Exhibit 1
AGREEMENT AND PLAN OF MERGER
EXECUTION VERSION
--------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
DATED AS OF JUNE 1, 2003
BY AND AMONG
PEOPLESOFT, INC.,
X.X. XXXXXXX & COMPANY
AND
JERSEY ACQUISITION CORPORATION
--------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
ARTICLE 1 THE MERGER................................................................................. 1
Section 1.1. The Merger.............................................................. 1
Section 1.2. Effective Time.......................................................... 2
Section 1.3. Closing of the Merger................................................... 2
Section 1.4. Effects of the Merger................................................... 2
Section 1.5. Certificate of Incorporation and Bylaws................................. 2
Section 1.6. Directors............................................................... 3
Section 1.7. Officers................................................................ 3
Section 1.8. Conversion of Shares.................................................... 3
Section 1.9. Exchange of Certificates................................................ 4
Section 1.10. Stock Options........................................................... 6
Section 1.11. Withholding Rights...................................................... 7
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY.............................................. 7
Section 2.1. Organization and Qualification; Subsidiaries; Investments............... 8
Section 2.2. Capitalization of the Company and its Subsidiaries...................... 8
Section 2.3. Authority Relative to this Agreement; Recommendation.................... 10
Section 2.4. SEC Reports; Financial Statements; Xxxxxxxx-Xxxxx Act Compliance........ 10
Section 2.5. Information Supplied.................................................... 12
Section 2.6. Consents and Approvals; No Violations................................... 12
Section 2.7. No Default.............................................................. 13
Section 2.8. No Undisclosed Liabilities; Absence of Changes.......................... 13
Section 2.9. Litigation.............................................................. 14
Section 2.10. Compliance with Applicable Law.......................................... 15
Section 2.11. Employee Benefits....................................................... 15
Section 2.12. Labor and Employment Matters............................................ 19
Section 2.13. Environmental Laws and Regulations...................................... 21
Section 2.14. Taxes................................................................... 22
Section 2.15. Intellectual Property................................................... 24
Section 2.16. Insurance............................................................... 27
Section 2.17. Title to Properties; Absence of Liens and Encumbrances.................. 27
Section 2.18. Certain Business Practices.............................................. 28
Section 2.19. Product Warranties...................................................... 28
Section 2.20. Material Contracts...................................................... 28
Section 2.21. Suppliers and Customers................................................. 31
Section 2.22. Affiliates.............................................................. 31
Section 2.23. Opinion of Financial Advisor............................................ 31
i
Section 2.24. Brokers................................................................. 31
Section 2.25. Company Rights Agreement................................................ 31
Section 2.26. Takeover Statutes....................................................... 32
Section 2.27 Interested Party Transactions........................................... 32
Section 2.28. Representations Complete................................................ 32
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION................................... 32
Section 3.1. Organization............................................................ 33
Section 3.2. Capitalization of Parent and its Subsidiaries........................... 33
Section 3.3. Authority Relative to this Agreement.................................... 34
Section 3.4. Parent Common Stock..................................................... 35
Section 3.5. SEC Reports; Financial Statements....................................... 35
Section 3.6. Information Supplied.................................................... 36
Section 3.7. Consents and Approvals; No Violations................................... 36
Section 3.8. No Default.............................................................. 37
Section 3.9. Litigation.............................................................. 37
Section 3.10. Opinion of Financial Advisor............................................ 37
Section 3.11. Brokers................................................................. 37
Section 3.12. No Prior Activities..................................................... 38
Section 3.13. No Undisclosed Liabilities; Absence of Changes.......................... 38
Section 3.14. Compliance with Applicable Law.......................................... 38
Section 3.15. Suppliers and Customers................................................. 38
Section 3.16. Parent Employee Benefit Matters......................................... 38
Section 3.17. Parent Intellectual Property............................................ 39
Section 3.18. Representations Complete................................................ 39
ARTICLE 4 COVENANTS.................................................................................. 40
Section 4.1. Conduct of Business..................................................... 40
Section 4.2. Preparation of S-4 and the Joint Proxy
Statement/Prospectus; Stockholders
Meetings............................................................... 45
Section 4.3. No Solicitation or Negotiation.......................................... 47
Section 4.4. Comfort Letters......................................................... 49
Section 4.5. Nasdaq National Market.................................................. 50
Section 4.6. Access to Information................................................... 50
Section 4.7. Certain Filings; Reasonable Efforts..................................... 51
Section 4.8. Public Announcements.................................................... 52
Section 4.9. Indemnification and Directors' and Officers' Insurance.................. 52
Section 4.10. Notification of Certain Matters;
Additions to and Modification of
Disclosure Schedules................................................... 53
Section 4.11. Affiliates.............................................................. 54
Section 4.12. Access to Company Employees............................................. 54
ii
Section 4.13. Company Compensation and Benefit Plans.................................. 54
Section 4.14. Employee Benefits....................................................... 55
Section 4.15. Takeover Statutes....................................................... 55
Section 4.16. Company Rights Agreement................................................ 56
Section 4.17. Parent Board of Directors............................................... 56
Section 4.18. Section 16 Matters...................................................... 56
ARTICLE 5 CONDITIONS TO CONSUMMATION OF THE MERGER................................................... 57
Section 5.1. Conditions to Each Party's Obligations to Effect the Merger............. 57
Section 5.2. Conditions to the Obligations of the Company............................ 57
Section 5.3. Conditions to the Obligations of Parent and Acquisition................. 58
ARTICLE 6 TERMINATION; AMENDMENT; WAIVER............................................................. 59
Section 6.1. Termination............................................................. 59
Section 6.2. Effect of Termination................................................... 61
Section 6.3. Fees and Expenses....................................................... 61
Section 6.4. Amendment............................................................... 62
Section 6.5. Extension; Waiver....................................................... 62
ARTICLE 7 MISCELLANEOUS.............................................................................. 62
Section 7.1. Nonsurvival of Representations and Warranties........................... 62
Section 7.2. Entire Agreement; Assignment............................................ 63
Section 7.3. Validity................................................................ 63
Section 7.4. Notices................................................................. 63
Section 7.5. Governing Law and Venue; Waiver of Jury Trial........................... 64
Section 7.6. Descriptive Headings.................................................... 65
Section 7.7. Parties in Interest..................................................... 65
Section 7.8. Certain Definitions..................................................... 66
Section 7.9. Personal Liability...................................................... 69
Section 7.10. Specific Performance.................................................... 69
Section 7.11. Counterparts............................................................ 69
iii
TABLE OF EXHIBITS
Exhibit A................ Form of Certificate of Merger
Exhibit B................ Form of Affiliate Agreement
Exhibit C................ Form of Company Voting Agreement
Exhibit D................ Form of Parent Voting Agreement
Annex A.................. Stockholders of Company that executed Voting Agreements
Annex B.................. Stockholders of Parent that executed Voting Agreements
iv
\
TABLE OF DEFINED TERMS
Cross Reference
Term in Agreement Page
---- --------------- ----
Acquiring Person .....................................................Section 2.25................. 31
Acquisition LLC ......................................................Section 1.1.................. 2
Acquisition ..........................................................Preamble..................... 1
affiliate ............................................................Section 7.8(a)............... 66
Agreement ............................................................Preamble..................... 1
Applicable Law .......................................................Section 7.8(b)............... 66
business day .........................................................Section 7.8(c)............... 66
capital stock ........................................................Section 7.8(d)............... 66
Certificate of Merger ................................................Section 1.2.................. 2
Certificates .........................................................Section 1.9(b)............... 4
Change in Control Plan ...............................................Section 2.11(l).............. 19
Change in the Company Recommendation .................................Section 4.2(b)............... 46
Closing Date .........................................................Section 1.3.................. 2
Closing ..............................................................Section 1.3.................. 2
Code .................................................................Preamble..................... 1
Company Acquisition Proposal .........................................Section 7.8(e)............... 66
Company Affiliates ...................................................Section 2.22................. 31
Company Board ........................................................Section 2.3(a)............... 10
Company Disclosure Schedule ..........................................Article 2.................... 7
Company Employee Plan ................................................Section 2.11(a)(iii)......... 15
Company Fairness Opinion .............................................Section 2.23................. 31
Company Financial Advisor ............................................Section 2.23................. 31
Company Insider ......................................................Section 4.18................. 56
Company IP ...........................................................Section 7.8(f)............... 66
Company Licensed IP ..................................................Section 7.8(g)............... 66
Company Owned IP .....................................................Section 7.8(h)............... 66
Company Participants .................................................Section 4.14(a).............. 55
Company Permits ......................................................Section 2.10................. 15
Company Plans ........................................................Section 1.10(a).............. 6
Company ..............................................................Preamble..................... 1
Company Preferred Stock ..............................................Section 2.2(a)............... 8
Company Recommendation ...............................................Section 4.2(b)............... 46
Company Registered IP ................................................Section 7.8(i)............... 67
Company Rights Agreement .............................................Section 2.2(a)............... 9
Company Rights .......................................................Section 2.2(a)............... 9
Company SEC Reports ..................................................Section 2.4(a)............... 10
Company Securities ...................................................Section 2.2(a)............... 9
Company Stock Option or Options ......................................Section 1.10(a).............. 6
Company Stockholder Approval .........................................Section 2.3(a)............... 10
Company Stockholders Meeting .........................................Section 2.3(a)............... 10
Company Voting Agreements ............................................Preamble..................... 1
Contract .............................................................Section 2.20(a).............. 28
v
DGCL .................................................................Section 1.1.................. 1
Distribution Date ....................................................Section 2.25................. 32
DOL ..................................................................Section 2.11(b).............. 16
Effective Time .......................................................Section 1.2.................. 2
Employee Agreement ...................................................Section 2.11(a)(v)........... 16
Employee .............................................................Section 2.11(a)(iv).......... 15
Employment Agreements ................................................Preamble..................... 1
End User Agreements ..................................................Section 2.20(c)(ii).......... 30
Environmental Laws ...................................................Section 2.13(a).............. 21
ERISA Affiliate ......................................................Section 2.11(a)(ii).......... 15
ERISA ................................................................Section 2.11(a)(i)........... 15
Exchange Act .........................................................Section 2.2(b)............... 10
Exchange Agent .......................................................Section 1.9(a)............... 4
Exchange Fund ........................................................Section 1.9(a)............... 4
Exchange Ratio .......................................................Section 1.8(b)............... 3
Final Date ...........................................................Section 6.1(b)(ii)........... 60
Financial Statements .................................................Section 2.4(a)............... 11
Governmental Entity ..................................................Section 2.6.................. 12
Hazardous Material ...................................................Section 2.13(a).............. 21
HSR Act ..............................................................Section 2.6.................. 12
incentive stock options ..............................................Section 1.10(a).............. 6
include or including .................................................Section 7.8(l)............... 67
include, without limitation ..........................................Section 7.8(l)............... 67
including, without limitation ........................................Section 7.8(l)............... 67
Indemnified Liabilities ..............................................Section 4.9(a)............... 52
Indemnified Persons ..................................................Section 4.9(a)............... 52
Insurance Policies ...................................................Section 2.16................. 27
Insured Parties ......................................................Section 4.9(c)............... 53
Intellectual Property ................................................Section 7.8(j)............... 67
IRS ..................................................................Section 2.11(a)(vi).......... 16
ISOs .................................................................Section 1.10(a).............. 6
Joint Proxy Statement/Prospectus .....................................Section 2.5.................. 12
knowledge or known ...................................................Section 7.8(k)............... 67
Lease Documents ......................................................Section 2.17(a).............. 28
License-In Agreement .................................................Section 2.15(b).............. 24
Lien .................................................................Section 7.8(m)............... 67
Material Adverse Effect on Parent ....................................Section 7.8(o)............... 68
Material Adverse Effect on the Company ...............................Section 7.8(n)............... 67
Material Contract ....................................................Section 2.20(a).............. 28
Material Contracts ...................................................Section 2.20(a).............. 28
Merger Consideration .................................................Section 1.8(a)............... 3
Merger ...............................................................Section 1.1.................. 1
Multiemployer Plan ...................................................Section 2.11(a)(vii)......... 16
Multiple Employer Plan ...............................................Section 2.11(a)(viii)........ 16
Nondisclosure Agreement ..............................................Section 4.6(c)............... 51
Notice of Superior Proposal ..........................................Section 4.3(b)............... 48
Other Interests ......................................................Section 2.1(c)............... 8
Parent Benefit Plans .................................................Section 3.16(a).............. 39
vi
Parent Board .........................................................Section 3.3(a)............... 34
Parent Common Stock ..................................................Section 1.8(a)............... 3
Parent Disclosure Schedule ...........................................Article 3.................... 32
Parent ESPP ..........................................................Section 4.14(b).............. 55
Parent Fairness Opinion ..............................................Section 3.10................. 37
Parent Financial Advisor .............................................Section 3.10................. 37
Parent Permits .......................................................Section 3.14................. 38
Parent Plans .........................................................Section 3.2(a)............... 33
Parent ...............................................................Preamble..................... 1
Parent Recommendation ................................................Section 4.2(c)............... 47
Parent Rights Agreement ..............................................Section 3.2(a)............... 34
Parent Rights ........................................................Section 3.2(a)............... 33
Parent SEC Reports ...................................................Section 3.5(a)............... 35
Parent Securities ....................................................Section 3.2(a)............... 34
Parent Stockholder Approval ..........................................Section 3.3(a)............... 34
Parent Stockholders Meeting ..........................................Section 3.3(a)............... 34
Parent Technology License ............................................Section 3.17................. 39
Parent Voting Agreements .............................................Preamble..................... 1
Pension Plan .........................................................Section 2.11(a)(ix).......... 16
person ...............................................................Section 7.8(p)............... 68
Proceeding ...........................................................Section 7.8(q)............... 68
Qualifying Amendment .................................................Section 7.8(r)............... 69
Registered Intellectual Property .....................................Section 7.8(s)............... 69
Restricted Company Share .............................................Section 1.8(e)............... 4
Restricted Parent Shares .............................................Section 1.8(e)............... 4
S-4 ..................................................................Section 2.5.................. 12
Xxxxxxxx-Xxxxx Act ...................................................Section 2.4(c)............... 11
SEC ..................................................................Section 2.4(a)............... 10
Section 16 Information ...............................................Section 4.18................. 56
Securities Act .......................................................Section 2.2(a)............... 9
Share ................................................................Section 1.8(a)............... 3
Shares ...............................................................Section 1.8(a)............... 3
Shrinkwrap Software ..................................................Section 2.15(b).............. 24
Significant Parent Product ...........................................Section 3.17................. 39
Subsidiary ...........................................................Section 2.1(a)............... 8
Superior Proposal ....................................................Section 4.3(c)............... 49
Surviving Corporation ................................................Section 1.1.................. 1
Tax or Taxes .........................................................Section 2.14(a)(i)........... 22
Tax Return ...........................................................Section 2.14(a)(ii).......... 22
Third Party Acquisition Proposal .....................................Section 4.3(c)............... 49
Third Party ..........................................................Section 4.3(c)............... 49
Triggering Event .....................................................Section 2.25................. 32
Welfare Plan .........................................................Section 2.11(a)(x)........... 16
vii
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "AGREEMENT") dated as
of June 1, 2003, is by and among PeopleSoft, Inc., a Delaware corporation
("PARENT"), X.X. Xxxxxxx & Company, a Delaware corporation (the "COMPANY"), and
Jersey Acquisition Corporation, a Delaware corporation and a wholly owned
subsidiary of Parent ("ACQUISITION").
WHEREAS, the Boards of Directors of the Company and
Acquisition have each unanimously (i) determined that the Merger is advisable to
and fair and in the best interests of their respective corporations and
stockholders, and (ii) approved the Merger upon the terms and subject to the
conditions set forth in this Agreement and the Board of Directors of Parent has
unanimously approved the Merger upon the terms and subject to the conditions set
forth in this Agreement;
WHEREAS, for U.S. Federal income tax purposes it is intended
that the Merger qualify as a reorganization under the provisions of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "CODE");
WHEREAS, the stockholders of the Company set forth on Annex A
hereto have executed and delivered to Parent irrevocable proxy and voting
agreements (the "COMPANY VOTING AGREEMENTS"), in the form of Exhibit C as an
inducement to Parent to enter into this Agreement;
WHEREAS, the stockholders of Parent set forth on Annex B
hereto have executed and delivered to the Company irrevocable proxy and voting
agreements (the "PARENT VOTING AGREEMENTS"), in the form of Exhibit D as an
inducement to the Company to enter into this Agreement; and
WHEREAS, certain officers and employees of the Company have
entered into employment and noncompetition agreements (the "EMPLOYMENT
AGREEMENTS"), effective upon consummation of the Merger, as an inducement to
Parent to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and
the representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, the Company, Parent and Acquisition hereby
agree as follows:
ARTICLE 1
THE MERGER
Section 1.1. The Merger. At the Effective Time and upon the
terms and subject to the conditions of this Agreement and in accordance with the
Delaware General Corporation Law (the "DGCL"), Acquisition shall be merged with
and into the Company (the "MERGER"). Following the Merger, the Company shall
continue as the surviving corporation (the "SURVIVING CORPORATION"), and the
separate corporate existence of Acquisition shall
1
cease. At the election of Parent, Parent, or a Delaware limited liability
company wholly owned by Parent ("ACQUISITION LLC"), may be substituted herein
for Acquisition, and the Merger may be restructured so that the Company shall be
merged with and into Parent or Acquisition LLC, with the result that Parent or
Acquisition LLC shall become the "Surviving Company"; provided, however, that
such substitution will not prevent the closing conditions in Section 5.2(d) and
5.3(d) from being satisfied. If Parent elects to effect such substitution of
Parent or Acquisition LLC for Acquisition and the foregoing conditions for such
substitution are satisfied, the parties shall amend this Agreement, prior to
Closing and effective prior to the Effective Time, as reasonably necessary to
effect such substitution; provided further, that, notwithstanding anything to
the contrary in this Agreement, in no event shall Parent be entitled to
terminate this Agreement because of the direct or indirect effect of such
election by Parent, and no condition set forth in Section 5.1 or Section 5.3,
which shall have otherwise been satisfied, shall be considered not satisfied
because of the direct or indirect effect of such election, including as a result
of the necessity of obtaining additional consents or approvals. Parent, as the
sole stockholder of Acquisition, hereby approves the Merger and this Agreement.
Section 1.2. Effective Time. Upon the terms and subject to the
conditions set forth in this Agreement, on the Closing Date, a Certificate of
Merger substantially in the form of Exhibit A (the "CERTIFICATE OF MERGER")
shall be duly executed and acknowledged by the Company and thereafter delivered
to the Secretary of State of the State of Delaware for filing pursuant to
Section 251 of the DGCL. The Merger shall become effective at such time as a
properly executed copy of the Certificate of Merger is duly filed with the
Secretary of State of the State of Delaware in accordance with Section 251 of
the DGCL or such later time as Parent and the Company may agree upon and as set
forth in the Certificate of Merger (the time the Merger becomes effective being
referred to herein as the "EFFECTIVE TIME").
Section 1.3. Closing of the Merger. The closing of the Merger
(the "CLOSING") will take place at a time and on a date (the "CLOSING DATE") to
be specified by the parties, which shall be no later than the second business
day after satisfaction (or waiver) of the latest to occur of the conditions set
forth in Article 5 except for such conditions which may only be satisfied by
delivery of documents or certificates at the Closing, at the offices of Xxxxxx,
Xxxx & Xxxxxxxx LLP, Xxx Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000,
unless another time, date or place is agreed to in writing by the parties
hereto.
Section 1.4. Effects of the Merger. The Merger shall have the
effects set forth in the DGCL. Without limiting the generality of the foregoing
and subject thereto, at the Effective Time, all the properties, rights,
privileges, powers and franchises of the Company and Acquisition shall vest in
the Surviving Corporation, and all debts, liabilities and duties of the Company
and Acquisition shall become the debts, liabilities and duties of the Surviving
Corporation.
Section 1.5. Certificate of Incorporation and Bylaws. The
Certificate of Incorporation of the Surviving Corporation shall be amended to
read the same as the Certificate of Incorporation of Acquisition in effect at
the Effective Time, and shall be the Certificate of Incorporation of the
Surviving Corporation until amended in accordance with Applicable Law; provided,
however, that at the Effective Time, Article I of the Certificate of
2
Incorporation of the Surviving Corporation shall be amended and restated in its
entirety to read as following: "The name of this corporation is X.X. Xxxxxxx &
Company." The bylaws of the Surviving Corporation shall be amended as necessary
to read the same as the bylaws of Acquisition in effect at the Effective Time
until amended in accordance with Applicable Law.
Section 1.6. Directors. The directors of Acquisition at the
Effective Time shall be the initial directors of the Surviving Corporation, each
to hold office in accordance with the Certificate of Incorporation and bylaws of
the Surviving Corporation until such director's successor is duly elected or
appointed and qualified.
Section 1.7. Officers. The officers of Acquisition at the
Effective Time shall be the initial officers of the Surviving Corporation, each
to hold office in accordance with the Certificate of Incorporation and bylaws of
the Surviving Corporation until such officer's successor is duly elected or
appointed and qualified.
Section 1.8. Conversion of Shares.
(a) At the Effective Time, each share of common stock,
par value $0.001 per share, of the Company (each a "Share" and, collectively,
the "SHARES") issued and outstanding immediately prior to the Effective Time
(other than (i) Shares held in the Company's treasury and (ii) Shares held by
Parent or Acquisition) shall, by virtue of the Merger and without any action on
the part of Acquisition, the Company or the holder thereof, be converted into
and shall become a number of fully paid and nonassessable shares of common
stock, par value $0.01 per share, of Parent ("PARENT COMMON STOCK") equal the
Exchange Ratio (the "MERGER CONSIDERATION"). Unless the context otherwise
requires, each reference in this Agreement to shares of Parent Common Stock and
to the Shares shall include the associated Parent Rights and associated Company
Rights, respectively. Notwithstanding the foregoing, if, between the date of
this Agreement and the Effective Time, the outstanding shares of Parent Common
Stock or the Shares shall have been changed into a different number of shares or
a different class by reason of any stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of shares,
then the Exchange Ratio shall be correspondingly adjusted to reflect such stock
dividend, subdivision, reclassification, recapitalization, split, combination or
exchange of shares.
(b) The "EXCHANGE RATIO" shall be 0.860.
(c) At the Effective Time, each outstanding share of
the common stock, $0.001 par value per share, of Acquisition shall be converted
into one share of common stock, $0.001 per share, of the Surviving Corporation.
(d) At the Effective Time, each Share held in the
treasury of the Company and each Share held by Parent or Acquisition immediately
prior to the Effective Time shall, by virtue of the Merger and without any
action on the part of Acquisition, the Company or the holder thereof, be
canceled, retired and cease to exist, and no shares of Parent Common Stock shall
be delivered with respect thereto.
(e) Each Share subject to repurchase by the Company, or
that is otherwise subject to a risk of forfeiture or other condition under any
applicable restricted stock purchase
3
agreement or other agreement with the Company, issued and outstanding
immediately prior to the Effective Time (each a "RESTRICTED COMPANY SHARE")
shall be exchanged pursuant to Section 1.8(a) into Parent Common Stock, subject
to repurchase by Parent on the same terms as governed such Restricted Company
Shares prior to the Merger ("RESTRICTED PARENT SHARES"); provided, however, that
the repurchase price for each Restricted Parent Share issued with respect to a
Restricted Company Share shall equal the repurchase price for the Restricted
Company Share divided by the Exchange Ratio. Certificates representing the
Restricted Parent Shares shall be held by Parent until such shares are no longer
subject to repurchase. Cash dividends on Restricted Parent Shares will be
distributed to the holder of such Restricted Parent Shares on whose behalf the
Restricted Parent Shares are being held by Parent. Any shares of Parent Common
Stock or other equity securities issued or distributed by Parent, including
shares issued upon a stock dividend or split, in respect of Restricted Parent
Shares (which remain restricted at the time of such distribution) will be
subject to the same restrictions and other terms as the Restricted Parent Share
with respect to which the distribution is made. Each holder of Restricted Parent
Shares will have voting rights with respect to Restricted Parent Shares (and
other voting securities) held by Parent on its behalf.
Section 1.9. Exchange of Certificates.
(a) Promptly following the Effective Time, as required by
subsections (b) and (c) below, Parent shall deliver to its transfer agent, or a
depository or trust institution of recognized standing selected by Parent and
reasonably satisfactory to the Company (the "EXCHANGE AGENT") for the benefit of
the holders of Shares for exchange in accordance with this Article 1: (i)
certificates representing the appropriate number of shares of Parent Common
Stock issuable pursuant to Section 1.8 and (ii) cash to be paid in lieu of
fractional shares of Parent Common Stock (such shares of Parent Common Stock and
such cash are hereinafter referred to as the "EXCHANGE FUND"), in exchange for
outstanding Shares.
