Exhibit 2.1
AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION is made and entered into as
of April 20, 1999, among Healtheon Corporation, a Delaware corporation
("Parent"), Merc Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of Parent ("Merger Sub"), and MedE America Corporation, a Delaware
corporation (the "Company").
RECITALS
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A. Upon the terms and subject to the conditions of this Agreement and
in accordance with the Delaware General Corporation Law ("Delaware Law"),
Parent, Merger Sub and the Company intend to enter into a business combination
transaction.
B. The Board of Directors of the Company (the "Company Board") (i) has
determined that the Merger (as defined in Section 1.1) is consistent with and in
furtherance of the long-term business strategy of the Company and fair to, and
in the best interests of, the Company and its stockholders, (ii) has approved
this Agreement, the Merger and the other transactions contemplated by this
Agreement and (iii) has determined to recommend that the stockholders of the
Company adopt and approve this Agreement and approve the Merger.
C. The Board of Directors of Parent (i) has determined that the Merger
(as defined in Section 1.1) is consistent with and in furtherance of the
long-term business strategy of Parent and fair to, and in the best interests of,
Parent and its stockholders and (ii) has approved this Agreement, the Merger and
the other transactions contemplated by this Agreement.
D. Concurrently with the execution of this Agreement, and as a
condition and inducement to Parent's willingness to enter into this Agreement,
certain stockholders of the Company are entering into Voting Agreements in
substantially the form attached hereto as Exhibit A (the "Company Voting
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Agreements").
E. The parties intend, by executing this Agreement, to adopt a plan of
reorganization within the meaning of Section 368 of the Internal Revenue Code of
1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. At the Effective Time (as defined in Section 1.2) and
subject to and upon the terms and conditions of this Agreement and the
applicable provisions of Delaware Law, Merger Sub shall be merged with and into
the Company (the "Merger"), the separate corporate existence of Merger Sub shall
cease and the Company shall continue as the surviving corporation. The Company
as the surviving corporation after the Merger is hereinafter sometimes referred
to as the "Surviving Corporation".
1.2 EFFECTIVE TIME; CLOSING. Subject to the provisions of this
Agreement, the parties hereto shall cause the Merger to be consummated by filing
a Certificate of Merger with the Secretary of State of the State of Delaware in
accordance with the relevant provisions of Delaware Law (the "Certificate of
Merger") (the time of such filing with the Secretary of State of the State of
Delaware (or such later time as may be agreed in writing by the Company and
Parent and specified in the Certificate of Merger) being the "Effective Time")
as soon as practicable on or after the Closing Date (as herein defined). Unless
the context otherwise requires, the term "Agreement" as used herein refers
collectively to this Agreement and Plan of Reorganization and the Certificate of
Merger. The closing of the Merger (the "Closing") shall take place at the
offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Professional Corporation, at a time
and date to be specified by the parties, which shall be no later than the second
business day after the satisfaction or waiver of the conditions set forth in
Article VI, or at such other time, date and location as the parties hereto agree
in writing (the "Closing Date").
1.3 EFFECT OF THE MERGER. At the Effective Time, the effect of the
Merger shall be as provided in this Agreement and the applicable provisions of
Delaware Law. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time all the property, rights, privileges, powers and
franchises of the Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and Merger Sub
shall become the debts, liabilities and duties of the Surviving Corporation.
1.4 CERTIFICATE OF INCORPORATION; BYLAWS.
(a) At the Effective Time, the Certificate of Incorporation of
Merger Sub, as in effect immediately prior to the Effective Time, shall be the
Certificate of Incorporation of the Surviving Corporation until thereafter
amended as provided by law and such Certificate of Incorporation of the
Surviving Corporation; provided, however, that at the Effective Time the
Certificate of Incorporation of the Surviving Corporation shall be amended so
that the name of the Surviving Corporation shall be "MedE America Corporation."
(b) The Bylaws of Merger Sub, as in effect immediately prior to
the Effective Time, shall be, at the Effective Time, the Bylaws of the Surviving
Corporation until thereafter amended.
1.5 DIRECTORS AND OFFICERS. The initial directors of the Surviving
Corporation shall be the directors of Merger Sub immediately prior to the
Effective Time, until their respective successors are duly elected or appointed
and qualified. The initial officers of the Surviving Corporation shall be the
officers of Merger Sub immediately prior to the Effective Time, until their
respective successors are duly appointed.
1.6 EFFECT ON CAPITAL STOCK. At the Effective Time, by virtue of the
Merger and without any action on the part of Merger Sub, the Company or the
holders of any of the following securities, the following shall occur:
(a) CONVERSION OF COMPANY COMMON STOCK. Subject to the provisions
of Section 1.6(f) below, each share of Common Stock of the Company ("Company
Common Stock") issued and outstanding immediately prior to the Effective Time,
other than any shares of the Company Common Stock to be canceled pursuant to
Section 1.6(b), will be canceled and extinguished and automatically converted
into the right to receive that number of shares of Parent Common Stock equal to
.6593 (the "Exchange Ratio") upon surrender of the certificate representing such
share of the Company Common Stock in the manner provided in Section 1.7 (or in
the case of a lost, stolen or destroyed certificate, upon delivery of an
affidavit (and bond, if required) in the manner provided in Section 1.9). If any
shares of Company Common Stock outstanding immediately prior to the Effective
Time are unvested or are subject to a repurchase option, risk of forfeiture or
other condition under any applicable restricted stock purchase agreement or
other agreement with the Company, then the shares of Parent Common Stock issued
in exchange for such shares of Company Common Stock will also be unvested to the
same extent and subject to the same repurchase option, risk of forfeiture or
other condition, as applicable, and the certificates representing such shares of
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Parent Common Stock may accordingly be marked with appropriate legends. The
Company shall take all action that may be necessary to ensure that, from and
after the Effective Time, Parent is entitled to exercise any such repurchase
option or other right set forth in any such restricted stock purchase agreement
or other agreement.
(b) CANCELLATION OF PARENT-OWNED STOCK. Each share of Company
Common Stock held by the Company or owned by Merger Sub, Parent or any direct or
indirect wholly-owned subsidiary of the Company or of Parent immediately prior
to the Effective Time shall be canceled and extinguished without any conversion
thereof.
(c) STOCK OPTIONS; EMPLOYEE STOCK PURCHASE PLANS; WARRANTS.
(i) At the Effective Time, all options to purchase Company
Common Stock then outstanding under the Company's Stock Option and Restricted
Stock Purchase Plan and the Company's 1998 Stock Option and Restricted Stock
Purchase Plan (the "Company Stock Option Plans") shall be assumed by Parent in
accordance with Section 5.8 hereof. Rights outstanding under the Company's 1998
Employee Stock Purchase Plan (the "Company Purchase Plan") shall be treated as
set forth in Article V hereof.
(ii) At the Effective Time, the warrants issued by the
Company and set forth on Part 2.2 of the Company Schedules (which warrants
entitle the holders thereof as set forth on such Part 2.2 to purchase the number
of shares of Company Common Stock set forth on such Part 2.2) (collectively, the
"Warrants") shall be, subject to Section 5.8 hereof, either exercised or
terminated prior to the Effective Time or converted into Parent Common Stock as
of the Effective Time. Part 2.2 of the Company Schedules describes, with respect
to each warrant outstanding, the number of shares of Company Common Stock into
which such warrant may be exercised, the exercise price, the name of the holder
of record, the termination date, whether such warrant has registration rights,
and, if applicable, a complete description of such registration rights.
(d) CAPITAL STOCK OF MERGER SUB. Each share of Common Stock of
Merger Sub (the "Merger Sub Common Stock") issued and outstanding immediately
prior to the Effective Time shall be converted into one validly issued, fully
paid and nonassessable share of Common Stock of the Surviving Corporation. Each
certificate evidencing ownership of shares of Merger Sub Common Stock shall
evidence ownership of such shares of capital stock of the Surviving Corporation.
(e) FRACTIONAL SHARES. No fraction of a share of Parent Common
Stock will be issued by virtue of the Merger, but in lieu thereof each holder of
shares of Company Common Stock who would otherwise be entitled to a fraction of
a share of Parent Common Stock (after aggregating all fractional shares of
Parent Common Stock that otherwise would be received by such holder) shall, upon
surrender of such holder's Certificate(s) (as defined in Section 1.7(c)),
receive from Parent an amount of cash (rounded to the nearest whole cent),
without interest, equal to the product of (i) such fraction, multiplied by (ii)
the average closing price of one share of Parent Common Stock for the ten (10)
most recent days that Parent Common Stock has traded ending on the trading day
ending one day prior to the Closing Date, as reported on the Nasdaq National
Market System ("Nasdaq").
(f) ADJUSTMENTS TO EXCHANGE RATIO.
(i) The Exchange Ratio shall be adjusted to reflect
appropriately the effect of any stock split, reverse stock split, stock dividend
(including any dividend or distribution of securities convertible
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into Parent Common Stock or Company Common Stock), reorganization,
recapitalization, reclassification or other like change with respect to Parent
Common Stock or Company Common Stock occurring on or after the date hereof and
prior to the Effective Time.
(ii) In the event that the 10 day average closing price for
Parent's Common Stock (as reported on Nasdaq) for the period ending two days
prior to the date of the Company Stockholders' Meeting (the "Meeting Price") is
less than $38.68, then Parent may, in its sole discretion and no later than 24
hours prior to the Stockholders Meeting, change the Exchange Ratio to a ratio
equal to $25.50 divided by the Meeting Price. In the event that the Meeting
Price is less than $38.68 and Parent does not exercise its right to change the
Exchange Ratio, then the Company may exercise its right to terminate the
Agreement as provided for in Section 7.1(h) hereof.
(iii) In the event that the Meeting Price is more than
$63.70, then the Company may, in its sole discretion and no later than 24 hours
prior to the Company Stockholders' Meeting, change the Exchange Ratio to a ratio
equal to $42 divided by the Meeting Price. In the event that the Meeting Price
is more than $63.70 and the Company does not exercise its right to change the
Exchange Ratio, then Parent may exercise its right to terminate the Agreement as
provided for in Section 7.1(i) hereof.
1.7 SURRENDER OF CERTIFICATES.
(a) EXCHANGE AGENT. American Stock Transfer & Trust Company,
Parent's Transfer Agent, shall act as the exchange agent (the "Exchange Agent")
in the Merger.
(b) PARENT TO PROVIDE COMMON STOCK. Promptly after the Effective
Time, Parent shall make available to the Exchange Agent for exchange in
accordance with this Article I, the shares of Parent Common Stock issuable
pursuant to Section 1.6 in exchange for outstanding shares of Company Common
Stock, and cash in an amount sufficient for payment in lieu of fractional shares
pursuant to Section 1.6(e) and any dividends or distributions which holders of
shares of Company Common Stock may be entitled pursuant to Section 1.7(d).
(c) EXCHANGE PROCEDURES. Promptly after the Effective Time,
Parent shall cause the Exchange Agent to mail to each holder of record (as of
the Effective Time) of a certificate or certificates (the "Certificates") which
immediately prior to the Effective Time represented outstanding shares of
Company Common Stock whose shares were converted into the right to receive
shares of Parent Common Stock pursuant to Section 1.6, cash in lieu of any
fractional shares pursuant to Section 1.6(e) and any dividends or other
distributions pursuant to Section 1.7(d), (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Exchange
Agent and shall be in such form and have such other provisions as Parent may
reasonably specify) and (ii) instructions for use in effecting the surrender of
the Certificates in exchange for certificates representing shares of Parent
Common Stock, cash in lieu of any fractional shares pursuant to Section 1.6(e)
and any dividends or other distributions pursuant to Section 1.7(d). Upon
surrender of Certificates for cancellation to the Exchange Agent or to such
other agent or agents as may be appointed by Parent, together with such letter
of transmittal, duly completed and validly executed in accordance with the
instructions thereto, the holders of such Certificates shall be entitled to
receive in exchange therefor certificates representing the number of whole
shares of Parent Common Stock into which their shares of Company Common Stock
were converted at the Effective Time, payment in lieu of fractional shares which
such holders have the right to receive pursuant to Section 1.6(e) and any
dividends or distributions payable pursuant to Section 1.7(d), and the
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Certificates so surrendered shall forthwith be canceled. Until so surrendered,
outstanding Certificates will be deemed from and after the Effective Time, for
all corporate purposes, subject to Section 1.7(d) as to the payment of
dividends, to evidence the ownership of the number of full shares of Parent
Common Stock into which such shares of Company Common Stock shall have been so
converted and the right to receive an amount in cash in lieu of the issuance of
any fractional shares in accordance with Section 1.6(e) and any dividends or
distributions payable pursuant to Section 1.7(d).
(d) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No
dividends or other distributions declared or made after the date of this
Agreement with respect to Parent Common Stock with a record date after the
Effective Time will be paid to the holders of any unsurrendered Certificates
with respect to the shares of Parent Common Stock represented thereby until the
holders of record of such Certificates shall surrender such Certificates.
Subject to applicable law, following surrender of any such Certificates, the
Exchange Agent shall deliver to the record holders thereof, without interest,
certificates representing whole shares of Parent Common Stock issued in exchange
therefor along with payment in lieu of fractional shares pursuant to Section
1.6(e) hereof and the amount of any such dividends or other distributions with a
record date after the Effective Time payable with respect to such whole shares
of Parent Common Stock.
(e) TRANSFERS OF OWNERSHIP. If certificates for shares of Parent
Common Stock are to be issued in a name other than that in which the
Certificates surrendered in exchange therefor are registered, it will be a
condition of the issuance thereof that the Certificates so surrendered will be
properly endorsed and otherwise in proper form for transfer and that the persons
requesting such exchange will have paid to Parent or any agent designated by it
any transfer or other taxes required by reason of the issuance of certificates
for shares of Parent Common Stock in any name other than that of the registered
holder of the Certificates surrendered, or established to the satisfaction of
Parent or any agent designated by it that such tax has been paid or is not
payable.
(f) REQUIRED WITHHOLDING. Each of the Exchange Agent, Parent and
the Surviving Corporation shall be entitled to deduct and withhold from any
consideration payable or otherwise deliverable pursuant to this Agreement to any
holder or former holder of Company Common Stock such amounts as may be required
to be deducted or withheld therefrom under the Code or under any provision of
state, local or foreign tax law or under any other applicable Legal Requirement
(as defined in Section 2.2). To the extent such amounts are so deducted or
withheld, such amounts shall be treated for all purposes under this Agreement as
having been paid to the person to whom such amounts would otherwise have been
paid.
(g) NO LIABILITY. Notwithstanding anything to the contrary in
this Section 1.7, neither the Exchange Agent, Parent, the Surviving Corporation
nor any party hereto shall be liable to a holder of shares of Parent Common
Stock or Company Common Stock for any amount properly paid to a public official
pursuant to any applicable abandoned property, escheat or similar law.
1.8 NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. All shares of
Parent Common Stock issued upon the surrender for exchange of shares of Company
Common Stock in accordance with the terms hereof (including any cash paid in
respect thereof pursuant to Section 1.6(e) and 1.7(d)) shall be deemed to have
been issued in full satisfaction of all rights pertaining to such shares of
Company Common Stock, and there shall be no further registration of transfers on
the records of the Surviving Corporation of shares of Company Common Stock which
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 I.
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1.9 LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall
issue in exchange for such lost, stolen or destroyed Certificates, upon the
making of an affidavit of that fact by the holder thereof, certificates
representing the shares of Parent Common Stock into which the shares of Company
Common Stock represented by such Certificates were converted pursuant to Section
1.6, cash for fractional shares, if any, as may be required pursuant to Section
1.6(e) and any dividends or distributions payable pursuant to Section 1.7(d);
provided, however, that Parent may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen or
destroyed Certificates to deliver a bond in such sum as it may reasonably direct
as indemnity against any claim that may be made against Parent, the Surviving
Corporation or the Exchange Agent with respect to the Certificates alleged to
have been lost, stolen or destroyed.
1.10 TAX CONSEQUENCES. It is intended by the parties hereto that the
Merger shall constitute a reorganization within the meaning of Section 368 of
the Code. The parties hereto adopt this Agreement as a "plan of reorganization"
within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the United States
Income Tax Regulations.
1.11 TAKING OF NECESSARY ACTION; FURTHER ACTION. If, at any time after
the Effective Time, any further action is necessary or desirable to carry out
the purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of the Company and Merger Sub, the officers and directors of the
Company and Merger Sub will take all such lawful and necessary action, so long
as such action is consistent with this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
As of the date hereof and as of the Closing Date (except as otherwise
contemplated herein), the Company represents and warrants to Parent and Merger
Sub, subject to the exceptions specifically disclosed in writing in the
disclosure letter and referencing a specific representation supplied by the
Company to Parent dated as of the date hereof (the "Company Schedules"), as
follows:
2.1 ORGANIZATION OF THE COMPANY.
(a) The Company has no subsidiaries, except for the corporations
identified in Part 2.1(a)(i) of the Company Schedules; and neither the Company
nor any of the other corporations identified in Part 2.1(a)(i) of the Company
Schedules owns any capital stock of, or any equity interest of any nature in,
any other entity, other than the entities identified in Part 2.1(a)(ii) of the
Company Schedules, except for passive investments in equity interests of public
companies as part of the cash management program of the Company. Unless
otherwise indicated, references to the "Company" throughout this Agreement shall
mean the Company and its subsidiaries, taken as a whole. The Company has not
agreed and is not obligated to make, nor bound by any written, oral or other
agreement, contract, subcontract, lease, binding understanding, instrument,
note, option, warranty, purchase order, license, sublicense, insurance policy,
benefit plan or legally binding commitment or undertaking of any nature, as in
effect as of the date hereof or as may hereinafter be in effect ("Contract")
under which Contract it may become obligated to make, any future investment in
or capital contribution to any other entity. Except as set forth in Part
2.1(a)(i) in the Company Schedules, the Company has not, at any time, been a
general partner of any general partnership, limited partnership or other entity.
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(b) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation and
has all necessary corporate power and authority: (i) to conduct its business in
the manner in which its business is currently being conducted; (ii) to own and
use its assets in the manner in which its assets are currently owned and used;
and (iii) to perform its obligations under all Contracts by which it is bound.
(c) The Company is qualified to do business as a foreign
corporation, and is in good standing, under the laws of all jurisdictions where
the nature of its business requires such qualification and where the failure to
so qualify would have a Material Adverse Effect (as defined in Section 8.3) on
the Company.
(d) The Company has delivered or made available to Parent a true
and correct copy of the Certificate of Incorporation and Bylaws of the Company
and similar governing instruments of each of its subsidiaries, each as amended
to date (collectively, the "Company Charter Documents"), and each such
instrument is in full force and effect. The Company is not in violation of any
of the provisions of the Company Charter Documents.
(e) The Company has delivered or made available to Parent all
proposed or considered amendments to the Company Charter Documents.
