Exhibit 2.1
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AGREEMENT AND PLAN OF MERGER,
DATED AS OF FEBRUARY 26, 2003,
BY AND AMONG
ELECTRONICS FOR IMAGING, INC.,
STRATEGIC VALUE ENGINEERING, INC.
AND
PRINTCAFE SOFTWARE, INC.
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TABLE OF CONTENTS
Page
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ARTICLE 1 THE MERGER 1
Section 1.1 The Merger................................................. 1
Section 1.2 The Closing................................................ 1
Section 1.3 Effective Time............................................. 2
Section 1.4 Effects of the Merger...................................... 2
Section 1.5 Certificate of Incorporation and Bylaws.................... 2
Section 1.6 Board of Directors and Officers............................ 2
ARTICLE 2 EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS; EXCHANGE OF CERTIFICATES 3
Section 2.1 Effect on Capital Stock.................................... 3
Section 2.2 Election Procedures........................................ 4
Section 2.3 Exchange of Certificates................................... 5
Section 2.4 Dissenting Shares.......................................... 8
Section 2.5 Company Stock Options; Restricted Shares; ESPP............. 8
Section 2.6 Certain Adjustments........................................ 11
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.1 Organization, Standing and Corporate Power................. 11
Section 3.2 Title to Assets; Subsidiaries.............................. 11
Section 3.3 Capital Structure.......................................... 12
Section 3.4 Authority; Noncontravention................................ 13
Section 3.5 SEC Documents; Undisclosed Liabilities..................... 15
Section 3.6 Intellectual Property...................................... 16
Section 3.7 Absence of Certain Changes or Events....................... 17
Section 3.8 Litigation................................................. 18
Section 3.9 Certain Contracts.......................................... 18
Section 3.10 Customers ................................................ 19
Section 3.11 Compliance with Applicable Laws .......................... 19
Section 3.12 Benefit Plans ............................................ 20
Section 3.13 Taxes .................................................... 22
Section 3.14 Information Supplied ..................................... 24
Section 3.15 Voting Requirements ...................................... 25
Section 3.16 State Takeover Statutes .................................. 25
Section 3.17 Brokers .................................................. 25
Section 3.18 Opinion of Financial Advisor ............................. 25
Section 3.19 Absence of Questionable Payments ......................... 25
Section 3.20 Insider Interests ........................................ 26
Section 3.21 Rights Agreement ......................................... 26
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ARTICLE 4 REPRESENTATIONS OF THE PARENT AND MERGER SUB 26
Section 4.1 Organization, Standing and Corporate Power................. 26
Section 4.2 Capital Structure.......................................... 26
Section 4.3 Authority; Noncontravention................................ 27
Section 4.4 SEC Documents; Undisclosed Liabilities..................... 28
Section 4.5 Information Supplied....................................... 28
Section 4.6 Absence of Certain Changes or Events....................... 29
Section 4.7 Voting Requirements........................................ 29
Section 4.8 Operations of Merger Sub................................... 29
Section 4.9 Litigation................................................. 29
Section 4.10 Brokers .................................................. 29
Section 4.11 Absence of Questionable Payments ......................... 29
Section 4.12 Insider Interests ........................................ 29
ARTICLE 5 COVENANTS 30
Section 5.1 Conduct of the Company's Business.......................... 30
Section 5.2 Advice of Changes.......................................... 32
Section 5.3 No Solicitation by the Company............................. 32
Section 5.4 The Form S-4 and the Proxy Statement; the Stockholders
Meeting.................................................... 34
Section 5.5 Letters of the Company's Accountants....................... 35
Section 5.6 Access to Information; Confidentiality..................... 35
Section 5.7 Reasonable Efforts......................................... 36
Section 5.8 Employee Matters........................................... 37
Section 5.9 Indemnification, Exculpation and Insurance................. 38
Section 5.10 Fees and Expenses ........................................ 39
Section 5.11 Public Announcements ..................................... 39
Section 5.12 Affiliates ............................................... 39
Section 5.13 Listing .................................................. 39
Section 5.14 Litigation ............................................... 40
Section 5.15 Rights Agreement ......................................... 40
Section 5.16 Obligations of Merger Sub; Voting of Shares .............. 40
Section 5.17 Stockholders Agreement Legend ............................ 40
ARTICLE 6 CONDITIONS PRECEDENT 40
Section 6.1 Conditions to Each Party's Obligation To Effect the Merger. 40
Section 6.2 Conditions to Obligations of the Parent and Merger Sub..... 41
Section 6.3 Conditions to Obligations of the Company................... 42
ARTICLE 7 TERMINATION 42
Section 7.1 Termination................................................ 42
Section 7.2 Effect of Termination...................................... 43
Section 7.3 Procedure for Termination.................................. 43
ARTICLE 8 General Provisions 44
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Section 8.1 Nonsurvival of Representations and Warranties.............. 44
Section 8.2 Amendment.................................................. 44
Section 8.3 Extension; Waiver.......................................... 44
Section 8.4 Notices.................................................... 44
Section 8.5 Definitions................................................ 45
Section 8.6 Construction and Interpretation............................ 46
Section 8.7 Counterparts............................................... 46
Section 8.8 Entire Agreement; No Third-Party Beneficiaries............. 47
Section 8.9 Governing Law.............................................. 47
Section 8.10 Assignment ............................................... 47
Section 8.11 Enforcement .............................................. 47
Section 8.12 Severability ............................................. 48
Annex I Defined Terms Index........................................ I-1
Exhibit A Form of Stockholders Agreement............................. A-1
Exhibit B Form of Affiliate Agreement................................ B-1
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of February 26, 2003 (this
"Agreement"), by and among Electronics for Imaging, Inc., a Delaware corporation
(the "Parent"), Strategic Value Engineering, Inc., a Delaware corporation and a
direct wholly owned Subsidiary of the Parent ("Merger Sub"), and Printcafe
Software, Inc., a Delaware corporation (the "Company").
RECITALS
The respective boards of directors of each of the Parent, Merger Sub and
the Company (and, in the case of the Company, upon recommendation of a special
committee of its board of directors) have approved and declared advisable this
Agreement and the merger of Merger Sub with and into the Company (the "Merger"),
upon the terms and subject to the conditions set forth in this Agreement,
whereby each issued and outstanding share of common stock, par value $0.0001 per
share, of the Company (the "Company Common Stock"), other than shares owned by
the Parent, Merger Sub or the Company and Dissenting Shares, will be converted
into the right to receive Merger Consideration.
Simultaneously with the execution and delivery of this Agreement and as a
condition and inducement to the willingness of the Parent and Merger Sub to
enter into this Agreement, the Parent and certain stockholders of the Company
(collectively, the "Stockholders") are entering into an agreement (the
"Stockholders Agreement"), substantially in the form of Exhibit A, pursuant to
which the Stockholders will agree to vote to adopt this Agreement and to take
other actions in furtherance of the Merger upon the terms and subject to the
conditions set forth in the Stockholders Agreement.
AGREEMENT
In consideration of the foregoing and the mutual covenants and agreements
in this Agreement, the parties, intending to be legally bound, agree as follows:
ARTICLE 1
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the conditions set forth
in this Agreement, and in accordance with the General Corporation Law of the
State of Delaware (the "DGCL"), Merger Sub shall be merged with and into the
Company at the Effective Time. Following the Effective Time, the Company shall
be the surviving corporation (the "Surviving Corporation") and shall succeed to
and assume all the rights and obligations of the Company in accordance with the
DGCL.
Section 1.2 The Closing. The closing of the Merger (the "Closing") will take
place at 9:00 a.m. on a date to be specified by the parties (the "Closing
Date"), which shall be no later than the second Business Day after satisfaction
or waiver of the conditions set forth in Article 6 (other than those conditions
that by their nature are to be satisfied at the Closing, but subject to the
satisfaction or waiver of those conditions), unless another time or date is
agreed to by the parties. The Closing will be held at the offices of Xxxxxx
Xxxxx & Xxxxxxx LLP, Xxx Xxxxxx Xxxxxx,
00xx Xxxxx, Xxxxxxxxxx, Xxxxxxxxxxxx 00000-0000, or such other place as is
agreed to by the parties.
Section 1.3 Effective Time. Subject to the provisions of this Agreement, as soon
as practicable on the Closing Date, the parties shall file a certificate of
merger or other appropriate documents (in any such case, the "Certificate of
Merger") executed in accordance with the relevant provisions of the DGCL and
shall make all other filings or recordings required under the DGCL. The Merger
shall become effective at such time as the Certificate of Merger is duly filed
with the Secretary of State of the State of Delaware, or at such subsequent date
or time as the Parent and the Company shall agree and specify in the Certificate
of Merger (the date and time the Merger becomes effective being hereinafter
referred to as the "Effective Time").
Section 1.4 Effects of the Merger. The Merger shall have the effects set forth
in Section 259 of the DGCL.
Section 1.5 Certificate of Incorporation and Bylaws.
(a) The certificate of incorporation of the Company, as in effect
immediately prior to the Effective Time, shall be amended as of the Effective
Time so that such certificate of incorporation is identical to the certificate
of incorporation of Merger Sub immediately prior to the Effective Time, except
that the Company's name shall be the name of the Surviving Corporation, and, as
so amended, such certificate of incorporation shall be the certificate of
incorporation of the Surviving Corporation until thereafter changed or amended
as provided therein or by applicable law.
(b) The bylaws of the Company, as in effect immediately prior to the
Effective Time, shall be amended as of the Effective Time so that such bylaws
are identical to the bylaws of Merger Sub, as in effect immediately prior to the
Effective Time, except that the Company's name shall be the name of the
Surviving Corporation, and, as so amended, such bylaws shall be the bylaws of
the Surviving Corporation until thereafter changed or amended as provided
therein or by applicable law.
Section 1.6 Board of Directors and Officers.
(a) The directors of Merger Sub immediately prior to the Effective Time
shall be the directors of the Surviving Corporation until the earlier of their
death, disability, resignation or removal or until their respective successors
are duly elected and qualified.
(b) The officers of Merger Sub immediately prior to the Effective Time
shall be the officers of the Surviving Corporation, until the earlier of their
death, disability, resignation or removal or until their respective successors
are duly elected and qualified.
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ARTICLE 2
EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
Section 2.1 Effect on Capital Stock. As of the Effective Time, by virtue of the
Merger and without any action on the part of the holder of any shares of Company
Common Stock or any shares of capital stock of Merger Sub:
(a) Each share of capital stock of Merger Sub issued and outstanding
immediately prior to the Effective Time shall be converted into and become one
fully paid and nonassessable share of Common Stock, par value $0.0001 per share,
of the Surviving Corporation.
(b) Each share of Company Common Stock that is owned by the Company,
Merger Sub or the Parent shall automatically be canceled and shall cease to
exist, and no consideration shall be delivered or deliverable in exchange
therefor.
(c) Subject to the provisions of this Article 2, each share of Company
Common Stock issued and outstanding immediately prior to the Effective Time
(other than shares to be canceled pursuant to Section 2.1(b) and Dissenting
Shares) shall be converted into the right to receive the Merger Consideration.
Each holder of a share of Company Common Stock shall have the right to elect, in
accordance with the procedures set forth in Section 2.2 and subject to Sections
2.2 and 2.3, to receive the following as Merger Consideration:
(i) for each share of Company Common Stock with respect to which an
election to receive cash has been effectively made and not revoked or lost
pursuant to Section 2.2 (a "Cash Election"), the right to receive in cash the
Transaction Value (the "Cash Consideration");
(ii) for each share of Company Common Stock with respect to which an
election to receive shares of common stock, par value $.01 per share, of the
Parent (the "Parent Common Stock"), has been effectively made and not revoked or
lost pursuant to Section 2.2 (a "Stock Election"), the right to receive the
Exchange Ratio of a share of Parent Common Stock (the "Stock Consideration");
and
(iii) for each share of Company Common Stock with respect to which no
Election has been effectively made or with respect to which an Election has been
revoked or lost pursuant to Section 2.2 (collectively, "Non-Election Shares"),
the right to receive the Cash Consideration.
(d) The following terms shall have the following meanings:
(i) "Closing Parent Share Value" means the average of the closing sales
prices of Parent Common Stock quoted on the Nasdaq National Market for the ten
consecutive trading days immediately preceding, and including, the fifth trading
day before the date of the Company Stockholders Meeting, rounded to four decimal
places.
(ii) "Exchange Ratio" means the Transaction Value divided by the Closing
Parent Share Value, rounded to four decimal places.
(iii) "Transaction Value" means $2.60.
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(iv) The Cash Consideration and the Stock Consideration are sometimes
referred to collectively (and on a per share basis) as the "Merger
Consideration."
(e) As of the Effective Time, all shares of Company Common Stock issued
and outstanding immediately prior to the Effective Time shall no longer be
outstanding and shall automatically be canceled and shall cease to exist, and,
subject to Section 2.4, each holder of a Certificate shall cease to have any
rights with respect thereto, except the right to receive Merger Consideration
and any cash in lieu of fractional shares of Parent Common Stock to be issued or
paid in consideration therefor upon surrender of such Certificate in accordance
with Section 2.3, without interest.
Section 2.2 Election Procedures. Each holder of record of shares (other than
Dissenting Shares) of Company Common Stock ("Holder") shall have the right,
subject to the limitations set forth in this Article 2, to submit an election in
accordance with the following procedures:
(a) Each Holder may specify in a request made in accordance with the
provisions of this Section 2.2 (an "Election") (i) the number of shares of
Company Common Stock owned by such Holder with respect to which such Holder
desires to make a Stock Election and (ii) the number of shares of Company Common
Stock owned by such Holder with respect to which such Holder desires to make a
Cash Election.
(b) The Parent shall prepare a form reasonably acceptable to the Company
(the "Form of Election") which shall be mailed to the Company's stockholders
entitled to vote at the Company Stockholders Meeting so as to permit the
Company's stockholders to exercise their right to make an Election prior to the
Election Deadline.
(c) The Parent shall make the Form of Election initially available at the
time that the Proxy Statement is made available to the stockholders of the
Company, to such stockholders, and shall use commercially reasonable efforts to
make available as promptly as possible a Form of Election to any stockholder of
the Company who requests such Form of Election following the initial mailing of
the Forms of Election and prior to the Election Deadline. In no event shall the
Form of Election initially be made available less than twenty days prior to the
Election Deadline.
(d) Any Election shall have been made properly only if the bank or trust
company designated by the Parent (the "Exchange Agent"), shall have received, by
5:00 p.m. local time in the city in which the principal office of such Exchange
Agent is located, on the day before the Company Stockholders Meeting (the
"Election Deadline"), a Form of Election properly completed and signed and
accompanied by certificates representing the shares of Company Common Stock (the
"Certificates") to which such Form of Election relates or by a customary
guarantee of delivery of such Certificates, as set forth in such Form of
Election, from a member of any registered national securities exchange or a
commercial bank or trust company in the United States; provided, that such
Certificates are in fact delivered to the Exchange Agent by the time required in
such guarantee of delivery. Failure to deliver shares of Company Common Stock
covered by a guarantee of delivery within the time set forth in such guarantee
shall be deemed to invalidate any otherwise properly made Election, unless
otherwise determined by the Parent, in its sole discretion. The Company and the
Parent shall cooperate to issue a press release reasonably satisfactory to each
of them announcing the date of the Election Deadline not
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more than fifteen Business Days before, and at least five Business Days before,
the Election Deadline.
(e) Any Holder may, at any time prior to the Election Deadline, change
his, her or its Election by written notice received by the Exchange Agent prior
to the Election Deadline accompanied by a properly completed and signed, revised
Form of Election. If the Parent shall determine in its reasonable discretion
that any Election is not properly made with respect to any shares of Company
Common Stock, such Election shall be deemed to be not in effect, and the shares
of Company Common Stock covered by such Election shall be deemed to be
Non-Election Shares, unless a proper Election is thereafter timely made.
(f) Any Holder may, at any time prior to the Election Deadline, revoke
his, her or its Election by written notice received by the Exchange Agent prior
to the Election Deadline or by withdrawal prior to the Election Deadline of his,
her or its Certificate, or of the guarantee of delivery of such Certificates,
previously deposited with the Exchange Agent. All Elections shall be revoked
automatically if the Exchange Agent is notified in writing by the Parent or the
Company that this Agreement has been terminated in accordance with Article 7.
(g) The Parent shall have the right to make all determinations, not
inconsistent with the terms of this Agreement, governing the validity of the
Forms of Election and compliance by any Holder with the Election procedures in
this Article 2. Neither the Parent nor the Exchange Agent shall have any
obligation to inform the Holder of any such determination.
Section 2.3 Exchange of Certificates.
(a) The Parent shall enter into an agreement with the Exchange Agent which
shall provide that the Parent shall deposit with the Exchange Agent at the
Effective Time, for the benefit of the holders of shares of Company Common Stock
issued and outstanding immediately prior to the Effective Time, for exchange in
accordance with this Article 2, certificates representing the shares of Parent
Common Stock and the Cash Consideration (such shares of Parent Common Stock,
together with any dividends or distributions with respect thereto with a record
date after the Effective Time, the Cash Consideration and any cash payable in
lieu of any fractional shares of Parent Common Stock being hereinafter referred
to as the "Exchange Fund") issuable or payable pursuant to Section 2.1 in
exchange for outstanding shares of Company Common Stock.
(b) As soon as reasonably practicable after the Effective Time, the
Exchange Agent shall mail to each Holder whose shares were converted into the
right to receive Merger Consideration pursuant to Section 2.1 and who did not
properly complete a Form of Election, (i) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Exchange
Agent and shall be in such form and have such other provisions as the Parent and
the Company may reasonably specify) and (ii) instructions for use in
surrendering the Certificates in exchange for Merger Consideration. Upon
surrender of a Certificate for cancellation to the Exchange Agent, together with
either (x) an Election by Holders making an effective Election or (y) letter of
transmittal by Holders not making an effective Election, in each case duly
executed, and such other documents as may reasonably be required by the Exchange
Agent, the holder of such
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Certificate shall receive in exchange therefor either (A) (1) a certificate
representing that number of whole shares of Parent Common Stock which such
holder has the right to receive pursuant to the provisions of this Article 2,
(2) dividends or other distributions, if any, in accordance with Section 2.3(c),
and (3) cash in lieu of any fractional share of Parent Common Stock in
accordance with Section 2.3(e) or (B) a check representing that portion of the
Cash Consideration issuable in respect of the shares of Company Common Stock
formerly represented by such Certificate, and, in either case, the Certificate
so surrendered shall forthwith be canceled. If a transfer of ownership of shares
of Company Common Stock has not then been registered in the transfer records of
the Company, the Merger Consideration issuable in respect of the shares of
Company Common Stock formerly represented by such Certificate may be issued to a
Person other than the Person in whose name the Certificate so surrendered is
registered if such Certificate shall be properly endorsed or otherwise be in
proper form for transfer, and the Person requesting such issuance shall pay any
transfer or other Taxes required by reason of the issuance of shares of Parent
Common Stock to a Person other than the registered holder of such Certificate or
establish to the reasonable satisfaction of the Parent that such Tax has been
paid or is not applicable.
(c) No dividends or other distributions with respect to shares of Parent
Common Stock with a record date after the Effective Time shall be paid to the
holder of any unsurrendered Certificate with respect to the shares of Parent
Common Stock represented thereby, and no cash payment in lieu of fractional
shares shall be paid to any such holder pursuant to Section 2.3(e), and all such
dividends, other distributions and cash in lieu of fractional shares of Parent
Common Stock shall be paid by the Parent to the Exchange Agent and shall be
included in the Exchange Fund, in each case until the surrender of such
Certificate in accordance with this Article 2. Subject to the effect of
applicable escheat or similar laws, following surrender of any such Certificate
there shall be paid to the holder of the certificate representing whole shares
of Parent Common Stock issued in exchange therefor, without interest, (i) at the
time of such surrender, the amount of dividends or other distributions with a
record date after the Effective Time theretofore paid with respect to such whole
shares of Parent Common Stock, and the amount of any cash payable in lieu of a
fractional share of Parent Common Stock to which such holder is entitled
pursuant to Section 2.3(e) and (ii) at the appropriate payment date, the amount
of dividends or other distributions with a record date after the Effective Time
but prior to such surrender and with a payment date subsequent to such surrender
payable with respect to such whole shares of Parent Common Stock.