(b) Parent shall use commercially reasonable efforts to
cause the Exchange Agent, promptly after the Effective Time (and in no event
later than five (5) business days following the Effective Time), to mail to each
holder of record of a certificate or certificates that immediately prior to the
Effective Time represented outstanding Shares (the "CERTIFICATES") and whose
Shares were converted into the right to receive shares of Parent Common Stock
pursuant to Section 1.8: (i) a letter of transmittal (which shall specify that
delivery shall be effected and risk of loss and title to the Certificates shall
pass only upon delivery of the Certificates to the Exchange Agent and shall be
in such form and have such other customary provisions as Parent and the Company
may reasonably specify) and (ii) instructions for use in effecting the surrender
of the Certificates in exchange for certificates representing shares of Parent
Common Stock. Upon surrender of a Certificate for cancellation to the Exchange
Agent, together with such letter of transmittal duly executed, the holder of
such Certificate shall be entitled to receive in exchange therefor a certificate
representing that number of whole shares of Parent Common Stock and, if
applicable, a check representing the cash consideration to which such holder may
be entitled on account of a fractional share of Parent Common Stock that such
holder has the right to receive pursuant to the provisions of this Article 1,
and the Certificate so surrendered shall forthwith be canceled. In the event of
a transfer of ownership of Shares that is not registered in the transfer records
of the Company, a certificate representing the proper number of shares of Parent
Common Stock
4
may be issued to a transferee if the Certificate representing such Shares is
presented to the Exchange Agent accompanied by all documents required to
evidence and effect such transfer and by evidence that any applicable stock
transfer taxes have been paid. Until surrendered as contemplated by this Section
1.9, each Certificate shall be deemed at any time after the Effective Time to
represent only the right to receive upon such surrender the certificate
representing shares of Parent Common Stock and cash in lieu of any fractional
shares of Parent Common Stock as contemplated by this Section 1.9.
(c) No dividends or other distributions declared or made
after the Effective Time with respect to Parent Common Stock with a record date
after the Effective Time shall be paid to the holder of any unsurrendered
Certificate with respect to the shares of Parent Common Stock represented
thereby, and no cash payment in lieu of fractional shares shall be paid to any
such holder pursuant to Section 1.9(f), until the holder of record of such
Certificate shall surrender such Certificate. Subject to the effect of
Applicable Law, following surrender of any such Certificate there shall be paid
to the record holder of the certificates representing whole shares of Parent
Common Stock issued in exchange therefor without interest (i) the amount of any
cash payable in lieu of a fractional share of Parent Common Stock to which such
holder is entitled pursuant to Section 1.9(f) and the amount of dividends or
other distributions with a record date after the Effective Time theretofore paid
with respect to such number of whole shares of Parent Common Stock and (ii) at
the appropriate payment date the amount of dividends or other distributions with
a record date after the Effective Time but prior to surrender and a payment date
subsequent to surrender payable with respect to such whole shares of Parent
Common Stock.
(d) If any Certificate for Shares shall have been lost,
stolen or destroyed, the Exchange Agent shall issue in exchange therefor upon
the making of an affidavit of that fact by the holder thereof such shares of
Parent Common Stock and cash in lieu of fractional shares, if any, as may be
required pursuant to this Agreement; provided, however, that Parent or the
Exchange Agent may, in its discretion, require the delivery of a bond or
indemnity reasonably satisfactory to Parent and the Exchange Agent.
(e) All shares of Parent Common Stock issued upon the
surrender for exchange of Shares in accordance with the terms hereof (including
any cash paid pursuant to Section 1.9(c) or 1.9(f)) shall be deemed to have been
issued in full satisfaction of all rights pertaining to such Shares and there
shall be no further registration of transfers on the stock transfer books of the
Surviving Corporation of the Shares that were outstanding immediately prior to
the Effective Time. If, after the Effective Time, Certificates are presented to
the Surviving Corporation for any reason, they shall be canceled and exchanged
as provided in this Article 1.
(f) No fractions of a share of Parent Common Stock shall
be issued in the Merger, but in lieu thereof each holder of Shares otherwise
entitled to a fraction of a share of Parent Common Stock shall upon surrender of
his or her Certificate or Certificates be entitled to receive an amount of cash
(without interest) determined by multiplying the average closing sale prices for
one share of Parent Common Stock as reported on the Nasdaq National Market for
the five (5) trading days prior to the Effective Time by the fractional share
interest to which such holder would otherwise be entitled (after aggregating all
shares owned by such
5
holder). The parties acknowledge that payment of the cash consideration in lieu
of issuing fractional shares was not separately bargained for consideration, but
merely represents a mechanical rounding off for purposes of simplifying the
corporate and accounting complexities that would otherwise be caused by the
issuance of fractional shares.
(g) Any portion of the Exchange Fund that remains
undistributed to the stockholders of the Company upon the expiration of twelve
(12) months after the Effective Time shall be delivered to Parent upon demand,
and any stockholders of the Company who have not theretofore complied with this
Article 1 shall thereafter look only to Parent for payment of their claim for
Parent Common Stock and cash in lieu of fractional shares, as the case may be,
and any applicable dividends or distributions with respect to Parent Common
Stock.
(h) Neither Parent nor the Company shall be liable to
any holder of Shares for shares of Parent Common Stock (or dividends or
distributions with respect thereto) or cash from the Exchange Fund delivered to
a public official pursuant to any applicable abandoned property, escheat or
similar Applicable Law.
Section 1.10. Stock Options.
(a) At the Effective Time, each outstanding option,
warrant or other right to purchase Shares (a "COMPANY STOCK OPTION" or
collectively, "COMPANY STOCK OPTIONS") issued pursuant to the Company's 1992
Incentive Stock Option Plan, 1992 Nonqualified Stock Option Plan, 1997 Employee
Stock Purchase Plan, 1997 Equity Incentive Plan, 1997 Employee Stock Purchase
Plan for Non-United States Employees, 2003 X.X. Xxxxxxx & Company Equity
Incentive Plan, YOUcentric 2000 Equity Compensation Plan or other agreement or
arrangement, whether vested or unvested, shall be converted as of the Effective
Time into an option, warrant or right, as applicable, to purchase shares of
Parent Common Stock in accordance with this Section 1.10. All plans or
agreements described above pursuant to which any Company Stock Option has been
issued or may be issued other than outstanding warrants or rights are referred
to collectively as the "COMPANY PLANS." At the Effective Time, each Company
Stock Option so converted shall be deemed to constitute an option to acquire, on
the same terms and conditions as were applicable to such Company Stock Option as
set forth in the applicable Company Plan and the agreement(s) evidencing the
grant thereof immediately prior to the Effective Time, including provisions with
respect to vesting, a number of shares of Parent Common Stock equal to the
number of shares of Parent Common Stock that the holder of such Company Stock
Option would have been entitled to receive pursuant to the Merger had such
holder exercised such Company Stock Option in full immediately prior to the
Effective Time at a price per share equal to (x) the aggregate exercise price
for the Shares otherwise purchasable pursuant to such Company Stock Option
divided by (y) the product of (i) the number of Shares otherwise purchasable
pursuant to such Company Stock Option, multiplied by (ii) the Exchange Ratio;
provided, however, that in the case of any option to which Section 421 of the
Code applies by reason of its qualification under Section 422 through Section
424 of the Code ("INCENTIVE STOCK OPTIONS" or "ISOs") the option price, the
number of shares purchasable pursuant to such option and the terms and
conditions of exercise of such option shall be determined so as to comply with
Section 424(a)
6
of the Code and it is the intention of the parties that such options will
qualify as incentive stock options following the Effective Time.
(b) As soon as practicable (but in no event later than
thirty (30) days) after the Effective Time, Parent shall deliver to the holders
of Company Stock Options appropriate notices setting forth such holders' rights
pursuant to the applicable Company Plan and that the agreements evidencing the
grants of such options shall continue in effect on the same terms and conditions
(subject to the adjustments required by this Section 1.10 after giving effect to
the Merger).
(c) At or before the Effective Time, Parent shall take
all corporate action necessary to reserve for issuance a sufficient number of
shares of Parent Common Stock for delivery upon exercise of Company Stock
Options assumed in accordance with this Section 1.10. Within ten (10) business
days after the Effective Time, Parent shall file a registration statement on
Form S-8 (or any successor or other appropriate forms) with respect to the
shares of Parent Common Stock subject to any Company Stock Options held by all
persons with respect to whom registration on Form S-8 is available and shall use
all commercially reasonable efforts to maintain the effectiveness of such
registration statement or registration statements (and maintain the current
status of the prospectus or prospectuses contained therein) for so long as such
options remain outstanding.
(d) At or before the Effective Time, the Company shall
cause to be effected any necessary amendments to the Company Plans to give
effect to the foregoing provisions of this Section 1.10.
Section 1.11 Withholding Rights. Each of the Company, the
Surviving Corporation and Parent shall be entitled to deduct and withhold from
the consideration otherwise payable to any person pursuant to this Article 1
such amounts as it is required to deduct and withhold with respect to the making
of such payment under any provision of federal, state, local or foreign tax law.
To the extent that amounts are so withheld by the Company, the Surviving
Corporation or Parent, as the case may be, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the holder of
Shares in respect of which such deduction and withholding was made by the
Company, the Surviving Corporation or Parent, as the case may be.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to each of Parent
and Acquisition, subject to the exceptions set forth in the Disclosure Schedule
(the "COMPANY DISCLOSURE SCHEDULE") delivered by the Company simultaneously with
the execution hereof (which Company Disclosure Schedule shall specifically
identify the specific Section or subsection, as applicable, to which each such
exception relates), that:
7
Section 2.1. Organization and Qualification; Subsidiaries;
Investments.
(a) Section 2.1(a) of the Company Disclosure Schedule
sets forth a true and complete list of each person in which the Company owns,
directly or indirectly, 50% or more of the voting interests or of which the
Company otherwise has the right to direct the management (each, a "SUBSIDIARY")
together with the jurisdiction of incorporation or organization of each
Subsidiary and the percentage of each Subsidiary's outstanding capital stock or
other equity interests owned directly or indirectly by the Company. All of the
outstanding capital stock or other ownership interests of each Subsidiary is
owned by the Company, directly or indirectly, free and clear of any Lien or any
other limitation or restriction. Each of the Company and Subsidiaries is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization and has all requisite power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted except where any failure of any Subsidiary to be
so organized, existing and in good standing could be cured by a ministerial
filing or payment of a fee or tax. The Company has made available to Parent and
Acquisition accurate and complete copies of the Certificate of Incorporation and
bylaws or comparable other governing documents, each as in full force and effect
on the date hereof, of the Company and each of its Significant Subsidiaries (as
such term is defined in Rule 1-02 of Regulation S-X of the SEC). Other than as
specified in Section 2.1(a) of the Company Disclosure Schedule, the Company has
no operating Subsidiaries other than those incorporated in a state of the United
States.
(b) Each of the Company and its Subsidiaries is duly
qualified or licensed and in good standing to do business in each jurisdiction
in which the property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification or licensing necessary except
in such jurisdictions where the failure to be so duly qualified or licensed and
in good standing would not, individually or in the aggregate, have a Material
Adverse Effect on the Company.
(c) Section 2.1(c) of the Company Disclosure Schedule
sets forth a true and complete list, as of the date hereof, of each equity
investment (including obligations that are convertible into equity securities)
made by the Company or any Subsidiary in any person (including the percentage
ownership as of the most recent practicable date for which the Company or such
Subsidiary has capitalization information for such entity and any management
rights granted to the Company or any such Subsidiary) other than the
Subsidiaries ("OTHER INTERESTS"). The Other Interests are owned directly or
indirectly by the Company free and clear of all Liens.
Section 2.2. Capitalization of the Company and its
Subsidiaries.
(a) The authorized capital stock of the Company consists
of (i) Three Hundred Million (300,000,000) Shares, of which, as of May 28, 2003,
One Hundred Twenty-Two Million Four Hundred Twenty-Six Thousand Six Hundred
Sixty-Four (122,426,664) Shares were issued and outstanding; and (ii) Five
Million (5,000,000) shares of preferred stock, par value $0.001 per share
("COMPANY PREFERRED STOCK"), none of which are outstanding as of the date
hereof. All of the outstanding Shares have been validly issued and are fully
paid, nonassessable and free of preemptive rights. As of May 28, 2003, an
aggregate
8
of Thirty-One Million Nine Hundred Sixty-Six Thousand Two Hundred Sixty-Nine
(31,966,269) Shares were reserved for issuance of which Twenty-Two Million
Forty-Five Thousand Three Hundred and One (22,045,301) Shares were issuable upon
or otherwise deliverable in connection with the exercise of outstanding Company
Stock Options issued pursuant to the Company Plans. Between May 28, 2003 and the
date hereof, no shares of the Company's capital stock have been issued other
than pursuant to the exercise of Company Stock Options already in existence on
such first date, and between May 28, 2003 and the date hereof, no stock options
have been granted. Except as set forth above and for the stockholder rights
("COMPANY RIGHTS") issued pursuant to that certain Preferred Stock Rights
Agreement, dated as of October 22, 2001, as amended, between the Company and
Computershare Trust Company, Inc., as Rights Agent (the "COMPANY RIGHTS
AGREEMENT"), as of the date hereof, there are outstanding (i) no shares of
capital stock or other voting securities of the Company, (ii) no securities of
the Company or any Subsidiary convertible into or exchangeable or exercisable
for, shares of capital stock or other voting securities of the Company or any
Subsidiary, (iii) no options, warrants or other rights to acquire from the
Company or any Subsidiary, and no obligations of the Company or any Subsidiary
to issue any capital stock, voting securities or securities convertible into or
exchangeable or exercisable for capital stock or other voting securities of the
Company or any Subsidiary, and (iv) no equity equivalent interests in the
ownership or earnings of the Company or any Subsidiary or other similar rights.
All of the outstanding Shares and Company Stock Options (collectively "COMPANY
SECURITIES") were issued in compliance with the Securities Act of 1933, as
amended (the "SECURITIES ACT"), and applicable state securities laws. As of the
date hereof, except with respect to the Restricted Company Shares, there are no
outstanding rights or obligations of the Company or any Subsidiary to
repurchase, redeem or otherwise acquire any outstanding shares of its capital
stock or other ownership interests. Other than the Company Voting Agreements,
there are no stockholder agreements, voting trusts or other arrangements or
understandings to which the Company, the Company Board or any Subsidiary is a
party, and to the Company's knowledge, there are no other agreements, voting
trusts or other arrangements or understandings, relating to the voting or
registration of any shares of capital stock or other voting securities of the
Company or any Subsidiary. Other than treasury stock as described in the
Financial Statements, no Shares, Company Preferred Stock or Company Stock
Options are owned by the Company or any Subsidiary. The Company has provided to
Parent a true and complete list of all holders of outstanding Restricted Company
Shares or Company Stock Options, the exercise or vesting schedule, the exercise
price per share, and the term of each Restricted Company Share or Company Stock
Option, as applicable and in the case of Company Stock Options, whether such
option is a nonqualified stock option or incentive stock option, and any
restrictions on the Company's right to repurchase of the Shares underlying the
options, and whether or not, to the Company's knowledge, an election under
Section 83(b) of the Code is in effect with respect to such Shares that are
Restricted Company Shares, in each case as of the date hereof. None of the terms
of the Company Stock Options or Restricted Company Shares provides for
accelerated vesting as a result of the execution and delivery of this Agreement
or the consummation of the transactions contemplated hereby. Other than as
disclosed in the Company's SEC Reports filed on or before the date hereof, since
the Company's initial public offering, the Company has not granted Company Stock
Options to employees or consultants under any Company Plan at an
9
exercise price of less than the fair market value per Share at the time of grant
as determined in good faith by the Company Board.
(b) The Company Rights and the Shares constitute the only
classes of equity 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").
Section 2.3. Authority Relative to this Agreement;
Recommendation.
(a) The Company has all necessary corporate power and
authority to execute and deliver this Agreement, to perform its obligations
under this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement, and the consummation of the
transactions contemplated hereby, have been duly and validly authorized by the
Board of Directors of the Company (the "COMPANY BOARD"). The Company Board has
directed that this Agreement be submitted to the Company's stockholders for
approval at the meeting of the Company's stockholders to be held in connection
with the Merger (the "COMPANY STOCKHOLDERS MEETING"), and except for the
approval of the Merger and the adoption of this Agreement by the affirmative
vote of the holders of a majority of the outstanding Shares (the "COMPANY
STOCKHOLDER APPROVAL"), no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by the Company and, assuming the due authorization,
execution and delivery by Parent and Acquisition, constitutes the valid, legal
and binding agreement of the Company, enforceable against the Company in
accordance with its terms, subject to any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereafter in effect relating
to creditors' rights generally or to general principles of equity.
(b) Without limiting the generality of the foregoing, the
Company Board has unanimously (i) determined that the Merger is advisable and
fair to, and in the best interests of the Company and the Company's stockholders
and (ii) approved this Agreement, the Merger and the other transactions
contemplated hereby, (iii) resolved to recommend approval and adoption of this
Agreement, the Merger and the other transactions contemplated hereby by the
Company's stockholders, and (iv) has not withdrawn or modified such approval or
resolution to recommend (except as otherwise permitted in this Agreement).
Section 2.4. SEC Reports; Financial Statements;
Xxxxxxxx-Xxxxx Act Compliance.
(a) The Company has filed all required forms, reports and
documents ("COMPANY SEC REPORTS") with the Securities and Exchange Commission
(the "SEC") since October 31, 1999, each of which complied at the time of filing
in all material respects with all applicable requirements of the Securities Act
and the Exchange Act, each law as in effect on the dates such forms, reports and
documents were filed. None of such Company SEC Reports, including any financial
statements or schedules included or incorporated by reference therein, contained
when filed any untrue statement of a material fact or omitted to state a
material fact required to be stated or incorporated by reference therein or
necessary in
10
order to make the statements therein in light of the circumstances under which
they were made not misleading, except to the extent superseded or amended by a
Company SEC Report filed subsequently and prior to the date hereof. The
consolidated financial statements of the Company included in the Company SEC
Reports (the "FINANCIAL STATEMENTS") fairly presented in all material respects,
in conformity with United States generally accepted accounting principles
applied on a consistent basis (except as may be indicated in the notes thereto
and except that unaudited statements do not contain footnotes in substance or
form required to the extent permitted by Form 10-Q of the Exchange Act), the
consolidated financial position of the Company and its consolidated Subsidiaries
as of the dates thereof and their consolidated results of operations and cash
flows for the periods then ended, except that the unaudited interim financial
statements of the Company contained in the Company's Quarterly Report on Form
10-Q for the quarter ended January 31, 2003 were subject to normal adjustments
that are not expected to be material in amount.
(b) The Company has heretofore made, and hereafter will
make, available to Acquisition or Parent a complete and correct copy of any
amendments or modifications that are required to be filed with or submitted to
the SEC but have not yet been filed with or submitted to the SEC to agreements,
documents or other instruments that previously had been filed with or submitted
to the SEC by the Company pursuant to the Exchange Act.
(c) Each required form, report and document containing
financial statements that has been filed with or submitted to the SEC since July
31, 2002, was accompanied by the certifications required to be filed or
submitted by the Company's chief executive officer and chief financial officer
pursuant to the Xxxxxxxx-Xxxxx Act of 2002 (the "XXXXXXXX-XXXXX ACT"), and at
the time of filing or submission of each such certification, such certification
was true and accurate and complied with the Xxxxxxxx-Xxxxx Act and the rules and
regulations promulgated thereunder.
(d) Since October 31, 1999, neither the Company nor any
Subsidiary nor, to the Company's knowledge, any director, officer, employee,
auditor, accountant or representative of the Company or any Subsidiary has
received or otherwise had or obtained knowledge of any complaint, allegation,
assertion or claim, whether written or oral, regarding the accounting or
auditing practices, procedures, methodologies or methods of the Company or any
Subsidiary or their respective internal accounting controls, including any
complaint, allegation, assertion or claim that the Company or any Subsidiary has
engaged in questionable accounting or auditing practices. No attorney
representing the Company or any Subsidiary, whether or not employed by the
Company or any Subsidiary, has reported evidence of a material violation of
securities laws, breach of fiduciary duty or similar violation by the Company or
any of its officers, directors, employees or agents to the Company Board or any
committee thereof or to any director or officer of the Company.
(e) To the knowledge of the Company, no employee of the
Company or any Subsidiary has provided or is providing information to any law
enforcement agency regarding the commission or possible commission of any crime
or the violation or possible violation of any Applicable Law. Neither the
Company nor any Subsidiary nor any officer, employee, contractor, subcontractor
or agent of the Company or any such Subsidiary has discharged, demoted,
suspended, threatened, harassed or in any other manner discriminated
11
against an employee of the Company or any Subsidiary in the terms and conditions
of employment because of any act of such employee described in 18 U.S.C. Section
1514A(a).
Section 2.5. Information Supplied. None of the information
supplied or to be supplied by the Company for inclusion or incorporation by
reference in (i) the registration statement on Form S-4 to be filed with the SEC
by Parent in connection with the issuance of shares of Parent Common Stock in
the Merger (such Form S-4, and any amendments or supplements thereto, the "S-4")
will, at the time the S-4 is filed with the SEC and at the time it becomes
effective under the Securities Act, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading or (ii) the joint proxy
statement/prospectus relating to the matters to be submitted to the Company's
stockholders at the Company Stockholders Meeting and the matters to be submitted
to Parent's stockholders at the Parent Stockholders Meeting (such joint proxy
statement/prospectus, and any amendments or supplements thereto, the "JOINT
PROXY STATEMENT/PROSPECTUS") will, at the date mailed to stockholders of the
Company and Parent and at the times of the Company Stockholders Meeting and the
Parent Stockholders Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein in light of the circumstances under which
they are made not misleading. The Joint Proxy Statement/Prospectus, insofar as
it relates to the Company Stockholders Meeting, will comply, as of its mailing
date, as to form in all material respects with the provisions of the Exchange
Act and the rules and regulations thereunder. Notwithstanding the foregoing, the
Company makes no representation, warranty or covenant with respect to any
information supplied or required to be supplied by Parent or Acquisition which
is contained in or omitted from any of the foregoing documents or which is
incorporated by reference therein.
Section 2.6. Consents and Approvals; No Violations. Except
for filings, permits, authorizations, consents and approvals as may be required
under applicable requirements of the Securities Act, the Exchange Act, state
securities or blue sky laws, the rules and regulations of the Nasdaq National
Market, and the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended
(the "HSR ACT"), any filings under similar competition or merger notification
laws or regulations of foreign Governmental Entities, and the filing and
recordation of the Certificate of Merger as required by the DGCL, no material
filing with or notice to and no material permit, authorization, consent or
approval of any United States (federal, state or local) or foreign court or
tribunal, or administrative, governmental or regulatory body, agency or
authority (each a "GOVERNMENTAL ENTITY") is necessary for the execution and
delivery by the Company of this Agreement or the consummation by the Company of
the transactions contemplated hereby. Neither the execution, delivery and
performance of this Agreement by the Company nor the consummation by the Company
of the transactions contemplated hereby will (i) conflict with or result in a
breach of any provision of the respective Certificate of Incorporation or bylaws
(or similar governing documents) of the Company or any Subsidiary, (ii) result
in a violation or breach of or constitute (with or without due notice or lapse
of time or both) a default (or give rise to any right of termination, amendment,
cancellation or acceleration or Lien) under any of the terms, conditions or
provisions of any Material Contract or (iii) violate any material order, writ,
injunction, decree, law, statute, rule or regulation applicable to the Company
or any Subsidiary or any of their respective properties or assets.
12
Section 2.7. No Default. Neither the Company nor any
Subsidiary is in (i) breach, default or violation (and no event has occurred
that with notice or the lapse of time, or both, would constitute a breach,
default or violation) of any term, condition or provision of its Certificate of
Incorporation or bylaws (or similar governing documents), (ii) breach, default
or violation (and no event has occurred that with notice or the lapse of time,
or both, would constitute a breach, default or violation) of any material term,
condition or provision of (A) any material note, bond, mortgage, indenture,
lease, license, contract, agreement or other instrument or obligation to which
the Company or any Subsidiary is now a party or by which it or any of its
properties or assets may be bound or (B) any material order, writ, injunction,
decree, law, statute, rule or regulation applicable to the Company or any
Subsidiary or any of its properties or assets.
Section 2.8. No Undisclosed Liabilities; Absence of Changes.