2.2 COMPANY CAPITAL STRUCTURE.
(a) The authorized capital stock of the Company consists of: (i)
30,000,000 shares of Company Common Stock, $0.01 par value, of which 13,006,557
shares have been issued and are outstanding as of the date of this Agreement;
and (ii) 5,000,000 shares of preferred stock, $0.01 par value, of which no
shares are outstanding as of the date of this Agreement. All of the outstanding
shares of capital stock of the Company have been duly authorized and validly
issued, and are fully paid and nonassessable. As of the date of this Agreement,
there are no shares of Company Common Stock held in treasury by the Company.
Upon consummation of the Merger, (A) the shares of Parent Common Stock issued in
exchange for any shares of Company Common Stock that are subject to a Contract
pursuant to which the Company has the right to repurchase, redeem or otherwise
reacquire any shares of Company Common Stock will, without any further act of
Parent, the Company or any other person, become subject to the restrictions,
conditions and other provisions contained in such Contract, and (B) Parent will
automatically succeed to and become entitled to exercise the Company's rights
and remedies under any such Contract.
(b) As of the date of this Agreement: (i) 836,814 shares of
Company Common Stock are subject to issuance pursuant to outstanding options to
purchase Company Common Stock under the Company Stock Option Plans; (ii) 300,000
shares of Company Common Stock are reserved for future issuance under the
Company Purchase Plan; and (iii) 1,334,050 shares of Company Common Stock are
subject to issuance pursuant to warrants to purchase Company Common Stock as set
forth on Part 2.2 of the Company Schedules. Stock options granted by the Company
pursuant to the Company Stock Option Plans are referred to in this Agreement as
"Company Options". Part 2.2(b) of the Company Schedules sets forth the following
information with respect to each Company Option outstanding as of the date of
this Agreement: (i) the name of the optionee; (ii) the particular plan pursuant
to which such Company Option was granted; (iii) the number of shares of Company
Common Stock subject to such Company Option; (iv) the exercise price of such
Company Option; (v) the date on which such Company Option was granted; (vi) the
applicable vesting schedule; (vii) the date on which such Company Option expires
and (viii) whether the exercisability of such option will be accelerated in
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any way by the transactions contemplated by this Agreement, and indicates the
extent of any such acceleration. The Company has made available to Parent
accurate and complete copies of all stock option plans pursuant to which the
Company has granted stock options that are currently outstanding and the form of
all stock option agreements evidencing such options. All shares of Company
Common Stock subject to issuance as aforesaid, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are issuable,
would be duly authorized, validly issued, fully paid and nonassessable. Except
as set forth in Part 2.2(b)(i) of the Company Schedules, there are no
commitments or agreements of any character to which the Company is bound
obligating the Company to accelerate the vesting of any Company Option as a
result of the Merger.
(c) All outstanding shares of Company Common Stock, all
outstanding Company Options, and all outstanding shares of capital stock of each
subsidiary of the Company have been issued and granted in compliance with (i)
all applicable securities laws and other applicable Legal Requirements (as
defined below) and (ii) all requirements set forth in applicable Contracts. For
the purposes of this Agreement, "Legal Requirements" means any federal, state,
local, municipal, foreign or other law, statute, constitution, principle of
common law, resolution, ordinance, code, edict, decree, rule, regulation, ruling
or requirement issued, enacted, adopted, promulgated, implemented or otherwise
put into effect by or under the authority of any Governmental Entity (as defined
below).
2.3 OBLIGATIONS WITH RESPECT TO CAPITAL STOCK. Except as set forth in
Part 2.3 of the Company Schedules and as set forth in Section 2.2 above, there
are no equity securities, partnership interests or similar ownership interests
of any class of any Company equity security, or any securities exchangeable or
convertible into or exercisable for such equity securities, partnership
interests or similar ownership interests, issued, reserved for issuance or
outstanding. Except as set forth in Part 2.3 of the Company Schedules and except
for securities the Company owns free and clear of all claims and Encumbrances
(as defined below), directly or indirectly through one or more subsidiaries, and
except for shares of capital stock or other similar ownership interests of
certain subsidiaries of the Company that are owned by certain nominee equity
holders as required by the applicable law of the jurisdiction of organization of
such subsidiaries (which shares or other interests do not materially affect the
Company's control of such subsidiaries), as of the date of this Agreement, there
are no equity securities, partnership interests or similar ownership interests
of any class of equity security of any subsidiary of the Company, or any
security exchangeable or convertible into or exercisable for such equity
securities, partnership interests or similar ownership interests, issued,
reserved for issuance or outstanding. For the purposes of this Agreement
"Encumbrances" means any lien, pledge, hypothecation, charge, mortgage, security
interest, encumbrance, claim, infringement, interference, option, right of first
refusal, preemptive right, community property interest or restriction of any
nature (including any restriction on the voting of any security, any restriction
on the transfer of any security or other asset, any restriction on the receipt
of any income derived from any asset, any restriction on the use of any asset
and any restriction on the possession, exercise or transfer of any other
attribute of ownership of any asset). Except as set forth in Part 2.3 of the
Company Schedules or as set forth in Section 2.2 hereof, there are no
subscriptions, options, warrants, equity securities, partnership interests or
similar ownership interests, calls, rights (including preemptive rights),
commitments or agreements of any character to which the Company or any of its
subsidiaries is a party or by which it is bound obligating the Company or any of
its subsidiaries to issue, deliver or sell, or cause to be issued, delivered or
sold, or repurchase, redeem or otherwise acquire, or cause the repurchase,
redemption or acquisition of, any shares of capital stock, partnership interests
or similar ownership interests of the Company or any of its subsidiaries or
obligating the Company or any of its subsidiaries to grant, extend, accelerate
the vesting of or enter into any such subscription, option, warrant, equity
security, call, right, commitment or agreement. As of the date of this
Agreement, except as set forth in Part 2.3 of the Company Schedules and except
as contemplated by this Agreement, there are no registration rights and there
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is, except for the Company Voting Agreement and except as set forth in Part 2.3
of the Company Schedules, no voting trust, proxy, rights plan, antitakeover plan
or other agreement or understanding to which the Company is a party or by which
it is bound with respect to any equity security of any class of the Company or
with respect to any equity security, partnership interest or similar ownership
interest of any class of any of its subsidiaries. Stockholders of the Company
will not be entitled to dissenters' rights under applicable state law in
connection with the Merger.
2.4 AUTHORITY; NON-CONTRAVENTION.
(a) The Company has all requisite corporate power and authority
to enter into 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 authorized by all necessary
corporate action on the part of the Company, subject only to the approval and
adoption of this Agreement and the approval of the Merger by the Company's
stockholders and the filing of the Certificate of Merger pursuant to Delaware
Law. A vote of the holders of a majority of the outstanding shares of the
Company Common Stock is sufficient for the Company's stockholders to approve and
adopt this Agreement and approve the Merger. This Agreement has been duly
executed and delivered by the Company and, assuming due execution and delivery
by Parent and Merger Sub, constitutes valid and binding obligations of the
Company, enforceable against the Company in accordance with its terms, except as
enforceability may be limited by bankruptcy and other similar laws and general
principles of equity. The execution and delivery of this Agreement by the
Company does not, and the performance of this Agreement by the Company will not,
(i) conflict with or violate the Company Charter Documents, (ii) subject to
obtaining the approval and adoption of this Agreement and the approval of the
Merger by the Company's stockholders as contemplated in Section 5.2 and
compliance with the requirements set forth in Section 2.4(b) below, conflict
with or violate any law, rule, regulation, order, judgment or decree applicable
to the Company or any of its subsidiaries or by which the Company or any of its
subsidiaries or any of their respective properties is bound or affected, or
(iii) except as set forth in Part 2.4(a) of the Company Schedules result in any
material breach of or constitute a material default (or an event that with
notice or lapse of time or both would become a material default) under, or
impair the Company's rights or alter the rights or obligations of any third
party under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of a material lien or
Encumbrance on any of the material properties or assets of the Company or any of
its subsidiaries pursuant to, any material note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise, concession, or other
instrument or obligation to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries or its or any of their
respective assets are bound or affected. Part 2.4(a) of the Company Schedules
lists all consents, waivers and approvals under any of the Company's material
agreements, contracts, licenses or leases required to be obtained in connection
with the consummation of the transactions contemplated hereby, which, if
individually or in the aggregate not obtained, would result in a material loss
of benefits to the Company, Parent or the Surviving Corporation as a result of
the Merger.
(b) Except as set forth in Part 2.4(b) of the Company Schedules,
no consent, approval, order or authorization of, or registration, declaration or
filing with any court, administrative agency or commission or other governmental
authority or instrumentality, foreign or domestic ("Governmental Entity"), is
required to be obtained or made by the Company in connection with the execution
and delivery of this Agreement or the consummation of the Merger, except for (i)
the filing of the Certificate of Merger with the Secretary of State of the State
of Delaware, (ii) the filing of the Prospectus/Proxy Statement (as defined in
Section 2.19) with the Securities and Exchange Commission ("SEC") in accordance
with the Securities Exchange Act of 1934, as amended (the "Exchange Act"), (iii)
such consents, approvals, orders, authorizations, registrations, declarations
and filings as may be required under applicable federal, foreign and state
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securities (or related) laws and the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), and the securities or antitrust laws of
any foreign country, and (iv) such other consents, authorizations, filings,
approvals and registrations which if not obtained or made would not be material
to the Company or Parent or have a material adverse effect on the ability of the
parties hereto to consummate the Merger.
2.5 SEC FILINGS; COMPANY FINANCIAL STATEMENTS.
(a) The Company has filed all forms, reports and documents
required to be filed by the Company with the SEC since January 1, 1999. All such
required forms, reports and documents (including those that the Company may file
subsequent to the date hereof) are referred to herein as the "Company SEC
Reports." As of their respective dates (or, if amended, as of the respective
dates of such amendments), the Company SEC Reports (i) complied as to form in
all material respects with the requirements of the Securities Act of 1933, as
amended (the "Securities Act"), or the Exchange Act, as the case may be, and the
rules and regulations of the SEC thereunder applicable to such Company SEC
Reports and (ii) did not at the time they were filed contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. None of
the Company's subsidiaries is required to file any forms, reports or other
documents with the SEC.
(b) Each of the consolidated financial statements (including, in
each case, any related notes thereto) contained in the Company SEC Reports (the
"Company Financials"), including each Company SEC Reports filed after the date
hereof until the Closing, (i) complied as to form in all material respects with
the published rules and regulations of the SEC with respect thereto, (ii) was
prepared in accordance with United States generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto or, in the case of
unaudited interim financial statements, as may be permitted by the SEC on Form
10-Q under the Exchange Act) and (iii) fairly presented the consolidated
financial position of the Company and its subsidiaries as at the respective
dates thereof and the consolidated results of the Company's operations and cash
flows for the periods indicated, except that the unaudited interim financial
statements may not contain footnotes and were or are subject to normal and
recurring year-end adjustments. The audited balance sheet of the Company as of
June 30, 1998 previously delivered to Parent by the Company and contained in the
Company SEC Reports as of December 31, 1998 is hereinafter referred to as the
"Company Balance Sheet." Except as disclosed in the Company Financials or as
incurred in the ordinary course of business since the date of the Company
Balance Sheet, neither the Company nor any of its subsidiaries has any
liabilities of a nature required under GAAP to be set forth on a balance sheet
(absolute, accrued, contingent or otherwise) which are, individually or in the
aggregate, material to the business, results of operations or financial
condition of the Company and its subsidiaries taken as a whole.
(c) The Company has heretofore furnished to Parent a complete and
correct copy of any amendments or modifications, which have not yet been filed
with the SEC but which are required to be filed, to agreements, documents or
other instruments which previously had been filed by the Company with the SEC
pursuant to the Securities Act or the Exchange Act.
2.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the date of the
Company Balance Sheet and except as set forth on Part 2.6 of the Company
Schedules, there has not been: (i) any Material Adverse Effect on the Company,
(ii) any declaration, setting aside or payment of any dividend on, or other
distribution (whether in cash, stock or property) in respect of, any of the
Company's or any of its subsidiaries' capital stock, or any purchase, redemption
or other acquisition by the Company of any of the Company's capital stock or any
other
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securities of the Company or its subsidiaries or any options, warrants, calls or
rights to acquire any such shares or other securities except for repurchases
from employees following their termination pursuant to the terms of their
pre-existing stock option or purchase agreements, (iii) any split, combination
or reclassification of any of the Company's or any of its subsidiaries' capital
stock, (iv) any granting by the Company or any of its subsidiaries of any
increase in compensation or fringe benefits, except for normal increases of cash
compensation in the ordinary course of business consistent with past practice,
or any payment by the Company or any of its subsidiaries of any bonus, except
for bonuses made in the ordinary course of business consistent with past
practice, or any granting by the Company or any of its subsidiaries of any
increase in severance or termination pay or any entry by the Company or any of
its subsidiaries into any currently effective employment, severance, termination
or director, officer or other employee indemnification agreement or any other
employment or consulting related agreement the benefits of which are contingent
or the terms of which are materially altered upon the occurrence of a
transaction involving the Company of the nature contemplated hereby, (v) entry
by the Company or any of its subsidiaries into any licensing or other agreement
with regard to the acquisition or disposition of any material Intellectual
Property (as defined in Section 2.9) other than licenses in the ordinary course
of business consistent with past practice, (vi) any amendment or consent with
respect to any licensing agreement filed or required to be filed by the Company
with the SEC, (vii) any material change by the Company in its accounting
methods, principles or practices, except as required by concurrent changes in
GAAP, or (viii) any revaluation by the Company of any of its assets, including,
without limitation, writing down the value of capitalized inventory or writing
off notes or accounts receivable other than in the ordinary course of business
and consistent with past practice.
2.7 TAXES.
(a) DEFINITION OF TAXES. For the purposes of this Agreement,
"Tax" or "Taxes" refers to any and all federal, state, local and foreign taxes,
assessments and other governmental charges, duties, impositions and liabilities
relating to taxes, including taxes based upon or measured by gross receipts,
income, profits, sales, use and occupation, and value added, ad valorem,
transfer, franchise, withholding, payroll, recapture, employment, excise and
property taxes, together with all interest, penalties and additions imposed with
respect to such amounts; (ii) any liability for the payment of any amounts of
the type described in clause (i) as a result of being a member of an affiliated,
consolidated, combined or unitary group for any period; and (iii) any liability
for the payment of any amounts of the type described in clause (i) or (ii) as a
result of any express or implied obligation to indemnify any other person or as
a result of any obligations under any agreements or arrangements with any other
person with respect to such amounts and including any liability for taxes of a
predecessor entity.
(b) TAX RETURNS AND AUDITS.
(i) The Company and each of its subsidiaries have timely
filed all federal, state, local and foreign returns, estimates, information
statements and reports ("Returns") relating to Taxes required to be filed by the
Company and each of its subsidiaries with any Tax authority, except such Returns
which are not material to the Company. The Company and each of its subsidiaries
have paid all Taxes shown to be due on such Returns.
(ii) The Company and each of its subsidiaries as of the
Effective Time will have withheld with respect to its employees all federal and
state income taxes, Taxes pursuant to the Federal Insurance Contribution Act
("FICA"), Taxes pursuant to the Federal Unemployment Tax Act ("FUTA") and other
Taxes required to be withheld.
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(iii) Neither the Company nor any of its subsidiaries has
been delinquent in the payment of any Tax nor is there any Tax deficiency
outstanding, proposed in writing (or otherwise, to the Company's knowledge,
proposed) or assessed against the Company or any of its subsidiaries, nor has
the Company or any of its subsidiaries executed any unexpired waiver of any
statute of limitations on or extending the period for the assessment or
collection of any Tax.
(iv) No audit or other examination of any Return of the
Company or any of its subsidiaries by any Tax authority is presently in
progress, nor has the Company or any of its subsidiaries been notified in
writing (or otherwise, to the Company's knowledge, notified) of any request for
such an audit or other examination.
(v) No adjustment relating to any Returns filed by the
Company or any of its subsidiaries has been proposed in writing by any Tax
authority to the Company or any of its subsidiaries or any representative
thereof.
(vi) Neither the Company nor any of its subsidiaries has any
liability for unpaid Taxes which has not been accrued for or reserved on the
Company Balance Sheet, whether asserted or unasserted, contingent or otherwise,
which is material to the Company, other than any liability for unpaid Taxes that
may have accrued since the date of the Company Balance Sheet in connection with
the operation of the business of the Company and its subsidiaries in the
ordinary course.
(vii) There is no contract, agreement, plan or arrangement
to which the Company is a party as of the date of this Agreement (excluding the
effect, if any, of the provisions of Section 5.12 hereof), including but not
limited to the provisions of this Agreement, covering any employee or former
employee of the Company or any of its subsidiaries that, individually or
collectively, could give rise to the payment of any amount that would not be
deductible pursuant to Sections 280G, 404 or 162(m) of the Code.
(viii) Neither the Company nor any of its subsidiaries has
filed any consent agreement under Section 341(f) of the Code or agreed to have
Section 341(f)(2) of the Code apply to any disposition of a subsection (f) asset
(as defined in Section 341(f)(4) of the Code) owned by the Company.
(ix) Neither the Company nor any of its subsidiaries is
party to or has any obligation under any tax-sharing, tax indemnity or tax
allocation agreement or arrangement.
(x) Except as may be required as a result of the Merger, the
Company and its subsidiaries have not been and will not be required to include
any adjustment in Taxable income for any Tax period (or portion thereof)
pursuant to Section 481 or Section 263A of the Code or any comparable provision
under state or foreign Tax laws as a result of transactions, events or
accounting methods employed prior to the Closing.
(xi) None of the Company's or its subsidiaries' assets are
tax exempt use property within the meaning of Section 168(h) of the Code.
(xii) Part 2.7 of the Company Schedules lists (A) any
foreign Tax holidays, (B) any intercompany transfer pricing agreements, or other
arrangements that have been established by the Company or any of its
subsidiaries with any Tax authority and (C) any expatriate programs or policies
affecting the Company or any of its subsidiaries.
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(xiii) The Company is not, and has not been at any time, a
"United States real property holding corporation" within the meaning of Section
897(c)(2) of the Code.
2.8 TITLE TO PROPERTIES; ABSENCE OF LIENS AND ENCUMBRANCES.
(a) Part 2.8(a)(i) of the Company Schedules lists the real
property interests owned by the Company as of the date of this Agreement. Part
2.8(a)(ii) of the Company Schedules lists all real property leases to which the
Company is a party as of the date of this Agreement and each amendment thereto
that is in effect as of the date of this Agreement. All such current leases are
in full force and effect, are valid and effective in accordance with their
respective terms, and there is not, under any of such leases, any existing
default or event of default (or event which with notice or lapse of time, or
both, would constitute a default) that would give rise to a material claim.
Other than as disclosed in Part 2.8(a)(i) and (ii) of the Company Schedules, the
Company owns no interest in real property.
(b) The Company has good and valid title to, or, in the case of
leased properties and assets, valid leasehold interests in, all of its material
tangible properties and assets, real, personal and mixed, used or held for use
in its business, free and clear of any liens, pledges, charges, claims, security
interests or other encumbrances of any sort ("Liens"), except as reflected in
the Company Financials and as set forth in Part 2.8(b) of the Company Schedules,
and except for liens for taxes not yet due and payable and such Liens or other
imperfections of title and encumbrances, if any, which are not material in
character, amount or extent, and which do not materially detract from the value,
or materially interfere with the present use, of the property subject thereto or
affected thereby.
