this Section 8.3, 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
Parent and Target shall share equally all filing fees incurred for the
pre-merger notification and report forms under the HSR Act.
(b) Certain Payments by Target.
(i) Target shall pay to Parent in immediately
available funds, within two (2) business days after demand by Parent, an amount
equal to $2,500,000 (the "TARGET TERMINATION FEE") if this Agreement is
terminated by Parent or Target pursuant to Section 8.1(g).
(ii) Target shall pay Parent in immediately
available funds, within two (2) business days after demand by Parent, an amount
equal to the Target Termination Fee, if this Agreement is terminated by Parent
or Target pursuant to Section 8.1(b) or Section 8.1(d) as a result of Target's
failure to obtain the required approvals of the shareholders of Target and
either of the following shall occur:
(1) if following the date hereof and
prior to the termination of this Agreement, a third party has announced an
Acquisition Proposal and within twelve (12) months following the termination of
this Agreement a Target Acquisition (as defined below) is consummated; or
(2) if following the date hereof and
prior to the termination of this Agreement, a third party has announced an
Acquisition Proposal and within twelve (12) months following the termination of
this Agreement Target enters into an agreement or letter of intent providing for
a Target Acquisition.
(iii) Target shall pay to Parent in immediately
available funds, within two (2) business days after demand by Parent, an amount
equal to the Target Termination Fee if all of the following occur: (A) this
Agreement is terminated by Parent pursuant to Section 8.1(b), (B) all of the
conditions precedent to Target's obligations to effect the Merger set forth in
Article VII have been satisfied or waived in writing by Target, and (C) Target
has nevertheless failed or refused to effect the Merger in accordance with the
terms of this Agreement.
(c) Certain Payments by Parent. Parent shall pay to
Target in immediately available funds, within two (2) business days after demand
by Target, an amount equal to $2,500,000 if all of the following occur: (1) this
Agreement is terminated by Target pursuant to to Section 8.1(b), (2) all of the
conditions precedent to Parent's obligations to effect the Merger set forth in
Article VII have been satisfied or waived in writing by Parent, and (3) Parent
has nevertheless failed or refused to effect the Merger in accordance with the
terms of this Agreement.
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(d) The parties acknowledge that the agreements contained
in Sections 8.3(b) and 8.3(c) are an integral part of the transactions
contemplated by this Agreement, and that, without these agreements, the parties
would not enter into this Agreement; accordingly, if Target or Parent, as
applicable, fails to pay in a timely manner the amounts due pursuant to Section
8.3(b) or 8.3(c) and, in order to obtain such payment, the other party makes a
claim that results in a judgment for the amounts set forth in Section 8.3(b) or
8.3(c), the party against whom the judgment is rendered shall pay the prevailing
party its reasonable costs and expenses (including reasonable attorneys' fees
and expenses) in connection with such suit, together with interest on the
amounts set forth in Section 8.3(b) or 8.3(c) at the prime rate of The Chase
Manhattan Bank in effect on the date such payment was required to be made.
Payment of the fees described in Section 8.3(b) or 8.3(c) shall not be in lieu
of damages incurred in the event of willful breach of this Agreement. For the
purposes of this Agreement, "TARGET ACQUISITION" shall mean any of the following
transactions (other than the transactions contemplated by this Agreement): (i) a
merger, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving Target pursuant to which the
shareholders of Target immediately preceding such transaction hold less than 50%
of the aggregate equity interests in the surviving or resulting entity of such
transaction, (ii) a sale or other disposition by Target of assets representing
in excess of 50% of the aggregate fair market value of Target's business
immediately prior to such sale or (iii) the acquisition by any person or group
(including by way of a tender offer or an exchange offer or issuance by Target),
directly or indirectly, of beneficial ownership or a right to acquire beneficial
ownership of shares representing in excess of 50% of the voting power of the
then outstanding shares of capital stock of Target.
8.4 AMENDMENT. Subject to applicable law, this Agreement may be
amended by the parties hereto at any time by execution of an instrument in
writing signed on behalf of Parent and Target.
8.5 EXTENSION; WAIVER. At any time prior to the Effective Time any
party hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto and (iii)
waive compliance with any of the agreements or conditions for the benefit of
such party contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party. Delay in exercising any right under this
Agreement shall not constitute a waiver of such right.
ARTICLE IX
GENERAL PROVISIONS
9.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Target and Parent contained in this Agreement
shall terminate at the Effective Time, and only the covenants that by their
terms survive the Effective Time shall survive the Effective Time.
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9.2 NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally or by commercial
delivery service, or sent via facsimile (receipt confirmed) to the parties at
the following addresses or facsimile numbers (or at such other address or
facsimile numbers for a party as shall be specified by like notice):
(a) if to Target, to:
Equinox Systems Inc.