Except as and to the extent disclosed in the Company SEC Reports filed on or
before the date hereof or as reflected on the consolidated balance sheet of the
Company for the quarter ended April 30, 2003, a true and correct copy of which
has been provided to Parent, other than liabilities or obligations to suppliers,
vendors, employees and landlords incurred in the ordinary and usual course of
such business consistent with past practices, neither the Company nor any
Subsidiary has any liabilities or obligations of any nature, whether or not
accrued, contingent or otherwise, that would be required by United States
generally accepted accounting principles to be reflected on a consolidated
balance sheet of the Company (including the notes thereto). Except for the
negotiation and execution of this Agreement, between April 30, 2003 and the date
hereof, the Company and each Subsidiary have conducted their respective
businesses in all material respects only in, and have not engaged in any
material transaction other than according to, the ordinary and usual course of
such businesses consistent with past practices, and there has not been any:
(a) Material Adverse Effect on the Company;
(b) damage, destruction or other casualty loss with
respect to any asset or property owned, leased or otherwise used by the Company
or any Subsidiary and having a value at the time of the incident of Two Million
Dollars ($2,000,000) or more, whether or not covered by insurance;
(c) declaration, setting aside or payment of any dividend
or other distribution in respect of the capital stock of the Company or any
Subsidiary, repurchase, redemption or other acquisition by the Company or any
Subsidiary of any outstanding shares of capital stock or other securities of, or
other ownership interests in, the Company or any Subsidiary except for
repurchases from individuals following their termination of service required by
the terms of their pre-existing stock option or purchase agreements;
(d) other than amendment of the Company Rights Plan
pursuant to Sections 2.25 and 4.16 hereof, amendment of any term of any
outstanding security of the Company or any Subsidiary;
13
(e) incurrence, assumption or guarantee by the Company or
any Subsidiary of any indebtedness for borrowed money other than in the ordinary
course of business and in amounts not in excess of One Million Dollars
($1,000,000);
(f) creation or assumption by the Company or any
Subsidiary of any Lien on any asset or property with a value of One Million
Dollars ($1,000,000) or more;
(g) loan, advance or capital contribution made by the
Company or any Subsidiary to, or investment in, any person other than (i) loans
or advances to employees in connection with business-related travel, in each
case made in the ordinary course of business consistent with past practices,
(ii) loans, advances or capital contributions or investments by the Company to
or in any wholly-owned Subsidiary, by any wholly-owned Subsidiary in the Company
or, by any wholly-owned Subsidiary in any other wholly-owned Subsidiary, and
(iii) the Other Interests;
(h) transaction or binding commitment made, or any
Contract entered into, by the Company or any Subsidiary relating to its assets
or business (including the acquisition or disposition of any assets or property)
or any relinquishment by the Company or any Subsidiary of any Contract or other
right, in either case, having a stated contract amount or otherwise potentially
involving Company or Subsidiary obligations or entitlements with a value of One
Million Dollars ($1,000,000) or more (other than Contracts with customers and
suppliers entered into in the ordinary course of business, consistent with past
practices);
(i) labor dispute, other than routine individual
grievances, or any activity or proceeding by a labor union or representative
thereof to organize any employees of the Company or any Subsidiary, or any
lockouts, strikes, work stoppages or, to the knowledge of the Company, any
threats thereof or any slowdowns or threats thereof by or with respect to such
employees;
(j) exclusive license, distribution, marketing or sales
agreement entered into or any agreement to enter into any exclusive license,
distribution, marketing or sales agreement;
(k) commitment to any person to (i) develop software
without charge or (ii) incorporate any software into any of the Company's
products;
(l) change by the Company in any of its accounting
principles, practices or methods; or
(m) increase in the compensation payable or that could
become payable by the Company or any Subsidiary to (i) officers of the Company
or any Subsidiary or (ii) any employee of the Company or any Subsidiary whose
annual cash compensation is One Hundred Thousand Dollars ($100,000) or more.
Section 2.9. Litigation. Except as disclosed in the Company
SEC Reports filed on or before the date hereof, there are no suits, actions,
proceedings, investigations or material claims pending or, to the knowledge of
the Company, any credible threat thereof against the Company, its Subsidiaries
or any of their respective properties or assets before any
14
Governmental Entity. Except as disclosed in the Company SEC Reports filed on or
before the date hereof, neither the Company nor any Subsidiary is subject to any
outstanding order, writ, injunction or decree of any Governmental Entity that
reasonably could be expected to result in any loss, expense, charge, assessment,
levy, fine or other liability being imposed upon or incurred by the Company or
such Subsidiary exceeding One Million Dollars ($1,000,000) or that reasonably
could be expected to prevent the consummation of the transactions contemplated
hereby.
Section 2.10. Compliance with Applicable Law. Except as
disclosed in the Company SEC Reports, each of the Company and Subsidiaries holds
all material permits, licenses, variances, exemptions, orders and approvals of
all Governmental Entities necessary for the lawful conduct of their respective
businesses (collectively, the "COMPANY PERMITS"). Except as disclosed in the
Company SEC Reports filed on or before the date hereof, each of the Company and
Subsidiaries has materially complied, and is in material compliance with, the
terms of the Company Permits. Except as disclosed in the Company SEC Reports
filed on or before the date hereof, the businesses of the Company and each
Subsidiary have been and are being conducted in material compliance with all
material Applicable Laws. Except as disclosed in the Company SEC Reports filed
on or before the date hereof, no investigation or review by any Governmental
Entity with respect to the Company or any Subsidiary is pending or, to the
knowledge of the Company, threatened.
Section 2.11. Employee Benefits.
(a) Definitions. For purposes of this Agreement, the
following terms shall have the meanings set forth below:
(i) "ERISA" means the Employee Retirement Income
Security Act of 1974, as amended;
(ii) "ERISA AFFILIATE" means any other person or
entity under common control with the Company within the meaning of Section
414(b), (c), (m) or (o) of the Code and the regulations thereunder;
(iii) "COMPANY EMPLOYEE PLAN" refers to any
material plan, program, policy, practice, contract, agreement or other
arrangement providing for compensation, severance, termination pay, stock
option, stock purchase, stock bonus, performance awards, membership interest or
membership interest-related awards, retirement, health, life, disability
insurance, dependent care, retirement, medical, fringe benefits or other
employee benefits or remuneration of any kind, funded or unfunded, written or
unwritten, including without limitation each "employee benefit plan," within the
meaning of Section 3(3) of ERISA that is or has within the last three (3) years
been maintained, contributed to, or required to be contributed to, by the
Company or any ERISA Affiliate for the benefit of any Employee and pursuant to
which the Company or any ERISA Affiliate has or may have any material liability
whether contingent or otherwise;
(iv) "EMPLOYEE" means any current or former
employee, director, or officer of the Company or any Subsidiary;
15
(v) "EMPLOYEE AGREEMENT" refers to each
management, employment (other than offer letters that do not alter "at will"
employment relationships and do not create any other binding obligation on the
Company other than setting initial compensation and rights to participate in
standard benefits), severance, or consulting agreement or contract as to which
obligations of the Company either currently or in the future are greater or
could reasonably be expected to be greater than Fifty Thousand Dollars ($50,000)
and each relocation, repatriation, expatriation, visa, work permit or similar
agreement or contract between the Company or any Subsidiary and any Employee or
consultant, as to which obligations of the Company either currently or in the
future are greater or could reasonably be expected to be greater than Ten
Thousand Dollars ($10,000);
(vi) "IRS" means the Internal Revenue Service;
(vii) "MULTIEMPLOYER PLAN" means any "Pension
Plan" (as defined below) which is a "multiemployer plan," as defined in Section
3(37) of ERISA;
(viii) "MULTIPLE EMPLOYER PLAN" means any "Pension
Plan" (as defined below) which is a "multiple employer plan," as defined in
Section 4063 or 4064 of ERISA;
(ix) "PENSION PLAN" refers to each Company
Employee Plan which is an "employee pension benefit plan," within the meaning of
Section 3(2) of ERISA; and
(x) "WELFARE PLAN" refers to each Company
Employee Plan which is a welfare plan as defined in ERISA Section 3(1).
(b) Company Employee Plans and Employee Agreements.
Section 2.11(b) of the Company Disclosure Schedule contains an accurate and
complete list of each Company Employee Plan and each Employee Agreement other
than Employee Agreements with Employees located in foreign countries that (A)
are customary or required by local law and (B) contain only customary and/or
legally required terms. The Company has never orally or in writing represented,
promised or contracted to any Employee to maintain or sponsor any Company
Employee Plan other than those listed in Section 2.11(b) of the Company
Disclosure Schedule. The Company has also made available to Parent complete and
correct copies of (i) the most recent plan documents, related trust documents,
adoption agreements, summary plan descriptions, and all amendments thereto for
each Company Employee Plan; (ii) the most recent annual reports on Form 5500
filed with the IRS with respect to each Company Employee Plan where such report
is required; (iii) each group annuity contract, insurance policy, service
agreement, and other material agreement or policy related to any Company
Employee Plan; (iv) the most recent annual nondiscrimination test reports for
each Company Employee Plan; (v) the most recent actuarial and audit reports for
each Pension Plan; (vi) all IRS determination letters and rulings received by
the Company and, for the last three years, copies of all correspondence to or
from the IRS, Pension Benefit Guaranty Corporation or the Department of Labor
("DOL") with respect to any proceeding involving any Company Employee Plan;
(vii) all material communications to any Employee relating to any Company
Employee Plan, or in each case, relating to any amendments, terminations,
establishments, increases or decreases in benefits, acceleration of payments or
vesting
16
schedules or other events which would result in any Liability to the Company;
and (viii) the most recent registration statement and prospectus prepared in
connection with each Company Employee Plan.
(c) Employee Plan Compliance. (i) Each Company Employee
Plan has been established and maintained in all material respects in accordance
with its terms and all Applicable Laws, including without limitation ERISA and
the Code; (ii) no "prohibited transaction," within the meaning of Section 4975
of the Code or Section 406 of ERISA, has occurred with respect to any Company
Employee Plan that could subject the Company, any Subsidiary or any Employee to
any material liability; (iii) no Employee of the Company has committed a
material breach of any responsibility or obligation imposed upon fiduciaries by
Title I of ERISA with respect to any Company Employee Plan; (iv) there are no
Proceedings pending, or, to the Company's knowledge, threatened or reasonably
anticipated (other than routine claims for benefits) with respect to any Company
Employee Plan or with respect to the assets of any Company Employee Plan which
could reasonably be expected to result in a material liability to the Company or
any Company Employee Plan; (v) other than the Company Plans (including
outstanding Company Stock Options thereunder) or the Company's Management Change
in Control Plan, each Company Employee Plan can be amended, terminated or
otherwise discontinued in accordance with its terms, without material Liability
to the Company, Parent or any of their respective ERISA Affiliates (other than
as required by Applicable Law, amounts for accrued benefits and administration
or contract expenses incurred in a termination event); (vi) there are no
inquiries, investigations, audits or Proceedings pending or, to the Company's
knowledge, threatened by the IRS or DOL with respect to any Company Employee
Plan or any related trust; (vii) neither the Company nor any ERISA Affiliate is
subject to any penalty or tax with respect to any Company Employee Plan under
Sections 4975 through 4980B of the Code; (viii) each Pension Plan that is
intended to be qualified under Section 401(a) of the Code is and has received a
favorable determination, notification, advisory and/or opinion letter with
respect to such status from the IRS or has time remaining to apply under
applicable Treasury Regulation or IRS pronouncement for a determination,
notification, advisory and/or opinion letter and to make any necessary
amendments, and to the Company's knowledge, no event has occurred and no
condition or circumstance has existed or exists which may reasonably be expected
to result in the disqualification of such Pension Plan; (ix) there is no
violation of any reporting or disclosure requirements imposed by ERISA or the
Code with respect to any Company Employee Plan that could result in a material
Liability to the Company; (x) all contributions required to be made to any
Company Employee Plan pursuant to Section 412 of the Code (without regard to any
waivers of such requirements) or the terms of the Employee Plan, have been made
on or before their due dates (including any contractual or statutory grace
periods); (xi) neither Company nor any ERISA Affiliate is, nor could any of them
reasonably expect to be, subject to (A) a security interest pursuant to Section
412(f) of the Code or (B) a lien pursuant to Section 412(n) of the Code or
Section 4068 or 302(f) of ERISA; (xii) no event has occurred and there exists no
condition or set of circumstances which could reasonably be anticipated to
result in any material Liability to the Parent, the Company or its ERISA
Affiliates with respect to any Company Employee Plan except to provide benefits
in accordance with the terms of each such Company Employee Plan; and (xiii) with
respect to each Company Employee Plan, all payments due from the Company or an
ERISA Affiliate to date have been made and all amounts properly accrued to date
as liabilities of the Company
17
which have not been paid have been properly recorded on the books of the Company
and are reflected in the Financial Statements.
(d) Pension Plans. At no time has the Company or its
ERISA Affiliates maintained a Pension Plan subject to Code Section 412 or ERISA
Section 302.
(e) Multiemployer and Multiple Employer Plans. At no time
has the Company or its ERISA Affiliates (which for this purpose includes any
entity that has been an ERISA Affiliate of the Company) within the last seven
(7) years contributed to or been required to contribute to any Multiemployer
Plan or Multiple Employer Plan.
(f) Post-Employment Obligations. No Company Employee Plan
provides, or has any Liability to provide, life insurance, medical or other
employee welfare benefits to any Employee upon his or her retirement or
termination of employment for any reason, except (i) as may be required by
statute, (ii) for benefits the full cost of which are borne by Employees of the
Company (or such Employees' beneficiaries or dependents), (iii) for death or
disability benefits under any Pension Plan, or (iv) for life insurance benefits
for any Employee who dies while in service with the Company.
(g) Welfare Plans. With respect to any Welfare Plans
maintained by the Company or its ERISA Affiliates, the Company and its ERISA
Affiliates have complied in all material respects with the provisions of
Sections 4980B, 9801 and 9802 of the Code.
(h) Plan Expenses and Amendment. Since the beginning of
the current plan year of any Company Employee Plan, no event has occurred and no
condition or circumstance has existed that could result in a material increase
in the benefits under such Company Employee Plan maintained by Company or any
Subsidiary from the level of benefits for the most recently completed plan year
of such Company Employee Plan. No insurance policy nor any other contract or
agreement affecting any Company Employee Plan requires or permits a retroactive
increase in premiums or payments due thereunder (other than any claims for
benefits under any self-funded Company Employee Plan). All amendments and
actions required to bring each of the Company Employee Plans into conformity
with all of the applicable provisions of ERISA and other Applicable Law have
been made or taken except to the extent that such amendments or actions are not
required by law to be made or taken until a date after the Closing Date and are
disclosed on Section 2.11(h) of the Company Disclosure Schedule or will be
provided to Parent within fourteen (14) days of the date hereof.
(i) Effect of Transaction.
(i) The execution of this Agreement and the
consummation of the transactions contemplated hereby will not (either alone or
upon the occurrence of any additional or subsequent events) constitute an event
under any Company Employee Plan, Employee Agreement, trust or loan that will or
may result in any material payment (whether of severance pay or otherwise),
acceleration, forgiveness of indebtedness, vesting, distribution, increase in
benefits or obligation to fund benefits with respect to any officer or employee
of the Company.
18
(ii) No payment or benefit which will or may be
made by the Company or Parent or any of their respective affiliates with respect
to any Employee will be characterized as an "excess parachute payment," within
the meaning of Section 280G(b)(1) of the Code.
(j) Foreign Plans. Any Company Employee Plan which is
subject to any laws, regulations, or jurisdiction outside the United States is
in material compliance with the requirements of such laws.
(k) Leased Employees and Independent Contractors. No
"leased employee," as that term is defined in Section 414(n) of the Code, or any
other person who is not classified as a common law employee of the Company is
eligible to participate in, nor does such person participate in, any Company
Employee Plan, and, to the Company's knowledge, no retroactive participation in
any Company Employee Plan would result due to reclassification of such an
individual as a common law employee of the Company or an ERISA Affiliate. The
exclusion of any such individual from any Company Employee Plan would not
reasonably be expected to cause any Company Employee Plan which is intended to
be qualified under Code Section 401(a) to lose such qualification, nor, to the
Company's knowledge, does the exclusion of any such individual violate the terms
of any Company Employee Plan.
(l) Change of Control Plan. The Company has executed the
amendment to the X.X. Xxxxxxx & Company Management Change In Control Plan (the
"Change in Control Plan") attached as Section 2.11(l) of the Company Disclosure
Schedule and such amendment was duly and validly authorized and immediately
prior to the Effective Time will be in full force and effect.
Section 2.12 Labor and Employment Matters.
(a) No collective bargaining agreement exists that is
binding on the Company or any Subsidiary. Neither the Company nor any Subsidiary
has received notice that any petition has been filed or proceeding instituted by
an employee or group of employees of the Company or any Subsidiary with the
National Labor Relations Board seeking recognition of a bargaining
representative, and no such petition or proceeding is pending or, to the
Company's knowledge, threatened.
(b) (i) There is no (A) labor strike, dispute or
stoppage pending or, to the Company's knowledge, threatened or (B) to the
Company's knowledge, slowdown pending or threatened against the Company or any
Subsidiary; and
(ii) Neither the Company nor any Subsidiary has
received in the last forty-eight (48) months any written demand letters, civil
rights charges, suits or drafts of suits, administrative or other claims made by
any of its employees which are or could be material.
(c) All individuals who are performing consulting or
other services for the Company or any Subsidiary are or were correctly
classified by the Company as either "independent contractors" or "employees" as
the case may be, and, at the Closing Date, will qualify for such classification,
except as would not result in material harm to the Company.
19
(d) Section 2.12(d) of the Company Disclosure Schedule
contains a list of the name of each officer, employee and independent contractor
of the Company and each Subsidiary, together with such person's position or
function, annual base salary or wages and any incentives or bonus arrangement
with respect to such person. The Company has provided to Parent or its counsel
all Form 1099s filed with the IRS for the past three (3) years. As of the date
hereof, the Company has not received any information that would lead it to
believe that any such person will or may cease to be engaged by the Company or
applicable Subsidiary for any reason, including because of the consummation of
the transactions contemplated by this Agreement.
(e) The Company and each Subsidiary (and, to the
Company's knowledge, each of the Company's and each Subsidiary's material
subcontractors) is in compliance with all Applicable Laws governing or relating
to employment, employment practices, terms and conditions of employment and
wages and hours, in each case, with respect to employees.
(f) The Company and each Subsidiary have in all material
respects withheld and reported all amounts required by law or by agreement to be
withheld and reported with respect to wages, salaries and other payments to
employees.
(g) There are no pending or, to the knowledge of the
Company, threatened claims or actions against the Company or any Subsidiary
under any worker's compensation policy or long-term disability policy.
(h) The Company is not liable for any material payment to
any trust or other fund or to any Governmental Authority, with respect to
unemployment compensation benefits, social security or other benefits or
obligations for Employees (other than routine payments to be made in the normal
course of business and consistent with past practices).
(i) To the Company's knowledge, the Company has not been
threatened with any claim for discrimination or harassment, including sexual
harassment.
(j) Section 2.12(j) of the Company Disclosure Schedule
sets forth a complete and correct list of all employees holding visas issued by
the United States, listing each such employee by name and type of visa. All
other employees of the Company and each Subsidiary working in the United States
and subject to United States immigration laws are citizens of the United States.
To the Company's knowledge, each employee of the Company and each Subsidiary
(whether employed within or outside of the United States) possesses all
applicable passports, visas or other applicable work authorizations with respect
to the location at which they are employed or with respect to which they travel
on behalf of the Company or any Subsidiary, and has complied with all applicable
immigration and similar laws.
(k) Neither the Company nor any Subsidiary is bound by
any agreement, nor has either taken or omitted to take any action, that
restricts its ability to terminate the employment of any of its employees at any
time without payment or other liability.
(l) The Company has furnished or made available to Parent
a list and description of all policies and guidelines of the Company and each
Subsidiary concerning employment practices, working conditions, hours and other
employment matters. The
20
Company and each Subsidiary (and to the knowledge of the Company, each of the
Company's and its Subsidiaries' material subcontractors) is in material
compliance with all such policies and guidelines.
Section 2.13. Environmental Laws and Regulations.
(a) The term "ENVIRONMENTAL LAWS" means any applicable
federal, state, local or foreign law, statute, treaty, ordinance, rule,
regulation, permit, consent, approval, license, judgment, order, decree or
injunction relating to: (i) Releases (as defined in 42 U.S.C. sec. 9601(22)) or
threatened Releases of Hazardous Material into the environment, (ii) the
generation, treatment, storage, disposal, use, handling, manufacturing,
transportation or shipment of Hazardous Material, (iii) the health or safety of
employees in the workplace, (iv) protecting or restoring natural resources or
(v) the environment. The term "HAZARDOUS MATERIAL" means (i) "hazardous
substances" (as defined in 42 U.S.C. sec. 9601(14)), including "hazardous waste"
as defined in 42 U.S.C. sec. 6903, (ii) petroleum, including crude oil and any
fractions thereof, (iii) natural gas, synthetic gas and any mixtures thereof,
(iv) asbestos and/or asbestos containing materials, (v) PCBs or materials
containing PCBs, (vi) any material regulated as a medical waste, (vii) lead
containing paint, and (viii) radioactive materials, but Hazardous Material does
not include office and janitorial supplies properly maintained.
(b) (i) During the period of ownership or operation
by the Company and its Subsidiaries of any of their current or previously owned
or leased properties, there have been no Releases of Hazardous Material by the
Company or any Subsidiary in, on, under or affecting such properties or any
surrounding site which could reasonably be expected to subject the Company to
material liability; (ii) the Company does not have any knowledge of the presence
of any Hazardous Material in, on, under, or affecting such properties or any
surrounding site which could reasonably be expected to subject the Company to
material liability; (iii) none of the Company or any Subsidiary has disposed of
any Hazardous Material in a manner that has led, or reasonably could be expected
to lead, to a Release which could reasonably be expected to subject the Company
to material liability; (iv) since January 1, 1995, none of the Company or any
Subsidiary has received any written notice of, or entered into any order,
settlement or decree, or become legally responsible for through agreement,
succession, assignment or other means, relating to: (A) any violation of any
Environmental Laws by the Company or any Subsidiary or the institution or
pendency of any suit, action, claim, proceeding or investigation by any
Governmental Entity or any third party in connection with any alleged violation
of Environmental Laws by the Company or any Subsidiary or (B) the response to or
remediation of Hazardous Material at or arising from any of the Company's or any
Subsidiary's properties; (v) other than non-compliance or violations that
individually or in the aggregate could not reasonably be expected to result in a
fine, penalty or other liability in excess of $50,000, the Company and all
Subsidiaries are in material compliance with all Environmental Laws and there
have been no material violations of any Environmental Laws by the Company or any
Subsidiary; (vi) the Company does not have any knowledge of any fact that is
reasonably likely to result in material liability to the Company under any
Environmental Law or which could reasonably be expected to prevent the Company
or any Subsidiary from complying with Environmental Laws; and (vii) other than
non-compliance or violations that individually or in the aggregate could not
reasonably
21
be expected to result in a fine, penalty or other liability in excess of
$50,000, each of the Company and each Subsidiary has obtained and is in material
compliance with all approvals, authorizations, certificates, consents, licenses,
orders and permits or other similar authorizations of all Governmental Entities,
or from any other person, that are required under any Environmental Law
applicable to the owned or leased properties of the Company or any Subsidiary.
Section 2.14. Taxes.
(a) Definitions. For purposes of this Agreement:
(i) the term "TAX" (including "TAXES") means (A)
all federal, state, local, foreign and other net income, gross income, gross
receipts, sales, use, ad valorem, transfer, franchise, profits, license, lease,
service, service use, withholding, payroll, employment, excise, severance,
stamp, occupation, premium, property, windfall profits, customs, duties and
other taxes, fees, assessments or charges of any kind whatsoever, together with
any interest and any penalties, additions to tax or additional amounts with
respect thereto, (B) any liability for payment of amounts described in clause
(A) whether as a result of transferee liability, of being a member of an
affiliated, consolidated, combined or unitary group for any period, or otherwise
through operation of law, and (C) any liability for the payment of amounts
described in clauses (A) or (B) as a result of any tax sharing, tax indemnity or
tax allocation agreement or any other express or implied agreement to indemnify
any other person; and
(ii) the term "TAX RETURN" means any return,
declaration, report, statement, information statement and other document filed
or required to be filed with respect to Taxes, including any claims for refunds
of Taxes and any amendments or supplements of any of the foregoing.
(b) (i) The Company and its Subsidiaries have duly
and timely filed all Tax Returns required to be filed; and (ii) all Tax Returns
that have been filed by the Company and its Subsidiaries are complete and
accurate, except to the extent any Taxes pertaining to the inaccuracy of clauses
(i) and (ii), in the aggregate, would not be material. None of the Tax Returns
filed by the Company or any of its Subsidiaries was required to contain (in
order to avoid the imposition of a penalty and determined without regard to
disclosure that may be made after the filing of the original Tax Return) a
disclosure statement under Section 6662 of the Code (or any predecessor
provision or comparable provision of state, local or foreign law). The Company
and its Subsidiaries have complied in all material respects with all Applicable
Laws relating to intercompany transactions and transfer pricing.
(c) Except with respect to Taxes that, in the aggregate,
would not be material, (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 have adequately provided in accordance with GAAP
in the financial statements included in the Company SEC Reports filed on or
before the date hereof for all Taxes (whether or not shown on any Tax Return)
accrued through the date of such Company SEC Reports; and (ii) all Taxes of the
Company and its Subsidiaries accrued following the end of the most recent
22
period covered by the Company SEC Reports have been incurred in the ordinary
course of business of the Company consistent with past practices and have been
paid when due in the ordinary course of business consistent with past practices.