(d) All shares of Parent Common Stock issued and any cash paid pursuant to
this Article 2 upon the surrender for exchange of Certificates in accordance
with the terms of this Article 2 shall be deemed to have been issued (and paid)
in full satisfaction of all rights pertaining to the shares of Company Common
Stock theretofore represented by such Certificates, subject, however, to the
Surviving Corporation's obligation to pay any dividends or make any other
distributions with a record date prior to the Effective Time that may have been
declared or made by the Company on such shares of Company Common Stock that
remain unpaid at the Effective Time, and there shall be no further registration
of transfers on the stock transfer books of the Surviving Corporation of the
shares of Company Common Stock that were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates are presented to the
Surviving Corporation or the Exchange Agent for any reason, they shall be
canceled and exchanged as provided in this Article 2, except as otherwise
provided by law.
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(e) No certificates or scrip representing fractional shares of Parent
Common Stock shall be issued upon the surrender for exchange of Certificates, no
dividend or distribution of the Parent shall relate to such fractional share
interests and such fractional share interests will not entitle the owner thereof
to vote or to any rights of a stockholder of the Parent. The Parent shall pay
each former holder of shares of Company Common Stock an amount in cash equal to
(i) the fractional share interest to which such former holder (after taking into
account all shares of Company Common Stock held at the Effective Time by such
holder) would otherwise be entitled multiplied by (ii) the Closing Parent Share
Value.
(f) Any portion of the Exchange Fund that remains undistributed to the
holders of the Certificates for six months after the Effective Time shall be
delivered to the Parent, upon demand, and any holders of the Certificates who
have not theretofore complied with this Article 2 shall thereafter look only to
the Parent for payment of their claim for Merger Consideration, any dividends or
distributions with respect to the Parent Common Stock and any cash in lieu of
fractional shares of Parent Common Stock.
(g) None of the Parent, Merger Sub, the Company or the Exchange Agent
shall be liable to any Person in respect of any shares of Parent Common Stock,
any dividends or distributions with respect thereto, any cash in lieu of
fractional shares of Parent Common Stock or any cash from the Exchange Fund, in
each case delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law. If any Certificate shall not have been
surrendered immediately prior to the date on which any amounts payable pursuant
to this Article 2 would otherwise escheat to or become the property of any
Governmental Entity, any such amounts shall, to the extent permitted by
applicable law, become the property of the Surviving Corporation, free and clear
of all claims or interest of any Person previously entitled thereto.
(h) The Exchange Agent shall invest any cash included in the Exchange
Fund, as directed by the Parent, on a daily basis. Any interest and other income
resulting from such investments shall be paid to the Parent. Any losses
resulting from such investments shall not reduce the right of any holder of a
Certificate to receive the amounts otherwise payable pursuant to this Article 2.
(i) If any Certificate shall have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the Person claiming such Certificate to
be lost, stolen or destroyed and, if required by the Parent, the posting by such
Person of a bond in such reasonable amount as the Parent may direct as indemnity
against any claim that may be made against it with respect to such Certificate,
the Exchange Agent shall issue in exchange for such lost, stolen or destroyed
Certificate the Merger Consideration with respect thereto and, if applicable,
any unpaid dividends and distributions on shares of Parent Common Stock
deliverable in respect thereof and any cash in lieu of fractional shares, in
each case pursuant to this Agreement.
(j) The Parent, the Surviving Corporation and the Exchange Agent shall be
entitled to deduct and withhold from the amounts otherwise payable to a holder
of shares of Company Common Stock pursuant to this Article 2 such amounts as any
of them reasonably determine to be required to be deducted and withheld under
the Internal Revenue Code of 1986 (the "Code") or provisions of other Tax law.
To the extent that such amounts are so withheld, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the former
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holder of shares of Company Common Stock in respect of which such deduction and
withholding was made by the Parent, the Surviving Corporation or the Exchange
Agent.
Section 2.4 Dissenting Shares.
(a) Notwithstanding any provision of this Agreement to the contrary, any
shares of Company Common Stock as to which the holder thereof has demanded and
properly perfected appraisal in accordance with Section 262 of the DGCL and has
neither effectively withdrawn nor lost the right to such appraisal ("Dissenting
Shares") shall not be converted into or represent a right to receive Merger
Consideration, but the holder thereof shall be entitled to only such rights as
are granted by the DGCL.
(b) Notwithstanding the provisions of Section 2.4(a), if any holder of
shares of Company Common Stock who demands appraisal of shares of Company Common
Stock under the DGCL effectively withdraws or loses (through failure to perfect
or otherwise) the right to appraisal, then as of the Effective Time or the
occurrence of such event, whichever later occurs, such holder's shares of
Company Common Stock shall automatically be converted into and represent only
the right to receive Merger Consideration as provided in Sections 2.1 and 2.2,
without interest, upon surrender of the Certificates representing such shares of
Company Common Stock pursuant to Section 2.3.
(c) The Company shall give the Parent (i) prompt notice of any written
demands for appraisal or payment of the fair value of any shares of Company
Common Stock, withdrawals of such demands and any other instruments related to
Dissenting Shares received by the Company or any of its directors or officers
and (ii) the opportunity to direct all negotiations and proceedings with respect
to demands for appraisal under the DGCL. Except with the prior written consent
of the Parent, the Company shall not voluntarily make any payment, admissions or
statements against interest with respect to any demands for appraisal, or settle
or offer to settle any such demands.
Section 2.5 Company Stock Options; Restricted Shares; ESPP.
(a) At the Effective Time, the Parent shall assume each Adjusted Option,
subject to the provisions of this Section 2.5. As soon as practicable following
the date of this Agreement, the board of directors of the Company (or, if
appropriate, any committee thereof administering the Company Stock Plans) shall
adopt such resolutions or take such other actions as may be required to effect
the following as of the Effective Time:
(i) adjust the terms of all outstanding Company Stock Options granted
under the Company Stock Plans, whether vested or unvested, as necessary to
provide that, at the Effective Time, each Company Stock Option outstanding
immediately prior to the Effective Time shall be amended and converted into an
option to acquire on the same terms and conditions as were applicable under such
Company Stock Option, the number of shares of Parent Common Stock (rounded down
to the nearest whole share) equal to (A) the number of shares of Company Common
Stock subject to such Company Stock Option immediately prior to the Effective
Time multiplied by the Exchange Ratio, plus (B) the product of ((x) the number
of shares of Company Common Stock subject to such Company Stock Option
immediately prior to the Effective Time
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multiplied by (y) the Cash Consideration divided by (z) the Closing Parent Share
Value (each, as so adjusted, an "Adjusted Option");
(ii) provide that an Adjusted Option may not be assigned, except to the
extent that its predecessor Company Stock Option could be assigned under the
terms of the applicable Company Stock Plan; and
(iii) make such other changes to the Company Stock Plans as the Company
and the Parent may agree are appropriate to give effect to the Merger.
No cash Merger Consideration will be paid with respect to any Adjusted
Option. The exercise price per share of Parent Common Stock issuable upon
exercise of an Adjusted Option shall be equal to the quotient obtained by
dividing (x) the aggregate exercise price payable for shares of Company Common
Stock subject to the Company Stock Option immediately prior to the Effective
Time by (y) the number of shares of Parent Common Stock subject to the Adjusted
Option immediately after the assumption and rounding up to the next whole cent.
For purposes of adjusting Company Stock Options pursuant to this Section 2.5(a),
each Company Stock Option shall be adjusted separately and shall not be
aggregated with any other Company Stock Option held by the same holder.
(b) After the Effective Time, the Parent shall deliver to the holders of
Company Stock Options notices setting forth such holders' rights pursuant to the
respective Company Stock Plans and the agreements evidencing the grants of such
Company Stock Options and that such Company Stock Options and agreements have
been assumed by the Parent and shall continue in effect on the same terms and
conditions (subject to the adjustments required by this Section 2.5 after giving
effect to the Merger). The Parent shall reserve for issuance from its authorized
but unissued shares of Parent Common Stock a number of shares of Parent Common
Stock equal to the number of shares subject to the Adjusted Options.
(c) The parties intend that the assumption of Company Stock Options
pursuant to this Section 2.5 shall satisfy the provisions of Section 424(a) of
the Code and that each Adjusted Option shall qualify, to the maximum permissible
extent, as incentive stock options under Section 422 of the Code to the extent
its predecessor Company Stock Option qualified as an incentive stock option
under Section 422 of the Code immediately prior to the Effective Time.
(d) A holder of an Adjusted Option may exercise such Adjusted Option in
whole or in part in accordance with its terms by following procedures to be
communicated by the Parent in the notice contemplated by Section 2.5(b),
together with the consideration therefor and the federal withholding Tax
information, if any, required in accordance with the related the Company Stock
Plan.
(e) Except as otherwise contemplated by this Section 2.5 and except to the
extent described in Section 3.3 of the Company Disclosure Letter, all
restrictions or limitations on transfer and vesting with respect to the Company
Stock Options awarded under the Company Stock Plans or any other plan, program
or arrangement of the Company or any of its Subsidiaries, to the extent that
such restrictions or limitations shall not have already lapsed, shall
9
remain in full force and effect with respect to such Company Stock Options after
giving effect to the Merger and the assumption by the Parent as set forth above.
(f) As soon as practicable following the Effective Time and in any event
within five Business Days following the Effective Time, the Parent shall prepare
and file with the SEC a registration statement on Form S-8 (or another
appropriate form) registering a number of shares of Parent Common Stock equal to
the number of shares subject to the Adjusted Options. Such registration
statement shall be kept effective (and the current status of the prospectus or
prospectuses required thereby shall be maintained) at least for so long as the
Adjusted Options remain outstanding. The Company shall cooperate with, and
assist the Parent in the preparation of, such registration statement. The Parent
shall not be required to register any shares of Parent Common Stock that are
subject to an Adjusted Option that may not be registered on Form S-8.
(g) If any shares of Company Common Stock outstanding immediately prior to
the Effective Time are unvested or are otherwise subject to a repurchase option,
risk of forfeiture or other condition under any Company Stock Option Plan or any
applicable Contract, then (except to the extent those shares vest by virtue of
the Merger pursuant to the express terms of the documents governing those
shares) the shares of Parent Common Stock issued in exchange for such unvested
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 bear any
appropriate legends. In addition, any portion of the Cash Consideration payable
with respect to those outstanding unvested shares shall be held by the Parent
and shall be paid out if, as and when those shares vest in accordance with the
vesting schedule in effect for such shares immediately prior to the Effective
Time. Any cash held with respect to unvested shares repurchased by the Parent
shall revert to the Parent. The Company shall take all action that may be
necessary to ensure that, from and after the Effective Time, the Parent is
entitled to exercise any such repurchase option or other right set forth in any
such restricted stock purchase agreement or other agreement. Section 2.6(g) of
the Company Disclosure Letter sets forth a true, correct and complete list as of
the date hereof of all holders of shares of Company Common Stock that are
subject to such repurchase options, forfeiture provisions or other restrictions
and the nature of those options, provisions or restrictions.
(h) Outstanding purchase rights under the Company's 2002 Employee Stock
Purchase Plan (the "Company ESPP") shall be exercised immediately prior to the
Effective Time, and each participant in the Company ESPP will accordingly be
issued shares of Company Common Stock at that time which shall be converted into
Merger Consideration pursuant to Sections 2.1 and 2.2. The Company's board of
directors (or the committee thereof administering the Company ESPP) shall take
whatever action may be required to amend the Company ESPP to provide for such
exercise date and to terminate the Company ESPP with that exercise date so that
no further purchase rights shall be subsequently granted or exercised under the
Company ESPP.
(i) All warrants to purchase shares of Company Common Stock (the "Company
Warrants") that are outstanding and unexercised at the Effective Time, shall,
unless otherwise expressly provided by the terms of such Company Warrant, (i)
remain subject to any vesting requirements applicable to such Company Warrant,
and (ii) be exercisable for the Cash
10
Consideration applicable to the number of shares of Company Common Stock that
may be acquired upon exercise of such Company Warrant.
Section 2.6 Certain Adjustments. If the Parent changes (or establishes a record
date for changing) the number of shares of Parent Common Stock issued and
outstanding prior to the Effective Time as a result of a stock split, stock
dividend, recapitalization, subdivision, reclassification, combination, exchange
of shares or similar transaction with respect to the outstanding Parent Common
Stock and the record date therefor shall be prior to the Effective Time, the
Stock Consideration shall be proportionately adjusted to reflect such stock
split, stock dividend, recapitalization, subdivision, reclassification,
combination, exchange of shares or similar transaction.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed in the disclosure letter delivered by the Company to the
Parent concurrently with the execution of this Agreement (the "Company
Disclosure Letter") and making reference to the particular Section of this
Agreement to which exception is being taken, including by cross-reference to any
other section of the Company Disclosure Letter to which such disclosure relates,
the Company represents and warrants to the Parent and Merger Sub as follows:
Section 3.1 Organization, Standing and Corporate Power. The Company and each of
its Subsidiaries is a corporation or other legal entity duly organized, validly
existing and in good standing (with respect to jurisdictions which recognize
such concept) under the laws of the jurisdiction in which it is organized and
has the requisite corporate or other power, as the case may be, and authority to
carry on its business as now being conducted, except for those jurisdictions
where the failure to be so organized, existing or in good standing, individually
or in the aggregate, would not reasonably be expected to have a Material Adverse
Effect on the Company. Each of the Company and its Subsidiaries is duly
qualified or licensed to do business and is in good standing (with respect to
jurisdictions which recognize such concept) in each jurisdiction in which the
nature of its business or the ownership, leasing, licensing, or operation of its
assets makes such qualification or licensing necessary, except for those
jurisdictions where the failure to be so qualified or licensed or to be in good
standing, individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect on the Company. The Company has provided to the
Parent prior to the execution of this Agreement complete and correct copies of
its certificate of incorporation and bylaws, as amended to the date of this
Agreement.
Section 3.2 Title to Assets; Subsidiaries.
(a) The Company and its Subsidiaries have good and marketable title to, or
the right to use, the assets and properties owned by them or used in their
respective businesses, free and clear of all pledges, claims, liens, charges,
encumbrances, mortgages and security interests of any kind or nature whatsoever
(collectively, "Liens"), except for (i) Liens securing indebtedness disclosed in
Section 3.5(c) of the Company Disclosure Letter, (ii) purchase money security
interests arising by operation of law with respect to assets acquired in the
ordinary course of business subsequent to December 31, 2002, (iii) any (A)
mechanics', carriers', workers' and
11
other similar Liens arising in the ordinary course of business which are not
delinquent and which in the aggregate are not material in amount, and do not
interfere with the present use of the assets of the Company or any of its
Subsidiaries to which they apply; (B) Liens for current Taxes not yet due and
payable; (C) Liens 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 Company or
any of its Subsidiaries; and (iv) with respect to any asset of the Company or
any of its Subsidiaries which consists of a leasehold or other possessory
interest in real property, all Liens, covenants, imperfections in title,
easements, restrictions and other title matters (whether or not the same are
recorded) not known to the Company or such Subsidiary to which the underlying
fee estate in such real property is subject which were not created by or
incurred by the Company or its Subsidiaries (the Liens referred to in clauses
(i) through (iv) are collectively, "Permitted Liens").
(b) Section 3.2 of the Company Disclosure Letter sets forth a true and
complete list of each of the Company's Subsidiaries. All the outstanding shares
of capital stock of, or other equity interests in (other than shares held by
directors or officers of the Company or its Subsidiaries for regulatory
reasons), each Subsidiary of the Company have been validly issued, are fully
paid and nonassessable and are owned, directly or indirectly, by the Company,
free and clear of all Liens and free of any restriction on the right to vote,
sell or otherwise dispose of such capital stock or other ownership interests,
except restrictions arising under applicable securities laws.
Section 3.3 Capital Structure.
(a) The authorized capital stock of the Company consists of 100,000,000
shares of Company Common Stock and 1,000,000 shares of preferred stock, par
value $0.0001 per share, of the Company (the "Company Authorized Preferred
Stock"). At the close of business on February 20, 2003, (i) 10,632,877 shares of
Company Common Stock were issued and outstanding; (ii) 10,732 shares of Company
Common Stock were held by the Company in its treasury; (iii) no shares of
Company Authorized Preferred Stock were issued or outstanding; (iv) 1,942,895
shares of Company Common Stock were reserved for issuance pursuant to the
Prograph Systems, Inc. 1999 Stock Option/Stock Incentive Plan, the Company ESPP,
the Company's 2000 Stock Incentive Plan, the Company's 2002 Key Executive Stock
Incentive Plan and the Company's 2002 Stock Incentive Plan (such plans,
collectively, the "Company Stock Plans") (of which 1,287,097 shares are subject
to outstanding Company Stock Options and 298,851 shares are reserved for
issuance under the Company ESPP); (v) 133,354 shares of Company Common Stock
were reserved for issuance upon exercise of outstanding Company Warrants; and
(vi) 7,341,975 shares of Company Common Stock were reserved for issuance in
connection with the rights (the "Rights") to purchase shares of Company Common
Stock issued pursuant to the Rights Agreement, dated as of February 13, 2003, by
and between the Company and Mellon Investor Services LLC (the "Rights
Agreement"). Except as set forth above, at the close of business on February 20,
2003, no shares of capital stock or other voting securities of the Company were
issued, reserved for issuance or outstanding. Other than Company Stock Options,
there are no outstanding stock appreciation rights, phantom shares or other
rights to receive shares of Company Common Stock on a deferred basis or other
rights linked to the value of shares of Company Common Stock granted under the
Company Stock Plans or otherwise. No bonds, debentures, notes or other
indebtedness of the Company having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on
12
which stockholders of the Company or any of its Subsidiaries may vote are issued
or outstanding or subject to issuance.
(b) Concurrently with the delivery of this Agreement, the Company is
delivering to the Parent a complete and correct list, as of February 20, 2003,
of each holder of outstanding stock options or other rights to purchase or
receive Company Common Stock (collectively, the "Company Stock Options") and
each holder of Company Warrants, the number of shares of Company Common Stock
subject to such Company Stock Option or Company Warrant, the name of the Company
Stock Plan pursuant to which such Company Stock Option was granted, the exercise
price of such Company Stock Option or Company Warrant, the vesting schedule of
such Company Stock Option or Company Warrant, the extent to which such Company
Stock Option or Company Warrant is vested, the Tax status under Section 422 of
the Code of such Company Stock Option, the term of such Company Stock Option or
Company Warrant and the events (including the Transactions or termination of
service following the Merger) which could accelerate the vesting of such Company
Stock Option or Company Warrant.
(c) All outstanding shares of Company Common Stock are, and all shares
which may be issued by the Company before the Effective Time will be, when
issued, duly authorized, validly issued, fully paid and nonassessable and will
be delivered free and clear of all Liens (other than Liens created by or imposed
upon the holders thereof) and not subject to preemptive rights. Except as set
forth in this Section 3.3 (including pursuant to the conversion or exercise of
the securities referred to above) and except pursuant to Company Stock Options
issued as expressly permitted by the terms of Section 5.1(b), (i) there are not
issued, reserved for issuance or outstanding (A) any shares of capital stock or
other voting securities of the Company or any of its Subsidiaries (other than
shares of capital stock or other voting securities of such Subsidiaries that are
directly or indirectly owned by the Company free and clear of Liens), (B) any
securities of the Company or any of its Subsidiaries convertible into or
exchangeable or exercisable for shares of capital stock or other voting
securities of, or other ownership interests in, the Company or any of its
Subsidiaries, or (C) any warrants, calls, options or other rights to acquire
from the Company or any of its Subsidiaries, and no obligation of the Company or
any of its Subsidiaries to issue, any capital stock or other voting securities
of, or other ownership interests in, or any securities convertible into or
exchangeable or exercisable for any capital stock or other voting securities of,
or other ownership interests in, the Company or any of its Subsidiaries and (ii)
there are no outstanding obligations of the Company or any of its Subsidiaries
to repurchase, redeem or otherwise acquire any such securities or to issue,
deliver or sell, or cause to be issued, delivered or sold, any such securities.
The Company is not a party to any voting agreement with respect to the voting of
any such securities. Other than the capital stock of, or other equity interests
in, its Subsidiaries, the Company does not directly or indirectly beneficially
own any securities or other beneficial ownership interests in any other entity.
The terms of the Company Stock Plans and the provisions of the agreements
evidencing such Company Stock Options expressly permit the assumption by the
Parent of the outstanding Company Stock Options as provided in Section 2.5,
without the consent or approval of the holders of such securities, the Company's
stockholders or otherwise.