Xxx Xxxxxxx Xxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx Xxxxxxxxxx
Fax No.: (000) 000-0000
with a copy to:
Xxx Xxxxxxx, Esq.
Xxxxxxxxx Xxxxxxx
0000 Xxxxxxxx Xxx.
Xxxxx, Xxxxxxx 00000
Fax No.: (000) 000-0000
(b) if to Parent or Subsidiary, to:
Avocent Corporation
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xx. Xxxxxxx Xxxxxxxx
Xx. Xxxxx Xxxxxxxxx
Fax No.: (000) 000-0000
with a copy to:
Xxxx X. Xxxxxx, Esq.
Sirote & Permutt
0000 Xxxxxxxx Xxx. Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Fax No.: (000) 000-0000
9.3 INTERPRETATION; KNOWLEDGE.
(a) 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." The table of contents and headings contained in this
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Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. When reference is made herein to
"THE BUSINESS OF" an entity, such reference shall be deemed to include the
business of all direct and indirect subsidiaries of such entity. Reference to
the subsidiaries of an entity shall be deemed to include all direct and indirect
subsidiaries of such entity.
(b) For purposes of this Agreement, the term "KNOWLEDGE"
means, with respect to any matter in question, that the executive officers of
Target or Parent, as the case may be, have actual knowledge of such matter.
(c) For purposes of this Agreement, the term "MATERIAL
ADVERSE EFFECT" when used in connection with an entity means any change, event,
violation, inaccuracy, circumstance or effect that is materially adverse to the
business, assets (including intangible assets), capitalization, financial
condition or results of operations of such entity and its subsidiaries taken as
a whole; provided, however, that in no event shall (A) a decrease in such
entity's stock price or the failure to meet or exceed Wall Street research
analysts' or such entity's internal earnings or other estimates or projections
in and of itself constitute a Material Adverse Effect or (B) any change, event,
violation, inaccuracy, circumstance or effect that results from (x) the public
announcement or pendency of the transactions contemplated hereby, (y) changes
affecting the Parent's and Target's respective industry generally or (z) changes
affecting the United States economy generally, constitute a Material Adverse
Effect.
(d) For purposes of this Agreement, "COMMERCIALLY
REASONABLE BEST EFFORTS" means the efforts that a prudent person or entity
desirous of achieving a result would use in similar circumstances to ensure that
such result is achieved as expeditiously as possible; provided, however, that an
obligation to use commercially reasonable best efforts under this Agreement does
not require the person or entity subject to that obligation to take actions that
would result in a Material Adverse Effect on such person or entity or that would
materially reduce the benefits to such person or entity of this Agreement and
the Merger.
9.4 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
9.5 ENTIRE AGREEMENT. This Agreement, including the Disclosure
Schedules, (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, it being understood that the Confidentiality Agreement shall continue in
full force and effect until the Closing and shall survive any termination of
this Agreement; and (b) are not intended to confer upon any other person any
rights or remedies hereunder, except as set forth herein.
9.6 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
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reasonably to effect the intent of the parties hereto. The parties further agree
to replace such void or unenforceable provision of this Agreement with a valid
and enforceable provision that will achieve, to the extent possible, the
economic, business and other purposes of such void or unenforceable provision.
9.7 OTHER REMEDIES; SPECIFIC PERFORMANCE. 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. The parties
hereto agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions hereof in
any court of the United States or any state having jurisdiction, this being in
addition to any other remedy to which they are entitled at law or in equity.
9.8 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware (except that the
rights and obligations of Target Shareholders with respect to the Merger shall
be governed by Florida Law), regardless of the laws that might otherwise govern
under applicable principles of conflicts of law thereof.
9.9 RULES OF CONSTRUCTION. The parties hereto agree that they have
been represented by counsel during the negotiation 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.
9.10 ASSIGNMENT. No party may assign either this Agreement or any
of its rights, interests, or obligations hereunder without the prior written
approval of the other parties. Subject to the preceding sentence, this Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors and permitted assigns.
9.11 WAIVER OF JURY TRIAL. EACH OF PARENT AND TARGET HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE ACTIONS OF PARENT AND TARGET IN THE
NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.
[Signature Page Follows]
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IN WITNESS WHEREOF, Parent, Target, and Subsidiary have caused this
Agreement to be executed by their duly authorized respective officers as of the
date first written above.
EQUINOX SYSTEMS INC.
By: /s/ Xxxxxxx X. Xxxxxxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: President & CEO
AVOCENT CORPORATION
By: /s/ Xxxxx X. Xxxxx
-------------------------------
Name: Xxxxx X. Xxxxx
Title: Executive Vice President
BLUE XXXXXX ACQUISITION CORPORATION
By: /s/ Xxxxx X. Xxxxx
-------------------------------
Name: Xxxxx X. Xxxxx
Title: Incorporator
49
****MERGER AGREEMENT****
