EXHIBIT 1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
JDA SOFTWARE GROUP, INC.,
CVP2 CORP.
AND
QRS CORPORATION
JUNE 17, 2004
TABLE OF CONTENTS
PAGE
ARTICLE 1 THE MERGER..................................................................................... 2
1.1 The Merger..................................................................................... 2
1.2 Closing........................................................................................ 2
1.3 Effective Time................................................................................. 2
1.4 Effects of the Merger.......................................................................... 2
1.5 Certificate of Incorporation and Bylaws........................................................ 2
1.6 Directors and Officers......................................................................... 3
ARTICLE 2 EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE COMPANY AND MERGER SUB; EXCHANGE OF
CERTIFICATES................................................................................... 3
2.1 Effect on Capital Stock........................................................................ 3
2.2 Exchange of Certificates....................................................................... 6
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................................................. 8
3.1 Organization, Standing and Corporate Power..................................................... 8
3.2 Subsidiaries................................................................................... 8
3.3 Capital Structure.............................................................................. 9
3.4 Authority; Noncontravention.................................................................... 11
3.5 Company SEC Documents; Financial Statements; Nasdaq Compliance................................. 13
3.6 Absence of Certain Changes or Events........................................................... 15
3.7 Absence of Litigation; Investigations.......................................................... 15
3.8 Compliance with Applicable Laws................................................................ 16
3.9 Contracts...................................................................................... 16
3.10 Absence of Changes in Benefit Plans; Employment Matters........................................ 19
3.11 Labor Matters.................................................................................. 19
3.12 Employee Benefit Matters....................................................................... 20
3.13 Taxes.......................................................................................... 21
3.14 Title to Properties............................................................................ 22
3.15 Intellectual Property.......................................................................... 23
3.16 Sale of Products; Performance of Services...................................................... 26
3.17 Environmental Matters.......................................................................... 27
3.18 Insurance...................................................................................... 28
3.19 No Restrictions on Business.................................................................... 28
3.20 Opinion of Financial Advisor................................................................... 28
3.21 Broker Fees.................................................................................... 29
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB........................................ 29
4.1 Organization, Standing and Corporate Power..................................................... 29
4.2 Subsidiaries................................................................................... 29
4.3 Capital Structure.............................................................................. 30
4.4 Authority; Noncontravention.................................................................... 31
4.5 Parent SEC Documents; Financial Statements; Nasdaq Compliance.................................. 33
4.6 Absence of Certain Changes or Events........................................................... 35
4.7 Absence of Litigation; Investigations.......................................................... 35
TABLE OF CONTENTS
(continued)
PAGE
4.8 Compliance with Applicable Laws................................................................ 35
4.9 Contracts...................................................................................... 36
4.10 Absence of Changes in Benefit Plans............................................................ 36
4.11 Employee Benefit Matters....................................................................... 37
4.12 Taxes.......................................................................................... 38
4.13 Intellectual Property.......................................................................... 38
4.14 No Restrictions on Business.................................................................... 40
4.15 Brokers........................................................................................ 40
4.16 Interim Operations of Merger Sub............................................................... 41
4.17 Interested Stockholder......................................................................... 41
4.18 Opinion of Financial Advisor................................................................... 41
ARTICLE 5 COVENANTS RELATING TO CONDUCT OF BUSINESS...................................................... 41
5.1 Conduct of Company's Business.................................................................. 41
5.2 Conduct of Parent's Business................................................................... 44
5.3 No Solicitation by the Company................................................................. 45
5.4 Employee Benefit Matters....................................................................... 47
ARTICLE 6 ADDITIONAL AGREEMENTS.......................................................................... 48
6.1 Registration Statement; Joint Proxy Statement.................................................. 48
6.2 Company Stockholders' Meeting and Parent Stockholders' Meeting................................. 50
6.3 Access to Information; Confidentiality......................................................... 51
6.4 Further Actions................................................................................ 51
6.5 Filings; Other Actions......................................................................... 52
6.6 Fees and Expenses.............................................................................. 53
6.7 Public Announcements; Other Communications..................................................... 53
6.8 Director's and Officer's Insurance and Indemnification......................................... 54
6.9 Section 16 Approval............................................................................ 54
6.10 Nasdaq Quotation............................................................................... 55
6.11 Blue Sky....................................................................................... 55
6.12 Affiliates..................................................................................... 55
6.13 Tax-free Reorganization........................................................................ 56
6.14 Representation on Parent Board................................................................. 56
ARTICLE 7 CONDITIONS TO THE MERGER....................................................................... 56
7.1 Conditions to Each Party's Obligation to Effect the Merger..................................... 56
7.2 Conditions to Obligation of Parent and Merger Sub.............................................. 57
7.3 Conditions to Obligation of the Company........................................................ 58
ARTICLE 8 TERMINATION, AMENDMENT AND WAIVER.............................................................. 58
8.1 Termination.................................................................................... 58
8.2 Effect of Termination.......................................................................... 60
8.3 Amendment...................................................................................... 60
8.4 Extension; Waiver.............................................................................. 60
TABLE OF CONTENTS
(continued)
PAGE
ARTICLE 9 GENERAL PROVISIONS............................................................................. 61
9.1 Nonsurvival of Representations and Warranties.................................................. 61
9.2 Notices........................................................................................ 61
9.3 Certain Definitions............................................................................ 62
9.4 Index of Defined Terms......................................................................... 63
9.5 Interpretation................................................................................. 68
9.6 Counterparts................................................................................... 69
9.7 Entire Agreement; No Third-Party Beneficiaries................................................. 69
9.8 Governing Law.................................................................................. 69
9.9 Assignment..................................................................................... 69
9.10 Consent to Jurisdiction........................................................................ 69
9.11 Enforcement.................................................................................... 70
9.12 Severability................................................................................... 70
Exhibit A - Company Form of Voting Agreement
Exhibit B - Parent Form of Voting Agreement
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), is dated as of June 17,
2004, by and among JDA Software Group, Inc., a Delaware corporation ("Parent"),
CVP2 Corp., a Delaware corporation ("Merger Sub"), and QRS Corporation, a
Delaware corporation (the "Company").
W I T N E S S E T H:
WHEREAS, upon the terms and subject to the conditions of this Agreement
and in accordance with the Delaware General Corporation Law ("DGCL"), Parent,
Merger Sub and the Company will enter into a business combination transaction
pursuant to which Merger Sub will merge with and into the Company (the
"Merger"); and
WHEREAS, the Board of Directors of Parent (i) has determined that the
Merger is fair to, and in the best interest of, Parent and its stockholders and
(ii) has approved this Agreement, the Merger and the other transactions
contemplated by this Agreement; and
WHEREAS, the Board of Directors of the Company (i) has determined that the
Merger is fair to, and in the best interest of, the Company and its stockholders
and (ii) has approved this Agreement, the Merger and the other transactions
contemplated by this Agreement; and
WHEREAS, Parent and Merger Sub and each executive officer and director of
the Company desire to enter into voting agreements in connection with the Merger
in the form set forth in Exhibit A; and
WHEREAS, the Company and each executive officer and director of Parent
desire to enter into voting agreements in connection with the Merger in the form
set forth in Exhibit B; and
WHEREAS, Parent, Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger; and
WHEREAS, for United States Federal income tax purposes, it is intended
that the Merger shall qualify as a tax-free reorganization under Section 368(a)
of the Internal Revenue Code of 1986, as amended (together with the rules and
regulations promulgated thereunder, the "Code"), and that this Agreement shall
be, and hereby is, adopted as a plan of reorganization for purposes of Section
368 of the Code;
WHEREAS, Section 9.3 of this Agreement contains certain definitions, and
Section 9.4 of this Agreement contains an index of defined terms in this
Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby,
Parent, Merger Sub and the Company hereby agree as follows:
1
ARTICLE 1
THE MERGER
1.1 The Merger. Upon the terms and subject to the conditions set forth in
this Agreement, and in accordance with the DGCL, at the Effective Time Merger
Sub shall be merged with and into the Company, whereupon the separate corporate
existence of Merger Sub shall cease, and the Company shall continue as the
surviving corporation (sometimes referred to herein as the "Surviving
Corporation") and shall succeed to and assume all the rights and obligations of
Merger Sub in accordance with the DGCL.
1.2 Closing. Upon the terms and subject to the conditions set forth in
this Agreement, including the satisfaction or waiver of the conditions set forth
in Article 7, the closing of the Merger (the "Closing") shall take place at the
offices of Xxxx Xxxx Xxxx & Freidenrich, LLP, located at 0000 Xxxxx Xxxxx
Xxxxxxxxxx, Xxxxx 000, Xxxxxx, Xxxxx at 10:00 a.m., Pacific time, on a date to
be specified by the Parties to this Agreement, which shall be no later than two
(2) Business Days after satisfaction or waiver of the conditions set forth in
Article 7 or such other date and time or location as mutually agreed to by the
Parties (the "Closing Date").
1.3 Effective Time. Upon the terms and subject to the conditions set forth
in this Agreement, as soon as practicable after the Closing and on the Closing
Date, the Company shall file with the Secretary of State of the State of
Delaware (the "Delaware Secretary of State") the certificate of merger (the
"Certificate of Merger") and such other documents as may be required by the DGCL
in order for the Merger to become effective duly prepared, executed and
acknowledged by the Parties, as applicable. The Merger shall become effective
upon the filing of the Certificate of Merger with the Delaware Secretary of
State unless Parent and the Company agree to a subsequent date or time and
specify such date and time in the Certificate of Merger (the time the Merger
becomes effective being hereinafter referred to as the "Effective Time").
1.4 Effects of the Merger. The Merger shall have the effects set forth in
the DGCL, including Section 259 of the DGCL. Without limiting the generality of
the foregoing, and subject thereto, at the Effective Time all the property,
rights, privileges, powers and franchises of the Company and Merger Sub shall be
vested in the Surviving Corporation, and all debts, liabilities and duties of
the Company and Merger Sub shall become the debts, liabilities and duties of the
Surviving Corporation.
1.5 Certificate of Incorporation and Bylaws.
(a) As of the Effective Time, by virtue of the Merger and without
any action on the part of Merger Sub or the Company, the Certificate of
Incorporation of the Surviving Corporation shall be amended and restated to read
the same as the Certificate of Incorporation of Merger Sub, as in effect
immediately prior to the Effective Time, until thereafter changed or amended as
provided therein or by applicable law, except that the Certificate of
Incorporation shall be amended to reflect that the name of the Surviving
Corporation shall be "QRS Corporation".
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(b) As of the Effective Time, by virtue of the Merger and without
any action on the part of Merger Sub or the Company, the Bylaws of the Surviving
Corporation shall be amended and restated to read the same as the Bylaws of
Merger Sub, as in effect immediately prior to the Effective Time, until
thereafter changed or amended as provided therein or by applicable law, except
that the Bylaws shall be amended to reflect that the name of the Surviving
Corporation shall be "QRS Corporation".
1.6 Directors and Officers. The directors of Merger Sub immediately prior
to the Effective Time shall be the initial directors of the Surviving
Corporation, to serve until the earlier of their resignation or removal or until
their respective successors are duly elected and qualified. The officers of
Merger Sub immediately prior to the Effective Time shall be the initial officers
of the Surviving Corporation, to serve until the earlier of their resignation or
removal or until their respective successors are duly elected and qualified.
ARTICLE 2
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
COMPANY AND MERGER SUB; EXCHANGE OF CERTIFICATES
2.1 Effect on Capital Stock. As of the Effective Time, by virtue of the
Merger and without any further action on the part of the holder of any shares of
capital stock of the Company, Parent or Merger Sub:
(a) Cancellation of Treasury Stock. Each share of common stock, par
value $0.001 per share, of the Company ("Company Common Stock") that is directly
owned by the Company or any wholly-owned Subsidiary of the Company immediately
prior to the Effective Time shall automatically be cancelled and shall cease to
exist, and no consideration shall be delivered in exchange therefor.
(b) Conversion of Merger Sub Common Stock. Each issued and
outstanding share of common stock of Merger Sub shall be converted into one
fully paid and non-assessable share of common stock of the Surviving
Corporation.
(c) Conversion of Company Common Stock. Each issued and outstanding
share of Company Common Stock (other than shares to be cancelled in accordance
with Section 2.1(a)) shall be converted, as of the Effective Time, into the
right to receive 0.50 shares (the "Exchange Ratio") of common stock, $0.01 par
value per share, of Parent (the "Parent Common Stock") (together with cash in
lieu of fractional shares pursuant to Section 2.2(g), the "Merger
Consideration"). At the Effective Time, all such shares of Company Common Stock
shall no longer be outstanding and shall automatically be cancelled and shall
cease to exist, and each holder of a certificate representing any such shares
shall cease to have any rights with respect thereto, except the right to receive
such holder's Merger Consideration. Notwithstanding the foregoing, the Merger
Consideration shall be adjusted to reflect fully the effect of any stock split,
reverse split, reclassification, stock dividend (including any dividend or
distribution of securities convertible into Company Common Stock or Parent
Common Stock), reorganization, recapitalization or other like change with
respect to Company Common Stock or Parent
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Common Stock occurring (or having a record date) after the date of this
Agreement and prior to the Effective Time.
(d) Options/Unvested Shares.
(i) Each Option to purchase shares of Company Common Stock
under the Company's Stock Plans which is outstanding immediately prior to the
Effective Time shall not be assumed by Parent and, accordingly, at the Effective
Time shall vest in full and become exercisable for all the shares of Company
Common Stock subject to such Option and, to the extent not exercised at or
before the Effective Time, shall terminate and cease to be outstanding
immediately upon the Effective Time, in each case in accordance with the express
terms of each of the Stock Plans and the applicable stock option agreement.
However, Parent hereby agrees that the Company may enter into an agreement with
each holder of an outstanding Option which will provide such holder with the
following rights: (A) the right to surrender the Option to the Company, as
proximately as possible prior to the Effective Time as to facilitate the
implementation of the following provisions, for a distribution payable by the
Company in shares of Company Common Stock (with any fractional share to be paid
in cash) equal to the amount by which the fair market value of the shares of
Company Common Stock at the time subject to such Option (with such fair market
value to be determined on the basis of the closing price per share of Company
Common Stock on the last trading day preceding the Closing Date) exceeds the
aggregate exercise price payable for those shares and (B) the right to have the
Company withhold a portion of the shares otherwise distributable under clause
(A) to the Option holder in order to satisfy the employee portion of the
federal, state and local income and employment withholding taxes incurred in
connection with the clause (A) distribution, with the withheld shares of Company
Common Stock to be valued on the basis of the fair market value to be determined
on the basis of the closing price per share of Company Common Stock on the last
trading day preceding the Closing Date and the Company to promptly pay that
amount in cash to the appropriate tax authorities on the employee's behalf. At
the Effective Time all shares of Company Common Stock distributable pursuant to
the exercise of the rights authorized pursuant to clause (A) of this subsection,
net of any shares withheld by the Company in satisfaction of the applicable
withholding taxes, shall be converted into the right to receive fully-vested
shares of Parent Common Stock in accordance with Section 2.1(c). Parent shall
assume any reserve of Company Common Stock which remains available for issuance
under the Stock Plans immediately after the Effective Time (after taking into
account the effect upon such share reserve of all exercises and lapses of
outstanding Options and the rights authorized pursuant to clause (A) of this
subsection and the lapse of any unexercised Options). In effecting such
assumption, the remaining reserve of Company Common Stock under each of the
Stock Plans shall be converted into shares of Parent Common Stock by multiplying
the remaining reserve of Company Common Stock under each of the Stock Plans by
the Exchange Ratio and rounding down to the next whole share of Parent Common
Stock. Unless and until otherwise approved by Parent's stockholders following
the Effective Time, any option grants or other awards from such assumed reserve
may only be made to individuals who are not at the Effective Time in the employ
or service of the Parent or any Affiliate of the Parent. Parent shall also have
the right, but not the obligation, after the Effective Time, to assume the Stock
Plans for purposes of making option grants and other awards from such assumed
reserve.
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(ii) Schedule 2.1(d)(ii) sets forth a true and complete list
as of the date hereof of each outstanding Option, including the option holder,
the number of shares of Company Common Stock subject to such option, the
applicable vesting schedule (including the number of shares vested as of the
date hereof), the exercise price payable per share and the number of shares
under each such Option that would vest due to acceleration upon the consummation
of the Merger and the transactions contemplated hereby, and the number of shares
available for issuance under the Stock Plans.
(iii) Each outstanding right to receive shares of Company
Common Stock under the Stock Plans ("Share Right Award") which is outstanding
immediately prior to the Effective Time shall vest in full at that time, and the
shares of Company Common Stock subject to those vested Share Right Awards shall
become issuable immediately prior to the Effective Time and shall be converted
as of the Effective Time into the right to receive fully-vested Parent Common
Stock in accordance with Section 2.1(c). However, the holder of each such Share
Right Award shall have the right to have the Company withhold a portion of the
shares otherwise issuable under such Share Right Award to satisfy the employee
portion of the applicable federal, state and local income and employment
withholding taxes, with the withheld shares of Company Common Stock to be valued
on the basis of the closing price per share of Company Common Stock on the last
trading day preceding the Closing Date and the Company to promptly pay that
amount in cash to the appropriate tax authorities on the employee's behalf.
(iv) Schedule 2.1(d)(iv) sets forth a true and complete list
as of the date hereof of each holder of unvested Company Common Stock and each
holder of an outstanding Share Right Award under the Stock Plans, including the
number of unvested shares of Company Common Stock held by such person or the
number of unvested shares of Company Common Stock subject to such person's Share
Right Award, the applicable vesting schedule for those shares, the purchase
price (if any) paid per share of unvested Company Common Stock held by such
person and the number of shares under each such Share Right Award that would
vest due to acceleration upon the consummation of the Merger and the
transactions contemplated hereby.
(e) Warrants. At the Effective Time, Parent shall assume each Common
Stock Purchase Warrant issued by the Company on February 9, 2001 to each of
Xxxxx Xxxxxxx and Xxxxx Xxxxxxx (each, a "Company Warrant") to purchase shares
of Company Common Stock, whether or not exercisable, and each such Company
Warrant shall be deemed to constitute a warrant to acquire, on the same terms
and conditions as were applicable under such Company Warrant immediately prior
to the Effective Time, the same number of shares of Parent Common Stock as the
holder of such Company Warrant would have been entitled to receive pursuant to
the Merger had such holder exercised such Company Warrant in full immediately
prior to the Effective Time, at a price per share of Parent Common Stock,
rounded up to the nearest whole cent, equal to (i) the aggregate exercise price
for the shares of Company Common Stock otherwise purchasable pursuant to such
Company Warrant divided by (ii) the aggregate number of shares of Parent Common
Stock deemed purchasable pursuant to such Company Warrant, provided that any
fractional share of Parent Common Stock resulting from an aggregation of all the
shares of a holder subject to Company Warrant shall be rounded down to the
nearest whole share. Prior to the Effective Time, the Company shall have given
prompt notice of adjustment of each Company Warrant, in accordance with the
terms of the Company Warrant and as contemplated under this Section 2.1(e), to
each of Xxxxx Xxxxxxx and Xxxxx Xxxxxxx.
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2.2 Exchange of Certificates.
(a) Exchange Agent. Prior to the Effective Time, Parent shall
designate a bank or trust company reasonably acceptable to the Company (the
"Exchange Agent") for payment of the Merger Consideration. Promptly after the
Effective Time, Parent shall deposit with the Exchange Agent for the benefit of
the holders of Company Common Stock certificates of Parent Common Stock
representing the number of whole shares of Parent Common Stock issuable pursuant
to Section 2.1(c) as Merger Consideration and sufficient funds to permit payment
in lieu of fractional shares pursuant to Section 2.2(g). Any Merger
Consideration deposited with the Exchange Agent which has not been distributed
pursuant to Section 2.2(b) hereof on or prior to the date which is one year
after the Effective Time shall be turned over to Parent, upon demand, and any
such holder who has not exchanged shares of Company Common Stock for the Merger
Consideration prior to that time shall thereafter look only to Parent for
payment of the Merger Consideration, and provided, further, that any and all
interest earned at any time on the cash deposited with the Exchange Agent shall
inure to the benefit of, and belong to, Parent.
(b) Exchange Procedure. As soon as reasonably practicable after the
Effective Time and in any event within five Business Days following the
Effective Time, the Surviving Corporation shall cause the Exchange Agent to mail
to each holder of record of a certificate or certificates which immediately
prior to the Effective Time represented outstanding shares of Company Common
Stock (the "Certificates"), whose shares were converted into the right to
receive such holder's ratable portion of the Merger Consideration, a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates held by such Person shall pass, only upon the
proper delivery of the Certificates and shall be in a form and have such other
provisions as Parent may reasonably specify) and instructions as specified by
Parent for use in effecting the exchange of the Certificates for the Merger
Consideration, which shall be in form and substance reasonably satisfactory to
the Company. Upon surrender of a Certificate for cancellation to the Exchange
Agent or to such other agent or agents as may be appointed by Parent, together
with such letter of transmittal, duly completed and executed, and all other
documents required by the instructions thereto, the holder of such Certificate
shall be entitled to receive in exchange therefor, and the Exchange Agent shall
promptly distribute to such holder, the number of shares of Parent Common Stock
(along with cash in lieu of fractional shares pursuant to Section 2.2(g)) into
which the shares of Company Common Stock theretofore represented by such
Certificate shall have been converted pursuant to Section 2.1(c), and the
Certificate so surrendered shall forthwith be cancelled. In the event of a
transfer of ownership of shares of Company Common Stock that is not registered
in the transfer records of the Company, payment may be made to a Person other
than the Person in whose name the Certificate so surrendered is registered, if
such Certificate shall be properly endorsed or otherwise be in proper form for
transfer and the Person requesting such payment shall pay any transfer or other
taxes required by reason of the payment to a Person other than the registered
holder of such Certificate or establish to the satisfaction of Parent that such
tax has been paid or is not applicable. Until surrendered as contemplated by
this Section 2.2(b), each Certificate shall be deemed at any time after the
Effective Time to represent only the right to receive upon such surrender the
Merger Consideration, without interest, into which the shares of Company Common
Stock theretofore represented by such Certificate shall have been converted
pursuant to Section 2.1(c).
6
(c) No Further Ownership Rights in Company Common Stock. All Merger
Consideration paid upon the surrender of Certificates in accordance with the
terms of this Article 2 shall be deemed to have been paid in full satisfaction
of all rights pertaining to the shares of Company Common Stock theretofore
represented by such Certificates. At the close of business on the day of the
Effective Time, the stock transfer books of the Company shall be closed, 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
for any reason, they shall be cancelled and exchanged as provided in this
Article 2.
