EXHIBIT 2.1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
DATED AS OF MAY 19, 2000
AMONG
CORNING INCORPORATED
IROQUOIS MERGER SUB, INC.
AND
INTELLISENSE CORPORATION
TABLE OF CONTENTS
PAGE
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ARTICLE I.........................................................................................................1
THE MERGER........................................................................................................1
SECTION 1.1 THE MERGER......................................................................................1
SECTION 1.2 CLOSING.........................................................................................1
SECTION 1.3 EFFECTIVE TIME OF THE MERGER....................................................................2
SECTION 1.4 EFFECT OF THE MERGER............................................................................2
SECTION 1.5 PURCHASE ACCOUNTING.............................................................................2
ARTICLE II........................................................................................................2
THE SURVIVING CORPORATION.........................................................................................2
SECTION 2.1 CERTIFICATE OF INCORPORATION....................................................................2
SECTION 2.2 BY-LAWS.........................................................................................2
SECTION 2.3 BOARD OF DIRECTORS; OFFICERS....................................................................2
ARTICLE III.......................................................................................................3
CONVERSION OF SHARES..............................................................................................3
SECTION 3.1 MERGER CONSIDERATION............................................................................3
SECTION 3.2 DISSENTING SHARES...............................................................................4
SECTION 3.3 SURRENDER AND EXCHANGE OF SHARE CERTIFICATES....................................................4
SECTION 3.4 NO FURTHER RIGHTS...............................................................................6
SECTION 3.5 CLOSING OF THE COMPANY'S TRANSFER BOOKS.........................................................6
ARTICLE IV........................................................................................................6
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.....................................................................6
SECTION 4.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION...................................................6
SECTION 4.2 CAPITALIZATION..................................................................................6
SECTION 4.3 SUBSIDIARIES....................................................................................7
SECTION 4.4 AUTHORIZATION...................................................................................7
SECTION 4.5 MATERIAL CONTRACTS..............................................................................7
SECTION 4.6 GOVERNMENTAL CONSENTS...........................................................................8
SECTION 4.7 LITIGATION......................................................................................8
SECTION 4.8 EMPLOYEE AGREEMENT..............................................................................9
SECTION 4.9 INTELLECTUAL PROPERTY...........................................................................9
SECTION 4.10 COMPLIANCE WITH OTHER INSTRUMENTS............................................................10
SECTION 4.11 DISCLOSURE...................................................................................10
SECTION 4.12 AFFILIATE TRANSACTIONS.......................................................................10
SECTION 4.13 RIGHTS OF REGISTRATION AND FIRST OFFER.......................................................11
SECTION 4.14 CORPORATE DOCUMENTS..........................................................................11
SECTION 4.15 TITLE TO PROPERTY AND ASSETS.................................................................11
SECTION 4.16 FINANCIAL STATEMENTS.........................................................................11
SECTION 4.17 CHANGES......................................................................................11
SECTION 4.18 EMPLOYEE BENEFIT PLANS.......................................................................13
SECTION 4.19 TAX RETURNS AND PAYMENTS.....................................................................13
SECTION 4.20 INSURANCE....................................................................................14
SECTION 4.21 LABOR AGREEMENTS AND ACTIONS.................................................................14
SECTION 4.22 CERTAIN BUSINESS PRACTICES...................................................................14
SECTION 4.23 COMPLIANCE WITH APPLICABLE LAWS..............................................................15
SECTION 4.24 REAL PROPERTY HOLDING CORPORATION............................................................15
SECTION 4.25 ENVIRONMENTAL AND SAFETY LAWS................................................................15
SECTION 4.26 TAX-FREE EXCHANGE............................................................................16
SECTION 4.27 BROKERS......................................................................................16
SECTION 4.28 BOARD APPROVAL...............................................................................16
SECTION 4.29 SOLE REPRESENTATIONS.........................................................................17
ARTICLE V........................................................................................................17
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUBSIDIARY...................................................17
SECTION 5.1 ORGANIZATION AND QUALIFICATION.................................................................17
SECTION 5.2 CAPITALIZATION.................................................................................17
SECTION 5.3 AUTHORITY RELATIVE TO THIS MERGER AGREEMENT....................................................18
SECTION 5.4 NO CONFLICTS, REQUIRED FILINGS AND CONSENTS....................................................18
SECTION 5.5 PARENT REPORTS AND FINANCIAL STATEMENTS........................................................19
SECTION 5.6 TAX-FREE EXCHANGE..............................................................................19
SECTION 5.7 BROKERS........................................................................................19
SECTION 5.8 BOARD APPROVAL.................................................................................19
SECTION 5.9 OPERATIONS OF MERGER SUBSIDIARY................................................................20
ARTICLE VI.......................................................................................................20
CONDUCT OF BUSINESS PENDING THE MERGER...........................................................................20
SECTION 6.1 CONDUCT OF THE BUSINESS PENDING THE EFFECTIVE TIME.............................................20
SECTION 6.2 COMPANY SHAREHOLDER VOTE.......................................................................22
SECTION 6.3 ACQUISITION PROPOSALS..........................................................................22
SECTION 6.4 SECTION 368(A).................................................................................22
SECTION 6.5 CONSENTS.......................................................................................22
ARTICLE VII......................................................................................................22
ADDITIONAL AGREEMENTS............................................................................................22
SECTION 7.1 ACCESS TO INFORMATION..........................................................................22
SECTION 7.2 REPRESENTATIONS OF HOLDERS OF COMPANY COMMON STOCK.............................................23
SECTION 7.3 FURTHER ACTION; CONSENTS; FILINGS..............................................................23
SECTION 7.4 EMPLOYEE AND OTHER ARRANGEMENTS................................................................24
SECTION 7.5 PUBLIC ANNOUNCEMENTS...........................................................................24
SECTION 7.6 COOPERATION....................................................................................25
SECTION 7.7 NOTICES OF BREACH..............................................................................25
SECTION 7.8 REGISTRATION OF OPTIONS........................................................................25
SECTION 7.9 APPOINTMENT OF SHAREHOLDER REPRESENTATIVE......................................................25
SECTION 7.10 CERTAIN EMPLOYEE BENEFITS MATTERS............................................................26
SECTION 7.11 DIRECTORS'AND OFFICERS'INDEMNIFICATION AND INSURANCE.........................................26
SECTION 7.12 BLUE SKY LAWS................................................................................26
SECTION 7.13 DECLARATION OF REGISTRATION RIGHTS...........................................................26
SECTION 7.14 PARENT FUNDING OBLIGATIONS.....................................................................27
--------------------------
ARTICLE VIII.....................................................................................................27
CONDITIONS PRECEDENT.............................................................................................27
SECTION 8.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.....................................27
SECTION 8.2 CONDITIONS TO OBLIGATION OF THE COMPANY TO EFFECT THE MERGER...................................28
SECTION 8.3 CONDITIONS TO OBLIGATIONS OF PARENT AND MERGER SUBSIDIARY TO EFFECT THE MERGER.................28
ARTICLE IX.......................................................................................................29
TERMINATION, AMENDMENT AND WAIVER................................................................................29
SECTION 9.1 TERMINATION....................................................................................29
SECTION 9.2 EFFECT OF TERMINATION..........................................................................30
SECTION 9.3 FEES AND EXPENSES..............................................................................30
SECTION 9.4 AMENDMENT......................................................................................30
SECTION 9.5 WAIVER.........................................................................................30
ARTICLE X........................................................................................................31
SURVIVAL AND INDEMNIFICATION.....................................................................................31
SECTION 10.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS........................................31
SECTION 10.2 INDEMNIFICATION BY THE PRINCIPAL SHAREHOLDER.................................................31
SECTION 10.3 CERTAIN LIMITATION ON INDEMNITIES............................................................31
SECTION 10.4 PROCEDURE....................................................................................32
SECTION 10.5 CERTAIN TERMS................................................................................33
SECTION 10.6 REMEDIES EXCLUSIVE...........................................................................33
ARTICLE XI.......................................................................................................33
GENERAL PROVISIONS...............................................................................................33
SECTION 11.1 DISPUTE RESOLUTION...........................................................................33
SECTION 11.2 NOTICES......................................................................................34
SECTION 11.3 SPECIFIC PERFORMANCE.........................................................................35
SECTION 11.4 ENTIRE AGREEMENT.............................................................................35
SECTION 11.5 INCORPORATION OF COMPANY DISCLOSURE SCHEDULE.................................................35
SECTION 11.6 ASSIGNMENTS; PARTIES IN INTEREST.............................................................35
SECTION 11.7 GOVERNING LAW; VENUE.........................................................................35
SECTION 11.8 HEADING......................................................................................36
SECTION 11.9 CERTAIN DEFINITIONS AND RULES OF CONSTRUCTION................................................36
SECTION 11.10 COUNTERPARTS.................................................................................40
SECTION 11.11 SEVERABILITY.................................................................................40
EXHIBITS
--------
Exhibit A Form of Shareholder Agreement (Preamble)
Exhibit B Terms and Conditions with Respect to Post-Closing Contingent
Consideration pursuant to Section 3.1(b)(ii))
Exhibit C-1 Form of Employee Agreement pursuant to Section 7.4(a)
Exhibit C-2 Form of Employee Agreement pursuant to Section 7.4(b)
Exhibit C-3 Employees to Enter into Agreements pursuant to Section 7.4(c)
Exhibit D Declaration of Registration Rights pursuant to Section 7.13
Exhibit 1.3 Certificate of Merger
Exhibit 2.3 Surviving Corporation Officers and Directors
Exhibit 3.3(b) Letter of Transmittal
Exhibit 7.2 Investment Letter
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "MERGER AGREEMENT"), dated as of May
19, 2000, by and among Corning Incorporated ("PARENT"), a New York corporation,
Iroquois Merger Sub, Inc. ("MERGER SUBSIDIARY"), a Delaware corporation and a
wholly-owned subsidiary of Parent, and IntelliSense Corporation (the "COMPANY"),
a Delaware corporation.
WHEREAS, the respective Boards of Directors of Parent, Merger
Subsidiary and the Company have approved the merger of the Company with and into
the Merger Subsidiary (the "MERGER"), upon the terms and subject to the
conditions set forth herein;
WHEREAS, the parties intend that the Merger qualify as a reorganization
under Section 368(a) of the Internal Revenue Code of 1986, as amended (the
"CODE"); and
WHEREAS, contemporaneously with the execution and delivery of this
Merger Agreement, as a condition and inducement to Parent's and Merger
Subsidiary's willingness to enter into this Merger Agreement, the Principal
Shareholder of the Company and the Company's Chief Financial Officer are each
entering into a shareholders voting agreement and irrevocable proxy (the
"SHAREHOLDERS AGREEMENT") the form of which is attached hereto as EXHIBIT A
pursuant to which, among other things, both such parties will vote their shares
(if any) in favor of the transactions contemplated by this Merger Agreement;
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties and agreements contained herein the parties hereto
agree as follows:
ARTICLE I
THE MERGER
Section 1.1 THE MERGER. Upon the terms and subject to the conditions
hereof and of the applicable provisions of the Delaware General Corporation Law
("DGCL"), at the Effective Time (as defined in Section 1.3), the Company shall
be merged with and into the Merger Subsidiary and the separate existence of the
Company shall thereupon cease, and the Merger Subsidiary shall continue as the
surviving corporation in the Merger (the "SURVIVING CORPORATION") under the laws
of the State of Delaware under the name "IntelliSense Corporation".
Section 1.2 CLOSING. Unless this Merger Agreement shall have been
terminated and the transactions herein contemplated shall have been abandoned
pursuant to Section 9.1, and subject to the satisfaction or waiver of the
conditions set forth in Article VIII, the closing of the Merger will take place
(1) on June 30, 2000 or (2) if early termination is given with respect to the
separate filings made by Parent and the Principal Shareholder under the HSR Act
(as defined herein) with respect to the transactions contemplated hereby, no
more than two business days after satisfaction or waiver of the conditions set
forth in Article VIII, at the offices of Xxxxxx, Xxxx & Xxxxxxx, Exchange Place,
Boston, Massachusetts, unless another date, time or place is agreed to in
writing by the parties hereto (the "CLOSING DATE").
Section 1.3 EFFECTIVE TIME OF THE MERGER. The Merger shall become
effective upon the filing of the certificate of merger in substantially the form
attached hereto as Exhibit 1.3 hereto (the "CERTIFICATE OF MERGER") with the
Secretary of State of the State of Delaware in accordance with the provisions of
DGCL. When used in this Merger Agreement, the term "EFFECTIVE TIME" shall mean
the time at which such Certificate of Merger is accepted for filing with the
Secretary of State of Delaware.
Section 1.4 EFFECT OF THE MERGER. The Merger shall, from and after the
Effective Time, have all the effects provided by the DGCL and other applicable
laws. If at any time after the Effective Time the Surviving Corporation shall
consider or be advised that any further deeds, conveyances, assignments or
assurances in law or any other acts are necessary, or reasonably desirable or
proper to vest, perfect or confirm, of record or otherwise, in the Surviving
Corporation, the title to any property or rights of Merger Subsidiary or the
Company (the "CONSTITUENT CORPORATIONS") to be vested in the Surviving
Corporation, by reason of, or as a result of, the Merger, or otherwise to carry
out the purposes of this Merger Agreement, the Constituent Corporations agree
that the Surviving Corporation and its officers and directors shall approve,
execute and deliver all such deeds, conveyances, assignments and assurances in
law and do all things necessary, or reasonably desirable or proper to vest,
perfect or confirm title to such property or rights in the Surviving Corporation
and otherwise to carry out the purposes of this Merger Agreement, and that the
officers and directors of the Surviving Corporation are fully authorized in the
name of each of the Constituent Corporations or otherwise to take any and all
such action so long as such action is consistent with this Merger Agreement.
Section 1.5 PURCHASE ACCOUNTING. For accounting purposes, the parties
hereto agree that the Merger will be treated as a "purchase".
ARTICLE II
THE SURVIVING CORPORATION
Section 2.1 CERTIFICATE OF INCORPORATION. The Certificate of
Incorporation of the Merger Subsidiary as in effect immediately prior to the
Effective Time shall be the Certificate of Incorporation of the Surviving
Corporation after the Effective Time, except that the name shall be changed to
"IntelliSense Corporation", until thereafter changed or amended as provided
therein or by applicable law.