Section 3.4 Authority; Noncontravention.
13
(a) The Company has all requisite corporate power and authority to enter
into this Agreement and, subject to receipt of the Company Stockholder Approval,
to consummate the transactions contemplated by this Agreement (the
"Transactions"). The execution and delivery of this Agreement by the Company and
the consummation by the Company of the Transactions have been duly authorized by
all necessary corporate action on the part of the Company, subject, in the case
of the Merger, to receipt of the Company Stockholder Approval. This Agreement
has been duly executed and delivered by the Company and, assuming the due
authorization, execution and delivery by the Parent and Merger Sub, constitutes
a legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms.
(b) The execution and delivery of this Agreement does not, and the
consummation of the Transactions and compliance with the provisions of this
Agreement will not, conflict with, or result in any violation of, or default
(with or without notice or lapse of time, or both) under, or give rise to a
right of amendment, termination, cancellation or acceleration of any obligation
or to the loss of a benefit under or increase of obligation under, or result in
the creation of any Lien upon any of the properties or assets owned by, licensed
to, or leased by the Company or any of its Subsidiaries under, (i) the
certificate of incorporation or bylaws of the Company or the comparable
organizational documents of any of its Subsidiaries, (ii) any Contract,
commitment, arrangement, understanding, instrument, permit, concession,
franchise or similar authorization applicable to the Company or any of its
Subsidiaries or their respective assets or (iii) subject to the governmental
filings and other matters referred to in Section 3.4(c), (A) any judgment, order
or decree or (B) any statute, law, ordinance, rule or regulation, in each case
applicable to the Company or any of its Subsidiaries or their respective
properties or assets, other than, in the case of clauses (ii) and (iii), any
such conflicts, violations, defaults, rights, losses or Liens that individually
or in the aggregate would not reasonably be expected to (x) have a Material
Adverse Effect on the Company, (y) impair the ability of the Company to perform
its obligations under this Agreement or (z) prevent or materially delay the
consummation of the Transactions.
(c) No consent, approval, order or authorization of, action by or in
respect of, or registration, recordation, declaration or filing with, any
federal, state, local or foreign government, any court, administrative,
regulatory or other governmental agency, commission or authority or any
non-governmental self-regulatory agency, commission or authority (each a
"Governmental Entity") is required by or with respect to the Company or any of
its Subsidiaries in connection with the execution and delivery of this Agreement
by the Company or the consummation by the Company of the Transactions, except
for (i) the filing with the Securities and Exchange Commission (the "SEC") of
(A) a proxy statement relating to the Company Stockholders Meeting (such proxy
statement, as amended or supplemented from time to time, the "Proxy Statement")
and (B) such reports under Section 13(a), 13(d), 15(d) or 16(a) of the
Securities Exchange Act of 1934 (the "Exchange Act") as may be required in
connection with this Agreement, the Stockholders Agreement and the Transactions;
(ii) the filing of the Certificate of Merger with the Secretary of State of the
State of Delaware and appropriate documents with the relevant authorities of
other states in which the Company is qualified to do business and such filings
with Governmental Entities to satisfy the applicable requirements of state
securities or "blue sky" laws; and (iii) such other consents, approvals, orders,
authorizations, registrations, declarations and filings the failure of which to
be made or obtained individually or in the aggregate would not reasonably be
expected to (x) have a Material Adverse
14
Effect on the Company, (y) impair the ability of the Company to perform its
obligations under this Agreement or (z) prevent or materially delay the
consummation of the Transactions.
Section 3.5 SEC Documents; Undisclosed Liabilities.
(a) The Company has filed all required reports, schedules, forms,
statements and other documents (including exhibits and all other information
incorporated therein) with the SEC since June 18, 2002 the ("Company SEC
Documents"). As of their respective dates, the Company SEC Documents complied in
all material respects with the requirements of the Securities Act of 1933 (the
"Securities Act") or the Exchange Act, as the case may be, and none of the
Company SEC Documents when filed (unless amended or superseded in a Company
Filed SEC Document, then on the date of such later filing) 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 light of
the circumstances under which they were made, not misleading. Except to the
extent that information contained in a Company SEC Document has been revised or
superseded in a Company Filed SEC Document, none of the Company SEC Documents
contains any untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(b) The financial statements of the Company included in the Company SEC
Documents comply as to form, as of their respective dates of filing with the
SEC, in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto (the "Accounting
Rules"), have been prepared in accordance with generally accepted accounting
principles ("GAAP") (except, in the case of unaudited statements, as permitted
by Form 10-Q of the SEC) applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and fairly present,
in all material respects, the consolidated financial position of the Company and
its consolidated Subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended (subject,
in the case of unaudited statements, to normal recurring non-material year-end
audit adjustments).
(c) Section 3.5(c) of the Company Disclosure Letter contains the unaudited
consolidated financial statements of the Company as of December 31, 2002 and
such financial statements have been prepared in accordance with GAAP applied on
a consistent basis and present fairly, in all material respects, the financial
position of the Company and its consolidated Subsidiaries as of December 31,
2002 and their consolidated results of operations and cash flows for the year
then ended (except for the omission of the notes thereto and subject to
non-material year-end audit adjustments).
(d) Except (i) as reflected in the most recent financial statements
included in the Company Filed SEC Documents or in the notes thereto or (ii) for
liabilities incurred in connection with this Agreement or the Transactions,
neither the Company nor any of its Subsidiaries has any liabilities or
obligations of any nature (whether accrued, absolute, contingent or otherwise)
which, individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect on the Company.
15
Section 3.6 Intellectual Property.
(a) The Company and its Subsidiaries have such ownership of or such rights
by license or otherwise in all patents and patent applications, mask works,
trademarks and service marks, trademark and service xxxx registrations and
applications, trade names, logos, brands, titles, copyrights, subsidiary rights,
copyright registrations and applications, trade secrets, names and likenesses,
know-how, proprietary processes, compositions of matter, formulae, designs,
computer software programs, domain names and other proprietary rights as are
necessary to conduct and permit the conduct of the business of the Company and
its Subsidiaries as currently conducted and currently proposed to be conducted
(collectively, the "Intellectual Property Rights"), except where the failure to
have such ownership or right by license or otherwise, individually and in the
aggregate, would not reasonably be expected to have a Material Adverse Effect on
the Company.
(b) Except as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Company, the conduct of the
business of the Company and its Subsidiaries as currently conducted and
currently proposed to be conducted does not infringe upon the intellectual
property rights of any third party or violate the privacy rights of any third
party or defame any third party. There are no present or, to the Knowledge of
the Company, threatened infringements or violations of or factual basis on which
a claim for infringement or violation could reasonably be asserted with respect
to the Intellectual Property Rights by any third party, except, in either case,
for such infringements or violations which, individually and in the aggregate,
would not reasonably be expected to have a Material Adverse Effect on the
Company.
(c) Except as set forth in Section 3.6 (c) of the Company Disclosure
Letter, neither the Company nor any of its Subsidiaries is a party to or bound
by any Contract (i) that contains any non-competition covenant or exclusivity
commitment that restricts, in any material respect, the manner in which, medium
in which, or the localities in which, all or a material portion of the business
of the Company and its Subsidiaries, taken as a whole, is conducted, (ii)
pursuant to which the Company or any of its Subsidiaries has assigned,
transferred, licensed or granted to a third party any Intellectual Property
Right on an exclusive basis or (iii) that contains any "most favored nation"
pricing provision.
(d) The Company and each of its Subsidiaries has taken all commercially
reasonable steps to protect the Company's and its Subsidiaries' rights in the
Company's or its Subsidiaries' confidential information and trade secrets that
it wishes to protect or any trade secrets or confidential information of third
parties provided to the Company or any of its Subsidiaries, and, without
limiting the foregoing, each of the Company and its Subsidiaries has and
enforces a policy requiring each employee and contractor to execute a
proprietary information/confidentiality agreement substantially in the form
provided to the Parent and all current and former employees and contractors of
the Company and any of its Subsidiaries have executed such an agreement and the
Company or its Subsidiaries has secured valid written assignments from all
consultants and employees who contributed to the creation or development of any
Intellectual Property Rights of the rights to such contributions that the
Company or its Subsidiaries does not already own by operation of law. The
Company has entered into written agreements with all third parties whose
confidential information the Company or its Subsidiaries
16
have used or to whom rights to access have been to the Company's or its
Subsidiaries confidential information. To the Company's Knowledge, all use,
disclosure or appropriation of the Company's or its Subsidiaries' confidential
information by, or to, a third party has been pursuant to the terms of a written
agreement between the Company or its Subsidiaries and such third party. To the
Company's Knowledge, all use, disclosure or appropriation of confidential
information of a third party by the Company, its Representatives or its
Subsidiaries has been pursuant to the terms of a written agreement between the
Company or its Subsidiaries and such third party, or is otherwise lawful.
(e) Except as set forth in Section 3.6(e) of the Company Disclosure
Letter, neither the Company nor any of its Subsidiaries has received any opinion
of counsel regarding any third party patents.
(f) Except as set forth in Section 3.6(f) of the Company Disclosure
Letter, neither the Company nor any of its Subsidiaries has disclosed or
delivered, or permitted the disclosure or delivery, to any escrow holder or
other third party, all or any part of the source code (including any algorithm
or documentation contained in, or relating to, any source code) of the
Intellectual Property Rights.
(g) Except as set forth in Section 3.6(g) of the Company Disclosure Letter
and except for non-exclusive license agreements entered into in the ordinary
course of business, there are no Contracts of any kind related to the
Intellectual Property Rights, nor is the Company or any Subsidiary bound by, or
a party to, any Contracts with respect to the Intellectual Property Rights.
Section 3.7 Absence of Certain Changes or Events. Except as contemplated by this
Agreement (including those actions not prohibited under Section 5.1) or the
Transactions and except for changes disclosed in the Company SEC Documents filed
and publicly available prior to the date of this Agreement (as amended to the
date of this Agreement, the "Company Filed SEC Documents"), since December 31,
2002, the Company and its Subsidiaries have conducted their business only in the
ordinary course, and since such date there has not been (a) any Material Adverse
Change in the Company, (b) any declaration, setting aside or payment of any
dividend or other distribution (whether in cash, stock or property) with respect
to any of the Company's capital stock (other than as expressly permitted by the
terms of Section 5.1(a)), (c) any purchase, redemption or other acquisition of
any shares of capital stock or any other securities of the Company or any of its
Subsidiaries or any options, warrants, calls or rights to acquire such shares or
other securities; (d) any split, combination or reclassification of any of the
Company's capital stock or any issuance or the authorization of any issuance of
any other securities in respect of, in lieu of or in substitution for shares of
the Company's capital stock, (e) (i) any granting by the Company or any of its
Subsidiaries to any current or former director, executive officer or other
employee of the Company or its Subsidiaries of any increase in compensation,
bonus or other benefits, except for normal increases in cash compensation to
non-executive employees in the ordinary course of business consistent with past
practice or as was required under any employment agreements in effect as of the
date of the most recent financial statements included in the Company Filed SEC
Documents and other than as expressly permitted by the terms of Section 5.1(k),
(ii) any granting by the Company or any of its Subsidiaries to any such current
or former director, executive officer or employee of any increase in severance
or termination pay, except to non-executive employees in the ordinary course of
business consistent with past
17
practice, (iii) any entry by the Company or any of its Subsidiaries into, or any
amendments of, any Benefit Plan with any current or former director, executive
officer or employee, except with non-key employees in the ordinary course of
business consistent with past practice, (iv) any amendment to, or modification
of, any Company Stock Option, (v) except insofar as may have been required by a
change in GAAP, any change in accounting methods, principles or practices by the
Company or any of its Subsidiaries materially affecting their respective assets,
liabilities, results of operations or businesses, (vi) any Tax election that,
individually or in the aggregate, would reasonably be expected to adversely
affect in any material respect the Tax liability or Tax attributes of the
Company or any of its Subsidiaries, (vii) any settlement or compromise of any
material income Tax liability, (viii) any acquisition, sale or transfer of any
material asset of the Company or any of its Subsidiaries other than in the
ordinary course of business consistent with past practice, (ix) any entering
into by the Company or any of its Subsidiaries of any material contract or
agreement, or material amendment or termination of any material contract or
agreement (other than in the ordinary course of business) or default by the
Company or any of its Subsidiaries under, any material Contract to which the
Company or any of its Subsidiaries is a party or by which it is bound (or to the
Knowledge of the Company, by any other party thereto), (x) any revaluation by
the Company or any of its Subsidiaries of any of their respective material
assets or (xi) except as would not individually or in the aggregate reasonably
be expected to have a Material Adverse Effect on the Company, any lapse,
reversion, termination or expiration of any Intellectual Property Rights.
Section 3.8 Litigation. There is no suit, arbitration, action, proceeding or
written claim ("Litigation") pending or, to the Knowledge of the Company,
threatened against or affecting the Company or any of its Subsidiaries that,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect on the Company nor is there any judgment, decree,
injunction, rule or order of any Governmental Entity or arbitrator outstanding
against the Company or any of its Subsidiaries having, or which would reasonably
be expected to have, individually or in the aggregate, a Material Adverse Effect
on the Company. Section 3.8 of the Company Disclosure Letter sets forth as of
the date of this Agreement of a complete list of all suits, arbitrations,
actions or proceedings to which the Company, or its Subsidiaries or any of their
assets are, or could reasonably be expected to be, a party or bound.
Section 3.9 Certain Contracts.
(a) Neither the Company nor any of its Subsidiaries is bound by, or a
party to, any non-competition or similar restriction relating to any business,
product or service anywhere in the world.
(b) No purchase Contracts of the Company or any of its Subsidiaries
continue for a period of more than twelve months or are in excess of the normal,
ordinary and usual requirements of its or their business or at any excessive
price.
(c) There is no outstanding sales Contract of the Company or any of its
Subsidiaries which continue for a period of more than twelve months.
(d) Neither the Company nor any of its Subsidiaries has any outstanding
Contracts with officers, employees, agents, consultants, advisors, salesmen,
sales representatives,
18
distributors or dealers that are not cancelable by it on notice of not longer
than thirty days and without liability, penalty or premium or any agreement or
arrangement providing for the payment of any bonus or commission based on sales
or earnings.
(e) Except as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Company, neither the Company
nor any of its Subsidiaries is in default, nor to its Knowledge is there any
basis for any valid claim of default, under any Contract made or obligation owed
by any of them.
(f) Neither Company nor any of its Subsidiaries has entered into any
Contract to indemnify any other party against any charge of infringement of any
intellectual property, other than indemnification provisions contained in
license agreements or purchase orders arising in the ordinary course of business
(other than guarantees by the Company or one of its wholly owned Subsidiaries on
behalf of the Company or one of its wholly owned Subsidiaries).
(g) Neither the Company nor any of its Subsidiaries has any debt
obligation for borrowed money, including guarantees (other than guarantees by
the Company or one of its wholly owned Subsidiaries on behalf of the Company or
one of its wholly owned Subsidiaries) of or agreements to acquire any such debt
obligation of others.
(h) Neither the Company nor any of its Subsidiaries has any outstanding
loan to any Person, other than to the Company or a wholly owned Subsidiary of
the Company.
(i) Neither the Company nor any of its Subsidiaries has any power of
attorney outstanding or any obligations or liabilities (whether absolute,
accrued, contingent or otherwise), as guarantor, surety, co-signer, endorser,
co-maker, indemnitor or otherwise in respect of the obligation of any Person,
corporation, partnership, joint venture, association, organization or other
entity (other than guarantees by the Company or one of its wholly owned
Subsidiaries on behalf of the Company or one of its wholly owned Subsidiaries).
Section 3.10 Customers. There has not been any Material Adverse Change in
the business relationship of the Company or any of its Subsidiaries with any
customer who accounted for more than five percent of the Company's and its
Subsidiaries' sales (on a consolidated basis) during the twelve months preceding
the date of this Agreement.
Section 3.11 Compliance with Applicable Laws.
(a) The Company and its Subsidiaries hold all material permits, licenses,
variances, exemptions, orders, registrations and approvals of all Governmental
Entities (the "Company Permits") that are required for them to own, lease or
operate their assets and to carry on their businesses, except where the failure
to have any such Company Permits, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on the Company. The
Company and its Subsidiaries are in compliance with the terms of the Company
Permits and all applicable statutes, laws, ordinances, rules and regulations,
except where the failure so to comply, individually or in the aggregate, would
not reasonably be expected to have a Material Adverse Effect on the Company.
19
(b) No action, demand, requirement or investigation by any Governmental
Entity and no suit, action or proceeding by any Person, in each case with
respect to the Company, any of its Subsidiaries, any of their respective assets
or any Benefit Plan, is pending or, to the Knowledge of the Company, threatened,
other than, in each case, those which, individually or in the aggregate, would
not reasonably be expected to (i) have a Material Adverse Effect on the Company,
(ii) impair the ability of the Company to perform its obligations under this
Agreement or (iii) prevent or materially delay the consummation of any of the
Transactions.
(c) To the Company's Knowledge and except as would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect on the
Company, (i) there have been no Releases of any Hazardous Materials at, on or
under any facility or property currently or formerly owned, leased, or operated
by the Company or any of its Subsidiaries, (ii) neither the Company nor any of
its Subsidiaries is the subject of any pending or threatened investigation or
proceeding under Environmental Law relating in any manner to the off-site
treatment, storage or disposal of any Hazardous Materials generated at any
facility or property currently or formerly owned, leased or operated by the
Company or any of its Subsidiaries and (iii) neither the Company nor any of its
Subsidiaries has assumed or otherwise agreed to be responsible for any
liabilities arising under Environmental Law. The term "Environmental Law" means
any and all applicable laws or regulations or other requirements of any
Governmental Entity concerning the protection of human health or the
environment. The term "Hazardous Materials" means all explosive or regulated
radioactive materials, hazardous or toxic substances, wastes or chemicals,
petroleum (including crude oil or any fraction thereof) or petroleum
distillates, asbestos or asbestos-containing materials, and all other materials
or chemicals regulated under any Environmental Law. The term "Release" means any
spill, emission, leaking, pumping, injection, deposit, disposal, discharge,
dispersal, leaching, emanation or migration in, into, onto, or through the
environment.
Section 3.12 Benefit Plans.
(a) Section 3.12(a) of the Company Disclosure Letter lists (i) each
individual employment, termination, or severance agreement with employees or
former employees of the Company whose annual compensation is at a base rate
equal to or exceeding $100,000, (ii) all employee benefit plans as that term is
defined in Section 3(3) of the Employee Retirement and Income Security Act of
1974 ("ERISA") and (iii) all other plans or compensation arrangements,
maintained or contributed to by the Company for the benefit of its employees (or
former employees) and/or their beneficiaries ("Benefit Plans"). An arrangement
will not fail to be a Benefit Plan simply because it only covers one individual.
(b) The Company has delivered or made available to the Parent a true and
complete copy of the following documents (to the extent that they are
applicable): (i) each Benefit Plan and any related funding agreements, including
all amendments (and Section 3.12(b) of the Company Disclosure Letter includes a
description of any such amendment that is not in writing), and (ii) the two most
recent Form 5500s (including all applicable schedules and the opinions of the
independent accountants) that were filed on behalf of any Benefit Plan.
20
(c) To the Knowledge of the Company, each Benefit Plan at all times has
been operated in accordance with its terms, and complies currently, and has
complied in the past, both in form and in operation, with all applicable laws,
including ERISA and the Code.
(d) The Company does not maintain any Benefit Plan that provides (or will
provide) medical, death, or other fringe benefits to former employees or
independent contractors (including retirees), other than benefits that are
required to be provided pursuant to Section 4980B of the Code or state law
continuation coverage or conversion rights.
(e) Except as provided in Section 3.12(e) of the Company Disclosure
Letter, none of the Benefit Plans provide any benefits that would result in
excess parachute payments (within the meaning of Section 280G of the Code),
either (i) solely as a result of the consummation of the Transactions or (ii) as
a result of the consummation of the Transactions and any actions taken after the
Closing. Furthermore, the consummation of the Transactions will not require the
funding, whether formal or informal, of the benefits under any Benefit Plan
(e.g., contributions to a Rabbi Trust).
(f) No Benefit Plan is subject to Title IV of ERISA.
(g) Except as would not, individually or in the aggregate reasonably be
expected to have a Material Adverse Effect on the Company, none of the Persons
performing services for the Company have been improperly classified as being
independent contractors, leased employees or as being exempt from the payment of
wages for overtime.
