Exhibit 99.1
CONFORMED COPY
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AGREEMENT AND PLAN OF MERGER
AND
REORGANIZATION
AMONG
SIEBEL SYSTEMS, INC.,
A DELAWARE CORPORATION;
SYRACUSE ACQUISITION SUB, INC.,
A CALIFORNIA CORPORATION;
AND
SCOPUS TECHNOLOGY, INC.
A CALIFORNIA CORPORATION
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DATED AS OF MARCH 1, 1998
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Section 1. DESCRIPTION OF TRANSACTION................................................ 2
1.1 Merger of Merger Sub into the Company..................................... 2
1.2 Effect of the Merger...................................................... 2
1.3 Closing; Effective Time................................................... 2
1.4 Certificate of Incorporation and Bylaws; Directors and Officers........... 2
1.5 Conversion of Shares...................................................... 3
1.6 Stock Options............................................................. 4
1.7 Closing of the Company's Transfer Books................................... 4
1.8 Exchange of Certificates.................................................. 4
1.9 Dissenting Shares......................................................... 5
1.10 Tax Consequences.......................................................... 6
1.11 Accounting Consequences................................................... 6
1.12 Further Action............................................................ 6
Section 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY............................. 6
2.1 Due Organization; Subsidiaries; Etc....................................... 6
2.2 Articles of Incorporation and Bylaws...................................... 7
2.3 Capitalization, Etc....................................................... 7
2.4 SEC Filings; Financial Statements......................................... 8
2.5 Absence of Changes Since the Date of the Company Balance Sheet............ 9
2.6 Absence of Changes Since the Date of the Unaudited Interim Balance Sheet.. 9
2.7 Leasehold; Equipment...................................................... 11
2.8 Title to Assets........................................................... 11
2.9 Receivables; Significant Customers........................................ 12
2.10 Proprietary Assets........................................................ 12
2.11 Contracts................................................................. 15
2.12 Year 2000 Liabilities..................................................... 17
2.13 Compliance with Legal Requirements........................................ 17
2.14 Governmental Authorizations............................................... 18
2.15 Tax Matters............................................................... 18
i.
TABLE OF CONTENTS
(CONTINUED)
PAGE
2.16 Employee and Labor Matters; Benefit Plans.......................................... 19
2.17 Environmental Matters.............................................................. 21
2.18 Insurance.......................................................................... 22
2.19 Transactions with Affiliates....................................................... 22
2.20 Legal Proceedings; Orders.......................................................... 22
2.21 Authority; Inapplicability of Anti-takeover Statutes; Binding Nature of Agreement.. 23
2.22 No Existing Discussions............................................................ 23
2.23 Accounting Matters................................................................. 23
2.24 Vote Required...................................................................... 23
2.25 Non-Contravention; Consents........................................................ 23
2.26 Fairness Opinion................................................................... 24
2.27 Financial Advisor.................................................................. 24
2.28 Disclosure......................................................................... 25
2.29 Customs............................................................................ 25
Section 3. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB............................ 25
3.1 Organization, Standing and Power................................................... 26
3.2 Certificate of Incorporation and Bylaws............................................ 26
3.3 Capitalization, Etc................................................................ 26
3.4 SEC Filings; Financial Statements.................................................. 26
3.5 Disclosure......................................................................... 27
3.6 Absence of Certain Changes or Events............................................... 27
3.7 Authority; Binding Nature of Agreement............................................. 28
3.8 Non-Contravention; Consents........................................................ 28
3.9 Proprietary Assets................................................................. 28
3.10 Contracts.......................................................................... 29
3.11 Compliance with Legal Requirements................................................. 29
3.12 Tax Matters........................................................................ 29
3.13 Governmental Authorizations........................................................ 30
3.14 Legal Proceedings.................................................................. 30
ii.
TABLE OF CONTENTS
(CONTINUED)
PAGE
3.15 Vote Required....................................... 30
3.16 Valid Issuance...................................... 31
3.17 Accounting Matters.................................. 31
3.18 Fairness Opinion.................................... 31
Section 4. CERTAIN COVENANTS OF THE COMPANY.................... 31
4.1 Access and Investigation............................ 31
4.2 Operation of the Company's Business................. 31
4.3 Operation of the Parent's Business.................. 34
4.4 No Solicitation..................................... 34
4.5 Financial Statements................................ 35
Section 5. ADDITIONAL COVENANTS OF THE PARTIES................. 35
5.1 Registration Statement; Prospectus/Proxy Statement.. 35
5.2 Company Shareholders' Meeting....................... 36
5.3 Parent Stockholders' Meeting........................ 37
5.4 Regulatory Approvals................................ 38
5.5 Stock Options....................................... 39
5.6 Form S-8............................................ 39
5.7 Indemnification of Officers and Directors........... 40
5.8 Pooling of Interests; Tax Free Reorganization....... 40
5.9 Additional Agreements............................... 40
5.10 Confidentiality..................................... 41
5.11 Disclosure.......................................... 41
5.12 Affiliate Agreements................................ 41
5.13 Tax Matters......................................... 41
5.14 Letter of the Company's Accountants................. 42
5.15 Noncompetition Agreements........................... 42
5.16 Nasdaq Listing...................................... 42
5.17 FIRPTA Matters...................................... 42
Section 6. CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND
MERGER SUB.......................................... 42
iii.
TABLE OF CONTENTS
(CONTINUED)
PAGE
6.1 Accuracy of Representations................................... 42
6.2 Performance of Covenants...................................... 43
6.3 Effectiveness of Registration Statement....................... 43
6.4 Stockholder Approval.......................................... 43
6.5 Agreements and Documents...................................... 43
6.6 No Material Adverse Change.................................... 44
6.7 FIRPTA Compliance............................................. 44
6.8 HSR Act....................................................... 44
6.9 Listing....................................................... 44
6.10 No Restraints................................................. 44
6.11 No Governmental Litigation.................................... 44
6.12 1998 Audited Financial Statements............................. 44
Section 7. CONDITIONS PRECEDENT TO OBLIGATION OF THE COMPANY............. 44
7.1 Accuracy of Representations................................... 45
7.2 Performance of Covenants...................................... 45
7.3 Effectiveness of Registration Statement....................... 45
7.4 Stockholder Approval.......................................... 45
7.5 Agreements and Documents...................................... 45
7.6 No Material Adverse Change.................................... 46
7.7 HSR Act....................................................... 46
7.8 Listing....................................................... 46
7.9 No Restraints................................................. 46
Section 8. TERMINATION................................................... 46
8.1 Termination................................................... 46
8.2 Notice of Termination; Effect of Termination.................. 48
8.3 Expenses; Termination Fees.................................... 48
Section 9. MISCELLANEOUS PROVISIONS...................................... 49
9.1 Amendment..................................................... 49
9.2 Waiver........................................................ 49
9.3 No Survival of Representations and Warranties................. 49
iv.
TABLE OF CONTENTS
(CONTINUED)
PAGE
9.4 Entire Agreement; Counterparts................. 50
9.5 Applicable Law; Jurisdiction................... 50
9.6 Disclosure Schedules........................... 50
9.7 Attorneys' Fees................................ 50
9.8 Assignability; Third Party Beneficiaries....... 50
9.9 Notices........................................ 50
9.10 Cooperation.................................... 51
9.11 Liability...................................... 51
9.12 Construction................................... 51
v.
An extra section break has been inserted above this paragraph. Do not delete
this section break if you plan to add text after the Table of
Contents/Authorities. Deleting this break will cause Table of
Contents/Authorities headers and footers to appear on any pages following the
Table of Contents/Authorities.
AGREEMENT AND PLAN
OF
MERGER AND REORGANIZATION
THIS AGREEMENT AND PLAN OF MERGER AND REORGANIZATION ("AGREEMENT") is made
and entered into as of March 1, 1998, by and among: SIEBEL SYSTEMS, INC., a
Delaware corporation ("PARENT"); SYRACUSE ACQUISITION SUB, INC., a California
corporation and a wholly owned subsidiary of Parent ("MERGER SUB"); and SCOPUS
TECHNOLOGY, INC., a California corporation (the "COMPANY"). Certain capitalized
terms used in this Agreement are defined in Exhibit A.
RECITALS
A. Parent, Merger Sub and the Company intend to effect a merger (the
"MERGER") of Merger Sub with and into the Company in accordance with this
Agreement and the California General Corporation Law (the "CGCL"). Upon
consummation of the Merger, Merger Sub will cease to exist, and the Company will
become a wholly owned subsidiary of Parent.
B. It is intended that the Merger qualify as a tax-free reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "CODE"). For accounting purposes, it is intended that the Merger
be treated as a "pooling of interests."
C. The Board of Directors of the Company has (i) determined that the
Merger is consistent with and in furtherance of the long-term strategy of the
Company and fair to, and in the best interests of, the Company and its
shareholders, (ii) approved this Agreement, the Merger and the other
transactions contemplated by this Agreement and (iii) determined to recommend
that the shareholders of the Company adopt and approve this Agreement and
approve the Merger.
D. The respective Boards of Directors of Parent and Merger Sub have
approved this Agreement and the Merger.
E. Concurrently with the execution of this Agreement, and as a condition
and inducement to Parent's willingness to enter into this Agreement, each of the
affiliate shareholders of the Company listed on Exhibit B-1 hereto is entering
into a Voting Agreement substantially in the form attached hereto as Exhibit C-
1; and as a condition and inducement to the Company's willingness to enter into
this Agreement, the affiliate stockholder of Parent listed on Exhibit B-2 hereto
is entering into a Voting Agreement substantially in the form attached hereto as
Exhibit C-2.
F. Concurrently with the execution of this Agreement, and as a condition
and inducement to Parent's willingness to enter into this Agreement, the Company
is entering into an Option Agreement substantially in the form attached hereto
as Exhibit D.
1.
AGREEMENT
The parties to this Agreement, intending to be legally bound, agree as
follows:
SECTION 1. DESCRIPTION OF TRANSACTION.
1.1 MERGER OF MERGER SUB INTO THE COMPANY. Upon the terms and subject
to the conditions set forth in this Agreement, at the Effective Time (as defined
in Section 1.3), Merger Sub shall be merged with and into the Company, and the
separate existence of Merger Sub shall cease. The Company will continue as the
surviving corporation in the Merger (the "SURVIVING CORPORATION").
1.2 EFFECT OF THE MERGER. The Merger shall have the effects set forth in
this Agreement and in the applicable provisions of the CGCL.
1.3 CLOSING; EFFECTIVE TIME. The consummation of the transactions
contemplated by this Agreement (the "CLOSING") shall take place at the offices
of Cooley Godward llp, Five Palo Alto Square, 0000 Xx Xxxxxx Xxxx, Xxxx Xxxx,
Xxxxxxxxxx, at 10:00 a.m. on a date to be designated by Parent (the "CLOSING
DATE"), which shall be no later than the second business day after satisfaction
or waiver of the conditions set forth in Sections 6 and 7. Contemporaneously
with or as promptly as practicable after the Closing, a properly executed
agreement of merger conforming to the requirements of the CGCL (the "AGREEMENT
OF MERGER") shall be filed with the Secretary of State of the State of
California. The Merger shall take effect at (a) the time the Agreement of Merger
is filed with the Secretary of State of the State of California or (b) at such
later time as may be as agreed by the parties and as may be specified in the
Agreement of Merger (the "EFFECTIVE TIME").
1.4 CERTIFICATE OF INCORPORATION AND BYLAWS; DIRECTORS AND OFFICERS.
Unless otherwise determined by Parent prior to the Effective Time:
(a) the Articles of Incorporation of the Surviving Corporation shall
be amended and restated as of the Effective Time to conform to the Articles of
Incorporation of Merger Sub as in effect immediately prior to the Effective
Time; provided, however, that at the Effective Time the Articles of
Incorporation of the Surviving Corporation shall be amended so that the name of
the Surviving Corporation shall be Scopus Technology, Inc.;
(b) the Bylaws of the Surviving Corporation shall be amended and
restated as of the Effective Time to conform to the Bylaws of Merger Sub as in
effect immediately prior to the Effective Time; and
(c) the directors and officers of the Surviving Corporation
immediately after the Effective Time shall be as mutually determined by Parent
and Company prior to the Effective Time, and shall serve until their respective
successors are elected and qualified or duly appointed, as the case may be.
2.
1.5 CONVERSION OF SHARES.
(a) Subject to Section 1.5(d), at the Effective Time, by virtue of the
Merger and without any further action on the part of Parent, Merger Sub, the
Company or any shareholder of the Company:
(i) any shares of Company Common Stock then held by the Company
or any subsidiary of the Company (or held in the Company's treasury) shall be
canceled;
(ii) any shares of Company Common Stock then held by Parent,
Merger Sub or any other subsidiary of Parent shall be canceled;
(iii) except as provided in clauses "(i)" and "(ii)" above and
subject to Section 1.5(b), each share of Company Common Stock then outstanding
shall be converted into the right to receive 0.36405 of a share of Parent Common
Stock; and
(iv) each share of the common stock, no par value per share, of
Merger Sub then outstanding shall be converted into one share of common stock of
the Surviving Corporation.
(b) The fraction of a share of Parent Common Stock into which each
outstanding share of Company Common Stock is to be converted pursuant to Section
1.5(a)(iii) (as such fraction may be adjusted in accordance with this Section
1.5(b)) is referred to as the "EXCHANGE RATIO." If, between the date of this
Agreement and the Effective Time, the outstanding shares of Company Common Stock
or Parent Common Stock are changed into a different number or class of shares by
reason of any stock split, stock dividend, reverse stock split,
reclassification, recapitalization or other similar transaction, then the
Exchange Ratio shall be appropriately adjusted.
(c) If any shares of Company Common Stock outstanding immediately
prior to the Effective Time are unvested or are subject to a repurchase option,
risk of forfeiture or other condition under any applicable restricted stock
purchase agreement or other agreement with the Company, then the shares of
Parent Common Stock issued in exchange for such shares of Company Common Stock
will also be unvested and subject to the same repurchase option, risk of
forfeiture or other condition, and the certificates representing such shares of
Parent Common Stock may accordingly be marked with appropriate legends. The
Company shall take all action that may be necessary to ensure that, from and
after the Effective Time, Parent is entitled to exercise any such repurchase
option or other right set forth in any such restricted stock purchase agreement
or other agreement.
(d) No fractional shares of Parent Common Stock shall be issued in
connection with the Merger, and no certificates for any such fractional shares
shall be issued. In lieu of such fractional shares, any holder of Company
Common Stock who would otherwise be entitled to receive a fraction of a share of
Parent Common Stock (after aggregating all fractional shares of Parent Common
Stock issuable to such holder) shall, upon surrender of such holder's Company
Stock Certificate(s) (as defined in Section 1.7), be paid in cash the dollar
amount (rounded to the nearest whole cent), without interest, determined by
multiplying such fraction by the closing price of a share of Parent Common Stock
on Nasdaq on the Closing Date.
3.
1.6 STOCK OPTIONS. At the Effective Time, all Company Options (as defined
in Section 2.3(b)) and rights to acquire shares of Company Common Stock under
the Purchase Plan (as defined in Section 2.3(b)) shall be assumed by Parent in
accordance with Section 5.5.
1.7 CLOSING OF THE COMPANY'S TRANSFER BOOKS. At the Effective Time: (a)
all shares of Company Common Stock outstanding immediately prior to the
Effective Time shall automatically be canceled and retired and shall cease to
exist, and all holders of certificates representing shares of Company Common
Stock that were outstanding immediately prior to the Effective Time shall cease
to have any rights as shareholders of the Company; and (b) the stock transfer
books of the Company shall be closed with respect to all shares of Company
Common Stock outstanding immediately prior to the Effective Time. No further
transfer of any such shares of Company Common Stock shall be made on such stock
transfer books after the Effective Time. If, after the Effective Time, a valid
certificate previously representing any of such shares of Company Common Stock
(a "COMPANY STOCK CERTIFICATE") is presented to the Exchange Agent (as defined
in Section 1.8) or to the Surviving Corporation or Parent, such Company Stock
Certificate shall be canceled and shall be exchanged as provided in Section 1.8.
1.8 EXCHANGE OF CERTIFICATES.
(a) Prior to the Closing Date, Parent shall select a reputable bank or
trust company to act as exchange agent in the Merger (the "EXCHANGE AGENT").
Promptly after the Effective Time, Parent shall deposit with the Exchange Agent
(i) certificates representing the shares of Parent Common Stock issuable
pursuant to this Section 1 and (ii) cash sufficient to make payments in lieu of
fractional shares in accordance with Section 1.5(d). The shares of Parent
Common Stock and cash amounts so deposited with the Exchange Agent, together
with any dividends or distributions received by the Exchange Agent with respect
to such shares, are referred to collectively as the "EXCHANGE FUND."
(b) As soon as practicable after the Effective Time, the Exchange
Agent will mail to the registered holders of Company Stock Certificates (i) a
letter of transmittal in customary form and containing customary provisions
(including a provision confirming that delivery of Company Stock Certificates
shall be effected, and risk of loss and title to Company Stock Certificates
shall pass, only upon delivery of such Company Stock Certificates to the
Exchange Agent), and (ii) instructions for use in effecting the surrender of
Company Stock Certificates in exchange for certificates representing Parent
Common Stock. Subject to Section 1.5(d), upon surrender of a Company Stock
Certificate to the Exchange Agent for exchange, together with a duly executed
letter of transmittal and such other documents as may be reasonably required by
the Exchange Agent or Parent, (A) the holder of such Company Stock Certificate
shall be entitled to receive in exchange therefor a certificate representing the
number of shares of Parent Common Stock that such holder has the right to
receive pursuant to the provisions of Section 1.5(a)(iii) together with any cash
in lieu of fractional share(s) pursuant to the provisions of Section 1.5(d), and
(B) the Company Stock Certificate so surrendered shall be canceled. Until
surrendered as contemplated by this Section 1.8(b), each Company Stock
Certificate shall be deemed, from and after the Effective Time, to represent
only the right to receive shares of Parent Common Stock (and cash in lieu of any
fractional share of Parent Common Stock) as contemplated by Section 1.5. If any
Company Stock Certificate shall have been lost, stolen or destroyed, Parent may,
in its discretion and as a condition precedent to the
4.
issuance of any certificate representing Parent Common Stock, require the owner
of such lost, stolen or destroyed Company Stock Certificate to provide an
appropriate affidavit and to deliver a bond (in such sum as Parent may
reasonably direct) as indemnity against any claim that may be made against the
Exchange Agent, Parent or the Surviving Corporation with respect to such Company
Stock Certificate.
(c) No dividends or other distributions declared or made with
respect to Parent Common Stock with a record date after the Effective Time shall
be paid to the holder of any unsurrendered Company Stock Certificate with
respect to the shares of Parent Common Stock represented thereby, until such
holder surrenders such Company Stock Certificate in accordance with this Section
1.8 (at which time such holder shall be entitled to receive all such dividends
and distributions, without interest).
(d) Any portion of the Exchange Fund that remains undistributed to
holders of Company Stock Certificates as of the date 180 days after the date on
which the Merger becomes effective shall be delivered to Parent upon demand, and
any holders of Company Stock Certificates who have not theretofore surrendered
their Company Stock Certificates in accordance with this Section 1.8 shall
thereafter look only to Parent (or its successor, if any) for satisfaction of
their claims for Parent Common Stock, cash in lieu of fractional shares of
Parent Common Stock and any dividends or distributions with respect to Parent
Common Stock.
(e) Each of the Exchange Agent, Parent and the Surviving Corporation
shall be entitled to deduct and withhold from any consideration payable or
otherwise deliverable pursuant to this Agreement to any holder or former holder
of Company Common Stock such amounts as may be required to be deducted or
withheld therefrom under the Code or under any provision of state, local or
foreign tax law or under any other applicable Legal Requirement. To the extent
such amounts are so deducted or withheld, such amounts shall be treated for all
purposes under this Agreement as having been paid to the Person to whom such
amounts would otherwise have been paid.