(d) No Liability. None of Parent, Merger Sub, the Company or the
Exchange Agent shall be liable to any Person in respect of any Merger
Consideration delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. If any Certificate shall not have
been surrendered prior to seven years after the Effective Time (or immediately
prior to such earlier date on which any Merger Consideration would otherwise
escheat to or become the property of any Governmental Entity), the Merger
Consideration shall, to the extent permitted by applicable law, become the
property of the Surviving Corporation, free and clear of all claims or interest
of any Person previously entitled thereto.
(e) Lost Certificates. 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
Parent, the posting by such Person of a bond in such reasonable amount as Parent
may direct as indemnity against any claim that may be made against it with
respect to such Certificate, the Exchange Agent will pay to the holder of such
lost, stolen or destroyed Certificate, such holder's Merger Consideration.
(f) Withholding Rights. Parent shall deduct and withhold from the
Merger Consideration otherwise payable pursuant to this Agreement to any holder
of Company Common Stock such amounts as it is required to deduct and withhold
with respect to the making of such payment under the Code, and the rules and
regulations promulgated thereunder, or any provisions of any other Tax law. To
the extent that amounts are so deducted and withheld by Parent, such deducted
and withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the holder of the Company Common Stock in respect to which
such deduction and withholding were made by Parent.
(g) No Fractional Shares. No fractional shares of Parent Common
Stock shall be issued in the Merger. All fractional shares of Parent Common
Stock that a holder of shares of Company Common Stock would otherwise be
entitled to receive as a result of the Merger shall be aggregated and if a
fractional share results from such aggregation, such holder shall be entitled to
receive, in lieu thereof, an amount in cash without interest equal to the
product of (i) the closing sale price of a share of Company Common Stock on the
Nasdaq National Market on the trading day immediately preceding the Effective
Time by (ii) the fraction of a share of Parent Common Stock to which such holder
would otherwise have been entitled.
7
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Sub that,
except as set forth in the written disclosure schedule prepared by the Company
which is dated as of the date of this Agreement and arranged in Sections
corresponding to the numbered and lettered Sections contained in this Article 3
(provided, however, that disclosure in any Section shall be deemed to have been
set forth in all other applicable Sections where it is reasonably apparent that
such disclosure is applicable to such other Sections notwithstanding the
omission of any cross-reference to such other Section) and is being concurrently
delivered to Parent in connection herewith (the "Company Disclosure Schedule"),
the following statements are true and correct as of the date of this Agreement,
except where another date is specified:
3.1 Organization, Standing and Corporate Power. Each of the Company and
its Subsidiaries is a corporation or other legal entity duly organized, validly
existing and in good standing, or local law equivalent, 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. Each of the Company and its Subsidiaries is duly qualified or
licensed to do business and is in good standing, or local law equivalent, in
each jurisdiction in which the nature of its business or the ownership or
leasing of its properties or operations makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so qualified
or licensed or to be in good standing, or local law equivalent, would not
reasonably be expected to have a Material Adverse Effect on the Company. The
Company has delivered or made available to Parent, prior to the execution of
this Agreement, complete and correct copies of (i) its Certificate of
Incorporation and Bylaws, in each case as amended through the date hereof, (ii)
its committee charters, codes of conduct or other comparable governing
documents, in each case amended through the date hereof, (iii) all the existing
written consents and minutes of the meetings of its Board of Directors and each
committee of its Board of Directors held since January 1, 2000 and (iv) all the
existing written consents and minutes of the meetings of its stockholders held
since January 1, 2000.
3.2 Subsidiaries. Section 3.2 of the Company Disclosure Schedule sets
forth (a) a list of the Subsidiaries of the Company, (b) the issued and
outstanding shares of capital stock of, or other equity or voting interests in,
each such Subsidiary and (c) the registered and beneficial holders of such
shares or other equity or voting interests in each such Subsidiary. All the
outstanding shares of capital stock of, or other equity or voting interests in,
each such Subsidiary have been validly issued and are fully paid and
nonassessable and are owned, directly or indirectly, by the Company, free and
clear of all mortgages, pledges, assessments, claims, liens, charges, security
interests and other encumbrances of any kind or nature whatsoever (collectively,
"Liens"). Except for the capital stock of, or other equity or voting interests
in, the Subsidiaries listed in Section 3.2 of the Company Disclosure Schedule,
the Company does not own, directly or indirectly, any capital stock of, or other
equity or voting interests in, any Person. The Company has delivered or made
available to Parent, prior to the execution of this Agreement, complete and
correct copies of each of the following documents: (i) the Certificate of
Incorporation and Bylaws (or similar organizational documents), in each case as
amended through the date hereof, (ii) all the existing written consents and
minutes of the meetings of its
8
Board of Directors and each committee of its Board of Directors held since
January 1, 2000 and (iii) all the existing written consents and minutes of the
meetings of its stockholders held since January 1, 2000, of each Subsidiary of
the Company.
3.3 Capital Structure.
(a) The authorized capital stock of the Company consists of
60,000,000 shares of Company Common Stock and 10,000,000 shares of preferred
stock, par value $0.001 per share ("Company Preferred Stock"). Of the 10,000,000
shares of Company Preferred Stock that are authorized for issuance, 1,000,000
shares have been designated as Series A Junior Participating Preferred Stock and
have been reserved for issuance under the Company's Rights Agreement, dated as
of October 17, 2002, between the Company and Mellon Investor Services LLC, as
amended (the "Rights Agreement"). As of the date hereof, (i) 15,939,155 shares
of Company Common Stock are issued and outstanding (none of which are subject to
repurchase options in favor of the Company by reason of having been originally
issued as restricted shares), (ii) 233,731 shares of Company Common Stock are
issued and held by the Company in its treasury and (iii) no shares of Company
Preferred Stock are issued and outstanding, or issued and held by the Company in
its treasury. The Company has delivered to Parent a true, complete and correct
schedule setting forth the number of shares of Company Common Stock held by each
registered holder thereof as of April 16, 2004, and since such date the Company
has not issued any securities (including derivative securities) except for any
shares of Company Common Stock issued upon exercise of Options outstanding under
the Stock Plans prior to such date.
(b) As of the date of this Agreement and regarding options to
purchase shares of Company Common Stock (each an "Option") under the Company's
1993 Stock Option/Stock Issuance Plan (the "1993 Plan") or Special Non-Officer
Stock Option Plan (the "1997 Plan" and collectively with the 1993 Plan, the
"Stock Plans"):
(i) The Company has reserved 6,200,000 shares of Company
Common Stock for issuance to employees, consultants and directors pursuant to
the 1993 Plan, of which (i) 1,146,632 vested shares have been issued pursuant to
option exercises, (ii) 2,982,268 shares are subject to outstanding, unexercised
options, and (iii) 678,893 shares remain available for issuance thereunder;
(ii) The Company has reserved 675,000 shares of Company Common
Stock for issuance to non-officer and non-director employees pursuant to the
Company's 1997 Plan, of which (i) 61,348 vested shares have been issued pursuant
to option exercises, (ii) 375,808 shares are subject to outstanding, unexercised
options, and (iii) 237,844 shares remain available for issuance thereunder; and
(iii) There are outstanding Share Rights Awards for the
issuance of 339,897 shares of Company Common Stock, which such number of shares
the Company has reserved for issuance thereunder.
(c) All outstanding shares of the Company's capital stock were duly
authorized, validly issued, and are fully paid and nonassessable and not subject
to or issued in violation of any purchase option, call option, right of first
refusal, pre-emptive right, subscription right or any
9
similar right under any provision of the DGCL, the Company's Certificate of
Incorporation, Bylaws or any Contract to which the Company is a party or
otherwise bound. None of the outstanding shares of the Company's capital stock
has been issued in violation of any federal or state securities laws. All of the
outstanding shares of capital stock of each of the Company's Subsidiaries were
duly authorized, validly issued, and are fully paid and nonassessable, and all
such shares (other than directors' qualifying shares in the case of foreign
Subsidiaries, all of which are scheduled on Section 3.3(c) of the Company
Disclosure Schedule) are owned by the Company or a Subsidiary of the Company
free and clear of all Liens. There are no accrued and unpaid dividends with
respect to any outstanding shares of capital stock of the Company or any of its
Subsidiaries.
(d) The Company Common Stock and the Rights (as such term is defined
in the Rights Agreement) constitute the only classes of securities of the
Company or its Subsidiaries registered or required to be registered under the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
(e) The Company is not a party to or bound by any agreement with
respect to the voting (including voting trusts or proxies), registration under
the Securities Act, or sale or transfer (including agreements relating to
pre-emptive rights, rights of first refusal, co-sale rights or "drag-along"
rights) of any securities of the Company or its Subsidiaries. To the Knowledge
of the Company, there are no agreements among other parties, to which the
Company is not a party and by which it is not bound, with respect to the voting
(including voting trusts or proxies) or sale or transfer (including agreements
relating to rights of first refusal, co-sale rights or "drag-along" rights) of
any securities of the Company or its Subsidiaries.
(f) Except as described in this Section 3.3 or as contemplated by
Sections 2.1(d) or 2.1(e), no capital stock of the Company or any of its
Subsidiaries or any security convertible or exchangeable into or exercisable for
such capital stock, is issued, reserved for issuance or outstanding as of the
date of this Agreement. Except as described in this Section 3.3 or as
contemplated by Sections 2.1(d) or 2.1(e), there are no options, preemptive
rights, warrants, calls, rights, commitments or agreements of any kind to which
the Company or any of its Subsidiaries is a party, or by which the Company or
any of its Subsidiaries is bound, obligating the Company or any of it
Subsidiaries to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital stock of the Company or any of its
Subsidiaries or obligating the Company or any of its Subsidiaries to grant,
extend or accelerate the vesting of or otherwise amend or enter into any such
option, warrant, call, right, commitment or agreement. Except for the Company's
repurchase rights with respect to unvested shares issued under the Stock Plans,
there are no rights or obligations, contingent or otherwise (including rights of
first refusal in favor of the Company), of the Company or any of its
Subsidiaries, to repurchase, redeem or otherwise acquire any shares of capital
stock of the Company or any of its Subsidiaries or to provide funds to or make
any investment (in the form of a loan, capital contribution or otherwise) in any
such Subsidiary or any other Person. There are no registration rights or other
agreements or understandings to which the Company or any of its Subsidiaries is
a party or by which it or they are bound with respect to any capital stock of
the Company or any of its Subsidiaries.
10
(g) The Board of Directors of the Company has taken all action
necessary (including resolving to amend the Rights Agreement prior the date
hereof, and a copy of such amendment has been provided to Parent prior to the
date hereof) in order to render the Rights Agreement and the Rights inapplicable
to the Merger and the other transactions contemplated by this Agreement with the
effect that (A) no "Distribution Date" (as such term is defined in the Rights
Agreement) has occurred or will occur as a result of the approval, execution or
delivery of this Agreement or the consummation of the Merger and the other
transactions contemplated hereby, (B) neither Parent nor Merger Sub has become
or will be an "Acquiring Person" (as such term is defined in the Rights
Agreement) solely as a result of entering into, performing the terms of or
consummating the transactions contemplated by this Agreement, (C) the
"Expiration Date" (as such term is defined in the Rights Agreement) will occur
at the moment in time immediately prior to the occurrence of the Effective Time,
and (D) the Rights Agreement will otherwise be inapplicable to Parent and Merger
Sub while this Agreement is in effect with respect to performing the terms of or
consummating the transactions contemplated by this Agreement.
(h) Notwithstanding the proxy statement delivered by the Company to
its stockholders, and any approvals obtained at or in connection with the
Company's 2004 annual stockholders meeting, the Company does not have any
obligation to, and does not intend to, implement, establish or put in place the
Company's 2004 Employee Stock Purchase Plan proposed for approval thereat.
3.4 Authority; Noncontravention.
(a) The Company has the requisite corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated by this Agreement, subject, in the case of approving this Agreement
and the consummation of the transactions contemplated by this Agreement,
including the Merger, to obtaining the Company Stockholder Approval. The
execution and delivery of this Agreement by the Company and the consummation by
the Company of the transactions contemplated by this Agreement have been duly
authorized by all necessary corporate action on the part of the Company and no
other corporate authorizations or approvals on the part of the Company are
necessary to approve this Agreement or to consummate the transactions
contemplated by this Agreement, subject, in the case of approving this Agreement
and the consummation of the transactions contemplated by this Agreement,
including the Merger, to obtaining the Company Stockholder Approval. This
Agreement has been duly executed and delivered by the Company and constitutes a
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms subject to (i) applicable bankruptcy,
insolvency, fraudulent transfer and conveyance, moratorium, reorganization,
receivership and similar laws relating to or affecting the enforcement of the
rights and remedies of creditors generally and (ii) principles of equity
(regardless of whether considered and applied in a proceeding in equity or at
law).
(b) The affirmative vote of the holders of a majority of the
outstanding shares of Company Common Stock as of the record date established for
the Company Stockholders' Meeting, voting as a single class at the Company
Stockholders' Meeting in favor of 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
the Merger.
11
(c) The Board of Directors of the Company, at a meeting duly called
and held at which all directors of the Company were present, duly adopted
resolutions (the "Company Board Approval") (i) approving and declaring advisable
this Agreement, the Merger and the other transactions contemplated hereby, (ii)
declaring that it is advisable and in the best interests of the Company and its
stockholders that the Company enter into this Agreement and consummate the
Merger on the terms and subject to the conditions set forth in this Agreement,
(iii) declaring that this Agreement is fair to the Company and its stockholders,
(iv) directing that this Agreement be submitted to a vote for adoption at a
meeting of the Company's stockholders to be held as promptly as practicable as
set forth in Section 6.2 and (v) recommending that the Company's stockholders
adopt this Agreement, which resolutions have not been subsequently rescinded,
modified or withdrawn in any way except as permitted by Section 5.3(a) or
Section 6.2(e).
(d) The execution and delivery of this Agreement by the Company and
the consummation of the transactions contemplated hereby and compliance by the
Company with the provisions hereof, do not and will not conflict with, or result
in any violation or breach of, or default (with or without notice or lapse of
time, or both) under, or give rise to a right of, or result in, termination,
cancellation or acceleration of any obligation, or result in the creation of any
Lien in or upon any of the properties or assets of the Company or any of its
Subsidiaries under, any provision of (i) the Certificate of Incorporation or
Bylaws of the Company or the Certificate of Incorporation or Bylaws (or similar
organizational documents) of any of its Subsidiaries, (ii) any Company Listed
Contract, and, to the Knowledge of the Company, any other individual Contract,
or (iii) subject to the governmental filings and other matters referred to in
the following paragraph, any statute, law, ordinance, rule, regulation,
judgment, order or decree, 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, terminations, cancellations,
violations, breaches, defaults, rights, results, losses, Liens or entitlements
that would not reasonably be expected to have a Material Adverse Effect on the
Company.
(e) No consent, approval, order or authorization of, or
registration, declaration or filing with, or notice to, any domestic or foreign
(whether national, federal, state, provincial, local or otherwise) government or
any court, administrative agency or commission or other governmental or
regulatory authority or agency, domestic or foreign (each, a "Governmental
Entity"), is required to be made or obtained by 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 contemplated
hereby or compliance with the provisions hereof, except (i) as may be required
by the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the
"HSR Act") or as may be required under any foreign anti-trust or competition law
or regulation, (ii) for the filing with the Securities and Exchange Commission
(the "SEC") of the Joint Proxy Statement and such other filings, notices or
reports under the Exchange Act, as may be required in connection with this
Agreement, the Merger and the other transactions contemplated hereby, (iii) for
any filings or notifications required under the rules and regulations of the
NASDAQ Stock Market, Inc. of the transactions contemplated hereby, and (iv) for
the filing of the Certificate of Merger with the Delaware Secretary of State and
appropriate documents with the relevant authorities of other states in which the
Company or any of its Subsidiaries is qualified to do business.
12
(f) Assuming that the representations and warranties made in Section
4.17 are true and correct, the Company Board Approval referred to in Section
3.4(c) constitutes approval of the Merger for purposes of Section 203 of the
DGCL and represents the only action necessary to ensure that the restrictions on
business combinations (as such term is defined therein) set forth in Section 203
of the DGCL does not and will not apply to the execution or delivery of this
Agreement or the consummation of the Merger and the other transactions
contemplated hereby.
3.5 Company SEC Documents; Financial Statements; Nasdaq Compliance.
(a) The Company has filed with the SEC on a timely basis all
reports, schedules, forms, statements and other documents required to be filed
by it since January 1, 2001, including all certifications and statements
required by (x) Rule 13a-14 or 15d-14 under the Exchange Act, or (y) 18 U.S.C.
Section 1350 (Section 906 of the Xxxxxxxx-Xxxxx Act of 2002)(collectively, the
"Certifications"), as such documents since the time of filing may have been
amended or supplemented with the SEC (the "Company SEC Documents"). Since
January 1, 2001, there have been no comment letters received by the Company from
the Staff of the SEC or responses to such comment letters by or on behalf of the
Company, that have not been provided to Parent. The Company maintains disclosure
controls and procedures required by Rule 13a-15 or 15d-15 under the Exchange Act
and such controls and procedures are designed to ensure that material
information relating to the Company, including its Subsidiaries, required to be
disclosed in the reports it files or submits under the Exchange Act is
accumulated and communicated to the Company's principal executive officer and
principal financial officer to allow timely decisions regarding financial
disclosure. No Subsidiary of the Company is required to file with the SEC any
report, schedule, form, statement or other document. As of their respective
dates, the Company SEC Documents complied as to form in all material respects
with the requirements of the Securities Act of 1933, as amended (the "Securities
Act"), or the Exchange Act, as the case may be, and the rules and regulations of
the SEC promulgated thereunder applicable to such Company SEC Documents. The
Company SEC Documents (i) were and, in the case of Company SEC Documents filed
after the date hereof, will be prepared in all material respects in accordance
with the applicable requirements of the Securities Act and the Exchange Act, as
the case may be, and (ii) did not at the time they were filed (or if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing), and in the case of such forms, reports and documents filed by the
Company with the SEC after the date of this Agreement, will not as of the time
they are filed, contain any untrue statement of a material fact or omit to state
a material fact required to be stated in such Company SEC Documents or necessary
in order to make the statements in such Company SEC Documents, in light of the
circumstances under which they were and will be made, not misleading; provided,
however, that all of the Company's Certifications are each true and correct
based upon the knowledge of the officer(s) making such Certifications, as made.
The Company is in compliance with the applicable listing rules of the Nasdaq
National Market and has not since January 1, 2001 received any notice from the
Nasdaq National Market asserting any non-compliance with such rules. As used in
this Section 3.5, the term "file" shall be broadly construed to include any
manner in which a document or information is furnished, supplied or otherwise
made available in writing to the SEC.
(b) The consolidated financial statements of the Company for the
fiscal year ended December 31, 2003 filed with the SEC (the "Company Financial
Statements") and all
13
other financial statements of the Company included in the Company SEC Documents,
including in each case the notes thereto (collectively with the Company
Financial Statements, the "Company SEC Financial Statements") complied 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, were prepared in accordance with
U.S. generally accepted accounting principles ("GAAP") applied on a consistent
basis during the periods involved (except as may be indicated therein or in the
notes thereto) and fairly presented in all material respects the consolidated
financial position of the Company 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 year-end audit
adjustments and other adjustments described therein). Section 3.5(b) of the
Company Disclosure Schedule contains a description of all non-audit services
performed by the Company's auditors for the Company and its Subsidiaries since
the beginning of the immediately preceding fiscal year of the Company and the
fees paid for such services; all such non-audit services were approved as
required by Section 202 of the Xxxxxxxx-Xxxxx Act of 2002. In the reasonable
opinion of the Company's audit committee, the fees paid to and the serviced
performed by the Company's auditors relating to such non-audit services as
described on Section 3.5(b) of the Company Disclosure Schedule do not impair
such auditor's independence. The Company has delivered or made available to
Parent copies of all policies, manuals and other documents promulgating the
Company's internal accounting controls. Section 3.5(b) of the Company Disclosure
Schedule lists, and the Company has delivered or made available to Parent copies
of the documents creating or governing, all of the Company's off-balance sheet
arrangements.
(c) Except as set forth in the Company Financial Statements and
except as arising hereunder, the Company and its Subsidiaries have no
liabilities or obligations of any nature (whether absolute, accrued, asserted or
unasserted, contingent or otherwise) that would be required by applicable
accounting requirements and the published rules and regulations of the SEC to be
reflected on or reserved against in any Company SEC Financial Statements that
are not disclosed, reflected or reserved against in such Company SEC Financial
Statements, except for such liabilities and obligations (i) that have been
incurred since December 31, 2003 in the Ordinary Course of Business, or (ii)
that would not reasonably be expected to have a Material Adverse Effect on the
Company.
(d) Neither the Company nor any of its Subsidiaries is a party to,
or has any commitment to become a party to, any joint venture, partnership
agreement or any similar Contract (including any Contract relating to any
transaction, arrangement or relationship between or among the Company or any of
its Subsidiaries, on the one hand, and any unconsolidated Affiliate, including
any structured finance, special purpose or limited purpose entity or person, on
the other hand) where the purpose or intended effect of such arrangement is to
avoid disclosure of any material transaction involving the Company or any of its
Subsidiaries in the Company Financial Statements.
(e) Since the date of the Company's last proxy statement filed with
the SEC, no event has occurred as of the date hereof that would be required to
be reported by the Company pursuant to Item 404 of Regulation S-K promulgated by
the SEC. Since July 30, 2002, neither the Company nor any of its Subsidiaries,
has, directly or indirectly, made or arranged for any extension or maintaining
of credit, or renewal of an extension of credit, in the form of a personal
14
loan to or for any director or executive officer of the Company in contravention
of Section 402 of the Xxxxxxxx-Xxxxx Act of 2002.