Section 2.2 BY-LAWS. The By-laws of the Merger Subsidiary as in effect
immediately prior to the Effective Time shall be the By-laws of the Surviving
Corporation, until thereafter changed or amended as provided therein or by
applicable law.
Section 2.3 BOARD OF DIRECTORS; OFFICERS. The directors and officers of
the Surviving Corporation, immediately after the Closing and as of the Effective
Time, shall be as set forth on EXHIBIT 2.3 hereof.
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ARTICLE III
CONVERSION OF SHARES
Section 3.1 MERGER CONSIDERATION. As of the Effective Time, by virtue
of the Merger and without any action on the part of any shareholder of the
Company or Merger Subsidiary:
(a) PARENT SHARES OF COMPANY COMMON STOCK. All shares of common stock,
$0.01 par value, of the Company ("COMPANY COMMON STOCK") which are held by
Parent or the Company shall be canceled and retired and shall cease to exist,
and no consideration shall be delivered in exchange therefor.
(b) CONVERSION OF REMAINING SHARES OF COMPANY COMMON STOCK. Each issued
and outstanding share of Company Common Stock on the date hereof (the "COMPANY
MERGER SHARES" but specifically excluding from the definition of Company Merger
Shares for all purposes hereof those shares of Company Common Stock as to which
Section 3.1(a) applies) shall, except as set forth in Section 3.2, be converted
into the right to receive a number of validly issued, fully paid and
nonassessable shares of Common Stock, par value $.50 per share, of Parent
("PARENT COMMON STOCK") equal to the aggregate of:
(i) 0.10626 shares of the Parent Common Stock (the "CLOSING
CONSIDERATION") and,
(ii) to the extent earned within the time and subject to the
terms and conditions set forth in EXHIBIT B hereto, 0.01791
shares of the Parent Common Stock (the "POST-CLOSING
CONTINGENT CONSIDERATION").
The aggregate Closing Consideration (2,016,755 shares of the Parent
Common Stock, based upon a "CLOSING EXCHANGE RATIO" of 0.10626) and the
aggregate Post-Closing Contingent Consideration (339,921 shares of the Parent
Common Stock, based upon a "CONTINGENT EXCHANGE RATIO" of 0.01791) payable in
respect of the Company Merger Shares shall constitute the "MERGER
CONSIDERATION". The Merger Consideration shall be delivered to the holders of
Company Merger Shares as provided in Section 3.3.
(c) ADJUSTMENTS TO THE MERGER CONSIDERATION. If at any time during the
period between the date of this Merger Agreement and the Effective Time, the
Company changes the number of shares of the Company Common Stock outstanding, or
Parent changes the number of shares of Parent Common Stock outstanding, in each
case as a result of a stock split, reverse stock split, stock dividend,
recapitalization or redenomination of share capital, the number of shares of
Parent Common Stock issuable as Closing Consideration and Post-Closing
Contingent Consideration and any other items dependent thereon shall be
appropriately adjusted.
(d) FRACTIONAL SHARES. No fractional shares of Parent Common Stock will
be issued as a result of the Merger. In lieu of any fractional share of Parent
Common Stock which might otherwise be issuable to a holder of the Company Common
Stock, the holder shall receive cash in an amount equal to the applicable
fraction multiplied by $185.30.
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(e) TREATMENT OF OPTIONS. Pursuant to the terms of the plans pursuant
to which the Company granted options to purchase the Company Common Stock (each
such grant, a "Company Stock Option") and pursuant to the terms of this Merger
Agreement, each outstanding and unexercised Company Stock Option shall, at the
Effective Time, be assumed by the Parent and, without any further action on the
part of any holder of a Company Stock Option, shall convert into the right to
purchase 0.10626 shares of Parent Common Stock (each, a "Parent Stock Option")
and the exercise price per share of Parent Common Stock under each such Parent
Stock Option shall be equal to the exercise price under the Company Stock Option
as written divided by the Closing Exchange Ratio; the result of which shall be
rounded down to the nearest whole cent. The adjustments provided herein with
respect to any Company Stock Options which are "incentive stock options" (as
defined in Section 422 of the Code) shall be effected in a manner consistent
with Section 424(a) of the Code. Promptly after the Effective Time, the Parent
shall issue to each holder of an outstanding Company Stock Option a notice
describing the foregoing assumption of such Company Stock Option by the Parent.
(g) SHARES FULLY PAID. The aggregate number of shares of Parent Common
Stock comprising the Post-Closing Contingent Consideration shall be issued to
the holders of Company Merger Shares immediately upon satisfaction of the
conditions set forth in Exhibit A and upon such issuance shall be fully paid and
nonassessable. The right to receive any Post-Closing Contingent Consideration
shall not be transferable or assignable except by operation of law. Except as
set forth in Article X, the Post-Closing Contingent Consideration shall not be
available to satisfy any indemnification obligations.
(h) TREATMENT OF SHARES OF MERGER SUBSIDIARY. Each issued and
outstanding share of common stock of Merger Subsidiary shall continue to be
outstanding and shall become one fully paid and nonassessable share of common
stock of the Surviving Corporation.
Section 3.2 DISSENTING SHARES. Each share of Company Common Stock as to
which (i) the holder thereof has not voted in favor of the Merger or has not
consented thereto in writing and (ii) a written demand for appraisal was filed
timely by such holder (in accordance with Section 262 of the DGCL) with the
Company (a "DISSENTING SHARE"), shall not be converted into and hence shall not
represent the right to receive the applicable proportionate share of the Merger
Consideration and such Dissenting Share shall be subject to the provisions of
Section 262 of the DGCL; provided, however, that if any such shareholder shall
withdraw his or her demand for payment or shall fail to perfect his or her
rights to such payment in accordance with the DGCL, then such holder's
Dissenting Shares shall cease to be Dissenting Shares and each such Share shall,
subject to the terms of this Merger Agreement and the DGCL, be converted into
and represent the right to receive the applicable proportionate share of the
Merger Consideration. Each holder of a Dissenting Share who becomes entitled,
pursuant to the DGCL, to receive an appraisal of his or her Dissenting Share or
the Surviving Corporation may file a petition in the Chancery Court of the State
of Delaware demanding a determination of the value of the Company's Common Stock
in accordance with Section 262 of the DGCL.
Section 3.3 SURRENDER AND EXCHANGE OF SHARE CERTIFICATES.
(a) Promptly after the Effective Time but in no event more than three
business days thereafter, Parent shall make available to Xxxxxx Trust (the
"PAYING AGENT") such certificates
4
evidencing such number of shares of Parent Common Stock to enable the Paying
Agent to effect the conversion of the Company Merger Shares into shares of
Parent Common Stock as provided in Section 3.3(b). No fractional shares of
Parent Common Stock will be issued, and any holder of Company Merger Shares
entitled to receive a fractional share of Parent Common Stock but for this
Section 3.3(a) shall be entitled to receive a cash payment in lieu thereof,
which payment shall represent such holder's fractional interest in a share of
Parent Common Stock.
(b) Except as provided in Section 3.2, on the Closing Date, Parent
shall cause the Paying Agent to deliver to each person who was a holder of
record of shares of the Company Merger Shares immediately prior to the Effective
Time: (i) a letter of transmittal in the form of EXHIBIT 3.3(b) attached, and
(ii) instructions for use in effecting the surrender of the Certificates
nominally representing the Company Merger Shares in exchange for certificates
representing the Parent Common Stock determined in accordance with Section
3.1(c). If and to the extent any of the Post-Closing Consideration is earned as
provided in Section 3.1(b)(ii) and in Exhibit B hereto, the Parent shall
promptly thereafter, but in no event more than three business days thereafter,
direct the Paying Agent to issue and deliver to the holders of the Company
Merger Shares immediately prior to the Effective Time the shares of Parent
Common Stock issuable to such holder as the Post-Closing Contingent
Consideration.
(c) After the Effective Time, each holder of a Certificate shall
surrender and deliver such Certificate to the Paying Agent together with a duly
completed and executed transmittal letter. Upon such surrender and delivery, the
holder shall receive a certificate representing the number of whole shares of
Parent Common Stock for which such holder's shares of the Company Merger Shares
have been converted and the Paying Agent shall direct Parent to issue to such
holder a check for any cash in lieu of any fractional share of Parent Common
Stock. Until so surrendered and exchanged, each Certificate formerly
representing an outstanding share of the Company Merger Shares shall after the
Effective Time be deemed for all purposes to evidence only the right to receive
the Merger Consideration as provided in Section 3.1, together with cash in lieu
of any fractional share of Parent Common Stock.
(d) At the Effective Time, the stock transfer books of the Company
shall be closed and no transfer of shares of the Company Common Stock shall be
made thereafter, other than transfers of shares of the Company Common Stock that
have occurred prior to the Effective Time.
(e) Any shares of Parent Common Stock that remain undistributed to the
shareholders of the Company as of the Effective Time for a period of four months
after the Effective Time (or four months after the date on which the
Post-Closing Contingent Consideration is earned, as applicable) shall be
delivered to Parent by the Paying Agent, upon demand, and any former
shareholders of the Company who have not previously complied with this Section
3.3 shall thereafter look only to Parent for payment of their claim for Parent
Common Stock and any dividends or distributions with respect to Parent Common
Stock which may have been made after Closing Date and/or cash in lieu of
fractional shares.
(f) Neither the Paying Agent, nor any of the Company, Merger Subsidiary
or Parent shall be liable to any holder of shares of the Company Common Stock
with respect to any shares of Parent Common Stock (or dividends or distributions
with respect to Parent Common Stock)
5
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law, rule, regulation, statute, order, judgment or decree.
(g) In the event any certificates shall have been lost, stolen or
destroyed, the Paying Agent shall issue such shares of Parent Common Stock and
any dividends or other distributions with respect to Parent Common Stock to
which such holder is entitled in exchange for such lost, stolen or destroyed
Certificates, upon the making of an affidavit of that fact by the holder thereof
and the delivery of such bond as the Paying Agent may reasonably require.
(h) No transfer taxes shall be payable by any stockholder of the
Company in respect of the issuance of the Parent Common Stock under this Section
3.3, except that if any Parent Common Stock is to be issued in a name other than
that in which the certificate surrendered has been registered, it shall be a
condition of such issuance that the person requesting such issuance shall pay to
Parent any transfer taxes payable by reason thereof, or of any prior transfer of
such surrendered certificate, or establish to the satisfaction of Parent that
such taxes have been paid or are not payable.
Section 3.4 NO FURTHER RIGHTS. From and after the Effective Time,
holders of certificates theretofore evidencing shares of the Company's Common
Stock shall cease to have any rights as shareholders of the Company, except as
provided herein or by law.
Section 3.5 CLOSING OF THE COMPANY'S TRANSFER BOOKS. At the Effective
Time, the stock transfer books of the Company shall be closed and no transfer of
shares of the Company's Common Stock shall be made thereafter. In the event
that, after the Effective Time, certificates for Company Merger Shares are
presented to Parent or the Surviving Corporation, they shall be canceled and
exchanged for Merger Consideration for each Company Merger Share represented as
provided in Section 3.3, subject to applicable law in the case of Dissenting
Shares.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Merger
Subsidiary that, except as set forth on the Company Disclosure Schedule which
has been delivered to the Parent prior to the execution of this Merger Agreement
(the "COMPANY DISCLOSURE SCHEDULE"):
Section 4.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate power and
authority to carry on its business as now conducted and as proposed to be
conducted. The Company is duly qualified to transact business and is in good
standing in each jurisdiction in which the failure so to qualify would have a
material adverse effect on the Company's business, properties or financial
condition, taken as a whole (a "COMPANY MATERIAL ADVERSE EFFECT").
Section 4.2 CAPITALIZATION. The authorized capital of the Company
consists of 50,000,000 shares of Company Common Stock, of which 29,424,111
shares are issued and outstanding (including 1,276,786 shares issued upon
exercise of options as referenced below)
6
and with respect to which 10,000,000 shares of Company Common Stock have been
reserved for issuance pursuant to the Company's 1994 Stock Option Plan, of which
options to purchase 2,895,908 shares of Company Common Stock are outstanding on
the date of this Merger Agreement and options to purchase 1,276,786 shares of
the Company's Common Stock have been granted and exercised. There are no other
classes of capital stock of the Company authorized. As of the date of this
Merger Agreement, there are no outstanding contractual obligations of the
Company or any subsidiary to (i) repurchase, redeem or otherwise acquire any
shares of capital stock of the Company or any of its subsidiaries or to provide
material funds to; (ii) make any material investment (in the form of a loan,
capital contribution or otherwise) in any person; or (iii), except as set forth
in Section 6.1(iii), issue shares of its capital stock. All the outstanding
shares of Company Common Stock are validly issued, fully paid and nonassessable.
Section 4.3 SUBSIDIARIES. Except as set forth in Section 4.3 of the
Company Disclosure Schedule: (a) the Company does not currently own or control,
directly or indirectly, any interest in any other corporation, association, or
other business entity; and (b) the Company is not a participant in any joint
venture, partnership or similar arrangement.
Section 4.4 AUTHORIZATION. All corporate action on the part of the
Company's board of directors necessary for the authorization, execution and
delivery of this Merger Agreement and all exhibits hereto, the Shareholders
Agreement referenced in the preamble hereof, the Investment Agreement referenced
in Section 7.2 hereof and the Employment Agreements referenced in Section 7.4
hereof (collectively, the "RELATED AGREEMENTS") to which the Company is a party,
the performance of all obligations of the Company hereunder and thereunder have
been duly and validly taken and the Company's board of directors has duly
recommended the approval of this Merger Agreement to its shareholders. This
Merger Agreement and the Related Agreements to which the Company is a party,
when executed and delivered by the Company, shall constitute valid and legally
binding obligations of the Company, enforceable against the Company in
accordance with their respective terms. The affirmative vote of the holders of
at least a majority of the total number of votes entitled to be cast by the
holders of the Company Common Stock outstanding as of the record date for a
special meeting of the Company's shareholders or the written consent of such
shareholders is the only vote of the holders of any class or series of the
Company's capital stock or other securities necessary to approve this Merger
Agreement and the Related Agreements to which the Company is a party and the
transactions contemplated by this Merger Agreement and such Related Agreements.