(f) Neither Parent nor the Surviving Corporation shall be liable to
any holder or former holder of Company Common Stock with respect to any shares
of Parent Common Stock (or dividends or distributions with respect thereto), or
for any cash amounts, delivered to any public official pursuant to any
applicable abandoned property, escheat or similar Legal Requirement.
1.9 DISSENTING SHARES. Notwithstanding anything to the contrary
contained in this Agreement, any shares of Company Common Stock outstanding
immediately prior to the Effective Time that are or may become "dissenting
shares" within the meaning of Section 1300(b) of the CGCL ("DISSENTING SHARES")
shall not be converted into or represent the right to receive Parent Common
Stock in accordance with Section 1.5(a)(iii) (or cash in lieu of fractional
shares in accordance with Section 1.5(d)), and each holder of Dissenting Shares
shall be entitled only to such rights as may be granted to such holder under
Chapter 13 of the CGCL. From and after the Effective Time, a holder of
Dissenting Shares shall not be entitled to exercise any of the voting rights or
other rights of a shareholder of the Surviving Corporation. If any holder of
Dissenting Shares shall fail to assert or perfect, or shall waive, rescind,
withdraw or otherwise lose, such holder's right to dissent and obtain payment
under Chapter 13 of the CGCL, then such
5.
shares shall automatically be converted into and shall represent only the right
to receive (upon the surrender of Company Stock Certificate(s) previously
representing such shares) Parent Common Stock in accordance with Section
1.5(a)(iii) (and cash in lieu of any fractional share in accordance with Section
1.5(d)) and any dividends or other distributions to which such holder is
entitled in accordance with Section 1.8.
1.10 TAX CONSEQUENCES. For federal income tax purposes, the Merger is
intended to constitute a reorganization within the meaning of Section 368 of the
Code. The parties to this Agreement hereby adopt this Agreement as a "plan of
reorganization" within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the
United States Treasury Regulations.
1.11 ACCOUNTING CONSEQUENCES. For accounting purposes, the Merger is
intended to be treated as a "pooling of interests."
1.12 FURTHER ACTION. If, at any time after the Effective Time, any
further action is determined by Parent to be necessary or desirable to carry out
the purposes of this Agreement or to vest the Surviving Corporation with full
right, title and possession of and to all rights and property of Merger Sub and
the Company, the officers and directors of the Surviving Corporation and Parent
shall be fully authorized (in the name of Merger Sub, in the name of the Company
and otherwise) to take such action.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to Parent and Merger Sub that, except
as set forth in the disclosure schedule that has been prepared by the Company in
accordance with the requirements of Section 9.6 and that has been delivered by
the Company to Parent on the date of this Agreement and signed on behalf of the
Company by the President of the Company (the "COMPANY DISCLOSURE SCHEDULE"):
2.1 DUE ORGANIZATION; SUBSIDIARIES; ETC.
(a) The Company has no Subsidiaries, except for the corporations
identified in Part 2.1(a)(i) of the Company Disclosure Schedule; and neither the
Company nor any of the other corporations identified in Part 2.1(a)(i) of the
Company Disclosure Schedule owns any capital stock of, or any equity interest of
any nature in, any other Entity, other than the Entities identified in Part
2.1(a)(ii) of the Company Disclosure Schedule, except for passive investments in
equity interests of public companies as part of the cash management program of
the Company. (The Company and each of its Subsidiaries are referred to
collectively in this Agreement as the "ACQUIRED CORPORATIONS".) None of the
Acquired Corporations has agreed or is obligated to make, or is bound by any
Contract under which it may become obligated to make, any future investment in
or capital contribution to any other Entity. None of the Acquired Corporations
has, at any time, been a general partner of any general partnership, limited
partnership or other Entity.
(b) Each of the Acquired Corporations is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation and has all necessary power and authority: (i) to conduct its
business in the manner in which its business is
6.
currently being conducted; (ii) to own and use its assets in the manner in which
its assets are currently owned and used; and (iii) to perform its obligations
under all Contracts by which it is bound.
(c) Each of the Acquired Corporations is qualified to do business as a
foreign corporation, and is in good standing, under the laws of all
jurisdictions where the nature of its business requires such qualification and
where the failure to so qualify would have a Material Adverse Effect on the
Acquired Corporations.
2.2 ARTICLES OF INCORPORATION AND BYLAWS. The Company has delivered to
Parent accurate and complete copies of the articles of incorporation, bylaws and
other charter and organizational documents of the respective Acquired
Corporations, including all amendments thereto. None of the Acquired
Corporations is in violation of any of the provisions of its articles of
incorporation or bylaws or equivalent governing instruments.
2.3 CAPITALIZATION, ETC.
(a) The authorized capital stock of the Company consists of: (i)
50,000,000 shares of Company Common Stock, $0.001 par value, of which, as of
February 27, 1998, 20,601,838 shares have been issued and are outstanding as of
the date of this Agreement; and (ii) 2,500,000 shares of preferred stock, $0.01
par value per share, of which no shares are outstanding as of the date of this
Agreement. All of the outstanding shares of Company Common Stock have been duly
authorized and validly issued, and are fully paid and nonassessable. As of the
date of this Agreement, there are no shares of Company Common Stock held in
treasury by the Company or by any of the other Acquired Corporations. Except as
set forth in Part 2.3(a) of the Company Disclosure Schedule: (i) none of the
outstanding shares of Company Common Stock is entitled or subject to any
preemptive right, right of participation, right of maintenance or any similar
right; (ii) none of the outstanding shares of Company Common Stock is subject to
any right of first refusal in favor of the Company; and (iii) there is no
Acquired Corporation Contract to which the Company is a party relating to the
voting or registration of, or restricting any Person from purchasing, selling,
pledging or otherwise disposing of (or granting any option or similar right with
respect to), any shares of Company Common Stock. Upon consummation of the
Merger, (A) the shares of Parent Common Stock issued in exchange for any shares
of Company Common Stock that are subject to a Contract pursuant to which the
Company has the right to repurchase, redeem or otherwise reacquire any shares of
Company Common Stock will, without any further act of Parent, the Company or any
other Person, become subject to the restrictions, conditions and other
provisions contained in such Contract, and (B) Parent will automatically succeed
to and become entitled to exercise the Company's rights and remedies under any
such Contract. None of the Acquired Companies is under any obligation to
repurchase, redeem or otherwise acquire any outstanding shares of Company Common
Stock.
(b) As of February 27, 1998: (i) 3,283,613 shares of Company Common
Stock are subject to issuance pursuant to outstanding options to purchase
Company Common Stock; and (ii) 77,079 shares of Company Common Stock are
reserved for future issuance under the Company's Employee Stock Purchase Plan
(the "PURCHASE PLAN"). (Stock options granted by the Company pursuant to the
Company's stock option plans are referred to in this Agreement as
7.
"COMPANY OPTIONS.") Part 2.3(b) of the Company Disclosure Schedule sets forth
the following information with respect to each Company Option outstanding as of
the date of this Agreement: (i) the particular plan pursuant to which such
Company Option was granted; (ii) the name of the optionee; (iii) the number of
shares of Company Common Stock subject to such Company Option; (iv) the exercise
price of such Company Option; (v) the date on which such Company Option was
granted; (vi) the applicable vesting schedule; and (vii) the date on which such
Company Option expires. The Company has made available to Parent accurate and
complete copies of all stock option plans pursuant to which the Company has
granted stock options that are currently outstanding and the form of all stock
option agreements evidencing such options. Except as set forth in Part 2.3(b) of
the Company Disclosure Schedule, there are no commitments or agreements of any
character to which the Company is bound obligating the Company to accelerate the
vesting of any Company Option as a result of the Merger.
(c) Except as set forth in Part 2.3(b) of the Company Disclosure
Schedule there is no: (i) outstanding subscription, option, call, warrant or
right (whether or not currently exercisable) to acquire any shares of the
capital stock or other securities of the Company; (ii) outstanding security,
instrument or obligation that is or may become convertible into or exchangeable
for any shares of the capital stock or other securities of the Company; or (iii)
shareholder rights plan (or similar plan commonly referred to as a "poison
pill") or Contract or circumstance under which the Company is or may become
obligated to sell or otherwise issue any shares of its capital stock or any
other securities other than shares of Company Common Stock which may be issued
pursuant to Company Options outstanding under any Plan.
(d) All outstanding shares of Company Common Stock, all outstanding
Company Options, and all outstanding shares of capital stock of each Subsidiary
of the Company have been issued and granted in compliance with (i) all
applicable securities laws and other applicable Legal Requirements, and (ii) all
requirements set forth in applicable Contracts.
(e) All of the outstanding shares of capital stock of each of the
Entities identified in Part 2.1(a)(i) of the Company Disclosure Schedule are
validly issued, fully paid and nonassessable and are owned beneficially and of
record by the Company, free and clear of any Encumbrances other than as would
not have a Material Adverse Effect on the Acquired Corporations.
2.4 SEC FILINGS; FINANCIAL STATEMENTS.
(a) The Company has made available to Parent accurate and complete
copies of all registration statements, proxy statements and other statements,
reports, schedules, forms and other documents filed by the Company with the SEC
since January 1, 1997 and will make available to Parent accurate and complete
copies of all such registration statements, proxy statements and other
statements, reports, schedules, forms and other documents filed after the date
of this Agreement and prior to the Effective Time (collectively, the "COMPANY
SEC DOCUMENTS"). All statements, reports, schedules, forms and other documents
required to have been filed by the Company with the SEC have been so filed. As
of the time it was filed with the SEC (or, if amended or superseded by a later
filing, then on the date of such filing): (i) each of the Company SEC Documents
filed with the SEC complied in all material respects with the applicable
requirements of the Securities Act or the Exchange Act (as the case may be) as
of the
8.
date of such filing and any Company SEC Documents filed after the date hereof
will so comply; and (ii) none of the Company SEC Documents contained any untrue
statement of material fact or omitted to state a material fact required to be
state therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
(b) The consolidated financial statements (including any related
notes) contained in the Company SEC Documents filed with the SEC (the "COMPANY
FINANCIAL STATEMENTS"): (i) complied as to form in all material respects with
the published rules and regulations of the SEC applicable thereto; (ii) were
prepared in accordance with generally accepted accounting principles ("GAAP")
applied on a consistent basis throughout the periods covered (except as may be
indicated in the notes to such financial statements or, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC, and except that the unaudited
financial statements may not contain footnotes and are subject to normal and
recurring year-end adjustments which in the case of the Company's SEC Documents
already filed as of the date hereof are not reasonably expected to be,
individually or in the aggregate, material in amount); and (iii) fairly present
the consolidated financial position of the Company and its Subsidiaries as of
the respective dates thereof and the consolidated results of operations of the
Company and its Subsidiaries for the periods covered thereby. The audited
consolidated balance sheet of the Company and its Subsidiaries included in the
Company's Annual Report on Form 10-K for the year ended March 31, 1997 is
sometimes referred to herein as the "COMPANY BALANCE SHEET" and the unaudited
consolidated balance sheet of the Company and its Subsidiaries as of December
31, 1997 included in the Company's Quarterly Report on Form 10-Q for the quarter
ended December 31, 1997 is sometimes referred to herein as the "UNAUDITED
INTERIM BALANCE SHEET." All financial statements (including any related notes)
contained in Company SEC Documents filed after the date hereof shall meet the
conditions set forth in (i), (ii) and (iii) of this Section 2.4(b).
(c) The Company has recognized revenues in accordance with GAAP and
Statement of Position 91-1 entitled "Software Revenue Recognition," dated
December 12, 1991 ("91-1"), issued by the American Institute of Certified Public
Accountants. The Company has recognized (i) initial license fee revenues only
after delivery of software products and upon satisfaction of all significant
post-delivery obligations; (ii) revenues associated with the grant of additional
licenses to the Company's existing customers upon shipment and upon satisfaction
of all significant post-delivery obligations; (iii) maintenance revenues ratably
over the term of the maintenance period; and (iv) consulting and training
revenues when the services were performed.
2.5 ABSENCE OF CHANGES SINCE THE DATE OF THE COMPANY BALANCE SHEET. Since
the date of the Company's Financial Statements and until the date of this
Agreement, there has not been any Material Adverse Effect on the Acquired
Corporations.
2.6 ABSENCE OF CHANGES SINCE THE DATE OF THE UNAUDITED INTERIM BALANCE
SHEET. Since the date of the Unaudited Interim Balance Sheet and until the date
of this Agreement:
(a) there has not been any material loss, damage or destruction to, or
any material interruption in the use of, any of the assets of any of the
Acquired Corporations (whether or not covered by insurance);
9.
(b) none of the Acquired Corporations has (i) declared, accrued, set
aside or paid any dividend or made any other distribution in respect of any
shares of capital stock, or (ii) other than pursuant to existing Plans
repurchased, redeemed or otherwise reacquired any shares of capital stock or
other securities;
(c) none of the Acquired Corporations has sold, issued, granted or
authorized the issuance or grant of (i) any capital stock or other security
(except for Company Common Stock issued upon the exercise of outstanding Company
Options), (ii) any option, call, warrant or right to acquire any capital stock
or any other security (except for Company Options described in Part 2.3(b) of
the Company Disclosure Schedule and except for Company Options that have
expired), or (iii) any instrument convertible into or exchangeable for any
capital stock or other security of the Acquired Corporations;
(d) the Company has not amended or waived any of its material rights
under, or permitted the acceleration of vesting under, (i) any provision of any
of the Company's stock option plans, (ii) any provision of any agreement
evidencing any outstanding Company Option, or (iii) any restricted stock
purchase agreement;
(e) there has been no amendment to the articles of incorporation,
bylaws or other charter or organizational documents of any of the Acquired
Corporations, and none of the Acquired Corporations has effected or been a party
to any merger, consolidation, share exchange, business combination,
recapitalization, reclassification of shares, stock split, reverse stock split
or similar transaction;
(f) none of the Acquired Corporations has formed any subsidiary or
acquired any equity interest or other interest in any other Entity;
(g) none of the Acquired Corporations has made any capital
expenditures which exceed $5,000,000 in the aggregate;
(h) except in the ordinary course of business and consistent with past
practices or as would not have a Material Adverse Effect on the Acquired
Corporations, none of the Acquired Corporations has (i) entered into or
permitted any of the assets owned or used by it to become bound by any Major
Contract (as defined in Section 2.11), or (ii) amended or prematurely
terminated, or waived any material right or remedy under, any Major Contract;
(i) none of the Acquired Corporations has written off as
uncollectible, or established any extraordinary reserve with respect to, any
account receivable or other indebtedness in excess of $100,000 with respect to
any single matter, or in excess of $500,000 in the aggregate;
(j) none of the Acquired Corporations has made any pledge of any of
its assets or otherwise permitted any of its assets to become subject to any
Encumbrance, except as would not have a Material Adverse Effect on the Acquired
Corporations;
(k) other than routine travel or relocation advances made to employees
in the ordinary course of business, none of the Acquired Corporations has (i)
lent money to any Person, or (ii) incurred or guaranteed any indebtedness for
borrowed money;
10.
(l) none of the Acquired Corporations has (i) established or adopted
any Plan (as defined in Section 2.16(a)), (ii) caused or permitted any Plan to
be amended in any material respect, or (iii) paid any bonus or made any profit-
sharing or similar payment to, or increased the amount of the wages, salary,
commissions, fringe benefits or other compensation or remuneration payable to,
either (A) its directors and executive officers in any material respect or (B),
except in the ordinary course of business consistent with past practice, its
employees (taken as a whole);
(m) none of the Acquired Corporations has changed any of its methods
of accounting or accounting practices in any respect unless required by GAAP;
(n) none of the Acquired Corporations has made any material election
with respect to Taxes;
(o) none of the Acquired Corporations has commenced or settled any
Legal Proceeding;
(p) none of the Acquired Corporations has entered into any material
transaction or taken any other material action that has had, or would reasonably
be expected to have, a Material Adverse Effect on the Acquired Corporations; and
(q) none of the Acquired Corporations has agreed or legally committed
to take any of the actions referred to in clauses "(c)" through "(p)" above.
2.7 LEASEHOLD; EQUIPMENT. None of the Acquired Corporations owns any real
property or any interest in real property, except for the leaseholds created
under the real property leases identified in Part 2.7 of the Company Disclosure
Schedule. All such real property is being leased pursuant to lease agreements
that are in full force and effect, are valid and effective in accordance with
their respective terms, and there is not, under any of such leases, any existing
default or event of default (or event which with notice or lapse of time, or
both, would constitute a default) that would result in a Material Adverse Effect
on the Acquired Corporations. All material items of equipment and other tangible
assets owned by or leased to the Acquired Corporations are adequate for the uses
to which they are being put, are in good condition and repair (ordinary wear and
tear excepted) and are adequate for the conduct of the business of the Acquired
Corporations in the manner in which such business is currently being conducted.
2.8 TITLE TO ASSETS. The Acquired Corporations own, and have good, valid
and marketable title to, or in the case of leased properties and assets, valid
leasehold interests in, all of their respective tangible properties and assets,
real, personal and mixed, necessary to enable the Acquisition Corporations to
conduct their business in the manner in which such business has been and is
being conducted, including: (i) all assets reflected on the Unaudited Interim
Balance Sheet; and (ii) all other tangible assets reflected in the books and
records of the Acquired Corporations as being owned or leased by the Acquired
Corporations. All of said assets are owned or leased by the Acquired
Corporations free and clear of any Encumbrances, except for (x) any lien for
current taxes not yet due and payable, and (y) Encumbrances that have arisen in
the ordinary course of business and that do not (in any case or in the
aggregate) materially detract from the value of the assets subject thereto or
materially impair the operations of any of
11.
the Acquired Corporations. It is understood that no representation is being made
in this Section 2.8 regarding Proprietary Assets or rights therein.
2.9 RECEIVABLES; SIGNIFICANT CUSTOMERS.
(a) Part 2.9(a) of the Company Disclosure Schedule provides a schedule
and aging of all accounts receivable of the Acquired Corporations as of the date
of the Unaudited Interim Balance Sheet. All existing accounts receivable of the
Acquired Corporations (including those accounts receivable reflected on the
Unaudited Interim Balance Sheet that have not yet been collected and those
accounts receivable that have arisen since the date of the Unaudited Interim
Balance Sheet and have not yet been collected) represent valid obligations of
customers of the Acquired Corporations arising from bona fide transactions.
(b) Part 2.9(b) of the Company Disclosure Schedule contains a list as
of the date of this Agreement of all loans and advances made by any of the
Acquired Corporations to any employee, director, consultant or independent
contractor of such Acquired Corporation, other than routine travel or relocation
advances made to employees in the ordinary course of business.
(c) Part 2.9(c) of the Company Disclosure Schedule sets forth a list
of all Significant Customers. For purposes of this Agreement, "SIGNIFICANT
CUSTOMERS" are the forty (40) largest customers of the Company that have
effected the most purchases, as measured in terms of fees payable under
Contracts to which an Acquired Corporation is a party as of the date hereof and
pursuant to which an Acquired Corporation has licensed or transferred any right
(whether or not currently exercisable) to use, license or otherwise exploit any
Acquired Corporation Proprietary Asset to any Person during the period of the
past seven (7) fiscal quarters None of the Company's Significant Customers has
canceled, returned or substantially reduced or, to the knowledge of the Company,
is currently attempting or threatening to cancel, return or substantially
reduce, any legally binding commitments (which commitments exist as of the date
hereof) with respect to any material purchases from, orders to or services
provided by the Company, which cancellation, return or substantial reduction or
attempt or threat to cancel, return or substantially reduce would have a
Material Adverse Effect on the Acquired Corporations. The Company has not
experienced any pattern of material customer complaints concerning the Acquired
Corporations' products and/or services, nor have any of the Acquired
Corporations' products returned by a customer or is aware that any customer may
return any products, except for returns for which adequate reserves have been
made and which would not result in a reversal of any material revenue.