3.6 Absence of Certain Changes or Events. Except as contemplated by this
Agreement, between March 31, 2004 and the date hereof, (a) the Company and its
Subsidiaries have conducted their respective businesses in all material respects
in the Ordinary Course of Business, and (b) there has not been any (i) Material
Adverse Effect on the Company; (ii) 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 or any of its Subsidiaries' capital stock; (iii) split,
combination or reclassification of any of the Company's or any of its
Subsidiaries' 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 or other securities of the Company or any of its
Subsidiaries (other than shares of Company Common Stock issuable upon exercise
of outstanding Options under the Stock Plans); (iv) damage, destruction or other
loss of more than $200,000 with respect to any asset or property owned, leased
or otherwise used by the Company or any of its Subsidiaries, whether or not
covered by insurance; (v) incurrence, assumption or guarantee by the Company or
any of its Subsidiaries of any indebtedness for borrowed money other than in the
Ordinary Course of Business of greater than $200,000; (vi) transaction or
binding commitment made, or any Contract entered into, by the Company or any of
its Subsidiaries relating to its assets or business (including the acquisition
or disposition of any assets or property) or any relinquishment by the Company
or any of its Subsidiaries of any Contract or any right there in, having a
stated contract amount or value of $200,000 or more (other than Contracts with
customers and suppliers entered into in the Ordinary Course of Business); (vii)
any exclusive license, distribution, marketing or sales agreement entered into
or any agreement to enter into such agreement; or (viii) any commitment to any
Person to (A) develop software without charge or (B) incorporate any software
into any of the Company's products.
3.7 Absence of Litigation; Investigations. Except as would not reasonably
be expected to have a Material Adverse Effect on the Company, there are no
claims, actions, suits, proceedings or, to the Knowledge of the Company,
governmental investigations, inquiries or subpoenas (i) pending against the
Company or any of its Subsidiaries, or any properties or assets of the Company
or of any of its Subsidiaries, or (ii) to the Knowledge of the Company,
threatened in writing against the Company or any of its Subsidiaries, or any
properties or assets of the Company or of any of its Subsidiaries. Neither the
Company nor any Subsidiary of the Company is subject to any outstanding order,
judgment, writ, injunction or decree that would have a Material Adverse Effect
on the Company or would prevent the consummation of the transactions
contemplated by this Agreement. There has not been since January 1, 2002 nor are
there currently any internal investigations or inquiries being conducted by the
Company, its Subsidiaries, their respective Board of Directors or other
equivalent management bodies or any third party or Governmental Entity or at the
request of any of the foregoing concerning any financial, accounting, Tax,
conflict of interest, self-dealing, fraudulent or deceptive conduct or other
misfeasance or malfeasance issues nor to the Knowledge of the Company have there
been any such internal investigations or inquiries between January 1, 2001 and
December 31, 2001.
3.8 Compliance with Applicable Laws. The Company and its Subsidiaries hold
all permits, licenses, variances, exemptions, certificates, authorizations,
orders and approvals of all
15
Governmental Entities which are necessary to the lawful operation of the
respective business of the Company and its Subsidiaries, except where the
failure to hold such Company Permits would not reasonably be expected to have a
Material Adverse Effect on the Company (the "Company Permits"). Except as would
not reasonably be expected to have a Material Adverse Effect on the Company, all
such Company Permits are in full force and effect and the Company and its
Subsidiaries are in compliance with the terms of the Company Permits and all
applicable statutes, laws, ordinances, rules and regulations, judgments and
decrees. The Company has not received any written notice to the effect that the
Company or any of its Subsidiaries is not in compliance with the terms of the
Company Permits or any such statutes, laws, ordinances, rules, or regulations.
3.9 Contracts.
(a) The Company has delivered or made available to Parent true and
complete copies (and any and all binding amendments, modifications and
supplements thereto) of the following (except for (x) those Contracts that have
expired or have been terminated in accordance with their terms, and (y) with
respect to Sections 3.9(a)(iii) through 3.9(a)(xii), Contracts with customers
that are not described in Section 3.9(a)(i)) (the "Company Listed Contracts"),
which, as of the date hereof, shall be listed on Section 3.9 of the Company
Disclosure Schedule:
(i) all Contracts of the Company or any of its Subsidiaries
with customers of the Company involving payments to the Company in excess of
$200,000 for the twelve-month period ending on March 31, 2004;
(ii) all Contracts of the Company or any of its Subsidiaries
with Persons other than Contracts with customers of the Company, made in the
Ordinary Course of Business involving payments by or to the Company or its
Subsidiaries in excess of $200,000 for the twelve-month period ending on March
31, 2004;
(iii) all Contracts of the Company, any of its Subsidiaries or
any of its Affiliates that contain a covenant restricting the ability of the
Company or any of its Subsidiaries to compete with respect to the development,
manufacturing, marketing or distribution of any of the Company's current
products or services, including Contracts with "most favored customer" pricing
provisions;
(iv) all Contracts of the Company or any of its Subsidiaries
with any Affiliate of the Company (other than any of its Subsidiaries) other
than (A) director and officer indemnification agreements, or (B) offer letters,
employment agreements, equity incentive agreements, compensation arrangements,
consulting agreements or similar arrangements, in each case providing solely for
at will employment or services and containing no right to any pay or benefits
after employment or services has terminated other than such pay or benefits as
are consistent with the Company's standard benefits package;
(v) (A) all Contracts of the Company or any of its
Subsidiaries granting any right to make, have made, manufacture, use, sell,
offer to sell, import, export, or otherwise distribute a Company Product, with
or without the right to sublicense the same, on an
16
exclusive basis, (B) any license of Intellectual Property to or from the Company
and/or any of its Subsidiaries, with or without the right to sublicense the
same, on (1) an exclusive basis or (2) a non-exclusive basis (other than end
user license agreements entered into for Shrinkwrap Software (other than a
Company Product) or customer Contracts that grant customers rights to use the
Company's hosted or network services that are not otherwise covered by 3.9(a)(i)
above), (C) all joint development agreements entered into by Company or any of
its Subsidiaries, (D) any Contract by which the Company or any of its
Subsidiaries grants any ownership right to any Company-owned Intellectual
Property owned by the Company and/or any of its Subsidiaries, (E) any Contract
under which the Company or any of its Subsidiaries grants an option relating to
acquiring ownership of any Company-owned Intellectual Property, (F) any Contract
under which the Company or any of its Subsidiaries has a stated obligation to
make fixed payments of minimum royalties, license fees or service fees
aggregating in excess of $200,000 during the calendar year ending December 31,
2004 with respect to any Company Intellectual Property, (G) any Contract under
which any party is granted any right to access Company Source Code for Company
Products or to use Company Source Code for Company Products to create derivative
works of Company Products, (H) any Contract of the Company or any of its
Subsidiaries that grants a customer a refund right (other than as a remedy for a
breach of warranty) on the installation of a Company Product, and that refund
period with respect to any such installation has not passed, lapsed, expired or
terminated, (I) any Contract that obligates the Company or any of its
Subsidiaries to provide any consulting services or maintenance and support
services at no cost to any customer, and (J) any Contract pursuant to which the
Company or any of its Subsidiaries has deposited or is required to deposit with
an escrow agent or any other Person any Company Source Code for Company
Products;
(vi) all material joint venture, partnership or other similar
Contracts resulting in the formation of a separate legal entity to which the
Company or any of its Subsidiaries is a party;
(vii) all Contracts of the Company or any of its Subsidiaries
relating to the borrowing of money or extension of credit other than standard
invoice terms for payments of invoices in connection with sales of the Company's
products or services (collectively, "Debt Obligations") pursuant to which any
material indebtedness of the Company or any of its Subsidiaries is outstanding
or may be incurred and all guarantees of or by the Company or any of its
Subsidiaries of any Debt Obligations of any other Person, other than standard
form invoices related to accounts payable of the Company or any of its
Subsidiaries;
(viii) all Contracts of the Company or any of its Subsidiaries
relating to the acquisition, issuance, voting, registration, sale or transfer,
preemptive rights, right of participation, right of first refusal, repurchase or
redemption rights, with respect to any securities of the Company, other than
those in connection with the Rights Agreement, the Stock Plans and the Share
Right Awards;
(ix) all Contracts of the Company whereby the Company is
restricted by any "standstill" obligations entered into since January 1, 2001;
17
(x) any Contract of the Company or any of its Subsidiaries
containing any material support or maintenance obligation on the part of the
Company or any of its Subsidiaries outside of the Ordinary Course of Business;
(xi) each Contract of the Company or any of its Subsidiaries
with any present director or executive officer of the Company or any of its
Subsidiaries or any stockholder who owns or controls ten percent (10%) or more
of the shares of Company Common Stock that requires the payment of $60,000 or
more per annum; and
(xii) all powers of attorney given by the Company or any
Subsidiary and Contracts and arrangements pursuant to which the Company or any
Subsidiary of the Company has any obligations or liabilities (whether absolute,
accrued, contingent or otherwise), as guarantor, surety, co-signer, endorser,
co-maker, or otherwise in respect of any obligation of any Person, or any
capital maintenance or similar agreements or arrangements.
(b) Each Company Listed Contract is in full force and effect (except
for those Contracts that have expired in accordance with their terms) and
constitutes a legal, valid and binding agreement, enforceable in accordance with
its terms (subject to (A) applicable bankruptcy, insolvency, fraudulent transfer
and conveyance, moratorium, reorganization, receivership and similar laws
relating to or affecting the enforcement of the rights and remedies of creditors
generally and (B) principles of equity (regardless of whether considered and
applied in a proceeding in equity or at law)), of the Company or each
Subsidiary, as applicable, and the Company or its Subsidiaries, as applicable,
have performed all of their material obligations (except those that have not yet
become due) under, and is not in violation or breach of or default under, any
such Company Listed Contract except for such violation or breach which would not
reasonably be expected to have a Material Adverse Effect on the Company. To the
Knowledge of the Company, the other parties to any Company Listed Contract have
performed all of their obligations (except those that have not yet become due)
under, and are not in violation or breach of or default under, any such Company
Listed Contract except for such violations, breaches or defaults which would not
reasonably be expected to have a Material Adverse Effect on the Company.
(c) The execution of this Agreement and the consummation of the
transactions contemplated hereby will not conflict with or cause a breach of any
Company Listed Contract and no approval or consent of any other party to any of
Company Listed Contracts is required in order for those Company Listed Contracts
to continue in effect after the consummation of the Merger.
3.10 Absence of Changes in Benefit Plans; Employment Matters.
(a) Since December 31, 2003, there has not been any adoption or
amendment in any material respect by the Company or any Subsidiary of:
(i) any stock ownership, stock purchase, stock appreciation,
stock option or phantom stock benefit plan, program or arrangement (whether oral
or written) not governed by ERISA and pertaining to the Company Common Stock
(together, "Equity Benefit Plans");
18
(ii) any pension, profit and retirement savings, cafeteria,
severance, disability, death, medical, welfare or other benefit plan, program or
arrangement (whether oral or written), that is an "employee benefit plan," as
defined in Section 3(3) of Employee Retirement Income Security Act of 1974, as
amended ("ERISA") (collectively, the "ERISA Benefit Plans") which the Company or
any entity, trade or business that is, together with the Company, required to be
treated as a single employer pursuant to Section 414 of the Code or Section 4001
of ERISA (a "Controlled Group Member") sponsors or maintains or to which the
Company or such entity, trade or business is required to contribute; or
(iii) any deferred compensation, cash bonus, stock bonus,
performance or other incentive compensation, severance, vacation, paid time off
or paid sick time benefit plan, program or arrangement (whether oral or
written), that is not governed by ERISA (collectively, the "Non-ERISA Benefit
Plans"), providing any such benefits to any current or former employee, officer
or director of the Company or any Controlled Group Member other than, in the
case of former employees, officers or directors, such benefits for which the
Company, any Controlled Group Member or their Subsidiaries has no current
liability or obligation.
(b) Except as set forth in Section 3.10(b) of the Company Disclosure
Schedule, (i) each of the employees of the Company and any Subsidiary is
employed at will, and (ii) there exist no employment (except employment at
will), consulting, deferred compensation, post-termination payment or severance,
change-in-control, termination or indemnification agreements or arrangements
(whether oral or written) between the Company or any Subsidiary, on the one
hand, and any current or former director, officer, employee or consultant of the
Company or any Subsidiary, on the other hand.
(c) Section 3.10(c) of the Company Disclosure Schedule sets forth a
list of all Contracts or arrangements to which the Company or any Subsidiary is
party, or to which either is subject, pursuant to which payments (or
acceleration of benefits or vesting of Options or Share Right Awards) may be
required upon, or may become payable directly or indirectly as a result of, the
transactions contemplated by this Agreement or any other change of control of
the Company. Complete and accurate copies of the Contracts and arrangements
listed in Section 3.10(c) of the Company Disclosure Schedule have been delivered
or made available to Parent.
3.11 Labor Matters. Neither the Company nor any of its Subsidiaries is a
party to or bound by any collective bargaining agreement with any labor
organization, group or association covering any of its employees, including
works councils, and, to the Knowledge of the Company, there are no attempts to
organize any of the Company's or any of its Subsidiaries' employees by any
person, unit or group seeking to act as their bargaining agent. The Company and
its Subsidiaries have complied with all applicable laws relating to the
employment of labor, including provisions thereof relating to wages, hours,
equal employment opportunity, collective bargaining, non-discrimination, and the
withholding and payment of social security and other Taxes except for such
failures to comply that would not reasonably be expected to have a Material
Adverse Effect on the Company. There are no pending or, to the Knowledge of the
Company, threatened charges of unfair labor practices or of employment
discrimination or of any other wrongful action with respect to any aspect of
employment of any person employed or formerly employed by the Company or any of
its Subsidiaries. To the Knowledge of the
19
Company, no union representation elections relating to the Company's or any of
its Subsidiaries' employees have been scheduled by any Governmental Entity and
no investigation of the employment policies or practices of the Company or any
of its Subsidiaries by any Governmental Entity is pending or threatened.
3.12 Employee Benefit Matters.
(a) Set forth in Section 3.12(a) of the Company Disclosure Schedule
is a list of (i) each currently outstanding loan to any employee, officer or
director of the Company or any Subsidiary, as well as (ii) each ERISA Benefit
Plan, (iii) each Equity Benefit Plan, and (iv) each Non-ERISA Benefit Plan (such
plans, agreements, arrangements described in clauses (ii) through (iii) and
related trusts and related agreements and arrangements being hereinafter
referred to as the "Benefit Plans"). The Company has delivered or made available
to Parent true and complete copies of all Benefit Plans, summary plan
descriptions, agreements representing awards (including Options or Share Right
Awards) granted thereunder, and all financial statements, actuarial reports and
annual reports and returns filed with the Internal Revenue Service or Department
of Labor with respect to the three (3) most recent filings made for such Benefit
Plans prior to the date hereof.
(b) Except as would not reasonably be expected to have a Material
Adverse Effect on the Company:
(i) each Benefit Plan has been operated and administered in
compliance with its terms;
(ii) each Benefit Plan complies, as applicable, with
requirements of ERISA and the Code, and all other applicable laws;
(iii) no "prohibited transaction" (within the meaning of
Section 406 of ERISA or Section 4975(c) of the Code) has occurred with respect
to any ERISA Benefit Plan;
(iv) each Benefit Plan can be amended, discontinued or
terminated at any time (including after the Effective Time) in accordance with
its terms, without liability (other than (A) liability for ordinary
administrative expenses typically incurred in a termination event, or (B)
liabilities for which sufficient assets are set aside in a trust or insurance
contract to satisfy such liabilities or which are accrued on the Company
Financial Statements);
(v) all contributions required to be made in connection with
any Benefit Plan through the date hereof have been timely made or, if not yet
due, have been accrued on the Company Financial Statements;
(vi) other than claims in the ordinary course for benefits
with respect to the Benefit Plans, there are no actions, suits or claims pending
with respect to any Benefit Plan;
(vii) all reports, returns and similar documents with respect
to the Benefit Plans required to be filed with any Governmental Entity have been
timely filed; and
20
(viii) neither the Company, nor any Controlled Group Member
has any obligation to provide health or other welfare benefits to former,
retired or terminated employees, except as specifically required under Section
4980B of the Code or Part 6 of Subtitle B of Title I of ERISA, and the Company
and the Controlled Group Members have complied in all respects with the notice
and continuation requirements of Section 4980B of the Code and Part 6 of
Subtitle B of Title I of ERISA and the regulations thereunder.
(c) Each Benefit Plan intended to qualify under Section 401(a) of
the Code has received a favorable determination opinion, advisory or
notification letter from the Internal Revenue Service as to its qualification
under Section 401(a) of the Code or has time remaining to apply for the same
under applicable Treasury Regulations or IRS pronouncements, and to the
Knowledge of the Company nothing has occurred that could adversely affect such
qualified status.
(d) Neither the Company nor any Controlled Group Member maintains,
sponsors, contributes to, or has an obligation to contribute to, or has
maintained, sponsored, contributed to, or had an obligation to contribute to,
any "defined benefit plan" (within the meaning of Section 3(35) of ERISA), any
multiemployer plan (within the meaning of Section 3(37) of ERISA), or any
multiple employer plan (within the meaning of Section 413 of the Code).
(e) There are no agreements, plans, arrangements or other contracts
covering current or former employees, consultants, directors or other service
providers of the Company or any Controlled Group Member which provide for any
payment or benefit that would, when considered individually or in the aggregate,
constitute a parachute payment under Section 280G of the Code.
3.13 Taxes.
(a) Except to the extent that failure to do so would not reasonably
be expected to have a Material Adverse Effect on the Company, the Company and
each of its Subsidiaries has timely filed all material Tax returns and reports
required to be filed by it, the due date for which (including any extensions
with respect thereto) occurred prior to the date of this Agreement, and has paid
all Taxes as shown to be owed on such returns and reports. All such Tax returns
were complete and accurate in all material respects. Except as would not
reasonably be expected to have a Material Adverse Effect on the Company, no
deficiencies for any Taxes have been proposed, asserted or assessed against the
Company, and no requests for waivers of the time to assess any such Taxes are
pending. As used in this Agreement, "Taxes" shall mean all federal, state, local
and foreign income, employment, property, sales, excise, transfer, registration,
value-added, goods and services, franchise and other taxes, tariffs or
governmental charges of any nature whatsoever.
(b) To the Knowledge of the Company (which shall be entitled to rely
on advice rendered by its independent accountants), neither the Company nor any
of its Subsidiaries has taken or agreed to take any action which would prevent
the Merger from constituting a transaction qualifying as a reorganization under
Section 368(a) of the Code.
21
(c) Except with respect to Taxes that, in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on the Company, (i) the
Company and its Subsidiaries have timely withheld and paid all Taxes that were
required to have been withheld or have become due or payable, respectively, and
(ii) all Taxes of the Company and its Subsidiaries accrued following the end of
the most recent period covered by the Company SEC Documents have been incurred
in the Ordinary Course of Business and have been paid when due in the Ordinary
Course of Business consistent with past practices.
(d) Neither the Company nor any of its Subsidiaries is a party to or
bound by any obligation under any Tax sharing, Tax allocation, Tax indemnity or
similar agreement or arrangement except for any such agreement or arrangement
among one or more members of an "Affiliated Group" within the meaning of Section
1504(a) of the Code, the common parent of which is the Company.
(e) Neither the Company nor any of its Subsidiaries has been a
"distributing corporation" or a "controlled corporation" in connection with a
distribution intended or purported to be governed by Section 355 of the Code.
(f) The Company and each of its Subsidiaries have complied in all
material respects with all applicable laws relating to intercompany transactions
and transfer pricing, except where the failure to comply would not reasonably be
expected to have a Material Adverse Effect on the Company.
(g) Neither the Company nor any of its Subsidiaries (nor any
predecessor thereof) is a party to a plan or agreement that could give rise to
remuneration the deduction for which could be disallowed under Section 162(m) of
the Code.
3.14 Title to Properties.
(a) Each of the Company and its Subsidiaries has marketable and
legal title to, or valid leasehold interests in, all of its properties and
assets except for such properties or assets that are no longer used in the
conduct of their respective businesses, and, other than properties and assets in
which the Company or any of its Subsidiaries has a leasehold interest, except
for defects in title, easements, restrictive covenants and similar Liens and
encumbrances that would not have a Material Adverse Effect on the Company.
(b) Each of the Company and its Subsidiaries has complied with the
terms of all real property leases to which it is a party and under which it is
in occupancy, and all such real property leases are in full force and effect,
except for such noncompliances or failures to be in full force and effect that
would not reasonably be expected to have a Material Adverse Effect on the
Company. The Company and its Subsidiaries enjoy peaceful and undisturbed
possession under all such leases. Neither the Company nor any of its
Subsidiaries own any real property.
3.15 Intellectual Property.
(a) Section 3.15(a) of the Company Disclosure Schedule lists all
registered Copyrights, Trademarks and Patents owned by the Company or any of its
Subsidiaries (the "Company Registered Intellectual Property"). All Company
Registered Intellectual Property
22
used or currently proposed to be used in the business of the Company or any of
its Subsidiaries as conducted prior to or on the Closing Date is valid and
subsisting. The Company and its Subsidiaries have good and valid title to all of
the Company-owned Intellectual Property, free and clear of any Liens. The
Company and its Subsidiaries have a valid license or other right to use all
Intellectual Property not owned by the Company or its Subsidiaries (the
"Licensed Intellectual Property") of sufficient scope of use necessary to
conduct the business of the Company or any of its Subsidiaries as conducted
prior to or on the Closing Date, and as currently proposed to be conducted by
the Company and its Subsidiaries. The Company-owned Intellectual Property and
the Licensed Intellectual Property (collectively, the "Company Intellectual
Property"), constitutes all Intellectual Property used or currently proposed to
be used in the business of the Company or any of its Subsidiaries as conducted
prior to or on the Closing Date, and as proposed to be conducted by the Company
and its Subsidiaries.
(b) To the Knowledge of the Company, none of the Company or any of
its Subsidiaries has infringed upon, misappropriated or otherwise come into
conflict with any Intellectual Property of any other Person. None of the Company
or any of its Subsidiaries has received any charge, complaint, claim, demand or
notice alleging any such infringement, misappropriation or other conflict. None
of the Company or any of its Subsidiaries is party to or the subject of any
pending or, to the Knowledge of the Company, threatened, suit, claim, action,
investigation or proceeding with respect to any such infringement,
misappropriation or conflict, that has not been settled or otherwise fully
resolved. Neither the Company nor any of its Subsidiaries is subject to any
proceeding or outstanding decree, order, judgment or stipulation restricting in
any manner the use, transfer or licensing of any Company-owned Intellectual
Property by the Company or any of its Subsidiaries, the use, transfer or
licensing of any Company Product by the Company or any of its Subsidiaries, or
that may affect the validity, use or enforceability of any Company-owned
Intellectual Property, and, with respect to Licensed Intellectual Property,
neither the Company nor any of its Subsidiaries received notice of any such
restriction. To the Knowledge of the Company, no other Person has infringed
upon, misappropriated or otherwise come into conflict with any Company
Intellectual Property. None of the Company or any of its Subsidiaries has
brought any action, suit or proceeding for infringement of any Company
Intellectual Property, or for breach of any license or agreement involving any
of such Company Intellectual Property, against any party.