Section 4.5 MATERIAL CONTRACTS. Set forth in Section 4.5 of the Company
Disclosure Schedule is a list of the following documents (the "MATERIAL
CONTRACTS"), true and complete copies of which (and all amendments and
modifications thereof and consents and waivers thereunder) have been provided to
Parent by the Company:
(a) All agreements with customers in existence on and not performed as
of May 12, 2000 and involving a purchase price of more than $100,000 in the
aggregate for products shipped or to be shipped or requiring professional
services to be performed under any such agreement.
(b) All written contracts with any employee (or former employee which
has not been fully performed by the Company or the employee) and all consulting
contracts relating to professional services or product development for the
Company's products.
7
(c) Any contracts which are to be performed in any material respect on
or after the Effective Time which (i) involve payments to or from the Company in
amounts greater than $100,000 annually or by their terms extend more than twelve
months after the date of this Merger Agreement (other than pursuant to automatic
renewal provisions which permit cancellation without penalty upon 90 days or
less notice); (ii) pertain to the use, occupancy or acquisition of real
property; (iii) create or evidence any indebtedness or obligation with respect
to borrowed money of the Company or assumption of any direct or indirect
responsibility for the obligations of any other person; (iv) are licenses of
Company Intellectual Property to third parties and licenses of Intellectual
Property to the Company, or (v) would limit or restrict the conduct of the
Business of the Company or its affiliates in the future, including any
confidentiality, non-compete or other similar agreement.
(d) All forms of product or service warranty with respect to the
Company's products.
(e) Except as set forth on Section 4.5 of the Company Disclosure
Schedule, there is no event or occurrence with respect to any Material Contract,
the occurrence of any event which of itself or with the giving of notice or the
passage of time or both would constitute an event of default under or breach of
such Material Contract, or would permit the other party thereto to cancel or
terminate performance or seek material damages for breach ("DEFAULT") on the
part of the Company or, to the Company's knowledge, written notice of any
Default on the part of any other party, in the performance of any obligation to
be performed or paid under any Material Contract.
(f) Except as set forth in Section 4.5 of the Company Disclosure
Schedule, the execution, delivery and performance of the Merger Agreement and
the Related Agreements will not result in a Default under any Material Contract.
Section 4.6 GOVERNMENTAL CONSENTS. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority on the part of
the Company is required for the consummation of the transactions contemplated by
this Merger Agreement other than (i) filings pursuant to federal or state
securities laws in connection with the purchase and sale of the shares of the
Company's Common Stock under this Merger Agreement, (ii) the filing of required
notices and/or registration statements with the Securities and Exchange
Commission, and (iii) compliance with the Xxxx Xxxxx Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR ACT").
Section 4.7 LITIGATION. To the Company's knowledge, there is no action,
suit, proceeding or investigation pending or currently threatened against the
Company that questions the validity of this Merger Agreement or any of the
Related Agreements, or the right of the Company to enter into any of them, or to
consummate the transactions contemplated hereby or thereby, or that might
reasonably be expected to result, either individually or in the aggregate, in a
Company Material Adverse Effect, or any change in the current equity ownership
of the Company, nor has the Company received any written notice that there is
any basis for the foregoing. The foregoing includes, to the Company's knowledge,
actions pending or threatened (or any basis therefor known to the Company)
involving any of the Company's employees' use of any information or techniques
allegedly proprietary to any of their former employers in
8
connection with the Company's business or any of the Company's employees'
obligations under any confidentiality, non-compete or assignment of invention
agreements with prior employers. The Company is not a party or subject to the
provisions of any order, writ, injunction, judgment or decree of any court or
government agency or instrumentality. There is no action, suit, proceeding or
investigation by the Company currently pending or which the Company currently
intends to initiate.
Section 4.8 EMPLOYEE AGREEMENT. Each employee, officer and consultant
of the Company has executed an agreement with the Company requiring that person
to protect the confidential information of the Company and to assign to the
Company any inventions made by that person while working for the Company. Except
as set forth in Section 4.8 of the Company Disclosure Schedule, the Company has
not received any written notice or, to its knowledge, any oral notice that any
of its employees or consultants are in violation thereof.
Section 4.9 INTELLECTUAL PROPERTY.
(a) For purposes of this Section 4.9, "INTELLECTUAL PROPERTY" shall
mean all products, tools, computer programs, specifications, source code, object
code, graphics, devices, techniques, algorithms, methods, processes, procedures,
packaging, trade dress, formulae, drawings, designs, improvements, discoveries,
development and other tools, inventions (whether or not patentable or
copyrightable and whether or not reduced to practice), know-how and other
technology that have been developed or are now developed or are being developed,
produced, used, marketed or sold by the Company and all other proprietary rights
in the foregoing, including, without limitation, all trade secrets, copyrights,
and domestic and foreign letters patent, trademarks, trade names, brand names
and the registrations, applications, renewals, extensions and continuations (in
whole or in part) thereof, all goodwill associated therewith, and all rights and
causes of action for infringement, misappropriation, misuse, dilution or unfair
trade practices associated therewith.
(b) Section 4.9 of the Company Disclosure Schedule sets forth
a list and brief description of all patents, patent rights, patent applications,
trademark registrations, trademark applications, service marks, service xxxx
applications, trade names and copyright registrations, being prepared by, owned
by or registered in the name of the Company.
(c) Except as set forth in Section 4.9 of the Company Disclosure
Schedule, to the knowledge of the Company, the Company owns all right, title and
interest (free and clear of any liens or encumbrances) or possesses adequate
third-party licenses or other valid rights to use all Intellectual Property used
or held for use in connection with the business of the Company as currently
conducted, except where the failure to own or possess such could not be
reasonably likely to, individually or in the aggregate, have a Company Material
Adverse Effect.
(d) Except as set forth in Section 4.9 of the Company Disclosure
Schedule, the Company has not received any written notice that, and to the
Company's knowledge no claim has been made or asserted that, any Intellectual
Property used or product sold or offered for sale by the Company infringed or
infringes on or otherwise violated or violates the proprietary rights of any
person, and such Intellectual Property, uses, sales and offers to sell are and
have been in accordance, in all material respects, with all applicable
third-party licenses. In addition to the
9
foregoing, except as set forth in Section 4.9 of the Company Disclosure
Schedule, to the Company's knowledge, the Company is not infringing any
proprietary rights of any third party.
(e) To the knowledge of the Company, no Intellectual Property owned or
licensed by or to the Company is being used or enforced in a manner that would
result in the abandonment, cancellation or unenforceability of such Intellectual
Property other than as would not reasonably be likely, individually or in the
aggregate, to have a Material Adverse Effect.
(f) The Company has taken reasonable steps in accordance with normal
industry practice to maintain the confidentiality of its Intellectual Property.
To the knowledge of the Company (i) there has been no misappropriation of any
Intellectual Property of the Company by any person, (ii) no employee,
independent contractor or agent of the Company has misappropriated any trade
secrets or other proprietary rights of any other person and (iii) no employee,
independent contractor or agent of the Company is in material default or breach
of any term of any employment agreement, non-disclosure agreement, assignment of
invention agreement or similar agreement or contract relating in any way to the
protection, ownership, development, use or transfer of material Intellectual
Property.
Section 4.10 COMPLIANCE WITH OTHER INSTRUMENTS. (a) The Company is not
in violation or default in any material respect of any provisions of its Second
Amended and Restated Certificate of Incorporation or Restated Bylaws or of any
judgment, order, writ or decree, to which it is a party or by which it is bound;
except in each case where such default or violation could not reasonably be
expected to have a Company Material Adverse Effect.
(b) The execution, delivery and performance of the Merger Agreement and
the Related Agreements and the consummation of the transactions contemplated
hereby or thereby will not result in any such violation or default.
Section 4.11 DISCLOSURE. No representation or warranty of the Company
contained in this Merger Agreement and the Exhibits attached hereto, or any
certificate furnished or to be furnished by the Company to Parent or Merger
Subsidiary at the Closing, contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements
contained herein or therein not misleading, when read together, in light of the
circumstances under which they were made.
Section 4.12 AFFILIATE TRANSACTIONS. Other than as set forth in Section
4.12 of the Company Disclosure Schedule, the Company is not indebted, directly
or indirectly, to any of its officers or directors or to their respective
spouses or children, other than expenses or advances of expenses incurred in the
ordinary course of business or relocation expenses of employees. To the
Company's knowledge, other than as set forth in Section 4.12 of the Company
Disclosure Schedule, none of the Company's officers or directors, or any members
of their immediate families, are, directly or indirectly, indebted to the
Company or have any direct or indirect ownership interest in any firm or
corporation with which the Company is affiliated or with which the Company has a
business relationship, or any firm or corporation which competes with the
Company; except that officers, directors and/or shareholders of the Company may
own stock in (but not exceeding two percent of the outstanding capital stock of)
any publicly traded company that may compete with the Company. To the knowledge
of the Company, other than as set forth
10
in Section 4.12 of the Company Disclosure Schedule, none of the Company's
officers or directors or any members of their immediate families are, directly
or indirectly, interested in any material contract with the Company. The Company
is not a guarantor or indemnitor of any indebtedness of any other person, firm
or corporation.
Section 4.13 RIGHTS OF REGISTRATION AND FIRST OFFER. The Company has
not granted or agreed to grant any registration rights, including piggyback
rights, to any person or entity, other than pursuant to the Shareholder Rights
Agreement between Parent and the Company.
Section 4.14 CORPORATE DOCUMENTS. The Second Amended and Restated
Certificate of Incorporation and Amended and Restated Bylaws of the Company are
in the form provided to Parent. The Company has provided Parent with access to
true and complete copies of the records of proceedings of the board of directors
of the Company and its shareholders since the Company was incorporated.
Section 4.15 TITLE TO PROPERTY AND ASSETS. Other then as set forth in
Section 4.15 of the Company Disclosure Schedule, the Company owns its property
and assets free and clear of all mortgages, liens, loans and encumbrances,
except such encumbrances and liens which arise in the ordinary course of
business and do not materially impair the Company's ownership or use of such
property or assets. With respect to the property and assets it leases, the
Company is in material compliance with such leases and, to the best of its
knowledge, holds a valid leasehold interest free of any liens, claims or
encumbrances.
Section 4.16 FINANCIAL STATEMENTS. The Company has delivered to Parent
its audited financial statements (balance sheet and profit and loss statement)
as of June 30, 1999, 1998 and 1997 (the "AUDITED STATEMENTS") and internal
unaudited balance sheet of the Company at March 31, 2000 and the related income
statement for the nine-month period then ended (the "MARCH STATEMENTS," and,
collectively with the Audited Statements, the "FINANCIAL STATEMENTS") for the
periods then ended. The Financial Statements have been prepared in accordance
with generally accepted accounting principles in the United States of America
("GAAP") applied on a consistent basis throughout the periods indicated and with
each other, except as set forth in Section 4.16 of the Company Disclosure
Schedule. The Financial Statements fairly present in all material respects the
financial condition and operating results of the Company as of the dates, and
for the periods, indicated therein, subject, in the case of the March
Statements, to normal year-end audit adjustments and subject to the absence of
footnote disclosure. Except as set forth in the March Statements or Section 4.16
of the Company Disclosure Schedule, the Company has no material liabilities,
contingent or otherwise, other than (i) liabilities incurred in the ordinary
course of business subsequent to March 31, 2000, and (ii) obligations under
contracts and commitments incurred in the ordinary course of business and not
required under GAAP to be reflected in the March Statements. The Company
maintains a standard system of accounting established and administered in
accordance with GAAP.
Section 4.17 CHANGES. Since March 31, 2000, other than as set forth in
Section 4.17 of the Company Disclosure Schedule, there has not been:
(a) any change in the assets, liabilities, financial condition or
operating results of the Company from that reflected in the Financial
Statements, except changes in the ordinary course
11
of business that have not been, in the aggregate, materially adverse to the
Company; or any incurrence of any indebtedness for borrowed money, leases,
guarantees, assumptions of the indebtedness or letters of comfort or similar
instruments (other than ordinary course borrowing and repayment under the
Company's two credit agreements existing as of the date hereof and as set forth
in Section 4.5 of the Company Disclosure Schedule);
(b) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the business, properties, or
financial condition of the Company (as such business is presently conducted);
(c) any waiver or compromise by the Company of a material right or of a
material debt owed to it;
(d) any satisfaction or discharge of any lien, claim, or encumbrance or
payment of any obligation by the Company, except in the ordinary course of
business and that is not material to the business, properties or financial
condition of the Company (as such business is presently conducted);
(e) any material and adverse change to a material contract or agreement
by which the Company or any of its assets is bound or subject;
(f) any material change in any compensation arrangement or agreement
with any employee, officer, director or shareholder;
(g) any sale, assignment or transfer of any patents, trademarks,
copyrights, trade secrets or other intangible assets except pursuant to license
or other agreements entered into in the ordinary course of business;
(h) any resignation or termination of employment for any reason of any
officer or key employee of the Company; and the Company does not know of any
impending resignation or termination of employment of any such officer or key
employee;
(i) receipt of notice that there has been a loss of, or material order
cancellation by, any major customer of the Company;
(j) any mortgage, pledge, grant of a security interest or lien by the
Company with respect to any of its material properties or assets, except liens
for taxes not yet due or payable or which do not materially impair the value of
such properties or assets;
(k) any loans or guarantees made by the Company to or for the benefit
of its employees, officers or directors, or any members of their immediate
families, other than travel advances and other advances made in the ordinary
course of its business to employees, officers or directors;
(l) any declaration, setting aside or payment or other distribution in
respect to any of the Company's capital stock, or any direct or indirect
redemption, purchase, or other acquisition of any of such stock by the Company;
or
12
(m) any arrangement or commitment by the Company to do any of the
things described in this Section 4.17.
Section 4.18 EMPLOYEE BENEFIT PLANs.