2.10 PROPRIETARY ASSETS.
(a) Part 2.10(a) of the Company Disclosure Schedule sets forth, with
respect to each Proprietary Asset owned by the Acquired Corporations and
registered with any Governmental Body or for which an application has been
registered or filed with any Governmental Body, (i) a brief description of such
Proprietary Asset, and (ii) the names of the jurisdictions covered by the
applicable registration or application. Part 2.10(a) of the Company Disclosure
Schedule identifies Contracts providing for any ongoing royalty or payment
obligations payable by an Acquired Corporation in excess of $100,000 annually
with respect to,
12.
each Proprietary Asset that is licensed or otherwise made available to the
Acquired Corporations by any Person and is material to the business of the
Acquired Corporations. The Acquired Corporations have good, valid and marketable
title to all of the Acquired Corporation Proprietary Assets identified in Part
2.10(a) of the Company Disclosure Schedule, and all other Proprietary Assets
owned by the Acquired Corporations that are material to the business of the
Acquired Corporations taken as a whole, free and clear of all Encumbrances,
except for (i) any lien for current taxes not yet due and payable, (ii) any
Encumbrances that have arisen in the ordinary course of business and that do not
(individually or in the aggregate) materially detract from the value of the
assets subject thereto or materially impair the operations of the Acquired
Corporations and (iii) any Contract to which an Acquired Corporation is a party
and pursuant to which an Acquired Corporation has licensed or transferred any
right (whether or not currently exercisable) to use, license or otherwise
exploit any Acquired Corporation Proprietary Asset to any Person. The Acquired
Corporations have a valid right to use, license and otherwise exploit all
Proprietary Assets identified in Part 2.10(a) of the Company Disclosure Schedule
to the extent necessary to the conduct of the business of the Acquired
Corporations as currently conducted. Part 2.10(a) of the Company Disclosure
Schedule sets forth a list of each Contract providing for the joint development
of any Acquired Corporation Proprietary Asset.
(b) Part 2.10(b)(i) of the Company Disclosure Schedule sets forth a
complete copy of the Company's standard form of license agreement (the
"COMPANY'S STANDARD LICENSE AGREEMENT"). Part 2.10(b)(ii) of the Company
Disclosure Schedule identifies (i) each Contract to which an Acquired
Corporation is a party as of the date hereof and pursuant to which an Acquired
Corporation has licensed or transferred any material right (whether or not
currently exercisable) to use, license or otherwise exploit any Acquired
Corporation Proprietary Asset to any Person (other than those Contracts entered
into in the ordinary course of business on terms that do not deviate in any
material respects from the Company's Standard License Agreement (except as
provided in (ii) below)) and (ii) each Contract which deviates from the
Company's Standard License Agreement with respect to (A) continuing obligations,
including, without limitation, service or post-contract customer support
transactions, (B) delivery of additional product (including, without limitation,
additional versions, features, functions and language) and separate rights to
upgrade and (C) amendments, arrangements, agreements or side deals not described
in such Contract, in a manner which individually or in the aggregate is
materially adverse to the business of the Acquired Corporations.
(c) The Acquired Corporations have taken reasonable measures and
precautions to protect and maintain the confidentiality and secrecy of all
material Acquired Corporation Proprietary Assets (except Acquired Corporation
Proprietary Assets whose value would be unimpaired in any material respect by
disclosure). Without limiting the generality of the foregoing, (i) all current
employees of the Acquired Corporations who are or were involved in, or who have
contributed to, the creation or development of any material Acquired Corporation
Proprietary Asset have executed and delivered to the Acquired Corporations an
agreement that at the time of execution was in the form of the Company's then
existing Confidential Information and Invention Assignment Agreement, and (ii)
all current consultants and independent contractors to the Acquired Corporations
who are or were involved in, or who have contributed to, the creation or
development of any material Acquired Corporation Proprietary Asset have executed
and delivered to the Company an agreement that at the time of execution was in
the form of the Company's then existing Consultant Confidential Information
13.
and Invention Assignment Agreement. The Company has made available to Parent the
current forms of the Company's Confidential Information and Inventions
Agreements for employees and consultants. No current or former employee,
officer, director, shareholder, consultant or independent contractor has any
right, claim or interest, including, without limitation, any moral rights, in or
with respect to any Acquired Corporation Proprietary Asset.
(d) Except as set forth in Part 2.10 (d) of the Company Disclosure
Schedule, to the knowledge of the Company: (i) all patents, trademarks,
tradenames, service marks, maskwork rights, copyrights and trade secrets held by
any of the Acquired Corporations are valid, enforceable and subsisting; (ii)
none of the Acquired Corporation Proprietary Assets and no Proprietary Asset
that is currently being developed by any of the Acquired Corporations (either by
itself or with any other Person) infringes, misappropriates or conflicts with
any Proprietary Asset owned or used by any other Person; (iii) none of the
products that are or have been designed, created, developed, assembled,
manufactured or sold by any of the Acquired Corporations is infringing,
misappropriating or making any unlawful or unauthorized use of any Proprietary
Asset owned or used by any other Person, and none of such products has at any
time infringed, misappropriated or made any unlawful or unauthorized use of, and
none of the Acquired Corporations or any of their Representatives has received
any notice or other communication (in writing or otherwise) of any actual,
alleged, possible or potential infringement, misappropriation or unlawful or
unauthorized use of, any Proprietary Asset owned or used by any other Person;
and (iv) no other Person is infringing, misappropriating or making any unlawful
or unauthorized use of, and no Proprietary Asset owned or used by any other
Person infringes or conflicts with, any material Acquired Corporation
Proprietary Asset.
(e) The Acquired Corporation Proprietary Assets constitute all the
Proprietary Assets necessary to enable the Acquired Corporations to conduct
their business in the manner in which such business has been and is being
conducted. Except as set forth in Part 2.10(e) of the company disclosure
Schedule, none of the Acquired Corporations has (i) licensed any of the Acquired
Corporation Proprietary Assets to any Person on an exclusive basis, (ii) entered
into any covenant not to compete or (iii) entered into any Contract limiting its
ability to transact business in any market or geographical area or with any
Person.
(f) Part 2.10(f)(i) of the Company Disclosure Schedule sets forth a
complete copy of the Company's standard form of source code escrow agreement
(the "COMPANY'S STANDARD SOURCE CODE ESCROW AGREEMENT"). Part 2.10(f)(ii) of the
Company Disclosure Schedule identifies each Contract to which an Acquired
Corporation is a party as of the date hereof and pursuant to which an Acquired
Corporation has disclosed or delivered to any Person, or permitted the
disclosure or delivery to any escrow agent or other Person, of the source code,
or any portion of the source code of any Acquired Corporation Proprietary Asset
(other than those Contracts entered into in the ordinary course of business on
terms that do not deviate in any material respect from the Company's Standard
Source Code Escrow Agreement). No event has occurred, and no circumstance or
condition exists, that (with or without notice or lapse of time) will, or would
reasonably be expected to, result in the required disclosure or delivery by the
Acquired Corporations or any of their escrow agents to any Person of the source
code, or any portion or aspect of the source code, or any proprietary
information or algorithm contained in any source code, of any Acquired
Corporation Proprietary Asset. Neither the execution of this Agreement nor the
consummation of any of the transactions contemplated hereby would
14.
reasonably be expected to result in the required release or disclosure by the
Acquired Corporations or any of their escrow agents of the source code, or any
portion or aspect of the source code, or any proprietary information or
algorithm contained in or relating to any source code, of any Acquired
Corporation Proprietary Asset.
(g) All software (and related Acquired Corporation Proprietary Assets)
that is sold, licensed or transferred by any Acquired Corporation to any Person
("PRODUCTS") are designed to be used prior to, during and after the year 2000
("YEAR 2000"), and are Year 2000 Compliant (as defined below). To the knowledge
of the Company, each of the Acquired Corporations has taken adequate steps to
ensure that all software (and related Proprietary Assets) used in its operations
are Year 2000 Compliant (as defined below). For purposes of this Agreement,
"YEAR 2000 COMPLIANT" shall mean that the Products can, individually, and in
combination and in conjunction with all other systems, products or processes
with which they are required or designed to interface, continue to be used
normally and to operate successfully (both in functionality and performance in
all material respects) over the transition into the twenty first century when
used in accordance with the documentation relating to the Products, including
being able to, before, on and after January 1, 2000 substantially conform to the
following: (i) use logic pertaining to dates which allow users to identify
and/or use the century portion of any date fields without special processing;
and (ii) respond to all date elements and date input so as to resolve any
ambiguity as to century in a disclosed, defined and pre-determined manner and
provide date information in ways which are unambiguous as to century, either by
permitting or requiring the century to be specified or where the data element is
represented without a century, the correct century is unambiguous for all
manipulations involving that element.
2.11 CONTRACTS.
(a) Part 2.11 of the Company Disclosure Schedule identifies each
Acquired Corporation Contract as of the date of this Agreement that constitutes
a "Major Contract." For purposes of this Agreement, each of the following shall
be deemed to constitute a "MAJOR CONTRACT":
(i) (A) any written Contract relating to the employment of, or
the performance of services by, any employee other than at will employment or a
Contract required solely on the basis of any Legal Requirement, (B) any Contract
pursuant to which any of the Acquired Corporations is required to make any
severance, termination or similar payment, bonus or relocation payment or any
other payment (other than payments in respect of salary or bonus paid in the
ordinary course consistent with past practices) to any current or former
employee or director of any of the Acquired Corporations and (C) any Contract or
Plan (including, without limitation, any stock option plan, stock appreciation
plan or stock purchase plan), any of the benefits of which may be increased, or
the vesting of benefits of which would be accelerated as a result of the Merger;
(ii) any material written Contract (A) providing for the
acquisition, transfer, development, sharing, license (to or by any of the
Acquired Corporations), use or other exploitation of any Proprietary Asset
(except for any Contract pursuant to which any Proprietary Asset is licensed to
the Acquired Corporations under any third party software license generally
15.
available to the public); or (B) with respect to the distribution or marketing
of any products of the Acquired Corporations;
(iii) any Contract which provides for indemnification of any officer,
director, employee or agent of any of the Acquired Corporations;
(iv) any Contract (not otherwise disclosed in Part 2.11 of the
Company Disclosure Schedule) imposing any restriction on the right or ability of
any Acquired Corporation (A) to license any of the Acquired Corporation
Proprietary Assets to any Person, (B) to compete or (C) to transact business in
any market or geographic area or with any Person;
(v) any Contract (A) relating to the acquisition, issuance, voting,
registration, sale or transfer of any securities (other than the issuance of
Company Common Stock upon the valid exercise of Company Options outstanding as
of the date of this Agreement), (B) providing any Person with any preemptive
right, right of participation, right of maintenance or any similar right with
respect to any securities, or (C) providing the Company with any right of first
refusal with respect to, or right to repurchase or redeem, any securities (other
than under any Plan);
(vi) any Contract requiring that the Company give any notice or
provide any information to any Person prior to accepting any Acquisition
Proposal;
(vii) any Contract (not otherwise identified in Part 2.11 of the
Company Disclosure Schedule) that contemplates or involves payment or delivery
of cash or other consideration by or to the Company for goods or services in an
aggregate amount in excess of $250,000 in any one year or $500,000 over the term
of such Contract;
(viii) any Contract or Plan (including, without limitation, any stock
option plan, stock appreciation 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 execution of this Agreement or the consummation 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;
(ix) any joint marketing or development Contract currently in force
under which an Acquired Corporation has continuing material obligations to
jointly market any product, technology or service and which may not be canceled
without penalty upon notice of thirty (30) days or less, or any Major Contract
pursuant to which an Acquired Corporation has continuing material obligations to
jointly develop any Proprietary Asset that will not be owned, in whole or in
part, by an Acquired Corporation and which may not be canceled without penalty
upon notice of ninety (90) days or less; and
(x) any Contract currently in force to disclose or deliver to any
Person, or permit the disclosure or delivery to any escrow agent or other
Person, of the source code, or any portion of the source code of any Acquired
Corporation Proprietary that is material to the Acquired Corporations taken as a
whole, except for any Contract that does not differ from the Company's Standard
Source Code Escrow Agreement in any material respect.
16.
(b) Each Major Contract, to the knowledge of the Company, is valid and
in full force and effect, and is enforceable by an Acquired Corporation in
accordance with its terms, subject to (i) laws of general application relating
to bankruptcy, insolvency and the relief of debtors, and (ii) rules of law
governing specific performance, injunctive relief and other equitable remedies.
(c) Except as set forth in Part 2.11 of the Company Disclosure
Schedule and except as would not individually or in the aggregate have a
Material Adverse Effect on the Acquired Corporations: (i) none of the Acquired
Corporations has violated or breached, or committed any default under, any
Acquired Corporation Contract, and, to the knowledge of the Company, no other
Person has violated or breached, or committed any default under, any Acquired
Corporation Contract; (ii) to the knowledge of the Company, no event has
occurred, and no circumstance or condition exists, that (with or without notice
or lapse of time) will, or would reasonably be expected to, (A) result in a
violation or breach by the Acquired Corporations of any of the provisions of any
Acquired Corporation Contract, (B) give any Person the right to declare a
default or exercise any remedy under any Acquired Corporation Contract, (C) give
any Person the right to a rebate, chargeback, penalty or change in delivery
schedule under any Acquired Corporation Contract, (D) give any Person the right
to accelerate the maturity or performance of any Acquired Corporation Contract,
or (E) give any Person the right to cancel, terminate or modify any Acquired
Corporation Contract; (iii) none of the Acquired Corporations or any of their
Representatives has received any written notice regarding any actual or possible
violation or breach by the Acquired Corporations of, or default under, any
Acquired Corporation Contract; and (iv) each of the Acquired Corporations has
obtained all necessary export licenses related to the export of its products.
(d) There is no Acquired Corporation Contract to which any
Governmental Body is a party or under which any Governmental Body has any rights
or obligations.
2.12 YEAR 2000 LIABILITIES. Except as would not have a Material Adverse
Effect on the Acquired Corporations, none of the Acquired Corporations has any
accrued, contingent or other liabilities of any nature, either matured or
unmatured, relating to costs associated with insuring that the computer systems,
or any software utilized by the Acquired Corporations or other components of the
Acquired Corporations' information technology infrastructure are Year 2000
Compliant (whether or not required to be reflected in financial statements in
accordance with GAAP, and whether due or to become due), except for: (a)
liabilities identified as such in the "liabilities" column of the Unaudited
Interim Balance Sheet; and (b) normal and recurring liabilities that have been
incurred by the Acquired Corporations since the date of the Unaudited Interim
Balance Sheet in the ordinary course of business and consistent with past
practices.
2.13 COMPLIANCE WITH LEGAL REQUIREMENTS. Each of the Acquired Corporations
is, and has at all times since March 31, 1995 been, in compliance with all
applicable Legal Requirements, except where the failure to comply with such
Legal Requirements has not had and will not have a Material Adverse Effect on
the Acquired Corporations. Since March 31, 1995, none of the Acquired
Corporations has received any notice or other communication from any
Governmental Body regarding any actual or possible violation of, or failure to
comply with, any Legal Requirement, except where the failure to comply with such
Legal Requirements has not had and will not have a Material Adverse Effect on
the Acquired Corporations.
17.
2.14 GOVERNMENTAL AUTHORIZATIONS. The Acquired Corporations hold all
Governmental Authorizations necessary to enable the Acquired Corporations to
conduct their respective businesses in the manner in which such businesses are
currently being conducted. All such Governmental Authorizations are valid and
in full force and effect.
2.15 TAX MATTERS.
(a) All Tax Returns required to be filed by or on behalf of the
respective Acquired Corporations with any Governmental Body with respect to any
taxable period ending on or before the Closing Date (the "ACQUIRED CORPORATION
RETURNS") if due on or before the Closing Date (i) have been or will be filed on
or before the applicable due date (including any extensions of such due date if
properly obtained), and (ii) have been, or will be when filed, prepared in all
material respects in compliance with all applicable Legal Requirements. All
amounts shown on the Acquired Corporation Returns to be due on or before the
Closing Date have been or will be paid on or before the Closing Date.
(b) The Company Financial Statements fully accrue all actual and
contingent liabilities for Taxes with respect to all periods through the dates
thereof in accordance with GAAP. Each Acquired Corporation will establish, in
the ordinary course of business and consistent with its past practices, reserves
adequate for the payment of all Taxes for the period from the date of this
Agreement through the Closing Date.
(c) Since March 31, 1995, no Acquired Corporation Return has been
examined or audited by any Governmental Body. No extension or waiver (other
than the normal extension occurring by reason of an extension of time to file a
Return) of the limitation period applicable to any of the Acquired Corporation
Returns has been granted (by the Company or any other Person), and no such
extension or waiver has been requested from any Acquired Corporation.
(d) No claim or Legal Proceeding is pending or, to the best of the
knowledge of the Company, has been threatened against or with respect to any
Acquired Corporation in respect of any material Tax. There are no unsatisfied
liabilities for material Taxes (including liabilities for interest, additions to
tax and penalties thereon and related expenses) with respect to any notice of
deficiency or similar document received by any Acquired Corporation with respect
to any material Tax (other than liabilities for Taxes asserted under any such
notice of deficiency or similar document which are being contested in good faith
by the Acquired Corporations and with respect to which adequate reserves for
payment have been established). There are no liens for material Taxes upon any
of the assets of any of the Acquired Corporations except liens for current Taxes
not yet due and payable. None of the Acquired Corporations has entered into or
become bound by any agreement or consent pursuant to Section 341(f) of the Code.
None of the Acquired Corporations has been, and none of the Acquired
Corporations will be, required to include any adjustment in taxable income for
any tax period (or portion thereof) pursuant to Section 481 or 263A of the Code
or any comparable provision under state or foreign Tax laws as a result of
transactions or events occurring, or accounting methods employed, prior to the
Closing.
18.
(e) There is no agreement, plan, arrangement or other Contract
covering any employee or independent contractor or former employee or
independent contractor of any of the Acquired Corporations that, considered
individually or considered collectively with any other such Contracts, will, or
could reasonably be expected to, give rise directly or indirectly to the payment
of any amount that would not be deductible pursuant to Section 280G or Section
162 of the Code. None of the Acquired Corporations is, or has ever been, a
party to or bound by any tax indemnity agreement, tax sharing agreement, tax
allocation agreement or similar Contract.
2.16 EMPLOYEE AND LABOR MATTERS; BENEFIT PLANS.
(a) Part 2.16 of the Company Disclosure Schedule identifies each
salary, bonus, deferred compensation, incentive compensation, stock purchase,
stock option, severance pay, termination pay, hospitalization, medical, life or
other insurance, supplemental unemployment benefits, profit-sharing, pension or
retirement plan, program or agreement (collectively, the "PLANS") sponsored,
maintained, contributed to or required to be contributed to by any of the
Acquired Corporations for the benefit of any current or former employee of any
of the Acquired Corporations.
(b) Except as set forth in Part 2.16of the Company Disclosure
Schedule, none of the Acquired Corporations maintains, sponsors or contributes
to, and none of the Acquired Corporations has at any time in the past
maintained, sponsored or contributed to, any employee pension benefit plan (as
defined in Section 3(2) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), whether or not excluded from coverage under specific
Titles or Subtitles of ERISA) for the benefit of employees or former employees
of any of the Acquired Corporations (a "PENSION PLAN"). None of the Plans
identified in Part 2.16 of the Company Disclosure Schedule is subject to Title
IV of ERISA or Section 412 of the Code.
(c) Except as set forth in Part 2.16 of the Company Disclosure
Schedule, none of the Acquired Corporations maintains, sponsors or contributes
to any: (i) employee welfare benefit plan (as defined in Section 3(1) of ERISA,
whether or not excluded from coverage under specific Titles or Subtitles of
ERISA) for the benefit of any employees or former employees of any of the
Acquired Corporations (a "WELFARE PLAN"), or (ii) self-funded medical, dental or
other similar Plan. None of the Plans identified in Section 2.16 of the Company
Disclosure Schedule is a multi-employer plan (within the meaning of Section
3(37) of ERISA).