(d) No claim for assessment or collection of Taxes is
presently being asserted against the Company or its Subsidiaries, other than
claims that, in the aggregate, are not material, and neither the Company nor any
of its Subsidiaries is a party to any pending action, proceeding, audit or
investigation by any governmental taxing authority, nor does the Company have
knowledge of any such threatened action, proceeding, audit or investigation. The
Company has no knowledge of any contingent liabilities for Taxes that, in the
aggregate, materially exceed the aggregate reserves therefor reflected in the
balance sheet included in the Company SEC Reports.
(e) Neither the Company nor any Subsidiary (nor any
predecessor thereof) (A) is a party to or bound by any closing agreement, offer
in compromise or any other agreement with any Tax authority, (B) 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, or (C) has ever been a
United States real property holding corporation within the meaning of Section
897(c)(2) of the Code. To the knowledge of the Company, each Company Stock
Option identified as an incentive stock option in the list provided to Parent
pursuant to Section 2.2(a) hereof, and each stock purchase right issued under an
employee stock purchase plan (or similar plan) has at all times since the
issuance of such Company Stock Option or stock purchase right qualified for
taxation under Section 421 through 423 of the Code. There are no (1) adjustments
under Section 481 of the Code or any similar adjustments with respect to the
Company or any Subsidiary (or their predecessors) that will be effective for any
period ending after the Closing, (2) outstanding waivers or outstanding
extensions of the statute of limitations in effect with respect to Taxes for
which the Company or any Subsidiary could be held liable, or (3) grants of power
of attorney to any person in effect with respect to Taxes for which the Company
or any Subsidiary would be liable.
(f) Neither the Company nor any of its affiliates has
taken or agreed to take any action that would prevent the Merger from
constituting a reorganization qualifying under the provisions of Section 368(a)
of the Code.
(g) Neither the Company nor any Subsidiary is a party to
or bound by any obligation under any Tax sharing, Tax allocation, Tax indemnity
or similar agreement or arrangement.
(h) Neither the Company nor any Subsidiary is a
"consenting corporation" within the meaning of Section 341(f) of the Code.
(i) Neither the Company nor any Subsidiary 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.
(j) No Subsidiary of the Company that is not a United
States person, as defined in the Code, is or at any time has been a passive
foreign investment company within
23
the meaning of Section 1297 of the Code, and neither the Company nor any
Subsidiary is a shareholder, directly or indirectly, in a passive foreign
investment company. No Subsidiary of the Company that is not a United States
person as defined in the Code (x) is, or at any time has been, engaged in the
conduct of a trade or business within the United States or treated as or
considered to be so engaged or (y) has, or at any time has had, an investment in
"United States property" within the meaning of Section 956(c) of the Code.
Neither the Company nor any Subsidiary is, or at any time has been, impacted by
(A) the dual consolidated loss provisions of the Section 1503(d) of the Code,
(B) the overall foreign loss provisions of Section 904(f) of the Code, or (C)
the recharacterization provisions of Section 952(c)(2) of the Code.
(k) No more than 5% of the outstanding capital stock of
the Company constitutes Restricted Company Shares.
Section 2.15. Intellectual Property.
(a) Section 2.15(a) of the Company Disclosure Schedule
accurately identifies all Company Registered IP and all unregistered trademarks
currently used by the Company or any Subsidiary, which unregistered trademarks
are used on or in relation to a product or service of Company which accounts
individually for more than $500,000 of revenue annually, indicating for each
item thereof the beneficial owner thereof and, if different, the record owner
thereof, the applicable registration, issuance or other identifying number, the
date of registration, issuance or filing, as applicable. In the case of any
Company Registered IP in which a person other than the Company or any Subsidiary
holds an ownership interest, Section 2.15(a) of the Company Disclosure Schedule
identifies such person and accurately describes the extent of such interest. No
person has an ownership interest in any copyright of the Company that would
entitle them to exploit the copyright without the Company's consent.
(b) "SHRINKWRAP SOFTWARE" means "off-the-shelf" computer
software applications, other than Company Owned IP, that are generally available
to all interested purchasers and licensees on standard terms and conditions.
Section 2.15(b) of the Company Disclosure Schedule accurately (i) identifies all
Company Licensed IP (A) that is incorporated in Company's products provided to
customers or provided to customers in connection with products or services of
the Company; (B) is "resold" or sublicensed to customers by the Company; (C)
that is used by the Company as a development tool, excluding Shrinkwrap
Software, or (D) is material to the Company's business and is not covered under
(A), (B) or (C), and is not Shrinkwrap Software; (ii) identifies the license or
other agreement or understanding pursuant to which such Company Licensed IP is
being licensed to or used by the Company or any Subsidiary (each, a "LICENSE-IN
AGREEMENT"); and (iii) sets forth a complete and accurate list of the amount of
any remaining unused prepaid royalty and identifies those License-In Agreements
under which royalty or license fee (excluding fees for maintenance and support),
may become payable by the Company or such Subsidiary, as applicable, thereunder
by reason of the passage of time, use or exploitation of the Intellectual
Property licensed thereunder. The rights licensed under each License-In
Agreement shall be exercisable by the Surviving Corporation on and after the
Closing to the same extent and at the same cost as the Company or such
Subsidiary, as applicable, prior to the Closing and no
24
party granting such rights has given formal written notice to the Company or, to
the Company's knowledge, threatened that it intends to terminate such License-In
Agreement prior to the expiration thereof in accordance with its terms.
(c) The Company or one of its Subsidiaries has good and
valid title to all of the Company Owned IP, including without limitation all
Company Registered IP identified in Section 2.15(a) of the Company Disclosure
Schedule, free and clear of any Liens, and, to the Company's knowledge, (i) the
Company Registered IP is valid and (ii) the Company has the right to enforce the
Company Owned IP against third parties. Neither the Company nor any Subsidiary
is obligated to make any payment to any person in connection with the
manufacture, use, sale, importation, distribution, display, modification or
other exploitation of any Company Owned IP or any of the Company's products. The
Company or any Subsidiary, as applicable, is free to make, use, modify, copy,
distribute, sell, license, import, export and otherwise exploit all Company
Owned IP on an exclusive basis subject to any nonexclusive (w) end-user licenses
granted to customers; (x) distribution rights granted to resellers or
distributors in the ordinary course of business; (y) nondisclosure or
confidentiality agreements pursuant to which any person has been granted access
to Company Owned IP but not the right to exploit such Company Owned IP; or (z)
partner agreements based on the Company's standard form of partner agreement. No
current or former employee, officer, director, stockholder, consultant or
independent contractor has any valid right, claim or interest in or with respect
to any Company IP which would impair or which could give rise to the impairment
of the Company's use, distribution, license or other exploitation of the Company
IP.
(d) The Company and each Subsidiary have taken reasonable
measures and precautions necessary to protect, preserve and maintain the
confidentiality and secrecy of all trade secrets and other confidential
information material to the Company's business and otherwise to maintain and
protect the value of all Company Owned IP. Neither the Company nor any
Subsidiary has disclosed or delivered or permitted to be disclosed or delivered
to any person, and no person (other than employees or consultants of the Company
and its Subsidiaries which need such information in the course of their
employment) has access to or has any rights with respect to, trade secrets and
other confidential information material to the Company's business, the source
code or any portion or aspect of the source code material to the Company's
business, or any proprietary information or algorithm contained in any source
code of any software material to the Company's business that comprises Company
Owned IP, other than (i) instances where such trade secrets, confidential
information and source code has been disclosed subject to an agreement with any
person pursuant to which such person is required to maintain the confidentiality
thereof, or (ii) other circumstances in which disclosure was made and the
Company promptly acted to mitigate and prevent any further disclosure. Without
limiting the generality of the foregoing, the Company has, and since 1993 has
had, a policy of requiring each employee of the Company or any Subsidiary, and
each independent contractor, who is involved in, or who contributes to, the
creation or development of any of the Company's products or Company Owned IP to
execute and deliver an agreement, substantially similar to the forms of
agreement delivered by the Company to Parent, assigning to the Company full
right, title and interest in and to what they create or develop in the scope of
their employment or assignment, as applicable. The Company substantially
complies, and during the time period referenced above has substantially
complied, with such policy. No
25
event has occurred, and no circumstance or condition exists, 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 source code, or any portion or
aspect of source code, currently maintained in escrow.
(e) (i) None of the Company Owned IP or any of the
Company's products or services or the Intellectual Property used by the Company
in its operations which is not Company Licensed IP or Shrinkwrap Software,
infringe, misappropriate, violate, dilute or constitute the unauthorized use of
any Intellectual Property of any third party and neither the Company nor any
Subsidiary has received (A) any notice or claim either oral or written in the
past three (3) years asserting or suggesting that any such infringement,
misappropriation, violation, dilution or unauthorized use is or may be occurring
or has or may have occurred, or (B) any written notice or claim since the time
of the Company's initial public offering asserting or suggesting that any such
infringement, misappropriation, violation, dilution or unauthorized use is or
may be occurring or has or may have occurred that would be material to the
business and operations of the Company. No Proceeding is pending or, to the
Company's knowledge, threatened, nor is there any pending claim or demand which
challenges the ownership, legality, validity, enforceability, use, exploitation
or modification by the Company or any Subsidiary of such Company Owned IP. No
Company Owned IP is subject to any outstanding order, judgment, decree, or
stipulation restricting the use thereof by the Company or any Subsidiary or, in
the case of any Intellectual Property licensed to others, restricting the sale,
transfer, assignment or licensing thereof by the Company or such Subsidiary to
any person.
(ii) To the Company's knowledge, the Company
Licensed IP does not infringe, misappropriate, violate, dilute or constitute the
unauthorized use of any Intellectual Property of any third party.
(iii) The Company has the right to grant the
licenses it grants in the course of its business.
(iv) To the knowledge of the Company, the Company
has the right to conduct its business as it is currently conducted.
(f) All Company Registered IP is (i) to the Company's
knowledge, valid, enforceable to the full extent permitted by the jurisdiction
in which it is registered and in full force and effect, and (ii) all
maintenance, annuity and other fees due in respect of such Company Registered IP
have been fully paid and all filings applicable thereto have been properly made
except with respect to Company Registered IP that the Company has made a
reasonable business judgment not to pursue protection or not to maintain. No
trademark included in the Company Registered IP is now involved in any
opposition or cancellation proceeding and no trademark that is currently used by
the Company has been involved in any opposition or cancellation proceeding. No
patent or patent application included in the Company Registered IP is now
involved in any interference, reissue or reexamination proceeding.
26
(g) To the knowledge of the Company, no person is
infringing or misappropriating any Company Owned IP in any material respect or
making any unlawful use of any products of the Company in any material respect.
Neither the Company nor any Subsidiary has initiated and is maintaining before a
court or in an arbitration proceeding claims or causes of action against other
persons for infringement by such persons of Company Owned IP (including claims
for past infringement of Intellectual Property). Neither the Company nor any
Subsidiary has, during the twelve (12) month period prior to the date hereof,
threatened in a writing sent by the Company's legal department or outside
counsel to initiate such proceeding.
(h) No Company Owned IP and, to the Company's knowledge,
no Company Licensed IP, incorporated into or used in conjunction with any
product, system, program or software module that is or was used in or material
to (or that relates to) the assets of the Company or any Subsidiary contains any
"back door," "time bomb," "Trojan horse," "worm," "drop dead device," "virus" or
other software routines or hardware components designed to permit unauthorized
access or to disable or erase software, hardware or data without the consent of
the user.
(i) None of the software products of the Company or any
Subsidiary is, in whole or in part, subject to the provisions of any open source
or other source code license agreement that (i) requires the distribution of
source code in connection with the distribution of the licensed software in
object code form; (ii) prohibits or limits the Company or any Subsidiary from
charging a fee or receiving consideration in connection with sublicensing or
distributing such licensed 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 the software by its terms
and not by operation of law.
Section 2.16. Insurance. Each of the insurance policies
maintained by the Company and each Subsidiary (the "INSURANCE POLICIES") is in
full force and effect and is valid, outstanding and enforceable, and all
premiums due thereon have been paid in full, or if not yet due and payable,
reserved by the Company on its unaudited balance sheet as of April 30, 2003 in
accordance with United States generally accepted accounting principles. True and
complete copies of all Insurance Policies have been delivered or made available
to Parent. None of the Insurance Policies will terminate or lapse (or be
affected in any other materially adverse manner) by reason of the execution and
delivery of, or consummation of any of the transactions contemplated by, this
Agreement. Each of the Company and each Subsidiary has complied in all material
respects with the provisions of each Insurance Policy under which it is the
insured party. No insurer under any Insurance Policy has canceled or generally
disclaimed liability under any such policy or, to the Company's knowledge,
indicated any intent to do so or not to renew any such policy. All material
claims of the Company or any Subsidiary under the Insurance Policies have been
filed in a timely fashion.
Section 2.17 Title to Properties; Absence of Liens and
Encumbrances.
(a) Neither the Company nor any Subsidiary has an ownership
interest in any real property, nor has it ever had an ownership interest in any
real property. Section 2.17 of the Company Disclosure Schedule sets forth a
complete and accurate list of all real property
27
currently leased or subleased by the Company or any Subsidiary, with the name of
the lessor and the date of the lease, sublease, assignment of the lease, any
guaranty given or leasing commissions payable by the Company or any Subsidiary
in connection therewith and each amendment to any of the foregoing
(collectively, the "LEASE DOCUMENTS"). True, correct and complete copies of all
Lease Documents have been delivered or made available to Parent or Parent's
counsel. All such current leases and subleases are in full force and effect, are
valid and effective in accordance with their respective terms, and there is not,
under any of such leases, any existing material default or event of default (or
event which, with notice or lapse of time, or both, would constitute a default)
by the Company or any Subsidiary or, to the Company's knowledge, by the other
party to such lease or sublease, or person in the chain of title to such leased
premises.
(b) Each of the Company and Subsidiaries has good and valid
title to, or, in the case of leased properties and assets, valid leasehold or
subleasehold interests in, all of its properties and assets, tangible and
intangible, real, personal and mixed, used or held for use in its business, free
and clear of any Liens, except for such imperfections of title, if any, that do
not materially interfere with the present value of the subject property. For
purposes of this Section 2.17 only, the terms "property" and "assets" do not
include Intellectual Property.
Section 2.18. Certain Business Practices. None of the Company,
any Subsidiary or, to the Company's knowledge, any directors or officers, agents
or employees of the Company or any Subsidiary, has (i) used any funds for
unlawful contributions, gifts, entertainment or other unlawful expenses related
to political activity; (ii) made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political parties or
campaigns or violated any provision of the Foreign Corrupt Practices Act of
1977, as amended; or (iii) made any payment in the nature of criminal bribery.
Section 2.19. Product Warranties. Section 2.19 of the Company
Disclosure Schedule sets forth complete and accurate copies of the forms of
written warranties and guaranties by the Company or any Subsidiary utilized with
respect to its products or services. There have not been any material deviations
from such warranties and guaranties that would obligate the Company or any
Subsidiary to provide products or services in any form or manner not consistent
with the relevant specifications for such products or services, and none of the
Company, any Subsidiary or any of their respective salespeople, employees,
distributors and agents is authorized to undertake obligations to any customer
or to other third parties in excess of such warranties or guaranties.
Section 2.20. Material Contracts.
(a) Section 2.20(a) of the Company Disclosure Schedule
sets forth a complete and accurate list of all written or oral contracts,
agreements, notes, bonds, indentures, mortgages, guarantees, options, leases,
licenses, sales and purchase orders, warranties, commitments and other
instruments of any kind (each a "CONTRACT"), to which the Company or any
Subsidiary is a party or by which the Company or any Subsidiary, is otherwise
bound, as follows (each a "MATERIAL CONTRACT" and, collectively, the "MATERIAL
CONTRACTS"):
28
(i) each "material contract" (as such term is
defined in Item 601(b)(10) of Regulation S-K of the SEC) with respect to the
Company and its Subsidiaries;
(ii) each Contract of the Company or any
Subsidiary other than with a customer pursuant to which the Company or any
Subsidiary received (or was entitled to receive) or paid (or was purportedly
obligated to pay) Two Million Dollars ($2,000,000) or more in the twelve (12)
month period ended April 30, 2003 (provided such Contract remains in effect as
of the date hereof);
(iii) each customer contract in effect on the date
of this Agreement under which the Company or any Subsidiary (A) received in the
twelve (12) month period ended April 30, 2003 or is entitled to receive
thereafter (1) One Million Dollars ($1,000,000) or more for products and (2) a
fixed amount to be paid in exchange for the provision of services or (B) commits
to any person after the date hereof to (I) develop software without charge or
(II) incorporate any software into any of the Company's products;
(iv) each Contract that requires payment by or to
the Company after April 30, 2003 of One Million Dollars ($1,000,000) or more
(provided such Contract is not by its terms cancelable by the Company or any
Subsidiary on 60 days or less notice);
(v) each Contract containing noncompetition
restrictions, including any covenant limiting the right of the Company or its
Subsidiaries to engage in any line of business or compete with any person in any
line of business, including any geographic limitations;
(vi) each Contract that either individually or in
the aggregate is material to any line of business of the Company or any
Subsidiary that requires any consent or other action by any person for, or will
be subject to default, termination, material repricing or other renegotiation,
or cancellation because of, the transactions contemplated hereby;
(vii) other than Shrinkwrap Software, each
Contract that either individually or in the aggregate, if terminated or expired,
would materially impair or prevent Company's ability to (A) develop, use, sell,
distribute or manufacture any products or services provided to customers in the
twelve (12) months ending April 30, 2003; (B) enter a line of business currently
contemplated by Company or any Subsidiary; or (C) conduct internal operations in
substantially the same manner and with the substantially same cost structure as
conducted by Company in the (12) months ending April 30, 2003;
(viii) each Contract for distribution of the
products of the Company or any Subsidiary through distributors or other channels
for resale or license to, or use by, end users;
(ix) each Contract of the Company or any
Subsidiary relating to, and evidences of, indebtedness for borrowed money or the
deferred purchase price of property (whether incurred, assumed, guaranteed or
secured by any asset) in excess of One Million Dollars ($1,000,000) (excluding
any equipment leases involving aggregate annual payments of less than $1,000,000
per lease);
29
(x) each Contract relating to any legal entity
in the nature of a partnership, limited liability company, or joint venture, in
which the Company owns more than 25% of the voting rights, or a material
strategic alliance;
(xi) each Contract that requires the Company or
any Subsidiary to grant "most favored customer" pricing to any other person;
(xii) each Contract which could prohibit the
consummation of the transactions contemplated by this Agreement; and
(xiii) each material Contract 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 (other
than Employee Agreements), provided that any agreement that requires the payment
of $60,000 per annum shall be deemed to be material.
(b) (i) Each Material Contract is a legal, valid and
binding obligation of the Company or a Subsidiary and, to the Company's
knowledge, each other person who is a party thereto, enforceable against the
Company or such Subsidiary and to the Company's knowledge, each such other
person in accordance with its terms; (ii) neither the Company or any Subsidiary
nor, to the Company's knowledge, any other party thereto is in material default
any Material Contract; and (iii) neither the Company nor any Subsidiary is a
party to any Material Contract that, to the Company's knowledge, the Company or
such Subsidiary does not have the present ability to fully perform.
(c) Neither the Company nor any Subsidiary is a party to
or otherwise bound by:
(i) any fidelity or surety bond or completion
bond except as required pursuant to Section 412 of ERISA;
(ii) other than the money back guarantees
contained in license agreements to the Company's end user customers ("END USER
AGREEMENTS"), any Contract pursuant to which the Company or any Subsidiary has
agreed to provide liquidated damages in excess of $500,000 individually or
$5,000,000 in the aggregate for failure to meet performance or quality
milestones;
(iii) other than End User Agreements or agreements
with sales agents or distributors of the Company's products, any Contract
pursuant to which the Company or any Subsidiary has agreed to provide (A)
indemnification other than routine indemnification to a third party in the
ordinary course consistent with past practices (other than this Agreement) or
(B) guaranty to a third party (other than this Agreement);
(iv) any Contract relating to the acquisition of
assets, property or any interest in any business enterprise having a value in
excess of One Million Dollars ($1,000,000) or disposition of assets, property or
any interest in any business enterprise outside the ordinary course of the
Company's or any Subsidiary's business and where the consideration is not
Shares;
30
(v) any material joint marketing or development
Contract; or
(vi) any agreement pursuant to which the Company
has granted or may grant in the future, to any party any source code which is
Company Owned IP or Company Licensed IP, a license or option or other right to
use or acquire source code other than source code licenses contained in each End
User Agreement, or agreement with sales agents or distributors of the Company's
products, all forms of which have been provided to Parent.
Section 2.21. Suppliers and Customers. The documents and
information supplied by the Company to Parent or any of its representatives with
respect to relationships and volumes of business done with the Company's or any
Subsidiary's significant suppliers and customers are accurate in all material
respects. During the last twelve (12) months, neither the Company nor any
Subsidiary has received any written notices of termination or written threats of
termination from any of the ten (10) largest suppliers or the twenty-five (25)
largest customers of the Company and its Subsidiaries, taken as a whole.
Section 2.22. Affiliates. Except for the directors and
executive officers of the Company, each of whom is listed in Section 2.22 of the
Company Disclosure Schedule, there are no persons who, to the knowledge of the
Company, may be deemed to be affiliates of the Company under Rule 145 of the
Securities Act ("COMPANY AFFILIATES").
Section 2.23. Opinion of Financial Advisor. Xxxxxx Xxxxxxx &
Co. Incorporated (the "COMPANY FINANCIAL ADVISOR") has delivered to the Company
Board its opinion to the effect that as of the date such opinion was delivered,
the Merger Consideration is fair, from a financial point of view, to the holders
of Shares (the "COMPANY FAIRNESS OPINION"). The Company has been authorized by
the Company Financial Advisor to permit, subject to the prior review and consent
by the Company Financial Advisor (such consent not to be unreasonably withheld),
the inclusion of the Company Fairness Opinion (or a reference thereto) in the
Joint Proxy Statement/Prospectus. As of the date hereof, such opinion has not
been withdrawn, revoked or modified. A true and complete copy of the Company
Fairness Opinion will be delivered to Parent promptly after receipt of written
confirmation thereof.
Section 2.24. Brokers. No broker, finder or investment banker
(other than the Company Financial Advisor, a true and correct copy of whose
engagement agreement has been provided to Parent) is entitled to any brokerage,
finder's or other fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
the Company.
Section 2.25. Company Rights Agreement. The Company has
amended the Company Rights Agreement (a copy of which such amendment has been
provided to Parent prior to the date hereof) so that the entering into of this
Agreement and the Company Voting Agreements, and the consummation of the
transactions contemplated hereby and thereby, do not and will not on the date
hereof or as the result of the passage of time (i) result in any person being
deemed to be an "ACQUIRING PERSON" (as defined in the Company Rights Agreement);
(ii) result in the ability of any person to exercise any Company Rights under
the Company Rights Agreement; (iii) enable or require the Company Rights to
separate from the
31
Shares to which they are attached or to be triggered or become exercisable; or
(iv) enable the Company to exchange any Company Rights for Shares, pursuant to
Section 24 of the Company Rights Agreement or otherwise. No "DISTRIBUTION DATE"
or "TRIGGERING EVENT" (as such terms are defined in the Company Rights
Agreement) has occurred or will occur as a result of the entering into of this
Agreement and the Company Voting Agreements. Copies of the Company Rights
Agreement, and all amendments thereto, have previously been made available to
Parent.
Section 2.26. Takeover Statutes. The Company Board has taken
all actions so that the restrictions contained in Section 203 of the DGCL
applicable to a "business combination" (as defined in such Section 203), and any
other similar Applicable Law, will not apply to Parent or Acquisition with
respect to the execution, delivery or performance of this Agreement and the
consummation of the Merger and the other transactions contemplated hereby.
Section 2.27 Interested Party Transactions. No director,
officer or other affiliate of the Company has or has had, directly or
indirectly, (i) an economic interest in any person that has furnished or sold,
or furnishes or sells, services or products that the Company or any Subsidiary
furnishes or sells, or proposes to furnish or sell; (ii) an economic interest in
any person that purchases from or sells or furnishes to, the Company or any
Subsidiary, any goods or services; (iii) a beneficial interest in any Contract
included in Section 2.15 or 2.20 of the Company Disclosure Schedule; or (iv) any
contractual or other arrangement with the Company or any Subsidiary; provided,
however, that ownership of no more than one percent (1%) of the outstanding
voting stock of a publicly traded corporation shall not be deemed an "economic
interest in any person" for purposes of this Section 2.27.