(h) Other than routine claims for benefits under the Benefit Plan and
those relating to qualified domestic relations orders, there are no (i) pending
or (ii) to the Knowledge of the Company, threatened lawsuits or other claims
against or involving any Benefit Plan, or any Fiduciary (within the meaning of
Section 3(21)(A) of ERISA) of such Benefit Plan brought on behalf of any
participant, beneficiary, or Fiduciary thereunder, nor is there any reasonable
basis for any such claim.
(i) The Company has no intention or commitment, whether legally binding or
not, to create any additional Benefit Plan, or to modify any existing Benefit
Plan so as to increase benefits to participants or the cost of maintaining the
Benefit Plan. The benefits under all Benefit Plans are as represented, and have
not been, and will not be, increased subsequent to the date of this Agreement.
No statement, either oral or written, has been made by the Company (or any agent
of the Company) to any Person regarding any Benefit Plan that is not in
accordance with such Benefit Plan that could have adverse economic consequences
to the Parent or the Surviving Corporation.
(j) To the Knowledge of the Company, all costs of administering and
contributions required to be made to each Benefit Plan under the terms of that
Benefit Plan, ERISA, the Code, or any other applicable law have been timely
made, and are fully deductible in the year for which they were paid, and all
other amounts that should be accrued to date as liabilities of the Company under
or with respect to each Benefit Plan (including administrative expenses and
incurred but not reported claims) for the current plan year of the Benefit Plan
have been recorded on the books of the Company.
21
(k) For purposes of this Section 3.12(k) "Company International Plans"
means each compensation and benefit plan required to be maintained or
contributed to by the law or applicable custom or rule of the relevant
jurisdiction outside of the United States. As regards each such Company
International Plan, unless disclosed in Section 3.12(k) of the Company
Disclosure Letter, to the Knowledge of the Company, (i) each of the Company
International Plans is in compliance with the provisions of the laws of each
jurisdiction in which each such Company International Plan is maintained, to the
extent those laws are applicable to the Company International Plans; (ii) all
material contributions to, and material payments from, the Company International
Plans that may have been required to be made in accordance with the terms of any
such Company International Plan, and, when applicable, the law of the
jurisdiction in which such Company International Plan is maintained, have been
timely made or shall be made by the Closing Date, and all such contributions to
the Company International Plans, and all payments under the Company
International Plans, for any period ending before the Closing Date that are not
yet, but will be, required to be made, are reflected as an accrued liability in
the most recent financial statements included in the Company Filed SEC
Documents; (iii) the Company has materially complied with all applicable
reporting and notice requirements, and all of the Company International Plans
have obtained from the governmental body having jurisdiction with respect to
such plans any required determinations, if any, that such Company International
Plans are in compliance with the laws of the relevant jurisdiction if such
determinations are required in order to give effect to the Company International
Plan; (iv) each of the Company International Plans has been administered in all
material respects at all times in accordance with its terms and applicable law
and regulations; (v) to the Knowledge of the Company, there are no pending
investigations by any governmental body involving the Company International
Plans, and no pending claims (except for claims for benefits payable in the
normal operation of the Company International Plans), suits or proceedings
against any Company International Plan or asserting any rights or claims to
benefits under any Company International Plan; and (vi) the consummation of the
transactions contemplated by this Agreement will not by itself create or
otherwise result in any liability with respect to any Company International Plan
other than the triggering of payment to participants.
(l) For purposes of this Section 3.12 only, the term the "Company" shall
include any entity that is aggregated with the Company under Section 414(b),
(c), (m), or (o) of the Code.
(m) Section 3.12(m) of the Company Disclosure Letter contains a complete
listing of all employees of the Company as of the date of this Agreement.
Section 3.13 Taxes.
(a) As used in this Agreement, (i) the terms "Tax" or "Taxes" mean (A) all
federal, state, local, foreign and other net income, gross income, gross
receipts, sales, use, ad valorem, alternative minimum, transfer, franchise,
profits, license, lease, service, service use, withholding, payroll, employment,
excise, severance, stamp, occupation, estimated, premium, property, windfall
profits, customs, duties or other taxes, fees, assessments or charges of any
kind whatsoever imposed by any Governmental Entity (a "Taxing Authority")
responsible for the imposition, collection or administration of any such taxes,
fees, assessments or charges, together with any interest and any penalties,
additions to tax or additional amounts with respect thereto, and (B) any
liability for any Tax described in the immediately preceding clause (A) as a
result of
22
being a transferee or successor, by contract or otherwise, or as a result of
being or having been a member of an affiliated, consolidated or combined group,
including under Treasury Regulation Section 1.1502-6 or similar state, local or
foreign law or (C) any liability for any amount described in the immediately
preceding clauses (A) or (B) pursuant to a tax indemnity, tax sharing or similar
agreement, arrangement or understanding; and (ii) the term "Returns" means all
returns, declarations, reports, statements and other documents (including any
related or supporting information, schedules or exhibits) required to be filed
in respect of Taxes, including any amendment with respect thereto.
(b) There have been properly completed and filed on a timely basis (taking
into account all properly obtained extensions) and in correct form all material
Returns required to be filed by or with respect to the Company or any of its
Subsidiaries. The foregoing Returns were correct and complete in all material
respects and the Company and each of its Subsidiaries has paid or there has been
paid on its behalf all Taxes due whether or not shown (or required to be shown)
on a Return. An extension of time within which to file any Return that has not
been filed has not been requested or granted.
(c) As of the date of this Agreement, there are no current or pending or
proposed audits or examinations of any Return relating to the Company or any of
its Subsidiaries by any Taxing Authority in connection with any of the Returns.
No waivers of statutes of limitation with respect to the Returns or the
assessment of Taxes have been given by the Company or any of its Subsidiaries
(or with respect to any Return which a Taxing Authority has asserted should have
been filed by the Company or any of its Subsidiaries) which waivers are still in
effect. All deficiencies asserted or assessments made as a result of any
examinations have been fully paid, or are being contested in good faith and an
adequate reserve therefor has been established in accordance with GAAP and is
fully reflected in the financial statements included in the Company Filed SEC
Documents or the financial statements included in Section 3.5(c) of the Company
Disclosure Letter.
(d) The accruals and reserves for unpaid Taxes of the Company or any of
its Subsidiaries (excluding any reserve for deferred Taxes established to
reflect timing differences between book and Tax income) set forth or included in
the most recent financial statements included in the Company Filed SEC Documents
are adequate in accordance with GAAP to cover all Taxes accrued or accruable
through the date thereof. The Company has no liability for unpaid Taxes incurred
after the date of the most recent financial statements included in the Company
Filed SEC Documents, other than Taxes incurred by it in the ordinary course of
business.
(e) Neither the Company nor any of its Subsidiaries has been a member of
an affiliated group filing consolidated, combined or similar Returns other than
the group of which the Company is the common parent. Neither the Company nor any
of its Subsidiaries is or at any time has been a party to or bound by (nor will
the Company or any of its Subsidiaries become a party to or bound by) any tax
indemnity, tax sharing, tax allocation or similar agreement that includes a
party other than the Company or any of its Subsidiaries.
(f) Neither the Company nor any of its Subsidiaries has constituted either
a "distributing corporation" or a "controlled corporation" in a distribution of
stock qualifying for
23
tax-free treatment under Section 355 of the Code (i) in the two years prior to
the date of this Agreement or (ii) in a distribution which could otherwise
constitute part of a "plan" or "series of related transactions" (within the
meaning of Section 355(e) of the Code) in conjunction with the Merger.
(g) The Company and each of its Subsidiaries has complied in all material
respects with the provisions of the Code (and similar provisions under any other
laws) relating to the withholding and payment of Taxes and has, within the time
and in the manner prescribed by Law, withheld from employee wages and paid over
to the proper Governmental Entities all material amounts required to be withheld
and paid over. The Benefit Plans and the other Company employee compensation
arrangements in effect as of the date of this Agreement have been designed so
that the disallowance of a material deduction under Section 162(m) of the Code
for employee remuneration will not apply to any amounts paid or payable by the
Company or any of its Subsidiaries under any such plan or arrangement and, to
the Knowledge of the Company, no fact or circumstance exists that would
reasonably be expected to cause such disallowance to apply to any such amounts.
(h) To the Knowledge of the Company, no claim has ever been made by a
Taxing Authority with respect to the Company or any of its Subsidiaries in a
jurisdiction where such entity does not file Returns that the Company or any of
its Subsidiaries is or may be subject to taxation by that jurisdiction.
(i) The Company is not, and has not been, a "United States real property
holding corporation" within the meaning of Section 897(c)(2) of the Code during
the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
(j) Except for liens for real and personal property Taxes that are not yet
due and payable, there are no liens for any material Tax upon any of the assets
or properties of the Company or any of its Subsidiaries.
(k) Neither the Company nor any of its Subsidiaries owns an interest in an
entity that would be treated as a partnership for federal income Tax purposes.
(l) Neither the Company nor any of its Subsidiaries has been required to
make, nor has there been proposed, any adjustment pursuant to Section 481 of the
Code.
(m) The Company is not a collapsible corporation under Section 341 of the
Code and has not filed an election as a consenting corporation under Section
341(f) of the Code.
Section 3.14 Information Supplied. None of the information supplied or to
be supplied by the Company specifically for inclusion or incorporation by
reference in (a) the registration statement on Form S-4 to be filed with the SEC
by the Parent in connection with the offer and sale of shares of Parent Common
Stock in connection with the Merger (the "Form S-4") will, at the time the Form
S-4 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 to make the statements therein not misleading or (b) the Proxy
Statement will, at the date it is first mailed to the Company's stockholders or
at the time of the Company Stockholders Meeting, contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
24
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Proxy Statement
will comply as to form in all material respects with the requirements of the
Exchange Act. No representation or warranty is made by the Company with respect
to statements made or incorporated by reference therein based on information
supplied by the Parent specifically for inclusion or incorporation by reference
in the Proxy Statement.
Section 3.15 Voting Requirements. The affirmative vote of the holders of a
majority of the voting power of all outstanding shares of Company Common Stock,
as of the record date for the Company Stockholders Meeting, adopting this
Agreement (the "Company Stockholder Approval") is the only vote of the holders
of any class or series of the Company's capital stock necessary to approve and
adopt this Agreement or any of the Transactions.
Section 3.16 State Takeover Statutes. The board of directors of the
Company, either directly or through action of a duly authorized committee
thereof has taken all necessary action to ensure that the provisions of Section
203 of the DGCL do not apply to the Parent or Merger Sub in connection with the
Stockholders Agreement, the Merger and the other Transactions. No other state
takeover statute or similar statute or regulation is applicable to the Merger or
the other Transactions.
Section 3.17 Brokers. No broker, investment banker, financial advisor or
other Person, other than UBS Warburg, the fees and expenses of which will be
paid by the Company, is entitled to any broker's, finder's, financial advisor's
or other similar fee or commission in connection with the Transactions based
upon arrangements made by or on behalf of the Company. The Company has furnished
to the Parent true and complete copies of all agreements under which any such
fees or expenses are payable and all indemnification and other agreements
related to the engagement of the Persons to whom such fees are payable.
Section 3.18 Opinion of Financial Advisor. The Company has received the
written opinion of UBS Warburg, dated February 25, 2003, to the effect that, as
of such date, the Merger Consideration is fair, from a financial point of view,
to the stockholders of the Company, a signed copy of which opinion has been or
promptly will be delivered to the Parent.
Section 3.19 Absence of Questionable Payments. Neither the Company nor any
of its Subsidiaries nor, to the Knowledge of the Company, any director, officer,
agent, employee or other Person acting on behalf of the Company or any of its
Subsidiaries, has used any corporate or other funds for unlawful contributions,
payments, gifts, or entertainment, or made any unlawful expenditures relating to
political activity to government officials or others or established or
maintained any unlawful or unrecorded funds in violation of Section 30A of the
Exchange Act. Neither the Company nor any of its Subsidiaries nor, to the
Knowledge of the Company, any current director, officer, agent, employee or
other Person acting on behalf of the Company or any of its Subsidiaries, has
accepted or received any unlawful contributions, payments, gifts or
expenditures. The Company and each of its Subsidiaries that is required to file
reports pursuant to Section 12 or 15(d) of the Exchange Act is in compliance
with the provisions of Section 13(b) of the Exchange Act.
25
Section 3.20 Insider Interests. To the Knowledge of the Company, no officer
or director of the Company or any of its Subsidiaries has any material interest
in any property, real or personal, tangible or intangible, including inventions,
patents, trademarks or trade names, used in or pertaining to the business of the
Company or any of its Subsidiaries.
Section 3.21 Rights Agreement. The Company has taken all actions necessary
to ensure that the execution of this Agreement and the consummation of the
Transactions will not cause the Parent or any of its Subsidiaries to be deemed
an Acquiring Person (as defined in the Rights Agreement). Neither the
Distribution Date nor the Stock Acquisition Date (each as defined in the Rights
Agreement) has occurred or will occur as a result of this Agreement or any of
the Transactions.
ARTICLE 4
REPRESENTATIONS OF THE PARENT AND MERGER SUB
Except as disclosed in the disclosure letter delivered by the Parent to the
Company concurrently with the execution of this Agreement (the "Parent
Disclosure Letter") and making reference to the particular Section of this
Agreement to which exception is being taken (which disclosures shall also
constitute representations and warranties hereunder), the Parent and Merger Sub
represent and warrant to the Company as follows:
Section 4.1 Organization, Standing and Corporate Power. Each of the Parent
and Merger Sub is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is incorporated and has
the requisite corporate power and authority to carry on its business as now
being conducted. Each of the Parent and Merger Sub is duly qualified or licensed
to do business and is in good standing (with respect to jurisdictions which
recognize such concept) in each jurisdiction in which the nature of its business
or the ownership, leasing, licensing or operation of its assets makes such
qualification or licensing necessary, except for those jurisdictions where the
failure to be so qualified or licensed or to be in good standing, individually
or in the aggregate, would not reasonably be expected to have a Material Adverse
Effect on the Parent. The Parent has made available to the Company prior to the
execution of this Agreement complete and correct copies of its certificate of
incorporation and bylaws and the certificate of incorporation and bylaws of
Merger Sub, in each case as amended to the date of this Agreement.
Section 4.2 Capital Structure. The authorized capital stock of the Parent
consists of 150,000,000 shares of Parent Common Stock and 5,000,000 shares of
preferred stock, par value $.001 per share, of the Parent (the "Parent
Authorized Preferred Stock"). As of February 18, 2003, (a) 54,782,061 shares of
Parent Common Stock were issued and outstanding, (b) no shares of Parent
Authorized Preferred Stock were issued and outstanding, and (c)32,097,186 shares
of Parent Common Stock are reserved for issuance under the Parent's 1989 Stock
Plan, the Parent's 1990 Stock Plan, the Parent's 1999 Equity Incentive Plan, the
Parent's Employee Stock Purchase Plan, the Management Graphics, Inc. 1985
Nonqualified Stock Option Plan, and the Splash Technology Holdings, Inc. 1996
Stock Option Plan (of which there were 11,763,408 outstanding options or rights
as of February 20, 2003 to acquire shares of Parent Common Stock). No bonds,
debentures, notes or other indebtedness of the Parent having the right to vote
(or convertible into, or exchangeable for, securities having the right to vote)
on any matters on which stockholders of
26
the Parent may vote are issued or outstanding. All outstanding shares of capital
stock of the Parent are, and all shares which may be issued in connection with
the Transactions will be, when issued, duly authorized, validly issued, fully
paid and nonassessable, not subject to preemptive rights and free and clear of
any Liens (other than Liens created by the holders thereof and restrictions on
transfer arising under applicable securities laws).
Section 4.3 Authority; Noncontravention.
(a) Each of the Parent and Merger Sub has all requisite corporate power
and authority to enter into this Agreement and to consummate the Transactions.
The execution and delivery of this Agreement by the Parent and Merger Sub and
the consummation by the Parent and Merger Sub of the Transactions have been duly
authorized by all necessary corporate action on the part of the Parent and
Merger Sub, as applicable. This Agreement has been duly executed and delivered
by the Parent and Merger Sub and, assuming the due authorization, execution and
delivery by each of the other parties hereto, constitutes a legal, valid and
binding obligation of the Parent and Merger Sub, enforceable against each of
them in accordance with its terms.
(b) The execution and delivery of this Agreement does not, and the
consummation of the Transactions and compliance with the provisions of this
Agreement will not, conflict with, or result in any violation of, or default
(with or without notice or lapse of time, or both) under, or give rise to a
right of amendment, termination, cancellation or acceleration of any obligation
or loss of a benefit under or increase of any obligation under, or result in the
creation of any Lien upon any of the properties or assets of the Parent or
Merger Sub under, (i) the certificate of incorporation or bylaws of the Parent
or Merger Sub, (ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other contract, agreement, obligation, commitment,
arrangement, understanding, instrument, permit, concession, franchise, license
or similar authorization applicable to the Parent or Merger Sub or their
respective properties or assets or (iii) subject to the governmental filings and
other matters referred to in Section 4.3(c), (A) any judgment, order or decree
or (B) any statute, law, ordinance, rule or regulation, in each case, applicable
to the Parent or Merger Sub or their respective properties or assets, other
than, in the case of clauses (ii) and (iii), any such conflicts, violations,
defaults, rights, losses or Liens that individually or in the aggregate would
not reasonably be expected to (x) have a Material Adverse Effect on the Parent,
(y) impair the ability of the Parent or Merger Sub to perform its obligations
under this Agreement or (z) prevent or materially delay the consummation of the
Transactions.
(c) No consent, approval, order or authorization of, action by, or in
respect of, or registration, recordation, declaration or filing with, any
Governmental Entity is required by or with respect to the Parent or Merger Sub
in connection with the execution and delivery of this Agreement by the Parent
and Merger Sub, the consummation by the Parent and Merger Sub of the
Transactions, except for (i) the filing with the SEC of (A) the Proxy Statement,
(B) the Form S-4 and (B) such reports under Section 13(a), 13(d), 15(d) or 16(a)
of the Exchange Act as may be required in connection with this Agreement, the
Stockholders Agreement and the Transactions; (ii) the filing of the Certificate
of Merger with the Secretary of State of the State of Delaware and such filings
with Governmental Entities to satisfy the applicable requirements of state
securities or "blue sky" laws; (iii) such filings with and approvals of the
NASDAQ National Market to permit the shares of Parent Common Stock that are to
be issued in connection with the Merger to be listed on The NASDAQ National
Market; and (iv) such other consents, approvals,
27
orders, authorizations, registrations, declarations and filings the failure of
which to be made or obtained individually or in the aggregate would not
reasonably be expected to (x) have a Material Adverse Effect on the Parent, (y)
impair the ability of the Parent or Merger Sub to perform its obligations under
this Agreement or (z) prevent or materially delay the consummation of the
Transactions.
Section 4.4 SEC Documents; Undisclosed Liabilities.
(a) The Parent has filed all required reports, schedules, forms,
statements and other documents (including exhibits and all other information
incorporated therein) with the SEC since December 31, 2001 (the "Parent SEC
Documents"). As of their respective dates, the Parent SEC Documents complied in
all material respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, and none of the Parent SEC Documents when
filed (and if amended or superseded in a Parent Filed SEC Document, then on the
date of such filing) 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 light of the circumstances under which
they were made, not misleading. Except to the extent that information contained
in a Parent SEC Document has been revised or superseded in a Parent Filed SEC
Document, none of the Parent SEC Documents contains any untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(b) The financial statements of Parent included in the Parent SEC
Documents comply as to form, as of their respective dates of filing with the
SEC, in all material respects with the Accounting Rules, have been prepared in
accordance with GAAP (except, in the case of unaudited statements, as permitted
by Form 10-Q of the SEC) applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and fairly present in
all material respects the consolidated financial position of the Parent and its
consolidated Subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal non-material recurring year-end audit
adjustments).
(c) Except (i) as reflected in the financial statements included in the
Parent SEC Documents or in the notes thereto or (ii) for liabilities incurred in
connection with this Agreement or the Transactions, neither the Parent nor any
of its Subsidiaries has any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) which, individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect on the
Parent.