(c) No royalties or other continuing payment obligations are past
due in respect of any Intellectual Property of a third party which is
incorporated in any product licensed or distributed by the Company or its
Subsidiaries.
(d) Each of the Company and its Subsidiaries has taken reasonable
and necessary steps (based on standard industry practices) to protect its
Intellectual Property and rights thereunder and, to the Knowledge of the
Company, no such rights to Intellectual Property have been lost as a result of
any act or omission by the Company or any of its Subsidiaries. The Software
owned by the Company or any of its Subsidiaries, was (i) developed by employees
of the Company or its Subsidiaries within the scope of their employment, (ii)
developed by independent contractors who have assigned their rights to the
Company or its Subsidiaries pursuant to written agreements or (iii) otherwise
lawfully acquired by the Company or its Subsidiaries from a third party pursuant
to written agreements.
23
(e) None of the Company or any of its Subsidiaries jointly owns or
claims any right, title or interest with any other Person (other than the
Company or any of its Subsidiaries) in any Company-owned Intellectual Property.
To the Knowledge of the Company, there has been no unauthorized use or
disclosure of any Company Intellectual Property by any current or former
officer, director, stockholder, employee, consultant or independent contractor
of the Company or any of its Subsidiaries.
(f) The Company and its Subsidiaries have taken reasonable and
customary measures and precautions necessary to protect and maintain the
confidentiality of all Trade Secrets in which the Company or any of its
Subsidiaries has any right, title or interest and otherwise to maintain and
protect all such Trade Secrets. Without limiting the generality of the
foregoing:
(i) All current and former employees, consultants and
independent contractors of the Company or any of its Subsidiaries who are or
were involved in, or who have contributed to, the creation or development of any
Company-owned Intellectual Property have executed and delivered to the Company
or its Subsidiary, as applicable, an agreement (containing no exceptions to or
exclusions from the scope of its coverage) that protects proprietary information
and assigns to the Company or its Subsidiary, as applicable, any and all such
Intellectual Property or have validly waived or otherwise conveyed the benefit
of any rights therein to the Company or its Subsidiary; and
(ii) Except pursuant to a Company Listed Contract listed under
Section 3.9(a)(v) of the Company Disclosure Schedule, neither the Company nor
any of its Subsidiaries has disclosed or delivered to any Person, or permitted
the disclosure or delivery to any escrow agent or other Person, of any Company
Source Code. No event has occurred, and no circumstance or condition exists as a
result of acts or omissions on the part of the Company or any of its
Subsidiaries (including the execution of this Agreement or the consummation of
any of the transactions contemplated hereby) or, to the Knowledge of the
Company, as a result of any other event or circumstance, that (with or without
notice or lapse of time) will, or could reasonably be expected to, result in the
disclosure or delivery to any Person of any Company Source Code.
(g) None of the Software in respect of the Company Products, in
whole or in part, is subject to the provisions of any Public Software or other
source code license agreement that (i) requires the distribution of source code
in connection with the distribution of or otherwise making available such
Software in object code form; (ii) prohibits or limits the Company or any of its
Subsidiaries from charging a fee or receiving consideration in connection with
sublicensing or distributing such Software (whether in source code or object
code form); or (iii) allows a customer, or requires that a customer have, the
right to decompile, disassemble or otherwise reverse engineer such Software by
its terms and not by operation of law. As used in this Agreement, "Public
Software" means any software that contains, or is derived in any manner (in
whole or in part) from, any software that is distributed as free software (as
defined by the Free Software Foundation), open source software (e.g., Linux or
software distributed under any license approved by the Open Source Initiative as
of the date of this Agreement as set forth xxx.xxx.xxx) or similar licensing or
distribution models which requires the distribution of source code to licensees
free of charge.
24
(h) The Company and its Subsidiaries, and their employees, have
complied at all times with all applicable privacy laws and regulations regarding
the collection, processing, disclosure and use of all data consisting of
personally identifiable information in each case as such term is defined under
the applicable law that is, or is capable of being, associated with specific
individuals.
(i) For purposes of this Agreement:
(i) "Intellectual Property" means all intellectual property,
including but not limited to (A) inventions (whether patentable or unpatentable
and whether or not reduced to practice), ideas, research and techniques,
technical designs, discoveries and specifications, improvements, modifications,
adaptations, and derivations thereto, and patents, Patent Applications, models,
industrial designs, inventor's certificates, and patent disclosures, together
with reissuances, continuations, continuations-in-part, revisions, extensions
and reexaminations thereof (the "Patents"), (B) trademarks (any applications for
registration therefor, including any modifications, extensions or renewals
thereof), all service marks, logos, trade dress, brand names and trade names,
assumed names, corporate names and other indications of origin (whether
registered or unregistered) (the "Trademarks"), (C) copyrights (whether
registered or unregistered and any applications for registration therefor,
including any modifications, extensions or renewals thereof) (the "Copyrights"),
(D) trade secrets, know-how and confidential business information and any other
information, however documented, that is a trade secret within the meaning of
the applicable trade secret protection laws, including without limitation the
Uniform Trade Secrets Act (the "Trade Secrets"), (E) internet domain names, and
(F) any similar or equivalent intangible assets, properties and rights to any of
the foregoing anywhere in the world.
(ii) "Patent Applications" means all published or unpublished
nonprovisional and provisional patent applications, reexamination proceedings,
invention disclosures and records of invention.
(iii) "Software" means any and all (A) computer programs,
including any and all software implementations of algorithms, models and
methodologies, whether in source code or object code, (B) databases and
compilations, including any and all data and collections of data, whether
machine readable or otherwise, (C) descriptions, schematics, flow-charts and
other work product used to design, plan, organize and develop any of the
foregoing and (D) all documentation, including user manuals and training
materials, relating to any of the foregoing.
(iv) "Company-owned Intellectual Property" means the
Copyrights, Trademarks, Patents and Trade Secrets owned by the Company or any of
its Subsidiaries.
(v) "Shrinkwrap Software" means "off-the-shelf" computer
software applications that are generally available to all interested purchasers
and licensees on standard terms and conditions, and which can be obtained for
less than $50,000.
(vi) "Company Products" means each and all of the products of
the Company or any of its Subsidiaries (including all software products),
currently being distributed,
25
currently under development, or otherwise currently anticipated to be
distributed under any product "road map" of the Company or any of its
Subsidiaries.
(vii) "Company Source Code" means any source code, or any
portion, aspect or segment of any source code, relating to any Company
Intellectual Property.
3.16 Sale of Products; Performance of Services.
(a) Since January 1, 2001, each Company Product, system, program, or
other asset designed, developed, manufactured, assembled, sold, installed,
repaired, licensed or otherwise made available by any of the Company or its
Subsidiaries to any Person:
(i) has conformed and complied in all material respects with
the terms and requirements of any applicable warranty or other Contract
delivered in connection therewith and with all applicable Legal Requirements,
except where any nonconformance or noncompliance has been cured or converted;
and
(ii) has been free of any bug, virus, design defect or other
defect or deficiency at the time it was sold or otherwise made available, other
than any immaterial bug or similar defect that would not adversely affect in any
material respect such product, system, program, Company Intellectual Property or
other asset (or the operation or performance thereof) or any bug or defect that
has since been corrected, remediated or cured.
(iii) All installation services, programming services, repair
services, maintenance services, support services, training services, upgrade
services and other services that have been performed by the Company or its
Subsidiaries were performed properly and in full conformity with the terms and
requirements of all applicable warranties and other Contracts delivered in
connection therewith and with all applicable Legal Requirements.
(b) Since January 1, 2001, no customer or other Person has asserted
or threatened to assert any claim against any of the Company or its Subsidiaries
(i) under or based upon any warranty provided by or on behalf of any of the
Company or its Subsidiaries, or (ii) under or based upon any other warranty
relating to any product, system, program, or other asset designed, developed,
manufactured, assembled, sold, installed, repaired, licensed or otherwise made
available by any of the Company or its Subsidiaries or any services performed by
any of the Company or its Subsidiaries, except in any case set forth in (i) or
(ii) above where such claim has been resolved and did not have and would not
reasonably expected to have a Material Adverse Effect on the Company.
3.17 Environmental Matters.
(a) Except as would not reasonably be expected to have a Material
Adverse Effect on the Company:
(i) each of the Company and its Subsidiaries possesses all
Environmental Permits necessary to conduct its businesses and operations as now
being conducted, and each such Environmental Permit is in full force and effect;
none of the Company
26
or its Subsidiaries has received written notification from any Governmental
Entity that any such Environmental Permits will be modified, suspended or
revoked;
(ii) each of the Company and its Subsidiaries is in compliance
with all applicable Environmental Laws and the terms and conditions of all
Environmental Permits, and none of the Company or its Subsidiaries has received
written notification from any Governmental Entity or other Person that alleges
that the Company or any of its Subsidiaries has violated or is, or may be,
liable under any Environmental Law;
(iii) there are no past or pending or, to the Knowledge of the
Company, threatened Environmental Claims (A) against the Company or any of its
Subsidiaries or (B) against any Person whose liability for any Environmental
Claim the Company or any of its Subsidiaries has retained or assumed, either by
Contract or by operation of law, and none of the Company or any of its
Subsidiaries has contractually retained or assumed any liabilities or
obligations that could reasonably be expected to provide the basis for any
Environmental Claim;
(iv) to the Knowledge of the Company, there have been no
Releases of any Hazardous Materials at, from, in, to, on or under any real
properties currently or previously owned, leased, or utilized by the Company or
any of its Subsidiaries, predecessors, or Affiliates that could reasonably be
expected to form the basis of any Environmental Claim against the Company or any
of its Subsidiaries; and
(v) neither the Company nor any of its Subsidiaries,
predecessors or Affiliates transported or arranged for the transportation,
treatment, storage, handling or disposal of any Hazardous Materials to any
off-site location that could reasonably be anticipated to result in an
Environmental Claim.
(b) To the Knowledge of the Company, there are no (i) underground
storage tanks, active or abandoned, (ii) polychlorinated biphenyl containing
equipment or (iii) asbestos containing material within the leasehold of any site
or building utilized by the Company or any of its Subsidiaries.
(c) There have been no environmental investigations, studies, tests,
audits, reviews or other analyses conducted by, on behalf of, or which are in
the possession of, the Company or any of its Subsidiaries which have not been
delivered or made available to Parent.
(d) For purposes of this Agreement, the following defined terms
shall apply:
(i) "Environmental Claims" means any and all actions, orders,
decrees, suits, demands, directives, claims, Liens, investigations, proceedings
or notices of violation by any Governmental Entity or other Person alleging
responsibility or liability arising out of, based on or related to (1) the
presence, Release or threatened Release of, or exposure to, any Hazardous
Materials at any location or (2) circumstances forming the basis of any
violation or alleged violation of any Environmental Law;
(ii) "Environmental Laws" means all laws, rules, regulations,
orders, decrees, applicable common law, judgments or binding agreements issued,
promulgated or
27
entered into by or with any Governmental Entity with applicable authority over
such matters relating to pollution or protection of the environment;
(iii) "Environmental Permits" means all permits, licenses,
registrations and other authorizations required under applicable Environmental
Laws;
(iv) "Hazardous Materials" means all hazardous, toxic,
explosive or radioactive substances, wastes or other pollutants, including
petroleum or petroleum distillates, asbestos, polychlorinated biphenyls, radon
gas and all other substances or wastes of any nature regulated pursuant to any
Environmental Law; and
(v) "Release" means any release, spill, emission, leaking,
dumping, injection, pouring, deposit, disposal, discharge, dispersal, leaching
or migration into the environment or within any building, structure, facility or
fixture.
3.18 Insurance. All physical assets of the Company and its Subsidiaries
carried for value on the Company SEC Financial Statements are covered by fire
and other insurance against such risks and in such amounts as are reasonable for
prudent owners of comparable assets, and true and complete copies of all such
insurance policies have been delivered or made available to Parent. Neither the
Company nor any of its Subsidiaries is in default with respect to any of the
provisions contained in any such policies of insurance or has failed to give any
notice or pay any premium or present any claim under any such insurance policy,
except for such defaults or failures that would not reasonably be expected to
have a Material Adverse Effect on the Company. The Company has no Knowledge that
any of such insurance policies will not be renewed by the insurer upon the
scheduled expiry of the policy or will be renewed by the insurer only on the
basis that there will be a material increase in the premiums payable in respect
of the policy.
3.19 No Restrictions on Business. Except for this Agreement, there is no
Contract, judgment, injunction, order or decree binding upon the Company or any
of its Subsidiaries which would have the effect of prohibiting or impairing any
business practice of the Company or any of its Subsidiaries, acquisition of
property by the Company or any of its Subsidiaries or the conduct of business by
the Company or any of its Subsidiaries as currently conducted or as currently
proposed to be conducted by the Company, other than any prohibition or
impairment that would not reasonably be expected to have a Material Adverse
Effect on the Company.
3.20 Opinion of Financial Advisor. The financial advisor of the Company,
Wachovia Capital Markets, LLC (referred to as, "Wachovia Securities"), has
rendered its opinion, addressed to the Board of Directors of the Company, to the
effect that, as of the date of such opinion, and subject to the assumptions,
qualifications and limitations set forth therein, the Exchange Ratio is fair,
from a financial point of view, to the stockholders of the Company. The Company
has provided or will promptly provide a true, complete and correct copy of such
opinion to Parent, solely for informational purposes.
3.21 Broker Fees. No broker, investment banker, finder or financial
advisor or other Person has been retained by, or is authorized to act on behalf
of the Company or any of its Subsidiaries, and is entitled to any broker's,
finder's, financial advisor's or other similar fee or
28
commission in connection with the transactions contemplated by this Agreement
(other than Wachovia Securities, whose brokerage, investment banking, finders
and financial advisory fees shall be paid by the Company). The Company has
heretofore delivered or made available to Parent a complete and correct copy of
all agreements between the Company and Wachovia Securities pursuant to which
such firm could be entitled to any payment relating to the transactions
contemplated hereby.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub represent and warrant to the Company that,
except as set forth in the written disclosure schedule prepared by Parent which
is dated as of the date of this Agreement and arranged in sections corresponding
to the numbered and lettered sections contained in this Article 4 (provided,
however, that disclosure in any Section shall be deemed to have been set forth
in all other applicable Sections where it is reasonably apparent that such
disclosure is applicable to such other Sections notwithstanding the omission of
any cross-reference to such other Section) and is being concurrently delivered
to the Company in connection herewith (the "Parent Disclosure Schedule"), the
following statements are true and correct as of the date of this Agreement,
except where another date is specified:
4.1 Organization, Standing and Corporate Power. Each of Parent and its
Subsidiaries is a corporation or other legal entity duly organized, validly
existing and in good standing, or local law equivalent, 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. Each of Parent and its Subsidiaries is duly qualified or licensed to
do business and is in good standing, or local law equivalent, in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties or operations makes such qualification or licensing necessary,
other than in such jurisdictions where the failure to be so qualified or
licensed or to be in good standing, or local law equivalent, would not
reasonably be expected to have a Material Adverse Effect on Parent. Parent has
delivered or made available to the Company, prior to the execution of this
Agreement, complete and correct copies of (i) its Certificate of Incorporation
and Bylaws, in each case as amended through the date hereof, (ii) all the
existing written consents and minutes of the meetings of its Board of Directors
and each committee of its Board of Directors held since January 1, 2000 and
(iii) all the existing written consents and minutes of the meetings of its
stockholders held since January 1, 2000.
4.2 Subsidiaries. All the outstanding shares of capital stock of, or other
equity or voting interests in, each Subsidiary of Parent have been validly
issued and are fully paid and nonassessable and are owned, directly or
indirectly, by Parent, free and clear of all Liens. Except for the capital stock
of, or other equity or voting interests in, the Subsidiaries listed in Section
4.2 of the Parent Disclosure Schedule, Parent does not own, directly or
indirectly, any capital stock of, or other equity or voting interests in, any
Person.
29
4.3 Capital Structure.
(a) The authorized capital stock of Parent consists of 50,000,000
shares of Parent Common Stock and 2,000,000 shares of Parent's preferred stock,
par value $1.00 per share (the "Parent Preferred Stock"). As of the date hereof,
(i) 29,473,420 shares of Parent Common Stock are issued and outstanding, (ii)
414,702 shares of Parent Common Stock are issued and held by Parent in its
treasury and (iii) no shares of Parent Preferred Stock are issued and
outstanding. Parent has delivered to the Company a true, complete and correct
schedule setting forth the number of shares of Parent Common Stock held by each
registered holder thereof as of June 16, 2004, and since such date Parent has
not issued any securities (including securities convertible into or exchangeable
for Parent securities).
(b) As of the date of this Agreement and regarding options to
purchase shares of Parent Common Stock (each a "Parent Option") under Parent's
1995 Stock Option Plan, as amended ("Parent 1995 Plan"), 1996 Stock Option Plan,
as amended ("Parent 1996 Plan"), 1996 Outside Directors Stock Option Plan
("Parent 1996 Outside Directors Plan"), and 1998 Nonstatutory Stock Option Plan,
as amended ("Parent 1998 Plan" and, collectively with the Parent 1995 Plan,
Parent 1996 Plan, and Parent 1996 Outside Directors Plan, the "Parent Stock
Plans"):
(i) Parent has reserved 7,500 shares of Parent Common Stock
for issuance pursuant to outstanding, unexercised options granted under the
Parent 1995 Plan (which has been terminated with respect to any future
issuance), and no other shares remain available for issuance thereunder;
(ii) Parent has reserved 8,200,000 shares of Parent Common
Stock for issuance to employees, consultants and directors pursuant to the
Parent 1996 Plan, of which (i) 2,500,570 vested shares have been issued pursuant
to option exercises, (ii) 4,378,807 shares are subject to outstanding,
unexercised options, and (iii) 1,320,623 shares remain available for issuance
thereunder;
(iii) Parent has reserved 225,000 shares of Parent Common
Stock for issuance to outside directors pursuant to the Parent 1996 Outside
Directors Plan, of which (i) 40,103 vested shares have been issued pursuant to
option exercises, (ii) 139,480 shares are subject to outstanding, unexercised
options, and (iii) 45,417 shares remain available for issuance thereunder; and
(iv) Parent has reserved 762,500 shares of Parent Common Stock
for issuance to employees and consultants pursuant to the Parent 1998 Plan, of
which (i) 220,407 vested shares have been issued pursuant to option exercises,
(ii) 431,483 shares are subject to outstanding, unexercised options, and (iii)
110,610 shares remain available for issuance thereunder.
(c) All outstanding shares of Parent's capital stock were duly
authorized, validly issued, and are fully paid and nonassessable and not subject
to or issued in violation of any purchase option, call option, right of first
refusal, pre-emptive right, subscription right or any similar right under any
provision of the DGCL, Parent's Certificate of Incorporation, Bylaws or
30
any Contract to which Parent is a party or otherwise bound. None of the
outstanding shares of Parent's capital stock has been issued in violation of any
federal or state securities laws. All of the outstanding shares of capital stock
of each of Parent's Subsidiaries were duly authorized, validly issued, and are
fully paid and nonassessable, and all such shares (other than directors'
qualifying shares in the case of foreign Subsidiaries) are owned by Parent or a
Subsidiary of Parent free and clear of all Liens. There are no accrued and
unpaid dividends with respect to any outstanding shares of capital stock of
Parent or any of its Subsidiaries.
(d) The Parent Common Stock constitutes the only class of securities
of Parent or its Subsidiaries registered or required to be registered under the
Exchange Act.
(e) Parent is not a party to or bound by any agreement with respect
to the voting (including voting trusts or proxies), registration under the
Securities Act, or sale or transfer (including agreements relating to
pre-emptive rights, rights of first refusal, co-sale rights or "drag-along"
rights) of any securities of Parent or its Subsidiaries. To the Knowledge of
Parent, there are no agreements among other parties, to which Parent is not a
party and by which it is not bound, with respect to the voting (including voting
trusts or proxies) or sale or transfer (including agreements relating to rights
of first refusal, co-sale rights or "drag-along" rights) of any securities of
Parent or its Subsidiaries.
(f) Except as set forth in the Parent Rights Agreement by and
between Parent and ChaseMellon Shareholder Services dated as of October 2, 1998
and as described in this Section 4.3, no capital stock of Parent or any of its
Subsidiaries or any security convertible or exchangeable into or exercisable for
such capital stock, is issued, reserved for issuance or outstanding as of the
date of this Agreement. Except as described in this Section 4.3, there are no
options, preemptive rights, warrants, calls, rights, commitments or agreements
of any kind to which Parent or any of its Subsidiaries is a party, or by which
Parent or any of its Subsidiaries is bound, obligating Parent or any of it
Subsidiaries to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital stock of Parent or any of its Subsidiaries or
obligating Parent or any of its Subsidiaries to grant, extend or accelerate the
vesting of or otherwise amend or enter into any such option, warrant, call,
right, commitment or agreement. Except for Parent's repurchase rights with
respect to unvested shares issued under the Parent Stock Plans, there are no
rights or obligations, contingent or otherwise (including rights of first
refusal in favor of Parent), of Parent or any of its Subsidiaries, to
repurchase, redeem or otherwise acquire any shares of capital stock of Parent or
any of its Subsidiaries or to provide funds to or make any investment (in the
form of a loan, capital contribution or otherwise) in any such Subsidiary or any
other Person. There are no registration rights or other agreements or
understandings to which Parent or any of its Subsidiaries is a party or by which
it or they are bound with respect to any capital stock of Parent or any of its
Subsidiaries.
4.4 Authority; Noncontravention.
(a) Parent and Merger Sub have the requisite corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated by this Agreement, subject to obtaining the Share
Issuance Approval. The execution and delivery of this Agreement by Parent and
Merger Sub and the consummation by Parent and Merger Sub of the transactions
contemplated by this Agreement have been duly authorized by all necessary
31
corporate action on the part of Parent and Merger Sub and no other corporate
authorizations or approvals on the part of Parent or Merger Sub are necessary to
approve this Agreement or to consummate the transactions contemplated by this
Agreement, subject to (i) Parent obtaining the Share Issuance Approval, and (ii)
Merger Sub obtaining approval of this Agreement and the Merger from Parent, as
Merger Sub's sole stockholder, which approval shall have been obtained as
promptly as possible after the execution of this Agreement. This Agreement has
been duly executed and delivered by Parent and Merger Sub and constitutes a
legal, valid and binding obligation of Parent and Merger Sub, enforceable
against Parent and Merger Sub in accordance with its terms subject to (i)
applicable bankruptcy, insolvency, fraudulent transfer and conveyance,
moratorium, reorganization, receivership and similar laws relating to or
affecting the enforcement of the rights and remedies of creditors generally and
(ii) principles of equity (regardless of whether considered and applied in a
proceeding in equity or at law).