Section 2.28. Representations Complete. The representations
and warranties made by the Company in this Agreement, the statements made in any
Schedules or certificates furnished by the Company pursuant to this Agreement,
and the statements made by the Company in any documents mailed, delivered or
furnished to the stockholders of Parent or the Company in connection with
soliciting their proxy or consent to this Agreement and the Merger, do not
contain and will not contain, as of their respective dates and as of the
Effective Time, any untrue statement of a material fact, nor do they omit or
will they omit, as of their respective dates or as of the Effective Time, to
state any material fact necessary in order to make the statements contained
herein or therein, in the light of the circumstances under which they were made,
not misleading.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF
PARENT AND ACQUISITION
Parent and Acquisition hereby represent and warrant to the
Company, subject to the exceptions set forth in the Disclosure Schedule (the
"PARENT DISCLOSURE SCHEDULE") delivered by Parent simultaneously with the
execution hereof (which Parent Disclosure
32
Schedule shall specifically identify the specific Section or subsection, as
applicable, to which each such exception relates) that:
Section 3.1. Organization.
(a) Each of Parent and Acquisition is duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all requisite power and authority to own, lease and operate its
properties and to carry on its businesses as now being conducted. Parent has
made available to the Company complete and accurate copies of the Certificates
of Incorporation and bylaws as in full force and effect on the date hereof, of
Parent and Acquisition.
(b) Each of Parent and Acquisition is duly qualified or
licensed and in good standing to do business in each jurisdiction in which the
property owned, leased or operated by it or the nature of the business conducted
by it makes such qualification or licensing necessary, except in such
jurisdictions where the failure to be so duly qualified or licensed and in good
standing would not, individually or in the aggregate, have a Material Adverse
Effect on Parent.
Section 3.2. Capitalization of Parent and its Subsidiaries.
(a) The authorized capital stock of the Parent consists
of (i) Seven Hundred Million (700,000,000) shares of Parent Common Stock, of
which, as of May 27, 2003, Three Hundred Sixteen Million Six Hundred Five
Thousand Nine Hundred Forty-One (316,605,941) shares of Parent Common Stock were
issued and outstanding; and (ii) Two Million (2,000,000) shares of preferred
stock, par value $0.01 per share, none of which are outstanding. All of the
outstanding shares of Parent Common Stock have been validly issued and are fully
paid, nonassessable and free of preemptive rights. As of May 27, 2003, an
aggregate of Ninety-Nine Million Six Hundred Six Thousand Seven Hundred
Thirty-Eight (99,606,738) shares of Parent Common Stock were reserved for
issuance of which Eighty-Two Million Five Hundred Forty Thousand Thirty-Nine
(82,540,039) shares of Parent Common Stock were issuable upon or otherwise
deliverable in connection with the exercise of outstanding options to purchase
Parent Common Stock issued pursuant to the following plans ("PARENT PLANS"):
Amended and Restated 1989 Stock Plan, 1992 Employee Stock Purchase Plan, Amended
and Restated 2001 Stock Plan, 2000 Nonstatutory Stock Option Plan, PeopleSoft
Inc. 2003 Directors Stock Plan, Teamscape Corporation 1998 Stock Plan,
SkillsVillage, Inc. 1999 Stock Plan, Advance Planning Solutions, Inc. 1998 Stock
Plan, Intrepid Systems, Inc. 1992 Stock Option Plan, Red Pepper Software Company
1993 Stock Option Plan, Trimark Technologies, Inc. 1993 Stock Option Plan,
Trimark Technologies, Inc. Employee and Consultants Stock Option Plan 1995,
Trimark Technologies Directors and Executive Officers Non-Statutory Stock Option
Plan 1998, Trimark Technologies Directors and Executive Officers Stock Option
Plan 1995, The Vantive Corporation Amended and Restated 1991 Stock Option Plan,
The Vantive Corporation 1997 Nonstatutory Stock Option Plan. Between May 27,
2003 and the date hereof, no shares of the Parent's capital stock have been
issued other than pursuant to options already in existence on such first date
issued under Parent Plans, and between May 27, 2003 and the date hereof, no
stock options have been granted. Except as set forth above and for the rights
(the "PARENT RIGHTS") issued pursuant to
33
Parent's First Amended and Restated Preferred Share Rights Agreement, effective
as of December 16, 1997, between Parent and BankBoston, N.A. (the "PARENT RIGHTS
AGREEMENT"), as of the date hereof, there are outstanding (i) no shares of
capital stock or other voting securities of Parent, (ii) no securities of Parent
or any of its subsidiaries convertible into or exchangeable or exercisable for
shares of capital stock or other voting securities of Parent, (iii) no options,
warrants or other rights to acquire from Parent or any of its subsidiaries, and,
except as described in the Parent SEC Reports, no obligations of Parent or any
of its subsidiaries to issue, any capital stock, voting securities or securities
convertible into or exchangeable or exercisable for capital stock or other
voting securities of Parent, and (iv) no equity equivalent interests in the
ownership or earnings of the Parent or other similar rights (collectively
"PARENT SECURITIES"). As of the date hereof, there are no outstanding rights or
obligations of the Parent or any of its subsidiaries to repurchase, redeem or
otherwise acquire any Parent Securities. Other than the Parent Voting
Agreements, there are no stockholder agreements, voting trusts or other
arrangements or understandings to which Parent is a party or by which it is
bound relating to the voting or registration of any shares of capital stock or
other voting securities of Parent.
(b) The Parent Rights and Parent Common Stock constitute
the only classes of equity securities of Parent or its subsidiaries registered
or required to be registered under the Exchange Act.
Section 3.3. Authority Relative to this Agreement.
(a) Each of Parent and Acquisition has all necessary
corporate power and authority to execute and deliver this Agreement, to perform
its obligations under this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by the boards of directors of Parent and Acquisition and by Parent as
the sole stockholder of Acquisition. The Board of Directors of Parent (the
"PARENT BOARD") has directed that the issuance of Parent Common Stock pursuant
to this Agreement be submitted to Parent's stockholders for approval at the
meeting of Parent's stockholders to be held in connection with the Merger (the
"PARENT STOCKHOLDERS MEETING") and, except for the approval of the issuance of
Parent Common Stock in the Merger by majority vote at a meeting of Parent's
stockholders at which a quorum is present (the "PARENT STOCKHOLDER APPROVAL"),
no other corporate proceedings on the part of Parent or Acquisition are
necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by each of Parent and Acquisition and assuming the due authorization,
execution and delivery hereof by the Company, constitutes a valid, legal and
binding agreement of each of Parent and Acquisition enforceable against each of
Parent and Acquisition in accordance with its terms, subject to any applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws now or
hereafter in effect relating to creditors' rights generally or to general
principles of equity.
(b) Without limiting the generality of the foregoing, the
Parent Board has unanimously (i) approved this Agreement, the Merger and the
other transactions contemplated hereby, (ii) resolved to recommend that Parent's
stockholders approve the issuance of Parent
34
Common Stock in the Merger, and (iii) has not withdrawn or modified such
approval or resolution to recommend.
Section 3.4. Parent Common Stock. The shares of Parent Common
Stock to be issued upon exercise of Company Stock Options assumed by Parent
hereunder will, when issued and delivered in accordance with this Agreement, be
duly authorized, validly issued, fully paid and non-assessable and issued in
compliance with federal and state securities laws. Parent has reserved the
shares of Parent Common Stock to be issued upon exercise of Company Stock
Options assumed by Parent pursuant hereto.
Section 3.5. SEC Reports; Financial Statements.
(a) Parent has filed all required forms, reports and
documents ("PARENT SEC REPORTS") with the SEC since December 31, 1999, each of
which complied at the time of filing in all material respects with all
applicable requirements of the Securities Act and the Exchange Act, each law as
in effect on the dates such forms, reports and documents were filed. None of
such Parent SEC Reports, including any financial statements or schedules
included or incorporated by reference therein, contained when filed any untrue
statement of a material fact or omitted to state a material fact required to be
stated or incorporated by reference therein or necessary in order to make the
statements therein in light of the circumstances under which they were made not
misleading, except to the extent superseded or amended by a Parent SEC Report
filed subsequently and prior to the date hereof. The consolidated financial
statements of Parent included in the Parent SEC Reports fairly present in
conformity with United States generally accepted accounting principles applied
on a consistent basis (except as may be indicated in the notes thereto) the
consolidated financial position of Parent and its consolidated subsidiaries as
of the dates thereof and their consolidated results of operations and cash flows
for the periods then ended.
(b) Parent has heretofore made, and hereafter will make,
available to the Company a complete and correct copy of any amendments or
modifications that are required to be filed with or submitted to the SEC but
have not yet been filed with or submitted to the SEC to agreements, documents or
other instruments that previously had been filed with or submitted to the SEC by
Parent pursuant to the Exchange Act.
(c) Each required form, report and document containing
financial statements that has been filed with or submitted to the SEC since July
31, 2002, was accompanied by the certifications required to be filed or
submitted by Parent's chief executive officer and chief financial officer
pursuant to the Xxxxxxxx-Xxxxx Act, and at the time of filing or submission of
each such certification, such certification was true and accurate and complied
with the Xxxxxxxx-Xxxxx Act and the rules and regulations promulgated
thereunder.
(d) Since December 31, 1999, neither Parent nor any of
its subsidiaries nor, to Parent's knowledge, any director, officer, employee,
auditor, accountant or representative of Parent or any of its subsidiaries has
received or otherwise had or obtained knowledge of any complaint, allegation,
assertion or claim, whether written or oral, regarding the accounting or
auditing practices, procedures, methodologies or methods of Parent or any of its
subsidiaries or their respective internal accounting controls, including any
complaint,
35
allegation, assertion or claim that Parent or any of its subsidiaries has
engaged in questionable accounting or auditing practices. No attorney
representing Parent or any of its subsidiaries, whether or not employed by
Parent or any of its subsidiaries, has reported evidence of a material violation
of securities laws, breach of fiduciary duty or similar violation by Parent or
any of its officers, directors, employees or agents to the Parent Board or any
committee thereof or to any director or officer of Parent.
(e) To the knowledge of Parent, no employee of Parent or
any of its subsidiaries has provided or is providing information to any law
enforcement agency regarding the commission or possible commission of any crime
or the violation or possible violation of any Applicable Law. Neither Parent nor
any of its subsidiaries nor any officer, employee, contractor, subcontractor or
agent of Parent or any such subsidiary has discharged, demoted, suspended,
threatened, harassed or in any other manner discriminated against an employee of
Parent or any of its subsidiaries in the terms and conditions of employment
because of any act of such employee described in 18 U.S.C. Section 1514A(a).
Section 3.6. Information Supplied. None of the information
supplied or to be supplied by Parent or Acquisition for inclusion or
incorporation by reference in (i) the S-4 will, at the time the S-4 is filed
with the SEC and at the time it becomes effective under the Securities Act,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading, or (ii) the Joint Proxy Statement/Prospectus will, at the date
mailed to stockholders of the Company and Parent and at the times of the Company
Stockholders Meeting and the Parent Stockholders Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein in light of
the circumstances under which they are made not misleading. Each of the S-4 and
the Joint Proxy Statement/Prospectus will comply, as of its mailing date, as to
form in all material respects the provisions of the Exchange Act and the rules
and regulations thereunder. Notwithstanding the foregoing, Parent makes no
representation, warranty or covenant with respect to any information supplied or
required to be supplied by the Company which is contained in or omitted from any
of the foregoing documents or which is incorporated by reference therein.
Section 3.7. Consents and Approvals; No Violations. Except for
filings, permits, authorizations, consents and approvals as may be required
under and other applicable requirements of the Securities Act, the Exchange Act,
state securities or blue sky laws, the rules and regulations of the Nasdaq
National Market, the HSR Act, and any filings under similar competition or
merger notification laws or regulations of foreign Governmental Entities and the
filing and recordation of the Certificate of Merger as required by the DGCL, no
material filing with or notice to, and no material permit, authorization,
consent or approval of any Governmental Entity is necessary for the execution
and delivery by Parent or Acquisition of this Agreement or the consummation by
Parent or Acquisition of the transactions contemplated hereby. Neither the
execution, delivery and performance of this Agreement by Parent or Acquisition
nor the consummation by Parent or Acquisition of the transactions contemplated
hereby will (i) conflict with or result in any breach of any provision of the
respective Certificates of Incorporation or bylaws (or similar governing
documents) of Parent or Acquisition, (ii) result in a violation or breach of or
constitute (with or without due
36
notice or lapse of time or both) a default (or give rise to any right of
termination, amendment, cancellation or acceleration or Lien) under any of the
terms, conditions or provisions of any material note, bond, mortgage, indenture,
lease, license, contract, agreement or other instrument or obligation to which
Parent or Acquisition or any of Parent's other subsidiaries is a party or by
which any of them or any of their respective properties or assets may be bound,
or (iii) violate any material order, writ, injunction, decree, law, statute,
rule or regulation applicable to Parent or Acquisition or any of Parent's other
subsidiaries or any of their respective properties or assets.
Section 3.8. No Default. Neither Parent nor any of its
subsidiaries is in (i) breach, default or violation (and no event has occurred
that with notice or the lapse of time, or both, would constitute a breach,
default or violation) of any term, condition or provision of its Certificate of
Incorporation or bylaws (or similar governing documents), or (ii) material
breach, default or violation (and no event has occurred that with notice or the
lapse of time, or both, would constitute a breach, default or violation) of any
term, condition or provision of (a) any material note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or obligation
to which Parent nor any of its subsidiaries is now a party or by which it or any
of its properties or assets may be bound, or (b) any material order, writ,
injunction, decree, law, statute, rule or regulation applicable to Parent nor
any of its subsidiaries or any of its properties or assets.
Section 3.9. Litigation. Except as disclosed in the Parent SEC
Reports filed on or before the date hereof, there is no suit, action,
proceeding, investigation or material claim pending or, to the knowledge of
Parent, any credible threat thereof, against Parent or any of its subsidiaries
or any of their respective properties or assets before any Governmental Entity.
Except as disclosed in the Parent SEC Reports filed on or before the date
hereof, neither Parent nor any of its subsidiaries is subject to any outstanding
order, writ, injunction or decree of any Governmental Entity that reasonably
could be expected to result in any loss, expense, charge, assessment, levy, fine
or other liability being imposed upon or incurred by the Parent or such
subsidiary exceeding One Million Dollars ($1,000,000) or that reasonably could
be expected to prevent the consummation of the transactions contemplated hereby.
Section 3.10. Opinion of Financial Advisor. Citigroup Global
Markets (the "PARENT FINANCIAL ADVISOR") has delivered to the Parent Board its
opinion to the effect that, as of the date such opinion was delivered, the
Exchange Ratio is fair, from a financial point of view, to Parent (the "PARENT
FAIRNESS OPINION"). Parent has been authorized by the Parent Financial Advisor
to permit the inclusion of the Parent Fairness Opinion (or, subject to the prior
review and approval of the Parent Financial Advisor (such approval not to be
unreasonably withheld), a reference thereto) in the Joint Proxy
Statement/Prospectus. Such opinion has not been withdrawn, revoked or modified
as of the date hereof. A true and complete copy of the Parent Fairness Opinion
will be delivered to the Company promptly after receipt of written confirmation
thereof.
Section 3.11. Brokers. No broker, finder or investment banker
(other than the Parent Financial Advisor) is entitled to any brokerage, finder's
or other fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of Parent or
Acquisition.
37
Section 3.12. No Prior Activities. Except for obligations
incurred in connection with its incorporation or organization or the
negotiation, execution and consummation of this Agreement and the transactions
contemplated hereby, Acquisition has neither incurred any obligation or
liability nor engaged in any business or activity of any type or kind or entered
into any agreement or arrangement with any person.
Section 3.13. No Undisclosed Liabilities; Absence of Changes.
Except as and to the extent disclosed by Parent in the Parent SEC Reports filed
on or before the date hereof other than liabilities or obligations to suppliers,
vendors, employees and landlords incurred in the ordinary and usual course of
such business consistent with past practices, neither Parent nor any of its
subsidiaries has any liabilities or obligations of any nature, whether or not
accrued, contingent or otherwise, that would be required by United States
generally accepted accounting principles to be reflected on a consolidated
balance sheet of Parent (including the notes thereto). Except for the
negotiation and execution of this Agreement, between March 31, 2003 and the date
hereof, the Parent and each of its subsidiaries have conducted their respective
businesses in all material respects only in, and have not engaged in any
material transaction other than according to, the ordinary and usual course of
such business consistent with past practices, and there has not been any
Material Adverse Effect on Parent.
Section 3.14. Compliance with Applicable Law. Except as
disclosed in the Parent SEC Reports filed on or before the date hereof, each of
Parent and its subsidiaries holds all material permits, licenses, variances,
exemptions, orders and approvals of all Governmental Entities necessary for the
lawful conduct of their respective businesses (collectively, the "PARENT
PERMITS"). Except as disclosed in the Parent SEC Reports filed on or before the
date hereof, Parent and its subsidiaries have materially complied, and are in
material compliance with, the terms of Parent Permits. Except as disclosed in
the Parent SEC Reports, the businesses of Parent and its subsidiaries have been
and are being conducted in material compliance with all material Applicable
Laws. Except as disclosed in the Parent SEC Reports filed on or before the date
hereof, no investigation or review by any Governmental Entity with respect to
Parent or any of its subsidiaries is pending or, to the knowledge of Parent,
threatened.
Section 3.15 Suppliers and Customers. The documents and
information supplied by Parent to the Company or any of its representatives with
respect to relationships and volumes of business done with Parent's or any of
its subsidiaries' significant suppliers and customers are accurate in all
material respects. During the last twelve (12) months, neither Parent nor any or
its subsidiaries has received any written notices of termination or written
threats of termination from any of the ten (10) largest suppliers or the
twenty-five (25) largest customers of Parent and its subsidiaries, taken as a
whole.
Section 3.16 Parent Employee Benefit Matters.
(a) Section 3.16(a) of the Parent Disclosure Schedule
lists, with respect to employees in the United States of Parent and, to the
knowledge of Parent and its subsidiaries, all employee benefit plans (as defined
in Section 3(3) of ERISA) and all bonus, stock option, stock purchase,
restricted stock, long term incentive, deferred compensation, retiree medical or
life insurance, supplemental retirement, severance or other benefit plans,
programs or
38
arrangements, and all employment, change in control, and severance agreements,
to which Parent or any of its subsidiaries is a party, with respect to which
Parent or any of its subsidiaries has any obligation or which are maintained,
contributed to or sponsored by Parent or any of its subsidiaries for the benefit
of any current or former employee, officer or director of Parent or any of its
subsidiaries (collectively, the "PARENT BENEFIT PLANS"), other than plans,
programs, arrangements or agreements that are not material. Copies or summaries
of each material Parent Benefit Plan have been made available to the Company.
Neither Parent nor any of its subsidiaries has any written commitment to create,
adopt or amend any material employee benefit plan, program, arrangement or
agreement, other than any immaterial modification or any modification or change
required by Applicable Law.
(b) Each Parent Benefit Plan is now in all respects in
compliance with its terms and with the requirements of all applicable laws and
regulations, including, without limitation, ERISA and the Code, except where any
non-compliance would not reasonably be likely, individually or in the aggregate,
to have a Material Adverse Effect on Parent. To the knowledge of Parent, no
action, claim or proceeding is pending or threatened with respect to any Parent
Benefit Plan, other than claims for benefits in the ordinary course and other
than such actions, claims or proceedings that could not reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect.
Section 3.17 Parent Intellectual Property. Parent (or one
of its subsidiaries) owns all of the Intellectual Property, or has obtained the
right to use all of the Intellectual Property that is not owned by it, that is
used in any material respect in Parent's businesses as currently conducted. The
products marketed, sold or licensed to customers by Parent and its subsidiaries,
exclusive of the Intellectual Property licensed from third parties, and all
Intellectual Property owned by Parent (or one of its subsidiaries) and used in
any material respect in Parent's businesses as currently conducted, do not
infringe upon, violate or constitute the unauthorized use of any valid and
enforceable rights owned or controlled by any third party, including any
Intellectual Property of any third party. To Parent's knowledge, the
Intellectual Property it has licensed from third parties, and used in any
material respect in Parent's businesses as currently conducted, does not
infringe upon, violate or constitute the unauthorized use of any valid and
enforceable rights owned or controlled by any other third party. To Parent's
knowledge, no Significant Parent Product contains any material defects, the
costs of which to repair or replace (or otherwise cure pursuant to a contractual
obligation to a customer) would result in a Material Adverse Effect on Parent.
Parent has received no formal written notice terminating or threatening the
termination of any Parent Technology License due to Parent's breach thereof. For
the purposes of this Section 3.17, "SIGNIFICANT PARENT PRODUCT" means any
product sold by Parent to third party end users that accounts for a substantial
portion of Parent's revenue and "PARENT TECHNOLOGY LICENSE" means any technology
license between Parent and any third party which allows Parent to embed
technology in a Significant Parent Product.
Section 3.18 Representations Complete. The representations and
warranties made by Parent and Acquisition in this Agreement, the statements made
in any certificates furnished by Parent and Acquisition pursuant to this
Agreement, and the statements made by Parent and Acquisition in any documents
mailed, delivered or furnished to the stockholders of Parent and the Company in
connection with soliciting their proxy or consent to this
39
Agreement and the Merger, do not contain and will not contain, as of their
respective dates and as of the Effective Time, any untrue statement of a
material fact, nor do they omit or will they omit, as of their respective dates
or as of the Effective Time, to state any material fact necessary in order to
make the statements contained herein or therein, in the light of the
circumstances under which they were made, not misleading.
ARTICLE 4
COVENANTS
Section 4.1. Conduct of Business.