Section 4.5 Information Supplied. None of the information supplied or to be
supplied by the Parent specifically for inclusion or incorporation by reference
in (a) the Form S-4 will, at the time the Form S-4 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 to make the
statements therein not misleading or (b) the Proxy Statement will, at the date
it is first mailed to the Company's stockholders or at the time of the Company
Stockholders Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which
28
they are made, not misleading. The Form S-4 will comply as to form in all
material respects with the requirements of the Securities Act. No representation
or warranty is made by the Parent with respect to statements made or
incorporated by reference therein based on information supplied by the Company
specifically for inclusion or incorporation by reference in the Form S-4.
Section 4.6 Absence of Certain Changes or Events. Except for liabilities
incurred in connection with this Agreement, the Stockholders Agreement or the
Transactions and except as disclosed in the Parent SEC Documents filed and
publicly available prior to the date of this Agreement (the "Parent Filed SEC
Documents"), since December 31, 2001, the Parent and its Subsidiaries have
conducted their business only in the ordinary course, and since such date there
has not been any Material Adverse Change in the Parent.
Section 4.7 Voting Requirements. No vote of any class or series of capital
stock of the Parent is necessary to approve and adopt this Agreement and the
Transactions.
Section 4.8 Operations of Merger Sub. Merger Sub has engaged in no business
activities and has conducted its operations only as contemplated hereby.
Section 4.9 Litigation. There is no Litigation pending, or to the Knowledge
of the Parent, threatened against or affecting the Parent or any of its
Subsidiaries nor is there any judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against the Parent or any of its
Subsidiaries having, or which would reasonably be expected to (a) have,
individually or in the aggregate, a Material Adverse Effect on the Parent, (b)
impair the ability of the Parent or Merger Sub to perform its obligations under
this Agreement or (c) prevent or materially delay the consummation of any of the
Transactions.
Section 4.10 Brokers. No broker, investment banker, financial advisor or
other Person is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the Transactions based upon
arrangements made by or on behalf of the Parent.
Section 4.11 Absence of Questionable Payments. Neither the Parent nor any
of its Subsidiaries nor any director, officer, agent, employee or other Person
acting on behalf of the Parent or any of its Subsidiaries, has used any
corporate or other funds for unlawful contributions, payments, gifts, or
entertainment, or made any unlawful expenditures relating to political activity
to government officials or others or established or maintained any unlawful or
unrecorded funds in violation of Section 30A of the Exchange Act. Neither the
Parent nor any of its Subsidiaries nor any current director, officer, agent,
employee or other Person acting on behalf of the Parent or any of its
Subsidiaries, has accepted or received any unlawful contributions, payments,
gifts or expenditures. The Parent and each of its Subsidiaries which is required
to file reports pursuant to Section 12 or 15(d) of the Exchange Act is in
compliance with the provisions of Section 13(b) of the Exchange Act.
Section 4.12 Insider Interests. No officer or director of the Parent or any
of its Subsidiaries has any material interest in any property, real or personal,
tangible or intangible, including inventions, patents, trademarks or trade
names, used in or pertaining to the business of the Parent or any of its
Subsidiaries.
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ARTICLE 5
COVENANTS
Section 5.1 Conduct of the Company's Business. Except as set forth in Section
5.1 of the Company Disclosure Letter, as otherwise expressly contemplated by
this Agreement or as consented to in writing by the Parent, during the period
from the date of this Agreement to the Effective Time, the Company shall, and
shall cause its Subsidiaries to, carry on their respective businesses in the
ordinary course consistent with past practice and use commercially reasonable
efforts to preserve intact their business to the end that their goodwill and
ongoing businesses shall not be impaired in any material respect at the
Effective Time. Without limiting the generality of the foregoing (but subject to
the above exceptions), during the period from the date of this Agreement to the
Effective Time, the Company shall not, and shall not permit any of its
Subsidiaries to:
(a) other than dividends and distributions (including liquidating
distributions) by a direct or indirect wholly-owned Subsidiary of the Company to
its parent, (i) declare, set aside or pay any dividends on, or make any other
distributions (whether in cash, stock, property or otherwise) in respect of, any
of its capital stock, (ii) split, combine or reclassify any of its capital stock
or issue or authorize the issuance of any other securities in respect of, in
lieu of or in substitution for shares of its capital stock, or (iii) purchase,
redeem or otherwise acquire, directly or indirectly, any shares of capital stock
of the Company or any of its Subsidiaries or any other securities thereof or any
rights, warrants or options to acquire any such shares or other securities,
(other than pursuant to the exercise of existing stock repurchase rights listed
in Section 3.3 of the Company Disclosure Letter);
(b) issue, deliver, sell, pledge or otherwise encumber or subject to any
Lien any shares of its capital stock, any other voting securities or any
securities convertible into, or any rights, warrants or options to acquire, any
such shares, voting securities or convertible securities, other than (i) the
issuance of Company Stock Options granted consistent with past practice to new
employees (other than executive officers) of the Company; provided that each
such Company Stock Option shall have an exercise price per share equal to the
closing price per share of Company Common Stock on the grant date, shall have
standard vesting provisions in conformity with customary practice and shall not
have any provisions which accelerate in whole or in part the vesting or
exercisability of such option in connection with the Transactions or any
termination of service at or at any time following the Merger, (ii) the issuance
of Company Common Stock upon the exercise of (A) the Company Stock Options, and
(B) the Company Warrants, in each case outstanding as of the date hereof in
accordance with their present terms, or upon the exercise of the Company Stock
Options referred to in clause (i) in accordance with their terms, or (iii) the
issuance of shares of Company Common Stock pursuant to the ESPP in accordance
with its present terms and not in violation of this Agreement;
(c) amend its certificate of incorporation, bylaws or other comparable
organizational documents;
(d) acquire or agree to acquire by merging or consolidating with, or by
purchasing all or substantially all of assets of, or by any other manner, any
business or any Person;
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(e) sell, lease, license, sell and leaseback, mortgage or otherwise
encumber or subject to any Lien (other than Permitted Liens) or otherwise
dispose of any of its properties or assets (including securitizations), other
than in the ordinary course of business consistent with past practice;
(f) (i) purchase, prepay or incur any indebtedness for borrowed money or
guarantee any such indebtedness of another Person, issue or sell any debt
securities or warrants or other rights to acquire any debt securities of the
Company or any of its Subsidiaries, guarantee any debt securities of another
Person, enter into any "keep well" or other Contract to maintain any financial
statement condition of another Person or enter into any Contract having the
economic effect of any of the foregoing, except for intercompany indebtedness
between the Company and any of its wholly-owned Subsidiaries or between such
Subsidiaries, or (ii) make any loans, advances or capital contributions to, or
investments in, any other Person, except for employee advances made in the
ordinary course of business consistent with past practice;
(g) make or agree to make any new capital expenditures which,
individually, are in excess of $25,000 or, in the aggregate, are in excess of
$100,000 or enter into any commitment for the purchase, lease or use of any real
property;
(h) make any Tax election that, individually or in the aggregate, would
reasonably be expected to adversely affect in any material respect the Tax
liability or Tax attributes of the Company or any of its Subsidiaries or settle
or compromise any material income Tax liability;
(i) (A) pay, discharge, settle or satisfy any material claims, liabilities
or obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), or Litigation (whether or not commenced prior to the date of this
Agreement) other than (1) the payment of an aggregate of $250,000 in connection
with Litigation or (2) the payment, discharge, settlement or satisfaction, in
the ordinary course of business consistent with past practice or in accordance
with their terms, of liabilities recognized or disclosed in the most recent
financial statements included in the Company Filed SEC Documents or incurred in
the ordinary course of business consistent with past practices since the date of
such financial statements, or (B) waive the benefits of, agree to modify in any
manner, terminate, release any Person from or fail to enforce any
confidentiality, standstill or similar Contract to which the Company or any of
its Subsidiaries is a party or of which the Company or any of its Subsidiaries
is a beneficiary;
(j) except as required by law or contemplated hereby, enter into, adopt or
amend or terminate any Benefit Plan or any other Contract, plan or policy
involving the Company or its Subsidiaries, and one or more of its directors,
officers or employees, or change the manner in which contributions to any
Benefit Plan are made or the basis on which such contributions are determined;
(k) except for normal increases relating to non-executive employees in the
ordinary course of business consistent with past practice or as required by the
terms of any employment agreement (the existence of which does not constitute a
violation of this Agreement), increase the compensation of any director, officer
or other employee or pay any benefit or amount not required by a Benefit Plan as
in effect on the date of this Agreement to any such Person;
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(l) increase the aggregate number of employees of the Company to more than
ten employees/consultants from the number of employees set forth in Section
3.12(m) of the Company Disclosure Letter;
(m) enter into any operating lease or incur (other than in the ordinary
course of business consistent with past practice) any liability or obligation
not required by GAAP to be recorded on the Company's consolidated balance sheet
at the time of incurrence;
(n) manage its cash, cash equivalents and working capital except in
accordance with past practices (which practices include applying commercially
reasonable efforts to collect receivables and not paying liabilities or other
obligations until they become due and payable);
(o) transfer or license to any Person or entity or otherwise extend, amend
or modify any rights to the Intellectual Property Rights of the Company or its
Subsidiaries other than in the ordinary course of business consistent with past
practices; provided that in no event shall the Company or any of its
Subsidiaries license on an exclusive basis or sell any Intellectual Property
Rights;
(p) enter into or amend any Contract pursuant to which any Person is
granted exclusive marketing, manufacturing or other rights with respect to any
product, service, process or technology of the Company or its Subsidiaries;
(q) enter into any Contract which, if it were in existence on the date of
this Agreement, would be required to be disclosed pursuant to Section 3.9; or
(r) authorize, commit or agree to take any of the foregoing actions.
Section 5.2 Advice of Changes. The Company and the Parent shall promptly advise
the other party orally and in writing to the extent it has Knowledge of (a) any
representation or warranty made by it (and, in the case of the Parent, made by
Merger Sub) contained in this Agreement becoming untrue or inaccurate such that
the condition set forth in Section 6.2(a) or Section 6.3(a), respectively, would
not be satisfied, (b) the failure by it (and, in the case of the Parent, by
Merger Sub) to comply with or satisfy in any material respect any covenant,
condition or agreement to be complied with or satisfied by it under this
Agreement or (c) any change or event causing, or which is reasonably likely to
cause, any of the conditions set forth in Article 6 not to be satisfied;
provided, however, that no such notification shall affect the representations,
warranties, covenants or agreements of the parties (or remedies with respect
thereto) or the conditions to the obligations of the parties under this
Agreement.
Section 5.3 No Solicitation by the Company.
(a) The Company shall not, nor shall it permit any of its Subsidiaries to,
nor shall it authorize or permit any of its directors, officers or employees or
any investment banker, financial advisor, attorney, accountant or other
representative retained by it or any of its Subsidiaries to directly or
indirectly through another Person, (i) solicit, initiate, resume or encourage
(including by way of furnishing or disclosing non-public information) any
Takeover Proposal, (ii) participate in any discussions or negotiations regarding
any Takeover Proposal, or (iii) enter into any Acquisition Agreement; provided,
however, that if, at any time prior to the date of the
32
Company Stockholders Meeting (the "Applicable Period"), the board of directors
of the Company (or the special committee thereof) determines in its good faith
judgment, after consultation with outside legal counsel, that the failure to
furnish such information or participate in such negotiations or discussions
would likely result in a breach of its fiduciary duties to the Company's
stockholders under applicable law, the Company and its representatives may, in
response to a Takeover Proposal with a price greater than the Transaction Value
that is otherwise reasonably likely to lead to a Superior Proposal which was not
solicited by it in violation of this Section 5.3(a), and subject to providing
prior written notice of its decision to take such action to the Parent and
compliance with Section 5.3(c), (x) furnish information with respect to the
Company and its Subsidiaries to any Person making a Takeover Proposal with a
price greater than the Transaction Value that is otherwise reasonably likely to
lead to a Superior Proposal pursuant to a customary confidentiality agreement on
terms at least as restrictive as the Confidentiality Agreement that permits the
disclosures to the Parent required by this Agreement and (y) participate in
discussions or negotiations regarding such Takeover Proposal. For purposes of
this Agreement, "Takeover Proposal" means any inquiry, proposal or offer from
any Person or "group" (as such term is defined in Section 13(d) of the Exchange
Act) relating to any direct or indirect acquisition or purchase of 15% or more
of the assets of the Company and its Subsidiaries, taken as a whole, or 15% or
more of any class or series of equity securities of the Company or any of its
Subsidiaries, any tender offer or exchange offer that if consummated would
result in any Person or "group" (as such term is defined in Section 13(d) of the
Exchange Act) beneficially owning 15% or more of any class or series of equity
securities of the Company or any of its Subsidiaries, or any merger,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction or the sale or other transfer of all or substantially all
of its assets involving the Company or any of its Subsidiaries, other than the
Transactions.
(b) Neither the board of directors of the Company nor any committee
thereof shall (i) withdraw, modify or supplement, or propose publicly to
withdraw modify or supplement, in a manner adverse to the Parent, the approval
or recommendation by such board of directors or such committee of this
Agreement, (ii) approve or recommend, or propose publicly to approve or
recommend, any Takeover Proposal, or (iii) approve or recommend, or propose to
approve or recommend, or execute or enter into, any letter of intent, agreement
in principle, merger agreement, acquisition agreement, option agreement or other
similar agreement or propose publicly or agree to do any of the foregoing (each,
an "Acquisition Agreement") related to any Takeover Proposal, other than any
such agreement entered into concurrently with a termination pursuant to the next
sentence in order to facilitate such action. Notwithstanding the foregoing,
during the Applicable Period, in response to a Superior Proposal which did not
arise out of or was not related to a breach of Section 5.3(a), the board of
directors of the Company (or the independent committee thereof) may (subject to
this and the following sentence) terminate this Agreement and recommend such
Superior Proposal (and concurrently with or after such termination, if it so
chooses, cause the Company to enter into any Acquisition Agreement with respect
to any Superior Proposal), but only at a time that is during the Applicable
Period and is after the fifth Business Day following the Parent's receipt of
written notice advising the Parent that the board of directors of the Company
(or the independent committee thereof) is prepared to accept a Superior
Proposal, specifying the material terms and conditions of such Superior Proposal
and identifying the Person making such Superior Proposal. For purposes of this
Agreement, a "Superior Proposal" means any proposal made by a third party to
acquire, directly or indirectly, including pursuant to a tender offer, exchange
offer, merger, consolidation,
33
business combination, recapitalization, liquidation, dissolution or similar
transaction, for consideration consisting of cash and/or securities, more than
50% of the combined voting power of the shares of Company Common Stock then
outstanding or all or substantially all the assets of the Company and otherwise
on terms which the board of directors of the Company determines in its good
faith judgment (after consultation with a financial advisor of nationally
recognized reputation), after considering all terms and conditions of such
proposal, including the likelihood and timing of its consummation, that such
proposal would result in a transaction delivering to the Company's stockholders
superior value, from a financial point of view, to the Merger and for which
financing, to the extent required, is then committed or which, in the good faith
judgment of the board of directors of the Company (or the independent committee
thereof), is reasonably capable of being obtained by such third party.
(c) In addition to the obligations of the Company set forth in Sections
5.3(a) and 5.3(b), the Company shall promptly (and no later than 24 hours after
receipt) advise the Parent orally and in writing of any request for information
or of any inquiry with respect to a Takeover Proposal, the material terms and
conditions of such request, inquiry or Takeover Proposal and the identity of the
Person making such request, inquiry or Takeover Proposal. The Company will
promptly keep the Parent informed of the status and details (including
amendments or changes or proposed amendments or changes) of any such request,
inquiry or Takeover Proposal.
(d) Nothing contained in this Agreement shall prohibit the Company from
taking and disclosing to its stockholders a position contemplated by Rule
14e-2(a) promulgated under the Exchange Act or from making any disclosure to the
Company's stockholders if, in the good faith judgment of the board of directors
of the Company (after consultation with outside legal counsel), failure so to
disclose would constitute a breach of its obligations under applicable law.
Section 5.4 The Form S-4 and the Proxy Statement; the Stockholders Meeting.
(a) As soon as practicable following the date of this Agreement, the
Parent and the Company shall prepare, and the Parent shall file with the SEC,
the Form S-4, in which the Proxy Statement will be included as a prospectus.
Each of the Company and the Parent shall use commercially reasonable efforts
(including the preparation of amendments to such documents and the provision of
supplemental information in response to SEC comments) to have the Form S-4
declared effective under the Securities Act as promptly as practicable after
such filing. The Company will use commercially reasonable efforts to cause the
Proxy Statement to be mailed to its stockholders as promptly as practicable
after the Form S-4 is declared effective under the Securities Act. The Parent
shall also take any action (other than qualifying to do business in any
jurisdiction in which it is not now so qualified or to file a general consent to
service of process) required to be taken under any applicable state securities
laws in connection with the issuance of Parent Common Stock in connection with
the Merger and the Company shall furnish all information concerning the Company
and the holders of capital stock of the Company as may be reasonably requested
in connection with any such action. If at any time prior to the Effective Time
any information relating to the Company or the Parent, or any of their
respective affiliates, officers or directors, should be discovered by the
Company or the Parent which should be set forth in an amendment or supplement to
either the Form S-4 or the Proxy Statement, so that (i) the Form S-4 would not
include any misstatement of a material fact or omit to state a material fact
necessary to make the statements therein not misleading or (ii) the Proxy
Statement would
34
not include any misstatement of a material fact or omit to state any material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, as applicable, the party which
discovers such information shall promptly notify the other parties hereto and an
appropriate amendment or supplement describing such information shall be
promptly filed with the SEC and, to the extent required by law, disseminated to
the stockholders of the Company. No filing of, or amendment or supplement to, or
correspondence to the SEC or its staff with respect to, the Form S-4 or the
Proxy Statement (including documents incorporated therein by reference) will be
made by either the Parent or the Company without providing the other party a
reasonable opportunity to review and comment thereon. The Parent will advise the
Company, promptly after it receives notice thereof, of the time when the Form
S-4 has become effective or any supplement or amendment has been filed, the
issuance of any stop order, the suspension of the qualification of the shares of
Parent Common Stock issuable in connection with the Merger for offering or sale
in any jurisdiction, or any request by the SEC for amendment of the Form S-4 or
the Proxy Statement or comments thereon and responses thereto or requests by the
SEC for additional information. The Company will advise the Parent, promptly
after it receives notice thereof, of any request by the SEC for the amendment of
the Proxy Statement or comments thereon and responses thereto or requests by the
SEC for additional information.
(b) The Company shall, as soon as practicable following the date of this
Agreement, establish a record date (which will be as soon as practicable
following the date of this Agreement) for, duly call, give notice of, convene
and hold the a meeting of its stockholders (the "Company Stockholders Meeting")
solely for the purpose of obtaining the Company Stockholder Approval. The
Company shall engage a proxy solicitation firm to assist it in attempting to
obtain the requisite vote of its stockholders. Subject to Section 5.3(d), the
Company shall, through its board of directors, recommend to its stockholders the
adoption of this Agreement. Without limiting the generality of the foregoing but
subject to its right to terminate this Agreement pursuant to Section 5.3(b), the
Company agrees that its obligations pursuant to the first sentence of this
Section 5.4(b) shall not be affected by the commencement, public proposal,
public disclosure or communication to the Company of any Takeover Proposal.
Section 5.5 Letters of the Company's Accountants. The Company shall use
commercially reasonable efforts to cause to be delivered to the Parent two
letters from the Company's independent public accountants, one dated a date
within two Business Days before the date on which the Form S-4 shall become
effective and one dated a date within two Business Days before the Closing Date,
each addressed to the Parent, in form and substance reasonably satisfactory to
the Parent and customary in scope and substance for comfort letters delivered by
independent public accountants in connection with registration statements
similar to the Form S-4. The Company shall provide all reasonable cooperation to
the Company's independent public accountants to enable them to issue the letters
referred to in this Section 5.5 and shall use all reasonable efforts to cause
them to do so.
Section 5.6 Access to Information; Confidentiality. Upon reasonable notice and
subject to the Confidentiality Agreement, dated February 6, 2003, between the
Parent and the Company (the "Confidentiality Agreement"), the Company shall, and
shall cause each of its Subsidiaries to, afford to the Parent and to its
officers, employees, accountants, counsel, financial advisors and other
representatives, reasonable access during normal business hours during the
period prior to
35
the Effective Time to all its properties, books, contracts, commitments,
personnel and records and, during such period, the Company shall, and shall
cause each of its Subsidiaries to, furnish promptly to the Parent (a) a copy of
each report, schedule, registration statement and other document filed by it
during such period pursuant to the requirements of federal or state securities
laws and (b) all other information concerning its business, properties and
personnel as the Parent may reasonably request (including the Company's outside
accountants work papers and the Company's monthly financial statements). The
Company shall not be required to provide access to or disclose information where
such access or disclosure would contravene any law, rule, regulation, order or
decree. No review pursuant to this Section 5.6 shall limit the Parent's or
Merger Sub's reliance on or the enforceability of any representation or warranty
made by the Company herein. The Parent will hold, and will cause its officers,
employees, accountants, counsel, financial advisors and other representatives
and affiliates to hold, any nonpublic information in accordance with the terms
of the Confidentiality Agreement.