(a) Section 4.18 of the Company Disclosure Schedule sets forth a
complete and correct list of all "employee benefit plans", as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and any other pension plans or employee benefit arrangements or
payroll practices (including, without limitation, severance pay, vacation pay,
company awards, salary continuation for disability, sick leave, deferred
compensation, bonus or other incentive compensation, stock option or stock
purchase arrangements or policies) maintained, or contributed to, by the Company
or any trade or business (whether or not incorporated) which is treated with the
Company as a single employer under Section 414(b), (c), (m) or (o) of the Code
("ERISA Affiliate") with respect to employees of the Company or their ERISA
Affiliates (the "COMPANY BENEFIT PLANS"). Each Company Benefit Plan is in
writing or a written summary thereof is included in Section 4.18 of the Company
Disclosure Schedule and the Company has furnished Parent with a true and
complete copy of each Company Benefit Plan document, including all amendments
thereto, and a true and complete copy of each material document prepared in
connection with each Company Benefit Plan, including, without limitation, (i) a
copy of each trust or other funding arrangement, (ii) each summary plan
description and summary of material modifications, (iii) the three most recently
filed Form 5500's, including all attachments thereto, and (iv) the most recently
prepared actuarial report and financial statement, if any, in connection with
each Company Benefit Plan. The Company does not have any express or implied
commitment (x) to create or incur liability with respect to or cause to exist
any other employee benefit plan, program or arrangement, (y) to enter into any
contract or agreement to provide compensation or benefits to any individual or
(z) to modify, change or terminate any Company Benefit Plan, other than with
respect to a modification, change or termination required by ERISA or the Code.
(b) The Company does not maintain any benefit plan which is subject to
Section 412 of the Code or Title IV of ERISA.
(c) Except with respect to the Company's 401(k) plan, none of the
Company's Benefit Plans is intended to qualify under Section 401(a) of the Code.
(d) Except as set forth on Section 4.18 of the Company Disclosure
Schedule, there has been no prohibited transaction (within the meaning of
Section 406 of ERISA or Section 4975 of the Code) with respect to any Company
Benefit Plan. The Company is not currently liable and has not previously
incurred any liability for any tax or penalty arising under Section 4971, 4972,
4975, 4979, 4980 or 4980B of the Code or Section 502 of ERISA, and no fact or
event exists which could give rise to any such liability.
Section 4.19 TAX RETURNS AND PAYMENTS. The Company has duly filed all
material foreign, federal, state and local income, franchise, excise, real and
personal property and other Tax returns and reports (including, but not limited
to, those filed on a consolidated, combined or unitary basis) required to have
been filed by the Company prior to the date hereof. All of the
13
foregoing returns and reports are true and correct in all material respects, and
the Company has paid or, prior to the Effective Time will pay, all Taxes,
interest and penalties shown on such returns or reports as being due or (except
to the extent the same are contested in good faith) claimed to be due to any
federal, state, local or other taxing authority. The Company has paid and will
pay all installments of estimated taxes due on or before the Effective Time. All
Taxes and state assessments and levies which the Company is required by law to
withhold or collect have been withheld or collected and have been paid to the
proper governmental authorities or are held by the Company for such payment. The
Company has paid or made (subject to year end audit adjustments) adequate
provision in accordance with GAAP in the financial statements of the Company for
all Tax payable in respect of all periods ending on or prior to the date of this
Merger Agreement and will have made or provided for all Taxes payable in respect
of all periods ending on or prior to the Closing Date. As of the date hereof,
all deficiencies proposed as a result of any audits have been paid or settled.
The Company has paid, collected or withheld, or caused to be paid, collected or
withheld, all amounts of Tax required to be paid, collected or withheld, other
than such Taxes for which adequate reserves (subject to year end audit
adjustments) in the Company Financial Statements have been established or which
are being contested in good faith. There are no claims or assessments pending
against the Company for any alleged deficiency in any Tax, and the Company has
not been notified in writing of any proposed Tax claims or assessments against
the Company.
Section 4.20 INSURANCE. The Company has in full force and effect the
fire and casualty insurance, business interruption insurance and all insurance
as is listed in Section 4.20 of the Company Disclosure Schedule.
Section 4.21 LABOR AGREEMENTS AND ACTIONS. The Company is not bound by
or subject to (and none of its assets or properties is bound by or subject to)
any written or oral, express or implied, contract, commitment or arrangement
with any labor union, and no labor union has requested or, to the knowledge of
the Company, has sought to represent any of the employees, representatives or
agents of the Company. There is no strike or other labor dispute involving the
Company pending, or to the knowledge of the Company threatened, which could have
a Company Material Adverse Effect, nor has the Company received written of any
labor organization activity involving its employees. To the Company's knowledge,
the employment of each officer and employee of the Company is terminable at the
will of the Company. To the best of its knowledge, the Company has complied in
all material respects with all applicable state and federal equal employment
opportunity laws and with other laws related to employment, except for such
noncompliance that will not have a Company Material Adverse Effect.
Section 4.22 CERTAIN BUSINESS PRACTICES. Neither the Company nor, to
its knowledge, any of its directors, officers, employees or agents has (i) used
any funds for unlawful contributions, gifts, entertainment or other unlawful
payments relating to political activity, (ii) made any unlawful payment to any
foreign or domestic government official or employee or to any foreign or
domestic political party or campaign or violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended, (iii) consummated any transaction,
made any payment, entered into any agreement or arrangement or taken any other
action in violation of Section 1128B(b) of the Social Security Act, as amended,
or (iv) made any other unlawful payment.
14
Section 4.23 COMPLIANCE WITH APPLICABLE LAWS. To the Company's
knowledge, the business of the Company has not been, and is not currently being,
conducted in violation of any federal, state, local or foreign law, statute,
ordinance, rule, regulation, judgment, order, injunction, decree, arbitration
award, agency requirement, license or permit of any Governmental Entity
(collectively, "COMPANY PERMITS") and no product has been exported in violation
of the applicable provisions of the U.S. export control laws except, in each
case, where the failure to comply would not have a Company Material Adverse
Effect. To the Company's knowledge, no investigation or review by any
Governmental Entity with respect to the Company is pending or threatened, nor
has any Governmental Entity indicated an intention to conduct the same. No
material change is required in the Company's processes, properties or procedures
in connection with any such Company Permits, and the Company has not received
any written notice of any material noncompliance with any such Company Permits
that has not been cured as of the date hereof. The Company has all permits,
licenses, franchises, variances, exemptions, orders and other governmental
authorizations, consents and approvals necessary to conduct its business as
presently conducted, except in each case where the absence of any of the
foregoing would not have a Company Material Adverse Effect.
Section 4.24 REAL PROPERTY HOLDING CORPORATION. The Company is not a
United States real property holding corporation within the meaning of Internal
Revenue Code Section 897(c)(2) and any regulations promulgated thereunder.
Section 4.25 ENVIRONMENTAL AND SAFETY LAWS. Except as disclosed in
Section 4.25 of the Company Disclosure Schedule:
(a) The Company (i) is in material compliance with all Environmental
Laws (as defined below ), (ii) has not received written notice of any asserted
liability or any liability (including liability with respect to current or
former subsidiaries or operations), with respect to any Environmental Laws,
(iii) holds or has applied in a timely manner for all Environmental Permits (as
defined below) applicable to its business and properties and (iv) is in material
compliance with its Environmental Permits;
(b) the Company has not received any written notice, demand, letter,
claim or request for information alleging that it is or may be in violation of,
or liable under, any Environmental Law;
(c) the Company has not entered into or agreed (i) to any consent,
decree or order and is not subject to any judgment, decree or judicial order
relating to compliance with or liability under Environmental Laws, and, to the
knowledge of the Company, no investigation, litigation or other proceeding is
pending or threatened in writing with respect thereto, or (ii) to indemnify any
third party in connection with any threatened or asserted claim for any
liability under any Environmental Law; and
(d) none of the real property owned or leased by the Company is listed
or, to the knowledge of the Company, proposed for listing on the "National
Priorities List" under CERCLA, as updated through the date hereof, or any
similar state list of sites requiring investigation or cleanup.
15
For purposes of this Merger Agreement:
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended as of the date hereof.
"Environmental Laws" means any applicable federal, state, local or
foreign statute, law, ordinance, regulation, rule, code, treaty, writ or order
and any enforceable judicial or administrative interpretation thereof, including
any judicial or administrative order, consent decree, judgment, stipulation,
injunction, permit, authorization, policy, opinion, or agency requirement, in
each case having the force and effect of law, relating to the pollution,
protection, investigation or restoration of the environment, including those
relating to the use, handling, presence, transportation, treatment, storage,
disposal, release, threatened release or discharge of Hazardous Materials.
"Environmental Permits" means any permit, approval, identification
number, license and other authorization required under any Environmental Law.
"Hazardous Materials" means (i) any petroleum, petroleum products,
by-products or breakdown products, radioactive materials, asbestos-containing
materials or polychlorinated biphenyls or (ii) any chemical, material or other
substance defined or regulated as toxic or hazardous or as a pollutant or
contaminant or waste under any Environmental Law.
Section 4.26 TAX-FREE EXCHANGE. To the knowledge of the Company,
neither the Company nor any of its Affiliates has taken or agreed to take any
action that would prevent the Merger from constituting a transaction qualifying
under Section 368(a) of the Code. The Company is not aware of any agreement,
plan or other circumstance that would prevent the Merger from qualifying under
Section 368(a) of the Code.
Section 4.27 BROKERS. Except for Broadview International LLC (the
"COMPANY'S FINANCIAL ADVISOR"), no agent, broker, finder, investment banker or
other firm or person is or will be entitled to any broker's or finder's fee or
other similar commission or other fee in connection with the transactions
contemplated by this Merger Agreement based upon arrangements made by or on
behalf of the Company.
Section 4.28 BOARD APPROVAL. The Board of Directors of the Company by
resolutions duly adopted by unanimous vote of those voting at a meeting duly
called and held and not subsequently rescinded or modified in any way (the
"COMPANY BOARD APPROVAL"), has duly (i) determined that this Merger Agreement
and the Merger are fair to and in the best interests of the Company and its
shareholders, (ii) approved this Merger Agreement and the Merger and (iii)
recommended that the shareholders of the Company adopt this Merger Agreement and
approve the Merger and directed that this Merger Agreement and the Transactions
be submitted for consideration by the Company's shareholders at a meeting of
such shareholders (or by action of written consent). The Company Board Approval
constitutes approval of this Merger Agreement and the Merger for purposes of
Section 203 of the DGCL. To the knowledge of the Company, except for Section 203
of the DGCL (which has been rendered inapplicable by actions of the Board of
Directors of the Company), no state takeover statute is applicable to the Merger
or the other Transactions.
16
Section 4.29 SOLE REPRESENTATIONS. The foregoing constitutes the sole
representations and warranties made by the Company under this Merger Agreement
and in connection with the transactions contemplated hereby. The Company does
not make and hereby disclaims any other representations or warranties.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUBSIDIARY
Parent and Merger Subsidiary jointly and severally represent and
warrant to the Company as follows:
Section 5.1 ORGANIZATION AND QUALIFICATION. Parent is a corporation
duly organized, validly existing and in good standing under the laws of the
State of New York. Merger Subsidiary is duly organized, validly existing and in
good standing (to the extent such concept is applicable) under the laws of the
State of Delaware. Each of Parent and Merger Subsidiary has the requisite
corporate power and authority to carry on its business as it is now being
conducted and is duly qualified or licensed to do business, and is in good
standing, in each jurisdiction where the character of its properties owned or
held under lease or the nature of its activities makes such qualification
necessary, except where the failure to be so qualified will not have a Parent
Material Adverse Effect (as defined below). Parent has heretofore made available
to the Company a complete and correct copy of the charter and bylaws, each as
amended to the date hereof, of Parent and Merger Subsidiary.
Section 5.2 CAPITALIZATION. The authorized capital stock of Parent
consists of 1,200,000,000 shares of the Parent Common Stock and 10,000,000
shares of preferred stock, par value $100.00 per share (the "PARENT PREFERRED
STOCK"). As of March 31, 2000: (a) 302,823,248 shares of Parent Common Stock
were issued and outstanding, all of which were validly issued, fully paid and
non-assessable, (b) 25,338,330 shares of Parent Common Stock were held in the
treasury of Parent, and (c) 118,003 shares of Parent Preferred Stock were
outstanding. As of May 18, 2000: (a) 11.1 million options to purchase Parent
Common Stock were outstanding and (b) an aggregate of 3.3 million shares of
Parent Common Stock were reserved for issuance under stock options issued
pursuant to the Parent's employee and director stock option plans (the "PARENT
STOCK PLANS"). Except as set forth in this Section 5.2, there are no options,
warrants or other rights, agreements, arrangements or commitments of any
character relating to the issued or unissued capital stock of Parent or
obligating Parent to issue or sell any shares of capital stock of, or other
equity interests in, Parent. All shares of capital stock of Parent subject to
issuance pursuant to the Parent Stock Plans, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are issuable,
will be duly authorized, validly issued, fully paid and non-assessable. All of
the shares of Parent Common Stock issuable upon consummation of the transactions
contemplated hereby will be duly authorized, validly issued, fully paid and
non-assessable and the issuance thereof will not be subject to any preemptive or
similar right. The authorized capital stock of Merger Subsidiary consists of
1,000 shares of common stock, par value $.01 per share of which 1,000 shares are
outstanding and held beneficially and of record by Parent.
17
Section 5.3 AUTHORITY RELATIVE TO THIS MERGER AGREEMENT. Each of Parent
and Merger Subsidiary has all necessary power and authority to execute and
deliver this Merger Agreement, to perform its obligations hereunder and to
consummate the Merger and the other transactions contemplated hereby. The
execution and delivery of this Merger Agreement by Parent and Merger Subsidiary
and the consummation by Parent and Merger Subsidiary of the Merger and the other
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action and no other corporate proceedings on the part of
Parent or Merger Subsidiary are necessary to authorize the execution and
delivery of this Merger Agreement or to consummate the Merger and the other
transactions contemplated hereby other than, with respect to the Merger, the
filing and recordation of appropriate merger documents as required by the DGCL.
This Merger Agreement has been duly and validly executed and delivered by Parent
and Merger Subsidiary and, assuming the due authorization, execution and
delivery by the Company, this Merger Agreement constitutes a legal, valid and
binding obligation of Parent and Merger Subsidiary, enforceable against Parent
and Merger Subsidiary in accordance with its terms.