(a) Conduct of Business of the Company. Except (i) as
expressly contemplated by this Agreement, (ii) as described in Section 4.1 of
the Company Disclosure Schedule, or (iii) to the extent that Parent shall
otherwise consent in writing (such consent or declination to consent not to be
unreasonably delayed), during the period from the date hereof to the earlier of
the Effective Time and the termination of this Agreement in accordance with its
terms, the Company shall, and shall cause each Subsidiary to, conduct its
operations in the ordinary course of business consistent with past practices
and, to the extent consistent therewith, and with no less diligence and effort
than would be applied in the absence of this Agreement, seek to preserve intact
its current business organizations, keep available the service of its current
officers and employees and preserve its relationships with customers, suppliers,
distributors, lessors, creditors, employees, contractors and others having
business dealings with it with the intention that its goodwill and ongoing
businesses shall be unimpaired at the Effective Time. Without limiting the
generality of the foregoing, except as otherwise expressly provided in this
Agreement and except as described in Section 4.1 of the Company Disclosure
Schedule, prior to the Effective Time, neither the Company nor any Subsidiary
shall, without the prior written consent (such consent or declination to consent
not to be unreasonably delayed) of Parent:
(i) amend its Certificate of Incorporation or
bylaws (or other similar governing instrument);
(ii) authorize for issuance, issue, sell, deliver
or agree or commit to issue, sell or deliver (whether through the issuance or
granting of options, warrants, commitments, subscriptions, rights to purchase or
otherwise), or alter or amend the terms of, any stock of any class or any other
debt or equity securities or equity equivalents (including any stock options or
stock appreciation rights) except for (A) the issuance and sale of Shares
pursuant to options granted under the Company Plans prior to the date hereof,
(B) options granted under Company Plans to purchase Shares to new hires of the
Company or any Subsidiary up to an aggregate maximum amount of Three Hundred
Twenty Thousand (320,000) Shares subject to options, provided that no such
options may be issued that will provide for acceleration as a result of the
consummation of the transactions contemplated by this Agreement whether or not
in connection with any other event, including termination of employment, (C)
options granted under Company Plans to purchase Shares to current employees in
connection with any adjustments or promotions on a basis consistent with past
40
practices of the Company up to a maximum of Ten Thousand (10,000) Shares subject
to options individually and an aggregate maximum of One Hundred Sixty Thousand
(160,000) Shares subject to options, provided that no such options may be issued
that will provide for acceleration as a result of the consummation of the
transactions contemplated by this Agreement whether or not in connection with
any other event, including termination of employment;
(iii) split, combine or reclassify any shares of
its capital stock, declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
its capital stock, make any other actual, constructive or deemed distribution in
respect of its capital stock or otherwise make any payments to stockholders in
their capacity as such, or redeem or otherwise acquire any of its securities or
any securities of any Subsidiary (other than the repurchase of Restricted
Company Shares and cancellation of Company Stock Options at repurchase price
that is less than the last quoted sales price of the Shares on the Nasdaq
National Market following termination of employment with, or provision of
services to, the Company or any Subsidiary);
(iv) adopt a plan of complete or partial
liquidation, dissolution, merger, consolidation, restructuring, recapitalization
or other reorganization (other than the Merger);
(v) alter through merger, liquidation,
reorganization, restructuring or any other fashion the corporate structure of
any Subsidiary (other than any wholly owned Subsidiary or foreign Subsidiary
that would be wholly owned but for a nominal number of director or similar
shares being owned by a foreign national as required by the law of the
jurisdiction of such foreign Subsidiary's organization);
(vi) (A) incur or assume any long-term or
short-term debt or issue any debt securities in excess of One Million Dollars
($1,000,000) or trade payables arising in the ordinary course of business
consistent with past practices; (B) assume, guarantee, endorse or otherwise
become liable or responsible (whether directly, contingently or otherwise) for
the obligations of any other person except for obligations of any Subsidiary
incurred in the ordinary course of business consistent with past practices; (C)
make any loans, advances or capital contributions to or investments in any other
person (other than to a Subsidiary or customary loans or advances to employees
in each case in the ordinary course of business consistent with past practices);
(D) pledge or otherwise subject to any Lien shares of capital stock of the
Company or any Subsidiary or any of the Other Interests; or (E) mortgage or
pledge any of its material properties or assets, tangible or intangible, or
create or suffer to exist any new material Lien (or any increase or expansion of
the scope of any existing Lien) thereupon other than as a result of
modifications to synthetic lease agreements outstanding on the date hereof;
(vii) except as may be permitted by clause (viii)
below or as may be required by Applicable Law, (A) enter into, adopt, make,
amend in any manner or terminate any employment agreement or any bonus payments
other than bonus payments to any person who is not a participant under the
Change in Control Plan and that are not in excess of Twenty Thousand Dollars
($20,000) individually or Five Hundred Thousand Dollars ($500,000) in the
41
aggregate, profit sharing, compensation, severance, termination, stock option,
stock appreciation right, restricted stock, performance unit, stock equivalent,
stock purchase agreement other than (x) offer letters to new hires provided that
no such offer letter shall provide (1) for the grant of options under Company
Plans that will provide for acceleration, or (2) provide any severance rights,
in either case as a result of the transactions contemplated by this Agreement
whether or not in connection with any other event, including termination of
employment, or alter any "at will" employment relationship and (y) options under
Company Plans to purchase Shares permitted by clause (ii), or (B) enter into,
adopt amend in any manner or terminate any pension, retirement, deferred
compensation, employment, health, life, or disability insurance, dependent care,
severance or other employee benefit plan agreement, trust, fund or other
arrangement for the benefit or welfare of any director, officer, employee or
consultant in any manner or (C) increase in any manner the compensation or
fringe benefits of any director, officer or employee or pay any benefit not
required by any plan and arrangement as in effect as of the date hereof
(including the granting of stock options, restricted stock, stock appreciation
rights or performance units);
(viii) (A) pay or agree to pay any severance or
termination pay to any director, officer, employee or consultant, except
payments (1) made pursuant to written agreements outstanding on the date hereof
or the Company's written policy in existence on the date hereof, the terms of
which are in all material respects completely and correctly disclosed on Section
4.1(a)(viii) of the Company Disclosure Schedule and copies of which have been
provided to Parent, (2) that are set forth in Section 4.1(a)(viii) of the
Company Disclosure Schedule with respect to the termination of employees or
consultants or (3) as required by Applicable Law or (B) amend or agree to amend
the Change in Control Plan, add any individual to the coverage of the Change in
Control Plan or increase any person's benefits under the Change in Control Plan;
(ix) exercise its discretion with respect to or
otherwise voluntarily accelerate the vesting of any Company Stock Option as a
result of the Merger, any other change of control of the Company (as defined in
the Company Plans) or otherwise;
(x) (A) except as permitted by clause (xiii)(E)
below, 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 Two Million Dollars ($2,000,000) in the aggregate, or 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
consistent with past practices; (B) enter into any exclusive license,
distribution, marketing or sales agreements; (C) enter into any commitment to
any person to (1) develop software without charge or (2) incorporate any
software into any of the Company's products; (D) sell, transfer or otherwise
dispose of any Intellectual Property other than sales of its products and other
non-exclusive licenses that are in the ordinary course of business and
consistent with past practices or (E) grant "most favored nation" pricing to any
Person;
(xi) except as may be required as a result of a
change in law or in United States generally accepted accounting principles,
change any of the accounting principles, practices or methods used by it;
42
(xii) revalue any of its assets or properties,
including writing down the value of assets or writing-off notes or accounts
receivable, other than in the ordinary course of business consistent with past
practices or due to changes in GAAP requiring such revaluation that are adopted
after the date hereof;
(xiii) (A) acquire (by merger, consolidation or
acquisition of stock or assets) any corporation, partnership or other person or
division or business unit thereof or any equity interest therein; (B) enter into
any contract or agreement that would be material to the Company and its
Subsidiaries, taken as a whole other than customer contracts in the ordinary
course of business consistent with past practices; (C) amend, modify or waive
any right under any Material Contract of the Company or any Subsidiary; (D)
modify its standard warranty terms for its products or services or amend or
modify any product or service warranties in effect as of the date hereof in any
material manner that is adverse to the Company or any Subsidiary; or (E)
authorize any additional or new capital expenditure or expenditures that
individually or in the aggregate are in excess of One Million One Hundred
Thousand Dollars ($1,100,000) per month, provided that the amount by which
capital expenditures in any month shall be less than One Million One Hundred
Thousand Dollars ($1,100,000) shall be carried over to future months to increase
the maximum that may be spent on capital expenditures in such future months;
(xiv) 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 refund of Taxes previously paid,
or agree to an extension of a statute of limitations with respect to the
assessment or determination of Taxes;
(xv) 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 Law, or fail to pay any
material Taxes when due;
(xvi) settle or compromise any pending or
threatened suit, action or claim that (A) relates to the transactions
contemplated hereby or (B) the settlement or compromise of which would involves
more than One Million Dollars ($1,000,000) or that would otherwise be material
to the Company with respect to non-monetary matters and its Subsidiaries or
relates to any Intellectual Property matters;
(xvii) enter into any licensing, distribution,
sponsorship, advertising, merchant program or other similar contracts,
agreements, or obligations which provide for payments by the Company or any
Subsidiary in an amount in excess of One Million Dollars ($1,000,000) over the
noncancelable term of the agreement;
43
(xviii) terminate any material software development
project that is currently ongoing, except pursuant to the terms of existing
contracts with customers;
(xix) fail to make in a timely manner any filings
with the SEC required under the Securities Act or the Exchange Act or the rules
and regulations promulgated thereunder;
(xx) subject to Sections 4.2 and 4.3 hereof,
engage in any action with the intent to directly or indirectly adversely impact
any of the transactions contemplated by this Agreement;
(xxi) knowingly take any action that would result
in a failure to maintain trading of the Shares on the Nasdaq National Market; or
(xxii) take or agree in writing or otherwise to
take any of the actions described in Sections 4.1(i) through 4.1(xxi) (and it
shall use all reasonable efforts not to take any action that would make any of
the representations or warranties of the Company contained in this Agreement
untrue or incorrect).
(b) Conduct of Business of Parent. Except (i) as
expressly contemplated by this Agreement, (ii) as described in Section 4.2 of
the Parent Disclosure Schedule, or (iii) to the extent that Company shall
otherwise consent in writing (such consent or declination to consent not to be
unreasonably delayed), during the period from the date hereof to earlier of the
Effective Time and the termination of this Agreement in accordance with its
terms, prior to the Effective Time, Parent and its subsidiaries shall
collectively conduct their operations in the ordinary course of business
consistent with past practices, and without limiting the generality of the
foregoing neither Parent nor Acquisition will:
(i) amend its Certificate of Incorporation or
bylaws (or other similar governing instrument) in a manner that would reasonably
be likely to adversely affect the Parent Common Stock;
(ii) pay or set a record date prior to the
Effective Date relating to any extraordinary dividend or extraordinary
distribution;
(iii) knowingly take any action that would result
in a failure to maintain trading of Parent Common Stock on the Nasdaq National
Market;
(iv) fail to make in a timely manner any filings
with the SEC required under the Securities Act or the Exchange Act or the rules
and regulations promulgated thereunder;
(v) acquire (by merger, consolidation or
acquisition of stock or assets) any corporation, partnership or other person or
division or business unit thereof or any equity interest therein if such
acquisition (A) would be deemed to be a significant acquisition as defined in
Rule 11-01(b)(1) of Regulation S-X, or (B) would create a substantial risk of
delay in the termination or expiration of any waiting period applicable to the
Merger under the HSR Act, provided that the limitations contained in this clause
(B) shall not apply to any
44
transaction closing after the termination or expiration of any waiting period
applicable to the Merger under the HSR Act;
(vi) engage in any action with the intent to
directly or indirectly adversely impact any of the transactions contemplated by
this Agreement; or
(vii) take or agree in writing or otherwise to
take any of the actions described in Sections 4.1(b)(i) through 4.1(b)(vi) (and
it shall use all reasonable efforts not to take any action that would make any
of the representations or warranties of Parent contained in this Agreement
untrue or incorrect).
Section 4.2. Preparation of S-4 and the Joint Proxy Statement
/Prospectus; Stockholders Meetings.
(a) As promptly as reasonably practicable following the
date hereof, Parent and the Company shall cooperate in preparing and each shall
cause to be filed with the SEC mutually acceptable proxy materials that shall
constitute the Joint Proxy Statement/Prospectus and Parent shall prepare and
file with the SEC the S-4. The Joint Proxy Statement/Prospectus will be included
as a prospectus in and will constitute a part of the S-4 as Parent's prospectus
and, subject to the provisions of Section 4.3(b), shall include the Company
Recommendation and the Parent Recommendation. Each of Parent and the Company
shall use commercially reasonable efforts to have the Joint Proxy
Statement/Prospectus declared effective under the Securities Act as promptly as
practicable after such filing and to keep the S-4 effective as long as is
necessary to consummate the Merger and the transactions contemplated hereby.
Each of Parent and the Company shall, as promptly as practicable after receipt
thereof, provide the other party with copies of any written comments and advise
each other of any oral comments with respect to the Joint Proxy
Statement/Prospectus or S-4 received from the SEC. Each party shall cooperate
and provide the other party with a reasonable opportunity to review and comment
on any amendment or supplement to the Joint Proxy Statement/Prospectus and the
S-4 prior to filing such with the SEC and will provide each other with a copy of
all such filings made with the SEC. Notwithstanding any other provision herein
to the contrary, no amendment or supplement (including by incorporation by
reference) to the Joint Proxy Statement/Prospectus or the S-4 shall be made
without the approval of both Parent and the Company, which approval shall not be
unreasonably withheld or delayed; provided that, with respect to documents filed
by a party hereto that are incorporated by reference in the S-4 or Joint Proxy
Statement/Prospectus, this right of approval shall apply only with respect to
information relating to the other party or its business, financial condition or
results of operations; and provided, further, that the Company, in connection
with a Change in the Company Recommendation, may amend or supplement the Joint
Proxy Statement/Prospectus or S-4 (including by incorporation by reference)
pursuant to a Qualifying Amendment to effect such a Change, and in such event,
this right of approval shall apply only with respect to information relating to
the other party or its business, financial condition or results of operations,
and shall be subject to the right of each party to have its Board of Directors'
deliberations and conclusions be accurately described. Parent will use
commercially reasonable efforts to cause the Joint Proxy Statement/Prospectus to
be mailed to Parent's stockholders, and the Company will use commercially
reasonable efforts to cause the Joint Proxy Statement/Prospectus to be mailed to
the Company's stockholders, in each case, as
45
promptly as reasonably practicable after the S-4 is declared effective under the
Securities Act. Each party hereto will advise the other party, promptly after it
receives notice thereof, of the time when the S-4 has become effective, the
issuance of any stop order, the suspension of the qualification of the Parent
Common Stock issuable in connection with the Merger for offering or sale in any
jurisdiction, or any request by the SEC for amendment of the Joint Proxy
Statement/Prospectus or the S-4. If, at any time prior to the Effective Time,
any information relating to Parent or the Company, or any of their respective
affiliates, officers or directors, is discovered by Parent or the Company and
such information should be set forth in an amendment or supplement to any of the
S-4 or the Joint Proxy Statement/Prospectus so that any of such documents would
not include any misstatement of a material fact or omit to state any material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, the party hereto discovering such
information shall promptly notify the other parties hereto and, to the extent
required by law, rules or regulations, an appropriate amendment or supplement
describing such information shall be promptly filed with the SEC and
disseminated to the stockholders of Parent and the Company. Parent shall also
take any commercially reasonable action (other than qualifying to do business in
any jurisdiction in which it is now not so qualified) required to be taken under
any applicable state securities laws in connection with the issuance of Parent
Common Stock in the Merger and upon the exercise of Company Stock Options, and
the Company shall furnish all information concerning the Company and the holders
of Shares as may be reasonably requested in connection with any such action.
(b) The Company shall duly take all lawful action to
call, give notice of, convene and hold the Company Stockholders Meeting as soon
as practicable on a date determined in accordance with the mutual agreement of
Parent and the Company for the purpose of obtaining the Company Stockholder
Approval and subject to Section 4.3, shall use commercially reasonable efforts
to solicit the Company Stockholder Approval. Notwithstanding anything to the
contrary contained in this Agreement, the Company may adjourn or postpone (i)
the Company Stockholders Meeting to the extent necessary to ensure that any
necessary supplement or amendment to this S-4 and/or the Joint Proxy
Statement/Prospectus is provided to the Company's stockholders in advance of a
vote on the Merger and this Agreement or (ii) the time for which the Company
Stockholders Meeting is originally scheduled (as set forth in the S-4 and the
Proxy Statement), if there are insufficient Shares represented, either in person
or by proxy, to constitute a quorum necessary to conduct the business of the
Company Stockholders Meeting. The Company Board shall recommend the approval of
the plan of merger contained in this Agreement by the stockholders of the
Company to the effect as set forth in Section 2.3(b) (the "COMPANY
RECOMMENDATION"), and shall not (i) withdraw, modify or qualify in any manner
adverse to Parent such recommendation or (ii) take any action or make any
statement in connection with the Company Stockholders Meeting inconsistent with
such recommendation (collectively, a "CHANGE IN THE COMPANY RECOMMENDATION");
provided, however, that the Company Board may evaluate whether to make and may
make pursuant to Section 4.3 a Change in the Company Recommendation prior to the
Company Stockholders Meeting pursuant to Section 4.3 hereof and may make any
statement required by 14d-9 or 14e-2 of the Exchange Act. Notwithstanding any
Change in the Company Recommendation, this Agreement shall be submitted to the
stockholders of the Company at the Company Stockholders Meeting for the
46
purpose of approving and adopting this Agreement and the Merger and nothing
contained herein shall be deemed to relieve Company of such obligation.
(c) Parent shall duly take all lawful action to call,
give notice of, convene and hold the Parent Stockholders Meeting as soon as
practicable on a date determined in accordance with the mutual agreement of
Parent and the Company for the purpose of obtaining the Parent Stockholder
Approval and, except as set forth in this Section 4.2(c), shall use commercially
reasonable efforts to solicit the Parent Stockholder Approval. Notwithstanding
anything to the contrary contained in this Agreement, Parent may adjourn or
postpone (i) the Parent Stockholders Meeting to the extent necessary to ensure
that any necessary supplement or amendment to this S-4 and/or the Joint Proxy
Statement/Prospectus is provided to Parent's stockholders in advance of a vote
on the Merger and this Agreement or (ii) the time for which the Parent
Stockholders Meeting is originally scheduled (as set forth in the S-4 and the
Proxy Statement), if there are insufficient Shares represented, either in person
or by proxy, to constitute a quorum necessary to conduct the business of the
Parent Stockholders Meeting. The Parent Board shall recommend the approval of
issuance of Parent Common Stock in the Merger by the stockholders of Parent (the
"PARENT RECOMMENDATION"), and shall not (i) withdraw, modify or qualify in any
manner adverse to the Company such recommendation or (ii) take any action or
make any statement in connection with the Parent Stockholders Meeting
inconsistent with such recommendation; provided, however, that the Parent Board
may evaluate whether to make and may make any statement required by 14d-9 or
14e-2 of the Exchange Act.
Section 4.3. No Solicitation or Negotiation.
(a) The Company, its Subsidiaries and other affiliates
and their respective officers, directors, representatives (including the Company
Financial Advisor or any other investment banker and any attorneys and
accountants) shall, and the Company shall use all reasonable efforts to cause
its and its Subsidiaries' and other affiliates' respective non-officer employees
with managerial responsibilities and agents to, immediately cease any
discussions or negotiations with any parties with respect to any Third Party
Acquisition Proposal. The Company also agrees promptly to request each person
that has heretofore executed a confidentiality agreement in connection with its
consideration of acquiring (whether by merger, acquisition of stock or assets or
otherwise) the Company or any Subsidiary, if any, to return (or if permitted by
the applicable confidentiality agreement, destroy) all confidential information
heretofore furnished to such person by or on behalf of the Company or any
Subsidiary and, if requested by Parent, to enforce such person's obligation to
do so. Neither the Company nor any Subsidiary or other affiliates shall, nor
shall the Company authorize or permit any of its or their respective officers,
directors or representatives to, and the Company shall use all reasonable
efforts to cause its and its Subsidiaries' and other affiliates' respective
non-officer employees with managerial responsibilities and agents not to,
directly or indirectly, encourage, solicit, participate in or initiate
discussions or negotiations with or provide any information to or enter into any
agreement with any person or group (other than Parent and Acquisition or any
designees of Parent and Acquisition) concerning any Third Party Acquisition
Proposal; provided, however, that if the Company Board determines in good faith,
after consultation with legal counsel, that it is necessary to do so in order to
comply with its fiduciary duties to the Company's stockholders under the DGCL,
the
47
Company may, in response to an unsolicited written Third Party Acquisition
Proposal that the Company Board determines in good faith, based on consultation
with the Company Financial Advisor, is from a Third Party that is capable of
consummating a Superior Proposal and only for so long as the Board of Directors
so determines in good faith that its actions are reasonably likely to lead to a
Superior Proposal, (i) furnish only to any Third Party pursuant to a
confidentiality agreement in a form substantially similar to the Nondisclosure
Agreement (A) the information with respect to the Company of the same type and
scope that the Company provided to Parent prior to the date hereof and (B) any
such additional information that such Third Party requests, but only if the
Company is permitted, and does in fact, simultaneously furnish such additional
information to Parent, and (ii) participate in discussions and negotiations
regarding such Third Party Acquisition Proposal; provided, further, that nothing
herein shall prevent the Company Board from taking and disclosing to the
Company's stockholders a position contemplated by Rules 14d-9 and 14e-2
promulgated under the Exchange Act with regard to any tender or exchange offer.
The Company shall promptly (and in any event within one (1) day after the
Company attains knowledge thereof) (x) notify Parent in the event the Company or
any Subsidiary or other affiliates or any of their respective officers,
directors, employees and agents receives any Third Party Acquisition Proposal,
including the terms and conditions thereof and the identity of the party
submitting such proposal, and any request for confidential information made in
connection with a Third Party Acquisition Proposal, (y) provide a copy of any
written agreements, proposals or other materials the Company receives from any
such person or group (or its representatives), and (z) promptly, and in any
event within one (1) day, advise Parent of any material modifications thereto.
(b) Except as set forth in this Section 4.3(b), the
Company Board shall not make a Change in the Company Recommendation or approve
or recommend, or cause or permit the Company to enter into any letter of intent,
agreement or obligation with respect to, any Third Party Acquisition Proposal.
Notwithstanding the foregoing, if the Company Board by a majority vote
determines in its good faith judgment prior to the Company Stockholders Meeting,
after consultation with outside legal counsel, that it is required to make a
Change in the Company Recommendation in order to comply with its fiduciary
duties, the Company Board may recommend a Superior Proposal, but only (i) after
providing written notice to Parent (a "NOTICE OF SUPERIOR PROPOSAL") advising
Parent that the Company Board has received a Superior Proposal, specifying the
material terms and conditions of such Superior Proposal and identifying the
person making such Superior Proposal and (ii) if Parent does not, within five
(5) days of Parent's receipt of the Notice of Superior Proposal, make an offer
that the Company Board by a majority vote determines in its good faith judgment
(after consultation with the Company Financial Advisor or another financial
advisor of nationally recognized reputation) to be at least as favorable to the
Company's stockholders as such Superior Proposal; provided, however, that no
Change in the Company Recommendation shall relieve the Company of its obligation
to submit this Agreement and such transactions to its stockholders for approval,
as provided in Section 4.2(b). Any disclosure that the Company Board may be
compelled to make with respect to the receipt of a Third Party Acquisition
Proposal or otherwise in order to comply with its fiduciary duties or Rule 14d-9
or 14e-2 will not constitute a violation of this Agreement, provided that such
disclosure states that no action will be taken by the Company Board in violation
of this Section 4.3(b).
48
(c) For the purposes of this Agreement, "THIRD PARTY
ACQUISITION PROPOSAL" means, other than in connection with the Merger or as
otherwise specifically contemplated by this Agreement, any proposal relating to
(i) any merger, consolidation, share exchange, business combination,
recapitalization or other similar transaction or series of related transactions
involving the Company or any Subsidiary other than the Merger in which the
stockholders of the Company immediately preceding such transaction hold,
directly or indirectly, less than ninety percent (90%) of the equity interests
in the surviving or resulting entity of such transaction or in any parent entity
immediately following such transaction; (ii) any sale, lease, exchange, transfer
or other disposition (including by way of merger, consolidation or exchange), in
a single transaction or a series of related transactions, of the assets of the
Company or any Subsidiary constituting ten percent (10%) or more of the
consolidated assets of the Company or accounting for ten percent (10%) or more
of the consolidated revenues of the Company; (iii) any tender offer, exchange
offer or similar transactions or series of related transactions made by any
person involving the Company's common stock constituting ten percent (10%) or
more of the Company's common stock; (iv) the acquisition by any person (other
than Parent or any of its affiliates) of beneficial ownership (as determined
pursuant to Rule 13d-3 of the Exchange Act) or the formation of any group (as
defined in Section 13(d) of the Exchange Act) to acquire beneficial ownership
(as determined pursuant to Rule 13d-3 of the Exchange Act) of more than ten
percent (10%) of the Company's common stock or the common stock of any
Subsidiary of the Company; or (v) any other substantially similar transaction or
series of related transactions that reasonably could be expected to result in
the acquisition of a controlling interest in the Company. For purposes of this
Agreement, a "THIRD PARTY" means a person (which includes a "person" as such
term is defined in Section 13(d)(3) of the Exchange Act) other than Parent,
Acquisition or any affiliate thereof. For purposes of this Agreement, a
"SUPERIOR PROPOSAL" means any bona fide Third Party Acquisition Proposal (1) to
acquire, directly or indirectly, for consideration consisting solely of cash
and/or publicly-traded securities (including securities that will be
publicly-traded immediately upon the consummation of such Superior Proposal),
eighty-five percent (85%) of the Shares then outstanding, or all or
substantially all of the assets of the Company, (2) that contains terms and
conditions that the Company Board by a majority vote determines in good faith
(after consultation with the Company Financial Advisor or another financial
advisor of nationally recognized reputation) to be more favorable to the
Company's stockholders than the Merger, (3) that the Company Board by a majority
vote determines in its good faith judgment (after consultation with the Company
Financial Advisor or another financial advisor of nationally recognized
reputation and its legal counsel) to be reasonably capable of being completed
(taking into account all legal, financial, regulatory and other aspects of the
proposal and the person making the proposal), (4) that does not contain a "right
of first refusal" or "right of first offer" with respect to any counter-proposal
that Parent might make, and (5) that does not contain any "due diligence"
condition and for which any financing upon which it is conditioned is committed.
Section 4.4. Comfort Letters.
(a) The Company shall use commercially reasonable efforts
to cause PricewaterhouseCoopers LLP to deliver a letter dated not more than five
days prior to the date on which the S-4 shall become effective and addressed to
itself and Parent and their respective Boards of Directors in form and substance
reasonably satisfactory to Parent and customary in
49
scope and substance for agreed-upon procedures letters delivered by independent
public accountants in connection with registration statements and proxy
statements similar to the S-4 and the Joint Proxy Statement/Prospectus.
(b) Parent shall use commercially reasonable efforts to
cause KPMG LLP to deliver a letter dated not more than five days prior to the
date on which the S-4 shall become effective and addressed to itself and the
Company and their respective Boards of Directors in form and substance
reasonably satisfactory to the Company and customary in scope and substance for
agreed-upon procedures letters delivered by independent accountants in
connection with registration statements and proxy statements similar to the S-4
and the Joint Proxy Statement/Prospectus.
Section 4.5. Nasdaq National Market. Parent shall use
commercially reasonable efforts to cause the shares of Parent Common Stock to be
issued in the Merger and the shares of Parent Common Stock to be reserved for
issuance upon exercise of Company Stock Options to be approved for listing on
the Nasdaq National Market, subject to official notice of issuance, prior to the
Effective Time.
Section 4.6. Access to Information.
(a) Between the date hereof and the earlier of the
Effective Time or the termination of this Agreement in accordance with its
terms, the Company will, and will cause each Subsidiary to use commercially
reasonable efforts to, give Parent and its authorized representatives (including
Parent's external auditors) reasonable access to all employees, plants, offices,
warehouses and other facilities and to all books and records and personnel files
of current employees of the Company and any Subsidiary as Parent may reasonably
require, and will cause its officers and each Subsidiary to furnish Parent with
such financial and operating data and other information with respect to the
business and properties of the Company and any Subsidiary as Parent may from
time to time reasonably request. Between the date hereof and the Effective Time,
Parent shall make available to the Company, as reasonably requested by the
Company, a designated officer of Parent to answer questions and make available
such information and documents regarding Parent as is reasonably requested by
the Company taking into account the nature of the transactions contemplated by
this Agreement. Such access shall be subject to the granting party's reasonable
security measures and insurance requirements and shall not include the right to
perform "invasive" testing, but shall include the right of Parent to do a
financial statement (including balance sheet) review prior to the Effective
Time.