2.9 INTELLECTUAL PROPERTY. For the purposes of this Agreement, the
following terms have the following definitions:
"INTELLECTUAL PROPERTY" shall mean any or all of the following
and all rights in, arising out of, or associated therewith: (i)
all United States, international and foreign patents and
applications therefor and all reissues, divisions, renewals,
extensions, provisionals, continuations and continuations-in-part
thereof; (ii) all inventions (whether patentable or not),
invention disclosures, improvements, trade secrets, proprietary
information, know how, technology, technical data and customer
lists, and all documentation relating to any of the foregoing;
(iii) all copyrights, copyrights registrations and applications
therefor, and all other rights corresponding thereto throughout
the world; (iv) all industrial designs and any registrations and
applications therefor throughout the world; (v) all trade names,
logos, URLs, common law trademarks and service marks, trademark
and service ▇▇▇▇ registrations and applications therefor
throughout the world; (vi) all databases and data collections and
all rights therein throughout the world; (vii) all moral and
economic rights of authors and inventors, however denominated,
throughout the world, and (viii) any similar or equivalent rights
to any of the foregoing anywhere in the world.
"COMPANY INTELLECTUAL PROPERTY" shall mean any Intellectual
Property that is owned by, or exclusively licensed to, the
Company.
"REGISTERED INTELLECTUAL PROPERTY" means all United States,
international and foreign: (i) patents and patent applications
(including provisional applications); (ii) registered trademarks,
applications to register trademarks, intent-to-use applications,
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or other registrations or applications related to trademarks;
(iii) registered copyrights and applications for copyright
registration; and (iv) any other Intellectual Property that is
the subject of an application, certificate, filing, registration
or other document issued, filed with, or recorded by any state,
government or other public legal authority.
"Company Registered Intellectual Property" means all of the
Registered Intellectual Property owned by, or filed in the name
of, the Company.
(a) Except as set forth in Part 2.9(a) of the Company Schedules,
no material Company Intellectual Property or product or service of the Company
is subject to any proceeding or outstanding decree, order, judgment, agreement,
or stipulation restricting in any manner the use, transfer, or licensing thereof
by the Company, or which may affect the validity, use or enforceability of such
Company Intellectual Property.
(b) Part 2.9(b) of the Company Schedules is a complete and
accurate list of all Company Registered Intellectual Property and specifies,
where applicable, the jurisdictions in which each such item of Company
Registered Intellectual Property has been issued or registered or in which an
application for such issuance and registration has been filed, including the
respective registration or application numbers. Each material item of Company
Registered Intellectual Property is valid and subsisting, all necessary
registration, maintenance and renewal fees currently due in connection with such
Registered Intellectual Property have been made and all necessary documents,
recordations and certificates in connection with such Registered Intellectual
Property have been filed with the relevant patent, copyright, trademark or other
authorities in the United States or foreign jurisdictions, as the case may be,
for the purposes of maintaining such Registered Intellectual Property.
(c) The Company owns and has good and exclusive title to, or has
license (sufficient for the conduct of its business as currently conducted and
as proposed to be conducted) to, each material item of Company Intellectual
Property or other Intellectual Property used by the Company free and clear of
any lien or encumbrance (excluding licenses and related restrictions); and the
Company is the exclusive owner of all trademarks and trade names used in
connection with the operation or conduct of the business of the Company,
including the sale of any products or the provision of any services by the
Company.
(d) The Company owns exclusively, and has good title to, all
copyrighted works that are Company products or which the Company otherwise
expressly purports to own.
(e) To the extent that any material Intellectual Property has
been developed or created by a third party for the Company, the Company has a
written agreement with such third party with respect thereto and the Company
thereby either (i) has obtained ownership of, and is the exclusive owner of, or
(ii) has obtained a license (sufficient for the conduct of its business as
currently conducted and as proposed to be conducted) to all such third party's
Intellectual Property in such work, material or invention by operation of law or
by valid assignment, to the fullest extent it is legally possible to do so.
(f) Except as set forth in Part 2.9(f) of the Company Schedules,
the Company has not transferred ownership of, or granted any exclusive license
with respect to, any Intellectual Property that is or was material to the
Company Intellectual Property, to any third party.
(g) Except as set forth in Part 2.9(g) of the Company Schedules,
the Company Schedules list all material contracts, licenses and agreements to
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which the Company is a party (i) with respect to Company Intellectual Property
licensed or transferred to any third party (other than end-user licenses in the
ordinary course); or (ii) pursuant to which a third party has licensed or
transferred any material Intellectual Property to the Company.
(h) Except as set forth in Part 2.9(h) of the Company Schedules,
all material contracts, licenses and agreements relating to the Company
Intellectual Property are in full force and effect. The consummation of the
transactions contemplated by this Agreement will neither violate nor result in
the breach, modification, cancellation, termination, or suspension of such
contracts, licenses and agreements. The Company is in material compliance with,
and has not materially breached any term any of such contracts, licenses and
agreements and, to the knowledge of the Company, all other parties to such
contracts, licenses and agreements are in compliance with, and have not
materially breached any term of, such contracts, licenses and agreements.
Following the Closing Date, the Surviving Corporation will be permitted to
exercise all of the Company's rights under such contracts, licenses and
agreements to the same extent the Company would have been able to had the
transactions contemplated by this Agreement not occurred and without the payment
of any additional amounts or consideration other than ongoing fees, royalties or
payments which the Company would otherwise be required to pay.
(i) Except as set forth in Part 2.9(i) of the Company Schedules,
the operation of the business of the Company as such business currently is
conducted, including the Company's design, development, manufacture, marketing
and sale of the products or services of the Company (including with respect to
products currently under development) has not, does not and will not infringe or
misappropriate the Intellectual Property of any third party or constitute unfair
competition or trade practices under the laws of any jurisdiction.
(j) Except as set forth in Part 2.9(j) of the Company Schedules,
the Company has not received notice from any third party that the operation of
the business of the Company or any act, product or service of the Company,
infringes or misappropriates the Intellectual Property of any third party or
constitutes unfair competition or trade practices under the laws of any
jurisdiction.
(k) Except as set forth in Part 2.9(k) of the Company Schedules
and to the knowledge of the Company, no person has infringed or misappropriated
or is infringing or misappropriating any Company Intellectual Property.
(l) The Company has taken reasonable steps to protect the
Company's rights in the Company's confidential information and trade secrets
that it wishes to protect or any trade secrets or confidential information of
third parties provided to the Company, and, without limiting the foregoing, the
Company has and enforces, or prior to the Closing will have and will enforce, a
policy requiring each key employee and contractor to execute a proprietary
information/confidentiality agreement substantially in the form provided to
Parent and all current and former employees and contractors of the Company have
executed such an agreement, except where the failure to do so is not reasonably
expected to be material to the Company.
(m) Except as set forth in Part 2.9(m) of the Company Schedules,
neither this Agreement nor the transactions contemplated by this Agreement,
including the assignment to Parent by operation of law or otherwise of any
contracts or agreements to which the Company is a party, will result in (i)
Parent's or the Company's granting to any third party any right to or with
respect to any material Intellectual Property right owned by, or licensed to,
either of them, (ii) either the Parent's or the Company's being bound by, or
subject to, any non-compete or other material restriction on the operation or
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scope or their respective businesses, or (iii) either the Parent's or the
Company's being obligated to pay any royalties or other material amounts to any
third party in excess of those payable by Parent or Company, respectively, prior
to the Closing.
2.10 COMPLIANCE; PERMITS; RESTRICTIONS.
(a) Neither the Company nor any of its subsidiaries is, in any
material respect, in conflict with, or in default or in violation of (i) any
law, rule, regulation, order, judgment or decree applicable to the Company or
any of its subsidiaries or by which the Company or any of its subsidiaries or
any of their respective properties is bound or affected, or (ii) any material
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries or
its or any of their respective properties is bound or affected, except for
conflicts, violations and defaults that (individually or in the aggregate) would
not cause the Company to lose any material benefit or incur any material
liability. No investigation or review by any Governmental Entity is pending or,
to the Company's knowledge, has been threatened in a writing delivered to the
Company, against the Company or any of its subsidiaries, nor, to the Company's
knowledge, has any Governmental Entity indicated an intention to conduct an
investigation of the Company or any of its subsidiaries. There is no material
agreement, judgment, injunction, order or decree binding upon the Company or any
of its subsidiaries which has or could reasonably be expected to have the effect
of prohibiting or materially impairing any business practice of the Company or
any of its subsidiaries, any acquisition of material property by the Company or
any of its subsidiaries or the conduct of business by the Company as currently
conducted.
(b) The Company and its subsidiaries hold, to the extent legally
required, all permits, licenses, variances, exemptions, clearances, consents,
orders and approvals from Governmental Entities that are material to and
required for the operation of the business of the Company as currently conducted
(collectively, the "Company Permits"). The Company and its subsidiaries are in
compliance in all material respects with the terms of the Company Permits,
except where the failure to be in compliance with the terms of the Company
Permits would not be material to the Company.
2.11 LITIGATION. Except as disclosed in Part 2.11 of the Company
Schedules, there are no claims, suits, actions or proceedings pending or, to the
knowledge of the Company, threatened against, relating to or affecting the
Company or any of its subsidiaries, before any court, governmental department,
commission, agency, instrumentality or authority, or any arbitrator that seeks
to restrain or enjoin the consummation of the transactions contemplated by this
Agreement or which could reasonably be expected, either singularly or in the
aggregate with all such claims, actions or proceedings, to be material to the
Company. No Governmental Entity has at any time challenged or questioned in a
writing delivered to the Company the legal right of the Company to design,
manufacture, offer or sell any of its products or services in the present manner
or style thereof. No action, proceeding, revocation proceeding, amendment
procedure, writ or injunction is pending, and to the Company's knowledge, no
action, proceeding, revocation proceeding, amendment procedure, writ or
injunction has been threatened by any Governmental Entity against the Company or
any of its subsidiaries in a writing delivered to the Company concerning any
environmental permit, Hazardous Material or any Hazardous Materials Activity (as
such terms are defined in Section 2.15 hereof) of the Company or any of its
subsidiaries. The Company is not aware of any fact or circumstance which could
involve the Company or any of its subsidiaries in any environmental litigation
or impose upon the Company any material environmental liability. As of the date
hereof, to the knowledge of the Company, no event has occurred, and no claim,
dispute or other condition or circumstance exists, that will, or that would
reasonably be expected to, cause or provide a bona fide basis for a director or
executive officer of the Company to seek indemnification from the Company.
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Except as disclosed in Part 2.11 of the Company Schedules, the Company
has never been subject to an audit, compliance review, investigation or like
contract review by the GSA office of the Inspector General or other Governmental
Entity or agent thereof in connection with any government contract (a
"Government Audit"), to the Company's knowledge no Government Audit is
threatened and in the event of such Government Audit, to the knowledge of the
Company no basis exists for a finding of noncompliance with any material
provision of any government contract or a refund of any amounts paid or owed by
any Governmental Entity pursuant to such government contract. For each item
disclosed in the Company Schedule pursuant to this Section 2.11 a true and
complete copy of all correspondence and documentation with respect thereto is
attached to such schedule.
2.12 BROKERS' AND FINDERS' FEES. Except for fees payable to (i)
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. pursuant to an engagement letter dated June 1, 1998
and amended March 18, 1999 and (ii) Warburg Dillon Read LLC pursuant to an
engagement letter dated March 25, 1999, copies of which have been provided to
Parent, the Company has not incurred, nor will it incur, directly or indirectly,
any liability for brokerage or finders' fees or agents' commissions or any
similar charges in connection with this Agreement or any transaction
contemplated hereby.
2.13 TRANSACTIONS WITH AFFILIATES. Except as set forth in the Company
SEC Reports, no event has occurred as of the date of this Agreement that would
be required to be reported by the Company pursuant to Item 404 of Regulation S-K
promulgated by the SEC. Part 2.13 of the Company Schedules identifies each
person who is an "affiliate" (as that term is used in Rule 145 promulgated under
the Securities Act) of the Company as of the date of this Agreement.
2.14 EMPLOYEE BENEFIT PLANS.
(a) DEFINITIONS. With the exception of the definition of
"Affiliate" set forth in Section 2.14(a)(i) below (which definition shall apply
only to this Section 2.14), for purposes of this Agreement, the following terms
shall have the meanings set forth below:
(i) "Affiliate" shall mean 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 issued thereunder;
(ii) "Company Employee Plan" shall mean any plan, program,
policy, practice, contract, agreement or other arrangement providing for
compensation, severance, termination pay, performance awards, stock or
stock-related awards, fringe benefits or other employee benefits or remuneration
of any kind, whether written or unwritten or otherwise, funded or unfunded,
including without limitation, each "employee benefit plan," within the meaning
of Section 3(3) of ERISA which is or has been maintained, contributed to, or
required to be contributed to, by the Company or any Affiliate for the benefit
of any Employee;
(iii) "COBRA" shall mean the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended;
(iv) "DOL" shall mean the Department of Labor;
(v) "Employee" shall mean any current, former, or retired
employee, officer, or director of the Company or any Affiliate;
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(vi) "Employee Agreement" shall mean each management,
employment, severance, consulting, relocation, repatriation, expatriation,
visas, work permit or similar agreement or contract between the Company or any
Affiliate and any Employee or consultant;
(vii) "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended;
(viii) "FMLA" shall mean the Family Medical Leave Act of
1993, as amended;
(ix) "International Employee Plan" shall mean each Company
Employee Plan, if any, that has been adopted or maintained by the Company,
whether informally or formally, for the benefit of Employees outside the United
States;
(x) "IRS" shall mean the Internal Revenue Service;
(xi) "Multiemployer Plan" shall mean any "Pension Plan" (as
defined below) which is a "multiemployer plan," as defined in Section 3(37) of
ERISA;
(xii) "PBGC" shall mean the Pension Benefit Guaranty
Corporation; and
(xiii) "Pension Plan" shall mean each Company Employee Plan
which is an "employee pension benefit plan," within the meaning of Section 3(2)
of ERISA.
(b) SCHEDULE. Part 2.14(b) of the Company Schedules contain an
accurate and complete list of each Company Employee Plan and each material
Employee Agreement. The Company does not have any plan or commitment to
establish any new Company Employee Plan, to modify any Company Employee Plan or
Employee Agreement (except to the extent required by law or to conform any such
Company Employee Plan or Employee Agreement to the requirements of any
applicable law, in each case as previously disclosed to Parent in writing, or as
required by this Agreement), or to enter into any Company Employee Plan or
material Employee Agreement, nor does it have any intention or commitment to do
any of the foregoing.
(c) DOCUMENTS. The Company has provided to Parent: (i) correct
and complete copies of all documents embodying to each Company Employee Plan and
each Employee Agreement including all amendments thereto and written
interpretations thereof; (ii) the most recent annual actuarial valuations, if
any, prepared for each Company Employee Plan; (iii) if the Company Employee Plan
is funded, the most recent annual and periodic accounting of Company Employee
Plan assets; (iv) the most recent summary plan description together with the
summary of material modifications thereto, if any, required under ERISA with
respect to each Company Employee Plan; (v) all IRS determination, opinion,
notification and advisory letters, and rulings relating to Company Employee
Plans and copies of all applications and correspondence to or from the IRS or
the DOL with respect to any Company Employee Plan; (vi) all material written
agreements and contracts relating to each Company Employee Plan, including, but
not limited to, administrative service agreements, group annuity contracts and
group insurance contracts; (vii) all communications material to any Employee or
Employees relating to any Company Employee Plan and any proposed Company
Employee Plans, in each case, relating to any amendments, terminations,
establishments, increases or decreases in benefits, acceleration of payments or
vesting schedules or other events which would result in any material liability
to the Company; (viii) all COBRA forms and related notices; and (ix) all
registration statements and prospectuses prepared in connection with each
Company Employee Plan.
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(d) EMPLOYEE PLAN COMPLIANCE. (i) The Company has performed in
all material respects all obligations required to be performed by it under, is
not in default or violation of, and has no knowledge of any default or violation
by any other party to each Company Employee Plan, and each Company Employee Plan
has been established and maintained in all material respects in accordance with
its terms and in compliance with all applicable laws, statutes, orders, rules
and regulations, including but not limited to ERISA or the Code; (ii) each
Company Employee Plan intended to qualify under Section 401(a) of the Code and
each trust intended to qualify under Section 501(a) of the Code has either
received a favorable determination letter from the IRS with respect to each such
Plan as to its qualified status under the Code, including all amendments to the
Code effected by the Tax Reform Act of 1986 and subsequent legislation, or has
remaining a period of time under applicable Treasury regulations or IRS
pronouncements in which to apply for such a determination letter and make any
amendments necessary to obtain a favorable determination; (iii) no "prohibited
transaction," within the meaning of Section 4975 of the Code or Sections 406 and
407 of ERISA, and not otherwise exempt under Section 408 of ERISA, has occurred
with respect to any Company Employee Plan; (iv) there are no actions, suits or
claims pending, or, to the knowledge of the Company, threatened or reasonably
anticipated (other than routine claims for benefits) against any Company
Employee Plan or against the assets of any Company Employee Plan; (v) each
Company Employee Plan can be amended, terminated or otherwise discontinued after
the Effective Time in accordance with its terms, without liability to Parent,
the Company or any of its Affiliates (other than ordinary administration
expenses typically incurred in a termination event); (vi) there are no audits,
inquiries or proceedings pending or, to the knowledge of the Company or any
Affiliates, threatened by the IRS or DOL with respect to any Company Employee
Plan; and (vii) neither the Company nor any Affiliate is subject to any penalty
or tax with respect to any Company Employee Plan under Section 402(i) of ERISA
or Sections 4975 through 4980 of the Code.
(e) PENSION PLANS. Except as set forth in Part 2.14(e) of the
Company Schedules, the Company does not now, nor has it ever, maintained,
established, sponsored, participated in, or contributed to, any Pension Plan
which is subject to Title IV of ERISA or Section 412 of the Code.
(f) MULTIEMPLOYER PLANS. At no time has the Company contributed
to or been requested to contribute to any Multiemployer Plan.
(g) NO POST-EMPLOYMENT OBLIGATIONS. No Company Employee Plan
provides, or has any liability to provide, retiree life insurance, retiree
health or other retiree employee welfare benefits to any person for any reason,
except as may be required by COBRA or other applicable statute, and the Company
has never represented, promised or contracted (whether in oral or written form)
to any Employee (either individually or to Employees as a group) or any other
person that such Employee(s) or other person would be provided with retiree life
insurance, retiree health or other retiree employee welfare benefit, except to
the extent required by statute.
(h) COBRA. Neither the Company nor any Affiliate has, prior to
the Effective Time, and in any material respect, violated any of the health care
continuation requirements of COBRA, the requirements of FMLA or any similar
provisions of state law applicable to its Employees and the requirements of the
Women's Health and Cancer Rights Act and the Newborns' and Mothers' Health
Protection Act of 1996.