Section 5.4 NO CONFLICTS, REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Merger Agreement by Parent and
Merger Subsidiary does not, and the performance of this Merger Agreement by
Parent and Merger Subsidiary will not: (i) conflict with or violate the
certificate of incorporation or by-laws of Parent and Merger Subsidiary, (ii)
(assuming the consents, approvals, authorizations and waivers specified in
Section 5.4(b) have been received and the waiting periods referred to therein
have expired, and any condition precedent to such consent, approval,
authorization, or waiver has been satisfied), conflict with or violate any Laws
applicable to Parent or Merger Subsidiary or by which any property or asset of
Parent or Merger Subsidiary is bound or affected, or (iii) result in any breach
of or constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or give to others any right of termination,
amendment, acceleration, or cancellation of, or result in the creation of a lien
or other encumbrance on any property or asset of Parent or Merger Subsidiary
pursuant to any note, bond, mortgage, indenture or credit agreement, or, to the
Parent's knowledge as of the date of this Merger Agreement, any other contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which Parent or Merger Subsidiary is a party or by which Parent or Merger
Subsidiary or any property or asset of the Parent or Merger Subsidiary is bound
or affected, except in the case of clause (iii) for any such conflicts,
violations, breaches, defaults or other occurrences of the type referred to
above which would not have a Parent Material Adverse Effect or would not prevent
or materially delay the consummation of the Merger.
(b) The execution and delivery of this Merger Agreement by Parent and
Merger Subsidiary does not, and the performance of this Merger Agreement by
Parent and Merger Subsidiary will not, require any consent, approval,
authorization, waiver or permit of, or filing with or notification to, any
Governmental Entity, except for applicable requirements of the Securities
Exchange Act of 1934 (the "Exchange Act"), as amended, the Securities Act of
1933, as amended (the "Securities Act"), blue sky laws, the HSR Act, and filing
and recordation of the Certificate of Merger as required by DGCL and except
where failure to obtain such consents, approvals, authorizations or permits, or
to make such filings or notifications, would not have a
18
Parent Material Adverse Effect or would not prevent or materially delay the
consummation of the Merger.
Section 5.5 PARENT REPORTS AND FINANCIAL STATEMENTS.
(a) Parent has filed with the SEC all forms, reports, schedules,
registration statements and definitive proxy statements (the "PARENT SEC
REPORTS") required to be filed by it with the SEC since December 31, 1997. As of
their respective dates, Parent SEC Reports complied as to form in all material
respects with the requirements of the Exchange Act or the Securities Act, as the
case may be, and the rules and regulations of the SEC thereunder applicable to
the Parent SEC Reports. As of their respective dates and as of the date any
information from such Parent SEC Reports has been incorporated by reference, the
Parent SEC Reports did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading. Parent has filed all material contracts and agreements and
other documents or instruments required to be filed as exhibits to the Parent
SEC Reports.
(b) The consolidated balance sheets of Parent as of December 31, 1999
and 1998, the three month period ended March 31, 2000 and the related
consolidated statements of operations, shareholders' equity and cash flows for
each of the years and, as applicable, quarter then ended (including the related
notes and schedules thereto) contained in Parent's Form 10-K/A for the year
ended December 31, 1999 and contained in Parent's Form 10-Q for the quarter
ended March 31, 2000 (the "PARENT FINANCIAL STATEMENTS") present fairly, in all
material respects, the consolidated financial position and the consolidated
results of operations and cash flows of Parent and its consolidated subsidiaries
as of the dates or for the periods presented therein in conformity with GAAP
applied on a consistent basis during the periods involved except as otherwise
noted therein, including in the related notes and except for year end audit
adjustments and to the absence of footnote disclosure for the financial
statements included within Parent's Form 10-Q for the three months ended March
31, 2000.
Section 5.6 TAX-FREE EXCHANGE. To the knowledge of Parent, neither
Parent nor any of its Affiliates has taken or agreed to take any action that
would prevent the Merger from constituting a transaction qualifying under
Section 368(a) of the Code. Parent is not aware of any agreement, plan or other
circumstance that would prevent the Merger from qualifying under Section 368(a)
of the Code.
Section 5.7 BROKERS. Except for Xxxxxxx, Xxxxx & Co. (the "PARENT'S
FINANCIAL ADVISOR") whose fees shall be paid by Parent, no agent, broker,
finder, investment banker or other firm or Person is or will be entitled to any
broker's or finder's fee or other similar commission or fee in connection with
the transactions contemplated by this Merger Agreement based upon arrangements
made by or on behalf of Parent.
Section 5.8 BOARD APPROVAL. The Board of Directors of Parent and Merger
Subsidiary by written consents or resolutions duly adopted at meetings duly
called and held have each duly approved the Merger and the transactions
contemplated by this Merger Agreement.
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Section 5.9 OPERATIONS OF MERGER SUBSIDIARY. Merger Subsidiary is a
direct, wholly owned subsidiary of Parent, was formed solely for the purpose of
engaging in the type of transactions contemplated by this Merger Agreement, has
engaged in no other business activities and has conducted its operations only as
contemplated by this Merger Agreement.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.1 CONDUCT OF THE BUSINESS PENDING THE EFFECTIVE TIME. From
and after the date hereof, prior to the Effective Time, except as set forth in
Section 6.1 to the Company Disclosure Schedule or as contemplated by this Merger
Agreement or required by Law, or unless Parent shall otherwise agree in writing,
the Company covenants and agrees that it shall carry on its business in the
usual, regular and ordinary course in substantially the same manner as
heretofore conducted (which shall be deemed to include in a manner consistent
with the budgets and plans heretofore made available to Parent, including all
capital expenditure and plant expansion plans), use all reasonable efforts to
preserve intact its present business organizations, keep available the services
of its employees and consultants and preserve its relationships and goodwill
with customers, suppliers, licensors, licensees, distributors and others having
business dealings with the Company and to protect its Intellectual Property to
the end that its goodwill and on-going businesses shall not be impaired in any
material respect at the Effective Time.
Unless Parent shall otherwise agree in writing and except as otherwise
set forth in Section 6.1 of the Company Disclosure Schedule, prior to the
Effective Time, the Company shall not:
(i) declare, set aside, or pay any dividends on, or make any
other distributions in respect of, any of its capital stock, split, combine or
reclassify any of its capital stock, purchase, redeem or otherwise acquire any
shares of capital stock of the Company or any other equity securities thereof or
any rights, warrants, or options to acquire any such shares or other securities;
(ii) grant, award or enter into any compensation or change of
control arrangement with any employee of the Company, other than in the ordinary
course of business of the Company, consistent with past practices, or change of
control arrangement with any employee of the Company;
(iii) issue, deliver, sell, pledge, dispose of or otherwise
encumber any shares of its capital stock including any Company Stock Options,
any other voting securities of the Company or any securities convertible into,
or any rights, warrants or options to acquire, any such shares or voting
securities, other than (A) the issuance of Company Common Stock upon the
exercise of Company Stock Options outstanding on the date of this Merger
Agreement or (B) within the ten-day period following the date of this Merger
Agreement, the issuance of additional Company Stock Options pursuant to the
Company's 1994 Stock Option Plan to purchase up to 3,280,397 shares of Company
Common Stock granted on the date hereof; or amend the terms of any such
securities, rights, warrants or options or, except as set forth in
20
Section 4.18 of the Company Disclosure Schedule take any action to accelerate
the vesting thereof;
(iv)amend the certificate of incorporation or by-laws of the
Company;
(v) acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial portion of the assets of, or by any other
manner, any business or any corporation, partnership, joint venture, association
or other business organization or division thereof, or any assets that are
material, individually or in the aggregate, to the Company, except, in any such
case, in the ordinary course of business;
(vi) subject to a lien or sell, lease, license or otherwise
dispose of or transfer any of its properties or assets or any Intellectual
Property, except for sales of products in the ordinary course of business;
(vii) incur or modify any indebtedness for borrowed money or
guarantee any such indebtedness of another person, issue or sell any debt
securities of the Company, guarantee any debt securities of another person, or
enter into any "keep well" or other agreement to maintain any financial
condition of another person, except, in any such case, for borrowings or other
transactions incurred in the ordinary course of business under the Company's
existing equipment line of credit including to repay existing indebtedness
pursuant to the terms thereof, enter into any leases, guarantees, assumptions of
indebtedness or letters of comfort or similar instruments or make any loans,
advances or capital contributions to, or investments in, any other person, or
compromise any material claims or litigation;
(viii) take any action or omit to take any action that would
cause any of its representations and warranties herein to become untrue in any
material respect; and
(ix) authorize any of, or commit or agree to take any of, the
foregoing actions; provided however, the Company may, before or after the
Closing Date, award or agree to award up to $2,000,000 in signing or other
bonuses, stock options or other compensation to individuals recruited as
employees of the Company after the date of this Merger Agreement (and, if and to
the extent any portion of such $2,000,000 is granted in the form of stock
options or other equity compensation, then any such grant would be subject to
Parent approval and Parent will use best efforts to make available such options
for the benefit of such employees).
(b) Within 10 business days after the end of each month following the
date of this Merger Agreement, the Company shall deliver to Parent financial
statements presented on a basis consistent with the March Statements and copies
of any Material Contracts entered into in accordance with this Merger Agreement
during the preceding month. The Company shall promptly provide the Parent copies
of all filings made by the Company with any Governmental Entity in connection
with this Merger Agreement and the transactions contemplated hereby.
(c) The Company shall, before settling or compromising any litigation,
claim, income tax or other material liability of the Company, consult with
Parent and its advisors as to the positions and elections that will be taken or
made with respect to such matter and shall not enter
21
into any such settlement or compromise without the consent of Parent, which will
not be unreasonably withheld or delayed.
Section 6.2 COMPANY SHAREHOLDER VOTE. Within 10 business days after the
date of this Merger Agreement, the Company shall take all action reasonably
necessary, in accordance with applicable law and its certificate of
incorporation and by-laws, to convene a special meeting of its shareholders or
obtain the written consent of its shareholders required under the DGCL to
approve the Merger and this Merger Agreement and the transactions contemplated
hereby. Parent will make a representative available to the Company's
shareholders to answer any questions such shareholders may have regarding the
Parent's business, management and financial affairs.
Section 6.3 ACQUISITION PROPOSALS. The Company shall not nor shall it
authorize any of its officers, directors, employees, agents or representatives
(including, any investment banker, attorney or accountant retained by the
Company) to initiate, continue, solicit or encourage, directly or indirectly,
any inquiries or the making of any proposal or offer to shareholders of the
Company, with respect to a merger, consolidation or similar transaction
involving, or any purchase of all or any significant portion of the assets or
any equity securities of, the Company (any such proposal or offer being
hereinafter referred to as an "ACQUISITION PROPOSAL") or engage in any
negotiations concerning, or provide any confidential information or data to, or
have any discussions with, any person relating to an Acquisition Proposal, or
otherwise knowingly facilitate any effort or attempt to make or implement an
Acquisition Proposal or enter into any agreement or understanding with any other
person or entity with the intent to effect any Acquisition Proposal. The Company
will notify Parent of any written Acquisition Proposals or oral Acquisition
Proposals made to any officer of the Company which in either event includes the
value of the Acquisition Proposal. Promptly after the execution hereof, the
Company will request each person which has heretofore executed a confidentiality
agreement in connection with its consideration of acquiring the Company or any
portion thereof to return or destroy all confidential information heretofore
furnished to such person by or on behalf of the Company.
Section 6.4 SECTION 368(a). The Merger is intended to qualify under
Section 368(a) of the Code. From and after the date of this Merger Agreement and
until the Effective Time, the parties shall use their respective reasonable best
efforts to cause the Merger to so qualify, and will not knowingly take any
action, cause any action to be taken, fail to take any action or cause any
action to fail to be taken which action or failure to act could prevent the
Merger from qualifying under the provisions of Section 368(a) of the Code.
Section 6.5 CONSENTS. The Company shall use its reasonable best efforts
to obtain all consents referenced in Section 4.5 of the Company Disclosure
Schedule and identified with an asterisk as a "required consent for closing".
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 ACCESS TO INFORMATION. From the date hereof through the
Effective Time, the Company shall afford to Parent and Parent's accountants,
counsel and other representatives
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full and reasonable access during normal business hours and upon reasonable
advance notice to its properties, books, contracts, commitments, records and
personnel and, during such period, shall furnish promptly to Parent (i) a copy
of each report, and other document filed or received by it pursuant to the
requirements of the HSR Act, and (ii) all other information concerning its
business (including research and development and manufacturing processes),
properties and personnel as Parent may reasonably request; provided however,
that all such access shall be coordinated exclusively through the Company's
President and Chief Executive Officer. Parent shall hold, and shall cause its
employees, agents and representatives to hold, in strict confidence all such
information in accordance with the terms of the Non-Disclosure Agreement dated
February 29, 1999, as amended, between Parent and the Company, which shall
remain in full force and effect in accordance with the terms thereof, including,
in the event of termination of this Merger Agreement. Parent and its
accountants, counsel and other representatives shall, in the exercise of the
rights described in this Section 7.1, conduct such activities in a manner that
avoids any undue disruption to or interference with the operation of the
business of the Company.
Section 7.2 REPRESENTATIONS OF HOLDERS OF COMPANY COMMON STOCK. Prior
to the Effective Time, each holder of Company Common Stock will execute and
deliver to Parent an agreement in the form set forth on EXHIBIT 7.2 hereto
acknowledging that the shares of Parent Common Stock representing the Merger
Consideration have not been registered under the Securities Act of 1933, as
amended, or any applicable state securities laws, that such shares are being
acquired for investment and not with a view to distribution, that the
certificates representing such shares will bear a legend restricting their
transferability and other customary representations in a transaction not
registered under the Securities Act.
Section 7.3 FURTHER ACTION; CONSENTS; FILINGS.