(b) Between the date hereof and the earlier of the
termination of this Agreement in accordance with its terms and the Effective
Time, the parties shall furnish to each other within two (2) business days
following preparation thereof (and in any event within thirty (30) business days
after the end of each fiscal quarter) an unaudited balance sheet as of the end
of such quarter and the related statements of earnings, stockholders' equity
(deficit) and cash flows for the quarter then ended, all of such financial
statements to be prepared in accordance with United States generally accepted
accounting principles in conformity with the practices consistently applied by
the Company or Parent, as the case may be, with respect to such financial
statements.
50
(c) Each of the parties hereto will hold, and will cause
its consultants and advisers to hold, in confidence all documents and
information furnished to it by or on behalf of another party to this Agreement
in connection with the transactions contemplated by this Agreement pursuant to
the terms of that certain Mutual Nondisclosure Agreement entered into between
the Company and Parent dated as of May 16, 2003 (the "NONDISCLOSURE AGREEMENT").
Section 4.7. Certain Filings; Reasonable Efforts.
(a) Subject to the terms and conditions herein provided,
each of the parties hereto agrees to use commercially reasonable efforts to take
or cause to be taken all action and to do or cause to be done all things
reasonably necessary, proper or advisable under Applicable Law to consummate and
make effective the transactions contemplated by this Agreement, including using
commercially reasonable efforts to do the following: (i) cooperate in the
preparation and filing of the S-4 and the Joint Proxy Statement/Prospectus and
any amendments thereto, any filings that may be required under the HSR Act and
similar competition or merger notification laws or regulations of foreign
Governmental Entities; (ii) obtain consents of all third parties and
Governmental Entities (other than as provided in clause (i) above) necessary,
proper, advisable or reasonably requested by Parent or the Company, for the
consummation of the transactions contemplated by this Agreement (but subject to
the last sentence of Section 4.8(b) below); (iii) contest any legal proceeding
relating to the Merger; (iv) take such actions as set forth on Section 4.7(a) of
the Company Disclosure Schedule and (v) execute any additional instruments
necessary to consummate the transactions contemplated hereby. Subject to the
terms and conditions of this Agreement, Parent and Acquisition agree to use all
reasonable efforts to cause the Effective Time to occur as soon as practicable
after the Company Stockholder Approval and the Parent Stockholder Approval is
obtained. The Company agrees to use, and to cause each Subsidiary to use, all
reasonable efforts to encourage their respective employees to accept any offers
of employment extended by Parent. If, at any time after the Effective Time, any
further action is necessary to carry out the purposes of this Agreement the
proper officers and directors of each party hereto shall take all such necessary
action.
(b) Parent and the Company will use commercially
reasonable efforts to consult and cooperate with one another, and consider in
good faith the views of one another, in connection with any analyses,
appearances, presentations, letters, white papers, memoranda, briefs, arguments,
opinions or proposals made or submitted by or on behalf of any party hereto in
connection with proceedings under or relating to the HSR Act or any other
foreign, federal, or state antitrust, competition, or fair trade law. In this
regard, but without limitation, each party hereto shall use commercially
reasonable efforts to promptly inform the other of any material communication
between such party and the Federal Trade Commission, the Antitrust Division of
the United States Department of Justice, or any other federal, foreign or state
antitrust or competition Governmental Entity regarding the transactions
contemplated herein. Nothing in the 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
51
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
agreement or be bound by any obligation that, in Parent's good faith judgment,
may have an adverse effect on the benefits to Parent of the transactions
contemplated by this Agreement.
Section 4.8. Public Announcements. Parent, Acquisition and the
Company shall consult with each other and shall mutually agree upon any press
release or public announcement relating to the transactions contemplated by this
Agreement and shall not issue any such press release or make any such public
announcement prior to such consultation and agreement, except (a) as may be
required by Applicable Law, court process or by obligations pursuant to any
listing agreement with any national securities exchange or the Nasdaq National
Market, in which case the party proposing to issue such press release or make
such public announcement shall use all reasonable efforts to consult in good
faith with the other party before issuing any such press release or making any
such public announcement, or (b) following a Change in the Company's
Recommendation, after which no such consultation or agreement shall be required.
Section 4.9. Indemnification and Directors' and Officers'
Insurance.
(a) After the Effective Time, Parent shall cause the
Surviving Corporation to indemnify and hold harmless (and shall also advance
expenses as incurred to the fullest extent permitted under Applicable Law to),
each person who is now or has been prior to the date hereof or who becomes prior
to the Effective Time an officer or director of the Company or any Subsidiary
(the "INDEMNIFIED PERSONS") against (i) all losses, claims, damages, costs,
expenses (including counsel fees and expenses), settlement, payments or
liabilities arising out of or in connection with any claim, demand, action,
suit, proceeding or investigation based in whole or in part on or arising in
whole or in part out of the fact that such person is or was an officer or
director of the Company or any Subsidiary, whether or not pertaining to any
matter existing or occurring at or prior to the Effective Time and whether or
not asserted or claimed prior to or at or after the Effective Time ("INDEMNIFIED
LIABILITIES"); and (ii) all Indemnified Liabilities based in whole or in part on
or arising in whole or in part out of or pertaining to this Agreement or the
transactions contemplated hereby, in each case to the fullest extent required or
permitted under Applicable Law. Nothing contained herein shall make Parent,
Acquisition, the Company or the Surviving Corporation, an insurer, a co-insurer
or an excess insurer in respect of any insurance policies which may provide
coverage for Indemnified Liabilities, nor shall this Section 4.9 relieve the
obligations of any insurer in respect thereto. The parties hereto intend, to the
extent not prohibited by Applicable Law, that the indemnification provided for
in this Section 4.9 shall apply without limitation to negligent acts or
omissions by an Indemnified Person. Each Indemnified Person is intended to be a
third party beneficiary of this Section 4.9 and may specifically enforce its
terms. This Section 4.9 shall not limit or otherwise adversely affect any rights
any Indemnified Person may have under any agreement with the Company or under
the Company's Certificate of Incorporation or bylaws as presently in effect.
52
(b) From and after the Effective Time, Parent shall cause
the Surviving Corporation to fulfill and honor in all respects the obligations
of the Company pursuant to any indemnification agreements between the Company
and its directors and officers as of or prior to the date hereof (or
indemnification agreements in the Company's customary form for directors joining
the Company Board prior to the Effective Time) and any indemnification
provisions under the Company's certificate of incorporation or bylaws as in
effect immediately prior to the Effective Time.
(c) For a period of six years after the Effective Time,
Parent will maintain or cause the Surviving Corporation to maintain in effect,
if available, directors' and officers' liability insurance covering those
persons who, as of immediately prior to the Effective Time, are covered by the
Company's directors' and officers' liability insurance policy (the "INSURED
PARTIES") on terms no less favorable to the Insured Parties than those of the
Company's present directors' and officers' liability insurance policy; provided,
however, that in no event will Parent or the Surviving Corporation be required
to expend on an annual basis in excess of 200% of the annual premium currently
paid by the Company for such coverage; provided further, that notwithstanding
the foregoing, in the event such coverage is no longer available (or is only
available for an amount in excess of 200% of the annual premium currently paid
by the Company for such coverage), Parent shall nevertheless use its
commercially reasonable efforts to provide such coverage as may be obtained for
such 200% amount; provided further, that, in lieu of maintaining such existing
insurance as provided above, Parent, at its election, may cause coverage to be
provided under any policy maintained for the benefit of Parent or any of its
subsidiaries, so long as the terms are no less favorable to the intended
beneficiaries thereof than such existing insurance.
(d) Parent will not, nor will Parent permit the Surviving
Corporation to merge or consolidate with any other Person or sell all or
substantially all of Parent's or such subsidiary's assets unless Parent or the
Surviving Corporation will ensure that the surviving or resulting entity assumes
the obligations imposed by this Section 4.9.
Section 4.10. Notification of Certain Matters; Additions to
and Modification of Disclosure Schedules. The Company shall give prompt notice
to Parent and Acquisition, and Parent and Acquisition shall give prompt notice
to the Company (such notice by delivery of supplements to the Company Disclosure
Schedule or the Parent Disclosure Schedule, as applicable), of (i) the
occurrence or nonoccurrence of any event the occurrence or nonoccurrence of
which has caused or would be likely to cause any representation or warranty
contained in this Agreement by such first party to be untrue or inaccurate in
any material respect at or prior to the Effective Time, and (ii) any material
failure by the Company, Parent or Acquisition, as the case may be, to comply
with or satisfy in any material respect any covenant condition or agreement to
be complied with or satisfied by it hereunder; provided, however, that the
delivery of any notice pursuant to this Section 4.10 shall not cure such breach
or non-compliance, be deemed to constitute an exception to the representations
and warranties under Article 2 or Article 3, or limit or otherwise affect the
remedies available hereunder to the party receiving such notice, provided,
further, that any addition to Section 2.1(a) of the Company Disclosure Schedule
disclosing a Subsidiary acquired or organized after the date hereof, Section
2.1(c) of the Company Disclosure Schedule disclosing any investment made after
the date hereof, Section 2.11(b) disclosing any Company Employee
53
Plan adopted after the date hereof or any Employee Agreement entered into after
the date hereof, Section 2.11(h) of the Company Disclosure Schedule disclosing
amendments or actions within fourteen days of the date hereof as provided
therein, Section 2.12(d) of the Company Disclosure Schedule disclosing any newly
hired employee or change in current employee's circumstances occurring after the
date hereof, Section 2.12(j) of the Company Disclosure Schedule disclosing any
employing obtaining any visa or losing any visa after the date hereof, Section
2.15(a) of the Company Disclosure Schedule disclosing any Company Registered IP
or unregistered trademarks acquired or registered after the date hereof, Section
2.15(b) of the Company Disclosure Schedule disclosing any Company Licensed IP
acquired or licensed after the date hereof, Section 2.17 of the Company
Disclosure Schedule disclosing any real property acquired or leased after the
date hereof, Section 2.19 of the Company Disclosure Schedule disclosing any new
product warranties made by the Company after the date hereof, Section 2.20(a) of
the Company Disclosure Schedule disclosing any Material Contract entered into
after the date hereof, Section 2.22 of the Company Disclosure Schedule
disclosing any person who becomes a Company Affiliate after the date hereof, or
Section 3.16 of the Parent Disclosure Schedule disclosing any Parent benefit
plan adopted after the date hereof or deleting any Parent benefit plan cancelled
after the date hereof shall not be deemed to constitute a breach of the related
representation or warranty, provided further that such disclosure referred to in
the immediately preceding proviso shall not limit or otherwise affect the
remedies available hereunder to either party to the extent that the action,
event, occurrence or agreement disclosed was in violation or breach of this
Agreement, including Section 4.1.
Section 4.11. Affiliates. The Company shall use commercially
reasonable efforts to obtain from all Company Affiliates, and from any person
who may be deemed to have become a Company Affiliate after the date of this
Agreement and on or prior to the Effective Time, a letter agreement
substantially in the form of Exhibit B hereto as soon as practicable. Parent
shall not be required to maintain the effectiveness of the S-4 for the purpose
of resale of shares of Parent Common Stock by stockholders of the Company who
may be affiliates of the Company or Parent pursuant to Rule 145 under the
Securities Act.
Section 4.12. Access to Company Employees. The Company agrees
to provide, and to cause each Subsidiary to provide, Parent with reasonable
access to its employees under procedures to be agreed upon by Parent and the
Company during normal working hours following the date of this Agreement, to
among other things, deliver offers of continued employment and to provide
information to such employees about Parent. All communications by Parent with
Company employees shall be conducted in a manner that does not disrupt or
interfere with the Company's efficient and orderly operation of its business.
Section 4.13. Company Compensation and Benefit Plans. The
Company agrees to take all actions necessary to amend, merge, freeze or
terminate any or all Company Employee Plans intended to constitute a Code
Section 401(k) arrangement, the 1997 Employee Stock Purchase Plan, the 1997
Employee Stock Purchase Plan for Non-United States Employees and any other
employee stock purchase plan effective at or immediately prior to the Closing
Date, each as requested in writing by Parent no later than five (5) business
days prior to the Closing Date (thirty (30) days prior to the Closing Date with
respect to the
54
1997 Employee Stock Purchase Plan, the 1997 Employee Stock Purchase Plan for
Non-United States Employees and any other employee stock purchase plan).
Section 4.14 Employee Benefits.
(a) Following the Closing Date, Parent shall arrange for
each participant in the Company Employee Plans (the "COMPANY PARTICIPANTS")
(including without limitation all dependents) who becomes a Parent employee (or
an employee of any Parent subsidiary or affiliate) after the Closing Date to be
eligible for the same benefits in the aggregate as those received by Parent
employees with similar positions and responsibilities and qualifications;
provided, however, that through December 31, 2003 Parent may instead, at its
option, continue a Company Employee Plan in lieu of providing benefits under a
corresponding Parent Benefit Plan. Each Company Participant shall, to the extent
permitted by law, the plan governing the benefits (as reasonably amended to
accomplish the following to the extent permissible under applicable law) and
applicable tax qualification requirements, and subject to any applicable break
in service or similar rule, receive credit for all purposes including, without
limitation, for eligibility to participate, amount of matching contributions,
and vesting under Parent Benefit Plans for years of service with the Company
(and its Subsidiaries and predecessors) prior to the Closing Date. If applicable
and to the extent possible under Parent's existing plans (as reasonably amended
to the extent necessary in accordance with applicable law), Parent shall cause
any and all pre-existing condition (or actively at work or similar) limitations,
eligibility waiting periods and evidence of insurability requirements under any
Parent Benefit Plans to be waived with respect to such Company Participants and
their eligible dependents and shall provide them with credit for any
co-payments, deductibles, and offsets (or similar payments) made during the plan
year including the Closing Date for the purposes of satisfying any applicable
deductible, out-of-pocket, or similar requirements under any Parent Benefit
Plans in which they are eligible to participate after the Closing Date.
(b) Parent agrees that, from and after the Closing Date,
the Company employees who become employees of Parent or any of its subsidiaries
may participate in the employee stock purchase plan sponsored by Parent (the
"PARENT ESPP"), subject to the terms and conditions of the Parent ESPP, and that
service with the Company shall be treated as service with Parent or its
subsidiaries for determining eligibility of the Company's employees under the
Parent ESPP. Unless Parent elects to continue the 1997 Employee Stock Purchase
Plan or the 1997 Employee Stock Purchase Plan for Non-United States Employees,
Parent agrees to create a special offering period under the Parent ESPP so that
the Company employees who become employees of Parent or any of its subsidiaries
can participate in the Parent ESPP within thirty (30) days from the Closing
Date.
Section 4.15. Takeover Statutes. If any Takeover Statute or
any similar statute, law, rule or regulation in any State of the United States
(including under the DGCL or any other law of the State of Delaware) is or may
become applicable to the Merger or any of the other transactions contemplated by
this Agreement, the Company and the Company Board shall promptly grant such
approvals and take such lawful actions as are necessary so that such
transactions may be consummated as promptly as practicable on the terms
contemplated by this Agreement or by the Merger and otherwise take such lawful
actions to eliminate or minimize the effects of such statute, law, rule or
regulation, on such transactions.
55
Section 4.16. Company Rights Agreement. The Company Board
shall take all further action (in addition to that referenced in Section 2.25)
to the extent necessary (including amending the Company Rights Agreement) in
order to ensure that following or as a result of the execution of this Agreement
or the Company Voting Agreements, or the consummation of the transactions
contemplated hereby and thereby, (i) no person shall be deemed to be an
Acquiring Person; (ii) no person shall have the ability to exercise any Company
Rights under the Company Rights Agreement; (iii) no Company Rights shall have
separated from the Shares to which they are attached or become exercisable; and
(iv) the Company shall not have the right to exchange any Company Rights for
Shares, pursuant to Section 24 of the Company Rights Agreement or otherwise.
Except in connection with the foregoing sentence, the Company Board shall not,
without the prior written consent of Parent, (i) amend the Company Rights
Agreement, or (ii) take any action with respect to, or make any determination
under, the Company Rights Agreement, including a redemption of the Company
Rights, in each case in order to facilitate any Third Party Acquisition Proposal
with respect to the Company; provided, however, that notwithstanding anything to
the contrary in this Agreement, the Company Board may (i) amend the Company
Rights Agreement solely for the purpose of extending the Distribution Date
thereunder to that time immediately prior to the consummation of an unsolicited
exchange or tender offer by a third party and (ii) take any action in connection
with the Company Rights Agreement that is required by order of a court of
competent jurisdiction.
Section 4.17. Parent Board of Directors. Parent shall take all
requisite action to appoint Xx. Xxxxxxx X. Xxxxxx to the Parent Board as a
member of Class I and as a member of the Corporate Governance/Nominating
Committee as of the Effective Time, provided that if Xx. Xxxxxx is unable or
unwilling to serve on the Parent Board at the Effective Time, Parent shall
instead take all requisite action to appoint such other person as the Company
may designate and who is reasonably acceptable to Parent.
Section 4.18. Section 16 Matters. If the Company delivers the
Section 16 Information to Parent at least 10 business days prior to the
Effective Time, then, prior to the Effective Time, the Parent Board, or an
appropriate committee of non-employee directors thereof, shall adopt a
resolution consistent with the interpretative guidance of the SEC so that (i)
the assumption of the Company Stock Options held by Company Insiders in the
Merger, and (ii) the receipt by Company Insiders of Parent Common Stock in
exchange for Shares pursuant to the Merger, shall in each case be an exempt
transaction for purposes of Section 16 of the Exchange Act. For purposes of this
Section 4.18, (1) "COMPANY INSIDER" shall mean any officer or director of the
Company who may become a covered person of Parent for purposes of Section 16 of
the Exchange Act and (2) "SECTION 16 INFORMATION" shall mean the following
information for each Company Insider: (A) the number of Shares held by such
individual and expected to be exchanged for shares of Parent Common Stock in the
Merger; and (B) the number of Company Stock Options held by such individual and
expected to be converted into options to purchase shares of Parent Common Stock
in connection with the Merger.
56
ARTICLE 5
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 5.1. Conditions to Each Party's Obligations to Effect
the Merger. The respective obligations of each party hereto to effect the Merger
are subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) the Company shall have obtained the Company
Stockholder Approval and Parent shall have obtained the Parent Stockholder
Approval;
(b) no statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
enforced by any United States federal or state court or United States federal or
state Governmental Entity that prohibits, restrains, enjoins or restricts the
consummation of the Merger;
(c) any waiting period applicable to the Merger under the
HSR Act or any other material foreign, federal or state antitrust, competition
or fair trade law shall have terminated or expired;
(d) any governmental or regulatory notices, approvals or
other requirements necessary to consummate the transactions contemplated hereby
and to operate the Surviving Corporation after the Effective Time in all
material respects as it was operated prior thereto (other than under the HSR Act
or any other material foreign, federal or state antitrust, competition or fair
trade law) shall have been given, obtained or complied with, as applicable
except where the failure to be given, obtained or complied with shall not have a
Material Adverse Effect on the Company or a Material Adverse Effect on the
Parent; and
(e) the S-4 shall have become effective under the
Securities Act and shall not be the subject of any stop order or proceedings
seeking a stop order.
Section 5.2. Conditions to the Obligations of the Company. The
obligation of the Company to effect the Merger is subject to the satisfaction at
or prior to the Effective Time of the following conditions:
(a) (i) each of the representations and warranties
qualified by "Material Adverse Effect on Parent" shall be true and correct as of
the date of this Agreement and as of the Closing Date as though made on and as
of the Closing Date, and (ii) each of the representations and warranties of
Parent and Acquisition set forth in this Agreement and not qualified by
"Material Adverse Effect on Parent", disregarding all qualifications and
exceptions contained therein relating to materiality, shall be true and correct
as of the date of this Agreement and as of the Closing Date as though made on
and as of the Closing Date (except to the extent that such representations and
warranties speak as of another date, in which case such representations and
warranties shall be true and correct as of such other date), except where the
failure of such representations and warranties to be true and correct would not,
individually or in the aggregate, have a Material Adverse Effect on Parent, and
at the Closing, Parent and Acquisition shall have delivered to the Company a
certificate to that effect, executed by two (2) executive officers of Parent and
Acquisition;
57
(b) the covenants and obligations of Parent and
Acquisition to be performed at or before the Effective Time pursuant to the
terms of this Agreement shall have been duly performed in all material respects
at or before the Effective Time, and, at the Closing, Parent and Acquisition
shall have delivered to the Company a certificate to that effect, executed by
two (2) executive officers of Parent and Acquisition;
(c) the shares of Parent Common Stock issuable to the
Company's stockholders pursuant to this Agreement and such other shares required
to be reserved for issuance in connection with the Merger shall have been
approved for quotation on the Nasdaq National Market, upon official notice of
issuance;
(d) the Company shall have received a written opinion of
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional Corporation, counsel to the
Company, to the effect that (i) the Merger will constitute a reorganization
within the meaning of Section 368(a) of the Code, and (ii) each of Parent,
Acquisition and the Company will be a party to the reorganization within the
meaning of Section 368(b) of the Code, and such opinion shall not have been
withdrawn; provided, however, that if Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx,
Professional Corporation, fails to deliver such opinion, then Xxxxxx, Xxxx &
Xxxxxxxx LLP, counsel to Parent, may deliver such opinion in satisfaction of
this closing condition; provided further, that any such opinion may rely on
representations as such counsel reasonably deems appropriate and on typical
assumptions. Parent, Acquisition, and the Company agree to provide to such
counsel such representations as such counsel reasonably requests in connection
with rendering such opinions; and
(e) subject to each of the disclosures in the Parent
Disclosure Schedule, there shall have been no Material Adverse Effect on Parent.
Section 5.3. Conditions to the Obligations of Parent and
Acquisition. The respective obligations of Parent and Acquisition to effect the
Merger are subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) (i) each of the representations and warranties
qualified by "Material Adverse Effect on the Company" shall be true and correct
as of the date of this Agreement and as of the Closing Date as though made on
and as of the Closing Date, and (ii) each of the representations and warranties
of the Company set forth in this Agreement and not qualified by "Material
Adverse Effect on the Company", disregarding all qualifications and exceptions
contained therein relating to materiality, shall be true and correct as of the
date of this Agreement and as of the Closing Date as though made on and as of
the Closing Date (except to the extent that such representations and warranties
speak as of another date, in which case such representations and warranties
shall be true and correct as of such other date), except where the failure of
such representations and warranties to be true and correct would not,
individually or in the aggregate, have a Material Adverse Effect on the Company,
and at the Closing, the Company shall have delivered to Parent and Acquisition a
certificate to that effect, executed by two (2) executive officers of the
Company;
(b) the covenants and obligations of the Company to be
performed at or before the Effective Time pursuant to the terms of this
Agreement shall have been duly
58
performed in all material respects at or before the Effective Time and, at the
Closing, the Company shall have delivered to Parent and Acquisition a
certificate to that effect, executed by two (2) executive officers of the
Company;
(c) subject to each of the disclosures in the Company
Disclosure Schedule, there shall have been no Material Adverse Effect on the
Company;
(d) Parent shall have received a written opinion of
Xxxxxx, Xxxx & Xxxxxxxx LLP, counsel to Parent, to the effect that (i) the
Merger will constitute a reorganization within the meaning of Section 368(a) of
the Code, and (ii) each of Parent, Acquisition and the Company will be a party
to the reorganization within the meaning of Section 368(b) of the Code, and such
opinion shall not have been withdrawn; provided, however, that if Xxxxxx, Xxxx &
Xxxxxxxx LLP fails to deliver such opinion, then Xxxxxx Xxxxxxx Xxxxxxxx &
Xxxxxx, Professional Corporation, counsel to the Company, may deliver such
opinion in satisfaction of this closing condition; provided further, that any
such opinion may rely on representations as such counsel reasonably deems
appropriate and on typical assumptions. Parent, Acquisition, and the Company
agree to provide to such counsel such representations as such counsel reasonably
requests in connection with rendering such opinions; and
(e) in connection with the compliance by Parent or
Acquisition with any Applicable Law (including the HSR Act or any other material
foreign, federal or state antitrust, competition or fair trade law), Parent
shall not be (i) required, or be construed to be required, to sell or divest any
assets or business or to restrict any business operations, or (ii) prohibited
from owning, and no limitation shall be imposed on Parent's ownership of, any
portion of the Company's business or assets.