(b) The affirmative vote of the holders of a majority of the shares
of Parent Common Stock present in person or represented by proxy at the Parent
Stockholders' Meeting (the "Share Issuance Approval") in favor of the issuance
of the Parent Common Stock in the Merger (the "Share Issuance") is the only vote
of the holders of any class or series of Parent's capital stock necessary in
connection with the transactions contemplated by this Agreement.
(c) The Board of Directors of Parent, at a meeting duly called and
held at which a quorum of the directors of Parent was present, duly adopted
resolutions (i) approving and declaring advisable this Agreement, the Merger and
the other transactions contemplated hereby, (ii) declaring that it is advisable
and in the best interests of Parent, Merger Sub and their stockholders that
Parent and Merger Sub enter into this Agreement and consummate the Merger on the
terms and subject to the conditions set forth in this Agreement, (iii) declaring
that the Share Issuance is fair for the Parent and their stockholders, (iv)
directing that the Share Issuance be submitted to a vote at a meeting of
Parent's stockholders to be held as promptly as practicable as set forth in
Section 6.2 and (v) recommending that Parent's stockholders approve the Share
Issuance, which resolutions have not been subsequently rescinded, modified or
withdrawn in any way.
(d) The Board of Directors of Merger Sub duly adopted resolutions
(i) approving and declaring advisable this Agreement, the Merger and the other
transactions contemplated hereby, (ii) declaring that it is advisable and in the
best interests of Merger Sub and Parent, as its sole stockholder, that Merger
Sub enter into this Agreement and consummate the Merger on the terms and subject
to the conditions set forth in this Agreement, and (iii) recommending that
Merger Sub's stockholder adopt this Agreement, which resolutions have not been
subsequently rescinded, modified or withdrawn in any way.
(e) The execution and delivery of this Agreement by Parent and
Merger Sub and the consummation of the transactions contemplated hereby and
compliance by Parent and Merger Sub with the provisions hereof, do not and will
not conflict with, or result in any violation or breach of, or default (with or
without notice or lapse of time, or both) under, or give rise to a right of, or
result in, termination, cancellation or acceleration of any obligation, or
result in the creation of any Lien in or upon any of the properties or assets of
Parent or any of its Subsidiaries under, any provision of (i) the Certificate of
Incorporation or Bylaws of Parent or Merger Sub or the Certificate of
Incorporation or Bylaws (or similar organizational documents)
32
of any of their Subsidiaries, (ii) any Parent Material Contract, or (iii)
subject to the governmental filings and other matters referred to in the
following paragraph, any statute, law, ordinance, rule, regulation, judgment,
order or decree, in each case, applicable to Parent or any of its Subsidiaries
or their respective properties or assets; other than, in the case of clauses
(ii) and (iii), any such conflicts, terminations, cancellations, violations,
breaches, defaults, rights, results, losses, Liens or entitlements that would
not reasonably be expected to have a Material Adverse Effect on Parent.
(f) No consent, approval, order or authorization of, or
registration, declaration or filing with, or notice to, any Governmental Entity
is required to be made or obtained by Parent or any of its Subsidiaries in
connection with the execution and delivery of this Agreement by Parent and
Merger Sub or the consummation by Parent and Merger Sub of the transactions
contemplated hereby or compliance with the provisions hereof, except (i) as may
be required by the HSR Act or as may be required under any foreign anti-trust or
competition law or regulation, (ii) for the filing with the SEC of the Joint
Proxy Statement relating to the Share Issuance Approval and such other filings,
notices or reports under the Exchange Act, as may be required in connection with
this Agreement, the Merger and the other transactions contemplated hereby, (iii)
for any filings or notifications required under the rules and regulations of the
NASDAQ Stock Market, Inc. of the transactions contemplated hereby, and (iv) for
the filing of the Certificate of Merger with the Delaware Secretary of State and
appropriate documents with the relevant authorities of other states in which
Parent or any of its Subsidiaries is qualified to do business.
4.5 Parent SEC Documents; Financial Statements; Nasdaq Compliance.
(a) Parent has filed with the SEC on a timely basis all reports,
schedules, forms, statements and other documents required to be filed by it
since January 1, 2001, including all of its Certifications, as such documents
since the time of filing may have been amended or supplemented with the SEC (the
"Parent SEC Documents"). Since January 1, 2001, there have been no comment
letters received by Parent from the Staff of the SEC or responses to such
comment letters by or on behalf of Parent, that have not been provided to the
Company. Parent maintains disclosure controls and procedures required by Rule
13a-15 or 15d-15 under the Exchange Act and such controls and procedures are
designed to ensure that material information relating to Parent, including its
Subsidiaries, required to be disclosed in the reports it files or submits under
the Exchange Act is accumulated and communicated to Parent's principal executive
officer and principal financial officer to allow timely decisions regarding
financial disclosure. No Subsidiary of Parent is required to file with the SEC
any report, schedule, form, statement or other document. As of their respective
dates, the Parent SEC Documents complied as to form in all material respects
with the requirements of the Securities Act, or the Exchange Act, as the case
may be, and the rules and regulations of the SEC promulgated thereunder
applicable to such Parent SEC Documents. The Parent SEC Documents (i) were and,
in the case of the Parent SEC Documents filed after the date hereof, will be
prepared in all material respects in accordance with the applicable requirements
of the Securities Act and the Exchange Act, as the case may be, and (ii) did not
at the time they were filed (or if amended or superseded by a filing prior to
the date of this Agreement, then on the date of such filing), and in the case of
such forms, reports and documents filed by Parent with the SEC after the date of
this Agreement, will not as of the time they are filed, contain any untrue
statement of a material fact or omit to state a
33
material fact required to be stated in such Parent SEC Documents or necessary in
order to make the statements in such Parent SEC Documents, in light of the
circumstances under which they were and will be made, not misleading; provided,
however, that the Parent's Certifications are each true and correct based upon
the knowledge of the officer(s) making such Certifications, as made. Parent is
in compliance with the applicable listing rules of the Nasdaq National Market
and has not since January 1, 2001 received any notice from the Nasdaq National
Market asserting any non-compliance with such rules. As used in this Section
4.5, the term "file" shall be broadly construed to include any manner in which a
document or information is furnished, supplied or otherwise made available in
writing to the SEC.
(b) The financial statements of Parent for the fiscal year ended
December 31, 2003 filed with the SEC (the "Parent Financial Statements") and all
other financial statements of Parent included in the Parent SEC Documents,
including in each case the notes thereto (collectively with the Parent Financial
Statements, the "Parent SEC Financial Statements") complied 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, were prepared in accordance with GAAP applied on a
consistent basis during the periods involved (except as may be indicated therein
or in the notes thereto) and fairly presented in all material respects the
consolidated financial position of Parent 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
year-end audit adjustments and other adjustments described therein). Section
4.5(b) of the Parent Disclosure Schedule contains a description of all non-audit
services performed by Parent's auditors for Parent and its Subsidiaries since
the beginning of the immediately preceding fiscal year of Parent and the fees
paid for such services; all such non-audit services were approved as required by
Section 202 of the Xxxxxxxx-Xxxxx Act of 2002. In the reasonable opinion of
Parent's audit committee, the fees paid to and the serviced performed by
Parent's auditors relating to such non-audit services as described on Section
4.5(b) of the Parent Disclosure Schedule do not impair such auditor's
independence. Parent has delivered or made available to the Company copies of
all policies, manuals and other documents promulgating Parent's internal
accounting controls. Parent does not have any off-balance sheet arrangements.
(c) Except as set forth in the Parent Financial Statements and
except as arising hereunder, Parent and its Subsidiaries have no liabilities or
obligations of any nature (whether absolute, accrued, asserted or unasserted,
contingent or otherwise) that would be required by applicable accounting
requirements and the published rules and regulations of the SEC to be reflected
on or reserved against in any Parent SEC Financial Statements that are not
disclosed, reflected or reserved against in such Parent SEC Financial
Statements, except for such liabilities and obligations (i) that have been
incurred since December 31, 2003 in the Ordinary Course of Business, or (ii)
that would not reasonably be expected to have a Material Adverse Effect on
Parent.
(d) Neither Parent nor any of its Subsidiaries is a party to, or has
any commitment to become a party to, any joint venture, partnership agreement or
any similar Contract (including any Contract relating to any transaction,
arrangement or relationship between or among Parent or any of its Subsidiaries,
on the one hand, and any unconsolidated Affiliate, including any structured
finance, special purpose or limited purpose entity or person, on the other hand)
where
34
the purpose or intended effect of such arrangement is to avoid disclosure of any
material transaction involving Parent or any of its Subsidiaries in the Parent
Financial Statements.
(e) Since the date of Parent's last proxy statement filed with the
SEC, no event has occurred as of the date hereof that would be required to be
reported by Parent pursuant to Item 404 of Regulation S-K promulgated by the
SEC. Since July 30, 2002, neither Parent nor any of its Subsidiaries has,
directly or indirectly, made or arranged for any extension or maintaining of
credit, or renewal of an extension of credit, in the form of a personal loan to
or for any director or executive officer of the Company in contravention of
Section 402 of the Xxxxxxxx-Xxxxx Act of 2002.
4.6 Absence of Certain Changes or Events. Except as described in any of
the Parent SEC Documents or contemplated by this Agreement, between March 31,
2004 and the date hereof, (a) Parent and its Subsidiaries have conducted their
respective businesses in all material respects in the Ordinary Course of
Business, and there has not been any (b)(i) Material Adverse Effect on Parent;
(ii) declaration, setting aside or payment of any dividend or other distribution
(whether in cash, stock or property) with respect to any of Parent's or any of
its Subsidiaries' capital stock; or (iii) split, combination or reclassification
of any of Parent's or any of its Subsidiaries' 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 Parent's capital stock or other securities
of Parent or any of its Subsidiaries (other than shares of Parent Common Stock
issuable upon exercise of outstanding Parent Options under the Parent Stock
Plans).
4.7 Absence of Litigation; Investigations. Except as would not reasonably
be expected to have a Material Adverse Effect on Parent, there are no claims,
actions, suits, proceedings or, to the Knowledge of Parent, governmental
investigations, inquiries or subpoenas (i) pending against Parent or any of its
Subsidiaries, or any properties or assets of Parent or of any of its
Subsidiaries, or (ii) to the Knowledge of Parent, threatened in writing against
Parent or any of its Subsidiaries, or any properties or assets of Parent or of
any of its Subsidiaries. Neither Parent nor any Subsidiary of Parent is subject
to any outstanding order, judgment, writ, injunction or decree that would have a
Material Adverse Effect on Parent or would prevent the consummation of the
transactions contemplated by this Agreement. There has not been since January 1,
2001 nor are there currently any internal investigations or inquiries being
conducted by Parent, its Subsidiaries, their respective Board of Directors or
other equivalent management bodies or any third party or Governmental Entity at
the request of any of the foregoing concerning any financial, accounting, Tax,
conflict of interest, self-dealing, fraudulent or deceptive conduct or other
misfeasance or malfeasance issues.
4.8 Compliance with Applicable Laws. Parent and its Subsidiaries hold all
permits, licenses, variances, exemptions, certificates, authorizations, orders
and approvals of all Governmental Entities which are necessary to the lawful
operation of the respective business of Parent and its Subsidiaries, except
where the failure to hold such Parent Permits would not reasonably be expected
to have a Material Adverse Effect on Parent (the "Parent Permits"). Except as
would not reasonably be expected to have a Material Adverse Effect on Parent,
all such Parent Permits are in full force and effect and Parent and its
Subsidiaries are in compliance with the terms of such Parent Permits and all
applicable statutes, laws, ordinances, rules and regulations, judgments and
decrees. Parent has not received any written notice to the effect that
35
Parent or any of its Subsidiaries is not in compliance with the terms of any
Parent Permits or any such statutes, laws, ordinances, rules, or regulations.
4.9 Contracts.
(a) For purposes of this Agreement, a "Parent Material Contract"
(and collectively, the "Parent Material Contracts") means each Contract to which
Parent or any of its Subsidiaries is bound or a party (except for those
Contracts that have expired or have been terminated in accordance with their
terms), (i) that is material to Parent, in that the termination or cancellation
of such Contract would reasonably be expected to have a Material Adverse Effect
on Parent, (ii) with customers of Parent involving software revenues recognized
by Parent in excess of $1,000,000 for the period beginning on January 1, 2003
and ending on May 31, 2004, but not including purchases by customers solely
pursuant to Parent invoices made in the Ordinary Course of Business, (iii) with
Persons which are not customers of Parent made in the Ordinary Course of
Business involving payments by or to Parent or its Subsidiaries in excess of
$1,000,000 for the period beginning on January 1, 2003 and ending on May 31,
2004, or (iv) with the 20 largest maintenance customers of Parent based upon
such customers' aggregate xxxxxxxx for maintenance revenues recognized by Parent
during the period beginning on January 1, 2002 and ending on March 31, 2004.
Each Parent Material Contract is in full force and effect and constitutes a
legal, valid and binding agreement of the Company or a Subsidiary of the
Company, as applicable, enforceable in accordance with its terms (subject to (i)
applicable bankruptcy, insolvency, fraudulent transfer and conveyance,
moratorium, reorganization, receivership and similar laws relating to or
affecting the enforcement of the rights and remedies of creditors generally and
(ii) principles of equity (regardless of whether considered and applied in a
proceeding in equity or at law)), of Parent or each of its Subsidiaries, as
applicable, and Parent or its Subsidiaries, as applicable, have performed all of
their material obligations (except those that have not yet become due) under,
and is not in violation or breach of or default under, any of such Parent
Material Contracts except for where such failure to perform, violation or breach
would not reasonably be expected to have a Material Adverse Effect on Parent. To
the Knowledge of Parent, the other parties to any Parent Material Contract have
performed all of their obligations (except those that have not yet become due)
under, and are not in violation or breach of or default under, any such Parent
Material Contract except for such violations, breaches or defaults which would
not reasonably be expected to have a Material Adverse Effect on Parent.
(b) The execution of this Agreement and the consummation of the
transactions contemplated hereby will not conflict with or cause a breach of any
Parent Material Contract and no approval or consent of any other party to any of
Parent Material Contracts is required in order for those Parent Material
Contracts to continue in effect after the consummation of the Merger.
4.10 Absence of Changes in Benefit Plans. Since December 31, 2003, there
has not been any adoption or amendment in any material respect by Parent or any
Subsidiary of Parent of:
(a) any stock ownership, stock purchase, stock appreciation, stock
option or phantom stock benefit plan, program or arrangement (whether oral or
written) not governed by ERISA and pertaining to the Parent Common Stock
(together, "Parent Equity Benefit Plans");
36
(b) any ERISA Benefit Plans which Parent or any Controlled Group
Member sponsors or maintains or to which Parent or such entity, trade or
business is required to contribute; or
(c) any Non-ERISA Benefit Plans, providing any such benefits to any
current or former employee, officer or director of Parent or any Controlled
Group Member.
4.11 Employee Benefit Matters.
(a) Except as would not reasonably be expected to have a Material
Adverse Effect on Parent:
(i) each ERISA Benefit Plan of Parent, Parent Equity Benefit
Plan and each Non-ERISA Benefit Plan of Parent (such plans, agreements,
arrangements, and related trusts and related agreements being hereinafter
referred to as the "Parent Benefit Plans") has been operated and administered in
compliance with its terms;
(ii) each Parent Benefit Plan complies, as applicable, with
requirements of ERISA and the Code, and all other applicable laws;
(iii) no "prohibited transaction" (within the meaning of
Section 406 of ERISA or Section 4975(c) of the Code) has occurred with respect
to any ERISA Benefit Plan of Parent;
(iv) all contributions required to be made in connection with
any Parent Benefit Plan through the date hereof have been timely made or, if not
yet due, have been accrued on Parent Financial Statements;
(v) other than claims in the ordinary course for benefits with
respect to the Parent Benefit Plans, there are no actions, suits or claims
pending with respect to any Parent Benefit Plan; and
(vi) all reports, returns and similar documents with respect
to the Parent Benefit Plans required to be filed with any Governmental Entity
have been timely filed.
(b) Each Parent Benefit Plan intended to qualify under Section
401(a) of the Code has received a favorable determination opinion, advisory or
notification letter from the Internal Revenue Service as to its qualification
under Section 401(a) of the Code or has time remaining to apply for the same
under applicable Treasury Regulations or IRS pronouncements, and to the
Knowledge of Parent nothing has occurred that could adversely affect such
qualified status.
(c) Neither Parent nor any Controlled Group Member maintains,
sponsors or contributes to, or has maintained, sponsored or contributed to, any
"defined benefit plan" (within the meaning of Section 3(35) of ERISA), any
multiemployer plan (within the meaning of Section 3(37) of ERISA), or any
multiple employer plan (within the meaning of Section 413 of the Code).
37
4.12 Taxes.
(a) Except to the extent that failure to do so would not reasonably
be expected to have a Material Adverse Effect on Parent, Parent and each of its
Subsidiaries has timely filed all material Tax returns and reports required to
be filed by it, the due date for which (including any extensions with respect
thereto) occurred prior to the date of this Agreement, and has paid all Taxes as
shown to be owed on such returns and reports. All such Tax returns were complete
and accurate in all material respects. Except as would not reasonably be
expected to have a Material Adverse Effect on Parent, no deficiencies for any
Taxes have been proposed, asserted or assessed against Parent, and no requests
for waivers of the time to assess any such Taxes are pending.
(b) To the Knowledge of Parent (which shall be entitled to rely on
advice rendered by its independent accountants), neither Parent nor any of its
Affiliates has taken or agreed to take any action which would prevent the Merger
from constituting a transaction qualifying as a reorganization under Section
368(a) of the Code.
4.13 Intellectual Property.
(a) Section 4.13(a) of the Parent Disclosure Schedule lists all
registered Copyrights, Trademarks and Patents owned by Parent or any of its
Subsidiaries, and is in current use in its or their business (the "Parent
Registered Intellectual Property"). All Parent Registered Intellectual Property
used or currently proposed to be used in the business of Parent or any of its
Subsidiaries as conducted prior to or on the Closing Date is valid and
subsisting. Parent and its Subsidiaries have good and valid title to all of
Parent-owned Intellectual Property, free and clear of any Liens. Parent and its
Subsidiaries have a valid license or other right to use all Intellectual
Property not owned by Parent or its Subsidiaries (the "Parent Licensed
Intellectual Property") of sufficient scope of use necessary to conduct the
business of Parent or any of its Subsidiaries as conducted prior to or on the
Closing Date, and as currently proposed to be conducted by Parent and its
Subsidiaries. Parent-owned Intellectual Property and the Parent Licensed
Intellectual Property (collectively, the "Parent Intellectual Property"),
constitutes all Intellectual Property used or currently proposed to be used in
the business of Parent or any of its Subsidiaries as conducted prior to or on
the Closing Date, and as proposed to be conducted by Parent and its
Subsidiaries.
(b) To the Knowledge of Parent, none of Parent or any of its
Subsidiaries has infringed upon, misappropriated or otherwise come into conflict
with any Intellectual Property of any other Person. None of Parent or any of its
Subsidiaries has received any charge, complaint, claim, demand or notice
alleging any such infringement, misappropriation or other conflict. None of
Parent or any of its Subsidiaries is party to or the subject of any pending or,
to the Knowledge of Parent, threatened, suit, claim, action, investigation or
proceeding with respect to any such infringement, misappropriation or conflict,
that has not been settled or otherwise fully resolved. Neither Parent nor any of
its Subsidiaries is subject to any proceeding or outstanding decree, order,
judgment or stipulation restricting in any manner the use, transfer or licensing
of any Parent-owned Intellectual Property by Parent or any of its Subsidiaries,
the use, transfer or licensing of any Parent Product by Parent or any of its
Subsidiaries, or that may affect the validity, use or enforceability of any
Parent-owned Intellectual Property, and, with respect to Parent Licensed
Intellectual Property, neither Parent nor any of its Subsidiaries received
notice
38
of any such restriction.. To the Knowledge of Parent, no other Person has
infringed upon, misappropriated or otherwise come into conflict with any Parent
Intellectual Property. None of Parent or any of its Subsidiaries has brought any
action, suit or proceeding for infringement of any Parent Intellectual Property,
or for breach of any license or agreement involving any of such Parent
Intellectual Property, against any party.
(c) No royalties or other continuing payment obligations are past
due in respect of any Intellectual Property of a third party which is
incorporated in any product licensed or distributed by Parent or its
Subsidiaries.
(d) Each of Parent and its Subsidiaries has taken reasonable and
necessary steps (based on standard industry practices) to protect its
Intellectual Property and rights thereunder and, to the Knowledge of Parent, no
such rights to Intellectual Property have been lost as a result of any act or
omission by Parent or any of its Subsidiaries. The Software owned by Parent or
any of its Subsidiaries, was (i) developed by employees of Parent or its
Subsidiaries within the scope of their employment, (ii) developed by independent
contractors who have assigned their rights to Parent or its Subsidiaries
pursuant to written agreements or (iii) otherwise lawfully acquired by Parent or
its Subsidiaries from a third party pursuant to written agreements.
(e) None of Parent or any of its Subsidiaries jointly owns or claims
any right, title or interest with any other Person (other than Parent or any of
its Subsidiaries) in any Parent-owned Intellectual Property. To the Knowledge of
Parent, there has been no unauthorized use or disclosure of any Parent
Intellectual Property by any current or former officer, director, stockholder,
employee, consultant or independent contractor of Parent or any of its
Subsidiaries.
(f) Parent and its Subsidiaries have taken reasonable and customary
measures and precautions necessary to protect and maintain the confidentiality
of all Trade Secrets in which Parent or any of its Subsidiaries has any right,
title or interest and otherwise to maintain and protect all such Trade Secrets.
(g) For purposes of this Agreement:
(i) "Parent-owned Intellectual Property" means the Copyrights,
Trademarks, Patents and Trade Secrets owned by Parent or any of its
Subsidiaries.
(ii) "Parent Products" means each and all of the products of
Parent or any of its Subsidiaries (including all software products), currently
being distributed, currently under development, or otherwise currently
anticipated to be distributed under any product "road map" of Parent or any of
its Subsidiaries.