(i) EFFECT OF TRANSACTION. 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
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may result in any payment (whether of severance pay or otherwise), acceleration,
forgiveness of indebtedness, vesting, distribution, increase in benefits or
obligation to fund benefits with respect to any Employee.
(j) EMPLOYMENT MATTERS. The Company: (i) is in compliance in all
material respects with all applicable foreign, federal, state and local laws,
rules and regulations respecting employment, employment practices, terms and
conditions of employment and wages and hours, in each case, with respect to
Employees; (ii) has withheld all amounts required by law or by agreement to be
withheld from the wages, salaries and other payments to Employees; (iii) is not
liable for any arrears of wages or any taxes or any penalty for failure to
comply with any of the foregoing; and (iv) is not liable for any material
payment to any trust or other fund or to any governmental or administrative
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 practice).
There are no pending, threatened or reasonably anticipated claims or actions
against the Company under any worker's compensation policy or long-term
disability policy. To the Company's knowledge, no employee of the Company has
violated any employment contract, nondisclosure agreement or noncompetition
agreement by which such employee is bound due to such employee being employed by
the Company and disclosing to the Company or using trade secrets or proprietary
information of any other person or entity.
(k) LABOR. No work stoppage or labor strike against the Company
is pending, threatened or reasonably anticipated. The Company does not know of
any activities or proceedings of any labor union to organize any Employees.
There are no actions, suits, claims, labor disputes or grievances pending, or,
to the knowledge of the Company, threatened or reasonably anticipated relating
to any labor, safety or discrimination matters involving any Employee,
including, without limitation, charges of unfair labor practices or
discrimination complaints, which, if adversely determined, would, individually
or in the aggregate, result in any material liability to the Company. Neither
the Company nor any of its subsidiaries has engaged in any unfair labor
practices within the meaning of the National Labor Relations Act. The Company is
not presently, nor has it been in the past, a party to, or bound by, any
collective bargaining agreement or union contract with respect to Employees and
no collective bargaining agreement is being negotiated by the Company.
(l) INTERNATIONAL EMPLOYEE PLAN. Each International Employee
Plan, if any, has been established, maintained and administered in material
compliance with its terms and conditions and with the requirements prescribed by
any and all statutory or regulatory laws that are applicable to such
International Employee Plan. Furthermore, no International Employee Plan, if
any, has unfunded liabilities, that as of the Effective Time, will not be offset
by insurance or fully accrued. Except as required by law, no condition exists
that would prevent the Company or Parent from terminating or amending an
International Employee Plan, if any, at any time for any reason.
2.15 ENVIRONMENTAL MATTERS.
(a) HAZARDOUS MATERIAL. Except as would not result in material
liability to the Company, no underground storage tanks and no amount of any
substance that has been designated by any Governmental Entity or by applicable
federal, state or local law to be radioactive, toxic, hazardous or otherwise a
danger to health or the environment, including, without limitation, PCBs,
asbestos, petroleum, urea-formaldehyde and all substances listed as hazardous
substances pursuant to the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, as amended, or defined as a hazardous waste pursuant
to the United States Resource Conservation and Recovery Act of 1976, as amended,
and the regulations promulgated pursuant to said laws, but excluding office and
janitorial supplies, (a "Hazardous Material") are present, as a result of the
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actions of the Company or any of its subsidiaries or any affiliate of the
Company, or, to the Company's knowledge, as a result of any actions of any third
party or otherwise, in, on or under any property, including the land and the
improvements, ground water and surface water thereof, that the Company or any of
its subsidiaries has at any time owned, operated, occupied or leased.
(b) HAZARDOUS MATERIALS ACTIVITIES. Except as would not result in
a material liability to the Company (in any individual case or in the aggregate)
(i) neither the Company nor any of its subsidiaries has transported, stored,
used, manufactured, disposed of, released or exposed its employees or others to
Hazardous Materials in violation of any law in effect on or before the Closing
Date, and (ii) neither the Company nor any of its subsidiaries has disposed of,
transported, sold, used, released, exposed its employees or others to or
manufactured any product containing a Hazardous Material (collectively
"Hazardous Materials Activities") in violation of any rule, regulation, treaty
or statute promulgated by any Governmental Entity in effect prior to or as of
the date hereof to prohibit, regulate or control Hazardous Materials or any
Hazardous Material Activity.
2.16 YEAR 2000 COMPLIANCE. Except as disclosed in Part 2.16 of the
Company Schedules, the Company's products and internal systems have been
designed to ensure date and time entry recognition, calculations that
accommodate same century and multi-century formulas and date values, leap year
recognition and calculations, and date data interface values that reflect the
century. The Company's products and internal systems manage and manipulate data
involving dates and times, including single century formulas and multi- century
formulas, and do not cause an abnormal ending scenario within the application or
generate incorrect values or invalid results involving such dates.
2.17 AGREEMENTS, CONTRACTS AND COMMITMENTS. Except as otherwise set
forth in Part 2.17 of the Company Schedules, as of the date hereof neither the
Company nor any of its subsidiaries is a party to or is bound by:
(a) any employment or consulting agreement, contract or
commitment with any officer or director or higher level employee or member of
the Company's Board, other than those that are terminable by the Company or any
of its subsidiaries on no more than thirty (30) days' notice without liability
or financial obligation, except to the extent general principles of wrongful
termination law may limit the Company's or any of its subsidiaries' ability to
terminate employees at will;
(b) any material agreement of indemnification or any material
guaranty, other than any agreement of indemnification entered into in connection
with the sale or license of software products in the ordinary course of
business;
(c) any agreement, contract or commitment containing any covenant
limiting in any respect the right of the Company or any of its subsidiaries to
engage in any line of business or to compete with any person or granting any
exclusive distribution rights;
(d) any agreement, contract or commitment currently in force
relating to the disposition or acquisition by the Company or any of its
subsidiaries after the date of this Agreement of a material amount of assets not
in the ordinary course of business or pursuant to which the Company has any
material ownership interest in any corporation, partnership, joint venture or
other business enterprise other than the Company's subsidiaries;
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(e) any joint marketing or development agreement currently in
force under which the Company or any of its subsidiaries have continuing
material obligations to jointly market any product, technology or service and
which may not be canceled without penalty upon notice of 90 days or less, or any
material agreement pursuant to which the Company or any of its subsidiaries have
continuing material obligations to jointly develop any intellectual property
that will not be owned, in whole or in part, by the Company or any of its
subsidiaries and which may not be canceled without penalty upon notice of 90
days or less;
(f) any agreement, contract or commitment currently in force to
provide source code to any third party for any product or technology that is
material to the Company and its subsidiaries taken as a whole;
(g) any agreement or plan, including, without limitation, any
stock option plan, stock appreciation right plan or stock purchase plan, any of
the benefits of which will be increased, or the vesting of benefits of which
will be accelerated, by the occurrence of any of the transactions contemplated
by this Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement;
(h) any agreement, contract or commitment currently in force to
sell or distribute any Company products, service or technology except agreements
with distributors or sales representatives in the normal course of business
cancelable without penalty upon notice of ninety (90) days or less and
substantially in the form previously provided to Parent;
(i) any mortgages, indentures, guarantees, loans or credit
agreements, security agreements or other agreements or instruments relating to
the borrowing of money or extension of credit;
(j) any settlement agreement entered into within five (5) years
prior to the date of this Agreement; or
(k) any other agreement, contract or commitment that has a value
of $100,000 or more individually.
Neither the Company nor any of its subsidiaries, nor to the Company's
knowledge any other party to a Company Contract (as defined below), is in
breach, violation or default under, and neither the Company nor any of its
subsidiaries has received written notice that it has breached, violated or
defaulted under, any of the material terms or conditions of any of the
agreements, contracts or commitments to which the Company or any of its
subsidiaries is a party or by which it is bound that are required to be
disclosed in the Company Schedules pursuant to clauses (a) through (k) above or
pursuant to Section 2.9 hereof or are required to be filed with any Company SEC
Report (any such agreement, contract or commitment, a "Company Contract") in
such a manner as would permit any other party to cancel or terminate any such
Company Contract, or would permit any other party to seek material damages or
other remedies (for any or all of such breaches, violations or defaults, in the
aggregate).
2.18 CHANGE OF CONTROL PAYMENTS. Part 2.18 of the Company Schedules
sets forth each plan or agreement pursuant to which any amounts may become
payable (whether currently or in the future) to current or former employees and
directors of the Company as a result of or in connection with the Merger.
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2.19 DISCLOSURE. None of the information supplied or to be supplied by
or on behalf of the Company for inclusion or incorporation by reference in the
registration statement on Form S-4 (or similar successor form) to be filed with
the SEC by Parent in connection with the issuance of Parent Common Stock in the
Merger (the "Registration Statement") will, at the time the Registration
Statement is filed with the SEC or at the time it becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in the light of the circumstances under which they are
made, not misleading. None of the information supplied or to be supplied by or
on behalf of the Company for inclusion or incorporation by reference in the
Prospectus/Proxy Statement to be filed with the SEC as part of the Registration
Statement (the "Prospectus/Proxy Statement"), will, at the time the
Prospectus/Proxy Statement is mailed to the stockholders of the Company, at the
time of the Company Stockholders' Meeting or as of the Effective Time, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they are made, not
misleading. The Prospectus/Proxy Statement will comply as to form in all
material respects with the provisions of the Exchange Act and the rules and
regulations promulgated by the SEC thereunder.
2.20 BOARD APPROVAL. The Company's Board has, as of the date of this
Agreement, unanimously (i) determined that the Merger is fair to, and in the
best interests of the Company and its stockholders, (ii) approved and deemed
advisable, subject to stockholder approval, this Agreement and the transactions
contemplated hereby and (iii) determined to recommend that the stockholders of
the Company approve and adopt this Agreement and approve the Merger.
2.21 OPINION OF FINANCIAL ADVISOR. The Company's Board has received an
opinion from ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc., dated the date of this Agreement, to the
effect that, as of such date, the Exchange Ratio is fair to the holders of the
Company Common Stock from a financial point of view, a copy of the written
opinion of which will be delivered to Parent after receipt thereof by the
Company.
2.22 RESTRICTIONS ON BUSINESS ACTIVITIES. Except as set forth in
Section 2.22 of the Company Schedule, there is no agreement, commitment,
judgment, injunction, order or decree binding upon the Company or to which the
Company is a party which has or could reasonably be expected to have the effect
of prohibiting or materially impairing any business practice of the Company, any
acquisition of property by the Company or the conduct of business by the Company
as currently conducted.
2.23 INSURANCE. The Company maintains insurance policies and fidelity
bonds covering the assets, business, equipment, properties, operations,
employees, officers and directors of the Company and its subsidiaries
(collectively, the "Insurance Policies") which are of the type and in amounts
customarily carried by persons conducting businesses similar to those of the
Company and its subsidiaries. There is no material claim by the Company or any
of its subsidiaries pending under any of the material Insurance Policies as to
which coverage has been questioned, denied or disputed by the underwriters of
such policies or bonds.
2.24 STATE TAKEOVER STATUTES. No state takeover statute or similar
statute or regulation applies to or purports to apply to the Merger, this
Agreement and the Company Voting Agreements or the transactions contemplated by
this Agreement and the Company Voting Agreements.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
As of the date hereof and as of the Closing Date (except as otherwise
contemplated herein), Parent and Merger Sub represent and warrant to the
Company, subject to the exceptions specifically disclosed in writing in the
disclosure letter and referencing a specific representation supplied by Parent
and Merger Sub to the Company dated as of the date hereof (the "Parent
Schedules"), as follows:
3.1 ORGANIZATION OF PARENT.
(a) Except as set forth on Part 3.1(a) of Parent Schedules and as
of the date of this Agreement, Parent does not own any capital stock of, or any
equity interest of any nature in, any other entity, except for passive
investments in equity interests of public companies as part of the cash
management program of Parent. Unless otherwise indicated, references to "Parent"
throughout this Agreement shall mean Parent and its subsidiaries, taken as a
whole. As of the date of this Agreement, Parent has not agreed and is not
obligated to make, nor bound by any contract under which contract it may become
obligated to make, any future investment in or capital contribution to any other
entity. Parent has not, at any time, been a general partner of any general
partnership, limited partnership or other entity.
(b) Parent is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation and has
all necessary power and authority: (i) to conduct its business in the manner in
which its business is currently being conducted; (ii) to own and use its assets
in the manner in which its assets are currently owned and used; and (iii) to
perform its obligations under all Contracts by which it is bound.
(c) Parent is qualified to do business as a foreign corporation,
and is in good standing, under the laws of all jurisdictions where the nature of
its business requires such qualification and where the failure to so qualify
would have a Material Adverse Effect (as defined in Section 8.3) on Parent.
(d) Parent has delivered or made available to the Company a true
and correct copy of the Certificate of Incorporation and Bylaws of Parent and
similar governing instruments of each of its subsidiaries, each as amended to
date (collectively, the "Parent Charter Documents"), and each such instrument is
in full force and effect. Parent is not in violation of any of the provisions of
Parent Charter Documents.
(e) Parent has delivered or made available to the Company all
proposed or considered amendments to Parent Charter Documents.
3.2 PARENT CAPITAL STRUCTURE.
(a) As of the date of this Agreement, the authorized capital
stock of Parent consists of: (i) 150,000,000 shares of Common Stock, $0.0001 par
value, of which 70,746,528 shares have been issued and are outstanding as of
April 16, 1999; and (ii) 5,000,000 shares of Preferred Stock, $0.0001 par value
per share, none of which shares have been issued or are outstanding as of the
date of this Agreement. All of the outstanding shares of Parent's Common Stock
have been duly authorized and validly issued, and are fully paid and
nonassessable.
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(b) As of the date of this Agreement: (i) 14,513,047 shares of
Parent Common Stock are subject to issuance pursuant to outstanding options to
purchase Common Stock under Parent's stock option plans; (ii) 1,333,853 shares
of Common Stock are reserved for future issuance under Parent's 1996 Stock Plan
(the "Parent Purchase Plan"); and (iii) 1,000,000 shares of Common Stock are
reserved for issuance under Parent's 1998 Employee Stock Purchase Plan. (Stock
options granted by Parent pursuant to Parent's stock option plans are referred
to in this Agreement as "Parent Options"). Parent has made available to the
Company accurate and complete copies of all stock option plans pursuant to which
Parent has granted stock options that are currently outstanding as of the date
of this Agreement and the form of all stock option agreements evidencing such
options. All shares of Parent Common Stock subject to issuance as aforesaid,
upon issuance on the terms and conditions specified in the instruments pursuant
to which they are issuable, would be duly authorized, validly issued, fully paid
and nonassessable.
(c) As of the date of this Agreement, 2,577,240 shares of Parent
Common Stock are subject to issuance pursuant to outstanding warrants to
purchase Common Stock.
(d) All outstanding shares of Parent Common Stock, all
outstanding Parent Options, and all outstanding shares of capital stock of each
subsidiary of Parent have been issued and granted in compliance with (i) all
applicable securities laws and other applicable Legal Requirements and (ii) all
requirements set forth in applicable Contracts.
3.3 OBLIGATIONS WITH RESPECT TO CAPITAL STOCK. Except as set forth in
Part 3.3 of Parent Schedules and as set forth in Section 3.2 above, as of the
date of this Agreement there are no equity securities, partnership interests or
similar ownership interests of any class of Parent equity security, or any
securities exchangeable or convertible into or exercisable for such equity
securities, partnership interests or similar ownership interests, issued,
reserved for issuance or outstanding. Except for securities Parent owns free and
clear of all claims and Encumbrances, directly or indirectly through one or more
subsidiaries, and except for shares of capital stock or other similar ownership
interests of certain subsidiaries of Parent that are owned by certain nominee
equity holders as required by the applicable law of the jurisdiction of
organization of such subsidiaries (which shares or other interests do not
materially affect Parent's control of such subsidiaries), as of the date of this
Agreement, there are no equity securities, partnership interests or similar
ownership interests of any class of equity security of any subsidiary of Parent,
or any security exchangeable or convertible into or exercisable for such equity
securities, partnership interests or similar ownership interests, issued,
reserved for issuance or outstanding. Except as set forth in Part 3.3 of Parent
Schedules or Section 3.2 above, as of the date of this Agreement there are no
subscriptions, options, warrants, equity securities, partnership interests or
similar ownership interests, calls, rights (including preemptive rights),
commitments or agreements of any character to which Parent or any of its
subsidiaries is a party or by which it is bound obligating Parent or any of its
subsidiaries to issue, deliver or sell, or cause to be issued, delivered or
sold, or repurchase, redeem or otherwise acquire, or cause the repurchase,
redemption or acquisition of, any shares of capital stock, partnership interests
or similar ownership interests of Parent or any of its subsidiaries or
obligating Parent or any of its subsidiaries to grant, extend, accelerate the
vesting of or enter into any such subscription, option, warrant, equity
security, call, right, commitment or agreement. As of the date of this
Agreement, except as contemplated by this Agreement and except as set forth in
Part 3.3 of Parent Schedules, there are no registration rights and there is no
voting trust, proxy, rights plan, antitakeover plan or other agreement or
understanding to which Parent is a party or by which it is bound with respect to
any equity security of any class of Parent or with respect to any equity
security, partnership interest or similar ownership interest of any class of any
of its subsidiaries. Stockholders of Parent will not be entitled to dissenters'
rights under applicable state law in connection with the Merger.
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3.4 AUTHORITY; NON-CONTRAVENTION.
(a) Parent and Merger Sub have all requisite corporate power and
authority to enter into 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 authorized
by all necessary corporate action on the part of Parent, subject only to the
filing of the Certificate of Merger pursuant to Delaware Law. This Agreement has
been duly executed and delivered by Parent and Merger Sub, upon due execution
and delivery by the Company, constitutes a valid and binding obligation of
Parent and Merger Sub, enforceable against Parent and Merger Sub in accordance
with its terms, except as enforceability may be limited by bankruptcy and other
similar laws and general principles of equity. The execution and delivery of
this Agreement by Parent and Merger Sub do not, and the performance of this
Agreement by Parent and Merger Sub will not, (i) conflict with Parent Charter
Documents, (ii) subject to compliance with the requirements set forth in Section
3.4(b) below, conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to Parent or any of its subsidiaries or by which
Parent or any of its subsidiaries or any of their respective properties are
bound or affected, or (iii) result in any material breach of or constitute a
material default (or an event that with notice or lapse of time or both would
become a material default) under, or impair Parent's rights or alter the rights
or obligations of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a material lien or Encumbrance on any of the material properties or
assets of Parent or any of its subsidiaries pursuant to, any material note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise, concession, or other instrument or obligation to which Parent or any
of its subsidiaries is a party or by which Parent or any of its subsidiaries or
its or any of their respective assets are bound or affected.