ARTICLE 6
TERMINATION; AMENDMENT; WAIVER
Section 6.1. Termination. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time whether
before or after approval and adoption of this Agreement by the Company's
stockholders or Parent's stockholders:
(a) by mutual written consent of Parent, Acquisition and
the Company;
(b) by Parent and Acquisition or the Company if:
(i) any court of competent jurisdiction in the
United States or other United States federal or state Governmental Entity shall
have issued a final order, decree or ruling, or taken any other final action,
restraining, enjoining or otherwise prohibiting the Merger and such order,
decree, ruling or other action is or shall have become nonappealable; or
(ii) the Merger has not been consummated by
November 30, 2003 which date shall be extended to February 28, 2004 if the
Merger shall not have been
59
consummated as a result of a failure to satisfy the conditions set forth in
Section 5.1(c) (as appropriate, the "FINAL DATE"); provided that no party may
terminate this Agreement pursuant to this clause (ii) 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 said date;
or
(iii) the Company shall have convened a Company
Stockholders Meeting to vote upon the Merger and shall have failed to obtain the
requisite vote of its stockholders at such meeting (including any adjournments
thereof); or
(iv) Parent shall have convened a Parent
Stockholders Meeting to vote upon the Merger and shall have failed to obtain the
requisite vote of its stockholders at such meeting (including any adjournments
thereof);
(c) by the Company if:
(i) there shall have been a breach of any
representation or warranty on the part of Parent or Acquisition set forth in
this Agreement or if any representation or warranty of Parent or Acquisition
shall have become untrue such that the conditions set forth in Section 5.2(a)
would be incapable of being satisfied by the Final Date; or
(ii) there shall have been a breach by Parent or
Acquisition of any of their respective covenants or agreements hereunder having
a Material Adverse Effect on Parent or materially adversely affecting (or
materially delaying) the consummation of the Merger, and Parent or Acquisition,
as the case may be, has not cured such breach within twenty (20) business days
after written notice by the Company thereof;
(d) by Parent and Acquisition if:
(i) there shall have been a breach of any
representation or warranty on the part of the Company set forth in this
Agreement or if any representation or warranty of the Company shall have become
untrue, such that the conditions set forth in Section 5.3(a) would be incapable
of being satisfied by the Final Date; or
(ii) there shall have been a breach by the
Company of one or more of its covenants or agreements hereunder having, in the
aggregate, a Material Adverse Effect on the Company or materially adversely
affecting (or materially delaying) the consummation of the Merger, and the
Company has not cured such breach within twenty (20) business days after written
notice by Parent or Acquisition thereof;
(e) by Parent and Acquisition, if the Company shall have:
(i) failed to make the Company Recommendation,
failed to reconfirm the Company Recommendation within ten (10) business days
following the reasonable request of Parent to do so, or effected a Change in the
Company Recommendation, whether or not permitted by the terms hereof; or
60
(ii) willfully and materially breached its
obligations under Section 4.3; or
(iii) willfully breached its obligations under
this Agreement to call the Company Stockholders Meeting in accordance with
Section 4.2(b) or to prepare and mail to its stockholders the Joint Proxy
Statement/Prospectus in accordance with Section 4.2(a);
provided that if the Company sends a notice of its intention to terminate this
Agreement pursuant to Section 6.1(c), the sending of such notice in and of
itself shall not be deemed to be a breach or default by the Company that would
permit Parent to terminate this Agreement pursuant to this Section 6.1(e).
Section 6.2. Effect of Termination. In the event of the
termination and abandonment of this Agreement pursuant to Section 6.1, this
Agreement shall forthwith become void and have no effect without any liability
on the part of any party hereto, or any of its affiliates, directors, officers
or stockholders other than the provisions of this Section 6.2 and Sections
4.6(c) and 6.3 and all of Article 7 with the exception of Sections 7.8 and
Section 7.10 hereof. Nothing contained in this Section 6.2 shall relieve any
party from liability for any breach of this Agreement prior to such termination.
Section 6.3. Fees and Expenses.
(a) If this Agreement is terminated:
(i) pursuant to Section 6.1(e); or
(ii) pursuant to Section 6(b)(iii) and (I) at any
time after the date of this Agreement and before the Company Stockholders
Meeting, a Company Acquisition Proposal shall have been publicly announced or
otherwise communicated to the stockholders of the Company and such proposal
shall not have been publicly and unconditionally withdrawn at the time of the
Company Stockholders Meeting and (II) within twelve (12) months after such
termination the Company or any Subsidiary enters into any definitive agreement
with respect to any Company Acquisition Proposal and consummates such Company
Acquisition Proposal at any time;
Parent and Acquisition would suffer direct and substantial damages, which
damages cannot be determined with reasonable certainty. To compensate Parent and
Acquisition for such damages, the Company shall pay to Parent the amount of
Fifty-Seven Million Dollars ($57,000,000) as liquidated damages (i) within one
(1) business day of the termination of this Agreement pursuant to Section
6.1(e), or (ii) on or before the closing of any Company Acquisition Proposal
described in Section 6.3(a)(ii), as applicable. It is specifically agreed that
the amount to be paid pursuant to this Section 6.3(a) represents liquidated
damages and not a penalty.
(b) Upon the termination of this Agreement pursuant to
Section 6.1(d) in addition to any other remedies that Parent, Acquisition or
their affiliates may have as a result of such termination (including pursuant to
Section 6.3(a)), the Company shall pay to Parent the amount of Five Million
Dollars ($5,000,000) as reimbursement for the costs, fees and
61
expenses incurred by any of them or on their behalf in connection with this
Agreement, the Merger and the consummation of all transactions contemplated by
this Agreement (including fees payable to investment bankers, counsel to any of
the foregoing and accountants); provided that no breach by Parent or Acquisition
shall have occurred that (either then or upon the passage of time as provided in
Section 6(c)(ii)) would permit the Company to terminate this Agreement pursuant
to Section 6.1(c).
(c) Upon the termination of this Agreement pursuant to
Section 6.1(c), in addition to any other remedies that the Company or its
affiliates may have as a result of such termination, Parent shall pay to the
Company the amount of Five Million Dollars ($5,000,000) as reimbursement for the
costs, fees and expenses incurred by any of them or on their behalf in
connection with this Agreement, the Merger and the consummation of all
transactions contemplated by this Agreement (including fees payable to
investment bankers, counsel to any of the foregoing and accountants) provided no
breach by the Company shall have occurred that (either then or upon the passage
of time as provided in Section 6(d)(ii)) would permit Parent to terminate this
Agreement pursuant to Section 6.1(d).
(d) Except as specifically provided in this Section 6.3,
each party shall bear its own expenses in connection with this Agreement and the
transactions contemplated hereby.
Section 6.4. Amendment. This Agreement may be amended by
action taken by the Company, Parent and Acquisition at any time before or after
approval of the Merger by the stockholders of the Company or Parent but after
any such approval no amendment shall be made that requires the approval of such
stockholders under Applicable Law without such approval. This Agreement
(including, subject to Section 4.10, the Company Disclosure Schedule and the
Parent Disclosure Schedule) may be amended only by an instrument in writing
signed on behalf of the parties hereto.
Section 6.5. Extension; Waiver. At any time prior to the
Effective Time, each party hereto may (i) extend the time for the performance of
any of the obligations or other acts of the other party, (ii) waive any
inaccuracies in the representations and warranties of the other party contained
herein or in any document certificate or writing delivered pursuant hereto, or
(iii) waive compliance by the other party with any of the agreements or
conditions contained herein. Any agreement on the part of any party hereto to
any such extension or waiver shall be valid only if set forth in an instrument,
in writing, signed on behalf of such party. The failure of any party hereto to
assert any of its rights hereunder shall not constitute a waiver of such rights.
ARTICLE 7
MISCELLANEOUS
Section 7.1. Nonsurvival of Representations and Warranties.
The representations and warranties made herein shall not survive beyond the
Effective Time or a
62
termination of this Agreement. This Section 7.1 shall not limit any covenant or
agreement of the parties hereto that by its terms requires performance after the
Effective Time.
Section 7.2. Entire Agreement; Assignment. This Agreement
(including the Company Disclosure Schedule and the Parent Disclosure Schedule)
and the Nondisclosure Agreement (a) constitute the entire agreement between the
parties hereto with respect to the subject matter hereof and supersede all other
prior and contemporaneous agreements and understandings both written and oral
between the parties with respect to the subject matter hereof and (b) shall not
be assigned by operation of law or otherwise; provided, however, that
Acquisition may assign any or all of its rights and obligations under this
Agreement to any direct or indirect wholly owned subsidiary of Parent, but no
such assignment shall relieve Acquisition of its obligations hereunder if such
assignee does not perform such obligations.
Section 7.3. Validity. If any provision of this Agreement or
the application thereof to any person or circumstance is held invalid or
unenforceable, the remainder of this Agreement and the application of such
provision to other persons or circumstances shall not be affected thereby and to
such end the provisions of this Agreement are agreed to be severable.
Section 7.4. Notices. All notices and other communications
pursuant to this Agreement shall be in writing and shall be deemed given if
delivered personally, sent by facsimile, sent by nationally-recognized overnight
courier or mailed by registered or certified mail (return receipt requested),
postage prepaid, to the parties at the addresses set forth below or to such
other address as the party to whom notice is to be given may have furnished to
the other parties hereto in writing in accordance herewith. Any such notice or
communication shall be deemed to have been delivered and received (A) in the
case of personal delivery, on the date of such delivery, (B) in the case of
facsimile, on the date sent if confirmation of receipt is received and such
notice is also promptly mailed by registered or certified mail (return receipt
requested), (C) in the case of a nationally-recognized overnight courier in
circumstances under which such courier guarantees next business day delivery, on
the next business day after the date when sent, and (D) in the case of mailing,
on the third business day following that on which the piece of mail containing
such communication is posted:
if to Parent or Acquisition: PeopleSoft, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxx
and
PeopleSoft, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxx
63
with a copy to: Xxxxxx, Xxxx & Xxxxxxxx LLP
Xxx Xxxxxxxxxx Xxxxxx
Xxxxxxx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx
Xxxxx X. Xxxxxxxx
if to the Company to: X.X. Xxxxxxx & Company
Xxx Xxxxxxxxxx Xxx
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxx, Xx.
and
X.X. Xxxxxxx & Company
Xxx Xxxxxxxxxx Xxx
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx
with a copy to: Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx,
Professional Corporation
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx
and
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx,
Professional Corporation
Xxx Xxxxxx
Xxxxx Xxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxx
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
Section 7.5. Governing Law and Venue; Waiver of Jury Trial.
(a) This Agreement shall be deemed to be made in and in
all respects shall be interpreted, construed and governed by and in accordance
with the law of the state of Delaware without regard to the conflict of law
principles thereof. The parties hereby
64
irrevocably and unconditionally submit to the exclusive jurisdiction of the
courts of the Court of Chancery of Delaware and the Federal courts of the United
States of America located in the State of Delaware solely in respect of the
interpretation and enforcement of the provisions of this Agreement and of the
documents referred to in this Agreement, and in respect of the transactions
contemplated hereby, and hereby waive, and agree not to assert, as a defense in
any action, suit or proceeding for the interpretation or enforcement hereof or
of any such document, that it is not subject thereto or that such action, suit
or proceeding may not be brought or is not maintainable in said courts or that
the venue thereof may not be appropriate or that this Agreement or any such
document may not be enforced in or by such courts, and the parties hereto
irrevocably agree that all claims with respect to such action or proceeding
shall be heard and determined in such a Delaware State or Federal court. The
parties hereby consent to and grant any such court jurisdiction over the person
of such parties and over the subject matter of such dispute and agree that
mailing of process or other papers in connection with any such action or
proceeding in the manner provided in Section 7.4 or in such other manner as may
be permitted by Applicable Law, shall be valid and sufficient service thereof.
(b) The parties agree that irreparable damage would occur
and that the parties would not have any adequate remedy at law in the event that
any of the provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached. It is accordingly agreed that
the parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
of this Agreement in any Federal court located in the State of Delaware or in
Delaware state court, this being in addition to any other remedy to which they
are entitled at law or in equity.
(c) Each party acknowledges and agrees that any
controversy which may arise under this Agreement is likely to involve
complicated and difficult issues, and therefore each such party hereby
irrevocably and unconditionally waives any right such party may have to a trial
by jury in respect of any litigation directly or indirectly arising out of or
relating to this Agreement or the transactions contemplated by this Agreement.
Each party certifies and acknowledges that (i) no representative, agent or
attorney of any other party has represented, expressly or otherwise, that such
other party would not, in the event of litigation, seek to enforce the foregoing
waiver, (ii) each such party understands and has considered the implications of
this waiver, (iii) each such party makes this waiver voluntarily, and (iv) each
such party has been induced to enter into this Agreement by, among other things,
the waivers and certifications in this Section 7.5.
Section 7.6. Descriptive Headings. The descriptive headings
herein are inserted for convenience of reference only and are not intended to be
part of or to affect the meaning or interpretation of this Agreement.
Section 7.7. Parties in Interest. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto and its
successors and permitted assigns and, except as expressly provided herein,
nothing in this Agreement is intended to or shall confer upon any other person
any rights, benefits or remedies of any nature whatsoever under or by reason of
this Agreement nor shall any such person be entitled to assert any claim
hereunder. In no event shall this Agreement constitute a third party beneficiary
contract.
65
Section 7.8. Certain Definitions. For the purposes of this
Agreement the term:
(a) "AFFILIATE" means (except as otherwise provided in
Sections 2.22 and 4.11) a person that, directly or indirectly, through one or
more intermediaries controls, is controlled by or is under common control with
the first-mentioned person;
(b) "APPLICABLE LAW" means, with respect to any person,
any domestic or foreign, federal, state or local statute, law, ordinance, rule,
regulation, order, writ, injunction, judgment, decree or other requirement of
any Governmental Entity existing as of the date hereof or as of the Effective
Time applicable to such person or any of its respective properties, assets,
officers, directors, employees, consultants or agents;
(c) "BUSINESS DAY" means any day other than a day on
which the Nasdaq National Market is closed;
(d) "CAPITAL STOCK" means common stock, preferred stock,
partnership interests, limited liability company interests or other ownership
interests entitling the holder thereof to vote with respect to matters involving
the issuer thereof;
(e) "COMPANY ACQUISITION PROPOSAL" means (i) any merger,
consolidation, share exchange, business combination, recapitalization or other
similar transaction or series of related transactions involving the Company or
any Subsidiary in which the stockholders of the Company immediately preceding
such transaction hold, directly or indirectly, less than sixty percent (60%) of
the equity interests in the surviving or resulting entity of such transaction or
in any parent entity immediately following such transaction; (ii) any sale,
lease, exchange, transfer or other disposition (including by way of merger,
consolidation or exchange), in a single transaction or a series of related
transactions, of the assets of the Company (whether directly or indirectly,
including through the acquisition of one or more Subsidiaries or such
Subsidiaries' assets) constituting forty percent (40%) or more of the
consolidated assets of the Company or accounting for forty percent (40%) or more
of the consolidated revenues of the Company; (iii) any tender offer, exchange
offer or similar transactions or series of related transactions made by any
person involving the Company's common stock constituting forty percent (40%) or
more of the Company's common stock; (iv) the acquisition by any person of
beneficial ownership (as determined pursuant to Rule 13d-3 of the Exchange Act)
of more than forty percent (40%) of the Company's common stock; or (v) any other
substantially similar transaction or series of related transactions that if
consummated would result in the acquisition of a forty percent (40%) or greater
interest in the Company.
(f) "COMPANY IP" means any Company Licensed IP or Company
Owned IP;
(g) "COMPANY LICENSED IP" means any Intellectual Property
that is owned by any other person and that is licensed to, used or distributed
by the Company or any Subsidiary;
(h) "COMPANY OWNED IP" means any Intellectual Property
owned (in whole or in part) by the Company or any Subsidiary;
66
(i) "COMPANY REGISTERED IP" means any Registered
Intellectual Property owned (in whole or in part) by the Company or any
Subsidiary;
(j) "INTELLECTUAL PROPERTY" means any patent, patent
application, trademark (whether registered or unregistered), trademark
application, trade name, fictitious business name, service xxxx (whether
registered or unregistered), service xxxx application, domain name, copyright
(whether registered or unregistered), copyright application, mask work, mask
work application, trade secret, know-how, customer list, franchise, system,
computer software, invention, design, blueprint, engineering drawing,
proprietary product, technology, proprietary right or other intellectual
property right or intangible asset;
(k) "KNOWLEDGE" or "KNOWN" means, with respect to any
matter in question, the actual knowledge of such matter of (i) any member of the
Board of Directors; or (ii) any employee or officer listed on Section 7.8 of the
Company Disclosure Schedule or Section 7.8 of the Parent Disclosure Schedule, as
applicable; of the Company or any Subsidiary, or Parent or any of its
subsidiaries, as the case may be, and each of such persons shall be deemed to
have actual knowledge of all books and records to which he or she has reasonable
access;
(l) "INCLUDE" or "INCLUDING" means "INCLUDE, WITHOUT
LIMITATION" or "INCLUDING, WITHOUT LIMITATION," as the case may be, and the
language following "include" or "including" shall not be deemed to set forth an
exhaustive list;
(m) "LIEN" means any mortgage, lien, pledge,
hypothecation, charge, security interest, encumbrance, equity, trust, equitable
interest, claim, preference, right of possession, lease, tenancy, license,
encroachment, covenant, infringement, interference, order, proxy, option, right
of first refusal, preemptive right, community property interest, legend, defect,
impediment, exception, reservation, limitation, impairment, imperfection of
title, condition or restriction of any nature including any restriction on the
transfer of any asset, any restriction on the receipt of any income derived from
any asset, any restriction on the use of any asset and any restriction on the
possession, exercise or transfer of any other attribute of ownership of any
asset; provided, however, that the term "Lien" shall not include (i) statutory
liens for Taxes, which are not yet due and payable or are being contested in
good faith by appropriate proceedings and disclosed in Section 2.14(d) of the
Company Disclosure Schedule, (ii) statutory or common law liens to secure
landlords, lessors or renters under leases or rental agreements confined to the
premises rented, (iii) deposits or pledges made in connection with, or to secure
payment of, workers' compensation, unemployment insurance, old age pension or
other social security programs mandated under Applicable Law, (iv) statutory or
common law liens in favor of carriers, warehousemen, mechanics and materialmen
to secure claims for labor, materials or supplies and other like liens, and (v)
restrictions on transfer of securities imposed by applicable state and federal
securities laws;
(n) "MATERIAL ADVERSE EFFECT ON THE COMPANY" means any
circumstance, change in, or effect on the Company and its Subsidiaries, taken as
a whole, that is, or is reasonably likely in the future to be, materially
adverse to the financial condition, earnings, results of operations, or the
business or operations (financial or otherwise), of the Company
67
and its Subsidiaries, taken as a whole, or on the ability of the Company to
perform its obligations hereunder, excluding any such circumstance, change or
effect to the extent resulting from or arising in connection with (i) changes or
conditions generally affecting the industries or segments in which the Company
operates, (ii) changes in general economic, market or political conditions
which, in the case of (i) or (ii), does not have a materially disproportionate
effect (relative to other industry participants) on the Company, (iii) any
litigation brought or threatened by stockholders of the Company (whether on
behalf of the Company or otherwise) in respect of the announcement of this
Agreement or the consummation of the Merger, or (iv) any disruption of customer,
business partner, supplier or employee relationships that resulted from the
announcement of this Agreement or the consummation of the Merger, to the extent
so attributable; provided, that any reduction in the market price or trading
volume of the Company's publicly traded common stock shall not be deemed to
constitute a Material Adverse Effect on the Company (it being understood that
the foregoing shall not prevent Parent from asserting that any underlying cause
of such reduction independently constitutes such a Material Adverse Effect on
the Company);
(o) "MATERIAL ADVERSE EFFECT ON PARENT" means any
circumstance, change in, or effect on Parent and its subsidiaries, taken as a
whole, that is, or is reasonably likely in the future to be, materially adverse
to the financial condition, earnings, results of operations, or the business or
operations (financial or otherwise), of Parent and its subsidiaries, taken as a
whole, or on the ability of the Parent to perform its obligations hereunder,
excluding any such circumstance, change or effect to the extent resulting from
or arising in connection with (i) changes or conditions generally affecting the
industries or segments in which the Parent operates, (ii) changes in general
economic, market or political conditions which, in the case of (i) or (ii), does
not have a materially disproportionate effect (relative to other industry
participants) on the Parent, (iii) any litigation brought or threatened by
stockholders of the Parent (whether on behalf of the Parent or otherwise) in
respect of the announcement of this Agreement or the consummation of the Merger,
or (iv) any disruption of customer, business partner, supplier or employee
relationships that resulted from the announcement of this Agreement or the
consummation of the Merger, to the extent so attributable; provided, that any
reduction in the market price or trading volume of Parent's publicly traded
common stock shall not be deemed to constitute a Material Adverse Effect on
Parent (it being understood that the foregoing shall not prevent the Company
from asserting that any underlying cause of such reduction independently
constitutes such a Material Adverse Effect on Parent);
(p) "PERSON" means an individual, corporation,
partnership, limited liability company, association, trust, unincorporated
organization or other legal entity including any Governmental Entity;
(q) "PROCEEDING" means any action, suit, litigation,
arbitration, proceeding (including any civil, criminal, administrative,
investigative or appellate proceeding and any informal proceeding), prosecution,
contest, hearing, inquiry, inquest, audit, examination or investigation
commenced, brought, conducted or heard by or before, or otherwise involving, any
Governmental Entity or any arbitrator or arbitration panel;
68
(r) "QUALIFYING AMENDMENT" means an amendment or
supplement to the Joint Proxy Statement/Prospectus or S-4 (including by
incorporation by reference) to the extent it contains (a) a Change in the
Company Recommendation, (b) a statement of the reasons of Company Board for
making such Change in the Company Recommendation, and (c) additional information
reasonably related to the foregoing; and
(s) "REGISTERED INTELLECTUAL PROPERTY" means all United
States, international and foreign: (i) patents, including applications therefor;
(ii) registered trademarks, applications to register trademarks, including
intent-to-use applications, or other registrations or applications related to
trademarks; (iii) copyrights registrations and applications to register
copyrights; (iv) registered mask works and applications to register mask works;
and (v) any other intellectual property that is the subject of an application,
certificate, filing, registration or other document issued by, filed with, or
recorded by, any state, government or other public legal authority at any time.
Section 7.9. Personal Liability. This Agreement shall not
create or be deemed to create or permit any personal liability or obligation on
the part of any direct or indirect stockholder of the Company or Parent or
Acquisition or any officer, director, employee, agent, representative or
investor of any party hereto.
Section 7.10. Specific Performance. The parties hereby
acknowledge and agree that the failure of any party to perform its agreements
and covenants hereunder, including its failure to take all actions as are
necessary on its part to the consummation of the Merger, will cause irreparable
injury to the other parties, for which damages, even if available, will not be
an adequate remedy. Accordingly, each party hereby consents to the issuance of
injunctive relief by any court of competent jurisdiction to compel performance
of such party's obligations and to the granting by any court of the remedy of
specific performance of its obligations hereunder; provided, however, that if a
party hereto receives all payments and reimbursements of expenses to which it is
entitled pursuant to Section 6.3(a), (b) or (c) it shall not be entitled to
specific performance to compel the consummation of the Merger.
Section 7.11. Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed to be an original but
all of which shall constitute one and the same agreement.
(Remainder of page intentionally left blank)
69
IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be duly executed on its behalf as of the day and year first above
written.
PEOPLESOFT, INC.
By: ________________________________________
Name:
Title: President and Chief Executive Officer
Date: June 1, 2003
X.X. XXXXXXX & COMPANY
By: ________________________________________
Name:
Title: President and Chief Executive Officer
Date: June 1, 2003
JERSEY ACQUISITION CORPORATION
By: ________________________________________
Name:
Title: President
Date: June 1, 2003
{SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER BY AND AMONG PEOPLESOFT, INC.,
X.X. XXXXXXX & COMPANY AND JERSEY ACQUISITION CORPORATION}
ANNEX A
STOCKHOLDERS OF COMPANY THAT EXECUTED VOTING AGREEMENTS
Xxxxxxx X. Xxxxx
Xxxxxxxx X. Xxxxxxxxxx
Xxxxx Xxxxx
Xxxxxx X. Xxxxxxxxx
Xxxxxx Xxxxxxxx
Xxxxxx X. Xxxx
Xxxxxxx Xxxxxx
Xxxxxxx X. Xxxxxx
Xxxxxxx Xxxxxxx
Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
Xxxxxx Xxxxxx
Xxxxx Xxxxxxx
Xxxxxxx Xxxx, Jr.
Xxxxxx Xxxxx
71
ANNEX B
STOCKHOLDERS OF PARENT THAT EXECUTED VOTING AGREEMENTS
X. Xxxxxx "Skip" Battle
Xxxxx Xxxxxx
Xxxxx Xxxxxxxx
Xxxxx X. Xxxxxx
Xxx X. Xxxxxx
Xxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxxxx, Xx.
Xxxxxx X. Xxxxxx
Xxxxxxx Xxxxxxxx
Xxx Xxxxx
Xxxx X. Xxxxxx
Xxxxx X. Xxxxxx
W. Xxxxxx Wilmington
Xxxxx X. Xxxxxxxx
72