(d) With respect to each Plan, the Company has made available to
Parent: (i) a copy of such Plan (including all amendments thereto); (ii) a copy
of the annual report, if required under ERISA, with respect to such Plan for the
last two years; (iii) a copy of the most recent summary plan description,
together with each Summary of Material Modifications thereto, if required under
ERISA, with respect to such Plan; (iv) if such Plan is funded through a trust or
any third party funding vehicle, a copy of the trust or other funding agreement
(including all amendments thereto) and accurate and complete copies the most
recent financial statements thereof; (v) copies of all material Contracts
relating to such Plan, including service provider agreements, insurance
contracts, minimum premium contracts, stop-loss agreements, investment
management agreements, subscription and participation agreements and
recordkeeping agreements; and (vi) a copy of the most recent determination
letter received from the Internal
19.
Revenue Service with respect to such Plan (if such Plan is intended to be
qualified under Section 401(a) of the Code).
(e) None of the Acquired Corporations is or has ever been required to
be treated as a single employer with any other Person under Section 4001(b)(1)
of ERISA or Section 414(b), (c), (m) or (o) of the Code. None of the Acquired
Corporations has ever been a member of an "affiliated service group" within the
meaning of Section 414(m) of the Code. None of the Acquired Corporations has
ever made a complete or partial withdrawal from a multi-employer plan, as such
term is defined in Section 3(37) of ERISA, resulting in "withdrawal liability,"
as such term is defined in Section 4201 of ERISA (without regard to subsequent
reduction or waiver of such liability under either Section 4207 or 4208 of
ERISA).
(f) None of the Acquired Corporations has any commitment to create any
Welfare Plan or any Pension Plan, or to modify or change any existing Pension
Plan (other than to comply with applicable law) in a manner that would affect
any employee of any of the Acquired Corporations.
(g) No Plan provides death, medical or health benefits (whether or not
insured) with respect to any current or former employee of any of the Acquired
Corporations after any such employee's termination of service (other than (i)
benefit coverage mandated by applicable law, including coverage provided
pursuant to Section 4980B of the Code, (ii) deferred compensation benefits
accrued as liabilities on the Company Balance Sheet, (iii) benefits the full
cost of which are borne by current or former employees of any of the Acquired
Corporations (or the employees' beneficiaries), (iv) death or retirement
benefits under any Pension Plan, (v) disability benefits under any Welfare Plan,
(vi) benefits arising in connection with a separation or severance program, plan
or arrangement and (vii) life insurance benefits for employees who died while in
service).
(h) With respect to any Plan constituting a group health plan within
the meaning of Section 4980B(g)(2) of the Code, the provisions of Section 4980B
of the Code ("COBRA") have been complied with in all material respects.
(i) To the knowledge of the Company, each of the Plans has been
operated and administered in all material respects in accordance with applicable
Legal Requirements, including but not limited to ERISA and the Code.
(j) Each of the Plans intended to be qualified under Section 401(a) of
the Code has received a favorable determination, opinion, advisory or
notification letter from the Internal Revenue Service or has an application
currently pending, and the Company is not aware of any material reason why any
such letter should be revoked.
(k) Neither the execution, delivery or performance of this Agreement,
nor the consummation of the Merger or any of the other transactions contemplated
by this Agreement, will result in any payment (including any bonus, golden
parachute or severance payment) to any current or former employee or director of
any of the Acquired Corporations (whether or not under any Plan), or materially
increase the benefits payable under any Plan, or result in any
20.
acceleration of the time of payment or vesting of any such benefits (unless the
Parent causes a partial or full termination to occur under a Pension Plan).
(l) Part 2.16 of the Company Disclosure Schedule contains a list of
all salaried employees of each of the Acquired Corporations as of the date of
this Agreement, and correctly reflects, in all material respects, their base
salaries, their targeted annual bonus amounts, their dates of employment and
their positions. None of the Acquired Corporations is a party to any collective
bargaining contract or other Contract with a labor union involving any of its
employees. All of the employees of the Acquired Corporations are "at will"
employees.
(m) Each Plan complies in all material respects with all applicable
Legal Requirements. Each of the Acquired Corporations is in compliance in all
material respects with all Contracts relating to employment, employment
practices, wages, bonuses and terms and conditions of employment, including
employee compensation matters.
(n) Each of the Plans in effect as of the Closing Date shall be
maintained in effect with respect to current employees, consultants, directors,
officers and other individuals who are covered by any such Plan immediately
prior to the Closing Date (the "AFFILIATED EMPLOYEES") until Parent otherwise
determines after the Closing Date; provided, however, that Parent or its
Subsidiary shall provide benefits to the Affiliated Employees for a period of
not less than one (1) year following the Closing Date which are no less
favorable in the aggregate than those provided under the Company's Pension Plans
and Welfare Plans. Without limitation of the foregoing, each employee of the
Company or Merger Sub immediately prior to the Closing Date who is participating
in any Plan shall receive credit for pre-Closing service with the Company and
its Subsidiaries or predecessor entities for all purposes under the Company's
Pension Plans and Welfare Plans or any successor plans to such plans offered by
Parent or its Subsidiaries or affiliates including (without limitation)
eligibility to participate, vesting and waiting periods under any benefit plan
of Parent or any of its Subsidiaries or affiliates.
2.17 ENVIRONMENTAL MATTERS. Except as would not have a Material Adverse
Effect on the Acquired Corporations: each of the Acquired Corporations is in
compliance in all material respects with all applicable Environmental Laws,
which compliance includes the possession by each of the Acquired Corporations of
all permits and other Governmental Authorizations required under applicable
Environmental Laws, and compliance with the terms and conditions thereof; none
of the Acquired Corporations has received any notice whether from a Governmental
Body, citizens group, employee or otherwise, that alleges that any of the
Acquired Corporations is not in compliance with any Environmental Law, and, to
the knowledge of the Company, there are no circumstances that will prevent or
interfere with the compliance by any of the Acquired Corporations with any
Environmental Law in the future; to the best of the knowledge of the Company, no
current or prior owner of any property leased or controlled by any of the
Acquired Corporations has received any written notice whether from a Government
Body, citizens group, employee or otherwise, that alleges that such current or
prior owner or any of the Acquired Corporations is not in compliance with any
Environmental Law; to the knowledge of the Company, all property that is leased
to, controlled by or used by the Company, and all surface water, groundwater and
soil associated with or adjacent to such property is in clean and healthful
condition and is free of any material illegal environmental contamination. (For
purposes of this Section 2.17: (i) "ENVIRONMENTAL LAW" means any federal, state,
local or
21.
foreign Legal Requirement relating to pollution or protection of human health or
the environment (including ambient air, surface water, ground water, land
surface or subsurface strata), including any law or regulation relating to
emissions, discharges, releases or threatened releases of Materials of
Environmental Concern, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Materials of Environmental Concern; and (ii) "MATERIALS OF ENVIRONMENTAL
CONCERN" include chemicals, pollutants, contaminants, wastes, toxic substances,
petroleum and petroleum products and any other substance that is now or
hereafter regulated by any Environmental Law or that is otherwise a danger to
health, reproduction or the environment.)
2.18 INSURANCE. The Company has delivered to Parent a copy of each
insurance policy and each self insurance program relating to the business,
assets or operations of any of the Acquired Corporations. Each such insurance
policy is in full force and effect as of the date of this Agreement. Since
December 31, 1997, except as set forth in Part 2.18 of the Company Disclosure
Schedule and except as would not have a Material Adverse Effect on the Acquired
Corporations, none of the Acquired Corporations has received any written notice
regarding any actual or possible (a) cancellation or invalidation of any
insurance policy, (b) refusal of any coverage or rejection of any material claim
under any insurance policy, or (c) material adjustment in the amount of the
premiums payable with respect to any insurance policy.
2.19 TRANSACTIONS WITH AFFILIATES. Except as set forth in the Company SEC
Documents, since the date of the Company's last proxy statement filed with the
SEC, no event has occurred as of the date of this Agreement that would be
required to be reported by the Company pursuant to Item 404 of Regulation S-K
promulgated by the SEC. Part 2.19 of the Company Disclosure Schedule identifies
each person who is an "affiliate" (as that term is used in Rule 145 promulgated
under the Securities Act) of the Company as of the date of this Agreement.
2.20 LEGAL PROCEEDINGS; ORDERS.
(a) As of the date hereof, except as set forth in Part 2.20 of the
Company Disclosure Schedule, there is no pending Legal Proceeding, and no Person
has, to the knowledge of the Company, overtly threatened in writing to commence
any Legal Proceeding: (i) that involves any of the Acquired Corporations or any
of the assets owned or used by any of the Acquired Corporations, including,
without limitation, any Acquired Company Proprietary Asset; or (ii) that
challenges, or that may have the effect of preventing, delaying, making illegal
or otherwise interfering with, the Merger or any of the other transactions
contemplated by this Agreement. As of the date hereof, to the knowledge of the
Company, no event has occurred, and no claim, dispute or other condition or
circumstance exists, that will, or that would reasonably be expected to, cause
or provide a bona fide basis for a director or executive officer of any of the
Acquired Corporations to seek indemnification from any of the Acquired
Corporations.
(b) There is no order, writ, injunction, judgment or decree to which
any of the Acquired Corporations, or any of the assets material to the business
of the Acquired Corporations, is subject. To the knowledge of the Company, no
officer or other employee of any of the Acquired Corporations is subject to any
order, writ, injunction, judgment or decree that
22.
prohibits such officer or other employee from engaging in or continuing any
conduct, activity or practice relating to the business of any of the Acquired
Corporations.
2.21 AUTHORITY; INAPPLICABILITY OF ANTI-TAKEOVER STATUTES; BINDING NATURE
OF AGREEMENT. The Company has the corporate power and authority to enter into
and, subject to obtaining shareholder approval, to perform its obligations under
this Agreement. The Board of Directors of the Company (at a meeting duly called
and held) (a) unanimously determined that the Merger is fair and in the best
interests of the Company and its shareholders, (b) unanimously approved the
execution, delivery and performance of this Agreement by the Company and has
unanimously approved the Merger and (c) unanimously recommended the adoption and
approval of this Agreement and the Merger by the holders of Company Common Stock
and directed that this Agreement and the Merger be submitted for consideration
by the Company's shareholders at the Company Shareholders' Meeting (as defined
in Section 5.2). This Agreement constitutes the legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, subject to (i) laws of general application relating to bankruptcy,
insolvency and the relief of debtors, and (ii) rules of law governing specific
performance, injunctive relief and other equitable remedies.
2.22 NO EXISTING DISCUSSIONS. As of the date of this Agreement, none of
the Acquired Corporations, and no Representative of any of the Acquired
Corporations, is engaged, directly or indirectly, in any discussions or
negotiations with any other Person relating to any Acquisition Proposal other
than the Merger.
2.23 ACCOUNTING MATTERS. To the knowledge of the Company, neither the
Company nor any of its affiliates has taken or agreed to, or plans to, take any
action that would prevent Parent from accounting for the Merger as a "pooling of
interests."
2.24 VOTE REQUIRED. The affirmative vote of the holders of a majority of
the shares of Company Common Stock outstanding on the record date for the
Company Shareholder Meeting (the "REQUIRED COMPANY SHAREHOLDER VOTE") is the
only vote of the holders of any class or series of the Company's capital stock
necessary to adopt and approve this Agreement and the Merger.
2.25 NON-CONTRAVENTION; CONSENTS. Except as set forth in Part 2.25 of
the Company's Disclosure Schedule, neither (1) the Company's execution, delivery
or performance of this Agreement or any of the other agreements referred to in
this Agreement, nor (2) the consummation of the Merger will directly or
indirectly (with or without notice or lapse of time):
(a) contravene, conflict with or result in a violation of (i) any of
the provisions of the articles of incorporation, bylaws or other charter or
organizational documents of any of the Acquired Corporations, or (ii) any
resolution adopted by the shareholders, the board of directors or any committee
of the board of directors of any of the Acquired Corporations;
(b) contravene, conflict with or result in a violation of any order,
writ, injunction, judgment or decree to which any of the Acquired Corporations,
or any of the assets material to the business the Acquired Corporations, is
subject;
23.
(c) contravene, conflict with or result in a violation of any of the
material terms or requirements of, or give any Governmental Body the right to
revoke, withdraw, suspend, cancel, terminate or modify, any Governmental
Authorization that is held by and is material to any of the Acquired
Corporations or that otherwise relates to and is material to the business of any
of the Acquired Corporations or to any of the assets owned or used by any of the
Acquired Corporations;
(d) contravene, conflict with or result in a violation or breach of
or result in a default under, any provision of any Acquired Corporation Contract
that is or would constitute a Major Contract, or give any Person the right to
(i) declare a default or exercise any remedy under any such Acquired Corporation
Contract, (ii) a rebate, chargeback, penalty or change in delivery schedule
under any such Acquired Corporation Contract, (iii) accelerate the maturity or
performance of any such Acquired Corporation Contract, or (iv) cancel, terminate
or modify any term of such Acquired Corporation Contract;
(e) result in the imposition or creation of any Encumbrance upon or
with respect to any asset owned or used by any of the Acquired Corporations
(except for Encumbrances that will not, in any case or in the aggregate,
materially detract from the value of the assets subject thereto or materially
impair the operations of any of the Acquired Corporations); or
(f) result in the disclosure or delivery to any escrow holder or
other Person (other than Parent or Merger Sub) of the source code, or any
portion or aspect of the source code, or any proprietary information or
algorithm contained in or relating to any source code, of any material Acquired
Corporation Proprietary Asset, or the transfer of any material asset of any of
the Acquired Corporations to any Person (other than Parent or Merger Sub).
Except as may be required by the Exchange Act, the CGCL, the HSR Act and the
rules of the National Association of Securities Dealers, Inc. ("NASD") (as they
relate to the S-4 Registration Statement and the Prospectus/Proxy Statement, as
defined in Section 2.28(b)), none of the Acquired Corporations was, is or will
be required to make any filing with or give any notice to, or to obtain any
Consent from, any Governmental Body or any industry regulatory body in
connection with (x) the execution, delivery or performance of this Agreement or
any of the other agreements referred to in this Agreement, or (y) the
consummation of the Merger or any of the other transactions contemplated by this
Agreement.
2.26 FAIRNESS OPINION. The Company's Board of Directors has received the
opinion of Xxxxxx Xxxxxxx & Co. Incorporated, financial advisor to the Company,
dated at or about the date of this Agreement, to the effect that the Exchange
Ratio is fair to the shareholders of the Company from a financial point of view.
The Company will provide a copy of the written opinion to Parent upon its
request.
2.27 FINANCIAL ADVISOR. Except for Xxxxxx Xxxxxxx & Co. Incorporated, no
broker, finder or investment banker is entitled to any brokerage, finder's or
other fee or commission in connection with the Merger or any of the other
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of any of the Acquired Corporations. The total of all fees,
commissions and other amounts that have been paid by the Company to Xxxxxx
24.
Xxxxxxx & Co. Incorporated and all fees, commissions and other amounts that may
become payable to Xxxxxx Xxxxxxx & Co. Incorporated by the Company if the Merger
is consummated have been communicated to Parent and the amounts to be paid shall
not exceed the amounts so communicated. Upon the request of Parent, the Company
will deliver to Parent copies of all written agreements under which any such
fees, commissions or other amounts have been paid or may become payable and all
indemnification and other agreements relating to the engagement of Xxxxxx
Xxxxxxx & Co. Incorporated.
2.28 DISCLOSURE. None of the information supplied or to be supplied by or
on behalf of the Company for inclusion or incorporation by reference in the
registration statement on Form S-4 to be filed with the SEC by Parent in
connection with the issuance of Parent Common Stock in the Merger (the "S-4
REGISTRATION STATEMENT") will, at the time the S-4 Registration Statement is
filed with the SEC or at the time it becomes effective under the Securities Act,
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 the light of the circumstances under which they are made, not
misleading. None of the information supplied or to be supplied by or on behalf
of the Company for inclusion or incorporation by reference in the
Prospectus/Proxy Statement to be filed with the SEC as part of the S-4
Registration Statement (the "PROSPECTUS/PROXY STATEMENT"), will, at the time the
Prospectus/Proxy Statement is mailed to the shareholders of the Company or
Parent, at the time of the Company Shareholders' Meeting or Parent Shareholders'
Meeting or as of 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 the light of the
circumstances under which they are made, not misleading. The Prospectus/Proxy
Statement will comply as to form in all material respects with the provisions of
the Exchange Act and the rules and regulations promulgated by the SEC
thereunder.
2.29 CUSTOMS. The Acquired Corporations have acted with reasonable care
to properly value and classify, in accordance with applicable tariff laws, rules
and regulations, all goods that the Acquired Corporations import into the United
States or any other country (the "IMPORTED GOODS"). To the Company's knowledge,
there are currently no claims for material amounts pending against any of the
Acquired Corporations by the U.S. Customs Service (or other foreign customs
authorities) relating to the valuation, classification or marking of the
Imported Goods. To the Company's knowledge, since January 1, 1995 there have
not been any material penalties assessed or claimed by the U.S. Customs Service
or foreign customs authorities with respect to the Imported Goods. To the
Company's knowledge, the Acquired Corporations have paid to the U.S. Customs
Service and relevant foreign customs authorities, with such exceptions as are
not material, all duties, tariffs and excise taxes assessed, due and payable
with such exceptions as would not result, in any individual case or series of
related cases in a Material Adverse Effect on the Acquired Corporations.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB.
Parent and Merger Sub represent and warrant to the Company that,
except as set forth in the disclosure schedule that has been prepared by Parent
in accordance with the requirements of
25.
Section 9.6 and that has been delivered to the Company on the date of this
Agreement and signed on behalf of Parent by the President of Parent (the "PARENT
DISCLOSURE SCHEDULE"):
3.1 ORGANIZATION, STANDING AND POWER. Parent is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Merger Sub is a corporation duly organized, validly existing and in
good standing under the laws of the State of California. Each of Parent and
Merger Sub has the corporate power to own its properties and to carry on its
business as now being conducted and is duly qualified to do business and is in
good standing in each jurisdiction in which the failure to be so qualified would
have a Material Adverse Effect on Parent and its Subsidiaries, taken as a whole.
3.2 CERTIFICATE OF INCORPORATION AND BYLAWS. Parent has delivered to
the Company accurate and complete copies of the certificate of incorporation,
bylaws and other charter and organizational documents of Parent, including all
amendments thereto. Parent is not in violation of any of the provisions of its
certificate of incorporation or bylaws. Parent has delivered to the Company
accurate and complete copies of the articles of incorporation, bylaws and other
charter and organizational documents of Merger Sub, including all amendments
thereto. Merger Sub is not in violation of any of the provisions of its articles
of incorporation or bylaws.
3.3 CAPITALIZATION, ETC.
(a) The authorized capital stock of Parent consists of: (i)
200,000,000 shares of Parent Common Stock, $0.001 par value, of which, as of
February 4, 1998, 35,522,785 shares were issued and outstanding (which amount
does not materially differ from the amount issued and outstanding as of the date
hereof); and (ii) 2,000,000 shares of preferred stock, $0.001 par value per
share, of which no shares are outstanding as of the date of this Agreement. As
of the date of this Agreement, there are no outstanding subscriptions, options,
calls, warrants or rights to acquire shares of Parent Common Stock other than
pursuant to stock issuance or stock option plans or other arrangements disclosed
in the Parent SEC Documents. The authorized capital stock of Merger Sub
consists of 100 shares of Common Stock ("Merger Sub Common Stock"), no par
value, all of which have been issued and are outstanding as of the date of this
Agreement and are held by Parent. As of the date of this Agreement, there are
no shares of Parent Common Stock held in treasury by Parent. None of the
outstanding shares of Company Common Stock is entitled or subject to any
preemptive right, right of participation, right of maintenance or any similar
right.