Section 5.7 Reasonable Efforts.
(a) Prior to the Closing, upon the terms and subject to the conditions of
this Agreement, each of the parties agrees to use commercially reasonable
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, all things necessary, proper or advisable (subject to any applicable laws)
to consummate the Merger and make effective the Merger and the other
Transactions as promptly as practicable including, (i) the preparation and
filing of all forms, registrations and notices required to be filed to
consummate the Merger and the other Transactions and the taking of such actions
as are necessary to obtain any requisite approvals, consents, orders, exemptions
or waivers by any third party or Governmental Entity, and (ii) the satisfaction
of the other parties' conditions to Closing. In addition, no party hereto shall
take any action after the date of this Agreement to materially delay the
obtaining of, or result in not obtaining, any permission, approval or consent
from any Governmental Entity necessary to be obtained prior to Closing.
Notwithstanding any other provision of this Agreement, neither the Company nor
any of its Subsidiaries shall be entitled to (nor shall Parent or any of its
Subsidiaries be required to) divest or hold separate or otherwise take or commit
to take any action that limits the Parent's or the Surviving Corporation's
freedom of action with respect to, or ability to retain, the Company or any of
its Subsidiaries or any material portions thereof or any of the businesses,
product lines, properties or assets of the Company or any of its Subsidiaries,
without the Parent's prior written consent (which may be withheld in the
Parent's sole and absolute discretion). Nothing in this Agreement shall require
the Parent to commence Litigation to remove any Restraint issued under any
antitrust law.
(b) Prior to the Closing, each party shall promptly consult with the other
parties to this Agreement with respect to, provide any necessary information
with respect to, and provide the other parties (or their respective counsel)
with copies of, all filings made by such party with any Governmental Entity or
any other information supplied by such party to a Governmental Entity in
connection with this Agreement, the Merger and the other Transactions. Each
party hereto shall promptly inform the other of any communication from any
Governmental Entity regarding any of the Transactions. If any party hereto or
Affiliate thereof receives a request for additional information or documentary
material from any such Governmental Entity with respect to any of the
Transactions, then such party shall endeavor in good faith to make, or cause to
be made, as soon as reasonably practicable and after consultation with the other
parties, an
36
appropriate response in compliance with such request. To the extent that
transfers, amendments or modifications of any Company Permits are required as a
result of the execution of this Agreement or consummation of any of the
Transactions, the Company shall, and shall cause the Company Subsidiaries to,
use commercially reasonable efforts to effect such transfers, amendments or
modifications.
(c) In connection with and without limiting the foregoing, the Parent, the
Company and their respective boards of directors shall (i) take all action
necessary to ensure that no takeover statute or similar statute or regulation is
or becomes applicable to this Agreement or any of the Transactions and (ii) if
any takeover statute or similar statute becomes applicable to this Agreement or
any of the Transactions, take all action necessary to ensure the Transactions
are completed as soon as practicable.
(d) Unless the statute of limitations will bar the bringing of such claim
after the termination of this Agreement, no party shall, directly or indirectly,
bring or initiate (including by counterclaim or impleader) any litigation or
other action before a Governmental Entity or arbitration against another party
or involving or affecting their assets.
Section 5.8 Employee Matters.
(a) As soon as practicable after the Closing Date (the "Benefits Date"),
the Parent shall provide, or cause to be provided, employee benefit plans,
programs and arrangements to employees of the Company that are the same as those
made generally available to similarly situated non-represented employees of the
Parent who are hired by the Parent after January 1, 2003. From the Effective
Time to the Benefits Date (which the parties acknowledge may occur on different
dates with respect to different plans, programs or arrangements of the Parent),
the Parent shall provide, or cause to be provided, the employee benefit plans,
programs and arrangements of the Company (other than equity-based plans,
programs and arrangements) provided to employees of the Company as of the date
hereof.
(b) With respect to each benefit plan, program, practice, policy or
arrangement maintained by the Parent (the "Parent Plans") in which employees of
the Company participate on the Benefit Date, (i) service with the Company and
its Subsidiaries (or their respective predecessors) prior to the Effective Time
shall be credited against all service and waiting period requirements under the
Parent Plans (provided that such recognition shall not be for the purpose of
determining (A) retirement benefits under the Parent's defined contribution
plans (unless otherwise required by law), (B) any Parent subsidy under the
Parent's retiree health plans) and (C) Parent's sabbatical benefit, (ii) the
Parent Plans shall not provide any pre-existing condition exclusions and (iii)
the deductibles, copayments and out-of-pocket maximums in effect under the
Parent Plans shall be reduced by any deductibles, copayments and out-of-pocket
maximums paid by such individuals under the Company Benefit Plans for the plan
year in which the Effective Time occurs. Unless Parent consents otherwise in
writing, the Company shall take all action necessary to terminate, or cause to
terminate, before the Effective Time, any Benefit Plan that is a 401(k) plan or
other defined contribution retirement plan.
(c) Within a reasonable period of time after the last business day of each
month after the date hereof and on the Closing Date, the Company shall, as and
to the extent necessary,
37
deliver to Parent any additional information which Company reasonably believes
would affect the determination of each person who the Company reasonably
believes is a "disqualified individual" (within the meaning of Section 280G of
the Code).
(d) Employees of the Company who transfer to the employment of the Parent
or the Surviving Corporation after the Effective Time and meet the eligibility
requirements for participation in the Parent Employee Stock Purchase Plan (the
"Parent ESPP") shall be eligible to begin payroll deductions under that plan as
of the next entry date thereunder beginning after the Effective Time.
Section 5.9 Indemnification, Exculpation and Insurance.
(a) The Parent and Merger Sub agree that all rights to indemnification and
exculpation from liabilities for acts or omissions occurring at or prior to the
Effective Time now existing in favor of the current or former directors or
officers of the Company and its Subsidiaries as provided in their respective
certificate of incorporation or bylaws (or comparable organizational documents)
and any indemnification agreements of the Company (as each is in effect on the
date hereof), the existence of which has been disclosed in the Company
Disclosure Letter, shall be assumed by the Parent and the Surviving Corporation,
without further action, as of the Effective Time and shall survive the Merger
and shall continue in full force and effect in accordance with their terms, and
the Parent shall cause the Surviving Corporation to honor all such rights.
(b) If the Surviving Corporation or any of its successors or assigns (i)
consolidates with or merges into any other Person and is not the continuing or
surviving corporation or entity of such consolidation or merger or (ii)
transfers or conveys all or substantially all of its properties and assets to
any Person, or otherwise dissolves the Surviving Corporation, then, and in each
such case, the Parent shall cause proper provision to be made so that the
successors and assigns of the Surviving Corporation assume the obligations set
forth in this Section 5.9.
(c) The Parent shall for a period of not less than six years after the
Effective Time, either (i) maintain the Company's current directors' and
officers' liability insurance covering acts or omissions occurring prior to the
Effective Time ("D&O Insurance") with respect to those Persons who are currently
covered by the Company's directors' and officers' liability insurance policy on
terms with respect to such coverage and amount no less favorable than those of
such policy in effect on the date hereof or (ii) cause to be provided by a
reputable insurance company coverage no less favorable, including with respect
to coverage and amount, to such directors or officers, as the case may be, than
the D&O Insurance, so long as the aggregate premium therefor would not be in
excess of $1.2 million (such amount the "Maximum Premium"). If the existing or
substituted directors' and officers' liability insurance expires, is terminated
or canceled during such six-year period, the Parent will obtain as much D&O
Insurance as can be obtained for the remainder of such period for an aggregate
premium not in excess of the Maximum Premium.
(d) The provisions of this Section 5.9 (i) are intended to be for the
benefit of, and will be enforceable by, each indemnified party, his or her heirs
and his or her representatives and (ii) are in addition to, and not in
substitution for, any other rights to indemnification or contribution that any
such Person may have by contract or otherwise.
38
Section 5.10 Fees and Expenses.
(a) All fees and expenses incurred in connection with the Merger, this
Agreement, the Stockholders Agreement and the Transactions shall be paid by the
party incurring such fees or expenses, whether or not the Merger is consummated,
except that each of the Parent and the Company shall in any event bear and pay
one-half of the costs and expenses incurred in connection with the filing,
printing and mailing of the Form S-4 and the Proxy Statement (including SEC
filing fees).
(b) If this Agreement is terminated pursuant to:
(i) Section 7.1(b)(ii) if the Company or any of its Subsidiaries enters
into an Acquisition Agreement or consummates any Takeover Proposal, for
consideration per share of Company Common Stock equal to or great than the
Transaction Value, within twelve months of such termination of (changing the 15%
amounts referred to in the definitions thereof in Section 5.3(a) to 40% for
purposes of this Section 5.10(b)), the Company shall, within two Business Days,
pay to the Parent $828,000 (the "Termination Fee") by wire transfer of
immediately available funds;
(ii) Section 7.1(d), the Company shall, within two Business Days of such
termination, pay to the Parent the Termination Fee by wire transfer of
immediately available funds;
(iii) Section 7.1(f), the Company shall, prior to such termination, pay to
the Parent the Termination Fee by wire transfer of immediately available funds.
The Company acknowledges that the agreements contained in this Section
5.10(b) are an integral part of the Transactions, and that without these
agreements the Parent would not enter into this Agreement; accordingly, if the
Company fails promptly to pay the amount due pursuant to this Section 5.10(b),
and, in order to obtain such payment, the Parent commences a suit which results
in a judgment against the Company for the fee set forth in this Section 5.10(b),
the Company shall pay to the Parent its costs and expenses (including reasonable
attorneys' fees and expenses) in connection with such suit, together with
interest on the amount of the fee at the prime rate of Citibank, N.A. in effect
on the date such payment was required to be made.
Section 5.11 Public Announcements. The Parent and the Company will consult
with each other before issuing, and provide each other the opportunity to
review, comment upon and concur with, any press release or other public
statements with respect to the Transactions, the Merger and the Stockholders
Agreement. The parties agree that the initial press release to be issued with
respect to the Transactions shall be in the form heretofore agreed to by the
parties.
Section 5.12 Affiliates. The Company shall deliver to the Parent at least
thirty days prior to the Closing Date, a letter identifying all Persons who are,
at the time of such letter, "affiliates" of the Company for purposes of Rule 145
under the Securities Act. The Company shall use commercially reasonable efforts
to cause each such Person to deliver to the Parent at least twenty days prior to
the Closing Date, a written agreement substantially in the form of Exhibit B.
Section 5.13 Listing. The Parent shall use commercially reasonable efforts
to cause the Parent Common Stock issuable as part of the Merger Consideration to
be approved for listing on the
39
NASDAQ National Market, subject to official notice of issuance, as promptly as
practicable after the date hereof, and in any event prior to the Closing Date.
Section 5.14 Litigation. The Company shall give the Parent the opportunity
to participate in the defense of any litigation against the Company and/or its
directors relating to the Transactions, this Agreement or the Stockholders
Agreement.
Section 5.15 Rights Agreement. The Company's board of directors shall not
after the date of this Agreement, without the prior written consent of the
Parent, (a) waive or amend any provision of the Rights Agreement or (b) take any
action with respect to, or make any determination under, the Rights Agreement,
including redeeming the rights or take any action to facilitate a Takeover
Proposal; provided however, that at any time during the Applicable Period if the
board of directors of the Company (or the special committee thereof) determines
in its good faith judgment, after consultation with outside legal counsel, that
the failure to take such action or make such determination under, waive or amend
the Rights Agreement would likely result in a breach of its fiduciary duties to
the Company's stockholders under applicable law, the Company's board of
directors may take such action or make such determination under, waive or amend
the Rights Agreement.
Section 5.16 Obligations of Merger Sub; Voting of Shares.
(a) The Parent shall cause Merger Sub to perform all of its obligations
under this Agreement and in connection with the Transactions.
(b) The Parent shall vote, or cause to be voted, in favor of adoption of
this Agreement, all shares of Company Common Stock owned by the Parent or any of
its Subsidiaries as of the record date (the "Record Date") for the Company
Stockholders Meeting.
Section 5.17 Stockholders Agreement Legend. The Company will inscribe upon
any certificate representing Subject Shares (as defined in the Stockholders
Agreement) tendered by a Stockholder (as defined in the Stockholders Agreement)
in connection with any proposed transfer of any Subject Shares by a Stockholder
in accordance with the terms of the Stockholders Agreement the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
STOCKHOLDERS AGREEMENT DATED AS OF FEBRUARY 26, 2003, AND ARE SUBJECT TO THE
TERMS THEREOF. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT THE PRINCIPAL
EXECUTIVE OFFICES OF THE COMPANY";
and the Company will return such certificate containing such inscription to the
Stockholder within three Business Days following the Company's receipt thereof.
ARTICLE 6
CONDITIONS PRECEDENT
Section 6.1 Conditions to Each Party's Obligation To Effect the Merger. The
respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
40
(a) The Company Stockholder Approval shall have been obtained.
(b) No judgment, order, decree, statute, law, ordinance, rule or
regulation, entered, enacted, promulgated, enforced or issued by any court or
other Governmental Entity of competent jurisdiction or other legal restraint or
prohibition (collectively, "Restraints") shall be in effect, and there shall not
be pending or threatened any suit, action or proceeding by any Governmental
Entity (i) preventing the consummation of the Merger, (ii) prohibiting or
limiting the ownership or operation by the Company or the Parent and their
respective Subsidiaries of any material portion of the business or assets of the
Company or the Parent and their respective Subsidiaries taken as a whole, or
compelling the Company or the Parent and their respective Subsidiaries to
dispose of or hold separate any material portion of the business or assets of
the Company or the Parent and their respective Subsidiaries, taken as a whole,
as a result of the Merger or any of the other Transactions or the Stockholders
Agreement or (iii) which otherwise would reasonably be expected to have a
Material Adverse Effect on the Company or the Parent, as applicable; provided,
however, that each of the parties shall have used commercially reasonable
efforts to prevent the entry of any such Restraints and to appeal as promptly as
possible any such Restraints that may be entered.
(c) The Form S-4 shall have become effective under the Securities Act and
shall not be the subject of any stop order or proceedings seeking a stop order.
(d) The shares of Parent Common Stock issuable to the Company's
stockholders as contemplated by this Agreement shall have been approved for
listing on The NASDAQ National Market, subject to official notice of issuance.
Section 6.2 Conditions to Obligations of the Parent and Merger Sub. The
obligation of the Parent and Merger Sub to effect the Merger is further subject
to satisfaction or waiver of the following conditions:
(a) The representations and warranties of the Company set forth herein
shall be true and correct as of the date hereof and as of the Effective Time,
with the same effect as if made at and as of such time (except to the extent
expressly made as of an earlier date, in which case as of such date), except
where the failure of such representations and warranties to be so true and
correct (without giving effect to any limitation as to "materiality" or
"Material Adverse Effect" set forth therein) does not have, and would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company. The Parent shall have received a certificate
signed on behalf of the Company by the chief executive officer of the Company to
such effect.
(b) The Company shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or prior to
the Closing Date. The Parent shall have received a certificate signed on behalf
of the Company by the chief executive officer of the Company to such effect.
(c) There shall have been no Material Adverse Change in the Company since
the date of this Agreement that shall not have been cured by the Closing Date,
and the Parent shall have
41
received a certificate signed on behalf of the Company by the chief executive
officer and the chief financial officer of the Company to such effect.
(d) The Parent shall have received the letters described in Section 5.5
from the Company's independent public accountants.
Section 6.3 Conditions to Obligations of the Company. The obligation of the
Company to effect the Merger is further subject to satisfaction or waiver of the
following conditions:
(a) The representations and warranties of the Parent and Merger Sub set
forth herein shall be true and correct as of the date hereof and as of the
Effective Time, with the same effect as if made at and as of such time (except
to the extent expressly made as of an earlier date, in which case as of such
date), except where the failure of such representations and warranties to be so
true and correct (without giving effect to any limitation as to "materiality" or
"Material Adverse Effect" set forth therein) does not have, and would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Parent. The Company shall have received a certificate
signed on behalf of the Parent by an authorized signatory of the Parent to such
effect.
(b) The Parent and Merger Sub shall have performed in all material
respects all obligations required to be performed by them under this Agreement
at or prior to the Closing Date. The Company shall have received a certificate
signed on behalf of the Parent by an authorized signatory of the Parent to such
effect.
(c) There shall have been no Material Adverse Change in the Parent since
the date of this Agreement that shall not have been cured by the Closing Date,
and the Company shall have received a certificate signed on behalf of the
Company by an authorized signatory of the Parent to such effect.
ARTICLE 7
TERMINATION
Section 7.1 Termination. This Agreement may be terminated at any time prior to
the Effective Time, whether before or after the Company Stockholder Approval:
(a) by mutual written consent of the Parent, Merger Sub and the Company;
(b) by either the Parent or the Company:
(i) if the Merger shall not have been consummated by June 30, 2003, but
the right to terminate this Agreement pursuant to this Section 7.1(b)(i) shall
not be available to any party whose failure to perform any of its obligations
under this Agreement results in the failure of the Merger to be consummated by
such time;
(ii) if the Company Stockholder Approval shall not have been obtained at
the Company Stockholders Meeting duly convened therefor (including at any
adjournment or postponement thereof);
42
(iii) if any Restraint having any of the effects set forth in Section
6.1(b) shall be in effect and shall have become final and nonappealable, but the
party seeking to terminate this Agreement pursuant to this Section 7.1(b)(iii)
shall have used commercially reasonable efforts to prevent the entry of and to
remove such Restraint;
(c) by the Parent, if the Company shall have breached or failed to perform
in any material respect any of its representations, warranties, covenants or
other agreements contained in this Agreement, which breach or failure to perform
(i) would give rise to the failure of a condition set forth in Section 6.2(a) or
6.2(b), and (ii) is incapable of being or has not been cured by the Company
within 30 calendar days following its receipt of written notice from the Parent
of such breach or failure to perform;
(d) by the Parent, if (i) there shall be a breach of Section 5.3 that
results in a Superior Proposal being made or (ii) the Company's board of
directors (or any committee thereof) shall have (whether or not permitted by
this Agreement) modified, withdrawn or supplemented their recommendation of this
Agreement and the Transactions in a manner adverse to the Parent;
(e) by the Company, if the Parent shall have breached or failed to perform
in any material respect any of its representations, warranties, covenants or
other agreements contained in this Agreement, which breach or failure to perform
(i) would give rise to the failure of a condition set forth in Section 6.3(a) or
6.3(b), and (ii) is incapable of being or has not been cured by the Parent
within 30 calendar days following its receipt of written notice from the Company
of such breach or failure to perform;
(f) by the Company in accordance with Section 5.3(b); provided that, in
order for the termination of this Agreement pursuant to this Section 7.1(f) to
be deemed effective, the Company shall have complied with all provisions of
Section 5.3, including the notice provisions therein, and with applicable
requirements of Section 5.10, including the payment of the Termination Fee; or
(g) by the Company, within five Business Days following the Record Date,
if on or before the Record Date, the Parent has not exercised the option in full
to purchase shares of Company Common Stock granted under the Stock Option
Agreement, dated as of February 13, 2003, by and between the Company and the
Parent.
Section 7.2 Effect of Termination. If this Agreement is terminated by either the
Company or the Parent as provided in Section 7.1, this Agreement shall forthwith
become void and have no effect, without any liability or obligation on the part
of the Parent or the Company, except to the extent that such termination results
from the willful and material breach by a party of any of its representations,
warranties, covenants or agreements in this Agreement. The Confidentiality
Agreement, the final sentence of Section 5.6, Section 5.10, this Section 7.2 and
Article 8 shall survive any termination of this Agreement.
Section 7.3 Procedure for Termination. If a party has a right to terminate this
Agreement under Section 7.1, it may only exercise that right by delivering
notice to the other parties of such termination, stating the subsection of
Section 7.1 providing the basis for such termination and paying any required
fees.