(a) Upon the terms and subject to the conditions hereof, each of the
parties hereto shall use its reasonable best efforts to (i) take, or cause to be
taken, all appropriate action and do, or cause to be done, all things necessary,
proper or advisable under applicable Law or otherwise to consummate and make
effective the Merger and the other transactions contemplated by this Merger
Agreement, (ii) obtain from Governmental Entities any consents, licenses,
permits, waivers, approvals, authorizations or orders required to be obtained or
made by Parent or the Company or any of their subsidiaries in connection with
the authorization, execution and delivery of this Merger Agreement and the
consummation of the Merger and the other transactions contemplated by this
Merger Agreement and (iii) make all necessary filings, and thereafter make any
other required submissions, with respect to this Merger Agreement, the Merger
and the other transactions contemplated by this Merger Agreement that are
required under (A) the Exchange Act and the Securities Act and the rules and
regulations thereunder and any other applicable federal or state securities
laws, (B) the HSR Act, and (C) any other applicable Law. The parties hereto
shall cooperate with each other in connection with the making of all such
filings, including by providing copies of all such documents to the nonfiling
party and its advisors prior to filing and, if requested, by accepting all
reasonable additions, deletions or changes suggested in connection therewith.
23
(b) Parent and the Company shall, and the Company shall cause its
Affiliates which are required to do so to, file as soon as practicable after the
date of this Merger Agreement but in no event more than fifteen business days
after the date of this Merger Agreement, notifications under the HSR Act and any
other applications or notices required under other Merger Control Laws and shall
respond as promptly as practicable to all inquiries or requests that may be made
pursuant to any Merger Control Laws for additional information or documentation
and shall respond as promptly as practicable to all inquiries and requests
received from any Governmental Entity in connection with antitrust matters. The
parties shall cooperate reasonably with each other in connection with the making
of all such filings or responses, including providing copies of all such
documents to the other party and its advisors prior to filing or responding.
Each of Parent, Merger Subsidiary and the Company, to the extent applicable,
further agrees to file contemporaneously with the filing of the applications any
requests for waivers of applicable Governmental Entities as may reasonably be
required to expeditiously prosecute such waiver requests and to diligently
submit any additional information or amendments for which the Governmental
Entity may reasonably ask with respect to such waiver requests.
Section 7.4 EMPLOYEE AND OTHER ARRANGEMENTS.
(a) Prior to the Effective Time, the Company shall use best efforts to
cause each employee of the Company to enter into an agreement with Parent in the
form of Exhibit C-1 to this Merger Agreement agreeing that such employee shall
preserve the confidentiality of the proprietary information of the Company and
the Parent and their affiliates, that all inventions of employee as an employee
of the Company or any of its affiliates shall be automatically assigned to
Parent and that such employee shall not compete with the Company with such terms
as are customary for employees of Parent.
(b) Prior to the Effective Time, the Principal Shareholder shall also
enter into an employment agreement with Parent in the form of EXHIBIT C-2 to
this Merger Agreement for a term of two years with an agreement not to compete
for five years after the date of this Merger Agreement.
(c) Promptly after the date hereof, the Company shall use best efforts
to cause the employees set forth on EXHIBIT C-3 to enter into an agreement
similar in form to EXHIBIT C-2 (as adjusted for position and compensation).
Section 7.5 PUBLIC ANNOUNCEMENTS. On or before the Closing Date, Parent
and the Company shall not (nor shall they permit any of their respective
Affiliates to), without prior consultation with the other party and such other
party's review of and consent to any public announcement concerning the
transactions contemplated by this Merger Agreement, issue any press release or
make any public announcement with respect to such transactions during such
period, and Parent and the Company shall, to the extent practicable, allow the
other party reasonable time to review and comment on such release or
announcement in advance of its issuance and use reasonable efforts in good faith
to reflect the reasonable and good faith comments of such other party, provided,
however, no party shall be prevented from making any disclosure required by law
at the time so required because of any delay on the part of the other party. The
parties intend that the initial announcement of the terms of the transactions
24
contemplated by this Merger Agreement shall be made by joint press release of
Parent and the Company on or about the date of execution and delivery hereof.
Section 7.6 COOPERATION. The parties shall cooperate in the integration
of Parent's acquisition of the Company, including preparing for the prompt and
orderly transition of employees, customers and suppliers of the Company's
business.
Section 7.7 NOTICES OF BREACH. The Company shall give prompt notice to
Parent, and Parent or Merger Subsidiary shall give prompt notice to the Company,
of (i) any representation or warranty made by it contained in this Merger
Agreement which has after the date hereof become untrue or inaccurate in any
material respect, or (ii) the failure after the date hereof by it to comply with
or satisfy in any material respect any covenant, condition, or agreement to be
complied with or satisfied by it under this Merger Agreement; provided, however,
that such notification shall be given prior to the Closing and shall not excuse
or otherwise affect the representations, warranties, covenants or agreements of
the parties or the conditions to the obligations of the parties under this
Merger Agreement.
Section 7.8 REGISTRATION OF OPTIONS. No later than fifteen (15) days
after the Effective Time, the Parent Common Shares subject to Company Stock
Options will be covered by an effective registration statement on Form S-8 (or
any successor form) or another appropriate form, and Parent shall use its
reasonable best efforts to maintain the effectiveness of such registration
statement or registration statements for as long as substitute Parent Company
Options remain outstanding. In addition, Parent shall use all reasonable efforts
to cause the shares of Parent Common Stock subject to Company Stock Options to
be listed on the NYSE.
Section 7.9 APPOINTMENT OF SHAREHOLDER REPRESENTATIVE. In the event the
Merger is approved by the shareholders of the Company in accordance with the
DGCL, upon and by such approval, and without further act of any shareholder,
each shareholder shall be deemed to have appointed and accepted the Principal
Shareholder (the "SHAREHOLDER REPRESENTATIVE"), as such shareholder's
representative and true and lawful attorney-in-fact and agent to act in such
shareholder's name, place and stead to take any actions which may be necessary
and desirable with respect to the Post-Closing Contingent Consideration, and to
execute in the name and on behalf of such shareholder any agreement,
certificate, instrument or document to be delivered by the shareholders in
connection with the Post-Closing Contingent Consideration. If the Shareholder
Representative shall resign, die, or become unable to act as the Shareholder
Representative, Xxxx Xxxxxxxx shall automatically be appointed as a replacement.
Any such successor Shareholder Representative shall have the same powers and
duties as if appointed as the original Shareholder Representative hereunder. The
Shareholder Representative or the shareholders shall promptly notify Parent of
the appointment of a successor Shareholder Representative. By approval of the
Merger as aforesaid, each shareholder of the Company (other than the Shareholder
Representative) agrees to jointly and severally, indemnify the Shareholder
Representative for, and hold him harmless against, any loss, liability, claim or
expense, including reasonable attorney's fees, arising out of or in connection
with his duties as Shareholder Representative under this Merger Agreement,
including the costs and expenses of defending himself against any such loss,
liability, claim or expense in connection herewith, unless such loss, liability,
claim or expense shall have been determined by a court of competent jurisdiction
to be a result of the Shareholder Representative's gross negligence or
intentional misconduct.
25
Section 7.10 CERTAIN EMPLOYEE BENEFITS MATTERS. For a period of two
years following the Effective Time and effective upon the Merger, Parent shall,
or shall cause the Surviving Corporation to, provide medical, 401(k), life and
disability benefits, cash compensation and other benefits to Surviving
Corporation employees that, in the aggregate, are comparable to the medical,
401(k), life and disability benefits cash compensation and other benefits that
were provided to such Surviving Corporation employees under the Company Benefit
Plans as in effect immediately prior to the Effective Time and that have been
disclosed or made available to Parent, other than employee benefit plans,
programs, contracts or arrangements providing for stock options, stock purchase
rights, restricted stock, phantom stock or other stock-based compensation.
Section 7.11 DIRECTORS' AND OFFICERS' INDEMNIFICATION AND INSURANCE.
(a) The By-Laws of the Surviving Corporation shall contain the
respective provisions that are set forth, as of the date of this Merger
Agreement, in Section 10 of the Company's By-Laws, which provisions shall not be
amended, repealed or otherwise modified for a period of six years from the
Effective Time in any manner that would affect adversely the rights thereunder
of individuals who at or at any time prior to the Effective Time were directors
or officers of the Company.
(b) For the period of six years after the Effective Time,
Parent shall cause to be maintained in effect a directors' and officers'
liability insurance policy, including terms and conditions that are no less
advantageous to the insured directors and officers than are contained in the
Company's current liability policy and with policy coverage for such six-year
period and in an amount at least equal to the coverage amount included in the
Company's current policy.
(c) In the event the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into any other person and
shall not be the continuing or surviving corporation or entity in such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any person, then, and in each case, proper provision
shall be made so that the successors and assigns of the Surviving Corporation
honor the indemnification obligations set forth in this Section 7.11.
(d) For a period of at least six years after the Effective
Time, Parent shall cause the certificate of incorporation of the Surviving
Corporation to continue to include a provision substantially similar to Article
SIXTH of the Certificate of Incorporation of the Company for the benefit of all
directors and officers of the Company prior to the Effective Time.
Section 7.12 BLUE SKY LAWS. Parent shall take such steps as may be
necessary to comply with the securities and blue sky laws of all jurisdictions
which are applicable to the issuance of the Parent Common Stock pursuant hereto.
The Company shall use its reasonable best efforts to assist Parent as may be
necessary to comply with the securities and blue sky laws of all jurisdictions
which are applicable in connection with the issuance of Parent Common Stock
pursuant hereto.
Section 7.13 DECLARATION OF REGISTRATION RIGHTS. Parent agrees that the
shareholders of the Company receiving Common Stock in the Merger shall be
entitled to the registration rights
26
set forth in the Declaration of Registration Rights attached hereto as EXHIBIT
D. In addition, Parent shall use all reasonable efforts to cause the shares of
Parent Common Stock to be issued in the Merger to be listed on the NYSE.
Section 7.14 PARENT FUNDING OBLIGATIONS.
(a) Parent hereby covenants and agrees that upon termination of this
Merger Agreement, Parent will reimburse all direct costs and expenses reasonably
incurred by the Company in connection with its performance of (i) the 3D Switch
Proposal previously provided by the Company to Parent (Xxxxxxx Xxx March 15,
2000) and (ii) the milestones set forth in EXHIBIT B hereto. Such expenses shall
include all costs associated with the purchase of equipment required in
connection with the foregoing as well as expenses related to the hiring and/or
termination (either of which shall occur on or before January 31, 2001) of
employees and consultants associated with the foregoing. Parent's aggregate
reimbursement obligations in respect of the foregoing shall not exceed $5
million assuming that such Merger Agreement termination occurs prior to June 30,
2000. In the event the Closing is extended beyond June 30, 2000, Parent's
reimbursement obligation may be increased but only if and to the extent that the
Company is directed by Parent in writing to undertake further activity in
connection with the 3D Switch Proposal and/or the milestones set forth on
EXHIBIT B hereto. Notwithstanding the foregoing, Parent shall not have any
reimbursement obligation under this Section 7.14(a) in the event that Parent and
the Company enter into a mutually acceptable agreement, separate from this
Merger Agreement, pertaining to the Company's completion of the 3D Switch
Proposal and/or the milestones set forth on EXHIBIT B, within 15 days of the
termination of this Merger Agreement. In the event such agreement is not entered
into within such 15-day period, Parent shall make immediate payment of such
reimbursement amount and the Company shall assign and transfer to Parent all
equipment purchased in connection with the foregoing and covered in full by such
reimbursement amount.
(b) Parent further covenants and agrees that it shall provide the
Surviving Corporation on a timely basis with funding sufficient to cover the
operating expenses and capital expenditure requirements of the Surviving
Corporation reasonably required in order to perform the milestones set forth on
Exhibit B on or before January 31, 2001; provided that such expenses shall not
exceed $6 million in the aggregate without approval of the Board of Directors of
the Surviving Corporation.
ARTICLE VIII
CONDITIONS PRECEDENT
Section 8.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligations of each party to effect the Merger shall be subject
to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) This Merger Agreement and the transactions contemplated
hereby shall have been approved and adopted by the requisite vote or written
consent of the holders of the Company Common Stock;
27
(b) The waiting period applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated and any other
consents from Governmental Entities and other third parties which in any case
are required to be received prior to the Effective Time with respect to the
transactions contemplated hereby shall have been received; and
(c) The consummation of the Merger shall not be restrained,
enjoined or prohibited by any order, judgment, decree, injunction or ruling of a
court of competent jurisdiction; provided, however, that the parties shall
comply with the provisions of Section 7.3 and shall further use their best
efforts to cause any such order, judgment, decree, injunction or ruling to be
vacated or lifted.
Section 8.2 CONDITIONS TO OBLIGATION OF THE COMPANY TO EFFECT THE
MERGER. The obligation of the Company to effect the Merger shall be subject to
the fulfillment at or prior to the Effective Time of the additional conditions,
unless waived by the Company, that:
(a) Parent and Merger Subsidiary shall have performed in all
material respects their respective agreements and covenants contained in this
Merger Agreement required to be performed at or prior to the Effective Time and
the representations and warranties of Parent and Merger Subsidiary contained in
this Merger Agreement shall be true when made and (except for representations
and warranties made as of a specified date, which need only be true as of such
date) at and as of the Effective Time as if made at and as of such time, except
as contemplated by this Merger Agreement and except for inaccuracies in
representations and warranties and failures to perform their respective
agreements that in the aggregate do not constitute a Parent Material Adverse
Effect; and the Company shall have received a certificate of an officer of
Parent and of Merger Subsidiary to that effect.
(b) The Company shall have received from Xxxxxx, Hall &
Xxxxxxx, counsel to the Company, or counsel to Parent, on the Closing Date, a
written opinion dated as of such date that the Merger qualifies as a
reorganization within the meaning of Section 368(a) of the Code.
(c) Parent shall have executed and delivered the Declaration
of Registration Rights attached as EXHIBIT D hereto.
(d) The Related Agreements referred to in Section 7.4(b) shall
have been duly authorized, executed and delivered by parties thereto other than
the Company and shall be in full force and effect.
Section 8.3 CONDITIONS TO OBLIGATIONS OF PARENT AND MERGER SUBSIDIARY
TO EFFECT THE MERGER. The obligations of Parent and Merger Subsidiary to effect
the Merger shall be subject to the fulfillment at or prior to the Effective Time
of the additional following conditions, unless waived by Parent:
(a) The Company shall have performed in all respects its
agreements contained in this Merger Agreement required to be performed at or
prior to the Effective Time
28
and the representations and warranties of the Company contained in this Merger
Agreement shall be true when made and (except for representations and warranties
made as of a specified date, which need only be true as of such date) at and as
of the Effective Time as if made at and as of such time, except as contemplated
by this Merger Agreement and except for inaccuracies in representations and
warranties and failures to perform its agreements that in the aggregate do not
constitute a Material Adverse Effect on the Company; and Parent and Merger
Subsidiary shall have received a certificate of the Chief Executive Officer or a
Vice President of the Company to that effect.