3.4 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Parent has made available to the Company accurate and complete
copies (excluding copies of exhibits) of each report, registration statement (on
a form other than Form S-8) and definitive proxy statement filed by Parent with
the SEC between January 1, 1997 and the date of this Agreement and will make
available to the Company accurate and complete copies of all such registration
statements, proxy statements and other statements, reports, schedules, forms and
other documents filed after the date of this Agreement and prior to the
Effective Date (the "PARENT SEC DOCUMENTS"). As of the time it was filed with
the SEC (or, if amended or superseded by a later filing, then on the date of
such filing): (i) each of the Parent SEC Documents filed with the SEC complied
in all material respects with the applicable
26.
requirements of the Securities Act or the Exchange Act (as the case may be) as
of the date of such filing and any company SEC Documents filed after the date
hereof and prior to the Effective Time will so comply; and (ii) none of the
Parent SEC Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(b) The consolidated financial statements contained in the Parent SEC
Documents: (i) complied as to form in all material respects with the published
rules and regulations of the SEC applicable thereto; (ii) were prepared in
accordance with GAAP applied on a consistent basis throughout the periods
covered (except as may be indicated in the notes to such financial statements
and, in the case of unaudited statements, as permitted by Form 10-Q of the SEC,
and except that unaudited financial statements may not contain footnotes and are
subject to normal and recurring year-end audit adjustments which in the case of
the Parent's SEC Documents already filed as of the date hereof are not
reasonably expected to be, individually or in the aggregate, material in
amount); and (iii) fairly present the consolidated financial position of Parent
and its subsidiaries as of the respective dates thereof and the consolidated
results of operations of Parent and its subsidiaries for the periods covered
thereby. The audited consolidated balance sheet of Parent and its subsidiaries
included in the Company's Annual Report on Form 10-K for the year ended December
31, 1996 is sometimes referred to herein as the "PARENT BALANCE SHEET." All
financial statements (including any related notes) contained in Company SEC
Documents filed after the date hereof shall meet the conditions set forth in
(i), (ii) and (iii) of this Section 3.4(b).
(c) The Company has recognized revenues in accordance with 91-1.
3.5 DISCLOSURE. None of the information to be supplied by or on behalf of
Parent for inclusion in the S-4 Registration Statement will, at the time the S-4
Registration Statement becomes effective under the Securities Act, 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
the light of the circumstances under which they are made, not misleading. None
of the information to be supplied by or on behalf of Parent for inclusion or
incorporation by reference in the Prospectus/Proxy Statement will, at the time
the Prospectus/Proxy Statement is mailed to the shareholders of the Company or
Parent, at the time of the Company Shareholders' Meeting or the Parent
Stockholders' Meeting or as of 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 the light of
the circumstances under which they are made, not misleading. The S-4
Registration Statement will comply as to form in all material respects with the
provisions of the Securities Act and the rules and regulations promulgated by
the SEC thereunder, except that no representation or warranty is made by Parent
with respect to statements made or incorporated by reference therein based on
information supplied by the Company for inclusion or incorporation by reference
in the Prospectus/Proxy Statement.
3.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in Part 3.6
of the Parent Disclosure Schedule between the date of the Parent Balance Sheet
and the date of this Agreement: (i) there has not been any event that has had or
would reasonably be expected to
27.
have a Material Adverse Effect on Parent; (ii) Parent has not declared, accrued,
set aside or paid any dividend; and (iii) the Company has not incurred any
liabilities other than in the ordinary course of business and consistent with
past practices.
3.7 AUTHORITY; BINDING NATURE OF AGREEMENT. Parent and Merger Sub have
the absolute and unrestricted right, power and authority to perform their
obligations under this Agreement; and the execution, delivery and performance by
Parent and Merger Sub of this Agreement have been duly authorized by all
necessary action on the part of Parent and Merger Sub and their respective
boards of directors. This Agreement constitutes the legal, valid and binding
obligation of Parent and Merger Sub, enforceable against them in accordance with
its terms, subject to (i) laws of general application relating to bankruptcy,
insolvency and the relief of debtors, and (ii) rules of law governing specific
performance, injunctive relief and other equitable remedies.
3.8 NON-CONTRAVENTION; CONSENTS. Neither (i) Parent or Merger Sub's
execution, delivery or performance of this Agreement or any of the other
agreements contemplated by this Agreement nor (ii) the consummation of the
Merger will directly or indirectly (with or without the lapse of time) (a)
conflict with or result in any breach of any provision of the certificate of
incorporation or bylaws of Parent or the articles of incorporation or bylaws of
Merger Sub, or (b) result in a default by Parent or Merger Sub under any
Contract to which Parent or Merger Sub is a party, except for any default which
has not had and will not have a Material Adverse Effect on Parent, or (c) result
in a violation by Parent or Merger Sub of any order, writ, injunction, judgment
or decree to which Parent or Merger Sub is subject, except for any violation
which has not had and will not have a Material Adverse Effect on Parent. Except
as may be required by the Securities Act, the Exchange Act, state securities or
"blue sky" laws, the CGCL, the HSR Act and the rules of the NASD (as they relate
to the S-4 Registration Statement and the Prospectus/Proxy Statement), Parent is
not and will not be required to make any filing with or give any notice to, or
to obtain any Consent from, any Person in connection with the execution and
delivery of this Agreement, or the consummation of the Merger.
3.9 PROPRIETARY ASSETS.
(a) Parent has good, valid and marketable title to all Proprietary
Assets owned by Parent that are material to the business of the Parent taken as
a whole, free and clear of all Encumbrances, except for (i) any lien for current
taxes not yet due and payable, (ii) any Encumbrances that have arisen in the
ordinary course of business and that do not (individually or in the aggregate)
materially detract from the value of the assets subject thereto or materially
impair the operations of Parent and (iii) any Contract to which Parent is a
party and pursuant to which Parent has licensed or transferred any right
(whether or not currently exercisable) to use, license or otherwise exploit any
Parent Proprietary Asset to any Person. Parent has a valid right to use,
license and otherwise exploit all Proprietary Assets of Parent to the extent
necessary to the conduct of the business of Parent as currently conducted.
(b) To the knowledge of Parent: (i) all patents, trademarks,
tradenames, service marks, maskwork rights, copyrights and trade secrets held by
any of Parent are valid, enforceable and subsisting; (ii) none of Parent
Proprietary Assets and no Proprietary Asset that is currently being developed by
Parent (either by itself or with any other Person) infringes,
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misappropriates or conflicts with any Proprietary Asset owned or used by any
other Person; (iii) none of the products that are or have been designed,
created, developed, assembled, manufactured or sold by Parent is infringing,
misappropriating or making any unlawful or unauthorized use of any Proprietary
Asset owned or used by any other Person, and none of such products has at any
time infringed, misappropriated or made any unlawful or unauthorized use of, and
neither Parent nor any of its Representatives has received any notice or other
communication (in writing or otherwise) of any actual, alleged, possible or
potential infringement, misappropriation or unlawful or unauthorized use of, any
Proprietary Asset owned or used by any other Person; and (iv) no other Person is
infringing, misappropriating or making any unlawful or unauthorized use of, and
no Proprietary Asset owned or used by any other Person infringes or conflicts
with, any material Parent Proprietary Asset.
3.10 CONTRACTS. Except as would not have a Material Adverse Effect on
Parent: (i) Parent has not violated or breached, or committed any default under,
any Contract to which the Parent is a party and which is material to the conduct
of the Parent's business as currently conducted, and, to the knowledge of
Parent, no other Person has violated or breached, or committed any default
under, any such Contract; (ii) to the knowledge of Parent, no event has
occurred, and no circumstance or condition exists, that (with or without notice
or lapse of time) will, or would reasonably be expected to, (A) result in a
violation or breach by Parent of any of the provisions of any such Contract, (B)
give any Person the right to declare a default or exercise any remedy under any
such Contract, (C) give any Person the right to a rebate, chargeback, penalty or
change in delivery schedule under any such Contract, (D) give any Person the
right to accelerate the maturity or performance of any such Contract, or (E)
give any Person the right to cancel, terminate or modify any such Contract;
(iii) neither Parent nor its Representatives has received any written notice or
other communication regarding any actual or possible violation or breach by
Parent of, or default under, any such Contract; and (iv) Parent has obtained all
necessary export licenses related to the export of its products.
3.11 COMPLIANCE WITH LEGAL REQUIREMENTS. Parent is, and has at all times
since December 31, 1996 been, in compliance with all applicable Legal
Requirements, except where the failure to comply with such Legal Requirements
has not had and will not have a Material Adverse Effect on Parent. Since
December 31, 1996, Parent has not received any notice or other communication
from any Governmental Body regarding any actual or possible violation of, or
failure to comply with, any Legal Requirement, which failure to comply has had a
Material Adverse Effect on Parent.
3.12 TAX MATTERS.
(a) All Tax Returns required to be filed by or on behalf of Parent
with any Governmental Body with respect to any taxable period ending on or
before the Closing Date (the "PARENT RETURNS") if due on or before the Closing
Date (i) have been or will be filed on or before the applicable due date
(including any extensions of such due date if properly obtained), and (ii) have
been, or will be when filed, prepared in all material respects in compliance
with all applicable Legal Requirements. All amounts shown on Parent Returns to
be due on or before the Closing Date have been or will be paid on or before the
Closing Date.
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(b) Parent Financial Statements fully accrue all actual and contingent
liabilities for Taxes with respect to all periods through the dates thereof in
accordance with GAAP. Parent will establish, in the ordinary course of business
and consistent with its past practices, reserves adequate for the payment of all
Taxes for the period from the date of this Agreement through the Closing Date.
(c) Since December 31, 1996, no Parent Return has ever been examined
or audited by any Governmental Body. No extension or waiver (other than the
normal extension occurring by reason of an extension of time to file a Return)
of the limitation period applicable to any of Parent Returns has been granted
(by Parent or any other Person), and no such extension or waiver has been
requested from Parent.
(d) No claim or Legal Proceeding is pending or, to the best of the
knowledge of Parent, has been threatened against or with respect to Parent in
respect of any material Tax. There are no unsatisfied liabilities for material
Taxes (including liabilities for interest, additions to tax and penalties
thereon and related expenses) with respect to any notice of deficiency or
similar document received by Parent with respect to any material Tax (other than
liabilities for Taxes asserted under any such notice of deficiency or similar
document which are being contested in good faith by Parent and with respect to
which adequate reserves for payment have been established). There are no liens
for material Taxes upon any of the assets of Parent except liens for current
Taxes not yet due and payable. Parent has not entered into or become bound by
any agreement or consent pursuant to Section 341(f) of the Code. Parent has not
been, nor will it be, required to include any adjustment in taxable income for
any tax period (or portion thereof) pursuant to Section 481 or 263A of the Code
or any comparable provision under state or foreign Tax laws as a result of
transactions or events occurring, or accounting methods employed, prior to the
Closing.
(e) There is no agreement, plan, arrangement or other Contract
covering any employee or independent contractor or former employee or
independent contractor of Parent that, considered individually or considered
collectively with any other such Contracts, will, or could reasonably be
expected to, give rise directly or indirectly to the payment of any amount that
would not be deductible pursuant to Section 280G or Section 162 of the Code.
Parent is not, nor has it ever been, a party to or bound by any tax indemnity
agreement, tax sharing agreement, tax allocation agreement or similar Contract.
3.13 GOVERNMENTAL AUTHORIZATIONS. Parent holds all Governmental
Authorizations necessary to enable Parent to conduct its business in the manner
in which such business is currently being conducted. All such Governmental
Authorizations are valid and in full force and effect.
3.14 LEGAL PROCEEDINGS. As of the date of this Agreement, there is no
pending Legal Proceeding, and no Person has, to the knowledge of Parent, overtly
threatened in writing to commence any Legal Proceeding that would have a
Material Adverse Effect on Parent.
3.15 VOTE REQUIRED. The only vote of Parent's stockholders required to
approve the issuance of Parent Common Stock in the Merger is the vote prescribed
by rules of the NASD (the "REQUIRED PARENT STOCKHOLDER VOTE").
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3.16 VALID ISSUANCE. The Parent Common Stock to be issued by virtue of
the Merger will, when issued in accordance with the provisions of this
Agreement, be validly issued, fully paid and nonassessable.
3.17 ACCOUNTING MATTERS. To the best of the knowledge of Parent, Parent
has not taken and has not agreed, and does not plan, to take any action that
would prevent Parent from accounting for the Merger as a "pooling of interests."
3.18 FAIRNESS OPINION. Parent's Board of Directors has received the
opinion of NationsBanc Xxxxxxxxxx Securities LLC, financial advisor to Parent,
dated at or about the date of this Agreement, to the effect that the Exchange
Ratio is fair to Parent from a financial point of view. Upon request of the
Company, Parent will deliver a copy of the written opinion to the Company.
SECTION 4. CERTAIN COVENANTS OF THE COMPANY.
4.1 ACCESS AND INVESTIGATION. During the period from the date of this
Agreement through the earlier of the Effective Time and the termination of this
Agreement (the "PRE-CLOSING PERIOD"), the Company shall, and shall cause the
respective Representatives of the Acquired Corporations to: (a) provide Parent
and Parent's Representatives with reasonable access to the Acquired
Corporations' Representatives, personnel and assets and to all existing books,
records, Tax Returns, work papers and other documents and information relating
to the Acquired Corporations; and (b) provide Parent and Parent's
Representatives with such copies of the existing books, records, Tax Returns,
work papers and other documents and information relating to the Acquired
Corporations, and with such additional financial, operating and other data and
information regarding the Acquired Corporations, as Parent may reasonably
request.
4.2 OPERATION OF THE COMPANY'S BUSINESS.
(a) During the Pre-Closing Period: (i) the Company shall use
commercially reasonable efforts to conduct its business and operations (A) in
the ordinary course, (B) in a commercially reasonable manner and (C) in
compliance with all applicable Legal Requirements, except to the extent that any
failure to comply with any applicable Legal Requirements would not have a
Material Adverse Effect on the Acquired Corporations; and (ii) the Company shall
(to the extent requested by Parent) cause its officers to report regularly to
Parent concerning the status of the Company's business.
(b) During the Pre-Closing Period, the Company shall not (without the
prior written consent of Parent), and shall not permit any of the other Acquired
Corporations to:
(i) (A) declare, accrue, set aside or pay any dividend or make any
other distribution in respect of any shares of its capital stock, or (B)
repurchase, redeem or otherwise reacquire any shares of capital stock or other
securities other than the repurchase of unvested shares at cost and below the
then fair market value of the Company Common Stock in connection with the
termination of an employee of an Acquired Corporation pursuant to any Plan and
consistent with past practices;
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(ii) sell, issue, grant or authorize the issuance or grant of
(i) any capital stock or other security, (ii) any option, call, warrant or right
to acquire any capital stock or other security, or (iii) any instrument
convertible into or exchangeable for any capital stock or other security (except
that the Company may (A) issue Company Common Stock upon the valid exercise of
Company Options outstanding as of the date of this Agreement, (B) grant Company
Options to employees hired after the date of this Agreement consistent with past
practices and subject to Parent's consent not to be unreasonably withheld and
(C) grant Company Options exercisable for an aggregate number of shares of
Company Common Stock not in excess of 200,000 shares, provided that such Company
Options are granted on an annual basis, at exercise prices not less than the
fair market value of the Company Common Stock on the date of grant and in
accordance with past practices to employees who are employees of the Acquired
Corporation as of the date of this Agreement;
(iii) amend or waive any of its rights under, or accelerate the
vesting under, any provision of any of the Company's stock option plans, any
provision of any agreement evidencing any outstanding stock option or any
restricted stock purchase agreement, or otherwise modify any of the terms of any
outstanding option, warrant or other security or any related Contract;
(iv) amend or permit the adoption of any amendment to its
articles of incorporation or bylaws or other charter or organizational
documents, or, subject to the other terms of this Agreement, effect or become a
party to any merger, consolidation, share exchange, business combination,
recapitalization, reclassification of shares, stock split, reverse stock split
or similar transaction;
(v) form any subsidiary or acquire any equity interest or other
interest in any other Entity (other than passive investments in equity interests
of publicly traded securities as part of the Company's cash management program);
(vi) make any capital expenditures in excess of $1,500,000 in
the aggregate;
(vii) acquire the business of any Entity;
(viii) incur any indebtedness for borrowed money (other than: (i)
in connection with the financing of ordinary trade payables; (ii) pursuant to
existing credit facilities; (iii) in connection with leasing activities in the
ordinary course of business; or (iv) for tax planning purposes in the ordinary
course of business) or guarantee any indebtedness of any person for borrowed
money, or issue or sell any debt securities or warrants or right to acquire debt
securities of any of the Acquired Corporations or guarantee any debt securities
of others.
(ix) establish, adopt or amend in any material respect any Plan,
pay any bonus except in accordance with the terms of existing Plans or pursuant
to commitments made prior to the date of this Agreement, or make any profit-
sharing or similar payment to, or increase the amount of the wages, salary,
commissions, fringe benefits or other compensation or remuneration payable to,
(A) any of its directors or executive officers, or (B) with respect to non-
executive officers and employees, other than normal periodic increases
consistent with past
32.
practices (it being understood that Company Options shall not be included in
compensation for purposes of this Section 4.2(b)(ix));
(x) grant any severance or termination pay to any officer or
employee except payments in amounts consistent with policies and past practices
or pursuant to written agreements outstanding, or policies existing, on the date
hereof and as previously disclosed in writing or made available to Parent, or
adopt any new severance plan;
(xi) hire any new employee having an annual base salary in excess of
$100,000, or engage any consultant or independent contractor for the payment of
compensation in excess of $100,000 over the term of such engagement, provided
such term is at least for a period of one year;
(xii) transfer or license to any Person or amend or modify in any
material adverse respect any rights (including without limitation distribution
rights) to the Proprietary Assets of the Acquired Corporations, or enter into
assignments of future patent rights, other than non-exclusive licenses and
distribution rights in the ordinary course of business and consistent with past
practice;
(xiii) sell, lease, license, encumber or otherwise dispose of any
properties or assets which are material, individually or in the aggregate, to
the business of the Company, except in the ordinary course of business
consistent with past practice or lend funds to any third party (other than
intracompany loans and travel advances in the ordinary course of business);
(xiv) change any of its methods of accounting or accounting practices
in any respect other than as may be required under GAAP;
(xv) make any material election with respect to Taxes adverse to
the Acquired Corporations;
(xvi) except in connection with this Agreement or the transactions
contemplated hereby, file or settle any Legal Proceeding;
(xvii) enter into any agreement requiring the consent or approval of
any third party with respect to the Merger; or
(xviii) agree or commit to take any of the actions described in
clauses "(i)" through "(xvii)" of this Section 4.2(b).
(c) During the Pre-Closing Period, the Company shall promptly notify
Parent in writing of: (i) the discovery by the Company of any event, condition,
fact or circumstance that has had or would reasonably be expected to have a
Material Adverse Effect on the Acquired Corporations. No notification given to
Parent pursuant to this Section 4.2(c) shall limit or otherwise affect any
representations, warranties, covenants or obligations of the Company contained
in this Agreement.
33.
4.3 OPERATION OF THE PARENT'S BUSINESS. During the Pre-Closing Period,
Parent shall not (without the prior written consent of the Company) (i) declare,
accrue, set aside or pay any extraordinary dividend or any other extraordinary
distribution in respect of any shares of its capital stock, (ii) repurchase,
redeem or otherwise reacquire any shares of as capital stock or other securities
in an extraordinary manner, (iii) amend or permit the adoption of any amendments
to its certificate of incorporation, (iv) become a party to any recapitalization
or (v) take any other action, if in such case the action would be materially
adverse to the shareholders of the Company compared to the stockholders of the
Parent.