(b) No consent, approval, order or authorization of, or
registration, declaration or filing with any Governmental Entity, is required to
be obtained or made by Parent in connection with the execution and delivery of
this Agreement or the consummation of the Merger, except for (i) the filing of
the Certificate of Merger with the Secretary of State of the State of Delaware
(ii) the filing of the Registration Statement and the Prospectus/Proxy Statement
in accordance with the Securities Act and the Exchange Act, respectively, (iii)
such consents, approvals, orders, authorizations, registrations, declarations
and filings as may be required under applicable federal, foreign and state
securities (or related) laws and the HSR Act, and the securities or antitrust
laws of any foreign country, and (iv) such other consents, authorizations,
filings, approvals and registrations which if not obtained or made would not be
material to Parent or have a material adverse effect on the ability of the
parties hereto to consummate the Merger.
3.5 SEC FILINGS; PARENT FINANCIAL STATEMENTS.
(a) Parent has filed all forms, reports and documents required to
be filed by Parent with the SEC since January 1, 1999. All such required forms,
reports and documents (including those that Parent may file subsequent to the
date hereof) are referred to herein as the "Parent SEC Reports"). As of their
respective dates (or, if amended, as of the respective dates of such
amendments), Parent SEC Reports (i) complied as to form in all material respects
with the requirements of the Securities Act, or the Exchange Act, as the case
may be, and the rules and regulations of the SEC thereunder applicable to such
Parent SEC Reports and (ii) did not at the time they were filed contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. None of
Parent's subsidiaries is required to file any forms, reports or other documents
with the SEC.
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(b) Each of the consolidated financial statements (including, in
each case, any related notes thereto) contained in Parent SEC Reports (the
"Parent Financials"), including each Parent SEC Report filed after the date
hereof until the Closing, (i) complied as to form in all material respects with
the published rules and regulations of the SEC with respect thereto, (ii) was
prepared in accordance with United States generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto or, in the case of
unaudited interim financial statements, as may be permitted by the SEC on Form
10-Q under the Exchange Act) and (iii) fairly presented the consolidated
financial position of Parent and its subsidiaries as at the respective dates
thereof and the consolidated results of Parent's operations and cash flows for
the periods indicated, except that the unaudited interim financial statements
may not contain footnotes and were or are subject to normal and recurring
year-end adjustments. The balance sheet of Parent contained in Parent's annual
report on Form 10-K for the year ended December 31, 1998 is hereinafter referred
to as (the "Parent Balance Sheet"). Except as disclosed in Parent Financials or
as incurred in the ordinary course of business since the date of the Parent
Balance Sheet, as of the date of this Agreement neither Parent nor any of its
subsidiaries has any liabilities required under GAAP to be set forth on a
balance sheet (absolute, accrued, contingent or otherwise).
(c) Parent has heretofore furnished to the Company a complete and
correct copy of any amendments or modifications, which have not yet been filed
with the SEC but which are required to be filed, to agreements, documents or
other instruments which previously had been filed by Parent with the SEC
pursuant to the Securities Act or the Exchange Act.
3.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. From the date of the Parent
Balance Sheet to the date of this Agreement, there has not been: (i) any
Material Adverse Effect on Parent, (ii) any declaration, setting aside or
payment of any dividend on, or other distribution (whether in cash, stock or
property) in respect of, any of Parent's or any of its subsidiaries' capital
stock, or any purchase, redemption or other acquisition by Parent of any of
Parent's capital stock or any other securities of Parent or its subsidiaries or
any options, warrants, calls or rights to acquire any such shares or other
securities except for repurchases from employees following their termination
pursuant to the terms of their pre-existing stock option or purchase agreements,
(iii) any split, combination or reclassification of any of Parent's or any of
its subsidiaries' capital stock, (iv) any granting by Parent or any of its
subsidiaries of any increase in compensation or fringe benefits, except for
normal increases of cash compensation in the ordinary course of business
consistent with past practice and grants of Parent Options, or any payment by
Parent or any of its subsidiaries of any bonus, except for bonuses made in the
ordinary course of business consistent with past practice, or any granting by
Parent or any of its subsidiaries of any increase in severance or termination
pay or any entry by Parent or any of its subsidiaries into any currently
effective employment, severance, termination or director, officer or other
employee indemnification agreement or any other employment or consulting related
agreement the benefits of which are contingent or the terms of which are
materially altered upon the occurrence of a transaction involving Parent of the
nature contemplated hereby, (v) entry by Parent or any of its subsidiaries into
any licensing or other agreement with regard to the acquisition or disposition
of any material Intellectual Property (as defined in Section 2.9) other than
licenses in the ordinary course of business consistent with past practice, (vi)
any amendment or consent with respect to any licensing agreement filed or
required to be filed by Parent with the SEC, (vii) any material change by Parent
in its accounting methods, principles or practices, except as required by
concurrent changes in GAAP, or (viii) any revaluation by Parent of any of its
assets, including, without limitation, writing down the value of capitalized
inventory or writing off notes or accounts receivable other than in the ordinary
course of business.
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3.7 TAXES.
(a) TAX RETURNS AND AUDITS.
(i) Parent and each of its subsidiaries have timely filed
all Returns relating to Taxes required to be filed by Parent and each of its
subsidiaries with any Tax authority, except such Returns which are not material
to Parent, and have paid all Taxes shown to be due on such Returns.
(ii) Parent and each of its subsidiaries as of the Effective
Time will have withheld with respect to its employees all federal and state
income taxes, Taxes pursuant to FICA, Taxes pursuant to the FUTA and other Taxes
required to be withheld.
(iii) Neither Parent nor any of its subsidiaries has been
delinquent in the payment of any Tax nor is there any Tax deficiency
outstanding, proposed in writing (or otherwise, to Parent's knowledge, proposed)
or assessed against Parent or any of its subsidiaries, nor has Parent or any of
its subsidiaries executed any unexpired waiver of any statute of limitations on
or extending the period for the assessment or collection of any Tax.
(iv) No audit or other examination of any Return of Parent
or any of its subsidiaries by any Tax authority is presently in progress, nor
has Parent or any of its subsidiaries been notified in writing (or otherwise, to
Parent's knowledge, notified) of any request for such an audit or other
examination.
(v) No adjustment relating to any Returns filed by Parent or
any of its subsidiaries has been proposed in writing by any Tax authority to
Parent or any of its subsidiaries or any representative thereof.
(vi) Neither Parent nor any of its subsidiaries has any
liability for unpaid Taxes which has not been accrued for or reserved on Parent
Balance Sheet, whether asserted or unasserted, contingent or otherwise, which is
material to Parent, other than any liability for unpaid Taxes that may have
accrued since the date of Parent Balance Sheet in connection with the operation
of the business of Parent and its subsidiaries in the ordinary course.
(vii) There is no contract, agreement, plan or arrangement
to which Parent is a party as of the date of this Agreement, including but not
limited to the provisions of this Agreement, covering any employee or former
employee of Parent or any of its subsidiaries that, individually or
collectively, could give rise to the payment of any amount that would not be
deductible pursuant to Sections 280G, 404 or 162(m) of the Code.
(viii) Neither Parent nor any of its subsidiaries has filed
any consent agreement under Section 341(f) of the Code or agreed to have Section
341(f)(2) of the Code apply to any disposition of a subsection (f) asset (as
defined in Section 341(f)(4) of the Code) owned by Parent.
(ix) Neither Parent nor any of its subsidiaries is party to
or has any obligation under any tax-sharing, tax indemnity or tax allocation
agreement or arrangement.
(x) Except as may be required as a result of the Merger,
Parent and its subsidiaries have not been and will not be required to include
any adjustment in Taxable income for any Tax period (or portion thereof)
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pursuant to Section 481 or Section 263A of the Code or any comparable provision
under state or foreign Tax laws as a result of transactions, events or
accounting methods employed prior to the Closing.
(xi) None of Parent's or its subsidiaries' assets are tax
exempt use property within the meaning of Section 168(h) of the Code.
(xii) Parent is not, and has not been at any time, a "United
States real property holding corporation" within the meaning of Section
897(c)(2) of the Code.
3.8 TITLE TO PROPERTIES; ABSENCE OF LIENS AND ENCUMBRANCES.
(a) All of Parent's current leases with respect to real property
are in full force and effect, are valid and effective in accordance with their
respective terms, and there is not, under any of such leases, any existing
default or event of default (or event which with notice or lapse of time, or
both, would constitute a default) that would give rise to a material claim. As
of the date of this Agreement, other than the leaseholds created under real
property leases, Parent owns no interest in real property.
(b) Parent has good and valid title to, or, in the case of leased
properties and assets, valid leasehold interests in, all of its tangible
properties and assets, real, personal and mixed, used or held for use in its
business, free and clear of any Liens, except as reflected in Parent Financials
and except for Liens for taxes not yet due and payable and such Liens or other
imperfections of title and encumbrances, if any, which are not material in
character, amount or extent, and which do not materially detract from the value,
or materially interfere with the present use, of the property subject thereto or
affected thereby.
3.9 INTELLECTUAL PROPERTY. For the purposes of this Agreement, the
following terms have the following definitions:
"PARENT INTELLECTUAL PROPERTY" means any Intellectual Property
that is owned by, or exclusively licensed to, Parent.
"PARENT REGISTERED INTELLECTUAL PROPERTY" means all of the
Registered Intellectual Property owned by, or filed in the name
of, Parent.
(a) No material Parent Intellectual Property or product or
service of Parent is subject to any proceeding or outstanding decree, order,
judgment, agreement, or stipulation restricting in any manner the use, transfer,
or licensing thereof by Parent, or which may affect the validity, use or
enforceability of such Parent Intellectual Property.
(b) Each material item of Parent Registered Intellectual Property
is valid and subsisting, all necessary registration, maintenance and renewal
fees currently due in connection with such Registered Intellectual Property have
been made and all necessary documents, recordations and certificates in
connection with such Registered Intellectual Property have been filed with the
relevant patent, copyright, trademark or other authorities in the United States
or foreign jurisdictions, as the case may be, for the purposes of maintaining
such Registered Intellectual Property.
(c) Parent owns and has good and exclusive title to, or has
license (sufficient for the conduct of its business as currently conducted and
as proposed to be conducted) to, each material item of Parent
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Intellectual Property or Intellectual Property used by Parent free and clear of
any Lien or Encumbrance (excluding licenses and related restrictions); and
Parent is the exclusive owner of all trademarks and trade names used in
connection with the operation or conduct of the business of Parent, including
the sale of any products or the provision of any services by Parent.
(d) To the extent that any material Intellectual Property has
been developed or created by a third party for Parent, Parent has a written
agreement with such third party with respect thereto and Parent thereby either
(i) has obtained ownership of, and is the exclusive owner of, or (ii) has
obtained a license (sufficient for the conduct of its business as currently
conducted and as proposed to be conducted) to all such third party's
Intellectual Property in such work, material or invention by operation of law or
by valid assignment, to the fullest extent it is legally possible to do so.
(e) The operation of the business of Parent as such business
currently is conducted, including Parent's design, development, manufacture,
marketing and sale of the products or services of Parent (including with respect
to products currently under development) has not, does not and will not infringe
or misappropriate the Intellectual Property of any third party or constitute
unfair competition or trade practices under the laws of any jurisdiction.
(f) Parent has not received notice from any third party that the
operation of the business of Parent or any act, product or service of Parent,
infringes or misappropriates the Intellectual Property of any third party or
constitutes unfair competition or trade practices under the laws of any
jurisdiction.
(g) To the knowledge of Parent, no person has infringed or
misappropriated or is infringing or misappropriating any Parent Intellectual
Property.
(h) Parent has taken reasonable steps to protect Parent's rights
in Parent's confidential information and trade secrets that it wishes to protect
or any trade secrets or confidential information of third parties provided to
Parent, and, without limiting the foregoing, Parent has and enforces a policy
requiring each employee and contractor to execute a proprietary
information/confidentiality agreement substantially in the form provided to the
Company and all current and former employees and contractors of Parent have
executed such an agreement, except where the failure to do so is not reasonably
expected to be material to Parent.
3.10 COMPLIANCE; PERMITS; RESTRICTIONS.
(a) Neither Parent nor any of its subsidiaries is, in any
material respect, in conflict with, or in default or in violation of (i) any
law, rule, regulation, order, judgment or decree applicable to Parent or any of
its subsidiaries or by which Parent or any of its subsidiaries or any of their
respective properties is bound or affected, or (ii) any material note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which Parent or any of its subsidiaries is a
party or by which Parent or any of its subsidiaries or its or any of their
respective properties is bound or affected, except for conflicts, violations and
defaults that (individually or in the aggregate) would not cause Parent to lose
any material benefit or incur any material liability. No investigation or review
by any Governmental Entity is pending or, to Parent's knowledge, has been
threatened in a writing delivered to Parent against Parent or any of its
subsidiaries, nor, to Parent's knowledge, has any Governmental Entity indicated
an intention to conduct an investigation of Parent or any of its subsidiaries.
There is no material agreement, judgment, injunction, order or decree binding
upon Parent or any of its subsidiaries which has or could reasonably be expected
to have the effect of prohibiting or materially impairing any business practice
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of Parent or any of its subsidiaries, any acquisition of material property by
Parent or any of its subsidiaries or the conduct of business by Parent as
currently conducted.
(b) Parent and its subsidiaries hold, to the extent legally
required, all permits, licenses, variances, exemptions, orders and approvals
from Governmental Entities that are material to and required for the operation
of the business of Parent as currently conducted (collectively, the "Parent
Permits"). Parent and its subsidiaries are in compliance in all material
respects with the terms of Parent Permits, except where the failure to be in
compliance with the terms of Parent Permits would not be material to Parent.
3.11 LITIGATION. Except as disclosed in Part 3.11 of Parent Schedules,
there are no claims, suits, actions or proceedings pending or, to the knowledge
of Parent, threatened against, relating to or affecting Parent or any of its
subsidiaries, before any court, governmental department, commission, agency,
instrumentality or authority, or any arbitrator that seeks to restrain or enjoin
the consummation of the transactions contemplated by this Agreement or which
could reasonably be expected, either singularly or in the aggregate with all
such claims, actions or proceedings, to be material to Parent. No Governmental
Entity has at any time challenged or questioned in a writing delivered to Parent
the legal right of Parent to design, manufacture, offer or sell any of its
products or services in the present manner or style thereof. As of the date
hereof, to the knowledge of Parent, no event has occurred, and no claim, dispute
or other condition or circumstance exists, that will, or that would reasonably
be expected to, cause or provide a bona fide basis for a director or executive
officer of Parent to seek indemnification from Parent.
3.12 BROKERS' AND FINDERS' FEES. Except for fees payable to ▇▇▇▇▇▇
▇▇▇▇▇▇▇ & Co. Incorporated pursuant to an engagement letter dated April 19,
1999, a copy of which has been provided to the Company, Parent has not incurred,
nor will it incur, directly or indirectly, any liability for brokerage or
finders' fees or agents' commissions or any similar charges in connection with
this Agreement or any transaction contemplated hereby.
3.13 ENVIRONMENTAL MATTERS.
(a) HAZARDOUS MATERIAL. Except as would not result in material
liability to Parent, no Hazardous Materials are present, as a result of the
actions of Parent or any of its subsidiaries or any affiliate of Parent, or, to
Parent's knowledge, as a result of any actions of any third party or otherwise,
in, on or under any property, including the land and the improvements, ground
water and surface water thereof, that Parent or any of its subsidiaries has at
any time owned, operated, occupied or leased.
(b) HAZARDOUS MATERIALS ACTIVITIES. Except as would not result in
a material liability to Parent (in any individual case or in the aggregate) (i)
neither Parent nor any of its subsidiaries has transported, stored, used,
manufactured, disposed of, released or exposed its employees or others to
Hazardous Materials in violation of any law in effect on or before the Closing
Date, and (ii) neither Parent nor any of its subsidiaries has disposed of,
transported, sold, used, released, exposed its employees or others to or
manufactured any product containing a Hazardous Material in violation of any
rule, regulation, treaty or statute promulgated by any Governmental Entity in
effect prior to or as of the date hereof to prohibit, regulate or control
Hazardous Materials or any Hazardous Material Activity.
(c) PERMITS. Parent and its subsidiaries currently hold all
environmental approvals, permits, licenses, clearances and consents (the "Parent
Environmental Permits") necessary for the conduct of
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Parent's and its subsidiaries' Hazardous Material Activities and other
businesses of Parent and its subsidiaries as such activities and businesses are
currently being conducted.
(d) ENVIRONMENTAL LIABILITIES. No action, proceeding, revocation
proceeding, amendment procedure, writ or injunction is pending, and to Parent's
knowledge, no action, proceeding, revocation proceeding, amendment procedure,
writ or injunction has been threatened by any Governmental Entity against Parent
or any of its subsidiaries in a writing delivered to Parent concerning any
Parent Environmental Permit, Hazardous Material or any Hazardous Materials
Activity of Parent or any of its subsidiaries. Parent is not aware of any fact
or circumstance which could involve Parent or any of its subsidiaries in any
environmental litigation or impose upon Parent any material environmental
liability.
3.14 YEAR 2000 COMPLIANCE. Except as disclosed in Part 3.14 of the
Parent Schedules, Parent's products and internal systems have been designed to
ensure date and time entry recognition, calculations that accommodate same
century and multi-century formulas and date values, leap year recognition and
calculations, and date data interface values that reflect the century. Parent's
products and internal systems manage and manipulate data involving dates and
times, including single century formulas and multi-century formulas, and do not
cause an abnormal ending scenario within the application or generate incorrect
values or invalid results involving such dates.
3.15 AGREEMENTS, CONTRACTS AND COMMITMENTS. As of the date of this
Agreement, neither Parent nor any of its subsidiaries, nor to Parent's knowledge
any other party to a material Contract of Parent, is in breach, violation or
default under, and neither Parent nor any of its subsidiaries has received
written notice that it has breached, violated or defaulted under, any of the
material terms or conditions of any material Contract of Parent in such a manner
as would permit any other party to cancel or terminate any such material
Contract of Parent, or would permit any other party to seek material damages or
other remedies (for any or all of such breaches, violations or defaults, in the
aggregate).
3.16 DISCLOSURE. None of the information to be supplied by or on
behalf of Parent for inclusion in the Registration Statement will, at the time
the Registration Statement becomes effective under the Securities Act, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they are made, not
misleading. None of the information to be supplied by or on behalf of Parent for
inclusion or incorporation by reference in the Prospectus/Proxy Statement will,
at the time the Prospectus/Proxy Statement is mailed to the stockholders of the
Company, at the time of the Company Stockholders' Meeting or as of the Effective
Time, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they are made,
not misleading. The Registration Statement will comply as to form in all
material respects with the provisions of the Securities Act and the rules and
regulations promulgated by the SEC thereunder, except that no representation or
warranty is made by Parent with respect to statements made or incorporated by
reference therein based on information supplied by the Company for inclusion or
incorporation by reference in the Prospectus/Proxy Statement.
3.17 BOARD APPROVAL. The Board of Directors of Parent has, as of the
date of this Agreement, approved the issuance of shares of Parent Common Stock
in connection with the Merger.
3.18 ORGANIZATION OF MERGER SUB.
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(a) Merger Sub is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation.
(b) Merger Sub was formed in order to effect the consummation of
the Merger, and as of the date of this Agreement has performed no other
operations.
ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME
4.1 CONDUCT OF BUSINESS BY THE COMPANY. During the period from the
date of this Agreement and continuing until the earlier of the termination of
this Agreement pursuant to its terms or the Effective Time, the Company and each
of its subsidiaries shall, except to the extent that Parent shall otherwise
consent in writing, carry on its business, in all material respects, in the
usual, regular and ordinary course, in substantially the same manner as
heretofore conducted and in compliance with all applicable laws and regulations,
pay its debts and taxes when due subject to good faith disputes over such debts
or taxes, pay or perform other material obligations when due subject to good
faith disputes over such obligations, and use its commercially reasonable
efforts consistent with past practices and policies to (i) preserve intact its
present business organization, (ii) keep available the services of its present
officers and employees and (iii) preserve its relationships with customers,
suppliers, distributors, licensors, licensees, and others with which it has
business dealings. In addition, the Company will use reasonable efforts to
promptly notify Parent of any material event involving the Company's business or
operations, to the extent that the Company has knowledge of any such material
event.
In addition, except as permitted by the terms of this Agreement, and
except as provided in Article 4 of the Company Schedules, without the prior
written consent of Parent, during the period from the date of this Agreement and
continuing until the earlier of the termination of this Agreement pursuant to
its terms or the Effective Time, the Company shall not do any of the following
and shall not permit its subsidiaries to do any of the following:
(a) Waive any stock repurchase rights, accelerate, amend or
change the period of exercisability of options or restricted stock, or reprice
options granted under any employee, consultant, director or other stock plans or
authorize cash payments in exchange for any options granted under any of such
plans;
(b) Grant any severance or termination pay to any officer or
employee except pursuant to written agreements outstanding, or policies
existing, on the date hereof and as previously disclosed in writing or made
available to Parent, or adopt any new severance plan;
(c) Transfer or license to any person or entity or otherwise
extend, amend or modify in any material respect any rights to the Company
Intellectual Property, or enter into grants to future patent rights, other than
non-exclusive licenses in the ordinary course of business and consistent with
past practice;
(d) Declare, set aside or pay any dividends on or make any other
distributions (whether in cash, stock, equity securities or property) in respect
of any capital stock or split, combine or reclassify any capital stock or issue
or authorize the issuance of any other securities in respect of, in lieu of or
in substitution for any capital stock;
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(e) Purchase, redeem or otherwise acquire, directly or
indirectly, any shares of capital stock of the Company or its subsidiaries,
except repurchases of unvested shares at cost in connection with the termination
of the employment relationship with any employee pursuant to stock option or
purchase agreements in effect on the date hereof;
(f) Issue, deliver, sell, authorize, pledge or otherwise
encumber, any shares of capital stock or any securities convertible into shares
of capital stock, or subscriptions, rights, warrants or options to acquire any
shares of capital stock or any securities convertible into shares of capital
stock, or enter into other agreements or commitments of any character obligating
it to issue any such shares or convertible securities, other than (i) stock
options pursuant to the Company Stock Option Plans granted to new employees of
the Company to purchase up to 15,000 shares in the aggregate (as appropriately
adjusted for stock splits and the like) of Company Common Stock with strike
prices equal to the fair market value of the Company Common Stock at the time of
grant and otherwise with vesting schedules and other terms and conditions
consistent with past practice, (ii) issuance of shares of Company Common Stock
pursuant to the exercise of stock options therefor outstanding as of the date of
this Agreement or granted pursuant to the preceding clause (i), (iii) issuance
of shares of the Company Common Stock to participants in the Company Purchase
Plan pursuant to the terms thereof, and (iv) issuance of shares of Company
Common Stock pursuant to exercise of the Warrants;
(g) Cause, permit or propose any amendments to its Certificate of
Incorporation, Bylaws or other charter documents (or similar governing
instruments of any of its subsidiaries);
(h) Acquire or agree to acquire by merging or consolidating with,
or by purchasing any equity interest in or a portion of the assets of, or by any
other manner, any business or any corporation, partnership, association or other
business organization or division thereof, or otherwise acquire or agree to
acquire any assets which are material, individually or in the aggregate, to the
business of the Company or enter into any material joint ventures, strategic
partnerships or alliances;
(i) Sell, lease, license, encumber or otherwise dispose of any
properties or assets which are material, individually or in the aggregate, to
the business of the Company, except sales of inventory and used equipment in the
ordinary course of business consistent with past practice;
(j) Incur any indebtedness for borrowed money or guarantee any
such indebtedness of another person, issue or sell any debt securities or
options, warrants, calls or other rights to acquire any debt securities of the
Company, enter into any "keep well" or other agreement to maintain any financial
statement condition or enter into any arrangement having the economic effect of
any of the foregoing other than (i) in connection with the financing of ordinary
course trade payables consistent with past practice or (ii) pursuant to existing
credit facilities in the ordinary course of business;
(k) Other than the payment of routine, annual bonuses to
employees, consistent with past practices, adopt or amend any employee benefit
plan or employee stock purchase or employee stock option plan, or enter into any
employment contract or collective bargaining agreement (other than offer letters
and letter agreements entered into in the ordinary course of business consistent
with past practice with employees who are terminable "at will"), pay any special
bonus or special remuneration to any director or employee, or increase the
salaries or wage rates or fringe benefits (including rights to severance or
indemnification) of its directors, officers, employees or consultants other than
in the ordinary course of business, consistent with past practice, or change in
any material respect any management policies or procedures;
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(l) Make any individual or series of related payments outside of
the ordinary course of business in excess of $100,000;
(m) Except as set forth on Part 4.1(m) of the Company Schedules
and except for any modifications or amendments that are made in the ordinary
course of business consistent with past practice, modify, amend or terminate any
Company Contract or other material contract or agreement to which the Company or
any subsidiary thereof is a party or waive, release or assign any material
rights or claims thereunder;
(n) Enter into any contracts, agreements, or obligations relating
to the distribution, sale, license or marketing by third parties of the
Company's products or products licensed by the Company other than in the
ordinary course of business consistent with past practice;
(o) Revalue any of its assets or, except as required by GAAP,
make any change in accounting methods, principles or practices;
(p) Engage in any action that could reasonably be expected to
cause the Merger to fail to qualify as a "reorganization" under Section 368(a)
of the Code, whether or not otherwise permitted by the provisions of this
Article IV; or
(q) Engage in any action with the intent to directly or
indirectly adversely impact any of the transactions contemplated by this
Agreement; or
(r) Hire any employee with an annual compensation level in excess
of $100,000; or
(s) Agree in writing or otherwise to take any of the actions
described in (a) through (r) above.
4.2 CONDUCT OF BUSINESS BY PARENT. During the period from the date of
this Agreement and continuing until the earlier of the termination of this
Agreement pursuant to its terms or the Effective Time, except as permitted by
the terms of this Agreement and except as provided in Section 4.2 of the Parent
Schedules, without the prior written consent of Company, Parent shall not engage
in any action that could reasonably be expected to cause the Merger to fail to
qualify as a "reorganization" under Section 368(a) of the Code.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 PROSPECTUS/PROXY STATEMENT; REGISTRATION STATEMENT; OTHER FILINGS;
BOARD RECOMMENDATIONS. As promptly as practicable after the execution of this
Agreement, the Company and Parent will prepare and file with the SEC, the
Prospectus/Proxy Statement and Parent will prepare and file with the SEC the
Registration Statement in which the Prospectus/Proxy Statement will be included
as a prospectus. Each of the Company and Parent will respond to any comments of
the SEC, will use its respective commercially reasonable efforts to have the
Registration Statement declared effective under the Securities Act as promptly
as practicable after such filing and the Company will cause the Prospectus/Proxy
Statement to be mailed to its stockholders at the earliest practicable time
after the Registration Statement is declared effective by the SEC. As promptly
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as practicable after the date of this Agreement, each of the Company and Parent
will prepare and file (i) with the United States Federal Trade Commission (the
"FTC") and the Antitrust Division of the United States Department of Justice
("DOJ") Notification and Report Forms relating to the transactions contemplated
herein as required by the HSR Act, as well as comparable pre-merger notification
forms required by the merger notification or control laws and regulations of any
applicable jurisdiction, as agreed to by the parties (the "Antitrust Filings")
and (ii) any other filings required to be filed by it under the Exchange Act,
the Securities Act or any other Federal, state or foreign laws relating to the
Merger and the transactions contemplated by this Agreement (the "Other
Filings"). The Company and Parent each shall promptly supply the other with any
information which may be required in order to effectuate any filings pursuant to
this Section 5.1. Each of the Company and Parent will notify the other promptly
upon the receipt of any comments from the SEC or its staff or any other
government officials in connection with any filing made pursuant hereto and of
any request by the SEC or its staff or any other government officials for
amendments or supplements to the Registration Statement, the Prospectus/Proxy
Statement or any Antitrust Filings or Other Filing or for additional information
and will supply the other with copies of all correspondence between such party
or any of its representatives, on the one hand, and the SEC, or its staff or any
other government officials, on the other hand, with respect to the Registration
Statement, the Prospectus/Proxy Statement, the Merger or any Antitrust Filing or
Other Filing. Each of the Company and Parent will cause all documents that it is
responsible for filing with the SEC or other regulatory authorities under this
Section 5.1 to comply in all material respects with all applicable requirements
of law and the rules and regulations promulgated thereunder. Whenever any event
occurs which is required to be set forth in an amendment or supplement to the
Prospectus/Proxy Statement, the Registration Statement or any Antitrust Filing
or Other Filing, the Company or Parent, as the case may be, will promptly inform
the other of such occurrence and cooperate in filing with the SEC or its staff
or any other government officials, and/or mailing to stockholders of the Company
and/or Parent, such amendment or supplement.
5.2 MEETING OF COMPANY STOCKHOLDERS.
(a) Promptly after the date hereof, the Company will take all
action necessary in accordance with Delaware Law and its Certificate of
Incorporation and Bylaws to convene a meeting of the Company's stockholders to
consider adoption and approval of this Agreement and approval of the Merger (the
"Company Stockholders' Meeting") to be held as promptly as practicable, and in
any event (to the extent permissible under applicable law) within 45 days after
the declaration of effectiveness of the Registration Statement. Subject to
Section 5.2(c) hereof, the Company will use its commercially reasonable efforts
to solicit from its stockholders proxies in favor of the adoption and approval
of this Agreement and the approval of the Merger and will take all other action
necessary or advisable to secure the vote or consent of its stockholders
required by the rules of Nasdaq or Delaware Law to obtain such approvals.
Notwithstanding anything to the contrary contained in this Agreement, the
Company may adjourn or postpone the Company Stockholders' Meeting to the extent
necessary to ensure that any necessary supplement or amendment to the
Prospectus/Proxy Statement is provided to the Company's stockholders in advance
of a vote on the Merger and this Agreement or, if as of the time for which the
Company Stockholders' Meeting is originally scheduled (as set forth in the
Prospectus/Proxy Statement) there are insufficient shares of Company Common
Stock represented (either in person or by proxy) to constitute a quorum
necessary to conduct the business of the Company's Stockholders' Meeting. The
Company shall ensure that the Company Stockholders' Meeting is called, noticed,
convened, held and conducted, and that all proxies solicited by the Company in
connection with the Company Stockholders' Meeting are solicited, in compliance
with the Delaware Law, the Company's Certificate of Incorporation and Bylaws,
the rules of Nasdaq and all other applicable legal requirements. The Company's
obligation to call, give notice of, convene and hold the Company Stockholders'
Meeting in accordance with this Section 5.2(a) shall not be limited to or
otherwise affected by the commencement, disclosure, announcement or submission
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to the Company of any Acquisition Proposal (as defined in Section 5.4(a)), or by
any withdrawal, amendment or modification of the recommendation of the Company
Board with respect to the Merger and/or this Agreement; provided, however, if
the Company terminates this Agreement pursuant to Section 7.1(j) hereof, the
Company not be obligated to convene and hold the Company Stockholders' Meeting.
(b) Subject to Section 5.2(c) below: (i) the Company Board shall
unanimously recommend that the Company's stockholders vote in favor of and adopt
and approve this Agreement and approve the Merger at the Company Stockholders'
Meeting; (ii) the Prospectus/Proxy Statement shall include a statement to the
effect that the Company Board has unanimously recommended that the Company's
stockholders vote in favor of and adopt and approve this Agreement and the
Merger at the Company Stockholders' Meeting; and (iii) neither the Company Board
nor any committee thereof shall withdraw, amend or modify, or propose or resolve
to withdraw, amend or modify in a manner adverse to Parent, the unanimous
recommendation of the Company Board that the Company's stockholders vote in
favor of and adopt and approve this Agreement and the Merger.
(c) Nothing in this Agreement shall prevent the Company Board
from withholding, withdrawing, amending or modifying its unanimous
recommendation in favor of the Merger if (i) a Superior Offer (as defined below)
is made to the Company and is not withdrawn, (ii) the Company shall have
provided written notice to Parent (a "Notice of Superior Offer") advising Parent
that the Company has received a Superior Offer, specifying the material terms
and conditions of such Superior Offer and identifying the person or entity
making such Superior Offer, (iii) Parent shall not have, within five (5)
business days of Parent's receipt of the Notice of Superior Proposal, made an
offer that the Company Board by a majority vote determines in its good faith
judgment (after consultation with a financial adviser of nationally recognized
reputation) to be at least as favorable to the Company's stockholders as such
Superior Proposal (it being agreed that the Company Board shall convene a
meeting to consider any such offer by Parent promptly following the receipt
thereof), (iv) the Company Board concludes in good faith, after consultation
with its outside counsel, that, in light of such Superior Offer, the
withholding, withdrawal, amendment or modification of such recommendation is
required in order for the Company Board to comply with its fiduciary obligations
to the Company's stockholders under applicable law and (v) neither the Company
nor any of its representatives shall have violated any of the restrictions set
forth in Section 5.4 or this Section 5.2. The Company shall provide Parent with
at least three business days prior notice (or such lesser prior notice as
provided to the members of the Company's Board but in no event less than
twenty-four hours) of any meeting of the Company's Board at which the Company's
Board is reasonably expected to consider any Acquisition Transaction (as defined
below).
For purposes of this Agreement "Superior Offer" shall mean an
unsolicited, bona fide written offer made by a third party (other than any
current stockholder of the Company who as of the date of this Agreement holds
more than 5% of the Company's capital stock) to consummate any of the following
transactions: (i) a merger or consolidation involving the Company pursuant to
which the stockholders of the Company immediately preceding such transaction
hold less than 50% of the equity interest in the surviving or resulting entity
of such transaction, (ii) a sale or other disposition by Company of assets
(excluding inventory and used equipment sold in the ordinary course of business)
representing in excess of 85% of the fair market value of Company's business
immediately prior to such sale or (iii) the acquisition by any person or group
(including by way of a tender offer or an exchange offer), directly or
indirectly, of ownership of 85% of the then outstanding shares of capital stock
of the Company, on terms that the Company Board determines, in its reasonable
judgment (after consultation with a financial adviser of nationally recognized
reputation) and without violating the provisions of Section 5.4 below to be more
favorable to the Company stockholders than the terms of the Merger.
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(d) Nothing contained in this Agreement shall prohibit the
Company or the Company Board from taking and disclosing to its stockholders a
position contemplated by Rules 14d-9 and 14e-2(a) promulgated under the Exchange
Act.
5.3 CONFIDENTIALITY; ACCESS TO INFORMATION.
(a) The parties acknowledge that the Company and Parent have
previously executed a Confidentiality Agreement, dated as of April 1, 1999 (the
"Confidentiality Agreement"), which Confidentiality Agreement will continue in
full force and effect in accordance with its terms.
(b) Access to Information. The parties will afford to each other
and their respective accountants, counsel and other representatives reasonable
access during normal business hours to their respective properties, books,
records and personnel during the period prior to the Effective Time to obtain
all information concerning the business, including the status of product
development efforts, properties, results of operations and personnel of the
Company, as the other party may reasonably request. No information or knowledge
obtained by either party in any investigation pursuant to this Section 5.3 will
affect or be deemed to modify any representation or warranty contained herein or
the conditions to the obligations of the parties to consummate the Merger.
5.4 NO SOLICITATION.
(a) From and after the date of this Agreement until the Effective
Time or termination of this Agreement pursuant to Article VII, the Company and
its subsidiaries will not, nor will they authorize or permit any of their
respective officers, directors, affiliates or employees or any investment
banker, attorney or other advisor or representative retained by any of them to,
directly or indirectly, (i) solicit, initiate, encourage or induce the making,
submission or announcement of any Acquisition Proposal (as hereinafter defined),
(ii) participate in any discussions or negotiations regarding, or furnish to any
person any non-public information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes or may
reasonably be expected to lead to, any Acquisition Proposal, (iii) engage in
discussions with any person with respect to any Acquisition Proposal, except as
to the existence of these provisions, (iv) approve, endorse or recommend any
Acquisition Proposal or (v) enter into any letter of intent or similar document
or any contract agreement or commitment contemplating or otherwise relating to
any Acquisition Transaction. Notwithstanding the foregoing, the Company may
(either directly or indirectly through its advisors or other intermediaries) (i)
furnish information regarding the Company and its businesses, properties,
operations and assets to a third party that has made an unsolicited written bona
fide Superior Offer prior to the Company Stockholders' Meeting; (ii) engage in
discussions or negotiations with such a third party relating to such Superior
Offer; and (iii) take any action required to be taken by the Company pursuant to
an order issued and not reversed, withdrawn or stayed by any court of competent
jurisdiction, provided, that, in each case only to the extent that: (A) the
Board of Directors of the Company shall have concluded in good faith on the
basis of written advice from outside counsel that such action is necessary in
order to comply with the fiduciary obligations of the Board of Directors under
applicable law; (B) neither the Company nor any representative of the Company
shall have violated any of the restrictions set forth in this Section 5.4; (C)
prior to furnishing such nonpublic information to, or entering into discussions
or negotiations with, such person or group, the Company gives Parent written
notice of the identity of such person or group and of the Company's intention to
furnish nonpublic information to, or enter into discussions or negotiations
with, such person or group and the Company receives from such person or group an
executed confidentiality agreement which shall be no less favorable to the
Company than the Confidentiality Agreement; and (D) contemporaneously with
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furnishing any such nonpublic information to such person or group, the Company
furnishes such nonpublic information to Parent (to the extent such nonpublic
information has not been previously furnished by the Company to Parent). The
Company and its subsidiaries will immediately cease any and all existing
activities, discussions or negotiations with any parties conducted heretofore
with respect to any Acquisition Proposal. Without limiting the foregoing, it is
understood that any violation of the restrictions set forth in the preceding two
sentences by any officer, director or employee of the Company or any of its
subsidiaries or any investment banker, attorney or other advisor or
representative of the Company or any of its subsidiaries shall be deemed to be a
breach of this Section 5.4 by the Company.