(b) The Related Agreements shall have been duly authorized,
executed and delivered by the parties thereto other than the Parent and the
Merger Subsidiary and shall be in full force and effect, provided that it shall
only be a condition to Closing that no less than 75% of the employees of the
Company (excluding the employees listed on Exhibit C-3 hereof) shall have signed
an agreement with Parent in the form of EXHIBIT C-1.
(c) There shall have been no circumstance, event, occurrence,
changes or effect that would reasonably be expected, individually or in the
aggregate, to have a Company Material Adverse Effect since the date of this
Merger Agreement.
(d) The Parent shall have received from Xxxxx Peabody LLP,
counsel to the Parent, on the Closing Date, a written opinion dated as of such
date that the Merger qualifies as a reorganization within the meaning of Section
368(a) of the Code.
(e) The Company shall have obtained those consents identified
with an asterisk as a "required consent for Closing" on Section 4.5 of the
Company Disclosure Schedule.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 TERMINATION. This Merger Agreement may be terminated at
any time prior to the Effective Time, whether before or after approval by the
shareholders of the Company:
(a) by mutual written consent of Parent and the Company;
(b) by the Company, upon a material breach of this Merger
Agreement on the part of Parent or Merger Subsidiary as set forth in this Merger
Agreement which has not been cured (following prompt notice thereof to Parent)
and which would cause the condition set forth in Section 8.2(a) to be incapable
of being satisfied by September 30, 2000;
(c) by Parent, upon a material breach of this Merger Agreement
on the part of the Company as set forth in this Merger Agreement which has not
been cured (following prompt notice thereof to the Company) and which would
cause the condition set forth in Section 8.3(a) to be incapable of being
satisfied by September 30, 2000;
29
(d) by Parent or the Company if any court of competent
jurisdiction shall have issued, enacted, entered, promulgated or enforced any
order, judgment, decree, injunction or ruling which restrains, enjoins or
otherwise prohibits the Merger and such order, judgment, decree, injunction or
ruling shall have become final and nonappealable; or
(e) by either Parent or the Company if the Merger shall not
have been consummated on or before September 30, 2000 (the "UPSET DATE"),
provided the terminating party is not at the time of such termination otherwise
in material breach of its representations, warranties or obligations under this
Merger Agreement.
Section 9.2 EFFECT OF TERMINATION. In the event of termination of this
Merger Agreement by either Parent or the Company, as provided in Section 9.1,
this Merger Agreement shall forthwith become void and there shall be no
liability hereunder on the part of any of the Company, Parent or Merger
Subsidiary or their respective officers or directors except as expressly herein
and provided that provided (i) the Confidentiality Agreement referenced in
Section 7.1 and Sections 9.2, 9.3(a) and Article XI shall survive the
termination and (ii) nothing herein shall relieve any party from liability for
any willful breach of any of their respective representations, warranties,
covenants or agreements set forth in this Merger Agreement.
Section 9.3 FEES AND EXPENSES.
(a) If the Merger is not consummated and the Closing does not occur,
all fees and expenses incurred in connection with negotiation and effectuation
of the terms and conditions of this Merger Agreement and the transactions
contemplated hereby, including without limitation all legal, accounting,
financial advisory, consulting and other fees and expenses of third parties
("THIRD PARTY EXPENSES"), incurred by the Parent or Merger Subsidiary, shall be
the obligation of the Parent, and all Third Party Expenses incurred by the
Company or its shareholders shall be the obligation of the Company.
(b) If the Merger is consummated and the Closing does occur, all
reasonable Third Party Expenses incurred by any party hereto shall be the
responsibility of the Parent or the Surviving Corporation, and shall be paid in
full immediately after the Effective Time.
Section 9.4 AMENDMENT. This Merger Agreement may be amended by the
parties hereto at any time before or after approval hereof by the shareholders
of the Company, but, after such approval, no amendment shall be made which (i)
changes the form or decreases the amount of the Merger Consideration, (ii) in
any way materially adversely affects the rights of the Company's shareholders or
(iii) under applicable law would require approval of the Company's shareholders,
in any such case referred to in clauses (i), (ii) and (iii), without the further
approval of such shareholders. This Merger Agreement may not be amended except
by an instrument in writing signed on behalf of each of the parties hereto.
Section 9.5 WAIVER. At any time prior to the Effective Time, the
parties hereto may, to the extent permitted by applicable law, (i) extend the
time for the performance of any of the obligations or other acts of any other
party hereto, (ii) waive any inaccuracies in the representations and warranties
by any other party contained herein or in any documents delivered
30
by any other party pursuant hereto and (iii) waive compliance with any of the
agreements of any other party or with any conditions to its own obligations
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.
ARTICLE X
SURVIVAL AND INDEMNIFICATION
Section 10.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations and warranties of the parties contained in this Merger Agreement
shall, notwithstanding any investigation by or notice by or to any party prior
to the Closing Date, survive the Merger for the period set forth in this Section
10.1. The representations and warranties of the Company and the representations
and warranties of Parent and Merger Subsidiary set forth in Article V shall
survive until the date which is fourteen (14) months after the Closing Date (the
"GENERAL EXPIRATION DATE"). Notwithstanding the foregoing: the representations
and warranties of the Company (i) in Section 4.19 (Tax) shall survive for three
(3) years after the Closing Date unless a Tax audit is conducted on the Company
by the appropriate Tax authority, in which case such Tax representation and
warranty shall survive solely with respect to the matters under such audit and
then only to the end of such audit period; and (ii) in Section 4.25
(environment) but only if and to the extent that such representation and
warranty relates to the property known as 00 Xxxxx Xxxxx, Xxxxxxxxxx, XX, which
representation and warranty shall survive until seven (7) years from the Closing
Date (as set forth in (i) and (ii) of this sentence, the "SPECIFIC EXPIRATION
DATE", together with the General Expiration Date, THE"EXPIRATION DATE"); and
provided further, however, that the representations and warranties that are the
subject of any Claim pending on the Expiration Date, as provided in Section
10.4, shall survive the Expiration Date until such Claim is finally resolved.
The covenants and agreements of the parties contained in this Merger Agreement
shall survive until fully performed.
Section 10.2 INDEMNIFICATION BY THE PRINCIPAL SHAREHOLDER. In the
manner herein provided, from and after the Closing Date with respect to any
Claim as to which notice is given prior to the Expiration Date, the Principal
Shareholder shall indemnify and hold harmless Parent and its affiliates, and
their respective employees, directors, agents and representatives (collectively,
the "Parent Indemnified Parties"), from and against any and all Loss and
Litigation Expense, which they or any of them may suffer or incur as a result of
or arising from any of the following: (a) any misrepresentation or breach of
warranty by the Company or (b) the failure by the Company to perform any
covenants and agreements under this Merger.
Section 10.3 CERTAIN LIMITATION ON INDEMNITIES.
(a) With respect to the indemnification obligation under
Section 10.2, the Principal Shareholder shall not have any obligation to
indemnify Parent Indemnified Parties to the extent that the aggregate of such
Claims exceeds $40 million. The Principal Shareholder shall not have any
indemnification obligations under Section 10.2 unless the aggregate of all
such Claims exceeds $1,500,000 provided, however that if such threshold is
reached, the Principal
31
Shareholder shall be liable for all such Claims, including the first
$1,500,000. The Principal Shareholder shall not be liable to any Parent
Indemnified Party with respect to any occurrence, event, circumstance, act or
omission unless such matter or a series of related matters arising from the
same occurrence, event, circumstance, act or omission or similar conduct by
the same individual which causes a representation or warranty to be breached
and which results in Loss or Litigation Expense of $150,000 or more.
(b) The Principal Shareholder shall not be obligated to
indemnify or hold harmless the Parent or Merger Subsidiary with respect to Loss
arising out of breaches of the representations and warranties of the Company
disclosed to Parent in accordance with Section 7.7 hereof.
(c) The Principal Shareholder shall have no obligation to
indemnify the Parent or Surviving Corporation for consequential damages, special
damages, incidental damages, indirect damages, lost profits, unrealized
expectations or other similar items.
(d) If and to the extent the Principal Shareholder shall be
required to indemnify the Parent or Surviving Corporation pursuant to this
Article X, such obligations shall be satisfied, at the option of the Principal
Shareholder by either cash payment or through a return or forfeiture by the
Principal Shareholder to the Parent of Parent Common Stock payable to the
Principal Shareholder as Post-Closing Contingent Consideration, such Parent
Common Stock to be valued at the Parent Closing Price.
Section 10.4 PROCEDURE.
(a) Promptly after acquiring knowledge of any Loss, or any action,
suit, investigation, proceeding, demand, assessment, audit, judgment, or claim
("CLAIM") which may result in a Loss, and prior to the Expiration Date, the
person seeking indemnity under this Article X (the "INDEMNITEE") shall give
written notice thereof to the Principal Shareholder.
(b) If the Claim is based on an action brought by a person not
affiliated with Parent or the Indemnitee, the Principal Shareholder shall have
the right, at its expense, to defend, contest or compromise such Claim, through
counsel of its choice (unless the Principal Shareholder is relieved of its
liability hereunder with respect to such Claim and Loss and Litigation Expense
by the Indemnitee) and shall not then be liable for fees or expenses of the
Indemnitee's attorneys (unless the Principal Shareholder and Indemnitee are
parties to the action and there exists a conflict of interest between the
Principal Shareholder and the Indemnitee, in which event the Principal
Shareholder will be responsible for the reasonable fees and expenses of one
attorney representing Indemnitee(s)), and the Indemnitee and the Principal
Shareholder shall provide to each other all necessary and reasonable cooperation
in the defense of all Claims, including, but not limited to, the services of
employees who are familiar with the transactions out of which such Claim or Loss
may have arisen. In the event that the Principal Shareholder shall undertake to
compromise or defend any Claim, it shall promptly notify the Indemnitee of its
intention to do so. In the event that the Principal Shareholder, after written
notice from Indemnitee, fails to take timely action to defend the same, the
Indemnitee shall have the right to defend the same by counsel of its own
choosing, but at the cost and expense of the Principal Shareholder, provided,
32
no settlement of a Claim by Indemnitee shall be effected without the consent of
the Principal Shareholder unless Indemnitee waives any right to indemnification
therefor. The Principal Shareholder may settle or compromise any Claim or
consent to the entry of any judgment (i) which includes the unconditional
release by the person asserting the Claim and any related claimants of
Indemnitee from all liability with respect to such Claim in form and substance
reasonably satisfactory to Indemnitee, and (ii) which would not adversely affect
the right of Indemnitee and its affiliates to own, hold, use and operate their
respective assets and businesses.
(c) Parent and the Principal Shareholder shall treat any payment under
this Article X for all Tax purposes as an adjustment of the Merger
Consideration, except to the extent such treatment is not permitted under
applicable Law.
Section 10.5 CERTAIN TERMS. For purposes of this Article X, the
following terms have the definitions set forth below:
"LITIGATION EXPENSE" means any expenses incurred in connection with
investigating, defending or asserting any claim, action, suit or proceeding
incident to any matter indemnified against under this Merger Agreement,
including, court filing fees, court costs, arbitration fees or costs, witness
fees and reasonable fees and disbursements of legal counsel (whether incurred in
any action or proceeding between the parties to this Merger Agreement or between
any party to this Merger Agreement and any third person and whether or not any
action or proceeding is commenced), investigators, expert witnesses, accountants
and other professionals.
"LOSS" means any loss, obligation, claim, liability, settlement
payment, award, judgment, fine, penalty, interest charge, expense, damage or
deficiency or other charge, measured after accounting for any insurance proceeds
actually received with respect thereto, other than Litigation Expense and back
tax loss.
Section 10.6 REMEDIES EXCLUSIVE. The remedies provided in this Article
X shall be the exclusive remedies of the parties hereto after the Closing in
connection with any breach of a representation or warranty, non-performance,
partial or total, of any covenant or agreement contained herein or any other
matter relating to this Merger Agreement, other than Claims for fraud or
intentional misrepresentation.
ARTICLE XI
GENERAL PROVISIONS
Section 11.1 DISPUTE RESOLUTION. The parties agree to negotiate in good
faith to resolve any dispute between them regarding this Merger Agreement,
provided, however, nothing contained in this Section 11.1 shall prevent any
party from seeking specific relief as provided in Section 11.3 of this Merger
Agreement to the extent such party reasonably deems such action necessary to
preserve its rights or the STATUS QUO ANTE pending such resolution. If the
negotiations do not resolve the dispute to the reasonable satisfaction of both
parties within a period of not less than sixty (60) days after either party
first notified the other of the dispute referenced in this Section, then each
party shall nominate one senior officer of the rank of Vice President or higher
33
as its representative. These representatives shall, within thirty (30) days of a
written request by either party to call such a meeting, meet in person and alone
(except for one assistant for each party) and shall attempt in good faith to
resolve the dispute. If the dispute cannot be resolved by such senior managers
in such meeting, the parties agree that they shall, if requested in writing by
either party, meet within thirty (30) days after such written notification for
one day with an impartial mediator and consider dispute resolution alternatives
other than litigation. If an alternative method of dispute resolution is not
agreed upon within thirty (30) days after the one day mediation, either party
may begin litigation proceedings. This procedure shall be a prerequisite before
taking any additional action hereunder.
Section 11.2 NOTICES. All notices or other communications under this
Merger Agreement shall be in writing and shall be given (and shall be deemed to
have been duly given upon receipt) by delivery in person, by telecopy (with
confirmation of receipt), or by registered or certified mail, postage prepaid,
return receipt requested, addressed as follows:
If to the Company:
IntelliSense Corporation
00 Xxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attention: President
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
With a copy to:
Xxxxxx, Xxxx & Xxxxxxx
Exchange Place
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx, III, Esq., P.C.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to Parent or Merger Subsidiary:
Corning Incorporated
Xxx Xxxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: General Counsel
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
34
or to such other address as any party may have furnished to the other parties in
writing in accordance with this Section.