4.4 NO SOLICITATION.
(a) From the date of this Agreement until the earlier of the Effective
Time or termination of this Agreement pursuant to Section 8, the Company shall
not, and shall not authorize or permit any Subsidiary of the Company or any
Representative of any of the Acquired Corporations (including for purposes of
this Section 4.4(a) each of the affiliate shareholders of the Company listed on
Exhibit B-1) to, (i) solicit, initiate, encourage or induce the making,
submission or announcement of any Acquisition Proposal or take any action that
could reasonably be expected to lead to an Acquisition Proposal, (ii) furnish
any information regarding any of the Acquired Corporations to any Person in
connection with or in response to an Acquisition Proposal, (iii) engage in
discussions with any Person with respect to any Acquisition Proposal, except as
to the existence of these provisions, (iv) subject to Section 5.2(c), approve,
endorse or recommend any Acquisition Proposal or (v) enter into any letter of
intent or similar document or any Contract contemplating or otherwise relating
to any Acquisition Transaction; provided, however, that prior to the approval of
this Agreement by the Required Company Shareholder Vote, this Section 4.4(a)
shall not prohibit the Company from furnishing nonpublic information regarding
the Acquired Corporations to, entering into a confidentiality agreement with or
entering into discussions with, any Person in response to a Superior Offer
submitted by such Person (and not withdrawn) if (1) neither the Company nor any
Representative of any of the Acquired Corporations shall have violated any of
the restrictions set forth in this Section 4.4 with respect to such Superior
Offer, (2) the Board of Directors of the Company concludes in good faith, after
consultation with its outside legal counsel, that such action is required in
order for the Board of Directors of the Company to comply with its fiduciary
obligations to the Company's shareholders under applicable law, (3) prior to
furnishing any such nonpublic information to, or entering into discussions with,
such Person, the Company gives Parent written notice of the identity of such
Person and of the Company's intention to furnish nonpublic information to, or
enter into discussions with, such Person, and the Company receives from such
Person an executed confidentiality agreement containing customary limitations on
the use and disclosure of all nonpublic written and oral information furnished
to such Person by or on behalf of the Company, and (4) contemporaneously with
furnishing any such nonpublic information to such Person, the Company furnishes
such nonpublic information to Parent (to the extent such nonpublic information
has not been previously furnished by the Company to Parent). Without limiting
the generality of the foregoing, the Company acknowledges and agrees that any
violation of any of the restrictions set forth in the preceding sentence by any
Representative of any of the Acquired Corporations, whether or not such
Representative is purporting to act on behalf of any of the Acquired
Corporations, shall be deemed to constitute a breach of this Section 4.4 by the
Company. In addition to the foregoing, the Company shall (i) provide Parent
with at least 24 hours prior notice (or such lesser prior notice as provided to
the members of the
34.
Company's Board of Directors but in no event less than eight hours) of any
meeting of the Company's Board of Directors at which the Company's Board of
Directors is reasonably expected to consider a Superior Offer and (ii) provide
Parent with at least two (2) business days or forty-eight (48) hours prior
written notice of a meeting of the Company's Board of Directors at which the
Company's Board of Directors is reasonably expected to recommend a Superior
Offer to its shareholders and together with such notice a copy of such Superior
Offer (pursuant to Section 4.4(b) below).
(b) The Company shall promptly notify Parent of any Acquisition
Proposal (including the identity of the Person making or submitting such
Acquisition Proposal and the material terms thereof) that is made or submitted
by any Person during the Pre-Closing Period. The Company shall keep Parent
informed with respect to the status of any such Acquisition Proposal and any
material modification thereto.
(c) The Company shall immediately cease and cause to be terminated any
existing discussions with any Person that relate to any Acquisition Proposal.
(d) Nothing contained in this Section 4.4 or elsewhere in this
Agreement shall prohibit the Company from (i) taking and disclosing to its
shareholders a position contemplated by Rules 14d-9 and 14e-2(a) promulgated
under the Exchange Act or (ii) making any disclosure to the Company's
shareholders if, in the good faith judgment of the majority of the members of
the Board of Directors of the Company, after consultation with independent legal
counsel, failure to so disclose would be inconsistent with applicable laws.
4.5 FINANCIAL STATEMENTS. The Company shall use commercially reasonable
efforts to cause its independent auditors to deliver to Parent on or prior to
April 30, 1998 the audited consolidated balance sheet of the Company and its
subsidiaries at March 31, 1998 and its audited consolidated statement of results
of operations for the fiscal year ended March 31, 1998, except that such balance
sheet and statement of operations need not contain footnotes (collectively, the
"1998 AUDITED FINANCIAL STATEMENTS"). The Company shall use commercially
reasonable efforts to cause its independent auditors to deliver to Parent on or
prior to May 31, 1998 the Company's Annual Report on Form 10-K for the fiscal
year ended March 31, 1998.
SECTION 5. ADDITIONAL COVENANTS OF THE PARTIES.
5.1 REGISTRATION STATEMENT; PROSPECTUS/PROXY STATEMENT.
(a) As promptly as practicable after the date of this Agreement, the
Company and Parent shall prepare and cause to be filed with the SEC the S-4
Registration Statement, together with the Prospectus/Proxy Statement and any
other documents required by the Securities Act, the Exchange Act or any other
Federal, foreign or Blue Sky or related laws in connection with the Merger and
the transactions contemplated by this Agreement ("OTHER FILINGS"). Each of
Parent and the Company will notify the other promptly upon the receipt of any
comments from the SEC or its staff or any other government officials and of any
request by the SEC or its staff or any other government officials for amendments
or supplements to the S-4 Registration Statement, the Prospectus/Proxy Statement
or any Other Filings or for additional information and will supply the other
with copies of all correspondence between such party or
35.
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 S-4
Registration Statement, the Prospectus/Proxy Statement, any Other Filings or the
Merger. Each of Parent and the Company shall use all reasonable efforts to cause
the S-4 Registration Statement (including the Prospectus/Proxy Statement) and
any Other Filings to comply with the rules and regulations promulgated by the
SEC, to respond promptly to any comments of the SEC or its staff and to have the
S-4 Registration Statement declared effective under the Securities Act as
promptly as practicable after it is filed with the SEC. Parent will use all
reasonable efforts to cause the Prospectus/Proxy Statement to be mailed to
Parent's stockholders and the Company will use all reasonable efforts to cause
the Prospectus/Proxy Statement to be mailed to the Company's shareholders, as
promptly as practicable after the Form S-4 Registration Statement is declared
effective under the Securities Act. The Company shall promptly furnish to Parent
all information concerning the Acquired Corporations and the Company's
shareholders that may be required or reasonably requested in connection with any
action contemplated by this Section 5.1. If any event relating to any of the
Acquired Corporations occurs, or if the Company becomes aware of any
information, that should be set forth in an amendment or supplement to the S-4
Registration Statement or the Prospectus/Proxy Statement, then the Company shall
promptly inform Parent thereof and shall cooperate with Parent in filing such
amendment or supplement with the SEC and, if appropriate, in mailing such
amendment or supplement to the shareholders of the Company and the stockholders
of Parent.
(b) Prior to the Effective Time, Parent shall use reasonable efforts
to obtain all regulatory approvals needed to ensure that the Parent Common Stock
to be issued in the Merger will be registered or qualified under the securities
law of every jurisdiction of the United States in which any registered holder of
Company Common Stock has an address of record on the record date for determining
the shareholders entitled to notice of and to vote at the Company Shareholders'
Meeting; provided, however, that Parent shall not be required (i) to qualify to
do business as a foreign corporation in any jurisdiction in which it is not now
qualified or (ii) file a general consent to service of process in any
jurisdiction.
5.2 COMPANY SHAREHOLDERS' MEETING.
(a) The Company shall take all action necessary and permitted under
all applicable Legal Requirements to call, give notice of, convene and hold a
meeting of the holders of Company Common Stock (the "COMPANY SHAREHOLDERS'
MEETING") to consider, act upon and vote upon the adoption of this Agreement and
approval of the Merger. The Company Shareholders' Meeting will be held as
promptly as practicable and in any event, if permitted under applicable law,
within forty-five (45) days after the S-4 Registration Statement is declared
effective under the Securities Act; provided, however, that notwithstanding the
anything to the contrary contained in this Agreement, the Company may adjourn or
postpone the Company Shareholders' Meeting to the extent necessary to ensure
that any necessary supplement or amendment to the Prospectus/Proxy Statement is
provided to the Company's shareholders in advance of a vote on the Merger and
this Agreement or, if as of the time for which Company Shareholders' Meeting is
originally scheduled (as set forth in the Prospectus/Proxy Statement) there are
insufficient shares of Company Common Stock represented (either in person or by
proxy) to constitute a quorum necessary to conduct the business of the Company's
Shareholders' Meeting. The Company shall ensure that the Company Shareholders'
Meeting is called, noticed,
36.
convened, held and conducted, and subject to Section 5.2(c) that all proxies
solicited by the Company in connection with the Company Shareholders' Meeting
are solicited, in compliance with all applicable Legal Requirements. The
Company's obligation to call, give notice of, convene and hold the Company
Shareholders' Meeting in accordance with this Section 5.2(a) shall not be
limited or otherwise affected by the commencement, disclosure, announcement or
submission to the Company of any Acquisition Proposal, or by any withdrawal,
amendment or modification of the recommendation of the Board of Directors of the
Company with respect to the Merger.
(b) Subject to Section 5.2(c): (i) the Board of Directors of the
Company shall unanimously recommend that the Company's shareholders vote in
favor of and adopt and approve this Agreement and the Merger at the Company
Shareholders' Meeting; (ii) the Prospectus/Proxy Statement shall include a
statement to the effect that the Board of Directors of the Company has
unanimously recommended that the Company's shareholders vote in favor of and
adopt and approve this Agreement and the Merger at the Company Shareholders'
Meeting; and (iii) neither the Board of Directors of the Company 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 the Company that the Company's
shareholders vote in favor of and adopt and approve this Agreement and 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 Parent if
said recommendation shall no longer be unanimous.
(c) Nothing in this Agreement shall prevent the Board of Directors of
the Company from withholding, withdrawing, amending or modifying its unanimous
recommendation in favor of the Merger if (i) a Superior Offer is made to the
Company and is not withdrawn, (ii) neither the Company nor any of its
Representatives shall have violated any of the restrictions set forth in Section
4.4, and (iii) the Board of Directors of the Company 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 the Company to
comply with its fiduciary obligations to the Company's shareholders under
applicable law (and, in any such case, to the extent it does so, the Company may
refrain from soliciting proxies to secure the vote of its shareholders as may
otherwise be required hereby). Subject to applicable laws, nothing contained in
this Section 5.2 shall limit the Company's obligation to hold and convene the
Company Shareholders' Meeting (regardless of whether the unanimous
recommendation of the Board of Directors of the Company shall have been
withdrawn, amended or modified).
5.3 PARENT STOCKHOLDERS' MEETING.
(a) Parent shall take all action necessary and permitted under all
applicable Legal Requirements to call, give notice of, convene and hold a
meeting of the holders of Parent Common Stock to consider and vote upon the
issuance of Parent Common Stock in the Merger (the "PARENT STOCKHOLDERS'
MEETING"). The Parent Stockholders' Meeting will be held as promptly as
practicable and in any event, if permitted under applicable law, within forty-
five (45) days after the S-4 Registration Statement is declared effective under
the Securities Act; provided, however, that notwithstanding the anything to the
contrary contained in this
37.
Agreement, Parent may adjourn or postpone the Parent Stockholders' Meeting to
the extent necessary to ensure that any necessary supplement or amendment to the
Prospectus/Proxy Statement is provided to Parent's stockholders in advance of a
vote on the issuance of Parent Common Stock in the Merger or, if as of the time
for which the Parent Stockholders' Meeting is originally scheduled (as set forth
in the Prospectus/Proxy Statement) there are insufficient shares of Parent
Common Stock represented (either in person or by proxy) to constitute a quorum
necessary to conduct the business of the Parent's Stockholders' Meeting.
(b) (i) The board of directors of Parent shall unanimously recommend
that Parent's stockholders vote in favor of the issuance of Parent Common Stock
in the Merger; (ii) the Prospectus/Proxy Statement shall include a statement to
the effect that the board of directors of Parent has unanimously recommend that
Parent's stockholders vote in favor of the issuance of Parent Common Stock in
the Merger; and (iii) neither the board of directors of Parent nor any committee
thereof shall withdraw, amend or modify, or propose or resolve to withdraw,
amend or modify, in a manner adverse to the Company, the unanimous
recommendation of the board of directors of Parent that Parent's stockholders
vote in favor of the issuance of Parent Common Stock in the Merger. For
purposes of this Agreement, said recommendation of Parent's board of directors
shall be deemed to have been modified in a manner adverse to the Company if said
recommendation shall no longer be unanimous.
5.4 REGULATORY APPROVALS. The Company and Parent shall use all reasonable
efforts to file, as soon as practicable after the date of this Agreement, all
notices, reports and other documents required to be filed with any Governmental
Body with respect to the Merger and the other transactions contemplated by this
Agreement, and to submit promptly any additional information requested by any
such Governmental Body. Without limiting the generality of the foregoing, the
Company and Parent shall, promptly after the date of this Agreement, prepare and
file the notifications required under the HSR Act in connection with the Merger.
The Company and Parent shall respond as promptly as practicable to (i) any
inquiries or requests received from the Federal Trade Commission or the
Department of Justice for additional information or documentation and (ii) any
inquiries or requests received from any state attorney general or other
Governmental Body in connection with antitrust or related matters. Each of the
Company and Parent shall (1) give the other party prompt notice of the
commencement of any Legal Proceeding by or before any Governmental Body with
respect to the Merger or any of the other transactions contemplated by this
Agreement, (2) keep the other party informed as to the status of any such Legal
Proceeding, and (3) promptly inform the other party of any communication to or
from the Federal Trade Commission, the Department of Justice or any other
Governmental Body regarding the Merger. The Company and Parent will consult and
cooperate with one another, and will consider in good faith the views of one
another, in connection with any analysis, appearance, presentation, memorandum,
brief, argument, opinion or proposal made or submitted in connection with any
Legal Proceeding under or relating to the HSR Act or any other federal or state
antitrust or fair trade law. In addition, except as may be prohibited by any
Governmental Body or by any Legal Requirement, in connection with any Legal
Proceeding under or relating to the HSR Act or any other federal or state
antitrust or fair trade law or any other similar Legal Proceeding, each of the
Company and Parent agrees to permit authorized Representatives of the other
party to be present at each meeting or conference relating to any such Legal
Proceeding and to have access to and be consulted in connection with any
document,
38.
opinion or proposal made or submitted to any Governmental Body in connection
with any such Legal Proceeding.
5.5 STOCK OPTIONS.
(a) At the Effective Time, all rights with respect to Company Common
Stock under each Company Option then outstanding shall be converted into and
become rights with respect to Parent Common Stock, and Parent shall assume each
such Company Option in accordance with the terms (as in effect as of the date of
this Agreement) of the stock option plan under which it was issued and the stock
option agreement by which it is evidenced. From and after the Effective Time,
(i) each Company Option assumed by Parent may be exercised solely for shares of
Parent Common Stock, (ii) the number of shares of Parent Common Stock subject to
each such Company Option shall be equal to the number of shares of Company
Common Stock subject to such Company Option immediately prior to the Effective
Time multiplied by the Exchange Ratio, rounding down to the nearest whole share
(with cash, less the applicable exercise price, being payable for any fraction
of a share), (iii) the per share exercise price under each such Company Option
shall be adjusted by dividing the per share exercise price under such Company
Option by the Exchange Ratio and rounding up to the nearest cent and (iv) any
restriction on the exercise of any such Company Option shall continue in full
force and effect and the term, exercisability, vesting schedule and other
provisions of such Company Option shall otherwise remain unchanged; provided,
however, that each Company Option assumed by Parent in accordance with this
Section 5.5(a) shall, in accordance with its terms, be subject to further
adjustment as appropriate to reflect any stock split, stock dividend, reverse
stock split, reclassification, recapitalization or other similar transaction
subsequent to the Effective Time. It is the intention of the parties that
Company Options assumed by Purchaser qualify following the Effective Time as
incentive stock options as defined in Section 422 of the Code to the extent such
Company Options qualified as incentive stock options immediately prior to the
Effective Date.
(b) The Company shall take all action that, subject to pooling
restrictions, may be necessary (under the plans pursuant to which Company
Options are outstanding and otherwise) to effectuate the provisions of this
Section 5.5 and to ensure that, from and after the Effective Time, holders of
Company Options have no rights with respect thereto other than those
specifically provided in this Section 5.5.
(c) Promptly following the Effective Date, Parent will issue to each
holder of an assumed or replaced Company Option a document evidencing the
foregoing assumption or replacement of such Company Option by Parent.
(d) The Parent and the Company shall mutually agree as to the
treatment of the Purchase Plan.
5.6 FORM S-8. Parent agrees to file a registration statement on Form S-
8 for the shares of Parent Common Stock issuable with respect to assumed Company
Options, as soon as reasonably practical after the Effective Time.
39.
5.7 INDEMNIFICATION OF OFFICERS AND DIRECTORS.
(a) All rights to indemnification existing in favor of the directors
and officers of the Company for acts and omissions occurring prior to the
Effective Time, as provided in the Company's Articles of Incorporation or Bylaws
(as in effect as of the date of this Agreement) and as provided in any
indemnification agreements between the Company and said officers and directors
(as in effect at the Effective Time), shall survive the Merger and shall be the
obligation of and observed by Parent and the Surviving Corporation for a period
of not less than eight (8) years from and after the Effective Time.
(b) From the Effective Time until the third anniversary of the date on
which the Merger becomes effective, the Surviving Corporation shall maintain in
effect, for the benefit of the current directors and officers of the Company
with respect to acts or omissions occurring prior to the Effective Time, the
existing policy of directors' and officers' liability insurance maintained by
the Company as of the date of this Agreement (the "EXISTING POLICY"); provided,
however, that (i) the Surviving Corporation may substitute for the Existing
Policy a policy or policies of comparable coverage, and (ii) the Surviving
Corporation shall not be required to pay an annual premium for the Existing
Policy (or for any substitute policies) in excess of 150% of the amount of the
last annual premium paid by the Company prior to the date of this Agreement for
the Existing Policy (the "PAST PREMIUM AMOUNT"). In the event any future annual
premium for the Existing Policy (or any substitute policies) exceeds 150% of the
Past Premium Amount, the Surviving Corporation shall be entitled to reduce the
amount of coverage of the Existing Policy (or any substitute policies) to the
amount of coverage that can be obtained for a premium equal to 150% of the Past
Premium Amount.
(c) This Section 5.7 shall survive the consummation of the Merger at
the Effective Time, is intended to be for the benefit of, and enforceable by,
each person entitled to indemnification pursuant hereto and each such person's
or entity's heirs and representatives, and shall be binding on all successors
and assigns of Parent and the Surviving Corporation.
5.8 POOLING OF INTERESTS; TAX FREE REORGANIZATION. Each of the Company
and Parent agrees (a) not to take any action during the Pre-Closing Period that
would adversely affect the ability of Parent to account for the Merger as a
"pooling of interests," (b) to use all reasonable efforts to attempt to ensure
that none of its "affiliates" (as that term is used in Rule 145 promulgated
under the Securities Act) takes any action that could adversely affect the
ability of Parent to account for the Merger as a "pooling of interests" and (c)
not to take any action either prior to or after the Effective Time that would
reasonably be expected to cause the Merger to fail to qualify as a
"reorganization" under Section 368(a) of the Code. The Company and Parent each
agrees to provide Coopers & Xxxxxxx L.L.P. and KPMG Peat Marwick L.L.P. such
letters as may be reasonably requested by either of them with respect to the
letters referred to in Sections 6.5(e) and 6.5(f) or any other letters relating
to such matters and delivered to the Company and Parent prior to the letters
referred to in Sections 6.5(e) and 6.5(e).
5.9 ADDITIONAL AGREEMENTS.
(a) Subject to the terms hereof, Parent and the Company shall use all
reasonable efforts to take, or cause to be taken, all actions necessary to
consummate the Merger
40.
and make effective the other transactions contemplated by this Agreement as
expeditiously as reasonably practicable. Without limiting the generality of the
foregoing, but subject to the terms hereof, each party to this Agreement (i)
shall make all filings (if any) and give all notices (if any) required to be
made and given by such party in connection with the Merger and the other
transactions contemplated by this Agreement, (ii) shall use all reasonable
efforts to obtain each Consent (if any) required to be obtained (pursuant to any
applicable Legal Requirement or Contract, or otherwise) by such party in
connection with the Merger or any of the other transactions contemplated by this
Agreement, and (iii) shall use all reasonable efforts to lift any restraint,
injunction or other legal bar to the Merger.