For purposes of this Agreement, "Acquisition Proposal" shall mean any
offer or proposal (other than an offer or proposal by Parent) relating to any
Acquisition Transaction. For purposes of this Agreement, "Acquisition
Transaction" shall mean any transaction or series of related transactions
involving: (A) any purchase from the Company or acquisition by any person or
"group" (as defined under Section 13(d) of the Exchange Act and the rules and
regulations thereunder) of more than a 5% interest in the total outstanding
voting securities of the Company or any of its subsidiaries or any tender offer
or exchange offer that if consummated would result in any person or "group" (as
defined under Section 13(d) of the Exchange Act and the rules and regulations
thereunder) beneficially owning 5% or more of the total outstanding voting
securities of the Company or any of its subsidiaries or any merger,
consolidation, business combination or similar transaction involving the
Company; (B) any sale, lease (other than in the ordinary course of business),
exchange, transfer, license (other than in the ordinary course of business),
acquisition or disposition of more than 5% of the assets of the Company; or (C)
any liquidation or dissolution of the Company.
(b) In addition to the obligations of the Company set forth in
paragraph (a) of this Section 5.4, the Company as promptly as practicable shall
advise Parent orally and in writing of any request for non-public information
which the Company reasonably believes would lead to an Acquisition Proposal or
to any Acquisition Transaction, or any inquiry with respect to or which the
Company reasonably should believe would lead to any Acquisition Proposal, the
material terms and conditions of such request, Acquisition Proposal or inquiry,
and the identity of the person or group making any such request, Acquisition
Proposal or inquiry. The Company will, consistent with the fiduciary duties of
the Company's Board, keep Parent informed as promptly as practicable in all
material respects of the status and details (including material amendments or
proposed material amendments) of any such request, Acquisition Proposal or
inquiry.
5.5 PUBLIC DISCLOSURE. Parent and the Company will attempt to consult
with each other, and to the extent practicable, agree, before issuing any press
release or otherwise making any public statement with respect to the Merger,
this Agreement or any Acquisition Proposal and will not issue any such press
release or make any such public statement prior to such consultation, except as
may be required by law or any listing agreement with a national securities
exchange. The parties have agreed to the text of the joint press release
announcing the signing of this Agreement.
5.6 REASONABLE EFFORTS; NOTIFICATION.
(a) Upon the terms and subject to the conditions set forth in
this Agreement, each of the parties agrees to use all reasonable efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, and to
assist and cooperate with the other parties in doing, all things necessary,
proper or advisable to consummate and make effective, in the most expeditious
manner practicable, the Merger and the other transactions contemplated by this
Agreement, including using reasonable efforts to accomplish the following: (i)
the taking of all reasonable acts necessary to cause the conditions precedent
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set forth in Article VI to be satisfied, (ii) the obtaining of all necessary
actions or nonactions, waivers, consents, approvals, orders and authorizations
from Governmental Entities and the making of all necessary registrations,
declarations and filings (including registrations, declarations and filings with
Governmental Entities, if any) and the taking of all reasonable steps as may be
necessary to avoid any suit, claim, action, investigation or proceeding by any
Governmental Entity, (iii) the obtaining of all necessary consents, approvals or
waivers from third parties, (iv) the defending of any suits, claims, actions,
investigations or proceedings, whether judicial or administrative, challenging
this Agreement or the consummation of the transactions contemplated hereby,
including seeking to have any stay or temporary restraining order entered by any
court or other Governmental Entity vacated or reversed and (v) the execution or
delivery of any additional instruments necessary to consummate the transactions
contemplated by, and to fully carry out the purposes of, this Agreement. In
connection with and without limiting the foregoing, the Company and the Company
Board shall, if any state takeover statute or similar statute or regulation is
or becomes applicable to the Merger, this Agreement or any of the transactions
contemplated by this Agreement, use all reasonable efforts to ensure that the
Merger and the other transactions contemplated by this Agreement may be
consummated as promptly as practicable on the terms contemplated by this
Agreement and otherwise to minimize the effect of such statute or regulation on
the Merger, this Agreement and the transactions contemplated hereby.
Notwithstanding anything herein to the contrary, nothing in this Agreement shall
be deemed to require Parent or the Company or any subsidiary or affiliate
thereof to agree to any divestiture by itself or any of its affiliates of shares
of capital stock or of any material business, assets or property, or the
imposition of any material limitation on the ability of any of them to conduct
their businesses or to own or exercise control of such assets, properties and
stock.
(b) The Company shall give prompt notice to Parent of any
representation or warranty made by it contained in this Agreement becoming
untrue or inaccurate, or any failure of the Company to comply with or satisfy in
any material respect any covenant, condition or agreement to be complied with or
satisfied by it under this Agreement, in each case, such that the conditions set
forth in Section 6.3(a) or 6.3(b) would not be satisfied, provided, however,
that no such notification shall affect the representations, warranties,
covenants or agreements of the parties or the conditions to the obligations of
the parties under this Agreement.
(c) Parent shall give prompt notice to the Company of any
representation or warranty made by it or Merger Sub contained in this Agreement
becoming untrue or inaccurate, or any failure of Parent or Merger Sub to comply
with or satisfy in any material respect any covenant, condition or agreement to
be complied with or satisfied by it under this Agreement, in each case, such
that the conditions set forth in Section 6.2(a) or 6.2(b) would not be
satisfied, provided, however, that no such notification shall affect the
representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement.
5.7 THIRD PARTY CONSENTS. As soon as practicable following the date
hereof, Parent and the Company will each use its commercially reasonable efforts
to obtain any consents, waivers and approvals under any of its or its
subsidiaries' respective agreements, contracts, licenses or leases required to
be obtained in connection with the consummation of the transactions contemplated
hereby.
5.8 STOCK OPTIONS; WARRANTS AND EMPLOYEE BENEFITS.
(a) At the Effective Time, each outstanding Company Option,
whether or not exercisable and regardless of the respective exercise prices
thereof, will be assumed by Parent. Each Company Option so assumed by Parent
under this Agreement will continue to have, and be subject to, the same terms
and conditions set forth in the applicable Company Stock Option Plan and the
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related option agreement immediately prior to the Effective Time (including,
without limitation, any repurchase rights or vesting provisions), except that
(i) each Company Option will be exercisable (or will become exercisable in
accordance with its terms) for that number of whole shares of Parent Common
Stock equal to the product of the number of shares of Company Common Stock that
were issuable upon exercise of such Company Option immediately prior to the
Effective Time multiplied by the Exchange Ratio, rounded down to the nearest
whole number of shares of Parent Common Stock and (ii) the per share exercise
price for the shares of Parent Common Stock issuable upon exercise of such
assumed Company Option will be equal to the quotient determined by dividing the
exercise price per share of Company Common Stock at which such Company Option
was exercisable immediately prior to the Effective Time by the Exchange Ratio,
rounded up to the nearest whole cent.
(b) It is intended that Company Options assumed by Parent shall
qualify following the Effective Time as incentive stock options as defined in
Section 422 of the Code to the extent Company Options qualified as incentive
stock options immediately prior to the Effective Time and the provisions of this
Section 5.8 shall be applied consistent with such intent.
(c) Other than as specifically provided for in this Section 5.8,
as soon as practicable after the execution of this Agreement, the Company and
Parent shall confer and work together in good faith to agree upon mutually
acceptable employee benefit and compensation arrangements (and terminate the
Company Purchase Plan immediately prior to the Effective Time, if appropriate)
so as to provide benefits to the Company employees generally equivalent in the
aggregate to those provided to similarly situated employees of Parent.
(d) To the extent that the Warrants are not exercised, converted
or terminated concurrently with or prior to the Effective Time, at the Effective
Time, the Warrants will be assumed by Parent. Each Warrant so assumed by Parent
under this Agreement will continue to have, and be subject to, the same terms
and conditions set forth in the applicable warrant agreement immediately prior
to the Effective Time (including, without limitation, any repurchase rights or
vesting provisions), except that (i) each Warrant will be exercisable (or will
become exercisable in accordance with its terms) for that number of whole shares
of Parent Common Stock equal to the product of the number of share of Company
Common Stock that were issuable upon exercise of such Warrant immediately prior
to the Effective Time multiplied by the Exchange Ratio, rounded down to the
nearest whole number of shares of Parent Common Stock and (ii) the per share
exercise price for the share of Parent Common Stock issuable upon exercise of
such assumed Warrant will be equal to the quotient determined by dividing the
exercise price per share of Company Common Stock at which such Warrant was
exercisable immediately prior to the Effective Time by the Exchange Ratio,
rounded up to the nearest whole cent.
(e) Prior to the Closing Date, Parent shall establish an employee
stock option plan substantially similar to the plans currently used to grant
Parent Options pursuant to which, following the Effective Time, Parent will
grant stock options to purchase an aggregate of 700,000 shares of Parent's
Common Stock to employees of the Company. The names of such employees and the
number of options to be granted to each employee will be determined prior to the
Closing Date. All such options shall have an exercise price equal to the closing
price (as reported on Nasdaq) of Parent's Common Stock on the date hereof. Such
options shall vest over a four-year period (25% of the shares thereto shall vest
on the first anniversary of the Closing Date and the remainder in equal monthly
increments thereafter). To the extent legally permissible and subject to
approval by the stockholders of Parent, all options granted pursuant to this
Section 5.8 (e) shall be incentive stock options as defined under Section 422 of
the Code.
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(f) Parent hereby agrees that until December 31, 1999, it shall
maintain the "matching" feature of the Company's 401(k) plan, whereby, subject
to certain restrictions, the Company is obligated to make contributions to an
employee's 401(k) account.
(g) Parent hereby agrees that from the Effective Time until the
first anniversary of the Closing Date, it shall maintain the Company's employee
severance policy.
5.9 FORM S-8. Parent agrees to file a registration statement on Form
S-8 for the shares of Parent Common Stock issuable with respect to assumed
Company Stock Options and options granted pursuant to Section 5.8(e) above as
soon as is reasonably practicable after the Effective Time and will use its
reasonable best efforts to maintain the effectiveness of such registration
statement thereafter for so long as any of such options or other rights remain
outstanding.
5.10 INDEMNIFICATION.
(a) From and after the Effective Time, Parent will 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 the Effective Time (the "Indemnified Parties").
The Certificate of Incorporation and Bylaws of the Surviving Corporation will
contain provisions with respect to exculpation and indemnification that are at
least as favorable to the Indemnified Parties as those contained in the
Certificate of Incorporation and Bylaws of the Company as in effect on the date
hereof, which provisions will not be amended, repealed or otherwise modified for
a period of six years from the Effective Time in any manner that would adversely
affect the rights thereunder of individuals who, immediately prior to the
Effective Time, were directors, officers, employees or agents of the Company,
unless such modification is required by law.
(b) For a period of three years after the Effective Time, Parent
will cause the Surviving Corporation to use its commercially reasonable efforts
to maintain in effect, if available, directors' and officers' liability
insurance covering those persons who are currently covered by the Company's
directors' and officers' liability insurance policy on terms comparable to those
applicable to the current directors and officers of the Company; provided,
however, that in no event will Parent or the Surviving Corporation be required
to expend in excess of 150% of the annual premium currently paid by the Company
for such coverage (or such coverage as is available for such 150% of such annual
premium).
5.11 NASDAQ LISTING. Parent agrees to authorize for listing on Nasdaq
the shares of Parent Common Stock issuable, and those required to be reserved
for issuance, in connection with the Merger, upon official notice of issuance.
5.12 ACCELERATION OF EMPLOYEE STOCK OPTION VESTING. If at any time
following the Effective Time but prior to the date two (2) years following the
Effective Time, (i) Parent shall terminate any employee of the Company without
"cause" (as defined below) or (ii) any employee shall terminate his or her
employment with Parent following a "material reduction in the duties" or
compensation of such employee by Parent or the relocation of such employee to a
location more than 25 miles from such employee's existing work location, without
the employee's consent, Parent shall cause all stock options which were granted
to such employee by the Company prior to the date of this Agreement to become
fully exercisable upon such termination (it being understood that the options to
be granted by Parent pursuant to Section 5.8 hereof are excluded from this
provision). A "material reduction in the duties" of an employee means a
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substantive reduction in duties, not a change in title or reporting hierarchy
occurring as a result of the Merger. For purposes of this Section 5.12, "cause"
shall mean (A) the continued poor performance by an employee of his or her
duties following notice and a reasonable period of time to correct such poor
performance; (B) an employee engaging in an act of dishonesty that is materially
and demonstrably injurious to the Company or Parent; or (C) the conviction of an
employee of a felony in respect of a dishonest or fraudulent act or other crime
of moral turpitude.
5.13 FIRPTA COMPLIANCE. On or prior to the Closing Date, the Company
shall deliver to Parent a properly executed statement, in a form reasonably
acceptable to Parent, that the Company Common Stock is not a "U.S. Real Property
Interest" as defined in and in accordance with the requirements of Treasury
Regulation Section 1.897-2(h)(2), for purposes of satisfying Parent's
obligations under Treasury Regulation Section 1.1445- 2(c)(3).
5.14 BOARD OF DIRECTORS. As soon as practicable following the
Effective Time and for so long as Welsh, Carson, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ and ▇▇▇▇▇▇▇
▇▇▇▇▇ & Co., L.L.C. (including such parties affiliated entities) collectively
hold at least 25% of the Parent Common Stock issuable to them in the Merger,
such entities shall collectively have the right to nominate one representative
to serve on Parent's Board of Directors.
5.15 COMPANY AFFILIATES; RESTRICTIVE LEGEND. Parent will give stop
transfer instructions to its transfer agent with respect to any Parent Common
Stock received pursuant to the Merger by any stockholder of the Company who may
reasonably be deemed to be an affiliate of the Company within the meaning of
Rule 145 promulgated under the Securities Act and there will be placed on the
certificates representing such Parent Common Stock, or any substitutions
therefor, a legend stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, APPLIES AND MAY ONLY BE TRANSFERRED (A) IN CONFORMITY
WITH RULE 145(d) UNDER SUCH ACT, (B) IN ACCORDANCE WITH A WRITTEN
OPINION OF COUNSEL, REASONABLY ACCEPTABLE TO THE ISSUER IN FORM AND
SUBSTANCE THAT SUCH TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED."
ARTICLE VI
CONDITIONS TO THE MERGER
6.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER. The
respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction at or prior to the Closing Date of the
following conditions:
(a) COMPANY STOCKHOLDER APPROVAL. This Agreement shall have been
approved and adopted, and the Merger shall have been duly approved, by the
requisite vote under applicable law, by the stockholders of the Company.
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(b) REGISTRATION STATEMENT EFFECTIVE; PROXY STATEMENT. The SEC
shall have declared the Registration Statement effective. No stop order
suspending the effectiveness of the Registration Statement or any part thereof
shall have been issued and no proceeding for that purpose, and no similar
proceeding in respect of the Prospectus/Proxy Statement, shall have been
initiated or threatened in writing by the SEC.
(c) NO ORDER; HSR ACT. No Governmental Entity shall have enacted,
issued, promulgated, enforced or entered any statute, rule, regulation,
executive order, decree, injunction or other order (whether temporary,
preliminary or permanent) which is in effect and which has the effect of making
the Merger illegal or otherwise prohibiting consummation of the Merger. All
waiting periods, if any, under the HSR Act relating to the transactions
contemplated hereby shall have expired or terminated early and all material
foreign antitrust approvals required to be obtained prior to the Merger in
connection with the transactions contemplated hereby shall have been obtained.
(d) TAX OPINIONS. Parent and the Company shall each have received
written opinions from their respective tax counsel (▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇, Professional Corporation, and Reboul, MacMurray, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ &
Kristol, respectively), in form and substance reasonably satisfactory to them,
to the effect that the Merger will constitute a tax-free reorganization within
the meaning of Section 368(a) of the Code and such opinions shall not have been
withdrawn; provided, however, that if the counsel to either Parent or the
Company does not render such opinion, this condition shall nonetheless be deemed
to be satisfied with respect to such party if counsel to the other party renders
such opinion to such party. The parties to this Agreement agree to make such
reasonable representations as requested by such counsel for the purpose of
rendering such opinions.
(e) NASDAQ LISTING. The shares of Parent Common Stock to be
issued in the Merger shall have been authorized for listing on Nasdaq, subject
to notice of issuance.
6.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF THE COMPANY. The
obligation of the Company to consummate and effect the Merger shall be subject
to the satisfaction at or prior to the Closing Date of each of the following
conditions, any of which may be waived, in writing, exclusively by the Company:
(a) REPRESENTATIONS AND WARRANTIES. Each representation and
warranty of Parent and Merger Sub contained in this Agreement (i) shall have
been true and correct as of the date of this Agreement and (ii) shall be true
and correct on and as of the Closing Date with the same force and effect as if
made on the Closing Date except, (A) in each case, or in the aggregate, as does
not constitute a Material Adverse Effect on Parent and Merger Sub; provided,
however, such Material Adverse Effect qualification shall be inapplicable with
respect to the representations and warranties contained in Section 3.17, and (B)
for those representations and warranties which address matters only as of a
particular date (which representations shall have been true and correct (subject
to the qualifications set forth in the preceding clause (A)) as of such
particular date) (it being understood that, for purposes of determining the
accuracy of such representations and warranties, any update of or modification
to Parent Schedules made or purported to have been made after the date of this
Agreement shall be disregarded). The Company shall have received a certificate
with respect to the foregoing signed on behalf of Parent by an authorized
officer of Parent.
(b) AGREEMENTS AND COVENANTS. Parent and Merger Sub shall have
performed or complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by them on or prior
to the Closing Date, and the Company shall have received a certificate to such
effect signed on behalf of Parent by an authorized officer of Parent.
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(c) MATERIAL ADVERSE EFFECT. No Material Adverse Effect with
respect to Parent shall have occurred since the date of this Agreement.
(d) CONSENT. In order to permit the grant of registration rights
to certain holders of the Company Common Stock in accordance with the terms of
that certain Registration Rights Agreement of even date herewith to which Parent
and such holders are parties, Parent shall have obtained consents from certain
of its stockholders who, along with Parent, are parties to an Amended and
Restated Investors' Rights Agreement dated January 28, 1999, and such consent
shall be reasonably satisfactory to the Company.
6.3 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF PARENT AND MERGER SUB.
The obligations of Parent and Merger Sub to consummate and effect the Merger
shall be subject to the satisfaction at or prior to the Closing Date of each of
the following conditions, any of which may be waived, in writing, exclusively by
Parent:
(a) REPRESENTATIONS AND WARRANTIES. Each representation and
warranty of the Company contained in this Agreement (i) shall have been true and
correct as of the date of this Agreement and (ii) shall be true and correct on
and as of the Closing Date with the same force and effect as if made on and as
of the Closing Date except (A) in each case, or in the aggregate, as does not
constitute a Material Adverse Effect on the Company; provided, however, such
Material Adverse Effect qualification shall be inapplicable with respect to the
representations and warranties contained in Sections 2.2(a) and (b), 2.3, 2.20
and 2.21 and (B) for those representations and warranties which address matters
only as of a particular date (which representations shall have been true and
correct (subject to the qualifications set forth in the preceding clause (A)) as
of such particular date) (it being understood that, for purposes of determining
the accuracy of such representations and warranties, any update of or
modification to the Company Schedules made or purported to have been made after
the date of this Agreement shall be disregarded). Parent shall have received a
certificate with respect to the foregoing signed on behalf of the Company by an
authorized officer of the Company.