Section 11.3 SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Merger Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Merger
Agreement and to enforce specifically the terms and provisions hereof, this
being in addition to any other remedy to which they are entitled at law or in
equity.
Section 11.4 ENTIRE AGREEMENT. This Merger Agreement, the Company
Disclosure Schedule, the Parent Disclosure Schedule, the Related Agreements and
the Confidentiality Agreement constitute the entire agreement and supersede all
other prior agreements and understandings, both written and oral, among the
parties, or any of them, with respect to the subject matter hereof.
Section 11.5 INCORPORATION OF COMPANY DISCLOSURE SCHEDULE. The parties
hereto agree that the Company Disclosure Schedule attached hereto forms an
integral part of this Merger Agreement. Notwithstanding anything to the contrary
contained in this Merger Agreement or in any section of the Company Disclosure
Schedule, any information disclosed in any one of such sections shall be deemed
to be disclosed in all of such sections. Certain information set forth in the
Company Disclosure Schedule is included solely for informational purposes and
may not be required to be disclosed pursuant to this Merger Agreement. The
disclosure of any information in the Company Disclosure Schedule shall not be
deemed to constitute an acknowledgment that such information is required to be
disclosed in connection with the representations and warranties made by the
Company in this Merger Agreement or that it is material, nor shall such
information be deemed to establish a standard of materiality.
Section 11.6 ASSIGNMENTS; PARTIES IN INTEREST. Neither this Merger
Agreement nor any of the rights, interests or obligations hereunder may be
assigned by any of the parties hereto, whether by operation of law or otherwise,
without the prior written consent of the other parties. Subject to the preceding
sentence, this Merger Agreement shall be binding upon and inure solely to the
benefit of each party hereto, and nothing in this Merger Agreement, express or
implied, is intended to or shall confer upon any person not a party hereto any
right, benefit or remedy of any nature whatsoever under or by reason of this
Merger Agreement, including to confer third party beneficiary rights, except for
the provisions of Article III and Sections 7.11 and 10.2.
Section 11.7 GOVERNING LAW; VENUE. This Merger Agreement, except to the
extent that the DGCL is mandatorily applicable to the Merger and the rights of
the shareholders of the Company, shall be governed in all respects by the laws
of the State of New York, without giving effect to the provisions thereof
relating to conflicts of law. Each of Parent and the Company hereby waives
personal service of any and all process and consents that all such service of
process be made by registered mail directed to the address stated in Section
11.2 hereof and service so made shall be deemed to be completed upon actual
receipt thereof. Each of the Company, for itself and on behalf of the Company
Indemnified Parties, and Parent, for itself and on behalf of the Parent
Indemnified Parties, waive any right to a trial by jury with respect to any
matter arising under this Merger Agreement and the transactions contemplated
hereby. Each of
35
Parent and the Company hereby consents to the non-exclusive jurisdiction and
venue of any state or federal court located within either Middlesex County or
Suffolk County, Massachusetts or the State of New York. Subject to compliance
with the dispute resolution provisions in Section 11.1, the defendant in any
action hereunder shall select the forum and venue for such proceeding in
accordance with the provision hereof. Each of Parent and the Company waives, for
itself and on behalf of the Company Indemnified Parties and Parent Indemnified
Parties, any objection to venue of any action instituted hereunder and consents
to the granting of such legal or equitable relief as is deemed appropriate by
the court.
Section 11.8 HEADING. The descriptive headings herein are inserted for
convenience of reference only and are not intended to be part of or to affect
the meaning or interpretation of this Merger Agreement.
Section 11.9 CERTAIN DEFINITIONS AND RULES OF CONSTRUCTION. As used in
this Merger Agreement:
(a) As used in this Merger Agreement:
"ACQUISITION PROPOSAL" has the meaning set forth in Section
6.3.
"AFFILIATE" as applied to any person, shall mean any other
person directly or indirectly controlling, controlled by, or
under common control with, that person; for purposes of this
definition, "control" (including, with correlative meanings,
the terms "controlling," "controlled by" and "under common
control with"), as applied to any person, means the
possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of that
person, whether through the ownership of voting securities, by
contract or otherwise.
"AUDITED STATEMENTS" has the meaning set forth in Section
4.16.
"CERCLA" has the meaning set forth in Section 4.25.
"CERTIFICATE OF MERGER" has the meaning set forth in Section
1.3.
"CODE" has the meaning set forth in the preamble to this
Merger Agreement.
"CLAIM" has the meaning set forth in Section 10.4.
"CLOSING CONSIDERATION" has the meaning set forth in Section
3.1(b).
"CLOSING DATE" has the meaning set forth in Section 1.2.
"CLOSING EXCHANGE RATIO" has the meaning set forth in Section
3.1(c).
"COMPANY" has the meaning set forth in the preamble to this
Merger Agreement.
"COMPANY BENEFIT PLANS" has the meaning set forth in Section
4.18.
36
"COMPANY BOARD APPROVAL" has the meaning set forth in Section
4.28.
"COMPANY COMMON STOCK" has the meaning set forth in Section
3.1(a).
"COMPANY DISCLOSURE SCHEDULE" has the meaning set forth in
Article IV, Introduction.
"COMPANY MATERIAL ADVERSE EFFECT" has the meaning set forth in
Section 4.1.
"COMPANY MERGER SHARES" has the meaning set forth in Section
3.1(b).
"COMPANY PERMITS" has the meaning set forth in Section 4.23.
"COMPANY STOCK OPTION" has the meaning set forth in Section
3.1(f).
"COMPANY'S FINANCIAL ADVISOR" has the meaning set forth in
Section 4.27.
"CONSTITUENT CORPORATIONS" has the meaning set forth in
Section 1.4.
"CONTINGENT EXCHANGE RATIO" has the meaning set forth in
Section 3.1(c).
"DGCL" has the meaning set forth in Section 1.1.
"DEFAULT" has the meaning set forth in Section 4.5(e).
"DISSENTING SHARE" has the meaning set forth in Section 3.2.
"ERISA" shall have the meaning set forth in Section 4.18(a).
"ERISA AFFILIATE" has the meaning set forth in Section
4.18(a).
"EFFECTIVE TIME" has the meaning set forth in Section 1.3.
"ENVIRONMENTAL LAWS" has the meaning set forth in Section
4.25.
"ENVIRONMENTAL PERMITS" has the meaning set forth in Section
4.25.
"EXCHANGE ACT" has the meaning set forth in Section 5.4(b).
"EXPIRATION DATE" has the meaning set forth in Section 10.1.
"FINANCIAL STATEMENTS" has the meaning set forth in Section
4.16.
"GAAP" has the meaning set forth in Section 4.16.
"GENERAL EXPIRATION DATE" has the meaning set forth in Section
10.1.
37
"GOVERNMENTAL ENTITY" means any government or subdivision
thereof or any administrative, governmental or regulatory
authority, agency, commission, court or tribunal.
"HSR ACT" has the meaning set forth in Section 4.6.
"HAZARDOUS MATERIALS" has the meaning set forth in Section
4.25.
"INDEMNITEE" has the meaning set forth in Section 10.4(a).
"INTELLECTUAL PROPERTY" has the meaning set forth in Section
4.9.
"LAWS" MEANS the laws, rules and regulations of any
Governmental Entity with jurisdiction.
"LITIGATION EXPENSE" has the meaning set forth in Section
10.5.
"LOSS" has the meaning set forth in Section 10.5.
"MARCH STATEMENTS" has the meaning set forth in Section 4.16.
"MATERIAL CONTRACTS" has the meaning set forth in Section 4.5.
"MERGER" has the meaning set forth in the preamble to this
Merger Agreement.
"MERGER AGREEMENT" has the meaning set forth in the preamble
to this Merger Agreement.
"MERGER CONSIDERATION" has the meaning set forth in Section
3.1(b).
"MERGER SUBSIDIARY" has the meaning set forth in the preamble
to this Merger Agreement.
"OUTSTANDING OPTIONS" has the meaning set forth in Section
3.1(c).
"PARENT" has the meaning set forth in the preamble to this
Merger Agreement.
"PARENT COMMON STOCK" has the meaning set forth in Section
3.1(b).
"PARENT FINANCIAL STATEMENTS" has the meaning set forth in
Section 5.5(b).
"PARENT INDEMNIFIED PARTIES" has the meaning set forth in
Section 10.2.
"PARENT PREFERRED STOCK" has the meaning set forth in Section
5.2.
"PARENT SEC REPORTS" has the meaning set forth in Section
5.5(a).
"PARENT STOCK OPTION" has the meaning set forth in Section
3.1(f).
38
"PARENT STOCK PLANS" has the meaning set forth in Section 5.2.
"PARENT STOCK PRICE" has the meaning set forth in Section
3.1(c).
"PARENT'S FINANCIAL ADVISOR" has the meaning set forth in
Section 5.7.
"PAYING AGENT" has the meaning set forth in Section 3.3(a).
"PERSON" shall include individuals, corporations,
partnerships, limited liability companies, trusts, other
entities and groups (which term shall include a "group" as
such term is defined in Section 13(d)(3) of the Exchange Act).
"POST-CLOSING CONTINGENT CONSIDERATION" has the meaning set
forth in Section 3.1(b).
"PRINCIPAL SHAREHOLDER" means the President and Chief
Executive Officer of the Company.
"RELATED Agreements" means the Shareholders Agreement and the
agreements referred to in Section 4.4.
"SECURITIES ACT" has the meaning set forth in Section 5.4(b).
"SHAREHOLDER REPRESENTATIVE" has the meaning set forth in
Section 7.9.
"SHAREHOLDERS AGREEMENT" has the meaning set forth in the
preamble to this Merger Agreement.
"SPECIFIC EXPIRATION DATE" has the meaning set forth in
Section 10.1.
"SURVIVING CORPORATION" has the meaning set forth in Section
1.1.
"TAX" shall mean any federal, state, local, foreign or
provincial income, gross receipts, property, sales, service,
use, license, lease, excise, franchise, employment, payroll,
withholding, employment, unemployment insurance, workers'
compensation, social security, alternative or added minimum,
ad valorem, value added, stamp, business license, occupation,
premium, environmental, windfall profit, customs, duties,
estimated, transfer or excise tax, or any other tax, custom,
duty, premium, governmental fee or other assessment or charge
of any kind whatsoever, together with any interest, penalty or
additional tax imposed by any Governmental Entity.
"THIRD PARTY EXPENSES" has the meaning set forth in Section
9.3(a).
"UPSET DATE" has the meaning set forth in Section 9.1(e).
39
(b) For purposes of the Merger Agreement, "to the knowledge of the
Company" (or words of similar import) shall mean the actual personal knowledge
of the Principal Shareholder or Chief Financial Officer of the Company
immediately prior to the Effective Time.
(c) Other Rules of Construction.
(i) References in this Merger Agreement to any gender shall
include references to all genders. Unless the context otherwise
requires, references in the singular include references in the plural
and vice versa. References to a party to this Merger Agreement or to
other agreements described herein means those Persons executing such
agreements.
(ii) The words "include", "including" or "includes" shall be
deemed to be followed by the phrase "without limitation" or the phrase
"but not limited to" in all places where such words appear in this
Merger Agreement.
(iii) This Merger Agreement is the joint drafting product of
Parent and the Company and each provision has been subject to
negotiation and agreement and shall not be construed for or against
either party as drafter thereof.
(iv) Each case in this Merger Agreement where a contract or
agreement is represented or warranted to be enforceable will be deemed
to include as a limitation to the extent that enforceability may be
subject to applicable bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or similar Laws affecting the
enforcement of creditors' rights generally and to general equitable
principles, whether applied in equity or at law.
(v) All references in the Agreement to financial terms shall
be deemed to refer to such terms as they are defined under GAAP,
consistently applied.
Section 11.10 COUNTERPARTS. This Merger Agreement may be executed in
two or more counterparts which together shall constitute a single agreement.
Section 11.11 SEVERABILITY. If any term or other provision of this
Merger Agreement is invalid, illegal or incapable of being enforced by any rule
of law or public policy, all other conditions and provisions of this Merger
Agreement shall nevertheless remain in full force and effect so long as the
economics or legal substance of the transactions contemplated hereby are not
affected in any manner materially adverse to any party. Upon determination that
any term or other provision hereof is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this Merger
Agreement so as to effect the original intent of the parties as closely as
possible to the fullest extent permitted by applicable law in an acceptable
manner to the end that the transactions contemplated hereby are fulfilled to the
extent possible.
* * * * * * * * *
40
IN WITNESS WHEREOF, Parent, Merger Subsidiary and the Company have
caused this Merger Agreement to be signed by their respective officers
thereunder duly authorized all as of the date first written above.
INTELLISENSE CORPORATION
By: _________________________
Printed Name:________________
Title:_______________________
IROQUOIS MERGER SUB, INC.
By: _________________________
Printed Name: _______________
Title: ______________________
CORNING INCORPORATED
By: _________________________
Printed Name: _______________
Title: ______________________
The undersigned Principal Shareholder, for good and valuable consideration,
receipt of which is hereby acknowledged, executes this Merger Agreement solely
for the purpose of acknowledging and agreeing to his obligations pursuant to
Article X of this Merger Agreement.
Date: May 19, 2000 ___________________________
Printed Name: Xxxxxxxx Xxxxxx
EXHIBITS AND SCHEDULES
EXHIBIT
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Exhibit A Form of Shareholder Agreement
Exhibit B Terms and Conditions with Respect to Post-Closing Contingent Consideration
Exhibit C-1 Form of Employee Agreement
Exhibit C-2 Form of Employee Agreement
Exhibit C-3 Employees to Enter into Agreements
Exhibit D Declaration of Registration Rights pursuant to Section 7.13
Exhibit 1.3 Certificate of Merger
Exhibit 2.3 Surviving Corporation Officers and Directors
Exhibit 3.3(b) Letter of Transmittal
Exhibit 7.2 Investment Letter
SCHEDULE
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4.3 Subsidiaries
4.5 Material Contracts
4.6 Governmental Consents
4.7 Employee Agreement
4.9 Intellectual Property
4.12 Affiliate Transactions
4.15 Title to Property and Assets
4.16 Financial Statements
4.17 Changes
4.18 Employee Benefit Plans
4.20 Insurance
4.25 Environmental and Safety Laws
6.1 Conduct of Business Pending the Effective Time