(iii) "Parent Source Code" means any source code, or any
portion, aspect or segment of any source code, relating to any Parent
Intellectual Property.
4.14 No Restrictions on Business. Except for this Agreement, there is no
Contract, judgment, injunction, order or decree binding upon Parent or any of
its Subsidiaries which would have the effect of prohibiting or impairing any
business practice of Parent or any of its Subsidiaries, acquisition of property
by Parent or any of its Subsidiaries or the conduct of business by Parent or any
of its Subsidiaries as currently conducted or as currently proposed to
39
be conducted by Parent, other than any prohibition or impairment that would not
reasonably be expected to have a Material Adverse Effect on Parent.
4.15 Brokers. Except for Citigroup Global Markets Inc., no broker,
investment banker, financial advisor or other Person has been retained by, or is
authorized to act on behalf of, Parent or any of its Subsidiaries and is
entitled to any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated by this Agreement.
4.16 Interim Operations of Merger Sub. Merger Sub was formed solely for
the purpose of engaging in the transactions contemplated hereby and has not
engaged in any other business activities and has conducted its operations only
as contemplated hereby. Merger Sub has not incurred, directly or indirectly, any
material liabilities or obligations except those in connection with its
organization or with the negotiation and execution of this Agreement and the
performance of the transactions contemplated hereby.
4.17 Interested Stockholder. Neither Parent nor Merger Sub, nor any of
their "affiliates" or "associates" have been "interested stockholders" of the
Company at any time within three years of the date of this Agreement, as those
terms are used in Section 203 of the DGCL.
4.18 Opinion of Financial Advisor. The financial advisor of Parent has
rendered its opinion, addressed to the Board of Directors of Parent, to the
effect that, as of the date of such opinion, and subject to the assumptions,
qualifications and limitations set forth therein, the Exchange Ratio is fair,
from a financial point of view, to Parent. Parent will promptly provide a true,
complete and correct copy of such opinion to the Company solely for
informational purposes.
ARTICLE 5
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Conduct of Company's Business. Except as otherwise provided in,
contemplated by or permitted by this Agreement, or as set forth in Section 5.1
of the Company Disclosure Schedule, between the date hereof and the Effective
Time, the Company shall, and shall cause its Subsidiaries, (i) to operate their
respective businesses in the Ordinary Course of Business, and (ii) to use all
commercially reasonable efforts to preserve intact their business relationships
with customers and other third parties, and keep available the service of their
current officers and employees. Without limiting the generality of the foregoing
and except as otherwise expressly provided in this Agreement, as set forth in
Section 5.1 of the Company Disclosure Schedule or consented to in writing by
Parent (which consent shall not be unreasonably withheld or delayed), prior to
the Effective Time the Company shall not, and shall not permit any of its
Subsidiaries to:
(a) declare, set aside or pay any dividends on, or make any other
distributions (whether in cash, stock or property) in respect of any of its
capital stock;
(b) purchase, redeem or otherwise acquire any shares of capital
stock or any other securities of the Company or its Subsidiaries or any options,
warrants, calls or rights to acquire any such shares or other securities, or
take any action to accelerate any vesting provisions of any
40
such shares or securities, other than (i) the repurchase of unvested shares of
Company Common Stock, at the original price paid per share, from employees,
consultants or directors upon the termination of their service relationship with
the Company or any Subsidiary, or (ii) any required action to effect the vesting
acceleration contemplated by any Contract existing on the date hereof;
(c) 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 any of its other securities;
(d) issue, deliver, sell, pledge or otherwise encumber any shares of
its capital stock, any other equity or voting interests or any securities
convertible into, or exchangeable for, or any options, warrants, calls or rights
to acquire, any such shares, voting securities or convertible or exchangeable
securities or any stock appreciation rights or other rights that are linked in
any way to the price of Company Common Stock or in any way alter the
capitalization structure of the Company or any of its Subsidiaries existing on
the date of this Agreement (other than the issuance of shares of Company Common
Stock upon the exercise of Options outstanding on the date of this Agreement
pursuant to their terms as in effect on the date of this Agreement or as a
result of the transactions contemplated hereby);
(e) amend its Certificate of Incorporation or Bylaws (or similar
organizational documents of any Subsidiary);
(f) effect any merger, consolidation, or business combination;
(g) adopt a plan of complete or partial liquidation, dissolution,
consolidation, restructuring or recapitalization of the Company or any of its
Subsidiaries or otherwise permit the corporate existence of the Company or any
of its Subsidiaries to be suspended, lapsed or revoked;
(h) directly or indirectly, sell, lease, sell and leaseback,
mortgage or otherwise encumber or subject to any Lien or otherwise dispose of
any of its properties or assets or any interest therein, other than (i) in the
Ordinary Course of Business, (ii) any Liens for taxes not yet due and payable or
being contested in good faith and (iii) such mechanics' and similar Liens, if
any, as do not materially detract from the value of any such properties or
assets;
(i) (i) repurchase, prepay or incur any indebtedness or assume,
guarantee or endorse any indebtedness of another Person or issue or sell any
debt securities or options, warrants, calls or other rights to acquire any debt
securities of the Company or any of its Subsidiaries, except for borrowings
incurred in the Ordinary Course of Business or transactions between the Company
and Parent or (ii) make any loans, advances or capital contributions to, or
investments in, any other Person, other than the Company or any direct or
indirect wholly-owned Subsidiary of the Company;
(j) enter into, modify, amend or terminate (i) any Contract which if
so entered into, modified, amended or terminated would (A) have a Material
Adverse Effect on the Company, (B) impair in any material respect the ability of
the Company to perform its obligations under this Agreement or (C) prevent or
materially delay the consummation of the
41
transactions contemplated by this Agreement or (ii) except in the Ordinary
Course of Business, any Company Listed Contract;
(k) (i) purchase, acquire, lease or license-in any material assets
in any single transaction or series of related transactions having a fair market
value in excess of $200,000; (ii) sell, transfer or otherwise dispose of any
material assets other than sales of its products and other non-exclusive
licenses of software in the Ordinary Course of Business; (iii) enter into any
exclusive license, distribution, marketing or sales agreements; (iv) enter into
any commitments to any person to develop Software without charge; (v) sell,
transfer or otherwise dispose of any of Company-owned Intellectual Property
other than in connection with sales of its products and non-exclusive licenses
in the Ordinary Course of Business; (v) terminate any material Software
development project that is currently ongoing, unless pursuant to the terms of
an existing Contract with a customer; or (vi) grant "most favored customer"
pricing to any Person other than in the Ordinary Course of Business;
(l) (i) except as otherwise contemplated by this Agreement or as
required to comply with applicable law, rule or regulation or any Contract or
Benefit Plans existing on the date of this Agreement, pay any material benefit
not provided for as of the date of this Agreement under any Contract or Benefit
Plan, or (ii) enter into, modify, amend or terminate any Benefit Plan, or (iii)
adopt or enter into any collective bargaining agreement or other labor union
contract applicable to the employees of the Company or any Subsidiary thereof;
(m) maintain insurance at less than current levels or otherwise in a
manner inconsistent with past practice in any material respect;
(n) except as required by GAAP, revalue any of its material assets
or make any changes in accounting methods, principles or practices;
(o) make or rescind any material election relating to Taxes or
settle or compromise any material Tax liability or enter into any closing or
other agreement with any Tax authority with respect to any material Tax
liability, or file or cause to be filed any material amended Tax return, file or
cause to be filed any claim for material refund of Taxes previously paid, or
agree to an extension of a statute of limitations with respect to the assessment
or determination of Taxes;
(p) fail to file any material Tax returns when due, fail to cause
such Tax returns when filed to be materially true, correct and complete, prepare
or fail to file any Tax return in a manner inconsistent with past practices in
preparing or filing similar Tax returns in prior periods or, on any such Tax
return of the Company, take any position, make any election, or adopt any method
that is inconsistent with positions taken, elections made or methods used in
preparing or filing similar Tax returns in prior periods, in each case, except
to the extent required by applicable Legal Requirements, or fail to pay any
material Taxes when due;
(q) effectuate a "plant closing" or "mass layoff," as those terms
are defined in the Worker Adjustment and Retraining Notification Act of 1988, as
amended, affecting in whole or in part any site of employment, facility,
operating unit or employee of Company or any of its Subsidiaries; and
42
(r) authorize any of, or commit, resolve or agree to take any of,
the foregoing actions.
Notwithstanding the preceding provisions of this Section 5.1, between the date
hereof and the Effective Time, the Company may, after providing notice to
Parent, in the Company's sole discretion and without the consent of Parent,
comply with its legally binding obligations outstanding as of the date hereof
which have been either provided to Parent or disclosed in the Company SEC
Documents in accordance with the terms of such agreements.
5.2 Conduct of Parent's Business. Except as otherwise provided in,
contemplated by or permitted by this Agreement, or as set forth in Section 5.2
of the Parent Disclosure Schedule, between the date hereof and the Effective
Time, Parent shall, and shall cause its Subsidiaries, (i) to operate their
respective businesses in the Ordinary Course of Business, and (ii) to use all
commercially reasonable efforts to preserve intact their business relationships
with third parties, and keep available the service of their current officers and
employees. Without limiting the generality of the foregoing and except as
otherwise expressly provided in this Agreement, as set forth in Section 5.2 of
the Parent Disclosure Schedule or consented to in writing by the Company (which
consent shall not be unreasonably withheld or delayed), prior to the Effective
Time Parent shall not, and shall not permit any of its Subsidiaries to:
(a) declare, set aside or pay any dividends on, or make any other
distributions (whether in cash, stock or property) in respect of any of its
capital stock (provided that cash distributions from any of such Subsidiaries to
Parent shall be permitted);
(b) split, combine or reclassify any of its capital stock or issue
or authorize the issuance of any other securities in respect of, in lieu of, or
in substitution for shares of its capital stock or any of its other securities
(other than any such transaction involving the capital stock of such Subsidiary,
which does not alter the status of such Subsidiary as a wholly owned Subsidiary
of Parent or a foreign Subsidiary of Parent that would be wholly owned but for a
nominal number of director or similar shares being owned by a foreign national
as is required by the law of the jurisdiction of such foreign Subsidiary's
organization);
(c) issue, deliver, sell, pledge or otherwise encumber any shares of
its capital stock, any other equity or voting interests or any securities
convertible into, or exchangeable for, or any options, warrants, calls or rights
to acquire, any such shares, voting securities or convertible or exchangeable
securities or any stock appreciation rights or other rights that are linked in
any way to the price of Parent Common Stock, other than (i) the issuance of
shares of Parent Common Stock upon the exercise of Parent Options pursuant to
their terms or as a result of the transactions contemplated hereby and (ii) the
issuance of Parent Options pursuant to the Parent Stock Plans to employees or
consultants of Parent after the date of this Agreement but in the ordinary
course of business for Parent and the subsequent exercise of those Parent
Options for shares of Parent Common Stock;
(d) amend its Certificate of Incorporation or Bylaws (or similar
organizational documents of any Subsidiary);
(e) effect any merger, consolidation, or business combination;
43
(f) adopt a plan of complete or partial liquidation, dissolution,
restructuring or recapitalization of Parent or any of its Subsidiaries or
otherwise permit the corporate existence of Parent or any of its Subsidiaries to
be suspended, lapsed or revoked, except with respect to the Subsidiaries of
Parent, other than JDA Software, Inc., where individually or in the aggregate
such liquidation, dissolution, restructuring or recapitalization would not
reasonably be expected to have a Material Adverse Effect on Parent;
(g) directly or indirectly, sell, lease, sell and leaseback,
mortgage or otherwise encumber or subject to any Lien or otherwise dispose of
any of its properties or assets or any interest therein, other than (i) in the
Ordinary Course of Business, (ii) any Liens for taxes not yet due and payable or
being contested in good faith and (iii) such mechanics' and similar Liens, if
any, as do not materially detract from the value of any such properties or
assets;
(h) (i) repurchase, prepay or incur any indebtedness or assume,
guarantee or endorse any indebtedness of another Person or issue or sell any
debt securities or options, warrants, calls or other rights to acquire any debt
securities of Parent or any of its Subsidiaries, except for borrowings incurred
in the Ordinary Course of Business or transactions between Parent and the
Company or (ii) make any loans, advances or capital contributions to, or
investments in, any other Person, other than Parent or any direct or indirect
wholly-owned Subsidiary of Parent;
(i) enter into, modify, amend or terminate (i) any Contract which if
so entered into, modified, amended or terminated would (A) have a Material
Adverse Effect on Parent, (B) impair in any material respect the ability of
Parent to perform its obligations under this Agreement or (C) prevent or
materially delay the consummation of the transactions contemplated by this
Agreement or (ii) except in the Ordinary Course of Business, any Parent Material
Contract;
(j) except as otherwise contemplated by this Agreement or as
required to comply with applicable law, rule or regulation or any Contract or
Parent Benefit Plans existing on the date of this Agreement, (i) pay any
material benefit not provided for as of the date of this Agreement under any
Contract or Parent Benefit Plan, or (ii) adopt or enter into any collective
bargaining agreement or other labor union contract applicable to the employees
of Parent or any Subsidiary thereof;
(k) except as required by GAAP, revalue any of its material assets
or make any changes in accounting methods, principles or practices; and
(l) authorize any of, or commit, resolve or agree to take any of,
the foregoing actions.
Notwithstanding the preceding provisions of this Section 5.2, between the date
hereof and the Effective Time, Parent may, after providing notice to the
Company, in Parent's sole discretion and without the consent of the Company,
comply with its legally binding obligations outstanding as of the date hereof
which have been either provided to the Company or disclosed in the Parent SEC
Documents in accordance with the terms of such agreements.
44
5.3 No Solicitation by the Company.
(a) The Company shall not, nor shall it permit any of its
Subsidiaries to, or authorize or permit any director, officer or employee of the
Company or any of its Subsidiaries or any financial advisor, attorney,
accountant or other advisor or representative of the Company or any of its
Subsidiaries to take any action to, directly or indirectly:
(i) solicit, initiate or facilitate any Takeover Proposal or
the making of any proposal that constitutes a Takeover Proposal; or
(ii) enter into, continue or otherwise participate in any
negotiations regarding, or furnish to any Person any nonpublic information
relating to the Company or any of its Subsidiaries or afford access to the
properties, books or records of the Company or any of its Subsidiaries to any
Person (other than Parent, Merger Sub and their respective officers, directors,
employees, agents and advisors) regarding a Takeover Proposal;
provided, however, that at any time prior to obtaining Company Stockholder
Approval, nothing in this Agreement shall prevent, and the Company may, in
response to a Takeover Proposal, and subject to compliance with this Section
5.3:
(A) furnish information with respect to the Company and
its Subsidiaries to the Person making such Takeover Proposal (and its
representatives) pursuant to a confidentiality agreement which is materially no
less favorable to the Company than the Confidentiality Agreement or participate
in discussions or negotiations with the Person making such Takeover Proposal
(and its representatives) regarding such Takeover Proposal; and
(B) enter into a binding written agreement providing for
the implementation of a Superior Proposal if the Company, following the approval
of the Board of Directors of the Company, elects to terminate this Agreement
pursuant to Section 8.1(f),
if in the case of (A) and (B) above, the Board of Directors of the Company
determines that (1) such Takeover Proposal constitutes, or is reasonably likely
to lead to, a Superior Proposal or (2) the failure to take such action would be
inconsistent with the fiduciary duties of the Company's Board of Directors under
applicable law. The term "Takeover Proposal" means any proposal or offer from
any Person relating to any direct or indirect acquisition, in one transaction or
a series of transactions, including any merger, consolidation, tender offer,
exchange offer, stock acquisition, asset acquisition, binding share exchange,
business combination, recapitalization, liquidation, dissolution, joint venture
or similar transaction, of (i) all or substantially all of the assets,
properties and business of the Company and its Subsidiaries or (ii) 35% or more
of the outstanding shares of Company Common Stock or capital stock of, or other
equity or voting interests in, the Company. The term "Superior Proposal" means a
Takeover Proposal that the Board of Directors determines in good faith, after
consultation with the Company's independent financial advisors of nationally
recognized reputation (who may be Wachovia Securities), is more favorable to the
Company's stockholders from a financial point of view than the Merger, taking
into account all of the terms and conditions of such proposal, the likelihood of
completion of such transaction, and the financial, regulatory, legal and other
aspects of such proposal.
45
(b) The terms of this Section 5.3 shall not prohibit the Company
from taking any action necessary in order to comply with Rule 14d-9 or Rule
14e-2 promulgated under the Exchange Act, provided that neither the Company nor
its Board of Directors shall, except as permitted by this Agreement, propose to
withdraw, amend, change or modify its recommendation of this Agreement and the
Merger, or to approve or recommend, or propose to publicly approve or recommend,
a Takeover Proposal.
(c) The Company shall immediately cease existing discussions or
negotiations with any Persons conducted heretofore with respect to a Takeover
Proposal.
5.4 Employee Benefit Matters.
(a) Unless Parent delivers written notice to the Company no later
than five Business Days prior to the Effective Time providing otherwise, the
Company shall take all action necessary to terminate, or cause to be terminated,
before the Effective Time, any Benefit Plan that is a 401(k) plan or other
defined contribution retirement plan or employee stock purchase plan.
(b) From and after the Effective Time, Parent will cause the
Surviving Corporation to honor in accordance with their terms, the employment,
indemnification or similar agreements between the Company and current employees
set forth in Section 3.9(a)(iv) of the Company Disclosure Schedule (each, an
"Employment Agreement"). Should Parent at any time after the Effective Time
terminate one or more of the Benefit Plans, whether pension plans within the
meaning of Section 3(2) of ERISA, welfare benefit plans within the meaning of
Section 3(1) of ERISA or any other employee benefit plans, then Parent shall at
that time (the "Benefit Plan Termination Date"), include the employees of the
Company and its Subsidiaries in the corresponding pension plans, welfare benefit
plans and other employee benefit plans of Parent on the same basis and terms as
the Parent's similarly situated employees participate. All welfare benefit plans
of Parent in which the employees of the Company or its Subsidiaries participate
after the Benefit Plan Termination Date shall provide coverage for pre-existing
health conditions on the same basis and terms as Parent's similarly situated
employees (which Parent represents is permitted under such plans), and all
limitations as to pre-existing conditions, exclusions and waiting periods shall
accordingly be waived with respect to participation and coverage under those
plans, other than limitations or waiting periods already in effect with respect
to one or more Company employees which had not been satisfied as of the Benefit
Plan Termination Date under the corresponding welfare benefit plans maintained
for such employees of the Company or its Subsidiaries immediately prior to the
Benefit Plan Termination Date. In addition, under each such welfare benefit plan
of Parent, the outstanding claims and expenses incurred by the employees of the
Company or its Subsidiaries under each corresponding welfare benefit of the
Company for the portion of the plan year preceding the Benefit Plan Termination
Date will be recognized, and the employees of the Company or its Subsidiaries
shall be given credit for amounts paid by them under each corresponding benefit
plan of the Company, for the portion of the plan year preceding the Benefit Plan
Termination Date, for purposes of applying deductibles, co-payments and
out-of-pocket maximums as though such amounts had been paid in accordance with
the terms and conditions of the successor welfare benefit plan of Parent. For
purposes of eligibility, vesting and benefit accrual (other than benefit
accruals under any defined benefit pension plan) under all pension, welfare
benefit and other employee benefit plans of
46
Parent, service by an employee for the Company or any Subsidiary prior to the
Effective Time shall be taken into account to the same extent as if such service
had been performed for Parent or the Surviving Corporation; provided, that
nothing herein in this sentence shall: (i) require the inclusion any such
employee in any such plan prior to the Effective Time, (ii) require Parent to
take more than commercially reasonable efforts to accomplish the foregoing, or
(iii) obligate Parent to incur material additional costs to implement any of the
foregoing; and provided further, that in determining the amount of vacation pay
owed to any such employee of the Company or Subsidiary, from and after the
Effective Time under the applicable terms of the vacation pay plan of Parent or
the Surviving Corporation, credit shall be given for such employee's service for
the Company or any Subsidiary prior to the Effective Time.
ARTICLE 6
ADDITIONAL AGREEMENTS
6.1 Registration Statement; Joint Proxy Statement.
(a) As promptly as practicable following the date of this Agreement,
Parent and the Company shall jointly prepare and shall file with the SEC a
document or documents that will constitute (i) the registration statement on
Form S-4 of Parent (together with all amendments thereto, the "Registration
Statement"), in connection with the registration under the Securities Act of
Parent Common Stock to be issued to the Company's stockholders pursuant to the
Merger and (ii) the joint proxy statement with respect to the Merger relating to
the Company Stockholders' Meeting and the Parent Stockholders' Meeting (together
with any amendments thereto, the "Joint Proxy Statement"). Copies of the Joint
Proxy Statement shall be provided to the Nasdaq National Market in accordance
with its rules. Each of the Parties shall use all reasonable efforts to cause
the Registration Statement to become effective as promptly as practicable after
the date hereof, and, prior to the effective date of the Registration Statement,
the Parties shall take all action required under any applicable laws in
connection with the issuance of shares of Parent Common Stock pursuant to the
Merger. Parent or the Company, as the case may be, shall furnish all information
concerning Parent or the Company as the other party may reasonably request in
connection with such actions and the preparation of the Registration Statement
and the Joint Proxy Statement. Each of Parent and the Company shall notify the
other of the receipt of any comments from the SEC or its staff on the
Registration Statement and the Joint Proxy Statement and of any request from the
SEC or its staff for amendments or supplements thereto or for additional
information and shall provide to each other promptly copies of all
correspondence between Parent, the Company or any of their representatives and
advisors and the SEC or its staff. As promptly as practicable after the
effective date of the Registration Statement, the Joint Proxy Statement shall be
mailed to the stockholders of the Company and of Parent. Each of the parties
hereto shall cause the Joint Proxy Statement to comply as to form and substance
in all material respects with the applicable requirements of the Exchange Act,
the Securities Act, and the rules and regulations of the Nasdaq National Market.
(b) The Company and Parent shall cooperate in connection with the
preparation of the Registration Statement, including by giving (i) each other
and their respective counsel a reasonable opportunity to review and comment on
the Registration Statement, each time before such document (or any amendment
thereto) is filed with the SEC, (ii) reasonable and good faith
47
consideration to any comments made by the other and its counsel, (iii) promptly
to the other party and its counsel any comments or other communications, whether
written or oral, such party or its counsel may receive from time to time from
the SEC with respect to the Joint Proxy Statement, (iv) a reasonable opportunity
to participate in the response to those comments by giving (A) the other party
and its counsel a reasonable opportunity to review and comment on the SEC
comments and proposed response, (B) reasonable and good faith consideration to
any comments made by the other party and its counsel, and (C) the opportunity to
participate in any discussions or meetings with the SEC.