(b) AGREEMENTS AND COVENANTS. The Company shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it at or prior to the Closing
Date, and Parent shall have received a certificate to such effect signed on
behalf of the Company by the Chief Executive Officer and the Chief Financial
Officer of the Company.
(c) MATERIAL ADVERSE EFFECT. No Material Adverse Effect with
respect to the Company and its subsidiaries shall have occurred since the date
of this Agreement.
(d) TERMINATION OF CERTAIN RIGHTS. Any and all agreements
granting any person or entity rights to register shares of the Company's capital
stock with the SEC or other Governmental Entity as well as any agreement
granting any person the right to nominate an individual to the Company's Board,
shall be terminated with no further force or effect.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 TERMINATION. This Agreement may be terminated at any time prior to
the Effective Time, whether before or after the requisite approvals of the
stockholders of the Company:
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(a) by mutual written consent duly authorized by the Boards of
Directors of Parent and the Company;
(b) by either the Company or Parent if the Merger shall not have
been consummated by September 30, 1999 (the "End Date") for any reason;
provided, however, that the right to terminate this Agreement under this Section
7.1(b) shall not be available to any party whose action or failure to act has
been a principal cause of or resulted in the failure of the Merger to occur on
or before such date and such action or failure to act constitutes a material
breach of this Agreement;
(c) by either the Company or Parent if a Governmental Entity
shall have issued an order, decree or ruling or taken any other action, in any
case having the effect of permanently restraining, enjoining or otherwise
prohibiting the Merger, which order, decree, ruling or other action is final and
nonappealable;
(d) by the Company or Parent if the required approval of the
stockholders of the Company contemplated by this Agreement shall not have been
obtained by reason of the failure to obtain the required vote at a meeting of
the Company stockholders duly convened therefor or at any adjournment thereof;
provided, however, that the right to terminate this Agreement under this Section
7.1(d) shall not be available to the Company where the failure to obtain Company
stockholder approval shall have been caused by the action or failure to act of
the Company and such action or failure to act constitutes a material breach by
the Company of this Agreement.
(e) by Parent (at any time prior to the adoption and approval of
this Agreement and the Merger by the required vote of the stockholders of the
Company) if a Company Triggering Event (as defined below) shall have occurred;
(f) by the Company, upon a breach of any representation,
warranty, covenant or agreement on the part of Parent set forth in this
Agreement, or if any representation or warranty of Parent shall have become
untrue, in either case such that the conditions set forth in Section 6.2(a) or
Section 6.2(b) would not be satisfied as of the time of such breach or as of the
time such representation or warranty shall have become untrue, provided that if
such inaccuracy in Parent's representations and warranties or breach by Parent
is curable by Parent through the exercise of its commercially reasonable
efforts, then the Company may not terminate this Agreement under this Section
7.1(f) prior to the End Date, provided Parent continues to exercise commercially
reasonable efforts to cure such breach (it being understood that the Company may
not terminate this Agreement pursuant to this paragraph (f) if it shall have
materially breached this Agreement or if such breach by Parent is cured prior to
the End Date);
(g) by Parent, upon a breach of any representation, warranty,
covenant or agreement on the part of the Company set forth in this Agreement, or
if any representation or warranty of the Company shall have become untrue, in
either case such that the conditions set forth in Section 6.3(a) or Section
6.3(b) would not be satisfied as of the time of such breach or as of the time
such representation or warranty shall have become untrue, provided, that if such
inaccuracy in the Company's representations and warranties or breach by the
Company is curable by the Company through the exercise of its commercially
reasonable efforts, then Parent may not terminate this Agreement under this
Section 7.1(g) prior to the End Date, provided the Company continues to exercise
commercially reasonable efforts to cure such breach (it being understood that
Parent may not terminate this Agreement pursuant to this paragraph (g) if it
shall have materially breached this Agreement or if such breach by the Company
is cured prior to the End Date);
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(h) by the Company prior to the Company Stockholders' Meeting in
the event the Meeting Price is less than $38.68 and Parent shall have elected
not to change the Exchange Ratio as provided for in Section 1.6(f)(ii) hereof;
(i) by Parent prior to the Company Stockholders' Meeting in the
event the Meeting Price exceeds $63.70 and the Company shall have elected not to
change the Exchange Ratio as provided for in Section 1.6(f)(iii) hereof; and
(j) by the Company in the event that the Company Board determines
(i) that there is a Superior Offer that has not been withdrawn and (ii) that
such Superior Offer requires a modification in its recommendation to the
Company's stockholders in favor of the Merger and the Board so modifies its
recommendation in compliance with the terms of this Agreement.
For the purposes of this Agreement, a "Company Triggering
Event" shall be deemed to have occurred if: (i) the Company Board or any
committee thereof shall for any reason have withdrawn or shall have amended or
modified in a manner adverse to Parent its unanimous recommendation in favor of,
the adoption and approval of the Agreement or the approval of the Merger; (ii)
the Company shall have failed to include in the Prospectus/Proxy Statement the
unanimous recommendation of the Company Board in favor of the adoption and
approval of the Agreement and the approval of the Merger; (iii) the Company
Board or any committee thereof shall have approved or recommended any
Acquisition Proposal; (iv) the Company shall have entered into any letter of
intent or similar document or agreement, contract or commitment accepting any
Acquisition Proposal; or (v) a tender or exchange offer relating to securities
of the Company shall have been commenced by a Person unaffiliated with Parent
and the Company shall not have sent to its security holders pursuant to Rule
14e-2 promulgated under the Securities Act, within ten (10) business days after
such tender or exchange offer is first published sent or given, a statement
disclosing that the Company recommends rejection of such tender or exchange
offer.
7.2 NOTICE OF TERMINATION; EFFECT OF TERMINATION. Any termination of
this Agreement under Section 7.1 above will be effective immediately upon the
delivery of a valid written notice of the terminating party to the other parties
hereto. In the event of the termination of this Agreement as provided in Section
7.1, this Agreement shall be of no further force or effect, except (i) as set
forth in Section 5.4, this Section 7.2, Section 7.3 and Article 8
(miscellaneous), each of which shall survive the termination of this Agreement,
and (ii) nothing herein shall relieve any party from liability for any willful
breach of this Agreement. No termination of this Agreement shall affect the
obligations of the parties contained in the Confidentiality Agreement, all of
which obligations shall survive termination of this Agreement in accordance with
their terms.
7.3 FEES AND EXPENSES.
(a) GENERAL. Except as set forth in this Section 7.3, all fees
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses whether
or not the Merger is consummated; provided, however, that Parent and the Company
shall share equally all fees and expenses, other than attorneys' and accountants
fees and expenses, incurred in relation to the printing and filing (with the
SEC) of the Prospectus/Proxy Statement (including any preliminary materials
related thereto) and the Registration Statement (including financial statements
and exhibits) and any amendments or supplements thereto.
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(b) COMPANY PAYMENTS. In the event that this Agreement is
terminated by Parent or the Company, as applicable, pursuant to Sections 7.1(b),
(d) (e), or (j) the Company shall promptly, but in no event later than two days
after the date of such termination, pay Parent a fee equal to $15 million in
immediately available funds (the "Termination Fee"); provided, that in the case
of termination under Section 7.1(b) or 7.1(d), such payment shall be made only
if following the date hereof and prior to the termination of this Agreement, a
third party has publicly announced an Acquisition Proposal and within 12 months
following the termination of this Agreement a Company Acquisition (as defined
below) is consummated or the Company enters into an agreement providing for a
Company Acquisition; provided, further that no termination by the Company giving
rise to the payment of the Termination Fee shall be effective until Parent
actually receives such fee. The Company acknowledges that the agreements
contained in this Section 7.3(b) are an integral part of the transactions
contemplated by this Agreement, and that, without these agreements, Parent would
not enter into this Agreement; accordingly, if the Company fails to pay in a
timely manner the amounts due pursuant to this Section 7.3(b) , and, in order to
obtain such payment, Parent makes a claim that results in a judgment against the
Company for the amounts set forth in this Section 7.3(b), the Company shall pay
to Parent its reasonable costs and expenses (including attorneys' fees and
expenses) in connection with such suit, together with interest on the amounts
set forth in this Section 7.3(b) at the prime rate of The Chase Manhattan Bank
in effect on the date such payment was required to be made. Payment of the fees
described in this Section 7.3(b) shall not be in lieu of damages incurred in the
event of breach of this Agreement. For the purposes of this Agreement "Company
Acquisition" shall mean any of the following transactions (other than the
transactions contemplated by this Agreement); (i) a merger, consolidation,
business combination, recapitalization, liquidation, dissolution or similar
transaction involving the Company pursuant to which the stockholders of the
Company immediately preceding such transaction hold less than 50% of the
aggregate equity interests in the surviving or resulting entity of such
transaction, (ii) a sale or other disposition by the Company of assets
representing in excess of 50% of the aggregate fair market value of the
Company's business immediately prior to such sale or (iii) the acquisition by
any person or group (including by way of a tender offer or an exchange offer or
issuance by the Company), directly or indirectly, of beneficial ownership or a
right to acquire beneficial ownership of shares representing in excess of 50% of
the voting power of the then outstanding shares of capital stock of the Company.
7.4 AMENDMENT. Subject to applicable law, this Agreement may be
amended by the parties hereto at any time by execution of an instrument in
writing signed on behalf of each of Parent and the Company.
7.5 EXTENSION; WAIVER. At any time prior to the Effective Time any
party hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties made to such
-48-
party contained herein or in any document delivered pursuant hereto and (iii)
waive compliance with any of the agreements or conditions for the benefit of
such party contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party. Delay in exercising any right under this
Agreement shall not constitute a waiver of such right.
ARTICLE VIII
GENERAL PROVISIONS
8.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Company, Parent and Merger Sub contained
in this Agreement shall terminate at the Effective Time, and only the covenants
that by their terms survive the Effective Time shall survive the Effective Time.
8.2 NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally or by commercial
delivery service, or sent via telecopy (receipt confirmed) to the parties at the
following addresses or telecopy numbers (or at such other address or telecopy
numbers for a party as shall be specified by like notice):
(a) if to Parent or Merger Sub, to:
Healtheon Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
Professional Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to the Company, to:
Mede America Corporation
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
-49-
with a copy to:
Reboul, MacMurray, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & Kristol
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
8.3 INTERPRETATION; KNOWLEDGE.
(a) When a reference is made in this Agreement to Exhibits, such
reference shall be to an Exhibit to this Agreement unless otherwise indicated.
When a reference is made in this Agreement to Sections, such reference shall be
to a Section of this Agreement unless otherwise indicated the words "include,"
"includes" and "including" when used herein shall be deemed in each case to be
followed by the words "without limitation." The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. When reference is
made herein to "the business of" an entity, such reference shall be deemed to
include the business of all direct and indirect subsidiaries of such entity.
Reference to the subsidiaries of an entity shall be deemed to include all direct
and indirect subsidiaries of such entity.
(b) For purposes of this Agreement the term "knowledge" means
with respect to a party hereto, with respect to any matter in question, that any
of the executive officers and controller(s) of such party, has actual knowledge
of such matter.
(c) For purposes of this Agreement, the term "Material Adverse
Effect" when used in connection with an entity means any change, event,
violation, inaccuracy, circumstance or effect (collectively, "Event") that is
materially adverse to the business, assets (including intangible assets),
capitalization, financial condition or results of operations of such entity
taken as a whole with its subsidiaries; provided, that "Material Adverse Effect"
shall not include any decrease in the price of either party's stock as reported
on Nasdaq unless such decrease is coupled with an Event that is a Material
Adverse Effect.
(d) For purposes of this Agreement, the term "person" shall mean
any individual, corporation (including any non-profit corporation), general
partnership, limited partnership, limited liability partnership, joint venture,
estate, trust, company (including any limited liability company or joint stock
company), firm or other enterprise, association, organization, entity or
Governmental Entity.
8.4 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
8.5 ENTIRE AGREEMENT; THIRD PARTY BENEFICIARIES. This Agreement and
the documents and instruments and other agreements among the parties hereto as
contemplated by or referred to herein, including the Company Schedules, the
Parent Schedules and the Confidentiality Agreement (a) constitute the entire
agreement among the parties with respect to the subject matter hereof and
-50-
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof, it being understood that
the Confidentiality Agreement shall continue in full force and effect until the
Closing and shall survive any termination of this Agreement; and (b) are not
intended to confer upon any other person any rights or remedies hereunder,
except as specifically provided in Section 5.10.
8.6 SEVERABILITY. In the event that any provision of this Agreement or
the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto. The parties further agree to replace
such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of such void or unenforceable provision.
8.7 OTHER REMEDIES; SPECIFIC PERFORMANCE. Except as otherwise provided
herein, any and all remedies herein expressly conferred upon a party will be
deemed cumulative with and not exclusive of any other remedy conferred hereby,
or by law or equity upon such party, and the exercise by a party of any one
remedy will not preclude the exercise of any other remedy. The parties hereto
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to seek an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having jurisdiction, this
being in addition to any other remedy to which they are entitled at law or in
equity.
8.8 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, regardless of the laws
that might otherwise govern under applicable principles of conflicts of law
thereof.
8.9 RULES OF CONSTRUCTION. The parties hereto agree that they have
been represented by counsel during the negotiation and execution of this
Agreement and, therefore, waive the application of any law, regulation, holding
or rule of construction providing that ambiguities in an agreement or other
document will be construed against the party drafting such agreement or
document.
8.10 ASSIGNMENT. No party may assign either this Agreement or any of
its rights, interests, or obligations hereunder without the prior written
approval of the other parties. Subject to the preceding sentence, this Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors and permitted assigns.
8.11 WAIVER OF JURY TRIAL. EACH OF PARENT, THE COMPANY AND MERGER SUB
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE ACTIONS OF PARENT, THE COMPANY OR MERGER SUB
IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.
*****
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized respective officers as of the date first
written above.
HEALTHEON CORPORATION
By:
Name:
Title:
MERC ACQUISITION CORP.
By:
Name:
Title:
MEDE AMERICA CORPORATION
By:
Name:
Title:
**** REORGANIZATION AGREEMENT ****
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
HEALTHEON CORPORATION
MERC ACQUISITION CORP.
AND
MeDE AMERICA CORPORATION
Dated as of April 20, 1999
TABLE OF CONTENTS
Page
ARTICLE I THE MERGER..........................................................1
1.1 The Merger......................................................1
1.2 Effective Time; Closing.........................................1
1.3 Effect of the Merger............................................2
1.4 Certificate of Incorporation; Bylaws............................2
1.5 Directors and Officers..........................................2
1.6 Effect on Capital Stock.........................................2
1.7 Surrender of Certificates.......................................4
1.8 No Further Ownership Rights in Company Common Stock.............5
1.9 Lost, Stolen or Destroyed Certificates..........................5
1.10 Tax Consequences................................................6
1.11 Taking of Necessary Action; Further Action......................6
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY......................6
2.1 Organization of the Company.....................................6
2.2 Company Capital Structure.......................................7
2.3 Obligations With Respect to Capital Stock.......................8
2.4 Authority; Non-Contravention....................................9
2.5 SEC Filings; Company Financial Statements......................10
2.6 Absence of Certain Changes or Events...........................10
2.7 Taxes..........................................................11
2.8 Title to Properties; Absence of Liens and Encumbrances.........13
2.9 Intellectual Property..........................................13
2.10 Compliance; Permits; Restrictions..............................16
2.11 Litigation.....................................................16
2.12 Brokers' and Finders' Fees.....................................17
2.13 Transactions with Affiliates...................................17
2.14 Employee Benefit Plans.........................................17
2.15 Environmental Matters..........................................20
2.16 Year 2000 Compliance...........................................21
2.17 Agreements, Contracts and Commitments..........................21
2.18 Change of Control Payments.....................................23
2.19 Disclosure.....................................................23
2.20 Board Approval.................................................23
2.21 Opinion of Financial Advisor...................................23
2.22 Restrictions on Business Activities............................23
2.23 Insurance......................................................23
2.24 State Takeover Statutes........................................23
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB..........24
3.1 Organization of Parent.........................................24
3.2 Parent Capital Structure.......................................24
3.3 Obligations With Respect to Capital Stock......................25
-i-
TABLE OF CONTENTS
(continued)
Page
3.4 Authority; Non-Contravention...................................26
3.5 SEC Filings; Parent Financial Statements.......................26
3.6 Absence of Certain Changes or Events...........................27
3.7 Taxes..........................................................28
3.8 Title to Properties; Absence of Liens and Encumbrances.........29
3.9 Intellectual Property..........................................29
3.10 Compliance; Permits; Restrictions..............................30
3.11 Litigation.....................................................31
3.12 Brokers' and Finders' Fees.....................................31
3.13 Environmental Matters..........................................31
3.14 Year 2000 Compliance...........................................32
3.15 Agreements, Contracts and Commitments..........................32
3.16 Disclosure.....................................................32
3.17 Board Approval.................................................33
3.18 Fairness Opinion...............................................33
3.19 Organization of Merger Sub.....................................33
ARTICLE IV CONDUCT PRIOR TO THE EFFECTIVE TIME...............................33
4.1 Conduct of Business by the Company.............................33
4.2 Conduct of Business by Parent..................................35
ARTICLE V ADDITIONAL AGREEMENTS..............................................36
5.1 Prospectus/Proxy Statement; Registration Statement; Other
Filings; Board Recommendations...............................36
5.2 Meeting of Company Stockholders................................36
5.3 Confidentiality; Access to Information.........................38
5.4 No Solicitation................................................38
5.5 Public Disclosure..............................................40
5.6 Reasonable Efforts; Notification...............................40
5.7 Third Party Consents...........................................41
5.8 Stock Options; Warrants and Employee Benefits..................41
5.9 Form S-8.......................................................42
5.10 Indemnification................................................42
5.11 Nasdaq Listing.................................................43
5.12 Acceleration of Employee Stock Option Vesting..................43
5.13 FIRPTA Compliance..............................................43
5.14 Board of Directors.............................................43
ARTICLE VI CONDITIONS TO THE MERGER..........................................43
6.1 Conditions to Obligations of Each Party to Effect
the Merger...................................................43
6.2 Additional Conditions to Obligations of the Company............44
6.3 Additional Conditions to the Obligations of Parent and
Merger Sub..................................................44
-ii-
TABLE OF CONTENTS
(continued)
Page
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER................................45
7.1 Termination....................................................45
7.2 Notice of Termination; Effect of Termination...................47
7.3 Fees and Expenses..............................................47
7.4 Amendment......................................................48
7.5 Extension; Waiver..............................................48
ARTICLE VIII GENERAL PROVISIONS..............................................48
8.1 Non-Survival of Representations and Warranties.................48
8.2 Notices........................................................49
8.3 Interpretation; Knowledge......................................49
8.4 Counterparts...................................................50
8.5 Entire Agreement; Third Party Beneficiaries....................50
8.6 Severability...................................................50
8.7 Other Remedies; Specific Performance...........................50
8.8 Governing Law..................................................51
8.9 Rules of Construction..........................................51
8.10 Assignment.....................................................51
8.11 WAIVER OF JURY TRIAL...........................................51
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