(b) Notwithstanding anything to the contrary contained in this
Agreement, neither Parent nor the Company shall have any obligation under this
Agreement (i) to dispose or cause any of its Subsidiaries to dispose of any
material assets, or to commit to cause any of the Acquired Corporations to
dispose of any material assets; (ii) to discontinue or cause any of its
subsidiaries to discontinue offering any material product, or to commit to cause
any of the Acquired Corporations to discontinue offering any material product;
(iii) to license or otherwise make available, or cause any of its Subsidiaries
to license or otherwise make available, to any Person, any material technology
or software or other material Proprietary Asset, or to commit to cause any of
the Acquired Corporations to license or otherwise make available to any Person
any material technology or software or other material Proprietary Asset; (iv) to
hold separate or cause any of its Subsidiaries to hold separate any material
assets or operations (either before or after the Closing Date), or to commit to
cause any of the Acquired Corporations to hold separate any material assets or
operations; or (v) to make or cause any of its Subsidiaries make any material
commitment (to any Governmental Body or otherwise) regarding its future
operations or the future operations of any of the Acquired Corporations.
5.10 CONFIDENTIALITY. The parties acknowledge that the Company and
Parent have previously executed a Mutual Non-Disclosure Agreement, dated as of
February 25, 1998 (the "CONFIDENTIALITY AGREEMENT"), which Confidentiality
Agreement will continue in full force and effect in accordance with its terms.
5.11 DISCLOSURE. The parties have agreed to the text of a joint press
release announcing the signing of this Agreement. To the extent reasonably
practicable, Parent and the Company shall consult with each other before issuing
any further press release and shall confer with each other promptly after the
date hereof regarding a plan with respect to public statements made with respect
to the Merger.
5.12 AFFILIATE AGREEMENTS. The Company shall use all reasonable efforts to
cause each Person identified in Exhibit F-1 to execute and deliver to Parent,
prior to the date of the mailing of the Prospectus/Proxy Statement to the
Company's shareholders and Parent's Stockholders, Affiliate Agreements in the
form of Exhibit E-1. Parent shall use all reasonable efforts to cause each
Person identified on Exhibit F-2 to execute and deliver to Parent and the
Company, prior to the date of the mailing of the Prospectus/Proxy Statement to
the Company's shareholders and Parent's stockholders, Affiliate Agreements in
the form of Exhibit E-2.
5.13 TAX MATTERS. At or prior to the Closing, the Company, Parent and
Merger Sub shall execute and deliver to Xxxxxx Godward LLP and to Xxxxxx Xxxxxxx
Xxxxxxxx & Xxxxxx tax
41.
representation letters in substantially the forms attached as Exhibit G-1 or G-
2, as applicable, or any other letter reasonably requested by such law firms.
Parent, Merger Sub and the Company shall use all reasonable efforts to cause the
Merger to qualify as a tax free reorganization under Section 368(a)(1) of the
Code.
5.14 LETTER OF THE COMPANY'S ACCOUNTANTS. The Company shall use all
reasonable efforts to cause to be delivered to Parent a letter of Coopers &
Xxxxxxx L.L.P., dated no more than two (2) business days before the date on
which the S-4 Registration Statement becomes effective (and reasonably
satisfactory in form and substance to Parent), that is customary in scope and
substance for letters delivered by independent public accountants in connection
with registration statements similar to the S-4 Registration Statement.
5.15 NONCOMPETITION AGREEMENTS. The Company shall use all reasonable
efforts to obtain and deliver to Parent at the Closing the Noncompetition
Agreements in the form of Exhibit H, executed by the individuals identified on
Exhibit I.
5.16 NASDAQ LISTING. Parent shall use all reasonable efforts to have
the shares of Parent Common Stock issuable to the shareholders of the Company
pursuant to the Agreement and such other shares required to be reserved for
issuance in connection with the Merger authorized for listing on Nasdaq upon
official notice of issuance.
5.17 FIRPTA MATTERS. At the Closing, (a) the Company shall deliver to
Parent a statement (in such form as may be reasonably requested by counsel to
Parent) conforming to the requirements of Section 1.897 - 2(h)(1)(i) of the
United States Treasury Regulations, and (b) the Company shall deliver to the
Internal Revenue Service the notification required under Xxxxxxx 0.000 - 0(x)(0)
xx xxx Xxxxxx Xxxxxx Treasury Regulations.
SECTION 6. CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND MERGER SUB.
The obligations of Parent and Merger Sub to effect the Merger and otherwise
consummate the transactions contemplated by this Agreement are subject to the
satisfaction, at or prior to the Closing, of each of the following conditions,
and upon consummation of the Closing, all conditions herein shall be deemed
satisfied and any liability for failure to satisfy any condition herein shall be
precluded:
6.1 ACCURACY OF REPRESENTATIONS. Each representation and warranty of the
Company contained in Section 2 of this Agreement shall be true and correct on
and as of the date of this Agreement and on and as of the Closing Date with the
same force and effect as if made on and as of the Closing Date except, (A) in
each case, or in the aggregate, as does not constitute a Material Adverse Effect
on the Acquired Corporations, (B) for changes contemplated by this Agreement,
and (C) for those representations and warranties which address matters only as
of a particular date (which representations shall have been true and correct
except as does not constitute a Material Adverse Effect on the Company as of
such particular date) (it being understood that, for purposes of determining the
accuracy of such representations and warranties, (i) all "Material Adverse
Effect" qualifications and other qualifications based on the word "material" or
similar phrases contained in such representations and warranties shall be
42.
disregarded except with respect to Section 2.4(a) and 2.4(b), the second
sentence of Section 2.9(c), Section 2.10(a) and 2.10(b) and Section 2.12, and
(ii) any update of or modification to the Company Disclosure Schedule made or
purported to have been made after the date of this Agreement shall be
disregarded).
6.2 PERFORMANCE OF COVENANTS. Each covenant or obligation that the
Company is required to comply with or to perform at or prior to the Closing
shall have been complied with and performed in all material respects.
6.3 EFFECTIVENESS OF REGISTRATION STATEMENT. The S-4 Registration
Statement shall have become effective in accordance with the provisions of the
Securities Act, and no stop order shall have been issued by the SEC with respect
to the S-4 Registration Statement.
6.4 STOCKHOLDER APPROVAL. This Agreement and the Merger shall have been
duly approved by the Required Company Shareholder Vote, and the issuance of
Parent Common Stock in the Merger shall have been duly approved by the Required
Parent Stockholder Vote. Fewer than 10% of the outstanding shares of Company
Common Stock shall be Dissenting Shares.
6.5 AGREEMENTS AND DOCUMENTS. Parent shall have received the following
agreements and documents, each of which shall be in full force and effect:
(a) Affiliate Agreements in the form of Exhibit E-1, executed by each
individual identified on Exhibit F-1, except to the extent that any such
individual has died or has become incapacitated;
(b) Noncompetition Agreements in the form of Exhibit J, executed by
the individuals listed in Exhibit K, except to the extent that any such
individual has died or has become incapacitated;
(c) a letter from Coopers & Xxxxxxx L.L.P., dated as of the Closing
Date and addressed to Parent, reasonably satisfactory in form and substance to
Parent, updating the letter referred to in Section 5.14;
(d) the statement referred to in Section 5.17(a), executed by the
Company; and
(e) a letter from Coopers & Xxxxxxx L.L.P., dated as of a date no
earlier than three (3) days prior to the Closing Date and addressed to Parent,
the Company and KPMG Peat Marwick L.L.P., reasonably satisfactory in form and
substance to Parent and KPMG Peat Marwick L.L.P., to the effect that, after
reasonable investigation, Coopers & Xxxxxxx L.L.P. is not aware of any fact
concerning the Company or any of the Company's shareholders or affiliates that
could preclude Parent from accounting for the Merger as a "pooling of interests"
in accordance with GAAP, Accounting Principles Board Opinion No. 16 and all
published rules, regulations and policies of the SEC;
(f) a letter from KPMG Peat Marwick L.L.P., dated as of a date no
earlier than three (3) days prior to the Closing Date and addressed to Parent
and the Company,
43.
reasonably satisfactory in form and substance to Parent, to the effect such firm
concurs with the conclusion of Parent's management that Parent may account for
the Merger as a "pooling of interests" in accordance with GAAP, Accounting
Principles Board Opinion No. 16 and all published rules, regulations and
policies of the SEC; and
(g) a certificate executed on behalf of the Company by its Chief
Executive Officer confirming that the conditions set forth in Sections 6.1, 6.2,
6.4 (with respect to the Required Company Shareholder Vote) and 6.6 have been
duly satisfied.
6.6 NO MATERIAL ADVERSE CHANGE. There shall have been no material adverse
change in the business, financial condition, operations or financial performance
of the Acquired Corporations since the date of this Agreement other than any
change in the generation of revenue (and any corresponding change in the
margins, profitability or financial condition of the Acquired Corporations)
resulting from the public announcement or pendency of the Merger.
6.7 FIRPTA COMPLIANCE. The Company shall have filed with the Internal
Revenue Service the notification referred to in Section 5.17.
6.8 HSR ACT. The waiting period applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated.
6.9 LISTING. The shares of Parent Common Stock to be issued in the Merger
shall have been authorized for listing on Nasdaq, subject to notice of issuance.
6.10 NO RESTRAINTS. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Merger
shall have been issued by any court of competent jurisdiction and remain in
effect, and there shall not be any Legal Requirement enacted or deemed
applicable to the Merger that makes consummation of the Merger illegal.
6.11 NO GOVERNMENTAL LITIGATION. There shall not be pending or threatened
any action, suit or litigation brought by the United States government or the
European Community, or any agency, commission, instrumentality, unit or body of
the United States Government or the European Community: (a) challenging or
seeking to restrain or prohibit the consummation of the Merger; (b) relating to
the Merger and seeking to obtain from Parent or any of its subsidiaries any
damages that may be material to Parent; (c) seeking to prohibit or limit in any
material respect Parent's ability to vote, receive dividends with respect to or
otherwise exercise ownership rights with respect to the stock of the Surviving
Corporation; or (d) which would materially and adversely affect the right of
Parent, the Surviving Corporation or any subsidiary of Parent to own the assets
or operate the business of the Company.
6.12 1998 AUDITED FINANCIAL STATEMENTS. Parent shall have received the
1998 Audited Financial Statements.
SECTION 7. CONDITIONS PRECEDENT TO OBLIGATION OF THE COMPANY.
The obligation of the Company to effect the Merger and otherwise consummate
the transactions contemplated by this Agreement are subject to the satisfaction,
at or prior to the
44.
Closing, of the following conditions, and upon consummation of the Closing, all
conditions herein shall be deemed satisfied and any liability for failure to
satisfy any condition herein shall be precluded:
7.1 ACCURACY OF REPRESENTATIONS. Each representation and warranty of
Parent and Merger Sub contained in Section 3 of this Agreement shall be true and
correct on and as of the date of this Agreement and on and as of the Closing
Date with the same force and effect as if made on and as of the Closing Date,
except, (A) in each case, or in the aggregate, as does not constitute a Material
Adverse Effect on Parent and Merger Sub, (B) for changes contemplated by this
Agreement and (C) for those representations and warranties which address matters
only as of a particular date (which representations shall have been true and
correct except as does not constitute a Material Adverse Effect on Parent and
Merger Sub as of such particular date) (it being understood that, for purposes
of determining the accuracy of such representations and warranties, (i) all
"Material Adverse Effect" qualifications and other qualifications based on the
word "material" or similar phrases contained in such representations and
warranties shall be disregarded except with respect to Sections 3.4(a) and (b)
and 3.9(a) and (ii) any update of or modification to the Parent Disclosure
Schedule made or purported to have been made after the date of this Agreement
shall be disregarded).
7.2 PERFORMANCE OF COVENANTS. All of the covenants and obligations that
Parent and Merger Sub are required to comply with or to perform at or prior to
the Closing shall have been complied with and performed in all material
respects.
7.3 EFFECTIVENESS OF REGISTRATION STATEMENT. The S-4 Registration
Statement shall have become effective in accordance with the provisions of the
Securities Act, and no stop order shall have been issued by the SEC with respect
to the S-4 Registration Statement.
7.4 STOCKHOLDER APPROVAL. This Agreement and the Merger shall have been
duly approved by the Required Company Shareholder Vote, and the issuance of
Parent Common Stock in the Merger shall have been duly approved by the Required
Parent Stockholder Vote.
7.5 AGREEMENTS AND DOCUMENTS. The Company shall have received the
following documents:
(a) Affiliate Agreements in the form of Exhibit E-2, executed by each
individual identified on Exhibit F-2, except to the extent that any such
individual has died or has become incapacitated;
(b) a legal opinion of Xxxxxx Godward LLP, dated as of the Closing
Date and addressed to Parent, to the effect that the Merger will constitute a
reorganization within the meaning of Section 368 of the Code (it being
understood that, in rendering such opinion, Xxxxxx Godward LLP may rely upon the
tax representation letters referred to in Section 5.13);
(c) a legal opinion of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, dated as of
the Closing Date, to the effect that the Merger will constitute a reorganization
within the meaning of Section 368 of the Code (it being understood that, in
rendering such opinion, Xxxxxx Xxxxxxx
45.
Xxxxxxxx & Xxxxxx may rely upon tax representation letters including those
referred to in Section 5.13);
(d) a letter from Coopers & Xxxxxxx L.L.P., dated as of a date no
earlier than three (3) days prior to the Closing Date and addressed to Parent,
the Company and KPMG Peat Marwick L.L.P., reasonably satisfactory in form and
substance to the Company, to the effect that, after reasonable investigation,
Coopers & Xxxxxxx L.L.P. is not aware of any fact concerning the Company or any
of the Company's shareholders or affiliates that could preclude Parent from
accounting for the Merger as a "pooling of interests" in accordance with GAAP,
Accounting Principles Board Opinion No. 16 and all published rules, regulations
and policies of the SEC;
(e) a letter from KPMG Peat Marwick L.L.P., dated as of a date no
earlier than three (3) days prior to the Closing Date and addressed to Parent
and the Company, reasonably satisfactory in form and substance to the Company,
to the effect that such firm concurs with Parent's management's conclusion that
Parent may account for the Merger as a "pooling of interests" in accordance with
GAAP, Accounting Principles Board Opinion No. 16 and all published rules,
regulations and policies of the SEC; and
(f) a certificate executed on behalf of Parent by an executive officer
of Parent, confirming that conditions set forth in Sections 7.1, 7.2, 7.3 and
7.6 have been duly satisfied.
7.6 NO MATERIAL ADVERSE CHANGE. There shall have been no material
adverse change in the business, financial condition, operations or financial
performance of Parent since the date of this Agreement other than any change in
the generation of revenue (and any corresponding change in the margins,
profitability or financial condition of Parent) resulting from the public
announcement or pendency of the Merger.
7.7 HSR ACT. The waiting period applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated.
7.8 LISTING. The shares of Parent Common Stock to be issued in the
Merger shall have been authorized for listing on Nasdaq, subject to notice of
issuance.
7.9 NO RESTRAINTS. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Merger
shall have been issued by any court of competent jurisdiction and remain in
effect, and there shall not be any Legal Requirement enacted or deemed
applicable to the Merger that makes consummation of the Merger illegal.
SECTION 8. TERMINATION.
8.1 TERMINATION. This Agreement may be terminated prior to the Effective
Time, whether before or after approval of the Merger by the shareholders of the
Company:
(a) by mutual written consent duly authorized by the Boards of
Directors of the Parent and the Company;
46.
(b) by either Parent or the Company if the Merger shall not have been
consummated by September 1, 1998 (unless the failure to consummate the Merger is
substantially attributable to an action or failure to act on the part of the
party seeking to terminate this Agreement and such action or failure to act
constitutes a material breach of this Agreement;
(c) by either Parent or the Company if a court of competent
jurisdiction or other Governmental Body shall have issued a final and non-
appealable order, decree or ruling, or shall have taken any other action, having
the effect of permanently restraining, enjoining or otherwise prohibiting the
Merger;
(d) by either Parent or the Company if (i) the Company Shareholders'
Meeting shall have been held (either on the date for which such Meeting was
originally scheduled or pursuant to any permissible adjournment or postponement)
and (ii) this Agreement and the Merger shall not have been adopted and approved
at such meeting by the Required Company Shareholder Vote (provided that the
right to terminate this Agreement under this Section 8.1(d) shall not be
available to the Company where the failure to obtain Company shareholder
approval shall have been caused by the action or failure to act of the Company
and such action or failure to act constitutes a material breach by the Company
of this Agreement);
(e) by Parent or the Company (at any time prior to the adoption and
approval of this Agreement and the Merger by the Company Required Shareholder
Vote) if a Triggering Event shall have occurred, provided that the right of the
Company under this Section 8.1(e) shall not be exercisable until May 30, 1998;
(f) by Parent or the Company (at any time prior to the adoption and
approval of this Agreement and the Merger by the Company Required Shareholder
Vote) if a Termination Event shall have occurred, provided that the right of the
Company under this Section 8.1(f) shall not be exercisable until May 30, 1998;
(g) by either Parent or the Company if (i) the Parent Stockholders'
Meeting shall have been held (either on the date for which such Meeting was
originally scheduled or pursuant to any permissible adjournment or postponement)
and (ii) issuance of the Parent Common Stock in the Merger shall not have been
approved at such meeting by the Required Parent Stockholder Vote (provided that
the right to terminate this Agreement under this Section 8.1(g) shall not be
available to the Parent where the failure to obtain Parent shareholder approval
shall have been caused by the action or failure to act of the Parent and such
action or failure to act constitutes a material breach by the Parent of this
Agreement);
(h) by Parent if any of the Company's representations and warranties
contained in this Agreement shall be or shall have become materially inaccurate,
or if any of the Company's covenants contained in this Agreement shall have been
breached, in either case such that the conditions set forth in Section 6.1 or
6.2 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, however, that if
an inaccuracy in the Company's representations and warranties or a breach of a
covenant by the Company is curable by the Company prior to September 1, 1998 and
the Company is continuing to exercise all reasonable efforts to cure such
inaccuracy or breach, then
47.
Parent may not terminate this Agreement under this Section 8.1(h) on account of
such inaccuracy or breach; or
(i) by the Company if any of Parent's representations and warranties
contained in this Agreement shall be or shall have become materially inaccurate,
or if any of Parent's covenants contained in this Agreement shall have been
breached, in either case such that the conditions set forth in Section 7.1 or
7.2 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, however, that if
an inaccuracy in Parent's representations and warranties or a breach of a
covenant by Parent is curable by Parent prior to September 1, 1998 and Parent is
continuing to exercise all reasonable efforts to cure such inaccuracy or breach,
then the Company may not terminate this Agreement under this Section 8.1(i) on
account of such inaccuracy or breach.
8.2 NOTICE OF TERMINATION; EFFECT OF TERMINATION. Any termination 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; provided, however, that (i) this Section 8.2,
Section 8.3 and Section 9 shall survive the termination of this Agreement and
shall remain in full force and effect, (ii) the termination of this Agreement
shall not relieve any party from any liability for any willful breach of this
Agreement and (iii) no termination of this Agreement shall affect the
obligations of the parties contained in the Confidentiality Agreement, all of
which obligations shall survive termination of this Agreement in accordance with
their terms.
8.3 EXPENSES; TERMINATION FEES.
(a) Except as set forth in this Section 8.3, all fees and expenses
incurred in connection with this Agreement and the transactions contemplated by
this Agreement shall be paid by the party incurring such expenses, whether or
not the Merger is consummated; provided, however, that Parent and the Company
shall share equally all fees and expenses, other than attorneys' and
accountants' fees, incurred in connection with (i) the printing and filing of
the S-4 Registration Statement and the Prospectus/Proxy Statement and any
amendments or supplements thereto and (ii) the filing of the premerger
notification and report forms relating to the Merger under the HSR Act.