(c) The Joint Proxy Statement shall include (i) with respect to the
Company and its stockholders, the approval of the Merger and the recommendation
of the Board of Directors of the Company to the Company's stockholders that they
vote in favor of approval of this Agreement and the Merger, subject to the
Company's rights under Sections 5.3 and 6.2(e), and (ii) with respect to Parent
and its stockholders, the approval of the Share Issuance and the recommendation
of the Board of Directors of Parent to Parent's stockholders that they vote in
favor of approval of the Share Issuance.
(d) No amendment or supplement to the Joint Proxy Statement or the
Registration Statement shall be made without the approval of Parent and the
Company, which approval shall not be unreasonably withheld or delayed. Each of
the parties hereto shall advise the other parties hereto, promptly after it
receives notice thereof, of the time when the Registration Statement has become
effective or any supplement or amendment has been filed, of the issuance of any
stop order, of the suspension of the qualification of the Parent Common Stock
issuable in connection with the Merger for offering or sale in any jurisdiction,
or of any request by the SEC for amendment of the Joint Proxy Statement or the
Registration Statement or comments thereon and responses thereto or requests by
the SEC for additional information.
(e) None of the information supplied by the Company for inclusion or
incorporation by reference in the Registration Statement or the Joint Proxy
Statement shall, at the respective times filed with the SEC or other regulatory
agency and, in addition, (i) in the case of the Joint Proxy Statement, at the
date it or any amendments or supplements thereto are mailed to stockholders of
the Company and Parent, at the time of the Company Stockholders' Meeting, at the
time of the Parent Stockholders' Meeting and at the Effective Time and (B) in
the case of the Registration Statement, when it becomes effective under the
Securities Act and at the Effective Time, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. If at any time prior to
the Effective Time any event or circumstance relating to the Company or any
Subsidiary of the Company, or their respective officers or directors, should be
discovered by the Company that should be set forth in an amendment or a
supplement to the Registration Statement or the Joint Proxy Statement, the
Company shall promptly inform Parent. All documents that the Company is
responsible for filing with the SEC in connection with the Merger will comply as
to form in all material respects with the applicable requirements of the rules
and regulations of the Securities Act and the Exchange Act.
(f) None of the information supplied by Parent for inclusion or
incorporation by reference in the Registration Statement or the Joint Proxy
Statement shall, at the respective times
48
filed with the SEC or other regulatory agency and, in addition, (i) in the case
of the Joint Proxy Statement, at the date it or any amendments or supplements
thereto are mailed to stockholders of the Company and Parent, at the time of the
Company Stockholders' Meeting, at the time of the Parent Stockholders' Meeting
and at the Effective Time and (ii) in the case of the Registration Statement,
when it becomes effective under the Securities Act and at the Effective Time,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. If, at any time prior to the Effective Time, any event or
circumstance relating to Parent or any Subsidiary of Parent, or their respective
officers or directors, should be discovered by Parent that should be set forth
in an amendment or a supplement to the Registration Statement or the Joint Proxy
Statement, Parent shall promptly inform the Company. All documents that Parent
is responsible for filing with the SEC in connection with the Merger will comply
as to form in all material respects with the applicable requirements of the
rules and regulations of the Securities Act and the Exchange Act.
6.2 Company Stockholders' Meeting and Parent Stockholders' Meeting.
(a) The Company shall, as promptly as practicable following the date
of this Agreement, establish a record date for, duly call, give notice of,
convene and hold a meeting of its stockholders (the "Company Stockholders'
Meeting") for the purpose of obtaining Company Stockholder Approval, regardless
of whether the Board of Directors of the Company determines at any time that
this Agreement or the Merger is no longer advisable or recommends that the
stockholders of the Company reject this Agreement or the Merger or otherwise
modifies its recommendation of the Merger, in all cases subject to its rights
under Section 5.3(a) and this Section 6.2. The Company shall cause the Company
Stockholders' Meeting to be held as promptly as practicable following the date
of this Agreement. The Company shall, through its Board of Directors, recommend
to its stockholders that they adopt and approve this Agreement and the Merger,
and shall include such recommendation in the Joint Proxy Statement, in each case
subject to its rights under Section 5.3(a) and this Section 6.2.
(b) Parent shall, as promptly as practicable following the date of
this Agreement, establish a record date for, duly call, give notice of, convene
and hold a meeting of its stockholders (the "Parent Stockholders' Meeting") for
the purpose of obtaining Share Issuance Approval shall call and hold the Parent
Stockholders' Meeting, as promptly as practicable after the date hereof for the
purpose of voting upon the Share Issuance. Parent shall, through its Board of
Directors, recommend to its stockholders that they adopt and approve the Share
Issuance, shall not amend or modify its recommendation in any manner adverse to
the Company, and shall include such recommendation in the Joint Proxy Statement.
(c) The Company and Parent shall use all reasonable efforts to hold
the Company Stockholders' Meeting and the Parent Stockholders' Meeting on the
same date and as soon as practicable after the date on which the Registration
Statement becomes effective. Except as otherwise contemplated by this Agreement,
Company shall use all reasonable efforts to solicit from its stockholders
proxies in favor of the approval of this Agreement and the Merger pursuant to
the Joint Proxy Statement and shall take all other action necessary or advisable
to secure the Company Stockholder Approval. Except as otherwise contemplated by
this Agreement, Parent shall use all reasonable efforts to solicit from its
stockholders proxies in favor of the Share
49
Issuance pursuant to the Joint Proxy Statement and shall take all other action
necessary or advisable to secure the vote or consent of stockholders required by
the DGCL or applicable stock exchange requirements to obtain such approval. Each
of the parties hereto shall use take all other action necessary or, in the
opinion of the other parties hereto, advisable to promptly and expeditiously
secure any vote or consent of stockholders required by applicable law and such
party's certificate or articles of incorporation and bylaws to effect the
Merger. The Company may retain an agent, on terms or conditions reasonably
acceptable to Parent, for the purpose of soliciting proxies on behalf of the
Company for the Company Stockholders' Meeting; provided, however, that in the
event of termination of this Agreement (other than a termination pursuant to
Section 8.1(c) or any termination pursuant to which a Termination Fee may be
payable), any and all fees and expenses of such agent shall be reimbursed to the
Company by Parent within five (5) days of a written request by the Company for
reimbursement.
(d) Merger Sub shall, immediately following execution of this
Agreement, submit this Agreement to Parent, as the sole stockholder of Merger
Sub, for adoption and approval. Upon such submission, Parent, as sole
stockholder of Merger Sub, shall adopt this Agreement and approve the
transactions contemplated by this Agreement by unanimous written consent in lieu
of a meeting in accordance with the requirements of the DGCL and the Certificate
of Incorporation and Bylaws of Merger Sub.
(e) Nothing in this Agreement shall prevent the Board of Directors
of the Company, either before or after the Company has filed or mailed the Joint
Proxy Statement, from withdrawing, amending, changing or modifying its
recommendation in favor of the Merger at any time prior to the approval and
adoption of this Agreement and approval of the Merger by the Company's
stockholders where the Board of Directors of the Company determines in good
faith, after consultation with its legal advisors, that its failure to do so
could reasonably be determined to constitute a breach of its fiduciary duties
under applicable law.
6.3 Access to Information; Confidentiality. The Company shall, and shall
cause each of its Subsidiaries to, afford to Parent and to the officers,
employees, attorneys, accountants and other representatives of Parent,
reasonable access during normal business hours during the period prior to the
Effective Time or termination of this Agreement, and without undue disruption of
their respective businesses, to their respective properties, books, contracts,
commitments, personnel and records and, during such period, the Company shall,
and shall cause each of its Subsidiaries to, promptly deliver or make available
to Parent (a) a copy of each report, schedule, form, statement and other
document filed by it or received 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 Parent may reasonably
request; provided, however, that to the extent that such information is
competitively sensitive, as determined in good faith by the Board of Directors
of the Company, including the Company's customer specific information or future
marketing or strategic plans, such information will be reviewed by outside
antitrust counsel before being shared with Parent or the officers, employees,
attorneys, accountants and other representatives of Parent. Parent will hold,
and will cause its respective officers, employees, attorneys, accountants and
other representatives to hold, any nonpublic information in accordance with the
terms of the Confidentiality Agreement, dated as of February 23, 2004, between
the Company and Parent (the "Confidentiality Agreement").
50
6.4 Further Actions. Upon the terms and subject to the conditions set
forth in this Agreement, each of the Parties agrees to use all commercially
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, and to assist and cooperate with the other Parties in doing,
all things that are necessary or advisable to consummate and make effective the
Merger and the other transactions contemplated by this Agreement, including (a)
the taking of all commercially reasonable acts necessary to cause the conditions
in Article 7 to be satisfied, (b) the obtaining of all necessary consents,
approvals or waivers from third parties and (c) the execution and delivery of
any additional instruments necessary to consummate the transactions contemplated
by, and to fully carry out the purposes of, this Agreement. Nothing set forth in
this Section 6.4 will limit or affect actions permitted to be taken pursuant to
Section 5.3, and notwithstanding this Section 6.4, the provisions of Section 6.5
shall govern with respect to filings with, and consents, approvals, permits or
authorizations from, Governmental Entities (including filings and other matters
related to the HSR Act).
6.5 Filings; Other Actions.
(a) Upon the terms and subject to the conditions herein provided
each Party hereto shall (i) use all commercially reasonable efforts to cooperate
with one another in determining which filings and registrations are required to
be made prior to the Effective Time, and which consents, approvals, waivers,
clearances, permits or authorizations or confirmations are required to be
obtained prior to the Effective Time, from Governmental Entities in connection
with the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, (ii) use all commercially reasonable efforts
to timely make all such filings and registrations and timely obtain all such
consents, approvals, waivers, clearances, permits, registrations, authorizations
or confirmations (including any required filings under the HSR Act or any
foreign antitrust, competition or trade law), (iii) use all commercially
reasonable efforts to avoid or eliminate as soon as practicable each and every
impediment under any antitrust law that may be asserted by any United States or
foreign governmental antitrust authority so as to enable the Parties to
expeditiously close the transactions contemplated hereby, and (iv) use all
commercially reasonable efforts to take, or cause to be taken, all other actions
and do, or cause to be done, all other things necessary, proper or appropriate
to consummate and make effective the transactions contemplated by this Agreement
as promptly as practicable.
(b) Without limiting the generality of the foregoing, the Company
and Parent shall, as promptly as practicable and before the expiration of any
relevant legal deadline, but in no event later than ten (10) Business Days
following the execution and delivery of this Agreement, file with (i) the United
States Federal Trade Commission and the United States Department of Justice, the
notification and report form required for the transactions contemplated hereby
and any supplemental information requested in connection therewith pursuant to
the HSR Act, which forms shall specifically request early termination of the
waiting period prescribed by the HSR Act and (ii) any other Governmental Entity,
any other filings, reports, information and documentation required for the
transactions contemplated hereby pursuant to any other foreign antitrust or
competition law. Each of the Company and Parent shall furnish to each other's
counsel such necessary information and reasonable assistance as the other may
request in connection with its preparation of any filing or submission that is
necessary under the HSR Act and any other foreign antitrust or competition law.
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(c) Parent and the Company shall keep each other apprised of the
status of any communications with, and any inquiries or requests for additional
information from, any Governmental Entity and shall comply promptly with any
such inquiry or request, including a request for additional information or
Second Request from the United States Federal Trade Commission and the United
States Department of Justice. Each Party shall permit the other Parties to
review any communication given by it to, and consult with each other in advance
of any meeting or conference with, any Governmental Entity or, in connection
with any proceeding by a private party, with any other Person, and to the extent
permitted by the applicable Governmental Entity or other Person, give the other
Parties the opportunity to attend and participate in such meetings and
conferences, in each case in connection with the Merger.
(d) Nothing in this Agreement, however, shall require or be
construed to require any Party hereto, in order to obtain the consent or
successful termination of any review of any such Governmental Entity regarding
the transactions contemplated hereby, to (i) sell or hold separate, or agree to
sell or hold separate, before or after the Effective Time, any assets,
businesses or any interests in any assets of businesses, of Parent, the Company
or any of their respective affiliates (or to consent to any sale, or agreement
to sell, by Parent or the Company, of any assets or businesses, or any interests
in any assets or businesses), or any change in or restriction on the operation
by Parent or the Company of any assets or businesses, or (ii) enter into any
other agreement or be bound by any obligation that, in Parent's good faith
judgment, may have a material adverse effect on the benefits to Parent of the
transactions contemplated by this Agreement.
6.6 Fees and Expenses.
(a) All fees, costs and expenses incurred in connection with this
Agreement, the Merger and the other transactions contemplated hereby shall be
paid by the Party incurring such fees or expenses, whether or not the Merger is
consummated; provided, however, that Parent and Company shall share equally all
fees and expenses (other than the fees and expenses of attorneys and
accountants) incurred in connection with the printing and filing with the SEC
the Joint Proxy Statement and Registration Statement and any amendments or
supplements thereto; provided, further, that Parent shall pay all fees and
expenses (other than the fees and expenses of attorneys and accountants of the
Company) incurred in connection with any filings made under the HSR Act and
other antitrust or competition law filings, and Parent will pay the cost of all
local counsel legal fees relating to this Agreement.
(b) In the event (i) Parent terminates this Agreement pursuant to
Section 8.1(d) and (A) at or prior to such termination a Takeover Proposal shall
have been publicly announced, commenced or otherwise become publicly known or
any Person shall have publicly announced an intention to make a Takeover
Proposal (and such Takeover Proposal or intention has not been withdrawn), and
(B) within six (6) months following the termination of this Agreement such
Takeover Proposal is consummated, or (ii) the Company terminates this Agreement
pursuant to Section 8.1(f), then the Company shall pay to Parent a fee in the
amount $3,750,000 (the "Termination Fee") by wire transfer to an account
designated in advance by Parent. The Termination Fee shall be payable (x) upon
consummation of the transactions contemplated by the Takeover Proposal with
respect to a termination described under clause (i) above, or (y) at the time of
termination by the Company under clause (ii) above.
52
6.7 Public Announcements; Other Communications. Parent and Merger Sub, on
the one hand, and the Company, on the other hand, shall consult with each other
before issuing, and give each other a reasonable opportunity to review and
comment upon, any press release or public statements with respect to this
Agreement, the Merger and the other transactions contemplated hereby, except as
may be required by applicable Legal Requirement, court process or obligations
with respect to NASDAQ Stock Market, Inc., in which case the Party proposing to
issue such press release or public statement shall use all reasonable efforts to
consult in good faith with the other Party prior to such release, public
statements or communications. The Parties agree that the initial press release
to be issued with respect to the entering into of this Agreement shall be in a
form mutually agreeable to the Parties.
6.8 Director's and Officer's Insurance and Indemnification.
(a) From and after the Effective Time, the Surviving Corporation
shall indemnify, defend and hold harmless to the fullest extent permitted by Law
the present and former officers and directors of the Company and its
Subsidiaries against all losses, claims, damages and liabilities in respect of
acts or omissions occurring at or prior to the Effective Time. Parent shall
cause the Surviving Corporation (and its successors) to establish and maintain
provisions in its certificate of incorporation and bylaws (or other comparable
organizational documents) concerning the indemnification and exoneration of the
Company's former and present officers, directors, employees and agents that are
no less favorable to those persons than the provisions of the Company's
certificate of incorporation and bylaws. Parent shall, and shall cause the
Surviving Corporation to, fulfill and honor in all respects all rights to
indemnification, advancement of litigation expenses and limitation of personal
liability existing in favor of the directors, officers and employees of the
Company and its Subsidiaries under the provisions existing on the date of this
Agreement in any indemnification agreements between the Company and such
individuals and all such provisions shall, with respect to any matter existing
or occurring at or prior to the Effective Time (including the transactions
contemplated by this Agreement), survive the Effective Time, and, as of the
Effective Time, Parent and the Surviving Corporation shall assume all
obligations of the Company in respect thereof as to any claim or claims asserted
prior to or after the Effective Time.
(b) Prior to the Closing, Parent shall obtain and pay for a
directors' and officers' liability insurance tail policy, including employment
practices and securities liability, for the Company (and the Surviving
Corporation as successor in interest) (the "D&O Policy") with a term of six
years following the date of the Closing and providing for coverage and amounts,
and containing terms and conditions, which are no less advantageous to the
directors and officers of the Company than the current policies of directors'
and officers' and liability insurance maintained by the Company; provided,
however, that in no event will Parent or the Surviving Corporation be required
to expend in excess of 200% of the annual premium currently paid by the Company
for such coverage for the purchase of such tail policy, and if the cost for such
coverage is in excess of such amount, Parent or the Surviving Corporation, as
the case may be, shall only be required to maintain such coverage as is
available for such amount.
(c) The provisions of this Section 6.8 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,
53
and 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.
6.9 Section 16 Approval. For purpose of exempting, from the short-swing
liability provisions of Section 16(b) of the Exchange Act, the exchange of the
shares of Company Common Stock held by the executive officers of the Company for
shares of Parent Common Stock in the Merger pursuant to the provisions of
Section 2.1(c), the Board of Directors of the Company shall, prior to the
Effective Time, take appropriate action to approve such exchange. In addition,
the Board of Directors of Parent shall, prior to the Effective Time, take
appropriate action to approve, with respect to any Company employees who will
become executive officers of the Parent as of the Effective Time, for purposes
of exempting from the short-swing liability provisions of Section 16(b) of the
Exchange Act, the issuance of shares of Parent Common Stock in exchange of the
shares of Company Common Stock held by such persons in connection with the
consummation of the Merger.
6.10 Nasdaq Quotation. Each of the Company and Parent agrees to use
reasonable efforts to continue the quotation of the Company Common Stock and
Parent Common Stock, respectively, on the Nasdaq National Market, during the
term of this Agreement so that appraisal rights will not be available to
stockholders of the Company under Section 262 of the DGCL. Parent shall use all
requisite commercially reasonable efforts to cause the shares of Parent Common
Stock to be issued in the Merger to be approved for quotation on the Nasdaq
National Market, subject to official notice of issuance, prior to the Closing
Date, to the extent such approval is then required under applicable law, SEC
regulations or Nasdaq National Market rules.
6.11 Blue Sky. Parent shall use reasonable efforts to obtain prior to the
Effective Time all necessary permits and approvals required under state
securities or "blue sky" laws to permit the distribution of the shares of Parent
Common Stock to be issued in accordance with the provisions of this Agreement.
6.12 Affiliates. Section 6.12 of the Company Disclosure Schedule
identifies all known Persons who may be deemed affiliates of the Company under
Rule 145 under the Securities Act (the "Rule 145 Affiliates"). The Company shall
supplement Section 6.12 of the Company Disclosure Schedule to reflect any other
known Rule 145 Affiliates after the date hereof. The Company shall use
commercially reasonable efforts to promptly obtain an executed affiliate
agreement from each Rule 145 Affiliate in form and substance reasonably
satisfactory to Parent and the Company (an "Affiliate Agreement"). Parent shall
be entitled to place appropriate legends on the certificates evidencing any
shares of Parent Common Stock to be received by Rule 145 Affiliates of the
Company in the Merger reflecting the restrictions set forth in Rule 145
promulgated under the Securities Act and to issue appropriate stop transfer
instructions to the transfer agent for Parent Common Stock (provided that such
legends or stop transfer instructions shall be removed, one year after the
Effective Time, upon the request of any holder of shares of Parent Common Stock
issued in the Merger if such holder is not then an affiliate of Parent for
purposes of Rule 144 under the Securities Act).
6.13 Tax-free Reorganization. Prior to the Effective Time, each of Parent
and the Company shall use its best efforts to cause the Merger to qualify as a
tax-free reorganization
54
under Section 368(a) of the Code, and shall not take any action reasonably
likely to cause the Merger not so to qualify. Parent shall not take, or after
the Effective Time cause the Company to take, any action reasonably likely to
cause the Merger not to qualify as a tax-free reorganization under Section
368(a) of the Code.
6.14 Representation on Parent Board. Parent shall take such action as may
be necessary to cause the number of Directors comprising Parent's Board of
Directors at the Effective Time to be sufficient to permit one director of the
Company, who shall be mutually agreed by Parent and the Company prior to the
mailing of, and identified in, the Joint Proxy Statement, to serve thereon;
provided, however, that such candidate shall be considered, qualified and
approved in accordance with the current procedures of Parent's nominating
committee or other applicable governing standards of the Parent's Board of
Directors, and such process shall be completed by Parent prior to the Effective
Time. Parent shall, as of the Effective Time, appoint such Director to serve on
Parent's Board of Directors for a term ending at the 2005 Annual Meeting of
Stockholders of Parent.
ARTICLE 7
CONDITIONS TO THE MERGER
7.1 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:
(a) Company Stockholder Approval. Company Stockholder Approval shall
have been obtained.
(b) Share Issuance Approval. Share Issuance Approval shall have been
obtained.
(c) Registration Statement Effective. The Registration Statement
shall have been declared effective by the SEC under the Securities Act and no
stop order suspending the effectiveness of the Registration Statement shall have
been issued by the SEC and no proceeding for that purpose shall have been
initiated by the SEC and not concluded or withdrawn.
(d) Listing of Parent Common Stock. The shares of Parent Common
Stock to be issued in connection with the Merger shall have been approved for
quotation on the Nasdaq National Market, subject to official notice of issuance.
(e) HSR Act and Other Approvals. The waiting period (and any
extension thereof) applicable to the consummation of the Merger under the HSR
Act and under any other legal requirement (including any authorization, consent,
order or approval, or dedication, filing or expiration of any waiting period) of
any Governmental Entity shall have expired or been terminated, as the case may
be, and no Governmental Entity is continuing to investigate the Merger and no
Governmental Entity or third party is seeking to challenge the consummation of
the Merger administratively or in court. Any requirements of other jurisdictions
or Governmental Entities applicable to the consummation of the Merger shall have
been satisfied, unless the failure of such requirements to be satisfied would
not have a Material Adverse Effect on the Company or Parent.
55
(f) No Legal Restraints. No temporary restraining order, preliminary
or permanent injunction or other judgment, order or decree issued by any court
of competent jurisdiction or other legal restraint or prohibition (collectively,
"Legal Restraints") that has the effect of preventing the consummation of the
Merger shall be in effect.