43
ARTICLE 8
GENERAL PROVISIONS
Section 8.1 Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time. This Section 8.1
shall not limit any covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time.
Section 8.2 Amendment. This Agreement may be amended by the parties at any
time prior to the Effective Time; provided that after receipt of the Company
Stockholder Approval, there shall not be made any amendment that by law requires
further approval by the stockholders of the Company without the further approval
of such stockholders. This Agreement may not be amended except by an instrument
in writing signed on behalf of each of the parties.
Section 8.3 Extension; Waiver. At any time prior to the Effective Time, a
party may (a) extend the time for the performance of any of the obligations or
other acts of the other parties, (b) waive any inaccuracies in the
representations and warranties of the other parties contained in this Agreement
or in any document delivered pursuant to this Agreement or (c) waive compliance
by the other party with any of the agreements or conditions contained in this
Agreement. Any agreement on the part of a party to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed on behalf of
such party. The failure of any party to this Agreement to assert any of its
rights under this Agreement or otherwise shall not constitute a waiver of such
rights. Section 8.4 Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally, telecopied (which is confirmed) or sent by
internationally recognized overnight courier (providing proof of delivery) to
the parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
(a) If to the Parent or Merger Sub, to:
Electronics for Imaging, Inc.
000 Xxxxxxxx Xxx
Xxxxxx Xxxx, Xxxxxxxxxx 00000
Telecopy No.: 650.357.3776
Attention: General Counsel
With a copy (which shall not constitute notice) to:
Xxxxxxxx Xxxxxx & Finger P.A.
Xxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Telecopy No.: 302.784.7035
Attention: Xxxxxxx X. Xxxxxxxx; and
(b) If to the Company, to:
44
Printcafe Software, Inc.
Forty 00xx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Telecopy No.: 412.456.1151
Attention: Chief Executive Officer
With copies (which shall not constitute notice) to:
Potter Xxxxxxxx & Xxxxxxx LLP
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Telecopy No.: 302.778.6029
Attention: Xxxxxxx X. Xxxxx; and
Xxxxxx, Xxxxx & Xxxxxxx LLP
One Oxford Centre, Thirty Second Floor
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Telecopy No.: 412.560.3399
Attention: Xxxxxxxx X. Xxxxxx
Section 8.5 Definitions. For purposes of this Agreement:
(a) an "Affiliate" of any Person means another Person that
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first Person, where
"Control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management policies of a Person, whether through
the ownership of voting securities, by contract, as trustee or executor, or
otherwise.
(b) "Business Day" means any day other than Saturday, Sunday or
any other day on which banks are legally permitted to be closed in New York.
(c) "Contract" means any written, oral, electronic or other
contract, lease, license, arrangement, commitment, undertaking or understanding
(whether or not defenses exist to enforceability)
(d) "Knowledge" of any Person that is not an individual means the
actual knowledge of such Person's executive officers after reasonable inquiry.
(e) "Material Adverse Change" or "Material Adverse Effect" means,
when used in connection with the Company or the Parent, any change, effect,
event, occurrence, condition or development or state of facts that (i) is or
would reasonably be expected to be materially adverse to the business, assets or
results of operations or condition (financial or other) of such party and its
Subsidiaries, taken as a whole, or (ii) prevents or materially delays the
consummation of the Merger or any other Transactions, in each case, other than
any change, effect, event, occurrence, condition or development or state of
facts (A) relating to the U.S. economy in general, (B) relating to the industry
in which such party operates in general (and not having a materially
disproportionate effect on such party relative to most other industry
participants), (C) resulting from the announcement or pendency of the
Transactions or (D) in respect of decreases in such
45
party's stock price (provided that any effect described in clauses (A), (B) or
(C) is direct and that the party claiming such effect shall have the burden of
proving such direct effect); provided however, in the case of the Company, none
of (x) the acceleration of the maturity date of any of the Company's existing
indebtedness, (y) the delisting of the Company Common Stock from the Nasdaq
National Market or (z) the inclusion of a "going concern" or similar
qualification in the audit opinion delivered by the Company's auditors in
connection with their report on the Company's financial statements for the year
ended December 31, 2002 shall constitute a Material Adverse Effect or a Material
Adverse Change.
(f) "Person" means an individual, corporation, partnership,
limited liability company, joint venture, association, trust, unincorporated
organization or other entity.
(g) a "Subsidiary" of any Person means another Person, an amount
of the voting securities, other voting ownership or voting partnership interests
of which is sufficient to elect at least a majority of its board of directors or
other governing body (or, if there are no such voting interests, 50% or more of
the equity interests of which) is owned directly or indirectly by such first
Person.
Section 8.6 Construction and Interpretation. When a reference is made in
this Agreement to a section or article, such reference shall be to a section or
article of this Agreement unless otherwise clearly indicated to the contrary.
Whenever the word "include," "includes" or "including" is used in this Agreement
they shall be deemed to be followed by the words "without limitation." The words
"hereof," "herein" and "herewith" and words of similar import shall, unless
otherwise stated, be construed to refer to this Agreement as a whole and not to
any particular provision of this Agreement, and article, section, paragraph,
exhibit and schedule references are to the articles, sections, paragraphs,
exhibits and schedules of this Agreement unless otherwise specified. The plural
of any defined term shall have a meaning correlative to such defined term, and
words denoting any gender shall include all genders and the neuter. Where a word
or phrase is defined herein, each of its other grammatical forms shall have a
corresponding meaning. A reference to any party to this Agreement or any other
agreement or document shall include such party's successors and permitted
assigns. A reference to any legislation or to any provision of any legislation
shall include any modification, amendment or re-enactment thereof, any
legislative provision substituted therefor and all rules, regulations and
statutory instruments issued thereunder or pursuant thereto. If there is an
ambiguity or a question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties, and no presumption or burden
of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement. Each provision of this Agreement
shall be given full separate and independent effect. Although the same or
similar subject matters may be addressed in different provisions of this
Agreement, the parties intend that, except as expressly provided in this
Agreement, each such provision be read separately, be given independent
significance and not be construed as limiting any other provision in this
Agreement (whether or not more general or more specific in scope, substance or
context). No prior draft of this Agreement nor any course of performance or
course of dealing shall be used in the interpretation or construction this
Agreement.
Section 8.7 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered (whether delivered by telecopy or
otherwise) one and the same
46
agreement and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other parties.
Section 8.8 Entire Agreement; No Third-Party Beneficiaries. This Agreement
(including the documents and instruments referred to herein) (a) constitutes the
entire agreement, and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter of this
Agreement (including the Exclusivity Letter dated February 12, 2003) and (b)
except for the provisions of Section 5.9, are not intended to confer upon any
Person, other than the parties, any rights or remedies.
Section 8.9 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York without giving
effect to any other choice of law or conflict of law provision or rule (whether
of the State of New York or otherwise) that would cause the application of the
laws of any jurisdiction, other than the State of New York, except to the extent
that the DGCL is mandatorily applicable to the Merger; provided, however, that
the laws of the State of Delaware shall govern the relative rights, obligations,
powers, duties and other internal affairs of each party and its board of
directors.
Section 8.10 Assignment. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned, in whole or in
part, by operation of law or otherwise by any of the parties hereto without the
prior written consent of the other parties. Any assignment in violation of the
preceding sentence shall be void. Subject to the preceding two sentences, this
Agreement will be binding upon, inure to the benefit of, and be enforceable by,
the parties and their respective successors and assigns.
Section 8.11 Enforcement. The parties agree that irreparable damage would
occur if any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of competent
jurisdiction, this being in addition to any other remedy to which they are
entitled at law or in equity. In addition, each of the parties (a) consents to
submit itself to the personal jurisdiction of the Court of Chancery of the State
of Delaware of and for the County of New Castle if any dispute arises out of
this Agreement or any of the Transactions; provided that if there is no
equitable subject matter jurisdiction in the Court of Chancery, each party
consents to submit itself to the personal jurisdiction of such other federal or
state court within the State of Delaware having subject matter jurisdiction over
such dispute, (b) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from the Court of
Chancery (or such other court) and (c) agrees that it will not bring any action
relating to this Agreement or any of the Transactions in any court other than
the Court of Chancery of the State of Delaware of and for the County of New
Castle; provided, that if the Court of Chancery declines to exercise equitable
jurisdiction over any such action (or any part thereof), then each party agrees
that it will transfer any such action (or part thereof) only to, or recommence
any such action (or part thereof), only in such other federal or state court
within the State of Delaware having subject matter jurisdiction over such
dispute. EACH OF PARENT, MERGER SUB, AND THE COMPANY IRREVOCABLY AND
UNCONDITIONALLY WAIVE ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR
47
OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NEGOTIATION OR
ENFORCEMENT HEREOF OR THE TRANSACTIONS.
Section 8.12 Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect. If the final judgment of a court of competent
jurisdiction or other authority declares that any term or provision hereof is
invalid, void or unenforceable, the parties agree that the court making such
determination shall have the power to and shall, subject to the discretion of
such court, reduce the scope, duration, area or applicability of the term or
provision, to delete specific words or phrases, or to replace any invalid, void
or unenforceable term or provision with a term or provision that is valid and
enforceable and that comes closest to expressing the intention of the invalid or
unenforceable term or provision.
48
Each of the Parent, Merger Sub and the Company has caused this
Agreement to be duly executed and delivered as of the date first written above.
ELECTRONICS FOR IMAGING, INC.
By: /s/ Xxx Xxxxx
Name: Xxx Xxxxx
Title: Chief Executive Officer
STRATEGIC VALUE ENGINEERING, INC.
By: /s/ Xxxx Xxxxxxx
Name: Xxxx Xxxxxxx
Title: Vice President
PRINTCAFE SOFTWARE, INC.
By: /s/ Xxxx X. Xxxx
Name: Xxxx X. Xxxx
Title: Chief Executive Officer
Annex I
DEFINED TERMS INDEX
Accounting Rules......................................................... 15
Acquisition Agreement.................................................... 33
Adjusted Option.......................................................... 9
Affiliate................................................................ 45
Agreement................................................................ 1
Applicable Period........................................................ 33
Benefit Plans............................................................ 20
Benefits Date............................................................ 37
Business Day............................................................. 45
Cash Consideration....................................................... 3
Cash Election............................................................ 3
Certificate of Merger.................................................... 2
Certificates............................................................. 4
Closing.................................................................. 1
Closing Date............................................................. 1
Closing Parent Share Value............................................... 3
Code..................................................................... 7
Company.................................................................. 1
Company Authorized Preferred Stock....................................... 12
Company Common Stock..................................................... 1
Company Disclosure Letter................................................ 11
Company ESPP............................................................. 10
Company Filed SEC Documents.............................................. 17
Company International Plans.............................................. 22
Company Permits.......................................................... 19
Company SEC Documents.................................................... 15
Company Stock Options.................................................... 13
Company Stock Plans...................................................... 12
Company Stockholder Approval............................................. 25
Company Stockholders Meeting............................................. 35
Company Warrants......................................................... 10
Confidentiality Agreement................................................ 35
Contract................................................................. 45
Control.................................................................. 45
D&O Insurance............................................................ 38
DGCL..................................................................... 1
Dissenting Shares........................................................ 8
Effective Time........................................................... 2
Election................................................................. 4
Election Deadline........................................................ 4
Environmental Law........................................................ 20
ERISA.................................................................... 20
Exchange Act............................................................. 14
I-1
Exchange Agent........................................................... 4
Exchange Fund............................................................ 5
Exchange Ratio........................................................... 3
Form of Election......................................................... 4
Form S-4................................................................. 24
GAAP..................................................................... 15
Governmental Entity...................................................... 14
Hazardous Materials...................................................... 20
Holder................................................................... 4
Intellectual Property Rights............................................. 16
Knowledge................................................................ 45
Liens.................................................................... 11
Litigation............................................................... 18
Material Adverse Change.................................................. 45
Material Adverse Effect.................................................. 45
Maximum Premium.......................................................... 38
Merger................................................................... 1
Merger Consideration..................................................... 4
Merger Sub............................................................... 1
Non-Election Shares...................................................... 3
Parent................................................................... 1
Parent Authorized Preferred Stock........................................ 26
Parent Common Stock...................................................... 3
Parent Disclosure Letter................................................. 26
Parent ESPP.............................................................. 38
Parent Filed SEC Documents............................................... 29
Parent Plans............................................................. 37
Parent SEC Documents..................................................... 28
Permitted Liens.......................................................... 12
Person................................................................... 46
Proxy Statement.......................................................... 14
Record Date.............................................................. 40
Release.................................................................. 20
Restraints............................................................... 41
Returns.................................................................. 23
Rights................................................................... 12
Rights Agreement......................................................... 12
SEC...................................................................... 14
Securities Act........................................................... 15
Stock Consideration...................................................... 3
Stock Election........................................................... 3
Stockholders............................................................. 1
Stockholders Agreement................................................... 1
Subsidiary............................................................... 46
Superior Proposal........................................................ 33
Surviving Corporation.................................................... 1
I-2
Takeover Proposal........................................................ 33
Tax...................................................................... 22
Taxes.................................................................... 22
Taxing Authority......................................................... 22
Termination Fee.......................................................... 39
Transaction Value........................................................ 3
Transactions............................................................. 14
I-3
Exhibit A
STOCKHOLDERS AGREEMENT
STOCKHOLDERS AGREEMENT, dated as of February 26, 2003 (this
"Agreement"), by and between the Electronics For Imaging, Inc., a Delaware
corporation (the "Parent"), and the undersigned stockholders (each a
"Stockholder" and collectively the "Stockholders") of Printcafe Software, Inc.,
a Delaware corporation (the "Company").
RECITALS
Concurrently with the execution of this Agreement, the Parent,
Strategic Value Engineering, Inc., a Delaware corporation and a direct
wholly-owned subsidiary of the Parent ("Merger Sub"), and the Company are
entering into an Agreement and Plan of Merger, dated as of the date of this
Agreement (the "Merger Agreement"), which provides for the merger of Merger Sub
with and into the Company, on the terms and subject to the conditions set forth
in the Merger Agreement (the "Merger"). Unless otherwise indicated, capitalized
terms not defined herein have the meanings set forth in the Merger Agreement.
Stockholder is the record holder and Beneficial Owner of, and has
voting control with respect to, such number of shares of common stock, par value
$0.0001 per share, of the Company (the "Common Stock") set forth on the
signature page of this Agreement (the "Subject Shares"). "Beneficial Owner" has
the meaning ascribed to the term "beneficial owner"in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended, and correlative terms shall have a
corresponding meaning.
As a material inducement to enter into the Merger Agreement and to
consummate the Merger, the Parent desires Stockholder to agree, and Stockholder
is willing to agree to vote the Subject Shares and any other such shares of
capital stock of the Company acquired by Stockholder so as to facilitate
consummation of the Merger.
AGREEMENT
The parties to this agreement, intending to be legally bound, agree
as follows:
1. Voting of Subject Shares.
Section 1.1 Voting Agreement. Subject to the terms and conditions of this
Agreement, at every annual and special meeting of the stockholders of the
Company called with respect to any of the following, and at every adjournment or
postponement thereof, and on every action or approval by written consent of the
stockholders of the Company with respect to any of the following, each
Stockholder shall vote or cause (including by the Proxy, as hereinafter defined)
to be voted the Subject Shares and any New Shares (as defined herein):
(a) in favor of adoption of the Merger Agreement, the approval of the
transactions contemplated thereby and by this Agreement, and approval of the
Merger and any action in furtherance thereof;
(b) in favor of waiving any notice that may have been or may be required
relating to any reorganization of the Company, any reclassification or
recapitalization of the capital stock of
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the Company or any sale of assets, change of control, or acquisition of the
Company by any other person, or any merger, consolidation or business
combination of the Company with or into any other person to the extent such
transaction is undertaken in connection with the Merger;
(c) in favor of any matter that could reasonably be expected to
facilitate the Merger;
(d) against approval of any Takeover Proposal or any proposal made in
opposition to, or in competition with, consummation of the Merger and the
transactions contemplated by the Merger Agreement; and
(e) against any of the following actions: (A) any merger, consolidation,
business combination, sale of assets, reorganization or recapitalization of the
Company or any Subsidiary of the Company with any person or entity other than
the Parent or Merger Sub, (B) any sale, lease or transfer of any material part
of the assets of the Company or any Subsidiary of the Company, (C) any
reorganization, recapitalization, dissolution, liquidation or winding up of the
Company or any Subsidiary of the Company, (D) any change in the capitalization
of the Company or any Subsidiary of the Company, or the corporate structure of
the Company or any Subsidiary of the Company, or (E) any other action that is
intended, or could reasonably be expected to, impede, interfere with, delay,
postpone, discourage or adversely affect the Merger or any of the other
transactions contemplated by the Merger Agreement.
Stockholder shall not, from the date of this Agreement until the Expiration Date
(as hereinafter defined), enter into any agreement or understanding with any
Person to vote (other than the Proxy granted in connection herewith) or give
instructions inconsistent with this Section 1.1.
Section 1.2 Proxy. Concurrently with the execution of this Agreement: (i)
Stockholder shall deliver to the Parent a proxy in the form attached hereto as
Exhibit A, which shall be irrevocable to the fullest extent permitted by law,
with respect to the shares referred to therein (the "Proxy"); and (ii)
Stockholder shall cause to be delivered to the Parent an additional proxy (in
the form attached hereto as Exhibit A) executed on behalf of the record owner of
any Subject Shares that are Beneficially Owned (but are not owned of record) by
Stockholder.
Section 1.3 New Shares.
(a) Stockholder agrees that any shares of capital stock of the Company
that (i) Stockholder holds of record and Beneficially Owns on the date hereof
and should have listed on the signature page of this Agreement, or (ii)
purchases or with respect to which such Stockholder otherwise acquires record or
Beneficial Ownership or voting control with respect to after the execution of
this Agreement and prior to the Expiration Date (the foregoing clauses (i) and
(ii) together "New Shares") shall be subject to the terms and conditions of this
Agreement to the same extent as if they constituted Subject Shares.
(b) After the execution of this Agreement until the Expiration Date,
Stockholder shall execute or cause to be executed such further proxies as may be
requested by the Parent with respect to any New Shares of which Stockholder
acquires or discovers Beneficial Ownership, and such Stockholder shall promptly
notify the Parent upon acquiring or discovering Beneficial Ownership of any
additional securities of the Company.
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2. Transfer of Subject Shares.
Section 2.1 No Disposition or Encumbrance of Subject Shares. Stockholder
covenants and agrees that, from the date of this Agreement until after the
Company Stockholders Meeting, such Stockholder will not, directly or indirectly:
(i) offer, sell, offer to sell, contract to sell, pledge, grant any option to
purchase or otherwise dispose of or transfer (or permit or announce any offer,
sale, offer of sale, contract of sale or grant of any option for the purchase
of, or permit or announce any other disposition or transfer of) any of the
Subject Shares, or any interest in any of the Subject Shares, to any Person
other than the Parent or a Person that expressly agrees to be bound as a
Stockholder by all of the terms of this Agreement; (ii) create or permit to
exist any Lien on or otherwise affecting any of the Subject Shares; or (iii)
reduce Stockholder's Beneficial Ownership of, interest in or risk relating to
any of the Subject Shares.
Section 2.2 Transfer of Voting Rights. Stockholder covenants and agrees
that, from the date of this Agreement until after the Company Stockholders
Meeting, Stockholder will not deposit any of the Subject Shares into a voting
trust or grant a proxy (other than the Proxy granted in connection herewith) or
enter into a voting agreement or similar contract with respect to any of the
Subject Shares.
3. Waiver of Appraisal Rights. Stockholder hereby irrevocably and
unconditionally waives any rights of appraisal, dissenters' rights or similar
rights that such Stockholder may have in connection with the Merger.
4. Representations and Warranties of the Stockholder.
Each Stockholder (severally and not jointly) represents and warrants, with
respect to such Stockholder, to the Parent:
Section 4.1 Ownership of Subject Shares. Stockholder represents and
warrants that Stockholder (i) is the record and Beneficial Owner of and has the
sole right to vote the Subject Shares, which at the date hereof are free and
clear of any liens, claims, options, charges or other encumbrances (other than
restrictions on transfer arising under state or federal securities laws or
pursuant to this Agreement) and (ii) does not own, either Beneficially or of
record, any shares of capital stock of the Company other than the Subject
Shares.