(b) If this Agreement is terminated by Parent or the Company pursuant
to Section 8.1(e), then the Company shall pay to Parent, in cash, a
nonrefundable fee equal to the product of (i) the "TERMINATION FEE PER SHARE"
(as defined below) and (ii) the "FULLY DILUTED COMPANY SHARE AMOUNT" (the
"TERMINATION FEE"), within three (3) days of such termination. The "TERMINATION
FEE PER SHARE" shall be equal to the product of (A) 0.025 multiplied by the
Exchange Ratio and (B) the average of the closing sales prices of a share of
Parent Common Stock as reported on Nasdaq for the ten (10) trading days ending
on and including the second trading day prior to the date of termination
specified in the termination notice provided for in Section 8.1(e) (or, for
purposes of using this definition in calculating the Termination Fee due under
Section 8.3(c) below, as provided for in Section 8.1(d)). The "FULLY DILUTED
COMPANY SHARE AMOUNT" shall be equal to the sum of (x) the aggregate number of
shares of Company Common Stock outstanding as of February 27, 1998 and (y) the
aggregate number of shares of
48.
Company Common Stock issuable upon exercise of all outstanding Company Options
(based on the treasury method) as of February 27, 1998.
(c) If this Agreement is terminated by Company or Parent pursuant to
Section 8.1(d) and (i) a Company Acquisition is consummated or (ii) the Company
shall enter into a definitive agreement providing for a Company Acquisition, in
either case at any time prior to the first anniversary of the date of this
Agreement, Company shall pay to Parent the Termination Fee contemporaneously
with the earlier of (i) the consummation of such Company Acquisition and (ii)
the public announcement by the Company of its entry into a definitive agreement
providing for a Company Acquisition.
(d) If this Agreement is terminated by Parent or the Company pursuant
to Section 8.1(g), then Parent shall pay to the Company $12,600,000 in cash
within three (3) days of such termination.
SECTION 9. MISCELLANEOUS PROVISIONS.
9.1 AMENDMENT. This Agreement may be amended with the approval of the
respective boards of directors of the Company and Parent at any time (whether
before or after approval of this Agreement and the Merger by the shareholders of
the Company; and whether before or after approval of the issuance of Parent
Common Stock in the Merger by Parent's stockholders); provided, however, that
(i) after any such approval of this Agreement and the Merger by the Company's
shareholders, no amendment shall be made which by law requires further approval
of the shareholders of the Company without the further approval of such
shareholders, and (ii) after any such approval of the issuance of Parent Company
Stock in the Merger by Parent's stockholders, no amendment shall be made which
by law or NASD regulation requires further approval of Parent's stockholders
without the further approval of such stockholders. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
9.2 WAIVER.
(a) No failure on the part of any party to exercise any power,
right, privilege or remedy under this Agreement, and no delay on the part of any
party in exercising any power, right, privilege or remedy under this Agreement,
shall operate as a waiver of such power, right, privilege or remedy; and no
single or partial exercise of any such power, right, privilege or remedy shall
preclude any other or further exercise thereof or of any other power, right,
privilege or remedy.
(b) No party shall be deemed to have waived any claim arising out of
this Agreement, or any power, right, privilege or remedy under this Agreement,
unless the waiver of such claim, power, right, privilege or remedy is expressly
set forth in a written instrument duly executed and delivered on behalf of such
party; and any such waiver shall not be applicable or have any effect except in
the specific instance in which it is given.
9.3 NO SURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties contained in this Agreement or in any certificate
delivered pursuant to this Agreement shall survive the Merger.
49.
9.4 ENTIRE AGREEMENT; COUNTERPARTS. This Agreement and the other
agreements referred to herein constitute the entire agreement and supersede all
prior agreements and understandings, both written and oral, among or between any
of the parties with respect to the subject matter hereof and thereof. This
Agreement may be executed in several counterparts, each of which shall be deemed
an original and all of which shall constitute one and the same instrument.
9.5 APPLICABLE LAW; JURISDICTION. THIS AGREEMENT IS MADE UNDER, AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
CALIFORNIA APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED SOLELY THEREIN,
WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW. In any action between
or among any of the parties, whether arising out of this Agreement or otherwise,
(a) each of the parties irrevocably and unconditionally consent in the State of
California; (b) if any such action is commenced in a state court, then, subject
to applicable law, no party shall object to the removal of such action to any
federal court located in the law, no party shall object to the removal of such
action to any federal court located in the State of California; (c) each of the
parties irrevocably waivers the right to trial by jury; and (d) each of the
parties irrevocably consents to service of process by first class certified
mail, return receipt requested, postage prepaid, to the address at which such
party is to receive notice in accordance with Section 9.9.
9.6 DISCLOSURE SCHEDULES. The Company Disclosure Schedule and Parent's
Disclosure Schedule shall each be arranged in separate parts corresponding to
the numbered and lettered sections contained in Section 2 or 3 as the case may
be, and the information disclosed in any numbered or lettered part shall be
deemed to relate to and to qualify the particular representation or warranty set
forth in the corresponding numbered or lettered section in Section 2 or 3 as the
case may be, as well as other sections of this Agreement to which any such
disclosures are clearly appropriate.
9.7 ATTORNEYS' FEES. In any action at law or suit in equity to enforce
this Agreement or the rights of any of the parties hereunder, the prevailing
party in such action or suit shall be entitled to receive a reasonable sum for
its attorneys' fees and all other reasonable costs and expenses incurred in such
action or suit.
9.8 ASSIGNABILITY; THIRD PARTY BENEFICIARIES. This Agreement shall be
binding upon, and shall be enforceable by and inure solely to the benefit of,
the parties hereto and their respective successors and assigns; provided,
however, that neither this Agreement nor any of the Company's rights hereunder
may be assigned by the Company without the prior written consent of Parent, and
any attempted assignment of this Agreement or any of such rights by the Company
without such consent shall be void and of no effect. Except as set forth in
Sections 5.5 and 5.7 with respect to the directors and officers of the Company,
nothing in this Agreement, express or implied, is intended to or shall confer
upon any Person any right, benefit or remedy of any nature whatsoever under or
by reason of this Agreement.
9.9 NOTICES. Any notice or other communication required or permitted to
be delivered to any party under this Agreement shall be in writing and shall be
deemed properly delivered, given and received when delivered (by hand, by
registered mail, by courier or express
50.
delivery service or by facsimile (confirmation obtained)) to the address or
facsimile telephone number set forth beneath the name of such party below (or to
such other address or facsimile telephone number as such party shall have
specified in a written notice given to the other parties hereto):
if to Parent: Siebel Systems, Inc.
0000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxx, XX 00000
Fax: (000) 000-0000
if to Merger Sub: Syracuse Acquisition Sub, Inc.
0000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxx, XX 00000
Fax: (000) 000-0000
if to the Company: Scopus Technology, Inc.
0000 Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Fax: (000) 000-0000
9.10 COOPERATION. Subject to the terms of this Agreement, the Company
agrees to cooperate fully with Parent and to execute and deliver such further
documents, certificates, agreements and instruments and to take such other
actions as may be reasonably requested by Parent to evidence or reflect the
transactions contemplated by this Agreement and to carry out the intent and
purposes of this Agreement.
9.11 LIABILITY. Notwithstanding anything to the contrary in this
Agreement or any of the agreements attached hereto as exhibits (collectively,
the "MERGER AGREEMENTS"), the parties hereto agree that no officer, director or
shareholder of any of the parties hereto shall be personally liable with respect
to any of the Merger Agreements or any of the transactions contemplated thereby,
other than with respect to their personal obligations under the Merger
Agreements.
9.12 CONSTRUCTION.
(a) For purposes of this Agreement, whenever the context requires:
the singular number shall include the plural, and vice versa; the masculine
gender shall include the feminine and neuter genders; the feminine gender shall
include the masculine and neuter genders; and the neuter gender shall include
masculine and feminine genders.
(b) The parties hereto agree that any rule of construction to the
effect that ambiguities are to be resolved against the drafting party shall not
be applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words "include" and "including,"
and variations thereof, shall not be deemed to be terms of limitation, but
rather shall be deemed to be followed by the words "without limitation."
51.
(d) Except as otherwise indicated, all references in this Agreement to
"Sections" and "Exhibits" are intended to refer to Sections of this Agreement
and Exhibits to this Agreement.
52.
IN WITNESS WHEREOF, the parties have caused this AGREEMENT AND PLAN OF
MERGER AND REORGANIZATION to be executed as of the date first above written.
SIEBEL SYSTEMS, INC.
By: /s/ Xxxxxx X. Xxxxxx
________________________________________
Title: Senior Vice President, Finance and
Administration and Chief Financial
Officer
_____________________________________
SYRACUSE ACQUISITION SUB, INC.
By: /s/ Xxxxxx X. Xxxxxx
________________________________________
Title: President and Chief Financial Officer
_____________________________________
SCOPUS TECHNOLOGY, INC.
By: /s/ Xxxxxxxx Xxxxxxx
________________________________________
Title: Senior Vice President and Chief
Financial Officer
_____________________________________
EXHIBITS INDEX
Exhibit A...... Certain Definitions
Exhibit B-1.... Company Shareholders who have executed Voting Agreements
Exhibit B-2.... Parent Stockholder who has executed Voting Agreement
Exhibit C-1.... Form of Voting Agreement for Company Shareholders
Exhibit C-2.... Form of Voting Agreement for Parent Stockholder
Exhibit D...... Form of Option Agreement
Exhibit E-1.... Form of Affiliate Agreement for Company Affiliates
Exhibit E-2.... Form of Affiliate Agreement for Parent Affiliates
Exhibit F-1.... Individuals executing Affiliate Agreement in Form of Exhibit E-1
Exhibit F-2.... Individuals executing Affiliate Agreement in Form of Exhibit E-2
Exhibit G-1.... Form of Tax Representation Letter to be delivered by Parent and
Merger Sub
Exhibit G-2.... Form of Tax Representation Letter to be delivered by Company
Exhibit H...... Form of Noncompetition Agreement
Exhibit I...... Individuals to execute Noncompetition Agreement in Form of
Exhibit H
Exhibit J...... Form of Noncompetition Agreement
Exhibit K...... Individuals to execute Noncompetition Agreement in Form of
Exhibit J
i.
EXHIBIT A
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Exhibit A):
ACQUIRED CORPORATION CONTRACT. "ACQUIRED CORPORATION CONTRACT" shall
mean any Contract: (a) to which any of the Acquired Corporations is a party;
(b) by which any of the Acquired Corporations or any asset of any of the
Acquired Corporations is or may become bound or under which any of the Acquired
Corporations has, or may become subject to, any obligation; or (c) under which
any of the Acquired Corporations has or may acquire any right or interest.
ACQUIRED CORPORATION PROPRIETARY ASSET. "ACQUIRED CORPORATION
PROPRIETARY ASSET" shall mean any Proprietary Asset owned by or licensed to any
of the Acquired Corporations or otherwise used by any of the Acquired
Corporations.
ACQUISITION PROPOSAL. "ACQUISITION PROPOSAL" shall mean any offer or
proposal (other than an offer or proposal by Parent) relating to any Acquisition
Transaction.
ACQUISITION TRANSACTION. "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 the Company 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 20% interest in the total outstanding
voting securities of the Company or any of its material 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 20% or more of the total outstanding
voting securities of the Company or any of its material Subsidiaries or any
merger, consolidation, business combination or similar transaction involving the
Company pursuant to which the stockholders of the Company immediately preceding
such transaction hold less than 80% 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 50% of the assets of the Company; or
(c) Any liquidation or dissolution of the Company.
AGREEMENT. "AGREEMENT" shall mean the Agreement and Plan of Merger
and Reorganization to which this Exhibit A is attached, as it may be amended
from time to time.
COMPANY ACQUISITION. "COMPANY ACQUISITION" shall mean any of the following
transactions (other than the transactions contemplated by this Agreement); (i) a
merger,
A1-1
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction involving the Company pursuant to which the shareholders
of the Company immediately preceding such transaction hold less than 50% of the
aggregate equity interests in the surviving or resulting entity of such
transaction or (ii) a sale or other disposition by the Company of assets
(excluding inventory and used equipment sold in the ordinary course of business)
representing in excess of 50% of the aggregate fair market value of the
Company's business immediately prior to such sale.
COMPANY COMMON STOCK. "COMPANY COMMON STOCK" shall mean the Common
Stock, $0.001 par value per share, of the Company.
CONSENT. "CONSENT" shall mean any approval, consent, ratification,
permission, waiver or authorization (including any Governmental Authorization).
CONTRACT. "CONTRACT" shall mean any written, oral or other agreement,
contract, subcontract, lease, binding understanding, instrument, note, option,
warranty, purchase order, license, sublicense, insurance policy, benefit plan or
legally binding commitment or undertaking of any nature, as in effect as of the
date hereof or as may hereinafter be in effect.
ENCUMBRANCE. "ENCUMBRANCE" shall mean any lien, pledge,
hypothecation, charge, mortgage, security interest, encumbrance, claim,
infringement, interference, option, right of first refusal, preemptive right,
community property interest or restriction of any nature (including any
restriction on the voting of any security, any restriction on the transfer of
any security or other asset, any restriction on the receipt of any income
derived from any asset, any restriction on the use of any asset and any
restriction on the possession, exercise or transfer of any other attribute of
ownership of any asset).
ENTITY. "ENTITY" shall mean any corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, company (including any limited
liability company or joint stock company), firm or other enterprise,
association, organization or entity.
EXCHANGE ACT. "EXCHANGE ACT" shall mean the Securities Exchange Act of
1934, as amended.
GOVERNMENTAL AUTHORIZATION. "GOVERNMENTAL AUTHORIZATION" shall mean
any: (a) permit, license, certificate, franchise, permission, clearance,
registration, qualification or authorization issued, granted, given or otherwise
made available by or under the authority of any Governmental Body or pursuant to
any Legal Requirement; or (b) right under any Contract with any Governmental
Body.
GOVERNMENTAL BODY. "GOVERNMENTAL BODY" shall mean any: (a) nation,
state, commonwealth, province, territory, county, municipality, district or
other jurisdiction of any nature; (b) federal, state, local, municipal, foreign
or other government; or (c) governmental or quasi-governmental authority of any
nature (including any governmental division, department, agency, commission,
instrumentality, official, organization, unit or body and any court or other
A2-1
tribunal), in each case with jurisdiction over Parent, the Acquired Corporations
or the material assets of the Acquired Corporations.
HSR ACT. "HSR ACT" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended.
LEGAL PROCEEDING. "LEGAL PROCEEDING" shall mean any action, suit,
litigation, arbitration, proceeding (including any civil, criminal,
administrative, investigative or appellate proceeding), hearing, inquiry, audit,
examination or investigation commenced, brought, conducted or heard by or
before, or otherwise involving, any court or other Governmental Body or any
arbitrator or arbitration panel.
LEGAL REQUIREMENT. "LEGAL REQUIREMENT" shall mean any federal, state,
local, municipal, foreign or other law, statute, constitution, principle of
common law, resolution, ordinance, code, edict, decree, rule, regulation, ruling
or requirement issued, enacted, adopted, promulgated, implemented or otherwise
put into effect by or under the authority of any Governmental Body.
MATERIAL ADVERSE EFFECT. An event, violation, inaccuracy,
circumstance or other matter will be deemed to have a "Material Adverse Effect"
on the Acquired Corporations if such event, violation, inaccuracy, circumstance
or other matter would have a material adverse effect on (i) the business,
financial condition, operations or financial performance of the Acquired
Corporations taken as a whole or (ii) Parent's ability to vote, receive
dividends with respect to or otherwise exercise ownership rights with respect to
the stock of the Surviving Corporation. An event, violation, inaccuracy,
circumstance or other matter will be deemed to have a "Material Adverse Effect"
on Parent if such event, violation, inaccuracy, circumstance or other matter
would have a material adverse effect on the business, financial condition,
operations or financial performance of Parent and its Subsidiaries taken as a
whole.
NASDAQ. "NASDAQ" shall mean the Nasdaq National Market.
PARENT COMMON STOCK. "PARENT COMMON STOCK" shall mean the Common
Stock, $.001 par value per share, of Parent.
PERSON. "PERSON" shall mean any individual, Entity or Governmental
Body.
PROPRIETARY ASSET. "PROPRIETARY ASSET" shall mean any: (a) patent,
patent application, trademark (whether registered or unregistered), trademark
application, trade name, fictitious business name, service xxxx (whether
registered or unregistered), service xxxx application, copyright (whether
registered or unregistered), copyright application, maskwork, maskwork
application, trade secret, know-how, customer list, franchise, system, computer
software, computer program (in source and executable form), algorithm,
invention, design, blueprint, engineering drawing, proprietary product,
technology, proprietary right or other intellectual property right or intangible
asset in any jurisdiction in the world; or (b) right to use or exploit any of
the foregoing in any jurisdiction in the world.
A3-1
REPRESENTATIVES. "REPRESENTATIVES" shall mean officers, directors,
employees, agents, attorneys, accountants, advisors and representatives.
SEC. "SEC" shall mean the United States Securities and Exchange
Commission.
SECURITIES ACT. "SECURITIES ACT" shall mean the Securities Act
of 1933, as amended.
SUBSIDIARY. An entity shall be deemed to be a "Subsidiary" of another
Person if such Person directly or indirectly owns, beneficially or of record, an
amount of voting securities of other interests in such Entity that is sufficient
to enable such Person to elect at leased a majority of the members of such
Entity's board of directors or other governing body.
SUPERIOR OFFER. "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 the
Company pursuant to which the stockholders of the Company immediately preceding
such transaction hold less than 50% of the equity interests in the surviving or
resulting entity of such transaction; (ii) a sale or other disposition by the
Company 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
the Company'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 the Company), 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 the
Company, on terms that the board of directors of the Company determines, in its
reasonable judgment, after consultation with its financial advisor, to be, if
such officer is consummated, more favorable to the Company's shareholders 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 the Company's board of directors to be obtained by such third party
on a timely basis.
TAX. "TAX" shall mean any tax (including any income tax, franchise
tax, capital gains tax, gross receipts tax, value-added tax, surtax, excise tax,
ad valorem tax, transfer tax, stamp tax, sales tax, use tax, property tax,
business tax, withholding tax or payroll tax), levy, assessment, tariff, duty
(including any customs duty), deficiency or fee, and any related charge or
amount (including any fine, penalty or interest), imposed, assessed or collected
by or under the authority of any Governmental Body.
TAX RETURN. "TAX RETURN" shall mean any return (including any
information return), report, statement, declaration, estimate, schedule, notice,
notification, form, election, certificate or other document or information filed
with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection
or payment of any Tax or in connection with the administration, implementation
or enforcement of or compliance with any Legal Requirement relating to any Tax.
A4-1
TERMINATION EVENT. A "TERMINATION EVENT" shall be deemed to occur if
the Company shall not have used reasonable efforts to hold the Company
Shareholders' Meeting as promptly as practicable and in any event within the
later of (A) forty-five (45) days after the Form S-4 Registration Statement is
declared effective under the Securities Act or (B) ten (10) days after any
amendments or supplement to the Prospectus/Proxy Statement are mailed to
shareholders of the Company.
TRIGGERING EVENT. A "TRIGGERING EVENT" shall be deemed to have
occurred if: (i) the Board of Directors of the Company 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) the Company shall have failed to
include in the Prospectus/Proxy Statement the unanimous recommendation of the
board of directors of the Company in favor of the adoption and approval of the
Agreement and the approval of the Merger; (iii) the board of directors of the
Company 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 public announcement of an Acquisition
Proposal; (iv) the board of directors of the Company shall have approved or
publicly recommended any Acquisition Proposal; (v) the Company shall have
entered into any letter of intent of similar document or any Contract accepting
any Acquisition Proposal; or (vi) a tender or exchange offer relating to
securities of the Company shall have been commenced by a Person unaffiliated
with Parent and the Company shall not have sent to its securityholders 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 the Company recommends rejection of such tender or
exchange offer.
A5-1