(g) Tax Opinions. Parent and the Company shall each have received
written opinions from Xxxx Xxxx Xxxx & Freidenrich LLP and Xxxxxx Xxxxx &
Bockius LLP, respectively, in form and substance reasonably satisfactory to
them, to the effect that the Merger will constitute a reorganization within the
meaning of Section 368(a) of the Code and such opinions shall not have been
withdrawn; provided, however, that if the counsel to either Parent or the
Company does not render such opinion, this condition shall nonetheless be deemed
to be satisfied with respect to such party if counsel to the other party renders
the opinion to such party in form and substance reasonably satisfactory to such
party, that the Merger will constitute a tax-free reorganization within the
meaning of Section 368(a) of the Code. Parent, Merger Sub and the Company shall
deliver to tax counsel, and tax counsel shall be entitled to rely upon,
reasonable and customary tax representations in connection with rendering such
opinions.
7.2 Conditions to Obligation of Parent and Merger Sub. The obligations of
Parent and Merger Sub to effect the Merger are further subject to the
satisfaction or waiver, on or prior to the Closing Date, of the following
conditions:
(a) Representations and Warranties. The representations and
warranties of the Company contained herein shall be true and correct (without
regard to the terms "material", "materially" or "Material Adverse Effect") as
though made as of the Closing Date such that the aggregate effect of any
inaccuracies in such representations and warranties would not have a Material
Adverse Effect on the Company, except (i) that the accuracy of representations
and warranties that by their terms speak as of a specified date will be
determined as of such date, and (ii) for changes contemplated by this Agreement.
Parent shall have received a certificate signed on behalf of the Company by the
chief executive officer or chief financial officer of the Company to such
effect.
(b) Performance of Obligations of the Company. The Company shall
have performed any covenants or obligations required to be performed by it under
this Agreement at or prior to the Closing Date in all material respects, and
Parent shall have received a certificate signed on behalf of the Company by the
chief executive officer or the chief financial officer of the Company to such
effect.
(c) No Material Adverse Effect. Since the date of this Agreement,
there shall have occurred no Material Adverse Effect on the Company.
(d) Employment Agreements. Each of the employment agreements entered
into with the employees of the Company identified on Schedule 7.2(d) hereto
concurrently with the execution of this Agreement shall be effective as of the
Effective Time in full force and effect.
7.3 Conditions to Obligation of the Company. The obligation of the Company
to effect the Merger is further subject to the satisfaction or waiver, on or
prior to the Closing Date, of the following conditions:
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(a) Representations and Warranties. The representations and
warranties of Parent and Merger Sub contained herein shall be true and correct
(without regard to the terms "material", "materially" or "Material Adverse
Effect") as though made as of the Closing Date such that the aggregate effect of
any inaccuracies in such representations and warranties would not have a
Material Adverse Effect on Parent, except (i) that the accuracy of
representations and warranties that by their terms speak as of a specified date
will be determined as of such date, and (ii) for changes contemplated by this
Agreement. The Company shall have received a certificate signed on behalf of
Parent and Merger Sub by the chief executive officer or chief financial officer
of Parent and Merger Sub to such effect.
(b) Performance of Obligations of Parent and Merger Sub. Parent and
Merger Sub shall have performed any covenants or obligations required to be
performed by them under this Agreement at or prior to the Closing Date in all
material respects, and the Company shall have received a certificate signed on
behalf of Parent and Merger Sub by the chief executive officer or chief
financial officer of Parent and Merger Sub to such effect.
(c) D&O Policy. Parent shall have obtained a binding commitment for
the D&O Policy, which commitment shall evidence the requirement that such policy
will become effective as of the Effective Time.
(d) No Material Adverse Effect. Since the date of this Agreement,
there shall have occurred no Material Adverse Effect on Parent.
ARTICLE 8
TERMINATION, AMENDMENT AND WAIVER
8.1 Termination. This Agreement may be terminated, and the Merger
contemplated hereby may be abandoned, at any time prior to the Effective Time,
whether before or after Company Stockholder Approval or Share Issuance Approval
has been obtained and notwithstanding adoption of this Agreement by the
stockholder of Merger Sub:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company if:
(i) the Merger shall not have been consummated by December 30,
2004 (the "End Date", as extended below); provided, that if (A) the Effective
Time has not occurred by the End Date by reason of nonsatisfaction of the
conditions set forth in Section 7.1(e) and (B) all other conditions set forth in
Article 7 have been satisfied or waived or are then capable of being satisfied,
then the End Date shall automatically be extended to January 31, 2005 (which
shall then be the "End Date"); provided, further, that no Party may terminate
this Agreement pursuant to this Section 8.1(b)(i) if such Party's failure to
fulfill any of its obligations under this Agreement shall have been a principal
reason that the Effective Time shall not have occurred on or before the End
Date,
(ii) any Legal Restraint set forth in Section 7.1(f) shall be
in effect and shall have become final and nonappealable,
57
(iii) Company Stockholder Approval shall not have been
obtained at the Company Stockholders' Meeting duly convened therefor; or
(iv) Share Issuance Approval shall not have been obtained at
the Parent Stockholders' Meeting duly convened therefor;
(c) by Parent if the Company shall have breached or failed to
perform in any respect any of its representations, warranties, covenants or
other agreements set forth in this Agreement, or if any representations or
warranties of the Company shall have become untrue which breach or failure to
perform or untrue representation or warranty (A) would give rise to the failure
of a condition set forth in Sections 7.2(a) or 7.2(b) and (B) cannot be or has
not been cured within thirty (30) days after Parent's giving written notice to
the Company of such breach (a "Company Material Breach") (provided, in each
case, that Parent is not then in Parent Material Breach of any representation,
warranty, covenant or other agreement set forth in this Agreement);
(d) by Parent if there shall have occurred a Company Triggering
Event, provided, that Parent is not then in Parent Material Breach of any
representation, warranty, covenant or other agreement set forth in this
Agreement (for purposes of this Agreement, "Company Triggering Event" shall
mean: (i) the failure of the Board of Directors of the Company to recommend that
the Company's stockholders vote to adopt this Agreement, or the withdrawal or
modification of the Company Board Approval in a manner adverse to Parent; (ii)
the Company shall have failed to include in the Joint Proxy Statement the
Company Board Approval or a statement to the effect that the Board of Directors
of the Company has determined and believes that the Merger is in the best
interests of the Company and the Company's stockholders; (iii) the Board of
Directors of the Company shall have approved, endorsed or recommended any
Takeover Proposal; (iv) a tender or exchange offer relating to securities of the
Company shall have been commenced and the Company shall not have sent to its
securityholders, within ten (10) Business Days after the commencement of such
tender or exchange offer, a statement disclosing that the Board of Directors
recommends rejection of such tender or exchange offer; (v) a willful and
material breach by the Company of Section 5.3; or (vi) the Company resolves,
agrees or proposes publicly to take any of the foregoing actions in response to
such Takeover Proposal);
(e) by the Company, if Parent or Merger Sub shall have breached or
failed to perform in any respect any of its representations, warranties,
covenants or other agreements set forth in this Agreement or if any
representations or warranties of Parent or Merger Sub shall have become untrue,
which breach or failure to perform (A) would give rise to the failure of a
condition set forth in Sections 7.3(a) or 7.3(b) and (B) cannot be or has not
been cured within thirty (30) days after the Company's giving written notice to
Parent of such breach (a "Parent Material Breach") (provided that the Company is
not then in Company Material Breach of any representation, warranty, covenant or
other agreement set forth in this Agreement); or
(f) by the Company if the Company is not in breach of its
obligations under Section 5.3 hereof and the Board of Directors of the Company
has authorized the Company to enter into a binding written agreement concerning
a transaction that constitutes a Superior Proposal.
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8.2 Effect of Termination. In the event of termination of this Agreement
by either the Company or Parent as provided in Section 8.1, this Agreement shall
forthwith become void and have no effect, without any liability or obligation on
the part of Parent, Merger Sub or the Company, other than Section 6.6, Section
6.7, this Section 8.2 and Article 9; provided, however, that no such termination
shall relieve any Party from any liability or damages resulting from an
intentional or willful breach or intentional or willful failure to perform by a
Party of any of its representations, warranties, covenants or other agreements
set forth in this Agreement.
8.3 Amendment. This Agreement may be amended by the Parties at any time
before or after Company Stockholder Approval and whether before or after
adoption of this Agreement by the stockholder of Merger Sub; provided, however,
that after any such approval, there shall not be made any amendment that by law,
rule or regulation requires further approval by the stockholders without the
further approval of such stockholders. This Agreement may not be amended except
by an instrument in writing signed on behalf of each of the Parties.
8.4 Extension; Waiver. At any time prior to the Effective Time, a Party
may (i) extend the time for the performance of any of the obligations or other
acts of the other Parties, (ii) 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 (iii) subject to the proviso of
Section 8.3, waive compliance by the other Party with any of the agreements or
conditions set forth 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. Any waiver or failure to insist upon
strict compliance with any obligation, covenant, agreement, provision, term or
condition of this Agreement shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure to comply. The failure or delay of
any Party to assert any of its rights under this Agreement or otherwise shall
not constitute a waiver of such rights.
ARTICLE 9
GENERAL PROVISIONS
9.1 Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any certificate or
instrument delivered pursuant hereto or thereto shall survive the Effective
Time. This Section 9.1 shall not limit any covenant or agreement of the Parties
which by its express terms contemplates performance, in whole or in part, after
the Effective Time.
9.2 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
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 Parent or Merger Sub, to:
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JDA Software Group, Inc.
00000 Xxxxx 00xx Xxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Chief Executive Officer
with a copy (which shall not constitute notice) to:
JDA Software Group, Inc.
00000 Xxxxx 00xx Xxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
Attention: General Counsel
and,
Xxxx Xxxx Xxxx & Freidenrich LLP
0000 Xxxxx Xxxxx Xxxxxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxxx, Esq.
(b) if to the Company, to:
QRS Corporation
0000 Xxxxxx Xxx Xxxxx
Xxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Chief Executive Officer
with a copy (which shall not constitute notice) to:
Xxxxxx, Xxxxx & Xxxxxxx LLP
Xxx Xxxxxx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxx, Esq.
9.3 Certain Definitions. For purposes of this Agreement the following
definition shall apply:
(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.
(b) "Business Day" means any day other than Saturday, Sunday or any
other day on which banks are legally permitted to be closed in San Francisco,
United States.
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(c) "Contract" means a loan or credit agreement, bond, debenture,
note, mortgage, indenture, guarantee, lease or other contract, commitment,
agreement, instrument, obligation, binding arrangement, binding understanding,
binding undertaking, permit, franchise or license, whether oral or written, that
has not been terminated and that contains any continuing obligation or liability
of the Company or a third party, other than any invoice, purchase order or
account set-up form made or issued in the Ordinary Course of Business (provided,
however, that for the purposes of the representations made in Sections
3.9(a)(iii) and 3.9(a)(v)(A), (B)(1), and (C) through (J), "Contract" shall be
deemed to include any such invoice, purchase order or account set-up form).
(d) "Knowledge" of the Company or Parent, as applicable, means the
actual knowledge of the individuals listed on Schedule 9.3(d) hereto, with
respect to the Company or Parent, as the case may be.
(e) "Legal Requirement" shall mean any federal, state, local,
municipal, foreign or other law, statute, constitution, principle of common law,
resolution, ordinance, code, edict, decree, rule, regulation, ruling or
requirement issued, enacted, adopted, promulgated, implemented or otherwise put
into effect by or under the authority of any Governmental Entity.
(f) "Material Adverse Effect" means, when used in connection with
the Company or Parent, as the case may be, any change, development, event,
effect or occurrence that, individually or in the aggregate, is material and
adverse to the business, condition (financial or otherwise) or results of
operations of such Party and its Subsidiaries, taken as a whole, or to the
ability of the Party to perform its obligations under this Agreement or to
consummate the Merger or the other transactions contemplated by this Agreement;
provided, however, that a Material Adverse Effect shall not include any change,
development, event, effect or occurrence resulting from (i) any changes that
generally affect the industries in which the Company or Parent operates; (ii)
any changes in general economic, financial, political, market or regulatory
conditions; (iii) an outbreak or escalation of war, armed hostilities, acts of
terrorism, political instability or other national or international calamity,
crisis or emergency, or any governmental or other response or reaction to any of
the foregoing, in each case, whether occurring within or outside the United
States (which, in the case of (i), (ii) and (iii), does not have a materially
disproportionate effect (relative to other industry participants) on such
Party); (iv) with respect to each Party, any changes or effects, including any
disruption of customer, employee, supplier or other similar relationships,
arising out of, or attributable to, the public announcement or pendency of the
Merger or the transactions contemplated by this Agreement; (v) any changes
arising out of, or attributable to, a material breach of this Agreement by the
other party; (vi) any changes required by any change in applicable accounting
requirements or principles, or applicable laws, rules or regulations; or (vii)
any changes resulting from compliance with the terms of, or the taking of any
action required by, this Agreement; provided, further, that (x) any change in
such Party's stock price or trading volume, or (y) any failure of such Party to
meet its internal financial projections or published analysts' forecasts
relating to it shall not, in and of itself, be deemed to constitute a Material
Adverse Effect.
(g) "Ordinary Course of Business" means, with respect to either the
Company or Parent, the Company's or Parent's, as the case may be, ordinary
course of business, consistent with past practice, existing prior to the date of
this Agreement.
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(h) "Parties" means the Company, Parent and Merger Sub, and each
shall be considered a "Party".
(i) "Person" means an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity.
(j) "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.
9.4 Index of Defined Terms. Solely for convenience purposes, the following
is a list of terms that are defined in this Agreement and the Section number
where such definition is contained:
TERM: SECTION:
----- --------
1993 Plan 3.3(b)
1997 Plan 3.3(b)
Affiliate 9.3(a)
Affiliate Agreement 6.12
Agreement First Paragraph
Benefit Plans 3.12(a)
Benefit Plan Termination Date 5.4(b)
Business Day 9.3(b)
Certificates 2.2(b)
Certificate of Merger 1.3
Certifications 3.5
Closing 1.2
Closing Date 1.2
Code Recitals
Company First Paragraph
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Company Board Approval 3.4(c)
Company Common Stock 2.1(a)
Company Disclosure Schedule Article 3
Company Financial Statements 3.5(b)
Company Intellectual Property 3.15(a)
Company Listed Contracts 3.9(a)
Company Material Breach 8.1(c)
Company-owned Intellectual Property 3.15(i)(iv)
Company Permits 3.8
Company Preferred Stock 3.3(a)
Company Products 3.15(i)(vi)
Company Registered Intellectual 3.15(a)
Property
Company SEC Documents 3.5(a)
Company SEC Financial Statements 3.5(a)
Company Source Code 3.15(i)(vii)
Company Stockholder Approval 3.4(b)
Company Stockholders' Meeting 6.2(a)
Company Triggering Event 8.1(d)
Company Warrant 2.1(e)
Confidentiality Agreement 6.3
Contract 9.3(c)
Controlled Group Member 3.10(a)(ii)
Copyrights 3.15(i)(i)
63
D&O Policy 6.8(b)
Debt Obligations 3.9(a)(vii)
Delaware Secretary of State 1.3
DGCL Recitals
Effective Time 1.3
Employment Agreement 5.4(b)
End Date 8.1(b)(i)
Environmental Claims 3.17(d)(i)
Environmental Laws 3.17(d)(ii)
Environmental Permits 3.17(d)(iii)
Equity Benefit Plans 3.10(a)(i)
ERISA 3.10(a)(ii)
ERISA Benefit Plans 3.10(a)(ii)
Exchange Act 3.3(d)
Exchange Agent 2.2(a)
Exchange Ratio 2.1(c)
GAAP 3.5
Governmental Entity 3.4(e)
Hazardous Materials 3.17(d)(iv)
HSR Act 3.4(e)
Intellectual Property 3.15(i)(i)
Joint Proxy Statement 6.1(a)
Knowledge 9.3(d)
Legal Requirements 9.3(e)
Legal Restraints 7.1(f)
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Licensed Intellectual Property 3.15(a)
Liens 3.2
Material Adverse Effect 9.3(f)
Merger Recitals
Merger Consideration 2.1(c)
Merger Sub First Paragraph
Non-ERISA Benefit Plans 3.10(a)(iii)
Option 3.3(b)
Ordinary Course of Business 9.3(g)
Parent First Paragraph
Parent 1995 Plan 4.3(b)
Parent 1996 Plan 4.3(b)
Parent 1996 Outside Directors Plan 4.3(b)
Parent 1998 Plan 4.3(b)
Parent Common Stock 2.1(c)
Parent Disclosure Schedule Article 4
Parent Benefit Plans 4.11(a)
Parent Equity Benefit Plans 4.10(a)
Parent Financial Statements 4.5(b)
Parent Intellectual Property 4.13(a)
Parent Licensed Intellectual Property 4.13(a)
Parent Material Contracts 4.9(a)
Parent Material Breach 8.1(e)
Parent Option 4.3(b)
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Parent-owned Intellectual Property 4.13(g)(i)
Parent Permits 4.8
Parent Preferred Stock 4.3(a)
Parent Products 4.13(g)(ii)
Parent Registered Intellectual 4.13(a)
Property
Parent SEC Documents 4.5
Parent SEC Financial Statements 4.5
Parent Source Code 4.13(g)(iii)
Parent Stock Plans 4.3(b)
Parent Stockholders' Meeting 6.2(b)
Party(ies) 9.3(h)
Patent Applications 3.15(i)(ii)
Patents 3.15(i)(i)
Person 9.3(i)
Public Software 3.15(h)
Release 3.17(d)(v)
Registration Statement 6.1(a)
Rights 3.3(g)
Rights Agreement 3.3(a)
Rule 145 Affiliate 6.12
SEC 3.4(e)
Securities Act 4.5(a)
Share Issuance 4.4(b)
Share Issuance Approval 4.4(b)
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Share Right Award 2.1(d)(iv)
Shrinkwrap Software 3.15(i)(v)
Software 3.15(i)(i)
Stock Plans 3.3(b)
Subsidiary(ies) 9.3(j)
Superior Proposal 5.3(a)
Surviving Corporation 1.1
Takeover Proposal 5.3(a)
Taxes 3.13
Trade Secrets 3.15(i)(i)
Trademarks 3.15(i)(i)
Termination Fee 6.6(b)
9.5 Interpretation. When a reference is made in this Agreement to an
Article or Section or the Company Disclosure Schedule or Parent Disclosure
Schedule, such reference shall be to an Article or Section of, or the Company
Disclosure Schedule or Parent Disclosure Schedule to, this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation". The term "or" has, except where
otherwise indicated, the inclusive meaning represented by the phrase "and/or".
The words "hereof", "herein" and "hereunder" and words of similar import when
used in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. All terms defined in this Agreement
shall have the defined meanings when used in any certificate or other document
made or delivered pursuant hereto unless otherwise defined therein. The
definitions contained in this Agreement are applicable to the singular as well
as the plural forms of such terms and to the masculine as well as to the
feminine and neuter genders of such term. Any agreement, instrument or statute
defined or referred to herein or in any agreement or instrument that is referred
to herein means such agreement, instrument or statute as from time to time
amended, modified or supplemented, including (in the case of agreements or
instruments) by waiver or consent and (in the case of statutes) by succession of
comparable successor statutes and references to all attachments thereto and
instruments incorporated therein. References to a Person are also to its
permitted successors and assigns.
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9.6 Counterparts. This Agreement may be executed by facsimile signature
and in one or more counterparts, all of which shall be considered one and the
same agreement and shall become effective when one or more counterparts have
been signed by each of the Parties and delivered to the other Parties.
9.7 Entire Agreement; No Third-Party Beneficiaries. This Agreement
(including the documents and instruments referred to herein) and the
Confidentiality Agreement between the Company and Parent (i) constitute the
entire agreement, and supersede all prior agreements and understandings, both
written and oral, among all or some of the Parties with respect to the subject
matter of this Agreement and (ii) except as provided in the provisions of
Section 6.8, are not intended to confer upon any Person other than the Parties
any rights or remedies.
9.8 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflict of laws thereof.
9.9 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 Party without the prior written consent of
the other Parties. Any assignment in violation of the preceding sentence shall
be void. Subject to the preceding sentence, this Agreement will be binding upon,
inure to the benefit of, and be enforceable by, the Parties and their respective
successors and assigns.
9.10 Consent to Jurisdiction. Each of the Parties hereto irrevocably and
unconditionally submits to the exclusive jurisdiction of either (a) the Court of
Chancery of the State of Delaware State or (b) any Federal court of the United
States of America sitting in the State of Delaware, for the purposes of any
suit, action or other proceeding arising out of this Agreement or any
transaction contemplated hereby (and each agrees that no such action, suit or
proceeding relating to this Agreement shall be brought by it or any of its
Affiliates except in such courts). Each of the Parties further agrees that, to
the fullest extent permitted by applicable law, service of any process, summons,
notice or document by U.S. registered mail to such Party's respective address
set forth above shall be effective service of process for any action, suit or
proceeding in Delaware with respect to any matters to which it has submitted to
jurisdiction as set forth above in the immediately preceding sentence. Each of
the Parties irrevocably and unconditionally waives (and agrees not to plead or
claim) any objection to the laying of venue of any action, suit or proceeding
arising out of this Agreement or the transactions contemplated hereby in (a) any
Court of Chancery of the State of Delaware State or (b) any Federal court of the
United State of America sitting in the State of Delaware, or that any such
action, suit or proceeding brought in any such court has been brought in an
inconvenient forum.
9.11 Enforcement. The Parties agree that in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached, monetary damages, even if available,
would be an inadequate remedy. 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, this being in addition to any other remedy in any Delaware State
court or any Federal court of the United States of America sitting in the State
of Delaware to which they are entitled at law or in equity.
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9.12 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 so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to either Party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the Parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the Parties as closely as possible in a mutually acceptable
manner in order that the transactions contemplated hereby be consummated as
originally contemplated to the greatest extent possible.
(Remainder of Page Intentionally Left Blank)
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement and Plan
of Merger to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
JDA SOFTWARE GROUP, INC.,
a Delaware corporation
By: /s/ Xxxxxx Xxxxxx
---------------------------------------
Its: President and Chief Executive Officer
CVP2 CORP.,
a Delaware corporation
By: /s/ Xxxxxx Xxxxxx
---------------------------------------
Its: President and Chief Executive Officer
QRS CORPORATION,
a Delaware corporation
By: /s/ Xxxxxxxxx X. Xxxxxx
---------------------------------------
Its: President and Chief Executive Officer
(Signature Page to Agreement and Plan of Merger)