Section 4.2 No Conflict. The execution and delivery of this Agreement and
the Proxy by Stockholder do not, and the performance of this Agreement and the
Proxy by Stockholder will not: (i) conflict with or violate any legal
requirement, order, decree or judgment applicable to Stockholder or by which
Stockholder or any of Stockholder's properties is bound or affected; or (ii)
result in any breach of or constitute a default (with notice or lapse of time,
or both) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of an encumbrance on
or otherwise affecting any of the Subject Shares pursuant to any note, bond,
mortgage, indenture, contract, agreement, commitment, lease, license, permit,
franchise or other instrument or obligation to which Stockholder is a party or
by which Stockholder or any of Stockholder's properties is bound or affected.
The execution and delivery of this Agreement and the Proxy by Stockholder do
not, and the performance of Stockholder's
A-3
obligations under this Agreement and the granting of the Proxy by Stockholder
will not, require any consent of any Person.
Section 4.3 Power; Enforceability. Stockholder has the legal capacity,
power and authority to enter into and perform all of Stockholder's obligations
under this Agreement. Stockholder has all requisite power and capacity to
execute and deliver this Agreement and the Proxy and to perform Stockholder's
obligations hereunder and thereunder. This Agreement and the Proxy have been
duly executed and delivered by Stockholder and assuming the due authorization,
execution and delivery by the Parent, constitute the legal, valid and binding
obligations of Stockholder, enforceable against Stockholder in accordance with
their respective 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.
There is no beneficiary or holder of a voting trust certificate or other
interest of any trust of which Stockholder is trustee whose consent is required
for the execution and delivery of this Agreement or the consummation by
Stockholder of the transactions contemplated hereby.
Section 4.4 Continuous Warranty. The representations and warranties
contained in this Agreement are accurate in all respects as of the date of this
Agreement, will be accurate in all respects at all times through the Expiration
Date and will be accurate in all respects as of the date of the consummation of
the Merger as if made on that date.
Section 4.5 No Other Proxy. Stockholder represents that any proxies
heretofore given in respect of the Subject Shares, if any, are not irrevocable,
and that such proxies (other than the Proxy) are hereby revoked.
5. Representations and Warranties of Parent.
The Parent represents and warrants to the Stockholder that it has
all corporate power and authority to execute and deliver this Agreement, to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of, and the performance of the
Parent's obligations under, and the consummation by the Parent of the
transactions contemplated by, this Agreement have been duly authorized by all
necessary action on the part of the Parent and no other proceedings on the part
of the Parent are necessary to authorize this Agreement or consummate the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Parent and, assuming due authorization, execution and delivery
by the Stockholder, constitutes the legal, valid and binding obligation of the
Parent, enforceable against the Parent in accordance with its terms.
6. Covenants of Stockholder. Stockholder hereby covenants and agrees to
cooperate fully with the Parent and to execute and deliver any additional
documents reasonably necessary or desirable and to take such further actions,
that in the reasonable opinion of the Parent may be reasonably necessary to
carry out the intent of this Agreement.
7. Consent and Waiver. Stockholder hereby gives any consents or waivers that
are reasonably required for the consummation of the Merger under the terms of
(a) any agreements
A-4
between such Stockholder and the Company or (b) pursuant to any other rights
such Stockholder may have.
8. Termination. This Agreement and any Proxy granted in connection herewith
shall terminate and shall have no further force or effect upon the earlier of
(i) the date of the Effective Time, (ii) the date the Merger Agreement is
terminated in accordance with its terms, (iii) a date agreed to by mutual
written consent of the Parent and the Stockholder and (iv) June 30, 2003. Such
termination date of this Agreement is referred to herein as the "Expiration
Date." If this Agreement is terminated pursuant to this Section 8, this
Agreement will become null and void and of no effect with no liability on the
part of any party to this Agreement and all proxies granted hereunder will be
automatically revoked; provided that such termination will not relieve any party
to this Agreement from any liability for its breach of this Agreement.
9. No Restraint on Director Action. This Agreement is intended to bind
Stockholder only with respect to the specific matters set forth herein, and
shall not prohibit Stockholder or its representatives from acting in accordance
with such person's fiduciary duties as an officer or director of the Company.
10. Limited Voting Rights. Stockholder will retain at all times the right to
vote such Stockholder's Subject Shares, in Stockholder's sole discretion, on all
matters other than those set forth in Section 1.1 which are at any time or from
time to time presented to the Company's stockholders generally. Nothing in this
agreement shall obligate Stockholder to vote the Subject Shares (a) in order
effect an amendment to the terms of the Merger Agreement or (b) in favor of the
adoption of the Merger Agreement after the board of directors of the Company has
modified its recommendation of the Merger Agreement in favor of a Superior
Proposal (as such term is defined in the Merger Agreement).
11. Miscellaneous.
Section 11.1 Survival of Representations, Warranties and Agreements. None
of the representations, warranties and agreements made by Stockholder in this
Agreement shall survive the Expiration Date; provided, however that the
termination of this Agreement shall not relieve any party from any liability for
any breach of this Agreement.
Section 11.2 Waiver. Any party to this Agreement may (a) extend the time
for the performance of the obligations or other acts of the other party to this
Agreement, (b) waive any inaccuracy of any representations or warranties of the
other party to this Agreement or (c) waive compliance by the other party with
the terms of this Agreement by the other party to this Agreement. Any such
action on the part of a party hereto shall be valid only if set forth in an
instrument in writing signed by such party. The failure of any party hereto to
assert any of its rights under this Agreement shall not constitute a waiver of
such rights. The waiver of any such right with respect to particular facts,
particular parties and other circumstances shall not be deemed a waiver with
respect to any other facts, party or circumstances and each right shall be
deemed an ongoing right that may be asserted at any time and from time to time.
A-5
Section 11.3 Expenses. All costs and expenses incurred in connection with
the transactions contemplated by this Agreement shall be paid by the party
incurring such costs and expenses.
Section 11.4 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect. If the final judgment of a court
of competent jurisdiction or other authority declares that any term or provision
hereof is invalid, void or unenforceable, the parties agree that the court
making such determination shall have the power to and shall, subject to the
discretion of such court, reduce the scope, duration, area or applicability of
the term or provision, to delete specific words or phrases, or to replace any
invalid, void or unenforceable term or provision with a term or provision that
is valid and enforceable and that comes closest to expressing the intention of
the invalid or unenforceable term or provision.
Section 11.5 Binding Effect and Assignment. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns, but, except as
otherwise specifically provided herein, neither this Agreement nor any of the
rights, interests or obligations of the parties hereto may be assigned by either
of the parties hereto without prior written consent of the other party hereto.
Without limiting any of the restrictions set forth in Section 2 or elsewhere in
this Agreement, this Agreement shall be binding upon any person to whom any
Subject Shares are transferred. Notwithstanding anything contained in this
Agreement to the contrary, nothing in this Agreement, express or implied, is
intended to confer on any Person any rights or remedies of any nature upon any
Person, other than the parties to this Agreement.
Section 11.6 Amendments and Modification. This Agreement may not be
modified, amended, altered or supplemented except upon the execution and
delivery of a written agreement executed by the parties hereto.
Section 11.7 Specific Performance; Injunctive Relief. The parties hereto
acknowledge that the Parent will be irreparably harmed and that there will be no
adequate remedy at law for a violation of any of the covenants or agreements of
the Stockholders set forth herein. Therefore, it is agreed that, in addition to
any other remedies that may be available to the Parent upon any such violation,
the Parent shall have the right to enforce such covenants and agreements by
specific performance, injunctive relief or by any other means available to the
Parent at law or in equity.
Section 11.8 Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally, telecopied (which is confirmed) or sent by
internationally recognized overnight courier (providing proof of delivery) to
the parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
A-6
If to Parent: Electronics For Imaging, Inc.
000 Xxxxxxxx Xxx
Xxxxxx Xxxx, Xxxxxxxxxx 00000
Telecopy No.: 650.357.3776
Attention: General Counsel
With a copy (which shall not constitute
notice) to:
Xxxxxxxx Xxxxxx & Finger P.A.
Xxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Telecopy No.: 302.784.7035
Attention: Xxxxxxx X. Xxxxxxx
If to a Stockholder: To the address for notice set
forth on the last page hereof.
With a copy (which shall not constitute notice)
to:
Potter Xxxxxxxx & Xxxxxxx LLP
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Telecopy No.: 302.778.6029
Attention: Xxxxxxx X. Xxxxx; and to:
Xxxxxx, Xxxxx & Xxxxxxx
One Oxford Centre, Thirty Second Floor
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Telecopy No.: 412.560.3399
Attention: Xxxxxxxx X. Xxxxxx
Xxxxxxxx Xxxxxxxxx Professional Corporation
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Telecopy No.: 412.562.1041
Attention: Xxxx X. Xxxxx and Xxxxx X. Xxxxxxx
or to such other address as any party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall only be
effective upon receipt.
Section 11.9 Governing Law.
A-7
(a) This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York without giving effect to any other
choice of law or conflict of law provision or rule (whether of the State of New
York or otherwise) that would cause the application of the laws of any
jurisdiction, other than the State of New York, except to the extent that the
DGCL is mandatorily applicable to the voting and transfer of the Subject Shares;
provided, however, that the laws of the State of Delaware shall govern the
relative rights, obligations, powers, duties and other internal affairs of the
Company and its board of directors.
(b) The parties agree that irreparable damage would occur if any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions of this
Agreement in any court of competent jurisdiction, this being in addition to any
other remedy to which they are entitled at law or in equity. In addition, each
of the parties (a) consents to submit itself to the personal jurisdiction of the
Court of Chancery of the State of Delaware of and for the County of New Castle
if any dispute arises out of this Agreement or any of the Transactions
contemplated hereby; provided that if there is no equitable subject matter
jurisdiction in the Court of Chancery, each party consents to submit itself to
the personal jurisdiction of such other federal or state court within the State
of Delaware having subject matter jurisdiction over such dispute, (b) agrees
that it will not attempt to deny or defeat such personal jurisdiction by motion
or other request for leave from the Court of Chancery (or such other court) and
(c) agrees that it will not bring any action relating to this Agreement or any
of the transactions contemplated hereby in any court other than the Court of
Chancery of the State of Delaware of and for the County of New Castle; provided,
that if the Court of Chancery declines to exercise equitable jurisdiction over
any such action (or any part thereof), then each party agrees that it will
transfer any such action (or part thereof) only to, or recommence any such
action (or part thereof), only in such other federal or state court within the
State of Delaware having subject matter jurisdiction over such dispute. EACH OF
PARENT, MERGER SUB, AND THE COMPANY IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY
RIGHT IT MAY HAVE TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
(WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO
THIS AGREEMENT, THE NEGOTIATION OR ENFORCEMENT HEREOF OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
Section 11.10 Entire Agreement. This Agreement constitutes the entire
agreement, and supersedes all prior agreements and understandings, either
written oral, among the parties with respect to the subject matter of this
Agreement.
Section 11.11 Agreement Negotiated. The form of this Agreement has been
negotiated by or on behalf of the Parent and the Company, each of which was
represented by attorneys who have carefully negotiated the provisions hereof.
Stockholder acknowledges that he or it has been advised to, and has had the
opportunity to, consult with his or its personal attorney prior to entering into
this Agreement. As a consequence, the Parent and the Stockholders do not believe
that any laws or rules relating to the interpretation of contracts against the
drafter of any particular clause should be applied in this case and therefore
waive its effects.
A-8
Section 11.12 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered (whether delivered by facsimile
or otherwise) one and the same agreement and shall become effective when one or
more counterparts have been signed by each of the parties and delivered to the
other parties.
Section 11.13 Effect of Headings. The Section headings herein are for
convenience only and shall not affect the construction or interpretation of this
Agreement.
Section 11.14 Legends. Any stock certificates representing the Subject
Shares or the New Shares shall be legended at the request of the Parent to
reflect the voting agreement and, if applicable, the irrevocable proxy granted
by this Agreement.
A-9
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed on the date and year first above written.
ELECTRONICS FOR IMAGING, INC.
By:
--------------------------------------------------------
Name:
------------------------------------------------------
Title:
------------------------------------------------------
Number of shares of Common Stock Beneficially Owned:
---------------------
STOCKHOLDER:
---------------------------
A-10
EXHIBIT A
IRREVOCABLE PROXY
The undersigned stockholder of Printcafe Software, Inc., a Delaware
corporation (the "Company"), hereby irrevocably appoints and constitutes the
board of directors of Electronics For Imaging, Inc., a Delaware corporation (the
"Parent"), and each of them, or any other designee of the Parent, as the sole
and exclusive attorneys and proxies of the undersigned, with full power of
substitution and resubstitution, to the full extent of the undersigned's rights
with respect to the shares of capital stock of the Company Beneficially Owned by
the undersigned, which shares are listed on the final page of this irrevocable
proxy (the "Irrevocable Proxy") and any and all other shares or securities
issued or issuable in respect thereof, or otherwise acquired by the undersigned
on or after the date hereof (collectively, the "Subject Shares"), until the
earlier of (i) the date of the Effective Time (ii) the date the Merger Agreement
(as hereinafter defined) is terminated in accordance with its terms, (iii) a
date agreed to by mutual written consent of the Parent and the Stockholder and
(iv) June 30, 2003, such termination date being referred to herein as the
"Expiration Date." Upon the undersigned's execution of this Irrevocable Proxy,
any and all prior proxies given by the undersigned with respect to any Subject
Shares are hereby revoked and the undersigned agrees not to grant any subsequent
proxies with respect to the Subject Shares until after the Expiration Date.
This Irrevocable Proxy is irrevocable (to the fullest extent
provided by applicable law), is coupled with an interest, is granted pursuant to
the Stockholders Agreement, dated as of February 26, 2003, by and between the
Parent and the undersigned stockholder of the Company (the "Stockholders
Agreement"), and is granted in consideration of the Parent entering into the
Agreement and Plan of Merger, dated as of February 26, 2003 (the "Merger
Agreement"), by and among the Parent, Strategic Value Engineering, Inc., a
Delaware corporation and a direct wholly-owned subsidiary of the Parent, and the
Company. Capitalized terms used but not otherwise defined in this Irrevocable
Proxy have the meanings given to such terms in the Merger Agreement.
The attorneys and proxies named above, and each of them, are hereby
authorized and empowered to by the undersigned at any time prior to the
Expiration Date to act as the undersigned's attorney and proxy to vote the
Subject Shares and to exercise all voting and other rights of the undersigned
with respect to the Subject Shares (including, without limitation, the power to
execute and deliver written consents with respect to the Subject Shares pursuant
to the General Corporation Law of the State of Delaware) at every annual,
special or adjourned meeting of the stockholders of the Company, and in every
written consent in lieu of such a meeting, or otherwise:
(a) in favor of adoption of the Merger Agreement, the approval of the
transactions contemplated thereby and by the Stockholders Agreement, and
approval of the Merger and any action in furtherance thereof;
(b) in favor of waiving any notice that may have been or may be required
relating to any reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company or any sale of assets,
change of control, or acquisition of the Company by any
A-11
other person, or any merger, consolidation or business combination of the
Company with or into any other person to the extent such transaction is
undertaken in connection with the Merger;
(c) in favor of any matter that could reasonably be expected to
facilitate the Merger;
(d) against approval of any Takeover Proposal or any proposal made in
opposition to, or in competition with, consummation of the Merger and the
transactions contemplated by the Merger Agreement; and
(e) against any of the following actions: (A) any merger, consolidation,
business combination, sale of assets, reorganization or recapitalization of the
Company or any Subsidiary of the Company with any person or entity other than
the Parent or Merger Sub, (B) any sale, lease or transfer of any material part
of the assets of the Company or any Subsidiary of the Company, (C) any
reorganization, recapitalization, dissolution, liquidation or winding up of the
Company or any Subsidiary of the Company, (D) any change in the capitalization
of the Company or any Subsidiary of the Company, or the corporate structure of
the Company or any Subsidiary of the Company, or (E) any other action that is
intended, or could reasonably be expected to, impede, interfere with, delay,
postpone, discourage or adversely affect the Merger or any of the other
transactions contemplated by the Merger Agreement.
Nothing herein shall obligate the undersigned Stockholder to vote
the Subject Shares (a) with respect to an amendment to the Merger Agreement or
(b) in favor of the adoption of the Merger Agreement after the board of
directors of the Company has modified its recommendation of the Merger Agreement
in favor of a Superior Proposal (as such term is defined in the Merger
Agreement).
The attorneys and proxies named above may not exercise this
Irrevocable Proxy on any other matter except as provided above. The undersigned
Stockholder may vote the Subject Shares on all such other matters.
All authority herein conferred shall survive the death or incapacity of
the undersigned and any obligation of the undersigned hereunder shall be binding
upon the heirs, personal representatives, successors and assigns of the
undersigned. THIS PROXY IS IRREVOCABLE.
Signature of Stockholder:
-------------------------------------
Print Name of Stockholder:
------------------------------------
Shares Beneficially Owned:
------------------------------------
A-12
Exhibit B
FORM OF AFFILIATE LETTER
Ladies and Gentlemen:
The undersigned, a holder of shares of common stock, par value $0.0001 per
share (the "Company Common Stock"), of Printcafe Software, Inc., a Delaware
corporation (the "Company"), is entitled to receive in connection with the
merger (the "Merger") of a subsidiary of Electronics for Imaging, Inc., a
Delaware corporation (the "Parent"), with and into the Company, securities of
the Parent, as the parent of the surviving corporation in the Merger (the
"Parent Securities"). The undersigned acknowledges that the undersigned may be
deemed an "affiliate" of the Company within the meaning of Rule 145 ("Rule 145")
promulgated under the Securities Act of 1933, as amended (the "Securities Act"),
by the Securities and Exchange Commission (the "SEC"), although nothing
contained herein should be construed as an admission of such fact.
If in fact the undersigned were an affiliate under the Securities Act, the
undersigned's ability to sell, assign or transfer the Parent Securities received
by the undersigned in exchange for any shares of Company Common Stock in
connection with the Merger may be restricted unless such transaction is
registered under the Securities Act or an exemption from such registration is
available. The undersigned understands that such exemptions are limited and the
undersigned has obtained or will obtain advice of counsel as to the nature and
conditions of such exemptions, including information with respect to the
applicability to the sale of such securities of Rules 144 and 145(d) promulgated
under the Securities Act. The undersigned understands that the Parent will not
be required to maintain the effectiveness of any registration statement under
the Securities Act for the purposes of resale of the Parent Securities by the
undersigned.
The undersigned hereby represents to and covenants with the Parent that
the undersigned will not sell, assign or transfer any of the Parent Securities
received by the undersigned in exchange for shares of Company Common Stock in
connection with the Merger except (a) pursuant to an effective registration
statement under the Securities Act, (b) in conformity with the volume and other
limitations of Rule 145 or (c) in a transaction which, in the opinion of counsel
to the Parent or other counsel satisfactory to the Parent or as described in a
"no-action" or interpretive letter from the staff of the SEC specifically issued
with respect to a transaction to be engaged in by the undersigned, is not
required to be registered under the Securities Act.
The Parent covenants that it will take all such actions as may be
reasonably available to it to permit the sale or other disposition of the Parent
Securities by the undersigned under Rule 145 in accordance with the terms
thereof.
The undersigned acknowledges and agrees that the legends set forth below
will be placed on certificates representing the Parent Securities received by
the undersigned in connection with the Merger or held by a transferee thereof,
which legends will be removed by delivery of substitute certificates upon
receipt of an opinion in form and substance reasonably satisfactory to the
Parent from independent counsel reasonably satisfactory to the Parent to the
effect that such legends are no longer required for purposes of the Securities
Act.
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There will be placed on the certificates for the Parent Securities issued
to the undersigned, or any substitutions therefor, a legend stating in
substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A TRANSACTION
TO WHICH RULE 145 APPLIES AND MAY ONLY BE TRANSFERRED IN CONFORMITY WITH RULE
145(d) OR PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED, OR IN ACCORDANCE WITH A WRITTEN
OPINION OF COUNSEL, REASONABLY ACCEPTABLE TO THE ISSUER IN FORM AND SUBSTANCE,
THAT SUCH TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED."
The undersigned acknowledges that (a) the undersigned has carefully read
this letter and understands the requirements hereof and the limitations imposed
upon the distribution, sale, transfer or other disposition of the Parent
Securities and (b) the receipt by the Parent of this letter is an inducement to
the Parent's obligations to consummate the Merger.
Very truly yours,
Signature:
-----------------------------
Printed Name:
--------------------------
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